PRIYA: Streamlining To Survive

The past two fiscals are ones that Priya would like to forget. In 2003-04,
the company's overall turnover slid by a further 42% over the previous fiscal's
drop of 14%. Its agency revenues was a saving grace, as the company posted

Rs 86.20 crore in 2003-04, which was slightly better than the previous fiscal's
Rs 85.49 crore.

As a damage control reaction, Priya decided to streamline its product
portfolio. The management at Priya decided to concentrate on profitability,
rather than turnover growth in an effort to put the company back in the black.

It did away with those brands that were not offering good margins. Priya had
to stop selling TraxData products, after the company was globally declared
bankrupt. At the same time, it added brands like Western Digital, AMD and
Philips monitors, which were offering better margins. Though AMD and Philips
were new inclusions to Priya's portfolio, they are already contributing 30% to
the company's overall agency revenues.

Priya blames the overcrowding of the distribution market and the subsequent
price-cutting for its negative growth. "Due to the overcrowding of the
market, distributors often have to stick with brands that don't yield good
profits," says Aditya Bhuwania, Executive Director, Priya Ltd. "This
is why we decided to stop selling LG, as we were not making any money in it,
though we were one of its leading distributors."

Priya has also limited its credit to the channel to enhance its cash flow. It
adhered to a policy if offering only 30 days credit to most of its dealers,
barring a few large OEMs. It has a dealer network of 3,000 partners across 22
cities. It opened offices in five cities last fiscal.

The company has also has service centers in 20 locations, most of which also
double up as warehouses, with a turnaround

time of 48 hours. "In most cases, we offer over the counter replacement.
But where repairs are necessary we get the product back to the customers within
two working days," notes Aditya.

Priya expects that an extensive service network will give it a competitive
edge over other distributors, who don't offer quick service. This is another
reason why the company invested into an ERP system, so that all the logistics
are well-aligned.

Priya wants to ramp up its volumes, especially for the newly included brands,
but is prudently waiting for this to happen gradually. This fiscal, the company
wants to ensure that there is no negative growth, even if there is no increase
in turnover. "Profitability has already increased in the past two quarters
and we were in the black in the second half of last fiscal," says Aditya.