In conversation with Atul Mehta, Chairman and Managing Director, Compuage Infocom Limited

To increase market penetration, we are focusing on expanding our network of dealerships and bringing on new brand collaborations to reach a broader target audience, affirms Atul Mehta, Chairman and Managing Director, Compuage Infocom Limited.

What is your outlook on the Indian Enterprise Solutions, Cloud Computing, IT Consumer and Hardware Services sectors? What are the emerging trends you are witnessing in the post-pandemic world? 

The demand from work-at-home had provided a boost for IT Consumer and Cloud segments during the pandemic, and as everything was unlocked, the demand from offices began to build which led to a strong demand from our enterprise solutions business. We saw an emerging trend in the cloud and enterprise solutions vertical, and going forward, expanding that portfolio will be our top priority. We are also developing our own platform to showcase our cloud services to distributors. Currently, 40 per cent of our company's revenue comes from cloud and enterprise services. 

Our IT consumer business contributes approximately 60 per cent of our total revenues, thanks in large part to the high demand for consumer electronics like laptops, desktops, printers, scanners, and the like. We expect to see increased demand from both new age and current businesses as technology advances. 

Compuage’s hardware services division is a distinct business entity that is still young and expanding; it now has 69 service locations with over 300 technical experts. We are putting our efforts into this sector because it provides superior profit margins. 

Can you throw some colour on your H1FY23 financial results? Also, what is your earnings outlook for H2FY23? 

For the first half of FY23, the company registered a 22 per cent growth in its total income which stood at Rs.2,186 crore over the same period last year. Gross Profit increased by 23 per cent to Rs 103 crore over the same period last year. Profit after tax for the first half of FY23 stood at Rs 14.6 crore, up 70 per cent over the same period last year, while EBITDA margins increased by 20 basis points to 2.8 per cent. We expect the second half of the year to be quite consistent. 

We feel that there is adequate potential for long-term development in the Indian market since the adoption of IT goods is lower than that of industrialised countries. We continue to focus on adding new brand partnerships and agreements to widen our product portfolio and explore newer markets to scale up our business, which will lead to better value creation and profitability. 

Could you highlight the business developments and distribution agreements you have signed in 2022? 

The addition of new brands is one of our primary areas of focus for expansion. We have added 9 brands to our portfolio in FY22 and have added 3 brand partnerships so far in FY23 with R&M, Super Micro Computer&Bosch Limited. The majority of these partnerships fall under either "IT Business" or "IT Cloud". These categories earn higher margins and help us improve our product mix and enhance our return on capital employed. Our objective is to sign at least a minimum of six to eight brands every year. That is the goal that we are working towards, and we are very confident of achieving that goal. 

Compuage Infocom has successfully concluded its Rights Issue worth Rs 41.58 crore. How do you plan to utilize these funds? 

Yes, the rights issue is successfully concluded. The money raised from the rights issue will be used largely to expand the business. A portion of the proceeds will go toward meeting its working capital requirements and supporting future expansion. There are no supplementary demands, capital expenditures, or inorganic expansion strategies needed. Our strategy for expansion is so far to focus on fostering a more natural kind of business. 

What is your strategy for penetrating the untapped markets specifically in Tier II, Tier III and beyond cities?  

As highlighted earlier, we believe that there is adequate potential for long-term development in the Indian market since the adoption of IT goods is lower than that of industrialised countries. To increase our market penetration, we are primarily focusing on expanding our network of dealerships and bringing on new brand collaborations to reach a broader target audience. We have a broad geographical pan-India footprint and, via our partners, may reach out to newer consumers of an established product. 

Presently, what are your top 3 strategic priorities? 

We are working toward our goals in developing Compuage 2.0, some of our top priorities are expanding our presence in the enterprise and cloud markets, and entering new brand collaborations and agreements to diversify our product offering are our current top strategic goals. In addition, the company aims to achieve a billion-dollar revenue in the next five years.