Wednesday, December 9, 2009

Chirag logs in to light up PC market

At a time most businessmen across industries were groping in the dark for ideas to survive the global meltdown, the face of 34-year-old Kaustuv Ray stayed all lit up, as if he was blissfully unaware of the turmoil. Hooked on to his laptop, the Kolkata-based businessman was watching his ‘Chirag’ shine bright and emerge India’s third largest domestic PC brand after HCL and Zenith.

“The recession came as a big blessing as it was during this time that we started bagging large-ticket PC contracts from government, corporates and the education sector. As most of the PC spenders were looking for cheaper options, it helped us to come up with extremely competitive pricing vis-à-vis the MNC brands,” says Ray, lead promoter and chairman of the Rs 520-crore Kolkata-based RP Group.

During the last nine months, Ray doubled the national market share for his Chirag brand to five per cent. Chirag computers are sold through 92 exclusive brand stores and more than 1,000 retail points across the nation. Today, Ray’s order book is full till February 2010. So much so, he is now running three shifts in his two factories at Howrah (near Kolkata) and Himachal Pradesh. He is not only setting up a second plant in Himachal, but also eyeing a turnover of Rs 880 crore by March 2010.

2009 has truly been a worthwhile year for the company. RP Group bagged large clients for the first time such as Reserve Bank of India, State Bank of India, Bank of Baroda, Central Bank of India, BSNL, Indian Railways, Coal India, Information and Broadcasting Ministry and Ministry of Defence.

There’s more. The group recently inked a deal with India’s largest retail chain, Future Group, to sell Chirag nettops at Big Bazaar and other group formats.

“This is an exclusive deal whereby Future Group outlets will only sell nettops priced at Rs 11,990. We are also in talks with others like Metro Cash & Carry and Croma,” says Ray.

A couple of months ago, RP Group also entered into an OEM deal with chip giant Intel. As a result, the company will now be privy to Intel’s upcoming products, technology roadmap, special price consideration, joint brand building and sales pitch for big deals. “With this, we are now in the same league with the MNCs like Hewlett-Packard, Dell, Acer and Lenovo,” says Ray.

No wonder, Chirag’s rise has caught the attention of industry watchers. As frontline IT research firm IDC India senior manager (computing products research) Sumanta Mukherjee says: “No doubt, Chirag lately has been quite visible in government deals, the nettop space and some billboards as well. It is a welcome move to see such regional PC brands gaining national ambitions.”

However, analysts warn the challenges for regional brands like Chirag may be quite a few. “While MNC brands always enjoy huge benefits of scale with multi-country manufacturing, it could be quite a task for a regional brand to match up to such scale in the marketplace. Plus, brands like Chirag would also need deep pocket as they have to build service infrastructure at par with MNCs. This could be a big challenge since margins in hardware are not just thin but eroding every year,” says Mukherjee.

Ray, however, is determined to make it big. “Today, whatever Chirag has achieved is due to long hours of work since 1999. Challenges has been all throughout, but proper strategising always pays,” he says.

With the likes of former ONGC chairman Subir Raha in the company’s board and providing strategic input, Ray’s confidence is today sky-high.

It all started when Ray, hailing from a Bengali middle-class family, dared to leave his secured job at Kolkata Port Trust, joined hands with an old friend, Shivaji Panja, and try the path of entreprenuership with a meagre capital of Rs 25,000. His business then was to supply paper rolls for telephone meters installed in STD booths. In fact, it was in one of such booth where Ray chanced to meet someone who wanted to buy a PC.

“I gave a lower quotation and bagged the deal. Still, I made a profit of Rs 13000,” gleams Ray. It was then the assembled PC market was at its peak. It took seconds for Ray to realise his gold pot. His strategy was simple: bulk purchase of computer components and sell the finished product at the lowest cost. However, there was a burning desire in Ray to develop his own brand.

“But I soon realised expenses involved in brand building were huge,” says Ray. It was then Ray thought of erecting billboards across Kolkata and also floated a TV production house.

“It helped me to reduce my costs of branding for Chirag. In fact, I still run the advertising and TV production business which too have emerged as additional revenue stream,” says Ray.

The group also floated its own soccer club, Chirag United Sports Club, in 2006 as a way to build the Chirag brand. Today, the club is in the third position of national football league, playing across India, and has become a good vehicle for brand building.

“Today, I own a cross-media platform for building the Chirag brand most cost-effectively. The return on investment through this approach has been much higher and has helped me reach to aam aadmi who constitutes my prime consumer segment,” says Ray.

RP Group also had roped in Sourav Ganguly as Chirag’s brand ambassador from 2006. However, the contract got over this September.

Ray has now drawn his future business plan. He plans to cross the Rs 1,000 crore revenue mark for the PC business by 2010-11; launch a laptop at Rs 12,990; acquire a software company to emerge as a complete system integrator and bag bigger commercial deals; and enter the big business of servers next year.

“My next big dream is to make Chirag an Indian MNC PC brand. And I have started working on it,” Ray signs off.


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