Chennai: Dell India Private Limited today commenced commercial production at its 4-lakh units per annum plant at Sriperumbudur near Chennai.

The Rs 2,000 crore company says it has chalked out an ambitious indirect sales strategy of selling through the traditional distribution network. The company's parent, US-based Dell Inc that Michel Dell started in 1984 while still at college, is famous for its direct sales model that made news when he decided to distribute through retailers in the US, the UK and Japan.

The Indian company will also go beyond direct sales in six months time, says Rajan Anandan, vice president and general manager, Dell India, in line with the global policy of selling through retailers. The company is studying the computer retailing industry in depth so to eliminate inefficiencies in the system.

Globally too the $57 billion turnover Dell is taking measured steps in its indirect strategy even as the company has sold 70,000 units in two months time through Wal-Mart chain in the US. The company does not supply to all the retail outlets in the US, as it is choosy, says Kip G Thompson, vice president, global facilities and strategic growth. He also says that the new channel strategy would not erode the company's margins, as the product offerings will be different. The one big challenge faced by the company is building up the capacity to cater to the needs of the new channel.

"For Dell going indirect is not a big issue unlike other computer manufacturers who went for direct sales from being indirect. We have the customer data, brand equity which will be leveraged advantageously," he adds.

In India, the indirect channel strategy gains importance as Dell India is targeting the small and the medium enterprise and the individual segments. The company has launched new models under the brand Vostro, XPS and Inspiron targeting these segments. The company has also launched notebooks in five colours.

"In the initial five years we looked at large corporations and our market share is 30 per cent in this segment. A year ago we entered the new segments like government, education, banking and retail," remarks Anandan.

Declining to quantify the price reduction owing to local production he says, "The company will pass on the cost reductions to its customers. In addition the Sriperumbudur plant would cut our delivery lead time by nearly 50 per cent."

While the Indian plant has one assembly line now, it has space to add couple of more over a period. The company will increase its capacity to 25 lakh units in a couple of years, rolling out all the product lines.

Except for couple of components supplied by Foxconn and Flextronics out of Chennai and items like packaging cartons that are localised, Dell India imports most of the components from China and Malaysia. Are the major vendors (nearly 90) finding the current volumes (4 lakh units per annum) finding it too small to set up shop here?

Hoping that the whole computer manufacturing supply chain system would be set up over a period, Thompson demands reduction of import duties to zero, which would attract investments by the company vendors.

The Indian plant has 150 employees out of which nearly 50 per cent consists of women.