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CCS Infotech to float a JV in South Africa news
Venkatachari Jagannath
20 April 2006
Chennai: Chennai-based computer manufacturer CCS Infotech Limited will be entering the South African market in a major way. The company will shortly float a 50:50 joint venture in South Africa in partnership with PHEIT Pty Limited.

"The initial investment will be around Rs12 crore," says director M A Hasan Abdul Kader. The company will also market networking products in South Africa."

According to him, CCS Infotech's wholly owned Singapore subsidiary CCS Infotech Singapore Pte Ltd will supply personal computers and laptops to the South African venture. To beef up production an additional investment of Rs2.5 crore will be made in the Singapore company.

"Initially we plan to make 100 machines per month for the South African market." The joint venture will happen in six months time. "There is good potential in South Africa. The basic idea is to expand our geographical spread."

The Rs32-crore revenue company has drawn up plans to expand its distribution set up in the domestic market. Part of the plan is to open exclusive retail outlets called CCS Zone.

Presently the company has three CCS Zones in Chennai. "The idea is to double that number in Chennai and also open in other cities taking the total number of CCS Zones to 30," says Kader. Majority of the outlets will be under franchisee model. The company will also be doubling its dealer network from the current 50.

In order to supply to the government offices directly the company is setting upgrading its Pondicherry plant to satisfy the criteria laid down by the Directorate General of Supplies and Disposals.

Speaking about the domestic PC market trend, Kader says the demand for branded PCs is going up at the cost of assembled ones. "The prices are coming down and the features in PCs are becoming standardised."

When asked as to whether a PC is becoming a mass product similar to a television, necessitating celebrity endorsements like Shah Rukh Khan for HP computers, he says, "The prices are coming down and the PC features are getting standardised. Given this situation only branding would help in promoting sales. And that is what some companies have started doing without talking much about the technology."

Even CCS Infotech's television commercial does not talk about what is inside the company's computer. "We are not for celebrity endorsements. These days, celebrities endorse several products and the brand recall is becoming is becoming lower."

If building the brand is important does the company continue to feature Intel's logo in all its advertisements? Is it to recover the part of the advertisement cost? It should be noted that Intel reimburses a major portion of the advertisement costs to the PC makers if they use Intel's logo and the slogan Intel Inside in the ad copy. CCS Infotech spends around Rs15 lakh per month on advertisements.

Responds director H Ratna Kumar, "This is different from celebrity endorsements. If you see our television commercial, just three seconds is given for projecting Intel. Further, partnering with a global brand like Intel is actually advantageous for us."

According to Kader, the company would close FY 2006 with a turnover of Rs62 crore. Over 80 per cent of that will be from PC sales and the balance from selling networking products, software development and others like staffing solutions.

The company is also planning to get into total facility management services in a major way shortly.

 


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CCS Infotech to float a JV in South Africa