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Zenith looks beyond Indian shores

Zenith is the story of how a company that started out selling products of other companies is today manufacturing and selling computers under its own brand, says Shivani Shinde.

For a person who started his career by selling electronic components, owning a successful company with an annual turnover of almost Rs 300 crore is a commendable achievement indeed. With IDC ranking Zenith Computers second largest to HCL among Indian PC manufacturers, Raj Saraf, Chairman & Managing Director of the company, is all set to replicate his success in international markets.

“In terms of growth, we have had a better rate than the industry,” says Saraf. After being in the Indian market for the last 25 years, the company is ready to make a mark in the Asia-Pacific region. PC shipments in Asia-Pacific will reach 37.3 million units in 2005, a 12.8 percent increase from 2004, estimates Gartner. According to MAIT, 3.63 million desktop PCs were sold in the Indian market in 2004-05.

Gartner expects the Indian market to grow 29.3 percent in 2005. Strong economic indicators on the back of a growth-directed finance budget have paved the way for healthy PC uptake in 2005.

Days of components past

Saraf started manufacturing electronic components in 1971 when he launched Zenith Semiconductors. Based on this experience, in 1980 he incorporated his dream to build a PC products company—Zenith Computers. Zenith is now a major brand in India for desktops, servers and laptops. The company has a manufacturing plant at Goa and it has been in the forefront of getting new technologies to India, from networking to notebooks.

Although the business began with selling electronic components imported from abroad (US), Zenith slowly began to get into the computer market. “When we started, computers had just entered the Indian market. We were the first to get Unix into the country and have computers running 16-bit operating systems in a LAN environment,” says Saraf.

His company was one of the first to talk of affordable PCs for the masses. According to Saraf, “An entry-level Zenith PC comes for Rs 13,000 and a laptop for Rs 20,000.” With more than 700 channel partners and almost 135 Zenith exclusive retail showrooms, he has been able to create a market for his company’s products.

Though Zenith was one of the companies to introduce low-price PCs, today there is sizeable competition with many others introducing PCs with a Rs 10,000 price tag (HCL, Sahara). However, Zenith does not seem to be worried about this trend. Says Devita Saraf (Raj Saraf’s daughter), Zenith’s Executive Director, “We do not believe that price points are a criterion. Further, those who are quoting Rs 10,000 have additional charges, thus making the final price more than what they say.” She also feels that low cost should not mean compromising the quality of the product.

Raj Saraf feels that over the years, both the customer and the market have changed considerably. He states that though having a computer is becoming necessary, gone are the days when PCs could be sold by application because the buyer has become smarter.

A turnaround

Until almost 2002, Zenith was selling other companies’ products ranging from servers to networking equipment. Around this time, it realised that products from HP, IBM and other MNCs were gaining ground, but its own products were not recognised. “We realised that we were also into manufacturing quality products, and decided to focus on our own products,” Saraf remarks.

The company’s plant in Goa manufactures at least 15,000 PCs a month with an almost similar consumption rate. The company has a strong customer base that includes corporates such as Godrej, Hindustan Lever, Air-India, ICICI Bank, Kotak Bank, Tata Power Company, Siemens, Dainik Bhaskar and Zydus Cadilla.

The turnaround strategy also worked with its manufacturing plant getting certified for ISO 9001, and with the introduction of the ‘Power of Seven’ series of notebooks.

We realised that we were also into manufacturing quality products, and decided to focus on our own products Raj Saraf CMD Zenith Computers	The present era is that of customisation. We were the first to realise this need, and hence the launch of customised notebooks for different professions Devita Saraf Executive Director Zenith Computers

Raj Saraf believes that after the desktop PC market boom, it is the turn of notebooks. “For the first time, notebook sales has outgrown desktops in the US,” he says. According to him, the SOHO segment will be the most responsive when it comes to purchasing notebooks. “For a SOHO client or a small businessman, notebooks make sense as they can be used both at home and office.”

Zenith’s new products include a range of notebooks—SalesPro, Executive, Analyst, Performer, Director, Strategist and Presidio. These notebooks are targeted at executives in the field, professionals, directors, strategists and CEOs; their prices range from Rs 35,000 to Rs 90,000.

Says Devita, “The present era is that of customisation. As a leader among Indian notebook brands, we were the first to realise this need, and hence the launch of customised notebooks for diffecommitmentrent professions.”

According to IDC Directions 2004, the laptop market has grown 170 percent. IDC’s report also mentions Zenith as a leading Indian laptop manufacturer with sales of nearly 3,000 laptops in 2003-04. India’s laptop penetration is 3 percent, which is negligible when compared to the rest of the world average of 40 percent. In the hardware sector, notebooks are the fastest-growing segment.

An aspect of the company’s to the SMB segment is highlighted by the fact that it entered into a tie-up with Microsoft, Intel and Samsung. They announced the launch of Multiply, a solution targeted at the SMB market. Instead of small businesses buying different hardware and software products separately and then integrating them, Multiply, a combination of world-class products from these companies, could serve their purpose. “Although the SMB space has been largely untapped by IT companies due to the complexity of the market, we four companies separately carried out extensive research on the various types of SMBs in India and their needs,” states Saraf.

On how much Multiply will cost considering the price-sensitive nature of this segment, Saraf affirms, “Multiply will be sold at about Rs 1.5 lakh and can be expanded according to an SMB’s needs up to a 75-user environment. Hardware and software upgrade options are available on request.” He claims that the package has been offered at a special ‘no profit, no loss’ price as a contribution by the companies to the SMB segment.

Looking ahead

After having made its mark in the domestic market, Zenith is now aggressively looking at the foreign shore. Beginning with SAARC nations such as Nepal, Sri Lanka and Bangladesh, the company is now entering into South Africa, the Middle East and South America.

“We have already started shipping our goods to South Africa—where we are in competition with Sahara—Middle East and South America. We expect at least 15 to 20 percent of our turnover to come from this market,” remarks Saraf. Exports have begun since the last six months, and, according to him, the response has been good.

However, he believes that since most of the company’s turnover comes from the Indian market, its focus will thus be on India while diversifying into the international market. “Since these markets have the potential, I feel that we can compete with the likes of Dell and HP,” Saraf opines.

The company will focus on the Zenith brand internationally as well. Thus it will not tie up with local vendors, but join hands with distributors in international markets. “As of now we are going to have one national partner in these countries and they can have many channel partners,” concludes Saraf.

shivani@expresscomputeronline.com