To commence our analysis of DC Infotech & Communication Ltd, we must first understand the business model of the company.
DC Infotech is an IT Solutions distribution company. It serves as a supply chain consolidator by purchasing IT products along with various other related products from vendors in bulk and then selling those products to channel partners and customers. Thus, the company has a B2B as well as a B2C sales model. In the B2B sales model, the channel partners are majorly corporate resellers, system integrators and retailers, etc.
Key Competitive Advantages:
Involved in the distribution business in the IT space, the company faces high competition but DC Infotech possesses key competitive advantages in the industry. To elaborate further:
- Value Additive Business Model: The company provides end to end services to its vendors and customers. In the case of vendors, the company provides technical response centres, parts logistics including reverse logistics along with customer support. This plethora of offerings helps the company in differentiating itself from others engaged in this field.
- Superior Business Partnerships: In any distribution business engaged in delivering technological products, forging business partnerships with major vendors is absolutely crucial. DC Infotech with its value additive business model operates as a sole supply chain service provider for few global vendors. These partnerships usually prove itself to be immensely lucrative for the parties involved.
- Widespread Reach & Network: DC Infotech is tasked with the role of distributing various technological products across India. To ensure that the task at hand is efficiently completed, the company has set up 4 Offices and 5 warehouses across the nation. In addition to that, the company has placed sales representatives at around 8 locations and operates with a channel network of more than 1600 channel partners. The impressive reach and network of the company gives the company the ability to carry out its distribution services across the nation.
- Logistical Competence: Logistical challenges faced by this industry are immense. The difficulties in the role are sharply increased by the vast geography of our nation coupled with the fact that vendors usually rely on completely different supply chain models. This is where DC Infotech with its robust IT infrastructure showcase their logistical competency by delivering products in a fast paced and economical manner.
In an industry where there are a lot of organised and unorganised players, these factors provide an edge to DC Infotech in this sphere to stand out. The company has garnered these advantages with years of experience which cannot be easily replicated.
Plans with the net proceeds accumulated by listing in the Stock Exchange back in 2019:
As a company engaged in distribution activities, efficient inventory management is essential for the survival and the success of the business. DC Infotech realises the fact that any expansion in its core business activities would put an additional strain on the working capital requirements of the company.
When we look at the financial results of the company, it can be clearly observed that maintaining a healthy working capital amount can prove to be the critical differentiator in this business.
A quick look at the Current Asset & Liabilities in FY17-18 & FY18-19 showcase might help in visualising the matter:
|Particulars (in ₹ Lakhs)||FY 2017-18||FY 2018-19|
|Cash and Bank Balances||110.08||89.47|
|Short Term Loans and Advances||236.26||262.41|
|Total Current Assets (A)||4,670.25||5,364.46|
|Short Term Liabilities||169.74||109.60|
|Total Current Liabilities (B)||2,646.47||3,172.08|
|Net Working Capital Requirement (A-B)||2,023.78||2,192.38|
It is clear that managing the gap between Current Assets and Current Liabilities majorly constituted of Inventory & Trade Receivables (Current Asset) and Trade Payables (Current Payables) is essential for the company or any other distribution based company for that matter.
Along with efficient inventory management, anticipating customer needs and emerging trends in the market is crucial in this business. Additionally, to take advantage of the opportunities, the company needs to possess a healthy balance sheet.
Strategies to be implemented going forward:
The company has certain goals in place for the future to take the firm to a higher level. In order to properly analyse the company in question, it is vital to assess the trajectory of the firm. Elaborating further on the strategies below:
- Focus on Internet of Things & Artificial Intelligence: Products related to IoT & AI have higher margins. Thus, using their existing relationship with high value brands DC Infotech can bring niche technologies and brands into India in a mainstream manner. If the company is successful in building and sustaining this pipeline, profitability can dramatically increase.
- Spreading into overlooked territories: Vast geographies still possess very low IT penetration across the nation. If these regions are brought into the mix by the DC Infotech pipeline, then that would increase volumes and sales for the company.
- Leveraging Core Competencies: Through years of experience in this segment, DC Infotech has developed areas of expertise in various fields such as logistics services, inventory management, order contentment, credit management, information systems and channel management. This expertise can be leveraged by the company in various segments irrespective of their industries.
It is very important to keep a track of the company’s success in the implementation of its adopted strategies in the future.
Cochin Shipyard Ltd (COCHINSHIP) Q4 FY22 Earnings Concall Transcript
Cochin Shipyard Limited (NSE:COCHINSHIP) Q4 FY22 Earnings Concall dated May. 26, 2022 Corporate Participants: Madhu S Nair -- Chairman & Managing Director Jose V J -- Director Finance Analysts: Vastupal Shah
All you need to know about Antony Waste Handling Cell in one article
Can you guess the name of the company that was listed during the IPO frenzy in 2020 and is the second largest player in the Indian municipal waste management industry?
Demystifying the Leading Non-Ferrous Recycling Company of India
“Hey, how is the market doing today?” “Oh!, its falling tremendously since morning” I am sure news like these might be a common topic of discussion for you nowadays. Interestingly,