NITO raises heat against Kolkata

In the latest development in north Bengal post the ban on Rashi Peripherals in Guwahati and the proposed adoption of the National Distributor Policy (NDP), North Bengal IT Traders Organization (NITO) has put up stern questions against some Kolkata based companies allegedly having a dual presence in distribution as well as in retail outlets.

A majority of channel partners in Siliguri and members of NITO questioned the viability of some major companies headquartered in Kolkata stating that channel partners in Siliguri needs to have clarity about the nature of business of the companies in Kolkata who are operating in Siliguri.

This move came in soon after the proposed realization from NITO that Kolkata based companies are controlling more than 80% of the total market in Siliguri with upcountry markets in north Bengal taking a severe blow in terms of operations and conduct of business.

"NITO seeks clarifications from some of the Kolkata based companies operating in Siliguri over their actual stance and grouping in the channels trade. Often, companies open branches and appoint channel partners stating themselves to be either national distributors or sub-distributors. On the other hand, we find these very companies (distributors) operating in the retail and end-user billing category", alleged Jayanta Halder, member, NITO.

The allegation brought by NITO against major Kolkata based companies arose after the saga in north-east India over the ban on Rashi Peripherals by North-East Computer Traders Association (NECTA).

According to NITO, since the ban over Rashi Peripherals by NECTA arose from the alleged dual nature of business conduct (distribution as well as retail) which, according to most of the channel partners in north Bengal is unethical, clarification over the nature of business of all major companies having a dual presence in distribution and retail now needs to be clarified.

"Why should there be ban only on Rashi Peripherals and clarifications sought only from this company? Every company (projecting themselves as national distributors) having a presence both in distribution as well as retail needs to be brought into focus. NITO thinks that through this clarification from major distributors, channel partners will find it beneficial to term and identify other partners and will result in conduct of ethical business", said Sankar Dhar, member, NITO.

Although the association hasn't opted to go for immediate actions, NITO is likely to raise the issue in the next meeting of Confederation of Indian IT Associations (CIITA) scheduled in Bhutan in August where NITO will be taking up the question of adoption of NDP.

So far, many channel partners in Siliguri have been in support of NECTA's ban over a national distributor on account of lack of clarity and alleged business malpractices.

"We should learn from the past mistakes in the channel community and strive to remove trade anomalies for a better business environment. An immediate clarity over the business model of some of the major companies will be beneficial for the trading scenario in Siliguri", said Arun Jain, president, NITO.

Also, questions about billing and partner profiles has been raised by the association alleging that some of the distributors go for unbridled billing across north Bengal without ever checking partner profiles and their records.

"The payment default issues plaguing Kolkata and the nearby markets are soon to drop down to Siliguri as most of the distributors resort to haphazard partner appointments and often misbalance the credit cycle. A subsequent failure of a payment cycle drops down to the smallest of the channel partner ultimately affecting the entire market", said Manoje Baid, past president, NITO.

Further, Debojyoti Gupta, member, NITO added, "The credit issue is one of the crucial points over which we have to think and the root cause of this is the lack of clarity over distribution companies in Siliguri".

"If a company identifies themselves as distributors and the market knows the company by this term, it is very unethical for the company to function in the retail segment. We have seen that some of the Kolkata based companies are billing to the end-user (from their retail outlets) at a lower rate than the dealer price", NITO alleged.

The allegations and the concern brought about by NITO and the proposed NDP of CIITA is likely to raise a storm in the channel trade affecting major houses in Kolkata. As the line of distribution and retail operations seems to be blurring, the channels in the eastern upcountry markets seems to be maturing and turning more professional asking for legality as well as ethical business practices.

So far, Siliguri is the second largest IT channel market in the east after Kolkata and any issue cropping up in the city is likely to get escalated at a higher level of concern.