EXECUTING WITH PRECISION – CRN INDIA

SOURCE: CRN INDIA, FEBRUARY 2013. BY SONALI DESAI, CRN

Mathew Chacko, V Murali and TG Ramesh of Chennai-based Precision Infomatic have created an organization that is recognized amongst India’s best system integrators. They share their journey so far, and future growth strategies.

Having graduated from the Government College of Engineering, Madras University in 1987, Mathew Chacko, Founder Director, Precision Infomatic, joined HCL Infosystems as a service engineer and spent 9 years with the company.

“My first assignment as service engineer was to maintain PCs and servers for Madura Coats in 1988. I was also instrumental in signing on Standard Fireworks and converting Loyal Textile mills—a Wipro customer, to HCL,” he recalls.

Around 1994, HCL launched HCL Frontline to focus on the emerging SME market. “To address initial hiccups and improve operations, I was transferred to Mumbai in 1995. A year after, HCL decided to go completely indirect and appointed channel partners to take care of sales and services,” he says.

Milestones

• 1996 Formed Precision Infomatic with V Murali and TG Ramesh
• 1998 Appointed as HP Premier Partner
• 1999 Started Precision TechServe, executed a Rs 15 crore project for Software Solutions
• 2000 Started geographic expansion; opened offices in metros
• 2004 Acquired ACP Computers in Mumbai; acquired customers like UTI and FirstSource
• 2006 Acquired ISO 9001 and 27001 certifications
• 2011 Was appointed Microsoft LAR; clocked Rs 280 crore
• 2012 Deployed HP servers and storage at Vodafone for project worth Rs 15 crore

The journey

In the beginning, Precision leveraged its relationship with HCL, which had a joint venture with HP. The turning point arrived when HP bought over HCL stock in the Indian entity, and launched the enterprise channels. “The direct partnership with HP increased our reach in market, account management and services, as also our topline. HP saw value in associating with us and made us their Premier Partner,” Chacko says.

In 1998, Precision implemented a turnkey project involving HP servers, PCs and services for Chennai-based Software Solutions, an IT services firm. “The customer was expanding. It wanted 200 servers and 4,000 nodes for its offices and franchises in tier-1 and -2 cities across the country,” he says. “We clocked Rs 15 crore from the project, which was implemented in phases over 2 years.”

With networking boom in the country, a focused services approach was the next logical step; hence Precision launched its services arm, TechServe.

We acquired ACP Computers, aRs 5 crore company, in 2004. It had customers in manufacturing &BFSI.This helped us grab several new customers in western India

The company signed on networking vendors such as Cisco, 3Com, Nortel, Molex, etc to complement its HP portfolio. Thereafter large orders started to come Precision’s way. It deployed 3,000 Cisco core switches and components of passive network for Software Solutions for Rs 1.5 crore. It offered technology consulting for Allsec Technologies as they set up a 2,000 seat BPO on Nortel platform, for Rs 2 crore. It also completed its first ever network infrastructure audit project for Bengaluru-based Apar Technologies (now Ness Technologies).

Says Murali, “TechServe was growing at a rate of 20-30 percent since inception, and was contributing 15 percent to the overall business. Precision grew 40 percent over the next 4 years to clock revenue of Rs 18 crore in FY2000-01.”

Over the next 2 years the company set up offices across major cities witnessing an average growth of 30 percent.

“We acquired ACP Computers in 2004. It was aRs 5 crore company with customers in manufacturing, banking and services. We acquired some good customers like the UTI Bank (now Axis), FirstSource, etc. With the skilled manpower and our guidance, the western region contributed 25 percent in the first year itself. We clocked Rs 50 crore in FY2005-06,” Chacko says.

In 2006, the company ventured in biometrics. “We realized that biometrics had large growth potential especially in the wake of the security concerns. We tied up with 3M for the equipment and developed attendance and access management solutions, and got them whetted by IIT Madras,” he says.

He adds that Precision also invested in educating customers and prospects on the maturity and benefits of biometric technologies.

Precision deployed solutions at Reliance, TCS, SBI, Indian Bank. The major breakthrough came with UID.

MS LAR business can be a profit builder if the licensing policies are linked with services. If LARs function as plain vanilla VARs, they will find it difficult to sustain

For UID, it sold its solutions to the enrolment agencies such as Karvy, Wipro, IL&FS, etc. Says Chacko, “We bundled our services as UID is a high uptime project. So if any one component (notebook, printer or webcam) is down even for a day, it results in a revenue loss of Rs 2,000. We have created a service desk with multi-lingual skills. For hardware-related problems, our service engineers visit onsite.”

Precision’s consistent growth and business strategies impressed InfoDrive Software, a Dubai-based IT service provider that purchased a 51 percent stake in 2007 through a structured payout model. “However, we bought-back the stake due to certain market developments in 2010,” Chacko shares.

Pressed by stiff competition and increased concentration on services business, Precision decided to go-slow on the transactional business in 2008.

Reasons Chacko, “Dell had a direct model, and was very aggressive on pricing. We decided to go slow on transaction business and focus on system integration and solutions. PCs were a part of the fulfillment. The contribution of transactions reduced to 25-30 percent.”

Current business

Precision Infomatic grew 39 percent to Rs 280.6 crore in FY2011-12 against Rs 202.6 crore in FY2010-11.

Chacko explains, “With a clear focus on solutions and services, we re-modeled our organization and created separate divisions for products, technology, value-added services and transactional services.

The year 2011 saw Precision gaining more ground. It clocked Rs 100 crore for supply of biometric solutions along with HP printers and notebooks to UIDAI, and the project contributed 45 percent to its overall revenues.

Last year, Precision set up a data center which has a capacity to scale up to 8,000 virtual servers and 3 petabytes of storage with an idea to offer RIM and hosting services.

It installed 15,000 biometric devices at SBI for its financial inclusion initiative; these devices allowed the bank to accept thumb-prints of people in rural areas to open no-frills bank accounts.

“Besides, we increased focus on products of big brands such as Microsoft, Cisco and HP. We work very closely with them and have dedicated resources to align with their business plans. We invested in pre-sales and account management teams, which is helping healthy topline revenues,” Murali claims.

A big contract for Precision in 2012, was deployment of HP server and storage systems for Vodafone for Rs 15 crore. It also won Rs 5 crore tender to deploy HP storage across ECIL offices in the country. The implementation which started toward end of December 2012 went live in January 2013.

Precision worked with Karvy to implement data center solutions across 20 districts of north India for the state’s National Population Register (NPR) project.

Another major development at Precision was its appointment as Microsoft LAR. While some of its peers were grappling with the large sum they had to deposit with Microsoft, Murali saw this as an opportunity for further growth.

He explains, “We are trying to understand the business differently. Partners who sell 500 licenses of Exchange are looking at services opportunities. It can be a good profit builder if the licensing policies are linked with services. If LARs continue to function as plain vanilla VARs, they will find it difficult to sustain.”

Future plans

Targeting 19 percent growth in FY2012-13, the company is aiming Rs 330 crore topline and revenue of Rs 1,000 crore in the next three to five years.

“Hardware reselling should contribute Rs 150 crore, services and solutions around Rs 160 crore, and about Rs 15 crore should come from software business,” says Chacko.

Meanwhile, the company is planning to set up a company-wide CRM solution that spans all functions, that’s expected to roll out later this year.

On a personal note

Chacko considers Shiv Nadar, Dr APJ Abdul Kalam and NandanNilekani as his role models for their achievements and contribution to society.

He is fond of fiction, and books on management and philosophy. He loves to play badminton and cricket, and was a part of the victorious Madras University team in 1985-86, and plays in the TN Cricket League.