EZY powers every second computer assembled in SL

In an interview with Daily News Business EZY Holdings Shafraz Hamzadeen talks about the EZY Holdings journey since its inception in Sri Lanka and future growth plans “Tea with CEO” column

Q: Tell us about EZY Holdings and its Business Verticals?

As a holding organization we have 3 primary business verticals. The first of this is EZY Infotech, which focuses on providing Value Added Distributorship (VAD) for solutions based products such as Oracle, Sun, Trend Micro, Intel, Samsung, AOC, Transcend, APC, Western Digital, etc. Here we work very closely with a partner network who in return provides. As a value added distributor, we ensure that the we actively represent the products, solutions and services offered by the brand owners with whom we have signed distributorship agreements.

On most occasions, these brand owners do not have active representation in the country and seek our assistance to do due justice in developing their brand. Therefore our distribution team who is scattered across the country look at innovative ways of taking them to market through our Value Added Reseller base who interact with consumers and corporate customers.

We currently have a very strong sales force who operate all across the country touching over 1,000 computer dealers who assemble computers and sell to end users. In this segment, our biggest strength lies in two fronts. First is our ability to be the exclusive distributor for the many brands that make up a computer. As a result, we carry every component that goes into a computer with brands such as Intel, AOC,Foxconn, Samsung, Transcend, Atlantis etc. Our second strength is our market reach which is unrivaled in the technology distribution space. These two key factors together have enabled us to be an efficient conduit between technology manufacturers and technology users. As a result, today we power every 2nd computer that is assembled in Sri Lanka. Apart from this, EZY Infotech also carries the branding rights of EZY computers which today have become a dominant player in the desktop computer segment in Sri Lanka.

Our second business vertical and the newest in the Group is EZY Corp, which is a complete distribution house which enables anyone and everyone to distribute their products across the country overnight using the countrywide infrastructure of EZY.The third, as many of you know is EZY Racing, Sri Lanka’s onlyprofessional motor racing company.

Q: You mentioned that every second computer assembled is powered by EZY, how have you achieved it?

Over the last 6 years we have strategically set up infrastructure across the country. This has enabled us to make full use of the business boom that has taken place post war. Our infrastructure enables us to cover all 9 provinces of Sri Lanka, through which we have created a broad-based structure which covers every dealer across the country. Our sales force ensures that a computer dealer subscribes to the entire range of products that we offer which on most occasions constitutes every component that makes up a PC.

As a result of this reach, we have driven every brand/ product we distribute to market leadership. Moreover we have also succeeded in achieving more than 50% market share across every product we distribute which translates to 1 in every 2 computers assembled being powered by us.

This has been quite an achievement especially when you consider the different challenges that are posed in the different geographies you represent. Our decentralized distribution structure coupled together with the centralized invoicing and credit control methodology has without doubt been one of the key factors behind our success. As a result, today EZY Infotech provides warranty and support for almost every second assembled computer.

Q: Talk us through EZY Corp and its scope?

With the post war business boom, one of the biggest drawbacks faced by the business community was the lack of infrastructure in Sri Lanka. As a result many organization have had nightmares in trying to position themselves nationwide. This has resulted in most manufacturers resorting to their trucking and delivering methodology which becomes a very expensive method of distribution. Most organizations struggle to keep this within 15 % of their revenue. Unfortunately, unlike many overseas countries, Sri Lanka doesn’t have complete inbound logistics providers or distribution hubs. The little we have charge high costs as the economies of scale don’t make sense.

EZY Corp provides instant access across the country to any company who wants to use our services. We focus on providing a complete distribution solution which starts from Central Stocking, Regional Stocking, Inventory Management, Delivery Management, Credit Management and Warranty Management. We currently have 9 distribution hubs island wide which are mapped to a central warehousing system we have in Colombo. These hubs are strategically positioned to cover a total province. Through these hubs we touch on average 2-3 districts. We have invested in this infrastructure and set it up so that people who want to drive market share could either appoint us EZY Corp as their country distributor or independently subscribe to use our services and house their sales force. The most significant aspect about this model is that it is guaranteed to keep your distribution cost below 5%. This translates to a substantial advantage for most companies.

Q: Tell us about EZY Racing and how your brand has been accepted?

We entered into professional motor racing in 2010, by setting up the EZY Motor Racing Corporation. At present we are the only professional motor racing team. For most people motor racing is a part of their marketing budgets whereas for us, EZY Motor Racing Corporation revolves around motor racing. To manage this successfully we concentrate on 4 pillars. We first contract the best drivers to drive for us. Secondly we provide them the resources and at times the vehicles to drive for us. Thirdly we have shareholders and partners who contribute financially and finally we have our own internal staff who drive the business.

Over vision is to become the only motor racing team in Sri Lanka to carry her flag on overseas terrain. In this respect I believe we are on the right track. Most of our drivers are on long term contracts, so the driver stability and performance is not in question. We have continued to develop our cars and invest in them to ensure the drivers could do what they do best.

Our partners have showed great faith in us by partnering on longer terms and most importantly our employees who focus on two separate verticals are motivated to drive results. The fact that we have 50 people dedicated to motor racing demonstrates the commitment we have to this business. Out of the 50 we have over 15 people only on the business aspect where they focus on providing returns to our sponsor partners off the race track. So as an organization we clearly are on the right track to be a Rs100 million organization by 2015, a feat achieved by no other in the motor racing history in Sri Lanka. The most encouraging fact for us is the receptiveness we have had within this short period. We currently have more than 18,000 fans and have an ardent follower-ship. The fact that we have sold over 2,000 EZY Racing merchandise memorabilia talks volumes not only about the brands strength, but also about the receptiveness to our brand.

We have plans of increasing our awareness amongst the public and you will soon notice ER stores around the country selling our merchandise and also displaying our partner products.

Q:What is your involvement in motor racing industry? What future plans do you have in this segment?

Motor racing is a sport that has huge scope and potential. Unfortunately many have realized it only now. My involvement in motor racing is primarily on the EZY Racing front. In this regard my focus purely is to provide the sport its due glamour and I believe we have been successful. Last year’s Colombo Night Race was the ultimate evidence any one needed as regards to the glamour that was brought back to the sport. I strongly believe that motor racing is the second most

watched sport in the country. Unfortunately the commercials behind motor racing haven’t made sense which has resulted in drivers not getting motivated. The only thing we could do is pave the way for young blood and try to make more sense out of the financial aspect of the sport which would definitely motivate drivers to participate more.

As a part of our future plans we intend on rolling out a country wide young driver programme which would provide many youngsters the opportunity to get into motor racing, which currently right now, for most people would only be wishful thinking. Through programmes like this we believe we could separate talent from financial dependence and thereby provide the opportunity for talented individuals to go forward irrespective of their bank balance.

Q: What is the position of the local IT industry?

Currently the dynamics are changing very fast. We need to innovate, adapt and move forward. The best example is the influence mobile phones have had on the ICT industry. Five years back no one thought that Nokia’s market dominance could even be touched. I believe no one dreamt that an organization which had no previous experience in the mobile phone industry would change the landscape of the mobile phone business. Apple introduces the i phone and everything has changed since. The most hip word is smart phones. The most defunct word is Nokia.

The smart phone and Tab evolution has had its fair impact on the IT market. We see more and more people checking mails and browsing the net on their tabs and phones. Desktops are fast becoming redundant and laptops are taking its place. The IT market is therefore forced to adapt to this and change accordingly. I believe the next couple of years are going to be very crucial because from now on we will see this migration from consumers. Therefore the future will definitely be

a merger of the IT and communication industry; therefore it is becoming increasingly difficult to talk about the future of the IT industry locally. I personally believe the growth in this sector is very much in place, but it doesn’t happen in the traditional way that we want to see it happen, which is an increase of computer sales. It is more or less happening in the growth of laptops and tablets

Q: What are the factors driving the growth of the industry?

Government and private sector play a huge role in this. The consumer demand has a set pattern of growth. This ideally translates to a 15-20% growth annually. However, infrastructure development that is initiated both by the public and private sectors are primarily where monumental growth takes place. Although 2012 has not stood by the potential that it promised , I strongly believe that there will be a paradigm shift in the growth forecast in the next 3 years as most

infrastructure initiatives will be on full pace during these years. In the current world we live in no infrastructure is complete without technology be it networking, hardware or software.

We will also see a massive shift in the way consumers use there pc’s. I am positive that over the next 3 years you will more or less use a terminal and pay per use, like you do on your mobile phone.

Q: What are the challenges faced by the industry?

Currently the largest and most obvious challenge is the exchange rate. The volatility displayed by it is not only reflecting on the purchasing price but also questioning the sustainability of the business. Secondly the current credit crunch and sanctions imposed on banks also do not help business. All this translates to a drop in consumer demand, hence 2012 has turned out to be a tougher year than

envisaged, even tougher than the recession years 2007/8, as many of us prepared ourselves for growth and invested further on infrastructure this year.

In today’s context. Software becomes as important as hardware. Especially with the tough piracy laws, consumers are pushed to install genuine software. The challenge many consumers face is the fact that software comes with a huge duty and VAT component added to it on top of the heavy price tag it already carries. As a result, putting genuine software sometime could translate to be an expensive affair as it can be as expensive as the computer. I strongly believe that if the industry wishes to be fair on consumers and increase growth rates,

software should also be duty and VAT free.