Home / Companies / HCL Infosystems ties up with Hamilton Beach

New Delhi: HCL Infosystems Ltd, an information technology (IT) hardware firm and a listed subsidiary of HCL Enterprise, is seeking to tap consumer electronics as its distribution business becomes a key revenue generator for the company.

On Friday, it tied up with Hamilton Beach Brand Inc., a US-based small electronic home appliances company, which will be making its debut in India in the consumer business. Under the partnership, HCL Infosystems will be marketing and providing a distribution network for products under the Hamilton Beach brand for five years.

“This is as strategic partnership. We are trying to build the consumer electronics vertical in addition to our existing verticals, IT and telecom," said Sutikshan Naithani, executive vice president and head of the Nokia distribution business at HCL Infosystems.

Some industry experts say the company’s decision to lean towards its distribution business, marking a shift from its core business, may not be such a good move.

“Earlier, the company had invested very heavily in its Nokia business for the distribution network. So they have some good amount invested and solid facilities in distribution," said Sanchit Vir Gogia, chief analyst and chief executive officer at Greyhound Research, adding that a decline in Nokia’s brand value has also had an impact on HCL Infosystems as well.

“This (partnership) could be a desperate measure to make use of the already existing resources and strength. While this is not a bad move, too much focus and dependence on its distribution business could be bad," he said.

The company remains optimistic about growth in the consumer electronics segment.

Hamilton Beach and HCL Infosystems are targeting a 10% market share in the premium organized kitchen appliance market in the next four to five years.

“The overall small electronic appliance market is about 10,000 crore in India, of which 6,000 crore is organized. The organized home appliances market is around 300 crore and is growing at 30%," said Naithani. “We want to capture 10% of this growing market, where we will position ourselves in premium segment, which is below luxury home appliance segment and at the higher end of the mid segment."

In the first phase, HCL Infosystems has rolled out 250 outlets in 25 cities which include metros and tier-I cities. It plans to take this number to 500 outlets by the end of this year. “We will be going from 25 cities to 35 cities in first six months of the next year," Naithani added.

India has emerged as one of the key potential markets for Hamilton globally.

“India is a very important market to us. We researched the market for the last two years and then decided to enter. Of our total marketing budget for Asia Pacific, Europe, Middle East and Africa, we plan to invest 30-50% of the total in India," said Brian Schwartz, director of international business development, APAC (Asia Pacific and EMEA Europe, Middle East and Africa), consumer market, Hamilton Beach. “Our strategy is to invest 100% more than our revenues in India for this year and the next. From third year to fifth year, the investment will come down to a sustainable 20% of the total revenue."

Greg Trepp, president and CEO, Hamilton Beach Brands, Inc., said, “India is a key focus in our global growth strategy. We foresee this alliance scaling new heights in the future."

Hamilton Beach, which has been present in India in commercial segment through its hotel offerings, also plans to invest in development of customized products for the country.

“We will not only be investing in marketing and branding. We are also looking at customized product development in India for which we have outsourced R&D (research and development) to a third party. Our engineers will work along with them," said Schwartz. “We are targeting primarily women audience in the age group of 25-36, who are working as well as the homemakers."

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