Redington India loses sales worth Rs 1,800 cr due to Covid-19 spread

Firm says these orders would have pushed the top line up by 15%

Redington (India), which provides end-to-end supply chain solutions for the IT and telecom sectors, has said it has lost sales worth Rs 1,800 crore due to the Covid-19 situation. This includes sales worth Rs 800 crore lost in India distribution. These orders would have pushed the top line up by 15 per cent and even boosted the bottom line, said the company officials.

In an earnings call for the quarter ended March 31, 2020, Raj Shankar, managing director of Redington (India) told analysts that apart from the India distribution losses, it has lost about $110 million of business in Middle East, Turkey, Africa and another $27 million in Singapore, South Asia. These were confirmed orders, but the firmm was unable to execute on account of lockdown. 

The company has recently started implementing various measures to improve cash flow. It was able to bring down working capital on a consolidated level, especially in India. It has delivered positive free cash flow, both in India and at overseas level, delivering a positive free cash flow at a consolidated level of Rs 1,267 crore. 

Redington is expecting a de-growth during the first quarter of the current fiscal, and the second quarter to be better than that. The company is expecting things to get back to normal starting from the third quarter of the year, and by fourth quarter, to be back to its heyday.

Responding to a question on  whether the company see companies like Apple go directly to e-commerce firms like Amazon, he said that the company's partners who buy from it are already going to the online marketplace to sell their products and the e-commerce firms mostly prefer to work with the distributor, who can take care of all their shipments, logistics, deliveries and others. This has been established over the last five years and the company has hardly lost any business on account of this business model. Both the online companies and the ventor, need a distributor, he added.

Pro-Connect, its supply chain management and warehousing solutions company, has registered a loss of Rs 57 crore, largely due to non-payment of trade advances by a business it acquired. It was left with the previous management and in the absense of Pro-Connect having its own management on the ground and not putting in effective controls and giving trade adavances which were not properly scrutinised, which has made a negative impact on the business.However, the company is correcting and consolidating this business during this year, said Shankar.

Redington has posted a decline of 21 per cent in profit before tax, at Rs 166.03 crore during the quarter ended March 31, 2020, from Rs 209.88 crore during the same period of last year. The total income for the quarter stood at Rs 12,677.25 crore, as against Rs 12,609.65 crore.