NEW DELHI
DECEMBER 18, 2006

According to a press release issued by eSys, it has received a financial injection of $100 million from Bangalore-based Indian software and services company Teledata Informatics Ltd. The release further said that the "strategic investment" is designed to help eSys maintain its growth and provide it with a war chest to fund acquisitions.

"We are pleased to close this investment, which will help us continue our growth," said Vikas Goel, Group Chairman and MD, eSys, who will also join the board of directors at Teledata. "We see it as a strategic infusion which will help eSys consolidate its position as the market leader in IT distribution and strengthen its position as a leading PC maker."

eSys claims that the investment will allow it to "continue and consolidate the growth" that has seen it develop into one of the largest components wholesalers in the world since its inception six years ago. Rising in a meteoric manner, during that time the company has bolstered revenues from $108 million to $2 billion and now employs more than 1,100 staff across 30 countries.

When asked about the valuation process adopted by eSys before going in for this investment by Teledata, the company's Singapore-based spokesperson declined to comment.

It is interesting to note that the investment from Teledata comes less than six weeks after eSys suffered the blow of losing Seagate from its vendor portfolio. eSys was Seagate's biggest global partner, procuring more than eight million hard drives a year from the company. eSys lost the prestigious contract after a dispute over a sales audit. Close on the heel of this development, eSys has been able to quickly move to bring its HDD offering back up to full strength by extending a deal with Samsung.

This announcement of Teledata investment comes at a time when eSys is going through a bad time. However, the channel community is questioning the manner in which this investment announcement was made.

While the company claims that it has got this 'unusually big' investment funding, experts in the market say that it is a result of mounting pressure from different vendors associated with eSys. Sources close to the industry are also questioning whether the deal is for real or not.

"The company has surely done this in order to save its name and reputation in the international market. Most vendors who were earlier associating themselves with the company have started to distance themselves. eSys management thinks that by this move they might be able to stand a better chance of survival in the highly contested global distribution realm. I still do not feel that this is a real investment with real money involved," added a New Delhi-based source on condition of anonymity.

While some industry insiders believe it is all being done in order to project a healthy image of the company, others say that if there is any investment it has been made by Goel who is Chairman and MD of the company.

"I don't think that there is any real money involved in this deal. This is all Goel's money, which he has passed on to the company himself." added another industry insider on condition of anonymity.

Restructuring at India?
At one end the company has lost big business opportunity in terms of Seagate and has announced big injection of money, at the other end it has engaged itself in a restructuring exercise to minimize the loss.

As part of this restructuring initiative, according to market sources the company is in the process of making certain changes in its Indian operations and R Govindan, CEO, eSys is likely to be shifted to the US operations, while Neeraj Chauhan, the Singapore-based COO is likely to come to India to take charge here.

When contacted, eSys official spokesperson here in India neither declined nor confirmed this development saying that all these matters were being decided centrally from Singapore.

After having been able to spread its wings globally in a short span of time, today eSys distributes well-established brands including Western Digital, Samsung and BenQ. The company also operates PC assembly plants in four countries, including the UAE.

(c) DQC News Bureau

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