Replying to Anil Mascarenhas of IIFL, Alok Dubey, Chief Finance Officer, Acer India says, “Acer, has tried to maintain a balance between their offering and pricing since the last 40 years. Currently, our products range from 11k (which includes the entry level laptops, PC stick, monitors etc) to above a lakh (which mainly includes the Predator gaming laptops and the high end ones).”
What are the changing trends here as far as products and pricing is concerned. Give us a range of your product prices.
Pricing of a product can be a result of various factors. During these years, the IT industry itself has witnessed major changes when it comes to gadgets. Acer, who is known for their innovative range of products, has always made it a point to maintain a pricing which wouldn’t look to unreal for the consumers. We believe that the product features should always be at par with the pricing. Manufacturers have to also keep their target audience in mind. For instance, if a laptop with the most basic configuration is priced at somewhere around 40k, the consumers would automatically shift to the competitor brand. These days, before purchasing any electronic product, we generally do a comparative check, which further helps us to decide on a specific electronic gadget, considering its specifications and pricing.
Acer, has tried to maintain a balance between their offering and pricing since the last 40 years. Being a company who has always stood in favour of innovative products, have made sure that we do not lose our existing customer base. Currently, our products range from 11k (which includes the entry level laptops, PC stick, monitors etc) to above a lakh (which mainly includes the Predator gaming laptops and the high end ones)
Comment on your geographic reach. What are your capex plans and how would they be funded?
Acer has put in place a robust channel strategy to accelerate growth. We currently have 27 stores across the countries, including Tier II and Tier III cities. Acer is strengthening its partnership as well as customer outreach program with intensive engagement programmes. We have forged strong partnerships with all the large format retail stores, with an aim to increase Acer’s brand presence in tier II and III locations. Acer has a robust distribution network comprising Acer Lounge, Acer Malls and Acer Points, and is planning to expand it even further. To keep pace with the dramatic changes in the IT landscape, Acer has been investing significantly in training, in-store merchandising with apt showcase/display of new high end models, sales enablement, schemes and easy finance options.
The Centre and the States are now considering introducing four rate structure - 6%, 12%, 18% and 26% - for the proposed dual GST system. How is it going to impact the tech companies?
Do not see any impact on the goods as the proposed rate of 12% and 18% is almost the same of the combined rate of Duty and local VAT but the services is getting pushed to 18% seems to be more expensive. Further the impact would be on software exporters as most of the companies engaged in export of software and having very negligible domestic sales. The present rate of service tax on the input services availed by these companies is presently levied at 15% is now proposed to levy at 18% under GST and the biggest challenge is utilization of unutilized GST credits. Even though automatic refund of 80% amount is granted when claim is submitted but it is affecting the Company’s Cash Flow.
In general the cost of compliance may increase due to requirement of separate registration under model GST Law for the Service providers as against the centralized registration and compliance under the present law.
Our immediate target is to reduce the cost on warehousing and logistics with limited number of warehouses. We do believe we will have cost savings and efficiency gains in the new GST regime.
India has very low tax compliance ratio, given India's tremendous needs for its growth. Will GST be India’s best bet to achieve fiscal consolidation?
With the adoption of GST there is a huge scope to address tax policy and compliance. The law, giving enough incentive for companies to declare transaction in order to claim tax credits will reduce overall tax evasion. Businesses will have only State and Central GST Departments to deal with instead of variety of state and central departments-bringing down- hopefully, disputes, litigation and cost of compliance. Due to non-tax evasion and more tax collection, more money will come into the system and that money will be used for development.