Redington unveils plan for new distribution centres

Redington plans to use some of the funds from its forthcoming IPO to construct automated distribution centres in the Middle East and India. The regional distribution giant has already submitted its IPO prospectus to the relevant authorities in India and is now awaiting formal approval to proceed.

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By  Stuart Wilson Published  October 26, 2006

Redington plans to use some of the funds from its forthcoming IPO to construct automated distribution centres in the Middle East and India. The regional distribution giant has already submitted its IPO prospectus to the relevant authorities in India and is now awaiting formal approval to proceed. Raj Shankar, director at Redington, stated: “Redington has decided to list the company on the India stock market. The purpose of the IPO is to raise additional capital to fund the automated distribution centres to be set up in India and the Middle East and also to finance the working capital required to meet the growth of the company.” “We have positioned ourselves as a supply chain solution provider with IT as one key vertical,” he added. “Our plan going forward is to identify new verticals and establish ourselves as a formidable player and market leader.” As part of its growth plan Redington has also embarked on an internal restructuring in the Middle East and Africa region. Mathew Thomas has been named as vertical head for IT distribution at Redington with a geographic remit covering the Middle East, Turkey, Africa and CIS. Simultaneously, Sumant Saran has been appointed vertical head for telecoms and new projects covering the Middle East and Africa. Thomas explained the rationale behind Redington’s plans to construct a new distribution hub for the Middle East: “We are looking at building an automated distribution centre at Jebel Ali using some of the working capital from the IPO. Our facilities are spread out at the moment in the UAE and this will look to bring everything under one roof.” “If you look at how a typical warehouse is operated in Jebel Ali at the moment it is just storage space. We will look to build a highly automated warehouse that uses advanced bar coding and shipment tracking technology. Many of the processes that are currently manual will become automated and this will reduce labour costs,” he added “Many companies are not using the full height of their warehouse at present because of the reliance on manual processes. We are looking at a new facility of at least 100,000 square feet and have already applied for the land in Jebel Ali and this has now been approved,” Thomas continued. “It will probably take 18 months to get this new facility up and running. Our in-country stocking points will continue to operate but they will be supplied on a just-in-time basis from the central warehouse in Jebel Ali,” said Thomas. Redington is expanding at a rapid rate both geographically and also in terms of the products that it takes to market in the Middle East and Africa. The company already has points of presence in Nigeria and Kenya and is now looking closely at setting up a facility in North Africa as well. Beyond IT, the company is also keen to expand into the consumer electronics distribution space. “In terms of new vertical markets there is no reason why we should not use our current skill sets to look to enter the consumer electronics distribution space as well. Once we have created the supply chain efficiency, this expertise can be applied to new sectors,” explained Thomas. Redington is also poised to confirm that it has extended its distribution agreement with Samsung. The deal had previously covered the UAE and a couple of countries in the Gulf but is now set to go region-wide — a move that fits neatly with Samsung’s recent restructuring, which saw Samsung Gulf given regional responsibility for the distribution of IT kit. Redington recently picked up WD distribution rights for Saudi Arabia as well. Redington’s new distribution agreements have not been confined to the Middle East. The distribution powerhouse has also been awarded Cisco rights in Nigeria — a deal that underscores the scale of Redington’s African ambition. The Middle East and Africa operation of Redington is also on target to meet its 40% sales growth projection for the financial year ending March 2007 giving it annual sales in the region of approximately US$630m. The company recorded revenues of US$450m for the year ending March 2006 in the Middle East and Africa, bagging the top spot on Channel Middle East’s 2006 Power List.

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