Dubai Computer Group to act against runaways

DCG to take action to recover member’ funds as trader reportedly closes leaving AED 30 million debt

Tags: Dubai Computer GroupUnited Arab Emirates
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Dubai Computer Group to act against runaways The UAE channel continues to be plagued by runaways.
By  Mark Sutton Published  June 29, 2011

Dubai Computer Group (DCG) has warned that it is taking strong action against IT companies that skip the market leaving big debts behind.

The local IT trade industry association, which comes under the umbrella of the Dubai Chamber of Commerce and Industry, says it was prompted to act after a recent spate of runaway incidents in the market that have exposed a number of its members to financial losses.

The DCG said in a statement that it will "go strongly against runaway companies to recover lost amount of its members".

The most recent incident came in mid-June, when computer and electronics trader Karya Technology LLC closed down, owing debts that are estimated at AED 30 million ($8.16m). The owner of the company, Sachin Sharma, is believed to have left the country, and is no longer in communication with DCG. Its premises are closed, and phone calls to Karya's telephone number listed with the DCCI went unanswered.

DCG reports that a large proportion of the debt is owed to its members rather than distributors. It is believed that Karya Technology had been buying purely on credit and selling at below cost price for as long as a year and a half.

The collapse of Karya has had a knock-on effect in the market, with at least one other DCG member leaving the UAE to avoid arrest for bouncing cheques. The affected company has kept its Dubai offices open however, and has been able to pay some creditors. The company is also working with DCG to resolve its issues, and the owner hopes to return to the UAE.

The latest incident follows on from the closure of Yousuf Mallala Computers, which first caused concern in the market in April. The company closed leaving debts estimated by DCG of between ten to fifteen million dirhams ($2.7 - $4m) although some market sources put the figure as high as $10m.

The DCG also said that it is taking action against IT Plus, which shut up shop in December 2010, with debts of around $1.5m, although DCG reports that its member's exposure was lower in both these cases, with money owed to banks and distributors.

DCG did not disclose what specific action it will take over these incidents, but it has formed action committees to look into individual cases, and it is asking member companies to share data if they have been exposed to runaway companies.

Shailendra Rughwani, president of the DCG said that the group is appealing to different parts of the IT channel to co-operate better on the runaway issue. The issue of the ease with which companies can buy stock on credit needs to be addressed, he said, and the DCG is also looking for more distributors to join the association and to share information.

"We really want to clean up the market, but we need everyone's help. These incidents are bringing a bad reputation to IT companies and to the IT industry in Dubai," Rughwani said.

(Karya Technology LLC is not related to US-based Karya Technologies Inc.)

2714 days ago
Reseller

every alternative thursday one company runs away from the computer street !!! does anyone knows it why ???
its just 'coz every shop wants to buy cargo at less than their actual cost, even if it is sold without any invoice to them.but they dont know that this cargo was sold by their neighbour for X price and again it is being sold to them for X-50 or 100 dhs.
This can be stopped only if people report about these kind of resellers to DCG or government authority so that innocent people can be saved.

2717 days ago
Bhargav Mehta

You need to avoid doing business with companies opening new business and secondly somone working somewhere else for hardly Aed 8K salary and overnight he is given million of dirhams worth of credit. Come on guys use some brains.

2717 days ago
Jack DCosta - Deal Time Computer Trading

If we go thru this reports Karya was undercutting for over a year and half and to top the icing he was member of Dubai Computer Group and he cheated almost the creamy Parters of DCG (who are desperate to do sales at any cost even after knowing that the company is undercutting) so how come DCG kept a blind eye to this

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