Westcon beats retreat from India

Distributor performing below parent Datatec's expectations

Global networking distributor Westcon Group is pulling out of India, its parent company Datatec revealed in a Stock Exchange announcement this morning.

In a trading statement for its financial year ended 28 February 2013, Datatec cut its annual revenue forecast for a second time.

It now expects full-year sales to be between $5.2bn (£3.4bn) and $5.3bn, down from the already reduced forecast of $5.4bn it issued in January.

Although integrator arm Logicalis continues to perform "strongly and slightly above plan", Westcon is trading behind expectations, especially in the US and Europe, Datatec said.

Datatec leapt into India in 2008 by acquiring a 50.1 per cent stake in Check Point, Nokia, McAfee, NetApp and Quantum distributor Inflow Technologies as part of an ambitious expansion strategy across the globe's major emerging markets.

The Johannesburg- and London-listed firm now draws about eight per cent of its revenue from Africa, India and the Middle East (AIME).

But it seems that Westcon's Indian dream is now over after Datatec confirmed it has reviewed the distributor's participation in the country, leading it to divest from the venture.

"Discussions with the local partners have commenced. The investment to date is not significant to the Group," it said.

Westcon accounted for 73 per cent of revenue in Logicalis' interim results, with Logicalis generating 26 per cent of the $2.62bn total.