Mr. Anil Khanna, Managing Director, Blue Dart Express Limited, South Asia's premier number one express air and integrated transportation, distribution and logistics Company and part of the Deutsche Post DHL group. He has been a Blue Darter for over 18 years, with an overall experience of 32 years across diverse industries. He took over as Managing Director in 2007 and since then has led the organization successfully with clear strategic vision, focus on customers and incisive execution of customer centric value propositions, thereby consolidating Blue Dart’s leadership position in the market-place. Under Anil's leadership, Blue Dart has broadened its strategic focus from being an air express company since inception to being a company that straddles customer offerings across time definite, priority, deferred as well as focus on industry specific solutions in air and ground express segments. Anil is a graduate from St. Stephen’s College, Delhi and holds an MBA degree in Marketing and Finance from UBS, Chandigarh.
Blue Dart is South Asia’s premier courier, and integrated express package distribution company. Secure, reliable, time-definite distribution across 26,804 locations in India and 220 countries worldwide is assured through its integrated air support and ground network, with over 1,342,677 sq. ft. of facilities which include 7 aviation hubs and bonded warehouses, 12 express hubs, 55 domestic warehouses, and dedicated air services with a fleet of three Boeing 737 freighters and four Boeing 757 freighters operating each night to the 7 main metros in India. Blue Dart's core competence lies in the business of superior express delivery services, maintaining reliability levels of 99.96%. A people-first company, Blue Dart continues to deliver value to its stakeholders through its people philosophy and corporate governance, based on distinctive customer service, business ethics,
accountability and profitability.
Replying to Anil Mascarenhas of IIFL, Anil Khanna says, “We not only anticipate increased activities in the sector in terms of investments but also consolidation in the sector.”
Give us a brief overview of the industry. What are the changing trends?
The express industry is a key enabler in facilitating trade and commerce because of the time-sensitive nature of most goods and the increasing demand for reliability, efficiency and speed. The opportunities are aplenty for the express industry in India as the current logistics spend in India is 13% of the GDP compared to a notably lesser percentage of the same in more developed economies. The need for the highest levels of efficiencies still exists.
The demand for express services is surging with each passing year and customer expectations have also risen tremendously. Today, the Indian express industry provides integrated, value-added, time-bound, door-to-door delivery of documents, parcels and merchandise. It supports industries such as electronics, telecommunication, IT, banking, retail, auto-components, textiles and apparels, gems and jewellery and pharmaceuticals. Moreover, with India recognized as an outsourcing destination, manufacturing sectors such as textiles, automobiles and pharmaceuticals are likely to witness increased activities in the medium to long term. In order to maintain competitiveness, companies operating in these industries are expected to outsource their logistics requirements to third-party logistics service providers and concentrate on their core-competency of manufacturing and marketing.
Besides, the opening up of banking, insurance, telecom and retail sectors would boost the demand for value-added express services in India, as these are major user industries.
What is the size of the industry? How well are you placed in India?
The organized domestic air express market is pegged at around Rs.15bn, which grew at a CAGR of 7-8% in the last five years, while the domestic organized ground express market is pegged at around Rs. 1,700cr, which grew at a CAGR of 14-15% in the last 5 years. (Source: Market Sizing 2009).
Blue Dart Express Limited is South Asia's number one express air and integrated transportation, distribution and Logistics Company and commands a market share of 40% (Source: Market Sizing 2009) in the domestic air express space. We have the most extensive domestic network of 26,804 locations serviced through 390+ DHL Blue Dart retail outlets, 7 dedicated aircraft, 5885 vehicles and reach to over 220 countries worldwide through our parent company DHL.
How is Blue Dart positioned as a company today? Is it more of a courier or logistics or one stop solution / warehouse?
We are commanding a 40% share in the domestic air express market is the only company providing a gamut of services – air express (both domestic and international through DHL), air freight, ground and charters. It is a one stop solution for any logistical requirement.
Blue Dart has predetermined goals to become the ‘Express & Logistics Provider of Choice’ for Indian businesses. It continues to be the ‘Trade Facilitator of the country’ and focuses on specific customer needs, rolling out relevant solutions that meet and exceed customer expectations. Blue Dart has built on its experience and expertise to offer logistics support that provides its customers a competitive advantage and edge in the marketplace. Through our logistics support, we simplify our customers’ lives and make them more successful.
What is your view on logistics industry and warehouse? What growth rates do you see?
The organised Indian express market is expected to grow at a CAGR of 17 percent till 2015 (Source: Market Sizing 2009). As we witness the mall culture and consumerism wave sweeping the Tier II & Tier III cities and towns, we see market growth for the industry in these locations. Impressive growth of manufacturing sector and organized retail sector has definitely boosted the domestic warehousing market. With domestic retail chains and international retailers eyeing a big market in India, now there is a greater demand for advanced and comprehensive warehousing services. The private warehousing sector which is highly fragmented should reorganize itself and capitalize on the substantial opportunities.
What are the entry barriers? Your take on third party logistics.
Express today plays an important role in trade and distribution because of the time-sensitive nature of many goods. For those looking at reliability, speed and security it is still the preferred option over other modes. However, inadequate infrastructure, increase in fuel cost and shortage of skilled manpower are some of the major challenges for this industry.
Over the last several years the use of third party logistics providers has grown dramatically and it has increasingly become an effective way to reduce costs and spread risks for traditional, vertically integrated firms. This not only helps the companies to concentrate on their core business but also eliminates investment in infrastructure, quick adaptability to changes in business environments, reduction in operating costs, risk sharing etc.
In terms of Outsourcing logistics, what trends are you seeing here as far as Indian companies are concerned?
The Logistics Service Providers have evolved in India and now there are large operators who offer complete supply chain solutions across industries. Apart from the usual logistical activities such as transportation and warehousing, these players also provide value added services such as customs clearance, freight forwarding, import-export management, inventory management, assembly / installation, packaging and labelling, distribution after sales support, reverse logistics etc.
The benefits of logistics outsourcing are being understood and appreciated and also the realization that apart from cost, customer service and delivery performance are also important to remain competitive on a global level where logistics are much more evolved and advanced.
What kind of investments do you see in the logistics sector, especially by PE funds etc?
PE investment in the logistics sector has been active after being on a low for a while. The primary reason for this was valuation mismatch of the proposed deals; but this year has witnessed good number of PE deals and going forward more are likely to happen. Now within logistics the cold storage segment is set to see some action due to the anticipation of the sector opening up. This is likely to see new players entering whilst the existing players feel the need to ramp up their offerings to more than just transporting the shipment.
Are you seeing a capacity crunch, especially at the ports? Do you see a near term solution?
Yes, we do have a capacity crunch at our ports. Albeit ambitious expansion plans have been laid out significant chunk of those projects are yet to take off and also we haven’t been able to add capacities at our ports. Delay in projects is another concern area as it not only results in cost over-runs but also affects trade and commerce adversely. Increase in private participation at ports is a positive development and the need is to add to the momentum.
How long does it usually take for importing a cargo container into India and for exporting one from India? How does it compare with other countries?
While international norms state that a gap of at least 30% should be maintained between installed capacity and actual throughput; the gap is about 8% at our Indian ports resulting in waiting time for the ships. As per a Parliamentary Committee report the average turnaround time for a ship in waiting at our ports was around 3.85 days in 2008-09 in contrast to the turnaround time of 10 hours at Hong Kong port. Indian ports are developing but need to catch up with their global counterparts at the earliest.
In terms of regulations or taxes, what would be your wish list from the government?
GST has thrown up an opportunity and will undoubtedly change the way we do business. It will be a move from Fiscal Supply Chain to Physical Supply Chain. Introduction of GST will make it economically viable to simplify distribution network and result in economies of large scale operations and process optimization. The Government has allowed 100% Foreign Direct Investment (FDI) to the courier industry in India. However, it is imperative to simplify the tax structure of the logistics industry to reduce complexities. Also better understanding on Government’s part about the role played by logistics in order to give it an ‘industry’ status and less cumbersome regulatory requirements of ST/Octroi/Customs will lend an added impetus.
How do you manage the spike in crude prices etc? To what extent are you able to pass on the rise?
Volatility in crude oil prices is a cause of major concern globally. Blue Dart has a fuel surcharge mechanism in place since December 2002 to neutralize the impact of the Aviation Turbine Fuel (ATF) costs. This has enabled us to manage and mitigate the phenomenal increase in costs.
Are you seeing consolidation in the sector?
With recession behind us now and the economy peaking we not only anticipate increased activities in the sector in terms of investments but also consolidation in the sector.
What is your warehousing capacity now?
Currently we have warehouses at 53 locations across the country, as well as bonded warehouses at the 6 major metros of Ahmedabad, Bangalore, Chennai, Delhi, Mumbai and Kolkata.
What are your capex plans? How would they be funded?
We plan to invest approximately Rs. 800-1000mn for expansion. All our capex plans are funded by internal accruals.
Brief us on your financials and your outlook.
Blue Dart posted Rs 943.7mn profit after tax for the year ended December 31, 2010. Income from Operations for the quarter ended December 31, 2010 was Rs 3188.8mn. The Income from operations (inclusive of fuel surcharge) has recorded an increase of 26.75% for the year ended December 31, 2010 as compared to the corresponding year ended December 31, 2009. The 2010 results have been in sync with our outlined expectations for the year.
While continuing to be the `Trade Facilitators’ in the country handling over 87 million domestic shipments, 0.74 million international shipments and over 3,38,990 tonnes of documents and parcels across the nation and 220 countries worldwide, we shall continue our focus on addressing specific needs of the customers delivering customized solutions.
Being a customer centric brand, Blue Dart has robust plans for India and will continue to focus on product innovation, reach expansion, transit time improvements, small town (Tier-II and III) activation and strengthening channels.
We are delighted to serve in ‘Blue Dart country’ with a business and human conscience to remain the customer’s First Choice.
Tell us more about your international operations. What steps are you taking to increase the same?
DHL Express (Singapore) Pte. Ltd. owns 81.03% stake in Blue Dart and the coming together of the world's No. 1 international air express service provider and South Asia's premier courier, and integrated express package Distribution Company has created a force to reckon with in the Indian logistics space. Through DHL’s international network, Blue Dart has access to 220 countries and territories worldwide. Likewise any shipments coming in to India is delivered through Blue Dart’s network across 26,799 locations in the country.
On the facility and infrastructure front, the Blue Dart-DHL facility at Bangalore International Airport Ltd. (BIAL) is the first of its kind in India and unique because of its fully integrated domestic and international express operations. This new facility will help synergize the domestic and international express operations of both businesses in South India.
How many aircrafts do you own and lease?
Currently we have 7 aircrafts – three Boeing 737 and Four Boeing 757. All these freighters are on lease.
What is the game plan now of DHL Express as far as Blue Dart is concerned?
The alliance between Blue Dart and DHL brings together synergies of two strong brands with premier offerings in the domestic and international air express and logistics arenas. DHL’s market leadership in international air express complements Blue Dart’s established domestic strengths and unique infrastructure, to provide customers with a complete spectrum of domestic and international express services, airfreight, ground and charter services in the country.
We have a strong team and an extremely well thought-out strategic focus till 2015. As part of this strategy, Blue Dart and DHL have formed an X-BU (cross Business Units) initiative that aims to ‘collaborate and simplify’ customers’ lives. This also includes increasing the count of ONE-RETAIL stores from 390+ to 1000 across India by 2015.
Both Blue Dart and DHL are well established brands, with strong brand recall and loyalty. Though the two businesses continue to work independently, both Blue Dart and DHL draw on each others’ strengths through collaboration and sharing of knowledge and best practices that make it a formidable unified team in the eyes of the customer. This alliance has given them a distinctive edge in the competitive market, where the customers stand to gain from DHL’s global reach and Blue Dart’s domestic network.
What is your vision for your company?
Our vision is "to be the best and set the pace in the express air and integrated transportation and distribution industry, with a business and human conscience. We commit to develop, reward and recognise our people who, through high quality and professional service, and use of sophisticated technology, will meet and exceed customer and stakeholder expectations profitably."
We want to establish continuing excellence in delivery capabilities focused on the individual customer. Blue Dart would like to bring immense value to internal and external stakeholders by incorporating high benchmarks and quality standards in every aspect of business. This would ensure that Blue Dart advances as a Brand with a clear focus on fundamentals and stands for Quality, Consistency, Reliability, Passion and Commitment. With this holistic approach, Blue Dart will remain a dominant force in the industry and consistently achieve higher growth in the years to come.
What are some of the innovative schemes brought up by Blue Dart in recent years to add value to the customer?
Blue Dart constantly rolls out promotions for our customers to keep them updated on our various offerings. Recently we announced the launch of a unique customer incentive campaign – ‘Ship and Win’ for its Time Definite Delivery (TDD) domestic retail customers. The campaign is a slogan based contest wherein TDD customers need to complete the slogan “I prefer Blue Dart-DHL TDD because…” on the TDD forms available at retail outlets. The best slogan can win bumper prizes.
Apart from this, we also introduce several sector-specific, innovative products and services in a phased manner, in line with specific needs and requirements of different industries like BFSI, Pharmaceuticals, IT, Consumer Durables, FMCG, Automotive, Retail, Textiles, Telecommunications etc. The new initiatives will upgrade our product range and improve service quality, thereby offering customers state-of-the-art air and ground express solutions across the country. These products provide the much-required flexibility to the shipper and consignee. Some recent additions to our product portfolio include Express Pallet, Smart Box: Ground Express and Time Definite Delivery to name a few.
In terms of security issues, where does Blue Dart stand?
Blue Dart is best equipped to address any issues related to security and follow strict guidelines to keep check on what we move. Every shipment undergoes 17 scans during its transit period from the origin to its actual destination. Also the 24x7 tracking mechanism empowers customers to monitor the status of their shipments at any given time. Our vehicles are installed with the GPS device that can be tracked from a centralised unit. This enables real-time visibility of each package and dynamic routings thus ensuring total control.
Tell us about your technology initiatives and what edge do you have here?
Blue Dart has been the only Indian Air Express Company that has invested extensively in technology infrastructure to create differentiated delivery capabilities, quality services and customised solutions for the customer. With over 3,465 computer terminals connected by dedicated leased lines, VSATs and Microwave links, Blue Dart has one of the largest private computer networks in India. We also employ wireless, mobile telephones, radio sets extensively to enhance our communication speed and connectivity with our troops on the field. Our Customer Service Cell is equipped with Automated Call Distribution Systems (ACDs) to provide quick response and support to our customers.
Blue Dart had foreseen how internet would benefit the core business of the company way back in 1996 and started exploring web-based solutions to extend the range of services available to its customers and integrate them into its core products.
We are the only Indian express company to have indigenously developed an advanced state-of-the-art track and trace system for all our shipments. Shipments are scanned from pick up to every transit point till delivery, using bar coding and laser scanner technology, transmitting updates automatically to our Oracle database. This enables our customers to receive real-time, complete and accurate information about their shipments.
For our aviation system, our in-house team has developed an in-house technology system, which allows real-time space and revenue management on the Blue Dart Aviation network. It ensures that the aircraft is filled profitably, and that all customers with space confirmed on the aircraft have the assurance that their packages would travel.
Technology at Blue Dart is designed to enhance the reliability of our operations and process efficiency, and add value to the customer through time and cost savings. All these ensure timely, secure and reliable pick-up and delivery of shipments thereby providing our customers peace of mind.
What is your staff strength in India? What are your recruitment plans?
Blue Dart customers are serviced through Blue Dart's national workforce of over 7204 employees, fleet of about 5885 vehicles, 7 dedicated aircraft and service centres that reach over 26,804 locations across India. This vast network ensures timely and reliable services o customers across Blue Dart country thus exceeding their expectations.
All our achievements have been possible because we have a team who believes in themselves and their company, a team with a winning attitude. We are a learning organization, we value self-development, and most of our managers are home-grown. Our team is a healthy mix of long term employees with solid industry knowledge and experience and new employees with path-breaking ideas that constantly provide fresh perspectives. Even though we strongly believe in promoting from within the system, we are also on the lookout for skilled and qualified people who are in sync with the organisation’s vision and effortlessly fit our culture.
Do you recruit from B-Schools? What do you think needs to be done by B-Schools to make their graduates job ready?
Yes, we do often recruit from B-schools. In my opinion, B-Schools should have more curriculums that give the students an insight of industries in a more realistic way and aligned to the fast changing economic landscape.
What is your message to those wishing to join your company?
Blue Dart is an organization which focuses strongly on customer requirements along with employee needs. People First policies have always been an integral part of the core value of Blue Dart.
Committed, diverse and over 7,204 strong are our most valued asset. All our achievements have been possible because we have a team who believe in themselves and their company, a team with a winning attitude. We are a learning organization and we value self-development.
Human Resources at Blue Dart is not merely a support function but more strategic in its approach with programmes like leadership development, succession planning, development of talent pipeline, vision and values actualization, building and sustaining culture, inculcating best practices etc. aimed at honing the skills of our talent pool.
We encourage the spirit of excellence in our employees through various rewards and recognitions like Bravo Blue Darter, Super Blue Darter, True Blue, and Employee of the Year. We also support employees to meet their financial commitments, responsibilities towards family and educational aids trough ‘STEP’ (Blue Dart’s educational aid scheme), ‘BRACE’ (Blue Dart’s reimbursement of accident claim and expenses), and ‘DBF’ (Death Benevolent Fund).
In the 2010 Employee Satisfaction Survey (ESS), 98.25% of eligible employees participated and rated ‘Pride for Working for Blue Dart’ as the highest scoring parameter. It is therefore not a coincidence that in 2010, Blue Dart won the prestigious recognition of being ‘One of India’s Best Place to work’.
We are proud to say that Blue Dart still has Day 1 employees who come to work with the same enthusiasm, dedication and commitment they displayed 27 years ago.
We will continue to invest in our people and remain an ‘Employer of Choice’.