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'It's time SMEs got their due in our scheme of things'

News Clip: DNA, Mumbai

16th December, 2011.

With a footprint spread across more than 630 cities and plans to cast its net further, Blue Dart is inarguably a market leader in the express logistics space. Amritha Pillay catches up with Anil Khanna, managing director, Blue Dart Express, who talks about industry outlook, the company's market share targets, strategic tie-ups and much more. Edited excerpts:

Most sectors are showing signs of a slowdown and the latest IIP figures have also not been very impressive. What kind of effect has this already had on the industry and what are your expectations, going forward?

Though the express industry is highly dependent on the economy, primarily manufacturing, our published financial results have been good. One of the reasons for this could be that we did a lot of innovative products, had a sectoral and geographical focus. Even if these initiatives would have been discounted, we still see a very good growth numbers. Honestly, we have not seen any impact of the current slump on our performance. Yes, there are verticals like automobile and realty sectors which have been mainly impacted due to interest rates moving upward. Otherwise, I do not see anything basically wrong with the economy. Furthermore, our customer engaging programmes have helped. Our growth will be faster than the rest of the industry.

What kind of growth rate has the company seen in the past few years, what are the growth targets for the next few years?

We were going well till mid 2008 at over 20%, then slowdown happened, which continued till 2009, that is when we did get impacted - but from the last quarter of 2009-10, we came back to over 20% and are still maintaining it. We already have an aggressive market share plan which aims at our market share both in air and ground express divisions. For this, we will have to grow faster than the industry. We have already identified our growth levers.

What would these growth levers be?

These would be adding a lot of new products - we have been regularly introducing new products like the latest Go Green carbon neutral service and that will continue. The other growth lever is the sectoral focus - there are certain sectors that do not get impacted by a slowdown - sectors like health sciences and the spare parts segment of the auto sector. We have thus identified verticals which are high-growth verticals like e-commerce, where we will look for a large market share. We have also then identified small and medium enterprises (SMEs) as another growth lever. We felt that as a company, we have probably focussed more on our large customers, SMEs thus offer an opportunity. Then, we are looking at geographic expansion, we are looking at a lot of towns and cities where we currently do not have presence, so we will expand our reach to those.

Prior to this, in smaller cities, we were more focussed on the in-bound side. We then realised that a lot of these tier-II and tier-III cities have a lot of out-bound potential. A few cities that we selected and focussed on in the last 5-6 months have put up a phenomenal show, with sales going up by almost five fold. These include cities like Aurangabad, Meerut and Rajkot and many more.

What are your market share targets in both Air Express and Ground Express divisions?

In 2009, our market share in air cargo was 39.4% and that of ground was 5.9%. The new study done for air cargo shows close to 44.5% and for ground, it's 10.2%, which is for the first quarter of this calendar year. We are aiming to take Air Express to above 50% and ground to 20% in the next five years.

With an intention to increase market share by more than 50% in the air express division, what are the strategic initiatives that the company will look at?

We are looking at tier-II cities, this would need certain tie-ups. We are tying up with large commercial airlines to use their belly space. We would also definitely need new facilities at airports beyond metros. We are just evaluating and number-crunching on which these cities would be. Once the cities are finalised, we would be approaching airport authorities.

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