Thursday, May 1, 2008

Direct Logistics Derives A Sizeable Amount Of Its Revenue From China.

A soldier charges ahead on his own & tames the Dragon
Direct Logistics Derives A Sizeable Amount Of Its Revenue From China

IF CAPTAIN Sunil Devrani of Indian army of the early 1990s had said that one day he would set foot in China, his listeners would have read war in his prediction. Go to China he did, but in a more peaceful way, as an entrepreneur many years later. Direct Logistics, which he started with a capital of Rs 20,000, after quitting the armed forces, is the only Indian logistics firm to derive a sizeable revenue from China.

Mr Devrani says after leaving the army, he had no idea what he was going to do next or whether he would be able to adjust to the “world outside”. The pyramid-like hierarchy of the armed forces bothered him. “Only a few make it to the top and I wasn’t sure about myself, so I decided to quit even if it meant being jobless,” says Mr Devrani.

The ensuing period of idleness, though, didn’t last long. He landed a job as a sales executive with a freight forwarding company. “The transition was tough” but Mr Devrani believed that if he could work his way through an arduous sales career, then the going would be a lot easier later.

Two years on, he quit once again, this time to branch out on his own. “It was a spur of the moment decision,” he says. He had to rely upon capital that was not much more than a month’s salary, the loyalty of two friends and an appetite for risk. “We had a pact. If we didn’t make money in the first month, each of us will put our CVs in the job market and shut shop,” says Mr Devrani. Happily for the trio, November 1997, the first month, turned in a handsome profit. “It was a sign that we were cut out for the job,” says Mr Devrani.

In a decade, Direct Logistics has reached a turnover of nearly Rs 120 crore and is the only freight forwarding & logistics company to have set foot in China. Almost 40% of the company’s revenue, today, originates from its Chinese operations. “China happens to be the largest market for us and the kind of business that we did in India in seven years took us only two years in China,” recalls Mr Devrani. Moreover, in October 2007, Direct Logistics acquired Shenzhen Dida, a Chinese freight forwarding, logistics and international transportation company, with a turnover of Rs 25 crore. This was the first-ever acquisition by an Indian company in the freight forwarding sector in China.

The strategy at Direct Logistics has been simple. To get more business by setting up one branch office in a major port or airport destination every year. “This has been our methodology right from the start,” says Mr Devrani. Today, Direct Logistics has its presence in India, China, Singapore, Hong Kong and Taiwan through its fullyowned offices. An expansion that has kept up pace with robust growth.

Ever since Direct Logistics set shop out of Mumbai in 2002, the topline growth has been almost 100% year-on-year. Says Mr Devrani, “From Rs 9 crore in 2003, we clocked revenues of Rs 19 crore, Rs 40 crore, Rs 65 crore every successive year to Rs 120 crore last year.” Perhaps, one of the reasons why the company has witnessed keen interest from financial institutions.

Early last year, the company received Rs 10 crore as its first round of funding from SIDBI Venture Capital, the venture capital arm of Small Industries Development Bank of India, after diluting a 10% equity stake.

Mr Devrani wants to take the turnover to Rs 1,000 crore by 2012. The key challenge will be talent management. “Ours is a people-sensitive business and managing them will be our biggest challenge,” adds Mr Devrani. However, he believes his core team will take the company there. “If I was in the army, I would like to take them with me to war.”

Article Resource:
Author: Ashish Kumar Mishra is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

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