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".

Custom Courier Products get Startup Cash Registers Ringing.

ONE key trait of entrepreneurs is to see opportunity in a crisis. When a company gets into financial trouble, it can make a typical employee quit in fear and find safety in another job. Then there are others, who will stick with the company and let events dictate to them. There are only a few who will use the chance to turn entrepreneurs. Ashis Nain is one of those who avoided the risk of job loss to embrace the risk of their own start-up.

At the age of 36, Mr Nain was otherwise happy as the chief operating officer of Elbee Services, the express logistics company that was only second to Blue Dart. But Elbee Services was in trouble as its foray into air cargo was struggling to cope with the business impact of some air crashes. Losses suffered as of March 2000 were close to Rs 36 crore. “Things were not moving in the right direction” and he decided to quit, Mr Nain says recalling his moment of reckoning. He loved the business and he would do something on his own.

And he incorporated ExpressIT. Mr Nain didn’t want a “plain vanilla” express company delivering documents or parcels to umpteen locations. He wanted to build a niche. Six months of research showed him that Blue Dart’s customised services to business users were going virtually unchallenged by other existing players. “Customers were getting uneasy about that and were looking for an alternative to the market leader,” he says. That need for a second player, which could hope to be one up on Blue Dart, with similar services led to the creation of ExpressIT.

ASHIS NAIN MD, EXPRESSIT

It all started with the pick-up and delivery of bank documents, debit and credit cards and such, but ExpressIT has since built a bouquet of services around this core offering. For instance, banking transactions such as issue of credit cards and loans require door delivery services, customer support and verification tasks.

A call centre does the marketing, a local agent helps in filling up the documents, another agency carries out verification and maintains database and a service provider delivers the product. ExpressIT wanted to straddle this entire supply chain. “What we told our customers is that having a single window is much more cost effective and convenient,” says Mr Nain. ExpressIT calls this customer management logistics and boasts of clients like GE Money, Deutsche Bank and ICICI Bank.

Another innovation is print & delivery. An online stock broking firm usually has various documents, which it has to print and deliver to its customers. It employs different agencies for these two functions. One that carries out the printing and another the delivery. “We offered to do both,” says Mr Nain.

Today, ExpressIT prints and delivers close to 5,000 documents for Networth Stock Broking each day. Mr Nain, though, believes that there is one reason why these service offerings have succeeded with customers. “While for a large organisation Blue Dart wasn’t flexible, we have been able to do that,” he says. With over 200 branches across India, ExpressIT clocked a turnover of Rs 32 crore last year.

With logistics being an important part of a growing economy, ExpressIT can hope to leverage its track record for bigger revenues. But even if there were to be a crisis in the industry, Mr Nain wouldn’t lose his sleep. As he recalls bailing out from a beleaguered company, he expresses confidence that his own start-up will seek to turn a crises into an opportunity to move to the next level.

Article Resource:
The article appeared in The Economic Times, Mumbai in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".