Drive India Enterprise Solutions Limited (DIESL), a Tata enterprise, is planning to focus more on its logistics division in the current financial year than its primary business of telecom parts selling, as revenue from its mainline trade is declining.
“The rates of mobile handsets and other related devices have become cheaper because of stiff competition in the market. Our revenue in rupee terms has been shrinking. We will focus more on our logistics division in the current fiscal,” says Ajay Chopra, the Chief Executive Officer (CEO) of the company.
In 2009-10, the net selling of telecom parts accounted for around 83 percent of the company’s Rs 1,350 crore total income.
In 2010-11, the CEO sees total revenue slipping below Rs 1,300 crore, mainly because of drop in telecom parts business.
Final results of 2010-11 will be released next week, he said.
“In 2011-12, we hope logistics revenue will be 42 to 45 per cent of our total sales. We are expecting around 50 per cent jump in logistics revenue this year,” said Chopra.
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The company’s logistic arm generates revenue mainly from transport of telecom parts.
However, to boost the topline, the company also has deals with major consumer goods makers to supply their products.
Out of its 170 warehouses in the country, the transport arm of DIESEL has 47 units located in the eastern region. In coming days, it will try to spread its presence in other major cities, said Chopra.
“We are number one in the eastern region, especially in north eastern states. But bad road conditions and international border issues in this region sometimes hinder the business growth. We are therefore, planning to focus on four metropolitan cities as most of the logistics order comes from these cities,” said Chopra.
“Studies suggest that there over 105 mobile phone companies in India. The success in this competitive and dynamic sector depends on achieving an efficient logistics and supply chain,” said the DIESL top official.
Telecom logistics comprises four to five per cent of the entire logistics pie in the country, accounting for almost 13 per cent of India’s GDP, said a company release.