& #8216;Our Warehouses Are In The Sky & #8217;

Once the infrastructure costs are covered, any incremental business brings very large portion of that revenue into the bottomline

The Rs 256-crore Blue Dart Express is one of the leading players in the Indian express industry. With an investment of over Rs 41 crore over the last four years in information technology, Blue Dart has almost changed its identity from being a courier company to a logistics provider for high-value cargo.

Last week, the company declared its first quarter results for FY02 -- a decent 22 per cent and 30 per cent topline and bottomline growth respectively.

Even as the economy shows no signs of improvement yet, Chairman, Tushar K. Jani, and managing director, Clyde Cooper, spoke to Rajesh Nair about the shape of things to come in the ensuing quarters for Blue Dart.

Isn't the 22 per cent topline growth for the first quarter a shade lower than what would have been expected of Blue Dart?

I think we have performed as per our budget. We are very much on line and the company has achieved its budgeted target. The industry has grown sizably over recent years, and the base has also correspondingly gone up.

When a 25 or 26 per cent revenue growth was estimated, the size of the industry was smaller. However, in terms of growth rate, Blue Dart has bettered the industry growth.

Because, the other industry players are projecting growth of 18 to 20 per cent and we have grown by over 22 per cent even in this quarter. Besides, we have to understand that this is the first quarter.

And this is not the best time of the year. As we go ahead in the following months, the growth will probably be higher than what we saw this quarter. In any case, it is too early to say. What I am saying is we are well within the budgeted growth for this year.

Even as we go further into the second and third quarter, the second best and the best quarters for the express courier industry, does the fact that we are increasingly being gripped by a slowdown concern you?

No, not so far. The most important reason for this is because the kind of products we have in our system have not been hit yet. We are not impacted at this point of time.

But certainly, the way the situation looks outside, there surely is concern. This is a case not just for Blue Dart, but with everyone in the industry.

So we are trying to rationalise our costs, we are looking at the way we are sourcing funds, reducing finance costs, looking at whether our fixed costs are being fully leveraged or not.

We are in the business of creating infrastructure. Once the infrastructure costs are covered, any incremental business brings very large portion of that revenue into the bottomline. We are trying to increase sales to maintain budgeted growth.

We are looking at each quarter as per our budgeted target. For this quarter, we have achieved our target. For the next quarter too, we have a budget. Our endeavour is to cleanly meet that and even try to surpass the set target.

Have you identified any niche area or emerging opportunity that the company will be capitalising on, to maintain the better-than-industry growth rate?

We have the infrastructure, and it is only a question of leveraging it to the maximum to optimise sales. We are also replacing the inefficiencies into efficiencies.

Today, Blue Dart can boast of a position in terms of infrastructural systems that no one else has. So I will take this opportunity to see where the customer wants us to go. We are looking at aggressively customising solutions for clients.

You look at PC (personal computer) penetration in the country. That is a big opportunity, as computers move, by and large, by the express mode.

PCs are assembled somewhere outside the country so you bring them into the country and handle the complete inventory solutions for the clients.

We are talking with a large number of PC manufacturers in the country. Some of them are also talking to us in terms of providing them with solutions.

We would have to handle inventory from the factory to the distributors, or from their assembly line to the customers.

We are looking at having a scenario where there would be no inventory either with them or with us. We operate a system where our warehouses are in the sky, and not on the ground.

Do you foresee any changes in the 80:20 mix in domestic to international business undergoing any shift in favour of international business especially in the post-QR (quantitative restrictions) regime?

The liberalisation has changed the domestic scenario. Certainly the multinationals and large companies abroad are looking at India as a large market. However, as far as we are concerned, the domestic market is huge. No doubt, international markets have potential too.

But our infrastructure gives us a definite advantage in the domestic market. Also, our partner, FedEx, is leveraging our infrastructure and are trying to consolidate on the leadership position in the international segment.

However, the current ratio is expected to stay the same -- even in the post-QR scenario. Both businesses are very complementary to each other. And it is a unique situation where in the 80:20 ratio is very good for a company of our size, and for the kind of business we are in.

In your endeavour to be a total logistics solution company, while your distribution network can be said to be in place, what is the status of inventory management systems?

We are the dominant player in the organised express industry with a market share of 38 per cent. We want to progressively increase our dominance.

Currently, we have three air planes, with the largest network servicing over 11,500 locations across the country. We have a definite advantage in terms of a 4,000-strong team of highly committed and professional employees.

We are highly technology-oriented. Blue Dart has pioneered the technology for operations and inventory in India. We have the systems to make readily available valuable information.

We have VSAT and computer networks across the country. We are on the Web, e-mail, Internet, Intranet, mobile phones, to keep the customers informed about the exact status of their consignments.

Our endeavour is that our customer should have no inventory. Our freighters enable us to carry out overnight delivery, thus ensuring that we give the best late night pick up and 11.30 am guaranteed delivery.

Considering that Blue Dart Aviation has an accumulated loss of over Rs 5 crore (FY01), how viable will it be for it to acquire a fourth freighter?

Well, it depends on the market response. If it is good, we will go ahead and procure not just a fourth aircraft, but even more. As of now, we are leveraging the existing space that we have. We are currently operating at an average 80 per cent capacity utilisation, and are bringing efficiency into our fleet management.

Today, in terms of engineering and operations capability, we are in a position to go ahead and create this infrastructure if need be. If Blue Dart wants a larger capacity, then the aviation company will put that extra capacity. Times are difficult.

But, if there is a requirement, we will create the space. We are hoping that if we continue to grow at the current rate, there is a likelihood that we might have to put more machines.