Q&A Anil Khanna, managing director, Blue Dart Express Ltd

News Clip :Asian Age, Mumbai

22th October, 2007.

'Air, road infrastructure major challenge'

Mr Anil Khanna took over as managing director of Blue Dart Express Limited in February 2007. He has been with Blue Dart for over 15 ye.1fS and moved to his current position after serving the company as a senior vice-president for the western region. Mr Khanna is a graduate from St. Stephen's College, New Delhi and holds an MBA degree in marketing and finance from the vas. Chandigarh. Excerpts from his interview with HEMANG PALAN:

What is the current size and the growth of the Indian logistics sector?
The Indian domestic logistics industry is currently pegged at Rs 2.770 crores. It is growing at 17.2 per cent per annum and is estimated to reach a turnover of Rs 5.266 crores by the end of year 2012. Blue Dart currently enjoys a 41.7 per cent market share in the orgainsed domestic air express segment. As India's GDP growth is currently buoyant, we are quite optimistic about the future of the country's logistics sector as the macroeconomic indicators in the country augur very well for our kind of businesses.

Which are the key factors that are fuelling the growth of the logistics sector in India?
The steep rise in domestic consumption by the Indian middle class has created a wide span of distribution related opportunities in the Indian logistics sector. The increasing competition among Indian manufacturers and the suppliers to cater to various needs of their consumers on time at different locations at a competitive cost has mainly fuelled the growth of the Indian logistics sector.

How important is the logistics sector to the growth of the Indian economy?
Logistics is the backbone of our country's economic growth. Manufacturers and suppliers in India currently enjoy the comfort of late-night pick-ups. Also, they are assured timely deliveries of their goods or documents. Logistic help has thus evolved from a primarily document centric service to a critical supply chain support for many industries in India. In an increasingly competitive environment, where the focus is on pruning the inventory costs, logistics support provides speed and reliability to the business houses. Rather than setting up their own infrastructure facilities and related operations, many companies in India are now looking at end-to-end solutions provided by reputed logistic companies.

Is rural India too contributing substantially to tile growth of the logistics sector?
Yes. It is very heartening to witness an increasing affluence expanding into Tier II and III Indian cities, which are emerging as important nodes of production, consumption and distribution. Such towns and places are growing more rapidly than the major metros and provide a wider catchment for suppliers of goods along with interesting distribution opportunities.

What are the challenges ahead for the players like you?
Air and road infrastructure development continues to be a major challenge ahead for the Indian logistic industry. The fuel prices too are a cause of concern as they account for a significant part of our operating expenses. Any kind of political disturbance or disruption is also detrimental to our sector.

Is inadequate airport infrastructure currently hampering the growth of the Indian logitics sector?
We are currently constrained by the size of the cargo facilities at the Indian airports. They have remained the same while our loads have increased manifold in the last few years. In addition to that the parking bays, airside and cityside accesses, and the traffic congestion on roads and highways have adversely affected the costs as well as the service quality of the Indian logistic service providers.

How advantageous has been DHL's major stake in the Blue Dart?
As part the DHL Group, Blue Dart currently enjoys access to the largest and the most comprehensive express and logistics network covering over 220 countries worldwide. We currently offer an entire spectrum of distribution services which include express, air freight, ocean freight. supply chain solutions, freight forwarding. customs clearance, project handling and charters. All our vices are offered through our four dedicated business units in India - DHL Express. DHL Global Forwarding. DHL fuel Supply Chainin and Blue Dart.

What are your future expansion/investment plans?
As part of our recenlIy introduced "Surfaceline" initiative, we would soon be adding 58 new warehouses spread across 1 million square feet across the country. We will continue to build our existing air infrastructure by including one more B 757 cargo aircraft before the end of the current financial year. We plan to invest around Rs 1,000 crores over the short to medium term in cargo aircraft, ramping up of the ground infrastructure, revamping the transit hubs and acquiring specialied hi-tech material handling equipments.

Are you eyeing any M&A deals in the domestic market?
Since its inception. Blue Dart has invested in building its own infrastructure which remains unmatched in the country till date. We have plans in place to strengthen our infrastructure to fortify and augment our leadership position in the express distribution space. We are constantly stUdying the market and are open to any opportunities that would further enhance our customer value.

How do you foresee the growth of your recently launched read express business in the country?
Our object is to be the unmatched, premium, complete end-to-end service provider in the domestic distribution space, focusing on the needs of our customers. The rapidly improving road infrastructure provides us with an opportunity to achieve this goal. Currently we have a modest market share in the ground segment, almost by default. However, we aim to achieve a dominant position in the next five years, leapfrogging over other players in the sector