Lt april 2011 by Raj Misra

INTERVIEW Carsten Hernig

PERSPECTIVE Oil & Gas

EVENT REPORT ICC Summit

PROFILE Anil Khanna

LogisticsTimes www.logisticstimes.net

April 2011

` 50

Quick Chat Kenneth F. Koval

Softlink Survey Are LSPs doing IT?

Retail Survey Malls not a favourite shopping joint

Om, Sweet Om! Ajay Singhal CMD, Om Group

Pranil Pr ranil Vad Vadgama dgama

Logistics Times

CONTENTS

All about Transportation, Distribution & Infrastructure Volume 1: Issue No.12 * April 2011 Editor in Chief Raj Misra rajmisra@logisticstimes.net Editor Ritwik Sinha ritwik@logisticstimes.net Consulting Editor Ramesh Kumar ramesh@logisticstimes.net Mumbai Bureau Rahul Kumar rahul@logisticstimes.net Sub Editor Neha Richariya Photographer Anil Baral Design Consultant S. Athar Hussain Designer Kausar Syed Circulation & Distribution Kamruddin SaiďŹ Legal Advisor Rakesh Garg Editorial Advisory Board Paul Lim Founder & President, Supply Chain Asia Vinod Singhal Brady Family Professor of Operations Management, Georgia Institute of Technology, College of Management Kate Vitasek Faculty, Centre for Executive Education The University of Tennessee Prof. K S Pawar Nottingham University Business School Prof. Samir Srivastava Associate Professor, IIM-Lucknow Prof. Akhil Chandra Institute of Logistics & Aviation Mgt Sanjay Upendram Founder & Chairman, Amarthi Management Consulting Swaran Singh Soni Consultant (Oil Industry) Arif Siddiqui Chairman, Coign Consulting

Marketing & Sales Outthink Strategies Ph: 65177214, 26412476, 9818097385 Email: sales@logisticstimes.net Printer & Publisher Deepa Misra for

E-77, West Vinod Nagar, Delhi -110092 Tel: +91 11 22478538-39, Fax: +91 11 22471764, Mumbai: +91 9322811550 Printed at Personal Graphics & Advertiser Pvt. Ltd. Y -22, Okhla Industrial Area-II, New Delhi-110020

www.logisticstimes.net

COVER STORY Om, Sweet Om Om!!

10 SURVEYS

IT & RETAIL Edit Note

Quick Chat

Perspective

Events

30 INTERVIEW

Carsten Hernig

EVENT REPORT

ICC Summit

Anil Khanna

PROFILE

EDIT NOTE

Dissecting Om’s Universe Ever since we started this magazine, a conscious effort has been to look at the affairs of the well established players (both domestic and MNCs) from close quarters. And in the list of domestic majors, the name of Om Logistics has always been cropping up in some discussion or the other. But in all fairness, not much information is available on them primarily because the company has by and large maintained a media shy mien. It took quite an effort for the consulting editor Ramesh Kumar to persuade and open them up to showcase the diverse operational components which comprise Om Logistics’ universe. But at the end of the exercise consisting of spending four days with top honchos of the company as well as physical visit to some of their sites in and around Delhi, his observation is that it is an interesting company which has quietly built up a considerable scale and has a vision to make its mark in new growth areas. Leaf through our cover story to get a sense of what this quiet company ( by the way, Merrill Lynch is a strategic investor) is upto. Are logistics providers really doing IT? That is adopting advanced technological solutions to give a cutting edge to their operations, chimed to the demands of the future. This edition carries a recent survey undertaken by Softlink which presents a mixed picture – probably with slightly more positive trappings. Another highlight of this edition is a survey on retail trends which has been compiled by Delhi based real estate tracker track2realty. The survey specifically talks about actual business patterns vis-à-vis consumers in our flashy malls and there are clear messages for those involved in retail supply chain. In the interview section, we bring to you Carsten Hernig, Lufthansa Cargo’s boss in India who is spearheading unit’s operation in South Asia and Middle East. Lufthansa is clearly the largest European airline in the country and its cargo unit is making the most of the opportunities delivered by its combo positioning – with nearly 75 widebodied frequencies per week on the passenger side as well as dedicated freighter services operation to Indian metros. In the conversation, Hernig candidly admits that the cargo unit of the global aviation major has high hopes from the Indian market even as he subtly underlines that processes need to be improved significantly. Last but not the least is the profile of Blue Dart’s top man Anil Khanna who seems to be obsessed with the idea of not allowing any kind of complacency to set in the system of domestic air express market leader. Very interesting conversation indeed wherein he shared his life details in almost no holds barred manner including his struggle to give up the smoking stick ( he is making the second serious attempt to get rid of this habit and to prove it, he took out a cardamom from his pocket offering me during the course of the conversation). Hope you would enjoy reading this edition. Waiting for your feeback. Ritwik Sinha ritwik@logisticstimes.net

LOGISTICS TIMES May 2010

NEWS BRIEFS

8 Expressways in the north

The government has recently confirmed plans to build two new expressways linking neighbouring pink city Jaipur and Chandigarh to the national capital — ventures that are likely to cost nearly $3 billion (Rs 12,750 crore). “The Centre has decided to build Delhi Jaipur and Delhi-Chandigarh expressways. Ministry officials will take up the issue with States of Delhi, Rajasthan and Haryana. Once they come on board, we will get the detailed project report,” Road Transport and Highways Minister, C.P. Joshi, recently told a news agency. The move comes at a time when the government is re-examining a proposal to set up Expressway Authority of India (EAI) on the pattern of National Highways Authority of India (NHAI) to facilitate building over 18,000 km of roads for high speed traffic entailing Rs 4,50,000 crore investment. New cargo facility

GMR Airport , which operates the upgraded Hyderabad and Delhi airports, has now planned to establish a modern cargo hub at Delhi airport. The facility is likely to become operational by 2013 and it would be set up on a land parcel of 25-acre with a capacity of over one million tonne. According to a company official, the cargo hub will comprise logistics park, exclusive facility for freight forwarding and warehouses among others.

LOGISTICS TIMES April 2011

Port capacity over 1 bn tonnes The country achieved a major feat during the course of fiscal 2010-11 with the port capacity crossing one billion tonens mark capacity. This includes the cumulative capacity of all major and non-major ports. Confirming this achievement, Rakesh Srivastava, Joint Secretary (Ports), Ministry of Shipping recently stated that the government is now targeting the port capacity to touch 3.2 billion tonnes by 2020. Stating that a new major port is likely to come up in Andhra Pradesh, the Joint Secretary said: “We have identified the location, and informed it to the government of Andhra Pradesh. As soon as the comments are received, we shall go ahead and establish the new port there.” According to Srivastava, the government is also working on the modalities to issue tax-free bonds for the development of port sector in the country.

Highest wagon procurements According to a news report, Indian Railways have set new record in the procurement of wagons in the financial year 2010-11. The total number of new wagons acquired last fiscal stood at 16,638 units. This is the highest ever wagon procurement in a single year since independence. The highlight of this procurement is that some upgrades in wagons that had eluded Railways for almost a decade have now been applied for the first time. Thus Railways have not only procured the highest number of wagons but procurements have also been superior in terms of technical specifications. The coach factories of Indian Railways produced 3079 passenger coaches during the financial year 2010-11, which is again the highest ever production in a year since independence. In a landmark performance, the Locomotive Production Units of Indian Railways also achieved highest ever production of 497 locomotives in the year 2010-11 which include 267 diesel locomotives and 230 electric locomotives.

“2011 is shaping as a big year” Starting trade lane between India and China, commencement of AFL’s integration and now the introduction of Boeing-777 freighter on Delhi route, 2011 is simply turning out to be the year of major developments for FedEx in India. In a quick chat with Ritwik Sinha on the sidelines of a company event in Delhi recently, Kenneth F Koval, Vice President ( India), FedEx talks about the consolidation drive of the company. 2011 is turning to be quite a year of major developments for you. Do you agree? You have aptly assessed it. We have been building up for a long time. We had a strategy as to how we would be growing in the Indian market. The acquisition of AFL and UFL allows us to complete our portfolio specifically with logistics and ground network and also to gain some size so that we can become more efficient. 2011 as you said is shaping up as big year for us as we go through the integration with AFL and UFL and move towards one strong brand of FedEx products. Yes, it is good for us and our customers. Every acquisition process has its own share of pains. In the case of AFL acquisition, it is purely the case of marriage of different cultures. How would you respond to it? We describe it as an Indian wedding. We went through a long courtship before completing the transaction and when we faced each other for the first time after the deal, we found out a lot of new things. And we are getting adjusted to that. So yes, we have some challenges but we have dedicated people

(L to R) Rakesh Shalia, MD-Marketing (Middle East, Indian Subcontinent & Africa and Kenneth F. Koval, Vice President (India), FedEx Express introducing Boeing - 777 freighter at Delhi airport

working on it. There are growth challenges, tax and integration challenges but we are working hard with the team to overcome those because we want to be one FedEx in India. What is your headcount now? Prior to the transaction, we had 2100 employees. We acquired another 1900 employees with AFL and UFL. So the employees pool is like 4000 and in addition we have a huge battery of contract personnel. Indian economy is on fire. Does it entail that you might have to put more capacity on the Indian route? You currently have a frequency of 31 from three Indian locations – Mumbai, Delhi and Bangalore. .

The GDP growth in India is projected at 8.5 percent and our industry usually grows by double margin of the GDP figure. So, it is possible that if we see additional growth, then we will have to enhance capacity. We are continuously monitoring the situation. You confirmed that 2011 is shaping up as a big year. Apart from integration with AFL, what other big developments we can expect? Apart from integration, emerging as one stop shop solution provider is the big idea. We will be able to have customers with one account number that can be used for the complete range of FedEx services. That is really what we are aiming.

It would give us much more visibility as a brand in India as well as literally when we go to a customer, we can explain him he doesn’t need to go somewhere else. Consolidation in Indian logistics industry is believed to be inevitable now. What is your take on it? Logistics industry no doubt is consolidating here. And it would probably get more pronounced when GST is implemented. With GST, you no longer require to be located in certain tax benefit areas. So we expect massive consolidation in the logistics business. Some industry observers are apprehensive not only on the schedule but also quality of the implementation of GST. Do you also share those concerns? GST has already been delayed by a year and now they are saying instead of next April, it would become effective from June. We believe that it would be inevitable that it is implemented. We hope it is implemented fast because it brings a tax regime which makes businesses easier in the country. If they implement as they say, it would deliver tremendous benefit. LOGISTICS TIMES April 2011

QUICK CHAT

SURVEY/IT

Are LSPs doing IT? The reluctance in adopting IT applications by logistics service providers (LSPs) is generally believed to be one of the critical bottlenecks which is not allowing the services standards to really improve on a sustainable basis in the Indian market. However, a recent survey conducted by Softlink clearly earmarks that the scenario is changing though some critical ifs and buts are still there. Excerpts from the report: I. Introduction Softlink’s report of its survey on adoption of IT in Logistics, India – 2010 features statistics on the IT readiness of a cross section of international Logistics Service Providers (LSP) in India. The report reveals: • The motivation LSPs to invest in technology • How the LSPs plan to invest in technology solutions next year. • Perceived benefits in adopting IT • Perceived barriers in adopting IT • Perception on an integrated ERP systems benefit to

organization • Use of technology with Customers

II. Methodology and Approach This survey was conducted online between December 2010 and February 2011 with responses solicited by targeted e-mail lists, select trade association memberships, various related industry databases and other targeted methods. More than 500 respondents from the international logistics participated in the survey. The majority of respondents were key figures, representing major companies. No individual responses were analyzed, but rather all responses were consolidated.

III. Profile of Respondents Of the respondents, 76% were Small and Medium Enterprise (SME) while 24% were large companies. Among the large companies, 4% represented companies with annual turnover above Rs 250 crore. Of the remaining respondents, 2.1% represented companies with annual turnover between Rs 100 crore to Rs 250 crore, 5.3% represented companies with annual turnover between Rs 50 Rs to 100 crore and 12% represented companies with annual turnover between Rs 10 to Rs 50 crore.

IV. Investment in IT – 2010 & 2011 (Planned) The respondents were asked about the company’s investment in information technology in 2010 and the planned budget for 2011. They were given the options of below Rs 10 lakh to Rs 25 lakh , Rs 25 lakh to Rs 50 lakh, Rs 50 lakh to Rs 1 crore and above Rs 1 crore. There is an increase of 41% compared to 2010 in companies that are planning to invest above Rs 1 crore. A significant 15% of respondents were unsure of budget allocation for 2011 and there is a decrease of 65% in the investment in the range of Rs 25 to Rs50 lakh. However, there is an increase of 12% in the number of companies planning to invest LOGISTICS TIMES April 2011

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SURVEY/IT

between Rs 10 to Rs 25 lakh whereas there is a 5% decrease in the companies investing less than Rs 10 lakh.

V. Motivating factors for IT adoption Respondents were asked to rank the motivating factor for adopting IT in their organization. 43% of the respondents said that Improving Operational Efficiency is top most factor in motivating IT adoption. 25% respondents cited Improving Customer Service as the driving force whereas

11% respondents felt Improving Data Quality has become necessary. Reducing labour cost and making shipment secure were cited as motivating factors by 7% and 6% respectively. The other factors were return on investment and direct customer request at 4% each.

Key Insights – Motivating Factors Improving customer services came a close second as a motivating factor among both large (27%) and SME (25%)

‘LSPs are looking for right partners’ Amit Maheshwari, Softlink

CEO,

“Not Come Across a Suitable Software” say a cross section of logistics service providers in India when asked about the barriers in adopting IT. This was one of the several interesting findings of the recent survey by Softlink on IT in Logistics in India. The reason behind this is not difficult to fathom as complexities of the sector make it difficult if not impossible to create software that would cater to their entire needs. If we take this finding in conjunction with the top benefit cited by the respondents in adopting IT namely Improving Operational Efficiency, it become clear that when it comes to information technology the LSP is looking for specific gains. The survey on IT in Logistics in India has yielded valuable insights and has revealed the thought process of the logistics service providers in IT investment and adoption. This is the second such survey conducted by Softlink; the previous survey also gave important trends on the sector. One of the key finding of the survey is LSPs are open to invest more in information technology provided they find the right software. The survey report also analyzes the preferences, views and opinions of large and SME companies. The finding of the survey corroborates our own view that there was a vacuum in the logistics sector as far as a right software solution was concerned. That is the reason we started working on our project for creating a comprehensive software solution that would answer all the needs of the LSP. The very fact that our ERP for the logistics sector, Logi-Sys, is gaining increasing patronage among the logistics players is testimony to its capabilities. Today Logi-Sys is a leader in ERP solution for LSPs and is increasingly being implemented by the top logistics players of the country. It is notable that around 90% of the respondents have said they are keen to implement an ERP solution for their organization provided they find the right software. It clearly shows that the LSPs are looking to leverage IT for maximum benefit.

LOGISTICS TIMES April 2011

Contrary to popular belief ROI is not the motivating factor in implementing a software solution. The survey has proved the perceived notion of ROI being the primary motivator for IT adoption to be a myth with only 4% of the respondents citing it as a benefit. Whereas a majority 43% said that Improving Operational Efficiency was the key motivating factor. The SME were more concerned about Reduced Labour Cost than large companies. Improving Data Quality, Making Shipments more Secure and Direct Customer Request were more of a motivating factor for the SME companies than large LSPs. This clearly shows that LSPs are not much bothered about direct ROI as the other benefits cited by them would ultimately lead to ROI. The logistics sector has a severe problem with untrained manpower that is also not IT savvy. The survey has confirmed this with respondents citing Lack of Expertise in IT, Untrained Manpower and Employee’s Fear of Change as the top three barriers in adopting IT. The untrained and semi-skilled manpower are likely to resist changes as they are wary of new technology and processes. This is substantiated by the fact that 33% of the respondents cited Employee’s Fear of Change as a barrier. Softlink has taken on its part steps to alleviate the problem by conducting training sessions for its clients and collaborating with various agencies and training institute for education and creation skilled manpower. The survey also indicates that not many of the large and SME companies feel Management’s Lack of Commitment as a barrier in IT adoption. When asked what the takeaways or benefits are for the logistics players from implementing IT, the top answers from the respondents were Quick Response and Access to information, which was cited by 83% and Improved Customer Service. The other benefits sought by the LSPs were Streamlined Logistics Processes and Control over Various Logistics Process. When this is conjoined with the fact that Improving Operational Efficiency is the Key motivating factor, it is quite clear that LSPs are not ready to compromise on their IT investment and look to have a solution that will deliver.

companies. Overall the respondents are keen on improving data quality. Large companies are more concerned about improving operational efficiency. This is evidenced by the fact that 52% have cited it as the top motivating factor. Comparatively 40% of SME have cited it as the top motivating factor. SMEs are concerned about reducing labour cost with 9% citing it as a motivating factor, comparatively only 1% of respondents from large companies have cited it.

VI. Perceived Barriers Respondents were asked about the perceived barriers in adopting IT within their organization from a list of options. Around 46% of the respondents said their lack of expertise in IT is a major barrier, 44% said that untrained manpower is a barrier, 18% said insufficient financial support is a barrier in adopting IT, the employees fear of change is cited as a barrier by 33%. The other perceived barriers were rigidity of organizational culture 12%, employees lack of commitment and involvement 28%, not finding suitable software partner 23%, exhaustive paper work difficult to computerize 14%, lack of commitment for top management 9% and 18% said that they do not perceive IT as an advantage. For the large companies untrained manpower is the biggest barrier in adopting IT while for SME’s it is lack of expertise. Both the segments were unanimous in terming employee’s fear of change as a barrier. Surprisingly 37% of large companies and 18% of SME have said that they have not come across a suitable software.

Key Insights – Perceived Barriers

The top three perceived barriers for SME companies are: lack of expertise in IT (48%), untrained manpower (42%) and employee’s fear of change (31%). For large companies, the top three barriers are: untrained manpower (50%), lack of expertise in IT (39%) and employees’ fear of change (39%) respectively. Only 13% of large companies have said that Insufficient Financial Support is a barrier in Adopting IT while 20% of SMEs have said so. Only 8% of SME and 12% of large companies have cited the management’s lack of commitment as a barrier in adopting IT.

VII. Perceived Benefits Respondents were asked about the perceived benefits in adopting IT. An overwhelming 83% of the respondents said that quick response and access to information are the major benefits. 73% were of the opinion that it improved customer service, 45% cited enhanced competitiveness as the major benefit, 57% cited reduced error and data re-

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SURVEY/IT

entry while 53% maintained the it improved data control. The other perceived benefits are track and trace facility 66%, streamlined logistics process 44%, control over various logistics functions 38%, reduced paper work 58%, more informed decision making 37%, standardized programs and procedures 41% and reduced manpower 45%

Key Insights â&#x20AC;&#x201C; Perceived Benefits in Adopting IT Majority of the respondents have cited Quick Response and access to information as the foremost benefit from adotion of IT. Improved Customer Service, Reduced paper work and reduced errors and data re-entry have been cited as the other top benefits. A overwhelming 90% of large companies and 81% of SMEs have reiterated that they perceive quick Response and access to information as the major benefit. For 69% of large companies, reduced errors and data reentry is of a perceived benefit while 53% of SME companies perceive it as a benefit. 65% of large companies and 65%

65% agreed that it would definitely benefit them, 11% disagreed that an ERP system would be of benefit to their organization.

Key Insights - ERP system Majority of the respondents, 89%, have said that an ERP solution that integrates all their operations will be beneficial to them. 11% of the total respondents have disagreed that an ERP solution would be beneficial. 36% of the large companies strongly agreed to the question while it is a notch lower among the SME companies at 20% While 68% of SME companies agreed on ERP solution being beneficial only 55% of large companies agreed. The trends indicate that even SMES are looking for integrated ERP system with 88% of the respondents from these companies said it would be beneficial while among the large companies it is 91%. Only 1% of SME companies strongly disagreed that an EPR system would be beneficial while among the large companies the figure is 4%.

IX. Use of IT with Customers Email is being used by 91% of the respondents for exchanging information with customers. 54% use daily status report for keeping the clients updated while 45% make use EDI tools for exchanging information. Web based tracking is used by 37% and 2% do not make use of any tools to exchange information with clients. Comparative figures, of large and SME companiesâ&#x20AC;&#x2122;, show that large companies make use of IT communication tools more than SMEs.

Key Insights of SME companies have cited track and trace Facility as a benefit in adopting IT. Large companies (67%) perceive streamlined logistics process as a benefit while only 31% of SME companies perceive it as a benefit in adopting IT. 58% of large companies perceive control over various logistics process as benefits in adopting IT while only 37% of SMEs think so. Enhanced competitiveness is the perceived benefit of 59% of large companies while only 40% SME companies had similar opinion.

VIII. Benefit of an ERP System When asked whether an ERP solution that integrates all their operations and links it with financial controls, benefit their organization, the respondents were almost unanimous in their concurrence. 24% of respondents strongly agreed that an ERP system would benefit their organization, while LOGISTICS TIMES April 2011

91% of all the respondents said they use email for communication with customers. Daily Status Report (DSR) (54%), EDI (45%) and Web Based Tracking (37%) are increasingly being used by companies overall for communicating and exchanging information with customers. Large companies are more particular about DSR with 73% of using it while 48% of SME make use of this tool for keeping their clients updated. Electronic Data Interchange is fast catching up with 54% of large companies and 43% SME making use of EDI for exchange information and data with their customers electronically. The overall figure is 45% Web Based Tracking is more popular with large companies with 50% using it, while only and 33% of SME provide web based tracking to their customers. A marginal 3% of SMEs have said that they do not use any kind of IT tools with their customers.

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Indians avoid mall shopping Delhi-based real estate tracking agency Track2Realty has recently come out with a survey which clearly underlines that Indian consumers still do not find malls as the favourite shopping hubs for their necessities. Among other things, the poor quality of goods has also been pointed as the major deterrent. Probably a pointer that the right kind of supply chain processes are yet to evolve in the country’s retail business. Summary of the report: As many as seven out of 10 Indians with disposal income, a whopping 72 per cent, go to shopping malls at least twice a month but don’t buy the monthly food & grocery, apparels or consumer durables over there. Nearly half, 47 per cent, of those who avoid shopping at malls point poor quality of goods as number one reason, while 38 per cent blame poor customer & after sale response of the retailer in case the product is defective and 15 per cent can’t stand to the long and unnecessary queue. Among the mall shoppers, 75 per cent only buy the grocery, apparel comes next at 48 per cent and only 22 per cent of mall shoppers buy consumer durables over there. Majority of those who don’t shop in the malls have tried shopping over there at least twice and then switched back to the local kirana and other traditional brand stores. No one is ready to believe, 94 per cent say, that shopping malls in the city are destination shopping for them. Eight out of ten, 82 per cent don’t have healthy shopping experience with the malls. These are the findings of the survey conducted by Track2Realty, the real estate market tracker. The survey was conducted in ten cities among the working professionals with majority of them having double income. 55 per cent of the respondents were male and 45 were female. The survey was conducted in Delhi-NCR, Mumbai, Kolkata, Chennai, Ahmedabad, Indore, Bangalore, Jaipur, Patna and Nagpur. A sample size of 2000 was taken for the study and the respondents were carefully selected amongst SEC A & B, between 24-40 years of age group with cushioned job or business and who were otherwise spending well. Face-to-face interviews were conducted where a set of structured questionnaire was given to them. 58 per cent of the respondents were male and 42 per cent female with nearly half of them having both couple working. The process was an attempt to understand the LOGISTICS TIMES April 2011

buying behavior of the Indians, and their attitude towards shopping malls. The survey also took into account certain psychographic parameters to judge the TG. Nine out of 10, 88 per cent, Indians who go to shopping malls either just hang out with friends at café corner, food court or it is for the purpose of watching a movie. The survey

has come as a bad news for the real estate and retail in India who are expecting to scale up the business with more FDI expected in the sector. More importantly, it is an eye opener for the realtors and the retailers who seemed to have failed to understand the psychograph and buying pattern of the Indians. No wonder, while they innovate in various ways to attract the footfall, it hardly translates into business. For instance, while the malls are repleting with fancy architecture and USPs like boulevard, promenades and events, nearly seven out of 10, 68 per cent of the shoppers are more comfortable at a shopping mall where they don’t have a difficult time finding a parking space or a subway to go to the mall across the street.

More than eight out of ten, 84 per cent reject buying top end luxury items at a mall. They would rather prefer a destination shopping where they don’t have to rub shoulders with the commoners. 72 per cent of the Indians have so

‘Can’t blame on supply chain alone’ Ravi Sinha CEO, Track2Realty For how long can retail and realty shy away from accepting the ground realities? The survey clearly suggests they need to grow up and not just blame the supply chain hurdles for the poor show of organized retail in India. The truth is out and howsoever hard it may hit them, the fact remains that they need to wake up to the reality of the conscious consumers who is not getting the quality shopping experience that he is looking for in a shopping mall, forget getting his aspirations fulfilled over there. Our survey findings fall flat on the face of both the retail and realty who have thus far failed to evolve a winning business model. Their glitz and glamour could not compensate for poor show in what actually translates footfalls into business. When we conceptualized this survey, there has been one obvious question haunting all of us—isn’t going to state the obvious? Well, we all know that the shopping malls across the country are more for hangouts and while retail is cribbing over astronomically high rentals, realty is also shrugging off poor business in the name of supply chain mismanagement of retailers. But then Track2Realty team had a serious research and thought process over the issue. That is the reason why we selected the demographic profile only from among the mall visitors who visit normally twice a month, have SEC A & B profile with disposable income to spend and are otherwise spending well on shopping. The idea was

to get more out of their psychograph than just shopping habits. The fact of the matter is that the initial mall hype drove many of them to try out shopping over there. But then the shopping experience was far from satisfactory. How can supply chain hurdles be blamed for a shoppers’ poor shopping experience? Moreover, astronomically high price inside the mall was not mentioned by the respondents in any of the selected cities as the prime reason to avoid mall shopping. So, high rentals and any other external factors are not the reasons why organized retail is yet to catch fancy in this part of the world. It is the poor positioning of the mall by the developer and retailers own poor planning, mismanagement and fly-by-night greed that has to be blamed for the sorry state of Indian retail. Experience of retail success across the world suggests that retailers are provided a captive audience in the given catchment area with no duplication of business model in the same cluster. This is where the Indian realtors have failed to take a lesson. Retailers on their part spend on extra over head cost to offer quality service to the customers by cutting down on the supply chain. However, in India while the retailers want to cut cost on the supply chain, they are also not ready to spend on the overhead cost. To add to it, they compromise on the quality of the goods and thus retail experience in India is based on low-cost-model business. Something that defies the conventional wisdom of retail which is based on volume sales with competitive pricing and better shopping experience.

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poor experience with the mall shopping that they don’t think more FDI in retail will make any significant change in the way malls are functioning today. More than seven out of 10, 74 per cent Indians suggest the developer should focus more on the basic amenities like parking, dedicated children’s space and better customer care than making huge investments on glass facades, loud music and neon lights. 67 per cent of the mall traffic fails to differentiate between various malls in the same catchment area. More than six out of 10, 63 per cent say the government should define a clear policy to make mall visit a pleasure. They suggest the authorities must not allow more than 2-3 malls in the same catchment area. More than eight out of 10, 82 per cent who otherwise spend time outdoors with the family, avoid shopping malls on weekends and holidays. Nearly all the mall visitors, 92 per cent, are pretty dissatisfied with the multi level security check where there is a security check at the mall entry and repetitive checking at every retailer. Overburdened roads in front of the mall with a signboard suggesting “work in progress” is what turns 77 per cent of Indians. What is all the more surprising is the fact that mall shopping, predominantly seen as a metro phenomenon, has more takers in cities beyond the four metros and other tier-I cities like Bangalore. More people are into mall shopping in tier-II cities like Patna with 47 per cent, Nagpur with 41 per cent and Indore with 37 per cent. The question is that what are the wish list of mall visitors

to lure this otherwise spend thrift into buyers. 90 per cent say they would like to see variety of products and a variety of brands must be available in each product category that provides a large number of options for the consumers. 77 per cent want spa fitness and wellness centres, dining experience, hotels, convenience centres, office centres. The sky high expectations of majority, as many as 58 per cent are to fuse living working and leisure activities. Additionally the survey also noted that the Indians across the country see malls as a hang out zone and hence their expectations with the malls are more on those lines than retail shopping destination. More than xix out of 10, 64 percent want to have space for a marriage party or a big birthday bash inside a shopping mall. Weddings, family gettogethers, birthdays, Xmas parties, or other such social dos in malls is what they think will drive them to the mall. But one thing is for sure. The Indian consumer won’t be lured by sheer glitz. Even those wearing it look for value for money. Clearly, Indian consumers do spend, provided there is a value proposition that the mall offers.

FORM IV Satement about ownership and other particulars about magazine Logistics Times : DELHI

5. Editor's Name

: Mr Raj Misra

2. Periodicity of its publication

: MONTHLY

Nationality

: Indian

3. Printers name

: Mr Madan Pokhriyal

Address

: A-301,

Nationality

: Indian

Address

: M/s Personal Graphics &

1. Palce of Publication

Neelpadam

Kunj,

Opp Dabur, Vaishali, Ghaziabad 6. Names and addresses of individuals who own the newspaper and parteners

Advertiser Pvt. Ltd.

or shareholdres holding. More than one percent of the total capital.

Y-22, Ph-II, Okhla Industrial

(i). Ms Deepa Misra, E-77, West Vinod Nagar, Delhi-11009

Area, New Delhi-20

(ii). Mr Raj Misra, A-301, Neelpadam Kunj, Opp Dabur, Vaishali,

4. Publisher's Name

: Ms Deepa Misra

Ghaziabad

Nationality

: Indian

I Deepa Misra hereby declare that the particulars given above are true to the

Address

: M/S Aksharganga Pvt. Ltd.

best of my knowledge and belief.

E-77, West Vinod Nagar, Delhi-110092

LOGISTICS TIMES April 2011

Date: 25.02.2011

Sd Signature of Publisher

Sweet O Ramesh Kumar

Anil Baral

Circa 1960. Independent India was hardly 13 years old! Rajendra Prasad was still the occupant of Rashtrapati Bhavan. Andâ&#x20AC;Ś Pandit Jawaharlal Nehru, the ďŹ rst Prime Minister, was calling the shots as usual. Remember that year, na? If you recall it was also the year that saw the release of several Bollywood classics: Mughal-e-Azam, Barsaat ki Raat, Kohinoor, Chaudvin ka Chand & Jis Desh Me Ganga Behati Hai just to name a few. LOGISTICS TIMES April 2011

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On a serious note, it was the year when the 40-MW Cirus (Canada-India Reactor, US) heavy water reactor became “critical” (functional) at the Bhabha Atomic Research Centre which helped India produce plutonium for the ﬁrst time which was put to use at Pokhran during the much-acclaimed nuclear test 14 years later. Celebrated Indian author R K Narayan got his short story, A Horse and Two Goats, published in The Hindu the same year. Did you ask who was the captain of Indian cricket team that year? Hmm… Gulabrai Sipahimalani “Ram” Ramchand before handing over charge to Nari Contractor. Haan… 11-year old Sunil Manohar Gavaskar, India’s original Little Master, was still inside school – learning three Rs. Bajaj Auto decided to go public that year. Rohtak was still part of the then undivided Punjab. Well, the list is endless…. Jus’ a sec. It was also the year – July – the Singhal family celebrated the arrival of the ‘bundle of joy’ called Ajay. Nobody – including his parents - would have anticipated that the ward of renowned grain merchant khandaan would one day create ripples in the logistics industry and go places. But, it was destiny, perhaps. Groomed in an entrepreneurial climate such as his, it is no surprise that Ajay Singhal dreamt of ‘business’ right from childhood. While pursuing graduation in commerce in Delhi, Om Industries sprung up to tinker with baklite moulding work. Absolutely nothing to do with the Rs.800 crore plus Logistics Empire he has built up over the past 30 years. Awesome. Add to that ‘wholesome’ as well. Somewhere while growing up , Ajay lost interest in moulding and tinkering. No charm left. With a mere Rs.60,000 as his personal investment along with his uncle, they chose the business of transport. Mind you, the nomenclature ‘logistics’ was yet to arrive. By the way, Om Industries was LOGISTICS TIMES April 2011

closed down. For three years, the new venture was in red. Had Maruti Suzuki not descended on the Indian stratosphere in 1983 as a full-fledged government-owned enterprise, Ajay and his uncle would have packed up and gone. “Lucky, Maruti happened,” says the six feet and salt-andpepper haired Om Group Chairman and Managing Director. At one point, they almost gave up the transport business and began scouting for fresh avenues to branch out. Yes, you’ve got the drift. They didn’t scoot off, courtesy Maruti Suzuki Limited. What’s the late Sanjay Gandhi’s dream car project that totally changed the landscape of Indian automobile industry in the early 1980s got to do with Ajay? Om’s growth is closely interlinked to automobile growth in India. It’s a beautiful story. A long one, too. Hear him out personally later (See Down Memory Lane). However, that was only half of the story. Ajay, though shy, is an astute talent spotter and knows how to rope in good professionals and most importantly how to retain them. Hire the right people and give full operational freedom to them is his success formula. Take one look at his professional management team and you know what we mean. Akash Bansal, Head of Logistics, began his career at Om Logistics when its turnover was approximately Rs.32 crore almost a decade ago as Management Trainee. The Lucknowite with an engineering degree from MIT, Aurangabad and an MBA to the hilt runs the flagship Om Logistics like his own ‘empire’ with a dream and wellscripted roadmap to double his Rs.550 crore empire before 2014. Significantly, he chose Om Logistics over an MNC offer because he saw “a massive potential for growth” for logistics business as well as on his personal career front. He has not looked back.

Road Map 2014

CAPTAIN & HIS CREW: (Bottom to Top) Ajay Singhal, Vikram Garg, Kamal Gupta, Akash Bansal, Sanjeev Rana, Nimit Gupta, Shantanu Dutta, Puneet Gupta and Ashish Mathur

Under Akash’s stewardship, Om Logistics is on a steep growth path. Rs.1000 crore by 2014 is the target for Om Logistics alone. Omx Express with emphasis on swiftness forms part and parcel of the group ﬂagship. Shantanu Dutta, another LOGISTICS TIMES April 2011

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professional who has spent a decade in the group, runs this division with a turnover of Rs.100 crore out of the Rs.550 crore kitty of Om Logistics. Om Trans Logistics Ltd, another group company, is under the tutelage of Vikram Garg as Chief Executive Officer. Om Trax Packaging Solutions Ltd, managed by Nimit Gupta, is a joint venture with Tradia of Japan. Om Infra Constructions, floated in 2009 and managed by the Puneet Gupta, is focused on warehouse. Omx Info Management Ltd, stewarded by Sanjeev Rana, deals in providing record management services or RMS to the group companies as well as clients outside the Om fold. Om Telecom Logistics Private Ltd is a supply chain management outfit fully geared up to meet the needs of the growing telecom industry where it dominates with a lion’s share of 60%. Managed by Ashish Mathur, an import from globally renowned Federal Mogul since 2007, Om Telecom Logistics was acquired by Om group to expand business when it

was doing business under the banner of Crossroad Logistics pvt. Limited. Kamal Gupta, Head of Operations, has also come on board a decade ago. With Ajay Singhal at the helm, the eight member team ably assisted by a strong IT and finance honchos, has the entire world to capture. What’s Om Logistics’ business sector wise? Automotive logistics brings in two-thirds of Rs.550 crore booty, white goods 15 per cent, pharma 10 per cent and miscellaneous including textile constitute 15 per cent. By 2014, Bansal is confident that while the business would have bloomed into Rs.1,000 crore, the existing ratio would more or less remain the same. “Maybe white goods contribute more” due the happy Indian economic story: 8 per cent GDP growth and more business and industrial hubs coming up right across the country. At present, Om Logistics has online connected 400 offices and 50 odd franchises in India and the credit for the same goes to S.K Goel the IT head of

the group who has presented Om with a state of art IT infrastructure to set Om on the growth trajectory. Goel has continuously invested in the required IT setup to enable customers have a user friendly interface with Om’s ERP. Bansal hopes to jack up this figure to 800 offices – with less emphasis on franchises and eye on increasing networking capability. Eastern India is set to witness Om’s fresh foray. At present, the business is skewed in favour of north, west and south in that order and east, very miniscule. Om’s clientele particularly in white goods and electronic segment (Samsung, Panasonic, LG etc) wants to grow exponentially and given the strong bonding between the logistics service provider and the client, sky is the limit. Om’s multimodal approach – in a light asset mode – fits the bill perfectly. Bansal seldom misses an opportunity to remind that Om is not a transport company, but “a fullfledged, end-to-end logistics and supply chain solution provider”. Point noted. You name it and Om is into it. Huge fleet (owned and outsourced); warehouses (owned and long-term-leased); packaging; freight forwarding by rail, road, air, sea. This makes Om as a single window “ALL ROUNDER” in its trade.

Global ambitions Young Garg and young Dalmia, fresh blood of Om Trans, has opened up two ofﬁces a few weeks ago: Toronto in North America and Shanghai in mainland China. While the group has decided to go on its own in North America under Omtrans Logistics Inc., it wisely chose to get into a tripartite equity deal with Tradia – the group’s joint venture partner through Om Trax – and a local Chinese government company. Garg explains this arrangement was necessitated because both Tradia and Om Trans imports a variety of items from China and therefore a strong need for a local set up. “Our volumes are growing exponentially and the previous local arrangement was not satisfactory,” elaborates. Om Trans, ﬂoated in 2000, has notched Rs.140 crore – posting a mind-numbing 70 per cent annual growth. Nonetheless, the LOGISTICS TIMES April 2011

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initial years were challenging. They were new to global business and it took time for them to assimilate the global trade practices. Om Trans began export of auto components to Europe and US and gradually won over global giants such Suzuki and Marubeni over a period of time to provide “door-to-door service”, unheard of, claims Garg. Materials shipped from the factory ﬂoors overseas, packed, carted to dockyard, shipped out to Indian destinations; then, customs clearance, transportation to destination, unpacking of machinery and equipment at the Indian assembly site. While Bansal dreams about Rs.1, 000 crore by 2014, Garg’s is no babe. His target: Rs.500 crore by the same deadline. Wow. “Everything is possible, because many global giants whom we do business with are converting India as a global hub. We know each other and comfortable. What more can one ask for?” asks Garg rhetorically. He is proud that Om Trans is a 4PL: absolutely no big ticket investment on its own. Parent company – read Om group – is there ready to parcel out whatever Garg and his lieutenants ask for. Why China and Canada? “We are trying to build a triangular set up linking China with India and Canada,” adds he. For next three years, he is focused on consolidating this triangular global footprint. Till then, no other shore is in sight for me.

Operational Challenges Kamal Gupta, Head Operations, who joined closely on the heels of Akash Bansal, does not mince words: “Customers’ demands are increasing day by day. Those who can meet this consistently in a cost effective way will survive.” Plan anyone can. What matters is implementation, asserts the Delhi born professional manager at Om Logistics. Increasing networks coupled with hiking warehousing capability on a pan-India scale and ensuring “customer delight” is a herculean task. Om has been at the pole peak forever, thanks to its service matrices, if Gupta is to be believed. Fleet management (approx. 3000 vehicles both owned and leased) is another challenge. Om, he concedes, is readying for LOGISTICS TIMES April 2011

higher capacity truck acquisition (both rigid and horse-and-trailer varieties) to meet growing need. Surprisingly, truck manufacturers are equally ready with higher capacity items. Fearing the likelihood of skilled labour shortage, Gupta is emphasizing on automation in the form of material handling equipment. Besides shortage, what worries anyone in this industry is the fact that labour is becoming “expensive”. The combo of higher capacity trucks in horse-andtrailer format and automation, Gupta is hopeful, would lead to faster “turnaround time” leading to asset optimization and thereby better returns for the company’s bottom-line. D.K.Yadav, Head operations (internal) who is with Om since last 25 years, based in Pune controls all India operations internally to ensure that the commitments laid by the team are met

with utmost satisfaction. His immense experience and knowledge about operations puts Om on a seat where customers feel delighted and assured about. While Om is booking more parcel vans and SLRs to gain greater rail movement accessibility, domestic air cargo has not been left out. As of today, Om handles 2,500 metric tons every month and expects to clock in an additional 1,500 metric tons by 2014. Om, despite being the pioneer in domestic air cargo, is still shying away from owning and operating its own air cargo ﬂeet. Chairman Singhal categorically maintains that money is not an issue but the operation is still not economically viable. Bansal and Gupta do not brush aside the possibility of Om getting into air cargo with its own ﬂeet. “For that to happen, courier business

is a necessity given its volume matters,” explains Bansal. Om is seriously looking into starting its Pan india courier business to support its ambitious plan of cargo aviation.

Express Lane Like Akash Bansal and Kamal Gupta, Shantanu Dutta, Country Manager, OMX Express, is also a decade old Omite. With a degree in economics from Bareilly College in Uttar Pradesh, the Agra-born boarded on the logistics bandwagon with MFT Roadlines of Punjab. In a way, he was exposed to logistics even in his childhood since his father was associated with Indian Air Force logistics division and used to get baffled over the “immaculate record maintenance” in that computerless era! For a while he flirted with advertising, before returning to courier business as Regional manager at DTDC. Lured by an advertisement for National Franchise Head position, the cleanshaven Dutta joined Om, safely passing from express courier to express cargo. “Om Air Cargo had an excellent reputation. If others take a day to move 1,000 kg cargo, Om would accomplish that task in less than two hours,” says a proud Dutta. Since 2004, he is promoting OMX Express as a brand, catering to a wide variety of clients with pan Indian presence. Small and Medium Enterprise (SME) segment is his focus area. Today, he is well entrenched in this segment with timely delivery and quality service. His nononsensical approach becomes evident when he claims that his team studies rival’s weaknesses closely and eliminate the same from OMX operations. Brilliant, one can say. At the same time, very few rivals have gone to emulate Dutta and team’s best practices. He is clueless as to why they don’t. Having identified his core client group, Omx is confident of adding more to its client list. Even in SMEs, size matters, avers he. As part of Om Logistics grouping, Dutta shares Bansal’s Rs.1,000 crore by 2014 corporate goal. “Doable,” is his crisp response.

Packaging Foray When Nimit Gupta, a young veteran, came out of college with a post graduate degree in electronics with special interest in VLSI design in 2007, He joined to learn the ropes of logistics trade. The new focus area for Om group was in packaging solution. Om group linked up with Tradia Corp of Japan as joint venture partner to specialize in all kinds of packaging solutions for individual and corporate clients. Movement of goods needs packaging is no secret. With Japanese technological expertise and corporate participation helped Om Trax to crack virgin areas. “Business is good,” concedes the bespectacled Gupta of Om Trax. The Japanese partner came into the Om fold via Vikram Garg of Om Trans, who mans the group’s global business. He closed the maiden year with Rs.10 lakh worth business and today, he is billing approximately Rs.6 crore. Given the group’s pan India footprint, expansion is deﬁnitely on his radar: slow, but steadily. Japanese association is a big door opener, he admits. Pricing is a prickly issue, but Om Trax chieftain is conﬁdent of outrivaling competition.

Warehouse Focus A new era is in the ofﬁng, thanks to the proposed GST regime that will make stocking options for companies an easy affair. Sensing a windfall, there is a mad

rush to build warehouses across India. Significantly, manufacturers would like to ride on the shoulders of leased options instead of building their own. Om’s head honcho and a name to reckon in the logistics industry is not one to leave any opportunity that knocks on his doors. Walks in Puneet Gupta, Director of Om Infrastructure Ltd. As on date, Om group has more than 300 warehouses – owned and long term leased – admeasuring one crore square feet. “Rising land prices is convinced us to look at vertical growth,” explains puneet. Om Infra, needless to say, is riding on the flagship’s reputation in the logistics sphere. . Multiplying warehouses in new locations tops the agenda and as a result, Puneet exudes confidence that he would reduce the dependence on leased option and in the process create tangible assets for the group. Paralally he is confident of creating support to infrastructure requirements to customers other that the group as well.

Telecom, new growth driver While Om group built its core strength on the automobile front over 30 years, Singhal was not unaware of huge growth opportunities in telecom arena. Instead of building a new ediﬁce from scratch, he opted for inorganic growth. In 2007, he quietly bought over Crossroad Logistics Ltd for approx. Rs.40 crore lock, stock LOGISTICS TIMES April 2011

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Zamaana kitna badal gaya Ajay Singhal, Chairman & Managing Director, Om Group of Companies

My roots are from Rohtak and we were grain merchants for generations. My own journey began in 1978. After my pre-Engineering course, I enrolled for a degree in commerce. While at it, I got into the business of baklite moulding under the banner of Om Industries after being prompted by one of my uncle through his belief that I would be able to establish a business till time I am through with my graduation. Not foreseeing much scope in baklite moulding, I sold the same for a paltry Rs 60,000 in early 1981 and invested the capital in transport business along with my uncle who had some rich experience working for a transport organsaition and formed a company by the name of South Roadlines. We did not make any headway for three years and even lost the capital investment we made for the formation of our company and were in a bit of confusion as to what should we do to create value for our company. The arrival of Maruti Suzuki changed our fortune. Lucky, Maruti happened. There was abundance of business LOGISTICS TIMES April 2011

for trucking from Kandla to Gurgaon to move CKD’s but the resources i.e trucks were limited and hence we innovated the loading pattern within the available resources and proved ourself to be cost effective which really pushed us on to the driver seat for our customer. A year of brainstorming over car carrier innovation in 1983 led to prosperity. Until then, new cars in India used to be driven on road to dealers. The concept of sending cars in a carrier was never thought of. The prototype undergone almost 50 odd changes before getting final seal of approval. But there was a mismatch of demand and supply as the production of cars was always more that the trucks availability in the market. On 1st Oct 1990 when we separated, I floated Om Auto Carriers to handle Maruti’s car carrier business. I chose ‘Om’ because I used to own and run a factory in Delhi under the name of Om Industries. Through this dedicated carriers we were successful in acquiring return loads i.e Bajaj scooters from Pune, which catalyzed our viability of during business and

also provided us with a firm stand in this business model. Futher as per suggestion of our close friends, Om Auto carriers was focusing purely on auto sector and hence looking into the penetration of logistics as the happening term we renamed our company and Om logistics in year 1992.Though we were happy with the new nomenclature, a new challenge cropped up. No one understood “logistics” part. ‘Yeh kya cheese hai?’ they began to demand. The queries turned into a deluge. Parishan hogayi hum. Yeh kya nayi musibat kadi ho gayi? We spent a lot of time explaining what we meant by logistics. Over the next two years, it became such a common word and we were relieved. When I look back, I feel proud for using “Logistics” for the first time in India. Over a period of time, automotive manufacturers were looking forward for a logistics model for sourcing of their raw materials from all parts of India. That’s how we got into inbound logistics. Then, in the course of handling business, automotive manufacturers again made Om Logistics to foray into air cargo to fetch its urgent requirements from wherever it wanted from. We again extended our boundaries to innovate and were successful in eliminating the concept of cooling time hence providing a commitment towards urgencies. Indian Airlines, ModiLuft and Sahara with whom we were working on this issue got this

condition rescinded citing that there was no need for such a long wait once the items were x-ray scanned before release. Over a period of time, OEM’s domestic components sourcing began to climb up, thereby reducing the import. That’s when the request for warehousing these components cropped up. Here was another logistics requirements from OEM’s “to provide JIT deliveries” i.e warehousing of the material close to the plant and delivery as per requirements “JUST IN TIME”. Interestingly, the dilemma was as to who would bear the cost of warehousing as neither the OEM nor the supplier was ready to bear the same. Gradually, we all understood the merits of OEM’s argument and amicably thrashed out issues. This actually led to Om Logistics venturing into warehousing in a grand manner. Not only warehouses, but management as well. This came over to us as a blessing and disguise, as we invested in our warehouses in 1996 which as on today are hardcore assets to us. Looking back, I still remember starting 1983. We almost decided to wind up our business because it did not make business sense to remain in transport segment. I personally began looking at new business opportunities. Luckily, we were patient and believed in ourself. Then there was no turning back. We set up separate companies such as Omx

Info Management, Om Trans, Om Trax, Om Telecom Logistics for different industry verticals. Another reason is to accommodate partners if we feel a necessity. For instance, we have a Japanese partner in Om Trax. I don’t hunt for talent. Nor do I pick and choose. Whoever joins us, they are made to feel that the organization holds them in high esteem. Complete operational freedom to heads of various divisions. I don’t breathe down their shoulders. We strictly follow ethical practices which again makes professionals happy. We are an extended family. No one is treated as an employee. This kind of working condition keeps attrition levels very low. Those who come on board, mostly stick with us. At the same time, whenever anyone wants to leave for greener pastures, we never stop them. We wish them luck and permit them to migrate. All reports point to the doubling of logistical spend over next three years. We expect to ride on the same sentiment. We also want to double ours by 2014. We are also ready for acquisitions. Like we did with the 100% acquisition of Crossroad logistics. Any further acquisitions may require capital and then we can plan for an IPO. Like I said, generating capital is not issue for our organisation. We are waiting for commercial viable projects. Our businesses

have to make reasonable profit. Otherwise, we won’t get into it. Our objective is not to become the Biggest-But to be the Best. That is why we abhor becoming a monopoly player in any segment. Competition is good for all. Competition enables us to ask for better pricing for our services. Monopolistic situation may help service provider to dictate pricing, but it does not last long. Monopoly is a short term profit proposition. Logistics is a complex business in India due to complex geographical and infrastructure issues, hence needs vast networking and co-ordination with cost control to execute required service with satisfaction. This is the basis reason for tough completion what Indian companies can present to MNC’s operating in India. Yes, we had been approached by many MNCs for acquisition/joint venture but we have decided to stay in business and create value for our organisation. We expect to be a Rs.10,000 crore company over the next decade. Way back in 1980s, friends used to tease me for having sold my factory and got into transportation or logistics business. Pagal ho gaya hai kya? They used to poke. Today, the same set of friends seeks my advice to enter this business. Zamaana kitna badal gaya! After Rs.10,000 crore target, what next? After that, a bit of rest. Then set a new target again. LOGISTICS TIMES April 2011

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and barrel and rechristened it as Om Telecom Logistics Private Limited. Yes, its specialization is in the area of telecom logistics. In yet another move reﬂecting his penchant for professionalism, he brought in Ashish Mathur, an ex-Federal Mogul supply chain management veteran, to manage the new telecom baby. You name the telecom operator in India; they are one of the most valued clients of Mathur. Hence, it is no surprise that his company enjoys 60 per cent market share. Though the ongoing 2G scam has slowed down growth, Mathur rightly feels it is just a passing phase and growth would return with new services and new players which would need Om Telecom Logistics’ capabilities. When it happens, its turnover would jump from the present Rs.100 crore. “In less than three years, we more than doubled our business,” boasts the chartered accountant-turned-supply chain specialist. Unlike Om group’s warehousing set up where the stored items are in transit mode, Om Telecom Logistics operations are long term in nature. “We hold and secure telecom operators’ requirements forever,” explains

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he. Each one of Ashish’s warehouses houses nothing less than Rs.30 crore worth of inventories at given point of time. Is he eager to expand his market share? “Nope,” says he. In a monopolistic framework, he would not be able to demand the “right price” before the customer has no yardstick to measure his competency vis-à-vis others. Also, he wants to retain the right to exit if situation warrants. What next? Consolidation, pat comes the reply because, “there was a tremendous growth over the past three years and we never found time to review our cost and operational efﬁciency and now is the time.” Having said that, Mathur is not sitting idle. He is in talks with his global clients for whom he would like extend all logistics support in the form managing their supply chain at home and abroad. Put it differently, Ashish is trying to sell Om group’s other strengths. “End to end telecom solution is what we are looking at,” adds he. Lalit Kumar, handling external communication, categorically maintains that the brand equity of Om group is unsurpassable. "Our work speaks

for itself".

RMS: What’s That? One of the surprising elements of Om group is the presence of Omx Info Management Limited. What has record management service, spearheaded by Sanjeev Rana, got to do with the group strategy? “During one of the group meetings, someone suggested that this is an area we need to be in,” explains Om group chairman Singhal candidly. So, it is there. “It is a hot area,” claims Rana, who had cut his teeth at Allied Lemuir of USA and Hecny group of Hongkong. Joining the Om group in 2006, he has built up Omx Info Management into a force to reckon with. Beginning with four people and a few lakhs in 2006, today he runs a 36-member team and Rs.1.5 crore turnover. Come 2014, he would be posting nothing less than Rs.five crore. This target is achievable since he is yet to go pan-India and there is Om brand equity to leverage. Wow! What an empire Singhal has erected over three decades. Chief Financial Officer Mukul Gupta points out that impressed with Om’s growth, Bank of America Meryll Lynch has invested US$20 million three years ago. The original intention was to exit as and when Om goes public. But market conditions in the aftermath of global financial tsunami derailed Om’s plans. “Our IPO was planned to get into ICD and CFS which needed huge tranches of money. But the economic viability is still an issue. We returned around one third of Meryll Lynch’s investment recently. Entry into courier business is certainly an area we looked at. Again, the return on investment is not attractive,” says he. Om group has everything: brand equity, reputation, professional team at the top and a dedicated and loyal workforce. Above all, a visionary and a down-to-earth chieftain at the helm. A new thrust on global presence. What more can the man from Rohtak who began the journey with just Rs.60, 000 in pocket 30 years ago and built a Rs.800 crore empire today ask for? A grand salute, unquestioningly.

LOGISTICS TIMES April 2011

INTERVIEW

“Process improvement LOGISTICS TIMES April 2011

“

is equally important

For the cargo unit of global aviation major Lufthansa, India has traditionally been a stronghold market in Asia for quite sometime. And according to Carsten Hernig, Regional Director (South Asia & Middle East), Lufthansa Cargo, the company is committed to further strengthen its position in the Indian market by making most of the opportunities which its vast network of freighters and passenger planes offer on a cumulative basis. In a candid chat with Ritwik Sinha, Hernig explains the big picture even as he strongly emphasizes that processes in air cargo business in the country leave a lot to be desired. Excerpts:

Let me begin with a very simple question. How would you explain Lufthansa Cargoâ&#x20AC;&#x2122;s operational profile in the country? I think the most remarkable point of our profile in the country is the fact that with our own freighter fleet, we are covering all metros in the country. In addition to that, of course, we are benefitting from the dense and high frequency network of our passenger airline where we are using the belly space. This gives us connectivity with the maximum number of destinations in India with all important locations in our gateway network namely, Frankfurt, Munich, Leipzig and Vienna. Basically in terms of connecting Indian trade to the world, we have accessibility to four main hubs, out of which we can reach over 200 destinations in the world. This is a service

pattern which probably makes Lufthansa cargo the leading carrier out of India. Can I get a sense of your tonnage capacity on a cumulative basis in the Indian market â&#x20AC;&#x201C; freighters as well as wide-bodied passenger aircrafts which you fly in the country? These figures go up and down with every schedule but for the forthcoming summer schedule, the capacity would be in the range of 1600 metric tonnes per week. As far as the frequency of freighters is concerned, it depends on the station. But in general, the ground rule is that we have a minimum two flights a week with freighters from every station. If we talk about some of the major global airlines especially from the

west, then a clear pattern is that they have normally avoided bringing in freighters in India and they prefer to carry the cargo load via their bellyspace. Now you are the biggest European player in the Indian market flying wide â&#x20AC;&#x201C;body aircrafts which means more capacity. Then why you have taken a contrarian approach by having a robust dedicated freighter services here as well? Here I must mention that during the aviation crisis in 2008, many European carriers who had selectively put on freighter service in India had by and large withdrawn. There are two answers. Firstly, if you look back into history, then we have been one of the strong freighter carriers in this country. So we have lived with the LOGISTICS TIMES April 2011

reputation of being a well established part of the trade in India. This has given has certain market position and here I am not just talking about the market share but more of market acknowledgement. This position certainly helped us during the recession period. The second is: India is the key market for us. Unlike other carriers, we are not looking at India as the landing point on the way to China. India plays a strategic role in the sense that we are having our own development plan for the Indian market itself. So to businesses here in India, we are providing regular service and this is our key USP. You started your stint here in India in 2008. How was the business mood then? The recessionary pressures had just started and it was certainly a bad phase to start your inning. Letâ&#x20AC;&#x2122;s put it that way. It was certainly not the peak time for the market. But even during that difficult phase, we opened a station in Hyderabad. We took a big risk but we saw that Indian trade is developing a certain demand out of Hyderabad. And it has turned out to be a good business move. In last three-four years, probably the single most remarkable development for Lufthansa has been the assimilation of Swiss and Austrian Airlines. Of these two, especially Swiss also has a dedicated and formidable cargo unit globally. Tell me with these new additions, what kind of integrated

offerings you can make to Indian customers now? Let me start with Swiss first. Swiss as you rightly said was a very successful cargo player in the past. To a certain extent, they have specialized on certain products like valuables and they have a very defined niche market supported by a very dedicated network focus. This has given them the USPs which customers acknowledge and appreciate. So why should you change a winning team? Lufthansa cargo is slightly different in its model. We are mainly a freight operator. So we are going for a bigger lot than what a belly carrier would do. So there is not much of overlapping. Last but not the least when it comes to Austrian Airlines, this is the latest addition to the Lufthansa network. And this is the capacity we are mainly using for our own cargo by loading on their belly. But Swiss is the dedicated unit in the market. They do their own branding and they are very successful with it. Some of the recent reports suggest that you are probably looking at Hyderabad as your next hub in this part of the world. You are part of an MoU there. Is it precisely the case? It depends on how you define a hub. If you define a hub for the network, then it means a lot of flights in and out with a lot of cross loadings. This is actually not we are looking at. We are looking at developing Hyderabad as a kind of hub for specific pharma businesses because production sites are nearby. Hyderabad

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India in terms of importance is getting to the level of Korea. But it would certainly go beyond that though at the moment, it is far away from China. India will catch up and in the long run, we see Japan, China and India as the big three Asian markets for us.

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INTERVIEW

LOGISTICS TIMES April 2011

airport is providing excellent facility for cool chain products. And from there, we are lifting these products, taking to our own temperature control hubs and then to the actual destinations. The second thing is that we are positioning from our end the equipments in Hyderabad. So that availability of specialized loading materials is available at any given point in time and the entire movement process is expedited. It could give customers an additional two-three days of time advantage which is extremely important if you have a product with a very short lifetime cycle. I would like to get an immediate historical sense of how your unit has grown in this country in last five years? If you take a little bit longer say ten years, India used to be very much of textile and handicraft markets in terms of outbound movement. But the industrial paradigm in the country has changed dramatically over last six-seven years. All of a sudden you have mobile phone manufacturers, pharmaceutical industry which is not only catering to the developing nations in the world but also to the first world countries. Auto-component industry is again growing big. And alongwith industrial development, you also have a shift in the production places. Traditionally, Chennai, Delhi and Mumbai were strong. But now Hyderabad is also gaining prominence because of pharmaceutical production. For autocomponent, the new center is Pune apart from traditional stronghold Chennai. New places are growing in importance and you have to adapt accordingly. Maybe the six metros where we are operating are not the last metros. There could be more addition to it. This is something you have to carefully track. And this has been the history of Lufthansa Cargo in the country. We traditionally operated in Delhi and Mumbai and then Chennai and Bangalore came. Kolkata faced a downturn but from this summer schedule, we are adding two freighters frequency to Kolkata. Are you particularly linking India

LOGISTICS TIMES April 2011

with Europe and other pockets in west? Or are you also looking at providing linkages in other zones? Our call line from India is mainly West bound. That means Europe and the US. We are not an Asian carrier. We have no network from here to China or Hong Kong. Europe and the US and also to a certain extent markets in South America, these are the zones where we cater. You also have a tie up with DHL and there is a joint venture entity called Aerologic. Is it also operating in India? Aerologic is operating in Delhi in India. This is the only place which they are serving right now. Aerologic is the pure operator. They have no commercial functions and they are purely aircraft operator which is used by Lufthansa cargo and which is also used on behalf of DHL, mainly for their express business. As you are asserting, you have a formidable positioning in the Indian market. Now this is a market which is projected to grow in the trajectory of anything above 8.5 percent in the next few years. So what is that big picture you have in mind to make the most of your positioning? We are certainly heading for a scenario wherein volumes will keep on mounting. But you have to keep in mind that absolute volumes are still relatively small compared to other traditional air cargo markets. So there would always be the need to strike fine balance between capacity and actual volume growth. Not percentage wise but in absolute figures. So this is serious consideration when you take a network decision. If you ask me about my picture on India, on exports front I see a further shift towards technical and complex products. On the import side, huge population would buy more things especially of machinery. Power of consumption would grow and that will drive import growth. You have been in India for three years now. Is there anything which LOGISTICS TIMES April 2011

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The real issue is that of filling the gaps in establishing the right processes. Every infrastructure in the world will come to its limitation if underlying processes of using the infrastructure is not right.

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INTERVIEW

has surprised you? Particularly, the jump in volumes which I believe revived from the second half of 2009? I would not say it has surprised me. If you are working in airline industry then you are used to such kind of developments. There are cycles of strong ups and downs. But being here living in India for three years, every day I am really surprised to see the opportunities in the market. You come up with a business idea and in majority of cases you are successful if you are not a bad entrepreneur. This makes the country for me very fascinating. The second thing which I really like about the country and which is so important for development: within the three years that I have been here, a lot of infrastructure has developed - greenfield airports, highways, metro line, airport terminals came, etc. If you ask me, India has no infrastructure problem. I think, the real issue is that of filling the gaps in establishing the right processes and make the most of the opportunities created by infrastructure turnaround. Every infrastructure in the world will come to its limitation if underlying processes of using the infrastructure is not right. I will give you an example here. If you look at the size of the building, terminal in Hong Kong might not be bigger than terminals at some of the airports in India. But those terminals are more efficient because they follow right processes and, therefore, there arenâ&#x20AC;&#x2122;t issues like delay and clearance constraints. Industry and authorities need to come

together to set it right here. Asia Pacific has also gradually evolved as a zone where Lufthansa has developed considerable strength. I would like to understand from you that within Asia-Pacific, how do you evaluate the strategic importance of Indian market? Let me resort to historical perspective again. Traditionally in Asia, the strong trade countries for us were Japan and Korea. Then China evolved and now it has become the biggest market. And then came India a few years back and has grown in strength for us. Now I think India in terms of importance is getting to the level of Korea. But it would certainly go beyond that though at the moment, it is far away from China. India will catch up and so its importance would grow. In the long run, we see Japan, China and India as the big three Asian markets for us. Finally, what is the kind of growth trajectory (in percentage terms) you have registered in the Indian market in the recent years and what are the expectations in the near to medium run? 2010 was an extraordinary year for airfreight in all over Asia. 2011 would be more of a normal year. Growth rates we are witnessing are in double-digits in tonnage but this would be less than 2010. As far as India is concerned, I believe we would be growing by anything between eight to double digit figure percentage in next few years.

LOGISTICS TIMES April 2011

PERSPECTIVE

Oil & Gas

Key Issues Very few industries require an immense array of supplies to be moved daily and frequently in large quantities domestically, globally, onshore and offshore. Managing this part of the supply-chain can be both an operational and logistics nightmare for most oil and gas companies, observes Amit Kumar, Principal & Lead - Chemical & Natual Resources Industry Group, Accenture Management Consulting. LOGISTICS TIMES April 2011

The petroleum supply chain can be divided into three different, yet closely linked, major segments. The upstream supply chain involves the exploration, forecasting and production of crude oil. The midstream industry processes, stores, markets and transports commodities such as crude oil, natural gas, natural gas liquids from remotely located oil wells to refineries. The downstream supply chain involves the process of forecasting, production, and the logistics management of delivering the petroleum products to customers around the globe. Fast depletion of the existing oil and gas assets, is forcing many companies to find oil and gas in new frontiers. These new frontiers are often found in more challenging environments, thereby forcing firms to drill deeper and further offshore. These recent developments have increased not only the technical and operational difficulties, but also the costs and risks associated with the development of new assets.

Supply Challenges In this industry, the types of shipments made vary widely from gloves to pipes, valves, cranes, chemicals, cement, steel, and drilling rigs, just to mention a few. In addition, very few industries require this immense array of supplies to be moved daily and frequently in large quantities domestically, globally, onshore and offshore. Managing this part of the supply-chain can be both an operational and logistics nightmare for most oil and gas companies. Delays in the arrival of pipes, casing, tubing, and other accessories, can result in extensive rig downtime and consequently high operating costs.

Distribution Challenges The oil and petrochemical industries are global in nature and their products are transferred between locations that are—in many cases—continents apart. The great distances between supply chain partners present a high variability of transportation times that can hurt suppliers in terms of service levels and final customers in terms of safety stock costs. In many instances, a shipment

Overall performance can be improved through effective matching of what is produced, when it is produced and the quantities to be produced to the specific customer requirement. has to exploit multiple transportation modes before reaching the final customer’s location. Considering such inflexible constraints involved, meeting the broadening prospect of oil demand and its derivates while maintaining high service-levels and efficiency is a major challenge in the petroleum industry.

Safety Challenges Petroleum companies ship a great deal of hazardous products, and supply chain partners must be aware of the locations of each shipment at any point in time. Just few years back, 12 people died when a ship collided with an oil platform in the Bombay High oil field area, sparking a fire that gutted a rig that produced one sixth of India’s oil. Just in 2010, the deepwater horizon oil spill by BP is the largest accidental marine oil spill in the history of the petroleum industry. Incidents like these illustrate the potential safety and security threats to the world’s oil and gas supply chain, as well as the potential consequences. Those consequences range from loss of life, environmental catastrophe to lost production and equipment damage.

Lack of Collaboration Another challenge in the petroleum industry supply chain is the attitude and anxiety regarding collaboration and information sharing between supply chain partners. While collaboration and information sharing represent a crucial factor for supply chain efficiency, companies in the petroleum industry are sometimes cautious when it comes to sharing their demand/costs information. This type of parsimony regarding collaboration and sharing demand/costs information can waste opportunities for costs saving.

Impact of geopolitics Oil prices are not really rooted in economics, in a narrow sense of supply and demand, but to a larger extent in global politics. Political developments which had major impact on the price over the recent years include, the 2003 war in Iraq, which was followed by instability, increasing terrorism and attacks on oil infrastructure. Other issues included the tensions in Nigeria, at present the largest oil producer in Africa, as well as, tensions between the USA and Venezuela, which provides about 15 % of US oil imports and was threatening to cut them off.

Key Success Strategies Some of the key strategies being adopted by successful oil and gas supply-chains globally are: Segment Customers Based Upon Service Needs: Different customers have different and sometimes unique requirements and meeting these requirements may necessitate segmented approaches to supply-chain configuration and coordination. Overall performance can be improved through effective matching of what is produced, when it is produced and the quantities to be produced to the specific customer requirement. To do this will require a certain level of marketing research, operational flexibility and sophisticated cost accounting. Customize Your Logistics Network: Logistics is a major part of a supply-chain. In addition to producing or providing the good or service a customer wants, it is very important to deliver the productservice bundle in the quantities and particularly, timing requirements set by the customer. Improvement of the supply-chain implies customization of the logistics network. For example, the entire logistics network in an oil and gas company can be strengthened LOGISTICS TIMES April 2011

PERSPECTIVE

when geologists, geophysicists, drillers, production engineers, reservoir managers, facilities engineers, economic evaluators, financial analysts, marketing experts, and government representatives come together to evaluate the technical and economic feasibility of an oil field development opportunity. By including the economic and financial aspects, many potential challenges can be discovered very early in the process. Watch for Market Signals and Plan Accordingly:

Demand variability amplification in a supply-chain is a big problem. Demand variability also increases as demand travels upstream in a supply-chain. This amplification of demand fluctuations from downstream to upstream in a supply-chain is the bullwhip effect. Dynamics and instability in schedules are constantly amplified from downstream to upstream in a supply-chain and should be controlled or dampened. Without this controlling or dampening measure, instability will result to larger costs. Form Partnerships To Enhance Supply-Chains:

The oil and gas industry is involved in a global supply-chain that involves domestic and international transportation, valuechain strategic warehouse management, order and inventory visibility and control, materials handling, import/export facilitation, and information technology.

LOGISTICS TIMES April 2011

It is thus important to build partnerships with the different players in the supply chain. Apply Strategic Sourcing: Strategic sourcing implies that suppliers who have consistently demonstrated superior performance deserve a favorable status, including customer loyalty and preferential treatment. Therefore, one method for improving a supply-chain is to select an excellent corps of suppliers. In particular, supplying an offshore platform is close to supplying a small city. In supply-chain management, these vendors and suppliers can be coordinated into one procurement hub, which in effect becomes a consolidation and expediting location, eliminating a lot of waste and costs. Adapt an Integrated Supply-Chain Technology Strategy: As it is becoming more difficult and

more challenging to find easily accessible new oil and gas discoveries while the existing fields are being depleted, oil and gas companies are being forced to take a more integrated approach to exploration, production, refining and marketing operations. Thus, one way of crossing this divide today is by adopting better and improved secondary and tertiary recovery technologies across the entire supply-chain. The oil and gas industry requires a fundamental work-process

change in order to accommodate the growing virtualization of a multinational business. Develop Channel Spanning Performance Measures: Oil and gas companies tend

to hire individual decision makers, but a measurement of supply-chain-wide performance will provide incentives for supply-chain improvement. If localized decision making is perpetuated across the chain, then, inefficiencies associated with it will not be eliminated. Adapt

Create

Operational

Innovation:

Traditionally, many oil and gas companies grow through the process of diversification of businesses, mergers, and acquisitions. In addition to these methods, an oil and gas company can grow and achieve superior profitability through operational innovation. Operational innovation includes coming up with entirely brand new ways of developing new products, providing customer service, filling orders, or performing any tasks along the supplychain that adds value to the enterprise. Supply Chain Risk Assessment: Conduct formal risk assessment of the entire supply chain on a periodic basis covering regulatory, financial, security, strategic, political, supply categories. A clear categorization of key risks, will improve proactive action by supply chain partners to mitigate or reduce the risk exposure.

LOGISTICS TIMES April 2011

EVENT REPORT

ICC SUMMIT:

Identifying the key challenges T

he inaugural edition of Indian Supply Chain and Logistics Summit, 2011 organised by Indian Chamber of Commerce (ICC) in Delhi last month saw two days of intense and meaningful discussion on the critical issues which are holding back the logistics industry to attain its potential. And the issue of peaking or

supply chain businesses in the inaugural session of the summit. Both in terms of their linkage with the national economy as well as the deterrents which are not allowing the evolution of a robust equilibrium between GDP growth and low but efficient logistics spent. Firstly, he touched upon the brighter side of the portrait. “We are all aware of the Indian

for the coming years is positive and we expect supply chain segment to keep on growing at a healthy rate of over 10 percent. The good news is: traditionally, SCM has been looked upon as cost center but that is gradually changing now. The improvement in various segments of infrastructure is also providing a big support,” Singh underlined. But he was

growth story. The GDP growth rate has been broadly in the range of nine percent (barring 2008-09) and this has also helped the supply chain industry to grow by 12 to 15 percent. The outlook

quick to point out at the shortcomings which have a larger, sweeping influence on the state of logistics and SCM in the country. “ The logistics spend is very high and there are a host of reasons for it- inefficiency in the overall system, multiple tax structure, the sector is by and large unorganized, there are still serious infrastructure bottlenecks, the turnaround time is very low, documentation process is very slow and LSPs have not been able to improve their capacity to be part of the India growth story,” he emphasized. R K Saboo, the chairman of Express Industry Council of India (EICI) lamented the fact that despite India emerging as a global hub of production, the scales

“10-13 percent of our GDP is wasted every year because our infrastructure is bad and, therefore, SCM and logistics are bad.” maturing was not merely analysed in the quantitative sense but rather from qualitative perspective. Identification of procedural hurdles, the inability of LSPs to change fast, the lack of infrastructure, the changing consumer aspiration meaning more pressure to adopt best of supply chain practices – on a macro basis, these issues dominated the proceedings for two days with leading industry representatives and experts asserting that the national economy can no longer afford to have a poor logistics and supply chain regime. Dr. Rajeev Singh, Director General of Indian Chamber of Commerce set the tone of the summit by presenting a comprehensive picture of logistics and LOGISTICS TIMES April 2011

Logistics Times

was media partner of this event

have not been enhanced in the logistics operations to a considerable extent. And he cited a series of reasons for it. “Under investment and thin margins – this is the basic trend of logistics in the country today. And this clearly emanates from the fact that the customers focus more on cost at the expense of quality. So we have a situation where there are suboptimal investment in building scales, only a handful of integrated logistics players exist, there are huge infrastructure gaps and inefficient hub and spoke model because of taxation hurdles,” he emphatically maintained. Harry Lagad, Executive Director, Gati made an interesting presentation encapsulating the evolution of modern SCM in past three decades. His arguments, however, also subtly dealt with the hurdles in the Indian market.

rising literacy and exploding middle class, etc, would create serious challenges for the logistics and SCM businesses. We are moving towards a scenario where lead times would be in hours and days and cycle times would be in minutes. Moving from jugad to good solutions would be inevitable and complexities have to be taken away at all cost,” he asserted. Anwarul Hoda, former member, Planning Commission in his speech drew the larger macro picture explaining the imperativeness of bringing in upgraded logistics regime. “The government wants to increase the share of manufacturing to GDP. And here logistics will play a major role. This hopefully would result in the gradual reduction of inefficiencies in the logistics processes,” he opined. He also emphasized upon the need to fast-track the infrastructure development much

model. On port side, we need dry ports to be doubled,” Hoda explained. Another interesting session titled “Regulatory Challenges and Desired Policy Framework” saw more teething issues spelt out by the speakers which the logistics industry has to suffer on a dayto-day basis. Suresh Bansal, Director and International Head, DTDC presented a long list of issues in hand. “ We sometimes believe we are dealing with 28 countries when it comes to operations. Different states have different regulations. We are the only country in the world which has octroi. Talent development is another major issue since there are few institutes. Logistics industry would always be the last employment choice and that means all of us would be facing serious challenges in the future,” he pointed out. He was particularly critical about delay in GST

“In India we know a product is moving from point a to b. But don’t know where exactly is the product at any given point in time.”

In almost hitting the nail on its head style, Lagad explained the lacuna. “1013 percent of our GDP is wasted every year because our infrastructure is bad and, therefore, SCM and logistics are bad. Only 47 percent roads are paved, only 10 percent of warehousing units existing in the country can be called modern and only five percent of our business comprise the organized domain,” he underlined. “Is India ready?,” that was the larger question he asked the audience while drawing the future scenario. “India, no doubt, is an awakening giant. Rising GDP and slowing population growth,

suited to the need of easing logistics and SCM process patterns. “Transportation accounts for 62 percent of logistics spend in the country and here a major difference can be made. We need to create access control expressways for international class road infrastructure. There is a big opportunity for the railways to increase its freight share – both bulk as well as container – by augmenting its capacity in saturated corridors. In warehousing land is an issue and here again railways can play an important role by providing its surplus land which can be developed under public-private-partnership (PPP)

implementation. “GST delay has been very disappointing. Even if the amendment in the bill takes place expeditiously, it would take 18 months for the implementation. Plus, going by the indications, there is not going to be single authority for GST and we are worried about it,” he said without pulling any punches. Representing the Railways Ministry at the summit was S K Mishra, Executive Director – PPP who assured the representatives of the logistics industry that the ministry is making all attempts to enhance its share in the freight business not only in quantitative but qualitative LOGISTICS TIMES April 2011

EVENT REPORT

terms as well. “We are trying to deal with quality issues deftly. Availability of capacity on demand, first and the last mile connectivity, guaranteed pick-up and delivery, cost and speed of transit – these are the issues we are looking at in association with private players,” he declared. Emphasizing that the railway ministry’s target is to reach to 2165 MT of load by 2019-20 ( from 890 MT in 0910), he maintained that a whopping Rs 14,00,000 crore of investment has been planned for next ten years to modernize railways which would be mostly pursued through PPP, internal accruals and prudent borrowing routes. “The pace of the dedicated freight corridor has been somewhat slow but now funding has been tied up for eastern and western corridors and the project would pick up the desired momentum,” he pronounced. “Improving Service While Reducing Working Capital & Costs”- this was another interesting session which featured during the summit, moderated by Ajay Chopra, CEO, DIESL. “ What is the basic premise of an efficient SCM – we want more, we want better but we also want better cost. And here the issue of supply chain optimization comes in,” Chopra set the ball rolling for discussion in these words. In an interesting brief presentation, he explained the ambit of efficient SCM system which includes order management, material acquisition, inventory carrying, IT and planning costs. He, however, pointed out what exactly hurts when the components are not in the right equilibrium. “Inaccurate information, improperly configured SCM system, poor distribution methods, lack of visibility, etc. hampers an efficient SCM mechanism. For instance, in India we know a product is moving from point a to b. But don’t know where exactly is the product at any given point in time. This milestone based approach is not right in a highly competitive environment where urgency is a key demand,” he explained. Joining the issue, R S Naware, Director, Siesta Logistics asserted that the logistics and SCM industry is all set to face major challenges because the rural demand is mounting in the country. “ We are going to LOGISTICS TIMES April 2011

witness a significant shift with rural market overtaking metros by 2012 end when it comes to the consumption of goods. This clearly means optimization would have to be undertaken expeditiously involving agility in terms of movement of goods and information and better alignment with warehousing network,” this was the key finding of his crystal gazing endeavor. On the concluding day of the summit, the key session was – Automotive Logistics in India which saw the presence of some of the leading representatives of the segment. And the poor state of infrastructure clearly emerged as the key concern of the speakers. “As against government’s target of 15-20 km/day,

the actual construction of highways is 6-7 km/day. The rail mode transportation of automotive industry is still very low at less than five percent. While auto manufacturers in the country are scaling up their capacity chasing demand, we would land in serious trouble if a vibrant multi-mode mechanism does not emerge in the country,” R S Kalsi, Executive Officer (Logistics), Maruti Suzuki pointed out. Prem Verma, CEO, Tata Motors Distribution endorsed this viewpoint in no uncertain terms. “Simply put, infrastructure would be the differentiator to attain the projections which we have for the automobile industry.” -Ritwik Sinha

LT Promotion Faridabad-based Nano cranes Pvt. Ltd. which launched the unique one tonner hydraulic mobile crane late last year is making swift sales penetration in the new markets in the country. To cater to the customers in the prominent industrial state Gujarat, the company recently appointed a new dealer in Ahmedabad. The contact details are: MR.NIRAV PATEL PRUTHVI ENTERPRISES, SHANTI BUNGALOW, PRITAM NAGAR, 1ST SLOPE,ELLIS BRIDGE, AHMEDABAD-380006, Mob-09925936796 Meanwhile, the list of LSP buyers of this revolutionary product is expanding on a consistent basis and recently some units were bought by the domestic major Transport Corporation of India (TCI).

PROFILE

The natural leader

Know t perso he n

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LOGISTICS TIMES April 2011

PROFILE

hose who know Blue Dart head honcho Anil Khanna from close quarters; his ardent love for sports is not a hidden fact (particularly of the game where men in blue have just done wonders). But that shouldn’t have been the reason for his colleagues to flood his message box with sms of a particular kind after that historical one day cricket match between Australia and South Africa in which over 850 runs were scored in less than 100 overs (99.5 overs to be precise). The date was March 12th, 2006 and Khanna was then heading the western region of the company. The story goes like this which many would find speaking volumes about Khanna’s leadership quality. Sometime prior to that unforgettable match between Kangaroos and Proteas, Khanna had called his western zone sales team for a meeting. The agenda: to improve the sales figure. His team’s response was crisp but clear: they are putting their best efforts and are almost hitting the maximum limit. But according to Khanna, the immediate task in hand was to go beyond what was perceived to be the best. “How many of you are glued to cricket?” Khanna asked. Up went all hands in the meeting room. “What is the maximum score which has been registered in the course of a one day game?” was the next question. “650-700,” that was the broad range pointed out by the respondents. “Do you think if there are four Sehwags in the team and all of them contribute, the maximum score can be stretched to 800?” here came the motivational googly. The answer was yes but as Khanna recalls, it was rather a meek endorsement. “After the meeting was over, I could make out that the team members were not convinced with my stretching the elasticity point theory which was wrapped in a cricketing analogy. However, fortunately this match happened a few days after the meeting where a mammoth total of around 870 runs were piled up in a single day. And after this match, I was flooded with the messages from my sales team saying LOGISTICS TIMES April 2011

we can do it. And thereafter there was a remarkable improvement in the sales team efforts,” Khanna shares with a broad smile when I caught up with him around mid-March in Delhi. Leadership is a quality which seems to come naturally to Anil Khanna, probably ingrained since his school days. A quick look at his around six decades journey clearly underlines that he is a man who has rose through the ranks by taking up challenges and while pursuing lofty goals, has remained glued to that quintessential team spirit guiding from the front. Born in a family of academicians (his father was a professor) in Meerut, the early part of his school days marked pre-occupation with sports. “Initially I was not very good in studies and was more into sports. I was a very good sportsperson and used to play football, cricket and hockey. As against me, my elder brother was quite studious. But somewhere around 7th standard, I realized that I will have to be good in studies as well and then maintained a subtle balance between sports and education. Eventually I became the House Captain and the Head Boy of the school as well (at St. Mary’s Academy). Thanks to the leadership role, I was awarded the ‘Best Student’. I think, I did reasonably well in school,” Khanna recounts. Khanna was then selected for NDA but at the insistence of his father, he joined the prestigious St. Stephens College in Delhi which was followed by an MBA degree in marketing and finance. His first professional stint was with Garware Paints where he joined as a management trainee but went on to become the branch head (of Uttar Pradesh division) within a short span of less than two years. This was followed by stints with USHA International in Jabalpur and later with Shalimar Tar Products where he had joined as Marketing Manager, South but within a year was promoted as Divisional Manager. “Shalimar Tar Products was a very good experience because it was a complete Profit Cost Head responsibility and I was not only responsible for revenue and profit but also had to manage procurement and production. We had to manage

everything on our own. I was posted in Chennai and was looking after the major states down south,” he says. By the time, Khanna had completed a little over the first decade of his working life, he had already cobbled ample experience of metro and tier-II locations (Chandigarh, Delhi, Kanpur, Jabalpur and Chennai), something which came quite handy when he got more into the strategy planning role at Blue Dart headquarters in Mumbai. Khanna’s association with Blue Dart began in 1992 and this ultimately turned out to be the innings of his life. Joining as regional manager in Delhi, he eventually reached to the helm position in 2007. But there have been many twists and turns in the tale along the journey. To begin with, the decision to join Blue Dart in early 90’s was primarily driven by his desire to relocate in north. “I was in Chennai and my family was feeling left out. A close relative had expired and I could not attend the funeral,” he explains. But he was not too keen on trying his luck in Blue Dart when a head hunter told him that there is an opportunity. On the persuasion of his wife, he reluctantly went to Mumbai to meet the then MD, Clyde Cooper and he was completely won over by his vision and personal charm. “When I met with Clyde, he didn’t ask me questions. Rather he sold me the idea of Blue Dart. I could see that he was a visionary and this organization would do well,” Khanna narrates that crucial meeting which ultimately became the germination ground for the big leap in his career. But there was an element of compromise when Khanna came on Blue Dart’s board. He was appointed as the Regional Manager for Delhi region which in his own words was a “step down positioning” from his previous stint where he was acting as the divisional manager of the entire southern market. However, he had developed this intrinsic belief in Clyde’s sky is the limit theory for Blue Dart. This was incidentally Khanna’s first professional tryst with services industry also and that meant learning the rules of the new game fast. “I was new to the service industry. I had done well

with product industry and had received a reasonably good grounding there. But I guess I learnt the fundamentals of the new segment fast. A year later I was promoted as GM,” Khanna recalls his early years with Blue Dart in these words. He later played an important part in turning around the north region when Delhi division was merged with the former. In 1996, there was a crucial management change in Blue Dart with Clyde moving out and another professional replacing him at the helm. This resulted in a lot of changes at the administrative level and Khanna was asked to shift his base to the headquarters though the proposition was littered with a serious challenge. “West region was in a bad shape then. In five years, five regional heads had changed and I was advised not to go to Mumbai. But I felt it would be good for my career. Within one year, we turned around the region and it emerged as the best business region in the country for us,” he informs. After DHL bought 81.03% stake in Blue Dart in 2005, clearly one of the most remarkable acquisitions in the arena of logistics in the country, the onus of spearheading the company fell on Malcolm Monteiro with Anil Khanna assisting him on several projects. But soon Malcolm was elevated to the position of Area Director, DHL Express, South Asia leaving the MD position vacant. And after a scrutiny process, Khanna was selected as the new leader of India’s leading air express company. “So what tilted the decision in his favour?” I ask. “I guess I knew the business and I had the advantage, since I had a proven track record of 15 years and as the Regional Head of the largest region, had exposure to all important functions” he replies. Under Khanna’s stewardship for nearly four years now, Blue Dart is believed to have consolidated its position in the domestic air express market with a hefty share of around 40 percent. The company is also aiming to break new grounds in the surface express segment. In the air express segment, Blue Dart is far ahead of any competition and

Young Anil Khanna as from outside it may house captain in his school seem that the business is almost a cake walk for them. Khanna, however, strongly refutes this theory. “Believe me, we have seen a lot of ups and downs in recent years. In 2007, a ground express operator entered the air cargo operation which was seen as a major threat. And other players were also making the moves and it was believed that Blue Dart would be under tremendous pressure. That was the time when very intense a new avatar as part of DHL group competition had started happening. in India without losing its identity. On And then in 2008, the slowdown almost all performance parameters, happened. So slowdown coupled with Blue Dart has delivered much beyond competition forced us to take a slew the expectations of stakeholders. “We of tough decisions in terms of cost keep getting best compliments from management and yield improvement. I DHL especially the way we handled the was very clear that we have to continue downturn. investing in service quality. This was Our stakeholders are happy because achieved through our various customer we are consistently delivering on our centric initiatives like First Choice, Net promises. When we prepared the plans Promoter Approach (NPA). We also for ground express in 2006, our prime launched new products that were tailor target was to improve our market share made to suit our customers’ needs along from 5% without dropping our yields. with a host of other initiatives. These Today we are close to 10 percent and we innovations coupled with our unfailing have done it without reduction in yields. customer service proved to be our On the contrary, we have improved the trump cards. We successfully came out yields and margins which has surprised of the downturn and 2010 has been a everyone.” very successful year.” Father of two grown up children (his Anil Khanna is quick to point out that at daughter is married and his son has just the broader macro-management level, a joined real estate business after finishing key task he has chosen for himself is to his studies), Khanna does talk about life not allow any element of complacency after Blue Dart though he is not hanging to set in. “It would be a fallacy to feel his boots anytime soon. “I would love that nobody could really stand up. I keep to retire at the right time. I would like telling my team that you can’t believe to indulge in some serious social work. that nobody would eventually stand I will keep myself busy but would stay up. If complacency finds its way in our in touch with Blue Darters.” For the operations, then Blue Dart can hurt Blue man who rose from the ranks showing Dart,” he strongly underlines. exemplary leadership quality, the essence According to Khanna, the innings at of Blue Dart is now also a permanently Blue Dart has been quite satisfying ingrained feature. for him especially in the last few years -Ritwik Sinha wherein the company has evolved in LOGISTICS TIMES April 2011

EVENTS TS

Learning from Captains

FedEx Express hosted an engaging event called the “FedEx Captains of the Game on 22nd Mar ,2011 at the Intercontinental, The Lalit, Mumbai. The event provided a unique platform for former Indian cricket captains, Kapil Dev and Anil Kumble who joined corporate honchos to discuss winning strategies, leadership and management values that steer both cricket and business decisions.

Future of Fashion DHL presented ‘Future of Fashion’ at Lakme Fashion Week Summer Resort 2011 to a packed audience. Partnering with cutting edge designers Atsu and Kallol Datta, DHL demonstrated its expertise as a trade facilitator for the fashion industry. The designs of Atsu and Kallol, which received rave reviews, were inspired by the attributes of DHL focusing on speed, vibrancy and precision. The brand colors saw prominence and the designs had a good balance of the trends that will unfold in the months to come. LOGISTICS TIMES April 2011

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Crystal’s Express Unit Crystal Logistics, the leading cold chain service provider, last month announced creating a separate entity called Crystal Express. This newly born unit commenced its operations on 25th March. The launch meet was attended by industries producing perishable food and beverages and pharma products. Express services would be provided on MumbaiAhmedabad-Delhi route for transportation of temperature sensitive products. Depending upon response from industries, this service will be extended to other routes in northern & southern regions as well as with increased frequency of service.

Credence’s Raigad Marathon As part of dedicated corporate social responsibility agenda, Credence Logistics has been actively working in the Raigad district. Recently it tied up with the District Collector’s office and District Sport Officer to sponsor and help organize the 9th Raigad Marathon. The Raigad Marathon has repeatedly shown itself to be one of the largest single-day sporting events in the district.

LOGISTICS LOGISTI TICS TIMES April 2011

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Air Charter Provider of the Year in Africa The world’s leading aircraft charter specialist Chapman Freeborn has landed the prestigious Air Charter Provider of the Year accolade at the Air Cargo Africa 2011 awards in Nairobi, Kenya. The STAT T i m e s a w a r d , presented at a ceremony recently, was nominated by freight forwarders and airlines and recognized the company for its excellence in air cargo across continents spanning 53 countries. Iain Clark, Regional Manager for Chapman Freeborn Africa, was present to collect the award on behalf of the company.

Award for Vijay Kalantri Vijay Kalantri, Chairman & Managing Director of Balaji Infra Projects Ltd & Dighi Port Ltd, was felicitated with the “Outstanding Contribution in Facilitation of Exim Trade” Award on 18.3.11 for his contribution towards resolving issues for the trade sector, over the years. S. Dutt Majumder, Chairman, Central Board of Excise and Customs, Government of India conferred this award to Kalantri. LOGISTICS TIMES April 2011

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