As the Chief Financial Officer and Chief Operating Officer of a leading express player, Blue Dart, I follow a very simple thumb rule - starting a month, quarter or year by assuming that it will be the most difficult one. This enables better planning and ensuring prudent measures. It is not what you do but what your planning strategy is that makes you a winner. After successfully weathering the 2008/09 economic slowdown, we encountered the slowdown of 2012/13 and managed to sail through successfully. Keeping the investment cycle, service quality and innovation ongoing was a result of starting from the worst so that you always land up with a good scenario. Remember if "Plan A" does not work, the alphabet has 25 more letters.
I enabled to broaden the strategic focus of the company from predominantly an Air Express to span across modes and transit times to become one window for all types of needs and products. The Ground Express foray has resulted in an increase in the market share from 8.5 per cent in 2009 to 13.2 per cent for the first quarter of 2012 with a compound annual growth of 39.1 per cent (from 2009 to 2011). Growth in earnings before interest and tax is in double digits. We also did a smart re-alignment of product mix to focus more on packages than documents. Without any dilution to the B2B business, which constitutes about 85 per cent of turnover, we aggressively championed the B2C segment. Our cash-on-delivery facility plays a major role in the B2C segment. We have also been able to achieve safe and timely remittance of cash-on-delivery money to our customers, which supports the cash flow needs of e-tailing companies.
I have been instrumental in giving directions on various cost-mitigating measures such as the fuel surcharge mechanism, reduction in working capital, renegotiations of real estate cost, and attractive long-term contracts during the slowdown. Amongst the various optimisation efforts undertaken, key ones have been the reduction of operating cost per move, operating cost per kg, cost per kg in both air and ground network, sweating of assets, better Return on Capital Employed, and others. Whilst staying focussed on cost, I have also propelled the organisation in the direction of innovation and sustainability through a renewed focus on the temperature-controlled logistics product, introduction of weight dimension labelling and on-the-move machines, smart truck, and leading the radio frequency identification project. The launch of carbon-neutral services is the first such domestic express service in South Asia.
We have seen the benefits of pre-empting and forecasting. Today, Blue Dart is a debt-free company. Capital expenditure, investment as well as working capital requirements are met through internal accruals. Various cost mitigating measures have borne rich fruits and enabled us to maintain our premium positioning in the Indian express industry.
#Revenue: Rs 1,492 crore, up 29%
#EBITDA: Rs 177 crore, up 14%
#Net Profit: Rs 124 crore, up 31%
(Figures for 2011/12, Source: Annual Reports)
#Stable working cycle capital at 7.89 days
#Average market value has risen 54.5% since 2010/11
#Provides differentiated product and service offerings and industry-specific solutions
#Launched India's first carbon-neutral delivery service in December 2011
#Launched smart truck pickup and delivery with route planner service in August 2011
We were very clear that customer is the lighthouse and, whatever course of action one takes it must always be for the benefit of the customer. Tough and difficult times call for increased attention to your customer requirements. We undertook customer satisfaction surveys to understand their pulse and requirements, and accordingly designed new products and services without compromising our premium position or our service quality. The result is that our customer retention rate is above 98 per cent. At 49 per cent market share in air and 13.3 per cent share in ground (as of 2012), we are the leaders of the express industry.
Ensuring healthy market capitalisation
The market value has shown a healthy growth from Rs 1,663.7 crore in 2009 to Rs 4,861.9 crore in 2012. Earnings per share have grown from Rs 25.60 in 2009 to Rs 61.90 in 2012.
The capital market acknowledged the company's consistent performance. The confidence of investors in Blue Dart was validated when the offer for sale was oversubscribed 3.5 times and the final price the sale fetched was Rs 1,949 apiece, which was 13 per cent higher than the floor price.
Organisations need to carve a niche for them in a cut throat market and one can be a niche player only if they offer something that is unique and relevant. A well-thought-out business plan, close monitoring, continuous innovation, adopting prudent and conservative measures to mitigate costs and customer centricity is what will help an organisation navigate uncharted waters.
Tough times call for tough measures and being prepared with a Plan B or C is the key to bouncing back in a bearish and slowing economy. Remember if "Plan A" does not work, the alphabet has 25 more letters.
Yogesh Dhingra is Director - Finance and COO of Blue Dart Express. He has been adjudged the Best CFO in the category - Best CFO of a MNC (Medium).