In conversation with Aneel Gambhir, Chief Financial Officer, Blue Dart
The role of the logistics sector has never been more crucial than in the year 2022. Going forward, the growth of the logistics industry will be centred on the adoption of technology and other initiatives. In this interview, Aneel Gambhir, Chief Financial Officer, Blue Dart, elaborates about the company’s strategies towards adopting technology and making their operations sustainable
What is your outlook on the Indian logistics and courier services’ industry?
A future outlook for the industry seems to be a space where faster results can be expected without compromising on quality. Technological leaps such as real-time ordering, visibility of end-to-end inventory, autonomous warehouses and hubs, drone delivery, and significant use of robotics is what we can expect in the foreseeable future. The idea is to use manpower for more complex and rewarding tasks, thereby increasing the effectiveness of the entire man-technology combination. An indigenous network modelling system needs to be developed and implemented to dynamically respond to changes in network schedules.
It must also recommend fast and reliable network routes linking shipment origins with destinations. Another important facet of the industry that is being highlighted now more than ever is sustainable logistics. The race against climate change is urging humanity to instantly adapt to more sustainable practices both in terms of a lifestyle and as well as business processes. Logistics contributes to a significant amount of carbon emissions year on year, and with an aim to reduce carbon emissions, numerous logistics providers are now opting for environmentally friendly alternatives such as e-vehicles.
The role of the logistics sector has never been more crucial than in the year 2022. Going forward, the growth of the logistics industry will be centred on the adoption of technology, be it tactical or operational decision-making, routing, fleet optimisation, data analysis or strategic planning. Technology will be all-pervasive. In FY 2023, we can expect an impetus given to the logistics industry owing to its significance as the backbone of every other industry across verticals. Over and above this, government policies such as ‘Make in India’, the ‘PM Gati Shakti’ plan and PLI schemes will benefit the logistics sector substantially.
Blue Dart reported a phenomenal 275 per cent year-on-year growth in its consolidated net profit for FY22. What are the factors responsible for this stellar outperformance?
Blue Dart’s journey over the last year showcased our resilience, responsiveness and reliability to all stakeholders which is mirrored in our Q4 and year-end financial performance. Once again, we proved our mettle in standing strong and supporting the nation as its trade facilitator. We were able to deliver one of the strongest performances in the recent past with the company posting profit after tax (PAT) of Rs 1,354 million for the quarter ended March 31, 2022 and PAT of Rs 3,764 million for the year ended March 31, 2022. On the back of superior customer experience, led by best-in-class service quality, the company witnessed healthy volume growth as well.
We carried 264 million shipments comprising 932,690 tonnes during FY 2021- 22. Our relentless focus on being a customer-centric brand, capitalising on our technological prowess, and investing in automation and digitisation to remain agile in this environment of volatility, uncertainty, complexity and ambiguity (VUCA) have helped us improve margins. Healthy top-line growth with better realisation, healthy volume growth from B2B and B2C customers, continued cost efficiency programmes, efficient manpower productivity, optimised aviation capacity utilisation and financial re-engineering aided the company in improving margins during the quarter as well as the financial year 2021-22.
This was despite the challenging geopolitical situation. The general price increase (GPI) implemented annually increases the shipment price. This also helped us in improving our realisations this quarter. Apart from this, international charters which were initiated during the pandemic last year continued to support the company’s revenues in the current financial year. With improved receivables management and cash flows, the company together with its wholly-owned subsidiaries also paid off all the borrowings from banks which not only reduced finance costs but also helped us become debt-free.
To commemorate New Year festivities, Blue Dart introduced Ugadi Express, a premium experience for consumers at discounted rates. The offer was valid in the states of Andhra Pradesh, Karnataka and Telangana. How was the response to this? Will you be launching similar offers on a broader scale in the near future?
Blue Dart is the ‘provider of choice’ to all our customers across all segments and regions in the country. Exceptional service quality is an attribute that has ensured Blue Dart continues to be a name common in every household and every business across the nation. Given our brand’s nationwide reach, as well as the reliability that it provides, we are keen to provide personalised solutions for every individual, across the nation. Therefore, while we celebrate major festivals such as Diwali, Raksha Bandhan and Christmas with the launch of mega offers, we also wanted to cater to specific regions with offers that are personalised for them. The response from Ugadi Express was phenomenal and well-received by our target audience, giving us the confidence to launch many such initiatives across the nation.
What is your strategy to maintain and further grow market leadership? What are the key growth levers for Blue Dart over the next 3-5 years? Currently, what are your top three strategic objectives?
Technology and digitalisation, sustainable logistics and enhancing our capabilities will be our three strategic objectives going forward – these will also be our key growth levers over the next few years. Technology has always been a major pivot for us and the pandemic only catapulted our innovation further. As a part of the Deutsche Post DHL Group, ‘Strategy 2025 – Delivering Excellence in a Digital World’ is of prime significance to us and therefore our initiatives are tailor-made to ensure lean operations that helped us ramp up and achieve high service levels at a short notice. The contactless delivery service – our ‘My Blue Dart’ mobile application – is an example of our creativity in innovation.
This is also the case with the Blue Dart Med-Express Consortium that leveraged drone technology to build robust healthcare infrastructure in remote areas. Going forward, we know the potential that remains untapped in leveraging technology solutions in the logistics space and we are excited to be pioneers on that front too. Tying in with prioritising technology and digitalisation, our aim is to continue with ‘Connecting People, Improving Lives’. Leveraging the use of technology, we aim to make our brand one that provides long-term sustainability and shows corporate responsibility through our initiatives that help the environment as well as the communities we reside in. Following the sustainability roadmap that we, as a part of the Deutsche Post DHL Group, align ourselves to, we work towards clean operations for climate protection (environment), being a great company to work for all (social) as well as being a highly trusted company (governance).
Complying with the ESG requirements we continue to innovate in this area in order to reach our goal of being a sustainable logistics provider of choice. We have also witnessed significant top-line growth this year. Growing customer demand necessitates re-investing in our capabilities. Therefore, our focus going forward will lie in expanding our reach and capacity handling. We are currently working out expansion plans on the drawing board. For positive economic indicators to continue, we need to equally enhance our ground capacity and air capacity. We have also been working on facility expansion to cater to volume requirements, taking into account the immense infrastructure which the government has been developing, whether it is the dedicated rail corridor, freight corridor or the logistic parks.
What is your earnings outlook for FY 2023?
We continue to maintain a positive outlook, being cautiously optimistic about what the future holds. The risk the pandemic poses still looms in the distance alongside numerous other geopolitical issues. However, the government’s intense focus on vaccination for all and India’s resilience have showcased green shoots. The current economic indicators are swaying towards the positive end of the spectrum and I foresee growth in double digits.