'We are open to acquisitions if opportunity persists'

Q&A: Malcolm Monteiro, sr VP & area director (South Asia), DHL Express (India)

With markets like Japan and Oceania coming down, global express delivery and logistics services provider DHL Express, part of the 60-billion euro Deutsche Post DHL, is laying major thrust on India. The company, which picked up an 81.03 per cent stake in Blue Dart Express India in 2005, says it is open to acquisitions as well, if opportunity persists. “India has been viewed as a very strong market for DHL and we are seeing tremendous growth and outlook here,” says DHL Express (India) senior vice-president and area director (South Asia) Malcolm Monteiro. In an interview, he shares with K Rajani Kanth DHL’s plans to increase its air freighter fleet, strategic investments and focus on Tier-II and Tier-III locations. Excerpts:

Are there any expansion plans on the anvil for the domestic market?
We are very bullish on this market and will continue our presence in the Indian context. We have got a fairly strong retail presence in terms of two brands – DHL and Blue Dart – with over 350 Retail Express centres and 30 offices across the country. This year, we will probably add another 10 retail centres, which are fairly big and strategic, both in Tier-I and Tier-II.

Do you have plans to add new aircraft to your freighter fleet?
Currently, we fly seven freighters in the country. We are committed to growing this infrastructure in the country. In 1996, when Blue Dart Aviation was launched, many people didn’t think that cargo aviation will be a big business. But we were convinced that the market needed this and are clearly focused on continuing in this space. We will evaluate in the next quarter whether we should have our eighth aircraft. This plan has a lead time. The new aircraft, a Boeing 757, will be inducted into our fleet in 2011, which is when we need it.

What is the investment that DHL is lining up for this expansion?
We have already invested over $300 million (approximately Rs 1,390 crore) in the Indian market over the last five-six years. The market is dynamic and things are changing rapidly. To continue to invest is not an issue. When an opportunity presents itself, we wouldn't be restricted by budgets.

What’s your focus on Tier-II and Tier-III markets?
A lot of manufacturing is going into these Tier-II and Tier-III markets. Especially, large customers and shippers are going into these markets and we are seeing more and more of these markets opening up. Focusing on Tier-II and Tier-III is an ongoing process.

Are you looking at acquiring any company that makes sense to your business like most of the domestic players are currently doing?
We have done our acquisition in Blue Dart, which is strategic in nature. Currently, we are building on this by expanding to Tier-II and Tier-III markets, and more importantly bringing in solutions for industry verticals. We are going to grow organically and are open to any kind of acquisitions, should there persist an opportunity.

How is the express services business likely to grow in the domestic market?
The whole logistics business in India is close to $80 billion and the express space that we are operating in is about Rs 7,000 crore. From all indications, the express industry is growing in the range of 12-15 per cent. We have been growing above the market average and will continue to be the leaders in the industry.

Where does India stand in terms of contribution to DHL’s global revenues?
The Asia Pacific region is the fastest growing area in the overall DHL network. Its share is increasing every year and we are finding that India in Asia Pacific is increasing and will continue to grow. India’s share in the Asia Pacific region would be close to 8-9 per cent. In shipment terms, DHL’s market share in India is 60 per cent. On the Blue Dart side (domestic air express), it is 44 per cent. We have been seeing positive trends in the last four-five months and the industry is in the positive territory of about 20 per cent growth. We are very optimistic about 2010 and expect to see a double digit growth here.