NDTV: DHL owns 81 per cent stake in Blue Dart Express. Blue Dart is an impressive brand and in last quarter it has posted strong numbers. What are your plans to ramp it up?
Daniel J McHugh: Blue Dart is an amazing company and it is completely complimentary with the business philosophy of DHL Express, which is to be the best and fastest in every market. As the market matures and the consumer income rises because of employment and investment, the road network and ground express network becomes much more important trade facilitator. So Blue Dart’s strategy going forward is to develop a ground express business to compliment its already dominant air express business.
NDTV: What are your plans to tap retail boom in India?
Daniel J McHugh: We’re very excited about retail in India. I think as economies become less dependent on exports and more focused on domestic markets, you see the emergence of retail. Hence more global players are willing to get involved in the local markets and we see local players getting bigger. We’re well positioned with both Blue Dart and DHL Express and especially with DHL’s supply chain unit I think we are poised to grow in retail.
NDTV: Could you give us an idea of what kind of revenue are you expecting from the retail segment?
Daniel J McHugh: It is tough to tell that number but if you look at the growth of Indian logistics market over the next few years then I think retail is going to be play a significant role in revenue statistics.
NDTV: Any special plan do you have for pharma industry in India?
Daniel J McHugh: We are already a fairly large player in the pharma industry around the world. If you are talking about clinical trials and finished pharmaceutical products, it is all about time. And logistics and distribution is all about the most efficient use of time for inventory or meeting the customer needs. Therefore, developing road logistics will give us an opportunity to grow in pharma and retail.
NDTV: Is agriculture an important theme for DHL going forward?
Daniel J McHugh: Well if you think about agriculture in raw commodities then we are not a major player. The heavy commodities in agriculture goods in not necessary in our interest area, however, we are interested in finished agricultural goods. As Indian nationals expand and develop manufacturing basis outside the traditional metro areas, the need for express for both air and ground is going to grow at 20 per cent a year, which I think is our opportunity.
NDTV: What’s the kind of synergy that you derive by taking Blue Dart Aviation internationally?
Daniel J McHugh: Blue Dart is a major Indian brand and it also has good reputation outside India. The relationship between DHL and Blue Dart offers an opportunity for us to look at how we can utilize Blue Dart’s aviation capability to add to DHL Express network in Asia.
NDTV: By when does Blue Dart Aviation fly overseas?
Daniel J McHugh: It’s under evaluation now but obviously there are regulatory requirements and air rights so it is a fairly complicated business. I think by the end of 2008 or 2009 we’ll able to see something.
NDTV: What will be the focus areas in terms of investment of Blue Dart in India?
Daniel J McHugh: Every business has its own challenges or what I call opportunities. The opportunity we are working on right now is Bangalore gateway where for the first time in India we are combining both DHL Express and Blue Dart network into a single managed gateway.
NDTV: Any plans to make Blue Dart a wholly own subsidiary?
Daniel J McHugh: I think today we are effectively one company so for our practical purposes it doesn’t get anything in terms of operating the company better.NDTV: Going forward how important will mergers and acquisitions be in terms of driving DHL’s strategy in India?
Daniel J McHugh: I believe that our strategy in India needs to be how do we make M&A with Blue Dart more powerful. I don’t see any major M&A down the path as I think we have already got one of the best platforms in India. We believe that our strategy going forward is organic growth. I think we can improve our current infrastructure and brand leadership and grow that in an efficient way than going through M&A way.
NDTV: Deutsche Post owns 100 per cent in DHL so going forward do you see synergy in teaming up with Indian postal authorities?
Daniel J McHugh: As we know India Post has signed a memorandum of understanding (MoU) with Deutsche Post World Net to create a multi-layer relationship beneficial to both organisations. The MoU is meant to facilitate co-operation in the field of conveyance and distribution of mails, logistic and warehousing operations and financial services. We are in discussions to find out areas of further cooperation.
NDTV: What would be the three things that you expect from the government that could drive the logistics business in India?
Daniel J McHugh: The three things important to drive the logistics sector include strong public private cooperation, understanding business needs from geographic opportunities and eliminating the impediments of speed from business point of view,
NDTV: Do you think the logistics sector is geared up to take advantage of investments into the sector?
Daniel J McHugh: DHL is a facilitator of the trade, which is in our ethos but we make money by moving things. I know our own footprint here and as you know we are larger than our next three competitors combined in India. The important thing for us is how we can develop our capabilities here by jointly leveraging our three different are business units in India.
NDTV: How do you compare your Chinese operations to Indian operations in terms of size and profitability?
Daniel J McHugh: China is significantly larger for us in terms of our overall revenue. We have a joint venture in China with Sinotrans and the joint venture has over 8,000 employees covering 383 cities in China. I envision India for DHL Express moving into top three markets in the next 3-4 years.
NDTV: What’s the kind of impact the US recession can have on the logistics industry and specifically DHL?
Daniel J McHugh: Clearly if the US is not into recession then it is close to one. However, the supply chain issues are separate but in terms of goods movement I think we have seen a slight decoupling.
NDTV: How do you make sure that you make most of the brands that DHL have in India?
Daniel J McHugh: It is a high quality opportunity because all the brands are well known. Right now it is working fine and we are happy that there is no brand confusion in the market.