(L to R) Subhasish Chakraborty, CMD and Abhishek Chakraborty, CEO of DTDC. Image: Amit Verma
DTDC Chairman Subhasish Chakraborty, one of the pioneers in the logistics space, built the company over 35-years ago with an initial investment of Rs70,000. The company expanded its footprint with a franchise model, a first of its kind in the industry, and covers nearly 70 percent of the country’s length and breadth.
Now competition is intense but Chakraborty believes DTDC has a strong moat. “Competition is not going to slow down as the market is evolving. There will be a red ocean kind of situation where every company cuts another company,” the founder, chairman, and managing director says. “Many startups have the luxury of showing abnormal growth, selling the services below the cost, just for the sake of creating a valuation [by] burning investor money.”
With his son Abhishek Chakraborty in the driver’s seat as the CEO, the company wants to focus on rapid delivery. Explaining the roadmap for growth and fundraising, the second-generation leader says, “We do believe that a company like DTDC has the right ingredients to take big steps in the future… Now, whether it is public markets or private markets, all options remain open.”
In a rare interview together, the father-son duo discusses early days of building the company, new market dynamics, business plans against an increasingly disruptive environment, the relationship between them at work, and how trust and responsibility shapes legacy. Edited excerpts of part one:
Yes, I was a very small kid. I just about started school at the time the brand was built. But I think my earliest memories, while they are not so much about the struggle, it’s about the great adventure. To see a man and the family, going through this journey, where you’re trying to build something with your own hands. It was very inspirational and always brought in a lot of curiosity.
I think the highlight is the people who make up this organisation, the people who work on the grassroots, our fantastic channel partners…I remember those early pioneers who walked along with him. As a young kid, watching all of those people huddled around to discuss how to expand the market, how to open up the next facility of DTDC… so, you imagine your father was like Christopher Columbus, pioneering, going out there, conquering new lands, opening up new places. I think, that is the image that really stays with me.
Subhasish: Once I started the company, I immediately understood that I cannot open only three-four offices. I have to have to open offices in many places, but with the money available to me, by selling the jewellery of my wife… because when I approached different banks, every bank told me to mortgage some asset. With that, I got some money. You will not believe, I only got Rs70,000.
That is the time I understood I want to be an entrepreneur. I want to create a network company. Google was not there. Internet was not there, but somehow, I found the work franchise. So, I thought agency means only commission, but I have to give entrepreneurship [opportunities]. So, I created something that we call channel partner, or franchise, today. Any given transaction they should earn at least three to four times what the company is earning.
With that partnership philosophy, entrepreneur philosophy, I created the first-of-its-kind, the franchise concept in India. It is a proven one-of-its-kind model. Many people are copying us, but they cannot create the original one. You see the success… we started with one partner in 1990, the first month. Today, apart from other parts of the world, in India alone we have 16,500 partners which is growing every day and that’s the way DTDC pioneered the franchise concept.
Also read: Shailesh Kumar’s shoe-string upbringing and the curious case of CABT Logistics
Changing market dynamics: ‘Moving from ecommerce to quick commerce’
Abhishek: The first thing one needs to understand about what’s changing, dynamic, in our market is that post Covid, the explosion of ecommerce and on the other side, technologically, the explosion of all the digital solutions and services mean that how business gets done is fundamentally changing. DTDC realises that what was a pioneering first-of-its-kind idea, has today become the core reason of why we grow so well.
When you add that digital capability with this huge physical network of 16,500 customer access points, you have a one-of-its-kind network. As India is rapidly moving from classic ecommerce to quick commerce, we believe that 96 percent of India’s population need to go only a few kilometres to access our network. That means the products, services, and packages that they require are that close. That modern commerce is now emerging.
Today we have more than 14,500 pin codes. That take takes care of more than 70 percent of India’s land mass. So, whether you are a DTDC consumer, you have a large enterprise with B2B requirements, or the new and modern B2C businesses, DTDC is able to cater to all of that, not just domestically but globally, thanks to our international presence in seven countries.
Eye on profitability: ‘Not in the game of burning investor money’
Subhasish: Many startups have the luxury of showing an abnormal growth, selling the services below the cost, just for the sake of growth, creating a valuation at the risk of burning investor money. That is how business is done today. Because they have an access to show the growth, even at the cost of losing money and selling at the cheaper rate to capture the customer and then showing a valuation and then getting money and then burning the money.
One thing that was clear for me, and for DTDC and our family, was to make sure that our cost is under control. Our customer is getting right services. At the same time, every transaction, everybody should earn money and get value. So, the profit and win-win philosophy of our company has always stayed right from the first year. That’s the reason DTDC, with its internal resources, always tries to do new research, new technology investments, new product innovations.
IPO plans: ‘Not in a hurry’ vs ‘All options remain open’
Subhasish: Competition is not going to slow down as the market is evolving. There will be a red ocean kind of, you know, situation where every company cuts another company. Throughout this journey of 35 years, we have faced hundreds of different kinds of competitors. Today we are still going stronger. We are present in each vertical of this logistic industry.
For 35 years, we managed our fund with our very strong cash flow management. We managed our fund internally even today. Possibly DTDC this year will cross… our revenue will cross around Rs2,500 crore. We are not in a hurry immediately to go to the IPO market.
Abhishek: Our track record shows that we have always given fantastic returns to existing shareholders. We have not only given back dividends, but have also used the infrastructure and the resources that we have to continue to grow the business. Now, while the question of whether the company would like to list itself is of course dependent on conversation that we continue to have internally with our management, with our shareholders. But what we do believe is that a company like DTDC has the right ingredients. To take big steps in the future, to invest even better, to produce better returns… Now, whether it is public markets or private markets, all options remain open.
Carrying the legacy forward: ‘Rs2,500 crore to Rs25,000 crore’
Subhasish: Many startups just build up, create value and sell it off. I think when I started this company, I believed, though I founded the company, this company is not just for me or my family. This company is built by the people. By our partners. So we always thought that we will do things that will never destroy those values. Coming back to our current situation, I think we are quite content, quite happy with the way we are working.
We have brought this company to the level [where it is today], and I am quite confident, knowing my son as a professional for the last 15 years, I think DTDC is in the right. It is possible by a young leader like him to take the company to the next level, from Rs2,500 crore to Rs25,000 crore.
Abhishek: It’s more about the targets you set for yourself. I want to embellish one fact that the trust was always there. When I joined this company, we were about Rs200 crore company. By the time I became CEO, we grew 12.5x. So, I asked myself, do I want to be a 40-year young CEO of a 35-year-old company or what was it the other way around, that, yeah, I’m a 40-year-old CEO of a 35-year young company. I like the latter.
I think the future is extremely bright for the whole country. I believe if India is going to do successful things and great things, a company like DTDC which has been with India in this journey, whether me, or succeeding generations, will continue to have great dreams and will probably make some good things happen.
The full episode is out now. Watch it here.