The Frequent Flyer

The Frequent Flyer

Deccan 360’s founder, Captain G.R. Gopinath, is a structured problem solver at work. But, the practical purveyor of India’s skies is all entrepreneur at heart. His current yearning is to revolutionise the country’s logistics sector. And his secret weapons are the learnings from the Air Deccan experience and ability to execute at breakneck pace

I was getting ready to interview Captain Gopinath, Founder of Deccan 360, an express logistics company. I pulled out my recorder; our photographer, Abhishek Scaria, was ready to start clicking and we were all set to begin the interview. I told him about our focus on analysing growth companies and the vision of contributing to the development of entrepreneurship in India. Suddenly, an excited Gopinath stopped me and said, “Before we begin, let me give you a print out of a note I wrote on Entrepreneurship for Emerging India. I would like you to read it and then let us begin the interview.”

As I was reading the article, there was one paragraph that caught my attention. It said: “Though the respectability of India has gone up because of world-class companies like the Tata Group, Reliance, Infosys, Dr. Reddy’s Labs, Aditya Birla Group etc., real jobs and wealth are getting created in less glamorous, small scale industries and in millions of small scale factories and shops across the country – you cannot escape the beehive of economic activity in Sarojini Market in New Delhi or DVG Road in Basavanagudi, Bengaluru.” I was very excited, as this was a thought I possessed too. I was convinced that robust growth in the small and medium size category could completely change the economic landscape in India.

The article even quoted instances from the U.S. economy in the 1980s when the growth of companies had a lot to do with the common man and his consumption. A McKinsey report also suggested that the fastest growing mid-size companies in the U.S. at the time were a building contractor, an exercise equipment manufacturer, a firm making and selling donuts and a company manufacturing household paint, among others.  India, today, is at a similar inflection point. Reforms to boost up entrepreneurship and support offered to small and mid-size entrepreneurs in the country can act as game-changers to our economy.

Gopinath is convinced, whether it is politics or unemployment, the solution lies in entrepreneurship and entrepreneurial thinking. He wanted new Indian entrepreneurs to deliver on their tasks with “hope, courage, honesty and hard work” and was convinced entrepreneurship was the way forward for a booming India. On that note, here is the riveting story of Captain Gorur R. Gopinath’s plan for Deccan 360.

“If you’re skating on thin ice, never try to go slow,” says Gopinath. It is a mantra he consciously follows while trying to solve ultra large-scale problems – the kind of problems Captain usually goes after. Air Deccan was born way back in 2003 with the vision to make the aam aadmi fly and in the process, launch India’s low cost aviation industry. It was not an easy problem to crack. From managing regulatory challenges to running a highly capital intensive business, the aviation industry was filled with problems. Yet, Gopinath believed there was a need for a “people’s airline”, one that would create a lot of customers who would be boarding a flight for the first time in their lives. The quantum of the problem did not deter Gopinath. Instead, he decided to go out there and execute his vision at phenomenal pace.

In March 2003, Deccan Aviation, then a private helicopter charter company, announced that it would launch India’s first low-cost airline. Gopinath had just got his license approved, but not much else was done. Yet, Gopinath, in his inimitable style, set the launch date for August 2003. He decided six months was enough to launch the airline.  Over the next few months, he worked with exceptional project management skills. From leasing aircrafts and raising capital to hiring the crew and putting together information technology systems in place, Gopinath worked in fast-forward mode. He says, “It was critical I executed fast. There was competition that had to be countered and for everyday I delayed in launching the airline, I would have been burning cash.” The project was hardly sans challenges, but on August 23rd 2003, India’s first low-cost airline was born.

I relate this story, especially, keeping in mind early-stage entrepreneurs. Here was Gopinath, working on a sector he was new to, on a business model (low-cost air carrier) that was completely unknown in India and in a sector that was as capital intensive as it can be. Yet, he was “a man in a hurry”, as several observers say, to revolutionise air travel in India.

The logistics dream

Gopinath believes that an entrepreneur has to be at the forefront of not only creating products or services, but also enabling consumer shifts in the country. He makes a compelling point. There is no doubt; some of the world’s greatest entrepreneurs – Sam Walton of Walmart or Fed Smith of FedEx – have been successful even without market research and other business enablers.  They simply created great offerings and then expanded the consumer market to use these offerings. Gopinath says, “When I created the business plan for Deccan 360, penetrating into every nook and corner in the country was part of the plan. The question was – how can I penetrate into the rest of India and stimulate growth from there, rather than cannibalising from existing players.”

 “I think the entrepreneur has to be at the forefront of not only creating products or services, but also enabling consumer shifts in the country.”

Armed with the learnings from the Air Deccan experience, Gopinath proceeded with his entrepreneurial journey. This time around it was not to transport people, but to transport products across the country. Deccan 360 was born with the vision of linking India to the rest of India.

The idea to launch an express logistics company came to Gopinath while still at Air Deccan when one of its flights had to get an engine replaced. But, the aircraft was in Kolkata then and the company had a backup engine warehoused in New Delhi. Gopinath thought it would be a one-day affair to move the engine. However, the problem was, there was no freight carrier in the country that could do this. He shipped the engine from Delhi to Singapore and then from Singapore to Kolkata. It took him six days to complete the move. That is when Gopinath knew that he had an opportunity. Transporting goods into and out of India was fairly easy, but moving goods within the country was a problem. Gopinath says, “Within a few days, I told Air Deccan’s board that the entire express logistics space was vacant, we have to get into this space.”

Without wasting any time, Gopinath listed out his “strategy” to roll out the new venture. Like he did before launching the low-cost airline (he studied the operations of Ryan Air, Europe’s most successful low-cost carrier and met with its deputy chief operations officer), he educated himself on the working model of FedEx and UPS, global leaders in the logistics space. He then listed out the big deliverables: create an unprecedented network, mobilise the right kind of funding, understand the execution challenges and the technology requirement.

Much like FedEx, he formulated a hub and spoke model – Nagpur was identified as the hub and today, is the location where goods are sorted out and pushed along the spokes to several locations across the country. Jude Fonseka, a former head of sales of FedEx in Australia, was hired as the first chief-executive officer. Deccan 360 was well set to take off. But, this time, Gopinath was not entering unchartered territory. First, he had the money from the sale of Air Deccan. Two, he knew a thing or two about managing air cargo operations. On the technology front, IBM and Infosys created the initial platform, and today Bengaluru-based MindTree is working on streamlining the technology requirements.

Gopinath believes that manufacturers should focus on producing goods and moving these goods should be the least of their issues. He wants to “move goods within India, as efficiently as possible” and in the process help small-scale industries distribute their products across the country without any hassles.

Gopinath says, “The big focus right now is stitching together air cargo services and ground transportation seamlessly.” He is convinced that Deccan 360 has to be a complete solutions provider. He believes manufacturers should focus on producing goods and moving these goods should be the least of their issues. For Indian manufacturing companies, warehousing and inventory costs are extremely high. According to Gopinath, in India, about 26 per cent of manufacturing costs come from logistics and supply chain. In the U.S., this number is at 12 per cent. This is really the problem Gopinath is out to solve – he wants to reduce costs for Indian manufacturers and increase the velocity at which they do business.

Inside India

A closer look at the competitive landscape clearly shows there is a need for a player like Deccan 360. BlueDart, the current market leader in the logistics space, has warehouses at over 53 locations and bonded warehouses at the seven major metros. However, if you want to ship industrial parts from the interiors of the country, there is no single carrier to service your request. Multiple carriers have to be roped in and the process is not efficient. Inventory costs for manufacturers go up, there is pilferage and documentation is a challenge. There are multiple check posts that have to be crossed and each state in India has different laws in terms of entry taxes for goods. In short, for companies that ship goods, logistics and supply chain is a day-to-day problem. Gopinath knows Deccan 360 can solve these problems for customers. From reduced costs to more efficient hassle free operations, manufactures can outsource their logistical nightmares.

But, if one needs to change the way an industry functions, creating an unprecedented network is critical, says Gopinath. This also means there is a big front-loading of costs and mobilising funding is part of the process. In April 2010, Mukesh Ambani’s Reliance Industries Ltd. (RIL) picked up a majority stake in Deccan 360. From a RIL perspective, the tie-up will also help its retail arm move goods more efficiently.

Gopinath states that Deccan 360 is a knowledge-driven company and it was critical to bring in people with experience. In his earlier venture, spotting talent in India for running a low-cost airline was extremely challenging. Except for pilots, a large percentage of the work force hardly came in with domain knowledge. At Deccan 360, Gopinath is adopting a very different approach. He is going after experience and is focused on building a team with domain expertise. Today, Deccan 360 is filled with people with prior work experience in FedEx, UPS and BlueDart, all of them leaders in the sector. Gopinath calls this “tacit knowledge” – knowledge that is difficult to transfer to another person. He says, “It is impossible to create another FedEx or a Toyota just by hiring from those companies.”  He wants to identify the best practices from all these firms and then, get everyone in the team to march to a common beat.

Throughout the interview, I can see the passion in Gopinath’s words. He continuously quotes management gurus and thought leaders from across the world. He tells me, he has been through several ups and downs, but being an entrepreneur is something he just cannot give up.

On a parting note, he quoted Jonathan Swift, the Irish essayist. He said: “The vision is the art of seeing the invisible.” Gopinath is clear on what he wants to achieve with Deccan 360. He, simply, wants to “move goods within India, as efficiently as possible.”

Management lessons from the Air Deccan experience

  • If you are an entrepreneur, do not go to several people to validate your idea. If you have a vision, you are seeing it, but do not expect other people to see it. An entrepreneur will have to rise above the facts and work towards delivering on an idea.
  • As cliched as this suggestion is, it is the most important – build a wonderful team. Ensure you build a company of giants, not a company of dwarfs. Try and hire as many people who are smarter than you and percolate that view across all levels of management.
  • While vision and dreams are important, solid systems and procedures are critical for success. We made a few mistakes on this front at Air Deccan and we paid for it. Roping in the right people to put the systems in place is critical.
  • Execution can make or break your venture. This is the best management advice I have ever received. Do whatever works for you, but execution has to be measured. Of course, strategy is equally important, but in large-scale projects, execution is paramount.

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