Professional Documents
Culture Documents
Business Plan - Sukam India
Business Plan - Sukam India
Submitted to
PROF. O. P. WALI
CONTRIBUTED BY:
This document is designed to serve as an introduction and briefing guide for top
illustration of the business intentions of the Joint Venture, provides a concise insight
into the basis upon which this project has been judged to be viable and concludes
By virtue of the simplified nature of this documents, detailed financial data is beyond
the scope of this synopsis and has thus, been made available separately in another
section.
EXECUTIVE SUMMARY –
The idea for SUKAM India Ltd. blossomed out of the fortuitous meeting of
India had increased by 20.4% in 2000-01 over the previous year. Growth
there would be a lot of movement required for goods , both from India
Economic Zones and product specific Agri Export Zones, the production
export to its major destinations like OECD, Asia & OPEC regions
showed significant increase. Exports in $ value grew by 12.8% to
liberalisation in the FDI , it became clear that the opportunity had arrived
to spread their wings and enhance their area of business which would
expand very fast. FDIs would require the movement of goods and raw
materials into the country for setting up of either the wholly owned
for the export market or domestic consumption. Both the markets would
price.
and the common business activity, they agreed to meet in the next few
Manu believed that the window of opportunity had arrived with the
domestic market getting smaller. It was becoming clear that only the big
and the most competitive would survive. There was a need to become
global and to achieve this they should bring some strength in their
is changing so fast that there would never be the perfect strategy with
the perfect technology with the perfect marketing opportunity with the
perfect product. So you need to back a team that's facile enough, and
business processes which would bring them at par with the other major
The salient points in the setting up of SUKAM INDIA LIMITED is given below:
1. The new company SUKAM INDIA LIMITED, has been formed by five partners
namely Mr Samir Suri, Ms. Urvashi Shah, Mr. Kaushik Dey, Mr. Ajit
2. Mr. Manu Chopra, owner of the courier firm is the major share holder. He is
providing his offices, staff and assets in Delhi. His domestic and international
business in couriering works on the basis of tie-ups with major players in the
market. The arrangement amongst partners is internal. The share in the profit
3. Sukam India Limited is strengthening its value chain by providing the services of
4. On the basis of the in-depth analysis done by the partners on the impact of
and increase in world trade due to the impact of the positive WTO
measures, the trade within and outside India will grow. This would result in
goods. To add on to the USP of SUKAM INDIA LIMITED, a tie-up has been
arranged with M/s. XPRESS LOGISTICS PTE., SINGAPORE. This foreign
company has made a name in the last ten years of operation in the field of
5. The advantage of their networking will benefit the new joint venture company
SINGAPORE will bring in technology to the new company as well as provide 50%
equity. The total Investment including the assets of Mr. Chopra's office set up in
Delhi would be Rs.3,57,30,000/-. The financial equity of 50% coming from Xpress
SUKAM India. Investment of Rs. 1,19,10,000/- has already been made in terms
of Mr. Chopra's office in Delhi. The loan requirement for investment in Chennai
and Mumbai of Rs.59,55,000/- has been arranged and being sourced from a
repayment of principal of one third at the end of each year. The total repayment
at the end of the first year works out to be Rs. 29,97,350/- ( Principal-
6. XPRESS SINGAPORE will set up a website in the name of the joint venture
company SUKAM EXPRESS. They will maintain this site. This site will provide
on-line tracking and tracing system for all documents and freight. Access to this
site would provide the on-line status of the document of freight sent by the
customer. This site would also provide eCRM concepts, list of branches of the
company, and names of the Express companies with which it has a tie-up. It will
also give information of the type of warehouse facilities available with the
company. This site would also provide facility to Retailers for online selling and
delivery of the goods. It has immense potential and the site can grow from here.
7. The joint venture company would set up its own offices in Delhi, Mumbai and
Cochin, Kolkata and Ahmedabad. The Sales Offices would function through
broker agents.
In short, Sukam Express, the logistics sevice provider will have to cater to
• DEVELOPMENT OF MANAGEMENT
• NATURE OF SHIPMENTS
• NATURE OF CLIENTS
• COST OF COMPUTERISATION
• SUMMARY
• VENTURE CAPITAL
• WORKING CAPITAL
• NOTES
If SUKAM XPRESS plans out its entry wisely and our expectations from the joint
venture are pragmatic and logical we are convinced that over a period of few years
SUKAM XPRESS can capture a major share of the Indian Express Industry Market.
But of course for this to happen the changes are not only likely in India but overall
serviced by approximately more than 5,000 courier companies, most of these are
broker agents who feed into the networks of other large Express companies. Such
brokers select particular networks for particular destinations depending upon price,
speed and reliability. The total courier market in India can be divided into 3 type of
categories:
(i) TYPE A: The franchise networks who work entirely on a free to free basis and
(ii) TYPE B: Broker agents who market their services independently and
depending upon the prices and services levels offered to them. However,
their main earnings from specialised regional routes which they operate
India-U.A.E., India-SIN, India-HKG and the rest of the world routing through
other larger networks. The unique selling point or in other words why
customers would like to use such companies is because they are able to
provide custom tailored packages in terms of prices and deliveries e.g. offer
next day delivery in LON, NYC, etc., deliveries by 9.00 a.m. in DEL, BOM,
MAA etc. which the larger networks would not be able to do because of the
deliveries.
are very few probably only 1 or 2 who have been able to achieve their
financial goals and have been able to sustain the high levels of investments
The revenue levels per package which the various companies are generating and
the market categories in which these companies can be categorized are as follows:
i) The Higher End: These are the companies which have their own networks
infrastructure are very high and therefore they are charging the highest
amount. The companies which can be placed in this category are Blue Dar
(Fed Ex), DHL, Elbee (UPS). The philosophy that guides these companies is
that their sustained income is generated from Imports and Exports and all the
ii) The Middle Group: Most of the visible courier companies like Overnite, First
Aramax, Skynet etc. come under this category. Such companies are basically
condition. They basically depend upon each other to provide the service
iii) The Lower End Group: These are the various local companies operating
International shipments they generate are routed through any of the category I
access to small and remote stations within particular states. They deliver the
NO.
1. Blue Dart (FEDEX) • Reliability
small cargo
large clients
The above information clearly indicates the enormous competition and thus implies
that it is absolutely necessary that we enter the market to expand our business
with a new product and not enter as just another courier company.
2. PLANS/INTENTIONS:
The long terms plan for expansion of SUKAM XPRESS Network/services in India
Pacific Region. In order to achieve this goal it would require us to undertake the
locations)
iii) Introduce new services and products: freight forwarding, warehousing and
with India).
iv) Market positioning and branding projection: i.e. not just as another express
v) Forecast
3. REQUIREMENTS:
Regional Hubs:
order to achieve a level to satisfy the requirements of the Worldwide Network the first
step should be to elevate the level of regional hubs at DEL, BOM, MAA, to
functioning 24 hrs a day with all custom clearance and related facilities.
owned by JVC)
(ii) Upgrade tie-ups for outsourcing from express companies only at BLR, CCU,
enhanced substantially. In order for the hub to operate round the clock the following
would be required:
(i) Vans/Mini trucks: The function of these vans would be to provide shuttle
services between airport & hub, OBC companies & Hub, etc. The vehicles for
the hub operations should not be confused with the vehicles for delivery
(ii) Two way communication: As most of the areas at the airports and customs
must be equipped with some sort of two way communication i.e. mobile
(iii) Computer Hardware: The hub must be equipped with the necessary computer
Sales Office:
In addition to the 24 hr hubs the immediate requirement to satisfy the needs of the
We are not setting up self-owned branch offices in BLR, CCU, COK AND HYD
The cost of establishing a sales office in any part of India today is in the region of
Rs.5,00,000.00. if the premises are rented and Rs.10,00,000.00 if the premises are
technology and system. The main equipment cost for a single sales office would be
It is not advisable to open sales offices purely on the assumption that there is
untapped market waiting for SUKAM XPRESS to capture. Even on the countrywide
Networks Blue Dart (FEDEX), Elbee (UPS) have suffered big financial losses due to
ill advised expansion planning. In order to avoid the failure and huge financial losses
campaigns etc. The sales office whether self-owned or Franchise would exclusively
sales.
The decision to set up our own offices and franchisee based offices would depend
(iii) Nature of shipments {heavy volume, SPX (non document) , DOX (document)}
• Efficiency of labour
business available from such centers could be very high in terms of volume
courier companies operating out of these stations, the revenue per piece
COK, LUD-DEL etc. There are courier companies operating between such
locations @ Rs.05.00/ pc. Which we, with our costs and investments
Ludhiana etc. A franchise based option at these places would work positively
self-owned regional hubs and strong financial backing will be in a very strong
business available.
(iv) Most frequent destinations e.g. USA, Europe etc. where shipments are
sent.
category.
There are certain locations such as Moradabad, Ludhiana, Panipat, Varanasi,
competitive tariff for heavy weight shipments. Such locations have, basically
courier companies, which demand rock bottom prices (well below the market
rates), which the main line courier companies like DHL, FEDEX, UPS OCS,
TNT, SUKAM cannot offer. These lower end courier companies have
NYC, SIN for specific market segments and are also able to sustain
FRA/Germany.
One of the major viruses the Express Industry is plagued by is the bad nature
of business of such companies is very large and is very attractive for the
prices to these clients, however collections from such customers generally run
bad or run into 4-6 month credit. Such a situation arises because of the
industry being disorganized. These customers are able to shift from one
Express company to another and are able to avail the services they need,
without being disturbed even if the company they utilise stops to provide
services to them. Due to such reason, many of the express companies have
are local people, well aware of the local environment & stability of the
customers. This way the large Express company Networks are able to pass
Certain locations within the country are very strong in regards to labour
unrest, strike, lockout etc. e.g. West Bengal, Uttar Pradesh etc. At such
locations due to strong labour unions, the efficiency of staff is low & cost of
running high.
The current number of packages per day received for delivery from each
STATIONS
TYO 200 30
LON 20 05
FRA 05 02
NYC 05 02
EUB 05 02
DXB 20 10
SIN 20 10
CMB 05 02
As is evident from the above table, the figures show that exports to India by
XPRESS LOGISTICS worldwide Network other than TYO, DXB, SIN, LON is
negligible in terms of revenue which may have helped to offset the high cost
volumes are so low that they will lead to higher rate per CWB at BOM, MAA,
BLR, HYD, CCU is too small to enable an office to break even on its fixed
our opening of new stations will not necessarily lead to reduction in cost of
transfer. Considering the lack of any financial support from the network, in
respect of this project, we may not be able to pass on any benefits of lower
several years. Once the volume of import deliveries from the network
increases the cost of handling per CWB would be lower as well. Providing
some subsidies to the franchisee which will lead to certain fixed cost for the
initial period.
The towns and cities, where we intend to set up franchise based offices have
CATEGORY B: Cities where the sales are expected to be more than Rs.3
CATEGORY C: Cities where the sales are expected to be more than Rs.2
CATEGORY A:
Bangalore.
CATEGORY B:
CATEGORY C:
Gurgaon, Noida, Goa, Bhopal, Varanasi, Madurai, Amritsar, Nagpur, Nasik,
CATEGORY D:
CATEGORY E:
It is much too early to identify a single person who will be solely accountable
for this task. In view of the size of the project and the long term implication we
feel that it would be necessary that our present country management team at
SUKAM DEL will be actively involved with the project. Whether it be in the
beginning, national level executives will be induced one each in the primary
change in style and attitudes would be required, we still feel that the transition
Branch Office level. This would naturally be aided and guided by pre-set
i) The country will be divided into 4 to 5 zones for ease of management and
Western & Eastern Zones) and each would be headed by a regional head
who would run his region as a profit center, with complete responsibility within
his region for marketing and sales, operations, administration, finance and
with experience in this line of work in order to see the above goals fulfilled.
ii) We are strongly of the opinion that, there has to be a combination of our own
iii) All branches/agents will have a branch manager appointed, responsible for
the overall smooth functioning of his branch. These branch managers would
then report to their Regional Heads who in turn will report to the Country
Manager. In case the concentration of branches in any one region is high, the
regional Head may group together a number of branches under the charge of
an Area Manager.
Such a structure we believe, would leave the Head Office free to concentrate
DIRECTOR FINANCE
COUNTRY HEAD
DIRECTOR OPERATIONS
DIRECTOR MARKETING
REGIONAL HEAD
BRANCH
OPERATION
CUSTOMER
SALES
MANAGER
MANAGER
MANAGER
SERVICE
MANAGER
OPERATION
CUSTOMER
SALES
EXECUTIVES
EXECUTIVE
SERVICE
EXECUTIVES
A
ANALYSIS:
Rs.45,00,000.00 = Rs.90,00,000.00.
The above estimate is based on the assumption that the office space is on rental.
SR. ITEMS A B
etc.
3. 8 Telephone lines (@ Rs.30,000 2,40,000.00 2,40,000.00
per line)
4. Telephone exchange/EPABX (3 25,000.00 25,000.00
operations)
9. Communications system (pagers, 20,000.00 20,000.00
enclosed)
to cater to increased work load. In terms of additional staff, equipment, office space,
etc.
MAA – 1,00,00,000
BOM – 1,00,00,000
2. Estimated Security deposit payable for 1000 48,00,000.00
deposit
MAA – 24,00,000
BOM – 24,00,000
3. 4 Telephone lines (@ Rs.30,000 per line) 3 2,40,000.00 2,40,000.00
MAA – 1,20,000
BOM – 1,20,000
4. Telephone Exchange/ EPABX (3 lines & 6 2,00,000.00 2,00,000.00
extensions)
5. 1 Fax machine 50,000.00 50,000.00
MAA – 25,000
DEL – 25,000
6. 1 Telex Machine (optional) 30,000.00 30,000.00
MAA – 15,000
BOM – 15,000
7. Photocopier machine 2,00,000.00 2,00,000.00
MAA – 1,00,000
BOM – 1,00,000
8. Delivery vans (4,2 for Hub operations, 2 for 16,00,000.00 16,00,000.00
MAA – 8,00,000
BOM – 8,00,000
9. Communications System 2,00,000.00 2,00,000.00
MAA – 6,00,000
BOM – 6,00,000
10. Computer system (as per details enclosed) 12,00,000.00 12,00,000.00
MAA – 6,00,000
BOM – 6,00,000
11. Staff Uniforms 1,00,000.00 1,00,000.00
MAA – 50,000
BOM – 50,000
TOTAL 2,38,20,000.00 86,20,000.00
SUKAM DELHI
COURIER SERVICE
No. LOSS
1. Courier Sales (Domestic & 10,00,000.00
International)
2. Imports – Inward Commission 4,00,000.00
commission to XPRESS
LOGISTICS, SIN)
3. Imports ex LHR/SIN/DXB/TYO 2,40,000.00
4. Franchise Sales 6,00,000.00
5. Salaries including Bonus / P.F./ 2,35,000.00
etc.
6. Communication charges 80,000.00
Taxes
8. Legal Expenses (professional 10,000.00
advisors etc.)
9. Computer Hardware 10,000.00
Maintenance
10. Vehicle maintenance (includes 30,000.00
Petrol & Repairs etc.)
11. Freight
Domestic 1,50,000.00
DEL, BOM)
(EUB,FRA,SIN,DXB,LON,TYO)
12. Customs/ dispatch clerks/ 75,000.00
receipts)
13. Stationary/ Packing Materials 75,000.00
Stationary etc.)
TOTAL 22,40,000.00 10,00,000.00 12,40,000.00
C
SUKAM XPRESS
CONSOLIDATION)
No. LOSS
1. SALES 62,50,000.00
DEL – 25,00,000
BOM - 12,50,000
MAA- 10,00,000
Franchisee – 15,00,000
2. Inward remittances (NET) 12,60,000.00
DEL – 42,25,000
BOM – 1 7,70,500
MAA- 20,28,000
TOTAL 75,10,000.00 60,23,500.00 14,86,500.00
Less Repayment of
CONSOLIDATION)
No. LOSS
1. SALES 85,00,000.00
BOM – 20,00,000
MAA - 15,00,000
DEL - 30,00,000
Franchisee – 20,00,000
2. Inward remittances (NET) 16,00,000.00
BOM – 27,00,000
MAA – 18,00,000
DEL - 30,00,000
TOTAL 1,01,00,000 97,00,000.00 26,00,000.00
Rs. 2,85,40,100.00
E
SUKAM XPRESS
CONSOLIDATION)
No. LOSS
1. SALES 1,00,50,000
Franchisee)
2. Inward remittances (NET) 20,02,400
BOM – MAA –
DEL - 86,00,000/-
TOTAL 1,20,52,400 86,00,000 34,52,400
Rs. 3,91,06,350.00
SUMMARY
It is evident from the attached Profit & Loss Summary that SUKAM XPRESS is
ANNUM.
With the formation of the joint venture, it can be expected that the expenses will rise
to about Rs.60,23,500.00 per month, in the first year. The major increase being due
During the first year of the joint ventures’ operations, we can expect a increase of
almost 100% in sales at Delhi and franchisees and a modest increase at Chennai
and Mumbai. The reason being the provision of customised logistics packages to
The expected sales from this region per month during the first year would thus be –
this, we expect the Net Inward Remittance from XPRESS LOGISTICS, SIN for India
Rs.12,60,000 per month reason being the opening up of QRs and increase in the
FDIs.
Using the above forecast Income & Expenditure figures for the first year, we arrive
at:
INCOME (ANNUAL)
Sales (Rs.62,50,000 X 12) = Rs.7,50,00,000
Total = Rs.9,01,20,000.
EXPENSES (ANNUAL)
We can thus, safely expect the Joint Venture to expect a Gross Profit of
In the short term, it is essential to employ a strategy of having the Joint venture
Management only at Mumbai, Chennai and Delhi. Other stations must be managed
entirely by Franchisee (as is the policy currently). This strategy offers two major
advantages to the Joint Venture. Firstly, it drastically reduces the investment capital
increasing and consolidating our market positions in the three major metro areas
(Mumbai, Chennai, Delhi). Once this is achieved, the place regarding Franchisee
locations e.g. Cochin, Mangalore, Tirupur etc., can be safely reviewed and where
25%, Net Inward Remittances by 20% and a 20 increase in expenses across the
region.
6. INTRODUCTION OF NEW SERVICES AND PRODUCTS – MARKET
In order to sustain the competition the joint venture company would have to
look at new avenues to generate revenue so that the company maintains its
probability and is able to provide the services to both its customers, clients
and the network at the required level. The new services which the company
could look into to generate additional sales would be like delivery service of
the same time look into expansion of its core business which is providing
Domestic and International courier and logistics service. Though new services
may be added the capital required to invest in new products and service
would have to come from the profits generated from the core business which
is the courier business. For the courier business to expand in India, we must
realize that such expansion and improvement in such services can not only be
within India but also is directly dependent on the fact that the XPRESS
The freight forwarder arranges for the shipment of goods as an agent for an
cannot afford an in-house specialist to handle paper work and other export
trade mechanics. Even in large companies, with active export departments
provides information and advice on routing and scheduling, rates and related
selected in terms of the total impact on cost. One estimate is that logistics
account for between 19 and 23% of the total cost of the finished product
points, reduced costs, reduction in losses from pilferage and damage and
the teams. They in turn brainstormed and sent suggestion back. The
solution. Slowly the shell began to fill out and a system began to take shape.
The background was that SUKAM's regional offices were having independent
LAN and none of the other offices were computerised. The PC's were limited
international track and trace system, was operating out of one office, Delhi-
head-office and data transfers were on STD and local dial-ups. The objectives
drawn were to inter-connect LAN and EDP and subsequently all remote
solutions that would fit the needs, thereby, giving the customer a complete
implementation and course corrections and tuning was done to ensure that
technology installed was giving the desired outputs. The users feedback was
sought and the solution was tuned to the needs of the user to ensure all user
The result was that Sukam Xpress got the solution to its needs in terms of
wide area network technology coupled with the requirement of local area
the opportunity arose. This led to a process of determining future needs and a
plan was worked out to resize and demand of applications and user. This plan
was supported by both the consultant and SUKAM's system personnel which
standardised routes for consignments covering its 242 locations all over the
Hyderabad & Erode which had the largest number of flight connections were
chosen as Hubs, where packages were sorted and reloaded for their
consignment is on its way. Its also makes the arrangement to the next
mail allowing for communication along cities but more importantly across
layers ,keeping top management in touch with the employees in the field.
Such heavy investment in Technology actually paid off . According to the top
instance, SUKAM tied up with Rediff on the Net, one of the first e-commerce
companies in India.
For instance, the company recently introduced Power Xpress, where
customers are put on line to SUKAM offices and have instance access to
flight and shipment schedules, price , etc. , allowing the customers to in turn
plan their consignments. City Bank's credit card division is one such client.
client's valuable time. The company has also introduced the SUKAM Collect
which allows the consignee to pay for the consignment. But apart from the
ability to introduce new products, the biggest pay off will come in when the
customer starts seeing couriers as more than just against to deliver his goods.
The two major points which the Overseas XPRESS LOGISTICS stations must
and from SIN, HKG & TYO. This image needs to be altered to one befitting a
number of points/service related issues which the new company, SUKUM XPRESS
Logistics to improve upon the service levels, invest in infrastructure, prepare global
corporate policies in regard to inter agent custom clearance, delivery and local
courier charges. We would like to highlight a few of these issues which if not taken
care of could jeopardise not only the future of the new company, SUKAM XPRESS,
but, also have a direct financial impact on the image of EXPRESS LOGISTICS.
(ii) SUKAM XPRESS in coordination and with the support of the Overseas
(iii) SUKAM XPRESS will stress upon the need to have better and more
7. CONCLUSION:
From the above Points – for – consideration we may safely conclude that:
(i) As is evident, SUKAM XPRESS India initially will have to rely heavily, if
concerned, for revenues to pay for the operating costs and incomes.
(ii) For freight forwarding and logistics business, it is important the SUKAM
SHOP FACILITY'.
(iv) Service levels will have to be upgraded to match, if not exceed the