Air freight services company Deccan 360 will hire a chief executive officer (CEO) and finalize its new business plan over the next two months as it prepares to expand operations, after raising funds through a stake sale last month to Reliance Industries Ltd (RIL), its founder G.R. Gopinath said.
Flying high: Deccan 360’s founder Gopinath said a business plan for the firm will be in place in two months. Ramesh Pathania / Mint
At least nine candidates have been shortlisted for the post of CEO to replace Jude E. Fonseka, a Sri Lankan settled in Australia who was let go as part of a cost-cutting effort at the company, which has retained him as a consultant.
“We are looking for somebody with Indian experience,” Gopinath told Mint. The new CEO will take the freight services firm’s business plan forward, said the aviation entrepreneur.
“I wanted somebody who is going to stay for the long term and grow the business and create wealth. We are going to strengthen it and deepen it,” he said
Gopinath is seeking to expand Deccan 360 operations to tap an air cargo business in which growth is expected to accelerate to an annual pace of 11.8% by 2011-12, from 5% in 2008-09, according to figures released by civil aviation minister Praful Patel earlier this month.
Mukesh Ambani’s RIL, India’ most valuable company, bought a stake in Deccan 360, run by Gopinath’s Deccan Cargo and Express Logistics Pvt. Ltd, last month.
In return for being a so-called strategic consultant, RIL will get a logistics backbone that can cut costs for its retail operations.
Without giving details of the shareholding structure, Gopinath said Reliance had bought anywhere between 26% and 49% of Deccan 360, which started commercial operations a year ago with a flight from Delhi to Hong Kong.
RIL and Deccan 360 teams are now meeting to identify “overlapping” synergies in areas such as information technology and logistics infrastructure, he said. A final business plan for the freight services firm will be in place in two months, said Gopinath, who pioneered low-cost flying in India with the erstwhile Air Deccan.
One plan is to set up a centralized warehouse in Nagpur to obviate the need for Deccan 360 customers to operate regional warehouses.
Deccan 360 works on a hub-and-spoke model, using Nagpur as the hub. It has appointed national service providers on a franchisee model and has already set up 80 service centres and eight surface hubs to service operations using its eight freighter aircraft, including Airbus A310s and ATRs, supported by a fleet of 300 trucks and 850 vehicles nationwide.
India’s air cargo market is still nascent. “Reliance is a conglomerate with several infrastructure assets, so I see this as an investment in the fundamental building blocks of the Indian economy,” said Vikram Krishnan, an analyst with US-based aviation consultancy Oliver Wyman. “Air cargo is a significantly underdeveloped field in India with significant growth potential as the economy grows.”
India has just 20 freighter aircraft currently. According to European plane maker Airbus SAS, the fleet size will expand to 210 by 2028, comprising 39 new freighters and 171 converted passenger planes.