People would love to see TCS in the stock market: President and CEO, TCS Holdings Limited

M.A. Mannan is the President and CEO of TCS Holdings Limited bringing with him over 22 years of business experience, both locally and internationally. Prior to joining TCS, Mannan served as the Executive Director at Silkbank where he was responsible for Islamic Banking and also spearheaded the Mergers & Acquisitions activities to deliver the best value for the bank.
Mannan further built on his headship experience in the financial sector, as Deputy CEO of UBL (2003-2005) where he was responsible for consumer and commercial banking as well as international operations. He then went on to serve as CEO of Dubai Islamic bank (2005-2010) where he was responsible for launching the franchise in Pakistan and leading it to its current status of being one of the largest Islamic banks in Pakistan.
Mannan has also served as the Chairman of the task force on remittance to Pakistan. He envisioned and created Pakistan Remittance Initiative (PRI); a joint venture between the State Bank of Pakistan, Ministry of Finance and Ministry of overseas Pakistanis. This was a breakthrough program which delivered more than $14billion in 2012/13. He is also a former member of the Revenue Advisory Council to Federal Board of Revenue (FBR) in Pakistan.
BR Research recently caught up with M.A. Mannan to discuss the future of e-commerce, logistics and supply chain in Pakistan. The following excerpts include his view on the state of the market and competition, plans for growth and appetite for financing.
BRR: Please elaborate on your business model?
M. A. Mannan: We currently have four key business areas. The first is our corporate business consisting of more than 15,000 corporate clients all over Pakistan. Our clientele is very diverse and spread all over the country. Our reach is such that if I ask you to name ten companies; eight of the ones you quote, will be TCS customers. In the beginning our services were limited to going to the customers to pick up their documents and parcels for delivery, but with time we have grown. Our Supply chain advisory is one of the latest additions to our service portfolio.
The idea is to change the game completely; now TCS goes to the customer to discuss their current business models and to understand what they are looking to do in the future? What are their short and long term goals? And once we completely understand their needs, specifically in logistic, we create customized solutions for them.
The customized solutions we provide take a three pronged approach in fulfilling their needs; the first being the services that we are currently providing them, then the services that we can provide to them to further enhance their organisation's productivity and efficiency, and the third is the infrastructure that we can provide to fulfil their future needs. So what we offer is an end to end package, a complete solution.
A good example to quote here is that of Telenor; one of our corporate clients. We provide Telenor with an end to end solution for their SIM management. The SIMs arrive in TCS warehouse, we package them, we maintain and manage the inventory, and we also distribute them and all this is done with a 0% Error Rate. With its SIM inventory management and distribution being taken care of by us, Telenor is able to focus on its core business.
We are providing similar level of customised solutions to other organisations, like PTCL, as well as other retailers and fashion houses. So this is how our corporate business operates, a part of this business is also making collections; we collect cash payments and also print bills. Most of the utility bills you receive at home are printed by us.
The second business area is the consumer business where any individual can send / receive a document / parcel etc from within Pakistan and also abroad. This is where our 780 plus express centres, spread throughout Pakistan, come into play.
Our Consumer business is what makes us a household name as most people only see the consumer side of TCS through our express centres, riders and our boxes, they don't see the corporate side of our business. This is why over 40,000 people walk into our express centres every day, trust us with their packages and this is what we take pride in, being of service to them.
We have a workforce of over 10,000 people, 4000 of these are our couriers. Our express centres mostly have 2 team members each to cater to the walk-in customers. We have a fleet of 500 plus vehicles that are satellite tracked. We also have our own 737 aircraft which connects all of Pakistan with us.
The third key business area is what we call International business. We get walk-in clients at service centres that want to send items to / or receive them from other parts of the world. Then we also do lots of deliveries for international companies since they don't have any local network. So in a lot of the cities and towns, we are the last mile courier service provider. TCS is the third largest domestic courier company in UAE, providing our services dedicatedly for around 15 years now. Our International business is also connecting Pakistanis abroad to Pakistan through e-commerce solutions. For example people living in the UAE, UK and the USA can order things for themselves and their families and get them delivered to their doorstep.
Which brings me to our fourth business area, which is TCS e-commerce; it has recently been incorporated as a new company. Previously, we did an experiment of sorts with TCS Connect and based on our learning we re-branded TCS Connect into Yayvo.com. Yayvo.com is now our official online presence for those who want the convenience of ordering things online or sending them as gifts.
So, these are the four business areas inside TCS Holdings. We have decided that instead of being product-driven we will always be customer-driven, and that our target market will be Pakistanis; those living in Pakistan or abroad, that's brought about a big shift within TCS.
BRR: What is the market share of TCS?
MM: There are no accurate measures available in Pakistan to work out the market share but I know that at one point or the other every Pakistani would have been a customer of TCS either directly or indirectly.
If I have to quote a percentage, I would say that our market share would be approximately 50%. As far as our e-commerce business area is concerned, that is still in early stages so I would refrain from quoting a percentage for that.
BRR: How do you view the market and competition?
MM: In traditional logistics and courier services our customers have made us number one with a clear margin. TCS has a unique position in the market being the pioneer and the market leader. There is competition, which will always be there and is always welcomed. Our focus is not on our competition but on our customers and that is what sets us apart from others.
In e-commerce, yes no doubt that there are international players who have made their name, and are already leading the market. But TCS e-commerce model is not per say model at all, and we're not trying to become the next Amazon or any other online shopping company. This is not what we are trying to do at all. So, why are we getting into e-commerce business? We are going into e-commerce business because world-wide every online company has struggled with the last mile. Every e-commerce company has faced issues of fulfilment, returns and the last mile because most of the times they have to depend on third-party service providers. This is where TCS has the edge; we have the reach which allows us to cover that last mile allowing us to peg the last mile as our USP in the e-commerce sector and we are building our business around this very strength.
People can buy something from Yayvo.com, and if they don't like it, they can return it to our service centre and get their money back. We deliver within twenty four hours without charging any premium, unlike many other service providers.
BRR: What are the company's plans for IPO and public listing?
MM: At this point in time, TCS is generating enough cash and profits for us to take care of our own investments in the future. We believe the best investment we can make is within our own company and people; with that philosophy in mind we are trying to take the company forward.
Having said that, based on our future expansion plans, clearer thoughts on what kind of investments will be required; that will throw the question back to us - how to raise that money? IPO is just one of the options, private equity could be another.
BRR: The market is abuzz with talk of an IPO. Are you saying it's not in the works?
MM: I'll tell you why they're expecting this; it's a very fortunate position for us to be in. TCS's name has come to light because of its governance standards. Our transparency, good governance and responsible tax citizenry have made TCS a household name. We need just a few tweaks to perform as a public limited company.
We're sure people would love to see TCS in the stock market. But we just have to be clear on when we need it; we should raise money when we need it. We don't want to do it just because the market is good right now. We have always believed in making life simple, convenient and easy for our people and customers, this is why we are where we are right now.
BRR: It seems there is a transformation under way at TCS. Would you agree?
MM: We call it 'thinking inside the box'. We are not doing anything new. What we are doing differently now is focusing on time and technology to predict what changes we will see in customers' needs in the future; our focus is to be there with a range of services to ensure that all of our customers' needs are met adequately.
Our strategy is an open source document developed by all of us at TCS. We are playing to our strengths and our strength lies in our people and our infrastructure. So the 10,000 people who were relevant yesterday are even more relevant today. Consider the example of Hazir 60 minutes; it is a success story with more than a thousand people using it every day. Only two options of this service have been launched so far; the third is coming soon, which we call 'Hazir - Sab Kuch'. You will soon experience a service that has never been seen or heard of before, all made possible because of our team.
In Pakistan, we are in a unique position but, at the same time combine this with e-commerce and what's happening around us and the writing is on the wall. In Europe, India and rest of the world, e-commerce is driving all logistics companies. This is creating an exciting opportunity for TCS. We worked really hard for 32 years to be in this position, but we're even more excited about the next ten years and beyond.