M.A. Mannan is the President and CEO of TCS Holdings (Private) Limited with over 24 years of local and international experience. Prior to joining TCS, Mannan served as the Executive Director at Silk Bank. He has also served as the Chief Executive of Dubai Islamic Bank and Deputy CEO of UBL. He started his career with Citibank and held leadership positions in Pakistan and the USA.

 Mannan sat with BR Research back in 2015 and we caught up with him once again nearly two years later to learn about TCS’s latest venture into e-commerce, its global partnership with logistics’ giant UPS and the growth prospects of the courier and logistics industry in Pakistan over the next decade. Here are some excerpts from our discussion:

BR Research: Give us a little bit of a background particularly your current product portfolio.

M A Mannan: TCS was incorporated nearly 33 years ago and at the time, there was absence of an efficient courier or logistics company for domestic market. Since then, we have grown so much that today if you want to send something from Pakistan, you simply say: “TCS it”. That’s a good place for a business to be in.

Over time, as the needs of our customers have changed, so have we. Our business has four segments. The first is corporate business. We have more than 15,000 corporate customers in Pakistan, spread across various sectors including banking, pharmaceuticals, textiles, fashion, you name it, and we have it.

The second segment is consumer business. Over 40,000 people walk into our express centers every day to send something somewhere. We have the largest network of express centers across Pakistan.

Our third segment is international business. We have had presence in Dubai for a while, and now the highlight of this business segment is our strategic alliance with UPS, which gives us access to the world’s largest courier company. Whatever they pick from anywhere in the world for delivery to Pakistan, gets to its destination through us and whatever we pick locally for international delivery, goes through UPS network.

The fourth segment of our business is e-commerce. Here, we have distinctively two offerings. One is e-commerce solutions, where we provide back-end solutions to other e-commerce companies, including warehousing, distribution and delivery.

Then we saw that there was an opportunity in Pakistan for a front-end e-commerce platform that provides good customer experience. So we formulated a new company called TCS e-com that launched Yayvo.com, our electronic market place. TCS Sentiments Express also comes under this segment.

BRR: Would you say Daraz is a big competitor for Yayvo?

Mannan: There are a lot of big players in the market, but I would say our business model is very different. We believe that Yayvo is not a typical e-commerce company. The idea is very different. We already have access to our existing corporate customers and then our extensive national network ensures our ability to deliver faster than anyone else.

I know of several e-commerce players losing on margins due to heavy discount offerings but we work with highest margins in the e-commerce industry. We don’t carry inventory and we count on our existing infrastructure to deliver.

Yayvo’s main focus, I would say, is fast delivery, great customer service, and great customer experience. We do 60 min deliveries; no e-commerce company in the world can say the same. Our big advantage is our network of express centers. You can walk into any of our 800+ express centers and return a product or even order a product if you don’t have access to the internet at home.

BRR: What is the current market share of TCS and the growth you have experienced over the past 10 or so years?

Mannan: Unfortunately, the industry is not very well-documented so whatever numbers I will quote are informal. From our own market intelligence, I would say we have more than 50 percent market share. We have grown our business every year. I would say our average growth would be around 20 percent annually. That’s the beauty here, country has gone through uncertain law and order situations, change of governments, but we have continued to grow because we are a grassroots company with hardworking people, which has clicked with its customers.

BRR: How about some of your competitors? Have they grown as much?

 Mannan: As I said, so much of the sector is undocumented so I cannot give a number on the competitors, but I can tell you that we continue to maintain roughly 50 percent plus revenue market share. And probably hold 80 percent share in the minds of the people.

BRR: You have an established brand name, so your goodwill is definitely one USP. What would say are some other ways you distinguish yourself in the market? Do you have a price point advantage?

 Mannan: First of all, our USP from the customer's perspective has always been the trust and confidence they have in us. That does not come easy and is a product of over 30 years of hard work.

We are a premium priced brand. We back that up with a lot of investment in technology, a strong infrastructure and professionalism. To deliver innovative products and solutions to make life simple, convenient and easy for our customers, we have to invest significantly, so we charge a premium. In any industry, there will be different business models and customers prefer one over the other. Customers make a choice every day. We have our own market, and we are very protective of that space.

In e-commerce, our business model in Yayvo.com is very unique. Most of the other websites are only a webpage but we have TCS express centers network to back this business. The best part is, if you want something that is not on the website, most sites return “zero searches found”. We say, give us a number and we will call you and get it for you from where you want. This is where our established backend comes into play. No one is doing that.

We are actually transforming TCS. From a consumer perspective, we are changing from a courier company to becoming a lifestyle brand. Our new product “HaazirSubKuch” is an excellent example. You can call us, and whatever you want, within the city or outside, we can bring it to you—from a mobile phone you left at home or a DVD you want to watch and do not want to go out and get it or a shawl you saw on the web in Peshawar. We are transforming the company as Pakistani consumer transforms. If you have anything halal and legal in mind, you should think of TCS to bring it to you.

BRR: What are some factors driving your demand in Pakistan?

Mannan: This is the theme we follow: TCS is a platform for others to succeed. Which means that we tell our clients about our platform and we let them decide how to use it.

Our platform is such that we can start by getting your raw material from anywhere in the world; we can store it in our warehouse, we can then bring it to your manufacturing sites and then we can take your products to your retail stores, or we can sell it online. That is our platform.

Our demand driver is the business plan of the corporate customers we are working with. As they grow, as their business models change, we transform this platform for them accordingly. Whether it is an MNC or an SME, we present this platform for them so they can focus on their product and we handle all the backend. That’s a super partnership.

An example of customized solutions would be passport delivery. We were the only company in Pakistan that was selected by government of Pakistan to deliver passports at the people’s doorstep. To do this, we came up with a solution where we took biometric scanning to the recipient’s doorstep.

The second demand driver is e-commerce. The problem is at least 70 percent of Pakistan does not have access to products that they should have, but as confidence grows, as mobile technology advances, people will have access to any product from Pakistan or outside, sitting wherever they are.

BRR: Do you see more players enter this sphere?

 Mannan: In e-commerce, there is the front end. I believe that many more players will come in. But on the back end, across the world, there are only a few that are able to survive, which is because one major issue with e-commerce is “last mile delivery”, where even Amazon and Alibaba struggle.

BRR: If Alibaba comes into Pakistan, how will you compete with it?

 Mannan: First of all, there is no competition. We are the only “last mile delivery” option in Pakistan. If Alibaba comes to Pakistan, they would need a “last mile delivery” partner, and we will be right there for them. And hopefully they can use our platform to succeed in Pakistan. One of the things that any e-commerce company looks at before entering the market is how we will do the delivery. We look at this as a cooperation, or an opportunity rather than competition.

BRR: In terms of revenues, which segment has the highest share, and how have they grown?

 Mannan: About 70 percent of our revenue is from corporate business; 20 percent will be from consumer business and 10 percent will be from international business. We have been very fortunate. Businesses go through ups and downs but our risk is so diversified that while certain industries are facing a downturn, others are growing, so we have been lucky to grow within the corporate business segment year on year.

The growth is in e-commerce. I foresee that in the next five years, e-commerce solutions will be our biggest revenue source.

BRR: Which is your high margin segment? 

 Mannan: When you deal in corporate segment, the bigger the volume, the lesser the margins. There is so much more business to be done, and it is on credit so the money cycle also comes into play. Our consumer business has the highest margins and it is cash based.

BRR: You have a domestic market as well as an international one with your partnership with UPS. Do you see yourself offering a price advantage?

Mannan: We have competitive pricing, especially in the international market but again, price is not something we compete on. It has never been our pitch. Our customers come to us for the services we offer in terms of delivery time, reliability and tracking facilities even for the international deliveries.

In the local market, there is a huge difference in the way we think. If you walk into our express center and say you want a box delivered to your location. We ask if you want it sent within a time slot. Customers can pick a time slot and there is money back guarantee if it does not reach on time. For such a service, we charge a premium. On the other hand, if you are not in a hurry, we offer the economy express. It will be much cheaper. So there is premium, normal and economy but it is not because of price. It is because of the needs of the customers.

BRR: Last time you said that you might go public, what’s the status now?

 Mannan: I didn’t say we will go public. I think I said that TCS will be a good stock to have, and I stand by that. When you look at a business like TCS which is extremely diversified, absolutely ethical with such growth trends, it would be a great stock to have. But when we decide to do that is a question mark.

Our thought process is that going public is a means to an end, not the end itself. Right now TCS is generating enough profits on its own to fund its growth so if and when we need additional funds, we would think about going public. The timing for that has to be defined by business and demand.