Reaching for the peak in logistics business

  • Smebiz
  • Monday, 02 Jul 2018

Down, not out: Andy has successfully grown the company and hopes to pull in a valuation of RM100mil by the time it goes public.

INSPIRATIONS can sometimes come from the least expected of circumstances. For Datuk Seri Mohniandi Harikrishnasamy, better known as M. Andy within his professional circle, it came at a time when he was looking absent-mindedly at a building while catching a break on his bike.

The company he founded, Everest Integrated Logistics, was conceptualised out of a desperate moment. But today, it has become a symbol of his towering ambition.

Andy and a former colleague of his started out as dispatch boys in 1996 after they decided to venture out on their own. They started a small business delivering parcels using their own bikes, and focused on the parcel delivery market in the Klang Valley.

Andy was the workhorse for the company, putting in up to 16 hours a day to ensure that they could offer customers the most efficient and value for money dispatch services.

“We were doing great, being the only company in town to guarantee same day delivery, something that people have to pay a premium for in those days. But once the money came in, greed started to take over.

“My partner wanted to take full control and take all the earnings, forcing me out of the company along the way,” recalls Andy.

New model: More logistics providers are evolving into ‘one-stop-shop’ to capitalise on cross-segment opportunities.
New model: More logistics providers are evolving into ‘one-stop-shop’ to capitalise on cross-segment opportunities.

Down and out, and without a clue on what to do next, he wandered around the city with his bike.

“I finally stopped and rested in front of a big building in the city centre. Looking up, I saw the corporate logo of AIA Insurance, which is symbolised by the Mount Everest,” he says.

Struck by the simple profoundness of the moment, Andy was spurred to take on his own mountain.

“That’s the moment I thought to myself, if I were to start something on my own, I needed a brand name that is recognisable, for people to have an impression of the company and our services” recalls Andy of those trying days.

He founded Everest Integrated Logistics in 2002.

The company specialises in logistics services, logistics management and transportation logistics to businesses in Malaysia and Singapore. It has its own fleet of van, motorcycles and trucks. Everest also provides retail distribution as well as air and sea freights.

Andy, the group managing director of the company, says the decision to use the name Everest has proven to be a right move. Not only has it given Andy a new boost, it has also worked well as a corporate brand name to gain customers’ attention, enabling it to secure businesses from multinationals and other large corporate clients.

Sizable manpower: The company currently has more than 300 workers.
Sizable manpower: The company currently has more than 300 workers.

Its mantra to success, says Andy, is “never say no to customers”.

One of the things that helped propel Everest’s business from a small parcel delivery company to a full-fledged logistics company was a chanced business deal from multinational consumer product company Proctor & Gamble.

Since then, Everest’s growth has been breathtaking. It grew from sharing a room within a small office when it started operations to taking over the entire office lot within a year.

“For us, the key to growth and profitability will be the ability to analyse customers’ needs and then respond quickly with differentiated and advanced logistics solutions,” he says.

“Being able to build a team of trusted people with you is also important as no business can grow without a good team to support you,” he adds.

Notably, the logistics industry in Malaysia as a whole has also seen good growth in recent years. Logistics demand can be attributed to the fact that more and more multinationals are also setting up regional offices and manufacturing plants in Malaysia to serve their global supply chains. But one of the most obvious reasons for logistics growth is the booming e-commerce market.

E-commerce in Malaysia has grown substantially; now, nearly 70% of the population, or more than 21 million people, have adopted e-commerce, notes Andy. Some of the top e-commerce sites like Lazada experience 5% merchandise volume growth daily at one point, he says.

According to the National e-Commerce Strategic Roadmap, Malaysian e-commerce is projected to grow at 11% a year. There is potential for this growth to double, Andy points out.

One-stop-shop provider

Over the last five years, as new customers enter the e-commerce market, there have been growing demands for more services apart from just traditional transportation services. Customers are also looking at warehousing services, freight forwarding and contract logistics providers.

In other words, the ability to become a “one-stop-shop provider” is emerging as a way to achieve differentiation and capitalise on cross-segment opportunities.

Most logistics service providers in Malaysia focus on specialised logistics solutions for specific industries. In the future, though, more and more of them will look into offering services across supply chains and industries.

End-users are also expected to centralise their supply chain needs, looking to one-stop providers rather than the current trend of engaging multiple logistics service providers for different logistics requirements.

Looking ahead, Andy says Everest could offer stakes to a private equity firm or strategic investors in the related sector that could help the company in terms of market access and capital injection to expand its logistics services. Having a strategic shareholder or institutional fund on board could also help raise the company’s profile and attract better valuation for the company.

The company has more than 300 workers and expects revenue to exceed RM15mil by this year.

Andy says Everest will be comfortable with an annual growth of about 15% to 20% as the company expands its fleet to cater for the last-mile delivery services, which will be crucial with increasing e-commerce adoption.

On the longer term plans for Everest, Andy says there is a need for the company to be a regional player and to open up the company to partnership with global peers even as the industry consolidates.

Driving ahead: The company has its own fleet of vans, motorcycles and trucks to provide full-fledged logistics services.
Driving ahead: The company has its own fleet of vans, motorcycles and trucks to provide full-fledged logistics services.

He notes that Everest has received interests and is currently in talks to form strategic alliances with China-based logistics firms that are keen to tap into the South-East Asia market. The company could sell a minority stake to potential investors ahead of its planned listing by 2020.

Everest has yet to start any engagement with banks for the potential IPO but will look into it by early next year once it has a firmer timeline for its listing plans. Andy has high hopes for the company. He expects Everest to have a valuation of more than RM100mil by the time it goes public.

“Listing is one of the ways for us to go global and tap into opportunities that will arise in line with our core businesses such as warehousing and cross border logistics services. The funds that will be raised from the IPO will also be allocated for investment in logistics related technologies.

“At the end of the day, we want our logistics sector to have a regional footprint. We want to be a regional hub,” he says.

He reckons that the growth in cross-border trade, especially in Asia, is expected to support the logistics industry for many years to come. This will also be a growth driver for Everest as it looks to expand regionally.

Everest is in the midst of finalising plans to start its own logistics operation in Singapore by this year. The company also has a foothold in Thailand via cross-border shipping activities. It is now setting its sights on China and India, two of the world’s largest consumer markets with great potentials for logistics services.

It is often said that to successfully reach the summit of Mount Everest, one needs a combination of good team support, loads of determination and a little bit of luck. Andy’s journey in building Everest Logistics into what it is today is like a climb up the famed mountain. And he is confident that he has the necessary combination to reach the peak.

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