Please give us a background about BVC ventures? How the company was established, the various sectors in which the company today operates, and where do you plan to take the company forward?
BVC ventures for us is our group holding arm in which we have businesses in logistics, security, technology, investments and so on. Our core business is logistics which is high value cargo logistics, which falls under the umbrella of BVC Logistics, that’s the brand under which that operates. We have another enterprise that you mentioned Vamaship, which is a tech aggregator for e-commerce logistics for small businesses. The BVC Logistics enterprise started in 1960. So, it has been over 60 years now and for us we started as a customs broker of only high value cargo. So, this was exclusively organized exports and imports of diamonds, that’s what our business started with. From there, we have evolved dramatically and today we are full stack logistics enterprise for high-value cargo. We have operations in over 10,000 pin codes within India; we have a joint venture through which we have 130 countries where we have secure door-to-door logistics activated.
Today, we work with logistics solution for the entire value chain of diamond, jewellery and gold. So, working with miners, manufacturers, wholesalers, retailers and e-tailers through the whole value chain and we work with over 21,000 businesses. In terms of the future for us, we have very deep relationships and trust among the gem and jewellery community which is a very small community and we plan to extend our businesses beyond logistics for this community, which is significantly large as a market. Our logistics business that we are going to chat about, is planning for an IPO in the coming years.
That sounds good. This precious goods business, it sounds a bit different because we keep hearing about general cargo, commodities being traded, moving through the ports but we don’t hear often about this precious goods logistics. So, could you please tell us more about how this industry functions, the logistics requirements of this sector and what is the size of this market in India?
Our business is divided into two parts, one is international and the second is domestic. In the domestic diamond and jewellery market the entire logistics operations are through air for secure transportation. International would be a 95:5 where you have 95% getting done through air and there would be silver bars and some type of commodities that happen by ocean. To share context, the entire secured logistics industry is slightly different in terms of the infrastructure that’s required. So, instead of regular trucks which operate, our entire business needs bullet proof vehicles. Instead of regular offices where you would have transit hubs, we would need vaults that are used for storage, temporary storage and long-term storage, and similarly even the transportation done by people, there would be gunmen who go along with every pickup team and delivery team. So, it’s very secure, the entire network.
Even inside an aircraft, there is a separate compartment where the valuable cargo is kept and even at airports there are strong rooms. So, broadly the entire network, door to door, is different from a regular general cargo shipment. Now, in terms of the size, the export industry is close to $40 billion of diamonds getting exported every year from India. We have 600 tonnes of gold getting imported into India each year. There aren’t too many logistics players and all of us compare each other to the value that is getting transported. BVC handles 60% of this $40 billion that gets exported in the form the goods of diamonds. So, there is broadly one metric to determine the market size, the within India transportation is also significantly large for us and there’s billions of dollars’ worth cargo that moves every month.
How is this market? Is there a lot of competition? How many players are there? Is it fragmented? Do you see now and then new players, new startups coming in? How is the scenario of this market?
In terms of number of players who do secured logistics, our entire business is divided into different capabilities, so the capabilities start at cash management as one capability where we have CMS and SIS and all these ATM management companies. Then you have the gold value chain where you have companies like Brinks India and BVC and so on who do some secured logistics, and then you have the diamonds and jewellery which are considered as sort of commodities in our space. So, across all these 3 value chains, if we look at number of players, there aren’t too many. There’s not too much fragmentation like we see in FCL and full truck load or any other type of logistics. In the international space, BVC is at 60%. There is another near competitor, which is an Israel-based enterprise which has significant market share of the remaining 40%, and similarly in domestic, it’s almost a split between two organized players, BVC and one more. So, there aren’t too many players in the organized space yet.
In terms of startups, we are seeing a lot of startups trying to do interesting things on the customer side, which means an example is let’s say, gold loans. Today, when you and I would walk into Muthoot or Manapuram or any of these stores, we would physically go there and get our gold tested and we will get a loan against it. Startups are trying to disrupt this by making it completely branchless. So, gone are the 4500 branches and they are trying to come to your house, do the testing right there, give you the money right there in your bank account and then the entire logistics takes over. So, these are types of companies which are attempting disruption and they are succeeding fairly well. We are happy to be supporting the entire startup ecosystem. On the logistics of high-value cargo, not too many startups yet.
Your tagline says infrastructure platform as a service. Could you please elaborate a bit on this aspect?
In terms of infra platform as a service, we broadly realized through the years, that a lot of companies are not being able to expand their business due to a very sensitive type of infra that is required for this type of cargo, which is jewelry and diamonds, and what BVC has built is an entire infrastructure network where each and every business can literally plug into the network and start securely storing, securely transporting and consume any type of trade transaction with absolute peace of mind. So, we built an entire platform which allows any jeweller to export or import to 130 countries, could be 25 million dollars, 150 crore rupees in one shipment, could be as low as 200 dollars which is 15,000 rupees in one shipment, entire range of solutions. Similarly, we have storage solutions across the country, so no one has to go and build physical vaults anywhere in the country. Bank lockers are always in shortage; there aren’t enough alternatives, so we have built this entire platform which we allow any business to expand in an absolutely asset light way.
Just to share an example, the doorstep gold loan we were speaking about, Rupeek, Indiagold and these startups, they initially had to go to every city and setup their own office, setup their own vaults and do the entire process of operations, and post partnering with BVC, they have been able to expand to any new city in the country with zero cost whatsoever. They literally just share a name of the city and BVC has the entire operations setup. So, someone is able to expand and disrupt other markets without being personally present there. Similarly, B2B side, individuals used to travel with gold and jewellery inside their sort of hand-carry in flights and then take it all the way to buyers which is completely changed to secure logistics being available. So, our platform allows any jeweller to transport crores of rupees worth jewellery without having to worry about any security risk or risk of other types and there are several other examples in terms of ecommerce as well where we have the cost of shipping jewellery, the low value jewellery in ecommerce is significantly high. It could cost between $40 to $50 at the minimum to ship on ring which could be let’s say $200 item. The only way to make this cheaper is to store goods in US or one of the consuming nations and then from there you run the entire last mile. So, you ship in bulk and then you start breaking into parts. So, we have a fulfilment center in New York where we have this entire operation. Ecommerce companies are shipping to our fulfilment center, we do the pick and pack for last mile, we have different solutions for this segment. So, have built infrastructure and built a platform on top to allow anyone to plug into it and expand their business.
In this sector, do the customers have some specialized requirements? Do they need any customized solutions?
Well, every second day we have some form of conversation with some type of customer who is looking at doing something new. Jewellery has been around for maybe 1000 – 2000 years now, starting with beads all the way and the organized trade today. The broad categories in which we are seeing some unique requirements is one, on the side of enabling sales. Second is on the side of just being able to reach more customers, execution of sales, and then there are some allied challenges post sale. In terms of enabling sale as an example, we spoke of ecommerce logistics…. jewellery being very expensive to ship, it used to cost between $100 to $200 to ship one small piece because of the minimum cost of infrastructure and security. BVC has been able to work very deeply to bring this down, from $100 to almost $20. We have also created a solution where shipping jewellery is cheaper than shipping documents on India Post.
So, these are the kind of things that we have to invent from scratch for these challenges and needs of customers where they want to ship for $20, they want ship thousands of dollars’ worth jewellery fully insured, for $20; how do you make it happen? So, that’s where we work backward. Similarly, one big requirement which is very unique is sales to extremely remote locations within India and across the world. So, we would have a lot of new customers that wholesalers have, who would be in Fiji, who would be in Maldives, who would be in some village in India and they would want secured logistics there and no player really offers that. So, these are the types of requirements which come up which for us become an opportunity to then expand our coverage.
Now, we are in 10,000 pin codes across the country with bullet proof vehicles and gun men and the whole security. A bunch of other requirements which come up …when anyone travels for a wedding and you would also possibly have experienced…there’s a lot of jewellery which goes with the guests and with the bride and all this jewellery is sort…in any destination…there’s a lot of risk involved in carrying all this jewellery, so we have created a solution for that. So, weddings is one, exhibitions is a completely different need altogether, duty free imports schemes are something that how do you do the customs clearance for those products. Fulfilment centres for commodities like diamonds which is very difficult to store, viewing centres where wholesalers invite buyers and they don’t want the infrastructure. So, bunch of different needs which keep coming up and it’s a very interesting sector and continuously evolving despite its age.
We have been through two waves of the pandemic in the past one-and-a-half year and every sector has seen its share of impact. So, what has been the impact to your sector and what is the current scenario? Is it back to business as usual?
On Covid-19, the international and the domestic, the within India consumption and international consumption are two very different stories. After lockdown 1, after April and May, every secured logistics company was thinking of pivoting because in non-essentials, diamonds is the last on the list and that’s broadly was the observation for the coming years. The stimulus package changed everything. Because consumers in US which is a primary consumption nation could not invest or spend money on services, which means restaurants or travel and these other forms of services we consume, they were spending on goods, and within goods as well, because fashion as a category is something that people are not being able to use, they are not going out, jewellery became an investment product and a consumption product which experienced a surge like no time in the past. You will be surprise that despite the pandemic, diamond companies have had the best year in history in 2020-21. In 9 months, they have done more turnover and more profit than their historic years; 2021-22 is now 4 and a half months, it looks like 2021-22 will be even better than 2020-21. So, what has happened for the international space is absolutely surprising for everyone. Any diamond people we meet, it’s sort of, what just happened but that’s the reality. On the domestic side though, it is not exactly as rosy. The lockdowns hit severely, retail stores were shut so they had inventory that could not be sent back or they didn’t have reorders. So, then the whole value chain – manufacturing, wholesale, everyone got impacted by it, and BVC as a result of that. So, post lockdown 1, between September to December, we experienced a surge, almost 120% year-on-year growth, on the domestic consumption. Post lockdown 2 that surge hasn’t come in yet but with the wedding season coming in, everyone expects a revival. So, it’s a mixed bag for BVC. On the international, we grew 60% year-on-year, on domestic we declined..but part of the whole journey.
You have just mentioned about planning for an IPO during our initial discussion. Also, tell us about your vision 2022?
In 2019 when BVC started its 60th year, that’s when we launched our new vision which was to make shipping the competitive advantage of 30,000 businesses by March 22. Now, we were at that point in time, at 15,000 customers….15,0000 businesses for whom we were making shipping, we were enabling shipping, and we really have reinvented despite Covid and primarily due to it and we now, are proud to share that by shipping with BVC, a customer literally can claim a competitive advantage because of the whole experience that someone has. We have grown to 21,000 businesses now and we are in the direction of reaching 30,000 but two hiccups on domestic lockdowns were worth a challenge. So, for us, the vision hopefully gets achieved; there was certainty of it, now the probability is slightly low but we are working hard. On the IPO side, the vision was to become IPO ready and the vision wasn’t to do an IPO but given the quantum of liquidity that we have in public markets, we are foreseeing and planning to look at the IPO relatively soon. It’s an irreversible decision so we are going to take time and deliberate over it before jumping into it, but it is on the cards and if not 2022 it will happen in the near future.