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Tuesday, 2 August 2016

From Re 1 to a Rs 450 cr revenue company – the legacy of Agarwal Packers and Movers

Ramesh Agarwal just had Rs 1 after he quit the Indian Airforce in 1987 as he had donated all his earnings. With zero capital, while Ramesh was wondering what to do, Subhash Gupta, an officer of the Indian Airforce, suggested the idea of starting a packers and movers service.

The journey of Agarwal Packers and Movers started in an office space in Secunderabad, costing Rs 250 per month. From making four shifts for the Indian Airforce, using Airforce trucks, this 30-year-old logistics company works towards shifting close to 82,000 to 83,000 homes across the country.

With a team size of over 5,000 people, Agarwal Packers and Movers has 103 branches across the country. The company has more than 1,000 trucks, hires over 1000 trucks, and has over 2,000 locker facilities, which is expected to touch 10,000 in the coming year. It generates close to Rs 450 crores in revenue every year.
Working with the Indian Airforce

Being an officer of the Indian Airforce, Ramesh, 54, knew the difficulties the officers face, especially when they have to regularly shift base. When Subhash suggested the idea, Ramesh began working on setting up the organisation.

He says: “I thought of the idea and felt it made sense, I knew there were different nuances in play. You need to have invoices, bills, consignment notes and list of items. So beginning with taking a photocopy of a regular transporter from a fellow officer, I started this service for the Indian Airforce officers.”

With zero capital, Ramesh was challenged with the task of marketing this across the Airforce base. Roping in his brother Rajendra Agarwal, Ramesh decided to give his number in the calendars that were a rage, which costed him Rs 4,000.

However, his friend Vijay Kumar’s mother came to his rescue and agreed to provide the capital, but in exchange for Vijay to be a part of the founding team. However, later Vijay decided to pursue his career in politics and exited Agarwal Packers and Movers.

The initial cost of their office space was given with the first four shifts they made. Ramesh says that they made a profit of Rs 8000, of which they returned Rs 4,000 to Vijay’s mother and the remaining money was pumped into operational expenses.
Ramesh Agarwal (Left) training the early staff in 1990
Building an emotional carrier

Starting from an era that was very different from today’s world of mobile apps and technology, Agarwal Packers and Movers has been able to differentiate itself from every other player in the market.

Today, there are several players in the home services and shifting market, but Agarwal Packers and Movers still claims to be in a leading position. There is Boxme that creates locker facilities and Mumbai-based BoxMySpace for people when they want to shift, and hyper-funded startups like UrbanClap.

Ramesh adds that one of the biggest differentiators he has been able to create is to work as an emotional carrier. Explaining this, he says

Shifting a home isn’t about shifting goods or it isn’t about the money. A person is shifting their memories with these goods, and memories always have emotions associated with them. If a home owner has a 30-year-old radio that isn’t working, it probably has zero costs to it. But it is still valuable enough to have packed, maybe because it was his father’s or grandfather’s. It is important that your team realises its value and gives it due respect.

He believes that no matter how advanced technology gets or what apps you use, emotions need to be ingrained into the team and the ground staff who actually do the shipping and moving.
Building a strong foundation

The task of hiring the first 10 people who can spearhead and bring that culture is difficult, but after that it becomes easier. The first 10 people is who matter, believes Ramesh. He roped in the first forerunners from his friends, people from Airforce and his village.

“It is a pleasant surprise when the packers behave in a cordial manner and treat your product the way you want them to be treated. They listen to what you need, and it is not a mindless rush,” says a 40-year-old banking executive, who has used Agarwal Packers and Movers services.

The team had procured their very first truck with the help of Cholamandalam Finance. They had approached Agarwal Packers and Movers with a truck that someone else had procured and hadn’t been able to pay for.

In 1993, GE Capital helped Agarwal Packers and Movers procure more trucks, and soon the fleet size began to expand and grow.

Present Core team at Agarwal Packers and Movers
Addressing every pain point

When they initially started, the market only had open bodied trucks. The team of packers had to climb on top of the truck and wrap it in a canvas cloth and rope.

It wasn’t a very efficient way of transportation and no matter how much they tried, the goods inside would move.

Thinking of an effective way of combatting this problem, Ramesh decided that they needed to build a complete steel enclosure. So in 1994, Ramesh with the help of a friend constructed a steel bodied enclosure for his trucks. This brought in a change in the way thelogistics business was done.

The team also found that the wooden boxes they used to pack were causing some damage due to hammering the box while while shifting.

Locker Cube Facilities
It was then the team decided to make portable boxes with hinges and have an insulation of 18mm sized thermocol sheets. The packaging innovations also drastically brought down the cost of the freight charges.

They replaced cartons that costed Rs 72 per carton with easy to use bags, which got down the cost to Rs 38 per bag. Flexible thermocol sheets were used instead of corrugated sheets, which reduced the cost to Rs 2.5 from Rs 7 per sheet. Air packed containers were used to avoid damage to petrol tanks of vehicles.

When the team realised that there were people who wanted exclusive trucks but couldn’t afford the cost of a whole truck and not even occupy half of its space, the team decided to build Trucking Cubes or Lockers.

Each of these lockers is given to the customer as per his or her requirements. The goods are packed in the lockers and shipped, the owner has a key and nobody is authorised to open those lockers other than the owner.

Packers and Movers in Action
Breaking the market

With these lockers in place, Agarwal Packers and Movers now aims to target the food and the pharmaceutical industry transport as well. Ramesh says that because of food being packed in close quarters, many expire before their dates.

“Every day close to 10 percent of the food and pharma industry goods get spoilt. Soaps, agarbattis, etc., are being packed along with biscuits and this can be damaging and dangerous. I think different lockers can be used for medicines, soaps, and food. I intend to make close to 10,000 cubes and we will touch a turnover of Rs 1,200 crore, and then will move it to one lakh cubes, which will reach a turnover of Rs 5000 crore,” says Ramesh.

He says that wherever there is a customer pain-point, the team aims to work relentlessly to solving the problem. He adds that gone are the days when you need to use carton boxes and gather all your friends and family to help you shift homes.

Ramesh explains, When Agarwal Packers and Movers first started, we would begin the day at 4 am, procure boxes from stores nearby, pack the goods, use paper and cloth to insulate and then put them in the trucks. We would pack over 2,000 boxes, which would take 18 hours. However, today everything has changed. Starting from a single man army today, we have a team of people.

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