Mr. Maheshwari brings over two decades of cumulative logistics industry knowledge, experience and technological expertise to the table. A Bachelor's Degree holder in Electronic Engineering, his expertise spans Strategic Planning, Information Management, Financial Resource Management, Product Development and Marketing. Under his leadership, Softlink, founded in 1992, has now grown to have presence in every major city of India, including Bangalore, Chennai, Hyderabad, Kolkata, Delhi and Mumbai.

Softlink was established in 2005, with the sole aim of simplifying operations of organizations in the logistics industry worldwide through highly specialized software products. Softlink is a global software product company which has carved its niche in providing software solutions across the logistics sector to Freight Forwarders, Custom Brokers, 3PL companies and also to Exporters and Importers. Softlink's products are used by more than 50,000 users in over 2,500 organisations. Softlink is amongst few Indian players that have been successful developing ERP products. Through a strong domain expertise in the logistics industry, Softlink has developed Logi-Sys - an ERP suite that caters to the specific requirements of logistics industry. The company has also developed X-ponent – a revolutionary Sales and Service management solutions which provides a holistic approach towards Sales, Marketing and customer service to the organizations across different verticals.

In a free-wheeling chat with Hemant Maradia of India Infoline, Mr. Maheshwari says: “Opportunities in the Logistics sector are unlimited. Adoption of IT is very low in this sector.”

How did this company come into being?

We started this company around five years back. I and another Director were the promoters.

The whole idea was to create software products for the Logistics sector and SMEs. My involvement with the logistics industry helped us a lot.

We are now dropping ‘logistics’ from the company name as we cater to SMEs also. Apart from the Logistics sector, we would come out with many products for the SME sector.

Do you have any big investors?

As of now we have not taken any investment from anybody. Software products business is a long gestation business. Initial investment is large and returns come much later. There are certain risks involved with the software product business and therefore investors in India tend to shun such companies.

We were approached by three Private Equity firms, but we refused the offers, as they come with their own timelines, targets and conditions. Software products business is a creative job. It is a risky business, but gains are also huge.

Why did you choose logistics, trade and freight forwarding verticals?

We were already having one successful product due to my old connections with the Logistics industry.

We hardly contributed anything in terms of capital but we had some products, which was a plus for us. The product that we were having was a cash cow. In fact, it is a cash cow even today and is generating a lot of cash.

Could you give us a sense of how big is the IT-related opportunity in these verticals – both in India and globally? What is the outlook going forward?

Logistics represents a big opportunity in India, as it constitutes 14% of the GDP. In terms of employment generation too it is pretty big. As of now though, it is very highly fragmented. But, opportunities in the sector are unlimited. Adoption of IT is very low in the logistics sector. The IT services and products market in the logistics sector is around Rs10bn.

The Government is pushing automation in logistics to reduce transaction costs. The NSDL is coming up SEZ online very shortly. The pilot is starting at SEEPZ. We are in touch with them. All these development will have a spiraling effect on logistics.

Last one year was terrible for the logistics sector, but now things have started looking up. Even top companies like Infosys and TCS are planning to tap the opportunities in this space. So, the segment is opening up for IT adoption and thus gives us an advantage. Growth is tremendous.

We straddle the entire logistics chain, right from CHA (customs house agents) to freight forwarders, 3PL companies, shipping companies and MUCCs.

What trend do you foresee in IT spending in logistics?

We had done a survey sometime back on IT adoption in logistics. Though there was some uncertainty people were not willing to cut IT spending. There is a regulatory push that is taking place, and at the same time customers have also started demanding quality service. So, there is very little choice for these logistics players. These two factors will drive IT adoption in the logistics sector.

Also, because of recession people had postponed their decision on IT spending. Now that the economy is looking up, things will start moving on this front.

Large logistics players have increased IT spending while in the SME space there was some amount of uncertainty.

What is your core competency? What is your USP? Explain your business model?

We have two major strengths. One is the domain knowledge of logistics, which makes us unique than any other IT player.

Availability of the manpower with the right skills is an issue. Not much talent is available in the market with the understanding of logistics. But, we have the right talent.

Our second biggest USP is that we have experience in building IT products for the logistics sector. Almost 40,000 people use our products.

How did you weather the global financial storm? How are things at present? What is the outlook?

Things started improving from November onwards. In fact, we are asking some of clients to delay the implementation of our enterprise product due to a few internal constraints. In a month or two, we will definitely be able to serve them better.

IT spending in Logistics will go up. Our survey is showing that; the ground reality is also supporting the same claim. Customers too appear to be more willing to spend on IT.

We came out with this ‘Logi-Sys’ product four months back. The minimum ticket size starts at Rs20 lakhs. Initially, a lot of people were skeptical and said the price was too high but now we have got more orders than what we can service.

Tell us about your revenue streams?

Currently we are having two revenue streams. One is the AMC (annual maintenance contracts) stream and the other is the Products stream. About 60% revenue comes from the license income and the balance 40% from the AMC business.

In fact, because of the AMC business we managed to survive the recession as it provided us with a steady income.

Two more streams have been added recently – Package Implementation and SAS.

We also do application development and consulting for our own products. We connect our products with the customers’ systems.

This business generates only about 2-3% of our total revenue.

Here again, we are witnessing increased interest from our customers for these types of services. As of now, we are not keen on promoting this business due to lack of internal resources. Most of our energy and resources have been consumed by the products. But, going forward we will increase our marketing efforts in this direction also.

What proportion of revenue comes from the global markets?

Overseas revenues are very low compared to the domestic market. Around 5% of our total turnover comes from abroad.

But, we are in talks with agents in Europe and South East Asia for our recently developed enterprise products. We are also contemplating having our own offices in some of the countries.

From next year, we intend to get around 30-40% of our total revenue from the overseas markets.

We are not looking at the US market. It is slightly more mature market. There is no point in entering the US market directly.

We may also look at Africa and the Middle East market also.

Brief us about your blockbuster product Impex?

It is now called Visual Impex. The same product will be introduced as Live Impex, which is a web-based version. It will be launched on the web in SAS model.

The enterprise version will be called Impex Pro.

As of now it is contributing about 30-35% of the licensed revenue of the company.

How much do you spend on product development?

As of now, we are spending close to 50% of our revenue on new product development. We want the pipeline to be ready by the time the economic downturn is over. We used the slowdown as an opportunity to hire talent and got good people.

How many employees do you have?

In Mumbai, we are having 50 people. Across India, the total is 75 people. We require less people but highly skilled ones.

Will manpower be a big challenge for you?

Lack of adequate talent is among the biggest issues for us. At times we are unable to work at the pace at which we want as we face shortage of manpower with the right skills.

Out of 200 people interviewed we can recruit only one person. Attrition is also high in the IT industry. Fortunately, I am able to retain my top guys for a long time.

Have you had any product failures?

When you create a spate of products some of them are bound to fail.

Out of five products, three will be successful while two may fail. This is the game which we have to play in the IT products business.

What is the strategy to de-risk your product portfolio?

As of now we have around 8 products. Out of them, 6 are for Logistics industry.

Our aim is to get at least half the revenues from non-logistics side of the business in 1-2 years. To that end, we are building a number of products. One such product is ready but we have not yet started marketing it. Right now, all are resources are tied up in existing products. We plan to launch the new product only in the new fiscal year.

SMB is another big opportunity that we are looking at closely. If these companies decide to computerise they have only two choices. One is Telly, which is at the low end of the spectrum and the other is SAP, which is a top of the line product.

So, there exists a huge gap which can be serviced by a company like us. We feel we have the capability to fill this void. We are already out with one product for the SMB segment and are planning another launch soon.

Are you looking at inorganic growth as well?

I don’t see any opportunities as of now. In India we don’t have companies who have the kind of products that would be of interest to us. We need something that will add value to our current offerings.

Do you have any fund raising plan?

We will definitely consider fund raising going forward. We are looking at both the options – an IPO or a strategic stake sale, to increase the pace of growth.

We are looking at a timeline of anywhere between six months to a year.

We are waiting for revenues from the new line of products to pick-up pace, which already is starting to happen.

What kind of growth do you expect going forward?

In the fiscal year 2009-10 we expect revenues to grow by 25%. Last year, it was a bit slow due to the economic downturn. But, now things are looking up. We are keeping our fingers crossed.

In the last 4-5 years, our revenues have been steady. Now we are looking to accelerate the pace of growth. It took us three years to build logistics business and we were selling existing products. The new range of products has come in only recently. They will start generating revenue soon.