Family constitution the definition of family business unity, growth and resilience for V-Trans

Agreeing on and abiding by a family constitution serves as the backbone for success for the leading Indian integrated logistics service provider V-Trans, owned and operated by the second-generation Shah family.

Mahendra Shah (pictured), group managing director and chief executive of V-Trans India Ltd, paid tribute to his late father and uncle as “the true entrepreneurs” who laid the foundation of the group based on ethics and values in 1958.

Part of the group’s foundation was the formulation of a family constitution, which promoted clarity and transparency of governance roles as the business expanded. There are eight members of the Shah family serving in all senior management positions, with Ashok Shah the chairman for the past 44 years.

Mahendra Shah said the constitution defines the roles and responsibilities of all family members based on their skills, capabilities and seniority. Their constitution sets disciplinary measures and calls for business council meetings where key decisions are made by consensus.

Mahendra Shah is directly involved in all aspects of the family business. The graduate of Rajkumar College, Rajkot and Sydenham College, Mumbai entered the family business in 1975 at the age of 22. Shah is credited with conceptualising and introducing systems and processes which standardised and professionalised the family business.

He was integral in transforming Vijay Transport, a regional transport company, to V-Trans, a pan India integrated logistics solution provider. Under his leadership, the company grew to a $130 million business, from 10 branches to 750 branches and from single product operator to an integrated entity.

The writer, public speaker and philanthropist has a personal interest in helping to create new leaders within the company. He founded the group’s training and development centre Pathshala in Ahmedabad to upskill the workforce in award-winning initiatives.

CampdenFB asked Shah about the family values he learned and lives by, the importance of professional development, the company’s growth strategy and how it is mitigating disruption from Covid-19 while integrating game-changing technology for competitive advantage.

You joined your family business in 1975 at the age of 22—was joining always your ambition?

Well, if I go back to those days, my college time, the idea was to pursue law studies further or to go abroad for higher education. But as the future would hold, I finally joined the business and now I think it was for the good.

As we heard Steve Jobs talking about connecting the dots, various things in my upbringing were paving way for the journey that I would have in the business. Like going early to the boarding school prepared me for being mentally tough, getting the best college education shaped me and made me determined to pursue the big and challenging objectives, and to face the odds boldly.

How did your family engage your interest in the business as a young man?

Our company was started by my late father and uncles, the true entrepreneurs. They laid the strong foundation of this group based on solid ethics and values which turned out to be the main guiding force for marching ahead. These core values and purpose gave a strong foothold and reputation that set V-Trans—Vijay Transport in those days—different from the rest of the players.

The transport industry during those days was far from being professional and value driven, and for that and the excellent services offered, Vijay Transport became the preferred brand for most of the companies. And that lured my interest to join the company and make it bigger.

The environment of the family was completely business driven, we would see our elders deeply involved in the business and naturally we started picking up the talks and terms. To an extent, we inherited the dedication and passion from them. The second and the third generation put the best efforts and helped in bringing the company where it is today. 

We also learned the values of being ethical, transparent and human in the business and as a family remained fast attached to these and the result was far rewarding.

Another strong thing we had in the family, that played a key role in the success of the family is unity and the professional approach of all the family members. We made a family constitution long back and every family member contributed to the holistic growth of the company.

You are personally involved in HR development and run programmes that help identify and mentor leaders—what qualities must the next generation of family business leaders possess in the 21st century?

Logistics is a people driven industry where HR plays the most important role. Human resource development is my passion and I have been directly heading this from the day I joined the business. I am a firm believer in investing in people. Our industry has a dearth of talent. My idea was to figure out the best solution for this gap. That led to the intense training programmes which we launched and also gave birth to a dedicated training and development centre of the group at Ahmedabad, Pathshala. Some of our training initiatives are:

-              NexStep—where we groom the mid-level colleagues to be prepared for the senior leadership roles. This is a yearlong, exhaustive training and development programme with many inputs, and presently we are running two batches of this. Nexstep has groomed many talented employees to senior level positions.

-              Utakarshta—where we train our colleagues to take on the role of a branch manager. For the past many years, we have rarely recruited BMs from outside, as this training produces the best talent internally itself.

-              CPI—a yearlong exhaustive training program to guide the team for establishing the importance of processes and guiding them to follow the set practices.

Which family values do you abide by in your approach to business?

Sticking to the ethics and culture of transparency, treating everyone with respect and being fair in all dealings, thus building trust in clients, employees and all associates are some of the key family values that we carry. Also I have set up some core beliefs in the business like Continuous Improvement, where we ensure that every day is better than yesterday, and strive for excellence in each aspect, I aim to provide excellent services to our clients and to make that as a key differentiating factor for our brand. Being ready and accepting change is another trait that has helped us to climb up the ladder.

Given Shah family members occupy all positions in senior management, what formal or informal processes have your family installed for communication, dispute resolution and succession?

We have a family constitution which defines induction and retirement processes with the entire business family. So are the disciplinary metrics. The roles and responsibilities of all family members have been defined based on their skills and capabilities and also their seniority. We have scheduled board meetings—a business council—where all key points are discussed and important decisions are taken based on consensus.

What is your growth strategy at V-Trans and how do you intend to finance it?

Our strategy so far has been of organic growth, we prefer taking consolidated steps, and not looking back on the path ventured. We are moving to an asset light model and our focus is on continuously building the best in class infra and technology.

The growth so far has been steady, excluding the last couple of years; our compound annual growth rate (CAGR) has been approximately 20%, which is impressive for our industry and business model. Presently we have more than 800 branches across India and we have started our operations in South Asian Association for Regional Cooperation (SAARC) countries also last year. With a fleet strength of more than 1,300 vehicles and a team of more than 3,000 dedicated people, we are today India’s leading logistics player.

The diversification within logistics with express delivery arm V-Xpress and warehousing solutions with V-Logis, makes us an integrated logistics player to serve every logistics need of our clients. We have our e-Com division which serves the last mile delivery.

We are financially stable, and self-funded, so far we haven’t gone for external funding however, we are open for collaborative and win-win propositions.

How is V-Trans embracing technology for competitive advantage in its business?

Being digital and technology-driven is not a choice anymore for anyone in the business, and the pandemic did accelerate further adaptations in this direction. Our being advanced on these fronts gave us an advantage and we were fully connected with our team and clients during the worst period of the pandemic.

Our computerisation journey started way back in 1986 and we have been continuously updating our IT scope regularly adapting the latest tools available which enable us to work efficiently and help us offer excellent service, support and visibility to our clients.

We have set up a digital committee, comprising of the top management and professionals. We meet every fortnight to discuss updated trends and technology and move forward towards updating our organisation with the same. Our in-house IT cell gives solutions to our ever-rising tech needs.

Enabling employees to work from any location with the same efficiency and ease.

Some of our key projects that we recently executed in the technology area include:         

—      Controlling and minimising the DEPS, with the help of Shop Floor Automation

—      Automated First mile and the last mile. Thereby removing the manual processes from the group. This includes barcoding and document preparation with handheld machines

—      A mega project of revamping the ERP suite for aligning the future and group’s ambition. For this we have associated the best global technology support consulting firms

—      Enabling the decision making based on the power of both data & experience

—      Visibility to clients through mobiles through our M-Cargo suite

Which have been your toughest business decisions during the Covid-19 pandemic and what are your expectations for the recovery?

Like all business enterprises and for the matter the entire world, the uncertainty of business continuity, the safety of our people and continuing serving our clients were some of the big concerns we had. With a huge workforce, a large infrastructure spread all over the country and a large fleet, we were burdened with massive overheads, apart from safety.

However, we immediately gathered all our professionals on zoom and kept in touch, motivated them, learned in regard to their safety and started discussing various measures to be active again, abiding with all government guidelines.

We assured all our employees about their wellbeing and retained full staff strength and ensured that they are not deprived of any dues. We took full care of all our staff stationed at our hubs which were allowed to operate being essential services on safety and daily requirements.

We got in touch with all our major and key clients and apprised them of our situation and assured them of services under the lockdown guidelines, even getting permissions to operate we, being essential services. Our brave staff, whom we called “Corona warriors”, helped our clients with the delivery of their goods. We facilitated these dedicated team members.

Our entire team started working from home, helped service the clients and kept our operations on with skeleton staff and whatever vehicles were available. I, with our senior management team conducted daily zoom meets with 100 plus of our managers and executives and the huge challenge and uncertainty was managed with reduced anxiety.

What measures has V-Trans implemented to mitigate supply chain difficulties?

The logistics scenario is evolving very fast, new tech players are challenging the set practices, the eComm boom has compelled the logistics sector to get rid of age-old inefficiencies. On one side a company like ours, will be focusing on being ahead of the curve in offering the best tech enabled solutions. On the other side, we or rather the industry as a whole, will focus on agility and on being better prepared to face such severely impacted things. Flexible models, extensive use of technology, fast decision-making and synergy and collaborations will be some key things to look at for being prepared and mitigating future risks.

How will you manage the risks some business families anticipate this year and next, namely rising inflation and interest rates?

Inflation is a real concern, for us fuel is a major part of our overall cost, and the way fuel prices are increasing is a concern for us and for the whole industry. At the back end, this is one of the reasons for price hikes of commodities in the retail market.

We have done great work in further optimising the cost as much as possible. We have built synergy between internal verticals and made tech-intervention for better output of the deployed resources. Our team has worked on data science and made predictive models for decision making that make us better planned for seasonal effects, we are testing the AI and ML at some of our trans-shipments for the next level of productivity. Our investment in people has also helped, we have the best of the talent to work with us, and we are also investing in building the infrastructure for higher connectivity to enable us to reach the smallest corner with the best possible cost.

Interest rates in general is a concern however, we are a debt free company in the actual sense, so it doesn’t impact our financials directly.