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Sunday August 14th, 2022

Andre Fernando: An insatiable hunger to build and grow businesses

Andre Fernando, Managing Director of MAC Holdings

Andre caught the entrepreneurial bug as a school kid; he hasn’t looked back since. He discusses his first job, and steering MAC Holdings’ journey, global reach, and how he fast-tracked growth in the last 10 years. He also delves into growth strategy in a post-Covid world that includes plans for expansion in the Indian subcontinent, a renewable energy thrust, and buying an airline general sales agency business in the region.

Can you paint us a picture of MAC Holdings and take us through its evolution over the last 25 years?

We began as a freight forwarding company 25 years ago with just three people. Our first client was an established freight company in the global fashion industry that we continue to provide logistics solutions to this day. Gradually, we built a strong clientele, including several multinationals operating out of Sri Lanka. Today, MAC Holdings is a group of companies in aviation, shipping, freight and logistics, fisheries and aquaculture, renewable energy, hospitality and leisure, and strategic investments. We have offices in Sri Lanka, the Maldives and Bangladesh and a worldwide presence through several agency partnerships.

The biggest contributor to the group is the logistics and freight forwarding business servicing leading fashion brands in Europe including the UK, and the US. We also run a hub operation in Sri Lanka for a large retailer with a strong presence in the UK and EU, shipping freight from 19 origins in Asia to Sri Lanka, making certain value additions and re-exporting. We also provide logistics solutions for traditional exports like tea, rubber, rubber products and other commodities.

We have a ship agency business with operations in Galle, Hambantota and Trincomalee and represent a feeder operation that covers Asia and the Indian subcontinent. The group has partnerships with some of the leading global ship managers, transferring their crew in the ports of Galle, Hambantota and Trincomalee. In addition, we provide ancillary marine logistics services such as delivering or repairing damaged parts and providing supplies to vessels.

Despite the disruptive impact of the Covid-19 pandemic, MAC Holdings has accelerated growth over the past 10 years, and we hope to grow our presence in the subcontinent by setting up operations in India and Pakistan and expanding current business in Bangladesh.

Can you elaborate on your growth strategy of the last ten years and the reasons behind your success?

Since its inception 25 years ago, the business has grown beyond our expectations. We had to compete with larger companies in the logistics industry, but we built strong relationships with our clients and partners and invested in technology to drive innovative logistics solutions. We create unique experiences for our clients with personalized services and technology-driven solutions: we do not just buy and sell freight space but offer our customers solutions that allow them to have more buy-in to the business. We are today one of the top air and ocean freight-forwarding companies in the country.

Ten years ago, we formulated a strategy to fast track growth. Group revenue has grown since then to Rs8 billion, and our employee base increased from 50 to over 200 persons in Sri Lanka alone.

First, we appointed independent directors and built a layer of capable senior managers. Whenever needed, we did not hesitate to hire professionals from outside the family concern. Second, we restructured a profit-sharing scheme for employees we had since inception to a performance-based incentive scheme. As a family business, we have a close-knit culture across the group, and I would say our successes are due to our biggest asset, people. Covid-19 has hit some of our businesses in the airline and leisure sector, but we have been able to take care of all our people by funnelling resources from the segments that are continuing to perform.

Third, we made some strategic acquisitions and joint ventures. One such acquisition was a 50% equity stake in Finlays Linehaul Express, a joint venture between Finlays Colombo and Hong Kong-based Linehaul Express, the exclusive express and courier GSA for Cathay Pacific and Dragonair. Linehaul Express is the world’s largest wholesale airport-to-airport express services provider with a portfolio of customs brokerage, airport-to-door, and airport-to-airport services. The business, now called Linehaul MAC Express, positions us to bring innovative and new solutions, particularly to the e-commerce market in Sri Lanka. We also established new GSAs during this period.

What are your plans for the future? What are the next steps for MAC Holdings that excites you the most?

Our strategy is a three-pronged approach to fast track growth: we will focus on the airline agency, ships agency, and freight and logistics segments. We are excited about expanding in Bangladesh and setting up direct operations in India and Pakistan. We will acquire an airline general sales agency in India and propel our logistics and freight forwarding business to the next level. People ask me if investing in the airline industry is the best thing right now, but the ongoing crisis has made valuations very attractive considering future growth potential. I believe a presence in the Indian business capital Mumbai and political capital, Delhi, will open new vistas and complement our interests in Sri Lanka, Bangladesh, and the Maldives. We expect the acquisition will give the group double-digit growth.

There are several other initiatives outside the scope of the logistics-led growth strategy. We intend to get into the processed food business on a vastly imported item that will generate considerable foreign exchange savings, so we see an immense opportunity in this segment.

Apart from all these, we are also building a renewable energy company because there is tremendous potential for growth in Sri Lanka. We made a strategic move this year when we invited Fumio Otani to join MAC Holdings. A mechanical engineer who was a long-serving CEO/President at Toshiba Corporation Japan, Mr Otani will help us build the energy business. I offered him the Chair of MAC Holdings, a position I occupied, to make way for his valued involvement with the company.

Looking back at the last quarter-century, what was the boldest decision you have had to make?

It was the decision to start my own business. I developed a passion for entrepreneurship from a very young age. Even as a school kid, my mother encouraged me to get involved in my father’s business. I had to quickly learn how to manage the operations of a manufacturing concern because even though I was a kid, circumstances compelled me to take on more responsibilities in the family business in plastic manufacturing. That experience gave me the hunger to solve problems and build new ventures.

My first job was at St Anthony’s Consolidated which I disliked, so I quickly moved on to my first real job as a sales executive for Korean Airlines GSA in Sri Lanka. Later, I joined a new freight forwarding company where I quickly rose up the ranks to become General Manager. I was still in my early 20s when I decided to leave my job and start my own freight company. It was a difficult time for me, but I am grateful I decided to venture out on my own because I have since built several successful companies and now taking MAC Holdings to a new era of expansion and growth.

If there was one leadership lesson that you learned the hard way, what would it be?

Never take shortcuts. Always focus on the long term and avoid the allure of short term gains. I was 23 years old when I built my own logistics and transport business, and within a few years, the business was doing extremely well. This was possible because I invested in relationships that take time to nurture. I also had to have a healthy store of self-belief. I was up against several giants in the industry, but I was determined to start my own business, and I’ve not looked back since. I must also thank the Lord above for the blessings bestowed on me. I am a devout Catholic with a deep respect for all other religions