What are the odds of a $40,000 start-up becoming the next DHL or Toll Group? We’ve all heard that it’s slim, but according to US consultant Keith McFarland, the chance is actually microscopic – only 0.036 per cent of companies ever surpass one billion in annual revenue.
Thai gas and transport company PTG, however, has proven that breakthrough success is possible. In less than 25 years, it has grown into a $40 million business that can hardly keep up with demand and will generate revenue of $1.6 billion in 2012.
Given the current economic framework and the fact that PTG is still only a regional business, the company’s stratospheric development is a rare phenomenon. At the end of last year, the kingdom’s economy contracted sharply after some of the worst flooding on record disrupted manufacturing. Official statistics* reveal that GDP declined by nine per cent in the time leading up to New Year’s Eve, and the economy contracted by 10.7 per cent.
So, how did a small start-up become a multi-billion Baht business, maintaining constant growth even in a phase of economic instability? According to business expert McFarland, the trick is putting together a growth strategy that “brings you the most results from the least amount of risk and effort.”
In PTG’s case, that strategy was based on a simple key word – localisation. Formed by a group of local businessmen, the idea was to build up a Thai-owned petroleum business serving a Thai clientele. “We wanted to give the Thai people a viable alternative to the foreign oil elite,” says PTG’s Executive Vice President, Rangsun Puangprang. “It may not sound that ground-breaking, but it was like offering a whole new product.”
From Puangprang’s point of view, PTG’s start-up strategy was nothing but intelligent product development. “We sold a new product to a client base we already knew. In fact, we probably knew our clientele better than anyone else in the market, so we could jump in at the deep end.” McFarland would say that an Intensive Growth Strategy like that is far less risky than having to learn a new product and market at the same time – and in PTG’s case, the expert’s advice proved right.
Today, the company purchases oil straight from the country’s leading refinery, Thai Oil, and supplies a company-owned network of service stations all around Thailand. “We control the entire supply chain in-house,” says Puangprang. “We have five oil depots throughout the country, but we mainly operate from the Saraburi province. Our key distribution centre is located in that area as well because it literally marks the middle of the kingdom.”
But, there is more to PTG’s success than just business lingo and strategy talk. It is the company’s simple, yet determined work philosophy that has carried it to the next level. “Our philosophy is to not only provide the best quality product, but also offer the best service wherever we interact with a client.”
According to Puangprang, that attitude is paying off since day one. “PTG is growing at rapid pace. At this point in time it is hard to determine where we are in the transportation market because we are expanding so fast, but the fact that we can barely keep up with purchasing new equipment should speak for itself.”
Despite that information vacuum, Puangprang has a rough idea where to position PTG in comparison to the global competition. “We have no data on where we are regarding market share in transport businesses, but we are close to 6 per cent market share in Thailand’s petroleum market. Plus we’re looking at revenue of $1.6 billion, which is quite remarkable considering we are only operating on a national level.”
Puangprang’s “battle plan” to capture the entire ASEAN region is already in place, but for now, it’s the local marketplace he is focusing on. “We still have to tackle a range of problems at home before we can venture abroad. Some government regulations and trailer specifications are still not conform to international standards, and the industry as a whole is in a state of flux at the moment. But, we see huge potential in the region, especially now that it is opening up to the world and governments start investing in infrastructure again.”
To operate at eye level with the opposition, PTG has chosen Volvo and Heil International as key suppliers on the equipment side. “You can’t stop globalisation,” says Puangprang, who is on charge of 170 semi-trailers and counting. “That doesn’t change our commitment to region, but it does affect our purchasing behaviour. We still expect the highest-possible payload, but criteria like safety and longevity have become more and more important as well.”
According to Puangprang, PTG has implemented a strict maintenance regime long ago to prolong the lifespan of the fleet and ensure a high safety standard. “We have a very strict routine of manual check ups in the morning and evening. To maximise safety and increase accountability, we are also interested in telematics that can monitor mileage, speed and driver behaviour in general,” he adds.
However, PTG is not all about cutting-edge equipment, as Puangprang points out. “Technology is only one part of the business, represented by the red font in our logo. Red is the colour of fire, the energy that is the backbone of every industry. But there is more to PTG. The green sweep, for instance, represents the environment, which we have to look after if we want to be successful in the long term. The white background, meanwhile, is a sign of purity, reflecting PTG’s honesty and moral integrity.”
PTG’s staff of 2000 – including 220 drivers with an average age of 30 – is fully committed to Puangprang’s vision of combining globally sourced technology and localised service under the banner of sustainability. Nonetheless, the Executive Vice President keeps reminding his team that the status quo is just a stopover on the road to success.
“Growth strategies should never be pursued in a vacuum, and being willing to change course in response to feedback from the market is as important as implementing a strategy in a single-minded way. That’s why we bank on a young and dedicated team and listen to what they have to say – I think we really represent the new Thailand,” says Puangprang – revealing PTG’s plan to add 120 service stations per year to the company’s current network of about 500 gas outlets. “We already operate more stations than Chevron and will soon overtake Esso and Shell as well. We’re aiming at a sales growth of 35 to 40 per cent per year.”
In that sense, it is no surprise that the company is already considering the next fleet increase. “We plan on adding some 60 truck and trailer combinations per year,” he says. “Safety and return of investment (ROI) will be the key criteria when making the purchasing decision. But, we don’t just need the best equipment to stay ahead of the pack, we also need the best concept to back us up, and I think history has proven that we’re on a good way.”
*Source: National Economic and Social Development Board (NESDB)