Blue Dart lines up Rs 100 cr capex for FY09

News Clip : DNA Money, Mumbai

08th November, 2008.

To beef up aviation infrastructure, facilities

Blue Dart Express Ltd, the air express and courier firm, has lined up capital expenditure of Rs 100 crore for FY09 to boost aviation infrastructure and set up 58 facilities across the country. This is part of the Rs 1,000-crore capex plan the company announced two years ago for execution over five to seven years.

Of the current Rs 100 crore capex announced, Blue Dart plans to spend Rs 65 crore on aviation infrastructure, which includes lease rentals for its freighters and for setting up cargo facilities at airports. The rest will be spent on setting up 58 facilities, including warehouses and office spaces.

With almost 42% of revenues coming from the aviation division, the company is taking another Boeing 757 on lease. With this new addition, its total fleet size has gone to seven. It now has three Boeing 757 and three Boeing 737.

Blue Dart had spent Rs 200 crore as capex in FY08, its silver jubilee year. A majority of this was used for aviation infrastructure, including aircrafts.

The company is now looking at increasing the number of its facilities by 20% from 320 now. It plans to set up new, bigger warehouses in strategic locations near airports across the country. The express cargo major is also looking to expand its presence beyond the seven airports in India.

Yogesh Dhingra, chief financial officer, said, "We are looking at airports such as Coimbatore, Guwahati and Chandigarh and are studying the routes for cargo movements. If we get return cargo on those routes, we might set up facilities there."

Besides, Blue Dart is trying to increase its area at exiting airports. At the moment, it occupies 22,000 sq m in the seven airports. Anil Khanna, managing director, said, "We are facing constraints in Delhi, Mumbai and Chennai and are in talks with airport authorities to give us more space. We might go in for expansion early next year."

The company, which is an 83.01% subsidiary of DHL Express, part of Deutsche Post, sees 40% of its business coming from documents and about 10% from international packages. The cargo airline is the only one in the domestic aviation market to be profitable, a fact that the management attributes to 82% capacity utilisation overall.

However, Blue Dart has seen volume growths in the express business being impacted by the global slowdown. "Volume growth has been impacted by 15-18% and sector such as telecom, information technology and auto were most hit," Khanna said.