Alliance-aided Growth Blue Dart Express:`Darting' the right course.

News Clip : The Financial Express, Kolkata.

13th July, 2003.

Blue Dart Express (BDEL) has done well on a consolidated basis during the quarter to June 2003. Its sales alliance with DHL Worldwide Express has done it well seen in a 29 per cent growth in net profit after tax to Rs 6.1 crore. The alliance has provided BDEL, access to DHL's global reach, unmatched cross-border specialisation, greater network flexibility and hi-tech infrastructure.

Net income from operations grew 5.4 per cent to Rs 82 crore. The ratio of BDEL's domestic: international business is around 80:20. Freight and staff cost together account for around 90 per cent of the total expenditure. While freight cost fell to 53.2 per cent of sales (53.7 per cent), staff cost was marginally up at 20.9 per cent of sales (20.1 per cent). Operating profit fattened 10.9 per cent to Rs 13.6 crore with OPM at 16.6 per cent (15.8 per cent). BDEL expects future growth to come from pharmaceuticals, banking and IT sector. Of late, shipments of drugs and pharmaceuticals had received a setback on the uncertainty over value-added tax.

The Accounting Standard on Intangible Assets (AS-26) became effective for accounting periods commencing on or after April 1,2003. Pursuant to the same, the company has eliminated
Rs 2.3 crore with a corresponding adjustment to the opening balance of reserves.

BDEL's core business is domestic integrated air express distribution and supply chain management. The company currently has a 38 per cent market share in the domestic market. It has a number of products including domestic priority, Dart Apex, Dart Collect, Voice Dart etc. BDE has a fleet of three Boeing 737-200 freighters that are used for carrying express cargo between four metros. The company is planning for regional dominance in Middle-East, Saarc and South-East Asia. In the Saarc region, the company already has a surface network in Nepal and Bangladesh.

As part of its fleet expansion plans, BDEL has acquired a fourth Boeing 737 aircraft. The acquisition has been routed through Blue Dart Aviation, its wholly-owned subsidiary. Before the advent of Blue Dart Aviation, domestic air freight was a grossly neglected area, with airlines focusing on passenger services as was the case in the US courier industry in 1977. But since then, the air freight business in the US courier industry has touched CAGR of 25 per cent with nearly 60 per cent market share. BDEL has obviously taken a cue from the US market and it has started acquisition of aircraft.

But one of the major operating costs for aircraft is aviation turbine fuel (ATF). The company has had to confront rising prices of ATF in the past.