Mumbai: Logistics services provider Blue Dart Express Ltd plans to increase exposure in India’s hinterland by targeting small-size acquisitions of niche regional players, a top official told Reuters.
The company is willing to spend Rs100 crore to Rs150 crore for small-ticket acquisitions but is not in talks with any players at present, Yogesh Dhingra, director-finance said.
“We don’t want to go for a big acquisition. We are looking at small regional players,” Dhingra, who is also the firm’s chief operating officer, said in an interview.
“It’s difficult to find a good candidate,” he said. The firm is scouting for buys in Madhya Pradesh, Gujarat and north east. Logistics is among the top five sectors which got most investments in 2009.
More mergers and acquisitions are likely over the next couple of years as firms expand to keep up with the fast-paced demand of the world’s second-fastest growing major economy, analysts said.
Economic recovery and greater industrial activity has spurred Blue Dart to raise its capital expenditure by half in 2010.
The firm, which follows the calendar year as its fiscal, plans to spend Rs850-900 million for capital expansion in 2010 compared with 600 million in 2009.
Investments will be in transit warehouses and hubs and airport facilities.
The company, which runs warehouses on lease, plans to open new warehouses in Delhi, Bangalore and Chennai this year, he said.
Blue Dart, which gets 83% of its revenues from air freight services, operates a fleet of 7 aircraft.
“We can continue with the existing 7 aircraft uptil mid-2011 and thereafter depending on how we see volumes growing, we can look at further additions,” Dhingra said.
The company has seen positive growth in the first two months of 2010 and expects to see double digit growth of below 20% in the financial year-ending December 2010..
“This year, we have closed January-February and both have been very positive months for us,” Dhingra said.
“Certainly, trends indicate growth will be in double digit, unlike in 2009, so that is a positive and we believe margin will also show an upward trend.”
Blue Dart saw consolidated revenues falling 7% in 2009 to about Rs907 crore.
“It (revenue growth) would not be above 20%” Blue Dart, in which DHL Express hold about 81% stake, is the market leader in the air express space. It is also rapidly expanding its ground services network, which currently accounts for about 17% of revenue.
Its ground business includes ground handling, maintenance capability and warehousing.
Blue Dart expects to increase contribution of the ground services segment to its overall revenue to over 30% in three years.
“Now we are focusing that (ground business) as a growth driver. Certainly the contribution of ground will keep increasing to the overall pie of our business,” he said.
It expects documents business to also revive, with key clients in the banking and insurance sectors showing signs of improvement, Dhingra said.
Shares of Blue Dart were down 0.69% at Rs709.2 in a weak Mumbai market.