BLUE DART IN NEWSOn 13 September 2002, passengers on a Jet Airways' Delhi- Bangalore flight noticed an exceptionally merry bunch. It was the Blue Dart team rejoicing in tying up with DHL after having ended a 19-year relationship with Federal Express (FedEx). The new tie-up had been announced at a press conference in Delhi the previous day. What was not announced was that FedEx found out about its partner's new alliance just a day before everyone else.FedEx's pact with Blue Dart started unravelling a little before the global courier firm set up a direct presence in India in 1997. The main cause of the acrimony was the exclusive nature of the contract. FedEx did not want Blue Dart to deal with any of its competitors. For instance, Blue Dart operated three aircraft, but the contract forbade the domestic courier from carrying any packages for TNT, UPS or DHL. Says Clyde Cooper, managing director, Blue Dart: "The key consideration for Blue Dart was the restrictive nature of the contract. It was not an equitable relationship".There were other issues too. Blue Dart was a domestic leader and wanted to strengthen its regional presence by tapping Indian trade with the SAARC nations. With three aircraft in Kolkata, Chennai and Mumbai, its infrastructure was ideal for tapping regional trade traffic emanating from places like Dubai and Bangladesh. But the contract with FedEx had territorial restrictions. Says Cooper: "There was some sense that any territory outside of India was not Blue Dart territory. The relationship stopped us from leveraging our domestic infrastructure to the fullest." So now Blue Dart is already exploring agent relationships in the region - Bangladesh, Nepal, Bhutan and the Maldives.Reluctant to talk about Blue Dart's reasons for walking out, FedEx's India managing director Jacques Creeten says: "We wanted to promote the FedEx brand in India. That was an issue." These were the commercial reasons for the break-up, but businesses can often be about people getting along, and FedEx and Blue Dart did not. Says a source: "Blue Dart viewed this as a master-slave relationship. There was just a lot of bad feeling". Along the way, Blue Dart's reliance on FedEx had diminished. When they signed up initially, 80 percent of the domestic courier company's business was international as compared to just 20 percent now.Till 1997, Blue Dart had a watertight contract with FedEx with no exit clause. Then a five-year contract was signed with a one-year exit clause. Last year, the relationship had deteriorated to such an extent that in June 2001, Blue Dart informed FedEx that it did not want to renew the contract that was due to expire on 1 October 2002. Thus, began negotiations between the partners. Simultaneously, Blue Dart started talking to other international carriers like TNT.A few weeks ago, DHL got wind of Blue Dart's talks with other global carriers and approached the company. Blue Dart never thought of approaching DHL for a tie-up as it was already aligned with Air Freight (AFL). DHL and AFL have had a relationship for 22 years and, in January this year, they cemented that with a joint venture. Says S. Raghunandan, country manager, DHL India: "It never occurred to Blue Dart that DHL would be open to another domestic tie-up."DHL feels its two tie-ups are non- competitive. AFL and Blue Dart compete with each other in the domestic market, but both will source outbound international deliveries through DHL. DHL has a direct presence in 11 cities, but has a non-exclusive contract with AFL for smaller towns. With this deal, DHL claims that its market share of the outbound courier business will go up from 60 percent to 70 percent The deal was done. On 12 September, Cooper sent an email to FedEx saying he did not wish to negotiate anymore. The next day, he signed up with DHL. Says a source: "FedEx never thought Blue Dart would walk out. They thought it was posturing for a bargain."While the DHL camp rejoices, FedEx needs to find a replacement post- September. It has announced tie-ups with Prakash Air Freight (part of Prakash Roadways) and Jeena and Company, a freight forwarder (Business World, 2002, p.16).27th April 2004, (www.bluedart.com) Blue Dart Express Limited, South Asia's largest integrated air express, courier and logistics company, posted a Rs. 41.30 crore profit before tax for the year ended March 31, 2004 compared to Rs. 31.19 crore for the year ended March 31, 2003. Net profit for the year ended March 31, 2004 stood at Rs. 26.48 crore, an increase of 25.62 percent over previous years net profit of Rs 21.08 crore. The Board has recommended a dividend of Rs. 4.50 per share for the year ended March 31, 2004 as compared to Rs 2.75 per share for the year ended March 31, 2003. Income from operations has increased by 13 percent as compared to the previous year.Commenting on the results, Clyde Cooper, Managing Director, Blue Dart Express Limited said, "Blue Dart has maintained its consistent strong performance in the year 2003-04 despite the concerns of spiralling oil prices. The year was one of consolidation for the company and Blue Dart made significant investments for the future. We have strengthened our distribution network with the setting up of new retail, customer service and distribution facilities across the country, which includes the inauguration of our stateof- the-art distribution complexes in Bhiwandi, Hyderabad and Mumbai, and an integrated facility at Kolkata Airport. We also added a fourth aircraft, which will be inducted shortly on a full time basis, into our fleet. These investments have already begun to yield results. Blue Dart shall continue to invest in strengthening its infrastructure and will expand its facilities for its customers".On 9th November 2004, DHL announced an investment of Rs730 crore for the acquisition of a majority stake in Blue Dart Express Ltd, the largest domestic express player. This includes an acquisition of 161.8 crore shares aggregating 68 per cent equity in Blue Dart at Rs350 per share for a total of Rs566.5 crore from the three founding shareholders of the Indian company and Schroder Capital Partners.While the founding shareholders are Clyde Cooper (16.6 per cent), Tushar Jani (16.74 per cent) and Khusro Dubash (15.89 per cent), the remaining equity portion being acquired by DHL includes 17 per cent from New Field Holding, the investment arm of Schroder Capital Partners Ltd. The remaining 1.98 per cent equity that is to change hands is held by Blue Dart Courier Services."It will be business as usual for both the companies which will run independently. There are natural, inherent synergies between the two and the current board of Blue Dart will remain in place," said Bryan Jamison, regional director, South-East Asia and Indian Sub-Continent, DHL Express Asia Pacific. DHL said it had finalized agreements with the shareholders. In line with statutory requirements, DHL will make a 20 per cent mandatory open offer to the public shareholders on November 11 at Rs350 per share in cash, subject to the terms and conditions set out in the offer document, thus taking up the total investment by DHL to Rs730 crore.4th March 2005, The recent acquisition of Blue Dart Express Ltd by DHL Express (Singapore) Pte Ltd has prompted a restructuring in the equity holding of Blue Dart Aviation Ltd, a subsidiary of Blue Dart Express. As foreign airline companies are not allowed to hold stakes in Indian aviation companies, Blue Dart Express, now a part of DHL Express, is planning to divest 60 per cent of its equity holding in Blue Dart Aviation to Mr. Tushar Jani and Mr. Khushroo Dubash, the original promoters of Blue Dart.The board of Blue Dart Express Ltd will be held on March 11 to consider the divestment of 1.44 crore equity shares to Mr. Jani and Mr. Dubash (30 per cent stake apiece). Mr. Jani, Mr. Dubash and Mr. Clyde Cooper, also a promoter, are selling their holding in Blue Dart Express to DHL Express. A company announcement posted on the BSE, said the meeting would also take note of the sale of equity shares of the company by the promoters.The meeting will also take up the sale of equity shares of the company by Newfields Holdings Ltd in favour of DHL Express (Singapore) Pte Ltd. It will also take note of equity shares tendered by shareholders following the completion of the open offer made by the acquirer, namely, DHL Express (Singapore) Pte Ltd. The meeting will also consider appointment of the nominee of DHL Express (Singapore) Pte Ltd, Mr. Bryan Jamison, as Director and Chairman of the company.Blue Dart Express Limited has divested 60 percent of its shareholding in Blue Dart Aviation Ltd. on 11th March 2005 (www.bluedart.com). Blue Dart Aviation has since been contracted to provide dedicated services to Blue Dart Express Limited.Mr. Chris Callen, Country Manager, DHL Express, India, in an interview given to Hindu Business Line on April 4th 2005 said that this development with Blue Dart is a logical extension of our current alliance and brings together two premium brands and preferred service providers in the domestic and international air express and logistics arenas. The Blue Dart deal creates a platform for DHL to build on current capabilities and further expand service offerings to the Indian market. We are committed to the long term growth in India.On their choice for Blue Dart he said that DHL Express India is no stranger to Blue Dart. The two companies have had an extremely successful business relationship through a sales alliance forged in 2002. This exciting development effectively consolidates our relationship and enables us to further refine our domestic and international product portfolio. We can now leverage DHL's international expertise and Blue Dart's established domestic network.With regard to organizational change; he said that it will be business as usual. Blue Dart and DHL will continue to operate independently but in close co-operation. Our commitment to customers...
Indian Courier Industry: The Leader's Dilemma
Indian Express industry has undergone large changes in recent past. Industry which was once dominated by Indian Postal Department is now dominated not only by a few large national players but also comprise large multinational players and small regional and local players. Indian industry is led by Blue Dart Express Ltd which has been maintaining its number one position with largest network.... (see full summary)
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