Sluggish trade conditions have had an adverse impact on the express industry players "" Blue Dart Express (BDL) and Elbee Services (ESL) "" affecting their first-half performance. Margins have been eroded, falling to around one per cent compared with 10 per cent in 1995-96, when the express industry was at its peak.
In the first half of 1997-98, ESL posted a Rs 3.41 crore loss, while BDL improved upon last years mediocre performance and posted a net profit of Rs 1.07 crore. If not for lease income from their aircraft, performance would have been worse.
ESLs income from operations showed a growth of just 6.8 per cent to Rs 56.13 crore though BDL managed to increase sales by 24.72 per cent to Rs 85.4 crore. The better growth at BDL was possible due to its large domestic market share of 36 per cent, according to Clyde Cooper, managing director, BDL.
In 1995-96, when the express industry was at its peak, these companies made aggressive expansion plans which were funded mainly through high cost borrowings. With income projections going awry, the burden of debt is dragging down the bottomline. ESLs interest burden increased to Rs 4.77 crore against Rs 0.66 crore. BDLs interest burden too rose by 36.68 per cent to Rs 2.72 crore but is likely to reduce as part of it is being replaced by funds raised from a Rs 23 crore private placement of FCDs to Newfield Holding.
Industry players expect performance to improve in the last quarter, as exports are expected to pick up then and the rupee depreciation will further boost export volumes.
The share prices of both companies have been falling, with ELS declining from Rs 72 in July to the current level of Rs 14, mainly due to its aircraft crash. BDL which had fallen from Rs 57 in August to Rs 15, gained to around Rs 24 in anticipation of a better performance.