Annual Report - Blue Dart - 2009-2010

BLUE DART EXPRESS LIMITED

ANNUAL REPORT 2009

DIRECTORS' REPORT

To the Members,

Your Directors have great pleasure in presenting the Nineteenth Annual
Report of your Company for the year ended December 31, 2009.



FINANCIAL RESULTS

(Rs. in Lacs)
Particulars For the year For the year
ended ended
December December
31, 2009 31, 2008

Revenues
Service Charges 90,523 97,447
Other Income 760 1,071
Less : Operating Expenses 80,150 84,935
Operating Profit (EBIDTA) 11,133 13,583
Less : Interest Cost 55 51
Depreciation /Amortisation 1,776 1,657
Earnings before tax 9,302 11,875
Less : Provision for Income tax 3,232 4,140
(including FBT)
Earnings after tax 6,070 7,735
Profit and Loss Account balance
brought forward 30,428 22,970
Profit available for appropriation 36,498 30,705
Proposed Dividend 237 237
Tax on Proposed Dividend 40 40
Transfer to General Reserves - -
36,221 30,428

REVIEW OF PERFORMANCE

The year 2009 has been one of the most challenging years for the global
economy. The fiscal year 2008-09 began amidst one of the severest financial
slowdowns worldwide, which decelerated the economic growth of India to
6.7%. While the market witnessed a sharp slowdown in new investments, the
rise in inflation and high interest rates led to cancellation and delay of
many planned projects of Corporate India. To counter this negative fallout
of the global economic slowdown, the Indian Government infused boosters to
the economy by providing stimulus

packages which supported to ease the scenario to a considerable extent and
prevented the economy from getting into a spiral downturn and propped the
GDP growth to 6.7% as against 9% growth rates in the immediate previous
three years.

During an adverse economic scenario, your Company posted a Rs.6,070 lacs
profit after tax for the year ended December 31, 2009 compared to Rs.7,735
lacs profit after tax for the year ended December 31, 2008. Income from
operations for the year ended December 31, 2009 was Rs.90,523 lacs,
compared to Rs.97,447 lacs for the year ended December 31, 2008.

In the year 2009, your Company completed 26 years of leading, innovating
and delivering the qualitative services to the Indian trade and commerce.
The Company focused on organic growth in the areas of product development,
improved features and transit time and enhanced reach. During the year,
your Company incessantly concentrated on its core Air Products, i.e.
Domestic Priority and Dart Apex, while building on Dart Surfaceline to
offer customers one-stop domestic express solutions and simultaneously
aimed to grow its international express revenue. Your Company launched the
Cash-on-delivery' feature, Smart Box on Ground Express and the Time
Definite Products viz; Domestic Priority 1030 and Dart Apex 1200. Your
Company also customised its products to meet specific needs and rolled out
certain additional and an innovative DHL international products and
services viz; Express Pallet, Economy Select, Duties and Taxes Paid,
Shippers Interest Insurance and Pre-Paid University Express.

The strategy is to build on the Air Express business where your Company
already has a formidable presence while expanding the Ground Services and
capturing further market share.

Your Company has been certified to the 1S0 9001 standards since 1996 and
has been successfully re-certified in September 2008 for 3 years, to the
new global ISO 9001-2000 standards for 'design, management and operations
of countrywide express transportation and distribution services within the
Indian sub-continent and to international destinations serviced through
multinational express companies.'

Your Company has been recently certified and upgraded to the latest ISO
9001:2008 standards.

DIVIDEND

Your Directors are pleased to recommend a dividend of Re.1/- per equity
share of Rs.10/- each.

Your Directors wish to conserve resources for future expansion and growth
of the Company.

The dividend, once approved by the members at the ensuing Annual General
Meeting, will be paid out of the profits of the Company for the year and
will sum up to a total of Rs.277 lacs, including dividend distribution tax,
as compared to Rs.277 lacs in the previous year.

TRANSFER TO RESERVES

This year, your Company does not propose to transfer any amount to General
Reserves. An amount of Rs.36,221 lacs is proposed to be carried forward to
Profit and Loss Account.

OPERATIONS REVIEW

Your Company is South Asia's premier courier and integrated express package
distribution Company and offers secure and reliable delivery of
consignments to over 21,000 locations in India and to over 220 countries
worldwide through its Sales Alliance with DHL Express (India) Pvt. Ltd.

Your Company, today, stands as the unrivalled leader in the domestic
express industry. Blue Dart stands as the dominant leader in the domestic
air express industry and commands a 43% market share. In the 'ground'
segment, your Company garnered a market share of 8%. Your Company since
inception invested in building an infrastructure which remains unmatched in
the country and in South Asia region. Your Company has an extensive reach
across the complex Indian geography and beyond, domestic transit hubs/
warehouses, a fleet of four Boeing 757s and three Boeing 737s freighter
aircraft offering a revenue payload of 300 tonnes per night, a flotilla of
over 5,412 vehicles, 300 facilities, 52 domestic warehouses and 10 express
hubs and over 6,000 committed and trained employees driven by a unified
passion of delivering service excellence and value.

During the year under review, your Company carried over 772.65 lacs
domestic shipments and over 7.18 lacs international shipments weighing over
267,000 tonnes.

AVIATION SYSTEM

The Company's ACMI Contract with Blue Dart Aviation Limited, its Associate
Company for dedicated air carriage capacity supported in sustaining Blue
Dart's leadership position despite turbulence in the Indian aviation
segment giving an edge to its service capability and service quality vis-a-
vis other players in the business.

Blue Dart Aviation Ltd. posted an excellent technical despatch reliability
(TDR) of 98.99% for the B737 and 99.28% for the 8757 fleet, with an overall
TDR of 99.19%, during the year.

With the volume growth being low due to the slowdown which impacted the
domestic movement of loads, your Company restructured its routing and
discontinued the Ahmedabad - Delhi - Ahmedabad route for part of the year.
During the year, Blue Dart Aviation Ltd., successfully carried out in-house
four numbers of 'C' checks on our B737 and 8757 freighters.

Blue Dart Aviation Ltd. has been allotted space at Delhi International
Airport Ltd. (DIAL), GMR Hyderabad International Airport Ltd. (GHIAL) and
at Kolkata Airport. The construction of these facilities is progressing
well. The Company proposes to move to DIAL, GHIAL and Kolkata facilities by
the first quarter of the year 2010.

FACILITIES I INFRASTRUCTURE

During the year, your Company added 13 new and 10 replacement facilities,
taking the total number of facilities to 300, with a total area of over
13.4 lacs sq.ft. across the country. Your Company plans to further
strengthen its infrastructure, including its air and ground fleet.

The Company's integrated facility of 220,757 sq.ft. at the Bengaluru
International Airport Ltd. (BIAL), along with DHL Express and Blue Dart
Aviation Ltd. has been functioning well. This facility provides faster
clearance and seamless handling of in-bound and out-bound international and
domestic shipments which has strengthened the unparalleled global and
domestic delivery network of DHL Express and Blue Dart Express Ltd.

During the year, your Company moved to its new warehouse having an area of
182,326 sq.ft. out of which 75,000 sq.ft. is allocated for Operations. This
warehouse named 'National Highway Hub' (NHH) is located at Bilaspur
(District: Gurgaon) in Haryana on National Highway no. 8 connecting Jaipur-
Delhi and is in close proximity to KMP (KundaliManesar-Palwal) Express Way/
Trade Corridor. The warehouse, having 41 docking bays, has been built to
suit your Company's operational requirements.

The Company proposes to carry out joint operations of Blue Dart Express
Ltd. and Blue Dart Aviation Ltd. from an airside space allotted at Kolkata
and this joint facility would provide for synergies resulting in better
offerings to the customers.

During the year, the Company opened a warehouse at Guindy (GWH) on Chennai
- Bangalore Highway. This warehouse is well connected to the Chennai-
Bangalore highway, Grand South Trunk Road (South TN) and Kolkata Highway.
Guindy Warehouse has 13 loading/ unloading bays with 23,000 sq.ft. of
constructed warehouse apart from 10,000 sq.ft. area for vehicle docking.

This focused approach in terms of infrastructure facilities provides us a
huge entry barrier shield in terms of first mile to last mile services.

FINANCE

The Company's New Financial Accounting Package viz; mPower implemented last
year has been successfully integrated, specially customised and enhanced to
suit the Company's complex requirements and for better and efficient
Accounting Systems. This Financial Accounting Package is an integrated
Central Package and ensures single source of data for majority of the
financial MIS. It is a centralised, integrated, secure, robust and user-
friendly package that has enhanced quality and integrity of data. The
implementation of mPower has resulted in cost, time savings and
productivity increase. The system provides information and intelligence on
a real-time basis.

Your Company has a healthy financial position and continues to enjoy 'zero-
debt' status.

During the year, your Company managed its surplus funds efficiently by
investing into various high rated debt schemes (liquid category) of mutual
funds for optimum working capital management. Liquidity in the Balance
Sheet requires to be balanced between earning adequate returns and the need
to cover adequate financial risk. Company's internal accruals adequately
supported working capital requirements, capital expenditure and dividend
payments.

During the challenging times, in the global and domestic market, your
Company efficiently managed its working capital, which is the best in the
industry and within the benchmarks laid down by the Global Parent Group.

The Company's Earning Per Share declined by 22% during the year to Rs.25.58
per share as compared to Rs.32.60 per share for the previous year,
primarily on account of the global economic slowdown.

CREDIT RATING

Your Company continues to enjoy the highest credit quality rating for its
commercial paper programme/ short-term debt programme:

1. 'A1+' (A one plus) assigned by ICRA Ltd. (an Associate of Moody's
Investors Service) for Company's commercial paper/ short-term debt
programme of Rs. 2,500 lacs (outstanding - nil). The rating indicates
highest credit quality for the short term instruments.

2. 'F1+(ind)' (F one plus (ind)) assigned by Fitch Ratings India Private
Ltd. for the Company's short-term programme of Rs. 3,000 lacs (outstanding
- nil), indicating the strongest capacity of timely payment of its
financial commitments.

ICRA has assigned LAA (L double A) (long term rating) to the Company's Bank
limits (working capital) of Rs. 3,615 lacs (including fund based and non-
fund based limits). The rating indicates the high credit quality rating to
long term debt instruments. ICRA also assigned A1 + (A one plus) (short
term rating) for the said limits. The rating indicates highest credit
quality rating assigned by ICRA to short terms instruments and carries
lowest credit risk.

SUBSIDIARY AND ASSOCIATE COMPANY

The audited statements of accounts for the year ended December 31, 2009 of
Concorde Air Logistics Ltd., the Company's Wholly-Owned Subsidiary,
together with the reports of Directors and Auditors, as required pursuant
to the provisions of Section 212 of the Companies Act, 1956, are attached.

The Consolidated Financial Results represents those of Blue Dart Express
Limited and its Wholly-Owned Subsidiary, viz. Concorde Air Logistics Ltd.
and its Associate Company, Blue Dart Aviation Ltd. The Company has
consolidated its results based on the Accounting Standard on Consolidation
of Financial Statements (AS-21) and Accounting Standard on Accounting for
Investments in Associates in Consolidated Financial Statements (AS-23)
issued by the Institute of Chartered Accountants of India.

DHL EXPRESS (SINGAPORE) PTE. LTD., PROMOTER SHAREHOLDER

As you are aware, DHL Express (Singapore) Pte. Ltd. holds 81.03% of the
Equity Capital of the Company. The acquisition of majority shares by DHL
Express (Singapore) Pte. Ltd., during the year 2005 provides the Company
and its customers with a firm strategic advantage. The service offerings
that would emanate from both organisations cover the entire spectrum of
distribution within India and, between India and the rest of world. Blue
Dart is a leading brand in the country with unmatched domestic network,
infrastructure and people. DHL is an acknowledged global leader with a
strong and long-standing presence in India. Together, both present a
powerful backbone to business and trade success for India and its trading
partners.

Globally, the year 2009 was a challenging year for Deutsche Post DHL.
However, to protect profitability, Deutsche Post DHL promptly focused on
cost efficiency and restructuring in its divisions. Deutsche Post DHL has
re-aligned its course and invested for the future in two important ways; by
creating lean, resilient structures for an unpredictable economy and by
laying the groundwork for long-term growth in the key industries and
markets.

OUTLOOK FOR THE FUTURE

Your Company is ideally placed in the Indian market to facilitate trade and
commerce in our country, with trained and committed force of over 6,000
people, latest state-of-the-art technology, integrated air and ground
infrastructure, wide geographical coverage to support India's growth and
development, distribution and third party logistics and supply-chain
management needs of the industry.

The Indian economy, with its strong fundamentals, has managed to tide over
the global downturn with greater resilience than many other countries, as
indicated by its GDP growth. Going forward, many economists believe that
the economic recovery will be driven by a new phenomenon - growing consumer
spending in emerging markets, with India at the forefront.

The Indian economy is well on its way to recovery and as projected by the
Finance Minister, Indian economy is expected to grow by 7.58.0% in the
current fiscal. The strong IIP growth from November 2009 till January, 2010
is reflective of the improving consumer confidence and the impact of the
government stimulus package on demand, even as the low base effect also
continues to play a role. With inflationary pressures building up at the
initial stages of recovery in the domestic economy, choosing the right time
for withdrawal of the fiscal and monetary stimulus remains a major
challenge for the policymakers. As per the India Economic Outlook Report by
Organisation for Economic Co-operation and Development (OECD), inflation is
projected at 7.3 percent growth in 2010 and 7.6 percent in 2011. Retail
inflation, which pinches consumers the most, is pegged at 7.1 percent in
2010 and at 6.2 percent in 2011. It indicates that the economic momentum is
strengthening.

In 2010, your Company's key focus areas would be Sales Development and
Productivities, Service Quality Enhancement, Loyal Customers, Profitability
and Motivated People.

Your Company would continue to focus on cost efficiency measures and aim at
an overall financial discipline. Your Company firmly believes that while
focus on driving core revenues and keeping costs down is important, success
would be achieved by ensuring that service quality through our highly
engaged and passionate people remains of the highest order.

Your Company plans to consolidate its position in the ground express
services without losing commitment to its air express products, which would
continue to be one of its key offerings. Your Company foresees both the
products complimenting each other and thereby enabling the Company to
acquire maximum market share. With increased government focus on
infrastructure, Tier 2 and Tier 3 cities are developing faster than
earlier. There are 71 cities in India with a population of more than 1

million and reaching out to these cities require good connectivity, both,
in air and on road. In an increasingly competitive environment, cost centre
management is a prime focus area and an increased reach and transit times
are potent arsenals for reduced costs. The emergence of SEZs, EPUs and IT
parks also present exciting prospects for our new service offerings. The
focus is on reducing lead times and enhancing accuracy as regards delivery
time across modes of delivery.

Your Directors look forward to improved performance over the coming years.

AWARDS AND RECOGNITIONS

Our innumerable efforts in the pursuit of endless excellence were
recognised throughout the year 2009. Your Company won serveral awards to
validate its Brand Equity and Leadership, Human Resource Philosophy,
Operational Efficiency and Corporate Governance and it is heartening to
note that numerous industry bodies and customers validate our stupendous
efforts.

Blue Dart was honoured with the Indy's Brand Leadership Award, Gold Medal
award for Blue Dart and Glory of India award for its Managing Director by
the Institute of Economic Studies, Leader in Prestige and Quality 2008.

We were voted a Superbrand, fifth time in a row. For the fourth consecutive
year, we became the recipient of the Reader's Digest Most Trusted Brand
Gold Award.

Your Company was honoured with the Best Express Provider of the Year at the
3rd Express Logistics & Supply Chain Awards, the Market Leadership Award by
the CMO Council, EDGE Award for innovations in optimising the customer
experience in real-time.

Your Company was conferred with the 'Amity HR Excellence Award' for the
year 2009 and was also honoured with the Best Employer Brand Award 2009.

Mr. Anil Khanna, Managing Director, was awarded an Outstanding
Entrepreneur of the Year' at the Asia Pacific Entrepreneurship Award 2009
by Enterprise Asia for showing outstanding tenacity, perseverance and
courage in the business, while Mr. Ketan Kulkarni, Head-Marketing,
Corporate Communications and Sustainability was awarded Pride for
Profession and the CMO council Best CMO of the year Award conferred by the
Global Jury at the 1st CMO awards and Conference in Indore.

DIRECTORS

During the year, Mr. Daniel McHugh, Nominee Director of DHL Express
(Singapore) Pte. Ltd., tendered his resignation as a Director with effect
from June 2, 2009. The Board accepted his resignation and placed on record,
its sincere appreciation and thanks for his valuable contribution during
his tenure as a Director of the Company. Consequently, Mr. Christopher Ong,
an Alternate Director to Mr. Daniel McHugh, ceased to be a Director with
effect from June 2, 2009 under the statutory provisions of the Companies
Act, 1956.

Mr. Christopher Ong, a nominee of DHL Express (Singapore) Pte. Ltd., was
appointed as an Additional Director of the Company with effect from June 2,
2009.

Mr. Christopher Ong holds office up to the date of the forthcoming Annual
General Meeting of the Company. The Company has received a notice under the
provisions of Section 257 of the Companies Act, 1956, for the appointment
of Mr. Christopher Ong as a Director of the Company. The resolution seeking
approval of shareholders for his appointment has been incorporated in the
Notice of forthcoming Annual General Meeting along with brief resume of Mr.
Christopher Ong.

In accordance with the provisions of the Companies Act, 1956, and Articles
of Association of the Company, Mr. Sharad Upasani, Director, retire by
rotation at the ensuing Annual General Meeting and, being eligible, offer
himself for re-appointment.

AUDIT COMMITTEE

The Audit Committee comprises of three Non-Executive Directors, viz.
Mr.Sharad Upasani, Mr. Malcolm Monteiro and Mr. Suresh Sheth.

The Chairman of the Committee is Mr. Sharad Upasani.

Mr. Tushar Gunderia, the Company Secretary, acts as the Secretary to the
Audit Committee.

The terms of reference of the Audit Committee are in accordance with the
provisions of Section 292A of the Companies Act, 1956 and Clause 49 of the
Listing Agreement pertaining to corporate governance norms.

The permanent invitees to the Audit Committee are Mr. Anil Khanna, Managing
Director and Mr. Yogesh Dhingra, Finance Director and Chief

Operating Officer.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956,
your Directors confirm:

(i) that in the preparation of annual accounts, the applicable accounting
standards have been followed, along with proper explanation relating to
material departures;

(ii) that the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the profit of the Company
for that year;

(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records, in accordance with the
provisions of the Act, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going
concern basis.

LISTING ARRANGEMENT

The Company's equity shares are listed on The Bombay Stock Exchange Ltd.
(BSE) and National Stock Exchange of India Ltd. (NSE). The Company has paid
its Annual Listing fees to the above stock exchanges for the Financial Year
2009- 2010.

CORPORATE GOVERNANCE

The Company is committed to maintain the high standards of Corporate
Governance. Your Company adheres to the requirements set out by the
Securities and Exchange Board of India's Corporate Governance practices and
has implemented all the stipulations as prescribed.

In recognition of a good Corporate Governance practices adopted by the
Company, Blue Dart, for the third time in a row, was selected as one of the
top 25 Companies adopting good Corporate Governance practices by The
Institute of Company Secretaries of India. This validates the high
standards of Corporate Governance adopted by your Company.

A separate Section on Corporate Governance, along with a certificate from
the Auditors confirming compliance is annexed and forms part of the
Directors' Report.

Management Discussion and Analysis Report also forms an integral part of
this Report and is set out as a separate section to this Annual Report.

CEO AND CFO CERTIFICATION

In accordance with the provisions of the Listing Agreement pertaining to
Corporate Governance norms, Mr. Anil Khanna, Managing Director and Mr.
Yogesh Dhingra, Finance Director & Chief Operating Officer, have certified
inter-alia, about review of financial statements and establishing and
maintaining internal controls for financial reporting for the year ended
December 31, 2009. The said certificate forms an integral part of the
Annual Report.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits under the provisions of
Section 58A of the Companies Act, 1956.

AUDITORS

The Statutory Auditors, M/s. Price Waterhouse, retire at the ensuing Annual
General Meeting and, being eligible, offer themselves for re-appointment.
Your Company has received necessary certificate from them confirming that
their re-appointment, if made, will be in accordance with the provisions of
Section 224(1 B) of the Companies Act, 1956.

The Board of Directors recommends re-appointment of M/s. Price Waterhouse
as Statutory Auditors of the Company subject to necessary approval from the
Shareholders of the Company.

HUMAN RESOURCE DEVELOPMENT

Employees are the backbone of a good organisation and to motivate them to
achieve greater heights, your Company's Human Resources Department (HRD)
undertook several initiatives towards their development, enhancement and
retention.

'People First' policies have always been an integral part of the core
values of Blue Dart. The highly motivated and passionate employee
environment was amply reflected in the online 'Employee Satisfaction
Survey' with 'Pride in working for Blue Dart' which remained the highest
scoring dimension having a mean score of 4.82 (on a scale of 1 to 5).

In difficult economic and business scenario of 2009, the Company emphasised
on conducting regular feedback through 'Open House' sessions across the
organisation and introduced the 'Team Brief', a new initiative, to
strengthen the internal communication mechanism and align the employees on
a regular basis on organisational performance, strategies and initiatives
adopted by the organisation to meet the challenges.

In 2009, as part of building customer centricity, Company's HR Department
introduced 'Delivering Smiles' module for the frontline staff and 705
personnel were imparted training through in-house and internal trainers.
Few of the other major training initiatives were 'Key to Personal
Effectiveness', 'You can make the difference'- Customer Service
Training,'Self Awareness and Personal Effectiveness', 'Counter Handling
(Retail Training)', 'Package Handling' etc. With the deployment of internal
trainers as above, training man days of 3.5 days was achieved in 2009. In
order to develop positive energy, informal bonding and fun at work place,
HRD also initiated number of People initiatives viz; Fashion show, Painting
competition for children, Picnics, Cricket tournament, Dandiya competition,
Anniversary celebrations, Christmas celebration etc.

EMPLOYEES

Information on the particulars of employees' remuneration as per Section
217(2A) of the Companies Act, 1956, read with Companies (Particulars of
Employees) Rules, 1975, forms part of this Report. However, as per the
provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the report
and accounts are being sent to all shareholders of the Company, excluding
the Statement of Particulars of Employees which is available for inspection
at the Registered Office of the Company during working hours. Any
shareholder interested in such particulars may inspect the same.

PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

The particulars regarding foreign exchange earnings and expenditure are
annexed hereto as Annexure 'A' and forms part of this Report. Since your
Company does not own any manufacturing facility, the other particulars
relating to conservation of energy and technology absorption stipulated in
the Companies (Disclosure of Particulars in the Report of the 'Board of
Directors' Rules, 1988) are not applicable.

CORPORATE SOCIAL RESPONSIBILITY

Your Company as a socially responsible corporate has undertaken numerous
steps to give back to the society, in whatever small way it can.

Blue Dart's commitment towards community causes has been unwavering since
its inception in 1983. The organisation completed 26 years in November,
2009. Blue Dart as a socially responsible corporate has an in-house
sustainability team responsible for identifying and addressing various
sustainability issues and supporting initiatives that make the world a
better place for future generations. As part of the DHL Group and in line
with its CSR platform, Blue Dart's major focus areas are:

- Education (Go Teach)

- Environment (Go Green)

- Disaster Management Response (Go Help)

DHL and Blue Dart jointly organised 'Volunteer Day' 2009 on 5th September
2009 to promote the spirit of volunteerism amongst its employees in India.
Over 2,000 DHL and Blue Dart volunteers in 8 major cities and 31 sites
across India participated in 21 volunteering activities.

During the year, 14 blood donation drives (Saving Lives) were held at Blue
Dart and DHL facilities, which resulted in collection of approx. 275.000
ml. of blood in 800 bottles that supported over 2,400 lives. Nearly 8 tons
of reusable materials were collected through a unique

resource mobilisation drive for donation to the underprivileged and needy.
Other initiatives undertaken were clean up drives, mending toys for
underprivileged children, sapling plantation and visiting charity homes for
children and elder citizens, in which our volunteers cleaned, entertained
and donated useful items to the beneficiaries.

The Company also volunteered to facilitate free movement of shipments
containing clothes, books, tooth brush, tooth paste and other hygiene
products, from Mumbai to underprivileged students in Nagai village, Tamil
Nadu.

The Company also organised 'Help a Child' initiative to mobilise resources
from across the regions and gave 'gifts' to deprived children during the
festive season of Christmas, 2009. The gifts comprised 20 bags of donations
- clothes, woolen clothes, toys, books, stationery, bags, shoes, lunch
boxes, water bottles, soaps, shampoos, toothpaste, etc. It was distributed
in 6 orphanages catering to around 400 children, between 3rd to 6th January
2010.

ACKNOWLEDGEMENT

The Board of Directors wishes to express its sincere appreciation for the
excellent support and co-operation extended by the customers, suppliers,
banks, financial institutions, solicitors, advisors, the Government of
India and concerned State Governments and other government departments and
authorities for their consistent support and co-operation to the Company.

Your Directors also wish to place on record their deep appreciation for the
exemplary contribution of the employees at all levels.

The enthusiasm and unstinting efforts of the employees enabled the Company
to remain as a leading player in the Express Industry.

We are also deeply grateful to our Shareholders for the confidence and
faith that they have always placed in us.

For and on behalf of the Board of Directors,

Sharad Upasani Anil Khanna
Chairman Managing Director

Malcolm Monteiro Suresh G. Sheth
Director Director

Mumbai,
February 23, 2010

ANNEXURE TO THE DIRECTORS' REPORT

ANNEXURE A'

PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

A) Conservation of Energy : Not applicable

B) Technology Absorption : Not applicable

C) Foreign Exchange Earnings and Outgo:

Earnings in Foreign Currency:

Earnings in foreign currency during the year were Rs. 682 lacs (previous
year - Rs.530 lacs)

Expenditure in Foreign Currency:

Expenditure in foreign currency during the year was Rs. 80 lacs (previous
year - Rs. 40 lacs)

MANAGEMENT DISCUSSION AND ANALYSIS

Industry Structure and Developments:

A well-developed Logistics Industry is important for the success and
overall growth of the economy coupled with an efficient Supply Chain
Management system. It provides a competitive edge to industry players.
Logistics has always been perceived as a cost centre, and across industries
efforts are being made to manage cost and especially so in the wake of the
global economic downturn.

Notwithstanding the economic slowdown, the Indian economy posted growth of
6.7% in 2009(1). This is the second highest economic growth rate after that
of China which grew by about 8%(2) in 2009. India is being globally
recognized as an outsourcing hub (in Manufacturing and Services sectors).
As a result, there is an increased demand for efficient logistics services
in India, leading to the growth and transformation of this sector. The
logistics sector has been growing at 7%(3) per annum for the last few years
and the overall Indian logistics spend is estimated to be approximately
Rs.5 trillion which is about 13%(4) of the country's Gross Domestic
Product. This is significantly higher than those of the developed nations
where it averages approximately 7%(3).

The logistics industry in India is highly unorganized; there are a large
number of players present across the value chain. The players from the
unorganized sector are more dominant in the road and air modes of
transport. In road transport, the market is highly fragmented with small
fleet owners, individual truck owners, etc., holding the majority share. In
the air mode, apart from express companies, there are passenger airlines
with their belly space, freight forwarders, etc.

With increased government focus on infrastructure, tier 2 and tier 3 cities
are developing faster than ever before. There are 71 cities(5) in India
with a population of more than one million. Reaching out to these cities
requires good connectivity, both by air and on road. The Indian express
market (a part of the logistics services market) has been doing that and is
growing at a CAGR of 17.2% and is estimated to be Rs. 7.6 billions(6) for
2009-10. The domestic organized express market is about 30%(6) of this. The
unorganized and semi-organized segments consist largely of regional and
intra-city service providers. In an increasingly competitive environment,
cost centre management is a prime focus area, and increased reach and
transit times are potent arsenals for reduced costs. The Government's focus
on the Golden Quadrilateral and enhancing Freight Corridors will further
enhance our prospects given our market leadership position.

Express Industry provides the speed and reliability to meet the mature and
aggressive demand of current markets and their customers who exhibit short-
attention spans and are exposed to many alternatives. We at Blue Dart have
identified this latent customer need that requires speedy and reliable
door-to-door services and have been serving our customers for the last 26
years by partnering them in their growth

and success stories. Blue Dart stands as the supreme leader in the domestic
air express industry and commands a market share of 43%(7). This dominant
position must be attributed to the huge investments that Blue Dart has made
in building an unmatched infrastructure in the South Asia region which
provides the stability to its business model.

Review of performance

With the global downturn looming large in the year 2008-09, the Government
of India infused boosters to the economy by providing stimulus packages.
This prevented the economy from getting into a downward spiral and propped
the GDP growth to 6.7%(1) which was in stark contrast to the 9%(1) growth
rates in the previous three years. The downturn, coupled with high food
inflation and interest rates, translated into reduced consumer demand
during 2009. This, in turn, resulted in reduced transportation and drop in
aircraft space utilization which impacted Blue Dart also.

On November 19, 2009, Blue Dart completed 26 years of leading, innovating
and delivering. The year 2009 was one of the most challenging in the
history of Blue Dart in terms of market conditions and business sentiments.
As a prudent organization, we focused on delivering on our core products,
i.e., Domestic Priority and Dart Apex, while building on Dart Surfaceline
to offer customer one-stop domestic express solutions whilst growing Blue
Dart's international revenue. In addition to this, we launched numerous
products and services to cater to the Time-Definite segments and specific
industry verticals which we believe will bring in scalability.

During the year, Blue Dart added 13 new and 10 replacement facilities. The
total across the country now stands at 300 facilities, a ground fleet of
over 5412 vehicles, 52 domestic warehouses and 10 express hubs. Blue Dart's
market share in the organized air express market reiterates its undisputed
position. Blue Dart also augmented its ground express space through its
Dart Surfaceline product and plans to achieve market leadership in short-
to medium-term.

Blue Dart, with four Boeing 757s and three Boeing 737s, has the unique
capability to offer an unrivalled payload of 300 tonnes each night on 60
route connections across an expansive and diverse Indian geography. To
capitalize on the improving road infrastructure in the country and in
continuation to the thrust on the ground product- Dart Surfaceline, Blue
Dart strengthened the ground network to serve the growing needs of the
market and since its launch, has expanded its reach to 21,000+ domestic
priority locations and 596 ground routes in India. During the year 2009,
Blue Dart carried over 772.65 lacs domestic shipments and over 7.18 lacs
international shipments both weighing over 267,000 tonnes.

The Company posted a Rs. 6,070 lacs profit after tax for the year ended
December 31, 2009, compared to Rs. 7,735 lacs profit after tax for the year
ended December 31, 2008. Income from operations for the year ended December
31, 2009 was Rs.90,523 lacs, compared to Rs.97,447 lacs for the year ended
December 31, 2008.

Products:

Blue Dart offers air and ground express, air freight, and charters and
through its synergies with the three DHL Business Units- DHL Express, DHL
Global Forwarding and DHL Exel Supply Chain- offers ocean freight, supply
chain solutions, freight forwarding, customs clearance, and project
handling capabilities.

The express service offers Domestic Priority for non-commercial documents
and packages under 32 kg. Dart Apex(TM) is a door-to-door, day-definite
supply chain and logistics distribution service for commercial shipments
that require regulatory clearance. Dart Surfaceline is a premium door-to-
door service providing an economical option of shipping packages via Blue
Dart's strong and expansive ground network. Smart Box - Air and Ground
Express - is the convenient door-to-door service in two sizes - 10 kg and
25 kg Freight services include domestic, early morning airport-to-airport
deliveries to the 7 metros: Mumbai, New Delhi, Kolkata, Chennai, Bangalore,
Ahmedabad and Hyderabad serviced by Blue Dart aircraft.

Blue Dart has 'interline' agreements with various international airlines
and also offers bonded warehousing and transshipment facilities. 'Charters'
offer palletized capacity for carriage of urgent and large volumes to
multiple airports in India and international airports in the region.

Rakhi Express and University Express (International)/Student Express
(domestic) meet the seasonal needs of consumers. 'Freight on Delivery'
(FOD), 'Demand draft on Delivery' (DOD) and 'Freight on Value' (FOV) are
others which have been very well-received by the market. Import Express is
the only importing service in India to offer a door-to-door facility for
importing shipments from over 200 countries around the world. Intra-SAARC
Road Express is a ground service between India and Bangladesh.

Blue Dart, in line with this focus on innovation, has also come up with
customized products to meet specific needs and rolls out certain additional
international products and services from DHL like Express Pallet -Air &
Ground, Economy Select, Duties & Taxes Paid, Shippers Interest Insurance
and Prepaid University Express.

On the domestic front, Blue Dart has launched the 'Cash-on-Delivery'
product, Smart Box on Ground Express and the Time-Definite products
Domestic Priority 1030 and Dart Apex 1200. The Time-Definite services are
backed by full money back guarantee.

Blue Dart is the only express company that offers an unmatched delivery
capability encompassing the entire spectrum of distribution services
wherein lies its unique business proposition.

A Customer Centric Brand

During the year, the Company reinforced the Blue Dart and DHL brands as a
unified force at all touch-points that deal with the domestic and
international services in the marketplace. This was done by strengthening
its retail format with combined 380+ ONE-RETAIL stores in the country,
which today remains unparalleled in terms of presence across the country.
The First Choice and Net Promoter Approach programmes continue to be a
guiding force to improve the service quality and ability to capture the VOC
(Voice of Customer) in a systematic way in order to bring in long-lasting
customer benefits and strengthening the brand experience. To further
strengthen and sustain the premium and thought leadership position in the
marketplace, the Company made its presence felt at key events, seminars and
media through media one-on-ones, media releases, by-line articles,
contributory articles, speaking opportunities, branding activities, etc.
These initiatives ensured that Blue Dart was visible in top-notch events
and mediums. In 2009, Blue Dart achieved the highest ever Share-of-Voice of
53%. On the Corporate Social Responsibility (CSR) front, Blue Dart aligned
its efforts on three key pillars: Education, Environment and Disaster
Management. The 'Blue Edge - Empowering Lives' programme, now a 6-month
course, continues to impact young lives from the marginalized segment of
our society. Blue Dart participated in various efforts to put various
environmental concerns in spotlight through events like Earth Day,
Volunteer Day, Power Saver-Initiative, Go-green drives, etc. In spite of
new entrants, Blue Dart continues to be viewed as a premium brand with high
customer satisfaction. Our customers perceive Blue Dart-DHL as the
strongest and leading brand in its category. This is also validated through
its dominant market share in the domestic and international express
markets.

Opportunities

The express industry is a key enabler in facilitating trade and commerce
because of the time-sensitive nature of most goods and the increasing
demand for reliability, efficiency and speed. The opportunities are aplenty
for the express industry in India as the current logistics spend in India
is 13% of the GDP compared to a notably lesser percentage of the same in
more developed economies. The need for the highest levels of efficiencies
still exists.

Air express remains the preferred option for those looking at reliability,
speed and security, and this augurs well with our business model. The
ground express too offers huge opportunities due to an increased affluence
expanding into tier II and III towns, which are emerging as important nodes
of production, consumption and distribution. They enjoy more rapid growth
than major metros and provide a wider catchment for suppliers of goods and
services, and present interesting distribution opportunities.

The Company has successfully leveraged its proven track record in the air
express business by positioning India's finest services in the ground
express organized market. The growth in Dart Surfaceline has been
exemplary. Blue Dart is focused on delivering value through its robust
aviation and ground network, domestic and international reach, market
leading transit times, superior technology, innovative and market-defining
product launches, and through passionate and dedicated people-force. With
strong infrastructure in place, the business is only expected to grow and
provide stable revenue streams.

Blue Dart is committed to improving its dominance through focused customer
acquisitions and enhancement of customer loyalty from existing and new
clients while continuing to open up new markets to service the needs of the
customer. The strategy revolves around industry focus and proactive
approach on feedback received on a regular basis from the customer touch
points. In addition to that, the Company will continue to invest in
infrastructure and employees, enhance brand visibility and pursue alliances
to meet customer needs on a continuous basis.

Outlook

According to the Finance Minister, India's economy is expected to grow by
7.5-8.0%(8) in the current fiscal and it could return to the 8-9%(8) growth
rates which were seen before the slowdown. India's GDP grew by 6.7%(9) in
the last fiscal year after clocking an average annual growth rate of more
than 9%(9) in the preceding three years.

Risks and Concerns

Economic Scenario

With the growth projections for India having been revised down to 7.5-
8.0%(8) in 2009 and less than 8%(8) per cent in 2010, inflationary
environment, sluggishness in the manufacturing and service sectors due to
decreased demand as a result of the global downturn will be expected to
impact the logistic sector resulting in inconsistent demand.

Government Policy

The proposed Ground Handling Policy at airports would significantly impact
the quality of air express and airline operations, and render the business
untenable. A review of the policy is critical to exclude air express and
airline operations because of the special needs of this segment that are
completely different from the passenger segment and because of the
significant role air express plays in trade facilitation within the country
and across borders. We are making our representation to the Ministry of
Civil Aviation. On account of various representations, the proposed Ground
Handling Policy has been deferred by the Government. We welcome the
decision.

The proposed postal bill is not in tandem with the best global practices
and would adversely impact the growth of trade and commerce in the country.
The amendment, if passed in its current format, would annul a 30-year-old
business employing over one million people, and would negatively impact
thousands across the country who have worked hard to set up infrastructure
and build the business, Blue Dart being no exception. We, however, welcome
the recent decision to temporarily withdraw the Cabinet Note for Bill.

Competition

An increasing number of players are entering the express industry and this
number is expected to rise. To ensure that Blue Dart remains ahead of the
market, the focus is on building its key differentiators of service
excellence and innovation and continuing to sustain and enhance its value
proposition in a field that is likely to witness strong pressure on yields.

Airport Facilities

India's aviation growth has given rise to a spate of start-up carriers
inducting large numbers of aircraft. Without sufficient improvement in
airport infrastructure to support their operations, air operators are
subjected to long queues for take-off and landing, resulting in increased
ATF and operations costs as well as delay. The fallout of the growth in
Indian aviation is a severe constraint in infrastructure facilities such as
airport warehouses and parking and transit bays. Anticipating the severe
constraints, Blue Dart has made representations to the heads of Mumbai and
Delhi airports with requests for facilities, parking and transit bays up to
the year (2015), impressing upon them the inadequacy of facilities to
support current and future growths, and the necessity for improvements to
facilitate Indian trade and business.

Aviation Turbine Fuel Costs

Volatility in crude oil prices is a cause of major concern globally. Blue
Dart has a fuel surcharge mechanism in place since December 2002 to
neutralize the impact of the Aviation Turbine Fuel (ATF) costs. This has
enabled us to manage and mitigate the phenomenal increase in costs.

Internal Controls and its Adequacy:

Across industries, internal processes control and systems play a critical
role in the health of a company. An effective system of internal controls
forms a keystone necessary for building, maintaining and improving
shareholder's value and helps to enhance the overall quality of the
business and enterprise. Blue Dart remains committed to ensuring an
effective internal control environment that provides assurance on the
efficiency of operations and the security of assets. Blue Dart has a sound
internal control system to ensure that all assets are protected against
loss from unauthorized use. All transactions are recorded and reported
correctly. The Company's internal control system is further supplemented by
internal audits carried out by the in-house internal audit teams and the
outsourced audit firm, KPMG. Well-established and robust internal audit
processes, both at business and corporate levels, continuously monitor the
adequacy and effectiveness of the internal control environment across the
Company and the status of compliance with operating systems, internal
policies and regulatory requirements.

The audit committee of the Board addresses significant issues raised by
both the Internal Auditors and Statutory Auditors. The Company also
conducts Risk-Assessment Workshops to define and identify what the
Company's most significant risks are and how those risks can be mitigated.
The members of the Senior Management actively participate and deliberate in
the Risk Workshops. The Company has been certified to be in conformance
with ISO 9001 standards since 1996 and has been successfully re-certified
in September 2008 for 3 years, to the new global ISO 9001:2000 standards
for 'design, management and operations of countrywide express
transportation and distribution services within the Indian subcontinent and
to international destinations serviced through multinational express
companies'. The Company has been recently certified and upgraded to the
latest ISO 9001:2008 standards.

Human Resources

People First policies have always been an integral part of the core value
of Blue Dart. The highly-motivated and passionate employee environment was
amply reflected in the online Employee Satisfaction Survey where 'Pride in
working with Blue Dart' remained the highest scoring dimension having a
mean score of 4.82.

The Company's overall mean score in the Employee Satisfaction Score (ESS)
for the year 2009 was 4.54 (on a scale of 1 to 5). The percentage of
employees who were 'Satisfied to very Satisfied' was 92.59%. It is a matter
of satisfaction that we have received an overall mean score of 4.54 in
2009, which is a positive indicator of continued and stable organizational
health and employee engagement.

As part of our endeavour to more actively listen to the voice of the
internal customers, the Company had introduced some new dimensions such as
Leadership Style, Future Vision, Values, Customer Orientation, and New
Initiatives in the ESS survey questionnaire. The mean score received for
these dimensions are 4.51, 4.62, 4.60, 4.69 and 4.68 respectively, which is
a very encouraging feedback in terms of employees' levels of motivation.

In the difficult economic and business situation of 2009, the Company
emphasized on conducting regular feedback through Open House sessions
across the organization and introduced Team Brief, a new initiative, to
strengthen the internal communication mechanism and align the employees on
a regular basis on organisational performance, strategies and initiatives
adopted to meet the challenges.

We are very happy to note that multiple Open Houses were conducted by our
Managing Director covering all the executives in April 2009 and Manager/Sr.
Managers of Head Office and West-1 Region in Nov/ Dec, 2009.

Open Houses were convened in all service centres on a quarterly basis to
align employees on various strategies and to seek their feedbacks; actions
were initiated on their areas of concern.

The Team Briefing sessions by the Managing Director with the Senior
Management Team were held every month updating them on various business
fronts, progress on new initiatives and strategies for the future. This
important initiative allows managers across the country to align all
employees with one communication.

In 2009, as part of building customer centricity, the Company's Human
Resources Department (HRD) introduced the Delivering Smile module for the
frontline staff and around 705 members of the staff were imparted training
through in-house/internal trainers. Some of the other major training
initiatives pertain to Key to Personal Effectiveness, Self Awareness and
Personal Effectiveness, Counter Handling (Retail Training), Package
Handling, etc. With the deployment of internal trainers as mentioned above,
training man-days of 3.5 was achieved in 2009.

We are committed to implementing integrated HRMS (PRIDE) online module. To
this end, Phase I and Phase II of PRIDE which includes modules like
Workforce Administration, Talent Acquisition Module Training & Managers
Self Service have been successfully designed, mapped, rolled out and
implemented. Phase III of PRIDE covering e-performance, Competency Mapping,
and Compensation & Budgeting has also been designed and is in the process
of final testing and rollout. As part of Phase III, Motiv8, the new
Performance Management System, with elements of goal-setting in the form of
individual KRAs, mid-year review and final assessment, has been made part
of e-performance. As part of the Competency Mapping Module, a competency
framework of eight Leadership and Managerial Competencies has been
articulated with full description and positive/negative behavioural
indicators. With the implementation of Phase III in 2010, the Competencies
can be linked to various other HR systems and processes.

To motivate and recognize the employees for their efforts and contribution,
three employees were awarded the Employee of the Year Award, 366 employees
were given Super Darter/Bravo Blue Darter, and 232 employees were given
True Blue awards for completing five years with Blue Dart.

In order to have highly-motivated people and team-bonding, the Initiators
Team has organized various events across the country with great zeal. These
include the Valentine's Day Special, Holi Celebration, Women's Day Special,
Dandiya, Volleyball Tournaments, Cricket Match, Shuttle Badminton
Competition, Friendship Day, Independence Day, Republic Day Celebration,
Diya Painting Competition, Children's Painting Competition, Diwali
Celebration, Christmas Celebration, BIDE Anniversary Celebration, etc.

Awards and Recognitions

Blue Dart won several awards validating its Brand Equity and Leadership,
Human Resource Philosophy, Operational Efficiency and Corporate Governance.

Blue Dart was honoured with the Indy's Brand Leadership Award, Gold Medal,
and Glory of India Award for Managing Director by the Institute of Economic
Studies, Leader in Prestige and Quality 2008. We also won the Reader's
Digest Most Trusted Brand 2009 - Gold Award - for the fourth year in a row,
EDGE Award for innovations in optimizing the customer experience in real-
time and the Consumer Superbrand for the fifth year in a row. The other
awards include the Best Express Provider of the Year at the 3rd Express
Logistics & Supply Chain Awards and the Market Leadership Award by the CMO
Council.

Blue Dart was conferred the Amity HR Excellence Award for the year 2009,
based on the annual comprehensive research on HR practices by Amity
International Business School. Blue Dart was also honoured with the Best
Employer Brand Award, 2009, in recognition of the Strategic and

Iconic Excellence in Talent Management, HR Strategy, Application of IT,
Innovation in Recruitment, Innovation in Retention Strategy, Innovation in
Career Development and Global HR Strategy.

Blue Dart was also amongst the top 25 companies at the ICSI, National
Awards for Excellence in Corporate Governance, 2009.

Our Managing Director was also awarded the Outstanding Entrepreneur of the
Year at the Asia-Pacific Entrepreneurship Award, 2009, by Enterprise Asia
for showing outstanding tenacity, perseverance and courage in the business,
while the Head - Marketing, Corporate Communications and Sustainability was
awarded Pride for Profession and the CMO Council Best CMO of the Year Award
conferred by the Global Jury at the 1st CMO Awards and Conference in
Indore.

Cautionary Statement

The statement forming part of this Report may contain certain
forward looking remarks within the meaning of applicable Securities Law &
Regulations. Many factors could cause the actual results, performances, or
achievements of the Company to be materially different from any future
results, performances, or achievements. Significant factors that could make
a difference to the Company's operations include domestic and international
economic conditions, changes in government regulations, tax regime and
other statutes.