Wednesday, 25 April 2018
Borusan Lojistik eyes to enter top ten globally

Borusan Lojistik, which aims to reach 1 billion dollars of turnover in 2015, and to become one of the top 10 contract logistics companies in the world by 2022, has taken a step to international transportation segment and got closer to its targets by purchasing Balnak.

kaan_gurgenc_borusanKaan Gürgenç, General Manager of Borusan Lojistik, emphasized that they are decisive about becoming a global actor in logistics and said, "After completing our integration process, we will start our long marathon with growth model". While Gürgenç mentioned that they will continue purchasing, he also emphasized that they will not turn their backs to any option.
Borusan Lojistik, which was restructured in 2002 with the vision of leadership, has made another strategic move last year and and purchased Balnak in order to reach its aim to become one of the top 10 contract logistics companies in 2022. Kaan Gürgenç, General Manager of Borusan Lojistik, said, "As Borusan Lojistik, we have evaluated organic and inorganic growth alternatives while we were building our 2011-2015 strategic plan and we have brought growth by purchase option to the forefront. When we saw that Borusan Lojistik and Balnak had strengths and properties that complement each other, we have decided to make this purchase" and he pointed out that with its more than 100 authorized agencies mostly in Europe, Balnak has accelerated their international operations. Gürgenç emphasized that their purpose in operational incorporation of two companies that have been performed professionally is to create more values than arithmetic sum of the current values of the companies.

Would you please tell us more about purchasing process of Balnak?
Borusan Lojistik's decision of purchasing a company, which specialized in international transportation, dates back to 2010. Even though we have organizations in overseas, we were not present as a player in the part, where we name as the international transportation. Since we are decisive about being a global company, couple of years ago, we have made a decision with a strategy about our desire to do business in international transportation field. There are two ways to actualize this goal. Either you purchase a specialist company, even though it seems expensive initially, or you make direct investments. Although the second option seems more attractive in terms of costs, you have to consider the empty capacity that you will carry until you make an appearance. When we compared these two options, we decided that it is more beneficial to transfer new blood and know-how.
As Borusan Lojistik, we have high standards; especially due to the deficiency of institutionalism in logistics sector, there are not many companies that we can work together. We have made a short list of five companies among these and started negotiations. At that time, the foreign partner of Balnak has decided to outflow funds. We started negotiations after Turkish partners of Balnak have also decided to sell the company. Our negotiations lasted for about three months. After a waiting period of one month, Competition Authority has given approval and we have purchased 100% of the shares of Balnak.

Well, was Balnak on your list of 5 companies? Are you still negotiating with other listed companies?
Yes, Balnak was on the list. We have negotiated with the other companies as well but when we shook hands with Balnak, the list has automatically been cancelled.

In your statements, you pointed out that Borusan Lojistik had grown 50% in one day after this purchase. What is Borusan Lojistik's position today?
Balnak has acquired over 200 million dollars of turnover in 2011. Once the purchasing process has been completed, total incomes of Borusan Lojistik and Balnak Lojistik have become 600 million dollars as from 2012.
Actually, Borusan Lojistik usually has a growth range between 30% and 40% annually. Our turnover in 2002 was 30 million dollars, and we have reached 400 million dollars in 2012. Until this purchase, our maximum annual growth was 42%. Comparing to 42% of annual growth, 50% of growth is a spectacular figure. When we consider this in general, Borusan Lojistik has become the leading company of Turkish logistics sector after this purchase, with its 6 companies on 4 continents, 4 thousand employees, more than 400 thousand sqm of warehouse areas, more than 10 thousand customers and 600 million dollars turnover. We plan to close 2013 with 650 million dollars of turnover.
As Borusan Lojistik, we believe that there must be differences between a 400 million-dollars company and 600 million-dollars company in terms of management. Because our target for 2015 is 1 billion dollars! In addition, we will also spend this year on integration. As you know, the companies come together in order to create more value than 1 + 1 = 2 in integration process. However, about 80% of these companies create a value less than 2. We will not be one of those unsuccessful examples. In other words, it will be more than 1 + 1 = 2 in our purchase. After that, we will start a long marathon with a growth model. I admit that this is aggressive, but we believe that this is the right method in order to turn this purchase into the desired value.

Will the new management include names from Balnak? Will you downsize your managerial staff?
Of course there will be. We progress very professionally about this matter and we manage this process together with two consultancy companies.  Boston Consulting Group assists us about the company integration strategy. Odgers Berndtson is on human resources and cultural integration. We will decide the names to be assigned in parallel with these evaluations and these works will end by March.
The hardest decision for me in my professional life is dismissal. However, we have to downsize our staff as a natural result of this purchase. However, since we did not offer international transportation service before, our expert managerial staff will continue their jobs.

What is your evaluation about the reflections of this purchase to the sector?
We get more positive reactions than we expected both from customers and from the companies of this sector. On the other hand, this purchase may create a little concern in the sector, because Borusan Lojistik was not present in international transportation before. But now we are an effective player in this sector as well and we aim to become the leader by growing rapidly.

Are there any new purchasing plans in your agenda?
Absolutely… We aim to become one of the top 10 contract logistics companies in the world in 2022. When we take a look at the top 10 companies in this field, we can see that they grow by purchasing. If we can internalize our ability to integrate and complete 2013 successfully, I can say that we will be able to take similar steps in every area. We might purchase a company from Europe or we might consider this kind of opportunities in the countries that we are present under Borusan Logistics brand. We might also purchase a company that performs international transportation in Turkey, or a company that specializes in domestic logistics.

Well, will you continue your rapid growth as 100% Turkish invested company?
We might make new purchases within the scope of our goal for 1 billion-dollar turnover in 2015. However, it is our priority and goal to achieve this target with our own resources. It is hard to talk prospectively. A major company might announce that it wants to be partners with Borusan Lojistik and this plan might change. Or we might decide to purchase a major company, and if we cannot do this with our own resources, we might make an agreement with a financial fund.
Each option is important for our business, we do not turn our backs to any option. However, I would like to point out; Borusan Lojistik is a strategic investment within Borusan Group. Thus, an alternative, such as transferring the majority of our shares to another company, is out of question for now.

What point have you reached at your international activities that you currently continue with Borusan Lojistik brand? Are there any other countries that will be added to the list in short or medium-term?
Within the scope of our international activities, we carry out business on four continents with our Borusan Logistics brand. We are present at total of 6 countries, namely the USA, the Netherlands, Algeria, United Arab Emirates, Iran and Kazakhstan. We offer the same services to our foreign customers, whatever we offer to our Turkish customers. The most important reason that we are in the Netherlands is that we wish to take part in project transportations on continental Europe. By means of our structuring in this country, we can bill our transportations that we make in Poland, Bulgaria or Hungary as if we are an EU company.
We aim to add Iraq and Georgia among these countries in 2013, now, the establishment works of the companies still continue. As of 2015, we plan to start our structuring in India and China.

Balnak had the Ottoman Project that it had brought forward before purchasing process. Within this context, it aims to grow in the regions by establishing partnerships, where the Ottomans ruled in the past. Is this project postponed, or does Borusan Lojistik plan to continue this project?
Balnak brought this project forward but they never got the chance to work on it because the sale process has started. In other words, no actions were taken within the context of this project. Actually, North Africa, Middle East and Turkic Republics are prominent in the geographical line of Borusan Lojistik. The majority of our growth scenario coincides with the Ottoman Project. As we continue our growth, Ottoman Project will be achieved in some ways.

Port management is one of the four strategic business areas of Borusan Lojistik. Kaan Gürgenç, who has stated that they continue to activate large-scale investments in Borusan Port that offers service in Gemlik in global standards, pointed out that they made 50 million-dollars machinery and additional construction investments after 100 million-dollars investment. Gürgenç said, "We plan to play big in port management," and stated that they must analyze competition thoroughly after Yıldırımlar Group has purchased Gemport Port. Gürgenç pointed out that they will engage third phase investment of 100 million dollars depending upon the developments and said: "We will continue to be fast and productive in sea. The rail connection that is planned to arrive at Gulf of Gemlik will make positive contributions."
Gürgenç, who has pointed out that they have participated in the tender of Gemlik Port but they do not have any purchase plans for now, also said, "We have significant know-how in port management. The companies from overseas want to come and operate our ports. Now we have two proposals that we are evaluating from United Arab Emirates and Oman. This is not a decision that requires investment, a new company will be established through a joint venture agreement. Borusan Lojistik will introduce its know-how in port management as the capital."

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