TNT is reportedly in talks over buying a stake in Indian road express company Gati.
The Times of India newspaper today cited sources as saying that discussions are taking place
between the Dutch group and the privately-owned Indian company, although no deal has been agreedyet. According to the newspaper, TNT has already had talks with the Hyderabad-based company overthe last few years.A TNT spokesman declined to comment on the “speculation”. TNT Express already has more than2,000 employees in India, mostly in its domestic road operations, and is looking to increaseintercontinental connectivity this year, he noted.
The possibility of Gati’s family owners selling a stake to a foreign company is “a long-runningrumour” and offers have been received in the past, the Times of India wrote. Now, however, thecompany has brought in international consultants to restructure its operations. One option might beto sell a majority stake in the core express business, a source told the newspaper.
Gati is one of the leading ground transport companies in India with more than 3,500 employeesand over 4,000 vehicles. It returned to profit last year (July 2009 – June 2010). It had revenuesof some €125 million (+19%) and made a small net profit of about €2.5 million. The Express divisionincreased parcel volumes by one third to 43.5 million and had revenues of about €108 million.
The company also unveiled a new express and logistics growth strategy, including internationalexpansion plans, aimed at tripling revenues by 2014. Under this plan, the Gati Express Distributiondivision would offer a range of products, including Express Parcel and Freight Services, GatiTransport Solutions (Full Truck, LTL and rail transport), and International Express and Freight,while a new separate supply chain/cold chain division, branded as ‘Gati RedSun’, would offer arange of contract logistics, distribution and value-added solutions. Non-core businesses would besold off.
The Indian express delivery market has entered a phase of consolidation over the last few years.DHL Express bought air express market leader Blue Dart, TNT acquired road transport firm Speedageand FedEd first bought local partner Pafex and recently announced the acquisition of AFL. Observersexpect more deals involving international and Indian-owned companies in view of the strong growthforecast for India in the years ahead.
