Indian express company Gati improved its profits in the third quarter ending March 31, 2012, andnine-month profits also rose despite flat revenues and heavy shipping losses.
The road delivery and supply chain company increased Q3 net profits by 124 per cent to Rs 81million (€1.2 million). The increase was mostly due to a one-off land sale, according to Indianmedia. But revenues dropped back to Rs 2.18 billion (€31.5 million) from Rs 2.29 billion in thesame period last year.
Over the first nine months, net profits rose by 63 per cent to Rs 171 million (€2.5 million)from the previous year’s Rs 105 million. Revenues rose slightly to Rs 6.83 billion (€98.5 million)as against Rs 6.8 billion in the corresponding period last year. For the nine month period, EBITDAmargin stood at 11.5 per cent as compared to 10.3 per cent for the corresponding period last year.
The core Express Distribution and Supply Chain division increased Q3 sales by 4.8 per cent toRs 2.1 billion and its operating profit grew to Rs 309 million from Rs 267 million. The EBITDAmargin stood at 13.1 per cent as against 10.6 per cent in the corresponding quarter of the previousyear.
Over the first nine months, the express division increased revenues to Rs 6.6 billion fromjust under Rs 6 billion last year. The operating profit rose to over Rs 1 billion from the previousyear’s Rs 705 million figure.
Gati said that the express division had posted an impressive performance notwithstanding thesluggish economic environment. Mahendra Agarwal, the company’s founder and CEO, commented: “Theslowdown in the economy has become a major challenge.”
But he highlighted the potential of the forthcoming joint venture with Japan’s Kintetsu. “While our revenues show a modest growth, we believe that the Express Distribution business willgrow significantly above the industry growth and the KWE partnership will enable us to provide anunmatched express distribution service to customers,” he declared.
Gati has transferred the bulk of the express division to the new joint venture Gati-KintetsuExpress Pvt. Ltd as of 31.03.2012. Gati will own 70 per cent of this company and the Japanese firmwill buy 30 per cent once regulatory approval has been gained.
The Indian firm reiterated that the partnership with KWE will help the express business togain access to a large base of potential KWE customers who have operations in India and to benefitfrom KWE’s operational expertise in 3PL and warehousing services.
In future, Gati said it plans to capture the growing logistics demand by strengthening theRoad Network with greater automation and better material handling facilities. It aims to introducemultimodal plus products with better transit times such as a ‘Premium plus’ service offering nextday (before noon) delivery between air and road using rail connectivity. In addition, it plans tofocus on the growing market demand for cold chain solutions, e-commerce and international freightforwarding.
Meanwhile, Gati’s small ocean shipping business was a major drag on results, posting anine-month loss of Rs 270 million compared to Rs 105 million last year. This business has beentransferred to a separate subsidiary, Gati Ship Pvt. Ltd, with effect from 31.03.2012 and a buyeris being sought for the loss-making business.
