Indian express company Gati is going slow on its ambitious investment plans and hiking rates by upto 10% to cope with a market cooling-off and higher costs, according to reports from India.
Managing director Mahendra Agarwal told reporters at last week’s India Economic Summit thatthe planned extension of the current two million square feet of warehousing facilities to 2.5million square feet by June 2009 might be completed “a couple of months later” in response to themarket slowdown. Gati had planned to invest 1.5 billion rupees (€23.7 million) in its July2008-June 2009 financial year on increasing its warehousing facilities.
Gati will also increase rates by 5%-10% in January 2009 in response to rising operatingcosts, including fuel, Agarwal added. He said he expected sales growth of 20% in the quartersending December 2008 and March 2009 but warned business might slow in the final quarter of theyear.
In its first quarter of 2008/09, ending September 30, Gati increased revenues by nearly 35%to 1.58 billion rupees (€24.9 million). But its operating profits dropped 50% to 54.2 millionrupees (€0.8 million) and net profit slumped to just 4.2 million rupees (€0.07 million).
The net profit declined due to high losses on the newly-launched air freighter business, thecompany noted in its quarterly results statement. In October 2007, Gati teamed up with Air India tolaunch a dedicated freighter service. “Gati Air Express” offers next-day delivery to around 30locations across India.
