aeroplane

Gati Limited is a pioneer and leader in the Express Distribution and Supply Chain Solutions in India. It was the revolutionary approach adopted by Gati that helped launch many path-breaking initiatives in the logistics segment and many were the firsts for the Indian market. In a span of 21 years, Gati has consistently explored various ways to bring premium value to the customer, always setting benchmarks in quality of service and customer satisfaction.

Overview
started as a cargo management company in 1989, Gati has grown into
an organization with more than 3500 employees a turnover of Rs 745 crore covering 99.36% of India. 4000 vehicles on road, fleet of refrigerated trucks

& container vessels Provides multi modal transportation include Road, Rail , Sea and Air

 Infrastructure facilities consist of rail transit centers, surface transit centers and air transit center across the country. Has overseas offices in Sri Lanka, Nepal , Hong Kong , Singapore, and China.
world class mechatronic warehousing facilities across India. Aims to be one- stop service provider in logistics solutions, focusing on warehousing and infrastructure, distribution centers, central

distribution center, Information technology and human resources .

 5 zonal offices, 61 express centers, 109 depots ,160 franchisees, 54 customer convenience centers, 20 surface transit centers, 19 air transit centers, 5 rail transit centers, 3827 extra service station and 27 modern warehouses spread out in 622 districts in the country. GATI is divided into 5 Zones
EAST KOLKATTA WEST MUMBAI NORTH DELHI

SOUTH SECUNDERABAD
CENTER INDORE

Gati Quick Facts

462 operating Units
135954 Delivery locations We deliver to 20,466 pin codes across India - 622

districts 1400 routes Over 4500 vehicles 65000 Tonnes handled per month 0.5 million shipments per month 4.2million packages handled per month

Gatis Portfolio Services

Gati Surface Express Gati Air Express AI Gati Courier Gati Art Express Gati RedSun Integrated Solutions Gati Kausar Gati Transport Solutions Gati Europe Express Gati Global Express Gati International the global arm Gati Ships the shipping division

VALUE ADDED SERVICES

FOD (Freight-on-delivery) COD (Cash-on-delivery) DOD (Draft / Cheque-on-delivery) Inbound Rate Agreement: Ensures hassle-free, convenient

supplies from your vendors. Holiday & Sunday Pick-up/Delivery Octroi Clearing Facility: Octroi (A tax on various goods brought into a town) clearance on behalf of customers Tamper-proof packing: Special bags for safe handling of high value cargo

Gati delivers its services to

Pharma & Pharma Samples Electronics & Electronic Components Automotives, Auto Spares Engg Products, Machinery, Spares Other in Mfg (Heavy Engg) Computer, Computer Peripherals Electrical Appliances, Products, Components Apparel Industry Fast Moving Consumer Products (FMCG) C & F, Courier and Cargo Printing & stationary

List of major customers of Gati

Vision and Mission

Be a globally preferred provider of India-centric supply chain services and solutions, and a leader in the Asia Pacific region Delight customers with quality service by setting new

trends through innovation and technology

Be the most preferred organisation for all stakeholders

Be a responsible corporate citizen with unwavering commitment to environmental protection and conservation

SNAPSHOTS
1989 Started operations as a Door-to-Door

cargo

company with Money

Money Back Guarantee for delays in delivery
1994 Introduced the concept of Cash On Delivery for

the first time in India

1994 Pioneered Desk-to-Desk service to meet the

price sensitive customer market

 1995 Introduced the Call Free Number for the first time in

Indian Logistics Industry

1996 Tied-up with Indian Airlines to facilitate speedier

delivery of shipments
1997 The first 3PL service provider in India 1998 First logistics company in India to be awarded an ISO

9001 certification
1999 Expanded services to SAARC countries

 2001 Launched Indias first Millennium Parcel train service 2003 Launched GEMS an end-to-end cargo management system 2003 Frost & Sullivan declared Gati The Best Logistics Company 2004 State-of-the-art mechantronic warehouses in major cities in India

2006 Unveiled a new corporate Identity and a new brand promise - Ahead in reach

 2008 Launched the Centralised Call Centre at Nagpur 2008 Strategic Alliance with GLS (General Logistics Systems)Europes Parcel Leader 2009 Launched a real time shipment delivery information system 2009 Launched Gati Academy 2010 Launched Gati RedSun, Supply Chain Division

 2010

Ventured into e-Commerce www.makemygiftz.com 2011 Awarded the Best Logistics Provider of the Year - Road at the 5th Express, Logistics & Supply Chain Awards 2011 Awarded for use of IT for maximising Business Impact - Video Conferencing at the EDGE Awards

Dominant player in the surface cargo segment in India, which accounts for more than 55% of the total volume of cargo moved. International presence, state-of-theart mechantronic warehouses, warehouse management solutions and value-added services should aid growth in market share.

Strengths

Entry into the coveted cold-chain logistics business through the acquisition of Kausar India, which has a fleet of 99 refrigerated vehicles

JV pact with Air India Cargo involving leasing up to five freighter aircraft in FY08. The company aims to gain 11% market share in the Indian domestic air cargo industry by December 2008 and 20% by June 2009. Agreement with Indian Airlines to develop a joint product called IC - Zipp to

leverage the growth in the retail courier market. This product will cover the highvalue courier segment and the company expects it to contribute towards business growth both nationally and internationally. the core Express Distribution and Supply Chain business has outperformed industry growth
largest network in India, our reach in the rural market is the widest. 19% of the total volume comes from our Rural delivery network (up by 2%)

Weaknesses
Dominance of Blue Dart in the domestic air cargo

industry. We expect Gati to face strong competition from Blue Dart in the domestic air cargo business. Freight expenses account for a majority of Gati's operating expenses. A further increase in Gati's freight expenses, with an increase in fuel costs, could potentially lead to further contraction in margins. Huge losses made by the Shipping division in current fiscal year has slashed the profit margin by Rs 93.8 million

Strong macroeconomic growth, robust growth in trade driving the growth of the Indian express industry.The industry was valued at Rs71 bn in 2005-06 and has grown in the range of 25%-30% over the past 5-6 years. We expect the industry to register a similar growth rate over the next few years. Exemption of interstate sourcing from VAT will make having centralized large warehouses more viable for companies than having local sourcing and distribution. We expect most Indian companies to outsource the warehousing function, creating a potentially attractive market for 3PL providers.

Entry of a large number of global retailers would require efficient and cost-effective supply chain solutions and 3PL and 4PL logistics solutions within the country. With the retail sector in India spending approximately Rs30 bn on JIT, companies like Gati stand to benefit.

Improvement in the logistics infrastructure in the country - the dedicated rail freight corridor, modernization of ports, and improvement in road infrastructure are set to give a boost to intra-state and inter- state freight movement. Tapping APAC markets by strategically partnering with a strong International player building on existing revenue from the provision of value-adding supply chain management services and delivering additional services to support the maturing needs of E-Commerce and Retail companies

Threats charges could have an adverse impact on A rise in fuel

margins, which are already low for the company
Significant investments involved in the setting up of

warehouses and building of vessels - capital-intensive industry.

An economic slowdown could impact the logistics

industry as a whole. Gati is close to defaulting on redemption of FCCBs issued in favour of Goldman Sachs which matures on 6th December 2011

PESTLE Analysis
P Political and L - Legal

Legal permit to cross the national and state borders Excise duties and tariffs are charged Regulations for transporting dangerous goods by

Road ADR Air- ICAO Sea MCA Motor Vehicle Act Introduction of GST by the government will increase the profit margins for the company.

E - Economic
The annual logistics cost in any country varies in between 9% to 20% of their GDP (US being 9% and India being 14%) In India, logistics industry has created employment for more than 43 million people

S Social
More and more business firms are opting for logistic companies for

their SCM

no two requirements are the same, and hence have customized solutions for all

types of business needs.

In an era of global warming Gati is opting for green logistic solution,

which is advantageous to its position as businesses are looking for greener partner

T Technology
Logistics Industry has become technology driven industry Shipment tracking system: It provides means and modes for customers

to track their shipments from anywhere, anytime using multiple communication modes viz. Internet , e-mail , IVR , Mobile(SMS) and telephone / toll free number GATI has implemented a custom built ERP on Oracle Technology to cover the entire cycle of operation from order to billing. PoD and E-PoD

E - Enviromental

Green GATI
In keeping with the rest of the Logistics and business community, GATI is also rolling out Green initiatives, few of which are detailed below: Ensuring successful delivery of shipments to the customer at the very first attempt thereby reducing vehicle driving hours resulting in saving cost and reduction of CO2 emissions. Reducing vehicle idling time by meticulous route planning and optimization of capacity. Training drivers to improve running time, to meet timelines and to maintain vehicles in good condition to result in better service levels and less carbon emission. Inducting a fleet of alternative fuel vehicles - to CNG vehicles. Consciously opting to use rail instead of road in several sectors as this results in better efficiency in service and cost saving, and thus less carbon footprint.

Market Analysis

Pricing Strategy
Driver of the performance of the Logistics Industry Is decided on the basis of the competitive strategy Overall Trade off: Increase firm profits

Everyday low pricing versus high low pricing

Fixed prices versus menu pricing

Nature of the Market

Industry is homogenous It is a oligopoly Industry HH Index is 1004 (UPS, FedEx, DHL, A.P. Moeller) Concentration Ratio of the first four companies in India is

around 65% (TNT Express, AFL, DHL and Blue Dart)

Advertising Strategies
Press
Media Print Ads Interviews Internet

Promotion
Efficient Distribution Network Provides Supply Chain Solutions

Promotion
Efficient Distribution Network Provides Supply Chain Solutions Has customized solutions for all types of business needs.

Be it single or multiple requirements, GATI can cater to customers across several verticals.

Advertising Strategies
Press Media

Print Ads
Interviews Internet

Porters Five Force Model

Porters Five Force Model

Threat of Entry High

Very high setup cost for any new entrant Existing competitors are large in number Very Low margin for operating

Intensity of rivalry High

Presence of tough competitors like Blue Dart DTDC CONCOR EMS Speed Post Industry growth is showing an upward trend both globally

and in India due to this rivalry has become even more intense Due to constant innovation, and up gradation Gati has managed to stay ahead of its competitors

Porters Five Force Model

Threat of Substitutes Medium

Companies like
Blue Dart

DTDC CONCOR EMS Speed Post Unorganized sectors. All are competing for the same share of pie.

Being market leader Gati has an upper hand The core business of the company - Express Distribution and Supply Chain Division posted a growth of 15.3% to Rs 2,280 million from the corresponding quarter in the previous year with PBT at Rs 163 million.
Total Income up by 15.3%, EBITA grew by 64%

Porters Five Force Model

Bargaining Power of Customers Low

Several potential competitors like DHL, CONCOR,etc pose

a threat to customer base of GATI.

With companies like TATA, 3M, Honda, Hp, etc as its

clients Gati has strong customer base

Market leader in Express Distribution and Supply Chain

Division gives Gati a slight edge over its competitors when it comes to customer preference.

Porters Five Force Model

Bargaining Power of Suppliers high

The orgainised logistic sector has few dominant players

which gives the suppliers large room for negotiation

Gatis unique services ( catering to all types of business

needs) weakens its position further against suppliers.

Financial Overview

CONSOLIDATED FINANCIAL HIGHLIGHTS PARTICULARS Sales Total Income Gross Profit Before Interest, Depreciation & Tax Interest (Net) Depreciation Profit Before Tax Income Tax Profit After Tax Dividend on Equity Share Capital Dividend Payout Equity Share Capital

` / Lakhs ` / Lakhs ` / Lakhs ` / Lakhs ` / Lakhs

2010-11 120,298 120,944 9,892 4,976 2,543

2009-10 92,611 93,345 8,745 4,425 2,718

2008-09 79,041 80,296 6,220 3,656

2,638

` / Lakhs
` / Lakhs ` / Lakhs %

2,373
963 1,410 25

1,602
653 950 20

(1,761)

105 (1,866)

Reserves & Surplus

(Excl.Revaluation Reserves) Net Worth Gross Block Net Block Loan

` / Lakhs
` / Lakhs ` / Lakhs ` / Lakhs

430
1,720 25,513 28,874

341
1,703 24,803 28,270

1,698
24,625 26,323 53,724

` / Lakhs
` / Lakhs ` / Lakhs

54,286
41,002 46,834

52,683
41,778 45,414

44,565
47,677

PARTICULARS

2010-11

2009-10 905.74 93.01 48.44 21.61 22.95 8.65 14.30 2.14 16.44 4.30 0.70 1.43 10.01 16.44 751.41 86.11 43.09 23.87 19.15 4.04 15.11 (-) 7.49 7.62 3.41 0.57 1.51 2.14 7.62

Income Profit before interest, depreciation and taxation Interest Depreciation Profit Before Tax Provision for Tax Profit After Tax Balance brought forward from previous year Balance available for appropriation Appropriations Proposed dividend Tax on dividend General reserve Balance Profit carried forward

FINANCIAL REPORT FOR THE FIRST QUARTER Posted a total income of Rs 2,364 million as compared to a total income of Rs 2,267 million in the previous year.
Posted a profit before tax of Rs 69 million as compared to a

profit before tax of Rs 62 million in the previous year.

Posted a growth of 15.3%

to Rs 2,280 million in the previous year with PBT at 163 million.

Business Highlights
Geared up to cater to an additional 20% growth in the

current capacity and infrastructure. 19% of total volume comes from our Rural delivery network. Technological house innovation led to productivity improvements which slashed the manpower requirement by 4%.

 Core business - express distribution and supply chain

has done a growth of 73% in its bottomline. The profit before tax was 16 crore and the topline has grown by 15% to Rs 226 crore.

Recommended Strategies and Objectives

Divestiture of shipping division Cost reduction through efficient supply chain

management
Making supply chain more flexible Making supply chain lean green and more efficient

Implementing the recommended strategies

Divestiture of shipping division The Shipping business of the company has a negative growth of 71% during the quarter impacting the performance of the core business adversely by Rs 93.8 million. Were it not for the loss of Gati Ships the company PBT would have been much higher at Rs. 256.8 million. Cost reduction through efficient supply chain management implementation and leverage of latest technologies

 Enterprise Resource Planning (ERP) softwares making

use of the silos of data that gets generated into useful information for the top management and materials managers If GST comes into force, the company should focus on logistics decisions on operational efficiency instead of tax optimization. positioning their warehouses and distribution channels based on the considerations of time, cost and logic rather than tax optimization.

Flexible Supply Chain Use of IT a step further, resulting into an intelligent system for supply chain integration, where all departments connected including suppliers and customers in the loop Intelligence like auto-replenishment, Concepts like Direct Store Delivery, where the vendor directly replenishes the stores bypassing the retailers DC It will require people at various stages of the SC to be able to take informed decisions at the moment, and help streamline operations and usher in multi-tiered advantages.

Annual Objectives and Policies

To maintain and increase the EBITA level from current 14%

to 20% by the end of next year. Reducing vehicle idling time by meticulous route planning and optimization of capacity. Focusing on the core business of the company which is Express Distribution and Supply Chain business Finding a strategic partner to support upcoming projects (sikkim) financially Look for FCCB renewal with Goldman Sachs Divesting the Shipping division and consolidating the profits

Strategy Review and Evaluation

Key parameters that need to be measured: Vehicle idle time. A reduction in idle time will ensure optimization
Volume utilization of consignments trucks Quarterly Financial Reports: to ensure that the

company is moving on the right track.