Gati mulls deal to add capacity

Express and logistics service provider Gati will be finalising a deal to either acquire or team up with a domestic freight forwarding company by the first quarter of the next fiscal to add capacity, reported The Hindu.

“In case we go for an acquisition, we may consider some stake dilution to fund the buy. We are yet to decide on the size of stake dilution,” said Harry Lagad, executive director.

Gati, which is expected to clock revenues of about US$219 million this fiscal year, is aiming at a turnover of $548 million by 2014.

“Our focus now is on supply chain logistics, including 4PL (fourth party logistics) and cold chain services. By 2014, this will account for about 60 per cent of our revenues. Today, this segment has a share of 15 per cent in our total revenues, with distribution services accounting for about 65 per cent,” he said.

The company recently tied up with UK-based Meridian Mobile to provide the entire supply chain services in India, marking its entry into the 4PL segment. In this segment, the company intends to provide more value-added services such as product sourcing, channel management, inventory management, distribution services and reverse logistics.

“Some services as part of this chain such as BPO and technology management solutions will be outsourced. We will target FMCG, telecom, pharmaceutical and retail segments,” Lagad said.

The company has lined up an expansion programme of $43.84 million for the next two years, which include procurement of cold chain trucks and setting up of container freight stations at all major ports in the country.

As part of its ongoing business restructuring process, Gati will not be making fresh investments in its shipping business — it presently operates six ships, including two chartered vessels; it recently sold two ships.

“We expect our shipping division to break even this fiscal year,” Lagad said.
(Source:www.cargonewsasia.com)