Gati to demerge shipping business, seek investor

Gati Ltd, the logistics services provider, will demerge its shipping division in order to monetise and strengthen the unit’s operations.

The demerged entity, called GatiShips, will be a subsidiary of the mothership.
Gati is also likely to scout for a partner to infuse funds into the shipping subsidiary.

“Strategically, this (demerger) now allows us to focus our internal investment efforts on the core segments of express distribution and supply chain, with a special focus on the cold chain,” Mahendra Agarwal, managing director and CEO of Gati, said.

The remnant Gati has also restructured into two verticals.

The express distribution division will focus on logistics through surface and air modes. The other vertical will offer supply chain and cold chain solutions to its clients.

“We will form a new division, called Gati RedSun, which will offer both cold and ambient supply chain solutions. The move will also allow us to bring into alignment our existing subsidiary and the Kausar Brand as a product offering under  Redsun,” Agarwal said.

“Last year has seen us strengthening our supply chain business and we are now geared to taking on larger and more sophisticated contracts for management of our customers’ total supply chain.

With our focus on the auto, telecom and consumer electronics sector, we are confident of becoming the market leader in the supply chain business in India,” he said. The company’s revenue has shot up 31.6% to Rs208.47 crore for the fourth quarter this year (it’s financial year ended on June 30) compared with Rs158.36 crore in the same period last year.

Revenues in the last fiscal surged 19.2% to Rs751.22 crore from Rs630.16 crore. Gati has also registered a 39.9% growth at the Ebidta level at Rs86.11 crore for 2009-10 compared with Rs61.53 crore for 2008-09.

Profit after tax stood at Rs15.11 crore compared with Rs15.05-crore loss for last year.