Gati, AI to start overseas cargo flights

NEW DELHI: Express distribution and supply chain company Gati is looking to commence overseas air cargo operations in partnership with Air India soon. Gati and AI had signed a pact late last year for commencing domestic cargo operations and already three Boeing 727-200 aircraft are being operated as freighters under this arrangement.

For the second phase of expansion, AI is readying Airbus 310 aircraft which would initially carry cargo between Hong Kong, China, India and Europe.

Gati is expected to sign a fresh agreement with Air India for overseas cargo business soon, MD and CEO Mahendra Agarwal told DNA Money.

The AI cargo business will have a national hub at Nagpur and a fleet size of 10 aircraft by the end of 2008-09; it could well become Rs 1,000 crore business by the end of the next fiscal.

Meanwhile, in a bid to strengthen its global parcel service reach, Gati on Monday entered into a strategic alliance with Amsterdam-based General Logistics Systems (GLS). As per the agreement, Gati would act as GLS’ international strategic partner in India and provide access to the remotest locations here since it covers 594 of 604 districts in the country.

“GLS would act as a strategic partner for Gati in Europe, providing easy access for Gati’s customers and enable Gati to penetrate and capture a significant market share in Europe,” Agarwal said.

“The alliance with Gati is specially designed to provide both GLS and Gati customers the advantages of size, reach, flexibility along with infrastructure to provide unmatched service levels in India and Europe,” GLS managing director, Saadi Al-Soudani, said. 

Then, Gati has already chalked out a $100 million investment plan over the next 18 months, after which it is eyeing topline of Rs 1,000 crore. This investment would be used for expanding warehouses, building IT capabilities and entering new business areas.

Of this corpus, Gati has already raised $40 million while the remaining $60 million would come from internal accruals.

Agarwal said air cargo accounts for only about 15% of topline now and the courier business brings in another 5% in revenues, but surface and rail cargo remain the bulk revenue generators at 80%. He said the company would close the next fiscal at Rs 1,000 crore.

b_sindhu@dnaindia.net