Founder & CEO’s Review
FY15-16 was a year of significant opportunities as well as challenges for the logistics industry. The B2B Express Distribution business remained subdued with single digit volume growth, and also, there was significant pricing pressure on account of sustained drop in fuel prices that followed the diesel price deregulation in the base year. At the same time, the B2C sector offered tremendous growth opportunities for the industry. Amidst these challenges and opportunities, there was significant increase in the competitive intensity with a number of new logistics players emerging in both B2C and B2B sectors.
In such circumstances, your company has done well by negotiating many challenges, and grabbing the available opportunities, thereby emerging stronger as we enter the next fiscal.
Highlights of FY2016:
- Consolidated group revenue grew 1% over previous year. This performance was against significant headwinds from diesel price decline which impacted our overall yields.
- Continued growth in Gati E-Commerce business. Combined ECOM and E-fulfilment centre revenue grew to INR 225 Cr compared to INR 130 Cr in FY2015
- PBT improved quarter-on-quarter through a focused Value Improvement Programme, that delivered savings in General & Administrative costs and improved Operating expenses through better capacity utilisation within our network
- Gati Kausar is all set to commission its first Cold Store in early FY16-17 which will make it an end-to-end solution provider in cold chain logistics sector, offering both cold storage and refrigerated transportation.
Based on the results and in view of our healthy balance sheet, our Board of Directors are proposing to the Annual General Meeting to pay out a 50% dividend.
While remaining focused on delivering the in-year results, your company has simultaneously worked towards building the capabilities for the future. The company has set itself an ambitious 2020 target of delivering “one million packages everyday, while ensuring zero delays and zero damages”. This can only happen with appropriate investments in new age Technology, further supported by requisite changes in Network Infrastructure and People. In parallel, the Go-to-Market approach is being refreshed and strengthened to remain ahead of competition.
Over the years, Gati has always maintained its technology edge over competition using its proprietary Enterprise Management System (GEMS) that allows full operational control and visibility, from dispatch to delivery, and from invoicing to receivables collection. Last year, Gati has embarked on a journey to adopt the next level automation in the package handling process. Hundred percent Bar Code scanning of each and every package has been introduced across the network as part of the Shop Floor Automation project (SFA). This automation initiative will ensure better accuracy, visibility and control over packages, thereby improving our service quality significantly.
Gati has always engaged customers with a firm belief that we are not just a service provider to its customers, but that Gati is a business partner to the customer, and thus, the customer’s business is our business. Through the last few months, Gati has consolidated its various product lines into a ‘One Gati’ organizational framework so that our field teams in Sales and Operations engage customers with integrated end-to-end solutions using our various product lines, rather than providing individual product services. This Go-to-Market approach of serving the customers’ needs in entirety rather than in parts is beginning to show its impact, and the results will be visible in the immediate future.
In summary, we have an exciting future ahead. The actions taken internally within the company and the improving macro-economic situation in the country, further buoyed by recent policy initiatives and the regulatory changes being pursued by the government, including the much anticipated introduction of GST framework in this financial year, all point towards a great year in the new fiscal 2016-17. The future holds immense opportunities and we are fully geared, to deliver on our commitments to various stakeholders.