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Gati Ltd has implemented some key improvement initiatives with focus on rationalising direct costs and launching digital enablers related to customer experience. Some more such initiatives are being fast-tracked, says Bala Aghoramurthy, Deputy Managing Director, Gati Ltd in his first media interview after Gati was acquired by Allcargo Logistics Ltd eight months ago. Excerpts:
How is Allcargo dovetailing the business case for acquiring Gati?
The investment hypothesis of acquiring Gati rests on three key aspects. Firstly, the aim is to ensure an effective turnaround so that Gati can pivot to a market leadership position in terms of revenue, margins, return on capital employed (ROCE) as well as customer, vendor and employee satisfaction. The second objective is to participate in the domestic manufacturing and consumption story. Thirdly, the idea is to synergize and leverage the largest combined work force in Indian logistics sector of Allcargo and Gati to cross sell and deep sell.
So far, we remain on track as far as our first and third objectives are concerned. Although Covid has temporarily played spoilsport in our mission to achieve our second objective, the economy has started to revive since August. September and October have been nearly normal with the pocket of year-on-year growth in few sectors. We remain firmly bullish on the domestic consumption story which will be buoyed further by manufacturing shifting to India. Therefore, the investment hypothesis is firmly in execution mode.
Which are the new areas you are looking at and why?
We are reviewing our e-commerce strategy to make a more impactful presence in the market. End-to-end cross border e-commerce is being looked at as an option given Allcargo’s global reach across 180 countries and Gati’s domestic reach in more than 19,800 PIN Codes in 735 of India’s 739 districts. We also endeavour to offer integrated logistics solutions for the combined customer base of Allcargo and Gati.
What will be the pricing strategy going forward?
At Gati, we endeavour to offer premium services at the best possible prices for our customers. The increasing diesel and fuel prices in Q2 FY21 warranted a revision in prices and the increase was reflected in our pricing strategy. Going forward, we will continue to strive to ensure best services to our customers, at the most competitive pricing.
What is the capex plan for the year?
Being an asset light company, Gati will only invest in enhancing the existing capabilities which will generate immediate returns. In terms of capex, we are primarily investing in upgrading our digital capabilities and hubs. We are targeting to go beyond 12 per cent market share and double digit EBIDTA margins over the next few quarters.
How are you re-orienting your relationships with clients and offerings to clients to grow business?
Customer service excellence has always been the key driving force of Gati. The three offerings which have led to an enhanced customer experience and growth are digital transformation, excellence in quality and end-to-end logistics solutions. We have been making a transformation in our digital technology, thus significantly improving the superiority of delivery and further enhancing tech-enabled solutions being offered to our customers. Our zero defects approach and wide range of product offerings create significant opportunities for value creation for our customers by gaining a competitive edge in the market.