A slump in its shipping business and the signing of a joint venture with a Japanese giant to extend its presence overseas, were the key developments during the quarter ended December 31, 2011 for logistics major Gati Ltd .
The company reported a 71 per cent rise in its net profit at Rs 5.26 crore for the second quarter ended December 31, 2011, compared to Rs 3.08 crore in the corresponding quarter the previous year. The total income during the period was up by 5 per cent at Rs 2,36.1 crore (Rs 225.3 crore).
The core business of the company — Express Distribution and Supply Chain Division (EDSC) where it is a market leader — was up 12 per cent at Rs 223.8 crore (Rs 200 cr) in comparative quarters. The operating profit of the division rose by 38 per cent to Rs 31.1 crore (Rs 22.5 cr).
Slump in shipping
Shipping business of the company remained sluggish and registered a de-growth on revenues at Rs 8.2 crore impacting the performance of the core business by Rs 2.34 crore. The re-structuring of the shipping business is in progress by way of de-merging it into an independent subsidiary and strengthening it by bringing in a global strategic partner according to the quarterly results release.
The company has successfully closed the re-issue of its Foreign Currency Convertible Bonds. It issued zero coupon FCCBs aggregating to $22,182,000 to Goldman Sachs International, with a yield to maturity of 5.76 per cent compounding semi annually and having a maturity of 5 years.
JV with Japanese company
Gati formed the JV with the Japanese global logistic service major Kintetsu World Express for its Express Distribution and Supply Chain business. Under the JV agreement, Gati will hold 70 per cent stake and 30 per cent will be held by KWE.