Gati LTD

GATI Limited
At The Threshold of A Big Leap
By: Badal Solapurwala

Kishan Tejani
Namit Patel
Gati Limited At the Threshold of

a Big Leap
Incorporated on 25th April, 1995 registered office at

Secunderabad
Provided services ranging from traditional point to point

transportation to complex end-to end integrated logistics
and supply chain management solutions.
Was Leader in Express Cargo movement and
Pioneer in Distribution and Supply Chain Management

solutions in India.
They offered a spectrum of services that were cost efficient

and flexible
Operates in three types of business segment viz.

Logistics
INDUSTRY SCENARIO
Express Industry comprised courier companies which offered

domestic & international services. The consignments held by the
express companies were broadly classified into :
Documents Any material comprising paper such as
correspondence, bill / invoice, brochure, catalogue, books, files,
account details etc.
Non Documents Items with or without commercial value like
CKD units, small machineries, electronic parts, spare parts etc.
On overall basis, documents accounted 60% of total revenue & the

rest 40% was non documents.
The 1980s saw the entry of professional players into the express
industry & since then the industry grew at a steady rate.
The Indian Express Cargo industry (organized & Un-organized both)

had enormous prospects for growth in local well as international
markets.
The express industry saw progressive growth in the last decade of

20th century due to trade & services. The elimination of trade
barriers, globalization of markets & trade led to expansion in
The ingress of international players led to transition & growth as

well as posed challenges by web based technology.
Express market Scenario Over 2000 express companies in
India. 20% in organized sector. 25% in semi-organized sector &
others in unorganized sector.
Sector
Revenue(Rs. In crore)
Market share (%)
Organized
1628
65
Semi Organized &

Unorganized
618
25
EMS Speed post
247
10
Total
2493
100
ORGANIZED SECTOR
Comprise of service providers with national &

international reach fortified with fully equipped
infrastructure & other value added services.
The major consumer sectors are: Pharmaceuticals, IT,

Readymade garments & FMCG products.
Domestic companies act in consolidation to international

service providers & some of them even have tie-ups with
them.
Solutions like Just in Time & e-Commerce enabled

considerable business opportunity for web enabled
services.
The organized sector which was principally in the

package segment of Cargo management illustrated high
growth.
The organized sector was by and large into documents

business. The margins were much lower than package
segment & also barriers to entry were also very less
The industry was not regulated therefore licensing was

not requisite to setup a cargo management company.
Entry barriers in the Package segment were high because

company needed strong distribution network, latest
technology, well trained staff, strong brand image &
economies of scale. (given the operating leverage of
industry was very high)
Cargo management companies were leveraging on their

strong distribution network & were providing customers
with value added services.
Logistics management emerged as a new growth

opportunity for these companies because a lot of
Porters 5 force model
Threat of New Entrant [ LOW ]
The barriers to entry are very high. One of the

reasons that there is a high entry barrier is the
high fixed cost associated with establishing the
international
transportation
network.
This
includes hubs, ground transportation vehicles, air
fleet, etc.
Additionally, existing companies can take

advantage of the absolute cost advantage
achieved by large volume of shipments and
economies of scale.
Bargaining power of buyers [ HIGH]
The bargaining power of large buyers in shipping

service industry is high.
Cost associated with switching from one shipping

service to another is very low. Therefore, buyers
can turn to a shipping provider that offer faster
service, lower price, or service innovation with
ease. This is especially true for large
corporations, like IBM, which ships in large
volumes and can bargain quantity discounts.
Bargaining power of suppliers [LOW]
The supplier power within this industry is fairly

low.
Large shipping service provider can affect prices

of supplies, like packaging materials. This is
because they buy in large quantities and can turn
to different suppliers easily.
Threat of substitute products [LOW]
There are not many substitutes to shipping. In

this day and age where many businesses have
strong online presence and a small physical
presence, it would be difficult to find a substitute
in delivering their product.
Shipping services are very much similar to a

commodity, in that it is not easily replaced with
another service or even a similar service.
Rivalry Amongst Existing Firms[HIGH]
Established players in shipping service industry complete

rigorously for a market share, the company who
responses first to the constantly changing environment
wins. Established companies have to strive for
continuous improvement in quality, lowering price, and
innovation.
There is very low switching cost for consumers in this

industry making rivalry even more intense.
In addition, intense rivalry is also due to the fact that

maintaining the infrastructure of an express delivery
company presents an exit barrier due to high fixed costs.
Marketing Environment
Environmen
tal Sector
Market
Technological
Nature of
impact
Impact
Is dominated by the unorganized sector
and Gati Ltd functions in the unorganized
sector.
High sophisticated technology usage.
Economic
Liberalization and Globalization has

made the industry favorable for
investment.
Regulatory
Lack of proper regulatory body results in

inefficient functioning of industry.
Political
No major role is played by it.
Socio-cultural
Service is customized to delight the

customer.
International
Intense rivalry and competition prevails

in the International Competition.
Swot analysis
Strengths:
Dominant
player in the surface cargo segment in India,

which accounts for more than 55% of the total.
Niche value additions such as third-party logistics, trucking
and warehousing solutions.
Re-engineered hi-tech warehouses and distributing
infrastructure
Advanced IT solutions to back up its services.
It provides multi modal connectivity.
Weakness:
Insufficient
regional and global presence as compared

with its competitors.
It has been neglecting courier segment
Opportunity:
Improvement
in the logistics infrastructure in the

country-better roads, improved ports etc..
Entry of a large no. of global retailers
Increasing investments, booming manufacturing and
development of organized retail sectors-provides
business potentials to express industries
Threats:
Global
competitors
Space limitations
Government Policy
Strategies
Expansion through concentration

It
focuses on services it provide

currently.
It
also focuses on recent customers

and new customer development by
providing them customized services.
Expansion through
Internationalization
They
provide services to over 200

countries.
The
company setup offices in Hong

Kong, Thailand, Malaysia and
Indonesia.
Business Policies
Purchase Policy
No question on purchase raw material

The Gati lettering in an original and unique font
which represents
Reliability
Speed
Discipline
It progress in the areas of technology and
automation is a response to changes in
manufacturing systems, inventory management
and supply chain practices across the world.
Financial Policy
It reports 73% increase in PBT (Q1 report 2015)

Last Dividend was 25%.
Annual turnover of 12094 Million out of which
70% from logistics division, 7% from shipping
division and 23% from fuel station division.
70-80% turnover from courier business and 2030% from cargo business.
Growth of logistics, shipping and fuel station are
22.47%, 11% and 4% respectively.
GDP is US$692 billion.
Personal Policy
Workforce of 2364 employee

512 trainees
For training, it co-opted consultants and resource
persons from reputed institutions such as IIM,NIIT,
ICFAI, AIMA etc.
Promotion policy opened a transparent career
development map for all especially those on the
Fast Track.
It contributes to education, training and
assistance to small industries
Marketing policy
622 out of 626 districts in India

Value added services like warehousing, trucking,
express and time-bound cargo.
Gati has always tried to stay one step ahead by
innovating and transforming its processes, refining
service offerings, redefining customer standards
internally and externally and using technology to
drive up customer satisfaction.
It provide multi-modal transportation road, rail, sea
and air.
collaboration and co-operation with B2B customers
and partners
24x7 call centres to understand and manage
customer expectations, plan cargos, shipments &
Operational policy
It was an ISO 9001:2000 certified company for

design, marketing and providing cargo management
services.
It offers an integrated Express Distribution and
customized Supply Chain Solutions to customers
across diverse industry verticals.
connectivity across air, road, ocean and rail
promise to stay Ahead in reach in service quality,
wide network, technology, automation
Information through the website, e-mail, SMS and
toll free number.
Gati launched the first exclusive Cargo Train
between Mumbai and Kolkata in association with
Indian Railways.
Future Strategy
Aims to be one-stop service provider in logistics

solutions, focusing on warehousing and
infrastructure, express distribution centers, central
distribution center, information technology and
human resources.
By providing contribution, it aimed at strengthening

the society by empowering the weaker segments
with education, funding and technical assistance.
It is trying to grow at steady rate.
Thank
You !!!

Gati LTD

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GATI Limited

At The Threshold of A Big Leap

By: Badal Solapurwala

Gati Limited At the Threshold of

Incorporated on 25th April, 1995 registered office at

Provided services ranging from traditional point to point

Was Leader in Express Cargo movement and

Pioneer in Distribution and Supply Chain Management

They offered a spectrum of services that were cost efficient

Operates in three types of business segment viz.

Express Industry comprised courier companies which offered

CKD units, small machineries, electronic parts, spare parts etc.

On overall basis, documents accounted 60% of total revenue & the

The Indian Express Cargo industry (organized & Un-organized both)

The express industry saw progressive growth in the last decade of

The ingress of international players led to transition & growth as

Market share (%)

Semi Organized &

EMS Speed post

Comprise of service providers with national &

The major consumer sectors are: Pharmaceuticals, IT,

Domestic companies act in consolidation to international

Solutions like Just in Time & e-Commerce enabled

The organized sector which was principally in the

The organized sector was by and large into documents

The industry was not regulated therefore licensing was

Entry barriers in the Package segment were high because

Cargo management companies were leveraging on their

Logistics management emerged as a new growth

Porters 5 force model

Threat of New Entrant [ LOW ]

The barriers to entry are very high. One of the

Additionally, existing companies can take

Bargaining power of buyers [ HIGH]

The bargaining power of large buyers in shipping

Cost associated with switching from one shipping

Bargaining power of suppliers [LOW]

The supplier power within this industry is fairly

Large shipping service provider can affect prices

Threat of substitute products [LOW]

There are not many substitutes to shipping. In

Shipping services are very much similar to a

Rivalry Amongst Existing Firms[HIGH]

Established players in shipping service industry complete

There is very low switching cost for consumers in this

In addition, intense rivalry is also due to the fact that

Liberalization and Globalization has

Lack of proper regulatory body results in

No major role is played by it.

Service is customized to delight the

Intense rivalry and competition prevails

player in the surface cargo segment in India,

regional and global presence as compared

in the logistics infrastructure in the

Expansion through concentration

focuses on services it provide

also focuses on recent customers

provide services to over 200