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Allcargo-owned Gati looks to buy out JV Kintetsu

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Allcargo owned Gati will purchase out its Japanese partner Kintetsu Worldwide in a JV Gati-Kintetsu Express Pvt. Ltd. this monetary year.

“We have already envisaged interest in buying them out. Discussions are going on valuations. When Allcargo bought Gati, there was an agreement made between Gati and Kintetsu World Express that for two years, there would be no change in the structure of the JV. Since that two-year period is over, we at Allcargo felt that it’s time for us to become a 100% ownership,”

Pirojshaw Sarkari, CEO, Gati

 Gati has appointed Ambit Capital to manage the deal.

Gati and Kintetsu formed the joint venture in 2012, of which Gati owns 70% while Kintetsu owns the remaining 30%.

 Kintetsu World Express is part of the over $10 billion-plus Kintetsu Group Holdings, Japan. 

Gati-KWE has enhanced its infrastructure footprint rapidly after Allcargo took over. 

 “We have now got three hubs–Farrukhnagar in the north, Nagpur central hub, Guwahati northeast hub. Today we are starting our movement to the Mumbai hub,” Sarkari said.

“By the end of March, we will finish the first phase of hub expansion. Once the infrastructure is in place, our topline will see faster growth,” added.

 Gati had earlier announced a decline of 83% in its quarterly net profit as compared to last year. The company reported a net profit of Rs 7 crore, which is down from Rs 46 crore as deferred taxes rose. Revenue rose to Rs 435 crore from Rs 400 crore a year earlier.

“The performance for Q2 FY23 is as per our expectations and reflects the focus on execution across the organization in line with our articulated strategy. Express business revenues for H1FY23 stood at Rs 734 crore registering a growth of 29%. The gross margin expansion remains on track. We have been able to deliver a positive bottom line for the second consecutive quarter and are optimistic about increasing the margins going forward. This growth & efficiency is a result of conscious efforts taken to increase our market share, reduce costs & increase operational efficiencies across the organization,” said Sarkari in a statement.

 Gati clocked a revenue of Rs 1,490 crore in FY22. According to a recent presentation to analysts Allcargo expects its express logistics revenue to touch Rs 2,700 crore to Rs 3,500 crore by FY26.

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