Allcargo group firm, Gati Ltd looks to become a Rs 3,000-crore company in three years, on the back of key accounts, micro, small and medium enterprises (MSMEs), and business-to-business (B2B) retail.
To achieve the target, the logistics company has identified three areas, including talent acquisition and building infrastructure Pirojshaw Sarkari, Chief Executive Officer said while acknowledging the fact that the company got “distracted” in the past as it tried its hands in other businesses rather than concentrating on the express logistics before coming under the ownership of Allcargo Group.
He said, the company might have got down in service in the past but a vast network remained its strength.
Now going forward Gati has set the goal to become a Rs 3,000-crore organization in the next three years.
“if we have to grow our business, it means that if we have to take it from Rs 1,000 crore to Rs 2,000 crore or Rs 3,000 crore,” Sarkari said.
Earlier this week, Gati-KWE opened its largest surface transshipment center at the Allcargo Logistics Park at Farukhnagar in Gurugram (Haryana) with capabilities to process short-haul cargo deliveries in the north and long-haul cargo movements on a pan-India spread.
It also announced its plans to set up seven more such facilities, including Mumbai, Bengaluru, Hyderabad, Nagpur, and Indore, in the next 15 months and 12 such hubs in the next three years.
The company had clocked a revenue of Rs 1,324 crore in the financial year ended March 31, 2022, as compared to Rs 1,714 crore in the earlier fiscal.
“We will have to build out larger hubs like the one at Farukhnagar. I’ve identified 12 such hubs in the country. And, once we get that kind of hubs ready, we are ready to handle even Rs 3,000 crore revenue,” Sarkari told PTI in an interaction.
He said segments such as key accounts, MSMEs, and B2B retail are expected to drive this growth.
Sarkari said key accounts give a company volume despite low yields from such accounts as they being large customers demand low pricing, and they account for as much as 50 percent in any kind of logistics structure.
He added that “we are going to concentrate on the MSMEs, who are the customers that actually will need somebody like us because of the reach”.
“Since we have the reach, we will provide them that reach to send their goods all over the country. And, the third area is retail B2B retail. So, these are three segments retail MSME and key accounts that we look at,” he said.
From an industrial perspective on the automotive spare parts, which is auto aftermarket and pharma companies, who use both air express and surface express, and the garment segments are big customers for a company like Gati.
He added that the e-commerce sector, not the last-mile delivery but only delivery from the vendors, is the area that Gati will be looking at for growth.
He said that the “entry mode” in B2B express services is high and unless a company covers the length and breadth as vast as India and can pick up or deliver from tier-II and tier-III cities, no customer is going to give it business. Because that is where the consumption is going up in India.
Sarkari said for the next 12-15 months the company will be concentrating on three areas talent acquisition, build-out infrastructure for the future, and actual digitization.
He said the front-end digitization has already been completed, while the company is now working on the back-end digitization, which is expected to be completed by March next year.
Although factors like pandemic-induced disruptions, changing customer behavior and consumption patterns, apart from the organization’s strategic decisions to focus on businesses that are its core expertise and exit non-core ones, among others, have had an impact on revenue numbers in the short term, this fresh approach taken by the organization is going to help it achieve the goal.