“Valuations are being discussed. 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.
Allcargo-owned Gati to buy out Japanese partner in JV this FY, says Gati CEO Pirojshaw Sarkari
Allcargo Logistics-owned Gati will buy out its Japanese partner Kintetsu Worldwide in a JV Gati-Kintetsu Express Private Limited this financial year.
“We have already envisaged interest in buying them out. There are discussions going on,” Gati CEO Pirojshaw Sarkari told ET in an interview Thursday.
“Valuations are being discussed. 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,” said Sarkari.
He added the company has appointed Ambit Capital to manage the deal.
Gati owns 70% of the JV, while Kintetsu owns the remaining 30%.
Kintetsu World Express is part of the over $10 billion plus Kintetsu Group Holdings, Japan. Gati and Kintetsu formed the joint venture in 2012.
Gati-KWE have enhancing their infrastructure footprint rapidly after Allcargo took over, said Sarkari.
“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,” he added.
“By the end of March, we will finish first phase of hub expansion. Once the infrastructure is in place, our topline will see faster growth,” added.
Earlier in the day, Gati announced a quarterly net profit of Rs 7 crore, down from Rs 46 crore a year earlier 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 organisation 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 positive bottom line for the second consecutive quarter and are optimistic of increasing the margins going forward. This growth & efficiency is a result of conscious efforts taken to increase our market share, reduce costs & increasing operational efficiencies across the organisation,” 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.
