Gati limited

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1. GATI – Limited At The Threshold of A Big Leap Vibhav K handelwal Pooja B abla Rishabh Srivastava Neha Chaudhary Pranab Kanwar Surujit Sui

2. Gati Limited – At the Threshold of a Big Leap Incorporated on 25 th 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 Shipping Fuel Stations 2

3. 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 1980’s 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 business 3

4. Sector Revenue(Rs. In crore) Market share (%) Organized 1628 65 Semi Organized & Unorganized 618 25 EMS Speed post 247 10 Total 2493 100 4 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.

5. 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. Unorganized / semi organized sector faced pressure because of unfavorable pricing environment. 5

6. 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 manufacturing companies were outsourcing their logistics requirements to third parties. 6

7. 7 Porter’s 5 Force Model

8. 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.

9. 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.

10. 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.

11. 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.

12. 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.

13. Marketing Environment Environmental Sector Nature of impact Impact Market Is dominated by the unorganized sector and Gati Ltd functions in the unorganized sector. Technological 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.

14. STRATEGIC ADVANTAGE PROFILE (SAP)

15. SWOT 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 15

16. 16 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

17. Strategies

18. 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.

19. Expansion through Internationalization They provide services to over 200 countries. The company setup offices in Hong Kong, Thailand, Malaysia and Indonesia.

20. Business Policies

21. 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.

22. Financial Policy It reports 73% increase in PBT (Q1 report) 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 20-30% from cargo business. Growth of logistics, shipping and fuel station are 22.47%, 11% and 4% respectively. GDP is US$692 billion.

23. 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

24. 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 & routes. Marketing policy

25. 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. Operational policy

26. 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.

27. Thank You !!!