Gati records 63% profit jump despite “sluggish” economy

Indian express company Gati Ltd has achieved a 63% increase in net profits for the first three quarters of its 2011-12 fiscal year. The firm reported last week that it made a INR 171m ($3.17m USD) net profit on INR 6.9bn ($128m USD) revenue during the nine months up to the end of March 2012.

The company’s margin before tax stood at 11.5% for the three quarters, up just over a percentage point compared to the same period the previous year.

The nine-month figure was helped by a 124% increase in net profit during the third quarter of Gati’s fiscal year, to INR 81m ($1.5m USD) on the quarter’s INR 2.18bn revenue ($40.4m USD).

During a “sluggish” third quarter, Gati said its express and supply chain division grew sales 4.8% compared to the same period last year, but its shipping division continued its loss-making performance.

The shipping unit has recorded a INR 270m loss ($5m USD) for the nine months, more than double the loss in the same period the previous year.

Part of the express and supply chain division is being transferred to a new joint venture with Japanese forwarding firm Kintetsu World Express (KWE). Subject to regulatory approvals, KWE is expected to own a 30% stake in the joint venture, investing INR 2.67bn in the project.

Mahendra Agarwal, founder and chief executive, said the slowdown in the economy had become a “major challenge” for his company.

“While our revenues show a modest growth, we believe that the express distribution business will grow significantly above the industry growth and the KWE partnership will enable us to provide an unmatched express distribution service to customers,” said Agarwal.

Gati has now grown from its founding in 1989 to a company of 3,500 employees and 4,000 vehicles, covering most of India along with a presence across the Asia Pacific region.