After departing the cold chain industry, express distribution company Gati Ltd is now aiming to lose some more weight and is in the process of divesting two more of its subsidiaries, trading solution and freight forwarding.
According to the company’s FY20 annual report, GIETL is 0.67 percent of its consolidated net assets, contributing just Rs 6.19 million to overall earnings.
Gati Ltd, which is owned by AllCargo Group, departed its cold chain solutions company, Gati Kausar India Ltd, in May to focus on express distribution and e-commerce. It is now closing its two other enterprises for the same reason. Gati Limited is looking for a potential buyer for its freight forwarding business while the company is winding down the Gati Import Export Trading Limited subsidiary.
A reefer is a refrigerated trailer that is mounted to a semi-truck to carry perishables and other temperature-sensitive commodities. Cold chain is an asset-heavy and capital-intensive industry, which contradicts Gati Ltd’s objective of becoming an asset-light corporation in the coming months.
In addition to an asset-light approach, the corporation intends to lighten its financial sheet. The company’s debt/equity ratio will fall to 0.29 after the Gati Kausar spin-off, down from 0.50 when Gati included the cold chain operation.
“We have been working on the exit of Gati Kauser for the last one-and-half –year, from the time of acquisition. If you do not own the refrigerated business we cannot be in the cold chain business because the concept of leasing reefer trucks is not developed in the country. Hence it made sense to exit this business,” said Bala Aghoramurthy, deputy managing director at Gati Ltd.
Gati Kausar had a Rs 103 crore debt as of March 31, 2021. Following the sale of loss-making Gati Kausar, which is now in the works, the company’s consolidated net debt is expected to fall to Rs 290 crore in FY21, down from around Rs 411 crore in FY20.
Gati Ltd also sold off its foreign loss-making unit Gati Asia Pacific Pte Ltd in August 2020, moving the firm closer to focused on its express operation.
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Hello, my name is Anuj Boruah. I am quite interested in writing about current events in business, finance, and the economy. I work as a newswriter at Reviewminute.
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