2. Gati Limited – At the Threshold of a Big Leap
Incorporated on 25th 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
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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
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4. Sector Revenue(Rs. In crore) Market share (%)
Organized 1628 65
Semi Organized &
Unorganized
618 25
EMS Speed post 247 10
Total 2493 100
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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.
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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.
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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
Environmenta
l 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.
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
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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
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.
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.
