Against the backdrop of moderate business environment and after-effects ofdemonetisation FY2016-17 was a challenging year for your company. Despite the challengesI am glad to report that we made significant advances to establish the direction forlonger-term success. Beyond the immediate horizon we are encouraged by the improvement inthe macro-economic trends and structural changes especially the GST roll-out which willhelp strengthen competitiveness and grow market share. With its diversified productportfolio discipline to provide quality service and the people talent the company isconfident of growing in ways that create long-term shareholder value.
The full year growth was moderate and chiefly affected by e-Commerce growth stagnationand lingering effects of demonetisation in select industry verticals. The post festiveslowdown in ecommerce industry and the slow tapering down of demonetisation effect on bothB2B and B2C segments had a material impact on your company's performance.
As widely reported GST is perceived as the most wide-ranging tax reorganisation andtargets to make India into "One Nation One Tax One Market". Thestructure proposed under the GST offers an ideal opportunity for organisations tore-engineer their existing supply chain networks to reduce inefficiencies. With itscomprehensive integrated service portfolio Gati is distinctively positioned to supportthe consequent supply chain realignment. Chiefly the company's pan-India reach has beenalready designed on a hub and spoke model for efficiency and speed.
A GST structure will also support reduction of bottlenecks like border check-posts andaid in faster flow of shipments by improving average speeds and subsequently increasingyour company's fleet utilisation. Information technology will be a critical differentiatorin the logistics industry post-GST not only in terms of compliance to the GSTN Networkbut also providing the better shipment visibility to customers.
Over the course of several months your company has taken affirmative steps oncompliance operations technology and manpower training to be ready for GST. Central toyour company's GST value proposition is the idea of "helping customers unlock the GSTadvantage". The objective is to help customers have control of their domestic supplychain make informed decisions based on demand and supply patterns and have confidence inthe pan-India network adjustments they make.
Our Business Operations and technology Strategies
Over the last few years the company has undertaken significant initiatives to fortifyits stronghold to deliver consistently to customers by developing end-to-end solutionsenhancing technology capabilities and augmenting operations quality processes. Thesestrategies are based on the fundamental premise that customers will continue to seeklarger role of logistics service providers like Gati who can integrate their uniquesupply chain requirements. Recent portfolio enhancement with the launch of Gati FulfilmentServices and commissioning of cold chain warehouses are reflective of this veryperspective.
On the core express distribution business the company is committed to maintaining itspan-India network and service leadership in the post-GST environment. Specific medium tolong-term changes in domestic supply chains like consolidation of customer warehouses willnecessitate improvement in service levels to areas outside the major metropolitan centers.Likewise our team has proactively worked on optimising the delivery network basis apredictive logic of load movement post GST. Additionally Gati is expanding its portfolioof multi-modal distribution and warehousing solutions offering customers morecustomisation in serving their emerging needs.
With the launch of its ambitious Shop-Floor Automation (SFA) initiative in earlyFY2017 your company reached a vital milestone. This package-level visibility through 100%Bar Code scanning is unprecedented in the domestic express distribution sector especiallyin the context of Gati's scale and reach. With all the complexities the undertaking tooktime to stabilise and I am happy to report that the automation is fully-implemented with apositive impact on customer experience and productivity. Going forward Gati will continueto advance such technology interventions to provide operational scalability costoptimisation and service improvement needed to support future growth opportunities andenhance profitability.
In November 2016 the company invested in BrownTape a technology platform that helpsonline sellers on multiple e-Commerce marketplaces to manage their orders from a singlewindow. The alliance will work on the vision of simplifying e-Commerce for all levels(small medium and large) of online sellers who will be able to manage their e-Commerceecosystem seamlessly.
To gain further penetration into consumer retail your company is also developingsolutions that integrate the online and offline shopping channels available to consumers.The strategy leverages the company's competitive edge on account of its experience inhandling both Business-to-Consumer and Business-to-Business channel logistics and willresult in longer and more profitable business relationship with customers.
Gati's longstanding investment in building people's skills and capabilities isessential to maintain leadership position in a competitive market. In FY2016-17 thecompany introduced learning interventions to meet talent requirement across the diversepan-India talent base. A Specialised skill development center was inaugurated during thecourse of the year to focus on driver safety and training across India. Additionallycross-functional teams across all locations have been put through rigorous GST trainingfor ensuring flawless roll-out and execution.
Building Sustainable Communities
Gati considers that operating in a responsible way is vital to fostering a strongbusiness for its people customers and the society in general. In line with this severalactivities towards Corporate Social Responsibility were carried out in FY2016-17.Community efforts took on special meaning in Bihar and Assam in July-August period wherecommunities were put in extreme conditions following wide-spread flooding. Gati`ites wereactively involved in the flood relief activities leveraging on the company's logisticscapabilities and reach. Another notable activity was the commissioning of solar-powereddeep water pumps in the Nagarjuna- Srisailam tiger reserve in collaboration with WWFIndia. In almost half a year of its installation this unique system based on clean andrenewable energy has been serving the water-scarce areas of reserve forests.
As the industry evolves in the post-GST environment your company will command theadvantages of competing in a larger market with opportunities for service innovation. Infact Gati's Vision 2020 is centered around providing end-to-end logistics solutionstailor-made to customer specific needs. Our focus remains on improving customerexperience leveraging ournetworkadvantageandcreatingavenues toward long-term shareholdervalue. I thank you for the unrelenting confidence in your company and its management.
Founder & CEO