Gati to build cold storage capacity

Gati Limited, a Hyderabad-based express distribution and supply chain solutions provider, is setting up 10 cold storage plants across the country at an investment of about Rs 200 crore in the next four years, according to executive director Harry Lagad.

“This calendar, we plan to open two cold storage units — one in Bangalore and the other in Delhi. Our overall plan is to have 10 cold storage units across the country in the next four years which will be our main hubs linked to our distribution networks. Also on the cards is shifting our hub from Ghaziabad to Kundli in north Uttar Pradesh where we will also start some cross-docking,” Lagad told Business Standard.

 

As part of its restructuring strategy, Gati recently bought Delhi-based cold chain company Kausar (India) Ltd, which will offer both cold and ambient supply chain solutions.

Stating that each of the proposed unit would have around 40,000-sq ft of built-up area in the modular form, he said the company would build on Kausar’s strength of 150 reefer (refrigerated) trucks to 500, both in the long-haul and short-haul five years from now.

“We are looking to rope in a small private equity player or a large international organisation who could bring in expertise and best practices into our cold chain management and distribution business,” Lagad said, adding the cold chain market in India was presently valued around Rs 12,000 crore and was projected to touch Rs 30,000 crore by 2020.

On the shipping business front, Gati has a wholly-owned subsidiary called Gati Ships based out of Chennai. It presently operates seven vessels — five of them company-owned and two on charter.

“Last two years were absolutely bad, both in terms of industry perspective as well as internal. But, I think a turnaround for the shipping industry is now likely. We are looking closely to bring in a strong partner... not necessarily funds, but those who have vessels. The induction of new vessels depends on new partners and the specific expertise they bring on to our table,” he said, while refusing to comment further.

Gati Ships presently operates in Singapore, Malaysia, Burma, Sri Lanka, India. Lagad said, the company eventually is looking to enter Reyong in Thailand, Indonesia and Philippines. “We should be there by June-July this year.”

“We are in the process of restructuring as it will be easier for us to bring in investments through partners into various subsidiaries. We are discussing with consultants, and based on their recommendations, we will take the next step and announce our new go-to-market strategies in three months from now,” he said adding the company expected a 30 per cent growth in revenues this financial year (ending June 2011) over Rs 900 crore achieved last year.

Gati Limited’s scrip ended the trade at Rs 52.35 on the BSE on Monday, down 3.06 per cent over the previous close of Rs 54.