CRISIL COMPANY REPORT | 1

Gati Ltd

GICS Industry : Air Freight & Logistics l Sub Industry : Air Freight & Logistics l Website : www.gati.com

NSE Ticker : GATI

Bloomberg Ticker : GTIC:IN

Face value / Share: 2.0

Div. Yield (%): 0.7

CMP (as on 15 Feb2011—Rs/share): 54.1

52-week range up to 15 Feb 2011 (Rs)(H/L): 86.30/51.8

Market Cap as on 15 Feb 2011 (Rs mn): 4,101

Enterprise Value as on 15 Feb 2011(Rs mn) : 8,482

Shares outstanding (mn) : 75.8

Free Float (%) : 50.2

Average daily volumes (12 months) : 417,196

Beta (2 year) : 1.1

Key Stock Indicators

Gati Limited (Gati) was incorporated in 1989. It offers integrated cargo services through road, rail,

air and sea transportation. The company operates a fleet of over 4,000 vehicles and 112

refrigerated vehicles and 6 container shipping vessels, and has 2 million square feet (mnsft) of

warehousing facilities across India. Gati has 5 rail transit centres, 9 air transit centres and 21

surface transit centres across the globe. The company employs ~3,500 employees.

KEY HIGHLIGHTS

Strong market presence in Asia-Pacific region and SAARC countries

Gati, through Gati Holdings, registered in Mauritius, has a strong market presence in the Asia-

Pacific region and SAARC countries with offices in Bhutan, China, Dubai, Hong Kong, Nepal,

Malaysia, Singapore and Thailand. During FY10, the company opened offices in Malaysia and the

Ghunghrou province of China to capitalise on the growing Asia-Pacific market. The company is also

planning to open operations in Vietnam to expand its footprint in the Asia-Pacific region. To

enhance its SAARC footprint, Gati has entered into a memorandum of understanding with Express

International, Bangladesh and is in talks with companies in Sri Lanka for a similar partnership.

Exports contributed to ~5% of FY10 revenues.

Initiatives taken to attain global quality in IT infrastructure

During FY10, Gati implemented a high-end vehicle tracking system (VTS) which provides

information in minutes. This system has been implemented in all the company’s express route and

service vehicles. The company has also set up video conference facility at all its express distribution

centres, zonal headquarters and major administrative offices to strengthen the communication

between different cities across different locations. A Network Monitoring Centre was established

to monitor the fleet movement using VTS technology, offering services of excellent quality to the

customers.

Launch of new division, Redsun

In FY10, Gati launched Redsun, a new division offering complete supply chain solutions. Redsun will

allow the company to offer a full range of supply chain solutions and technologies which will

differentiate Gati in the market place from being a pure play distribution company to a full-fledged

supply chain solutions company. Redsun will offer temperature sensitive services, re-engineering

services, managed services, value-added distribution and SME logistics support.

KEY RISKS

• Volatility in prices of fuel might affect margin

• Poor logistics infrastructure pushes up cost

• Technological obsolence, especially for IT infrastructure

• Entry of several small and medium players may impact margin

YTD 1-m 3-m 12-m

GATI -19 -10 -26 -8

NIFTY 4 -4 -11 14

Note:

1) YTD returns are since June01, 2010 to Feb 15, 2011.

2) 1-m, 3-m and 12-m returns are up to Feb 15, 2011.

J un-0 8 J un-09 J un-10

R eve nue (R s m n) 7 ,379 .5 7 ,951 .6 9,3 29.9

E B IT D A m a rg ins (% ) 9 .4 6 .9 9.4

P AT (R s m n) 154 .2 -27 2.1 95.0

P AT m a rg ins (% ) 2 .1 -3.4 1.0

G ea ring (x) 0 .9 2 .0 1.8

E P S (R s /s ha re ) 1 .8 n.m 1.1

P E (x) 53 .2 n.m 48.5

P /B V (x) 3 .0 1 .8 1.8

R oC E (% ) 12 .2 4 .9 8.9

R oE (% ) 6 .9 n.m 3.8

E V/E B IT D A (x) 14 .9 16 .1 10.2

n.m.: Not meaningful

Promoter

49%

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Others

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Stock Performances vis-à-vis market

Indexed price chart

Shareholding (As on December 31, 2010)

Key Financial Indicators

CRISIL COMPANY REPORT | 2

Gati Ltd

BACKGROUND

Gati Ltd was incorporated in 1989. It offers integrated cargo services through road, rail, air and sea transportation. The company operates a fleet of over 4,000 vehicles and

6 ships. It has 5 rail transit centres, 9 air transit centres and 21 surface transit centres across the globe. In FY10, the operations in the express distribution and supply chain

segment contributed ~77% to revenues, coast-to-coast shipping contributed ~10%, fuel stations contributed ~12% and others contributed ~1%.

Gati’s warehouse network connects to 622 of the 626 districts in India. The company plans to set up warehouses at Patna, Dehradun, Daman, Panvel and Nagpur. Some of

the clients of the company are Hitachi, Sony, LG, Onida, Titan, Nokia, NCR, Siemens, Tata, Bayer, Zenith, etc. Gati has offices in China, Singapore, Bhutan, Dubai, Hong Kong,

Thailand, Nepal and Malaysia. The company employs ~3,500 employees.

COMPETITIVE POSITION

Peer Comparison

Gati Ltd.

Blue Dart Express

Ltd. Sical Logistics Ltd.

Allcargo Global

Logistics Ltd

Jun-10 Dec-10 Mar-10 Dec-10

Revenue (Rs mn) 9,334.5 9,096.7 7,249.8 20,619.5

EBITDA margins (%) 9.3 11.8 5.0 10.6

PAT (Rs mn) 95.0 610.2 -352.8 1,407.1

PAT margins(%) 1.0 6.7 -4.9 6.8

Gearing (x) 2.1 0.0 4.3 0.3

EPS (Rs/share) 1.9 39.8 3.7 56.4

PE (x) 28.2 25.6 19.9 2.4

P/BV (x) 1.6 4.4 0.8 0.4

RoCE (%) 7.5 20.6 0.2 21.7

RoE (%) 4.1 14.1 n.m 24.2

EV/EBITDA (x) 10.8 22.6 31.2 2.0 n.m: Not meaningful

FINANCIAL PROFILE

Top-line, operating margin grow, company shows profit

Gati’s top-line grew at a CAGR of ~23% between FY08 and FY10. In FY10, it

increased 17.3% year-on-year to Rs 9.3 bn, from Rs 7.9 bn in FY09. Growth

was on account of exceptional performance delivered by the express

distribution & supply chain business, which saw revenue growth of ~23%.

Operating margin increased by 250 basis points y-o-y to 9.4% on account

of streamlining of IT technology and strict control over operating

expenses.

The company swung back to a profit in FY10, reporting PAT of Rs 95 million

(mn), after reporting a net loss of Rs 272 mn in FY09.

Units J un-08 J un-09 J un-10

R evenue R s m illion 7,379.5 7,951.6 9,329.9

E B ITD A m arg ins P er cent 9.4 6.9 9.4

P AT R s m illion 154.2 -272.1 95.0

P AT m arg ins P er cent 2.1 -3.4 1.0

R evenue growth P er cent 29.1 7.8 17.3

E B ITD A g rowth P er cent 47.8 -21.7 61.4

P AT g rowth P er cent 16.9 -276.5 134.9

G earing Tim es 0.9 2.0 1.8

R oC E P er cent 12.2 4.9 8.9

R oE P er cent 6.9 n.m 3.8

K ey Financ ia l Indic ators

INDUSTRY PROFILE

Airline Services

The airline services industry covers the scheduled commercial operations of Indian carriers on both domestic and international routes. It also includes the cargo operations

of the carriers. The growth in domestic and international passenger traffic to a large extent on account of the advent of low fare carriers (LFCs), stable ticket prices and

strong demand from corporate and leisure travelers. The domestic aviation market is highly competitive with presence of nine players. Increase in ticket prices happens

but with a substantial lag to the increase in fuel costs. This affects the profitability of carriers. Indian carriers face severe competition from alternate modes of transport on

domestic routes and large international carriers on international routes, which adds to the challenges faced by carriers.

Logistics

CRISIL Research has estimated the overall Indian logistics spend at Rs 2.7 trillion in 2008-09, which includes only primary transport modes and infrastructure, equivalent to

around 8.2 per cent of the Gross Domestic Product (GDP). And if the secondary movement (from the hub to the various depots) is also included, this shoots up to 10.7 per

cent, which is significantly higher than those of developed nations where it averages 5-7 per cent. Higher logistics spend as percentage of GDP can be attributed to the

overall inefficiency in logistics operations, multiple tax structures, inadequate infrastructure and unorganised nature of the industry in India.

With escalating competition and cost pressures, companies are increasingly focusing on their core competencies by outsourcing their logistics requirements to third party

logistics (3 PL) players. The future of the Indian logistics industry is currently governed by three key factors viz. increasing domestic demand, reducing logistics cost and

improvement in Infrastructure.

CRISIL COMPANY REPORT | 3

Gati Ltd ANNUAL RESULTS

Income Statement Balance sheet

(Rs million ) Jun-08 Jun-09 Jun-10 (Rs million ) Jun-08 Jun-09 Jun-10

Net Sales 7,168.4 7,904.1 9,261.1 Equity share capital 169.3 169.8 170.3

Operating Income 7,379.5 7,951.6 9,329.9 Reserves and surplus 2,557.2 2,209.1 2,411.7

Tangible net worth 2,726.5 2,378.9 2,582.0

EBITDA 697.0 546.0 881.5 Deferred tax liablity:|asset| 74.8 73.7 96.0

EBITDA Margin 9.4 6.9 9.4 Long-term debt 1,379.9 2,989.6 2,333.9

Short-term-debt 981.9 1,778.1 2,238.9

Depreciation 185.5 248.1 271.8 Total debt 2,361.8 4,767.7 4,572.8

Interest 298.3 567.1 485.5 Current liabi lities 617.6 637.4 782.0

Other Income 22.5 14.1 36.0 Total provisions 247.1 16.6 53.5

Total liabilities 6,027.8 7,874.3 8,086.3

PBT 235.7 -261.6 160.2 Gross block 3,049.6 5,170.6 5,049.9

PAT 154.2 -272.1 95.0 Net fixed assets 3,082.9 4,724.7 4,435.6

Investments 203.6 203.7 202.1

PAT Margin 2.1 -3.4 1.0 Current assets 2,741.5 2,946.0 3,448.6

Receivables 1,212.1 1,213.2 1,497.3

No. of shares (Mn No.) 84.7 84.9 85.2 Inventories 34.6 70.2 126.9

Cash 163.9 213.5 191.8

Earnings per share (EPS) 1.8 n.m. 1.1 Total assets 6,028.0 7,874.4 8,086.3

Cash flow Ratio

(Rs million ) Jun-08 Jun-09 Jun-10 Jun-08 Jun-09 Jun-10

Pre-tax profit 235.7 -255.2 160.2 Revenue growth (%) 29.1 7.8 17.3

Total tax paid -67.3 -11.7 -43.0 EBITDA growth(%) 47.8 -21.7 61.4

Depreciation 185.5 248.1 271.8 PAT growth(%) 16.9 -276.5 134.9

Change in working capital -972.0 -365.6 -342.8

EBITDA margins(%) 9.4 6.9 9.4

Cash flow from operating activities -618.1 -384.4 46.2 Tax rate (%) 28.6 -4.2 26.9

Capital Expenditure -1,261.2 -1,917.0 5.2 PAT margins (%) 2.1 -3.4 1.0

Investments and others 1.6 -0.1 1.6

Dividend payout (%) 43.9 0.0 35.9

Dividend per share (Rs) 0.8 0.0 0.4

Cash flow from investing activities -1,259.6 -1,917.1 6.8 BV (Rs) 32.2 28.0 30.3

Equity raised/(repaid) 1,056.3 -72.5 -53.8 Return on Equity (%) 6.9 n.m. 3.8

Debt raised/(repaid) 589.6 2,405.9 -194.9 Return on capital employed (%) 12.2 4.9 8.9

Dividend (incl. tax) -79.2 0.0 -39.7

Others (incl extraordinaries) -7.2 17.6 213.7 Gearing (x) 0.9 2.0 1.8

Interest coverage (x) 2.3 1.0 1.8

Debt/EBITDA (x) 3.4 8.7 5.2

Cash flow from financing activities 1,559.5 2,351.0 -74.7

Change in cash position -318.2 49.5 -21.7 Asset turnover (x) 3.0 1.9 1.8

Opening cash 482.2 163.9 213.5 Current ratio (x) 1.5 1.2 1.1

Closing cash 163.9 213.5 191.8 Gross current assets (days) 133 127 126

n.m : Not meaningful;

QUARTERLY RESULTS

(Rs million) Dec-10 % of Rev Dec-09 % of Rev Sep-10 % of Rev Dec-10 % of Rev Dec-09 % of Rev

No of Months 3 3 3 6 6

Revenue 2,252.6 100.0 1,822.8 100.0 2,265.6 100.0 4,518.2 100.0 3,538.3 100.0

EBITDA 216.5 9.6 218.0 12.0 224.0 9.9 440.4 9.7 437.6 12.4

Interest 116.0 5.1 113.3 6.2 109.3 4.8 225.3 5.0 231.6 6.5

Depreciation 52.8 2.3 60.5 3.3 53.5 2.4 106.3 2.4 127.3 3.6

PBT 47.7 2.1 44.2 2.4 61.2 2.7 108.8 2.4 78.7 2.2

PAT 31.8 1.4 38.4 2.1 37.5 1.7 69.2 1.5 61.1 1.7

Profit and loss account

CRISIL COMPANY REPORT | 4

Gati Ltd

FOCUS CHARTS & TABLES

Mar 2010 J un 2010 S ep 2010 Dec 2010

P rom oter 49.0 49.0 49.0 49.0

F II 3.3 3.0 2.9 3.0

D II 0.1 0.1 0.1 0.1

Others 47.5 47.9 47.9 47.9

S hareholding P attern (P er c ent)

Director Name Designation

Krishan Lal Chugh (Mr.) Non-Executive Chairman

Mahendra Kumar Agarwal (Mr.) Managing Director

Sunil Kumar Alagh (Mr.) Non-Executive Director

Himmat Singh Lagad (Mr.) Executive Director

Sudhakar Reddy Peesara (Dr.) Non-Executive Director

Talluri Suryanarayana Rao (Mr.) Non-Executive Director

Anoop Kishore Seth (Mr.) Nominee Director

N. Srinivasan (Mr.) Non-Executive Director

Ram S. Tarneja (Dr.) Non-Executive Director

A.P.V.N. Sarma (Mr.) Non-Executive Director

Board of Directors

Additional Disclosure

This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT).

Disclaimer

This report is based on data publicly available or from sources considered reliable. CRISIL Ltd. (CRISIL) does not represent that it is accurate or complete and hence, it should not be relied upon as

such. The data / report is subject to change without any prior notice. Opinions expressed herein are our current opinions as on the date of this report. Nothing in this report constitutes investment,

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contact 'Client Servicing' at +91-22-33423561, or via e-mail: clientservicing@crisil.com.

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