Logistics company Gati’s e-commerce division, Gati e-connect, has posted revenues of Rs 45 crore for the quarter ended 30th June 2015 (Q1-FY16), increasing by over 100% year on year, Sanjeev Kumar Jain, Director Finance, at the company, said on its earnings conference call. Gati’s growth is “primarily led by our e-commerce business, which almost constitutes 11% of our total revenue.”
EBIDTA for their e-commerce business was between 16-17% during the quarter, but “as the e-commerce business revenue increases in the overall revenue, the profit will increase.”. The company plans to invest around Rs 30-40 crore for e-commerce expansion in the year. Gati’s e-fulfilment business grew 20% year on year.
Expecting to cross Rs 200 crore in e-commerce deliveries this fiscal; gearing up for festive season
The company, which reported Rs 127 crore from e-commerce deliveries last financial year, expects to cross Rs 200 crore in ecommerce delivery revenues this financial year, especially since it has done Rs 45 crore in revenue from the business, and it isn’t even the festive season. In the last fiscal, it reported e-commerce revenues of Rs 127.4 crore, up 164% from Rs 48.3 crore the fiscal year before that.
Dhruv Agarwal, EVP for Gati-KWE, said that the company is gearing up for the festive season: “…the festival season will start approximately middle of August with the Independence Day sales etc., but the capacities on the ground that we are building right now really cater for the September, October, November time period, which is your Dusshera (and) Diwali, in which, last year we had seen almost a three to four times spike. So starting August, the momentum will build on these volumes and will really peak in October (and) November. So I do not think we will see Rs 45 to Rs 80 kind of crore jump in Q2, but typically Q3 we do have exponential jump, (and) probably in Q2 we should see a Rs 60 to Rs 65 crore type of number. ”
The company currently has a delivery capacity of about 45000 packages a month “and we have not significantly expanded this capacity over last quarter, but we have improved the efficiencies. So in the last quarter we were delivering about 35,000 to 36,000 on average a day and in this quarter we are doing about 38,000 to 39,000 on average a day. However, moving forward we are looking at expanding this capacity to about 90,000 deliveries a day by Q3, probably by the end of Q3. We have a separate plan where we will be bringing in a temporary capacity for the festival season which we are working out right now. So during that festival season for the three months or so we will add-on significant amount of capacity that will go away in Q4 and then we will move forward with about 90,000 packages a month capacity.”
– Gati has opened 13 consolidation centers for its first mile pickup in the e-commerce vertical. “This has helped us to strengthen our network and stickiness with the customers. Our core competence of handling large parcels remains unchallenged and with the recent focus of e-tailors on white goods which will help us to further consolidate our position in this segment,” the company said.
– Gati’s had 1500 bikers, drivers and e-com agents dedicated to e-commerce as of 30th June 2015
– Gati has also recently launched Gati App which will allow customers host of features on their hand phones.
Gati has launched an Android and iOS app, which has seen over 8000 downloads. The company says it is getting about 1500 queries on it every day “regarding tracking of various packages and then we get about on average 600 queries a day on other things like pickup requests, rate enquiries etc.”
From the Annual Report (download)
-“The hallmark of FY14-15’s performance has been the growth of our last mile delivery services to the e-Commerce companies, that posted a growth of 164% over the previous year”
– The company commissioned 2 more e-fulfilment centers in FY15 at Chennai and Jaipur, apart from three eFCs in Delhi, Mumbai & Hyderabad.
– In FY15, it employed IBM’s Sterling Commerce Suite, to help online retailers meet the rising consumer demand for efficient delivery of products.
– “e-Commerce logistics services is the fastest growing business vertical for Gati . Between FY2011-12 and FY14-15 this segment maintained a CAGR of more than 100%. In FY14-15 the average number of packages delivered per month has grown to 40,000.”
– “Increased the Tablet roll out to cover more E-Com delivery personnel”