Logistics company Gati said that it had e-commerce revenues of Rs 37.5 crore for the quarter ended September 30 (Q2 FY18). This was a decline of 19.53% from Rs 46.6 crore in the same quarter last year. E-commerce revenue has been declining over the past few quarters following demonetization and the introduction of the GST regime. In the preceding quarter, Gati’s e-commerce revenues stood at Rs 42.2 crores. Therefore, H1’s e-commerce revenues stood at Rs 79.7 crore.

This is in stark contrast to the situation a couple of years. For context, the e-commerce division in Gati was its fastest growing segment in FY 2015-16 and it had revenues of Rs 207.8 crore for the year, growing 63.1% from the previous year’s Rs 127.4 crore.

Note that the second quarter is generally a strong period for companies due to increased spending during the festivals. But it looks like the festival season hasn’t panned as expected for the company. “First of all, there was an anticipation of a good September because the festival season started in September. In the start of the festival season, the e-tailers themselves were not happy about their performance,” Bala Aghoramurthy, Deputy Managing Director, Gati
Kintetsu Express Limited said in the analyst call.

“There was a core correction thereafter happened in the second phase, which actually falls into October. Dussehra started at the end of September and then Diwali near the end of October so the start of the festival season was not good for the e-commerce industry by itself,” he added.

Change in COD business

Aghoramurthy said that there was a shift in the number of cash-on-delivery (COD) orders. “The first if you recall our COD volumes, etc., used to be really in the high range in the festival season, for example, we used to do almost 70% COD as a contribution. The more recent trend is closer to about 40% to 45% of COD contribution,” he explained.

Pressure on pricing 

Aghoramurthy added that the company is facing pressure on pricing for logistics. “We are seeing a trend where the larger retailers are happy to experiment with their own logistics services so that is one trend that we are seeing, but I am reasonably positive all these are cycles where companies experiment alternate mode and then find the most efficient,” he said.

“Gati, of course, as changed track at least once in the last two three years I did explain in the previous call as well and that we started off with a larger rail segments in the Tier-II, Tier-III cities we moved to the smaller rail segments and so on. So we are actively reevaluating what is the best source that is definite pressure on the pricing and volume track,” he added.



  • Net profit for the quarter stood at Rs 20.8 crore, an increase of 179% YoY, but this was mainly due to a one-time gain of Rs 23.7 crore due to the conversion of foreign currency convertible bonds (FCCB).
  • Revenue from operations was Rs 406 crore, down by 4.6% over Q2 FY17.

Editor’s note: For this quarter, Gati had only declared financial results for the quarter and uploaded the press release after a week. Typically, the press release has details on the performance of the e-commerce business which has not been given this quarter. This information was taken from the analyst call released earlier this week.

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