-Pranav-Abhishek -Amit -Mittali

About The Industry

INDUSTRY SCENARIO Express Industry comprised courier companies which offered domestic & international services. The consignments held by the express companies were broadly classified into : Documents Any material comprising paper such as correspondence, bill

/ invoice, brochure, catalogue, books, files, account details etc.small machineries, electronic parts, spare parts etc.

Non Documents Items with or without commercial value like CKD units,

On overall basis, documents accounted 60% of total revenue & the rest 40% was non documents. The 1980s saw the entry of professional players into the express industry & since then the industry grew at a steady rate.

The Indian Express Cargo industry (organized & Un-organized both) had enormous prospects for growth in local well as international markets. The express industry saw progressive growth in the last decade of 20th century due to trade & services. The elimination of trade barriers, globalization of markets & trade led to expansion in business3

The ingress of international players led to transition & growth as well as posed challenges by web based technology. Express market Scenario Over 2000 express companies in India. 20 in organized sector. 25 in semi-organized sector & others in unorganized sector.

SectorOrganized Semi Organized & Unorganized EMS Speed post Total

Revenue(Rs. In crore)1628 618 247 2493

Market share (%)65 25 10 100

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ORGANIZED SECTOR Comprise of service providers with national & international reach fortified with fully equipped infrastructure & other value added services. The major consumer sectors are: Pharmaceuticals, IT, Readymade garments & FMCG products. Domestic companies act in consolidation to international service providers & some of them even have tie-ups with them.

Solutions like Just in Time & e-Commerce enabled considerable business opportunity for web enabled services. The organized sector which was principally in the package segment of Cargo management illustrated high growth.

Unorganized / semi organized sector faced pressure because of unfavorable pricing environment. The organized sector was by and large into documents business. The margins were much lower than package segment & also barriers to entry were also very less.5

The industry was not regulated therefore licensing was not requisite to setup a cargo management company.

Entry barriers in the Package segment were high because company needed strong distribution network, latest technology, well trained staff, strong brand image & economies of scale. (given the operating leverage of industry was very high) Cargo management companies were leveraging on their strong distribution

network & were providing customers with value added services.

Logistics management emerged as a new growth opportunity for these companies because a lot of manufacturing companies were outsourcing their logistics requirements to third parties.

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Porters 5 Force Model

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Threat of New Entrant [ LOW ]The barriers to entry are very high. One of the reasons that there is a high entry barrier is the high fixed cost associated with establishing the international transportation network. This includes hubs, ground transportation vehicles, air fleet, etc. Additionally, existing companies can take advantage of the absolute cost advantage achieved by large volume of shipments and economies of scale.

Bargaining power of buyers [ HIGH]The bargaining power of large buyers in shipping service industry is high. Cost associated with switching from one shipping service to another is very low. Therefore, buyers can turn to a shipping provider that offer faster service, lower price, or service innovation with ease. This is especially true for large corporations, like IBM, which ships in large volumes and can bargain quantity discounts.

Bargaining power of suppliers [LOW]The supplier power within this industry is fairly low. Large shipping service provider can affect prices of supplies, like packaging materials. This is because they buy in large quantities and can turn to different suppliers easily.

Threat of substitute products [LOW]There are not many substitutes to shipping. In this day and age where many businesses have strong online presence and a small physical presence, it would be difficult to find a substitute in delivering their product. Shipping services are very much similar to a commodity, in that it is not easily replaced with another service or even a similar service.

Rivalry Amongst Existing Firms[HIGH]Established players in shipping service industry complete rigorously for a market share, the company who responses first to the constantly changing environment wins. Established companies have to strive for continuous improvement in quality, lowering price, and innovation.

There is very low switching cost for consumers in this industry making rivalry even more intense.In addition, intense rivalry is also due to the fact that maintaining the infrastructure of an express delivery company presents an exit barrier due to high fixed costs.

About The Company

Gati Limited At the Threshold of a Big Leap Incorporated on 25th April, 1995 registered office at Secunderabad Provided services ranging from traditional point to point transportation to complex end-to end integrated logistics and supply chain management solutions. Was Leader in Express Cargo movement and Pioneer in Distribution and Supply Chain Management solutions in India. They offered a spectrum of services that were cost efficient and flexible

Operates in three types of business segment viz. Logistics Shipping Fuel Stations14

CRITICAL SUCCESS FACTORS (CSFs) CSF, sometimes referred to as strategic factors, are those which are

vital for organizational success. When strategists consciously look for such factors and take them

into consideration for strategic management, they are likely to be more successful while putting in relatively lesser effort.

Probability Of Impact High High Medium Low

Impact On Business

Medium High High Low

Low Low Low Low

Critical High To be watched

CSFs FOR GATI LTDProbability Of Impact Impact On Business

HighHigh Distribution, Brand Image, Market, Technological International

MediumSocio-Cultural, Economic

Low-

Medium

Regulatory,

-

Low

Political

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ENVIRONMENTAL THREATS AND OPPORTUNITY PROFILE (ETOP)

MARKET ENVIRONMENT: India currently spends 13% of

its GDP on logistics, which is expected to come down to 8.10% due to logistics systems and acceptance of service providers. Indian logistics industry characterized by dominance of the unorganized market. Players can be broadly categorized as local transporters, transporters providing some kind of value added services such as warehousing services, and completely integrated players providing 3PL services. The transportation service service provider segment is completely dominated by small local trucking companies and individual truckers.

Technological Environment: In this new age , with the high degree of sophistication in the

express segment in the transportation market, the old myths of outdated technology and static management systems have been dispelled.

Economic Environment: India has witnessed a sharp increase in trade over the past five

years, led by strong economic growth and liberalization. With increasing exports and India's recognition as a manufacturing hub, international trade has also gone up considerably over the past five years. Consequently, the need for logistics has gone up sharply over the past few years across industries. Express delivery industry witnessed 15% CAGR over the last 3

years.

Regulatory Environment: The core issues for the firm include whether the highly competitive

EDS/courier industry, with no entry or exit barriers and multiple operators (more than 2500 companies) actually need a regulator. Express' courier operators are still seeking an independent regulatory authority to regulate the written communications sector. It is incorrect to presume that the express industry is not regulated

by any other act, rules or norms of the country. They are subject to the jurisdiction of the Consumer Protection Act, 1986, whose jurisdiction the proposed amendment bill will take away.

Political Environment Politics had no great role in the industry

Socio-cultural environment: The express logistics sector, through its added-value

services, has fared better than the road freight industry. Increasing growth propelled by delighted customers with

quality and delivering value beyond their expectations.

International Environment: The competition in the package delivery service is very global. The

presence of FedEx Corporation, UPS, DHL, USPS as well as a host of other smaller companies at home and abroad. As well as competing against bigger players, GATI Ltd must also compete with regional delivery companies and international delivery companies that serve only their country. Competition is not becoming more global due to the fact that

companies are merging and the industry is consolidating and companies are making alliances with each other. These are the visible signs of a shakeout occurring within an industry.

Environmental Sector

Nature of impact

Impact

Market Technological Economic Regulatory

Is dominated by the unorganized sector and Gati Ltd functions in the unorganized sector. High sophisticated technology usage. Liberalization and Globalization has made the industry favorable for investment. Lack of proper regulatory body results in inefficient functioning of industry.

PoliticalSocio-cultural International

No major role is played by it.Service is customized to delight the customer. Intense rivalry and competition prevails in the International Competition.

STRATEGIC ADVANTAGE PROFILE (SAP)

Marketing Capability Factors ( ) Marketing capability factors could be segregated into the

following basic categories: Product Price

Products: Express (Document and non-document) :- this was the basic product of

all express service providers. The delivery time was time bounded and was assured depending upon the distance between pick up and delivery locations. Door to Door (by air and surface) :- under this product, companies offered

an option selection of mode of transport (if the customer did not specify the mode of transport, the consignment were transported by air. In case of heavy consignments or destinations on the trunk route surface mode was used.). Door to airport and airport to door :- Under these products the express

companies took the total responsibility of preparation of legal documentation and procedures.

Price: GATI

can be classified based on their general pricing strategy. GATI must decide whether their approach is to use price as a competitive advantage or to seek competitive advantage in non-price ways.

Discount Pricing Competitive Pricing Full Price Pricing

Financial capability factors ( ) Raising Funds Gati plans its processes effectively to raise funds & make

available for business needs Follow domino discipline in fund management & ensure that fund availability doesnt affect customer value delivery

Controlling Expenditure Build a disciplinary system that ensure that the methods of

monitoring expenditure are reliable. Guidelines to the team members to how they can control expenditure.

Operational capability factors ( ) Gati established modern state-of-art warehouses at Gurgaon,

Ludhiana, Jaipur, Indore, Kolkata and Pondicherry with multilevel stacking features for effectively space utilization. Equipped with stackers ,forklifts , etc , they also offers several benefits and services like online inventory control and monitoring , flexible hiring options and data collection. In Sept. 2004 Gati entered into a special tie-up with India

airlines and launched Gati gold and Gati silver for speedy air delivery of time-sensitive consignments at several major airports in India. It offers value-added services such as flexible delivery options ,

online tracking ,etc. Besides this it is more cost-effective in comparison to other services.

Personnel Capability Factor ( ) The Company has launched a series of innovative HR-

development initiatives including e-HR, which gives complete emoluments and related information of every personnel. manpower that is committed to the growth of the organization. Training continues to be one of the important part of area of HR.

The company has a strength of more than 2000 trained

They were provided opportunity for lateral shift-geographical or

functional and have their talent potentially rewarded.

Information capability Factors ( ) Gatti website was inaugurated in 2002. It aimed at rendering

better services to customers.

GATI

implemented web based ERP called gati@web, comprising GEMS (Gati Enterprise Management System), a custom-developed application, Oracle CRM and Oracle Financial. This is completely a centralized and on-line application. In order to connect to this application, 120 plus locations have been networked through lease lines and VSAT companys central server at its Head Office, GATI.

Set up an alternative disaster recovery site, to supplement the

SWOT Analysis

Strengths: Dominant player in the surface cargo segment in India, which accounts for more than 55% of the total. Niche value additions such as third-party logistics, trucking and warehousing

solutions.

Re-engineered hi-tech warehouses and distributing infrastructure Advanced IT solutions to back up its services.

It provides multi modal connectivity.

Weakness: Insufficient regional and global presence as compared with its competitors. It has been neglecting courier segment

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Opportunity: Expanding economy...WTO agreements Improvement in the logistics infrastructure in the country-better roads,

improved ports etc.. Entry of a large no. of global retailers Increasing investments, booming manufacturing and development of organized retail sectors-provides business potentials to express industries

Threats: Global competitors Direct competition from unorganized sectors.. Space limitations

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Strategies

Expansion through concentration It focuses on services it provide currently. It also focuses on recent customers and new customer

development by providing them customized services.

Expansion through Internationalization They provide services to over 200 countries. The company setup offices in Hong Kong, Thailand,

Malaysia and Indonesia.

Business Policies

Purchase Policy No question on purchase raw material The Gati lettering in an original and unique font which

represents Reliability Speed Discipline It progress in the areas of technology and automation is a response to changes in manufacturing systems, inventory management and supply chain practices across the world.

Financial Policy It reports 73% increase in PBT (Q1 report) Last Dividend was 25%. Annual turnover of 12094 Million out of which 70% from logistics

division, 7% from shipping division and 23% from fuel station division. 70-80% turnover from courier business and 20-30% from cargo business. Growth of logistics, shipping and fuel station are 22.47%, 11% and 4% respectively. GDP is US$692 billion.

Personal Policy Workforce of 2364 employee 512 trainees

For training, it co-opted consultants and resource persons from

reputed institutions such as IIM,NIIT, ICFAI, AIMA etc. Promotion policy opened a transparent career development map for all especially those on the Fast Track. It contributes to education, training and assistance to small industries

Marketing policy 622 out of 626 districts in India Value added services like warehousing, trucking, express and time-

bound cargo. Gati has always tried to stay one step ahead by innovating and transforming its processes, refining service offerings, redefining customer standards internally and externally and using technology to drive up customer satisfaction. It provide multi-modal transportation road, rail, sea and air. collaboration and co-operation with B2B customers and partners 24x7 call centres to understand and manage customer expectations, plan cargos, shipments & routes.

Operational policy It was an ISO 9001:2000 certified company for design, marketing

and providing cargo management services. It offers an integrated Express Distribution and customized Supply Chain Solutions to customers across diverse industry verticals. connectivity across air, road, ocean and rail promise to stay Ahead in reach in service quality, wide network, technology, automation Information through the website, e-mail, SMS and toll free number. Gati launched the first exclusive Cargo Train between Mumbai and Kolkata in association with Indian Railways.

Future plan

Future Strategy Aims to be one-stop service provider in logistics solutions, focusing

on warehousing and infrastructure, express distribution centers, central distribution center, information technology and human resources. By providing contribution, it aimed at strengthening the society by

empowering the weaker segments with education, funding and technical assistance. It is trying to grow at steady rate.

Thank You !!!