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Gati to return to profitability next quarter: Allcargo Logistics

PTI | Mumbai | Updated: 05-06-2020 15:16 IST | Created: 05-06-2020 15:16 IST
Gati to return to profitability next quarter: Allcargo Logistics

Allcargo Logistics expects Gati, the express courier services firm it recently acquired, to return to profitability next quarter, after having been stalled by the coronavirus lockdown in the current quarter

Allcargo Chairman Shashi Kiran Shetty also expects a brighter future for the Hyderabad-based subsidiary as it is awaiting a tax write-back of Rs 50-60 crore through the ongoing dispute settlement scheme and thus close the fiscal year with a healthy bottomline. "We've applied for the Vivad Se Vishwas scheme, under which the government is encouraging taxpayers to end their disputes with taxmen through negotiated settlement. "Gati has a disputed tax claim of Rs 150-160 crore and we hope to settle it at half... and thus will be able to write back at least Rs 50-60 crore by December," Shetty told PTI. After its open offer, Allcargo now controls close to 47 per cent in Gati, and Shetty expects the integration of the two companies over the next 16 months. Allcargo had appointed turnaround experts Alvarez & Marsal to revive Gati and improve the best practices between the two companies. The COVID-19 lockdown had almost crippled the business of Gati. "While April was really bad, from mid-May, the situation began to improve and so far June seems to be normal. But Mumbai being still shuttered is a big drawback," he said. However, Shetty was quick to note that Gati was profitable before the lockdown and the problem is only in the current quarter as he expects to return to full normalcy from the second quarter. Last December, Allcargo announced buying a controlling stake in Gati for around Rs 416 crore and thus entering the express logistics space. Gati has a wide-ranging customer base across corporates, e-commerce companies, as well as small and medium enterprises. It has a presence across 727 districts catering to 19,000 PIN codes. Asked whether Gati will remain a publicly traded entity post-integration, he answered in the affirmative. The Gati acquisition is in line with Allcargo's long-term strategy of strengthening the domestic business and helps it become an end-to-end logistics solutions provider.


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