The directors take pleasure in presenting their Report for the year
 ended June 30,2012.
 
 Financial Highlights                                    (Rs. in mn)
 
                                  Consolidated         Standalone
 
 Particulars                 2011-12     2010-11   2011-12     2010-11
 
 Income                        12890      12113      8013        9081 
 
 Profit before Finance 
 Cost, Depreciation &
 Amortization taxation 
 & Exceptional Item             1802       1007      1697         966
 
 Less: Finance Cost              619        516       471         520
 
 Depreciation & 
 Amortization (Net)              370        254       272         216
 
 Profit before tax & 
 exceptional items               813        237       955         229
 
 Exceptional items              (145)         0         3           0
 
 Profit/(Loss) before tax        668        237       958         229
 
 Less: tax expenses              253         96       238          86
 
 Profit/(Loss) after Tax         415        141       720         143
 
 Add: Balance in Profit and
 Loss brought forward            (62)      (139)      100          21 
 from previous year
 
 Profit Balance available 
 for appropriation               353          2       820         164 
 Appropriations
 
 -Special Interim Dividend        52          0        52           0
 
 -Proposed final dividend         43         43        43          43
 
 -Tax on dividend                 15          7        15           7
 
 -General reserve                 72         14        72          14
 
 Balance Profit/(Loss)
 carried forward                 171        (62)      638         100 
 
 Dividend
 
 Consequent to restructuring of the Company, for the financial year
 2011-12, your directors are pleased to have approved payment of Special
 (Interim) dividend @ 30% on equity share of Rs. 2/- each (Rs. 0.60 per
 equity share). This was paid in the month of July, 2012.
 
 Further, your directors recommend a final dividend of 25% on the share
 capital of Rs. 173 mn forthe year ended June 30,2012.
 
 This along with the special interim dividend, takes the total dividend
 to 55% (Rs. 1. 10 per share) for the financial year 2011-12
 absorbingasumofRs. 11 Omn including dividend tax ofRs. I5mn.
 
 Review of Operations
 
 During the year under review, at consolidated level, your Company
 achieved a turnover ofRs. 12,890 mn as against Rs. 12,113 mn in the
 previous year showing a growth of 6.41 % and EBIDTA of Rs. 1802 mn as
 against Rs. 1007 mn in the previous year, on consolidated basis. Your
 company has recorded a profit before tax ofRs.668 mn and profit after tax
 ofRs. 415 mn as against Rs.237 mn andRs. 141 mn respectively in the previous
 year.
 
 At standalone level, your Company recorded a turnover of Rs. 8,013 mn as
 against Rs. 9081 mn in the previous year. Further profit before tax was Rs.
 958 mn and profit after tax was Rs. 720 mn as againstRs. 229 mn and Rs. 143
 mn respectively in the previous year.
 
 Express Distribution and Supply Chain (EDSC)
 
 In order to strengthen Gati''s leadership position in India and
 establish its global foot print and to create more value to the
 shareholders, your directors have been exploring opportunities for some
 time now. To achieve this, during the year, your company has signed a
 strategic joint venture with Kintetsu World Exress (KWE). KWE is listed
 on Tokyo Stock Exchange and is a global provider of a logistic services
 and solutions to its worldwide clients. Established in the year 1970
 KWE today has a total of 308 offices in 194 cities in 32 countries.
 
 Consequently, your Company formed a subsidiary Company namely
 Gati-Kintetsu Express Pvt. Ltd. (jV Company) and transfered substantial
 part of its ''Express Distribution and Supply Chain''division. The
 division was transferred to JV company under a Business Transfer
 Agreement (BTA) on a going concern basis, along with associated assets,
 liabilities, employees and debts amounting to Rs. 3305 mn with effect
 from March 31,2012. KWE through its affiliates invested Rs. 2,677 mn to
 acquire 30% stake in the JV Company through primary subscription and
 acquiring shares held by Gati Ltd. in the JV Company.  The alliance
 brought together the Company''s market leadership position in EDSC
 solutions in India and KWE''s large base of global logistics customers
 and expertise in meeting the supply chain requirements of global
 corporations. Your Company now holds 70% and KWE and its affiliates
 holds 30% stake in the JV Company. Mr. Mahendra Agarwal, Founder and
 CEO of the Company would continue to provide leadership to the JV
 Company also.
 
 The alliance with Kintetsu World Express will benefit from the
 synergies of being associated with a globally recognized brand in the
 industry and has strong compatibility in culture and core values of
 both organizations. It opens up the global customer base and network of
 KWE for the JV company which has been formed just in time to take full
 advantage of opening up of FDI in retail sector. Many Japanese
 companies have recently increased the pace of Investments in India to
 benefit from Indian consumer growth story. This strategic investment is
 longterm in nature seeking to provide exceptional service to those
 companies who are in the process of establishing manufacturing and
 trading bases in India.
 
 Consequent to the transfer of EDSC division into the JV Company with
 effect from March 31,2012, the revenues pertaining to the last quarter
 of the Financial Year 2011 -12 were not accounted in the books
 (standalone) of the Company.
 
 Coast-to-Coast
 
 The company''s Shipping division continued to face challenges on
 business and operational fronts due to poor economic conditions and
 sector specific business environment leading to unsatisfactory
 performance for this year as well. During the year under review, the
 Company''s shipping division recorded a revenue of Rs. 180 mn and loss
 from operations ofRs. 288 mn against Rs. 923 mn and Rs. 162 mn respectively
 in the previous year.
 
 In order to turn around the Division, your company restructured the
 shipping business into a wholly owned subsidiary -Gati Ship Private
 Limited, as a going concern basis with effect from March 31, 2012
 pursuant to the approval of the shareholders of the Company. Your
 directors now strategise to induct a strategic partner to raise
 required capital to grow the shipping business profitably.
 
 Gati International and Subsidiaries
 
 Gati International, the global wing of Gati Ltd. is one of the leading
 providers of end to end freight forwarding services, specializing in
 air freight and ocean freight shipments and associated supply chain
 value added services.
 
 During the year under review, the International division recorded
 revenue ofRs. 756 mn with operating margins ofRs. 70 mn as againstRs. 639 mn
 &Rs. 59 mn respectively in the previous year.
 
 With a view to focus only on growth markets in APAC, your company is
 consolidating its position in China, Hongkong, Thailand & Singapore.
 
 During the year under review, considering the business potentiality,
 your company has re-structured its investment in international
 subsidiaries to control them through the Singapore subsidiary company
 i.e. Gati Asia Pacific Pte Ltd., (GAP) and closed Gati Holdings Ltd.,
 (GHL) Mauritius, the erstwhile direct subsidiary.
 
 Accordingly, GAP became the direct wholly owned subsidiary of your
 company (earlier step down) and all the step down subsidiaries of GHL
 have now become the step down subsidiaries of GAP.
 
 Accounts of Subsidiaries
 
 The Ministry of Corporate Affairs, New Delhi vide its notification no.
 2/2011 dated February 8,2011 granted subject to fulfillment of certain
 conditions, general exemption from attaching the annual accounts and
 other reports of Company''s subsidiaries, as required under section
 212 of the Companies Act, 1956. Copies of these annual accounts and
 related information will be made available on the Company''s website
 atwww.gati.com and also on request. The annual accounts of the
 subsidiary companies will be made available at the registered office of
 the company and also at the venue during the Annual General Meeting.
 The financial information as required in the above referred
 notification for each subsidiary is published at the end of the
 consolidated financial statements in the Annual Reportforthe year
 2011-12.
 
 Abridged Annual Accounts
 
 As in the last year and in accordance with the SEBI Guidelines and the
 Companies Act, 1956, abridged standalone and consolidated annual
 accounts for the year ended June 30,2012 are being circulated while
 detailed accounts will be made available on request and also at the
 venue of the Annual General Meeting.
 
 Foreign Currency Convertible Bonds (FCCBs)
 
 During the year, your Company had successfully refinanced and repaid
 FCCBs issued in 2006 through afresh issue of FCCBs for an aggregate US$
 22.18 mn on favorable terms. The new FCCBs are due for repayment in
 2016.
 
 Al-Gati Arbitration
 
 Your Company has initiated Arbitration Proceeding with the National
 Aviation Company of India Limited (NACIL) in respect of certain
 disputes that had arisen between your Company and NACIL arising out of
 the Wet Lease Agreement that your Company had entered into with NACIL
 in the year 2007 wherein NACIL had invoked the Bankguarantee ofRs. 300
 mn. Your Company had objected to the wrongful invocation of the
 Bankguarantee and raised claims on NACIL in respect of the continuous
 breaches committed by it during the tenure of the Wet Lease Agreement.
 NACIL has in turn raised certain counter claims on the Company in the
 proceedings. The disputes are pending before the Arbitral Tribunal. No
 orders have been passed against the Company nor have any claims been
 adjudicated in the matter as on date. In the opinion of the Company''s
 Attorneys, no provision is considered necessary at this stage. The
 Auditors in their report have stated their inability to express an
 opinion in the matter.
 
 Future Prospects
 
 Having successfully completed business restructuring and capital
 infusion, your Company would now focus more on the profitable growth of
 e-Commerce, Cold Chain and International Freight Forwarding businesses
 apart from providing strategic direction to all its subsidiaries and
 management of portfolios of investments. Growth in the e-Commerce area
 is expected to touch Rs. 200 billion by 2020 as an Industry. This channel
 of distribution has picked up pace in the last year and faces
 challenges in its supply chain to provide cash on delivery services to
 residential locations across the country. In the E-Commerce space, your
 company is uniquely placed to provide services in Metros, Capitals,
 Tier 2 and 3 cities which will add to the growth of consumption through
 tele shopping and the internet. Your company is therefore increasing
 its capacity to cater to this industry with high quality, value, and
 branded product delivery. Cold chain is also a high growth future
 business where growth is expected to be fuelled by fiscal incentives
 and sector friendly government policies.
 
 Despite modest growth in the last quarter, your Company remains
 optimistic of economic improvement and tap into consumption driven
 industries.
 
 Accounting Policy
 
 Your company has exercised the option under Companies (Accounting
 Standard) Amendment Rules 2009 relating to AS 11 and accordingly,
 appropriate adjustments have been made in the value of fixed assets and
 also the treatment of exchange gain/loss.  The net impact of such
 changes have been disclosed in the financial statements.
 
 Equity Share Capital
 
 Your company has allotted 5,77,387 Equity Shares of Rs.2/- each pursuant
 to exercise of options vested under Employee Stock Option Scheme
 (ESOS). Consequently, as on 30th June, 2012, the company''s share
 capital stood at Rs. 173 mn comprising of 8,65,82,287 equity shares of
 Rs.2/- each fully paid up as compared to Rs. 172 mn comprising
 of8,60,04,900 equity shares ofRs.2/- each in the previous year.
 
 Fixed deposits
 
 As on June 30, 2012, fixed deposits from the public and shareholders
 stood at Rs. 224 mn out of which Rs. 2.20 mn remained unclaimed. There were
 no overdue deposits.
 
 Directors
 
 During the year, your Board co-opted Mr.Yoshinobu Mitsuhashi and Mr.
 Sanjeev Kumar Jain as Additional Directors of the Company with effect
 from June 29, 2012 and July 1, 2012 respectively. Mr. Yoshinobu
 Mitsuhashi is an Independent and Non- Executive Director and Mr.
 Sanjeev Kumar Jain is a Whole Time Director designated as Director -
 Finance. As per the provisions of Section 260 of the Act, both the
 Directors hold the office up to the date of the forthcoming Annual
 General Meeting (AGM) of the Company and are eligible for appointment
 as Directors. Resolutions seeking approval of the members for the
 appointment of Mr. Yoshinobu Mitsuhashi and Mr. Sanjeev Kumar Jain as
 Directors of the Company will be in the forthcoming AGM for your
 approval.
 
 As per Section 256 of Companies Act, 1956 and in terms of Article 115
 of the Articles of Association of the Company Mr. K L Chugh and Dr. P S
 Reddy retire by rotation at the ensuing Annual General Meeting and
 being eligible, offer themselves for reappointment in terms of Article
 115 of the Articles of Association of the company.
 
 The brief profile of the directors who are to be appointed/re-appointed
 forms part of the notes to the notice of the ensuing Annual General
 Meeting.
 
 The remuneration paid to the Managing Director for the year ended June
 30, 2012, turned out to be excess due to inadequate profits. The Board
 of Directors noted the foregoing and considering the comparative
 industry standards and significant role played by the Managing Director
 in turning around and bringing back the Company into track, the Board
 felt that the remuneration paid to him was in line with his long
 experience and expertise and accordingly ratified, confirmed and
 approved, subject to the approval of the Shareholders and of the
 Central Government, the payment of remuneration, in excess of the
 limits prescribed under Schedule XIII of the Act and decided to waive
 the recovery of the excess remuneration paid to him, subject to
 approval of the Central Government in this regard. Post your approval,
 an application in this regard, will be made to Central Government for
 seeking its approval for waiver of the requirement for recovery of
 excess remuneration paid to the Managing Director.
 
 Transfer of unclaimed dividend
 
 Pursuant to the provisions of section 205A (5) of the Companies Act,
 1956, the unclaimed dividend amount pertaining to the financial year
 2003-04 was transferred by the Company to the Investor Education and
 Protection Fund (IEPF) and the unclaimed dividend pertaining to the
 financial year 2004-05 is due for transfer to IEPF. The dividend once
 transferred to Investor Education and Protection Fund cannot be
 claimed.
 
 Directors'' Responsibility Statement
 
 Pursuant to the requirement under section 2I7(2AA) of the Companies
 Act, 1956 with respect to the Directors'' Responsibility Statement, it
 is hereby confirmed:
 
 1.  That in the preparation of the Accounts for the Financial Year
 ended 30th June, 2012, the applicable accounting standards have been
 followed along with proper explanation relating to material departures,
 if any;
 
 2.  That the Directors have selected such accounting policies and
 applied them consistently and made judgments and estimates that were
 reasonable and prudent, so as to give a true and fair view of the state
 of affairs of the Company at the end of the financial year and of the
 profit of the Company for the year under review;
 
 3.  That the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities;
 
 4.  That the Directors have prepared the accounts for the financial
 year ended 30th June, 2012 on a ''going concern'' basis.  Auditors
 
 The Statutory Auditors of the company M/s. R S Agarwala & Co, Chartered
 Accountants, Kolkataand M/s. B K Agarwal & Co, as Branch Auditor who
 shall retire at the conclusion of the ensuing Annual General Meeting
 and are eligible for reappointment as statutory and branch auditors
 respectively for the financial year 2012-13. They have furnished a
 confirmation to the effect that their proposed re-reappointment, if
 made, would be within the limit prescribed under section 224( IB) of
 the Companies Act, 1956, and that they are not disqualified for such
 re-appointment within the meaning of Section 226 of the Companies Act,
 1956.
 
 The Auditors in their report have observed that they are unable to
 express an opinion in regard to the Management''s view that no
 provision presently required pending resolution of the Air India
 Arbitration. The reason therefore has been given in the financial notes
 to the accounts and is also covered in their report.
 
 Personnel
 
 Particulars of employees pursuant to section 217(2A) of the Companies
 Act, 1956 are part of the report and are available to any member on
 request.
 
 Energy, Technology and Foreign Exchange
 
 The information required under the Companies Act (Disclosure of
 particulars in the report of Board of Directors) Rules, 1988 is given
 in the Annexure -1.
 
 Employees Stock Option Scheme
 
 During the year under review, 1,64,000 options were granted and
 accepted under Employee Stock Option Scheme of the Company. The
 disclosure as required pursuant to SEBIESOS guidelines is enclosed as
 Annexure - II.
 
 Corporate Governance
 
 Pursuant to Clause 49 of the Listing Agreement, a report on Corporate
 Governance is enclosed as Annexure-lll.  Acknowledgement
 
 We thank our customers, vendors, investors, bankers, Government
 authorities and shareholders for their continued support during the
 year. We place on record our appreciation of the contribution made by
 employees at all levels.
                    
                               For and On behalf of the Board
 
 Secunderabad,                 K. L. Chugh
 
 August 9,2012                 Chairman