See revenue growth at 15%; EBITDA at 30% in FY14: Gati

Logistic player Gati expects to grow revenue at 15 percent and earnings before interest tax depreciation and amortization at 30 percent in current financial year, Mahendra Agarwal, Founder and CEO told CNBC-TV18.

Gati has reported a consolidated sales turnover of Rs 322.23 crore and a net profit of Rs 6.70 crore for the quarter ended Jun '13. Other income for the quarter was Rs 6.54 crore.

Below is the verbatim transcript of the interview

Q: Could you walk us through why the bottom-line has fallen so much. We understand it is down 83 percent on a year on year (YoY) basis, what is your expectation for the full year?

A: Gati has done quite well for June ending accounting year 2012-2013. The top revenue of Gati consolidated has increased to Rs 1290 crore, a increase of 7 percent over the last year and the EBITDA margin is Rs 100 crore, a significant improvement from last year – almost 8 percent of the revenue. We expect next year 2013-14 to be much better though the economy is still quite sluggish. We expect the revenue to increase by 15 percent on a consolidated basis and EBITDA margin will increase double of that – minimum of 30 percent. We have seen this trend in the last quarter. In the last quarter revenue and EBITDA margin both had increased – revenue by 15 percent YoY and EBITDA margin 30 percent YoY. July also the same trend continues.

Q: Also if I tie you down to just the performance this quarter what is it that has led to such an upsurge in your margins from 0.3 percent on a YoY basis – this time they have clocked in nearly 6 percent odd and what is a sustainable run rate that you think you can achieve going forward?

A: Our margin goes up when the revenue goes up because the increase in revenue, the contribution on increased revenue directly goes to the EBITDA.

In Q4 we have seen that our business on pharma, FMCG, electrical and electronics and also auto spare parts has shown good improvement. Our other divisions and subsidiaries have also done better and we expect the same trend to continue in all our businesses of Gati.

Q: Your shipping business has posted a loss in Q4. Will it still be posting a loss in the coming quarter as well?

A: We are not going to have any loss in the shipping division there has been a good turnaround. One of our ships have started operating on the West Coast along with partnership with ISL – a Tata Group company – Kandla to Vallarpadam at Kochi. We started this service last month. In month of July we already have a breakeven and there will be profit from next month which is August onwards. So, that will also add to the bottom-line for 2013-14.