Gati market cap is roughly 336 cr.

 

 

They bring in roughly 70 cr in cash but most of it would be used up to pay off interest worth 50 cr. After dividend not much was left over for growing the business.

 

The stock is down about 50% from last year with most of the damage around Nov 11 when the market feeling was that it would default on FCCBs.

 

This was a hyped stock during the stock market boom with lot of expectations built in. Thereafter they managed to screw it up by growing indiscriminately. It's painful to see that about half of the company's asset built up using debt was in the shipping business which has constantly made losses.

 

The promoter have vision and strive for quality etc. like he (Mahendra the chap at the top) is a big fan of UPS and is somewhat  progressive from a business standpoint. However, corp governance or atleast good decision making is a question mark since they invested so much money in a loss making venture like shipping which is grandiously called "Coast to Coast". Also they have other businesses and most of their share holding is in pledged state.

 

 

Clearly this was a company which needed money. That has now happened via an investment by Kintetsu a Japanese player. The money is about 280 cr for a 30% stake in a hived off logistics business.

 

The promoters seem to be making the right noises. They have admitted mistakes were made and now seem to be interested in a higher market cap. That is very much feasable if they can earn some money by reducing debt further by selling portions of the shipping business assets even if at a loss. 

 

Overall the newer money, renewed promoter interest, new partnership and newer relationships from partnerships (like worldwide deals Kintetsu has with biggies like HP, Dell etc), asset hiving, cash it earns etc make it seem that the company is worth more than market cap (360 cr) + new FCCB (forget the amount but I think it was below 100 cr)+ debt (250 cr remaining). The combined system could make a profit above 50 cr in 1-2 years.

 

 

It's not clear if promoters are just making right noises or will carry the plans through. Again. such promoters can always screw shareholders in novel ways. My personal sense is that like TTK they seem to be intrested in a higher market cap

 

Also, it's not clear how much of the earnings from the JV will be attributed to the listed company. The 50-60 cr number is for the overall combined entity.

Link of interview by Mahendra Aggarwal Link