E-commerce slowdown hits GATI

GATI, one of India’s largest parcel and logistics companies, reported a 6% decline in its operating revenue for the July-September period, and blamed an ‘abrupt slowdown’ in certain segments of e-commerce.

The company was able to bring down expenses, including non-cash items, by only about 3.1%.

As a result, the company also swung to a pretax loss of Rs 8.58 cr from a profit of Rs 4.85 in the same quarter last year and a profit of Rs 4.84 in the preceding, June quarter.

Compared to the June quarter, revenue was down 4%.

“The drop in business performance is on account of an abrupt slowdown in cross-border e-commerce and in the local TV-commerce, coinciding with a low seasonality quarter in domestic e-commerce business,” the company said.

“The drop in top line is mainly attributed to low seasonality of e-commerce and cold chain verticals in Q2 FY20 with consequent impact in bottom line,” it added.

The company’s flagship Express Distribution entity, Gati-Kintetsu Express Private Limited (GKEPL), recorded a revenue of Rs 304.2 cr in Q2 as against Rs 300 cr in the preceding quarter, or Q1.

The numbers indicate that the e-commerce sector was indeed slowing in the June quarter.

However, major players — such as Amazon and Flipkart — have claimed that the festival season — which started in October — has been very strong and sales and volumes have increased in keeping with the trend seen in recent years.

Mahendra Agarwal, Founder & CEO of GATI echoed similar sentiments.

“While there is a palpable slowdown in the economy,it is only a question of time before business momentum picks up again in the near term, especially with the upcoming festive season.”

The company delivers over 6 million packages a month and claims to cover 99% of India with its 5,000 vehicles.