The Hindu Business Line : Gati Corpn looking to raise $43 million

Gati Corporation has approved an issue of 15.71 lakh shares at Rs 423 per share to AMP Cap investors. The company is looking to raise almost $43 million. The company, according to its Managing Director, Mr Mahendra Agarwal, has a plan of putting in $100 million in the next three years.

Excerpts from CNBC-TV18's exclusive interview.

How much money are you looking to raise? Are you going to be using this for expansion?

We are looking at raising almost $43 million. We have also raised some money through rights issue, which was done about six months ago. In the next three years, we are going to put in $100 million in the company, in addition to $25- 30 million that we have already put in the last couple of years.

Half of this money will come through equity. The balance would come through internal accruals. We are putting all this money to enhance the capability of the company. What are the plans to use the route of equity to raise this cash?

About $15 million has already come from AMP investment. Another $3 million is going to come through the convertible warrants and $20 million through FCCBs. In the EGM, we have already passed the resolution. By next month, this $20 million should come through FCCB. Another $5 million will come from the promoters. We have already raised the balance through the rights issue.

What are your plans to ease your debt interest?

With AMP investment we have already become a debt-free company. This year, we are going to close almost at Rs 400 crore without looking at our fuel station, which brings in about Rs 80 crore. We have already passed a resolution in the EGM that fuel stations will be hived off into its own subsidiary. This Rs 400 crore will go up to Rs 1,000 crore in the next three years. In June 2009, Gati will be a 20-year-old company.

What will be the total equity dilution? What kind of EPS can we expect from Gati in June FY06?

The EPS will be almost Rs 18. Last year, it was Rs 17. So we are looking at an EPS more than that, despite the dilution. When the FCCB gets converted in the future, the total dilution would be almost about 20-22 per cent and the promoters' holding at that time would come down to almost 45 per cent. But we don't expect the EPS to go down. Further, we are expecting the bottomline to almost double than the topline growth.

There was a talk of foreign partnership with TNT. How open are you to that? Are you in conversation with companies?

We were and are not in conversation with any company. Gati is a truly Indian multinational. It is on a very strong footing. It is a leader in express distribution and supply chain solution. With the infusion of this fund, we are going to enhance our capability and are going to create a world-class facility in terms of warehousing.

How soon does the fuel station get hived off into a separate entity?

That will happen in the next two-three months.

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