Gati Ltd has approved a proposal to form a joint venture with Kintetsu World Express (KWE), Japanese logistic services provider with global reach. The joint venture has been christened as ‘Gati-Kintetsu Express’.
While Gati would have 70 per cent stake in the new company, KWE would hold the balance in the joint venture for which it would invest Rs 267.7 crore. Through a business transfer agreement, the express distribution and supply chain business of Gati would be transferred to the new entity.
Gati said that KWE’s investment of Rs 267.7 crore would be through a combination of primary and secondary acquisition of shares and the funds raised would primarily be used to reduce debt. The joint venture would be consolidated in the financials of Gati whose balance-sheet would be significantly deleveraged.
The joint venture would benefit from Gati’s expertise in 3PL and express distribution in India and KWE’s freight forwarding expertise and global customer base. It would also invest in high-end 3PL facilities, including temperature controlled warehouses.