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Directors Report of Gati Ltd.

Mar 31, 2016

The Directors have great pleasure in presenting the report of the
Business and Operations of your Company (''the Compan/ or ''Gati''), along
with the audited financial statements, for the financial year ended
March 3 1, 2016.The Consolidated Performance of your Company and its
subsidiaries has been referred to wherever required.

Financial Highlights

(? in mn)

Consolidated Standalone
Particulars
2015-16 2014-15 2015-16 2014-15

Total Income 16,818 16,627 4,980 4,546

Profit before Finance
Cost, Depreciation &
Amortization,Taxation 1.456 1,538 560 526
& Exceptional item

Less: Finance cost 425 419 175 139

Depreciation and
Amortization Expenses 383 332 162 101

Profit before Tax &
Exceptional items 648 787 223 286

Less: Exceptional items - 29 - 29

Profit before tax 648 758 223 257

Less:Tax expenses 156 192 25 18

Profit before
Minority Interest 492 566 - -

Less: Minority Interest 124 154

Profit after tax 368 412 198 239


Dividend

Your Directors have recommended dividend of 50% (? I per share) for the
financial year ended March 3 1,2016 (previous year 70%, including
special interim dividend of 30%).

Review of Operations

During the year under review, at consolidated level, your Company
achieved a revenue of ? 16,818 mn, EBITDA of ? 1,456 mn, PBT of ? 648
mn and PAT of ? 492 mn as against a revenue of ? 16,627 mn, EBITDA of ?
1,538 mn, PBT of ? 758 mn and PAT of ? 566 mn respectively in the
previous year.

At standalone level, your Company recorded a revenue of ? 4,980 mn,
EBITDA of Rs 560 mn, PBT of ? 223 mn and PAT of ? 198 mn as against a
revenue of ? 4,546 mn, EBITDA of ? 526 mn, PBT of ? 257 mn and PAT of ?
239 mn in the previous year.

e-Commerce

In line with expectations, the e-Commerce industry has been abuzz with
activity through the course of last year.The established e-Commerce
companies have made accelerated progress in terms of customer base
expansion, product portfolio enhancement and new vendor acquisition. A
trend has emerged wherein many new e-Commerce SMEs are mushrooming
across large towns and cities in the country. As per recent reports,
tier 2 and 3 cities have seen a 30% to 50% rise in e-Commerce
transactions.

In such industry context, your company has further evolved its growth
strategy by tapping into the emerging e-Commerce SME segment, while
also increasing its presence in the lower weight segment of established
e-tailers. During the year under review, the e-Commerce division of
your company has recorded a revenue of ? 2,078 mn as against ? 1,274 mn
in the previous period.The number of packages handled has grown in
excess of 70%, as compared with last year.

Subsidiaries

Gati-Kintetsu Express Pvt Ltd.(GKEPL)

GKEPL offers solutions in Express Distribution - Surface, Rail and
Air;Transport Solutions for bulk transportation;Warehousing and end-to-
end Supply Chain Solutions across the logistics value chain. In
Financial Year 2015-16, your flagship subsidiary, GKEPL contributed 68%
to the consolidated business of your Company.

During the year under review, GKEPL recorded a revenue of ? I 1,416 mn,
EBITDA of ? 953 mn and PAT of ? 440 mn against a revenue of ? I 1,424
mn, EBITDA of ? 1, 160 mn and PAT of ? 575 mn in the previous year.

The Express Distribution business registered a YoY growth of 2% (appx)
in Surface Express and Air Express. The charged weight YoY growth of 6%
in Surface Express and 2% in Air Express helped to partially offset the
impact of the fuel price drops vis-a-vis the base year, post the diesel
price deregulation in September 2014.

The Transport Solutions business performance in Financial Year 2015- 16
was severely impacted on account of the loss of the parcel train tender
in the west-east corridor.Your company has recently secured two new
parcel rail tenders for two crucial lanes in this corridor, and these
will help your company to now re-establish its dominance in rail parcel
segment.

Your company intensified its focus on the Warehousing business by
creating a strong pipeline of customers needing 3PL and Fulfilment
services. These efforts have yielded positive results with the SCM
division registering a more than 50% growth in Financial Year 15-16.

Gati Kausar India Ltd. (GKIL)

India''s cold chain sector forms the backbone of the food processing and
food service industry, providing cold storage and refrigerated
transportation for a range of businesses including Packaged Foods,
Quick Service Restaurants, Pharmaceuticals, Animal Protein, Fresh Fruit
and Vegetables. Increasing consumer demand for quality processed food,
stringent regulations for food safety and focus on Good Distribution
Practices (GDP) in pharmaceuticals, have all helped generate greater
need for high-quality cold supply chain solutions. Gati Kausar already
has a visible presence in refrigerated transportation and serves many a
number of popular brands.

During the year under review, Gati Kausar recorded a revenue of ? 494
mn, EBITDA of ? 47 mn and Loss of ? 40 mn against a revenue of ? 462
mn, EBITDA of ? 25 mn and Loss of ? 48 mn in the previous period.

Going forward, Gati Kausar aims to provide end-to-end cold chain
solutions by offering high quality cold storage capability, in addition
to refrigerated trucking. A significant first step in this regard is
the scheduled commissioning of its first Refrigerated Express
Distribution Centers (REDC) in early financial year 16-17. Gati Kausar
plans to build a network of REDCs over time to enable itself to compete
more effectively in the cold chain business.

Consolidated Financial Statements (CFS)

The Consolidated Financial Statements of your Company for the financial
year 2015-16 are prepared in compliance with applicable provisions of
the Companies Act, 2013 read with the Rules issued thereunder,
applicable Accounting Standards and the provisions of Securities and
Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (hereinafter referred to as the
"Listing Regulations"). The consolidated financial statements have been
prepared on the basis of audited financial statements of your Company,
its subsidiaries, as approved by the respective Board of Directors.

The CFS should therefore be read in conjunction with the directors''
report,financial notes,cash flow statements and the individual auditor
reports of the subsidiaries.

Pursuant to provisions of section 129(3) of the Companies Act, 2013, a
statement containing salient features of the financial statements of
the Company''s subsidiaries is attached to the financial statements of
the Company.

Abridged Annual Accounts

Pursuant to the provisions of the first proviso to Section 136(1) of
the Act and Rule 10 of Companies (Accounts) Rules, 2014, the abridged
annual accounts are being sent to all shareholders whose e-mail id''s
are not registered with the Company. The full annual report is
available on the website of your Company at www.gati.com and available
for inspection at the registered office of the Company during working
hours. Any member interested in obtaining the full annual report may
write to the Company Secretary and the same will be furnished on
request.

Air India and Gati Arbitration

In the year 2009, your Company discontinued Freighter Aircraft
operations as per the arrangement with National Aviation Company of
India Ltd (NACIL) (erstwhile Indian Airlines Ltd.,) and now Air India
(Al), due to continuous failure and defaults by NACIL. The Learned
Arbitral Tribunal adjudicating on the disputes between your Company and
Air India Limited in respect of the discontinued freighter operations
of the Company, has passed its Award dated September 17, 2013, whereby,
it has inter alia directed Air India Limited to pay an amount of ?
26.82 Crs to your Company against which an amount of ? 26.59 Crs is
included in the Loans and Advances being the difference between the
amount of bank guarantee invoked by NACIL and claims acknowledged by
the Company. Further, the Learned Tribunal has directed Air India
Limited to pay interest @ 18% per annum on the awarded amount.

Air India Limited took up the matter before the Honorable High Court of
Delhi by filing an application for setting aside the award, in which
the High Court has upheld the Arbitral Tribunal award except the claim
for damages of ?4.97 crores. Both Air India and your Company have filed
cross appeals before the division bench of the Honourable High Court of
Delhi. The Honourable High Court has directed Air India to deposit ?
22.00 crores. Air India has since deposited the amount with the Court
pending adjudication of appeals filed by Air India and your company.
Appeals are also scheduled for hearing shortly. Pending disposal of the
said appeals, the said amount of ? 22.00 only crores having been
deposited in the court has been made over to your company pursuant to
the direction of the division bench of the Honorable High Court of
Delhi.

Future Prospects

By all accounts, India stands alone as an island of hope in an
otherwise volatile, and uncertain, global economy. Recent policy
initiatives and regulatory changes pursued by the government, are aimed
at accelerating India''s GDP growth to 7.6% and beyond, in the near
future. The logistics industry will be a direct beneficiary of this
growth momentum. Equally, the ultimate winner within the logistics
industry will be one who is able to outpace competition by delivering
on the ever increasing demands of service, quality and cost in both B2B
and B2C sectors.

As part of its ''Vision 2020'' exercise, your company has embarked on an
ambitious mission of ramping up its operations towards delivering "a
million packages a day, while ensuring zero delays and zero damages."
To this end, the company has identified three key pillars of change
namely Technology, People and Customer Satisfaction.

Technology - Your Company has always been a pioneer in the logistics
industry when it comes to introducing new technology and adopting
global best practices. In the last few months, your company has
undertaken an ambitious project to automate its all- India network
operations using Barcode Scans on each and every package across the
country. Such expansive technology automation is unprecedented in the
Express Distribution industry in India, especially in the context of
Gati''s scale and network reach. Once this rollout is completed, enroute
track-n-trace will improve from today''s docket level visibility to 100%
visibility at an individual package level, and thereby, operational
issues such as shortages, misrouting, etc. will stand significantly
reduced. Thus, your company is in the process of adding on a
significant new operations capability that will help deliver value to
the customers. Furthermore, your company is evaluating new
state-of-the-art IT technologies for a de-novo development of an
Enterprise Management System, than can handle the varied needs of the
B2B and B2C in an integrated manner, both to help improve efficiency
and productivity in our operations and also to excel satisfying our
customer expectations.

People - Significant changes are being effected in your company to
address the talent needs of the future. The leadership has been re-
organized along inter-dependent functional chains to drive greater
functional excellence and to support an improved performance culture.
Talent mix is also being overhauled to infuse further technology
capability and build higher-order analytics skills at each operating
level.

Customer Satisfaction - In the emerging market context, logistics
business is no more restricted to being a provider of distribution or
warehouse service, but has expanded in scope to becoming an effective
business partner to the customers. Recognizing this change, your
company is continuously evolving its approach by placing customer
satisfaction at the very centre of the business decision making
process. Focus on new product innovations has been ramped up.
Integrated solution selling to address end-to-end logistics needs of
the customer has been initiated as the new go-to-market approach.

Your Directors are very confident that fact based progress on these
three pillars of change will help accelerate your company''s growth
towards achieving the dream of delivering one million packages a day
over the next few years, to our customers satisfaction and to our
shareholders delight.

Fixed deposits (FD)

As on March 31, 2016, fixed deposits of your Company stood at ? 361.44
mn out of which ? 9.94 mn remain unclaimed and there were no overdue
deposits as on that date. During the year under review, your Company
has accepted deposits to the tune of ? 32.83 mn. There was no default
in repayment of deposits or payment of interest thereon during the year
and there are no deposits which are in non- compliance with the
requirements of the Companies Act, 2013.The current fixed deposits
carry a rating of "A Minus" issued by Credit Analysis and Research
Limited (CARE).

Directors & Key Managerial Personnel (KMP)

In accordance with the provisions of Section 152 of the Companies Act,
2013, Mr.Yoshinobu Mitsuhasi, Director who retires by rotation and
being eligible, has offered himself for re-appointment.

The present tenure of Mr. Mahendra Agarwal, Founder & CEO is completion
on July 31, 2016. Further your Directors at its meeting held on April
27, 2016 have approved the re-appointment of Mr. Mahendra Agarwal
w.e.f August 01,2016, without remuneration from your company, for a
further period of five (5) years, subject to the approval of the
shareholders at the ensuing Annual General Meeting.

In compliance with Regulation 36(3) of Securities and Exchange Board of
India (Listing Obligations and Disclosure Requirement) Regulations,
2015, brief resume of all the Directors proposed to be appointed /
re-appointed are attached along with the Notice of the ensuing Annual
General Meeting.

Mr. VSN Raju, Company Secretary & Compliance Officer resigned w.e.f
April 28,2016 and his resignation was accepted by the Board of
Directors.Your directors place on record their sincere appreciation for
the valuable contribution made by Mr.VSN Raju during his tenure.

Apart from above, there have been no changes in Directors and KMP.

Particulars of Employees and related disclosures

The remuneration paid to your Directors is in accordance with the
Nomination and Remuneration Policy formulated in accordance with
Section 178 of the Companies Act, 2013 and Regulation 19 of the
Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirement) Regulations, 2015 (including any statutory
modification(s) or re-enactment(s) for the time being in force).The
salient aspects covered in the Nomination and Remuneration Policy have
been outlined in the Corporate Governance Report which forms part of
this report.

The information required under Section 197 (12) of the Act read with
Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 is annexed as Annexure -A.

Declaration on Independent Directors

Pursuant to sub section (6) of Section 149 of the Companies Act, 2013
and Regulation 16( I )(b) of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirement) Regulations, 2015, all
the Independent Directors of your Company have given declaration that
they have met the criteria of independence as required under the Act
and the regulations.

Remuneration Policy:

Your Directors has, on the recommendation of the Nomination &
Remuneration Committee, framed a policy for selection and appointment
of Directors, Senior Management Personnel and their remuneration.The
Remuneration Policy forms part of the Corporate Governance Report.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the
Securities and Exchange Board of India (Listing Obligation and
Disclosure Requirements) Regulations, 2015, the Board of Directors has
carried out an annual performance evaluation of their own, the
directors individually as well as the evaluation of the working of its
Audit, Nomination & Remuneration and other Committees. The manner in
which the evaluation has been carried out has been explained hereunder.

A structured questionnaire was prepared after taking into consideration
inputs received from the Directors, covering various aspects of the
Board''s functioning such as adequacy of the composition of the Board
and its Committees, Board culture, execution and performance of
specific duties, obligations and governance.

A separate exercise was carried out to evaluate the performance of
individual Directors including the Chairman of the Board, who were
evaluated on parameters such as level of attendance, engagement and
contribution, independence of judgement, safeguarding the interest of
the Company and its minority shareholders etc.The performance
evaluation of the Independent Directors was carried out by the entire
Board, excluding the director being evaluated. The performance
evaluation of the Chairman and the Non-independent Directors was
carried out by the Independent Directors. The Directors expressed their
satisfaction with the evaluation process.

Board Committees

Detailed composition of the mandatory Board committees namely Audit
Committee, Nomination and Remuneration Committee, Corporate Social
Responsibility Committee, Stakeholders Relationship Committee, number
of meetings held during the year under review and other related details
are set out in the Corporate Governance Report which forms a part of
this Report.

Particulars of Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013 read with the
Companies (Meetings of Board and its Powers) Rules, 2014, forms part of
the Financial Statements.

Corporate Social Responsibility (CSR)

In terms of section 135 and ScheduleVII of the Companies Act, 2013 read
with Companies (Corporate Social Responsibility Policy) Rules, 2014
made thereunder, the Board of Directors of your Company have
constituted a CSR Committee.

The CSR Committee has framed a CSR Policy which forms part of the
Annual Report on CSR annexed as Annexure - B to this report.

GKEPL had earmarked a budget of ? 12.57 mn (i.e. 2% of average net
profits of the previous 3 years) for FY 2015-16 and spent ? 12.99 mn
during the year towards CSR activities across India.

Related Party Transactions

Related party transactions that were entered during the financial year
were on an arm''s length basis and were in the ordinary course of
business. There were no materially significant related party
transactions with the Company''s Promoters, Promoter Group, Directors,
Senior Management Personnel or their relatives, which could have had a
potential conflict with the interests of your Company. Accordingly,
Form AOC-2 is not applicable to your Company.

Further all Related Party Transactions are placed before the Audit
Committee for approval. Prior omnibus approval for normal company
transactions is also obtained from the Audit Committee for the related
party transactions which are of repetitive nature as well as for the
normal company transactions which cannot be foreseen and accordingly
the required disclosures are made to the Committee on quarterly basis
in terms of the approval of the Committee.

Your Directors have on the recommendation of the Audit Committee,
adopted a policy to regulate transactions between your Company and its
Related Parties, in compliance with the applicable provisions of the
Companies Act 2013, the Rules made thereunder and the Securities and
Exchange Board of India (Listing Obligations and Disclosures
Requirements) Regulations, 2015.

Meetings of the Board and Committees

Five Meetings of the Board of Directors were held during the year. For
further details on the meetings and the attendance of directors/
members, please refer report on Corporate Governance of this Annual
Report.

Vigil Mechanism

Pursuant to the provisions of section 177(9) & (10) of the Companies
Act, 2013 and Regulation 22 of Securities and Exchange Board of India
(Listing Obligation & Disclosure Requirements) Regulations, 2015, a
Vigil Mechanism for directors and employees to report genuine concerns
about any instance of any irregularity, unethical practice and/ or
misconduct has been established. Further, the details as aforesaid is
available on the website of your company at www.gati.com.

Familiarisation Programme for Independent Directors

Pursuant to Securities and Exchange Board of India (Listing Obligation
& Disclosure Requirements) Regulations, 2015 the Company shall
familiarise the Independent Directors with the Company, their roles,
rights, responsibilities in the Company, nature of the industry in
which the Company operates, business model of the Company, etc.,
through various programmes.

Accordingly, your Company arranged a technical session on January 19,
2016 to familiarize the Independent Directors, the details of which are
disclosed on the website of the company at http://www.
gati.com/pdf/lnvestors/Familiarization-Programmes-for-lndependent-
Directors-Jan-19-2016.pdf.

Directors'' Responsibility Statement

Pursuant to the requirement under section 134(5) of the Companies Act,
2013 with respect to the Directors'' Responsibility Statement relating
to the Company (Standalone), it is hereby confirmed:

1. That in the preparation of the Accounts for the financial year
ended March 31,2016, the applicable accounting standards and schedule
III of the Companies Act, 2013 (including any statutory modification(s)
or re-enactment(s) for the time being in force), have been followed and
there is no material departure;

2. That the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that were
reasonable and prudent, so as to give a true and fair view of the state
of affairs of the Company as at March 3 1,2016 and of the profit and
loss of the Company for the financial year ended March 31,2016;

3. That the proper and sufficient care has been taken for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 (including any statutory
modification(s) or re-enactment(s) for the time being in force) for
safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities;

4. That the accounts have been prepared on ''going concern'' basis, for
the financial year ended March 3 1,2016;

5. That the Company, had laid down internal financial controls and
that such internal financial controls are adequate and were operating
effectively;

6. The directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and such systems are adequate and
operating effectively.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form
MGT-9 in accordance with Section 92(3) of the Companies Act, 2013 read
with Companies (Management and Administration) Rules, 2014, is annexed
as Annexure - C.

Development and Implementation of Risk Management Policy

Your Company has an elaborate risk Management process and has adopted
systematic approach to mitigate risk associated with accomplishment of
objectives, operations and revenues etc. The details of Risk Management
as practiced by your company is provided as part of Management
Discussion and Analysis Report which forms part of this Annual Report.

Internal Financial Controls

Your Company has established and maintained a framework of internal
financial controls and compliance systems. Based on the same and the
work performed by the internal auditors, statutory auditors and
external agencies and the reviews performed by Top Management team and
the Audit Committee, your Directors are of the opinion that your
Company''s Internal Financial Controls were adequate and effective
during the financial year 2015-16.

Further the statutory auditors of your company has also issued an
attestation report on internal control over financial reporting (as
defined in section 143 of Companies Act 2013) for the financial year
ended March 3 1, 2016, which forms part to the Statutory Auditors
Report.

Transfer of unclaimed dividend

Pursuant to the provisions of Companies Act, 1956/2013, the unclaimed
dividend amount pertaining to the financial year 2007-08 was
transferred by your Company to the Investor Education and Protection
Fund (IEPF) and the unclaimed dividend pertaining to the financial year
2009-10 is due for transfer to IEPF.

Auditors

a) Statutory Auditors

Pursuant to the provisions of section 139 of the Act and the rules
framed thereafter, M/s. R S Agarwala and Co., Chartered Accountants,
Kolkata were appointed as statutory auditors of the Company from the
conclusion of the 19th AGM of the Company held on August 5, 2014 till
the conclusion of the 22nd AGM to be held in the year 2017, subject to
ratification of their appointment at every AGM.

b) Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013
and The Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, your Company has appointed M/s. dvmgopal &
Associates, Practising Company Secretaries, to undertake the
Secretarial Audit of your Company.The Report of the Secretarial Audit
is annexed as Annexure - D.

Further, M/s. dvmgopal & Associates, Practising Company Secretaries,
carries out Reconciliation of Share Capital Audit every quarter and the
report thereon is submitted to the Stock Exchanges.

Conservation of Energy,Technology Absorption and Foreign Exchange
Earnings & Outgo

The above information as required under the Companies Act, 2013, is
annexed as Annexure - E.

Employees Stock Option Scheme

Details of the shares issued under Employee Stock Option Scheme (ESOS),
as also the disclosures, in compliance with Section 62 of the Companies
Act, 2013 and Rule 12 of Companies (Share Capital and Debentures)
Rules, 2014 and Securities and Exchange Board of India (Share Based
Employee Benefits) Regulations, 2014 as on March 31, 2016, is annexed
as Annexure - F to this Report.

Further the details as aforesaid is available on the website of your
company at http://www.gati.com/wp-content/uploads/2016/06/
ESOS-disclosure.pdf.

Change in Capital Structure and Listing at Stock Exchanges

The equity shares of your Company continue to be listed and traded on
the BSE Ltd. (BSE) and National Stock Exchange of India Ltd.(NSE)
During the period under review, 2,45,400 equity shares were allotted on
exercise of the options vested under the Employee Stock Option Scheme
and admitted for trading on NSE and BSE. Consequently, the Equity Share
Capital of your Company increased from 8,74,77,537 equity shares of Rs
II- each to 8,77,22,937 equity shares of Rs II- each.

Corporate Governance

Your Company is committed to maintain the high standards of corporate
governance and adhere to the corporate governance requirements set out
by Securities and Exchange Board of India. The Report on corporate
governance as stipulated under Securities and Exchange Board of India
(Listing Obligation & Disclosure Requirements) Regulations, 2015 forms
part of the Annual Report and is annexed as Annexure-G. The requisite
certificate from the Practicing Company Secretary confirming compliance
with the conditions of corporate governance as stipulated under the
aforesaid Regulations is part of this report.

Management Discussion and Analysis (MD&A)

MD&A Report for the financial year under review, as stipulated under
Regulation 34 of Securities and Exchange Board of India (Listing
Obligations & Disclosure Requirements) Regulations, 2015, is presented
in a separate section forming part of the Annual Report.

General

Your Directors state that no disclosure or reporting is required in
respect of the following items as there were no transactions on these
items during the year under review:

1. Issue of equity shares with differential rights as to dividend,
voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of
your Company under any scheme save and except ESOS referred to in this
Report.

3. No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern status and Company''s
operations in future.

4. During the year under review, there were no cases filed pursuant to
the Sexual Harassment of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013.

5. There were no material changes commitments affecting the financial
position of your Company between the end of financial year (March
31,2016) and the date of the report (April 27,2016).

Acknowledgment

Your Directors thank various departments of Central and State
Government, Organizations and Agencies for the continued help and
co-operation extended by them to your company. Your Directors also
gratefully acknowledge all stakeholders of the Company viz. members,
customers, dealers, vendors, Financial Institutions, banks and other
business partners for the excellent support received from them during
the year. Your Directors place on record their sincere appreciation to
all employees of the Company for their unstinted commitment and
continued contribution to the Company.

For and on behalf of the Board

Place: Hyderabad K L Chugh

Date:April 27,2016 Chairman

DIN: 00140124


Mar 31, 2015

Dear Members,

As members are aware the Promoter family embarked upon the express distribution business way back in 1989 and incorporated a company to augment the business in 1995 which has now completed 25 years of useful existence and celebrated the silver jubilee earlier this year. Your Directors are now pleased to present the 20th Annual Report and the Audited Financial Statements of your company for the financial year ended March 31,2015.

During the financial year 2013-14, your Board of Directors changed the financial year from "July - June" to "April - March" in line with the provisions of the Companies Act, 2013. Consequently, the period under review consists of 12 months i.e. April 2014 to March 2015 and the previous financial year 2013-14 consists of 9 months i.e. July 2013 to March 2014. As such the financials of the two periods are not readily comparable.

Financial Highlights (Rs. in mn) Consolidated Particulars 2014-15 2013-14 (9 m) (9 m)

Total Income 16,627 11,272

Profit before Finance Cost, Depreciation & Amortization, Taxation 1,538 947 & Exceptional item

Less: Finance cost 419 325

Depreciation and Amortization (Net) 332 221

Profit before tax & exceptional items 787 401

Less: Exceptional items 29 0

Profit before tax 758 401

Less:Tax expenses 192 118

PAT before minority interest 566 283

Less: Minority interest 154 49

Profit after tax 412 234

Transferred to general reserve - -

Special Interim dividend* - -

Proposed dividend* - -

Balance profit transferred to surplus account - - (Rs. in mn) Standalone Particulars 2014-15 2013-14 (9 m) (9 m)

Total Income 4,546 2,626

Profit before Finance Cost, Depreciation 526 216 & Amortization, Taxation & Exceptional item

Less: Finance cost 139 47

Depreciation and Amortization (Net) 101 40

Profit before tax & exceptional items 286 129

Less: Exceptional items 29 0

Profit before tax 257 129

Less:Tax expenses 18 (77)

PAT before minority interest - -

Less: Minority interest - -

Profit after tax 239 206

Transferred to general reserve 24 21

Special Interim dividend 52 --

Proposed dividend 70 61

Balance profit transferred to 93 124 surplus account

There is no dividend distribution tax in view of set off u/s.115-O of the Income Tax Act, 1961.

Credit Rating

Due to continued strong performance of the company, Company''s credit rating has been improving over the years as reflected below.

Instrument Rating

Gati Ltd - Long Term Facilities A minus

Gati-KWE - Long Term Facilities A

Gati-KWE - Short Term Facilities A1 plus

The improved ratings has significantly reduced the effective cost of borrowing.

Change in Capital Structure and Listing at Stock Exchanges

The equity shares of your Company continue to be listed and traded on the BSE Ltd and National Stock Exchange of India Ltd. During the period under review, 2,13,450 equity shares were allotted on exercise of the options vested under the Employee Stock Option Scheme, and admitted for trading on NSE and BSE. Consequently, the Equity Share Capital of the Company increased from 8,72,64,087 equity shares of Rs 2/- each to 8,74,77,537 equity shares of Rs 2/- each.

Dividend

During the year under review, to mark the completion of 25 years in business, your Directors approved payment of special interim dividend @ 30% on equity shares of Rs.2/- each (Rs.0.60 per share). This was paid in December 2014.

The Directors have now recommended a final dividend of 40% (Rs. 0.80 per share) for the year ended March 31, 2015 (previous year 35%). This together with the special interim dividend already paid, makes a total dividend of 70% (Rs. 1.40 per share) for the financial year 2014-15 (previous year total of 35%).

Review of Operations

During the year under review, at consolidated level, your Company achieved a revenue of Rs. 16,627 mn, EBITDA of Rs. 1,538 mn, PBT of Rs. 758 mn and PAT of Rs. 566 mn as against a revenue of Rs. 11,272 mn, EBITDA of Rs. 947 mn, PBT of Rs. 401mn and PAT of Rs. 283 mn respectively in the previous period (9 months).

At standalone level, your Company recorded a revenue of Rs. 4,546 mn, PBT of Rs. 257 mn and PAT of Rs. 239 mn as against a revenue of Rs. 2,626 mn, PBT of Rs. 129 mn and PAT of Rs. 206 mn in the previous period (9 months).

e-Commerce

The e-Commerce business is growing at a CAGR of 125% over the last four years and will continue to soar for the next couple of years. During the period under review, the Company forayed into e-fulfilment centers by setting up five (5) e-fulfilment centers in major cities complemented with a spectrum of other solution offerings such as packaging, reverse logistics, and consolidation services. The comprehensive portfolio would facilitate the Company to penetrate into the E-Commerce ecosystem deeply and increase its footprint across the package delivery value chain. On the technology front, The Company has implemented bar code scanners to improve inventory control; CCTV surveillance system is built to strengthen the security and quality of service; and delivery personnel have been provided with tablets to enable real time tracing & tracking of shipments, CoD and other parameters of delivery.

With the Indian e-Commerce industry set to grow at a rapid pace, clocking 12 million orders per month by CY16 (Source: Accel Partners''), we believe that logistics service providers will realize mammoth growth opportunities. We believe that as one of the leading e-Commerce logistics service providers, we are strategically placed to benefit from the expected growth in the industry and our strategic initiatives remain to support the volume growth through investment in new facilities, infrastructure and technology.

During the year under review, e-Commerce division recorded a revenue of Rs. 1,274 mn as against a revenue of Rs. 408 mn in the previous period (9 months).

Indian Subsidiaries

Gati-Kintetsu Express Pvt Ltd. (Gati-KWE)

During the financial year under review, Gati-KWE, the flagship subsidiary, contributed 69% to the business of the Company. Gati- KWE offers solutions in Express Distribution - Road, Rail and Air; Transport Solutions for bulk transportation, e-fulfilment and Supply Chain Solutions that span end to end of the value chain. The financial year 2014-15 has been a challenging year, impacted adversely by slow growth of economy. GDP and IIP growth have been at 7.4 % and 2.8 % respectively during the year.

Gati-KWE commands leadership position in road transportation business, and second in Air cargo transportation. In Express Road category, your Company has registered a growth of 12% in (YoY). In Air Cargo space, your Company has registered healthy growth of 23% (YoY) in spite of weak growth of industry. The Transport Solutions business had a de-growth of 2% over the previous year due to operational challenges. Gati-KWE is first 3PL Company to introduce e-fulfilment services for e-commerce industry and is successfully running 5 e-fulfillment centers.

Gati-KWE understands the value of quality services. The Company has taken significant steps to improve the quality through automation of the processes like introduction of CCTV Tablets and Scanners to reduce defects and improve service efficiency levels. Gati-KWE has successfully run pilot project of bar-coding all packages and will be the first Express Cargo Company to introduce 100% barcode scanning of cargo. As a process, Gati-KWE is heading towards culture driven quality approach from initiative driven approach through continuous implementation of initiatives like 5S implementation, Service Quality standardisation.

During the year under review, Gati-KWE recorded a revenue of Rs. 11,424 mn, EBITDA of Rs. 1,160 mn and PAT of Rs. 575 mn against a revenue of Rs. 7,836 Mn, EBITDA of Rs. 837 mn and PAT of Rs. 369 mn in the previous period (9 months).

Project Udaan, a comprehensive program under implementation by Gati-KWE for enterprise transformation has yielded positive results and believe that it can drive the Company to higher levels of efficiency in the coming years. Under project Udaan various inter disciplinary initiatives have been taken on cost and revenue side to improve profitability of the Company by unlocking value and improving efficiency. Whilst in the first year, the project primarily drove short term initiatives to bring a positive change and momentum, it is also in the process of implementing structural changes around organisation structure, network design and capacity. Impact of short term initiatives is visible on efficiency and capability and are confident that the long term initiatives will enable us to become robust information driven lean and agile organisation.

Gati-KWE has grown in terms of Capacity, capabilities and overall organizational efficiencies. In the current year, Gati-KWE is poised for an exciting period of growth and expansion, as it envisages making informed structural changes based on advanced analytical tools around network & route optimization. To set new standards and excel beyond the expectations of all our stakeholders is the goal for the year, and the Company is confident achieving this goal.

Gati Kausar India Ltd. (GKIL)

Valued at Rs. 132 billion in 2012, the Indian cold chain industry is expected to grow at a CAGR of 16 percent until Fiscal 2017 (Source: Accel Partners'').Transportation is expected to grow at a higher CAGR of 18 percent as compared to storage, which is expected to grow at a CAGR of 16 percent during Fiscal 2017. With an established presence in cold chain, GKIL is well positioned and will be able to capitalize on the growth opportunity that this presents. Our growth strategy for cold chain operations, is to complement our existing delivery capabilities with future cold chain development with Pan India presence. Likewise, in past year and this year both, we will be investing ahead by strengthening our sales structure and operational processes to emerge as an integrated supply chain solution provider.

With a view to align and to seize the opportunities in the cold chain emerging market, Gati Kausar has raised Rs.1500 Mn from Mandala Capital AG Ltd. and Mandala Agribusiness Investments II Ltd. Out of the Rs.1500 Mn, Rs. 300 Mn has been invested in the form of Equity shares and Compulsory Convertible Preferential shares (CCPS) and the remaining Rs. 1200 Mn shall be invested in the form of Non- Convertible Debentures cum Bonds (Bonds). The funds raised will be utilized primarily for building a network of cold warehouses across the country over the next three years thus enabling the Company to offer integrated cold chain logistics and supply chain management, as well as value added services. With an existing fleet of 220 reefer trucks, Gati Kausar intends to build synergies for its customers by offering both reefer storage and transportation under one umbrella as the company will have strong and right mix of portfolio which will enable it to achieve its long term objectives. Multiple growth drivers exist for Gati Kausar as a cold chain solution provider which can aligned to globally fast emerging market of dairy, sea foods, pharma, meat products along with preserving, storing of agri products and thus increasing profitability to the company and returns to its investors.

During the year under review, GKIL recorded a revenue of Rs. 462 mn, EBITDA of Rs. 25 mn and Loss of Rs. 48 mn against a revenue of Rs. 358 mn, EBITDA of Rs. 34 mn and loss of Rs. 39 mn in the previous period (9 months).

Overseas Subsidiaries & Associates

During the year under review, two step down subsidiaries viz, Gati Cargo Malaysia SDN BHD, Malaysia and Gati China Holdings Limited, Mauritius have been liquidated due to unviable operations.

Gati Ship Ltd. (GSL)

In May 2014, your Company divested 12.09% stake in GSL, and GSL has since become an associate. Further, GSL has discontinued its operations and has settled all its major liabilities and exited from all major commercial contracts successfully. This has helped the Company to reduce the losses significantly and stopped further losses in future.

GSL ceased to be a subsidiary with effect from May 16, 2014 and accordingly the consolidated accounts consists of the performance of the Company till May 15, 2014.

A report on the financial position / performance of each of the subsidiaries, associates and joint ventures forms part of the consolidated financial statements.The Policy for determining material subsidiaries has been posted on the Company''s website at: http:// www.gati.com/images/pdf/investors/announcements/Policy-on- material-subsidiaries.pdf.

Special Reserve

During the year under review, the Irrecoverable advances to subsidiary Gati Ship Limited of Rs.238.44 Mn net of Rs.3.02 Mn realised on sale of 12,10,000 equity shares of Gati Ship Limited, investment in Gati Ship Limited of Rs. 1,080.10 Mn, loss on transfer of shipping division in Gati Limited during F.Y 2011-12 of Rs. 1,101.90 Mn and other losses Rs. 142.84 Mn have been adjusted against the Special Reserve in the Consolidated Balance Sheet. All the above accounting treatment is in accordance with the Scheme of Arrangement approved by the Honourable High Court of Andhra Pradesh vide their order dated March 19, 2013. The statutory auditors have drawn attention to these adjustments in their report as a matter of emphasis.

Consolidated Financial Statements (CFS)

In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report.

The CFS should therefore be read in conjunction with the directors'' reports, financial notes, cash flow statements and the individual auditor reports of the subsidiaries.

Abridged Annual Accounts

Pursuant to the provisions of the first proviso to Section 136(1) of the Act and 10 of Companies (Accounts) Rules, 2014) the abridged annual accounts is being sent electronically to all shareholders. The full annual report is available on the website of the Company at www. gati.com and available for inspection at the registered office of the Company during working hours. Any member interested in obtaining the full annual report may write to the Company Secretary and the same will be furnished on request.

Air India and Gati Arbitration

In the year 2009, the Company discontinued Freighter Aircraft operations as per the arrangement with National Aviation Company of India Ltd (NACIL) (erstwhile Indian Airlines Ltd.,) and now Air India (AI), due to continuous failure and defaults by NACIL. The Learned Arbitral Tribunal adjudicating on the disputes between the Company and Air India Limited in respect of the discontinued freighter operations of the Company, has passed its Award dated September 17, 2013, whereby, it has inter alia directed Air India Limited to pay an amount of Rs. 26.82 mn to the Company against which an amount of Rs. 26.59 mn is included in the Loans and Advances being the difference between the amount of bank guarantee invoked by NACIL and claims acknowledged by the Company. Further, the Learned Tribunal has directed Air India Limited to pay interest @ 18% per annum on the awarded amount. Air India has preferred an application in the Delhi High Court inter alia seeking setting aside of the Award against which objection has been filed. The matter is awaiting disposal by the High Court.

Future Prospects

The new Government initiatives like "Make in India" and possible implementation of GST in the near future would give further impetus to the logistics industry and with the companies PAN India network including cold chain transportation would augment profitability to the company and improve shareholders value. The guidance for the company looks optimistic on the back of improving macro-economic outlook, rising consumer confidence levels and growth-friendly government policies.

The Company''s flagship subsidiary, Gati-KWE is poised for better growth through solution selling by integrating warehousing, distribution along with other value added services. In the e-Commerce space, your Company is uniquely placed to provide services in all weight categories and across Metros, State Capitals, Tier two and three cities, which is the growing need of the e-Commerce industry. In e-Commerce solutions, your Company is integrating supply chain solutions and distribution through e-fulfillment centres. The e-Commerce vertical has potential to register multi fold growth (YoY). The Company''s focus will be to explore and tap more e-fulfillment centres to cater growing demand of e-Com Companies.

Fixed deposits (FD)

As on March 31, 2015, fixed deposits of the Company stood at Rs. 475.81 mn out of which Rs. 10.31 mn remain unclaimed and there were no overdue deposits as on that date. During the year under review, your Company has accepted deposits to the tune of Rs. 252.58 mn. There was no default in repayment of deposits or payment of interest thereon during the year and there are no deposits which are in non-compliance with the requirements of the Companies Act, 2013.

Directors & Key Managerial Personnel (KMP)

Ms. Sheela Bhide has been appointed as an Additional Directorin the category of Woman Director and Independent director pursuant to section 149 of the Act w.e.f. August 6, 2014 in accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, who shall hold office till the ensuing Annual General Meeting of the Company.

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Sanjeev Jain, Director-Finance who retires by rotation and being eligible, has offered himself for re-appointment.

The brief profiles of the directors who are to be appointed / re- appointed forms part of the notes and explanatory statement to the notice of the ensuing Annual General Meeting.

Pursuant to the provisions of Section 203 of the Companies Act, 2013the appointments of Mr. Mahendra Agarwal, Founder & CEO, Mr. Sanjeev Jain, Director Finance and Mr. VSN Raju, Company Secretary as Key Managerial Personnel of the Company was formalized

Particulars of Employees and related disclosures

The information required under Section 197(12) of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given as Annexure - A.

Declaration on Independent Directors

All the Independent Directors confirmed that they have met the criteria of independence as required under Section 149 of the Companies Act, 2013.

Remuneration Policy:

Your Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy forms part of the Corporate Governance Report.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and other Committees. The manner in which the evaluation has been carried out has been explained hereunder.

A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of attendance, engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board, excluding the director being evaluated.. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors. The Directors expressed their satisfaction with the evaluation process.

Particulars of Loans, Guarantees & Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 forms part of the Financial Statements.

Corporate Social Responsibility (CSR)

In terms of section 135 and Schedule VII of the Companies Act, 2013 read with rules made thereunder, the Board of Directors of your Company have constituted a CSR Committee.

CSR Committee of the Board has framed a CSR Policy which forms part of the Annual Report on CSR which is given as Annexure - B.

Gati-KWE has earmarked a budget of Rs. 7.67 mn (i.e. 2% of average net profits of the previous 3 years) for FY 2014-15 and spent Rs. 7.91 mn during the year towards CSR activities across India.

Related Party Transactions

Related party transactions that were entered during the financial year were on an arm''s length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company''s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company.Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its approval and the particulars of contracts entered during the year as per Form AOC-2 is given as Annexure - C.

Meetings of the Board

Six Meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance of this Annual Report.

Vigil Mechanism

Pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at: http://www.gati.com/images/pdf/ investors/Gati-Vigil-Mechanism-Policy.pdf.

Familiarisation Programme for Independent Directors

Pursuant to Clause 49 of the Listing Agreement, the Company shall familiarise the Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc., through various programmes.

Accordingly, the Company has arranged a technical session on December 6, 2014 to familiarize the Independent Directors about their roles, responsibilities and duties as Independent Directors. The details of the familiarisation programme has been disclosed on the website of the Company at: http://www.gati.com/images/pdf/ investors/Familiarisation-Programme-for-Independent-Directors.pdf.

Directors'' Responsibility Statement

Pursuant to the requirement under section 134(5) of the Companies Act, 2013 with respect to the Directors'' Responsibility Statement relating to the Company (Standalone), it is hereby confirmed:

1. That in the preparation of the Accounts for the period ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, as explained in earlier paragraph;

2. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year under review;

3. That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. That the accounts have been prepared on a ''going concern'' basis, for the period ended March 31,2015.

5. That the Company, had laid down internal financial controls and that such internal financial controls are adequate and were operating effectively.

6. The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT-9 is given as Annexure - D.

Development and Implementation of Risk Management Policy

Your company has a robust Risk Management Policy which has been implemented and placed effectively. The Company has been addressing various risks impacting the Company which includes the identification of various elements of risk impacting the company and mitigation of the same.

The details of Risk Management as practiced by the company is provided as part of Management Discussion and Analysis Report which forms part of this Annual Report.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

Transfer of unclaimed dividend

Pursuant to the provisions of section 205A (5) of the Companies Act, 1956, the unclaimed dividend amount pertaining to the financial year 2006-07 was transferred by the Company to the Investor Education and Protection Fund (IEPF) and the unclaimed dividend pertaining to the financial year 2007-08 is due for transfer to IEPF.

Auditors

a) Statutory Auditors

M/s. RS Agarwala and Co, Chartered Accountants, Kolkata were appointed as the statutory auditors of the company at the 19th AGM held on August 5, 2014, for a period of three (3) years, subject to ratification at every AGM. The Company has received letter to the effect that the ratification of appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment. As required under Clause 49 of the Listing Agreement, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

b) Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s dvm gopal & associates, a firm of Practising Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is given as Annexure - E.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo

The above information as required under the Companies Act, 2013 is given as Annexure - F.

Employees Stock Option Scheme

Details of the shares issued under Employee Stock Option Scheme (ESOS), as also the disclosures in compliance with Section 62 of Companies Act, 2013 and Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 and SEBI (Share Based Employee Benefits) Regulations, 2014 and SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines,1999 as on March 31, 2015 is given as Annexure - G to this Report.

Corporate Governance

The Company is committed to maintain the high standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Report on corporate governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report and is given as Annexure - H.

The requisite certificate from the Practicing Company Secretary confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49 forms part of the report.

Management Discussion and Analysis (MDA)

MDA is provided as a separate section in the annual report.

General

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.

3. Save as provided in this report, neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

5. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

6. There were no material changes / commitments affecting the financial position of the Company between the end of financial year (March 31,2015) and the date of the report (April 28, 2015).

Acknowledgment

Your Company is grateful to the customers and business partners for their support and encouragement especially in the time of slow economic growth.Your Board is appreciative of the passion, dedication and commitment demonstrated on the job by all the employees.Your Directors wish to place on record their gratitude to the Customers, Government, Financial Institutions, Banks and Shareholders for their continuing support, guidance, and assistance over the years.

For and on behalf of the Board

Place: Hyderabad K L Chugh Date: April 28, 2015 Chairman DIN: 00140124


Jun 30, 2012

The directors take pleasure in presenting their Report for the year ended June 30,2012.

Financial Highlights (Rs. in mn)

Consolidated Standalone

Particulars 2011-12 2010-11 2011-12 2010-11

Income 12890 12113 8013 9081

Profit before Finance Cost, Depreciation & Amortization taxation & Exceptional Item 1802 1007 1697 966

Less: Finance Cost 619 516 471 520

Depreciation & Amortization (Net) 370 254 272 216

Profit before tax & exceptional items 813 237 955 229

Exceptional items (145) 0 3 0

Profit/(Loss) before tax 668 237 958 229

Less: tax expenses 253 96 238 86

Profit/(Loss) after Tax 415 141 720 143

Add: Balance in Profit and Loss brought forward (62) (139) 100 21 from previous year

Profit Balance available for appropriation 353 2 820 164 Appropriations

-Special Interim Dividend 52 0 52 0

-Proposed final dividend 43 43 43 43

-Tax on dividend 15 7 15 7

-General reserve 72 14 72 14

Balance Profit/(Loss) carried forward 171 (62) 638 100

Dividend

Consequent to restructuring of the Company, for the financial year 2011-12, your directors are pleased to have approved payment of Special (Interim) dividend @ 30% on equity share of Rs. 2/- each (Rs. 0.60 per equity share). This was paid in the month of July, 2012.

Further, your directors recommend a final dividend of 25% on the share capital of Rs. 173 mn forthe year ended June 30,2012.

This along with the special interim dividend, takes the total dividend to 55% (Rs. 1. 10 per share) for the financial year 2011-12 absorbingasumofRs. 11 Omn including dividend tax ofRs. I5mn.

Review of Operations

During the year under review, at consolidated level, your Company achieved a turnover ofRs. 12,890 mn as against Rs. 12,113 mn in the previous year showing a growth of 6.41 % and EBIDTA of Rs. 1802 mn as against Rs. 1007 mn in the previous year, on consolidated basis. Your company has recorded a profit before tax ofRs.668 mn and profit after tax ofRs. 415 mn as against Rs.237 mn andRs. 141 mn respectively in the previous year.

At standalone level, your Company recorded a turnover of Rs. 8,013 mn as against Rs. 9081 mn in the previous year. Further profit before tax was Rs. 958 mn and profit after tax was Rs. 720 mn as againstRs. 229 mn and Rs. 143 mn respectively in the previous year.

Express Distribution and Supply Chain (EDSC)

In order to strengthen Gati's leadership position in India and establish its global foot print and to create more value to the shareholders, your directors have been exploring opportunities for some time now. To achieve this, during the year, your company has signed a strategic joint venture with Kintetsu World Exress (KWE). KWE is listed on Tokyo Stock Exchange and is a global provider of a logistic services and solutions to its worldwide clients. Established in the year 1970 KWE today has a total of 308 offices in 194 cities in 32 countries.

Consequently, your Company formed a subsidiary Company namely Gati-Kintetsu Express Pvt. Ltd. (jV Company) and transfered substantial part of its 'Express Distribution and Supply Chain'division. The division was transferred to JV company under a Business Transfer Agreement (BTA) on a going concern basis, along with associated assets, liabilities, employees and debts amounting to Rs. 3305 mn with effect from March 31,2012. KWE through its affiliates invested Rs. 2,677 mn to acquire 30% stake in the JV Company through primary subscription and acquiring shares held by Gati Ltd. in the JV Company. The alliance brought together the Company's market leadership position in EDSC solutions in India and KWE's large base of global logistics customers and expertise in meeting the supply chain requirements of global corporations. Your Company now holds 70% and KWE and its affiliates holds 30% stake in the JV Company. Mr. Mahendra Agarwal, Founder and CEO of the Company would continue to provide leadership to the JV Company also.

The alliance with Kintetsu World Express will benefit from the synergies of being associated with a globally recognized brand in the industry and has strong compatibility in culture and core values of both organizations. It opens up the global customer base and network of KWE for the JV company which has been formed just in time to take full advantage of opening up of FDI in retail sector. Many Japanese companies have recently increased the pace of Investments in India to benefit from Indian consumer growth story. This strategic investment is longterm in nature seeking to provide exceptional service to those companies who are in the process of establishing manufacturing and trading bases in India.

Consequent to the transfer of EDSC division into the JV Company with effect from March 31,2012, the revenues pertaining to the last quarter of the Financial Year 2011 -12 were not accounted in the books (standalone) of the Company.

Coast-to-Coast

The company's Shipping division continued to face challenges on business and operational fronts due to poor economic conditions and sector specific business environment leading to unsatisfactory performance for this year as well. During the year under review, the Company's shipping division recorded a revenue of Rs. 180 mn and loss from operations ofRs. 288 mn against Rs. 923 mn and Rs. 162 mn respectively in the previous year.

In order to turn around the Division, your company restructured the shipping business into a wholly owned subsidiary -Gati Ship Private Limited, as a going concern basis with effect from March 31, 2012 pursuant to the approval of the shareholders of the Company. Your directors now strategise to induct a strategic partner to raise required capital to grow the shipping business profitably.

Gati International and Subsidiaries

Gati International, the global wing of Gati Ltd. is one of the leading providers of end to end freight forwarding services, specializing in air freight and ocean freight shipments and associated supply chain value added services.

During the year under review, the International division recorded revenue ofRs. 756 mn with operating margins ofRs. 70 mn as againstRs. 639 mn &Rs. 59 mn respectively in the previous year.

With a view to focus only on growth markets in APAC, your company is consolidating its position in China, Hongkong, Thailand & Singapore.

During the year under review, considering the business potentiality, your company has re-structured its investment in international subsidiaries to control them through the Singapore subsidiary company i.e. Gati Asia Pacific Pte Ltd., (GAP) and closed Gati Holdings Ltd., (GHL) Mauritius, the erstwhile direct subsidiary.

Accordingly, GAP became the direct wholly owned subsidiary of your company (earlier step down) and all the step down subsidiaries of GHL have now become the step down subsidiaries of GAP.

Accounts of Subsidiaries

The Ministry of Corporate Affairs, New Delhi vide its notification no. 2/2011 dated February 8,2011 granted subject to fulfillment of certain conditions, general exemption from attaching the annual accounts and other reports of Company's subsidiaries, as required under section 212 of the Companies Act, 1956. Copies of these annual accounts and related information will be made available on the Company's website atwww.gati.com and also on request. The annual accounts of the subsidiary companies will be made available at the registered office of the company and also at the venue during the Annual General Meeting. The financial information as required in the above referred notification for each subsidiary is published at the end of the consolidated financial statements in the Annual Reportforthe year 2011-12.

Abridged Annual Accounts

As in the last year and in accordance with the SEBI Guidelines and the Companies Act, 1956, abridged standalone and consolidated annual accounts for the year ended June 30,2012 are being circulated while detailed accounts will be made available on request and also at the venue of the Annual General Meeting.

Foreign Currency Convertible Bonds ("FCCBs")

During the year, your Company had successfully refinanced and repaid FCCBs issued in 2006 through afresh issue of FCCBs for an aggregate US$ 22.18 mn on favorable terms. The new FCCBs are due for repayment in 2016.

Al-Gati Arbitration

Your Company has initiated Arbitration Proceeding with the National Aviation Company of India Limited ("NACIL") in respect of certain disputes that had arisen between your Company and NACIL arising out of the Wet Lease Agreement that your Company had entered into with NACIL in the year 2007 wherein NACIL had invoked the Bankguarantee ofRs. 300 mn. Your Company had objected to the wrongful invocation of the Bankguarantee and raised claims on NACIL in respect of the continuous breaches committed by it during the tenure of the Wet Lease Agreement. NACIL has in turn raised certain counter claims on the Company in the proceedings. The disputes are pending before the Arbitral Tribunal. No orders have been passed against the Company nor have any claims been adjudicated in the matter as on date. In the opinion of the Company's Attorneys, no provision is considered necessary at this stage. The Auditors in their report have stated their inability to express an opinion in the matter.

Future Prospects

Having successfully completed business restructuring and capital infusion, your Company would now focus more on the profitable growth of e-Commerce, Cold Chain and International Freight Forwarding businesses apart from providing strategic direction to all its subsidiaries and management of portfolios of investments. Growth in the e-Commerce area is expected to touch Rs. 200 billion by 2020 as an Industry. This channel of distribution has picked up pace in the last year and faces challenges in its supply chain to provide cash on delivery services to residential locations across the country. In the E-Commerce space, your company is uniquely placed to provide services in Metros, Capitals, Tier 2 and 3 cities which will add to the growth of consumption through tele shopping and the internet. Your company is therefore increasing its capacity to cater to this industry with high quality, value, and branded product delivery. Cold chain is also a high growth future business where growth is expected to be fuelled by fiscal incentives and sector friendly government policies.

Despite modest growth in the last quarter, your Company remains optimistic of economic improvement and tap into consumption driven industries.

Accounting Policy

Your company has exercised the option under Companies (Accounting Standard) Amendment Rules 2009 relating to AS 11 and accordingly, appropriate adjustments have been made in the value of fixed assets and also the treatment of exchange gain/loss. The net impact of such changes have been disclosed in the financial statements.

Equity Share Capital

Your company has allotted 5,77,387 Equity Shares of Rs.2/- each pursuant to exercise of options vested under Employee Stock Option Scheme (ESOS). Consequently, as on 30th June, 2012, the company's share capital stood at Rs. 173 mn comprising of 8,65,82,287 equity shares of Rs.2/- each fully paid up as compared to Rs. 172 mn comprising of8,60,04,900 equity shares ofRs.2/- each in the previous year.

Fixed deposits

As on June 30, 2012, fixed deposits from the public and shareholders stood at Rs. 224 mn out of which Rs. 2.20 mn remained unclaimed. There were no overdue deposits.

Directors

During the year, your Board co-opted Mr.Yoshinobu Mitsuhashi and Mr. Sanjeev Kumar Jain as Additional Directors of the Company with effect from June 29, 2012 and July 1, 2012 respectively. Mr. Yoshinobu Mitsuhashi is an Independent and Non- Executive Director and Mr. Sanjeev Kumar Jain is a Whole Time Director designated as "Director - Finance". As per the provisions of Section 260 of the Act, both the Directors hold the office up to the date of the forthcoming Annual General Meeting (AGM) of the Company and are eligible for appointment as Directors. Resolutions seeking approval of the members for the appointment of Mr. Yoshinobu Mitsuhashi and Mr. Sanjeev Kumar Jain as Directors of the Company will be in the forthcoming AGM for your approval.

As per Section 256 of Companies Act, 1956 and in terms of Article 115 of the Articles of Association of the Company Mr. K L Chugh and Dr. P S Reddy retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment in terms of Article 115 of the Articles of Association of the company.

The brief profile of the directors who are to be appointed/re-appointed forms part of the notes to the notice of the ensuing Annual General Meeting.

The remuneration paid to the Managing Director for the year ended June 30, 2012, turned out to be excess due to inadequate profits. The Board of Directors noted the foregoing and considering the comparative industry standards and significant role played by the Managing Director in turning around and bringing back the Company into track, the Board felt that the remuneration paid to him was in line with his long experience and expertise and accordingly ratified, confirmed and approved, subject to the approval of the Shareholders and of the Central Government, the payment of remuneration, in excess of the limits prescribed under Schedule XIII of the Act and decided to waive the recovery of the excess remuneration paid to him, subject to approval of the Central Government in this regard. Post your approval, an application in this regard, will be made to Central Government for seeking its approval for waiver of the requirement for recovery of excess remuneration paid to the Managing Director.

Transfer of unclaimed dividend

Pursuant to the provisions of section 205A (5) of the Companies Act, 1956, the unclaimed dividend amount pertaining to the financial year 2003-04 was transferred by the Company to the Investor Education and Protection Fund (IEPF) and the unclaimed dividend pertaining to the financial year 2004-05 is due for transfer to IEPF. The dividend once transferred to Investor Education and Protection Fund cannot be claimed.

Directors' Responsibility Statement

Pursuant to the requirement under section 2I7(2AA) of the Companies Act, 1956 with respect to the Directors' Responsibility Statement, it is hereby confirmed:

1. That in the preparation of the Accounts for the Financial Year ended 30th June, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

2. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year under review;

3. That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. That the Directors have prepared the accounts for the financial year ended 30th June, 2012 on a 'going concern' basis. Auditors

The Statutory Auditors of the company M/s. R S Agarwala & Co, Chartered Accountants, Kolkataand M/s. B K Agarwal & Co, as Branch Auditor who shall retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment as statutory and branch auditors respectively for the financial year 2012-13. They have furnished a confirmation to the effect that their proposed re-reappointment, if made, would be within the limit prescribed under section 224( IB) of the Companies Act, 1956, and that they are not disqualified for such re-appointment within the meaning of Section 226 of the Companies Act, 1956.

The Auditors in their report have observed that they are unable to express an opinion in regard to the Management's view that no provision presently required pending resolution of the Air India Arbitration. The reason therefore has been given in the financial notes to the accounts and is also covered in their report.

Personnel

Particulars of employees pursuant to section 217(2A) of the Companies Act, 1956 are part of the report and are available to any member on request.

Energy, Technology and Foreign Exchange

The information required under the Companies Act (Disclosure of particulars in the report of Board of Directors) Rules, 1988 is given in the Annexure -1.

Employees Stock Option Scheme

During the year under review, 1,64,000 options were granted and accepted under Employee Stock Option Scheme of the Company. The disclosure as required pursuant to SEBIESOS guidelines is enclosed as Annexure - II.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement, a report on Corporate Governance is enclosed as Annexure-lll. Acknowledgement

We thank our customers, vendors, investors, bankers, Government authorities and shareholders for their continued support during the year. We place on record our appreciation of the contribution made by employees at all levels. For and On behalf of the Board

Secunderabad, K. L. Chugh

August 9,2012 Chairman


Jun 30, 2010

The Directors take pleasure in presenting their report for the year ended June 30, 2010.

Financial Results

(Rs. in Crores)

Particulars 2009-10 2008-09

Income 751.41 630.33

Profit before interest, depreciation and taxation 86.11 61.53

Interest (Net) 43.09 35.41

Depreciation (Net) 23.87 23.01

Profit before tax & exceptional items 19.15 3.11

Exceptional items - (16.88)

Profit/ (Loss) before tax & after exceptional items 19.15 (13.76)

Provision for tax 4.04 1.29

Profit/ (Loss) after tax 15.11 (15.06)

Balance brought forward from previous year (7.49) 8.58

Balance available for appropriation 7.62 (6.48)

Appropriations

Proposed dividend 3.41 -

Ta x on dividend 0.56 -

Tonnage Tax Reserve - 1.01

General reserve 1.51 -

Balance carried to Balance Sheet 2.14 (7.49)



Dividend



Your directors are pleased to recommend a dividend of 20% on the share capital of Rs. 17.03 crores for the year ended June 30, 2010 (previous year nil). This would absorb a sum of Rs. 3.97 crores including dividend tax of Rs. 0.56 crores. An amount equivalent to Rs. 1.51 crores has been transferred to general reserve.

Review of Operations

During the year under review, your company achieved a turnover of Rs. 744.72 crores, as against Rs. 618.08 crores in the previous year, showing a growth of 20.49%. The strategy to focus on creating further value to our customers and on streamlining the operational costs, enabled the Company to achieve improvement in EBIDTA margin to 11.6% (9.9% in 2008-09). Your company has recorded a profit before tax of Rs. 19.15 crores and profit after tax of Rs. 15.11 crores as against loss before and after tax of Rs. 13.76 crores and Rs. 15.06 crores respectively in the previous year.

At consolidated level, your Company recorded a turnover of Rs. 926.11 crores as against Rs. 790.41 crores in the previous year. Further, consolidated profit before Tax was Rs. 16.02 crores (loss before tax of Rs. 17.61 crores in 2008-09) and consolidated profit after tax for the year was Rs. 9.50 crores (Net loss of Rs. 18.66 crores in 2008-09).

Express Distribution and Supply Chain (EDSC)

The year 2009-10 was a challenging year for your Company. However, given concentrated efforts of the team, and a keenly focused growth strategy, your company has been able to achieve an impressive growth that is higher than the industry growth in many of the verticals that it operates. During the year under review, the Company’s EDSC division achieved a revenue of Rs. 652 crores as against Rs. 525 crores in the previous year recording a growth of 24% and Profit before tax & interest of Rs. 79 crores as against Rs. 34 crores in the previous year showing an improvement of 132%.

Your company surpassed its previous record of handling 33 mn packages to 43 mn packages with an increase in total weight carried from 1500 tonnes per day, in the previous year, to 2100 tonnes per day, in the year 2009-10.

During the year, your company extended its reach by opening 8 new depots, operating through a total number of 432 depots, reaching 20,000 locations across the country. Your company extended its infrastructure at strategic locations to cater to its growth.

Your company has continued to provide an extensive road, air and rail network to its clients. Railway utilization has been increased by 30% over the previous year. Along with 193 company owned vehicles your company engaged 1,072 vendor vehicles to operate its road network. A Network Monitoring Centre was established to monitor the fleet movement using VTS technology, offering service of excellent quality to its customers.

Your company increased the value added services it offers to its clients especially in the area of information and inventory management in the fast growing retail and telecommunication sectors. Your company worked with its clients and branched into vendor management and reverse logistics, taking your company closer to its vision of becoming the most preferred Integrated Logistics Service Provider in India.

Coast-to-Coast

The economic turbulence had its biggest impact on your company’s Shipping business. With the reduction of global inventories, Shipping came under pressure as global rates collapsed. During the year under review, the Company’s shipping division achieved a revenue of Rs. 93.23 crores as against Rs. 93.49 crores in the previous year recording a marginal degrowth. The Profit before tax & interest decreased by 89% to Rs. 2.08 crores from Rs. 19.76 crores in the previous year. Your company’s Shipping team continued to also battle numerous operational issues which together with the global economic impact, led to disappointing results for the year. Not deterred by the adverse circumstances, the Management team of your Shipping division is committed to an extremely focused execution plan to bring about a turnaround on the operational front. Your Board of Directors reviewed both the strategic and operational plans of the Shipping division and its fit to the core business and recommended to transfer the Shipping division into a subsidiary Company.

Gati International and Subsidiaries

India has changed. The world is focused on India and the growth opportunities that India offers and the recognition of India’s prowess to be a global leader. Indian companies are fast moving into the global arena and are putting their brands and services in the competitive global markets of Europe and America. Your company too is focused on becoming a leader in its field within the Asia Pacific region and to be recognised as a global partner for our existing and new customers with capabilities to offer unique and world class logistics services and solutions. This is a business unit which your company has continued to strategically invest into, support and nuture for the past 5 years and your board is confident that it will start showing good results in the next 12 months.

Your company, through its parent subsidiary Gati Holdings, registered in Mauritius is now well established in the Asia Pacific region with its own offices and operations. Your company’s International business in India and Asia Pacific region showed a steady growth over the previous year inspite of the global financial crisis which effected the International freight Industry very deeply. While most organizations in our industry were struggling to keep pace with their previous year’s revenues and operating margins your company’s top line grew in India on this product by approximately 69% and recorded a revenue of Rs. 47 crores with an operating margin of Rs. 4.6 crores as against Rs. 28 crores revenue & Rs. 3.2 crores operating margins in the previous year. In Asia Pacific region we recorded a revenue of Rs. 46 crores as against Rs. 40 crores in the previous year with an operating margin of Rs. 3.7 crores as against Rs. 5 crores during the previous year.

For the financial year 2010-11, we have projected a revenue growth of 50% in India and 67% in Asia Pacific countries from the International Business.

In the year under review, your Company further strengthened its partnership with agent in Europe- Maurice Ward and Co. We have also opened our own offices in Malaysia and Ghunghzou province in China to capitalize on the growing Asia Pacific market, our future plan is to open our operations in Vietnam as a strategy to expand our foot print in the APAC.

In order to enhance our visibility in SAARC region we entered into a Memorandum of Understanding with Express International, Bangladesh, this new relationship is a resultant of our commitment in SAARC countries and is expected to provide additional business in the region, We are also in discussion with a few companies in Sri Lanka for a similar partnership.

We are confident that with the very strong positive steps being taken by the management of your company we would enhance our market share and emerge as one of the preferred integrated logistics and supply chain service providers for our customers in the Asia Pacific Region.

During the year under review, the name of one of the subsidiaries “Gati Skyways Ltd” has been changed to REDSUN Supply Chain Solutions Ltd. Kausar India Ltd., a subsidiary of the Company was delisted from the Delhi and Ludhiana Stock Exchanges.

IT Initiatives:

Your Company continues to invest to attain global quality in IT infrastructure. During the year under review, we have implemented successfully a high end Vehicle Tracking Solution (VTS) which provides information by the minute. This has been implemented on all our Service & Express Route vehicles. Our Network Monitoring Cell monitors our fleet 24 x 7 using this VTS system resulting in pro-active action thus increasing our service level and customer satisfaction.

Your Company has strengthened communication capabilities by setting up Video Conference facility at all our Express Distribution Centres, Zonal Head Quarters and other major strategic administrative offices. It has also enhanced the features in the mobility solution and Business Intelligence tool to cater to the sales & service team requirement to focus on business trend and KPI improvements.

Accounts of Subsidiaries

Your Company has obtained approval from the Ministry of Corporate Affairs, New Delhi under section 212(8) of the Companies Act, 1956 vide their letter no. 47/475/2010-CL III dated 10/06/2010 for exemption from attaching individual annual accounts of all the Indian and International subsidiaries for the year ended June 30, 2010. Copies of these annual accounts and related information will be made available on our website: www.gati.com and also on request. The annual accounts of the subsidiary companies will be available at the registered office of the company and also at the venue during the Annual General Meeting. The financial information as required in the above referred approval for each subsidiary is published at the end of the consolidated financial statements in the Annual Report.

Abridged Annual Accounts

As in last year and in accordance with the SEBI Guidelines and the Companies Act, 1956, abridged standalone and consolidated annual accounts for the year ended June 30, 2010 are being circulated while detailed accounts will be made available on request and also at the venue of the Annual General Meeting.

AI-Gati Arbitration:

Your Company has entered into an Arbitration Proceeding with the National Aviation Company of India Limited ("NACIL") in respect of certain disputes that had arisen between your Company and NACIL arising out of the Wet Lease Agreement that your Company had entered into with NACIL in the year 2007. Your Company had raised claims on NACIL in respect of the continuous breaches committed by it during the tenure of the Wet Lease Agreement. NACIL has in turn also raised certain counter claims on your Company in the proceedings. The disputes are pending. No orders have been passed against your Company nor have any claims been adjudicated in the matter as on date in the said proceedings.

Future Prospects:

In the very competitive world, Industry is changing globally, demanding change and new solutions from the Logistics Industry. In response your company is changing. Global re-alignment to market needs and customer demands is necessary. Our business has to move down the line from B2B to now B2C. In the next five years, your company plans to launch a strong network on E-Commerce trade so Gati becomes a preferential provider of ground services. On the services side, we plan to launch a slew of new service offerings which will put your company in the premium segment. The launch of your company’s new division, Redsun, will now allow us to offer a full range of supply chain solutions and technologies which will differentiate us in the market place from being a pure play Distribution company to a full fledged Supply Chain Solutions and knowledge company, attracting new customers & creating a new tomorrow.

Accounting Policy

Your company has exercised the option under Companies (Accounting Standard) Amendment Rules 2009 relating to AS 11 and accordingly, appropriate adjustments have been made in the value of fixed assets and also the treatment of exchange gain/loss. The net impact of such changes have been disclosed in the financial statements.

Equity Share Capital

Your Company has allotted 278,850 Equity Shares of Rs. 2/- each to the employees under the Companys Employee Stock Option Scheme at Rs. 31.20 per share at a cash premium of Rs. 29.20 per share. Consequently as on June 30, 2010, the Company’s Share capital stood at Rs. 17.03 crores comprising of 85,154,900 equity shares of Rs. 2/- each fully paid up as compared to Rs. 16.98 crores comprising of 84,876,050 equity shares of Rs. 2/- each, in the previous year.

Fixed Deposits

As on June 30, 2010, fixed deposits from the public and shareholders stood at Rs. 21.96 crores; out of which Rs. 0.44 crores remained unclaimed. There are no overdue deposits.

Directors

Mr. N Srinivasan and Mr. Sunil Kumar Alagh, Independent Directors, retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

Mr. Himmat Singh Lagad, Director was appointed as an Executive Director with effective from December 1, 2009, subject to the approval of shareholders and Central Government.

Brief particulars of the above directors are furnished in the notice for the annual general meeting.

The remuneration paid to the Managing Director & CEO for the year ended June 30, 2010, turned out to be excess due to inadequate profits. The Board of Directors noted the foregoing and considering the comparative industry standards and significant role played by the Managing Director & CEO in turning around and bringing back the Company on track, the Board felt that the remuneration paid to Managing Director & CEO was in line with his long experience and expertise and accordingly ratified, confirmed and approved, subject to the approval of the shareholders and of the Central Government, the payment of remuneration, in excess of the limits prescribed under Schedule XIII of the Act. Post your approval, an application in this regard, will be made to the Central Government seeking its approval for the excess remuneration paid to Mr. Mahendra Agarwal, Managing Director & CEO.

Directors Responsibility Statement

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to the Directors Responsibility Statement, it is hereby confirmed:

1. That in the preparation of the Accounts for the Financial Year ended June 30, 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

2. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the year under review;

3. That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. That the Directors have prepared the accounts for the financial year ended June 30, 2010 on a going concern basis.

Auditors

M/s. R. S. Agarwala & Co., Chartered Accountants, the retiring auditors are eligible for re-appointment. The Auditors in their Report have stated that they are unable to express an opinion in regard to the Management’s view that no provision is presently required pending resolution of the Air India Arbitration. The reason therefore has been given in the financial notes to the accounts and is also covered in their report.

Personnel

Particulars of employees pursuant to section 217(2A) of the Companies Act, 1956 are part of the report and are available to any member on request.

Energy, Technology and Foreign Exchange

The information required under the Companies Act (Disclosure of particulars in the report of Board of Directors) Rules, 1988 is enclosed as Annexure - I.

Employee Stock Option Schemes

The disclosure as required pursuant to SEBI ESOS Guidelines is enclosed as Annexure - II.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement, a report on Corporate Governance is enclosed as Annexure - III.

Awards and Accolades:

- Gati Limited has established, documented and implemented a Quality Management System as per ISO 9001: 2008 Standards. Now Gati is an ISO 9001: 2008 Certified Company.

- Gati has been awarded the NASSCOM - CNBC "IT User Award - 2009" for the Logistics Vertical.

Acknowledgement

We thank our customers, vendors, investors, bankers, Government authorities and shareholders for their continued support during the year. We place

on record our appreciation of the contribution made by employees at all levels.

For and on behalf of the Board

Secunderabad, K. L. Chugh

August 18, 2010 Chairman