Study of Profitability of a Logistics Company

3652 WordsApr 10, 201115 Pages
STUDY OF PROFITABILITY OF A LOGISTICS COMPANY USING ECONOMETRICS TOOLS Executive summary This study examines the impact of three factors, namely Sales, Fixed assets and Interest paid on the profitability of a logistics company. Econometric tool of multiple linear regression model was used for analyzing the impact of above factors on profitability of a major logistics company GATI Limited. Based on the financial data of last 10 years 2000-2009 the regression analysis has revealed that profitability of GATI ltd. is significantly affected positively by increase in fixed assets and adversely affected by increase in interest paid. The impact of increase in sales volume on profitability is positive but miniscule. In addition seasonality…show more content…
Moreover, projects such as the Golden Quadrilateral program, National Maritime program, and introduction of freight corridors in rails shall strengthen the growth. The current economic scenario, which is largely impacted by the global slowdown however is expected to recover soon with the fall in logistics costs due to the huge developments in infrastructure. With the rise in disposable incomes, changing consumer preferences, fast emerging retail segments, infrastructure investment, the Indian logistics sector and the 3PL markets are expected to witness explosive growth in the successive years. Constraints and Challenges The biggest challenge faced by the organised logistics companies in India today, is competition from the unorganized operators. This is coupled with increasing environmental pressures, government regulations and subsidies for infrastructure development. Adding to all these, is the lack of “Industry status” to the logistics sector. Business Risks and Mitigation The Year 2008-2009 for India was quite different from the expectations of industry stalwarts and economy speculators. Increase in input materials costs, wages, interest and transportation forced companies to cut costs. Logistic service providers therefore are required to be cost effective and more efficient to compete in market place. High logistics and warehousing costs in India shows that there are
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