Express distribution and supply chain service Gati Ltd has formed a joint venture (JV) with a Japanese firm Kintetsu World Express to reduce its debt that stood at Rs 500 crore.
"The JV will deleverage Rs 500 crore debt burden," Gati Chief Executive Officer Mahendra Agarwal told reporters here.
Under the JV named Gati-Kintetsu Express, Gati will hold 70 % stake and Kintetsu World Express (KWE) 30 % for its Rs 267.70 crore investment.
The fund infusion will make Gati's balance sheet much stronger through a significant deleveraging of the debt and reduction in the interest costs upto 50 %, he said.
The interest cost reduction would help in reinvestment like upgradation of existing warehouses and creating new warehouses.
"With this partnership, we will have access to global customers, especially in Japan, who are present in India or making their presence here," Agarwal said.
When asked about profit of Gati, the company chief said the company is expecting a profit after tax of Rs 60-70 crore during FY'12 (July to June).
In 2012-13, the profit would be maintained, he added.
The shares of Gati were trading at Rs 41.10 in the afternoon trading, down 2.14 % from its previous close on the Bombay stock exchange.