From challenges to triumph: The rise of Mahindra Logistics
Mahindra Logistics Ltd (MLL), despite a short-term challenging scenario, is making strides to pursue its vision of becoming a ₹10,000-crore logistics service provider. An integrated third-party logistics (3PL) service provider, specialising in supply chain management and enterprise mobility, the ₹5,500-crore company, a part of the Mahindra Group, aims to be among the 10 most admired global logistics companies by 2030.
Today, MLL serves over 400 corporate customers across various industries such as automobile, engineering, consumer goods, and e-commerce. The company, following an asset-light business model, provides customised and technology-enabled solutions that span the supply chain and people mobility services. Backed by a total workforce of over 30,000 people, the company operates in over 19,000 pin codes, encompassing a substantial portion of the country’s economic activities. In fact, these pin codes collectively contribute to 82 per cent of the country’s GDP.
Over the last decade, the company has built up its capabilities to emerge as a leading integrated supply chain logistics provider. From being focused primarily on the auto and manufacturing space, and that too within the Mahindra Group, MLL has ramped up its 3PL logistics capabilities significantly, providing customised, innovative, and technology-enabled solutions to a wide range of customers across diverse industries in the domestic logistics market. It carries out over 50,000 full truckload (FTL) trips monthly. Today, non-Mahindra/non-auto business contributes 40 per cent to the company’s overall revenue.
MLL operates in two major business segments: supply chain management (SCM) and enterprise mobility (EM). The company’s SCM business includes supply chain consultancy, warehousing, stores and line feeding, transportation, and freight forwarding. Its EM business, on the other hand, provides customisable and technology-enabled employee transportation services to corporate enterprises.
MLL’s contract logistics business provides transportation, warehousing, stores and line feeding, fulfilment, and value-added services (VAS). Backed by 22.1 million sq ft of warehousing space, it serves 400+ clients and operating locations, deploying 15,000+ vehicles per month. Showing its commitment to the environment, the company boasts 4 million sq ft of solar-powered warehouses.
In 2022, the company acquired the B2B express business of Rivigo to significantly expand its B2B express segment, which offers B2B express and PTL (partial truckload) transportation with pan-India coverage. Today, MLL provides the fastest, safest, and most reliable express deliveries to over 19,000 pin codes across the country, with 16 strategic hubs connected to 200+ terminals while collaborating with over 400 business partners across regions. The company is on course to turn around its express business, which has been facing challenges due to weak volume demand.
MLL offers air and ocean freight forwarding services (Lords Freight) for imports and exports through a strong network of global partners. Its proficiency in designing a wide range of technology-led freight solutions in customs and cross-border compliance, freight forwarding, international e-commerce, and landside logistics enables it to manage consignments end-to-end and drive efficiency at every step of the supply chain. It operates in 50+ freight forwarding lanes globally and has access to 100+ global freight forwarding network partners.
MLL’s last-mile delivery network enables it to deliver its customers’ products even to the most remote locations, providing a seamless and convenient shopping experience. It has a fleet of 1,600+ electric vehicles (2W, 3W, and 4W) and 70+ EV charging stations, serving 6,000+ pin codes. The company carries out 350,000+ orders per day. It facilitates deliveries for major e-commerce players and is building India’s largest 3W EV fleet. In 2022, MLL’s acquisition of last-mile delivery start-up Whizzard provided further momentum to its last-mile business. The company is well positioned to meet the growing demand in the e-commerce space with integrated fulfilment and distribution solutions in the direct-to-consumer segment.
MLL was among the first in India to enter the EV cargo space, and it continues to lead the way in sustainable and environmentally friendly logistics solutions. Its EV cargo vehicles are designed to provide a range of benefits, including reduced carbon emissions, lower operating costs, and improved safety and efficiency. The company has been investing in innovative technologies and processes to ensure that its last-mile delivery network remains at the forefront of the industry.
Additionally, the company is a multi-service provider for mobility solutions, offering comprehensive mobility services for individuals and enterprises across major cities in India. Under this business, the company deploys 5,000+ vehicles every day across 100+ locations pan-India. In fact, over 25,000 people experience these services daily. MLL’s enterprise mobility business contributes around 6 per cent to consolidated revenue, while the supply chain management business accounts for the remaining major share.
Connecting India
“Building a nation is an ambitious task, and seamless logistics serve as the backbone that keeps the lifelines of cities and communities thriving. At MLL, our pursuit, encapsulated by ‘Rising Beyond: Connecting India’, focuses on creating the largest multi-service logistics network that reaches every corner of the country. We are reshaping India’s logistics landscape, driving prosperity through enhanced connectivity and sustainable practices. Through our enhanced capabilities and infrastructure, we are on our journey to rise beyond capabilities, enhancing efficiency, and fostering connectivity nationwide,” says Rampraveen Swaminathan, managing director & CEO, MLL.
Having reported weaker performance amidst challenging macroeconomic and geopolitical conditions in FY24 (revenue Rs5,506 crore), the company is on course to clock growth of around 10-15 per cent during the current fiscal year of FY25. For the 9M FY25 period, the company’s consolidated revenue grew around 12 per cent to Rs4,535 crore, compared to Rs4,055 crore. During this period, the company managed to bring down net losses to Rs29.1 crore from Rs41.9 crore through better cost management and turnaround of the express business. The gross margins during this period increased by 9 per cent to Rs422 crore.
“The year 2023-24 witnessed a slowdown across the industry, characterised by several end-markets facing challenges, despite the auto and discrete manufacturing sector maintaining its strength. The e-commerce industry, in particular, experienced overcapacity, especially in volume growth, leading to capacity consolidation among major players. However, during the current fiscal, at an overall level, we continue to make progress in most business segments. We have seen year-on-year improvement across most of our business segments. The 3PL business is well positioned for growth, given the positive order book we have and the pipeline of new projects over the next two quarters. The cross-border mobility business continues to make structural improvements while managing some short-term volatility in end markets,” avers Swaminathan.
“Our primary focus continues to be the express business, notwithstanding a weaker-than-expected performance in the quarter (Q3FY25), which we just completed. The confidence and actions we have taken will generate positive momentum. Over the last four quarters in the express business, we have been able to improve our gross margin from -13 per cent to around -5 per cent, despite only marginal volume growth. So, for us, the key priority now is driving volume in the business. We have several ongoing initiatives, not yet fully reflected in the bottom line for the quarter we just completed, but we are confident that, although they may take some time, they will deliver results in the coming quarters. All in all, we should be in a much stronger strategic and operational position this year than we were last year,” adds the MLL CEO.
A PhillipCapital India Research report observes that weaker consumption trends and cost pressures in surface transport impacted performance in 3QFY25. The express business had lower-than-anticipated volumes, with a 5 per cent QoQ decline due to operational challenges and seasonality. MLL witnessed a drop in volumes from existing clients while adding new customers with a monthly volume of 3,500 tonnes. The demand environment in express remains challenging, with significant volatility and competitive pressure. Management expects the business to turn around by 1HFY26. Express remains a critical part of the company’s turnaround plan.
The cross-border and last-mile business segments continue to demonstrate volume growth, despite sectoral pricing headwinds. Last-mile delivery revenue grew by 68.9 per cent YoY to Rs100 crore with Whizzard consolidation and showed a gross margin improvement of 352 bps YoY, aided by a reduction in fleet costs through supply synergy. Mobility business performance declined due to client churn and low offtake. Airport passenger load increased by 8 per cent YoY and is expected to benefit from new airports at Noida and Navi Mumbai, observes the report.
SCM revenue recorded an annual order win of Rs250 crore in 3QFY25, including Rs100 crore in 3PL, a new contract for Noida airport in mobility, and an express contract with a monthly volume of 3,500 tonnes. Grade A warehousing capacity has increased from 13.3 million sq ft in 1QFY23 to 22.1 million sq ft in 3QFY25. The company started a 0.3 million sq ft warehouse in Guwahati and expects an addition of 1 million sq ft from Kolkata, Phaltan, and Agartala by FY25. Underutilisation of warehousing, with a white space of 1.5 million sq ft, is expected to reduce over the next six months
‘We believe the scalability that MLL’s asset-light model provides, along with emerging opportunities in 3PL outsourcing, should spur growth ahead for MLL’, says the PhillipCapital India Research report.
According to a Motilal Oswal Financial Services report, large and organised logistics players and start-ups are poised to capitalise on the growth opportunities presented by the booming e-retail sector, which will drive growth in express logistics. This growth will be fuelled by the expanding presence of e-commerce in various sectors, such as furniture, groceries, and medicines. In contrast, smaller traditional players may struggle, especially those heavily reliant on document shipments. Companies that proactively build relationships and make strategic investments are expected to be in a better position to leverage the e-commerce boom.
Promising future
As per a NITI Aayog report, India’s logistics cost as a percentage of GDP is around 14 per cent, compared with 10-11 per cent for BRICS countries and 8-9 per cent for developed nations. Going forward, India’s logistics cost as a percentage of GDP is expected to decline, driven by initiatives such as the implementation of GST, investments in road infrastructure, development of inland waterways and coastal shipping, and the thrust on DFCs
‘The logistics sector has undergone significant reforms and witnessed substantial infrastructure investments in recent years, establishing a robust foundation for sustainable growth. While traditional segments, FTL and LTL, are expected to grow steadily (with LTL expected to outpace FTL growth) due to an overall economic upturn, niche segments such as 3PL and express services are expected to experience faster growth of 13-15 per cent CAGR over FY23-28. Organised players are likely to capture a larger market share, thanks to policy implementations like GST and the e-way bill,’ says the Motilal Oswal report.
“I think we’ve been steadfast over the long term, and I think we’ve had a fairly volatile or, let’s say, variable short term. From a long-term perspective, we continue to invest in our strategy to be an integrated logistics company that can connect this country, and we can execute that with a strong focus on sustainability and integration. So, over the last 2 years, we have continued to expand, improved our contract logistics business towards solutions, and, underlying that, continued the expansion of our warehousing network,” says the CEO.
“We have expanded a range of infrastructure and solutions. Integrated solutions that combine line haul distribution and different forms of warehousing operations now account for around 25 per cent of our revenue. The non-Mahindra business is approximately 40 per cent of our revenue, and in the non-automotive segment, warehousing makes up 40 per cent of our business. Solutions account for around 40 per cent of our business overall, with the total solutions segment making up about 22-25 per cent. That focus has remained, and I think our commitment to expanding our offerings has continued to grow,” explains Swaminathan.
“In the last 5 years, we have grown from around 14 to 37 offerings, and, obviously, a large part of that has come through acquisitions. Therefore, while we continue to be number one in contract logistics, we have now also become a fairly large player in express, last-mile delivery, and global cross-border business. We have expanded our offerings, launching, for example, air charter services out of Dubai and so on. So that focus on expanding offerings continues,” adds the CEO.
Swaminathan joined the company as its CEO in October 2019 and was recently appointed its managing director. Over the last few years, Swaminathan, who is fondly called ‘Ram’ by his colleagues, has played a key role in progressing the company’s transformation journey. He has initiated multiple initiatives, not only to make MLL a resilient entity but also to establish it as a robust player in the rapidly changing domestic logistics sector. Under his leadership, MLL grew from Rs3,264 crore in FY21 to Rs5,506 crore in FY24, despite a challenging market scenario.
He has over two decades of relevant industry experience across sectors such as automotive, paper, and energy and has a strong track record of leading businesses. An MBA by qualification, he began his career with Tata Administrative Services (TAS) and was associated with companies such as Cummins Inc, where he was Executive Director – Power Systems Business. Before joining MLL, he was Senior Vice President – International Operations at Schneider Electric. He has also served on the boards of Dodla Dairy Ltd, International Paper Holdings Asia Singapore Pte Ltd, and EROEI Power Solutions Pvt Ltd.
While expanding its offerings, the company has continued to invest in technology, particularly its LOGIONE ecosystem, which is an industry first in its ability to integrate business segments. LOGIONE – the integrated IT suite – provides MLL’s customers with deep visibility and insights into their processes and operations. It also enables the company to be a strategic partner by allowing it to configure, optimise, and execute supply chain requirements with accuracy, efficiency, and excellence. With the aim of creating business value through data analytics, LOGIONE acts as a strategic tool for driving bottom-line corrections. This is achieved through operational optimisation and the development of predictive risk assessment capabilities to enhance performance. It also provides business intelligence across operations, compliance, safety, and other aspects, deploying geo-analytics to improve visibility and network optimisation. In fact, LOGIONE is an umbrella brand that integrates all of MLL’s technology applications under one roof “Technology, when applied to logistics, has been shaping and optimising the supply chain process. With reduced response times, efficient solutions, end-to-end and real-time visibility, flexibility, and insights, businesses can make informed decisions and gain complete control over their supply chains. This leads to tailored solutions, improved service, and strong partnerships with our customers,” says an MLL official.
Green solutions
From its inception as a green last-mile cargo delivery service, MLL’s eDeL has evolved into a comprehensive green logistics ecosystem. Today, eDeL is its sustainable suite of green logistics solutions that enables customers to mitigate emissions across their supply chains while supporting its goal to become carbon neutral by 2040. Addressing the growing urgency to operate in a carbon-neutral way, eDeL – MLL’s portfolio of green logistics solutions – assists customers in understanding their carbon emissions and reducing them through a range of green logistics strategies.
“Our green logistics solutions are centred around our core sustainability pillars: decarbonising supply chains, green infrastructure, and operational circularity. These pillars guide us in our goal to become carbon neutral by 2040. Our decarbonisation strategy includes sustainable transportation practices, afforestation initiatives, last-mile electrification, energy efficiency measures, and piloting LNG fuel. We also offer an advanced emissions analytics report that provides our customers with real-time visibility and reporting of their carbon footprint, enabling them to make informed decisions towards reducing emissions. Our commitment to sustainable logistics practices extends to our infrastructure, encompassing energy-efficient warehouses and offices, large-scale solar projects, EV charging infrastructure, and effective water management systems,” explains the official.
With various initiatives in place, MLL is today well placed to explore emerging opportunities. As an integrated player, MLL offers comprehensive solutions, including warehousing, distribution, express, last-mile, and cross-border logistics. Its offerings and solutions optimise customers’ end-to-end needs, from imports, inbound transportation, storage, and outbound transportation to distribution, fulfilment, returns processing, and reverse logistics. The company has a strategically located, multi-client, carbon-neutral, world-class warehousing network catering to distribution and evolving consumption patterns.
The company has over 22 million sq ft of warehousing space across India. It has more than 4.4 million sq ft of state-of-the-art, Grade A warehousing facilities across Pune, Luhari, Hyderabad, Zaheerabad, Chennai, Nashik, and Bhiwandi, with over 2.5 million sq ft of warehousing space under development. MLL offers multi-modal services, including rail transportation for auto and farm customers, and is expanding these services to other sectors as well. It is also enhancing cross-border solutions with its air charter operations in key international markets such as the UAE. Expanding its global presence, it caters to demand on critical trade lanes originating from the UAE.
All in all, the company has demonstrated a great deal of resilience despite weaker macroeconomic conditions. With improved capacity utilisation in the B2B express business and strong order intake in 3PL, the long-term growth outlook appears promising. Going forward, prospects are set to improve further with the government’s multiple policy-related measures. In the short term, although there are some headwinds, the long-term prospects remain bright, and MLL, as a transformed entity, is well positioned to explore new avenues.