One of India’s leading 3PL (third-party logistics) solution providers, Mahindra Logistics Ltd was attracting growth through acquisitions and has decided to temporarily halt this strategy for the next 12 months after the investments made in inorganic expansion over the past 3 years affected the firm’s profitability. In the fiscal year 2023, the company’s yearly revenue decreased by 21% to Rs 27.42 crore from Rs 34.57 crore in the fiscal year 2022, while net revenues increased by 25.6% to Rs 5,128.29 crore from Rs 4,083 crore the previous year.
Currently, the firm will focus on improving profitability, CEO and MD of Mahindra Logistics, Rampraveen Swaminathan said “In the last few years, we made 3 acquisitions in line with transforming third-party logistics, the company want to construct cross-border express, last mile, reinvent, and reimagine mobility. For now, the decks are ready and will scale them, and sweat them out; therefore, there is no intent or outbound interest in more acquisitions in the near-to short-term or mid-term.”
In the last few years, the company made 3 acquisitions in line with transforming third-party logistics,
So far, the firm has invested close to Rs 347.44 cr in obtaining the business and is planning to increase in the coming year. The end-to-end 3PL solution provider has finalised the obtaining of a 60% stake in ZipZap Logistics Private Limited, a last-mile logistics service provider, for about Rs 72 cr; a logistics firm, for Rs 225 cr; a 100% stake in the B2B express business of Rivigo services, and a 100% equity capital acquisition of Meru Cabs, a ride-sharing company, from its parent M&M (Mahindra & Mahindra). The deal size is Rs 50.4 cr all in cash.
Although the firm will not be exploring any inorganic business, it has unveiled that it will look into any interesting opportunity that comes up. As we see on the revenue front, the logistics player is confident of about business turnover of Rs 10,000 cr by the fiscal year 2026. “The business experienced growth in the years to come from the automotive and discrete manufacturing sectors; however, as a result of the cyclical drop, the consumer and e-commerce sectors developed somewhat more slowly.
The firm has invested close to Rs 347.44 cr in obtaining the business and is planning to increase in the coming year
Mahindra Logistics planning to expand its footprint. Currently, owing 19 mn sq ft of warehousing space across the nation. It is looking to add approx 2 to 2.5 mn sq ft of warehousing space every year and to develop around 30 million sq ft by the fiscal year 2027.
On top of it, the Mahindra company will also continue to expand its EV (electric vehicle) cargo fleet. Probably around 20% of our last mile is EV, and another 10-15% is CNG; we intend to have a 40 per cent electric fleet by 2026. Mahindra Logistics Ltd now owns an electric cargo fleet of 1300 EVs. The MD (Managing Director) noted that once the company crosses the threshold of 2,000 EVs, it will explore a partner model. In fact, the firm has, in recent past years, launched a 4-wheeler offering, enabling it to carry more volume, and is now working to introduce a 2-wheeler offering soon.