Mahindra Logistics Expects Mid-term Growth in Supply Chain Business

The ongoing pandemic has curbed the mobility , the supply chain business is expecting to drive growth for Mahindra Logistics over the mid-term.

In an interview, Rampraveen Swaminathan, managing director and chief executive, Mahindra Logistics says, “Our growth focus will be re-oriented substantially towards the supply chain business over the mid-term. Demand for shared mobility will take at least 18-24 months to return to pre-pandemic levels."

The company has reported a revenue of Rs.3,471 crore in FY20, and is expecting to reach Rs.10,000 crore by FY26, as part of its five-year growth plan. Mahindra Logistics is also expecting a sharp growth in the shared mobility space during the period, as it is a “sunrise segment", says Rampraveen.

Betting big on new opportunities around mobility services, Mahindra group created a separate vertical, Mahindra Mobility Services, in April 2020. The business covers Mahindra Logistics, including its B2B mobility division Alyte, First Choice Wheels, or the used car business, besides new acquisitions such as Meru and Zoomcar.

According to a BNP Paribas report, the Mahindra group has set a market capitalization target of Rs.20,000 crore for its mobility business by 2025-26 from the existing Rs.5,000- 6,000 crore.

Rampraveen further states, “Despite the pandemic, our FY26 target has not changed. A year ago, shared mobility was Rs.10,000-12,000 crore market. We had a strategy, which was driven around asset supply optimization, services development, delivering these B2B and B2C solutions and electrifying the network. We were looking at fairly aggressive growth. We had four percent market share and we saw good headroom to grow the business. Now that the market has pretty much tanked due to covid-19, the company’s financial horizons are being revised now."

On the supply chain front, which contributed 89 percent to the company’s revenue in FY20, it is looking to grow in non-automotive areas.

He further continued, “We are pivoting away from manufacturing and automotive towards consumption and fulfillment. That is more non-cyclical unlike the former. Auto slowed down last fiscal and that impacted our business, too. It also means we will grow more in our solutions business along with value-added services. Our e-commerce and consumer business has been growing at over 20 percent this fiscal year except in Q1. The warehousing and solutions business within supply chain has also seen that pull through effect and has been growing at 18-20 percent this year."