Mahindra Logistics posts Rs 8.30 crore net loss on 97% YoY decline in supply-chain-management segmental profit

Mahindra Logistics, an integrated logistics and mobility solutions provider for the automotive and other industries, reported a net loss of Rs 8.30 crore in Q1 FY24. This was due to a steep 97%  dyear on year ecline in the company's supply chain management (SCM) segmental profit. The SCM segment, which constitutes more than 94% of the company's revenue, stood at Rs 2.23 crore in Q1 FY24, versus Rs 74.97 crore reported in the same period last year.

Mahindra Logistics' top leadership had earlier claimed that it had taken some of the impact of the slowdown in last-mile delivery business to moderate the coverage on account of increasing price competition in that space. 

Revenue from operations rose 7.78% YoY to Rs 1,293.22 crore in Q1FY24. However, the company's total expenses increased by 9.69% YoY to Rs 1,298.83 crore.

The company operates in two distinct business segments: SCM and Mobility Services. Within the SCM business, it provides contract logistics, B2B Express, last-mile delivery, and forwarding services. In Mobility, the company provides enterprise mobility services, such as cab on demand, airport pickup, and transfer services under the Alyte and Meru brands.

The decline in the SCM segment's profit is likely due to a number of factors, including an apparent slowdown in the e-commerce space. The company also faces stiff competition from other logistics providers.

Autocar Professional had earlier reported on how Mahindra Logistics is shifting to a build-to-suit (BTS) model for its warehousing networks. The company believes that this model will be more suitable for its long-term growth plans and will lead to a better payoff as compared to earlier times when it was more OEM or component supplier-focused.

As a result of this shift, Mahindra Logistics is adding new warehousing facilities, such as a large one in Nashik. The company also plans to open similar facilities in other geographies.

 It is also developing a new 1 million-square-foot warehouse park in the Chakan-Talegaon region, which is expected to be operational by the end of this financial year. The warehouse park will be spread over three phases, with the first phase comprising 0.5 million square feet. The company plans to add close to 2 to 2.5 million square feet of warehousing space annually and to develop around 30 million square feet by FY27. On the whole, Mahindra Logistics currently has 19 million square feet of warehouse space across the country. 

The company claims that its expansion plans are in line with the growing demand for logistics services in India. The automotive logistics industry in the country is growing rapidly, driven by the increasing demand for vehicles and the growing complexity of the supply chain. The market is expected to reach a value of US$ 8.667 billion by 2029, at a CAGR of 6.2%, industry estimates suggest.