MAHLOGNSEQ1FY2428 July 2023

Mahindra Logistics Limited

9,712words
53turns
8analyst exchanges
0executives
Key numbers — 40 extracted
rs,
xchange and on our company's website. In the interest of leaving more time for questions and answers, I'm going to kind of keep my update short. I will provide a short update on the external environme
INR10,000 crore
lities. We believe this customer-driven approach will help us achieve our objective of revenue of INR10,000 crores in revenue and class-leading financial returns. During F'22-'23, we took several steps to accele
7%
emand concerns for businesses with global exposure. The passenger vehicle wholesale sales rose by 7% year-on-year, driven by new product launches and easing supply chain issues, but it sequentially
0.5 million
offset this drop in volume. However, we have seen an increase in white space, where approximately 0.5 million square feet, during this quarter due to site closures and most of those were in the middle quarte
40%
n with major fleet Moderators focusing on expanding their EV fleets and targeting probably around 40% to 50% of vehicles to be electric by the end of 2026. This is mirrored by an increased focus by p
50%
major fleet Moderators focusing on expanding their EV fleets and targeting probably around 40% to 50% of vehicles to be electric by the end of 2026. This is mirrored by an increased focus by policyma
70%
a period of time. The volume of aviation traffic in India has -- Indian airports has increased by 70% in F'22 and '23. I mean this year; the aviation traffic volume is expected to grow by another 17%
17%
70% in F'22 and '23. I mean this year; the aviation traffic volume is expected to grow by another 17%. That has a strong impact on our airport services business, which has been seeing a rebound on ac
39%
ugh -account growth and the acquisition of new accounts. Collectively, during the quarter we just 39% year-on-year growth in the mobility sector business. If I have to sum it all up in terms of broad
INR130 crore
despite the challenges in e-com. For the quarter, 3PL contract logistics order intake was around INR130 crores on an annualized contract value basis. Some of that is offset by churn in the e-commerce segment
25%
sisting those accounts. A combination of these factors resulted in a volume drop of approximately 25% to 30% on a quarter-on-quarter basis. What we have done is probably the transition is intimate so
30%
those accounts. A combination of these factors resulted in a volume drop of approximately 25% to 30% on a quarter-on-quarter basis. What we have done is probably the transition is intimate some of t
Guidance — 20 items
Rampraveen S.
opening
“We continue to expect growth in this segment from our business' perspective, but do expect to see some moderation in the second half across both auto and farm businesses.”
Rampraveen S.
opening
“Our demand from north and west continues to be below forecast, the clients we work with.”
Rampraveen S.
opening
“Now we do work with a series of clients in this segment, and we expect here that growth will be quite moderate for the rest of this year.”
Rampraveen S.
opening
“And so, we expect growth both in account and with new account volumes.”
Rampraveen S.
opening
“And we do expect that this will continue over a period of time.”
Rampraveen S.
opening
“But we do expect to see that picking over the rest of this year, and hopefully, the momentum will sustain.”
Rampraveen S.
opening
“We expect that this will be recovered by th early part of H2 and we will be back on a growth track at that time.”
Rampraveen S.
opening
“We have obviously -- we expect that to come back and track through the middle of this quarter because of the new businesses we have won.”
Rampraveen S.
opening
“And we expect to consolidate and continue to improve our performance through the rest of this year.”
Sumit Kishore
qa
“If you could give us some sense of how the volume growth trajectory in B2B expects -- needs to pan out in the remainder of fiscal and how does network utilization need to improveto secure your target of becoming EBITDA positive here in H2 of the financial year?”
Advertisement
Risks & concerns — 15 flagged
There are some early indicators of possible headwinds in the case of demand slowdown in specific categories such as LCVs and tractors as a result of increasing inflation and interest rates, slightly weaker global macro is prompting new demand concerns for businesses with global exposure.
— Rampraveen S.
The stress in demand in semi-urban and rural sector appears to have bottomed out.
— Rampraveen S.
As we had mentioned last quarter, we have seen trading impact of this with the closure of multiple sites in our business across several of our customer accounts.
— Rampraveen S.
Sequentially, within Q4 and Q1, we did see growth in volume despite the challenge of continued drop in prices.
— Rampraveen S.
We've had a challenge, obviously, in the first and the fourth quarter of last year with some slowdown in demand closures.
— Rampraveen S.
We won new accounts but the net impact of it was marginally down.
— Rampraveen S.
This was despite the impact of the MESPL acquisition.
— Rampraveen S.
Excluding the impact of the MESPL acquisition, our gross margins for the quarter were at 11.5%.
— Rampraveen S.
The impact of the businesses were very different.
— Rampraveen S.
The lords business, the freight forwarding business is in a challenging environment as prices remain under pressure.
— Rampraveen S.
Obviously, we have seen the impact of churn on the e- mahindra LOGISTICS com side and a year-on-year basis, obviously, sooner because of the Bajaj account as well, right, the fall -- drop and fall in that.
— Rampraveen S.
So how confident are we in kind of being like a breakeven by third quarter, which you were just mentioning, considering that the feelers we are getting is that there is some slowdown in the Express Logistics in the first quarter and little bit in the second quarter.
— Alok Deora
Now what we've seen is, obviously, in this quarter because we have been doing network transitions, which are there, we've seen the impact of those network transitions playing out.
— Rampraveen S.
The challenge we've had for the large part is just the sheer level of volume drop and the impact of the volume drop because volume dropped by another 30%, 35%.
— Rampraveen S.
Because now, we are seeing the actual impact of it, but as you have shown with the Meru business, or as we have shown in some of the other businesses that we do believe we have the ability to make scale profitable.
— Rampraveen S.
Q&A — 8 exchanges
Q
Hi Ram, I have two questions. The first one is you mentioned in B2B Express, there has been a volume drop of 20% to 25% quarter-on-quarter. If you could give us some sense of how the volume growth trajectory in B2B expects -- needs to pan out in the remainder of fiscal and how does network utilization need to improveto secure your target of becoming EBITDA positive here in H2 of the financial year? That's the first question. Secondly, on contract logistics, the revenue growth of 6% has decelerated. And could you give us a sense of how much potential is there to increase revenue and contract lo
Rampraveen S.
I think as I said, and you may remember, I think what we had said from where from the baseline effect of the share of the volume growth the business has had and maybe at the time mahindra LOGISTICS of the acquisition, collectively, both the businesses have around 420,000 to 450,000 tons of volume. And we need another 10% volume growth to be able to get 10% to 15% volume to get an EBITDA positive level, assuming that all the cost reduction actually would -- and would fall through. Obviously, the cost reduction is a function of 2 things. It's a function of operating leverage and the velocity of
Q
I've just had one question around Rivigo. So, we have seen that, again, the losses are quite significant there. I mean, if we want to look at it. So, we are operating at around 20% EBITDA margin or EBITDA loss, 22% EBITDA margin loss. So how confident are we in kind of being like a breakeven by third quarter, which you were just mentioning, considering that the feelers we are getting is that there is some slowdown in the Express Logistics in the first quarter and little bit in the second quarter. So just some colour on that if you could highlight this particular business.
Rampraveen S.
I think, first of all, let me answer your question on the more direct part of what gives us confidence. And then I talk a little bit more about, I think, more strategic factors here. We did expect that synergies plus up 15% growth would get us to a positive EBITDA window. And from there on would be able to drive broader growth in the business. And that's how kind of -- that was the plan, right? Now what we've seen is, obviously, in this quarter because we have been doing network transitions, which are there, we've seen the impact of those network transitions playing out. mahindra LOGISTICS And
Q
Hi, Good Evening everyone and thanks for the opportunity, I have a couple of questions. The first one is a little bit confused with the industry outlook you gave in your opening remarks where certain automotive segments, you see a little bit of weakness. Demand in north and west mahindra LOGISTICS remains subdued. E-commerce also competitive intensity short term is expected to result in demand moderation. Now with all these headwinds, where do we expect really volumes coming from? Or what is the kind of industry growth are you looking for in your key segments, not in the immediate term, but fo
Rampraveen S.
Sure. A great question. I'll come back and reframe that my comment, just to help clarify that. The second question is essentially, if you could just quantify this impact of GoAir, the onetime loss that we took, more of a bookkeeping question. Absolutely. Good question. I'll take a bookkeeping one first. Always in here. So, I think -- so we had, I think, pending receivables of around INR2.5 crores -- INR2 crores to INR2.5 crores. We can send you a more exact number. If we reach out to the Investor Relations team. But somewhere around INR2 crores, INR2.5 crores was the receivables due from GoAir
Q
Hi Ram, thank you for the opportunity,I had a question on the warehousing piece of business. So, while you've not provided the space entirely manages roughly about 19 million, you did highlight that there was about 500 lakh square feet reduction. I mean, how do you see the warehousing space addition going ahead or perhaps the warehousing piece of business this year? Because I do see that the overall margin profile of the supply chain business, the 3PL contract logistics business has been improving. And I just wanted to check if there is further avenue of improvement in that particular sector.
Rampraveen S.
Hi Kripa, I think the improvement in supply chain business has been a couple of things I think we have seen where we have -- just our warehousing businesses, we have made a lot of focus on this productivity improvement there, and there's been some yield coming from that. Some bad accounts or poor yield accounts have been shut down, that's helped as well. And the third one is where we have the integrated solutions. We have been doing a lot more of cost extraction between the warehousing and the transportation basis. And so that's been the 3 big levers we have been working on. And I think that w
Q
Sir my question is related to just a bookkeeping point. So, can you please bifurcate the SCM revenue between Mahindra and non-Mahindra businesses?
Rampraveen S.
Yes, the Mahindra business is revenue 51% overall so we index it, so slightly higher obviously on SCM because mobility was 6%. Got it Sir, Thank You.
Q
Hi Ram, so, my question is mainly on the mobility business. So, can you guide us on how it will pan out for the rest of the year? What kind of improvement are we seeing in the reversal of work-from-home trends? And like you had mentioned about the airport business doing well. So, can you give some numbers or directionally growth for FY '24? mahindra LOGISTICS
Rampraveen S.
Sure. I think from an immediate perspective where I think the airport business, the growth there is driven really by 2 factors: One, obviously, is our in-airport growth, right, and the second one is around expanding to newer cities. I think we are revising our electric vehicle fleet for growth in our airport operations right now because we have to augment it to drive substantial growth there. But broadly, I think the platform revenue level, as you know, the Meru business has platform accounting revenue, which is different because of the aggregator model we use an accounting treatment associate
Q
Yes, thank you Sir, you mentioned on the B2B Express business there is a 25%-30% decline in volume and we're looking to turnaround by the second half of the year. So, any benchmark volume number where you think this is required to breakeven the segment at what level of volume?
Rampraveen S.
So, Ankita, as I said earlier on in my earlier comments, we had around 4 lakh tons, right, on a consolidated basis, and we need it to be around 10% above that to be on a full EBITDA base -- breakeven basis, including synergy. So, we are down around 25% from where we were. mahindra LOGISTICS So, if we do the math we need around 30,000, 35,000 tons of volume, right, probably on 35,000 tons of volume and then the synergies to play out. So, there is a lot of work around that and somewhere in the middle of Q3, we expect to be able to get there. Early signs of volume growth are positive. I think Alo
Q
Thank you, everyone. I hope we've been able to answer all your questions satisfactorily. However, if you need any further clarifications or want to know more, but the companyneed mahindra LOGISTICS any further clarifications or wants to know more, the company is pleased to contact our SGA our Investor Relations Advisors. Thank you once again for joining us on the call, and wish you a great week ahead. Thank you.
Management
Advertisement
Speaking time
Rampraveen S.
19
Moderator
10
Alok Deora
5
Ankita Shah
5
Amit Dixit
4
Krupashankar
3
Sumit Kishore
2
Jainam Shah
2
Saras
2
Shogun Jain
1
Opening remarks
Shogun Jain
Thank you, Aman. Good evening, everyone, and thank you for joining us on Mahindra Logistics Limited Q1 FY '24 earnings conference call. We have Mr. Rampraveen Swaminathan, MD and CEO, and the senior management team with us. I hope everyone has had a chance to view the financial results and investor presentation posted on the company's website and stock exchanges. We will begin the call with opening remarks from Ram followed by a Q&A session. Before we begin, I'd like to point out that some of the statements made during today's call may be forward-looking. A disclaimer to that effect was included in the earnings presentation. I'd now like to invite Ram, MD and CEO of Mahindra Logistics Limited to make preliminary remarks.
Rampraveen S.
Thank you, Shagun, and good evening, everyone. I trust you all have had a chance to view our presentation and financial results, which are available on the stock exchange and on our company's website. In the interest of leaving more time for questions and answers, I'm going to kind of keep my update short. I will provide a short update on the external environment and our end market performance, a few key business elements and events of the quarter, status of the ongoing integration of the Rivigo PTL acquisition. And finally, I'll conclude by discussing highlights of our financial performance and our focus areas for the remainder of the year. From a broad macro perspective, the economy of India has and continues to see a tremendous transformation in recent years. So, the momentum continues to remain positive. As evidenced in the recent visit of the Honourable Prime Minister to the U.S., the centricity of our nations and economic and geopolitical force continues to grow. This growth, of
Advertisement
← All transcriptsMAHLOG stock page →