Rampraveen Swaminathan, managing director and CEO of Mahindra Logistics Ltd, told Shubhra Tandon that the company has significant investments lined up from warehousing business as well. Edited excerpts:
Mahindra Logistics Ltd, the logistics arm of the Mahindra and Mahindra (M&M) group, is bringing down contribution from M&M’s auto business steadily to make way for more business coming in from consumption-led sectors as requirement for integrated end-to-end solutions grow. Rampraveen Swaminathan, managing director and CEO of Mahindra Logistics Ltd, told Shubhra Tandon that the company has significant investments lined up from warehousing business as well. Edited excerpts:
Q. Despite the impetus and growth in the logistics sector, Q1 numbers remained a bit subdued. What were the primary reasons?
A. The regional lockdowns, high commodity costs and fuel prices impacted demand across the end markets. Sequentially, revenue and profitability declined partly due to seasonal adjustments, and the impact of the second wave of Covid across our end markets. During the quarter, we witnessed decline in volume as there was restriction in movement of non-essential goods for the substantial part of the first two months of the quarter.
Q. Mahindra Logistics has been bringing down the contribution of business coming from M&M, which is now at 52%. What will be M&M’s share going forward and reasons for it?
A. While we continue to increase our expertise and continue to strengthen our services and clients in the auto segment, including M&M, our focus has been on expanding our non-M&M share of business. We are specially focused on consumption-led sectors like FMCG, pharma, e-commerce, where we see a large opportunity for growth and requirement of integrated end-to-end solutions. Our focus in these verticals is already adding to our non-auto clients, and we believe that this pie will increase further in the forthcoming years.
Q. According to analyst reports, MLL is aiming for a revenue mark of Rs 10,000 crore in the next four-five years with warehousing contributing Rs 3,000 crore. How do you plan to achieve this?
A. As a part of our strategy, we are focused on building capacities that will be Grade A, large ‘Built to Suit’ multi-user warehouses. We are on track to commission nearly 4 million square feet of such spaces in this fiscal. We have facilities coming up at locations like Luhari, Chakan, and Hyderabad amongst many others. The second driver is the focus towards solutions and value-added services, which will be the revenue and margin growth driver. We are focusing on integrated solutions, particularly in the e-commerce and consumer space, wherein the MLL will provide end-to-end services including first-mile, mid-mile and last-mile transportation and complete management of multiple level of warehousing. Our goal is to add 10 million square feet of warehousing space by March 2024. We see demand growing not only in Tier 1 cities but spreading to Tier-2 and -3 cities already. We intent to commission an overall 12-15 million sq. ft. space addition in the next five years.
Q. Even with softness in the auto segment of MLL, the company has been witnessing good growth coming in from FMCG, e-commerce and pharma. Are there plans to focus more on these segments?
A. On the supply chain side, we are constantly working towards expanding our growth through our integrated solution offerings in the non-auto market, significantly which is around e-commerce, consumer durables, e-commerce, pharma, as we consider them as consumption driven industries, which we believe will provide us an opportunity to create a balanced long-term growth strategy. We continue to focus on manufacturing but also investing in these markets. We are also focussing on freight forwarding business, which has been growing aggressively for us. We think cross border supply chains will move in a significant way.
Q. What is the outlook for FY22 and what are some of the key trends to look out for in MLL?
A. We are focusing on re-modelling our business for internal disruptions and then kind of trying to be agile to respond to different categories of demand. Some of the key trends would be growth in e-commerce and omni-channel retailing, resilient supply chains, growth in warehousing and fulfilment logistics, shift towards multi modal logistics, service and tech integration
Q. Logistics sector has also seen good hiring momentum given the growth that it has seen over the past year and it is going to increase. What is the hiring outlook at MLL?
A. In the last one year, we also saw an increase in seasonal jobs. While MLL has employed 10,100 people on a seasonal basis during FY21, a significant number of these employees has been retained in various operations. In addition to this, the company takes pride to add 40% staff to its third-party workforce during the pandemic. In line with our five-year road map on Diversity, Equity and Inclusion, in the last one year, we also onboarded ex-servicemen, air force and navy mainly for large operations at customer site. Our LGBTQ+ policy has led us to hire a number of colleagues from the community across the country in FY21. Also, we have seen an upward trend by hiring more than 40 women under this programme to date and the plan is to take this number to 50 by the end of 2021.