Mahindra hopes express biz to turn profitable amid focus on cost efficiency

Mahindra Group on Thursday said it is expecting its express business to turn profitable amid its focus on getting back volumes to achieve cost efficiency.

It also said the turnaround in the express business will bring the overall profitability in the logistics business.

The group's arm Mahindra Logistics Ltd (MLL) acquired the B2B express business of Rivigo in September 2022 and brought it under the MLL Express Services.

MLL saw its consolidated profit after tax declining 33 per cent to Rs 10.7 crore in the September quarter from Rs 15.9 crore in the same quarter of the last year.

The losses for the Express business were reduced by 32 per cent on a year-on-year basis, driven by continuous cost optimisation, while Ebitda losses came down by 10 per cent on a sequential basis, the company said.

 

The growth in volumes continues to be a key priority for the business as it progresses towards an Ebitda breakeven, it had stated in the statement at the time of the Q2 earnings announcement.

"The revenue growth is there. What we have not met expectations is in our profit performance and that is primarily driven by the acquisition of Rivigo, now the express business," Amarjyoti Barua, Group Chief Financial Officer at M&M Ltd, told PTI here.

Noting that in the express business, a certain amount of volume is required to be able to get cost efficiency, he said that pockets of inefficiency, including making sure that truck loads are higher than 50-odd per cent, have already been identified.

"Now, what is needed is to get the volume back in that business. And there was so much focus on efficiency that some of the commercial intensity needed to come back into the business. And I think that's where we have to put a lot more focus.

"Once we get that volume, the cost leverage will come through in a big way," Barua said.

"So, we expect by the end of the year, once these volume actions bear fruit, you will see the express business also profitable."  "And that should help drive the overall profitability of the logistics business," Barua added.

He said that while the express business continues to be a challenge, the rest of the portfolio is doing quite well.

"In fact, a lot of the subsidiaries that were a challenge because of the global conditions are now all turning a profit," he said.