Mahindra Logistics Ltd
NSE:MAHLOG

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Earnings Call Transcript

Earnings Call Transcript
2023-Q2

from 0
Operator

Ladies and gentlemen, good day, and welcome to the Mahindra Logistics Limited Q2 and H1 FY '23 Earnings Conference Call. We have with us from the management, Mr. Rampraveen Swaminathan, Managing Director and CEO; Mr. Yogesh Patel, Chief Financial Officer; and Mr. Shogun Jain, Strategic Growth Advisor. [Operator Instructions] Please note, that this conference is being recorded.

I now hand the conference over to Mr. Shogun Jain. Thank you, and over to you, sir.

S
Shogun Jain
executive

Good morning, everyone, and thank you for joining us on the Mahindra Logistics Limited Q2 FY '23 earnings conference call. We have with us Mr. Rampraveen Swaminathan, MD and CEO, and Mr. Yogesh Patel, CFO of the company. I hope everyone has had a chance to view our financial results and investor presentation, which were recently posted on the company's website and stock exchanges. We will begin the call with opening remarks from management, followed by an open forum for Q&A.

Before we begin, I'd like to point out that some of the statements made during today's call may be forward-looking in nature, and a disclaimer to that effect has been included in the earnings presentation that was shared with you earlier.

I now invite Ram, MD and CEO of Mahindra Logistics Limited to make preliminary remarks.

R
Rampraveen Swaminathan
executive

Thank you, Shogun, and good morning, everyone. I hope you and your loved ones are doing well and safe. I trust you all have had a chance to view our presentation and financial results, which is available on the stock exchange and our company's website. Pursuant to queries in past earnings calls, we have expanded the information provided around our 3 business segments, the 3PL business, network services and mobility, as well as details around MLL stand-alone and subsidiary company performance.

Before I share any specific comments in our operations, order intake and key corporate developments during the quarter, just sharing a quick update on the external environment and the trends in our end markets and businesses. We'll then discuss our financial performance in Q2 and H1 and FY '23, and our focus areas for the remainder of the year.

Let me just quickly begin with external environment in our end market. Leading economic indicators just transportation, warehousing and inventory ideally indicate potential performance of the overall economy. Q2 FY '23 marked a cool off in key commodity prices, including those of base metals and crude oil as against the Q1 FY '23 period, which had witnessed elevation in commodity prices. To curb prevailing inflation, the RBI has adopted a part of aggressive policy type.

In addition, the demand situation has broadly been stable compared to the previous quarter while rural demand remained muted due to inflation's impact on disposable income. Input costs, especially those connected to the price of crude oil and palm oil has stabilized after a period of increase. Due to the stronger monsoon, going against renewal demand is being used by the opponent. We entered Q2 of FY '23 with an optimistic outlook on demand with the advent of the festive season and some sector level sales, but demand has remained neutral across many categories, especially e-commerce. While the sector has seen higher value growth gaining momentum in terms of demand, underlying volume growth has been lower than anticipated or forecasted by our enterprise customers. The operating environment remains challenging in Q2 FY '23 for multiple factors.

During the quarter, as auto demand went up, we did see significant shortages in supply of car carriers in some parts of the country, which resulted in a tightening of purchase price and an accretionary trend there. Vehicle and driver shortages were also there in some other segments. During the quarter, we saw increase in costs related to our frontline workforce and outsourced manpower, which specifically impacted our 3PL contract logistics business. International [ cross-border ] [indiscernible] continue to see downward pricing corrections, especially for ocean cargo on the Asia and European lanes. These factors have an impact on revenue and margin of our forwarding business. And key announcement of policy shift during the quarter was the announcement of the National Logistics policy.

The National Logistics policy aims to promote singles goods movement, but also increasing the competitiveness of Indian industries through better logistics infrastructure. While getting Gati Shakti is focused on the creation of physical infrastructure, the MLP will concentrate on logistics across shipping, storage inventory and investments in digital systems and processes. The NLP is all encompassing from a strategic view across the problems of high cost and low efficiency and by focusing on building a broad interdisciplinary [ cross-sector ] and multi-jurisdictional framework for the increase -- for improving the logistics ecosystem. The policy stated objectives are to increase the competitiveness of Indian manufacturing exports and export and accelerate the initial economic growth by improving logistics infrastructure and reducing the overall cost of logistics. The goal then is to build a world-class infrastructure for logistics, which is in part with many other countries in the world.

The NLP thus will need to cut logistics spending from approximately 14% to 16% of GDP today, gradually towards and worldwide average of around 8% of GDP by year 2030. In line with this, the value of the Indian logistics market is expected to [ reduce as ] rise significantly from its current value during the next 2 years. The new ONDC initiative holds exciting prospects for providing open services and infrastructure, especially in the last mile, and we are looking forward to be part of the same.

Let me now move on and talk briefly about our end markets and of course, beginning with the automotive industry. Since last year, auto industry has been seeing an uptick in demand with most categories showing encouraging traction. Since demand driver is still functioning and [ channel ] is observed prior to the festival season, the longer-term outlook continues to remain optimistic. Our chip shortages reduced the ability to fulfill demand has increased across the board. And I think across -- broadly inventory has increased, leading up to the festive season. As a result of rising cost for raw materials, of course, billings unions have reset prices. Also, there is a significant addition of new models, which are creating a greater pattern of demand right across the industry, both in terms of HTVs and other passenger vehicles and commercial vehicles.

Demand [indiscernible] continue [indiscernible] which has been offset by strong urban demand for HTVs. Commercial vehicle retail fell due to seasonality, but we expect that to be revised, especially given the high infrastructure spending and the volatile freight moment [indiscernible] show a very positive trend in terms of broad freight carriage. The festive season and lower supply chain issues due to chips has resulted in broader availability and movement of products as OEMs increase their volumes to fulfill demand.

The consumer durable industry after robust summer, the consumer electronics industry traditionally experiences some slowing of activity in this quarter due to seasonal factors. As well as demand moderation because of higher prices and a subsequent reallocation spending towards other forms of recreation. Margin pressure has also been witnessed in the industry as a result of cost-related headwinds, and increased comp driven density. Our leading brands and distribution channels are still hopeful that the festive season will see a strong return to healthy demand. Sales of durables on Amazon's Great Indian Festival and Flipkart's Big Billion Days has seen an uptick.

However, demand for entry-level products has remained weak as inflation has had an impact, the demand for lighting and products have not been significantly impacted and the industry continues to see a robust offtake. The broad softness has persisted in the last few months, and we estimate this to continue.

Moving on to the e-commerce industry, the e-commerce industry, the growth has been fueled by multiple factors, including better logistics, higher level of [ occurrence ], greater technology to new platforms, increased online shopping offers and a broader level of digital adoption post COVID. In contrast, the modern Indian logistics sector comprises logistical international elements with respect to service supply chains and production. During the last few years, there has been a dramatic size in online adoption and this trend is predicted to continue. Companies that specialize in providing logistics services are directly [ impacted by ] expansion in the industry. Many of the e-commerce companies are turning towards increased outsourcing as a greater rapidly expand network and accelerate order fulfillment.

While our broad long-term macros are positive, demand has been subdued during the festive peaks early in the quarter, and volume has merely shown moderate growth with continuing pricing pressures. The significant expansion in the past few years, right, have added a lot of network capacity and down and this has shifted more towards consolidation, especially among marketplaces. Moving on to mobility, the enterprise mobility segment is showing a pick in demand for the increased work from office policy. And therefore, we have seen a 20% to 30% uptick in trip levels. However, work from home remains the norm for night-shift operations, which is a significant use case for enterprise transportation. And that has impacted the scale and speed of the recovery.

Though we remain optimally committed to expanding in the segment through a focus on service quality, safety and optimizing our journey towards electrification. The frequency of business travels and personal travels in India has increased dramatically in the recent past. As we return to post COVID environment or post COVID level of activity there. Overall, we have seen this flow into moderate growth in the enterprise part of our mobility business. And a 40% to 45% growth in airport transportation services, provided by Meru.

If I sum this all up, I think across the quarter, we are in the midst of a strong auto recovery. The farm environment is stable, and demand pattern across other markets are bearing the short-term signs [indiscernible]. The operating environment and the supply of the cost side has been impacted by inflationary trends in parts of the transportation sector and rising front line and operating costs.

If you look at our business, our 3PL and network services businesses continue to see growth in volume in the first half of the year and the quarter just gone by. During the quarter, the 3PL business grew by 32% on a year-on-year basis. And for the first half, it grew by 35%, driven by strong performance in auto and continued growth in our existing operating sites. We continue to see volume growth and demand for integrated solutions over the past few quarters.

The farm sector continues to do well, positive at most [indiscernible] prevails. The tariff harvest approaches and commodity prices remain stable, and we are optimistic about growing performance there.

Within the supply chain businesses or the 3PL business specifically, the M&M business grew by 47% with robust drivers especially in the auto side of the business. The non-M&M SCM business grew by 12% and by continued growth in e-commerce, consumer and other markets. In the second quarter compared to last year, last year was an exceptionally strong second quarter driven by a recovery from the second wave of the pandemic. And this year, it's been more muted. And therefore, if you look at H1 growth year-on-year, the non M&M businesses for the first half of the year grew by approximately 20%.

The share of solutions and warehousing was 14% year-on-year. Sequentially compared to Q1 of FY '23, we saw growth in 3PL volumes, as well as growth in our network services businesses. Freight forwarding, last mile delivery and B2B expressed of 18% on consolidated revenues in the quarter. The Freight Forwarding business growth has slowed down with [ COVID ] pricing correction and underlying volume growth remains robust and positive.

Before I talk about consolidated financial performance, I'd like to spend a few thoughts to talk about recent corporate developments and as well as the performance of our subsidiaries. Let me just begin the acquisition of the of the part truck load or Express Business of Rivigo. We recently entered into a Business Transfer Agreement with Rivigo Services Private Limited and its promoters as of September 26, 2022, to acquire the B2B Express Business of Rivigo, including all rights titles, beneficial ownership and interest thereof on a slump sale basis. The scope of the transaction also includes the complete technology stacks and the IT usage of the Rivigo brand.

Rivigo was founded on 2014, a pioneer in the relay trucking model that relies heavily on strong technology and technological capabilities. The acquisition will strengthen our company's B2B Express business. By leveraging and utilizing Rivigo's large network of 250-plus processing centers and branches covering an area of more than 1.5 million square feet. And more importantly, actively leveraging a strong technology capability. We believe that there are strong synergies across networking and customer service. Rivigo's operations network covers more than 19,000 pin codes across India and we're providing existing opportunity for us to collectively grow the business.

Over the last few years, there are Rivigo Express business has had challenges, right? And those especially got accelerated during the COVID period. However, despite the fluctuating revenue levels, we believe the quality of the services remain very strong and underlining its work and technology architecture is top quartile. The revenues generated by the Rivigo Express business in FY '22 was INR 371 crores. The Express business EBITDA is currently negative, largely driven by the operating cost structure.

We have very defined plans to drive synergy and combination of the businesses and the focus around cost optimization in certain levers. We are confident the company is beginning to generate positive EBITDA in the next 2 quarters. And of course, we will share progress of that along the way.

During the quarter, we also incorporated wholly owned subsidiaries, [indiscernible] Freight Services Private Limited in Mumbai was established in September, the company has an authorized share capital of INR 5 crores and INR 1 crore in paid up capital. BFSPL will engage in cross-border logistics, supply chain management, freight forwarding and air charter businesses. By far our customers in India and across -- and outside.

Let me also quickly talk about some of the other important subsidiaries. We know the Mobility business is needed as you all know, has been focused on B2C and airport across 5 major cities in India. While the segment was impacted by COVID. And over the last few years by varying demand and supply patterns. Since the acquisition, the operating rigor and the focus on cost control has started showing results, with increased levels of synergy at the operating level between the Meru and Alyte businesses. Consequent to that, in the first half of the year, revenue was INR 44.6 crores as compared to INR 23.9 crores in H1 FY'22, a significant growth level.

Profit after taxes. Our losses at a PAT level have narrowed down to INR 4.2 crores in H1 FY '23 compared to a loss of INR 10.8 crores in the first half of FY '22, a significant reduction in our losses as we drive those synergies and cost optimizations. [ eDeL ] this is the last mile delivery business, which we invested in earlier this year. has been scaling up its operations as well. Revenue for H1 FY '23 was INR 62.4 crores as compared to INR 52 crores in H1 of FY '22. We continue to make investments or support investment in that business to expand the offerings around microfulfillment and B2C and also investment expanding the network and the technology infrastructure of the company.

As a result of those investments, the company continues to have an impact of that. PAT losses for H1 FY '23 were up marginally from INR 1.9 crores in H1 FY '22 to a loss of INR 2.8 crores in H1 FY '23.

2x2 Logistics, acetate cars business has obviously been seeing disruptions for some time now. Over the last year, we have, due to retro-fitment and rebuild reasons, a high substantial amount of fleet off road. We have started completed retro-fitment for several parts of the fleet and operations are resumed. At the end of the quarter, more research of the fleet had been redeployed, right, in operations. We continue the investment to complete the retro-fitment and redeployment of the assets. Overall, the car carrier industry is seeing broader positive outlook in terms of demand, and we believe on completion of the rebuild of retro-fitment, the business will be well positioned to show a strong recovery in revenue annually.

For the quarter gone by, the business has made a loss of INR 1.1 crores in Q2 FY '23, which is marginally better than a loss of INR 1.2 crores in Q2 FY '22.

Let me now share consolidated financial performance for the quarter. Revenue for Q2 FY '23 increased by 28% on a year-on-year basis to INR 1,326 crores. Sequentially, compared to the first quarter of FY '22, revenue increased by 11%. Revenue from supply chain management, including our 3PL and Network Services businesses, contributed 95% of overall revenue and the mobility business has contributed for 5% of overall revenue.

Gross margin at a fully consolidated basis stood at 9.7% in Q2 FY '23 compared to 9.8% in Q2 FY '22. Gross margin was impacted favorably by volumes and underlying cost movements. It was impacted unfavorably due to 2x2 operations, a drop in margins of the forwarding business and an increased shift in terms of production towards full truckload transportation in our 3PL business.

Our EBITDA for the quarter stood at INR 70.9 crores, up INR 49.2 crores in Q2 of FY '22. PBT on a fully consolidated basis, is up 118% from INR 7.7 crores in the prior year's Q2 to 16.7 crores in Q2 FY '23. Our PAT was up by 145% to INR 11.3 crores in the quarter. These are on a consolidated basis prior to consolidation of JV and the share of [indiscernible] part grew by 15% year-on-year from INR 9.3 crores to INR 14 crore.

The proportion of revenue from the Mahindra Group comprised 53% in Q2 FY '23. And we just also shared a few more details around the segment level performance. Revenue from supply chain, it increased from INR 978 crores to INR 1,263 crores, up by 29%. The mobility segment grew by 15% to a quarterly revenue level of INR 62.8 crores. Our SCM revenue has seen an uptick in the growth across our 3PL business and continued growth in our network services businesses. Our revenue from the Mahindra Group Supply Chain businesses grew from [ INR 483 crores ] to INR 708 crores in Q2 FY '23. Our non-M&M SCM businesses, which include the 3PL and network services businesses grew from around INR 495 crores in Q2 FY '22 to INR 555 crores in Q2 FY '23.

Our warehousing and value-added businesses for the non-M&M SCM business have grown from INR 201 crores to INR 223 crores, which shows the growth of 11%. Share of warehousing and value-added services in non-M&M SCM businesses has reached 40.2%.

As we move forward, we will be really committed to our long-term focus on growth that consistently laid out our vision for the business, which is a combination of strengthening and expanding our core 3PL business, diversifying service lines around freight forwarding, B2B Express and last mile. And remaining focused on building a diversified market bridge across automotive, e-commerce, consumer demand, pharma and other segments. We do also remain focused on enhancing capital efficiency. The focus on driving and operating costs and increasing the productivity of our business.

As we keep investing on our core business, right, we are seeing the impact of that from a margin perspective. But those businesses, we remain confident will turn around in the coming quarters as we see increased scale and margin expansion. Those should accelerate the earnings of the company. In the short-term, we are anticipating increased demand from our existing accounts despite softer demand and growth in our global forwarding business. And we remain focused on the cost reduction and continue to invest in technology to drive differentiation for our customers and value for our customers.

With this, I will open the floor for questions.

Operator

[Operator Instructions] First question is from the line of Mukesh Saraf from Spark Capital.

M
Mukesh Saraf
analyst

Yes, first question is on the Express business in your Network Services, you see that Y-o-Y, obviously, the gross margins have declined significantly. It was 0.8% positive last year same time, and now it's negative while revenue growth is about 18%. Could you give some kind of sense on what -- I mean, what has led to the margins declining? Because peers -- in your peers that we see the numbers, the B2B Express business, they're all around the mid-teens margins. While if our scale is still lower, could you give some kind of outlook there? Also in relation to this, in terms of the fleet, in terms of the shopping centers, do we have dedicated fleet separately for this business and sorting centers as well? Are we able to kind of utilize the existing fleet and sorting centers for this business?

R
Rampraveen Swaminathan
executive

Mukesh, I think the Express business, telling from an operating model perspective, we obviously run a collection of hubs serving around 8,000 pin codes directly and obviously a set of external pin codes across the country. From an NAV perspective right now, those hubs are serviced to schedule in all lineals, right, which operate between them. These are vehicles dedicated to that business, right? We don't own the vehicles. We obviously post them, but these are -- this is a network which operates on a time to time basis, and therefore, we dedicated to that end of the business. What has changed, obviously, on margins year-on-year as you have seen already contra -- right now already.

We are in the process of expanding the network, right, and scaling that up. And therefore, through the quarter, we have obviously added new locations, new geographies, to serve them. And I just scale up both typically in the Express business, we are investing in the network. We're investing in network ahead of the demand because customers come up after you have an operating offering. And I think we, therefore, look at most of the express businesses through the scale-up period. They obviously do have the reinvestment cycle.

At the same time, I think it's certain to note that if you look at the Express business, at a quarterly level, while we have seen a swing in terms of margins. If you compare H1 versus H2, we've actually seen that margins have improved. So that's just an additional data point. Of course, as we complete the Rivigo acquisition, we will drive the integration of our existing Express business and that business together. As you know, that's strategically been driven by the drive to build scale on a -- of strong operating systems and expanding network and really create technology. And therefore, I think the combined -- the combination of these businesses will obviously, I think, allow us to change the slope of the network -- expansion of the network, but also the movement of margins. We do obviously expect that in the medium-term margins will refer come -- will be similar to comms right from the market.

M
Mukesh Saraf
analyst

And this continues, I mean, we are at a INR 200 crore annual kind of run rate here for the Express business. And Rivigo is about INR 370 crores business that we have acquired. So are we looking at, say, INR 600 crore kind of a number on an annual number sometime next year?

Y
Yogesh Patel
executive

No. So Mukesh, we are actually at around last 12 months, we had INR 170 crores to INR 180 crore revenue. H1 is actually INR 97 crores.

M
Mukesh Saraf
analyst

So annual is INR 200 crores is what I was looking at.

R
Rampraveen Swaminathan
executive

So roughly INR 200 crores. But if we consider the deal with [ LPL ] last year numbers, INR 180 crores plus INR 370 crores, we get to INR 550 crores. Number for the last financial year.

And we obviously are looking at a fairly strong growth there. But the immediate and the short-term focus is to actually drive very strong service quality, ensure that we protect yield and we have [indiscernible] cost. Because I think if you look at this is -- I mean, if you get an integration wrong , we can actually lose customers in this industry as well.

M
Mukesh Saraf
analyst

And just my second question, again on the network services, we've also kind of highlighted the last mile number there. And so just wondering, this last mile is a dedicated service that we provide, aside of the last mile we might be doing as a part of our SCM Integrated service. So this is just a dedicated last-mile service that we provide.

R
Rampraveen Swaminathan
executive

Yes, so this is just -- this part of the business the last mile gets sold as a service, right? So this is not anything we do on integrated solution level that normally will get rolled up under the 3PL part of the business. Delivery stations, delivery associates, electric EV cargo based on delivery services. The network, which is around across over 120 cities in the country, right, services. This also, if I may add, excludes revenues of result. Revenues are not consolidated, combining -- and you have seen the result was around INR 62 crores in the first half of year. And so if we combine both of those, to include last mile every business would probably be -- the total magnitude of that would be around INR 160 crores on an H1 basis. right, growing at 20%, 25% level. Our last mile delivery business actually grew 55% last quarter as we penetrated some newer segments like groceries and so on.

M
Mukesh Saraf
analyst

And my last one is, I mean, we have given indicators -- I mean, the gross margins for various segments. Could you kind of give an indicator of gross margin between Mahindra and non-Mahindra and say, transportation warehousing [indiscernible]. And it would just be helpful in understanding how the mix changes because we're seeing a strong growth in automobile and hence Mahindra is doing very well. And I think transportation also is into that. So some things might help.

R
Rampraveen Swaminathan
executive

So I'd say if I just -- I think as we mentioned before in prior earnings calls as well as we really don't differentiate from a Mahindra versus non-Mahindra account. The margin profiles are driven more by the kind of service on it. The Mahindra business is largely full structural transportation and network, with cross-docks and all levels of postponement in the supply chain. As opposed to non-Mahindra businesses, which, of course, actually have a larger share of warehousing solutions, up around 40% of business. So it's a bit unfair to actually do them from a competitive perspective. What I can say, as we have said earlier on, is there are transportation businesses, and we have on gross margin is on the high single-digit level. And our warehousing and solutions generally have something in the mid-teens.

That's roughly -- that is roughly what carries the weightage of the margins. Now a couple of things I do want to add here, which I think would be relevant is one, obviously, we've seen, as I mentioned in my opening comments, a fairly significant inflationary impact from a car carrier perspective. Our car carrier shortages have been significant. That has obviously had a trailing impact on margins in the second quarter, right? And will probably flow through a little bit in the third quarter. But we expect that to get rebalanced as our partners add new capacity in the coming months, right? And so that's one thing. And of course, we do with the Mahindra business actually operate through a fair amount -- through a combination of management fees of servicing plus a [indiscernible] of savings. And we try to develop positivity in the network. That's the level of savings in the second quarter has been impacted, but that's something, again, which we believe will catch up to the rest of the year.

Operator

[Operator Instructions] The next question is from the line of Damodaran from Equitas Capital.

U
Unknown Analyst

You've answered the better disclosures that you have come out with this time. So a few questions around that. I mean, firstly, among -- between the network services business and the 3PL business. So what is the customer overlap between all the businesses, 3PL freight forwarding expressed in last mile? And a related question to that is what is the internal management structure to sort of ensure that there is sufficient management band that can be given to all these different businesses, given that you have dedicated competitors in each segment. And there will be different metrics, and you are a challenger. So I just wanted to hear your thoughts on that.

R
Rampraveen Swaminathan
executive

So it's a great question, Damodaran, thank you for that. So let me -- I will take them in sequence if I don't follow your order bear with that. So I think this is from a customer overlap perspective, I think from a customer count perspective, there's probably 25% to 30% overlap of those customers, right? Obviously, we do cross-sell, up-sell to our clients across the board. What I think differentiates these businesses is that we are customers by these services and what drives value creation in businesses. So in the natural services businesses, a lot of times, the customers just buy the plain, the basic service itself. There is not -- it's not a multiservice integrated solution. It's normally a customer who wants to move more across countries, right, wants to actually move packages across geographies by surface. Or wants to do last mile deliveries in a specific part of the city or state. So we tend to buy services on a service level basis and don't buy a bouquet of integrated offering, right? So the same customer, therefore, buys it very differently at times, and that's why we actually keep them the way they are.

The second part of it is the way we create value in the 3PL business through the integration and solution design and dominant capability. In the [indiscernible] having the infrastructure and driving utilization and service quarter, right? And therefore, these businesses are kept differently and measure differently because of that.

Your other question was around management structure. And obviously, the 3PL each of these businesses has an independent or a clear P&L owner. And each of those P&L owners essentially our partners or the early owners are part of our company leadership team, right? And we have individual P&Ls, which we have kind of end-to-end accountability to drive. We have, obviously, programs inside the country which are enabled and driving synergy, both in terms of demand and supply. So for example, may be 2 procurement [indiscernible] often it happens to a central group. It supports all parts of the business. We do obviously work on customer account management across multiple service lines. But individual businesses actually have specific P&L managers or leaders and they manage the operations. The demand generation operations and the service quality of their respective businesses.

U
Unknown Analyst

The other question that I had was your I mean, disclosures on Rivigo. So can you just give some more color on the profitability metrics, I mean what sort of EBITDA loss is it making right now? And what's the plan to sort of turn it profitable? I mean where will you generate the cost savings from [indiscernible]?

R
Rampraveen Swaminathan
executive

I think from the past perspective obviously, Rivigo has always reported numbers on an integrated basis between FTL and PTL. And therefore, the blended numbers are not fully reflective [indiscernible] of the carve-out of the business. The way we have done the BPA, we have specifically carved out sections of the business. A partial business which covers deals like to cover in the transaction. And therefore, the blended earnings are not very reflective, right? That said, obviously, today the business is probably at a minus 7% to 8% EBITDA level on a one-time basis. Now what will drive that value creation on the combined business? So first of all, I think Mukesh asked earlier, our combined business is around INR 500 crore -- the combined expense is INR 550 crore, INR 560 crore. And sort of operating 2 networks, we obviously synergize that we work. So increasing higher volume throughput through a combined network is one thing which is actually going to drive obviously, lower operating cost, right, at a network operating level.

The second thing, obviously, is that [ root ] optimization and lean optimization across geographies and customer banks, our focus areas to drive asset utilization or trip utilization across wages and we express that utilization of all the vehicles will improve, and that will drive down cost. The third thing, of course, is that we are looking obviously at higher purchasing leverage. At MLL, we acquired and buy significantly higher level of [indiscernible] transport capacity. And that synergy is something which we'll bring to bear, right, in the combined business, and that should give us significant leverage. And lastly, the management or the operating structure modality, building on what I already commented to Mukesh, Damodaran, is that the operator shared services model, individual businesses are responsible for demand generation, operation service quality. But we don't really have, but overheads are shared across multiple segments, offers a much [indiscernible] revenue base. And that should allow us to optimize the overhead structures for the business.

So combined to these 3 or 4 broad levers [indiscernible] is brought along with volume growth, right? As we combine go to market, we expect to be able to get the combined business and turn it to positive EBITDA in the coming quarter.

U
Unknown Analyst

Just one last question from my side. We saw some working capital deterioration this time around. So I mean, could you comment on the level of sustainability of working capital and what's the reason for the deterioration?

R
Rampraveen Swaminathan
executive

Yogesh will take that.

Y
Yogesh Patel
executive

Our working capital days as of end of September to that 13 days, which is, in fact, a change of 2 days from what we were earlier when we started this financial year. The main reason, I mean, this is the period of time usually middle of the year. It kind of balloons up a bit given the customers. Usually -- I mean, during the festival season, the payouts towards bonuses, et cetera, are higher. And there is a little bit of stretch on the days sales outstanding or the receivables per se. So that's the primary reason for this 2-day delta. What you see in working capital deployed in the company, which by -- as we come towards end of Q3 and then Q4 is always an improving trend from that perspective. But usually, this is kind of, I would say, a little bit of cyclicity and middle of the year for [indiscernible].

U
Unknown Analyst

Yes. But even if I look at September to September, it deteriorated fairly -- I mean it's almost half. So even -- I mean these seasonal issues would have impacted last H1 result as well?

Y
Yogesh Patel
executive

No, Damodaran, I think if you're looking at an absolute value perspective, absolute value would have gone up because of the size of business, which has gone up itself. What I was trying to do is trying to explain to you saying that one is the absolute working capital deployed because we are an asset-light company. From that perspective, as predominant deployment, I mean, in terms of investment in the business to be from a working capital perspective, -- and as your business volume growth, your commensurate deployment of working capital would be...

U
Unknown Analyst

Yogesh, I'm just looking at the cash flow generated, I mean that's -- it's INR 30 crore for this half year versus INR 97 crore for the last half, I mean, H1 FY '22. So I mean, there's a sharp jump in trade receivables around [ INR 35 crore ], right? I mean if you're saying that the seasonal then that bad impact should have been there in the last -- I mean, last September results [indiscernible]. That's where the question was coming from.

Y
Yogesh Patel
executive

Right Damodaran, so that last September with last September quantum of business which we are doing. This September, I'm saying from if you convert that back to days, right? So I mean, I did come back to beginning itself to say that how does this work with receivables, and that's the real reason. So I confirm to you that, yes, that has been seen. And the reason why this is and [indiscernible] we are sure of that that is could rationalize. I mean this is the peak season as well as festival season both leads to this particular data.

U
Unknown Analyst

So you're saying that, I mean, working capital, you should not expect any sizable movement in terms of number of days on an annual basis that this is the season.

Y
Yogesh Patel
executive

That's correct.

Operator

[Operator We] instructions have the next question from the line of Pranay Roop Chatterjeei from BCPL.

P
Pranay Roop Chatterjee
analyst

Just one quick question on the same working capital and cash generation. So if I look at the free cash generation in H1 2023, it has been negative and largely because of working capital outflow, which Yogesh mentioned is because of elevated DSOs in the H1 of the year,Right? So if I compare versus last year, it's correct that the DSOs When you include accrued sales is elevated, and then it sort of comes down as the year goes by. But what I also see is that your DPOs are worth it. You were able to leverage your DPOs to a large extent in the last 2, 3 halves but that has sort of normalized right now.

Any comment on whether any vendor relationships have changed in terms of contractual DPO numbers? Anything that has happened on that front? And ,#2 any comment on free cash generation going ahead? Like should be able to see a positive outflow or due to the new businesses normalizing, we should expect a negative flow for a few quarters.

R
Rampraveen Swaminathan
executive

You're right. So from a number of perspective itself, cash generating from operating activities for first half has been negative

Conclusive INR 25 crore number. And on then the payables piece, I mean, I think what I mentioned probably from the 2, 3 things happened to macroeconomic factors around retail in terms of our operational metrics one is the whole inflationary effect, which has gone through, which has kind of not from a vendor ecosystem perspective. Obviously, there is a little bit more burn in cash from the subset as we operate. While there is no change in terms from our perspective, Are -- again, seasonality of during this time, even our vendor would expect us to clear this off per se. Second is our share of business towards warehousing and valuable services as a larger deployment of manpower and rental fees, which again is going ahead of the cycle from manpower costs, get paid out every month from a calendarized perspective.

So these couple of things. But from -- again, as I mentioned in earlier question from [indiscernible] as well, that if you were to look at asset-light business obviously is or other terms what we envisage with our customers and vendors, both combined with state towards a particular number of days of working capital, which we steer our business with, and we should get back there. But the reason I think is common here from the inflationary or availability aspect of supply, be it on the auto car carrier side, which Ram mentioned earlier, where -- and the seasonality now linked to the sector season where the payables also does get paid out from that perspective. So these couple of things on the cable side.

P
Pranay Roop Chatterjee
analyst

Got it. Okay.And my second and last question is more strategic in nature. So over the last couple of years,Mahindra logistical business has shown increased focus on the network services side of things, which obviously, all of them are in investment phase and have limited scale. So right now, we have the express business, which is at about 0% GM Your last mile is also at a 0% GM. Rivigo is going to get integrated and your meru cap is also scaling up at this point of time.

My question is, internally, when you discuss at a consolidated level, do you have a broad firstly revenue target and a broad PBT target in mind? So I understand it's going to be very difficult to predict bottom line profitability for the next, let's say, 3, 4 quarters. But at a management level, do you have targets in mind in terms of, look, this is what we would like to achieve out of all entities once sort of the normalized end, especially in terms of cash generation. Will you have any internal targets of turning cash profitable, let's say, next year or in 2 years' time? So if you could just discuss these high-level management targets.

R
Rampraveen Swaminathan
executive

I think from the earning cash. I wouldn't petite the cash metrics we have seen in the first half are a continuing metric just go and look at back at the recent and past I think as Yogesh has already said, we don't expect the working capital metrics, right, to fundamentally change through this year. There are 3, 2 parameters that sharpen especially as demand patterns move across asset classes, right?

But broadly, those should be in play. That said, I think that's a working capital factor. I think there is a broader portfolio element here, of course, right? So as you know, we have been adding more detail around for all our benefit. The core 3PL business has also grown quite significantly over the last 3 years, especially in non-M&M share. I mean on automotive share as we have built strong positions in consumer and e-commerce, right?

And that business on a margin level is also -- is at a pre-investment level in terms of margin, right, as we've expanded the warehousing business and try to build a much stronger differentiation with technology.

So that -- it's not like that business has a margin significant focus. Clearly, the network services business is a very important focus for us. We are investing in it. And there is a scale point at which these businesses have an inflection point in terms of earnings.

As we actually look at our 3 network services business, the freight forwarding business has kind of pretty much already being there, right? It's either 9% and 10% gross margin level. right? It's right across quarters. It is -- it's kind of been growing and now has achieved scale, right? And therefore, that's kind of what our businesses should look like at scale in the network services piece. Trading the express business is an investment curve, right? And the last mile delivery business also investment curves, both organically and inorganically right? Scale is important in this business demand.

So we do obviously focus on driving that scale up, right? And add it all up, I think we've always said that our -- we believe that what is critical for us as a company and what we think needs us unique is our focus on being a multi-service businesses and business and the multi-market business, right? So in the last 2 years, in automotive was softer, our nonautomotive businesses actually grew at a much faster pace. Today, as you've seen some impact of softness in some of our nonautomotive market. It's automotive, which is driving growth, right? And it is balanced across sectors, which we have continually invest in, which we think is very important.

Similarly, balance across service lines is very important. So while we focus on 3PL. Sometimes 3PL will grow faster, but at a mature level as we get the right scale across these businesses, we think the combination of this business is what makes more us create value for our shareholders, as well as for our customers because we didn't provide integrated solutions.

Now in terms of targets, I think each business actually has targets. Obviously, the 3PL business is a more mature business. It has separate cash and profitable targets compared from a network service business. But the overall portfolio is headed towards a broader direction, which we have said before as well, that we can hope to become a 10,000 crore company. That's the aspiration. We put it out there in the public world. And we expect that secularly, across the globe. We should be able to continue to grow profit In a [indiscernible] pre COVID levels, right? I think have pre COVID level margins and that we run to 2% at a PAT level, and we expect to be -- our aspiration is that to be better than that as the portfolio matures over the next 2, 3 years, right? And most of the network service businesses should actually look like the freight forwarding business. Right at maturity and scale.

So that's kind of -- as you know, we don't give guidance Pranay but the closest level of detail I could probably share with you.

Operator

[Operator Instructions] The next question is from the line of Sachin Trivedi from UTI AMC.

S
Sachin Trivedi
analyst

Just from 1 to 3-year perspective, again, not looking for margin guidance per se, but the warehousing business or the supply chain business that we operate in, how should we think about, let's say, if I were to -- If I don't want to go into specific margin number, but what kind of potential that this business will have in terms of profitability just because we have scaled our non-Mahindra warehousing business substantially. but yet to see the results stat of that number in the numbers. And so just maybe you can help us understand that side of it because that's our core of the business. And if you can help us that -- with that.

R
Rampraveen Swaminathan
executive

Sure. So I think if you actually look at the business, I mean just divide this subsidy to 3 parts, so if you look at -- because the margin when you see them is a consolidation of all 3, the drivers of the margins are quite different. So if you look at our gross 3PL business ,and you see the results, we will see that we are a gross margin of around 11% in the second quarter, and that business historically -- so that's actually being in that 10% to 11% now, it's probably in the high 10s.

We expect to continue to focus on driving margin improvement at the 30 to 50 basis points at an annual level, Now we not -- that business because of the Ind AS 116, we have obviously invested or expanding the warehousing network. And there has been a flow-through impact because of the AS 116 gets accounted. Most of warehousing network actually services staticky.

If you look at the 3. The network services businesses, we

are roughly now around 20% of our revenue. But those businesses at a segment level are around 5% gross margin because they are an investment income, As I said earlier on, at peak at scale, those businesses should also be at 10-plus percent in terms of gross margin with lower capital intensity because we are not investing in a single of warehouses, et cetera, which should be in the warehousing part of our business, right? And therefore, that business should be at that level, And so as you look at the going-forward margin profile, I think the ramp-up in different segments are different. The 3PL business is a business which is more core to us. The more established volume.

And there, we expect to continue grow to drive improvement base margin,Accretion The network businesses are where we are building scale. The growth will also be faster. So there'll be 2 factors, revenue factor and the higher revenue growth will also be also driven -- also drive better margin performance.Right?

But that's kind of the way we drive our 2- to 3-year view on these businesses in such. And obviously, we break those 2 to 3 years views into new specific targets, which are there for the individual business is a short-term perspective.

Operator

The next question is from the line of Vikram Suryavanshi from Phillip Capital Private Limited.

V
Vikram Suryavanshi
analyst

Sir, you talked about, I think, network services and growth and our focus of being a multiservice business. Just trying to understand, we did that framework getting outlook on particularly non-Mahindra 3PL side of the business in terms of our focus on client addition and traction with the existing customers in terms of slightly better growth outlook for that kind of a business. How are we looking at there?

R
Rampraveen Swaminathan
executive

I think our growth outlook is I think as we said earlier on, I think the goal is to grow the non-mahindra businesse [indiscernible] 3PL part of it by 15% to 20% every year. right? And to grow the overall non-mahindra business, including network services by north of 35%. If you look at this quarter, obviously, it's been a bit lower, but if you look at H1 this year, I think combined, we kind of combine up at 20% year-on-year growth despite some of the kind of slightly softer trends from in the recent months around some of our markets.

Why I say H1 is important because last year, Q1 was COVID impacted, Q2 was COVID recovery, right? And therefore, because quarter-to-quarter is not as accurate as H1 into H2. So that growth is something which we are focused on sustaining. During the quarter, we have continued our clients this time because we added a little bit more detail around our segment performance. I do not cover acquisition of accounts in our opening company. But I can share with you that we have continued to expand,in person we had -- first, we had -- we continue to have strong retention rate at a client number level across our business. And during the quarter, we have actually added more accounts.

I think given the nature of the economy right now and the macros, I think obviously, this quarter, we saw more additions in the consumer and manufacturing business where we have added work with both the different manufacturing clients. But we've added some contracts in the e-commerce space. I think the space of that has come down -- has been lower than the past there.

Overall, for the quarter, I think we had quarterly order intake on the non-Mahindra side, mostly 3PL of around INR 80 crores to INR 100 crores of new contract on annual contract value basis. So that's kind of roughly the run rate we were on in the quarter in terms of order intake.

V
Vikram Suryavanshi
analyst

Okay, Got it And just to get a feedback, like the customers when you talk to the new segments because we are seeing good response from consumer e-commerce or manufacturing, but customers' ability to go to 3PL partners, is it becoming more and more aggressive, or it is still a slow process and people are taking their own time to migrate? How is that response in terms of different verticals, and to what kind of the basically speed which -- is it like as anticipated, or still we need to do a lot of work to really bring them on the table? So I just wanted to get that sense of how fast we can see that migration in India, the broader opportunity for retail players?

R
Rampraveen Swaminathan
executive

The auto industry, I think, has always been a higher outsource in industrial in terms of 3PL. I think since GST, so I think that's definitely needed. I think e-commerce has also been a screening of networks and volumes actually has obviously use a partner model quite aggressively to drive growth and actually adoption in both those markets is very, very good. I think consumer durable FMCG, FMCG, pharma and other categories there. I think there, historically, obviously, those markets have been served through CFA models.

Post GST, I think there has been a growth in traction quite significantly in that space. But it's a very distributed network. So companies continue to move that. They don't -- very few companies are doing a lift and shift of an entire network, right? In fact, over the last 2 years, with all the variabilities of COVID I think that has actually placed a challenge on companies in terms of redesigning the supply chain network because there are new considerations are there.

But I think the trend is fairly -- is overall healthy I mean our own estimates are in India right now, the 3PL is around 6% of the industry in our estimate. And we think that given the work trend around formalization, given customers we tied towards more integrated and recent policy shift like we think NMP, We think 3PL will probably come on 10% over the next 4, 5 years.

Operator

The next question is from the line of Alok Deora from Motilal Oswal.

A
Alok Deora
analyst

Sir, my question was more towards Rivigo. I just wanted to understand, you had recently put up a press release on the delay in the closure of that your transaction. So how are we -- by when can we expect that coming in? And also some color on what's the -- how much losses are there in that business? And by when we can see the turnaround there.

R
Rampraveen Swaminathan
executive

Yes, so I think the [indiscernible] delay in terms of what you listed out as mostly on account of procedural delays and procedural factors. Obviously, from a government perspective, we listed them out, right, clearly. We have planned a certain schedule around it, but given there has also been a festive season and into Diwali and other occasions have come in. There's just been procedural delays in that. I think as we stand right now, we probably expect the next -- in the next couple of weeks, we will be able to close the transaction subject to all conditions being met from all parties and in obvious terms we are requiring it.

Now I think from a profitability perspective, I think I indicated earlier on that the numbers have always been blended. So we don't actually are not really reflected what we think -- what we have estimated it now is that probably on a running rate run rate level, the business is probably at minus -- a negative 7% to 8% EBITDA right? And that's what we are hoping. And I think I already talked about the 4 levers which we are focused on to drive and keep a positive EBITDA level, combined both our export business which exists today and the business which we buy from the Rivigo Services Private Limited.

A
Alok Deora
analyst

Sure, so overall, when we see Rivigo financials, it's at around 45% to 50% loss. So express business, you are saying it's around 7% to 8%.

R
Rampraveen Swaminathan
executive

No, I think that's not -- unfortunately actually that's not what I'm saying what I'm actually saying is that Rivigo RSPL operated on a certain blended model in terms of revenue market and cost structures, right? What we have done is we are essentially buying parts of that business. And the parts of the business we are buying right now, right, are at that kind of EBITDA level. As we buy the business, right, obviously, we have plans on kind of turns around and restructure.I mean I hope that was clearer

A
Alok Deora
analyst

Yes. So actually, I was just trying to understand how much losses the extra business as out of the total because I think they have 2 businesses. One is the FTL and one is Express.

R
Rampraveen Swaminathan
executive

I think it's hard for me to comment on how very important their numbers are there. I think that's probably best for the RSPL management to respond to and kind of award I just would not like to answer that. But as I said, we have given what we are buying and the run rate to [indiscernible].

A
Alok Deora
analyst

And also, sir, so we are going to pay around INR 225 crores for that business. So how do we see the debt moving because I think some bit of debt will also come up for this, right, because the operating cash flow might not be entirely sufficient to pay for this.

R
Rampraveen Swaminathan
executive

Yes. So I think at this point, obviously, the business will be funded through internal accruals and there will be a component of debt, clearly, which is there in the short term look, right? At the same time, I think exactly how the overall debt table will work out, we are in the second -- third quarter of the year. And we have still strong growth this year, right? So obviously, we have to look at our forward view over the next 12 to 15 months in terms of working capital requirements, organic capital investments and investments in Rivigo -- and we'll build a consolidated view of that. Right now, we don't have a specific sort of numbers to share, right? But what I would say a look is directionally yes, there will be debt on the table.

A
Alok Deora
analyst

Just last question. So we are having these new businesses which are coming, which are at losses or lower profitability. So for the next year or next couple of years, do we see the margins being at near above current levels or slightly lower than these numbers? Any ballpark range we can work with because -- yes.

R
Rampraveen Swaminathan
executive

So, what I would say is I think it's -- I think every business is a slightly different frequency. So first, I think the 3PL business. I think we kind of share the margins with you on that, and we expect kind of it's on a stable basis and have organic kind of margin improvement focus. If you look at within the network services businesses, there are actually 3 different businesses in 3 different stages.

The freight forwarding business look is actually at the 10% gross margin level, right? And just scaling that business up. The Spare business has obviously been where we are steering it up now faster through the Rivigo acquisition of the business from right? And the last-mile delivery business is a business which is kind of breakeven. And I think these businesses each -- but we also have very different growth drivers to our portfolio, and they compete with different uses. We completed last month in last-mile delivery businesses in Express with express companies.

So I think it's not -- so we -- I won't call a specific number in terms of margin on a blended basis. I do believe that we will hold or improve at this stage, our 3PL freight forwarding margins. The other business is, obviously, as we build scale, we'll have a multiplier effect from a margin perspective.

Operator

The next question is from the line of Abhishek Ghosh from DSP.

A
Abhishek Ghosh
analyst

A few questions for the SCM part of the business, non-M&M, what will be the average tenure for a typical contract?

R
Rampraveen Swaminathan
executive

The SCM part of the business non-M&M I think it's a some ether numbers [indiscernible] I said that the warehousing integrated solutions contracts are probably would be 3 years an average plus on average. If I had to take an average presented the number. And I think the transportation contracts depends on how much of network design we have on the FTL side and how we integrate with -- but those contracts also change between up around 2 years, 2 to 3 years. If there is a Standard transportation contract, if it's integrated across the board across transportation that housing solutions, it will probably be around 3 years of an average.

A
Abhishek Ghosh
analyst

Why I asked this question, Ram, is because a lot of those contracts which are signed in that FY '19 levels or 2019 levels must be coming up for repricing now. So how do you look at the margin profile of those contracts, what you were getting in 2019? Are you able to kind of get the same kind of margins? Or has it improved, deteriorated because of the competitive scenario? I wanted to kind of get some understanding around that.

R
Rampraveen Swaminathan
executive

I think if you look at our past at least on the [indiscernible] and the solutions part, I think you would see that, that business has grown significantly actually in the last 3 years. Substantial part of is actually not coming for recontracting officially right now. But that said, I think the net numbers you obviously show on net of any churn which might be there. Time right now, I think on an apple-to-apple basis, we are able to, by and large, hold or will improve margins, right? And what I mean apple-to-apple is that if the customer do sometimes change the scope of the contract, they do change a number of plants covered a number of locations involved. So those kind of changes do happen. So it's a very hard thing to perfectly predict. But I would say that we have to do an apples to apples comparison, we are definitely able to hold margins and renewals.

A
Abhishek Ghosh
analyst

And would it be fair to assume that you have productivity gains in these [indiscernible] , which are...

R
Rampraveen Swaminathan
executive

Yes, that's what I said we're able to hold or margin expand margins. I didn't some part of how I get shared base on productivity benefits, how much we share those benefits our clients, et cetera, is very case-to-case kind of profit stream, right? But and, think directionally, we do -- we are focused on maintaining our expand of margins. In fact, I would say the margin discipline is something which, on the 3-player part of the business, we are actively holding especially in the current environment. And therefore, we do not -- if we don't meet margin hurdles, we will not probably -- sometimes we probably not do contracts, they're not able to beat margin hurdles, whether they're renewals or new contracts.

A
Abhishek Ghosh
analyst

The other thing is you've spoken about this aspiration of this INR 10,000 crores of top line. Is there an aspirational margin cash flow ROEs as well, or is it just a top line aspiration?

R
Rampraveen Swaminathan
executive

I think at this stage, we do obviously have aspirations. But as you know, Abhishek we don't have an aspiration top line with our aspiration bottom line. But as a matter of policy, we don't essentially give guidance on that. I think we've obviously shared the top line aspiration note to help obviously share with everyone what how -- not just a number but also a staircase to that aspiration. And the shape of the revenue in terms of our vision of being not just a multiservice business and a multi-market business, which I think is very important to give long-term diversification.

A
Abhishek Ghosh
analyst

Reason I ask this question is if I just look at your current quarter's top line and broadly first half top line. And if I just compound it by about 20%, 25% even without Rivigo, you will be there at that revenue target. So that is fairly achievable, and that is fairly visible when we kind of model it. But if I look at your profit from the last peak cycle, what you had seen in FY '19 of about INR 86 crores of PAT, the trajectory is still a lot weaker. So I was just trying to understand from that perspective because if I could just compound the earnings at the current level, you're there at that INR 10,000 crores of revenue and with Rivigo, I think that should be quite easy. But how should we look at the on the PAT basis.So that was the ...

R
Rampraveen Swaminathan
executive

I think what -- why we are -- as you can see in a more detailed disclosure now, all our businesses are not exactly at the same level, because we're investing in growth, the growth will come with the investment, right? So if you go back to the prior peak number at that time, we were almost completely clear at 3PL and enterprise mobility buisness. There is no network service at that time, right?

And therefore, today, the 3PL business is still in a pretty stable place right? The network businesses within them with some mix of businesses, some of which are getting to the right level of margin like freight forward it and other is investing. So as an asset like company, I mean most of our investments are actually on to the P&L, because expanding networks and the building network and we're putting capacity ahead of demand.

But and therefore, one has to actually look at the business in terms of peak levels across the portfolio, right? And prior comparisons, I mean, are probably more reveal from the portfolio at that time versus the portfolio. I think 2, 3 years ago, remain at INR 10,000 crores in aspiration that we were asking how it's going to get to a revenue level. And actually appreciative of the fact that you have greater confidence today given the net to those in the next 3, 4 years. I think we have similar aspirations from a margin perspective and we believe we are confident in our view that we can deliver that that are going to say.

Operator

Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to the management for their closing remarks. Thank you, and over to you.

R
Rampraveen Swaminathan
executive

Thank you, everyone. I hope we have been able to answer all your questions satisfactorily. However, if you give any further clarifications or would want to know more about the company. Please contact our team or SGR Investor Relations Advisers.

Thank you once again for taking the time to join us for the call, and wish you and your family and colleagues for later..

Operator

Thank you very much. Ladies and gentlemen, on behalf of Mahindra Logistics Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.

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