Business Standard, Press Trust of India | Mumbai Last Updated at December 27, 2020 15:18 IST
Mahindra Logistics is on an ambitious growth path with a target of achieving Rs 10,000-crore revenue by FY26
Mahindra Logistics, which is on an ambitious growth path with a target of achieving Rs 10,000-crore revenue by FY26 through inorganic and organic routes, is planning to deploy electric vehicles (EVs) for last-mile delivery shortly, a top company official has said.
The plan comes on the heels of online retailer Amazon India’s move to deploy EVs for last-mile delivery. The company is reportedly in touch with Mahindra Electric and Kinetic Green for vehicle supplies.
Swedish furniture retailer Ikea (through Gati Logistics), and online grocery store Bigbasket also use EVs for last mile delivery, according to media reports.
Mahindra Logistics is one of the largest third-party logistics (3PL) service providers, specializing in supply chain management and enterprise mobility (people transport solutions, for which it already uses EVs in some parts of the country).
According to Rampraveen Swaminathan, the company’s managing director and chief executive, a key part of the near three-fold growth drive in five years includes adding 2 million sq ft of warehousing annually over the next few years with each of the yards spanning 4-5 lakh sq ft.
The company has 16 million sq ft space now. In Q3 alone, it added 0.75 million sq ft space in Chennai and Hyderabad.
As an integrated logistics solutions provider, the company offers 13 services, and one of the new services it is keen to enter is deploying EVs for last-mile delivery. The company will be launching this soon, Swaminathan told PTI.
The other leg of the Rs 10,000-crore revenue push from Rs 3,800 crore in FY20 involves entering new services and scaling up existing verticals, he said.
The company is planning a large expansion of the freight forwarding business, which is a money spinner now (it is already growing at 20 per cent).
To achieve scale, the company is also open to acquisitions, Swaminathan said, adding expansion will also see widening of its business-to-business (B2B) and business-to-consumer (B2C) verticals.
Mahindra Logistics is also looking at new markets and new geographies, including taking its freight forwarding business overseas, he said.
However, nothing has been finalised on this front, and there is no hurry to go international as the domestic market is very large, he added.
Elaborating on launching EVs for last-mile delivery, he said it will be a critical business for the company as the nation is being driven to an all-EV market in a decade or so down the line.
For successful operations of EVs, what is of critical importance is optimising the cargo weight, he said.
The company is trying to push the industry, which currently uses mostly electric two-wheelers, into larger adoption of EVs for last-mile delivery, Swaminathan said.
He said another strategy for faster growth is to pivot the company away from its over dependence on auto segment, especially the parent group, and shift revenue focus to the consumption story being played out now by pharma, e-commerce and food supply chains, thus offering end-to-end fulfillment logistics.
Even after so many years, 50 per cent of the company’s revenue still comes from auto segment only, he said.
Moving away from auto segment will see the company focusing more on FMCG, pharma, e-commerce, and international exim business, he added.
Reflecting the changes taking place in the economy, which is a faster and deeper embrace of consumption, the company will also focus on service-level integration to offer end-to-end solutions or what is called fulfillment services, Swaminathan added.
Mahindra Logistics was founded over four decades ago as an in-plant logistics arm of Mahindra’s automotive business. The company today serves over 400 corporates across automobile, engineering, consumer goods and e-commerce segments.
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