Mahindra Group’s third party logistics provider – Mahindra Logistics – is concentrating its focus on a number of specific sectors as part of a major overhaul in its organisation designed to increase revenue.
The company is restructuring operations under four new markets: automotive and engineering, automotive outbound, consumer and pharmaceuticals, and ecommerce. The focus on fewer more lucrative areas of business comes ahead of its public offering in 2018, when revenue from the company is expected to hit $1 billion.
“Mahindra Logistics has decided to narrow down its focus on specific sectors where it expects most growth to come from and exit the rest,” said the company’s CEO Pirojshaw Sarkari. (That exit means it will no longer transport project cargo, minerals or cement).
The company said the idea behind the strategy was to get closer to the customer and offer them industry-specific competencies. Mahindra Logistics earns a major chunk of its revenues from companies associated with the parent Mahindra Group but is planning to reduce that and generate more income from non-Mahindra companies.
Mahindra Logistics has increased its capabilities in international freight forwarding through the acquisition of a majority stake in Lords Freight India. They have also entered into a joint venture with Indian Vehicle Carriers called 2x2 Logistics aimed at providing services in the finished vehicle sector. Initially, the company will invest in 100 specially designed car carriers that can also handle two-wheelers, for which India is the world’s largest market. According to Pirojshaw Sarkari, chief executive officer of Mahindra Logistics, further fleet investments will follow.
Outbound vehicle logistics accounts for around 40% of MLL’s revenue – the largest operation at the logistics company. In an interview with Mahindra Logistics at the end of last year Sushil Rathi, senior vice-president at Mahindra Logistics, who is responsible for managing the supply chain business, explained that the company was dedicating more assets in the automotive outbound sector.
“If you look at the different OEMs in India, they all have expansion plans for the future,” Rathi says. Amidst this expansion, MLL foresees a lack of specialised carriers in particular, such as those focused on different-sized vehicles.
“That’s why we thought it was the right time to move into assetising, so we can look at the design of the car carrier and give a different experience to OEMs,” he said. Read the full interview here.