Mumbai: In the crowded lanes of India’s logistics market, even giants can stumble. Mahindra Logistics, a cornerstone of the Mahindra Group, seems to be navigating through a challenging terrain. Despite the conglomerate’s success across other sectors, the logistics arm is struggling to turn growth into profit. The unaudited consolidated results for Q2 FY25, ending 30 September 2024, reveal a dynamic yet troubled picture—while revenues surged, profit margins hit a roadblock, hinting at both promising opportunities and deep-rooted operational hurdles.
The company reported a consolidated revenue from operations of Rs 1,521.10 crores for Q2 FY25, marking an 11 per cent increase from Rs 1,364.76 crores during the same quarter last year. This growth was primarily driven by strong performance in the supply chain management segment, which saw increased demand across industries. However, the company’s profit trajectory didn’t mirror this upward trend.
Profitability took a significant hit, with a net loss of Rs 10.75 crores compared to a loss of Rs 15.93 crores in Q2 FY24. Despite efforts to improve operational efficiency, rising expenses eroded the gains from higher revenue. Operating costs surged by 12 per cent, reaching Rs 1,306.85 crores, driven by increased freight rates and employee expenses.
Mahindra Logistics’ managing director & CEO, Rampraveen Swaminathan, acknowledged the challenges, stating, “While we are encouraged by the revenue growth, the increase in operating costs continues to be a headwind, impacting overall profitability.” The company also saw higher finance costs due to rising borrowing expenses, which climbed to Rs 19.12 crores, up from Rs 16.53 crores in the previous year.
Further complicating the financial landscape, depreciation and amortisation expenses rose by 4 per cent, amounting to Rs 53.96 crores. Although Mahindra Logistics expanded its asset base to support growth, these costs weighed heavily on its bottom line.
The balance sheet showed a marginal improvement in total assets, increasing to Rs 2,595.52 crores as of September 2024, compared to Rs 2,477.20 crores in March. Despite this, the company’s debt-to-equity ratio escalated from 0.56 to 0.87 over the past year, signalling a higher reliance on borrowings.
In the face of these challenges, Mahindra Logistics continues to push forward, prioritising cost control and strategic investments. The management is optimistic about improving margins in the upcoming quarters, driven by initiatives to streamline operations and optimise its supply chain network.
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