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Mahindra Logistics eyes acquisitions in SE Asia to strengthen freight wing

Avishek Rakshit/Kolkata 14 May 19 | 05:41 PM

Mahindra Logistics plans acquisitions in south-east Asia to develop its freight forwarding wing to achieve its targeted turnover of Rs 6,000 crore by 2021.

Of its Rs 3,860 crore revenue posted in the last fiscal year, freight forwarding accounts for only five per cent of the total revenue, while the company has set a target of atlest 10 per cent revenue contribution from this segment by 2021.

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Pirojshaw Sarkari, Mahindra Logistics CEO, believes that since organic growth in this segment will take time, acquisition is a quicker way towards achieving this goal.

“We will look at acquisitions of companies who have presence in the segments we operate in and have strong logistical presence across south-east Asian countries", he said.

The primary business segments of Mahindra Logistics are automotive, engineering, consumer and e-commerce.

In 2014, Mahindra Logistics acquired a majority stake in Mumbai-based Lords Freight India, which specialises in international logistics solutions. The acquisition marked its foray into freight forwarding space. 

Backed by a 30 per-cent growth in its earnings from consumer and e-commerce verticals, the Mahindra Group company will also be adding 2 million square foot of warehousing space in the country and is looking at locations in Delhi NCR, Bangalore, Kolkata and Mumbai. The company currently has 15 million square feet of warehousing space, all of which are taken on lease. 

By June this year, it hopes to operationalise its first fully automated 100 thousand square feet sort centre in Dankuni in West Bengal.

Optimistic about the growth in third party logistics market in India on account of the GST rollout, the firm is expecting to sustain the previously achieved growth momentum in the consumer and e-commerce segments.

“While the target is to achieve Rs 6,000 crore turnover by 2021, we are also looking at increasing our revenue share from the non-Mahindra Group businesses and aim at reducing the Mahindra Group part of revenues below 50 per cent of the total turnover", Sarkari said.

During 2008, its revenues from the Mahindra Group of companies accounted for 88 per cent of its total revenue, which reduced to 54 per cent in the last fiscal year. 

Moreover, with an aim to reduce its costs, Mahindra Logistics is also exploring the possibility to move cargo via inland and coastal waterways and it hopes to trial-run cargo movement by end of this year.

“We are currently analysing the prospects of waterways and things like the multi-modal transport mechanism including use of Ro-Ro boats are crucial. The waterways route is important for the cost-effective freight movement not just from south India to east India but also for the trade between India and Bangladesh", he said. 

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