Key takeaways of the call

Supply Chain Management (SCM) revenue up by 13.6% to Rs 917 crore of which M&M revenue was up by 15.3% to Rs 543 crore and non M&M revenue was up by 11.3% to Rs 374 crore. Of non M&M revenue in SCM segment the auto revenue was up by 9% to Rs 85 crore (23% of non M&M revenue) and that of non auto was up by 12% to Rs 289 crore (77% of non M&M revenue). Similarly of non M&M business the Warehousing and value-added services was up by 33.3% to Rs 96 crore (26% of non M&M revenue) and that of transportation was up by 5.3% to Rs 278 crore (74% of non M&M revenue).

Revenue of Non Auto segment in SCM business for the first time ever crossed revenue of Rs 1000 crore in FY2019. FMCG/Consumer industry is consolidating and it is a new growth area.

Proportion of warehousing and other value-added activities reached 26% in Non-M&M SCM Segment. Non-M&M Warehousing and value-added services revenue have grown by 30% over FY18.

SCM business as industry is expected to grow by 10-12% in FY20 and the company's non M&M SCM business expected to register a growth higher than the industry.

The company continues to see double digit growth in non M&M of SCM business.

Demand and supply side of M&M is material for the company that determines the opportunity for the company rather than the M&M growth numbers. Further M&M group has large number of companies across various industries metals, aerospace and defence apart from auto. The company continues to bid and win opportunities in other companies.

About 90% of M&M business is transportation.

New orders won in Q4FY19 will give full year contribution in FY20.

Top 25 clients continue to account about 65% of non M&M SCM revenue.

In Q4FY19, the company added 1 million sft taking the overall capacity to about 15.8 million sft.

Post GST, consolidation is happening in case of consumer goods industry. Post GST, the company changed strategy to take forward position on warehousing.

In auto industry the logistics opportunity is at 3 part/type i.e. in-plant logistics; 2) inbound logistics; 3) outbound logistics. While the in plant logistics is currently largely handled by the company themselves, the inbound was given region wise to logistics players depending on who is strong in that region. The outbound logistics is equal to transportation and normally given to about 10 players. So there is enough opportunity for the company to grow in auto industry especially in plant/in factory logistics.

The company continue to be an asset light model. Capex spend for FY19 was about Rs 27 crore and the capex for FY20 will be of same ballpark level.

The company has achieved positive free cash flow of Rs 39 crore for FY 19 as compared to negative in the previous 2 years.

Client retention rate has been 100% for the top 25 SCM, non Mahindra group clients in F19.