Pirojshaw Sarkari, CEO of the company addressed the call.

Highlights of the call:

MLL is an integrated third-party logistics (3PL) service provider, specializing in supply chain management and people transport solutions.

Mahindra Logistics has registered 3% fall in consolidated sales to Rs 899.03 crore for the quarter ended June 2019.

With 10 bps expansion in OPM to 4.5%, the fall at operating profit was restricted at 1% to Rs 40.06 crore.

PBT was down 24% to Rs 28.65 crore.

Net profit was lower by 22% to Rs 18.64 crore.

Due to adoption of new accounting standards, EBIDTA margins increased 120 bps & EBIDTA increased by Rs 10.7 crore due to regrouping of expenses as Amortization & Finance Cost.

This quarter saw a mixed performance from the end use sectors.

Growth in verticals focused on auto industry impacted due to unprecedented slowdown in the automotive sector. This impacted our SCM business – M&M and Non M&M.

It saw continuation of good momentum in Consumer & Pharma and E-Commerce verticals.

Bulk vertical revenue was impacted due to shrinkage in business from a large customer.

Warehousing & Value-added service revenues in Non M&M SCM increased to Rs 96 crore, up 25%.

People Transport Solutions (PTS) revenues increased 9% to Rs 98 crore.

The management is confident about long-term growth prospects of the organized 3PL industry in the country. Keeping that in mind, it continues to invest in digital and transformation projects.

Quarter other income grew due to interest received on Income Tax refund of Rs 36 crore.

Revenue from Top 20 Non M&M SCM customers contributes 64% of total Non M&M SCM Revenue.

The company is planning to double its warehousing capacity in eastern region in the next couple of years.

Budget was positive for the company. Positives from the budget are the government's plan to invest Rs 100 lakh crore in infra, Invest in Jal Marg, introduction of electronic invoicing system.

Auto sector was to turn for better post election results. However it did not happen. Domestic auto volumes were impacted due to variety of reason including cost of ownership, insurance cost, liquidity crunch faced by the NBFCs, rise in key commodity prices and forex volatility.

Q1 2020 was one of the worst quarters in recent times according to SIAM. Sales fell 12%.

July continued to show subdued auto demand and performance.

Consumer goods showing decline in past 1-2 quarter due to economic issues affecting consumer demand in both rural and urban areas. Good monsoon will have positive impact in sentiment for this segment. Also volume is expected to improve during festive demand.

Mahindra group accounted for 55% of total sales compared to 57%.

SCM business from Mahindra group fell due to slowdown in auto sector.

Non auto revenues stood at Rs 231 crore against Rs 232 crore.

It continues to focus to increase business from existing and new customers.

Existing customer business will remain subdued as it was in Q1. To compensate the company is looking at new customers in bulk segment. Vedanta Transportation, Volkswagen After market Warehousing, Wheels transportation, Alstom Stores, ARAI Transportation, Federal Mogul Surface Express, Pfizer Control Tower, Gulf oil Transportation are some of its new client additions in bulk segments (non M&M).

It continues to build strong customer relationship.

In Marketing MLL is a leading voice in the industry.

Consumer, e-commerce and pharma have grown 20% in Q1 but due to loss of but Bulk vertical revenue was impacted due to shrinkage in business from a large customer. And so the overall growth was subdued.

Its logistic cost depends on where the auto is manufactured and where it is transported. If manufacturing is reduced, its inbound and outbound volumes decreases proportionately. But the business is mostly dependent on the distance between manufacturing and demand of the auto segment.

New clients acquired in Auto segment in last 2 quarters saw their volumes decrease tremendously.

Auto is the major industry it is in. This is showing no signs of improvement. So M&M and SCM business will be down for the year. It is thus looking at non M&M business.

It would be difficult to see double digit growth for FY 2020.

Endeavor will be to expand margins in the long run. It refused to comment for the current and next year.