Key takeaways of the call

Q4FY20 was a challenging period, with continued softness in auto sector and the onset of the Covid-19. The nation-wide shutdown of industries, facilities and movement of goods has had an impact on logistics, transportation & mobility. Both demand and supply side is impacted for the industry.

The company during the quarter continued to execute its strategy and delivered strong growth in Ecommerce, Consumer and Freight forwarding.

M&M SCM business in Q4FY20 was down by 28% to Rs 392.5 crore with non-M&M business registering a fall of 9% to RS 337.9 crore for the period. However the Non-M&M warehousing and value-added business grew by 10%YoY for Q4FY20 (up 24% for FY20). So the 9% fall in non M&M SCM was largely dragged by 16% fall in revenue of transport segment to Rs 232.8 crore. Interms of Auto & Non Auto mix, the non M&M SCM non-Auto business was down by 7% to Rs 268.5 crore with auto was down by 19% to Rs 69.4 crore. The Enterprise Mobility was down by 17% to Rs 81.33 crore.

Lower overall non M&M SCM revenue is largely due to shrinkage of bulk business which was offset by ecommerce, consumer, pharmaceuticals etc.

Ecommerce, Freight Forwarding, Consumer & Pharma verticals have sustained the growth trajectory during the quarter, driven by new business acquisitions in existing and new customers in these verticals.

The company is closely tracking the impact of Covid-19 on the economy. As things continue to evolve, the company is working along with customers and partners of the company to ensure safety and ramp up of operations.

During Lockdown, the company have initiated several practices including work from home, social distancing, sanitization and digital communication. It has also launched programs to support its ecosystem though measures such as driver helpline, emergency cab services and other relief programs.

In initial phase of lockdown, due to lack of clarity lakhs of trucks were stranded on road. After a week from start of lockdown, about 90% of the company's leased trucks stranded were taken to place of safety and security in the network of the company. Even today about 40-45% of vehicles don't have drivers. This is a challenge and the priority for the company is to ensure all the stranded vehicles reach destination points.

Before Covid it expected recovery in Auto segment demand by H1 of FY21 but now that recovery is pushed to end of calendar year 2020.

Large part of non-M&M SCM business is non essentials such as ecommerce, consumer products etc. So April was a tough period for non M&M business. Similar to non-M&M SCM, the Enterprise Mobility business was also deeply impacted in April/May. Manufacturing though opened up in May the supply chain is still disturbed with lot of volatility in the volumes/cargo. Hope things will start stabilizing gradually going forward.

Expects fundamental shift towards E-commerce in post Covid world. The company sees opportunities in groceries and pharma in e-commerce space with change in lifestyle.

Of more than 16 million square feet of warehousing space managed barring a million square feet all others have back to back contracts with customers. So there will not be much of impact on account of fixed costs (rentals etc).

As small logistics players feel increased stress, the company expects consolidation in the industry.

Collections in April and May met the required targets

The company invested in freight forwarding and express services. The integrated logistics service across the borders with geographical expansion to more location both in domestic and overseas helps the company to win customers especially in ecommerce space.

Capex spent in FY20 was about Rs 66 crore. Given the environment, the cost sensitivity measures driven across operations while selectively continuing to make investments for building skills and capabilities.

The company is committed to asset light business model and remain focused on delivering value through customized solutions, operational excellence and enhanced digitization.