Mahindra Logistics has registered 8% fall in consolidated sales to Rs 852.42 crore for the quarter ended Sep 2019. But with 70 bps expansion in OPM to 4.4%, the operating profit grew by 11% to Rs 37.78 crore. Gained by 43% jump in other income the PBIDT was up by 12% to Rs 39.63 crore. However with interest cost and depreciation stand higher by 412% (to Rs 4.15 crore) and 245% (to Rs 17.71 crore) the PBT was down by 39% to Rs 17.77 crore. Taxation though stood lower by 37% to Rs 6.47 crore in absolute terms the tax rate stood higher and thus the PAT was a fall of 41% to Rs 11.30 crore. The share of loss from JV was higher at Rs 0.15 crore (against nil) and the minority interest was share of loss of Rs 0.05 crore (against a share of profit of Rs 0.15 crore). Thus the net profit (attributable to owners) was lower by 41% to Rs 11.20 crore.
- Downside in Operating income was due to lower revenue from both supply chain management (SCM) business as well as people transportation solution (PTS). The segment revenue of PTS was down by marginal 1% to Rs 97.14 crore. However the segment revenue of SCM was down by strong 9% to Rs 755.28 crore hit largely by slowdown in automotive sector. In SCM while the M&M business registered a fall of 19% that of non M&M revenue was up by 9% to Rs 336.8 crore. The fall in non M&M business is also largely due to auto sector (down 15% to Rs 70.9 crore) as non-auto registered a sharp growth of 17% to Rs 265.9 crore. Further in SCM while the warehousing revenue was up by 25% to Rs 158.1 crore that of transportation was down by 15% to Rs 597.2 crore.
- EBIT was flat (up 0%) at Rs 71.42 crore with the segment profit of SCM was up by 4% to Rs 62.91 crore. Despite lower sales early single digit growth in segment profit of SCM was largely due to 100 bps expansion in segment margin to 8.3%. However hit by both marginal fall in sales and 200 bps contraction in segment margin to 8.8%, the segment profit of PTS was down by sharp 20% to Rs 8.51 crore.
- OPM expanded by 70 bps to 4.4% and that was largely due to lower Opex. Opex as proportion to sales net of stocks was down by 340 bps to 84.5%. And that of staff cost was higher by 220 bps to 9.0%. Similarly the OE was up by 50 bps to 2.1%. Lower Opex was partly due to adoption of Ind AS 116 'Leases'.
- Other income was higher by 43% to Rs 1.85 crore and thus the PBIDT was up by 12% to Rs 39.63 crore. The interest cost jumped by 412% to Rs 4.15 crore. And the depreciation leaped up by 245% to Rs 17.71 crore. Jump in interest and depreciation is largely due to adoption of Ind AS 116 'Leases' and the impact of the same is Rs 3.28 crore in interest cost and Rs 11.89 crore in depreciation. Thus the PBT before EO was down by 41% to Rs 11.30 crore.
The Company has adopted Ind AS 116 'Leases' with the date of initial application being April 1, 2019 using the modified retrospective approach. The Company has-applied the standard to its leases with the cumulative impact recognized on the date of initial application. Accordingly, previous period information has not been restated. This has resulted in recognizing a right-of-use asset of Rs 112.17 crore, Net Investment in Lease of Rs 1.76 crore and a corresponding lease liability of Rs 121.72 crore by adjusting retained earnings of Rs 10.52 crore (including the impact of deferred tax created of- Rs 2.72 crore) as at April 1, 2019. In the profit and loss for the current year, the lease rent which was hitherto accounted under "Operating Expenses" and "Other Expenses" in previous periods has now been accounted as depreciation cost for "right — of — use" of asset and finance cost for the interest accrued on lease liability. Accordingly, profit for the current quarter is lower by Rs 1.85 crore.
Half yearly performance
Consolidated sales was down by 6% to Rs 1751.45 crore. But a 40 bps rise in OPM to 4.4% saw the operating profit up by 5% to Rs 77.84 crore. Spurred further by 112% jump in OI to Rs 8.86 crore, the PBIDT was up by 10% to Rs 86.70 crore. After accounting for higher interest and depreciation the PBT was down by 31% to Rs 46.42 crore.
Segment profit of SCM was down by 1% to Rs 127.10 hit largely by lower sales (down 7% to Rs 1556.24 crore) as its segment margin expanded by 50 bps to 8.2%. However hit by 150 bps contraction in segment margin to 9.2% the segment profit of PTS was down by 11% to Rs 18 crore despite higher sales.
With taxation stand lower by 30% to Rs 16.44 crore, the PAT was down by 31% to Rs 29.98 crore. After accounting for higher share of loss from associate and lower minority interest (a swing of Rs 0.58 crore to a share of loss of Rs 0.13 crore) the net profit was down by 31% to Rs 29.84 crore.
Management comment
Commenting on the performance, Rampraveen Swaminathan, CEO of Mahindra Logistics, said, "Automotive industry continues to see an unprecedented downturn. We sustained growth momentum in our Non-Auto segment driven by Ecommerce, Consumer & Pharma verticals. During the quarter we continued our growth in warehousing and value-added services and have added 0.7 million square-feet of warehousing space under management. Our focus remains on margin improvements through increased operational efficiency and cost optimization. We have a positive outlook towards the logistics sector due to the underlying growth drivers and government focus on reducing cost of logistics and improving logistics performance index".
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