Effective April 1, 2019 the company/group has adopted Ind AS 116 ‘Leases' and applied the standard to all lease contracts existing on April 1, 2019 using the modified retrospective method on the date of initial application. Consequently, the group recorded the lease liability and right of use assets at the present value of the lease payments discounted at the incremental borrowing as on date of initial application. Resultantly, the figures for the current period are not comparable with the previous period.

• Downside in Operating income is attributable 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 9% to Rs 91.07 crore (or 10% of sales). However the segment revenue of SCM was down by 7% to Rs 816.86 crore (or 90% of sales) hit largely by lower volume on account of slowdown in automotive sector. In SCM while the M&M business registered a fall of 18% (to Rs 424.3 crore) that of non M&M revenue was up by 8% to Rs 392.6 crore. The rise in non M&M business is largely due to 12% growth (to Rs 312.5 crore) in non-auto sector revenue of non M&M business. However the auto sector revenue of non M&M business too was down by 7% to Rs 80.1 crore. Further in non M&M SCM revenue while the transportation segment register a flat growth (up 0% to Rs 270.7 crore) the warehousing business grew by sharp 30% to Rs 121.9 crore.

• EBIT was up by 5% to Rs 77.28 crore with the segment profit of SCM was up by 9% to Rs 68.73 crore. Despite lower sales high single digit growth in segment profit of SCM was largely due to 120 bps expansion in segment margin to 8.4%. However hit by both fall in sales and 90 bps contraction in segment margin to 9.4%, the segment profit of PTS was down by sharp 17% to Rs 8.55 crore.

• OPM expanded by 70 bps to 4.7% and that was largely due to lower Opex. Opex as proportion to sales was down by 340 bps to 84.5%. However the staff cost was higher by 180 bps to 8.8%. Similarly the OE was up by 60 bps to 2.0%. Lower Opex was partly due to adoption of Ind AS 116 'Leases' under which the lease expenses recognized earlier as direct cost is now bifurcated between amortization of Right to Use Asset and finance cost of lease rent payable. Due to Ind AS 116, the Opex was lower by Rs 12.67 crore and other expenses was down by Rs 1.30 crore. On the other hand the depreciation and finance cost was up by Rs 12.33 crore and Rs 3.22 crore. The net impact at PBT level was the profit was lower by Rs 1.68 crore.

Consolidated sales was down by 6% to Rs 2659.38 crore. But a 60 bps rise in OPM to 4.5% saw the operating profit up by 9% to Rs 120.26 crore. Spurred further by 90% jump in OI to Rs 10.87 crore, the PBIDT was up by 13% to Rs 131.13 crore. After accounting for higher interest and depreciation the PBT was down by 31% to Rs 67.76 crore. With taxation stand lower by 37% to Rs 22.11 crore, the PAT was down by 27% to Rs 45.65 crore. After accounting for higher share of loss from associate and lower minority interest (a swing of Rs 0.66 crore to a share of loss of Rs 0.18 crore) the net profit was down by 27% to Rs 45.39 crore.

Segment profit of SCM was up by 2% to Rs 195.83 hit largely by lower sales (down 7% to Rs 2373.10 crore) as its segment margin expanded by 80 bps to 8.3%. However hit by 140 bps contraction in segment margin to 9.3% the segment profit of PTS was down by 13% to Rs 26.55 crore despite flat sales.

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. 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 before tax for the current period is lower by Rs 5.02 crore.

Commenting on the performance, Rampraveen Swaminathan, CEO of Mahindra Logistics, said, "We continue to demonstrate resilient performance despite the challenging environment in the auto sector. While our efforts to grow our business in the Auto vertical remain on track, we continue to deliver strong growth in E-comm and consumer businesses. During the quarter we continued to see benefits from cost reduction and productivity improvement initiatives. We are increasing our capabilities and remain focused on expanding our value added services and solution offerings to our customers".

Other developments

The company during the quarter ended Dec 2019, has allotted 36720 equity shares of RS 10 each fully paid up on exercise of stock options by employee under the MLL-Key Executive Stock Option Scheme, 2012.

The company during the quarter ended Dec 2019 granted 128313 Restricted Stock Units (RSU's) under the Mahindra Logistics Employee Restricted Stock Unit Plan 2018 and also approved grant of 40000 RSU's w.e.f. Feb 1, 2020 under the same scheme.