Mahindra Logistics Limited

Instrument Amount
(In Rs. Crore)
Rating Action
Long-term, fund-based limits 50.0 Upgraded to [ICRA]AA- (stable) from
[ICRA]A+ (stable)
Short-term, non-fund based limits 5.0 [ICRA]A1+ reaffirmed
Short-term, fund-based limits 15.0 [ICRA]A1+ withdrawn

ICRA has upgraded the long-term rating assigned to the Rs. 50.0 crore
*
long-term, fund-based limits of
Mahindra Logistics Limited (MLL or the company)

to [ICRA]AA- (pronounced ICRA double A minus)

from [ICRA]A+ (pronounced ICRA A plus). ICRA has reaffirmed the short-term rating assigned to the
Rs. 5.0 crore short-term, non-fund based limits of MLL at [ICRA]A1+ (pronounced ICRA A one plus).
The long-term rating has a stable outlook. ICRA has also withdrawn the [ICRA]A1+ (pronounced
ICRA A one plus) rating assigned to the Rs. 15.0 crore short-term, fund-based limits of MLL, as the
company has not raised funds against the rated instrument; there are no amounts outstanding against
the said instrument.

The upgrade in long-term rating takes into account the marked improvement in operating performance
and financial risk profile of the company over the last two years as indicated by strong profitability, debt
free capital structure and healthy free cash flows generated by the company. The ratings continue to
take into consideration the strong parentage of MLL by virtue of it being a wholly-owned subsidiary of
M&M (rated [ICRA]AA+ (stable)/A1+), its growing SCM business primarily led by increasing business
from the Mahindra Group companies and the leadership position it enjoys in the MPTS business by
virtue of its first mover advantage. ICRA notes that the company continues to follow an asset light
business model with fleet and warehouses taken on lease, which is especially positive in declining
business environments.

MLL is positioned as a key intermediary in M&Ms Automotive & Farm Equipment business by
providing end-to-end supply chain solutions. The strong business linkage with the Mahindra Group,
particularly its parent, in the SCM segment provides MLL with the requisite experience, volumes and a
stable business avenue. MLLs SCM business is currently largely focused on the automotive segment,
in line with its large dependence on the parent group for business. While MLL has also developed a
client base outside the Mahindra Group, its current dependence on the parent group remains high at
76% of total revenues during 2012-13. While the company aims to develop a diversified client base
across multiple industry verticals, meaningful revenue diversification can be expected only over the
medium to long-term.

The operating margins of MLL remain thin reflecting competitive pressures and weak pricing power,
especially in its SCM business segment. While the profit margins are relatively better in the MPTS
business, the business remains vulnerable to competition from a large number of unorganised players.
The ratings take note of the improvement in operating margins over the last two years driven by
management reorganisation and improvement in business processes. Profitability has improved,
despite thin margins, owing to asset light business strategy adopted. The capital structure of the
company remains comfortable and the company was debt free as of March 31, 2013; utilization of
working capital limits was negligible over the past year. Debt coverage indicators remain strong owing
to improved profitability and healthy cash accruals. Effective utilization of the cash accruals remains a
key sensitivity; the management has indicated its desire to become an integrated logistics service
provider by having a footprint in international freight forwarding services, and is considering an
acquisition in the domain.




* 100 Lakh = 1 Crore = 10 Million
For complete rating scale and definitions, please refer to ICRAs website (www.icra.in) or other ICRA
Rating Publications



Company Profile:
A wholly-owned subsidiary of Mahindra & Mahindra Limited (M&M), Mahindra Logistics Limited (MLL)
is a third party logistics (3PL) provider operating primarily in two segments namely, Supply Chain
Management (SCM) and Mahindra People Transport Solutions (MPTS). The company commenced
operations in December 2000 as a division of M&M to handle the captive logistics and supply chain
needs of the Mahindra group companies. The division later began operating for external clients across
the country. In October 2008, MLL was spun off as a 100% subsidiary of M&M. This spin off was with
effect from 1st April 2008. The company is head quartered in Mumbai, has nine offices across the
country and has over 2,200 employees.

Recent Results:
For the twelve months ending March 31, 2013, the company reported a net profit of Rs. 24.4 crore on
an operating income of Rs. 1,532.1 crore as against a net profit of Rs. 10.8 crore on an operating
income of Rs. 1,386.9 crore for the twelve months ending March 31, 2012.

September 2013
For further details please contact:
Analyst Contacts:
Mr. Subrata Ray (Tel. No. +91 22 61796386)
[email protected]

Relationship Contacts:
Mr. L. Shivakumar, (Tel. No. +91-22-6179 6393)
[email protected]

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Corporate Office
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Mumbai
Mr. L. Shivakumar
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Email: [email protected]

3rd Floor, Electric Mansion, Appasaheb Marathe Marg,
Prabhadevi, Mumbai - 400 025
Ph : +91-22-30470000, 24331046/1053
/1062/1074/1086/1087, Fax : +91-22-24331390
Kolkata
Mr. Jayanta Chatterjee
Mobile: 9845099459
Email: [email protected]

A-10 & 11, 3rd Floor, FMC Fortuna, 234/3A, A.J.C. Bose
Road Kolkata700020
Tel: +91-33-22876617/8839 22800008/22831411
Chennai
Mr. Jayanta Chatterjee
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Email: [email protected]

5th Floor, Karumuttu Centre, 498 Anna Salai, Nandanam,
Chennai-600035.
Tel + (91 44) 45964300, Fax + (91 44) 9434 3663

Bangalore
Mr. Jayanta Chatterjee
Mobile: 9845099459
Email: [email protected]

'The Millenia',
Tower B, Unit No. 904, 9th Floor, Level 9, 19-14, 1 & 9,
Murphy Road, Bangalore - 560 008
Tel:91-80- 43396400 Fax:91-80-43396409

Ahmedabad
Mr. L. Shivakumar
Mobile: 989986490
Email: [email protected]

907 & 908 Sakar -II, Ellisbridge,
Ahmedabad- 380006
Tel: +91-79-26585049, 26585494, 26584924,
Tele Fax: +91-79-25569231
Pune
Mr. L. Shivakumar
Mobile: 989986490
Email: [email protected]

5A, 5th Floor, Symphony, S.No. 99, CTS 3909, Range Hills
Road, Shivajinagar,Pune-411 090
Tel: + 91-20-25561194-25560196; Fax: +91-20-25561231
Hyderabad
Mr. Jayanta Chatterjee
Mobile: 9845099459
Email: [email protected]

4th Floor, SHOBHAN, 6-3-927/A&B. Somajiguda, Raj
Bhavan Road, Hyderabad500083
Tel:- +91-40-40676500