Mahindra Logistics Readies For Rs 829 Crore IPO

Mahindra Logistics IPO opens on October 31.

 A worker stands on top of a shipping container as it is lifted by a crane at an integrated logistics park. (Photographer: Dhiraj Singh/Bloomberg)
A worker stands on top of a shipping container as it is lifted by a crane at an integrated logistics park. (Photographer: Dhiraj Singh/Bloomberg)

Mahindra Logistics Ltd, the logistics arm of automobile maker Mahindra & Mahindra Ltd. today said its Rs 829.36 crore initial public offering will open on October 31.

The price band for the IPO has been fixed at Rs 425-429 per share, valuing the company at Rs 3,023-3,052 crore. The share sale is a pure secondary offering, which will see parent Mahindra, Normandy Holdings Ltd and private equity firm Kedaara Capital collectively sell 19.33 million shares or 27 percent stake.

Post the IPO, M&M’s holding in the company will come down to 61 percent, Kedaara Capital’s stake will be reduced to 9.5 percent and 3 percent stake will be with employees.

Mahindra Logistics provides services such as warehousing, transport, in-factory logistics, people logistics and freight forwarding for clients across industries such as auto and auto component manufacturing, consumer, pharmaceuticals and e-commerce.

“We are an asset-light company and our technology-enabled business model allows for scalability of services as well as the flexibility to develop and offer customised logistics solutions across a diverse set of industries,” said Pirojshaw Sarkari, chief executive officer of Mahindra Logistics. The company operates in two business verticals – supply chain management and corporate people transport solutions.

The company’s consolidated revenue stood at Rs 2,676.22 crore for the financial year 2017-18, of which 88.9 percent was came from the SCM business. About 70 percent of the revenue for the company was derived from non-Mahindra clients including Volkswagon, BMW, JSW Steel. Sarkari expects contribution from this segment to go up in the coming years.

The Goods and Services Tax is an enabler and a growth driver for the company, Sarkari said. “The GST regime could bring about consolidation of warehouses in India, thereby providing opportunities for organized third party logistics service providers to manage complex distribution channels for companies operating in India,” said Sarkari. The industry also stands to benefit from the government’s thrust on infrastructure, he added.

The Indian logistics industry, which comprises segments such as road freight, rail freight, coastal freight, warehousing, cold chain and container freight stations and inland container depots, is expected to grow at a compound annual growth rate of 13 percent to Rs 9.2 lakh crore by fiscal 2020, the company said in its draft prospectus citing a report by rating agency CRISIL.

Watch the full interview with Pirojshaw Sarkari, chief executive officer of Mahindra Logistics on the rationale for the IPO.