Mahindra Logistics Limited

Instrument Amount In Rs. Crore Rating Action

Long-term, fund-based limits Short-term, fund-based limits Short-term, non-fund based limits

50.0 15.0 5.0

[ICRA]A+(stable) reaffirmed [ICRA]A1+ reaffirmed [ICRA]A1+ reaffirmed

ICRA has reaffirmed the [ICRA]A+ (pronounced ICRA A plus) rating assigned to the Rs. 50.0 crore * (revised from Rs. 45.0 crore), long-term, fund-based limits of Mahindra Logistics Limited (MLL) †. ICRA has also reaffirmed the [ICRA]A1+ (pronounced ICRA A one plus) rating assigned to the Rs. 15.0 crore (revised from Rs. 63.0 crore), short-term, fund-based limits and the Rs. 5.0 crore, short-term, non-fund based limits of MLL. The long-term rating has a stable outlook. The ratings reaffirmation takes 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&M’s 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. MLL’s 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 77% of business during 2011-12. 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 profitability is somewhat 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 in 2011-12, after a decline in the last two years, driven by management reorganisation and improvement in business processes. The capital structure of the company remains comfortable with debt comprising primarily working capital loans. Coverage indicators have also improved on back of improved profitability. 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 People Transport (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 1,600 employees.

*

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

+91-22-30470027) subrata@icraindia. Shivakumar (Tel. the company reported a net profit of Rs. as to the accuracy. All information contained herein must be construed solely as statements of opinion and ICRA shall not be liable for any losses incurred by users from any use of this publication or its contents . For further details please contact: Analyst Contacts: Mr. makes no representation or warranty. The ICRA ratings are subject to a process of surveillance which may lead to a revision in ratings.094. +91-22. 2012. No. timeliness or completeness of any such information. 7. All Rights Reserved. Although reasonable care has been taken to ensure that the information herein is true. express or implied.icra.386.For the twelve months ending March 31. No.in) or contact any ICRA office for the latest information on ICRA ratings outstanding. 10.8 crore for the twelve months ending March 31. such information is provided ‘as is’ without any warranty of any kind. 1. 2012.com Relationship Contacts: Mr.9 crore as against a net loss of Rs. All information contained herein has been obtained by ICRA from sources believed by it to be accurate and reliable. ICRA Limited. Subrata Ray (Tel.8 crore on an operating income of Rs. 2011.30470005) shivakumar@icraindia.1 crore on an operating income of Rs. L.com © Copyright. 1. and ICRA in particular. Contents may be used freely with due acknowledgement to ICRA ICRA ratings should not be treated as recommendation to buy. sell or hold the rated debt instruments. Please visit our website (www.

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