Mahindra Logistics - Initiating Coverage

INDIAN THIRD PARTY LOGISTICS (3PL) SECTOR
INITIATING COVERAGE – MAHINDRA LOGISTICS (ADD, TP- Rs. 550),

COMPANY UPDATE – TRANSPORT CORPORATION OF INDIA (BUY, TP- Rs. 350)
MARCH 19, 2018
Page 1
3PL in India (vs. global 3PL operators) has primarily revolved around transportation services (~70% of Indian 3PL sector vs. ~50% in China).
However, we believe GST has fast-tracked the industry to an inflection point from where other services (value-added warehousing to begin INITIATING COVERAGE
with and gradually supply chain management) will see significant adoption. Within the logistics sector, we find 3PL as the most attractive sub- MARCH 19, 2018
segment due to its unique combination of being asset light yet having high entry barriers; moreover 3PL is expected to outgrow (17-20% CAGR
through 2022) the logistics industry (11-13% CAGR through 2022) by a significant margin. Initiate coverage on Mahindra Logistics (MAHLOG) Industry LOGISTICS
with an Add rating (TP: Rs. 550; 32x FY20 EPS) and maintain BUY on Transport Corporation of India (TCI) with a SOTP based TP of Rs. 350.
Domestic 3PL operators have either evolved from being pure-play transporters or have started out as a division within a manufacturing company. 30% Sensex
Most 3PL operators have a key sector expertise (Automobile - MAHLOG, TVS Logistics, TCI’s supply chain services (SCS); FMCG/Retail – Future 25%
Supply Chain, Fiora, Gati-KWE) allowing them to incorporate industry best practices to its client’s supply chain. We believe MAHLOG boasts of 20%
critical success factors in a nascent 3PL industry: 1) anchor clients (Mahindra group) 2) anchor industry (automotive) 3) asset light and hence 15%
flexible model 4) high customer retention rate (92% through FY15-17) thereby providing opportunity to penetrate beyond basic 10%
transportation/warehousing 5) IT infra and 6) established relationship with business partners providing network of fleet/hubs/warehousing. 5%
0%
MAHLOG stands out vs. peers : MAHLOG has the highest revenue CAGR of 17% (on a high base as it stands at 3x the size of the second largest
Mar-17 Jun-17 Sep-17 Dec-17 Mar-18
domestic operator) vs. peers at 9-12%; this is primarily driven by non-Mahindra group (last five year CAGR of 30%+ vs. sub-10% for business from
Mahindra group). While operating margins are at the lower end of the pack, RoIC is among the highest given its highly asset light model (6.9x fixed Sensex
asset turn over vs. peers at ~2x) and lowest working capital days ( sub-30 days vs. peers at 90-100 days). Recommendations
Expect growth to remain strong : We expect the strong momentum in non-Mahindra group business to continue through FY20 (30% CAGR vs.
11% for Mahindra group) driven by higher penetration of services with current customer base (top 20 Non-Mahindra clients currently outsource CMP TP Reco
~10-15% of respective logistics spends) aided by MAHLOG’s high customer retention. This also drives exposure to non-auto sectors as the MAHLOG 520 550 ADD
proportion to auto has declined from 74% in FY15 to ~60% in FY17. We expect aforementioned to also aid in margin improvement as non-
Mahindra business has lower share of transportation revenue (78% vs. 91%). We estimate operating margin for Mahindra group business to be TRPC 265 350 BUY
lower at ~6% vs. ~10% for non-Mahindra. Moreover, we see upside to these margins as share of value added services typically see an inflection
Stock performance (%)
point after about three years of relationship . Expect Mahindra group margins to remain stable as it is a ‘cost-plus’ model.
Passenger transport segment(PTS) : PTS market size is expected to grow at 8-9% CAGR through FY20 segment driven by IT and ITES sectors. 1m 3m 12m
MAHLOG’s established presence coupled with technology backed services is expected to drive 9% revenue CAGR. Furthermore, operating margins MAHLOG 15% 23% -
are expected to improve 100bps on the back of shutdown of shuttle bus services (loss-making) from Jan’18. TRPC -7% -8% 15%
Valuation: We expect consolidated revenue, EBITDA and PAT CAGR (FY18-20) of 18% / 34% / 40%, respectively. We expect healthy pre-tax OCF Sensex -2% -2% 12%
growth of 143% CAGR through FY18-20 (adjusted for TDS refund) as TDS refund is expected from 1HFY19. Our valuation for MAHLOG (32x FY20 RESEARCH ANALYSTS
EPS) factors in (1) attractive PEG ratio of 0.75 in comparison to top global 3PL average PEG of 1.5 (trading at 20x CY19 EPS) and (2) strong EPS
growth resulting in healthy pre-tax RoIC and RoCE of 42% and 32%, respectively, in FY20 MUKESH SARAF
Transport Corporation of India : We see TCI’s SCS division as the key growth driver as it leverages on its integrated operations (FTL/LTL, coastal mukesh@sparkcapital.in
shipping and multimodal). While ~70% of the segment is dependent on auto sector, expect addition of new clientele across diverse industries to +91 44 4344 0041
drive TCI SCS’s revenue CAGR of 22% from FY18-20, while sustaining EBITDA margin at ~11%. We expect overall revenue and EBITDA CAGR of 17% KRUPASHANKAR NJ
and 23%, respectively, through FY18-20. Valuing based on SOTP (page 75) to arrive at TP of Rs.350 krupashankar@sparkcapital.in
+91 44 4344 0098
Key risks: Delayed 3PL adoption, especially by domestic manufacturers; competition from global 3PL players; changing regulatory environment
find SPARK RESEARCH on Page 2
(SPAK <go>)
SECTOR VALUATION SUMMARY – 3PL AND ROAD LOGISTICS
Company Revenue (Rs. bn) EBITDA % PAT (%) EPS (Rs.) RoE (%) RoCE (%)
FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E
Mahindra
26.7 33.7 39.8 47.0 2.9% 3.2% 3.8% 4.2% 1.7% 1.8% 2.1% 2.5% 6.8 8.7 12.5 17.2 14.1% 15.7% 19.0% 21.3% 14.2% 15.6% 18.7% 21.0%
Logistics
Transport
Corporation of 18.0 21.4 25.4 29.5 8.7% 9.4% 9.8% 10.4% 3.9% 4.5% 5.1% 5.9% 9.2 12.7 17.2 22.9 13.1% 15.5% 18.1% 20.3% 9.8% 11.2% 13.2% 15.3%
India
TCI Express 7.5 8.7 10.5 12.3 8.8% 10.0% 11.0% 11.5% 5.4% 6.5% 6.8% 7.2% 10.6 14.8 18.7 23.1 28.8% 30.8% 29.8% 28.2% 23.3% 27.2% 26.9% 25.9%
VRL Logistics 18.0 19.7 22.8 27.0 12.1% 13.2% 14.4% 14.8% 3.9% 5.6% 6.6% 6.6% 7.7 12.3 16.8 19.7 13.4% 19.3% 22.8% 22.6% 10.2% 14.8% 16.5% 16.5%
Blue Dart Express 26.9 28.2 30.8 34.1 12.7% 13.0% 14.6% 15.5% 5.2% 5.4% 6.9% 8.1% 58.9 64.2 89.7 115.9 34.5% 32.9% 38.1% 38.4% 20.7% 21.8% 29.9% 34.6%
Price/Earnings EV/EBITDA EV/Sales

CMP Mkt Cap TP
Company Reco
(Rs.) (Rs. Mn) (Rs.)
FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E
Mahindra Logistics 76.6x 59.7x 41.5x 30.3x 45.2x 32.2x 22.7x 17.2x 1.3x 1.0x 0.9x 0.7x 520 35,273 550 ADD
Transport
28.7x 20.9x 15.4x 11.6x 14.5x 11.6x 9.4x 7.5x 1.3x 1.1x 0.9x 0.8x 265 20,160 350 BUY
Corporation of India
TCI Express 44.2x 31.8x 25.1x 20.4x 27.4x 20.8x 15.7x 12.7x 2.4x 2.1x 1.7x 1.5x 470 17,996 600 BUY
VRL Logistics 50.2x 31.6x 23.1x 19.7x 17.0x 13.8x 11.4x 9.3x 2.1x 1.8x 1.6x 1.4x 388 35,402 485 BUY
Blue Dart Express 69.0x 63.4x 45.3x 35.1x 28.4x 27.0x 21.7x 18.2x 3.6x 3.5x 3.2x 2.8x 4,069 96,549 4,400 REDUCE
Source: Bloomberg, Company, Spark Capital Research
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FOCUS CHARTS
Indian Third party logistics (3PL) industry

3PL’s healthy growth prospects is expected to attract incremental investments and
3PL industry growth expected to outpace logistics sector growth
new players in the space
HIGH 3PL players
580
Indian Logistics Industry vs 3PL (Rs. Bn) leverage on their
244
expertise and
Express proven track
Services/LTL record creating
20% Container 3PL and
FF/ Project Logistics high entry barriers
335 17% Logistics Contract
and healthy
NVOCC Logistics
110 returns
ROCE
9,236 15,230 Agri Cold Last 5 Year Growth
FTL
WH Chain 15-20%
11% Custom
6,425 13% 9,100 Bonded WH Tank 10-15%
Coastal Shipping
Farm 5-10%
Port Services
0-5%
FY17 FY20E FY17 FY22E
Air (domestic)
LOW Barriers to Entry HIGH
Source: CRISIL Source: A&M Source: A&M, Spark Capital Research
Increase in outsourcing of value added services expected to reduce transportation

contribution (~70% of current 3PL market)
30%
Transportation as SERVICES EXPECTED TO BE
% of Indian 3PL Anchor Track
OUTSOURCED TO 3PL PLAYERS record in
Clients
Warehousing as % Potential services currently insourced specific
of Indian 3PL Industry
Packaging
logistics
Labelling
70% Quality checks CRITICAL 3PL
Kitting Scalability SUCCESS
In-factory logistics and
flexibility
FACTORS
SERVICES CURRENTLY Inventory and order management Technology
OUTSOURCED TO 3PL PLAYERS Bundling integration
Primary outsourcing activities Dedicated help desks
Transportation Transport management systems Established
Warehousing Infrastructu
IT-enabled warehousing services
Customs (EXIM) re (Network
Reverse logistics and fleet)
Source: Industry, Spark Capital Research
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FOCUS CHARTS
Mahindra Logistics – Penetration of services in Non-Mahindra clientele to drive revenue and margin growth
Customer Breakup
MAHINDRA NON-MAHINDRA TOTAL SCM SEGMENT
9% 14%
Transportation vs Warehousing
22%
Transportation Transportation Transportation

78%
Warehousing Warehousing Warehousing
91%
86%
Given the established supply chain of Mahindra Auto and Farm

Presently, Top 20 Non-Mahindra customers outsource 10-15% of
Equipment services segment (~90% of Mahindra revenues), expect As relationship with clientele evolves, expect incremental
total logistics cost. Expect addition of new clients coupled with
limited change in % contribution from transportation and outsourcing of warehousing and other value added services to
increase in wallet share of existing clientele to drive revenue
warehousing. However, expect logistics outsourcing from other drive revenue and operating margin expansion.
growth
Mahindra entities (Non-M&M) like Mahindra CIE, Punjab tractors
Operating margins* Operating margins* Operating margins Op. profits contri (%)
Operates on cost + margin basis
30%
57%
45%
33%
51%
63%
18%
19%
11% 11% 11%
10% 7% 8% 8%
Operating Margins
9% 10% 7%
6% 6% 6% 6% 6% 6% 6% 7% 6% 6% 6% 7%
5% 6%
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY13E FY14E FY15E FY16E FY17E FY18E FY19E FY20E FY13E FY14E FY15E FY16E FY17E FY18E FY19E FY20E Non-Mahindra
M&M group
Limited scope of value added services due to established Expect increasing penetration of services in clients older than 3
Expect increasing contribution from Non-Mahindra clientele to
operations. Margins to remain flat years as manufacturers outsource non-core operations based on
drive operating margins
MAHLOG’s established track record
*Estimated; Source: Company, Spark Capital
 Due to nascent phase of 3PL industry and limited track record of benefits derived from 3PL, manufacturers prefer to outsource only primary functions of logistics. However,
we expect maturing customer mindset and MAHLOG’s established track record to result in higher penetration of new services. Expect operating margins to expand 160bps
through FY17-20E.
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Table of contents
DEFINING THIRD PARTY LOGISTICS (3PL)
 What is 3PL?
 How is Indian 3PL different from other global economies?
 What are the key 3PL services and levels of outsourcing?
 What are the critical aspects for a 3PL?
 What are key parameters when selecting 3PL service provider?
3PL GROWTH DRIVERS
 Why will GST benefit 3PL industry?

 Why will corporates choose 3PL over existing service provider?
 Where are the key growth opportunities?
COMPETITIVE ANALYSIS
 Who are the top people for multiple sectors?

 How are 3PL players differentiating services?
COMPANIES
 Mahindra Logistics
 Transport Corporation of India
Page 6
Distinguishing 3PL In Logistics Value Chain

Services Actors Key Companies
Industries, Cargo
Manufacturing 1 PL manufacturers,
and Retailing traders, suppliers
Full Truckload (FTL),

SERVICES INTEGRATION
Less-than-truckload
Transportation 2 PL (LTL), Express
transportation
Integrated
3 PL logistics
Logistics
(Third Party Logistics) service
provider
Supply Chain Lead

Logistics
Management 4 PL Providers &
(Fourth Party Logistics) Consultants
Supply Chain Integration Third Party Logistics refers to the use of external companies to perform logistics functions
that have traditionally been performed within an organization. The functions
encompasses the entire logistics process or selected activities within this process.
Post GST, 3PL is expected to be key beneficiary in the long run as industries gradually shifts towards integrated supply chain (consolidation of warehouses and network
management) to attain logistics efficiency. Furthermore, rationalisation of Logistics Service Provider (LSP) vendors will lead to established players like Mahindra Logistics,
Future supply chain, TVS Logistics and TCI Supply Chain, to gain share over unorganised player
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Curbing logistics cost while managing supply chain complexities is likely to shift industry supply chain from silo to integrated
Traditional Supply Chain
SHIFT TOWARDS LOGISTICS
Plan Plan Plan EFFICIENCY
 Post GST, industries would
Role of 3PL in traditional supply gradually transition
chain: towards integrated supply
Supplier Production Distribution Consumer chain model to attain
 Transactional relationship with higher operating
primary emphasis on efficiencies. Expect higher
transportation reliance on contract
logistics/3PL as different
Order Order Order
industry dynamics will lead
to tailor-made supply chain
solutions.
Our Take: Integrated Supply Chain
 In post-GST era, manufacturers will re-evaluate their entire supply chain
to attain synergies. While each sector is expected to make tailor made
changes to its supply chain, key emphasis will be placed on consolidating
Supplier
warehouses and optimising transportation to minimising logistics cost.
Larger role of 3PL in integrated supply chain:
Expect:
Plan  Re-design supply chain (transportation and
‒ Rationalising of logistics vendors Order warehousing)
‒ Consolidation of warehouses based on consumption centres  Reduce inventory level across value chain
‒ Improving reach to market (secondary transportation) to gain Plan
Supply
Plan  Providing Value Added Services (VAS)
competitive edge Consumer Chain Production
Order Order
Tower  Improving forecasting abilities and
‒ Increase penetration of technology to provide real time information responsiveness
Plan
and reduce inventory levels across supply chain Order  Cost effective and time definite
 Given criticality of supply chain to cater to dynamic demand conditions, transportation from source to destination
we believe cost conscious manufacturers will outsource logistics (non-  Technology enabled services to provide
core component of operations) to 3PL players to manage its logistics Distribution real time update
needs.
 In India, MNC’s form a higher composition of 3PL’s customer base due to
benefits witnessed in other global economies. We expect Indian EFFICIENT SUPPLY CHAIN SOLUTION
businesses to follow suit in the long run.
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3PL in developed economies have reached consolidation phase while India’s 3PL industry has recently gained traction
USA
CHINA
INDIA
STAGES OF CONSOLIDATION ►
Beginning Growth Consolidation Alliance

 New markets with low competition  Fragmented markets and intensifying  Industry consolidation with  Major competitors create alliances
as companies form competition increased market concentration
India’s 3PL space is expected to witness rapid growth on the back of supply chain rejig post GST, favorable macroeconomic conditions,
government policies and maturing industry mindset on logistics. Expect 3PL to benefit from setup of new and smart infrastructure and improving
operating efficiencies.
Logistics Cost 3PL Revenue 3PL Revenue as % of Logistics

(USD bn) (USD bn) cost Globally, 3PL constitutes 10% of logistics industry
2008 2016 CAGR 2008 2016 CAGR 2008 2016 Delta

APAC 1,603 3,185 9.0% 118 305 12.6% 7.4% 9.6% 2.2% 5.4%
1.1
NA 1,633 1,856 1.6% 148 200 3.8% 9.1% 10.8% 1.7%
0.8 5.2%
Europe 1,708 1,666 -0.3% 171 172 0.1% 10.0% 10.3% 0.3%
LatAm 260 431 6.5% 16 37 11.1% 6.2% 8.6% 2.5% 11.1
Others 1,271 1,089 -1.9% 48 40 -2.2% 3.8% 3.7% -0.1% 8.2
Total 6,475 8,226 3.0% 501 754 5.2% 7.7% 9.2% 1.4%
US and European markets have witnessed large scale cross border M&A to drive growth, while CY16 CY22
improving consumption in emerging economies drives growth
Global Logistics ($ tn) 3PL ($ tn)
Source: Armstrong and Associates, 3PL study, Spark Capital Research
Page 9
How is Indian 3PL different from other global economies?

Composition of logistics cost
USA Market size (2016): China Market size (2016): India

7% USD $166.8bn USD $166.7bn
13% 12%
11%
30%
54% 77%
33%
63%
Transportation expenses Warehousing expenses Administrative expenses*

Source: Industry, China logistics study, SCM Digest, Spark Capital Research
Chinese 3PL sector : Indian 3PL sector :

USA 3PL sector :  India’s multi-layered and complex tax regime and
 3PL Growth has been driven by changing enterprises mindset
 In 1990’s, enterprises/shippers just wanted 3PL infrastructure issues have resulted in high logistics
to focus on core competencies. The competitive intensity
to move their freight. Now enterprises want real cost (driven by higher transportation and inventory
emphasized on speed-of-market response
time information on their freight, and how 3PL carrying cost) and lower 3PL penetration in the
can move it more efficiently and economically  Rampant growth of chain commerce (a form of commercial country
the next time. operations in which certain shops in the same industry are
linked by joint stock replenishment and operating  Automobile sector has the highest 3PL penetration
 US 3PL market size was estimated at $166.8bn in due to JIT manufacturing driven by Japanese
technologies to improve the economy of scale)
2016, making it the largest global 3PL market companies
 Chinese 3PL market size was estimated at $166.7bn in 2016,
making it the second largest global 3PL market  MNC’s form a sizable clientele base for Indian 3PL
players due to historic benefits reaped from 3PL in
other economies.
India’s pre-GST tax regime and infrastructure issues resulted in higher composition of transportation cost in Indian logistics space in comparison to US and China. Expect GST
led focus on logistics efficiencies coupled with shifting enterprise preference (focus on core competencies) to drive 3PL growth in India
Page 10
Indian 3PL market estimated to outpace overall logistics sector growth over the medium term
While 3PL market size is valued differently by industry experts, it is expected to outpace logistics sector growth over the medium term
580 1,333
244
Key Reason for low 3PL penetration in India
20% 12%
17% • 3PL has gained wide acceptance in developed
755 countries, as the companies in these nations have
335 wide and complex distribution networks and do not
110
19,052 consider logistics as a core competency. However,
9,236 15,230 9%
11% this scenario has yet to be replicated in India,
13% resulting in smaller 3PL market size as percentage
12,576
6,425 9,100 of logistics industry.
• Expect unorganized sector’s difficulty to adhere to
FY17 FY22E
compliance to result in shift of market share to
FY17 FY20E CY11 CY16
organized in a rapidly growing logistics space
Logistics Market Size 3PL Market
Source: CRISIL Source: A&M Source: World Bank

Source: CRISIL, A&M, World Bank, Spark Capital Research
3PL’s healthy growth prospects is expected to attract incremental investments and new players in the space
HIGH 3PL players leverage
on their expertise 3PL growth will be driven by:
and proven track
Express  GST led rejig of industry supply chain to attain logistics
record creating high
Services/LTL
3PL and entry barriers and efficiency
Project Logistics Container healthy returns
FF/ Logistics Contract  Maturing consumer mindset to understand
NVOCC Logistics complexities and cost involved in supply chain
ROCE
Tank Cold  Evolving technology to drive performance

FTL Agri WH
Farms Chain  Reducing capital allocation towards non-core functions
Custom Last 5 Year Growth
Bonded WH like logistics
Coastal Shipping 15-20%
10-15%
 Compliance to changing regulatory norms
Port Services
5-10%
Air (domestic) 0-5%
LOW Barriers to Entry HIGH
Source: A&M, Spark Capital Research
Page 11
High entry barriers
Level of Customer
Asset intensity Premiumisation RoCE Entry Barrier 3PL is the only specialised
fragmentation stickiness
logistics sub-industry to
have low asset intensity
Contract Logistics and high entry barriers due
Moderate Low High High High High
(3PL) to difficulty in setup of
network and establishing
track record
Container logistics Low Very High Moderate Moderate High High
Cold Chain
(products and Moderate High High High Moderate Moderate
commodities)
Project Cargo Moderate High Low Moderate High High
Coastal Shipping Moderate Very High Low Moderate Moderate Moderate
Custom bonded
Very High Moderate Moderate High Moderate Moderate
warehouses
Ecommerce
Moderate Low Low Moderate High Low
Logistics
Source: A&M, Spark Capital
Segments such as road transport and freight forwarding, have low barriers to entry, due to low asset intensity. However, 3PL, despite low asset intensity, has high entry
barriers due to established network, differentiated services and track record in industry specific logistics. Furthermore, It would be difficult for a new entrant to take away a
client due to long term contracts entered with logistics service provider (high cost of replacement). We believe MAHLOG’s established network and good rapport with its
clientele will make it difficult for competition to poach clients.
Page 12
3PL services in India and levels of outsourcing
Levels of Outsourcing
Transactional Tactical Strategic

(Box in-box out) (Box in-piece out) (Channel partner)
Primary 3PL Services*
Transportation High High High
Warehousing Low Low High
Value added Services Low Moderate High
MNCs primarily in Automobile, IT

Sectors FMCG,FMCD, Ecommerce Retail, Auto Comp, Mobiles
hardware etc.
Importance of 3PL service

Low Moderate High
provider
A biscuit manufacturer distributing Auto comp for OEMs and aftermarket Huawei Enterprise India appointed
Examples from factory to warehouse to distribution. In FMCG, product Redington to manage its Enterprise
distributors bundling (tooth paste with brush) services distribution in India
*Other key services include logistics consulting and freight forwarding provided on need basis; Source: Industry, Spark Capital Research
Currently, majority of Indian 3PL operations constitutes transactional (box in-box out) outsourcing. Expect increasing importance of logistics efficiency to drive outsourcing of
non-core in-house operations to 3PL companies.
Page 13
CASE STUDY:
DRAWING A PARALLEL – Ryder Systems Inc.
In an attempt to better understand critical success factors, we analysed

the US 3PL market, which started gaining traction in mid 1990’s and
continued to grow at 9% CAGR over two decades. We handpicked Ryder
Anchor Track Systems, transporter turned 3PL service provider, to analyse
Clients record in performance across economic cycles.
specific Background:
Industry  Started in 1933 as a full service truck leasing (FTL) company, Ryder
logistics System, Inc. provides a continuum of logistics, supply chain, and
transportation management solutions worldwide. The Company's
offerings range from full-service leasing, comprehensive supply chain
solutions (SCS), logistics management services, and e-Commerce
CRITICAL 3PL solutions. The SCS segment provides logistics and supply chain services
Scalability
SUCCESS from industrial start (raw material supply) to finish (product
and flexibility distribution). SCS also offers dedicated contract carriage service by
– Creating FACTORS supplying trucks, drivers, and management and administrative services
Technology to customers on a contract basis.
agile supply Geographies catered:
integration
chain
 Ryder operates in North America (Canada, Mexico, and US), and Asia
(China and Singapore). The US accounts for around 85% of its total
revenues.
Established
Industries and customers:
Infrastructure
 Ryder's clientele operate in wide variety of industries such as
(Network and automotive, food and beverage, technology, business and personal
fleet) services, and industrial. The company's customers have included
General Motors, Fiat Chrysler, Toyota, Mazda, Associated Grocers,
Bendix, Cisco, Clark and Reid, and CVS/Caremark.
Page 14
Anchor Clients
Case Study: Ryder Systems Inc Anchor Client – General Motors (GM) Revenue contribution GM as anchor client was
pivotal to expand Ryder‘s
54% 35% 14% 3PL operations
Started in 1933 as a full service truck leasing (FTL) company, was the first to implement North
1987 America’s large scale Just-In-Time supply delivery in 1987 and started providing extensive 3.0 61% 64% 70%
transportation and distribution services to automotive OEMs like GM and Fiat Chrysler.
53% 60%
Ryder’s strong presence in auto transportation allowed it to provide integrated logistics 2.5 60%
59% 60% 60% 41% 37% 50%
solutions to its clientele. Ryder was one of the many 3PL providers when General Motors (GM)
1995 and Fiat Chrysler started outsourcing its logistics. It transported over 50% of GM’s vehicles
2.0 51% 52%
48% 40%
produced in North America. GM constituted over 50% of division’s revenues for the year. 1.5 39% 30%
20%
1997 Ryder becomes the GM’s lead logistics provider for 4 Latin America plants 1.0
10%
0.9 1.0 1.1 0.9 1.0 1.2 1.6 1.5 1.5 1.9 1.5 1.7 1.9 1.7 1.4 1.5 1.9 1.9 2.1 2.1 2.2 2.4 2.6
Ryder's role with Chrysler grew into that of a 4PL—overseeing the automotive company's 0.5 0%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
North American plants by performing logistics engineering, modeling, and network design.
1997-2007 Ryder expanded its clientele and provided strategic oversight on supply chain for multiple
clients including Chrysler.
SCS Revenues (Rs. bn, LHS) Top 10 clients as % of revenues
Recessionary events resulted in weak auto demand thereby impacting Ryder’s revenues (24%
2007-2010 decline
 While handling GM’s supply chain allowed Ryder to add new clientele in automotive
The operations diversified its customer base and expanded further in emerging economies. It industry (Toyota, Mazda, Honda), it also made Ryder susceptible to GM’s production
2010-2017 reduced its top 10 client dependency from 64% in 2010 to 48% in 2017 while reporting 8% problems from 2005-08
CAGR for the period.
 Top 10 clients accounted for 59-64% of revenues over CY05-10 supporting Ryder‘s
operations during recessionary economic cycles
FY14 FY15 FY16 FY17

Anchor clients are critical to 3PL operations to ensure:
100%
Anchor
97%
93%
90%
clients  Minimum resource (warehouse and trucking) utilization guarantee

76%
71%
70%
63%
62%
61%
contrib
54%
54%
51%
50%
 Establishing sector specific track record

46%
40%
40%
35%
ution
28%
 Long term contracts
3PL service Mahindra Future Supply TKM Global

Fiora Services Proconnect Expect reliance on anchor clients continue as they will support operations during
provider Logistics Chain Logistics
Top economic/industry downturn
Mahindra Group Future Group Trent (Westside) Redington Tata Steel
Customer
Anchor clients provides resource utilization visibility and ability to achieve operating leverage over time. We believe anchor clients are critical especially in initial phase of 3PL
market growth as manufacturers turn towards 3PL operators to provide lead logistics (4PL) solutions in the long run.
Source: Company, Spark Capital Research
Page 15
Track record in specific industry logistics

Year of incorporation
Automotive (OEM and Auto comp) – (3PL market size Rs. 253-263bn) FMCG/FMCD/Retail – (3PL market size Rs. 47-51bn)
Started as Future group’s logistics arm, it caters to diverse sectors such as fashion
2007 Started as Mahindra and Mahindra group’s logistics arm 2006
and apparel, F&B and FMCG
Started as global 3PL service provider. Focussed predominantly on the auto sector Fiora Caters predominantly to Trent group – (Westside, Trent hypermarkets, Star
2004 1989
in India before acquisition of DIESL Services Bazaar)
Applied supply chain best practices and diversified services from transportation. Logistics 2004 A subsidiary of LG Group Korea, it provides consumer electrical logistics for LG
2006
Initially focussed on automotive sector
Pharma – (3PL market size Rs. 22-24bn)
2002 Applied supply chain best practices and diversified services from transportation
JV formed between Gati and Kintetsu World Express to provide Express transport
2011
& 3PL solutions in India
1999 JV between TCI and Mitsui formed for Toyota Kirloskar Motors operations
Electronics, IT and Telecom – (Telecom 3PL market size Rs. 0.2-0.4bn)
Started supply chain services as a part of Redington (India) Ltd and acquired
1997 Applied supply chain best practices and diversified services from transportation 2009
capabilities to manage end-to-end supply chain
2001
Started to provide technology driven logistics solutions, the company was Bulk – (3PL market size Rs. 8-10bn)
acquired by French logistics major - FM Logistics in 2016
1986 Caters predominantly to Tata Steel and fellow subsidiaries
Started as a integrated logistics service provider, the company grew inorganically
2009
through its acquisition and JV with FIEGE (German LSP) Part of OP Jindal Group providing bulk supply chain solutions (Cement, steel and
2011
iron)
Ryder Systems Inc
18% 16% 13% 8% 9% 10%

20% 20% 21%
Industrial and other Ryder’s trucking service catered to Automotive sector since
17% 18% 33% 34% 32% 34%
36% 36% 36% Retail and CG
1980’s. It leveraged on its relationship to gain share in
22% 22%
18% 20% 18% 18% automotive 3PL space. Post 2008 recession, the company
16% 16% 17% Hi tech started catering to the food and beverage and retail segment
43% 45% 41%
36% 27% 28% 26%
37% 38% Automotive to reduce its exposure to automotive cyclicality
2009 2010 2011 2012 2013 2014 2015 2016 2017
 End-to-end supply chain forms a critical component for any industry and corporates assess 3PL players on the basis of adequate supply chain management track record.
 Expect automotive focused 3PL players like MAHLOG and Transport Corporation of India (TRPC) to diversify into other sectors to reduce susceptibility to sector cyclicality
 Expect FMCD and Pharma sector to be early adopters of 3PL as focus increases on outsourcing non-core competencies
Page 16
Technology integration
Indicative IT target operating model for cargo transportation and logistics companies
User Layer
Globally, application of 3PL
technologies cater to three main
functions:
Communication  Customer interface (providing

Layer real-time updates/decision
making capabilities)
 Inventory and supply chain
management
 Customer Analytics
Business
Support 3PL companies are expected to
Applications make significant investments in
multiple technologies such as
Order Management System,
CRM, Data Management etc. to
enable high quality service to its
clientele
Data Layer
Source: Enroute, Spark Capital Research
 Use of tech tools has enabled 3PL to provide integrated supply chain solutions and reduce logistics cost. Given the predominant asset light operations of 3PL players, expect
Indian 3PL players to continue sizable investments in technology to provide cutting edge solutions
Page 17
Established infrastructure (network and fleet)

North East
FSC MAHLOG DHL Safex FSC MAHLOG DHL Safex
Ambala Ambala Ludhiana Amritsar Kharagpur Kolkata Kolkata Patna
Gurgaon Ludhiana Roorkee Ambala Ranchi Raipur Guwahati Guwahati
Ludhiana
Kanpur Delhi Rudrapur Haridwar Jamshedpur Ranchi
Jaipur Delhi Rudrapur Bhubaneshwar Kolkata
Chandigarh
Jaipur Gurgaon Ambala Raipur
Kanpur Jaipur New Delhi
Gurgaon Meerut
Agra Ghaziabad
Jaipur Kanpur
Lucknow Lucknow Guwahati
Varanasi
Allahabad
MAJOR CONSUMPTION CENTERS
Ranchi Kharagpur
Rajkot Indore Jamshedpur
Vadodara Kolkatta
Ahmedabad Baroda Raipur
West Surat Nagpur Bhubaneshwar South
Vapi
FSC MAHLOG DHL Safex FSC MAHLOG DHL Safex
Nagpur Indore Indore Indore
Mumbai Hyderabad Hyderabad Hyderabad Hyderabad
Pune Warrangal Vishakapatnam
Indore Ahmedabad Ahmedabad Ahmedabad Vijayawada Bangalore Belgaum Vizag Bangalore
Hyderabad
Ahmedabad Baroda Vadodara Mumbai Chennai Bangalore Bangalore Chennai
Mumbai Surat Vapi Pune Belgaum Coimbatore Chennai Chennai Salem
Pune Vapi Mumbai Nagpur Goa Coimbatore Coimbatore
Mumbai Pune Nashik Kochi Kochi
Pune Nagpur
Bengaluru Chennai
Nagpur
Trichy Key infrastructure traits before choosing 3PL for a region:
Kochi Coimbatore  Proximity to consumption centers
 Option of Built to suit/multi-user warehouse
 Capability to scale up based on seasonal peak demand
 Transportation capabilities (Facility to support FTL, LTL, Multimodal)
Expect incremental demand for faster and efficient logistics services at key consumption pockets on the back of increasing manufacturing activity and rising per capital income
Page 18
Scalability and Flexibility – Creating Agile Supply Chain

3PL operators enter into contracts with asset heavy players to provide back end support
 Globally, major 3PL players have
an asset light model to provide
flexibility in a dynamic demand Transporters Warehousing Technology
condition.
 Indian 3PL players like MAHLOG Strategic long term contracts with fleet
Tie-up with multiple tech
and FSC, followed global suit to operators (with minimum service level
product developers to provide
adapt faster to various industry agreement) and warehouse lessors (contract
cutting edge tech
tenure dependent on built-to-suit
cycles. warehouse or multi-user warehouse)
 While developed economies have
witnessed consolidation and  Small and  Associated Road  Indospace  Assetz  Arkieva  IBM
vertical integration to derive medium fleet Carriers  Embassy  E-shang  JDA Software  SAP
synergies, Indian 3PL market is in operators  Navata Logistics Industrial Parks Redwood  CIRRUS
nascent stage and expected to  VRL Logistics  Janata Roadways  LOGOS India  Panchshil Realty  Neovia
remain asset light over the  Rivigo  Stellar Value  Zoho
medium term.  DARCL Chain  Datex
Ryder Systems Inc Potential supply chain disruptors

Asset light model allows 16% 50 Regulatory issues 3PL companies use latest technology to
operational flexibility 44
based on economic cycles
-11%
40 Decline in warehouse lease rental identify optimal supply chain while factoring
35 35
30 31 in the changing industry/environmental
25% 23
18
Technological advancement dynamics. For e,g. MAHLOG uses CLASS
15 15 technology to assess the changing customer
11
10 Warehousing automation demand and provide efficient supply chain
Shut down of Europe and Latin America
operations due to recession
Scaling up of multimodal logistics solution
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Warehouse (Mn sq.ft) Internet of things
 End-to-end supply chain forms a critical component for any industry and corporates assess 3PL players on the basis of adequate supply chain management track record.
 Expect automotive focused 3PL players like MAHLOG and Transport Corporation of India (TRPC) to diversify into other sectors to reduce susceptibility to sector cyclicality
 Expect FMCD and Pharma sector to be early adopters of 3PL as focus increases on outsourcing non-core competencies
Page 19
What Are Key Parameters When Selecting 3PL Service Provider?

• Open to change and transformation with respect to the shifting business dynamics (stay abreast with paradigm shifts in technology and business
models)
General Mills • Infinite proactiveness to bring new ideas to table for their customers’ growth
• Must acknowledge its strong and weak areas and be candid about it
- Vivek Gaurav,Head – Planning, Customer Service & Logistics, General Mills India
Scalability, financial stability and high quality industry reference are key aspects while vetting for 3PL service providers and determine whether your
Ferrero supply chain adds value or becomes a cost drain
- Rohit Batra, Vice President – Supply Chain (India Sub continent), Ferrero India
 Inherent capability to integrate the latest technology into the work practices to drive efficiencies
 Provide customised solutions based on the local requirements
Wildcraft
 Continual sharing of industry best practices with the customers in supply chain
-Raviraj Rodrigues, SCM Head, Wildcraft India
 Very strong discipline to ensure safety of its clients’ goods
 Technology plays an enabling role in offering a transparent view of the entire supply chain
Henkel
 Damage/pilferage liability clause
- Sandeep Baxla, Head Supply Chain – India Sub-continent, Henkel Adhesives Technologies
 Adapts and executes new strategies and programs to support changes in the overall company strategies or market place changes
 Flexibility to respond quickly to demand and opportunities
abof.com Logo
 Ownership of goods providing improved supply chain visibility & supply chain risk
- Sukanta Das, COO, abof.com
 Customer centricity: 3PL should be owning the customers of the brand they serve
 Cost management: 3PLs experience in managing different companies and strong competencies in creating cost efficiencies
Becton Dickinson Logo  Creativity/process innovation: Traditionally companies view 3PL partners as mostly transactional and times are changing where relationships are
becoming more collaborative.
- Soumyakant Dwivedy, Head – Supply Chain, Becton Dickinson India
 Infrastructure: 3PL should possess sizable warehouse space, adequate team support, MHEs, safety & security requirements with capabilities to cater to
ad hoc requirements
Liberty Shoes Logo  Technology support: The service provider should have the technology support that is required to execute and perform daily tasks
 Flexibility & key account management: The service provider should be flexible in responding to changes
- Manu Verma, Head – Logistics, Liberty Shoes Ltd
Source: Industry, Media Articles, Spark Capital Research
 While 3PL companies differentiate services, we believe 3PL players are selected on the basis of 3 key parameters: 1) Potential reduction logistics cost, 2) Value addition to
existing supply chain and 3) risk mitigation strategies
Page 20
Table of contents
 What is 3PL?
3PL GROWTH DRIVERS


COMPANIES
Page 21
3PL GROWTH DRIVERS
Realigning supply chain post GST – Focus on attaining logistics efficiency to result in new clients
Pre GST Lead Distance Total Lead Distance
500-2500 KM < 400 KM < 100 KM <3000 KM
FTL FTL & LTL/EXPRESS LAST MILE DELIVERY
MULTIPLE SMALL
MANUFACTURER STATE WAREHOUSE DISTRIBUTOR RETAILER
Post GST Lead Distance Total Lead Distance
Scenario 1 1000-1500 KM < 1000 KM < 100 KM <2600 KM

Expect increase in frequency
of FTL and LTL/Express
services across supply chain.
Expect to see lead distances FTL LTL/ EXPRESS LAST MILE DELIVERY
for LTL/Express to increase at
the expense of FTL lead
distance LIMITED NO. OF LARGE
MANUFACTURER DISTRIBUTOR RETAILER
WAREHOUSE
Scenario 2 < 2500 KM < 100 KM <2600 KM

Direct delivery from plant to
consumption centers via
LTL/Express mode could also
be a possible alternative LTL/EXPRESS LAST MILE DELIVERY
where warehousing is not
required and plant is
centrally located
MANUFACTURER DISTRIBUTOR RETAILER
Pre-GST
Primary Transportation Warehousing Secondary Transportation
Base Case Lead distance (KM)
MFG  WH 500-2,500
Decrease in primary
Larger warehouses at hub
Increase in total lead distance on EXPECTATION:
INCREASE IN transportation distance from account of additional movement
WH  DS 400 locations  3PL players like MAHLOG are
SECONDARY production center to hubs from hub warehouses to spokes
DS  RT 100
LOGISTICS TO Potential to reduce the expected to benefit from supply
Total 3,000
BENEFIT Larger volume movement number of warehouses at Overall increase in per unit cost of chain rejig as corporates look to
Post GST
LTL/EXPRESS to/between hub location spoke location resulting in secondary transportation. optimise supply chain with optimal
Scenario 1 Lead (KM) Scenario 2 Lead (KM) warehouse cost reduction
MFG  WH 1,000-1,500 MFG  DS <2,500
LOGISTICS distance to multiple consumption
SERVICE Use of higher capacity Increase in no. of inventory centers. Expect reshaping of supply
WH  DS 1,000 DS  RT 100 vehicles for movement turns per warehouse
PROVIDERS chain is expected to reduce overall
DS  RT 100 between hub locations resulting in lower per unit
Total 2,600 Total 2,600 supply chain cost by 20-25%
▼15-25% ▼20-30% ▲30-50%
Page 22
3PL GROWTH DRIVERS
Warehouse consolidation is picking up – Sectoral impact contingent on the trade-off between warehousing and transportation costs
Inbound Focused Outbound Focused Cost Efficiency Focused
Consumer
Auto Comp Engineering Ecommerce FMCG Apparel/Retail Electronics Pharma Bulk (Cement) Bulk (Steel)
Durables
Logistics cost 2.5%
5-5.5% 4% 9% 5-7% 5-6% 4-5% 2-4% 20-22% 5-7%
(as % of turnover) (Domestic formulation)
Transportation
cost
Warehousing cost
 Auto OEM  Emphasises on  Ensure short delivery times with faster TAT  Homogeneous cost sensitive
follows JIT inbound time  Prefer to set up warehouses close to demand centers products
manufacturing bound logistics  Last mile delivery accounts for a considerable share in the total logistics expense  Emphasis placed on using cost
emphasizing on  Share of  Use of specialised services (e.g. temperature controlled transportation) efficient transportation solutions.
timely transport outbound  Multimodal (rail and road) transport
 In-factory logistics is used on specific routes
logistics cost for higher due to
auto comp heavy nature of
depends on end product
level of sub-
contracting
Warehouse
consolidation
potential
Change in logistics requirement for key industries Opportunities for organized LSP Changes witnessed post GST
 Investment in a fleet of higher capacity vehicles which could
 Use of higher capacity vehicles for transportation to/between
be used for primary transportation  Post rollout of GST, higher tonnage MHCV trucks (>25T) grew
Transportation hub locations
 Investment in optimum mix of vehicles for secondary 76% YoY (July-January) while overall MHCV grew at 39%
 Change in mix of vehicles required for secondary distribution
distribution
 Setting up warehouses close to key consumption centers to  CBRE report states average size of space leased increased from
enable Hub-&-spoke distribution 65,000 sq ft in H1CY17 to ~85,000 sq ft during H2CY17
 Demand for large automated warehouses (grade A) at key hub  Investment in large technology enabled multiuser  Key regions witnessing faster warehouse consolidation include
Warehousing
locations warehousing facilities for key industries at Hub locations NCR (Delhi, Haryana, UP and Rajasthan), Bangalore (Karnataka,
 Increase in share of national LSPs with multilocation and multi AP, TN), Kolkata (WB, Orissa, Jharkhand), Guwahati (North
service capabilities East)
Source: Industry, CRISIL, A&M, Spark Capital Research
Sectors with limited benefits of warehouse consolidation:

 In case of low value products (e.g. biscuits in FMCG or apparel in retail), per unit warehousing cost is lower than per unit transportation cost as these sectors place emphasis on faster turnaround
time. Expect limited warehouses consolidation opportunities in these sectors
 Cost sensitive sectors (for e.g. Cement and Steel) would re-engineer transportation as it constitutes higher portion of overall logistics cost
Page 23
3PL GROWTH DRIVERS
Why will GST benefit 3PL industry?

Existing Supply chain inefficiencies 3PL Capabilities
Transportation Transportation
 Tie-up with multiple fleet owners/broker networks
 Transportation accounts for 70% of overall logistics TRANSPORTER/
to provide faster and efficient transit (higher INDIA
costs. Long distance transportation is around 50% of
tonnage trucks carrying longer lead distance to CONTRACTOR
this cost.
reduce transportation cost/ton)
 Vehicles run 30-40% lower than their capability in
 Capabilities to handle multimodal logistics
spite of better road conditions
 The dry haul proportion is high due to fragmented
supplier base with significant information asymmetry  Technological tools to provide free flow of LOGISTICS
Intermediation cost is around 5-8% of the long haul information SERVICE
spent.
PROVIDER
Warehousing Warehousing
 Smaller size state warehouses with poor  Lower warehousing cost for larger grade A
infrastructure to cater to consumption centers warehouses due to economies of scale.
 Connectivity to the market and the distance to the
market
 Better connectivity to multiple consumption centers DEVELOPED SUPPLY CHAIN
 Providing best practices for efficient supply chain ECONOMIES PARTNER
management
 Capabilities to handle multi-user warehouses
 Capabilities to provide value added services
Other factors driving 3PL demand

 Considering logistics beyond cost center: As the scale of operations have continued to grow at a faster pace, emphasis has been placed on automation and productivity
improvement has become more important than cost control of existing cost heads
 Changing consumer mindset: Indian corporates have matured to understand complexities and cost involved in supply chain. The total cost of supply chain not only factors in
basic functions but takes into consideration losses due to transit, pilferage, delays, loss sales.
 Evolving technology: Technological advancement has become need of the hour to drive performance. Rising cost of technology requires frequent allocation of capital
thereby making it viable for companies.
Page 24
3PL GROWTH DRIVERS
Why will GST benefit 3PL industry?
‘GST era will upend small state warehouse paradigm, benefiting large players such as Mahindra Logistics, which will be able to offer economies of scale at
Mahindra Logistics Logo their regional hubs’
- Pirojshaw Sarkari, CEO, Mahindra Logistics
‘If logistics spend is at $50-70 billion, I see a cost saving of 2-3% in the next 3-5 years due to combination of various factors post GST’
TVS Logistics logo
- R.Dinesh, Managing Director, TVS Logistics
‘GST probably for the first time in the history of the country, allows people to build their supply chain design purely from the first principles of the supply
chain and not really from taxation point of view. Expect large scale high efficiency models which will come into play. Both these things put together, we
Future Supply Chain logo
can expect some very interesting times ahead for the industry as a whole and probably specifically for Future Supply Chain also. ‘
- Mayur Toshniwal, Managing Director, Future Supply Chain
‘Companies operate smaller factories and warehouses to take advantage of tax breaks offered by various states, as well as to avoid transporting goods
over too many borders. Almost all states act like different countries. Expect GST and E-way Bill to formalizes the logistic sector and bring the person who
TCI SCS logo
is sending and receiving the cargo as part of the integrated chain.’
- Vineet Agarwal, Managing Director, Transport Corporation of India
‘Supply chain or logistics existed as a tiny part of a bigger function within the organisation and did not exist as a separate function’
Genex Logistics
–Mansingh Jaiswal, Director and CEO, Genex Logistics
‘With the elimination of multiple state taxes, the decisions on location of warehouse & distribution will be purely based on operational efficiency rather
than tax consideration. This will benefit large 3PLs like TCI SCS as we also have an own backbone of services. Furthermore, there is no impact of cascading
TCI SCS logo taxes and hence choosing an organized player like us who is fully compliant to all laws would be relatively cheaper in doing business than the unorganized
players.’
- Jasjit Sethi, CEO, TCI SCS
‘Post-GST, DTDC has seen a 25-30 per cent growth in warehouse space demand and this is expected to move up to 50 per cent soon. In terms of size, the
DTDC Logo 50,000 to 130,000 sq ft warehouses are ideal as they bring in more efficiencies.’
- Abhishek Chakraborty, Executive Director, DTDC Express Ltd
Source: Industry, Media Articles, Spark Capital Research
 Favorable regulations like GST and E-way bill are making it difficult for unorganised to remain competitive. Expect growing significance of supply chain to benefit organised
3PL players like Mahindra logistics, TVS logistics, Future Supply Chain, and Transport Corporation of India
Page 25
3PL GROWTH DRIVERS
Why would one choose 3PL over existing supply chain process?
Key questions to be addressed before
Reasons to outsource
Cut costs outsourcing
Companies that have a track record of inventory losses and incremental loss due to
supply chain inefficiencies are likely to see 3PL as a solution. Given the dynamic
Is logistics a core competency?
Avoid changes to supply chain, companies are happy to outsource warehousing and
Scalability
Capex distribution centers
Is there adequate capital Incurring frequent capex towards properties and equipment assets for supply chain
3PL committed/allocated for supply chain? services can be reallocated post outsourcing to 3PL
Companies facing frequent damages/pilferage and supply chain lapses will prefer
Is there adequate control on supply
3PL who offer structured way of managing logistics with reporting systems, KPI and
Focus on chain?
Better contract agreements. Capabilities to handling product expiry/return logistics
core
flexibility
business
Capability to cater to seasonal demand and faster adaptability to growing business
Is there provision to provide scalability?
needs
Improved
services Is there adequate experience to manage Compliance to multiple standards, and flexibility to adapt to changing regulatory
compliance or regulatory changes? requirements. Enforces Industry best practices
Key risks of outsourcing supply chain to 3PL:

 Operations impacted in case of supply chain disruption: Globally, 3PL industry has high entry barriers as 3PL companies establish their expertise in a sector’s supply chain and assess impact on
supply chain across multiple economic cycles. Expect risk mitigation strategies and firm Service Level Agreements (SLA) to overcome this risk.
 Reluctance to provide critical production information: In India, Automotive sector has been the first to adopt 3PL due to JIT manufacturing process. However, 3PL has only resulted in lowering
supply chain cost and no instance of loss of information. Furthermore, MNC’s continue to rely on 3PL for global supply chain efficiencies. Expect improving track record of 3PL to reduce reluctance
to outsource.
 Overdependence results in lower bargaining power: An automotive OEM outsources inbound and outbound logistics to multiple 3PL companies to ensure limited overdependence on single
operator. Expect this trend to continue until mutual rapport is created.
 Transition from India’s multi-layered and complex tax regime to GST provides Indian companies an opportunity to assess their supply chain. Given the criticality of supply chain, expect large
number of corporates to approach 3PL players to get consultation on supply chain rejig.
 While corporates have an opportunity to internally operate their supply chain, 3PL provides cost benefits such as industry best practices, economies of scale, updated technological
capabilities, and flexibility to dynamic conditions.
 The other parameters to be factored are
‒ Shifting focus towards core competencies
‒ Scalability – avoiding incremental cost during seasonality
‒ Low capital commitment
Page 26
3PL GROWTH DRIVERS
Services beyond transportation - Total logistics solutions with compliance, Value added services, - Penetration of service portfolio
Transportation constitutes ~70% of 3PL
industry revenues
30%
NICHE SERVICES PROVIDED BY

GLOBAL 3PL PLAYERS
70% Other value added services offered

Transportation as % of Indian 3PL Claims/auditing
Warehousing as % of Indian 3PL
SERVICES EXPECTED TO BE Predictive analytics
OUTSOURCED TO 3PL PLAYERS Security analysis
Potential services currently insourced Contingency/crisis planning

Labour management
Packaging
Labelling Green logistics
Quality checks Recycling and waste management
SERVICES CURRENTLY Kitting
OUTSOURCED TO 3PL PLAYERS Inventory Financing Services
In-factory logistics
Inventory and order management Compliance solutions
Primary outsourcing activities
Bundling
Transportation Dedicated help desks
Transport management systems
Warehousing
IT-enabled warehousing services
Customs (EXIM) Reverse logistics
 Due to nascent phase of 3PL industry and limited track record of benefits derived from 3PL, manufacturers prefer to outsourceonly primary functions of logistics. However,
we expect maturing customer mindset and increasing realization of benefits derived from 3PL to result in penetration of new services. Expect increasing penetration of new
services to drive expansion of MAHLOG’s SCM operating margins
Source: Industry, Spark Capital Research
Page 27
3PL GROWTH DRIVERS
Where are the key growth opportunities?
Industry-wise breakup of 3PL market
3PL Market Size in FY17 3PL Market Size in FY20 CAGR Expectation Logistics cost as % of
S. No Industry Commentary
(Rs. Bn) (Rs. Bn) (FY17-20) (%) Industry Turnover
1 Automotive 253-263 398-409 15-16 5-5.5% (Auto comp) Outbound logistics comprises most significant part
2 Ecommerce 59-62 135-140 30-32 5% Emphasis will remain on shorter delivery time
Others
3 Engineering 3-5 6-8 20-22 3-6% Potential for 3PL growth in inbound logistics
Consumer durable
4 20-22 39-43 24-26 5-7% Higher C&F presence limits entry to 3PL players
and FMCG
Consolidation in supply chain post GST with emphasis on cost

5 Pharma 22-24 29-31 8-10 2.5%
efficiency will drive shift towards 3PL.
Transportation cost accounts for 95%. Preference for

6 Bulk 8-10 10-12 6-8 20-22% (Cement)
multimodal transportation due to low value-high vol
7 Organized retail 27-29 60-62 29-31 5-6% High emphasis on outbound logistics
8 Telecom 0.2-0.4 0.2-0.4 -
9 Others - Total 80-90 144-156 20-22
*Estimated; Source: CRISIL Report, Spark Capital
Our Take
 Given the criticality of reach to multiple consumption centers, we believe FMCG, FMCD and Pharma will be early adopters of 3PL
Page 28
Table of contents
 What is 3PL?
3PL GROWTH DRIVERS


COMPANIES
Page 29
Who are the listed companies in 3PL sector?
Operating
Asset light Asset light Asset light Asset light Moderate(owned fleet)
model
Warehouse
10.0 4.2 12.0 6.0 3.3
(mn sq.ft.)
Owned fleet - 1350 (for milk run

Contract with 1000 business Contract with business partners Contract with 100+ business
Fleet operations). Fleet leased on Own fleet. Fleet leased on need.
partners (687 containerised fleet) partners
need.
Auto, Fashion and apparel, F&B, Auto, Retail, Chemicals, Auto, Pharma, Ecommerce,
Sectors Auto, Engineering, FMCG, FMCD, Electronics and Tech, Telecom
FMCG, Ecommerce, Healthcare, Pharmaceuticals, FMCG, Textiles, FMCG, FMCD,
catered Pharma, Ecommerce, Bulk and infra, Ecommerce
Electronics and Tech Telecom, Electricals, Electronics & Tech
Others Auto , Other Pharm

Other , 19% Others a, 15%
22% s,
s, , 19%
32% 30% Others IT ,
Electro
, 37% 38%
Sector nics &
Tech,
revenue 6%
breakup
Ecom, Fashio FMCG/
Auto, 7% n& Auto, Teleco FMCD, Auto ,
68% Appar 70% m& 6% 17%
FMCG el , Ecom , infra , Textile
, 23% 24% 12% 13% s, 10%
Top Client Mahindra & Mahindra Future Group NA Redington NA
Auto: Volkswagen, Ashok Fashion & Apparel: Pepe Jeans, Auto: Toyota, Tata Motors, Electronics & Tech: Oppo, Auto: Ford, Tata Motors, Honda
Leyland, BMW India, 3M India, Clarks Footwear, Jack & Jones, Volkswagen, Sonalika, Bajaj Lenovo Cars, Maruti Suzuki, Volkswagen
Bosch, and Mercedes-Benz India Vero Moda Retail, Wildcraft Auto, Hyundai, Maruti Suzuki, Telecom: Vodafone, Idea Pharma: Cipla, Novartis, Torrent
Others: Siemens, Vodafone, FMCG: Reckitt Benckiser, Hero Motocorp, TVS Motors Cellular, Indus Towers pharma, Sun Pharma, Abbott
Other Key
Thermax, JSW Steel Amway, Kellogg, Mondelez FMCG: HUL, Café Coffee Day, Ecommerce: Snapdeal FMCG: HUL, Dabur, Godrej
Clientele
Others: HPL Electric & Power, ITC, P&G, Cadbury, Amul FMCD: Samsung, Toshiba, Sony
Pepperfry, TTK Prestige, Others: NITCO, Nokia, Dixon, Others: Ricoh, Flipkart, Amazon,
Samsung, Whirlpool, Sun Pharma Myntra, Jabong, Paytm,
Starbucks
*Estimated; Source Industry, Spark Capital Research
Page 30
Who are other key 3PL companies in sector?

TVS Logistics Safe Express Om Logistics Avvashya CCI Apollo Logisolutions
Presence 2004 1997 1999 2015 2009
Avvashya Group (Flagship: Allcargo Apollo Group

Group TVS Group - Om Group of Companies
Logistics) (Flagship: Apollo Tyres)
Operating
Asset light Moderate(owned fleet) Moderate(owned fleet) Asset light Asset light
model
Warehouse
10 12 15 2.0 0.4
(mn sq.ft.)
Contract with multiple business 3,000+ fleet operated (majority

Fleet 3,000 dedicated fleet Third party service providers Third party service providers
partners owned)
Apparel & Lifestyle, E-commerce, Electronics, engineering &

Automotive, Consumer & Retail,
Auto, FMCG, Consumer Durables, Healthcare, Hi-Tech, Publishing to Automotive and Engineering, E- automobiles, pharma, healthcare ,
Sectors Fashion, Pharmaceutical/Life
Retail, Engineering, Energy, Automotive, Engineering & commerce, Fashion and Retail, fashion & textiles, luxury, FMCD,
catered Science, Technology, Energy,
Chemical, Paper and Construction Electrical Hardware, FMCG & Chemical, Pharma and Food retail , e-commerce, renewable
Telecom, Healthcare, Engineering
FMCD energy, hospitality
Auto: Apollo Tyres, Marubeni Auto: Apollo Tyres, Bharat Forge

Auto: TVS Motors, Ford and other
Automotive, Maruti Suzuki, Pharma: Aurobindo Pharma,
major OEMs
Mitsubishi, NTN Bearing Others: Auto: Ashok Leyland Novartis, Dentomed Healthcare,
Key Clientele Others: Catered primarily by its -
Dabur India, De Diamond, Dish TV, Ecommerce: Flipkart Piramal Healthcare
subsidiary (DIESL)
Jindal Polyfilms, Shakti Bhog Others: Samsung, Micromax,
Foods, Varun Beverages Kirloskar Chillars
*Estimated; Source Industry, Spark Capital Research
Page 31
DHL Supply Chain India DB Scheneker Spear Logistics (FM Logistics)
Commenced
2001
Indian 2013 1990
(acquired by FM logistics in 2009)
operations
Operating
Asset light Asset light Asset light
model
Warehouse
7 1.8 3.4
(mn sq.ft.)
Aerospace, Automotive, Beverages, Consumer,

Sectors Consumer, Technology, Energy, Engineering and Manufacturing, Auto & Auto Anciliary, Engineering, Oil & Gas, Telecom,
Electronics, fashion & Retail, Healthcare & Pharma,
catered Automotive, Retail, Life Sciences and Healthcare, Chemicals Beverages, Consumer Goods, Retail
Marine, Perishables, Oil & Gas, Recyclables, Solar
Global 3PL
presence 220 Countries 130 Countries 14 Countries
(Countries)
DHL Supply Chain India plans to invest ~$100 million in additional

Committed DB Schenker has announced its expansion plans, which
capacity in the next 3-4 years, with ~65 per cent towards An initial outlay of Rs 3bn. Spear’s long-term plan is to
capital envisages expanding warehousing footprint to 3 mn sq ft
warehousing. invest €30-40 mn over the next three years.
investment and revenues growth of 20% CAGR.
(Warehousing space to increase to 10 mn square feet by 2020)
Source: Company, Media Articles, Spark Capital Research
Our Take
 Despite asset light operations, 3PL players’ expertise in supply chain handling has resulted in high entry barriers. The imperative GST rollout has created a favourable outlook
for 3PL in the space. Global players such as DHL worldwide, DB Schenker and FM Logistics have identified India as the next growth driver and committed sizable capital to
reap benefits in the long run. Expect entry of new global 3PL players in India to gain share in the fast paced growth
Page 32
Competitive Landscape
Mahindra logistics has maintained its healthy growth momentum despite large scale of operations
Revenue (Rs. Bn) Revenue Growth
CAGR: 17%
23.7 140%
22.7
Despite its scale, MAHLOG maintained its growth 120%
momentum compared to FSC and TCI-SCS
18.1 100% MAHLOG and
16.8
14.8 80% 82% FSC.
12.9
60% Proconnect
CAGR: 12% CAGR: 9% CAGR: 49%
40%
34% grows on low
7.4 6.7 31% base
6.1 6.2 20% 21%
5.2 5.6 5.5 5.2 5.4
3.5 3.3 4.1 0%
1.5 2.3
0.3 0.7 0.8 1.1 -20% FY13 FY14 FY15 FY16 FY17 9MFY18
Mahindra Logistics Future Supply Chain TCI - SCS Proconnect MLL FSC (Overall)
FY13 FY14 FY15 FY16 FY17 9MFY18
TCI - SCS Proconnect
Operating/EBITDA margins is a factor of transportation, warehousing and Value added services
EBITDA (Rs. Bn) EBITDA Margin MAHLOG’s

Operating Profit
(Rs. Bn) 25.0% operating
margin
20.0% (ranged
1.6 1.6 16.2%
15.5%
between 5-
15.0%
1.2
1.1
7%) is lower
0.9 0.9 10.0% 10.6% than EBITDA
0.7 0.7 0.7 0.7
0.8
0.7 7.1% margins of
0.6 0.7 0.6 0.5 5.0% peers due to
0.3 0.4 asset light
0.2 0.3 0.0%
0.2 operations
0.1 FY13 FY14 FY15 FY16 FY17 9MFY18
0.0 0.1
(outsource
MLL* FSC (Overall) entire asset
Mahindra Logistics* Future Supply Chain TCI - SCS Proconnect
TCI - SCS Proconnect requirement)
FY13 FY14 FY15 FY16 FY17 9MFY18 *Operating margin
Source Company, Spark Capital Research
Page 33
Working Capital Analysis - Peers have a diversified customer and sector base
170 Debtor days Creditors days Cash Conversion Cycle (Days)

161163
155 75 77 76 95
141 73 90
84
64 79 77
65 63
53
48 54 52 53
90 90 90 47
83 82 83 41 39 39
38 39
67 71 27
56 53 53 27 17 21
38 43 19 20 17 4 4
31 32 12 12 12 11 13
-7 -7 -4
Mahindra Future Supply Proconnect Om Logistics Mahindra Future Supply Proconnect Om Logistics Mahindra Future Supply Proconnect Om Logistics
Logistics Chain Logistics Chain Logistics Chain
• Sustenance of bargaining power with suppliers and customers to be the key component for 3PL player. While FSC’s high debtor days reflect high credit to Future group entities, MAHLOG’s
debtor days indicate higher receivable period for Non-Mahindra clientele (as revenue contribution of non-Mahindra clients rose to 46% in FY17 from ~25% in FY13).
• In a high growth cycle phase, MAHLOG continues to maintain low cash conversion cycle compared to peers.
MAHLOG FSC Proconnect Om Logistics MAHLOG’s working capital

Working 27
105
131 123 138 133 133 days are sizable lower
21 89 93 93
Capital 54 56 63 54 56 63 compared to peers. Expect it to
7 3 6
Days reduce on account of reducing
accrued revenues and TDS
FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 refund
72% 77%
156%
114% 220% 70% 82% 75% 61% 55% 61%
73% 143% 52% MAHLOG’s incremental
OCF to 30% 75% 76% working capital requirement
-19% -4%
EBITDA has resulted in lower OCF to
EBITDA ratio in FY16 and FY17
FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17
FY13 FY14 FY15 FY16 FY17
*Estimated; Source Company, Spark Capital Research

Page 34
Competitive Landscape
RoCE and RoIC
RoCE – Pre Tax (%) RoIC – Pre Tax (%)
69% 135%
66% MAHLOG’s healthy historical
64% 62% 121%
RoCE and RoIC is aided by its
asset light operations and
45% efficient working capital cycle
55% 80%
69% though constrained by lower
35% 66% 70%
31%
61% profitability (higher revenue
23% 41% from transportation.
21% 20% 21% 37%
29% Proconnect’s incremental
15% 22% 24%
12% 21% 16% contribution from warehousing
13%
21%
17% 18% 20% operations (~60% of revenues)
16% 18%
4% 6% 16% aids its operations
4% 6% FY13 FY14 FY15 FY16 FY17
Source Company, Spark Capital
Net Debt to Equity Total asset turnover ratio
Asset turnover ratio is substantially higher for

0.6 0.6 MAHLOG compared to peers. Expect the trend
0.5 0.4 15.4 to continue as MAHLOG is expected to operate
0.5 14.6
0.4 0.3 0.4
0.3 0.3 0.2
by asset light model to provide scalability and
0.1 0.2 0.1 flexibility
8.9
6.3 6.9
(0.1) 5.9 5.7 5.2 4.7
(0.2)
1.7 1.8 2.1 3.0
(0.5) (0.4) 2.1
2.2
(0.7)
(0.8) 1.5 1.4
1.2 1.1 1.4
Mahindra Logistics Future Supply Chain Proconnect Om Logistics
Mahindra Logistics Future Supply Chain Proconnect Om Logistics
Source Company, Spark Capital Source Company, Spark Capital
Page 35
How are 3PL players differentiating services? Technology and value added services
Technologies Value added services Other business segments
Transport Management Services: MILES, MyCargo360

 Packaging, bundling, quality checks and kit-building. In-
Warehouse Management Services: Mahindra Warehouse Passenger transport
factory and line feed at 35 manufacturing locations
Management System (MWMS), Oracle Logfire WMS, CLASS
Transport Management Services: Vehicle tracking system
Warehouse Management Services: Dynamic Put-to-Light (PTL)
sortation system, high speed cross belt sorter at MIHAN with capacity  Packaging, Kitting, Sorting, Labeling, Reverse Logistics,
Express transportation, Cold chain
to handle 2,000 cases per hour, Leanbox (last mile delivery platform), Consolidation
Oracle, SAP and Uniware, Vendor relationship management portal,
auto replenishment system
Transport Management Services: Advanced Vehicle Tracking System,
Management Information System (MIS), dashboards and decision  Quality Check and Put away, Return Shipment Full truck load (FTL), Less than
support systems Management, labeling, kitting, Key account management, truckload (LTL), express logistics,
Warehouse Management Services: ASRS, Pick/Put to Light, Stock data storage, Multimodal (rail and ship)
Management System, EDI (Electronic Data Interchange) for ERP
 Kitting, shrink/stretch wrapping, bundling and de-
Warehouse Management Services: ASN, Put-away Pick and Ship, Hand
bundling, stickering and bar coding, reverse logistics. Cold -
held terminals and VNA rack systems
chain
Transport Management Services: Transport Management System,  Kitting and Packaging solutions, special handling
TRACE (last mile) (preservation, special packaging, & other activities as
Global 3PL operations (catering to
Warehouse Management Services: Msys suite for ERP, Demand required by the customer) and safety management, Tax
50 countries), Defense logistics
Forecasting & Planning, Product Data Management, Mobile Resource and Compliance Management, Cash Management, Vendor
solutions
Management, Business Intelligence Reporting, Supplier Information Consolidation, Accounting / MIS
Portal and Parts Catalogue, Vendor Managed Inventory (VMI)
 Option of To-pay/Freight collection on delivery, inventory
Warehouse Management Services: Inhouse WMS solution to integrate Express transportation
replenishment, picking, kitting
with ERP systems, Vendor Managed Inventory (VMI), Put Away sorting
 Investment Planning, Site allocation, Feasibility Study,
Market Analysis, Land Acquisition, Permission and
Warehouse Management Services: DI system, Direct On Line Road transportation, Rail Services,
Licenses, Layout planning, Architectural and Structural
Deliveries, MIS, logistics related manpower support
Planning, Warehouse Modeling
 Tech-enabled platforms have reduced cost of operations and reduced pilferage & spillage. Competitors are assessed by service quality, reliability, price and the ability to
address varying requirements of different sectors and specific customer needs comprehensively
Page 36
Table of contents
 What is 3PL?
3PL GROWTH DRIVERS


COMPANIES
Page 37
MAHINDRA LOGISTICS
Page 38
MAHINDRA LOGISTICS CMP Target Price Rating
Rs. 527 Rs. 550 ADD
Initiating Coverage
Company Factsheet
Company Factsheet
 Incorporated in 2007, Mahindra Logistics (MAHLOG) provides integrated third party supply chain and people transport solutions to companies across
multiple industries. Its technology enabled, asset-light business model allows for scalability of services as well as the flexibility to develop and offer
customized logistics solutions across diverse set of industries. MAHLOG’s subsidiary, 2x2 Logistics, provides logistics and transportation services to OEMs to
Background
carry finished automobiles from the manufacturing locations to stockyards or directly to the distributors. MAHLOG’s other subsidiary, Lords Freight (India),
provides international freight forwarding services for exports and imports, customs brokerage operations, project cargo services and charters. The
subsidiaries were added to the fold in 2015 and currently have small scale of operations.
 Pirojshaw Sarkari, CEO, has over 25 years of experience in the logistics sector. Prior to becoming CEO of MAHLOG in 2010, he served as Managing Director in
UPS Jetair Express Private Limited and UPS International, Philippines. Mr. Sarkari is a qualified Chartered Accountant and has completed a course on Mahindra
Universe from Harvard Business School.
Management  Sushil Rathi, COO, manages Supply Chain Management business of MAHLOG. Mr. Rathi has over 30 years of experience across diverse industries. Prior to
depth joining MAHLOG, he has worked with Anantara Solutions Private Limited, the Premier Automobiles Limited and Satyam Computer Services Limited. Mr. Rathi
holds a Bachelor’s degree in Mechanical engineering and post graduate diploma in Industrial Engineering from NITIE.
 Nikhil Nayak, CFO and Compliance Officer, has over 30 years of experience. Prior to MAHLOG, Mr. Nayak worked with Bristlecone Inc., Pidilite Industries,
Bombay Dyeing and ATIC Industries Limited. Mr. Nayak is a qualified Chartered Accountant.
 Total number of Directors: 8

Board Composition
 Independent Directors: 4
Presence  Operates on a pan-India basis with a presence across 15 hubs serving over 14,000 postal codes
 Asset light model

Key Success
 Integrated technology enabled services
Factors
 Operational support for Mahindra Group entities
Corporate Banking HDFC Bank Ltd, Kotak Mahindra Bank Ltd., State Bank of India, The Zoroastrian Co-operative Bank Limited
Auditors B.K. Khare & Co.

(SPAK <go>)
Mahindra Logistics | Initiating Coverage | Rating - ADD | Target Price of Rs. 550
Operations
Supply Chain 24 city offices

Consulting
350 locations
SUPPLY CHAIN
Freight MANAGEMENT
Last Mile Delivery
Forwarding (SCM) 1000 business partners
Warehousing space:
10 mn sq.ft.
SUBSIDIARY
Value Added Integrated 2x2 LOGISTICS  Outbound transportation for Auto OEM’s
Services (Packing,
Labelling, Kit- Service Transportation LORDS FREIGHT (INDIA)  Freight forwarding services
Building)
Provider
12 cities
MAHLOG’s
Warehouse
Network of Cross
Inventory and PASSENGER
Docks and TRANSPORT 120 locations
Order
Consolidation SERVICES (PTS)
Management
Centers
In-plant Stores 500 business partners
and Linefeed
Page 40
Snapshot of company profile
Revenue breakup – SCM drives revenue growth

Consolidated Revenues (Rs. Mn) Consolidated EBITDA (Rs. Mn)
CAGR: 12% CAGR: 18% CAGR: 25% CAGR: 16%
Addition of new Non-Mahindra client results in reducing revenue contribution Transportation contributes over 75% of revenues over last five years
from Mahindra group
While warehousing contribution has grown from 8% to 12%, sizeable contribution from
• Exposure to Mahindra group transportation constrains profitability
has declined over years as
13%
70% 30% experience from handling 16% 15% 13% 12% 11% 10%
FY15 17% supply chain for Mahindra 8% 8% 11% 12% 13% 12%
group has enabled MAHLOG
to acquire new non-
Mahindra clients.
76% 76% 75% 75% 75% 78%
• Emphasis has been placed on
adding few large clients
33%
54% 46% FY17 13%
Transportation Warehousing and other related People logistics
Source: Company, Spark Capital Research Source: Company, Spark Capital Research
Page 41
Positives/ Opportunities
Increasing penetration of services
Negatives/ Threats
(value beyond transportation)
Customer Concentration
Asset light operations enables
scalability and flexibility
Recurring Investment in
Technology
Established network
Increasing working capital
requirements
Diversifying Beyond Automotive
Page 42
Increasing penetration of services – Providing value beyond transportation

Customer Breakup
MAHINDRA NON-MAHINDRA TOTAL SCM SEGMENT
9% 14%
Transportation vs Warehousing
22%
Transportation Transportation Transportation

78%
Warehousing Warehousing Warehousing
91%
86%
Given the established supply chain of Mahindra Auto and Farm

Presently, Top 20 Non-Mahindra customers outsource 10-15% of
Equipment services segment (~90% of Mahindra revenues), expect As relationship with clientele evolves, expect incremental
total logistics cost. Expect addition of new clients coupled with
limited change in % contribution from transportation and outsourcing of warehousing and other value added services to
increase in wallet share of existing clientele to drive revenue
warehousing. However, expect logistics outsourcing from other drive revenue and operating margin expansion.
growth
Mahindra entities (Non-M&M) like Mahindra CIE, Punjab tractors
Operating margins* Operating margins* Operating margins Op. profits contri (%)
Operates on cost + margin basis
30%
57%
45%
33%
51%
63%
18%
19%
11% 11% 11%
10% 7% 8% 8%
Operating Margins
9% 10% 7%
6% 6% 6% 6% 6% 6% 6% 7% 6% 6% 6% 7%
5% 6%
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY13E FY14E FY15E FY16E FY17E FY18E FY19E FY20E FY13E FY14E FY15E FY16E FY17E FY18E FY19E FY20E Non-Mahindra
M&M group
Limited scope of value added services due to established Expect increasing penetration of services in clients older than 3
Expect increasing contribution from Non-Mahindra clientele to
operations. Margins to remain flat years as manufacturers outsource non-core operations based on
drive operating margins
MAHLOG’s established track record
*Estimated; Source Company, Spark Capital
 Due to nascent phase of 3PL industry and limited track record of benefits derived from 3PL, manufacturers prefer to outsource only primary functions of logistics. However,
we expect maturing customer mindset and MAHLOG’s established track record to result in higher penetration of new services. Expect operating margins to expand 160bps
through FY17-20E.
Page 43
Asset light operations enables scalability and flexibility

MAHLOG has the highest asset turnover amongst asset light logistics players (3PL,
Express, Transportation)
Supplier Total Asset Turnover (x)
18.0 15.4
14.6
16.0
14.0
Indian Asset Light Logistics Service Providers
Plan and 12.0
8.9
Order 10.0 7.3 7.3
6.9 7.2
8.0 6.3
6.0
Plan and 4.0
Order Plan and
Supply 2.0
Consumer Chain Tower
Order Production
-
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Mahindra Logistics FSC TCI TCI Express Blue dart Express
Plan
5.5
Global Asset Light 3PL Companies
Order 4.6 4.5 4.5
4.2
4.5 3.8
3.8
3.5
3.2
3.0
2.5 2.4
Distribution 2.3
1.5
CY12 CY13 CY14 CY15 CY16 CY17
CH Robinson Echo Global Expeditors Landstar Panalpina
Source Company, Bloomberg, Spark Capital

Global matured asset light 3PL companies operate at average of 3x
 Flexible and scalable, solutions and services: MAHLOG’s asset light operations allows it to assess its processes based on demand. Its long-standing relationships with a large
number of business partners (providing fleet and warehousing space) enable it to serve the requirements of a diverse set of industry verticals.
 Managing seasonal demand: This business model also allows it to manage any fluctuations in demand more efficiently and minimize any adverse effects resulting from cyclical
movements.
 Efficient capital allocation: Reduces capital expenditure towards addition of physical assets (land, vehicles, grade A warehouse etc.).
 Operational risk: Ability to pass through of hike in fuel costs
 Compliance: Quicker adaptability to regulatory changes
Page 44
Established Network – operating under hub-&-spoke model
MAHLOG network hubs and cross docks catering to network of warehouses Sector based services provided using MAHLOG’s expertise and business partners
Automotive FMCG
• Inbound logistics: Network of cross • Inbound logistics: Transportation

docks and consolidation centres used services for RM sourcing, consolidation
for JIT manufacturing centres for production planning and
• Outbound logistics: Stockyards and scheduling
warehouses to deliver finished vehicles • Outbound logistics: Warehouses for
and spares for after market consolidating finished goods and time
bound delivery to C&F agents or
distributors
FMCD Pharma
Inbound logistics: Consolidation centres Inbound logistics: Specialised

and transportation services of components transportation of raw materials
for assembly Outbound logistics: Time bound delivery
Outbound logistics: Warehouses for to C&F agents/distributors
consolidating finished goods (flexibility to
manage seasonal demand) and last mile
delivery
Ecommerce Bulk
Inbound logistics: Transportation to Outbound logistics: Efficient

Fulfilment centre and distribution centres transportation solutions with wide reach
Outbound logistics: Last mile delivery
 MAHLOG’s pan-India network comprising of 24 city offices and over 350 operating
locations coupled with large network of over 1,000 business partners providing us
vehicles, warehouses and other assets and services, enables it to provide integrated
logistics solution. Expect MAHLOG’s network to be a key strength to its overall
operations
Source: Industry, Company, Spark Capital
Page 45
Diversifying Beyond Automotive

Mahindra’s strong presence in automotive sector reflects its logistics support to Mahindra group
Automotive: Top Clients

24% 27% 31%
2%
5%
8%
74% 68% 61% Others:
FY15 FY16 FY17
Automotive Ecommerce Others
3PL Market Size in FY17 (Rs. Bn) 3PL Market Size in FY20 (Rs. Bn) CAGR Expectation (%)
Auto Comp 108-112 165-170 14-16
Pre-GST, Automotive was
Cars and Uvs 66-68 the only sector with high
119-121 20-22
CVs and Tractors 25-27 3PL presence due to JIT 33-35 8-10
2W and 3W 54-56 manufacturing 81-83 13-15
Total Automotive 253-263 398-409 15-16
Ecommerce 59-62 135-140 30-32
Engineering 3-5 6-8 20-22
Consumer durable and FMCG 20-22 39-43 24-26
Pharma 22-24 29-31 8-10
Bulk 8-10 10-12 6-8
Organized retail 27-29 60-62 29-31
Telecom 0.2-0.4 0.2-0.4 -
Source: CRISIL, Spark Capital
 While automotive 3PL market is expected to grow at 15-16% CAGR through FY17-20, growth prospect for other sectors is estimated at 20-22%. Furthermore, reducing
exposure to automotive sector will make MAHLOG less susceptible to sector cyclicality.
Page 46
Nascent 3PL Industry resulting in customer concentration
While between FY15 and FY17,

29.3% client retention rate has been
33.0%
36.9% 92% for the top 25 SCM, non
43.5%
Mahindra clients and 100% in
56.5% 9M F18, expect intensifying
63.1%
70.7% 67.0% competition may impact
retention rate over the
medium term
29.9%
36.8%
46.0% 45.9%
70.1%
63.2%
54.0% 54.1%
FY15 FY16 FY17 9MFY18
Mahindra Group as % of Revenues Non-Mahindra Group as % of Revenues
 Currently, MAHLOG’s top 20 clients outsource 10-15% of their logistics services to 3PL players. Expect increasing penetration of services to result in high revenue
contribution from top 20 clients over the medium term. However, MAHLOG will remain susceptible to loss of contract of its top 20 clients.
Page 47
Frequent investment in technology (advancement)
250 62% 70% MAHLOG’s key technologies

52% 60%
200 • MyCargo360 – Flexible and scalable Transport Management Services (TMS)
50% deployed across industries vertical
150 40% • Mahindra Integrated Logistics Execution System (MILES) – Exclusively used for
26% transportation of finished Automobiles
100 30%
16% • Mahindra Warehouse Management System (MWMS) – Order processing and
13% 20%
50 inventory management
10%
194 206 108 112 128
0 0%
• CLASS: Technology to assess the changing customer demand and provide efficient
FY13 FY14 FY15 FY16 FY17 supply chain solution
Intangible Assets (Rs. Mn, LHS) Intangible as % of GB • Control Tower (CT) - Managing committed transport timelines using real time
tracking and journey planning
Investment in tech has allowed MAHLOG to
Benefits reaped from investment in technology
• Study, model, design and optimize supply chain and logistics solutions for
clients; • Design and model tailormade supply chain solutions for clients
• Manage inventory as well as connect and exchange information with clients’
• Integrate with client Enterprise Resource Panning (ERP) to control supply chain
systems allowing them to control any supply chain gaps;
gap
• Plan and optimize routes, transportation networks and consignment loads
which has resulted in adherence to committed transit time and cost • Plan and optimize routes, transportation networks and consignment loads to
optimization for clients. adhere to committed transit time and cost optimization
 MAHLOG will continue to automate major processes to improve process efficiency, reduce costs, and offer a differentiated value proposition to clients. Going forward, it
will focus on the key areas provided below.
 Advanced transportation management system with an integrated ecosystem involving real-time exchange of information with diverse client and service provider systems.
 Real-time and seamless supply chain visibility across the entire logistics value chain.
 Advanced warehouse management service for faster accessibility to the markets.
 Implementation of “internet of things” projects in certain operations.
 Advanced employee transportation management service for enhanced user experience.
 Using analytics to support real time decision making and operations support
Page 48
Increasing Working capital requirements
TDS refund (Rs. Mn)

33 33 33
40 35
35 27 TDS @ 2% started in June, 770
30
2015 and MAHLOG has
30 21 25 not received refunds for
25 544
20 over two year period
20
15
15 7 254 276
6 10
10 3 169
5 5 111
19 4 15 5 15 5 24 7 31 7 38 7 37 7 37 6
0 0
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
Other Assets Other Liabilities WC days
4 4
60 3 3 3
4
55
2
50
0
45 -4 -2
40 -4  We believe MAHLOG has bargaining power
35 -7 -7
-6
to stretch its business partners incase of
delays in receipt of payment from its
30 -8
31 38 32 39 38 41 43 39 56 53 55 52 55 52 55 52 customers. However, any adverse change in
25 -10
contract terms (client and business partner)
may result in working capital deterioration
Debtors Days (LHS) Creditor Days (LHS) Cash Conversion Cycle (RHS)  The transportation revenue is subject to
1,053 998 TDS @ 2% while refunds are delayed
861 845
627 thereby pressurizing cash flow. Expect
delays in refunding of TDS to increase
working capital days thereby impacting
205 cash flow from operations
FY13 FY14 FY15 FY16 FY17 FY18E
-46 FY19E FY20E
-412
Cash flow from operations (Rs. Mn)*
Page 49
Snapshot – Supply Chain Management (SCM)

90% 89%
30,000 100%
79%
25.0 71%
% Contribution
94% 20,000 9,528 9,213
Rs. Mn
5,281 60% 50%
MAHLOG leveraged
1,601 3,523 59%
1,277 on its supply chain
20.0 92% 10,000 expertise to expand
CAGR: 12% 13,217 13,266 12,858 14,188 13,477
11,585 its non-Mahindra
90%
90% - 0% clientele base
89%
15.0
% Contribution
88% Non Mahindra Group Mahindra Group
88%
Rs. Bn
87% Mahindra as % of SCM Revenues
10.0 86%
85%
84%
84% 24% 27% 31%
2% 5% Substantial
5.0 8% contribution to
82% Mahindra group has
74% 68% 61% led to high exposure
12.9 14.8 16.8 18.1 23.7 22.7 to automotive
0.0 80% sector
FY13 FY14 FY15 FY16 FY17 9MFY18 FY15 FY16 FY17
SCM Revenues (Rs. Bn, LHS) % of Overall Revenues (RHS) Automotive Ecommerce Others
2% 1% 1% MAHLOG’s services
Key Business Strategies to fuel growth 12% 13% 14% constitutes higher
• Higher share of revenues from Non-Mahindra group entities composition of box-
in box-out
• Increasing Value Added Services to clientele while focusing on few large clients
86% 86% 85% contracts. Expect
• Diversifying into consumer, pharmaceuticals, e-commerce, and bulk transportation to
• Emphasis on technology constitute over 80-
• Leveraging on the changing logistics industry dynamics, particularly with 85% of revenues
FY15 FY16 FY17 over the medium
implementation of the GST regime
term
Transportation Warehousing Others
Page 50
Established network to leverage on changing logistics industry dynamics

Expect increasing trend of multi-user warehouses to benefit MAHLOG Warehousing services
Forms majority of MAHLOG’s existing warehouse network
Contracts tenure: >5 years

Built-to-suit
Structure: racks and warehousing space setup on basis of volumes handled
Lower margin
High growth expectation post GST

At present, Gurgaon is the only facility with multi-user option and Chakan is expected to be
added in April’18
Multi-user
Key Strength:
Capability to cater to seasonal demand
Key weakness:
Need healthy occupancy from multiple clientele to cover operating costs
 Back to back contract: billed on space irrespective of usage
Types of Contract  Variable: Billed based on inbound and outbound volumes handled; Contract clause
includes minimum and maximum volumes to be handled– (high margins)
Transportation services
Operates in-bound transportation network specifically tailored to meet client needs in
automotive and engineering industry
In-bound logistics
Collecting parts or components from cluster of suppliers through milk run operations with
the support of cross-dock network (in process of expanding cross-dock facilities)
MAHLOG has developed dedicated express delivery network technology enabling it to
track and trace and provide notification.
Outbound
Presence across 15 hubs serving over 14,000 postal codes.
Express Network
The network is built and operated on an exclusive basis for existing clientele.
Provide transportation of finished vehicles from OEM manufacturing location to

Specialized stockyards or distributors in specialized carriers.
automotive
outbound Source a majority of car carriers from large network of business partners
Per piece transportation - separately billed on lead distance with diesel pass through
10.0 million square feet of warehousing space across India spread across built-to-suit clause
Contract Type
warehouses, multi-user warehouses, stockyards, network hubs and cross-dock For built to suit warehousing services, transportation solutions contract tenure is ~2 years
with renewal option
Page 51
Supply Chain Management segment expected to drive overall revenue growth

50.0 31% 35% 4.0 CAGR: 21% CAGR: 27% 8.2% 9.0%
7.8%
28% CAGR: 19% 7.1% 7.2% 8.0%
30% 3.5 6.6%
40.0 6.3% 6.0% 7.0%
25% 3.0 5.7%
CAGR: 17% 19% 19% 6.0%
30.0 2.5
15% 20% 5.0%
13% 2.0
11% 15% 4.0%
20.0 1.5
8% 3.0%
10%
1.0 2.0%
10.0
5% 0.5
12.9 14.8 16.8 18.1 23.7 30.3 36.2 43.1 0.7 0.9 1.2 1.1 1.6 2.2 2.8 3.5 1.0%
0.0 0% 0.0 0.0%
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
Operating Profits (Rs. Mn, LHS) Operating Margins % (RHS)
SCM Revenues (Rs. Bn, LHS) Growth YoY (%, RHS)
Expect increasing share of warehousing and penetration of services to drive margin expansion.
CAGR: 11% 22.0 Furthermore, Incremental demand for multi user warehouses will result in better margins for facilities
20.0 21.0
CAGR: 30% with lower utilization (Gurgaon)
CAGR: 5% 17.9
16.2
13.2 13.3 12.9 14.2 % of SCM Revenue
11.6 12.4
10% 11% 21%
9.5 29% 40% 41% 45% 49%
CAGR: 65%
5.3
3.5 90% 89% 79% 71% 60% 59%
1.3 1.6 55% 51%
Mahindra Group Revenues (Rs. Bn) Non-Mahindra Revenues (Rs. Bn) FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
Mahindra Group Non-Mahindra Group
7.6%
• MAHLOG will continue to leverage on its established network to add new
600 7.4% 7.6% clientele while diversifying services in existing Non-Mahindra clients.
7.3%
7.2% 7.4%
400 • Expect higher growth from Non-Mahindra clientele to drive its overall share in
7.2%
200 SCM segment
7.0%
0
330 413 495 569
6.8%
• Transportation constitutes majority of revenues for Mahindra group resulting in
FY17 FY18E FY19E FY20E lower operating margins. Expect
• Expect higher penetration of services in Non-Mahindra clientele to drive margin
3PL Industry (Rs. Bn, LHS)* Mahindra Logistics share (%, RHS)
growth
Page 52
Snapshot –Passenger Transport Services (PTS)
PTS Revenue grew at 5% CAGR while its operating margins hover between 9-10%
CAGR: 5% CAGR: 7% Losses in

16% 320 10.5%
3.5 15% 17% 10.1% shuttle bus
10.0%
3.0 15% 300 10.0%
services
13%
2.5 12% (started as
% Contribution
13% 280 9.3% project in
11% 9.5%
Rs. Mn
2.0
Rs. Bn
10% 260 9.0% 9.0% Dec’16 and

11%
1.5 9.3% 9.0% discontinue
9% 240 d in Jan’18)
1.0
8.5% resulted in
0.5 7% 220
2.5 2.7 2.5 2.5 3.0 2.5 230 268 228 233 298 229 110bps
0.0 5% 200 8.0% operating
FY13 FY14 FY15 FY16 FY17 9MFY18 FY13 FY14 FY15 FY16 FY17 9MFY18 margin
decline
PTS Revenues (Rs. Bn, LHS) % of Overall Revenues (RHS) Operating Profits (Rs. Mn, LHS) Operating Margins % (RHS)
Non-Mahindra clientele dominates revenue contribution Top five clients command higher share of revenues
Revenue contribution - Mahindra and Non-Mahindra Top 5 clients as % of PTS revenues
93% 94%
3,500 94%
92% 48.0%
3,000
Key clients include Tech
2,500 92% % Contribution
46.3%
Mahindra Limited,
Rs. Mn
2,000 89% 45.8% AXISCADES Engineering

90%
1,500 2,751 Technologies Limited
2,243 2,306 2,380
1,000 88%
and ANZ Support
43.8%
500 Services India Private
- 276 195 200 163 86% Limited
FY15 FY16 FY17 9MFY18
Mahindra Group Non Mahindra Group Non - Mahindra as % of PTS Revenues
FY15 FY16 FY17 1QFY18
PTS segment caters to over 100 domestic and multinational companies operating in the
IT, ITeS, BPO, financial services, consulting and manufacturing industries
Page 53
People Transportation Service (PTS) Business
Industry growth driven by IT and ITES
PTS Market Size Key success factors

MAHLOG’s
• Presence: MAHLOG’s PTS division is present across 120 client locations across
Market Share: 5%
major cities in India catering predominantly to IT and ITeS industries.
CAGR: 9% • Fleet management: Operates fleet of passenger vehicles and shuttle buses
85-95 through its 500 business partners. MAHLOG has also introduced multiple
65-75
incentive driven programs to improve driver turnout, vehicle and service
quality, and on time performance.
• Renewed contracts: Enters into annual contracts customized according to
client (per trip, per KM, per employee etc.)
FY17 FY20
Source CRISIL Reasearch, Spark Capital
Operating Margins expected to improve to 10% post shutdown of shuttle bus

Revenue Contribution to declines as SCM growth outpaces PTS
services
CAGR: 9% CAGR: 14%
18% 10.1% 10.1%
4.5 20% 0.5 10.0% 10.1% 10.2%
4.0 13% 0.4 10.0%
15%
3.5 9% 10% 0.4 9.8%
3.0 7% 7% 10% 0.3 9.3% 9.6%
9.3%
2.5 0.3 9.4%
5% 9.1%
2.0 -1% 0.2 9.0% 9.2%
1.5 0% 0.2 9.0%
1.0 -6%
-5% 0.1 8.8%
0.5 2.5 2.7 2.5 2.5 3.0 3.3 3.6 3.9 0.1 8.6%
0.2 0.3 0.2 0.2 0.3 0.3 0.4 0.4
0.0 -10% 0.0 8.4%
PTS Revenues (Rs. Bn, LHS) Growth YoY (%, RHS) Operating Profits (Rs. Mn, LHS) Operating Margins % (RHS)
Page 54
Supply Chain Management (SCM) segment expected to drive overall growth
Supply Chain Management (SCM) segment contribution to consolidated revenues expected to increase on back of high growth
11% 10% 9% 8%
13% 12% 30%
CAGR: 18% 37%
46% 46% 49% 53%
CAGR: 20%
89% 90% 91% 92%
87% 88% 70% 63%
CAGR: 12% 54% 54% 51% 47%
FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20
SCM PTS Mahindra Non-Mahindra

Supply Chain Management (SCM) segment contribution to consolidated revenues expected to increase on back of high growth
Contribution to Operating Profit

CAGR: 34%
CAGR: 24% 12% 11% 10%

16% 18% 16%
CAGR: 25%
88% 89% 90%
84% 82% 84%
FY15 FY16 FY17 FY18 FY19 FY20
SCM PTS
Page 55
Operational Metrics - Consolidated

EBITDA margins expected to improve; Employee Cost and other expenses as % of
Gross margin expected to expand due to growth in non-Mahindra segment
revenues expected to remain flat
22.5% 14.0%
95% 21.8% 22.1% 24.0% 11.6% 11.4% 11.1% 11.2%
21.5% 12.0% 9.9%
19.8% 22.0%
90% 10.0% 8.4%
17.7% 20.0% 7.6% 7.1% 7.3% 7.1% 7.1% 7.1% 7.1%
4% 3% 8.0%
85% 18.0% 6.4%
4%
15.1% 5% 16.0% 6.0% 4.5% 5.0%
80% 5% 5% 5% 5% 14.0% 4.0%
12.0% 2.0% 3.8% 4.2%
75% 2.4% 3.0% 3.0% 2.9% 3.2%
86% 85% 82% 80% 79% 78% 78% 78% 10.0% 0.0% 2.5%
70% 8.0% FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
Other Expenses as % of Revenues Employee Cost as % of Revenues
Freight cost as % of Revenue (%, LHS) Labour cost as % of Revenue (%, LHS)
EBITDA Margins (%)
Gross Margin (%, RHS)
Strategic consulting fee to be paid till FY18 Key Personnel

Healthy Remuneration
RoE on account of asset light operations FY17 (Rs.Mn) % of PAT
Pirojshaw Sarkari, CEO 16.7 3.6%
250 0.9% Nikhil Nayak, CFO 6.7 1.5%
Consulting Service fee (Rs.
0.8%
Mn, LHS) 0.8% Sushil Rathi, COO 10.8 2.3%
200 0.7%
Consulting Service fee as %
of Revenues (RHS) 0.6% Neeraj Balani, VP Business Developmen 7.5 1.6%
150
0.5% Rama Malik, VP PTS 7.4 1.6%
0.4% Mehernosh Mehta, VP HR 5.6 1.2%
100
0.3% 0.3% 0.3%
Ravi Prakash Begur, GM – PTS 5.7 1.2%
50 0.2%
0.1%
25 62 206 103
0.1% Others 9.1 2.0%
0 0.0%
FY15 FY16 FY17 FY18E
Overall Key Personnel Remuneration 69.3 15.1%
Page 56
Operational Metrics - Consolidated

Healthy cash balances to fund stretch in working capital Healthy capital structure – Debt availed for subsidiary operations
2.5 0 0.1
2.1 -407 -872 -2084 -1281 -802 -307 -626 -1177
1.9
2.0 -500
0.1
1.5
1.5 1.3 -1000 0.1 0.1
1.1 0.1 0.1 0.1
1.0 0.9 0.9 0.8 -1500
0.6 0.7
0.5 0.5 0.1
0.4 0.4 0.4 0.0
0.5 0.2 0.20.2 0.2 0.2 -2000
0.1 0.1 0.1 0.1 0.0
0.0
0.0 -2500 0.0 0.0
Cash and Liquid investments (Rs. Bn) OCF* (Rs. Bn) Capex (Rs. Bn) Net Debt (Net Cash) (Rs. Mn, LHS) Debt to Equity (Times, RHS)
*Adjusted for TDS; Source Company, Spark Capital Source Company, Spark Capital
OCF expected to improve on back of improving profitability though partially offset

RoIC and RoE expected to improve on the back of improving profitability
by stretch in working capital
160%
1.56 135%
140% 121%
1.14 120%
100% 80%
0.73 0.70
0.64 80%
0.30 60% 41% 38%
29% 29% 33%
0.02 40%
(0.19)
20% 36%
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E 28% 14% 16% 19% 21%
0% 20% 13%
Pre-Tax OCF to EBITDA (Times) RoIC - Pre Tax (%) RoE (%)
Page 57
PEER COMPARISON
Page 58
PEER COMPARISON
Financial comparison
Comparison with domestic logistics peers
3PL
Express LTL
(Transportation focused)
Parameter Mahindra Logistics TCI OM Logistics TCI Express Blue Dart VRL Logistics
FY11-FY14 FY15-FY17 FY18-20E FY11-FY14 FY15-FY17 FY18-20E FY11-FY14 FY15-FY17 FY11-FY14 FY15-FY17 FY18-20E FY11-FY14 FY15-FY17 FY18-20E FY11-FY14 FY15-FY17 FY18-20E
Revenue (CAGR) 16% 18% 18% 5% 8% 17% 9% 16% - 7% 19% 17% 12% 10% 19% 6% 17%
Gross Margins % 51.1% 19.7% 22.1% 18.9% 19.8% 20.0% 81.1% 44.8% - 23.0% 24.9% 33.5% 40.4% 48.1% 29.1% 28.9% 33.0%
EBITDA (CAGR) 186% 16% 34% 3% 15% 23% -5% 20% - 13% 27% 4% 25% 20% 7% 2% 24%
EBITDA Margins % 1.8% 2.8% 3.7% 7.6% 8.2% 9.9% 11.0% 10.9% - 8.3% 10.8% 11.7% 11.9% 14.4% 16.1% 14.5% 14.1%
EPS (CAGR) - 3% 38% 6% 23% 34% -6% 8% - 24% 25% 8% 4% 34% -3% 5% 27%
PAT Margins % 1.0% 1.8% 2.1% 2.8% 3.7% 5.2% 5.2% 5.2% - 4.6% 6.8% 7.9% 6.2% 6.8% 4.8% 5.1% 6.3%
Total WC days 12 18 33 56 63 67 71 74 - 42 31 20 14 12 37 28 19
Pre-Tax OCF as % of EBITDA 281.3% 28.2% 45.3% 86.7% 111.4% 80.6% 72.7% 66.2% - 106.0% 93.2% 88.6% 103.2% 97.3% 97.5% 102.7% 98.0%
Post Tax OCF as a % of IC 84.5% 3.5% 6.8% 14.7% 17.8% 14.7% 11.6% 10.7% - 35.0% 25.2% 22.4% 44.6% 59.9% 21.8% 26.8% 27.0%
FCF - cumulative (Rs.Mn) 290 -404 125 330 218 382 105 253 - 137 146 711 1,322 2,511 250 1,448 461
FCF/OCF 36% 139% 101% 20% 10% 22% 23% 60% - 23% 20% 50% 51% 73% 13% 63% 22%
RoE’s (%) 17% 15% 18% 15% 15% 18% 14% 16% - 26% 30% 21% 34% 36% 30% 21% 22%
RoCE (%) 24% 16% 18% 11% 11% 13% 12% 13% - 25% 27% 21% 23% 29% 13% 15% 16%
RoIC (Pre-Tax) (%) 60% 64% 33% 16% 14% 16% 19% 21% - 42% 42% 32% 46% 57% 16% 18% 23%
Net debt to equity (x) -0.1 -0.5 -0.1 0.8 0.6 0.5 0.5 0.4 - 0.1 0.1 -0.2 0.4 0.0 2.6 0.7 0.2
Total Asset Turnover (x) 14.9 7.4 7.3 2.5 2.2 2.1 1.7 2.1 - 4.7 3.5 2.0 2.7 3.0 1.4 1.8 2.2
Page 59
PEER COMPARISON
Valuation comparison
Company EPS growth % RoE (%) RoCE (%)
Mahindra Logistics 6.8 8.7 12.5 17.2 14.1% 15.7% 19.0% 21.3% 14.2% 15.6% 18.7% 21.0%
Transport Corporation of India 9.2 12.7 17.2 22.9 13.1% 15.5% 18.1% 20.3% 9.8% 11.2% 13.2% 15.3%
TCI Express 10.6 14.8 18.7 23.1 28.8% 30.8% 29.8% 28.2% 23.3% 27.2% 26.9% 25.9%
VRL Logistics 7.7 12.3 16.8 19.7 13.4% 19.3% 22.8% 22.6% 10.2% 14.8% 16.5% 16.5%
Blue Dart Express 58.9 64.2 89.7 115.9 34.5% 32.9% 38.1% 38.4% 20.7% 21.8% 29.9% 34.6%
Price/Earnings EV/EBITDA EV/Sales

CMP Mkt Cap
Company
(Rs.) (Rs. Mn)
Mahindra Logistics 520 35,273 76.6x 59.7x 41.5x 30.3x 45.2x 32.2x 22.7x 17.2x 1.3x 1.0x 0.9x 0.7x
Transport Corporation
265 20,160 28.7x 20.9x 15.4x 11.6x 14.5x 11.6x 9.4x 7.5x 1.3x 1.1x 0.9x 0.8x
of India
TCI Express 470 17,996 44.2x 31.8x 25.1x 20.4x 27.4x 20.8x 15.7x 12.7x 2.4x 2.1x 1.7x 1.5x
VRL Logistics 388 35,402 50.2x 31.6x 23.1x 19.7x 17.0x 13.8x 11.4x 9.3x 2.1x 1.8x 1.6x 1.4x
Blue Dart Express 4,069 96,549 69.0x 63.4x 45.3x 35.1x 28.4x 27.0x 21.7x 18.2x 3.6x 3.5x 3.2x 2.8x
Page 60
PEER COMPARISON
Peers Comparison – Charts comparison
900 500
VRL Logistics 450 Transport Corporation of India
800 25x
42x 400
700
350 21x
600 34x
CMP (Rs.)
CMP (Rs.)
300
500 26x 17x
250
400 200
18x 13x
300 150
200 10x 100 9x
100 50
2x 5x
0 0
Apr-15
Dec-15
Sep-16
Mar-18
Jul-14
Jun-17
Oct-16
Apr-17
Oct-17
Sep-15
May-16
Aug-17
Nov-15
Dec-16
Dec-17
Mar-16
Feb-17
Mar-18
Jul-15
Jul-16
Jan-16
Jun-17
12M fwd P/E 12M fwd P/E
12,000
Blue Dart Express Target PE Multiple Target Price
10,000 85x
8,000 69x VRL Logistics 25x* 485

CMP (Rs.)
6,000 53x
Transport Corporation of
37x 15x* 350
4,000
21x
India
2,000
5x TCI Express 26x 600
0
May-13
Oct-14
Oct-16
Mar-18
Feb-14
Feb-16
Jul-17
Jun-15
Blue Dart Express 38x 4,400
12M fwd P/E *Implied PE
Page 61
PEER COMPARISON
Global Peer Comparison
Company Revenue (USD bn) EBITDA % EPS (USD) RoE (%)
CY16 CY17 CY18E CY19E CY16 CY17 CY18E CY19E CY16 CY17 CY18E CY19E CY16 CY17 CY18E CY19E
C. H. Robinson 13.1 14.9 16.1 17.0 6.9% 5.8% 6.1% 6.2% 3.6 3.3 4.5 4.9 42% 36% 40% 41%
Kuehne + Nagel 16.8 18.9 23.8 24.8 6.7% 6.2% 5.6% 5.7% 5.7 6.1 7.2 7.8 32% 34% 35% 36%
DSV 10.1 11.4 13.0 13.6 4.8% 6.9% 7.8% 8.0% 13.4 18.4 3.5 4.0 17% 24% 26% 28%
Expeditors 6.1 6.9 7.4 7.8 11.8% 10.8% 10.8% 10.9% 2.4 2.5 2.9 3.1 24% 23% 26% 27%
Mainfreight 1.5 1.7 1.9 2.0 7.4% 8.2% 8.4% 8.7% 0.9 1.0 0.8 0.9 16% 16% 16% 17%
Price/Earnings PEG EV/EBITDA EV/Sales

Mkt Cap
Company
(USD bn)
CY16 CY17 CY18E CY19E CY16 CY17 CY18E CY19E CY16 CY17 CY18E CY19E
C. H. Robinson 12,810 25.6 27.7 20.5 18.8 0.97 15.2 16.3 14.2 13.2 1.1 0.9 0.9 0.8
Kuehne + Nagel 18,533 24.4 23.2 21.1 19.6 1.62 15.2 14.4 13.2 12.3 1.1 0.9 0.7 0.7
DSV 14,885 37.0 26.1 22.7 20.0 1.34 22.4 17.0 15.8 14.6 1.6 1.4 1.2 1.2
Ryder Systems 11,304 27.2 26.6 21.9 20.4 1.94 14.3 14.2 12.8 12.0 1.7 1.5 1.4 1.3
Mainfreight 1,816 28.5 24.6 22.3 19.7 1.47 15.9 13.9 12.8 11.6 1.3 1.2 1.1 1.0
Source: Bloomberg, Company, Spark Capital Research
Page 62
CMP (Rs.)
CMP (Rs.)
120
160
100
140
0
20
40
60
80
150
300
450
0
Mar-06
Mar-09
Mar-07
Mar-10
Mar-08
PEER COMPARISON
Mar-11 Mar-09
Mar-10
Mar-12
Mar-11
Mar-13
Mar-12
DSV
Peers Comparison – Charts comparison
C. H. Robinson
Mar-14 Mar-13
12M fwd P/E
12M fwd P/E

Mar-14
Mar-15
Mar-15
Mar-16
Mar-16
Mar-17 Mar-17
Mar-18
Mar-18
30x
20x
10x
35x
15x
25x
9x
5x
13x
21x
25x
17x
CMP (Rs.) CMP (Rs.)

100
0
20
40
60
80
100
150
200
250
0
50
Mar-06 Mar-07
Mar-07 Mar-08
Mar-08 Mar-09
Mar-09
Mar-10
Mar-10
Mar-11
Mar-11
Mar-12
Mar-12
Expeditors
Mar-13
Kuehne + Nagel
Mar-13
12M fwd P/E
12M fwd P/E
Mar-14
Mar-14
Mar-15
Mar-15
Mar-16
Mar-16
Mar-17
Mar-17
Mar-18 Mar-18
9x
37x
2x
10x
14x
30x
16x
18x
23x
26x
30x
22x
Page 63
Financial Summary
Abridged Financial Statement
Rs. Mn FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
Profit & Loss
Revenue 15,321 17,507 19,309 20,639 26,666 33,659 39,773 46,987
Gross profit 2,209 2,644 3,420 4,085 5,726 7,335 8,770 10,572
EBITDA 365 525 570 523 762 1,085 1,510 1,953
Depreciation 31 32 60 83 146 200 237 274
EBIT 334 493 509 441 616 885 1,273 1,679
Other Income 35 63 87 132 97 65 81 156
Interest expense 7 1 4 13 35 41 46 44
Exceptional items 0 0 0 0 0 0 0 0
PBT 362 555 592 559 678 909 1,308 1,792
Reported PAT (after minority interest) 244 378 385 360 461 591 850 1,164
Adj PAT 244 378 385 360 461 591 850 1,164
EPS (Rs.) 4.2 6.4 6.5 6.0 6.8 8.7 12.5 17.2
Balance Sheet
Net Worth 859 1,243 2,681 3,047 3,477 4,053 4,887 6,036
Deferred Tax -34 -53 -71 -88 -129 -129 -129 -129
Total debt 0 0 40 236 280 347 357 317
Other liabilities and provisions 166 216 276 403 552 624 706 800
Total Networth and liabilities 992 1,407 2,926 3,598 4,180 4,895 5,822 7,024
Gross Fixed assets 316 397 412 722 977 1,177 1,377 1,577
Net fixed assets 101 156 216 452 572 572 535 461
Capital work-in-progress 4 2 0 28 7 7 7 7
Goodwill 0 0 0 0 0 0 0 0
Investments 0 0 0 0 0 0 0 0
Cash and bank balances 407 872 2,124 1,517 1,082 654 1,325 1,929
Loans & advances and other assets 782 722 782 1,377 2,257 3,478 3,737 4,369
Net working capital -302 -345 -197 224 262 184 218 257
Total assets 992 1,407 2,926 3,598 4,180 4,895 5,822 7,024
Capital Employed 826 1,191 2,650 3,196 3,628 4,271 5,116 6,225
Invested Capital (CE - cash - CWIP) 415 317 526 1,650 2,539 3,610 3,784 4,288
Net debt -407 -872 -2,084 -1,281 -802 -307 -967 -1,612
Cash Flows
Cash flows from Operations (Pre-tax) 569 597 418 -99 230 23 1,319 1,473
Cash flows from Operations (post-tax) 484 486 268 -479 -293 -295 861 845
Capex 58 102 110 354 243 200 200 200
Free cashflows 426 384 158 -833 -536 -495 661 645
Free cashflows (post interest costs) 419 383 155 -845 -550 -495 661 645
Cash flows from Investing -18 -39 -1,648 10 534 -200 -200 -200
Cash flows from Financing -64 17 1,029 184 24 67 10 -40
Total cash & liquid investments 407 872 2,124 1,517 1,082 654 1,325 1,929
Page 64
Financial Summary
Key variables
Mahindra Grp - Revenues/Total(%) 70.1% 63.2% 54.0% 53.8% 50.9% 47.4%
Non-Mahindra - Revenues/Total(%) 29.9% 36.8% 46.0% 46.2% 49.1% 52.6%
Supply Chain - Revenues (Rs. Mn) 16,789 18,139 23,715 30,323 36,202 43,059
Growth ratios
Revenue 10.5% 14.3% 10.3% 6.9% 29.2% 26.2% 18.2% 18.1%
EBITDA 45.9% 44.0% 8.5% -8.1% 45.7% 42.3% 39.1% 29.4%
Adj PAT 125.9% 54.8% 1.9% -6.6% 28.1% 28.2% 43.9% 37.0%
Margin ratios
Gross 14.4% 15.1% 17.7% 19.8% 21.5% 21.8% 22.1% 22.5%
EBITDA 2.4% 3.0% 3.0% 2.5% 2.9% 3.2% 3.8% 4.2%
Adj PAT 1.6% 2.2% 2.0% 1.7% 1.7% 1.8% 2.1% 2.5%
Performance ratios
Pre-tax OCF/EBITDA 156.0% 113.7% 73.3% -18.9% 30.2% 2.1% 87.4% 75.4%
OCF/IC (%) 116.7% 153.2% 51.0% -29.0% -11.5% -8.2% 22.7% 19.7%
RoE (%) 28.4% 36.0% 19.6% 12.6% 14.1% 15.7% 19.0% 21.3%
RoCE (%) 30.2% 37.5% 20.2% 12.6% 14.2% 15.6% 18.7% 21.0%
RoCE (Pre-tax) 44.6% 55.1% 31.0% 19.6% 20.9% 24.1% 28.8% 32.4%
RoIC (Pre-tax) 80.5% 134.6% 120.9% 40.5% 29.4% 28.8% 34.4% 41.6%
Fixed asset turnover (x) 48.5 49.1 47.7 36.4 31.4 31.3 31.2 31.8
Total asset turnover (x) 15.4 14.6 8.9 6.3 6.9 7.4 7.4 7.3
Financial stability ratios
Net Debt to Equity (x) (0.5) (0.7) (0.8) (0.4) (0.2) (0.1) (0.2) (0.3)
Net Debt to EBITDA (x) (1.1) (1.7) (3.7) (2.4) (1.1) (0.3) (0.6) (0.8)
Interest cover (x) 69.6 883.7 73.4 (36.3) (8.4) (7.3) 18.8 19.3
Cash conversion days -7 -7 -4 4 4 2 2 2
Working capital days 7 3 6 21 27 33 30 30
Valuation metrics
Fully Diluted Shares (mn) 57.7 58.8 59.7 59.7 67.8 67.8 67.8 67.8
Market cap (Rs.mn) 35,273
P/E (x) 122.8 80.9 80.5 86.2 76.6 59.7 41.5 30.3
P/OCF(x) 72.8 72.6 131.7 (73.6) (120.4) (119.4) 41.0 41.7
EV (Rs.mn) (ex-CWIP) 34,862 34,400 33,189 33,963 34,464 34,960 34,299 33,654
EV/ EBITDA (x) 95.6 65.5 58.3 64.9 45.2 32.2 22.7 17.2
EV/ OCF(x) 72.0 70.8 123.9 (70.9) (117.6) (118.3) 39.9 39.8
FCF Yield -1.4% 1.9% 1.8%
Price to BV (x) 41.0 28.4 13.2 11.6 10.1 8.7 7.2 5.8
Dividend pay-out (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Dividend yield (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Page 65
Crystal ball gazing
Over FY18-22, MAHLOG is expected to record revenue and EBITDA growth of ~16% and 31%, respectively. Revenue growth is
driven by 1) logistics supply chain outsourcing to 3PL players, 2)penetration of services from existing clientele and 3) improving
macro economic conditions. EBITDA growth is expected to be driven by growth in warehousing and value added services
especially by Non-Mahindra clientele.
Revenue growth driven by incremental demand for Improving operating efficiencies resulting in healthy
Healthy operating performance to sustain multiple
3PL services returns
FY11-FY14 FY14-FY17 FY18-FY22E FY11-FY14 FY14-FY17 FY18-FY22E P/E multiple FY22E EPS Price target
Revenues CAGR 16% 18% 16% RoE (%) 17.0% 15.4% 20.7% 30x 30 900
Gross Margin 51% 20% 22% RoCE (%) 24.0% 15.7% 20.5%
EBITDA CAGR 186% 16% 31% RoIC (%) 60.0% 63.6% 42.5%
EBITDA margin 1.8% 2.8% 4.2% Average 1 yr fwd
EPS CAGR - 3% 36% PE (x) -
Total Asset Turnover (x) 14.9 7.4 7.1 EV/EBITDA (x) -
Total WC days 12 18 30 Peak 1 yr fwd
Pre-tax OCF/EBITDA (%) 281% 28% 68% PE (x) -
Post Tax OCF as a % of IC 84% 3% 19% EV/EBITDA (x) -
Debt/EBITDA 5.4 (2.4) (0.8)
TOTAL
PAT CAGR of 36%, RETURN OF
Entry = Rs. 520 @ 30x
No Cumulative Dividends implied exit multiple of
FY20 EPS
36x on FY22E EPS 73%
Page 66
TRANSPORT CORPORATION OF INDIA – SUPPLY CHAIN SEGMENT
Page 67
TRANSPORT CORPORATION OF INDIA CMP
Rs. 265
Target Price
Rs. 350
Rating
BUY
Company Update
An integrated multimodal logistics service provider
COMPANIES
WAREHOUSES CONSOLIDATION
SUPPLIERS
DEDICATE & SHARED CENTER
1. Market Place
CUSTOMERS
2. Inventory Based
~ 200,000 ~ 150,000 ~ 20,000

units / day Orders / day Deliveries / day
SUPPLY CHAIN SOLUTIONS
1. At Supplier 2. Inventory / Marketplace / Cross Dock - FC 3. At Customer Place
1. Supplier Coordination 1. Receipts and Bar Coding 1. Doorstep delivery

2. Scheduling 2. Put away and Storage 2. FOD
3. Route Optimization 3. Order processing on SLA 3. Reverse Logistics
4. Sortation and ship
5. Return Shipment Management
6. Return to vendor
 TCI group’s integrated presence across logistics value chain making it well placed to cater its clientele. Its extensive network and infrastructure coupled with vast management experience laid
foundation for new opportunities such as priority services, Supply chain solutions and multimodal logistics. We believe TCI will be able to leverage on its network to strengthen its footprint in
logistics space.

(SPAK <go>)
Pag
TRANSPORT CORPORATION OF INDIA | Company Update | Rating - BUY | Target Price Of Rs. 350
Established network and operations
Warehousing space:
12 mn sq.ft.
100,000 pallet positions
100+ warehouses (majority leased)
5,000+ strong workforce
TCI well placed to benefit from incremental demand for faster and efficient logistics services at key consumption pockets on the back of increasing manufacturing activity and
rising per capital income
Page 69
Segment wise snapshot
TCI Freight TCI Supply Chain Solution TCI Seaways
 3PL services
 Full Truckload (FTL)
 Value added services supported with key
Services offered  Less-than-Truckload (LTL)  Coastal shipping
technology to provide customized solutions
 Over Dimensional Cargo (ODC)
 Supply chain consultancy
Contribution to overall 47% 42% 11%

revenue (FY18E) (Rs. 9.2bn) (Rs. 7.4bn) (Rs. 2.5bn)
Revenue CAGR
4% 12% 18%
(FY12-18E)
EBITDA margins
1.7%-4.1% 10.0%-12.0% 14.0%-30.9%
range (FY12-FY18)
Moderate. Owns over ~1200 truck fleet out of High. Owns 5 ships; 4 catering to East coast
Low. Fleet operated on contractual basis. Hubs
Capital intensity 7000 operated on daily basis and ~1mn sq.ft out (Chennai-Andaman, Vizag Andaman) and one
developed on need basis
of 12mn sq.ft. of managed warehousing space. service(Gujarat-Kochi)
RoCE range (FY12-FY18) 1.9%-10.2% 11.2%-20.3% 6.9%-20.0%
Mr, Vineet Agarwal, MD

Key Management Mr. R U Singh – CEO,
Mr. I S Sigar, CEO, TCI Freight Mr. Jasjit Singh – CEO,
Personnel TCI Seaways
TCI SCS
Page 70
Snapshot - XPS and SCS contributed over 52% of Revenue & EBIT from FY12
EBITDA Contribution: intensely competitive freight segment limits EBITDA growth in
Revenue Contribution: XPS and SCS offsets freight segment lag FY12-14 while crude fall aides in FY14-16
In Rs. Mn In Rs. Mn
Rev. EBITDA
14,587 17,665 18,400 19,583 20,484 22,256 22,904 1,110 1,374 1,447 1,499 1,551 1,876 1,995
(Rs.mn) (Rs.mn)
4% 4% 5% 5% 6% 5% 6% 11%
11% 7% 9%
19% 18% 17%
17% 22% 25% 27% 26% 28% 27% 24% 32% 37%
40%
26% 26% 35% 36% 35%
27% 28% 29% 30% 29% 31% 29%
30%
30% 27%
50% 31% 28%
46% 43% 40% 38% 37% 37% 30% 28% 22% 16% 9% 12% 13%
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Freight XPS SCS Seaways Freight XPS SCS Seaways
XPS and SCS segments’ contribution to topline has grown steadily from 43% in FY10 to 56% in FY16 at the expense of freight segment, which dropped from 50% in FY10 to 37%
in FY16. The increasing requirement for priority services and supply chain solutions for auto sector led to 8-10% CAGR over past 6 years while intense competition in freight
segment limited its growth potential. Subsequently, the overall EBITDA margins improved from ~7.5% in FY10 to 8.1% in FY16.
Page 71
Strategically placed infrastructure and expertise in supply chain reengineering to benefit TCI SCS
Potential benefits post GST

Suppliers
Milk runs
Mfg plant - OEM
Regional Stock Yard /
Dealers
• Proximity to customer
(JIT) Distribution Hub • Reduce lead time
Auto • Reduce damage ratio
Value Added  Regulatory change on car trailer length from • Integrated ERP systems to
Parts Consolidation Services: QC
Centre
April 2017 opens opportunities for multimodal reduce WC
3PL players expected to provide supply logistics. TCI expected to benefit the most
chain reengineering solutions post
implementation of GST
Potential changes post GST
C&F Agents
Redistribution • C&F agents outsourcing supply
Retail Outlet
Regional Stockist chain requirement to 3PL
Central
Mfg plant
Warehouse
Distribution • Streamlining sourcing and
FMCG Center distribution to avoid bullwhip
effect
Super Stockist Super Stockist
Impacted post implementation of GST
TCI SCS’s value proposition

• Supply Chain Design and Reengineering: The existing supply chain structure focuses of state warehouses to achieve tax efficiencies. However, implementation of GST is
expected to facilitate logistics efficiencies through remodeling of supply chain network. TCI can leverage on its supply chain expertise to streamline processes and efficiently
utilize assets and capital.
• Lead Logistics: Providing end-to-end supply chain solutions supported by IT enabled systems for key account management. Expect C&F agents to gradually shift to professional
logistics service provider post implementation of GST.
• Warehouse Management: Strategically placed infrastructure supported by IT systems for better coordination with suppliers and end customers
• Value added services: Warehouse value adds such as quality checks, ticketing, labeling, kitting and returns management
• Information and records management: Indexing, storage of active and inactive records for informed decision making
GST will shift manufacturer’s focus from tax efficiencies based supply chain to logistics efficiencies. Expect manufacturers and stockists to shift to 3PL players as they lack
expertise and infrastructure (IT systems and large integrated warehouses).
Emergence of 3PL and 4PL services in India will benefit SCS division as it is well placed to provide shop floor to consumption centre supply chain solutions.
Page 72
Infrastructure spend focused towards expanding hubs and warehouse network
Capex spent predominantly towards expansion of warehousing capacity and replacement of fleet
Rs. mn 2006-16 2016-17 2017-18 (9M) 2017-18E
Hub Centers & Small warehouses 3,394 179 220 500
Ships & Containers 1,558 651 91 170
Trucks & Cars 3,042 276 138 353
Others (W/H Equp., IT etc.) 907 145 33 277
TOTAL 8,901 1,251 482 1,300
Capex (Rs.mn) Total
571 757 899 663 849 1,525 1,684 7,888 14,836
• Inching towards achieving its vision of multi-

5,264 specialist transport system provider, TCI has
2765 Emphasis on
expanding
focused on strengthening its infrastructure
warehousing through expanding its network (1400 offices
2,663
1580 capabilities to across country) and warehouses (~12mn sq.ft.
strengthen of warehousing space).
supply chain
5,255 • The spend on infrastructure over last two years
2833 solutions
segment indicates management’s preparedness for GST
448 608
252 296 led growth
237 152 221 253 548 765 902 1358
204 487 270 322 120 118 710
69 53 101 50 104 141 129
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY10-17
Freight XPS SCS Seaways Others
Page 73
Established operations expected to aid contract logistics growth

Services Operations Differentiator Growth Expectation
Focus  Supply chain solutions to auto  ~12mn sq.ft. of warehousing  Incorporate learnings from JV  High growth (20-25%)
points sector (~70% of revenue) while space with Mitsui and extending
diversifying into Chemical and  Customized own fleet of ~1200 services to other sectors
Retail sector trucks and 34 refrigerated trucks
Industry growth: 15-20% Higher requirement for regional large Rising preference to integrated service Diversification to other sectors expected
warehouses for auto and ecommerce provider for end-to-end supply chain to reduce high dependence on
segment service provider automotive sector
Revenue growth expected on back of addition of new customers from diverse sectors Operating margins to hover around ~11%
CAGR: 17% CAGR: ~22% CAGR: 17% CAGR: ~25%

16 44% 46% 50% 1,600 14.0%
41% 42% 12.0% 11.6%
39% 45% 11.2% 11.3% 11.2%
14 37% 37% 39% 1,400 10.7% 11.1% 10.6% 10.8% 11.0% 12.0%
34% 40% 10.0%
12 1,200
30% 35% 10.0%
10 30% 1,000
23% 8.0%
Rs. Bn
Rs. Mn
8 25% 800
20% 6.0%
6 600
15% 4.0%
4 400
10%
2 5% 200 2.0%
2.5 3.9 4.5 5.2 5.4 6.1 6.2 7.4 9.0 11.3 13.4 264 437 542 601 541 684 707 779 970 1240 1503
0 0% 0 0.0%
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
Revenues (Rs. Bn, LHS) % of Total Revenues % of Total Revenues excl. XPS EBITDA (Rs. Mn, LHS) EBITDA Margin (%, RHS)
Source: Spark Capital Research Source: Spark Capital Research
Expect TCI SCS to benefit from imminent spurt in contract logistics aided by 1) GST lead supply chain rejig with shift of focus from tax efficiencies to logistics efficiencies,
2)addition of new clientele from diverse sectors and 3)growth in quintessential auto and ecommerce sector
Page 74
Financial metrics
Revenue growth led by supply chain segment EBITDA growth driven by SCS and seaways operations
In Rs. Mn
GST led supply chain rejig and shift of

market share to organized players is
expected to drive revenue growth
Remuneration indicative of high professional involvement SOTP – Valuation
Top management remuneration comes down while key management FY20E EBITDA
SOTP EV/EBITDA (x) EV(Rs. Mn)
remuneration increases highlighting high level of professional involvement (Rs.Mn)
1000 22.0% 25.0% TCI Freight 519 4.0 2,076
19.5% 20.1%
800
17.6% 17.1% 20.0% TCI SCS 1,503 12.0 18,031
600 15.5% 15.6%
14.6% 14.8%
400 13.8% 13.3%
13.6% 15.0% TCI Seaways 1,036 9.0 9,326
200 16.2% 14.6%
430 513 478 515 620 758 850 703
0 10.0% Others 83 5.0 413
FY10 FY11* FY12* FY13 FY14 FY15 FY16 FY17
Net Debt (Rs. Mn) 3,176
PAT (Rs. Mn, LHS) Market Cap (Rs. Mn) 26,670

Top Management Remuneration as a % of PAT (%, RHS)
Overall Management Remuneration as a % of PAT (%, RHS) Target Price (Rs./Share) 350
*Remuneration NA for other Key Management personnel; Source: Company, Spark Capital Research
Page 75
Financial Summary
Rs. mn FY13* FY14* FY15* FY16* FY17 FY18E FY19E FY20E
Profit & Loss
Revenue 19,512 20,273 21,967 22,578 18,042 21,419 25,366 29,482
Gross profit 3,709 3,861 4,320 4,742 3,502 4,151 5,073 6,044
EBITDA 1,449 1,493 1,704 1,823 1,575 2,022 2,496 3,070
Depreciation 421 424 495 539 578 689 739 799
EBIT 1,028 1,069 1,209 1,284 996 1,333 1,757 2,271
Other Income 54 57 124 122 177 204 224 245
Interest expense 322 297 319 282 286 311 306 288
Exceptional items 4 0 2 0 0 0 0 0
PBT 757 829 1,012 1,124 888 1,226 1,675 2,229
Reported PAT (after minority interest) 519 620 759 851 703 965 1,306 1,739
Adj PAT 515 620 758 850 703 965 1,306 1,739
EPS (Rs.) 7.1 8.5 10.0 11.2 9.2 12.7 17.2 22.9
Balance Sheet
Net Worth 3,883 4,400 5,612 4,917 5,809 6,628 7,788 9,380
Deferred Tax 314 327 285 320 392 392 392 392
Total debt 3,324 3,045 3,068 3,394 4,066 4,330 3,930 3,830
Other liabilities and provisions 619 671 941 819 318 368 426 486
Total Networth and liabilities 8,139 8,443 9,905 9,449 10,584 11,717 12,535 14,087
Gross Fixed assets 6,062 6,247 7,524 8,021 8,761 10,061 11,061 12,611
Net fixed assets 3,914 3,836 4,783 5,169 5,325 5,936 6,196 6,948
Capital work-in-progress 30 182 68 123 568 568 568 568
Goodwill 0 0 0 0 0 0 0 0
Investments 332 452 444 231 298 298 298 298
Cash and bank balances 165 173 165 124 184 403 418 654
Loans & advances and other assets 820 955 1,176 1,192 1,601 1,607 1,614 1,621
Net working capital 2,878 2,846 3,268 2,609 2,608 2,905 3,441 3,999
Total assets 8,139 8,443 9,905 9,449 10,584 11,717 12,535 14,087
Capital Employed 7,521 7,772 8,964 8,630 10,266 11,349 12,109 13,601
Invested Capital (CE - cash - CWIP) 7,326 7,417 8,731 8,383 9,514 10,378 11,123 12,379
Net debt 3,159 2,872 2,903 3,270 3,882 3,927 3,512 3,176
Cash Flows
Cash flows from Operations (Pre-tax) 1,205 1,633 1,455 2,567 1,654 1,662 1,930 2,523
Cash flows from Operations (post-tax) 1,017 1,429 1,261 2,330 1,387 1,402 1,561 2,033
Capex 595 556 1,416 1,750 1,156 1,300 1,000 1,550
Free cashflows 422 872 -156 580 231 102 561 483
Free cashflows (post interest costs) 100 576 -475 298 -55 -210 255 195
Cash flows from Investing -688 -720 -1,471 -988 -1,629 -1,300 -1,000 -1,550
Cash flows from Financing -294 -702 203 -1,383 322 118 -546 -246
Total cash & liquid investments 165 173 165 124 184 403 418 654
*Includes financials of TCI XPS segment (demerged in FY17)
Page 76
Financial Summary
FY13* FY14* FY15* FY16* FY17 FY18E FY19E FY20E
Key variables
Freight Revenues (Rs. Mn) 7,776 7,797 8,156 8,400 9,223 10,073 11,282 12,071
Supply Chain Revenues (Rs. Mn) 5,197 5,423 6,129 6,249 7,374 9,019 11,274 13,416
Seaways Revenues (Rs. Mn) 950 1,137 1,220 1,407 1,639 2,467 2,961 4,145
Growth ratios
Revenue 6.7% 3.9% 8.4% 2.8% 12.9% 18.7% 18.4% 16.2%
EBITDA 0.2% 3.1% 14.1% 7.0% 17.7% 28.4% 23.4% 23.0%
Adj PAT 0.1% 19.6% 22.5% 12.0% 18.0% 37.4% 35.3% 33.1%
Margin ratios
Gross 19.0% 19.0% 19.7% 21.0% 19.4% 19.4% 20.0% 20.5%
EBITDA 7.4% 7.4% 7.8% 8.1% 8.7% 9.4% 9.8% 10.4%
Adj PAT 2.6% 3.1% 3.4% 3.8% 3.9% 4.5% 5.1% 5.9%
Performance ratios
Pre-tax OCF/EBITDA 83.1% 109.3% 85.4% 140.8% 105.0% 82.2% 77.3% 82.2%
OCF/IC (%) 13.9% 19.3% 14.4% 27.8% 14.6% 13.5% 14.0% 16.4%
RoE (%) 14.0% 15.0% 15.1% 16.2% 13.1% 15.5% 18.1% 20.3%
RoCE (%) 10.2% 11.0% 12.0% 12.1% 9.8% 11.2% 13.2% 15.3%
RoCE (Pre-tax) 14.9% 14.7% 15.9% 16.0% 12.4% 14.2% 16.9% 19.6%
RoIC (Pre-tax) 14.6% 14.5% 15.0% 15.0% 11.1% 13.4% 16.3% 19.3%
Fixed asset turnover (x) 3.3 3.3 3.2 2.9 2.2 2.3 2.4 2.5
Total asset turnover (x) 2.5 2.4 2.4 2.3 1.8 1.9 2.1 2.2
Financial stability ratios
Net Debt to Equity (x) 0.8 0.7 0.5 0.7 0.7 0.6 0.5 0.3
Net Debt to EBITDA (x) 2.2 1.9 1.7 1.8 2.5 1.9 1.4 1.0
Interest cover (x) 3.2 4.8 4.0 8.3 4.8 4.5 5.1 7.1
Cash conversion days 54 51 54 42 53 50 50 50
Working capital days 58 56 58 48 79 71 67 64
Valuation metrics
Fully Diluted Shares (mn) 72.8 72.9 75.7 76.1 76.1 76.1 76.1 76.1
Market cap (Rs.mn) 20,160
P/E (x) 37.5 31.2 26.5 23.7 28.7 20.9 15.4 11.6
P/OCF(x) 19.8 14.1 16.0 8.7 14.5 14.4 12.9 9.9
EV (Rs.mn) (ex-CWIP) 23,289 22,850 22,994 23,306 23,473 23,518 23,103 22,767
EV/ EBITDA (x) 16.1 15.3 13.5 12.8 14.9 11.6 9.3 7.4
EV/ OCF(x) 22.9 16.0 18.2 10.0 16.9 16.8 14.8 11.2
FCF Yield 0.5% 2.8% 2.4%
Price to BV (x) 5.2 4.6 3.6 4.1 3.5 3.0 2.6 2.1
Dividend pay-out (%) 14.1% 15.3% 14.8% 13.4% 12.0% 12.6% 9.3% 7.0%
Dividend yield (%) 0.6% 0.6% 0.6%
*Includes financials of TCI XPS segment (demerged in FY17); ^Adjusted
Page 77
Crystal ball gazing
Over FY18-22, TRPC is expected to record revenue and EBITDA growth of ~15% and 20%, respectively. Revenue growth is driven
by 1)improving macro economic conditions, 2) logistics supply chain outsourcing to 3PL players, and 3)shift of FTL volumes from
unorganised sector(~70% of road volumes in FY17) to organised. EBITDA growth is expected to be driven by higher contribution
from supply chain services(3PL) and increase in movement of freight by multimodal logistics.
Revenue CAGR of 15% from FY18 to FY22 driven by Improving operating efficiencies resulting in healthy
Healthy operating performance to sustain multiple
incremental demand for 3PL services returns
FY11-FY14 FY14-FY17 FY18-FY22E FY11-FY14 FY14-FY17 FY18-FY22E FY22 EBITDA

SOTP EV/EBITA (x) EV (Rs.mn)
(Rs.mn)
Revenues CAGR 5% 8% 15% RoE (%) 15.2% 14.8% 19.2% TCI Freight 594 3.0 1,783
Gross Margin 19% 20% 20% RoCE (%) 10.6% 10.9% 14.7% TCI SCS 2,040 12.0 24,484
TCI Seaways 1,492 9.0 13,430
EBITDA CAGR 3% 15% 20% RoIC (%) 15.6% 13.9% 18.8% Others 83 5.0 413
EBITDA margin 7.6% 8.2% 10.4% Average 1 yr fwd Net Debt (Rs.mn) 872
EPS CAGR 6% 23% 29% PE (x) 9.3 13.8 - Mkt Cap (Rs.mn) 39,238
Total Asset Turnover (x) 2.5 2.1 2.1 EV/EBITDA (x) 7.2 9.5 - Target Price 516
Total WC days 56 63 64 Peak 1 yr fwd

Pre-tax OCF/EBITDA (%) 87% 111% 84% PE (x) 18.0 19.3 -
Post Tax OCF as a % of IC 15% 18% 17% EV/EBITDA (x) 12.6 13.7 -
Debt/EBITDA 2.1 2.5 1.0
TOTAL
PAT CAGR of ~28%, RETURN OF
Entry = Rs. 265 @ 12x Cumulative Dividends of
implied exit multiple of
FY20 EPS Rs.6/share
15x on FY22E EPS 97%
Page 78
Spark Disclaimer
BUY Stock expected to provide positive returns of >15% over a 1-year horizon REDUCE Stock expected to provide returns of <5% – -10% over a 1-year horizon
Absolute Rating
Interpretation
ADD Stock expected to provide positive returns of >5% – <15% over a 1-year horizon SELL Stock expected to fall >10% over a 1-year horizon
Spark Disclaimer
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Advisor. Spark Capital has also an associate company Spark Infra Advisors (India) Private Limited which is engaged in providing infrastructure advisory services.
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INDIAN THIRD PARTY LOGISTICS (3PL) SECTOR

INITIATING COVERAGE – MAHINDRA LOGISTICS (ADD, TP- Rs. 550),

MARCH 19, 2018

Price/Earnings EV/EBITDA EV/Sales

Source: Bloomberg, Company, Spark Capital Research

Indian Third party logistics (3PL) industry

Increase in outsourcing of value added services expected to reduce transportation

MAHINDRA NON-MAHINDRA TOTAL SCM SEGMENT

Transportation Transportation Transportation

Given the established supply chain of Mahindra Auto and Farm

*Estimated; Source: Company, Spark Capital

DEFINING THIRD PARTY LOGISTICS (3PL)

3PL GROWTH DRIVERS

 Why will GST benefit 3PL industry?

 Who are the top people for multiple sectors?

Distinguishing 3PL In Logistics Value Chain

Full Truckload (FTL),

Supply Chain Lead

Beginning Growth Consolidation Alliance

Logistics Cost 3PL Revenue 3PL Revenue as % of Logistics

2008 2016 CAGR 2008 2016 CAGR 2008 2016 Delta

Source: Armstrong and Associates, 3PL study, Spark Capital Research

How is Indian 3PL different from other global economies?

USA Market size (2016): China Market size (2016): India

Transportation expenses Warehousing expenses Administrative expenses*

Chinese 3PL sector : Indian 3PL sector :

Source: CRISIL Source: A&M Source: World Bank

Tank Cold  Evolving technology to drive performance

High entry barriers

Project Cargo Moderate High Low Moderate High High

Coastal Shipping Moderate Very High Low Moderate Moderate Moderate

3PL services in India and levels of outsourcing

Transactional Tactical Strategic

Transportation High High High

Warehousing Low Low High

Value added Services Low Moderate High

MNCs primarily in Automobile, IT

Importance of 3PL service

In an attempt to better understand critical success factors, we analysed

FY14 FY15 FY16 FY17

clients  Minimum resource (warehouse and trucking) utilization guarantee

 Establishing sector specific track record

 Long term contracts

3PL service Mahindra Future Supply TKM Global

Track record in specific industry logistics

18% 16% 13% 8% 9% 10%

2009 2010 2011 2012 2013 2014 2015 2016 2017

Communication  Customer interface (providing

Source: Enroute, Spark Capital Research

Established infrastructure (network and fleet)

Source: Company, Spark Capital Research

Scalability and Flexibility – Creating Agile Supply Chain

Ryder Systems Inc Potential supply chain disruptors

What Are Key Parameters When Selecting 3PL Service Provider?

DEFINING THIRD PARTY LOGISTICS (3PL)

3PL GROWTH DRIVERS

 Why will GST benefit 3PL industry?

 Who are the top people for multiple sectors?

FTL FTL & LTL/EXPRESS LAST MILE DELIVERY

Post GST Lead Distance Total Lead Distance

Scenario 1 1000-1500 KM < 1000 KM < 100 KM <2600 KM

Scenario 2 < 2500 KM < 100 KM <2600 KM

Sectors with limited benefits of warehouse consolidation: