News Update

Rivigo deal will increase our express delivery business threefold: MD of Mahindra Logistics

• ByStartupStory     |    September 29, 2022

Rampraveen Swaminathan, managing director of Mahindra Logistics, claimed that the Rivigo transaction will help the company practically increase its express delivery business to more than Rs 500 crore in a year.

Mahindra Logistics’ business will be mostly comprised of the business-to-business express delivery operations of Rivigo, which it is purchasing. The Mahindra Group’s third-party logistics company posted consolidated earnings of Rs 4,083 crore during the most recent fiscal year.

Therefore, while the media has covered Rivigo’s financial issues, Swaminathan told ET that “we truly believe that service quality indicators are good, unit margins are positive, and revenue yield per kilo or tonne is good.” “The P&L (profit and loss statement) has some positive aspects. The company has been losing money overall, primarily due to the account that it has been sub-scale.”

According to Swaminathan, who will serve as the company’s chief executive, Rivigo’s B2B rapid package service may reach the necessary scale when combined with Mahindra Logistics’ operations.

On Monday, Mahindra Logistics announced that it would purchase Rivigo’s B2B express delivery division—roughly half of the startup’s business—for Rs 225 core in a backdoor sale. In accordance with the agreement, Mahindra Logistics will buy the prospects, teams, properties, expertise platform, and overall model of the division.

It won’t exactly be “plug-and-play” to integrate with Rivigo, according to Swaminathan, and the transition to a single technology platform for the combined firm might take up to a year.

Making sure that service delivery and quality stay robust is a key principle, he said. “The customer who demands a service with a set time frame is, by definition, the B2B express business. They seek you out because you offer service within a set period of time and excellent performance. If you start doing that wrong, your credibility will suffer.

After purchasing Spot-on, modern logistics company Delhivery recently encountered a variety of challenges, which caused its losses to increase for the quarter that ended June 30.

As Mahindra Logistics focuses on diversifying away from the line-haul full-truck load business, the express parcel B2B business is one of the fastest growing segments of the company.

In connection with the recent sale of Rivigo’s express B2B business, around 1,300 employees will move from Rivigo to Mahindra Logistics. Most of these executives work in Rivigo’s many hubs directly on the ground. Swaminathan said he doesn’t expect any layoffs as a result of the agreement.

On August 23, ET reported that Rivigo had discussed a potential sale with FirstCry, an omnichannel retailer of children’s products, and the online retailer Flipkart. The company wanted to raise money and potentially go public, but due to global macroeconomic headwinds, it was difficult for late-stage entrepreneurs to do so.

Rivigo continues its full-truck load business, which is an asset-heavy model and has roughly 1,000 vans in its inventory.

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