Mahindra Logistics acquires Rivigo’s B2B express business for Rs225 cr
29 Sep 2022
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Mahindra Logistics is acquiring Rivigo Services Private Limited’s B2B express business for Rs225 crore, as per the company’s filing with the stock exchange. Under the terms of the agreement, Mahindra Logistics will acquire the express business, including the customers, team and assets of RSPL’s B2B express business, RSPL’s technology platform and the Rivigo brand.
Cash-strapped Rivigo has been looking for a merger and acquisition deal as the company could not raise external funds. The logistics unicorn has already sold 80 per cent of its truck fleet in order to switch to an asset-light model, but that also did not work out.
Rivigo’s B2B express network currently covers over 19,000 pin codes with over 25 processing branches. However, its operating revenue shrank 40 per cent and stood at Rs634 crore during the fiscal year ending March 2021.
Rivgo’s B2B express business picked up and accounted for over 58 per cent or Rs371.3 crore of the company’s total FY21 revenue. But cash constraints forced Rivigo to sell its B2B express business for less than its FY21 revenue. Rivigo also has undergone mass layoffs, valuation correction, shutdowns and consolidations.
Founded in 2014 by Deepak Garg and Gazal Kalra, Rivigo was once hailed as a disruptor in the B2B logistics space and the company also became the first unicorn in the trucking or B2B logistics space. It has raised around $300 million across multiple equity and debt financing rounds to date.
The pandemic disrupted the businesses across sectors, and Rivigo was no exception. The company’s problems worsened in the post pandemic period with the burden of fixed costs, and client losses. All of this compounded to bring Rivigo to its current predicament.
Reports citing Rampraveen Swaminathan, managing director and CEO of Mahindra Logistics, said post acquisition the two existing B2B express businesses will be combined, which will give them a revenue run rate of Rs550-600 crore annually on a trailing 12-month basis. The focus for the next 4 quarters will be on improving the margins and there will be 3 levers for that, volume growth by combining both the businesses, by driving better transport optimisation and cost management and by optimising operating footprints. Swaminathan expects the combined business to turn positive over the next 4 quarters and then they will be EPS accretive.
