Delhivery Limited , India's largest fully integrated logistics service provider, has announced significant expansion plans, including the incorporation of new subsidiaries internationally and in the financial services sector. The company's Board of Directors has approved these strategic moves to strengthen Delhivery's global logistics capabilities and diversify its service offerings.

International Expansion

Delhivery plans to expand its international presence by incorporating step-down wholly owned subsidiaries in the United Kingdom and United Arab Emirates. Key details of this expansion include:

• The new subsidiaries will be owned by Delhivery Singapore Pte. Ltd., a wholly owned subsidiary of Delhivery Limited.
• Both entities will operate in the logistics business, providing supply chain solutions and logistics services.
• Delhivery plans to invest up to INR 5.00 crore in each subsidiary through one or more tranches via 100% subscription to share capital in cash.
• The incorporation is subject to approval from competent authorities.

Financial Services Subsidiary

In a move to diversify its offerings, Delhivery's Board of Directors has also approved the incorporation of a wholly owned subsidiary named Delhivery Financial Services Private Limited. This new entity will:

• Operate in the financial services sector
• Offer credit, payment, FASTag aggregator, fuel cards, and insurance solutions
• Target partners including truckers, fleet owners, riders, and MSMEs
• Function as a financial layer supporting Delhivery's logistics network
• Leverage the company's data, reach, and partner ecosystem to enhance liquidity access and improve operational efficiency

Delhivery plans to invest up to INR 12 crores and hold 100% shareholding in this new subsidiary. The incorporation is subject to approval from relevant authorities, including the Registrar of Companies.

Strategic Implications

These expansions mark significant steps in Delhivery's growth strategy. By establishing a presence in the UK and UAE, the company is positioning itself to tap into key global markets and enhance its cross-border logistics capabilities. The financial services subsidiary aims to create synergies with Delhivery's existing logistics network, potentially improving operational efficiency and providing additional value to partners.

Financial Commitment and IPO Proceeds Utilization

Delhivery's decision to invest in these new ventures demonstrates its commitment to growth and diversification. The company recently submitted its Monitoring Agency Report for the quarter ended September 30, prepared by Axis Bank Limited, showing no deviation from the stated IPO objectives.

Key points from the report:

• The company's IPO, conducted from May 11-13, 2022, raised Rs. 52,350.00 million.
• The total IPO proceeds of Rs. 38,863.03 million have been fully utilized across three main objectives:
  1. Organic growth initiatives: Rs. 19,000.00 million
  2. Funding inorganic growth: Rs. 10,000.00 million
  3. General corporate purposes: Rs. 8,863.03 million

Market Position

Delhivery has been experiencing growth, as evidenced by its recent financial results. For the reported quarter, the company reported:

While the company faced a loss of INR 50.49 crore for the quarter, it's important to note that this includes integration costs related to recent acquisitions.

Outlook

The establishment of subsidiaries in the UK, UAE, and the financial services sector aligns with Delhivery's long-term strategy of becoming a global, diversified logistics player. As the company continues to expand its international footprint and service offerings, it may leverage its technology-driven approach and extensive experience in the Indian market to compete in these new territories and sectors.

These moves come at a time when global supply chains are evolving, and there's an increasing demand for efficient, technology-enabled logistics and financial solutions. Delhivery's expansion into these strategic areas could potentially open up new revenue streams and partnership opportunities in both the international logistics sector and the financial services industry.

As Delhivery awaits regulatory approvals for these new subsidiaries, the industry will be watching closely to see how these expansions unfold and impact the company's global market position and service portfolio.

Delhivery has announced its financial results for the second quarter, showing mixed performance with revenue growth but a wider net loss.

Financial Highlights

For Q2, Delhivery reported:

• Revenue from services of ₹2,559.00 crore, a 16.8% year-over-year increase from ₹2,190.00 crore in the same quarter of the previous year.
• Net loss of ₹504.00 million, significantly higher than the ₹102.00 million loss in the same period last year.
• EBITDA of ₹682.00 million, up from ₹573.00 million in the previous year, with the EBITDA margin slightly improving to 2.66% from 2.62%.

Business Segment Performance

Express Parcel

• Shipment volumes reached 246 million, a 32% year-over-year growth from 185 million in the previous year's quarter.
• Revenue increased by 24% year-over-year to ₹1,611.00 crore.
• Service EBITDA margin stood at 15.3%, slightly higher than the 15.1% in the same quarter last year.

Part Truck Load (PTL)

• Tonnage grew by 12% year-over-year to 477,000 MT.
• Revenue increased by 15% year-over-year to ₹546.00 crore.
• Service EBITDA margin improved to 8.5% from 2.9% in the corresponding quarter of the previous year.

Ecom Express Integration Update

Delhivery completed the acquisition of Ecom Express on July 18. The integration process is underway with the following updates:

• Volume manifestation at Ecom ceased during Q1, and exit of non-express businesses is in progress.
• Network rationalization plan is completed, with net retention of 7 facilities for long-term Delhivery usage.
• Integration cost incurred in Q2 was ₹90.00 crore, with total integration costs expected to remain within the previously guided ₹300.00 crore.

New Initiatives

Delhivery is expanding its service offerings:

• Rapid: 20 active stores in 3 cities, with plans to expand to 25 stores. The company has signed its first B2B client, with operations going live in NCR in October.
• Direct: Currently active in Ahmedabad, NCR, and Bengaluru, with plans to launch in 4 more cities.

Freight Index One Launch

In a separate announcement, Delhivery launched the Freight Index One platform, aiming to bring transparency to the Indian logistics market. This open platform provides historical, current, and forward Full Truckload (FTL) pricing estimates for major trucking lanes and vehicle types.

Rohan Anand, Head of Data Science at Delhivery, stated, "Our aim is to bring greater transparency and structured information to India's logistics market at a lane level."

Kapil Bharati, Chief Technology Officer, added, "Providing access to a wide variety of stakeholders will allow efficient price benchmarking and enable customers to better plan budgets and negotiate rates using market-wide data."

The launch of Freight Index One demonstrates Delhivery's commitment to innovation and improving efficiency in the logistics sector.

Delhivery's Q2 results show revenue growth and improved EBITDA, despite a wider net loss. The company continues to focus on strategic initiatives like the Ecom Express integration and the launch of Freight Index One, aiming to strengthen its position in the Indian logistics market.