Mahindra War Room 2013

Partners Sector - Logistics Business

MAHINDRA PARTNERS SECTOR LOGISTICS BUSINESS CASELET Mahindra Partners is the internal incubator of new businesses for the Mahindra Group, supporting a portfolio of existing ventures across Retail, Logistics, Boats, Energy and Media, while constantly exploring new ventures. This caselet pertains to Mahindra Logistics Business. BUSINESS BACKGROUND Mahindra Logistics began in 2000 to service the complex transportation needs of Mahindras Automotive Sector. Within a short span of time, Mahindra Logistics expanded capacity to service external clients, and today works with an extensive cross-section of major corporate clients, being the premier logistics service providers in Supply Chain Management and People Logistics.! LIVE BUSINESS CHALLENGE: GOING BANANAS WITH MAHABANANA The Banana, is one of Indias popular fruits with over 3.70 Lac hectares under cultivation, second only to Mango. Among all states, Maharashtra contributes the maximum area of about 90,000 hectares, with farms concentrated in Jalgaon district. India is the worlds largest producer of Bananas, producing approximately 15 million metric tons annually. Only 0.05% of the domestic production is exported, and the rest is consumed within the country as a table fruit. Realizing the importance of the fruit, the Agriculture Marketing Board of Maharashtra has established! Mahabanana, a farmers marketing organization, in 2002, with headquarters at Jalgaon. There are 26 co-operative societies registered under Mahabanana and each such member society has 300-350 small and marginal farmers. About 8000 farmers have enrolled themselves as members under the organization. The Logistics cost accounts for about 30-35% of the total cost in the Banana business. The chain from producer to customer is long, involving four to ve intermediaries. This system has denied the producer a fair price, and by multiple intermediate margins also affected the price paid by the consumers.! Banana is harvested when the fruit is slightly or fully mature depending on the market preferences. For long distance transportation, harvesting is done at 75-80% maturity.!The planted crop gets ready for harvest within 12-15 months of planting and the main harvesting season of banana is from September to April.! ! Bunches attain maturity from 90-150 days after owering depending upon variety, soil, weather condition and elevation. The current method of transportation of Banana is in the form of wooden or cardboard boxes, rectangular in shape, with bamboo baskets used for packaging and transportation of fruit. In some cases banana bunches are packed in old gunny bags
Broadvision Perspectives Client Condential Page 1 of 2

Mahindra War Room 2013

Partners Sector - Logistics Business

wrapped with banana leaves. Due to poor packing quality, bananas deteriorate and fetch low price. Road transport by trucks is the most popular mode of transport due to easy approach from orchards to the market. For distant markets rail wagons are used. The whole system used for banana logistics, from farm to nal consumer, needs to be changed and revolutionized. The high proportion of Logistics cost offers a good opportunity for Mahindra Logistics to disruptively innovate in this space - there is an opportunity to develop a sound business model with a cost advantage of around 30% compared to the other players. This can happen through a reduction in the cost per kilo incurred towards logistics, keeping the quality of the fruit intact. This can be done while ensuring that the growers of bananas get their fair share of the benet, realizing Rise! Using Logistics thinking and ideas like space optimisation!(specialised trucks), return loads, transportation by train, ripening under transportation etc, develop a comprehensive model for Mahindra to tap into the Banana Transportation Logistics Opportunity.

Broadvision Perspectives Client Condential

Page 2 of 2