Mahindra Logistics To Acquire Troubled Startup Rivigo’s B2B Express Business

Mahindra Logistics on Monday (September 26) said that it will acquire the B2B express business of logistics startup Rivigo. 

Both sides have reached an agreement to undertake a business transfer agreement (BTA) that will see Mahindra Logistics acquire customers, team and assets of Rivigo’s B2B express arm, Mahindra Logistics said in a statement, without disclosing the acquisition cost. 

As per the contours of the deal, Rivigo will continue to operate its truck fleet and own rights to the full truck load (FTL) operations. Mahindra will also acquire the startup’s technology platform and the Rivigo brand in the process. 

The deal will augment Mahindra Logistics’ existing B2B express business and enable it to further scale its business operations and accelerate capabilities in the B2B express logistics segment. 

The deal will also allow Mahindra Logistics to leverage Rivigo’s network, technology and process capabilities to further streamline its operations.

“This acquisition will enhance and strengthen our offerings and reach for our customers in the B2B express and PTL (partial truck load) space. Team Rivigo has built deep capabilities, and we look forward to building on the strengths as we integrate the businesses. We are excited by the team, as they share a common ethos with a shared focus on empowering drivers & communities,” Mahindra Logistics MD and CEO Rampraveen Swaminathan said. 

Rivigo CEO Deepak Garg said, “We believe the customers, and employees of our PTL business will benefit greatly from being part of a high-quality, end-to-end Supply chain services company like Mahindra Logistics.”   

Founded in 2014 by Gazal Kalra and Deepak Garg, Rivigo offers pan-India delivery services to ecommerce, pharmaceutical, automobile, and fast-moving consumer goods (FMCG) companies.

Operating a full-service technology suite, Rivigo’s B2B express network currently covers more than 19,000 pin codes across the country. Besides, the startup also has more than 250 processing centres and branches spanning an area more than 1.5 Mn sq. ft.

The Troubled Startup

It was not immediately clear what prompted the startup to sell its B2B express business operations. In recent months, Rivigo has come under considerable strain as it has failed to attract investors to raise funds amid the funding winter. 

Last month, reports surfaced that Rivigo was in talks with Flipkart and Xpressbees for a potential sale amid its worsening financial situation.

It is pertinent to note that Xpressbees is the logistical arm of baby marketplace FirstCry. Mahindra held around 14% via multiple entities in FirstCry as of March 2021. 

Reports also indicated that Rivigo’s board recently told the top executives to look for potential buyers and that ‘staying independent wasn’t an option anymore’. The startup also tweaked its business to an asset-light model and reduced the fleet size significantly from 3,000.

Interestingly, Rivigo claims to host a fleet of more than 5,000 trucks.

With a reported cash burn of around INR 15 crore per month, the startup has been struggling to cope up amidst rising costs. The lack of clarity about its path to profitability complicated the matters further, keeping investors away.

Rivigo primarily competes with Delhivery, e-Kart, DHL, among others. 

According to a report, the Indian logistics market was pegged at around $250 Bn in 2021 and was projected to grow to $380 Bn by 2025 at a compound annual growth rate (CAGR) of 10%-12%.