Shading doesn't work

I am trying to export a mesh from Blender and display it using Mogre. However, shading doesn't seem to work. Here is what the image looks like in Mogre



and this is what I want it to look like (blender image)



I have 2 lights in my scene

Light light = sceneMgr.CreateLight("Light1");
light.Type = Light.LightTypes.LT_POINT;
light.Position = new Vector3(0, 150, 250);
light.DiffuseColour = ColourValue.White;
light.SpecularColour = ColourValue.White;

light = sceneMgr.CreateLight("Light3");
light.Type = Light.LightTypes.LT_SPOTLIGHT;
light.DiffuseColour = ColourValue.Blue;
light.SpecularColour = ColourValue.Blue;
light.Direction = new Vector3(-1, -1, 0);
light.Position = new Vector3(30, 30, 0);
light.SetSpotlightRange(new Degree(35), new Degree(50));


and my material file is as follows

material mannequin/SOLID/TEX/skin.jpg
{
technique
{
pass
{
diffuse 0.000000 0.702151 0.481990
specular 0.500000 0.500000 0.500000 12.500000
texture_unit
{
texture skin.jpg
}
normalize_normals on
lighting on
shading phong
}
}
}

Unfortunately I'm new to both Blender and Mogre, so can someone please help me with this? I think I'm missing something pretty obvious. My apologies to more experienced users if this is not post-worthy, however I have spent hours trying to debug this and am not able to come up with a solution.

Thanks.