Leyland arm signs pact with Shriram Transport

Ashok Leyland, the Hinduja group's flagship, and the largest truck financing company, Shriram Transport Finance Company, have entered into a partnership to revitalise the transport exchange, floated by Ashley Transport Services, a subsidiary of Leyland.

As part of the agreement, Shriram Transport will hold 40 per cent equity in ATC, while the remaining will be held by Ashok Leyland and the Hinduja Group. Financial details for the 40 per cent equity by Shriram in ATC were not disclosed.

Addressing a press conference, R Seshasayee, managing director, Ashok Leyland, said transport exchanges were intended to bring in transparency and efficiency in the freight intermediation service dominated by small, localised and unorganised players.

These exchanges are like ITC's e-choupals in the transport sector where the truck owners and the shipper would be brought on electronic platforms to address their issues of poor return availability and revenue leakages, among others. "It would serve as a one-stop shop to meet the many needs of transporters," Seshasayee added.

ATS has transport exchanges in 29 locations and intends to add 16 locations by the end of the year. It expects to reach 100 locations in the coming years.

R Thyagarajan, chairman, Shriram Group, said the initiative was a step closer towards bringing in another set of services in the transport sector into organized operation.

According to estimates, working capital requirements per truck will be 70,000-80,000 per month.

In the immediate future, ATS will earn its revenue through two streams "" one through earning fee for placement of vehicles and the another through fee-based (loan origination) business.

The credit requirement of the trucking industry is estimated to be about Rs 70,000 crore and the tie-up envisages meeting 5-10 per cent of total credit requirements. Shriram Group is reported to have a customer base of five lakh truck owners.