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After Mahindra, Tata Motors may invest in load aggregator start-up

 

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  Tata Motors, India’s biggest commercial vehicle manufacturer, is keen to enter the load aggregator space, after the sector saw its first corporate action a year ago with the entry of Mahindra & Mahindra, the country’s second-biggest CV maker.

 

A senior company official said that given Tata Motors’ large and loyal consumer base it makes business sense to tie up with its clients for providing this add-on service. Tata Motors is exploring the idea of making an equity investment in a start-up for which it is already talking to a few companies. 

“We have been looking at this space for a long time. The aggregators are also our clients. So the aggregator may be the third party but they are dealing with our clients. We are actually talking to a few aggregators rather than getting into the business as such, which seems to what Mahindra has done; they themselves have become an aggregator, that is not what we will do. There are some aggregators with whom we having discussions”, said Ravi Pisharody, executive director (commercial vehicles), Tata Motors. 

The Anand Mahindra-led Mahindra & Mahindra, which has got a sizeable presence in the small commercial vehicle category, entered the web-based load aggregator space in November last year with the launch of SmartShift. 

More than half a dozen companies floated by graduates of Indian Institute of Technology (IIT) and backed by venture capitalists and private equity companies already operate in this space. The Porter, Grofer are some of the companies operating as load aggregators. Their business model is similar to that of Uber and Ola but for the cargo segment. 

“Too early to say if we would be investing in them, we are examining. The trouble is that there are too many of them (but) we have to back the right people. The partnership could be in different forms, we don’t have to buy into the company. We also have a lot to bring to the table. We can also offer to all buyers the opportunity to link up to the aggregators. So these are things we are exploring, investment into an aggregator may not be necessary but this is much of a strategic call, which we will decide shortly”, added Pisharody. 

Tata Motors has several offerings in the light truck category starting with mini trucks having a payload of 600 kg going up to 9,000 kg. For load aggregators, such light trucks are in greater demand since they operate mostly within city and municipal limits tapping intra-city cargo movers.

M&M’s SmartShift, which started with a ten-member team, is today handling 1,200 transactions every day even though not every user is adept at using its application on a smartphone. Therefore the start-up, where M&M has done seed funding, has developed a way to handle customers who still use feature phones. 

Its service is presently available in Mumbai and Hyderabad for the time being and will be extended to other cities. The SmartShift business has reported a growth of 50% every month since its launch last year.  

According to a report, the logistics industry is pegged at $130 billion of which 40% is intra-city. At least 1.8 million small commercial vehicles handle a minimum of 4 million transactions every day.