Mahindra Logistics, the third party logistics arm of India’s Mahindra Group, has announced a joint venture partnership with vehicle logistics provider Indian Vehicle Carriers that will give the 3PL direct access to transport assets for the first time. The partnership will be branded ‘2x2 Logistics’, and will aim to launch a fleet of car carrier trucks that can handle both vehicles and two-wheelers.
Mahindra Logistics (MLL) will have an unspecified majority stake in 2x2 Logistics, which will develop and expand existing transport networks in India, such as better linking vehicle production clusters in the north, west, south, and east of the country. Initially, the company will invest in 100 specially designed car carriers that can also handle two-wheelers, for which India is the world’s largest market. According to Pirojshaw Sarkari, chief executive officer of Mahindra Logistics, further fleet investments will follow.
“This is the first time we will be significantly assetising our business by investing in 100 car carriers to begin with, and then ramping up capacity,” said Sarkari. “It will help strengthen our operating capabilities in automotive logistics, our largest target industry vertical, with a clear focus on technology, quality and corporate governance. Forming such partnerships with our business associates will be an important part of our growth and success.”
Mahindra sees a significant potential for specially designed car carriers in India, as OEMs expand their product lines in the country. These need to meet a variety of needs, including the dimensions of the vehicles being carried, and special handling requirements. “We are already one of the largest automotive logistics service providers in India and this joint venture will allow us to directly operate assets and serve our customers with a greater degree of predictability and control,” said Sushil Rathi, senior vice-president, Mahindra Logistics.
Indian Vehicle Carriers, based in Mumbai, is one of India’s largest vehicle logistics carriers, serving carmakers, two-wheelers, tractor and commercial vehicle manufacturers.
Investment for the joint venture is funded in part by Mahindra Partners, which is the group’s $900m, quasi-private equity division, of which Mahindra Logistics has been part since 2009. Mahindra Partners is slated to float on the stock market by 2017, and expanding the logistics division further, including brands outside Mahindra Group, appears to be a priority.
“We follow a unique model of fostering innovation, creative business models and mutually beneficial partnerships,” said Parag Shah, managing partner at Mahindra Partners. “2x2 Logistics will allow MLL to build a significant asset base and enhance its pan-India transportation network, leading us that much closer to an IPO by 2017.”
Earlier this year, Mahindra Logistics acquired a majority stake in Lords Freight after private equity firm Kedaara Capital bought a minority stake in the logistics company.
Mahindra Logistics offers inbound and outbound logistics services across India, including in-plant logistics at 26 different plants and outbound distribution services for 1m vehicles per year, according to its website. Its current revenues are in excess of INR 1,750 crores ($285m).
Automotive Logistics will feature a forthcoming exclusive interview with Mahindra Logistics in the coming weeks.