Indian road logistics industry is anticipated to witness a steady but restrained growth trajectory in the fiscal year 2025, as projected by the credit rating agency, ICRA. The forecast suggests a modest expansion of revenues within the range of 3-6 percent, primarily attributed to several factors influencing the sector's dynamics.

According to ICRA's analysis, the industry's growth pace is expected to be constrained by several factors. These include the limited capacity of logistics players to adjust freight rates, anticipated softening of government expenditure during the election period due to the Model Code of Conduct obligations and a moderation in consumer demand sentiments owing to elevated levels of inflation and interest rates.

Despite the prevailing challenges, ICRA maintains a stable outlook for the sector. This optimistic stance is underpinned by sustained momentum in economic activities, the increasing traction of organised trade and ongoing support from diverse segments such as e-commerce, FMCG, retail, pharmaceuticals and industrial goods.

An indication of the resilience within the sector is evidenced by the performance metrics of e-way bills and FASTag volumes. E-way monthly volumes have remained robust, hovering above 85 million for the past four months. Although slightly below the all-time high of 100 million recorded in October 2023, this sustained level signifies resilient domestic trade and transportation activities.

Similarly, the monthly FASTag volumes have mirrored the trends observed in e-way bills. Ranging from 295 to 350 million in the current fiscal year, with a peak of 348 million in December 2023, the figures reflect the continuity of business operations despite market fluctuations and external uncertainties.

Commenting on the same, Vice President and Sector Head – Corporate Ratings, ICRA Limited, Suprio Banerjee, said: “ICRA’s sample set witnessed a modest revenue growth of 2.3% in 9M FY2024 on a YoY basis amidst tapering demand due to high inflation, an uneven monsoon, a high interest rate regime and relatively muted festive season. Thus, on an elevated base of FY2023, ICRA estimates a low single digit growth of 2-5 percent in FY2024.  The growth for road logistics sector in FY2025 is expected to be in the range of 3-6 percent, owing to the impact on demand from high inflation, high interest rate regime and soft (though improving) consumer sentiment.”

“The industry operating profit margin contracted to 11.2 percent in 9M FY2024 on account of increase in operating costs (ex-fuel) due to the high inflationary regime and pressure on realisations, given the sticky retail diesel rates, limiting any formula-driven price rise. ICRA expects the margins to remain in the range of 10.5-12.5 percent in FY2024 and FY2025 over 12.4 percent in FY2023 amidst inflationary headwinds and despite benefits of efficiency gains due to increasing digitalisation and value-added service offerings of industry players. Key debt metrics like OPBITDA is expected to have moderated marginally to 1.5-1.7 times in FY2024 from 1.4 times in FY2023 with rising operating costs (ex-fuel), given the persistently high inflation levels and increase in debt due to debt-funded capital expenditure for new vehicles and anticipated rise in lease liabilities due to expanding branch network and technology investments,” he added. 

He also informed, “Additionally, road logistics players also remain exposed to environmental and social risks. Tightening emission control norms necessitate alternative fuel vehicle investments or investments in the current fleet. They are also exposed to litigation or penalties arising from issues related to harmful emissions and waste, which may lead to financial implications and impact reputation. The social risk includes driver shortage, health, safety and quality of work-life balance for drivers.”

While the Indian road logistics industry faces challenges such as constrained pricing abilities and economic uncertainties, it continues to exhibit resilience and stability. The sector's ability to adapt to changing circumstances and sustain operational momentum underscores its significance within the broader economic landscape. 

As the fiscal year progresses, stakeholders will closely monitor developments, seeking opportunities to navigate challenges and capitalise on emerging trends.

Ashok Leyland, the Indian flagship of Hinduja Group and the country’s leading commercial vehicle manufacturer, signed a memorandum of understanding (MoU) with Indian Bank to provide finance facilities for its M&HCV dealers.

Through the cooperation, Ashok Leyland's M&HCV dealers will have easier access to finance solutions, enabling them to improve company operations and effectively manage their working capital. Dealers may grow their operations with ease thanks to Indian Bank's customised financing alternatives, which offer better liquidity, quicker loan approvals and competitive interest rates. This partnership underscores Ashok Leyland's dedication to empowering its dealer network and promoting sustainable growth in the commercial vehicle sector by guaranteeing increased financial flexibility.

C Neelakantan, Head of Treasury and Direct Taxation at Ashok Leyland, and Saurabh Dalmia, Head of Cash Management at Indian Bank, signed the MoU in the presence of Madhavi Deshmukh, National Sales Head of MHCV at Ashok Leyland, Ashutosh Choudhury, Executive Director, Roopali Singh, DGM-CMS Vertical, and Munash Dalal, AGM-CMS Vertical, who were representatives from Indian Bank.

Balaji K M, CFO, Ashok Leyland, said, “Ashok Leyland is delighted to partner with Indian Bank to offer customised finance solutions to our valued M&HCV dealers. With Indian Bank’s expansive network of 5,880 branches across India, we can cater to our dealers in every region. This strategic partnership will strengthen Ashok Leyland's market position. We remain committed to delivering exceptional experiences to our customers.”

Madhavi Deshmukh, National Sales Head – MHCV, Ashok Leyland, said, “The strategic collaboration with Indian Bank will deliver exceptional financing solutions to our valued dealers, extending our market reach and reinforcing our commitment to innovation and partner success. This partnership will provide tailored financing solutions designed to meet the unique requirements of our dealers. We remain dedicated to fostering long-lasting relationship with our dealer network.”

Ashutosh Choudhury, Executive Director, Indian Bank, said, “Indian Bank is pleased to partner with Ashok Leyland to provide their dealers seamless and tailored financing solutions. This collaboration reaffirms our commitment to supporting the diverse financial requirements of businesses in the commercial vehicle sector. With Indian Bank’s best-in-class processes, we are confident that more dealers will benefit from this partnership, enabling them to scale their operations and drive business growth.”

Ashok Leyland, a leading commercial vehicle manufacturer, has inaugurated its 22nd Light Commercial Vehicles (LCV) dealership in Uttar Pradesh. The new 3S facility located in Chunar, Mirzapur will further strengthen the company’s presence in North India.

The company’s LCV portfolio includes Saathi, Dost, Bada Dost, Partner and MiTR targeted for a wide range of customers and applications.

Viplav Shah, Head – LCV Business, Ashok Leyland, said, “Recognising immense potential of Uttar Pradesh as a key market for us, we are thrilled to strengthen our presence in the region. Our new dealership in Chunar (Mirzapur) would go a long way in reinforcing our presence in the state. The phenomenal success of our ‘Dost’, ‘Bada Dost,’ and the new ‘Saathi’ range underscores the robustness of our products - thanks to their best-in-class mileage, superior performance, and higher payloads. We take immense pride in our exceptional service retention levels, with nearly 70% of our customers returning to our dealer workshops even beyond the warranty period. This new dealership marks yet another milestone in our journey to provide the best possible experience to our valued customers.”

Ashok Leyland, one of the country’s leading commercial vehicle manufacturers, has signed a Memorandum of Understanding (MoU) with Nagaland Rural Bank for a strategic vehicle financing partnership. The partnership will see Ashok Leyland get access to customised financial solutions from Nagaland Rural Bank.

The MoU was signed by C Neelakantan, Head -Treasury and Direct Taxation, Ashok Leyland and Velayutham Sadhasivam, Chairman, Nagaland Rural Bank.

Balaji K M, CFO, Ashok Leyland, said, “At Ashok Leyland, we are dedicated to continuously enhancing customer experience and delivering greater value in our products and services. Nagaland Rural Bank is a regional rural bank with a strong presence in the state. With this partnership in place, our customers in the region will have access to comprehensive financing solutions with specially curated easy repayment plans”.

Sanjeev Kumar, President – MHCV, Ashok Leyland, said, “Ashok Leyland is looking forward to collaborating with Nagaland Rural Bank to offer our customers highly attractive financing solutions. This strategic partnership not only strengthens our market presence but also reinforces our commitment to innovation and customer success. With cutting-edge technology and industry-leading total cost of ownership, our products are designed to drive profitability and value for our customers. We remain steadfast in our commitment to deliver exceptional customer experience and build long lasting relationships.”

Velayutham Sadhasivam added, “Nagaland Rural Bank is delighted to collaborate with Ashok Leyland to provide seamless vehicle financing solutions. This partnership underscores our commitment to meeting the diverse financial needs of commercial vehicle customers across the state. We are confident that this alliance will help us expand our reach and offer customized financing options, fostering the growth of businesses in the commercial vehicle sector.”

Eicher Trucks & Buses, a business unit of VE Commercial Vehicles, has announced that it successfully hosted the second Woman Transporters Delegation at its Bhopal plant.

The event saw women leaders in the transport industry exchange ideas, share insights and explore new business opportunities. The discussion revolved around a wide range of topics such as digitisation, alternative fuels and intelligent mobility solutions that provide challenges and opportunities.

The women leaders were given an exclusive tour of Eicher’s Bhopal plant, an interactive session with VECV Executive Management and test drive experience.

Vinod Aggarwal, MD & CEO, VECV, said, “At Eicher Trucks and Buses, we firmly believe that inclusivity and diversity strengthen businesses and drives growth. Technology and digital solutions are transforming the industry, making businesses smarter and more efficient. While we are taking steps to improve diversity and inclusion internally through initiatives like an all-woman assembly line in Bhopal, we thank you for working with us to foster innovative approaches in the commercial vehicle industry."

Bhagwan K Bindiganavile, EVP, Strategic Planning, Brand & Communications, VECV, added, “The Indian CV industry is transforming rapidly, guided by Prime Minister Narendra Modi’s vision of Seven Cs for mobility solutions: Common, Connected, Convenient, Congestion-free, Charged, Clean and Cutting-edge. We appreciated the women leaders focus on balancing the new technologies making logistics more efficient with a people-first approach.”

SS Gill, Chief Commercial Officer, VECV; B Srinivas, COO, Eicher Trucks and Buses; Ramesh Rajagopalan, EVP, Customer Service, Retail Excellence and Network Development and Vimal Mulchandani, EVP- Manufacturing Operation, Eicher Trucks & Buses & Volvo Buses also engaged with the women transporters delegation.