The Hindu Business Line : Ashley Transport seeks bank funds for `challan discounting'

ASHLEY Transport Services Ltd, the newly-floated subsidiary of Ashok Leyland, is in talks with several banks for funds for a new line of business, called challan discounting.

`Challan discounting' refers to financing transport operators on the basis of the receipt which the operator gets after delivering a load.

Typically, companies that send goods across by a truck do not pay the truck operator immediately at the end of the assignment. The truck driver delivers the goods and gets a document called `goods received note' (GRN). He then gets funds - usually, from a freight broker - on the basis of the GRN.

`Challan discounting' (also known as `parchi financing') is an industry tradition. But the first organised player in this field is Ashley Transport Services.

The company was formed a few months ago, with a paid-up equity of about Rs 10 crore. Ashok Leyland has a 70 per cent stake in this company, which also provides Web-based freight exchange services. The other 30 per cent is held by Ashok Leyland Finance, now a division of IndusInd Bank.

It is understood that while Ashley Transport Services will act as a facilitator for challan discounting, the actual funding will be provided by banks. Sources in Ashok Leyland have told Business Line that the company intends to rope in a few banks for keeping a channel of funding open for this purpose. IndusInd Bank is expected to be one of them.

The entry of a corporate into this field is seen by many in the trucking industry as a welcome development, one that would release the truck operators from the clutches of brokers.

Many transport operators said that they did not know of Ashley Transport Services, but said that challan discounting by an Ashok Leyland group company would be useful. "Most of the truck operators will use this service," said Mr R. Aravamudhan, a truck operator from Vellore.

While Ashok Leyland itself sees Ashley Transport Services as "one more way of being with the customer," others in the group smell big bucks in the business.

"The market size could be as high as Rs 10,000 crore," said a highly placed source in the group. He said that Ashley Transport could facilitate challan discounting deals worth at least Rs 1,000 crore over the next three years.

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