Growth driven by reduced dependence on any specific customer, product or geography
VRL Logistics is a well-established and respected name in the country when it comes to surface transportation and an industry leader in parcel transportation. It is also a leading player in the private bus transport industry and one of the biggest private sector operators in the space. With an excellent track record for over four decades, VRL has increased its size and scale of operations and operates on a pan-India basis at present. The company occupies leadership position in the country for Less than Truck Load (LTL) movement of goods and it is only the absence of validated industry data that prevents it from acclaiming this fact. Apart from the movement of general parcel, the surface transportation operation also covers other services such as Full Truck Load (FTL), Priority Cargo Services and Car Carrying.
During FY17, VRL Logistics registered a gross income of Rs. 1,81,238.33 lakhs as against previous year’s gross income of Rs. 1,73,120.09 lakhs, depicting a growth rate of 4.69%. The company has earned a Profit Before Tax (PBT) of Rs. 10,530.07 lakhs. Its Goods Transport Division achieved a turnover of Rs. 1,42,615.26 lakhs thereby registering a growth rate of 5% as compared to the previous year. The growth in other verticals including bus operations was marginal. During the year the company earned a net profit of Rs. 7,047.26 lakhs.
During FY 2016-17, VRL’s largest customer and the top 10 customers put together contributed to 1% and 6% of the revenues of the goods transport business respectively. This has ensured that the company has no dependencies on any customers or product categories. Similarly, there are no geographical or product related dependencies for the business which better insulates the company vis-à-vis competition.
Segment-wise performance
VRL’s goods transportation revenues recorded a growth of 5.02% which is the result of a growth in the realization per ton though the freight volume remained flat during the year. The bus operations division recorded a marginal revenue increase of 2.71%, going up from Rs. 31,760.97 lakhs to Rs. 32,620.63 lakhs. The transport of passengers by air division recorded revenues of Rs. 1,603.43 lakhs as against corresponding revenues of Rs. 1,117.78 lakhs.
VRL has established owned trans-shipment hubs at key locations like Hubballi, Mumbai, Mangalore, Mysore, Bhilwara, Gangavati and Davangere. Long term leases have also been entered into at key locations such as Chennai, Delhi, Hyderabad, Bengaluru, Pune, Kolkata, etc. Owned infrastructure enables the company to set up good quality maintenance facilities as also better infrastructure for goods movement and mechanised material handling. The ownership of premises at key business locations such as Delhi, Hyderabad, Bengaluru, Pune, Kolkata, Surat, etc., would provide the company with a lot of flexibility in conducting business operations and the same leading to considerable cost savings and also would enable the company to scale up its service levels. It might consider gradually expanding its owned infrastructure at such key locations in the years to come.
The two major advantages that VRL enjoys over its competition are its well established wide network of branches and franchisees and its owned fleet of commercial vehicles with dedicated in-house vehicle body designing and vehicle maintenance facilities to cater to the parcel transportation. The company presently operates across 23 States and 4 Union Territories in India and its reach is unmatched for the offering of LTL goods transportation services.
VRL is also one of the largest fleet owners of commercial vehicles in the country, if not the largest, and the same enables the company to set unparalleled standards in the movement of LTL cargo in India in terms of service levels and safety of consignments. The policy at VRL is to own its vehicles for offering LTL services as also own significant infrastructure facilities comprising of warehouses and maintenance facilities.
It also has a dedicated in-house IT setup which is a significant strength of the company. The entire IT infrastructure of the company is operated internally and the in-house developed ERP enables the company to seamlessly operate on an online real time basis across all its business verticals as also has integration with franchisees and select customers. It has also built up capability to maintain its owned vehicle fleet internally and the cost savings arising out of economies of scale by way of tie-ups with fuel suppliers, vehicle manufacturers for supply of spare parts, tyres, etc., as well as ongoing.