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VRL Logistics Profits Plunges Again, Passenger Services Drags The Profit


VRL Logistics Logo
The logistics giant of India has reported a lower profits for the quarter. Though revenue grew by 5.2% YoY, profits showed a de growth of 54%. Operating margin of the company has reduced by almost half to the current level of 5.78% (which was 10.56% in Q2FY16).
VRL operates in four segments; Goods Service, Bus Service, Power Sale and Air Charter. Goods operations accounts for the majority of revenue at 79.83%, followed by Bus service (16.20%) and Power Sale (2.43%). Bus services has been dragging the net profits of the consolidated group. The bus service has reported operating loss (before finance and tax expense) of 4.41 Crs.
EBIT margin of goods service decreased from 13.35% in Q2 FY16 to 8.62% for the current quarter. On others side, Sale of power reported 15.65% increase in revenue YoY and EBIT margin improvement of 112 basis point YoY.
In the half year ending 30 Sep 2016, VRL added 31 Heavy commercial vehicles and 44 buses, taking the current fleet size to 4,329.
VRL has reduced its debt by 27.4% since Mar-31 2016. Currently 81% of its transport vehicles and 66% of its passenger vehicles are debt free. More importantly 53% (2060) of its transport vehicle has been logged in balance sheet at a book value of Rs 1.
VRL as a logistics firm will be impacted positively with GST when it comes through. While current prospects look weak, the longer term benefit of GST and a smoother economy will be reflected after years.


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