VRL Logistics

The stock price tanked 20% yesterday, getting frozen on the lower circuit. The market is miffed with the decision of the company’s Chairman and MD, getting together to start a regional airline company. They issued a clarification stating that this company would not be a part of VRL but a new venture, in their own private capacity. Yet the market is perturbed because the management will be selling part of their shares in VRL Logistics to raise money for the regional airline foray. The investment for the airline company is pegged at Rs.1400 crore and the Chairman will be diluting Rs.300-400 crore through stake sale. There will be strong shareholder resistance for this foray but the Chairman said very nonchalantly in a TV interview that he was “not bothered about shareholder approval into aviation.”

The company is pre dominantly parcel delivery service provider (68.45 % of total Revenue as of FY16) with pan –India last mile connectivity through a fleet of 3872 owned vehicles. Other Business interests include Wind power generation with 42.5 MW wind farm and Air Charter Operations through two aircrafts and courier services. For Q4FY16, QoQ, the company’s performance was dull. Consolidated net revenue dropped 4% at Rs.416 crore. EBITDA was down 26% at Rs.50 crore and net profit was down 46% at Rs.13 crore. Goods transport, passenger transport and power – all three Verticals showed a drop in topline and EBIT; air charter was the only one which showed a growth.

It ended Fy16 with consolidated net revenue of Rs.1722 crore, up 3% while net profit was up 12% at Rs.102 crore. Its net debt currently stands at Rs.271 crore, down 36%.