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Benefiting from its impressive asset base and extensive network

* VRLL, with its large asset base of 5,671 trucks, has successfully transformed itself into a specialized goods transport (GT) company by focusing on its highmargin LTL (less than truck load) segment.

* In FY23, VRLL expanded its branch network by adding 184 new branches, which led to a significant increase in volumes.

* To capitalize on the growth opportunity in the LTL segment, VRLL has placed orders for 1,667 GT vehicles at a capex of INR6.97b. The fleet expansion will increase the company’s capacity by ~30,000 tonnes. Currently, the trucks have a total carrying capacity of 82,657 tonnes.

* The company's customer base grew to ~0.8m in Mar’23 from ~0.7m in Mar’22. With growing demand for a logistics partner with a nationwide footprint, VRLL is in a favourable position to attract large customers.

* In addition, VRLL has a comprehensive infrastructure setup, which includes various owned facilities such as branches, offices, and transshipment hubs.

Plans to add 1,667 trucks to capture growth opportunity in LTL segment

* In FY24, VRLL is expected to withdraw ~1,220 vehicles, which have been in operation for more than 15 years, in compliance with the government’s vehicle scrappage policy. Subsequently, VRL has ordered 1,667 trucks from Ashok Leyland (1,560 trucks) and Tata Motors (107 trucks) for INR6.97b.

* The proposed capex is expected to help the company meet its business demand in due course and reduce its dependence on hired vehicles.

* The fleet expansion would also improve efficiency as new vehicles are technologically more advanced and fuel efficient. It would result in a net capacity addition of ~30,092 tonnes (37% of existing capacity), allowing VRLL to cater to expected demand growth in industry volumes.

Branch addition in new areas to boost volumes

* In FY23, VRLL added 184 new branches and intends to add more branches in the east and northeast regions. ? These branches will attract new customers and enhance the company's ability to serve existing customers.

Exiting non-core business like Bus, Power and Wind; focus on the high growth Goods transport business

* VRLL in FY23 sold its Bus business for INR2.3b and its Wind power business for INR528m. The company has decided to focus solely on the GT segment. The board has also granted in-principle approval for the sale/ transfer of the ‘Transportation of Passengers by Air’ business through a slump sale

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