Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- VRL Logistics Ltd (BOM:539118, Financial) achieved a revenue growth of around 9% year-on-year, increasing from INR683 crores to INR742 crores.
- The company saw an 8% increase in volumes, from 10,00,000 tonnes to 10,70,000 tonnes.
- Price realization improved by 1%, from INR6650 to INR6724 per tonne.
- VRL Logistics Ltd (BOM:539118) expanded its branch network by adding 36 new branches in the current quarter, contributing to a 3.55% increase in tonnage.
- The customer base increased from 8 lakh to 9 lakh customers over the past year, indicating strong market penetration and customer acquisition.
Negative Points
- The company faced operational challenges due to long absentees of staff during elections and extreme heatwaves, impacting efficiency and causing delays.
- EBITDA decreased by 8% in absolute terms, from INR111 crores to INR102 crores, and as a percentage of revenue, it decreased by around 2%.
- Employee costs increased by 1.5% to revenue, from 16% to 17.81%, due to annual increments and internal promotions.
- Toll charges increased due to the rise in the number of toll booths and higher toll rates, impacting operational costs.
- The company experienced a significant decline in PAT, which decreased by 60% from INR34 crores to INR13 crores.
Q & A Highlights
Q: Were your volumes also impacted due to unavailability of labor in this quarter or was the impact only on cost? What volume growth should we expect for the full year?
A: Yes, even the volumes have been impacted in the current quarter due to delays in services at key transshipment hubs. We had to stop some bookings in selective areas, especially in Delhi. For the full year, we expect close to double-digit growth, around 7% to 8% in tonnage.
Q: Can you provide details on the realized profit from the sale of a land parcel? Are there other non-core land parcels that might be divested?
A: The sold property was earlier used by our media business and had low operational dependency. There are no other surplus assets planned for monetization at this time.
Q: What portion of the depreciation and interest costs are related to lease rentals?
A: For depreciation, it is around INR39 crores, and for finance cost, it is around INR16 crores. These are related to rental expenses accounted as depreciation and finance cost due to Ind AS entries.
Q: Has the profitability decrease impacted your CapEx plans for this year?
A: Initially, we did CapEx in April, but post disturbances and volume impact, we have slowed down on CapEx. Depending on tonnage growth, we will decide on increasing vehicles.
Q: Have you seen the price hike being rolled out across all customers, or is the net impact lower?
A: The price hike has been rolled out across all customers. Realizations improved around 6% in July, and this trend is expected to continue.
Q: Is owning vehicles turning out to be more expensive than hiring?
A: The increase in costs is due to higher driver incentives and disturbances. However, depending on outside vehicles would have been more expensive. Owning vehicles is not more costly overall.
Q: Can we expect similar branch additions in the coming quarters?
A: We plan to add around 100 branches for the full financial year. The number may go up but will not be less than that.
Q: Is the price hike sufficient to absorb increased costs, or is there scope for margin improvement?
A: The current price hike is sufficient to absorb increased costs. If there are drastic changes in expenses, we may reconsider freight rates.
Q: How are competitors reacting to the price hike, and how are customers responding?
A: Some competitors have also increased rates. Local geographic players, who are our main competitors, tend to follow our rate increases. Some customers may temporarily leave but usually return.
Q: What volume growth are you targeting for FY26?
A: We expect around 12% to 14% growth in tonnage for FY26. This target is consistent with our efforts to maintain growth despite an increased base.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
