VRL Logistics Ltd Management Discussions

Indias logistics sector is the backbone of its economy, facilitating the movement of goods and services across vast geographical regions. The industry is rapidly evolving, driven by infrastructure advancements, policy reforms, digitalization, and sustainable initiatives. With the implementation of projects like PM GatiShakti and dedicated freight corridors, India is moving towards an integrated and efficient logistics ecosystem.

The Indian logistics industry is valued at approximately $250 billion, contributing about 14% to the countrys GDP. It encompasses various modes of transport, including road, rail, air, and waterways. The sector is driven by key players such as trucking companies, third-party logistics providers (3PLs), warehousing firms, e-commerce giants, and government agencies.

1. Key Segments:

Road Transport: Accounts for about 60% of freight movement, supported by the extensive highway network.

Rail Transport: A crucial part of bulk logistics, especially for commodities like coal, iron ore, and cement.

Air Cargo: Mostly used for high-value, time-sensitive shipments, including pharmaceuticals and electronics.

Waterways & Ports: Indias maritime trade is expanding, leveraging inland and coastal shipping for cost effective bulk transportation.

Developments and Trends in the Indian Logistics Industry

Indias logistics landscape is undergoing a transformation, driven by several key developments:

A. Government Initiatives & Policy Reforms

PM GatiShakti National Master Plan: Focuses on integrated infrastructure planning to improve logistics efficiency.

National Logistics Policy (NLP): Aims to reduce logistics costs and improve sector competitiveness.

GST Implementation: Has streamlined the movement of goods, eliminating interstate checkpoints and reducing transit delays.

Dedicated Freight Corridors (DFC): Boosts rail freight transport

B. Infrastructure Investments

Expansion of National Highways and Expressways to enhance road transport.

Development of Multi-modal Logistics Parks (MMLPs) for seamless cargo movement.

Port modernization projects under Sagarmala to improve maritime trade efficiency.

C. Digital Transformation

Adoption of AI, IoT, and Blockchain for real-time tracking and operational efficiency.

Growth of digital freight matching platforms connecting shippers with logistics providers.

Increased use of telematics and automated warehousing solutions.

D. Sustainable and Green Logistics

Investment in electric trucks and fuel-efficient transport solutions.

Promotion of rail and waterways to reduce carbon footprint.

Implementation of green warehousing practices using renewable energy.

E. Challenges in Indian Logistics

Despite advancements, the sector faces several hurdles:

High Logistics Costs: Indias logistics expenses account for 13-14% of GDP, higher than global averages.

Infrastructure Gaps: Poor road conditions and congestion affect efficiency.

Fragmentation: The industry is dominated by small, unorganized players.

Skilled Workforce Shortage: Lack of trained professionals in supply chain management.

Environmental Impact: Increasing emissions from traditional transport modes.

F. Future Outlook

The future of Indian logistics is shaped by ongoing innovations and policy support:

Expansion of high-speed freight corridors to reduce transit time.

Widespread adoption of autonomous trucking and smart logistics solutions.

Increased foreign direct investment (FDI) in logistics parks and supply chain networks.

Integration of AI and automation for optimized inventory management.

G. Significance of Roadways in Indian Logistics landscape

Backbone of Transportation - Roadways serve as the primary mode of transportation, connecting rural and urban areas, enabling the efficient movement of goods and materials across the country

Accessibility and Reach -Indias extensive road network provides unparalleled accessibility, reaching even remote and isolated regions, ensuring the delivery of essential supplies and services.

Cost-Effective and Flexible - Roadways offer a cost-effective solution for logistics, with the ability to adapt to changing demands and deliver goods on a just-in-time basis.

Integrating Rural Economies - Robust road infrastructure integrates rural economies with the larger national supply chain, empowering local producers and connecting them to wider markets .

Road logistics is a critical component of the global supply chain, responsible for transporting goods efficiently across regions. In India, the industry is integral to economic growth, facilitating trade and commerce while supporting multiple sectors such as manufacturing, retail, and agriculture. With advancements in infrastructure, technology, and policy reforms, road logistics continues to evolve, improving efficiency and sustainability.

The road logistics industry comprises various stakeholders, including:

1. Truck Operators The backbone of logistics, ranging from large fleet owners to individual truckers.

2. Logistics Service Providers – Companies offering end-to-end transportation solutions, including warehousing and freight forwarding.

3. Infrastructure Developers – Government agencies and private players involved in road construction and maintenance.

4. Technology Providers Companies supplying telematics, fleet management solutions, and AI-driven optimization tools.

5. Regulatory Bodies – Government authorities overseeing policies, taxation, and compliance standards for road transport.

Indias road logistics is characterized by a fragmented structure, with small and unorganized truck operators dominating the market. However, increasing formalization and consolidation are reshaping the industry dynamics.

The Logistics Performance Index (LPI) report reveals a noteworthy advancement in Indias infrastructure score, moving up five places from 52nd in 2018 to 47th in 2023

LPI ratings for India has shown improvement, rising to the 38th position out of 139 countries in 2023 from its 54th ranking in 2014.

Average pace of NH construction increased by 143% to 28.3 km/ day from 2014

The NH network increased by 60% from 91,287 km in 2014 to1,46,195 km in the year 2024. 4-lane and above - National Highways (excluding HSCs): The length grew approximately 2.5 times, from about 18,300 km to 45,900 km between 2014 and 2024

Currently the logistics business is highly fragmented and has innumerable participants, including major local players, worldwide industry leaders, the express division of the government postal service, and rising start-ups that focus on e-commerce delivery. The industry includes transportation, warehousing, and value-added services like packaging, labelling, and inventory management. With the advent of technology-driven solutions such as transportation management systems (TMS) and warehouse management systems, Indias logistics industry has witnessed tremendous development in recent years (WMS). These solutions have assisted logistics firms increasing operational efficiency, lowering costs, and improving customer service. (Source: IBEF) Overall, while the Indian logistics industry is poised for significant growth opportunities, companies will need adapt to changing market dynamics, invest in technology and infrastructure, and focus on innovation to stay competitive in this dynamic environment

Conclusion

Indias logistics industry is transitioning towards a more organized, technology-driven, and efficient sector. With government initiatives, private investments, and digital innovations, the industry is set for substantial growth. Addressing infrastructural bottlenecks and adopting sustainable practices will be crucial for long-term success.

Material Source : Ministry of Finance, Ministry of Road transport & Highways, E&Y, Niti Ayog, India Brand Equity

Foundation

2. SWOT ANALYSIS STRENGTHS

With an extensive network around the Country, VRL Logistics is able to provide personalized, localized support to our clients no matter where they are. VRLs core strength is its large size and scale of operations undertaken on a pan India basis with the largest owned vehicle. We take pride in our extensive fleet of modern, well-maintained vehicles that are optimized for efficiency and reliability. Our diverse fleet includes a wide range of trucks, trailers, and specialized equipment to handle any freight requirements. Our vehicles are regularly serviced and inspected to meet the highest industry standards. With a track record of five decades, we are one of the largest distribution networks in India. We are the only "Asset- Right" organized player in Less than Truck load logistics business in India. Our wider spread provides us greater stability during regional disturbances. VRL is a well-established brand in the country when it comes to surface transportation and the industry leader in the parcel transportation space. As on 31st March 2025, the Company operated with the total of 6115 owned vehicles having carrying capacity of 85261 tons, and several ownedpremises,includingbranches,officesand transhipment hubs. We maintain our stand that your Company also occupies the 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 us from emphatically acclaiming this fact.

The following graph depicts the YoY increase in number of Vehicles and Capacity.

The two major advantages that your Company 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. Your Company is also one of the largest fleet owner of commercial vehicles in the Country and the same enables the Company to set unparalleled standards in the movement of LTL cargo in India through Hub and Spoke model in terms of service levels and safety of consignments.

The below figure depicts the Network and Reach of the Company.

The Company presently operates through 1253 branches across 24 States and 5 Union Territories in India and its reach is unmatched for the offering of LTL goods transportation services. The below figure reach of the Company.

The Company operates through a hub and spoke model which helps in utilization of vehicle capacity to optimal levels. The below figure depicts the ‘Hub and Spoke consignment delivery model followed by the Company.

The hub-and-spokemodelcreatesnumerousbenefits, including:

Continuous movement for loads thanks to centralized handoffs.

Reduced lengths-of-haul, which improve scheduling, reduce transit time and help drivers

Consistent on-time performance, which enhances service levels and ensures products arrive in the right place at the right time.

Improved driver recruiting and retention. This produces additional benefits, including higher tenure, route consistency, increased transit dependability and performance, and improved safety.

Reduced costs and enhanced productivity

Lower carbon footprint, because few empty miles driven reduces wasted fuel and emissions.

Consistent pricing mitigates the risk of third-party carrier price fluctuations.

Vehicle utilization: load distribution Optimum utilization of vehicles due to efficient The policy at VRL is to own its vehicles for offering LTL services as alsoownsignificantinfrastructure facilities comprising of warehouses and maintenance facilities. We also have a dedicated in-house IT setup which is a significant strength of your Company and the same has rendered a lot of control, cost savings and business flexibility over the years. 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 integration with franchisees and select customers. Your Company also has built up capability to maintain its owned vehicle fleetinternally 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 in-house R&D in this domain have enabled the Company to utilize its vehicles for a significantly longer term vis-a-vis the industry as also at significantly lesser maintenance costs.

Fuel costs continue to constitute a substantial portion of operational expenditure in the logistics sector. To mitigate price volatility and ensure consistent availability, we have established company-owned fuel stations at strategic locations. These outlets source fuel directly from refineries, enabling us to bypass intermediaries, maintain price stability, and secure uninterrupted supply strengthening both cost efficiency and fleet reliability.

Your Company benefits from in-house research and development with a capability to implement its findings and experiment with newer products and technologies on its owned vehicles. Several of its key findings have today been accepted and implemented even by vehicle manufacturers. In combination with own vehicle body designing facility with technology to fabricate lighter and longer bodies, that reduces the overall weight of the vehicle and ensure higher payload, and also with combination of multiple types of commodities handling such as heavy and bulk consignments inside goods carriages, the goods carriages can be utilized at higher capacity as compared to the earlier periods.

Overall, the in-house maintenance facility helps the Company to better utilize its fleet than competition as the vehicles owned by the Company can be used for longer period of time vis-a-vis outside vehicles. Also ~20% of the Goods transportation vehicles are fully depreciated ensuring vehicle fleet availability with no additional depreciation costs. Also ~81% of the Goods Transportation fleet is debt free with no associated finance costs.

Your Company also has a very well diversified customer base of ~9 lakhs plus across various Industrial Sectors. During FY 2024-25, the Companys largest customer and the top 10 customers put together contributed only 1% and 3% of the revenues respectively. VRL has the lowest trade receivables in the industry. This has ensured that the

Company has no dependencies on any specific customers or product categories or product related dependencies for the business which better insulates your Company vis-a-vis competition.

With emphasis on connectivity, the management has taken steps to identify and expand the branch network. Going further this would lead to opening of newer business premises and help into tapping newer sectors from which the company would greatly benefit.

WEAKNESSES, RISKS AND CONCERNS

Infrastructure and Connectivity Challenges: The Indian logistics industry faces significant infrastructure and connectivity challenges that hinder its growth and efficiency. road networks, outdated rail systems, and underdeveloped inland waterways, creates bottlenecks and delays in the movement of goods. Poor last-mile connectivity to remote and rural areas further exacerbates the problem, making it difficult to reach customers and access markets. Additionally, outdated and fragmented warehousing limited storage capacity and technology integration hamper the overall supply chain efficiency.

Another major issue is the lack of integrated and efficient logistics hubs that can facilitate seamless multimodal transportation and distribution. The absence of well-connected logistics parks, inland container depots, and dry ports limits the industrys ability to leverage economies of scale and optimize transportation routes. Suboptimal port infrastructure, including limited cargo handling capacity, outdated equipment, and congestion, further exacerbates the challenges faced by the logistics industry.

Addressing these infrastructure and connectivity challenges will be crucial for the Indian logistics industry to achieve its full potential and meet the growing demands of the rapidly expanding economy. Investments in modernizing transportation networks, developing integrated logistics hubs, and upgrading port facilities will be necessary to improve the overall efficiency and competitiveness of the sector.

The transportation and logistics sector is grappling with several structural challenges such as:

Fuel price fluctuations Shortage of trained drivers and labour

Increase in toll charges due to more & more roads being covered under toll as also frequent increase in rates of existing toll rates on tolled roads

As the industry is fragmented, there are several intermediaries in the ecosystem leading to multiple cargo exchanges, thereby increasing costs and operational inefficiencies.

Lack of end-to-end supply chain visibility and ability to track and trace the cargo remains a challenge for the service providers and customers.

The sector is also constantly grappling with inefficiencies, however, because of which the cost of Indian logistics is 13 to 14 percent of GDP (in developed nations these costs amount to 8 to 10 percent of GDP). These inefficiencies stem from three reasons: 1. The two most unorganized sectors dominate the logistics market—road transport and warehousing. Road transport is particularly deeply fragmented truck owners with fewer than five trucks constitute more than half of all goods vehicles on the road. 2. Indias modal mix is heavily skewed towards road, with 60 to 65 percent of transport happening via road compared to 25 to 30 percent in developed countries, prompting higher costs. The use of inland waterways and coastal shipping is limited, while the containerization of cargo in rail remains minimal. 3. Indirect costs are high and include inventory carrying costs, theft and damages— often because of poor planning, forecasting and lack of proper management of stock.

Your Company, being one of the organized players in this highly fragmented and unorganized market, stands to benefit as gradually businesses realize the costs of inefficiencies the smaller and regional operators present. Such gradual shift can be particularly seen after the post-pandemic economic revival also aided by a stricter GST regulatory environment.

Organizations have realized that they need to build networks and/or channels that will allow them to adapt quickly and easily in a changing environment. Organizations will have to build systems that can optimize costs, accelerate reaction times and diversify channels. For networks to adapt quickly and function smoothly, it is also important to build agile teams willing to change and adapt rapidly to the external environment. Swift reaction to disruptions can hasten change and minimize damage. Given the same as also the very nature of LTL freight being transacted, we believe that your Company would easily adapt to any given change being witnessed across markets as owing assets and operating offices across the country provides it with the requisite flexibility and option to moderate or reorganize any changes to freight movements.

The surface transport industry suffers from an acute driver shortage issue and the said problem also affects your Company. The management opines that this is the single most important factor that affects all the transporters across the country. Your Company is however relatively better placed in this regard. VRL offers best in class salaries and emoluments including incentives to its drivers which help retention of this cadre. The Company also has enlisted its drivers on its payrolls and extends all statutory benefits such as PF, ESI, etc. to its drivers apart from significant insurance coverage as well. The Company offers a good work environment as well and also takes care of their skill development by conducting routine training programs awareness camps for its drivers. Your Company also conducts frequent health checkup and health camps for the drivers so as to make them more health conscious. Shortages however still remain and your Company is striving to further encourage more and more individuals to take up driving profession by visiting potential villages and towns and trying to remove the stigma being associated with the driving profession. The management also propagates at several forums the necessity of a joint industry effort to overcome this problem which is only expected to become more challenging in the days to come.

Lack of owned infrastructure at key centers is another present day weakness in the managements opinion. The Company has established owned transshipment hubs at key locations like Bengaluru, Mumbai, Surat, Hubballi, Mysuru, Mangaluru, Vijayapura, Ballari,and Davangere. Long term leases have also been entered into at key locations such as Chennai, Delhi, Hyderabad, Ahmedabad, Pune, Kolkata, etc. Owned infrastructure enables the company to set up good quality maintenance facilities as also better infrastructure for goods movement and material handling.

The ownership of premises at such key business locations provides the Company with a lot of flexibility in conducting business operations and the same lead to considerable cost savings and also enable the Company to scale up its service levels. Setting up owned infrastructure would however entail significant investments which in turn affect the return ratios and the management would need to balance the two so as to optimize stakeholder value as well as to cater to business growth for future. Your Company would continue to gradually expand its owned infrastructure at such key locations in the years to come.

OPPORTUNITY

The present day stabilization of the GST regime has necessitated several documentation requirements to which organized players are better suited. Be it e-waybill compliance and providing necessary information to the customers for their compliances etc.

The mandatory E-Invoicing turnover threshold for business entities is now reduced to Rs.5 crore from 01.08.2023. E-invoicing was made mandatory for business entities with Turnover of Rs.500 crores and above from October-2020. This was further limited to Rs.20 Crores and above from April-2022. Now, with all business entities with turnover of Rs.5 crores and above required to e-invoice, this would further lay emphasis on entities being more compliant. This would present additional business opportunity to your Company as smaller businesses would now scout for better logistics services from a compliance perspective.

The vehicle scrappage policy is a government-initiated program to replace old vehicles from Indian roads. According to the new policy, commercial goods vehicles greater than 15 years will have to be mandatorily scrapped if they do not pass the fitness and emission tests.

The imminent implementation of scrappage policy is being tentatively viewed by the road transport industry as there would be a very significant reduction in the number of vehicles plying on the roads. This however would be a blessing in disguise for your Company. The eventual situation of higher demand for vehicles would work favorably and coupled with the inevitable freight rate hike caused by such policy implementation would lead to a higher margins for the Company. Also, given the internal expertise the company has on the vehicle maintenance front all useful spare parts from the vehicles getting scrapped would be available for usage apart from the one-time salvage income expected. It is pertinent to take note that any such scrappage would also not entail any hit to the Companys profitability as such older vehicles are fully depreciated.

Your Company has 842 vehicles which are more than 15 years old as of March 31, 2025 with a total capacity of 8331 tons i.e. 9.8% of total capacity & 13.8% of total vehicle count. The management has however ensured that orders for higher capacity replacement vehicles are already put in place.

THREAT

Fluctuations in fuel prices resulting from diesel de-regulation, lorry hire charges payable to third party vehicles and input costs especially those related to tolls as also others like rent, salary etc. have a significant bearing on the Companys profitability margins. These represent a significant portion of the operating costs and any inability to pass on the same in entirety affects profit margins adversely. In particular, the cost of fuel has increased in the recent years regularly and fluctuates significantly due to various factors which are beyond our control. Historically, due to low customer dependencies, the Company has been in a position to pass on predominantly or at times even completely such increases to customers through periodic increase in freight rates. However, the ever present volatility represents a considerable threat to our result of operations.

During the year the GST changes requisitioned the levy of GST on a reverse charge basis even on rented premises where the Lessors did not charge GST. This has brought all our branch offices under the purview of GST. We do not claim GST input due to our opting for the abatement option thereby our rental costs have significantly risen during the year and would continue to adversely impact us going ahead.

The Companys operations could also be affected owing to development of newer policies by the different State Governments of the country. To quote an example, several states / cities have prohibited the entry of commercial diesel operated vehicles that are beyond a certain age. This necessitates the shifting of older vehicles and deploying these over other permitted routes which entails a cost. Also, one can never be certain as to when similar decisions would be implemented across other States and major cities which could affect us adversely. The Companys business operations are totally dependent on the road network in India. There are various factors that affect the road network such as political unrest, bad weather conditions, natural calamities, regional disturbances or even third party negligence that can affect the condition of vehicles and cargo / passengers. Even though the Company undertakes various measures to avoid or mitigate such factors to the extent possible, some of these have the potential of causing extensive impact on operations and assets.

3. SEGMENT-WISE PERFORMANCE

Prior to the FY2022-23, the company operated in four segments namely:

1. Goods Transport 2. Bus Operations 3. Wind power

4. Transportation of Passengers by Air

From FY 2022-23, the company made a strategic decision to focus only on the High growth oriented Goods Transport Business. For FY2024-25, the revenue from operations increased by 9.43% from 2,88,862.03 lakhs to 3,16,094.8 lakhs. Including other income the total revenue increased by 9.51% from 2,90,971.85 lakhs to 3,18,640.65 lakhs

4. OUTLOOK

The gross GST revenue collected from April 2024 to March 2025 i.e. in the FY 2024-25 was 22,08,861 crore. After adjusting for refunds, the net GST revenue for March 2025 stood at 1,76,526 crore, registering a 7.3 percent year-on-year increase from 1,64,592 crore. (Source: Ministry of Finance) Further, mandatory e-invoicing being limited to Rs. 5 Crores and above from 01.08.2023 would further lay emphasis on even smaller entities on being more compliant. In the aftermath of the pandemic, financially strong and organized players stand to benefit at the expense of smaller and marginal players who dominate the industry. This was seen last year as well. The inherent strength in our business model ensures that the Company is not dependent on any particular customer or industry for its revenues. In these difficult times, the available drivers and vehicles are being selectively deployed for Full Truck Loads and Parcels depending on return load and ground level position as the situation warrants. We are transacting freight business coming our way and our entire team approaches existing customers as also potential customers for getting business. We are doing an internal review and are conducting focused state-region level meeting to increase the freight density in the local pockets for growth and we are encouraged by the response to such initiative. During the year 97 new Branches were added. The said increase in the branches contributed to increase of overall tonnage and the same is only expected to significantly increase in the days to come.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and the nature of its operations. The Internal Control function emanates at the Board level and its scope and authority of the Internal Audit function is well defined.To maintain objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the executive Chairman and the Managing Director. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies across the Company. Based on the report of internal audit function, process owners undertake remedial action in their respective areas and thereby strengthen the controls.

Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit

Committee of the Board.

As regards the operation of internal controls, majority of these have been inbuilt in the internal procedures established by the organization which are also documented internally. These include in details the methodology to be adopted right from transacting bookings, effecting consignment deliveries, etc. and also describes the practices to be followed for the smooth operation of business. Inspection teams are formed at the head officelevel as well as at the transshipment level and cover the entire branch network of the Company periodically for exhaustive inspection for adherence to the set procedure. Deviation from the laid down procedure is escalated to the Functional heads as also directly to the Executive Directors.

The Company had laid down guidelines, policies, procedures and structure to enable implementation of appropriate internal financial controls across the company. These control processes enable and ensure the orderly and efficient conduct of companys business, including safeguarding of assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and timely preparation & disclosure of financialstatements.

There are control processes both on manual and IT applications including ERP applications, wherein the transactions are approved and recorded. Review and control mechanisms are built in to ensure that such control systems are adequate and operate effectively.

Other control processes are IT driven and the in-house information technology capabilities ensure that due flexibility is available in the system to further strengthen controls as the case may be. Your management appreciates the need to remain efficient in its working and recognizes their responsibility in establishing controls as also effectively implementing them and monitoring their effectiveness on a periodic basis.

6. DISCUSSION ON FINANCIAL PERFORMANCE w.r.t. OPERATIONAL PERFORMANCE

( in lakhs)

Particulars	Year Ended 31st March, 2025	Year Ended 31st March, 2024
Revenue from operations	3,16,094.80	2,88,862.03
Other income	2,545.85	2,109.82
Total Income	3,18,640.65	2,90,971.85
Profit Before Finance Costs and	59,841.77	41,454.01
Depreciation
Finance Costs	9,483.75	7,786.48
Depreciation and Amortisation of expenses	25,362.46	21,616.30
Profit Before Tax	24,995.56	12,051.23
Tax Expense	6702.27	3,193.80
Profit for the Year(excludingother comprehensive income)	18,293.29	8,906.10

Note: All financial numbers for Continued Operations Goods Transportation

Revenue from operations increased by 9.43% from 2,88,862.03 lakhs in FY24 to 3,16,094.80 lakhs in FY25. Including other income the total revenue increased by 9.51% from 2,90,971.85 lakhs in FY24 to 3,18,640.65 lakhs in FY25."The improvement in turnover is primarily attributed to an increase in freight rates, with realization per ton rising by 9.48% while volumes remained stable. Alongside the freight hikes implemented in previous quarters, In

Q4FY25 we conducted a comprehensive review of business transactions and contracts, evaluating their margin contributions and potential impact on overall tonnage. Through this analysis, we identifiedand phased out certain low-margin operations, ensuring this optimization did not compromise tonnage growth. As a result, we achieved our highest-ever EBITDA and EBITDA margins in the current year." Further the margin improvement is also due to good control on Fuel Expenses, which is a major cost of operation in our business. We further increased the Bulk purchase quantity (as a percent of total quantity) from 28.84% in

FY24 to 37.54% in FY25. The fuel procurement cost per litre is reduced from 87.99 to 85.03. On overall basis the fuel cost as a % to the revenue reduced from 30.14% to 27.32%.

The improvement in the operational efficiencies in the current quarter also led to improvement in EBITDA margins: We saw major efficiency in effective utilisation of our own vehicles. This enabled us to have control on the dependency on hired vehicles. Due to the same, Lorry hire charges reduced as a percent to revenue from 7.71% in FY24 to 5.54% in FY25.

The rest of the expenses were more or less in line with the past trend but depicted a decrease when expressed as a percentage of revenue owing to higher freight realisation.

In absolute terms the EBITDA of the company increased by 44.36% from 41454.01 lakhs to 59841.77 lakhs. When expressed as a percentage to the total income for the year, the EBIDTA margin increased by 4.53% from 14.25% in FY24 to 18.78% in FY25.

Depreciation increased by 17.33% from 21616.3 lakhs to 25362.46 lakhs

In absolute terms the EBIT of the company increased by 73.81% from 19837.71 lakhs to 34479.31 lakhs. When expressed as a percentage to the total income for the year, the EBIT margin increased by 4% from

6.82% in FY24 to 10.82% in FY25

Interest Expense increased by 21.8% from 7786.48 lakhs to 9483.75 lakhs

In absolute terms the PBT of the company increased by 107.41% from 12051.23 lakhs to 24995.56 lakhs. When expressed as a percentage to the total income for the year, the PBT margin increased by 3.7% from

4.14% in FY24 to 7.84% in FY 25

In absolute terms the PAT of the company increased by 105.4% from 8906.1 lakhs to 18293.29 lakhs. When expressed as a percentage to the total income for the year, the PAT margin increased by 2.68% from

3.06% in FY24 to 5.74% in FY 25

The details of operating expenses as a percent to revenue is presented in the table below

YOY	FY25		FY24	Difference		Reasons
	(% to Revenue)			(%)
EBITDA	18.78%		14.25%	4.53%		Increase in Freight Rates and Discontinuation of low margin business leads to improvement in realisation and margins
Fuel cost	27.32%		30.14%	(2.82%)		Fuel consumption qty increased by 2.6%. Average purchase cost per litre of fuel reduced from 87.99 to 85.03. Bulk purchase from refineries as a percent of total quantity increases from 28.84% to 37.54%
Lorry Hire	5.54%		7.71%	(2.17%)		Decrease in long haul hired vehicle Kms due to improvement in kms by own vehicles
Vehicle Running, Repairs & Maintenance	4.89%		4.45%	0.44%		Increase in Kms covered by owned vehicles. Increase in driver incentives
Stores and Spares consumed		2.27%	2.38%		(0.11%)	Addition of new vehicles. Percentage maintained.
Tyres, Flaps and Re- treading		2.39%	2.30%		0.09%	Addition of new vehicles. Percentage main- tained.
Bridge & Toll expenses		7.75%	7.94%		(0.19%)	Increase in number of Toll Plazas from 1383 to 1727 across India, increase in Toll Rates and Increase in Kms by Owned vehicles. the per- centage to revenue is decreased due to freight hikes
Rent		2.37%	2.04%		0.33%	Addition of new branches. Expansion in exist- ing branches/TPT area and renewal of Lease Agreements. Part of rental expenses are ac- counted as Depreciation and Interest expenses under Ind As 116
Hamali (Loading & Unloading charges)		6.60%	6.73%		(0.13%)	Increase in Loading and Unloading charges. However Percentage is maintained due to freight hikes
Employee Cost		17.11%	16.67%		0.44%	Increase in number of employees due to addi- tion of new branches & Internal promotions on selective basis
Other Expenses		4.97%	5.40%		(0.43%)	Percentage to revenue is decreased due to freight hikes
Depreciation		7.96%	7.43%		0.53%	Increase in Capex and Increase in ROU on account of addition/expansion of new leased branches/TPTs area
EBIT		10.82%	6.82%		4.00%	Due to increase in EBITDA
Finance Costs		2.98%	2.68%		0.30%	Increase in debt and Increase in lease liabil- ity on account of addition/expansion of new leased branches/TPTs area.
PBT		7.84%	4.14%		3.70%	Due to increase in EBIT
PAT		5.74%	3.06%		2.68%	Due to increase in PBT

On a year-over-year basis, we expanded our network by adding 84 new branches, which collectively contributed approximately 1% to the overall tonnage. Concurrently, we rationalized our footprint by closing 40 branches, after careful evaluation indicated that their business potential could be effectively serviced through adjacent branches.

This strategic optimization reflects our continued focus on operational efficiency and resource consolidation." .

Apart from this there was an expansion of existing Branch Area/TPT area in key markets. Going further, we plan to open more number of branches in the untapped markets. Our strategy of expansion of branch network is going to continue and we plan to add around 25 - 30 branches every quarter, especially in untapped markets. The below GRAPH depicts the increase in number of branches from FY 2021-22 to FY 2024-25.

Apart from this, the management of the company has undertaken many steps to control the key operational costs such as increase in quantity of bulk purchase of fuel directly from the refineries, Key route mapping to minimise the number of loading and un-loadings which resulted into optimise utilisation of our own vehicles and drastic reduction on dependency of the hired vehicles.

Our customer base increased to ~9 lakhs. We believe that the continuous shift of customer base to VRL from unorganized sector will be maintained as compliance requirements becomes stricter under GST.

On the fleet side, we added 457 vehicles of different capacities in line with our expansion plans to garner more market share and also reduce dependency on third party vehicles. Net addition post scrappage was 121 Vehicles.

Number of vehicles increased from 5944 vehicles in FY 24 to 6115 vehicles in FY25. The below chart illustrates the capacity wise breakup of our vehicles as on 31.03.2025

Total vehicles carrying Capacity is 85261 tons in FY25 as compared to 86405 tons in FY24

Apart from this we are also currently operating with 216 Trailers with a total capacity of 5433 tons.

Capacity Breakup as on Mar 31, 2025

- excluding Cranes(14) and Tankers(23)

Capex: The strong cashflow mainly through the internal accruals of the company led to robust expansion plans of the company. The current year strong cash flows enabled us to make major capex of44366 lakhs including investments in purchase of properties at Bengaluru, Mysuru and Mangaluru along with the routine Capex on the

Vehicles. The Investments in Bengaluru Transhipment is having its own business advantages with better financial metrics . The table below highlights the foresight and strategic rationale behind our investment in the Bengaluru property—an initiative driven by long-term growth ambitions, logistical advantage, and value creation potential. This forward-looking decision aligns with our vision to enhance operational resilience and future scalability.

Property Details
Total Land Area (sq mtr)	112401.36
Total Building Area (sq mtr)	48221.78
Land Value (in lakhs)	17819.53
Building Value (in lakhs)	5292.25
Total Investment (in lakhs)	23111.78
Funded through Debt (in lakhs)	18500.00
Funded Through Internal Accruals (in lakhs)	4611.78

 

Financial Benefits	( in lakhs)
Reduction in Annual Rent expenses (incl GST)	1571.43
Third party Rental Income	148.65
Realisation of Rent Deposit	900.00
Due recovery of our investments made over the years in useful amenities such as internal Road	330.58
work, Fuel station, Weigh bridge, Solar installation, STP etc
Reduction in ROU (IND AS-116)	2744.46
Reduction in Lease Liability (IND AS-116)	2902.64
Land value which is is Non depreciable	17819.53
Low Cost Debt @ 8.6% p.a

BUSINESS ADVANTAGE

A readymade setup for our Satellite workshop which can now be scaled up and fitted with requisite advanced vehicle maintenance infrastructure Increase in storage facility by creating Vertical storage stacks Usage of Mechanisation to reduce dependency on Loading/Unloading Workforce. The said hub is located right along the Mumbai – Bengaluru (NH-4 / AH 47) and offers unmatched connectivity to the southern states. It is ideal from a surface logistics point of view connecting the Southern states to Western and Northern India The size and location of the property make it ideal for future expansion plans to support the Companys growth objectives The said hub is critical to the Companys South India operations. On an average around 3000 tons gets handled at this transshipment hub daily

Analytical Ratios:

Particulars	As at March 31, 2025	As at March 31, 2024	Change %	Reason for more than 25% change
Return on Equity	18.02%	9.25%	94.86%	Due to improvement in profits for the year
Net capital turnover ratio	(22.73)	(16.26)	39.79%	Due to improvement in Trade Receiva- bles, Cash and Cash equivalents and Other Current Assets more than propor- tionate increase in Turnover
Net Profit Ratio	5.79%	3.08%	87.71%	Due to improvement in profit for the year.
Return on Capital employed	14.42%	9.70%	48.72%	Due to improvement in profit fortheyear.
Current Ratio	0.64	0.54	19.34%
Debt - equity Ratio	1.13	1.10	3.24%
Debt Service Coverage	0.40	0.34	17.65%
Ratio
Trade Receivables turno- ver ratio	30.22	29.35	2.97%
Trade payables turnover ratio	35.34	28.71	23.09%
Return on Investment	7.32%	8.01%	(8.70%)

7. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT EMPLOYEE

DATA

The total employee strength of the Company as of 31.03.2025 was 22236. Given the nature of operations, a significant portion of the said employee strength comprises of drivers, cleaners, garage mechanics and other unskilled employees. Despite the large number of employees as also considering the widespread geographical operation of the Company, your management feels proud to state that the employer – employee relations remained extremely cordial throughout the year. There were no instances of strikes, lockouts or any other action on part of the employees that affected the functioning of the Company. It is noteworthy that there is no Employee Union / Trade Union / Union within the organization.