VRL Logistics Ltd Management Discussions.


Road transport in India is dominated by the Full-Truck-Load (FTL) segment, which makes up around 88% of the road industry size, due to low entry barriers. While the FTL business is commoditised, the road express business (2%) requires setting up of a strong network to get adequate tonnage and be profitable. Less than truck load (LTL) is about 10% of the road transportation sector and it is more profitable than FTL. Indias USD 100 bn road logistics market has clocked 9-10% CAGR over the past decade. It is believed that with the increased economic activity, current & future mix of rail and roads in surface transport, supported by positive regulatory changes and infrastructure investments will lead to the sector posting CAGR of around 10% to around USD 190 bn by FY25. A key trend that one can observe in the past 12-18 months, is that post GST there has been a beginning of a shift from FTL to LTL business. This is mainly due to the customers demanding quicker and smaller truck loads directly to distributors rather than multiple warehouses that are situated in every state.

The road transportation sector is highly fragmented with the presence of a large number of unorganised small truck operators. It is estimated that over 70% of truck owners in India have a fleet size of between one and five trucks. Truck operators are heavily dependent on intermediaries such as brokers and booking agents. The handlers hold a dominant position in pricing freight rates, shrinking margins of truck operators. Consequently, pure road transportation or trucking lacks pricing power and has low ability to pass on rising fuel and other costs. Larger fleet owners are obviously much better placed due to a large client base which they use to optimise utilisation and achieve better margins. On per kg basis, LTL has relatively higher margin compared to FTL as the customer has relatively low bargaining power. Established players who have large fleets of about 1,000 plus trucks are able to venture into the high margin LTL business.

Logistics in India is no longer a business process, it has become an integral part of the value chain operations.

The domestic logistics sector is set to grow at 8-10 per cent over the medium term with the outlook remaining largely stable, as per ratings agency ICRA. Union Budget 2020 was considered positive to raise transportation conditions and logistics infrastructure.


However, India is facing several challenges amid its own country-wide lockdown: labour shortages, cargo capacity challenges, a manufacturing slowdown, order delays and stuck shipments, and demand and supply shocks. Indias real gross domestic product (GDP) is at its lowest in 6 years because of the COVID-19 standstill adversely affecting consumption and investment in the Indian economy. Even as the government has announced some relief in the lockdown, inland logistics companies volume is likely to fall 10-15 per cent in the financial year 2020-21 as the consumption demand could take a longer time for recovery, according to India Ratings. It is expected that operational recovery for logistics players will be gradual and prolonged over 2020-21.

The manufacturing halt has reduced demand for logistics services, which likely will result in downward pressure on prices across warehousing, freight, and logistics. With countries around the world imposing lockdowns, minimal export-import movements have amplified the crisis in the logistics space.

Restriction of air travel and international flights globally has contributed to the slowdown in the movement of goods, and Indias lockdown brought first- and last-mile transportation and intermodal movement of goods to a standstill.

Despite logistics being categorised as essential services, we expect volumes to decline, given the first-mile (cargo evacuation from port) and the last-mile (supply-chain between inland container depots to company warehouses) challenges. Severe shortage of labour and drivers along with health safety environment (HSE) checks at ports for foreign vessels may lead to congestion at ports/depots, which may impact their efficiencies," it said.

Post lockdown, consumer sentiment will not be very positive and they may not spend out of the way for non-essential goods. Inventory of non-essential products at retail shelves and supply chain channels will be same as of pre-lockdown period. Moreover, there may not be a festive season leading to surge in sudden demand of consumer electronics, white goods and apparel or lifestyle products.

On the other hand, we foresee shortage of drivers and handlers after lockdown. Shortage of drivers will reduce the availability of available trucks for loading and such scenario can create a gap in demand and supply of trucks. So post lockdown, without any real surge in demand, shortage of trucks and surge in freight rates are expected.

In case of essential goods (grocery/FMCG products) off take from retail may slightly go down for some time, as end consumers have a tendency of keeping high inventory at time of crisis. Such consumer behaviour is visible in current crisis, which means immediately after lockdown there will not be huge pull from customers instead the demand for inventory replenishment at retail will prevail.

The pandemic also presents the possibility of invocation of force majeure clause which may increase contingent liability risk. In an economic downturn, logistics players not only face a lower demand for their services but also are exposed to the risk of a fall in market tariffs/rentals. Even in cases where revenues are backed by medium- to long-term contracts, unprecedented events such as a global pandemic, often allows the counterparty to invoke force majeure provisions. The likelihood of such an event and its impact varies significantly across businesses depending on the credit profile of their counterparty, performance

of the industry and the nature of services provided by them.

As the overall level of economic activity remains subdued, The overall demand for freight transportation services is expected to contract in 2020-21. Also, the impact on profitability and cash flows is uncertain due to lack of clarity over realisations, cost reduction initiatives taken by players, and government support. Meanwhile, new CAPEX and infra projects may be postponed due to weak liquidity and poor economic scenario. This will impact negatively on road transportation sector.

The trucking industry in India will be impacted by Covid-19 as stated above but is expected to grow much faster. The truckers who have bought trucks with 50-100 percent institutional finance will see a tough time and need to maintain 90 percent capacity utilisation for upcoming EMIs, Insurance premiums & Permit with same freight cost despite high diesel cost. This is due to disturbed production-consumption cycle with only 30 percent of trucks operating with cut-throat competition for loads. Increasing Demand of e-commerce products, growing Reefer trucks, technical innovations such as E vehicles, Fleet Management Software and more are disrupting the competition space.

However proactive initiatives under taken by government may help in reversing the existing trend.

1. Increased government spending

The government under the budget of 2020-2021 has allocated 170,000 crore for transportation which is 8 percent higher than the budgetary allocation of 2019-2020. The National Infrastructure Pipeline for 2019-2025 pegged the projected capital expenditure for Transportation (covering roads, railways, ports and airports) at about Rs 35.7 lakh crore. Various efforts include Bhratamala Pariyojana and the Sagarmala Project and Bangalore suburban transport project.

2. High seasonal demand variation

The demand for trucking in India is the highest during festive months (Sept, Oct, Nov, and Dec) and harvesting months (February to April) where the occupancy of trucks can rise by 30-40 percent along with freight fluctuations of 6-7 percent in comparison to normal freight rates prevailing in the trucking Industry.

3. Change in government regulations

The government is constantly changing the regulations associated with trucking industry such as restriction of trucks above the age of 15 years to phase out older & polluting vehicles from the country. GST has shifted all manual transactions to digital mode with e-way bills and Fastags ensuring more transparency into the system. The government has even revised Axle norms to increase load capacity that has increased the load capacity of the Individual Vehicles and also overall carrying capacity of the Vehicles has been improved.

India Logistics Sector has witnessed a robust CAGR with the highest share to freight forwarding market followed by warehousing, courier parcel and express market and VAS Market. Road freight is the dominant mode with transportation to domestic flow corridors and international neighbouring countries also. Many real estate developers such as Indospace, Logos India, ESR and many more are making constant investments in the warehousing market in Gurgaon, Chennai and Mumbai. E-commerce sector is becoming extremely popular with the introduction of online payments such as Amazon Pay, Paytm, Gpay and new popular delivery apps.

Small fleet owners (SFO) dominated industry (70 percent of all fleet) operating at a margin of 8-12 percent and average transaction days of 12-15 per month.Indian road freight market has witnessed an average CAGR during 2014-19 due to revision in BS VI norms, scrappage policy, GST and new axle norms from the government with a rise in average highway construction of roads.

The developments of Bhratamala Pariyojana and the Sagarmala projects and the Eastern and Western Dedicated Freight Corridors, developments of ports along with Public-Private partnership Projects has stimulated the growth in the market. On the front of assessing seasonality fluctuations in demand, freight rates usually high during the festive season in September- December.

Technology is changing the landscape of road transport in India. Various startups are using more intensive technology to provide real-time tracking of trucks, increased transparency and accuracy with regard to delivery times and more efficient capacity utilisation. Due to tech-enabled scheduling of loads, the use of middlemen is reducing and resulting in higher efficiency. We can see the apparent benefits of new tech-based business models; however, it poses a threat to established road transport companies and forces them to come up with innovative solutions to hold their market share.



VRL is a well-established brand in the country when it comes to surface transportation and the industry leader in the parcel transportation space. It is also the leading name in the private bus operations industry and with a track record of over four decades, VRL has large size and scale of operations and operates on a pan India basis. 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 acclaiming this fact. Apart from the movement of General Parcel, the surface transportation operations also cover other services such as Full Truck Load (FTL), Priority Cargo Services, Car carrying as also Air Cargo to a limited extent.

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. The Company presently operates across 22 States and 5 Union Territories in India and its reach is unmatched for the offering of LTL goods transportation services. 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 in terms of service levels and safety of consignments.

The above figure depicts the ‘Hub and Spoke consignment delivery model followed by the Company. The policy at VRL is to own its vehicles for offering LTL services as also own significant infrastructure 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 fleet internally 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.

Your Company also benefits from in-house research and development with a capability to try 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.

Your Company also benefits from the recent revision in Safe Axle Weights for Goods Transport vehicles by the Transport Division of Ministry of Road Transport and Highways which permits the carrying of higher weight on a Goods Transport vehicle thereby increasing its payload. In combination with own vehicle body designing facility 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.

Your Company also has a very well diversified customer base. During FY 2019-20, the Companys largest customer and the top 10 customers put together contributed only 1% and 4% of the revenues of the Goods Transport business respectively. This has ensured that the Company has no dependencies on any customers or product categories. Similarly, there are no geographical or product related dependencies for the business which better insulates your Company vis-a-vis competition.


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. The Company offers a good work environment as well and also takes care of their skill development by conducting routine training programs as well as 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 Hubballi, Mumbai, Mangalore, Mysore, Bhilwara, Vijayapura, Gangavati, Surat and Davangere. Long term leases have also been entered into at key locations such as Chennai, Delhi,

Hyderabad, Bengaluru, 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 enables the Company to scale up its service levels. Setting up such 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 consider gradually expanding its owned infrastructure at such key locations in the years to come.

Covid-19 is being harped upon by one and all as one of the biggest threats to every business worldwide and the same is true, albeit only in the near short and medium term. Human beings have lived through several such catastrophes as also pandemics and the facilities, technology as also infrastructure would place todays world in a much better position to cope up and overcome the aftereffects of this pandemic in the days to come. One of the positives emanating out of this occurrence is that people would be more aware and sensitive to their individual health and well-being and this would ensure that the human resources in general would contribute more to their respective organizations in a much better manner in the days to come.


Financial year 2020-21 is bound to be a one-time blip for all major business houses of the country and your Company would not be an exception to this. Freight volumes Operations however increasing and are bound to surpass pre-Covid-19 days in the near short term. This is so because being organized enables your Company to better handle the ongoing scenario as also many of the unorganized smaller operators have already shut shop as they were unable to cope up with the financial stress the pandemic presented. We in fact remain quite optimistic of the possibility of relatively higher volumes coming your Companys fold in the days to come.

Your Company expected to benefit out of the GST implementation. The same however could not happen due to several causes. The existing provisions of E-way Bill and GST Law needs to be further strengthened and monitoring of the compliances level needsto be improved further to mitigate the transactions with non-compliancesin the existing system. The Covid-19 pandemic did bring in a lot of financial burden to small fleet owners and many of them have closed their business and resuming normal service in the near future by these operators seems difficult. This is bound to ensure that the freight business being handled by them would be shifted to organized transporters like us. We do expect to now see some actual volume growth which was expected at the initial stage of GST implementation. We maintain that there would a marked shift in the operating model of surface transporters in the country and the hub-and-spoke model would find a lot of following in the Indian context. Your Company has been operating on a hub-and-spoke model all along and its experience and expertise in the movement of LTL parcels is unmatched which has enabled it to be at the very helm of this business in India.

Your Company also has successfully implemented processes within the operations to ensure full compliance with the GST and E-way bill requirements. With in-house IT the Company is also expected to benefit from monetizing this capability to smaller vendors in the industry.

Your Company also has successfully obtained the requisite approvals from the respective RTOs and is now well poised to reap the benefits under the recent revision in Safe Axle Weights for Goods Transport vehicles by the Transport Division of Ministry of Road Transport and Highways which permits the carrying of higher weight on a Goods Transport vehicle. As of date, majority of the high capacity tonnage vehicles have been approved thereunder and these vehicles will be effectively used to carry the additional load as compared to the earlier periods. The same is expected to benefit your Company in the coming days.


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. In the coming days, the same would be a daily phenomenon. 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 or bus ticket prices. However, the ever present volatility represents a considerable threat to our result of operations.

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.

Also, protectionism policies in respect of passenger buses being considered by a few states could also affect the passenger travel business. We however have adequate strength in our business model to overcome any such developments albeit the same could have a bearing on associated costs. Needless to say, the inherent business model of the Company ensures that your Company is much better placed as against its competition in this regard.

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.


The Overall revenues of the company Company increased by 0.54% during the current year in comparison with the earlier year.

Goods transportation revenues recorded a growth of 2.29%. The said growth is the result of a growth in the freight volumes.

The revenues of Bus Operations division recorded a decrease of 9.63% due to fleet reduction. Despite fleet reduction, the realization per passenger and occupancy rates combination resulted in better yield visa-vis the earlier fiscal.

The Wind Power division of the Company recorded revenues of 1864.74 lakhs, a decrease of 15.57% due to reduction in installed capacity

The Transport of Passengers by Air divisions recorded revenues of 1982.34 lakhs as against corresponding revenues of 1072.22 lakhs for the previous year.


With the GST and related E-waybill implementation organized players will stand to benefit and the smaller and unorganized players need to step up and meet the compliance requirements which appears very difficult given the present day scenario which is only further aggravated by the Covid-19 Pandemic. We expect that further stabilization of the GST regime will usher in a new era for our industry. Similarly we now expect better utilization and revenue realization per vehicle for our Goods Transport Vehicles in view of the recent revision in Safe Axle Weights for Goods Transport vehicles which permits the carrying of higher weight on a Goods Transport vehicle thereby increasing its payload.

On the passenger bus operations front, we expect that the legislative changes will gradually make way for organized players to sustain and the present day unhealthy competition to wane in the coming days.

The “asset ownership” model operated by the Company coupled with its nearly 20000 employee base presents significant monthly Fixed costs which need to be absorbed by the operating revenues. The revenues are meagre for the months of April and May and June is expected to be no different given that the Brick and Mortar businesses are labour dependent and the present mass labour movement poses production challenges for our clients. Thereby the management of the Company expects the results for the first quarter of FY 2020-21 to be discouraging. We expect the Company to report significant financial loss for this period.

The inherent strength in our business model ensures that the Company is not dependent on any particular customer or industry for its revenues. During FY 2019-20, the Companys largest customer and the top 10 customers put together contributed only 1% and 4% of the revenues of the Goods Transport business respectively. In these difficult time, the available drivers and vehicles are being selectively deployed for Full Truck Loads and Parcels depending on return load and other ground level position as the situation warrants. We are transacting freight business coming our way and our entire team has existing customers as also potential customers for getting business.

The Company has not availed the option to postpone the repayment of the principal amounts due on its outstanding loans. The Company has honoured its debt service obligations in a timely manner and would continue to do so in the days to come. This itself is demonstrative of the faith and positive outlook that your management has on the Company.

Going ahead, we believe that we need to live through with the Corona virus and find ways and means to overcome the challenges it presents. Historically, man has overcome every such pandemic and the adverse economic effects of these are at best temporary. Our Company is financially strong and well placed to overcome this temporary setback. From the second quarter onwards, we expect the recoupment of losses. We expect the business volumes to start picking up significantly from August 2020 onwards and the restoration of freight volume normalcy by the last quarter of this fiscal.

Any quantification of financial results as of now would be at best guesswork and we do not wish to quantify these as the ground realities are dynamic and would render any estimation ‘off-mark in hindsight. Financial year 2020-21 is indeed an aberration in the history of this Company and a one-off year of abnormality. We expect the resumption of healthy financial growth from the next fiscal onwards.


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 corrective 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 in the Procedure Manual. The said manual describes 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 office level 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 financial statements. There are control processes both on manual and IT applications including ERP applications, wherein the transactions were approved and recorded. Review and control mechanisms are built in to ensure that such control systems are adequate and operating 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 their workings and recognized their responsibility in establishing controls as also effectively implementing them and monitoring their effectiveness on a periodic basis.


Particulars Year Ended 31st March, 2020 Year Ended 31st March, 2019
Total Income 2,12,885.65 2,11,746.82
Profit Before Finance Costs and Depreciation 30,858.48 25,191.92
Finance Costs 3,673.67 1,086.37
Depreciation and Amortisation of expenses 16,753.43 10,058.09
Profit Before Tax 10,431.68 14,047.46
Tax Expense 1,420.19 4,855.85
Profit for the Year(exclusive of other comprehensive income) 9,011.49 9,191.61

The revenue from operations increased by 0.43% from 2,10,954.40 lacs to 2,11,853.97 lacs. Including other income the growth rate increased by 0.54% from 2,11,746.82 lacs to 2,12,885.65 lacs.

EBITDA of the company for FY 2019-20 was 30858.48 lacs. On account of Ind AS-116 the EBITDA of the Company increased by Rs 8393.53 lakhs. The Company has adopted Ind AS 116, Leases, effective 1 April 2019, using modified retrospective approach, wherein comparative information are not required to be restated. The details of the same are as below:


• Effective 1st April 2019 the Company adopted Ind AS 116 , Ind AS 116 which requires a lessee to recognize right of use ( assets and lease liabilities for all leases with a term of more than twelve months) unless the underlying asset is of a low value

• Ind AS 116 has been applied using modified retrospective approach wherein the cumulative effect is recognised at the date of initial application i.e., as at 1st April 2019. The lease liability is measured at the present value of the balance lease payments, discounted using the lessees incremental borrowing rate at the date of such initial application. The ROU assets have been recognized in a manner, using the aforesaid borrowing rate, as if the Standard had been applied since the lease commencement date, reduced by the amortization upto the date of initial application.

The adoption of this new standard resulted in measurement of lease liabilities at 27047 lakhs and recognition of ROU assets at 24624 lakhs by adjusting retained earnings to the extent of 1911 lakhs (net of tax), as at transition date, including adjustments for prepaid rent balances, lease equalization reserve, etc. as at such transition date.

• As a part of the Lease accounting, further, the Company recognized interest expense of 2521 lakhs on lease liability and depreciation of Rs 6441 lakhs on ROU assets, for the current year as against rent expense of 8393 lakhs that would have been recognized had Ind AS 116 not been adopted, resulting in profit before tax for the year ended 31 March 2020 being lower by 569 lakhs.


• As a result of the above, EBITDA of the company increased to 30858.48 lacs. On account of Ind AS-116 the EBITDA of the Company increased by a sum of 8393.53 lakhs.

• The EBIT of the company has decreased by 6.80% from 15133.83 lacs to 14105.05 lacs. Owing to the Lease adjustment as detailed above, depreciation increased by 66.57% from 10058.09 lacs to 16753.43 lacs.

• The PBT of the company has decreased by 25.74% from 14047.46 lacs to 10431.68 lacs. In percentage terms, this margin decreased by 1.73% from 6.63% to 4.90% while Interest expense increased from 1,086.37 lacs to 3,673.37 lacs. On account of Ind AS-116 the PBT of the Company decreased by 568.76 lacs and in percentage to Revenue by 0.27%.

• The PAT of the company has decreased by 1.96% from 9191.61 lacs to 9011.49 lacs. Margins decreased by 0.11% from 4.34% to 4.23%. On account of Ind AS-116 the PAT of the Company is decreased by 425.61 lacs (net of tax) and in percentage to Revenue by 0.21%.

Goods Transport (GT)

GT revenue increased by 2.29% from 168601.88 lacs to 172469.20 lacs. Tonnage increased by 6.18%. The growth in

tonnage was impacted by the lockdown towards the end of March 2020, given that the month of March historically has been

a productive month for the entire logistics industry. As a result, tonnage which grew by 8% upto 9MFY20 was restricted to

6.18% in FY20 due to restricted movements in Q420.

GT EBITDA of the company has incr. 23006.01 lacs in absolute terms while

margins increased by 1.17% from 12.17% to 13.34%. On account of Ind AS-116 the EBITDA of GT segment is increased by 7666.64 lakhs and in percentage to revenue by 4.45%. EBITDA margins were also impacted by the fixed costs that the company incurred during lockdown, such as Rent, Salary, Vehicle taxes, enroute expenses and Compensation charges paid to drivers and labour. All these expenses were incurred in spite of vehicles being stationery during the lockdown period. Apart from this, procurement of fuel also increased, as company operated its own vehicles and cut down on dependence on hired vehicles. Fuel expenses as a percent to total GT income increased by 0.17%. This was compensated by decrease in Lorry hire expenses by 1.84% as a percent of total GT income. Toll expenses also increased by 0.56% as a percentage of total GT income, due to reduction in cash back for usage of Fast tags from 5% to 2.5% and also due to higher distance covered by company vehicles. Other Expenses that impacted the margins besides fuel costs were Repairs & Maintenance, Insurance charges, Hamali charges and Tyre costs.

Passenger Travel (PT)

PT revenue decreased by 9.63% from 38032.74 lacs to 34371.06 lacs. The decrease in revenue is due to decrease in number of buses from 381 to 337, leading to decrease in the number of passengers travelled by 14.4% and decrease in number of trips by 10.2%. Realisation per passenger increased by 5.76%. Also, during the latter half of March 2020 the buses were stationery and did not yield any revenues as such.

PT EBITDA of the company increased from Rs4136.27 lacs in FY19 to 4863.98 lacs in FY20. On account of Ind AS-116 the EBITDA is increased by 726.89 lacs in FY20. EBITDA Margins increased by 3.28% from 10.88% in FY19 to 14.15% in FY20.

In spite of decrease in the number of buses, EBITDA of PT increased, on account of increase in realisation per passenger by 5.76% and also due to route optimization leading to healthy margins. Such higher realization compensated the adverse

movement in other operational costs as a percent of PT income such as Fuel costs, Toll charges, Insurance and Taxes, Employee costs, etc.

Wind power

Sale of Power decreased by 15.57% from 2208.51 lacs to 1864.74 lacs. There were local disturbances at the Wind Power site including disruption of 33 KV transmission lines. Such disruption was during the peak season. The matter has been taken up with Suzlon and the Company expect to be compensated for such losses in the ensuing fiscal. Also one of the Wind Mill was defunct due to mechanical failure thereby reducing the installed capacity by 1.25 MW.

Transport of Passengers by Air

Revenue from this segment increased by 84.88% from Rs 1072.22 lacs in FY19 to Rs1982.34 lacs in FY20 due to increase in revenue flights during the year.

Cost saving measures

During the year we have initiated few key cost saving measures as under:

- Usage of Bio-fuel (28.03% of total quantity in FY20) and procurement of fuel directly from refineries, Redemption benefits have helped in curtailing Fuel expenses.

- The Company benefitted from revision in axle load norms for the Goods Transport vehicles. Accordingly as of today majority of the vehicles have been certified and approved by the respective RTO Authorities to carry the additional load as permitted by the Government. On account of this the utilization levels of the existing vehicles have been improved and also realization per trip is increased as compared to the earlier period.

- Introduction of Fast tags on all our vehicles resulted into lower advance amounts for trip expenses as also resulted in our availing a considerable discount on the toll costs

- A conscious branch profitability study was initiated and measures were taken to close 81 non performing GT branches, while adding 49 new GT branches. This not only helped in our saving costs, but also resulted in consolidation of operations without affecting Goods Transport business turnover.

- We also laid due emphasis on prioritizing the deployment of our own fleet thereby reducing dependence on outside vehicles. During the year there was a significant decrease in the distance covered by outside vehicles vis-a-vis the earlier year. To ensure quality of service we have also commenced GPS tracking of outside vehicles.

Significant changes to key financial Ratios:

Barring Debt Equity ratio, Current Ratio and Interest Coverage ratio there was no significant change to the other key financial ratios, i.e. Debtors Turnover, Inventory Turnover, Operating Profit margin and the Net profit margin.

The Debt Equity ratio was 0.2 as of March 31, 2019 and the same increased to 0.3 as of March 31, 2020. The same is the result of meeting capex by raising debt. During the year the Company raised loans, predominantly to finance the purchase of Goods Transportation Vehicles.

The Current ratio of the Company decreased from 1.38 as of March 31,2019 to 0.69 as of March 31,2020. This is due to lease liability of 8389.82 lakhs

Return on Net Worth

The Return on net worth increased from 14.22% for the financial year 2018-19 to 14.28% for the financial year 2019-20


The total employee strength of the Company as of 31.03.2020 was 19698. 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.