Hubli-based logistics major VRL Logistics has raised Rs 175 crore from New Silk Route (NSR), an Asia-focussed private equity fund. The company plans to use the funds to retire its high cost debt amounting to Rs 100 crore and also fund expansion plans.
“After deferring our public offer plan last year due to the unfavourable market conditions, three to four investors had approached us for investing in our company. We have now signed the agreement with NSR and raised Rs 175 crore. The purpose is to clear our high cost debt, which is of the order of Rs 500 crore raised from select banks and financial institutions. We will also use part of the funds for our expansion plans,” Vijay Sankeshwar, chairman, VRL Logistics, told Business Standard.
Explaining why investing in VRL was an attractive proposition for NSR, he said: “Logistics is a risk-taking, ‘daredevil business’. It takes a long time to establish the business. Today, VRL has a vast network with wide-ranging services from goods transport to passenger services. There are no real competitors to us in this business because we are the only company to provide both goods transport solutions and passenger services. No other logistics company has more than 600 trucks in their fleet, while we operate 3,200 trucks and 460 buses.”
He said there is no other logistics company that can match the kind of pricing, quality of service, personal care, wide reach and network that VRL offers. Today, VRL Logistics has 1,000 branches across the country.
To begin with, VRL intends to retire Rs 100 crore high-cost debt borrowed from the banks and financial institutions. Out of the remaining funds, it plans to buy property for its logistics business at various places and also buy new vehicles.
“For the fiscal 2012-13, we are yet to prepare our purchase plan. But, we intend to spend at least Rs 20 crore on new vehicle purchase this year and another Rs 100 crore on purchase of property in Delhi and Bangalore,” he said.
Presently, VRL operates 3,200 trucks and 460 buses for its goods transp-ort and passenger businesses. It plans to buy more trucks and buses this year to expand its fleet.
“We already operate a transshipment yard outside Delhi with 160,000 sq ft area. But this facility will be insufficient to meet our growing requirements after 2-3 years. So, we are looking to expand this facility by adding additional space. We are also planning to set up a transport hub at Bangalore for which we need 50 acres,” Sankeshwar said.
With the purchase of some multi-axle buses from Volvo recently, VRL has started long-distance trips like Bangalore-Shirdi, Bangalore-Ahmedabad, Bangalore-Hyderabad and Mangalore-Hyderabad.
The company ended fiscal 2011-12 with a turnover of Rs 1,130 crore, showing a growth of 26.6 per cent over the previous year. Of this, the bus segment contributed Rs 220 crore to the topline.
Apart from the logistics business, VRL also operates a charter flight and has interests in wind energy in north Karnataka.
It recently re-entered the media business with the launch of a Kannada newspaper, Vijaya Vani. The paper, now published from four centres with a print run of 140,000 copies per day, will be expanded to six other centres in the next two months, Sankeshwar added.
