VRL Logistics files for IPO; New Silk Route to part-exit

Goods and passenger transport services provider VRL Logistics has filed its draft red herring prospectus (DRHP) to raise up to Rs 142 crore ($22.5 million) through a fresh issue besides an offer for sale which would see its private equity backer New Silk Route (NSR) part-exit.

This would make it yet another PE-backed firm queuing up for a public float and second NSR-backed firm to tap on to the public market. While NSR is looking to part-exit from VRL it is looking to fully exit Ortel Communications.

Here's a snapshot of the IPO

* Public issue to raise Rs 142 crore through issue of fresh shares besides offer for sale of 17.1 million shares by NSR and promoters.

* Overall issue to comprise 25 per cent of the total equity base.

* Bankers: ICICI Securities and HSBC Securities.

* VRL had previously filed its DRHP in December 2010 but did not go ahead with the IPO.


* VRL is a pan-India surface logistics and parcel delivery service provider. Its operational infrastructure for the goods transportation business as of September 30, 2014 comprised 603 branches (comprising 583 leased branches and 20 owned branches) and 346 agencies across India, and of such 603 branches, 48 (41 leased branches and seven owned branches) served as strategic transshipment hubs.

* Its goods transportation service business serves a broad range of industries, including FMCG as well as other industries, including food, textiles, apparel, furniture, appliances, pharmaceutical products, rubber, plastics, metal and metal products, wood, glass, automotive parts and machinery.

* The firm operates through a hub-and-spoke model and as of September 30, 2014, its goods transportation fleet included 3,446 owned vehicles, majority of it owned by the firm. Of this, 1,142 vehicles were less than five years old, 2,336 were debt free and 1,239 were fully depreciated.

* It also provides luxury bus services across the states of Karnataka, Maharashtra, Goa, Andhra Pradesh, Telangana, Tamil Nadu, Gujarat and Rajasthan and operations are focused on high density urban commuter cities such as Bengaluru, Mumbai, Pune and Hyderabad, and also connects tier-2 and tier-3 cities. As of September 30, 2014, it owned and operated 467 buses (including 48 staff buses), of which 407 were less than five years old, 75 were debt free and five were fully depreciated. As of September 30, 2014, it had 85 branch offices (of which 78 were leased offices and seven were owned offices), 748 agencies and 389 prepaid agencies for the bus operations business.

* The firm also operates car carrier vehicles for transportation of cars, vehicles for liquid transportation, as well as a courier service business across Karnataka. It also has minor business interests in wind power, air charter services and hospitality.

* As of September 30, 2014 it had 13,851 employees, including 4,283 drivers (but excluding line drivers).


Goods transportation is the primary business and revenue from such business in fiscal 2012, 2013, 2014 and the three months ended June 30, 2014 was Rs 858.5 crore, Rs 987.8 crore, Rs 1,128.1 crore and Rs 300 crore, respectively, representing 75.95 per cent, 74.52 per cent, 75.52 per cent and 72.96 per cent, respectively, of the total revenue.

General and priority parcel services represented 91.75 per cent, 89.15 per cent, 88.51 per cent and 86.38 per cent of its goods transportation revenue in fiscal 2012, 2013, 2014 and the three months ended June 30, 2014, respectively.

Revenue from bus operations in fiscal 2012, 2013, 2014 and the three months ended June 30, 2014 was Rs 217.8 crore, Rs 284.8 crore, Rs 308.1 crore and Rs 95.98 crore, respectively.

In fiscal 2012, 2013 and 2014 and in the three months ended June 30, 2014, the company's total revenue was Rs 1,135.2 crore, Rs 1,335.3 crore, Rs 1,503.7 crore and Rs 412.9 crore, respectively, while its profit after tax was Rs 76.7 crore, Rs 45.7 crore, Rs 57 crore and Rs 25.1 crore, respectively, in such periods.

Objective of Issue

Of the proceeds from the fresh issue of shares the firm would use Rs 83.1 crore for purchase of goods transportation vehicles and Rs 35 crore for repayment/pre-payment, in full or part, of certain debt.


NSR owns 19.25 million shares representing 22.5 per cent stake in VRL and is divesting over two-thirds of this comprising around 14.55 million shares in the offer for sale.

The PE firm had put in around Rs 160 crore to buy the stake in 2011-12. It invested Rs 110 crore through a preferential allotment and bought shares worth Rs 50 crore from one of the promoters.

Sankeshwars, the promoters of VRL Logistics, are also selling a small chunk of shares as part of the secondary offering.

(Edited by Joby Puthuparampil Johnson)

Leave Your Comment(s)