Stock Fundamentals

How cost-cutting helps VRL Logistics

Satya Sontanam | Updated on August 23, 2020

The stock of VRL Logistics went up by about 10 per cent last week, following news reports that the company was scrapping its ageing fleet of vehicles

The operator managing the asset-heavy business, as per the report, won’t buy new trucks and will get rid of 700 low-capacity trucks to rein in repair costs amid a nascent recovery in demand.

No new vehicle addition was expected in any case, as the company had already added a large number of vehicles (around 319) in the first quarter of the calendar year 2020.

Scrapping of old vehicles and plans to remove routes that aren’t seeing enough demand can cushion margins. In the June quarter, the company reported sales growth of negative 70 per cent y-o-y as the business was severely impacted due to stranded vehicles and for want of migrant labourers amid the nationwide lockdown.

Published on August 23, 2020

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