“A STUDY ON EFFECT OF WORKING CAPITAL ON THE FINANCIAL PERFORMANCE”

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS OF

BACHELOR OF COMMERCE DEGREE OF BANGALORE UNIVERSITY

BY NANDAN H S
REGISTRATION NO: U03FS21C0212

UNDER THE GUIDANCE OF

Asst.Prof. MANUJA N
DEPARTMENT OF COMMERCE

KLE SOCIETY’S DEGREE COLLEGE, NAGARBHAVI

2023-24
 CERTIFICATE OF INTERNSHIP

This is to certify that NANDAN H S bearing Reg.No U03FS21C0212 Student of

KLE Society’s Degree College, Nagarbhavi he has completed an internship course
from (22-3-2024 to 22-4-2024) from our institution. His conduct during stay with us
was satisfactory. I wish you all the best in the endeavor.

The marks secured by him 9.5 out of 10

Signature with Company seal

 DATE:

CERTIFICATE

This is to certify that NANDAN H S bearing Reg.No U03FS21C0212 is a student

of VI SEM B.COM of our college. He has prepared an internship report entitled
“A STUDY ON EFFECT OF WORKING CAPITAL ON THE FINANCIAL
PERFORMANCE” a study conducted during 22-3-2024 to 22-4-2024 at Company
name Bangalore, as a partial fulfillment of the examination of VI SEM B.COM.

PRINCIPAL
 STUDENT DECLARATION

NANDAN H S, hereby declare that this report entitled a study on “A STUDY ON

EFFECT OF WORKING CAPITAL ON THE FINANCIAL PERFORMANCE” study conducted by
me during the summer vocation from 22-3-2024 under the supervision and
guidance of Asst.Prof. MANUJA N faculty of the Department of Commerce KLE
Society’s Degree College, Nagarbhavi

DATE: SIGNATURE

PLACE: BANGALORE REG.NO: U03FS21C0212

 ACKNOWLEDGEMENT

The success and final outcome of this internship report required a lot of guidance
and assistance from many people and I am extremely fortunate to have their support
till the completion of my report work.

 Firstly, I would like to thank the Ms. Pushpa Jadhav for giving me the
opportunity to do an internship within the organization.
 I would like to express my special thanks to our faculty co-coordinator Dr.R
MadhanKumar as well as our principal Dr.Darshan S who gave me the
golden opportunity to do an internship, which helped me in learning a lot of
new things and also a warm exposure to the world of accountancy and finance.
 I would also like to thank my parents who gave me the permission to complete
the internship and also my friends who always helped me when there was a
need of their help during the project.
 Although this report has been prepared with utmost care and deep routed
interest, even then I accept it as respondent and imperfect.
 It is a great opportunity and pleasure for me to express my profound gratitude
towards all the individuals who directly or indirectly contributed towards
completion of this report.
 EXECUTIVE SUMMARY

I NANDAN H S is currently pursuing my graduation in Bachelor of Commerce at

KLE SOCIET’S DEGREE COLLEGE.
 B.com is an undergraduate program under the NEP scheme. Through this
course connects classroom learning to a real-world environment, an individual
can learn practical, Professional, and technical skills associated with many of
the procedures of financial analysis and accounting standards.
 Bangalore University B.com Programme we are having a subject internship
in which we have to work hands-on training under a VRL LOGISTICS LTD
for a period of 6 to 8 week
 As a part of my academic, I did my internship at VRL LOGISTICS LTD for
30 days (90 hours). In this period I have learned impact of working capital on
financial performance
 This project is about my internship and detail information about the task which
had been undertaken by me during this internship period.
 Table of Contents

CHAPTER PAGE
TOPICS
NO NO
Cover Page i
Company Certificate ii
College Certificate iii
Student Declaration iv
Acknowledge v
Table of Contents vi
Charts of Contents viii
Executive Summary ix

INTRODUCTION AND ORGANIZATIONAL 1-16

PROFILE
I 1.1 Introduction about the area of research 2-5
1.2 Statement of problem 5-6
1.3 Industry Analysis 6-7
1.4 Company Profile 7-16

DESIGN OF STUDY 17-28

II 2.1 Objectives of study 18-21
2.2 Methodologies 21-25
2.3 Scope of study 25-27
2.4 Logistics 27-28

DISCUSSION 29-41
3.1 Industry structure and developments 30-31
III
3.2 SWOT analysis 32-34
3.3 Segment-wise performance 34-35
3.4 Internal control systems and their adequacy 35-36
3.5 Discussion on financial performance 37-39
3.6 Goods transport 39-41

LEARNING OUTCOMES 42-43

VI 4.1 Learning Experience 43

FINDING, SUGGESTION AND CONCLUSION 44-49

5.1 Findings 45-46
V
5.2 Suggestion 47
5.3 Conclusion 48-49
 CHAPTER 1

INTRODUCTION AND ORGANIZATONAL

PROFILE

Page 1
 1. INTRODUCTION

1.1 Introduction of Working Capital

A company's working capital is the sum of money on hand to cover ongoing expenses.
The distinction between a company's current assets, such as cash, accounts receivable,
and inventory, and its current liabilities, such as accounts payable and short-term debt,
is what is known as the current ratio. In order to run smoothly, it must have enough
working capital to pay its debts, buy inventory, and pay its employees on time.
Without enough working capital, a company might find it difficult to fulfil its
obligations, which could lead to missed payments, late fees, and even bankruptcy. A
customer's needs must be met striking a balance between the available cash and the
business' operational requirements, such as inventory control, accounts receivable,
and accounts payable. A company can increase cash flow, lessen its reliance on debt
financing, and attain longterm financial stability by optimizing its working capital.

Working capital is crucial for an organization company for the following reasons:

An organization business needs to have enough money to buy products, pay suppliers,
and pay other operational costs to satisfy customer demand. Lack of working capital
could prevent the business from meeting customer demand, costing it sales and
revenue. Managing cash flow for it to be possible to pay its obligations and cover
expenses on time, an organization the business must effectively manage its resources.
Cash flow. Ineffective cash flow management can result in money issues, such as past
due payments to lenders and suppliers, which can harm the company's reputation.
Investing in growth to expand and stay competitive, an organization company must
make investments in people, machinery, and technology. The release of funds for
expansion projects can be facilitated by effective working capital management.
A company's current assets and current liabilities company make up working capital.
Here are a few illustrations of each:

Current assets: Cash and cash equivalents, which include funds in checking and
savings accounts and quickly convertible short-term investments. Accounts receivable
these are sums that customers owe the business for products or services they received
on credit.
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Inventory this refers to the supplies that a business keeps on hand for production or
sales, including raw materials, work-in-progress, and finished goods.

Current liabilities accounts payable are the invoices that a business must pay to its
suppliers for products or services that were obtained on credit. Loans with a repayment
term of one year or less are referred to as short-term loans and lines of credit. Every
business needs to manage its working capital to make sure it can cover its expenses
and continue operations.

Working capital is made up of four essential elements debtors, creditors, stock, and
cash. Debtors Customers who owe money to a business for goods or services they
have purchased but have not yet paid for are referred to as debtors. Debtors are crucial
for working capital because they represent the future cash inflow that a business can
anticipate. Creditors the suppliers and vendors to whom a business owes money for
goods or services acquired on credit are referred to as creditors. In order for the
business to be able to pay its bills on time and keep its suppliers happy, managing
creditors is crucial. Stock describes the inventory or products that a business has
available for sale. To ensure that the business has enough inventories to satisfy client
requirements while avoiding overstocking, which can tie up working capital, stock
management is crucial. Cash The liquid funds that a business has on hand to pay for
short-term expenses are referred to as cash. It is critical to manage cash to make sure
the business has enough money to pay its bills on time and cover any unforeseen costs.

So, the short-term assets and liabilities that a business uses to finance its daily
operations are known as working capital components. A company can make sure it
has enough cash flow to meet its obligations and reach its long-term objectives by
managing these elements effectively. The evaluation of a company's financial health
and success is referred to as financial performance. It gives a general overview of how
well a business is bringing in money, controlling costs, and turning a profit. Financial
ratios and metrics that help gauge a company's long-term financial health are
frequently used to evaluate financial performance. A variety of metrics, such as
revenue, profit margin, return on investment, debt-to-equity ratio, and operating cash
flow.

These metrics are used by lenders, investors, and to evaluate a company's capacity for
long-term growth, risk management, and return generation.

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Making wise investment decisions, determining a company's creditworthiness, and
spotting growth opportunities all require knowledge of a company's financial
performance. Companies can decide how to allocate resources, capital management,
and strategic planning by keeping an eye on their financial performance. By doing this,
they can maintain its long-term success and its stakeholders' trust the various metrics
and ratios that are used to gauge a company's financial health and success are included
in the financial performance components. Among the essential elements of financial
performance are Operating cash flow is the sum that a business brings in from its daily
operations. It is an important measure of liquidity. Because it shows a company's
capacity to produce cash from its core business operations. Earnings per share is a
metric used to determine how profitable a per share of its common stock, the company

The amount of profit being made per share of stock is determined by dividing net
income by the total number of outstanding shares. Investors, lenders, and other
stakeholders can assess a company's financial health, gauge its profitability, determine
its potential for growth, and make educated decisions about lending money to the
business or investing in it by examining these aspects of financial performance.

Additionally, businesses can use these metrics to track. A company's financial

performance can be significantly impacted by its working capital. While inefficient
management can result in decreased profitability and liquidity, effective controlling
working capital can increase a company's liquidity, profitability, cash flow. There are
significant ways that working capital could affect financial performance Working
capital, is the cash on hand that a business can use to pay its immediate debts.
As opposed to that, if a company has more working capital. Then it needs, it may be
able to invest in new ventures, grow its business, or reduce debt, all of which can help
it become more financially stable and long-term viable. Profitability By lowering the
capital and reducing unauthorized borrowing, efficient management of working
capital can contribute to higher profitability. A company can improve its income and
cut the cost of borrowing, such as interest and fees, by managing its working capital
more effectively. Working capital has an effect on a company's capacity for growth
and operational expansion. A business can invest in new opportunities, increase its
customer base, and boost its market competitiveness by employing sound working
capital management.

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Measurement of profitability: One crucial metric for determining a company's
profitability is net profit. It displays how effectively a business is turning a profit from
its operations. Luring investors in before investing their money, investors are
constantly curious about a company's profitability. Evaluation of growth potential a
company's potential for growth is also evaluated using net profit. If an organization
consistently produces high net profits, it can put those profits back into the company,
creating more room for expansion.

Profitability: By lowering the capital and reducing unauthorized borrowing, efficient

management of working capital can contribute to higher profitability. A company can
improve its income and cut the cost of borrowing, such as interest and fees, by
managing its working capital more effectively. Working capital has an effect on a
company's capacity for growth and operational expansion. A business can invest in
new opportunities, increase its customer base, and boost its market competitiveness
by employing sound working capital management.

Measurement of profitability: One crucial metric for determining a company's

profitability is net profit. It displays how effectively a business is turning a profit from
its operations. Luring investors in before investing their money, investors are
constantly curious about a company's profitability. Evaluation of growth potential a
company's potential for growth is also evaluated using net profit. If an organization
consistently produces high net profits, it can put those profits back into the company,
creating more room for expansion.

1.2 Statement of Problem

Understanding how working capital management affects the organization's overall

financial performance is crucial because working capital management is a key
component of businesses' financial operations. A thorough examination of the
connection between VRL Logistics Limited's working capital and financial
performance will offer useful insights for the company as well as the larger logistics
sector. Finding the ideal balance between preserving sufficient levels of working
capital and maximizing their profitability is a challenge for many businesses. This
study analyzes whether VRL logistics is managing working capital effective.

Page 5
 Aims
• Determining the ideal level of working capital to maximize profitability by analyzing
the impact of changes in working capital on profitability.
• To evaluate how working capital practices affect financial performance.
• This studyto analyze whether, VRL logistics is managing working capital effectively.
• To identify which attribute of working capital has a greater impact on the financial
performance with special reference to VRL logistics.

1.3. Industry Analysis

VRL Logistics is a prominent logistics and transportation company in India. To
conduct an industry analysis of VRL Logistics, we'll examine the logistics sector in
India and evaluate the company's position within it. However, please note that my
knowledge is based on information available until September 2021, so some recent
developments may not be included. The logistics industry in India plays a vital role in
facilitating the movement of goods across the country. It encompasses various sectors,
including transportation, warehousing, freight forwarding, and third-party logistics
(3PL) services. India's logistics sector has been growing steadily due to factors such as
economic growth, e-commerce expansion, government initiatives, and increasing
trade volumes.

Industry Analysis of VRL Logistics:

VRL Logistics, founded in 1976, has emerged as a significant player in the Indian
logistics industry. It offers a wide range of services, including transportation of goods,
parcel services, courier services, and logistics solutions. The company operates
through an extensive network of branches, depots, and strategically located
warehouses. VRL Logistics has a well-known brand and a strong presence in the
Indian market, which contributes to its competitive advantage. Extensive Network
Company has built a robust network of branches and depots, enabling it to provide
logistics services across various regions of India. Diverse Service Portfolio VRL
Logistics offers a comprehensive range of logistics services, catering to different
customer needs and requirements limited While VRL Logistics has a strong domestic
presence, its international operations and global reach are relatively limited. This may
hinder its ability to tap into the global logistics market.

Page 6
The logistics industry in India faces infrastructure-related challenges such as poor road
conditions, congested ports, and limited warehousing facilities. VRL Logistics may
encounter similar issues in its operations.

Growing E-commerce Market. The rapid expansion of the e-commerce sector in India
presents significant opportunities for logistics companies. VRL Logistics can
capitalize on this trend by providing specialized services tailored to the e-commerce
industry. b. Government Initiatives: The Indian government has introduced various
initiatives like the "Make in India" campaign and the development of dedicated freight
corridors. These initiatives aim to improve logistics infrastructure, reduce costs, and
enhance efficiency, which can benefit companies like VRL Logistics.

Intense Competition the logistics industry in India is highly competitive, with the
presence of several large players and numerous small and mid-sized companies. VRL
Logistics faces the risk of losing market share to both established and emerging
competitors. b. Regulatory Challenges: The logistics sector in India is subject to
various regulations and compliance requirements. Changes in policies or regulatory
frameworks can impact the operations and profitability of logistics companies.
Overall, VRL Logistics has a strong position in the Indian logistics industry,
leveraging its established brand, extensive network, and diverse service offerings.

1.4 Company Profile

VRL Logistics Limited is an Indian logistics and transportation company
headquartered in Bengaluru, Karnataka. It was founded in 1976 by Vijay Sankeshwar
and has since grown into one of the largest logistics companies in India. VRL Logistics
operates a wide range of logistics services including full-truckload and less-than-
truckload transportation, courier and parcel services, warehousing and distribution,
and international freight forwarding. The company has a fleet of over 4,000 vehicles
and operates in over 1,000 locations across India. In addition to its logistics services,
VRL Logistics also operates in the passenger transportation segment through its
subsidiary, VRL Travels. VRL Travels operates a fleet of over 1,000 buses and
provides bus transportation services across India.VRL Logistics has been recognized
for its excellence in logistics and transportation, winning numerous awards including
the Best Supply Chain and Logistics Company at the Economic Times Logistics
Awards in 2019 and the Logistics Company of the Year atthe Global Logistics

Page 7
Excellence Awards in 2018.As of 2021, VRL Logistics has a market capitalization of
over $1.5 billion and employs over 15,000 people across its various businesses

Here are some of the key officials of VRL Logistics:

Vijay Sankeshwar
He is the Chairman and Managing Director of VRL Logistics. He founded the
company in 1976 and has been instrumental in its growth and success.

Anand Sankeshwar
He is the Vice Chairman and Joint Managing Director of VRL Logistics. He has been
associated with the company since 1997 and has played a key role in its expansion and
diversification.
Ramesh Sankeshwar
He is the Executive Director of VRL Logistics. He has been associated with the
company since 1994 and has played a key role in its operations and logistics
management.

Keshav Sunkar
He is the Chief Financial Officer (CFO) of VRL Logistics. He has been associated
with the company since 2014 and has over 20 years of experience in finance and
accounting

Subhasish Chakraborty
He is the Independent Director of VRL Logistics. He is a seasoned professional with
over 40 years of experience in the logistics and transportation industry.

N. R. Narayana Murthy
He is also an Independent Director of VRL Logistics. He is a well-known entrepreneur
and the founder of Infosys, one of India's leading IT companies Overall, VRL
Logistics has a strong leadership team with decades of experience in the logistics and
transportation industry, enabling the company to provide innovative and efficient
logistics solutions to its customers

Vision: To become the most preferred and reliable logistics and Transportation
Company in India, providing innovative and efficient solutions to our customers.

Page 8
Mission: To leverage our extensive network and fleet of vehicles to provide end-to-
end logistics solutions to our customers, ensuring timely and efficient delivery of
goods and services.

Core Values: Customer Focus: We are committed to understanding the needs of our
customers and providing customized solutions to meet their requirements.
Integrity: We conduct our business with the highest level of integrity, transparency,
and ethical standards.

Employee Development: We value our employees and are committed to their growth
and development, providing them with a challenging and rewarding work
environment.

Overall, VRL Logistics aims to be a customer-centric company that provides

innovative and efficient logistics solutions while upholding the highest standards of
integrity and ethical conduct. The company's core values are cantered around
customer focus, innovation, teamwork, integrity, and employee developments, which
guide its operations and decision-making processes. -VRL Logistics operates in
various regions across India, providing logistics and transportation services to its
customers. The company has a vast network of branches and warehouses, enabling it
to provide end-toend logistics solutions to its customers. Here are some of the key
operating areas of VRL Logistics:

South India: VRL Logistics has a strong presence in South India, with a large number
of branches and warehouses located in the states of Karnataka, Tamil Nadu, Kerala,
and Andhra Pradesh.

West India: VRL Logistics also operates in the western region of India, with branches
and warehouses located in Maharashtra, Gujarat, and Goa.

North India: VRL Logistics has a growing presence in North India, with branches and
warehouses located in Delhi, Haryana, Uttar Pradesh, and Rajasthan.

East India: VRL Logistics operates in the eastern region of India, with branches and
warehouses located in West Bengal, Odessa, and Bihar.

Page 9
Overall, VRL Logistics has a pan-India presence, with a vast network of branches and
warehouses across the country. The company is able to provide logistics and
transportation solutions to customers across various industries, leveraging its
extensive network and fleet of vehicles to ensure timely and efficient delivery of goods
and services.

The core business of VRL Logistics is transportation and logistics. The company
operates a wide range of logistics services including full-truckload and less-
thantruckload transportation, courier and parcel services, warehousing and
distribution, and international freight forwarding.VRL Logistics is primarily
engaged in providing transportation solutions for various industries such as
manufacturing, retail, ecommerce, and others. The company has a vast network of
offices and warehouses across India, which enables it to provide end-to-end logistics
solutions to its customers.

Apart from logistics, VRL Logistics also operates in the passenger transportation
segment through its subsidiary, VRL Travels. VRL Travels operates a fleet of over
1,000 buses and provides bus transportation services across India. VRL logistics wide
variety of services which are as follows:
VRL Logistics has a diverse range of clients across various sectors, including FMCG,
pharmaceuticals, retail, e-commerce, and automotive, among others. Some of its
major clients include:

• Hindustan Unilever Limited (HUL)

• Britannia Industries Limited

• Coca-Cola India

• Procter & Gamble (P&G)

• Marico Limited

• ITC Limited

• Asian Paints Limited

• Mahindra & Mahindra Limited

• Tata Motors Limited

• Hyundai Motor India Limited

Page 10
These are just some of the major clients of VRL Logistics, and the company serves
many other customers across India. The company's extensive network and fleet of
vehicles enable it to provide efficient and reliable logistics solutions to its clients,
irrespective of their industry or location.

Transportation services

VRL Logistics offers transportation services for various types of cargo, including full
truckload, part truckload, and express cargo. The company has a large fleet of trucks
and trailers, ranging from small vehicles for local transportation to large vehicles for
long- haul transportation.

Warehousing and distribution services

VRL Logistics provides warehousing and distribution services to its customers,

including storage, inventory management, and order fulfilment. The company has a
network of warehouses and distribution centres across India, equipped with modern
technology and managed by trained professionals.

Courier Service

General Parcel forms the core of VRL's business and involves pan Indian movement
of consignments of varying size and weight across the country on a Less than Truck
Load (LTL) go down to go down Basis. The Company also provides the option of
door collection and door delivery to the customers at a cost. The Priority Cargo
business involves door-to-door delivery.

Full Truckload Services (FTL)

We provide FTL service to our customers by leveraging our broad base of select
branches as well as through our network of independent brokerage agents. We provide
door-to door FTL service to our customers, in which the goods are loaded on to our
vehicle at the premises of the customer and then delivered to the specified destination.

Transport of Passengers by Air

In 2008, VRL Logistics Ltd. ventured into the Transport of Passengers by Air Industry.
It was a gradual progression for the company. The Indian Aviation Industry has

Page 11
experienced a tremendous growth in the last few years, more so in the Private Aviation
Sector. Keeping in mind the emerging market demand, VRL decided to enter the
Transport of Passengers by Air Industry and serve VVIPs, VIPs & Corporate India.

VRL Outdoor

VRL permits the usage of its vehicles for branding. Reputed corporate have had tie-
ups with us in the past and these include Mahindra & Mahindra, Bosch, Maruti,
Michelin, Hindustan Petroleum, United India Insurance, National India Insurance, etc.

Renewable energy services

VRL Logistics operates a subsidiary company called VRL Renewable Private

Limited, which is involved in the development and operation of renewable energy
projects. The company has set up wind and solar power projects in various parts of
India.

Media services

VRL Logistics operates a subsidiary company called VRL Media Limited, which is
involved in the production and distribution of films, television programs, and other
media content. The company has produced several popular films and television shows
in India.

Page 12
Page 13
Key Elements of VRL Logistics

Consolidation position in South Indian market: The company already has the
highest Network and branches in South India. The company's focus to has been
interstate business delivering goods to those state with increase in the number of
branches in each of the South India states the company now plan to expand interstate
transportation in this southern state.
Increase its share from the North Indian market: VRL Logistics hopes to
increase its taking from the northern Market by establishing more office in key state
like Rajasthan, Haryana, etc.
Increase its trust on marketing large share from the corporate market: The
company is in the process of sharing up its marketing function, by hiring senior
people to know all its business, with specific focus on corporate business and
Express Cargo business.
Established infrastructure: The company has established and networking spanning
the entire country VRL Logistic Limited network of the branches and Agencies
entire country exceed 931 all through the India, and it is growing fast. The
company's 20 plus years enables the hub and spoke model of the company by
aggregating goods of small quantities that can be distributed through its branch
network the network of branches and add along with a large fleet of owned vehicles
4360 plus trucks and light motor vehicles the company to cover the length and
breadth of the country efficiently with flexibility in operations.
Employee's strength: There is a strong employer and employee relationship in VRL
Logistic limited. Company such as provident funds gratuity scheme medical scheme
retirement pension scheme there educational benefits and maturity benefits etc. are
provided by the company. The company introduced various novel schemes like
payment to drivers based on mileage driven by them even the Hamas and drivers of
the organization or extended by the benefits of EPS/ PF etc. it is at least 30,000
people are benefited by way of direct or indirect employment from company.

Page 14
COMPANY PRODUCT AND SERVICE

CARGO AND COURIER: A subsidiary of VRL Group, VRL General Cargo

started its business service as transportation between Hubballi and Gadag, and later
has spread across Bangalore and Belagavi. It has extended into courier services and
express cargo, which are now operative in 23 states, handling over 216 million
cargos/year, being one of the large networks in the country. Its courier services are
operative for parcels ranging from small to large size. Karavandajam, a food diet,
marketed by VRL Group via its courier services.
TRAVEL: VRL's public tour business is operated by its division Vijayanand
Travels. With having more than80 branches, and operated by 1000+ agents, it is the
largest in tour business services in Karnataka and Maharashtra. It owns 1550 buses
(incl. 742 Volvo buses of 9400 XL and 9400PXmulti-axle models) covering six
states, moving across 350 routes in the country.
MEDIA: VRL Group's flagship entity, Vijayavani was started on 1 April 2011,
which is now the largest circulated newspaper in Karnataka. VRL Group's subsidiary
company VRL Media Ltd., prints Vijayavani and is published in 9 cities of the state.
(181Vijayavani 'slead editor of its editorial division is Chenne gowder and Subhash
hoogar. Karnataka's second largest circulated news paper Vijaya Karnataka, was
started by Vijay Sankeshwar (of VRL Group) in October 2000, and was sold to the
Times group on June 16, 2006.In April 2017, VRL Media Ltd. started Digvijaya
News 24x7, a Kannada television news channel.
WIND POWER GENERATION BUSINESS: A wind farm, when installed on
agricultural land, has one of the lowest environmental impacts of all energy sources.
Wind power occupies less land area per kilowatt-hour of electricity generated than
any other energy conversion system, apart from rooftop solar energy, and is
compatible with grazing and crops. It generates the energy used in its construction in
just 3 months of operation, yet its operational lifetime is 20-25 years.
AIR CHARTER BUSINESS: We entered the air charter business in 2008 to
provide services to individuals and corporate clients. We purchased a new Premier
1A aircraft from Hawker Beech craft Inc., USA. The Premier 1A aircraft is a twin
engine sophisticated aircraft with space for 2 pilots and 6 passengers. This aircraft
has a Non Scheduled Operator Permit issued by the Director General of Civil
Aviation (DGCA), Government of India.. The Company has also acquired a second

Page 15
hand Premier 1 aircraft from Force Motors, Pune in the year 2013. The acquisition of
this aircraft is expected to strengthen the capacity to garner more chartering business
owing to better aircraft availability for routine long term charters.

COMPANY ACHIEVEMENTS
 The company started with one lorry and today it has a fleet of thousands of
Lorries.
 The turnover of the company is increasing year by year.
 The company is recommended by the Indian Bank Association Mumbai.
 Vijay Karnataka newspaper and another subsidiary of VRL is being awarded with
“Audit bureaus of circulation” Certification for highest circulation.
 Ananda printers and publishers fixed and recurring deposits scheme.
 Vijay Ananda Road Lines fixed deposit scheme.

COMPANY AWARDS
 Udyogratana
 Sarigeratana
 Inspiration leader of news India
 Karnataka Rajyotsava Award
 PADMASHRI by the central government

Page 16
 CHAPTER-02
DESIGN OF STUDY

Page 17
2.1 Objectives of studying

The study of the effect of working capital on financial performance can be enriched
by considering several key objectives derived from logistics, as outlined previously.
Each objective can be tailored to analyze how efficient management of working
capital influences a company's financial health:

Efficiency: Efficiency sits at the heart of any successful organization. It's the ability
to achieve desired results with the least amount of wasted resources, be it time, money,
materials, or energy. Imagine a well-oiled machine – every part functions flawlessly,
contributing to the smooth operation of the whole. In a business context, efficiency
translates to streamlined processes, reduced costs, and maximized productivity. This
translates to a significant competitive advantage, allowing companies to deliver high-
quality products and services faster and at a lower cost. From optimized inventory
management to well-organized workflows, a focus on efficiency empowers
businesses to achieve their goals with minimal waste and frustration. By constantly
analyzing and improving their processes, organizations can unlock the true potential
of efficiency, propelling them towards long-term success.

Optimization : An optimization report is a roadmap to improvement. It analyzes the

performance of a system, process, or campaign, pinpointing areas where things can
be fine-tuned for better results. Imagine it as a detective story, gathering data (the
clues) on factors like costs, speed, or conversion rates. It then uses these clues to
identify bottlenecks and inefficiencies (the suspects). Finally, the report recommends
changes (the solution) to optimize performance and achieve the desired outcome,
whether it's minimizing costs, maximizing speed, or boosting conversions. This data-
driven approach allows you to make informed decisions and unlock the full potential
of whatever you're optimizing.

Customer Satisfaction : A Customer Satisfaction report is a vital tool for

understanding how your customers perceive your products, services, and overall
experience with your company. This report dives into key metrics like ratings,
reviews, and survey responses, providing valuable insights into customer sentiment.

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By analyzing these metrics, the report unveils areas where you excel in delighting
customers, along with aspects that might require improvement. It helps identify trends
and patterns, allowing you to tailor strategies to address customer concerns and
enhance satisfaction.

Furthermore, the report can be segmented by product, service, or customer

demographics for a more granular understanding. This targeted analysis empowers
data-driven decisions to optimize your offerings and personalize the customer journey
for different segments.

Risk management : Risk management is the cornerstone of ensuring an

organization's smooth operation. It's a proactive approach that identifies potential
threats, analyzes their likelihood and impact, and implements strategies to mitigate
them. This systematic process aims to minimize disruption, financial losses, and
reputational damage. By pinpointing critical risks early on, companies can develop
contingency plans and make informed decisions to safeguard their assets, employees,
and overall objectives. Effective risk management fosters a culture of preparedness
and resilience, enabling businesses to navigate uncertainty and capitalize on
opportunities.

Sustainability : Sustainability reports are documents that outline a company's

environmental, social, and governance (ESG) efforts. These reports detail a
company's impact on the planet, its workforce, and its overall ethical practices. They
typically cover a specific reporting period, like a year, and showcase progress on
established sustainability goals. Stakeholders, including investors, customers, and
regulators, use these reports to assess a company's commitment to responsible
practices and long-term success. In essence, sustainability reports are a form of
transparent communication that demonstrates a company's dedication to creating a
positive impact beyond just its bottom line.

Innovation : Innovation is the cornerstone of progress in logistics. It's the driving

force behind constantly evolving technologies and practices that reshape how goods
move from origin to destination. By embracing new ideas, the logistics industry
tackles challenges like cost reduction, faster delivery times, and environmental
concerns. This focus on innovation fosters the development of solutions like

Page 19
automation in warehouses, data-driven route optimization for transportation, and the
exploration of autonomous vehicles. Furthermore, it opens doors to exploring
sustainable practices like electric delivery fleets and eco-friendly packaging solutions.
Ultimately, innovation in logistics is not just about keeping up with the latest trends;
it's about actively seeking ways to revolutionize the industry for a more efficient, cost-
effective, and sustainable future.

Global Perspective : In today's interconnected world, understanding global logistics

is crucial for business success. It goes beyond just shipping products across borders.
A global perspective considers the complexities of international trade, including
navigating customs regulations, trade agreements, and varying infrastructure across
countries. It also recognizes cultural differences in consumer preferences,
communication styles, and legal frameworks. By incorporating a global perspective,
companies can ensure culturally sensitive logistics practices, optimize their
international operations, and gain a competitive edge in the global marketplace.

Cost Reduction: Within the realm of logistics, cost reduction stands as a central pillar
supporting a company's financial well-being. Every aspect of logistics, from streamlined
inventory management to optimized transportation networks, contributes to minimizing
operational expenses. This report will delve into various cost-saving strategies employed in
logistics, analyzing their impact on the bottom line. We'll explore how efficient logistics
practices not only enhance operational efficiency but also free up tied-up capital, ultimately
propelling a company's financial performance towards a stronger position.

Collaboration: Within the intricate world of logistics, collaboration isn't just a

buzzword; it's the glue that holds the entire supply chain together. By fostering
cooperation among various stakeholders – suppliers, manufacturers, distributors,
retailers, and even competitors – logistics can achieve new heights of efficiency and
effectiveness. This collaborative approach brings several key benefits:

1. Shared Information: Open communication channels allow real-time visibility into

inventory levels, transportation schedules, and potential disruptions. This empowers
all parties to make informed decisions and adapt to changing circumstances.

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2. Resource Optimization: Collaboration enables joint planning and utilization of
resources like warehouses and transportation. This reduces redundancies, optimizes
capacity, and minimizes overall costs.
3. Innovation & Problem-Solving: By working together, stakeholders can leverage
diverse expertise to tackle complex challenges. This fosters a culture of innovation,
leading to the development of creative solutions for logistics bottlenecks.
4. Risk Mitigation: Collaborative risk management allows for proactive planning and
contingency measures. Early warnings about disruptions can be shared, and
alternative solutions can be implemented swiftly, minimizing potential losses.

Continuous Improvement: The concept of continuous improvement forms the

bedrock of a high-performing logistics operation. This report delves into the ongoing
process of evaluating, refining, and enhancing logistics practices. It analyzes current
methods for efficiency, cost-effectiveness, and customer satisfaction. By identifying
areas for improvement and implementing data-driven solutions, the report outlines a
roadmap for streamlining operations, optimizing resource allocation, and minimizing
waste. This continuous cycle ensures logistics remain adaptable to ever-changing
market demands and technological advancements, ultimately positioning the
company for long-term success.

2.2. Methodologies
Operational Processes: Analyzing these processes unveils VRL's commitment to
efficiency, from route optimization and fleet management to leveraging technology
for real-time tracking and streamlined workflows. The report further explores VRL's
meticulous quality assurance measures, ensuring adherence to industry standards and
customer expectations. By understanding these operational processes, we gain
valuable insight into VRL's ability to deliver exceptional service and maintain its
position as a leader in the Indian logistics industry.

Technology Integration: VRL Logistics recognizes the transformative power of

technology and integrates it seamlessly into their operations. This report explores their
strategic use of advanced technologies to achieve greater efficiency, transparency, and
customer satisfaction. VRL leverages tools like GPS tracking for real-time shipment

Page 21
visibility, route optimization software to plan efficient delivery routes, and warehouse
management systems to optimize storage and retrieval processes. These technologies
empower VRL to make data-driven decisions, minimize delivery times, and ensure
optimal resource allocation. Furthermore, they foster transparency by providing
customers with real-time updates on their shipments, enhancing trust and overall
customer experience.

Supply Chain Management: The various stages involved in getting products from
source to customer, including procurement, production planning, inventory
management, and distribution. The focus will be on identifying areas for improvement
and implementing strategies to optimize efficiency, reduce costs, and enhance overall
customer satisfaction. By analyzing data on lead times, inventory levels, and
transportation routes, the report will propose solutions to streamline operations and
create a more resilient supply chain

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Customer-Centric Approach: The VRL Logistics' Customer Relationship
Management (CRM) strategy, a crucial element in their success. It delves into how
VRL fosters positive customer interactions and builds long-lasting relationships. The
report analyzes how VRL leverages its CRM system to gather customer data,
understand their specific needs, and tailor logistics solutions accordingly. By
implementing effective communication channels and providing real-time shipment
tracking, VRL builds trust and transparency with its clients. Additionally, the report
examines VRL's potential use of loyalty programs or feedback mechanisms to further
strengthen customer relationships and ensure continuous improvement in service
delivery.

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Quality Assurance : VRL Logistics prioritizes maintaining the highest quality
standards throughout its operations. This section of the report delves into their
robust Quality Assurance (QA) framework. It outlines VRL's commitment to
exceeding customer expectations through meticulous processes. The report details
regular audits and inspections that ensure adherence to industry regulations and
internal quality benchmarks. Additionally, it highlights VRL's investment in
employee training programs, equipping staff with the knowledge and skills to
deliver exceptional service consistently. By implementing a comprehensive QA
strategy, VRL Logistics fosters trust and builds strong relationships with its clients.
This unwavering commitment to quality sets them apart in the competitive Indian
logistics industry.

Sustainability Initiatives : VRL Logistics recognizes the growing importance of

environmental responsibility. Their sustainability initiatives focus on mitigating
their environmental impact and promoting eco-friendly practices throughout the
supply chain. This report explores their efforts in several key areas:

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 Fuel Efficiency: VRL is actively adopting fuel-efficient vehicles and exploring

alternative fuel options like biofuels to reduce greenhouse gas emissions and
dependence on fossil fuels.
 Eco-friendly Packaging: The report details VRL's transition towards sustainable

packaging materials like recycled cardboard and biodegradable alternatives to

minimize waste and promote responsible resource management.
 Green Logistics Practices: Initiatives such as route optimization software and

driver training programs aim to reduce unnecessary travel and fuel consumption,
contributing to a greener logistics footprint.

By implementing these strategies, VRL Logistics demonstrates its commitment to

environmental stewardship and positions itself as a leader in sustainable logistics
practices within the Indian market.

Iterative Optimization: VRL Logistics understands that true leadership demands

constant progress. A dynamic process of evaluating, refining, and enhancing logistics
practices. VRL doesn't settle for static solutions. They analyze current methods for
efficiency, cost control, and customer satisfaction. Data serves as the fuel for this
ongoing cycle, guiding them to identify areas for improvement. This report outlines a
roadmap for streamlining operations, optimizing resource allocation, and minimizing
waste. Through iterative optimization, VRL ensures they remain adaptable to a
changing landscape. This commitment to continuous progress positions them as a
frontrunner in the Indian logistics industry.

VRL Logistics' strategic implementation of these methodologies positions them for

sustained leadership in the Indian logistics industry. This comprehensive approach
ensures efficient and cost-effective delivery, leverages technology for real-time
visibility, and prioritizes customer satisfaction through tailored solutions.
Furthermore, a focus on sustainability demonstrates their commitment to responsible
practices.

Page 25
2.3. Scope of study
Gauging employee satisfaction: Assessing the level of job satisfaction at VRL
involves examining various factors that influence employees' contentment and
engagement. Key areas of focus include the work environment, compensation and
benefits, opportunities for career advancement, and the quality of management and
leadership. Additionally, the impact of job security, work-life balance, and
recognition programs on employees' morale should be considered. Collecting data
through surveys, interviews, and performance metrics can provide valuable insights
into the overall job satisfaction levels. Understanding these elements helps identify
strengths and areas for improvement, ultimately contributing to a more motivated
workforce.

Real-World Applications: Real-world applications could demonstrate the impact of

technology on their operations, perhaps detailing how a warehouse management system
improved inventory control and picking efficiency. By showcasing these concrete examples,
the report bridges the gap between theory and practice, providing a clear picture of VRL's
strategies in action. This allows readers to understand the tangible benefits VRL's
methodologies bring to their operations and customer experience.

Page 26
Software Tools and Platforms: The software landscape potentially used by VRL
Logistics to optimize their operations. It delves into popular route optimization tools
like Route4Me, OptimoRoute, and Rubific. These software solutions offer features
such as real-time traffic updates, multi-stop route planning, and vehicle capacity
optimization. Case studies of similar applications in the logistics industry will be
examined to showcase the tangible benefits of route optimization software. By
analyzing these tools and their successful implementations, we can gain valuable
insights into how VRL can potentially leverage technology to further enhance their
efficiency and cost-effectiveness.

Fundamentals of Vehicle Routing Problems (VRP) : The world of logistics hinges

on efficient delivery routes. Vehicle Routing Problems (VRPs) tackle this challenge
by finding the optimal set of routes for a fleet of vehicles visiting multiple locations.
Imagine a pizza delivery company - a VRP would determine how to deliver the most
pizzas in the least time, considering factors like distance, traffic, and order fulfillment
times. By analyzing these complexities, VRP solutions aim to minimize costs,
improve delivery times, and ultimately enhance customer satisfaction. This
fundamental concept forms the foundation for numerous logistics applications,
ensuring smooth operations and efficient resource allocation.

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2.4. Logistics

VRL Logistics emerges as a comprehensive transportation and logistics provider in

India, offering a diverse range of services:

Express Cargo: VRL Logistics' Express Cargo service caters to businesses requiring
swift and efficient delivery of their goods. Their commitment to on-time delivery
ensures your products reach their destination quickly, minimizing delays and
disruptions in your supply chain. Furthermore, VRL offers warehousing and
redistribution capabilities, providing a flexible solution for businesses with complex
logistical needs. This combination of speed, reliability, and value-added services
makes VRL Express Cargo a compelling option for businesses seeking a dependable
partner in the fast-paced world of logistics.

VRL Courier: VRL Courier stands out for its commitment to efficient parcel
delivery. Dedicated route vehicles ensure your package travels directly to its
destination, minimizing delays. For added peace of mind, VRL offers a user-friendly
online track and trace facility. This allows you to monitor your shipment's progress in
real-time, providing valuable information on its location and estimated arrival time.
Whether you're sending important documents or treasured gifts, VRL Courier offers
a reliable and convenient solution for all your parcel delivery needs.

Passenger Transportation: VRL Logistics isn't just about cargo – they're a major
player in passenger transportation as well. Holding the title of market leader in
Karnataka, VRL boasts a fleet of 230 ISO-certified buses offering various
configurations to suit different travel needs. Passengers can enjoy the convenience of
e-ticketing and appreciate VRL's commitment to punctuality. An added touch of
comfort comes with separate seating for women, making VRL a reliable and secure
choice for travelers across Karnataka.

Parcel Services: VRL Logistics has established itself as a powerhouse in Indian

parcel delivery. Their impressive daily handling capacity of 6,000 Metric Tonnes
(MT) speaks volumes about their ability to manage large volumes efficiently.

Page 28
CHAPTER-03

DISCUSSION

Page 29
3.1. INDUSTRY STRUCTURE AND DEVELOPMENTS

The logistics industry in India, considered to be the lifeline of the country, holds
unprecedented importance as it connects various markets, suppliers and customers
dotted across the country, and has now been firmly embedded as an integral part of
the national GDP value chain. The Indian logistics sector provides livelihood to more
than 22 million people. The logistics industry is highly fragmented and consists of
multiple active players which include large scale domestic players, leading global
players and emerging start-ups specializing in e-commerce deliveries. Infrastructure
readiness and technology are expected to be the key drivers of growth for the Indian
logistics industry. The growth in logistics sector is expected to be driven by increasing
penetration of products into more cities and towns, as well as the growth of economic
activity and manufacturing moving to these towns. In addition, the demand for value-
added services from consumers provides opportunities for the industry players to
elevate themselves from an operational role to a more strategic one.
The logistics sector has witnessed robust growth with the highest share in the freight
forwarding market, followed by the warehousing, courier parcel, and express and
value-added services markets. The Indian freight and logistics market is evolving,
keeping in line with the technological and infrastructural developments and various
policy reforms taken by the government, including the introduction of e-way bills,
fast-tag, e-invoicing, and GPS-based toll collection. The National Logistics Policy
(NLP) is aimed at streamlining and strengthening India’s logistics sector, promoting
the seamless movement of goods across the country, and increase the ease of doing
business for players in the sector. The traditional logistics industry in India is
witnessing a significant shift toward digitization and contactless operations due to the
COVID-19 pandemic. The robust growth in manufacturing envisioned through the
“Make in India” initiative will demand high levels of logistical efficiency, which
means that goods must be produced and efficiently transported to markets at
reasonable prices. The deeper penetration into Bharat (Tier II, III & IV towns),
economy enhancing initiatives, GST implementation and other initiatives such as
Make in India, Digital India and the National Logistics Policy, all hold a promise for
an efficient and integrated logistics industry in the days ahead.

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The Multi-Modal Logistics Parks (MMLPs) policy is a key policy initiative of the
Government of India to improve the country’s logistics sector. This initiative will
lower freight costs, reduce vehicular pollution and congestion, and cut warehouse
costs to promote domestic and global trade. The government is also focusing on
strengthening the market in terms of competition, reduced freight rates and barriers,
and technological developments.
The agricultural, retail, and manufacturing sectors are boosting the country's freight
and logistics industry With the aforementioned efforts it is hoped that in the next 5
years the targets set by the National Logistics policy to improve India’s ranking in
Logistics Performance Index to 25 will ensure that the Logistics sector serves as an
engine of growth and a key driver for transforming India to a 5 trillion dollar economy
Road transportation is highly fragmented: The approximately $ 110 billion market in
India can be divided into full truck load (FTL) and less than a truck load (LTL-which
is 35 percent of the road transportation market). Owners of fewer than five trucks
provide more than half of all goods vehicles on the road. Platformization provides the
optimal means to aggregate such a fragmented market and better utilize trucks.
Significant issues plague the transportation value chain: The market depends heavily
on regional brokers and struggles with financing issues. Shippers face issues such as
low-price power, low efficiency and transparency, and the limited visibility of
vehicles and shipment in the value chain. Carriers lack skilled drivers, technology,
struggle with unpredictable backhaul availability and face long detention times.
Middlemen (one or many) bridge the distance between the shipper (load provider) and
truck/fleet owner resulting in additional costs in the system.
A network and greater scale could help to organize this highly fragmented market,
streamline costs for customers/shipment providers, convert large LTL to FTL by
combining load and ensure steady load and profits to carriers/truck owners. This could
help logistics players to double margins and resolve key issues. The way companies
use FTLs, LTLs, and milk runs, for example, is changing. In the supply chains of fast-
moving consumer goods and some other products, milk runs are more efficient
because they can effectively aggregate demand across several different Stock Keeping
Units (SKUs) and companies. To become more responsive to changing demand,
companies are also increasing their use of LTLs.

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3.2. SWOT ANALYSIS
Strength: VRL core strength is the large size and scale of operations we undertake
on a pan India basis. With a track record of over four 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 2022, the Company operated with the total of 4816 vehicles with a
carrying capacity of 71056 tons, and several owned premises, including branches,
offices and 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 acclaiming this fact. 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
below figure depicts the ‘Hub and Spoke’ consignment delivery model followed by
the Company

Page 32
Weaknesses, Risk and Concerns: As per International Monetary Fund (IMF) World
Economic Outlook, October 2021, the global recovery is continuing, but the
momentum has slowed, hampered by the pandemic. Pandemic outbreaks in critical
links of global supply chains have resulted in longer-than-expected supply
disruptions, further feeding inflation in many countries. However, downside risks
emanating from outbreak of new variants of COVID-19 remain. India’s logistics
sector is highly fragmented and the aim is to reduce the logistics cost from the present
14% of GDP to less than 10%. India’s logistics sector is very complex with more than
20 government agencies, 40 PGAs, 37 export promotion councils, 500 certifications,
10000 commodities, 160 billion $ market size. It also involves 12 million employment
base, 200 shipping agencies, 36 logistics services, 129 ICDs, 168 CFSs, 50 IT
ecosystems and banks & insurance agencies.
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: VRL Logistics Limited 39th 61 Annual Report 2021-22
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. India’s 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.

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 by the business entities with
Turnover of Rs. 500 crores and above from October-2020, and further limiting it to
Rs. 20 Crores and above from April-2022 would further lay emphasis on entities being
more compliant. The vehicle scrappage policy is a government-initiated program to

Page 33
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 from April 01, 2023. The imminent
implementation of scrappage policy is being tentatively viewed by the road transport
industry as there would VRL Logistics Limited 39th 62 Annual Report 2021-22 be a
very significant reduction in the number of vehicles plying on the roads. This however
would be a blessing in disguise. 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 margin for the Company. Also, given
the internal expertise the company has on the vehicle maintenance front al 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 Company’s profitability as the vehicles are fully
depreciated.
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 Company’s
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 or bus ticket prices.
However, the ever present volatility represents a considerable threat to our result of
operations. The Company’s 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 Company’s 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

Page 34
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. There is an expectation of a further waves of Covid-19. If
the same happens, the business operations would again see a disruption over such time
that the central govt./state govt. resorts to lockdown. However your Company has
demonstrated resilience to such temporary blips and your management remains
confident of overcoming any such situation

3.3 SEGMENT-WISE PERFORMANCE

The Overall revenues of the Company increased by 36% during the current year in
comparison with the earlier year.
The total revenue of the Company increased from Rs. 177578.73 lakhs to Rs.
241046.54 lakhs. The revenue from Goods Transport segment which is the major
segment in our operations increased by 34.19% from Rs. 159275.00 lakhs to Rs.
213738.24 lakhs.
The revenue from Bus Operations Segment increased by 57.16% from Rs. 13033.56
lakhs to Rs. 20483.75 lakhs.
The revenue from Sale of Power segment increased by 43.71% from Rs. 1757.44
lakhs to Rs. 2525.69 lakhs.
The revenue from Transport of Passengers by Air segment decreased by 5.83% from
Rs.1182.37 lakhs to Rs. 1113.38 lakhs.

3.4 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

Page 35
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 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 company’s 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.

Page 36
3.5 DISCUSSION ON FINANCIAL PERFORMANCE

The revenue from operations increased by 35.78% from Rs 176292.24 lacs to Rs

239365.25 lacs. Including other income the growth rate increased by 35.74% from Rs
177578.73 lacs to Rs.241046.54 lacs. EBITDA of the company for FY 2021- 22 was
Rs.42098.16 lacs. Your company clocked the highest ever revenues in this fiscal as
compared to our earlier years with better profit margins. The improvement in
Turnover is on account of Growth in Good Transport segment which is the major
segment in our VRL Logistics Limited 39th 64 Annual Report 2021-22 operation.
Revenue from Bus operations also stabilized post covid. We believe that the growth
in our core Goods Transport segment was amply aided by the proactive decisions
taken by the management. The change in strategies post covid not only helped in
expanding our clientele base but also helped in garnering a large chunk of market
share of the shift to the compliance efficient organized business houses, from risky
unorganized logistics service providers. We laid emphasis on expanding our network
as is evident from addition of 91 new branches in FY22. Going further, we plan to
open more number of branches in the untapped markets. The below diagram illustrates
the Zonewise percentage of new branches opened in FY 2021-22.

Page 37
The mandatory E-Invoicing by the business entities with Turnover of Rs. 500 crores
and above from October-2020, and further limiting it to Rs. 20 Crores and above from
April-2022 would further lay emphasis on Entities being more compliant. We believe
the steps taken by the Government clearly indicates that the business transactions
needs to be done in a complied and organized way rather that the non-complied
manner which were or being supported by the unorganized transporters while
transportation of the Goods. We have also seen that commodities which was being
handled majorly by the unorganized sector has seen a major shift to our company , for
example : Coconut products – In FY19 we used to handle 48 tons and in FY 22 the
same has increased to 5595 tons, Leather products has seen an increase from 2422
tons in FY19 to 15000 tons in FY 22. Areca nuts products has seen an increase from
4925 tons in FY 19 to 11500 tons in FY 22. To concentrate on the High growth
oriented and High Return LTL Goods Transportation business the company has
decided to sell the non-core segment of Sale of Power business and also sold one of
the Aircraft in Q4 of the current fiscal.
In absolute terms, the EBITDA of the company increased by 61.7% from Rs
26,035.04 lakhs to Rs 42,098.16 lakhs. However, when expressed as a percentage to
the total income for the year, the EBIDTA margin increased by 2.8% from 14.66% to
17.46% in FY 22. Total operating cost, in absolute terms increased by 31.28% from
Rs 1,51,543.71 lakhs to Rs 1,98,948.38 lakhs The EBIT of the company increased by
151.57% from Rs 10,056.03 lakhs to Rs 25,298.4 lakhs When expressed as a
percentage of total income, the same increased by 4.84% from 5.66% to 10.5%.
Deprecation increased by 5.14% from Rs 15,979.01 lakhs to Rs 16,799.76 lakhs The
PBT of the company increased by 229.29% from Rs 6,374.07 lakhs to Rs 20,989.22
lakhs. When expressed as a percentage of total income, the same increased by 5.12%
from 3.59% to 8.71%.

Page 38
VRL Logistics Limited 39th 65 Annual Report 2021-22 Interest Expense increased
by 17.03% from Rs 3,681.96 lakhs to Rs 4,309.18 lakhs Profit after tax of the
company increased by 255.27% from Rs 4,506.79 lakhs to Rs 16,011.26 lakhs. When
expressed as a percentage to total income it increased by 4.1% from 2.54% to 6.64%
Dividend - The Board of Directors at their meeting held on February 02, 2022 have
recommended an interim dividend of Rs.8/- per equity share out of the current year’s
profits. The same has resulted in a total outflow of Rs.7,067.47 lakhs.

3.6 Goods Transport (GT)

GT revenue increased by 34.19% from Rs.1,59,275 lacs to Rs. 2,13,738.24 lacs.
Tonnage increased by 27%. The increase in tonnage is on account of addition of new
customers in the existing branches, expansion in network by opening of new branches
in untapped market, focusing on geographic product-wise marketing and shifting of
customers from the unorganized transport service providers to organized service
providers on account of reforms in GST and E-way bill compliance norms. We are
hoping that considering our focus to increase our network going forward to the
untapped market by opening of new branches and the shifting of customers from
unorganised players to organised players (who are contributing major share in the
Indian Transport Industry) our growth pattern will continue even going forward. GT
EBITDA of the company increased by 51.13% from Rs 26,641.04 lakhs to Rs
40,263.3 lakhs in absolute terms while margins increased by 2.11% from 16.73% to
18.84% inspite of fuel prices rising continuously in FY 22.
The improvement in EBITDA is mainly on account of increase in GT volumes and
increase in freight rates. The higher growth in GT volumes resulted in to higher
growth in revenue during the year and the percentage of certain variable costs and
certain fixed costs to the revenue have been declined due to operational synergies.
The Diesel cost as a percent to the revenue increased from 28.38% to 30.09%.
We continuously monitor the diesel rates since diesel cost is major expenses for our
business. In view to have a better control on Diesel cost we focused to procure more
quantity of diesel from the refineries. After the reduction of Duties on diesel from
November the procurement of Bio-diesel is not much viable as compared to the
procurement of diesel from the refineries. Accordingly the quantity of bio diesel has
been reduced.

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We are having our own pumps in 6 locations and another one in the pipeline to
commence. These steps definitely ensure that our fuel procurement costs are way
lesser than the market fuel rates. In spite of the rising fuel prices, the company was
able to compensate by controlling their other operating expenses (as a percentage of
total revenue). Major costs such as Employee costs reduced by 2.02% from 17.15%
to 15.13%, Vehicle repairs and Maintenance reduced by 0.92% from 8.08% to 7.16%,
Bridge & Toll Charges reduced by 0.40% from 6.69% to 6.29%, Tyres, Flaps and Re-
treading reduced by 0.08% from 2.55% to 2.47%, Rates & Taxes by 0.10% from
0.90% to 0.79%, Insurance by 0.25% from 1.17% to 0.91% , Agency Commission by
0.13% from 1.30% to 1.17%, Hamali by 0.15% from 6.20% to 6.06%, Clearing and
Forwarding by 0.02% from 0.07% to 0.05% Some major costs that increased as a
percent of margin include Lorry Hire charges by 0.02% from 7.54% to 7.56%, Rental
costs by 0.25% from 1.61% to 1.86%, and Claims by 0.01% from 0.09% to 0.11%. In
view of these changes the EBITDA margin improved from 16.73% to 18.84%.
This clearly indicates that the Company was able to fully pass on the incremental costs
to the customers in this segment despite a difficult economic situation which is an
encouraging sign.  Increase in volume and better realisations leads to higher
EBITDA margins  Geographical Expansion • Business shift from unorganized to
organized fleet operators due to GST, E-way Bill & E- invoicing reforms •
Operational Efficiencies • Increased contribution from newer commodities. VRL
Logistics Limited 39th 66 Annual Report 2021-22 Since we are expanding our
Network and also adding many new customers we expect that the volume growth will
continue in the coming quarters. Further as we are having the best method of
operations with our own infrastructure facilities we can have better control on key
expenses such as Diesel costs etc and maintain the margins in the coming quarters.

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Page 41
 CHAPTER-04
LEARNING OUTCOMES

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 4.1 Learning Experience

Experience is the crucial aspect for every student to have a successful and challenging
carrier. It is just not enough to know the theoretical aspects taught inside the
classroom, but the real world exposure is very important. Every student has to gain
the knowledge of communication skills, decision making power etc that is possible
only by mingling with all kinds of people. I would like to say that, this In-plant
training has given me an opportunity to have a corporate exposure so as to face my
career challengingly.

My In-plant training at VRL was very helpful and knowledge based, as it gave a
practical experience of corporate functioning of the company. I got a very co-
operative experience, which made to have a successful study of the company's
activity in each section and was able to acquire practical knowledge in this field.

Through this training I got to know about how the management theories and concepts
are applied in organizations. I saw how managers efficiently manage a large number
of employees, machines to run the company to lead towards its goals. More over the
in- plant training was a good exposure for me to the working conditions of the
organizations.

The leadership styles, working style and communication flow were understood from
the overall study of each department. The company follows participative leadership
style.

The authority, responsibility, relationship and information flow etc. Prevailing in the
company was studied. How the training techniques like on the job training are
adopted in the organization was learnt. The social responsibility programs and the
corporate governance of the company were studied during the period. I also got to
know the healthy relationship maintained between the employees, suppliers etc.

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 CHAPTER-05

FINDING, SUGGESTION AND CONCLUSION

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 5.1 Findings

 The total assets of the company in the year 2017(Rs.896.68cr) and in the year
2018(Rs.862.26cr). Which is decreased in the year 2018 by 3.83% because of
it couldn’t utilize assets properly. K.L.E. SOCIETY’S SHRI
MRITYUNJAYA COLLEGE OF ARTS, COMMERCE AND CENTRE
FOR POST GRADUATION STUDIES IN COMMERCE, DHARWAD Page
66 A STUDY ON FINANCIAL ANALYSIS OF VRL LOGISTICS
LIMITED.

 The comparative record reveals that reserves and surplus as Rs.508.23cr in

the year 2021 and Rs.526.53cr in the year 2020 it decreases by 3.367% in the
year 2021 due to increase in liabilities.

 The liquidity position of VRL Company was not satisfactory during the study
period 2019-20, and 2020-21 expect the year 2017-2018; 2018-2019 as the
current ratio was less than 2:1 which is the standard proportion for current
ratio.

 The company had the quick ratio less than 1:1 standard ratio 1:1 during the
study period. Quick ratio of the company indicates that the company had less
quick asset over the period of the study.

 The debt equity ratio of the company was less than 2 except 2020-21. The
standard proportion for the debt and equity of a firm should be 2:1.
Therefore, it indicates that the debt equity position of the company highly
satisfactory as this proportion is highly acceptable.

 The gross profit ratio of the company during the study period showing
decreasing trend in the year 2018-19 and 2020-21 It indicates that the gross
profit was not favorable to the company during the study period.

 The profitability of the company was satisfactory in the year 2017-18, 2018-
19 and 2019-20, but it again decline from 48.15 to 25.53 in the year 2020-
21during the study period.

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 The operating ratio of the company had an increasing trend from the year
2017-18 (159.19), in the year 2020-2021 (209.20) which shows company
earned maximum profit.

 The return on asset ratio of the company was fluctuating trend over the study
period. The ratio was maximum in the year 2017-2018 (107.35) compared
with other present year and it indicates that the utilization of assets by the
company was not good during the study period. K.L.E. SOCIETY’S SHRI
MRITYUNJAYA COLLEGE OF ARTS, COMMERCE AND CENTRE
FOR POST GRADUATION STUDIES IN COMMERCE, DHARWAD Page
67 A STUDY ON FINANCIAL ANALYSIS OF VRL LOGISTICS
LIMITED

 The return on shareholders' equity ratio was mixed trend. During the study
period 2017- 18 (156.03) this ratio is indicates a very high return on
shareholder’s equity. But in the year 2020-21 it was declined.

 The earnings per share of the company had very high ratio (10.25) in the year
2017-18 of the study and it is an indication of very high return per share of
the company. But it decline in the year 2020-21 due to increase in operating
expenses.

 The ratio for book value per share subsequently increases from the year
2017-2018 (65.69) to 2018-2019 (71.53). In the final year 2020-2021 the
book value per share fluctuating in the value (67.62) of the company.

 Fixed assets turnover ratio is not satisfactory due to reduction of investment

in fixed assets therefore company fails to generate satisfactory income from
fixed assets.

 The debtor's turnover ratio is good i.e. in the year 2017-2018(23.80), 2018-
19(26.52), 2019-20(25.72), and 2020-21 (27.57). It shows the collection of
debtors is very prompt.

 Working capital was couldn’t utilized properly due to its lower revenue.

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 5.2 Suggestion

 Management must achieve the targets by utilizing the current assets and
reducing the current liabilities.

 The company may increase its liquidity position through investing in readily
marketable securities there by maintaining sufficient working capital.

 Management should give more importance towards the raise in investments

in fixed assets by way of acquiring from the available excessive cash and
bank balance and other working capital assets.

 Suitable steps should be initiated to keep the operating expenses of the

company under control.

 Return on Assets of the company was in fluctuating trend. So the company

should take appropriate action to effectively utilize the Assets of the
company.

 The company should take appropriate measures to increase the gross profit
and net profit by reducing the variable expenses.

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 5.3 Conclusion

The management of a company's finances must include working capital. The ability
of the business to fulfil its immediate obligations. Due to its critical role in
determining a company's financial performance and health, working capital
management is a crucial component of fiscal management. It examines how working
capital affects a company's financial performance. The management of a company's
working capital directly affects its liquidity, profitability, and risk. Making sure the
company has enough cash and other liquid assets to meet its short-term obligations
is goals of working capital management.

Financial distress and even bankruptcy can result from a lack of adequate working
capital. Thus, it is crucial to keep working capital at a healthy level. Liquidity,
profitability, and risk can how working capital affects financial performance.
Profitability is a company's capacity to make money, whereas risk is the
unpredictability of its future cash flows. Let us begin by considering the impact of
working capital on liquidity. The amount of working capital a company has is a crucial
aspect in determining its liquidity. If a company does not have enough working
capital, it could run into trouble financially if it cannot meet its short-term obligations.
A company that has excessive working capital may not be making the best use of its
resources. As a result, it is critical to maintain a working capital level that balances
the business's liquidity needs with operational efficiency. A business can increase its
liquidity by effectively managing working capital by making sure it has enough cash
and other liquid assets to cover its immediate liabilities.

Second, consider the impact of working capital on profitability. The amount of

working capital a company has can have a significant impact on its profitability. Lack
of working capital could prevent a company from taking advantage of lucrative
opportunities or force it to use expensive financing options. However, a company
with excess working capital may be skipping out on investment opportunities that
could generate greater returns.

As a result, it is critical to maintain a working capital position that balances the

company's need for profitability with its liquidity needs. By efficiently managing
working capital and ensuring that it has the resources required to take advantage of

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profitable opportunities, a business can increase its profitability. Finally, let us
consider how working capital impacts risk. The working capital a business has can
also have an effect on its risk profile. Lack of working capital could force a company
to use expensive financing options, increasing its financial risk.

However, a company with excess working capital might not be using its resources as
effectively, which would put it at a higher operational risk. In order to balance the
needs of the business for risk, profitability, and liquidity, it is essential to maintain the
ideal level of working capital. By effectively managing working capital, a company
can reduce both operational and financial risk, which raises the overall risk profile of
the company. An organisation can boost its financial performance and reach its long-
term objectives by managing working capital well.

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