A Project Report on LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR

“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”

EXECUTIVE SUMMARY

In the field of management practical work plays a vital role, it is this practical

knowledge which drives one to his or her ultimate desire. In the similar way company can

achieve its ultimate goal only if it has sufficient service which contents prospective workers.

Title of the project:

“Logistics Management in VRL Logistics Limited at Varur”.

This fruitful venture was accomplished by undertaking the study at VRL Logistics

Limited, which is well known for its quality and in time service. The pioneer provides service

in goods transportation, passenger transportation and courier service.

The Logistics chain starts from suppliers or consigner, the strength of the chain would

emerge from the relationship that are nurtured between the consignee (person to whom the

goods are delivered) and transporter of each line and the flexibility would be a result of the

transparency of communication, speed of reaction and the focus on core competence.

Need for the study:

To study the various aspects involved in the Logistics management.

Objectives of the study:

i. To study the various costs involved in the Logistics management.

ii. To the importance of warehousing in Logistics management.

iii. To know overview of freight movement.

Limitations of the study:

The necessary information about the project was given by the company. Some of the

study was depended on observation.

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Findings:

i. The effective pricing strategy of VRL Logistics Limited.

ii. The various kinds of services offered by them.

iii. The material handling in the Varur TPT.

iv. The capacity of the warehouse.

v. The strategies of the VRL logistics Limited.

vi. Factors affecting road transportation.

Suggestions:

i. It should emphasize on warehousing facilities provided.

ii. Transhipment labours should be given sufficient training to handle the

goods.

iii. The company should build relationship with industries for more

contracts.

iv. TPT labours may be divided into three shifts for the efficiency. At

present they are working in two shifts of 12 hours each.



INTRODUCTION TO LOGISTICS

Logistics is a broad, far-reaching function which has a major impact on a society’s

standard of living. In a modern society, we have come to expect excellent logistics services,

and tend to notice logistics only when there is a problem.

The difficulty in shopping for food, clothing, and other items if logistics

systems do not conveniently bring all of those goods or items together in one

place, such as a single store or a mall.

The challenge in locating the proper size or style of an item if logistical

systems do not provide for a wide mix of products, colours, sizes, and styles

through the assortment process.

The frustration of going to store to purchase an advertised item, only to find

out the store’s shipment is late arriving.

There are only few of the issues for granted which illustrate how logistics touches

many facets of daily lives. Because of the magnitude of the impact of logistics on society and

individuals, a macro approach is taken to understand the logistics management.

Logistics is called by the many names, including the following:

Business logistics

Distribution

Logistical management

Supply chain management

Supply management

What these terms have in common is that they deal with the management of the flow

of goods or materials from one point of origin to point of consumption, and in some cases

even to the point of disposal.



The Council of Logistics Management (CLM) describes logistics management as “The

process of planning, implementing and controlling the efficient, effective flow and storage of

goods, services, and related information from point of origin to the point of consumption for

the purpose of conforming to customer requirements.”

KEY LOGISTICS ACTIVITIES

Outlined below are the key activities required to facilitate the flow of a product from

point of origin to point of consumption. All of these activities, listed below, may be

considered part of the overall logistics process.

Customer service

Demand forecasting/planning

Inventory management

Logistics communication

Material handling

Order processing

Packaging

Plant and warehouse site selection

Procurement

Return goods handling

Traffic and transportation

Warehousing and storage

While all organization may not explicitly consider these activities to be part of

logistics activities, each activity affects the logistics process.



Figure shows how logistics activities drive total logistics costs.


Place/customer service levels

Customer service Parts and service support Return goods handling

Inventory carrying costs

Inventory management Packaging Reverse logistics

Transportation costs

Traffic and Transportation

Lot quantity costs

Material handling Procurement

Warehousing costs

Warehousing and storage Plant and warehouse site

selection

Order processing and Information costs

Order processing Logistics communication Demand forecasting/planning


OBJECTIVES OF THE STUDY

1. To understand the logistics management.

2. To study the role of infrastructure in logistics management.

3. To study various documents maintained while transportation of

goods.

4. To study manpower used and material handling in loading and

unloading of trucks.

5. To study various costs involved in logistics and steps to reduce

those costs.

6. To study the booking and delivery process maintained in

organization.

7. To study the importance of warehousing in logistics.

8. To know the potential for logistics industry in fourth coming years.

METHODOLOGY

It’s not only the data; it is the way in which we collect the data. So

methodology is the sequence in which the data are collected. The tools for

collection of data for the present project work are the primary data and

secondary data. The information furnished in this report has been collected

primary data as well as secondary data.

The primary data is collected through the interaction with the

managers, supervisors, drivers, and labours of the company. The secondary data

has been collected from annual reports and company website.



INDUSTRY PROFILE

INDUSTRY OVERVIEW

Healthy economic growth, rise in the production of key commodities, infrastructure

investments and growth in import-export have led to growth in freight movement in the past 5

years, with roadways dominating freight movement on account of higher flexibility, reach and

customer preference.

Domestic freight transportation service (DFTS) refers to transportation of goods

within India; Here the mode of transportation also mainly refers to roadways and railways, as

they carry nearly 90 per cent of the cargo in volume terms.

The domestic freight transport services may be characterized as a large growing

sector. The size of the DFTS sector in India, comprising mainly transport by roads, railways,

coastal shipping and pipelines is estimated at 1,590 billion tonne kilometres (btkm) in volume

terms and at Rs. 1,990-2,010 billion in value terms in 2006-07. In volume terms, as per

CRISIL Research it is estimated that the sector has grown at 10.5 per cent per annum during

2001-02 to 2006-07, whereas during 2006-07 to 2011-12, it is forecast to grow at 10.1 per

cent per annum, and reach a projected size of 2,569 btkm by 2011-12.Going forward, given

the buoyancy in the economy and expected completion of infrastructure projects, the overall

freight movement is expected to remain strong. As a result, roadways will further gain market

share, backed by its inherent advantages of flexibility and due to the growth in demand from

redistribution segment. On the other hand, railways’ share will decline on account of capacity

constraints, until the dedicated freight corridors are completed.

In 2006-07, road transport services comprised nearly 58 per cent of the total freight

share, followed by rail transport at around 32 per cent and coastal shipping and pipelines with

relatively smaller shares of around 5 percent each. As per CRISIL Research roadways expects

to continue to dominate freight movement, with its share expected to grow to a tidy 61 per

cent in 2011-12.

On the other hand, the share of railways is expected to decline to 29 per cent in 2011-

12, on account of capacity constraints during the same period, while the share of pipelines and

coastal movements will remain small. Thus, road transport will remain the growing segment,



owing to its plus points such as greater coverage, higher flexibility and door-to-door delivery.

The sector will enjoy the benefits out of its inherent advantages despite higher effective cost.

Other factors like lower risk of handling loss, lesser loading and unloading of goods,

investments made in the NHDP and relatively higher customer orientation as perceived by

users also give road freight transport an edge.

INTRODUCTION

Transportation is the process of moving goods and passengers from origin to

destination in the timely and cost efficient manner possible with the available modes of

transportation.

MODES OF TRANSPORTATION:

In order to transport material from one place to another transporters have to use Rail,

Road, Air, Water and Pipe Line as the modes of Transportation. A brier introduction to the

various mode of transportation is as follows

Rail: Used for delivery of a wide range of goods including coal, iron ore, cement, food

grains, fertilizers, steel, petroleum products and other heavy goods.

Road: Used by suppliers to deliver goods in a cost effective manner. Many transport

companies have expertise for fast delivery, packaging etc. for making scheduled delivery.

Air: Used mostly for delivery of high value and low volume goods from distant

suppliers, usually not connected by any other mode of Transportation. It is also suitable for

emergent item to be imported for some specific requirement.

Water: Used by firms for delivery of goods from distant suppliers, mostly conducted

in containers of varied size. This mode is ideal for transportation of heavy and bulky goods

and suitable for products with long lead times.

Pipe Line: Used by oil sector companies for mass movement of Petroleum products

including gases. Due to quite low operating cost it is one of the preferred modes of

transportation.



INDUSTRY CLASSIFICATION

FRAMEWORK FOR FREIGHT DEMAND DETERMINATION



DRIVERS THAT INFLUENCE FREIGHT MOVEMENT

The overall freight movement in the country depends significantly on the growth in

industrial, agricultural production and imports. This is also reflected in the high degree of

correlation (>0.99) between GDP (industrial plus agriculture) and imports (called adjusted

GDP) versus freight movement during 1971-72 to 2006-07.Besides economic growth, the

investments made in infrastructure of transport segments also are an important driver of

freight movement in a particular mode of transportation.

Even though economic growth is the most significant driver for freight movement in a

broad sense, the extent of influence specific demand drivers will have on a particular mode of

transport may vary. For instance, freight movement in coastal shipping mainly depends on the

extent of import-export in the country, while, rail and road freight movement has been

significantly influenced by the hub and spoke model of freight distribution.



REVIEW OF FREIGHT MOVEMENT

During 1991-92 to 2006-07, the total freight movement is estimated to have increased

at a CAGR of around 7.2 per cent, to 1,590 btkm in volume terms and at Rs 1,990-2,010

billion in value terms in 2006-07, in line with the CAGR of 5.9 per cent in adjusted GDP

during the same period. Further, when the adjusted GDP growth declined from 7.3 per cent in

1996-97 to 2.3 per cent in 1997-98, demand for freight movement also declined from 5.2 per

cent to 4.4 per cent. Similarly, over the past years, while adjusted GDP growth increased at a

CAGR of 7.3 per cent, freight movement during the same period has increased at a CAGR of

about 10.5 per cent.



DOMESTIC ROAD FREIGHT TRANSPORTATION SERVICE:

Overview

Going forward, given the buoyancy in the economy and expected completion of

infrastructure projects, the overall freight movement is expected to remain strong. As a result,

roadways will further gain market share, backed by its inherent advantages of flexibility and

due to the growth in demand from redistribution segment. On the other hand, railways’ share

will decline on account of capacity constraints, until the dedicated freight corridors are

completed. In 2006-07, road transport services comprised nearly 58 per cent of the total

freight share, followed by rail transport at around 32 per cent and coastal shipping and

pipelines with relatively smaller shares of around 5 percent each. As per CRISIL Research

roadways expects to continue to dominate freight movement, with its share expected to grow

to a tidy 61 per cent in 2011-12 (excluding demand from last mile). On the other hand, the

share of railways is expected to decline to 29 per cent in 2011-12, on account of capacity

constraints during the same period, while the share of pipelines and coastal movements will

remain small. Thus, road transport will remain the growing segment, owing to its plus points

such as greater coverage, higher flexibility and door-to-door delivery. The sector will enjoy

the benefits out of its inherent advantages despite higher effective cost. Other factors like

lower risk of handling loss, lesser loading and unloading of goods, investments made in the

NHDP and relatively higher customer orientation as perceived by users also give road freight

transport an edge.



FREIGHT MOVEMENT: BULK VERSUS NON-BULK

Freight movement can be divided into bulk and non-bulk freight. Bulk freight includes

commodities like cement, fertilizer, food grains, POL, iron ore etc and non-bulk freight

includes general cargo (increasingly containerized). In 2006-07, bulk commodities are

estimated to have constituted about 70 per cent of the total freight movement. While 90-95

per cent of the railways’ freight constitutes bulk commodities, roadways’ freight is evenly

balanced between bulk and non-bulk commodities, with the non-bulk commodities

contributing 45-50 per cent of its total freight movement. Coastal shipping and pipelines

largely move bulk commodities. Over the next 5 years, the share of non-bulk freight

movement is expected to increase to 40 per cent of the overall freight movement, largely

supported by road transport. While 60 per cent of the road freight transport is expected to be

constituted by non-bulk commodities, the railways’ freight mix will continue to be dominated

by bulk commodities at 90 per cent. (Estimations are on btkm terms.)

ROAD FREIGHT MOVEMENT: HAULAGE-WISE

The road transport sector can be broadly divided into two areas, primary transportation

that is, long haul (>800 km), medium haul (350-800 km) and short haul (50-350 km)] and

secondary transportation (referred to as last mile distribution with <50 km). In 2006-07, out of

the total primary road freight movement (estimated in btkm terms), long haul contributed

close to 20 per cent, medium haul contributed over 55 per cent and short haul around 25 per

cent. Railways have an upper hand over roadways in long haul movement of commodities

mainly on account of its favourable cost economics (lower freight rates) and tie up with

government undertakings for freight movement. On the other hand, road transport has been a

favoured mode of transport in the medium haul, due to competitive and effective freight cost,

fuel efficient vehicles, improved highway infrastructure etc.



INHERENT ADVANTAGES INFRASTRUCTURE SUPPORT GIVE AN EDGE TO

ROAD TRANSPORT

Historically, railways has remained a dominant mode of transport in India, over the

past few decades, roadways has gained a significant share in the overall traffic movement,

while railways has lost its market share.

The reasons that have helped roadways gain market share are as follows:

Greater coverage as compared to any other mode of transport

Higher flexibility in terms of door-to-door delivery, giving it an edge despite

higher effective cost

Lower risk of handling loss, due to lesser loading and unloading of goods.

Investments made by the government in the NHDP.

Given the above-mentioned advantages and growth in road infrastructure, the road

transport network has acquired a considerable advantage over a period of time. This is evident

from the fact that during 2001-02 to 2006-07, while freight demand in road transportation

sector is estimated to have grown by 12.3 per cent, the growth in the overall road freight

movement was about 10.5 percent, and the growth in rail freight movement was just about 8.5

per cent. Consequently, over the past few decades, the share of road transport in the total

freight movement has also been increasing; this share has been estimated to increase from

53.3 per cent in 2001-02 to around 57.8 percent in 2006-07, supported by strong economic

growth, inherent advantages of roadways and initiatives in infrastructure development. (It

may be noted that this share of road excludes last mile freight movement).



BUSINESS OVERVIEW OF THE VRL LOGISTICS LIMITED

VRL Logistics is into the business of transportation and logistics service of goods and

transportation of passengers by road. They have a long operating track record of more than

two decades in this business. The chairman Mr. Vijay Sankeshwar has over three decades of

experience in the transportation industry. They have also recently forayed into wind power

generation and air charter business.

VRL Logistics offer following services which are summarized below -

1. Goods Transportation

a. Full truck Load

b. Less than full truck Load (Parcel)

• General Parcel

• Express Cargo

c. Courier

d. Passenger Travels

2. Wind Power Generation

3. Air Charter Business



VRL OPERATION

Goods Transportation and distribution business is carried across 17 states and 7

Union Territories i.e. Pondicherry, Daman, Silvassa, Chandigarh, Karaikal, Yanam, Mahe

covering 649 cities through out India. They cover the states of Karnataka, Andhra Pradesh,

Tamilnadu, Kerala, Maharashtra, Goa, Gujarat, Rajasthan, Punjab, Haryana, Delhi, Himachal

Pradesh, Uttar Pradesh, Chhattisgarh, Madhya Pradesh, West Bengal (Kolkata) and

Uttarakhand under this business.

Passenger transport business is carried on under the name of “Vijayanand Travels”.

They carry on this business within the state of Karnataka, Maharashtra and Tamilnadu

covering 56 cities in all. They have 40 branches and 466 franchisees across the states of

Karnataka, Maharashtra and Tamilnadu for their passenger transport business.


VRL LOGISTICS LIMITED

Transport and logistics Wind Power Generation Air Charter Operation

Passenger Travels

Vijayanand Travels

Goods Transportation

Full Truck Load

Express Cargo

Less Than Full Truck Load

(Parcel)

Maruti Parcel Carriers

AirRailRoad

General Parcel

Courier

Shiva Road lines


The fleet strength as on February 29, 2008 comprises of 2,683 vehicles, all of which are

owned by the Company. The fleet comprises of 2,446 vehicles for goods transportation, 197

vehicles for passenger travels and 40 vehicles for internal use which includes fork lifts,

cranes, staff buses, water tankers, diesel tanker, tractors etc.

Wind power generation: In 2006 VRL Logistics commenced wind energy business

in southern India at Kappatgudda, Gadag district in the state of Karnataka. Company had

issued various purchase and work orders to various Suzlon entities for the supply,

commissioning and erection of 34 Wind Turbine Generators (WTGs). As on date all the 34

WTGs are operational. These WTGs are presently under warranty period which expires on

March 31, 2008. Operations and maintenance of windmills are been taken care of by Suzlon

Energy Limited by a team of experts at the site.

Company has installed 34 wind turbine generators (10 WTGs in the month of

September 2006 and 24 WTGs in the month of March 2007) with a capacity of 1250 KW

(1.25MW) and all are operational. The total capacity of the wind turbine generators amounts

to 42.5 MW. Between April 1, 2007 and February 29, 2008, 77818019(KW) units of power

have been generated with a PLF of 22.77%.

Air charter business: VRL Logistics have entered into the air charter business by

providing services to individuals and corporate passengers. Recently, the Company has

purchased premier 1A aircraft from Hawker Beech craft Incorporation, USA. Premier 1A is 2

pilots and 6 passenger seat aircraft (with 4 club configuration seats). They have also entered

into MOU dated November 1, 2007 with Indamer Company Private Limited for the

maintenance of the aircraft.

Company have also made an application to the Ministry of Civil Aviation, requesting

for a no objection certificate which grants a Non Scheduled Operator Permit. They have been

granted the initial NOC dated March 23, 2007 to operate Non Scheduled Operator Permit

from the Ministry of Civil Aviation. They will operate on an all India basis subject to

necessary government approvals. The air charter business is headed by Vice President- Air

Charter, who looks after all the activities of this business. They also started recruiting the



pilots, co pilots, security officers and other staff for the business. They will be on the payroll

of the VRL Logistics Limited.

COMPANY PROFILE

VRL LOGISTICS LTD VARUR, HUBLI

BRIEF HISTORY OF THE COMPANY

The Managing Director Mr. V, B, Sankeshwar started as an individual

transporter in January 1976. Without any background and experience, initially for the first two

years he suffered heavy losses, and then by end of 1977 he started as a local transporter

between Hubli and Gadag. In 1978 due to personal management and effective service he

purchased one old lorry and he observed activities of other well known transporter, and

started first parcel service from Bangalore to Hubli, Garage, and Belgaum. With only two

Lorries gradually business picked up.

Similarly Smt Lalita .V. Sankeshwar purchased one old lorry in the year 1979

and running individually and some times hiring out to Vijayanand Road Lines which was

proprietary concern then, company came in to existence effective from 31st march 1983. Due

to efficient management and co-operation from the staff the total turn over and business

picked up.



The above proprietorship firm was converted into a private limited company and sold

its lorries to the company and the company came in to existence effective from 31st march

1983. Since then, the business has grown leaps and bounds and VRL LOGISTICS LTD is

presently engaged not only in the goods transportation business but in the passenger

transportation and courier business. VRL LOGISTICS LTD today is the leader in the parcel

transportation business in India – in fact the only organized segment player with a clear focus

on the parcel segment- and has an extensive network of more than 800 branches throughout

the country.

VRL LOGISTICS LTD’s revenue for the year ending March 2008 is 2750 million; the

company got 81% of its revenues from goods transportation, 18% from passenger

transportations 1% from other source.



COMPETITIVE STRENGTHS

An established brand having a good reputation:

They have built a brand over two decades, owing to their commitment to quality

service standards, reliability and timeliness of services offered and long-standing presence in

the industry. They have a long operating track record in the industry. They have expanded

their service offerings over the years; having commenced operations with parcel cargo

transportation, they presently offer other services such as express cargo, courier and passenger

transportation. They provide several luxury offerings in passenger transportation business.

They also share good relationships with their business associates such as truck manufacturers

and equipment manufacturers who are very critical to the business.

Large and established size and scale of operations:

There are a multi-service transport and logistics provider with their presence in

17 states and 7 Union Territories in India. They offer a wide range of services such as

parcel cargo, express cargo, full truck load and courier services in addition to passenger

transportation. Company has an extensive network of operations which enables us to

provide connectivity even to certain remote locations. As on February 29, 2008 they

have a fleet strength of 2683 owned vehicles for carrying on the goods transportation

and passenger transportation business. They have presented below a summary of the

size of operations in the goods transportation and passenger transportation business:

Details Goods Transportation Passenger Travels

No. of vehicles owned 2479 222

No. of States covered 17 3

No. of Union Territories 7 -

No. of cities covered 649 56

No. of transhipment hubs 43 -

No. of branches (owned) 799 40



No. of Franchisees 1387 466

The large fleet size provides them multiple benefits like ability to provide the services

in larger number of routes, better margins on consignments, less dependence on hired

vehicles, and reputation for reliable delivery of the consignment / passengers in a timely

manner. Also the variety of vehicles fleet enables them to service the diverse nature of

consignments of their customers and requirements of their passengers.

Long operating history in the transport and logistics business:

They have an operating track record of over 24 years in the transport and logistics

business. The chairman Mr. Vijay Sankeshwar, who has been actively involved in the

business and management of the Company enjoys over three decades of experience in the

transport industry. They have extensive experience in the transport and logistics industry

enables us to gauge and understand the changing trends and growth prospects in the industry.

They have always believed that there is a growth potential in the transport and logistics

industry. During 1991-92 to 2006-07, the total freight movement is estimated to have

increased at a CAGR of around 7.2 per cent, to 1,590 btkm in volume terms and at Rs 1,990-

2,010 billion in value terms in 2006-07, in line with the CAGR of 5.9 per cent in adjusted

GDP during the same period.

Strong In-house capabilities:

They have developed strong in-house capabilities over a period of time which enables

to improve the efficiency of the vehicles and improve their delivery model. Their in-house

body designing facility enables us to build the structures for the vehicles based on their

specifications, thereby maximizing utilisation of space and minimising the body weight by

using light metals like aluminium along with the steel, rather than steel alone. The in-house

competency also includes vehicle repair and maintenance facility at Varur where they focus

on carrying on preventive maintenance measures to minimize the events of breakdown or

damage to vehicles.



Long serving and experienced management team:

They believe that employing and retaining individuals with experienced backgrounds

has enabled us to capitalize on their collective expertise in understanding this business and

ensuring its growth. They are led by a management team with sound experience and expertise

in the transport and logistics industry. The promoters are actively involved in management of

the business operations. The Chairman and Managing Director, Mr. Vijay Sankeshwar, has

over 3 decades of experience in the industry and provides the strategic direction to the

operations.

Integrated Business model:

They offer a range of services that are complementary to each other and thus

constitute a unique business framework. They have adopted a hub and spoke distribution

model for delivery of their consignments, which entails establishment of several transhipment

hubs and re-distribution of consignments there from to the respective destinations. This

ensures significant cost savings, rationalization of routes covered by the vehicles and

optimum utilization of resources including vehicles, manpower etc. They have 43

transhipments hubs, 799 owned branches and 1387 franchisees, which enables the smooth

flow of goods and services. They are an integrated transport solution provider with the variety

of services that they offer. The service offerings enable us to access a diversified customer

base comprising both institutional and retail customers. This enhances brand visibility among

different customer segments.



CURRENT POSITION

The company currently is on a growth path having achieved a turnover exceeding Rs

2,750 million for the year ending March 2008. The company has the largest network of

branches among all transport companies in south India with over 1000 branches in Karnataka,

Tamil Nadu, Andhra Pradesh and Kerala. The company currently owns 2479 trucks and

LCVs, 222 buses and regularly hires additional trucks from the market to render its services.

This makes the company the largest individual owner of vehicles in India giving the company

additional flexibility in its operating margins higher than other players in the organized

transport industry. The company is known for its reliable quality service during its operation

for the last two plus decades. VRL is an established brand name and this enables the company

to charge premium rates to its customer.

Turnover of Logistics division increased to Rs.51258.80 lacs in the current year

registering on increase of 17.20% over turnover of FY 2006-07. Express Cargo which is part of

logistics has achieved considerable operational success to reach turnover of Rs.2663.69 lacs in

FY 2007-08.

The Turnover details are as below.



From the above figures we can say that there is steady increase in the growth of the turn

over of the company. Within 25 years company has focused towards its Goals.

VISION, MISSION AND OBJECTIVES

VISION

To become the primer company that cuts across various segments and remaining

as the torchbearer of each segment that the group venture in to.

MISSION

To provide the highest quality service to our customers by continuously

increasing cost efficiency and maintaining delivery deadlines. To encourage our

employees /workforce to strive for quality and excellence in everything they do.

To promote team work and create a work environment that takes care of talent

and brings out the best in our employees.

THE VALUES

“PUNCTUALITY, INTEGRITY, HONESTY, LOYALTY AND

CREDIBILITY”

THE QUALITY POLICY

We are committed to provide Quality Logistics services consistently at

reasonable price and to continually improve the same to achieve customers’

delight on a sustainable basis.



OBJECTIVES OF THE COMPANY

The main objective of the company is to provide good service to customer with

the reasonable rate and provide quick prompt and safe service.

To develop the transportation business in states like Andhra Pradesh,

Tamilnadu and Kerala.

To have fixed-assets mainly own storehouse in big cities like Davanagere,

Gulbarga, Bangalore etc.

To have an independent own building with printing machines &computer for

each &every district.

Training for all the employees.

Quick and safe service.

Customer satisfaction.

Competitive price.

Attain market leadership.



ACHIEVEMENTS AND AWARDS

VRL LOGISTICS LTD well known as ‘VRL’ has been a staunch believer of ‘Symbol

of Service’ and has become a familiar name in the country and in the state of Karnataka with

more than 600 branches all over the country. The company has 1600 vehicles consisting of

cargo and passenger buses and claims to be the largest single fleet owner in the world.

The company has been making all the efforts to have its own infrastructure facilities

like trans shipment yards, etc, in all the key business places, by acquiring the immovable

properties, the company has already established its own business activity centres and has also

been acquiring land properties. Thus, the group has been acquiring valuable assets.

Managing director of VRL LOGISTICS LTD Sri V.B.Sankeshwar has been awarded

“Udyog Ratna Award” in 1994, “Sarige Ratna Award” in 1998 and “Vishveshwarayya

Navaratna Award “in 2003.



CENTRALIZED BUILDING / LAND IS UTILIZED FOR THIS PURPOSE

Head office Building.

Transhipment godown.

Work shop for existing vehicles.

Canteen facilities for employees.

Drivers rest room.

The company has own petrol bunks Indian Oil Corporation.

Effluent treatment plant with capacity of 1, 75,000.

Rain water harvesting plant’ surface rainwater harvesting.

Surface rain water harvesting.

Roof water harvesting.

OWNERSHIP PATTERN AND MANAGEMENT

This company has been converted into a full-fledged public ltd

company since 14-02-1997. The authorized, issued, subscribed and paid up share capital of

the company as on date is 2000crores (200000 equity share of Rs 1000 each). To augment

resources for its future infrastructure development, the company is envisaging a public deposit

scheme for since infrastructure development such as purchase of buildings, godowns, etc, at

various places where the company has established its activities.



SHIFT FROM UNORGANIZED SECTOR TO ORGANIZED SECTOR

Currently, it is estimated that the unorganized sector accounts for over 86% of

the goods transport in the country. With the introduction of VAT, significant shift of the

business is expected from the unorganized sector to the organized sector (given that sales tax

evasion is no longer an attraction under the VAT scheme) and VRL LOGISTICS LTD is well

poised to take advantage of this shift with its wide network and the image of being a reliable

service provider.

Leadership position with revenue in excess of Rs 51258.80 lacs from the Logistics

division for the year ending March 31, 2008, the company is a leader in this segment, in fact,

the only organized sector player with a distinct focus on the parcel segment.

The companies further hopes to consolidate the position in this segment by increasing

its thrust on marketing and establishing further stations across India to increase its reach.

With the largest reach in south India, the company has a well established network of

branches enabling, procuring and distribution of goods across south India. The company

currently has in excess of 350 branches in Karnataka, Tamil Nadu and Kerala making it the

transporter with the largest reach in south India. Needless to say the impressive reach of VRL

LOGISTICS LTD within south India combined with its reliability has made VRL

LOGISTICS LTD the preferred transport of many a corporate houses in the southern region.



BOARD OF DIRECTORS

Sri. VIJAY SANKESHWAR (Chairman and Managing Director)

Has ardent faith in transparency to the core. He is a cut throat business

entrepreneur and a technocrat, highly professional in finance and accounts, legal and

personnel, advertisements and in circulation or marketing.

Sri. ANAND SANKESHWAR (Managing Director of Vijayanand Logistic

Ltd)

Sri. L. RAMANAND BHAT (CTO VRL LOGISTICS LTD)

He is the brain behind the entire computer system, heads the entire activities of

the workshop and garage for maintaining the bodybuilding of vehicles.

Sri. K. N. UMESH (Chief Executive Officer)

Heads the entire cargo transport activities of the southern and northern parts of

the country with HQ in Bangalore.

Sri. D. N. KULKARNI (Vice President of finance department)

Director of board at VRL handles finance and accounts wing of the group.



ORGANIZATION CHART


Anand Sankeshwar

Managing Director

Vijay Sankeshwar

Chairman and Managing Director

S.L.Nagaraj

Chief Accounts

Officer

K.N.Umesh

CEO

L.R.Bhat

CTO

V.V.Karmadi

VP (Operation)

G.S.Ayyer

VP (Finance)

R.P.Raichur

Director

(Finance)

Anjan Rao

VP (Aviation)

D.N.Kulkarni

VP (Finance)

Sunil Nalavadi

Chief Accounts

Officer

S.G.Patil

GM (HRD)

Prabhu Salageri

GM (Travels)

Y.M.Hannalli

GM

(Infrastructure)

S.R.Hatti

GM

(Administration

)

C.M.Baluthi

GM (MPC)


DEPARTMANTS HELPING IN SMOOTH RUNNING OF ORGANIZATION

Legal department

Complaint department

Maintenance department.

H R Department (Personal Department)

Account and finance department

Garage Department

Commission department

Service department

Information Technology

Legal department

Legal department is one which plays most prominent part in the company. It focuses

on all the legal aspects concerned to the company. It functions positively towards the success

of the VRL LOGISTICS LTD group of companies.

Its functional activities are:

Settlement of industrial disputes

Industrial disputes include strikes; lockouts are settled under industrial

dispute act. Thus settlement of these disputes is one of the activities concerned with trade

unions.

Settlement of workmen compensation



This compensation, under workmen compensation act include accidents, matters

related to gratuity pension etc are settled provided accidents to employees on job.

Settlement of accidents claims:

In case of accidents are losses to the vehicles of VRL LOGISTICS LTD of

companies occurs then compensation can be claimed by this department.

To avoid illegal activities in the firm:

Illegal activities such as theft, robbery within premise are avoided thus this department

is created.

Advice the departments in firm

This legal department acts as an advisor for the different department of the

firm concerning with ethics, Social obligation towards the public.

Suit against debtors

Customers are given maximum period to clear the debt. If the positive response

is not given first notice is sent. That is within 30 days and second notice within 90 days and

third notice within 20 days and thereafter are not sent but personnel approach is given and

then legal action is imposed, these notices are issued in order to avoid legal litigation, enmity.

Suit against bounced Cheque:

Customers paying by the cheque if return by bank when there is no enough

money in an a/c for it to be paid then the company has right to the customers for such as act.

Settle legal charges.

It is the responsibility of this department to pay all legal charges charged by

the court/govt.



Complaint department

Here is department to handle and settle the customer complaints, this

department takes care of customers to keep up their interest in the companies service problem

of customers will be handled efficiently and settled properly of their satisfaction.

Complaints settled by this department are

Delays

Delay caused in delivering of materials to destination point. Delay due to delivers

negligence inconvenience etc.

Settlement

When the customer complaints about delay in delivery of goods with LR no enquiry

will be made from destination point about the undelivered goods. And the date of right

delivery date will be given. If any loss is caused to customer due to delay, such loss is

compensated based on value of goods.

Exchange of materials:

This is one complaint that customer may complain. Sometimes the goods may be

misplaced by the consignor unknowingly. So the customer is not in a position to receive the

goods. Therefore the above complaint is placed.

The company takes back the goods from wrongly delivered consignee and redelivers

to the right consignee.

Road robberies, fire theft etc

The goods are undelivered to the destination point due to robberies fire theft etc. If the

goods are lost during transit, short certificate will be issued to customer until the goods are

traced. If fail to trace, loss is compensated on the basis of value of goods on certain condition.



Demurrage Collection Points

It is a point at which goods consigned will be stored when consignee fails to take

responsibility of these goods that is when goods consigned reach the destination, point and

fails to take delivering consignor. When they fail to respond the notice, goods will be sent to

and stored in demurrage collection point.

The notice inform them to take delivering of the goods consigned and settled and

unclaimed charges if any generally. 3 notices will be sent first 30 days, second 90 days, and

third 120 days. And a notice will be sent from demurrage collection point. When goods are

about to sell through auction.

Booking place – Destination (delivery point)

1st notice – 30 days

2nd notice – 90 days

3rd notice – 120 days

Department

Sold through – Final notice

Auction _ before setting



Maintenance department and House Keeping Department

It means maintenance of various vehicles which includes bus, lorry and other goods

carries. At present there are 2686 vehicles which include Volvo buses, luxury, buses, lorry,

mini bus etc.

Functions of Maintenance Department:

Centralized purchasing

Repairing the vehicles

Complete body building of vehicles

Changing of oil clutches as per the schedule for precautions.

Hiring the lorries on the buses of locality and demand

Maintenance of drivers accounts i.e. payment of salary to drivers,

looking after their performance, appointment of new drivers etc.

Maintenance department is playing an important role in the company because

The Company can save the cost with proper maintaining of available resources and proper

utilizing them.



Account and Finance department

Significant of Accounting Policies.

Bases of preparation of financial statement

The financial statement are prepared on the historical cost convention basis in

accordance with the generally accepted accounting principles and they accounting standards

referred to in section 211(3C) of the companies act 1956 except otherwise stated.

Revenue recognition:

The company generally follow mercantile system of accounting expect on claims

which is a counted on cash basis.

Fixed assets

Fixed assets are started at cost of acquisition construction except in certain

fixed assets. Which has been revaluing less depreciation? All cost relating to the acquisition

and installation of fixed assets are capitalized and include borrowing cost the assets is put to

use.

Depreciation

Depreciation on fixed assets has been provided on straight line method at rates

prescribed in schedule XIV to the companies’ Act 1956.

Borrowing cost

Borrowing cost directly attributable to the acquisition or construction of qualifying

fixed assets are capitalized as part of the cost of the assets up the date assets is put to use other

borrowing cost are charged to the profit and loss account in the year in which they are

incurred.



Taxation

Provision for current tax is made and retained in the accounts on the basis of

estimated tax liability as per the applicable provisions of income tax act 1961 and considering

assessment order and decision of appellate authorities in company’s case.

Goods and passenger transport business are subject to various taxes, which may

significantly affect profits. VRL is exposed to various taxes imposed by the State and the

Central government which include Wheel Tax for seater and sleeper buses, Inter State

Transportation Tax for buses operating between two states and service tax which are levied

upon private operators. The rates of these taxes have steadily increased in the past three years.

For example, the Wheel Tax which is payable by a private transport operator has

increased from Rs. 3,300/- per quarter in fiscal 2005 to 43.03% Rs. 4,720/-, in fiscal 2007 (per

quarter), for sleeper busses, and, Rs. 750/- in fiscal 2005 to 200% Rs. 2,250/-, in fiscal 2007

(per quarter), for seater busses. As they plan to expand their services and enter different states,

they may be exposed to different tax regimes in different states, which may adversely affect

profitability.

In goods transportation they pay tax to the municipal corporation which is called as

octroi. They pay octroi in Maharashtra, Andaman and Nicobar, and Manipur. If the octroi is

paid by the company then the penalty will be received from the customer. The company also

pay State entrance tax which is 1% of the value of the goods.



H R Department

It is heart of VRL LOGISTICS LTD group. It is department where matters relating to

recruitment, settlement of grievances etc taken place. A well experienced person any manager

of personnel department looks it after. Its activities are spread out over large area, some are:

Employment

Well force of employees

Facilitating for provident fund gratuity

Facilities of ESI

Matters relating to leave, salary, bonus etc

Improving employer employee relation

Providing facility to relating employer or by termination

Training

Training can be defined as the process whereby people learn the knowledge,

behaviour, skills needed in order to perform the job more effectively. It is the systematic

process of matching employee characteristics and employer requirements. So, it is closely

linked to other human resources. It is designed for non-managers. It is for a short duration and

for specific job related purpose. It is essential for all the employees in the organization

because trained person/manpower is the biggest asset to an organization.

Objectives of HR Department

To increase productivity of the organization

To reduce cost

To prepare for future assignment

To reduce labour absenteeism



To minimize the operational errors

To establish a sound relationship between worker and his job

To increase employees moral and confidence.

Importance of Training

Better quality work; if the training (formal) is provided with the best methods

and standardized norms, then it will help to improve the quality of service. Trained employees

will do less operational mistakes and perform the work effectively.

Less learning period; a systematic training program helps to reduce the time

and cost involved in learning. Employees can easily reach the acceptable level of

performance. They need not waste their time and effort in learning through trail and error.

Higher productivity; as training improves the skill and knowledge of employee’s increases

which helps to increase output have quality and quantity.

Cost reduction

More economical use of machineries and resources can be done through

training, which will in turn reduce the cost of operation per unit.

Supervision

Well-trained employees tend to be self-reliant and motivated Therefore,

supervisory burden is reduced and the span of supervision can be enlarged.



STAFF SELECTION IS ON THE BASES OF CERTAIN COMPANY RULES AND

REGULATIONS

Employees who complete 5 years in the company get gratuity funds and

insurance facilities. VRL LOGISTICS LTD implemented these schemes for all employees

Pension schemes are based on salary + dearness allowance at the rate of 12% from

employee’s salary matching amount is also contributed by the company and deposited in the

account of employees...There has not been a single instance of labour unrest. This is due to

the strong employee-employer relationship and various.

Welfare ensures adopted by the company such as provident fund, educational

benefits, gratuity scheme, medical reimbursement, pension scheme, maternity benefits.

The company has introduced various novel schemes like payment to drivers

based mileage driven by them. Even the labour and drivers of the organization are given

benefits of ESI/PF etc.

Apart from direct employment, the company has introduced a self-employment

scheme for local entrepreneurs by appointing them as agents of the company. The company

has found that in small places, local people are in a better position to cater to the needs of

customers without adding overheads to the company. It is estimated that at least 15000 people

are benefited by way direct and indirect employment from this company.

ENTERPRISING MANAGEMENT TEAM

The top management of the team is a highly proven team in planning and

implementing new plans and consolidating leadership position in their business. The team has

over 20 years experience in running a leading transport business.

Management Responsibilities (ISO 9001- 2000)

Customer satisfaction.

Statutory or regulatory requirement needed to conduct business.

Management requirement

Employee’s satisfaction



GARAGE DEPARTMENT

The repairs and maintenance of all the vehicles including buses are undertaken at the

centralized garage located at Varur Hubli. Shirr. L. Ramananda Bhat, CTO of the company

heads the garage operation. They have been maintaining stock of all spares and tyres and oil

required for the up keep of the vehicles. The total stock of spares and tyres and others on any

given date is of the order of Rs. 3.50 cores.

The minimum reorder level depends upon the type of vehicles and availability of

spares. This is being monitored both at the garage as well as the head office. The entire

operation and the infrastructure control have been computerized and the efficiency is to the

extent of 95%.

BODY BUILDING OF VECHICLES AND OTHER ACTIVITES

In the beginning VRL LOGISTICS LTD was arranging the truck bodies built

the other bodybuilding located at Namakkal and Mettupalyam. The company has since taken

up with the body building activities of VRL LOGISTICS LTD vehicles with all modern

facilities. This part VRL LOGISTICS LTD activity has been self-sufficient. All the heavy

goods vehicles and LCVs purchased during 1996-97 are mounted with in-house bodybuilding.

With this view in mind VRL LOGISTICS LTD has been procuring all the inputs such as

aluminium sheets, iron and steel bars, etc, required for the body building activities. There is



considerable saving by way of excise duty and central tax by virtue of VRL LOGISTICS

LTD activities having taken up all acts it’s on own.

Information Technology

The information technology division is located in the workshop in Varur. This

division oversees the information technology requirements of Company including the

computerizing of their branches, hubs and offices. The computerization of hubs has facilitated

mailing of delivery reports and quick flow of information between different offices, delivery

offices and transhipment hubs of the Company. This enables effective coordination and

tracking of the consignment.

Information technology division prepares software which are hardware-related such

as office automation-related, courier tracking and accounting software. Global Positioning

System (“GPS”) – they have developed their own GPS based tracking device which they have

installed in selected vehicles. In addition to helping us keep track of the movement of the

vehicles, the GPS system also tracks the time spent by the vehicle when not in motion, the

location it has stopped in addition to tracking pre assigned route to be followed by the vehicle.

This discourages the drivers from not complying with the instructions given to them regarding

the route and time sheets that they are required to comply with.

Most of the software requirements are met in-house and in the event that any activity

is outsourced by the company, the source code is retained by the Company to ensure that it

can be used at a later stage as per the requirements of the Company.

Some of the important developments of information technology division include:

Vehicle Maintenance Tracker: This application schedules the maintenance of the

entire fleet and generates reminders and alerts automatically when any

maintenance events become due. These reminders help in avoiding the premature

failure and the excess consumption of parts.



Vehicle Traffic Application: This application controls the entire movement of the

vehicles and keeps track of the drivers’ performances in terms of the fuel average

and the distance travelled. This also tracks the advance amount paid to the drivers

and the diesel vouchers issued for en route fuelling. This application is online and

ensures access to this data from any part of the world.

Consignment Delivery Application: This application is used in delivery branches

to raise online cash receipts and track the consignment. This application also

maintains a record of the stock in the Company’s godowns and is used to answer

queries from the customers regarding the arrival of consignments. The records of

stock and the delivery particulars are updated every 24 hours.

Hub Application: This application receives the consignment from other hubs and

booking branches and dispatches them to the final destination and some times

reroute to other hubs.

On line bus ticket booking system: This application is hosted online on the web

server and all agents and passengers log on to this application for booking

passenger tickets.

Accounting package: This application consolidates all accounting programs and

helps in the preparation of periodical financial statements, MIS reports etc.

Remote access to networked computers: This application enables the Company to

take remote access of any computer system linked to the network. This facility is

used for monitoring the operations of the employees and also for conducting

training sessions for employees in remote locations.



SWOT ANALYSIS

STRENGHT

None regulated industry:

Since, it is a courier service industry it needs no license to enter this industry, it

is a non control industry.

High entry barriers:

The courier companies have to make a lot of investment in establishing a

national network and for it the requisite, infrastructure and technology has to be set up. This

discourages new entrants to a large extent, for instance Elbe has 124 branches.

1200+servicesable locations and 10 major hubs

WEAKNESS

Dependent on economy scenario:

In the mid-80 the Industry grew at a rapid rate. This growth rate was sustained in the

90’s but with the revival of the economy and the greater reach of major players in the

segment, the industry is expected to ground at an increasing rate.

Have to face the bureaucracy:

Express companies like other multinationals have introduced new technology and

standards PF efficiency into India, The major courier companies, which have tie ups with

international giants are facing problems with bureaucratic setup in India



OPPORTUNITIES

Value added services:

The courier companies endeavour to add to the products of their customers to

differentiate themselves from their competitors.

Backward integration:

The companies cease to be dependent on others for the service they need and

have integrated backwards; this is explained by the huge distribution network and the number

of vehicle owned by these companies.

THREATS

Economy showdown:

Being driven by the general economic scenario there is always the threat of it

being affected by showdown in the economy.

New technology:

The company also needs to be constantly in touch with the latest technology to

help them provide the best service possible; today a thing like tracking are fairly common and

has become a norm.



TRANSPORT AND LOGISTICS BUSINESS

The Transport and logistics Business is divided into two segments:-

1. Goods Transportation

2. Passenger Transportation

GOODS TRANSPORTATION

VRL Logistics, goods and logistics services include Full Truck Load, Less than full

truck load (Parcel) and courier service. Less than full truck load is further divided into express

cargo and general parcel service.

They have a fleet strength of 2479 vehicles, which includes:

Light Commercial Vehicles (“LCV”) with a gross vehicle weight of up to 7500

Kg,

Medium Commercial Vehicles (“MCV’) with a gross vehicle weight between

7500 Kg and 12,000 Kg,

Heavy Commercial Vehicles (“HCV”) with a gross vehicle weight of more

than 12,000 Kg,

Trailers with carrying capacity up to 49 tonnes

Small vehicles for internal use like collection and delivery of goods in the

cities and towns.

All these 2479 vehicles are owned by the company. However, in peak seasons

company also take vehicles on hire for transporting goods. This ensures that customers are not

put to any inconvenience. Therefore, last minute bookings are usually not turned away.



OFFERING IN THE GOODS TRANSPORT BUSINESS ARE AS FOLLOWS:

FULL TRUCK LOAD

Under full truck load, they provide door to door service to the customer, wherein the

goods are loaded at the premises of the customer and are delivered to a certain delivery point

as specified by the customer. Here the customer hires full truck for transport of goods from

one location to another. This service is used by customers / manufactures who have large

quantities of goods to be transported. This service is offered to the customer at a pre

determined price.

In this the whole and sole responsibility will be on the driver only. He only has to

react to the negotiations of the customers.

In full truck load price will be determined on per tonne base. Now the price is 3020

Rs/tonne. Here the driver will be provided with three water proof covers to provide good

service to customer. Before rise in the fuel prices the full truck load service was available for

2900Rs/tonne.

Some of the organizations which take help of this service are

West coast paper mill Dandeli.

Kalyani steels Ltd.

Sri Renuka sugar’s Munavalli.

Bell ceramic’s for clay transportation

Omkar purified water Ltd

Vijay Karnataka Paper Industry

All pharmaceutical’s situated in Hubli, Belgaum, Bijapur and Banglore

etc.

Organization itself.

The company provided this facility to transport mines from Hospet to Manglore which

was then exported. This service was dropped as it was not profitable.

To trace the misuse of full truck load organization takes help of certain weighbridges

situated in different places.



LESS THAN FULL TRUCKLOAD (PARCEL)

Less than Full Truckload service is categorised into two categories; parcel and express

cargo. Under Less than Full Truckload the customers do not hire the entire truck.

GENERAL PARCEL

VRL Logistics provides general parcel services in 17 states, 7 Union Territories

covering 649 cities in India. The parcel business is not a time bound service. However the

company aims at faster deliveries to enhance customer satisfaction. Booking of the parcel is

done at booking office, and then sent through one or more transhipment hubs. At each of the

transhipment hubs the goods are segregated and finally delivered to delivery office. The

customer then collects it from delivery office. However in case customers demand, they

provide door to door also on extra charges. If the parcel is not collected by the consignees

from their branches within the specified periods they collect demurrages charges and also

send reminders to the consignor and the consignee. In case such reminders are not responded

to within the specified period they intimate the customer that the consignment is sent back to

head office at Varur. If the parcel is still not collected within the time specified in the

intimation letter, a notice of auction is sent to the consignor and consignee, after which the

consignment is disposed off in accordance with the notice.

Freight charges for parcels in VRL Logistics

In this category the charges made on the bases of weight and space occupied by the

consignment which ever is higher.

On the basis of weight:

Min weight considered is 40 kg i.e. if the weight of the consignment is below 40 kg

then also it will be considered as 40 kg only. Freight also varies according to distance it has to

cover.

For example: to transport the parcel of 7 kg from Dharwad to Banglore the company

charges 60/- Rs



On the basis of space:

For determining the rate the parcel is weighted at the booking house on the

bases of CFT. The organization considers 1 CFT = 10kg.

CFT=Length*Breadth*Height/1728

Example: For the container of 18 ft length, 8 ft width and 7 ft height

CFT is calculated as

CFT=18*12*8*12*7*12/1728 kg

=1741824/1728 kg

=10.08 kg

=10 kg

If the goods are of light weight and bigger in size then the goods are measured. The

height, width and length are measured in terms of inches and multiplied.

If the CFT cannot be measured, rate is charged as per the weight and distance. After

determining the rate, the WAYBILL No. Is marked or labelled on the goods. The goods are

then forwarded.

Competitors:

In Karnataka

a. Ghatge Patil Transportation Ltd

b. Prakash Roadlines

c. DHL

d. Deluxe

In Andhra Pradesh

a. Kirti

b. Navatha



c. SMRT

MARUTI PARCEL CARRIERS

Maruti Parcel Carriers (MPC) is one of the goods carrier divisions which operate

independently under its own name “Maruti Parcel Carriers”. Under this they provide services

from booking office to delivery office without routing it through the transhipment hubs. MPC

offers its services in the state of Karnataka covering 17 cities in all. MPC has a total network

of 25 branches. Currently it has two booking centres one at Bangalore and other at Hubli. Rest

of the 23 branches act as delivery offices. Parcels are collected from the booking centres and

transported to various delivery offices.

SHIVA ROADLINES

Shiva Roadlines was started in the year 2003 as a separate division by the company.

Shiva Roadlines provides service only in the state of Karnataka covering 6 cities. Shiva

Roadlines has 6 owned branches. It provides door to door services without routing it through

transhipment hubs. It carries goods weighing more than two tonnes only.

VRL EXPRESS CARGO "Anywhere Anytime"

Delivery on time zero excuses. This mantra is driving force behind the success of VRL

Express Cargo.

Surface, Train & Air Cargo mode services.

Dedicated Company owned vehicles.

Door pick-up and door delivery.

On-time delivery.

Online track & trace facility.

24X7X365 days operations.

Dedicated & well-groomed customer care windows.



Extensive nation-wide network.

The express cargo business of company is done on a door to door basis and in a time

bound manner using road/rail/air as a mode of transport. The express cargo business was

initially started for booking and delivery of goods within Karnataka; however today express

cargo service is available in 17 states, 7 Union Territories covering 649 cities in India.

Express cargo mainly focuses on the requirements of their corporate customers who want time

bound deliveries of goods to their various locations. The company charges higher freight

amount towards the transportation of goods under this service. Company transport a

substantial part of their express cargo using roads as mode of transport. In certain instances

they may transport express cargo using roads and the services of railways or airlines.

Under this category the charges will be 4 times than the general parcel. In this service

the company uses two drivers to provide quick and safe service. There will be time bound for

the drivers. If drivers are late then penalty will be paid by them.

VRL COURIER SERVICE "On Time Every Time"

Capitalising on the synergy of their transport network that connects all over

Karnataka, they are into Courier Services focusing on delivering documents and small parcels

in a time bound manner.

Storing & dedicated Operating Team.

Time Bound Delivery with an Emphasis "On Time Every Time".

Delivery Schedules ranging From 24/48/72/96 hours.

Dedicated Route Vehicles.

VRL LOGISTICS LTD started courier services in the year 1992, which marks the

beginning of courier services in company. The turnover of courier service was Rs 4 corers per

annum in the year 2007-08. It has become famous at the national level. But on July 17, 2007 it

has reduced to only Karnataka.



Company now offers courier services in the state of Karnataka, covering 27 districts

and 164 cities. Under this service, they receive non-bulky parcels which include small

articles/documents from consignors to be delivered to the consignees in a time bound manner

and on a door-to-door basis. The price charged by the company for transporting parcel

through courier service is determined on the basis of the weight or volume of the goods and

the distance of the delivery at customer’s place.

Under this company has divided customers in to categories i.e. walking and regular

customers. Door pick-up facility is provided for the regular customers. Regular customers are

also awarded with some credits in the payments. They can pay monthly once.

Charges for courier service:

For one dock of 250 Grams: 10/-Rs

For 1 kg the charge will be: 20/-Rs

250 Grams is considered as the minimum weight. Above 250 Grams and below 1 kg is

considered as 1 kg only.

This dept is having its branches and agencies in various cities. The branches are

maintained by the organization only. The agents have to deposit certain amount in the favour

of the organization. The agents in Bangalore city deposit 20000/- Rs and in other cities

10000/-Rs are deposited.

LIST OF DAILY CUSTOMER OF COURIER SERVICES IN HUBLI

ICICI BANK

STATE BANK OF INDIA

WEST COAST PAPER MILLS

Other daily customers.



THE COMPETITORS OF VRL LOGISTICS LTD (COURIER SERVICE)

1) DTDC Courier service.

2) Professional couriers.

3) Teja courier.

4) First flight courier

5) Parkash courier.

6) Other couriers



TERMS USED IN LOGISTICS

Consignments

VRL will transport all types of goods like cloth, medicines electrical parts,

motors parts, stationary etc.

Consigner

A consigner is the party who books the consignment for transport through

VRL.

Consignee

A consignee is the party who takes delivery of goods booked on presentation

of his copy of waybill

Types of Risk Beard

Carriers Risk:

Explains that all risks are borne by the transporter while in transportation.

Owner Risk:

Makes the transporter unliable from all risk.



DRIVERS

Drivers are the life & blood of VRL Logistics Ltd. Wages & salary is given to

drivers is on per km basis1Km = 70 paise. The drivers have to cover 40 kms per hour.

Driver are also hired on fixed salary basis Rs. 1,950/- per month

For Long distance journey

Double Drivers - 400 Kms 40 paise per km

Single Driver - 400 Kms 70 paise per km

Facilities for drivers

1) House rent allowance is given to drivers. This allowance is given at

20% of the salary

2) Education allowance all the drivers are also provided with education

allowance. This facility is given only to that person who has completed one year of

service in the organization

3) Provident fund- all drivers are enjoying this facility. Employee have to

contribute 12% towards provident fund & the employer has to contribute the same

amount

4) Employee state insurance- employees are contributing 1.75% of their

basic salary & DA. Employer is contributed 4.75% of the total salary paid by them.

5) Gratuity- This is available to only those who has completed 5 year of

services.

Company also provide various types of incentive schemes to truck drivers besides the

fixed amount paid to them for their services.



These incentive schemes work on a monthly basis and are as follows:

Monthly incentive structure for light commercial vehicles (5 Toner)

(Above 7000 kms & 8000 Kms); this incentive is based on the

kilometres covered by the drivers.

Monthly incentive structure for 9 toners (Above 6000 kms to 8000

Kms); this incentive is also based on the kilometres covered by the

drivers.

Monthly incentive structure for long route multi axel vehicles; this

incentive is based on the kilometres covered by the drivers on specified

long route.

Quick incentive; this incentive is based on reaching the fixed

destination before scheduled time.

Diesel incentive: This incentive is based on the saving of the diesel in

one trip and accordingly the incentive is provided to them

Company has also started the Loss Recovery levied for late service if the vehicle

reached the fixed destination after schedule time. They charge their driver very minimum

amount depends on how much hour taken for delay.

Terms and conditions

The company does not take the responsibility of leakage, shortage damage to goods by

rain sunlight, other cause beyond its control

Crockery, glasses & other delicate items are booked at the absolute risk of consigner.

The company shall not be liable for wrong deliveries if the addresses not mentioned

exactly.

The court in Hubli along shall have the jurisdiction in respect of all claims & matters

arising under the consignment.

The company has the right to reweightment at the destination & collection before

delivery such amount that have be omitted or under charged.



DOCUMENTS MAINTAINED

BOOKING SECTION:

In booking section there are two persons who book the parcels while booking process, staff use receipt book. That book involved five copies

Consignor copy.

Consignee copy.

Proof of delivery copy (POD).

Head office copy (HOP).

Delivery sheet.

a) CONSIGNOR COPY:

In Consigner copy booking staffs write in consigner copy “who has booked the documents” and in another consignee section of the consignor copy write “who will receive the document or its destination and write amount, date signature, declarations” in consignor copy.

It contains consignor’s Name and address.

Phone number

Amount

Value of consignments

Charges

Weight of parcel or document

TERMS AND CONDITIONS OF CONSIGNER COPY:

The customers after entrustment of documents or cargo or goods to VRL LOGISTICS LTD Courier division for carriage or transportation shall be deemed to have accepted and agreed to the terms and conditions and specified as standards conditions of carriage.

1. All documents or covers or envelopes letters are accepted for transport by air, road, and

railways.

2. Nature, contest, conditions and values of consignment are unknown to the company and

carriers are packed by owners and are at OWNER’S RISK.

3. Consignor or consignee shall be responsible for any delay, detection, loss or forfeiture

of goods by any government authorities due to wrong declaration to contest or improper

documents etc.



4. The company will not carry explosive or prohibited coin or industrial diamond,

currency (paper or coin) of any nationality, lottery ticket and contraband items.

5. The company is not liable for any loss or damage or leakage, or for late delivery due to

break-down, accident, fire, riots, strike, theft, flood, rain, sun and other natural

calamities which are its beyond its control.

6. The company shall not in any case be liable for consequential losses such as loss or

profit, interests, market and utility, VRL LOGISTICS LTD. Disclaims all warranties

expressed or implied with respect to this consignment for any loss, shortage, damage or

unfair seen delay, in the carriage.

7. No complaints or enquirer will be entertained after 15 days from the date of booking.

8. No agent, servant or representative of company has authority to after modify any

provisions of consignment note.

9. The court in Hubli City alone shall have jurisdiction in respect to all disputes arising

under this consignment note.

b) CONSIGNEE COPY (RECEIVER)

This copy gives to receiver of the parcel. That addresses mention in consignee’s copy.

THE CONSIGNEE COPY (RECEIVER) CONTAINS

It contains consignor’s address.

Phone number.

Amount.

Value of consignments.

Charges.

Weight of parcel or document.

Receiver’s signature.



c) PROOF OF DELIVERY COPY (POD)

This copy gives to receiver and takes his signature and that come back to booking office and will give to person or company who have booked the parcels (consignor)

It contains consignor’s address.

Phone number.

Amount.


Charges.


d) HEAD OFFICE COPY (HOC).

This copy is for head office reference

It contains consignor and consignee address.

Phone number.

Amount.


Charges.


TRIP SHEET

This copy is prepared in triplicate. It contains courier LR number, receipt

number, weight of consignment and content of consignment. Number of pieces, source of

origin & source of destination. It is prepared in order to know the places from where the cover

is sent & to which place it is to be sent.

DELIVERY SHEET

Delivery of articles is done by delivery post. Particulars of delivery of articles

are written in delivery sheet. It contains the details of branch office, consignee name, original

place, consignee note, time, date & signature. Also if the booking party is a company seal

should be taken from the company.



ACCOUNTS

Booking statement is prepared for accounts purpose single entry system is

maintained here. They have a book system as well as computerized system booking

statements contains C/N number, weight destination & amount of consignment, branch and

date.

DEBIT VOUCHER

It is a voucher where any expenditure made by the staff is maintained. It is

attached to cash statement & sent to the head office to claim the amount.

CREDIT VOUCHER

This is the voucher which is given to the sub branches or agencies while submitting

the accounts, the issue booking statements along with total amount to this branch

COMPLAINTS REGISTER

It is a book where entry of customer complaints such as late delivery,

misplacement, improper courier is noted.

NON DELIVERY BOOK

It is a book where non-deliveries are noted is case of door locks, shifts, transfers;

incomplete address or party refusal parcel is brought back. Entry is done in this book.



MODE OF PAYMENT OPTIONS FOR THE CUSTOMERS

The price charged by the Company for transporting parcels is determined on the basis

of the weight or volume of the goods and the distance of the delivery point. They have three

types of payment mechanisms in their parcel and courier business:

i. Paid:

Under this system, the consignor pays the charges to the Company at the time of

booking the consignment. This is the most common mechanism of payment and this enables

us to receive the revenues immediately.

ii. To Pay:

Under this system, the consignor does not pay the charges at the time of booking the

consignment but the consignee is required to pay the same upon collecting the consignment

from the office.

iii. Running Account:

Under this mechanism, the consignor does not pay the charges to company at the time

of booking the consignment, nor is the consignee is required to pay the same upon collecting

the consignment. Company provides its services on credit and keeps a running account of the

charges the consignor / consignee is liable to pay, and the consignor / consignee is required to

make payment against the running account on a weekly / monthly basis. This facility is only

extended to selected high-volume regular customers.



WORKING OF GOODS TRANSPORTATION

TRANSHIPMENT POINT

Transhipment point is important section of VRL group, where in all the materials

which are booked from the offices all around the country, whose destination is the area under

Hubli branches are bought in, sorted out, stored and then sent to their respective destinations

within two days, however the goods that are to be claimed by the consignee have a demurrage

period of thirty days. In simple words it is the Hub and Spokes arrangement, the

Transhipment point acts as the hub and all the destinations (places) coming under this

Transhipment point are act as the spokes.

There is 110 staff working at Hubli Transhipment point as well as 250 contracted

labourers working day and night around thirty- forty labourers working in each batch.

The Transhipment point has the following departments

Booking section

Vehicle and accounts maintenances section

Delivery section

Short excess section

Booking section

At the booking office the booking of the goods to be transhipped are made. There are

thirty plus people working in this section, these peoples are normally sent for collection,

making and continuing of the goods, and looking after the clerical work in this section. The

main function of the booking section is to take the goods from the consigner and weighting

them. Then the freight price is fixed for the goods are sent to the transhipment point for the

delivery. Freight rates are varied according to the distance covered, nature of the goods,

season, condition of the roads, type of goods to be transhipped and risk involved in it. There

for the freight of the goods is charged on the following basis.

Bulky goods

Goods with heavy weight



Weightless goods

Long distances

Short distances

Working of the Booking section

The goods to be transhipped are booked as per the instruction of the customers at the

booking office and according to the goods forwarding note is prepared.

The customer has to fill the goods in forwarding note. The transhipment company

verifies the goods according to forwarding note. After the goods forwarding note is filled by

the customer marking at goods is done. The marking of goods is done by the clerk in the

booking office on it can also be done privately by consigner. The invoice number, and

marking number, is included in goods forwarding note.

On the basis of forwarding note way bill is prepared. It is bill containing information

regarding the consigner’s name, consignee’ name, date of delivery, nature of material weight,

type of packing & freight.

It is prepared by booking clerk. For convince and documentations, four copies of way

billing prepared. They are

Consignee copy

Consignor copy

Head office copy

Drivers copy

Vehicle and accounts section

This section basically deals with load management as well as with some of the

miscellaneous accounts. Where the vehicle in charge has to perform the basic function of

tallying the total market load that is with them in accordance with the availability of trucks,



normally there is a deficit in the availability of trucks, which is fulfilled by hiring trucks from

outside.

He has five people working under him. Of these one person handles the cash and

accounts for advances given to the drivers which are in turn handed over to the drivers

account section. There are three persons looking after vehicle maintains. If the vehicles are in

need of some heavy repairs, they sent it to the work shop or else the minor repairs are handled

then and there. The last person is meant for the miscellaneous works like collection, booking

outside trucks and any other routine work.

Delivery Section

All the goods collected at different booking office are to be transported are all bought

to the transhipment point. These goods are then separated, sorted and according to destination

to which they are to be sent.

These goods are then sent to their respective destinations and the delivery offices in

that area unloads the goods and delivers to the consignees. For goods more than two tones or

hundred cartoons boxed, there is availability of free door delivery.

Working of Delivery Section

When the goods are received from the booking offices they are

classified in two ways.

Urgent delivery goods

Non-urgent delivery goods.

Urgent delivery goods are those goods which are to be dispatched immediately or at

the earliest possible time.

The Non-urgent delivery goods on the other hand are the ones which do not require

such urgency.

The delivery of the goods also depends on the nature of payment, if the payment is

already made then it is very easy to delivery the goods, as the delivery is made

immediately after collecting the consignee’s copy. But in case of goods in regard



of which the payment has not been received, the goods are delivered only after

cash is received from the consignee.

In this case a receipt is prepared acknowledging the payment. The consignee’s seal

and signature is taken behind the copy of the receipt as a proof. On delivery the

name of the person taking delivery, quality and L.R. no. is recorded for future

reference.

The delivery office stores the goods for free for a maximum period of thirty days

in case of regular customers and twenty days for others. After this period a notice

is sent to the consignee to collect his goods. If fails, another notice is sent after

sixty days. A last notice is sent after ninety days. If he fails to do so again the

goods are sold and the amount is adjusted. But in case if the goods are collected

after the first notice or the second demurrages are collected.

Some of the documents used by this section are

Cash receipt book

Daily delivery and stock report

Inward statement

Short/Excess book

Unloading report

Short/Excess Section

While loading the goods some times the goods are loaded in excess or may fall short

this will be at their destinations when verified.

In case the excess goods are not claimed, these goods are sent to the search and found

department at Gadag. If the goods are sent on to pay basis and nobody claims, the company

has a right to sell the goods and make good its loss.



Working of the Transhipment Point

The materials that come from the booking offices are verified according to the trip

sheet, which is sent by the booking office.

Then the materials are unloaded.

The next step is to prepare the unloading report.

Materials are sorted according to there destinations.

Materials are sorted according to their destination in proper section provided at a

Transhipment point.

Materials of one destination are loaded in a single vehicle.

All the required documents are maintained by the respective departmental heads.



HUB AND SPOKE MODEL OF FREIGHT DISTRIBUTION AT VRL

LOGISTICS.

Under the Hub and Spoke system, VRL transhipment yards act as hubs and the

various booking and delivery offices act as spokes. The hub acts as a connector between the

booking office and the delivery office. The hub receives the booking consignments from

various branches, which are segregated, based on the destination and then dispatched directly

to the delivery office or to the other hub, which connects to the delivery office.

Once consignments are booked at the spoke they are unloaded at the nearest hub based

on the destination of the consignment. Once the unloading of a certain number of trucks is

complete, all the consignments meant for a particular destination are aggregated and loaded

into a truck for further transportation. This ensures that every truck is filled to capacity and its



utility is improved. In case a hub does not have enough consignments for a particular

destination, the goods are unloaded onto the next nearest hub to be further aggregated at that

hub en-route to the destination.

The processes followed by the company are designed to meet the various business

objectives such as simplicity in understanding and implementation, effective information

capture of a particular transaction, traceability of goods, automatic internal controls, etc.

A brief overview of order fulfilment process is given below:

BOOKING CENTRE

TPT

DC

HD


Customer walks in

Determine thekind of cargoand type of customer

Accept goods from client

and issue a goodsconsignment note

Prepare trip sheet andprovide to

driver

Consolidate daystransactions

and forward to HO

Unload goods, aggregate

goodscheck against GCs

Load the goods

Prepare trip sheet andprovide to

driver

Prepare consolidatelist of days

transactions andforward to HO

Receive updatesfrom various.

Update the databasewith the received

information.

Receive goodsDeliver goods

against acash receipt

note.


As soon as the customer agrees to the terms and conditions of the contract, the goods

are booked and the customer is issued a Goods Consignment Note (‘GCN’). The GCN

contains all relevant details such as the\ type of consignment (i.e. express, full load, parcel,

etc), type of customer (to pay, paid, account paying), volume of goods, rate, and estimated

value of goods. At the time of loading the goods at the branches, a “trip sheet” is prepared and

handed over to the driver. If the customer pays at the time of booking, cash is received based

on a “Cash Receipt Note” which records the details about the cash received like amount of

cash, and corresponding GCN.

At the Transhipment yard (TPT) the goods are unloaded and an unloading report is

prepared which needs to tally with the trip sheet. The goods to a particular destination are

aggregated and are loaded onto a truck wherein a fresh trip sheet is prepared. At the delivery

point, the goods are unloaded (and an unloading report is prepared). The goods are released to

the receiver and acknowledgement obtained. If the goods to be delivered were of “to pay”

type, goods are released after cash is received and a Cash Receipt Note is generated. All

branches (booking or delivery) deposit the cash receipts of each day to pre-designated bank

accounts.

In case of computerized branches, where the database is prepared for all the bookings

made on these branches and sent to the Head Office. In case of non-computerized branches,

copies of documents are sent directly to the Head Office. Each branch and Transhipment yard

also sends Daily Reports on the activities to the Head Office.

As the location and the extent of these transhipment hubs are essential for the smooth

functioning and success of the business, we try to ensure that these hubs are strategically

located and the consignments that are booked to the various destinations are within a radius of

200-250 km of the destination.

The transhipments hubs are overseen by a Vice President – Operations (TPT) and the

employees work on a shift basis to ensure that there is no stoppage in the activities. The



operation team personnel deployed at their hubs include managers/in charge, shift in charge,

supervisors, clerks, and traffic in charge, data entry clerks and skilled labourers. All the hubs

are interlinked to each other, which provide us with the opportunity to ensure effective

delivery of the goods and also track the consignment. This also enables the hubs to be aware

of the goods, which are being transported. The loading and unloading activities take place

with the help of cranes, forklifts and trolleys, which are equipped to handle heavy goods in a

safe and smooth manner.

Branches

Currently, they have 839 branches in 17 states and 7 Union Territories in India. In all

the branches they provide booking and delivery services.

Particulars No. of Branches No. Of Branches

Goods Transportation

General Parcel 342

Express cargo 342

Courier 79

Maruti Parcel Carriers 25

Shiva Roadlines 6

Total Branches for goods Transportation 799

Passenger Transportation 40

Total Branches 839



INDUSTRY STRUCTURE AND PARTICIPANTS

Freight consignors usually prefer roadways over railways due to its inherent advantage

of higher accessibility and reach, and customer orientation unlike other modes of transport.

Moreover, the customers get an edge in bargaining power, as the roadways is highly

fragmented and there is intense competition even among the large transporters. However, the

large organised players who provide value-added services such as warehousing, containerised

movement, supply chain management etc are also able to influence the terms and conditions

of the freight contract, as not many transport operators provide such services. Also, while the

bargaining power of suppliers seems strong, given that there were only a few equipment

suppliers catering to a large customer base of transporters, more players showing interest in

entering the equipment manufacturing space, bargaining power of suppliers is set to come

down in future.



Industry participants in road freight transportation sector

The structure of the road freight transport industry in India has always been and

continues to be highly fragmented. It comprises many players who provide transportation

services, intermediaries – transport contractors / booking agents who can provide haulage

services, brokers who fetch equipment and drivers for a commission, and the consignors /

users who constitute the ultimate demand for the services.

TRANSPORT OPERATOR

Transport operator is the one who provides transportation in the entire transportation

services value chain. These operators can be broadly classified into single truck or small fleet

operators (those who own up to 1-5 trucks) and fleet operators (those who own more than 5

trucks). Fleet operators can be further segmented into medium fleet operators who have a fleet

of 6-20 trucks and large fleet operators who own more than 20 trucks.

ROLE OF TRANSPORT OPERATOR

Small truck operators

Single truck or small fleet operators are operators who own up to 5 trucks. While in

certain cases, the single truck operator is both the owner and the driver of the truck, the truck

may be operated by the operator’s family members, relatives etc.

Following are some of the typical characteristics of a small fleet operator:

Ownership: Ownership of up to 5 trucks



Broker dependence: Significant dependence on brokers for business

Haulage: Mainly ply on last mile and short haul routes not exceeding 150-200

km

Operations: Operate mostly in the full truck load business

Attachment of vehicles: Small operators are usually attached to the large fleet

operators.

Large fleet operator

Following are some of the typical characteristics of large fleet operators are:

Ownership: They own or control a relatively larger fleet size, typically over 20

trucks

Broker dependence: They directly bid for contracts with consignors / users

without the support of any intermediary

Haulage: They operate predominantly on long haul on a hub and spoke

distribution model

Operations: They operate in both the fully loaded and partly loaded truck

businesses

Attachment of vehicles: They use the services of smaller operators when they

need to have additional vehicles.

Large fleet operators dominate road transport

In terms of structure, the road transport services segment is highly fragmented, while

the Railways are owned by the government. Coastal ships are either captively owned by end

users or by several small fleet operators, while pipelines are owned by a few organizations

mainly in the public sector. While road freight transport is generally described as highly

fragmented, large fleet operators control a significant portion of both the stock of commercial

vehicles and freight. According to estimates the large fleet operators (defined as owning more

than 20 trucks each) cumulatively own about 50 per cent of the total stock of commercial

vehicles and control about 65 per cent of the total stock of commercial vehicles. Similarly,



freight carrying capacity of vehicles owned by large fleet operators is estimated to be over 70

per cent and the same for vehicles controlled by them is estimated to be close to 85 per cent of

the total road freight capacity. Apart from the vehicles that are owned, controlled vehicles

also include vehicles attached by small fleet operators.

Domination on stock and load carrying capacity

The organised large fleet operators of the industry are relatively small in number and

have varying payloads; but, these large fleet operators carry a significant portion of both the

stock of commercial vehicles and freight. CRISIL Research estimates large fleet operators to

own over 50 per cent of the total stock of commercial vehicles (commercial vehicles includes

light, medium and heavy commercial vehicles excluding three-wheelers goods) and control

about 65-70 per cent of the total stock of commercial vehicles.

Controlled vehicles are vehicles owned and net of vehicles attached with the fleet

operator. Net of vehicles attached means vehicles received on attachment less vehicles given

on attachment.

According to CRISIL Research estimates, large fleet operators’ load carrying capacity

with owned vehicles is over 70 per cent and with controlled vehicles is close to 85 percent for

the year 2006 -07. The fleet is primarily used for general goods transportation, with the

operators working on a hub and spoke distribution model. The industry interactions with

operators and users also revealed that apart from their broad-based transport stock, large fleet

operators are able to generate business on account of goodwill, assurance of timely delivery

and quality, distribution network and necessary infrastructure.

Transport operation and haulage

Large fleet operators operate on all haulage segments — short, medium and long.

However, as they are dominant in the medium and long haul operations, they operate on a hub

and spoke system of distribution. As the large operators cover a wide geographical area,



ranging from 200-1,500 km or even more, they typically have a wide network of branches

throughout the country, apart from the necessary infrastructure to support their network. This

enables them to attract users and get business on a continuous basis.

Unlike small fleet operators / single truck owners, large fleet operators operate on both

the full truckload and parcel truck load operations. Parcel truck load refers to small packages

booked by consignors that occupy only a part of the entire truck space. Large fleet operators

are able to operate in both the segments due to their wide range of distribution network and

clientele, the consignors’ perception of higher reliability and quality assurance.

FREIGHT RATES

As per the research, demand-supply and cost factors emerge as the two key

determinants of freight rates; however, regulations and industry structure also have a role to

play in influencing freight rates. These factors explain why freight rates have risen

continuously over the past five years, despite significant fragmentation of the road transport

sector. Over the next 5 years, the cost of transport operations may reduce structurally and this

will reduce freight rates (adjusting for inflation); however, the rates may continue to remain

firm over the next 1 year, due to continuation of healthy economic growth as well as cost

pressures.

FREIGHT RATE DETERMINANTS



Demand-supply dynamics

Freight rates have a direct impact on the distribution costs of the manufacturing sector

and therefore have indirect implications for the economy as well. A recent World Bank study

states that, “despite many impediments, mainly related to the existing infrastructure, India has

achieved a highly competitive, low-cost road freight transport for basic services, with its

highway freight rates being the lowest in the world”.

However, it should be noted that the costs of delay and uncertainty in transportation do

push up the effective cost of the users significantly.

Fuel price and capital cost



Fuel costs typically constitute more than 50 per cent of the transport operator’s total

costs; accordingly, any increase in diesel prices may reduce the player’s operating margins.

However, empirically, it has been observed that while the transport operators have been able

to pass on the fuel cost increase through higher freight rates when freight availability was at

its peak, the same has not been the case during recessionary periods, when they had to absorb

the small changes in diesel prices, and take a toll on their profitability.

The following graph will show the trends in freight rates and diesel prices.

Capital costs (interest and depreciation): also constitute as a major cost for transport

operators; in fact these costs constitute 6-10 per cent of their freight income. Moreover,

considering the 95 per cent penetration of finance in new truck sales and over 85 per cent

penetration in second hand sales, interest cost have gained significant importance in the cost

structure of transport operators over the past few years.

Likewise, as the number of commercial vehicles that are 0-4 years old is as much as

40 per cent — usually 0-4 years is the period during which the finance for new commercial

vehicles has to be repaid — the influence of any change in interest cost may affect the freight

rates. Hence, hardening of interest rates may lead to postponement of truck purchases and in a

scenario of good freight availability this may lead to a further rise in freight rates.



Comparison with Railway as mode of transport

An analysis of the normal freight rates of roadways versus railways revealed that

while the railway freight has risen marginally during 2002-03 to 2006-07, the road freight has

continued to grow. Moreover, during the same period, while the market share of roadways

(excluding last mile) increased from 54.0 per cent in 2002-03 to 58.0 per cent in 2006-07, that

of railways declined from 34.0 per cent to 31.5 per cent.

However, if we consider the effective freight rate, which is the normal freight rate plus

freight cost for last mile transportation and loading and unloading cost, the rail and road

freight rates are relatively comparable. This shows that even though the effective freight rate

of railways is competitive, the share of roadways is higher in the total freight movement, due

to its inherent advantages such as door to door delivery, higher accessibility and customer

orientation.



Other Factors affecting Road Transportation

Road development

India has a road network of 3.3 million km, one of the largest in the world, of which

national highways and state highways together contribute only about 6 per cent. But they

carry about 80 per cent of the total road traffic. Given that roads occupy a crucial position in

the growth and development of the transportation industry in general and specifically the road

transportation segment, the government undertook several projects to expand the road

network nationwide to provide connectivity and mobility in both the rural and urban areas.

Vehicle utilization

Vehicle utilisation is measured in terms of the distance covered by the operator during

the year. Changes in vehicle utilisation significantly affect the cash flows of an operator. A 10

per cent improvement in equipment speed, leads to a 5-7 per cent increase in distance covered

during the year, thereby resulting in a 15 per cent improvement in cash flows. Consequently,



the efficiency of the transporters goes up, as the average turnaround time decreases, and the

business expands by 5-7 per cent (number of trips). Monetarily also the transporter is

benefited, as the fixed costs gets spread over a higher base, thus improving the cash flows.

Given the good freight availability, if another driver is added, the vehicle utilisation will go

up, as the vehicle halting time will come down when one driver rests the other will utilise the

vehicle. Additional revenues from increased vehicle usage may more than offset higher costs

like fuel and labour. Variables that affect vehicle utilisation include the type of commercial

vehicle, road infrastructure / traffic, time spent at check posts and rest time.

Fuel cost

Fuel cost constitutes a major part of the cost structure of a transport operator; it

constitutes between 55-60 per cent of the total costs. Moreover, fuel costs are variable in

nature; hence, a small movement in fuel price or fuel efficiency significantly affects the cash

flows of the transport operator. A 10 per cent increase in fuel costs, for instance, increases the

total cost by 4 per cent.

Vehicle-mix and fuel efficiency

Transport operators can maximise their profitability by maintaining a suitable vehicle

mix, given the existing freight availability, its range of operations, type of freight carried and

contracts with customers. Since the late nineties, the preference for higher gross vehicle

weight commercial vehicles has been increasing, as they are more profitable with their higher

payload capacity and relatively better fuel cost economics.

OUTLOOK OF ROAD FREIGHT TRANSPORTATION SECTOR

The overall freight movement to grow at a CAGR of 10.1 per cent over the next 5

years and reach a projected size of 2,569 btkm. Healthy economic growth, increase in

production of key commodities, likely completion of infrastructure projects and rise in

infrastructure investments are expected to bring about this growth. In terms of proportion,



CRISIL Research expects roadways to continue to dominate the freight movement with its

share expected to grow from 57.8 per cent in 2006-07 to 60.7 per cent in 2011-12 (excluding

demand from last mile). Share of railways, on the other hand, is expected to decline from 31.6

per cent in 2006-07 to 28.8 per cent in 2011-12, on account of capacity constraints during the

same period. While the share of air and coastal freight movement will continue to remain

small, the coastal freight movement will rise due to rise in export and import in the country,

albeit, on a small base.

Over the next 5 years, CRISIL Research expects roadways to continue to move

majority of its freight in the medium and short haul segments; however, as capacity

constraints will crop up at the railways’ end, the roads will gain in the long haul segment as

well (till dedicated freight corridors by railways is completed; expected to be completed post-

2011-12). Growth in the last mile segment will soar to double digits in value terms over the

next 5 years, as the redistribution movement from retail consumption will continue to

maintain buoyant.

PROJECTED FREIGHT MOVEMENT



PROJECTED SHARE OF TRANSPORT MODES

INFRASTRUCTURE FACILITIES AND UTILITIES



The network of Transhipments/branches/offices covers 17 states and 7 Union

Territories in India. They have their Head Office at Varur and Corporate office at Hubli, 5

Administrative Offices, 43 transhipments hubs, 839 branches (goods transportation &

passenger) and 1853 franchisees, (goods transportation & passenger) which enables the

smooth flow of goods and services. The booking and delivering is transacted through the

transhipment hubs which are connected to the respective branches.

They offer the services of express cargo, parcel and courier. This business has been set

up to work on a “Hub and Spoke Model” to improve vehicle utility and increase efficiency.

Depending on the quantum of material handled by each hub, the hubs are classified as major,

mid and small size hubs.

a. Major Hubs

There are nine major hubs and more than 500 MT materials per day are handled by

these hubs. These nine hubs are located at Hubli, Sidrawali (Delhi), Salem, Vijaywada,

Hyderabad, Pune and Bangalore (three hubs).

b. Midsize Hubs

There are nineteen midsize hubs, which handle from 100 MT to 500 MT materials per

day. These hubs are located at Mangalore, Gangavati, Mysore, Shimoga, Bijapur, Harihar,

Goa, Ernakulam, Coimbatore, Madurai, Chennai, Aurangabad, Shiroli (MH), Solapur,

Anantpur, Chittoor, Vishakhapattanam, Hyderabad Local and Ahmadabad.

c. Small Hubs

There are fifteen small hubs handling less than 100 MT materials per day. These hubs

are located at Vapi, Prodattor, Nellore, Kurnool, Rajahmundry, Kozhikode, Bagalkot, Gadag,

Gokak, Bellary, Gulbarga, Kolkatta, Nagpur, Trichy, and Indore.

WAREHOUSING FACILITY IN VRL LOGISTICS LIMITED



Warehousing is an integral part of every logistics system. Warehousing plays a vital

role in providing a desired level of customer service at the lowest possible total cost.

Warehousing activity is an important link between the producer and the customer. Over the

years, warehousing has developed from a relatively minor facet of a firm’s logistics system to

one of its most important functions.

We can define warehousing as that part of a firm’s logistics system that stores

products (raw materials, parts, goods-in-process, finished goods) at and between point of

origin and point of consumption, and provides information to management on the status,

condition, and disposition of items being stored.

Warehouses at VRL Logistics Limited

Transhipment hub act as a ware house.

In the transhipment hub the goods which are to be delivered to other destinations are

stored. The space of the warehouse in Hubli is 40,000 sq feet. The total space which is called

as carpet area is around 60,000 sq feet. The warehouses are not well organised. The goods

which are unloaded are brought and kept in the respective places. There is no separate

compartment or racks for the goods to store, which may lead to misplacing of the goods.

The total capacity of the transhipment is around 1500 tonne to 1800tonne. There are

43 transhipments through out India. As explained above they are divided in to major, mid, and

small size hubs.

Store-room for automobile parts.



They have entered into an agreement with Ashok Leyland for the supply of

automobile spare parts and units in the Vehicle Maintenance Department for the maintenance

of the vehicles. As per the agreement, they have provided the space to Ashok Leyland

admeasuring 1000 sq. feet in their workshop for the storage of spare parts and units. These

spares parts are available to them at discounted rates. The spare parts are used as and when

required by them and payment done on a weekly base.

This eliminates the cost of maintaining the inventory, cost of transport incurred in

procuring the spare parts at the same time ensuring timely availability of spare parts. There

are 6 branches through out India and all of them are computerised. The fourth coming year’s

estimation for stores is 1.74 crores. They store adequate spare parts which will be sufficient

for fourth coming three months.

Store-room for tyre section.

The company uses mainly four types of tyres. They are J K tyre, Apollo tyre,

Bridgestone tyre, and China tyre. They prefer Apollo tyres. The minimum stock maintained is

100 tyres and maximum is 6000 tyres. They use their trucks only for the transportation of

tyres.

Store-room for stationery department.

The stationary items which are required for the office use are printed in their printing

presses only and stored in the store houses. There are four printing presses through out India.

They store 400 items these store rooms. These store rooms are located in Hubli, Bangalore,

Delhi, Kanpur, Vijayawada, and Ludhiana.

MATERIALS HANDLING IN VRL LOGISTICS LIMITED



Materials handling is one of the important aspect in the logistics industry. The

materials should be carefully handled without damaging. The organization can use several

equipments which help on safe handling. As labours are not skilled they should be given some

basic training. In loading and unloading of each truck 10-15 labours are assigned under one

supervisor. At a time 22 to 28 trucks can be loaded in the Hubli TPT.

The equipments used in VRL Logistics Limited are as follows.

Fore clip

This is used to lift the goods and move from one place to another place. This can lift 5

to 6 tonne weight.

Hydraulic trolley



Hydraulic trolley is used by the labours to transfer the goods from one place to another

place. Here, the goods are kept on the pallet and then with help of this trolley they can lift that

pallet to move the goods. This can lift the goods of 3 to 4 tonnes. They are 25 in number in

Varur TPT.

Handle vehicle

Handle vehicle can lift up to 2 tonne which will be pushed or pulled by labours to

move the goods. The number of handle vehicle in Varur TPT is 55.

Pallet



Pallet is used to keep the materials, which is then lifted to move more goods at time. It

can be lifted by both hydraulic trolley and fore clip.

Crane

Crane is used to load the goods of large quantity and huge weight. All the major hubs

are provided with cranes.



FINDINGS

MAJOR FINDINGS:

The model used to provide the better service to the customer is Hub and Spoke

model.

The process of goods transportation takes place in three steps i.e. booking,

transportation, and delivery.

The pricing strategy of VRL logistics limited

The pricing is done on the basis of weight and space occupied by the

consignment (whichever is higher).

The labours in the Varur TPT are not skilled and trained, so the material

handling is not efficient.

The area of the Varur TPT is around 40,000 Sq feet. The area is utilised

efficiently for the present demand. The ware house can store around 1400 to

1600 tonne of material.

The factors affecting the road transportation.

Difference between large truck operator and small truck operator.

Freight rate determinants.

Potential for the freight movement in the fourth coming years.

GENERAL FINDINGS:

During the course of the study it was found that VRL LOGISTICS LTD. is a

service sector.

The organization focuses on customer satisfaction and best and speed service.

The major advantage is that the company is a single largest service provider in

south India.

They discontinued out of state courier service.



SUGGESTIONS

The following are the suggestions for the company for future growth and prospects:

The company should focus more on safe handling and fast service.

It should emphasize on warehousing facilities provided.

They can construct racks to make use of space in the warehouse.

They have to purchase more material handling equipments as the business

is growing.

Transhipment labours should be given sufficient training to handle the

goods.

All vehicles used for transportation should be given container facility.

The company should build relationship with industries for more contracts.

The TPT labours can be divided into three shifts for the better efficiency.

Now they are working in two shifts of 12 hours each.

The courier service can be provided in Maharashtra to gain more

customers.



CONCLUSION

VRL LOGISTICS LTD is offering high quality service for customers.VRL

LOGISTICS LTD’s experience in service market through which the company can offer the

best service to the customer. The company has made sincere efforts to achieve its goals and

objectives over the years. It has good service record and has good market potential and image.

VRL LOGISTICS LTD is building long lasting relationships with its customers. Every

member of VRL LOGISTICS LTD is motivated to perform and deliver to the fullest of their

ability by constantly upgrading the skill-set of employees to suit long-term goals. Through

this the company expects to come out with highly competitive and technologically advanced

service and solutions.

As the global scenario is changing and due to globalization and liberalization the

business environment also went into sea change, so the logistics plays an important role in

today’s business environment. As it is the part of supply chain management it is crucial in

every business organization.

So the company should take the advantage of changing business environment as

logistics is called lifeline of any business.



BIBLIOGRAPHY

Books Referred:

“FUNDAMENTALS OF LOGISTICS MANAGEMENT”

By D.M. Lambert, J.R.Stock, Lisa M. Ellram

“SUPPLY CHAIN MANAGENENT”

By B.S.Sahay

“LOGISTICS AND SUPPLY CHAIN MANAGEMENT”

By G. Raghuram, N. Rangraj.

COMPANY REPORTS (ANNUAL REPORT)

Websites:

www.vrllogistics.com

www.google.co.in

www.logisticsfocus.com


http://www.logisticsfocus.com/

http://www.google.co.in/

http://www.vrllogistics.com/

Documents

A Project Report on LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR