VRL Logistics to demerge wind power business

VRL Logistics Ltd, the Hubli-based Rs 450-crore transport company, is demerging its wind power business to focus on its core activity, goods and passenger transport. The company is in the process of setting up a separate company for managing the windmill business.

Vijay Sankeshwar, chairman and managing director, VRL Logistics, said, "We are set for a rapid growth in the logistics business and have found that the windmill business is not our core activity. In order to concentrate on our logistics business, we are demerging the windmill business and setting up a new entity for managing it. This will help us provide complete logistics services to our customers."

The company forayed into the wind energy business last year and has set up a 42-Mw windmill at an investment of Rs 250 crore, about 80 km from Hubli in North Karnataka.

At present, there are 200 fans running at the mill and the power is supplied to the state power grid. However, after the demerger, VRL aims to grow the business further with an addition of new fans every year.

During 2007-08, the company is looking at a turnover of Rs 45 crore from the sale of wind energy, he told Business Standard.

VRL Logistics is looking at a growth of 18-20 per cent in its turnover to over Rs 500 crore for the year-ending March 2008. The company, which was to go in for an initial public offer has, however, postponed its plans to the next fiscal as it wants to first demerge its windmill business, Sankeshwar said adding the company intends to raise Rs 250-300 crore.

He said the company was also open to partnerships in its logistics business. The company has given a mandate to Edelweiss Capital Ltd, an investment bank and brokerage house, to prepare a business plan.

"All options are open for us and how much percentage to be divested is yet to be decided. We will decide on that based on a report from Edelweiss. As of now, we are not in talks with any company for a partnership," he said.

VRL is also ramping up its fleet size. It placed an order worth Rs 83 crore for supply of 600 trucks, to Ashok Leyland. The company plans to buy 1,000 vehicles during the year.