Decrease in diesel excise duty helps VRL curtail margin decline

A reduction in excise duty for procurement of fuel from retail outlets has helped VRL, one of the leading B2B parcel suppliers to curtail its margin decline. 

According to the company, retail procurement of diesel increased from 53.83 percent  in Q3 of the current fiscal to 74.12 percent  in Q4FY22 and 99.25 percent  in Q1FY23. The company, during an investor presentation, cited the fact that a decrease in excise duty on fuel helped it in curtailing its margin impacted due to other business reasons. 

As reported earlier by Autocar Professional, with the Centre decreasing the excise duties on retail fuel by  Rs 9.5  and Rs 7 respectively on petrol and  diesel respectively in May, clubbed with freezing of prices at PSU oil marketing companies, the fuel at retail stations had become   relatively cheaper than those offered for bulk purchases and also  at privately held retail pumps. This prompted the  private oil marketing companies to  reduce supplies on the grounds as retailing  became unviable for them. 

As a result, bulk purchasers of auto fuels such as VRL and several of its peers tactfully shifted their fuel sourcing from retail fuel stations, which had a rippling effect, with several fuel stations, particularly in the hinterlands purportedly going dry, thereby impacting car owners. With the situation going out of hand, the centre has been forced to take several measures including tweaking of certain regulations and enforcing the private players to continue their supply in all parts of their geographical reach. 

VRL, which owns nearly 5036 goods transport vehicles functions with help from its 47 massive transhipment hubs. The company also owns 279 passenger transport vehicles.  Further, the Hubballi-based VRL Logistics is looking to add around 1600 customised trucks  in order to take benefits  of  vehicle scrappage policy, which mandates disposal of  commercial vehicles (CV) that have been in continuous use for over 15 years of run.