VRL shares crash as promoters contemplate aviation foray

May 27, 2016: The shares of VRL Logistics closing at 20 percent lower on May 24, 2016 at the National Stock Exchange as its promoters Vijay Sankeshwar and Anand Sankeshwar announced their plans to start a regional airline through the sale of a minority stake in VRL Logistics. The fall in share prices was indicative of the market sentiment as the aviation sector is not deemed to be lucrative. This fall is in stark contrast to VRL Logistics stellar performance in the previous year where its shares gained more than 50 percent of the issuing price. Both analysts and investors did not take the news of VRL Logistics foray into aviation. VRL shares continued to fall in the BSE despite the broader sense riding high by 383 points on favourable global cues. "The board members should note that we may seek to dilute a portion of our present holding in VRL Logistics in order to provide us with liquidity to enable our investment for the aviation venture," said the promoters in a filing to BSE. The company later issued a clarification that the foray into aviation was not finalised. Aniruddha Phadnavis, company secretary and compliance officer, VRL Logistics, said in an official statement, “The promoters of VRL Logistics have clearly indicated that the release pertaining to selling their stake to enable the foray into aviation is only a statement of intent and they intend to continue to hold a majority stake in the company. VRL Logistics is not contemplating an entry into the civil aviation space and has no plans to commence an airline anytime soon.” The company’s promoters Vijay Sankeshwar and Anand Sankeshwar also highlighted that the equity dilution would not happen in one go but rather spread over three to four years.