VIP Industries has been looking to restructure its operations post-pandemic and amid changing consumer preferences for luggage over the last few years, founder-chairman Dilip Piramal told FE.Piramal also said Nisa Godrej’s exit from the company as an independent director this week was unexpected.
“She is respected within the consumer goods industry and is a competent individual. She was, however, not in agreement with our succession planning and leadership accountability. While I can see her point of view, I have no choice but to respect her decision,” he said.
The company has hired Boston Consulting Group (BCG) for management consultancy and also put a five-pronged strategy in place for FY25, according to its last investor presentation. This includes achieving double-digit revenue growth, ensuring market share gains from the first half of FY25, tapping the premium segment, achieving Ebitda margins of 15% from the second half of FY25 and optimising inventory with reduced debt and interest costs.
Piramal said he is giving BCG at least a year to reinvigorate the business, which is now led by Neetu Kashiramka as its managing director. He also admitted that VIP Industries, which was once the leader in the `15,000-crore organised luggage market in India, has had management issues in the past, following the pandemic.
The company, which is now the second-largest organised luggage maker in India after Samsonite, closed FY24 with sales of `2,245 crore, a year-on-year growth of nearly 8%. Its net profit fell by nearly 65% in FY24 to `52 crore against the year-ago period.“We saw two MDs depart in three years,” he said.
“The Covid and post-Covid period has not been easy for luggage companies. Travel came to a halt during Covid-19 and consumption trends have changed post-Covid, with a preference for hard luggage versus soft luggage. We are strong in the soft-luggage category with a large soft-luggage manufacturing capacity in Bangladesh,” he said.
A recent report by Crisil notes that the shift from hard luggage to soft luggage in India has been swift in the post-Covid period. The market share of hard luggage, considered durable and stylish by travellers, has jumped from 33% in FY18 to over 55% in FY24, it said.Piramal said the company has been looking to optimise its capacity by reducing soft-luggage production as well as repurposing existing soft-luggage capacity to produce duffels bags and backpacks apart from hard luggage.The company is also tapping the premium luggage market with brands such as VIP, Skybag and Carlton whereas Aristocrat will remain a mass-market brand. Aristocrat has luggage starting from Rs 1,800 up to Rs 2,500 a unit. In Skybag and VIP, the range extends from `2,500 to `7,000 per unit, while Carlton offers products up to Rs 18,000 a unit.
From: financialexpress
Financial News