Dilip G Piramal, Chairman of VIP Industries (Image Source: VIP Industries / www.vipindustries.co.in)
In the run-up to the festive season, VIP Industries chairman Dilip Piramal spoke of his hopes of strong demand ahead of the festive season in an interview with CNBC TV-18. Edited excerpts:
Is demand on the ground strong enough? And will you stick to the guidance given earlier about Rs 2,000 crore in revenue and margins in the mid-teen levels at the end of the year?
Yes, I think we are on track to do that and we’re trying to improve it, but let us see. So far we are on track.
Is demand strong enough? If so, have you pushed through any kind of price increases?
No, I don’t think there is any need but that’s because I think prices are now sort of stabilising and in some rare cases they’re coming down also. And with increased volumes over last year, things are looking quite all right.
It’s been three really challenging years but can you give us some colour on demand for domestic and international travel? The wedding season is back in a big way too, so what kind of growth are you seeing and what kind of sustainable growth do you see over the next one to two years?
The percentage of growth is not very relevant because we are taking from a very low base, so I would say that if things were normal we would be having about 10 percent growth.
You had targeted around Rs 2,000 crore revenues in FY23. Do you stick to that guidance?
Growth was 10 percent when things were normal, now the growth level is much higher, so we are looking at absolute figures now for the time being. Of course we have it for comparison but that doesn’t mean much. If you’ve grown 50 percent in a particular segment or overall also that doesn’t mean anything… The absolute figures are more important.
Are you seeing more premium products being sold?
No, not as yet because actually they’ve had some supply problems. You see, what has happened in this survey period is that manufacturing has come back to India and Bangladesh for us, which means the number of items in terms of SKUs has gone up tremendously. We were buying from about 10 vendors in China and now we are making all of that ourselves, so that is a very massive increase. So there are some issues there, but it’s the premium products which were not selling so much in the Covid period. However the demand for them is more or less normal now. I wouldn’t say that there is a particular increase in premium products but that can happen maybe after six months, when the availability is much better.
Smaller rival Safari has been growing at a good clip. You had also indicated that your market share had come down a little bit, to around 47 percent, but you wanted it to get back to around 50 percent. Is that happening?
Actually, in the last quarter I think we have gained 1 percent market share. No doubt our competitors are doing quite well, so I think that means that the overall market is increasing or maybe we’ve got some market share from the unorganised sector. The unorganised sector has been badly affected because their supplies came mainly from China and I don’t think they have been able to replace that so fast… One of our larger competitors is Samsonite and their figures come out only six monthly because they are not a listed company. Except for us and Safari, nobody else is listed so the information is not as accurate as we would like it to be but we have verified and we have actually gained 1 percent market share in the last quarter.
I can say from personal experience that after not traveling for two years, a lot of your luggage starts falling apart. So now that the people have started traveling, I guess there’s outsized demand?
Yeah we’ve seen the results of all that and domestic travel is at a very high level, but international travel has still not picked up so much. There are restrictions and there are not so many flights today. But domestic travel is at a very high level, and fares are coming down, so all in all it looks like a good a good season and good prospects.
