v i p industries ltd share price Management discussions


Following the second wave of the Covid-19 pandemic, India’s economy was well on its way to recovery, with both the manufacturing and service sectors exhibiting consistent growth. However, the emergence of new Covid variants, supply-chain disruptions arising out of the Russia-Ukraine crisis and more recently, rising inflation have been posing fresh challenges to economic development. Despite these adversities, India’s Gross Domestic Product (GDP) is estimated to have grown at 8.9% in FY 2021-22, which is the highest among the leading economies, and growth is expected at 8.2% in FY 2022-23.

The Indian economy is expected to remain resilient despite the ongoing geopolitical conflicts, mainly due to the economy’s inherent strengths, strong fundamentals, and growth promising sectors. Growth will be supported by various dynamic reforms undertaken by the government, expenditure onsuch as significant infrastructure, thrust on domestic manufacturing and technology-enabled development, and recovery in consumer demand, among others.


(Source: IMF World Economic Outlook, April 2022)


Luggage Industry in India

The luggage market in India is estimated to be around

7,000-8,000 crore, with organised players constituting 40% of the market. Over the last few years, the industry has grown consistently, aided by rising personal income levels, changing lifestyles, growing middle-class, availability of low-cost airfares, and diverse travel packages. Growing convenience of online shopping has led to a major shift in consumer preferences towards the purchase of travel bags and other luggage bags through e-commerce platforms.

Since the COVID-19 pandemic prompted majority of the population to sit at home owing to travel restrictions and lockdown, the luggage and backpacks industry has been hit hard by the pandemic. Also, most of the potential consumers limited their spending on travel luggage, which directly impacted the growth of the industry players. However, domestic demand is seen picking up with improving consumer sentiment and recovering air passenger traffic. Re-opening of schools and colleges is also expected to support recovery in backpacks business.

The premium segment is expected to pick up significantly with the resumption of international travel.

On a positive note, the aviation industry saw strong, pent-up travel demand supported by improved economic activity from the second half of 2021. The desire in consumers to vacation abroad or to visit friends and relatives has been displayed on several occasions, with a surge in bookings when restrictions were eased on certain international routes. Business travel also gained momentum contributing to the traction in travel statistics.

Growth in air passenger traffic increased by 55% in the current year (April 21-March 22) as compared to de-growth of 63% in the previous year (April 20-March 21).


VIP Industries Limited is amongst Asia’s leading manufacturers and suppliers of luggage, backpacks, and handbags and the market leader in the organised luggage segment. The Company has a range of leading brands, positioned across the entire price range, catering to value (Aristocrat), mid (VIP, Skybags), and premium (Carlton, Caprese) price points. For over 50+ years, the Company has revolutionised the luggage and travel industry with continuous product innovation in line with changing trends, adherence to quality and international aesthetics.

The Company’s manufacturing infrastructure includes two state-of-the-art units in India and six in Bangladesh which are equipped with modern technologies. Moreover, its strong distribution network gives easy access to VIP luggage everywhere in India via 5,883 points of sale across exclusive stores, multi-brand stores, large format retail, defense canteens, and e-commerce. Inspired by the Company’s values of youthfulness, meritocracy, entrepreneurship and innovation along with core tenets of open communication, transparency and agility, its talented employees are always on a quest to take the Company to greater heights.


During FY 2021-22, net revenue from operations grew by 105.01% to 1,257.19 crore from 613.22 crore in FY 2020-21. Profit after tax for the current year stood at 63.73 crore as against (84.53) crore loss in the previous year, marking a growth of 100%. EBITDA stood at 164.45 crore as against (17.52) crore loss in FY 2020-21.

Financial Review (Consolidated)

Particulars 2021-22 2020-21 2019-20
Revenue from Operations 1289.51 618.56 1714.35
EBITDA 180.76 (16.92) 306.72
PBT (Before Exceptional Item) 86.16 (124.61) 196.91*
PBT (After Exceptional Item) 86.16 (124.61) 148.41
PAT 66.93 (97.49) 111.73
Net Worth 559.67 517.18 610.11
Debt to Equity Ratio 1.20 1.12 1.04
Earnings per share () 4.73 (6.90) 7.91


* Exceptional/Extra-Ordinary item of 48.5 Crore - loss due to fire at Ghaziabad werehouse in April, 2019.

Financial Review (Standalone)

Particulars 2021-22 2020-21 2019-20
Revenue from Operations 1257.19 613.22 1709.99
EBITDA 164.45 (17.52) 220.75
PBT (Before Exceptional Item) 83.85 (112.89) 169.62*
PBT (After Exceptional Item) 83.85 (112.89) 121.12
PAT 63.73 (84.53) 88.73
Net Worth 505.25 468.49 547.02
Debt to Equity Ratio 1.04 1.15 1.10
Earnings per share () 4.51 (5.98) 6.28


* Exceptional/Extra-Ordinary item of 48.5 Crore - loss due to fire at Ghaziabad werehouse in April, 2019.

Key Financial Ratios (Consolidated) Operation as per SEBI Listing Obligations and Disclosure Requirements (Amendment) Regulations, 2018

Particulars 2021-22 2020-21 2019-20
Debtors Turnover 7.03 2.97 6.06
Inventory Turnover 1.57 0.98 1.65
Interest Coverage Ratio 4.5 -3.19 7.45
Current Ratio 1.74 1.84 1.89
Debt Equity Ratio 0.22 0.30 0.05
Operating Profit Margin (%) 5.77% -23.15% 12.10%
Net Profit 5.19% -15.76% 6.52%
Return on Net Worth (RONW) (%) 12% -18.9% 18.3%

Key Financial Ratios (Standalone) Operation as per SEBI Listing Obligations and Disclosure Requirements (Amendment) Regulations, 2018

Particulars 2021-22 2020-21 2019-20
Debtors Turnover 7.11 2.98 6.08
Inventory Turnover 2.45 1.36 2.09
Interest Coverage Ratio 4.73 -2.98 6.6
Current Ratio 1.83 1.71 1.77
Debt Equity Ratio 0.15 0.32 0.06
Operating Profit Margin (%) 4.69% -23.47% 9.78%
Net Profit 5.07% -13.78% 5.19%
Return on Net Worth (RONW) (%) 12.6% -18% 16.2%

Operational Review FY 2021-22

Opened 32 retail stores during the year, taking the total store count to 376.

Expanded hard luggage (HL) production capacity by 55 lacs (annual) units across India and Bangladesh.

Invested 2.75% of net revenue as Advertising & Promotion (A&P) expenses.

Launched new products in value (Aristocrat) and mid (Skybags) segments.

65.50% and 241% growth achieved in e-commerce and modern trade, respectively.


The Company is expected to be amongst the key beneficiaries of the re-opening of economies and resumption of normalcy. It is likely to be the market leader in its category in the coming years due to focus on high-growth categories and efforts on strengthening the distribution mix in modern trade and e-commerce.

Focus on higher growth opportunities, improvement in product mix and cost-saving initiatives are likely to result in margin improvement.

Further, the Company is planning to increase the production of Polypropylene-made products which will enable it to manage costs in a rising inflation environment. This will significantly reduce its dependence on China for sourcing of merchandise as well as enable it to gain more upstream control. It is also enhancing its Hard Luggage (HL) production capacities in Bangladesh to leverage the accelerated shift of consumer preference toward this category. Scaling up of Bangladesh’s operations will provide the Company with a sustainable competitive advantage and support its overall margin profile in the oligopolistic Indian luggage market. It is also expanding its retail store network to 500 by the end of 2022-23.

Capacity expansion and strengthening of EBO network provide ample growth visibility and sustenance of demand over the medium-term. In terms of product mix, the Company is focusing on production of Skybags and Aristrocrat bags to fulfil the increasing demand and achieve higher market share in these brands. The management of the Company also expects the demand to remain robust going forward and expects to sustain the growth momentum.


The Company has established a comprehensive risk management framework for identifying and managing the key business risks. The Company formulates strategies through appropriate checks and balances to monitor and mitigate identified risks to minimise their impact on the Company’s operational and financial performance.

Key risks include demand risk, operational risk, personnel risk, technology risk, among others. Additionally, it faces external risks such as overall economic slowdown, declining demand in key markets and raw material unavailability. It also faces risks related to the challenges posed by the pandemic.


Human Capital is pivotal to the growth and success of the organisation. The HR policy of the Company aims to foster a safe and conducive work environment, promote trust and transparency, and a sense of teamwork among the employees. During the year, the Company enjoyed a cordial relationship with its workers while continuing to hone their skills and capabilities by conducting various development training programmes. As on March 31, 2022, the Company’s total employee strength stood at 1,277.


The Company has a well-framed internal control system in place commensurate with the size and nature of its business. The budgetary control system of the Company monitors all the expenditures against approved budgets on an ongoing basis. M/s. Suresh Surana & Associates LLP are the Internal Auditors of the Company. The internal audit function maintains internal controls to safeguard the Company’s assets against losses, provides a high degree of assurance regarding the effectiveness and efficiency of operations, and of financial controls and compliance with laws and regulations. The Internal Auditors submit their audit findings and reports to the Audit Committee every quarter.

The management considers and takes appropriate action on the recommendations made by the Statutory Auditors, Internal Auditors, and the Audit Committee of the Board.

Cautionary statement

Statements in this report describing the Company’s objectives, projections, estimates and expectations may be ‘forward-looking statements’ within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations include economic conditions affecting demand and/ or price conditions in the domestic and overseas markets in which the Company operates, changes in government regulations, tax laws and other statutes and incidental factors. The Company assumes no responsibility to publicly amend, modify or revise any forward–looking statements on the basis of any subsequent developments, information or events.