VIP Clothing Ltd Management Discussions.

This report covers the operations and financial performance of the Company for the year ended 31 March, 2021 and forms part of the Annual Report.


The second wave of Covid-19 in India was four times worse than the first wave in terms of infections and deaths seen in the country. The second wave disrupted the already battered growth process from the first wave, it added. Due to this the overall profitability of the Company during the year under review has been adversely affected in all the business segments. At the end of the year the COVID 19 pandemic resulted in a strong growth shock, which is expected to result in medium-term demand slow-down, especially for the textile sector. As of now it is difficult to predict the timing and the nature of the bounce back in consumer demand.


Indias textiles industry goes back several centuries and is among the oldest industries in the country. The Indian textile industry is one of the largest in the world with a large unmatched raw material base and manufacturing strength across the value chain. It is the 2nd largest manufacturer and exporter in the world, after China.

Although F.Y. 2020-21 was a challenging year for the textile industry, it has been a learning year and taught us to conduct the business in a different manner. The Company growth was impacted adversely during the year due to the overall industry slowdown, but it continued to grow ahead of the market. The company progressed towards developing into a well-diversified multi-channel and multi-category business. The company offers competitive & innovative range across all product categories designed specifically for the tastes and preferences of its target consumers.


The Company since long engaged in the manufacture and marketing of innerwear under brand name VIP, Frenchie, Feelings and Leader. In addition Company last year also launched a brand Brat with is specially for kids and is still looking forward for its development in kidswear. The Company has strong recall value of brand in the market with robust sales channel from distribution & wholesales to modern trade, institution, e-commerce and retail store sales channel to cater the needs of the consumer. The growth of innerwear segment, in India, can be attributed to the introduction of various international brands and other regional players. The evolution of branded innerwear is mainly rooted in urban India. Taking the opportunity of Pandemic period, the Company in FY 2020 launched Mask which was addition to the current products. Whereas in year 2021 company also launched Dhoti-Leisurewear as a new product.

Currently the biggest threat is next wave of COVID-19. This global pandemic has impacted overall consumer demand across Industries. It all depends how fast it can be controlled to help in boosting confidence and reducing uncertainties. Further abnormal increase in input cost and non-clarity on rates of export benefits are creating uncertainty among the manufacturers / exporters.



The Indian innerwear market is primarily dominated by womens innerwear which accounts for 64 per cent of the total innerwear market and it accounts for 16 per cent of the total womens apparel market. Various product categories in womens innerwear are brassieres, camisoles, panties, tees, nighties, shorts, etc. Brassieres and panties contribute 85 per cent of the total womens innerwear segment.

Women are conscious about the brands and styles for their intimate wear. The trend is not restricted to just metros but can be witnessed spreading in Tier I, II and III cities. This adoption of branded lingerie has led to influx of international and domestic innerwear brands. (source: Indian companies)


The mens innerwear market is currently valued at Rs 11,000 Crore and is expected to grow at a CAGR of 7 per cent over the next decade to reach Rs 21,800 Crore by 2028. It contributes 7 per cent of the total mens apparel market.

The market is dominated by a large number of small-scale players making ~60-65 per cent of the market fragmented and unorganised. However, the market segment is evolving gradually and moving towards organised retail. (source: Indian companies)


The kids wear market is expected to grow at a CAGR of 8.5% in the next five years. With a booming kids population in India and owing to distinct factors like the growing trend of nuclear family system, increased spending on children, greater brand awareness among kids, and better focus on this segment by organized players, the kids wear industry is poised to grow in the coming years. (source: Indian companies) Market for kids apparel is the fastest growing industry in India. Childrens garments are available in various forms and designs. There is an excellent opportunity for the organised players to lay a strong foundation in this segment. Indian market is now moving towards an international look in terms of childrens apparel.

A cursory analysis of the kids buying behaviour indicates that they are an independent customer group displaying considerable pester power that they have inculcated and now seem to be exerting. Additionally, kids are highly self-conscious and can be easily affected by peer pressure, at a very young age, and thus can be very demanding, often at the cost of the parents peace of mind if not their pockets. (source: Indian textile journal)


The present market trends show an inclination amongst Indian consumers to spend more on innerwear, leading to aggressive growth of this category especially in premium and luxury price segments. The recent mode of retailing through online channels has permeated into the innerwear category as well giving it much exposure to the consumers.

It is evident that Indian innerwear industry has come a long way in last decade and perception of todays consumer towards innerwear has changed. The category is no more considered a basic necessity but a fashion indulgence which gives confidence and feel good factor.

i. Growing Indian middle class- moving up ladder Rising disposable income, economic growth and dual income households has led in the emergence of a middle class which is ready to spend and experiment with fashion and style. With more income to spend the middle class has become more brand conscious. This has led to higher value and volume.

ii. Change from need driven to aspiration driven buying The recent consumer trends show that price is not the most important criteria anymore for this segment. For evolving consumers, looking good has become an important aspect of life. Therefore, spending on apparel, personal care and grooming is on the rise. Occasion specific products like seamless bras, strapless bras, padded bras, bralettes, etc. are being sought. There has been a rising demand for functionality based womens innerwear like shapewear, tummy tuckers, etc. for women desiring a slimmer look; non-wired brassieres for woman facing comfort issues after prolonged use of wired ones; and sports bras suitable for physically active women.

iii. Emergence of online retail channels The emergence of online retail channels has bolstered sales of premium innerwear among the youth. The fashion conscious women residing in tier I, II cities with limited access to brick and mortar stores are most benefitted through the emergence of online retail in innerwear segment. It has been witnessed that women are the key buyers of innerwear available on online channels. (Source: Images of Business Fashion)


The Company is exposed to various types of risks associated with business of the Company, which will be internal as well as external risk. One of the key risks faced by the Company in todays scenario is the fluctuations in the price of raw material. Any increase in prices of raw materials could create a strain on the operating margins of the Company. We operate in a highly competitive market with competitors who may have better ability to spend more aggressively on advertisement and marketing and more flexibility to respond to changing business and economic conditions. Further, there are regional or smaller competitors who have certain advantages over us. An increase in the amount of competition that we face could have a material adverse effect on our market share and sales. The Company has in place risk management procedure to identify and evaluate the risk on a regular basis. The Company has the risk management committee, who brain-storm on the various risks associated with the Company. The details of risk committee have been mentioned in the Corporate Governance report.


The Company has implemented adequate procedure and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statement. The Company has a regular check on expenses including capital expenditure. The Management considers and takes appropriate action on the recommendations made by the Statutory Auditors, Internal Auditors and the Audit Committee of the Company.

In addition, the software solutions such as SAP, DMS, field assistance and number of other robust system provides the Company to control over various business processes, increases productivity, better inventory management, promotes quality, reduced material cost, effective human resources management, reduced overheads boosts profits, plan its sales, production and monitor and control the processes in case any deviation.


As on March 31, 2021 the Company had 1,123 people (Employees 352 + Workers 771) working directly and indirectly with the Company. The industrial relations in all units of the Company continue to be cordial. The skills, experience and passion of our people facilitate deeper customer understanding and engaging relationships and strengthen our brand value as a preferred employer. We continue to step up efforts to accelerate our value-based growth strategy and the overall development of human capital. We nurture our people by investing in their empowerment through learning and development, wellness and safety besides providing contemporary workplace facilities.


The Company accord the highest priority to health and safety of its employees and communities it operates in. The Company has been fully committed to comply with all applicable laws and regulations and maintains the highest standard of Occupational Health and Safety and ensures safer plants by conducting safety audits, risk assessments and periodic safety awareness campaigns and training to employees. We believe in good health of our employees.

Further, to prevent the spread of pandemic Covid 19., the Company has taken all precautionary measures required, such as use of masks and sanitizers, social distancing etc., at all its plants and construction sites as well as at office locations. Your Company is in full compliance of all Government directives issued in this behalf. The Company has always considered safety as one of its key focus areas and strives to make continuous improvement on this front.


(Rs In Lakhs)

Particulars 2020-21 2019-20
Revenue from operation 14305.23 17276.41
Profit before Interest, Depreciation & Tax (excluding Other Income) 297.41 -1572.94
Less : Finance Cost 1090.38 1038.21
Less : Depreciation 392.96 424.05
Add : Other Income 206.61 277.21
Profit/(Loss) Before exceptional item and Tax -979.32 -2757.99
Profit /(Loss) for the year (excluding OCI) -104.55 -1495.04
Profit/(Loss) for the year (including OCI) -102.23 -1505.74
Key Financial Ratio:
Particulars 2020-21 2019-20 Change (%)
Return on Net Worth (%) -0.76% -11.02% 93.13%
Return on Capital Employed (%) -6.22% -16.74% 62.88%
Basic EPS (after exceptional items) in Rs -0.13 -1.81 92.82%
Debtors Turnover 2.63 3.17 17.14%
Inventory Turnover 1.21 1.37 11.44%
Interest Coverage Ratio 0.10 -1.66 106.15%
Current Ratio 1.44 1.50 4.11%
Debt Equity Ratio 0.66 0.58 -13.88%
Operating Profit Margin (%) 2.08% -9.10% 122.84%
Net Profit Margin (%) -0.73% -8.65% 91.55%

Explanation on Key Financial Ratio:

The rapid spread of the Covid-19 pandemic across countries, including India, has not spared Indias apparel sector either, adding to the woes of the player who have already experienced a rather challenging fiscal year 2021. Amid a subdued demand scenario in the domestic as well as the international markets, intensifying competition and lags witnessed in the clearance of export incentives, there was a drop in turnover and negative impact on profitability and financial ratios for FY21 as compared to FY20.

For VIP Clothing Limited
Chairman & Managing Director
(DIN: 00192182)
Place: Mumbai
Date: August 10, 2021