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V I P Industries Annual Report 2023 Summary

  1. VIP Industries achieved strong growth across brands and channels. The company is committed to a transformation plan to ensure long-term business sustainability. The luggage and backpacks market in India is estimated at ~₹10,000 crores, with branded players constituting ~56% of the market. The organized segment (branded offerings) is outpacing the industry's growth, with a rate of 15%, indicating promising expansion opportunities.

  2. VIP Industries has invested in expanding in-house manufacturing capacity, reducing reliance on sourcing from China. A capital expenditure plan of ₹200 Crores has been initiated to enhance manufacturing capabilities.

  3. The company is actively expanding its distribution network to reach customers in Tier 2 and Tier 3 cities, catering to the aspirations of a broader customer base.

  4. The Caprese brand is positioned to expand in the mid-premium to premium segment.

  5. VIP Industries experienced significant growth in value and volume, with revenue reaching ₹2,082 Crores, a 61% increase.

  6. Strong growth was observed in premium, mass premium, and value categories.

  7. The company maintained gross margins above 50% through efficient cost management. A fire incident at a factory in Bangladesh resulted in an exceptional loss of ₹47.2 Crores. Despite this setback, VIP Industries achieved its most profitable year. The company invested ₹100 Crores to expand manufacturing capabilities, increasing in-house and controlled manufacturing. VIP Industries allocated ₹200 Crores for further capacity expansion in India and Bangladesh, aiming to meet demand for the next three years.

  8. VIP Industries expanded its distribution network, achieving a 90% penetration in relevant towns. The company established over 125 EBOs and aims to add 150 more in the current financial year.

  9. During the year, the company has observed increased demand for its products due to rising disposable incomes, particularly in smaller towns. There's also a growing trend of online shopping. The company aims to offer customers convenient options, whether they prefer shopping in-store or from the comfort of their homes as part of their go-to-market strategy.

  10. The company has successfully expanded its distribution network, adding over 200 towns in lower population-strata areas. This expansion has resulted in a 90% penetration in the addressable towns' universe, extending their reach to over 1,200 towns across the country.

  11. Their goal is to reach every town with a population of 50,000 or more by the middle of the next financial year to make their products easily accessible to a wide range of customers and meet the growing demand for their brands.

  12. Furthermore, the company achieved a significant milestone by opening over 125 Exclusive Business Outlets (EBOs) during the year, reaching a total of 500 stores. This is the highest number of stores added in a single year, indicating a strong commitment to expansion. Despite facing store closures during the pandemic, they have not only restored their pre-pandemic EBO strength but exceeded it.

  13. They plan to continue this momentum by adding another 100 outlets in the current financial year, primarily through the capital-light franchisee model. This ambitious expansion strategy aims to further enhance their brand's accessibility.

  14. The company has launched an 'Accelerator Programme' in collaboration with Boston Consulting Group (BCG) to rapidly advance their e-commerce efforts and become industry leaders by developing essential capabilities and knowledge throughout the current financial year.

  15. In the performance review, the premium portfolio, including Carlton, VIP, and Skybags, experienced robust revenue growth, driven by increased international, student, and corporate travel. New premium product launches received positive customer feedback, and the hard luggage segment excelled in the uprights category.

  16. VIP: 23% revenue, 65% YoY growth Skybags: 31% revenue, 50% YoY growth Carlton: 6% revenue, 84% YoY growth Balance share: Value Brands and Caprese Brand.

  17. In FY 2022-23, the company launched 23 products in the premium segment, which included backpacks.

  18. The company plans to innovate by offering adaptable luggage formats, exploring new markets and user segments, and introducing sustainability-focused products. They aim to cater to diverse demographics, including Gen Z, women travelers, children, and tech-savvy consumers, while also addressing hygiene concerns and providing smart, convenient, and affordable travel solutions.

  19. Our international business, currently contributing 4% to our revenue, achieved its highest-ever revenue in the past year with 173% Year-on-Year Growth.

  20. This success marks the beginning of a promising journey, with a strong focus on international growth. With expanded manufacturing capabilities and a commitment to quality, the company is well-prepared to enter new markets and strengthen its presence in existing ones, including the Middle East, Asia Pacific, and Europe.


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