VIP Industries Limited has informed the Exchange about Transcript of Earnings Conference Call on Audited Financial Results (Standalone and Consolidated) for the quarter and year ended March 31, 2025
May 20, 2025
BSE Limited Phiroze Jeejeebhoy Towers, Dalal St, Kala Ghoda, Fort, Mumbai – 400 001.
Code No. 507880
National Stock Exchange of India Ltd. Exchange Plaza, 5th Floor, Plot No. C/1, G Block, Bandra Kurla Complex, Bandra (East), Mumbai – 400 051. Code – VIPIND
Subject: Transcript of Earnings Conference Call on Audited Financial Results (Standalone and
Consolidated) for the quarter and year ended March 31, 2025
Dear Sir/Madam,
Please find enclosed herewith transcript of the Earnings Conference Call held on May 14, 2025 on the Audited Financial Results (Standalone and Consolidated) for the quarter and year ended March 31, 2025. The same is also available on the Company’s website https://vipindustries.co.in/storage/investor- con-call-transcripts/May2025.pdf
Kindly take the same on record.
Thanking you,
Yours faithfully,
For V.I.P. Industries Limited
Ashitosh Sheth Company Secretary & Head – Legal ACS 25997
Registered Office: DGP House, 5th Floor, 88C, Old Prabhadevi Road, Mumbai 400 025. INDIA. TEL: +91 (22) 66539000 FAX: +91 (22) 66539089, EMAIL: corpcomm@vipbags.com WEB: www.vipbags.com CIN - L25200MH1968PLC013914
VIP Industries Limited Q4 & FY25 Earnings Conference Call 14th May, 2025
MANAGEMENT
MS. NEETU KASHIRAMKA – MANAGING DIRECTOR - VIP INDUSTRIES LIMITED
MR. MANISH DESAI - CHIEF FINANCIAL OFFICER - VIP INDUSTRIES LIMITED
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VIP Industries Limited – 14th May, 2025
Moderator:
Ladies and gentlemen, good afternoon and welcome to the Q4 & FY’25 Earnings Conference
Call of VIP Industries Limited.
As a reminder, all participant lines will be in the listen-only mode and there will be an
opportunity for you to ask questions after the presentation concludes. Should you need
assistance during the conference call please signal an operator by pressing “*” then “0” on your
touchtone phone. Please note that this conference is being recorded.
I now hand the conference over to Ms. Devyanshi Dave from Adfactors PR Investor Relations
team. Thank you and over to you ma’am.
Devyanshi Dave:
Thank you. A very good afternoon to everyone. A warm welcome to the Q4 and FY’25 earnings
call of VIP Industries Limited.
From the senior management we have with us, Ms. Neetu Kashiramka – Managing Director
and Mr. Manish Desai – Chief Financial Officer.
Before we begin the conference call, I would like to mention that some of the statements made
during the course of today's call may include certain forward-looking statements, including
those related to the future financials and operating performances, benefits and synergies of
the company's strategy, future opportunities and growth of the market of the company
services. Further, I would like to mention that some of the statements made in today's
conference call may involve risks and uncertainties.
Thank you and over to you, Ms. Neetu Kashiramka.
Neetu Kashiramka:
Good afternoon everyone, thanks for joining the call. Before we move on to P&L performance,
I would like to just highlight progress which is made on balance sheet commitment, we had set
out for ourselves at the beginning of the year.
During the year, we reduced our inventory by over Rs.200 crore, in volumes approximately 25
lakh pieces. Our cash flows from operating activities improved significantly during the year to
Rs.292 crore positive, versus a negative Rs.131, crore last year. The cash generated was utilized
to reduce borrowings and also funded some of the businesses, like e-commerce and modern
trade where the revenues have increased. It has been invested in the debtors. Our debt during
the year was reduced by Rs.118 crore. We also got a favorable judgment in the high value
indirect tax litigation. Contingent liability to the tune of Rs.357 crore have been taken away, so
contingent liability is no more existing now.
Moving to some macro environment:
Luggage industry, has been one of the most attractive sectors post COVID. High growth rates,
positive travel macros, low entry barriers have attracted multiple new entrants. Most of these
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VIP Industries Limited – 14th May, 2025
new entrants are in the online space backed by large investor funding. High heat competition
has fueled price war in our segment, especially in the mid-price segment. Heavy discounting
initiated by online brands and e-commerce platform has also put some pressure on realization,
not only for us, but across the industry. Our commitment to reduce slow moving inventory
further added pressure on our average selling price so while our value growth has been flat
after removing the price support, volume continues to grow in double digit, at 10% for the
quarter and 11% for full year.
We are trying to balance our premium portfolio with various new product offerings, we have
exciting new launches coming up in our premium and mass premium brands Barring a few,
most of these new launches are now made in India, reducing our dependence on China and
also resulting better gross margins. Our commitment towards premiumization is also visible in
our recent brand investments for our premium and mass premium offerings. I am sure, all of
you must have noticed our high decibel campaign across the country in last four weeks. We
have included glimpses of the same in our presentation as well. Initial response to these, brand
activations is definitely quite encouraging.
Moving on to the channel specific performance:
E-commerce continued to be the fastest growing space for us at 40% both for the quarter as
well as for full year. Focused approach for B2B partnership also resulted in a double digit
growth for this channel. The closure of modern trade stores by partners impacted growth for
the channel, also our EBOs, we have actually closed non-performing retail stores to the tune of
more than 100. Going forward, we will concentrate on penetrating deeper into top 14 markets
in the country to ensure better store level profitability. We are also opening Carlton exclusive
stores to improve our premium mix. Overall, today we have 404 stores.
Traditional channels had growth challenges during the quarter as we focused on reducing
channel inventories. In fact, we closed our traditional trade sales on 20th March for the first
time in the quarter 4 of this year. Multiple planned initiatives to improve a premium mix are
underway. Our recent backpack collection received positive response in the market. Backpack
was the fastest growing category for the quarter. Hard luggage was the fastest growing
category both for the quarter as well as for the year. It contributes to 60% of our total portfolio.
We have also made headway in travel accessories category during the year.
Profitability was definitely a challenge during the year, mainly gross margin which was
impacted by downward pressure on selling prices, inventory provisions and netting off of price
support for e-commerce channels. Multiple initiatives for improvement in gross margin is
underway and will help us improve our gross margins in the coming quarters, starting from the
quarter 1 itself. Manpower cost optimization with year-on-year and quarter-on-quarter
decrease of 16% and 20% respectively.
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VIP Industries Limited – 14th May, 2025
Our employee benefit expenses as a percentage of revenue now stands at 10% against 12% in
the last year. Other expenses has reported a sequential increase, mainly on account of
performance marketing spends for e-commerce, professional fees, investment towards dealer
conferences and product road shows. Supply Chain improvements have started to showcase
some benefits, starting from March ‘25. With reduced inventories we have surrendered four
lakh square feet of space in Quarter 4 and another three lakh square feet of space, we are in
the process of surrendering. All this will contribute positively to our margin improvements in
the coming quarters.
Future outlook:
Fundamental demand indicators seems to be positive. There are multiple wedding dates in
fact, this year the number of weddings is maximum in last 10 years. Even hotels and travel
portals are definitely showing better results. We are very confident that the demand indicators
will definitely be in favor of the category. We are steadfast in our transformation journey.
Successful result of the same will be showcased in the upcoming quarters, starting with the
quarter 1. To conclude, I would like to say that, the year 24-25 was a year of big solves across
multiple areas, and the results for the same will be visible from the next quarter as we see
FY’26 to be much, much better year for us.
With this, I conclude my opening remarks and open the floor for questions.
Moderator:
Thank you, ma'am. Ladies and gentlemen, we will now begin with the question-and-answer
session. The first question comes from the line, line of Jinesh Joshi from PL Capital. Please go
ahead.
Jinesh Joshi:
First of all, Madam, can you let us know what is the quantum of slow moving stock that is now
left with us, and also out of this Rs.700 crore of inventory that we have with us, can you tell us
what is the quantum of RM and WIP inventory?
Manish Desai:
If you look from the slow moving inventories, we would not like to give any absolute value, but
has come down considerably over the last year. The pain has almost reduced to a negligible
amount as we stand today. In terms of the WIP what are you talking about the raw material
WIP, or the capital work in progress?
Jinesh Joshi:
No, the inventory WIP?
Neetu Kashiramka:
It’s the split of FG and RM.
Manish Desai:
RM will be approximately around Rs.215 odd crore
Jinesh Joshi:
Understood. And also, on the other expense side while we have given the reasons that it was
higher sequentially due to performance marketing and professional fees, also we did some
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VIP Industries Limited – 14th May, 2025
dealer conferences but is it possible to kind of share what is the total quantum of these
expenses which were there in this quarter?
Manish Desai:
These are contributing a substantial amount which we would not like to quantify on this call.
Neetu Kashiramka:
It will be available in our annual report though.
Manish Desai:
We would not like to quantify currently.
Neetu Kashiramka:
And some quantifications we have already given in the presentation.
Jinesh Joshi:
One last question from my side, this inventory provision of Rs.5 crore, can you explain what is
that, and what is the total quantum of inventory that we have that would warrant any kind of
future provision, if you can call out that. You also mentioned that you have surrendered about
four lakh square feet of warehousing space, and another three lakh is in the process of
surrendering. So what can be the savings in the warehousing cost also, if you can give some
color on that, that's it from my side.
Manish Desai:
In terms of the provision it is mixed against the raw material as well as some slow moving FG.
It would not be appropriate to say any amount which will come because our efforts are anyway
on accelerated way to liquidate those kind of slow moving inventories. But if the need arises
will again do a revisit on this provisioning policy and do provision in the best considering the
liquidation moment. In terms of warehousing, I would say that the impact by another three
lakhs will be surrendering it so in a year time frame, we will be saving another Rs.2.5 crore
minimum on the warehousing side, considering that next 1 or 2 Quarters, I am talking about.
Quarter 4 again will be a seasonal period, so we will see that point of time, what we need to
commensurate into this.
Jinesh Joshi:
You mentioned Rs. 2.5 crore, savings?
Neetu Kashiramka:
He is talking about is for three lakh square feet.
Moderator:
Thank you. The next question comes from the line of Ritesh Shah from Investec. Please go
ahead.
Ritesh Shah:
Ma’am first question is, you indicated on closure of stores by the modern trade partners. Can
you provide some more color over here, and secondly, what is the motivation behind Carlton
exclusive new stores, basically if you could help us underlying the thought process and
economics. Thank you.
Neetu Kashiramka:
Yes. Basically, we have closed 133 stores overall, and have opened 32 stores. The idea is that,
lot of these stores were opened in tier three, tier four cities where the throughput is very low.
For example, a store where cost is Rs.5 lakh, if my revenue is Rs.2 lakh, I don't think it will ever
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VIP Industries Limited – 14th May, 2025
be able to make profitable so going forward, the idea is, for exclusive stores we will focus on
top tier cities where minimum threshold revenue is Rs.8 lakh per month. And basis that, this
year we are targeting to open 50 stores, 20 in Carlton, and balance in VIP lounge. The idea of
opening exclusive Carlton stores , in the top areas for example like Bandra, Colaba anyways
50%, 60% of our store revenue was coming from Carlton and therefore, we thought that it
would be a better idea to have a full Carlton assortment across these premium areas, which
can give us better premium positioning as well as better revenues.
Ritesh Shah:
Overall distribution standpoint, can you just help us with the numbers on EBO and MBO,
specifically if you can break it up between tier one, two and three that would be quite useful.
Neetu Kashiramka:
Exact breaking up in tier one, tier two, I don't have immediately but we will definitely be able
to give you, but total number of stores, as we talk today it stands at 404.
Ritesh Shah:
Sure. Just a follow up ma’am when you say Rs.5 lakh of store cost, what all does it include over
here?
Neetu Kashiramka:
Everything, rental, plus the salary of store manager, the light, everything, all the cost, operating
expenditure of that stores, not the cost of product.
Ritesh Shah:
Right. And ma'am, would you like to qualify any headline asset turn, margin profile or ROC
threshold that we look at, you did give a number of Rs.8 lakh minimum revenue. So before we
shut down, is there a particular threshold, say within two years, three years?
Neetu Kashiramka:
We definitely give 12 months to the store to at least break even before we decide to take these
calls. Most of these stores which we are closing are actually existing for two to three years.
Moderator:
Thank you. The next question comes from the line of Bharghav from Ambit Asset Management.
Please go ahead.
Bharghav:
Ma'am my first question is that, obviously we have spent a lot in terms of marketing starting
April, and also a lot of new product launches have been done. So, the idea behind this is to get
back our GT market share which has reduced from 21% to 17%, and also our modern trade
market share, where salience of revenue has again reduced from Rs. 26 % to Rs. 23 %?
Neetu Kashiramka:
It's not market share it's basically the salience, that offline salience for the business has to go
up. The idea behind spending the money on the brand is to actually showcase and have a
change in the perception in the minds of people. Like lot of people didn't know that VIP is as
contemporary as any other brand can be one is that, and also the product on which we have
spent on VIP is the first product from the Japanese designer. All these are reasonable prices,
better margins, and also will definitely increase the confidence of the channel partners.
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VIP Industries Limited – 14th May, 2025
Bharghav:
So ma’am in your opinion, this e-com share this is at about 31% do you see this reducing as we
get the offline channel sales back?
Neetu Kashiramka:
It may not reduce, but we want to be at 30% for FY26. It should not go up from there, which
means that both my channels should grow equally.
Bharghav:
But fair to say that 50% plus gross margin can come only on the back of offline firing products
or even to e-commerce we can?
Neetu Kashiramka:
It can come with a better product mix. In fact, in e-commerce as well, we have just launched
Carlton also with Flipkart and Amazon. Definitely in e-commerce, we are trying to increase our
premium portfolio share.
Bharghav:
So, net-net the focus in FY’26 will be to get the gross margin back to 50% right?
Neetu Kashiramka:
Yes. In fact, most of the back end work is over, it’s all about now front ending basically selling
and therefore getting the benefits.
Bharghav:
And this backpack, is it possible to increase the share of revenue maybe to 14%, 15% or given
the kind of launches we have done?
Neetu Kashiramka:
We are definitely looking at increasing the share, but we have done well. In Quarter 4, we have
grown by 23% on our backpack portfolio which remains our focus category. We have backpack
ranging from Rs.600 going up to Rs.12,500, so we have the entire stack up, and we definitely
looking in FY’26 to expand our distribution, to make backpack a larger salience in overall
category. The good part on backpack is, it's a daily use case so basically, every person almost
changes backpack every year, and this has daily use case as well as a higher throughput across
the country.
Bharghav:
And on modern trade, any development, any inroads we are making on the modern trade
front?
Neetu Kashiramka:
We have definitely made some inroads , but I would not like to talk on this call because of
confidentiality , but yes definitely some of the larger doors we have cracked some of the price
points, and we are definitely looking at a larger share of business in the year to come.
Moderator:
Thank you. The next question comes from the line of Tejas Shah from Avendus Park. Please go
ahead.
Tejas Shah:
Just starting with clearly this year as the year progressed, our priority shifted from growth to
repairing balance sheet first. So looking at the current scenario of inventory debt, what are the
levels you will be comfortable with to pivot back to growth? And then, if you can share the
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VIP Industries Limited – 14th May, 2025
absolute numbers or ratios which you are actually looking to kind of shift focus to growth rather
than balance sheet?
Neetu Kashiramka:
Most of the large ticket items on balance sheet is done, so we have started focusing on growth
already, which is visible from a media campaigning We are now looking forward for growth
and the other ratios will all start improving as the business improves. However, on the
inventory level, we are looking at reducing it further by Rs.150 crore and the same level we
want to reduce our debt in this year.
Tejas Shah:
Sure. My second question is to this branding spent that you spoke about on VIP. Now, in last
decade or so, we would have done multiple attempts to kind of make look VIP standalone
brand contemporary and obviously I don't have data to judge whether it has worked or not,
but at aggregate level, how do you judge ROI on suspension, and when we see some of this
brands, even old age or some new age also, who would have achieved scale without spending
so much on branding. So how do we kind of think about with such spends which we kind of do
every two, three years, to revive VIP as a brand?
Neetu Kashiramka:
There are two parts to this question. One, do we really need to spend the money on the brand
is what you are saying, so if we just give discounts and we want to sell, that's one which we are
not creating brand we are just selling commodity. As an organization, we believe that we have
brands, and therefore it needs to be nurtured to get the right ROI. I can tell you, we have spent
on three products, we have spent on Lexus in VIP, we have spent on Paradise in Skybag, and
we have spent on Gemma in Carlton. In two of these three cases, we have stocked out already.
And one of the case, we have sold 22,000 pieces in 30 days, which means that we have already
done the ROI. I am going to spend in this quarter Rs.12 crore to Rs.15 crore, and I have already
earned that money, which means we have got the ROI. It's not that we are going to spend like
this every month, but this was required for us to also get confidence from our channel partners,
because for last few years we have not spent. Also, they need to know that yes, VIP is back we
are still alive. As earlier also said, that I will only spend when I can make money, which is an
indication that I am spending because I am earning.
Tejas Shah:
Okay. Ma’am my question was largely on VIP standalone, Carlton and Skybag fully understand.
Neetu Kashiramka:
I have a view that VIP is known to everybody in the country. It's we who have not capitalized
this opportunity, and I will definitely, if I were to choose between which brand to spend more,
I will spend more on VIP, because I always say that, even small kids know VIP but they are not
buying it, and why we already know that answer, and therefore I have to make sure that in next
12 months, people buy VIP. All my efforts on getting better products, getting technology driven
products, will be all around VIP. One more big initiative which we are doing is, from 1st July
onwards, all my products will be in case of VIP and Skybag, Carlton will come with a tag, “find
me tag”. It's again a special feature which nobody else is offering in the world.
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VIP Industries Limited – 14th May, 2025
Tejas Shah:
I genuinely wish you we find growth also with this. Ma’am last one on store expansion. So we
are definitely going consolidating phase. We were shutting stores, and we are opening where
ROIs can be better and also we are cutting down our storage areas or warehouse areas also.
So just was wondering, obviously you have a very tight rope walk over here, but was just
wondering, at one end we are actually kind of shrinking the growth input parameters, and then
we are trying to revive growth also. So then we are expecting very high productivity from lesser
input going forward. So just wanted to understand, how are we thinking about this?
Neetu Kashiramka:
Okay, again will break this into two parts one on warehouse. We were having 63 lakh pieces of
inventory when we started on 1st of April, 24 and today the number is around 38 lakhs. Now,
because the inventory is reasonable, I would say it has to come down to 30 and for that, I am
surrendering the warehouse space. I am not saying that I am reducing my input, but I am
actually cutting down on inefficiencies. The second again, on the store, if my store throughput
is less than my cost, I don't think it is viable. Now, we are only focusing on 14 top cities, and
therefore throughput will definitely come, it doesn't mean that I am giving away the area where
I was having a store and where I have stopped. What I am doing is, that area will be serviced
through MBOs, will be serviced through my GT will be serviced through my other modern trade
partners. I am not vacating the space, I am only saying that, instead of selling it directly through
my exclusive store, how can I sell this through an MBO which will help me reduce my fixed cost,
so basically, it is all about efficient working and removing inefficiencies.
Tejas Shah:
Very clear, and if I may squeeze in the last one. Ma'am, we would have done our inventory
planning for this year I am assuming a quarter back or 2 Quarters back, and we started on a
good note this fiscal year. But what is unfortunate events have played out in last one month or
so, do you believe that somewhere there is a risk of slowdown happening in our calculation for
the first quarter or first half of this year which is non-wedding season largely?
Neetu Kashiramka:
First quarter is a big wedding season.
Manish Desai:
If you are referring to the political, it will have some kind of bearing, what we heard and what
we came to know about it is, people are just changing the destination to travel, but they have
not stopped traveling. We are not seeing any kind of larger substantial disruption coming on
the way because of this kind of concern, and that's where we stand as of now.
Neetu Kashiramka:
I have had discussion with two or three large travel companies, where they said people are just
changing the destination, if they were going to Kashmir instead of that now maybe they are
going to South or they are going to Thailand, but people are going.
Moderator:
Thank you. The next question comes from the line of Prerna Jhunjhunwala from Elara Capital.
Please go ahead.
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VIP Industries Limited – 14th May, 2025
Prerna Jhunjhunwala:
Ma’am just wanted to understand with all these initiatives that you have spoken about, what
is the growth that you think is achievable in this year, and how do you see whether we should
think about double digit growth coming in, and how would the volume and pricing play now,
given that last year was a big price correction year. So, do you think we can see price increases
or premiumization helping you to gain ASPs at an average level?
Neetu Kashiramka:
Yes, that’s the endeavor, this year most likely our volume and value growth should match. On
the growth front I would say that whatever is the category growth, we should do 1% or 2%
better than that.
Prerna Jhunjhunwala:
Okay. So if the category growth for example, is around 10% we should be able to do 12% is
where we are?
Neetu Kashiramka:
Yes, that’s what I am saying.
Prerna Jhunjhunwala:
And it should be equally divided between volume and value is?
Neetu Kashiramka:
Yes, that will be our key focus area.
Prerna Jhunjhunwala:
Okay. And in terms of hard luggage versus soft luggage, do you see the weight of hard luggage
increasing further as the industry trend is moving towards.
Neetu Kashiramka:
No, we don't think so. In fact, maybe little bit soft luggage should go up, because suddenly we
have started getting inquiries regarding soft luggage premium portfolio. Premium consumers
are definitely asking for more soft luggage, and we have few soft luggage products lined up,
getting launched in next two to three months.
Manish Desai:
And visibility from the competition portfolio also suggests that the ratio should tilt slightly
towards more on the soft luggage.
Neetu Kashiramka:
Yes, 3%-4% more soft luggage will happen.
Prerna Jhunjhunwala:
What is attracting people to soft luggage, is there?
Neetu Kashiramka:
Not attracting, there are some consumers who are still hooking on to soft luggage because of
the ease of opening and also less breakages, so basically, only after you use you know the
pluses and minuses, hard luggage is definitely prone to more breakages versus soft luggage.
Prerna Jhunjhunwala:
Okay. So people are shifting back.
Neetu Kashiramka:
I won’t say shifting back, it’s like their preference is soft luggage, and therefore they need and
these consumers are actually the premium consumers who are eyeing for soft luggage. People
moved from soft luggage to hard luggage mostly in the entry points because of the Rs.1,000
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VIP Industries Limited – 14th May, 2025
reduction in the OPP, so soft luggage opening price point used to be Rs.2,500. However, hard
luggage opening price point started with Rs. 1,499 that is where the low end totally shifted but
premium consumers, there is a set of consumer who are still liking soft luggage, and that will
remain. So 30% in the upright soft luggage will definitely have a share and that is good for us,
because we are the best in soft luggage across the industry.
Prerna Jhunjhunwala:
Yes, make sense. In terms of sourcing, how are we using our Bangladesh facilities, is it
completely on soft luggage even today or we have started with hard luggage over there?
Neetu Kashiramka:
Only 20% capacity remains for soft luggage upright now, balance is duffels and backpacks, and
as we speak we are utilizing 90% of our capacity.
Prerna Jhunjhunwala:
Okay. Ma'am, is there any capacity available in hard luggage as well in India, because this we
don’t clearly fully utilized at 90% in Bangladesh?
Neetu Kashiramka:
Bangladesh is soft luggage, and we can increase capacity in Bangladesh just by increasing the
number of hours of shift. Today, we are doing eight hours of work, we can make it 10 hours
and 12 hours, and then we can increase the shift, so the capacity can be doubled by just adding
one more shift.
Prerna Jhunjhunwala:
Okay. And what is the situation in Indian capacity?
Neetu Kashiramka:
No constraint, it's always a constraint remains with the assembly, which is easy to do, we do
not have constraint on shell blowing and injection molding. .
Prerna Jhunjhunwala:
Okay. And how do we see the trajectory for margins going forward because you have seen,
even if 50% gross margins because of other expenses being higher while we repair our balance
sheet, our margins have not turned up higher. So how do we see the EBITDA margin panning
out for you going forward?
Manish Desai:
We would not have to give any forward guidelines, but you can understand from the current
year which we have talked about repairing the balance sheets, although we work parallelly on
the growth. You heard MD talking about various steps we have taken on the cost optimization,
including the manpower and the other related cost this all should go into improving our EBITDA
margin as we move forward.
Neetu Kashiramka:
And it will be visible from Quarter 1 itself, it's just matter of two, three months to see.
Prerna Jhunjhunwala:
Okay. And last question on advertisement expenditure, then I will come back to the question
queue again. Advertisement expense, do we see a substantial increase this year, or it should
be at last year's level?
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VIP Industries Limited – 14th May, 2025
Neetu Kashiramka:
I would say that we will earn to spend, and whatever spending’s we are doing is basis what we
have earned, so it will definitely increase from last year, but not disproportionately.
Prerna Jhunjhunwala:
So what percentage can we look at?
Neetu Kashiramka:
Additional 2%.
Moderator:
Thank you. The next question comes from the line of Shirish Pardesi from Motilal Oswal
Financial Services Limited. Please go ahead.
Shirish Pardesi:
Just two quick questions, on the retail front, general paid and retail, what is the March closing
inventory you are working with, at the shelf?
Manish Desai:
You are talking about the retail channel, distributors and retailers, or stores, or our own stores.
Shirish Pardesi:
Retail and general trade?
Manish Desai:
General trade would not be high, the last 10 days were going in to clean up the shelf and other
stuff to make available for the Muhrat billing, so you won't expect high accumulation of
inventory with the retail channel.
Neetu Kashiramka:
15 to 20 days of inventory.
Shirish Pardesi:
And what kind of DSO we work with general trade?
Neetu Kashiramka:
Seven days.
Shirish Pardesi:
Okay, my second question is, on the journey which you walked about last one year, looking at
new designs and new colors and more to suiting with the new Gen Z population. So the quick
question here is that, what is the contribution of this efforts which you have made in terms of
overall sales, in terms of volume or value you can share?
Neetu Kashiramka:
In the current year of FY’26 we estimate 40% of our revenue to come from new collection.
Shirish Pardesi:
And what was that number in FY25?
Manish Desai:
Somewhere around 25% to 28%.
Shirish Pardesi:
Just last follow up on this, this all new collection which you have launched in the market, is the
gross margin is better than your overall company gross margin, or I am again asking gross
margin, not EBITDA.
Neetu Kashiramka:
It is yes.
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VIP Industries Limited – 14th May, 2025
Shirish Pardesi:
And what differential would it be?
Manish Desai:
We would not like to quantify it, given the confidentiality.
Shirish Pardesi:
So, for example if you are targeting 50% is the ambition, will it go to 55% if that number comes
to 45%?
Neetu Kashiramka:
It won't go to 55%, it can go to 52% 53%.
Manish Desai:
Again this 55% is going to come from the existing lineup, and we have to calibrate on the price
point, so definitely it will have a major effect.
Moderator:
Thank you. The next question comes from the line of Prachi Kotekal from Bay Capital
Investment Advisors. Please go ahead.
Prachi Kotekal:
So, if I recall in your concall, post Q3 results you had guided for a double digit exit EBITDA for
this year, around 12% if I remember correctly. And, obviously we have not sort of achieve that.
I just wanted to understand, when you gave that double digit EBITDA guidance you would have
had certain expectations in mind of how things would pan out and how they have actually
panned out. Just wanted to understand where are the big misses between where you had
guided and what has actually happened. A few areas you could help us understand why we
have missed that guidance would be very helpful.
Neetu Kashiramka:
One, biggest thing is that we took some calls in the view of reduction in inventory to sell some
of the items at cost or slight very little margin. Second we also decided to have lower
inventories with the channel partners all this we have done for a sustainable future growth.
Otherwise, lot of our channel partners were unhappy because they were holding stocks, and
therefore their ROIs were also low. I wanted to start my FY’26 with a positive note, therefore
we took some of those calls and we did inventory provision so basically the idea was that, let's
leave the baggage in FY’25 and start FY’26 with a positive note.
Prachi Kotekal:
Understood, okay. So your expectations for a double digit margin in FY’26 does that still stand
or we could expect?
Neetu Kashiramka:
See, I don't want to give guidance’s therefore, let's see 1st Quarter, and then maybe we can
then further discuss.
Prachi Kotekal:
Understood. And on the pricing, intensity, the competition, last two months almost or one and
a half month of this year. If you could just give us some sense, has it cooled down or has it
intensified?
Neetu Kashiramka:
I would say in last 45 days it has been same, I don't see it has intensified. I believe that some
common sense will prevail in everybody and I feel this is the bottom where we have reached
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VIP Industries Limited – 14th May, 2025
below this I don't think anybody can survive. We are not seeing that kind of pressure below
what we are already there.
Prachi Kotekal:
Okay, so this is the bottom you feel?
Neetu Kashiramka:
Yes. As an organization also I feel worst is behind us.
Moderator:
Thank you. The next question comes from the line of Ritesh Gandhi from Discover Capital.
Please go ahead.
Ritesh Gandhi:
This is just a follow up on the last person's question. Look, this was the halfway through
February, where we were talking about double digit like 12% EBITDA exit run rate. And even
earlier, when we had met we had discussed that there were certain amount of rationalization
of expenses which had already happened, so it would like naturally move up and that the
numbers were already in the bag. So, what would be helpful is that, we understand that and
we appreciate that you are accepting that we have missed the number, but just wanted to
understand that with a little bit more granularity of how much of it was inventory hit, or how
come we hadn't already realized that some of our clients were actually holding the inventory
and that there were pricing it, we were going to take just wanted to understand this little work
of granularity because this isn't a small miss, it's a very, very large miss.
Neetu Kashiramka:
One thing on inventory with channel partners, in February we did some meetings, we did
conferences, roadshows, and we met some of the large channel partners from top 25. This was
a common problem which everybody alluded and as an organization we took this big call, that
for a future sustainable business going forward we need to take those kind of tough calls..
Whether we should have spoiled one quarter or we should spoil few years that was the
balancing which had to be done. The second thing on inventory, definitely we had plans to
reduce slow moving inventory to maximum. We always know that if we are planning to do 100,
sometimes that 100 has not happened and therefore again, I thought let's take this provision
so that we don't have these kind of baggages hanging around us in future. Those two big calls
which we took made this happen.
Manish Desai:
Right, those are the two critical things.
Neetu Kashiramka:
We compromised 1 Quarter versus confidence of our channel partners for future.
Ritesh Gandhi:
No, but what I was asking was that, if you were expecting to already be at a 12% EBITDA things
we were expecting in the February when we had the call, would already have been normalized
then it would be a little bit strange for not for us by then not to already have a feedback from
channel partners. Know the inventory they have, know the ROI which they are taking, and for
it to just happen over the last minute.
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VIP Industries Limited – 14th May, 2025
Neetu Kashiramka:
Actually, we started doing conferences and meetings after 15th of February. This is when we
had open discussions and we took those decisions, on 3rd or 4th February when we met, we had
not made up our mind, or I did not know the granularity of the problem maybe.
Ritesh Gandhi:
Okay. And is there a reporting issue, is there an MIS issue, is there a communication issue that
we already know that, that our channel partners are unhappy with that, just want to
understand that?
Neetu Kashiramka:
Channel partners will not come directly and talk to me on a daily basis. This was my initiative,
I wanted to meet them and make them happy for next year. I spent 15-20 days in the market,
and this is what I realized was the biggest problem for us and I wanted to solve it.
Manish Desai:
This is also in-line with the Shubmuhrat preparation, when we do it, we will find out a channel
check in more detail.
Ritesh Gandhi:
Okay. And the other question is that, with regards to given the overall increase in kind of
comparative intensity which is not there in the industry, while the industry growth rate
obviously continues to be robust, obviously the comparative intensity from the D2C, et cetera,
has increased materially. Do you think that could lead to a structural impact on our overall
profitability and goes up marginal levels and this is only an exceptional year, and the
structurally we will have a lower margins?
Neetu Kashiramka:
Structurally things have changed a little bit. For example, in the past, we have made 17% to
18% EBITDA, but we are not saying that we will go back there. We are saying that it should be
in the range of 12% to 15%, so some structural changes have happened, which means that our
realizations have come down. I don't think it is going to go up meaningfully, or it is going to go
up to the extent it used to be three years ago, because there is a structural change in the hard
luggage mix and the hard luggage opening price points. We have reach a rock bottom from
here, it will go up, but not to the extent from where it came down.
Moderator:
Thank you. The next question comes from the line of Nitin Jain from Value Investments. Please
go ahead.
Nitin Jain:
So before I ask my question, just a piece of feedback, which I had given last quarter as well, just
to reiterating it now, if you could release the investor presentation a little in advance, rather
than just five minutes before the call, it will be helpful. Thank you.
Neetu Kashiramka:
Yes, definitely.
Nitin Jain:
So, my questions are, what is the quantum of debt reduction we are planning in this FY’26 and
the second question is, some of the expenses like professional fees and product road shows,
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VIP Industries Limited – 14th May, 2025
et cetera that have bumped up the other expenses this quarter. So which of these do you think
are one off and which one could repeat in H1. Thank you.
Neetu Kashiramka:
Reduction in debt Rs.125 crore, and legal and professions 50% is one off, which will not be
there in H1. These roadshows are done in March, but not to the extent what we did this time
on a lower scale, but this time we did definitely on a larger scale for us to basically talk to our
channel partners that we are back.
Nitin Jain:
And in the dealer conferences would be one off as I understand?
Neetu Kashiramka:
Yes.
Moderator:
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to
hand the conference over to Mr. Manish Desai from VIP Industries Limited for his closing
remarks.
Manish Desai:
So, I hope we have answered all the questions satisfactorily, if anyone still remain in the queue,
I would request them to reach out us and we will definitely provide clarification and answers
to it. Thank you and have a good evening to all of you.
Moderator:
Thank you, sir. Ladies and gentlemen, on behalf of VIP Industries Limited, that concludes this
conference. Thank you for joining us and you may now disconnect your lines.
This is a transcript and may contain transcription errors. The Company or the sender takes no
responsibility for such errors, although an effort has been made to ensure high level of accuracy.
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