💰 Financial Performance

Revenue Growth by Segment

Overall revenue declined 3% in FY25 to INR 2,178 Cr from INR 2,245 Cr in FY24. In H1 FY26, revenue registered a significant 18% YoY degrowth to INR 968 Cr. While the value segment brands (Aristocrat and Alfa) grew at a 20% CAGR over the last four years, the e-commerce channel, which previously grew at double digits, saw a sudden drop in Q1 FY26, impacting primary sales.

Geographic Revenue Split

The company operates across India with nearly 14,000 points of sale in 1,400 towns. While specific regional percentage splits are not disclosed, the company is shifting focus toward top-tier cities to promote premium and mass-premium brands, having closed 133 underperforming stores in FY25 to optimize the geographic footprint.

Profitability Margins

Operating margins witnessed a steep decline from 15.2% in FY23 to 8.8% in FY24, and further to 4.04% in FY25. This was driven by a 650 bps impact on gross margins due to intense price competition and heavy discounting to liquidate slow-moving inventory. Net profit margin for FY25 was -3.16%, resulting in a net loss of INR 69 Cr compared to a profit of INR 54 Cr in FY24.

EBITDA Margin

EBITDA margin for Q1 FY26 was 5%, down from 8% in Q1 FY25. However, the company reported an adjusted EBITDA margin of 10% for the same period when excluding one-time inventory provisions. The decline is attributed to higher warehouse-related expenses and aggressive pricing on e-commerce platforms.

Capital Expenditure

No significant capital expenditure is planned for the medium term as the company focuses on debt reduction and inventory liquidation. Historical capex was not explicitly valued in INR Cr, but the company is prioritizing the monetization of non-core assets with a market value of INR 116 Cr to support liquidity.

Credit Rating & Borrowing

CRISIL downgraded the company's long-term rating to 'CRISIL A+/Negative' from 'CRISIL AA-/Negative' in late 2025. Borrowing costs are reflected in an interest coverage ratio that moderated sharply to 1.25 times in FY25 from 3.54 times in FY24 due to operating losses.

⚙️ Operational Drivers

Raw Materials

Key raw materials include Polypropylene and Polycarbonate for hard luggage manufacturing, and various fabrics for soft luggage. Zippers are also a critical component, with localization efforts underway to reduce costs.

Import Sources

Soft luggage and certain components are sourced from China and the company's own subsidiaries in Bangladesh, while hard luggage is primarily manufactured in India.

Key Suppliers

Not specifically named in the documents, though the company utilizes a mix of domestic manufacturing and international sourcing from China and Bangladesh.

Capacity Expansion

Current capacity is not disclosed in units, but the company is focusing on manufacturing efficiency rather than expansion, having closed 133 stores in FY25 to improve per-square-foot realization.

Raw Material Costs

Gross margins were impacted by 650 bps in FY25, largely due to pricing pressure rather than raw material spikes, though the company is localizing components like zippers to mitigate costs. COGS for Q1 FY26 was INR 309 Cr against revenue of INR 561 Cr.

Manufacturing Efficiency

The company is shifting toward hard luggage production using recyclable materials to align with ESG goals and improve manufacturing sustainability.

Logistics & Distribution

The company maintains a vast network of 14,000 points of sale and 500 Exclusive Brand Outlets (EBOs). Distribution is being rationalized by closing 133 underperforming franchise and company-owned stores.

📈 Strategic Growth

Expected Growth Rate

15-20%

Growth Strategy

Growth will be driven by a transition to new management under the Multiples-led consortium, which is acquiring a 31.89% stake. Strategies include focusing on premium segments, calibrated price hikes, launching innovative products, and expanding the EBO network in top-tier cities while liquidating old inventory to restore margins to the 13-15% range.

Products & Services

Hard luggage (polypropylene and polycarbonate), soft luggage, and travel accessories.

Brand Portfolio

VIP, Aristocrat, Alfa, and Skybags.

New Products/Services

Launch of 100% recyclable hard luggage made from polypropylene and polycarbonate; new innovative launches in the premium segment are expected to drive revenue recovery.

Market Expansion

Expansion is focused on increasing the number of Exclusive Brand Outlets (EBOs) in major Indian cities and strengthening the e-commerce presence, which grew to 31% of revenue in FY25.

Market Share & Ranking

VIP is the largest player in the Indian luggage industry with a 36% market share as of FY25, followed by Safari (33%) and Samsonite (32%) in the organized segment.

Strategic Alliances

A share purchase agreement was signed in July 2025 for a consortium led by Multiples Alternate Asset Management to acquire up to 31.89% of the company at INR 388 per share.

🌍 External Factors

Industry Trends

The luggage industry is shifting toward hard luggage and e-commerce distribution. E-commerce now accounts for 31% of VIP's sales, up from 22% YoY, though this channel is seeing increased competition from new digital-first brands.

Competitive Landscape

Intense competition from both organized players (Safari, Samsonite) and unorganized players, particularly on e-commerce platforms where new entrants offer aggressive pricing.

Competitive Moat

The company's moat is built on its 54-year brand legacy and a massive distribution network of 14,000 points of sale. However, this moat is being challenged by e-commerce players who bypass traditional distribution.

Macro Economic Sensitivity

Demand is sensitive to the marriage season and travel trends. Q1 FY26 margins were expected to be higher due to the marriage season but were offset by inventory provisions.

Consumer Behavior

Consumers are increasingly shifting toward online purchases and showing a preference for hard luggage over soft luggage.

Geopolitical Risks

Sourcing from Bangladesh and China exposes the company to regional geopolitical stability and trade policy changes.

⚖️ Regulatory & Governance

Industry Regulations

The company adheres to the Companies Act and SEBI Listing Obligations. Operations are subject to environmental norms regarding waste generation, which increased to 1.31 tonnes/revenue in 2024.

Environmental Compliance

ESG initiatives include reducing GHG emissions intensity to 8.17 tCO2/revenue and increasing the use of recyclable materials. Specific compliance costs in INR were not disclosed.

Taxation Policy Impact

The effective tax benefit in FY25 was INR 22 Cr due to reported losses.

Legal Contingencies

The company reported no pending disciplinary actions for bribery or corruption and no complaints regarding conflicts of interest involving KMPs or Directors.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the successful transition to new management and the ability to liquidate remaining old inventory without further massive hair-cuts to margins.

Geographic Concentration Risk

Highly concentrated in the Indian market, though it sources internationally. Domestic sales are spread across 1,400 towns.

Third Party Dependencies

Significant dependency on e-commerce platforms for 31% of revenue and on third-party manufacturers in China and Bangladesh for soft luggage.

Technology Obsolescence Risk

Risk of falling behind in digital marketing and e-commerce strategy compared to new-age competitors.

Credit & Counterparty Risk

Receivables quality is generally stable, but the company has extended its accounts payable cycle to 90 days in FY25 from 42 days in FY24 to manage liquidity.