VIP Industries promoters explore stake sale

The promoters of VIP Industries Ltd are considering selling their stake in India’s largest luggage and travel accessories maker, two people familiar with the development said.

The deal, including a potential open offer, could be worth as much as $1 billion and see the promoters completely exit the business, one of the people said. The promoters have hired the investment banking team of InCred Capital to manage the sale, the people cited above said, requesting anonymity.

The Dilip Piramal-led promoter group owns a little over 50% of VIP Industries, the owner of luggage brands such as VIP, Carlton and Skybags. The market value of VIP Industries is around ₹9,310 crore, valuing the promoters’ stake at about ₹4,650 crore.

Private equity (PE) firms are most likely to be interested in the asset, given that VIP Industries is much larger than its Indian rivals, except Safari Industries, the first person cited above said.

Rising incomes, an expanding travel infrastructure, and online bookings have fuelled a surge in travel among Indians, resulting in heightened demand for luggage. VIP Industries, which holds a substantial market share in this rapidly growing sector, offers a lucrative opportunity for PE firms to tap the burgeoning demand for travel-related products from India’s increasingly mobile middle class.

“Indians are travelling more. Having a single suitcase or satchel for travel at home will no longer suffice for the growing Indian middle class. PE firms interested in the Indian consumer will consider this aspect when bidding for the asset,” an investment banker aware of the deal said, adding that it may take a few months to complete the transaction.

In September 2021, funds managed by Premji Invest acquired a 1.66% stake from the promoters of VIP Industries.

VIP has close to 44% market share in the organized luggage category, according to an ICICI Securities analyst report.

VIP acquired the London-based Carlton brand in 2004 and merged with Aristocrat Luggage Ltd in 2007, and has been selling luggage under these brands since then. The company reported a profit of ₹160.93 crore on revenue of ₹2,019.53 crore in the year ended 31 March.

Dilip Piramal did not respond to emails and text messages requesting comments on Monday. A mail sent to InCred’s spokesperson did not elicit any response.

In August, VIP’s managing director, Anindya Dutta, resigned effective from the close of business hours on 13 November, the company said. The company elevated its chief financial officer, Neetu Kashiramka, as managing director starting 14 November.

“We believe VIP Industries has to resolve some near-term hurdles in the coming quarters, such as supply constraints, inventory optimization and regaining lost market share. With the management’s strategic planning towards brand building and developing a strong distribution network to support future growth, we believe the company’s structural long-term growth story still remains intact,” a report by Axis Securities said on 4 August.