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Our Bureau

Kolkata , Feb. 22

THE VIP Industries stock today witnessed increased activity and gains of 4 per cent on the major bourses. According to market sources, the anticipated business restructuring, expansion and better profit expectations have kept the stock moving.

VIP Industries has proposed to set up its third new unit, most likely in the northern region. Promoted by Dilip G Piramal, the company manufactures moulded luggage (from high-density polyethylene), soft luggage (from nylon, polyester, jupolene, printed polyester) and ABS (acrylonitrile butadiene styrene) items including briefcases, suitcases, handbags, carry bags and vanity cases.

At present, its two factories produce nearly five million pieces a year, making it the second largest producer of hard-case luggage in the world. It has also begun outsourcing some of the items from China recently.

Last year, it acquired Carlton International plc's brand and its manufacturing facilities in the UK, now rechristined as Carlton Travel Goods. This is a 100-per cent subsidiary of VIP Industries. The plant and machinery of the UK unit have also been transferred to VIP Industries' manufacturing facilities at Nashik.

According to analysts, there are a number of key operatives working in favour of better valuation of the stock. Mr Shashin Upadhyay of Angaram Stockbroking said cost reduction, improvement in sales, including exports, and better margins are some of the indicators in the last few quarters.

The expansion plan also suggested growth in demand for its branded products in the international and domestic markets.

Its three design labs in Nashik, London and Hong Kong are considered to be providing marketing edge over its competitors. The company has to its credit several international patents and design registrations.

The company has reduced its work force significantly from 3,500 in 2003 to current 1,200 workers through VRS.

Mr Upadhyay felt that the proposed introduction of VAT is likely to benefit the company significantly. According to a fund manager, introduction of VAT will provide the ground for merger of Blow Plast, the marketing unit of the group and has a chain of retail outlets in the country, with the company.

"The rationale for the separation of the two businesses was to avail themselves of sales tax advantages. Introduction of VAT is likely to encourage the promoters to merge the two outfits for better synergies and improving the balance sheet of VIP," an industry insider observed.

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