Net profit at VIP Industries' third quarter was down at Rs 3.5 crore versus Rs 10.3 crore, year on year (YoY). Net sales were down at Rs 213 crore versus Rs 223 crore, YoY.

Its Q3 EBITDA was down at Rs 11.5 crore versus Rs 24.6 crore, YoY. Its Q3 EBITDA margin was at 5.4 per cent versus 11 per cent YoY, on account of spurt in other expenses. The company’s hard luggage segment continued to face rough weather, which was compensated somewhat by 10-15 per cent growth in the soft luggage segment.

The company has already taken three price hikes during the year aggregating 2-3 per cent in hard luggage and 4-5 per cent in soft luggage.

Caprese hand bags, launched by VIP Industries in October, has received a decent response and is now available in over 100 stock keeping units at 300 touch points, of which 200 are exclusive VIP outlets.

The company is looking to notch up its point of sales to 500 by March this year. The segment has products priced at Rs 1,500-3500. The segment is expected to incur a loss over the next two years as VIP is focusing on advertisement and brand building initiatives, say analysts.

They add that margin pressure, especially due to rupee depreciation and higher promotional expenses on ladies hand bag segment, is bound to persist.

(This article was published on February 9, 2013)
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