The VIP Industries board recently appointed Chairman Dilip G Piramal as the MD of the company for two years with effect from March 25. He will succeed his daughter Radhika, who has been appointed as Vice-Chairperson and Executive Director of the company, but will be based in the UK. Considering Radhika Piramal had been groomed as the gen next successor, the role reversal was unexpected. However, father and daughter have plans for India’s leading ₹1,500-crore luggage company, with exports as a focus area along with brand building and innovation across luggage brands VIP, Aristocrat and Skybags.In a chat, Dilip Piramal spoke about the significance of his new role and the way ahead for his company. Excerpts:
Why were your reinstated as MD, considering your daughter was meant to take over as the head of the company in future?
Radhika is relocating to London and since there was a need for the MD to be present in the country, I again got back to that role.
We also thought that since she was going to be based out of the country, it should not be construed as a move to evade taxes and that there should be no ambiguity in that respect.
Besides, we needed to give a boost to our exports, for which there was a need to have somebody overseas. Our professional managers are already there to do the job and we expect them to innovate and the designation change for me is more technical in nature. But Radhika will continue to be the Executive Director.
Are you still competing with Samsonite to gain share in the luggage industry?
Samsonite is in the top segment while we are in all the segments with the highest market share in the organised luggage category. Over the past three-four years our share has grown from 48 per cent to 52 per cent.
Will you be adding more luggage brands in your portfolio and even look at acquiring some more?
Today we have five luggage brands and one handbag brand.
There will be no further acquisitions although we did buy Aristocrat in 1998 and Carlton in 2004. We even broke off the distribution and marketing deal with Delsey since it did not want to have a long-term commitment. Besides, there are not too many strong luggage brands which can be bought.
What are your plans for Caprese, your only handbag brand ?
We are looking at further opportunities to grow the franchise of Caprese, possibly into accessories . There is good growth in the Indian market and we have larger plans for Caprese where we will continue to have Alia Bhat as it brand ambassador. In fact, today, Caprese is almost as big a brand as the 45-year-old VIP.
Any plans to upgrade Caprese to a more premium brand to compete with international brands who are already here?
Just because I ride a Mercedes it does not mean the rest of India also can afford to have one. In the case of handbags there is a market but only at price points between ₹2,000 and ₹4,000 and even that is perceived to be expensive by the Indian consumer. Caprese will always be a mass premium brand which can give an international experience to the consumer.
Why did you take the trouble to buy a premium brand like Carlton when acceptability of certain price points is an issue in India?
Unlike handbags where consumers may be comfortable paying ₹1,000, there is a market for the premium luggage brand of Carlton. We have got a telescopic strategy for each brand since each addresses a different market segment.
Will you continue manufacturing or rely on Chinese imports?
We will continue manufacturing hard luggage and have even set up a plant in Bangladesh. But for soft luggage there will be sourcing from China.
Did VIP and the luggage industry feel the pinch of demonetisation with slower sales?
Demonetisation impacted us positively as it made made everybody tax compliant, especially the unorganised sector, which had been evading taxes to a certain extent. Today just about a third of the market is branded or organised in luggage and demonetisation will give a level playing field.
Any further restructuring planned within the group?
Blowplast, the manufacturing company, has already been merged with VIP and the restructuring process is now complete.