VIP Industries held a conference call on 17 May 2022 to discuss the results for the quarter ended Mar'22 and way forward. Mr. Anindya Dutta- Managing Director of the company addressed the call.

Highlights of the Concall

• Q4FY22 witnessed disruption caused by a short third wave of covid impacting 2-3 weeks of revenues

• Domestic travel reported a sharp dip in Q4FY22 first since June'21. The barometer of the demand- airline passenger traffic witnessed a sharp decline witnessing 40% lower air traffic in January 2022 than sequentially November and December 2021.

• Raw material price inflation continued to be on the rise. The company rolled out a price increase during the quarter to manage raw material inflation

• The company is seeing higher growth in value segment (Arisrocat and Alfa) which is a must for overall share gain, which grew to 36% of total sales in Q4FY22 compared to 27% in Q4FY21 and 25% in FY20.

• Q4FY22 saw a QoQ bounce back in skybags with improved availability and new range introduction

• Q4FY22 saw 40% of its total annual advertising spends.

• Hard luggage proportion in the upright segment improved 62% in Q4FY22 compared to 49% in FY20. Upright segment contribution to total sales increase to 76% in Q4FY22 compared to 63% in FY20. The company had spent about Rs 35 to 40 crore in capacity expansion of hard luggage in both India and in Bangladesh facilities.

• The company points of sale has come back to the pre covid levels and has started very strongly rebuilding its own exclusive business outlets

• Q4FY22 gross margins after netting of other income is 53% as compared to 49% in Q3FY22 mainly due to price increase and mix in favour of VIP & skybags

• Q4FY22 employee cost is at Rs. 56 crore vs Rs 50 crore in Q3FY22, increase is mainly due to additional workers at Bangladesh and stock options given to employees.

• The company own manufacturing has scaled up to almost two thirds of the total sales in Q4FY22. And adding the exclusive and dedicated manufacturing partner its controlled manufacturing stands at about 85%.

• The company had taken about 5% price hike in November 2021 and 4.5% in March 2022. The price increase can prove to be a demand dampener & bring in competitive play from the industry

• Upright volumes for the company have come to the same level of FY20 but overall volumes are still lower at 83% of total volumes in FY20.

• Reliance take over led to closure of 430 shops across the Future group and is only slowly & progressively opening up. Future group contributed to around 48% of its pre pandemic MT revenues

• The company expects 30-35 crore of capex in FY23

• India has resumed regular international flights while domestic travel heading towards pre covid levels. Corporate travel expected to rebound to 70% of pre pandemic in 2022. Every indicator of consumption points towards very positive demand environment.