VIP Industries held a conference call on 27 July 2022 to discuss the results for the quarter ended Mar'22 and way forward. Mr. Anindya Dutta- Managing Director and Ms. Neetu Kashiramka – CFO of the company addressed the call.

Highlights of the Concall

• The company reported a disruption free quarter post pandemic, the peak season quarter. Revenues were at Rs 591 crore is the highest revenue quarter that it had ever reported. This is also a 5% growth over the pre pandemic Q1FY20 quarter.

• Q1 revenue growth at 66% over Q4 FY22 Mar quarter. Hard Luggage constitutes 46% of total revenue for this quarter.

• Q1FY23 gross margin after netting of other income is 50% as compared to 53% in Q4FY23 mainly on account of higher raw material rate.

• Q1FY23 overall expense is at Rs. 192 crore as compared to Q4FY22 was at Rs. 157 crore. Increase is mainly on account of increase in advertisement spend, freight cost and exchange rate fluctuation.

• The company saw sequential growth in airline passenger traffic both in April and May. However, the level of domestic passenger traffic was not same as what was in Q1FY20. It was slightly lower. And it also saw a slight decline in the month of June.

• Volume growth compared to pre covid period was around 8%.

• International travel has also opened up while it's still gaining momentum.

• The company didn't see much of a corporate travel coming back.

• The company saw overall a very good conducive demand environment. There were enough wedding dates within the quarter and it was celebrated the way it should be. Schools and colleges opening helped the company in terms the sale that is dependent on on the consumption because of schools and colleges.

• The company is also dealing with an inflation that it had not dealt almost in one decade. It had almost at a 24% inflation over the same time last year. Inflation is not only putting pressure on profitability, but also could be a potential demand dampener.

• The closure and transition of future group had a big impact on the company. Almost 430 stores of future growth across all his banners were closed and only 44 were operational in quarter one for business. The company had a high dependence on this one account as almost 15% of its revenues used to come from future group stores all banners put together pre pandemic which was extremely constrained in this quarter. The company expects this revival to happen by Q3FY23 hopefully.

• Exclusive business outlets has performed very well during the quarter as it has come back to the same revenue as it was in Q1FY20 with almost 100 stores lower than what was in Q1FY20.

• Revenue from own manufacturing has increased to 64% in Q1FY23 compared to 35% in Q1FY20. Revenue from China has fallen to 11% from 40% over the same period. Third party sourcing remained flat at 25%.

• The company is confident about the demand environment to remain stable going forward.