VIP Industries held a conference call on 10 May 2023 to discuss the results for the quarter ended Mar'23 and way forward. Mr. Anindya Dutta- Managing Director and Ms. Neetu Kashiramka – Executive director and CFO of the company addressed the call.

Highlights of the Concall

• Q4 revenue reported an all-round growth at 27% YoY (volume 27%) and 45% over base (volume 40%). For the overall year, the revenue growth was at 61%. Revenue growth was 22% compared to pre covid year which is FY'20

• General trade formed 22% of total revenues in Q4FY23 (22% in Q4FY22) while retail trade formed 11% (12%), modern trade 29% (25%), Ecommerce 11% (11%), CSD CPC 16% (20%), Institutional 6% (7%) and International 4% (3%)

• Brandwise Carlton formed 6% of total revenues in Q4FY3 (5% in Q5FY22) while VIP formed 23% (23% in Q4FY22), Skybags 33% (33%), Aristrocat with Alfa 35% (36%) and Caprese 4% (2%)

• Gross margin for Q4 stood at 58%, a gain of almost 800 basis points sequentially and about 4.6% gain compared to the same quarter last year. The gross margin for the full year stood at 51%. HIgher gross margin was led by cost efficiencies and softening of all input costs.

• EBITDA for the year stood at 15.8% at Rs 331 crore led by an efficient fixed cost management which led the flow-through of the efficiencies generated in direct cost into its EBITDA.

• The company took the the final hit of the future group outstanding, the charge-off in terms of doubtful debt was about Rs 23 crore for the year, without which underlying EBITDA for the year would have been at 17%.

• The company also had an unfortunate incident of fire that raised in one of its factories in Bangladesh. While it has a full insurance coverage, the company booked an exceptional loss of Rs 47.2 crore on account of the loss due to fire during the quarter.

• The company invested approximately Rs 100 crore in manufacturing capex during the year and it plan to further invest Rs 200 crore in FY24 to build its own manufacturing capacities keeping in mind the demand for the next couple of years. Own manufacturing forms around 70% of total sales compared to 42% in FY20

• Own manufacturing capacity is expected to rose to 2150 thousand pm compared to 1400 thousand pm.

• The company exclusive business outlets have crossed the 500 mark in FY23 which is is significantly ahead of pre-COVID. It continues to have aggressive plans to take this to as high as 800 EBOs during FY24.

• The company traditional trade distribution has crossed the 1200 town mark in FY23 and it intend to continue its penetration and driving effective coverage to a target of covering all 50,000 population towns by the middle of FY25.

• The company had a huge setback due to the closure of the future group accounts in modern trade channel, but not only it covered for the loss of stores during the year but made up for the growth through other chains. Now with all the closed stores being fully operational under the Reliance banner, the company stands to have an advantage.

• The company has initiated an accelerator program in the e-commerce channel, where it seem to have a competitive gap. It has gotten on board BCG, one of the best consulting firms in the field to build for them the right capabilities and muscles in an accelerated way for the future.

• The company targeted range of gross margin is around 53-55% and Ebitda is 17-18%