VIP Industries held a conference call on 31 October 2023 to discuss the results for the quarter ended September’23 and way forward. Ms. Radhika Piramal Executive Vice Chairperson and Ms. Neetu Kashiramka – Managing Director and Chief Financial Officer of the company addressed the call.

Highlights of the Concall

• Overall revenue growth stood 6t 8% during the quarter while volume growth stood at 10%

• The offline and online (trade channels) cumulative growth is at a 13%

• CSD revenues was impacted in the quarter due to a large scale range refreshment driven by CSD, expected to bounce back strongly going forward

• International market was impacted due to slowdown in international demand in middle east. Also supply chain in China is improved quite a lot which also impacted its international business.

• Ecommerce continues to grow at over 50% YoY

• Gross margins bounced back to 55.5% after being impacted in Q1 on account of hampered production at its Bangladesh facility.

• Other expenses include Rs. 6 crore professional fees to BCG for ecommerce project and Rs. 3 crore on account of marketplace activations

• General trade formed 22% of total revenues in H1FY24 (23% in H1FY23) while retail trade formed 10% (11%), modern trade 27% (26%), Ecommerce 21% (15%), CSD CPC 9% (12%), Institutional 6% (7%) and International 4% (5%)

• Brandwise Carlton formed 5% of total revenues in H1FY4 (5% in H1FY23) while VIP formed 20% (24% in H1FY23), Skybags 31% (31%), Aristrocat with Alfa 39% (36%) and Caprese 4% (4%)

• The company added 57 towns in its distribution expansion journey in Q2FY24. It has opened 37 EBOs (exclusive brand outlet) and has signed up for six airports.

• Aristocrat brand did better than all the other brands again. However skybag is following up with 12% growth which shows its new launches are picking up.

• Ebitda did not expanded during the quarter due to higher spend on ecommerce channel, outflow of Rs 6 crore for BCG and also increase in overall freight rates and higher warehousing cost. The company had anticipated higher sales in Q1 and Q2 which did not happen and had taken more warehouses.

• The company expects higher growth in Q3 led by large wedding period and strong fundamental demand indicators of passenger traffic and hotel occupancy.

• The company attributed lower sales growth compared to its peers to its own internal problems and expects to recover market growth in one or two quarters. The company is planning to launch 26 new products in next 3-4 months and also looking towards premiumization as theme because India is growing towards premiumization.

• Current capacity is around 17 lakh pieces which it is targeting to 20 lakhs

• The company mentioned that promoter keeps getting offers from PE firms, and a sale could take place at some point in the future