VIP Ind cuts debt significantly, to focus on weaker segments

Luggage-maker VIP Industries has achieved a significant reduction in debt from Rs 137 crore in FY'10 to Rs 40 crore at the end of the first quarter of the current fiscal and now plans to focus on certain weak segments of its business where there is growth potential.

"We brought down our debt from Rs 137 crore to Rs 87 crore in FY'10. In the first quarter of FY11, we brought it down further to just Rs 40 crore. Now our debt-equity ratio stands at 0.2," VIP Industries Chairman Dilip Piramal told PTI here.

This was made possible by strong cash-flows in Q1, FY11, he said, when the company clocked net sales of Rs 235.4 crore, up 17 per cent over the previous year.
    
The company, which is very strong in its core product areas of suitcases and briefcases, now plans to enhance its focus on products such as backpacks and small items like laptop bags, where it feels there is tremendous growth potential.
    
"We are very strong in suitcases and briefcases. However, we are not as strong in backpacks and items like laptop bags. We now intend to strengthen ourselves in these areas," Piramal said.
    
The company plans to expand its product-range in these segments and come out with better quality products at good prices. It also plans to beef-up its sales channels, especially at the lower end.
    
The luggage-maker has earmarked an ad spend of around Rs 35-40 crore in FY'11, Piramal said.
    
Driven by robust growth in sales volumes and value, VIP Industries -- which is the world's second largest luggage maker -- clocked sales of Rs 235.4 crore in Q1, FY11, with its EBITDA at Rs 46.2 crore (19.6 per cent of sales).
    
Profit before tax was Rs 41.2 crore while profit after tax (PAT) stood at Rs 32.2 crore, up 60 per cent from Rs 20.1 crore in the year-ago period.