Global private equity firm Advent International is eyeing a controlling stake in listed luggage and travel accessories maker VIP Industries, three people with knowledge of the development said. This marks a revival of sale talks after almost a year when the Dilip Piramal-led promoter group first decided to pare stake.
“The deal has been revived, and Advent is the front runner,” the first person cited above said. The second person said that the talks were not yet conclusive and could fall apart.
“The entire promoter stake is up for sale,” the second person added. The proposed stake sale, if it goes through, will also trigger an open offer as per the regulatory guidelines. All three people cited above spoke on condition of anonymity.
Mint was the first to report last October of the promoter group’s plans to sell controlling stake in the luggage maker, which owns brands such as VIP, Carlton and Skybags. The thought of a sale was triggered by the lack of a succession plan with the next generation of the promoter family unlikely to continue with the business.
The promoters own 51.74% of the company as of the quarter ended September 2024, data from BSE showed. The rest is owned by retail and institutional investors. As of Tuesday’s close, the market value of VIP Industries was around ₹6,531.91 crore, valuing the promoters’ stake at about ₹3,379 crore.
“The deal is likely to be at a 10-15% premium to the market price,” the second person cited above said. In the past 12 months, the stock has slid by almost 25.7%, data on exchanges shows. As on Tuesday, 19 November, the share price of the company stood at ₹459.95 a share on NSE.
An Advent International spokesperson and Neetu Kashiramka, chief executive of VIP, declined to comment. Company chairman Dilip Piramal could not be immediately contacted for a comment.
VIP’s standing
Over the years, VIP has grown both organically and inorganically. In 2004, it acquired the London-based Carlton brand, and merged with Aristocrat Luggage Ltd in 2007. VIP has been selling luggage under these brands since then.
For the financial year ending 31 March 2024, the company’s revenues grew 7.5% to ₹2,257 crore, against ₹2,099 crore in the previous fiscal year, according to data from exchanges.
The luggage maker has a distribution network of approximately 11,430 points of sales in India across around 1,300 towns. Currently, it has 500 exclusive brand outlets (EBOs) and targets to expand the count to 800 EBOs by the end of FY25, according to a May 2024 ratings release by Crisil.
Challenging times
VIP has steadily lost market share over the past decade to entrenched rivals such as Samsonite and Safari Industries, as well as new-age D2C brands. Many of these brands are now led by former VIP executives.
In a span of five years, VIP’s market dominance has shrunk from 48% of the organized market to a 37% share, according to a Mint report this April. This means about four out of 10 buyers of branded luggage owns a VIP product.
Besides, with new startups emerging to challenge the incumbents, the Indian travel and luggage space is heating up. Earlier this year, Mint reported on how new-age direct-to-consumer brands such as Mokobara, Assembly, Nasher Miles, Icon and Uppercase have secured funding from risk investors and are looking to disrupt the space.
In an earlier interview with Mint, Kashiramka had said that VIP is targeting 15-20% compounded annual growth rate in revenue over the next three to five years. She said the company was exploring new product domains including backpacks and duffels, targeting a significant shift in VIP’s product mix towards a more even distribution between luggage and non-luggage items.
Currently, 75% of VIP’s business comes from luggage. While luggage replacement cycle has come down to two to three years, backpacks are replaced annually by most, she said. Over the next three years, she said she expects the revenue split to change to 60-40 in favour of luggage.
India’s luggage market
Rising incomes, an expanding travel infrastructure, and online bookings have fuelled sharp growth in travel among Indians, which is driving a surge in demand for premium luggage and bags.
As per Statista, the revenue generated in the luggage and bags market in India amounts to $15.04 billion in 2024. It is expected that the market will experience compounded annual growth rate (CAGR) of 5.02% between 2024 and 2029, per Statista’s projections. It is projected that 87% of the sales in the luggage and bags market will be attributed to non-luxury.
India’s organised luggage market is led by companies such as VIP Industries, Samsonite and Safari. The organised sector accounts for about 40% of India’s ₹15,000-crore luggage industry, according to a report by global analytics firm Crisil last year, and it is mainly this segment that has boomed in the wave of the pandemic.
