VIP Industries is in focus after the company posted a good set of Q1 earnings. In an interview to CNBC-TV18, Dilip G Piramal, Chairman of the company spoke about the results and his outlook for the company.
We have increased prices by 6 percent, said Piramal.
He further said that all brands are doing relatively well and Skybags have the highest rate of growth.
According to him, rupee stability and strength has aided company's margin.
Below is the verbatim transcript of the interview:
Nigel: Could you give us some clarity on taxes; the taxes post goods and services tax (GST) implementation?
A: Our costs have gone up by 11 percent which is the increase of the GST.
Sumaira: What about the impact on margins. Would you need to look at hiking prices?
A: At the moment we have increased our prices by about 6 percent; balance 6 percent we are meeting from our own pocket and margins have come down to that extent.
Sumaira: Give us a brief sense on what the individual revenue and the growth breakup for your different brands?
A: We do not give those details but all our brands are doing relatively well and particularly Skybags has the highest rate of growth.
Sumaira: What has been the impact of the rupee appreciation? I asked because of the large number of import that comes in from China. Would you have seen any bit of a positive impact?
A: This has been happening for about six months now and rupee is stable at 64/USD. So let us say it has come down from 65/USD to 64/USD and to that extent we have got that benefit.
Nigel: Talk about your Bangladesh operations. What is the potential revenue you can be getting from that expansion that you have taken up and if you could help us as to when can we see profitability coming out of this expansion?
A: That has to be seen because the buying prices from Bangladesh are quite good and that will increase our margins by about 1 percent but our overall purchases from Bangladesh are quite small.
Sumaira: Could you give us some sense of what the rest of FY18 looks like on the revenue as well as the margin front?
A: We are in absolute state of flux at the moment because of GST and what has happened is that it has also affected our canteen store department (CSD) sales because the CSD department also is undergoing a lot of reorganisation within. They did not buy anything in June and even in July the sales were low. They are anyway toning down their sales, so there is a double impact both of sales volume there and the margins overall. So right now it is in absolute state of flux. Let's see if we can take another price increase later on this year.
Let me tell you that we were doing extremely well. Our first two months were outstanding and we were well on our way to have record sales and profits but this has been a major speed breaker but because our overall market strength is very good, the markets are very good; our competitive strength is very good, the underlying tone is quite confident in our company.
Nigel: Give us a sense about competition. What is the competition coming in from Samsonite, American Tourister?
A: Our market share is about 52 percent and presently the market is in great state of flux, so I cannot give any accurate figure. We ourselves are not aware of that but our market share is very positive and it is moving in a positive direction.
Sumaira: What is the opportunity and outlook in terms of your international business? What is the current revenue from exports and what is your internal target there?
A: The international business has been sluggish and that has been a weak spot. We continue to do less than 10 percent of our sales, in fact that percentage has come down even more.
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