I attended VIP AGM on July 30, I was the only one who asked any questions. Most of the questions were answered by D G Piramal in very generic way. AGM was over in 20-25 mins.
DGP Speech
- FY19 was the best year of the company & company achieved highest ever MCap & became $1bn company for a short period. The MCap since has come down.
- The maximum growth was achieved in Aristocrat brand
- We want to consolidate our position in domestic market & start focusing on export markets from next year.
Questions
- What is the long term growth guidance & what are the drivers for this growth at industry level (megatrends) & what are we doing as a company to capitalize on them?
- Sales distribution across east/west/north/south or city wise etc. & what are the markets where our market share is less the overall average & steps to address that?
- Did we miss a trick in the Cricket World Cup in ads? American Tourister did campaign with Virat Kohli? Also we see a lot of premium stores at airports (Mumbai T2, Hyderabad) from Samsonite. Are those spaces part of your strategy to have premium stores?
- One of the trends mentioned for growth is airline travel. But airline travel has been growing for many years & we have been growing at 10% except for FY19. Why was that & what has changed?
- Are you looking to launch any special package for weddings like Titan did with jewelry?
- Do you as a company understand digital? When a customer visits your website or eComm website & then visits your store, do you have data on him (Credit Bureau, Social Media etc.) to right sell ot upsell?
- As exports is one of the focus areas of the company, can you talk about R&D program? Can you talk about some elements like - lighter material, fold-able material, newer designs, digital locks etc.?
DGP Answers
The company was started in 1971 & the company management was very good till 1992-93. After liberalization, a lot of talented people left the company & joined other big organizations. This continued till 2002. From then on management started getting better & he feels - currently the management is the best.
We break down the markets into 1000 clusters, there are 200 clusters in the Mumbai.
Today we have so many products that a 1000 sqft. shop (which is pretty decent size) can only keep 8-9% of our range.
Samsonite is present in 130 countries & they are market leaders in most major markets they are present in except India. They are present in India for 20 years & still VIP is the market leader with 50% market share for all these 20 years.
The government is very reactive & they reduced GST on bags from 28% to 18%.
We do below the line, area specific, marketing + products for weddings. In Eastern sector of the country, there has to be VIP bags in every wedding. Such is the strength of the VIP brand in this economically backward area. VIP brand sells more than Aristocrat in this area.
Yes, we are average in digital strategy & a lot of improvements can be done. Skybags & Caprese has good digital strategy, other brands need work.
With regards to R&D, we opened our first tool room in 1978 which was the first of its kind in India. Later, a lot of manufacturing moved to China but we are bringing it back via Bangladesh.
Sudip Ghosh
In an offline discussion, Sudip Ghosh said - there is very large unorganized bags market in India & that will remain strong growth driver. He said there are 130Cr Indians & if one assume some 100-500-1000 as ticket size on average, the opportunity size is pretty large. On any good year in terms macro etc., we should clock 25% growth. FY20 is an exception.
On excellent Q1 margins, he said we want to under promise & over deliver.
Disc - I have small tracking position. This is not a buy/sell recommendation. Please do your own due diligence. I am not a SEBI registered analyst.