VIP is among the most popular baggage manufacturers in India. For generations, VIP bags have accompanied Indians on trips for school, personal vacations, and work purposes. Nonetheless, although the company has enjoyed great success over the past few decades, it has not been devoid of problems.

VIP Industries is currently undergoing some of the greatest changes in its history. The company is making a transition from being a family-based enterprise to being a professionally managed firm that enjoys backing from private equity.

Understanding VIP Industries

VIP Industries is among the top players in the luggage and travel accessories industry of India. It markets a range of products at various price points using several brands.

The brands used by the company include:

• VIP
• Skybags
• Aristocrat
• Alfa
• Caprese
• Carlton (ceased operations)

Such a multi-brand strategy enables VIP to reach out to consumers across various levels of affluence.

In terms of manufacturing, VIP uses a mix of its domestic manufacturing units and plants located in Bangladesh. Such a business strategy helped VIP achieve significant success initially but was among the causes of its downfall later on.

The distribution channel of the company involves:

• Brand-exclusive shops
• Multi-branded retail shops
• Modern trade
• Online sales channels
• Distributors and dealers

Such an extensive distribution network contributed significantly to the dominance of VIP in the luggage market of India.

How VIP Lost Its Market Leadership

A few years ago, VIP held a larger market share in the organized luggage market in India, holding more than 40%. Currently, it holds less than 29% of the market share. There have been several strategic errors committed by the organization leading to its market share erosion.

Not Catching Up with Soft to Hard Transition Trend

VIP committed a major error in not adapting quickly to changes in customer preferences. At the turn of the early 2010s, VIP increased production capacity through the setting up of factories in Bangladesh. It was a great decision then since it had several benefits, including:

• Lower labor cost
• Raw material imports are duty-free from China
• Export to India duty-free

Through these decisions, VIP enhanced profits for shareholders.

However, there was an underlying problem in the strategy. The Bangladesh factories were specifically set up to manufacture soft luggage using fabric material. After the COVID-19 outbreak, consumer preferences had shifted towards suitcases made using polycarbonate and polypropylene materials.

Hard suitcases gained popularity due to their:

• Increased durability
• Waterproof features
• Current designs
• Protection of belongings

However, VIP’s production process was highly inclined toward soft suitcases. Thus, the company faced difficulties in catering to the increasing demands. Its facilities in Bangladesh were operating at below full capacity, and there was excess stock of soft suitcases.

The E-Commerce Challenge

Another significant change took place during and post-pandemic times. Consumers purchased more products through online channels compared to any other point in time. One such category that was witnessing online sales was that of luggage. Consumers were able to easily compare prices and read reviews with hundreds of alternatives being available online. Although competitors responded promptly to this development, VIP suffered from some challenges. VIP had an extensive offline network comprising dealers, distributors, and retail outlets. Online price competition usually led to tensions between VIP and these channels. It became increasingly difficult for VIP to manage a healthy balance between online and offline sales channels. This hampered the growth of VIP in one of the most rapidly growing channels. Competitors meanwhile established themselves strongly in online sales channels such as Amazon and Flipkart.

Too Many Brands, Too Little Focus

One would say that having many brands within VIP’s portfolio was initially perceived as an advantage. Nevertheless, over time, it proved difficult for the organization to cope with. VIP needed to allocate its limited marketing budget and management skills to handle different brands simultaneously. VIP needed to cover different brands whereas other competing organizations including Safari chose a selective marketing approach. Safari was very focused on creating value-based offerings that were favored by most customers. It managed to achieve greater success in this aspect especially in the post-COVID era because customers preferred purchasing from established brands. VIP also possessed value-based brands such as Aristocrat and Alfa. Nevertheless, their marketing activities were carried out across the entire product range.

Leadership and Succession Problems

Among the numerous reasons why VIP faced difficulties, the matter of leadership transitions became the key. Namely, in 2017, Radhika Piramal took a step back from management roles. Afterward, Dilip Piramal temporarily assumed the position of CEO. Despite that, the problem of succession remained unresolved. From 2019 to 2025, VIP had three CEOs.

The process of frequent changes in leadership caused multiple issues:

• Strategic shifts.
• Absence of long-term strategies.
• Inconsistency in their implementation.
• Uncertainty regarding organizational direction.

Issues with supply chain management, marketing strategy development, and channel management were caused by leadership turmoil. Ultimately, the family understood that younger members did not have an interest in running the luggage business. This required a long-term solution.

A Major Turning Point: Private Equity Takes Control

In 2025, VIP Industries entered a new era. VIP Industries was bought out in part by Multiples Private Equity, along with other partners, including Mithun Sacheti, founder of CaratLane,

and Samvibhag Securities. Thus started a huge change in the company. It wasn’t merely that new people owned some of the stocks. The new owners were actively transforming the future of the firm.

Why the New Owners Matter

Experience and knowledge are some of the qualities that characterize the investors who have come on board. Mithun Sacheti has made a name for himself by making CaratLane one of India’s largest omnichannel retail firms. This kind of experience may prove to be useful in helping VIP solve its problem.

Some other qualities that the investors possess include:

• Operational skills
• Financial sharpness
• Strategic planning ability
• Good corporate governance

Complete Management Overhaul

Once in charge, the new company owners made sure to quickly reorganize the leadership.

They changed several key positions, such as:

• Chief Executive Officer (CEO)
• Chief Financial Officer (CFO)
• Chief Marketing Officer (CMO)
• Chief Strategy Officer (CSO)

This restructuring indicated that a new era had begun. What the new era was about was simple: sorting out the company and laying the groundwork for sustainable growth.

The Carlton Brand Problem

One of the initial issues encountered by the newly appointed management team related to the Carlton brand. It is important to note that Carlton was VIP’s premium luggage brand and accounted for 6% of revenues. At the same time, VIP had been engaged in trademark infringement litigation. Under a Supreme Court directive, the corporation was instructed to cease the production and sale of Carlton-branded products in India by June 1, 2026. This situation posed an immediate problem. The company needed to sell out its existing stock of Carlton luggage by the deadline. VIP used discounts to do so.

As stated earlier, discounting included:

• 50% off in March 2026
• Up to 75% off during April and May 2026

Despite the efficiency of discounting for the purpose of clearing inventory, it greatly impacted profitability. VIP ceased operations relating to Carlton by June 2026. The court decision ended VIP’s struggle; however, the company lost its premium brand that generated significant profits.

Cleaning Up Old Inventory

The new management also made an analysis of the company’s inventory.

As a result of that, they discovered:

• Obsolescence of soft luggage
• Slow movers
• Excessive stock

Instead of keeping those items in the books of account, they decided to make their way to the income statement.

This means that the company suffered from:

• Inventory reduction
• Charges
• Reduced profits

However, despite being painful at first, it helps in creating a stronger company. Investors usually react positively to such decisions since they clean up the balance sheet.

Selling Non-Core Assets

As part of its restructuring process, VIP also chose to divest some of its non-core assets. The firm disposed of two land leases and raised substantial money. This has helped the firm raise money for its ongoing restructuring processes. Moreover, these deals led to one-time gains, which have helped boost the liquidity position of the firm.

Why Recent Results Look Weak

The performance of the organization during FY26 was underwhelming. However, a good number of these factors resulted from onetime restructurings as opposed to poor business performance.

The main factors were as follows:

• Carlton stock clearance
• High discounts
• Stock impairments
• Costs associated with restructurings
• Costs associated with the management transition

Since all these costs are one-time, they might not recur in future periods. This is critical when assessing the future performance of the firm.

Has VIP Reached Its Lowest Point?

Many people have viewed FY26 as the bottom of the turnaround journey. There are various reasons behind this assumption. 

Carlton Issue Has Been Resolved 

All the inventory from Carlton has been disposed of. As a result, there is less probability of facing huge liquidation losses in future periods.

Inventory Positions Are Better

Days of inventory have dropped considerably to where they were before in 2015-16.

When there is lower inventory:

• It provides better cash flow
• Prevents any obsolescence problem
• Operational efficiency improves
• Most Restructuring Is Behind Us

There may still be some costs incurred in restructuring. But most of the major cleanup activities have already taken place. It implies that future earnings will better reflect real operations.

Growth Opportunities Ahead

With the conclusion of the cleaning process now in sight, VIP can turn its attention to growth initiatives.

Some of the growth opportunities include:

Enhancing the Omnichannel Footprint

One of the most important opportunities that VIP faces is that of improving the linkages between offline and online sales channels. This would be an aspect where Mithun Sacheti’s experience could come in handy. An enhanced omnichannel approach will enable VIP to gain a greater competitive advantage in the prevailing retail environment.

Increasing Domestic Manufacturing Capability of Hard Luggage

VIP is ramping up the domestic manufacturing capability for hard luggage. It makes sense given the prevailing trend favoring hard luggage and helps VIP reclaim market share. It will also help increase efficiency through automation.

More Effective Utilization of Bangladesh Facilities

VIP has reduced the labor force in Bangladesh, thus boosting cost-efficiency. Rather than being restricted to soft luggage, management wants to focus on high-demand categories, which include:

• Backpacks
• Duffel bags
• Travel goods

Final Thoughts

VIP Industries has been going through a massive change process recently. Over the last ten years, it suffered a number of serious strategic errors, including an inability to adapt to the emergence of hard luggage, slow development of e-commerce capabilities, diversification of efforts into too many brands, as well as management uncertainty.

However, the entry of the highly promising private equity consortium gave another chance to make a comeback. The new management has already undertaken some tough decisions that needed to be taken, namely liquidation of excess stocks, settlement of the Carlton problem, organizational and operational restructuring, and improvement of corporate governance.

Although VIP’s situation remains fragile at the moment, some positive signals suggest that the worst part might be behind it. Its future success will largely depend on the effectiveness of adaptation to the changing preferences of consumers, e-commerce development, and competition with traditional rivals and new direct-to-consumer brands.

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