“Some Competition is Always Good.”: Dilip Piramal of VIP Industries
There’s hardly a household in India that doesn’t own a VIP suitcase or an airbag. Based in Mumbai, VIP Industries Ltd. is not only India’s most trusted luggage brand but also the world’s second largest and Asia’s largest luggage brand. The company started out with suitcases in the 70s, but now has an array of products such as polycarbonate strolleys, Nylon-based strolleys, printed luggage, handbags, backpacks, wallets, and travel accessories.
The Tech Panda interviewed the Chairman of VIP Industries, Dilip Piramal, who in spite of being a billionaire, is known for his simple habits. As one of the industrialists invited to the Horasis India meeting due to be held on 24th and 25th of June in Malaga, Spain, Piramal told us about how a competitive India will place itself on the global map soon.
Piramal believes that India’s vast economic growth sector is always good news for companies like VIP Industries Ltd. and that VIP is ready to go international. Recently, as a part of their diversification, VIP has set up a factory in Bangladesh.
“When a company becomes very large in its own country, it’s natural for it to go international. India, as a country, is getting very competitive, and China is getting expensive. China is now becoming a middle-income country, and our export should take off in a large way,” he said.
Piramal also trusts that India is on the right path to becoming a global economy. “The government is taking action on basics like electricity, cooking gas, and water. India is already a 2-trillion-dollar economy, and we are probably the fastest growing economies in the world,” he says.
The 68-year-old billionaire strongly believes that GST has been a great change for the country and for VIP. “It is one of the most effective fiscal reforms to be taken in the country and it has made the economy more formal and more tax compliant,” he says. Piramal says that the non-compliant sector of the Indian economy might be critical of GST, but it will only bring order to the economy. “It’s a boon for us and we welcome it. It is like a revolution because of which business is getting more organized,” he adds.
VIP operates through its many brands, which include, apart from VIP, Aristocrat, Skybags, Alfa, Buddy, and Carlton, which reach out to different kinds of customers. Though the VIP brand is the most popular, fifteen years ago, VIP’s research showed VIP was losing its cool quotient with the youth. Although young people believed in the brand’s reputation, they called it their parents’ brand. Piramal says that is when VIP launched Skybags, a youth-appealing brand that took off nicely.
“VIP is also doing well, but Skybags, as a brand, has become as large as VIP today,” he says.
Piramal recalls that the reason for launching Carlton was that VIP’s thirty-year presence, from 1975 to 2005, had made it too generic. “We launched Carlton around 5-6 years ago at the top segment, because one brand cannot serve everyone. When a brand becomes generic, it is not exclusive anymore,” he explains.
Thus, the company launched Carlton in the luxury luggage section, which has gained good traction, lending VIP 25% of the market share in the segment. VIP dominated the Indian luggage market for decades before Samsonite and other foreign players entered the market. “Prior to Samsonite, we had no competition,” Piramal recalls. With 80% of the market covered by VIP, there were no challenges. “But some competition is always good for the market. It establishes certain norms,” the industrialist says.
Samsonite is one of the most successful multi-national names in the international luggage market. With operations in about 130 countries, Samsonite are strong market leaders, but in India, Piramal is happy to point out, Samsonite was not able to sweep the market. “They have been in India for more than 20 years. Yet our market share is about 40% higher than that of Samsonite. That shows our strength,” he says proudly.
VIP used to market Delsey for 10 years, but without any long-term commitments, they started promoting their own brand, Carlton. VIP acquired Carlton in 2004 but launched it in India only after their conflict of interest with Delsey ended. Currently, VIP is comfortably placed with more than 50% of the market share. “As a company, we have never had such a strong dominance in the last 20 years since Samsonite came in, because prior to that, there wasn’t much competition.”
According to reports, in the last 13 years, the average rate of expansion of India’s luggage industry has been almost 13%. This growth is a result of improved travel infrastructure in the form of national highways, airports, and railway stations. Air travel, both domestic and international, have also spiked. By 2020, India is projected to output around 50 million outbound tourists, which is always good news for the luggage industry.