Why the Piramals are Letting Go of VIP Industries
Dilip Piramal, the chairperson and founding family member of VIP Industries, is selling a majority stake in the company to a private equity firm. Here’s why.
Vip IndustriesLuggage MarketPrivate EquityDilip PiramalMarket TrendsReal EstateJul 19, 2025
India’s branded luggage market is dominated by three major players: Samsonite, Safari, and VIP, with these companies collectively commanding nearly 90% of the industry. Among them, VIP Industries stands out as India’s largest luggage manufacturer.
However, just a few days ago, a significant change occurred. Dilip Piramal, the chairperson and a founding family member, decided to part with control. He is set to sell a 32% majority stake in VIP to a group of investors, including Multiples Alternate Asset Management, Samvibhag Securities, and Mithun Sacheti and family, the founders of CaratLane. The investors will also make an open offer to buy another 26% from public shareholders, potentially making the total deal worth around ₹3,200 crores.
VIP Industries has been a family-run business since its inception in 1968 as Aristoplast Pvt. Ltd. In 1980, Dilip Piramal took over the reins after the passing of his father, Gopikishan Piramal. So, why is he selling now, especially when VIP has been a dominant player in the luggage market for decades?
The primary reason is that the next generation of the Piramal family is not interested in continuing the legacy. However, that’s only part of the story. Piramal believes he should have exited the business much earlier, and holding on too long has cost him dearly.
To understand this, we need to look at how VIP’s business works. The luggage market can be divided into two main categories: hard luggage and soft luggage. Hard luggage is durable and protective, ideal for travelers concerned about the safety of their belongings. Soft luggage, made of fabric or polyester blends, is lighter and more flexible, making it easier to handle and store.
The market has been swinging between these two categories based on consumer trends. Currently, hard luggage makes up nearly 80% of sales. However, VIP didn’t anticipate this shift, despite starting out as a hard luggage maker. Dilip Piramal admitted that the company struggled to adapt to the growing demand for hard luggage.
This is ironic because VIP originally made durable, hard-shell briefcases that were built to last. One customer even used a VIP briefcase to shield themselves from gunfire during the Punjab militancy in the 1980s. Despite this legacy, VIP found itself lagging in the hard luggage category, which now accounts for more than half of its revenue.
In the 2000s and 2010s, VIP focused heavily on soft luggage as Indian travelers preferred lighter, more flexible bags. The company revamped its supply chain, inventory, and design to cater to this demand. However, after the pandemic, hard luggage made a strong comeback, and VIP was left with excess soft luggage inventory and a supply chain not equipped to quickly scale up hard luggage production.
Another challenge for VIP is the intense price competition in the luggage market. The industry is split between the organized and unorganized sectors. The organized market includes established brands like VIP, Safari, and Samsonite, as well as new entrants like Mokobara, Uppercase, Nasher Miles, and Assembly. These brands compete through recognition, online visibility, and steep discounts, often at the expense of profitability.
The unorganized sector consists of smaller manufacturers and unbranded sellers, who often offer lower prices and sometimes even counterfeit products. This has created a price war that is difficult to sustain, especially for legacy brands. Samsonite’s CFO blamed the culture of discounting for their revenue drop in Asia, particularly in India, and specifically called out VIP and Safari during an investor call.
VIP denied these allegations, stating that the discounts were limited to their soft luggage range. They claimed that the real challenge came from new-age brands, some of which were selling below cost to gain market share. Despite this, the price battles and competition began to reflect in VIP’s financial performance.
VIP’s revenues have declined since peaking in FY24. In FY25, the company reported a loss of ₹69 crores, and their EBITDA margin dropped to 3% from 9% earlier. They incurred losses in three out of four quarters last year. In contrast, Safari, another major player in the organized luggage market, had a strong FY25 with ₹1,772 crores in revenue, ₹143 crores in net profit, and a 12% EBITDA margin.
These challenges have led the Piramals to believe that handing over VIP to a private equity firm is the best move. They feel that the current professional management has hit a wall, struggling to keep up in a highly competitive market. Additionally, none of the heirs are interested in taking over, making the sale to a PE firm that specializes in unlocking value a logical next step.
As part of the takeover, there is an open offer to public shareholders at ₹388 per share, which is 17% lower than the current market price. While this might seem like a bad deal, it could set VIP up for a much-needed reboot. The entire luggage industry has been in a slump, and VIP appears to be the only major player heading into a full transformation with new owners and a new strategy.
Private equity firms are known for driving rapid change and creating value. Whether this will translate into real gains for shareholders remains to be seen. For now, the Piramals are stepping aside, hoping that this move will revitalize VIP and secure its future in the competitive luggage market.
Frequently Asked Questions
Why is Dilip Piramal selling a majority stake in VIP Industries?
Dilip Piramal is selling a majority stake in VIP Industries because the next generation of the Piramal family is not interested in continuing the business, and he believes he should have exited earlier. Additionally, the company has struggled to adapt to market trends and faces intense competition.
What are the two main categories in the luggage market?
The two main categories in the luggage market are hard luggage and soft luggage. Hard luggage is durable and protective, while soft luggage is lighter and more flexible.
How has the luggage market trended in recent years?
In recent years, the luggage market has swung towards hard luggage, which now makes up nearly 80% of sales. However, VIP Industries, which previously focused on soft luggage, struggled to adapt to this shift.
What challenges is VIP Industries facing in the market?
VIP Industries is facing challenges such as intense price competition, deep discounting by competitors, and a shift in consumer demand towards hard luggage. These factors have affected the company's financial performance.
What does the future hold for VIP Industries after the sale?
The future of VIP Industries after the sale to a private equity firm is uncertain. However, the new owners are expected to drive rapid changes and create value, potentially leading to a reboot of the company and a new strategy to compete in the market.
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