VIP Industries faced 'management crisis' over last few years, says promoter Dilip Piramal, ownership change 'best thing' for company

Mumbai, July 14, 2025 – In a candid admission, VIP Industries’ outgoing promoter Dilip Piramal has revealed that the company endured a prolonged "management crisis" in recent years, which impacted its strategic direction and performance. Piramal, who recently divested his family’s majority stake in the luggage maker to the PE-backed conglomerate Advent International, described the ownership change as “the best thing that could have happened” to VIP Industries.

The remarks shed new light on the internal challenges the 50-year-old luggage brand faced, even as it battled market headwinds, changing travel habits, and intensifying competition from both global and domestic players.

Leadership Turbulence Behind the Scenes

Speaking to the media after the stake sale, Piramal admitted, “The last few years have been difficult. There was a serious management crisis — not in terms of integrity, but in capability and vision.” He explained that VIP Industries, once a pioneer in India’s luggage segment, lost its competitive edge due to leadership inconsistencies and a lack of agility in responding to changing market trends.

The crisis culminated in multiple changes at the top executive level. CEO succession saw delays and uncertainty, with internal conflicts stalling long-term strategic initiatives. The brand struggled to modernize operations, adapt to digital retail channels effectively, and regain lost ground to fast-growing rivals like Samsonite, American Tourister, and Indian upstarts such as Nasher Miles.

Advent International’s Entry: A Turning Point

The ownership shift came after months of speculation. In June 2025, Advent International acquired the Piramal family’s 50.2% stake in VIP Industries for ₹4,200 crore, valuing the company at approximately ₹8,360 crore.

“Advent brings deep operational expertise, a global footprint, and capital strength,” Piramal said, adding that the new leadership has already begun restructuring efforts, including hiring seasoned executives, enhancing supply chain capabilities, and increasing investments in product innovation.

Industry analysts view the move as a strategic inflection point. “VIP had been lagging behind in e-commerce penetration and product diversification. Advent’s backing could inject the much-needed operational rigor and market focus,” said Meenakshi Arora, senior analyst at ICICI Securities.

Historical Legacy, Modern Challenges

Founded in 1971, VIP Industries once dominated the Indian luggage market, producing iconic brands like Aristocrat, Skybags, and Carlton. Under Piramal's stewardship, it grew into one of Asia’s largest luggage manufacturers, with a footprint spanning over 45 countries.

However, the last five years saw a confluence of pressures — a pandemic-induced travel slump, rising raw material costs, and aggressive pricing by competitors. The company’s revenue fell 22% year-on-year in FY21 before recovering partially in FY22 and FY23.

Despite a rebound in travel and tourism post-COVID, VIP struggled to reclaim its earlier momentum. A muted brand refresh strategy, sluggish R&D investments, and weak digital outreach further widened the gap with nimble challengers.

Market Reaction and Shareholder Sentiment

The news of Advent’s acquisition was met with optimism on Dalal Street. VIP Industries’ shares surged over 14% following the announcement, reaching a 52-week high of ₹744 on the NSE.

Investors seem hopeful that the new owners will chart a bold revival path. “The market is rewarding clarity and direction,” noted Ravi Menon, portfolio manager at Axis Mutual Fund. “With Piramal stepping back and Advent stepping in, it ends the ambiguity around the company’s leadership and long-term intentions.”

However, Menon cautioned that the road to transformation will require time. “Cost optimization, product realignment, and regaining customer trust are not overnight shifts,” he added.

Looking Ahead: Opportunities and Watchpoints

With a fresh board and renewed strategic vision, VIP Industries aims to reclaim leadership in the ₹10,000-crore Indian luggage market. Early signs indicate a pivot towards:

• Premium product segments, to counter Samsonite and Delsey.

• Tech-enabled smart luggage solutions, aligning with global travel tech trends.

• Omni-channel sales strategy, with stronger presence on Flipkart, Amazon, and its own D2C platform.

• Global sourcing and lean manufacturing, to improve margins.

Yet challenges remain. The highly seasonal nature of the luggage business, foreign exchange exposure, and supply chain disruptions still loom large. Advent’s ability to strike a balance between cost-efficiency and brand innovation will be closely watched.

Promoter’s Final Word

In a reflective tone, Dilip Piramal expressed satisfaction with the transition. “We’ve taken this company from a family-run business to a professionally-run enterprise. Now it needs global muscle and management intensity — something Advent can provide. I’m confident it’s in the right hands.”

Piramal, who will now serve in an advisory capacity until the transition completes, is expected to gradually step away from all operational roles.

The disclosure of a “management crisis” within VIP Industries underscores the importance of visionary leadership and adaptability in today’s fast-changing consumer landscape. As the company begins its next chapter under Advent International, stakeholders — from shareholders to consumers — are watching closely to see if India’s oldest luggage brand can reinvent itself for the modern traveler.