VIP Industries Ltd. expects its sales to grow at 5-10 percent for the rest of the ongoing financial year amid subdued consumer sentiment.
“This year the growth rate has come down as for the same period last year. We were growing at 20-25 percent,” said Dilip Piramal, chairman at India's largest homemade luggage company. “But we are satisfied with this growth while the overall consumer sentiment is subdued.”
Indians have cut spending on soaps and biscuits to cars and appliances because of lack of jobs and stagnant wages, dragging the nation's GDP to its lowest in 26 quarters. They have also cut back on travel.
Piramal, however, expects the company's gross margins to remain “quite good” on account of favourable input costs and selling prices.
IDBI Capital, in a research report, said VIP Industries' strategy of setting up units in Bangladesh to avoid 15 percent duty on imports from China is likely to improve its operating margin by 50-100 basis point over the next two years.
Shares of the Mumbai-based company rose as much as 2 percent to Rs 433.90 apiece. That compares with a 0.61 percent fall in the Nifty 50 Index.
Watch | VIP Industries' Piramal on the demand outlook and more...
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