Dilip Piramal, Chairman of luggage company VIP Industries, has said that the younger generation of his family is not interested in managing the business. His remarks come a day after the company notified the stock exchanges that the promoter group entities plan to sell a 32% stake to a group of private equity investors and others. "We are a family-owned business, and the next generation is not very keen on running it," Mr Piramal told NDTV Profit on Monday, a day after the company informed stock exchanges of the significant divestment.
VIP Industries is one of India's leading luggage manufacturers. Dilip Piramal has led the company for over five decades. Speaking to NDTV Profit, he said, "In all our 53 years of existence, VIP has been the market leader. But in the last five years, we have been losing market share. Last year, we reported losses in all four quarters."
"The company is facing a lot of management problems, hence it's going to be a struggle for the first time. In 2-3 years, we should do well," the business tycoon added.
VIP Industries has a market capitalisation of Rs 6,830 crore, according to financial services website AngelOne. Post the stake sale, Dilip Piramal and the group's shareholding in the company will come down to 19.73% from 51.73%.
The sellers include Dilip Piramal and various entities forming part of the promoter group - Kemp and Company Ltd., DGP Securities Ltd., Kiddy Plast Ltd., Piramal Vibhuti Investments Ltd. and Alcon Finance & Investment Ltd.
"For me, it's important to safeguard shareholder interests, which aligns with my own. The only viable path forward was to bring in a new management team with ownership interest," Mr Piramal said.
He added that after several rounds of discussion, the company has found a private equity investor. "A private equity player suits us well, as their goal is to double or triple their investment in 2-3 years," he told the outlet.
The businessman said that he is not looking to sell beyond a 32% stake. "I don't need the money. I need good value for my shares. The company is facing significant management issues, so the road ahead will be challenging initially," he said.
However, he added that the company has "strong fundamentals and will turn around soon". "I urge investors to be patient. Management transition is not easy," he said.
Mr Piramal also mentioned that someone from the family will continue to hold a seat on the board. Speaking on growth, he said, "International markets are a promising opportunity for us. We have the potential to become a multinational company. India is very well suited for the luggage industry."
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