Nisaba Godrej resigns as independent director from the board of VIP Industries

The development comes over differences in succession planning with Dilip Piramal, the founder-chair of the country’s second-largest luggage maker, which had a market capitalization of $830 million on 5 June.

“As discussed, due to my differing view on leadership accountability and succession planning, I will be resigning from the Board effective June 3rd, 2024," Godrej, who is the executive chairperson of Godrej Consumer Products Ltd (GCPL), said in her resignation letter to Piramal, according to a disclosure made by the company to the exchanges.

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“Ms Nisa Godrej was not in agreement with our succession planning as also our leadership accountability," Dilip Piramal, who turns 75 in December, told Mint when contacted. “We are aware of these issues and we had certain plans which got delayed due to some operational problems. We have been working with Boston Consulting Group for management consultancy. However, Ms Godrej is not satisfied with the speed of our actions. In the circumstances, she has decided not to continue to remain on the board." An email sent to Godrej remained unanswered till press time.

The issue

At the heart of the current issue is the reluctance of Radhika Piramal, VIP’s London-based vice-chairperson and Dilip’s daughter, to continue running the business. This has prompted the family, which owns 51.76% of the company, to look at selling its stake.

Godrej, who was inducted into the nine-member board of VIP Industries in April 2019, was one of the four members of the nomination and remuneration committee or NRC, the board-appointed panel that oversees succession planning and remuneration of the chief executive and other senior executives inside a firm.

Also Read: How VIP is trying to shed its baggage

Tushar Jani, the founder of Blue Dart Courier Services, is the chairman of the NRC, and Dilip Piramal and Amit Jatia, the proprietor of McDonald’s franchise in the country, are the two other members.

Tough competiton  

Until a few years ago, VIP Industries was the country’s largest luggage maker. But last year, the world’s largest luggage maker, Samsonite overtook it in India. In calendar year 2023, Samsonite’s revenue in India of $273.7 million was higher than VIP Industries’ $263 million, per Samsonite’s global annual filings.

VIP Industries has faced the double-whammy of competition from cheaper Chinese manufacturers and its own inability to garner a larger share of the premium market.

Moreover, the company has also seen a slew of top-level exits. In fact, in August 2023, Anindya Dutta resigned as managing director of the company after assuming the role in February 2021. In January 2021, Sudip Ghose had resigned as the company’s managing director with effect from 31 January 2021. Ghose took over as MD in April 2018.

New CEO

To revive its fortunes, the company entrusted Neetu Kashiramka with the CEO role last August. Kashiramka, who joined the company as the chief financial officer in April 2020, and Radhika, promised that the company would do better in the current year, as they outlined a four-pronged approach. Under this strategy, VIP Industries plans to expand its product range, scale up its presence in the premiumization space, build a stable leadership team, and improve profitability.

Also Read: VIP Industries promoters explore stake sale

“I would like to reassure all our investors that in the quarter gone by, there have been many changes and many inputs. A lot of good work has happened in many different departments and in the company, and it will start to show in the current quarter that is Q4 and then further in Q1 as our MD gets more time to make decisions and then implement those decisions," Radhika said in a post-earnings analyst call on 31 January. “I am extremely confident that there will be much better performance in the calendar year 2024."

VIP Industries’ revenue improved 7.5% in the year ended March 2024 to ₹2,256.7 crore, compared to a 58% jump in the year ended March 2023.

Profit slumped 64.3% in the same period, from ₹152.34 crore to ₹54.30 crore. This was primarily because it sold fewer bags than what it manufactured and last year saw the company deducting costs on bags made in the year ended March 2023.

VIP’s shares closed 7.7% higher at ₹491 on Wednesday.