The agency has, however, reaffirmed its rating on the short-term bank facilities and commercial paper programme of the company at 'Crisil A2+'.
Crisil Ratings stated that the rating action factors in higher-than-anticipated decline in the company's operating performance in fiscal 2026 and the expectation that it will remain below earlier estimates over the near term.
VIP is likely to continue reporting net losses in fiscal 2027, which will constrain the financial risk profile and impact key debt metrics. The company is undergoing a transition with Multiples Alternate Asset Management (Multiples) acquiring 31.9% stake and assuming management control in December 2025.
Revenue growth is expected to remain modest in fiscal 2027 (mid-single digits) before improving to 12'13% compound annual growth rate (CAGR) over the medium term, supported by new product launches and initiatives to strengthen channel presence.
Operating profitability is expected to recover gradually, aided by cost rationalisation measures, including supply chain optimisation, value engineering, scale-based sourcing and improved retail network efficiency.
While these measures should support margin recovery and reduce net losses, the pace of profitability improvement remains a key rating sensitivity. Debt protection metrics are expected to stay constrained in the near to medium term due to modest profitability.
Crisil Ratings expects debt to rise over the medium term to support working capital needs and capital expenditure (capex) for expansion and maintenance. Liquidity remains adequate, supported by unencumbered cash of Rs 116 crore and absence of long-term debt obligation.
Multiples, along with co-investors, acquired 31.89% stake in VIP through a two-tranche transaction at Rs 388 per share, completed between September and December 2025. Crisil Ratings will monitor the company's strategy and financial policy under the new management with expectations of timely promoter support, if required.
The ratings continue to reflect VIP's established brand in the luggage segment, supported by a diversified product and revenue profile, and potential support from new promoters.
These strengths are partly offset by weak profitability due to intense competition from organised and unorganised players, modest financial risk profile and high working capital intensity.
VIP manufactures hard luggage in India and markets hard and soft luggage sourced from India, China and its Bangladesh subsidiaries. VIP is one of largest players in the luggage industry in India.
The company's consolidated net loss widened to Rs 128.90 crore in Q4 FY26 from net loss of Rs 27.36 crore reported in Q4 FY25. Revenue from operations declined 11.7% year on year (YoY) to Rs 436.23 crore in the quarter ended 31 March 2026.
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