VIP to pack a punch, merge Blow Plast with itself

VIP to pack a punch, merge Blow Plast with itself

Author | Source: The Economic Times | Tuesday, Mar 07,2006 8:16 AM

VIP to pack a punch, merge Blow Plast with itself

VIP Industries is exploring options to merge Blow Plast with itself, in a move that is likely to consolidate its position in the local luggage sector.

In a statement to the Bombay Stock Exchange, VIP said that a board meeting is scheduled for March 9 to consider the feasibility of a merger with Blow Plast.

The Dilip Piramal-controlled VIP Industries is the market leader in the Rs 600-crore organised luggage industry in India, with a 60-61% market share. While the manufacturing of luggage is done by VIP Industries, Blow Plast handles the marketing operations. Blow Plast holds 48.8% of VIP Industries' equity capital.

“The reason for a possible merger arises from the need to cut expenses in the two companies, and to avoid confusion among investors,” said a company spokesperson. Both companies are listed on the BSE and have seen a rise in their share prices recently.

On Monday, VIP Industries' share price rose 20% to Rs 127.20, while the Blow Plast stock climbed 17.6% to Rs 118.90. The company has a strong positioning in the mid-priced and premium segment, while its low priced brands are marketed under the Alfa series. The overall luggage industry in the country is pegged at Rs 1,400 crore, with Rs 600 crore in the organised market and the rest in the unorganised sector.

VIP Industries' nearest competitor is Samsonite which has an estimated 20-21% market share, said analysts.

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