In the mid-1990s, after India opened its economy to foreign investment, the American luggage maker Samsonite decided to foray into the country. India’s luggage market had been changing for many years, from metal trunks and cloth or leather holdalls to leaner, lighter and more contemporary products such as suitcases and handbags.
Samsonite spotted a growth opportunity. It had by then become the world’s largest luggage maker, thanks in part to its acquisition of American Tourister. But it couldn’t crack the India market for several years because of a local company. That company was VIP Industries Ltd.
Led by its founder Dilip Piramal, VIP had near-total dominance of the market until the 1990s. Samsonite initially tried to forge a joint venture with VIP. When that plan didn’t go anywhere, it formed a partnership with another local businessman, Ramesh Tainwala, who later became Samsonite’s India CEO and is credited with the US company’s success.
Cut to 2025, the 75-year-old Piramal this week decided to hang up his boots and sell a controlling stake in VIP to a consortium of investors led by Indian private equity firm Multiples Alternate Asset Management. The investor group, which also includes Enam Group’s Akash Bhanshali, and CaratLane founder Mithun Sacheti, will buy a nearly 32% stake in VIP for about Rs 1,763 crore while Piramal will retain around 20%.
Why is it important? Well, for one, it highlights the decline of an industry titan. But perhaps more importantly, it showcases a new path for Indian family-run businesses to resolve succession issues.
But what made Piramal sell control of a company he started more than 50 years ago? You see, VIP has been gradually losing market share for the past two decades, thanks not only to competition from Samsonite and Safari Industries but also due to cheap Chinese imports and local unorganised segment players.
In recent years, especially after the travel sector rebounded from the Covid-era restrictions, VIP has lost even more market share. Its revenue has stagnated for three years in the Rs 2,000-2,200 crore range and it swung to a loss in 2024-25. Meanwhile, Samsonite, Safari and several new-age brands such as Uppercase, Mokobara and Nasher Miles are making their mark among the younger generation or those looking for more stylish or contemporary products.
In 2024, for instance, VIP’s revenue market share was 38% while Safari held 32% and Samsonite 30%. In 2020, VIP’s share was 47% and the other two controlled 53%, according to an investor presentation. This reflects in the stock market performance. Even though Safari is smaller by revenue, its market capitalisation of Rs 10,845 crore is more than a third higher than VIP’s Rs 6,742 crore. This gap widens considering that the Piramal-Multiples deal was struck at Rs 388 per share, compared with its current price of around Rs 475, and valued the company at around Rs 5,500 crore.
To his credit, Piramal hasn’t tried to shirk responsibility. He admits the company has been facing several challenges and needs fresh blood to steer it out of the crisis. Couldn’t his children do the job? Well, his daughter Radhika, who took over in 2008 and is currently vice chairperson, did try to turn things around and even managed to do so for some time.
But Piramal realises it’s time to hand over the reins to someone else. And that’s a lesson for India Inc., where a majority of businesses are run by families and passed on from one generation to another even when they are publicly listed or hire professional CEOs. As Piramal admitted, and some industry observers have previously noted, many members of the younger generation are not interested in running family businesses. Piramal’s decision shows them the path forward.
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Uncertainty Prevails
Moving on to the larger $283-billion Indian IT industry, most of India’s top software companies have reported quarterly earnings over the past few days and the results, at best, are a mixed bag.
Tata Consultancy Services, the industry leader, posted a 1.3% rise in first-quarter consolidated revenue to Rs 63,437 crore, missing estimates as uncertainty related to US tariffs kept its clients cautious about spending. Its net profit topped forecasts, rising 6% to Rs 12,760 crore, but that was due partly to a delay in wage hikes.
TCS CEO K Krithivasan said on a conference call that the trend of delays in decision-making by clients intensified in Q1 and that it was “too early” to predict when growth would resume.
HCL Tech’s revenue beat estimates but its profit fell more than expected. The No. 3 IT player’s net profit dropped 9.7% to Rs 3,843 crore while consolidated revenue climbed 8.2% to Rs 30,349 crore. HCL Tech CEO C Vijayakumar said overall demand remained stable and didn’t worsen as feared earlier. The company revised its revenue growth forecast for 2025-26 to 3-5% from 2-5% earlier but lowered its operating margin forecast to 17-18% from 18-19%.
Wipro’s revenue rose 0.8% to Rs 22,135 crore and net profit jumped 11% to Rs 3,330 crore, both topping analysts’ forecasts thanks to improved client spending in parts of its Americas business.
Srini Pallia, CEO of India’s fourth-largest IT company, said the quarter started with the company facing “significant macro uncertainty” but there was strong deal momentum in the Americas. Separately, Wipro chairman Rishad Premji said the overall environment remained uncertain but customers were getting acclimatized to living in an uncertain world.
Tech Mahindra, the No.5 IT company, slightly missed Q1 revenue forecasts as sales in the Americas slumped. Its topline rose 2.7% to Rs 13,351 crore but revenue from the Americas market fell 5.9%. Its net profit surged 34% to Rs 1,141 crore but missed market estimates. CEO Mohit Joshi said the market was still “very, very volatile” and that it was too early to say whether the tide had turned towards significant growth or towards a recession.
All in all, the IT industry isn’t out of the woods and a cloud of uncertainty still hangs over it. So, for now, just hang tight!
Speed Bumps Ahead
While IT companies are concerned about an uncertain demand environment in the US and other foreign markets, India’s auto companies are grappling with weak prospects at home.
The Society of Indian Automobile Manufacturers, an industry body, said this week that car sales by manufacturers to dealers fell 7.4% in June to 312,849 units from 337,757 units a year earlier. June’s sales are an 18-month low.
For the April-June quarter, car sales slipped 1.4% from a year earlier to a two-year low and slumped 13% when compared with the January-March quarter. To be sure, car sales typically jump in January-February as companies offer discounts to clear the previous year’s inventory. Sales often slip thereafter, but this year’s decline has been particularly sharp.
Why are car sales falling? The reason is obvious, actually. Demand, especially in urban areas, has been weak for several months as a slowing economy and tepid wage hikes lead to a drop in disposable incomes.
In fact, sales had grown by just 2% in 2024-25 after rising 8.7% in 2023-24. Sales had soared 27% in 2022-23, but that was thanks mainly to pent-up demand as economic activities resumed after the Covid-19 pandemic waned.
SIAM President Shailesh Chandra said that sentiment across categories has remained “subdued” so far and that the industry is also facing supply-side challenges, presumably referring to China tightening supplies of rare earth minerals.
So, what’s the outlook for the industry? Well, sales are likely to remain muted in the current financial year, too, with growth expected to be barely 1-2%. What can help the sector, however, is festive demand after September and a cut in interest rates on loans. But how far can these factors help to offset the weak demand is too difficult to gauge for now.
Ready for the Ride
The slowdown in local sales may have been giving sleepless nights to owners and top management of many auto companies but at least one company and its owner would be least bothered about it.
That company would be Tesla, founded and led by the world’s richest man Elon Musk. This week, Tesla opened its first showroom in Mumbai and launched its Model Y electric SUV that it expects to start delivering from the third quarter.
Tesla displayed Model Y cars made in China at the launch event. It also showcased its supercharger that it will install at eight locations in Mumbai and in and around New Delhi, where it plans to open its second showroom.
The launch comes after several years of Tesla going back and forth on its plans for India, where Musk once even thought of setting up a factory before changing his mind, and a tussle that still continues over India’s high tariffs on imported cars.
India is important for Tesla even though electric cars make up only about 4% of total car sales. The government wants to push up the share of electric vehicles to 30% by 2030, and this is prompting both foreign and local companies to go full throttle. India’s electric-car segment is dominated by Tata Motors, Mahindra & Mahindra, and a joint venture of JSW and China’s MG Motors. China’s BYD also operates in India and Vietnam’s VinFast is set to make an entry, too.
India is important for Tesla for another reason—its dwindling sales in other countries because of competition from BYD and several other Chinese EV makers as well as Musk’s political activities that have put off consumers.
Can Tesla make its mark in India? A lot will depend on price, service network and how competition evolves.
The Model Y carries a starting price tag of more than Rs 60 lakh and goes up to nearly Rs 70 lakh, thanks to India’s high customs duties on imported vehicles. This translates into roughly $70,000 to over $81,000. The same car costs less than half in China and one-third less in the US or Germany.
At current prices, Tesla will compete with German luxury giants BMW, Audi and Mercedes-Benz, as well as South Korea’s Kia and Hyundai rather than mass-market EV makers Tata Motors and Mahindra. All these companies have established sales and service networks throughout India and a strong brand recall—Tesla has neither. It won’t be an easy ride.
Market Wrap
India’s stock markets slipped for a third week in a row amid tepid earnings reports from companies. The BSE Sensex
ended about 0.9% down this week while the Nifty 50 slipped 0.8%.
Most sectoral indices also ended lower, though pharma and metals eked out a gain. Market breadth was divided with
almost half of the 50 Nifty stocks rising and the other half falling.
Banks and financials services stocks were among the top losers. Axis Bank fell the most after reporting first-quarter
earnings that missed market expectations. Kotak Mahindra Bank, Shriram Finance, Jio Financial, HDFC Bank, and insurers
HDFC Life and SBI Life also ended lower.
IT stocks continued their losses for a second week, with HCL Tech falling the most. Tech Mahindra, TCS and Infosys also
slipped during the week but Wipro managed to buck the trend thanks to relatively more upbeat earnings.
Index heavyweight Reliance Industries, state-run Bharat Electronics, Zomato parent Eternal and Asian Paints were
among the other laggards.
On the other hand, auto stocks were the standout performers despite the industry going through a slowdown. Hero
MotoCorp was the top performer this week, followed by Mahindra & Mahindra and Bajaj Auto.
FMCG companies Nestle India, Tata Consumer and ITC also gained this week, as did PSU stocks ONGC and Coal India and
the Adani twins – Adani Enterprises and Adani Ports.
Earnings Snapshot
- Axis Bank standalone net profit falls 4% to Rs 5,806 crore, missing estimates of an increase
- LTIMindtree revenue rises 7.6% to Rs 9,841 crore, net profit increases 10.6% to Rs 1,254 crore
- L&T Tech Services revenue rises 16.4% to Rs 2,866 crore, misses forecasts; profit grows 0.7% to Rs 316 crore
- ITC Hotels Q1 consolidated net profit jumps 54% to Rs 133 crore, revenue rises 16%
- Ola Electric Q1 loss widens to Rs 428 crore from Rs 347 crore a year ago
- ICICI Lombard Q1 profit rises 29% to Rs 747 crore on higher premium from health policies
- HDFC Life Insurance profit up 14% to Rs 546 crore
- ICICI Prudential Life Insurance profit jumps 34% to Rs 302 crore
- Angel One Q1 profit drops 61% to Rs 114 crore on F&O trading curbs
- HDB Financial Q1 consolidated profit falls to Rs 568 crore from Rs 582 crore year ago
- Tata Technologies profit rises 5% to Rs 170 crore, beats expectations
Other Headlines
- Jane Street deposits $567 million as per SEBI order, plans to resume trading in India
- Jio BlackRock gets SEBI approval to launch five passive funds
- US, India “very close”; to trade deal, says Donald Trump
- State Bank of India to raise Rs 25,000 crore via share sale, Rs 20,000 crore through bonds
- HDFC Bank to consider issuing bonus shares, special interim dividend
- Retail inflation falls to more than six-year low of 2.1% in June
- India’s trade deficit narrows to $18.78 billion in June from $21.88 billion in May as imports fall
- India’s gold imports in June falls 40% to two-year low of 21 tons on high prices
- India’s unemployment rate holds steady at 5.6% in June
- Anthem Biosciences’ Rs 3,395-crore IPO subscribed nearly 64 times
- Fertility services provider Indira IVF Hospital files for IPO via confidential route
- SEBI approves Embassy Group-controlled WeWork India’s IPO
- Biocon may launch generic Wegovy obesity drug in India, Canada in two years, reports Reuters
- State-run MTNL defaults on Rs 8,585 crore of loans from seven public-sector banks
- Reliance acquires home appliances maker Kelvinator from Sweden’s Electrolux
That’s all for this week. Until next week, happy investing!
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