My notes from the annual report 2023.
- Growth in travel has sustained beyond the post lock-down revenge travel phenomenon, indicating perhaps a more permanent trend.
- The demand in the backpack segment, which was the last to recover post-pandemic, has been very strong during the year led by opening of schools and offices.
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- Most offices now require physical presence either full-time or partially
Segments:
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The E-commerce channel continued to lead the category growth with continued trends on increasing digital penetration, e-commerce adoption for higher ticket purchases & deeper geographic penetration.
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In Hyper channel, value retailers continued their strong growth in the category further helped by a jump in outlet addition.
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The General Trade channel segment also grew well as organised companies offered better pricing to channel partners, translating to more competitive consumer pricing.
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The demand in the Canteen Stores Department segment was stable during the year.
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In last one year the premium segment has bounced back strongly, driven by increasing affluence and increasing consumer preference for better-featured products. This trend is expected to continue over the foreseeable future.
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In order to meet the rising demand for hard luggage, the Company has set up a new manufacturing plant through Safari Manufacturing Limited, wholly owned subsidiary in Halol, Gujarat for production of polypropylene zippered hard luggage.
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expanded its production capacity for polycarbonate zippered hard luggage in the existing manufacturing plant
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The Company introduced a new brand, Urban Jungle, in the casual premium segment.
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This brand will initially focus on the zippered hard luggage category. With a strong focus on engaging younger consumers and driving growth with digital shoppers, the Company is focussing on scaling up the Direct to Consumer business through its own brand websites i.e.
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- www.urbanjungle.shop
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The Company will continue its efforts on building its brands via a strong advertising presence on digital platforms.
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To enhance its physical brand availability and recall, the Company added several retail stores in prestigious high-footfall locations. These exclusive retail stores have helped improve the premium sales mix as well as drive better brand equity with the consumers.
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The International Business division of the Company has gained good traction in several global markets, especially the West Asian countries with large Indian diaspora taking advantage of the latent equity of the ‘Safari’ brand in this segment.
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a structural shift towards domestic manufacturing has also helped manage the margins better.
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The Company has significantly increased its procurement of soft-luggage and backpack categories from domestic market and Bangladesh, the sourcing locations continue to be more cost competitive compared to China.
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With e-commerce continuing to be a lead growth channel and consumers moving to digital platforms for content consumption, it is critical for the long-term to invest aggressively in this area for continued growth.
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Is now investing behind scaling up its own brand websites.
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While the overall growth for the domestic economy and travel sub-sector continues to be very strong, the risk of a global slowdown continues to be a demand-side threat. To continue to outperform the market and sustain profitable growth is the most important medium-term challenge.
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The long period of supply disruption during the pandemic-era as well as adverse ocean freights and currency movement have put imported soft-luggage products at a significant pricing disadvantage versus the domestically produced hard-luggage. This has accelerated the consumer (preference) shift from soft-luggage to hard-luggage, which was already happening, driven by increasing preference for more premium-looking and durable hard-luggage products.
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The Company continued to invest in zippered hard luggage by continuing to expand its range of polycarbonate zippered cases as well as launch of polypropylene zippered cases.
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Backpack: The backpack category had a sharp bounce back in demand this year led by the first full year of physical schooling post the pandemic and rising physical attendance in offices. With huge numeric potential still untapped by the organised sector, the Company is looking to invest aggressively behind this category as a strong growth driver.
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The Company has also made significant investments in modernising and improving its warehousing capability. The Company has invested in upgrading its SAP system which has a positive impact on operations and value chain. These improvements will help the Company in reducing costs and making its supply chain leaner and more responsive to the changing market.
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While the pressure on raw material and sourcing costs has eased out in the second half of the year, the Company intends to keep improving price realisation through product mix improvement.
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exports as a percentage of the total turnover of the entity = 0.47%
definition of segments:
- General Trade - standalone stores selling luggage, backpacks and other types of bags exclusively
- Modern Trade - large format stores offering a wide variety of merchandise including luggage and bags
- Ecommerce Resellers - companies selling luggage on Ecommerce marketplaces like Amazon, Flipkart, etc
- Canteen Stores - A department with the armed forces running canteens for soldiers. They sell various merchandise including luggage and bags at special rates
- B2B - various organisations doing one-off bulk purchases for employees or their own customers
- D2C - consumers directly buying from the Company’s websites
Risks :
The major risks as identified by the Company are
- demand-risks due to recessionary trends in the global economy,
- currency risk associated with imports,
- unfair competition, etc.
Going through their strategy presentation from 2021, they have remained focused on the growth areas. a few slides that are useful from that I have pasted below:
