Safari Industries India Ltd Management Discussions

A. Industry Structure and Developments:

The last year saw several geo-political disruptions globally, directly impacting the global economy, particularly the travel industry. Despite these factors, the volume growth in the Indian luggage industry has remained strong with long-term factors such as growth in domestic travel and marriage demand continuing to stay in place. The value growth in the industry has seen a slow-down due to an intense competitive environment fuelled by new entrants as well as some of the legacy players fighting for market share.

Overall structural factors continue to have a positive long-term impact on the industry. Despite the geo-political headwinds resulting in a loss of demand for international travel, domestic travel has remained strong. This shift towards domestic destinations has impacted the size mix away from larger sized luggage to medium sized luggage and cabin size. Over the long-term the ongoing capital investments by Airlines in fleet expansion and overall infrastructure improvement for Roads & Railways is expected to further fuel travel growth. In the Indian context, weddings remain a massive short-term driver, with luggage sets being a staple for trousseaus, gifting and travel planning. With a young demographic profile in the country, this factor will continue to fuel growth.

On the consumer side, the luggage industry is currently undergoing a significant structural shift, evolving from a purely functional utility market into a lifestyle and fashion-led sector. Consumer preferences are evolving rapidly with colour and design increasingly becoming central to purchase decisions. Led by Gen Z and Millennials, the demand for "luggage as lifestyle" is rising irrespective of the price category. Luggage is increasingly seen as a fashion accessory rather than a storage box, leading to a surge in vibrant colours. This trend is further shortening luggage replacement cycles as consumers treat luggage as an "outfit" for their social media travel content.

The overall long-term outlook for the organised sector remains very robust with continued shift away from unbranded to branded luggage, as consumers prioritize warranties, quality and brand prestige over low-cost unorganized options.

Company Development:

The Company continued to grow ahead of the market led by a well-defined portfolio catering well to diverse consumer needs and strong go-to- market strategy. Safari brand has been adjudged as the No. 1 Luggage Brand in India in revenue terms for the third successive year (Source: Euromonitor International Limited; Personal Accessories 2026 ed; Luggage category; GBN; all retail channels, value RSP terms; 2025 data).

Driven by continued growth on the hard luggage category, the Company alongwith Safari Manufacturing Limited, wholly owned subsidiary has further scaled up capacity at its manufacturing plants for polypropylene and polycarbonate zippered hard luggage in Jaipur, Rajasthan and Halol, Gujarat, through investments in additional machinery and focus on increased efficiencies via automation. During the year under review, the Company has also started indigenising its premium portfolio, building in-house production capabilities to produce high-quality well-crafted premium hard luggage.

The Company is focussing on growing in the mid-premium segment employing a multi-brand approach to serve this market in a well segmented manner. Urban Jungle (a casual premium brand focussing on the youth) has been growing well with a digital-first approach. Safari Select (a semi-formal design approach) is scaling up as a premium upgrade for Safari brand loyalists. The Company has also taken a brand licence for "Carlton" to foray into the super-premium price segment; this brand will be launched by the Company in FY 2026-27.

The Company has continued to expand its footprint of exclusive retail stores targeting consumers in premium high footfall areas, to lead the overall premiumization strategy. Urban Jungle and Safari Select as the premium brands from the house of Safari, now contribute to a bulk of sales in this channel. This channel coupled with Premium Large Format stores will be key drivers to the overall premiumization agenda for the Company. This will help drive long-term consumer equity and advocacy through an integrated approach that focussed on superior brand experience.

The Company continues to invest in enhancing its back-end capabilities focusing on automation and technology, for more efficient manufacturing and a responsive supply chain.

B. Opportunities and Threats:

The sustained increase in the competitive intensity in the industry is driving a sharp structural shift towards hard luggage at value pricing. The Company has further expanded its hard luggage capacity to ensure that it can continue to drive growth capitalising on the rapid expansion of the Hard Luggage category. It is also investing behind building in-house premium manufacturing capability to help improve profitability as it scales up in higher price segments.

The rapid consumer shift towards "luggage as lifestyle" is leading consumers to increasingly look for brands with more relevant offerings. This is expected to help drive category expansion at the mid and premium end as increasing affluence and discernment reflects in consumer brand choices. To capitalise on this opportunity the Company is investing on building a lifestyle-segmented roster of brands which includes Urban Jungle, Safari Select and now Carlton (long-term brand license) through consumer-relevant aesthetic and functional innovation.

The Company has diversified its Backpack category supplies, building a larger supplier base within India while continuing to retain key vendors based in Bangladesh and China. This has helped de-risk against potential geo-political and macro-economic uncertainties.

Quick-commerce channel is expected to continue its growth as it expands it presence across cities and consumer preference for faster deliveries strengthens. The Company is building specialised supply chain and front-end capability to ensure that the specific requirements of this channel are well met.

Companys linear structure facilitates faster and better decision making which allows the Company to grab opportunities in time.

C. Segment/ Product-wise Performance:

The Hard Luggage category is now the dominant category in Luggage Trolleys. The Company has been able to capitalise well on the demand growth on this category with consistent investment on capacity enhancement. The Company has also made efforts to sub-segment the category across different consumer need-states with a strong multi-brand offering covering all price tiers. The Company has strengthened its design and back-end capability to deliver innovations in aesthetics, colour, shapes, opening mechanism, etc. The Company is consistently enhancing its portfolio with innovative product offerings to drive consumer preference.

The Company has grown very well in the Backpack category through strong focus on product and go-to- market strategies that have helped it gain market share in key growth channels such as E-commerce, Exclusive Retail and Hypermarkets. The multi-brand product portfolio of the Company caters to diverse use-cases, consumer life-stages and lifestyle sub-segments to ensure that all core consumer needs in the category are well covered across price-tiers. The Company will continue to invest aggressively behind this category as a strong growth driver.

D. Outlook:

The Company has maintained its growth trajectory well ahead of the market, but there are several uncertainties due to larger geo-political factors. Hence, it will be important for the Company to stay focussed on specific channels, categories and consumer segments that are expected to drive market growth.

The Company has continued to optimise its supply chain for better responsiveness and cost, by investments in modern technology in the areas of ERP, warehousing and planning capability. The Company will continue to undertake focussed investments to make its supply chain more robust and future ready.

The mid and premium price-segments continue to be large opportunity areas for the Company that are critical for long-term sustainable growth and profitability improvement. It is important for the Company to invest aggressively in building its share in these categories to improve its price realisation through product mix improvement.

While there continue to be some uncertainties, the overall growth drivers are well in place for the Company to continue a high growth trajectory with improving profitability.

E. Risks and Concerns:

The Company is exposed to various risks and uncertainties which may adversely impact its performance. The Companys future growth prospects and cash flow generation could be materially impacted by any of these risks or opportunities. The major risks as identified by the Company are cost-risks due to global geo-political upheavals, currency risk associated with imports, intense price competition, etc.

The Company follows the Enterprise Risk Management (ERM) framework to manage and mitigate such risks which is primarily based on the integrated framework for enterprise risk management and internal controls developed by the Company.

F. Internal Control Systems and their adequacy:

M/s. Moore Singhi Advisors LLP were appointed as the Internal Auditors of the Company to review internal controls periodically with specific reference to evaluation of the current business processes, identify gaps, inefficiencies, process exceptions and suggest action plans, verify adherence to risk mitigation plans, to review sourcing and supply chain management, plant operations and effectiveness, sales planning and distribution channels, branches of the Company, warehouses and retail operations, to provide assurance regarding various compliances by assessing the reliability of financial controls, IT controls and compliance with applicable laws and regulations. The Company has a regular check on expenses including capital expenditure. The Company has documented policies and SOPs with regards to all major activities. The Internal Auditors submit their reports to the Audit Committee quarterly. The Management considers and takes appropriate action on the recommendations made by the Statutory Auditors, Internal Auditors and the Audit Committee of the Company. Significant policies with changes during the year, if any, are disclosed in the notes to the financial statements.

G. Financial Performance with respect to operational performance:

- Sales:

The Total Income of the Company for the year ended 31^st March 2026 was at Rs. 2,079.78 Crore (previous year Rs. 1,808.31 Crore).

- Expenditure:

The Total Expenses of the Company for the year ended 31^st March 2026 was at Rs. 1,917.88 Crore (previous year Rs. 1,656.03 Crore).

- Profit:

Profit after Tax for the year under review amounted to Rs. 124.78 Crore (Previous Year Rs. 117.53 Crore).

H. Material Developments in Human Resources/ Industrial Relations front, including number of people employed:

The Company has in place ESOP Scheme and ESAR Scheme to ring-fence critical talent while also attracting high-potential individuals to the organization.

During the year, the Company initiated talent development programs through well-structured training initiatives. The JumpStart program was introduced to enable seamless onboarding and effective integration of new hires. In addition, the retail-focused training program Power Up, along with the Reward & Recognition initiative Shining Stars, were successfully launched to strengthen employee engagement and drive performance excellence.

During the year, Industrial Relations remained cordial.

The employee strength as on 31^st March 2026 was 851.

I. Financial ratios:

Sr. No. Particulars	FY 2025-26	FY 2024-25
Debtors Turnover (days)	45 days	42 days
ii. Inventory Turnover (days)	89 days	98 days
iii. Interest Coverage Ratio	22.16 : 1	21.52 : 1
iv. Current Ratio	4.44 : 1	4.16 : 1
v. Debt Equity Ratio	0.11 : 1	0.12 : 1
vi. Operating Profit Margin (%)	8.30%	9.02%
vii. Net Profit Margin (%)	6.11%	6.64%

Since the change in ratio is less than 25%, no explanation is required to be furnished.

J. Return on Net Worth:

Financial Year	FY 2025-26	FY 2024-25
Return on Net Worth (%)	13.00%	13.85%

 

ON BEHALF OF THE BOARD OF DIRECTORS	sd/-
For SAFARI INDUSTRIES (INDIA) LIMITED	Sudhir Jatia
Place: Mumbai	Chairman & Managing Director
Date: 19th May 2026	DIN:00031969