Surge in travel helping India’s luggage industry, says Crisil
₹700 crore this fiscal, Rushabh Borkar, associate director at Crisil Ratings said. “While this will increase their debt levels, overall capital structure and coverage metrics will not be materially impacted because of improved cash accruals. Gearing and interest coverage of our sample set will remain comfortable at 0.6 time and 11.5 times, respectively." Crisil analysed luggage makers that account for 90% of the organised sector’s revenue.
Organised luggage makers enjoy an estimated 40% share of the nearly ₹15,000 crore industry. Overall, luggage makers are set to see a 15% jump in revenues this fiscal despite a high-base effect of 40% growth last fiscal. Rising penetration of hard luggage made by the organised sector, and continuing momentum in tourism and corporate travel will help companies report strong sales.
India’s organized luggage market is led by companies such as VIP Industries, Samsonite, Safari, among others. These companies have benefited on the back of consumer shift to hard luggage. “Consumer preference for hard luggage has driven up operating efficiencies and improved capacity utilisation of the organised sector.
That, in turn, should expand their operating margin 150-200 basis points (bps) on-year to 16% this fiscal," Crisil said. In fact, over the past five fiscal years, the market share of hard luggage has shot up to 55% from 33%. “Operating margins are relatively better on them since these are manufactured locally.
On the other hand, the fragmented unorganised sector largely imports soft luggage from China. They have been impacted by supply-chain disruptions and implementation of the Goods and Services Tax, leading to loss of market share," said Jaya Mirpuri, Director, Crisil Ratings. Crisil,
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