What's Next For Saraswati Saree After Successful Listing?
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00:00The first management for the day is Saraswati Sarees.
00:03Now, of course, big listing.
00:05It was in focus.
00:06Stock listed at a premium of 25%.
00:09The IPO was oversubscribed by over 100 times.
00:13My colleague Mahima spoke with the management
00:15and began by asking about the successful listing
00:17and the growth outlook ahead.
00:18Listen in to a slice of that conversation.
00:23As you can see in our numbers, which
00:25we have shown in RHP and DRHP, we
00:28see the growth.
00:30We've seen the growth from 2014 to 2021.
00:34We've seen growth from 2021 to 2023.
00:37I think going forward, ethnic wear is going to boom.
00:40As industry report says, we're going to have 5% to 6% growth.
00:44But I think we can focus on growing more than industry.
00:48OK, so you will expect a growth of more than 5% to 6%
00:52in coming years.
00:52OK, and FY24 has just gotten over.
00:56So I want to understand that what
00:57is the kind of volume versus value growth
01:00that you've seen in FY24?
01:02And what does FY25 look like similarly?
01:08So in FY24, we sold 1,60,000 sarees, which is huge.
01:13And before that, in FY23, we had sold 1,50,000-odd sarees.
01:19And value-wise, we've also grown.
01:21We had done 601,000 sales in FY23.
01:24And in FY24, we did 612 cutouts.
01:28And I can't give you future projections right now.
01:31But what I can say is we'll improve and we'll grow.
01:33That's definitely for sure.
01:35OK, Nikhil.
01:36And Nikhil, right now, your presence
01:38is more towards the West and the South.
01:41Any plans of geographical expansion
01:44going forward when it comes to the North and Eastern markets,
01:47or even the Central markets for that matter?
01:50I think West and South is still untapped.
01:53I mean, yeah, we have close to more than 90%
01:57a share in West and South.
01:59And out of that, 88% is West.
02:01But I think this 88% is just the reflection of our revenues,
02:0788%.
02:08I think there is a major market to tap still in West and South.
02:11So we'll currently focus on West and South.
02:13OK.
02:13And when it comes to the demand side,
02:17and when it comes to the garmenting business,
02:20and especially when it comes to ethnic garmenting business,
02:22there's always been a debate that there's always competition
02:25from the unorganized sector.
02:27So I want to understand if you have some kind of statistics
02:30that at present, how much of sales
02:33happens from unorganized as well as the organized sector.
02:36And where do you see the trends going forward?
02:43As the industry report reflects, the organized sector
02:46is 25% to 30%.
02:47And unorganized is 70% odd.
02:50I think we are seeing growth in organized sector
02:53than unorganized sector.
02:56The reason for that is after implementation
02:58of GST and other laws, I think it is, I mean,
03:03unorganized sector is finding it difficult.
03:06Because to grow, you need to have a good balance sheet
03:09and access to good capital.
03:11And without having a strong balance sheet,
03:12it is impossible now.
03:14So I think organized sector is going to grow better
03:16than unorganized sector.
03:18For sure.
03:18And right now, like you rightly mentioned,
03:22the unorganized sector is 25% to 30%.
03:25How long do you think will this 25% to 30%
03:29will take to come to that 0% mark?
03:31And that 70% from the organized sector will go to 100% mark?
03:38Yeah.
03:39Actually, organized is 25% to 30%.
03:42Unorganized is 70%.
03:45I think the trajectory is going to go for this industry
03:53is organized sector will grow from 25% to 30%.
03:58And unorganized sector is going to go down.
04:01OK.
04:01And you've also mentioned in your IHP
04:05that you are entering into men's ethnic wear.
04:08Give us some color as to how your strategy is
04:10going to be like.
04:11What kind of markets you are going to enter?
04:12What kind of products you are going to fall into?
04:14Give us some details on that.
04:19Yeah, so we already cater to 13,000 unique customers.
04:22These 13,000 unique customers are family shops
04:25that we cater to.
04:26They already have saris that they buy from us.
04:29They also focus on men's ethnic wear.
04:30I think this men's ethnic wear product,
04:33they'll start buying from us.
04:35And what we see is in this fiscal year,
04:38we're going to see the contribution of men's ethnic
04:41wear in our revenue.
04:42And the focus is to give them mid to premium range.
04:47We'll start off with low, but we'll
04:49focus on mid to premium range.
04:51And once we get the hang of the market, which
04:54is men's ethnic wear, because we're just entering in that,
04:57I think we'll see the contribution of men's ethnic
05:00wear growing in our revenue.
05:03OK, and can you help me quantify how much of a revenue addition
05:07as well as bottom line addition and margin addition
05:09will contribute, will come from contribution
05:12from the men's ethnic wear?
05:17I mean, I think it's too soon to answer that.
05:19I mean, we need to test the market first.
05:22But I think over the period, it's
05:24going to be significant, but over the period.
05:26OK, and since you mentioned the premium segment,
05:32premium side of things, I want to understand
05:34that what are the trends like when
05:36it comes to buying from the non-premium segment
05:39and the premium segment, both in saris as well as
05:42men's ethnic wear?
05:46Yeah, so I didn't get that part.
05:48If you could repeat that.
05:49Right, so I'm asking that what are the kind of trends
05:52that you're observing when it comes to buying?
05:55People are buying more premium side of products,
05:57or people are still concentrated towards the non-premium side
06:00of things.
06:01How are the trends like?
06:07India, as a market, is more focused on mid and mid-range.
06:11I think the mid-range is going to grow as well as premium,
06:14but I think mid-range is going to grow more than premium.
06:17OK, and I also want to understand
06:20that at present, in terms of total revenue,
06:24how much of a revenue contribution
06:26comes from e-commerce platforms?
06:28A revenue contribution from saris is 90%,
06:32and kurtis and dress material is close to 5%,
06:37and dress is blouse piece and pant piece.
06:39So there is no, I mean, men's ethnic wear,
06:42there is no contribution because we're going to stop that.
06:45But in future, you're going to see a change in numbers,
06:49which will definitely reflect in our FY25 numbers.
06:52Right, so Nikhil, all of this comes from e-commerce.
06:55No, this comes directly from physical store sales.
06:58Online, we have yet to start, and over the period,
07:01even online, I think there is going to be,
07:03I mean, it's going to contribute to our revenue.
07:05Online is a strategy, it's a complementary strategy,
07:09complementing to our physical stores.
07:11So basically, what we are going to do is,
07:13with online sales, we're going to be able to
07:15contribute to our revenue.
07:17So, we're going to be able to contribute to our revenue.
07:19So, we're going to be able to contribute to our revenue.
07:22So, basically, what we are going to do is,
07:24with online, the customer who visits us once in a week,
07:27we are trying to get their purchase multiple times
07:30in a week, and once in a month to 15 days,
07:33or once in 15 days or twice a month.
07:37So, it's a complementing, the online product
07:41is going to be complementing our physical stores.
07:43Okay, and is there any kind of internal targets
07:45that you're aiming at when it comes to online sales?
07:53Internal is something we are just discussing.
07:55I can't give targets right now,
07:57but I'm sure it will reflect in our numbers.