Why Is Safari Industries Profitable While Market Leader...

Synopsis: VIP Despite being the market leader, it reported a Rs. 143 crore net loss in Q2 FY26 on Rs. 406 crore revenue with negative 26 percent operating margin, while Safari Industries earned Rs. 47 crore net profit on Rs. 534 crore revenue, maintaining healthy 14 percent operating margins through lean inventory, low debt, and focused execution.

Safari Industries and VIP Industries operate in the same luggage market, sell similar products, and face identical consumer trends. Yet their financial outcomes are sharply different. While Safari continues to report steady profits and healthy operating margins, VIP despite being the market leader has slipped into losses in recent quarters. The contrast is clearly visible in their quarterly numbers.

Safari Industries (India) Limited, founded in 1980 and based in Mumbai, designs, manufactures, and sells luggage, backpacks, and travel accessories in India. Its product range includes hard and soft luggage, laptop and school bags, duffle bags, and travel accessories, marketed under brands like Safari, Safari Select, Genius, Urban Jungle, and Genie through its own stores, website, and e-commerce platforms.

V.I.P. Industries Limited, founded in 1968 and based in Mumbai, manufactures and retails luggage, backpacks, handbags, and accessories in India and abroad. Its offerings include hard and soft luggage, duffle bags, backpacks, business satchels, and ladies’ handbags, sold under brands like VIP, Caprese, Carlton, Skybags, Alfa, and Aristocrat through exclusive outlets, e-commerce platforms, and exports.

Financial Comparison

Revenue

In Q2 FY26, Safari Industries reported sales of Rs. 534 crore, up from Rs. 458 crore in Q2 FY25, showing a 17 percent year-on-year growth. Compared to Rs. 528 crore in Q1 FY26, sales increased slightly by 1 percent quarter-on-quarter, indicating stable business momentum.

VIP Industries reported sales of Rs. 406 crore in Q2 FY26, down from Rs. 544 crore in Q2 FY25, a 25.37 percent year-on-year decline. Sales also fell sharply from Rs. 561 crore in Q1 FY26, translating into a 28 percent quarter-on-quarter drop, showing weak demand and heavy pressure on the business.

Operating Profit

Safari’s operating profit in Q2 FY26 stood at Rs. 74 crore, compared with Rs. 48 crore in Q2 FY25, a strong 54 percent year-on-year growth. Compared to Rs. 79 crore in Q1 FY26, operating profit declined marginally by 6 percent QoQ, but margins remained healthy at around 14 percent.

VIP reported an operating loss of Rs. 106 crore in Q2 FY26, versus an operating loss of Rs. 2 crore in Q2 FY25. On a quarter-on-quarter basis, VIP moved from a profit of Rs. 25 crore in Q1 FY26 to a deep loss in Q2 FY26, with operating margins falling to –26 percent.

Net Profit

Safari posted a net profit of Rs. 47 crore in Q2 FY26, up from Rs. 30 crore in Q2 FY25, reflecting a 57 percent year-on-year growth. Compared to Rs. 50 crore in Q1 FY26, profit dipped slightly by 6 percent QoQ, but remained solidly positive.

VIP recorded a net loss of Rs. 143 crore in Q2 FY26, compared with a Rs. 33 crore loss in Q2 FY25, meaning losses widened sharply year-on-year. Losses also increased from Rs. 13 crore in Q1 FY26, indicating worsening financial stress.

Why Are the Financial Outcomes So Different?

Safari Industries profitability is inseparable from its promoter Sudhir Jatia. Since taking charge in 2011, Jatia transformed Safari from a struggling Rs. 50-crore company into a luggage major with a market capitalisation of over Rs. 10,600 crore. Revenue expanded 24 times from Rs. 70 crore to more than Rs. 1,700 crore, while market share rose sharply from 2 percent to 23.4 percent. This operational turnaround sets the foundation for why Safari continues to make money even as its larger rival VIP Industries slips into losses.

A Customer-First Model

One of the clearest examples of Jatia’s thinking is Safari’s replacement-over-repair policy. Instead of maintaining a costly after-sales repair network like competitors, Safari replaces damaged luggage within warranty. While this may appear expensive for a mass-market brand, it actually enforces strict quality discipline and avoids recurring repair costs. This philosophy has helped Safari protect brand trust while keeping operating expenses under control, a subtle but powerful driver of long-term profitability.

Inventory Management

Inventory discipline is one of the biggest differences between the two companies. In FY25, Safari operated with inventory days of 138 days, while VIP’s inventory days stood at around 222 days. Faster inventory turnover improves cash flow, reduces discounting risk, and boosts return on capital employed.

VIP’s high inventory has led to working-capital stress and margin pressure, especially when demand slowed. Safari’s lean inventory model has helped it stay profitable even in challenging periods.

Debt and Interest

Safari Industries has a much lower debt burden compared to VIP Industries, which helps protect its profitability. As of March 2025, Safari’s total borrowings are Rs. 125 crore, including Rs. 8 crore long-term debt, Rs. 12 crore short-term borrowings and Rs. 105 crore as lease liabilities. Because debt levels are low, Safari’s interest cost in FY24–25 was just Rs. 9 crore, which has a limited impact on profits.

VIP Industries, on the other hand, is far more leveraged. Its total borrowings stand at Rs. 751 crore as of March 2025, with Rs. 415 crore in short-term debt and Rs. 336 crore in lease liabilities. This higher debt resulted in a steep interest expense of Rs. 79 crore in FY24–25. The heavy interest burden puts pressure on VIP’s earnings and cash flows, especially when operating performance is weak.

Different Strategy

Instead of fighting VIP and Samsonite directly in the premium segment, Jatia focused on capturing the unorganised market. Consumers buying cheap luggage wanted better quality but had limited options. Safari solved this gap by offering value-for-money products with strong distribution. Jatia first fixed distribution, then design, and finally diversified into backpacks and school bags.

This step-by-step approach paid off. Today, backpacks contribute 23 percent of Safari’s sales, largely by taking share from unorganised players. VIP, despite having multiple brands, has not been able to match Safari’s momentum in this segment.

Execution Speed

Safari was an early mover in e-commerce and today generates over 30 percent of revenue online, significantly higher than peers. Product lines are kept separate for online and offline channels, allowing better pricing control and inventory efficiency. This execution speed and channel clarity have helped Safari maintain margins even during aggressive online discounting cycles.

Brands

Safari remains largely a single-brand company, with 92 percent of sales coming from the Safari brand. While VIP operates multiple brands, Safari’s simplicity allows sharper focus, fewer SKUs, and better scale efficiencies. Jatia’s hands-on leadership, trust in teams, and quick decision-making have helped the company avoid complexity-driven inefficiencies.

VIP’s losses can be attributed to higher costs, slower inventory movement and execution challenges, despite its strong leadership position in the market. Safari, while smaller in scale, has remained profitable due to better inventory discipline, stable margins and focused cost control. Having largely established itself in the mass-market segment, Safari is now cautiously entering premium categories such as Urban Jungle and Magnum, where margins are better, and investors appear confident in Sudhir Jatia’s ability to execute this transition over time.

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