VIP Industries, Safari Industries and the Dawn of the D2C Era | The Spotlight ft. Rahul Dani

ELI5 / TLDR

India’s luggage business used to be a two-horse race: VIP, the 1970s pioneer that built its own factories, and Samsonite, the foreign premium player. Then a former VIP executive bought a dying brand called Safari, ignored both giants, and went hunting for the customer who’d never owned a branded suitcase before. He won. Now a swarm of Instagram-native D2C brands is selling neon bags with phone chargers, funded by private equity cash, and the old guard is scrambling to defend a market it once owned outright.

The Full Story

This is a one-hour conversation between Krish Kothari and Rahul Dani of Monarch Networth Capital, walking through how three eras of the Indian luggage industry stack on top of each other. It’s a sector study disguised as a chat about suitcases.

VIP: the moat that became a millstone

VIP started in 1968 out of a plastics-moulding family business, and launched India’s first premium luggage in 1978 under Dilip Piramal. The whole strategy rested on one idea: make it yourself.

VIP has been one of the flag bearers of the luggage industry… the father of the luggage industry. His 15% CAGR profitability was largely there because of the entire idea of focusing on in-house manufacturing — which now has turned into his biggest weakness as well.

That sentence is the entire episode in miniature. In-house manufacturing gave VIP the best gross margins, the best inventory control, and the cash to hire celebrities — they spent ~4.5% of revenue on advertising when nobody else did. The masterstroke was Bangladesh: in 2011-13, riding free-trade agreements, VIP built plants there for soft luggage (the kind that needs stitching, so labour cost matters). Soft luggage grew to 60-70% of revenue and margins peaked at 18% around 2017.

Then the ground shifted under all of it. Three things broke VIP at once:

Demand flipped from soft to hard luggage. Hard luggage is poured into a mould — no labour advantage. VIP’s Bangladesh edge evaporated.
GST killed the unorganised market. Buyers who used to grab a cheap bag from a roadside stall (“Linking Road guys”) moved to organised, mass-market brands. But VIP had bet the future was premiumisation — it wasn’t ready for a flood of mass-segment demand.
VIP fumbled e-commerce. Roughly 60% of revenue came from general trade. Selling the same bag at half-price online would have enraged its dealers, so e-commerce stayed stuck at ~9% for years.

Add a revolving door of CEOs and you get a company that today does ~₹2,500 crore revenue, ~12% EBITDA margins, ~₹54 crore profit — and is openly rumoured to be for sale, most likely to a private equity buyer who can rebuild it whole. The current CEO, Neetu Kashiramka, is making the hard calls the others wouldn’t: cutting Bangladesh labour, pivoting to hard luggage, hiring marketers from FMCG “with no baggage.” The jury, Dani says, is still out.

Safari: the man who picked the easy enemy

The hero of the story is Sudip Jatia, who spent his VIP years (from ~2006) learning sourcing — China offices, Hong Kong, Bangladesh vendor networks. In 2011 he bought Safari, then a loss-making no. 2 with a 3-4% market share, and did the opposite of VIP on almost every axis.

I think what Sudip Jatia has done is phenomenal. I’m trying to figure out what the real secret sauce is.

Dani’s answer, when Kothari presses him, is disarmingly simple: Safari refused to fight the giants. VIP and Samsonite were busy clawing premium share off each other. Jatia walked past that brawl entirely and went after the unorganised market — the person buying a ₹1,000 bag for the first time.

The logic is almost mathematical. Premiumisation can’t happen until customers first move from unorganised to organised. So get them into a store, sell them a cheap branded Safari, and let India’s rising incomes do the upgrading later. A ₹1,000 bag also has a short, painless replacement cycle — you’ll happily swap it in two years; a ₹7,000 bag you grit your teeth and keep.

The other half of the secret sauce was channel. Where VIP froze, Safari leaned all the way into e-commerce.

No one thought you could sell luggage online — but this guy did it pretty well. The top sellers for the luggage industry would probably be Safari.

And Safari kept its manufacturing light and disciplined: build a plant only at ~80% utilisation, only for hard luggage (mould-based, capital-efficient — ₹50-60 crore of plant throws off ₹400-500 crore of revenue), never repeat VIP’s mistake of a giant labour-heavy soft-luggage operation. Soft luggage and premium bags get sourced from Bangladesh and China respectively, because Jatia knows exactly what India can’t make well. Result: one focused brand, ~30% share, the fastest-growing player in the country. Only later did he pivot upmarket with Urban Jungle and Safari Select, and into company-owned stores at airports — but cautiously, treating them as advertising, not as a profit engine.

The D2C wave: fashion, not utility

Then comes the third era. A pack of digital-native brands — Mokobara, Nasher Miles, Assembly, Uppercase — looked at luggage and saw something VIP and Safari never did:

There is a class of people who don’t look at luggage as luggage. They look at it as fashion. They want to stand out — the Gen Z, the millennials — they want to be that person with the neon bag at the airport.

These brands skip factories entirely. They design in India, source from one giant luggage-manufacturing city in China, sell purely online, and lean on Instagram aesthetics and PE funding. Mokobara (sub-₹200 crore revenue) reportedly turned down an acquisition offer, raised private equity, and is now expanding into offline stores, accessories, and quick commerce. Apparel brands — Tommy Hilfiger, US Polo — are bolting bags onto their lineups too.

Dani is candid about the catch. The supply chain is essentially identical for everyone, prices are broadly similar, so differentiation is mostly subjective design taste — a shaky long-term moat. Much of the growth is private-equity cash burn dressed as a business.

Do they actually make money, or is it all cash? It’s all cash. The moment the PE guy decides we’ve done what we had to do and need to start making money…

His prediction: two or three D2C brands survive, the rest “fly off.” For the next two-ish years, heavy discounting compresses everyone’s margins (revenue keeps growing on travel tailwinds; profit takes the hit). But five-to-six years out, the structure snaps back to an oligopoly — VIP, Safari, Samsonite, plus maybe one or two survivors. The reason is the wall every disruptor eventually hits: you can import from China only so long before you must manufacture in India, and that’s brutally hard. That’s where the new brands “shut up shop — we had a great journey, we got money from Shark Tank, but it’s not our cup of tea.”

Key Takeaways

VIP is the largest Indian luggage company by revenue (~₹2,500 cr) because it runs 5-6 brands; Safari is the largest single brand in unit sales.
VIP’s in-house manufacturing was its moat (best gross margins, 18% peak EBITDA ~2017) and became its trap when demand shifted from soft to hard luggage.
Hard luggage is mould-based and capital-light; soft luggage and backpacks are labour-intensive, which is why production migrated to Bangladesh and China.
GST was a bigger shock to luggage than the pandemic — it wiped out the unorganised market and pushed buyers toward organised mass-market brands.
VIP missed e-commerce (stuck ~9% for years) because cheaper online prices would have cannibalised its dominant general-trade dealer channel; now ~25% via e-comm after hiring BCG to fix it.
Safari’s strategy was to ignore VIP and Samsonite and convert first-time, unorganised-market buyers — the bottom of the pyramid — then pivot upmarket later.
Safari pioneered selling luggage online (top seller on Flipkart/Amazon) and keeps manufacturing disciplined: hard luggage only, plants built at ~80% utilisation.
Safari’s manufacturing is capital-efficient — roughly ₹50-60 cr of plant supports ₹400-500 cr of revenue (high asset turns).
D2C brands (Mokobara, Nasher Miles, Assembly, Uppercase) compete on fashion/design and colour, not durability; they source from China and sell online, no factories.
The luggage supply chain is near-identical across players, so cost structures and prices are broadly the same — differentiation is mostly design taste.
Most D2C growth is private-equity-funded cash burn; many have stopped heavy discounting, which signals the funding tap tightening.
VIP is a likely acquisition target, probably for private equity (to rework it whole) rather than a strategic buyer wanting only a brand or two; the Piramal family appears ready to exit.
Sector tailwinds are real: rising air-passenger traffic, more airports, Indians traveling more, and replacement cycles shortening from 10-15 years to 2-3 years.
Building a mass-market luggage brand from scratch is hard — it needs heavy spend on advertising, capacity, and dealer networks — so the mass segment is unlikely to be disrupted; new entrants cluster in premium/semi-premium instead.

Claude’s Take

This is a genuinely good sector primer, and it reads like exactly what it is: a sell-side analyst from Monarch Networth talking his book in measured tones. Worth flagging up front — the framing leans constructive on Safari (and implicitly on a VIP turnaround/takeover), and the “Monarch did channel checks” asides are part data, part marketing. Take the optimism with the usual grain of salt. There’s no hard valuation work here, no numbers on the D2C brands’ actual losses, and the cheerful “it’ll consolidate back to oligopoly” thesis is asserted more than argued.

What lifts it above the average finance podcast is the one clean idea at its centre: pick your competitor wisely. Safari’s whole rise comes from choosing the unorganised market as its opponent instead of the giants — the cleanest illustration of “don’t fight where the strong players are fighting” you’ll find in an Indian consumer context. The soft-vs-hard luggage and GST-as-bigger-than-Covid points are non-obvious and stick. The discussion of why incumbents can’t just spin up a pure-online brand (channel conflict, bandwidth) is also sharper than the usual hand-waving.

The weakness is the back third, where every answer becomes “tailwinds are huge, it’s a great space, few ups and downs.” When an analyst can’t find anything bearish to say about an entire sector, that’s the moment to sit up. The honest counter-question the episode never quite answers: if the supply chain, prices, and cost structures are identical for everyone, what exactly is the durable moat for anyone — including Safari? “First-mover in mass” and “good vendor relationships” are real but soft. Score: 7. Clear, well-structured, and genuinely educational on the industry mechanics; docked for the promotional tilt and the thin treatment of the disruptors’ actual economics.