Rupa is one of the leading knitwear brands in India. Rupa has daily capacity to produce 7,00,000 pieces of finished goods. In 2017 it has acquired license from French connection ltd to develop, manufacture and sell the innerwear and related products under brand name FCUK. It has also entered into license agreement with fruit of the loom a wholly owned subsidiary of Berkshire Hathaway. Rupa not only manufactures innerwear but it also manufacturers casual wear for kids, men, women, it manufacturers great range of ladies clothes like leggings, t-shirts, palazzo, kurti, pant. It also produces classic winter hoodies for men and all types of thermal wear for kids, men and women.
Eight Rupa products are manufactured every year. Rupa’s products are available through network of 1,500+ dealers who have direct reach across 1,50,000 retail outlets. Products are also available at 20 Executive brand outlets and 150+ modern retail stores. The modern retail stores include reliance retail, Walmart, Dmart, pantaloons, Lifestyle, Sobo Central. In future company plans to increase its sales by selling products to 300 modern retail stores. These will include Lulu, Sarvana, Chennai silks, pothy’s.
SECTOR STUDY:
INNERWEAR:
Indian innerwear was earlier taken into consideration as essential commodity but from last 3-4 years it is taken as into fashion statement.
Indian Inner Wear Market (Figures in Rs Billion):
| Year | Market Size |
| 2020 | 475 |
| 2025 | 876 |
Indian Innerwear market was valued at Rs 475 billion in 2020 and is expected to reach Rs 876 billion by 2025 growing at a CAGR of 12%. The innerwear market is dominated by a large number of small scale players, making 60-65% of the market unorganized. However, the market is evolving gradually and moving towards organized retail. The premium innerwear market in India has been experiencing the increasing entry of global brands, mostly through partnerships and tie-ups with home grown brands.
Classification Of Innerwear sector by Gender:
| Gender | Percentage |
| Male | 32 |
| Female | 68 |
Classification Of Inner Wear Sector by different Price segments:
| Price Segment | Percentage |
| Affordable segment (less than Rs 65 per piece) | 30 |
| Economy Segment (per piece price between 65-130) | 21 |
| Semi Premium Segment (per piece price between Rs130-275) | 25 |
| Premium Segment (Per piece Price between Rs 275-650) | 15 |
| Semi Luxury Segment (Per piece price between Rs 650-1300) | 6 |
| Luxury Segment (Per piece price more than Rs 1300) | 3 |
Indian Men’s Inner wear market (Figures in Rs billion):
| Year | Market Size |
| 2020 | 139 |
| 2025 | 226 |
Men’s innerwear market was valued at Rs 139 billion in 2020 and is expected to reach Rs 226 billion by 2025 growing at a CAGR of 10%. Inner wear market is classified into five product categories: low economy, mid-market, premium, and super premium. The Rs 6.5 billion super premium category grew by 26% and the Rs 18 billion premium segment by 22% whereas the Rs 47 billion medium category, retailing at an average Rs 250 a piece, grew by 17%. There are more than 1 lakh multi brand outlets across India, which accounts for over 60% of the total sales of innerwear, while the rest take place through modern trade formats like malls or online portals.
Product categories in men’s innerwear include briefs, trunks, vests, boxer shorts etc. The market has historically been highly fragmented and unorganized. Even today is dominated by numerous small scale players that caters to 60-65% of the total demand. So we can see a huge shift from unorganized to organized in coming years. Men’s innerwear segment has product offerings ranging from Rs 60 a piece to Rs 300 a piece. Average selling price in the premium segment have increased from Rs 166 per piece in 2009 to Rs 650 per piece in 2021. Average selling price in the semi luxury segment have increased to Rs 1,300 per piece and average selling price in luxury segment have increased to more than Rs 1,300 a piece.
Companies Catering In different price segment:
| Price Segment | Companies |
| Economy (Per piece price between Rs 65-130) | Rupa, Lux, Dollar, Amul Macho |
| Semi Premium or Medium (Per piece price between Rs 130-275) | Rupa, Lux, VIP, Amul Macho, U.S Polo, Page Industries, Dixy Scott, Fruit of the loom (Rupa brand), Van Huesun |
| Premium Segment (Per piece Price between Rs 276-650) | FCUK (Rupa Brand), Fruit Of the Loom (Rupa Brand), Page Industries, Tommy Hilfiger, U.S Polo, Van Huesun, |
| Luxury Segment ( Per piece price between Rs 650-1300) | FCUK (Brand of Rupa), Calvin Klein, Tommy Hilfiger. |
Rupa is the only Indian innerwear company which caters to all price segments of Men’s innerwear segment. Indian consumer spends on innerwear products is significantly lower than other Asian peers. This is visible across both men’s and women’s segment with gaps of over 90% against countries like China and Thailand. This shows there is huge opportunity for growth, driven by rising per capita spend on innerwear segment.
Women’s innerwear segment (Figures in Rs Million):
| Year | Market Size |
| 2020 | 321 |
| 2025 | 621 |
Women’s innerwear segment was valued at Rs 321 billion in 2020 and is expected to reach Rs 621 billion by 2025 growing at a CAGR of 14%. Indian innerwear market is primarily dominated by women’s innerwear which accounts for 68% of the total innerwear market and accounts for 15% of the women’s apparel market. Branded innerwear contributes 38-42% of the women’s innerwear market and this share is expected to grow to 45-50% by 2023. Product categories in women’s innerwear include brassieres, camisoles, tees, nighties, panties, shorts etc. brassieres and panties contributes 85% of the total women’s innerwear segment. All price segments contributed to growth, leaders were medium, premium and super premium categories. While this can be broadly attributed to the advent of multinational brands in market place and the growth of the organized retail. Other factors like growing number of working women, change in fashion trends, increasing awareness about better fits, colours, quality, brands, increasing per capita income, rising level of information and media exposure have also given the industry a new dimension. The trend is not just restricted to metros but can be witnessed spreading in Tier II, III and IV cities.
In women’s Innerwear the affordable range of innerwear is Rs 60-150, the economy range is Rs 100-250, the premium range us Rs 250-Rs 400 and luxury range is from Rs 400-Rs 3,000. Women Innerwear market is expected to reach about 71% of the total innerwear market by 2025.
Kids wear Segment:
Kids wear segment was valued at around Rs 1,022 billion in 2020 and is expected to reach Rs 1,440 billion by 2025. India has world’s largest youngest population in the age group of 0-14 years which accounts for 27% of total Indian population. This shows huge opportunity for kids wear segment. Indian kids wear segment is highly unorganized. So unorganized to organized will play well in this.
Human Behaviour in Shopping innerwear:
| Behaviour | Percentage |
| Shopping more than 3-4 times a year | 53 |
| Shopping 2-3 a year | 11 |
| Shopping just once a year | 36 |
| Behaviour | Percentage |
| Buying More than 3-4 pairs in single purchase | 66 |
| Buying 2-3 pairs in single purchase | 12 |
| Buying just 1 pair | 22 |
GROWTH DRIVERS FOR INNERWEAR SECTOR:
1)Indian middle class consumer: Moving up the ladder India accounts for 3% of the global middle class with 65 million households. The consumer population belonging to middle and upper class is expected to grow at 8% to reach 140 million households by 2026. Now a days the lower class is moving towards the middle class and in future the present middle class will shift to the status of upper middle class, this shift is because of the economic growth, increasing disposable incomes, dual income households etc. This has brought remarkable changes in the style of people. They have more income to spare, becoming more brand conscious and opting for better products and services.
2) Changing from need driven to aspiration driven:
Buying with the changing social dynamics and buying powers, people are becoming conscious of brands in intimate apparels too. While the still shop with mom and pop stores, they have also started exploring newer avenues like brand EBOs, LFS and online platforms. This shift in this sector can be attributed to aggressive marketing techniques of innerwear brands targeted at the aspiring and open minded young middle population. With increasing disposal incomes, they have shifted from need based shopping to splurging on styles.
3) Increasing Urbanization:
There will be an increasing trend of urbanization, a peaking of the population in the working age group, a large share of this population will be employed in the services sector. About 34% of India’s population is urban, 400 million more are expected to become urban dwellers by 2050. By 2030, the proportion of India’s urban population is expected to increase to 40% even as the population becomes larger. This urbanization pace is rapidly creating a segment pool of Indian that display migrant tendencies and are without baggage of habits.
4) Growing Fashion Consciousness:
With the rise in disposable income and sophistication of digital and other media, consumer are becoming more aware, fashion conscious demanding under varieties and designs. There is a trend towards barnd loyalty, where style and design are among the top three consideration for customers.
5) Premiumisation focus:
The Indian innerwear market was once highly price sensitive and people spent on innerwear cautiously. However, the market has changed and is witnessing the advent of premium innerwear brands along with the entry of global brands.
6) Shift from unorganized to organized segment, especially with the unorganized players being weakened by the pandemic and thus also having limited advertising and marketing power.
7) Transition to branded innerwear products and on the back of greater awareness creation by the organized players and consumer choosing these products for enhanced comfort.
8) Rising disposable incomes, thus driving discretionary purchases for consumer to try out new products that innovate around styles, designs and materials.
9) Multiple channels of easy product availability, including EBOs, MBOs and online that provide the added convenience of home delivery.
10) Growing power of digital influencer and their large fan following will also emerge as a major driver of influencing innerwear demand.
ATHLEISURE WEAR:
Industry players constantly looking for new revenue stream or product segmentation where they can generate higher realization than the regular innerwear. Fortunately new trend emerges in the industry where players are focusing on outwear like track pants, shorts, T-shirts and most importantly athleisure wear, which will give them a higher margin on select products. India’s athleisure market is growing at 18-20% and current market size is around Rs 540 billion. Of this, the men’s wear segment accounted for 8-10% growth and the women’s and children’s segment 11-15%. This trend of athleisure, majorly driven by millennials is expected to expand reach beyond urban India to Tier II, III and IV regions. About 30% of athleisure wear is sold online at present. India accounts for only 2% of total global athleisure market.
GROWTH FACTORS OF ATHLEISURE WEAR:
1)A key factor that has led to the increase in demand of athleisure can be contributed to the growing health consciousness among Indians. Activities like aerobics, swimming, running, yoga various dance have now become a part of average Indian’s life. There is rise in health and wellness expenditure among Indian consumers which has contributed to the segment’s growth and athleisure fits the bill since it is a combination of trendy sportswear and relaxed apparel
2) people these days look out for sustainable products rather than specific one dimensional products. Gone are those days where formal, casual and sportswear used to fall under different segments. Now a days one product is thought to be perfect or adaptable under all situation. The current consumption of athleisure is an epitome of the how people look or want their clothing to be. Athleisure wear is perfect for millenials who are always looking for an option that fills gap between sportwear and trendy clothes, helping them switch effortlessly between work and workout. Mixing active wear or athleisure wear with ready to wear is the new norm today.
BIGGEST CONSUMPTION OF INNERWEAR AND ATHLEISURE WEAR WILL COME FROM TIER II, III AND IV CITIES OR RURAL AREAS:
Real wealth generation and expansion of business will take place in tier II, III, IV cities and smaller towns. Internet penetration in smaller cities and towns have helped a lot to transform smaller cities and towns economically. People of smaller cities and towns are getting aware of everything. Older generation of smaller cities and towns were not educated due to financial problems and not aware about importance of education. But now older generations are compromising on themselves to educate their new generations. This new generations are nothing but millennilas. Education and internet penetration have made them aware of everything like brands, technology etc. They will be real consuming power of India. India will have youngest population by 2030 in world by half of India’s population below age of 30. And the best part of it is it that majority of them will ne educated and aware of everything. Means half of India’s population will be educated. I may not be surprised to see smart villages in India. All this will lead to increase in consumption of innerwear and athleisure wear.
Retail sales in tier I cities are declining by 8% but sales in Tier II, III and IV cities are increasing by 10%. Share of luxury retail in Tier II, III and IV cities grew from around 9% in 2013 to 60% in 2021. This clearly shows consumer behavior in Tier II, III and IV cities is changing.
Active Internet Users in Urban Area (Figures in million);
| Year | Active Internet User | % of total Urban Population using Internet | Growth (%) |
| 2017 | 250 | 55 | 15 |
| 2018 | 280 | 61 | 12 |
| 2019 | 309 | 66 | 10 |
| 2020 | 323 | 67 | 4 |
Total Urban Population: 485 million
Active Internet Users in Rural Area (Figure in Million)
| Year | Active Internet User | % of total rural Population Using Internet | Growth (%) |
| 2017 | 134 | 30 | 30 |
| 2018 | 182 | 20 | 13 |
| 2019 | 264 | 28 | 45 |
| 2020 | 299 | 31 | 13 |
Total Rural India population :949 million
Segment wise usage of Internet in Urban India:
| Segment | Usage (%) |
| Entertainment | 96 |
| Communication | 92 |
| Social Media | 84 |
| Net Commerce | 59 |
| Online Shopping | 43 |
Segment Wise Usage of Internet in Rural India:
| Segment | Usage (%) |
| Entertainment | 96 |
| Communication | 87 |
| Social Media | 79 |
| Net commerce | 30 |
| Online shopping | 13 |
Active internet users in India is expected to increase by 45% by 2025 to touch 900 million from around 622 million. Increase in internet users will be driven by higher internet adoption in Rural India which has clocked 13% growth to 299 million internet users or 31% of India’s rural population. By 2025 there will be more internet users in Rural India than in Urban India. Total urban population is 485 million out of this 323 million uses internet. And total rural population is 949 million. Out of this only 299 million uses internet. This shows there is wide space left which give opportunity for companies to grow in Tier II, III, IV and rural India. 43% of urban population uses internet for online shopping. And only 13% of Rural population uses internet for online shopping. This shows that rural India has wide space for growth in terms of retail consumption. The number of users in Rural and small towns will not remain low through out life, in fact they will go on increasing because of increase in income and modernization. As the number of internet users in rural India will go on increasing the brand awareness in smaller towns and Rural areas will also go on increasing. This is the main reason why big brands, malls and all are focusing on smaller towns and rural areas of India. Because next retail growth or growth of consumption will come from smaller cities, towns and rural areas of India.
Online players says around 90% of new customers are from Tier II cities or below Tier II cities. Real consumption of India will come from Tier II, III, IV and rural areas because they are highly low penetrated places. Consumer behavior in smaller cities and towns is changing. They are like instead of buying unbranded products which are not good in quality it is better to pay little more and buy branded products which has good quality.
India will have 1 billion smartphones by 2026 with rural areas driving the sales of smartphones. The growth of smartphones in rural areas will grow at a CAGR of 6% compared to 2.5% in urban areas. Just imagine the brand awareness in rural areas by 2026. This will led to increase in consumption in smaller cities and towns. India’s online shopper base to be the second highest largest globally by 2030, with nearly 500-600 million shoppers. By 2030 Tier II, III, IV and smaller towns will contribute 88% of new online shoppers and $150 billion in cumulative internet incremental online retail GMV.
RETAIL INDUSTRY:
Indian Retail Market (Figure in U.S $ Billion) :
| Year | Market Size |
| 2019 | 779 |
| 2020 | 705 |
| 2026 | 1407 |
| 2030 | 1884 |
Indian retail market is expected to grow from $705 billion in 2020 to $1884 billion in 2030. Out of this, lifestyle segment contributes only 15% of total Indian retail market.
Category Wise Break Up of Total Retail Market (Figures in %):
| Segment | Market Contribution |
| Food & Grocery | 68 |
| Lifestyle | 15 |
| Electronics | 5 |
| Others | 12 |
E-retail Shopper (Figures in Million):
| Country | Shoppers |
| China | 702 |
| U.S | 211 |
| India | 160 |
| Japan | 85 |
| Brazil | 76 |
Online penetration of retail is expected to reach 10.7% by 2024 versus 4.7% in 2020.
GROWTH DRIVERS FOR RETAIL SALE IN INDIA:
1)Growing Consumption: India’s consumption expenditure will reach to $6 trillion by 2030.
2) Growth of rural consumption and breakdown of Urban-rural paradigm: By 2030 rural per capita consumption will grow 4.3 times. In Urban India it will grow 3.5 times.
3) Attitude shifts: By 2030, 370 million generation customers, between ages of 0-25 will have grown up in India with internet, smartphones and digital media.
4) Growing Digital Influence: Digital Influence spending is currently between $45-50 billion a year and is projected to reach $550 billion by 2025. This will account for 30-35% of all retail sales.
5) Huge middle income population: By 2030, middle income and high income households will drive nearly $4 trillion of incremental spend.
Total Households As Per Income Brackets (In Millions) (As Per Indian Rupees,)
| Particulars | 2018 | 2024 |
| Rs 90,000 (Deprived) | 66.5 | 54.5 |
| Rs 90,000 to 2,00,000 (Aspirers) | 102 | 96 |
| Rs 2,00,000 to 10,00,000 (Middle Class) | 79 | 121.5 |
6) Young Working age majority: With median age of 31 by 2030 Vs 42 in China, 40 in the U.S, India will remain one of the youngest nation in the world.
7) One billion diverse internet users: By 2030, access to the internet will extend to about 1.1 billion Indians and 9 out of 10 Indians over the age of 15 years will be online.
8) Huge number of Millennial population: By 2030, India will have nearly 90 million new households headed by millennials.
9) Social Media: There were 448 million social media users in India in 2021. The number of social media users in India increased by 78 million between 2020-2021. The number of social media users in India was equivalent to 32.3% of total population in 2021. Many apparel brands has started giving ads on instagram to create awareness about their brands. India has total 140 million instagram users. Social media creates brand awareness among customers.
All this shows India is changing from utilitarian economy to consumption economy
DETAIL AND EXPANSION STRATEGIES OF RUPA:
1) 7,00,000+ Finished goods pieces per day, 1,50,000+ Retail Outlets,
9,000 SKUs, 1,500+ dealers, 100+ registration of trademark’s both nationally and internationally, 18 sub brands, 3 tons/day Yarn Dyeing, 25 tons/day Fabric Dyeing.
2) Region-wise Revenue split (Figures in %):
| Region | Revenue Contribution |
| East | 40 |
| North East | 2 |
| North | 25 |
| West & Central | 19 |
| South | 8 |
| Overseas | 6 |
3) Gender-wise Revenue split (Figures in %):
| Gender | Revenue Contribution |
| Men | 86 |
| Women | 10 |
| Kids | 4 |
4) Brand Development Cost (Figures in Rs Crore):
| Year | Cost |
| 2018 | 86 |
| 2019 | 82 |
| 2020 | 71 |
| 2021 | 53 |
| 2022 | 62 |
| Q1 FY23 | 20 |
5) Rupa plans to increase its export revenue five times to Rs 165 Cr from Rs 33 Cr at present.
6) Rupa currently has 20 executive brand outlets. Company plans to create mid size franchise stores. Company will establish this franchisee stores in 50 cities of India. Company will add 50+ such franchisee stores in FY23 and will open 150+ executive brand outlets through out India in next 2-3 years.
7) Re-organising the distribution channel:
Earlier company use to sell through wholesaler, semi wholesaler and retailers. Now company will sell direct to distributor and then distributors will sell direct to retailers. Due to re-organising the distribution channel company faced poor results in last quarter since company was changing its whole distribution structure.
Advantages of re-organising the distribution channel:
Better control on prices with well-defined margins for distributors and retailers.
Better inventory management with mapping of primary and secondary sales.
Improving inventory turnover with support to distributors and direct interaction with retailers.
Increase sales through increasing presence and availability at retail counters of all the SKUs.
8) To launch Rupa in the global online market of UAE via Amazon. Brand launch on e-commerce b2b through Ajio
FINANCIALS:
| 2018 | 2019 | 2020 | 2021 | 2022 | |
| Revenue (Rs Cr) | 1,156 | 1,154 | 974 | 1,312 | 1,474 |
| Net Profit (Rs Cr) | 86 | 74 | 61 | 175 | 191 |
| EPS | 10.84 | 9.33 | 7.78 | 22.04 | 24.12 |
| ROE | 17.27 | 13.61 | 10.71 | 24.02 | 21.75 |
| Debt To Equity | 0.23 | 0.38 | 0.30 | 0.19 | 0.40 |
The report on RUPA AND COMPANY was made on 26th September, 2022 at CMP of Rs 330.25.