Saraswati Saree Depot Limited
Company
| Website 🔗 |  |
| Business Activity | Trade |
| Division | Apparel |
| Sub-class | Women’s Ethnic Wear – Sarees |
| Location | Kolhapur, Maharashtra Ulhasnagar, Maharashtra |
| Establishment Year | 1966 |
Management
| Managing Director | Vinod Dulhani |
| Educational Qualifications | Higher secondary education from Maharashtra State Board |
| Experience | Over 27 years of experience in the apparel industry |
| Annual Salary | ₹ 50 Lakhs |
| Total Number of Employees | 314 |
About
Saraswati Saree Depot Limited is a prominent player in India’s wholesale saree market. Established in 1966 as a family-run partnership firm, the company specializes in the wholesale trading (B2B) of women’s ethnic wear, primarily focusing on sarees. The company has two physical stores in Kolhapur and Ulhasnagar, Maharashtra, which serve as key points of sale for its extensive product range.
Products and Services:
Core Product:
Sarees, categorized by occasion (casual, wedding, festive, party), fabric (silk, cotton, etc.), weave (Banarsi, Paithani, etc.), pattern (woven, printed, etc.), and ornamentation (zari, sequins, etc.).
Other Products:
Kurtis, dress materials, blouse pieces, lehengas, bottoms, and other women’s apparel accessories.
Services:
Wholesale distribution of women’s ethnic wear, with plans to expand into men’s ethnic wear and e-commerce.
Clients:
Retailers:
Small and large retail stores that sell sarees and other women’s apparel to end consumers.
Wholesalers:
Businesses that purchase products in bulk from Saraswati Saree Depot and further distribute them to smaller retailers.
Distributors:
Entities that facilitate the movement of products from the company to various retailers and wholesalers across different regions.
Work Processes:
Procurement:
The company sources its products from a vast network of over 900 weavers and suppliers across India, leveraging long-standing relationships to ensure quality and variety.
Inventory Management:
Saraswati Saree Depot employs robust inventory management systems to maintain optimal stock levels, ensuring they meet customer demand while minimizing holding costs.
Suppliers:
Weavers:
Over 900 weavers across India, supply a wide variety of sarees and other ethnic wear.
Distribution Network:
The company operates through two physical stores in Maharashtra, catering to a diverse customer base of retailers, wholesalers, and distributors. They also plan to expand their sales channels through e-commerce platforms.
Other Key Aspects:
Wholesale Focus:
The company operates exclusively in the B2B segment, selling its products to other businesses rather than directly to end consumers.
Market Presence:
Operates two stores in Maharashtra, catering to over 13,000 unique customers in Fiscal 2024.
Product Range:
Offers a vast catalogue of over 300,000 SKUs, primarily sarees categorized by occasion, fabric, weave, pattern, and ornamentation.
Business Process Flowchart
Revenue – Category
Revenue – Region
Audit and Legal
Auditor’s Remarks:
The auditors issued a qualified opinion on the company’s financial statements for FY 2022, 2023, and 2024. The qualification highlights a key concern:
- Lack of Detailed Stock Records:
The company did not maintain stock records providing quantitative details of the goods it dealt with during these years. As a result, the closing inventory value was determined based on physical counting and related procedures.
Related Party Transactions:
In Fiscal 2024, the total value of these related party transactions amounted to ₹1,096.48 million, representing 17.95% of the total revenue from operations for that period.
Non-Compliances and Other Issues:
The company and its director, Vinod Dulhani, have voluntarily filed adjudication applications with the Registrar of Companies (RoC) for various non-compliances under the Companies Act. These include:
- Commencing Business Before Filing e-Form INC-20A
- Errors in the List of Board Meetings in the Director’s Report
- Non-appointment of Internal Auditor
- Delayed Filing of Board Resolution for CFO Appointment
Contingent Liabilities:
Saraswati Saree Depot Limited have contingent liabilities related to penalties payable to the Registrar of Companies (ROC), amounting to ₹0.75 million.
Legal Cases:
SWOT Analysis
Strengths
| Established Market Presence: The company has a long history in the saree wholesale business, dating back to 1966. This legacy has allowed them to build strong relationships with suppliers and customers, fostering trust and loyalty. |
| Diverse Product Portfolio: With over 300,000 SKUs, the company offers a wide variety of sarees and other women’s apparel, catering to diverse customer preferences and reducing reliance on a single product category. |
| Bulk Buying Capabilities: The ability to purchase in bulk allows the company to negotiate better prices with suppliers, optimize costs, and mitigate supply chain risks. |
Weaknesses
| Wholesale Focus: Operating exclusively in the wholesale segment limits the company’s direct interaction with end consumers, potentially hindering brand building and responsiveness to market trends. |
| Dependence on Third-Party Manufacturers: The company relies entirely on external weavers and suppliers for its products, exposing it to risks related to quality control, supply chain disruptions, and potential conflicts of interest. |
| Geographic Concentration: A significant portion of the company’s sales is concentrated in the western zone of India, making it vulnerable to regional economic fluctuations or disruptions. |
Opportunities
| E-commerce Expansion: The growing e-commerce trend in India presents an opportunity for the company to expand its sales channels and reach a wider customer base. |
| Men’s Ethnic Wear Market: Entering the men’s ethnic wear segment could open up a new revenue stream and capitalize on the growing demand for traditional attire. |
| Organized Retail Growth: The increasing shift towards organized retail in the saree market presents an opportunity for the company to expand its market share and brand presence. |
Threats
| Competition: The apparel industry, including the saree market, is highly competitive, with both organized and unorganized players vying for market share. |
| Economic Conditions: Economic downturns or fluctuations in consumer spending could adversely affect the company’s sales and profitability. |
| Shifting Consumer Preferences: Changing fashion trends and preferences could impact the demand for sarees and other ethnic wear. |
Porter’s Five Forces1
| Threat of New Entrants | MODERATE – HIGH |
| The saree industry, particularly the unorganized segment, has a low barrier to entry. This means new players can enter the market relatively easily, increasing competition. However, establishing a strong brand presence and distribution network takes time and resources, which could pose a challenge for new entrants. The entry of large organized players like Taneria, Navyasa, and Avantra could also increase the barriers to entry for smaller players. |
| Bargaining Power of Suppliers | LOW – MODERATE |
| The company sources its products from over 900 weavers and suppliers. This suggests a relatively low bargaining power of suppliers, as the company has a diversified supplier base and can switch between suppliers if needed. However, the reliance on third-party manufacturers for all its products could create some dependence on key suppliers, potentially increasing their bargaining power. |
| Bargaining Power of Buyers | MODERATE |
| The company operates in the wholesale market, selling to retailers, wholesalers, and distributors. These buyers likely have moderate bargaining power due to the availability of alternative suppliers and the fragmented nature of the saree industry. |
| Threat of Substitute Products or Services | LOW – MODERATE |
| While there are other forms of women’s ethnic wear like kurtis and salwar kameez, sarees hold a unique cultural and traditional significance in India. |
| Rivalry Among Existing Competitors | HIGH |
| The saree industry is highly fragmented and competitive, with numerous organized and unorganized players. This leads to intense rivalry, with competition based on pricing, product variety, quality, and brand reputation. The entry of large organized players has further intensified competition in the market. |
Peer Comparison
The company’s performance on various financial and operational metrics compared to Sai Silks (Kalamandir) Limited for FY 2024 is as follows:
| Metric | Saraswati Saree Depot Limited | Sai Silks (Kalamandir) Limited |
| Revenue from Operations (₹ in millions) | 6,109.04 | 13,735.50 |
| EBITDA Margin (%) | 6.73% | 15.43% |
| PAT Margin (%) | 4.83% | 7.34% |
| Return on Equity (ROE) (%) | 58.88% | 9.49% |
| Return on Capital Employed (ROCE) (%) | 64.46% | 14.46% |
| Interest Coverage Ratio | 16.95 | 3.55 |
| Debt to Equity Ratio | 0.67 | 0.45 |
Green Box
IPO Funds:
Funding Working Capital Requirements:
The company aims to raise a significant portion of the proceeds to bolster its working capital. This will be used to support the day-to-day operations of the business, including purchasing inventory, managing operational expenses, and handling trade receivables. The wholesale nature of the business necessitates a robust working capital to ensure smooth operations and facilitate growth.
Bulk Buying Capabilities:
The company’s focus on bulk purchasing allows it to optimize costs, negotiate better prices with suppliers, and mitigate supply chain risks.
Experienced Management Team:
The company’s promoters and management team bring decades of experience in the apparel industry, providing valuable insights and strategic direction.
E-commerce Expansion:
Saraswati Saree Depot intends to capitalize on the growing e-commerce trend by strengthening its online sales channels. This would involve investing in digital platforms and building an omnichannel presence to reach both B2B and B2C customers.
Strengthen Inventory Management:
By focusing on continuous review, replenishment, and product innovation, the company aims to enhance sales and profitability by offering a fresh and appealing selection to its customers.
Industry Outlook:
The saree industry in India is projected to expand at a CAGR of 5-6% from FY2024 to FY2029
Amber Box
Seasonality:
The business is subject to seasonal demand patterns, which can lead to fluctuations in revenue and challenges in inventory management. Festive Season (September – November) (37%), Wedding Season (March to May) (26%) and the remaining 6-month period (37%) roughly generate equal amounts of revenue for the company.
Annual “Utsav” Event:
The company hosts an annual promotional event called “Utsav” before Diwali, showcasing exclusive collections and offering significant discounts. This event has become a cornerstone of their marketing efforts, driving high customer engagement and contributing significantly to annual sales.
Red Box
Negative Cash Flows:
The company experienced negative cash flows from operating activities in fiscal 2024 and 2022. While this improved in 2023, it indicates potential challenges in generating sufficient cash from core operations to sustain the business and fund growth.
Dependence on a Single Product Category:
The company’s business is heavily reliant on the sale of sarees, which account for over 90% of its revenue. Any shift in consumer preferences could significantly impact the company’s financial performance.
Low-Profit Margins:
The company operates in a high-volume, low-margin business model. This makes it susceptible to any sudden changes in the market or increases in costs, which could significantly impact its bottom line.
Images
- The force value of “LOW” is considered good Click Porter’s Five Forces article for more information. ↩︎
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