Sailani Tours N Travels coming with an IPO to raise upto Rs 1.90 crore

Sailani Tours N Travels

• Sailani Tours N Travels is coming out with an initial public offering (IPO) of  12,64,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 15 per equity share.
  
• The issue will open on June 27, 2022 and will close on June 30, 2022.
  
• The shares will be listed on SME Platform of BSE.
  
• The share is priced 1.5 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is Gretex Corporate Services.
  
• Compliance Officer for the issue is Purvi Agarwal. 
  

Profile of the company

Sailani has evolved through its 3 years journey and started to make a name for its self in travel industry and is one of the recognised holiday brands that cater to the overall travel needs of an Indian and International traveller in the state of Kolkata. The company’s business can be broadly categorised as Leisure Travel, Corporate Travel, Forex and Visa Processing. It designs travel packages for both individuals and groups for their domestic and international leisure travel. It make travel arrangements for corporate clients to cater to their business meetings, conferences, events and as an incentive for their employees and business partners. It provide end to end travel solutions including land, air and cruise bookings, hotel bookings, in-transit arrangements, local sightseeing, visa, passport and medical insurance assistance and such other destination management services. Besides, it provide travel related foreign exchange & payment solutions.

Within Leisure Travel the company has 2 sub-segments i.e., Outbound Travel and Domestic Travel. Its Domestic and Outbound Travel businesses include selling holiday packages for travel in India and overseas respectively. Under Corporate Travel it offer a full range of business travel services through a team of dedicated relationship managers. It offer customized business travel solutions for corporate clients with an endeavour to optimize their travel budget.

Proceed is being used for:

• Meeting working capital requirements.
  
• General corporate purposes.
  

Industry overview

The Indian tourism and hospitality industry have emerged as one of the key drivers of growth among the services sector in India. Tourism in India has significant potential considering the rich cultural and historical heritage, variety in ecology, terrains and places of natural beauty spread across the country. Tourism is an important source of foreign exchange in India similar to many other countries. The foreign exchange earnings from 2016 to 2019 grew at a CAGR of 7% but dipped in 2020 due to the COVID-19 pandemic. In FY20, tourism sector in India accounted for 39 million jobs, which was 8% of the total employment in the country. By 2029, it is expected to account for about 53 million jobs. According to WTTC, India ranked 10th among 185 countries in terms of travel & tourism’s total contribution to GDP in 2019. During 2019, contribution of travel & tourism to GDP was 6.8% of the total economy Rs 13,68,100 crore ($194.30 billion).

India is the most digitally advanced traveler nation in terms of digital tools being used for planning, booking, and experiencing a journey. India’s rising middle class and increasing disposable income has supported the growth of domestic and outbound tourism. By 2028, Indian tourism and hospitality is expected to earn $50.9 billion as visitor exports compared with $28.9 billion in 2018.The travel market in India is projected to reach $125 billion by FY27 from an estimated $75 billion in FY20.The Indian airline travel market was estimated at $20 billion and is projected to double in size by FY27 due to improving airport infrastructure and growing access to passports. The Indian hotel market including domestic, inbound and outbound was estimated at $32 billion in FY20 and is expected to reach $52 billion by FY27, driven by the surging demand from travelers and sustained efforts of travel agents to boost the market. India was globally the third largest in terms of investment in travel and tourism with an inflow of $45.7 billion in 2018, accounting for 5.9% of the total investment in the country. The hotel & tourism sector received cumulative FDI inflow of $15.89 billion between April 2000 and June 2021. Indian government has estimated that India would emerge with a market size of 1.2 million cruise visitors by 2030-31.

Pros and strengths

Skilled and quality staff: The company operates in service industry wherein the biggest asset of the Company is the quality of its human resources. It attach great importance to its well-knit motivated team of committed people. They provide the customer interface and are always aligned to the customers’ requirements, which reflect the company's standards of service quality. It has built a team of experienced, skilled and efficient personnel having in depth knowledge of the business and unspoken passion to promote products. They are important components in contributing to the productivity of its business. It utilize a competitive compensation structure for its managerial personnel and staff, and this structure helps it attract and retain its managerial personnel. It has dedicated and experienced management teams for the execution of special assignments, as well as for human resources, operations, quality management, and its international business. It also have regular training programs for its staff and management personnel.

Product spectrum: The company’s wide choice of product offerings caters to all the travel needs of an Indian and International traveller. It provide a ‘One Stop Shop’ for all the travel requirements from visa to ticketing, to holidays, to insurance, to foreign exchange, under one roof. This cross selling of products facilitates its customers, thereby, making it its unique selling proposition. Besides, its constant innovation in its product offering and flexibility to meet the ever-changing needs of its customers, are some of the key differentiating value propositions that has enabled it to grow the sale of its holiday packages. It has helped it to differentiate its products vis-a-vis the products offered by its competitors.

Technology infrastructure: The company deploy efficient information technology platforms in the Indian Travel Industry. It has developed a totally integrated front, mid and back-office solution on its website. Its website enables centralized dynamic packaging system, covering all travel related services - air tickets, hotel reservations, car rentals, cruises, rail bookings, package tours and holidays, enables individual, corporate client to include all products and services which they want on a real time basis. Its website is designed to analyze customer needs for better servicing and ensure repeat business for it. It generates reports identifying areas of opportunity and thereby helps it in customizing to improve the efficiency of its products. On the front end, it also has a round the clock number dedicated with right technology & infrastructure and manned with well informed and efficient executives to address to the customer requirements including complaints if any.

Risks and concerns

Face competition: The Indian travel market is intensely competitive. Its success depends upon its ability to compete effectively against numerous established and emerging competitors, including other online travel agencies, traditional offline travel companies, travel research companies, both in India and outside India. Factors affecting its competitive success include, among other things, price, availability and variety of travel services and products, brand recognition, customer service including ease of use and accessibility, customer loyalty, reliability of products and services, fees charged to customers and technology. Some of its competitors may have significantly greater financial, marketing, more experienced management and other resources than it and certain of its competitors have a longer history of established businesses and reputations in the Indian travel market as compared to it due to which they may offer more services and facilities at similar or competitive prices. In addition, entry of global online travel agencies in India could also alter the competitive landscape of the industry in the future.

Limited experience: The company has launched its hotels and holiday packages segment for India and international locations in 2019 and its ability to effectively compete in the hotels and holiday packages business depends significantly on its ability to contract with hotels in advance for guaranteed availability of hotel rooms. It also rely on hotel suppliers to provide it with rooms at discounted prices. However, its contracts with hotel suppliers are mostly non-exclusive and short-term. There can be no assurance that its hotel suppliers will renew contracts with it in the future or not demand more favorable terms than those it has previously agreed or at all, including reducing commission rates on bookings made through it. In order to maintain and grow its business and to effectively compete with its competitors in potential markets, it will need to establish new arrangements with hotels and other accommodation options of all ratings and categories in its existing markets and in new markets. There can be no assurance that it will enjoy the same brand recognition as in its other more established businesses or be able to identify appropriate hotels or build successful relationships with these service providers on favorable terms, or at all.

Require additional capital from time to time: The company may require additional capital from time to time depending on its business needs. Any fresh issue of shares or convertible securities would dilute the shareholding of the existing shareholders and such issuance may be done on terms and conditions, which may not be favorable to the then existing shareholders. If such funds are raised in the form of loans or debt, then it may substantially increase its interest burden and decrease its cash flows, thus prejudicially affecting its profitability and ability to pay dividends to its shareholders.

Outlook

Sailani Tours N Travels is engaged in offering Tourism and Hospitality services. The company is a travel agency and offers services like Leisure Travel, Corporate Travel, Forex and Visa Processing. It designs travel packages for both individuals and groups for their domestic and international leisure travel. The company make travel arrangements for corporate clients to cater to their business meetings, conferences, and events. It continuously innovate its product and services offerings with the flexibility to meet the changing needs of its customers and to address their needs better. This also helps it to differentiate its products vis–a–vis the products offered by its competitors. It has set team of motivated and experienced staff in sales, operations and other departments to meet the quality and service expectations of its customers. On the concern side, the market in which the company is doing business is highly competitive on account of both the organized and unorganized players. Players in this industry generally compete with each other on key attributes such as technical competence, distribution network, pricing and timely delivery. It require several approvals, licenses, registrations and permits in ordinary course of its business. Additionally, it need to apply for renewal of approvals which expire, from time to time, as and when required in the ordinary course.

The company is coming out with a maiden IPO of 12,64,000 equity shares of Rs 10 each at a fixed price of Rs 15 per share to mobilize around Rs 1.90 crore. On performance front, the company’s total revenue decreased by Rs 316.75 lakh or 73.78% to Rs 112.56 lakh for the financial year 2020- 21 from Rs 429.31 lakh for the financial year 2019-20. The company’s profit after tax increased by 41.74% to Rs 3.14 lakh for the financial year 2020-21 from Rs 5.39 lakh for the financial year 2019-20, reflecting a net decrease of Rs 2.25 lakh. Meanwhile, the company intends to focus on use of targeted marketing initiatives such as digital and print advertisements, as well as marketing through traditional channels such as outdoor advertising. Its marketing and advertising initiatives shall be directed to increase brand awareness, acquire new customers, drive customer traffic across its retail channels and strengthen brand recall value. It also intend to invest adequate time and resources for training its employees, which would foster mutual trust, improve the quality of customer service and place further emphasis on continued retention.