Naturewings Holidays
- Naturewings Holidays is coming out with an initial public offering (IPO) of 9,50,400 equity of face value of Rs 10 each for cash at a fixed price of Rs 74 per equity share.
- The issue will open on September 3, 2024 and will close on September 5, 2024.
- The shares will be listed on SME Platform of BSE.
- The share is priced 7.40 times higher to its face value of Rs 10.
- Book running lead manager to the issue is Fedex Securities.
- Compliance Officer for the issue is Annu Jain.
Profile of the company
Incorporated in December 19, 2018, Naturewings Holidays is a tourism company with its primary focus being the entire Himalayan destination across India, Nepal and Bhutan. It offers specialised and curated holiday packages for leisure travellers visiting the Himalayan ranges. It offers end to end travel solutions including land and air bookings, hotel bookings, in-transit arrangements, local sightseeing and such other destination management services. It designs travel packages for both individuals and groups traveling to the Himalayan destinations. It is one of the Indian companies that is registered with the Tourism Council of Bhutan, through its representative. It recently started its international division to offer its services on international destination. Besides, it also started providing value added service such as travel related foreign exchange & payment solutions.
Go-to-market strategy spans the entire value chain of leisure holiday packages for the Himalayan Ranges covering B2C (Business to Consumer) and B2B (Business to Business which includes business to agents). Its focused approach enables it to cater to the B2C and B2B channels, namely, educated urban consumers, in a cost-effective manner. Its travel agent network provides additional scale to its business by leveraging its destination knowledge and experience in order to aggregate consumer demand from over 100 travel agents in more than 12 major cities across India as of March 31, 2024.
The company also offers non-curated standard holiday packages to the Himalayan Ranges through its website. Its online portal provides necessary details to the travelers about the packages, like detail itinerary, site to visit, hotel sets and any special notes related to the package. The company’s website is supported by payment gateways thus enabling its potential customers to book and pay for their holiday packages.
Proceed is being used for:
- Meeting working capital requirements
- Marketing and business promotions
- General corporate purposes
Industry Overview
India being one the most popular travel destinations across the globe has resulted in the Indian tourism and hospitality industry emerging as one of the key drivers of growth among the services sector in India. The tourism industry in India has significant potential considering that Tourism is an important source of foreign exchange in India similar to many other countries. It is widely acknowledged that the tourist and hospitality sector, which encompasses travel and hospitality services like hotels and restaurants, is a development agent, a catalyst for socioeconomic growth, and a significant source of foreign exchange gains in many countries. India's rich and exquisite history, culture, and diversity are showcased through tourism while also providing significant economic benefits. India has a robust domestic market which could soften the impact as compared with nations that rely largely on international tourists. The GDP per capita of India in 2021 was projected at $2,191 at current prices. It is expected to reach $3,209.67 by 2024.GDP of India grew 0.8% in the third quarter of 2022 compared to the previous quarter. It is expected to reach US$ 405.84 billion by 2028 from being at $199.63 billion in 2018. In 2021, the hotel occupancy recovered substantially, reaching56-58% in October 2021, from 30-32% in April 2021.Airport enhancement and the spread of regional airports are opening new opportunities for business, and for drawing larger visits from tourists.
India is ranked 10th among 185 countries in terms of travel & tourism’s total contribution to GDP in 2019. According to WTTC, the contribution of India's travel and tourism sector to India's economy was worth $199.6 billion in 2022. The Indian travel and tourism industry is expected to record an annual growth at 7.1% per annum. India’s Travel and Tourism GDP contribution grew by 5.9%. 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 travellers and sustained efforts of travel agents to boost the market.
India as a 360-degree destination was promoted by the Ministry of Tourism to the international travel industry through participation in major international travel exhibitions like Arabian Travel Mart, Dubai and World Travel Market, and London, etc. It is irrefutable that the tourist industry is becoming a more significant economic force and has the potential to be used as a tool for development. The tourist industry not only drives growth, but it also raises people's standards of living with its ability to provide significant amount of diverse employment opportunities. It promotes environmental preservation, champions diverse cultural heritage, and bolsters international peace. By 2028, Indian tourism and hospitality is expected to earn $50.9 billion as visitor exports compared with $28.9 billion in 2018.
Pros and strengths
Brand with a proven track record and targeted marketing strategy: The company is recognised as a Himalayan range specialist destination management travel company by its customers. It is one of the few Indian companies that are registered with the Tourism Council of Bhutan (through its representative). During the period September 2022 to April 2023 a total of 40,665 tourist visited Bhutan and out of this figure, 23944 were tourist from India. As against these, a total of 1057tourist that visited Bhutan during the corresponding period was organized by the company, thus contributing to 1.83% of the tourist that visits from India. Moreover, it has invested in developing and promoting its brand since its inception, using a combination of online, offline, cross-marketing, social media and other marketing initiatives. Its marketing programs and initiatives also include promotional, seasonal, festival and event related offers. Its marketing strategies have increased its brand awareness, driven potential customers to its platforms and improved the rate at which visitors become customers.
Its synergistic multi-channel go-to-market approach for business and leisure travelers: The company has designed a unique “go-to-market” strategy that is a mix of B-2-C and B-2-B. This comprehensive approach creates strong network effects, which addresses the travel market in India with a focus on the Himalayan Ranges. Its business model follows a reverse funnel model, where it sources its customer across India offering specialised and focused service in the Himalayan ranges. Its distribution channels are supported by a hybrid platform, which is a combination of its websites, and network of travel agents across India as well as call centers. It has developed streamlined software across its distribution channels, which provides it with multiple points of contact for marketing additional travel products and services to existing customers.
Experienced management team with an established track record: The company attributes its growth to the experience of its Promoter, senior management team and its young sales and service team. It has qualified and experienced management team and staff and substantially contributing to the growth of its business operations. The company is managed by a team of experienced and professional personnel with exposure in various aspects of the business and industry. Its management team is well placed to provide strategic leadership and direction to explore new emerging opportunities as well as constantly improve its current operations. Its team works in the form of composite work group and their dedicated performance has enabled it to build up capabilities to expand its business.
Risks and concerns
Not entered into any contracts with its travel agent or travel supplier: As on March 31, 2024, the company works with around 100 travel agents across India. It had not appointed any exclusive travel agents or travel supplier from whom it receives request for travel package or customers. It conducts its business with such agent and supplier solely on the basis of good faith. There can be no assurance that such travel agents will not terminate or alter their arrangements with it at a short notice or without notice. In the absence of definitive agreements, there can be no assurance that such travel agents will continue to be associated with it in the future, on reasonable terms, or at all. Owing to such arrangements with its travel agents, it may not be able to restrict them from entering into similar arrangements with its competitors, or otherwise control the manner in which they undertake their business, which in turn, may adversely affect its results of operations, cash flows and financial condition.
Travel and Tours Industry is cyclical and sensitive to changes in the economy: The travel industry is cyclical and sensitive to changes in the economy in general. The sector may be unfavorably affected by such factors as changes in the global and domestic economies, changes in local market conditions. If the economic growth of India or other countries that it operates in slows down, there may be a gradual decline in the willingness for people to travel. A global or domestic recession may severely impact the tour and travel industry and consequently its business. Further, revenues and cash flows in the travel and tourism industry are affected by seasonality and depend on various factors such as school holidays, public holidays, conducive weather conditions and political conditions in the destination for travel. Any disruptions of its operations or adverse external factors affecting business during these key seasons may lead to a reduction in its revenues and may have a material adverse impact on its results of operations.
Dependent on third parties for significant portion of its operational services: The company relies on a variety of third party service providers for certain operational services relating to its business, including hotels, travel agent, travel guide, rent-a-car service, as well as its backend service providers such as third-party software and service providers, payment processors and gateways, cloud computing service providers. In particular, it relies on this third parties to: assist in conducting searches and processing bookings for its travel products and services, process payments, provide computer infrastructure critical to its business, and provide customer relationship management, or CRM services. Further, it does not enter into any contract with service providers. In the event such service provider terminates their arrangement on short notice or without notice, it may be unable to find alternative service providers on such short notice on commercially reasonable terms, terms favorable to it, or at all. As a result, terminating any of its arrangement with its service providers could disrupt its operations and adversely affect its business, results of operations, cash flows and financial condition.
Outlook
Naturewings Holidays is a tour company that offers holiday packages for leisure travellers visiting the Himalayan ranges. The company mainly focuses on regions such as India, Nepal and Bhutan. The company provides comprehensive travel solutions, including land and air bookings, hotel reservations, in-transit arrangements, local sightseeing, and destination management services. It caters to individuals and groups visiting Himalayan destinations and has recently launched an international division to extend its services to global destinations. As of March 31, 2024, the company had more than 100 travel agents registered with them in most major cities in India. The company's network of travel agents has helped it expand its presence and distribution network in India. On the concern side, the company is exposed to risks associated with businesses in the geographies that it operates, particularly those in the Bhutan travel industry, including bankruptcies, restructurings, consolidations and alliances of its travel suppliers, the credit worthiness of these service partners, and the possible obligation to make payments to its travel suppliers. Moreover, the company relies on third party service providers for a significant portion of its operational services and its business may be adversely affected if they fail to meet its requirements or face operational disruptions.
The company is coming out with a maiden IPO of 9,50,400 equity shares of Rs 10 each at a fixed price of Rs 74 per share to mobilize Rs 7.03 crore. On performance front, the company’s revenue from operations for the FY24 was Rs 2181.18 lakh from Rs 1170.47 lakh during the FY23. The revenue from operations of the company has increased in the year FY24 by 86.35%, mainly on account of increase in number of holiday packages managed during the year from 967 in FY23 to 1338 in FY24. Moreover, the company’s profit after tax was increased from Rs 65.08 lakh in FY23 to Rs 111.92 lakh in FY24. The profit after tax increased by 71.97% as compared to FY23. The company intends to grow its customer base by continuing to provide leisure travelers, a seamless and integrated technology platform that meets all their travel needs. Its service offerings and quality act as an incentive to employees who transact with it on its corporate travel platform to cross-pollinate and transact with it for their personal travel needs on its B2C platform. This cross-pollination enables it to service this audience in a cost-effective way thus increasing its Sales Value per Man Night, an indicator of the premium worthiness of its customers. It strives to improve the premium worthiness of its customers over the years. Going forward, it will focus on increasing its Tier 2 and Tier 3 markets share, which currently have lower online penetration levels for travel. As a strategy, the company will increase its marketing spend targeting this market segment. It expects to see an increased customer base from Tier 2 and Tier 3 cities as the disposable income increases.
