In 1992, infamous stockbroker Harshad Mehta was charged with stock manipulation to the tune of almost Rs 5,000 crore. The scam left in its wake financial devastation for hundreds of investors. One of these was Jharkhand-based businessman Mulchand Jain, who lost all his money and needed to start afresh.
With the help of his teenage son Tushar Jain, the duo started to sell bags on the streets of Mumbai. In what can only be described as an amazing ‘bags to riches’ story, Tushar and his father completely transformed the business into a baggage behemoth.
Under Tushar’s leadership, the business was formally launched as High Spirit Commercial Ventures in 2012. Its meteoric rise saw it become India’s fourth largest maker and seller of backpacks and luggage. The Rs 250-crore company now has its headquarters in Mumbai and 10 regional offices spread across India, covering every district of the country.
“After launching just six years ago, we have become a Rs 250 crore company. We have emerged as the largest brand in the Indian backpack segment by selling seven million bags last year, and we are the fourth largest bags brand in the country,” says Tushar Jain (41), Co-founder, High Spirit Commercial Ventures.
“We bootstrapped the company by starting with a small investment. Our finances then grew substantially over the years with the help of internal accruals and working capital from banks. For our future growth plans and touching Rs 1,000 crore, we are looking for a strategic investor to infuse Rs 100 crore in our business.”
In an exclusive interaction with SMBStory, Tushar Jain, Co-founder, High Spirit Commercial Ventures, reveals more about his inspiring story and how he led High Spirits to success.
SMBStory: How did you go from selling on the streets to becoming such a large enterprise?
Tushar Jain: I started trading in Surat in 1999 with 300 retailers. I moved to Mumbai in 2002 with an aim to cover the pan-Indian market. We then launched our first inhouse brand ‘Priority’. We began associations with several important clients and provided customized bags to them around 2006.
By 2007, we had set foot in the market and become a well-established unit. We then started our first manufacturing unit, which made between 3,000 and 4,000 bag pieces a day. This was a huge turning point and we declared a profit of over Rs 25 crore.
The year 2012 marked the official beginning of High Spirit Commercial Ventures and by then we were at Rs 60 crore. In 2014, we had reached the production capacity of 10,000 to 20,000 bags per day and a turnover of about Rs 90 crore. In 2017, we launched Traworld and Hashtag, and catapulted ourselves to Rs 250 crore and a manufacturing capacity of 30,000 to 35,000 units per day.
SMBS: How big is the bags market in India and how is High Spirits different from the competition?
TJ: The size of the Indian luggage industry is pegged at Rs 20,000 crore and is expected to grow at 17 to 19 percent per annum. There is tremendous potential for value fashion products both in India and for exports. The demand for bags has increased since the segment has moved from a ‘steady and spacious’ bags positioning to a ‘fashionable’ positioning.
Thus, the mindset of people in the country towards buying luggage bags has changed over a period of time. Now, people want to own more than one bag and they buy bags for multiple purposes. Increasing domestic and international travel also bodes well for the growth of this sector. We try to provide products which are high quality and affordable.
This has really worked well for our consumers and as a result, we have ended up becoming a large player in the industry. We have done extremely well in our premium range as well, and recently signed Bollywood actor and style icon Sonam Kapoor Ahuja as our brand ambassador for Traworld.
SMBS: How did High Spirits diversify into so many baggage categories?
TJ: We tried to identify the gaps and opportunities in the baggage industry and plugged them with our products. We only made high quality and fashionable products at affordable prices, and diversified the parent company by creating different brand names for bags.
For example, Humpty Dumpty is the range exclusively for kids, Traworld is the premium luggage brand for travellers, Hashtag is the brand for youth and Priority is the umbrella brand. If you look broadly, the company has presence in two segments: backpacks and luggage bags. Traworld is our only luggage brand and the rest are backpacks.
SMBS: How has High Spirits leveraged digital to its advantage?
TJ: Digital platforms have evolved as a new platform for growth of businesses across the world. We know that having a successful digital presence will boost our business as it targets the youth and young adults, setting trends instantly. It has become a crucial part in sustaining our business which targets such audiences.
We run a lot of ad, product and endorsement campaigns on social media to help our customers know what’s new and what they can look out for from us. We also have a good presence across all ecommerce portals.
SMBS: What has been the impact of your work on society?
TJ: We are doing our bit by employing over 500 artisans on project basis and 500 employees on payroll, who work in our manufacturing units in various capacities. We have also groomed entrepreneurs who have emerged as large distributors of our company and have achieved sales of Rs 50 crore each.
But there have been a few challenges. We have seen that the bags segment has become a discount-based market. We like to offer high quality fashionable products at affordable prices rather than quoting high prices and offering huge discounts on MRP. Another predominant challenge we face is to retain and grow the artisan talent and provide them regular wage-based employment.
SMBS: What is your advice to people who want to set up a business in the same sector?
TJ: To entrepreneurs, I would like to state that there are endless opportunities but they need to have the confidence in themselves to pursue their dream and the courage to execute it. Secondly, it is important to bring about a balance between professional and personal life.
There is tremendous scope for the development of organised MSMEs catering to manufacturing and retailing of bags in the country. Currently, the organised market is 35 percent, and post-GST, there is tremendous scope for increasing this share. If the Government of India supports this by setting up clusters and invests in common facilities, this sector would be the largest generator of MSMEs and employment.
The labour cost forms 35 percent of the total cost of the bag, which is very large and can generate employment for millions of people. Currently, millions of people in China are engaged in manufacturing of bags but we have a bigger potential here in India. We can significantly tap into the exports market if the cluster model is adopted.
SMBS: What are your plans for the company in the next five years?
TJ: We are looking at becoming a Rs 1,000 crore turnover company in the next four to five years. We have also set up a 1.31 lakh square foot factory at Bhiwandi near Mumbai, which is for manufacturing of backpacks.
We are also setting up a manufacturing facility for hard luggage in the next six months at the same facility, and the capacity for that will be 60,000 bags per month. Along the same lines, we are setting up a major plant in Patna, Bihar, where we will manufacture 25 lakh bags per annum.