About Brainbees Solutions (Firstcry) Limited

Brainbees Solutions (Firstcry) is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products, in terms of GMV, for the Financial Year 2024, according to the RedSeer Report, with a growing presence in select international markets. In India, they sell Mothers’, Babies’ and Kids’ products through their online platform, company-owned modern stores, franchisee-owned modern stores and general trade retail distribution.

They launched the FirstCry platform in India in 2010 with the goal to create a one-stop destination for parenting needs across commerce, content, community engagement, and education. They named their platform “FirstCry” because they believe that a baby’s first cry is a special moment for parents, and they aim to make such moments of the parenting journey filled with joy and happiness. They seek to develop a tangible, emotional, multi-year relationship with parents, especially mothers, with whom their first engagement begins from their baby’s conception (i.e., nine months before birth) and can continue until their child reaches about 12 years of age. According to the Report, childcare is a non-discretionary, essential expense, for which there is perpetual need. They operate in a retail category with high purchase frequency, in which children outgrow clothing sizes quickly and need consumables such as diapers and other baby products along with other needs that evolve with age. Thus, once parents establish a connection with them, they are likely to start a predictable and frequent transactional journey of about twelve years as their children grow.

They have expanded internationally in select markets, establishing a presence in UAE and KSA in 2019 and 2022 respectively, where they aim to replicate their India playbook. According to the Report, they are the largest specialist online Mothers', Babies' and Kids' Product retail platforms in UAE, in terms of GMV, for the Financial Year 2024. Further, in KSA, they are the largest online-first Mothers’, Babies’ and Kids’ product-focused retail platform, according to the Report. After the UAE, they aim to replicate thei India playbook in KSA.

Across their platform, they offer products from third-party Indian brands, global brands, and their home brands. They have created trusted home brands in the Mothers’, Babies’ and Kids’ products categories through their deep insights and understanding of the requirements of their customers, robust data analytics tools, in-house design and development capabilities and by leveraging the market recognition of the “FirstCry” brand. As a reflection of FirstCry’s strong brand recognition and customer trust, BabyHug, one of FirstCry’s home brands, is the largest multi-category Mothers’, Babies’, and Kids’ products brand in India in terms of GMV, for the Financial Year 2024, according to the RedSeer Report. Further, they leverage their management team’s experience in creating and scaling up their home brands to help D2C Indian and global brands scale their business in India across direct-tocustomer channels and modern stores. They believe that these brands will benefit from their expertise in creating and scaling brands and leverage their multi-channel distribution network, sourcing capabilities, supply chain infrastructure, and integrated technology ecosystem.

INDIA CHILDCARE MARKET
India has one of the highest birth rates globally, with 16.3 births per thousand people in 2022. The annual birth rate of India is approximately 1.5x of developed economies. While India witnessed a small decline in birth rates due to Covid, the decline was smaller than that seen in other countries. The decline in birth rates in India during Covid was primarily attributable to apprehensions about hospital visits, an unpredictable vaccine landscape, and economic uncertainty. However, with high vaccination rates and strong economic resilience witnessed postCovid, India's birth rate is expected to rebound strongly in the coming years which is reflected in the record levels of marriages witnessed in the recent past.

Childcare Products spending per capita in India is currently nascent, at only ₹9,280-9,350 in the Financial Year 2024. It is projected to grow faster than those in mature markets, at a CAGR of 13-15% from the Financial Year 2024 to the Financial Year 2029 (compared to 2-4% for USA and 5-7% for China). The growth in per capita spending on Childcare Products in India is projected to be among the fastest globally. This is driven by increasing awareness of childcare, child health, and wellness, rising disposable incomes, and shifting customer perceptions that regard spending on Childcare Products as essential. This change is due to the non-discretionary nature of childcare expenses, for which there is a perpetual need.

The Indian Childcare Products market grew at a CAGR of 10% pre-COVID-19 to reach ₹1,980-2,080 billion (approximately US$25-26 billion) in the Financial Year 2020. Between the Financial Year 2021 and the Financial Year 2024, the market experienced a substantial post-COVID-19 rebound and expanded at a CAGR of approximately 19% to reach ₹2,800-2,900 billion (approximately US$35-36 billion) in the Financial Year 2024. 

The Childcare Products market in India is projected to grow at a CAGR of 12-14% to reach ₹5,150-5,450 billion (approximately US$64-68 billion) by the Financial Year 2029 as parents are increasingly shifting their preferences towards branded Childcare Products, especially in categories like apparel and consumables, basis increase in disposable income and rising concern towards health and safety of children. 

The market comprises both vertical and horizontal players, vertical players have single childcare product category (e.g. apparel) focused value propositions, whereas horizontals operate across childcare products’ categories. With multiple kids-only exclusive brand outlets (EBOs) in the mid-to-premium and premium segment, there is a market opportunity in the value segment for a “kids-only” player. Within the organized offline B&M market for childcare products, customer preference is shifting towards Specialty Mothers, Babies, and Kids Retailers, which offer a one stop solution for all the children needs. Historically, except for health & food in Childcare products, the Childcare market has been low on brand penetration, and within the branded childcare products, there are only a handful number of large multi-category childcare product brands.

UAE and KSA Childcare Products Market
UAE Childcare Products Market
The UAE retail market was steadily growing at a pre-pandemic CAGR of 2-3% and was sized at ₹5-5.2 trillion (approximately US$63-65 billion) in the Financial Year 2020. After experiencing a pandemic-induced contraction, UAE’s retail market witnessed a strong recovery growing to ₹6.7-6.9 trillion (approximately US$ 84- 86 billion) in the Financial Year 2024. This growth was anchored by resilient consumer demand, an expanding expatriate population, robust spending by tourists, strong shopping mall culture, and a fast-growing e-commerce market. 

Specifically, the e-commerce market was sized at ₹1-1.2 trillion (approximately US$ 13-15 billion) in the Financial Year 2024. UAE’s ecommerce market has grown by a CAGR of approximately 38% between the Financial Year 2019 and the Financial Year 2024 driven by near ubiquitous smartphone and internet penetration, strong omnichannel consumer behaviour, and rising disposable incomes. The e-commerce market is projected to grow to ₹2.2-2.4 trillion (approximately US$ 28-30 billion) by the Financial Year 2029 with a penetration (as ashare of the overall retail market) of approximately 25%, a notable rise from approximately 16% in the Financial Year 2024. 

The Childcare products market in the UAE was ₹205-215 billion (approximately US$ 2.6-2.7 billion) in the Financial Year 2024 and is projected to grow at a 3-5% CAGR to reach ₹240-280 billion (approximately US$ 3- 3.5 billion) by the Financial Year 2029. The growth in the Childcare products market in UAE is driven by the acceleration of digitalization through e-commerce platforms, resumption of schools and regular activities post COVID-19 lockdown, increasing participation of new Childcare-focused, verticalized e-commerce brands and shift of customer preference towards trustworthy and branded products. 

Organized players have shown strong resilience during the COVID-19 pandemic leading to the quick recovery of multiple categories such as apparel and consumables in the UAE Childcare products market. In the next five years, digital and technology-based toys and games are expected to witness a significant rise in demand while scientific/educational toys and arts and crafts will drive growth in traditional toys. Ready-to-eat/prepared baby food will also see a significant increase in demand due to the increasing population of working parents. 

In the UAE childcare products market, FirstCry competes with organized horizontal online players such as Amazon and Noon and vertical players such as Namshi, and Mumzworld, among others. FirstCry is the largest specialist online Mothers', Babies' and Kids' Product retail platforms in UAE, in terms of GMV, for the Financial Year ending March 2024.

KSA Childcare Products Market
The KSA retail market, which was sized at ₹10.6-10.8 trillion (approximately US$ 133-135 billion) in the Financial Year 2024, experienced a robust recovery following a COVID-induced contraction. This strong resurgence was fuelled by resilient consumer demand, a rebound in tourism, increased retail spending, particularly in major metropolitan areas, and a fast-growing e-commerce market. 

KSA's e-commerce market, sized at ₹1.3-1.5 trillion (approximately US$ 16-19 billion) in the Financial Year 2024, is projected to grow to ₹3.2-3.4 trillion (approximately US$ 40-42 billion) by the Financial Year 2029. This growth is expected to be driven by near-ubiquitous smartphone and internet penetration, a large young population, and the Vision 2030 plan. The e-commerce market's penetration (as a percentage of overall retail) is expected to increase from approximately 13% in the Financial Year 2024 to approximately 22% by the Financial Year 2029. The Childcare products market in KSA exhibited a modest growth between the Financial Year 2017 and the Financial Year 2024, growing from ₹455-465 billion (approximately US$5.7-5.8 billion) to ₹535-545 billion (approximately US$6.7-6.8 billion) over this period. However, the market is projected to reach ₹640-680 billion (US$ 8-8.5 billion) by the Financial Year 2029. 

The growth in the KSA Childcare products market is driven by an increasing number of international brands, rising penetration of e-commerce, higher employment rates, growing concern of parents towards children’s health and safety and a wide variety of SKUs that have increased shopping convenience on online platforms. 

Children’s apparel was the worst affected due to the COVID-19 pandemic. Other categories such as baby food and consumables did not get significantly affected as they primarily cater to babies in the 0-4 years age group, and parents usually consider purchase for babies in this group as essential. Categories such as consumables (excluding diapers) and apparel are expected to grow significantly in the next five years. There is a huge opportunity for Childcare focussed e-commerce entrants in the coming years due to a lack of specialty brands and growing demand for Childcare Products in the country. 

In the KSA childcare products market, FirstCry competes with organized online horizontal players such as Amazon and Noon and vertical players such as Mamas and Papas, and Babyshop, among others. In KSA, FirstCry is the largest online-first Mothers', Babies' and Kids' product-focused retail platform.

India Preschool Market
The Indian Preschool market, which stood at ₹285-295 billion (approximately US$ 3.6-3.7 billion) in the Financial Year 2020, underwent a contraction owing to Covid, but demonstrated a resilient rebound, reaching ₹325-335 billion (approximately US$4-4.2 billion) in the Financial Year 2024. The Preschool market is expected to further grow at a CAGR of 13-15% to reach ₹638-658 billion (approximately US$8-8.2 billion) by the Financial Year 2029. The Preschool market is projected to grow at a CAGR of 13-15% over the next five years, which is faster than the projected CAGR of 9-11% in the number of preschools. This indicates that the average per-capita spend is likely to increase, due to the premiumization of the market. Given the expansion of the middle-class population, increasing disposable income, and rising awareness among parents about the importance of education, a higher educational expenditure by parents is expected in the upcoming years. 

The growth of the Indian Preschool market is also underpinned on the back of an increasing employment rate for women, rising number of Nuclear Households, government policies such as the national Early Childhood Care and Education policy (“ECCE”) promoting pre-schooling in India, expansion of the franchisee model in untapped areas such as Tier 2+ Cities and Towns, and increasing propensity to spend on quality education and rising urbanization.

India had a total of 160,000-170,000 Preschools in the Financial Year 2020, and while the number declined slightly during Covid, it rebounded strongly to reach pre-pandemic levels in the Financial Year 2024 as preschools started to reopen and return to normalcy. The number of Preschools is projected to grow at a CAGR of 9-11% to reach 260,000-270,000 by the Financial Year 2029. This growth is driven by multiple factors such as increasing adoption of franchisee Preschools, low per-capita Preschool spending in India compared to developed geographies, and various government initiatives to develop Preschool and childcare sector in rural India.

India Diaper Manufacturing Market
The manufacturing contribution to GDP is expected to increase from approximately 13% in the Financial Year 2023 to >20% by the Financial Year 2032. This is on the backdrop of significant government reforms specifically to boost manufacturing in India. The Make in India campaign, increased FDI ceiling, and reduced corporate tax rates are some of the key reforms and policies introduced by Government of India.

The Indian diaper manufacturing market has been consistently growing at a CAGR of approximately 14% from the Financial Year 2017 and was valued at ₹92-94 billion (approximately US$ 1.2 billion) in the Financial Year 2024. The market is expected to grow further at a CAGR of 15-17% to reach ₹185-195 billion (approximately US$ 2.3-2.4 billion) by the Financial Year 2029 on the back of increasing penetration in Tier 2+ Cities and Towns. 

In the Financial Year 2024, less than 5% of diapers were imported while the rest were manufactured in India. Domestic manufacturing is highly consolidated with 4 players capturing 80-90% of the market share. Due to the high demand in the India market, domestic manufacturers export only approximately 1% of the diapers that are manufactured, and the remaining approximately 99% are sent out to retailers through the domestic distribution network. In the Financial Year 2024, approximately 75-77% of the diapers were sold through offline retail channels, and e-commerce accounted for approximately 23-25% of the sales. 

The entire value chain except manufacturing is highly fragmented, posing a great opportunity for retailers who can easily integrate the value chain as they enjoy higher ease of backward integration. 

A multi-channel retailer can drive margins for the company and value for their customers by vertically integrating their operations. Customers demand high product quality across the categories. As vertically integrated retailers have complete control over the entire operations, they can ensure that products meet the highest quality standards. Vertically integrated retailers can enjoy better margins, which can be utilized to increase brand recognition. They can further benefit from lower turnaround time and thus, can improve revenue cycles. As a vertically integrated retailer has control over the quality of product and the entire supply chain, they can guarantee a better customer experience. Brands and retailers with access to data can benefit from controlling manufacturing operations.

BRAINBEES SOLUTIONS (FIRSTCRY) LIMITED STRENGTHS
1. They are India’s largest multi-channel, multi-brand retailing platform for Mothers’, Babies’ and Kids’ products
2. Their platform has powerful network effects driven by content, brands and data
3. Brand affinity, loyalty and trust of customers in the FirstCry brand
4. Combination of curating growing home brands and relationships with third-party brands
5. Their technology and data driven, personalized customer journey leads to higher customer engagement Personalized
6. Full-stack platform with control over manufacturing and supply chain
7. Proven and scalable business model

BRAINBEES SOLUTIONS (FIRSTCRY) LIMITED STRATEGIES
1. Grow their customer base by continuing to invest in brand, technology, products and their membership program
2. Grow their offline and online touchpoints to strengthen their multi- channel competitive advantage
3. Continue to expand their portfolio of home brands
4. Expand general trade retail distribution of their home brands
5. Further invest in manufacturing in the baby and kids’ product categories, and supply chain capabilities
6. Selective expansion in international markets
7. Expand and Grow Globalbees House of Brands

BRAINBEES SOLUTIONS (FIRSTCRY) LIMITED RISK FACTORS & CONCERNS
1. Risks related to the Objects to the Offer
2. Their proposed expansion plans relating to the opening of new modern stores and setting up of new warehouses are subject to the risk of unanticipated delays in implementation and cost overruns.
3. Their investments in D2C brands through their Globalbees Brands platform may not be successful.
4. The sale of their home brand products subjects them to unique risks and heightens certain other risks.
5. Their business depends on the growth of the online commerce industry in India and their ability to effectively respond to changing customer behavior on digital platforms.
6. Their Subsidiaries, Swara Baby Products Private Limited, Solis Hygiene Private Limited and Swara Hygiene Private Limited manufacture diapers for their home brands and for third-party brands.
7. They significantly depend on franchisees, warehouse operators, logistic partners, distributors and other such commercial relationships for their product distribution network.
8. They are exposed to risks emanating from non-availability of any exclusive arrangements with thirdparty brands that offer their products on their platform.