Companies

Relaxo confident of cruising through Covid wave two

Abhishek Law Kolkata | Updated on April 27, 2021

Ramesh Kumar Dua, Managing Director and Wholetime Director, Relaxo Footwears

The footwear major is tapping learnings from the past to put its best foot forward

Utility footwear major, Relaxo is expecting to see through the second wave of Covid-19 infections, banking on learnings from the past.

While mass pricing helped it register better than pre-Covid level numbers, the company has also seen a steady rise in demand for offerings like slippers in the hinterlands and upcountry markets. Increased traction during the harvesting season, despite a series of localised lockdowns, has been another feature.

Production was ramped up anticipating disruptions and rising cases in the early part of this year.

On a shoestring: Covid-19 to knock down footwear industry revenue by 15% this fiscal

Relaxo deals primarily in non-leather offerings that include slippers, sneakers, school shoes and beach footwear across brands like Relaxo, Bahamas, Flite and Sparx. It sold nearly 18 lakh pairs in FY20 (FY21 results are pending), making it amongst the largest players in India.

According to Ramesh Kumar Dua, Managing Director and Wholetime Director, Relaxo Footwears, one of the trends it witnessed during the first wave of infections and a national lockdown was increased demand for open footwear.

From small towns, where distributors had picked up extra stocks ahead of the March-April harvesting season, the demand soon shifted to cities as e-commerce opened up and people were staying back at home. This led to supply crunches.

In 2021, a similar trend is expected, with cities going under lockdown in view of rising cases, and people look to stay back at home, fearing infections.

“Currently there is no demand for school shoes. But, yes, sales of open footwear is on the rise again. Even sneakers and athleisure are witnessing growth. Immediately, we are not anticipating a complete lockdown. But, there will be containment zones, restrictions, some shutdowns here and there. We have seen that last year and are preparing ourselves accordingly this time,” he told BusinessLine.

Sales push

The company, listed on the NSE, had higher than pre-Covid level production by the end of H1 FY21 (September 2020). It is expecting better sales in FY22. Rural and upcountry markets will continue to fare better than urban ones.

Kerala-based affordable footwear maker VKC on firm footing

Though a majority of Relaxo’s business is done through its distributors and retail stores, it is strengthening its e-commerce presence. About 10 per cent of revenues are from e-commerce players and the segment is growing at a faster pace than the traditional one.

About 5 per cent of its topline is from exports, with West Asian nations — Saudi Arabia and UAE and the African ones, Papua New Guinea, Tanzania, and Panamas —being major ones. Plans are afoot to increase presence in these regions.

Capex

Relaxo has also not cut back on capex.

Nearly ₹150 crore is expected to go towards ramping up units, including one at Bhiwadi in Rajasthan. The company has five units in Haryana, two in Rajasthan and one in Uttarakhand, producing close to 9,00,000 pairs daily. Factories are currently operational with safety precautions being put in place for workers.

Margins continue to be stretched because of rising polymer prices.

Published on April 27, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.