News Article appearing in today’s Financial Chronicle newspaper…
Relaxo plans expansion, brand revamp
ByG Balachandar Nov 07 2012 , Chennai
Delhi-based footwear firm, Relaxo plans aggressive capacity expansion and brand revamping to boost the topline and is racing to cross Rs 1,000 crore mark in revenues in the current financial year, supported by new initiatives.
The company has been clocking consistent growth over the past several years. Its revenues and profits have recorded CAGR of about 30 per cent and 32 per cent respectively, resulting in 20 per cent plus return on equity (ROE) over the past five years. It clocked net sales of Rs 860 crore and net profit of Rs 40 crore in 2011-12.
aGoing forward, the company is committed to continue expanding manufacturing capacities, product and brand portfolio and market presence. The company is inching closer to cross Rs 1,000 crore revenue milestone in the current financial year. In this direction, a series of initiatives are being taken by the company to revamp and manage our next level of growth,a Ramesh Kumar Dua, managing director of the company said.
The company is planning a capex of Rs 60 crore for establishing a PU (polyurethane) footwear plant and this project is likely to be completed by the end of this financial year. With this plant, the companyas total capacity will go up by about 30,000 pairs per day, taking the total capacity to about four lakh pairs per day. It has already launched Flite-PU fashion range of footwear and that have reported to have well received among footwear buyers.
In addition, it is also planning to build a warehouse with an investment of Rs 25 crore. Further, the company has also lined up a plan to open 25-30 retail stores (Relaxo Shoppe) every year in an attempt to expand the direct reach to customers, build the brand and increase in sales. At present, the number of exclusive stores stands at 158, up from 149 at the end of FY2012. This year, the total number of stores is expected to touch about 175. These exclusive outlets contributed Rs 61 crore to the total revenues of the company. Relaxoas flagship brands are Hawaii, Flite, Sparx and Schoolmate and these are catering to different categories of customers.
aThe company is promoting its brands aggressively to increase their visibility. For that, it has roped in three Bollywood stars for the endorsement a Salman Khan to endorse Hawaii, Katrina Kaif to endorse Flite and Akshay Kumar to endorse Sparx. This is expected to help the company to maintain its market share in the mass segment through Hawaii brand and further penetrate the lower and upper-middle class segment through existing products and upcoming launches of Flite and Sparx brands,a said Tejashwini Kumari, analyst at Angel Broking.
Relaxo competes with both branded as well as the unorgansied market. Hawaii, the mass product faces stiff competition from the unorganised market. On the other hand, Sparx faces competition from branded shoes.
The company has a strong foothold in the slippers market and a very wide distribution channel of 50,000 distributors and retailers across the country. However, its 158 company-owned outlets are spread only in north a Delhi, Rajasthan, Gujarat, Haryana, Punjab, Uttar Pradesh and Uttarakhand. It has seven factories a five in Bahadurgarh (Haryana) and one each in Bhiwadi (Rajasthan) and Haridwar (Uttaranchal).