Our Basic Products were in high demand even during lockdown: Sushil Batra, CFO, Relaxo Footwears Limited
In an interview with the National Bulletin’s Editor In Chief, Syed Mashkur Hussain, Batra talked about how the company has sailed through the most challenging time of the modern world, ie, COVID -19.
Think about a footwear brand and what comes effortlessly to your mind is Relaxo. In fact, today its popularity has made Relaxo synonymous with slippers.
Despite the presence of a lot of multi-national and luxurious footwear companies in India, Relaxo has emerged as a household name because of its variety of basic product range in the slippers category. It is the country’s largest footwear manufacturer with a pan India presence.
Sushil Batra, Chief Financial Officer, Relaxo Footwears Limited deserves credit for increasing its financial fortune. With his decade-and-a-half long association with the company, he has played a vital role in achieving short-term as well as long-term financial objectives.
This earned him the title of the Best CFO for ‘Sustained Wealth Creation & Healthy Balance Sheet Management’ by Yes Bank.
Coming from a teacher’s family, Batra’s humble background of a village in Haryana keeps him always grounded and down-to-earth in all aspects of life – be it personal or professional.
In an interview with the National Bulletin’s Editor In Chief, Syed Mashkur Hussain, Batra talked about how the company has sailed through the most challenging time of the modern world, ie, COVID -19. Excerpts from the interview:-
Q: How do you see the impact of Covid-19 on the overall footwear industry and how has Relaxo performed in these challenging times.
A: The Covid-19 mandated countrywide lockdown and as far as I remember its process was stared from March 21 and the actual lockdown was announced on March 25. The last financial quarter is a very crucial time for any company. Though we register the sale in all four quarters, the fourth one gives us a good quantum of sale and so we lost ten precious days of sale due to Covid-19.
Lockdown closed all sale opportunities as all shops were closed and all customers' movement stopped. So the full year, everything was going as per our plans but in the last ten days, everything went haywire. Keeping in mind the health emergencies, the lockdown was the necessity without any alternative.
Q: So what did you do with the huge inventories which remained unsold in the last ten days of the financial year?
A: Yes, you are right that like many other companies, we also ended with a lot of unsold inventories. However, since we are an open footwear company which, majorly deals in a variety of basic range of slippers, it turns out to be our strength also. The last ten days of March and the whole of April remained quite tough due to lockdown but the moment some relaxation was announced at the beginning of May, we experienced a pretty decent demand in the open footwear sale which really surprised us.
The feedback that we received from the market was quite encouraging as our basic slippers were selling like anything. You will be surprised to know that we sold out all our unsold inventories of March in May and we were very satisfied with the response.
Q: But what are the factors that boost up the demand for slippers in May onwards?
A: Yes, there were a couple of reasons besides the fact that summer is already a natural season for the high demand for open footwear products.
First, since the harvesting season coincided with the lockdown relaxation period, a lot of rural areas witnessed a spurt in the demand. It is because farmers and their families ventured out for agricultural reasons, they bought the basic variety of slippers.
Since we are the largest non-leather footwear company, we have a strong presence in rural, semi-urban, and urban cities across the country. In fact, our executives working in the field informed as that people were visiting the shop at night in May to buy multiple pairs of slippers because shops were closed during the day.
The second reason could be the restricted movement of people within the home and in the neighbouring areas. It looks like people preferred to buy multiple pairs of slippers for home and outside as it is comfortable to move around. It is also easy to take in and take out.
Another factor was the movement of a huge number of workers from one city to another due to lockdown. They bought basic slippers for they couldn’t afford the premium product.
I believe these are some of the factors that luckily worked in our favour in May and June. In fact, by the end of July, we touched the numbers which we had in the pre-COVID period.
Q: Did you feel any constraint on the manufacturing part since the sale almost touched the pre-COVID period as you said?
A: Yes, there was a challenge at the manufacturing side as we had to work within a lot of restrictions. Labour was a problem as they went to their home towns. So far as raw material is concerned, it was not that big a problem as we get rubber from Kerala and some other products we import from other countries. Besides, we always keep two months' stock in advance so we were able to meet the demand and clear our old inventories.
I must say that despite all restrictions, both state and the central government were very supportive in terms of giving approvals for a lot of activities. We also ensure that we are following all COVID norms in all eight manufacturing plants – five in Bahadurgarh (Haryana), two in Bhiwadi (Rajasthan), and one in Haridwar (Uttarakhand).
Q: What percentage of your product is in a closed or premium footwear category and how has that fared during restrictions?
A: Out of total product, our 20 percent is in the closed and premium footwear category which includes sports shoes and luxury sandals. That has been a challenging area because of several reasons. In fact, like many other companies, we are struggling at that front. It is our open footwear segment that has sailed us through the tough time.
The basic reason is that people didn’t move out to the gym, park, etc during May, June, and July, and even today movement is very much restricted. People want to go for basic buying but they are not spending money on luxury items. Another reason is the decrease in purchasing power due to job losses, pay cuts, etc. And the situation is still as it is.
Sometimes we have partial lockdown and sometimes weekly lockdown. This impacts the opening of shops and the movement of people.
Q: Are e-commerce companies helping in boosting the demand for sale?
A: Yes, very much. E-commerce companies are helping a lot because people are not going to the market. Roads are over-crowded but shops are empty. Since public transport is not available to the optimum level, people are using private transport and that’s why roads are crowded.
A lot of people are placing orders through e-commerce and that’s a good thing. You will be surprised to know that we, with 80 percent into basic footwear and 20 percent in the luxury segment, have touched 75 percent of sales as compared to the last year’s.
Q: Do you think everything is normalised now and the sale has also stabilized as it used to be during the normal period?
A: I cannot say that it is normal because I think a lot of people are a little cautious about luxury or high-value item buying. People are under financial pressure also as I said. Purchasing behaviour is a little cautious. That will be there till we find a good solution for COVID. Necessary buying is still happening.
As per my reading, if we close this financial year with 85 to 90 percent of sales against last year’s we should be more than happy. We have touched 75 % to date.