Relaxo Footwears Ltd. (RELAXO) Q4 FY22 Earnings Concall Transcript

Relaxo Footwears Ltd. (NSE: RELAXO) Q4 FY22 Earnings Concall dated May. 13, 2022

Corporate Participants:

Akhil Parekh — Analyst

Ramesh Kumar Dua — Managing Director

Gaurav Dua — Executive Vice President – Marketing

Analysts:

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

Gaurav Jogani — Axis Capital Ltd. — Analyst

Bharat Chhoda — ICICI Securities Ltd. — Analyst

Mythili Balakrishnan — Alchemy Capital Management Pvt Ltd — Analyst

Manish Poddar — Motilal Oswal Wealth Management Ltd. — Analyst

Ashish Kanodia — Ambit Capital Private Limited — Analyst

Nikunj Gala — Sundaram Asset Management Company Limited — Analyst

Unidentified Participant — — Analyst

Priyam Khimawat — ASK Investment Managers Pvt. Ltd. — Analyst

Umang Mehta — Kotak Securities Limited — Analyst

Deven Kulkarni — Marcellus Investment Managers Pvt. Ltd. — Analyst

Girish Pai — Nirmal Bang Financial Services Pvt. Ltd. — Analyst

Ankit Kedia — Phillip Capital India Pvt. Ltd. — Analyst

Vikas Jain — Equirus Capital Private Limited — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q4 FY’22 Relaxo Footwear Limited Earnings Conference Call Hosted by Centrum Broking Limited. [Operator Instructions]

I now hand the conference over to Mr. Akhil Parekh from Centrum Broking Limited. Thank you, and over to you, sir.

Akhil Parekh — Analyst

Thank you. Ryan. Good afternoon, everyone. On behalf of Centrum Broking Limited, I would like to welcome you all to Relaxo Footwears’ quarter four FY’22 earnings conference call. From the management, we have with us today Mr. Ramesh Dua, Managing Director; Mr. Ritesh Dua, Executive Vice President – Finance; Mr. Gaurav Dua, Executive Vice President – Marketing; Mr. Sushil Batra, CFO; and Mr. Vikas Tak, Company Secretary.

We’ll begin the call with a brief discussion from the management and then we can open the floor for Q&A session. Over to you, sir. Thank you.

Ramesh Kumar Dua — Managing Director

Thank you, Akhil. Good afternoon to everyone. Ladies and gentlemen, thank you very much for attending our earning call for the financial year 2021-’22. We have already shared our earning press release and result presentation. Hope you got an opportunity to go through that. I will start with Q4 FY’22 financial performance, followed by full year FY’22 financial performance.

In Q4 FY’22 Relaxo booked operating revenue of INR690 crores as compared to INR748 crores in the corresponding period of previous year. Revenue during the quarter was affected due to disruption caused by Omicron variant of COVID, GST rate hike from 5% to 12% with effective from January ’22 on footwear priced below INR1,000, and subdued demand due to high inflation. EBITDA during the quarter in at INR111 crores as compared to INR163 crores in the corresponding period of the previous year. Our EBITDA margin for the quarter is 15.9%. EBITDA margin decreased mainly due to steep increase in raw material prices and extra support provided to pay towards GST rate differential on inventory. Our profit after tax is INR63 crores for the quarter as compared to INR102 crores in the corresponding period of previous year. For FY 2022, our revenue stood at INR2,653 crores as compared to INR2,359 crores, which is a growth of 12% year on year. The growth in revenue is achieved mainly due to calibrated price hike taken during the year to mitigate impact of high raw material process. EBITDA is at INR416 crores as compared to INR495 crores in the previous year. Our EBITDA margin for the year is 15.7%. The decline in EBITDA margin is mainly on account of increase in raw material prices and normalization of selling, marketing, and administrative expenses in FY’22 as compared to FY’21. Our profit after tax is INR233 crores as compared to INR292 crores during the previous year. During FY 2022, we generated cash of INR140 crores from operation and spent Rs 140 crores in capex. At the end of March 31st, 2022, we have 394 exclusive brand outlets which contributed around 7% of our FY’22 revenue. Export crossed INR100 crores mark and its picking up with opening of market and its contribution is more than 4% of revenue of FY 2022.

Going forward, we are cautious about the continual extraordinary inflation and remain cautiously optimistic on the basis of strong recovery across categories, especially in the high-value closed footwear category after opening up of offices, schools, and college. We believe that we are well positioned in the footwear marketplace by providing the right price/value equation to our customer, while making sure our products remain affordable and accessible. We remain committed to all our stakeholders by creating a strong foundation for the future, which can provide a sustainable and profitable growth for the long term.

Thank you. We can open now the floor for questions. Thank you very much.

Questions and Answers:

Operator

[Operator Instructions] [Operator Instructions] Our first question comes from the line of Tejas Shah with Spark Capital. Please go ahead.

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

Yeah. Hi, sir. Thanks for the opportunity. Just will start with a couple of basic questions. If you can help us to understand the split between — the realization split increase which has happened between price increase and premiumization if any happened during the year and during the quarter.

Ramesh Kumar Dua — Managing Director

Yeah. Price increased because this full year was lot of inflation. Raw material prices went up. So price increase was in the range of 25% across all the categories, in few categories more and few categories less. So this is majorly due to the price increase. And product mix, because closed footwear was sold much more as compared to FY’21, so that mix also happened in this year. So overall increase majorly is due to price increase.

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

So, sir, this 25% price increase would be at customer level because of GST increase as well, but that would not have totally reflected in our numbers, right?

Ramesh Kumar Dua — Managing Director

No, it’s a mix of raw material and GST. GST came only in January 2022. That was the last increase which we took. But overall, from start of the year from May onwards, raw material prices were going up. So we took price — four price increases during the year.

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

Okay. Okay. Sir, second, though initial period yet, but almost four, five months have passed by after GST increase has happened. So what is the initial feedback in terms of customer and both channel, whether they have absorbed this price hike easily or it will take some more time for demand and channels to settle down on this?

Gaurav Dua — Executive Vice President – Marketing

Yeah. Tejas, this is Gaurav Dua this side. So it’s been four months you’re right. And what we are seeing is in first two, three months there was a pressure because it was new for the trade, so there was lot of resistance. People were talking about taking this price back from 12% to 5%. They were giving representation to the government. But now it is settled — the rates have been settled. Post that, but there is definitely pressure because of inflation. Consumer sentiments are still not so great. And whatever the pass on of price what we have done or the industry has done, it’s taking time for the consumer as well as for the trade to take it.

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

Okay. Okay. And sir, last one, based on the recent channel checks which has been done on the sector, it does seem that there is a huge traction in online channel for closed footwear, especially the sports footwear or athleisure footwear. So, have we seen any such traction in our number, A? And what was our exposure to online channel for the full year as a company and also within the Sparx brand in particular?

Gaurav Dua — Executive Vice President – Marketing

So, yes, Sparx brand has done very well in e-commerce platform, and we can see the growth rate was more than 40% in e-commerce platform. So there is a traction of sports shoe selling more on e-comm.

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

Okay. And sir, what will be the total exposure of online as a channel for us?

Gaurav Dua — Executive Vice President – Marketing

We were last year around 10%. Now it is 11.5%.

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

Okay.

Gaurav Dua — Executive Vice President – Marketing

So it’s going to go…

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

Yes, sir. Go ahead, please.

Gaurav Dua — Executive Vice President – Marketing

Yeah. No, you can continue. You can continue.

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

No, sir. I’ll come back in queue for follow-up questions on this. Thanks a lot.

Gaurav Dua — Executive Vice President – Marketing

Yeah. Thank you.

Operator

Thank you. Our next question comes from the line of Gaurav Jogani with Axis Capital. Please go ahead.

Gaurav Jogani — Axis Capital Ltd. — Analyst

Thank you for taking my question, sir. Sir, my first question is with regards to the RM inflation as you’ve highlighted. So is the bulk of the RM inflation now done or do we need to take further price increases to mitigate this RM inflation that we’re seeing?

Ramesh Kumar Dua — Managing Director

I’m Ramesh Kumar Dua this side. No, raw material situation continues to remain unpredictable. You cannot say for guaranteed everything is settled. Always we are getting news, different kind, sometimes packing material, chemicals, polymers, so things are not stable as yet. We can’t say confidently that things have stabilized as far the raw material situation is concerned. But we have to be watchful of it and accordingly we have to see market dynamics also, and accordingly keep on taking appropriate actions.

Gaurav Jogani — Axis Capital Ltd. — Analyst

Sure, sir. To put the other way around, if assuming whatever the RM prices are today, so does it covers the — whatever the price increases that we have taken, as on today RM price do we cover it or do we need to still take further some pricing action to cover the impact? Because the impact on margin is huge, as can be seen from the results. So still do we need to take more price increases to even cover today’s RM inflation?

Ramesh Kumar Dua — Managing Director

No, we have to wait and see all these things. Ultimately our goal at the moment is to focus on our market share in the market and keeping in view the article that we are in, which are meant for masses, lower rank of society, so that’s very important that we be keeping strict vigil on it. And accordingly take appropriate actions at appropriate time.

Gaurav Jogani — Axis Capital Ltd. — Analyst

Okay. Sure, sir. Sir, my next question is with regards to your volume if you see this particular year, so the volume this particular year has even seen a decline if we compare versus FY’20. While I do agree that there was some impact during the first quarter due to Omicron and even this quarter was impacted. But how do you see the volume trajectory going ahead in the light of the sharp RM inflation that we are seeing, given our target consumer is very price sensitive?

Gaurav Dua — Executive Vice President – Marketing

So last year, if you remember, in May we had this Corona wave where everything was shut down and followed by January also we had a small Omicron variant coming in. So definitely there has been pressure on volume in term — because last to last year the closed — open footwear was selling a lot because people were at home and the shift — there was extraordinary sales happening on last to last year. So to sustain that was a challenge. And going forward, the consumer sentiments are still not so buoyant. So we feel I think after maybe quarter one things will come back. But very difficult to say right now because of unpredict — supply chain things are not settled, raw material prices are not settled. But we are hoping that quarter two onwards we can see some recovery.

Gaurav Jogani — Axis Capital Ltd. — Analyst

Sure, sir. And sir, one last question from my end is regarding the sportswear segment. Sir, the sportswear or so to say the casual footwear segment has been seeing very good traction as such. And in this light we have seen lately one of our listed competitors getting — sorry, one of our competitors getting listed on the exchange, and they have been showing smart growth in Q4 as well. So in that extent, sir, if you — in that light, if you see what is our action towards the sportswear segment? What are we doing to address that?

Gaurav Dua — Executive Vice President – Marketing

So we have three brands. They are — basically it’s — for them it is a athleisure brand, what we hear. So that is one-third of our business. So we are also seeing a good growth rate in athleisure and sports category. So we are growing in line with the industry.

Gaurav Jogani — Axis Capital Ltd. — Analyst

Sure, sir. Anything that you’re saying, because a general market check suggests that they are higher on the market share percentage-wise given that they are very dominant in that segment. So anything that we are doing in terms of product launches or expanding our reach on the online or anything of that sort that you can highlight that we are increasing our presence there.

Gaurav Dua — Executive Vice President – Marketing

Definitely we are taking some steps. And I think this is a — like, for example, we are increasing some A&SP spends on e-comm and having new tie-ups with like different channels also. So it’s a continuous process.

Gaurav Jogani — Axis Capital Ltd. — Analyst

Sure, sir. Thank you. And that’s all for me. I’ll come back for more questions.

Operator

Thank you. Our next question comes from the line of Bharat Chhoda with ICICI Securities. Please go ahead.

Bharat Chhoda — ICICI Securities Ltd. — Analyst

Yeah. Thanks for the opportunity, sir. Generally, when we see, Relaxo has a good working capital cycle of around 50 days, but this time it appears to be on the higher side of it, closer to 90 days. So what is the reason for the same, sir? Is it more of RM being — raw material being accumulated or is it the finished goods? Can you just provide a brief view on that?

Ramesh Kumar Dua — Managing Director

This year being that because there was pressure on the sale visible also. So our inventory has increased normally more than expected. And there are two reasons for inventory increase. One is the pressure upon sale and then prices also, because your cost of goods, everything has increased. So it has also given a multiplying effect upon the inventory. That is the one reason. And then second…

Bharat Chhoda — ICICI Securities Ltd. — Analyst

Sir, your voice was not clear. Could you please repeat, sir? I was not able to get it.

Ramesh Kumar Dua — Managing Director

Okay. Just I am repeating. So inventory is the major reason for working capital disturbance [Phonetic] in this year and there are two reasons. One, there was a pressure upon the sale; and second, because the cost of goods has also increased, even raw material [Phonetic] also, and we are carrying little more inventory just to be more cautious about the future price increase. So inventory has increased in the balance sheet. That is visible also. And second, I think some debtors [Phonetic] also little bit — not much but little bit there is a increase. These are the two reasons working capital is under pressure. And materials long-term [Phonetic] is raw material also.

Bharat Chhoda — ICICI Securities Ltd. — Analyst

Okay. And sir, we have seen the realization being significantly higher at this level. Do you see we would see an impact on the volumes going ahead and probably also what are the margins we should work with like? Is it the 17%, 18% kind of a margin that is possible for us to maintain with the current level of prices?

Ramesh Kumar Dua — Managing Director

Yes. Margin definitely because this year has been a little tough year comparatively and FY’21 was a best year even though never thought. But FY’20 if we compare with that, so that margins are definitely achievable, and we intend to and we are hopeful that will be achieved, FY’20 base if you see.

Bharat Chhoda — ICICI Securities Ltd. — Analyst

So FY’20 base is what we should work with then for FY’23?

Ramesh Kumar Dua — Managing Director

Yes, we can say that. FY’20 was 17%, and this year we achieved lower than that. So definitely, we intend and it’s possible also.

Bharat Chhoda — ICICI Securities Ltd. — Analyst

At this level, do you see the consumer actually — like the volumes are they being impacted or how is it, sir? Because that could you please provide a view on that because how the consumer is reacting, the volumes have been down or how it is at these price levels?? I think initially, there has been comments from your side probably, but post that stabilization, is that volume again picking up?

Gaurav Dua — Executive Vice President – Marketing

So as you are well aware that because of inflation, the purchasing power of the lower end of the pyramid, the mass market, they are feeling the pinch of inflation. So they are looking — some of them are looking for cheaper alternatives. You can understand they are — because they have no money in their pockets. So they are going for cheaper alternatives. So there is a volume pressure, no doubt about it. But I think from quarter two onwards, this thing will be much better.

Bharat Chhoda — ICICI Securities Ltd. — Analyst

Okay, sir. That’s it from my side. Thanks for answering the question. Thank you.

Operator

Thank you. Our next question comes from the line of Mythili Balakrishnan with Alchemy Capital. Please go ahead.

Mythili Balakrishnan — Alchemy Capital Management Pvt Ltd — Analyst

Thank you. I just wanted to get a couple of data points from you. I wanted to understand the mix between the different brands Sparx, Bahamas, Flite, and the normal Hawaii.

Gaurav Dua — Executive Vice President – Marketing

So we are doing like Hawaii and Bahamas come under Hawaii division. So that is around 25%. And Flite is 37.5% and similarly is Sparx, 37.5%.

Mythili Balakrishnan — Alchemy Capital Management Pvt Ltd — Analyst

Got it. And within Sparx, 50% was sandals and the rest 40% were closed toes. Has that portfolio changed in terms of the mix?

Gaurav Dua — Executive Vice President – Marketing

Yes, it has changed. Now it is 60% shoes and 40% sandals, as athleisure growing tremendously.

Mythili Balakrishnan — Alchemy Capital Management Pvt Ltd — Analyst

And are the sandals part of the business under pressure or both of them are doing…

Gaurav Dua — Executive Vice President – Marketing

Both are doing well. The only thing is there is a good demand in athleisure and sportswear. That e-commerce is growing much faster because of India becoming more fit and demand of these products are going high.

Mythili Balakrishnan — Alchemy Capital Management Pvt Ltd — Analyst

Got it. Could you also help me understand the distributor and channel mix for us currently, I mean how much is your online and wholesaler?

Gaurav Dua — Executive Vice President – Marketing

So we have around 680 distributors, 650 to 680 distributors, and online contributed around 11.5 percentage of our sales, 7% is contributed by retail, and 4% by exports.

Mythili Balakrishnan — Alchemy Capital Management Pvt Ltd — Analyst

Got it. And my last question was on was on capex. We have spent like around INR140 crores this year. Just wanted to get a sense of is there some larger capex in the [Indecipherable] given our venture into the south, et cetera?

Ramesh Kumar Dua — Managing Director

No, no, we don’t have any intent to spending in south, but definitely we are expanding our capacity in north where we have our own setup. So we are integrating our back-end operations and for that we are working. So this year also we have intent to spend around INR100 crores. So it will add production [Phonetic] mainly.

Mythili Balakrishnan — Alchemy Capital Management Pvt Ltd — Analyst

Thank you. That’s all from me.

Operator

Thank you. Our next question comes from the line of Manish Poddar with Motilal Oswal Asset Management. Please go ahead.

Manish Poddar — Motilal Oswal Wealth Management Ltd. — Analyst

Hi, sir. Just three questions. First is, if you can help me with this extra trade support, which you have given to the channel, how much is the quantum for that?

Gaurav Dua — Executive Vice President – Marketing

So extra trade support we gave in Q3 because we were having inventory in December and GST was effective from January. So in that quarter, we gave around INR15 crores to INR18 crores and some — because we were carrying some inventory at our end also, we gave the support in this quarter also. That is around INR8 crores to INR10 crores in this quarter also.

Manish Poddar — Motilal Oswal Wealth Management Ltd. — Analyst

Okay. And you said the prices in the channel now — or actually inventory in the channel is liquidated or has got the new pricing. Is that a fair understanding?

Ramesh Kumar Dua — Managing Director

Now new [Indecipherable] material has come in the market, so that old inventory is almost clear. So now everything is true [Phonetic] in the system.

Manish Poddar — Motilal Oswal Wealth Management Ltd. — Analyst

Okay. Just two more data points, if you can. You said now 650-odd distributors are there. How many distributors have you added in the full year?

Gaurav Dua — Executive Vice President – Marketing

So that is roughly around 10% what we have added.

Manish Poddar — Motilal Oswal Wealth Management Ltd. — Analyst

Okay. And just in terms of SKUs, would you be able to help me how many articles do we have and let’s say what is the addition on a YoY basis?

Gaurav Dua — Executive Vice President – Marketing

So just a second — 400 articles we have right now, and if you talk about SKU, it is — just a second, 12,257 SKUs we have.

Manish Poddar — Motilal Oswal Wealth Management Ltd. — Analyst

And what is the change? Is it a reduction in that? Because magnitude of the reduction. Just wanted to understand what was this number let’s say FY’21.

Gaurav Dua — Executive Vice President – Marketing

No, there is no reduction in SKUs.

Ramesh Kumar Dua — Managing Director

So it’s around 10,000 to 12,000 generally always changing also. Some articles are plus and some minus also. So it’s always changing, but range is around 10,000 to 12,000.

Manish Poddar — Motilal Oswal Wealth Management Ltd. — Analyst

Okay, fair enough. Thank you so much.

Operator

Thank you. Thank you. Our next question comes from the line of Ashish Kanodia with Ambit Capital. Please go ahead.

Ashish Kanodia — Ambit Capital Private Limited — Analyst

Yeah. Hi, sir. The first question is in terms of capacity addition, so in terms of volumes, what is the capacity addition plan for the next two years? And across which brands or categories will we be expanding those?

Ramesh Kumar Dua — Managing Director

Already we have reached the capacity of 10,000 pairs per day. And utilization is around 65%. And within this category, we are focusing to free [Phonetic] some capacity capacity of whatever is required in shoe division.

Ashish Kanodia — Ambit Capital Private Limited — Analyst

Okay, sir. Got it. Second thing in terms of price hike, I think the full year price hike was 25%. But in terms of the price hike taken in 4Q, apart from the 7% which you might have taken because of GST, was there any other price hikes as well?

Ramesh Kumar Dua — Managing Director

Last price hike we took in December? So that was inclusive of GST as well as material impact also. So that was the last one.

Ashish Kanodia — Ambit Capital Private Limited — Analyst

Okay, okay, very helpful. And last question in terms of there is an inflationary trend in RM prices, but is there any disruption in the supply of RM as well, or at least on the supply side, that’s not a challenge?

Ramesh Kumar Dua — Managing Director

No, we’re getting the supplies, but we are — what we are doing is we are maintaining inventory of the material because this uncertainty is there — it is always there. So we have to keep some material — raw material in inventory for possible any disruption if it’s there.

Ashish Kanodia — Ambit Capital Private Limited — Analyst

Sure, sir. That’s helpful. Just on the inventory side, is it possible to share out of the total inventory which you are carrying at the year end, what percentage would be pertaining to finished goods and what percentage would be of raw material?

Ramesh Kumar Dua — Managing Director

Percentage, so overall maximum inventory related to FG because most of the materials we keep around 50 to 60 days inventory in the system, but this time it was little higher. So on average, we keep around 40 days, but this time it is higher. So percentage terms, you can say around one-third will be — around 30% will be raw material and rest is WIP and FG.

Ashish Kanodia — Ambit Capital Private Limited — Analyst

Okay, got it, sir. That’s all from my side. Thank you.

Operator

Our next question comes from the line of Nikunj Gala with Sundaram AMC. Please go ahead.

Nikunj Gala — Sundaram Asset Management Company Limited — Analyst

Good evening, sir. Sir, just wanted to understand on the pricing trend. You mentioned 25% increase which you have taken, this is — this increase is at the consumer level or if I look at your realization increase on a YoY basis for FY ’22 it is also near 22.7%. Similar kind of increase is also at the consumer level?

Ramesh Kumar Dua — Managing Director

MRP, you can say consumer level, yes.

Nikunj Gala — Sundaram Asset Management Company Limited — Analyst

See even at the MRP it’s a 25% increase on a YoY basis? This includes the GST increase also from 5% to 12%, right?

Gaurav Dua — Executive Vice President – Marketing

Yes, yes. But it depends upon category to category also.

Nikunj Gala — Sundaram Asset Management Company Limited — Analyst

Okay, sure.

Gaurav Dua — Executive Vice President – Marketing

It’s not 25% across all categories. In some categories more, some category less. So it depends upon the raw material.

Nikunj Gala — Sundaram Asset Management Company Limited — Analyst

Okay, got it, sir. And if I look at this price increase on a three-year basis, our realization on a three-year basis, it would be 7%. So just wanted to understand this 7% increase on a three-year basis, how this much have impacted the consumer from the volume perspective, because our volumes are down 2% on a three-year basis. So is that a very meaningful impact that you are looking at the external environment that the demand has been impacted so much purely on account of this a price increase?

Ramesh Kumar Dua — Managing Director

I’m Ramesh Dua. The price increase has happened more in Hawaii slippers, Bahamas, and Flite EV [Phonetic], because they are having high content of polymers which became very expensive. So there price increase has been extraordinarily high. And that affected the demand of the articles. So that 25% what we are talking, that is average across all categories.

Nikunj Gala — Sundaram Asset Management Company Limited — Analyst

Yeah. I understand. Sorry to dwell more on this. Can you just help us with the — let’s take an example of average large part of your chunk of your product would be selling at approximately INR250, INR300 a article at the consumer level, and on that you have taken, say, 20%, 25% increase. So that INR250 to INR300 kind of like INR50 per pair would have such a big impact on the volume? Just want to understand that.

Ramesh Kumar Dua — Managing Director

Yes, yes. You’re right. In some categories we can feel the heat that you’re saying INR50 increase is there. So it has definitely affected some volume. But I think going forward, this thing will improve, because other people also are increasing their prices. So it will take consumer some time to really adjust to the new prices.

Nikunj Gala — Sundaram Asset Management Company Limited — Analyst

Sure. And just last one question. On a very sustainable basis, what kind of a working capital you think would be doable in the medium term? I understand this year it would be high on account of high RM, but what is the target threshold level you work with?

Ramesh Kumar Dua — Managing Director

Threshold from which angle, amount terms or what you would…

Nikunj Gala — Sundaram Asset Management Company Limited — Analyst

Like on a very sustainable working capital base…

Ramesh Kumar Dua — Managing Director

Sustainable working capital, if it’s three months, I think things are workable smoothly, three, 3.5 months maximum.

Nikunj Gala — Sundaram Asset Management Company Limited — Analyst

Sir, this is different from last time, if I look at seven, eight years back it was two months. Now we have shifted to three months kind of working capital?

Ramesh Kumar Dua — Managing Director

Because the shoe category is growing much faster. It’s a high-value item, so its lead time is much more. And we have to give little more credit to the trade also because it is high-value item, So that’s why it’s increasing. And moreover, the raw material prices have also grown up like anything. So overall value term, it’s definitely putting pressure on the working capital side.

Nikunj Gala — Sundaram Asset Management Company Limited — Analyst

Sure. Thank you, sir. Thanks for your time.

Operator

Thank you. Our next question comes from the line of Akhil Parikh with Centrum Broking Limited. Please go ahead, sir.

Akhil Parekh — Analyst

Thanks for the opportunity. Sir, my first question is on the price rise. What is the price differential now between Relaxo’s footwear and say unbranded and some of our peers like Aqualite, VKC [Indecipherable]?

Gaurav Dua — Executive Vice President – Marketing

Your voice is — can you repeat the question. Your voice you can’t hear.

Akhil Parekh — Analyst

Sorry, I’ll repeat the question. How is the price differential between the Relaxo versus our peers and versus the unbranded?

Gaurav Dua — Executive Vice President – Marketing

See what it was last year we have maintained the same gap. It is not that there is a huge gap in terms of like what it was one year back. So I can just say that we are always expensive and unorganized. You cannot compare brand with unorganized. It’s very difficult, because they do pricing on daily basis, so we do not do. So it’s very difficult to compare with the unbranded. But if you talk about other brands, whatever difference was there before, it is same.

Akhil Parekh — Analyst

And how much that would be roughly?

Gaurav Dua — Executive Vice President – Marketing

Depends upon brand to brand. There are so many other brands also. If you’re talking about Aqualite, so 5% to 10% difference is always there.

Akhil Parekh — Analyst

Got it. But does that lead to a downtrading say, for example, given that the unbranded is cheaper and they can sacrifice on quality, have we seen a trend where consumers have shifted from a branded player to unbranded?

Gaurav Dua — Executive Vice President – Marketing

Some parts of India or you can say bottom of pyramid where people are feeling the heat of inflation a lot, so they are doing it because again money in the pocket. Whatever money they have and it’s getting depreciated, so they are going towards the unorganized. But that is a short-term phenomena because the quality is not that good so they will come back to the brand.

Akhil Parekh — Analyst

Okay. And my second and last question is, in terms of the retail touchpoints, if I look at fourth quarter ’21 presentation, we said we had 50,000 touchpoints and now we say we have 60,000 touchpoints. So any specific geographies where we have added 10,000 outlets in last one year?

Gaurav Dua — Executive Vice President – Marketing

So it is across actually but major in west and south.

Akhil Parekh — Analyst

Got it. Thanks a lot. That will be it for me.

Operator

Thank you. Our next question comes from the line of Nisarg Gandhi [Phonetic], an investor. Please go ahead.

Unidentified Participant — — Analyst

Thank you for the opportunity. My first question is regarding how your customers are reacting to the significant price increase? And will you be willing to reduce the prices if the raw material pressure softens, which is something, if I recall correctly, you have never done in the past?

Ramesh Kumar Dua — Managing Director

We have always remained relevant to the market conditions and also keep our prices competitive. Keeping a view of our input cost, we have to act accordingly and that we will keep on happening.

Unidentified Participant — — Analyst

Okay. Thank you, sir. And just one more question if I may. Do you see an increasing contribution from e-commerce like from as high as 15% to even 20% from 11.5% this year in less than [Phonetic] medium-term? And if you can outline what is your growth strategy for incremental share in e-commerce.

Gaurav Dua — Executive Vice President – Marketing

So as everybody knows that digital is growing and e-commerce is the fastest growing category in footwear. So 11% to 15% in one year will be difficult, but we are definitely having high aspirations, and we will grow to a good number. But difficult to say right now if it will become 11% and 15% in just one year.

Unidentified Participant — — Analyst

No, sir, I was just looking to know more about the strategy that you are deploying to increase your maybe revenue share from the e-commerce channel.

Gaurav Dua — Executive Vice President – Marketing

Strategy if you ask like, we are going to increase the spends on the different channels, be it ecomm and so that is one — and we are going for SMUs or whatever product specific — whatever calls we have to take, we are doing that. And we are adding more channels in that.

Unidentified Participant — — Analyst

Okay. Thank you, sir. Thank you for taking my questions.

Operator

Thank you. Our next question comes from the line of Priyam Khimawat with ASK Investment. Please go ahead.

Priyam Khimawat — ASK Investment Managers Pvt. Ltd. — Analyst

Hi, sir. Two quick questions from my end. First you highlighted a sales mix as 25% in Hawaii and Bahamas and 35% each in Sparx and Relaxo. So was that volume you were referring to or was that a value breakup?

Ramesh Kumar Dua — Managing Director

It’s a value breakup, value.

Priyam Khimawat — ASK Investment Managers Pvt. Ltd. — Analyst

Okay. And how would the volumes be then if you could share that please?

Ramesh Kumar Dua — Managing Director

Volume generally we don’t share, but overall, you know…

Gaurav Dua — Executive Vice President – Marketing

90% Hawaii.

Ramesh Kumar Dua — Managing Director

Yes, maximum contribution come from Hawaii, Hawaii is including Bahamas also; second is Flite; and [Indecipherable] is the last one, so this is the break-up.

Priyam Khimawat — ASK Investment Managers Pvt. Ltd. — Analyst

Okay. Sir, and secondly, on the price increases, you highlighted that our last price increase was in December ’21. Right now we are already in May, and I assume that raw material prices would have further inched up from December up to now. So are we contemplating any further price increases in the near-term or the increase taken in December was sufficient for us to maintain a margin at the desired level?

Ramesh Kumar Dua — Managing Director

Currently, we’d like to continue with what pricing has been already there and let the things stabilize. Every now and then changing pricing destabilizes the market and creates lot of uncertainty.

Priyam Khimawat — ASK Investment Managers Pvt. Ltd. — Analyst

Fair enough. But can we see some pressure on margins then in quarter one, quarter two, because there will be a lag in price increases?

Ramesh Kumar Dua — Managing Director

Yeah, that will be there. After all, things are in the system, new things are getting adjusted. But things will improve in the next quarter, maybe somewhat this quarter also.

Priyam Khimawat — ASK Investment Managers Pvt. Ltd. — Analyst

Okay. Sir, and you highlighted our online share is 11.5% on the overall volume, but if I take closed footwear category as a whole, what will be our online share there? I was just trying to understand, are we in line with competition or ahead of them.

Ramesh Kumar Dua — Managing Director

Can you just repeat your question?

Priyam Khimawat — ASK Investment Managers Pvt. Ltd. — Analyst

Sir, our overall share in online 11.5%, as you highlighted. I just wanted to understand what would be the share in closed footwear category, sports and athleisure primarily?

Gaurav Dua — Executive Vice President – Marketing

So if you talk about online, so in Sparx we have — 60% we’re doing shoes and 40% is sandals even in online. So majority of sales are coming more than INR500 MRP in online.

Priyam Khimawat — ASK Investment Managers Pvt. Ltd. — Analyst

Okay. Sir, let me put it other way. Out of that — in our Sparx brand, what would be the online contribution?

Gaurav Dua — Executive Vice President – Marketing

It’s more than 25%.

Priyam Khimawat — ASK Investment Managers Pvt. Ltd. — Analyst

Okay, perfect. That’s what I was looking for. Thank you.

Operator

Thank you. Our next question comes from the line of Mr. Umang Mehta with Kotak Securities. Please go ahead.

Umang Mehta — Kotak Securities Limited — Analyst

Thank you, sir. I just had one question. In the online channel, at the EBITDA level, so considering the delivery and all those expenses as well, would it be profit making for the company?

Gaurav Dua — Executive Vice President – Marketing

We try to keep same margins what we have online, offline, and retail. So we last time also discussed that we do not want that goods flow from one channel to another because of prices. So we keep it same.

Umang Mehta — Kotak Securities Limited — Analyst

Same margin, you mean the gross margin, right? But considering the expenses of fulfillment of those orders, would you still be making same level of margins, EBITDA level?

Ramesh Kumar Dua — Managing Director

Yes, it’s the same. Just we keep everything same.

Umang Mehta — Kotak Securities Limited — Analyst

Got it. Understood. And just one quick question on the geographic breakup. Would it be possible to share some broad numbers on region-wise sales?

Gaurav Dua — Executive Vice President – Marketing

So our major sales come from north India that is around 50%, and then 18% come from east, same west 18%, and around 13% from south.

Umang Mehta — Kotak Securities Limited — Analyst

Got it. Thank you so much and all the best.

Operator

Thank you. Our next question comes from the line of Deven Kulkarni with Marcellus. Please go ahead.

Deven Kulkarni — Marcellus Investment Managers Pvt. Ltd. — Analyst

Yeah. Sir, so around two years ago, our distributor count was around 800 and today it has come down to around 650. So why has the distributor count reduced over the last two years?

Gaurav Dua — Executive Vice President – Marketing

So we have — we want quality distributors. So less than INR10 lakh sales per month, so there were many number, so we have cut down the tail. So we are focusing on — the cost of reaching them was also not — it was not viable. So we are focusing on good number of distributor holding more than INR10 lakhs per month. So that is how we decided. It was the tail. We have to cut the tail.

Deven Kulkarni — Marcellus Investment Managers Pvt. Ltd. — Analyst

Right. And is this exercise now over or it is work in progress?

Gaurav Dua — Executive Vice President – Marketing

Sorry, can you repeat?

Deven Kulkarni — Marcellus Investment Managers Pvt. Ltd. — Analyst

Sorry, is this exercise of cutting the distributors over or it is still work-in-progress?

Gaurav Dua — Executive Vice President – Marketing

So it is a continuous process. It is a continuous process. We add 50 or we remove 25 who are not performing, so it’s a continuous process.

Deven Kulkarni — Marcellus Investment Managers Pvt. Ltd. — Analyst

Right. Sir, and secondly, your presentation says that you have added around 10,000 retail touchpoints over the last one year or so. And despite that we have seen a volume decline. Now given that this is the essential category and replacement cycle would be two times a year roughly, so what explains the volume decline?

Ramesh Kumar Dua — Managing Director

Volume decline is mainly due to price, region, and GST impact, and these are the reason. So we added definitely new touchpoints, but ultimately, there is overall pressure from the demand, so this is the reason for volume decrease.

Deven Kulkarni — Marcellus Investment Managers Pvt. Ltd. — Analyst

Right. Sir, is there any channel destocking because of the price rise?

Gaurav Dua — Executive Vice President – Marketing

Channel, what you said, channel destocking?

Deven Kulkarni — Marcellus Investment Managers Pvt. Ltd. — Analyst

Yeah. I mean reduction of inventory in the channel because the prices have gone up by 20%, 30%.

Gaurav Dua — Executive Vice President – Marketing

Yes, yes. Distributors and retailers are very cautious because of so many changes on MRPs, so they’re keeping less stock.

Deven Kulkarni — Marcellus Investment Managers Pvt. Ltd. — Analyst

Okay. Sir, and will it be possible to quantify what will be the reduction in inventory in the channel in volume terms roughly?

Ramesh Kumar Dua — Managing Director

Sorry, it’s not — we don’t have it. Distributor inventory and in the system at the retail level, that’s not possible. We don’t have.

Deven Kulkarni — Marcellus Investment Managers Pvt. Ltd. — Analyst

Okay, that’s it. Thank you.

Operator

Thank you. Our next question comes from the line of Girish Pai with Nirmal Bang. Please go ahead.

Girish Pai — Nirmal Bang Financial Services Pvt. Ltd. — Analyst

Yeah. Thanks for the opportunity. You had an 8% decline in volume in FY ’22 versus FY ’21. Did the market also decline at the same rate? And if not, who gained market share?

Ramesh Kumar Dua — Managing Director

Overall category of Hawaii and [Indecipherable], it has actually goes down because this year the market has opened up and outdoor people have started to be on the market. So closed footwear is great [Phonetic]. And this, what you call it, chappals and these things have gone down, and at the same time, because of high inflation, buying power of these masses has gone down. So they are trying to hold on to their old slipper also and so delaying their purchase.

Girish Pai — Nirmal Bang Financial Services Pvt. Ltd. — Analyst

No, I was trying to understand whether we’ve lost market share to any competitor — unlisted competitor, maybe somebody who’s come from the south, for instance.

Ramesh Kumar Dua — Managing Director

No, no, that’s not there. You see, last year because it was abnormal, exceptional year, open footwear sale was much, much higher than the normal. So that’s why you are seeing that there is a degrowth in the number. That is the only reason, because last year we sold more open footwear. This year demand was less comparatively and closed footwear picked up in this year. So we don’t see there is I think some shifting of market share from here to there. It’s the overall number that has come down due to open footwear and closed footwear. If you go to three years back also, our this segment was 25%.

Girish Pai — Nirmal Bang Financial Services Pvt. Ltd. — Analyst

And what was the mix of open to closed footwear in FY ’22 compared to FY ’21?

Ramesh Kumar Dua — Managing Director

This year it is around 20:80, 20% is closed quarter, 80% is opened footwear. And last time it was 50%, 55%.

Girish Pai — Nirmal Bang Financial Services Pvt. Ltd. — Analyst

Okay. And did you see any difference between urban versus rural demand?

Gaurav Dua — Executive Vice President – Marketing

Yes, yes. Rural we are feeling more pinch. There is more pressure in the rural side of India. Urban still there is a movement. But in rural India, they are not able to absorb the inflation or price hikes.

Girish Pai — Nirmal Bang Financial Services Pvt. Ltd. — Analyst

Okay. Lastly there was a mention that you will start doing better starting from quarter two. What exactly do you mean by that?

Gaurav Dua — Executive Vice President – Marketing

As we have increased prices in December and still there are three to four MRPs lying with the retailers, and they are liquidating that. So we are hopeful that whatever prices we have taken that will be absorbed and all the old inventory will be out of the system. So there’s a lot of confusion with retailers having multiple MRPs with him. So we are thinking that once he liquidate his stock and the new rates will be adjusted.

Girish Pai — Nirmal Bang Financial Services Pvt. Ltd. — Analyst

Okay. My last question is on ad spend. What was that as percentage of sales in FY ’22 versus FY ’21?

Ramesh Kumar Dua — Managing Director

So FY ’21 being a tough year, the spend was less — intentionally it was less, but definitely this year we spent, as we have been doing, around 4%. So this is the gap between FY ’21 and FY ’22. ’22 was a normal year, ’21 was a little different year.

Girish Pai — Nirmal Bang Financial Services Pvt. Ltd. — Analyst

Okay. Thank you very much.

Operator

Thank you. Our next question comes from the line of Ankit Kedia with Philip Capital. Please go ahead.

Ankit Kedia — Phillip Capital India Pvt. Ltd. — Analyst

Sir, couple of questions from my side. Do we sell to B2B players like Udaan and AJIO business? And what would be our contributions from them?

Gaurav Dua — Executive Vice President – Marketing

We started with Udaan and AJIO, but our contribution is quite less. It is less than 1% also you can say that. So it’s a new channel for us, and the problem with them is they are playing a discounting game, which we do not want to disrupt the market. So we are cautiously watching them. And then going forward then we’ll see how we have to do business.

Ankit Kedia — Phillip Capital India Pvt. Ltd. — Analyst

Sir, because one of your competitors books double-digit revenues through these channels in the sports category. So do we sell directly to them or through a distributor channel we’ll sell them?

Gaurav Dua — Executive Vice President – Marketing

Through our distributor.

Ankit Kedia — Phillip Capital India Pvt. Ltd. — Analyst

Okay. And sir, my second question was, while you did say south is only 13% and we added more MBOs to west and south, could you share that the maximum volume decline would have come more in the north market or it was evenly spread north, south, east, west?

Gaurav Dua — Executive Vice President – Marketing

No, it was more in north and east part of India. West and south did well. Reason being — one more reason being west and south was affected more because of COVID lockdown, which they bounced back very well last year.

Ankit Kedia — Phillip Capital India Pvt. Ltd. — Analyst

Sure. Sir, so in these two geographies, two years down the line, do you think both these geographies together can contribute around 40%, 45% of our revenues in two years’ time or they will still remain in that 30% ballpark range?

Gaurav Dua — Executive Vice President – Marketing

It’s very difficult to say right now how they will grow exactly to 45% or remain at 30%, 35%. But definitely they have a more growth rate.

Ankit Kedia — Phillip Capital India Pvt. Ltd. — Analyst

Sure. Thank you so much.

Operator

Thank you. Our next question comes from the line of Vikas with Equirus. Please go ahead.

Vikas Jain — Equirus Capital Private Limited — Analyst

Thank you so much, sir, for the opportunity. Sir, my first question on the raw materials side. Can you quantify what has been the jump in the raw material prices for the quarter versus 3Q and versus 4Q of last year? Any number to attach to it?

Ramesh Kumar Dua — Managing Director

Different materials have a different — we can tell you as an average, average of different kinds of material inflation. Or you want to know specific raw material wise [Indecipherable].

Vikas Jain — Equirus Capital Private Limited — Analyst

There will be top two or the major part of the raw material, number probably an average.

Ramesh Kumar Dua — Managing Director

Yeah. You want Q4 versus Q4 or full year versus full year?

Vikas Jain — Equirus Capital Private Limited — Analyst

Q4 versus Q3 and versus Q4 versus 4Q of last year.

Ramesh Kumar Dua — Managing Director

Q4 versus Q4 there is a huge. Definitely last year it was a very good year from raw material point of view. You can see in some material, it was around 80% also, which is also major contributor in the material side. So Q4 versus Q4 overall there is a huge jump, you can say around 50%, 60%. But Q3 versus Q4 because already material had peaked out, so that will comparatively be much lower, maybe around 20%, Q3 versus Q4 in overall.

Vikas Jain — Equirus Capital Private Limited — Analyst

Okay. Okay. And sir, one another question, similar to it. So there are 2 parts. First, the GST hike that has to be passed on and second is the RM inflation that has to be passed on in price hike that we are taking. So can we say that the GST pass on is almost done and it is only the raw material price hike that has to be taken, or even the GST part is also left in the — to be reflected in the price that you have to take?

Ramesh Kumar Dua — Managing Director

I think GST has been done now. That is now history. By and large, it has been settled in the market. It’s really taking time, but yes it has been settled now. So raw material is the only leftover item and overall inflation in the system — overall inflation on all fronts, it is also there in the — everywhere it’s there.

Gaurav Dua — Executive Vice President – Marketing

There are two things. One thing is cost of input has gone up because of the raw material itself and GST also. Other end, the buying power of the consumer has gone down. So both things have affected actually.

Vikas Jain — Equirus Capital Private Limited — Analyst

Correct. Sir, just your view as to how the market or probably our competition are strategizing with respect to taking the price hikes. Are they more of taking the price hike or they are cutting back on taking the price hike just to ensure that the demand does not get hit big time?

Gaurav Dua — Executive Vice President – Marketing

Raw material is quite common for all of them, so they have also taken price hike, and all of them are also feeling the heat. There’s a limit to pass on the price to the end consumer. So for now it is wait and watch. Let us see how prices go in next quarter.

Vikas Jain — Equirus Capital Private Limited — Analyst

Thank you so much.

Operator

Thank you. Our next question comes from the line of Tejas Shah with Spark Capital. Please go ahead.

Ramesh Kumar Dua — Managing Director

Tejas, your voice is not coming.

Operator

Mr. Shah, your line is unmuted.

Ramesh Kumar Dua — Managing Director

Yes, we can hear you.

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

Hello, am I audible?

Ramesh Kumar Dua — Managing Director

Yes, yes, Tejas, you can just continue.

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

Yeah. Sir, a couple of follow-ups. Sir, in most categories we are competing with unorganized, and across categories in our channel checks we are picking up that wherever unorganized was depending on — are dependent on Chinese imports, they have been struggling both on inflation and also availability count because the supply chain has been disrupted badly. So are we seeing any benefit of that in our favor because our supply chain will be relatively much more robust than unorganized competition in the three segments that we operate in?

Ramesh Kumar Dua — Managing Director

The material that we are using in our Hawaii slipper, Flite, EVA, we are always keeping good inventory in that system. So there is no question of disruption in our manufacturing we’re seeing. We have been cautious — we have to be cautious on that.

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

Yes. Precisely that is the point. So definitely we are actually better off than some of the unorganized players. So are we seeing that natural gain happening in market share because unorganized is not as competitive compared to, let’s say, they were two years back or a year back?

Ramesh Kumar Dua — Managing Director

But the material like polymers, EVA, PU, PVC or natural rubber, they are available in domestic also. So that’s not an issue for them. Material is available. Now it is a question of price. A year back the prices were very high in local markets because — but now comfortable pricing is there. So availability has not been a concern for these categories.

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

Fair point. Got it. Sir, second and last question. If I see our volume, we are actually lower than FY ’20 volume. So understandably, our capacity utilization will be lower than what we had in FY ’20 because we had capex also in the last two years. So again, we have guided for INR100 crores of capex this year. This looks a bit higher on maintenance capex side. So just wanted to understand what is this outlay for?

Ramesh Kumar Dua — Managing Director

Because every year we — it’s a very fast-moving article, and we have to create new designs, so a lot of money goes in the mold side also, around INR25 crores, INR30 crores, every year it’s a recurring capex every year we have to do. Then we are setting up some back-end operation. That is almost in the final stage. So few expenses definitely will go there. So these are the two major and other routine expenditure around IT and around this one INR8 crores, INR10 crores. So INR100 crores almost in this size it’s always there.

Tejas Shah — Spark Capital Advisors (India) Private Limited — Analyst

Okay. Fair enough, sir. That’s all from my side and all the best, sir.

Operator

Thank you. Our next question comes from the line of Mrs. Trivedi [Phonetic] with Trident Capital. Please go ahead.

Unidentified Participant — — Analyst

Hi, can you hear me?

Ramesh Kumar Dua — Managing Director

Yes, yes.

Unidentified Participant — — Analyst

Rameshji, my question is to you. It seems we are in a rather difficult situation where, as you mentioned, in some ways the volume or — the top line is not in our hands because the consumer is stressed because of inflation. And the margin is also not in our hands because the raw material has a lot of pricing concerns. Under these kind of scenarios, how do you manage the business, what are the numbers and metrics that you focus on these days?

Gaurav Dua — Executive Vice President – Marketing

So we are going to increase our A&SP spend, plus we are going to have a competitive range introduced soon, so that we are able to get the top line fixed first. So that is the priority number one. And there will be some measures in appointment of new distributor, adding more outlets. So definitely, I think we will be coming back with the numbers.

Unidentified Participant — — Analyst

Okay. And as the situation is unfolding, there are so many different scenarios that are possible. Which is the scenario that you would be most worried about? And I’m thinking, for example, if there is protracted inflation increase for the next, let’s say, 18 months, 24 months, then I would imagine that there will be a lot of pain in the system. But I’m curious to hear from your experience what is it that you worry about the most in terms of future expectations.

Ramesh Kumar Dua — Managing Director

At times we have to first protect our market share and top line, and we have to keep our pricing very competitive, so that we are there. When the things settle down, then you can always have your better pricing and margins also.

Unidentified Participant — — Analyst

Can I ask you a follow up on this? I think at least a couple of times during the call you have emphasized on market share. Why do you care so much about market share and why do you think if you have market share then pricing and margin and everything else follows? I think it’s very interesting your keen focus on market share.

Ramesh Kumar Dua — Managing Director

It’s very important we have — we cannot lose our shelf space. We have to be there in the mind of the consumer always. That is of prime importance. Once we are always there, then everything else will follow then only. If we lose the market share, what we are left with?

Unidentified Participant — — Analyst

Got it. And in your experience, and I’m thinking, let’s say, in early 2010 when the inflation was 10% or 12% how was — if you compare that period to now, any learnings and lessons that you can apply from those times to today?

Ramesh Kumar Dua — Managing Director

This time inflation has been very severe. For example, the EVA material which was at INR120 costing 1.5 year back, if that becomes INR300, it is very severe. It never happened in ’10 [Phonetic]. So at that time, inflation was there but it was gradual and gradually price hikes were taken. Things settled like that. This year it has been very fast, so far as we have to take four price increases in the last one year. It has never happened. And still today also uncertainty continues. That’s it.

Unidentified Participant — — Analyst

Got it. But in these times, while it is bad for the economy and unfortunate for the consumers, but in some ways, is this not a good time for Relaxo to really seize and take market share from unorganized players for whom the pain will be much more?

Ramesh Kumar Dua — Managing Director

No, no, pain is for all, but they are in the system, they will always remain in the system. And we all generally coexist. Share can go down here and there. That’s it. But doesn’t mean somebody will be wiped out in the system.

Unidentified Participant — — Analyst

And you feel more competition from unorganized players given your price points or from all of these organized players, particularly the ones who are now going public as well and face pressure from their investors to show good results?

Ramesh Kumar Dua — Managing Director

Competition is from unorganized also and organized also. But we have to always remain competitive on all fronts. We can’t just look down upon anybody lightly.

Gaurav Dua — Executive Vice President – Marketing

They were selling before now also. So listing and non-listing does not…

Ramesh Kumar Dua — Managing Director

They were always in the system. They will remain always in the system, you know.

Unidentified Participant — — Analyst

Yes, yes. Got it. And one final question if I might. Rameshji, my biggest concern is succession plan for Relaxo. Is this something that is actively discussed in the company or is this something that the board is discussing? What are your personal thoughts on this?

Ramesh Kumar Dua — Managing Director

So that thing is in process. We are serious on it, but we can’t divulge beyond anything now.

Unidentified Participant — — Analyst

Okay, all right. Thank you so much and good luck to you.

Operator

Thank you. Ladies and gentlemen, due to time constraint, that was the last question for today. I now hand the conference over to Mr. Akhil Parekh for closing comments.

Akhil Parekh — Analyst

Thanks, Ryan. On behalf of Centrum Broking, I would like to thank the entire management team of Relaxo for answering all the questions very patiently and in detail. I’ll hand over the call to the management team for any closing remarks. Thank you. Thank you all for joining. This is all from our side. Looking forward to joining you again. Thank you very much. Thank you from Relaxo side.

Operator

[Operator Closing Remarks]