Relaxo Footwears Limited (530517) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Relaxo Footwears Limited Q4 and FY '24 Earnings Conference Call, hosted by DAM Capital Advisors Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajiv Bharati from DAM Capital Advisors. Thank you, and over to you, sir.

Thank you so much, Reah. Good evening, everyone. Representing DAM Capital. It is our absolute pleasure to host Relaxo Footwears Limited for its Q4 FY '24 conference call. From the management side, we have Mr. Ramesh Kumar Dua, Chairman and Managing Director; Mr. Gaurav Kumar Dua, Whole Time Director; Mr. Ritesh Dua, Executive Vice President, Finance, Mr. Sushil Batra, Executive Director and Chief Financial Officer; and Mr. Ankit Jain, Company Secretary. We'll begin the call with a brief discussion from the management, and then we'll open the floor for Q&A. Thank you, and over to you, Mr. Sushil.

Thank you, Rajiv. Good evening. Can you hear me Rajiv?

Yes, sir.

Good evening, everyone, and thank you for joining us on our Q4 and full year FY '24 earning call to discuss the financial and operational performance of the company. We have already uploaded the earnings press release and the investor presentation on the stock exchanges as well at our website and hope that you have had the opportunity to go through those. Before we begin the question-answer session, let me quickly go through the Q4 and FY '24 performance, starting with Q4. During Q4 FY '24, we recorded revenue of INR 747 crores as compared to INR 765 crores in Q4 FY '23, reporting a marginal decline of 2.3% year-on-year on account of slight decline in volumes. EBITDA for the quarter was at INR 120 crores, up by 2% year-on-year from INR 118 crores in the corresponding quarter of the previous year. EBITDA margins were up marginally by 69 basis points and stood at 16.1% in Q4 FY '24 as against 15.4% in Q4 FY '23. PAT was at INR 61 crores as compared to INR 63 crores reported in Q4 FY '23. PAT margin for Q4 FY '24 remained flat at around 8.2%. Now coming on the full year FY '24. We have achieved a moderate growth of 4.7% year-on-year from INR 2,783 crores in FY '23 to INR 2,914 crores in FY '24. This performance was largely driven by a significant uptick in open footwear volume, a witness to the efficacy of our strategic initiative to regain market share. EBITDA for the year was INR 407 crore as against INR 336 crores in FY '23, registering a growth of 21.1%. EBITDA margin was at 14%, improved by 188 basis -- year-on-year as against 12.1% in FY '23. Margin majorly benefited from the softening of raw material prices, which was partially offset by the increased fixed costs. PAT was at INR 200 crores in FY '24 as compared to INR 150 crores in FY '23, recording a significant growth of 29.8%. PAT margin was 6.9% during FY '24 against 5.6% in FY '23, improving by 133 basis points year-on-year. In FY '24, the company incurred a total CapEx of INR 248 crores, including a purchase of 30-acre land parcel in Bhiwadi, Rajasthan, worth INR 127 crores. We remain a net debt-free company supported by a positive cash from operations. Our key strengths include our in-house manufacturing capability, strong distribution network, product quality and strong brand recognition. We continue to explore new revenue and focus on other new channels and e-commerce platform for growth. We are confident that our ongoing efforts will lead favorable result for us in the future. Thank you. The floor is now open for questions.

[Operator Instructions] First question is from the line of Shirish Pardeshi from Centrum Broking.

Just two questions in the beginning. This 5 million -- 5 crore pieces what we have sold in quarter 4 against 5.1 crore in the quarter 1. So can you give some more color what segment, which segment and which markets is driving this? And something more on the inventory side, is the inventory is now under control in the [ retrieved ]? Or do you think it will take some more time? And the second question is on the pricing bit. What kind of pricing aspiration we will hold or we will continue the similar price over FY '25?

Yes. This is Gaurav. Just to answer your question. Q4, when we started, there was a QC order BIS was implemented. So if you see that subdued growth or a little minus coming in, that the main reason was that we were implementing BIS. So there was some confusion in the market, how it will be implemented. So we increased price marginally. And then we saw that we were able to implement all this BIS. And regarding -- what is the second question?

I think the growth, what we have seen in a number of payers. So quarter 1 was 5.1 crores and quarter 4 has come back to 5 crores. So any color on what kind of growth we are seeing in number of payers, which is now remained at 5 crore on an average?

No, our month January was affected because of BIS. That's why we're not able to cover that -- we could not cross that 5.1 crore figures.

Is the similar trend has continued? And the question was -- the parallel question was that whether the inventory is now adjusted or normalized or still there will be some effect, which can be seen in quarter 1?

So inventory is now normalized. There's no problem with inventories. And I think now that things have started picking up in the market.

Okay. And the second question is that in terms of pricing aspiration, what should we look in FY '25 is the price increases will happen? Or will remain as where we are?

Ramesh Kumar Dua. The pricing depends upon our cost of the inputs. As the input remains stable then prices also remained stable. So by and large, we have to make sure we are always competitive in the markets, keeping that thing in view, we have a pricing strategy.

Next question is from the line of Devanshu Bansal from Emkay Global.

Sir, we have invested in acquiring this land parcel during the year for enhancing our manufacturing capacity. I just wanted to check what is the current capacity utilization? And what is the expected increase in the capacity with this new addition?

Capacity utilization, around 65%. And on the land parcel that we have bought, we have to always stay ahead of the curve where land searching is always a time-consuming. So for future growth. So we have land in our hand. So whenever we want to increase production, then we have to start the process of building the factory because we are always having greenfield projects. And then we take steps accordingly. So that is something keeping future in view as we have acquired this land.

Understood, sir. And a follow-up to this is, there is a lot of substandard open footwear being imported as of now, which should, in my opinion, at least be restricted after BIS implementation. So is this capacity expansion somewhat factoring in restricted imports from other countries? Which may sort of lead to higher demand from local players like Relaxo?

Earlier also before implementation of BIS. The product category we were in by and large other than Hawaii segment. Nothing was imported. It is only where footwear industry was not able to make that kind of products, they were being imported. Now after this kind of restriction, definitely some shoes, some -- in EVA slippers their import will be restricted. [ Practically ] low quality the EVA shipper were being imported. So there will be a restriction on that. Indirectly, we may have some benefit. Let us wait and see.

Yes, sir. That's what I'm trying to ask. So is this benefit going to be large in quantum? Or is it just a small benefit that can come to a place like Relaxo?

I don't think it is going to be very large. Overall import was hardly 5% to 6% of the Indian consumption. That is going to be restricted.

Understood, sir. Understood. And one last question is our ROE is currently at 8% to 10% over the last 2 years. So how do you see these levels? And any trajectory that you would like to sort of highlight in the initiatives that the company is taking to improve this?

ROE definitely because the profits were under pressure in the last 2, 3 years. So that's why it has come down, and we have added more assets in the system. So from next year or in coming time, it should [Audio Gap] growth will be there. So it will improve definitely.

Okay. Last -- sorry, final bookkeeping question is, sir, while revenues have grown by about only 4%, 5% in this year, the receivable increase is about 30-odd percent. Is this something a one-off? Or why is this number increased at FY '24 end?

This has increased because there is a pressure in the market. The demand is subdued. So because of pressure in the market, there is an increase of the outstanding. So the payments are slow, you can say, the payment is slow in the market.

Next question is from the line of Prerna Jhunjhunwala from Elara Capital.

I would like to understand the demand outlook in both open footwear and closed footwear? How do we see for the next 1 year and beyond? And what are the figures for the sale?

See, as you see, the sports segment is growing faster than the open footwear category. But lastly, what we have seen is that open has grown more than the closed footwear -- Sports, if you can -- sport shoes. So the industry, if you talk about 3 to 4 years' time. Sports footwear or closed footwear will definitely exceed in growth compared to the open footwear.

Okay. And what are current capacities if you see the breakup of the two? And what is the revenue share of the 2 segments?

See, as company Relaxo as a whole, our closed footwear contributes 20%, and open footwear contributes 80%. But one of the brand, which is Sparx, there, it is 65% closed -- 60% closed and 40% open. So we are trying to grow this category Sparx, which has more contribution and it has more contribution of closed footwear.

Okay. And why wasn't closed footwear under pressure this year? I did not understand that part?

So that is because of the demand. A lot of -- you can say, a lot of new entrants have come in the market and the price what they are offering. But there's more supply than demand in the last 2 years. A lot of capacity has been put in by the other players.

Okay. So you mean there is an oversupply of product in the market?

Local pressure, yes.

So you see that oversupply correcting in how much time? Is it fair to ask, I mean, understand that? Or it is nonmarket forces?

It depends on what market they are. It's dependent on the market. But consolidation will happen definitely.

Okay. Okay. And will you please help us understand the brand-wise revenue share as well?

Already we have shared in our investor presentation, but even then, I can tell you. So Relaxo, it's contributing like with Bahamas, 25%. And then Sparx and Flite both are equal, so 25% Relaxo plus Bahamas and rest 50-50 Sparx and Flite.

Okay. So Relaxo and Bahamas 25%, Flite 25%?

Flite is 37% and..

Sparx is 37%. So 50% of 75 divided by 2. 37.5% roughly half-half.

Next question is from the line of Videesha Sheth from AMBIT Capital.

My first question is on the market share. In 2Q, you had mentioned about gaining market share that was lost in FY '23. So any comments on how market share has moved in the second half of the year? That is the first question.

Yes, you must have read, we have sold maximum number of pairs. We have touched 19.5 crores, that is all-time high. So this is done by more sales in Open Footwear. So we have gained our volume growth is more than the value growth.

Okay. So on a value basis, market share would have increased?

Yes, Correct.

Got it. Got it. And the second question was we've always been talking about increasing our agency and presence in the south of India. So any incremental initiatives that are being undertaken to increase the share from that region?

So we have implemented DMS across India. So DMS has been implemented throughout. Now we have launched the app. So this is a retailer app. We are doing engagement with the retailer now. So with the help of the app, we are able to touch 50,000 outlets. So 50,000 outlets have downloaded this app. So there is a direct connect from company to the retailer now. So if you talk about South last year -- there was a little decline in sales. There were pressure in the market. So we are just trying to maintain that market share.

Okay. And essentially, this app that we're talking about, would that largely help from a demand -- from a more accurate demand or forecasting perspective?

Correct, correct. Demand for -- a lot of things we can even pass on these gifts to the retailer directly. We'll try to -- we'll understand what is the market demand and which outlets are demanding but how the -- what is the market share of this outlet. A lot of data will come through that.

[Operator Instructions] Next question is from the line [ Omkar Kulkarni ] from Shree Investments.

My question was mainly regarding the revenue, which has been flattish for the last 3 years. What kind of revenue positions you can model for this? And you have talked about the industry growing at -- I mean, not industry, the footwear market side growing by around 15% to 17% possibly next year. So our growth has been 3% to 5% -- 4% we are projecting the market size to be around -- growing at [indiscernible]. What kind of projections we can [indiscernible]?

This year, we have taken certain sales strategic initiatives in which we have launched DMS, which will control our -- or keep an eye on secondary sales. Then we have improved our retailers connect. We are also through brand sellers and e-commerce [ reform ] selling direct to consumer. So all this information, which we'll gather through all these 3 apps will be kind of a big source of knowing monthly to what is what. And all this combined effort will help us penetrate and grow better in the coming time.

Yes. But if you can specifically guide us like what low-digit growth or like mid-teen growth or low single-digit growth? Or what kind of growth you are expecting? Not [ save money 3 out of ] [indiscernible].

We are expecting a double-digit growth this year.

Which you haven't done for the last 3 years?

Yes, because a lot of initiatives we have taken. And this -- a lot of sales transformation is taking place, whose fruits we'll bear this year onwards.

And what kind of margins are sustainable on a medium-term basis?

Around 15% to 16% EBITDA you can let us you can expect.

15% to 16% EBITDA, correct?

15% to 16%. Yes.

Okay. But isn't the EBITDA percent for last 2, 3 years has been like ranging from 12% or 14%, 15%? So like on sustainable basis we can 15%, 16% possible, right?

No, next year, it is a going to be like that. We had difficult years, no, because raw material volatility was too much. We achieved in this quarter also -- this year -- if you can see this quarter, we have achieved 16% EBITDA.

Talk more about the competitive intensity. What kind of competitive intensity that you are seeing currently in the market?

[indiscernible] that is always there. It will always remain. We have to keep ourselves more competitive than others. That is our focus.

Yes. But just now you said that there were some new entrants. So because of that, what kind of competition level is currently?

So more people when they come into industry, they pass on more credit in the market. They pass some more discount in the market. So this happens once in 5, 6 years. But now things will consolidate, and we will definitely gain the market share.

Next question is from the line of Tanmay Gupta from Motilal Oswal.

Sir, I just wanted to understand. The revenue declined 2% in this quarter and margins -- and gross margins improved to 60%. Is that because of the high sales in closed footwear for the quarter? Is my understanding right?

So the sales were not high in the -- open footwear was more if you talk about sales.

So sir, I just wanted to understand where the gross margin lever is coming from?

We have taken a moderate price increase.

Okay. In the open footwear?

That's correct. Correct.

And so because of the raw material price increase we have taken or we will maintain these prices going forward?

We'll maintain these prices. It depends upon raw material also, plus because of BIS. A lot of -- we have improved the quality. We have improved the specs of our products also. So it's mixed. So it's both.

So we can expect like 58% to 60% of gross margins going forward? I believe.

Yes.

Understood, sir. And sir, second question is on the sportswear. So like sportswear would be around INR 200 crores to INR 250 crores in our -- in the Sparx?

Sparx we have 400 crores plus.

No. In the sportswear, sportswear could be like how much of the Sparx in total?

50% of that. If you talk about closed footwear, 55% is closed of total of INR 1,000 crores what we do in Sparx.

Right, right. So sir, I just wanted to understand the strategy -- increasing our closed footwear penetration because, as you said, a lot of unorganized peers have also come up. And we have, obviously, the competition comes organized. So looking going forward, are we -- how will we penetrate the footwear, the closed footwears footprint in the market? And [ renewed ] with the price range or premiumization or what kind of strategy if you can -- little bit tell me?

A lot of steps. I would like -- it's not special this year. Every year, we take a lot of steps like, it depends upon launching of new entities we launch every year and then new markets, new distributors, opening new outlets, then e-commerce. The penetration in e-commerce earlier it was through a distributor started through BAS. A lot of steps there like 15, 20 steps you take. The strategy we can't define right now.

But the pricing would be around INR 400 to INR 600? I mean [ to the March ] segment, we will be focusing on?

You're talking about ASP 400 to 600? Or what?

Yes, it means ASP and in the trade distribution channel like that.

The ASP will be almost similar. We'll try to improve that. The Sparx ASP is more than INR 458. Overall.

Next question is from the line of [ Varun Gajaria ] from Boring AMC.

Just wanted to understand how is the supply chain alignment in terms of social [indiscernible]. Do we import raw materials? So how is it aligned at this point? And I'll ask my follow-up question after this.

Presently, supplies are consistent. There's not much of a challenge in the sourcing the material. The material -- natural over, we are sourcing here in India itself and the other polymers like EVA, they're being imported. And it has been always there. So presently, we don't find any challenge on that.

Okay. Sir, EVA polymers are reported from China?

No, no, not China. They are a lot of other countries.

Got it. So there's no challenge there in terms of sourcing?

I don't think we source any polymers from China.

How is the impact of BIS that we'll be seeing on overall raw materials supply and the relevant demand across industries? Because it seems there has been some commentary in the market that currently some of the factories based out in China have not been approved. So sourcing of sportswear, especially has been a challenge since the first few months. How do you see that trending in terms of inventory and overall demand?

The overall -- as far as we are concerned, we have implemented these BIS standards. And it is the people who have been importing and depending on them, maybe they will face some problems. But as we are concerned, we have been our own manufacturers and selling. So we will have no issue of that.

Next question is from the line of Chandra Govindaraju from Ashmore.

What was the actual mix from last year for FY '23?

You want to know channel mix or brand-wise mix? What are you asking -- which mix?

I'm looking for the revenue mix?

But tell you brand-wise or what?

Brand-wise.

25% is from Relaxo and Bahamas and 37% from Flite brand and 38% is from Sparx brand.

Okay. That is for this year, right? Right, I am asking for FY '23.

More or less -- revenue-wise, it was more or less because volume has grown in the open footwear, but value mix is more or less same. Not much changed.

No -- major change is not.

Major changes in the volume, but value-wise, it's more or less the same, 25% and 37% and 38%.

Okay. Okay. And whatever I'm trying to understand is in terms of pricing, which Sparx also had corrections. That's what I'm trying to understand.

Sparx -- there's no correction.

There's no correction. We are trying to maintain the volumes. And we have grown in volume, our value is low single digit.

That is open footwear.

Major volume growth is in open footwear.

If I remember correctly, last year, when we spoke, we were looking for more premiumization of Sparx. Because there was raw material volatility and though you might have not increased the prices, but can we expect price increases in Sparx in this year for FY '25?

We have been developing our new products as per the requirement of the market. So premium products are also coming. Not that they have restricted anything. Now ultimately, it is a need of the consumer or pickup in the market what happens. But we are offering new [ multiples ] also in the market.

Next question is from the line of Vikas Jain from Equirus Securities.

Yes, sir, my first question is with respect to the implementation of quality control. [indiscernible]

Mr. Jain we are not able to hear you.

Yes. Hello? Is it better now?

Yes, sir. Please go ahead.

So the question was with the quality control being implemented now, has that led to any increase in the cost? Production cost for you -- bear for us? Or any sort of something? Is there any meaningful uptick that we are seeing in that?

Well, there have been some moderate increase in costs, which we have already accordingly passed down and revise the rates. So not a major issue at all. Otherwise also, we have been already quality-conscious players. So it was not much of a thing. Only certain specs, which government wanted to have -- so we have aligned this.

Correct. Correct. So then in net [indiscernible], how do you rate the implementation across [indiscernible] that are operating in the same price points? And how do you think the adherence is being like implementation? How would you rate the competition actually going on that level? Are the competitors and everyone following that vigorously?

As far as the rule, government has exempted micro and small from this implementation of QCO. It is only on medium and large industry. We are one of the large industries. So as far we are concerned, we have implemented it.

Right. But -- means at the ground level, are you seeing that with -- because some players are exempted, is there any differential that has been created here? Any impact coming out of it on the overall demand?

No, we do not see that. It's too early to say that because there's some extension given by government also. So it's -- we'll wait and watch the situation right there.

Got it. That's correct. Okay. Okay. Sir, second question is [indiscernible] closed footwear means in quality terms, while -- how would you rate the demand actually at this point in time? Has it like be taking a lot [indiscernible] to open footwear also that the rural is picking up? And people are going back to normal. So how do you see the journey in that point of time and do you see -- further a good amount of pickup happening yet?

So in last year, inflation was high, and we witnessed a lot of down trading by consumers. And because of that, there were delay in purchases of sport shoes, which is in discretionary in nature. So going forward, we are expecting good monsoon and the demand should definitely uptick.

Okay. Okay. And you believe while, as you rightly mentioned, there was a market share loss, but we have gained by passing on the raw material price increase. Substantial room for further gaining share lift?

This year, we have taken a lot of sales transformation initiatives. That will help the company to grow at a better rate than competition, I think.

Next question is from the line of Jasmine from VT Capital.

I wanted to understand your trend on the realizations? I see that quarter-on-quarter, there has been a slight increase on the realization. But the volumes have also grown consistently with that. So going ahead, are we looking at more the end users picking up? Also, do we see any realization [ cut in ] open footwear and in closed footwear if people give separate trends for those, please?

Realization is not going to come down. It is only -- it will improve. But whatever rates we are having, they're very competitive, and there is no room for a reduction of -- in prices. So that rate goes down. It will only improve.

From both open and closed footwear?

Yes.

And my last question is on the international side. I wanted to understand how much the exports are contributing and how the different countries are doing where we're exporting?

I am Ritesh Dua. We are around 4.5% of what our company turnover in exports. And we are getting traction from all the continents like Africa and Asia, then Gulf, then Central America and Oceana. So all markets are responding well. So wherever we have -- all these countries we are selling in our own brand and we're getting good traction. And we're doing all the marketing activities also in these markets, in these priority markets. And we are bullish for future as well.

Just one clarification. I wanted to understand how much is the margin [ between what ] we're exporting and with domestic, if it would just be a range, if you could provide?

It is almost similar because we get incentive also. So it's almost similar when you compare with the company level margins.

Next question is from the line of [ Shantena Malik-Chaudry ] Credit Info [indiscernible].

So my first question is on your take on premiumization. So like what are we looking into like -- how to grow our premium product and how much quantum of revenue we are generating from this theme? And going forward, what should be the opportunity from this kind of thing? This is my first question.

So premiumization is a journey. So every year, we are trying to increase our ASP. Last year, because of the demand the volume was -- we -- the volume, we grew much more than the volume was more than the value. So this year also, we are expecting in our NPD, we'll launch more of the premium articles. And try to increase our ASP higher.

Yes. So despite that, our realization trend is going to be in the range of [ 145 -- 150 ]? Or there will be an increase in these [indiscernible]?

Definitely, there will be an increase because we -- last year, we were at [ 161 ], which came down to [ 148 ]. So we'll definitely try to go above what we did last year.

Okay. And sir, I just wanted to understand how much quantum of [ revenue ] comes from this premium portfolio?

So if you talk like our -- we have a premium brand called Sparx, which is contributing 1/3 of our total sales. So if you talk about premium, definitely, we have added more brands like Bahamas and Flite Urban Basics. So our journey is on -- we have to improve in premium range.

So this will continue to remain 1/3 this year? Or we are looking some increase in that?

They will be increased, definitely, there will be an increase.

Okay. And second one is on e-commerce. So like how we are looking to leverage on the e-commerce segment and like what is our take on that?

See, last year, you have seen there were a lot of discounting happening on e-commerce. So we have taken some corrective action. And now we are focusing more on BAS, business as seller to control the prices.

Okay. And so any percentage figures that how much e-commerce forms that are part of the total channel?

We do roughly around 9% to 10% in e-commerce. Of our total sales, 9% to 10% of total sales, yes.

Okay. And sir, last one is like we are seeing in terms of open and closed footwear will continue to remain 75%? Or like it's going to see some changes?

No. Right now, it is 80% is open and 20% is closed. So we are expecting that 75%, 25%, to become.

Next question is from the line of Mr. Rajiv Bharati from DAM Capital Advisors.

Sir, this is regarding the CapEx line item. So you have done INR 250 crores this time. You mentioned that INR 127 crores was for this land. And typically, you do INR 25 crores, INR 30 crores on the molds bit. Can you explain the remaining part of it?

It should say -- last time, it's a plant and machinery also, and we are adding building also. So last year, we added 1 manufacturing plant to -- for back-end sport in the PU category. And machines also we buy in the range of INR 30 crores, INR 40 crores. It's a routine expansion, which is always required. So INR 25 crores ,INR 30 crore at the most. So that is the breakup.

Sure. And it looks like -- I mean, is it right that the Sparx utilization currently is close to [ 70 ], 75%?

No, that the case, it's around 55% to 60% overall company at 65%. So that's the overall number.

And are the immediate plans of expanding this Sparx bit in the next fiscal or so?

Already we have capacity. That's not required immediately in the expansion of capacity.

Yes. And this online bit, you mentioned that 9% is coming from online. On the Sparx bit, this was close to 25% odd. Have we seen any improvement or additional improvement there after March?

You're talking about this April or last full year?

For the -- so I was under the impression that the B2B guys have been slightly slow in ordering or placing orders. And that's why -- and we were slightly heavily indexed on the Sparx side, on the online bit, right? I think 1/4 of Sparx is online. Have you seen some improvement on this front in the, let's say, second half?

Second half of last year, you're talking about, right?

'24.

Yes, yes. So last year, there were a lot of issues coming from some of the sites. They were undercutting because of they have that big billion day and all whatever. So we have corrected that, and we have taken control on our own, and now we are focusing on brand as seller. So we are just maintaining the volume at the e-commerce, if you talk about that.

Next question is from the line of Resha Mehta from GreenEdge Wealth.

So the first question is that while our revenue for this financial year has grown by 5%, but if we look at the employee costs and other operating costs, they have grown almost by 13% and 16%, respectively. So anything exceptional here?

There is no exception because revenue has not grown as expenses has grown. So in case of implied, definitely, there is an increment and writing of some people also. So because revenue has grown by hardly 5%, so that's why percentage has increased. But in absolute terms, there is a normal inflation cost has increased.

All right. And can you also break up your revenue into how much of it comes from Metros, Tier 1 to rural?

We have distributors district wise. So we do not capture exactly what is the rural. So major distributors are 5 lacs plus towns. So we are not able to capture exact what is the rural sale. Because rural is villages. We are not able to capture right now that.

[Operator Instructions] Next question is from the line of Prerna Jhunjhunwala from Elara Capital.

I just wanted to understand your A&P expenditure for the year? And are you planning to increase [ maintain ASP ] for next year?

So if you talk about ASP, so it is roughly around -- for advertisement, we do around 4% to 4.5%. And the rest is the schemes and that -- both put together comes to 9%. And we're trying to maintain that same number.

So when you're looking at growing at a higher rate next year, what initiatives will help you to grow? Just wanted to understand that at a higher rate? When the demand continues to remain a little subdued as to your commentary earlier?

Yes. So they are not one. But there are multiple actions we are going to take. This is one. Advertisement is one. Then we are improving on our reach to the retailers. So we have implemented the app, which was -- I was talking earlier. So we have enrolled 50,000 outlets. And our focus is how we can make it to 1 lakh outlet within this year. So a lot of activities are happening at BTL level, at ground level. So definitely, advertisement, if we see the market going up, that will also increase. And we are focusing on e-commerce, adding more outlets on EBOs. So there are a lot of things.

So EBOs, how many you're going to increase this year? Just trying to understand.

So 50 to 60. We currently have more than 400. We're going to add 50 to 60 more outlets.

And any market competition-related activity that you've seen, like increase discounts by competitors, et cetera? So how are you reacting to the same?

So definitely, see, a lot of activities. Again, I'm saying that we are we are trying to go in the unrepresentative areas. We are adding more number of distributors, adding more number of outlets. So the reach we are trying to increase that and we are controlling the outstanding, and we are keeping an eye on the market and taking steps accordingly. So this is a monthly program what we do, and we try to understand what is happening in the market and take corrective actions.

Okay. Okay. And sir, has the competitive intensity increasing in open footwear as well? Or only closed footwear?

Majorly in closed footwear.

Okay. Understood. And sir, in closed footwear, what are your capacity utilization? I missed that part.

It is 55% in closed footwear.

And our total capacity is 150,000 pairs, if I'm correct?

Yes, yes. You're right. It's a 10.5 lakh pair per day.

Next question is from the line of Vikas Jain from Equirus Securities.

Sir, in the presentation, you gave the brand-wise volume mix for FY '24. Could you help maybe from [indiscernible].

I think we lost you.

Sir, brand-wise, volume mix for FY '23? If you could give?

Brand-wise also -- last year also almost it was same share. You're talking volume?

Volume, you said it was different, right? You said value it was same, but volume was different, right?

Yes, volume-wise definitely different. So let me get some data. Just as we can see it. If we can get it -- just, I think to provide, where we can provide on that easily? Any anything else to accept this one?

Nothing. That was the only question.

Value-wise we are the same. But volume, it is increase in open footwear.

Next question is from the line of Mr. [ Omkar Kulkarni ] from Shree Investments.

My question is have the management setting any internal targets for the next 3 to 4 years? In terms of revenue, profitability, cash flow, ROE, ROCE, et cetera, to grow the business? Just wanted to know the management's vision in the business?

Next year, we have told. We will be having double-digit growth. We aim to grow it at double digit growth for the next 2 to 3 years.

What about the [ debt ] parameters? Profitability, ROE, ROCE?

Other parameters, ultimately, we have to [ wipe ] the competition, raw material prices and keep our prices ultimately competitive. So accordingly, I don't see any fear that we'll see any challenge in EBITDA or profitability.

My other specific question, is that [ in 5, 6 years back ], this was a different kind of Relaxo we used to see. But now [ perhaps there ] is no more in the company. If you look at the ROE that best industry -- best level. The revenue growth were also seemed very good. But I guess, last 3, 4 years that has not been the case and this question.

No. Because in the past, there was a lot of volatility in the raw material prices that affected us. Since we have to import the raw materials, we have to maintain a long supply chain, but also [indiscernible]. That is why we are telling things a little better.

Raw material volatility affects each and every player in the industry, right? I mean why won't it affect only Relaxo, right?

Because we are one of the largest importer of raw material. We can't depend upon local availability of material. The local they are smaller consumption. And they buy from a local market. But we have to maintain a long supply chain from all imports.

Correct. The raw material volatility would have been there 5, 6 years back as well, right? Still [ growth wise sequential ]. I wanted to know what is the exact reason for this?

The raw material volatility -- what you're talking about, it has been too much if you talk about previous year. Because we talk about EVA from INR 120 per kg, it went to INR 300. And this is short span, it came down to INR 150, INR 120 again. That kind of volatility we've never seen in the past.

Okay. So this is like related to particular commodity you're talking about, [ volatility of the commodity ]?

It was the [ mineral ] registered polymer. It was low density polyethylene also, PVC also. All polymers, they became volatile. Because we have to keep -- I mean, a good inventory of all these things. And that was the reason of that. Otherwise, generally, we are [ manificial ] in the rising market. We always have good inventory. This is the first time when it rose to INR 300 and then came down INR 150. So that affected us.

Okay. Can you confidently say that for the next couple of years, your profit will be higher than the revenue growth at least?

No. Nobody can predict what kind of raw material you will get, what kind of extra uncontrolled circumstances we'll be facing. Only thing is we have to see, we have to keep ourselves competitive. And based on the raw material costs, we have to keep our pricing.

In terms of growing the business, what kind of model you are targeting? Like EBO or [ net company ]? What kind of models you are targeting, the online model or like what exactly are you targeting?

No, we are focusing on all channels. Not that we are neglecting any channel. We have to see how we should grow. Our e-commerce business should grow. General trade should grow, exports should grow. We're focusing on all these channels, not any channel at the cost of another channel.

As there are no further questions, I would now like to hand the conference over to Sushil, sir, for closing comments. Over to you.

Thank you all for joining the call. This is all from our side. Looking forward to joining you again. Thank you very much.

Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.