Q4 20/21

May 24, 2021

Ladies and gentlemen, good day, and welcome to the Relaxo Footwear's Q4 FY 'twenty one Earnings Conference Call hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen only mode And there will be no opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Gaurav Jogani from Axis Capital. Thank you, and over to you, sir. Good afternoon, everyone. On behalf of Axis Capital, I would like to welcome you all to the Laxo Futures Q4 FY 'twenty one Earnings Conference Call. From the management we have with us today Mr. Ramesh Kumar Dua, Managing Director Mr. Ritesh Dua, Executive Vice President, Finance Mr. Gaurav Dua, Executive Vice President, Marketing Mr. Sushil Batra, CFO Mr. Vikas Tark, Company's secretary, we'll begin with a brief discussion from the management's end, and then we can open up the floor for the Q and A. Over to you, sir. Thank you. So good afternoon to everyone. Ladies and gentlemen, thank you very much for attending our earnings call for the financial year 202021. We have already shared our earnings I will start with Q4 FY 2021 financial performance followed by full year FY 2021 financial performance. In Q4 FY In Q4 FY 2021, RELAXO booked operating revenue of INR 7.48 crores, which is a growth of 38% year on year. The strong revenue growth was partially due to low base of Q4 FY 2020. As we know, sales was impacted in Q4 of last year due to lockdown in the month of March last year. EBITDA during the quarter was INR163 crores, which was a strong growth of 69% earlier the corresponding period of previous year. Our EBITDA margin for the quarter was 21.8, vis a vis EBITDA margin of 17.8 percent in Q4 FY 2020. Our profit after tax was INR102 crore for the quarter, up by 97% year on year with a PAT margin of 13.7%. For FY 2021, our revenue declined marginally by 2% INR2,359 crores with EBITDA margin of 21%. Our PAT of INR292 crores in FY 2021 with a margin of 12 point 4% grew by 29% year on year mainly due to product mix and selling and administrative expenses. During FY 2021, we generated a cash of INR 5.13 crores from operations and spent INR142 crores in CapEx and repayment of current and non current borrowings. At the end of March 21, We have 398 exclusive brand outlets, which contribute around 7% of total revenue. Export is holding its ground and contributing around 4% of revenue. During the ongoing crisis, We are undertaking all necessary measures to ensure safety and well-being of our employees and partners. We continue to support and provide assistance to our distributor and customers. Due to lockdown in various parts of India, overall demand for We are in subdued right now. However, we believe that demand for footwear should bounce back whenever these restrictions are lifted. The 2nd wave of COVID-nineteen in India is more severe and continues to impact lives and livelihoods. We stand with all those affected and are dedicated toward protecting and supporting our employees, partners and communities in the face of this unfolding crisis. Lexor remains committed towards its stakeholder by creating a sustainable, profitable and growing business. The company enjoys comfortable liquidity position with 0 net debt and continuing to provide assistance to its distributor and vendors. Despite the uncertainty related to the extent and length Of the press wave, we believe that company is well placed to emerge stronger in the post COVID-nineteen world. We remain committed to give The best experience and value for money to our customer and creating long term value for our shareholders. We can now open the floor for questions. Thank you very much. Thank you. Ladies and gentlemen, we will now begin with the question and answer session. The first question is from the line of Nehal Jamm from Edelweiss. Please go ahead. Yes. Thank you so much and Good evening to the entire management. So a couple of questions from my side and I'm taking from our last interaction. At that point in time, obviously, you mentioned that given the trend in raw material prices, you expect that longer term margins Would sustain at around 18%, but we've obviously ended the year at a much higher number. So first, if you could comment what is it that you expect going forward then after which I can come to my next Mr. Batra? Yes. And this is no. No, I cannot take it. This year, that is 2021, the margin have been more Because you have been saving on account of sales and promotional expenses, travel expenses And some professional expenses. So that has been the one and the competitive price also have been benign. And some efficiencies you worked at back end also in our plants. That was the main reason for More than expected EBITDA level of achieving. So, and is it that in the coming year we Most of these expenses would normalize, especially on the advertising part? You have to see it from time to time how the things are. Currently, the way again, second wave has come up. So traveling will remain restricted, But brand building is something you can't avoid. That we have to go on. So this year, our strategy is that we have to build our brand in the long term interest. So this year compared to last year, our Expenses on brand building will be more. This is what I want to say. Sorry to interrupt, sir. We are not able to hear you clearly. I'm telling the expenditure on brand building this year will be more than it was last year because for longer period, we cannot keep on selling on brand expenditure like advertisement and all that. So this year as a strategy, we'll be spending more money on brand building. That is what I wanted to tell. That's very clear, sir. Thank you so much. One more question from my side. I just wanted to understand On the industry scenario present, would it be fair to say that given the disruption that has happened because of COVID, Especially in a lot of our MBO channel, there has been disruption of other brands, which has helped us increase market share. Would that be a right sense of what is happening on ground at this point in time? Well, The way things are, the total I mean very chaotic, unpredictable environment that we are prevailing in. Nobody expected that COVID wave 2 will be like that. We are now said we are in the lockdown. And Then only the lockdown will start opening up, then only things will start working. Essentially, 3 out of our 8 plants are only operating and maybe only 10%, 15% markets are open. So business is largely affected. So the way things open and then only we'll be able to really know All the things take shape. But as far as unorganized is concerned, definitely we are in a better Situation then unorganized players. That advantage we might have than others. And as far as the our retail offices are concerned, where our business is hardly 7%, 8%. So last year also we suffered a lot of retail outlets were closed, but because we are selling to Multi brand outlets, which are in I mean, through wholesalers and distributors around 50,000 we are attending. So that is our saving risk that we are able to have in our business. But that is a way to think. That advantage will help, sir. Sure. Just the last question that what will be the share of e commerce for the entire E commerce is good in modern trade and all these 100 is 10%, so I would say 8% rather. So our sales are very low. We are selling up not very high value item. Last year, the e commerce was closed for because a lot of time. So shoes and all these things, sale was less. So ultimately, because of all these things, our Business was little bit affected e commerce, but it is not a very big state for us in e commerce. All right. I think, Asar, more on multi brand outlets. No, no, absolutely. I was just trying to understand that this year, Given the disruption, there is a sizable increase in our share compared to last year, especially on the e comm side. No, no, no. You can't accept because ultimately our articles are Mostly price around INR 150 to INR 125 or INR 200. These articles are available to be sold on This, what you call it, online. Okay. They generally sell to multi brand outlets only. Absolutely. Because in the Q2 when the disruption was, I'll just speak, we had reached a 10% share. So I just wanted to check maybe there is a continuation of that Once the open up happened after, say, September, October? No, when online, when things open up, then it is there, but we have to see now Earlier, how the things have panned out. This is also we are setting a lockdown. Yes. And ultimately, this year or last year, Is the market chaotic? What we find is that when the markets are like that, when the people are indoors, More of the slip will have sold last year. This year also is the things that remain like this, the people I know. This close foot here Will remain affected and the sale on online will also remain affected. Understood. That's very helpful. I'll come back in the queue. I have a few more questions and I'll come back in the queue and take them. Thank you so much. Thank you. The next question is from the line of Amnesha Gharwal from Prabhudas Liladhar. Please go ahead. Yes. Hi, sir. I have a couple of questions. My first question is on the raw material trend. If you look at gross margins, both On a Y o Y as well as on a Q o Q basis, our gross margins were actually down. Because in this quarter, they are 56.8. In the previous quarter, there were 58.9%. So how much is the inflation in raw material currently? And because I understand that Most of these petrochemical based imports, they have moved up even in the month of March, April and May. And secondly, how much price increase we have undertaken? And will we be able to sustain our gross margins at the current levels? So that is my question number 1, first part of the margin. The second on the margin side is that if you look last year, we have actually cut down on our overhead significantly. If I look at the full year, they are down by nearly 400 bps and you are yourself integrating a debt standpoint before. Now looking at this scenario that this year's Nice and will come back, raw materials are high. So what sort of, you can say, outlook on margins would you like to get from here on? So this is my first question on margins. Yes. The way things are, No. Normal prices definitely they have gone up and quickly I mean, volatile. Any business cycle, we have gone through it. So what is our strategy? Every quarter, whatever price are, accordingly, We will then take our decision, keeping you market condition, price division. So whatever is required, Whatever is possible, then we pass it on to our customers. So this is what we have been doing. Normally, here in the natural, they will always vary. And accordingly, we also but at the same time, we have to be also watchful that What is the competitive intensity in the market? And then how you can't just immediately You kind of need a reaction in prices and then after 3 months you may say, okay, now prices have gone down, so we reduce it. So there has to be a kind of stability. From our best judgment, we pass on supply either compared to industry and according to the decision and Nescore, but again we review the things. This is what we have been doing since 80s, I will call it. And this is what we tend to do in the future also. Keep on the prices, keep on quarterly reviewing the same market conditions and accordingly passing on. Margin is concerned that you Naturally, this year, things are different. So we have to watch the margin conditions and take a decision. The way things are gross margin may get impacted. But on a base overall year basis, We have to wait and see. We can't do say now. Accordingly, Malayman also do The course collection in between also. And that's the brand new exercise that we already taken. That's it. The call will be taken, but then we keep on reviewing all these things. Mark, what's the very volatile? Long material wise advice, this lockdown exercise, nobody can See, with guarantee, how long lockdown will continue? How long cold wave will continue? Now there is a fear of COVID, 3rd wave also. So the weak things are nothing can be said with certainty. We have to see, keep on reviewing every quarter and take corrective action. Yes. So how much pricing we would have undertaken in the past few months? It is around 78% we have taken, but again this price rise is depending upon article to article in the same category also. Some article, we have taken more than 10%, 15% also. But again, we have to see which article can take how much price it is. Some articles because we are in a kind of fashionable market. Some articles don't perform. Some products we have performed too much. And then we have to see what is the competition rate of similar articles. So accordingly, article by article, we have to review. You can't generally say, okay, 7% all around. So we have to be very watchful on all the article to article we have to decide. Okay. So my second question is on the demand scenario because the RELAXO caters more to the value for money segments in footwear. And last year, Rudolf India, small town, that was not impacted much by the first wave of COVID, but this time around the scenario seems to be different. So what sort of an on the ground situation you are currently witnessing? And And you will it take longer for the demand to come back this time around more so in the small towns in rural India? Well, again, the things are, I'll call it difficult to predict. But as the thing is, the way Things are, I mean, now COVID wave second is now going down, things are improving. We think a couple of things A couple of months things will start improving and maybe back to normal. Many times, This is a pent up demand, a kind of a thing. Immediately things start improving. I think June, July thing will start, July will be the Very good month to improve. In June also, 1, but different states are taking different decision. If the lockdown prevails, I think they'll remain the way they are because it is something a very difficult thing to predict. So we have to wait and see only. Nobody gets service identity. What is going to happen? Because everybody is confused to whomsoever we ask the question. How long things will happen? The way things are, nobody can predict. We'll have to wait and see. Okay. Thanks a lot. So just one thing, how much CapEx are we planning for the current year? Mr. Agarwal, may we request that you return to the question queue? With the participants waiting for their turn. Thank you. Ladies and gentlemen, in order to ensure that the management is The next question is from the line of Akhil Parekh from Alara Capital. Please go ahead. Hi, thanks for the opportunity. My first question is on the demand for closed footwear, like 1st few quarters of the year, The demand was driven by open footwear. But the expectations were like as we move closer to the festive season and winter season, the demand will pick up. So how has that been the case? How is the demand in closed footwear for Q3 as well as Q1? Well, you are right. Demand of Closed footwear did improve during festive season, the quarter 3 and quarter 4 both. Before that, Demand of closed footwear was really not because it was all under a fear of Lockdown and lot of months we lost. People were also cautious in moving in the markets. People were more indoor. So shoe business was affected. But after this, what you call it, festival season, 3rd quarter and 4th quarter have been quite satisfactory as far as We'll close for this concern. Okay. And would it be fair to say that demand is now back to pre COVID level for almost all the categories? This quarter 4, yes, it was rather better. But now again, this Q1 of this year, we are sitting in lockdown. So what can be said about this time? Sure. Sure. Just last question on the price rise, you mentioned that on an average 7% to 8% price rise. So have you passed on the entire inflation in the raw material Same to you, EVA and PVC, because the prices of raw metal have risen far more than 7%, 8% in last three quarters. So should we expect more price hikes to happen during 1st 2 quarters of the year? Well, we are to again review quarter by quarter. This is what we decided for this quarter, keeping in view the market conditions also. Now then we have to see how much raw materials, sometimes we have In stock also some materials, which we have. But at the same time, again, we have to look outward also and backward also. What is the supply chain? And outward, what is the market emerging competition scenario? Keeping that thing in view, We review the things and then accordingly revise our prices whatever, whenever, Quarter by quarter. Sure. Thanks a lot and best wishes for the coming quarters. Thank you. The next question is from the line of Tejas Shah from Spark Capital. Please go ahead. Hi, sir. Hi, team. Thanks for the opportunity. Hope all of you are keeping well. Sir, sorry to stress this point more, but The first question pertains to our margin philosophy and I'll just give you some data before I before you answer the question. So in last 3 years, we have added roughly INR 400 crores of turnover and we have added INR 200 crores of EBITDA there, INR 193 crores to be Which roughly means that incremental turnover is actually coming at way higher EBITDA margin. And Obviously, this year is abnormal and you said that some of the costs were not there. But in normal scenario, where would you like this business to operate At least for the near term, will it be 17% range or will it be or that is not the part of the calculation at all and it is an outcome based on the economic environment? Currently, sir, it is very difficult to tell you what a beta margin will be because things are totally unpredictable. The way we are sitting in a lockdown, and the way things are, it is difficult. Some materials are expensive. Overhead, we'll just mount the way things are. We are trying to control the things. But let the things settle down, then only quarter by quarter things will improve. Sure. Things are very unpredictable at the moment, volatile totally. Nobody can predict at this moment what the year is going to end. We only hope that this wave settles down, things start opening up. Then accordingly, we will take our decisions accordingly, Depending upon whether the price division is required, whether what expenses to be saved for this year, we have to then take all these precautions. Definitely, it's the thing. Even the pressure, the margin will be under pressure only. So let me rephrase the question. So Let's assume hypothetically and then we hope so for that, that situation normalizes very fast. As a business, are we comfortable Operating at 20% plus margin without compromising on our competitive moat or our competitive power in the way competitive landscape that in any case we are operating in. We have always watched competition also accordingly. When the competition intensity is there, we have to keep You were very reasonable with our pricing also. So that actually we don't want to lose market share also, you understand. And then you have to spend money on brand building also. So all this is keeping it together, Sustaining 20% this year is going to be a real challenge. It is not possible, the way things are now. But we have to Wait quarter over quarter and see how the things open up. Fair enough. So this answers the question. The second Sachin, you mentioned and last time also you had mentioned export presence in international market. So any more Formal details on that, A, and will it be part of any way PLI scheme that government has proposed? Ritesh, you can take it. Yes. Just to repeat my second question second part of the question. So, will it be anyways connected to PLI scheme that government is proposing on footwear as well? Let me answer the first part first. Actually, we are right now at 4% of our Revenue, 4% of the company revenue is growing export sales and we are able to sustain this sales in last year also Even because due to COVID, all these Gulf countries and African countries have been affected a lot. But we have been able to maintain and we're able to achieve around 98% of the previous year. Since the government incentives, we have been already in touch with the government Whatever in thinking we have been able to avail, we are waiting. And surely this impact of COVID is happening in this quarter as well. Because many countries have partial outbound or night curfew or complete lockdown. So we are just having a wait and watch thing, all the things improve. But the good part is we have been exporting in our own brand with our standard of quality, which is really giving bringing confidence in the mind of consumer there. So we are very confident we will come back soon, Hello? Yes, please go ahead. Yes. That's all from my side. Thanks a lot. Thank you. We'll move on to the next question. That is from the line of Nikhil Chaudhry from Credit Suisse Portfolio. Please go ahead. Yes. Hi, sir. Thank you for the opportunity. So I have just two questions. Sir, can you share the mix of closed footwear when we Started the year and probably versus now when we end the year. Can you repeat, please? Hello. Am I audible? Can you repeat the question? I'm audible? Yes. Yes, yes. I'll repeat. Sir, can you share the mix of closed footwear in the total portfolio when we started the year and versus now when we end the year? We can average out for the year. Our closed footwear share is around 15%, 85% is open for 2 years. Okay. And it is same like when we started the year and then we are ending the year, In the start of the year, we were in lockdown. There were no share at all. If we lost, may also some part be lost, What was the share? Share was definitely 1st quarter, 2nd quarter share was low. It was only after festival, 3rd and 4th when things started opening up and People started moving around, then only the close focus started improving. But actually, I'm confused. Yes, yes. Yes. So 3rd and 4th quarter share of gross stood here was better. It improved. It came to maybe better than Imadal last year, but first two quarters it was affected. Okay. Okay. And sir, when we started the year, as in what I've meant is, like when we started before the lockdown, What is the usual share like because where I'm coming from is because campus is also coming up with lot of closed like varieties or SKU was in the close quarter end. What our checks suggested campus has become aggressive. So just wanted a sense on How the competitive intensity is from campus and how we are able to tackle it? So that competition is a very good thing for The company always remain more active and it is always good to have good competition and as a result the whole industry grows. And as far as your question, earlier than last year, what was our share? It was 20% Because Q1 and Q2 of the previous year were much better than what it was last year. So this year, because sale of slipper was much higher Growth was much more. So the ratio of open FITU went up across FITU because today also Throughout the year, schools were closed, so sales was not there. People were moving less outdoors, so sales was affected. And other article also like can issue that is again close to clear. Schools were closed, there were no sales. So that has been one of the reasons. Even outdoor movement is less, sale of closed footwear goes down. Got it. Got it. Sir, all in all, we have not lost any market share, right? No, no. There is no loss of share. It is cyclical because of the market conditions that things are happening like that. Got it. Got it. And sir, last thing, I just wanted to understand our strategy wherein the competitor is having 9 distributors for a set of area and we are just having 1 or 2 distributors. Because mortgage stream the balance 1 or 2 distributors are keeping all the SKUs, cut sizes. Just wanted a perspective because I understand probably 1 or 2 distributors are not able to keep all the cut sizes SKUs and supply to the MBUs, our MBUs. You know, It is a matter of strategy. When you have too many distributors, they fight among themselves. And then they say we don't get margin. But that competition will be intensely will make too much among the distributor and also they start losing interest in the brand. Okay. But when you give a allocated area to a distributor, then only he become more motivated To do that. And we have to forecast that area. So that today, suppose you are my customer, I give you certain area and you do with your own hardware Well of that area. Tomorrow's booth, they put another distributor. So how you should like? After you have nurtured and developed the area. So it is your territory, your responsibility also. Today, my salespeople go in the market and take orders, whom they give order to out of the 9. If it is 1, I will give to that person only, yes? The person who is responsible for the territory. Agree, agree, sir. So that is the way I just Allocation of India? Fair from the point of view of distributors, but just wanted A sense on how retailers are perceiving us because what happens is probably say if they're getting I understand, I'm completely I'm agreeing with you like the distributor will definitely want to preserve his own interest as to he should not have the competition and But retailers will have lesser choices and then probably from the point of view of retailers, then it becomes little hard in Keeping our SKUs in all gut sizes, just getting a perspective like I understand distributor will benefit like distributor very bad. I understand when I I think some distributors cannot handle all the range. Then we may say, okay, you take these 2 brands, rest we give to another. But still, he will Have some kind of a I mean control or responsibility of that category. But if there is a true retailer point of view, you are right. If we have more choices, Then he also plays between 2 distributors, too much cutting of discount, too much then he expects too much of credit also from each other. That's also a very unhealthy position. As a company, we go to the retailer, we find what difficulties he's Then we sort out the way the things are. We don't want a distributor should overcharge. At the same time, we don't want The retailer should force him to cut too much discount and then both bleed later on. And retailers also in many times 1st 2 months discount to the consumer. That also we want to see. When the retailer doesn't turn, he looks back at the distributor, he looks at the company. We want there has to be some responsibility of the distributor, give him the area, let me develop it, whatever difficulty our retailer is, And we are there to take care of it. This is the way we do things. Got it, got it, sir. Very clear, very clear. Thank you and wish you all good luck. That's it so much. Thank you. Thank you. The next question is from the line of Dhaval Mehta from ASK Investment Management. Please go ahead. Yes. Good evening, sir. Thank you for the opportunity. So my first question is, let's say, in FY 2021, What would have been the industry decline of the footwear category? And how the competitive landscape has changed, let's say, in last 1 year? Yes. I would like to come to my name to Gaurav. So if you have noticed during last year, the formal segment, outdoor segment has declined And the casual segment and like the work from home segment has increased, the open footwear. So party wear, fancy wear have declined in leather shoes, outdoor shoes, but the casual footwear, open footwear has increased. Correct, Correct. But even let's say pre pandemic, open footwear used to be around 15%, 20% of the overall industry size, right? So if The large part of the industry has declined, the overall industry would have declined sharply. Is my adjustment correct? The major this thing has come That has come in leather shoes and outdoor shoes. So that has declined tremendously and the gains are in open footwear. Okay. Okay. And in terms of competitive landscape, be it from unorganized players or organized players, how it has changed in last 1 year? It's a similar thing. The ASP has gone down. If you see as an industry, the ASP has gone down because again the closed footwear being expensive have come down in share and the open footwear, which are quite cheaper, has gone up. Yes. So similar thing with the unorganized also as well. Okay. Okay. So if Let's say the whatever the share of unorganized was pre pandemic, is the share similar now or that overall share has come down of the overall price? It's very difficult to measure. We don't have a credible agency who can back the data that this is the percentage drop or this is the percentage increase. So our guesstimate we can say, slight decrease we have seen. Okay, okay. My second question is Any color, let's say, in terms of which brand of ours has done exceedingly well, be it Flyte, Sparks or TILEXO? And in terms of geographies, which geography has seen healthy growth? So if you see, in India, Maharashtra and Kerala was had maximum lockdowns. So these 2 states, West and South was impacted more, but North one North India and East India was doing pretty well. This is last year scenario. But currently, it's all locked down, so difficult to say. Is the profitability same across all the geographies, sir? Yes, more or less is the same. It's more or less is the same. It's only the freight which is very less. Okay. Okay. So as most of our factors is in Nord, so if Nord does well, then I believe the freight cost will be lower. So that Helps the margins? Correct, correct. Okay, okay. Got it, sir. Sure. Thank you. Thank you and all the very best, sir. Thank you. The next question is from the line of Bhargav Burdadev from Kotak Mutual Fund. Please go ahead. Yes. Good afternoon, and congrats for a very strong performance. So my first question is that You mentioned that the close footwear demand had been impacted in FY 2021. But As we sort of enter second half of this fiscal, it seems likely that post Vaccination, it could slowly start coming back. So in your experience, is it possible to broadly Quantify what could be the extent of pent up demand? And when I say quantify, you mean would it be 1.5x of normal demand, 2x of Sir, it is very difficult to quantify the things. We have to wait and see the we don't even to what extent our lockdown will reduce today. Things are so poetic, so unpredictable. We have to just move the way things are accordingly. Sure, sure, sure. But you think that there will be an element of pent up demand for sure, right? Because this particular demand cannot get lost, The first required demand. The pent up demand will be there, but there's a lot of fear in the minds of the people. Even when the long run is lifted, I don't think it will start moving very freely. Okay. It will take some time. Sure. And then hopefully things will improve. This is what we think. Sure. Secondly, sir, how are we prepared in the event there is a Strong pent up demand. Do are we carrying enough inventory to sort of meet that demand? Or can we sort of push our factories Sort of meet that demand, how are we prepared on that point? We have inventories also at the same time, we have production capacities also. So we always have a cushion in our production capacity generally utilize the 70%. We will push on that. So it doesn't make you we can have Unlimited inventory that also you have to take care. But the way thing will pan out, accordingly we will take decisions and actions. Okay. And lastly, sir, at the company level, is it fair to say that the volume growth for the full year Volume decline for portfolio would be in the range of 8% to 9%. And across Openware and closedware, in Openware we would have grown, But in the closed footwear, we would have seen significant volume decline. Is that a fair assessment? No, no. Last year, actually, our volume grew, Grew by around 7% because slipper sale was much more than the close to clear, and that is no value segment. But because Demand was much more of preferred. So and our sale is only 2% less. So we could only make up because our slip per share was more. So actually volume has grown by around 7%. Gotcha. Okay. So this realized increase of 7% was for the quarter and not for the full year? Full year, we're talking about full year, this volume. Okay. And so for the full year, you are saying volume growth was 7% and average realization would have been down because of increase in personnel? Correct. Correct. Okay, okay. Okay, sir. I understand. Thank you very much for the clarity. Thank you. The next question is from the line of Girish Pai from Nirmal Bang. Please go ahead. Yes. Thank you for the opportunity, sir. Sir, I just want to understand, has there been an overconsumption situation in FY 2021 for open footwear, which could potentially mean Software demand in FY 2022? No. It doesn't mean that today You require slipper always. Last year's slipper candidate after there is a limited life of the product. It is Anybody requires at least 2 sleepers in a year. So that demand is going to remain. So when the things start opening up, consumption will begin. Consumption is still today also, it was if your indoor still at least you require sleep, but you're not barefooted. Consumption is still there. So last year's consumption cannot affect this year's consumption. This is what I want to say. Okay, sir. Sir, had the 2nd wave not happened, say, you were sitting in the month of February And looking out into FY 2022, what are the growth you would have probably looked at? I mean, what kind of numbers were you people looking at internally? Assuming that second wave is not going to happen. Yes, it is. It would have been much better because after all whole month we are lost This May April also sales were affected. So there is no point in just dreaming of those things what could have happened. But now let us see what the reality is. The reality is cold here is there and things are affected. We have to see now how How would June pan out and how our Q2 pan out? That is weird to see. That's important. Okay. Lastly, sir, at some point in time, I think 3, 4 years back, you had started this distribution Restructuring where you focus more on exclusive distributors. Now has the journey come to an end or is it are we still on this journey? Sir, we are on the journey. Always you keep on improving the things, the way you're working. Today also we are doing the same thing And putting DMS system on those people, encouraging more and more people to become Exclusively, our distributors selling our products, then looking at their areas, territories, How we can make them more responsible? How they can make them more efficient? How we can add retailers to them more Kind of a universe being created. So it is ever ending exercise. There is nothing like whatever you even the best things So we are always on it and today also I will say that this is ongoing exercise. So for 650 to 700 distributors that you have, how many of them would be exclusive to you, sir? 125 or maybe this we are trying to encourage them more and more to convert our exclusive. So that journey will continue. Okay. So thank you very much. Thank you. The next question is from the line of Ankit Kedya from Philip Capital. Please go ahead. So I just wanted to understand the premiumization trend. How much was the premium product sold in the year? Given that open footwear in the first half, we saw a lot of premium flight and others being sold, while closed footwear was more entry level products. So by the end of the year, how did that change happen? And from FY 2020 to FY 2021, has the premiumization Overall increase significantly for us would have also aided some gross margins? No, sir. Last year was a tough year. Rather, we have contributed a lot of value for money articles. So as a result, our receipts once every time was lower. Most slippers sold, although in the slipper segment, we did add premium segments also. But ultimately, because shoe segment was not And there also in shoe segment, we had to introduce value common issues also. So overall, last year, our average selling price came down, All the volumes went up. Sure. Asana, second question is regarding the school category. How big is the school category for us and how much is the inventory in the system for the schools? Because last year school didn't start and this year With the uncertainty in the schools, there could be a lot of pent up demand from the school side. So if you could just share how does the school Put by Industry Workforce? Sir, it is a very, very small share in our scheme of things. So, hardly nothing. Just 1.5 Around 1% is our share in our scheme of things, 2 business, 1.5% or so. And otherwise, these schools are not still closed. So there is no shoe consumption at all. Right. And sir, my last question is regarding the new BIS certification guidelines for footwear manufacturers, which is compulsory from 1st July. How will that change the unorganized sector? Because it will be very tough for them to get the certification. And do you see post this in the second have a good market share gain for organized footwear compared to unorganized footwear, Amin? First of all, this guideline already Our association is in regular talks with BIS and the government, and they are likely to be postponed by implementation of this thing. This will take time because it is very confusing even they are not clear. The way they have put the way notification is even it is not clear. Whether they use a word I just give one example. They say Hawaii Chapel. Now what Hawaii Chapel will attract to this thing, but nobody knows about Hawaii Chapel. Then what is the meaning of Even they are not clear. When we ask them, what is it about YJPL? They are not able to explain because they see change. These Things that we have picked up, they have picked up, we were 20 years back what was happening. So they are now in talk with us. They our industry is talking to them We have understood the things. Accordingly, the likelihood that this thing We will postpone for quite some time, implementation of these guidelines. Sure. Sure. And sir, just one last thing, what was the absolute A and P spend last year? And if you could just share the absolute amount we are looking to spend in FY 2022, that would be very helpful, Approximately, FY 'twenty two, what are we looking at? We are again going we are thinking to 8% to 9%, increased by 1% to 2%. Yes. Awesome. Thank you. Ladies and gentlemen, We'll be taking the last question that is from the line of Mr. Gaurav Jagani from Axis Capital. Please go ahead. Thank you for the opportunity, sir. Sir, first question is with regards to how much of the cost that we are able to save In FY 2021, how much of that can be sustained going ahead, I mean, in FY 2022? So I think 3% to 4% for the saving of the overall savings That's what we're going to do this year. So basically whatever we have been able to save on last year, Approximately 3% to 4% of which we can say this year. Is that understanding correct? No, no, no. Again, we have to gain watch the market scenario and take decisions accordingly. We will plan something, but ultimately, you have to see the market Scenario decide whether it is pricing, whether it is brand building, whether it is the business and promotion expenses, everything we have to do. It's a very dynamic environment which we are operating. You can't just say it is writing on the wall you do like this. If the market dynamics change, we have to change our fee also. That is the way it is. Not that one to one to plan, then we have to see the environment. Environment is dynamic and we have to be flexible accordingly. That is what we will be acting on. Sure, sir. And sir, my next question is with regards to the replacement cycle in the footwear industry. So have you seen any changes over the past five 10 years, I mean, earlier like people used to replace it every 1 year, 2 year and has that replacement cycle gone now overall basis? Have you seen any trends as such? No, we can only say earlier our total consumption was per capita consumption guesstimate 1.5 pair. Now this estimate is too fierce for capital consumption. So That is what reflects consumption has gone up only because of this. Many people are keeping more fares than what they are keeping earlier. And as far as the poor man is concerned, he is the those who wear slippers, There's consumption anytime too because one slipper lasts hardly 6 months, around 6 months, 3 years to buy 2 pairs. The overall consumption of footwear has gone up because there is a variety, there is a fashion. So because of fashion itself, people buy 10 to 1 for the month That is a way to know and has increased. Sure. I said last question from my end is, what is your CapEx guidance For the year FY 2022, this coming year. CapEx? Yes. Around INR140, INR 45 crores What's your plan? Okay, sure. That's all for me, sir. Thank you. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments. Thank you all for joining the call. This is all from our side. Looking forward to join you again. Thank you very much. Okay. Thank you all. Thank you. Thank you. Ladies and gentlemen, on behalf of AXIS of Capital Limited. That concludes this conference call. Thank you for joining us and you may now disconnect your lines. Thank you. Thank you.