I have analyzed Relaxo Footwears in detail and I have prepared a pitchbook regarding its future prospects.

1. PRESENTED BY AJAY RAMAKRISHNAN

2. RELAXO FOOTWEARS LTD.
Relaxo Footwears manufactures and sells affordable,
non-leather footwears through multibrand outlets as
well as from exclusive relaxo outlets. It’s key brands
includes Relaxo, Sparx, Flite and Bahamas.
WHY RELAXO?
1. Largest Footwear Manufacturing Company
2. Monopoly
3. Simple Business Model
4. Pioneer in Integrating Technology
5. Himalayan Moats
VISION, MISSION AND SLOGAN
• To share the journey with every Indian
• Accept Nothing Less than the best you can get
• “Committed to provide best In class footwear”
0
5
10
15
20
25
FY16 FY17 FY18 FY19 FY20 FY21
No.of Pairs Sold (In Crores)

3. RELAXO FOOTWEARS LTD.
PRODUCT
PRICE
QUALITY
BRAND
DISTRIBUTION
MANUFACTURING
OUTCOME
Market Share of 9-10%
Sold 19.1 mn. Pairs in FY20
9 State of Art
Manufacturing Plants with
Word Class Concepts
50,000 Retailers and 400
COCO Stores
10 Brands with Influential
Ambassadors
Every stage of manufacturing
process is monitored with
Quality Tests
The Real ‘Value for Money’
Product
Product available for every age
group and at every price point.
Over 6000+ SKUs

4. STRATEGIC APPROACH – COST LEADERSHIP
UNDERSTANDING ROOTS
Until 1976: The Dua Family was a Plastic Wholesaler
1976: Launched Relaxo Brand
1984: The Company was Incorporated
1995: IPO to set up a plant in Haryana
1995: Started manufacturing rubber slipper for the masses
2000: Expanded Capacity in Haryana
2004: Launched ‘Flite’ and ‘Sparx’ Brands
2005: 1st COCO Store Launched
2007: Commenced Exports
2010: Renewable Power Capacity of 6.00 MW
2012: Signed top-notch celebrities as Brand Ambassadors
2013: Launched E- Commerce and Set up Regional
Warehouses
2016: 250th COCO Store
2017: Revamp of Relaxo Brand
2019: ICRA Upgraded Long- term rating to AA-
2020: Merger with Relaxo Rubber and Marvel Polymers
0
50000
100000
150000
200000
250000
300000
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
Revenue (₹ in Lakhs)
THE COMPANY HAD BROUGHT IN ACCENTURE
STRATEGY AS THEIR MANAGEMENT CONSULTANT IN
2004 WHICH LASTED FOR 13 YEARS.
IN THE YEAR 2015, THE COMPANY HIRED DELOITTE
AND BCG AS THEIR CONSULTANTS.
THESE 3 CONSULTING BEHEMOTHS STRATEGIZED
THEIR VISION AND BUILT GREAT MOATS

5. STRATEGIC APPROACH – STICK TO BASICS
Ramesh Kumar
Dua,
Managing Director,
Relaxo Footwears
Ltd.
What Accenture did?
They built the first two layers of Competitive Advantage.
1st Layer: Installed SAP (Systems, Applications and Products in Data
Processing) in 2004. As a result, the receivable days of the company
was brought down from 90 days to 30 days. Bata and other players still
take 90 days for Receivables.
2nd Layer: Due to quick cash conversion cycle FCFF and RoCE
Increased. Now Accenture advised the Dua family to reinvest their profits
in setting up manufacturing units. They started to build factories after
factories in every alternative year. This is the only company in the Indian
footwear market to achieve ‘Economies of Scale’. They were previously
plastic wholesalers, so they are procuring plastics at 10% discount due
to their influence in the plastic wholesale market. Every other
manufacturer outsource their production including Bata, Metro, Nike etc.
What Deloitte and BCG did?
These two consultants went on to build layers after layers of competitive
advantage. They advised the company to replicate their success in the
sandals and shoe market. They replicated famous foreign companies
like ‘Crocs’ which was priced at ₹2,000 by introducing a knock-off
product under ‘Flite’ brand for as low as ₹250. Another major move was
to remove wholesalers and replacing them with distributors. As a result,
they now have 50,000 dealers (3 times higher than BATA).

6. S
W
O
T
• Leading Brand
Recognition
• Large raw
material usage,
10% discount on
plastics
• Using State of
the art Tech
• Economies of
Scale
• Product
Diversification
• High Potential
• COVID, GST and
DEMON
• Rapid expansion in
the Economy
• Opportunities in
Online space
• Less number of
Organized players
• Uneconomical Size
of Manufacturing
units
• Inefficiency in
Supply Chain
(Currently being
addressed through
Microsoft NAV
(ERP Soln.))
• Inflation
• Growing Tech
Expertise
• Geo Political
threats
• Competitive
Pressures
Strength Opportunity
Weakness Threats

7. RELATIVE MARKET SHARE
HIGH LOW
MARKET
GROWTH
RATE
LOW
HIGH
BCG GROWTH SHARE MATRIX
The Company has 18% Market Share in
the Open Footwear Market.
In the Closed Footwear Market, it has
around 12% Market Share. It ranks
second in this after Bata.
The company’s CAGR is 10% and its close
rivals CAGR is in the south of 4%

8. Strong Brand Recall -
Specialist knowledge -
Economies of scale -
Cost advantages -
- Substitute Performance
- Low cost of Switching
- No substitution for Casual Footwear
- Can be substituted for Closed
Footwear
Driving price down -
Size of each order -
Price Sensitivity -
- Very less bargaining power as they
have 6+ large scale suppliers to
procure raw materials
- Moreover the company have expertise
in procurement of Plastics
COMPETITIVE RIVALRY
Paragon – Direct Market Competitor
VKC – Is staying in our opportunity
zone
Bata – Closed footwear Competitior
PORTER’S FIVE FORCES ANALYSIS (RELAXO)

9. Loyal Customer Base -
No access to Distribution Channels -
Huge Capex -
Product Differentiation -
- Knockoff from Unorganized Sector
- High cost of Switching
- Difference in Utility
- Substitute offers superior quality
sometimes
More concentrated customer base-
High market knowledge-
Price Sensitivity -
- High cost of switching from one
supplier to other
- Suppliers turning to manufacturers
- Only a small portion of suppliers
supply to Bata
COMPETITIVE RIVALRY
Paragon – Direct Market Competitor
VKC – Is staying in our opportunity
zone
Relaxo – Dominant in Open footwear
PORTER’S FIVE FORCES ANALYSIS (BATA)

10. Relatively new entrant-
No Specialist knowledge -
Trying to achieve Economies of scale
-
Cost advantages -
- Substitute Performance
- Low cost of Switching
- Relaxo for Casual Footwear
- Can be substituted for Closed
Footwear
Driving price down -
Size of each order -
Price Sensitivity -
- Very high bargaining power as they
have only 1 supplier.
- They don’t have any niche knowledge
in raw material procurement
COMPETITIVE RIVALRY
Bata – Industry Leader in Office
footwear
VKC – Is staying in our opportunity
zone
Relaxo – Dominant in Open footwear
PORTER’S FIVE FORCES ANALYSIS (PARAGON)

11. MINTZBERG’s 5 Ps
Plan
• A Leading player in the ‘Value’ segment
• A Robust Product Portfolio
• Sustained Manufacturing Excellence
• Committed to Quality
• Talent Management
• Highly Tech Oriented
Ploy
• Market Leadership
Position
• First mover advantage
• Strong Brand Recognition
• Diverse Revenue Models
• Strong Distribution
Network
Pattern
• Aligning Product Portfolio
• Structured Market
Research
• Product Innovation
• Portfolio Rationalization
• Brand Equity
Position
• India – 2nd Largest
Manufacturer
• Present in Sweet Spot –
Value Segment
• Targeting the Masses
• Building brands through
Celebrity endorsements
Perception
• Value Brand
• Second largest selling
sports shoe in Amazon
• Best known for Hawaii
Chappals
• Fashionable, Comfortable
and Affordable

12. • Increasing Global Pressures – WTO
• Closely follow local governments and
pay political advisory fees
• Taxation Policies (Local Government)
• Economic Cycles
• Increasing Liberalization
• Inflation Rate
• FX Rate
• Demographics
• Migration
• Education Level
• Leisure Interests
• Societal Norms
• IP
• R&D
• Supply chain disruptions using Tech
• Maturity of Technology
• Scrutiny of Environmental Agencies
• Waste Management
• Renewable Technology
• Encouraging Recyclable Materials
• Data Protection Laws
• Legal protection of IP
• Time taken for business
cases in court
• Labour Laws in India
PESTLE
Analysis

13. USE OF RESOURCES - VRIO MODEL
?
What is the result?
V
Is it valuable?
R
Is it rare?
I
Is it hard to
imitate?
O
Is the firm organized
around?
Competitive disadvantage
Competitive parity
Temporary competitive
advantage
Unused competitive
advantage
Sustainable
Advantage

14. VRIO ANALYSIS
FOR RELAXO
E-commerce
Quality of service
Brand & reputation
Distribution stability
Financial stability
Innovation
Customer service
Competitive parity
Competitive
Advantage
Sustainable
Competitive
Sustainable
Competitive
Competitive
VALUABLE RARITY COSTLY TO IMITATE ORGANIZATION
COMPETITIVE
IMPLICATION

15. SUSTAINABILITY INITIATIVES
SOURCING, COMMUNITIES AND EMPLOYEES
• Relaxo has worked towards embedding sustainability
throughout its inbound supply chain by preferring
indigenous sourcing wherein locally available raw
materials are generally used by the company.
• To support the sustainability and environmental
purpose, they also use packing materials made of
waste products.
• Most of our suppliers are located very close to the
manufacturing plants, thus putting minimum strain on
environment due to transportation.
• It outsources job-work like hospitality, security, and
canteen facilities to nearby local and small vendors.
They also continuously audit these suppliers for quality
systems and manufacturing capabilities.
• In certain products the waste is recycled completely
while in few, it is recycled partially. In addition to this,
the Company has tie up with cement companies to
consume their waste as fuel.
PRODUCT LIFE CYCLE SUSTAINABILITY
• The company achieves sustainability through clearly
defined objectives and targets which are based on
reduction in energy consumption, emissions and waste
management, water conservation.
• The products are produced after going through series
of quality tests as per standard manufacturing
processes.
• Relaxo was using Pet Coke, followed by Agro based
biofuel for all boilers across plants, requiring steam for
process. As a sustainability measure, the company
changed agro fuel based boilers to Gas Fired Boilers
(PNG & LPG).
• Regular training for employees to manage the
resources in an efficient manner.
• The Company is adopting power trading for improving
planning for consumption of electricity.
• Environmental friendly disposal mechanism of Waste
• Installation of new equipment to save thermal energy

16. Cost Leadership Stratefy
Marketing Strategy to use Celebrities
Business Strategy to employ FCFF
back to the firm
Hires from Top Indian
Management Institutes
Training and Upskilling for
efficiency
Procurement of Raw Material
They have an army of workforce
Training is given in house
Very low churn rate
Participative Leadership Style
Increase Organizational
Commitment through indulging
employees in the Company’s
CSR.
Standardized production
and manufacturing
practices
Random & Batch Testing
Headquartered in Delhi, which helps
them to oversee operations and supply
chain
Though formerly a family owned
business, have great management
structure and hierarchies
SKILLS
SYSTEMS
SHARED VALUE
Commitment to QUALITY
Pouring money into R&D for
INNOVATION
MCKINSEY 7s FRAMEWORK

17. BALANCED SCORECARD INTEGRATED WITH STRATEGY MAP
FINANCIAL
CUSTOMER
INTERNAL
LEARNING
Profitability
Increase Revenue Cutting Cost
Win-Win Deals Cutting Cost
Improve IT Service Improve User Experience
Improve Knowledge Base Develop Competencies
• Net profit increase
• Operating costs
• Sales Increase, %
• Customer acquisition, %
• Time to market, days
• Designing own Website for
E- Comm – Sales up by %
• Quality Improvement
• Employee survey
• IT efficiency index
18%
- 6%
20%
10%
- 3 days
12%
• Standardize
production
• Increase weekly sales
targets
• Integrated Microsoft
NAV
• Unboxing Vids and
Shoeshake Challenge
• ISO 9001
• BCG Consulting
• Introduction of
MOOCs
• Training program for
efficient use of
Resources
Objectives Measures Targets Initiatives

18. GOALS OF RELAXO FOOTWEAR
To Drive Costs Down And To Increase High Gross Margins
The company recently took a hit due to inflation, which spiked up the input costs such as polymer and other specialty
chemicals used in manufacturing. To control their costs, the company is about to invest 80 Crores from its free cash
flow in a new factory near Bahadurgarh.
Improve Online and Retail Presence
The company aims to improve their online presence and retail presence. Since stores were closed during pandemic,
they pivoted to ‘digital-only’ strategy and sold a lot of pairs through Amazon, Flipkart and from their own website.
Initially, the pivot took some time but now they’re ready with their own website too. Online sales contributes around 7%
of their revenue mix and they’re expecting to increase it to 12% in the upcoming quarters.
Regarding Retail, they are planning to grow through MBOs first and then leverage their brand equity to pull customers
to EBOs (400 outlets as of Mar 22’).
Currently. Their retail plan is not aggressive because they want to maintain the ratio of sale in the same levels.
Capital Allocation
When we take a look at the revenue numbers of the last decade, the company has been giving double digit revenue
growth (not CAGR) almost every year. The company’s share price doubles every four years. It is because of its 30%
RoCE which helps in gunning out more production by achieving economies of scale. The company aims allocating
capital on debt reduction (99% done), dividends (wealth max for shareholders), Capex (80 Crore Investment) and
strategic acquisitions (Relaxo rubbers and Marvel Polymers).

19. RECOMMENDATIONS
RECAP
• Tightest Working Capital Cycle
• Widest Entry Level Products
• Widest range of Dealership
• Lowest Cost Structure
The Company produces 8.2 Lakh pairs everyday and around
19.2 Crore pairs per year. There are 130 Crore people in India,
which means the company sell only to the 20% of the market.
The Balance 80% is left with the unorganized sector.
The cheapest chappal you can get from amazon is a ‘Relaxo
Chappal’ – Cost ₹80 and the closest competitor is ‘Paragon’
which costs ₹139. Why is this Important? Refer Calculating
Market Potential.
130 Crore
100 Crore 30 Crore
(Annual Income (Affluent
Less than 1 Lakh) People)
Only Relevant organized Stiff Competition from
player is Relaxo from players like Nike,
Adidas, Bata etc.
(Calculating Market Potential)
MACROS IN FAVOUR OF RELAXO
When looking at the growth curve - GST, Demonitization and Covid -19 play a very crucial role. There are tax evading
manufacturers in Kanpur, Ulhasnagar, Tiruppur etc. Because of the above mentioned factors, the unorganized sector is
getting huge blows in their business. So, in the near future the 80% of the unorganized market will fall into the hands of
the Dua Family. This is a straight 10 year ride – They are religiously following ‘Stick to Basics’ strategy which helps
them to build factories after factories and also helps them in Cost efficiency.

20. RECOMMENDATIONS
The ‘Nestle’ Narrative
We would advise the company to take into account five major growth drivers
• Differentiated product quality through In-house manufacturing.
• Distributors-led sales infrastructure (both EBOs and MBOs)
• Tech Investments to enhance systems and processes
• Improved Online Presence
• Efficient Capital Allocation
Why do we call it ‘Nestle’ Strategy?
The current market capitalization of Relaxo footwears Ltd. is ₹2.8 Billion. Let’s with their reinvestment rate and with out
recommendations the company compounds money at 20%. A decade hence Relaxo will be at the position of today’s
Nestle. Simply put, what we are recommending is a textbook way of building a monopoly through epic efficiency. There
are around 25 companies in India which contributes to 90% of India’s GDP. Of course, both Nestle and Relaxo are
among those 25. In India’s journey to reach $10,000 per-capita income, the country will go through great expansion
which results in monopolization of great franchises like Relaxo which is led by honest and hardworking promoters.

21. THANK YOU