Relaxo Footwears Limited has announced a 21 per cent drop in net profit for the first quarter to June 30, stating a profit of Rs. 44 crore against Rs. 56 crore in the corresponding period a year ago. The company’s turnover was up marginally at Rs. 748 crore against Rs. 739 crore in the corresponding quarter of the previous year.
According to Ramesh Kumar Dua, Chairman and Managing Director, the company’s nominal revenue increase was due to weak consumer sentiments, mainly on account of election-related disruptions and extreme heat in various parts of the country.
“We are operating in a labour-intensive industry where government-set minimum wages have risen significantly,” he said.”We chose not to pass on the higher costs to consumers because of the current market conditions, which have become subdued and lower-than-expected, and thus hit our profitability this quarter. At the same time, capital investments to increase future production capacity have resulted in higher depreciation.”.
