The Indian subsidiary of Spanish sanitaryware maker Roca used to invest ₹100 crore on capex every year. This year, the COVID-19 pandemic has affected its business. However, the company expects to bounce back by October and its expansion plan is on track,K.E. Ranganathan, MD, Roca Bathroom Products Pvt. Ltd. said in an interview. Edited excerpts:
How was your company’s performance prior to COVID-19, in the first quarter?
Our financial year is the calendar year. For CY2019, we registered a revenue of ₹1,350 crore, including exports, and recorded a robust 16% growth. For the first quarter January-March 2020, the company registered an overall growth of 2% in revenue in spite of COVID-19 disruptions during second half of March 2020.
How did you manage to register growth while most players reported a huge decline in Q1?
We address different consumer segments with appropriate brands. The luxury segment is addressed by Armani Roca & Laufen (Swiss made) brands, while the super-premium segment is catered to by Roca brand. The most popular Parryware brand is for premium segment and the ‘affordable’ segment has Johnson Pedder.
Parryware recorded 8% revenue growth in Q1 on the back of several market led initiatives. Key ones included new products (which account for 20% of revenue), trade loyalty programs, market development activities, new showrooms, deeper penetration into rural India, tie-ups with all key developers and builders, consumer-led promotions and plumbing technician friendly practices.
We reach out to over 220 cities in India and have customer-care centres operating in 30 cities covering more than 9,000 pin-codes providing 24/7 faster service through trained technicians. Our key focus in the business is to take care of the needs of our trade partners & end consumers. Meeting and exceeding their needs is the only way we can be of relevance to them. Over the last many years the company keeps investing heavily in the market place, in the innovative products and in technology to remain contemporary. We invest close to 7% of our revenues for these growth oriented measures which is yielding desired results.
How is the buying pattern during the COVID-19 times?
As the markets opened up from mid-May 2020 across India, we started helping over 15,000 retailers to prepare the outlet to receive customers in the new normal. Every aspect of retailing, both static & inter-active, was looked into.
As our bathroom products need the touch-n-feel effect, we worked on proper maintenance/ cleanliness aspects. Our constant interaction with showroom salesmen showed that customers are returning back to showrooms and looking at products for immediate replacement needs. The usual habit of customers jumping between 4-5 shops and making 3-4 trips before finalizing the purchase has drastically got reduced due to fear of COVID. The customers want to complete the purchase process in a hurry and leave the premises fast. They are not haggling for too much negotiations on prices. Reasonable discounts make them happy. What they need is hygiene, comfort of handling and good service. Our retailers have quickly learnt this art of selling in the new normal consumer world of shopping.
Tell us about the challenges faced during the lockdown?
When COVID-19 attacked India, we had to shut all our factories, warehouses and offices from March 23.We lost sales for the last week of March 2020 as dispatches could not happen due to lockdown. In spite of this, we ended the quarter Jan.-March 2020 on a positive growth of 2%, overall. April was a washout for everyone.During May, we re-started our engine and ended with 40% recovery of pre-COVID-19 levels. June was much better with more markets opening up.
Do you see demand bouncing back?
With over 60% of our 15,000 outlets re-opening, we could see the demand coming back strongly. We re-started manufacturing with all safety norms. Overall, we see demand for our brands to touch 100% of pre-COVID levels by September. We are confident of returning to growth in revenue by October/November as festival season ushers in more demand.
Have you tweaked your expansion plans due to COVID-19?
Every year, we invest close to ₹100 crore across our manufacturing facilities, showrooms, market development actions and technology support areas. Before COVID-19, our company was growing at a CAGR of 14-15%. Due to COVID-19, our growth rate for 2020 will be affected. We do expect to get back to higher growth levels from year 2021 onwards. To support this growth, we expect our capex and expansion plans to sustain the current levels, going forward.
Presently, Roca group worldwide procures only 3% of production made in India for global markets. This is expected to touch 10% level in 3-4 years. We have ambitions plans for India in the years ahead. We will continue to invest heavily in manufacturing technology, expansion of capacities and acquisition of facilities, including greenfield.
Our faucets capacity is nearing full and we are on the look out for expansion and acquisition. Our plastics products capacity will need expansion in two years from now. Also for sanitaryware, we will need to expand in 3-4 years.
On the market front, we invest close to 7% of our revenues in setting up company-owned showrooms, developing rural markets, expanding showrooms of our trade partners, increasing brand visibility through TVC and onground activations. These measures will continue as we see the demand rising much higher in the year 2021 onwards post-COVID rebound.
We continue to invest heavily on our people to meet increasing consumer demands for products and services. Overall we have a game plan to double our revenue in the next five years and continue to stay highly profitable. Roca is always a long-term player in every market and invests constantly and consistently in elevating the experience of bathroom product buyers.
Hygiene takes top priority in new normal. How do you address it?
Everyone realizes the need for water saving e-taps or foot-operated taps. We have launched electronic flushing urinals for public places. Touch-less or Touch-free is the new normal everywhere to avoid contracting virus. We are now ready to launch a wide range of dis-infectants for bathroom maintenance such as sanitaryware cleaners, taps cleaner, floor cleaners and hand sanitisers. These products being launched in Parryware brand will address the hygiene conscious customers and make them feel safe.
Tell us about the digital initiatives?
During the last week of June 2020, we quickly launched a digital platform ‘Parryware Safe Buy’ for all our brands (Roca, Parryware and Johnson Pedder) to be in touch with out customers. We are getting huge response from customers, making their buying experience much easy and safe.