Reebok, the leading sports and fitness brand in the country with a 54 per cent market share, says its Indian revenues touched Rs 1,400 crore (at retail prices) for the calendar year ending December 2008. Revenues at retail price is an industry term for comparison between branded apparel and footwear industry players.
The company has added that it will also maintain its advertising and marketing spends at 10 per cent of its sales, even as its spends for the Indian Premier League (IPL) increase this year.
“We are increasing our marketing expense three-fold for IPL with 25 per cent of our total A&M budgets dedicated to the event,” Sajid Shamim, Executive Director for Marketing, Reebok India Company (RIC), says. The brand will be associated with Team Mohali, a new addition to its fold besides last year’s Kolkata Knight Riders, Bangalore’s Royal Challengers and the Chennai Super Kings.
Marketed and traded in India through RIC – a subsidiary of the Germany-headquartered Adidas – Reebok has grown its revenues eight times in the last six years in India, according to Vishnu Bhagat, the firm’s chief financial officer.
Earlier this month, RIC received an LAA- long-term rating, and an A1+ short-term debt rating for its Rs 300-crore bank limits.
“The company has availed of Rs 300 crore in funds to support our aggressive growth plans in the past few years,” Bhagat explains. These funds are reflected as working capital credit lines in the company’s balance sheet. According to IRCA, RIC’s turnover for the nine-month period ending September 2008 is Rs 406 crore, with a profit after tax of Rs 17 lakh.
The company, however, admits that calendar year 2009 is fraught with uncertainty. With a retail footprint of 720 franchise stores and presence in 230 cities, the plan for 2009 includes expansion to 300 cities with 900 franchise stores, says Bhagat.
However, “...we will not require any additional loans this year to support our expansion plans as the company’s operating margins have been improving and is now expected to improve further due to the high credit rating by ICRA,” he adds. “We plan to substitute some of our existing working capital lines with commercial paper and, thus, reduce our interest costs by 2 per cent, giving us a saving of 20 per cent on our operating costs,” says Bhagat.
