Earn first, spend later: CavinKare changes mantra due to slowdown

Unlike other companies, CavinKare reported growth in certain divisions despite the slowdown. While Ranganathan has taken advantage of the situation, he also claims that one needs to be “cautiously optimistic” in such a scenario.

“We witnessed conflicting trends among some of our divisions. Sale in some divisions slacked but others such as our dairy division is doing really well. It is growing at 25-27 per cent while that of fruit drinks is growing by 50 per cent,” he said during an event in the city.

“Also, owing to the slowdown, the cost at which we are now getting some of our raw materials from other companies has fallen drastically. We are paying half or one third the earlier price. We could have never imagined prices falling to such margins. But, companies need to play this game cautiously,” Ranganathan added.

Speaking about the shift in strategy that the company has adopted, the top executive said, “Normally, we spend on advertisement to increase reach among consumers in expectation of future growth. This year, however, we made an exception and decided that instead of spending first and earning later, we will earn first and spend later.” He added that the company is also shifting their advertisements from traditional mediums such as the television to new media as most of the shopping now-a-days happen via smartphones.

Elaborating further on their strategy, Ranganathan said that budget meetings — which used to happen annually and quarterly — are now being carried out monthly to keep a track of the ground situation. “We decided to recalibrate our budget every month because we do not know yet know the full impact of the economic slowdown and the coronavirus. We have to be cautiously optimistic and not give in to pressure,” he said.

The company plans to continue concentrating on innovation and introducing new products into the market. “The economy will hopefully be back on track by the next two quarters. And we continue to put a lot of thrust on innovation and will not stop introducing new products. We will ensure that they succeed even in these turbulent times,” the top executive said.

He also said that although there is no one mantra that every company can follow in such situations, it’s important for every company to find its own headroom. “Our plan is to increase our business even if the industry does not grow,” said Ranganathan.