This report contains statements that are the Companys beliefs and may be considered to
be "Forward Looking Statements" that describe our objective, plans or goals. All
these forward looking statements are subject to certain risks and uncertainties,
including, but not limited to, government action, local & global political or economic
developments, changes in legislation, technology, risk inherent in the Companys growth
strategy, dependence on certain suppliers and other factors that could cause our actual
results to di_er materially from those contemplated by the relevant forward looking
statements. These forward looking statements included in this report are made only as on
the date of this report and we undertake no obligation to publicly update these forward
looking statements to reflect subsequent events or circumstances.
Industry structure and developments
Lifestyles changes, economic growth, and heightened focus on health, especially in the
wake of the pandemic, have boosted demand for footwear globally. Further, there is a
gradual shift in consumer perception towards footwear, elevating it from being a
functional necessity to a lifestyle accessory, requiring occasion based usage, leading to
an increase in overall demand. Global footwear market trends indicate a robust growth with
CAGR of 15 – 17% over FY22-25.
Rising disposable incomes, easy accessibility and a change in attitude is prompting
Indians to move up the value chain, seeking products for di_erent use occasions, spurring
design & development of new segments in footwear. This is fuelling growth in
individual categories, be it slippers, sandals or shoes, in terms of price, performance
and aesthetics, driving industry leaders to innovate their o_erings continually.
India is the second largest producer of footwear globally, next only to China. As one
of the fastest growing industries, it o_ers an array ranging from traditional to the
modern, in both leather and non-leather categories. Indian footwear industry not only
generates employment opportunities nationwide but also contributes to the economy.
According to Invest Indias report on the non-leather footwear industry in India, the
sector is poised to grow eight-fold by 2030 wherein Indias share will soon cross the $6
billion mark by 2024. Further, the share of unorganised sector is gradually declining,
paving way for growth of branded footwear.
Socio economic advances in India and a burgeoning middle class with rising disposable
income and growing aspirations is hastening shift towards brands and premium products,
driving growth for the Indian footwear market. A dynamic lifestyle, evolving purchase
habits and impact of social media has brought about rapid changes in fashion trends,
influencing footwear industry as well. Increasing awareness towards fitness and well-being
has only further spurred footwear styling and growth, more so in the branded segment.
Additionally, growth of online market places supported with rapidly developing
infrastructure for logistics and billing has created an enabling landscape for tapping
latent demand across the country. Quick to spot this emerging trend, the companies too
have rejigged their strategies and earmarked significant investments for this.
Advancements in big data and analytics provide invaluable insights about consumer
behaviour, useful for product development and strategic marketing planning. Innovative
experiences of Omni channel presence, BNPL (Buy Now, Pay Later) and Quick Commerce are
building excitement into this arena and startups of all kind are jumping onto this
bandwagon. On their part, Indian consumers are increasingly at ease with technology and
digital ecosystems, readily buying in to this transition even as a bonanza of choice,
convenience and price optimisation makes them the ultimate winner.
Opportunities and challenges Opportunities:
With broad macro factors turning favourable, Indian footwear industry is poised for
rapid growth. Infrastructural development pacing up, increasing urbanisation, changing
consumption patterns, growth in organised retail and conducive business environment will
all provide momentum to the industry. Even as presently about 90% of the footwear produced
in India is consumed domestically, this is expected to scale up in near future.
Indian footwear industry enjoys a competitive advantage over its international peers as
it has easy access to cost e_cient skilled manpower and abundant raw material thus holding
potential of evolving into a manufacturing hub for exports. With conducive policies it can
generate significant employment, primarily for weaker sections of society.
The India growth story has also brought about evident changes on the consumption front.
Conducive business environment and positive socio economic changes within tier II &
III cities have opened up new vistas of growth, making consumers more conscious about
available choices in footwear and means to access them with ease. More women entering the
workforce and a younger population with evolving lifestyle has only further aided this
transition to the organised sector.
Challenges, risks & concerns:
FY23 has seen great unrest globally amidst geo political tensions and a raging war in
Europe with no signs of abating. This has had catastrophic impact on supply chains
internationally, disrupting availability of raw materials and leading to inflationary
pressures all across.
The Indian footwear industry is subject to regulatory pressures and increasing
requirements of compliance to evolving commercial and technical norms can a_ect business
and financial performance, at least in the short run.
Even as the footwear industry is moving towards being an organised sector, large number
of small scale players pose a strong price competition to those dealing in branded
products, pushing them to embrace greater technology and innovation in their manufacturing
and marketing processes.
While the impact of Covid-19 pandemic has slowed down, it is still far from being over,
rearing its ugly head every once in a while, casting a dark shadow over life and business
alike, subduing outlook before complete normalcy returns.
Economic and political factors, both national and global, that are beyond control, and
factors force majeure may directly a_ect performance of the Company as well as the
footwear industry.
These factors include interest rates and its impact on availability of retail space,
rate of economic growth, fiscal and monetary policies of governments, inflation,
deflation, consumer credit availability, consumer debt levels, tax rates and policy,
unemployment trends, terrorist threats and activities, worldwide military and domestic
disturbances and conflicts, pandemics, and other matters that influence consumer
confidence and spending.
The Company is subject to risks arising from material price changes and exchange rate
fluctuations which may adversely a_ect our financial performance.
The raw material prices, notwithstanding slight moderation in recent months, continue
to remain high which, if sustained, may negatively impact profitability of the industry in
FY24.
During the normal course of business, the competition is ever increasing from domestic
and international brands. The availability and retention of talent, tackling counterfeit
goods, product quality management, innovation and new product development, rapidly
changing consumer preferences, impact of strategic and marketing initiatives, data
security etc. may a_ect your Company. Your Company has 8 (eight) state of art
manufacturing units and normal challenges of labour management, technological
developments, etc. are, nonetheless, risks faced by your Company.
Your Company monitors its major risks and concerns at regular intervals. Appropriate
steps are taken in consultation with all concerned including the Risk Management Committee
and the Audit Committee of the Board to identify and mitigate such risks. The Board is
responsible for reviewing the Enterprise Risk Management Policy of the Company whereas the
Audit Committee of the Board is responsible for evaluating the risk management systems in
the Company.
Your Company, with over four decades of experience in manufacturing and marketing of
footwear, is better placed than its peers to counter these uncertain times.
Internal Control System and its adequacy
A separate paragraph on internal control systems and its adequacy has been provided in
the Boards Report.
Human Resources/Industrial Relations
Over the last year, your Company has taken various initiatives for employee benefit and
retention. The detailed information is provided at point no. 3 of the Boards Report. The
relationship of your Company with employees has been cordial during the year. As on March
31, 2023, the total number of employees of the Company are 6,736 against 8,026 on March
31, 2022.
Financial Performance of the Company
During the FY23, your Company achieved a turnover of H2782.77 crores and profit of
H154.47 crores. Detailed report on financial performance of the Company is provided in
point no. 2 & 3 of the Boards Report.
The Board has recommended a final dividend @ 250% equivalent to H2.50/- per equity
share of H1/- each fully paid up for the FY23.
The capital expenditure incurred during the FY23 amounted to H174.35 Crore as compared
to H145.87 Crores in FY22. The capital expenditure was in line with the growth strategy of
your Company and was funded through internal accruals.
Your Company has no term loan outstanding as on March 31, 2023.
Your Company has only one segment i.e. ‘Footwear and related products and the
performance is already captured in point no. 2 & 3 of the Boards Report and Financial
Statements.
Details of Significant changes in Key financial ratios along with explanation
In compliance with the requirement of Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as
Listing Regulations), the key financial ratios along with explanation for significant
changes (i.e. changes of 25% or more as compared to the immediately preceding financial
year) has been provided hereunder:
S. N. |
Particulars |
UOM |
2022-23 |
2021-22 |
Change in % between Current FY & Previous FY |
Explanation/ Reason for Change |
| 1 |
Debtors Turnover |
Times |
9.69 |
11.36 |
-14.70 |
- |
| 2 |
Inventory Turnover |
Times |
3.20 |
3.31 |
-3.32 |
- |
| 3 |
Interest Coverage Ratio |
Times |
11.92 |
21.26 |
-43.93 |
Due to lower EBIT & increase in Interest Cost |
| 4 |
Current Ratio |
Times |
2.54 |
2.57 |
-1.17 |
- |
5 |
Debt Equity Ratio |
Times |
- |
0.01 |
-100.00 |
There was no utilisation of working capital limits at year end |
| 6 |
Operating Margin i.e. EBITDA |
% |
12.07 |
15.67 |
-22.97 |
- |
7 |
Net Profit Margin |
% |
5.59 |
8.83 |
-36.69 |
Net Profit margin was impacted mainly due to higher raw material prices
and subdued demand |
8 |
Return on Net worth |
% |
8.55 |
13.96 |
-38.75 |
Return on Net worth was impacted due to lower profits |
Net Profit Margin, Operating Margin (EBITDA) and Return on Net worth were impacted due
to higher raw material prices.
Outlook
The India growth story is going strong with the country growing to claim its spot as
fifth largest economy in world rankings. India continues to be a preferred investment
destination for FDI among all emerging economies. A stable political environment providing
infrastructural development, conducive economic policies, ease of doing business and a
growing middle class prophesises Indias supremacy over the next decade.
With gradual settling down of raw material prices and supply chain stability we can
expect improved financial performance.
While consumer expectations are always rising over time, your Company is well ahead of
the curve with all its brands in a position of leadership. A ‘Customer First
approach coupled with a strong, committed distribution network supported by aggressive,
proactive marketing strategies provide a strong moat against competitive threats.
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