lawreshwar polymers ltd Management discussions



After experiencing high market volatility from multiple headwinds in 2022, the global economy is showing signs of resilience in 2023. The slowdown is expected to be less pronounced in 2023 than previously anticipated. However, higher inflation, tighter monetary conditions, and the Russia- Ukraine war continue to impact the global economy. Inflation is projected to decline from 8.7% in 2022 to 7% in 2023 and 4.9% in 2024. Further, key factors such as the rebounding of Chinas economy, improved supply-chain functioning, and the recent decline in energy and food prices indicate the improvement in economic activity in 2023.

According to the International Monetary Fund (IMF), global GDP growth is projected to decline from 3.4% in 2022 to 2.8% in 2023 and rise to 3% in 2024. Growth across Advanced Economies (AEs) is expected to decline from 2.7% in 2022 to 1.3% in 2023 before rising to 1.4% in 2024. Emerging and Developing Economies (EMDEs) fared better and grew at 4% in 2022 and are expected to grow at 3.9% in 2023 and 4.2% in 2024. Asia-Pacific will be the most dynamic of the worlds major regions in 2023, with China and India leading the growth.

(Source: IMF World Economic Outlook, April 2023)

Indian Economy

The Indian economy is relatively insulated from global spillovers and continues to be among the fastest growing economies in the world. Indias real GDP grew by 7.2% in FY2023 as against 9.1% in FY2022 and reflects robust domestic consumption and lesser dependence on global demand. Despite the weak external demand, the merchandise exports registered healthy growth. Further, increasing disposable income will stimulate consumption and boost the demand for goods and services across industries.

According to the IMF, the Indian economy is expected to advance steadily at 5.9% in FY2024 before rising to 6.3% in FY2025. The economic growth is primarily driven by robust domestic consumption, abating of inflation, technology- enabled development, export growth, and revival in credit growth among others. Additionally, increased capital expenditure on infrastructure and the growth-enhancing policies such as the PLI schemes, Make in India and Atmanirbhar Bharat will strengthen the infrastructural and manufacturing base, lead to higher productivity and build a strong foundation for sustained economic growth.

(Source: Ministry of Statistics & Programme Implementation; IMF World Economic Outlook, April 2023)


The Indian footwear market witnessed a rapid transformation in the last few years. The footwear business, a major retail sub-sector, has become one of the most dynamic sectors in recent years due to changing customer sentiments. According to Retailers Association of India, sales of the footwear segment grew by 34% in the retail sector in FY2023 compared to the last year. The organised footwear segment has been growing at a faster rate due to rising urbanisation and contemporary retail formats. The market share of the organised footwear segment is estimated to grow from 30% in FY2020 to 36%-40% by FY2025. The major growth drivers are the shift in perception of footwear from a utilitarian commodity to a fashion statement, changing lifestyles, growing economies, heightened focus on health, and digital penetration. The expansion of exclusive brand outlets in Tier II and small towns and increased share of e-retail are also aiding the growth of the organised footwear sector. Further, the government has allowed 100% FDI through the automatic route for this sector. The governments campaigns Make in India and Self-reliant India will boost domestic manufacturing and increase the competitiveness of Indian manufacturers in the global market. These initiatives will benefit the Indian footwear industry and promote the export of footwear.

(Source: Retailers Association of India; 5paisa; Invest India, Non-Leather Footwear Industry in India)


The Indian footwear market is well-positioned to achieve healthy growth in the coming years, aided by a growing young and working population, increasing aspirations and affordability, the meteoric rise of e-commerce, and exposure of global fashion trends among others. The Indian footwear market is expected to grow at a CAGR of 15% to 17% from Rs.920 - Rs.950 billion in FY2022 to Rs.1,380 - Rs.1,450 billion by FY2025. The organised footwear industry is estimated to reach Rs.530 - Rs.550 billion by FY2025. (Source: ICICI direct; CRISIL Report - Assessment of organised retail and footwear industries in India, August 2021)

• De-reservation of the footwear sector

• Growing domestic and international markets

• Rising disposable income and economic growth

• Growth of the retail sector and e-commerce

• Use of modern technology

• Mandatory footwear quality standards will be applicable from 1st July, 2023 which will curb sub-standard imports

(Source: The Economic Times)


• Unorganised players intensify competition by leveraging low price points

• Entry of multinationals in the domestic market

• Compliance issues with the environmental norms and regulations

• Shortage of skilled workforce and high wages

• Fast-changing fashion trends

• Imports from China


Incorporated in 1994, Lehar Footwears Limited (LFL) is North Indias leading mass-footwear manufacturer and branded distribution company. Your Company is predominantly engaged in the manufacturing of high-quality non-leather footwear including lightweight open-footwears (slippers/ sandals), Hawai slippers, school shoes, canvas shoes, sports shoes, PVC shoes and EVA/PVC/PU injected footwear. Your Company has established its reputation as one of Indias most trusted brands in the local market. It has also established a strong foothold globally and exports its products to South Africa, South Arabia, Somalia, Kenya and Qatar. It has 4 manufacturing facilities located in Rajasthan and 2 retail stores (factory outlets) in Jaipur, Rajasthan.


Your Company is engaged in the business of manufacturing footwear, so the Management considers "Footwear" as the only business segment of LFL. Your Company sold 2.02 crore pairs of footwear in FY2023 as against 1.55 crore pairs in FY2022.


Your Company delivered a strong performance in FY2023 owing to improving market sentiments and focus on profitability, business growth and premiumisation of the brand. It recorded a robust net profit of Rs.512.99 Lakhs as against Rs.250.55 Lakhs in FY2022. Its turnover for the fiscal year stood at Rs.20,216.41 Lakhs as against Rs.13,747.14 Lakhs the previous year.


Your Company envisages robust growth in the coming years with its well-diversified product portfolio, unparalleled reach, and financial strength on the back of strong demand for its products in the market. New product development, branding and promotion and exports will fuel your Companys growth engine. It is focussed on deploying consistent efforts towards the introduction of newer product designs and extension of core products to cater to the increased demand of EVA and PU products in the market. Your Company aims to keep its products relevant, competitive and value for money for customers which will further enable your Company to penetrate deeper in the target market and expand its top line and bottom line.


Your Company has a structured risk management framework for the timely and effective identification, assessment, and mitigation of key business and operational risks. It formulates robust mitigation strategies to monitor and mitigate identified risks and concerns in the industry to minimise their impact on your Companys operational and financial performance and business environment. It also adopts preventive measures as considered expedient and necessary.

The increasing competition from both local and international players is something that your Company recognises. It continuously assesses the risks and concerns in the Footwear Industry that may impact its current operations, future performance, and business environment. To address these risks and concerns, it takes proactive measures as deemed necessary. Your Company understands the need to make continuous changes in its product portfolio mix to stay relevant to the millennials and the growing youth population in India. Along with rising competition, changes in customer behaviour and the impact of online marketing initiatives also affect your Companys performance, given its extensive distributor network across India. While employment opportunities are on the rise, retaining talent is considered a challenge. Your Company also acknowledges the importance of modernising its IT systems and protecting data from the risk of loss or theft, which is a global concern. It regularly monitors its major risks and concerns, and takes appropriate steps in consultation with relevant committees of the Board to identify and mitigate these risks.


Your Company has an adequate and structured internal control system commensurate with the size, nature and complexity of its business. It comprises authorisation levels, supervision, checks and balances and procedures through documented policy guidelines and manuals and ensures that all transactions are authorised, recorded and reported correctly and adherence to the applicable policies and regulations. The operational managers exercise their control over business processes through operational systems, procedural manual and financial limits of authority manual, which are regularly reviewed and updated to improve the systems and efficiency of operations. Your Company places prime importance on an effective internal audit system. The internal control system is supplemented by internal audits, regular reviews by the management and well- documented policies. Your Companys independent internal audit system monitors the entire operations and services and its observations and recommendations are reviewed by the management and Audit Committee of the Board, which takes appropriate corrective measures as deemed fit.


Your Company considers its employees as the most important asset and integral to its growth and competitive position. It promotes a safe and conducive work environment, inclusive growth, equal opportunities and competitiveness and aligns employees goals with the organisations growth vision. It regularly conducts training programmes for the enhancement of skills, capabilities, working speed, and time management skills of the employees. It continues to nurture a culture that values meritocracy and motivates employees by offering performance-based rewards and growth opportunities. Inspired by your Companys values of meritocracy, entrepreneurship, and innovation along with core tenets of open communication, transparency, and agility, its talented employees are always on a quest to take your Company to greater heights. As on 31st March, 2023, your Companys total employee strength stood at 279 including contractors. Further, industry relations remained peaceful and harmonious during the year.


The Management Discussion and Analysis may contain certain statements describing your Companys objectives, plans, goals, projections, and expectations which may be forwardlooking statements within the meaning of applicable laws and regulations and are based on informed judgements and estimates. Actual results may differ materially from those expressed or implied. These forward-looking statements are subject to certain risks and uncertainties, including but limited to, changes in government regulations and policies, economic development, raw material availability and prices, competitive pressures, risks inherent in your Companys growth strategy and other factors that could cause the actual results to differ materially from those either expressed or implied in the forward-looking statements.