Supra Trends Ltd Management Discussions.
(Forming part of Directors Report)
(a) Industry structure and developments
Global Footwear Market is expected to garner $371.8 billion by 2020, registering a CAGR of 5.5% during the forecast period 2015 - 2020. Footwear industry is growing at a steady pace since the past few years. Analysis of the report includes various types of footwear including athletic and non-athletic shoes used by individuals of all age groups and gender. The rising demand for fancy, trendy yet comfortable footwear among all age groups is a key factor driving the global footwear industry. The global footwear market is segmented by type of footwear, end users of footwear, various platforms for sale of footwear, material used, and their sales across various geographies. Asian countries, such as China and India are major exporters of leather footwear across developed countries (UK and US). The report explains material used for manufacturing footwear, which includes leather and non-leather; and analyses
The market for both types of footwear.
Leather footwear are premium products occupying a significant market share in the global market for footwear. Additionally, rising health concerns are influencing individuals to perform indoor and outdoor physical activities. This trend has generated a high demand for athletic shoes, in turn increasing the demand for footwear. Over the past decade, the global market for footwear has witnessed a steady growth and is anticipated to continue at the same pace in the years to come. The estimation of global market is based on revenue generated by the sale of footwear across
Different geographic regions.
Market players are also focusing on expanding their sales channels through different web portals across various regions. Online platforms for purchase of footwear are gaining steady popularity among teenagers and youths, thereby occupying a significant share among all distribution channels. Presently, manufacturers are focusing on developing and innovating new products, to maintain their market positions. Leading companies operating in the market, such as Adidas, Timberland, Nike, and ECCO among others are constantly devising new solutions and focusing on providing better services while upgrading the designs of their existing footwear models.
In April 2015, PUMA launched a lightweight football boot featuring Japanese dragon Graphics for soccer lover. The launch helped the company increase more customers for football shoes manufactured by the company. The shoe industry is set to scale new heights amidst a dynamic competitive landscape. Additionally, companies are using various platforms, such as Olympic Games, F1 car racing events and are collaborating with international sports platforms in a bid to promote themselves worldwide. In July 2014, Adidas collaborated with Manchester United to promote its brand among football teams. This partnership provided necessary platform for Adidas to reinforce their brand image on international sports platform, thereby making considerable additions to their brand.
Opportunities and Threats
The global footwear market is foreseen in a report by Transparency Market Research (TMR) to hold a significantly consolidated nature during the forecast period 2017-2025. In 2016, leading companies secured a 72.1% share of the market. In the same year, the market witnessed the dominance of Nike Inc., which is expected to continue securing a larger share in the coming years. Top companies such as Asics Corp., New Balance Inc., Puma SE, and Adidas AG could look to increase their presence in the market. With a view to penetrate new markets, companies are foretold to expand their product portfolios.
TMR envisages the global footwear market to expand at a 3.0% CAGR to be valued at a US$278.8 bn by the end of 2025. In 2016, the market was worth a US$215.7 bn. Among various footwear types, non-athletic could show colossal growth in the market, considering its 52.9% revenue share achieved in 2016. From a geographical perspective, the market could testify the rise of North America as a leading region, taking into account its US$78.5 bn revenue earned in 2017.
Risks and concerns.
The identified risk and concern before your Company are competitive business environment, changing consumer preferences, cheap and under invoiced imports, inadequate infrastructure, steep increase in rental cost and labour wages, unexpected changes in raw material prices, changes in the customers shopping preference, foreign currency exposure, large unorganized sector in comparison to organized, lack of skilled labour, increase in environmental issues and inadequate investment are considered as risk factors. Your Company monitors its major risks and concerns at regular intervals. Appropriate steps are taken in consultations with all concerned including the Risk Management Committee and Audit Committee of the Board to mitigate such risks.
The Company has proper and adequate internal control systems to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly. The internal control system provides for well documented policies, guidelines, authorizations approvals and procedures. The observations arising out of audit are subject to periodic review, compliance and monitoring. The significant observations, made in internal audit reports, along with the status of action thereon are reviewed by the Audit Committee of the Board of Directors on a regular basis for future appropriate action, if deemed necessary.
Discussion on Financial Performance with respect to Operational Performance:
1. Total Income: During the year under review Supra Trends Limited has achieved a gross total income of Rs621,774/-
2. Share Capital: The paid-up share capital as on 31stMarch, 2019 is 50,00,000/- divided into 500000 fully paid-up equity shares of Rs.10/- each.
3. Net Loss: (592,673)
4. Earnings Per Share (EPS): The Earning Per Share for the Financial Year 2018-19 is Rs.(0.119)per share (Face Value: Rs.10/- each). Your directors are putting continuously efforts to increase the performance of Company and are hopeful that the performance in coming year will improve in faster way.
Your company recognizes that the human resources are the most crucial factor for achieving sustained growth over the years. The management considers its highly motivated and passion driven work force as it s partner in the growth of the company.