(Forming part of Directors Report)
Industry structure and developments
India is the second-largest producer of footwear and third-largest footwear consumer
globally. Economists predicted India to become a favorable market for fashion retailers on
the back of a large young adult consumer base and increasing disposable income. Luxury
retailing is also gaining importance in India. This includes fragrances, gourmet
retailing, accessories and jewellery among many others. This momentum of the footwear
market in India, on the back of growing demand for trendy, fancy and comfortable footwear
among the youth of the Country, however, has been disturbed by the massive shock of the
corona virus pandemic and the shutdown measures to contain it.
Global economy has plunged by a severe contraction and Global growth is projected at 6%
in 2023, moderating to 4.4% in 2022. Except stores selling essential commodities, most
other stores were shut down across the Country for nearly two months in the year under
review and were operating under checkered conditions for the rest of the year. Even today,
partial lockdowns or restrictive conditions continue to impact retail store operations.
The pandemic also led to non-reopening of Schools which impacted sales of school shoes.
Even with the aggressive Covid-vaccination drives, the consumer sentiment would take some
time to revive. Though there is a shift of focus to e-commerce, it currently accounts for
more than 4% of the Countrys overall food and grocery, fashion, consumer electronics
retail trade.
The industry is witnessing an upward revision and anticipates a vaccine-powered
recovery in the second half of 2022-23, however, there may remain a subdued economic
activity in non-essential retail business. High uncertainty surrounds this outlook, due to
the pandemic, to the speed of vaccine-powered normalization and the evolution of financial
conditions.
Under the "New Normal" as India Inc. shifted to "Work from Home"
and with socialising becoming a rare occasion, shoppers are purchasing casual and
comfortable open footwear. The silver lining, however, is the increasing awareness of
health, thereby driving the demand for sports footwear. The retail footwear business is
expected to improve gradually as economic activity is improving.
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
The market for both types of footwear.
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 retail sector in India is emerging as one of the largest sectors in the economy. It
contributes 10% to GDP and 8% to employment. The total market size of Indian retail
industry stood at US$ 950 billion in 2018 and is forecast to reach US$ 1,200 billion by
2023 and US$ 1,750 billion by 2026. India is poised to become a favourable market for
fashion retailers given the following growth drivers for retail
1. Favourable demographics
2. Rise in income and purchasing power
3. Change in consumer mindset
4. Brand consciousness
5. Easy consumer credit and increase in quality product.
Segment wise / Product wise Performance
India is the fifth largest preferred retail destination globally. The sector is
experiencing exponential growth, with retail development taking place not just in major
cities and metros, but also in tier II and tier III cities. India ranked 73rd in the
United Nations Conference on Trade and Developments Business-to-Consumer (B2C) E-commerce
Index 2019. Online penetration of retail is expected to reach 10.7% by 2024 versus 4.7% in
2019. The governments focus to improve digital infrastructure in Tier 2 and Tier 3
markets would be favourable to the sector.
Outlook
To resume the growth path, your Company is taking necessary steps such as expanding its
e-commerce footprint making deliveries. Your Company is continuously working on various
cost-optimization measures including rental renegotiation, closure of unviable stores and
digitalization drive across the organization, etc., to eliminate redundancies. Your
Company continues to focus on stylish, comfortable and durable quality products so as to
be ahead of competition. Your Company is also working aggressively on increasing its reach
to customers.
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.
Internal Control Systems and adequacy
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: Nil/-
2. Share Capital: The paid-up share capital as on 31st March, 2023 is
50,00,000/- divided into 5,00,000 fully paid-up equity shares of Rs.10/- each.
3. Net Loss: 1,34,000 Loss
4. Earnings Per Share (EPS): The Earning Per Share for the Financial Year
2022-23 is Rs. (0.27) 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.
Material developments in Human Resources / Industrial Relations front, including number
of people employed.
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 its partner in the growth of the company.
Details of significant changes (i.e. change of 25% or more as compared to the
immediately previous financial year) in key financial ratios, along with detailed
explanations therefor, including:
Financial |
Formula |
Standalone |
Deviation |
Reasonfor |
Ratios |
|
2022-23 |
2021-22 |
(%) |
Change |
Debtors Turnover Ratio (times) |
[Revenue from operations/ Average Trade receivables] |
NA |
NA |
NA |
|
Inventories Turnover Ratio (times) |
[COGS/Average Inventories] |
NA |
NA |
NA |
|
Interest Coverage Ratio (times) Current Ratio |
[EBIT/Finance Cost] [Current Asset/Current |
NA |
NA |
NA |
|
| (times) |
Liability] |
12.20 |
12.05 |
1.18% |
|
Debt Equity Ratio (times) |
[Debt/Shareholders Equity] |
-5.98 |
9.23 |
-35% |
Some Part of Debt from Related Party Cleared in Current Year |
Operating Profit Margin Ratio (%) |
[EBIT/Revenue from Operations] |
NA |
NA |
NA |
|
Net Profit Margin Ratio (%) |
[Profit After Tax#/Revenue from Operations] |
NA |
NA |
NA |
|
Return on Net Worth (%) |
[Profit for the year (before exceptional items and after tax)/Net
Worth] |
0.14 |
0.19 |
-27.55% |
No operations in the Company |
Disclosure of Accounting Treatment:
Where in the preparation of financial statements, a treatment different from that
prescribed in an Accounting Standard has been followed, the fact shall be disclosed in the
financial statements, together with the managements explanation as to why it believes
such alternative treatment is more representative of the true and fair view of the
underlying business transaction.
|
For and on behalf of the Board |
|
For SUPRA TRENDS LIMITED |
|
Sd/- |
|
Mathamsetty Venkata Krishna Sunil Kumar |
Date:28th August, 2023 |
Chairman & Managing Director |
Place: Hyderabad |
(DIN: 03597178) |
+91-9892691696
