1.

Introduction

1.1 Overview The Indian Footwear Industry is gearing up to leverage its strengths towards maximizing benefits. Strength of India in the footwear sector originates from its command on reliable supply of resources in the form of raw hides and skins, quality finished leather, large installed capacities for production of finished leather & footwear, large human capital with expertise and technology base, skilled manpower and relatively low cost labor, proven strength to produce footwear for global brand leaders and acquired technology competence, particularly for mid and high priced footwear segments. Resource strength of India in the form of materials and skilled manpower is a comparative advantage for the country. Leather footwear in India are dress shoes, casuals, moccasins, sport shoes, horrachies, sandals, ballerinas, boots. Non-leather footwear in India is Shoes, Sandals and Chappals made of rubber, plastic, P.V.C. and other materials. With changing lifestyles and increasing affluence, domestic demand for footwear is projected to grow at a faster rate than has been seen. There are already many new domestic brands of footwear and many foreign brands such as Nike, Adidas, Puma, Reebok, Florsheim, Rockport, etc. have also been able to enter the market. The footwear sector has matured from the level of manual footwear manufacturing methods to automated footwear manufacturing systems. Many units are equipped with In-house Design Studios incorporating state-of-the-art CAD systems having 3D Shoe Design packages that are intuitive and easy to use. Many Indian footwear factories have also acquired the ISO 9000, ISO 14000 as well as the SA 8000 certifications. Excellent facilities for Physical and Chemical testing exist with the laboratories having tie-ups with leading international agencies like SATRA, UK and PFI, Germany.

One of the major factors for success in niche international fashion markets is the ability to cater them with the latest designs, and in accordance with the latest trends. India, has gained international prominence in the area of Colors & Leather Texture forecasting through its outstanding success in MODEUROP. Design and Retail information is regularly made available to footwear manufacturers to help them suitably address the season's requirement. The Indian market for footwear includes all producers of non-cleated, rubber and plastic footwear designed in style or for use. The industry is a collection of smaller, segmented, yet often overlapping markets, defined by both the price and the purpose of the shoes. For instance, there are mini-markets for shoes designed for each of many sports and other purposes: basketball, running, walking, tennis, and casual wear. The greatest overlap between these categories is between performance shoes and casual wear. Therefore, there is some degree of overlap between most segments. The industry is dominated by a few large firms, while the majority of other players have less than 5% market share. These firms fight for market share through non-price competition, on strategies such as strengthening brand image and increasing product proliferation. The success of each firm is greatly dependent upon its marketing campaigns. The brand image of the major firms is created by extensive marketing campaigns and celebrity endorsements. Consumers associate themselves with a particular brand and tend to stick with the brand with which they are comfortable. Entry to the industry is difficult as brand loyalties are high. Standing on the threshold of a retail revolution and witnessing a fast changing retail landscape, the Indian footwear market is set to experience the phenomenal growth in coming years. In past few years too, the market has seen robust growth, says Indian Footwear Industry Analysis report. This report provides extensive research and in-depth analysis on the Indian footwear market. The detailed data and analysis given in the report will help the client to evaluate the leading-edge opportunities critical to the success of the footwear market in India. The forecasts and estimations given in this report are not based on a complex economic model, but are intended as a rough guide to the direction in which the market is likely to move. This forecast is based on a correlation between past market growth and growth of base drivers.

1.2 History of Footwear Footwear is estimated to have started its long history of human use during the Ice Age some 5 million years ago. Unkind weather conditions are said to have created the necessity for footwear. Other evidences show that footwear came to use at the end of the Paleolithic Period, at about the same time the early humans learned the art of leather tanning. Early pieces of footwear were made of wrappings, usually made of leather or dried grasses. Later on pieces were developed from an oval piece of leather which is bound by a piece of strong leather thongs. Sandals, which are the first crafted footwear, are the successors to these wrappings. In Egyptian funeral chambers, paintings show the different stages in the preparation of leather and footwear. The images also show that in Egypt, footwear depicted power and class. The Pharaohs sandals were distinguished by the turned up toes, a characteristic which is missing in the commoners footwear. Egyptian sandals were crafted using straw, papyrus, or palm fiber. Later on, Egyptian women adorned their footwear with precious stones and jewels. Material evidences showed that the Greeks loved and took good care of their feet by using different footwear for different activities. Greek women began wearing sandals to signify their social class. Their footwear signified beauty, elegance, refinement, and extravagance. It has been said that Greek women of bad reputation attracted men by wearing elevated sandals. These sandals create a clacking sound when the wearer moves, and this sound was considered as a symbolic flaunting of sexual charms. In Mesopotamia, leather wrappings are tied to the feet by a strip of the same material. Romans, on the other hand, created durable leather thongs so their legions can travel to places on foot. It is also believed that foot fetishes began with the Romans when Senator Lucius Vitellus frequently kissed the shoe of his mistress which was hidden in his tunic. In Rome, footwear also exhibited social class. The consuls wore white shoes, the senators wore brown shoes, and the uniform footwear for the rest of the region was a short pair of boots that uncovered the toes.

But in all of these early civilizations, footwear indicated social status. Footwear consists of garments that are worn over the feet. They are worn mainly for protection and hygiene, but also for fashion and adornment. Footwear items come from a wide range of materials including leather, rubber, canvass, wood, and plastic. But early pieces were made from available materials like straw, leather, cowhide, and grasses. When footwear is assembled, the main components are adhesives, cushion, counter fort, heel, hook, insole, laces, sole, steel shank, tack, toe puff, tread, and welt. Generally, footwear is classified into: boots, industrial footwear, shoes, and sandals. Boots are available as cowboy boots, galoshes, ski boots, thigh length boots, and so on. Industrial footwear includes plastic boots and rubber loafers which are used in laboratories, construction sites, and production lines. Shoes include athletic shoes (or running shoes), climbing shoes, clogs, high heels, mary janes, moccasins, mules, loafers, tap shoes, and cross-training shoes. Sandals, on the other hand, include espadrilles, flipflops or thongs, slide-ons, and slippers. Footwear is considered an extension of ones personality. Well-maintained footwear says things about the owner, with cleanliness as the most important concern. Although the intricacy of this craft may have been Lost to modernization, their influences are still present in shoes today. The moccasins worn in early times by people in cold countries are still being worn there, while the sandal patterned after the Egyptians creation is still frequently used in hotter countries.

Production Technology: The production of the industry starts with Agro Industries and progresses through the chemical industry and tanning to manufacturing. Leather is a by-product of the food industry. It is a commodity and as such is subject to market forces in a similar way to tea, sugar, coffee, etc.

2. Indian Footwear Industry

2.1 Regional Segmentation
i) Geographic: ( City or Rural areas)

Companies focus more on metro cities because people believe in trying innovative, new and better products. In different regions different people have different preferences for the type of footwear. Urban people go for more stylish footwear than rural people. Rural people concentrate on durability rather than giving preference to style and look.
ii) Demographic:

Gender: Male sector of footwear industry have limited categories like shoes, chappals and sandals. Footwear is chosen according to their frequency of usage. Female sector includes variety of range as it is the most fashion oriented sector. Age: Various age groups are targeted by the industry. Footwear is the product that each and every individual will use till its lifetime. Income: Here industry needs to find out that how much expenses are incurred by the people regarding their footwear. Various range of footwear is available targeting every income group.
iii) Psychographic:

It depend on the requirement of the consumer that which particular segment they need to approach for the products available in the market by the different players. Eg: A Professional goes for purchasing for Formal Shoes, Student goes for Casual Footwear.

2.2 Market Performance and Exports Nearly 75% of Indias Export of Footwear is to the European Countries and the USA. The Indian Footwear Industry provides employment opportunities to a total of 1.1 million people, mostly from the weaker sections of the society. Out of this, about 0.2 million are employed in the organized sector, 40% of who are women. Remaining 0.9 million people are engaged in unorganized footwear sector like rural artisans, cottage and household units etc. The Footwear Sector is now de-licensed and de-reserved, paving the way for expansion of capacities on modern lines with state-of-the-art machinery. To further assist this process, the Government has permitted 100% Foreign Direct Investment through the automatic route for the Footwear Sector.

INDIA S FOOTWEAR EXPORT GROWTH OVER THE LAST FOUR DECADES 7

Footwear export has increased from US$40.15 million in 1977-78 to US$ 1475.83 million in 2007-08

CHART SHOWING GLOBAL IMPORT OF FOOTWEAR VS INDIA S EXPORT OF FOOTWEAR

Indias Exports of Footwear Country-wise Share in Total Exports (2007-08) Source: DGCI& S 8

Indian Footwear Industry in a Nutshell: - Second largest footwear producer after China - 2.06 billion pairs produced in an year - 16 % of the global production is produced in India - Contract manufacturers supply to leading global brands - 644 Member produces situated as clusters at Chennai, Ambur, Ranipet, Kanpur, Agra, Mumbai, Delhi and Karnal.

3. Key Players of the Industries.

3.1 Domestic Players: 9

Bata:Bata India is the largest company for the Bata Shoe Organization in terms of sales pairs and the second largest in terms of revenues. With 1250 stores across the country, it also has the widest retail network within the BSO. By the time Bata had come to India in 1931, it was already recognized as a leading shoe brand. Its manufacturing and marketing operations heralded the rise and the development of a modern footwear industry in India. Before Bata, footwear was produced primarily in the handicrafts and small enterprise segments. Bata, over the decades, used the current knowledge' from its international experience to create adaptive and innovative baseline standards for the shoe businesses in India.

Incorporated as Bata Shoe Company Private Limited in 1931, the company was set up initially as a small operation in Konnagar (near Calcutta) in 1932. In January 1934, the foundation stone for the first building of Bata's operation - now called the Bata. In the years that followed, the overall site was doubled in area. This township is popularly known as Batanagar. It was also the first manufacturing facility in the Indian shoe industry to receive the ISO: 9001 certification.

The Company went public in 1973 when it changed its name to Bata India Limited. Today, Bata India has established itself as one of Asia's largest footwear retailer. It has cornered around 35 per cent market share in the organized sector (and approx. 8.5% of the total footwear market) 10

Almost 98 percent of the company's revenue is from the domestic market while the rest is from exports. The company currently sells over 45 million pairs of shoes every year and has an annual sales turnover of more than Rs 8000 million (USD 178 million). Over the years, Bata India has established a leadership position in the footwear industry and is easily the most trusted name in branded footwear. Its retail network of 1250 stores gives it a reach/ coverage that no other footwear company can match. The stores are present in good locations and can be found in all the metros, mini-metros and towns

In terms of products, the company has now built a good, market-oriented collection that is in line with fashion trends and offers a good quality to price ratio. Its product range now encompasses classic shoes such as Ambassador for Men and comfort shoes such as Comfit for ladies, as well as a more trendy collection for ladies in the Marie Claire range and a sporty fashion collection for young adults in the North Star range. Bata's smart looking new stores supported by a range of better quality products are aimed at offering a superior shopping experience to its customers. And the new face of Bata India is now visible to the industry as well as its customers. Today, backed by a brand perception of experience, the company is working towards positioning itself as a vibrant and contemporary young brand. It has significantly transformed its retail formats to become more lifestyle-oriented, which has helped change consumer perceptions to a large extent.

Achievements

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AMITY CORPORATE EXCELLENCE Bata India has been awarded the AMITY CORPORATE EXCELLENCE AWARD on 21st February 2008. This award has been given for Bata's excellent performance and retail growth during the past year.

IMAGES Retail Award This award was received in the footwear category on on 6th September 2007. This award was a part of Reid & Taylor Awards for Retail Excellence presented during India Retail Summit 2006.

Super Brands Award It is awarded to the 1st top ten Super brands of India. Super brand signifies the recognition that the consumer is giving to the Brand Image, Brand Value and Brand Delivery. The award ceremony was held in Mumbai on 12th April 2007

FMCG Consumer Reaction Award

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Bata won FMCG Consumer Reaction Award in Fashion & Specialties (Shoes) on March 2007. The Award was presented by: Bharati Vidyapeeth's Institute of Management Studies & Research (BVIMSR).

Lycra Images Fashion Awards Bata is honoured for 3 consecutive years as Most Admired Brand of the year in Footwear Category on 25th January 2007.Awards - 2006

Retailer of the Year Award This award was received on 24th Nov 2006 in the footwear category. This award was a part of Reid & Taylor Awards for Retail Excellence presented during India Retail Summit 2006.

Amity Corporate Excellence Award This award was given to Bata by Amity International Business School on 22nd 24th Feb 2006 for having achieved an enviable position of one of the best and most admired company of the world with their unparalleled performance.Awards - 2005

Super Brands Awards

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It is awarded to the 1st top ten Super brands of India on 23rd Sept 2005. Super brand signifies the recognition that the consumer is giving to the Brand Image, Brand Value and Brand Delivery

Retail Asia Pacific Top 500 Awards Bata won the Top Retailer 2006-India Bronze award on 7th Sept 2005. This award is given by Retail Asia Pacific TOP 500. Bata has a worldwide reach, with operations across 5 continents managed by 4 regional meaningful business units (MBUs). Each unit benefits from synergies specific to their environment, such as product development, sourcing or marketing support. Each MBU is entrepreneurial in nature, and can quickly adapt to changes in the market place and seize potential growth opportunities. Bata today

Serves 1 million customers per day Employs more than 40,000 people Operates 4,600 retail stores Manages a retail presence in over 50 countries Runs 40 production facilities across 26 countries

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Incorporated as Bata Shoe Company Private Limited in 1931 in India, the company went public in 1973 when it changed its name to Bata India Ltd. Bata India today

Serves 1 Lakh customers per day Employs more than 8000 people Operates 950 retail stores Runs 5 production facilities across India

Our first factory was set up in Konnagar in 1931 which was then shifted to Batanagar. At the five factories - Batanagar, West Bengal (1936);Bataganj, Bihar (1942); Faridabad, Haryana (1951); Peenya, Karnataka (1988); Hosur, Tamil Nadu (1994) - the Company manufactures quality leather, rubber, canvas and PVC shoes in wide-ranging designs and styles at affordable prices. Bata India has a in-house tannery at Mokamehghat in Bihar, which is the second largest in Asia.

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Liberty:Liberty Shoes Ltd. is the only Indian company that is among the top 5 manufacturers of leather footwear in the world with a turnover exceeding U.S. $100 million. Company produces more than 50,000 pairs of footwear a day covering virtually every age group and income category. Products are marketed across the globe through 150 distributors, 350 exclusive showrooms and over 6000 multi-brand outlets, and sold in thousands every day in more than 25 countries including fashion-driven, quality-obsessed nations like France, Italy, and Germany. Liberty has developed a spectrum of 10 exclusive brands, each of which has been given that extra edge to cater to a specific target group. Today, the new range from Liberty is all about style, design, and comfort. The range imbibes the spirit of fun and is trendy to the core. Liberty has something for every occasion, for every income bracket & every age group. It pampers its customer by keeping pace with global footwear fashion trends and by going that extra mile which is why, special care has been taken to make sure that the outlets' design meets the specific needs and taste of the target groups. Apart from the existing brands, Liberty is busy fashioning the look of the future in footwear. Introducing new designs that redefine styles and comfort associated with the finest in workmanship. These are the brands of Liberty

Steeped in a philosophy that has at its core innovation, technology and advancement, we at Liberty, pride ourselves over and above everything else on our healthy and heart-felt respect for the human ethos, which projects itself in the expectancy and excitement with which one greets

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the arrival of the new combined with a sincere and deep regard for the old, which is appreciative of and adopts at every stage the unique balance between modernization and tradition. Liberty as a brand is constantly evolving to keep pace with the changing trends, styles, beliefs, and aspirations of people while maintaining the sanctity of certain traditions like workmanship and good value. Liberty Shoes, a manufacturer of footwear, is broadening its market by establishing specialized retail stores called Revolutions. The introduction of an entirely new product range to cater to a wider income group along with diversifying their focus from mens shoes and children school shoes to catering to the entire family which will help increase Libertys addressable market. The company has introduced shoes for fashion conscious consumers. Liberty Shoes, a manufacturer of footwear, is broadening its market by establishing specialized retail stores called Revolutions. We expect the company to increase its presence in a more diversified income group. Higher sales combined with expansion in profit margins are expected to drive earnings. Current valuations do not discount these positive developments.

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Pantaloon-Liberty JV: Pantaloon and Liberty Shoes entered in to a JV in September, 05 to set up a chain of large format footwear retail stores ranging between 10,000-15,000 square feet. Liberty Shoes will invest Rs.122.5mn for 49% stake and Pantaloon will invest Rs.127.5mn for 51% stake. The JV will set up 45 stores by 2008. The details of this venture are still under discussion; therefore we have not factored any upside from this JV into our projections. Benefits from expansion in Uttaranchal Plant: To avail of the promotional incentives available at Uttaranchal, Liberty has set up a plant with capacity of 480,000 pairs. The plant commenced operations in June 04. The excise duty savings from this plant were Rs.15mn in FY05 and are expected to be Rs.30mn in FY06. The company is also expanding capacity to 1.18mn pairs. This expansion will be completed by June-July, 06. Therefore excise duty savings in FY07 will be Rs50mn. VAT and reduction in raw materials cost: The implementation of VAT @ 12% has enabled the company to revise their prices taking a long term view of their strategy. Backward integration will contribute to reduction in raw material cost. Both these factors will increase operating margins from 12.2% in FY05 to 14.9% in FY06 and 15.9% in FY07. Valuations: We expect turnover of the company to grow from Rs1780mn in FY05 to Rs.2197mn in FY06 and Rs2618mn in FY07 along with EPS growth of 78% CAGR over the next 2 financial years. RoCE is also expected to increase from 16% in FY05 to 21% in FY07. At CMP of Rs262, the stock trades at a PEG of 0.28xFY06 and 0.20x FY07. Based on PEG of 0.25x FY07, we expect 26% growth in price to Rs330.We recommend BUY on the stock.

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Khadim:The Rs 120-crore Khadim group of companies, one such player now emerging as a market leader in the region, has already gone into manufacture, along with 100 per cent outsourcing, and is now poised to expand in a big way, particularly in eastern region and South, mainly Tamil Nadu, Andhra Pradesh and Karnataka.

Established in Kolkata in 1953 by a Bengali businessman, Mr Satya Prosad Roy Burman, as a small trading outfit involved in footwear wholesale business, Khadims has grown steadily and today commands brand premium in several States. Khadim have grown mainly through our outsourcing strengths and today have as many as 27 retail outlets in both urban and semi-urban centers and some 150 franchisee shops. The Khadim group of companies, with a significant presence in the footwear segment, especially in the east and south regions, has redefined its business plans to leverage the Khadim's brand and register a major brand presence entailing an in lifestyle of retailing Rs 50 in crore the in the semi-urban next three markets. years. The company plans to launch 10 superstores initially in district towns, under `Khadim's Khazana' investment The first such store, housed in 30,000 sq ft and spread over four floors, has been launched at Kanchrapara town in North 24 Paraganas district. The particular store concept being adopted by Khadim's - to make it suitable to a semi-urban target audience with an ethnic quotient. Mission: Ensuring customer delight and stakeholders return by delivering quality product at affordable price through extensive retail network

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Vision: To be in every Indian step.

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Lakhani:Mr. K.C. Lakhani started this commendable journey in 1966 with the inception of Lakhani Rubber Works, a small venture to manufacture rubber components. His hardship and commitment made Lakhani Rubber Works an acclaimed name in the industry. Eight years later, he expanded his vision further when the group diversified into the manufacturing of Beach Slippers and that signaled a new dawn in the history of Indian Shoe Industry. And three years later, the Canvas Shoes followed. His endeavor and systematic approach helped the group expanding its horizons to sports shoes manufacturing in the year 1982. This never ending saga of success continued with their tie-up with Adidas India for the manufacturing of sports shoes. Today, the group is the largest manufacturer of beach slippers in India with a production capacity of 40 million pairs per year. Also, it is the largest manufacturer & largest exporter of canvas and vulcanized shoes in India, with a production capacity of 3.5 million pairs per year. Lakhani Armaan group is the largest producer of Sports Shoes, PU Injected Sports Shoes, PVC Injected Sports Shoes and Leather Shoes with a total capacity of 5.4 million pairs per year. It also manufactures high fashion ladies and gents leather shoes for the European Union Market. The eminence of the company, in the International Footwear Industry, is apparent from the fact that it has been manufacturing sports shoes for the global sports apparel manufacturing giant, adidas. For over 80 years the adidas Group has been part of the world of sports on every level, delivering state-of-the-art sports footwear, apparel and accessories. Today, the adidas Group is a global leader in the sporting goods industry and offers a broad portfolio of products. Lakhani Armann group has been manufacturing sports shoes for adidas for the last 10 years and it is the only suppliers in India. The group is manufacturing more than 1 million pairs per year for the brand adidas including all the latest high tech shoes.

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Beside this, the group also has the distinction of being the largest suppliers of rubberized auto components to major automobile players in the Indian market. Year of tracking key industries extensive experience and knowledge coupled with primary research has enabled the group to deliver specified products to their customer. The company has been awarded by the President Giani Jail Singh for its commitment to quality. Today, after this success in domestic market Lakhani Armaan has expanded its horizon by, exporting its range of quality products to the international market in UK, Germany, France, Spain, Switzerland, Holland, Italy, Mexico, Japan and South Africa. The company has also been awarded by the Prime Minister Mr Atal Bihari Vajpai for its Export Excellence.

Products

Sports
The sports Shoes manufacturing facility is equipped with high end machinery for producing top of the line sports shoes. Skilled manpower and superior technology has enabled the company to produce shoes known for comfort and better performance. Over the years, the company has immensely upgraded itself in terms of quality and production capacity.

Leather 23

Lakhani Armaan has world-class facilities at its leather shoe manufacturing unit. Its a perfect blend of man & machines to achieve world-class quality standards. At Lakhani Armaan, special care has been taken to ensure that the leather footwear developed at its manufacturing facility combines the right balance of fashion and comfort. Canvas At Lakhani Armaan canvas Shoes are manufactured in the state of the art facility. The facility is well equipped to manufacture premium-quality Premoulded Canvas Shoes, Rolled Sole Canvas Shoes and Unlined Vulcanized Shoes. The division is producing more than 11000 pairs per day for the domestic and export market. EVA Lakhani Armann has ultra modern facility for the manufacturing of EVA and Beach Slippers. The group has made the best use of the EVA injection technology by substantially increasing the product line and the production capacity. The company is again geared up to install two color EVA injection machines in its facility. Lakhani Armaan group is the largest manufacturer of beach slippers in India with a production capacity of 40 million pairs per year. Also, it is the largest manufacturer & largest exporter of canvas and vulcanized shoes in India, with a production capacity of 3.5 million pairs per year. It is the largest producer of Sports Shoes, PU Injected Sports Shoes, PVC Injected Sports Shoes and Leather Shoes with a total capacity of 5.4 million pairs per year. It also manufactures high fashion ladies and gents leather shoes for the European Union Market. The eminence of the company, in the International Footwear Industry, is apparent from the fact that it has been manufacturing sports shoes for the global sports apparel manufacturing giant, adidas.

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For over 80 years the adidas Group has been part of the world of sports on every level, delivering state-of-the-art sports footwear, apparel and accessories. Today, the adidas Group is a global leader in the sporting goods industry and offers a broad portfolio of products. Lakhani Armann group has been manufacturing sports shoes for adidas for the last 10 years and it is the only suppliers in India. The group is manufacturing more than 1 million pairs per year for the brand adidas including all the latest high tech shoes. Beside this, the group also has the distinction of being the largest suppliers of rubberized auto components to major automobile players in the Indian market. Year of tracking key industries extensive experience and knowledge coupled with primary research has enabled the group to deliver specified products to their customer.

Relaxo:The Company such is the story behind the creation and flourishing of Relaxo Footwear, the company that has established itself as one of the most stalwart, quality conscious and avantgarde footwear companies in the Indian economy today.

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Headquartered in New Delhi, India, it maintains a fine combination of comfort, style, and workmanship and is embarking upon appreciable growth plans for the future. The company began as a small enterprise in the year 1976 and was officially incorporated in 1984 and further went into public listing in 1995. According to the 2008 Business Survey, it has now emerged as the second largest footwear producer in India. Relaxo Footwear commenced its journey with the manufacture of Hawaii slippers. It has now grown into a large-scale entrepreneurship catering to the basic needs of the quintessential Indian citizen. From a modest sale figure of Rs. 1 million in 1977 to more than Rs. 5000 million last year; the company has experienced a record-breaking growth since inception. Today, the company manufactures over 3 lakh pairs of footwear per day, which approximately adds up to over 10 million pairs per year. Each pair is given thorough attention by the dedicated and skilled employees working at the 10 state-of-the-art manufacturing units in Northern India. Thus, it is no small wonder that the annual turnover has multiplied 2.4 times in the last 3 years from Rs. 305 crore in 2007-08 to a whopping Rs. 550 crore in 2009-10. Whats more, with over 30 years of experience and 100 million satisfied customers, Relaxo keenly looks forward to achieving an estimated annual turnover of Rs. 1000 crore by the year 2012. Vision & Mission : Relaxo Footwear was conceptualized with a lot of hope and hard work by an outstanding pilot team of brilliant Indians, headed by the enterprising Dua family. Likewise, the companys vision and mission were as powerful as its personality. Vision: Achieving an annual turnover of Rs 1000 crore by the end of 2012. Mission: Ensuring customer satisfaction in keeping with the companys motto of "Quality Par Excellence". Core Values The Core Values that Relaxo lives by are exclusive in their overpowering simplicity and absolute effectiveness. They are: 1. Corporate Citizenship 2. Honesty

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3. Transparency 4. Employee Satisfaction 5. Customer Orientation 6. Team Orientation Hawaii: Hawaii is the most popular brand in the Relaxo portfolio. It comes in diverse shades and styles and its comfort value makes it a favorite among all age groups. With an output of 3,00,000 pairs a day, Relaxo is the largest manufacturer of Hawaii in India. Flite: Flite is Relaxos most exclusive brand. Its unique fashionable and light quality is ensured by its manufacturing process, involving cutting-edge EVA technology. Available in an array of colours and designs, it is among the popular products in the casual footwear industry Sparx: Sparx is a range of sports shoes, sandals and Hawaii slippers that embodies the spirit of today's generation. Available in awe-inspiring colours and designs, it reflects verve and dynamism as an iconic youth brand and is symbolic of a wholehearted zest for life. Schoolmate: Schoolmate is a range of school shoes for boys and girls and is an expression of Relaxos faith and commitment towards the young leaders of tomorrow. Made with special care to pamper thousands of tiny feet, each pair bears the mark of superb workmanship and adaptable design.

3.2 Global Market:

Adidas:-

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Adidas Ltd. is a major German sports apparel manufacturer and part of the Adidas Group, which consists of Reebok sportswear company, Taylor Made- Adidas golf company, and Rockport. Besides sports footwear, the company also produces other products such as bags, shirts, and other sports and clothing related goods. The company is the largest sportswear manufacturer in Europe and the second largest sportswear manufacturer in the world. The following table shows the revenue of the company from the year 2005 to 2009. And it is seen that the revenue of the company is increasing. Financial data in millions of euros[29] Year 2005 2006 2007 2008 2009 Sales 10.084 10.266 12.478 14.636 16.084 818 1 098 EBITDA 532 627 725 560 600 Net results 483 499 520 551 2231 Net debt 1498 946 594

Adidas today, is manufacturing different style of shoes used for different purposes by many people. Whether it is running, playing or walking Adidas provides shoes for every different activity. Adidas currently manufactures several running shoes, including the adiStar Control 5, the adiStar Ride, the Supernova Sequence, and the Supernova Cushi, among others. In addition, their performance apparel is widely used by runners. Adidas also uses kangaroo leather to make their more expensive shoes. The Tapie affair After a period of trouble following the death of Adolf Dassler's son Horst Dassler in 1987, the company was bought in 1989 by French industrialist Bernard Tapie, for 1.6 billion French francs (now 243.918 million), which Tapie borrowed. Tapie was at the time a famous specialist of rescuing bankrupt companies, an expertise on which he built his fortune. Tapie decided to move production offshore to Asia. He also hired Madonna for promotion. He sent Walter Head, from Christchurch, New Zealand, a shoe sales representative, to Germany and

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met Adolf Dassler's descendants (Amelia Randall Dassler and Bella Beck Dassler) and was sent back with a few items to promote the company there. In 1992, Tapie was unable to pay the interest from his loan. He mandated the Crdit Lyonnais bank to sell Adidas, and the bank subsequently converted the outstanding debt owed into equity of the enterprise, which was unusual as per the prevalent French banking practice. Apparently, the state-owned bank had tried to get Tapie out of dire financial straits as a personal favour to Tapie, reportedly because Tapie was Minister of Urban Affairs (ministre de la Ville) in the French government at the time. In February 1993, Crdit Lyonnais sold Adidas to Robert Louis-Dreyfus, a friend of Bernard Tapie for a much higher amount of money than what Tapie owed, 4.485 billion (683.514 million) francs rather than 2.85 billion (434.479 million). Tapie later sued the bank, because he felt "spoiled" by the indirect sale. Robert Louis-Dreyfus became the new CEO of the company. He is also the president of the Olympique de Marseille football team, a team Tapie owned until 1993. Tapie filed for personal bankruptcy in 1994. He was the object of several lawsuits, notably related to match fixing at the soccer club. During 1997, he served 6 months of an 18 month prison sentence in La Sant prison in Paris. In 2005, French courts awarded Tapie135 million compensation (about 886 million francs).

Post-Tapie era In 1994, combined with FIFA Youth Group, SOS Children's Villages became the main beneficiary.

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In 1997, Adidas AG acquired the Salomon Group who specialized in ski wear, and its official corporate name was changed to Adidas-Salomon AG because with this acquisition Adidas also acquired the Taylormade Golf Company and Maxfli which allowed them to compete with Nike Golf. In 1998, Adidas sued the NCAA over their rules limiting the size and number of commercial logos on team uniforms and apparel. Adidas withdrew the suit, and the two groups established guidelines as to what three-stripe designs would be considered uses of the Adidas trademark. Adidas launched legal proceedings against the world's biggest retailer, Wal-Mart, claiming that it copied some of its products as revealed by Sanjay Sinha of ADIDAS INDIA. In 2003, Adidas filed a lawsuit in British court challenging Fitness World Trading's use of a twostripe motif similar to Adidas's three stripes. The court ruled that despite the simplicity of the mark, Fitness Worlds use was infringing because the public could establish a link between that use and Adidas's mark. In September 2004, top English fashion designer Stella McCartney launched a joint-venture line with Adidas, establishing a long-term partnership with the corporation. This line is a sports performance collection for women called "Adidas by Stella McCartney" and it has been critically acclaimed. Also in 2005, on 3 May, Adidas told the public that they sold their partner company Salomon Group for 485m to Amer Sports of Finland. In August 2005, Adidas declared its intention to buy British rival Reebok for $3.8 billion (US). This takeover was completed with partnership in January 2006[1] and meant that the company will have business sales closer to those of Nike in North America. The acquisition of Reebok will also allow Adidas to compete with Nike worldwide as the number two athletic shoemaker in the world. In 2005, Adidas introduced the Adidas 1, the first ever production shoe to utilize a microprocessor. Dubbed by the company "The World's First Intelligent Shoe" it features a microprocessor capable of performing 5 million calculations per second that automatically

30

adjusts the shoe's level of cushioning to suit its environment. The shoe requires a small, userreplaceable battery that lasts for approximately 100 hours of running. It currently retails for $250 (USD). On 25 November, 2005, Adidas released a new version of the Adidas 1 with an increased range of cushioning, allowing the shoe to become softer or firmer, and a new motor with 153 percent more torque. On 11 April 2006, Adidas announced an 11-year deal to become the official NBA apparel provider. They will make NBA, NBDL, and WNBA jerseys and products as well as teamcoloured versions of the "Superstar" basketball shoe. This deal (worth over $400 million) takes the place of the previous 10-year Reebok deal that was put in place in 2001. That means the partnership would be continuing to Reebok. One of the main focuses of Adidas is football kit and associated equipment. Adidas also provides apparel and equipment for all teams in Major League Soccer. Adidas remain a major company in the supply of team kits for international football teams. Adidas also designs and makes clothes, sandals, watches, eyewear, bags, baseball caps, and socks. As well, Adidas has a branded range of male and female deodorants, perfumes, aftershave and lotions.

Nike:Nike, Inc. is a major publicly traded sportswear and equipment supplier based in the United States. The company is headquartered in the Portland metropolitan area of Oregon, near Beaverton. It is the world's leading supplier of athletic shoes and apparel and a major manufacturer of sports equipment with revenue in excess of $16 billion USD in 2007. As of 31

2008, it employed over 30,000 people worldwide. Nike and Precision Castparts are the only Fortune 500 companies headquartered in the state of Oregon. Nike, originally known as Blue Ribbon Sports, was founded by University of Oregon track athlete Philip Knight and his coach Bill Bowerman in January 1962. The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger, making most sales at track meets out of Knight's car. The company's profits grew quickly, and in 1966, BRS opened its first retail store, located on Pico Boulevard in Santa Monica, California. By 1971, the relationship between BRS and Onitsuka Tiger was nearing an end. BRS prepared to launch its own line of footwear, which would bear the newly designed Swoosh.

Nike

produces

wide

range track

of

sports

equipment. They field, football,

Their first products were currently also make shoes, for a wide range of sports baseball, ice hockey,
A Nike brand athletic shoe

running track

shoes. &

jerseys, shorts, base layers etc. including tennis, Association

lacrosse, basketball and cricket. Nike Air Max is a line of shoes first released by Nike, Inc. in 1987. The most recent additions to their line are the Nike 6.0, Nike NYX, and Nike SB shoes, designed for skateboarding. Nike has recently introduced cricket shoes, called Air Zoom Yorker, designed to be 30% lighter than their competitors'. In 2008, Nike introduced the Air Jordan XX3, a high performance basketball shoe designed with the environment in mind. Acquisitions

32

In July 2003, Nike paid $305 million to acquire Converse Inc., makers of the iconic Chuck Taylor All Stars. In an effort to target the low-end athletic goods market, Nike purchased the parent company of Starter athletic clothing brand in August 2004 for $43 million. On 23 October 2007, it was announced that the sports apparel supplier Umbro, known as the manufacturers of the England national football team's kits, had agreed to be bought by Nike in a deal said to be worth 285 million (~$600m). On 3 March 2008 Umbro was completely acquired by NIKE Inc. Products Nike produces a wide range of sports equipment. Their first products were track running shoes. They currently also make shoes, jerseys, shorts, baselayers etc. for a wide range of sports including track & field, baseball, ice hockey, tennis, Association football, lacrosse, basketball and cricket. The most recent additions to their line are the Nike 6.0 and Nike SB shoes, designed for skateboarding. Nike has recently introduced cricket shoes, called Air Zoom Yorker, designed to be 30% lighter than their competitors'. In 2008, Nike introduced the Air Jordan XX3, a high performance basketball shoe designed with the environment in mind. Nike positions its products in such a way as to try to appeal to a "youthful....materialistic crowd". It is positioned as a premium performance brand. However, it also engineers shoes and apparel for discount stores like Wal-Mart under the Starter brand. Nike sells an assortment of products, including shoes and apparel for sports activities like association football, basketball, running, combat sports, tennis, American football, athletics, golf and cross training for men, women, and children. Nike also sells shoes for outdoor activities such as tennis, golf, skateboarding, association football, baseball, American football, cycling, volleyball, wrestling, cheerleading, aquatic activities, auto racing and other athletic and recreational uses. Nike is well known and popular in Youth culture, Chav Culture and Hip hop culture as they supply urban fashion clothing. Nike recently teamed up with Apple Inc. to produce the Nike+ product which monitors a runner's performance via a radio device in the shoe which links to the iPod nano. While the product generates useful statistics, it has been criticized

33

by researchers who were able to identify users' RFID devices from 60 feet (18 m) away using small, concealable intelligence motes in a wireless sensor network. In 2004, they launched the SPARQ Training Program/Division. It is currently the premier training program in the U.S. In the video game Gran Turismo 4 there is a car by Nike called the NikeOne 2022, designed by Phil Frank. Headquarters

Nike's world headquarters are surrounded by the city of Beaverton, Oregon but are technically within unincorporated Washington County. From Nike's perspective, the company, one of only two Fortune 500 employers still headquartered in the state of Oregon (Precision Castparts is the other), has such a large payroll, that it should not be annexed to Beaverton without its consent. Nike prefers to work with the Washington County Government as it develops and expands its headquarters. Annexation would cost the company $700,000 per year in increased taxes for services it already receives from the county and various special-purpose districts. From Beaverton's perspective, the company's expectation for special treatment is counter to the city's desire to have zoning and other laws apply equally to all businesses, big and small. A nearby Costco store, one of that company's earliest, was annexed into Beaverton years ago without incident, and Beaverton's focus on additional annexation during the 21st century reflects a desire to streamline both city and county government by having metropolitan-area services handled by cities instead of counties. The Oregonian dates the bad blood between the two back to the Nike purchase of 74 acres (0.3 km) of nearby Beaverton land which soon fronted the Jared Co-operation. When Nike proposed expanding their headquarters in that direction, Beaverton at first wanted them to build housing near the MAX station and criss-cross the property with two public roads, expectations defined by 34

the zoning already in place when Nike bought the land. Beaverton's request was mostly consistent with Metro's transit-oriented development plans for the region. After a year, which included a threat by Nike to move 5,000 jobs out of the state, Beaverton backed down from the requirement for housing, but the lack of accommodation was something that Nike did not forget. The annexation standoff soon led Beaverton to attempt a forcible annexation. That led to a lawsuit by Nike, and lobbying by the company that ultimately ended in Oregon Senate Bill 887 of 2005. Under that bill's terms, Beaverton is specifically barred from forcibly annexing the land that Nike and Columbia Sportswear occupy in unincorporated Washington County for 35 years, while Electro Scientific Industries and Tektronix get that same protection for 30 years. Manufacturing Nike has contracted with more than 700 shops around the world and has offices located in 45 countries outside the United States. Most of the factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines,and Malaysia. Nike is hesitant to disclose information about the contract companies it works with. However, due to harsh criticism from some organizations like CorpWatch, Nike has disclosed information about its contract factories in its Corporate Governance Report. Human rights concerns Nike has been criticized for contracting with factories in countries such as China, Vietnam, Indonesia and Mexico. Vietnam Labour Watch, an activist group, has documented that factories contracted by Nike have violated minimum wage and overtime laws in Vietnam as late as 1996, although Nike claims that this practice has been halted. The company has been subject to much critical coverage of the often poor working conditions and exploitation of cheap overseas labor employed in the free trade zones where their goods are typically manufactured. Sources of this criticism include Naomi Klein's book No Logo and Michael Moore's documentaries. Nike has been criticized about ads which referred to empowering women in the U.S. while engaging in practices in East Asian factories which some felt disempowered women.

35

During the 1990s, Nike faced criticism for use of child labor in Cambodia and Pakistan as well as Green, Ohio in factories it contracted to manufacture soccer balls. Although Nike took action to curb or at least reduce the practice of child labor, they continue to contract their production to companies that operate in areas where inadequate regulation and monitoring make it hard to ensure that child labor is not being used. These campaigns have been taken up by many college and universities, especially antiglobalization groups as well as several anti-sweatshop groups such as the United Students against Sweatshops. Despite these campaigns, however, Nike's annual revenues have increased from $6.4 billion in 1996 to nearly $17 billion in 2007, according to the company's annual reports. Nike sells an assortment of products, including shoes and apparel for sports activities like association football, basketball, running, combat sports, tennis, American football, athletics, golf and cross training for men, women, and children. Nike also sells shoes for outdoor activities such as tennis, golf, skateboarding, association football, baseball, American football, cycling, volleyball, wrestling, cheerleading, aquatic activities, auto racing and other athletic and recreational uses. Nike is well known and popular in youth culture, chav culture and hip hop culture as they supply urban fashion clothing. Nike recently teamed up with Apple Inc. to produce the Nike+ product which monitors a runner's performance via a radio device in the shoe which links to the iPod nano. While the product generates useful statistics, it has been criticized by researchers who were able to identify users' RFID devices from 60 feet (18 m) away using small, concealable intelligence motes in a wireless sensor network. Nike has contracted with more than 700 shops around the world and has offices located in 45 countries outside the United States. Most of the factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia.

Reebok:-

36

Reebok International Limited is a producer of athletic footwear, apparel, and accessories and is currently a subsidiary of Adidas. The name comes from the Afrikaans spelling of rhebok, a type of African antelope or gazelle. The company, founded in Bolton, United Kingdom, in 1895, was originally called J.W. FOSTER & SONS but was renamed Reebok in 1958. The company's founders, Joe and Jeff Foster, found the name in a dictionary won in a race by Joe Foster as a boy; the dictionary was a South African edition, hence the spelling. Reebok surged in popularity in 1982 after the introduction of the Freestyle athletic shoe, which was designed for women and came out when the aerobics craze started. Not only was the Reebok Freestyle popular as athletic wear, but also as casual wear. As a result the Freestyle became an icon of the 1980s fashion scene with hi-top versions (including two velcro straps at the top) and colors, including white, black, red, yellow, and blue. Reebok continues to produce the Freestyle as it is popular with cheerleading, aerobic dancing, the gym and consumers. Footwear Reebok uses footwear factories in 14 countries. Most factories making Reebok footwear are based in Asiaprimarily China (accounting for 51% of total footwear production), Indonesia (21%), Vietnam (17%) and Thailand (7%). Production is consolidated, with 88% of Reebok footwear manufactured in 11 factories, employing over 75,000 workers. Apparel Reebok has factories in 45 countries. The process of purchasing products from suppliers is organized by region. Most (52%) of Reebok's apparel sold in the US is produced in Asia, with the rest coming from countries in the Caribbean, North America, Africa and the Middle East. Apparel sold in Europe is typically sourced from Asia and Europe. Apparel sold in the Asia Pacific region is typically produced by Asian-based manufacturers.

37

Puma:Puma AG Rudolf Dassler Sport (officially styled PUMA) is a major German multinational company that produces high-end athletic shoes, lifestyle footwear and other sportswear. Formed in 1924 by Rudolf Dassler, the company is based in Herzogenaurach, Germany. Puma AG has approximately 9,204 employees and distributes its products in more than 80 countries. For the fiscal year 2003, the company had revenue of 1.274 billion. Puma were the commercial sponsors for the many series, with the jerseys and clothing sporting the Puma brand. Japanese fashion guru Mihara Yasuhiro teamed up with Puma to create a high-end and highconcept line of sneakers. Puma is the main producer of enthusiast driving shoes and race suits. They are the prime producer in both Formula One and NASCAR especially.

They had successfully won the rights of sponsoring the 2006 FIFA World Cup champions, the Italian national football team, with them making and sponsoring the clothing worn by the team. Their partnership with Ferrari and BMW to make Puma-Ferrari and Puma-BMW shoes has also contributed to this effect. On March 15, 2007 Puma launched its first new 2007/2008 line of uniforms for a club, and Grmio will be the first to use the laser sewn technology;similar to the one worn by Italy at the World Cup in 2006. Grmio and other Brazilian clubs will be the first to use the technology because their season starts six months earlier than European clubs. Puma also makes baseball cleats, and Johnny Damon, the all-star center fielder for the New York Yankees, is their spokesperson. He wore pumas during the Red Sox 2004 World Series win. He has his own cleat called the DFR metals.

38

4. Strategic Analysis

4.1 Porters Five Forces Analysis

Buyers/Customers Power:1. Consumers Benefit on Account of Competitive Market:-

As the competition in the market is increasing, it gives the buyers the power to bargain on the product price. If the buyer will not get the attractive buyer , he may turn to the competitor who is providing the competitive prices.
2. Increasing Product Options:-

As the more and more options are available in the market , the buyer may turn to the other company for better options.
Suppliers Power:-

1. Lack of Raw materials:As the suppliers for the raw material for the footwear is lacking. It may be possible that the numbers of suppliers are less in the market which helps the suppliers to have greater power.
Rivalry among Competitors:1. Intense Competition in a Fragmented Market:-

As the Footwear industry is fragmented, there isnt any market leader in the industry. So every firm can enjoy the benefits of competition in the market.
2. Increase in Advertising Expenditure:-

39

As the competition is high, every firm needs to spend more on the advertisement to survive in the highly competitive market.

3. Rise in Specialization:As the numbers of players are increasing in the market, every firm needs to specialize in any one sector to target any one segment.
Threat of New Entrants:-

1. Availability of Niche Segments:-

As the there are so many markets which are niche and not touched by any marketer.It encourages the new entrants to enter the footwear industry.
Threat of Substitutes:-

There is not any kind of substitute available in the market for footwear. So there is not any threat of substitutes.

40

4.2 PEST ANALYSIS OF INDIAN FOOTWEAR INDUSTRY:-

Political:-

Home market lobbying/pressure groups Very few sporting events apart from cricket fixtures to attract customers

Economic

Marginal share of 2.44 percent in global trade worth US$ 97.606 billion Estimated target of 12 bn $ (7bn $ export + 5 bn $ domestic) trade by the year 2012 overseas economies and trends The Indian footwear retail market is expected to grow at a CAGR of over 20% for the period spanning from 2008 to 2011. Footwear is expected to comprise about 60% of the total leather exports by 2011 from over 38% in 2006-07 Growing middle class and growing buyer power leading customers to look for branded shoes.

41

 Seasonality issues sports is more of a rage in summers Lack of targeting of market segments for kids and women

Social

Lifestyle trends upward shift demographics Consumer attitudes and opinions changing favorably towards branded shoes Media views Consumer buying patterns Fashion and role models Buying access and trends Advertising and publicity

Technological Competing technology development India offers benefits like low cost of production, abundant raw material, and a huge consumption market Research funding in design and requirements Manufacturing maturity and capacity Information and communications Consumer buying mechanisms/technology

42

 Innovation potential Technology access, licensing, patents

43

4.3

Opportunities and Threats

OPPORTUNITIES:

Abundant scope to supply finished leather to multinationals setting up shop in India. Growing fashion consciousness globally. Use of information technology and decision support software to help eliminate the length of the production cycle for different products Product diversification - There is lot of scope for diversification into other products, namely, leather garments, goods etc. Growing international and domestic markets. Exposure to newer markets through Fairs/ BSMs Retain customers through quality supplies and timely deliveries Aim to present the customer with new designs, infrastructure, and country & company profiles. Use of modern technology Exhibit strengths in manufacturing, for example, strengths in classic shoe manufacturing, hand crafting etc. De-reservation of the footwear sector.

THREATS:

Entry of multinationals in domestic market. Stiff competition from other countries. (The performance of global competitors in leather and leather products indicates that there are at least 5 countries viz, China, Indonesia, Thailand, Vietnam and Brazil, which are more competitive than India.)

Non- tariff barriers - Developing countries are resorting to more and more non tariff barriers indirectly. Improving quality to adapt the stricter international standards. 44

Fast changing fashion trends are difficult to adapt for the Indian leather industries. Limited scope for mobilizing funds through private placements and public issues, as many businesses are family-owned.

5. Financial Analysis
5.1 Key Ratios

a. Return Related:
Bata India Limited As on Return on Total Assets (%) Return on Networ th (%) Return on Capital Emplo yed (%) 31Ma r09 28. 3 31Ma r08 21. 4 31Ma r07 17. 4 Liberty Shoes Limited As on Return on Total Assets (%) Return on Networ th (%) Return on Capital Emplo yed (%) 31Ma r09 8 31Ma r08 10. 1 31Ma r07 11. 4 Mirza International Limited 31- 31- 31Ma Ma Ma As on rrr09 08 07 Return on Total 8.4 2.1 2.4 Assets (%) Return on Networ th (%) Return on Capital Emplo yed (%) 14. 5 Relaxo Footwear Limited As on Return on Total Assets (%) Return on Networ th (%) Return on Capital Emplo yed (%) 31Ma r09 21. 3 31Ma r08 20. 6 31Ma r07 16

20. 1

20. 9

20. 3

6.1

13. 5

17. 3

4.5

1.2

19. 8

17. 3

11. 9

32. 4

25. 6

22. 6

8.4

12. 4

12. 5

2.4

-3

9.9

25. 2

25. 9

20. 9

b. Liquidity:
Mirza International Limited 31- 31- 31Ma Ma Ma As on rrr09 08 07 Curre nt 2.5 2.9 3.4 Ratio (x) Quick Ratio 1 1.1 1.4 (x)

Bata India Limited As on Curre nt Ratio (x) Quick Ratio (x) 31Ma r09 1.4 31Ma r08 1.4 31Ma r07 1.6

Liberty Shoes Limited As on Curre nt Ratio (x) Quick Ratio (x) 31Ma r09 3.2 31Ma r08 3.4 31Ma r07 3.1

Relaxo Footwear Limited As on Curre nt Ratio (x) Quick Ratio (x) 31Ma r09 1.4 31Ma r08 1.7 31Ma r07 1.9

0.4

0.3

0.3

1.7

1.8

1.8

0.6

0.7

45

Cash Ratio (x)

0.3

0.1

0.2

Cash Ratio (x)

0.1

0.1

0.1

Cash Ratio (x)

--

0.1

--

Cash Ratio (x)

0.1

0.1

0.2

c. Profitability:
Bata India Limited As on Gross Margin (%) Operati ng Margin (%) Net Profit Margin (%) Adjuste d Net Profit Margin (%) Asset Turnove r(x) 31Ma r09 24. 7 31Ma r08 21. 8 31Ma r07 18. 9 Liberty Shoes Limited As on Gross Margin (%) Operati ng Margin (%) Net Profit Margin (%) Adjuste d Net Profit Margin (%) Asset Turnove r(x) 31Ma r09 24. 4 31Ma r08 26. 4 31Ma r07 28. 2 Mirza International Limited 31- 31- 31Ma Ma Ma As on rrr09 08 07 Gross Margin (%) Operati ng Margin (%) Net Profit Margin (%) Adjuste d Net Profit Margin (%) Asset Turnove r(x) 20 16. 7 2.2 23. 6 Relaxo Footwear Limited As on Gross Margin (%) Operati ng Margin (%) Net Profit Margin (%) Adjuste d Net Profit Margin (%) Asset Turnove r(x) 31Ma r09 25. 7 31Ma r08 24. 8 31Ma r07 23. 5

9.3

7.3

6.1

7.7

9.9

12

1.6

7.6

10

9.4

8.2

6.2

6.2

5.5

3.1

6.4

7.7

1.6

0.5

6.3

3.5

3.4

2.7

6.2

6.2

5.9

3.1

6.3

7.7

1.6

0.5

6.3

3.6

3.4

2.6

3.1

3.1

1.1

1.3

1.1

1.2

2.5

2.3

2.2

d. Cash Flow:
Mirza International Limited 31- 31- 31Ma Ma Ma As on rrr09 08 07 Operat 11. 17 10. ing 4 1 Cash Flow/S ales

Bata India Limited As on Operat ing Cash Flow/S ales 31Ma r09 10. 3 31Ma r08 5.4 31Ma r07 5.4

Liberty Shoes Limited As on Operat ing Cash Flow/S ales 31Ma r09 11. 3 31Ma r08 9.2 31Ma r07 20. 8

Relaxo Footwear Limited As on Operat ing Cash Flow/S ales 31Ma r09 10. 1 31Ma r08 10 31Ma r07 8.7

46

(%)

(%)

(%)

(%)

e. Leverage:
Mirza International Limited 31 31 31 As on M M M ar- ar- ar09 08 07 Debt/Eq uity ratio (x) Total Debt/Tot al Assets (x) Long term Debt/Net worth (x) Interest Coverag e (x) 1 0.9 0.9

Bata India Limited 31 M ar09 0.1 31 M ar08 0.2 31 M ar07 0.2

Liberty Shoes Limited 31 M ar09 0.8 31 M ar08 1 31 M ar07 1.3

Relaxo Footwear Limited 31 M ar09 1.5 31 M ar08 1.2 31 M ar07 1.1

As on

As on

As on

Debt/Eq uity ratio (x) Total Debt/Tot al Assets (x) Long term Debt/Net worth (x) Interest Coverag e (x)

Debt/Eq uity ratio (x) Total Debt/Tot al Assets (x) Long term Debt/Net worth (x) Interest Coverag e (x)

Debt/Eq uity ratio (x) Total Debt/Tot al Assets (x) Long term Debt/Net worth (x) Interest Coverag e (x)

0.1

0.1

0.2

0.4

0.5

0.5

0.5

0.4

0.4

0.6

0.5

0.5

--

--

--

0.1

--

--

--

0.3

0.3

0.9

13. 3

8.1

6.5

2.3

3.5

0.3

0.2

2.2

2.7

2.8

2.9

47

f. Working Capital:
Mirza International Limited 31 31- 31Ma Ma As on M rrar08 07 09 Workin g Capital 0.2 0.3 0.4 to Sales (x) Workin g Capital Days (days gross sales) Receiva bles (days gross sales) Creditor s (days cost of sales) FG Inventor y (days cost of sales) RM Inventor y (days consum ption) Relaxo Footwear Limited 31 31 As on M M ar- ar09 08 Workin g Capital 0.1 0.1 to Sales (x) Workin g Capital Days (days gross sales) Receiva bles (days gross sales) Creditor s (days cost of sales) FG Inventor y (days cost of sales) RM Inventor y (days consum ption)

Bata India Limited 31Ma r09 31Ma r08 31Ma r07

Liberty Shoes Limited 31Ma r09 31Ma r08 31Ma r07

As on Workin g Capital to Sales (x) Workin g Capital Days (days gross sales) Receiva bles (days gross sales) Creditor s (days cost of sales) FG Inventor y (days cost of sales) RM Inventor y (days consum ption)

As on Workin g Capital to Sales (x) Workin g Capital Days (days gross sales) Receiva bles (days gross sales) Creditor s (days cost of sales) FG Inventor y (days cost of sales) RM Inventor y (days consum ption)

31 M ar07 0.1

0.2

0.2

0.2

0.4

0.4

0.5

54. 6

54. 7

66. 4

14 5.4

15 5.9

16 8

89. 5

12 0.6

14 3.6

19. 4

31. 7

35. 8

8.3

9.3

9.4

10 3.9

10 2.5

11 0.8

27. 2

38. 7

44. 5

17. 7

18. 7

23. 5

66. 2

71. 7

74

69. 3

60. 9

74. 5

27. 7

43. 9

43. 4

29. 8

28. 3

24. 9

10 8.7

12 0.6

13 8.6

69. 7

82. 1

83. 5

33. 2

47. 7

66. 1

29. 3

29. 4

20. 2

26. 8

33. 5

37. 2

62. 8

40. 7

64. 3

52. 2

77. 8

70. 3

26. 7

39. 3

33. 5

48

g. Per Share:
Bata India Limited As on 31Ma r09 31Ma r08 31Ma r07 Liberty Shoes Lomited As on 31Ma r09 31Ma r08 31Ma r07 Mirza International Limited 31- 31- 31Ma Ma Ma As on rrr09 08 07 Book Value Per Share (Rs) Earnin gs Per Share (Rs) Divide nd Per Share (Rs) Relaxo Footwear Limited As on 31Ma r09 31Ma r08 31Ma r07

Book Value Per Share (Rs) Earnin gs Per Share (Rs) Divide nd Per Share (Rs)

46. 1

38. 2

32. 7

Book Value Per Share (Rs) Earnin gs Per Share (Rs) Divide nd Per Share (Rs)

71. 8

67. 4

58

6.4

6.8

67. 2

Book Value Per Share (Rs) Earnin gs Per Share (Rs) Divide nd Per Share (Rs)

60. 9

50. 5

42. 7

10. 5

9.5

7.4

4.4

9.4

10. 1

0.6

0.4

9.8

11. 9

8.8

5.3

2.5

--

--

--

0.1

0.2

2.5

0.7

0.7

0.7

h. Growth:
Mirza International Limited 313131Ma As on Mar Mar r-09 -07 08 Total Operat 14.2 0.7 29.5 ing 9 2 7 Incom e EBIT 75.6 67.5 90. DA 1 4 98 N. 108. EBIT 14.3 M. 26 4 Net 261. 54.2 91. Profit 37 8 81 Total Assets 2.03 0.4 8 9.73 Relaxo Footwear Limited 31- 31- 31Ma Ma Ma As on rrr09 08 07 Total Operat 33. 29. 17. ing 31 55 46 Incom e EBIT DA EBIT Net Profit Total Assets 34. 45 41. 7 35. 24 36. 96 38. 43 49. 56 64. 42 16. 46 51. 53 77. 35 76. 28 23. 84

Bata India Limited As on Total Operat ing Incom e EBIT DA EBIT Net Profit Total Assets 31Ma r09 10. 61 42. 46 41. 27 10. 69 7.0 1 31Ma r08 13. 77 32. 28 36. 41 28. 02 10. 75 31Ma r07 12. 63 48. 65 61. 63 47. 52 11

Liberty Shoes Limited As on Total Operat ing Incom e EBIT DA EBIT Net Profit Total Assets 31Ma r09 2.9 9 18. 77 24. 54 52. 88 5.0 1 31Ma r08 11. 57 1.5 1 8.3 2 7.1 1 3.6 8 31Ma r07 8.4 3 0.6 1 -3 9.1 7 45. 28

49

Key Ratios of major players affecting Industry:Mkt. Cap. (Rs. Cr.) 2195.44 181.48 148.78 498.66 3024.36 P/C Ratio 23.9 11.3 5 9.4 12.4 P/E Ratio 34.2 19.7 8 13.2 19.58

Company Name Bata India Liberty Shoes Mirza International Relaxo Footwear Ind.Composite

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Ratios impact on the Footwear Industry Bata YRC Aggregate India 200903 Debt-Equity Ratio Long Term Debt-Equity Ratio Current Ratio Fixed Assets Inventory Debtors Interest Cover Ratio PBIDTM (%) PBITM (%) PBDTM (%) CPM (%) APATM (%) ROCE (%) RONW (%) 0.64 0.3 1.46 2.53 3.22 8.84 2.75 9.56 7.49 6.83 5.91 3.84 12.03 9.87 0.13 0.03 1.63 3.42 3.91 43.57 11.34 12.39 9.88 11.52 8.55 6.04 35.93 24.38 Shoes 200903 0.94 0.12 1.18 1.92 3.45 3.47 1.58 10.68 8.02 5.6 5.7 3.04 8.63 6.34 International 200903 0.93 0.4 1.07 1.63 3.81 12.03 1.63 10.11 7.07 5.77 4.65 1.61 9.91 4.37 Footwear 200903 1.33 1.01 1.01 2.49 10.64 23.05 2.25 13.14 10.58 8.45 6.06 3.49 27.39 21.12 Liberty Mirza Relaxo

5.2 Trend Analysis of Indian Footwear Industry

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Interpretation of the above chart is that the profit earnings ratio of the Indian Footwear Industry is only 19.58% in the economy. As the major players of the industries is on the bullish trend, the development is seen among them is to be seen due to the technology improvement, taste and preferences of the customers. Thus the demographic improvement will make a huge impact on the overall Industry. So on the bases of this we can say that the phase of the Indian Footwear Industry is Growing Industry.

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6. Key Issues & Facts

6.1 Advantages of Footwear Industry: Indian footwear market is expected to grow at 19% CAGR by 2012 on growing demand for women and children footwear, rising brand-consciousness and rising role of women in retail purchases. With growing demand for children and women footwear , the Indian footwear retail market is projected to grow at a CAGR of about 19% between 2009 and 2012. Low cost of footwear production is another major advantage with India which will help in sustaining footwear demand in near future. India has tremendous untapped potential in the ladies and kids footwear segment. Besides, women in India are becoming a key decision maker for most of the retail buying like footwear as their role in family planning and contribution to income is increasing. They have also been found doing impulsive buying for their kids during their visit to shopping malls. Thus, this changing trend will definitely help in raising the demand for footwear in India. Indian footwear market gives intensive qualitative and quantitative evaluation of the market. 6.2 Key Success factors:

Focus on exports, develop international quality products. Should be in constant touch with international fashion trends and designs. Need to have a wide product range to cater to all markets segments. Raw material sourcing critical as prices fluctuate often. Domestic market - need to focus on distribution. Product branding essential.

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6.3 Key Drivers:

Increasing consumerism and fashion consciousness driving the market Manufacturers emphasizing on branding leather products Export market expected to grow. Many international brands have started outsourcing from India.

6.4 Ethnic Footwear Industry Status: Its production topography is decentralized, unorganized and cluster centric. Family units carry out the production. Most of the family members are associated with production processes. Male members are doing cutting, stitching and pasting work. Women do the embroidery work. The industry is on decline and migration of artisans to other professions and cities is visible in all clusters. On account of certain product deficiencies and lack of process of renewal and touch with consumer preferences, the sector is getting marginalized and most of the artisans are at subsistence level. Product deficiencies, lack of standardization, absence of innovation and improved designs, onslaught of cheaper footwear produced by organized factories, low productivity and prevailing exploitative marketing channels made this sector uncompetitive. It impacted the economic conditions of artisans and its result is the migration of artisans to other professions and cities. Their children also started opting for other professions. The danger of extinction of this art and cultural heritage is more. 6.5 Key Challenges: 1) Location: "Right Place, Right choice" Location is the most important ingredient for any business that relies on customers, and is typically the prime consideration in a customers store choice. Locations decisions are harder to change because retailers have to either make sustainable investments to buy and develop real

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estate or commit to long term lease with developers. When formulating decision about where to locate, the retailer must refer to the strategic plan:

Investigate alternative trading areas. Determine the type of desirable store location Evaluate alternative specific store site

2) Merchandise: The primary goal of the most retailers is to sell the right kind of merchandise and nothing is more central to the strategic thrust of the retailing firm. Merchandising consists of activities involved in acquiring particular goods and services and making them available at a place, time and quantity that enable the retailer to reach its goals. Merchandising is perhaps, the most important function for any retail organization, as it decides what finally goes on shelf of the store. 3) Pricing: Pricing is a crucial strategic variable due to its direct relationship with a firm's goal and its interaction with other retailing elements. The importance of pricing decisions is growing because today's customers are looking for good value when they buy merchandise and services. Price is the easiest and quickest variable to change. 4) Target Audience: "Consumer the prime mover" "Consumer Pull", however, seems to be the most important driving factor behind the sustenance of the industry. The purchasing power of the customers has increased to a great extent, with the influencing the retail industry to a great extent, a variety of other factors also seem to fuel the retailing boom. 5) Scale of Operations:

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Scale of operations includes all the supply chain activities, which are carried out in the business. It is one of the challenges that the Indian retailers are facing. The cost of business operations is very high in India.

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7. Finding, Recommendations and Conclusions:-

The Indian footwear retail market is expected to grow at a CAGR of over 20% for the
period spanning from 2008 to 2011.

Footwear is expected to comprise about 60% of the total leather exports by 2011 from
over 38% in 2006-07.

Presently, the Indian footwear market is dominated by Mens footwear market that
accounts for nearly 58% of the total Indian footwear retail market.

By products, the Indian footwear market is dominated by casual footwear market that
makes up for nearly two-third of the total footwear retail market.

As footwear retailing in India remain focused on mens shoes, there exists a plethora of
opportunities in the exclusive ladies and kids footwear segment with no organized retailing chain having a national presence in either of these categories.

The Indian footwear market scores over other footwear markets as it gives benefits like
low cost of production, abundant raw material, and has huge consumption market.

The footwear component industry also has enormous opportunity for growth to cater to
increasing production of footwear of various types, both for export and domestic market.

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8. Bibliography: www.bseindia.com www.nseindia.com www.myiris.com www.footwearsinfoline.tripod.com www.bataindia.com www.libertyshoes.com www.relaxo.com www.ibef.org www.business.gov.in

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