India is the second largest footwear producer in the world after china and accounts 14% of global footwear production. Demand for high quality footwear produced in Europe and other parts of the world is expected to slowdown, as people are looking for medium or lower priced products. This is good sign for the Indian footwear industry since India along with China is the main supplier of low-priced footwear.
The ongoing financial crisis would have very less impact on the Indian footwear market due to continued growing demand for footwear by the expanding middle class families. Some of the leading footwear companies are Bata India, Liberty Shoes, Mirza International, Relaxo Footwear etc. Footwear companies offer a range of shoes under categories such as women's footwear, men's footwear and children footwear.
The aggregate net sales 6 footwear companies posted a growth of 7% to Rs 502.28 crore. Operating profit margins registered healthy expansion of 410 bps to 13.0% resulting operating profit to grow by 57% to Rs 65.18 crore. Other income declined to Rs 2.07 crore from Rs 9.4 crore restricting PBIDT growth to 32% to Rs 67.25 crore. With decline in interest cost and marginal rise in depreciation by 14% to Rs 10.12 crore and 17% to Rs 13.00 crore-led PBT to grow by 57% to Rs 44.13 crore. As the effective tax rate increased by 2080 bps to 36.1%, the net profit grow by 19% to Rs 28.18 crore.
The Union Budget 2009-10 is expected to unveil measures to improve the competitiveness of export oriented sectors like textile, leather etc. While the demand in the advanced markets of US and European Union has turned sluggish, the domestic players are wresting orders by working on slimmer margins. This can improve, depending on the additional incentives expected to be provided in the Union Budget 2009-10. Also, the domestic demand is improving, which is quite well tapped by frontline players like Bata India.
According to report-Indian Footwear forecast to 2012, 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. In terms of exports it is estimated footwear would comprise around 65% of total leather exports by 2011. Over all, the footwear sector has the potential to grow at a double digit, despite sluggishness in demand in the advanced markets.
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