Assignment on Valuation of Liberty shoes

Submitted to : Prof T .Vishwanathan

Submitted by : Nitesh Kunwar Kirti Kamboj Juhi Binaykiya

Micro and macro economic analysis :

Economic growth and rising disposable incomes India is growing at an average annual rate of 7.6% for the past five years and it is expected to continue growing at an equal if not faster rate. The rapid economic growth is increasing and enhancing employment and business opportunities and in turn increasing disposable incomes. As the benefits of growth trickle down, an increasing number of people are moving up from the economically weaker class to join the middle class. The middle class with its rising numbers and incomes is thus becoming the biggest market segment. The affluent class too will continue to grow in terms of size and value, albeit, at a slower pace than the middle class. A study prediction on the effect of economic growth on different classes : Middle class, defined as households with disposable incomes from Rs 200,000 to 1,000,000 a year comprises about 50 million people, roughly 5% of the population at present. By 2025 the size of middle class will increase to about 583 million people, or 41% of the population. Extreme rural poverty has declined from 94% in 1985 and is projected to drop to 26% by 2025. Affluent class, defined as earnings above Rs 1,000,000 a year will increase from 0.2% of the population at present to 2% of the population by 2025. Affluent classs share of national private consumption will increase from 7% at present to 20% in 2025. Future outlook of the industry based on the consumer needs and his ability to spend. India is standing on the threshold of a retail revolution and witnessing fast changing retail scenario, with footwear market set to experience phenomenal growth in the coming years. The entry of numerous international players has also resulted in providing a significant boost to the Indian footwear market and the demand for Indian footwear will continue to grow in future . The success mantras for footwear market in India lies in the core set of privileges existing in the country itself, including low labour cost, skilled working professionals, etc. The footwear industry in India is presently witnessing various shift in the trends that are indicative of contributing in the future growth of the industry. For instance, many companies in the market are dealing in a range of stylish eco-friendly footwear to ensure that the buyers do not sacrifice on comfort or style, while opting for green shoes. Similarly, more and more people are now opting for custom-made or designer footwear providing opportunities for footwear designers. Also it foresees immense opportunities for increasing trend of online footwear retail market. Shoe manufacturers have gained a sudden upsurge in the retailing of footwear with the rise of e-commerce and the growing trend of online shopping. Furthermore, there also

exists huge demand for the traditional footwear market in India. Fashion freak youngsters now prefer ethnic footwear to give a touch of Indian glamour to their western outfits. Also Indian footwear industry is mainly driven by mens footwear segment, which has been booming with the: rise in the purchasing power and the growth of image consciousness among the youngsters. Furthermore, with the rising younger working class population, the demand for formal footwear has also seen significant increase.

Whereas, the old-age group demand for medical footwear that offers comfort and health benefits together with high quality. Also with the maximum population still living in rural areas, the demand for footwear is increasing in these regions. Rising income level of the people and brand awareness has further boosted the demand for premium footwear.

Industry Analysis The post liberalization era has opened up a plethora of opportunities for the leather industry. With global players looking for new sourcing options (in addition to China, India stands to gain a bigger share of the global market. Leading brands from the US and Europe are planning to source leather and leather products from India.) India has a less than 3% share in the global trade in leather compared to China's 20%. Realizing the growth potential of the leather industry, the Government of India has been making significant efforts to promote rapid advancement of the industry. On June 30, 2005, the Cabinet Committee on Economic Affairs (CCEA) decided to implement a Rs 2.9 billion scheme for the integrated development of the leather sector. Under this scheme, existing tanneries will be modernized and new units will be set up for footwear, components and leather products. This scheme is expected to result in gains in terms of productivity, rightsizing of capacity, cost-cutting, and design-development. Speciality of India : India ranks first among major livestock holding countries in the world and thus has a rich endowment of raw materials in terms of the cattle population. It has the capacity to fulfill 10% of the global leather requirement. Presently, the Indian footwear market is dominated by Mens footwear market that accounts for nearly 58% of the total Indian footwear retail market in following manner : 1. 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. 2. 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. 3. 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. 4. 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. Growth of the industry : Leather footwear is the leading product category driving the growth of the leather industry. At present, Indian footwear industry rank second-largest footwear producer after China. Our study has effectively monitored the current and future trend of the Indian footwear market on the basis of which, it is considered to possess a significant potential with overall market anticipated to grow at a CAGR of around 14% during 2012-2014. The market is delicensed, which further creates expansion opportunities for the production capacities in modern state-of-the-art units. The industry comprises of firms in all capacities starting from small artisans to prominent global players. Specialized institutions like CLE (Council for Leather Exports) and CLRI (Central Leather Research Institute) have been set up to promote the overall performance of the industry.

Company analysis
SWOT Analysis Strength

Wide Reach with 150 distributors, 350 exclusive showrooms and more than 6000 multi-brand outlets HumanTech Centers i.e. Liberty is high in Research and Development Old Established Brand with huge popularity Among the top 5 leather footwear Manufacturers in the world Good advertising and branding through TVCs and print ads Has popular sub-brands like Coolers, Force10, Senorita, Gliders

Weakness

Has limited franchise presence as compared to some other footwear brands Lacks global presence, which can be a huge potential segment

Opportunity

Has increased reach in Southern India but with more number of franchisee stores has an opportunity to increase reach PAN India In India, People now look towards buying footwear as a blend of fashion and comfort, so now has an increasing market size Global expansion would help in brand building and sales

Threats

Intense Competition form existing brands Commoditization if fashion footwear not differentiated well Constantly changing footwear technology and fashion

STP(Segmentation Targeting and Positioning)

Segment Full Market Coverage in Income Target Group Liberated Youth which prefers fashionable footwear Positioning Stylish Freedom for Movement

Competitors Liberty Shoes is an India-based company engaged in manufacturing of footwear. The company manufactures and sells leather footwear for all age groups under the brand names Coolers, Fortune, Force10, Gliders, Windsor, Senorita, Tiptopp, Footfun, Prefect, Warrior, Freedom and Workman. Hence as it is introducing products in various brand names and in various segments in design and targeting varied age group people it is also facing similar competition from Bata India and Relaxo Footwear . Retail It believes that every segment of our the customer base has a right to fashionable footwear which makes them look good, and feel good. Hence, while it devotes the most fashionable selections to those with high tastes in style; its offerings also blend fashion with affordability. At the same time, a wide range of industries are able to function more effectively, benefiting from the safety shoes offered by Liberty which is operating 400 exclusive stores and 6000 multi brand outlets. Distribution The world chooses to step ahead in our footwear. And so in turn,it took a step ahead with a strong distribution network that reaches out to the most far flung areas of India, and beyond to more than 25 countries across the world. This strong and ever expanding network is a reflection of its commitment to dress more feet fashionably. Institutional sales With increasing construction and development activity taking place across the world, the need to ensure safe working conditions for the workforce is at an all time high. The answer comes in the form of the world class range of Warrior Safety Shoes from Liberty that helps industries around the globe work safe, work better. Conforming to Euro Safety Norms (EN 345), this safety footwear is recognized as standard professional gear for workers in light and heavy engineering units as well as defence forces. So the feet the world moves on, moving in Liberty Footwear!!!