Lehar Footwears Ltd

Dear Stakeholders,

MACROECONOMIC LANDSCAPE

Before delving into the performance for FY2023-24, it's crucial to understand the current external environment. The global economy is grappling with numerous challenges, including subdued growth, rising geopolitical tensions, and inflation. Despite these global headwinds, India has stood out as a beacon of resilience, achieving the highest growth rate among major economies. This growth is fuelled by the government's sustained focus on infrastructure and housing, a rising contribution of manufacturing to GDP, and improved living conditions for a large segment of the population. Additionally, long-term structural factors such as a young demographic, increasing disposable incomes, and large-scale digitisation position India as a significant opportunity for the coming decades.

DRIVING GROWTH THROUGH OPERATIONAL MASTERY

This year, we have achieved significant milestones that have strengthened our position in the market. We successfully obtained the BIS licence for our product offerings, addressing industry-wide concerns regarding BIS regulations. By proactively clearing non-compliant inventory, we have strenghthened our position in the market. The BIS certification also aids us in navigating regulatory changes more effectively. Furthermore, we are increasing our focus on improving in-house efficiency and reducing dependence on third-party manufacturers, aiming to enhance product quality and operational control.

During the financial year, we received financial aid totalling

3.6 crores from the Government of India for our publicity campaign and brand promotion efforts. This funding is part of a larger assistance package of 9 crores, to be disbursed over three years, under the 'Brand Promotion of Indian Brands in Footwear and Leather Sector' sub-scheme of the Indian Footwear and Leather Development Programme (IFLDP).

Furthermore, we have intensified our efforts on brand endorsement to strengthen our brand presence and deepen our market penetration. To achieve this, we launched the star-studded campaign "Chalti Chale Lehar", featuring renowned Bollywood celebrity Govinda. This campaign has greatly enhanced our brand's appeal and visibility.

One of the key highlights remains our export sales as the segment witnessed a remarkable growth of ~120% in FY2023-24 to reach approximately 37 crores. We have enhanced our market reach in the Middle East and Africa, significantly expanding our total addressable market

(TAM). To further penetrate the global market, we have strengthened our relationship with the distributors, retailers, and wholesalers, and developing targeted products for our international clients, we are consistently increasing our market share in these regions. Our Company anticipates robust growth and a higher contribution from the export segment in the near future.

STEPPING AHEAD WITH RESILIENCE AND GROWTH

In the FY2023-24, Lehar Footwear experienced significant developments across various financial metrics. Revenue from operations stood at 194.3 crores. Despite this, the Company demonstrated strong operational efficiency, as evidenced by a robust 31.7% growth in EBITDA, reaching

18.25 crores compared to 13.9 crores in the previous year. The EBITDA margin improved by 250 basis points, standing at 9.4% against 6.9% in the previous fiscal year, driven by an improved product mix, enhanced operational efficiency, and a higher contribution from export sales.

Profit Before Tax (PBT) rose to 8.9 crores from 6.5 crores in the preceding year, showcasing a growth of

37%. Meanwhile, Profit After Tax (PAT) for FY2023-24 was 6.6 crores, compared to 5.1 crores in FY2022-23, demonstrating a growth of 29.4%. Additionally, during FY2023-24, the Company successfully raised 7.9 crores through the conversion of 20,14,000 equity share warrants into an equal number of equity shares to warrant allottees.

These financial achievements highlight Lehar Footwear's resilient performance and strategic initiatives driving sustainable growth.

LEADING THE WAY TO NEW HORIZONS

Lehar Footwear is poised for significant growth and expansion in both the domestic and international markets. Our export business continues to gain momentum, reflecting strong sales growth across various global regions. Domestically, we are witnessing a promising revival with increased demand emerging from rural and semi-urban markets. The government's continued focus on rural consumption is likely to lead to recovery in discretionary spending. This focus on rural markets aligns with our strategic objectives and will further enhance our domestic sales.

Moreover, our Company expects a resurgence in our tender business, driven by the renewed term of the elected government, which brings fresh opportunities and stability. Additionally, the introduction of ‘Bha', India's proprietary footwear sizing system, presents a significant variable for the upcoming financial year. While the full impact of this development is yet to be determined, it holds the potential to reshape our operations and customer interactions. As we navigate these changes, Lehar Footwear remains committed to leveraging these opportunities to strengthen our market position and drive sustained growth.

IN CLOSING

I extend my gratitude to all our employees, customers, distributors, investors and other stakeholders for their continued support. Looking ahead, the opportunities before us are abundant. We have cemented our position as an eminent player in the industry and now with our ambitious business strategies, we are well-positioned to continue our journey of growth and innovation. Our strategic investments towards branding programmes, expanding market presence, technological advancements, and unwavering commitment to quality and customer satisfaction will propel us into the next orbit of success.

I remain dedicated to our continued success and look forward to working with each one of you to take Lehar Footwear to greater heights and create value for all.

With warm regards,