S.R.Industries ltd.manufacturing sport shoes for MNC

S.R.Industries Ltd.manufacturing sports shoes for MNC.brands like PUMA,FILA,Umbro,Future group & many more reputed brand.current market cap is around 10 croe @ cmp of ₹.6.70/-. Total secure & unsecure debt around ₹ 40 crore.last year (2015-16) no major growth in top line & reported negative bottom line.but last three quarters performance of this year showing turn around.(possible).

I recently received response to my emailed questionnaire from management & it sound interesting.here is the copy paste of email response.

Dear Mr. Shinde,

Thank you for your email showing your interest in finding out more details about your company.

Please find detailed response to your questions below.

You may please call up or visit our website www.srfootwears.com for more information.

Best Regards

Amit Mahajan

On 17-03-2017 17:26, sanjay shinde wrote:

Dear promoter

This is Mr.sanjay shinde.I am a shareholder of S R Industries ltd.I recently browsed your website www.srfootwear.com. & also checked your annual report 2016 & conclude that your doing something interesting. I have few question as a shareholder please answer.

(1)Q) who is your customer?give revenue break up Answer - We are working with MNC clients such as Puma, Future Group and Fila. We are also in discussions with some more brands for tie-up.
(2)(Q) what is annual capacity ? Give break up (Answer)product wise Our Annual capacity is rated at over 3 Million pairs. The break-up product wise can be varied, depending on category wise demand.
(3) Debt figure?

A)We are enclosing the 31 December results which provide the Debt details.
(4) please provide export figure
a)Exports are currently low but are expected to rise in coming quarters
(5) operating profit margin & net profit margin?
(Answer) Existing profit margins are available from the quarterly results. However, these are expected to rise in coming quarters as debt levels fall, and topline rises.
(6) what is your topline & bottom line target for next ((year?

answer)We hope to achieve a topline of Rs. 65 Crores in next year, and net profit should be around Rs 5 Crores
(7) Number of employee? We have approximately 700 employees
(8) what about dividend to shareholders? We certainly hope to pay dividend to our shareholders. However, due to high levels of debt repayment, we do not foresee dividend payout in the next year.
(9) is it possible to turnaround this year? As per the results of 31st December, the company is in profit and we fully expect to remain in profit this year. We further expect a better performance in the coming quarters.
(10)Q. what about product quality you manufacturing?
Answer:- We are working with some of the most quality conscious brands and are supplying high quality products to them.

my knowledge of financial number analysis is very poor I request senior forum member please list your views on this company.

Sector perspective

India is the largest global producer of footwear after China, accounting to approx 13% of world footwear production, which is close to 16 billion pairs. This means that the average consumption globally is about 2-3 pairs/person. India produces approximate 2,000 Million pairs annually in different categories of Footwear. India exports about 115 million pairs, thus nearly 95% of its produce meets its own domestic demand.

With an estimated global population of 7-8 billion, India constitutes a share of approx 15%, which means 1.2 to 1.3 billion feet needs to be covered from heat, cold, injuries, protection etc. Footwear sector is a very significant segment of Leather and Non Leather products in India.

Size of Indian Domestic Footwear Industry is estimated to be worth 20-25,000 crores where leather and non-leather Footwear per capita consumption is estimated to be approx 1.1 pairs. In addition to this, Slippers (Hawai Chappals) segment is close to 10000 crores with per capita consumption are estimated to be 1 pair.
Our immediate Asian Neighbors reflect good per capita consumption between 3-4 pairs, whereas the developed nations such as US, EU, UK etc. enviably enjoy a far better per capita of 7 to 8 pairs.

The challenge for Indian Footwear Industry is lit large but anticipating India to become amongst top 5 Superpowers in 2030, our consumption rates can reach as high as 7-8 Pairs. In such a scenario, India would need to produce anywhere between 8-10 billion pairs consider yearly population growth.

Consolidating mid-term status by 2020, the potential target for Indian Footwear Industry will equalize consumption pattern of 3-4 pairs. With six/seven years to go, we need to scale our production from current level of 2 billion pairs to nearly 5 billion pairs at a CAGR rate of 30-40%.

Favorably for us, India ranks No.1 in milk production & we have the largest resource of cattle population in the world. Additionally, on the strength of raw material available domestically, the large pool of skilled and unskilled manpower, we have all the capability to take this challenge head on.

Given this backdrop of homogeneous potential it would not be an exaggeration to say that Footwear Sector is today, on engine of incremental growth. With global integration of Indian Industry, rapid change in lifestyle, income growth at bottom of the wealth pyramid, Footwear industry is expected to grow leaps and bounds

(source of above sector perspective is ETRetail)

Disclosure:- invested for long term.


Good Sir, You have identified another company which is in the manufacturing of Shoes along with other players like BATA and Mirza International. Presently Mirza International is facing problem with Indian Currency appreciation against US dollar. So what type of aggrement SR industry is made with their respective clients against forex appreciation is also we have to consider as one of the threat to the industry may be for short term.

Thank you.

Export Number is negligible.they are manufacturing for domestic market on contract basis for MNCs

Thank you

Sanjay shinde

then it’s ok.
thank you.

Very high debt with high interest costs as well.

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Very low liquidity. Even buying 1000 stocks can shoot up the prices by double digits %.

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I agree sir debt is very high but look at historical as well as current OPM is also attractive.if they sustain this kind of OPM then gradually debt will come down.i hope management is honest.

Thank you

Sanjay shinde

STARTED studying this company. holding few share. company will have 0.5 eps this year. and next year it will be 3-3.5 eps. I think within 2-3 quarter company will start performing. watching how story shaping…

Superhouse ltd is only comparable listed peer doing contract manufacturing quoting Trailing twelve month P/E 10.

Is the company suspended from trading?

Trade only once in week.monday only.due to GSM 3

srindafe.pdf (328.9 KB)
S.R.industries ltd.New client BATA India.but promoter sold few shares for funding the growth.Need further digging from seniors.

Thank you

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I have a question, which might sound unrelated. Why should someone invest in S.R.Industries than say Relaxo, BATA or Mirza? It is not into any niche product. I don’t know what value they add. They seem to be just a contract manufacturing company. Negative reserves.The last few quarters they seem to do good. I am trying to think what Sanjay sir might be thinking here. Is it like it has a very small capitalization and even with one to good quarters, the market will revalue the company? So does it boil down to thinking that the performance of last couple of quarters can be extrapolated? On the other hand why can’t the same extrapolation be applied to say Relaxo. They have well established brands and they are growing decently.

Just posting some work I had done on the company. (My first ever post on the forum) :slight_smile:

Disclosure -- I had invested some months back around Rs 7 and have exited very recently

Company History

• 1989 – Co was a manufacturer of terry towels operating as 100% EOU
• 1994 – Co launched around Rs 4-5 crores IPO
• 2004-05 – NIL Long term debt
• 2006 – Capex in terry towel division with long term debt under TUFS
• 2008 – Global slowdown impacted co’s 2 main customers Bed, bath & beyond & another customer went belly up. Cotton yarn prices increased substantially. Terry towel division faced turbulent times
• 2010 – Co thought of diversifying into footwear manufacturing as terry towel business had slowed.
• 2013 – Remained in losses


Co is a contract manufacturer for sports shoes, lifestyle footwear, flip flops and sandals for MNC companies like Puma, etc. There are 2 types of sports shoes manufactured – cemented & injected. Cemented is generally what is globally adopted by brands. SR Industries manufactures shoes using cemented technology.

Revenue contribution in FY17

Sports shoes - 35%
Flip flops - 30%
Sandals - 35%

The realizations and margins are highest in sports shoes followed by sandals and then flip flops

Entry Barriers
It takes 6-8 months to get factory audited and then 4-6 months to work on product development and start supplying.

• Puma is the largest customer since 2010 and contributes to 85% of sales in FY16, 82% sales in FY17 & FY18E are at <60%
• In FY16, co had entered into long term business arrangements with Puma Sports India Private Limited, Cravatex Ltd. (Fila division), Future Retail Limited (will manufacture their brands like Umbro, Buffalo, etc), H & M Hennes & Mautritz, Elisir Lifestyle Pvt. Ltd., Reliance Retail Limited (co will manu their private labels), Wildcraft India Pvt. Ltd. In Q1FY18, co will start supplying to Bata for their Power brand which is a new customer.

• Co has a plant in HP which has excise duty exemption till 2020
• Current capacity = 1.2 lacs per month. Fy17 C = 80-90k/ month. Optimum CU= 85-90%. With the help of debottlenecking which the co is trying to undertake the capacity can be ramped upto 1.4-1.45 lacs/ month provided co can tie-in funds of Rs 2-2.5 crores for this capex.
• During lean demand periods, co also takes up low value jobs like manufacturing flip flops, sandals to keep the plant running at optimum capacities

• Sales – FY17 Rs 45 crores & FY18: 60-70 crores so can assume Rs 65 crores. Sales had halved in FY16 over FY15 as there was slowdown in domestic footwear industry.
• Gross Margins – Co aims to maintain at 47-48%
• EBITDA Margins –Increasing share of sports shoes which is a higher margin product can lead to EBITDA margins of around 20-21%
• Excise Duty – Co enjoys excise duty exemption on its plan in Himachal Pradesh till 2020
• Debt – Co aims to reduce LTD to NIL by Jan, 2019. There will be a debt repayment of Rs 40-45 lacs per month.

imageShareholding as of Jun17
No of shares (Lac) Stake
Promoters 56.89 41%
Public 82.26 59%
Total 139.15 100%

Shareholding after stake sale by promoters in July17
No of shares (Lac) Stake
Promoters 39.11 28%
Public 100.04 72%
Total 139.15 100%

Shareholding after CCD and CCW to be issued in Sep17 **
** No of shares (Lac) Stake

Promoters 39.11 18%
Public (Old) 100.04 47%
Public (New) 75.00 35%
Total 214.15 100%

After doing all this, approximately (4.8cr + 1.5cr) i.e Rs6.3cr will be infused in the company as equity.

(CCD were issued to 29 different individuals)

Considering the turnaround happening in the company and that the co being expected to do well, I was a little bit concerned that the promoters reduced their stake from 41% to 18% in a matter of 2 months.


Good analysis.i sold my investment recently because of promoters reducing stake drastically…really cause of concern.

Diclosure :- As on today (04/12/2017) not holding single share.