Henri Bergson, one of the most famous and influential philosophers of
 the late 19th century-early 20th century, had once said: To exist is
 to change, to change is to mature, to mature is to go on creating
 oneself endlessly.
 
 We at Liberty Shoes have adopted this philosophy of change as an
 article of faith in our organization. And I would like to begin by
 expressing my gratitude to all of you for accepting the change we had
 proposed last year. The change, I am happy to add, has already started
 yielding positive results but more of that later.
 
 Lets start with the macro picture
 
 The year 2009-10 has been a watershed year for us. Notwithstanding the
 global recession, Indian economy has shown great resilience and
 continued to be in the growth mode.
 
 Indian footwear industry emerged as the engine of growth for the entire
 Indian leather industry and today India is the second largest global
 producer of footwear after China accounting for nearly 13% of global
 footwear production of 16.00 billion pairs.
 
 The domestic consumption of footwear within India, due to an expanding
 middle class, especially within urban areas, has been driving the
 growth of the footwear industry. Today, nearly 95% of the countrys
 footwear production goes to meet its own domestic demand.
 
 The entire leather sector is now de-licensed and de-reserved1,
 paving the way for expansion on modern lines with state-of-the-art
 machinery and equipment. The footwear sector too has matured from the
 level of manual footwear manufacturing methods to automated footwear
 manufacturing systems.
 
 The Indian footwear retail market is slated to grow at a CAGR of over
 20% for the period spanning from 2008 to 2011. Footwear is also
 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. Theres no organized retailing chain with a national presence
 in ladies and kids footwear segment. The casual footwear segment
 makes up for nearly two-third of the total footwear retail market.
 
 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.
 
 In other words we have opportunities, opportunities and more
 opportunities.
 
 And now shifting focus to the picture your Company presents
 
 As I mentioned at the outset, 2009-10 was a year of visible change, a
 year in which we acted boldly, reorganized ourselves, and positioned
 the Company for higher growth in productions, sales and profits.
 
 Our manufacturing units are showing enhanced productivity. And our
 brand is all set to attract a younger, more compelling target customer.
 We have also taken steps to adapt our brand to fit with todays more
 
 casual workplace. And more importantly, with our operating expertise -
 from footwear design to the retail floor we are able to identify
 emerging footwear trends and deliver the hottest styles that consumers
 want right now.
 
 We continue to be the no. 1 brand name, value-priced footwear for the
 entire family. It all starts with the power of our branded offering
 across all types of footwear, and the ability to anticipate shifting
 customer preferences. Were meeting those preferences with highly
 developed merchandising systems that move product, store-by-store,
 filling each locations demand for the hottest footwear.
 
 Our retail operations are today strategically positioned for achieving
 significant results. Both our Company- owned showrooms as well as
 franchisee stores are poised to further increase their market share
 now. We are investing in dynamic merchandising and marketing programs.
 
 Putting our extensive database and powerful systems technology to the
 best use we are executing targeted advertising and store display
 programs that pull customers into our stores.
 
 One of the major components of our turn-around strategy is our
 fashion-right product and our bold image campaign. By placing fresh
 product and eye catching displays in our stores we plan on driving
 sales gains.  Were also seeking to improve profitability through a
 better mix of retail locations. While closing our low performing stores
 we are at the same time opening new concept stores in the right
 places, with the right look that exudes the new image. While the
 process is still in the early stages of transition we expect to see
 improved operating results and increased store sales during the coming
 year.
 
 There is a new sense of urgency and a renewed passion in our operations
 and credit goes to our employees and business partners for embracing
 this enthusiasm.
 
 Theres a lot to look forward to
 
 In light of the encouraging prospects, we are obviously confident that
 it will soon be reflected in our brands worth. That said, we continue
 to focus on growing sales and earnings and on building a compelling
 business. We believe that the Market will come to recognize the
 progress weve made, and will eventually reward us with a proper
 multiple.
 
 And so much to do for those around us
 
 We are ever conscious of the fact that our reputation stems not just
 from quality products and technological innovations but also from the
 manner in which we discharge our responsibilities towards our
 employees, our customers, the society and the environment. Utmost
 importance is given to ensuring safe, healthy and non-discriminatory
 working conditions for all our employees and ethical standards and
 practices are rigorously adhered to. Ecological awareness also happens
 to be uppermost on our minds. A testament to this fact is the
 importance we have accorded to making all our Humantech Centers
 environment-friendly with extensive green covers.
 
 Thank you for going that extra mile with us.
 
 Adesh Kumar Gupta
 
 Chief Executive Officer