Liberty Shoes

The Directors have pleasure in presenting the 22nd Annual Report of
 the Company together with the Audited Accounts for the year ended 31 st
 March, 2008.
 
 The highlights of the financial statements are as under: -
 
 Financial Highlights:
 
                                                 (Rs. in lacs)
 Particulars                                      2007-08      2006-07
 
 Gross Sales                                     25789.35     23754.48
 Export                                           4538.31      4816.86
 Domestic                                        21251.04     18937.62
 Less: Excise Duty                                1004.27      1539.93
 Net Sales                                       24785.08     22214.55
 Other Income                                      507.11       167.28
 Profit before Interest and Deprecation           3542.73      3245.01
 Interest                                         1288.09       830.50
 Depreciation                                      637.97       463.35
 Profit before taxation                           1616.76      1915.16
 Provision for Taxation & Deferred tax liability    11.62       249.22
 Profit after tax                                 1605.14      1701.94
 Add/(Less): Previous year Adjustment              (8.97)        16.38
 Net Profit for the year                          1596.17      1718.32
 Add: Opening Balance                             2290.43      1172.11
 Profit Available for Appropriation(s)            3886.60      2890.43
 Transfer to General Reserve                       600.00       600.00
 Surplus carried to Balance Sheet                 3286.60      2290.43
 
 
 Review of Companys Operations:
 
 During the year under review, your Company achieved Gross Sales of Rs.
 25789.35 Lacs (Previous year Rs. 23754.48 Lacs) and Net Sales of Rs.
 24785.08 Lacs (Previous year Rs. 22214.55, Lacs) recording an increase
 of 8.57% & 11.57% respectively as compared to the previous year. The
 Profit after Tax of the Company stood at Rs. 1605.14 Lacs as compared
 to Rs. 1701.94 Lacs in the previous year. This Profit also includes a
 profit of Rs. 254.99 Lacs available to the Company on disposal of
 assets of its Rubber Division whose activities have already been
 dispensed with. The operating profit margins were reduced mainly due to
 higher interest costs and the lower utilization of available
 capacities. The Company, as indicated in our previous reports, has
 expanded its manufacturing capacities in view of its retail
 initiatives. However, the retail ventures so far have not performed up
 to the Companys expectations Your Directors are concerned with this
 situation and are taking appropriate measures to overcome the
 shortcomings.
 
 Your Company wishes to dominate the Indian footwear industry with best
 available technology, expanded capacities, latest fashionable products
 and also by further spreading its existing customer network. The
 ongoing economic slowdown and continuously rising inflationary trends
 could adversely affect the working of the Company in the short run but
 being fully equipped to meet growing demands of the fast changing
 fashionable industry, your Directors feel that your Company has a
 promising future in the long run.
 
 Brand building and Business Promotion:
 
 Your Company, being fashion conscious has been spending a sizable
 amount on its brand building and business promotion activities. Apart
 from expending on advertisement through print and visual media, the
 Company also sponsored major fashion events. During the year under
 consideration, your Company sponsored Pantaloon Femina Miss India 2008
 at Mumbai and introduced specialized collection for this event. In
 spite of the inexorable pressure from various directions, the brand
 promotional activities of your Company have been highly appreciated and
 also suitably awarded.
 
 Subsidiaries / Joint Venture
 
 Your Company has two subsidiaries- Liberty Retail Revolutions Ltd.
 (LRRL) engaged in footwear retailing and Liberty Foot Fashion Middle
 East FZE, Dubai set up for global retailing.
 
 Liberty Retail Revolutions Ltd. (LRRL)
 
 LRRL, during the year under consideration, has further strengthened its
 retail presence by increasing its Revolution outlets. LRRL as on 31st
 March, 2008 has 33 (Previous year 18) retail stores spread over the
 major cities in India.  The Company for the financial year ended 31st
 March, 2008 has posted Sales of Rs. 1722.62 Lacs (Previous year Rs.
 1243.50 Lacs) and recorded a loss of Rs. 460.94 Lacs (Previous year a
 net loss of Rs. 91.91 Lacs).
 
 LRRL, during the year, has allotted 6.50 Lacs Equity Shares of Rs. 10/-
 each at a premium of Rs. 140/- per share aggregating to Rs. 975 Lacs on
 a preferential basis.
 
 Your Companys stake, due to this allotment, in LRRL now stood at
 93.86% (Previous year 99.96%).
 
 Liberty Foot Fashion Middle East FZE Dubai (LFF)
 
 Your Directors are of the opinion that overseas operations of the
 Company can further be strengthened by enhancing its presence in the
 Middle East. Considering the potential available and in view of its
 plans for global retailing your Company has set up its Wholly Owned
 Subsidiary (WOS) at Middle East in UAE. Your Company till 31st March,
 2008 has invested a sum of Rs. 248.62 Lacs (Previous year Rs. 164.06
 Lacs) in its WOS. This WOS has not yet commenced its business
 activities however it is in the process of establishing the required
 infrastructure for the same.
 
 Joint Venture (JV)
 
 The Companys JV for footwear retailing with Pantaloon Retail India
 Ltd. (PRIL) has established 25 retail footwear stores (Previous year
 16) till 31st March, 2008. During the year, this Joint Venture has
 changed its financial year from its earlier period of July-June to
 April-March. In the consolidated results given else where in the Annual
 Report, its during the year under review the joint venture partner,
 with the consent of your Company and the execution of deed of
 adherence, has transferred its shareholding to Future Ventures India
 Ltd., another Company of their group.
 
 Your Companys stake in JVs Equity is 49% whereas the Pantaloon holds
 51% stake. Your Company towards its requisite stake has contributed a
 sum of Rs. 785.76 Lacs up to 31st March, 2008. The Company for the
 financial year ended 31st March, 2008 has posted Sales of Rs. 2187.91
 Lacs (Previous year Rs. 797.04 Lacs), and recorded a loss of Rs.
 1242.33 Lacs (Previous year Rs. 668.13 Lacs).
 
 Exemption from including Balance Sheet of the Subsidiaries
 
 Your Company applied to the Central Government under section 212(8) of
 the Companies Act, 1956 seeking an exemption from attaching the copy of
 Balance Sheet, Profit & Loss Account, Directors Report and Auditors
 Report of its retail subsidiary and its wholly owned overseas
 subsidiary at Dubai. In terms of approval granted by the Central
 Government vide order No: 47/365/2008-CL-III dated 30th May, 2008, copy
 of Balance Sheet, Profit & Loss Account, Report of Board of Directors
 and the Auditors of the two subsidiaries have not been attached with
 the Balance Sheet of the Company. However, the statement required under
 Section 212 of the Companies Act, 1956 is attached to the Audited
 Accounts. The Company shall also make these documents / details
 available upon request by any member of the Company interested in
 obtaining the same. The Consolidated Financial Statements pursuant to
 Accounting Standard AS 21 issued by the Institute of Chartered
 Accountants of India, presented by the Company include the financial
 information of its subsidiaries.  
 
 Dividend:
 
 Your Directors, considering the financial requirements, do not
 recommend dividend on the Equity Share Capital of the Company for the
 financial year ended 31st March, 2008. Your Directors feel that ensuing
 proposal in the long run will strengthen the financial resources of the
 Company.
 
 Disclosure(s):
 
 The Company has so far not issued ESOP to its employees and there are
 no such plans envisaged at present in this regard.  
 
 The Company has not under taken any exercise of buy back of its Equity
 Share either from the shareholders or from the Capital market during
 the year under review.
 
 Considering the size and operations of business, the Company has a
 suitable frame work of risk assessment and risk mitigation. All types
 of business risks are analysed and all corrective measures are taken
 wherever needed.
 
 Corporate Governance:
 
 The Corporate Governance Report, as prescribed under the provisions of
 the Listing Agreement and as amended by the SEBI from time to time was
 adopted by the Board of Directors in their meeting held on Friday, 29th
 August, 2008.  A separate section on Corporate Governance along with
 Statutory Auditors certificate confirming the compliance is annexed and
 forms part of this Report. Director(s):
 
 Retirement by Rotation:
 
 Sh. Sunil Bansal, Sh. Surendra Kumar Arya and Sh. Satish Kumar Goel,
 Director(s) of the Company retire by rotation as prescribed in Section
 256 of the Companies Act, 1956 and being eligible offer themselves for
 the re- appointment.
 
 Directors Responsibility Statement
 
 Pursuant to section 217(2AA) of the Companies Act 1956, the Directors
 to the best of their knowledge and belief confirm that:
 
 i) in preparation of the Annual Accounts of the Company as on 31st
 March, 2008, the applicable Accounting Standards have been followed
 along with proper explanation relating to material departures;
 
 ii) they have selected such accounting policies and applied them
 consistently and made judgments and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company at the end of the financial year and of the profits of the
 Company for that period;
 
 iii) they have taken proper and sufficient care for maintenance of
 adequate accounting records with in the provisions of the Companies
 Act, 1956 and for safeguarding the assets of the Company and for
 preventing and detecting frauds and other irregularities;
 
 iv) they have prepared the annual accounts on a going concern basis.
 
 Auditors and their Report: *
 
 M/s. Pardeep Tayal & Co., Chartered Accountants, the retiring Auditors
 being eligible to be considered for re- appointment under Section 224(1
 B) of the Companies Act, 1956, have offered themselves for
 reappointment and have furnished a certificate of their eligibility to
 continue in this capacity. The enabling resolution in this respect is
 being placed at item no. 5 of the Notice. The Audit Committee and the
 Board recommend the re-appointment for the approval of the members.
 
 The Board has examined the Statutory Auditors Report on accounts of
 the Company and their clarifications, where ever necessary, have been
 included in the Notes to the Accounts section of the Annual Report.
 
 Cost Auditors:
 
 In conformity with the directives of the Central Government, the
 Company has appointed M/s. K.L. Jaisingh & Co., Cost Accountants, as
 the Cost Auditors of the Company under Section 233 B of the Companies
 Act, 1956 for the financial year 2007-08.
 
 Fixed Deposits:
 
 In terms of the provisions of Section 58 A of the Companies Act 1956
 read with Companies (Acceptance of Deposit Rules) 1975, the Company has
 not accepted any fixed deposit during the year under consideration.
 
 Outstanding Share Capital and its Listing:
 
 Your Company has outstanding Share Capital of Rs. 17,04,00,000/-
 consisting of 1,70,40,000 Equity Shares of Rs. 10/- each and these
 Equity Shares are presently listed and available for trading at
 National Stock Exchange of India - Ltd. (NSE) & Bombay Stock Exchange
 Ltd. (BSE).
 
 Particulars of Employees:
 
 During the year, no employee, whether employed for the whole or part of
 the year, was drawing remuneration exceeding the limits mentioned under
 Section 217(2A) of the Companies Act, 1956 and Rules framed there
 under.
 
 Energy Conservation, Technology Absorption and Foreign Exchange
 Earnings and Outgo:
 
 Information in accordance with the provisions of Section 217(1)(e) of
 the Companies Act, 1956 read with Companies (Disclosure of Particulars
 in the Report of Board of Directors) Rules, 1988 regarding conservation
 of Energy, Technology Absorption and Foreign Exchange Earnings and
 Outgo is given in the Annexure forming part of this report.
 
 Acknowledgments:
 
 Your Directors take this opportunity to express their appreciation to
 the shareholders, channel partners, employees at all levels, bankers
 and various Government departments who have supported the Company
 during the year and also look forward for their support in all future
 endeavors of the Company.
 
                                             For and on behalf of 
                                             the Board of Directors
 
 Place: Libertypuram, Karnal                 Adesh Gupta   
 Dated: Friday, 29th August, 2008            Chairman of the Meeting