Fundamental Analysis of Relaxo Footwear & Khadim India

RESEARCH REPORT
(Subject code MBA/208)

on
FUNDAMENTAL
ANALYSIS
of
RELAXO FOOTWEAR & KHADIM INDIA

Submitted in partial fulfillment of the award of degree of
MASTERS OF BUSINESS ADMINISTRATION
(Session 2017-19)
Affiliated to
J.C. BOSE UNIVERSITY OF SCIENCE AND TECHNOLOGY, YMCA, FARIDABAD
Submitted to: Submitted by

Controller of Examination VIPUL Kr. GARG
YMCA, Faridabad MBA 4th Sem.
Univ. Roll no.
Under the guidance of:

MISS SHIVANGI
Asst. Professor
RAM COLLEGE OF ENGINEERING AND MANAGEMENT

Palwal, Haryana
1
STUDENT DECLARATION
This is to certify that I, student of MBA 4th sem., have completed the Research
Report titled ”FUNDAMENTAL ANALYSIS” under the guidance of “MS.
SHIVANGI” in partial fulfillment of the requirement for the award of Degree of
Masters of Business Administration at Shri Ram College of Engineering and
Management, Palwal, which is affiliated to J.C. Bose University of Science and
Technology, YMCA, Faridabad.
The information and data given in the report is authentic to the best of my
knowledge.
This is an original piece of work & I have not submitted it earlier elsewhere.
Date: Signature:
Place: Name: VIPUL Kr. GARG
Univ. Roll No.:
2
ACKNOWLEDGEMENT
On the completion of my RESEARCH FILE on

FUNDAMENTAL ANALYSIS. I would like to thank my
teachers specially Ms.Shivangi (internal guide) and all the
faculties of SRCEM for the knowledge they have given me
during my MBA, by which I would be able to use all these
knowledge in practical way.
VIPUL KUMAR GARG
3
PREFACE
This project provides a sound coverage of all the aspects of

fundamental analysis. Classroom teachings helps the student by
making their conceptual base clear, but this research file helps
the students to get the practical knowledge of the concept
fundamental analysis. Normally the student are not aware of
actual requirement in the practical field, a system of research
report has been established to make the students aware of actual
difficulties that come in the way of practical field, which is not
taught in classroom teachings, so the students are given
practical training in the course of their education.
4
Executive Summary
This research basically gives an investor a well insight about

FUNDAMENTAL ANALYSIS in RELAXO & KHADIM INDIA for
long term. After studying this report anybody can understand that how
one should invest in long term and how he can maximizes his profits and
minimizes his losses. Here in this file we will study about what
fundamental analysis is? And what are the criteria for doing investment
in a company which is good for long term. So, after taking the point into
consideration discussed in this file one can appropriately take suitable
decisions.
SUMMARY OF RELAXO :-
In 1976, two brothers Mukund Lal Dua & Ramesh Kumar Dua dreamed to take
their father’s footwear business to what Relaxo is today - one of the leading and
most popular footwear companies in India. A household name, literally.
With its headquarter in New Delhi and 8 manufacturing units, Relaxo produces
over 6 lacs pairs of footwear, every day. Relaxo footwear’s range boasts a fine
combination of comfort, style, and quality workmanship. A wide collection of
fashionable, colourful, comfortable and durable footwear for men, women and
children.
For a changing India. For a trendsetting India. Relaxo is geared to meet the quality
and choice expectations of a young India with its sub-brands such as Sparx,
Bahamas, Flite, Schoolmate and Relaxo Hawaii.
Our Certifications & Affiliations :-

Our continuous efforts have resulted the following certifications & affiliations to
our credit:
 ISO 9001: 2015 - Quality Management System

 ISO 14001: 2015 - Environmental Management System
 OHSAS 18001: 2007 - Occupational Health and Safety Assessment Series
5
 BIS/SATRA Manufacturing Standards
 India’s Best Corporate Brand 2016 at The Economic Times Best Corporate
Brands Summit
 CLE (Council for Leather Export)
 Sparx – India’s most trusted brand in Footwear Category as per “ Brand Trust
Report 2016 “
 Power Brand Of the Year 2015 by Plan Man Media
Quality, Environmental and Safety Policy
 Relaxo is committed to provide innovative value added quality products,

environmental protection and occupational health.
 Relaxo shall fulfill all compliance obligations, prevent environmental pollution,
conserve natural resources and prevent injury & ill health.
 This policy shall be communicated to all those who are working for and on behalf
of the organization and will be made available to all interested parties.
 The above commitments would be achieved through continual improvements and
by meeting set objectives and their targets.
Our corporate objectives :-
Quality, Environmental and Safety Objectives
 Create a culture for quality, environment protection & safety through effective
training.
 Design & develop innovative products through customer research and analysis.
 Meet and exceed customer expectation.
 Meet all compliance obligations.
 Improve quality through control of rejections, rework & 5S
 Utilize resources optimally (reduced energy consumption & effluent discharge,
control of emissions, water conservation & human resource efficiency).
 Improve occupational health & workplace safety.
 Comply to ISO 9001, ISO 14001 and OHSAS 18001 standards.
SUMMARY OF KHADIM INDIA :-
Khadim’s was established in December 3, 1981 as S.N. Footwear Industries Private

Limited, a private limited Company under the Companies Act, 1956, with the
Registrar of Companies. Through the next many years, the company was involved
in whole-selling and distribution of branded basic utility footwear. From 1993, with
its foray into retailing, Khadim’s emerged as a popular fashion footwear brand, as
also one of the leading organized footwear retailers in India. Today, under the able
6
leadership of Chairman and Managing Director, Mr. Siddhartha Roy Burman,
Khadim’s has grown to 853 and 829 ‘Khadim’s’ branded exclusive retail stores
outlets as on June 30, 2017 and March 31, 2017 respectively, in 23 states and 1
Union Territory nationally.
Our Company is one of the leading footwear brands in India, with a two-pronged
focus on retail and distribution of footwear. We are the second largest footwear
retailer in India in terms of number of exclusive retail stores operating under the
‘Khadim’s’ brand, with the largest presence in East India and one of the top three
players in South India, in fiscal 2016. We also had the largest footwear retail
franchisee network in India in fiscal 2016. (Source: Technopak Report)
Our core business objective is ‘Fashion for Everyone’, and we believe that our
Company has established an identity as an ‘affordable fashion’ brand, catering to
the entire family for all occasions. As at June 30, 2017 and March 31, 2017, we
operated 853 and 829 ‘Khadim’s’ branded exclusive retail stores across 23 states
and one union territory in India, respectively, through our retail business vertical.
Further, we had a network of 377 and 357 distributors in the three month period
ended June 30, 2017 and fiscal 2017, respectively, in our distribution business
vertical.
Our Company was incorporated in 1981, and through the next several years, our
Company was involved in wholesaling and distribution of branded basic utility
footwear, and we had forayed into the retail business in 1993.
Our Company operates through two distinct business verticals, retail and
distribution, each with its predominantly own customer base, sale channels and
product range. Our retail business operates through our exclusive retail stores
catering to middle and upper middle income consumers in metros (including mini-
metros) and Tier I – Tier III cities, who primarily shop in high street stores and
malls, for fashionable products. Our distribution business operates through a wide
network of distributors catering to lower and middle income consumers in metros
and Tier I – Tier III cities, who primarily shop in multi-brand- outlets (“MBO”) for
functional products. We are also engaged in the business of institutional sales and
export of footwear.
Our Company is led by our Promoter, Chairman and Managing Director,
Siddhartha Roy Burman. With 34 years of experience of working with the
Company, Siddhartha Roy Burman has been instrumental in the growth of our
business. Our corporate Promoter is Knightsville Private Limited.
Our revenue from operations (gross) was ₹1,785.43 million (net revenue from
operations was ₹1,784.33 million), ₹6,217.30 million (net revenue from operations
was ₹6,212.49 million), ₹ 5,351.13 million (net revenue from operations was
7
₹5,345.21 million) and ₹ 4,618.40 million (net revenue from operations was ₹
4,601.58 million) in the three month period ended June 30, 2017, fiscals 2017,
2016 and 2015, respectively, in terms of our Restated Financial Statements.
The journey of more than 34 years has been more than just rewarding; it has been
Khadim’s much of its business philosophy and consumer approach, all of which
can still be traced to the hustle and bustle of the whole-sale market and the people
who once crowded our store’s back-alley.
While this association benefits our continued growth, it is our customers who
sustain our business; a fact Khadim’s has always been, and is still deeply
appreciative of. Thus, with the introduction of new trends in shopping in 1993,
Khadim’s transformed itself into a retailing point of interest, opening exclusive
outlets in quick succession to channel direct communication with customers and
improve from real-time feedback.
Subsequently, by the 2000s, realizing the need for expansion and organized
retailing, Khadim’s became a manufacturing and retailing corporate house,
bringing Sales, Finance, Supply Chain Management, Human Resources, Brand
Management, Legal, Systems & IT, Buying and Merchandising, as well as
Manufacturing under one umbrella.
Today Khadim’s enjoys nationwide prominence with 853 and 829 number of
Khadim’s branded exclusive retail stores, in the three month period ended June 30,
2017 and fiscal 2017, respectively, across 23 states and one union territory in India
and continue to deliver fashionable and comfortable shoes without a price tag that
ever gets too high. “Affordable fashion for everyone” remains at the core of our
business objective.
8
TABLE OF CONTENT
S. No. PARTICULARS PAGE

NO.
INTRODUCTION OF FUNDAMENTAL
CH – 1
ANALYSIS
CH - 2 INTRODUCTION OF COMPANIES
CH - 3
RESEARCH METHODOLOGY
CH – 4 ANALYSIS
CH - 5
DATA INTERPRETATION
CH - 6 FINDINGS
SUGGESTIONS & RECCOMENDATION

CH - 7
CH – 8
CONCLUSION
9
CH – 9 QUESTIONAIRE
CH-10
REFERENCE / BIBLIOGRAPHY
LIST OF TABLES & FIGURES

10
NAME OF FIGURE PAGE NO.
OPERATING PROFIT MARGIN
NET PROFIT MARGIN
RETURN ON EQUITY RATIO
DEBT TO EQUITY RATIO
INTEREST COVERAGE RATIO
11
CHAPTER-1
INTRODUCTION OF FUNDAMENTAL
ANAYLYSIS
INTRODUCTION OF FUNDAMENTAL ANAYLYSIS
12
A. Fundamental analysis is a stock valuation methodology that uses financial
and economic analysis to envisage the movement of stock prices. The
fundamental data that is analysed could include a company’s financial
reports and non-financial information such as estimates growth, demand for
products sold by the company, industry comparisons, economy-wide
changes, changes in government policies etc.
The outcome of fundamental analysis is a value (or a range of values) of the

stock of the company called its ‘intrinsic value’ (often called ‘price target’ in
fundamental analysts’ parlance).To a fundamental investor, the market price
of a stock tends to revert towards its intrinsic value. If the intrinsic value of a
stock is above the current market price, the investor would purchase the
stock because he believes that the stock price would rise and move towards
its intrinsic value. If the intrinsic value of a stock is below the market price,
the investor would sell the stock because he believes that the stock price is
going to fall and come closer to its intrinsic value.
To find the intrinsic value of a company, the fundamental analyst initially

takes a top-down view of the economic environment; the current and future
overall health of the economy as a whole. After the analysis of the macro-
economy, the next step is to analyse the industryenvironment which the firm
is operating in. One should analyse all the factors that givethe firm a
competitive advantage in its sector, such as, management experience,
historyof performance, growth potential, low cost of production, brand name
etc. The next step is to study the company and its products.Some of the
questions that should be asked while taking up fundamental analysis of a
companywould include:
1. What is the general economic environment in which the company is

operating?Is it conducive or obstructive to the growth of the company
and the industry inwhich the company is operating?
For companies operating in emerging markets like India, the economic

environmentis one of growth, growing incomes, high business confidence etc. As
opposed to this acompany may be operating in a developed but saturated market
with stagnant incomes,high competition and lower relative expectations of
incremental growth.
2. How is the political environment of the countries/markets in which the

companyis operating or based?
13
A stable political environment, supported by law and order in society leads to
companiesbeing able to operate without threats such as frequent changes to laws, ,
terrorism, nationalization etc. Stable political environment also means thatthe
government can carry on with progressive policies which would make doing
businessin the country easy and profitable.
3. Does the company have any core competency that puts it ahead of all the
othercompeting firms?
Some companies have patented technologies or leadership position in a particular

segment of the business that puts them ahead of the industry in general. For
example,Reliance Industries’ core competency is its low-cost production model
whereas Apple’scompetency is its design and engineering capabilities adaptable to
music players, mobilephones, tablets, computers etc.
4. What advantage do they have over their competing firms?
Some companies have strong brands; some have assured raw material supplies
whileothers get government subsidies. All of these may help firms gain a
competitive advantageover others by making their businesses more attractive in
comparison to competitors.For example, a steel company that has its own captive
mines (of iron ore, coal) isless dependent and affected by the raw material price
fluctuations in the marketplace.Similarly, a power generation company that has
entered into power purchase agreementsis assured of the sale of the power that it
produces and has the advantage of beingperceived as a less risky business.
5. Does the company have a strong market presence and market share? Or
does itconstantly have to employ a large part of its profits and resources in
marketingand finding new customers and fighting for market share?
Competition generally makes companies spend large amounts on advertising,

engagein price wars by reducing prices to increase market shares which may in turn
erodemargins and profitability in general. The Indian telecom industry is an
example of cutthroat competition eating into companies’ profitability and a
vigorous fight for marketshare. On the other hand there are very large, established
companies which have aleadership position on account of established, large market
share. Some of them havenear-monopoly power which lets them set prices leading
to constant profitability.
B. Why is fundamental analysis relevant for investing?
14
There are numerous ways of taking investment decisions in the market such as
fundamentalAnd technical analysis.
Let’s take a look at some reasons why fundamental analysis is used for stock-
picking in themarkets?
1. Efficient Market Hypothesis (EMH)
Market efficiency refers to a condition in which current prices reflect all the
publicly availableinformation about a security. The basic idea underlying market
efficiency is that competitionwill drive all information into the stock price quickly.
Thus EMH states that it is impossibleto ‘beat the market’ because stock market
efficiency causes existing share prices to alwaysincorporate and reflect all relevant
information. According to the EMH, stocks always tendto trade at their fair value
on stock exchanges, making it impossible for investors to eitherconsistently
purchase undervalued stocks or sell stocks at inflated prices. As such, it should
be impossible to outperform the overall market through expert stock selection or
market timingand that the only way an investor can possibly obtain higher returns
is by purchasing riskierinvestments. The EMH has three versions, depending on the
level on information available:
i. Weak form EMH :-
The weak form EMH stipulates that current asset prices reflect past price and
volumeinformation. The information contained in the past sequence of prices of a
security is fullyreflected in the current market price of that security. The weak form
of the EMH implies thatinvestors should not be able to outperform the market using
something that “everybody elseknows”. Yet, many financial researchers study past
stock price series and trading volume(using a technique called technical analysis)
data in an attempt to generate profits.
ii. Semi-strong form EMH :-
The semi-strong form of the EMH states that all publicly available information is
similarlyalready incorporated into asset prices. In other words, all publicly
available information isfully reflected in a security’s current market price. Public
information here includes not onlypast prices but also data reported in a company’s
financial statements, its announcements,economic factors and others. It also implies
that no one should be able to outperform themarket using something that
“everybody else knows”. The semi-strong form of the EMH thusindicates that a
company’s financial statements are of no help in forecasting future price
movements and securing high investment returns in the long-term.
15
iii. Strong form EMH :-
The strong form of the EMH stipulates that private information or insider
information too isquickly incorporated in market prices and therefore cannot be
used to reap abnormal tradingprofits. Thus, all information, whether public or
private, is fully reflected in a security’s currentmarket price. This means no long-
term gains are possible, even for the management of acompany, with access to
insider information. They are not able to take the advantage to profitfrom
information such as a takeover decision which may have been made a few
minutesago. The rationale to support this is that the market anticipates in an
unbiased manner,future developments and therefore information has been
incorporated and evaluated intomarket price in a much more objective and
informative way than company insiders can takeadvantage of.Although it is a
cornerstone of modern financial theory, the EMH is controversial and oftendisputed
by market experts. In the years immediately following the hypothesis of
marketefficiency (EMH), tests of various forms of efficiency had suggested that the
markets arereasonably efficient and beating them was not possible. Over time, this
led to the gradual
acceptance of the efficiency of markets. Academics later pointed out a number of
instancesof long-term deviations from the EMH in various asset markets which
lead to argumentsthat markets are not always efficient. Behavioral economists
attribute the imperfections infinancial markets to a combination of cognitive biases
such as overconfidence, overreaction,representative bias, information bias and
various other predictable human errors in reasoningand information processing.
Other empirical studies have shown that picking low P/E stockscan increase
chances of beating the markets. Speculative economic bubbles are an anomalywhen
it comes to market efficiency. The market often appears to be driven by
buyersoperating on irrational exuberance, who take little notice of underlying
value. These bubblesare typically followed by an overreaction of frantic selling,
allowing shrewd investors to buystocks at bargain prices and profiting later by
beating the markets. Sudden market crashesare mysterious from the perspective of
efficient markets and throw market efficiency to thewinds. Other examples are of
investors, who have consistently beaten the market over longperiods of time, which
by definition should not be probable according to the EMH. Anotherexample where
EMH is purported to fail are anomalies like cheap stocks outperforming themarkets
in the long term.
2. Arguments against EMH
Alternative prescriptions about the behaviour of markets are widely discussed these
days.Most of these prescriptions are based on the irrationality of the markets in,
16
either processingthe information related to an event or based on biased investor
preferences.
C. Steps in Fundamental Analysis
Fundamental analysis is the cornerstone of investing. In fact all types of investing

comprisestudying some fundamentals. The subject of fundamental analysis is also
very vast. However,the most important part of fundamental analysis involves
delving into the financial statements.This involves looking at revenue, expenses,
assets, liabilities and all the other financialaspects of a company. Fundamental
analysts look at these information to gain an insight intoa company’s future
performance.Fundamental analysis consists of a systemtatic series of steps to
examine the investmentenvironment of a company and then identify opportunities.
Some of these are:
a) Macroeconomic analysis - which involves analysing capital flows, interest
rate cycles,currencies, commodities, indices etc.
b.) Industry analysis - which involves the analysis of industry and the companies
that area part of the sector
c.) Situational analysis of a company
d.) Financial analysis of the company
e.) Valuation
17
CHAPTER – 2
INTRODUCTION OF COMPANIES
18
INTRODUCTION OF COMPANIES
ABOUT RELAXO FOOTWEAR :-
19
In 1976, two brothers Mukund Lal Dua & Ramesh Kumar Dua dreamed to take
their father’s footwear business to what Relaxo is today - one of the leading and
most popular footwear companies in India. A household name, literally.
With its headquarter in New Delhi and 8 manufacturing units, Relaxo produces
over 6 lacs pairs of footwear, every day. Relaxo footwear’s range boasts a fine
combination of comfort, style, and quality workmanship. A wide collection of
fashionable, colourful, comfortable and durable footwear for men, women and
children.
For a changing India. For a trendsetting India. Relaxo is geared to meet the quality
and choice expectations of a young India with its sub-brands such as Sparx,
Bahamas, Flite, Schoolmate and Relaxo Hawaii.
Our Certifications & Affiliations :-

Our continuous efforts have resulted the following certifications & affiliations to
our credit:
 ISO 9001: 2015 - Quality Management System

 ISO 14001: 2015 - Environmental Management System
 OHSAS 18001: 2007 - Occupational Health and Safety Assessment Series
 BIS/SATRA Manufacturing Standards
 India’s Best Corporate Brand 2016 at The Economic Times Best Corporate
Brands Summit
 CLE (Council for Leather Export)
 Sparx – India’s most trusted brand in Footwear Category as per “ Brand Trust
Report 2016 “
 Power Brand Of the Year 2015 by Plan Man Media
Quality, Environmental and Safety Policy
 Relaxo is committed to provide innovative value added quality products,

environmental protection and occupational health.
 Relaxo shall fulfill all compliance obligations, prevent environmental pollution,
conserve natural resources and prevent injury & ill health.
 This policy shall be communicated to all those who are working for and on behalf
of the organization and will be made available to all interested parties.
 The above commitments would be achieved through continual improvements and
by meeting set objectives and their targets.
Our corporate objectives :-

20
Quality, Environmental and Safety Objectives
 Create a culture for quality, environment protection & safety through effective
training.
 Design & develop innovative products through customer research and analysis.
 Meet and exceed customer expectation.
 Meet all compliance obligations.
 Improve quality through control of rejections, rework & 5S
 Utilize resources optimally (reduced energy consumption & effluent discharge,
control of emissions, water conservation & human resource efficiency).
 Improve occupational health & workplace safety.
 Comply to ISO 9001, ISO 14001 and OHSAS 18001 standards.
Core values we follow :-
The Core Values that Relaxo lives by are exclusive in their overpowering
simplicity and absolute effectiveness.
 Corporate Citizenship
 Honesty
 Transparency
 Employee Satisfaction
 Customer Orientation
 Team Orientation
Our Management System :-

Our Management Systems and Initiatives are based on some of the best practices in
the global industry today. We meticulously plan and execute each initiative to its
maximum potential, so as to leave no stone unturned on our journey to become a
market leader.
 Annual Business Planning objective setting

 Quarterly business review
 Capacity assessment and planning
 Monthly Business review through performance score card
 IMS- ISO 9001:2015, ISO 14001: 2015 & OHSAS 18001:2007
 Rolling out of ERP across Relaxo (SAP)
 Initiating continuous improvement through team projects
 Suggestion schemes (Parivartan)
21
ABOUT KHADIM INDIA :-
Khadim’s was established in December 3, 1981 as S.N. Footwear Industries Private

Limited, a private limited Company under the Companies Act, 1956, with the
Registrar of Companies. Through the next many years, the company was involved
in whole-selling and distribution of branded basic utility footwear. From 1993,
with its foray into retailing, Khadim’s emerged as a popular fashion footwear
brand, as also one of the leading organized footwear retailers in India. Today,
under the able leadership of Chairman and Managing Director, Mr. Siddhartha Roy
Burman, Khadim’s has grown to 853 and 829 ‘Khadim’s’ branded exclusive retail
stores outlets as on June 30, 2017 and March 31, 2017 respectively, in 23 states
and 1 Union Territory nationally.
Our Company is one of the leading footwear brands in India, with a two-pronged
focus on retail and distribution of footwear. We are the second largest footwear
retailer in India in terms of number of exclusive retail stores operating under the
‘Khadim’s’ brand, with the largest presence in East India and one of the top three
players in South India, in fiscal 2016. We also had the largest footwear retail
franchisee network in India in fiscal 2016. (Source: Technopak Report)
22
Our core business objective is ‘Fashion for Everyone’, and we believe that our
Company has established an identity as an ‘affordable fashion’ brand, catering to
the entire family for all occasions. As at June 30, 2017 and March 31, 2017, we
operated 853 and 829 ‘Khadim’s’ branded exclusive retail stores across 23 states
and one union territory in India, respectively, through our retail business vertical.
Further, we had a network of 377 and 357 distributors in the three month period
ended June 30, 2017 and fiscal 2017, respectively, in our distribution business
vertical.
Our Company was incorporated in 1981, and through the next several years, our
Company was involved in wholesaling and distribution of branded basic utility
footwear, and we had forayed into the retail business in 1993.
Our Company operates through two distinct business verticals, retail and
distribution, each with its predominantly own customer base, sale channels and
product range. Our retail business operates through our exclusive retail stores
catering to middle and upper middle income consumers in metros (including mini-
metros) and Tier I – Tier III cities, who primarily shop in high street stores and
malls, for fashionable products. Our distribution business operates through a wide
network of distributors catering to lower and middle income consumers in metros
and Tier I – Tier III cities, who primarily shop in multi-brand- outlets (“MBO”) for
functional products. We are also engaged in the business of institutional sales and
export of footwear.
Our Company is led by our Promoter, Chairman and Managing Director,
Siddhartha Roy Burman. With 34 years of experience of working with the
Company, Siddhartha Roy Burman has been instrumental in the growth of our
business. Our corporate Promoter is Knightsville Private Limited.
Our revenue from operations (gross) was ₹1,785.43 million (net revenue from
operations was ₹1,784.33 million), ₹6,217.30 million (net revenue from operations
was ₹6,212.49 million), ₹ 5,351.13 million (net revenue from operations was
₹5,345.21 million) and ₹ 4,618.40 million (net revenue from operations was ₹
4,601.58 million) in the three month period ended June 30, 2017, fiscals 2017,
2016 and 2015, respectively, in terms of our Restated Financial Statements.
OUR HISTORY
The journey of more than 34 years has been more than just rewarding; it has been
Khadim’s much of its business philosophy and consumer approach, all of which
can still be traced to the hustle and bustle of the whole-sale market and the people
who once crowded our store’s back-alley.
23
While this association benefits our continued growth, it is our customers who
sustain our business; a fact Khadim’s has always been, and is still deeply
appreciative of. Thus, with the introduction of new trends in shopping in 1993,
Khadim’s transformed itself into a retailing point of interest, opening exclusive
outlets in quick succession to channel direct communication with customers and
improve from real-time feedback.
Subsequently, by the 2000s, realizing the need for expansion and organized
retailing, Khadim’s became a manufacturing and retailing corporate house,
bringing Sales, Finance, Supply Chain Management, Human Resources, Brand
Management, Legal, Systems & IT, Buying and Merchandising, as well as
Manufacturing under one umbrella.
and continue to deliver fashionable and comfortable shoes without a price tag that
ever gets too high. “Affordable fashion for everyone” remains at the core of our
business objective.
Our Founder & Chairman Emeritus
“Surprisingly and thankfully as well, several hands supported me in my maiden

venture and I loved my business all the more.”
Lt. Shri S.P Roy Burman, also fondly remembered as ‘Barobabu’, was a visionary
par excellence. His pioneering spirit that believed in blending ‘intelligence with
imagination’ played a key role in carving the destiny of Khadim’s; a process of
transformation of a tiny single-shop entity to a colossus in footwear retailing with
more than 853 and 829 number of Khadim’s branded exclusive retail stores, in the
three month period ended June 30, 2017 and fiscal 2017, respectively, across the
country.
“More than being a manufacturer, I love to manufacture manufacturers.”
Lt. Shri Roy Burman was a father-figure for countless small shoe manufacturing
entrepreneurs with his dynamic and insightful perception of technology as well as
consumer psychology. It is his indomitable drive that helped Khadim’s become one
of the market leaders in organized footwear retailing in India.
Even in a country where exceptional entrepreneurs are not uncommon, Lt. Shri Roy
Burman stands out, not only for his business achievements but for his sensitivity
24
towards the needs of the teeming humanity around him. His missionary zeal to
build a business of stature was always tempered with the need to address social and
economic issues that Indian society was commonly plagued with.
Even today, as Khadim’s gears up to expand exponentially and deliver value to the
fashion-conscious and progressive young customers, Lt. Shri Roy Burman’s
humanitarian philosophy continues to guide and motivate us.
From the Desk of Chairman & Managing Director
Welcome to the World of Khadim’s - footwear manufacturers and retailers who

work based on a remarkably simple ideology: to make shoes that fit everyone, in
style, quality and price. This frankness of objective has made Khadim’s what it is
today; a people’s brand that delivers what it promises: fashion footwear that is not
only affordable, but comfortable and lasting as well.
Our journey awarded Khadim’s much of its business philosophy and consumer
approach. It helped established a strong connection with people at the most basic
levels of manufacturing, selling and buying shoes that continues to drive
Khadim’s’s success.
While this association benefits our growth, Khadim’s believes it is our customers
who sustain our business. With the introduction of new fashion trends in 1993,
Khadim’s felt the need to transform itself into a retailing point of interest, and open
exclusive outlets in quick succession to channel direct communication with
customers and improve from real-time feedback.
all of which has been possible due to an insightful management and a loyal
workforce that has displayed high regards for customer satisfaction at every step.
“Affordable fashion for everyone” remains at the core of our business.
BOARD OF DIRECTORS
Siddhartha Roy Burman is the Chairman and Managing Director of our Company
and is our individual Promoter. He holds a bachelor’s degree in Commerce from
the University of Calcutta. He is responsible for the overall strategic decision
making of our Company and provides leadership to all operations. He has been
associated with our Company since its incorporation and was appointed as the
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Managing Director in April 2005 and subsequently on November 26, 2012, he has
been re-designated as Chairman and Managing Director. He has 34 years of
experience in the footwear industry.
Ms. Namrata Ashok Chotrani holds a bachelor’s degree in Commerce from the
H. R. College of Commerce & Economics, Mumbai University, and a master’s
degree in business administration from INSEAD. She has been associated with
Fairwinds Asset Managers Limited since 2012 and has a total experience of over
nine years in the field of private equity and M&A advisory. Prior to joining
Fairwinds Asset Managers Limited, she was associated with KPMG. She had been
associated with the Company since last 4 (Four) Years particularly from September
20, 2013 till March 09, 2016 as Non-voting observer and from March 10, 2016 till
November 21, 2017 as nominee Director, representing Reliance Alternative
Investments Fund - Private Equity Scheme I.
Dr. Indra Nath Chatterjee is a Non-Executive, Independent Director of our

Company. He holds a Post-Graduate Diploma in Management from the Indian
Institute of Management, Calcutta and a Doctorate in Management from Symbiosis
International University. He is a Fellow member of the Institute of Company
Secretaries of India and a Fellow member of the Institute of Cost Accountants of
India. He has been associated with the Company since 2006 and has 42 years of
experience working in multi-national corporations, public sector undertakings, and
educational institutions. Prior to joining our Company, he has been associated
with Hinduja Group as Group President, Jindal Drilling & Industries Limited as
Director and the Oil and Natural Gas Corporation Limited as Director (Finance).
Further, he had also been associated with Tata Engineering and Locomotive
Company Limited (currently known as Tata Motors Limited), Indian
Airlines, Kamani Services Private Limited, Calcutta Business School, IFFCO-
Tokio General Insurance Company Limited and Pioneer Insurance Services
Limited.
Prof. (Dr.) Surabhi Banerjee is a Non-Executive, Independent Director of our

Company. She holds a master’s degree in arts from the University of Leeds and a
Doctorate in English from University of Calcutta. She has 37 years of experience as
an academician. Prior to joining our Company, she was associated with Netaji
Subhas Open University as the vice chancellor, with Gour Banga University as the
vice- chancellor, and with the Central University of Orissa as vice- chancellor.
Mr. Ritoban Roy Burman son of Mr. Siddhartha Roy Burman, Chairman and
Managing Director of the Company, is a graduate in Mass Communication from St.
Xavier’s College, Kolkata. He joined Khadim India Limited in 2013 as Manager-
26
Marketing and worked till 30th November 2017. He has gained good exposure in
various aspects of footwear marketing during his tenure with the Company.
Alok Chauthmal Churiwala is a third generation stockbroker and an Angel

Investor. He holds a Bachelor's degree in Commerce form H.R. College of
Commerce & Economics, Mumbai. He also holds a Diploma in Securities Law
from the Government Law College, Mumbai apart from executive learning
programs form IIM, Ahmedabad & Indian School of Business, Hyderabad. He has
a rich experience of over 20 years in the Indian Capital Markets.
Churiwala Securities Private Limited (CSPL) is spearheaded by Mr. Alok

Chauthmal Churiwala, whose focus and vision has helped the company to establish
itself as a prominent and respected player in the industry. He has been responsible
for starting the CDSL and NSE operations of the Churiwala Group. He was also
responsible for the CSPL's tie up with Larsen & Toubro and Trade.com for their
Internet venture (Lttrade.com).
He is the Former Vice-Chairman of the BSE Brokers Forum, which is an industry

representative body. He was also on the Board of ICSA (International Council for
Securities Association) as Asian representative and has attended their meetings in
Paris, Sydney, Mumbai and Stockholm. He also represented Indian Capital Markets
at ASF (Asian Securities Federation) at Seoul. Besides being an Ex-member of the
BSE Governing Board, he has been actively involved in various committees of the
exchange. He is on the advisory Board of ICCL (Indian Clearing Corporation Ltd).
He is a much sought after visiting faculty offering lectures on a wide spectrum of
subjects relating to Capital Markets in India. He is widely quoted in various
business publications viz. Economic Times, Business Standard, Dalal Street,
Financial Express and television media like NDTV Profit, Doordarshan, Zee
Business, Star News, Sahara, BBC and CNBC, CNN-IBN, etc.
AUDIT COMMITTEE
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Mauris pharetra rutrum ex
non condimentum. Praesent congue ex eget congue malesuada. Vivamus
elementum risus eu molestie finibus. Donec et nisl sed sapien ultrices auctor. Nulla
facilisi. Class aptent taciti sociosqu ad litora torquent per conubia nostra, per
inceptos himenaeos. Vivamus tristique rutrum nisl, non rutrum metus maximus ac.
Nulla varius hendrerit sodales. Ut eget maximus nunc. Morbi at elementum libero,
sit amet faucibus erat. Nulla ullamcorper gravida tincidunt.
Suspendisse eget neque ante. Aenean maximus non libero a laoreet. Vivamus at
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mauris sed diam fringilla porta eget vel erat. Integer scelerisque urna augue, semper
sodales purus mollis ut. Sed sed neque facilisis, viverra augue tempor, ornare dolor.
Donec iaculis massa ipsum, at feugiat magna condimentum nec. Suspendisse
potenti. In in mi ligula. In purus lacus, sagittis et mi et, luctus tempor nibh. Integer
auctor ex vitae quam aliquam placerat quis quis ex.
Mauris accumsan, sem ut aliquet ultrices, sem urna vehicula magna, ac lacinia nulla
sapien non eros. Proin vehicula fringilla nisl, eget maximus elit interdum sed. Cras
id lobortis odio. Donec sapien nulla, dapibus id nulla in, euismod faucibus neque.
Morbi laoreet urna quis turpis consequat, id semper magna imperdiet. Aenean eu
volutpat leo. Integer vitae nisi eros. Sed rutrum mi in sapien laoreet, ac vestibulum
mauris hendrerit. Nam at bibendum lacus. Nulla viverra dui nec nunc hendrerit,
vitae molestie risus congue. Quisque vel libero sagittis, fringilla mauris at, eleifend
arcu. Nam blandit orci ac purus egestas sollicitudin. Duis eget urna dui.
Pellentesque dignissim at nibh ut commodo.
NOMINATION AND COMPENSATIONS COMMITTEE
28
INDEPENDENT DIRECTORS COMMITTEE
CSR SUSTAINABILITY COMMITTEE
29
POLICY ON CODE OF CONDUCT
PREAMBLE
1. This Code of Conduct (“the Code”) shall be called ‘Code of Conduct’ for Board of
Directors and Senior Management personnel and all employees of ‘Khadim India
Limited’ and hereinafter referred to as “the Company”.
2. The Code has been framed in compliance with the regulation 17(5) & 46(2)(d) of
SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015 (“Listing
Regulations”) which stipulates that the Board of Directors of every listed company
shall lay down a code of conduct for all Board members and Senior Management
personnel of the Company.
3. The term “Senior Management” shall mean personnel of the Company who are
members of it’s core management team excluding the Board of Directors.
Normally, this would comprise of all members of management one level below the
executive directors, including all functional heads.
4. The code of conduct shall be posted on the website (www.khadims.com) of the
Company.
5. The conduct of directors should be in accordance with the articles of association of
the company but in no case should contravene the duties specified by the law.
6. Directors, being trustees of shareholders, have fiduciary relationship with them. As
such, the directors have fiduciary duties towards the company. The Companies Act,
30
2013 has codified these fiduciary duties which though were not explicitly stated
under the previous law, were implied in view of the fact that directors are in a
fiduciary relationship with the company and its members the duties of a director as
specified under section 166 of the Companies Act, 2013s
OBJECTIVE
A Code of Conduct has the purpose of being the central guide and reference for
employees in day to day decision making and functioning. The Code is meant to
reflect the organization’s purpose, mission, values and principles, and linking these
to the standards of professional conduct. The conduct of individuals, therefore,
should clearly reflect what the organization ‘stands for’ and how the organization
wishes to see itself projected to the outside world. A Code is an open and public
disclosure of how the organisation operates.
A Code will fulfil other functions. It will become a tool that encourages discussion
around ethical dilemmas, prejudices and grey areas that can arise during every day
working; it will provide the opportunity to create a positive public identity for the
organization that can raise levels of public confidence and trust. Corporate ethics
are about more than avoiding contravention of any law; they are about how we
behave towards each other and the outside world.
GENERAL GUIDELINE
Everybody associated with Khadim India Ltd is responsible for following the rules
and guidelines that build on Khadims’ basic values and that form attitudes we can
be proud of. At Khadim, everyone has to be involved in this and help to create a
sound corporate culture based on satisfaction and security.
Khadims’ guidelines for corporate ethics apply to members of the board of
directors, managers and other employees of Khadim as well as others acting on
behalf of Khadim India Limited. It is the line managers' responsibility to make sure
everybody is aware of, and complies with, these guidelines. As a Khadims’
employee, it is his/her duty to read and follow the guidelines. Those who infringe
Khadims’ rules and guidelines must be prepared to face the consequences that are
in line with the infringement's type and scope.
It is Khadims’ policy to comply with all applicable laws and governmental rules
and regulations. In the event that there are differences between such laws, rules and
regulations and the standards set out in the Code of Conduct, the highest standards
consistent with applicable local laws shall be applied. It is the personal
responsibility of each to adhere to these applicable standards, including those
relating to accounting and auditing matters.
31
THE POLICY
A. RELATION TO EMPLOYEES
Human rights
Khadim India Ltd respects the personal dignity, privacy and rights of each
individual employees interact with during the course of work and shall not in any
way cause or contribute to the violation or circumvention of human rights.
Working environment
Khadim India Ltd shall be a professional workplace with an inclusive working

environment. The employee shall act with integrity and treat with respect his/her
colleagues and others that he/she meet through his/her work.
Khadim India Ltd is opposed to discriminatory practices and shall do its utmost to
promote equality in all employment practices. No direct or indirect negative
discrimination shall take place or be allowed based on race, colour, caste, gender,
sexual orientation, age, disability, language, religion, legitimate political or other -
opinions, national or social origin, property, birth or other status. Khadim India Ltd.
does not tolerate degrading treatment towards any employee, such as mental or
sexual harassment or discriminatory gestures, language or physical contact that is
sexual, coercive, threatening, abusive or exploitative.
Occupational Health, Safety and Employee Security
Khadim India Ltd shall be a pioneer in the field of health, safety and employee
security to promote good health and safe working environment in compliance with
recognized standards. Employees share the responsibility for achieving this goal.
Khadim India Ltd. shall do its utmost to control hazards and take necessary
precautions to prevent accidents and occupational diseases.
Forced Labour
Any employment relationship with Khadim India Ltd shall be freely chosen and
free from threats. Khadim opposes the use of forced or compulsory labour,
including but not limited to exchange of labour for payment of debt. Any employee
shall be free to leave his/her employment as per the terms stated in his/her letter of
appointment. No one shall be required to deposit money, or similar in order to get
or keep their employment with Khadim India Ltd.
Child labour
32
Khadim India Ltd shall not employ or contract child labour as per the prevailing
law .
If the employee becomes aware of any employment situation in breach with the
standards set out above, he/she shall at once notify his/her immediate superior or
any other appropriate executive. The employment situation shall straight away be
remedied in the best interests of the child.
Loyalty, impartiality, Honesty & Integrity, conflict of interests and related
party transactions
Khadim India Ltd respects the individual employee's right to a private life and
private interests, but demands openness and loyalty to the company and the
company's interests. Employee shall not take actions or have interests that make it
difficult to perform his/her work objectively and effectively. Service to Khadim
India Ltd should never be subordinated to personal gain and advantage. Conflicts
of interest should, wherever possible, be avoided. Employee shall never take part in
or attempt to influence a decision or settlement if there is a conflict of interest or
other circumstances exist, which could give grounds to question one's impartiality.
All employee of Khadim India Ltd. including officers and directors, in discharging
their responsibilities should not intent to deceive or to gain undue advantage from
or to injure the interest or reputation of Khadim India Ltd. or it’s shareholders or
it’s creditors or any other person, whether or not there is any wrongful gain or
wrongful loss on the part of the employee. Even intentional concealment of fact or
misrepresentation should not be done.
Conflicts of interest could involve, but are not limited to, customers, suppliers,
contractors, present or prospective employees, competitors or outside business
activities. Anything that would present a conflict for him/her would likely also
present a conflict if it is related to a member of his/her family.
Should a conflict of interest arise employee shall on his/her own initiative evaluate
and notify his/her immediate superior or the Khadim India Ltd Compliance
Manager of his/her partiality or the conflict of interest.
Confidentiality
Employee agrees at all times during the term of his/her employment and thereafter,
to hold in strictest confidence, and not to use, except for the benefit of the
Company, or to disclose to any person, firm or corporation without written
authorization of the Management, any Confidential Information of the Company.
“Confidential Information” means any proprietary information of the Company,
technical data, trade secrets or know-how, including, but not limited to, research,
product plans, products, services, customer lists and customers (including, but not
33
limited to, customers of the Company on whom the employee called or with whom
he/she became acquainted during the term of his/her employment), markets,
software, developments, inventions, processes, formulae, technology, designs,
drawings, engineering, hardware configuration information, marketing, finances or
other business information disclosed to him/her by the Company either directly or
indirectly in writing, orally or by drawings or observation of parts or equipment.
Employees further agree and recognize that the Company has received, and in the
future will receive from third parties their confidential or proprietary information
subject to a duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes. Employee agrees to hold
all such confidential or proprietary information in the strictest confidence and not
to disclose it to any person, firm or corporation or to use it, except as necessary in
carrying out work for the Company, this being consistent with the Company’s
agreement with such third party.
Employee agrees that all Confidential Information is the property of the Company
and agrees to return to the Company all confidential information in his/her
possession, in whatever form, to the Company whenever called upon to do so.
Conflicting Employment
During the term of the employment with the Company, the employee shall not
engage in any other employment, occupation, consulting or other business activity
nor shall he/she engage in any other activities that conflict with his/her obligations
to the Company.
The employee agrees that subject to any regulations issued by the Company from
time to time which may apply to him/her, he/she will not receive or obtain directly
or indirectly any discount, rebate, commission or other inducement in respect of
any sale or purchase of any goods or services effected or other business transacted
(whether or not by him/her ) by or on behalf of the Company or an associated
company and if he/she (or any firm or company in which he/she is directly or
indirectly engaged, concerned or interested) obtains any such discount, rebate,
commission or inducement, he/she will immediately account to the Company for
the amount so received or the amount received by such firm or company.
Conflict of interest
The Company will issue certain conflict of interest guidelines contained herein
below. Employees agree to diligently adhere to these guidelines of the Company.
It is the policy of the Company to conduct its affairs in strict compliance with the
letter and spirit of the law and to adhere to the highest principles of business ethics.
Accordingly, all officers, employees and independent contractors must avoid
activities, which are in conflict, or give the appearance of being in conflict, with
34
these principles and with the interests of the Company. The following are
potentially compromising situations, which must be avoided. Any exceptions must
be reported to the Management and written approval for continuation in this regard
must be obtained.
1. Revealing Confidential Information to outsiders or misusing Confidential
Information. Unauthorized divulging of information is a violation of this policy
whether or not for personal gain and whether or not harm to the Company is
intended.
2. Accepting or offering substantial gifts, excessive entertainment, favours or
payments, which may be deemed to constitute undue influence or otherwise be
improper or embarrassing to the Company.
3. Participating in civic or professional organizations that might involve divulging
Confidential Information of the Company.
4. Initiating or approving any form of personal or social harassment of employees.
5. Investing or holding outside directorship in suppliers, customers, or competing
companies, including financial speculations, where such investment or directorship
might influence in any manner a decision or course of action of the Company.
6. Improperly using or disclosing to the Company any proprietary information or
trade secrets of any former or concurrent employer or other person or entity with
whom obligations of confidentiality exist.
7. Unlawfully discussing prices, costs, customers, sales or markets with competing
companies or their employees.
8. Making any unlawful agreement with distributors with respect to prices.
9. Improperly using or authorizing the use of any inventions, which are the subject of
patent claims of any other person or entity.
10.Engaging in any conduct, which is not in the best interests of the Company.
Employees agree to take every necessary action to ensure compliance with these
guidelines and to bring problem areas to the attention of higher management for
review. Violations of this conflict of interest policy may result in discharge without
warning and would be deemed to be termination for Cause.
Political activity
Khadim India Ltd does not give support to political parties, either in the form of
direct financial support or through indirect political contributions. No employee
shall, in the course of his/her employment, provide by way of either monetary
contributions or gifts of any kind, any support whatsoever to a political party.
35
B. RELATIONS TO CUSTOMERS, SUPPLIERS, COMPETITORS &
PUBLIC AUTHORITIES
General
Customers shall be met with insight, respect and understanding. Employees shall
always try to fulfil the needs of the customer in the best possible manner, within the
guidelines for corporate ethics that apply to the business. Customer's personal
information shall be protected in accordance with the relevant laws on protection of
personal data.
Suppliers shall be treated impartially and justly. Suppliers in competition for
contracts with Khadim India Ltd shall at all times be able to trust Khadim India
Ltd's selection processes. When selecting suppliers, employees shall therefore
follow the company's established guidelines and routines at all times.
Khadim India Ltd's competitiveness in the market is based on good products and
services at the right price. Employees shall always meet the company's competitors
in an honest and professional manner.
Public authorities shall be met in an appropriate and open manner. Public
information about the company shall only be supplied by Khadim India Ltd's
management or by the person responsible for public communications, unless
otherwise agreed.
Competition
Khadim India Ltd wants fair and open competition in all markets, both nationally
and internationally. Under no circumstances shall employee cause or be part of any
breach of general or special competition regulations, such as illegal cooperation on
pricing, illegal market sharing or any other behaviour that is in breach of relevant
competition laws.
Corruption and bribery
Khadim India Ltd is firmly opposed to all forms of corruption. Employees shall
never offer or accept illegal or inappropriate gifts (monetary or otherwise) or other
remuneration in order to achieve business or personal advantages. Nor shall he/she
use agreements with middlemen to channel payment to anyone in such a way that
may be interpreted as corruption.
Gifts and business courtesies
Employees shall always exercise caution in relation to offering or accepting gifts

and business courtesies. He/she shall not accept gifts or other remuneration if there
36
is reason to believe that its purpose is to influence business decisions. If in doubt,
always consult his/her immediate superior or the Khadim India Ltd Compliance
Manager.
Money laundering
Khadim India Ltd is firmly opposed to all forms of money laundering and shall
take steps to prevent its financial transactions from being used by others to launder
money.
C. RELATION TO ENVIORNMENT
Khadim India Ltd shall be at the forefront in protecting the environment and
undertake initiatives to promote greater environmental responsibility.
Real estate and movables
Khadim India Ltd's property and assets, e.g. buildings and equipment, shall be
managed and safeguarded in an appropriate manner. Employee shall observe the
company's security requirements concerning access to and use of the company's
facilities, IT resources and access to electronic resources and documents. The
company's equipment and property may be used for personal purposes only if
expressly agreed in connection with the employment or as a result of Khadim India
Ltd's rules and guidelines. Any incidence of burglary / theft or otherwise which
resulted to loss or damage to any property or assets of the company shall be
reported immediately to the Senior Management personnel including
Administration and Internal Audit & Insurance Departments for appropriate legal
and other steps.
Inventions and Intellectual property
Intellectual property such as know-how, methodology, concepts and ideas are

important to Khadim India Ltd's success in the market. If the employees are
involved with the company's intellectual property he/she shall protect and
administer it in the interest of the company. He/she shall also respect the
intellectual property rights of others and seek to avoid contravention of such rights.
Unless otherwise specified by law or orders from public authorities, he/she shall
not make corporate intellectual property, corporate secrets or other important
information available to third or unauthorised persons before seeking permission
from Khadim India Ltd’s Compliance Manager and without obtaining a signed
confidentiality agreement.
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INFORMATION HANDLING AND DATA PROTECTION
Information, communication and contact with the media
All information from Khadim India Ltd shall be reliable and correct, and maintain
high professional and ethical standards. All of those who, through their work, deal
with information about the company are responsible for meeting these standards
and authorised by the company can only do this.
Protection of personal data
Khadim India Ltd’s processing of personal data shall be subject to the care and
awareness which is required according to applicable law and regulations and
relevant for information that might be sensitive, regardless whether the data refer to
customers, employees or others. Subject to compliance with the general principle
stated above, processing of personal data should be limited to what is needed for
operational purposes, efficient customer care, relevant commercial activities and
proper administration of human resources.
D. INTERNAL CONTROL, ACCOUNTING AND REPORTING
Expertise and authority
All decisions shall be made at the appropriate level in accordance with the
applicable regulations concerning authority. The employee may only obligate the
company vis-à-vis others if he/she holds such special authority, and must at all
times keep within the limits of his/her authority.
Internal control
Khadim India Ltd shall have good internal controls that ensure that the company's
goals and strategies are fulfilled and complied with. Internal controls shall ensure
that the business processes are at all times efficient and carry an acceptable level of
risk, that physical and intangible assets are safeguarded and utilised, that financial
information is correct and timely, and that laws, regulations and guidelines are
followed. Any identified control lapse or weakness shall be brought to the
knowledge of Senior Management personnel for timely rectification. Internal
controls are the primary responsibility of management, but the adherence of
implemented internal control is the responsibility of individual employees in
discharging their responsibility.
Accounting
Khadim India Ltd's accounting shall ensure that all transactions are correctly
38
registered in accordance with applicable law and good accounting practice.
Employees shall follow the company's regulations concerning the registration of
transactions and proper documentation and they share the responsibility for
ensuring that business transactions are fully and correctly reported and
documented, and in accordance with applicable accounting practices and standards.
The annual accounts and interim accounts shall be in accordance with the law and
good accounting practice.
Reporting and disclosure
Khadim India Ltd's reporting shall in all material respects comply with applicable
laws and regulations and be full, fair, accurate, timely and understandable.
E. HANDLING OF INFRINGEMENTS
As soon as an employee becomes aware of an infringement of Khadim India Ltd's
rules and guidelines, he/she should raise this issue with his/her immediate superior.
If this is not possible he/she should report the infringement directly to the
“Competent Authority” as defined in para 3(e) of the “Vigil Mechanism / Whistle
Blower Policy” of Khadim India Ltd. i.e CFO, VP-HR, Company Secretary &
Head Legal, Head-Internal Audit, GM-Commercial or send e-mail directly to
‘vigilance@khadims.com’. Failure to do so is itself a breach of this Code.
F. REPORTING TO KHADIM INDIA LTD.

Company Secretary and Head Legal
Mr Abhijit Dan
Email: compliance@khadims.com
Reporting to the Board of Directors:
The Board of Directors:
Kankaria Estate, 5th Floor, 6, Little Russel Street, Kolkata – 700071.

Khadim India Ltd does not allow reprisals of any kind against those who, in good
faith, report an infringement or suspicion of an infringement of the rules or
guidelines.
Any questions relating to how this Code should be interpreted or applied should be
addressed to the Khadim India Ltd Compliance Manager.
39
The Board of Directors shall take all action it considers appropriate to investigate
any violations reported to it. If a violation has occurred, Khadim India Ltd will
take such disciplinary or preventive action, as it deems appropriate, after
consultation with the Board of Directors.
Any changes to or waivers of this Code for executive officers or directors or other
employees of Khadim India Ltd may only be made by the Board of Directors and
must be promptly disclosed.
The Company will monitor this ‘Code of Conduct’ periodically to ensure strict
compliance and any idea or suggestion for improvements or needed amendment to
this ‘Code of Conduct’ can only be considered and incorporated with the prior
approval from the Board of Directors of Khadim India Ltd.
G. RELATION TO DIRECTORS
Without limiting the generality of the duties stated in the Companies Act, 2013, the
Listing Regulations, SEBI (Prohibition of Insider Trading) Regulations, 2015 and
the Code of Conduct for Prevention of Insider Trading framed thereunder and other
applicable laws, the duties of a director are as under:
In terms of Section 166 of the Companies Act, 2013, a director shall:
1. act in accordance with the articles of the Company;
2. act in good faith in order to promote the objects of the Company for the benefit of
its members as a whole, and in the best interests of the Company, its employees,
the shareholders, the community and for the protection of environment;
3. exercise his duties with due and reasonable care, skill and diligence and shall
exercise independent judgment;
4. not involve in a situation in which he may have a direct or indirect interest that
conflicts, or possibly may conflict, with the interest of the Company;
5. not achieve or attempt to achieve any undue gain or advantage either to himself or
to his relatives, partners, or associates and if such director is found guilty of making
any undue gain, he shall be liable to pay an amount equal to that gain to the
Company;
6. Shall not assign his office and any assignment so made shall be void.
H. NON-EXECUTIVE DIRECTOR
A Non-Executive Director (NED) is a member of the Board of Directors of the
Company who does not form part of the executive management team. He is not
involved in the day-to-day running of business but monitors the executive activity
40
and contributes to the development of strategy. It is clarified that an Independent
Director of the Company as such is a Non-Executive Director of the Company, and
accordingly, this Code also applies to Independent Directors of the Company.
Non-Executive Directors will comply with all applicable laws and regulations of all
the relevant regulatory and other authorities as may be applicable to such Directors
in their individual capacities, and be committed to maintaining high standards of
integrity in every sphere of activity.
Non-Executive Directors will safeguard the confidentiality of all information
received by them by virtue of their position and shall promptly report.
41
CHAPTER – 3
42
Types of Research Methods
Business research methods can be defined as “a systematic ad scientific procedure
of data collection, compilation, analysis, interpretation, and implication pertaining
to any business problem”. Types of research methods can be classified into several
categories according to the nature and purpose of the study and other attributes. In
methodology chapter of your dissertation, you are expected to specify and discuss
the type of your research according to the following classifications.
General Classification of Types of Research Methods :-

Types of research methods can be broadly divided into
two quantitative and qualitativecategories.
Quantitative research “describes, infers, and resolves problems using numbers.

Emphasis is placed on the collection of numerical data, the summary of those data
and the drawing of inferences from the data”.
Qualitative research, on the other hand, is based on words, feelings, emotions,

sounds and other non-numerical and unquantifiable elements. It has been noted that
“information is considered qualitative in nature if it cannot be analysed by means of
mathematical techniques. This characteristic may also mean that an incident does
not take place often enough to allow reliable data to be collected”.
Types of Research Methods According to Nature of the Study :-

Types of the research methods according to the nature of research can be divided
into two groups: descriptive and analytical. Descriptive research usually involves
surveys and studies that aim to identify the facts. In other words, descriptive
research mainly deals with the “description of the state of affairs as it is at present”,
and there is no control over variables in descriptive research.
Analytical research, on the other hand, is fundamentally different in a way that “the
researcher has to use facts or information already available and analyse these in
order to make a critical evaluation of the material”.
Types of Research Methods According to the Purpose of the Study :-

According to the purpose of the study, types of research methods can be divided
into two categories: applied research and fundamental research. Applied research is
also referred to as an action research, and the fundamental research is sometimes
43
called basic or pure research. The table below summarizes the main differences
between applied research and fundamental research. Similarities between applied
and fundamental (basic) research relate to the adoption of a systematic and
scientific procedure to conduct the study.
Applied Research Fundamental Research
§ Aims to solve a problem by adding

to the field of application of a discipline
§ Tries to eliminate the theory by adding
to the basics of a discipline § Often several disciplines work
together for solving the problem
§ Problems are analysed from the point
§ Often researches individual cases
of one discipline
without the aim to generalise
§ Generalisations are preferred
§ Aims to say how things can be
§ Forecasting approach is implemented changed
§ Assumes that other variables do not § Acknowledges that other variables
change are constant by changing
§ Reports are compiled in a language of § Reports are compiled in a common
technical language of discipline language
Differences between applied and fundamental research
Types of Research Methods according to Research Design :-
On the basis of research design the types of research methods can be divided into
two groups – exploratory and conclusive. Exploratory studies only aim to explore
the research area and they do not attempt to offer final and conclusive answers to
research questions. Conclusive studies, on the contrary, aim to provide final and
conclusive answers to research questions.
Table below illustrates the main differences between exploratory and conclusive
research designs:
Exploratory research Conclusive research
Loosely structured in Well structured and

Structure desing systematic in design
44
Have a formal and
Are flexible and definitive methodology
investigative in that needs to be followed
Methodology methodology and tested
Most conclusive
researches are carried out
Do not involve testing of to test the formulated
Hypotheses hypotheses hypotheses
Findings might be topic

specific and might not
have much relevance Findings are significant as
outside of researcher’s they have a theoretical or
Findings domain applied implication
Main differences between exploratory and conclusive research.
In this research, I am going to use quantitative research and with its help we
will compare two companies.
45
CHAPTER-4
ANALYSIS
46
ANALYSIS
In this, data collected are of two types which are following :
1) Primary Data : Primary data is data which is collected for first type. And
primary data can be collected from various different methods or sources which are
following:-
i. Personal Interview.
ii. Observation Method.
iii. Questionnaire Method.
iv. Schedule Method.
2) Secondary Data : Secondary datais that datawhich has been already collected
earlier.Secondary data can be collected from the following sources :-
i. Collected from government publications.

ii. Collected from newspaper or magazines.
iii. Collected from internet or private corporate publications.
Now I am going to use purely secondary data for the fundamental analysis of
Relaxo Footwear Ltd.
Firstly we’ll study about important Ratios in fundamental analysis with

ragards to Relaxo’s data (figures are mentioned in crores):-
Data for the ratios are taken from the following Final Statement of
Relaxofoorwear
47
48
49
50
1. Profit Margin Analysis :-
In the income statement, there are four levels of profit or profit margins – gross
profit,operating profit, pre-tax profit and net profit. The term “margin” can
apply to the absolute number for a given profit level and/or the number as a
percentage of net sales/revenues.Profit margin analysis uses the percentage
calculation to provide a comprehensive measure of a company’s profitability on
a historical basis (3-5 years) and in comparison to peer companies and industry
benchmarks.
Basically, it is the amount of profit (at the gross, operating, pre-tax or net
income level) generated by the company as a percentage of the sales generated.
The of margin analysis is to detect consistency or positive/negative trends in a
company’s earnings. Positive profit margin analysis translates into positive
investment quality. To a large degree, it is the quality, and growth, of a
company’s earnings that drive its stock price. Various profit margins are
fo0llowing :
i. Operating Profit Margin :-
By subtracting selling, general and administrative, or operating expenses from a

company’sgross profit number, we get operating income. Management has much
more control overoperating expenses than its cost of sales outlays. Thus, investors
need to scrutinize theoperating profit margin carefully
Positive and negative trends in this ratio are, for the mostpart, directly attributable
to management decisions. A company’s operating income figure isoften the
preferred metric (deemed to be more reliable) of investment analysts, versus its net
income figure, for making inter-company comparisons and financial projections.
OPM = Operating Profit/ Net Sales = 244.03*100/1734.44 = 14.07%, which is a

healthy return for Relaxo and
And for Khadim India =258.21*100/5345.21 = 4.8%, which is very low.
ii. Net Profit Margin :-
Often referred to simply as a company’s profit margin, the so-called bottom line is
the mostoften mentioned when discussing a company’s profitability. While
undeniably an importantnumber, investors can easily see from a complete profit
margin analysis that there are several income and expense operating elements in an
51
income statement that determine a net profit margin. It behoves investors to take a
comprehensive look at a company’s profit margins one a systematic basis.
NPM = 121.75*100/1734.44 = 7.02%, which is on increasing year by year for

relaxo.
And for Khadim India = 252.44*100/5345.21 = 4.72% which is again a low ratio.
2. Return On Equity :-
This ratio indicates how profitable a company is by comparing its net income to its
averageshareholders’ equity. The return on equity ratio (ROE) measures how much
the shareholders earned for their investment in the company. The higher the ratio
percentage, the more efficient management is in utilizing its equity base and the
better return is to investors.
ROE = Net income / Average Shareholder’s Equity
Net income = 128.28

Shareholder’s equity for year 2015 = 367.82
Shareholder’s equity for year 2016 = 467.98
Average shareholder’s equity =(367.82 + 467.98)/2 = 423.90
ROE = 128.28*100/423.90 = 28.37%, that is a very good return for a shareholder

of Relaxo. No any security or any saving account or any fixed deposite can give
you that much return.
And for Khadim it is, 16%, it is okay but less thenRelaxo.
3. Debt-Equity Ratio :-
The debt-equity ratio is another leverage ratio that compares a company’s total
liabilities toits total shareholders’ equity. This is a measurement of how much
suppliers, lenders, creditors and obligors have committed to the company versus
what the shareholders have committed.
To a large degree, the debt-equity ratio provides another vantage point on a

company’s leverage position, in this case, comparing total liabilities to
shareholders’ equity, as opposed to total assets in the debt ratio. Similar to the debt
52
ratio, a lower the percentage means that a company is using less leverage and has a
stronger equity position.
D/E Ratio = Total debt liability/Shareholder’s equity = 202.60/479.98 = 0.42,

which means debt liability of relaxo is less then half of its equity.
And Khadim India has 0.57 which is greater than Relaxo and it is a bad reflaxion.
4. Interest Coverage Ratio
The interest coverage ratio is used to determine how easily a company can
pay interestexpenses on outstanding debt. The ratio is calculated by dividing
a company’s earningsbefore interest and taxes (EBIT) by the company’s
interest expenses for the same period.The lower the ratio, the more the
company is burdened by debt expense. When a company’sinterest coverage
ratio is only 1.5 or lower, its ability to meet interest expenses may
bequestionable.
Interest Coverage ratio = EBIT/Interest = 193.96/22.89 = 8.47, which tells that

Relaxo can pay 8 times interest from its income in present time which is a good
sign of a growing company. Whereas Khadim has 4.01 times ratios.
5. Price / Earnings Ratio

The P/E ratio (price-to-earnings ratio) of a stock (also called its “P/E”, or simply
“multiple”) is a measure of the price paid for a share relative to the annual net
income or profit earned by the firm per share. It is a financial ratio used for
valuation: a higher P/E ratio means that investors are paying more for each unit of
net income, so the stock is more expensive compared to one with lower P/E ratio.
The P/E ratio has units of years, which can be interpreted as “number of years of
earnings to pay back purchase price”, ignoring the time value of money. In other
words, P/E ratio shows current investor demand for a company share. The
reciprocal of the PE ratio is known as the earnings yield. The earnings yield is an
estimate of expected return to be earned from holding the stock.
Price-to-earnings ratio is popular in the investment community. Earnings power is

the primary determinant of investment value.
PE = Market Price per Share / Earnings Per Share
There are a number of variants on the basic PE ratio in use. They are based upon
how theprice and the earnings are defined.
53
Price: is usually the current price is sometimes the average price for the year
Earnings Per Share (EPS):
a.) earnings per share in most recent financial year.
b.) earnings per share in trailing 12 months (Trailing PE).
c.) forecasted earnings per share next year (Forward PE).
d.) forecasted earnings per share in future year.
P/E = 493.30 (current market price)/10.02(EPS) = 48.79 for relaxo

For khadim = 451/21 = 21.47 it is on buying zone
Now on the basis of these ratios we’ll study a analysis named DUPONT
analysis:
Du-Pont Analysis
The DuPont ratio can be used as a compass in the process of assessing financial
performance of the company by directing the analyst toward significant areas of
strength and weakness evident in the financial statements.
The DuPont ratio is calculated as follows:
ROE = NET PROFIT MARGIN* TOTAL ASSET TURNOVER *

FINANCIAL LEVERAGE
ROE =(NET INCOME/SALE)*(SALES/AVERAGE ASSETS)*(AVERAGE

ASSET/ AVERAGE EQUITY)
The ratio provides measures in three of the four key areas of analysis, each
representing acompass bearing, pointing the way to the next stage of the
investigation.
The DuPont Ratio Decomposition
The DuPont ratio is a good place to begin a financial statement analysis because it
measuresthe return on equity (ROE). A for-profit business exists to create wealth
for its owner(s). ROE is, therefore, arguably the most important of the key ratios,
since it indicates the rate at which owner wealth is increasing. The three
54
components of the DuPont ratio, as represented in equation, cover the areas of
profitability, operating efficiency and leverage.
We have already studied about profitability ratio. Let us study about Toptal Assets
Turnover and Financial Leverage.
NET PROFIT MARGIN = 7.02%
Total Asset Turnover
The total asset turnover (TAT) ratio measures the degree to which a firm generates
sales with its total asset base. It is important to use average assets in the
denominator to eliminate bias in the ratio calculation. Financial ratio bias is
commonly present when combining items from both the balance sheet and income
statement.
For example, TAT uses income statement sales in its numerator and balance sheet
assets in the denominator. Income statement items are flow variables measured
over a time interval, while balance sheet items are measured at a fixed point in
time. In cases where the firm has been involved in major change, such as an
expansion project, balance sheet measures taken at the end of the year may
misrepresent the amount of assets available and/or in use over the course of the
year. Taking a simple average for balance sheet items (i.e., ((beginning +
ending)/2)) will control for at least some of this bias and provide a more accurate
and meaningful ratio. The limiting assumption is that the change in the balance
sheet occurred evenly over the course of the year, which may not always be the
case.
Total Asset Turnover = Sales/ Average Assets

Sales= 1734.44
Total asset for year 2015 = 578.80
Total asset for year 2016 = 682.57
Average asset = (578.80 + 682.57)/2 = 630.685
TAT = 1734.44/630.685 = 2.75
The Financial Leverage

Leverage ratios measure the extent to which a company relies on debt financing in
its capital structure. Debt is both beneficial and costly to a firm. The cost of debt is
lower than the cost of equity, an effect which is enhanced by the tax deductibility
of interest payments in contrast to taxable dividend payments and stock
repurchases. If debt proceeds are invested in projects which return more than the
55
cost of debt, owners keep the residual, and hence, the returnon equity is “leveraged
up.” The debt sword, however, cuts both ways. Adding debt createsa fixed payment
required of the firm whether or not it is earning an operating profit, andtherefore,
payments may cut into the equity base. Further, the risk of the equity position
isincreased by the presence of debt holders having a superior claim to the assets of
the firm.The leverage multiplier employed in the DuPont ratio is directly related to
the proportion of debt in the firm’s capital structure. The measure, which divides
average assets by average equity, can be restated in two ways, as follows:
FINANCIAL LEVERAGE = AVERAGE ASSET/ AVERAGE EQUITY
AVERAGE ASSET = 630.685
EQUITY FOR YEAR 2015 = 367.82
EQUITY FOR YEAR 2016 = 479.98
AVERAGE EQUITY =(367.82 + 479.98)/2 = 423.9
FINANCIAL LEVERAGE = 630.685/423.9 = 1.48
Combination and Analysis of the Results

Once the three components have been calculated, they can be combined to form the
ROE, as follows:
ROE = 7.02*2.75*1.48 = 28.57, which is near to ROE we have already calculated.

So, this analysis says that if these above three avtivities affect the ROE of the
company.
Secondly, we’ll study about top-down method of valuation:-
Top-Down Valuation (EIC Analysis)
1) Economy
The stock market does not operate in a vacuum. It is an integral part of the whole
economyof a country. To gain an insight into the complexities of the stock market
one needs todevelop a sound economic understanding and be able to interpret the
impact of importanteconomic indicators, which may be studied to assess the
national economy as a whole. Theleading indicators predict what is likely to
happen to an economy.
56
Perfect examples of leading indicators are the unemployment position, rainfall and
agricultural production, fixed capital investment, corporate profits, money supply,
credit position and the index of equity share prices. An overall growing or a
contracting economy affects every industry in the country positively or negatively.
One can seldom find flourishing industries in an otherwise stagnant economy.
Thus, understanding economy and capital flows, interest rate cycles and currency
fluctuations, etc. is very important as it impacts the stock prices.
Economic Indicators
An economic indicator (or business indicator) is a statistic about the economy.

Economicindicators allow analysis of economic performance and predictions of
future performance.Economic indicators include various indices, earnings reports
and economic summaries, suchas unemployment, housing starts, consumer price
index (a measure for inflation), industrialproduction, bankruptcies, Gross Domestic
Product, broadband internet penetration, retailsales, stock market prices, money
supply changes etc. Economic indicators are primarilystudied in a branch of
macroeconomics called “business cycles”. Economic Indicators can haveone of
three different relationships to the economy:
a.) Procyclic: A procyclic (or procyclical) economic indicator is one that moves
in the
same direction as the economy. Therefore, if the economy is doing well, this
number
is usually increasing, whereas if we are in a recession this indicator is decreasing.
The
Gross Domestic Product (GDP) is an example of a procyclic economic indicator.
b.) Counter cyclic: A counter-cyclic (or countercyclical) economic indicator is

one that
moves in the opposite direction as the economy. The unemployment rate gets larger
as the economy gets worse so it is a counter-cyclic economic indicator.
c.) Acyclic: An acyclic economic indicator is one that is not related to the health
of the
economy and is generally of little use. They have little or no correlation to the
business
cycle: they may rise or fall when the general economy is doing well, and may rise
or
57
fall when it is not doing well.Economic indicators fall into three categories:
leading, lagging and coincident.
Leading economic indicators are indicators which change before the economy
changes. Stockmarket returns are a leading indicator, as the stock market usually
begins to decline beforethe economy declines and they improve before the
economy begins to pull out of a recession.
Baltic Dry Index, an index that tracks bulk dry freight rates across the world is
another leadingindicator and indicates a slowdown in the bookings for bulk dry
carriers with its fall and thusindicating a subsequent slowdown in the international
trade. Leading economic indicators arethe most important type for investors as they
help predict what the economy will be like inthe future.
A lagging economic indicator is one that does not change direction until a few
quarters after
the economy does. The unemployment rate is a lagged economic indicator as
unemploymenttends to increase for 2 or 3 quarters after the economy starts to
improve.
Coincident indicators are those which change at approximately the same time and
in thesame direction as the whole economy, thereby providing information about
the current stateof the economy. Personal income, GDP, industrial production and
retail sales are coincidentindicators. A coincident index may be used to identify,
after the fact, the dates of peaks andtroughs in the business cycle.
Many different groups collect and publish economic indicators in different

countries. In
the U.S. the collection of economic indicators is published by the United States
Congress.Their Economic Indicators are published monthly and are available for
download in PDF andtext formats. The indicators fall into seven broad categories.
Each of the statistics in thesecategories helps create a picture of the performance of
the economy and how the economy islikely to do in the future.
• Total Output, Income, and Spending
These tend to be the broadest measures of economic performance and include such
statistics as the Gross Domestic Product which is used to measure economic
activity andthus is both procyclical and a coincident economic indicator. The
Implicit Price Deflatoris a measure of inflation. Inflation is procyclical as it tends to
rise during booms andfalls during periods of economic weakness. Measures of
58
inflation are also coincidentindicators. Consumption and consumer spending are
also procyclical and coincident.
• Employment, Unemployment, and Wages
The unemployment rate is a lagged, countercyclical statistic. The level of civilian

employment measures how many people are working so it is procyclic. Unlike the
unemployment rate it is a coincident economic indicator.
• Production and Business Activity
These statistics cover how much businesses are producing and the level of new
construction in the economy. Changes in business inventories is an important
leadingeconomic indicator as they indicate changes in consumer demand. New
constructionincluding new home construction is another procyclical leading
indicator which is watchedclosely by investors. A slowdown in the housing market
during a boom often indicatesthat a recession is coming, whereas a rise in the new
housing market during a recessionusually means that there are better times ahead.
 Prices

This category includes both the prices consumers pay as well as the prices
businesses pay forraw materials and include:
a.) Producer Prices [monthly]
b.) Consumer Prices [monthly]
c.) Prices Received And Paid By Farmers [monthly]
These measures are all measures of changes in the price level and thus measure
inflation.
• Money, Credit, and Security Markets
These statistics measure the amount of money in the economy as well as interest
rates andinclude:
a.) Money stock (M1, M2, and M3) [monthly]

b.) Bank Credit at all commercial banks [monthly]
c.) Consumer credit [monthly]
d.) Interest rates and bond yields [weekly and monthly]
e.) Stock prices and yields [weekly and monthly]
59
Nominal interest rates are influenced by inflation, so like inflation they tend to be
procyclicaland a coincident economic indicator. Stock market returns are also
procyclical but they are aleading indicator of economic performance.
• Government Finance
These are measures of government spending and government deficits and debts:
a.) Budget Receipts (Revenue)[yearly]

b.) Budget Outlays (Expenses) [yearly]
c.)Union Government Debt [yearly]
Governments generally try to stimulate the economy during recessions and to do so

theyincrease spending without raising taxes. This causes both government spending
andgovernment debt to rise during a recession, so they are countercyclical
economic indicators.
They tend to be coincident to the business cycle.
 International Trade

These are measure of how much the country is exporting and how much they are
importing:
a.) Industrial Production and Consumer Prices of Major Industrial Countries
b.) International Trade In Goods and Services
c.) International Transactions
When times are good people tend to spend more money on both domestic and
importedgoods. The level of exports tends not to change much during the business
cycle. So thebalance of trade (or net exports) is countercyclical as imports outweigh
exports during boomperiods. Measures of international trade tend to be coincident
economic indicators.While we cannot predict the future perfectly, economic
indicators help us understand wherewe are and where we are going which is of
great help when assessing the overall health ofthe economy.
2) Industry
Fundamental analysis consists of a detailed analysis of a specific industry; its

characteristics,past record, present state and future prospects. The purpose of
industry analysis is to identifythose industries with a potential for future growth
and to invest in equity shares of companiesselected from such industries. We look
60
at the product lifecycle phase and competitive outlookin a particular industry to
gauge the overall growth and competitive rivalry amongst theplayers in the
industry.
3) Company
At the final stage of fundamental analysis, the investor analyses the company. This
analysishas two thrusts:
1. How has the company performed vis-à-vis other similar companies? and
2. How has the company performed in comparison to earlier years. It is imperative
that one completes the economic analysis and the industry analysis before a
company is analysed because the company’s performance at a period of time is to
an extenta reflection of the economy, the political situation and the industry.
What does one look at when analysing a company? There is no point or issue too
small to beignored. Everything matters.
The different issues regarding a company that should be examined are:

1. The Management
2. The Company
3. The Annual Report
4. Cash flow
5. Ratios
The Management
The single most important factor one should consider when investing in a company
and oneoften overlooked, is its management. It is upon the quality, competence and
vision of themanagement that the future of company rests. A good, competent
management can make acompany grow while a weak, inefficient management can
destroy a thriving company. Indiancorporate history has many examples where an
able and visionary management has workedwonders for companies and their stock
prices. Sunil Mittal of Bharti Airtel, Azim Premji ofWipro, Narayan Murthy of
XYZ, Deepak Parekh of HDFC, are few such examples where themanagement of
the companies headed by strong leadership have helped companies
createsignificant wealth for their investors.
In India, management can be broadly divided in two types:
1. Family Management
2. Professional Management
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Family management
Family managed companies are those that have at the helm a member of the owner
orcontrolling family. The Chairman or the Chief Executive Officer is usually a
member of thecontrolling family and the Board of Directors are peopled either by
members of the familyor their friends and associates. All policy is determined by
the controlling family and whilesome policies may be good, some of the policies
may not necessarily be in the shareholders’best interest.
The advantage of such companies is the loyalty family members would have tothe
company which they consider their own. Earlier, family managed companies were
oftenorthodox, autocratic, rigid and averse to change. This is no longer true. There
have beensome changes in the way family controlled businesses are managed. In
many family managedcompanies, although the man at the helm is a scion of the
family, the management is run byprofessional managers. Many such businesses are
very successful.
Professional Management
Professionally managed companies are those that are managed by professionals

who areemployees of the company. In such companies, the chief executive officer
often does noteven have a financial stake in the company (or a minority stake). He
is at the helm ofaffairs because of his ability and experience. The professional
manager is a career employeeand he remains at the seat of power so long as he
meets the company’s business targets.
Consequently, he is always result-oriented and his aim is often meeting the annual
budget andbusiness targets. He may not necessarily be tied to the company by
loyalty but is focused onperformance on a consistent basis which improves
shareholder value. As a professional he isusually aware of the latest trends in
management philosophy and tries to introduce these tomaximise employee
performance. He tries to run his company as a lean, effective machinestriving for
increased efficiency and productivity.
As a consequence professionally managedcompanies are usually well-organized,

growth-oriented and good performers. Companies thatcome readily to mind are
ITC, HDFC, Hindustan Lever, L&T to name a few. One disadvantage
ofprofessionally managed companies is that the professional managers may leave
the companyfor better pay and perquisites offered by another company. This is a
loss for the companyespecially if the person is a high performer. Many companies
therefore promote or createlong term commitment and loyalty by offering
62
employees stock options (i.e. giving themshares of the company). The employee
thus becomes a part owner and becomes interestedin the sustainability and
profitability of the enterprise. It is a win-win situation for both. Thecompany gets
the services of a loyal competent employee. The employee builds his wealth.
It is a fact that in many professionally managed companies there is corporate

politics. Thesis because managers are constantly trying to climb up the corporate
ladder. The end is oftenwhat matters, not the means. Often too, as a consequence,
the best person does not get thetop job; rather losing out in the political
environment. This does not always happen in familymanaged companies as one is
aware that the mantle of leadership will always be worn by theson or daughter of
the owner.
What to look for
It would be unfair to state that one should invest only in professionally managed
companiesand overlook family managed companies. There are well managed,
profitable companies inboth categories. There are also badly managed companies in
both categories. What then arethe factors one should look for?
1.) Integrity of Management
The most important aspect is management integrity. This must be beyond question.
It isoften stated that a determined employee can perpetrate a fraud, despite good
systems andcontrols. Similarly, if it so desires, the management can juggle figures
and cause great harmand financial loss to a company (for their own personal gain).
Tracking integrity may not beeasy but over time managements distinguish
themselves from others on issues of honestyand integrity.
2.) Past record of management
Another point to consider is proven competence, i.e. the past record of the
management.
How has the management managed the affairs of the company during the last few
years? Hasthe company grown? Has it become more profitable? Has it grown more
impressively thanothers in the same industry? It is always wise to be a little wary of
new management and newcompanies. Wait until the company shows signs of
success and the management proves itscompetence.
63
3.) How highly is the management rated by its peers in the same industry?
This is a very telling factor. Competitors are aware of nearly all the strengths and
weaknessesof management of their rivals and if they hold the management in high
esteem it is truly worthyof respect. It should be remembered that the regard the
industry has of the management ofa company is usually impartial, fair and correct.
4.) How the management fares in adversity?
In good times everyone does well. The inherent strength of a management is tested
at timesof adversity. During a time of recession or depression, it is important to
consider how wellthe management did: Did it streamline its operations? Did it
close down its factories? Did it(if it could) get rid of employees? Was it able to sell
its products? Did the company performbetter than its competitors? How did sales
fare? A management that can steer its company indifficult days will normally
always do well.
5.) The depth of knowledge of the management
Its knowledge of its products, its markets and the industry is of paramount
importance becauseupon this can depend the success of a company. Often the
management of a company that hasenjoyed a preeminent position sits back thinking
that it will always be the dominant company.In doing so, it loses its touch with its
customers, its markets and its competitors. The realitysinks in only when it is too
late. The management must be in touch with the industry andcustomers at all times
and be aware of the latest techniques and innovations. Only then can itprogress and
keep ahead. A quick way of checking this is to determine what the market shareof
the company’s products is and whether the share is growing or at least being
maintained.
6.) The management must be open, innovative and must also have a
strategy
It must be prepared to change when required. It must essentially know where it is

going andhave a plan of how to get there. It must be receptive to ideas and be
dynamic. A companythat has many layers of management and is top heavy tends to
be very bureaucratic andponderous. There are “many chiefs and few braves”. They
do not want change and oftenstand in the way of change. Their strategy is usually a
personal one, on how to hold onto theirjobs.
64
7.) Non-professionalised Management
It is not recommended investing in a company that is yet to professionalize because

in suchcompanies decisions are made on the whims of the chief executive and not
with the good ofthe company in mind. In such companies the most competent are
not given the positions ofpower. There may be nepotism with the nephews, nieces,
cousins and relatives of the chiefexecutive holding positions not due to proven
competence but because of blood ties.
65
CHAPTER – 5
DATA INTERPRETATION
66
DATA INTERPRETATION
1. OPERAGING PROFIT MARGIN :-
Chart Title
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
OPM Category 2 Category 3 Category 4
RELAXO KHADIM Column1
This chart shows that Operating profit margin of Relaxo is greater than Khadim
which is a positive indicator for relaxo as a comparision.
67
2. NET PROFIT MARGIN :-
Chart Title
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
NPM
As this chart shows Net Profit Margin of relaxo is greater than khadim that’s again
a positive sign for relaxo.
68
3. RETURN ON EQUITY :-
Chart Title
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
ROE
This chart shows return on equity is greater of relaxo is greater than khadim and
every investor want to get higher return so they will choose to invest in relaxo.
69
4. DEBT EQUITY RATIO :-
Chart Title
0.60%
0.50%
0.40%
0.30%
0.20%
0.10%
0.00%
DER
As this chart shows higher debt equity ration for khadim compare than relaxo, this
is bad for khadim that is has greater debt compare to equity in regards of relaxo
which have lower debt compare to equity.
70
5. INTEREST COVERAGE RATIO :-
Chart Title
9
0
ICR
RELAXO KHADIM Series 3
As above chart shows ICR is greater for relaxo and lower for khadim. Relaxo can
pay more no. of time interest out of their profits in uncertainity compare than
khadim.
71
CHAPTER- 6
FINDINGS
72
FINDINGS
1) From the above data analysis we can see that all the numbers are
showing a nice picture of Relaxo and comparative analysis of
Khadim with Relaxo company. Positive number are keeps on
increasing and negative numbers are keeps on decreasing year by
year for Relaxo and opposite for Khadim India.
2) As in this Fundamental analysis we have taken data for recent

years so our investment will also takes some time to grow.
And we can say that fundamental analysis helps us in investing for
long term and getting return more than risk free rate of interest by
investing in equity shares .
3) This investment gives us not only a capital gain by appreciation in

share price but also helps in getting short term return from this
investment which is dividend.
73
CHAPTER- 7
SUGGESTIONS & RECOMMONDATIONS
74
SUGGESTIONS & RECOMMONDATIONS
If I’ll have to give some suggestions, I’ll give following three

suggestions:-
1) In fundamental analysis we should choose a company with

increasing operating cash flow from year to year.In the case of
relaxo we can see that its operating cash flow has increased from
10748.32 lakhs in year 2015 to 15943.20 lakhs in year 2016.
2) We should choose a company which should be debt- free or has

relatively less debt or has very low debt in compare to its
equity. In the case of this company we have relatively less debts
which is 0.42 denoted by Debt-Equity Ratio.
3) Company should has negative working capital or less working

capital. In this case working capital is 41842.32-36125.24 =
5717.08 lakhs which is relatively low. Now you are thinking why
negative working capital. There is a reason behind it and the reason
is negative working capital occurs due to more creditors over
current assets and creditors increase when company has advance
money from the wholesale customers which means customers want
to buy its product more and more (or market needs this product).
75
CHAPTER – 8
CONCLUSION
76
CONCLUSION
By doing above comparative research study all the numbers for

RELAXO FOOTWEAR is positive in comparasion to KHADIM
INDIA which has almost all negative numbers. So, by doing this
study we can say that fundamental analysis reveal long term view
of any company and RELAXO FOOTWEAR is growing company
as far as long term horizon is concerned.
So, all the indicators are positive for RELAXO. And one can buy relaxo
for long term investment horizon.
77
CHAPTER – 9
QUESTIONNAIRE
78
QUESTIONNAIRE
1.) WHAT IS THE INDICATOR OF PROFITABILITY FROM THE BELOW

OPTIONS ?
a. NET PROFIT RATIO b. DEBT TO EQUITY RATIO
c. INTEREST COVERAGE RATIO d. P/E RATIO
2.) NEGATIVE WORKING CAPITAL INDICATES :-
a. POSITIVE VIEW b. NEGATIVE VIEW
c. BOTH VIEWS d. NONE
3.) WHICH OF THE FOLLOWING IS SOLVENCY RATIO?
a. DEBT EQUITY RATIO b. CURRENT RATIO
c. STOCK TURNOVER RATIO d. TRADE RECIEVABLE RATIO
4.) INCREASING OF WHICH NO. CAN LEADS TO A POSITIVE VIEW?
a. OPERATING CASH FLOW b. LONG TERM DEBT
c. INTEREST LIABILITY d. TRADE PAYABLES
5.) DECREASING OF WHICH CAN BE A POSITIVE POINT FOR

COMPANY ?
a. TRADE PAYABLE b. PROFITABILITY RATIO
c. NET MARGIN RATIO d. SALES OF COMPANY
6.) HIGHER INTEREST COVERAGE RATIO SHOWS :-

79
a. HIGHER CAPABILITY OF PAYMENT
b. LOWER CAPABILITY OF PAYMENT
c. NEUTERAL CAPABILITY OF PAYMENT
d. NOT RELATABLE TO PAYMENT
7.) AS IN ABOVE RESEARCH RELAXO HAS INCREASING OPERATING

CASHFLOW THAN KHADIM THIS SHOWS :-
a. FUNDAMENTALLY STABILITY OF RELAXO
b. NOT STABILITY FOR RELAXO
c. NOT LINKED TO THIS LOGIC
8.) P/E RATIO MEANS :-
a. PRICE READY TO PAY FOR ONE UNIT OF EARNING.
b. PRICE READY TO TAKE FOR ONE UNIT OF EARNING.
C. NONE.
80
CHAPTER – 10
REFERENCES
81
REFERENCES
1.) Final Statement are taken from annual report of Relaxo Footwear.
(www.finalstatementsof relaxofootwearforyear2015-16 >PDF Annual report
of RELAXO). And for KHADIM India it is taken from -
http://download.dionglobal.in/admin/Reports/DRHP070720171.PDF
2.) Some data is taken from

moneycontrol.(www.moneycontrol.com/Moneycontrol Mobile Application
can also be used).
3.) And theoretical data are taken from Fundamental Analysis Module of
NCFM.
4.) For more information about companies one can go for :
a. www.aboutrelaxofootwearltd.com – for RELAXO
b. www.aboutkhadimindialtd.com – for KHADIM
82

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Fundamental Analysis of Relaxo Footwear & Khadim India

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RESEARCH REPORT

(Subject code MBA/208)

RELAXO FOOTWEAR & KHADIM INDIA

J.C. BOSE UNIVERSITY OF SCIENCE AND TECHNOLOGY, YMCA, FARIDABAD

Submitted to: Submitted by

Under the guidance of:

RAM COLLEGE OF ENGINEERING AND MANAGEMENT

Place: Name: VIPUL Kr. GARG

Univ. Roll No.:

On the completion of my RESEARCH FILE on

VIPUL KUMAR GARG

This project provides a sound coverage of all the aspects of

This research basically gives an investor a well insight about

Our Certifications & Affiliations :-

 ISO 9001: 2015 - Quality Management System

Quality, Environmental and Safety Policy

 Relaxo is committed to provide innovative value added quality products,

Our corporate objectives :-

Quality, Environmental and Safety Objectives

SUMMARY OF KHADIM INDIA :-

Khadim’s was established in December 3, 1981 as S.N. Footwear Industries Private

S. No. PARTICULARS PAGE

SUGGESTIONS & RECCOMENDATION

LIST OF TABLES & FIGURES

OPERATING PROFIT MARGIN

NET PROFIT MARGIN

RETURN ON EQUITY RATIO

DEBT TO EQUITY RATIO

INTEREST COVERAGE RATIO

INTRODUCTION OF FUNDAMENTAL ANAYLYSIS

The outcome of fundamental analysis is a value (or a range of values) of the

To find the intrinsic value of a company, the fundamental analyst initially

1. What is the general economic environment in which the company is

For companies operating in emerging markets like India, the economic

2. How is the political environment of the countries/markets in which the

Some companies have patented technologies or leadership position in a particular

4. What advantage do they have over their competing firms?

Competition generally makes companies spend large amounts on advertising,

B. Why is fundamental analysis relevant for investing?

1. Efficient Market Hypothesis (EMH)

i. Weak form EMH :-

ii. Semi-strong form EMH :-

2. Arguments against EMH

C. Steps in Fundamental Analysis

Fundamental analysis is the cornerstone of investing. In fact all types of investing

ABOUT RELAXO FOOTWEAR :-

Our Certifications & Affiliations :-

 ISO 9001: 2015 - Quality Management System

Quality, Environmental and Safety Policy

 Relaxo is committed to provide innovative value added quality products,

Our corporate objectives :-

Core values we follow :-

Our Management System :-

 Annual Business Planning objective setting

Khadim’s was established in December 3, 1981 as S.N. Footwear Industries Private

“Surprisingly and thankfully as well, several hands supported me in my maiden

“More than being a manufacturer, I love to manufacture manufacturers.”

From the Desk of Chairman & Managing Director

Welcome to the World of Khadim’s - footwear manufacturers and retailers who

Dr. Indra Nath Chatterjee is a Non-Executive, Independent Director of our

Prof. (Dr.) Surabhi Banerjee is a Non-Executive, Independent Director of our

Alok Chauthmal Churiwala is a third generation stockbroker and an Angel

ROE =(NET INCOME/SALE)(SALES/AVERAGE ASSETS)(AVERAGE

ROE = 7.022.751.48 = 28.57, which is near to ROE we have already calculated.