1

CHAPTER 1
PROFILE OF THE COMPANY
1.1 Introduction of the Company
Name of the Company: Relaxo Footwears Limited
Corporate Office: Aggarwal City Square, Plot No 10, Mangalam Place ,District Centre,
Sector-3, Rohini, New Delhi- 110085(India)
Phone No.: 91-11-46800500, 46800600
Fax: 91-11-46800598, 46800599
Email: rfl@relaxofootwear.com
Website: www.relaxofootwear.com
Origin: Relaxo Footwear Limited is a national company
Registered Office: 316-319, Allied House, Inderlok Chowk, Old Rohtak Road, Delhi-
110035 (India). Phone No: 91-11-23128534, 23120955, 23127081, 23128366
Areas of Geographical Location:
1. RFL-I Plot No. 327, MIE, Bahadurgarh, Haryana
2. RFL-II Plot No. 326, MIE, Bahadurgarh, Haryana
2

3. RFL-III A-1130&1130(A), RIICO Industrial Area, Phase III, Bhiwadi, Rajasthan
4. RFL-IV 30/ 3/2 Rakba Mooja Hasanpur Tikri Border(Near Sales Tax Office)
Bahadurgarh, Haryana
5. RFL -V 83-92, Sidcul Industrial Area, BHEL,Haridwar, Uttarakhand
6. RFL VI A 342-343, Footwear Park, Industrial Estate, Sector-17,Bahadurgarh,
Haryana
7. RFL- VI B Plot No. 328-329,MIE,Bahadurgarh,Haryana
8. RFL-VIIA PLOT NO.37, Sector 4B, Bahadurgarh, Haryana
9. RFL-VIIB Bahadurgarh
10. RFL-VIII Bahadurgarh
1.2 About Relaxo Footwears Limited
Relaxo Footwear Limited is an India based public limited company engaged in the
business of manufacturing and trading of footwear and accessories through its retail,
export and wholesale network and is listed on the Bombay Stock Exchange (BSE) and
National Stock Exchange (NSE). The company Relaxo Footwear Limited is one of the
leading players in Footwear Industry. Relaxo Footwear Limited was incorporated in 1984
as a private limited company to market the products of group concerns such as hawaii
slippers, light weight slippers, canvas shoes, PVC footwear etc. It was subsequently
converted into public limited company in 1993. In the year 1995-1996 the company has
transformed from solely a trading/ marketing agency to that of a full fledged
manufacturing unit by putting up a facility to produce 50000 pairs of hawaii and light
weight slippers per day on a two shift basis at Bahadurgarh, Haryana.
3

Relaxo Footwears Limited (RFL) is one of India's large quality conscious footwear
companies. Headquartered in Delhi, India, it maintains a fine combination of comfort,
style and workmanship and is embarking on appreciable growth plans for the future. It
stepped into the footwear industry in 1976. It started off with the manufacture of Hawaii
slippers and subsequently diversified into manufacturing casuals, joggers, school and
leather shoes. While foreign footwear companies have introduced a brand culture in India
and are focusing on the rich and upper-middle-class, Relaxo is catering to the lower-
middle-class and the lower-income group.
The company has established 8 manufacturing plants spanning North India. These are
located in Haridwar, Bahadurgarh (Haryana) and Bhiwadi (Rajasthan). Each
manufacturing unit is equipped with world-class machinery and hi-tech product testing
laboratories.
RFL has been gaining momentum in both its top line and bottom line over the last couple
of years. The 2 years (FY08 and FY09) have been excellent years for RFL as far the
overall performance is concerned. The company has been reporting Sales in the range of
Rs 200 crores to Rs 250 crores since 2004. In FY08 it saw its first jump in the total sales
to Rs 305 crores and then by the end of FY09 the sales touched Rs 407 crores. The
company has started to gain a momentum in its top line since the last few years as new
manufacturing units went on stream. The case has not been very different in terms of the
bottom line also.
4

RFL enjoys a very good market share especially in the northern part of the country. RFL
has the capacity to manufacture over 100 million pairs, per annum. It is second only to
Bata India. Its capacity to manufacture 200,000 pairs of Hawaii slippers per day is one of
the highest in the footwear industry. A network of 350 distributors and 30,000 retailers
operating across India ensures that all its products reach customers in almost all parts of
North, West and South India.
RFL began by manufacturing and selling Hawaii footwear. Over the years it has added
products to its portfolio that are better placed than Hawaii footwear i.e. light slippers
and shoes & sandals. In terms of perception of trade, it has moved up the value chain.
Design, product development, quality and affordable price the four cornerstones of
footwear business RFL is well placed in all of these. Shoes give RFL a higher margin
compared to the other two products. The recent increase in profitability is partially
explained by the higher proportion of shoes in the product mix lately.
1.3 Companys Vision and Mission:
a) Mission of the Company:
1. To reach out to masses and offer world class product.
2. Customer satisfaction through continual improvement and innovation.
3. Quality par excellence.
4. To provide consistent value added quality footwear.

5

b) Vision of the Company:
1. To implement continuous improvement culture and Lean Manufacturing Tools
and techniques.
2. To establish production norms for Sparx Product Line through work
measurement studies.
3. To implement the established norms by engaging its employees.
1.4 Product Range of the Company:
RFL produces different products under different brands. It produces Hawaii Footwear in
the brand name of Relaxo whereas the light slippers segment is branded as Flite and
Sparx includes line of sports shoes, sandals and Hawaii footwear. Main categories are
as follows:
FOOTWEAR
AREA
RFLs footwear products cater to the needs of home, casual,
sports & school wear. Currently, it offers these under four
categories including:
1. Hawaii
2. Casualz
3. Joggers
4. Schoolmate
6

FOOTWEAR
RANGE
The footwear range offered include:
1. Sparx Sport Shoes
2. Sparx Sandals
3. Flite Men's EVA Footwear
4. Flite Lady's EVA Footwear
5. "Schoolmate" School Shoes
6. Hawaii Slippers
7. Casualz Men's Dip Shoes
8. "Elena" Ladies Bellies
9. "Relaxo" Canvas Shoes
10. "Leatherite" Slippers
11. "Boston" Men's Shoes
12. "Mary Jane" Lady's Fancy Footwear
BRANDS These exclusively designed and manufactured footwear products
are offered to clients under following brand names:
1. Sparx
2. Flite
3. Casualz
4. Elena
5. Esteem
6. Bahamas
7

7. Hawaii
8. Leatherite
9. Canvas
Table 1.1: Table showing different products offered by Relaxo Footwears Limited
1.5 Size of Company (in terms of manpower and turnover)
Currently 4000 employees are working with the organisation. The annual turnover of the
company is 1000 crores.
1.6 Organisational Structure of the Company
The delegation of powers is decentralized to facilitate quick decision-making.
Figure1.1: Figure showing organisational structure of Relaxo Footwears
Limited
8

1.7 Market Share and Position of the Company in the Industry:
Relaxo Footwears Limited shares a large market share in the footwear industry and is on
the 2
nd
position in the footwear industry.

Table 1.2: Table showing market position of Relaxo Footwear Limited
RFL is ranked number two after the market leader Bata when the financial performance is
compared in terms of income, expenditure and net profit.
Figure 1.2: Figure showing financial performance of Relaxo Footwear
0
20000
40000
60000
80000
100000
Total Income
9

1.8 PRESENT LEADERSHIP
The people with whom the researcher interacted during the internship are as follows:
1. Mr. Suraj Kumar: Deputy Manager(Finance)
2. Mr. Pramod Singh Bisht: Finance officer
3. Ms. Manvi Arora: Officer (Sales Tax)
4. Ms. Priyanka Bagga: Excise Officer

1.9 SOURCE OF DATA COLLECTION
The data collection was done through:
1. Primary Data: A well structured questionnaire was prepared to collect the
information from the company.
2. Secondary Data: For the project the source of secondary data collection is as
follows:
i. Annual report of Relaxo Footwear Limited 2014
ii. www.relaxofootwear.com


10

CHAPTER 2
SWOT ANALYSIS OF THE COMPANY
Strengths
a) Over 35 years of experience
b) Record breaking growth rate
c) Second largest footwear company
in India
d) Customer base of around 100
million people
e) Largest manufacturer of hawaii
slippers
f) Manufacturing experience
g) Quality product
h) Massive institutional support

Weakness
a) Unorganised nature of the sector
b) Insufficient focus on value
innovation
c) Unhygienic environments

Oppurtunities
a) Improved efficiency of working
capital management
Threats
a) Changes in fashion trend
b) Increasing inflation
11

b) Exploring of export oppurtunities
c) Improvement in cost structure
d) Better technology
e) Better linkages with international
market
c) FDI
d) Competition
e) Risk of availability of labour

2.1 Strengths and Weakness of the Company
2.11 Strength of the Company:
1. Over 35 years of experience:
Stepping into footwear industry in the year 1976, the company have over 35
years of experience in the manufacturing of Hawaii slippers, casuals, joggers,
school & leather shoes.
2. Record breaking growth rate:
The Company has experienced a record-breaking growth rate of 4800% within
last 10 years. From a modest sale of around Rs. 1 million in the year 77-78, we
have today crossed Rs. 3000 million figures.
3. Second largest footwear company in India:
With capacity to manufacture over 100 million pairs, per annum, Relaxo has
emerged as second largest footwear brand second only to Bata.
4. Customer base of around 100 million people:
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In the domestic market, the company has a customer base of around 100 million
people.
5. Largest manufacturer of Hawaii slippers:
With the capacity to manufacture 200,000 pairs of Hawaii slippers on a per day
basis, Relaxo is the largest manufactures of Hawaii slippers.
6. Manufacturing experience:
The company caters to several international buyers of high repute. Premium shoe
brands like Nike and Dunlop sourced their sports-friendly joggers from Relaxo.
7. Quality product:
Quality is that something extra in Relaxo products which is perceived by the
customers as a valid reason for buying again.
8. Massive institutional support:
There is massive institutional support for technical services, designing, manpower
development and marketing.
2.12 Weaknesses of the Company:
1. Unorganized nature of the sector (at large):
The unorganised nature of the sector at large acts as a weakness as a whole.
Proper organization should be there.
2. Insufficient focus on value innovation:
Focus on other important factors decreases the focus on value innovation which is
also essential
3. Unhygienic environments etc
13

Somethings the working conditions are not hygienic or not upto the standards so it
acts as a weaknesses. If the working conditions will not be proper then it will not
be appropriate for proper working.
2.2 Oppurtunities and Threats of the Organisation
2.21 Oppurtunities of the Company:
1. Improved efficiency of working capital management:
Proper management of working capital is there now a days which acts as a great
opportunity as it helps in reducing wastage.
2. Exploring of export oppurtunities:
Various export oppurtunities are there in the present time and taking advantage
out of them is a great advantage.
3. Improvement in cost structure would add to operating margins of the
company:
The improvement in the cost structure adds to the operating margins of the
company which helps in increasing profits
4. Better technology:
Technology is getting better day by day that helps in cost reduction as a result in
increasing profits.
5. Better linkages with international market (via fairs and BSMs):
Linkages with international markets acts as a great opportunity through fairs
because it helps in increasing the import and export.
14

2.22 Threats of the Company:
1. Changes in fashion trend:
Changes in fashion trends and slow down in consumption pattern of the
consumers may adversely affect the turnover of the company.
2. Increasing inflation:
Increasing inflation is considered a threat which would increase overall input
cost, as well as conversion costs.
3. FDI:
Government Policy on relaxing the Foreign Direct Investment (FDI) limits in the
retail sector will allow many Multi- National Companies to enter into the Indian
Retail Market, which might pose as a probable risk, since the Company will be
competing with the International players as well.
4. Competition:
The products face competition from the products of global and established Indian
companies and it continues to exert pressure on the operations.
5. Risk of availability of labour:
With the growing demand of the product, there is always a risk of availability of
manpower for increasing production levels.
2.3 Best Practises / USPS that the Company Follows
1. Quality control:
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From the time of its inception Quality control managers monitor every stage of
manufacturing process, right from pre production to shop floors. Shaping and
designing undergo the same stringent checks as the final product. Some of the
quality tests that the products are subjected to are:
i. Random Testing
ii. Batch Testing
iii. Tactical Wear Testing
2. Corporate Social Responsibility:
Corporate social responsibility has always been at the heart of the activities of
Relaxo Footwears Limited. The steps taken by Relaxo Footwears Limited are as
follows:
i. The company actively advocates the use of recyclable material at every
level.
ii. Relaxo Footwear Limited is also helping in generating wind power. A 6
MW capacity windmills at Jodhpur in Rajasthan have a generation of
approximately 12 million units per annum. The energy produced will be
clean, non polluting and a tangible contribution to a healthier and greener
planet.
iii. The company is also dedicated towards Cancer care programme which is
expanding day by day. The patients are being treated and cured at Ganga
Prem Hospice Cancer Clinic, Rishikesh from support of Relaxo.
iv. The company has been making humble contributons and taking
meaningful measures to enrich the socio-economic environment and living
16

standard of the people around especially backwards and economically
weaker sections of the society.
3. Conservation of energy:
Energy conservation is an ongoing process in the company by investing in the
latest energy efficient technologies, to conserve energy on all locations, plants and
sites of the company. This energy conservation measure has helped the company
to restrict the impact of increase in the cost of energy thereby reducing the cost of
production of goods to that extent.
4. Corporate Governance:
Corporate Governance is about the commitment to human values in business and
translates into ethical corporate conduct. Corporate Governance has occupied
pivotal position at Relaxo Footwears Limited since inception. The business has
since then been conducted in most transparent and ethical manner. All the
necessary steps have been taken with changing socio economic scenario to ensure
that the conduct of business is as per the policies of the management namely
honesty, transparency and ethical behaviour.
2.4 Deviations/ Variations in Practices Followed by Company with the
Concepts Taught in Classroom
There are no deviations found during the training programme.


17

CHAPTER 3
DATA COLLECTION AND PRESENTATION
A. Data Collection
3.1 Marketing
3.11 Product planning process:
Product development:
The company gives emphasis upon new product development in order to keep its product
ahead in fast changing fashionable and competitive market. The company has adopted
product engineering and rationalisation by focusing upon latest design and quality. To
achieve the desired result, the company carried out extensive market research on its
product and also obtained feedback of customers thereon. This step has been leading
towards increase in sales of products which are of latest designs and more in demand.
Consequently, it resulted into brand recognition of the company.
Product lines of the company:

Different brands in product line:
Popular markets/geographical regions where product is sold:
18

Over the years the Relaxo has steadily integrated its competencies at the back end and
today the production units are spread right across the length and breadth of northern
India.
Major competitors:
Relaxo Footwears Limited is one of the largest players in the sector it belongs to. The
other major players in the footwear industry are Bata India, Liberty Shoes, Lakhani
Footwear, Mirza International of which Lakhani is not the listed peer. In this segment,
it is competing with Bata India, Action Shoes and Liberty Shoes. Relaxos edge is
based on low price, reasonable quality and large production capacity. Its
manufacturing capacity, of 100 million pairs per annum, is second only to Batas. It
also has the capacity to manufacture 3, 00,000 pairs of Hawaii slippers per day which
is the highest in India. The companys financial performance has been compared with
these competitors.
RFL is ranked number two after the market leader Bata when the financial
performance is compared in terms of income, expenditure and net profit.
Market segmentation- customer currently buying products:
The market segmentation of Relaxo footwear limited is as follows:
Mens wear: 60%
Womens wear: 30%
19

Kids wear: 10%



USP of brands (unique feature/ competitive advantage):
Relaxo footwear limited are committed to provide consistent value added quality
footwear and services to satisfy the customers through continual improvement and
innovation. Relaxo footwear limited targets the low income group.
3.12 Promotion
Components of promotion mix:
Advertising:
Market Segmentation
Mens wear
womens wear
Kids wear
20

The celebrities reflect Relaxos brand personality in a unique manner. Salman Khan
the heartthrob of India depicts strength, attitude and style thus making him the
perfect blend for being the brand ambassador of Hawaii slippers. Katrina Kaif as
brand ambassador of flite range of slippers for women is looked up as fashion
diva and icon. Her vibrant and unconventional style is often imitated by women
across the country. The brand ambassador for sparx, sports shoes and sandals,
Akshay kumar , the action hero matches all the qualities of a sparx man.
Sales promotion:
Sales promotion is done in Relaxo Footwear Limited by various discounts and special
offers. Relaxo Footwear Limited provides 20% discount to the staff members and
their family members as well.
Budget allocation for promotional activities:
Budget for the promotional activities for the year 2013-2014 are as follows:
Advertisement and publicity = Rs. 4727.33 lacs
Sales promotion schemes = Rs. 5313.46 lacs
Cash discount = Rs 3273.51 lacs
Measurement of effect of sales promotion and advertisement
21

The company measures the effect of sales promotion and advertisement by checking
the sales at various outlets and the profits as well that whether they are increasing
or not.
Customer relationship management
CRM policies
Interaction with the customers through feedback and suggestions.
Benefits of CRM attained by organisation
CRM helps in retaining the customers because through feedback and suggestion the
product can be changed according to customers need that help in increasing the
sales as well as the profit of the organisation.

HUMAN RESOURCE MANAGEMENT:
HR planning, recruitment, selection, induction:
Structure of HR department
22


Total number of employees:
Currently 4000 employees are working with the organisation. The managerial level
employees include 3000 employees and non managerial includes the 1000
employees.
Total no of permanent employees:
Total numbers of permanent employees are 3500
Total number of temporary employees:
Total number of temporary employees are 500.
Internal sources of recruitment:
GM
AGM
DGM
OFFICER
23

a) references
b) through currently working employees
c) through retired staff
External sources of recruitment:
a) interviews
types of training:
behavioural and technical training

Performance appraisal:
In the company the KRA (Key Result Area based) performance appraisal system
is followed.
Frequency of performance appraisal:
Annually
Role of supervisor:
Checking the performance of the employees throughout.
Role of self in performance appraisal:
Performing al the task properly with efficiency and effectiveness
Career development:
Career development:
Higher education subsidy for supervisor
Welfare
Working environment of the organisation:
24

The working environment of the organisation was very disciplined,
Working hours of the organisation
The working hours of the organisation was from 9am to 6pm.
Leave policy of the organisation
An employee gets 15 days paid leave from the office anually
Social security benefit
a) medical insurance
b) personal accidental insurance
c) group term life insurance
d) regular visit of doctors
social security measures:
provident fund and ESI


3.3 FINANCE
PROFITS
Method of estimating future profit:
The company generally anticipates its future profits on the basis of the past.
Method of distributing profits:
25

The company distributes its profits in the form of dividends and rest is used as the
retained earnings.
CAPITAL STRUCTURE
Contribution of debt and equity in companys capital structure:
The company never issues debentures so the capital structure of the company does
not include debentures. The capital structure of the company consists of the
shareholders fund which comprises of the share capital and the reserve and the
surplus. The share capital as on 31 March 2014 was Rs. 600.06 lacs and the reserve
and surplus was Rs. 27056.12 lacs. (For more details refer to the balance sheet
attached in annexure)
Changes in capital structure in last one year:
in the year 2012-2013 the capital structure was Rs. 21443.56 lacs and in the year
2013-2014 it was Rs. 27656.18.
FINANCING
INTERNAL AND EXTERNAL SOURCES OF FINANCE DEPLOYED BY
THE COMPANY
The internal and external sources of finance deployed by the company are share
capital, reserves and surplus, secured and unsecured loans, borrowings and
retained earnings.

26


Factors considered while deciding sources of finance:
a) Cost of debt
b) Market conditions
c) Risk involved
d) Future
WORKING CAPITAL:
WORKING CAPITAL MANAGEMENT
Working capital means the funds available and used for day to day operations (i.e.;
working) of an enterprise. It consists broadly of that portion of assets of a business
which are used in or related to its current operations. It refers to funds which are
used during an accounting period to generate a current income of a type which is
consistent with major purpose of a firm existence. Working capital may be
defined in two ways, either as the total of current assets or as the difference
between the total of current assets and total of current liabilities. The current
assets comprises inventories (including raw materials, work-in-progress and
finished goods and spares), sundry debtors including receivables, readily
realizable securities and tax reserve certificates, short-term investments, accrued
incomes, prepaid expenses (not in the nature of deferred charge), cash at bank,
and cash in hand. The current liabilities includes trade creditors, accounts payable,
27

outstanding or accrued expenses, bank overdraft, outstanding liabilities, short-
term loans and borrowings and certain obligations including different provisions,
i.e., provision for taxation, proposed dividend etc.

A firm must have adequate working capital, i.e.; as much as needed the firm. It should
be neither excessive nor inadequate. Both situations are dangerous. Excessive
working capital means the firm has idle funds which earn no profits for the firm.
Inadequate working capital means the firm does not have sufficient funds for
running its operations. Decisions relating to working capital and short term
financing are referred to as working capital management. Working capital
management involves the relationship between a firm's short-term assets and its
short-term liabilities. The basic objective of working capital management is to
manage firms current assets and current liabilities in such a way that the
satisfactory level of working capital is maintained, i.e.; neither inadequate nor
excessive and to ensure that a firm is able to continue its operations and that it has
sufficient ability to satisfy both maturing short-term debt and upcoming
operational expenses. The management of working capital involves managing
inventories, accounts receivable and payable, and cash. Working capital some
times is referred to as circulating capital.
The management of working capital is important to the financial health of businesses
of all sizes. The amounts invested in working capital are often high in proportion
to the total assets employed and so it is vital that these amounts are used in an
28

efficient and effective way. The twin objectives of profitability and liquidity must
be synchronized and one should not impinge on the other for long. Working
capital policies have a great effect on a firms liquidity and profitability.
Therefore, the working capital should be managed in such a way which will
ensure higher profitability
1
and proper liquidity
2
to the business concern.

CONCEPTS OF WORKING CAPITAL
There are two concepts of working capital:
Balance sheet concept or traditional concept.
Operating cycle concept.

Balance Sheet Concept of Working Capital
It shows the position of the firm at a certain point of time. It is calculated on the basis
of balance sheet prepared at a specific date. In this method there are two types of
working capital.
o Gross working capital
o Net working capital

1
Profitability: Ability of the firm to generate net income on a consistent basis.
2
Liquidity: Ability of an asset to be converted into cash quickly.
29

Gross Working Capital- It refers to a firms investment in current assets. The sum of
the current assets is the working capital of the business. The sum of the current is
quantitative aspect of working capital which emphasizes more on quantity than on
its quality, but it fails to reveal the true picture of the financial position of the
business because every increase in current liabilities will decrease the gross
working capital.
Net Working Capital- It is difference between the current assets and current
liabilities or the excess of total current assets over total current liabilities. It can
also be defined as that part of a firms current asset which is financed with long
term funds. It may be either negative or positive. When the current assets exceed
the current liabilities, the working capital is positive and vice-versa.

Operating Cycle Concept
The duration or time required to complete the sequence of events right from the
purchase of raw materials for cash to the realization of sales in cash is called
operating cycle or working capital cycle. The operating cycle consists of three
phases:
In phase 1, cash gets converted into inventory. This would include purchase of raw
materials, conversion of raw materials into work-in-progress, finished goods and
terminate in the transfer of goods to stock at the end of the manufacturing process.
30

In the case of trading organization, this phase would be shorter as there would be
no manufacturing activity and cash will be converted into inventory directly. The
phase will, of course, be totally absent in case of service organizations.
In phase 2 of the cycle, the inventory is converted into receivables as credit sales are
made to customers. Firms which do not sell on credit will obviously not have
phase 2 of the operating cycle.
The last phase, phase 3, represents the stage when receivables are collected. This
phase completes the operating cycle. Thus, the firm has moved from cash to
inventory, to receivables and to cash again.

Figure 1: Operating Cycle

31

These phases affect cash flows, which most of time, are neither synchronized nor
certain. The firm is required to invest in current assets for a smooth, uninterrupted
functioning.

The length of the operating cycle is the sum of:-
Inventory conversion period (ICP) - It is the total time needed for producing and
selling the product. It includes:

o Raw material conversion period (RMCP)
o Work-in-process conversion period (WIPCP)
o Finished goods conversion period (FGCP)

Debtors conversion period (DCP) - It is the time required to collect outstanding
amount from the customers.


DETERMINANTS OF WORKING CAPITAL

The total working capital requirement is determined by a wide variety of factors. It
should be, however, noted that these factors affect different enterprises
differently. They also vary from time to time. In general, the following factors are
involved in a proper assessment of the quantum of working capital required:-

GENERAL NATURE OF BUSINESS: The working capital requirements of an
enterprise are basically related to the conduct of the business. According to the
nature of business they have to maintain a sufficient amount of cash, inventories
and book debts. The industrial concerns require fairly large amounts of working
capital though it varies from industry to industry depending on their assets
structure.

PRODUCTION CYCLE: Another factor which has a bearing on the quantum of
working capital is the production cycle. The term production or manufacturing
cycle refers to the time involved in the manufacture of goods. It covers the time-
span between the procurement of raw materials and the completion of the
32

manufacturing process leading to the production of finished goods. To sustain
such activities the need of working capital is obvious.

BUSINESS CYCLE: The working capital requirements are also determined by
the nature of the business cycle. The variations in business conditions may be in
two directions: (i) upward phase when boom conditions prevail, and (ii)
downward phase when economic activity is marked by a decline. During the
upswing of the business activity the need of working capital is more as opposed to
the downward phase of the business.

PRODUCTION POLICY: The requirement of working capital also depends on
the production policy of the firm. In manufacturing concerns having mostly
seasonal demand for the product the production policy is a significant determinant
of working capital.

CHANGES IN PRICE LEVEL: General increase in price level increases working
capital need of a firm because the firm has to pay more for maintaining the
previous level on working capital.

GROWTH AND EXPANTION: As a company grows, it is logical to expect that a
larger amount of working capital will be required. The critical fact is however, is
that the need for increased working capital funds does not follow the growth in
business activities but precedes it.

AVAILABILITY OF RAW MATERIALS: In case raw materials are easily
available on soft terms the firm does not require maintaining a huge inventory of
raw materials. Such a firm does not require blocking up huge amount of working
capital for this purpose. On the contrary if raw materials are scarce and its supply
is irregular and seasonal in nature the firm needs to store a reasonable quantity of
raw materials in hand. The working capital need of such a firm is significantly
high.

DIVIDEND POLICY: The payment of dividend consumes cash resources and,
thereby, affects working capital to that extent. Conversely, if the firm does not
pay dividend but retains the profits, working capital will increase.

DEPRECIATION POLICY: Depreciation policy also exerts an influence on the
quantum of working capital. Depreciation charges do not involve any cash
33

outflow. The effect of depreciation policy on working capital is, therefore
indirect.

TAXATION
Criteria for calculating service tax
Relaxo footwear limited is registered under service tax as service receiver paying
service tax @ 12.36% on different services after taking benefit of abatement if
any.
Criteria for calculating excise duty
Excise duty is payable on production and is payable on removal from factory or
warehouse. For calculation and deposit of excise duty in a manufacturing concern
we need to know cenvat available which is adjusted against it and then final duty
is paid.
Excise duty on footwear is paid on MRP basis where MRP>RS 500
The criteria is
> Rs 500< Rs1000=6%
>Rs 1000=12%
INTERNATIONAL BUSINESS
34

Import and Export Procedures and Documentation
An EXPORT is any good or commodity, transported from one country to another
country in a legitimate fashion, typically for use in trade.An IMPORT is any good
(e.g. a commodity) or service brought in from one country to another country in a
legitimate fashion, typically for use in trade.
Goods are imported in India or exported from India through sea, air or land. Goods
can come through post parcel or as baggage with passengers. Procedures naturally
vary depending on mode of import or export. All these procedures are based on
the rules and regulations of RBI, its circulars on import/export of goods or
services.
IMPORT PROCEDURE
Import trade refers to the purchase of goods from a foreign country. The procedure
for import trade differs from country to country depending upon the import
policy, the statutory requirements and customs of different countries. In almost all
the countries of the world import trade is controlled by the Government.
The objectives of these controls are proper use of foreign exchange, restrictions on
imports of non-essential and luxury goods, development of indigenous industries,
etc. In India, the following steps are involved in importing goods from any foreign
country.
Steps in Import Trade
35

Following steps are taken in import trade:
Trade Enquiry: First step in import trade is to make trade inquiries asking for
details of goods, price, terms of sales etc.
Procurement of Import license and quota: An Import license is essential to
import goods from a foreign country. A license is issued under import policy
announced every year by the government.
Obtaining foreign exchange: After getting import license, foreign exchange is
obtained from RBI. An application in a prescribed form is submitted giving
details of exchange required.
Placing the indent or order: An order is placed with the exporter for the supply
of goods.
Dispatching a letter of Credit: To ensure payment the exporter asks for a letter
of credit from the importer. The issuer of this letter guarantees the payment as per
terms.
Obtaining necessary documents: The exporter sends necessary documents
giving details of goods dispatched.
Customs formalities and clearing of goods: After receiving the necessary
documents, importer has to receive the goods. He receives delivery order, pays
dock dues, fill in the bill of entry, pay custom or import duty etc.
Making the payment: The payment is made as per the terms agreed earlier.
Closing the transaction: If the goods are as per the satisfaction of the importer
then the transaction is closed.
36


EXPORT PROCEDURE
Any exporter before exporting goods should obtain Exporters Code Number from the
Reserve Bank of India known as RBI code number. In addition, an exporter is
required to obtain an Importer-exporter code (IEC)
3
number from the Office of the
Director General of Foreign Trade or his regional Offices. These two numbers
have to be furnished in the export documents. From April2001 the IEC has been
replaced with the PAN number
4
issued by the Income Tax authorities. This is the
uniform identification number for transaction with any Government agencies like
Customs, Central Excise etc.
The exporter should also procure an export order/consent from the foreign buyers.
The exporter intending to export any goods should file a document called
Shipping Bill with the Customs Department. All the columns in the Shipping Bill
should be filled in properly, which includes the name and address of the exporter,
name and address of the foreign buyers, Quantity and description of the goods,
FOB value, etc. The documents to be enclosed to the Shipping Bill are:
a) Invoice

3
Importer Exporter Code: IEC Code is unique 10 digit code issued by DGFT Director General of Foreign
Trade, Ministry of Commerce, and Government of India to Indian Companies. (Source:
http://www.infodriveindia.com/IEC-Code/Default.aspx)
4
PAN number: Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form
of a laminated card, by the Income Tax Department. (Source:
http://www.incometaxindia.gov.in/PAN/Overview.asp)
37

b) Purchase order/contract
c) G.R. form in duplicate
d) Export license, if the goods are falling in the negative list of the Export and
Import Policy.
e) Exporters declaration regarding correctness of the value, goods, etc; (Section
50 of the Customs Act, 1962).
The Shipping bill so filed with the Customs is assigned with a serial number with date
by the noting clerk and then the Shipping Bill is scrutinized by the
Appraiser/Superintendent and after assessment it is countersigned by the
Assistant/Deputy Commissioner. The original copy of the Shipping Bill is
detached by the noting clerk when no export duty is payable. If any export; duty
is payable original copy of shipping bill is detached by cash department after
collecting duty and making suitable endorsement on all the copies of shipping bill.
The other copies are then returned to the Exporter/CHA. Thereafter the
Exporter/CHA presents the duplicate and triplicate copies of shipping bill with
other documents and the goods to the Appraiser/Superintendent in charge of
examination. The Appraiser/Superintendent examines a percentage of the
consignment with reference to the documents and gives an order called LET
EXPORT order on duplicate and triplicate copies of Shipping Bill. The goods
thereafter remain in the Customs area till they are loaded into the conveyance
(Ship/Aircraft/Container) under Customs supervision.
Triplicate, Quadruplicate, Export Promotion copy of the Shipping bill and duplicate
copy of G.R. form are returned to the Exporter/CHA. The Preventive
38

Officer/Inspector supervises the loading of export goods into the conveyance and
makes an endorsement to that effect on the Shipping Bill and G.R. form. Original
G.R. form is detached by the Preventive Officer/Inspector for onward
transmission to the Reserve Bank of India (R.B.I.)

Flow of export procedure
1) Making an application of export under the Foreign Exchange Act to The Ministry
of Economy, Trade and Industry
2) Sending the copy of the Application to The Ministry of Environment
3) Giving notice to the State of import
4) Receiving the answer from the State of import
5) Sending the answer to The Ministry of Economy, Trade and Industry
6) Granting the approval of export under the Foreign Exchange Act
7) Granting the export movement document to exporter
7) sending the copy of the export movement document to The Ministry of the
Environment
8) Declaration of export under the Customs Law
9) Permission of export under the Customs Act
10) Delivery and the obligation of accompanying any exported cargo with the
movement document to the importer.
11) Giving notice of completed disposal

39

IMPORT/EXPORT DOCUMENTS
As we all know we are living in a global village and there is hardly anything that
doesnt shift between borders be it rations, home items, chemical goods and even
automobile. Import/Export is a regular practice for several manufacturing
industries, and the basis for living for others. It is almost sure that you have
employed various importing methods in your trade before, but there are few
essential things to keep in mind when systematizing your documentation.
A common saying is that exporting and importing has nothing much to do with
products and a lot to do with documentation! It sounds completely odd but it is
true! The significance of correct paperwork cant be underplayed in accurately
organizing exporting and importing. Export import credentials are the keystone of
global trade and make the process easy to understand.
There is normally little variation in the documentation essential for trade from nation
to nation but they are sure to include the following:
Letter of credit - this is applied for making payments for imported items, once
the required papers are handed over. A letter of credit mainly says that the
importers bank guarantees to pay provided the entire documents specified in it are
in order.

Purchase order - It appears like a trade requirement but it may be desirable for
financing. The buyer may need to prove the order to his bank to organize a
40

provisional loan or customs may desire to see the paperwork to make sure the
whole thing is legitimate.

Certificates of origin - Various countries have limitations on the introduction of
commodities from certain other countries, and may apply duty to these
commodities or ban them altogether. On the other hand, there may be tax benefits
on items from specific supply sources. In such cases, an exporter will require to
present a Certificate of Origin, which is certified by a designated regulatory
authority.

Manufacturer's Certificate - It is required in addition to the Certificate of Origin
for few countries to show that the goods shipped have actually been manufactured
and is available.

Bill of lading It is a required shipment document for sea consignments when
commodities are sent by sea route, as proof that the commodities have been sent
by the supplier.

Airway bill - Same as bill of lading except that it is a document involved in Air
shipment.

Inspection or Quality credential - If the buyer requires an examination of goods
prior to shipment, these are vital documents to making sure the deal is established
in accordance to the buyers requirement.

Packing List - The List of all of the cardboard boxes within the container and the
contents within the boxes.
41


Invoice - The most essential document. Make sure that a complete synopsis of
merchandise is outlined and it is invoiced in the currency of sale.
Despatch Note- It is filled by the exporter to specify the action to be taken by the
postal department at the destination in case the address is non-traceable or the
parcel is refused to be accepted.

Shipping Order - Issued by the Shipping (Conference) Line which intimates the
exporter about the reservation of space of shipment of cargo through the specific
vessel from a specified port and on a specified date.

Others - These are other detailed requirements from country to country. For
instance, Australia has strict quarantine limitations governing the trade of animal
and food items. You would need to secure a permit, or subject your items to an
inspection or both.

42

IMPORT/EXPORT POLICIES
The Government of India, Ministry of Commerce and Industry announces Export Import
Policy after every five years. EXIM policy, in general, aims at developing export
potential, improving export performance, encouraging foreign trade and creating
favorable balance of payments position. The current EXIM Policy covers the period
2010-2014. The Export Import Policy (EXIM Policy) is updated every year on the 31st of
March and the modifications, improvements and new schemes become effective from 1st
April of every year.
EXPORT POLICY IN INDIA
Most items can be freely exported from India.
A few items are subject to export control in order to :
o Avoid shortages in the domestic market.
o Conserve national resources.
o Protect the environment.
Export profits are exempt from income tax.
Higher royalty payments of 8% (net of taxes) are permitted on export sales as
compared to 5% on domestic sales.
Export commissions up to 10% are also permissible.
Inputs required to be imported for export production are exempted from the basic
customs duty.
Export Oriented Units (EOUs) and Export Processing Zones (EPZs) enjoy special
incentives such as:
o Duty Free import of capital goods for the purpose of export production.
o Duty Free import of raw materials for the purpose of export production.

43

IMPORT POLICY IN INDIA
Import policy has 3 major objectives:
o To make necessary imported goods more easily available, including
essential capital goods for modernizing and upgrading technology.
o To simplify and streamline procedures for import licensing.
o To promote efficient import substitution and self-reliance.
Imports are allowed free of duty for export production under a duty exemption
scheme.
Duty Exemption Scheme has been specified for more than 4200 items.
There are no quantitative restrictions on imports of capital goods and
intermediates.
Import of second-hand capital goods is permitted provided they have a minimum
residual life of 5 years.
There is an Export Promotion Capital Goods (EPCG) Scheme under which:
o Exporters are allowed to import capital goods (including computer
systems) at concessionary customs duty.
o Service industries enjoy the facility of zero import duty.

44

IMPORT/EXPORT CONTRACT

A contract is an agreement that creates an obligation that is a binding, legally enforceable
agreement between two or more competent parties.

A contract can be worked out either by the seller or the buyer, and it is called a sales
contract or a purchase contract respectively. The formal contract consists of the following
main terms:
Name of commodity
Quality of commodity
Quantity of commodity
Packing of commodity
Price of commodity
Payment
Insurance
Inspection
Cargo claims
Force majesties
Import Export Contract Terms on Price Methods
FOB - Free on Board Free on Board means that the seller fulfills his obligation
to deliver when the goods have passed over the ship's rail at the named port of
shipment. The buyer has to bear all costs and risks of loss of or damage to the
goods from that point. FOB terms require the seller to clear the goods for export.
This term can only be used for sea or inland waterway transport.
CFR or C&F - Cost and Freight Cost and Freight means that the seller must pay
the cost and freight necessary to bring the goods to the named port of destination
but the risk of loss or damage to the goods, as well as any additional costs due to
events occurring after the time the goods have been delivered on board the vessel,
45

is transferred from the seller to the buyer when the goods pass the ship's rail in the
port of shipment. The CFR term requires the seller to clear the goods for export.
CIF - Cost, Insurance, and Freight CIF means that the seller has the same
obligations as under CFR but with the addition that he has to procure marine
insurance against the buyer's risk of loss of or damage to the goods during the
carriage. The seller contracts for insurance and pays the insurance premium.
DAF - Delivered at Frontier (...named place) DAF means that the seller fulfills
his obligation to deliver when the goods have been made available, cleared for
export, at the named point and place at the frontier, but before the customs border
of the adjoining country. The term is primarily intended to be used when goods
are to be carried by rail or road, but it may be used for any other mode of
transport.
Import Export Contract Terms on Payment Methods
Irrevocable L/C (Letter of Credit) - A letter of credit eliminates financial risks
for the manufacturer, and the distributor. When distributor confirms the order, a
letter of credit is drawn from that company's bank to a branch in the
manufacturers bank.
This letter of credit confirms that funds are available from the distributor to cover the
same costs quoted. An irrevocable letter of credit assures the order will not be
cancelled at any time. When that letter of credit is likewise confirmed by
manufacturers bank to deliver the goods, the distributor is assured of delivery.
Once the letter of credit is confirmed by the bank, the currency exchange is also
46

confirmed, so manufacturer doesn't have to worry about the fluctuation in
currency.
Basically, the bank holds the money until all shipping documents are presented. The
letter of credit states the terms and conditions to make it legal and negotiable into
money, usually holding for proof of shipment of the goods. The freight forwarder
helps to attain all those documents. After handing them to the banker, the letter of
credit is turned into liquid assets to pay the manufacturer and all other invoices
from the transaction.
Irrevocable L/C is the one that can not be withdrawn or amended by the opening bank
without the agreement of the beneficiary. This kind of L/C is more secure and
hence is most often used. It claims our attention that, according to Uniform
Customs and Practice of Commercial Documentary Credits
5
500, if a L/C is not
marked as being irrevocable or not, it should be taken as irrevocable.
Remittance - Import Export Contract Terms - Remittance is of three types: Mail
Transfer (M/T), Telegraphic Transfer (T/T), and Demand Draft (D/D).
o By Mail Transfer, the buyer will hand over the payment of the goods to
the remitting bank that will authorize its branch bank or correspondent
bank in the country of the beneficiary by mail to make the payment to him.
o By Telegraphic Transfer, the buyer will hand over the payment of the
goods to the remitting bank which will authorize its branch bank or
correspondent bank in the country of the beneficiary by telegraphic means
to make the payment to him. Mail transfer is less expensive, but it costs

5
Uniform Customs Practice: It governs the operation of letters of credit.
47

more time, while telegraphic transfer is more expensive but it is much
sooner.
o By Demand Draft, the buyer will come to the local bank to buy a banker's
bill and then deliver it to the seller or beneficiary by mail. When the seller
or beneficiary has received it, he will come to the bank designated by the
banker's bill for cash. Apart from banker's bill, promissory notes or checks
can also be used in this way.

IT ENABLED SERVICES
Deployment of ERP system
Relaxo footwear, an avant garde footwear manufacturer is a leading brand in the
country. It was primarily in wholesale, distribution and exports. Planning the next
spurt of high growth it entered into company owned company operated (coco)
retail stores. Relaxo identified the need for Enterprise Resource Planning (ERP)
solution with an integrated Point of Sales (POS) solution, to streamline and
reportly manage and control related operations. It partnered with Microsoft
R
gold
certified partner, Trisoft systems to deploy LS Retail NAV, which is an end to end
retail solution. The solution covers transactions, from POS to back office,
functions to consolidate business operations at the head office. After a successful
deployment, the company saves significant person hours each month. In addition,
it has seen a reduction in operational costs and high return on investment.
Management control over stores has improved with efficient monitoring of sales
48

and profitability data. This high degree of control gives the management
confidence to open many more retail outlets.
The store operations were tracked manually and recorded at regular interval the
data was consolidated at head office. This was complex and time intensive
process and was not ideal for a growing retail chain. When the number of retail
outlets reached above 10 stores, the management recognised the need for a
solution to manage inventory and invoicing of the stores to exert total control and
simplify operation consolidation of data from all stores and centralised location
was necessary for smooth functioning of multiple stores at different locations.
In 2006 the IT team at Relaxo started evaluation of ERP-POS solutions for data
consolidation. The management evaluated multiple solutions for data
consolidation. The management evaluated multiple solutions including Retail Pro,
Logic Soft, Retail Excel and LS Retail NAV for over a three month period. After
thorough market research, it short listed LS Retail based on Microsoft Dynamics
NAV to carry out all its operations such as financials, stocks, inventory and point
of sales operations.




49

3b Data presentation
Data presentation of finance


Figure : Earning per Share



0
2
4
6
8
10
12
Earning Per Share
0
2000
4000
6000
8000
Net Profit
50

Figure : Net Profit



Figure : Creditors Turnover Ratio



0
2
4
6
8
10
12
14
Creditors Turnover
ratio(times)
0
2
4
6
8
10
12
Stock Turnover Ratio
51

Figure 9: Inventory Turnover Ratio


Chapter 4
FUNCTIONAL ANALYSIS OF THE COMPANY



Chapter 5
SUMMARY & CONCLUSIONS
5.1 Findings/Results
The findings/results of the study are as follows:
a) Relaxo footwear limited is on the second number in Indian market
b) It was observed that profit after tax of Relaxo Footwear Limited
increased by 2082.82 lacs in the year 2013-2014. In the year 2012-
52

2013 it was 4480.82 lacs and in the year 2013-2014 it became
6563.64 lacs.
c) It was observed that stock turnover was changing
d) Earning per share is high in 2014.
5.2 Lessons Learnt
Experience about working environment obtained in the company:
The working environment of Relaxo Footwear Limited was very good and
friendly. The working environment was disciplined as well.
5.3 Suggestions
the company was very cooperative and helpful. They provided information on the
different aspects as required. Students can be sent to Relaxo Footwear Limited in
future as it was a good platform to learn