Overview of Chairman’s Statement at the 75th Annual General Meeting
of the Company held on June 19, 2008.

INDIAN ECONOMY

Our economy continues to show a robust growth of over 8 % per annum, for four years running, having peaked at 9.6 % in 2006 - 07. While increased inflation is a cause of worry, Government is taking several steps to control inflation, and with a better Agri-production, we expect inflation will come down to around 5.5 - 6 %. Our country’s substantial investments in Infrastructure projects, Governments employment incentive plans in rural areas, and robust economic growth augur well for your Company. We expect better buying power both in urban, semi-urban and rural areas, and more demand for value for money, and latest fashion shoes for ladies, men and children. We hope Government and Private sector initiatives in Agriculture Research and extension services, will allow us to achieve 4 % growth in Agriculture productivity, thus making more disposal income available for items like shoes and accessories, which your Company markets.

OPERATIONS

The Company has achieved a net turnover of Rs.8674.8 million in 2007 as compared to Rs. 7702.0 million in 2006, which is a growth of 12.6%.

The results of the year 2007 reflect the sustainability of the Company's turnaround, which began in 2004 with restructuring efforts, and subsequent innovation (in product and retail formats), both of which still continue. The Company has made a Profit before tax of Rs.551.5 million in the year 2007. Profits of 2006 included Rs.171.3 million from one time exceptional items. Without considering the exceptional item of 2006, the increase in Profit before tax for the year 2007 is 72.1% over the previous year. The increase is attributable to stricter cost control, improved product mix, new shoe designs, renovation of 40 existing stores, opening of 67 new stores, consolidation and specialization of factories and continued transformation of the wholesale business.

All these improvements were possible as a result of several new initiatives taken by the management during the year, in addition to the initiatives, which had begun, in the earlier years. Retail Restructuring has been our core focus, new model of managing stores have been put in place, and productivity linked remuneration packages have been established, cash drain stores have been reduced to 74 from 140 in 2006. Wholesale business, which was a mega drain on profits in the past, has become profitable. We have also formally restricted credit to wholesalers to forty-five days, and our actual performance is below the specified timing. We have created three independent distribution Channels, in the wholesale business: Urban, Institutional and Industrial safety and Branding. Our urban wholesale division sells over 15 million pair of shoes thro’ 16 depots and 150 large distributors, catering to more than 20,000 dealers. Our Industrial safety division caters to needs of various industries, with special features like impact and heat resistance, oil resistance, and lightweight shoes. Our Institutional sales division is focusing on the special needs of our Defence and Para Military Forces; Hospitability, Airlines, Retail, Construction, Hospitals, Mining and many other industries, who have specialized needs. The Branding Division sells footwear under Hush Puppies, Dr. Scholl’s, Power and Bubble gummer, to department stores, footwear chains and specialty stores.

Our factories have been transformed to specialize in specific type and design of footwear. Our special focus and emphasis has been on building a strong team of employees, through inside and outside the company training, besides recruiting high caliber personnel. Your Company has built and continues to strengthen relationships and gain confidence of Banks, credit rating agencies, investors, our esteemed shareholders, suppliers and employees. Our vision and objective is to improve the service to customers by better merchandizing in much bigger stores, built to international standards. Size of new stores range from 3000 sq ft and up to 10,000 sq ft. We have renovated old stores, built in Bata Global format. We want to give our customers a great shopping experience.


INDUSTRIAL RELATIONS

I am happy to inform you that the Industrial Relations in our Factories were peaceful and cordial during 2007. The Company is re-enforcing Performance Linked Salary at all levels of employees so that a culture of accountability can be developed. All the executives and managers have been given clear goals / objectives for the year. We have a robust selection process and antecedent verification has been made mandatory for all selected candidates. A well-formulated strategy has been put in place to retain best talent in the company and reduce attrition rates. Evaluation process of our employees’ has been improved so that promotion and recognition are awarded only to deserving candidates.

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