Shares of Haryana-based footwear manufacturer Liberty Shoes jumped over 14 percent on Monday after the company posted a 35.4 percent increase in net sales to Rs 142.05 crore in Q4 March 2014 compared to same period last year.

Speaking to CNBC-TV18, Adesh Gupta, CEO, Liberty Shoes said the shoe-maker saw an increase in new customers by 20-25 percent. He also said the company may take a small hike in certain categories. However, he said there is no need for any capex expansion in the near-term.

Below is the transcript of Adesh Gupta's interview to CNBC-TV18's Sumaira Abidi & Nigel Dsouza.

Sumaira: You've achieved the FY14 topline guidance of Rs 500 crore. What will FY15 look like? A: We are excited for this year. This (FY14) has been a milestone year for us where we have breached a level of Rs 500 crore. This (has) set the whole company, all the stakeholders, to look for sustainable growth. We are looking for (growth) the next financial year, on the drawing board stage, which is between 20-25 percent. It could be even higher.

Nigel: You have clocked 8.8 percent margin approximately for this particular quarter. What caused this margin expansion of around 130 bps on a year-on-year basis and can it get better?

A: I think there are two aspects to it. 1) Going forward we expect the input cost will come down because there is rupee appreciation, which means the imported raw material we use, probably will be cheaper. 2) When the topline increases to a certain degree, the gross margin contribution towards the net profitability also increases substantially. These two put together will give us a better margin going forward in the next financial year.

Sumaira: The last time we spoke to you, you said it was a change in merchandise assortment, which was helping you guys in terms of your financials. Is that going to be enough to sail your through the next year as well?

A: We have changed our business model. We have innovated, particularly in a fashion industry. We have changed our business model from push to pull. That is the fundamental on which the whole company is riding. We are riding a wave, which would continue with next financial years because the change in merchandise assortment and all other parameters which the company is doing is a continuous process. But the paradigm change, which the company, has made from push to pull, is the reason we see much more footfall and conversion of footfall. We have seen in our stores, there is a 22-25 percent new customers being added, which is a good sign going forward. The brand equity of the company is increasing in the minds of consumer and the lifestyle change and the merchandise assortment, which is adding to the feel of the company and the products, will give a good value to the shareholders.

Sumaira: What does this take your market share to now and are there any price hikes that you could be looking at?

A: It doesn't appear to me that we will have a huge price increase but maybe smaller dose of increase in certain product categories depending on the export or institutions or domestic. It all depends where the costs are going to increase, so that particular portion will see some surge in the price but otherwise we do not see a huge change in the price going forward.

Nigel: With regards to your capex plans this year and if you have any can you give us a ballpark figure and also how will you look to fund it?

A: As far as the capacity is concerned at the backend we do not see any need for any capex expansion but however the whole focus has now shifted from manufacturing to marketing and the whole expansion which will happen going forward will be more in the retail stores and we are hoping to add lot of new stores going forward in next year which will give us a targeted growth because that is where the growth is going to come from. So, that is where the capex will go which will be most likely supply chain or working capital.

It's not necessarily in plant and machinery.

Source: Money Control (http://www.moneycontrol.com/news/results-boardroom/no-capex-expansion-plans-may-hike-prices-liberty-shoes_1072078.html)

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