I would recommend using the Taxpayer Information Report or Annual Information Report generated by IT-Dept. You can access it by login to IT Efiling website.
It gives a true blue picture and avoids difference with IT Dept collated nos.

From a purely consumer point of view, I can affirm from first-hand experience that Redtape shoes are one of the best available in the market at prices that are affordable to the Indian middle class.

However, from an investment perspective, I see a few main issues with the organized footwear business as a whole.

1. First is the lack of customer stickiness and our general obsession with price and discounts over quality. So there is very little pricing power in the hands of manufacturers if any at all.

2. Second is the pervasive presence of unorganized players. The FY23 Annual Report of Redtape states that about 85% of the Indian footwear market resides in the hands of these unorganized players and perhaps more importantly the entry barrier is low for new players to enter.

However, this is completely my personal opinion and doesn’t make Redtape a bad investment whatsoever, especially with India slowly migrating towards becoming a middle-income economy. It is only that I feel there are better businesses available and I am open to contrarian views on this point.

Disclosure – Not invested

Now that we have had some time to absorb new information from AGM 2023 Updates and also deliberated amongst friends/other investors/in-house VP domain experts, let’s summarise some Key Information and go on to stick our necks out and make bold to present some Key Insights (forward-looking, that look clear to me, but of course will need some more field validation from domain experts, than what we have today!).

Disc: SBCL stock is currently at expensive levels. This post has forward looking inferences (which may all go wrong). Buying at these levels will be fraught with risks. Being Invested, my views are biased.

Key Information to focus on (all data/facts that move the needle the most!)

1. Isabellen Hutte commands 60-70% share of EV BMS shunts supplies to Tier1 EV BMS suppliers like Bosch, Hella, Continental that in turn supply to all major Auto OEMs. ISAH primary bonding tech is Hard Resistant Bonding, EBW bonding tech share is probably negligible. Has Patents around the Hard Resistant Bonding tech/processes.

2. EBW Bonding tech vendors (capable of EBW Shunt strips) include IsabellenHutte (1 EBW m/c), Vishay (3 EBW), Shivalik (8 EBW, also some are with multiple guns, so total is more like 11(?), Wieland Germany (1 EBW), Cyntech Taiwan (1 EBW), Korean (2 companies, 1 EBW each), Chinese (2 companies, servicing Chinese Market primarily).

3. Totally 8 Competitors globally (EBW Shunt strips capable) approved with OEMs. Effectively 5 players only in SBCL addressable market as Chinese players serve the China market, and ISAH concentrates on propagating Hard Resistant Bonding tech, has negligible EBW Shunts presence. Vishay is NOT a competitor but a win-win customer. Wieland (a major player) is a new entrant though to EBW Shunt strips, Cyntech was a SBCL customer before and new entrant, Korean players one of them also a SBCL customer before, and new entrant.

4. Typically the supply relationships between a Tier1 like Bosch and a Tier 3 supplier like ISAH (for a particular OEM platform) are contracted for the expected life of the product. So say for a OEM platform introduced in 2015/16, the shunt supply contract is typically 10 years and running/in-force till say 2025/2026

5. Almost all OEMs have introduced/working on new Platforms that will be launched in 2025/2026 timeframes. Due to large number of sensors in an BEV and Hybrid EVs and thus consequent proliferating errors, OEMs have now specified ASIL C standards with an aggregate desired accuracy 1% at the BMS level, and compartmentalised error levels for different components e.g. this 1% accuracy desired at BMS level translates to 0.05% accuracy level required at individual Shunt level (existing vehicles have 1% accuracy requirements at Shunt level)

6. SBCL Tier1 customers like Bosch, Hella, Continental demand (but can’t measure 0.05% shunt level accuracy) but the OEMs can and do measure before approving. SBCL has passed this stage with all major global OEMs now.

7. ISAH has also been making Current Sensing (CSM) modules using their Shunts. And started offering the same to the OEMs (effectively competing with other Tier1 supplier just like Bosch, Hella and Continental). OEMs ONLY care about ASIL C 1% accuracy at CSM/BMS level, they do not care whether Shunts came with Hard Resistant Bonding tech or EBW Bonding tech.

Key Insights to fix on (Inherently forward looking)
We solicit more work and discussion around these with industry domain experts)

1. SBCL is today positioned at every major Auto OEM for their EV forays mostly through their Tier1s like Hella, Continental, Bosch and Others (nail these down). In some, the positioning is very strong like in Continental and Hella (buttressed by forward visibility of 6-7 years), likely to become as big, or better than the Vishay relationship. Very likely a few years down the line SBCL will emerge as the primary vendor for both Hella and Continental offerings to OEMs

(Work in progress will be uploading shortly)

For more exploration

1. Wieland E-Mobility (EBW shunt strips, Shunts, Shunts-based Current Sensors)
2. Cyntech ASIL C and ASIL D Shunt Modules

Red Tape AGM Short Notes:

Question about Geographical Expansion Plans:

Management Reply:

At present, majority of revenue comes from Jammu Kashmir, Punjab, Haryana, Himachal, Uttar Pradesh and Rajasthan.

We are now expanding in cities like Hyderabad. We’re looking to open more stores in coastal Andhra Pradesh cities like Guntur, Vijayawada, Vishakhapatnam. We are also expanding in Gujarat in a big way. And the Northeast is also something that we are toying with right now.

In the West India, In South India states like Tamil Nadu, Central India we don’t have a single shop So there is a lot of place lot of room to grow within India.

We have expanded our online warehouse, multi-fold this year, and the results should start coming out from the third quarter of this financial year. We are extremely optimistic about the future of footwear industry in India and believe that we have just started.

Question about Product Expansion Plans:

Management Reply:

We are not experimenting with any new categories as of now but next year when hopefully things get more settled down, we are planning to get into the luggage industry and backpacks and cabin sized suitcases.

Question about Competitors:

Management Reply:

In Footwear Space:

In the footwear industry, we compete with some of the lower ranges of brands like Reebok, Adidas and Puma. Lotto and Fila are our direct competitor and brands like Campus, they have certain premium ranges that also sell in the same price vicinity as ours.

In Apparel Space:

We would be competing with brands like Allen Solly and Peter England, John Players and even some of these primary label brands of Westside and Pantaloons.

we’re facing this competition is by improving the product quality, making a better product for consumers and overall giving consumers a better experience for shopping.

Question about Spors shoe market size:

Management Reply:

As per surveys done by some independent agencies, they say that the Indian sports shoe in the Indian footwear industry is around INR93,000 crores and is set to increase to INR1,41,000 crores by 2025.

The exact numbers, nobody knows, because still a very big part of our industry is unorganized. It’s slowly and slowly becoming more and more organized. So, as it gets organized, the numbers go up. So, there’s tremendous scope for growth in the future.

Question about perception of Discount Brand:

Management Reply:

Whenever they come shopping in REDTAPE, we want them to get the sweetest deal. We want them to get the best product, best value for the money. And each consumer should feel like he’s a winner. If this winning spirit is alive, that’s the DNA of our brand.

If you look at our margins, they are also highest. EBITDA is healthy. So, whether it’s 50% or 80%, this is a marketing strategy designed for making consumers buy a product. The Indian consumer mindset, unfortunately today, does not want to buy anything full price, from a car to a house, they want a discount. So this is the trend as of today. If tomorrow the trend changes, we will be flexible enough to change with the trend.

can they achieve 500 cr in 3 years?