The thesis has played out beautifully here.

Latest annual report is out. And no guarantee commissions.

Total payment to directors of 7cr (mostly salary to Shuja, who richly deserves it IMO) which is 5% of PAT.

Contrast this with payment to directors of 14cr in FY22 (from mirza Anual report).

Even if we include the mirza int FY23 payment this is flat compared to FY22 numbers while PAT has grown well. Importantly most of PAT comes from Redtape, most of director remuneration from Mirza. So Redtape shareholders have nothing to worry about.

Some more notes:

Industry Tailwinds/TAM

1. The FMCG, apparel & footwear, and consumer electronics are the largest retail segments in India, constituting 65%, 10%, and 9% respectively of the retail market. Online shoppers in India are expected to reach 500 million by 2030 and the e-Commerce market is expected to touch US$ 350 billion in GMV by 2030.

2. 35B$ online TAM for redtape.

3. India is the world’s second-largest buyer and producer of footwear, with an eight-fold rise expected by 2030. The Indian footwear industry is projected to grow by 24.73 percent per year (CAGR 2021-2025)

4. Nearly 85% of the Indian footwear industry comprises unorganised players who sell their products at meagre prices and enjoy multiple benefits such as lower sales tax, lower overhead cost, lower labour cost and absence of research and development (R&D) expenses

5. Shift to Organized has HUGE TAM

Strategy

1. Over the years, we have broadbased our brand presence across various fashion verticals, and tapped into the men’s clothing and accessory category in 2006. Today, our brand also caters to the fashion needs in the female and kids clothing and accessory category
2. improved our penetration in existent markets leveraging our strong omni-channel presence, especially with a strong focus on digital infrastructure

Growth

1. Redtape stores grown from 348 to 387. (11% growth). So good SSSG too.

Business Details

1. The Company is having 100% controlling stake in M/s Mirza Bangla Limited. Mirza Bangla Limited was acquired under the Scheme of Arrangement from Mirza International Limited. However due to pending completion of legal formalities for transfer, investment are still held in the name of Mirza International Limited. ** The Company is partner in M/s Sen En Mirza Industrial Supply Chain LLP having Profit sharing of 52%.
2. Inventory turnover ratio of 2.82 is healthy.
3. For comparison, Relaxo is at 3.2. Campus 3.66. Metro shoes is at 1.67. Bata is at 1.71. So redtape is better than most, but there is some headroom to expand more. My guess is, Inventory turnover might be a tradeoff with margins. Need to understand this better.

Durable Competitive Advantages

1. With a legacy of almost 3 decades, REDTAPE has emerged as one of India’s most trusted fashion and lifestyle brand with a strong presence not only limited to domestic but also international markets

2. We have an integrated footwear manufacturing unit based out of UPSIDC Industrial Area in Uttar Pradesh

3. It is on the balance sheet of Redtape

4. And they make sports/casual shoes along with leather shoes

5. two online MP warehouses located at Noida Sector 59 and UPSIDC Industrial Area Unnao in Uttar Pradesh

6. we have been conducting extensive research and making consistent product innovations to cater to the everchanging fashion trends across the world.

7. Redtape: Athleisure: Men’s Apparels, Shoes and Women’s Footwear, Accessories

8. Mode by REDTAPE: Women’s Ethnic wear

9. Bond Street by REDTAPE: Men’s Casual footwear

10. At REDTAPE, we have carved our growth trajectory on the back of a strong brand recall which is synonymous with trust, quality and the latest fashion(Fast fashion).

Management

1. Shuja: A graduate in science from the California State University, USA, Mr. Shuja Mirza has a rich experience in the field of marketing. Leveraging his experience, he is managing operations, product design, development and manufacturing. He also introduced the Retailing Units and Online Division in the Company, which helped us grow exponentially. Additionally, owing to his exposure in the international markets, he is also responsible for diversifying and bringing the needed vigor to the Company

Disc: Invested, biased