Liberty Shoes Ltd

Dear Shareholders,

Your Directors are presenting the 37th Annual Report of the Company together with the Audited Financial Statements for the financial year ended 31st March, 2023.

Financial Highlights:

The highlights of the financial statements are as under:-

(in Lakh)

Review of the operations of the Company:

During the financial year 2022-23, your Company achieved its highest-ever turnover in its history, with total revenue reaching to 65,432.70 Lakh as against 48,781.68 Lakh during the previous year. This achievement reflects a 34% increase compared to the previous year. Furthermore, your Company's profitability also soared, with net profits reaching to 1,291.93 Lakh, marking a 476% increase from the previous year of 224.29 Lakhs. These financial milestones are purely a demonstration of our dedication, thought out plans and the management commitment for continuous improvement.

The Financial results have to be observed keeping in view the fact that the year under consideration has been the first full year of operations without any disruption of impact of COVID-19 which has impacted company's operations in the last 2/3 years.

E-commerce (on line portals) played a pivotal role in our success, contributing 15% of our total revenue during the financial year. This channel's growth underscores our commitment to digital transformation and meeting customer preferences of the modern trade. We also strengthened our retail footprint by opening of 55 new stores, reaching 425 exclusive showrooms nationwide including COCO stores. The first half of the financial year 2022-23 saw a surge in pent-up demand across our industry wherein opening of schools, institutions and offices compelled the consumers to revive their need of essential items like footwear and other related products. Your Company responded promptly to meet this demand, adapting our operations and strategies to capitalize on these opportunities. This resilience and adaptability have been helpful for our continuing growth trajectory in 2nd half as well. Our focus on sound financial management resulted in reducing receivables and the efficient utilization of working capital which contributed to a healthy free cash flow position. This financial strength allows us to explore new growth avenues and also comprehend our investment towards long-term sustainability of the Company.

In line with our commitment to innovation and enhanced customer satisfaction, your Company during the year under consideration has introduced its new range of premium casual footwear with novel identity of LEAP7X which has been very well acknowledged by the consumers. To augment the promotion of this product category, the Company strategically engaged two eminent Bollywood celebrities, Ayushman Khurana and Rakul Preet Singh, as Brand Ambassadors for our athleisure brand, Leap7X. Considering the athleisure-centric nature of the brand, the association with these Bollywood stars perfectly aligns with the message conveyed in Leap7X's latest campaign, "Sitaare Aise Hi Nahi Bante Mehnat Karni Padti Hai AM To PM." Their endorsement creates a compelling connection between the brand and the essence of the campaign, reflecting the contemporary and active lifestyle embraced by Leap7X. Their presence and influence bring credibility and appeal to the brand, further enhancing Company's market position and customer engagement.

During the financial year 2022-23, to enhance our brand presence and customer engagement, we allocated substantial resources to marketing activities and incurred approx. 25 Crores as against 5 Crores (approx.) during the previous year .The said advertising expenses comprised almost 30% value done through use of non cash mode against clearance of slow moving stocks as part of strategy of promotions and also reduction of stocks. These efforts have yielded positive results, strengthening our market position and customer loyalty.

Liberty ,as members are aware, has always been perceived as Innovative brand and continuing with the same approach has recently introduced new technology of NITPRO to further maintain our competitive edge and staying at the forefront. Your Company during the year also successfully upgraded its proven ERP by implementing the SAP S/4 HANA system, (cloud based) for streamlining its operations and also enhancing efficiency across the organization. This technology upgrade positions us for greater agility and adaptability in the ever-evolving business landscape.

Your Director are of the opinion that Footwear Industry per se has enormous potential to grow in future and Liberty is all set to exploit that potential.

Credit Rating:

During the year under review, CARE Ratings Limited, a leading rating agency, has assigned its Ratings CARE BBB+; (Triple B Plus) in respect of Long Term banking facilities (comprising Term Loan and Working Capital fund based facilities) and CARE “A2” (“A” Two) in respect of Short Term banking facilities (comprising non fund based facilities) sanctioned by the Banks to the Company. According to the rating given based on Company's improved liquidity position ,the outlook on the Long Term rating has been assigned stable.

Subsidiary Company, their Performance & Consolidated financial statement:

The Wholly Owned Subsidiary (WOS) in the Middle East has already been discontinued by the Company, as previously announced. No financial statements for the year under review were required to be filed and submitted, as required by Section 129 of the Companies Act, 2013, as this WOS ceased to exist as of 2018.

Dividend

Since your Company is not among top 1000 listed Companies based on market capitalization (calculated as on 31st March, 2023), therefore it is not having dividend distribution policy as provided under Regulation 43 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (as amended) herein after referred as “Listing Regulations” in this report). However, your Company will adopt the same as and when it is applicable on it.

The Board considering the Company's performance and financial position for the year under review, approved and paid Interim dividend at the rate of 25% (Rs. 2.50 per equity share) on each fully paid-up equity share of Rs. 10/-. The total outflow on account of Interim Dividend from the company's profits for the financial year that ended on 31st March, 2023 was Rs. 4.26 Cr.(inclusive of applicable T.D.S.). The Interim dividend was paid to the members whose names were listed in the Register of Members as of Friday, September 23, 2022 i.e, which was the Record Date for the purpose of payment of interim dividend.

Transfer to Reserves

Your Directors proposed to transfer NIL (Previous Year NIL) to the General Reserves out of the profits available with the Company for appropriations. Accordingly, an amount of 1342.60 Lakh (Previous Year 262.72 Lakh) has been proposed to be retained in the Profit & Loss Account of the Company.

Transfer to Investor Education and Protection Fund

In compliance with Sections 124 and 125 of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund)

Rules, 2016 (“IEPF Rules”) as amended from time to time, a sum of 3.48 Lakh for FY 2014-15 (Final Dividend) has been deposited into the specified bank account of the IEPF, Government of India, towards unclaimed/unpaid dividend amount for the financial year ended March 31, 2015.

As per the said Rules, the corresponding equity shares in respect of which Dividend remains unclaimed/ unpaid for seven consecutive years or more, are required to be transferred to the Demat Account of the IEPF Authority. During the year under review, your Company has transferred 30,561 underlying Equity Shares to the Demat Account of the IEPF Authority, in compliance with the aforesaid Rules.

Employees Stock Option Scheme(s)

During the year ended 31st March, 2023, your Company has not floated any scheme in relation to Employees Stock Option(s) and no such further plans have been initiated at present in this regard.

Nomination and Remuneration Policy

Your Board of Directors, on the recommendation of the Nomination and Remuneration Committee, framed and adopted a policy for identifying and recommending the selection and appointment of Directors and KMPs of the Company and remuneration to Directors, KMPs and other employees. The contents of the Policy and evaluation criteria have been stated in the Corporate Governance Report. The revised Nomination and Remuneration Policy is set out in Annexure-I of this Report. The Policy is also available on the website of the Company i.e. www.libertyshoes.com.

Policy on Prevention of Insider Trading

Your Company has adopted a code of Conduct for Prevention of Insider Trading with a view to regulate trading in Equity Shares of the Company by the Promoters, Directors, Employees, designated persons and other connected persons. The said Code of Conduct is available on the website of the Company at www.libertyshoes.com. The Code requires pre-clearance for dealing in Company's shares and prohibits purchase or sale of shares in your Company by the Promoters, Directors, Employees, designated persons and other connected persons while they are in possession of unpublished price sensitive information and also during the period when the Trading Window remains closed.

Familiarization Program

In order to encourage active participation of Independent Directors and in order to understand the business environment, your Company has been familiarizing the Independent Directors on its Board with detailed presentations by its business functional heads on the Company operations, strategic business plans, new products and technologies including significant aspects of the Industry and its future outlook. Once appointed, the Non Executive & independent Directors undergo the familiarization program of the Company. The Non executive & independent Directors are also provided with financial results, internal audit findings and other specific documents as sought by them from time to time. They are also made aware of the various policies and code of conduct and business ethics adopted by the Board. Details of familiarization programs extended to the Non Executive & Independent Directors during the year under consideration are disclosed on the Company website at www.libertyshoes.com.

Risk Management Policy & Risk Management

The Management of the Company has always been consciously reviewing its business operations in accordance with set rules and procedure and if any deviation or risk is found, remedial and effective steps are being taken to minimize the deviation and risk. In line with the provisions of Section 134 (3) (n) of the Companies Act, 2013, the Company has developed a Risk Management Policy to build and establish the process and procedure for Identifying, assessing, quantifying, minimizing, mitigating and managing the associated risk at early stage. Policy is aimed to develop an approach to make assessment and management of the risks in financial, operational and project based areas in timely manner. The main objectives of the Risk Management Policy is inter-alia, to ensure that all the current and future material risk exposures of the Company are identified, assessed, quantified, appropriately mitigated, minimized and managed, to protect the brand value through strategic control and operational policies and to enable compliance with appropriate regulations wherever applicable, through the adoption of best practices. The Board of Directors of the Company assesses several type of risks which include Business Environment Risks, Strategic Business Risks and Operational Risks etc. The Board of Directors periodically reviews and evaluates the risk management system of the Company so that the management controls the risks through properly defined networks. Head of the Departments are responsible for implementation of the risk management system as may be applicable to their respective areas of functioning and report to the Board and Audit Committee. No risks threatening the existence of the organization have been identified. However there are other risks against which adequate mitigation plans are prepared.

The Risk Management policy is available on the Company's website of the Company athttp:// investor.libertyshoes.com/doc/Risk_Management_ Policy.

Whistle Blower Policy (Vigil Mechanism)

As per the provisions of Section 177 (9) & (10) of the Companies Act, 2013 read with Regulation 22 of Listing Regulations, your Company has an effective mechanism of reporting illegal or unethical behavior. The Company has a Whistle Blower Policy (vigil mechanism) wherein the directors, employees, consultants and contractors are free to report violations of laws, rules and regulations or unethical conducts, actual or suspected fraud or violation of the Company's code of conduct or ethics policy to the nodal officer. The mechanism followed is appropriately communicated within the Company across all levels and has been posted on the Notice Board of the Company. The confidentiality of those reporting violations etc. is maintained and they are not subjected to any discriminatory practice. The concern can be reported by sending an e-mail message at the dedicated address viz. ethicscounsellors@ libertyshoes.com. Individuals can also raise their concerns directly to the CEO or the Chairman of the Audit Committee of the Company. Any allegation falling within the scope of the concerns are identified, investigated and dealt with appropriately. The Audit Committee periodically reviews the functioning of this mechanism. The Vigil mechanism established in the

Company provides adequate safeguards against victimization of director(s) or employee(s) or any other person who avail the mechanism. During the year, no personnel of the Company was denied access to the Audit Committee. The details of establishment of Vigil mechanism/Whistle Blower Policy of the Company are available at the website of the Company viz. www.libertyshoes.com.

Non-applicability of Maintenance of Cost Records:

The Central Government has not prescribed the maintenance of cost records under Section 148(1) of the Companies Act, 2013 and Rules made there under with respect to the Company's nature of business.

Buy Back of Equity Shares:

Your Company has not undertaken any exercise to buy back its Equity Shares from the shareholders during the year under review.

Public Deposit(s):

The Company has not accepted/renewed any public deposits and as such, no amount on account of principal or interest on deposits from public was outstanding as on date of the balance sheet.

Re-appointment of Directors to retire by rotation

Sh. Adish Kumar Gupta & Sh. Ashok Kumar, Directors of the Company will be retiring by rotation at the 37th Annual General Meeting in pursuance of the provisions of Section 152 of the Companies Act, 2013 and being eligible, have offered themselves for the re-appointment at the 37th Annual General Meeting.

Appointment(s) and Cessation of office of Directors Appointment(s)

(a) The members at the 36th Annual General Meeting held on 30th September, 2022 have approved the appointment of Sh. Gautam Baid (DIN: 00021400) as an Independent Directors of the Company for consecutive term effective from 01st April, 2022 to 28thSeptember, 2024.

(b) On the basis of recommendation of Nomination and Remuneration Committee, the Board of Directors of the Company in their meeting held on 11th August, 2023 have approved the appointment of Sh. Piyush Dixit (DIN: 03514223) and Sh. Anand Das Mundhra (DIN: 00167418) as Additional Directors as well as Independent Directors of the Company for a first term of 3 years commencing from 11th August, 2023 to 10th August, 2026 subject to the approval of the members in their forthcoming Annual General Meeting. Accordingly, their candidature(s) along with resolution(s) are being placed in the ensuing Annual General Meeting for appointment as an Independent Director of the Company as above.

Brief Profile of above Directors, nature of their expertise in specific functional areas and names of Companies in which they hold directorship/ chairmanships between directors inter se as stipulated under Companies Act, 2013, Listing Regulations and Secretarial Standards, is provided in the Annexure A to the Notice

Cessation of office of Director:

After closure of financial year, 2022-23, due to pre-occupations, Sh. Arvind Bali Kumar and Sh. Sanjay Bhatia, Independent Directors have tendered resignation from the position of Directorship of the company with effect from 24th May, 2023. Besides above, there were no other reasons for tendering of their resignations. The Board of Directors of the Company in their meeting held on 30th May, 2023 have placed on record appreciation for the contribution made by the above Directors during their respective tenure(s).

Cessation of Chief Executive officer (CEO)

Sh. Adesh Gupta has ceased to be a Chief Executive Officer of the Company w.e.f. 5th September, 2023 as per the decision of the Board of Directors of the Company taken in their meeting held on this date.

Key Managerial Personnel

The following persons are the Key Managerial Personnel (KMPs) of the Company as per the provisions of the Companies Act, 2013-

Committees of the Board

The Company's Board has constituted the following Committees:

1. Audit Committee

2. Management Committee

3. Stakeholders Relationship Committee

4. Nomination and Remuneration Committee

5. Corporate Social Responsibility Committee

The detail of terms of reference of the Committees, Committee composition, meetings held during the year and attendance at the meetings of the Committees are provided in the Corporate Governance Report.

Number of meetings of the board

Six meetings of the board were held during the year. The detail of the composition, board meetings held during the year and attendance at the meetings are provided in Corporate Governance Report. The maximum time gap between two meetings did not exceed 120 days.

Annual Evaluation of Directors and Board as a whole

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Board is required to monitor and review the Board evaluation framework. In line with the Corporate Governance Guidelines, the Annual Performance Evaluation is conducted for all members as well as the working of the Board and its Committees. This evaluation is with specific focus on the performance and effective functioning of the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The evaluation process also considers the time spent by each of the Board Members, core competencies, personal characteristics, accomplishment of specific responsibilities and expertise. In addition, the Chairman is also evaluated on the key aspects of his role. The Board evaluation is conducted through questionnaire having qualitative parameters and feedback based on ratings. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The outcome of the Board evaluation for the financial year under consideration was discussed by the Nomination and Remuneration Committee and Board at their respective meeting held on 13th February, 2023, excluding the director being evaluated.

During the year under review, the Company has complied with all the criteria of Evaluation as evisaged in the SEBI Circular on "Guidance Note on Board Evaluation”. In lines with the provisions of the Companies Act, 2013 and Listing Regulations, separate meeting of the Independent Directors of the Company was held on 30th January, 2023 in the absence of non-independent directors and members of management inter alia to evaluate the performance of the non-Independent Directors, Board as a whole of the Company, its committees, Chairman and to assess the quality, quantity and timeliness of flow of information between the Company management and the Board.

Attributes, Qualifications & Independence of Directors and their appointment

The criteria for determining qualifications, positive attributes and independence of Directors in terms of the Act and the Rules there under, both in respect of Independent Directors and other Directors as applicable, has earlier been approved by the Nomination and Remuneration Committee during the financial year 2015-16 (amended from time to time). The Policy of the Company also provides that Non-Executive Independent Directors be drawn from amongst eminent professionals with experience in business/finance/law/public administration & enterprises. The Board Diversity Policy of the Company requires the Board to have balance of skills, experience and diversity of perspectives appropriate to the Company. Directors are appointed/re-appointed with the approval of the Members for a shorter period say, two to five years only. All Directors, other than Independent Directors, are liable to retire by rotation and are eligible for re-election in terms of the provisions of Articles of Association. The Independent Directors of your Company have confirmed that they meet the criteria of independence as prescribe under section 149 of the Companies, Act, 2013 and Regulation 16 of Listing Regulations.

The Nomination and Remuneration Policy as approved by the Board of Directors of the Company has been attached to this report and also accessible on the website of the Company at www.libertyshoes.com

Material changes and commitments affecting financial position between end of the financial year and date of report

As per the provisions of Section 134(3) (1) of the Companies Act, 2013, no material changes or commitments affecting the financial position have occurred between the end of financial year of the Company to which the financial statements relates to the date of the report.

Change in the nature of Business, if any

There was no change in the nature of business of the Company during the year under review.

Statutory Disclosures

Your Directors state that there being no transactions with respect to following items during the year under review, no disclosure or reporting is required in respect of the same.

1. Deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of your Company under any scheme

4. No settlements have been done with banks or financial institutions.

Internal financial control systems and their adequacy

Liberty's internal financial controls are adequate and operate effectively and ensure orderly and efficient conduct of its business including adherence to its policies, safeguard its assets, prevent and detect frauds and errors, maintain accuracy and completeness of its accounting records and further enable it in timely preparation of reliable financial information. During the year, such controls were tested and no reportable material weakness in the design or operation was observed. However, the Company has observed few instances of deviation from the existing Corporate Governance guidelines and immediately coming the same in to information of Board/Management Committee, the necessary remedial measure has been taken including action against the concerned.

The Company has in place a strong and independent Internal Audit Department which is responsible for assessing and improving the effectiveness of internal financial control and governance. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee. The information has been provided in the Management Discussion and Analysis Report in detailed manner.

Declaration by Independent Directors

The Company has received necessary declarations from each independent director under Section 149(7) of the Companies Act, 2013, that she/he meets the criteria of independence laid down in Section 149 (6) of the Companies Act, 2013 and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Regulation 25(8) of the Listing Regulations and there is no change in the status of their independence and have confirmed that they are not aware of any circumstances or situation which exists or may be reasonably anticipated that could impair their ability to discharge their duties. The Board of Directors of the Company also confirms that the Independent Directors also meet the criteria of expertise, experience, integrity and proficiency in terms of Rule 8 of the Companies (Accounts) Rules, 2014 (as amended) and on the basis of declarations submitted by the Independent Directors with the Company the Board of Directors is having positive outlook towards the integrity and expertise of the Independent Directors.

The Independent Directors of the Company had undertaken requisite steps towards the inclusion of their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs (IICA) in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment & Qualification of Directors) Rules, 2014 and have registered themselves with the Independent Director's databank as required under the above provisions. Furthermore, they have also renewed their registration with IICA for applicable tenures. The Independent Directors (other than Independent Directors who have appeared and completed the online proficiency self assessment test) are yet to appear for the online proficiency self-assessment test and hence, the opinion on the aforesaid would be provided in the next year's annual report.

Directors' Responsibility statement

Pursuant to Section 134 (3) (c) of the Companies Act, 2013, your Directors, based on the representations received from the management, confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) they have prepared the annual accounts on a going concern basis;

v) they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; and

vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory and Secretarial Auditors and external consultants and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2022-23.

Audit Committee and their Recommendations/ Observations

Your Board has a duly constituted Audit Committee in terms of Section 177 of the Companies Act, 2013 read with the Rules framed there under and Regulation 18 of the SEBI (Listing Regulations and Disclosure Requirements) Regulations, 2015. The term of reference of the Audit Committee has been approved by the Board. The details pertaining to composition of Audit Committee, no. of meetings held during the year under review, brief term of reference and other details have been included in the Corporate Governance Report, which forms part of this report. The recommendations/observations of the Audit Committee placed before the Board during the financial year ended 31st March, 2023 in respect of matters pertaining to the financial management or any other matter related thereto, were considered and duly accepted by the Board of Directors of the Company.

Statutory Auditors and their Report

Pursuant to the provisions of Section 139 of the Companies Act, 2013, the members at their 36th Annual General Meeting (“AGM”) of the Company held on 30th September, 2022 had appointed M/s Pardeep Tayal & Co. Chartered Accountants, Panipat (Firm registration No. 002733N), for a term of 5 (five) consecutive years from the conclusion of 36th Annual General Meeting till the conclusion of 41st Annual General Meeting to be held in the year 2027.

Auditors' Report:

Your Company's Directors have examined the Statutory

Auditors' Report issued by M/s Pardeep Tayal & Co, Chartered Accountants on the Annual Accounts of the Company for the financial year ended 31st March, 2023. There is no reservation, qualification or adverse remark made by the Statutory Auditors in their Report and their clarifications, wherever necessary, have been included in the Notes to the Accounts section as mentioned elsewhere in this Annual Report. During the period under consideration, no incident of frauds was reported by the Statutory Auditors pursuant to Section 143 (12) of the Companies Act, 2013.

Secretarial Auditors and their Report

In terms of Section 204 of the Act, read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended), your Board of Directors in their meeting held on 9th August, 2022 appointed M/s JVS & Associates, New Delhi a Practicing Company Secretaries for the financial year 2022-23 for conducting the Audit of secretarial records of the Company and issue their report.

The Secretarial Audit Report in respect of secretarial records of the Company for the Financial Year ended March 31, 2023 has been submitted by M/s JVS & Associates and taken on record by the Board of Directors of the Company. The Report of the Secretarial Auditors in Form MR-3 for the financial Year ended 31st March, 2023 is enclosed to this Report. The Board members have examined the above said report and observed that there is no reservation, qualification and adverse remark made by the Secretarial Auditors except delay in filing of Corporate Governance Report for the Quarter ended 30th June, 2022.

Management Response: The Company has submitted the said Report on Corporate Governance for the Quarter ended 30th June, 2022 and also complied with the stipulations of the Stock Exchanges related to non- compliance.

Appointment of Internal Auditors

On the recommendation of Audit Committee, your Board of Directors in their meeting held on 30th May, 2023 had appointed M/s R.C. Kapoor & Co., Chartered Accountants, New Delhi as internal Auditors of the Company, in accordance with terms of the provisions of Section 138 read with Section 179 of the Companies

Act, 2013 and rule 8 of the Companies (Meetings of Board and its Powers), Rules, 2014 and rule 13 of the Companies (Accounts) Rules, 2014 for the financial year 2023-24 for conducting the Internal Audit of the books of accounts and reviewing and ensuring the Internal Control system of the Company and to issue their report. The above firm have submitted its consent and also confirmation that they are qualified to act as Internal Auditors of the Company.

Internal Audit Report:

The Internal Audit Report in respect of books of accounts and Internal Control system of the Company for the Financial Year ended March 31, 2023 has been submitted by Sh. Rajesh Gupta, which has been duly considered and requisite actions were taken by Audit Committee and reports thereon were also taken on record by the Board of Directors of the Company. The Board members have examined the above said report and observed that there is no reservation, qualification and adverse remark made by the Internal Auditors.

Particulars of Loans, Advances, Guarantees and Investments

The Company has not granted any loan, guarantee or made any investments during the year ended 31st March, 2023 under Section 186 of the Companies Act, 2013 and Rules made there under. Pursuant to Section 186 (4) read with Rule 11 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), disclosure on particulars relating to Loans, advances and investments are provided as part of the financial statements.

Significant and material litigation/orders

(a) During the year under review, no Corporate Insolvency Resolution application was made or proceeding was initiated, by/against Liberty Shoes Ltd. under the provisions of the Insolvency and Bankruptcy Code, 2016 (as amended), except two applications filed earlier against the Company by its two vendors which were pending for adjudication at National Company Law Tribunal (NCLT), Chandigarh. The Company, in consultation with its legal consultants, has opposed the admission of the above applications before NCLT and the Hon'ble Tribunal vide its order dated 15th June 2023 have dismissed the said two petitions.

As on date no proceedings are pending for adjudication at NCLT Chandigarh in respect of petitions so filed against the Company.

Sh. Adarsh Gupta, partner of LFC, anticipating the dismissal of IBC petition from Hon'ble NCLT, has approached Hon'ble Delhi High Court at New Delhi and filed a petition under Section 9 of the Arbitration & Conciliation Act, 1996 on behalf of the firm against the Company seeking Ex-parte injunction order against the continuation of Trademark License agreement dated 3rd April 2013 on the similar grounds of its petition at NCLT but further extending the disputes of terms of payment of Royalty and its calculation from financial year 2018-19 to 2022-23 after serving Termination notice on 4th May, 2023. The Company, on the basis of legal opinion available has opposed the petition filed by Sh. Adarsh Gupta, partner of LFC including maintainability thereof before Hon'ble Delhi High Court and the Hon'ble Delhi High Court vide its Order dated 21st August, 2023 has dismissed the above petition being not maintainable.

Since members are aware that the Company has long term arrangements with three firms namely Liberty Group Marketing Division (LGMD), Liberty Enterprises (LE) & Liberty Footwear Co. (LFC), initially executed in 2003 and then last renewed with validity till 31st March 2028 for the exclusive use of complete business of three firms including their IPR & trademarks. Sh. Harish Gupta, one of the partners of LFC and Sh. Arpan Gupta, beneficiary and legal heir of one of the partners of LFC, LE & LGMD have given their termination notice(s) of the Company's arrangements with above firms. It is pertinent to point out here that Sh. Harish Gupta given his termination notice in respect of Company's arrangement with LFC and Sh. Arpan Gupta has given his termination notice(s) in respect of Company's arrangement with three firms i.e. LFC, LE and LGMD and in response to such notice(s), the Company, besides invoking of arbitration clause available under the agreement with LFC, has approached jurisdictional

Court at Karnal under Section 9 of Arbitration & Conciliation Act 1996 and has been granted status quo orders by the Ho'nble Court at Karnal initially against LFC and subsequently against LGMD. Subsequent to that (granting of status quo order against LFC by Karnal Court) the Company has also approached Hon'ble Punjab & Haryana High Court at Chandigarh for appointment of Arbitrator by filing petition against LFC under Section 11 of the said Act. The Company has taken legal opinion form one of the reputed Legal firm in this regard and hopeful of positive proceedings in the matter. Both the petitions filed by the Company against the respective firms under Section 9 and Section 11 of the Arbitration and Conciliation Act, 1996 are pending to be adjudicated by the respective Courts.

Considering the legal opinion available with the Company regarding continuity of arrangements with the above said firms till the end/expiry of the term till 31st March, 2028, the Company does not foresee or assess any pecuniary impact going forward till the time it is settled or otherwise adjudicated by the Hon'ble Court(s) or Arbitrator to be appointed.

(b) During the year under consideration and till the date of this report, there were no other significant and material orders passed by the regulators or courts or tribunals and no litigation was outstanding as on 31st March, 2023, which would impact the going concern status and Company's operations in future.

Transactions with Related Parties

During the year 2022-23, all transactions entered by the Company with related parties as defined under the Companies Act, 2013, Rules made there under, were in the Ordinary Course of Business and at Arm's Length basis. The Audit Committee granted omnibus approval for the transactions (which are repetitive in nature) and the same was reviewed by the Audit Committee and the Board of Directors on quarterly basis. Your Company does not have a material unlisted subsidiary as defined under Regulation 16 (1) (c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Your Directors shall formulate a Policy to determine Material Unlisted Subsidiary as and when the relevant provisions for the same are applicable on it in future.

There were no materially significant transactions with related parties during the financial year 2022-23 which were in conflict with interest of the Company. Since all the related party transactions entered in to by your Company were in the ordinary course of business and also on an arm's length basis, therefore details required to be provided in the prescribed Form AOC-2 is not applicable to the Company. However, the Company has been undertaking transactions for last so many years in respect of payment of Royalty/Franchise fees to few of the related parties after obtaining due prior approval of the concerned regulatory authorities and shareholders under the provisions of Companies Act and SEBI Guidelines. All the related party transactions have been disclosed in the Notes to financial statements as required under IND AS-24 of the Accounting Standard.

In line with the provisions of the Companies Act, 2013 and the Listing Regulations, the Board had approved and adopted policies on Related Party Transactions which has been uploaded on the Company's website www.libertyshoes.com under the “investor relations section”.

Particulars of Directors and Employees

The information required under Section 197(12)of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and subsequent amendments thereto, is given in Annexure II and the same forms part of this report.

A statement containing the Information of top ten employees in terms of remuneration drawn as provided under Section 197 (12) of the Companies Act, 2013 read with rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and subsequent amendments thereto, is given in Annexure III and the same forms part of this report. During the financial year 2022-23, no employee, whether employed for whole or part of the year, was drawing remuneration exceeding the limits mentioned under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and subsequent amendments thereto.

Extract of Annual Return

In terms of Sections 92(3) and 134(3)(a) of the Act, annual return is available under the ‘Investors' section of the Company's website i.e. www.libertyshoes.com.

Corporate Social Responsibility (CSR)

Your Company has been involved in social initiatives for last three decades and engaged in various activities in the field of education, primary healthcare, communities, ecology and environment etc. It believes in long lasting impact towards creating a just, equitable, humane and sustainable society. In Liberty, CSR initiatives were being undertaken, long before the provisions of the Companies Act, 2013 and with the implementation of new provisions of Section 135 of the Companies Act, 2013, Liberty is committed to further strengthen its effort and activities by demonstrating care for the community through its focus on education and development of skills, health and wellness including treatment for poor, needy & uninsured people, environment sustainability including promoting of green initiatives and Improvement of the living conditions of inhabitants and support to disaster relief efforts etc. The various CSR initiatives undertaken by your Company during the year under consideration are as under:-

1. Promotion of Quality education in the Schools and Women Empowerment

Liberty, is deeply committed to social responsibility, and this commitment is evident through various initiatives supporting the education and overall development of underprivileged children in the vicinity of its Plants/Offices. Through generous contributions and sponsorships, the company ensures that children from economically disadvantaged backgrounds have access to quality education, healthcare services, and balanced nutrition. Liberty's vision extends beyond academic excellence; it aims to nurture responsible and compassionate citizens who can positively impact society. By empowering these young minds with education, healthcare, and essential resources, the company strives to create a brighter and more equitable future for the underprivileged.

In addition to its focus on education and development, Liberty understands the financial challenges faced by families. To alleviate this burden, the company provides essential items like books, bags, uniforms, and other necessities to schools free of cost, ensuring that no child is deprived of education due to economic constraints. These comprehensive philanthropic efforts reflect Liberty's unwavering dedication to making a significant and lasting impact on the lives of these children, enabling them to overcome obstacles and reach their full potential as responsible and empowered individuals.

Liberty is contributing to the promotion of cultural education through their initiative "Har Ghar Tiranga Azadi ka Mahotsav." This endeavor aims to spread awareness and knowledge about the significance of our national flag, promoting a sense of freedom and unity among the people. By actively participating in this celebration, individuals can embrace their cultural heritage and contribute to the noble cause of education and patriotism.

2. Promotion of Fitness & Sports amongst the youth from the community

Liberty contributed for providing training to youth athletes of Karnal, Haryana for preparing them to participate in National Games and Olympics.

Your Company is making significant contributions to the Paralympic Association by sponsoring disabled players from Guwahati. Their support aims to prepare these talented athletes to participate in the Olympics. Through this initiative, Liberty is empowering differently-abled individuals and helping them achieve their dreams on the international sports.

3. Contribution towards Water, Sanitation and Hygiene

Liberty is dedicated to ensuring access to safe drinking water for students in schools across Karnal, Haryana. To achieve this goal, they are actively working on supplying water coolers to the District Child Welfare organization. This initiative will have a positive impact on the health and well-being of students, creating a conducive learning environment and promoting overall welfare in the region.

The company, in collaboration with the Rotary Foundation of India, remains committed to combating hunger, poverty, and providing aid to the underprivileged during emergencies in New Delhi. Their ongoing efforts are focused on making a positive difference in the lives of those in need, fostering a sense of compassion and support within the community.

The company, in alliance with the Diya Foundation, persistently extends its support to the vulnerable population during emergencies in New Delhi. By maintaining a steadfast commitment, they aim to provide essential aid and assistance to those in dire need, working towards alleviating the impact of crises and fostering a stronger, more compassionate community.

4. Contribution towards COVID 19 (Relief)

Liberty is committed to continuing its support for COVID-19 relief initiatives by providing Infrared Thermometers in Karnal, Haryana. Collaborating with the District Education Officer, their efforts aim to ensure the safety and well-being of students, teachers, and staff by facilitating non- contact temperature measurements and contributing to the overall health management in educational institutions during these challenging times.

5. Contribution for reconstruction of heritage Buildings and development of Public Infrastructure

Liberty has contributed for the reconstruction of building of National heritage Liberty is making substantial contributions to the restoration and reconstruction of national heritage buildings. Through these donations, the company plays a vital role in safeguarding the country's cultural legacy, ensuring the protection and upkeep of historically significant structures for the benefit of future generations. This commitment underscores Liberty's deep respect for cultural heritage and its dedication to actively contributing to the preservation and celebration of the nation's rich historical legacy, including in the city of Karnal. Sri Guru Ravidas Sabha is among the beneficiaries of Liberty's commendable support for these endeavors.

6. Other CSR activities and initiatives:

Liberty has contributed for the promotion of religious activities by contributing to temples/Pooja/various registered Kalyankari Sabhas and societies.

During the year under consideration the Company has complied with the provisions of Companies Act, 2013 by making the required contribution on the activities as stated in Schedule VII of the Act. The Annual Report on Corporate Social Responsibility activities as required under Sections 134 and Section 135 of the Companies Act, 2013 read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 (as amended) and Rule 9 of the Companies (Accounts) Rules, 2014 is provided in Annexure IV of this report. The CSR policy is available on the website of the Company at www.libertyshoes.com.

Disclosure under the Sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company has always believed in providing a safe and harassment free workplace for every individual working in Liberty's premises through various interventions and practices. The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment.

The Company has in place a robust policy on prevention of sexual harassment at workplace. The policy aims at prevention of harassment of employees as well as contractors and lays down the guidelines for identification, reporting and prevention of sexual harassment. There is an Internal Complaints Committee which is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the policy. The said Committee has its presence at corporate office as well as at plants.

During the year ended 31st March, 2023 the Committee did not receive any complaint pertaining to sexual harassment.

Corporate Governance and Ethics

Your Company believes in adopting best practices of corporate governance. Corporate Governance principles are enshrined in the spirit of Liberty, which form the core values of Liberty. These guiding principles are also articulated through the Company's Code of Conduct, Corporate Governance guidelines, Charter of various Sub-Committees and disclosure policy.

As per regulation 34 of the Listing Regulations, a separate section on corporate governance practices followed by your Company, together with a certificate from Statutory Auditors M/s Pradeep Tayal & Co., Chartered Accountants, on compliance with corporate governance norms under the Listing Regulations, is given at page no. 88 to page no. 89 of this Annual report.

Management Discussion and Analysis Report

In terms of Regulation 34 of the Listing Regulations, the Management Discussion and Analysis report on your Company's performance, industry trends and other material changes with respect to your Company, wherever applicable, are presented at page no. 92 to page no. 97 of this Annual report. The Management Disclosure and Analysis Report provides a consolidated prospective of economic, social and environmental aspects material to our strategy and our ability to create and sustain value to our key stakeholders.

Conservation of Energy and Technology Absorption and Foreign Exchange Earnings and outgo:

Information in accordance with the provisions of Section 134 (1) (m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 in relation to conservation of Energy and Technology Absorption and Foreign Exchange Earnings and Outgo is given in the “Annexure V”, which forms part of this report.

Compliance with Secretarial Standards:

The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

Outstanding Share Capital and its Listing:

Your Company has outstanding Share Capital of 17,04,00,000/- (Previous Year 17,04,00,000/-) consisting of 1,70,40,000 (Previous Year 1,70,40,000) Equity Shares of 10/- each and these Equity Shares are presently listed and available for trading at National Stock Exchange of India Ltd. (NSE) and BSE Ltd. (BSE).

Acknowledgments and Appreciation:

Your Directors take this opportunity to place on record their sincere gratitude for the consistent cooperation and support received from the shareholders, Bankers, Channel Partners and the Government Authorities.

Your Directors place on record their deep appreciation to the employees at all levels for their hard work and dedication.

For and on behalf of the Board of Directors

Shammi Bansal

Chairman of the Meeting

DIN: 00138792

Place: Gurugram, Haryana

Dated: Tuesday, 5th September, 2023