Vela Footwear Business Plan › Section 3 › Company Overview & Strategic Rationale

Vela Footwear Manufacturing (Pty) Ltd is conceived as a modern,
vertically integrated footwear producer purpose-built for the South
African market. Its strategic premise is simple: the structural gap
between what South Africa consumes and what it manufactures is large,
persistent and now actively supported by industrial policy. Vela exists
to convert that gap into bankable, locally owned manufacturing
capacity.

Company at a glance

Mission and strategic objectives

Vela’s mission is to manufacture durable, certified, competitively
priced footwear in South Africa, building a profitable enterprise that
anchors local employment and supply chains while delivering attractive
risk-adjusted returns to investors. The Company pursues five strategic
objectives over the plan horizon:

• Establish a flagship integrated plant
  commissioned within approximately sixteen months of financial close,
  certified to the relevant safety standards from first commercial
  production.
• Secure anchor demand through multi-year
  industrial safety-footwear contracts and retail / government
  school-footwear programmes that underwrite baseload
  utilisation.
• Expand margin through integration and scale,
  lifting gross margin from the low twenties to near thirty percent as
  sole moulding, yield improvement and procurement leverage
  mature.
• Build a defensible local brand in casual leather
  footwear, capturing the consumer shift toward locally made product
  encouraged by the Master Plan.
• Reach investment-grade credit metrics, clearing
  a 1.30x DSCR covenant from Year 3 and reducing net debt / EBITDA below
  1.0x by Year 5.

Strategic rationale

A large market served mostly by imports

South Africa consumes on the order of 90 million pairs of footwear a
year, yet imports dominate supply. Roughly US$320 million of footwear
was imported in 2024 — a five-year high — with China the single largest
source, ahead of Vietnam and Italy. Every contract Vela wins in safety,
school or casual footwear is, in effect, an import displaced. This is
the core of the investment thesis: demand already exists; the
opportunity is to supply it locally.

Policy designed to favour local manufacture

The R-CTFL Master Plan sets an explicit target of lifting locally
manufactured share from around 44% to 65% by 2030, backed by retailer
localisation commitments, a 30% ad valorem import duty, a proposed
increase in the alternate specific duty to R20 per pair, 15% import VAT,
and concessional development finance. The dtic and IDC support
qualifying manufacturers through capital grants, a
7.5%-of-value-addition production incentive and preferential lending.
Vela is structured to be a direct beneficiary of each of these
levers.

KwaZulu-Natal: the right place to build

The eThekwini–Pietermaritzburg corridor combines South Africa’s
established leather and tannery cluster, deep manufacturing labour, and
direct access to the Port of Durban for both imported componentry and
finished-goods logistics. Locating here shortens inbound leather supply
chains, reduces freight exposure and situates Vela within an existing
industrial ecosystem — lowering both build risk and steady-state
operating cost.

Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of Vela Footwear Manufacturing (Pty) Ltd.