NEW DELHI, November 22: The concept of running a parallel industry with established brands is not restricted to the East Asian countries alone -- India too has jumped onto the bandwagon. One such industry is PVC-footwear which has already carved out a market of Rs 300 crore for itself.

Though PVC-moulded footwear is not new to the Indian market, lack of innovative designs, accessibility and awareness has hampered the growth of this consumer industry."Media exposure and some mega-marketing by the big companies made the concept of footwear popular in smaller towns and villages, but the prices of these big companies were pocket-pinching. We took inspiration from their designs and provided almost similar quality and designs at cheaper rates and it clicked," says K.C. Jindal of Super Plastics.

Giving another reason for its popularity, Raj Kumar, Press Secretary of PVC Compound & Footwear Manufacturers Association, says, "These shoes are easy to maintain. Our target customers work in water and mud. You cannot expect them to wear a Reebok or Nike. Anyway, these brands are beyond their reach. Our range starts from Rs 6 and goes up to Rs 350 while their cheapest is way ahead of our most expensive ones." With the marginal increase in the purchasing power of customers and enormous increase in demand for latest designs, the PVC footwear industry, according to estimates, has 60 per cent annual growth. No doubt the sector has already put its best foot forward."

Earlier Tri Nagar in New Delhi was catering to the needs of the market countrywide. But now local markets have emerged in Pune and Patna etc; still we are unable to meet the market demand. This itself speaks volumes about the market potential," says Ramesh Aggarwal of Micro Plastics, a sister concern of Action Shoes.

The footwear business is not restricted to moulded footwear only; another fast emerging area is PVC shoe soles. The bigger local players design and make the upper portion of the shoes while for the PVC sole fitting, they rely on these manufacturers. "We are not inferior in quality- its just that our customers are not ready to pay for the superior quality. If some company comes with such demand we can give them the finest quality and technology available in the market." says K.C. Gupta of Orient Plastics.

The opening up of the economy besides energising the sector has given a boost to small entrepreneurs. As the latest designs brought in by the multinationals provide 'inspiration' to these entrepreneurs and they don't even eat into their market share, the local manufacturers are in a buoyant mood."The entry of the multinationals have been very positive and will remain so as long as they don't eye our market." says Jindal.

There is a three-fold division in the Indian footwear market. First is the upmarket segment which goes for big names and international brands and is ready to pay any price for them; second is the middle class which prefers the Indian brands; third is the lower or labour class which wants cheap, easy-to- maintain footwear. This section constitutes the biggest market segment in terms of the number of customers. Though the margins are not comparable to that of established brands, a large number of customers creates good business prospects.

The investment needed to start this business ranges between Rs 6-10 lakh. With limited demand for machines and it being a labour-oriented industry, that too not skilled labour, the setting up of a production unit is not an uphill task. The basic machines are a 'vertical' or a furnace and a 'horizontal' or dye or moulding machines. 'Vertical' costs around Rs 1.40 lakh and is easily available in the local market. A beginner can start with second-hand machines which will reduce the investment costs considerably. The other important part is dye or moulding machines. One set of moulding machines costs between Rs 50,000 and Rs 1 lakh, but the fast changing designs demand regular investments on the dyes. As this industry is labour-intensive, there is a regular demand for labourers, but one need not run around to search them. A number of contractors who provide labourers at nominal charges are there in the market. There are two systems of wage distribution in the market- one is the fixed monthly wage system and the other depends on the number of finished products per day.

The raw material for PVC-footwear includes a number of chemicals, colour sprays, foam etc., but the basic ingredient is PVC- crystal. There are two types of crystals available- one is fresh crystal and second is the recycled one. The fresh crystal costs around Rs 40 per kg while the recycled one costs around Rs 15 per kg. Though comparatively easy to start with, this business has its own set of problems; the major one being that of marketing. Most of the manufacturers supply their products to dealers in Sadar Bazar market who further distribute it to different parts of the country. Because of the rising competition among manufacturers, dealers in Sadar Bazar bargain for longer credits which normally goes for 5-6 months." This creates difficulty for the small entrepreneurs, because they have to pay in cash for the raw material." says Kumar.

Another problem is fast changing fashion. Keeping up with the changing market trends poses major hurdles in the business. One dye costs around Rs 50,000 to Rs 1 lakh and if the design fails to click or some new design catches up in the market, older ones become useless and the money invested goes down the drain. " We have seen manufacturers winding up their business because they could not bear the financial losses" says Gupta.

Highlighting the change in the situation says Aggarwal," Now the situation has improved slightly. Today the market is so big that if certain designs fail to click in the northern region, they may click in the eastern or western regions."

Though fast-changing fashion has brought in a certain degree of risk into the business, it has also expanded the market. Today machines are moulding out 600 pairs every day; and with the turnover of every medium-size manufacturer running into crores, the shoe moulding business seems to have moulded itself into a profitable enterprise.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.