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Business Environment Project

Indian Footwear
Industry
Submitted to:MR. SUDHENDU BALI
(Professor - Applied Science Department)
PEC University of Technology

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INDIAN FOOTWEAR INDUSTRY

Third largest global producer after USA,


accounting for 9% of the global annual
production of 22 billion pairs.

Estimated at ~ 50,000 cr. out of which 64%


is domestic and remaining export.

More than 4000 manufacturing units in


footwear(55% small scale).

PESTEL Analysis
POLITICAL:

Financial assistance by the government provided to the extent of 20%-30%


of the cost of plant subject to a ceiling of Rs. 50 lakh for both categories for
technology up-gradation/modernization and/or expansion.

Cut in excise duties of footwear products in the budget for financial year
2015-2016.

Government initiatives to attract foreign direct investment. (allowed 100%)

ECONOMICAL:

Rising disposable income and consumers increasing spending.

Bata India Ltd remains the leader in footwear with a retail value share of 8%
in 2015.

Expected to grow strongly and sales expected to touch Rs 860 billion by


2019.

SOCIAL:

Consumer attitudes and opinions changing favorably towards branded shoes.

Due to NGOs and social groups the importance of human life, working conditions,
work ethics, and health of the workers have increased.

With various schemes promoting Primary and secondary education, more students
are going to be enrolled in schools and colleges, providing the footwear industries.
Itll also increase per capitia income due to increased employment.

300000000

DEMOGRAPHIC STRUCTURE

250000000
200000000
150000000
100000000
50000000
0

0-14 years

15-24 years
Male

Female

25-54 years

55-64 years

65 years and over

TECHNOLOGICAL:

In-house Design Studios incorporating state-of-the-art CAD systems having 3D Shoe


Design.

Social media systems becoming increasingly popular has resulted in buyers shifting
towards E-Commerce websites for value deals and saving time. Other policies like 30
day replacement guarantee allows peace of mind.

Digital media for product advertising and sponsoring at major events organized in India.

Breakthrough product innovations enhancing comfort, agility and durability.

ENVIRONMENTAL:

Reliable supply of resources in the form of raw hides and skins, quality finished
leather, large installed capacities for production of finished leather & footwear

India offers a huge consumption market.

LEGAL:

FDI (Foreign Direct Investment): Liberalizing FDI was another important part of
Indias reform, driven by belief that this would increase total volume of investment
in Indian economy

Funding is available to enable tanners to modernize manufacturing facilities in


footwear sector. Machinery also benefits from duty free/concessional import
regulation.

There is concessional rate of interest on export credits to mitigate the effects of


rupee appreciation which has led to tightening of credit.

Tom Baa introduced mechanized production techniques making bata first


1905 mass producers of shoes in Europe.

1914 The company had a significant development due to military orders.


The companys head factory expanded as demand for the inexpensive shoes
1928 grew rapidly.

1931 Bata Shoe Organization setup factories in India.

1936 Commenced manufacturing shoes in Batanagar.

2006 The company bagged the Retailer of the year award for the year

2009 Opened 69 new Bata stores, which are all over 3000 square feet.

BATA
Companys 98 percent revenue comes
from domestic operation. It owns
~1200 stores spread across 400
cities in India

Bata has a retail presence in over


70 countries across five continents
, with a million customers per day.

It employs more than 40,000


people in its 5,000 retail stores,
manages 27 production facilities.

It is estimated that since the day it was found, Bata has sold more than
14 billion pairs of shoes

Sales Turnover
Profit and
Sales

30,000.00
Liberty Shoes; 8%
25,000.00

Superhouse; 10%
Sreeleathers; 1%
Bhartiya Inter; 6%

20,000.00

Bata India; 39%

15,000.00

Mirza Intl; 13%


10,000.00
Relaxo Footwear; 22%
5,000.00

0.00

Bata India

Relaxo Footwear

Mirza Intl

Sreeleathers

Liberty Shoes

Superhouse

2005

2005

2009

Sales & Other Income

Bhartiya Inter

2007

2007

2009

2011

2011

2013

2015

Net Profit

2013

2015

Sales &
7,525.3 9,038.05 11,210. 16,959.9 21,297.54 27,808.31
Other Income 9
11
1
Net Profit

124.91

474.44

672.27

2,258.39 1,907.43

2,311.72

( Rs. in Million ) Bata Annual Report 2014-15

Suggestions
Increase their distribution network to give a boost to
the sales.
To increase its appeal among the younger generations,
increase its focus on e-commerce and digital
platforms.
Targeting the unorganized market.

Relaxo
From a modest sales figure of
1million in 1977 to more than
14.80 billion last year.
Record breaking growth since
inception.
Over 3 lakh pairs of footwear per
day,
Over 10 million pairs per year.
Largest manufacturer of hawaii
chappals in India.

Volume growth year on year is also accompanied by


simultaneous price hikes.

7x rise in sales since FY06.

REASONS FOR THEIR SUCCESS

Good distribution network. Present even in smaller villages

Sales
10%

Multi-brand retail
Self-owned
shops

90%

Most of their business (~90%) comes through distributors


with excellent terms

Suggestions
Improve exports in countries in Europe, Africa and
other Asian countries.
Shift focus to parts other than North India, increase
the sales force to cover all regions of India.
Drive Online Sales
Relaxos online sales are limited to
shopatrelaxo.com.

1954

A small shop manufacturing 4 pairs a day

1964

Liberty was born got 1st export order.

1982

Liberty brought world class products to domestic market.

1995

With 10 sub brands serving all kinds of consumers

2003

with a consumer centric strategy, Liberty started serving customers

2010

Revolutionized their supply chain for excellent manufacturing strength

2014

Moving with a vision to be a Rs.1, 000 Crore Company

Steps being taken to improve


profitability
Planning to set up 30-50 company-owned stores.
Liberty Shoes will set up three new manufacturing
units to double its production capacity.
Demand will be generated through new variety.
Broadening of Distribution Network.

BATA

LIBERTY

RELAXO

Multiple sub brands


and third party
brands such as Hush
Puppies.

Multiple sub brands


and brands such as
Force 10 and Gliders.

Product Line across 3


segments with focus
on Slippers and
sports footwear.

Oldest shoe brand in


the country.

Position itself as
Stylish looks.

Positions itself as
value for money.

Key Risks
Upswing in raw material prices
Globally Competitive Business Environment
Labour Price

Summarising the Porter


Analysis

BASIS OF
COMPARISON

RELAXO

BATA

LIBERTY

Barriers to Entry

Bargaining Power of

Absent

Absent

Absent

High

High

High

Low

High

Low

High

Low

High

Buyers

Bargaining Power of
Supplier

Threats of
Substitutes

SUMMARY

Major potential for employment, especially for weaker sections

Supporting economy through its foreign exchange earnings.

Remains amongst the top ten foreign exchange earners for the country.

Strong push is required in various aspects including favorable policies


which would help in

rationalizing tax structure,

providing infrastructural support in capacity building,

reducing transaction costs

increasing the availability of skilled labor in the country.

Thank You