Walking The Talk In The Shoe Business
36-year-old Adarsh Gupta, executive director, Liberty group, isnt exactly the stereotypical rags to riches businessman. He started out in an established family business but is credited with building it from a Rs 22-crore midget into a fast-growing Rs 250-crore domestic footwear major straddling sportshoes, leatherwear and slippers in a decade. But he isnt ready to put his feet up just yet.
My grandfather was in the textiles business and when my father and uncle entered the shoe business it was a major diversification. We started in Karnal (Haryana) and are still based there. Initially we were only in retailing.
We entered production only in 1948 and were in the leather shoewear line. We started with three employees and an initial investment of Rs 25,000. Now we have 2,000 employees and our turnover for 96-97 was Rs 250 crore.
Our companys presence in the domestic market can really be divided into two periods. The first was from 1948-1968. And between 1968 and 1983 we were only exporting. We re-entered the domestic market only in 1983.
People feel that being born into a big business family gives one the privilege of becoming the boss without sweating it out. Few realise that the expertise of handling a company doesnt come on a silver platter. You could lose all that you have built up over a period in no time, if you hand over the business to an utter novice.
That is why I started learning about the various operations while I was at college in Karnal. Starting from the lowest level, I learnt the various ins and outs in the companys functioning. To get exposure to international designs I went to Italy. After completing a one-year course in shoe designing and modelling, I returned to India.
Initially, I used to manage the manufacturing side of the business. But later, I felt that I was better suited to managing the advertising and marketing operations, so I took over this function in 1986. The group turnover was Rs 22 crore. Since then, I have been handling the advertising and marketing for both our domestic and international businesses (the group has five companies).
The first period can be characterised as a growing one in terms of experience and capacity development. We were exporting all our products after 1968 east Europe was the prime destination because it was more lucrative. Today, exports account for a little over 20 per cent of our turnover.
It was only in the late eighties that we adopted a multi-brand strategy. From 1990, we have been launching new ranges every few years. We started with the Force 10 range of sport shoes. Then we had Windsor, Fortune, Gliders, Senorita, Geosport and recently, Coolers. Gliders is produced the most but the main revenue earner is the Windsor line. We have a common distribution and promotion network for all the brands.
Though we have entered almost all segments we dont aim to specialise in any one field, whether it is sports shoes or casual leather wear. This approach gives us flexibility; when demand for a certain segment starts falling we can use the same plant to produce another line of shoes.
When we decided to re-enter the domestic market Bata was our sole competitor in leather footwear. The market was big enough and growing rapidly as well, so we did not eat into each others sales. Now, in the sportshoe segment especially there are many competitors domestic as well as multinational. Many people are buying shoes sold by the MNCs. People dont realise that the shoes sold by Nike and Reebok are domestically produced. They either get shoes produced to their specifications and market them or give a licence to a local manufacturer to produce them.
We have no foreign tie-up. All our technology is indigenous but if we find that there is some new technology that will take long to develop then we dont think twice before buying it. So, much of our profit is ploughed back into R&D because technology is constantly changing and we want to give the best that there is to our consumers.
We want to consolidate our brands rather than increase them. We have identified our niche market and want to target that. Spreading ourselves thin over different ranges and regions isnt our game strategy. For example, even though Reebok and Nike have a huge range of shoes for different sports we have not followed their policy. We have introduced the Geo-sport range of shoes in three sports golf, cricket and soccer and plan to remain in these sections for some time. Similarly, we have greatest presence in the north because it accounts for the highest per capita consumption of shoes in India. So if and when this market region is saturated we will think about shifting to other regions.
Earlier, we used to sponsor and promote different sports. I dont consider this value for money any longer, so we have discontinued sponsorships. With a lot of shoe companies promoting sports, individual sportspersons and teams, this policy might seem odd, but I stick by it. What concerns us most is increasing the manufacturing capacity and output; whether it is for the domestic market or for export is secondary.
I have diversified to a small extent. I produce lighters under the brand names Sholay and Stylite and this business is doing well. But my future lies is in the shoe business under the Liberty company umbrella.