ON THE RIGHT FOOT March 2018 issue

ON THE RIGHT FOOT

Some ideas come easy, don't they? In the summer of 1994, a 23-year old would-be-entrepreneur Nitin Tiwari met a gentleman wearing safety footwear in South Leicestershire. Considering workers in the manufacturing sectors in India and other LDCs and emerging nations were then alien to this very concept, that gave birth to a big potential business idea. A safety footwear manufacturing unit was born.

Niladri S. Nath | April 2017 Issue | The Dollar Business


Entrepreneurs work hard for years on ideation, product design and market research to come up with a viable business idea. However, for Nitin Tiwari, all that he needed was a casual conversation and a gut feeling. “In 1994, just months before I graduated from South Leicestershire College in UK, I met a gentleman wearing a pair of safety shoes. It was an unpremeditated conversation about his shoes, but the conversation instilled the idea in my mind to set up a manufacturing plant for safety footwear in India,” recollects Tiwari.

He admits, “It took me a while to take a decision. But the absence of quality safety shoes in India gave me the confidence and optimism to generate a new business opportunity and become a category leader.”

While he was still in England, he sketched out the initial plans. And once he returned to India, in the same year, he set the idea into motion. “Honestly speaking, I didn’t do any market research to weigh the viability of the business idea. I purely followed my gut feeling,” he shares in a light tone.

 

"In the 18th year of operations, he opened a corporate office in Mumbai"

 

As a 23-year-old entrepreneur (then), what Tiwari needed was some funds to keep his dream alive. Luckily, Andhra Bank came to the rescue and loaned him Rs.10 lakh. And that was the first thread in the journey of Acme Fabrik, a small new company in Gwalior, Madhya Pradesh. However, at that time, little did he know that more than two decades later, his company would turn into an export powerhouse. “During the verification process, the branch manager made a prophetic remark. He said I would open an office in Mumbai within 15 years,” he shares. Young Tiwari wasn’t so sure about it. But as fate would have it, in 2012, the 18th year of his company’s operations, he did open a corporate office in Mumbai.

Teething Troubles

Tiwari recalls how the first couple of years were all about struggles. Challenges came in the form of unavailability of funds to scale up manufacturing, scarcity of skilled labour, unavailability of land due to lack of initiatives from the government, etc. However, Tiwari feels that these are challenges that every entrepreneur faces. “However, the biggest challenge of them all was the fund crunch,” he narrates.

On the business front, to spread awareness about the utility of safety shoes emerged as another challenge. “Most workplaces in India had no standard safety rules. And even when rules existed, many-a-times the standards were compromised. The use of safety footwear was unheard of,” explains Tiwari. It was tough. But he was determined to bring about a revolution in the industry. Tiwari focussed on market development, and soon his hard work started to get recognised. “We conducted some product trials with companies like MICO-Bosch and Crompton Greaves. And, the fact that our products could live up to their standards gave me a renewed  sense of confidence,” he describes. While he tasted success with the trials, there were other hiccups in the waiting. Gwalior (the town where Acme Fabrik was founded), being a tier III city, came with its set of advantages and disadvantages. “It was easy to find loyal employees, but they were unskilled labourers. We had to impart training before we could induct them to the shop floor,” Tiwari explains. He also faced a modicum of resistance from his immediate family  because of the nature of his business. “On a lighter note, my family members and relatives were against this business. Born with a Brahmin lineage, they thought that dealing with animal skins wasn’t the right profession,” laughs Tiwari.

What kept the young entrepreneur on track was positive attitude and patience; he knew India was industrialising at a fast pace and the demand for his products will ride the growth wave. Tiwari in the mean time cleverly ensured that the company’s balance sheet was immaculate so that he could raise fresh funds when he needed to expand the business.
    
Uncommon Tactics

Tiwari also leveraged his relationship with his alma mater in UK to good effect. During the initial days, he used to source case studies on safety footwear through some of his professors at South Leicestershire College. He would then put together relevant details from the case studies and send them across to his potential clients along with proposals letters. The idea paid off, but not without resistance from some managements which felt that safety shoes, which are heavier than normal shoes, would reduce work efficiency. Tiwari would also visit different companies and demonstrate how his wearables could save workers from physical injuries. “I would ask them about the number of absentees due to injuries and explain how using our shoes could reduce absenteeism,” he shares. In addition to that, the government’s fresh emphasis on strict adherence to the the Factories (Amendment) Act, 1987 added to his advantage. “After a lot of hard work, companies like MICO-Bosch, Crompton Greeves, Ashok Leyland and Tata Motors became our clients,” says Tiwari with a sigh of relief.

STEPPING UP THE GAME

After years of struggle, the company started to stabilise. “In 2002, things started to change. So, we imported a Direct Injection Process Polyvinyl (DIP PVC) machine under Export Promotion Capital Goods (EPCG) Scheme and augmented our production capacity. Then in 2005, we purchased some land in Gwalior to set up a plant, which we further expanded in 2010. We also imported a PU Double Density machine in 2009 from Germany,” Tiwari recalls. Alongside, the company started to diversify the product portfolio. “Since every industry needed a different type of protection shoes, we started to develop a range of products as per the safety standard requirement of each industry,” adds Tiwari. The company now offers shoes with anti-static and electrostatic dissipative (ESD) resistant features, high-voltage shock-proof features, oil, chemical, and heat-resistant as well as with cold insulation features. Tiwari, steadfast with the target he had set, went on rapidly expanding the company. Within a few years, he opened two more units in Gwalior, three in Kanpur and one in Mumbai. And in 2016, he decided to change the company’s name from Acme Fabrik to Acme Universal Safezone 9 Pvt. Ltd. Along with the expansion, Tiwari also widened his distribution network, across the country. The rechristened company now has 42 distributors throughout India. At present, the company manufactures 8,000 pairs of safety shoes, per day. Tiwari claims his company is the largest of its kind in India and he plans to compete with Cofra, the Italian safety shoe-maker which makes about 22,000 pairs of such shoes, every day. Acme Universal Safezone 9 Pvt. Ltd.'s revenues hit the Rs.1-crore mark in FY2002 and for FY2016, the company's revenues stood at Rs.150 crore, while net profit was approximately Rs.8 crore. For FY2017, Tiwari expects to clock in Rs.200 crore in revenues.

GLOBAL FORAY

Besides capacity expansion, widening domestic distribution networks and diversifying products, Tiwari also wanted to tap into the global market. So, in 2003, he made his first attempt by writing to various industries in the Middle East, which, he says, was a challenge at that time because of the limited mode of communication. Nevertheless, he persisted and it fetched him Rs.20 lakh in revenue for FY2004 (in the first year). His initial targets were countries like United Arab Emirates (UAE), Qatar and Kuwait, but they had their share of challenges. “The Middle East markets were price-sensitive because they were sourcing from countries like China, Pakistan and Bangladesh. I had to come up with a feature that could beat those products,” narrates Tiwari. Soon he realised that durability of the product was one way to have an edge. “We offered a 24-month warranty on our shoes. But because our products were priced a little higher, distributors were reluctant to accept our products. It took us around three years to prove to them that our products were different and better,” he explains. But why the Middle East? Why not India’s neighbours? “The Middle East is regarded as the exports gateway to various countries. Now our international portfolio has expanded to South Africa, Iraq, Iran, Australia, Chile, Cameroon, New Zealand, etc.,” explains Tiwari. The company currently exports 25% of its products to 20 countries and generates around Rs.50 crore from exports.

Nitin Tiwari posing with PU Double Density machine at the company's manufacturing facility in Gwalior. The company imported the machine
from Germany in 2009

 

EYES ON EXPORTS

Now that a lot has already been achieved in the domestic market, Tiwari wants to scale up the business. “The target is to become a Rs.500 crore company by 2022 and export 50% of our production,” says Tiwari. The team is now focusing on acquiring smaller manufacturing companies in Europe and participating in various trade exhibitions across the globe. For the record, the company just bagged a huge order at the Intersec trade fair, recently held in Dubai. “We are thinking about setting up a manufacturing facility in Africa to feed the market and we are in talks with a raw material manufacturing company in China,” reveals Tiwari, who has also won the ‘Make in India Emerging Entrepreneur’ award. At the same time, he also plans to compete with established names like Reebok, Puma and other global manufacturers as well as brands operating in India like Liberty and Bata. Simultaneously, as manufacturers of safety shoes the world over are focussing on environment-friendly raw materials amid fast-changing trends to replace the use of leather in daily lives, Acme Universal too wants to focus on innovation-led products. “Efforts are being made to replace leather with a material that has similar strength and breathability,” shares Tiwari. However, as the new material is very expensive, Tiwari is investing 10-15% of the profit in R&D to explore better options. Another target up Tiwari’s sleeves is to get CE (Conformité Européene or European Conformity), a certification needed to export to Europe. Other to-be-received certifications include PFI and Intertek.

A HELPING HAND

While he himself is leaving no stone unturned to stay ahead in the game, Tiwari laments that under the ‘Make in India’ initiative, while the government is offering many sops to startups, it has, by and large, ignored existing players like Acme Universal. “The government must define the types of support for both new and existing manufacturers,” expresses Tiwari. He also feels the duty drawback on safety shoes is insufficient. Further, unnecessary delays at the ports add to the woes of MSME exporters. “Currently, it takes around eight days to transport a consignment from Gwalior to Mumbai. The government must address this urgently to bring down the shipment time as well as cost,” he stresses.  

 

"Workplaces in India had no safety standard rule, let alone proper shoes"

 

THE ROAD AHEAD

Tiwari believes that the demand for safety shoes in India is growing. “At the recent Intersec trade fair in Dubai, buyers from the Middle East, Egypt, Iran, Iraq and Russia were more interested in India-made safety shoes than those made in China,” shares Tiwari. “We want to go global and venture into the personal protective equipment category too. We have already started manufacturing waterproof footwear and leather gloves and accessories, etc.,” he says. With such enthusiasm, who can stop him from achieving his dreams?

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