HAWAI CHAPPAL

Introduction:
Hawai chappals are used by practically all cross-sections of people, including the young and old,
urban and rural, poor and rich. While the lower middle class uses it as utility footwear, the more
affluent sections use it for casual wear.
Market Potential:
Since hawai chappals are used by a large cross-section of the population, it may be assumed
that of the total population of 365 lakhs in the north-eastern region, about 60% i.e. about 219
lakhs would be using hawai chappals. The demand for hawai chappals would mainly depend on
the rate of wear for the users. In the case of those who use it for daily wear, namely the poorer
sections and rural folk, the life may be shorter whereas for others it may be longer. On an
average it may be assumed that a user would require one pair of hawai chappals in a year. On
this basis, the demand for hawai chappals in the north eastern region is estimated at 219 lakhs
pairs per year. There are at present only two units manufacturing hawai chappals in the north
eastern region. Bulk of the demand is being met by established brands like Bata, Lakhani,
Carona and a host of small manufacturers outside the region, who sell the products in the north
eastern market. If new tiny units are able to capture even 5% of the market, they have adequate
market opportunity to the tune of 11 lakh pairs per year. Considering the capacity of a typical tiny
unit as 150,000 pairs there is scope for over 7 tiny units to be set in the north eastern region.
Plant Capacity:
A typical unit would have a capacity of 150,000 pairs and produce 105,000 pairs on the following
basis:
Effective working hours
Capacity utilization
Daily production at 70% of rated cap.
Working days/year
Annual production

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8 hrs/day (1 shift)
70%
350 pairs
300
105,000 pairs.

The product-mix would include chappals with plastic strap as well as chappals with rubber strap.
The following product-mix is suggested.
Qty./Year
Plastic strap chappal
:
35,000 pairs
Rubber strap chappal
:
70,000 pairs
Raw Materials:
The raw materials required are rubber sole, plastic strap, rubber strap and packing materials.
Rubber sheets are required for making rubber sole. These sheets normally come in standard size
from which 35 pairs of soles can be made. On this basis the annual requirements are
Per year
Rubber sole sheet
:
3,010 Nos.
Plastic strap
:
35,000 pairs
Rubber strap
:
70,000 pairs
Packing materials
:
105,000 Nos.
Process:
The main process steps involved in the making of hawai chappal are
i)
Cutting of sole
ii)
Polishing of sole upper
iii)
Punching of sole
iv)
Fitting strap
v)
Packaging in cartoons.

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Machinery:
The main machinery required are
i)
ii)
iii)
iv)
v)

Sole cutting machine

Polishing machine
Punching machine
Size plate machine
Electric motor

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:

2 Nos.
2 Nos.
2 Nos.
2 Nos.
1 No.

:
:

1000 sq.ft.
Negligible

Infrastructure:
The main infrastructure facilities required are
Shed
Power
Location:
The suggested locations are
Assam

Manipur
Nagaland
Meghalaya
Arunachal Pradesh
Mizoram
Sikkim
Total Capital Requirement:
The total capital requirement including
lakhs as follows:

Guwahati, Dibrugarh, Tezpur, Silchar,

Bongaigaon, Dhubri.
Imphal, Ukhrul, Churachandpur
Dimapur, Tuensang, Wokha
Shillong, Tura, Williamnagar
Itanagar, Zero, Pasighat, Along
Aizawl, Lunglei
Gangtok, Jorthang

:
:
:
:
:
:

fixed capital and working capital is estimated at Rs 4.07

(Amount Rs lakh)

A.

Fixed Capital:
Land and building
Machinery
Misc. Fixed Assets
Preliminary & pre-op. expenses

On rent
2.00
0.50
0.30
2.80

Total (A)
B.

Working Capital:
Amount (Rs lakh)
Raw materials and packing materials
Stock of finished goods
Working expenses
Receivable

Note: Working capital may be financed as

Bank Finance :
Margin money :

month
1 week
1 month
1 week
Total (B)
Total (A + B )

0.38
0.30
0.17
0.42
1.27
4.07
0.83
0.44
1.27

Means of Finance:
The project cost of Rs 3.24 lakhs could be financed as under (merely indicative and subject to
change by SFCs/Banks):
Promoters contribution(35%)
Term loan(65%)

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:

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1.05
2.11
3.24

Operating Expenses:
The annual operating expenses are estimated at Rs 13.30 lakhs as below:
Amount (Rs lakh)
Raw materials
Rubber sole sheet
@ Rs 190/- per sheet 3,010 Nos.
Rubber strap
@ Rs 1.80 per paid 70,000 Nos.
Plastic strap
@ Rs 1.50 per paid 35,000 Nos.
Packing materials
@ Rs 1.00 1,05,000 packets
Utilities
Wages & salaries
Rent
Other overheads
Selling expenses @ 20% on annual sales
Interest on Term Loan
:
Interest on bank finance for working capital
Depreciation 10% on m/c.

5.72

1.25

0.53

:
:
:
:
:
:

1.05
0.20
1.50
0.36
0.25
3.57
0.25
0.12
0.20
15.00

:
:

Sales Realization:
The market price of established brands of hawai chappals such as Bata, Carona, Lakhani etc.
varies between Rs 40/- and Rs 60/- depending on size while lesser known brands sell their
products for Rs 25/- to Rs 35/-. Based on this, ex-factory price of Rs 18/- per pair for plastic strap
chappals an dRs 15 per piece for rubber strap chappals has been considered. On this basis the
total sales realization is estimated at Rs 17.85 lakhs as under.
Nos./year

Rs/pair Rs in lakh

Rubber strap chappals 70,000 18/-

12.60

Plastic strap chappals

5.25
17.85

35,000 15/-

Profitability:
Based on the sales realization and the operating expenses, the pre-tax profit at 70% working
capacity would be Rs 2.85 lakhs per year. This works out to a return on investment of 70%. The
plant would break even at about 34% of the rated capacity.
Highlights:
The major highlights of the project are as follows:
Total Capital requirement
Promoters contribution
Annual Sales realization
Annual Operating Expenses
Annual Profit
Return on sales
Break-even point
No. of person employed (direct)

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Rs. 4.07 lakhs

Rs 1.13 lakhs
Rs. 17.85 lakhs
Rs. 15.00 lakhs
Rs. 2.85 lakhs
16%
34%
8 Nos.

Machinery Suppliers:
M/s Elder Mechanical Works,
A- 59, Sham Nagar,
New Delhi 110 018
M/s G.G. Engineering Works,
5/1 B, Industrial Estate,
Kirti Nagar,
New Delhi 110 015
M/s Haria Engineering Works,
Shankar Tekri Industrial Estate,
Post Box No. 643
Jamnagar
M/s Kelachandra Iron & Steel Works,
Chingawanam,
Kerala 686 537
M/s Major Machine Tools,
B XXX-94 Sherpur Khurd,
Byepass Road,
Ludhiana
M/s Sant Rubber Machines (P) Ltd.,
Bassi Road,
Sirhind 140 406

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