Apresentation

ONLEATHER INDUSTRY REVIEW

2016 – 18FACULTY OF MANAGEMENT

Pacific Academy of Higher Education and Research University, Udaipur

Guided By: Submitted By:himanshu panchal Mr. Jinendra Vyas(Assistant Professor)

Introduction

Leather is one of the most widely traded commodities globally. The growth in demand for leather is driven by the fashion industry, especially footwear. Apart from this, furniture and interior design industries, as well as the automotive industry also demand leather. The leather industry has a place of prominence in the Indian economy due to substantial export earning and growth, besides the fact that it employs 2.5 people. India is fifth-largest exporter of leather goods and accessories in the world.

HISTORY

Over the years the Indian leather industry has undergone drastic change from being a mere exporter of row material in the early 60’s and 70’s to an exporter of finished, value-added leather products. The main reason behind this good transformation is the several policy initiative taken by the government of India. Since 1991 as India adopted the globalization and liberalization economic policies, the leather industry has flourished consistently in several ways and has contribute heavily to the Indian exchequer. There has been a phenomenal growth in exports from Rs.320 million in the year 1965-66 to Rs.69558 million in 1996-97.

Important leather products exported by India

Leather Footwear Leather GarmentsLeather Goods (Including Harness & Saddlery, Leather Gloves etc.)Footwear Components (Shoe Uppers, Soles etc.)Finished Leather

 Predominantly, most of the manufacturing units for leather goods are located in cities like Kolkata, Chennai, Mumbai, Kanpur, Bangalore and Pondicherry.Kanpur is popularly known as the “Leather City of the World”. Kanpur leather traders Export leather goods in large volumes throughout the world. These massive amounts of leather products are shipped to New Delhi and other major cities in India by the Kanpur leather traders. From these places, they are exported to other nations of the world.Kanpur leather traders are involved in manufacturing, exporting, and supplying of all types of finished leather products.

Sourcing Hubs

Full-grain leather refers to the leather which has not had the upper "top grain" and "split" layers separated.Top-grain leather is the second-highest quality and has had the "split" layer separated away, making it thinner and more pliable than full grain.Corrected-grain leather is any leather that has had an artificial grain applied to its surface.Split leather is leather created from the fibrous part of the hide left once the top-grain of the rawhide has been separated from the hide.

TYPES OF LEATHER 

Percentage share of leather product in export

45%

9%

22%

3%

21%

percentege share of leather product in export

FOOTWEAR

LEATHER GARMENTS

LEATHER GOODS

SADDLERY AND HARNESS

FINISHED LEATHER

Percentage share of various countries in India's leather & leather product export

57%

11%

3%

8%

1%

3%

17%

European unionUSAUAEHong KongAfricaChinaother

Employment in different sectors of leather industry

Sector Total Employment Flaying, curing & Carcass Recovery 8,00,000Tanning & Finishing 1,25,000Full Shoe 1,75,000Shoe Uppers 75,000Chappals & Sandals 4,50,000Leather Goods & Garments 1,50,000

STRUCTURE OF INDUSTRIESThe leather industry is spread in different segments, namely, tanning & finishing footwear & footwear components, leather garments, leather goods including saddlery & harness, etc. The estimated production capacity in different segments is as under

Product Capacity Leather Hides 64 million piecesSkins 166 million pieces Footwear & Footwear Components  a) Shoes 100 million pairsb) Leather shoe uppers 78 million pairsc) Non-leather shoes/chappals etc 125 million pairs  Leather Garments 6 million pieces  Leather Products 70 million pieces Industrial Gloves 40 million pairs Saddlery 6000 pieces 

Flow chart for leather processingHides & Skins

Curing

Soaking

Liming

Deliming

Bathing

Pickling

Splitting

Retaining

Dyeing

Finished leather

Depickling

Vegetable Tanning

Mineral Tanning

Neutralization

 Public/Private Sector Leather Products companies in India.

Company Name  Company Website 1 Bata India  www.bata.in 2 Relaxo Footweas  www.relaxofootwear.com 3 Mirza International  www.mirza.co.in 4 Bhartiya International  www.bhartiya.com 5 LibertyShoes  www.libertyshoes.com 6 Superhouse  www.superhouse.in 7 Lawreshwar Polymers  www.leharfootwear.com 8 Tinna Overseas  www.tinna.in 9 Super Tannery  www.supertannery.com 10 Sarup Industries  www.sarupindustries.com

1] Bata India Ltd-Bata India is the largest retailer and leading manufacturer of footwear in India and is a part of the Bata Shoe Organization. Incorporated as Bata Shoe Company Private Limited in 1931, the company was set up initially as a small operation in Konnagar (near Calcutta) in 1932. It was also the first manufacturing facility in the Indian shoe industry to receive the ISO: 9001 certification.2] Relaxo Footwears Ltd-Such is the story behind the creation and flourishing of Relaxo Footwear, the company that has established itself as one of the most stalwart, quality conscious and avant-garde footwear companies in the Indian economy today. Headquartered in New Delhi, India, it maintains a fine combination of comfort, style, and workmanship and is embarking upon appreciable growth plans for the future.3] Mirza International Ltd-Mirza International Limited is India’s leading manufacturer and marketer of leather footwear and finished leather. With an established footprint that spans across 30 countries, as well as a rock solid infrastructure, Mirza has taken ground-breaking strides in the Indian leather industry since its inception in 1979.4] Bhartiya International Ltd-Bhartiya International Limited is an India-based company, which manufactures leather garments and accessories. The Company’s segments include: Leather Products and Textile/ Textile Product. Its fashion products include leather outerwear, accessories, textile apparel, leather finishing and design studio.

5] Liberty Shoes Ltd-Liberty Shoes have been fashioning footwear, for well over 60 years now, for the style-conscious people around the globe. Currently with an annual turnover exceeding INR.600 crore (U.S. $150 million), company  figure amongst the top 5 manufacturers of leather footwear of the world producing more than 50,000 pairs a day using a capacity of more than 3 lakh square feet of leather per month.6] Superhouse Ltd-Superhouse Group , is a multi- unit and multi- product conglomerate with brand leadership in the field of footwear manufacturing and exports. The Group is well equipped with the most modern machineries and a specialized workforce and produces all types of quality leather, leather goods and textile garments that are appreciated all over the world.7] Lawreshwar Polymers Ltd-Lawreshwar Polymers Ltd was incorporated as a Private Limited Company in the year 1994 with the object of manufacturing of canvas shoes, lightweight hawai chappals and EVA Injection footwear.8] Tinna Overseas Ltd-Tinna Overseas was originally incorporated as a private limited company on 4 Mar.`87. It became a deemed public limited company w.e.f. 31 Mar.`92 and a public limited company on 18 Apr.`94. It is the flagship of the Tinna group, engaged in the manufacture of leather footwear, footwear components, thermoplastic rubber (TPR) compounds, edible oil, shipping and warehousing.

9] Super Tannery Ltd-Super Tannery Ltd (STL), established in 1953, started operations by processing 50 Buffalo hides per day, converting them into Vegetable Tanned Leather for shoe soles. Since then, the company, well guided by a professional approach, has marked an important name for itself in the world leather map, making it, one of the oldest and well reputed business houses of Northern India.10] Sarup Industries Ltd-Sarup Industries Ltd is engaged in the business of leather, tanneries and developing the new products with wide range of uppers, soles, tanneries and complete shoes. Sarup Industries Ltd is one of the leading manufacturers of export quality shoes in Northern India.

7 cities of India famous for leather industry1. Jajmau – Kanpur, Uttar Pradesh-Jajmau is also known as Jajesmow, is a district of Kanpur. This is the main and the largest center for the leather industry in India. Home to some of the largest leather tanneries in the Northern part of India. The Kanpur’s leather and tannery industry contribute to around Rs 6,000 crore worth foreign exchange for the country and  also gives direct livelihood to more than one lakh people.

2. Unnao – Uttar Pradesh-Located approximately 18 km from Kanpur & 60 km from Lucknow city. Tanning is one the biggest industry in Unnao and this city is very popular for its huge leather industry. Big leather manufactures like, Superhouse Group, Mirza Tanners, Rahman Exports, and Zamzam Tanners have their factories in Unnao.

3. Chennai- Tamil Nadu-Chennai is located on the Coromandel Coast off the Bay of Bengal. In south India, Chennai is the biggest industrial and commercial center. And also a major cultural, economic and educational center. It contributes far more than 50 percent of India’s total leather exports. It also has a CSIR research institution named the Central Leather Research Institute.

4. Ambur – Tamil Nadu-Located on the banks of the Palar River, it is a town and the state Assembly Constituency in the Vellore District of Tamil Nadu. Home to a major part of the India’s leather tanning industry. This town has also earned its nickname as the Leather City of South India. India’s largest and finest tanneries are located here, which makes it one of the leading exporters of leather goods in India. The finished and unfinished products include shoes, garments, and gloves.

5. Kolkata – West Bengal Also known as the City of Joy, is the capital city of the Indian state of West Bengal. It is located on the east banks of the river Hooghly. It is the major commercial, educational and cultural center of the Eastern India. It is the second most important tanning center in the India. Home to around 500 tanneries which contribute about 22-25 % of the total country’s tanning. It also contributes to about 55% of the total country’s export contribution.

6. Agra – Uttar Pradesh-Agra is located on the banks of the river Yamuna; it is the northern most state of Uttar Pradesh. Total 40% of the population largely depend on agriculture, and the others on the leather and footwear business. Agra city is very popular for its leather goods in the country. The Leather footwear of Agra is very popular all across the world for its superb craftsmanship.

7. Ranipet – Tamil Nadu-Located on the northern bank of the Palar river, this city is also known as Ranipettai. It is a suburb, town and also the industrial hub of the Vellore city. It houses nearly 400 small and medium leather units. The large number of medium-scale leather industries which make both finished leather and leather articles for export.

FOREIGN INVESTORS

Apache Group (Taiwan), Nellore, Andhra PradeshFeng Tay Shoes (Taiwan), Cheyyar, Tamil Nadu Itares (Italy), Ambur, Tamil Nadu

SWOT ANALYSISStrength High GrowthReady availability of highly skilled and cheap manpower.Large raw material base.Policy initiatives taken by the Government.Capability to assimilate new technologies and handle large projects.Continuous emphasis on product development and design upgradation.

Weaknesses Lack of warehousing support from the government.International price fluctuation.Huge labour force resulting in high labour charges.Lack of strong presence in the global fashion market.Unawareness of international standards by many players

OpportunitiesRising potential in the domestic market.Growing fashion consciousness globally.Use of information technology and decision support software to help eliminate the length of the production cycle for different products.Use of e-commerce in direct marketing.ThreatsMajor part of the industry is unorganisedLimited scope for mobilising funds through private placements and public issues (many businesses are family-owned)Difficulty in obtaining bank loans resulting in high cost of private borrowingStricter international standardsHigh competition from East European countries and other Asian countriesLack of communication facilities and skills

India’s export of leather and leather products for seven years

                         (Value in Million $)

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Finished Leather 627.95 841.13 1024.69 1093.73 1284.57 1329.05 1046.44

Footwear 1507.59 1758.67 2079.14 2066.91 2531.04 2278.18 2147.2

Leather Garments 428.62 425.04 572.45 563.54 596.16 604.35 554.29

Leather Goods 757.02 855.78 1089.71 1180.82 1351.50 1454.83 1369

Saddlery & Harness 83.39 87.92 107.54 110.41 145.54 162.70 146.38

Total 3404.57 3968.54 4873.53 5015.41 5908.82 5829.11 5263.26

Source: DGCI&S  

GOVERNMENT REGULATION

Globalization of the Indian economy is a major objective of the Government. It has been appreciated that given the right type of policy support and framework, India would be able to substantially augment her exports. The basic thrust of Indian economic policy in the recent years has been to integrate the Indian economy with the global economy and expose the Indian manufacturers to the global market and competition.This sector as a Focus Sector in the Foreign Trade Policy 2004-09 to implement Special Focus Initiatives is a bold move towards further up gradation of the leather industry.ILDP- Indian Leather Development Programme –The Euro 223.15 Million scheme was undertaken during the Ninth Five Year Plan (1996-2000) and is still being implemented during the Eleventh Five Year Plan ( 2007-2012).

Tannery Modernization Scheme - This was launched under ILDP in 2000. The objective was to support existing tanneries for undertaking modernization programe for positive environmental impact, becoming competitive, effecting better capacity utilization, achieving productivity gains and reducing wastage.NLDP - National Leather Development Programe – The Joint Programe of Government of India and UNDP with a total outlay of Euro 19.11 Million ( with Euro 11.7 Million from UNDP and the rest by Indian Government) was drawn up for the integrated development of leather and leather products sector within the countryLeather Technology Mission - The Government of India launched the four year mission in January 1995 aimed at spreading the awareness of wide variety of technology in the leather sector primarily focusing the tanneries. The program coordinated by Council of Scientific and Industrial Research with its constituent organization, Central Leather Research Institute covered 172 projects in 16 States.

GROWTH DRIVERS

The Indian government has put in place an array of measure for skill development and skill up-gradation of workforce.Youth power: with 55% of work force below the age of 35, the Indian leather industry has one of the youngest and most productive workforce.Skilled labor at your doorstep: The humans resource development sub-scheme under the Indian leather development program (ILDP) implemented by the departmental of industrial policy and promotion(DIPP) is providing skill development training to the unemployed for placement in the leather industry while upgrading skills of the existing workforce at the shop floor level and importing training to trainers.

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