WINTER TRAINING PROJECT REPORT

ON
A STUDY ON TREND ANALYSIS & GROWTH DETERMINANTS
IN LEATHER INDUSTRY

SUBMITTED TO
KANPUR INSTITUTE OF MANAGEMENT STUDIES
(AFFILIATED TO DR. A.P.J. ABDUL KALAM TECHNICAL
UNIVERSITY, LUCKNOW)
IN PARTIAL FULLFILMENT OF THE REQUIREMENTS FOR THE
AWARD OF THE DEGREE
MASTER OF BUSINESS ADMINISTRATION

UNDER THE GUIDANCE OF

(MR. SAURABH GUPTA)

SUBMITTED BY:
SATYAM GUPTA
ROLL NO- 1571470152
SESSION (2015-2017)

1
 CERTIFICATE

This is to certify that SATYAM GUPTA, Roll number 1571470152 a student of MBA in Kanpur

Institute of Management Studies, has carried out the research work presented in this research report

titled A STUDY ON TREND ANALYSIS & GROWTH DETERMINANTS IN LEATHER

INDUSTRY for the award of master of business administration from KANPUR INSTITUTE OF

MANAGEMENT STUDIES for the academic batch 2015-2017, under my guidance.

Name & Sign of Project Guide

Mr. SAURABH GUPTA

Dean (Academic)
Mr. ALTAF QAIYUM

DECLARATION

2
I SATYAM GUPTA declare the project entitled A Study on Trend Analysis & Growth

Determinants in Leather Industry is my original work.

This Project is done in partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION by DR. A.P.J ABDUL KALAM TECHNICAL

UNIVERSITY, LUCKNOW.

Place: Unnao SATYAM GUPTA

Date: Roll No.1571470152

ACKNOWLEDGEMENT

3
First of all I wish to express my profound gratitude and sincere thanks to my
esteemed learned Professor MR. ALTAF QAIYUM, K-IMS who allowed me to
conduct this project work.
I would like to thank my project guide Mr. SAURABH GUPTA who was always
there to help and guide me when I needed help. Her perceptive criticism kept me
working to make this project more full proof. I am thankful to him for his
encouraging and valuable support. Working under him was an extremely
knowledgeable and enriching experience for me. I am very thankful to him for all the
value addition and enhancement done to me.
No words can adequately express my overriding debt of gratitude to my parents
whose support helps me in all the way. Above all I shall thank my friends who
constantly encouraged and blessed me so as to enable me to do this work
successfully.
Last but not the least; I would like to thank my Dad who supported me in making this
project possible.

SATYAM GUPTA

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 TABLE OF CONTENT

S.NO. TOPICS PAGE NO.

1. TITLE PAGE 1

2. CERTIFICATE 2

3. DECLARATION 3

4. ACKNOWLEDGEMENT 4

5. TABLE OF CONTENT 5

6. EXECUTIVE SUMMARY 6

7. ABOUT LEATHER INDUSTRY 13

8. RESEARCH METHODOLOGY 35

9. DATA ANALYSIS AND INTERPRETATION 41

10. FINDINGS 66

11. CONCLUSION 69

12. RECOMMENDATIONS 71

13. BIBLIOGRAPHY 75

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EXECUTIVE SUMMARY

EXECUTIVE SUMMARY
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This Project deals with A Study on Trend Analysis & growth Determinants In

Leather Industry. The need for carrying this research project is to analyze the past

trends, compare it with ongoing trends and then forecasting the future expected craze

in leather industry leather chemicals.

Leather sector is known for its consistency in high export earnings and it is among

the top ten foreign exchange earners for the country. It holds a prominent place in the

Indian economy.

Leather industry has reached its maturity stage where as it has it bring about latest

innovations, technological inventions and various Research and Development work

to remain afloat and blossom in this competitive market. Various Brands like Nike,

Reebok and Adidas have already captured the market of footwears, garments etc.

Consumer of now-a-days is more inclining towards designer and fashionable stuff

and for that ready to shell out any amount of money for it. Nike understood their

customers needs and market trends and became the No. 1 footwear company in the

world. Hence leather Industry has to observe its customers and the fashion trends in

market to compete at the highest level.

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The trend in export scenario is seen to decline a by a margin raising questions of the

future of leather industry in India. There could be two possible reasons of global

rescission or unavailability to cope up with fashion trends and some external factors.

Barring rescission the observation that is made after the research analysis is that

factors like unavailability of raw material, Quality degradation of hides and skin, lack

of skilled labor, shortage of abattoirs and slaughter houses and other indirect factors

like fashion movement, EXIM policies, expensive labor and global approach is

bringing the decline in the graph.

Raw material challenge void could be hugely filled by rearing more animals. Animal

husbandry is one of the steps that could be taken. The other factor that affecting the

growth of this industry is the exaggerated fear about pollution caused by leather

tanneries. The tanneries should adopt ZLD zero liquid discharge system to meet the

requirements of pollution board. To meet the anticipated export and domestic

requirements, the industry calls for massive capacity expansion. Smooth flow of

finance is critical for timely creation of such capabilities. A major problem faced by

this industry is the lack of exclusive leather parks, there is a talk about their opening

but unfortunately nothing yet has taken place. There is a need of vocational training

on a large scale so that a continuous supply of labor is available to industry at

competitive levels. Technology up gradation is the best way to improve the

productivity and quality consistency of the products and to provide the buyers with

8
more services that make procurement in India more attractive than in any other

competing countries. One of the other most important strategies would be adopting

new marketing strategies. It is a time that India as a country considers creating a

brand image.

Other urgent steps that could be taken could be price competitiveness, diversification

of markets of Indian products to areas not seemingly affected by global meltdown.

Quality, delivery, packaging etc must be maintained at assured levels without giving

opportunity to any unscrupulous buyers to renege on their contracts.

ABOUT THE PROJECT

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The project entitled A Study On Trend Analysis & Growth Determinants In Leather

Industry is a research work that aims to find the trend of the various factors that affect the Indian

leather industry. Growth determinants here include raw hides and skin, labor, consumer behavior,

industry analysis and fashion movement, etc.

In this project firstly the various feedback is been taken from the people who are already somewhat

related to leathers either directly or indirectly. For example- what kind of leather shoes you prefer,

do you prefer using laptop cum office leather portfolios, etc. various color patterns and trends in

leather product is studied here.

In the second part of the report deals with analysis that was done on the secondary data that was

available on the internet, leather portals and provided by the company. Then after the projections

are made for the future

Finally the findings and conclusions are drawn on basis of both primary and secondary data and

suitable recommendations are made.

OBJECTIVE OF THE PROJECT

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The purpose of this research project is to analyze the past trends of the growth determinants that

affect the leather industry, study the current trends by collecting primary data and then make

projections for the future. This research is majorly done to find the various trends of the growth

determinants like raw hides and skin, consumer behavior, fashion movement and labor that directly

affect the leather industry.

The first part of the report deals with finding the trends in various leather and its products like

shoes, garments, portfolios and other leather accessories based on color, design, quality, etc.

It then satisfies the purpose of determining and studying of various trends of leather industry.

SCOPE OF THE STUDY

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The project A Study on Trend Analysis & Growth Determinants In Leather Industries finds

its application in leather as well as chemical industry.

The project helps predicting future trends in leather and its products so that the production can be

done accordingly.

Challenges that are faced by the leather industry are also discussed here and remedies to deal with

it.

Readers will find it interesting as the report will smoothly take you through to the various

determinants in leather industry and current trends of leathers at present.

12
ABOUT LEATHER INDUSTRY

13
Indian Leather Industry

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The leather industry occupies a place of prominence in the Indian economy in view of its massive
potential for employment, growth and exports. There has been an increasing emphasis on its
planned development, aimed at optimum utilisation of available raw materials for maximising the
returns, particularly from exports. The exports of leather and leather products gained momentum
during the past two decades. There has been a phenomenal growth in exports from Rs.320 million
in the year 1965-66 to Rs.69558 million in 1996-97. Indian leather industry today has attained well
merited recognition in international markets besides occupying a prominent place among the top
seven foreign exchange earners of the country.

The leather industry has undergone a dramatic transformation from a mere exporter of raw
materials in the sixties to that of value added finished products in the nineties. Policy initiatives
taken by the Government of India since 1973 have been instrumental to such a transformation. In
the wake of globalisation of Indian economy supported with liberalised economic and trade policies
since 1991, the industry is poised for further growth to achieve greater share in the global trade.

Apart from a significant foreign exchange earner, leather industry has tremendous potential for
employment generation. Direct and indirect employment of the industry is around 2 million. The
skilled and semi-skilled workers constitute nearly 50% of the total work force. The estimated
employment in different sectors of leather industry is as follows:

Sector Total Employment

Flaying, curing & Carcass Recovery 8,00,000

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Tanning & Finishing 1,25,000

Full Shoe 1,75,000

Shoe Uppers 75,000

Chappals & Sandals 4,50,000

Leather Goods & Garments 1,50,000

Structure of the industry

The 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 pieces

Skins 166 million pieces

Footwear & Footwear Components

a) Shoes 100 million pairs

b) Leather shoe uppers 78 million pairs

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c) 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

The major production centres for leather and leather products are located at Chennai, Ambur,
Ranipet, Vaniyambadi, Trichi, Dindigul in Tamil Nadu, Calcutta in West Bengal, Kanpur in Uttar
Pradesh, Jalandhar in Punjab, Bangalore in Karnataka, Delhi and Hyderabad in Andhra Pradesh.

Raw material supplies

There exists a large raw material base. This is on account of population of 194 million cattle, 70
million buffaloes, 95 million goats. According to the latest census, India ranks first among the
major livestock holding countries in the world. In respect of sheep with 48 million sheeps, it claims
the sixth position. These four species provide the basic raw material for the leather industry.

The annual availability of 166 million pieces of hides and skins is the main strength of the industry.
This is expected to go up to 218 million pieces by the end of year 2000. Some of the goat/calf/sheep
skins available in India are regarded as speciality products commanding a good market. Abundance

17
of traditional skills in training, finishing and manufacturing downstream products and relatively low
wage rates are the two other factors of comparative advantage for India.

Tanning and finishing capacity

With training and finishing capacity for processing 1192 million pieces of hides and skins per
annum spread over different parts of the country, most of which is organized along modern lives,
the capability of India to sustain a much larger industry with its raw material resource is evident. In
order to augment the domestic raw material availability, the Government of India has allowed duty
free import of hides and skins from anywhere in the world. It is an attraction for any foreign
manufacturer who intends to shift his production base from a high cost location to low cost base.

Export Potential

The leather industry, one of the major foreign exchange earners of the country recorded significant
growth since the beginning of the decade. Today the share of the value added finished products in
the total exports from leather sector are 80% as against 20% in 1970s.

(Value in million US$)

Category 1998-99

Finished Leather 265.2

Leather Footwear 290.2

Footwear Components 243.7

Leather Garments 368.6

Leather Goods 429.0

Saddlery and Harness 33.4

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 Total 1630.1

Export of Leather and Leather Products from India

140000
117223.4
120000
110343.2
100000
101143
R s. M illio n

80000
81520.38 69557.8
60000
61570.61
40000

20000

0
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99

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 (Value in million Rs.)

Chart Title
6

0
Category 1 Category 2 Category 3 Category 4

Series 1 Series 2 Series 3

Top ten
Indian leather exporters

Tata International Ltd.

Florind Shoes Ltd.

Punihani International

Farida Shoes Ltd.

Mirza Tanners Ltd.

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T. Abdul Wahid & Company

Hindustan Lever Ltd.

Super House Leather Ltd.

RSL Industries Ltd.

Presidency Kid Leather Ltd.

Indian Leather Footwear Industry

India is the world's second largest producer of footwear; its production estimated over 700 million
pairs per annum. At about US $ 300 million per year, footwear accounts for 18 percent share of total
exports of leather exports.

Various types of shoes produced and exported from India include dress shoes, casuals, moccasins,
sports shoes, horacchis, sandals, ballerinas, and booties. Major production centres are Chennai
(Madras), Delhi, Agra, Kanpur, Mumbai (Bombay), Calcutta and Jalandhar.

Most of the modern footwear manufacturers in India are already supplying to well established
brands in Europe and USA. The large domestic market and the opportunity to cater to world
markets makes India an attractive destination for technology and investments. Equally relevant is it
for the footwear components industry, at this juncture, it is posed for real growth and
diversification.

Indian Leather Goods Industry

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Items produced by this sector include, in addition to bags, handbags, handgloves and industrial
gloves, wallets, ruck sacks, folios, brief cases, travelware, belts, sports goods, upholstery and
saddlery goods.

A surfeit of modern units in Chennai, Kanpur and Calcutta employing skilled human resources and
equipped with modern and sophisticated machinery account for a diversified range of superlative
small leather goods including bags, purses, wallets, industrial gloves etc. made of quality leathers of
cows, sheep, goats and buffaloes. The products meet the requirement of bulk buyers and consumers
in Europe, USA and Australia.

The major market for Indian leather goods is Germany, with an offtake of about 25 per cent of the
leather goods produced in India followed by USA, UK, France and Italy. With products ranging
from designer collections to personal leather accessories, this sector has a share of 20.53 per cent in
the leather industry, while maintaining an average growth rate of 11 per cent recorded in the last
five years.

Indian Saddlery Industry

India is one of the largest producers of saddlery and harness goods in the world. The saddlery
industry was established in the 19th century primarily to cater to the needs of military and police.
From then on initiatives were taken to develop, the industry and today there are over 150 units in
the organised sector, out of which approximately 105 are 100% export oriented units.

Kanpur, in the state of Uttar Pradesh, is a major production centre for saddlery goods in India
accounting for more than 95% of the total exports of saddlery items from India. Kanpur, because of

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its specialisation in tanning and finishing of buffalo hides is the only centre in the country where
harness leather, which is major input for saddlery industry, is manufactured.

The export of saddlery and harn'ess items have showed an annual growth rate of about 40%
reaching DM 64 million during 1998-99. The major importers of Indian saddlery are Germany,
USA, UK, France, Scandinavia, Netherlands, Japan, Australia and New Zealand.

Indian Leather Garments Industry

The Leather Garment Industry occupies a place of prominence in the Indian leather sector. The
product classification of leather garments comprise of jackets, long coats, waist coats, shirts,
pant/short, children garments, motorbike jackets, aprons and industrial leather garments.

Indian leather garments, which entered the world market only in the mid-eighties with exports of
Rs. 15 crores in 1997-98, account for about Rs. 1530 crore in 1997-98. The major export
destination of leather garments from India is Germany. In 1997, German imports of leather
garments aggregated DM 1786 million of which DM 304 million worth of imports went from India.
India, China and Turkey were the major suppliers of leather garments for the German market, as
they accounted for about 78% of the market share.

Among the three major exporting nations of leather garments, India maintains a similar level of
market share of about 20%, in both German and EU markets.

Other markets for India include Italy, U.K., U.S.A. France, Spain and Netherlands. Recently,
successful attempt had been made for exports to Denmark, Switzerland and Canada.

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Indian leather industry - Investment & Sales

The ratio of investment : sales value is 1: 2.25, which is very low when compared to other
industries. This is mainly due to low capacity utilization of the units. The capacity utilisation of
units in respect of hides converting raw into unfinished leathers is estimated at 49%, raw to finished
60% and unfinished to finished 70%.

In the case of skin based tanneries, the respective percentages are 64, 67 and

70. The main reasons reported for under utilisation of capacity are raw material shortage, high price
of raw materials, lack of modernisation, financial constraints, power constraints and stringent
environmental regulations.

Marketing of leather and leather products in Germany & the EU

The leather sector offers a good potential which Indian entrepreneurs can exploit in Germany and
other EU markets characterised by ever growing competitiveness in terms of price and quality, on
one hand, and the environmental considerations, on the other. With a strong foothold that the Indian
leather industry has had for long in these markets, and its advantage of raw material and labour
resources, Indian leather exporters can, and should, mount a concerted marketing campaign to wrest
a share consistent with their inherent strength and potential. This has to be done against the
background of the well-known salient features of the German market:

The world's second largest import and export market

A difficult buyers' market with hyper competition and high expectations

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 A dynamic multi-faceted market with rapid technological development and innovations A
market where a considerable amount of buying power is devoted to satisfying individual needs

A market influenced by the rising average age of the population and low birth rate

A market where environment awareness and eco-friendly production becomes more and more a
pre-requisite for successful marketing of products

Recipe for market intelligence

Market information through journals and magazines

Schuhmarkt

Schuhkurier

Lederwaren Report

Quick Market Assessment

Window shopping

Backward calculation of price

Catalogues/ leaflets

Trade Fairs

GDS Dusseldorf Herren Mode Woche - Munich

Expo-Riva Schuh - Italy Igedo Fashion Fair - Dsseldorf

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 Leipzig Fashion Fair SPOGA - Cologne

Lederwarenmesse - Offenbach

Agents

Marketing channels

The emerging trend in Germany has been towards direct imports. The other noteworthy feature is
the integration of retailing and manufacturing, particularly for the footwear sector. This has led to
increased emphasis on distribution aspects of business. Other distributors, like departmental stores,
mail order houses, super markets and non-leather shops have also gained importance. Many outlets
get direct supplies either from the manufacturers and importers or from wholesalers and buying
associations (Einkaufs- Verband, e.V.).

These developments necessitate the marketing strategies to be attuned to the specifics of the
different channels, keeping in sharp focus the changes taking place in the distribution pattern of
chain stores, retailers, discounters, etc.

The strategy should focus on a structural approach to the promotion of export of leather products
from India. This must include market information for exploring new markets, participation in
different international trade fairs, organising trade delegations, organising buyer-seller meets,
liaisoning with the representatives of the buying houses, etc.

For the successful marketing of their products, the Indian exporters should aim for long lasting
trade relations based on stable partnerships. In such a context, the German importer needs to be

26
viewed as much more than only a buyer and distributor. He would normally take care of the timely
development of the samples and collections through fashion and design information and also by
employing pattern makers and designers. In addition, he would organise advertising and PR
activities, besides holding sufficient stocks.

Environmental aspects for leather products

Manufacturers who produce environmentally sound products will enjoy a competitive advantage in
all business relations with EU in general and Germany in particular. The pitch has to be to
successfully emphasise the environmental

soundness of the product in the information to the buyers since major attention is being paid to the
increasing role of the environmental regulations. Therefore, the manufacturers have to view their
products and production processes not just by looking at traditional aspects like price, quality,
customer demands, etc. but also at the environment. Environmentally sound production,
consequently, opens new market opportunities.

The regulations concerning the ban on the use of Azo Dyes and PCP need to be specially taken care
of. Use of both these inputs has been banned due to their carcinogenic nature. Likewise, for
compliance with the German packing regulations, Indian suppliers have to stick to the basic
principle that packaging material be reusable and recyclable. Consumers may have a tendency to
choose products, which are easily recognisable as such and are labeled according to legal
stipulations. The hallmark for these environment-friendly products is normally referred to as
ECO-LABEL. This indicates that the product is manufactured in consonance with the
environmental regulations.

Global Scenario :

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The global trade in leather and leather products has been increasing over the years from mere US$ 4
billion in 1972 to US$ 70 billion in 1997.

Although the exports of Indian leather and leather products have grown manifold during the past
decades, our country's share in global trade is around 3% among world imports of leather products.
Whereas India's share in world imports of leather footwear is 1%. Major exporting countries of
leather footwear are China (14% share), Portugal (6% share), Brazil (5% share) and Indonesia (4%
share).

India's share in world imports of leather garments is 6%. Major exporting countries of leather
garments are China (36% share), Germany (9% share), Italy (7% share), Turkey (5% share) and
Pakistan (4% share)

India's share in world imports of leather goods is 7%. Major exporting countries are China (22%
share), Italy (22 % share), France (7% share) and Greece (5% share),

India's share in world imports of harness and saddlery is 8%. Major exporting countries of harness
& saddlery are Germany (14 % share), U.K. (14 % share), China (12% share).

Overall, India is facing fierce competition in international market from countries like China,
Vietnam, Thailand, Indonesia, etc., which are emerging as major manufacturing countries.

East European countries like Poland, Romania, Czech and Slovak Republics have re-emerged as
major production centres particularly for footwear sector. These countries pose major challenge to
Indian exporters as they enjoy geographical advantage.

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For other uses, see Leather (disambiguation).

"Deerskin" redirects here. For the novel by Robin McKinley, see Deerskin (novel).

A variety of leather products and leather-working tools

Leather is a durable and flexible material created by tanning animal rawhide and skin, often cattle
hide. It can be produced at manufacturing scales ranging from cottage industry to heavy industry.

People use leather to make various goodsincluding clothing (e.g., shoes, hats, jackets, skirts,
trousers, and belts), bookbinding, leather wallpaper, and as a furniture covering. It is produced in a
wide variety of types and styles, decorated by a wide range of techniques.

Chrome-tanned leather, invented in 1858, is tanned using chromium sulfate and

other chromium salts. It is more supple and pliable than vegetable-tanned leather and does not
discolor or lose shape as drastically in water as vegetable-tanned. It is also known as wet-blue
for its color derived from the chromium. More exotic colors are possible when using chrome

29
 tanning. The chrome tanning method usually only takes a day to finish, and the ease and agility
of this method make it a popular choice. It is reported that chrome-tanned leather adds up to
80% of the global leather supply.

Vegetable-tanned leather is tanned using tannins and other ingredients found in

different vegetable matter, such as tree bark prepared in bark mills, wood, leaves, fruits,
and roots. It is supple and brown in color, with the exact shade depending on the mix of
chemicals and the color of the skin. It is the only form of leather suitable for use in leather
carving or stamping. Vegetable-tanned leather is not stable in water; it tends to discolor, so if
left to soak and then dried it shrinks and becomes harder. In hot water, it shrinks drastically and
partly congealsbecoming rigid, and eventually brittle. Boiled leather is an example of this,
where the leather has been hardened by being immersed in hot water, or in boiled wax or
similar substances. Historically, it was occasionally used as armor after hardening, and it has
also been used for book binding.

Aldehyde-tanned leather is tanned using glutaraldehyde or oxazolidine compounds. This is

the leather that most tanners refer to as wet-white leather due to its pale cream or white color. It
is the main type of "chrome-free" leather, often seen in shoes for infants and automobiles.

Formaldehyde tanning (being phased out due to danger to workers and sensitivity of many
people to formaldehyde) is another Aldehyde tanning method. Brain-tanned leathers fall into
this category, and are exceptionally water absorbent.

Brain tanned leathers are made by a labor-intensive process that uses emulsified oils, often
those of animal brains such as deer, cattle, and buffaloes. They are known for their exceptional
softness and wash ability.

Chamois leather also falls into the category of Aldehyde tanning, and like brain tanning,
produces a porous and highly water-absorbent leather. Chamois leather is made using marine
oils (traditionally cod oil) that oxidize easily to produce the Aldehyde that tan the leather to
color it.

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 Rose-tanned leather is a variation of vegetable oil tanning and brain tanning, where
pure rose Otto replaces the vegetable oil and emulsified oils. Rose-tanned leather tanned leaves
a powerful rose fragrance even years from when it is manufactured. It has been called the most
valuable leather on earth, but this is mostly due to the high cost of rose Otto and its labor-
intensive tanning process.

Synthetic-tanned leather is tanned using aromatic polymers such as the Novolac or Neradol
types (syntans, contraction for synthetic tannins). This leather is white in color and was
invented when vegetable tannins were in short supply during the Second World
War. Melamine and other amino-functional resins fall into this category, as well, and they
provide the filling that modern leathers often require. Urea-formaldehyde resins were also used
in this tanning method before people realized the hazards that formaldehyde presents to tanners
and consumers.

Alum-tanned leather is transformed using aluminum salts mixed with a variety of binders
and protein sources, such as flour and egg yolk. Alum-tanned leather is technically not tanned,
as tannic acid is not used, and the resulting material reverts to rawhide if soaked in water long
enough to remove the alum salts.

Rawhide is made by scraping the skin thin, soaking it in lime, and then stretching it while it
dries. Like alum-tanning, rawhide is not technically "leather", but is usually lumped in with the
other forms.[citation needed]
Rawhide is stiffer and more brittle than other forms of leather; it is
primarily found in uses such as drum heads and parchment where it does not need to flex
significantly; it is also cut up into cords for use in lacing or stitching and for making many
varieties of dog chews.

Leather, usually vegetable-tanned, can be oiled to improve its water resistance.

This currying process after tanning supplements the natural oils remaining in the leather itself,
which can be washed out through repeated exposure to water. Russia leather was an important

31
international trade good for centuries.Frequent oiling of leather, with mink oil, neats-foot oil, or a
similar material keeps it supple and improves its lifespan dramatically.[citation needed]

Leather with the hair still attached is called "hair-on".

Leather Industry In India

Last Updated: November, 2016

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 earnings and growth.

The Indian leather industry accounts for around 12.9 per cent of the worlds leather production of
hides/skins. The country ranks second in terms of footwear and leather garments production in the
world.

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Export highlights
Total leather and leather good exports from India stood at US$ 5.92 billion in FY 2015-16.
During 201516, the major markets for Indian leather products were US (14.25 per cent),
UK (12.24 per cent), Germany (11.5 per cent), Italy (6.9 per cent), Spain (5.6 per cent), Hong
Kong (5.4 per cent), France (5.3 per cent), UAE (4.5 per cent), Netherlands (3.2 per cent), China
(2.8 per cent) and Australia and Belgium (1.45 per cent each).
At 47.0 per cent, footwear accounted for the lions share of leather exports in FY 2015-16,
followed by leather goods and accessories with 23.0 per cent share, finished leather with 18.0
per cent share, leather garments with 9.0 per cent share, and saddlery & harness with 3.0 per cent
share.
Per capita footwear consumption in India is expected to increase up to four pairs, while
domestic footwear consumption is expected to reach up to five billion pairs by 2020.

COUNCIL FOR LEATHER EXPORTS

The Council for Leather Exports (CLE) is an autonomous non-profit organisation, which is
entrusted with export promotion activities and the development of the Indian leather industry. About
3,172 companies manufacturing/exporting leather and leather products are members of the Council.

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Production processes [edit]

Drying of leather in East Timor

Leather tanning in Fes, Morocco

Tanned leather in Marrakech

Main article: Leather production processes

The leather manufacturing process is divided into three fundamental sub processes: preparatory
stages, tanning, and crusting. All true leathers undergo these sub processes. A further sub process,
surface coating can be added into the leather process sequence, but not all leathers receive surface
34
treatment. Since many types of leather exist, it is difficult to create a list of operations that all
leathers must undergo.The preparatory stages are when the hide/skin is prepared for tanning.
Preparatorystagesmay include: preservation,
soaking, liming,unhearing,fleshing, splitting,relining, deliming, bating, degreasing,
frizing, bleaching, pickling, and depickling.

Tanning is a process that stabilizes the protein of the raw hide or skin so it does not putrefy, making
it suitable for a wide variety of end applications. The principal difference between raw and tanned
hides is that raw hides dry out to form a hard, inflexible material that, when rewetted (or wetted-
back) putrefy, while tanned material dries to a flexible form that does not become putrid when
wetted-back.

Many tanning methods and materials exist. The choice ultimately depends on the end application
for the leather. The most common tanning material is chromium, which leaves the tanned leather a
pale blue color (due to the chromium). This product is commonly called wet blue. The hides, when
finished pickling, are typically between pH 2.8 and 3.2.[citation needed]
At this point, tannery workers
load the hides into a drum and immerse them in a float that contains the tanning liquor. The hides
soak while the drum slowly rotates about its axis, and the tanning liquor slowly penetrates through
the full thickness of the hide. Workers periodically cut a cross-section of a hide and observe the
degree of penetration. Once the process achieves even penetration, workers slowly raise the float's
pH in a process called basification, which fixes the tanning material to the leatherand the more
tanning material fixed, the higher the leather's hydrothermal stability and shrinkage temperature
resistance. Chrome-tanned leather pH is typically between pH 3.8 and 4.2.[citation needed]

Crusting is a process that thins, retains, and lubricates leather. It often includes a coloring operation.
Chemicals added during crusting must be fixed in place. Crusting culminates with a drying and
softening operation, and may include:

Summing

Splitting

Shaving

35
 Rechroming

Neutralization

Retaining

Dyeing

Fatliquoring

Filling

Stuffing

Stripping

Whitening

Fixating

Setting

Drying

Conditioning

Milling

Staking

Buffing

For some leathers, workers apply a surface coating. Tanners call this finishing. Finishing operations
can include:

36
 Oiling

Brushing

Padding

Impregnation

Buffing

Spraying

Roller coating

Curtain coating

Polishing

Plating

embossing

Ironing, ironing-combing (for hair-on)

Glazing

tumbling

37
38
39
40
 SWOT ANALYSIS: LEATHERINDUSTRY

STRENGTHS

Existence of more than sufficient productive capacity in tanning.

Easy availability of low cost of labor.
Exposure to export markets.
Managements with business background become quality and environment conscious.
Presence of qualified leather technologists in the field.
Comfortable availability of raw materials and other inputs.
Massive institutional support for technical services, designing, manpower development and
marketing.
Exporter-friendly government policies.
Tax incentives on machinery by Government.

41
 Well-established linkages with buyers in EU and USA.

WEAKNESSES

Low level of modernization and up gradation of technology, and the integrate developed
technology is very slow.
Low level of labor productivity due to inadequate formal training / unskilled labor.
Horizontal growth of tanneries.
Less number of organized product manufacturers.
Lack of modern finishing facilities for leather.
Highly unhygienic environment.
Unawareness of international standards by many players as maximum number of
leatherindustries are SMEs.
Difficulties in accessing to testing, designing and technical services.
Environmental problems.

42
SWOT Analysis of the Indian leather industry

43
Opportunities Strengths Threats

Rising potential in the domestic High Growth Major part of the industry
market is unorganized
Ready availability of highly
Growing fashion consciousness Limited scope for
skilled and cheap manpower
globally mobilizing funds through
Large raw material base private placements and
Use of information technology
public issues (many
and decision support software Policy initiatives taken by the
businesses are family-
to help eliminate the length of Government
owned)
the production cycle for different
Capability to assimilate new
products Difficulty in obtaining
technologies and handle large
bank loans resulting in
Use of e-commerce in direct projects
high cost of private
marketing borrowing
Continuous emphasis on
product development and
Stricter international
design upgradation
standards
Weaknesses
High competition from

Lack of warehousing support East European countries

from the government and other Asian countries

International price fluctuation Lack of communication

facilities and skills
Huge labour force resulting in
high labour charges

Lack of strong presence in the

global fashion market

44
OPPORTUNITIES

Abundant scope to supply finished leather to multinationals setting up shop in India.

Growing fashion consciousness globally.
Use of information technology and decision support software to help eliminate the length of
the production cycle for different products
Product diversification - There is lot of scope for diversification into other products,
namely, leather garments, goods etc.
Growing international and domestic markets.

THREATS

Entry of multinationals in domestic market.

Stiff competition from other countries. (The performance of global competitors in leather
and leather products indicates that there are at least 5 countries viz, China, Indonesia,
Thailand, Vietnam and Brazil, which are more competitive than India.)
Non- tariff barriers - Developing countries are resorting to more and more non tariff
barriers indirectly.
Improving quality to adapt the stricter international standards.
Fast changing fashion trends are difficult to adapt for the Indian leather industries.

45
46
47
 RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

48
METHOD OF RESEARCH

Research methods may be understood as all those methods/techniques that are used for conduction
of research.
The method of research analysis that I have used for my report is Content Analysis.
Research is also done by use of secondary data and the research methods used are of two types -

Analysis of Historical records: Recording of notes, content analysis.

Analysis of Documents: statistical compilation and manipulations, reference and Abstract
guides content analysis.

Secondary research

The data was available to me through the means of journal, magazines, publications and internet etc
and then trend analysis was done it accordingly

TYPE OF RESEARCH

Descriptive research includes surveys and fact-finding inquiries of different kinds. The
major purpose of descriptive research is description of the state of affairs as it exists at
present. In social science and business research we quite often use the term Ex post fact o
research for descriptive research studies. The main characteristic of this method is that the
researcher has no control over the variables; he can only report what has happened or what
is happening. Most ex post factresearch projects are used for descriptive studies in which the

49
 researcher seeks to measure such items as, for example, frequency of shopping, preferences
of people.

Applied research is one in which a solution or conclusion is to be drawn for a business

problem that could be immediate in nature.

Exploratory research is used as for getting some new insights into the phenomenon.
Broadly classifying, we can say that type of research used here is Descriptive Research.

Types of Data

Secondary Data

Secondary data: on the other hand, are those which have already been collected by
someone else and which have already been passed through the statistical process.

50
METHODS OF COLLECTING PRIMARY AND SECONDARY DATA

SECONDARY DATA

INTERNET
BOOK BANKS
GOVT AGENCIES
PRIVATE RESEARCH
INSTITUTIONS
JOURNALS, etc
PRIMARY DATASURVEYSN

51
 DATA ANALYSIS AND
INTERPRETATION

FOOTWEAR INDUSTRY

52
53
 Chart Title
6

0
Category 1 Category 2 Category 3 Category 4

Series 1 Series 2 Series 3

Footwear exports have increased from US$ 82.56 million in 1979-80 to US$ 1507.51 million 2009-10.
WAGES ANALYSIS

54
 States 2005- 2006- 2007- 2008- 2009-
06 07 08 09 10

Andhra 45-110 45-128 45-128 58.25- 58.25-

Pradesh 163
Arunachal 55-57 55-57 55-57 55 55
Pradesh
Assam 48-97 48-97 48-97 54.80- 54.80-
79.60 79.60
Bihar 66-71 66-75 66-75 75-89 75-89
Chhattisgarh 53-79 52.87- 52.87- 69- 69-
EXPORT TRENDS
79.13 79.13 102.27 103.28
Goa 56-94 75-94 75-94 90-110 90-110
Gujarat 50-99 50-99 50-99 55- 55-
114.80 115.80
Haryana 87-88 94-95 94-95 140.94 138
Himachal 65 70 70 100 100
Pradesh
Jammu & 66 66 66 66 66
Kashmir
Jharkhand 68 50.06- 50.06- 92- 86.40-
77.57 77.57 100.07 90
Karnataka 57-99 63-103 63-103 73.96- 73.96-
133.10 133.10
Kerala 72-174 72-189 72-189 72- 72-
328.80 328.80
Madhya 57-87 61.37- 61.37- 88.20- 88.20-
Pradesh 94.13 94.13 133.65 133.65
Maharashtra 44-149 45-155 45-155 58.33- 46.13-
209.65 201.30
Manipur 70-72 69.55- 69.55- 72.40 72.40
72.40 72.40
Meghalaya 70 70 70 70 70
Mizoram 91 91 91 103 103
Nagaland 66-70 66-70 66-70 80 66-70
Orissa 53 55 55 70 70
Punjab 88 90.44- 90.44- 102.60- 102.60-
94.24 94.44 104.31 104.31
Rajasthan 73-76 73-82 73-82 100- 87.81-
102.12 100
Sikkim 85 85 85 100 100
Tamil Nadu 54-137 54.44- 54.44- 57.94- 57.94-
150 150 158.70 158.70
55
Tripura 50-66 51.35- 51.35- 59.03- 62-
65.77 65.77 98.08 98.08
Uttar 57-110 58- 68- 76.31- 76.31-
LEATHER EXPORT PROJECTIONS FRPM FY10 TO FY14

4000
3500
3000
2500 Leather
2000 Footwear
1500 Leather Garments
1000 Leather Goods
500
0
FY 10 FY 11 FY 12 FY 13 FY 14

Segment- Wise Composition of Leather Export (FY 09)

Footwere
2.6 Leather Goods
18.7 8.2 Leather Garments
Finished Leather
Saddlery and
11.8 24.3 Harness

56
 COUNTRY-WISE EXPORT

Germany Italy
UK US
1.6
24.6 14.1
Honkong France
2.4
Spain Netherland
4.1 12.9
6.1 UAE Australia
6.1 11.5 Others
6.6 10

CHEMICALS

Chemical Industry is an important constituent of the Indian economy. Its size is estimated at around
US$ 35 billion approx., which is equivalent to about 3% of India's GDP. The total investment in
Indian Chemical Sector is approx. US$ 60 billion and total employment generated is about 1
million. The Indian Chemical sector accounts for 13-14% of total exports and 8-9% of total imports
of the country. In terms of volume, it is 12th largest in the world and 3rd largest in
Asia. Currently, per capita consumption of products of chemical industry in India is about 1/10th of
the world average. Over the last decade, the Indian Chemical industry has evolved from being a
basic chemical producer to becoming an innovative industry. With investments in R&D, the
industry is registering significant growth in the knowledge sector comprising of specialty
chemicals, fine chemicals and pharmaceuticals. The Indian Chemical Market Segment wise is as
Under:

57
Concentration on Chemical industry

17%
Gujarat
Panjab
9%
Madhya pradesh
Tamilnadu
Uttar Pradesh
6%
53%
Maharastra
6% Others
5%
4%

58
COMPETITION IN CHEMICALS

S.No. Company MT/Annum %share

1 BASF 14200 12.91
2 Clariant 11200 10.18
3 TFL 1200 10.91
4 Alpa 3000 2.73
5 Stahl 2500 2.27
6 Laxness 7000 6.33
7 Balmer lawrie 3800 3.45
8 Indofil 2500 2.27
9 HCL 1200 1.09
10 Viswaat 3000 2.73
11 Dhuper 4000 3.67
12 Anita Ent 1600 1.45
13 Associated 2400 2.18
14 Pidilite 1500 1.36
15 Abhilash 2600 2.36
16 Others 37500 34.09
Total 1,10,000 100

Investment details of Indian leather industry

59
 Chart Title
6

0
Category 1 Category 2 Category 3 Category 4

Series 1 Series 2 Series 3

Composition of Indian leather

exports to Germany (1998-99)
3% 8%
13%

31%

15%

30%

Leather Leather F ootwear Footwear Component

Leather Garments Leather Goods Saddlery and Harness

60
 Export of leather and leather products
to Germany (1998-99)

109.5 113.2
120
100
Million US $

80
48.86 56.03
60
28.25
40
20 8.51

0
Leather Leather Footwear Leather Leather Saddlery and
Footwear Component Garments Goods Harness

LEATHER 2020: CHALLENGES AND OPPORTUNITIES

Market driven

Raw material resources

Consumer preferences
Smart materials
Composites
Environmental stipulations

Product driven

Design and engineering

Life cycle assessment
Safety
New avenues
Futuristic components and accessories
Optimum energy consumption

Process technology driven

61
 Biological option
Atom economy
Clean/green options
Efficient machinery
Value addition
Subjective/objective assessment
Zero discharge
Intelligent processing
Futuristic chemicals

Human resource driven

Manpower for research and training

Educational reforms
Preparing manpower for 2020.

62
FUTURE PLANS

15
New markets
16 Diversification
33
Capacity Expansion
Modernization
16 Marketing
initiatives
20

CHALLENGES IN TECHNOLOGY

63
 Challenges in IT adoption (%)

Availability of funds for implementation26

Unavailability of Skilled labour21

Challenges in IT
Too small a business for business adoption19 adoption (%)

No relevant software for business17

High cost of implementation17

0 5 10 15 20 25 30

Challenges

The major hindrances that affect the growth of the Indian leather industry are:

Environmental issues: The leather industry is considered to be a major pollutant, especially

during the last stages of production in tanning. As the leather industry also releases its waste

64
 and chemicals in to water bodies it is known to badly affect groundwater. Due to its nature,
importing countries have set global standards, besides banning usage of many chemicals.

Unavailability of raw materials: The unavailability of raw materials is a serious problem for
both the developed countries and the developing countries like India. Other components like
fittings, adhesives and many more are also less accessible in preferred scale.

Chinese competition: China dominates the global leather industry due to its low production
costs.

Lack of technology: In India leather is produced in the old fashioned way through tanning
that takes a lot of time to process raw hide skin into leather. Further, the activities of
designing, cutting and stitching are done manually, which affects the quality and unit value
realization of products. Evidently, the industry lacks in terms of level of modernization and
technology readiness.

Inadequate investments: The leather industry needs to make high capital investments for
proper production processes and infrastructure.

Lack of skilled labor: The industry is affected by lack of skilled labor, and low level of labor
productivity, as the employees are not exposed to any formal training.

Underutilization of capacity: Due to deficient raw materials, shortage of finance, labor

problems and regular power failure there is underutilization of capacity in the industry.

ISSUES AND CHALLENGES

65


ISSUES & CHALLENGES

Opposition by local for setting up of industries 7

Red tapism/Bureaucracy 10

inadequate infrastructure/power supply 11

Lack of tech know how 11 Series 1

Moving average
Competition from other region/country 11 (Series 1)
Lack of skilled manpower 11

Taxes and octroi levied by the govt 12

Arranging finance for working capital 13

Fluctuating price of raw material14

0 2 4 6 8 10121416

66
Future outlook

The government, recognizing the colossal prospects of this sector, has adopted policies
conducive for the growth of the leather industry. CLE expects the leather and leather goods
exports to reach US$ 7 billion by 2013-14 and as a result generate additional employment
opportunities for around one million people. It is believed that the domestic market has not
been so badly affected by global melt down. With all efforts by the public and private sector
players the Indian market is expected to bounce back soon. For some time, the leather
sector has been looking at the domestic market with interest. The current situation may give
the right impetus for at least some of the players to enter the domestic market with greater
bestow and commitment. The industry must explore the domestic market option with an
open mind and bring in many new products as well.

Technology up gradation

The best way to beat competition is to improve productivity and quality consistency of our
products; and to provide buyers with more services that make procurement in India more attractive
than in other competing countries. Both these call for induction of best available technology and
processes.

New marketing strategy

On the marketing front it is time that India as a country considers creating a brand image. Besides,
large manufactures who operates in domestic and export markets could develop and propagate their

67
own brands. Red tape, an Indian brand of footwear is reported to be doing quite well in UK
likewise, Hide sign, a garment label of India, is also doing well. Instead of exclusively depending
on export demand, if the manufactures could also target domestic market for a reasonable
percentage of their production, would lend greater stability to their business. More efforts towards
brand creation and promotion along with appropriate distribution strategy in terminal markets will
yield better revenue to the firms and the industry. It should be noted that many products made in
India are already reaching the medium to higher medium price segments in global markets. For
example, the footwear sold by many Indian exporters in the price range of $US 20-25 also leather
goods supplied by Indian manufactures reach some of the best brands.

Dealing with recession

It is reasonable to estimate that the demand has fallen from developed countries at least to the extent
of 20%. The effect on Indias export performance has been significant with a reduction in exports of
20% over the last year exports. At the same time, it must be noted that with Indias growth rate
projection having been scaled down to 7%, the domestic demand has shown a little decline.

Buyers looking for alternate sources of supply

One glimmer of hope, is the report in newspapers that some of the global giants like adidas, Nike,
etc. are looking at India for supply of footwear , leather goods etc for the popular price level
because china has become very expensive. It is not known whether this will translate into higher
demand from these companies. It may be good idea if agencies like the CLE could explore this
option further an d increase the comfort level of these major players of India. It is important that
they go to the right type of suppliers at the beginning. It is also necessary that the Indian supply
chain must be ready enough to respond to such increase demand, assuming that it will materialize.

68
Capacity constraints as discussed have been one major reason for Indias rather slower rate of
export growth.

FINDINGS

69
70
 MAIN FINDINGS

All Corporate people and executives are very much inclined towards using leather products
and leather accessories.
People sometimes prefer international brands like Nike, Reebok, adidas, etc. over leather
products because of durability, old trend and low brand image.
4.16% people prefer using non leather products because of religious factors.
The 68% used leather product is shoe which is generally more preferred in designs.
Designer shoes which are long toed are the current trend in market of leather footwear.
Black and brown are the first choice color shoes among corporate people.
Plain sheep leather jackets remains first choice of people.
Sheep leather is generally appreciated because of its fineness in quality and high quality
value
Leather portfolios are more preferred than any other carry bags as they solve dual purpose of
laptop cum office bag and more over gives corporate feel.
Brown leather portfolios are more preferred over black ones
Leather wallets are more preferred over cloth wallets but it should be book style.
Plain black leather belts are still able to remain afloat in the market.

Cow leather products are not preferred by many because of cultural factors.

71
 CONCLUSION

CONCLUSION

The leather industry comprising of tanning & finishing, footwear & footwear components, leather
garments, leather goods including saddler & harness etc. segments is the fourth largest foreign

72
exchange earner for India. Leather industry in India is spread over organized as well as unorganized
sector. Though traditionally the Indian leather industry has been an exporter of tanned hides and
skins, in the early seventies itself, it set its sights on becoming a major player in the leather products
segments. The industry uses primarily indigenous natural resources with little imports.

Leather industry employs 2.5 million persons. A large part (nearly 60-65%) of the production is
done by the Small/Cottage Sector. The annual export value of Leather industry is poised to touch
about 2 billion US dollars. Leather industry is among st top 8 export earners for India. An estimated
15% of total purchase of leading global brands in footwear, garments, leather goods & accessories
in Europe, is outsourced from India. Most companies in India are ISO Certified Leather industry
has a large scope to grow in near future.

73
 RECOMMENDATION

RECOMMENDATION

Price competitiveness will be an important factor. The exporters have to be ready to meet
this situation by more efficient organization of their production and cost cutting.
Diversification of markets for Indian products, to areas not seemingly affected by the global
melt down badly, is desirable. Latin American and African countries, recently explored by
Indian exporters, could be ventured into with the right type of products at the right prices.
Sharing the worries of the buyers in developed market and working jointly with them in
meeting the situation would go a long way in bonding firm relationships.
Quality, delivery, packaging etc. must be maintained at a assured level without giving an
opportunity to any unscrupulous buyers to renege on their contracts

74
 The industry should not give a chance to social NGOs within an outside the country to rake
up issues like environmental lapses, poor worker facilities and benefits, peer workplace
environment etc.

BIBLIOGRAPHY

75
 BIBLIOGRAPHY

MAGZINES AND JOURNALS

http://www.thesauerreport.com/sample.php

http://www.leathermag.com/news/categoryfront.php/id/176/SauerReport.html

WWW.BASF.COM

WWW.LEATHERINDIA.ORG

WWW.CLRI.ORG

WWW.INDIALEATHERPORTAL.COM

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