Tag: #industry

The Leather Industry

The Leather Industry holds a very prominent place in the Indian economy and is one of the oldest manufacturing industries in India. It provides employment to about 2.5 million people in the country and has an annual turnover of approximately USD 5,000,000.

India is one of the best destinations in the world for investing in the leather industry because it is abundant with raw materials in the form of huge population of cattle. India accounts for 21% of the world’s cattle and buffalo and 11% of the world’s goat and sheep population.

Apart from the easy availability of raw materials, investors are able to enjoy easy and abundant supply of skilled manpower, world-class technology, competent and favourable environmental standards, and the devoted support of allied industries.

Leather is a durable and flexible material created via the tanning of putrescible animal rawhide and skin, primarily cattle hide.

Several leading international leather goods manufacturing brand names, such as Hugo Boss, Tommy Hilfiger, Versace, Guess, and DKNY, have invested in India and are engaged in sourcing leather goods from India.

Leather Industry in India is a mixture of both the organized and the unorganized sectors. About 75% of the leather output in India is generated by the small, cottage and artisan sectors (unorganized). Leather making dates back to pre-historic age.  However, the modern method of leather production was introduced to India by the English and the French in 1857.

Traditionally, the leather industry in India produces hides and skins. However, there are also the secondary leather industries such as leather shoes, leather garments and other leather goods such as ladies’ bags, gloves, travel cases, wallets, belts and desktops. 

Over the years the leather industry in India has undergone drastic change from being a mere exporter of raw materials in the early 60’s and 70’s to now becoming an exporter of finished, value-added leather products.

The main reason behind the transformation is the several policy initiatives taken by the government of India. Indian leather industry has attained a prominent place in the Indian export and has become the top 7 industries that earn foreign exchange for the country. After the liberalization of Indian economy in 1991, the leather industry has flourished consistently in several ways and has contributed heavily to the Indian exchequer.

The government of India in its Foreign Trade Policy for 2000–2009 has identified the leather industry as a focus sector in view of its immense potential for export growth and triggering employment generation prospects.

Investment opportunities in the leather industry lie in different segments related to the industry, which include tanning and finishing of leather products, manufacturing of leather garments, manufacturing of leather footwear and footwear parts, and manufacturing of leather goods, such as harness and saddlery amongst a host of other opportunities.

However, the footwear industry in particular holds greater potential for investments in India. India produces approximately 700 million pairs of leather footwear every year and accounts for an 18% share of the total Indian leather export. After footwear manufacturing, leather goods or products, such as wallets, travel wares, belts, and handbags offer great returns on investment.

The structure of the leather industry is spread in different segments, namely, tanning & finishing, footwear & footwear components, leather garments, leather goods including saddlery & harness, etc.

Indian Leather Goods Industry : Items produced by this sector include, in addition to bags, handbags, hand gloves and industrial gloves, wallets, ruck sacks, folios, brief cases, travelware, belts, sports goods, upholstery and saddlery goods. 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. 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. The major export destination of leather garments from India is Germany.

Tanning is the process of converting putrescible skin into non-putrescible leather, usually with tannin, an acidic chemical compound that prevents decomposition and often imparts colour. With tanning 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 organised 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.

There are over 2,000 tanneries in India. Many of them are scattered in small scale and cottage sector all over India especially West Bengal, Tamil Nadu, Maharashtra and Uttar Pradesh. It is anticipated that the leather industry in India will generate an estimated USD 7 billion by 2011.  It is no wonder that India is one of the top exporters of leather along with France and the UK. 

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

There exists a large raw material base in the Indian leather industry. This is on account of population of 194 million cattle, 70 million buffaloes and 95 million goats. According to the latest census, India ranks first among the major livestock holding countries in the world. In respect of 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.
 
India is the world’s second largest producer of footwear ; its production estimated over 700 million pairs per annum. At about USD 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. Most of the modern footwear manufacturers in India are already supplying to well establish brands in Europe and USA.

Generally there are three types of leather which is sold in three forms : Full-grain leather, Corrected-grain leather and Suede.

There are a number of processes whereby the skin of an animal can be formed into a supple, strong material commonly called Leather like Vegetable-tanned leather, Chrome-tanned leather, Aldehyde-tanned leather, Synthetic-tanned leather, Alum-tanned leather and Raw.

Today the share of the value added finished products in the total exports from leather sector are 80% as against 20% in 1970s. The top ten Indian leather exporters are : Tata International Ltd., Florind Shoes Ltd., Punihani International, Farida Shoes Ltd., Mirza Tanners Ltd., T. Abdul Wahid & Company, Hindustan Lever Ltd., Super House Leather Ltd., RSL Industries Ltd., Presidency Kid Leather Ltd and Indian Leather Footwear Industry.

Even though most of the leather and leather products from the industry in India are exported, the leather shoe manufacturers or exporters in India for instance, will import soles, insoles, shoe lasts, counters, toe puffs, polishers and stiffeners. The value of such imported items can make up to 10% to 20% of the total value of the leather goods. 

India being one of the top exporters of leather is facing few challenges in the Leather Industry :

  • Historically, the slaughter of cattle in India is banned in respect of the government legislation due to the animal’s sacred status.  Leather producers wait for the cattle to die from natural causes such as old age, starvation or diseases.  Unfortunately, cattle with diseases cannot produce high quality leather.
  • Cattle died from natural causes must be quickly processed to prevent decay and hide deterioration. This makes it challenging for leather producers because the dead cattle must be processed wherever the carcass is found instead of doing it within a leather production facility.
  • For vegetable dyed leather, the supply of chrome salts used in leather production is limited in supply to the leather producers. When producers tried to switch to a chemical dye, PCP (Pentachlorophenol), it was eventually banned in India due to the chemical being a carcinogen.
  • Apart from this effluent management, non-tariff barriers, quality specifications and cost of compliance to various standards hinder the export growth of the Indian leather industry.

However, going by the future forecast of the Indian leather industry gives ample scope to the sector to progress. With its rich resource base of raw hides, skins and human capital the industry has the capability to increase its share in global leather trade. The global leather industry is in the process of shifting its manufacturing base from developed to developing nations. This provides an opportunity for increased flow of foreign direct investment (FDI) into India.

In such a scenario, factors like abundance of leather, increasing awareness for quality, manufacturing know-how and designing capabilities all work in favour of India. 

Excellent Career in FMCG (Fast Moving Consumer Goods) Industry

Fast Moving Consumer Goods (FMCG) sector is characterized by strong MNC presence and a well established distribution network. In India the easy availability of raw materials as well as cheap labor makes it an ideal destination for this sector. There is also intense competition between the organized and unorganized segments and the fight to keep operational costs low. Due to this intense competition coupled with good enough growth in the sector, it requires huge number of human resource year on year. Fast Moving Consumer Goods (FMCG) goods are all consumable items (other than groceries/pulses) that one needs to buy at regular intervals. These are items which are used daily, and so have a quick rate of consumption, and a high return.  

FMCG can broadly be categorized into three segments which are :  

• Household items as soaps, detergents, household accessories, etc,

• Personal care items as shampoos, toothpaste, shaving products, etc and finally

• Food and Beverages as snacks, processed foods, tea, coffee, edible oils, soft drinks etc.  

Global leaders in the FMCG segment are Nestlé, ITC, Hindustan Unilever Limited, Reckitt Benckiser, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills, Pepsi, Gillette etc. The burgeoning middle class Indian population, as well as the rural sector, presents a huge potential for this sector. The FMCG sector in India is at present, the fourth largest sector with a total market size in excess of USD 13 billion as of 2012. This sector is expected to grow to a USD 33 billion industry by 2015 and to a whooping USD 100 billion by the year 2025. Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the sector. Rural demand is set to rise with rising incomes and greater awareness of brands. There are number of factors that will drive future growth in this sector. Increasing rate of urbanization, expected to see major growth in coming years will give a big push to this sector.

Moreover, rise in disposable incomes, will lead to premium brands having faster growth and deeper penetration. ​​​​​​​   Innovative and stronger channels of distribution to the rural segments are also giving a big push to this sector in terms of deeper penetration. Moreover, the icing on the cake is the increase in rural non-agricultural income and benefits from government welfare programmes resulting in increased purchasing power. Innovation in FMCG is a wide concept which aside from creating, launching and marketing new products also includes improving shopping processes, providing consumers with a range of tools to purchase products as also ensuring that the entire organization is focused on the singular goal of improving the customer’s overall experience. Therefore, in all functions like marketing, Finance, HR, IT, operations and strategy, there is a demand for talent by FMCG companies.  

As Indian consumers become more global in their aspirations and desires, as they travel abroad and are exposed to global products, their appetite to consume products in their home market will only increase. To meet this demand, FMCG companies need to focus on R&D and innovation as a means to grow the business. At the same time, product lifecycles are shrinking, companies across categories are launching new products, and the pressure to market new products, quickly, is strong. Due to these factors, FMCG companies recruit people at all levels including freshers from B-schools. As innovation becomes critical to the sector’s growth story, there is more demand for freshers as companies want to capitalize on their fresh ideas.

Working in FMCG gives you a chance to work with the biggest brands

A big benefit of working in the FMCG industry is that it is home for many of the world’s largest brands. Some that you might recognize and even have in your home include Heinz, Unilever, Procter and Gamble, Coca-Cola and Nestle. And so are their products. Having the opportunity to work for a brand that you like and use on a regularly basis can increase your job satisfaction and make you enjoy your work more.

Most of the job openings are from industry giants. Therefore, you have a great chance to enter one of the world’s largest companies. Whether you have always wanted the prestige of working for a market leader or you are just attracted to the perks of being employed by one of the world’s industry giants, FMCG can open those doors to you.

FMCG offers opportunities to have a global career

Most industries are concentrated in capitals and big cities. However, FMCG offers opportunities all over the globe for those who are interested. Not only does doing a traineeship in FMCG take you to at least two countries over the course of a year, but having a real job in FMCG can take you anywhere you want. FMCG companies are scattered worldwide and depending on the skills you would like to gain and the job you have, you can land anywhere between Sydney, Hong Kong, Berlin and New York.