Power cuts force Tamil Nadu leather units to suspend ops

Leather units – mostly small and medium enterprises (SMEs) – in Ambur, Vaniyambadi and Pernambut in Tamil Nadu’s Vellore district have been forced to suspend operations owing to the continuous power crisis in the state, said industry representatives. Some 2,000 people had moved out of the industry, they added.

The state’s Vellore district accounts for almost 30 per cent of the Indian leather industry’s annual revenues of $5 billion. The power cuts last for up to 10 hours a day and have caused great inconvenience to the industry.

While the bigger units are facing a production loss of about 40 per cent due to the power cut, the worst-hit are SMEs, said M Rafeeque Ahmed, chairman of the Council for Leather Exports and president of the Federation of Indian Export Organisations (FIEO).

“As many as 2,000 people have gone out of the industry from this district alone,” he added.

The southern region accounts for almost 40 per cent of the Indian leather industry, and a major chunk is from Tamil Nadu, especially from Vellore district.

The major tanning clusters in India are in Chennai, Ambur, Ranipet, Kolkata, Kanpur and Jalandhar. There are some 2,091 tanneries in the country — 45 per cent in Tamil Nadu, 26 per cent in West Bengal and 18 per cent in Uttar Pradesh. Most tanneries are clustered within the states of Tamil Nadu, West Bengal, Uttar Pradesh and Punjab.

Most of the medium and large tanners perform customised work for the larger manufacturers and exporters of leather goods on a fixed-margin basis or a pre-negotiated price for the finished leather. The need to import more raw hides, skins and wet-blue is growing continuously.

At present there are some 400-500 leather units, including tanneries and shoe factories, in Ambur, Vaniyambadi and Pernambut. Nearly 80 per cent of them are small-scale units that cannot afford generator sets.

Ahmed said that because of the cost of power, the cost per shoe has increased by Rs 15-20, which customers do not want to pay. The power crisis comes at a time when the Indian leather industry has seen a big fall in European orders, as a result of Europe’s economic crisis.

“In a way, it’s a blessing in disguise for the industry,” said S Srinivasan, a leather exporter. If the flow of orders from customers were normal, the industry would miss delivery schedules, since power is not available to run units — and that may make them liable to pay compensation, added Ahmed.

Leather processing is a continuous process and once hides are loaded in the drum, it has to run continuously or else the acid will eat away the skin. Units that do not have generator sets are scared of loading leather in the drum.

Industry representatives have suggested that the government should declare a two-day power holiday for the leather industry, instead of subjecting it to continuous power cuts every day. In the remaining five days, it can provide eight hours of continuous power supply daily, so that manufacturers can execute orders and give workers two days off per week, they suggested.