Status of Pallavaram Tanners
• The 120 functional tanneries located in Pallavaram and Chromepet annually account for an estimated production of 20crore sq.ft. of finished leathers valued at Rs.1200 crores.
• The basic raw materials are Wet-blue, E.I. Tanned Leathers, Dyes and Chemicals, Syntans and Fat liquers.
Associations Involvement
• All the functional tanners in the area are members of Pallavaram Tanners Industrial Effluent Treatment Company (PTIETC) which is treating the Effluents through CETP.
• Product manufacturers, Chemical and machinery suppliers are also members of Pallavaram Tanners Association (PTA).
• Both Associations (BMOs) are actively associating with Chennai Leather Cluster programmes and interventions.
Drawback
• Apart from meeting the high Procurement prices of Wet-Blue and E.I Leathers, the local tanners have to meet the cost of chemicals, electricity, salaries and most importantly the maintenance charges of the CETP.
• Added to this, efforts are being made to establish R.O Plant in the CETP. Once the R.O Plant is established, the tanners are forced to pay their share of contribution, both in errection as well as in its huge maintenance cost.
• Out of Rs.30crores being invested on RO plant, the tanners have already contributed Rs.10crores.
• Hence, major drawback faced by the local tanners is ability to cost competitiveness to process leathers by incurring these costs and market them at Competitive rates compared to those produced in other clusters”.
• Any reduction in processing costs by way of saving in dyes/ chemicals, power, water etc. will make them viable to compete.
• The SIDBI-EDI, Chennai Leather Cluster has mooted the idea of Formation Pallavaram Tannery Cluster Company Private Limited (PTCCPL) for bulk purchase of dyes directly from Ahmedabad Dyes & Chemicals Manufacturing Cluster Ltd. (ADMAC).
Estimated Consumption of Chemicals
• The daily consumption of chemicals and dyes in Pallavaram, Chromepet tanneries is estimated at 120 tons. The consumption of Chrome Tanning Agents and wattle GS Powder is another 20 tons/day.
• Of the total chemicals consumed by the tanners, the finishing chemicals and other auxiliaries account for 54%, followed by basic chemicals and re-tanning agents 30% and fat-liquoring agents and dyes 16%.
Accrued Benefit
• Around 140 tons of chemicals and dyes per day are utilized by the tanners. The source of Procurement is through the dealers and retail agents.
• A chain of middlemen are involved in the supply chain, leading to remarkable price markup on the chemicals. Neither the producer nor the consumer viz. the tanners are benefitted.
• The retail price per Kg of dyes is Rs.350/kg where as the quote given by ADMAC Ahmedabad is Rs.250/kg. Even after meeting the transport cost, local taxes and other over heads, the tanners will gain 30 to 35% through direct purchase and effective distribution will benefit 120 tanners.
• The aggregate benefit for the tanners in the cluster per annum is valued at Rs.7.00 crores.
Formation of Pallavaram Tannery Cluster Company Private Limited (PTCCPL)
• Encouraged by the aggregate benefits to be accrued, some selected tanners have formed a company called Pallavaram Tannery Cluster Company Private Limited (PTCCPL) (Special Purpose vehicle SPV) to Procure Chemicals and Dyes directly from Ahmedabad Dyes & Chemicals Manufacturing Cluster Ltd. (ADMAC).
• An amount of Rs.11/-lakhs had already been collected from the members as share capital.
• The “PTCCPL” was registered, obtained Tin number, Opened bank account and Rs.11/-lakhs credited in the bank.
• Towards bulk purchase of dyes the PTCCPL approached BDS Market Project of Chennai Leather Custer for financial tie up.
• The BDS Provider arranged by Chennai Leather Cluster visited local SIDBI for raising funds.
• After interactions among BDS provider, Local SIDBI Officials, PTCCPL Members and the cluster staff, a suitable scheme for sanction of Rs.30/-lakhs was prepared and submitted to Chennai SIDBI.
• The local office has processed the application and recommended to PMD office, SIDBI, New Delhi for final sanction of Rs.30/-lakhs.
• The SIDBI has agreed in principle for sanctioning Rs.30lakhs as term loan.
Objectives of Pallavaram Tannery Cluster Company Private Limited (PTCCPL)
The major objectives of this company is to :
• Procure dyes and chemicals at very competitive rates directly from the Ahmedabad Dyes Manufacturers Association (ADMAC).
• Promote bulk purchase of farmic acid directly from GNFC Ltd., or through National Small Industries Corporation (NSIC).
• Eliminate the role of middlemen, agents, whole sellers and retailers in the supply chain.
• Share the benefits accrued through bulk purchase of dyes and chemicals among the tanners in the company.
• Promote direct import and export of selected chemicals and dyes.
• Act effectively as a net working agency to all its members and guide them in day to day business both in domestic and international markets.
• Function as Liason Office and network the tanners with domestic and international buyers.
• Co-ordinate with institutions like CLRI, MSME(DI), CLE, NSIC and other related Associations.
Progress of PTCCPL
• On 19th October 2010, there were business interactions among 25 members of both Ahmedabad and Pallavaram Tannery Cluster Company Private Limited (PTCCPL) in Chennai.
• Samples sent by SPV Ahmedabad were tested by the Chennai tanners.
• On 18th March 2011, the Pallavaram Tannery Cluster Company Private Limited (PTCCPL) members of Chennai visited Ahmedabad, detailed discussions were held on modalities, terms of payment, quality, standards, quantity required other costs involved etc.
• The first initial purchase order for Rs.94000/- was placed on 22.3.2011 by Pallavaram Tannery Cluster Company Private Limited (PTCCPL) to ADMAC.
• The dyes as per direct purchase orders were received by PTCCPL on 3rd May 2011.
• Subsequent purchase orders and normal business operations are in progress.