Leather

IMPORT & EXPORT Submitted to Sohel Kazi BMS Degree Names Arkar Matin Joshua Dsouza Faria Idrisi Aakash Khadye Jim Sebastian Nargis Merchant Bhagesh Nanaposhe Zeeshan sayyed Riyaz Sheikh Afsha Syed Roll No 04 08 15 20 31 34 37 47 50 59

Class:SYBMS

Semester: 3

Div: A

Studying at: Rizvi Education Societys Rizvi College of Arts Science &Commerce Bandra (west), Mumbai-400050. Academic Year: 2011-2012

Declaration
I and my all group member student of SYBMS, Semester -4, Div A, academic years 2011-12 studying at Rizvi college of arts science, & commerce, hereby declare that the work done on the project entitled leather product is true & original & any reference used in the project is duly acknowledged.

Date : {Signature}

ACKNOWLEDGEMENT
This work is a synergistic product of many minds. We would like to thank few individuals who help us immensely in completing this project successfully. They helped not only providing information but also by boosting my confidence and giving us moral support. The manufacture of different leather product owner who were our respondents, help in conducting personal interview for their kind cooperation and patience. My project guide, Mr.Sohel Kazi for being ever ready to give us the necessary guidance to go about the project. And last but not the least, our family and friends without whose invaluable support this would not have been possible.

Contents
Introduction to leather and leather industry.4 Licenses: ........... 8 Availability of resources (raw material) ..9 Analysis and Research & Development of leather industry.15 Demand for leather in regional and international market..17 Promotion: 20 Export procedures and Documentation:. 21 Existing Companies in the market............................................................................................................22 Growth .23 Insurance 24 Swot analysis ..26 Swot analysis

Introduction to leather and leather industry

A.

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

B.

Leather Industry 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 utilization of available raw materials for maximizing 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 globalization of Indian economy supported with liberalized economic and trade policies since 1991, the industry is poised for further growth to achieve greater share in the global trade.
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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.

BUSINESS PLAN:
In practical, we have to follow following steps to start a business in India or anywhere. These steps are as follows. Chose a business name and business startup strategy. Incorporate business and get license to start Make suitable business plan Financial arrangements -Marketing and advertisement of business and products Research and development and growth of business. We will be starting business in partnership and above mention members will be our partner. The work will be divided as per their specialized skill and interest in business. We will setup business as traders of product. In order to know the market demand and growth, our first step will be R & D and market research. After our research completed, then we will decide the nature of product. And the research made by our partners clearly shows that leather industry is one of the growing industries in India. This is the main reason for choosing this business. This will help us in practical life too. A. Description: The leather and leather products industry is one of Indias oldest manufacturing industries that catered to the international market right from the middle of the nineteenth century. India is the largest livestock holding country (21% large animals and 11% small animals). It is a source for over 10% of the global leather requirement. Availability of raw material will help us in growth of industry and also in manufacturing leather product. Our research shows that leather & leather product exports forecasted and expected to increase due to various favorable policies and subsidies from our government to promote leather & leather products in other countries. After this we will register our business with sales tax and get VAT TIN and CST TIN Nos. Which help us to trade in Maharashtra or in our country. After we succeed in this stage, we will apply for import and export license.

B.

COMPETITORS FINANCE:
i. RED TAPE jackets denims mens footwear the brand has now diversified into Womens footwear BATA Bags Belts Jackets Shoes

i.

We are targeting some brands like woodland, red tape etc. initially we sell our product at regional level then after few years we will go for export procedure. We decided to export leather in Europe countries as they are in great need of leather as these countries are considered as cold. We also found that financial assistance to the exporters are generally provided by Commercial Banks, before shipment as well as after shipment of the said goods. The assistance provided before shipment of goods is known as per-shipment finance and that provided after the shipment of goods is known as post-shipment finance. Pre-shipment finance is given for working capital for purchase of raw-material, processing, packing, transportation, ware-housing etc. of the goods meant for export. Post-shipment finance is provided for bridging the gap between the shipment of goods and realization of export proceeds. The later is done by the Banks by purchasing or negotiating the export documents or by extending advance against export bills accepted on collection basis. While doing so, the Banks adjust the pre-shipment advance, if any, already granted to the exporter.
A.

AVAILABILITY OF RAW MATERIAL:

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 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 specialty products commanding a good
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There exists a large raw material base. This is on account of population of 194 million cattle, 70 million

market. Abundance 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. Easy availability of raw material and human force lead to growth in business and help us to trade internationally.

Licenses:
An export license is a document issued by the appropriate licensing agency after which an exporter is allowed to transport his product in a foreign market. The license is only issued after a careful review of the facts surrounding the given export transaction. Export license depends on the nature of goods to be transported as well as the destination port. So, being an exporter it is necessary to determine whether the product or good to be exported requires an export license or not. To determine whether a license is needed to export a particular commercial product or service, an exporter must first classify the item by identifying what is called ITC (HS) Classifications. Export license are only issued for the goods mentioned in the Schedule 2 of ITC (HS) Classifications of Export and Import items. A proper application can be submitted to the Director General of Foreign Trade (DGFT). The Export Licensing Committee under the Chairmanship of Export Commissioner considers such applications on merits for issue of export licenses. After getting license from government we will move towards registration with dock or custom to store our goods or product before shipment procedure. A. Customs Formalities: Central Board of Excise and Customs (CBEC) is assigned a number of tasks, some of which are:

Collection of customs duties on imports and exports as per basic customs laws (Customs Act 1962 and customs tariff Act 1975) Enforcement of the various provisions of the Customs Act governing imports and exports of cargo, baggage, postal articles and arrival & departure of vessels, air crafts etc. Discharge of various agency functions and enforcing various prohibitions and restrictions on imports and exports under the Customs Act and other allied enactments; Prevention of smuggling including introduction of narcotics drug trafficking; and International passenger processing.

Availability of resources (raw material)

Leather is a durable and flexible material created via the tanning of putrescible animal rawhide and skin, primarily cattle hide. It can be produced through different manufacturing processes, ranging from cottage industry to heavy industry.
The leather and the fur industries are differentiated by the manufacturing importance of the raw materials used to make the wares. In the leather industry, the skin and rawhide are by-products of the meat industry, because the meat has greater commercial value than the rawhide and skin. In the fur industry, the meat is a by-product, because the skins and hides have greater commercial value. Moreover, in taxidermy, the raw materials usually are only the animals head and back; hide and skin also are the raw materials for manufacturing, animal, glue and gelatin.

A.

Forms Of leather
Several tanning processes transform hides and skins into leather: 1. Vegetable-tanned leather is tanned using tannin and other ingredients found in vegetable matter, tree bark, and other such sources. 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.

2. Chrome-tanned leather, invented in 1858, is tanned using chromium sulfate and other salts of chromium. 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 esoteric colors are possible using chrome tanning.

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3. 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.

4. Synthetic-tanned leather is tanned using aromatic polymers such as the Novolac or Neradol types. This leather is white in color and was invented when vegetable tannins were in short supply during the Second World War.

5. Alum-tawed leather is transformed using aluminium salts mixed with a variety of binders and protein sources, such as flour and egg yolk.

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

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A.

Types of leather
In general, leather is sold in four forms: 1. Full-grain leather refers to the upper section of a hide that previously contained the epidermis and hair, but were removed from the hide/skin. Full-grain refers to hides that have not been sanded, buffed, or snuffed (as opposed to top-grain or corrected leather) in order to remove imperfections (or natural marks) on the surface of the hide. The grain remains in its natural state allowing the best fiber strength and durability. The natural grain also has natural breathability, resulting in less moisture from prolonged contact. Rather than wearing out, it will develop a natural patina over time, with some cracking and splitting. The finest leather furniture and footwear are made from full-grain leather. For these reasons, only the best raw hide is used to create full-grain leather. One way to test if leather is full-grain is to lightly scratch its surface with your nail. If it leaves a lighter-colored streak, it's full-grain. Fullgrain leathers are typically available in two finish types: aniline and semi-aniline.

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2. Top-grain leather is a misnomer: it gives the false impression that it is "top" quality. In fact, full-grain is the highest quality. Top-grain leather is the second-highest quality. Its surface has been sanded and refinished. As a result, it has a colder, plastic feel, less breathability, and will not develop a natural patina. However, it does have 2 advantages over full-grain leather: it is typically less expensive, and has greater resistance to stains.

3. Corrected-grain leather is any leather that has had an artificial grain applied to its surface. The hides used to create corrected leather are of inferior quality that does not meet the high standards for use in creating vegetable-tanned or aniline leather. The imperfections are corrected and an artificial grain applied. Most corrected-grain leather is used to make pigmented leather as the solid pigment helps hide the corrections or imperfections. Corrected grain leathers can mainly be bought as two finish types: semi-aniline and pigmented.

4. 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. During the splitting operation, the grain and drop split are separated. The drop split can be further split (thickness allowing) into a middle split and a flesh split. In very thick hides, the middle split can be separated into multiple layers until the thickness prevents further splitting. Split leather then has an artificial layer applied to the surface of the split and is embossed with a leather grain (Bycast leather). Splits are
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also used to create suede. The strongest suedes are usually made from grain splits (that have the grain completely removed) or from the flesh split that has been shaved to the correct thickness. Suede is "fuzzy" on both sides. Manufacturers use a variety of techniques to make suede from full-grain. For example, in one operation, leather finish is applied to one side of the suede, which is then pressed through rollers; these flatten and even out one side of the material, giving it the smooth appearance of full-grain. Latigo is one of the trade names for this product. Reversed suede is grained leather that has been designed into the leather article with the grain facing away from the visible surface. It is not a true form of suede. The International Union of Leather Technologists and Chemist Societies have a glossary of leather terms that can be found at IULTCS.

A.

Manufacturing Process:
The leather manufacturing process is divided into three fundamental sub-processes: preparatory stages, tanning, and crusting. All true leathers will undergo these sub-processes. A further subprocess, surface coating can be added into the leather process sequence, but not all leathers receive surface 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. Preparatory stages may include: preservation, soaking, fleshing, reliming. Tanning stage is the process which converts the protein of the raw hide or skin into a stable material which will not putrefy and is suitable for a wide variety of end applications. Crusting is the process by which the hide/skin is thinned, retanned, and lubricated. Often a coloring operation is included in the crusting sub process. The chemicals added during crusting must be fixed in place. For some leathers, a surface coating is applied.

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Analysis and Research & Development of leather industry A. Analysis

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
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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 centers particularly for footwear sector. These countries pose major challenge to Indian exporters as they enjoy geographical advantage.

B.

Research and Development

Leather in modern culture Due to its excellent resistance to abrasion and wind, leather found a use in rugged occupations. The enduring image of a cowboy in leather chaps gave way to the leather-jacketed and leatherhelmeted aviator. When motorcycles were invented, some riders took to wearing heavy leather jackets to protect from road rash and wind blast; some also wear chaps or full leather pants to protect the lower body. Many sports still use leather to help in playing the game or protecting players; its flexibility allows it to be formed and flexed. The term leathering is sometimes used in the sense of a physical punishment (such as a severe spanking) applied with a leather whip, martinet, etc. Leather fetishism is the name popularly used to describe a fetishistic attraction to people wearing leather, or in certain cases, to the garments themselves. Many rock groups (particularly heavy metal and punk groups in the 1980s) are wellknown for wearing leather clothing. Leather clothing, particularly jackets, almost come as standard in the heavy metal and Punk subculture. Extreme metal bands (especially black metal bands) and Goth rock groups have extensive leather clothing, i.e. leather pants, accessories, etc. Many cars and trucks come with optional or standard 'leather' seating. This can range from cheap vinyl imitation leather, found on some low cost vehicles, to real -Nappa leather, found on luxury car brands like Mercedes-Benz, BMW, and Audi. Leather biodegrades slowly, and takes 2540 years to decompose. Religious sensitivities to leather
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In religiously diverse countries, leather vendors are typically careful to clarify the kinds of leather used in their products. For example, leather shoes will bear a label identifying the animal from which the leather was taken. In this way, a Muslim would not accidentally purchase pigskin leather, and a Hindu could avoid cow leather. Such taboos increase the demand for religiously neutral leathers like ostrich and deer .Judaism forbids the comfort of wearing shoes made with leather on Yom Kippur, Tisha B'Av, and during mourning.

Demand for leather in regional and international market

A. Leather industry International demand The countrys tanneries and leather and leather goods makers are putting on war paint to battle for more orders in the international markets

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The latest data published on the website of Export Promotion Bureau (EPB) shows that the countrys leather export earnings rose 29.94 per cent to US $149.46 million, in the last seven months of the fiscal 2010-11, as against $115.02 million in the corresponding period of the previous year. The EPBs data revealed that leather goods exports, during the period between July 2010 and January 2011, were to the tune of $149.46 million, which is 8.46 per cent lower than the target of $163.28 million. An analysis of the EPB data showed that the countrys leather product export earnings were forging ahead due to growing international demand for Bangladeshi leather products, mainly for quality and cheaper prices. But in terms of export earnings leather products lag far behind finished leather. According to the statistical data of EPB, the country earned $31.40 million through exports of leather products during the July 2010-January 2011 period; the earning was 62.11 per more than the targeted figure of $19.37 million. During the last seven months of the current fiscal, exporters of leather products registered 145.70 per cent earnings growth over that in the corresponding period of the previous year. B. Leather industry regional demand Recently, the Indian leather industry experienced a boom. It stood to gain a bigger share of the global market, with leading brands from US and Europe either importing or planning to source leather and leather products from India. If one is to believe reports by the Department of Industrial Policy and Promotion of various industries, the leather industry has been developing rapidly. India has around 3% share in the global trade of leather in comparison to Chinas 20%. In order to promote the rapid advancement of this industry, the Government of India has been constantly making efforts to show improvements. Leather industry is the 10th largest sector in the Indian manufacturing sector, providing employment to 2.5 million people and weaker sections/minorities, of which about 30 % are women. Also, due to its considerable export revenue, prospects and expansion, this sector holds a prominent place in the Indian Economy. It is also the largest manufacturing sector and its products are considered amongst the top ten export earners of the country. Leather garments and other leather goods in India are among the major production and thus have a lot of demand even overseas. India has colossal natural resources of raw hides & skins due to which the export of leather products has undergone a structural transformation resulting in increased exports of various leather products.
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Promotion:
We will go for web designing and billboards. Our marketing strategy will be getting orders more as we can and the will concentrate on dispatch the orders on time. We will try to maximize our productivity by giving our best in selected business. In India there is a council for leather export and products. The Council for Leather Exports (popularly known as CLE) set up in July 1984, is an autonomous non-profit company registered under the Indian Companies Act, 1956 entrusted with export promotion activities and development of the Indian leather industry. CLE's activities are multiple and directed towards assisting its members in extending their global reach thereby increasing their exports. We will try to register with above institution as soon as we can.

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Export procedures and Documentation:

Setting up an export business requires basic documentation such as a Permanent Account Number (PAN card), Importer Exporter Code (IEC) from DGFT office and opening a bank account. Other key factors include knowledge of trading systems, FTP and Industrial Policy, access to market information (for which internet is a good source), ensuring product quality and compliance with export procedures & documentation. The Ministry of Commerce, through the Director General of Foreign Trade (DGFT), controls the Foreign Trade Policy (FTP), while the Ministry of Finance, through the Reserve Bank of India (RBI) and the Indian Customs, controls the physical movement of goods and services and the transactions of foreign exchange (both inflow & outflow) from the country. Receipts of proceeds of exports by way of foreign exchange and payment for imports to foreign suppliers by way of foreign exchange are to be routed through normal banking channels only.

A.

Documentation:
The entire documentation in export trade can be basically divided into two categories: Export Documents Pre-shipment Documents Post-shipment Documents

The standard pre-shipment documents include: Customs Invoice Packing List G R Form (original and duplicate) ARE-1 Form (original and duplicate) Copy Of Export order Letter Of Credit

The standard pre-shipment documents include: Custom attested invoice Custom attested packing list
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Existing Companies in the market

1. Tata International Ltd. 2. Florind Shoes Ltd. 3. Punihani International 4. Farida Shoes Ltd. 5. Mirza Tanners Ltd. 6. T. Abdul Wahid & Company 7. Hindustan Lever Ltd. 8. Super House Leather Ltd. 9. RSL Industries Ltd. 10. Presidency Kid Leather Ltd.

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Growth
Whilst IT spends growth is expected to hardly change in September 2011 compared with August for all manufacturers, the top growing manufacturing sectors will see advancement. The highest spend increases are projected for Petrochemicals followed by Leather Products manufacture. A. Cow and Buffalo Leather We are the manufacturers and exporters of Cow and Buffalo leather used in various leather products. With our wide experience and efficient manufacturing, we have achieved remarkable growth in both domestic and global markets. Cow Leather Indian origin cow skin is one of the top grades of raw materials available around the world. Our cow leather is available in various finishes and colors. Finished Cow Leather Our finished cow leather is available in soft, nappa, natural milled, wrink .

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Insurance
Export credit insurance protects you from the consequences of the payment risks, both political and commercial. It enables you to expand your overseas business without fear of loss. Further, it creates a favorable climate for you under which you can hope to get timely and liberal credit facilities from the banks at home. You can obtain Export Credit Insurance from the Export Credit and Guarantee Corporation of India Limited. In order to provide you Export Credit Insurance, the following covers are issued by the ECGC: Standard policies to protect you against the risk of not p 7 3 receiving payment while trading with overseas buyers on short-term credit. Specific policies designed to protect you against the risk of not receiving payment in respect of: exports on deferred payment terms services rendered to foreign parties construction work, including turnkey projects undertaken abroad

The policies are either: Whole Turnover Policies in the form of 'Open Cover' in respect of shipments made during 24 months period. You have to obtain credit limit on each one of your buyers to enable ECGC to approve a limit on the basis of credit worthiness of the buyer. These policies are basically similar to whole turnover policies but only apply to specific contracts. Specific Policies for exports of capital goods on medium or long-term credit, turnkey projects, civil construction works and technical services. These policies are basically similar to whole turnover policies but only apply to specific contracts. Financial guarantees issued to banks against risk involved in providing credit or guarantee facilities to you, and Special schemes viz. transfer guarantee issued to protect banks which add confirmation to letters of credit, Insurance cover for Buyers' Credit, Lines of Credit, Joint Ventures and Overseas Investment Insurance, and Exchange Fluctuation Risk Insurance. The other guarantees which banks can offer to you through ECGC schemes are :--- Bid Bonds,--- Advance Payments Guarantee,--- Bank guarantee for due
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performance of the contract by the exporter,---Bank guarantee for payment of retention money,--- Bank guarantee for loans in foreign currencies. Details of these schemes can be obtained from your own banker or local office of the Export Credit and Guarantee Corporation of India Ltd. The Shipments (Comprehensive Risks) Policy is the one ideally suited to cover risks in respect of goods exported on short-term credit. Shipments to associates or to agents and those against letter of credit can be covered for only political risks by suitable endorsements to the shipments (comprehensive risks) Policy. Premium is charged on such shipments at lower rates. For obtaining a policy you should apply to the nearest office of the ECGC in the prescribed Form no.121 (obtainable from ECGC) along with the following documents: Bank Certificate about the financial position Application form for fixing the credit limit Name/address of foreign buyer fixing sub-limits

After examining the proposal, ECGC would send the exporter an offer letter stating the terms of its cover and premium rates. The policy will be issued after the exporter conveys his consent to the premium rate and pays a non-refundable policy fee of Rs. 100 for policies with maximum liability limit p 7 3 up to Rs. 5 lakhs; Rs. 200 between Rs. 5 lakhs and Rs. 20 lakhs and Rs. 100 for each additional Rs. 10 lakhs or part thereof subject to a ceiling of Rs. 2500.As commercial risks are not covered in the absence of a credit limit, you are advised to apply to ECGC for approval of credit limit on buyer in the prescribed Form No:144 (obtainable from ECGC) before making shipment. Credit limit is the limit up to which claim can be paid under the policy for losses on account of commercial risks. If no application for credit limit on a buyer has been made, ECGC accepts liability for commercial risks up to a maximum of Rs. 5, 00,000 for D.P. /C.A.D. transactions and Rs. 2, 00,000 for D.A. transactions provided that at least three shipments have been effected to the buyer during the preceding two years on similar terms, at least one of them was not less than the discretionary limit availed of by the exporter and the buyer had made payment on the due dates

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Swot analysis
A. Opportunities A. A. Rising 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 High Growth Ready 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 up gradation Strength

Threats Major part of the industry is unorganized Limited 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 borrowing Stricter international standards High competition from East European countries and other Asian countries Lack of communication facilities and skills

A.

Weakness 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

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