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Tata International Ltd (TIL), the $1.2-billion Tata Group company manufacturing leather products, is hoping to be a major supplier in the market for auto-leather manufacturing through its tie-up with US-based GST Autoleather Inc.
The agreement with GST, announced last week, gives the Tata company access to Western manufacturing techniques, and assistance in sales and marketing. Through the partnership, the company is exploring an area in which few organised players are present, Chris Hansen, who heads the global leather business at TIL, told India’s Business Line from its plant in Dewas, Madhya Pradesh.
“Most of the automotive leather in the country is imported. Technically, automotive leather is not an easy thing to make. Car manufacturers import the leather from Italy, Germany, and Austria,” he said.
Automotive leather requires larger hides, typically that of buffaloes. Tanneries in Kanpur, Uttar Pradesh, do produce that, but the raw material is exported to foreign auto-leather makers. With this venture, TIL is positioning itself as the only large company out to locally make leather for the original equipment manufacturers in the auto segment.
The company will operate from its tannery at Dewas (the facility in Dewas is currently producing between 4-5 million sq ft per month across its various product ranges bovine, sheep and goat predominantly for footwear and upholstery). To make room for the new venture, the company will adjust volume of production in its other business of making upholstery for furniture.
“In 18 months, about three quarters of our capacity will be dedicated to the automotive leather business, and we will gradually phase out the furniture upholstery business,” Hansen said.
However, the move to start the new line comes at a time the Indian automotive industry suffered a sales decline, a first in the last decade.
Source: Hindu Business Line