In a move to help tanneries cut procurement costs, the Entrepreneurship Development Institute of India (EDII), Chennai, has floated a special purpose vehicle under Business Development Services (BDS) Market Development Project of Small Industries Development Bank of India (SIDBI).

The pilot project is intended to enhance the overall manufacturing capacity and export of leather and leather products of Micro, Small and Medium Enterprises in Pallavaram under the Chennai leather and leather product cluster.

Established a year ago, Pallavaram Tannery Cluster Company Private Limited (PTCCPL) has 22 tanneries as members. Till September, 8,000 kg of chemicals and dyes valued at Rs.20 lakh were procured at a cost of Rs.250 to 260 a kg against local market rate of Rs.375 to 400 a kg. Talking to The Hindu , EDII cluster manager B.K. Naidu said, “The intervention has resulted in reduction of procurement cost by 30 per cent. If extrapolated for the entire cluster, the saving or reduction will amount to Rs.42 crore per annum. This intervention had also helped the manufacturers of chemicals and dyes in Ahmedabad cluster.” According to him, 170 tanneries and 260 leather products units in the Chennai leather cluster employed about 40,000 people. It produced approximately Rs.4,000 crore worth of products, out of which export was Rs.2,000 crore.

“Within a short span, we have demonstrated the strength of cluster approach. Out of the 170 firms located in Pallavaram, Nagalkeni and Chromepet, 22 tanners have joined the SPV. There are about 30 tanners in Madhavaram and Kelambakkam areas and are willing to avail our services. This concept can be extended to Ambur, Ranipet, Vaniyambadi, Tiruchi, Dindigul and Erode as well,” he said.