The continuing downturn in the US economy has compelled Kanpur-based Mirza Tanners to put their expansion plans on hold, including diversification into women’s footwear.
Kuruvilla Kuriakose, finance director, said: ‘We plan to invest Rs100 crore (US$20.8 million) over three years.’
This includes separate divisions for women’s footwear, men’s footwear, and leather finishing, since the company import a large amount of semi-finished cow leather, with final processing done in a unit close to Delhi in Uttar Pradesh.
The expansion is thought to be financed through internal accruals of $12.5 million plus market borrowings. It will increase the company’s footwear-making capacity from 3 million to 5.5 million per annum.
Finished leather manufacturing capacity will increase by 1.5 million sq ft per month. The turnover will go up by 2.2 times in three years. The company achieved a $39.4 million turnover in 2000-01 but the US market, which earlier was expected to recover by the middle of the year, did not do so. It is still unclear when the buying would begin, Kuriakose said.
‘We are waiting for the signs of revival. Once it is there, we shall start factory operations. We have a record of completing factories in twelve months’, he said.
However, performance in the US and Germany has had an effect on the second half performance of the company. ‘October and November were particularly bad and our turnover suffered by 10% to 15%’, said Kuriakose. ‘Although things improved in December, the improvement has not neutralised the shortfall of the last two months’, he added.
In the last financial year, the company made a net profit of $304,000 and in the first half, their net profit was $182,000.
This was due to the strength of the South African market and the normal conditions in the UK market.
Source: Daily Business Standard, New Delhi
