A very complex complex4 April 2001
As you drive through the Tangra, Topisa and Tiljala areas of eastern Kolkatta (Calcutta), the first things you notice are the people,who occupy every available bit of space; the squalor, the dust and, perversely, how neatly turned out the school children are in their brightly coloured uniforms. All seem to be laughing and chattering amidst the 584 tanneries that have sprung up in these areas. You notice acres of wet-blue drying on the ground, on poles and on top of buildings. You notice the waste chrome tanning liquor that is running in the gulleys down the streets in which the children play cricket. You notice that heaps of chrome shavings are being used as wickets in these games; that people are standing in the street selling bits of scrap leather along side the fruit and meat. And you wonder what will they all do when the tanneries are lost to a new complex 20 kilometres out of Kolkatta. Chi Thai tannery is one of these 584 tanneries and the consultant leather technologist, Kaushik Bhuiyan, has developed the tannery and the processes Chi Thai use. The tannery produces about 200,000 ft² per month and gets most of its raw cow hides, which are turned into garment leathers, from the states of Uttar Pradesh, Bihar and locally in Bengal. Bhuiyan said that a major problem was the smuggling of raw material to Bangladesh. Indeed, last year Ms Maneke Gandhi, union minister for social welfare, said that 15,000 cattle were smuggled through the West Bengal Bangladeshi border every day and Paresh Rajda, president of the Indian Leather Products Association, said that raw hides and skins were also being taken to Bangladesh and Nepal. But, the problem at Chi Thai tannery is simply that with the reduction in raw material supply, prices have risen but there is no possibility of increasing the price of the finished leather. Thus, margins are squeezed further. 'We are also facing problems of subsidies given by our competitors' governments in China and Bangladesh, which make our prices seem even higher', Bhuiyan commented. 'We have the advantage of good quality raw material, but cannot compete if other governments give incentives on the export of leather, while our government is doing nothing.' He admits that the pollution considerations will force the tanneries to vacate Tangra, Topisa and Tiljala: 'We will have to move, and we have put the deposit down, but really we want to stay. The leather complex is our future. And the cost of land in the city is quite high, so we may recoup some of the costs, but generally tanners do not have enough money and, if there is no government finance, no tanneries will go.' What concerns Bhuiyan is how the West Bengal government has gone about forcibly moving the tanners. Initially, the Supreme Court said the tanners had to deposit a first installment towards land costs, at Rs600 m2. Of these tanneries 508 also deposited a second installment and, thus, would be entitled to relocation. So far, 25 tanneries have paid the full cost of the land and they are the only ones who will be handed land. So, what of the others? The obvious guess is that many will close forever. Even M L Dalmiya & Co Ltd, the site's constructors, concede that 20% of the tanneries will not be able to afford to transfer to the new complex. The tanner has to buy the land, build the tannery and transfer the production, all while continuing to produce leather in the old factory. The latest supreme court ruling, given at the end of January, said the tanners have to pay the final land price by April 2001, construct the buildings within two years and move within three. Indeed, the tannery owners are questioning many aspects of the project. They wonder about the construction worthiness of the land at the new Calcutta Leather Complex (CLC), in Karaidanga, 20 km from the city, even though the first plots were handed over on January 20. Work on the project, which was awarded to Dalmiya in 1995 on a 'buy-operate-transfer' (BOT) basis, is being carried out slowly. While a 53-acre plot has been handed over to 53 units (new and to be relocated), much of the work relating to CLC is yet to be attended to, see graph above. According to industry experts monitoring the project these include construction of the Common Effluent Treatment Plant (CETP) and approach roads. Unido has designed the CETP, with a capacity of 30,000 m3/day and Italprogetti, the Italian machinery producers, are also understood to be involved in supplying the CETP with the equipment required. The estimated project cost of the CETP is around Rs800 million (US$18 million), and West Bengal sources said that Dalmiya had been asked to speed up the CLC job. The tanners are concerned that the land that had been allocated is too small to carry out future expansions. At a meeting of the steering committee of the tanneries, they also voiced concern about the ability of the land to support equipment and wanted a certification to this effect by a competent agency. Dalmiya say that the tests they have completed show the land will support equipment at a level of 4.25 m2 per tonne. However, there are respected people in the industry who question whether levels of 5 m2 per tonne are enough. The concern stems from the fact that over 1,000 acres of the CLC have been built on low lying wetland by raising the land level three feet. To be fair, the site and the statistics are impressive. Funds, estimated at RS5,000 crores in direct investment, will produce the world's largest integrated leather complex. 'This will create a greener, cleaner Calcutta', the brochure says. The 1,100 acres site will have everything from a raw hide market to integrated garment leather production units, tanneries to an export processing zone. When complete there will be 35 million litres of water available (with enough water in reserve to supply the tanneries for 28 days before replenishing is needed), 45 km of roads, 60 km of pipelines and schools, training institutions, hospitals and dispensaries. The question of completion also weighs heavily with Pradip Das, Dalmiya's only leather technologist working on the project. 'We have already been delayed by five years due to legal wranglings but phase one, which involves the completion of eight zones, will be handed over, ready, by June 10, 2001.' In the first lot, the biggest plot of around 20,000 m2 is going to Taj Leather Works, who deal in industrial gloves, and shoe uppers. Alam Tannery, an exporter of car and furniture upholstery, also has a big plot. The remaining plots would be around 200 m² each. Going beyond the original project scope, sophisticated IT infrastructure has also been planned. This will support around 5,000 voice and 3,000 data users through LAN. CLC will also have its own portal to facilitate B2B e-commerce. 'The big tanners will get 20-25,000 m², while the small and medium sized companies have been offered the same size of land they had in Kolkatta. If they want more they have to pay more', Mr Das commented. 'Dalmiya are trying their level best to co-operate with the industry since the tanning areas are at the heart of the city, employing 150,000 people in the leather and associated industries. The CLC will employ more people.' 'The problem we have had is that tanneries who have paid the minimum price simply to keep on the right side of the Supreme Court judgment are now expecting to receive land commensurate with the size of the tannery they have in Kolkatta. They assumed that they could 'upgrade' later, which is not so. They will get what they paid for.' 'We expect hide production to run at around 1,400-1,500 tonnes per day, which will attract chemical companies because the tanners will need to have the chemicals on site.' Here, Dalmiya have been clever, because they intend to have chemical production facilities on site which could, presumably, be offered to a company at the right price. They are also planning hotel facilities, possibly in conjunction with one of the big hotel chains in Asia, and housing will be important because the workers will not necessarily want to travel the 20 km to the complex from Kolkatta. This could well be on a rental basis. The area was chosen because 'it is a backward area, there is a good availability of water and the basin makes it possible to store that water.' There are also good links with the city. The road has been widened, although not to the width required for easy access. There is also access to the airport. To complete the transformation, the inhabitants of two villages, Boderait and Gangapur, which currently sit slap-bang in the middle of the complex, are being rehoused and the villages bulldozed. Quoted in the Daily 'The Hindu Business Line', Mr Dalmiya, chairman of the group, ruled out an oft-voiced fear of tanners that they might be asked to relocate once again as Kolkatta expanded its boundaries. 'This is not likely as no residential construction would be allowed in this area since it is mostly wetlands.' Which begs the question, that if the residential building is not allowed, how safe is it to build tanneries and move an entire industry that employs 150,000 people.