Indian shoemakers on wrong foot
With world in COVID-19 grip, global brands cancel orders
Indian shoe majors are in dire straits as many international brands have cancelled a portion of their orders and put on hold the rest for the winter season due to the COVID-19 outbreak.
According to rough estimates, India exports about 130 million pairs of shoes every year, accounting for total revenue of ₹25,000 crore. Two of the big firms — Tata International Ltd. (TIL) and Farida Group — collectively have 11 shoe manufacturing units spread across Chennai, Ambur, Ranipet and Chittoor in Andhra Pradesh.
The ₹2,000-crore Farida Group planned to export nine million pairs in FY20 and the ₹1,000-crore Tata International, 4.8 million pairs. Farida caters to global brands such as Clarks, Rock Port, Hush Puppies and Florsheim while TIL serves Alpine Stars , Caleres, Clarks, H&M, Deichmann, Geox,and Marks & Spencer, Massimo Dutti, Zara and Woverine among others.
“We supply our shoes to 10 international brands. Till date, we have received cancellation orders from eight brands that sell our products under their brand name in the U.S. and Europe,” said Rafeeque M. Ahmed, chairman, Farida Group and president, All India Hides and Skins Tanners and Merchants Association.
He said the cancellation for winter season accounted for 40% and orders on hold were 25%.
“We have already purchased the raw materials for the next season. If we wished, we could operate our units in Special Economic Zones with 50% workforce, after obtaining special permission. But, we have decided not to go ahead,” he said.
Farida group employs over 22,000 employees across its 11 subsidiaries. As a special gesture, the company paid 15 days March month salary to its staffers and asked them to spend it wisely.
“There is a liquidity crisis everywhere. Overseas buyers are not willing to lift the goods as they have to pay various duties and warehousing charges. There is a huge pile up of inventories at their end resulting in stoppage of production,” he said.“Uncertainty is killing us. We don’t know what will happen on April 14 and beyond that,” added V. Muthukumaran, head, Leather products, Tata International Ltd and president, India Shoe Federation.
“This season’s sale is almost over. We will find the impact of COVID-19 during the next two seasons. Until then, we will have to reschedule our production,” he added.e Federation.
TIL services about 25 international brands and it exports 96% of its production. As of now, TIL has received cancellation of 30% orders and 10% of production has been put on hold. TIL also paid 15 days advance salary to its staffers.
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