Analysis of Leather Industry of Pakistan

4. What is leather?
Leather, in the largest scope is any hide or skin taken from an
animal that has been processed by tanning. There are many
different ways of tanning leather. The end result of the
leather being tanned is subject to the method used.
The term “hide” is used for the skin of cattle
The term “skin” is used for the skin of smaller animals like
goats, sheep and calves.

5. Where does leather come from?
The animals from which the
hides are taken vary depending
on what leather product is to be
manufactured. Each hide can be
split into layers to manufacture
different products some animals
that are used are cowhide,
goatskin.

6. History
• At the time of independence there were only a few tanneries
producing sole leather and that too at a very small scale.
• In the early days of independence some tanneries were established
in Karachi
• In 1950's some were established in Lahore and adjoining areas.
• The 1960's saw the installation of more units in other parts of the
country like Multan, Sahiwal, Kasur, Gujranwala and Sialkot. These
units were well-equipped with the latest and modern facilities.

7. • More advanced units were established in the 1970's and
Pakistan started production of finished leather.
• The era of 1980's saw a period of improved quality
production.
• In 1990 the leather sector jumped to become the second
largest foreign exchange earner for the country by
contributing 10.41 percent toward the total export revenue.
• During July-November 2008-09, the leather exports of
Pakistan faced a decline of 27 percent while India, which
exported 43 percent more leather garments, witnessed 27
percent increase in its leather exports during the same
period.

8. Present scenario
• PAKISTAN is considered to be the hub of producing high quality
Leather and Leather Products, and there are about 800 Tanneries in
the country actively engaged in producing best quality finished
leather of Cow, Buffalo, Sheep & Goat skins.
• Pakistan is rich in agricultural products and has a large livestock
population which plays an important role in the economy of Pakistan
by producing around 13.0 Million Hides and 47.4 Million Skins per
annum (2009-10)

9. • The quality of goat skins, cow, buffalo hides in Pakistan is
satisfactory. The type of sheep skins we have in Pakistan is
better in respect of grain, substance and compactness of
fibers. Leather manufacturers & exporters are determined to
increase export of quality finished leather and leather
products.
• The industry is playing their positive role in activating WTO
with quality consciousness and full sense of responsibilities to
uphold the perfect image of Leather Industry of Pakistan. As
being the most significant contributor or the country’s GDP
and foreign exchange earnings,
•

10. • The Leather Industry of Pakistan is employing more than
500,000 peoples directly and indirectly. (2009-2010)
• It contributes 5% of GDP and 5.4% to the overall export
earnings of the country and is considered to be the most
significant sector.

11. Raw Materials
1. Hides
• Cow: The cow raw material is considered a
superior raw material upon buffalo because of its
fine, tight and comparatively uniform structure.
• Buffalo: It is considered as the specialty of
Pakistan in World.

12. 2. Skin
• Goats: It is good for making shoe upper
leathers, garment and goods leather.
• Sheeps: Leather made from sheep raw
materials has a very good and softer touch
and considered best for leather garments.

13. Major Products
• Footwear
• Leather garments
• Leather gloves
• Handbags and purses
• Key chains
• Wallets
• Sports goods

14. TYPES OF LEATHERTYPES OF LEATHER
In general, leather is sold in three forms
• Full-Grain leather or Top-Grain is referring to the upper section of a hide
that contains the epidermis or skin layer.
• Corrected-Grain leather is any Top-Grain leather that has had its surfaces sanded,
buffed or snuffed in order to remove any imperfection on the surface due to insect
bites, healed scars or brands
• Split leather is leather that is created from the fibrous part of the hide left once
the Top-Grain of the raw hide has been separated from the hide.

15. PRODUCTION PROCESS
• Vegetable-tanned leather
• Chrome-tanned leather
• Aldehyde-tanned leather
• Synthetic-tanned leather
• Alum-tanned
• Rawhide

16. Vegetable tanning
• Vegetable tanning is a method of using plant
material like bark and leaves to convert
animal skins into durable leather .
• Vegetable tanned leather is created by
tanning the animal skin, using a natural
product found in plants and trees.
• Tannins produced by plants and trees, give
the roots and stem their natural brown color.
• By extracting the tannin or boiling the
leather with the plant or tree material, the
leather is dyed a natural brown color
depending on the type of plants or trees

17. CHROME TANNED/WET BLUECHROME TANNED/WET BLUE
• It was invented in 1858 and introduced in
1980’s in Pakistan.
• It is tanned using chromium sulfate and
other salts of chromium.
• It is more supple and pliable than
vegetable-tanned leather, and does not
discolor or lose shape as drastically in
water as vegetable-tanned.
• Also known as wet-blue for its color
derived from the chromium. More esoteric
colors are possible using chrome tanning.

18. Tanning Process
1. Warehousing and sorting
2. Soaking
3. De-Fleshing
4. Liming
5. Bating, pickling, tanning
6. Samming
7. Splitting

19. 8. Skiving
9. Sorting
10. Neutralizing, filling out,
dyeing and greasing
11. Drying
12. Staking
13. Finishing
14. Quality Control
15. Dispatch

20. Pricing strategy
• The grading system is the method manufacturers use to present their
pricing structures to retail dealers. Leather suppliers also use a grading
system to distinguish their leathers and prices to manufacturers.
• Grades may vary according to different producers. One producer's “A"
may be another producers grade “3" or “4".
• Leather craft's grading system features five grades
• The lower grades represent various different leather qualities ranging
from painted hides to corrected hides to anilines.
• This year the price of a cow hide ranges from Rs 1,600 to Rs 1,900, goat
Rs 240 to Rs 250 per skin and for sheep the price stands at Rs 370 to Rs
400 per skin. (2009)

21. Problems faced by the industry
• Quality
• Cost of production
• The issue of chrome
• Shortage of water

22. • Energy Issues
• Environmental challenges
• Waste water
• Solid waste
• Air emissions

23. Leather industry may receive 20 per cent less animal
hides
DAWN.COM
November 18, 2010
• KARACHI: The relatively soaring price of animals and their less
numbers could result in 20 per cent less hides to the leather
industry this year.
• Due to inflation, high prices and low number of animals,
people preferred collective sacrifice of animals. According to
an estimate, around 70 per cent cows and 30 per cent other
small animals have been sacrificed this year.
• This scenario shows the leather industry may face 20 per cent
less hides this year. Also, soaring prices of hides may disturb
the industry and leather exports. — DawnNews

24. How many cattle died and its
recent prices
• Visiting the rain-effected areas, Prime Minister Syed Yusuf Raza Gilani
claimed that 64,000 cattle heads had been lost in 21 districts of the
province. (2011- dawn news)
• According to Sindh Livestock Department Secretary Laeeq Memon, only
12,066 cattle heads were lost during the monsoon rains till September 10.
Of these, 729 were cows, 1,154 buffaloes, 3,505 sheep and 6,068 goats.
(2011 - dawn news)
• The price of a healthy goat is no less than Rs 15,000, while a medium
weight heifer (young cow) may cost around Rs 40,000 this year. Last year,
price of a sheep/goat ranged between Rs 9,000 to Rs 10,000 and a heifer
was sold between Rs 20,000 to 30,000 per head ( 2011 - business
recorder)

26. Five Years Export of Leather &
Leather Products

29. Percentage share of Leather Products in Export Performance
(2009-10)

30. Where does leather Industry fall in WTO
• General : Hides and skins and leather are covered under the Agreement on
Agriculture of WTO. Moreover, the Agreement on Agriculture also has indirect
implications for the sector through meat and dairy policies.
• Tarrifs: No import tariffs are applied to raw hides and skins in Pakistan at present.
Tariff escalation (Increase in price, specially due to inflation) . is an issue for leather
and leather products as import tariffs vary according to the level of processing; i.e.
finished leather, leather bags, leather shoes etc. Carry high tariffs in some
countries.
• Export subsidies : Direct export subsidies/refunds are hardly used in the sector.
However, at present Pakistan is giving 25 per cent freight subsidy on exports of
leather garments for a period of one year, starting from January 1 to December
31, 2005 .
• Environmental measures Tanning industry can be highly polluting,
The cost of meeting environmental standards is one reason for shift of activity
from developed to developing countries.

31. • Food security Provides income for processors and is a source of
employment in tanning and manufacturing.
• Export restrictions and prohibitions Export prohibitions, export taxes and
combinations are used in a number of developing countries. Pakistan at
one time was using export prohibitions against raw hides and skins.
However, there are no more export restrictions at the present.
• Food security Provides income for processors and is a source of
employment in tanning and manufacturing.
• Rural Development : Important.
• Safeguard measures: Limited

32. STRENGHTS
• Eid- ul- azha
• Availability of cheap manpower.
• High demand in international markets.
• Skins can be obtained in huge amount because there is a lot
of meat consumption in pakistan
• Fashion*

33. WEAKNESS
• Rising production cost makes leather industry uncompetitive.
• Hides and skins are lost due to skin diseases, malnutritions,
and primitive slaughtering techniques
• Environmental Issues.
• Energy crisis.
• Smuggling of raw materials and live animals.
• Meat prices and the prices of raw hides and skins are also
indicative of this unchecked draining out of live animals.

34. OPPRUTUNITIES
• Export of garments using allowable fox fur trimmings for
decoration should also be permitted for boosting export of
value added leather garments.
• Export of wetblue grain and split leather is another demand
of leather industry which is not been taken care of.
• Latest plant and machinery is available off the shelf in the
international markets and can be purchased in short span of
time in pakistan.

35. Threat
• Competitors in the market.
• According to sources approximately 1.5 million animals were
killed due to the devastating floods in the country. (business
recorder 2010)
• High cost of production

36. Recommendations
1. Introducing Brand Names
2. Focusing on Footwear Sector
3. Control on Smuggling
4. Control on Diseases of Livestock
5. Reduction of Duties on Machinery

37. 6. Imports should be made duty free
7. New process and new machinery should be introduced that
could improve the quality and reduce the cost of production
8. Training must be given to the work force.

38. References
• http://www.streetdirectory.com/travel_guide/62681/modelling/leather_
what_is_it.html
• http://www.fashionnetasia.com/en/BusinessResources/2285/AN_OVERVI
EW_OF_PAKISTAN_LEATHER_INDUSTRY.html
• http://www.dawn.com/2010/11/18/leather-industry-may-receive-20-per-
cent-less-animal-hides.html
• http://www.pakistantanners.org/
• http://www.textilesindepth.com/index.php?page=about-leather
• http://www.scribd.com/doc/24975694/Analysis-of-Leather-Industry-in-
Pakistan