One of the largest Indian companies, Tata Group, will enter the Romanian market through its leather articles division, Leather SBU (Strategic Business Unit) this year. Its goal is to gain control of 10% of the Romanian leather market together with Romanian company Oxalaga within two years. This market of raw material for producers of footwear, leather articles and clothing is currently estimated at $400 million.
Tata has concluded a partnership with Oxalaga, which will bring the Indian group’s products to both the domestic and Eastern European markets.
“Oxalaga will act as sole agent of Tata International for marketing and sales. Oxalaga will get materials from Tata International exclusively, that will come from India, Bangladesh, Nepal, China and Saudi Arabia,” the Indian group officials said.
In the long run, the partnership between the two companies targets selling finished leather on markets other than those in the Far East, which is part of the expansion strategy of the leather and footwear division of the Indian company.
As far as the Romanian market is concerned, this partnership means creating a source of much cheaper materials and semi-finished products.
“This will boost the competitiveness of the Romanian companies on both the domestic and the international market, considering that most of the leather imports are now controlled by Italian companies, which operate very high prices,” Doru Mladin, Oxalaga chairman and owner says. He added this partnership also included a series of investments to be made as of next year. “At the moment,” he said, “several options are being considered, such as building a processing facility in Romania, a greenfield-type project.”
“Romania is the focus area, since in Europe, it is the only major footwear producer with competitive labour costs compared to the world’s leading producer countries,” Tata’s representatives explained.
Tata’s annual revenues amount to $11.2bn and are derived from the over 300 companies that make up the group. The owner, Ratan Tata, is one of India’s moguls, one of the richest and most popular people in that country. His fortune is largely based on the automotive group Tata Motors.
Oxalaga is a footwear production management company, which has its own factory, Valceana SA that makes 5,000 pairs of footwear a day. It has collaborative agreements with the area’s top manufacturing facilities providing a combined production capacity of 72,000 pairs per day.
miruna.lebedencu@zf.ro