Cash crunch to affect hides collection

KARACHI: Tanners fear less collection of hides and skins this Eid ul Azha owing to cash flow problems being faced by the industry in the backdrop of held up customs duty drawback, sales tax and income tax refunds by the FBR.

The industry also feels that there could be a steep fall of up to 42 per cent in value of hides and skins due to recession in the world leather market where major players like China, Turkey and European countries have already depreciated their currencies.

On average, tanners usually collect hides and skins having value of Rs10-12 billion but this Eid they fear the value would drop to Rs6-7bn. An estimated 7.3 million pieces of hides and skins are expected to be collected this time.

In a statement, Pakistan Tanners Association (PTA) Chairman Muhammad Musaddiq said that recession in world economies would generate shorter demand and export of leather from Pakistan. He was critical of the government for holding back their funds which were causing liquidity problem for the industry.

“This is going to adversely impact the purchasing power of tanners during Eid and result in lesser collection of hides and skins,” the statement added.

According to PTA estimates, during the three days of Eid ul Azha starting from Friday, 2.5 million cow and buffalo hides would be collected at an average price of Rs1,500 to Rs1,800 per piece.

Similarly, collection of goat skins would be around 4m with an estimated price of Rs175 to Rs225 per piece and of sheep 0.8m skins with an average price of Rs125 to Rs175 per piece. Collection of camel hides would be around 30,000 with an estimated price of Rs800 to Rs1,000 per piece.

The PTA chief also urged the government to ensure uninterrupted supply of power and gas to the sector.

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