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Future Outlook

This chapter covers the growth prospects and future plans of the SMEs that operate in the leather and auto component industries in the Chennai cluster.

Majority of the players from both sectors expect stagnant growth in the next 5 years. Only 5% companies are optimistic about their respective industries growing by more than 20% in the next 5 years.

The two most prominent future plans of the companies are tapping new markets and diversifying into related products.

Some other salient features that emerged from the analysis:

• 70% companies, which are not IT compliant, have not yet decided about IT implementation in the near future.
• 82% companies are planning to invest up to Rs 5 mn in plant and machinery in the near future.

Section A: Auto component industry

The players in the auto component industry gave a moderate forecast about growth in the auto component industry, as 76% expected the industry to grow in the range of 0-10%.

According to the survey results, most respondent companies in the auto component industry are primarily planning to diversify, to enter new markets and to expand their existing capacity to meet market demand in the near future.

Some other salient features that emerged from the analysis are as follows:

• All companies, which are not IT compliant, have not yet decided about IT implementation in the near future.
• None of the companies that are IT compliant have plans to increase their IT expenditure in the next 2 years.
• 73% companies are planning to invest up to Rs 5 mn in plant and machinery in the near future.

Section B: Leather Industry

The survey attempted to understand the views of leather companies on the growth prospects of the industry in the next 5 years. According to 42% players, the industry is not expected to undergo any significant change in the next 5 years.

According to the survey results, one-third of the leather SMEs are planning to enter new markets, and 20% have plans to diversify in the near future.

Slated below are some other salient features that emerged from the analysis:

• All leather companies, which are not IT-compliant, have not yet decided about IT implementation in the near future.
• None of the leather companies that are IT compliant have plans to increase their IT expenditure in the next 2 years.
• 84% companies are planning to invest up to Rs 5 mn in plant and machinery in the near future.