Shoemaker Pou Chen Corp (寶成工業) yesterday signed a memorandum of understanding (MOU) with Tamil Nadu to invest 23 billion rupees (US$280.6 million) in the Indian state, the company and a government agency said.
The world’s largest contract maker of branded athletic and casual footwear is to establish a manufacturing base in a special economic zone in the state’s Kallakurichi District through High Glory Footwear India Pvt Ltd, Pou Chen said in a Taiwan Stock Exchange filing.
High Glory Footwear is a wholly owned subsidiary of Yue Yuen Industrial (Holdings) Ltd (裕元工業), which is 51.11 percent owned by Pou Chen and mainly responsible for the shoe-making group’s original equipment manufacturing (OEM) business.
Photo: Bloomberg
The investment is to be carried out in two phases from fiscal year 2023-2024 to fiscal year 2034-2035, the filing said.
Under the terms of the MOU, the Tamil Nadu government would provide infrastructure support, land allotment, investment subsidies and tax breaks to High Glory Footwear, the filing said.
The agreement gives High Glory Footwear the flexibility to complete its commitments at any time within the 12-year investment period, it said, adding that any changes to its commitments or the investment period are subject to approval by the Tamil Nadu government.
“As India offers a large supply of labor and extends favorable government policies, it is expected that this investment would be able to expand and diversify the group’s production capacities in an economically sound manner to support the sustainable of business,” the filing said.
Pou Chen last week reported that its first-quarter consolidated revenue fell 4.3 percent year-on-year to NT$64.37 billion, as OEM sales dropped 18.1 percent year-on-year amid inventory adjustments by major brands. Sales at its retail business, handled by subsidiary Pou Sheng International Ltd (寶勝國際), improved 6.5 percent thanks to steady recovery in end-market demand.
Pou Chen’s OEM business counts international brands such as Nike Inc, Adidas AG, Asics Corp, New Balance Athletic Shoe Inc, Timberland Co and Salomon SAS among its customers, company data showed.
“Over the next 12 years, this partnership will generate employment opportunities for more than 20,000 people in the non-leather footwear sector, especially for the youth and women in and around the Kallakurichi district,” Guidance Tamil Nadu wrote on Twitter yesterday.
Guidance Tamil Nadu, the state’s investment promotion agency, earlier this month announced that Hong Fu Footwear Group (宏福鞋業), another Taiwanese shoemaker, plans to invest 10 billion rupees over three to five years to establish a manufacturing base in Ranipet District, which is expected to create 20,000 jobs, the Central News Agency reported.
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