We met the Management of Crew B. O. S. Products Ltd (CB) and visited their facilities and came back impressed. CB is like any other export oriented leather manufacturer. It plays the volume game, does not rely on a single customer, and supplies to numerous well-known labels in the global fashion industry. However, what is different about CB that excites us the most is its Management's vision and confidence in achieving its goals.

At the various meetings with foreign buyers, the CB management reiterates the importance India has acquired as a dependable supplier. It takes the buyer through a list of facts that highlight the Indian advantage:

1) Hither, buyers forced Indian suppliers to compromise on pricing holding out China as a threat. Over the past few years, labor force in Chinese leather industry has shrunk, putting a question mark on China's dependability.

2) With China's domestic consumption picking up, Chinese companies were reluctant to compromise on product pricing. As a result, a number of Chinese fashion labels have sprung, eating away into the export pie.

3) The last and perhaps the most important is the steady appreciation of Yuan and the pressure on China to speed up the appreciation. This would be the clincher as India would win on the current pricing power advantage vis-à-vis China. The sales pitch has been successful and has helped CB win several deals, prompting it to enhance capacity by setting up a new facility at Neemrana (Rajasthan).

CB has started a pilot project by entering the retail sector. It has set up two stores in Delhi and Mumbai. The raison d'etre for the ambitious foray into retail is that the margins here would be far higher than those it earns acting as an outsourcing partner. The other clear advantage is that, CB's products would be on par with the best as it is continuously interacting with the best in the industry.

CB has its own design studio where young expert designers showcase their skills to the best in the industry. In some cases, buyers come to depend so much on CB that they use its design studio as a captive center, and place orders based on designs exhibited by CB's designers.

CB's various initiatives reflect its long-term goals. The CB academy is a first of sorts as the company trains fresh recruits from villages preparing them for a productive role in the leather industry. Every new recruit receives thorough on-the-job training; even the juniormost employee can call the factory head and freely share ideas, which reflects on the cultural milieu of the company.

CB's financials are sound, making it an attractive micro-cap pick
(mkt cap Rs. 2.20 bn.) The company is expect to register 30% export CAGR over FY10-13. CB is positioned strategically to benefit from India's retailing boom underpinned by strong growth in the leather industry coupled with the company's substantial expansion plans.

We do not have a rating on CB and it features strongly on our coverage horizon.