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From Tehelka Magazine, Vol 5, Issue 42, Dated Oct 25, 2008
BUSINESS & ECONOMY  
Jeans

The Jeans That Built Bellary

A quiet Karnataka backwater has become the epicentre for a denim jeans manufacturing revolution, reports SANJANA from Bellary

POINT BLANK. Walker. Nasty. Podium. These are not just random words in an English dictionary. They are the names of successful brands of denim jeans, manufactured in Bellary, north Karnataka. To the tune of an estimated annual turnover of Rs 150 crore. It’s a big sum for a district labeled “one of the most backward districts of the state” on its own official web page.

Consider this: the 2001 census pegged the total population of Bellary at slightly over 3 lakh. A third of Bellary’s population, over 1 lakh people, is employed in the jeans manufacturing industry. According to the Human Development report (2005) for Karnataka, Bellary stood in the ninth position on the Income Index for the state’s districts — and the jeans industry is second only to the mining sector in being the major contributor to this development.

Jeans from Bellary are not just popular in Karnataka: feeding the low to mid range price segment, they are as sought after in Andhra Pradesh, Tamil Nadu, Kerala and Maharashtra. Priced 30-50 percent lower than premium international brands such as Lee, Levis or Wrangler, jeans from Bellary cost between Rs 145-Rs 750 a pair.

Price is not the only reason for their popularity: a major reason is the fact that these manufacturers use similar quality denim to that used by big tag brands. “We source denim from the same manufacturing mills as these premium brands and are still able to offer a huge markdown on the final pricing. because operations are outsourced. High volumes also drive down retail prices,” says Bharrani, a partner with BB Brothers, the group that makes Point Blank and Podium brands. Bharrani’s firms is one of the few in Bellary that has an export business footprint as well — Point Blank reaches Australia under the same brand name. In Europe and US however, Point Blank jeans are sold under the go-to-market brand name of Dragonfly. In the Middle East, once again, they are sold under a different brand name.

The different brand names are not just market-driven strategies or ways to beat export tax. They fit perfectly into the extremely profitable retail industry logic. Wholesale jeans manufacturers often supply leading domestic and international retailers with unbranded pairs, which are then sold by retailers under their own brand names. For a sizeable profit, that is. On average, a pair of jeans made in in Bellary costs Rs 350, while the same paid in a store in Bangalore’s glitzy malls is marked upwards of Rs 900.

Of course, no manufacturer will divulge the names of retailers who buy in Bellary. Ganesh Murthy, a purchasing manager at one of Bangalore’s leading one stop retail shops, is not surprised. “We always sign non-disclosure agreements with our suppliers. Who would want to know that the jeans they are paying huge amounts for were actually manufactured in far-flung Bellary?” he asks.

There is a great deal of truth in that statement. Bellary, despite its long history of engagement with garment manufacture (the town tailored uniforms for the British), is stamped with the label of not being ‘good enough’. Backward Bellary cannot match quality standards that customers expect from the brands they buy in bigger metropolises.

Manufacturing units in and around Bangalore cater to the GAP, Tommy Hilfiger or Mexx, while Bellary’s units are confined to providing products for second rung brands. Admits Bharranii, “Quality has always been a concern for Bellary’s manufacturers. The ad-hoc production and the lack of quality control standards all add up. The required amount of technology and capital investment that abounds in Bangalore is obviously missing in Bellary.”

The state government has mooted the idea of establishing an Apparel Park to boost Bellary’s units. The idea, first proposed in 2001, is still at the notification stage, pending final approval. Spread over 174 acres in Mundaragi and Guggarhatti villages around the town, the proposed park will cost the government Rs 27 crore.

While the park itself is yet to come up, the bickering over how it will benefit manufacturers has begun. “There might be a promise of proper infrastructure facilities but I doubt there will be many takers. The cost of moving into the park, along with the cost that we will incur to shift all the workers there, will add up to quite a bit. Besides, we survive through outsourcing, something that will not be possible if we move into the Park,” says Mahesh Jain, a small-time trader.

THE OUTSOURCING that Jain refers to is a distribution of the production process — once the denim fabric is received from the mills, it has be styled, cut, stitched, dyed, ironed and then packaged. The process involves multiple players, none of whom are located under a single roof. K Mohammed Shafi of Donar Garments runs three units, with 50 machines, where the fabric is stitched. “There are different machines — every pair of jeans needs about eight different machines and their cost ranges from Rs 2 lakh to Rs 18 lakh. Not many manufacturers in Bellary can afford all this under one roof. As an informal estimate, Shafi figures there might be around 200 such stitching units in Bellary — a figure that does not include those who choose to work out of their own homes.

What is interesting is that Bellary became a jeans manufacturing hub almost without assistance from the state government. But traders agree that if this backwater wants to leverage this to tap overseas markets, this unassisted business model will not work. •

WRITER’S EMAIL:
sanjana@tehelka.com

From Tehelka Magazine, Vol 5, Issue 42, Dated Oct 25, 2008
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