Underdog’ Khekra…

Almost 30 kilometres from Delhi, khekra, a town in Baghpat (Uttar Pradesh) could have been another panipat in terms of home furnishing export business as both started simultaneously four decades ago with equal potential. But while panipat grew by leaps and bounds, khekra houses only four reasonably good companies as more than 40 small and medium level units closed down over the years. One can give many reasons for the same, but the fact is that even today the town has enough scope for new factories, and requires a lot of improvement and changes. As usual, changes and improvements are not easy, especially in neglected areas, where keen observation is required. This also raises question mark on the Government’s claim to support development of new hub/cluster in places where industry has still not reached despite enough opportunities. Team Apparel Online spends a whole day at Khekra talking to villagers, factory owners and workers to get an overall first- hand feel of this ‘underdog’ home furnishing centre.

“Four decades ago, we didn’t have cars and used to go on scooter from here to Dehradun to approach the higher authorities for the development of the area; but despite endless efforts, we are disappointed as still there is no proper road to reach Khekra. Other issues include lack of satisfactory drainage system, no fire brigade station, no training centre, besides no financial support from banks, etc. Power supply had improved just 3 years back otherwise there is nothing to talk about receiving support from the Government or administration,” shared Mukesh Gupta, MD, Balaji Loomtex. Apart from these existing problems, the main reason for the closure of many units was that most of these were just manufacturers who were supplying final products to Delhi-based merchant exporters. Unable to convert themselves into direct exporters as margins of merchant exporters decreased making it difficult to supply to them; these manufacturers finally gave up with no option but to wind up.

The units that are doing good business from the centre like Chahat Export, Balaji Loomtex, Continental Home Furnishings, and Weavetex Overseas is primarily because their owners belong to the local area and they initiated units long ago and developed the same even as they moved to the NCR to set-up offices. These companies rue that the Government and administration are not utilizing the advantages of the Centre for development. First of all, there is abundant land here and that too at much lower prices compared to Delhi-NCR or any such hub. One Bigha (1,939 sq. yards) land in Khekra normally costs Rs. 60 lakh for an easily approachable location. The circle rate is quite high which makes it almost impossible for anyone to buy land in proper way, without ‘managing’ the things, which is a headache. Secondly, not only are the wages minimum here compared to all other textile/ apparel hubs, but the living cost of a worker is also very less compared to neighbouring areas. Though the local labour is insufficient, it is available in surrounding villages.

Local entrepreneurs share that if someone is willing to invest, they prefer nearby Tronica City (8 km away from this area towards Delhi) despite 20 per cent higher cost of land and more struggle to arrange labour. “Till date, there is not even a single textile unit that has come up here because it’s hard to survive here with no solution to basic problems. For outsiders, law and order is also a problem,” honestly points out Sanjay Gupta, Director, Chahat Export.

About 25 to 30 per cent of the workers in these four units are locals of Khekra and nearby villages like Sankrodh, Bada Gaon, Mandola and District Baghpat. Despite employment opportunities and a boost to local economy by influx of migratory workers, villagers have their own concerns as there are no noticeable CSR (Corporate Social Responsibility) efforts from these factories, also these units have sucked the groundwater of the area and treated water coming out from the huge unit of Weavetex Overseas is a headache for villagers. “These companies should increase the number of local labour in their factories which will be a support for them as well as to local villages. Though some youth may be indisciplined and have attitude, but not all. These companies have done in the name of welfare or CSR for the village,” said Ramesh Tyagi, State General Secretary, Rashtriya Lok Dal and villager of Subhanpur Village. Similar is the opinion of Raj Singh Pahalwan, Social Worker, Khekra, “Villagers are suffering from the improper drainage system; neither factory nor administration has done any sustainable solution for the same. Due to this we are facing the issue of unhealthy drinking water. The problem is existing from a long time.” Earlier there was a hospital supported by Kabir Oldtex, but it is no more functional as the factory has shut its operations. Though all the units claimed that they do lots of charity for the village, Balaji Loomtex claims that they have a school here and 20 per cent of students are getting free education.

Continental Home Furnishings: Strengthened business via exploring US market

Vinod Singhal, CMD, Continental Home Furnishings (CHF) started his unit in Khekra in 1973 and worked almost 17 years with Ikea, enjoying a turnover of almost US $ 22 million (Rs. 130 crore). In 2012, Ikea decided not to work with them but Vinod and his team did not lose heart and moved to the US for business, which has developed consistently and for last three years he is doing business with US buyers worth US $ 8.33 million (Rs. 50 crore). The company is now again in the process to work with Ikea. Today the company is working with most of the top buyers like Walmart, Kmart, Sears, Macy’s, Ralph Lauren, etc. It is in process to start a cone dyeing plant with an investment of US $ 1 million (Rs. 5 crore).

Prior to 2012 blanket and sheet sets, its core product for the US market was new for it; but now the company has a strong identity for both the products. “Our blanket business can grow 3 times,” says Vinod with confidence. His experience, and company’s position of more than 4 decades, besides strong creative team of 16 designers has made it possible. “Our designs are quite exclusive and majorly we get orders of the same from buyers rather than doing their creation,” says Vinod who strongly feels that product development is the strength of the company. Doing 60 per cent of its business in North America, it is also into 6 countries in Europe as well as Japan, Korea and South America. Having a vertical setup from weaving to packaging, besides an advance manufacturing system, CHF manufactures cushions, rugs, curtains, throws and bath mats for Europe. Apart from huge capacities and above mentioned qualities, the company also strictly adheres to compliance norms with 4 certifications to its name. Continuously moving forward, CHF recently received its first order from Kohl’s of 1,30,000 pieces with an average FOB of US $ 10 per piece, on the other hand in the next 6 months its cone dyeing plant will be functional.

Europe was never slow for Balaji Loomtex

In 1975, Balaji Loomtex initiated from Khekra and Europe was the focus for the company, during recession when most of the medium level units catering to Europe were almost crashed, the company registered huge growth of 70 per cent. Basic products of low cost, and manufacturing entire range of home furnishing products so that buyers need not to go anywhere else, is the simple and successful strategy of the company. Now planning to start towel manufacturing, the company is enjoying annual business of US $ 5 million (Rs. 28 crore) and is expecting 25 per cent growth this year.

Bed covers, rugs, bath mats, table cloths, cushion covers and place mats are the core products of the company, for which Panipat is also known. But Balaji Loomtex claims to be much more cost-effective than Panipat as not only wages are low in Khekra, but overheads of the company are also very limited. “Apart from dyeing and weaving to packaging, we have in-house facilities, so we have full control over entire process,” says Amit Gupta, Director, handling business with his brother Ankur and father Mukesh Gupta. He also adds that during recession more demand was for basic products and that is why his products did very well at that time. The company is carrying forward that growth from recession till date.

About 70 per cent business of the company is with Europe while rest is with Latin America. As season and economy are different in both the markets, Balaji Loomtex enjoys the advantage in both markets throughout the year and does not feel the need to explore new markets. “Both of our markets have enough scope, which we have yet to explore so we are focusing on the same. But it does not mean that we are not doing anything new. We are coming up with a towel manufacturing unit with an initial investment of Rs. 2 crore in the next 5 months, as our buyers are also sourcing terry towels. So we will be able to offer them this product; also a new product helps in attracting new buyers,” avers Amit.

Chahat Export: Focused approach towards growth

Started in 1985 with a humble beginning, proprietor Sanjay Gupta really worked hard and is still doing so to enjoy an annual business of US $ 5 million (Rs. 28 crore) with its product strength in cushions and kitchen linen. Satisfied with its focused European customers, the company doesn’t wish to explore any other country or new product category as it believes in less but focused business. Handling a team of 140 people, Sanjay is an interesting personality who believes in genuine way of working and real commitment to buyers.

In a discussion lasting almost 40 minutes with Apparel Online, 7 to 8 staff members also came into Sanjay’s simple but beautiful room and openly discussed issues related to sourcing and product development. He handles all of them with ease. “It’s my involvement in the entire process which gives results; be it cost, smooth supply chain or timely delivery. We strongly felt during the slow period that genuine manufacturers who are serious and can deliver as per commitment, is the priority of buyers. We don’t have any compliance certificate but follow all the norms which are required. We ask our buyers what they want and we serve accordingly,” says Sanjay.

With 2 designers and 15 people in the sampling team, buyers’ hunger for creativity is satisfied most of the time. FOB of its products start from Euro 2 and goes up to Euro 10. Flexibility within its entire system is another feature of Sanjay’s company, as normally it takes orders of at least 500 pieces but to its regular buyers it does 200 pieces also. Sourcing raw material from Panipat and Delhi, dyeing is outsourced from Meerut and is not a problem for him; in fact he does not see any big issue in running his factory in Khekra. “Local issues or market conditions are not problems, these are part of business and we have to manage it,” he concludes.