Brands, Bluffs, Bargains and Big Scams!

So... You think you're cool while flashing your outfits with brands like levis, wrangler, provogue, louise phillipe, or whatever you think is awesome according to your standards or imagination. Have you ever spent more then a grand or two for your favorite denim or that super hot shirt of yours (like I have)? Well, this one is going to be a li'l disappointing for you then! 

I have always believed that quality does not come cheap! - But in my little hunt for the divine truth in the last few days, I've known better. One of my friends is opening a shirt manufacturing factory back in West Bengal. He had come here, to A'bad to buy some raw material, and hence the quest began. I witnessed few of the most amazing trading secrets - which I would like to share free of cost.

I have NOT mentioned the real names of the companies, persons and places in the following description, to avoid any conflicts - however, for my near and dear friends, if you would like to verify the facts or if you are planning to start your own business in this field, let me know and I can share the sources.

So, consider a brand like Burberry (www.burberry.com) - which sells one shirt at the cost of £250 (18000 Rs.) or more, or a brand like Newport, which sells its denim jeans at $45 or more (1.5-2 grands in Indian market), and consider they are manufactured at Champaklal Mills* - located in a small town near A'bad - Gujarat. Now Champaklal is in the business of manufacturing and exporting since a long long time, has equipment worth at least 500 crores and has a production unit spread over at least 6 square kms., which is merely one of its locations out of total 9 such locations across India (contact me if you don't believe this) to manufacture denims, sarees, shirting and suiting materials, ready made garments for kids, etc. etc. all to be exported to Dubai, Japan, UK, US, etc.

So, Wrungler happens to be a huge client for Champaklal - and they have given an assignment to them to produce 500,000 (5 lac) before a mutually agreed date - lets say 30th Feb (I know, don't crib about it)! Champaklal is anyway efficient and produces 450,000 denims by 30th, but somehow is not able to deliver the rest 50,000. Now remember, they have already produced the raw material for those 50,000 - probably even cut it accordingly and have washed it (washing is what gives the 'oooh!' looks to your jeans). So they have to manufacture these 50,000 anyway, but due to their agreement with Wrungler - they can supply only 450,000 and send an invoice for the same.

However, the rest 50,000 goes into their warehouse and is called "surplus" product. This surplus keeps on accumulating in the warehouse, and after 6 months, Champaklal decides to dispose it off! So, Champaklal has an annual sale that happens right outside its premises under the name of Champaklal Co-operative Society of Mill Workers (since this all is billable) and sells all of these surplus fabric to local dealers at the rate of 10% the actual manufacturing cost. The manufacturing cost of your 1500 Rs. denim is hardly 500 Rs. for them. So, the selling price for surplus is Rs. 50!!! That's right - One Dollar! Half a Pound! -Pacchaas Rupaiya! 

Next question - Who buys this? Not individuals but dealers like Mr. Chunnilal* who has a 6 by 6 feet store in Lal Darwaja and a 15 by 15 warehouse near Astodiya. So Chunni buys all these imported maal at 50 to 60 Rs. each, stores it at his warehouse, and sends samples to the local retailers like Fashion Junction* near a reputed college in the city. More then 80% of the stock is exported to Kolkata, Delhi, Mumbai and other cities to similar local retailers. 

The local chap would either remove the brand logo and put his own, or he may sell it off with the actual brand logo at some 800 bucks. Oh, I forgot to mention he bought this thing for about Rs. 300 per piece. So, guys like you and I finally go to this Fashion Junction and exclaim "Oh! A wrungler for just 8oo!!! Wow!" and we happily buy it and tell our friends about it! 

Champaklal mill has already profited from the 450,000 that they sold to Wrungler, 
Chunni has made the most out of it, despite of being a small enterprise - since he bought not just wrungler but EVERYTHING from the surplus stock - all the other brands as well! 
And the retailer, Mr. Feknani also got his fair share! 

In the last three days, I visited 2 such Champaklals, 1 Chunni - who by the way is an MBA from London and runs a cheap clothing shop at Lal Darwaja, and various Mr. Feknanis in my quest to get some good deals for my friend.

Trrrrrrrrrrrrrrust me, if you thinking that you will start your own business with this information and make a fortune, you are probably the millionth guy to have thought about it. Next blog would be on how Indian Factories make a fortune despite of being absolutely crapy - so check out if you interested in owning factories as well! 

GOD™ BLESS!­

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