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Bagging a new market

Jai Arjun Singh | August 02, 2003

It's a brand that has moved from unremarkable, unambitious origins to becoming the best-known player in the Indian leather business.

But Hidesign isn't resting on its laurels just yet. The company, hitherto known mainly for its utility-based bags and briefcases, is getting into synthetics and expanding its portfolio to include more fashionable leather products.

But all this, insists Hidesign president Dilip Kapur, will be done without compromising the brand's core values.

"We felt the need to get into trendier products," says the genial, well-spoken Kapur, who -- being accustomed to Pondicherry's balmy climate -- comes to Delhi only when it's absolutely necessary.

The company is going down the fashion route through a soon-to-be-launched range of bags aimed at "the kind of market where products have a limited life because new fashions come in."

The other change in Hidesign's strategy is that it is making more products for women. This decision had its roots in the recession that followed the 9/11 tragedy which, Kapur says, severely affected leather sales worldwide.

"At the time, we were largely into men's products, which were worst hit," he says. "While the post-9/11 gloom was on, there was a significant dip in men's spending on such products, but women's buying habits weren't affected to the same extent."

Research shows that at the best of times, the likelihood of women patronising a fashionable high-quality product is almost thrice that of their male counterparts.

Today 50 per cent of Hidesign's products are for female consumers. "Ladies handbags contributed about 43 per cent of our turnover last year," says Kapur.

"This year so far handbags have contributed 64 per cent and we believe this figure will grow further. So we are concentrating on bringing in newer and more fashionable styles in handbags."

With Hidesign now clearly targeting the career woman, the focus is on a mix of design, fashion and quality.

Kapur has strong views on what makes for high-quality leather. "The first sign of bad leather is when it looks perfect and has a distinct shine," he says.

"Higher-grade leather will always have less finish." It's part of company policy to rebel against "that shiny, unnatural look."

Another of the company's hallmarks is its use of vegetable tanning, which, Kapur says, is much more ecologically friendly than the widely practised chrome tanning.

A few years ago, when the Tamil Nadu government shut down 500-odd tanneries for ecological reasons, Hidesign's factory was one of the few allowed to continue operating.

"The area around tanneries that use chrome-tanned leather is virtually a wasteland," says Kapur, "but our factory is surrounded by lily gardens."

"But vegetable-tanned tanned leather isn't very soft or flexible, hence is best used for making briefcases," he says.

Hidesign had a modest start. The brand began life in 1978 as a one-man artisan workshop, with Kapur handcrafting leather bags, jackets and accessories for export.

At the time he was more involved with the Aurobindo Ashram (Auroville) in Pondicherry than with leather. He would produce bags at home during the spare time he got from working for Auroville.

"It was little more than a hobby back then," he laughs, "but without my even realising it the operations kept getting bigger. I had to keep expanding."

On one occasion, he remembers, a German company placed an order for 300 bags -- and Kapur had never made more than 20 a month! "I realised I was on to something," he says.

It wasn't until 1990 though that he got really serious about his hobby, setting up a factory near his house and employing 300 workers.

Today that number has risen to over 2,000. Besides the seven-acre plant in Pondicherry, Hidesign has two European-standard tanneries near Chennai.

The company has a turnover of Rs 48 crore (Rs 480 million) in India and a further Rs 8 crore (Rs 80 million) to Rs 10 crore (Rs 100 million) from its South African subsidiary, which was started to tap the South African market.

Last year the company also floated a new joint venture called Hidesign Global in Amsterdam -- the plan being to set up specially designed, exclusive stores all over the world.

Though exports account for close to 80 per cent of the company's sales, India is fast emerging as a high-potential market for Hidesign, which is why a lot of investment is planned in new shops this year.

"There will be four new exclusive stores -- in Noida, Gurgaon, Mumbai and Chennai," says Kapur, "apart from new alliances with multi-brand departmental stores." The company already has around 15 exclusive stores across India.

In 1991 Hidesign had started dabbling in leather garments as well. But Kapur admits the move hasn't been particularly successful. "Leather garments as a percentage of our turnover are reducing," he says.

"Garments made of leather have become less fashionable internationally." Further, the Indian leather garments industry has come down by 30 per cent, thanks largely to competition from China (which has a huge pig leather base), Vietnam and Indonesia.

So the bags category is clearly the way ahead for the company. Further, the accent on fashion will mean more worked-upon leathers, antique feel and finish, embellishments on bags, handiwork and craftsmanship.

But at the same time, some core values can't be compromised, adds Kapur. "Hidesign will never make a bag you can't carry to office."

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