The Agricultural Research Station of the University of Agricultural Sciences, Dharwad, Karnataka, has released a naturally-coloured cotton variety, DDCC–1. To popularize this variety, its large scale cultivation in Uppinabetageri village of the Dharwad district was arranged under contract farming system in collaboration with Khadi Nekar Sahakari Utpadak Sangha, Niyamita, which buys back cotton of the contract farmers and processes it into garments for marketing. This study has analysed the value addition to naturally-coloured cotton at different stages of processing. It has been found that during ginning one quintal of colour cotton yielded 35 kg lint, 64 kg seed and 1 kg of waste. This lint underwent spinning process and yielded 29.69 kg yarn and 5.31 kg waste. The yarn underwent the weaving process and yielded 28.96 kg cloth and 0.98 kg. waste. The 29.96 kg cloth has been found equivalent to 106.28 metres of cloth. While preparing (cuttings) shirts, 1.28 m of waste material was obtained. Finally, 42 shirts were made from 105 m of cloth. The study has found that an additional value of Rs 5,875 was generated through processing kapas into cotton garments (shirts). Its break-up at different levels of processing has been recorded as follows: ginning, Rs 327 (5.57%); spinning, Rs 781 (13.30%); weaving, Rs 1626 (27.68%); and garments manufacturing, Rs 3140 (53.45%).