Praxis Business School
Phase 2
A Report
Submitted to
Prof. K. Dasaratharaman
In partial fulfilment of the requirements of the course
Retail Management
15/09/13
By
Asmita Datta
Harshit Parekh
Prabina Chettri
Sanget Balgi
Retail Scenario in India
The Indian retail sector can be divided into two broad categories: Unorganised Retail and Organised Retail.
Organised retail is made up of those retailers who are licensed for trading activities and are registered to pay taxes to the
government. The unorganised retail on the other hand consist of unauthorised small shops, general stores, corner shops
among other small retail outlets. Over the last few years, the retail sector has been the fastest growing sector in the country
and India has been ranked fifth among the top 30 emerging markets for retail. In the past decade the Indian retail sector has
undergone a sea of change. The market which was once dominated by small neighbourhood stores that serviced the needs
of millions of customers in country, has now a fair share of hypermarkets, supermarkets and departmental stores, especially
in large cities.
Market Share
8%
92%
Organised
Retail
Unorganised
Retail
According to the India Retail Report, 2013 the total Indian retail market is dominated by the unorganised sector
with an approximate share of 92%. The retail sector grew by almost 10.6% between 2010 and 2012 and is expected to
increase to USD 750-850 billion in 2015. Food and Grocery is the largest category within the retail sector followed by the
Apparels and Mobile segment. Among the organised retail, Apparel is the largest segment followed by Mobile and the
Telecom segment.
Share of Different Retail Verticals in Modern
Retail
Apparel
20%
Food & Grocery
33%
Mobile & Telecom
4%
Consumer Electronics
6%
Food Services
Jewellery
7%
8%
11%
11%
Footwear
Others
The Government of India had been considering opening up the Multi brand Retail Trade (MBRT) to FDI for a
long time. They had released a discussion paper in 2010 which had gathered extensive public and industry views but it was
in September, 2012 when the Government decided to pass the FDI policy in MBRT. The FDI policy may have a low impact
on one segment but may be a stumbling block for another segment. Some of the key points of the policy have been
highlighted below:

Multi brand retailers must make a minimum investment of USD 100 million with atleast 50% of the
investment in backend infrastructure.

Retailers can set up in cities with a minimum population of 1 million provided the state government has
given an approval. Currently there are 18 cities with population of more than 1 million where the state
government has approved the implementation of the policy.

Multi-brand retailers should have 30% sales from private label brands or unbranded products sourced from
small industries

Multi brand retailers with FDI will not be able to use e-commerce, whereas Indian retailers could use ecommerce as an alternate channel for sales
High inflation and borrowing costs followed by job insecurity in the face of economic uncertainty have hurt
consumer confidence. This could be felt in the automobiles and electronics sectors, which have seen a decline in sales for
eight months in a row. Weakening of rupee has made imports expensive forcing many consumer products companies to
increase the prices in their products. But the Indian consumption story is an attractive one even though it has lost some of
its shine recently. According to a study done by Boston Consultancy Group in October 2012, close to 20% of the Indian
consumers are going to increase their discretionary spending in the next 12 months as compared to other mature US and
the UK markets. And 34% of the consumers are going to switch from cheaper products to high end ones. Over the past
few years retailers have taken several steps to growth during the uncertain times such as they have expanded deeper in the
hinterland, increased their pace of launches, added more premium products in their range and offered discounts and freebies.
The entry of global brands in the country has provided the consumer with a variety of choices thus increasing
competition between companies. But these global brands also expose the consumers with newer and higher price points.
What is perceived as a potential threat also provide an opportunity for the companies in the retail sector. The Indian retail
sector provides a big opportunities for the companies but also poses challenge to follow the growth profitability.
Retail till recently had always been conducted through brick and mortar stores but the recent years have seen a
paradigm shift in modern retail with the introduction of online retailing. The mating of internet with secure payment systems
has given rise to multi-channel retailing. According to the Indian Retail Report 2013, online retail in India is forecasted to
grow between 7 to 10 times the current market size and would capture almost 15% of the total retail pie by 2015. Inherent
efficiencies of the business model and potential cost benefits are expected to give online retail an edge over the traditional
retail format. However for online retail to succeed in India critical factors like order fulfilment, payment mechanism and
tapping into growing mobile commerce need to be addressed.
While e-tailing is still a very small share of sales for multi-channel retailers, but it is a strategic tool to ensure customer
retention and to reach out to more customers in smaller cities where it is not feasible for the retailers to set-up stores. Activity
in this segment has begun with many consumer product companies launching their own e-tailing formats. However many
companies are still not geared up for the online channel and are yet to develop a sales and marketing approach suited to the
requirement of the e-retailers.
On 1st August, 2013 the Union Cabinet approved several changes in the FDI policy to make the multi-brand retail
sector more attractive for foreign investments. The changes would allow FDI in cities with population less than 10 lacs.
With regards to the sourcing norms, the retailers would have to procure upto 30% of the products from SMEs which have
a total investment in PPE of USD 2 million. The ‘small industry’ status would only be counted only at the first encounter
between the retailer and such industry. The company would continue to be continued to be called a ‘small industry’ even if
the investments grows beyond USD 2 million. There has even been an amendment in the provision regarding back-end
infrastructure. The retailers would have to spends USD 50 million in back-end infrastructure which will include processing,
manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture
market produce infrastructure etc. Expenditure in land-costs and rentals would not be accounted for the purpose of backend infrastructure.
Key Drivers and Challenges for the Indian Retail Sector
Key Drivers- India is the fourth largest country in terms of purchasing-power parity and the retail sector plays a key role in
driving growth having an impact on the three stakeholders- producers, workers and the consumers. Some of the key drivers
of the Indian retail industry are highlighted below:

Higher Disposable Income- Higher disposable income in middle class and lower middle class has increased the
consumption of essential and non-essential products

Change in Consumption Pattern-Over the past few years, the consumption patterns have changed. Earlier Indian
customers were loyal to a particular brand but now they are not hesitant in experimenting with newer brands. The
change in customer perception has paved way for new entrants.

Availability of Low-Cost Credit-Earlier due to lack of availability of cash, consumers were postponing their
purchases. But now due to availability of credit, transactions between the buyers and sellers have become more
flexible.

Localisation of products to cater the needs of Indian consumers-Research and Development and new product
development has led to the emergence of localised products. More and more localised products are being created
and launched for the Indian consumers. This has led to higher sales of stores catering to such customised products.

Efficient Supply Chain-An efficient supply chain is considered as a backbone of any organised retail chain. As a
retailer achieves scale in operations, this has to be backed by an efficient supply chain. Presence of intermediaries
could lead to higher costs in terms of wastages and higher margins.

Ability of IT in being a differentiator- IT can be a differentiator and bring efficiency in the entire value chain. IT
helps in timely dissemination of information at all levels and aids in sound inventory management. IT would enable
a retailer in dealing with stock-out, seasonality, transferring stocks from one store to another, and ensuring lower
levels of slow moving or dead stock.
Retail Formats: Store Count and Share in Retail Space in 2011 and Projections for 2016
2006
Format
Supermarket
Average
Size
2011
2016
No. of Share in Total No. of Share in Total No. of Share in Total
Stores
Space (%)
Stores
Space (%)
Stores
Space (%)
2,000
500
5
4,000
9
8,500
8
700
100
0
400
0.3
2,000
1
Hypermarkets
50,000
40
10
300
17
1,000
25
Discount Store
1,000
500
2
1,500
2
4,000
2
Speciality Stores
1,500
10,000
75
30,000
50
50,000
37
Department Stores
30,000
50
7
600
20
1,400
21
Convenience Store
Cash and Carry
Total
70,000
2
1
300
2
200
7
11,192
100
36,830
100
67,1000
100
Confluence of various factors
Key Challenges – The advent of FDI policy in multi brand retail could pave the way for modernization of the Indian retail
sector, but even well-heeled existing players need to pay heed to the Indian political, social and competitive landscape. Some
of the challenges faced by players have been discussed below:

Availability of Rental Space-Hypermarkets require more than 60,000 sq. ft. of space while department stores
require more than 20,000 sq. ft. of space. Availability of such space in a prime location is difficult and only available
at high rental costs

High Rental Costs-According to an industry estimate, rentals constitute approximately 40 percent of the total cost
of sales and the rentals in prime locations have increased by almost 50 percent in the last three years. Thus successful
negotiations of rent would constitute a key success factor for many Indian retailers

Lack of Industry Status-Due to the absence of the ‘industry status’, organised retail faces difficulties in
procurement of organised financing and fiscal incentives. Retailers are not able to avail the sops that come along
with an ‘industry status ’.

Shortage of Skilled Manpower-Front-end/Retail assistant profiles in a retail store form a major portion of
employment in the retail sector while store operations account for 75-80 percent of total employment in the
organised retail sector. Retail training opportunities such as niche courses for areas like merchandising and supply
chain are limited and this condition is more alarming in the unorganised retail space where the manpower is not
equipped with even the basic level of retail specific and customer specific skills.

Policy induced barriers-The organised retail sector is governed by both Ministry of Commerce and Consumer
Affairs. Ministry of Commerce takes care of retail policies while the Ministry of Corporate Affairs regulates the
sector through licences and legislations. There is a need to manage the retail sector through a single apex body as a
single body is more effective especially in addressing the retailers’ grievances. Also political change in state and
central governments puts a lot of political risk on the foreign investments in retail.

Lack of proper infrastructure and distribution channel- Better storage facilities, better transportation medium
and huge investments can pose a problem for the retailers.
Choice of Retail Business and Reasons for Choice
We have decided to open an apparel store in Kolkata as a part of retail business plan. We are planning to open an
apparel company that designs and sources items and sell to retailers, including department stores, specialty shops and
discounters and retail customers. The store would be a part of this company. The company would source popular branded
products and sell them through the retail store. The company would in future acquire licenses to manufacture goods under
particular brand names, and will market and advertise these lines. One license would cover many products. Production would
be outsourced to developing countries, where labour costs are inexpensive, relative to those of the United States and Europe.
The store would contain apparels of brands which have a good reputation for quality, style or value, are popular
among shoppers. The clothing company would possess a broad line-up of well-known brands has a competitive advantage
over its peers. The store would also contain products of private labels which are less expensive than branded items, selling
goods would be more profitable for the company.
There are a number of reasons why we have decided to open an apparel store. Retail stores are typically more
profitable than their wholesale brethren. By selling our own merchandise at retail, the company would cut out the middle
man and increase profits. However, this strategy could be risky. Instead of just designing and producing clothes and filling
wholesale orders, the company would also have to find store locations with good potential, manage inventory, and avoid big
markdowns.
The apparel industry is fragmented and highly competitive. There are a number of major players, but there are also
countless niche stores and private companies that cater to specific demographics. Apparel stocks are economically sensitive.
Although clothing is a basic need, people have wide discretion as to when they update their wardrobes and how much they
spend. When times are good, apparel sales are usually brisk, but during periods of economic uncertainty and contraction,
clothing is an area where people can easily trim outlays
Porter’s Five Forces Analysis
Threat of New entrants--- Moderate to high.
There are almost no entry barriers except some moderate capital requirements. There are no serious switching costs
amongst customers and brand loylty is relatively low. There is no need for huge capital requirement to start producing one’s
clothes line, but there is a capital requirement to build one’s own distribution channel and to advertise the brand. It is hard
to build a strong brand using clothes so one should built its own distribution network including own shops or use ecommerce. The apparel industry is quite profitable, so that entrants appear quite often.
Threat of substitutes--- No substitutions for clothes.
Clothes have been used for centuries, which makes rivalry more intensive. However, there is substitute to retail chain, it is
e-commerce. In order not to lose power many companies have their own sites. Apparel is not an exception.
Bargaining Power of customers--- moderate
Customers can’t put a firm under serious pressure. The customer base is large and each buys a small amount, so price
sensitivity is a threat. Due to absence of high brand loyalty, customers are quite price-sensitive, so it gives the retailers the
power.
Bargaining Power of suppliers--- Low to moderate.
There are a lot of suppliers of raw materials in this industry, but nonetheless it takes some time and money to switch to
another supplier. Uniqueness of the materials is low, so all suppliers are quite the same.
Competition--- High.
It is the main factor in the industry. In the modern market it is really hard to attract new customers. Advertising costs a lot
and furthermore, it is hard to create really attractive advertising, to create something really new. There are a lot of brands
existing in the market. They try to differentiate themselves in order to find their niche and decrease competition, but
nonetheless in every niche there are 3-5 direct competitors of different size, but in some locations there are only 1-2 firms
and so these locations are quite attractive to the new entrants.
Other Evaluated Options
We had considered two other options along with the idea of opening up of a retail store. The other options considered were
that of opening of a footwear store or opening a restaurant. But we have not considered these two options and the reasons
for the same are given below:
Reasons for not choosing to open a footwear store:
Higher Taxes: There is a VAT of around 12.5-13% on footwear in India as compared to that in apparel which is around
5%. The reason for this is that the footwear category is not considered an essential while apparel is considered an essential
category.
Longer Time in Transportation: In Kolkata it may take 5-10 days to deliver the products from the warehouse to the store.
Another problem would be in transporting goods from one store to another when both the stores are located in different
cities. This process may be time consuming and it would require the payment of three different types of taxes. Longer time
would also result in higher costs.
Change in Regulations-Frequent changes in the norms could have an impact on the business and it would not add any
value to the product. For e.g. shoes are considered pre-packed goods and shoe sizes have to be written in centimetres. The
labelling also requires the name of the factory where it is manufactured to be written on the label. Any change in the
regulations would have any impact on the business and make it unprofitable.
Reasons for not choosing to open a restaurant:
Application of licences and permits is time consuming- Many licenses and permits can take several weeks, even months
to be approved. Common licences and permits for restaurants, regardless of state include liquor licences, sign permits and
workers compensation.
Initial Investments may be high as compared to an apparel store- Although there are various banks and private equity
players who are ready to fund a restaurant project but initial investments is high as location and skilled staff is capital intensive
Location can be a deterrent-Finding an appropriate location may be difficult as rentals at a prime location would be high.
Location may break or make a store.
Global and Indian Scenario of the Apparel Industry
An environmental scan requires a detailed study of the scenario before taking a decision. It gives an idea about the
territory to be entered and better preparation against the uncertainties that may accompany the decision. The chosen retail
business is apparel. An environment scan both on global and national perspective will require careful monitoring of the
apparel retail industry and any identifying signs of opportunities and threats that may influence current or future decisions.
Global Scenario:
The global apparel industry is forecasted to have a value of $1, 184.1 billion. This growth is primarily because of the
increase in demand of knitted apparel, especially in categories of T-shirts, dresses, etc.; rather than woven apparel. The US
is the biggest importer of apparels in this world followed by Germany and Japan. However, the rate of increase of demand
for apparel from developed economies is declining. Future growth in demand for apparels is primarily expected to come
from the emerging economies mainly due to the population growth, increase in urbanization, and increase in per capita
income among other reasons.
The global apparel industry can be divided into two distinctive centers of activities - the consumption and the production
hubs. Both production and consumption was previously done in developed economies such as the USA and EU. But over
the years, the production has shifted to developing countries like, India, China, Bangladesh, etc due to the cost advantage
enjoyed by these countries.
Global Scene of the Production and Consumption Hubs
Apparel Production Share of Countries
24%
China
3%
50%
India
Bangladesh
4%
Vietnam
6%
Turkey
13%
Others
Source: Knowledge Paper by Technopak 2012
22
Top Global Apparel Importers (By Value)
USA
25%
38%
Germany
Japan
12%
United Kingdom
7%
8%
10%
France
Others
Source: Knowledge Paper by Technopak 2012
22
The developed economies have continued to be the major consuming center as the developing economies are still
in the nascent stage to generate demand for consumption. The global apparel industry is also driven by a few factors, these
factors result in the trends in the market that influence the decisions taken by the global players.
Key Trends seen at a global level:
Capitalise on Trade Preferences: Factors like lower duty rates for export to/import from certain countries are more
efficiently utilised. The apparel industry is now more inclined towards reducing the costs and revising their export/import
decisions depending on less hassles and more profit.
Demand for more skilled labour: To reduce production time and increase efficiency, there is a need for skilled labours
who can have knowledge on the process and also on the equipment used to manufacture the products. This may result in
rise of the labour costs, which in turn can be posed as a challenge in the industry.
Focus on adding more values: The apparel industry to boost its declining demand is depending on adding more value in
the products. Better designs, innovation (both in designs and technology), branding to protect margins, etc are given more
importance to reduce cost and maintain the current price or charge a premium.
Manage inflationary trends:
Change in Supply Chain: The supply chain of global apparel industry has become complex and is expected to grow more
complex.
Consumer
Consumer
Retailer
Retailer
Consumer
Retailer
Wholesaler
Wholesaler
Wholesaler
Manufacturer
Manufacturer
Manufacturer
PAST
PRESENT
FUTURE
There is also an inclination to satisfy demand within a shorter period of time and hence shorter delivery period.
Previously the supply chain was rigid and followed a strict process where goods were passed from manufacturers to
wholesalers, then to retailers and finally to consumers. Presently, goods are also transferred directly from manufacturers to
retailers along with the traditional cycle of transfer of goods. Adding to this, it is also predicted that manufacturers may
directly sell their goods to consumers in near future, to satisfy demand for lower priced goods of equal or better quality than
what exists at present. It has also been observed that the number of sizes available in apparel and readymade garments has
also increased with lesser number of units under each size.
Global Textile & Apparel Trade ($ Billion)
1040
840
662
710
530
493
389
279
74
42
31
86
35
22
71
2005
77
49
38
146
126
Others
2011
Fibre
Yarn
2016 (P)
Fabric
Apparel
81
55
46
168
2021 (P)
The global textile and apparel trade was valued to be at $662 billion in 2011 and is growing at a CAGR of 5%.
In 2011, China dominated global textile and apparel exports. China also dominated trade of intermediate textile goods
with a share of 8% in global fibre exports, 23% in yarn exports and 38% in fabric exports. The increasing consolidation of
textile manufacturing base in the vicinity of apparel manufacturing will become a retarding factor of textile trade.
Indian Scenario:
Segment-wise Split of Indian Apparel
Market
9%
10%
43%
Mens
Women
38%
Boys
Girls
Source: Thriving in the Era of Constant Change: Challenges in T&A Industry
At present, the Indian Apparel Industry is estimated to be around $ 50 billion (Rs 270,000 crore). Despite the
economic slowdown, the apparel industry in India is expected to grow at around 13-15% and cross $125 billion (Rs 675,000
crore) mark by 2020. Menswear accounts for the biggest share of the Indian apparel market followed by women’s wear.
Though menswear constitutes 43% of the total apparel market, kids wear has the highest growth rate. Acceptability of
readymade apparel in smaller town and rural India, which until recently relied on tailored garments is considered as an
emerging trend in the apparel market which promises a stability in the market share of menswear.
Women’s wear occupies 38% of the total apparel market in India. It is expected to grow at a CAGR of 9% in the
next 10 years. Many menswear brands have extended their presence to women’s wear as women’s wear segment is considered
more lucrative due to relatively low brand penetration compared to menswear and high growth potential.
The kids wear market consists of 19% of the total Indian apparel market. In 2011 it grew by 11% and since then is
observed to be fastest growing segment (girls wear growing faster than boys wear) in the Indian apparel market.
Some of the key drivers of growth in the kids wear market can be given as follows:





Increasing affluence of Indian parents hence increase in expenditure on children
Increasing awareness of parents regarding kid’s brands
Improved awareness amongst kids about which brand and what to wear
Increase in media exposure resulting in more fashion conscious parents and children
Rising eagerness for experimentation
95% of the total sales in apparel happen through departmental stores, and 70% in hypermarkets such as Big Bazaar or
Spencer’s Retail in India.
Current Players in the Apparel Industry
Top Global Players
Companies
Net
Gross
Revenue Profit
EBIDTA
Net
Profit
No. of Stores Average
EBIDTA
per store
Average Net
Profit
per
Store
Fast Retailing Co. Ltd.
11150
7129.13
1491
925
222
4.97
.67
Limited Brands Inc
10459
4429
1573
753
2875
.55
.26
Inditex SA
464
332
52
32
6009
.09
.05
Hannesbrands Inc.
4526
1420
440
232
201
2.19
1.15
The Gap Inc.
15561
1544
1942
1135
3400
.57
.34
TJX Corporation
6190
1756
732
453
3000
.24
.15
(Figures are in USD million and the data has been collected from the companies’ annual reports)
Top Indian Players
(The figures are in INR crs and the average gross profit and average EBIDTA are in INR lacs)
Indian Retailers Vs. Global Retailers
Logistics Cost as a % of
Price
Inventory Turns
Stock-out Percent
Shrinking Percent
Indian Retailers
Approximately 10%
3 to 14
5 to 15
3.1
Global Retailers
5%
Average 18
Below 5
Average 1
Net
Revenue
Gross
Profit
EBIDTA
30.12
4.14
0.8
55 828.00
1.45
315.16
85.83
83.21
252 160.67
33.02
110.71
67.13
-14.25
411 263.56
-3.47
17.92
15.07
-100.89
437 -11.25
-23.09
Provogue India
793.95
209.99
75.02
130 1,043.17
57.71
Brandhouse Retail
767.68
94.39
55.06
327 1,110.47
16.84
Zodiac Clothing
325.49
212.28
23.17
105 1,933.33
22.07
Indian Terrain
141.77
82.91
13.05
228 4,684.18
5.72
Companies
Total No.
of Stores
Average Gross Profit
per Store
Average EBIDTA
per store
Anshu's Clothing
Kewal Kiran
Clothing
Cantabil Retail India
-
Koutons Retail India
Market Size of the Indian Apparel Industry
The Indian apparel industry is made up of five segments- menswear, womenswear, kidswear, unisex and uniforms.
While menswear is the largest segment womenswear and kidswear has emerged as the fastest growing segments. Although
apparel manufacturing is the least capital intensive activity in the textile value chain but at the same time highly capital
intensive and requires skilled, semi-skilled and unskilled labourers. Due to low entry barriers, numerous players have entered
the market and the profitability of the players is highly influenced by raw materials and input prices.
The Indian apparel industry grew at a CAGR of 10% from Rs. 1260 billion in FY07 to Rs. 2026 billion in FY12.
According to a CARE Research report, the industry is estimated to grow at a slow rate of 4-5% in FY13 on account of the
overall slowdown of the economy. The industry is expected to grow at a CAGR of about 8% from Rs. 2026 billion in FY12
to Rs. 2726 in FY16. This growth has been attributed to factors like rising disposable income, increasing percentage of youth
population, rising retail penetration and urbanisation, increased use of plastic money leading to impulsive buying,
Projected Segment Wise Scenario in FY14
UNIFORMS
350
KIDS APPAREL
Segments
380
UNISEX APPAREL
160
WOMEN'S APPAREL
760
1
1
MEN'S APPAREL
790
0
100
200
300
400
500
600
700
800
900
Market Size (Rs. bn)
According to a report it has been predicted that the India and China would be the leading countries in terms of
apparel consumption by 2025 and the Indian and the Chinese markets would be bigger than those of US and EU. The
annualised growth of the Chinese markets was 15% while that of the Indian markets was 12% between 2007 and 2012.
According to a survey done by the Clothing Manufacturers Association of India (CMAI), the current market size of
the Indian apparel industry has been estimated to be around Rs. 270,000 crs and is expected to reach to Rs. 675,000 crs by
2020. The branded apparel segment contributes 25% to the overall apparel segment and it expected to reach to 40% by
2020. The apparel industry was worth Rs. 1876 billion in FY12
CARE has further estimated that the Indian apparel exports would grow at a CAGR of 9% to about Rs. 928 billion
in FY16, which would be attributed to the gradual shift of the apparel industry from the developed western nations to the
non-traditional developing nations. US and EU are the major markets where the Indian exports are directed and due to an
economic downturn in these markets is affecting the Indian exports. The apparel exports grew at a CAGR of 10.3% between
FY07 and FY12.
Projected Segment Wise Market Share
Market Size (Rs. bn)
950
700
930
650
380
100
MEN'S APPAREL
WOMEN'S APPAREL
Type of Apparel
FY16
340
220
160
UNISEX APPARELS
FY12
430
KIDS WEAR
UNIFORMS
Key Drivers and Challenges of the Apparel Industry
The global apparel industry is one of the most significant revenue generators for the Indian economy. It helps in
trade, job creation and more investment. Apparel industry has tremendous product variety, short product life cycles, unstable
demand and at times lengthy distribution cycle. India has been able to cater to its global as well as national consumers which
resulted in it being one of the prominent manufacturer and exporter of apparels.
Key Drivers of the Apparel Industry:
The growth in the apparel industry is due to some particular factors which affects both the global and Indian apparel
market. Some of the factors can be listed as follows differentiated depending on its appropriateness in the global or Indian
apparel market or both.
Global:





Government Support: Support from the government helps in a huge way to boost global apparel industry. If the
policies are designed such that import and export of goods and raw materials accompany less hassles, the apparel
trade automatically gets boosted. In countries like South Africa, Singapore, Brazil, etc, government helps in hosting
as well as funding fashion shows in order to boost economy.
Awareness of International Brands: Retailers are trying their best to differentiate their products and generated
brand awareness to maintain and strengthen their position in the global apparel market. This results in more
innovative and attractive products at a more competitive price which attracts more customers.
Recognition of Local Designers: Various designers from developing countries are gaining recognition in the
international apparel industry. This results in specific demands from the countries both for the designer products
as well as similarly designed cheaper versions.
Increasing Demand: With the empowerment of developing economies, the reduction in growth of the demand
for apparels in developed economies is getting partially compensated. Many manufacturing countries manufacture
their products to sell in their own country as the increase in per capita income along with awareness and preference
in the population has resulted in internal demand for apparels.
Changing Consumer Behaviour: Consumer spending on apparel has been decreasing. Power is shifting slowly
from manufacturers and retailers to the customers. The customers can dictate what they want and how much to
charge for it. Consumer expectations are going beyond just material purchase and to convenience, design, service,
shopping experience, etc provided. This is also accompanied by getting the value for the money they have paid. This
makes the retailers face a tough challenge to supply the products as per required and at an affordable price to the
consumers. This results in manufacturing of products such that consumers are interested to buy.
Indian Market:

Rise in Household Income: 21 million of 210 million households in India have already earned more than $4,000
a year, meeting the criteria for what is called “the consuming class.” Based on McKinsey report, by 2015 the number
of consuming class households will likely triple to 64 million.



Increasing Trends of Special Occasion: Menswear mainly has three categories, namely casual wear, formals and
special occasion wear. Indian men now prefer more western styled jackets, collared shirts, and other popular
fashions. According to a recent McKinsey study, 38% of Indian respondents admitted to be highly inclined to buy
apparels for specific occasions, like, gym wear, ethnic wear, party wear, sportswear, etc; which is higher in proportion
than in countries like Russia (3%), Brazil (5%) or China (6%).
Growth of Women Empowerment: With the rise in women empowerment and addition of women in the
workforce, women are not only able to buy what they choose but also can diversify into western wear if preferred.
Women are more conscious and have a wide range of products that they would like to buy, starting from sarees to
western wear.
Self-Expression: Television, advertisement an internet had helped Indian customers to come across innovative
styles along with easy availability through internet. A trend in abroad does not take much time to spread to India
now. Fashion abroad has been a way of self-expression and increasingly, Indian customers are choosing fashion as
a way of self-expression too. This gives rise to differently styled apparels as per consumer needs.

Rapid Urbanisation & Modernisation: Indian urban population is at around 30%, but research shows that there
will be a rise in the number of individuals shifting to urban locations due to migration from rural areas to urban
areas for a better lifestyle. This would automatically give rise to demand for apparel as a major percentage of the
new city residents will be gen-next consumers and would like to go for denims and other apparels in fashion.

Growth of Organised Retail: Organised retail in India is about 8% at present. But as estimated over the next 10
years due to the rapid establishment of hypermarkets and shopping malls across the country, Indian apparel market
may get a boost
Key Challenges of Apparel Industry:
Global:





Rising Costs: Rising costs of labour, raw materials, distribution, etc in a time when consumer demand has dampened
is one of the major challenges in this industry. Moreover the volatility of the foreign exchange market also adds to
the woe.
Labour Challenges: Low wage rates accompanied by long working hours, poor work environment and deployment
of child labour in the manufacturing countries results in the industry being constantly at the lime light or in low
production phase due to labour unrest. Manufacturers often lose customers due to ethical buying procedure.
Manufactures also face high labour costs as the wage rate of labours increase depending on the inflation rate.
Increasing Productivity: Increasing productivity of the apparel sector in major manufacturing countries is a challenge
due to the less efficient processes used that also require greater manual labour. Countries like China, sri Lanka, India
have succeeded in modernizing their production process.
Supply Chain Challenges: The separation of consumption and production hubs has also added pressure on the
supply chain. Shorter lead times, right replenishment strategy and quality sourcing at low cost are being viewed as
factors that can provide a competitive edge.
Compliances & Sustainability: Companies are adopting sustainability practices driven by consumer awareness,
environmental norms, etc. The demand to abide by environmental laws and healthy working conditions are
becoming more popular in manufacturing countries. Retailers and brands worldwide are publicising Corporate
Social Responsibility and related events in a bid to improve their perception among consumers.
Indian Market:

Competition from Lower Cost Producing Countries: The Indian apparel exporters have faced strong
competition from a number of low cost countries



Political Uncertainty: Political uncertainty in India has resulted in second thoughts for investment
Supply Chain Challenges: Apparel distribution faces challenge in India due to short product ife cycle but longer
lead time
Labour Challenges: India has been on focus due to child labour usage and long working hours.
Perception Mapping of Current Competitors
Segment of Apparel Industry Chosen: Lifestyle Apparel for Men and Women (Formal and Casual)
The global and Indian players are plotted in a graph with the vertical axis measuring the extent of high fashion merchandise
the horizontal axis measuring the amount of assortments of merchandise.
(i)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Global Players:
H&M
Jack & Jones
Lacoste
Ralph Lauren
Tommy Hilfiger
United Colours of Benetton
Vero Moda
Zara
High Fashion
Quaintness
(ii)
(a)
(b)
(c)
(d)
(e)
(f)
Indian Players:
Central
Kewal Kiran
Pantaloons
Provogue
Shoppers Stop
Wills Lifestyle
Perceptual Map of Premium Apparel Retailers (India)
High Fashion
Provogue
Shoppers
Pantaloons
Stop
Kewal Kiran
Central
Wide
Assortment
Limited
Assortment
Wills
Lifestyle
Quaintness
Chosen Positioning for our Retail Business
The mission of Monet is to offer quality, western wear in an assortment of sizes and styles to accommodate
all varying body styles and shapes. We position ourselves as one stop place for men & women to shop for high fashion &
trendy apparel, with its bright and colourful ambience we open up as an all season store with western wear having a trendy
clothesline.
As we are situated in the epicentre of residential community and posh locality we believe they will make up the
largest percentage of our customer base. As popularity about the store increases we expect to see an assortment of curiosity
seekers, and local residents from the community as well as seasonal purchasers during festival season. . We feel it is essential
to our initial and on-going success that we locate ourselves in the heartbeat of the community. We also strive to create an
atmosphere of acceptance and community, as well as a retail environment where individuals can identify and bond with their
culture.
Since we are in the value segment, we would differentiate on the basis of our service and product portfolio. For e.g.
we would be hiring a professional fashion designer whom the clients could consult for their needs. Based on the designs,
orders would be given to the suppliers and individual craftsmen. This would attract customers who would want to go to a
designer but is not able to do so as it proves to be expensive. Thus we would position ourselves as retailers who are providing
customised services at a reasonable price.
Positioning Statement
For the more full-bodied individual seeking western apparel, Monet Western Wear will offer name brand western wear in a
larger assortment of styles and sizes that aren't always readily available in the mass western apparel retailers.
Keys to Success
In order to succeed in the western wear apparel industry Monet Western Wear must:

Carry an assortment of sizes to fit the more ample frames of their target customer base.

Provide customers with top notch personalized customer service in an atmosphere of eastern hospitality.

Advertise and promote in areas that our target customer base will learn about our store.

Continuously review our inventory and sales and adjust our inventory levels accordingly.
Key Aspects that were derived from Positioning
Introduction:
Our aim is to establish a high fashion lifestyle apparel store that caters to men and women in Kolkata, India. Our focus is to
provide our customers with a varied range of western casual and formal wears and also various accessories like bags, belts,
shoes, etc and position ourselves as one of the top retail stores servicing this segment. Our brand is aimed to encourage
customers to be experimental with new clothing styles and accessories. Our mission is to understand our customers’ needs
and hopes and cater to them.
Key Objectives:






To provide a shopping environment that caters to the needs of the young professionals in Kolkata- vibrant, yet
elegant and sophisticated
To provide quality and style, and warm customer service to the customers and maintain good relationship with
suppliers
To retain our customers
To gain a position among the key players in this segment within a short period of time (say 1 or 2 years)
To set up branches in other cities if our brand is successful in Kolkata as well as expansion of retail space in Kolkata
To provide healthy work environment for our employees
Product: Merchandise Strategy
Stages Merchandising:
1. Planning retail ranges involves careful consideration of the customer, competitors and the type of business
2. Sourcing is locating and purchasing merchandise to sell in the store. An apparel retailer will try to source fashionable
clothing from low cost sources and sell them at high street prices
3. Arranging and displays can have major effects on sales, especially in apparel retailing. At certain time of the years,
display is even more critical (festive seasons, fresh new collection, etc), also placing of accessories (female accessories
will be placed next to women wear and male accessories will be placed next to menswear)
4. Space management is the planning of space allocation and designing of the store and this may require a computer based
planned model
Planning:
The type of goods sold to the customers helps in creating an image of the business. Hence the mix of the right
merchandise is very important, but as a start-up, it is more important to display that kind of retailer image to attract customers
to the store in the first place.
The type of good to be sold in Monet is mainly speciality goods, where the customers take a great deal of time and
effort in locating and researching about these kinds of goods. They are high involvement product and form an important
part of the customers’ lifestyle and self-image.
Assortments and Mix in Monet:
Monet will only house its own brand in its 1, 200 sq feet store. The products that customers can expect in Monet are as
follows:
Apparel
Classics (Formals)
Men
Women
Shirts
Shirts
Trousers
Trousers/Skirts
Suiting
Suiting
Fever (Evening and Party Wears)
Men
Women
Party Shirts
Cocktail Dresses
Party Trousers
Party Dresses
Evening Wears
Frolic (Casual Wears)
Men
Women
Shirts
Tops
Trousers/Shorts/Jeans
Skirts/Trousers/Jeans
Signature * (to be discussed later)
Accessories
Men
Women
Shoes
Shoes
Belts
Belts
Bags/Wallets
Bags
Specialities
Specialities
The lines of apparels will be available for a wide range of sizes (XS, S, M, L, XL, and XXL)
The first year will be a bit tough as there will be high chances of faulty estimation of sales and excess stock bulking
up for a particular size. Excess stocks will have to be sold off at mark downs. It is important to identify the stock outs and
the less selling ranges and work on them accordingly. Merchandise will be constantly monitored on their performance and
the less profitable ones will need replacement as soon as possible. Extensive research on the global and Indian fashion trend
will help Monet to prepare for understanding customer expectations and also attain the business’s financial objectives.
Managing its merchandise is an important look out for Monet as:



Responding to the merchandise life cycle and sales variability is important for Monet’s existence
Managing the assortments of the products will help in the profitability
Accounting the tastes and preferences of the customers will help Monet in future
To manage merchandise well, Monet needs to understand the buying cycle that consists of:




Start of the selling period- when we choose to start selling in Monet and which season we start our operation
End of the selling period- when the season ends signifies the time for replenishing the stocks with the new flavour
of the season
Identify high sales point- sales will be at its peak during festivals
Day of the week contributing to more sales- observation shows weekends are more preferred for shopping, so this
needs to be considered while managing merchandise
Sourcing:
Monet will have:
1.
2.
3.
4.
Classics- The collection of formal wears by Monet will be known as ‘Classics’.
Fever- The collection of evening and party wears by Monet will be known as ‘Fever’.
Frolic- All the casual wears will be under the name ‘Frolic’.
Signature- ‘Signature’ will be a separate line and will not be available before Monet turns a year old. After a year,
Monet will host a fashion show to display its collection. This collection will have the apparels and accessories from
all the apparel assortments under Monet and will also have the new assortment called ‘Signature’, which will be
different from the collection available in the store and will be available to customers on request. The fashion show
will also display various accessories and these products will be priced at a much higher price range.
Monet will not manufacture its own product but have designers to design the products based on popular fashion
trends. Monet will place orders and acquire the products from the suppliers comprising of wholesalers, individual craftsman,
etc.
Arranging and Display:
A few things that will need care as we set up the first store are how we display and arrange inside and outside of
Monet. The entrance of the store will have a glass door so that individuals while walking may glance into the shop. There
will be a board bearing Monet’s logo and name above the glass door.
Inside the store, merchandise will be arranged with the smaller ones displayed before the larger ones. The
mannequins will be placed at eye level. The merchandise will be grouped together according to their line of assortment and
placed at different parts of the store. The displays and mannequins will be simple and there will be no clutter that may
confuse the customers. There will be a two pairs of trial rooms at the back of the store (two for men and two for women).
Some of the fixtures that we will require for the store are as follows:
Fixture
Location in-store
Gondolas
Commonly in the centre of aisles and
walkways
Racks
Generally on back walls and divisions
between themes or product areas
Hangers
Used in on floor and wall mounted displays
Glass
Used as shelf in showcase or wall mounted
shelves
Counters
Check out and customer service counters
Mannequins
Used to show window displays, lifestyle
themes
Mirrors
Against walls and dividers, trial rooms
Custom Fixtures
Anywhere in the store, it is made to fit
Place: Location Strategy:
Monet is situated in Elgin Road. We had lease a retail space of 1, 200sq feet to set up Monet. This location is chosen
depending on the following factors:
Accessibility: Elgin Road is situated at the heart of the city and can be accessed easily through both public and private
transport. It also has workplaces around and in adjoining areas where young professionals are employed.
Demand, Population and Buying Power: the residents around this area are from high income group family and are known
to spend if offered quality products. The area has a healthy mix of individuals from varied ethnicities with enough buying
capacity to indulge in luxury items.
Promotion: Marketing & Promotion Strategy:
Brand ‘Monet’: The name of the brand was chosen such that it is easy for the customer to remember and hence recall.
The Logo:
M
A good brand adds value to the business. Consumers are prepared to pay significantly more for these brands relative
to cost. This is possible through differentiation of the product from the competitors in such a way that it creates value for
the consumer.
The experience of shopping in Monet will be our differentiator. A few points that need to be looked after with care
in order to make the shopping experience memorable are:

Quality: If the quality of merchandise available in Monet is good, fashionable and at par with the customer’s
expectation then it will be able to carve its place in the customer’s mind; if Monet can provide quality and reliability,
the customers will return satisfied and will spread the word about Monet to their peer.

Style and Cut: The styles available in Monet will be fashionable and the apparels will have designers’ notes attached
along with the price tag that gives a brief description about the uniqueness of the product and when and how it
should be worn.

Availability: Good relationship with the suppliers need to be made so that the store never runs out of any collection
before the new one comes, a good supply chain management model will be implemented to make sure of the
availability of the required line of apparel.

Customer Interaction: Young professionals who are the main target group of Monet will be assisted by trained
individuals, having knowledge about the trend of the season. Monet will train these individuals so that their
assistance gives the customers a feel of having a personal shopping assistant whenever they require any help. Monet
will also invite its in-house designer sometimes to meet the visiting customers or when the customer would like to
meet the designer. The designer will inform the customer about the merchandise that suits his/her personality. The
customers will also be welcomed with refreshment in between their shopping process. Customers will also be
regularly updated on the new fashion of the season or any ongoing offers on the store.

Packaging: Monet’s merchandise will be packed in a brown/white paper bag to carry with its logo in black on it.

A well invested brand: The layout of the store, the merchandise available, the way employees will interact with
customers will portray that Monet is a brand that is well invested into and will provide consistent service.
Our main focus will be satisfying customers followed by building a strong brand.
Promotions:

Advertising: Monet will be advertised through billboards across the city, popular English dailies and radio. While
the former two can attract customer through visual display, the last one needs to convey the message of availability
of high fashion garments and its location.

Sales Promotion: The store will offer a free accessory from Monet if purchase amount is over Rs 8, 000 initially.
This is mainly aimed to induce trials among the customers.

Loyalty Card Program: This promotional activity will be done once the store is opened. In this program, we would
offer customers a membership card when they purchase above a certain limit. Once these customers become
members of the loyalty program, special discounts and offers would be given. These customers would not only be
informed about the latest merchandise on offer, but they would also be given promotional offers on national
holidays and special occasions for e.g. birthdays and anniversaries. By doing this, we would not only be able have a
loyal base of customers, but we would also be able to understand their buying behaviour.

Social Media: Monet will have pages in popular social media sites like Facebook and Twitter where regular
discussions about the latest fashion trends, new apparels, accessories, hairstyles etc will be discussed. A particular
“look” of the season will be uploaded and how to attain it will be described below. Lots of tricks to look smart and
beautiful in a short time will be uploaded.
Price: Pricing Strategy
Since we are a new store, we would follow a dual pricing strategy whereby we would have a short term pricing and
a long term pricing strategy. In short term pricing strategy we would sell our range of merchandise at a lower price as
compared to our competitors in Elgin Road and neighbourhood areas. The prices would be lowered without compromising
on the quality of the merchandise. Though we would get lower margins but we would be able to attract a higher footfall. We
would enjoy higher margins once the brand takes off.
Many retailers offer high quality merchandise without attempting to lower the prices. As new entrant, we would not
be able to do this, atleast in the near future. The prices would be adjusted to meet the prevailing market conditions.
CSR: Monet will also be associated with a cause, every month, a certain percentage of the profit will go to the welfare of
children in an orphanage located in the city and customers or individuals donating through Monet will also receive special
discount on their next purchase from the store. A certificate from the organisation will be obtained and be laminated to
display in the shop, which certifies the claims of profit sharing and donation from the customers/potential customers are
honestly handed over to the organisation and is rightfully used for the welfare of the children.
Pentagonal and Triangular Elements
Pentagon elements
This is a part of differentiation elements and this is what the customer interacts with.
PLACE:
We will place our store in Elgin road as it is a well-known and posh area and also has some already established
competitors. The reason for choosing a high street location is that it gives location and catchment advantages and a place
like Elgin road will pull a good crowd.
The super-built up area of the apparel store would be would be of approximately 1600 square-feet and the carpet
area would be around 1200 square feet.
The layout will be done in a way to make the visibility of designs very easy for customers as well as make a
“customer-pull” environment. There will be a runway coming out of the dressing room space and extending 6-7 feet into
the sales floor. The runway will be rimmed with chairs, this would allow friends who have come to shop with the customer
to take a seat and help the customer choose the clothing she's considering buying. The runaway area would also give a feel
of fashion model to our customers.
PRODUCT:
Our products will be high fashioned and available in all sizes. We will have apparels and accessories. For apparels
we will have formals, party wear and also casuals. And for accessories we will have shoes, belts, wallets and specialties.
The store will have the latest arrivals and party wear in hangers on the left side as it catches maximum attention and
casuals can be kept in piles at the centre where the customer will wander about.
PEOPLE:
Since our target customers are young professionals we will have trained individuals, having adequate knowledge
about fabrics and designs. These individuals will be trained in a way so that their assistance gives the customers a feel of
having a personal shopping assistant whenever they require any help. The customers will also be welcomed with
refreshment in between their shopping process. Customers will also be regularly updated on the new fashion of the
season or any ongoing offers on the store.
VALUE – price and quality
As a new entrant we will initially keep the pricing suitable enough to meet the prevailing market conditions. Our
prices will be slightly lower than that of the competitors around the store. This will increase the footfall and also better the
shopping experiences of our customers as their expectations will be met as far as the prices are concerned. We will also
give the best possible quality in the given price.
COMMUNICATION:
Our advertisements will be done through billboards across the city, popular English dailies and radio in order to
attract customers through visual display as well as convey the message of availability of high fashion garments and its
location. We will also have some sales promotion to induce trials among the customers.
We will also have a loyalty card program which will be offered to customers on a purchase above a certain
amount. Through this program we will not only inform the customers about the latest merchandise on offer, but they
would also be given promotional offers on national holidays and special occasions for e.g. birthdays and anniversaries. By
doing this, we would not only be able have a loyal base of customers, but we would also be able to understand their buying
behaviour.
We will have pages in popular social media sites like Facebook and Twitter where regular discussions about the
latest fashion trends, new apparels, accessories, hairstyles etc will be discussed. A particular “look” of the season will be
uploaded and how to attain it will be described below. Lots of tricks to look smart and beautiful in a short time will be
uploaded.
Triangle elements
This is a part of the cost elements and the customer does not interact with it directly
SUPPLIERS:
Our suppliers will be mainly young designers who design clothes that are even exported outside the country. For
example we have a factory near Bakrahat where clothes are made in batches and designed by some designers who have a
rich experience in the industry.
SYSTEMS:
Customer Acquisition Process: This is a process through which we will describe the system of managing our
customer prospects and their inquiries. Initially, the customers would be acquired with the help of club, cafeteria tie -ups.
Special offers would be provided for cluster buying.
Customer Buying Process: All the customers would be provided an assisted shopping experience. A customer
would be required to come to the store and choose from the wide variety of products. There will be a professional
designer in the store who will design according to the needs of the customer and the design will be implemented. Not only
that, there will be a sample of the same design on display and in case it is a success it will be manufactured in bulk.
LOGISTICS:
Logistics services that would be required to procure the material will be provided by the supplier. The only
logistics service that would be required would be from the tailoring division/warehouse to the store.
Model Store EBITDA
While operating an apparel store some of the expenses that could be incurred are as follows:















Purchase of Inventory
Rent
Salary
Phone
Advertising
Insurance Premium
Legal and Professional Fees
Electricity Expenses
Printing and Stationary
Vehicle Expenses
Conveyance and Daily Travelling Expenses
Repairs and maintainence
Tour and Travelling Expenses
Advertising and Publicity Expenses
Sales Promotion Expenses
Out of these expenses, rent, power and salary would be the largest components. For major apparel players in India,
employee cost as a percentage of sales have crept up and are at a three year high. Lease rentals have marginally increased but
they have been lower than that observed in 2009 and 2010. Retailers are adopting cost control strategies to deal with
EBITDA margin pressures like boosting labour productivity, better inventory management, increasing supply chain
efficiencies and throughput from the new stores. Some of the expenses of the competitors as a percentage of total revenue
are shown below
Lease Rental as a % of Sales
12%
10.50%
9.50%
10%
8.50%
8.20%
8%
7%
7.50%
7.50%
7%
6.50%
6%
6%
4.30%
4.30%
3.80%
4%
4%
3%
2.50%
2%
0%
Pantaloons Retail
Shoppers Stop
FY09
Provogue
FY10
FY11
FY12
Brandhouse Retail
Employee Cost as a % of Sales
8.00%
7.50%
7%
7.00%
6.00%
5.80%
5.50%
5.00%
6% 6.20%
6.10%
5.50%
4.50%
4.30%
3.80%
4.00%
3.00%
3.50%
2.50%
2.80%
2.10%2.00%
2.00%
1.00%
0.00%
Pantaloons Retail
Shoppers Stop
FY09
Provogue
FY10
FY11
Brandhouse Retail
FY12
EBITDA Margins as a % of Sales
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
Sep-11
Oct-11
Nov-11
Dec-11
Pantaloons Retail
Jan-12
Feb-12
Shoppers Stop
Mar-12
Apr-12
Provogue
May-12
Jun-12
Jul-12
Brandhouse Retail
Aug-12
Sep-12
EBITDA Model
Shoppers Stop
Kewal Kiran Clothing
Model Store
Store Size
4920 sq feet
1800 sq. feet
1500 sq. feet
Revenue
Rs. 44,060
Rs. 7,600
Rs. 14,000
Purchases
28,113
3,162
6,300
Changes in Inventories
-620.7
15
140
Lease Rent
4,227
73
840
Employee Cost
3,146
857
560
Electricity Charges
1,249
26
420
Repairs and Maintainence
1,138
83
420
Other Expenses
4338
1,530
1,400
Total Expenses
41,591
5,769
10,080
EBITDA
2,469
1,853
3,920
EBITDA Margin
6%
24%
28%
(The figures are in INR per square feet)
The EBITDA Model for a model store has been prepared after analysing various costs of different apparel
companies in the value segment. The aim would be to achieve sales of more than Rs. 14,000 per square feet and having an
EBITDA Margin of more than 25%. Finance cost and taxes would further dent into the operating profits. With an EBITDA
margin of more than 28%, net profit margin of more than 13% could be aimed for. This is after assuming that a working
capital loan as well as a term loan would be required.
Capital Expenditure Assumptions
The super-built up area of the apparel store would be would be of approximately 1600 square-feet and the carpet area
would be around 1200 square feet. Based on a research report by CBRE Research, the rental cost would be Rs. 240 per
square feet in an area like Elgin Road in Kolkata. Rental Movements in high streets and shopping centres have been
shown in the following few graphs.
High Street Rental Movement
400
350
INR/sq. ft./month
300
250
200
150
100
50
0
H2 2010
H1 2011
Park Street
H2 2011
Elgin Road
H1 2012
H2 2012
Camac Street/ Shakespeare Sarani
Shopping Center Rental Movement
350
INR/sq. ft. /month
300
250
200
150
100
50
0
H2 2010
H1 2011
H2 2011
H1 2012
Axis Title
EM Bypass
Salt Lake
Jadavpur
ESTIMATED COST OF SETTING UP THE STORE
Building/Store
Rent @ Rs. 2,80,000 p.m.
Vehicle
Rs. 4,50,000
6 months’ Rent Deposit
Rs. 16,80,000
Location Improvement Costs
Rs. 8,48,000
H2 2012
Marketing Expenses
Rs. 66,500
IT Expenses
Rs. 4,75,000
Public Relations Expenses
Rs. 55,000
Miscellaneous Operating Expenses
Rs. 88,000
Contingencies at 5%
Rs. 1,83,000
Margin Money for Working Capital
Rs. 3,71,750
Total Cost of Setting Up the Store
Rs. 43,54,250
LOCATION IMPROVEMENT COSTS
Cost of Fittings and Interior Decoration
Rs. 7,20,000
3 Air Conditioners at Rs. 38,000 , Electrification and Auxillary
Equipment
Rs. 1,18,000
Supplies
Rs. 10,000
Total Location Improvement Costs
Rs. 8,48,000
MISCELLANEOUS OPERATING EXPENSES
Hangers for Clothing
Rs. 10,000
Insurance
Rs. 40,000
Accounting Set-Up
Rs. 5,000
Association fees and directories
Rs. 3,000
Office and Cleaning Supplies
Rs. 30,000
Total Miscellaneous Operating Expenses
Rs. 88,000
+
MARKETING EXPENSES
An Exterior Sign and 2 Center Pylon Signs
Rs. 30,000
Interior Signage and Décor
Rs. 10,000
Trademark Registration and Legal Expenses
Rs. 8,000
Logo Design
Rs. 3,000
Business Card Design and Printing
Rs. 3,500
Flyer Design and Printing
Rs. 4,000
Coupon Design, Printing and Redemption Costs
Rs. 8,000
Advertising Expenses
Rs. 1,50,000
Total Marketing Expenses
Rs. 2,16,500
IT EXPENSES
Laptop and related Software
Rs. 40,000
Laser Printer
Rs. 5,000
2 Cordless Phones
Rs. 6,000
IT Consultant and Technical Support Fees
Rs. 2,000
Telecom Services: high speed Internet via cable modem and digital
phone
Rs. 3,000
Domain Registration
Rs. 1,000
Website Hosting, Design and Development
Rs 7,000
POS Software
Rs. 5,000
POS Touch System
Rs. 58,000
POS Cash Drawer
Rs. 5,000
Burglar Alarm
Rs. 3,50,000
Total IT Expenses
Rs. 4,75,000
PUBLIC RELATIONS EXPENSES
Grand Opening Event including Food, Beverages, Entertainment and
Signage
Rs. 30,000
Advertising around the Grand Opening
Rs, 10,000
Media Relations around the Grand Opening
Rs. 15,000
Total Public Relations Expenses
Rs. 55,000
The cost of fittings and interior decoration has been estimated to be around Rs. 600 per square feet which amounts to
Rs. 7, 20,000. The store fixtures include poles, racks, shelves, gondolas, mannequins, sizers and bookcases
Inventory Policy
In our apparel store we will use an inventory tracking system that will tell us what merchandise is in stock, what is
in order, when it will arrive and what was sold. By using such a system we would be able to identify fast moving items which
we need to reorder and the slow moving items which we should markdown or which we need to specially promote. Inventory
will be controlled at the cash register with the point of sale (POS) software and equipment. The POS software would record
transactions as and when they happen. This would also ensure that the inventory records are also up-to date. The POS
equipment would include credit card readers, electronic cash drawers, receipt printers and bar code readers. The POS
software package would help in keeping track of the business cash flow through an integrated accounting module.
We would count our inventory once every fortnight (count cycle). Processing paperwork and placing orders with
our vendors would take us fifteen days (order cycle) and the order may take another fortnight (delivery cycle). Thus we
would need around 50 days of inventory in hand from the first day of the count cycle to stay in operation until the
merchandise arrives. With 50 days of inventory in hand, we would be able to turn around inventory, 7 times in an entire
year.
Since we are aiming for revenue of Rs. 10,000 per square feet or total revenue of Rs. 1,20,00,000 and inventory of
50 days, we would need a stock in hand of Rs. 16,50,000. Since the sales would be in cash, we are assuming 10% of the sales
would be credit sales with a holding period of 10 days. This would require a working capital tie up of Rs. 33,000 in debtors.
Working Expenses would be related the general selling and administrative expenses and would amount to approximately Rs.
16,80,000. We can assume a holding period of 15 days resulting in a working capital tie-up of Rs. 70,000. The total working
capital requirement would be around Rs. 17,53,000. Since we would have a strategic tie-up with our suppliers which would
enable us a credit period of 30 days which would result in Rs. 2,66,000 as creditors. Thus the net working capital requirement
will be of Rs. 14,87,000. Assuming that we would require margin money of 25% of the net working capital, the remaining
working capital could be financed through a working capital loan. The margin money that would be required is Rs. 3,71,750.
Thus the permissible bank finance would amount to Rs. 11,50,000.
Holding Period in Days
Working
(Rs.)
Stock in Hand
50
16,50,000
Debtors
10
33,000
Working Expenses
15
70,000
Total Working Capital Requirement
Less: Trade Creditors
Capital
Requirement
17,53,000
30
2,66,000
Net Working Capital
14,87,000
Less: Promoters Margin Money (25%)
3,71,750
Permissible Bank Finance for Working Capital
Rs. 11,15,250
Our suppliers for the merchandise would be individual craftsmen, importers, distributors and wholesalers. Before
the start of the business, we would establish a list of suppliers, with their quotes, prices, delivery and credit terms and discount
options.
For calculating the cost of goods sold, we would use the Last-In-First-Out (LIFO) Method where we are assuming
that the first units bought would be the first units sold. This method would be beneficial in case of increasing inventory
costs. This method would be more realistic as the inventory value would be closer to the current costs. It would also help
us report lower net profit, leading to lower income tax expense and more cash availability for investment purposes. Every
year the inventory will be valued at lower of cost or the net realisable value.
Inventory Cycle Across Apparel Retailers
300
250
250
215
200
160
150
100
185
170
185
139
120
98
80
75
65
60
130
100
63
50
0
Pantaloons Retail
Shoppers Stop
FY09
Provogue
FY10
FY11
FY12
Roll Out Strategy for Monet:
Brandhouse Retail
Monet is a new store in a posh locality on the heart of Kolkata. Therefore, Monet requires a lot of work before it
can actually set its foot into high fashion apparel business. The most important part in making Monet a big name is generating
awareness among its potential customers. For generating awareness, popular English/Vernacular newspaper (like TOI, The
Telegraph, ABP, etc) and magazines (like Sananda) for print media will be chosen. Popular radio channels like 107.8 Power
FM and RadioMirchi will be chosen to generate awareness about Monet. Moreover there will be billboards across the city in
specific areas like Camac Street, near Exide Crossing, etc.
Social media will play a very important part in generating awareness about Monet. Sites like Facebook and Twitter
can be used to communicate the starting of Monet and the merchandise it deals in. Here makeover tips, style tips, etc will
be posted. Various designer look will also be posted along with the details about the products used, where to get them and
what is their price.
The store will start with the latest high fashion trends that are popular for the season. Apparels starting from Rs 600
to Rs 20, 000 will be available in the store. Accessories will start from Rs 20 and will go up to Rs 10, 000. The store will start
off with a sales promotion to attract customers to come. The store will offer a starting promotion where there will be 3
different ways to attract customers:
(i)
(ii)
(iii)
If a customer shops for more than Rs 8000 in one day, he/she will be given an accessory worth Rs 1000
If a customer goes ahead and recommends the shop to another individual, who comes and visits Monet and
purchases merchandise, then, the customer who recommended gets a discount voucher of about 20% from
Monet issued, all he/she needs to do is mention a code that he will be sent through an e mail or text (if e mail
is unavailable)(the purchaser will be asked to fill a small survey while checking out of the shop. One of the
questions will ask him/her to mention the source from where he learnt about Monet.)
The first customer of the day in Monett will receive a discount of 10%
Since Monet is a new store, it would follow a dual pricing strategy whereby it would have a short term pricing and
a long term pricing strategy. In short term pricing strategy Monet would sell the range of merchandise at a lower price as
compared to our competitors in Elgin Road and neighbourhood areas. The prices would be lowered without compromising
on the quality of the merchandise. Though this would generate lower margins but it would be able to attract a higher footfall.
Monet would enjoy higher margins once the brand takes off.
Many retailers offer high quality merchandise without attempting to lower the prices. As new entrant, Monet will
not be able to do this, at least in the near future. The prices would be adjusted to meet the prevailing market conditions.
CSR: Monet will also be associated with a cause, every month, a certain percentage of the profit will go to the welfare
of children in an orphanage located in the city and customers or individuals donating through Monet will also receive special
discount on their next purchase from the store. A certificate from the organisation will be obtained and be laminated to
display in the shop, which certifies the claims of profit sharing and donation from the customers/potential customers are
honestly handed over to the organisation and is rightfully used for the welfare of the children.
Merchandising Mix Strategy for Monet:
Monet will only house its own brand in its 1, 200 sq feet store. The products that customers can expect in Monet are as
follows:
Apparel
Classics (Formals)
Men
Women
Shirts
Shirts
Trousers
Trousers/Skirts
Suiting
Suiting
Fever (Evening and Party Wears)
Men
Women
Party Shirts
Cocktail Dresses
Party Trousers
Party Dresses
Evening Wears
Frolic (Casual Wears)
Men
Women
Shirts
Tops
Trousers/Shorts/Jeans Skirts/Trousers/Jeans
Signature * (to be discussed later)
Accessories
Men
Women
Shoes
Shoes
Belts
Belts
Bags/Wallets
Bags
Specialities
Specialities
The lines of apparels will be available for a wide range of sizes (XS, S, M, L, XL, and XXL)
Store Layout:
The assumption is that a rectangular store space of 40ft by 30ft is obtained for the store. The left side of the store is for male
apparels and accessories, while the right side is for females. This order may change depending on the consumer behaviour
observed post the inauguration of the store and so this sectional division is not plotted on the store layout. The window
display will show the latest fashion trends, on the left side there will be make mannequins and on the right side there will be
females. The circles are circular rings of apparels hanging on a circular rod with the help of hangers. Circle 1, 2 and 3 are for
latest male apparels and circle 4, 5 and 6 are for latest women wears. The mannequin (M1) is placed such to attract attention
when people walk past the store and glance inside it through the glass entrance/exit doors. The M1 will be a bunch of 3-4
mannequins wearing the best sellers (initially the new trends). M2 will be a male mannequin dressed in formal wear. The
table below will discuss the location of the different apparels and accessories, which will be placed in the shop. The layout
and the placements may change as per required.
Apparel
Location in the Shop
Classics (Formals)
Men
Women
Men
Women
Shirts
Shirts
G1 (up)
C4(up)
Trousers
Trousers/Skirts
C3(down)
C4 (down)
Suiting
Suiting
C3(up)
C4 (up)
Fever (Evening and Party Wears)
Men
Women
Men
Women
Party Shirts
Cocktail Dresses
C 1 (up)
C2
Party Trousers
Party Dresses
C 1 (down)
C2
Evening Wears
C2
Frolic (Casual Wears)
Men
Women
Men
Women
Shirts
Tops/Tops
G1 (down)
G2
Trousers/Shorts/Jeans
Skirts/Trousers/Jeans
T3
C5
On Order
On Order
Signature * (to be discussed later)
Accessories
Men
Women
Men
Women
Shoes
Shoes
T2
T4
Belts
Belts
Accessories
Accessories
Bags/Wallets
Bags
Accessories
Accessories, Table 1
Specialities
Specialities
Accessories
Accessories, Table 1
C 1, 2, 3, 4 and 5 are clothes line fixed to the wall, each clothes line has an upper line and a bottom line. Clothes are hung
on these clothes lines with the help of hangers. G1 and G2 are glass racks, each having one upper and one lower rack. T2,
3 are tables where merchandises are arranged.
People Strategy and Own vs. Franchise Store Strategy:
People Strategy is about how the employees and people associated with a business institution are taken care of so
that the business is benefitted. Since the differentiator of Monet from its competitors is mainly the service rendered by its
employees, it is very important that the culture of Monet is unique and appreciated by the customers, so that they like to
come back again and again to the store. For achieving a warm and welcoming environment with an admirable culture Monet
needs to ensure that its employees find it to be a wonderful place to work in and therefore be loyal to it. To ensure this,
Monet needs to follow few basic steps in its initial years. Some of the basic steps are as follows:
Proper Recruitment: Recruitment for Monet is very important. It needs to choose the current set of employees to
compete with competitors like Wills Lifestyle, Shoppers Stop, etc who are experienced players and already have a set of loyal
customers who trust in them. There should be a good mix of experienced as well as novice employees both for customer
interaction and other works. The experienced ones along with the training provided by Monet can help in nurturing the
novice employees to do their work as per required. There should be trainings on how to present oneself to the customer,
how to suggest them on the various products in the store without appearing to be pushy and able to comment/suggest on
the latest trend or fashion. The store manager should be able to manage the employees under him/her and able to lead them
wherever required.
Retaining Employees: Retaining employees is harder than recruiting them. Monet should be a place where every
employee should feel that his/her presence in the shop makes a difference. This feeling of importance will assure
commitment in retaining the employees which Monet will train. The employees will be treated with respect and rewarded
for their good work. Each month there may be “Employee of the Month” contest for them which will assure small gift
hampers along with a badge stating that the particular person is employee of the month. Monet will need to ensure that it
is a safe and fair workplace where every employee has equal rights.
Monet and its Employees: If the employees are happy, they make effort to make the customer happy. The employees will
work together to make Monet a destination for every shopper.
To explain the strategy of Monet, the following diagram may be considered. It explains how the people strategy can help
Monet to make a unique place for itself and differentiate it from its competitor.
There will be one store manager who will be given a salary of Rs 16, 000 initially and this will be incremented as
soon as sales increases. There will be four sales person (2 male and 2 females, one of each will be experienced), the
experienced ones earning a salary of Rs 9, 000 each and the inexperienced ones Rs 7, 000 each. They will be allotted 4
holidays each month, but, two sales persons of the same gender cannot be absent on the same day. The shop will remain
open on all of the days initially, but later after the shop gains popularity, it might be kept closed on one of the weekdays that
will be observed to generate the least sales compared to other days of the week.
There will be “Employee of the Month” contest where the employee who generates the most sales (in case of the
experienced sales person) or the employee who had improved the most (in case of the novice sales person) will be awarded
with a badge that states “Employee of the Month” and a small gift hamper. The employees will be provided with hot
beverages in the afternoon from the store.
Now, Monet has its own in house designer who is well qualified and talented. Monet pays a monthly salary of Rs 70,000 to
him for enabling him to showcase his designs in the store of Monet.
Space Allocation between different Product Lines
Out of 1200 sq. feet of carpet area, 700 sq. feet will be allocated to the products while the remaining space will be occupied
by cash counter and moving space
Classics
150 sq. feet
Fever
300 sq. feet
Frolic
170 sq. feet
Accessories 80 sq. feet
Project P&L Statement
INCOME STATEMENTNCOME STATEMENT
(in INR)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Store Size (sq. feet)
1,200
1,200
1,200
1,200
1,200
1,200
Revenue Per Square Feet
8,300
9,130
10,043
11,047
13,257
15,908
Gross Sales
99,60,000
1,09,56,000
1,20,51,600
1,32,56,760
1,59,08,112
1,90,89,734
VAT@5%
4,98,000.00
5,47,800.00
6,02,580.00
6,62,838.00
7,95,405.60
9,54,486.72
Net Sales
94,62,000
1,04,08,200
1,14,49,020
1,25,93,922
1,51,12,706
1,81,35,248
54,00,000
56,70,000
59,53,500
62,51,175
68,76,293
75,63,922
Changes in Inventory Level
1,68,000
1,72,200
1,76,505
1,80,918
1,89,964
1,99,462
Lease Rent
2,80,000
2,80,000
3,08,000
3,08,000
3,69,600
3,69,600
14,40,000
15,84,000
17,42,400
19,16,640
22,99,968
27,59,962
Electricity Charges
6,00,000
6,30,000
6,61,500
6,94,575
7,64,033
8,40,436
Repairs and Maintainence
2,40,000
2,52,000
2,64,600
2,77,830
2,91,722
3,06,308
Other Expenses
14,40,000
14,76,000
15,12,900
15,50,723
15,89,491
16,29,228
Total Expenses
95,68,000
1,00,64,200
1,06,19,405
1,11,79,860
1,23,81,069
1,36,68,916
EBITDA
-1,06,000
3,44,000
8,29,615
14,14,062
27,31,638
44,66,331
Depreciation Expense
4,97,388
3,57,932
2,61,488
1,92,959
1,43,392
1,07,116
Preliminary Expense Write Off
3,29,500
Expenses
Cost of Goods Sold
Employee Cost
-
-
-
-
-
Interest Expense
Interest on Term Loan
1,74,417
1,44,083
1,13,750
83,417
53,083
22,750
Year 0
Equity and Liabilities
Promoters' Funds
Reserves and Surplus
Total Equity Funds
Year 1
9,05,975
9,05,975
-12,00,012
9,05,975 -2,94,037
Year 2
BALANCE SHEET
Year 3
Year 4
Year 5
Year 6
9,05,975
-1,72,799
7,33,176
9,05,975
2,28,180
11,34,155
9,05,975
6,75,728
15,81,703
9,05,975
15,90,031
24,96,006
9,05,975
27,69,875
36,75,850
Term Loan
Working Capital Loan
Creditors
14,00,000
-
11,66,667
7,89,000
4,43,836
9,33,333
8,65,000
4,66,027
7,00,000
9,49,000
4,89,329
4,66,667
10,41,000
5,13,795
2,33,333
12,42,000
5,65,175
14,84,000
6,21,692
Total Equity and Liabilities
23,05,975
21,05,466
29,97,537
32,72,484
36,03,165
45,36,514
69,02,670
Assets
Fixed Assets
Preliminary Expenses
18,94,475
3,29,500
13,97,087
-
10,39,156
-
7,77,668
-
5,84,709
-
4,41,317
-
3,34,201
-
82,000
82,000
12,27,945
27,288
59,178
-6,06,033
7,08,378
13,50,740
30,016
60,658
-6,83,044
7,58,370
14,85,814
33,018
62,174
-4,59,001
11,22,005
16,34,395
36,320
63,728
1,39,382
18,73,825
19,61,274
43,584
65,322
15,56,115
36,26,294
23,53,529
52,301
66,955
40,95,685
65,68,469
23,05,975
21,05,466
29,97,537
32,72,484
36,03,165
45,36,514
69,02,670
Current Assets
Stock in Hand
Debtors
Working Expenses
Cash in Hand
Total Current Assets
Total Assets
Interest on Working Capital Loan
Total Interest Expense
PBT
Tax@33.45%
PAT
92,708
1,01,638
1,11,508
1,22,318
1,45,935
1,74,370
2,67,124
2,45,721
2,25,258
2,05,734
1,99,018
1,97,120
-12,00,012
-2,59,653
3,42,870
10,15,369
23,89,227
41,62,096
-86,854
1,14,690
3,39,641
7,99,196
13,92,221
-1,72,799
2,28,180
6,75,728
15,90,031
27,69,875
-12,00,012
CASH FLOW STATEMENT
Year 1
Year 2
Year 3
Year 0
Sources of Funds
Promoters' Funds
Term Loan from Bank
Working Capital Finance
Cash Flows from Operations
Sundry Crditors
Total Sources of Funds
Application of Funds
Fixed Assets
Repayment of Term Loan
Interest on Term Loan
Interest on Working Capital Loan
Preliminary Expenses
Current Assets
Vehicle
Stock in Hand
Debtors
Working Expenses
Total Current Assets
Total Application of Funds
Increase/(Decrease) in Cash During the Year
Opening Balance
Closing Balance
Year 4
Year 5
Year 6
9,05,975
14,00,000
7,89,000
-3,73,124
4,43,836
76,000
1,85,133
22,192
84,000
4,89,668
23,301
92,000
8,68,687
24,466
2,01,000
17,33,423
51,380
2,42,000
28,76,990
56,517
23,05,975
8,59,711
2,83,325
5,96,969
9,85,153
19,85,803
31,75,508
18,94,475
-
2,33,333
2,33,333
2,33,333
2,33,333
2,33,333
2,33,333
12,27,945
27,288
59,178
13,14,411
1,22,795
2,729
1,479
1,27,003
1,35,074
3,002
1,516
1,39,592
1,48,581
3,302
1,554
1,53,438
3,26,879
7,264
1,593
3,35,736
3,92,255
8,717
1,633
4,02,605
22,23,975
15,47,744
3,60,336
3,72,925
3,86,771
5,69,070
6,35,938
82,000
82,000
-6,88,033
82,000
-6,06,033
-77,011
-6,06,033
-6,83,044
2,24,044
-6,83,044
-4,59,001
5,98,382
-4,59,001
1,39,382
14,16,733
1,39,382
15,56,115
25,39,570
15,56,115
40,95,685
3,29,500
-
Cash Flows to Equity Funds
Initial Investments
Operating Cash Flows
PAT
Depreciation
Preliminary Expense Write-off
Operating Cash Flows
Changes is Working Capital
Release of Working Capital
After Tax Salvage Value of Fixed Assets
CASH FLOWS TO EQUITY FUNDS
Year 0
Year 1
Year 2
Year 3
9,05,975
-12,00,012
4,97,388
3,29,500
-3,73,124
-1,04,811
IRR
Year 5
Year 6
-1,72,799
3,57,932
2,28,180
2,61,488
6,75,728
1,92,959
15,90,031
1,43,392
27,69,875
1,07,116
1,85,133
-1,16,291
4,89,668
-1,28,971
8,68,687
-2,84,357
17,33,423
-3,46,087
28,76,990
3,67,092
3,34,201
Repayment of Term Loan
Net Cash Flows
Year 4
-9,05,975
-2,33,333
-2,33,333
-2,33,333
-2,33,333
-2,33,333
-2,33,333
-7,11,268
-1,64,491
1,27,363
3,50,997
11,54,003
33,44,950
23%
Cash Flows to Total Funds
Initial Investments
Operating Cash Flows
PAT
Depreciation
Preliminary Expense Write-off
Interest On Long Term Borrowings(1-tax rate)
Interest On Short Term Borrowings(1-Tax Rate)
Operating Cash Flows
Changes is Current Assets
After Tax Salvage Value of Fixed Assets
After Tax Salvage Value of Current Asset
Net Cash Flows
Cost of Capital
IRR
CASH FLOWS TO TOTAL FUNDS
Year 0
Year 1
Year 2
Year 3
-30,94,975
-12,00,012
4,97,388
3,29,500
1,16,074
61,697
-1,95,353
-1,27,003
Year 4
Year 5
Year 6
-1,72,799
3,57,932
2,28,180
2,61,488
6,75,728
1,92,959
15,90,031
1,43,392
27,69,875
1,07,116
95,887
67,640
3,48,660
-1,39,592
75,701
74,208
6,39,576
-1,53,438
55,514
81,402
10,05,603
-3,35,736
35,327
97,120
18,65,870
-4,02,605
15,140
1,16,043
30,08,174
3,34,201
24,72,784
-30,94,975
19%
-3,22,356
2,09,068
4,86,139
6,69,867
14,63,265
58,15,159
Break Even Point Analysis
Average
Sales
Year 1
Year 2
BREAK EVEN ANALYSIS
Year 3
Year 4
Year 5
Year 6
1,28,60,183
94,62,000
1,04,08,200
1,14,49,020
1,25,93,922
1,51,12,706
1,81,35,248
Variable Costs
Cost of Goods Sold
Electricity Charges
Repairs and Maintaince
Interest on Working Capital Loan
Changes in Inventory
Total Variable Costs
62,85,815
6,98,424
2,72,077
1,24,746
1,81,175
75,62,236
54,00,000
6,00,000
2,40,000
92,708
1,68,000
65,00,708
56,70,000
6,30,000
2,52,000
1,01,638
1,72,200
68,25,838
59,53,500
6,61,500
2,64,600
1,11,508
1,76,505
71,67,613
62,51,175
6,94,575
2,77,830
1,22,318
1,80,918
75,26,815
68,76,293
7,64,033
2,91,722
1,45,935
1,89,964
82,67,945
75,63,922
8,40,436
3,06,308
1,74,370
1,99,462
90,84,497
Contribution Margin
52,97,947
29,61,293
35,82,363
42,81,408
50,67,107
68,44,761
90,50,751
Fixed Costs
Rent
Interest on Term Loan
Depreciation
Preliminary Expense
Employee Cost
Other Costs
Total Fixed Costs
3,19,200
98,583
2,60,046
54,917
19,57,162
15,33,057
42,22,964
2,80,000
1,74,417
4,97,388
3,29,500
14,40,000
14,40,000
41,61,304
2,80,000
1,44,083
3,57,932
15,84,000
14,76,000
38,42,015
3,08,000
1,13,750
2,61,488
17,42,400
15,12,900
39,38,538
3,08,000
83,417
1,92,959
19,16,640
15,50,723
40,51,738
3,69,600
53,083
1,43,392
22,99,968
15,89,491
44,55,534
3,69,600
22,750
1,07,116
27,59,962
16,29,228
48,88,655
1,02,50,780.11
80%
1,32,96,309
141%
1,11,62,595
107%
1,05,32,143
92%
1,00,70,297
80%
98,37,477
65%
97,95,537
54%
Break Even Point in Sales
BEP as a % of Sales