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A BUSINESS PLAN REPORT ON

FABRIC RETAIL BUSINESS

Submitted by:
SHYAMSUNDER N MULE
USN: 4JY10MBA41
Under the guidance of:
Prof. Mr.GIRISH BAGHA
Professor,
JSSCMS, Mysore.

Submitted to:
Vishweshwarayya technological university, Belgaum
in partial fulfilment of the requirements
for the award of
MASTER OF BUSINESS ADMINISTRATION

SRI JAYACHAMARAJENDRA COLLEGE OF ENGINEERING, MYSORE


JSS Technical Institutions Campus,
Mysore-06
Autonomous Institution affiliated to Visvesvarayya Technological University
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Table of Contents
Executive summary ....................................................................................................................................... 4
Objectives ..................................................................................................................................................... 5
Company Overview ....................................................................................................................................... 5
Vision......................................................................................................................................................... 6
Mission ...................................................................................................................................................... 6
Strengths and Core Competencies ........................................................................................................... 6
Challenges ................................................................................................................................................. 6
Company Ownership................................................................................................................................. 6
Company Location and Facilities............................................................................................................... 6
Product and Services..................................................................................................................................... 7
Benefits and Features: .............................................................................................................................. 7
Why people need this service? ................................................................................................................. 7
Competitive Advantages ........................................................................................................................... 8
Start-up Summary ......................................................................................................................................... 8
Marketing Analysis ........................................................................................................................................ 8
Target customers ...................................................................................................................................... 8
Trends ....................................................................................................................................................... 8
Market Demand ........................................................................................................................................ 9
Industry Life Cycle ..................................................................................................................................... 9
Cyclical trends in business ........................................................................................................................ 9
Market Potentials ................................................................................................................................... 10
Market Opportunities ............................................................................................................................. 10
Barriers to Entry ...................................................................................................................................... 10
Market is highly competitive, so no such barriers exist in the industry. ............................................. 10
Strategy and Implementation ..................................................................................................................... 10
1 Philosophy ............................................................................................................................................ 10
2 Marketing strategy ............................................................................................................................... 11
a) Value Proposition ............................................................................................................................ 11
b) Branding .......................................................................................................................................... 11

c) Marketing Objectives ...................................................................................................................... 11


d) Strategy ........................................................................................................................................... 12
3 Sales strategy ....................................................................................................................................... 12
4 Operations ........................................................................................................................................... 12
5 Goals..................................................................................................................................................... 13
Swot Analysis .............................................................................................................................................. 13
Strengths ................................................................................................................................................. 13
Weaknesses ............................................................................................................................................ 13
Opportunities .......................................................................................................................................... 14
Threats .................................................................................................................................................... 14
Marketing Mix ............................................................................................................................................. 14
a) Product................................................................................................................................................ 14
b) Price .................................................................................................................................................... 15
c) Place .................................................................................................................................................... 15
d) Promotion ........................................................................................................................................... 15
FINANCIES ................................................................................................................................................... 16
initial investment .................................................................................................................................... 16
Sources of funds...................................................................................................................................... 16
Means of finance .................................................................................................................................... 16
Expected revinue .................................................................................................................................... 16
INCOME STATEMENT .............................................................................................................................. 17
CALCULATION OF CASHFLOW FROM PRESPECTIVE OF INVESTOR ......................................................... 18
Approx IRR 75% ....................................................................................................................................... 18
pya back period ....................................................................................................................................... 18
PROJECTED BALANCE SHEET ................................................................................................................... 19

Executive summary
The clothing Store will be a start-up retail men's, women's, and children's clothing
store specializing in unique clothing from other parts of the Belgaum. This
business will be a casual urban wear traditional clothing store which will be run by
the owner, it will be located at maruti galli Belgaum. This store will also have a
local market and will serve both youth and adults. Our intent is to provide the
community with unique clothing they would normally purchase outside of the city.
The fashion and retail business tends to be overly youth focused. However, by
closely following generational fashion trends as well as our own customers'
purchasing preferences, we will tailor our inventory to meet the specific needs of
our clientele. We will solely focus on the our styles, colors and fits will be our
specialty.
we plan to promote our retail business with an ambitious, targeted marketing
campaign, which will include a grand opening event, local media coverage, print
advertising.
1. For establishment of Fabric Retail Business in Belgaum This feasibility has been
conducted.
2. The initial cost of the project is Rs 22230000/- including the initial capital of
Rs12230000/- and initial working capital of Rs10000000/3. Projected Revenue for the project for first 5 years are Rs 33000000, 36300000,
43560000, 52272000, 62726400
4. Payback period of the project is approximately 1 year 5 month.
5. Gross profit for first 5 years are Rs14649000, 17706100, 23341870, 29836185,
37413446.
6. The IRR of the project is 75%

Objectives

Establish a unique clothing retail business in the city of Hartford,


Connecticut
Create jobs
Provide quality clothing and customer service at a reasonable price
Achieve the largest market share in the city for urban wear
Achieve a profit within the first year
Continually and consistently increase total number of customers per year
Increase average length of customer relationships and decrease customer
turnover

Company Overview
It is a retail store for men and women wear with good quality clothing. We present
an extensive variety that are manufactured using different fabrics such as Cotton,
Silk, Wool and others. Available in a wide range of gorgeous colors, designs and
prints, these apparels are designed keeping in mind the most up-to-date fashion
trends. The Clothing Store's primary goal is to find customers and keep them
coming back.
Store will set the pace for both rural and urban fashion for all seasons. Last year's
outfit will be accessorized to be this year's outfit. People like to buy clothing pieces
and accessories to continue wearing clothing that would be out-of-date otherwise.
Store also cater to all types of customers and for all occasions other than routine
shopping. Examples: Wifes buying gifts for their husbands, friends buying gifts
for their friends, etc.
Retail profits can be as high more then 50 percent on clothing. The sales and profit
margins in a specialty clothing store are higher than the average retail store. We
have the opportunity to profit successfully.
The urban clothing market is the most exciting, fastest growing market for
consumers. They will always look for unique clothing pieces and they will not
hesitate to buy them.

Vision

To be a distinguished fashions-wear retailer known worldwide for the quality of


products, setting new trends and lifestyles
Mission

To offer continuous value added products to our customers.


To accomplish this, we focus on exceptional design, innovation, quality,
convenience and interactive communication.
Strengths and Core Competencies

The foundation parameters on which we ensure the excellence of our garments are:
Material
Cut
Design conformation
Embroidery
Stitching
Stability
Finish
Color fastness
Challenges

Increasing competition, especially from big chains like malls.


High cost materials
Changing demands and catering to this demand
Changing fashions and changing behavior of demographics
Company Ownership

The store will be retail sales of urban clothing and associated products.58% owned
by the proprietor and 48% owned by bank loan.

Company Location and Facilities

Maruti Galli Belgaum, Dist- Belgaum, State-Karnataka,


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Product and Services


For different customer groups, our variety of clothes is offered in different
customers and is tremendously comfortable to wear. Our offered clothing
collections for men and women are:
Shirting
We offer an exceptional range of shirting that are offered in a multitude of
Colors and patterns.
Suitings
We make an extensive range of suiting that are offered in diverse colors and
Patterns.
Saris
An exclusive range of saris
We offer a broad range of designer saris available in eye catching prints and colors.
Dress materials
An exclusive range of dress materials with heavy designing and quality materials
Benefits and Features:

Highlighted features:
- Lovely designs and prints
- Eye-catching colors
- Long-lasting Apparels
- Comfortable to wear
- Available in various sizes
Why people need this service?

A number of the factors that have made us the ideal choice of our customers are:
Various variety under a single roof
Quality guaranteed goods
Customization
Capacity to accept mass orders
Well-timed delivery
Easy payment modes of Cash

Competitive Advantages

While there is no guarantee a competitor will locate within our area, we have no
doubt in our fashion sense, outstanding customer service and quality products.
Our supplier relationships and exclusive product offerings will prevent future
competitors from entering the market as a competitor. Also, it takes time to build a
retail store, and by the time a competitor attempts to compete with us directly, we
will have already established a strong customer base.
Start-up Summary
Total start-up expense (including fixtures, equipment, and grand opening) is
22230000. Startup assets required 4230000 in inventory. With the owners'
investment of 8000000, the amount of additional start-up funds needed are
14230000.
Marketing Analysis
Target customers

Clothing fabric is a business-to-consumer retail shop. Male and Female are our
clear target customers. However, we do realize that we will likely attract young
Male and Female customer. Moreover, we expect a portion of our products to catch
on with the younger generations. It's important that we do not offer products that
are exclusive to the older audience.
Trends

The retail fashion industry is a solid business with ever-changing styles and everpresent consumer demand. While supercenters and megastores ruled the past two
decades, more and more consumers are looking for change. They're searching for a
more serene and customer-friendly shopping experience. This is true especially for
those nearing retirement age. In reality, as the Baby Boomers numbers decrease,
there will be fewer older Generation X-ers to sell to. However, this market
decrease will not occur for at least twenty years. Even then, clothing will always be
in high demand. The fashion industry in Belgaum has been thriving since the
advent of moving pictures.

Market Demand

Shifting demographics made the male and female clothing business look attractive
to new entrants and, therefore, the market became tremendously competitive. Big
retail chains began to penetrate the market. Sales continued to grow. Fueling this
growth was a climb in birth rates in the late 1980s and early 1990s.
Industry sales normally peak between late August and December. Throughout this
phase, stores compete for valuable back-to-school sales and holiday gift purchases.
Stores normally generate between 50 percent of their annual sales in these
months.
Industry Life Cycle

Clothing market is at maturity stage although its generating good demand and
sales and has good scope for businesses for next few years. The higher birth rate
was observed in late 90s and early 2000s which boomed the market and now
demand is still growing but with slow birth rates as compared to past years. This
makes industry stand at maturity level in its life cycle.
Although this sector of the industry is season-driven, this cycle will not affect it
much.

Cyclical trends in business

This business has conventionally been highly seasonal, as with other clothing
businesses, so spring is on the way, this is also the season for weddings, and has
some gorgeous dresses and suits for wedding parties.
New sessions of schools will be starting in month or so (march to august) which
also boost the sales of cloths for kids.
Month of December also a high sales month due to Christmas celebrations
people love to shop and buy presents

Market Potentials

Shifting demographics made the male and female cloth business attractive to new
entrants and, therefore, tremendously competitive. Sales will continue to grow in
the next 5 years:
Market Opportunities

Market is growing with a rapid rate so its a great opportunity to enter in the
market where demand is increasing drastically
Birth rate has remained high in the past 5 years meaning more potential for kids
cloth purchasing.
Country is going through recessionary period so parents are on tight budget,
which is a great opportunity for our business to offer discounts and low pricing
packages to attract our consumers
This business has conventionally been highly seasonal, as with other clothing
businesses, so spring is on the way, this is also the season for weddings and
gorgeous dresses and suits for wedding parties.
New sessions of schools will be starting in month or so.

Barriers to Entry

Market is highly competitive, so no such barriers exist in the industry.

Strategy and Implementation


1 Philosophy

Our company's core business strategy is to combine exceptional and


knowledgeable customer service with quality stylish merchandise. And we'll
provide an enjoyable shopping experience for our customers.Clothing business a
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wide selection of fashionable, figure-flattering clothing. Our aim is to establish our


company as a pioneer in this youth-obsessed industry and build a boutique brand
name that will be synonymous with the fashion industry revolution.
2 Marketing strategy

Basic strategy of our business is to launch kids wear by the next some months.
Initially we launch normal kids wear which will cater the needs of masses.
By the end of the year, we will launch customized products to cater to the need of
every individual customer.
Later on, school accessories and school wear are also in the pipe line
a) Value Proposition

Our core value proposition is that we will add value to our product by providing
matchless male female and kids wear with extensive range of color and different
sizes in comfortable and durable fabric with easy mode of cash transactions at
comparatively low prices.

b) Branding

We position our selves as a brand, which gives quality products at fairly low prices
with extensive range of vibrant colors and continuous value addition to our
products with innovative ideas in design in printing.

c) Marketing Objectives

Image ourselves as a brand with competitive edge


To offer continuous value added products to our customers
To achieve our financial target
Set a benchmark in industry as a cost leader through minimization of waste and
improve performance
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d) Strategy

Meet the demands of market and supply demanded goods on time without any
barrier or hurdle
Offer excellent products at low price
Make products according to the needs of the customer
Give good hassle-free ambiance for shopping, which will help the business and
give edge over rivals
Develop a friendly store environment and decoration, which will attract
customers to bring their family in the store and shop with comfort.

3 Sales strategy

Clothing store generate sales via strategic marketing efforts. These concentrated
efforts will be targeting new and returning customers as well as single-visit tourist
consumers. We will also implement a referral program rewarding customers who
refer new customers with discount coupons. Following our grand opening we will
offer promotional discounts and seasonal and clearance sales throughout the year.
Clothing store will accept cash and payment via major credit and debit cards. Cash
layaway plans will also be permitted. Returns and exchanges must take place
within 30 days of purchase and receipts are mandatory.
Our sales staff will include both co-owners and 2-3 part-times sales associates.
Comprehensive training will be provided to each sales associate - to include selling
merchandise as well as how to provide fashion advice to customers. Our sales team
will earn an hourly rate, plus a generous percentage of commission from each sale.
4 Operations

As a retail store will conduct business seven days a week from 9 a.m. to 9 p.m.
Wednesday through Monday, from 9 a.m. to 9 p.m. Tuesday 9 p.m. to 1 p.m.
During the holiday seasons and during special events, store hours will be extended.
In addition to the two full-time co-owners, three part-time employees will be hired
to serve customers.

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5 Goals

The following is a list of business goals and milestones we wish to accomplish our
first year of operations.

Complete renovating, stocking, hiring and initial marketing.


Host a successful grand-opening event.
Penetrate and raise awareness in 60 percent our targeted consumer market.
Achieve a profit margin of 50 percent.
Build a solid customer base and mailing list.
Generate repeat and referral sales.
Become a profitable business with expansion potential.
Establish a solid reputation as quality retail establishment.

Swot Analysis
Strengths

Experience and understanding of the fashion industry


Unique shopping experience with exceptional customer service
Great downtown location
Large and growing consumer base
Huge Product Line with variations.
Business will have longer hours and better prices as compared to competitors.
Discounts are available for bundle buying.
Expertise in getting new products to the market quickly
Expertise in providing good customer service
Customization available for individual customers
Weaknesses

New in business as compare to rivals


Huge capital required to start business as credit is not easily available from
supplier in start
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Marketing expense in the start will be huge, to establish brand name required
lot of advertising

Opportunities

Outstanding shopping experience will lead to repeat business


Seasonal business: in summer demand is very high as new academic session
starts and also a wedding season
Sector is growing fast in state and in the area our business operating
Girls wear demand is huge so adding value in this category will be the great
advantage
Animated movies increased the demands and popularity of printed shirtings.

Threats

Competition is high and big chains like Wall-Mart, Gap and Limited
Incorporation
People are more conscious for pricing due to recession and going for discounts

Marketing Mix
a) Product

We present an extensive range of male female and kids wear that are manufactured
using different fabrics such as cotton, silk, wool and others. Available in a wide
range of gorgeous colors, designs and prints, these apparels are designed keeping
in mind the most up-to date fashion trends.

14

b) Price

Penetration Pricing will be the pricing strategy for our business, as our business is
new and at the high street of Belgaum where competition is huge, so we try to give
good quality at low price to penetrate in the market and try to achieve higher sales
volume to set low price and better quality strategy. Once we achieve this objective
then try to charge higher price for our customized products for value addition
c) Place

At one of the high street of Belgaum City

d) Promotion

Advertising:
1. Above The Line:
- Internet
- Radio
- Magazines ( Parents and kids magazines only)
- Newspapers ( Only Weekends for two or three weeks)
2. Below The Line:
- Flyers ( through hawkers)
- Coupons

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FINANCIES
initial investment
Perticular

Amount

Cost of materials

10000000

Building

3000000

Interior & Exterior Decoration

1000000

Furniture

1000000

Machinerys
Genarator

100000

Dit Fabric Printing Machine

700000

Dit Fabric Embrodery Machine

525000

Computerized Swetching Mach

875000
25000

Computer

5000

Printer

17230000
Land

5000000

Total

22230000

Sources of funds

Means of finance

Particulars

Particulars

Amount

Equity

Amount

8000000 FA

12230000

Long term loan

14230000 NWC

10000000

Total

22230000 Total

22230000

Expected revinue

nor of day
production
tot revinue

330

330

330

330

330

100000

110000

132000

158400

190080

33000000 36300000 43560000 52272000 62726400

16

INCOME STATEMENT
1
total Revinue

33000000 36300000 43560000 52272000 62726400

EXPENDITURE
Purchases

10000000 11000000 13200000 15840000 19008000

Salaries

1812000

1993200

2192520

2411772

2652949

Postage and Stationery

10000

10000

10000

10000

10000

Licence and other Fees(legal charges)

10000

10000

10000

10000

10000

Miscellaneous Expenses(general exp)

100000

100000

100000

100000

100000

Repairs & Maintanence

25000

27500

30250

33275

36602.5

Insurance

200000

200000

200000

200000

200000

Fuel

50000

50000

50000

50000

50000

Electricity charges

60000

66000

72600

79860

87846

Total Expenditure

12267000 13456700 15865370 18734907 22155398

EBDIT

20733000 22843300 27694630 33537093 40571002

Less. DEP

6084000

EBIT

14649000 17706100 23341870 29836185 37413446

Less.Int

1588681

EBT

13060319 16397677 22349249 29199417 37177662

Less. Tax 30%

3918096

4919303

EAT

9142224

11478374 15644474 20439592 26024363

5137200

1308423

4352760

992621.2

6704775

3700908

636768.1

8759825

3157556

235783.9

11153299

17

CALCULATION OF CASHFLOW FROM PRESPECTIVE OF INVESTOR


INV

0 Year

FA

14230000

NWC

8000000

Revenue

Year 1

33000000

Year 2

Year 3

36300000

43560000

Year 4

52272000

Year 5

62726400

Total Expenditure

12267000

13456700

15865370

18734907

22155398

EBDIT

20733000

22843300

27694630

33537093

40571002

Less. DEP

6084000

EBIT

14649000

Less.Int

1588681

5137200
17706100

4352760
23341870

1308423

992621.23

3700908
29836185
636768.1

3157556
37413446
235783.9

EBT

13060319

16397677

22349249

29199417

37177662

Less. Tax 30%

3918096

4919303

6704774.6

8759825

11153299

EAT

9142224

11478374

15644474

20439592

26024363

Add Depn

6084000

5137200

4352760

3700908

3157556

Net cash flow

15226224

16615574

19997234

24140500

29181920

PV @ 12%

13594842

13245834

14233636

15341724

16558605

Approx IRR
75%

pya back period


Year

Cashflow

Cummulative

15226224

15226224

16615574

31841798 1yr 5month

19997234

51839032

24140500

75979532

29181920

105161451

18

PROJECTED BALANCE SHEET


Year 1
SOURCES OF
FUNDS :
Promotors
Fund

Year 2

Year 3

Year 4

Year 5

8000000

8000000

8000000

8000000

8000000

Reserves Total
Total
Shareholders
Funds

9142224

11478374

15644474

20439592

26024363

Secured Loans
less :
repayment

14230000

12020201

9530143

6724285

3562572.8

2209799

2490057

2805859

3161712

3562696.1

17142224

19478374

23644474

28439592

34024363

Total Debt

12020201

9530143

6724285

3562572.8

-123.276

Total Liabilities
APPLICATION
OF FUNDS :

29162425

29008517

30368759

32002165

34024240

Building

2700000

2430000

2187000

1968300

1771470

land

5000000

5000000

5000000

5000000

5000000

machinery

3384000

2707200

2165760

1732608

1386086

cls stock

5000000

7500000

10000000

10000000

10000000

Bank

13078425

11371317

11015999

13301257

15866683

Total Assets

29162425

29008517

30368759

32002165

34024240

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