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TRANSCRIPT
University of Nottingham
Part 2: Business Plan: Karma Ltd.
Anshul Muthe
MBA Entreprenuership Supervisor: Christopher Mahon
Year of Publication: 2010/2011
1
Table of Contents
Executive Summary………………………………………………………………………………………………………………….…4
1. Introduction................................................................................................................................6
2. The Company................................................................................................................................7
3. Strategy……..................................................................................................................................10
4. Location & Facilities...................................................................................................................11
5. Product………………......................................................................................................................13
6. Marketing……………....................................................................................................................15
7. Marketing Plan..........................................................................................................................21
8. Operations................................................................................................................................29
9. Finance Summary……….............................................................................................................31
10. Risk.........................................................................................................................................33
Appendix 1...............................................................................................................................34
Appendix 2...............................................................................................................................35
Appendix 3...............................................................................................................................37
Appendix 4...............................................................................................................................39
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Appendix 5...............................................................................................................................43
Appendix 6...............................................................................................................................44
Appendix 7...............................................................................................................................45
Appendix 8...............................................................................................................................51
Appendix 9...............................................................................................................................53
Appendix 10.............................................................................................................................54
Appendix 11.............................................................................................................................57
Appendix 12.............................................................................................................................59
Appendix 13.............................................................................................................................60
Appendix 14.............................................................................................................................61
Appendix 15.............................................................................................................................62
Appendix 16.............................................................................................................................63
Appendix 17.............................................................................................................................64
Appendix 18.............................................................................................................................65
Word Count: 5639
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Executive Summary Founded by five partners Karma Ltd. Is a textile company who is looking to establish its own brand in
the Indian market. The company will produce scarves and shawls which will cater to the taste of
Indian consumers. The product itself breathes innovation in is designs and materials used in
production. The management team brings a wealth of diverse business experience to the venture;
four of the partners have been part of major textile firms and have studied the Indian market for
years. Textiles breathe through their family blood and most of these Individuals have worked with
International and local clients.
The Indian clothing and fashion accessory market has grown tremendously over the past few years.
Indian consumers now view accessories not as an add-on by as a product by itself with consumers
being more brands conscious, it provides a great opportunity for establishing a brand dedicated to
fashion accessories itself. There is a huge portion of the accessory market which still remains
untapped and is largely categorized by an unorganized sector thus there is a great potential for
branded products. The fashion accessories market is estimated at around 10,000 crores rupees in
the organised sector by the actual figure is much more than that. The growth rate is estimated at 20-
30 per cent per annum1. There is scope for branded accessories for the Indian youth. It is estimated
that India between 2010-2030 will add 241 million people in the working-age population 2. All these
factors provide an excellent opportunity for the partners to establish a fashion accessories store in
India.
Through our research we have found that Indian consumers are on the lookout of local brands in
accessories. Our product with our marketing strategy will be a perfect fit for the Indian Market.
1 http://retail.franchiseindia.com/articles/Retail-Trends/Retail-Industry/Growing-market-of-fashion-accessories-361/2 http://trak.in/tags/business/2010/03/02/india-young-population/
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The partners are looking to invest rupees four crore into the business as a start-up and looking to
take this to new levels by establishing retail outlets in six tier 1 cities in India. The partners believe
that with an highly-skilled entrepreneurial team and a good mix of experience they can make Karma
Ltd a pioneer in the fashion accessories industry in India.
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1. Introduction R.K Overseas has been in the textile business for over 80 years. They currently run a manufacturing
plant in Amritsar and deal with many suppliers across India. Their current business is exporting
shawls, scarves and other accessories to clients across the world. RK Overseas is a family owned firm
with seven stakeholders. The company has two managing directors Sunil Khanna and Sagar Khanna.
The company has been dealing with global department stores and designers such as Bloomingdales,
Macys, Brooks Brothers, BCBG, Marshalls, and Nordstrom etc...
Currently RK Overseas competes with other export houses such as Ahuja Sons (Delhi, India),
Sharman Shawls (Ludhiana, India), Syntex (Ludiana, India) and Pankaj Mercantile (Mumbai, India). In
the recent years there has been increasing competition from Chinese based manufacturers who can
supply products at a cheaper rate. Since most of the department stores and retail houses are in a
credit crunch they find it hard to justify buying products at a higher rate. In the export business all
these companies are competing on product margins.
RK Overseas is a vertically integrated company with manufacturing to design processes all in-house.
The Indian textile market is lucrative, it accounts for nearly 14% of the total industrial production of
the country and nearly 5% of the GDP3. RK Overseas will establish a new privately held company
called Karma LTD. This company will look to establish its own brand in the Indian market. (Appendix
1)
3 http://www.cci.in/pdf/surveys_reports/indias_textile_sector.pdf
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2. The Company
Mission
To be the leading brand in the fashion accessories market in India.
Vision
To provide customers with quality products that will exceed their fashion appetite
Objectives
Turn a profit by the end of Q3 Year 2 Establish 2 retail stores by Q4 Year 2 Expand to six tier 1 cities by Year 5 Develop brand awareness, equity and loyalty through innovative product designs and
marketing campaigns.
Management Team
The management team brings a wealth of diverse business experience to the venture. The
shareholders have over 20 years each in the textile business. They collectively possess an eclectic
mix of entrepreneurial, financial, sales, product design innovation and marketing experience.
(Appendix 2)
Shri Sagar Khanna, MBA CEO:
Sagar has an entrepreneurial background, He moved from Amritsar to Mumbai when he was 18
years old. With only thousand rupees in his pocket, he established RK Overseas. He was able to
successfully gain international clients such as Marks and Spencer, Niemen Marcus, Kenzo etc. with
his business acumen. Sagar has a MBA degree from Narsee Mongee University, which is well reputed
in Mumbai, India. Sagar has over 25 years working as the CEO of RK Overseas and has taken the
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company to new heights. The company has seen a record high 22 crore turnover during his time as
the CEO. His wealth of textile and business knowledge will guide Karma LTD to new heights.
Anshul Muthe M.B.A, Marketing Director:
Entrepreneurship runs rampant in Anshul’s blood, having spent his time growing up around his
father’s pharmaceutical business. At eighteen, Anshul went to experience the wonders of America
having received a scholarship to Ohio State University where he obtained a Bachelor of Arts in
International Business. Afterwards, Anshul gained experience with firms Freddie Mac, Canon and
UBS Financial. He most recently completed his M.B.A from the University of Nottingham.
Smt. Reena Khanna, B.COM. Product Development Director:
Reena wife of Sagar has been working with RK Overseas on developing product designs for over 20
years. She brings over 20 years of product design experience. She has designed Shawls, Scarves and
other accessories for international clients and received lot of praise from Indian press. Reena is
fashion savvy and is always looking out for new trends in the Indian and International markets.
Product innovation is her forte; in 2004 she developed a new design which reached a record order of
100,000 units from international and local clients.
Shri Raghav Khanna MSC, B.COM. Operations Director:
Raghav son of Sagar and Reena graduated from the University of Manchester with a degree in
Textiles management. He has been working with his father assisting in the operations and logistics
since he was 14. Through his business acumen and tenacity to improve operations throughout RK
Overseas he has saved the company approximately 2 crore rupees. He has increased operational
efficiencies and during his tenure at RK Overseas he has managed to achieve ISO certification.
Sunil Khanna M.B.A, Plant Director:
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Sunil brother of Sagar Khanna has successfully run the plant in Amritsar, India. During his tenure he
has ensured operational growth and installed four Solzer and Donier Looms which are state of the
art weaving machines. The factory has received various certifications such as ISO 9001 and Global
Organic Textile Standard (GOTS). The plant has managed to implement ERP systems and run
successfully for over 40 years. Sunil has a MBA from the Delhi School of Business.
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3. StrategyKarma LTD will adopt a differentiated strategy. Currently none of the competitors have a retail store
dedicated to only shawls, scarves and accessories. This new entity will use their innovative designs,
differentiated store concept and the first mover advantage to their benefit. Karma LTD will have
launched a new design collection that will be segregated by consumer choices by mid and high-end
fashionable products. The company will establish high end retail stores in tier 1 cities in India. India
currently has an increasing middle class which has about 300 million versus china’s 100 to 200
million4. With an increasing middle class and an ever booming economy it provides the ideal launch
pad for an Indian brand. Karma LTD will adopt its USP which is innovative product designs and high
quality products to leverage its position in the Indian market. (Appendix 5)
Tier 1 cities five year plan (Appendix 3)
Location Month Year
Delhi (Flagship store) August 2012
Mumbai August 2012
Bangalore September 2013
Hyderabad September 2014
Kolkata September 2015
Chennai September 2016
4 http://www.businessweek.com/magazine/content/10_05/b4165084462859.htm
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4. Location & Facilities Office:
Karma LTD offices will be located in Mumbai. These offices will carry marketing, administrative,
operational, product development and accounting functions.
Factory:
The factory will be located in Amritsar, India. It is located in Punjab and the main commercial
activities are fabrics, tourism, and import and export trade of garments.
Why Amritsar?
Karma LTD will use current operational facilities of RK Overseas. RK Overseas factory has been
established since over 80 years and has grown tremendously. They currently produce Scarves,
Shawls, Stoles, Mufflers, throws and other fabrics for many international clients. RK Overseas
currently has state of the art machinery 4 Solza Looms, seven Donier Looms, 10 power Looms and 2
Airjet Looms. With hi-tech warping machinery in place and an established production process in
place it provides Karma LTD with an ideal production house.
Retail Locations
Karma LTD will establish retail stores in tier 1 cities. These stores will be located in high end luxury
malls. Currently with the Indian economy booming and the purchase power of individuals increasing
the footfall in malls have seen a sharp increase. Currently there are over 100 malls operating all over
India and more than 300 malls being developed. Mall space is expected to touch over 60 million
square feet and there is a scope for specialty malls emerging5. The total retail sales are expected to
5 http://www.chillibreeze.com/articles_various/Malls-in-India.asp
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grow from US$ 395.96 billion in 2011 to US$ 785.12 billion by 20156. According to the BMI India
retail report the following are the factors for retail growth7
Robust economic growth
High disposable Income
Rapid construction of organised retail infrastructure
Expansion in the middle and upper class consumers
Availability of personal credit
The above factors are expected to contribute towards a retail sales growth of 12.2 %8. (Appendix 4)
6 http://www.ibef.org/industry/retail.aspx7 http://www.ibef.org/industry/retail.aspx8 http://www.ibef.org/industry/retail.aspx
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5. Product Karma LTD’s retail store will focus main on scarves and shawls. The retail store will also carry a
limited stock of dresses. Scarves and shawls will make up 80% of the products in the store and the
rest will be dedicated to dresses.
Material
With an abundance of raw materials and India being a self-reliant industry (Appendix 6), the raw
materials will be sourced from local suppliers in Amritsar. The main material used in making the
scarves and shawls will be the following
Product Material
Scarf & Shawl Cotton
Scarf & Shawl Silk
Scarf & Shawl Wool
Scarf & Shawl Modal
Scarf & Shawl Bamboo
Scarf & Shawl Viscose
Scarf & Shawl Linen
Scarf & Shawl Cashmere
The premium scarves and shawls will be made of fine wool, silk and cashmere. This will be the
premium line of Karma LTD. These will be a mixture of machine and handmade products.
Collection
There will be two collections that will be launched annually. The summer collection will focus on
scarves and shawls made primary of Linen, viscose, silk and modal. The winter collection will be
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focused on silk, cashmere and wool. Reena Khanna who is a fashion designer will launch these
collections every year. The collections will be focused on two key aspects
1. Product Quality
2. Product Innovation
Each collection will have 20 premium products and 75 mid-range products. (Appendix 7)
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6. Marketing Market Research (Industry)
The Indian economy in the recent years has experienced exponential growth. It is expected that by
2050 India’s economy could be larger than even America’s9. Within 15 years it is projected that
Indians should on average be four times richer than today10. India has shifted into a high gear with
consumers and the middle class having a greater disposable income. The current economy is thriving
in most sectors. The Textile industry is the second largest in the world with China being the largest.
The industry contributes 14% to the countries industrial output and about 17% to the export
earnings11. With most textile firms focusing on exports this leaves a big opportunity to capture the
domestic market. The industry itself is categorised in handlooms, power looms and mills. The
advantage lies in the mills sector as it is well organised and caters to most international and local
brands. The domestic apparel market is currently growing at 10% per annum12 and there has been an
increase in FDI in the country. Urban consumers have become more brand conscious and seek
lifestyle and luxury products. Retail malls and units are contributing to the increasing consumer
consumption.
Figure 1: Indian Textile Market projection
9 http://news.bbc.co.uk/1/hi/6294409.stm10 http://news.bbc.co.uk/1/hi/6294409.stm11 http://www.indialawoffices.com/pdf/textileindustry.pdf12 http://www.citiindia.com/images/PDF/Indian%20Textile%20Industry%202011%20(brief)(5).pdf
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Source: CITI Report13
In 2009 the Indian textile market was about US$32.6 Billion and is expected to nearly double to US$
57 Billion by 2015. With world economies slow declining the domestic market will growth even
further. The key drivers for the domestic market is the following
Increasing youth population
Increase in disposable household income
Retail segment growth
Market Research (Fashion Accessories)
The Indian clothing and fashion accessory market has grown tremendously over the past few years.
The Indian consumers now view accessories not as an add-on by as a product by itself with
consumers being more brands conscious, it provides a great opportunity for establishing a brand
dedicated to fashion accessories itself. There is a huge portion of the accessory market which still
remains untapped and is largely categorized by an unorganized sector thus there is a great potential
for branded products. The fashion accessories market is estimated at around 10,000 crores rupees
in the organised sector by the actual figure is much more than that. The growth rate is estimated at
13 http://www.citiindia.com/images/PDF/Indian%20Textile%20Industry%202011%20(brief)(5).pdf
16
20-30 percent per annum14. There is scope for branded accessories for the Indian youth. It is
estimated that India between 2010-2030 will add 241 million people in the working-age
population15. India currently has almost 70 percent of the population under 35 years of age thus
providing a tremendous scope16. The Indian market for apparel accessories which include shawls,
scarves in 2008 was estimated at Rs 9.1 billion and is expected to reach Rs. 12 billion by 2012 17. One
of the opportunities is that 57% of the industry is largely unorganized18. Apparel accessories are
largely purchased at the streets and local markets hence consumers do not find enough branded
accessories to purchase.
The key drivers for the accessories market is the growing population with over 1.1 billion people in
India it is one the countries with the youngest population19. The country has the lowest median age
and 50% of the population is less than 25 years and 70% less than 35 years 20. The second
contributing factor is the growing disposable income of the middle class. Indian corporate salaries
have grown a staggering 14% considering the currently global economic climate21.
Figure 2: Accessories market value.
14 http://retail.franchiseindia.com/articles/Retail-Trends/Retail-Industry/Growing-market-of-fashion-accessories-361/15 http://trak.in/tags/business/2010/03/02/india-young-population/16 http://retail.franchiseindia.com/articles/Retail-Trends/Retail-Industry/Growing-market-of-fashion-accessories-361/17 http://www.ice.gov.it/paesi/asia/india/upload/182/Market%20Research%20on%20Accessories%20in%20India.pdf18 http://www.ice.gov.it/paesi/asia/india/upload/182/Market%20Research%20on%20Accessories%20in%20India.pdf19 http://www.ice.gov.it/paesi/asia/india/upload/182/Market%20Research%20on%20Accessories%20in%20India.pdf20 http://www.ice.gov.it/paesi/asia/india/upload/182/Market%20Research%20on%20Accessories%20in%20India.pdf21 http://www.ice.gov.it/paesi/asia/india/upload/182/Market%20Research%20on%20Accessories%20in%20India.pdf
17
Source: Italian Trade commission22.
It is estimated based on the value of textile fabrics and other materials the total market as seen in
the above figure is at Rs. 9.1 Billion. This provides a tremendous opportunity in the organised
accessories market.
Market Research (Survey)
In order to get a general understanding on purchase and Indian consumer behaviour we conducted a
quantitative research. This focused on three questions
1. Where does the customer buy accessories from?
2. How much does the consumer pay for these accessories?
3. How often do they purchase accessories?
The results were encouraging. Out of 52 women that were questioned a high percentage said they
purchased from the local market which are largely unorganised players. The second highest with
27% of the women saying they purchased accessories when they travelled abroad for vacation or
shopping. One of the interesting results was that consumers questioned pay in a price range of 3000-
5000 rupees this is very encouraging. An Interesting observation was that a high percentage was
willing to pay higher those 5000 rupees.
22 http://www.ice.gov.it/paesi/asia/india/upload/182/Market%20Research%20on%20Accessories%20in%20India.pdf
18
When the consumers were asked how often do they purchase accessories? There was an even
spread among consumers. This was slightly worrying since a high percentage said they purchase
randomly or on impulse. (Appendix 8).
Competitors Analysis
The Indian market is largely fragmented and there is little or no stores dedicated to fashion
accessories. Most consumers buy accessories from local markets and street corners. The lack of
branded accessories is visible. The main competitors for Kris are listed below. Although these main
deal in apparel with little focus on accessories.
Top 10 Indian Brands
Brand Name Company Info. Market
Ahuja Sons The company is well established player in accessories. They have
been in business since 1979. Their primary business is in Shawls
and Scarves23.
Accessories
Shaw
Brothers
The company is one of the leading export houses of Shawls and
Scarves.
Accessories
(Export Mainly)
Oswal Group Oswal Group is a premier textile group of northern India having its corporate office at Ludhiana, Punjab. Oswal Group is primarily in the business of spinning and dyeing of all types of yarns indifferent blends and manufacturing of garments.
Accessories &
Garments
(Export)
Tarun
Tehlani
He is a fashion designer who has established retail stores in India. Established designer since 199024.
Bridal wear,
Men’s,
Women’s and
Accessories.
23 http://www.ahujasons.com/home.html24 http://www.taruntahiliani.com/index.html#/ABOUTTT
19
Bombay
Dyeing
Since the first store in 1879 and the only store manager, the growth has not only been in our presence, but also in of how much we offer today. Stylish linens, towels, home furnishings, leisure clothing, kids wear and a whole blissful range of other products are now available across 350+ exclusive Bombay Dyeing Retail or 2000+ Multi-brand Stores25.
Home
furnishings,
Men’s and
Women’s
apparel
Satyapaul Satya Paul, synonymous with signature prints, evocatively feminine designs and timeless style has established itself as a global brand, unhindered by national boundaries26.
Bridal Collection
Reliance
Textiles
Reliance’s Manufacturing Division at Naroda, Ahmedabad is one
of the largest and most modern textile complexes in the world.
The Company’s flagship brand VIMAL is one of the most trusted
brands of premium textiles in the country27.
Accessories,
home
furnishings and
garments
Raymonds The Raymond Group was incorporated in 1925 and within a span
of a few years, transformed from being an Indian textile major to
a global conglomerate28
Mens and
Womens
Apparel
Rohit Bal Rohit Bal is a well-known Indian designer who has opened stores
in Tier 1 cities. He has designed clothes for many Bollywood
movies and shows.
Men’s and
Women’s
apparel
Listed above are the Top 10 Indian brand companies. These are the main competition for Kris,
although none of these Indian brands have a specialised accessory orientated store. In-direct
competition occurs from international brands entering the Indian market. (Appendix 9).
25 http://www.bombaydyeing.com/26 http://www.satyapaul.com/satyapaul/shop/TheBrandView?catalogId=10051&langId=-1&storeId=1000127 http://www.ril.com/html/business/textiles.html28 http://www.raymondindia.com/grp.asp
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7. Marketing Plan Kris- The brand
The main identifier for our brand is our name, “Kris.” Short for the Hindu god Krishna. Many people
in India worship Krishna. The name Krishna literally means ‘all-attractive’29. So Krishna is not only the
God but he is also considered as the most beautiful person. It is said in Indian community that we
are all part of Krishna which is the drops of the ocean water, mother earth and other aspects. The
better we understand ourselves the easier it is to understand the true meaning behind life30.
Krishna is a central figure in Hinduism. He is often described as beautiful, elite, super human being.
The true essence of Krishna is the beauty and pureness behind him. This is reflected in our brand.
The term Krishna consciousness means how to act in harmony with ultimate reality. It is explained
that we are all naturally conscious and our bodies are our real selves 31. Our brand will make you free
from any illusion and will help you experience true bliss with our high quality products. Krishna has
been an integral part of all five business partners lives. We truly believe in the name and our brand.
Krishna as seen in the image bellow is known to wear a lot of accessories. He personifies a complete,
slightly playful, elite and attractive individual. He was considered to be very playful and mischievous
with many women attracted to him.
Figure 3: Krishna
29 http://www.krishna.com/30 http://www.krishna.com/31 http://www.krishna.com/
21
Source: Krishna website32
Krishna was a prince and as seen in the image above he was very elegant. His pure grace and
accessories made him a very attractive prince. He truly is seen as elite in the Indian communities and
worshiped.
Brand Building
Kris, being a fashion accessory brand for the middle and upper Indian society, it is important that we
build our brand through the right channels. We would need to create a buzz among the upper
middle class. The upper and middle class are brand conscious and women spend a lot of time finding
the right accessories. With a limited branded accessories market it is important that Kris establish an
elite and luxury perception in the Indian consumers. The marketing strategy will be focused on
building an elite brand perception through brand ambassadors and word of mouth marketing. Indian
consumers admire fashion idols mostly in Indian movies. One of the key initiatives that Kris will take
is to promote itself through the Bollywood community. In order to build Kris, the marketing
initiatives will focus on various promotion channels such as movie marketing, brand ambassadors,
hoardings, retail POP’s and word of mouth.
32 http://www.krishna.com/
22
Segmentation, Targeting and Positioning
Segments
Target
Position
Kris will target women who are 25 years of age and greater. These women should be from the
middle and upper income groups. The main segments that Kris will target are women who are
fashion savvy. These women are trendy and look at branded clothes. One important target segment
is women who are status orientated for e.g. women who often shop at hi-end fashion stores like
Gucci. Socialites are extremely important for our word of mouth branding. These women often go
for afternoon parties, fashion events, Bollywood and media parties. The trendsetters are our brand
ambassador and women who are fashion adventurers. In India there is a high percentage of women
who are housewives. These women make an important target segment for Kris. As most of these
women often shop during the day and attend lunches and other events.
23
Fashion SavvyStatus
OrientatedSocialites Trendsetters Housewives
Women 25+, Middle and Upper Income groups
Fashionable, innovative and high quality products
The position we hope that our brand will create in the mid of our target audience is an elite, high
fashion and great product quality.
Price
Kris with its branding strategy expects to obtain a niche position in the Indian market. In order to
establish a high-end brand, Kris will adopt a pricing strategy which is catered to the middle and
upper middle class. Listed below is the average approximate price of branded accessories in India.
Brand Target Audience Average retail Price
Rohit Bal High-End Rs. 5000
Tarun Tehlani Mid & High-end Rs. 3000
Bombay Dyeing Mid Rs. 1500
Raymond Mid Rs. 1000
Satya Paul Mid Rs. 3000
Gucci High-End Rs. 13,000
Aldo Mid Rs. 1000
As seen in the table above these price points cater to the high and Middle income groups. The
average price falls in the range between Rs. 3000-5000. Although these brand have also
distinguished products between themselves as being high-end and mid. Kris will have products that
are priced between 3000-5000 rupees for the mid-range and high-end products which are starting
from 8000-10,000 rupees. The product price points will differ based on the material used in
production. The complete 2011 collection with price points is listed in the (Appendix 7).
24
Promotion
In order to establish a niche brand presence in the Indian market it is critical to promote the brand
through the right channels. Based on our target segments and positioning of the brand the following
chart depicts the channels most suited to create brand awareness.
Figure 4: Promotion Channels
As per the figure above the following will be the channels adopted by Kris to establish and promote
the brand year on year.
Website
In order to be a high-end player in the Indian market, it is important to establish a great website. The
website will be modelled after high-end brands such as loro Piana, Gucci and Rohit Bal. The website
will focus on providing the consumer with an upscale and niche look and feel. The website will be
user-friendly and adopt web 2.0 standards (Appendix 10)
25
BUZZ GENERATION
WEBSITE
MAGAZINES
EVENT SPONSORSHIPS
HOARDINGS
MALL PROMOTIONS
BRAND AMBASSADORS
PERSONAL CONTACTS
RETAIL STORE
Retail Store
The Retail store will adopt a hi-end look and feel with a clean shop floor design and a heavy focus on
product. The goal of the retail store is to create a relaxed hi-end look and feel that will give the
consumer an enjoyable shopping experience. For the retail store design Francorp LTD. will provide us
with a store design expert. The design expert will work with Reena Khanna on creating a niche store
which integrates our brand ideology. (Appendix 11)
Magazines
Karma Ltd. will focus on the 5 fashion magazines in India. These magazines have a narrow target
audience which focus on our target segments and income groups. This will help build brand
awareness and entice consumers to enter our retail shops.
Magazines
Femina
Vogue
Bazaar
Cosmopolitan
Filmfare
These magazines target women who are 20 years and over. This falls into the perfect channel to
create brand and a buzz about the brand. (Appendix 12)
Personal Contacts
All five partners will use their personal contacts to promote the launch and their stores. This is an
critical step. Since all the partners have a lot of industry contacts and members of textile councils
etc. Anshul Muthe has a big friend circle with many Bollywood actors and media contacts. This will
26
leverage the brand perception and awareness. It is critical for this to set in the mind of Indian
consumers who are extremely movie orientated. Indian is one of the largest movie producers and
with about one billion population that are star struck it will help establish a brand presence.
Event Sponsorship
Kris will look to sponsor fashion events. The main fashion event in India which attracts all textile and
business associates takes place twice a year both in Mumbai. It is called the Lakhme fashion week. It
is globally recognized and attracts a huge crowd. Kris will work with Lakhme to sponsor an
accessories stand and branding banners at the venue. This provides Kris with a perfect opportunity
to create brand awareness amongst the target group. (Appendix 13)
Mall Promotion
Kris will be promoted in tier 1 city malls. The 6 malls in which Kris open retail stores there is will
banners and mall events which will be sponsored by Kris. There will be Point of Purchase items such
as brochures handed out.
Hoardings
In order for Kris to be promoted hoardings are an ideal way to promote it. A plan for Mumbai has
been selected and the same will follow for other cities. The hoardings selected will be only in upscale
areas and where the maximum traffic is located. (Appendix 14)
Brand Ambassador
This is one of the most important ways to promote our product in India. For a brand ambassador we
have approached Sonam Kapoor an actress, model and fashion savy person. She is absolutely
stunning and is an ideal person to promote Kris. She has a huge fan following and is considered the
most fashion orientated person in India. (Appendix 15)
27
Launch Plan
Kris will launch on August 22nd of 2012. In order to make Kris a success it is important to create a
buzz in the two launch cities Mumbai and Delhi. The lakhme fashion week starts on August 16 th
through August 22nd. This is India’s premier fashion event. In order to launch Kris we will have our
brand ambassador reveal our fashion accessories product line. This will not only create brand
awareness but will help leverage our launch of the stores. The launch plan will include sponsorship
and promotion by Sonam Kapoor, hoardings around both cities and public relations articles.
(Appendix 16)
All activities which are listed above are accounted for in the marketing budget (Appendix 17).
28
8. Operations In order for Kris to be a successful brand logistics will play a critical role. Karma ltd. will adopt an
agile supply chain strategy. The key to making Kris a successful brand is the following
Flexibility (All store managers will provide bi-weekly inputs to the product designer)
Since fashion accessories are smaller products the aim will be to have quick product
turnover
Faster communication and greater flexibility awarded to store managers by a customized
ERP
Strict timetables and cut-offs for products.
All products will be delivered by road or air from the factory based in Amritsar, Punjab. These
products will be delivered monthly and will be closely monitored to see stock fluctuation.
Figure 5: Logistics
29
Factory - Amritsar
Delhi
Retail store 1
R
Hyderabad
Retail store 4
R
Mumbai
Retail store 2
R
Kolkata
Retail store 5
R
Bangalore
Retail store 3
R
Chennai
Retail store 6
R
RoadAir
Air
Air
Air
Air
As seen in the figure below all items will be produced in our factory in Amritsar and delivered
through road or air depending on the location of the stores. FedEx has devised special courier rates
for karma ltd. (See Appendix). All marketing, administrative and product design will take place in the
Mumbai office.
One of the major aspects that Karma ltd. will incorporate in their supply chain is a flexible ERP. The
ERP should have the following aspects.
Inventory management
Task management
Instant customer feedback (Through retail staff)
Order placement and stock replenishment
Sales forecasting
Manufacturing capacity & production information
Chat and communication portal
Sales & functional audits
Figure 6: Customised ERP
30
Inventory MGT
Reporting Business
Intelligence
Store Operations
Supply Chain
Data MGT
9. Finance Summary Balance Sheet, P&L and Cash Flow projections for 5 Years, broken down by each year are available in Appendix 18
As a founding team, the five directors have chosen not to receive a salary from the business in year 1 as we believe in bootstrapping at the outset in the interest of cash flows. Each of the founding partners have decided on the equity sharing ratios mentioned below
Profit-Sharing.
Partners Name Percentage of Equity Funds Invested
Sagar Khanna 25% 100,00,000
Sunil Khanna 20% 80,00,000
Reena Khanna 25% 100,00,000
Raghav Khanna 15% 60,00,000
Anshul Muthe 15% 60,00,000
Total 100% 400,00,000
As per the agreement with the five partners, we have decided to invest funds of a combined 4crores initially into the business. As per our Profit and Loss account we expect that our product sales increase year on year. In the first year we have projected sales to reach approximately 4 crores and sixty two Lakhs. Although this is a high expectation we realise that production costs will also increase on a year on year basis.
We projected our sales figure based on the manufacturing unit costs and the demands in the current market. In order for use to make a projection we have listed certain assumptions which are key to our forecasts. Sixty per cent of our inventory is expected to be sold during peak months which we have identified as August through January and in off peak season we have projected only forty percent sales. This has allowed us to better understand our financial position.
As we have decided to outsource production to R.K. Overseas, we feel that manufacturing costs can be kept at a minimum. The per unit manufacturing for our high-end products is at 1500 rupees per unit with an 5 per cent commission provided to R.K Overseas on the MRP of the product.
As per our financial projections we expect a gross profit listed below through the years. The figure is listed in Lakhs.
Year 1 Year 2 Year 3 Year 4 Year 5
31
G.Profit 51.31 119.98 186.15 248.52 313.42
The five partners of the firm are risk adverse individuals and therefore have decided to have kept more cash in hand in case of unforeseen events. The cash at hand expected at the end of the first year is 57.2 lakhs which can be used to overcome any unforeseen events. It is also important to note that partners have chosen to invest funds through their own financial savings.
32
9. Risk
The goal of every business is to mitigate risk; the five partners have identified six areas where we feel there could be a potential risk.
Risk Area DescriptionPrice of Raw Materials
The price of raw materials sourced for the production would fluctuate based on the government’s pricing. This is critical to our cost structure and might vary.
Climate The weather in India has many implications, first on the production. Fibres such as cotton, silk are in abundance in India but the country is prone to weather extremes. Extreme temperatures and rainfall could halt production.
Retail Space Although malls are growing in India. In three metropolitan cities we have estimated that we would lease stores in malls which are scheduled to be developed. In case of malls being delayed, the partners would look to open solo stores and other options.
Imitability Since our products will be available in stores. The product designs could be imitated by cheap players in the local markets. Currently we would utilise the first mover advantage by setting up retail store for our accessories. We would be the first textile company to create a retail store of accessories. This could open the door for many followers.
Financials Although we project healthy sales and a cash rich company, there might be a requirement for re-finance if sales targets and the right brand image has not been developed.
Although these factors are general it is essential to state them. The partners of the firm truly believe their capabilities and the product itself.
33
APPENDIX 1.
SWOT ANALYSIS (Indian Textile Industry)
Strengths Weaknesses
The Indian textile industry currently is independent and self-reliable.
The textile industry is largely fragmented.
There is an abundance of raw materials such as cotton. India is the 2nd largest producer of natural and manmade fibres33. This also helps the industry control costs.
The industry is heavily dependent on cotton
There is an abundance of low cost skilled labour. 34 There is technological obsolescence
Growing domestic market. India has an increasing domestic market.
Recently there has been a decline in mills.
India’s economy is booming and FDI has increased in recent years.
Most textile companies have lower production capabilities
Most mills, looms etc... Have manufacturing flexibilities, which allows for fast product innovation.
Lack of ethical standards and compliant to international standards. Labour unions and issues often occur35.
Has operational advantages and presence across value chain. This can reduce lead times.
Lack of trade memberships and practises
Infrastructure is still lacking. This often causes production and logistical issues.Labour laws are stringent but not often followed. Strikes by unions occur.
Opportunities Threats
Since the Indian economy is booming there is an increasing potential in the domestic market
With China being the manufacturing hub. There is an increasing pressure.
There is an increasing retail industry, with over 300 malls in plans to be developed.
Product Quality needs to be monitored and there is a lack of standards.
Consumers have a higher purchasing power and disposable income
Diminishing power and hand loom products. This leaves
Indian consumers are becoming more brand conscious
Pricing pressures are increasing
India was under a Quota regime till 2005. This put restrictions on trade and production. With the elimination of this it provides companies with ability to increase production
Land, retail and other property values are increasing
Appendix 2.
33 http://www.icac.org/econ_stats/country_facts/e_india.pdf34 http://www.globalresearch.ca/index.php?context=va&aid=1353035 http://www.globalresearch.ca/index.php?context=va&aid=13530
34
Management Team Structure
Management Team responsibilities:
Sagar Khanna
Sagar will lead the management team, he will work on a strategic level and guide the team through key retail initiatives and overlook the entire company operations.
Sunil Khanna
Sunil will be responsible on handling plant operations in Amritsar. He will work on making our operations efficient and ensure production operates at an optimal level. He will be responsible in fulfilling retail product demands.
Reena Khanna
Reena will be responsible in product development. She will be responsible in creating innovative products, new and fashionable designs that will cater to the needs of our consumers. She will need to develop timely design collections.
Raghav Khanna
Raghav will be responsible in handling all operational aspects such as retail stock management, logistics and adapting industry standards to ensure products are delivered on time. He will handle retail and plant logistics.
Anshul Muthe
Anshul will be responsible for marketing products throughout the retail stores and in tier 1 cities. He will be responsible for promotional activities, creating brand awareness and establishing marketing campaigns throughout India.
35
SAGAR KHANNA
CEO
SUNIL KHANNA
PLANT DIRECTOR
REENA KHANNA
PRODUCT DEVELOPMENT
DIRECTOR
RAGHAV KHANNA
OPERATIONS DIRECTOR
ANSHUL MUTHE
MARKETING DIRECTOR
36
Appendix 3.
Store # Location Month Year
1 Delhi (Flagship store) August 2012
2 Mumbai August 2012
3 Bangalore September 2013
4 Hyderabad September 2014
5 Kolkata September 2015
6 Chennai September 2016
Karma LTD will look to establish retail stores in tier 1 cities.
Retail Store 1
37
Legend
Retail Outlets
Location Delhi, India
Mall Name
DLF Emporio Mall
Launch Date
September 2012
About the mall
DLF Emporio has been designed as a name synonymous with luxury - offering a unique shopping experience where the accent is on exclusivity, space and aesthetics. There is simply no other place where such a wealth of designer and premium merchandise, lifestyle products and services are showcased under one elegant roof. The nuances of luxurious serenity are going to be expressed at DLF Emporio in a way found only in the fashion capitals of the world, offering just the right kind of tasteful and sublime ambience to attract high value spenders36.
Current Brands they carry
Versace, Versace Collection, Burberry, Bottega Veneta, Canali, Cartier, Fendi, Gucci, Georgio Armani.
Image
Lease Terms
Fixed Fee rental
Appendix 4:Retail Locations
36 http://www.dlfemporio.com/dlf/wcm/connect/emporio/Emporio+Site/Left+Link/ABOUT+US/
38
Retail Store 2
Location Mumbai, India
Mall Name Palladium Mall
Launch Date November 2012
About the mallIn the industrial zone of Lower Parel, where the sound of mill machinery has been replaced by the clatter of heels, High Street Phoenix has opened the doors to the 200,000 square foot Palladium mall. A shopping and entertainment experience adjacent to the under-construction Shangri La Hotel. Spread across four levels, the elegant interiors compliment the mix of premium and luxury brands -- which simply means finer ice-cream, better beer, costlier clothes and gift shopping made easier37.
Current Brands they carry Zara, Rohit Bal, Diesel, Georgio Armani, Canali, Burberry
Image
Lease Terms Fixed Fee rental
37 http://www.cnngo.com/mumbai/shop/palladium-227937
39
Retail Store 3
Location Bangalore, India
Mall Name UB City Mall
Launch Date September 2013
About the mallUB City has four towers namely, UB Tower (19 Floors), Comet (11 Floors), Canberra (17 Floors) and Concorde (19 Floors). The later three towers are all named after aircraft. UB City will house the Group offices under one roof - UB Tower. Concorde & Canberra will have retail space on the lower floors and office space in the higher levels, while Comet will have serviced apartments. It will house commercial offices, banks, high-end retail stores, a five star hotel, serviced apartments, restaurants, food courts, pubs, health clubs and cafes. Multi-level parking areas will offer virtually unlimited parking spaces. Also on the blueprint is an amphitheatre with food courts and landscaped gardens. UB City will provide parking space for over 1,100 cars. Being an environment friendly project and keeping in mind the green surroundings of Cubbon Park, one-third of the space has been earmarked for landscaped gardens38.
Current Brands they carry Louis Vuitton store, along with Gucci, Dunhill, Ferragamo, Jean-Paul Gaultier, Moschino and Stella MacCartney
Image
Lease Terms Fixed Fee rental
38 http://en.wikipedia.org/wiki/UB_City
40
Retail Store 4Location Hyderabad, IndiaMall Name DLF Mall (Due to be completed by 2013)Launch Date September 2014Brands they are going to carry
Giorgio Armani, Salvatore Ferragamo, Louis Vuitton, Cartier, Fendi, Dior, Just Cavali, Aigner, Tods, Tiffany’s, Burberry and Hugo Boss
Lease Terms Fixed Fee rentalRetail Store 5
Location Kolkota, IndiaMall Name CESC Mall (Due to be completed by 2012)Launch Date September 2015About the mall The luxury mall will span across 400,000 sqft of retail space, on three acres of
land in central Kolkata. The mall will house about 20- 25 luxury brands, and labels like Canali and Gucci39.
Brands they are going to carry Salvatore Ferragamo, Bottega Veneta and Ermenegildo Zegna
Lease Terms Fixed Fee rentalRetail Store 6
Location Chennai, India
Mall Name DLF Mall (Due to be completed by 2014)
Launch Date September 2016
Brands they are going to carry Giorgio Armani, Tiffany’s, Burberry and Hugo Boss
Lease Terms Fixed Fee rental
39 http://luxpresso.com/news-indulge/kolkata-to-get-first-luxury-mall/6422
41
Appendix 5
Business Model
42
KARMA LTD. PRODUCTION
Mumbai Delhi
Hyderabad
Chennai
Bangalore
Kolkata
R.K.OVERSEAS FRANCORP
Karma ltd business model will focus on its core competencies which is product design. The vision, strategy, business processes, product design, administrative duties and marketing will be the responsibilities of Karma ltd. The Mumbai office which is their head office will handle these duties. It provides both production and retail management agency with clear direction on these aspects. Production will be outsourced to R.K Overseas which will handle plant operations and logistics. Their responsibility will be to fulfil retail demands. Francorp will be responsible to manage retail operations in our six outlet stores. They will run and manage these retail outlets.
Karma ltd has chosen to outsource production to R.K. Overseas and retail management to Francorp India. The core capabilities (Product Design) will be Karma ltd. responsibility. This business model will help the individual parties focus on their main competence. This is critical to make Karma Ltd. a successful company.
Appendix 6
Product Materials
Product Type Fibre
Scarf & Shawls Bamboo and Modal
Scarf & Shawls Linen
Scarf & Shawls Linen and Modal
Scarf & Shawls Fine wool
Scarf & Shawls Silk and wool
Scarf & Shawls Twill wool
Scarf & Shawls cashmere
Scarf & Shawls Solo wool
Scarf & Shawls SM Net wool
Scarf & Shawls Viscose and Cotton
Scarf & Shawls Cambric cotton
Scarf & Shawls Silk modal
Scarf & Shawls Modal
Scarf & Shawls Modal and bamboo
Scarf & Shawls Silk and cotton
Scarf & Shawls Silk viscose and cotton
Scarf & Shawls Silk and bamboo
Scarf & Shawls cotton voile
Scarf & Shawls Cotton and modal
Scarf & Shawls Poly cotton
43
Appendix 7
Product Collection
There will be two collections launched each year. Winter and summer. Listed below is the tentative winter collection for 2012. These products have been categorised by High-end and Mid-range products.
High- End Winter Collection 2012
44
45
Product Price Range # of Product designs Material used in above collection
5000- 10,000 20 Silk
Fine Wool
Cashmere
Mid-range Winter Collection 2012
46
47
48
49
Product Price Range # of Product designs Material used in above collection
2000- 3000 45 Wool
3000-5000 30 Cotton
Modal
Viscose
Linen
Bamboo
Appendix 8
Market research
A market research was conducted to understand Indian consumer’s perception and understanding of the fashion textile industry.
Survey research objectives
Identify where consumers buy fashion accessories How much do they spend on fashion accessories How often do they purchase accessories
Sampling plan
For my research survey, I choose the female population ranging from 24 through 50 years of age. There were 52 females who were in the middle to high income group were asked three questions.
Data Collection Methodology
We used a simple qualitative method where the data was collected and analysed. The data was collected on a standard questionnaire and tabulated.
Results
Where do you buy fashion accessories from?
20%
27%
53%
Purchase Locations
Local StoresInt. StoresLocal Market
50
Price paid for accessories?
Price Ranges Results1000-3000 34%3000-5000 42%5000 plus 24%
How often do you purchase accessories?
Purchase frequency ResultsOnce a month 29%Twice a month 39%Randomly 32%
51
Appendix 9
Indirect Competition (Foreign brands in Indian Market)
Listed above are International brands present in the Indian market. These have a average brand presence though they do not focus on accessories.
52
Appendix 10
Website
Website: The website will be modelled after the following niche websites.
Loro Piana :
Gucci:
53
Rohit Bal:
54
The website will be modelled after the websites mentioned above. It will provide a similar user experience but have consistent look and feel. The following will be the sections in the website
Home About US Kris (The Brand
Company Products Store Locator
History Philosophy Management Team
Hi-end Future plans
Fashion Designer
Mid Mall Info.
The Website will have a mix of dynamic and static pages, with a flash integrated throughout the website. It will have a clean and niche look and feel.
55
Appendix 11
Retail Store
Francorp India will establish retail store designs and blocking venue sites for Karma LTD. Francorp has been Asia’s leading franchising and retail Solutions Company since 1999. The following will be Francorp responsibilities
1. Retail Store Design2. Retail Mall contracts and hiring of space3. Retail store staff management 4. Stock management & other retail duties. 5. Franchising throughout tier 1 cities.
As per the responsibilities above francorp will help Karma LTD establish and run retail stores across tier 1 cities in India.
Store Designs samples
56
Sample 1: It will have a heavy focus on lighting thus enhancing the products. It will create an exclusive look and feel.
Sample 2: It provides the consumer with a more spacious and clean look and feel.
The entire sample listed above is ideas on how we need to establish the store design. Francorp will design and implement the retail store and Reena Khanna will assist in the design process.
57
Sample 3: Similar to sample 1 it also has a heavy focus on products. The lighting will focus on products.
Sample 4: This provides a clean and product focus look and feel.
Appendix 12
Magazines
Magazines Number of Issues per yr Subscription Rate (1 yr)
Femina 28 Rs. 1400
Vogue 20 Rs. 1200
Bazaar 10 Rs. 1000
Cosmopolitan 12 Rs. 1200
Filmfare 12 Rs. 1300
Listed above are the number of subscription issues per year and the price offer to consumers. Karma Ltd. will advertise Kris in these magazines.
58
Appendix 13
Event Sponsorship
Karma ltd will look to sponsor two Lakhme fashion week events. Lakmé Fashion Week (LFW) is jointly organised by Lakmé, the No.1 cosmetics and beauty services brand in India and IMG, the global leader in fashion weeks and event production. LFW has been conceived and created with a vision to “Redefine the future of fashion and Integrate India into the global fashion world”. LFW is organized twice every year. LFW Winter / Festive 2011 will be held from August 16 to August 2140.
Venue Layout
40 http://www.lakmefashionweek.co.in/?main_page=EventInfo
59
Appendix 14
Hoardings
Hoarding boards are selected based on high-end localities and high traffic areas.
SR NO LOCATION TYPE DAYS
1 Kemps Corner to Haji Ali ILL 102 Chowpaty Near Patel Bridge ILL 103 Mumbai Central Near Maratha Mandir Theatre NL 204 Mahalaxmi (W) Opp. Race Course Near Signal (SET OF 3) NL 155 Lower Parel Nr Markeet GK MARG (alakh) NL 206 Byculla Trf Going Towards J.J TO BYCULLA ILL 107 Dadar Tilak Bridge Plaza to Tt LHS ILL 208 Prabhadevi, Near Prabhadevi Circle & Siddhivinayak Temple NL 109 Cadell road Dargha Gali- Hinduja ILL 1010 MAHIM MANTUNGA (SET OF 10) NL 1511 BANDRA ON FLYOVER CAUSEWAY JN ILL 1512 Santa Cruz Highway Vakola Flyover sym ILL 2013 Bandra E, Thakaray Bridge 1st ILL 1514 Andheri, JVPD circle (L.H.S ) (instead of mobile van) ILL 2015 Andheri Link Road, Chitrakut Nr. Fame Adlabs & Fun Republic 3 ILL 2016 worli Opp.Passport office NL 1017 Sion, L.B.S.Marg fcg Trf cmng frm Bandra dharavi towards sion&Kurla ILL 2018 Chembur,Nr.RCF,Bridge fcg trf cmng frm chembur going towards chunabhatti ILL 1519 THANE (W)ABOVE ASHOK TALKIES BOTH SITE FCG NL 2020 THANE ILL 2021 Bandra Junction NL 1022 ANDHERI ON JOG FLYOVER ILL 1023 NERUL NR DY PATIL COLLEGE ILL 2024 BUS SHELTER AT CHURCHGATE STN ILL 2025 BUS SHELTER AT KHAR LINKING ROAD ILL 2026 Goregaon Sport Club to Hyper City ILL 1027 Khar S.V Above Shahil Hotel Trf Going Towards Bandra ILL 20
28 Goregaon W.E. Highway Nr. Aarey Junction Flyover ILL 20FOC SITES
30 Juhu Gulmohar rd Opp Amar Juice Center NL 1031 Andheri Nr. Lokhandwala Samarth Vaibhav ILL 1032 Tardev Fly Over NL 1033 Malad (w) Fcg Road NL 1034 Pawan Hans S.V. Rd. NL 10
These are the hoarding sites that will be selected in Mumbai India. Similar sites will be selected in Delhi, Bangalore, Chennai, Kolkata and Hyderabad.
60
Appendix 15
Brand Ambassador
Sonam Kapoor
Sonam Kapoor is India premier actress. She has been working in the film industry since 2005. She was born into a Bollywood family with her father Anil Kapoor an extremely talented actor who has worked in Slum dog millionaire. Sonam has won many fashion awards and is considered to be India’s fashion idol. With new movies coming up and many fashion shows lined up she provides Kris with the perfect brand icon. Her simple beauty, fashion sense, personality and fan following is a perfect match for Kris. Apart from being an actress she is a family friend of Anshul Muthe.
61
Awards Number
FilmFare award 2
Stardust 2
Star Screen 2
Zee cine 1
Brand ambassadors 2
Appendix 16
Launch Plan
Launch Date:- August 22nd
Pre Launch Activity:- Lakhme Fashion show (Sonam Kapoor reveals product line)
Mumbai DelhiFashion show sponsorship
August 21st 2012 Hoardings August 21st – September 21st 2012
Fashion show product launch
August 21st 2012 Mall Promotions August 22nd
PR articles 4 August 22nd 2012 PR Articles August 22nd 2012Hoardings August 21st –
September 21st 2012POP’s August 22nd 2012
POP’s August 22nd 2012
Each store our brand ambassador will cut the ribbon and all celebraties, fashion pundits etc.. will be called. There will be food and refreshments served in our premier store. POP’s such as brochures will be distributed.
62
Appendix 17
Marketing BudgetYear 1 Event Sponsorship Lakhme Fashion Week 20,00,000
Hoardings Mumbai & Delhi 10,00,000Magazines Femina, Vogue, Cosmopolitan, Filmfare & Bazaar 2,00,000Mall Promotions Banner adds, Retail Store POP’s 3,00,000Brand Ambassador Sonam Kapoor (Fixed fee) 12,00,000Website Development 1,50,000Public Relations Newspapers 2,00,000
Year 2 Event Sponsorship Lakhme Fashion Week 20,00,000
Hoardings Bangalore 4,00,000Magazines Femina, Vogue, Cosmopolitan, Filmfare & Bazaar 2,00,000Mall Promotions Banner adds, Retail Store POP’s 4,50,000Brand Ambassador Sonam Kapoor (Fixed fee) 12,00,000Public Relations Newspapers 2,00,000
Year 3 Event Sponsorship Lakhme Fashion Week 20,00,000
Hoardings Hyderabad 4,00,000Magazines Femina, Vogue, Cosmopolitan, Filmfare & Bazaar 2,00,000Mall Promotions Banner adds, Retail Store POP’s 6,00,000Brand Ambassador Sonam Kapoor (Fixed fee) 12,00,000Public Relations Newspapers 2,00,000
Year 4 Event Sponsorship Lakhme Fashion Week 20,00,000
Hoardings Kolkata 4,00,000Magazines Femina, Vogue, Cosmopolitan, Filmfare & Bazaar 2,00,000Mall Promotions Banner adds, Retail Store POP’s 7,50,000Brand Ambassador Sonam Kapoor (Fixed fee) 12,00,000Public Relations Newspapers 2,00,000
Year 5 Event Sponsorship Lakhme Fashion Week 20,00,000
Hoardings Chennai 3,00,000Magazines Femina, Vogue, Cosmopolitan, Filmfare & Bazaar 2,00,000Mall Promotions Banner adds, Retail Store POP’s 9,00,000Brand Ambassador Sonam Kapoor (Fixed fee) 12,00,000Public Relations
Newspapers 2,00,000
63
Appendix 18
Financial Statements
PROJECTED PROFITABILITY STATEMENT - RS IN LAKHS
YEAR I II III IV V
INCOME
sales462.0
0693.0
0924.0
01155.0
0 1386.00
EXPENDITURE
Stock208.2
0312.3
0416.4
0 520.50 624.60Retail Store Lease 30.00 42.00 52.80 63.60 74.40Francorp Charge 12.00 12.00 12.00 12.00 12.00Employee 30.00 48.00 64.80 82.50 99.00Marketing & Sales 50.50 44.50 44.00 47.50 48.00Admin & Office 48.00 52.80 58.08 63.88 70.27Pre-paid Retail store lease 7.00 7.00 7.00 7.00 7.00Sundry Expense 3.00 3.00 3.00 3.00 3.00
Total Expense388.7
0521.6
0658.0
8 799.98 938.27
Earnings before depreciation, 73.30171.4
0265.9
2 355.02 447.73Interest & tax.
Income tax @ 30% 21.99 51.42 79.77 106.50 134.31
Earnings after tax 51.31 119.9 186.1 248.52 313.42
64
8 5
65
PROJECTED BALANCE SHEET - RS IN LAKHS
YEAR I II III IV V
ASSETS
Fixed assets as per schedule 30.00 42.00 52.80 63.60 74.40
Pre-paid Retail store lease 7.00 7.00 7.00 7.00 7.00
Stock 142.00 215.60 345.70 420.10 433.67
Debtors 200.40 325.00 400.00 450 525.00
Misc. current Assets 35.12 30.80 42.15 28.95 40.15
Cash Balance 40.00 55.00 65.00 85.00 90.00
454.52 675.40 912.651054.6
5 1170.22
LIABILITIES
Capital Account 400.00 550.00 720.00 800.00 850
Profit & Loss Account 51.31 119.98 186.15 248.52 313.42
Sundry Creditors 3.21 5.42 6.50 6.13 6.8
454.52 675.40 912.65 1054.7 1170.22
66
PROJECTED CASH FLOW STATEMENT - RS IN LAKHS
YEAR I II III IV V
SOURCES OF FUNDS
Partners Contribution400.0
0 - -
Reciepts of from Customers462.0
0693.0
0924.0
01155.0
01386.0
0Increase in Sundry Creditors 3.21 5.42 6.50 6.13 6.8
865.21
693.00
924.00
1161.13
1392.80
APPLICATION OF FUNDS
Increase in Fixed Assets 30.00 42.00 52.80 63.60 74.40Rental Advance 7.00 7.00 7.00 7 7
Payments to suppliers208.2
0312.3
0416.4
0 520.50 624.60Income - Tax 30% 21.99 51.42 79.77 106.50 134.31Payments to Employees 30.00 48.00 64.80 82.50 99.00Francorp Charge 12.00 12.00 12.00 12.00 12.00Marketing & Sales 50.50 44.50 44.00 47.50 48.00Admin & Office 48.00 52.80 58.08 63.88 70.27
407.69
570.02
734.85 903.48
1069.58
Opening cash Balance400.0
0 57.52180.5
0 369.65 627.3
Surplus457.5
2122.9
8189.1
5 257.65 323.22
Closing Cash Balance 57.52180.5
0369.6
5 627.30 950.52
67
Assumptions
Sales
1 Number of high end products 202. Number of Mid-range products 753. Stores will carry 10 quantities of each every month. Therefore in a
month they will have 9504. Average price of Hi-End product 8000 and Mid-range 30005. Assumption of 60% of products sold during peak season and 40 %
of products sold during off-season6. Peak Season lasts for 6 months (Aug-Jan) and Off-Season for 6
months Feb-July.
Based on the assumptions above Sales are forecasted below
Year 1 Year 2 Year 3 Year 4 Year 5Sales 462.0 693.00 924.00 1155.00 1386.00
Figures are listed in Lakh rupees.
Office & Administrative Expenses:-
This Includes rent, printing and stationary, Travelling, Logistics and conveniences. It is expected to increase at 10%..
Year Total Expenses1st Year 48,00,0002nd Year 52,80,0003rd Year 58,08,0004th Year 63,88,0005th Year 70,27,000
68
LABOUR CHARGES
Year
1st Year 30,00,000
2nd Year 48,00,000
3rd Year 64,80,000
4th Year 82,50,000
5th Year 99,00,000
Labour Charges are expected to increase by 10%.
Manufacturing & Supplier Costs
Manufacturing Assumptions Price in rupeesManufacturing cost per Hi-End unit is 1500
Manufacturing cost per Hi-End unit is 500
Supplier to Charge 5% on Retail tagged price Therefore
Hi-end – 400Mid-range 150.
Total Supplier Cost per Unit Hi-End 1900 and Mid-range 650
Retail Store Leases Locations lease was based on the metropolitan cities and the current rates of rent
Location Lease AmountMumbai 12,00,000Delhi 18,00,000Hyderabad 10,80,000Chennai 10,80,000Bangalore 10,80,000Kolkota 10,80,000
69
Corporate Tax
Corporate tax rate is expected to stay the same at 30% per annum.
Profit Sharing
Partners Name Percentage of Equity
Funds Invested
Sagar Khanna 25% 100,00,000Sunil Khanna 20% 80,00,000Reena Khanna 25% 100,00,000Raghav Khanna 15% 60,00,000Anshul Muthe 15% 60,00,000Total 100% 400,00,000
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