2011BUSINESS PLAN - DENIM JEANS Atul Dwivedi, Kuldeep Ghorpade, Naveneet Yadav, Vinay Prajapati National Institute of Fashion Technology 9/15/2011
Business PlanOutline of a Business Plan-PrologueName of the businessAtul DenimsOfficial address of the businessAtul DenimsSector CSitapur Road, lucknow industrial AreaLucknow-226016PH- 0522- 250314/15/16www.atuldenims.comOwnership pattern of the businessPartnership Firm (Pvt. Ltd.)Names and addresses of the ownersAtul Dwivedi73, Maruti PuramIndira NagarLucknow, 226016Nature of the businessDenim Manufacturing and Distribution
Outline of a Business Plan-Executive SummaryVision We are ethically run business to provide energy to compete the Fashion in todays Era.Mission "Our Mission is to provide denim for the next Gen family, from every " walk & stage in life, for every occasion, with a wide range of excellent quality that makes them look and feel good”
Summary of the Operation Plani) No. of working days per annum: 260ii) No. of working shifts 8 hr per day: 1iii) Installed Capacity: 60000 Garment/ Monthiv) Utilised Capacity (%): Year-I: 30% Year-II: 70%We Will Start Our Production from the Second Month
Summary of the Marketing Plan Distribution & WH(Faizabad) Head Distribution & Quarter Distribution & WH(Sultanpur) &WH In WH(Basti) Lucknow Distribution & WH(Vanaras)
Summary of the Financial Plan Highlighting the Sources of Finance1.1 Land and Building:BuildingOn rent 50000 Rs/month1.2 Machinery/ equipment:Sr. No. Description Nos. Reqd. Rate (Rs.) Total Value (Rs.)1 Sewing Machines(2nd hand) 250 10,000 2500002 Finishing Machines(2nd Hand) 6 10,000 60,0003 Washing Machines(2nd Hand) 3 25000 7500004 Dryer(2nd Hand) 2 30000 60,0005 Samples Washing Machines 2 20,000 40,0006 Boiler(2nd Hand) 1 5,00000 5,000007 Miscellaneous 100000 100000 Total 17,60,0001.3 Miscellaneous Fixed Assets:Sr. No. Description Total Value (Rs.)1 Stationary (Paper cutters, 2000 Rulers etc.)1.4 Preliminary and Pre-Operative Expenses:Sr. No. Particulars Amount (Rs.)1 Establishment Expenses 10,00002 Trial production expense and sampling 30,0003 Firm and Design Registration charges. Certifications 300004 (payment gateways, VeriSign, Authenticity etc.)5 Initial Advertising Expenses 300005 Website building 7000 Total 1,97,000
1.5 Working Capital:Sr. No. Item Duration Total Value (Rs.)1 Raw Material Stock 7 days 38500002 Salary 30days(300 20,00000 workers) Total 58,50,0001.6 Total cost of the Project:Sr. No. Particulars Total Value (Rs.)1 Fixed Capital 17,60,0002 Working Capital 97,00,0003 Preliminary & Preoperative Expenses 1,97,0004 Administrative and others(Utilities etc.) 10,00000 Total 1,26,57,0001.7 Means of Finance:Sr. No. Particulars Amount (Rs.) Remarks1 Own Investment 60,000002 Financial Banks 80,00000 IDBI(13% Interest) Total 140,000002.1 Sales Revenue:Year. Item (s) Qty. produced per year Rate/unit Capacity Utilisation (%) Total1 Garment(1st year) 216000 250 35 6,30,00,0002 Garment(2nd Year) 5040000 250 70 12,60,0000003 Garment(3rd Year) 5040000 250 70 12,60,0000005 Garment(3rd Year) 5040000 250 70 12,60,000000
3.0 Profitability Projections:Sr. Particulars Amount (Rs. In lakhs)No. Year I Year II Year III Year Year V IVA. Sales Realisation 630 1260 1260 1260 1260B. Cost of Productioni) Raw Materials 514.8(30%) 1029 1029 1029 1029ii) Utilities 8 12 12 12 12iii) Salaries/ Wages 112.32 112.32 112.32 112.32 112.32iv) Repairs and Maintenance 2 3 3 3 3v) Selling and Distribution 2 3 3 3 3 Expensesvi) Administrative Expenses .6 .7 .7 .7 .7vii) Rent/ Interest 9 9 9 9 9viii) Misc. Expenses 1 1 1 1 1 649.7 1170 1170 1170 1170C. Less: Depreciation 3.52 3.52 3.52 3.52 3.52D. Gross Profit/ Loss (A-B) -19.72 89.98 89.98 89.98 89.98 PBT
Outline of a Business PlanIndustry Segment Watch & optical Consumer durable 7% elec 3% Apprel Home Décor 32% 14% Book 7% Footwear Food 10% 20% Health,Beauty 7%
ProductsWe will make only denim jeans which will be the straight fit, tight fit and comfortable fitLeading Branded Players: Levi Strauss, Lee, Spyker, Numero Uno, Trigger, PeterEngland, Reliance, DNMX,Newport, Wrangler, Live-in, Sprax
Non Branded: Approximate 50Intensity of competition: HighMajor players in the industry: Levi Strauss, Lee, Spyker, Numero Uno, Trigger, PeterEngland, Reliance,DNMX, Newport, WranglerMarket share of competitors:Market Capacity: Capacity of India to make denim fabric -600 million m 79 % denims are tagged with a label. Domestic market sales – 300 million m/annum Per capita consumption of jeans in India – 0.3/person/annum Export of denim – 170 -180 million m/annum Domestic denim consumption – 300 million m At 10% CAGR it grows up to 530 million m. annum by 2015Trend of new products introduction in the industry: MediumTrend of product modification in the industry: HighIndustry ForecastHistorical industry turnover:Forecasted industry growth rate: 10% growth rate CAGRDetails on competitor turnover and profit:Business Description:Product portfolio – Denim for men and womenStyle portfolio – Regular fit, straight fit, skin fitProposed size of operation – Small to medium ScaleEntrepreneurial creative outcome explicit in the business -Background of entrepreneur - All are post graduated from NIFT and hands of experience in variouscompanies with diverse area of expertise.Product portfolio -1) Quality of materials: first quality denim Fabric and other trims & accessories of good quality.2) Product style:3) Product features: different kind of washes, variety, and good quality of fabric.4) Product options: p/v trousers, cotton trouser.5) Brand Name: Atul Denims6) Packaging: Packed in printed transparent polybag of Atul Denim Ltd.7) Warranty and product support service – 6 months warranty of rivettes.
Marketing Plan 1) Forecast of market for the business: 2) Marketing zones for the business: South, East, West, North, Central 3) Product pricing methodology: Rs. 300 to 500/pair 4) Product / service promotion policies:Selection of distribution channels – Manufacturer, distributor, retailers
Business Strategies:Market segments• Description of major product / service users -• Quantitative measures of market potential –• Number of potential customers -• Volume of business in terms of monetary value• Trend analysis of historical data
Business Goals:SWOT Analysis: Strong entrepreneurial class Poor work practices resulting in higher labour cost Flexibility in production of small order lots component Presence of integrated i.e. concept to consumer. High transaction and power cost Ability to handle value additions, embellishments etc. Technological obsolescence and lower efficiencies Adequate labour supply at relatively competitive A lack of strong linkages between raw material supplier and wages the apparel manufacturer. Growing Domestic Market Few Raw Material Suppliers. STRENGTH Weakness Opportunity Threats Poor work practices resulting in higher labour cost Understanding the customer because of the language component advantages High transaction and power cost No other manufacturer in nearby area Technological obsolescence and lower efficiencies Reducing the Supply chain can boom this business Few Raw Material Suppliers. Can enter in Retail Section. Daytime Transportation is probhited.
Environment Analysis:Social:People from Eastern are ready to wear the denim as work wear and casual wear. There is a paradigm shift frompolyester cotton and its blends to denim among UP youth.Economical:UP. Youth are having enough discretionary income for shopping..Legal:-The policies are placed in UP which will bolster the business environment.Political:-UP government is a stable state government and promotes indigenous business in UP.Indian Domestic Market for ApparelAccording to estimates, the size of the denim market in India is about 65-70 million pairs. Its a largestructured industry growing at about 15-20% a year.A good volume of denim wear stocks comprise domestic/international brands and/or private labels formen, women and children. Denim wear as a whole contributes on an average 28 per cent to the annualsales of the retail outlets offering denim wear brands. Of all the respondent retailers, 52.7 per cent saidthat denim wear contributes 30 per cent in overall annual sales, while for 29.7 per cent it contributesalmost 50 per cent.
Denim Market in India• There are 23 denim mills in India• 600 million m/year denim manufacturing capacity (installed/under installation)• Approx. 79 % of the jeans sold in India are tagged with a label, the rest by tailors and localizedmanufacturers.• The menswear obtains a majority share of the Indian market with around 75 per cent, women’s wear ataround 15 per cent and kids wear at around 10%. (This is because the Indians are still very conservativewith most of the denim wear in women’s segment being worn in the cities)• Domestic Market sells approx. 300 million metres/ annum: Domestic denim market of India is huge andgrowing. The per capita consumption of jeans in India is, however, only about 0.3 jeans per person p.a.• The domestic denim market in India consumes about 300 million m of denim currently and at a 10%CAGR, can reach about 530 million m in 2015.Market Size and Scope for Denim Jeans WearThe retail market size for Jeanswear in India is Rs 32.97 billion invalue and 63,500 (‘000) pieces in volume for the year 2008. Thisgrew at a relatively healthy rate of 7 per cent in value and 9.1 percent in volume over the year 2007.Fastest value growth was in the super premium range of Jeanswear(13.4 per cent)–the sole range that recorded some positive growthin average selling price: this growth was 5 per cent as compared tojust 1 per cent growth in the premium and low ranges, a 1 per centdecrease (negative growth) in the mid segment, and a 3 per cent decrease in average selling price for theeconomy ranges of Jeanswear. This stagnancy in price growth has had positive effects on volumes growth.Volumes grew 10 per cent to 23.7 million units in the mass entry level range bringing about an 11.1 percent growth in market size (Rs 5.1 billion); a 9 per cent volume growth in the economy and mid ranges ofJeanswear effected 24.87 million and 11.64 million unit sales respectively in the two ranges. Salesrealisation stood at Rs 10.8 billion in the economy range and Rs 10.84 billion in the mid-range ofJeanswear. Volume and value growth was slowest in the premium range of Jeanswear (4 per cent and 5per cent respectively), with 3.17 million unit sales in 2008.Trends indicate a sustained high level of volume growth at the entry level in Jeanswear, with consumers insmaller urban centres and rural hubs taking to this apparel category. Jeanswear is indeed evolving as aunique apparel category where consumer demand exists across all ranges, largely driven by the combinesof a high fashion quot.
Organization Structure: CEO GM GM GM R&D Operation Marketing Manager Manager R&D Finance Production managerRemuneration policy Organigati on Needs and Value External Internal Relativies( Remuneration Relativities Salary (Job Surveys) Strategy Evaluation) Individual Need(Parfrma nce Management) Objective is successful recruitment reward and retention of suitable staff, meeting organization Goals
Supply ChainMumbai and Delhi Major Cities DistributerRetailer Local Distributer Retailer Rural Area Retailer Rural Area Retailer
Industry Segmentation:Pricing Methodology1) Quality image: Yes2) Pricing: Marginal pricing3) Discounts: No4) Promotional quantity and price concessions: 20 pcs, yes5) Credit tern and collection period: 45 days payment, 5% discount on cash paymentPromotional Policies1) Media choice: Local Newspaper/local trade publications2) Media message value for Money3) Publicity Measures: No. of inquiries from retailers to HQ or office.4) Propagation measures: displaysDistribution Channel1) Choice of retailer: According to quantity taken and payment terms2) Geographical Boundary: 3 regional office and one central office will operate in the radius of 200 Km3) Logistics: By third party logistics