Pepe Denim was founded in 1984 and had grown to 300 stores and 20,000 employees by 2001. After 2007, the company's stock prices began declining even as sales remained consistent. To address declining profits due to competition, an employee, Sneha, suggested introducing denim skirts and handbags, which could be manufactured using the same materials and workers as jeans. Analysis showed the new product lines would increase costs by 32% but profits by 32%, with net profit ratios improving from 18.67% to 21.86%, indicating the new products would benefit the company.

1. Case Analysis of Pepe Denim
Section:B Group:5

2. Introduction
 Pepe Denim was founded in 1984 by Bajaj
brothers
 In 1994, the company decided to go public
 By 2001, the company had 300 across the
country and a workforce of 20,000
 It also started exporting its jeans to China,
Brazil and Nepal
2

3.  Pepe Denim was doing good business till 2007 and
sales were increasing every year.
 After 2007, the stock price of the company started to
decline, even though sales were consistent.
 The company thought that this decline was because
of the recession
 But even after 2007, the stock prices remained flat and
profit continued to decline
3
The Case

4. 4
Suggestion & Estimate by Vipin

5. 5
Sneha’s Suggestion
Since there was a decline in profit due to the
competition, Mr. Bajaj asked Sneha for suggestions:
 Sneha suggested to Introduce 2 new products:
 Denim Skirts
 Denim Handbags for Women
 These 2 products could easily be manufactured as
they require the same raw materials and with the little
training the same tailors could undertake the stitching
activity
 Mr. Bajaj accepted this suggestion as he thought the
2 products would be a good strategic fit for the
existing product line

6. Decision Making Process
Define the Objectives of the Business or the Goals
Identify the Alternatives
Gather Concrete Information
Comparison of the Alternatives
Choosing the Best Option
Step 1
Step 2
Step 3
Step 4
Step 5
6

7. 7
Total Cost of all 3 Products

8. 8
COGS Comparison
1,400,000,000.00
1,200,000,000.00
1,000,000,000.00
800,000,000.00
600,000,000.00
400,000,000.00
200,000,000.00
-
925,000,000.00
1
COGS before recomendation 925,000,000.00
COGS after recomendation 1,254,500,000.00
1,254,500,000.00
Amount in Rs.

9. 9
Income Statement

10. 10
PAT Comparisons
168000000
178500000
262350000
300000000
250000000
200000000
150000000
100000000
50000000
0
PAT

11. 11
Are the Two New Products Beneficial
 Yes it can be recommended to launch the two
products as they will generate a greater income than
that of the previous versions.
 The profit is greater by 8,38,50,000 i.e. 31.96%

12. 22.00%
21.50%
21.00%
20.50%
20.00%
19.50%
19.00%
18.50%
18.00%
17.50%
12
Net Profit Ratio
17.00%
18.67%
19.83%
21.86%
Net profit ratio before redcomendation
Net profit ratio after vipin's recomendation
Net profit ratio after Sneha's recomendation

13. 16
18
20
22
18.67
19.83
21.86
PBT/Sales
After Addition
Vipin's Estimate
Before Addition
13
Conclusion

14. Thank You
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