Professional Documents
Culture Documents
on
[Subject-business
environment]
SUBMITTED TO:
SUBMITTED BY:
MS. SACHIN JAIN VISHAL
KR. JAISWAL
LECTURER, LSB. ROLL.-
B38.
SE
CTION-R326
MB
A-1st SEM.
DA
TE-20-12-08
PREFACE
Last but not the least I would like to thank the Almighty
for always helping me.
INTRODUCTION
VISHAL MEGAMART is a retail house in India. As of April 30, 2007,
it operates 50 retail stores, including two stores which are operated by
their franchisees. These 50 stores are spread over about 1,282,000square
feet and are located in 18 states across India. In its efforts to strengthen
thier supply chain, it has set up seven regional distributions centres and
an apparel manufacturing plant.
Our Promoters
The following individuals are the Promoters of our Company:
a). Mr. Ram Chandra Agarwal;
b). Mrs. Uma Agarwal; and
c). Mr. Surendra Kumar Agarwal.
The following companies are the Promoters of our Company:
a). Unicon Marketing Private Limited;
b). Ricon Commodities Private Limited; and
c). Vishal Water World Private Limited.
In addition, the following HUFs are the Promoters of our Company:
a). Mr. Ram Chandra Agarwal (HUF)
The details of our Promoters who are individuals, are as follows:
Identification Particulars Details
PAN ACZPA8989R
Passport No. F2654105
Voter ID Number HVV2586279
Driving License Number Not Applied For
Bank Account Number 066010200007115, Rajouri Garden Branch, New
Delhi.
For other details relating to Mr. Ram Chandra Agarwal, Mrs. Uma
Agarwal and Mr. Surendra Kumar Agarwal, including addresses,
terms of appointment as our Directors and other directorships, see
the section titled “Our Management” beginning on page 109. The
details of our Promoter companies are as below:
(a). Vishal Water World Private Limited (“Vishal Water World”)
Vishal Water World was incorporated on May 7, 1999 as a private
limited company under the Companies Act. Its registered office is
situated at Mouza-Kuchpukur, P.S. Bhangore, 24 Parganas (South) West
Bengal, Kolkata. Vishal Water World is presently engaged in the
business of operating an amusement centre and sports complex.
Mentioned below are certain details of Vishal Water World:
Board of Directors
As of April 30, 2007, the board of directors of Vishal Water World
comprises Mr. Ram Chandra Agarwal
and Mrs. Uma Agarwal.
Acquisition of Business from M/s Vishal
Garments and M/s The Vishal Garments
Year---- Milestone
Understanding of
the ‘value retail’ segment
Thier stores and distribution centres are spread in various parts and
regions of the country. This has not only enabled us to build thier brand
value but also facilitated us to explore cost-effective sthiercing from
different locations, identify potential markets and efficiently establish
new stores in different locations. An aggregate of 43 of 50 of thier
existing stores are located in Tier II and Tier III cities, which, It believe,
enables us to capture market share in locations where a majority of thier
target customers are located.
Private labels
Thier Strategy-----------
It intends to pursue the following strategies in order to consolidate
thier position as an operator in the ‘value Retail’ segment in India.
Thier growth strategy is based on:
Increasing thier penetration in the country by
leveraging thier supply chain, distribution and
logistics network
Expansion of FMCG
PACTICAL ISSUES------------------
"SBI Vishal Mega Mart Card is one of the best co-branded credit cards
that offers reward points and other benefits to frequent shoppers and will
be free for those who spend above Rs 7,500 per annum," SBI Card CEO
Roopam Asthana said.
Asthana said the card would be free of cost for the first year, but would
charge Rs 700 per annum if purchase on the card was less than Rs 7,500.
Other SBI Card holders could also flip their card for SBI Vishal Mega
Mart Card and use it like any other credit card.
"By partnering with SBI Card, we are not just offering customers a
convenient payment mechanism but a unique consumer loyalty
programme that rewards them every time they shop," Vishal Retail MD
Ram Chandra Agarwal said.
Other offers in the credit card are no transaction fee on fuel purchase at
select IOC and IBP petrol pumps and balance transfer facility without
any interest for 75 days and complementary personal accident insurance.
In the initial years, returns are limited due to the high real estate costs,
large and sustained capital expenditure to create scale, and start-up costs
for store infrastructure.
However, investors with longer investment horizons are beginning to
recognise the potential for long-term value appreciation of investing in
differentiated businesses with large-scale plans and able execution
teams.
Apart from the traditional sources like banks and financial institutions,
there are multiple avenues including PE funds. Companies have even
successfully approached the IPO (initial public offering) route to raise
funds.
The company has added retail sales space aggressively in last financial
year. In FY2005, the company added 1 mn sft while it declined to 0.85
mn sft in FY06 and zoomed to 2.7 mn sft in FY07. This FY, the
company has been little bit slow due to unrealistic realty prices and has
managed to add mere 1.5 mn sft till the end of Nov.The company is
expected to clock sales of Rs 7,400 crore for FY2008 but going by the
recent reported numbers, a slowdown is imminent.
IMPACT OF VARIOUS ENVIRONMENT ON
“VISHAL MEGAMART”
Social Impact
The hypermarkets would be spread over an area of 150,000 sq. ft. and
sell apparel, consumer durables, IT and lifestyle products, and home
furnishings besides all the goods available in VISHAL MEGAMART.
Community facilities including a health centre and pharmacy, and a
vocational training centre to assist youth in tapping employment avenues
would also be provided at these centers. Sixty-eight Town Centers, each
spread over 130,000 sq. ft. would be in place in most of the 70 district
headquarters of Uttar Pradesh by the end of next year.
LEGAL IMPACT
In this
environment
govt. plays his legal role to develop the mentioned industry. He makes
suitable law for the multi-dimensional growth of the industry. Govt. has
also fixed a limited FDI in this sector, no body will invest more money
from this limit, but after liberalization govt. changes his policy.
Liberalization of the Indian economy and rationalisation of business
procedures have already ensured a high economic growth with a rapidly
expanding base for the manufacturing and hi-end services sectors. Fresh
avenues for gainful employment to a predominantly young and talented
population have created high disposable incomes that translate in to
higher consumption and thus better opportunities for all verticals of
retail to flourish. The country's dynamic retail landscape presents a
grand opportunity to investors from across the globe, to use India as a
strategic business hub.
ECONOMIC IMPACT
North India accounted for 62% of FY 2007 sales, east India 19%, west
India 15% and south India 4%. In FY07, the apparel business
contributed 63% of revenues, while the non-apparel business contributed
22% and the FMCG sector 15%.
Strong Infrastructure
During FY2002-2007 the company gre 112% & 163% CAGR on top
line & bottom line respectively. During FY2007, the sales & PAT was at
Rs 602 & Rs 25 crore respectively. The OPM & NPM were decent at
11.50% & 4.15% respectively.
Expansion Plans
At the upper price band of Rs 270 per share, the P/E would be 24.1 times
the FY 2007 EPS of Rs 11.15 on post-issue equity of Rs 22.40 crore.
The leading players like Pantaloon Retail, Shopper’s Stop and Trent
(India), enjoy very high valuation with the PER of around 90, 80 and 40,
respectively. Although VRL does not fall in to that league due to its
value retail business model focused on smaller towns & cities,
nevertheless, retail being a high growth industry, Vishal Retail will also
do well & command good valuation.
VISHAL MEGAMART expect the company to post sales & PAT growth
of 60% & 70% respectively over FY07-09. Valuing conservatively at 18
- 20x FY2009 EEPS of Rs 29.91, VISHAL MEGAMART see the stock
scaling up to Rs 538-600 levels over next one year. Investors can
certainly subscribe to this growth stock.
Currently, the India retail market is $332.8 billion (Rs 13,30,000 crore)
strong, growing at the rate of 10.8% per annum, as per Images F&R
Research estimates. Of this, the share of organised retail in 2007 is
estimated to be only 5.9%, which is $19.6 billion (Rs 78,300 crore). But
this modern retail segment grew at the rate of 42.4% in 2007, and is
expected to maintain a faster growth rate over the next three years,
especially in view of the fact that major global players and Indian
corporate houses are seen entering the fray in a big way. Even at the
going rate, organized retail is expected to touch $57.5 billion (Rs 2,300
crore) by 2010, constituting roughly 13$ of the total retail market. With
several states in the country permitting retailers to purchase produce
directly from farmers, the farmers too are adapting to the new
opportunity to cultivate assigned crops and take special care of the same.
This gets them instant credit at higher.
POLITICAL IMPACT
This environment is very important from the view of these particular
topics, because every way would pass through the political coridor.The
Government of India has succeeded in its reform process; the economy
is poised to grow at an annual rate of 5% during 2005-2010. The reforms
include policies to woo foreign investors, make import duties in
compliance with WTO commitments and customize the EXIM policy to
boost imports.
Due to some political region at least three major cities saw protests in
May against Reliance, India’s largest corporation, entering the business
of retailing fresh vegetables and fruits through its brand Reliance Fresh.
In Ranchi and Indore, the protests had political backing and turned
violent.
The protestors, mostly street vendors, fear the company’s low prices will
destroy their market. While it is too early to know if their fears are
founded in reason or hype, the protests also stem from the fact that they
feel cheated by a government that is in a hurry to promote large retail
businesses and refuses to keep its promises made to small vendors and
retailers, who control about 95 per cent of the country’s overall retail
business. India has an estimated 12 million street vendors in its cities—
the 2004 National Policy for Urban Street Vendors pegs it at 10 million
—and roughly 2.5 per cent of each city’s population is engaged in
vending on streets.
Many visible corporate brands are into the retail business: VISHAL
MEGAMART, Bharti, Big Bazaar, Godrej and Subhiksha. India has not
allowed FDI in multi-brand retailing. But international behemoths like
Wal-Mart, which has a deal with Bharti, are raring for joint ventures.
(Wal-Mart is world’s largest retailer and the second largest corporation.
Labour unions, women’s rights groups, and grassroots organizations
have long argued that the reason for Wal-Mart’s cheap prices is how
shoddily it treats its employees. Wal-Mart had to leave Germany and
South Korea because it did not get the kind of room for its policies as in
the US and other countries.)
TECHNOLOGICAL IMPACT
India’s organized retail industry, constituting 3 per cent of the total retail,
is indeed on a growth path. It has necessitated the development of
sophisticated IT solutions to enable more profitability, efficiency and an
enriching customer experience. Retailing is the second largest income
generator in India after agriculture and constitutes 38 per cent to gross
national income. Dynamic Vertical Solutions Pvt Ltd, based in Gurgaon,
has already made a mark in the field by providing complete end-to-end
solutions for different types of retailers. Atanu Ghose, Technology Head
at DVS and an IT veteran with 37 years of experience, who was in
Bangalore recently to attend FRO2008 — the Franchise and Retail show
— shares some of his perceptions on IT deployment in retail sector.
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46
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Magazines:-
1) Business world.
2) India Today.
3) The pitch