Haritha ME

Project Report 2018-2019 The influence of price on the demand supply of Varanasi sarees
TABLE OF CONTENTS
CHAPTER TITLE PAGE NO.
1 INTRODUCTION 2
 INTRODUCTION 3
2 INDUSTRIAL PROFILE&COMPANY
PROFILE 5
 INDUSTRIAL PROFILE 6
8
 COMPANY PROFILE
3 RESERCH METHODOLOGY 9
4 DATA ANALIYSIS 11
5 FINDINGS,SUGGESTIONS&CONCLUSION 17
 FINDINGS 18
 SUGGESTIONS 18
 CONCLUSION 19
BIBLOGRAPHY 21
MES Kuttipuram Page 1 Department of MBA

CHAPTER 1
INTRODUCTION

Supply and demand

Supply and demand is perhaps one of the most fundamental concepts of economics and it
is the backbone of a market economy. Demand refers to how much quantity of a product or
service is desired by buyers. The quantity demanded is the amount of a product people are
willing to buy at a certain price; the relationship between price and quantity demanded is known
as the demand relationship. Supply represents how much the market can offer. The quantity
supplied refers to the amount of a certain good producers are willing to supply when receiving a
certain price. The correlation between price and how much of a good or service is supplied to the
market is known as the supply relationship. Price, therefore, is a reflection of supply and
demand. The relationship between demand and supply underlie the forces behind the allocation
of resources. In market economy theories, demand and supply theory will allocate resources in
the most efficient way possible.
The Law of Demand

The law of demand states that, if all other factors remain equal, the higher the price of a
good, the less people will demand that good. In other words, the higher the price, the lower the
quantity demanded. The amount of a good that buyers purchase at a higher price is less because
as the price of a good goes up, so does the opportunity cost of buying that good. As a result,
people will naturally avoid buying a product that will force them to forgo the consumption of
something else they value more. The chart below shows that the curve is a downward slope.

A, B and C are points on the demand curve. Each point on the curve reflects a direct correlation
between quantities demanded (Q) and price (P). So, at point A, the quantity demanded will be
Q1 and the price will be P1, and so on. The demand relationship curve illustrates the negative
relationship between price and quantity demanded. The higher the price of a good the lower the
quantity demanded (A), and the lower the price, the more the good will be in demand (C).
The Law of Supply
Like the law of demand, the law of supply demonstrates the quantities that will be sold at
a certain price. But unlike the law of demand, the supply relationship shows an upward slope.
This means that the higher the price, the higher the quantity supplied. Producers supply more at a
higher price because selling a higher quantity at higher price increases revenue.
A, B and C are points on the supply curve. Each point on the curve reflects a direct correlation
between quantities supplied (Q) and price (P). At point B, the quantity supplied will be Q2 and
the price will be P2, and so on.
Supply and Demand Relationship
Imagine that a special edition CD of your favorite band is released for Rs 20. Because the
record company's previous analysis showed that consumers will not demand CDs at a price
higher than Rs 20, only ten CDs were released because the opportunity cost is too high for

suppliers to produce more. If, however, the ten CDs are demanded by 20 people, the price will
subsequently rise because, according to the demand relationship, as demand increases, so does
the price. Consequently, the rise in price should prompt more CDs to be supplied as the supply
relationship shows that the higher the price, the higher the quantity supplied.
If, however, there are 30 CDs produced and demand is still at 20, the price will not be
pushed up because the supply more than accommodates demand. In fact after the 20 consumers
have been satisfied with their CD purchases, the price of the leftover CDs may drop as CD
producers attempt to sell the remaining ten CDs. The lower price will then make the CD more
available to people who had previously decided that the opportunity cost of buying the CD at Rs
20 was too high.
Equilibrium
When supply and demand are equal (i.e. when the supply function and demand function
intersect) the economy is said to be at equilibrium. At this point, the allocation of goods is at its
most efficient because the amount of goods being supplied is exactly the same as the amount of
goods being demanded. Thus, everyone (individuals, firms, or countries) is satisfied with the
current economic condition. At the given price, suppliers are selling all the goods that they have
produced and consumers are getting all the goods that they are demanding.

As you can see on the chart, equilibrium occurs at the intersection of the demand and supply
curve, which indicates no allocate inefficiency. At this point, the price of the goods will be P*
and the quantity will be Q*. These figures are referred to as equilibrium price and quantity. In
the real market place equilibrium can only ever be reached in theory, so the prices of goods and
services are constantly changing in relation to fluctuations in demand and supply.
Disequilibrium
Disequilibrium occurs whenever the price or quantity is not equal to P* or Q*.
1. Excess Supply
If the price is set too high, excess supply will be created within the economy and
there will be allocate inefficiency.
At price P1 the quantity of goods that the producers wish to supply is indicated by Q2. At P1,
however, the quantity that the consumers want to consume is at Q1, a quantity much less than
Q2. Because Q2 is greater than Q1, too much is being produced and too little is being consumed.
The suppliers are trying to produce more goods, which they hope to sell to increase profits, but
those consuming the goods will find the product less attractive and purchase less because the
price is too high.

2. Excess Demand
Excess demand is created when price is set below the equilibrium price. Because the
price is so low, too many consumers want the good while producers are not making enough
of it.
In this situation, at price P1, the quantity of goods demanded by consumers at this price is Q2.
Conversely, the quantity of goods that producers are willing to produce at this price is Q1. Thus,
there are too few goods being produced to satisfy the wants (demand) of the consumers.
However, as consumers have to compete with one other to buy the good at this price, the demand
will push the price up, making suppliers want to supply more and bringing the price closer to its
equilibrium.
Shifts vs. Movement
For economics, the "movements" and "shifts" in relation to the supply and demand curves
represent very different market phenomena:
1. Movements
A movement refers to a change along a curve. On the demand curve, a movement denotes
a change in both price and quantity demanded from one point to another on the curve.
The movement implies that the demand relationship remains consistent. Therefore, a
movement along the demand curve will occur when the price of the good changes and the

quantity demanded changes in accordance to the original demand relationship. In other

words, a movement occurs when a change in the quantity demanded is caused only by a
change in price, and vice versa.
Like a movement along the demand curve, a movement along the supply curve means that the
supply relationship remains consistent. Therefore, a movement along the supply curve will occur
when the price of the good changes and the quantity supplied changes in accordance to the
original supply relationship. In other words, a movement occurs when a change in quantity
supplied is caused only by a change in price, and vice versa.

2. Shifts
a shift in a demand or supply curve occurs when a good's quantity demanded or supplied
changes even though price remains the same. For instance, if the price for a bottle of beer
was Rs 50 and the quantity of beer demanded increased from Q1 to Q2, then there would
be a shift in the demand for beer. Shifts in the demand curve imply that the original
demand relationship has changed, meaning that quantity demand is affected by a factor
other than price. A shift in the demand relationship would occur if, for instance, beer
suddenly became the only type of alcohol available for consumption.
Conversely, if the price

for a bottle of beer was Rs 50 and the quantity supplied decreased from Q1 to Q2, then there
would be a shift in the supply of beer. Like a shift in the demand curve, a shift in the supply
curve implies that the original supply curve has changed, meaning that the quantity supplied is
affected by a factor other than price. A shift in the supply curve would occur if, for instance, a
natural disaster caused a mass shortage of hops; beer manufacturers would be forced to supply
less beer for the same price.


CHAPTER 2
INDUSTRIAL PROFILE & COMPANY PROFILE

INDUSTRIAL PROFILE
The textile industry is primarily concerned with the design, production and distribution of
yarn, cloth and clothing. The raw material may be natural or synthetic using products of the
chemical industry. The textile industry is among the oldest and the largest manufacturing
industries in India. It is more than a couple of centuries old and occupies a dominant position in
India’s industrial structure. The textile industry occupies a unique place in the economy of the
country by virtue of its contribution to the industrial output, employment generation and foreign
exchange earnings. It has been the “mother industry” of the country and it has been an engine of
economic growth. By its unique place of importance, the textile industry in India is positioned to
sub serve important socio-economic goals. The origin of the textile mill dates back to 1818 when
the first cotton mill was established at Fort Gloster near Calcutta. The industry has come a long
way and has grown phenomenally, many a time against heavy odds. The industry today has
grown to become the second biggest in the world.
The Indian textile industry is one of the largest in the world with a massive raw material
and textiles manufacturing base. Our economy is largely dependent on the textile manufacturing
and trade in addition to other major industries. About 27% of the foreign exchange earnings are
on account of export of textiles and clothing alone. The textiles and clothing sector contributes
about 14% to the industrial production and 3% to the gross domestic product of the country.
Around 8% of the total excise revenue collection is contributed by the textile industry. So much
so, the textile industry accounts for as large as 21% of the total employment generated in the
economy. Around 35 million people are directly employed in the textile manufacturing activities.
Indirect employment including the manpower engaged in agricultural based raw-material
production like cotton and related trade and handling could be stated to be around another 60
million. A textile is the largest single industry in India (and amongst the biggest in the world),
accounting for about 20% of the total industrial production. It provides direct employment to
around 20 million people. Textile and clothing exports account for one-third of the total value of
exports from the country. There are 1,227 textile mills with a spinning capacity of about 29
million spindles. While yarn is mostly produced in the mills, fabrics are produced in the power
loom and handloom sectors as well. The Indian textile industry continues to be predominantly
based on cotton, with about 65% of raw materials consumed being cotton. The yearly output of

cotton cloth was about 12.8 billion m (about 42 billion ft). The manufacture of jute products (1.1
million metric tons) ranks next in importance to cotton weaving. Textile is one of India’s oldest
industries and has a formidable presence in the national economy in as much as it contributes to
about 14 per cent of manufacturing value-addition, accounts for around one-third of our gross
export earnings and provides gainful employment to millions of people. They include cotton and
jute growers, artisans and weavers who are engaged in the organized as well as decentralized and
household sectors spread across the entire country
The Kerala textile industry ranks second among the traditional

industries of the state in them of providing employment. Spinning is the largest sector in the
textiles industry in Kerala. There are 17500 weavers in Kerala, including the co-operative and
private sector. The handloom industry of Thiruvananthapuram and Kannur and in some parts of
Kozhikode, Palakkad, Trissur, Ernakulum, Kollam, Kasaragod and employees about 100000
people. Kerala has 58400 handlooms and 5500 pow looms. Around 94% of the total numbers of
looms are under the cooperative sector, the rest being under industrial entrepreneurs. The overall
production of handloom cloth by handloom industry of Kerala was 25.55 million meters in 2010-
2011, valued at US$ 40. OO million

COMPANY PROFILE
LAMIYA SILKS, KUNNAMKULAM
Lamiya silk is one of the best textile groups in Kerala. The first textiles showroom of Lamiya
silks was started in 1986 at moonnupeedika, Trissur district, Kerala. They are doing textiles
business for last 25 years. They are dealing with the trading of readymade garments, textiles and
cosmetics items. Their showroom with 1500 to 2000 square feet space each, which are located at
various district of Kerala state. They have achieved this milestone by providing excellent
services and product quality. Their main motto is supplying quality and branded items with
lowest price according to the satisfaction of their customers. They have 14 large retailer’s textiles
showroom in Kerala. Those are situated in palarivattam, monnupeedika Calicut, thripayar,
Thrissur, tirur and Malappuram. 14th showroom of Lamiya silks was started at kunnamangalam,
Calicut. One of the branches of Lamiya silks in kunnamkulam was established on 9th AUG
2012.there are more than 100 employees working in this shop and more than 500 in whole
Kerala. Most of their customers are from Malappuram, Thrissur, Ernakulum, Calicut and
Palakkad district of Kerala states.
Lamiya silks have earned a phenomenal success in the world of textiles. They further
strive to acquire distinction in the textile industries by attaining the position of a market leader.
They also look forward to establish standards of quality and adopt modern strategies in order to
make their way to the summit.

CHAPTER 3
RESEARCH METHODOLOGY

RESEARCH METHODOLOGY
Research means a search for facts-answers to questions and solutions to problems. It is purposive
investigation. A research can be defined as a scientific and systematic search for pertinent
information on specified topic. The data collected for analyses is in primary manner from
LAMIYA SILKS, KUNNAMKULAM. This study is done by conducting a personal interview
with the supervisor and employees collecting information about the Varanasi Silks.
OBJECTIVES OF THE STUDY
 The project aims at understanding the impact of price on the demand and supply of
Varanasi Silks in Lamiya silks.
SOURCE OF DATA COLLECTION
PRIMARY DATA
For this purpose I collect required data from employees and supervisor through the
personal interview.
SECONDARY DATA
These are the data that have already been passed through the statistical process.
Secondary data for this study was collected to a small extent going through brochures, files, etc.
Various documents, journals, articles and reports were reviewed.
TOOLS FOR DATA ANALYSES AND INTERPRETATION
A. Presentation tool
 Graph
 Tabulation

CHAPTER 4
DATA ANALYSIS & INTERPRETATION

DATA ANALYSIS
A Banarasi saree is a saree made in Varanasi, a city which is also called Benares or
Banaras. The sarees are among the finest sarees in India and are known for their gold and
silver brocade or zari, fine silk and opulent embroidery. The sarees are made of finely
woven silk and are decorated with intricate design and, because of these engravings, are
relatively heavy.
Their special characteristics are Mughal inspired designs such as intricate intertwining
floral and foliate motifs, kalga and bel, a string of upright leaves called jhallar at the outer, edge
of border is a characteristic of these sarees. Other features are gold work, compact weaving,
figures with small details, metallic visual effects, pallus, jal (a net like pattern), and mina work.
The sarees are often part of an Indian bride's trousseau.
Depending on the intricacy of its designs and patterns, a saree can take from 15 days to a
month and sometimes up to six months to complete. Banarasi sarees are mostly worn by Indian
women on important occasions such as when attending a wedding and are expected to be
complemented by the woman's best jewelry.
Demand and supply analysis
However, comparing the sales information of a Varanasi Silks in last four months are the key
to understanding the business's demand and supply of that product. It is essential for learning
about your company and planning for the future.
Demand and supply of Varanasi silks
MONTH price Quantity Quantity

Demanded Supplied
(per number) (per number)
June 30000 7 15
July 32500 8 5
August 32500 2 3
September 32000 4 8

11
10
9
8
7
6 Quantity Demand(per
number)
5
Quantity Supplied(per
4 number)
3
2
1
0
June July August September
 Graph showing Demand supply of Varanasi silks in last four months
Explanation of the graph and table

 The table shows demand and supply of Varanasi silk in the last four months June, July,
August and September.
 From the table clearly understood that the price of the Varanasi silks approximately same.
 The quantity of a product per number have been presented in the Y- axis whereas Months
on Y- axis.
 In June the supply is greater than the quantity demanded but in July the demand increases
and supply decreases
 In August the quantity of demand is really small compare to the demand in other months.
The demand is increasing slightly in September.

CHAPTER 5
FINDINGS, SUGGESTIONS & CONCLUSION

FINDINGS
 Price of Varanasi Sarees approximately same in the last four months only slight changes is
occurring. In august the demand and supply of the quantity of Varanasi sarees decrease .It is a
luxurious saree slight changes in the price do not change the demand and supply of the product.
 In July and august the price of Varanasi sarees remains constant but the demand supply
decreasing. The demand of Varanasi sarees is less in August compare to the demand in July but
the price is same. The quantity supplied is also decrease.
 Demand and supply of Varanasi sarees decrease mainly due to flood in Kerala. The flood cause
somany issues in the business and its sales. Because of the flood somany people postponed their
marriage so the seasonal sales of the textiles decrease so the demand and supply of the product
decreases.
 The demand and supply of Varanasi silks reduce due to floods on august not by decreasing or
increasing of price.
SUGGESTIONS
After flood the demand and supply of Varanasi silks are slightly increasing. For better
sales of the product improve its quality and gave more promotions to the product. Price do not
affect the demand and supply of the luxurious product.

CONCLUSION
The luxurious purchase is directly related to their income. Luxury goods are not bought
for the same reasons that normal or inferior goods are, as they do not adhere to the conventional
wisdom of economical decision making. Instead, consumer decision making plays a huge role in
the sales of luxury goods, particularly status consumption, and the motivations for status
consumption were identified according to different types of motivations. By analyzing this data,
the economic effects of luxury goods were identified. Because their primary consumer base is
not affected severely by economic hardships, the sales of luxury goods are able to maintain a
consistency not found in other goods. This trickled down into growth for the suppliers of these
luxury brands as well, because the increase in demand for supply by luxury goods makers was
able to offset the decrease in demand by normal goods makers. Even if consumer’s buy same
luxury goods, the perception of the buying motives differ with every individual. Many luxury goods
exhibit superior quality compared to goods from other brands. In these cases, luxury goods can be seen as
worthwhile investments for people buying them. Automobiles, jewelry, and other goods have clear
advantages for paying more. For jewelry, the gem may be clearer or cut more intricately; for automobiles,
performance may be better.
In some cases, though, luxury goods offer no visible benefits for their price. Although identical
products may go through different processes to be sold on the market, sometimes it is difficult to discern
why people should pay such hefty premiums for the products. In cases such as these, status consumption
comes in. While there may be several different motivations for status consumption, the general goal is
identical: oftentimes consumers will pay premiums for luxury goods with no significant differences in
quality simply to reflect a high status.

CHAPTER 6
BIBLIOGRAPHY

BIBLIOGRAPHY
WEBSITE
 www.google.com
 www.wikipedia.com
 www.managementhelp.org.com
 www.investopedia.com

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Project Report 2018-2019 The influence of price on the demand supply of Varanasi sarees

CHAPTER TITLE PAGE NO.

MES Kuttipuram Page 1 Department of MBA

MES Kuttipuram Page 2 Department of MBA

Supply and demand

The Law of Demand

MES Kuttipuram Page 3 Department of MBA

The Law of Supply

Supply and Demand Relationship

MES Kuttipuram Page 4 Department of MBA

MES Kuttipuram Page 5 Department of MBA

Disequilibrium occurs whenever the price or quantity is not equal to P* or Q*.

MES Kuttipuram Page 6 Department of MBA

Shifts vs. Movement

MES Kuttipuram Page 7 Department of MBA

quantity demanded changes in accordance to the original demand relationship. In other

MES Kuttipuram Page 8 Department of MBA

Conversely, if the price

MES Kuttipuram Page 9 Department of MBA

MES Kuttipuram Page 10 Department of MBA

MES Kuttipuram Page 11 Department of MBA

MES Kuttipuram Page 12 Department of MBA

The Kerala textile industry ranks second among the traditional

MES Kuttipuram Page 13 Department of MBA

LAMIYA SILKS, KUNNAMKULAM

MES Kuttipuram Page 14 Department of MBA

MES Kuttipuram Page 15 Department of MBA

OBJECTIVES OF THE STUDY

SOURCE OF DATA COLLECTION

TOOLS FOR DATA ANALYSES AND INTERPRETATION

MES Kuttipuram Page 16 Department of MBA

MES Kuttipuram Page 17 Department of MBA

The sarees are often part of an Indian bride's trousseau.

Demand and supply analysis

Demand and supply of Varanasi silks

MONTH price Quantity Quantity

MES Kuttipuram Page 18 Department of MBA

 Graph showing Demand supply of Varanasi silks in last four months

Explanation of the graph and table

MES Kuttipuram Page 19 Department of MBA

MES Kuttipuram Page 20 Department of MBA

MES Kuttipuram Page 21 Department of MBA

MES Kuttipuram Page 22 Department of MBA

MES Kuttipuram Page 23 Department of MBA

MES Kuttipuram Page 24 Department of MBA

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