A STUDY ON COST OF CAPITAL OF NEXTBUYING CLOTHING

Submitted in the partial fulfillment of the requirements

for the award of the degree in

MASTER OF BUSINESS ADMINISTRATION

By
GANESH P

(225012101032)

under the guidance of

DR .S.S.YAMINI PRIYA

FACULTY OF MANAGEMENT STUDIES

Dr. M.G.R.
Educational and Research Institute
(Deemed to be university)
Maduravoyal, Chennai-600 095
(An ISO 9001-2008 certified Institution)
University with Special Autonomy Status

Dec 2023

1
 TABLE OF CONTENT
SL.NO CONTENT PAGE NO

1 3
DECLERATION
2 4
Bonafied Certificate
3 5
Acknowledgement
4 7 -15
Section I Introduction

7
1.Introduction of the concept of summer project

8
2. Objective of the study

11
3.Scope of the study

15
4.Limitation of the study
5 16-21
Section II – Company Profile

16
1.Introduction of the company

18
2. History of the company

21
3. Activities of the company
6
Section III - Report 27 – 39

27
1. Observation of the company

35
2. Summarizing the project experience
38
3.Findings during the project work

39
4. Suggestions for improvement
7 CONCLUTION 40

2
 DECLARATION

I GANESH P is hereby declare that the Internship Report entitled A STUDY ON COST OF

CAPITAL OF NEXTBUYING CLOTHING is done by me under the guidance of

DR.S.S.YAMINI PRIYA is submitted in partial fulfillment of the requirements for the award

of the degree in MASTER OF BUSINESS ADMINISTRATION.

DATE:

3
 Dr. M.G.R.
Educational and Research Institute
(Deemed to be university)

Maduravoyal, Chennai-600 095

(An ISO 9001-2008 certified Institution)

FACULTY OF MANAGEMENT STUDIES

BONAFIDE CERTIFICATE

This is to certify that this Internship Report is the bonafied work of Mr.P.GANESH who carried out
the Internship entitled A STUDY ON COST OF CAPITAL OF NEXTBUYING CLOTHING under our
supervision from DR.S.S.YAMINI PRIYA.

Internal Guide Head of the Department

Submitted for Viva Voce Examination held on

4
 ACKNOWLEDGEMENT

To acknowledge here, all those who have been a helping hand in completing this Internship, shall be an
endeavor in itself

I extremely thankful to our Chancellor Thiru A.C.SHANMUGAM,B.A., B.L., our President

Er. A.C.S. ARUN KUMAR, B.E. I express my sincere thanks to our Secretary Thiru A. RAVIKUMAR
and our Vice Chancellor DR.S.GEETHALAKSHMI, I would like to take the opportunity to express my
profound gratitude to Dr. G BRINDHA, Professor & head, and my Internship guide, Faculty of
Management Studies, for her kind permission to undergo Internship work successfully.

I thank DR.S.S.YAMINI PRIYA guiding me to execute my final year Internship. I also thank all faculties
and batch mates in Faculty of Management Studies, for their support and guidance throughout the course of
final year Internship.

I thank Mr. GOPINATH for guiding and supporting throughout my Internship

I owe my wholehearted thanks and appreciation to entire staff of the company for their cooperation and
assistance during the Internship.

Name of the student

P GANESH

5
6
 SECTION – I
INTRODUCTION
Nextbuying clothing is a company started with the ambition of selling best quality men‟s wear with the affordable

price . This company was started in the year 2020 with the capital of 25 lakhs , with the staff of 40 . This company was

capturing the retail market of men‟s wear all over India particularly in south India. Here they are producing all type of

men‟s wear like shirts , pants , shorts etc. in all sizes.

1. INTRODUCTION OF THE CONCEPT OF THE SUMMER INTERNSHIP.

The study is mainly conducted for the Nextbuying clothing. In present scenario, study of cost of
capital important marketing strategy in global business competition. An organization strategy that
combines all of its marketing goals into one comprehensive plan, where a good marketing
strategywill be drawn from market research and focus on the right product mix in order to achieve
the maximum profit with a potential capital and sustain business. Today‟s customer is the king of
the market so customer retention has great importance in business. Customer Retention is the
activity that a selling organization undertakes in order to maintain customers as their assets. The
study is mainly to identify what the customer is expecting from the Nextbuying clothing. And
what are the measures need to take in order to retain the customers. Since the population
size is in number 100 samples have been chosen. The target respondents would be the
customers of Nextbuying clothing. So this study lies under descriptive research with random
sampling method. The data is framed and collected through primary source with the
above analysis a findings , suggestion will be engraved and conclusion will be suggested to the
Nextbuying clothing where improvements can be done for the growth of the company.

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2. Objective of the study
The cost of capital is the cost of a company's funds (both debt and equity), or from an investor's point of view is
"the required rate of return on a portfolio company's existing securities". It is used to evaluate new projects of a
company. It is the minimum return that investors expect for providing capital to the company, thus setting a
benchmark that a new project has to meet.

For an investment to be worthwhile, the expected return on capital has to be higher than the cost of capital. Given a
number of competing investment opportunities, investors are expected to put their capital to work in order to
maximize the return. In other words, the cost of capital is the rate of return that capital could be expected to earn in
the best alternative investment of equivalent risk; this is the opportunity cost of capital. If a project is of similar risk
to a company's average business activities it is reasonable to use the company's average cost of capital as a basis for
the evaluation or cost of capital is a firm's cost of raising funds. However, for projects outside the core business of
the company, the current cost of capital may not be the appropriate yardstick to use, as the risks of the businesses
are not the same.

A company's securities typically include both debt and equity; one must therefore calculate both the cost of debt
and the cost of equity to determine a company's cost of capital. Importantly, both cost of debt and equity must be
forward looking, and reflect the expectations of risk and return in the future. This means, for instance, that the past
cost of debt is not a good indicator of the actual forward looking cost of debt.

Once cost of debt and cost of equity have been determined, their blend, the weighted average cost of
capital (WACC), can be calculated. This WACC can then be used as a discount rate for a project's projected free
cash flows to the firm.

7
COST OF DEBT :

When companies borrow funds from outside lenders, the interest paid on these funds is called the cost of debt.
The cost of debt is computed by taking the rate on a risk-free bond whose duration matches the term structure of
the corporate debt, then adding a default premium. This default premium will rise as the amount of debt increases
(since, all other things being equal, the risk rises as the cost of debt rises). Since in most cases debt expense is
a deductible expense, the cost of debt is computed on an after-tax basis to make it comparable with the cost of
equity (earnings are taxed as well). Thus, for profitable firms, debt is discounted by the tax rate.

COST OF EQUITY :

The cost of equity is inferred by comparing the investment to other investments (comparable) with similar risk
profiles. It is commonly computed using the capital asset pricing model formula:

i. Cost of equity = Risk free rate of return + Premium expected for risk
ii. Cost of equity = Risk free rate of return + Beta × (market rate of return – risk free rate of return)

where Beta = sensitivity to movements in the relevant market.

Types of cost of capital :

• Long term debt and loans,

• Preference share capital.

• Equity share capital, and.

• The retained earnings.

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Weighted average cost of capital :

The weighted cost of capital (WACC) is used in finance to measure a firm's cost of capital. WACC is not dictated by
management. Rather, it represents the minimum return that a company must earn on an existing asset base to satisfy
its creditors, owners, and other providers of capital, or they will invest elsewhere.

The total capital for a firm is the value of its equity (for a firm without outstanding warrants and options , this is the
same as the company's market capitalization) plus the cost of its debt (the cost of debt should be continually updated
as the cost of debt changes as a result of interest rate changes). Notice that the "equity" in the debt to equity ratio is
the market value of all equity, not the shareholders' equity on the balance sheet. To calculate the firm's weighted cost
of capital, we must first calculate the costs of the individual financing sources: Cost of Debt, Cost of Preference
Capital, and Cost of Equity Cap.

Calculation of WACC is an iterative procedure which requires estimation of the fair market value of equity capital
if the company is not listed. The Adjusted Present Value method (APV) is much easier to use in this case as it
separates the value of the project from the value of its financing program.

Capital structure :

Because of tax advantages on debt issuance, it will be cheaper to issue debt rather than new equity (this is only
true for profitable firms, tax breaks are available only to profitable firms). At some point, however, the cost of
issuing new debt will be greater than the cost of issuing new equity. This is because adding debt increases
the default risk – and thus the interest rate that the company must pay in order to borrow money. By utilizing too
much debt in its capital structure, this increased default risk can also drive up the costs for other sources (such as
retained earnings and preferred stock) as well. Management must identify the "optimal mix" of financing –
the capital structure where the cost of capital is minimized so that the firm's value can be maximized.

9
Example :

Suppose a company considers taking on a project or investment of some kind, for example installing a new piece of
machinery in one of their factories. Installing this new machinery will cost money; paying the technicians to install
the machinery, transporting the machinery, buying the parts and so on. This new machinery is also expected to
generate new profit (otherwise, assuming the company is interested in profit, the company would not consider the
project in the first place). So the company will finance the project with two broad categories of finance: issuing debt,
by taking out a loan or other debt instrument such as a bond; and issuing equity, usually by issuing new shares.

The new debt-holders and shareholders who have decided to invest in the company to fund this new machinery
will expect a return on their investment: debt-holders require interest payments and shareholders
require dividends (or capital gain from selling the shares after their value increases). The idea is that some of the
profit generated by this new project will be used to repay the debt and satisfy the new shareholders.

Suppose that one of the sources of finance for this new project was a bond (issued at par value) of $200,000 with
an interest rate of 5%. This means that the company would issue the bond to some willing investor, who would
give the $200,000 to the company which it could then use, for a specified period of time (the term of the bond) to
finance its project. The company would also make regular payments to the investor of 5% of the original amount
they invested ($10,000), at a yearly or monthly rate depending on the specifics of the bond (these are called
coupon payments). At the end of the lifetime of the bond (when the bond matures), the company would return
the $200,000 they borrowed.

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3. Scope of study

Nextbuying clothing is a leading lifestyle retail clothing with over 2 retail stores across India. Nextbuying clothing
offers stylish, high-quality products across Menswear, Menswear, Kids wear and fashion accessories through a
diversified portfolio of own brands, national and international brands. The uniqueness of the store is the core, which
delivers "fashion at great value". Spread over 8,000 – 24,000 square feet of shopping area, each Nextbuying
clothing store is designed to offer a unique shopping experience for the entire family through wide aisles,
coordinated displays and highly trained fashion professionals offering best in class customer assistance. Nextbuying
clothing customer through www. Nextbuyingclothing .com can access a large collection of fashionable, high quality
products atgreat value delivered at their door steps.

MISSION AND VISION :

Mission: To become India‟s largest retailer delivering superior value to its customers, suppliers and
shareholders.

Vision: Deep insight into India‟s economic, cultural and consumption diversity.

Indian Retailing :

Indian retailing is a rapidly growing industry, amounting to nearly 10% of the overall GDP. It has a potential
market of nearly a trillion dollars. The point really is on the share of unorganized sector in Indian retailing,
nearly 90% of the market. Nevertheless, the trend is shifting more towards the „Organized Retail‟ and
„E-commerce‟. The modern retailing is expected to grow at a CAGR of 20% and the traditional retailing at
10% per annum in the coming years. The e-commerce is set to grow at an even faster rate. Therefore, the
potential for players like Reliance Retail, which spreads its wings through most of the consumer space, is huge.
Furthermore, with the organized sector expanding into rural areas, the opportunities are huge. With the
changing aspirations and preferences, consumers are moving towards the modern retail shops, in turn
prioritizing quality.

The cost of capital has a central role in financial management because it provides a way to link
investment and financing decisions of a firm. An interrelationship the size of between capital
budgeting and cost of capital. For example, to determine the size of the capital budget, managers need
information about both the return on investment opportunities and the cost of capital. It helps in two
ways, first, assist in identify the discount rate to be used to evaluate proposed capital investments,
second, to serve as guidelines in developing capital structure and evaluating financial alternatives.

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The key usages of cost of capital in financial management are discussed below.

1. Cost of Capital in Capital Budgeting:

The cost capital is the fundamental requirement of capital budgeting technique especially based on
discounted cash flows. The acceptance and rejection of a proposal depends upon cost of capital
associated with it. A proposal with higher rate of return have lesser net present value in comparison
of another proposal with lesser cost of capital, therefore, more chances to reject the proposal with
higher cost of capital. Since, the cost of capital represent to minimum rate of return to be earned on
an investment, thus, a costly source of finance expects higher rate of return from assets to be funded
from such source of finance. Net present value, profitability index, discounted payback period
method and many more are based on cost of capital to discount the cash flows. Hence, the cost of
capital is very useful in capital budgeting decisions.

2. Cost of Capital in Determination of Capital Structure:

Every source of fund has own features, few are costly in comparison of others, some are easily
available etc. A firm, commonly, uses both equity and debt as a mix in its total financing. The cost
of debt is considered at lower rate in comparison to equity. At the same, there is tax advantage on
debt security but not on equity capital. Therefore, an optimum mix of debt and equity is helpful in
determination of average cost of capital. In designing an optimal capital structure, the management
has to keep in mind the objective of maximizing the value of the firm which makes cost of capital
important in financial planning of the firm.

3. Cost of Capital and Financial Performance of the Firm :

The average cost of capital of a firm represents risk and return of the firm. A firm with high cost
of capital exposed to high rate of risk, and impacts firm‟s profitability. If the actual profitability
of a proposal is more than the projected and actual cost of capital, the performance may be said
to be satisfactory, vice-versa.

4. Cost of Capital and Financial Decisions:

Cost of capital has more usages in financial decision making, e.g., in valuation of retained earnings,
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dividend policy, capitalization or profit also. Cost of capital involves business risk as well as
financial risk, therefore, it recognizes the time value of money in optimum manner. Moreover,
cost of capital also take explicit and implicit cost into account, thus, opportunity cost is also
considered in financial decision making when the decision is taken on the basis of cost of capital.

a. OBJECTIVES OF THE STUDY :

The main objective of the research is to analyze and compare the impact of capital structure on
cost of capital of DSE-listed MNCs & domestic companies of Bangladesh over a 20-year period
(1997-2016). Specific objectives are:

a. To analyze and compare the weighted average cost of capital of MNCs & domestic companies
over the study period.

b. To explore the change in weighted average cost of capital due to change of weight of debt
for both MNCs & domestic companies and makes a comparison between them.

c. To test the significance of association between weighted average cost of capital and financial
leverage ratios.

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 b. IMPORTANCE OF THE STUDY :

The Cost of Capital is very important in Financial Management and plays a crucial role in the

following areas:

1. Capital budgeting decisions:

The cost of capital is used for discounting cash flows under Net Present Value method for investment
proposals. So, it is very useful in capital budgeting decisions.

2. Capital structure decisions:

An optimal capital is that structure at which the value of the firm is maximum and cost of capital is the
lowest. So, cost of capital is crucial in designing optimal capital structure.

3. Evaluation of final Performance:

Cost of capital is used to evaluate the financial performance of top management. The actual profitably
is compared with the actual cost of capital of funds and if profit is greater than the cost of capital the
performance nay be said to be satisfactory.

4. Other financial decisions:

Cost of capital is also useful in making such other financial decisions as dividend policy, capitalization
of profits, making the rights issue, etc.

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 4 LIMITAION OF THIS STUDY

• This research work is a especially primarily based on secondary facts, as it's miles based on

audited debts from the company

• Resources were limited

• Study is conducted only for 2022 to 2023

• Less importance has been given to number one facts which is really the authentic facts and more

reliable

• The importance of raw data is not high, and the original data is actually raw data and is more

reliable.

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 SECTION-II

1.Introduction of the company

Nextbyuing Clothing web solutions, Established in the year 2020 Nextbyuing Clothing is a professional Ready

made Garments company based in Chennai, South India. Our Company providing solutions for garments and

development, Our rich portfolio justifies the fact that we function as a world class offshore web development

Company. We believe Good service is good business our aspects are to focus the needs of our clients and provide

100% satisfaction. Our passion is to provide a world class garments to all the startups and large organizations. We

deliver website designing and development services ranging from simple static to interactive dynamic, responsive

website. Our garments process always takes into consideration the requirements, suggestion and continuous

feedback from our clients in order to deliver web work that not only satisfies them but exceeds their expectations.

Why Nextbyuing Clothing? For over ten years Nextbyuing Clothing have been delivering beautiful, standards

compliant web sites and has emerged as a premium website design company in Chennai. With a deep

commitment to designing the best possible experience for the end user it comes as no surprise that our work is

showcased around the web. Our web portfolio speaks for itself. From simple brochure sites through to highly

complex database driven applications, Nextbyuing Clothing can design and build a solution that will work for you

and your clients. 17 A professionally designed website is the most cost effective marketing tool available in the

world today. We are confident that all of our clients would not hesitate to recommend our garments services.

2.1.2 DIFFERENCE BETWEEN PUBLIC COMPANY AND PRIVATE COMPANY Basis of difference Public

company Private company 1. Minimum Number of members Minimum number of members required to form a

public company is seven Minimum number of members required to form a private company is two 2. Maximum

number of members No limit on maximum number of members Maximum number of members is fifty 3. Name

The word „Limited‟ is used at the end of the company‟s name The word „Private Limited‟ is used at the end of the

company‟s name 4. Commencement of Business It can start its business only after getting a certificate of

common-cement of business It can commence its business as soon as it obtains certificate of Incorporation 5.

Invitation to public It invites public to subscribe to its shares It cannot invite public to subscribe to its shares 6.

Transfer of shares There is no restriction on transfer of its shares There is restriction on the transfer of its shares 7.

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Number of directors It must have at least three directors It must have at least two directors 18 8. Minimum Capital

It must have a minimum paid up capital of five lack rupees (Rs.500000) It must have a minimum paid up capital

of one lack (Rs.100000). 2.1.3 Our Uniqueness • » One stop solutions for your complete requirements • » Own

innovative design team will provide a unique identity to your business • » Vast Pool Of IT Professionals • »

Extended Business Philosophy • » Having 10 years of experience in providing internet services and solutions • »

We use modern software engineering practices to further our intent. 2.1.4 Our team We are a team of young

enthusiasts with strong focus, dedication and passion for what we do. We help you maintain and improvise your

online identity and Rediscover and reinstate your brand. We also facilitate you to reach out in the Global markets.

Project Manager Layout Designer 19 Garmentsers Web Developers Content Writers Hosting & Testing Engineers

Nextbyuing Clothing was established with an aim to provide Low Cost Garments, Development and SEO, Web

promotions and social marketing services that not only meet the expectations, but also reflect our philosophy of

creating real values for our clients. We have a holistic approach that goes beyond mere cost savings for our client.

2.1.5 Our Mission To be a global online service provider in India having an excellent customer service with

pioneering technology, creativity, integrity and social responsibility. 2.1.6. Our Vision • » To create and deliver

emerging highest quality precision services. • » To ensure that projects are completed and delivered within the

time requirements of our customers. • » To satisfy our customer's requirements and expectations through

dedicated service. • » To treat each customer and employee with integrity and fairness. 20 • » To invest in

technologies and personnel that will enable our company to stay at the forefront of precision online capabilities 21

2.2. HISTORY OF THE COMPANY For over ten years Nextbyuing Clothing have been delivering beautiful,

standards compliant web sites and has emerged as a premium clothing company in Chennai. With a deep

commitment to designing the best possible experience for the end user it comes as no surprise that our work is

showcased around the world. Our products speaks for itself. Nextbyuing Clothing can design and build a solution

that will work for you and your clients. A professionally designed website is the most cost effective marketing

tool available in the world today. We are confident that all of our clients would not hesitate to recommend our

garments services. A company is a voluntary association of individuals formed to carry on business to earn profits

or for non-profit purposes. These persons contribute towards the capital by buying its shares in which it is

17
divided. A company is an association of individuals incorporated as a company possessing a common capital i.e.

share capital contributed by the members comprising it for the purpose of employing it in some business to earn

profit. As per Companies Act 1956, a company is formed and registered under the Companies Act or an existing

company registered under any other Act”. • ARTIFICIAL LEGAL PERSON A company is an artificial person as

it is created by law. It has almost all the rights and powers of a natural person. It can enter into contract. It can sue

in its own name and can be sued. • INCORPORATED BODY A company must be registered under Companies

Act. By virtue of this, it is vested with corporate personality. It has an identity of its own. Although the capital is

contributed by its members called shareholders yet the property purchased out of the capital belongs to the

company and not to its shareholders • CAPITAL DIVIDE INTO SHARES 22 The capital of the company is

divided into shares. A share is an indivisible unit of capital. The face value of a share is generally of a small

denomination which may be of Rs.10, Rs.25 or Rs.100. • TRANSFERABILITY OF SHARES The shares of the

company are easily transferable. The shares can be bought and sold in the stock market. • PERPETUAL

EXISTENCE A company has an independent and separate existence distinct from its shareholders. Changes in its

membership due to death, insolvency etc. does not affect its existence and its continuity • LIMITED LIABILITY

The liability of the shareholders of a company is limited to the extent of face value of shares held by them. No

shareholder can be called upon to pay more than the face value of the shares held by them. At the most the

shareholders may be asked to pay the unpaid value of shares. • REPRESENTATIVE MANAGEMENT The

number of shareholders is so large and scattered that they cannot manage the affairs of the company collectively.

Therefore they elect some persons among themselves to manage and administer the company. These elected

representatives of shareholders are individually called the „directors‟ of the company and collectively the Board of

Directors. • COMMON SEAL A common seal is the official signature of the company. Any document bearing

the common seal of the company is legally binding on the company.

2.2.1 TYPES OF COMPANIES: Companies can be classified under the following heads: 1. On the basis of

formation. 23 2. On the basis of liability. 3. On the basis of ownership. On the basis of formation. On the basis of

formation companies can be categorised as: (a) Statutory Company A company formed by a Special Act of

parliament or state legislature is called a Statutory Company. Reserve Bank of India, Industrial Financial
18
Corporation of India, Life Insurance Corporation of India, Delhi State Finance Corporation are some of its

examples. (b) Registered Company A company formed and registered under the Companies Act, 1956 or earlier

Companies Acts is called a Registered Company. The working of such companies is regulated by the provisions

of the Companies Act. On the basis of liability On the basis of liability, companies can be categorized as: (a)

Company limited by shares The liability of the member of such company is limited to the face value of its shares.

(b) Company limited by guarantee The liability of each member of such company is limited to the extent of

guarantee undertaken by the member. It may arise in the event of its being wound up. 24 (c) Unlimited Company

The company not having any limit on the liability of its members is called an unlimited company. Liability in

such a case extends to the personal property of its shareholders. Such companies do not use the word „limited‟ at

the end of their name. (d) Company under section 25 A company created under section-25 is to promote art,

culture and societal aims. Such companies need not use the term limited at the end of their name. Punjab,

Haryana, Delhi chambers of commerce, etc. are the examples of such companies. On the basis of ownership On

the basis of ownership, companies can be categorized as: (a) Private Company A private company is one which

by its Articles of Association: (i) Restricts the right of members to transfer its shares; (ii) limits the number of its

members to fifty (excluding its past and present employees); (iii) Prohibits any invitation to the public to

subscribe to its shares, debentures. (iv) The minimum paid up value of the company is one lack rupees

(Rs.100000). The minimum number of shareholders in such a company is two and the company is to add the

words „private limited‟ at the end of its name. Private companies do not involve participation of public in general.

(b) Public Company A company which is not a private company is a public company. Its Articles of association

does not contain the above mentioned restrictions. 25 Main features of a public company are: (i) The minimum

number of members is seven. (ii) There is no restriction on the maximum number of members. (iii) It can invite

public for subscription to its shares. (iv) Its shares are freely transferable. (v) It has to add the word „Limited‟ at

the end of its name. (vi) Its minimum paid up capital is five lacks rupees (Rs.500,000). (c) Government Company

A Government company is one in which not less than 51% of its paid up capital is held by (1) Central

Government or (2) State Government, or (3) Party by Central Government and partly by State Government.

Example of a Government company is Hindustan Machine Tools Limited, (HMT) State Trading Corporation

(STC). Minerals As Metals Training Corporation (MMTC). (a) Foreign company A foreign company is one
19
which is incorporated outside India but has a place of business in India, for example Philips, L.G, etc. standard

materials. (b) Holding company and Subsidiary company A holding company is a company which controls

another company (called subsidiary company) either by acquiring more than half of the equity shares of another

company or by controlling the composition of Board of Directors of another company or by controlling a holding

company which controls another company. 26 (c) Listed company and unlisted company A company is required

to file an application with stock exchange for listing of its securities on a stock exchange. When it qualifies for the

admission and continuance of the said securities upon the list of the stock exchange, it is known as listed

company. A company whose securities do not appear on the list of the stock exchange is called unlisted company.

2.2.2 LOCATIONS OF THE COMPANY:  Chennai  A comprehensive range of services and smart solutions

from mining and manufacturing to cloths, cars, and foods freighter is cargo solutions is all about delivering the

right product, to the right place, at the right time, at the price. Their combined services equip them to design,

implement, operate and manage smart supply chain solutions. By understanding their clients business inside and

out they deliver integrated and customized solutions to create a competitive advantages. Operational excellence

provides them with a smart process that drives continuous improvement which makes them better at what they do

innovation sits at the heart of smart. Thinking outside the box and making better use of resources is the very

essence of smart supply chain solution. And the bottom line. They create smart supply chain solutions that level

the playing field and give your business a competitive advantages.

2.3 HIERARCHY OF THE COMPANY

2.3.1. WHAT HIERARCHY OF THE COMPANY?  The hierarchy of a company is a model used to

organize different authority levels in an organization. Company hierarchy enables the organization to classify

its employees into distinct levels, clarifying who handles certain tasks. Corporate hierarchies commonly follow

a top-to-bottom approach, with the high-level positions having greater power and influence than the lower

ones. The compensation and benefits typically increase as you move up the hierarchy. Also, those at the top

have more responsibilities to ensure the achievement of the company's strategic goals.  The hierarchy a

business may adopt can vary, with the type dependent on various factors, such as size, geographical spread,

number of employees, business model, and company culture. Some companies have obvious lines of

20
 communication and span of control among the levels, while others may choose to have a more equal approach to

employee hierarchical structure.

2.3.2HOW THE HIERARCHY OF THE COMPANY WORKS:  Typically, company hierarchy works by

organizing employees according to roles such as administrative, supervisory, executive, or entry-level positions.

You can think of a company hierarchy as a pyramid, with the most powerful employees being few at the top of

the pyramid, and the less powerful team members at the bottom in greater numbers.  The hierarchy defines roles

and responsibilities, with those at the top responsible for making strategic decisions, deciding on policies, and

creating strategies. The employees at the middle and bottom are responsible for implementing and following those

policies. Sometimes, business units or departments will overlap, making the structure more difficult to define. 28

2.4 ACTIVITIES OF THE COMPANY » One stop solutions for your complete requirements » Own innovative

design team will provide a unique identity to your business » Vast Pool of IT Professionals » Extended Business

Philosophy » Having 10 years of experience in providing internet services and solutions » We use modern

software engineering practices to further our intent. » To create and deliver emerging highest quality precision

services. » To ensure that projects are completed and delivered within the time requirements of our customers. »

To satisfy our customer's requirements and expectations through dedicated service. » To treat each customer and

employee with integrity and fairness

21
 RESEARCH

METHODOLOGY :

Description of the calculations

Article 22 (4) of the Implementing Regulation 2019/317 establishes that the cost of capital shall be

equal to the product of:

➢ The total assets base excluding interest-bearing accounts;

➢ The weighted average of the interest rate on debts (or cost of debt – COD) and of the return

on equity (ROE). This is commonly known as the weighted average cost of capital (WACC).

The return on equity (RoE) or cost of common equity is an estimate of a reasonable rate of return on

the shareholders‟ or owners‟ investment. It is normally estimated by using a market driven model

called the Capital Asset Pricing Model (CAPM), which attempts to measure the relationship between

the risk of a share (or stock) and its return, given the level of risk of the activity. In the case of air

navigation service providers, the market for shares is either not existing or very limited. Therefore, the

ANSPs market risk has to be estimated either within the CAPM approach, or using another

methodology proposed by the ANSP based on its own assumptions.

22
The interest rate on debts or cost of debt (CoD) is represented by the weighted rates of interest paid

by the ANSP on the debt instruments.

Potential issues in the implementation of the method

The PRB has detected three potential issues when implementing the methodology as described in the

previous section. The first issue is related to the capital structure of ANSPs, the second concerns the

computation of inflation, and the third relates to the maximum risk borne by the ANSPs.

3.1 RESEARCH HYPOTHESIS & METHODOLOGY :

Writing a hypothesis is one of the essential elements of a scientific research paper. It needs to be to
the point, clearly communicating what your research is trying to accomplish. A blurry, drawn-out, or
complexly-structured hypothesis can confuse your readers. Or worse, the editor and peer reviewers.

A captivating hypothesis is not too intricate. This blog will take you through the process so that,
by the end of it, you have a better idea of how to convey your research paper's intent in just one
sentence.

HYPOTHESIS :

HO : Nature of satisfaction level for the customers is dependent to service provided by the
NEXTBUYING CLOTHING
1 : Nature of satisfaction level for the customers is independent to service provided by the
The cost of capital has a central role in financial management because it provides a way to link
investment and financing decisions of a firm. An interrelationship the size of between capital
budgeting and cost of capital. For example, to determine the size of the capital budget, managers need
information about both the return on investment opportunities and the cost of capital. It helps in two
ways, first, assist in identify the discount rate to be used to evaluate proposed capital investments,
second, to serve as guidelines in developing capital structure and evaluating financial alternatives.
The key usages of cost of capital in financial management are discussed below.

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5. Cost of Capital in Capital Budgeting:
The cost capital is the fundamental requirement of capital budgeting technique especially based on
discounted cash flows. The acceptance and rejection of a proposal depends upon cost of capital
associated with it. A proposal with higher rate of return have lesser net present value in comparison
of another proposal with lesser cost of capital, therefore, more chances to reject the proposal with
higher cost of capital. Since, the cost of capital represent to minimum rate of return to be earned on
an investment, thus, a costly source of finance expects higher rate of return from assets to be funded
from such source of finance. Net present value, profitability index, discounted payback period
method and many more are based on cost of capital to discount the cash flows. Hence, the cost of
capital is very useful in capital budgeting decisions.

6. Cost of Capital in Determination of Capital Structure:

Every source of fund has own features, few are costly in comparison of others, some are easily
available etc. A firm, commonly, uses both equity and debt as a mix in its total financing. The cost
of debt is considered at lower rate in comparison to equity. At the same, there is tax advantage on
debt security but not on equity capital. Therefore, an optimum mix of debt and equity is helpful in
determination of average cost of capital. In designing an optimal capital structure, the management
has to keep in mind the objective of maximizing the value of the firm which makes cost of capital
important in financial planning of the firm.

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7. Cost of Capital and Financial Performance of the Firm :

The average cost of capital of a firm represents risk and return of the firm. A firm with high cost
of capital exposed to high rate of risk, and impacts firm‟s profitability. If the actual profitability
of a proposal is more than the projected and actual cost of capital, the performance may be said
to be satisfactory, vice-versa.

8. Cost of Capital and Financial Decisions:

Cost of capital has more usages in financial decision making, e.g., in valuation of retained earnings,
dividend policy, capitalization or profit also. Cost of capital involves business risk as well as
financial risk, therefore, it recognizes the time value of money in optimum manner. Moreover,
cost of capital also take explicit and implicit cost into account, thus, opportunity cost is also
considered in financial decision making when the decision is taken on the basis of cost of capital.

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3.2 DATA COLLECTION APPROACH :

The process of gathering and analysing accurate data from various sources to find answers to research
problems, trends and probabilities, etc., to evaluate possible outcomes is Known as Data Collection.

Types of data collection :

There are two types of data collection, they are

Primary Data :

As the name implies, this is original, first-hand data collected by the data researchers. This process
is the initial information gathering step, performed before anyone carries out any further or related
research. Primary data results are highly accurate provided the researcher collects the information.
However, there‟s a downside, as first-hand research is potentially time-consuming and expensive.

Secondary Data :

Secondary data is second-hand data collected by other parties and already having undergone
statistical analysis. This data is either information that the researcher has tasked other people to
collect or information the researcher has looked up. Simply put, it‟s second-hand information.
Although it‟s easier and cheaper to obtain than primary information, secondary information raises
concerns regarding accuracy and authenticity. Quantitative data makes up a majority of secondary
data.

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 SECTION III
1.OBSERVATION OF THE COMPANY

ANNUAL REPORT 2020 – 2021

INDEPENDENT AUDITOR‟S REPORT To The Members of Nextbyuing Clothing (Formerly

known as V&B Lifestyle India Private Limited) Report on the Audit of the Financial Statements
Opinion We have audited the accompanying financial statements of Nextbyuing Clothing (Formerly
known as V&B Lifestyle India Private Limited) (“the Company”), which comprise the Balance
Sheet as at 31 March 2021, and the Statement of Profit andLoss (including Other Comprehensive
Income), and Cash Flow Statement and the Statement of

Changes in Equity for the year then ended, and a summary of significant accounting policies and
other explanatory information (hereinafter referred to as „Financial Statements‟). In our opinion and
to the best of our information and according to the explanations given to us, the aforesaid financial
statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so
required and give a true and fair view in conformity with the Indian Accounting Standards prescribed
under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as
amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of
affairs of the Company as at 31 March 2021, and its profit, total comprehensive profit, its cash flows
and the changes in equity for the year ended on that date. Basis for Opinion We conducted our audit
of the financial statements in accordance with the Standards on Auditing specified under Section
143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the
Auditor‟s Responsibility for the Audit of the financial statements section of our report. We are
independent of the Company in accordance with the Code of Ethics issued by the Institute of
Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our
audit of the financial statements under the provisions of the Act and the Rules made thereunder, and
we have fulfilled our other ethical responsibilities in accordance with these requirements and the
ICAI‟s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate
to provide a basis for our audit opinion on the financial statements

Report on Other Legal and Regulatory Requirements :

1. As required by Section 143(3) of the Act, based on our audit, we report that:
a) We have sought and obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purposes of our audit.
b) In our opinion, proper books of account as required by law have been kept by the Company so far
as it appears from our examination of those books.

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c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the
Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in
agreement with the books of account.
d) In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section
133 of the Act.
e) On the basis of the written representations received from the directors, taken on record by the Board
of Directors, none of the directors is disqualified as on 31 March 2021 from being appointed as a
director in terms of Section 164(2) of the Act.
f) With respect to the adequacy of the internal financial controls over financial reporting of the

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Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure
A”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the
Company‟s internal financial controls over financial reporting.

g) With respect to the other matters to be included in the Auditor‟s Report in accordance with the
requirements of section 197(16) of the Act, as amended, in our opinion and to the best of our
information and according to the explanations given to us, the Company has not paid/ provided any
remuneration to its directors during the year.

h) With respect to the other matters to be included in the Auditor‟s Report in accordance with Rule 11
of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our
information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its
financialstatements (Also refer note 25 to the Financial Statement);

ii. The Company did not have any long-term contracts including derivative contracts for which there
were any material foreseeable losses; iii. There were no amounts which were required to be transferred
to the Investor Education and Protection Fund by the Company.

2. As required by the Companies (Auditor‟s Report) Order, 2016 (“the Order”) issued by the Central
Government in terms of Section 143(11) of the Act, we give in “Annexure B”, a statement on the
matters specified in paragraphs 3 and 4 of the Order.

Management’s Responsibility for Internal Financial Controls :

The Company‟s management is responsible for establishing and maintaining internal financial
controls based on the internal control over financial reporting criteria established by the Company
considering the essential components of internal control stated in the Guidance Note on Audit of
Internal Financial Controls over Financial Reporting (the “Guidance Note”) issued by the Institute of
Chartered Accountants of India (“ICAI”). These responsibilities include the design, implementation
and maintenance of adequate internal financial controls that were operating effectively for ensuring
the orderly and efficient conduct of its business, including adherence to company‟s policies, the
safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and
completeness of the accounting records, and the timely preparation of reliable financial information,
as required under the Act.
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Post-Employment Benefits
Defined Contribution Plans :

A defined contribution plan is a post-employment benefit plan under which the Company pays
specified contributions to a separate entity. The Company makes specified monthly contributions
towards Provident Fund and Pension Scheme. The Company‟s contribution is recognized as an
expense in the Statement of Profit and Loss during the period in which the employee renders the
related service.

Defined Benefit Plans :

The Company pays gratuity to the employees whoever has completed five years of service with the Company
at the time of resignation. The gratuity is paid @15days salary for every completed year of service as per the
Payment of Gratuity Act, 1972.
The liability in respect of gratuity and other post-employment benefits is calculated using the Projected Unit
Credit Method and spread over the period during which the benefit is expected to be derived from employees‟
services.
Re-measurement of Defined Benefit Plans in respect of post-employment are charged to the Other
Comprehensive Income.

Employee Separation Costs :

The Company recognizes the employee separation cost when the scheme is announced and the Company is
demonstrably committed to it.

Tax Expenses :
The tax expense for the period comprises current tax and deferred income tax. Tax is recognized in Statement
of Profit and Loss, except to the extent that it relates to items recognized in the Other Comprehensive Income
or in equity. In this case, the tax is also recognized in Other Comprehensive Income and Equity.

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1. Current Tax :
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to
the Income Tax authorities, based on tax rates and laws that are enacted at the Balance sheet date.

2. Deferred Tax :
Deferred tax is recognized on temporary differences between the carrying amounts of asset and
liabilities in the Financial Statements and the corresponding tax bases used in the computation of
taxable profit.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period
in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred
tax liabilities and assets are reviewed at the end of each reporting period.

Foreign Currencies Transactions and Translation :

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of
transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the
functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in
Statement of Profit and Loss except to the extent of exchange differences which are regarded as an
adjustment to interest costs on foreign currency borrowings that are directly attributable to the
acquisition or construction of qualifying assets which are capitalized as cost of assets.
Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded
using the exchange rates at the date of the transaction. Non-monetary items measured at fair value in
a foreign currency are translated using the exchange rates at the date when the fair value was
measured. The gain or loss arising on translation of non-monetary items measured at fair value is
treated in line with the recognition of the gain or loss on the change in fair value of the item.

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Financial Instruments:

i) Financial Assets
A. Initial Recognition and Measurement
All Financial Assets are initially recognized at fair value. Transaction costs that are directly
attributable to the acquisition or issue of Financial Assets, which are not at Fair Value through Profit
and Loss, are added to the fair value on initial recognition. Purchase and sale of Financial Assets are
recognized using trade date accounting.

B. Subsequent Measurement
a) Financial Assets Measured at Amortized Cost (AC)
A Financial Asset is measured at amortized Cost if it is held within a business model whose objective
is to hold the asset in order to collect contractual cash flows and the contractual terms of the Financial
Asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.

b) Financial Assets Measured at Fair Value Through Other Comprehensive Income (FVTOCI)
A Financial Asset is measured at FVTOCI if it is held within a business model whose objective is
achieved by both collecting contractual cash flows and selling Financial Assets and the contractual
terms of the Financial Asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.

c) Financial Assets Measured at Fair Value Through Profit or Loss (FVTPL)

A Financial Asset which is not classified in any of the above categories are measured at FVTPL.

ii) Financial Liabilities

A. Initial Recognition And Measurement :

All Financial Liabilities are recognized at fair value and in case borrowings, net of directly
attributable cost. Fees of recurring nature are directly recognized in the Statement of Profit and Loss
as finance cost.

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B. Subsequent Measurement :

Financial liabilities are carried at amortized cost using the effective interest method.
For trade and other payables maturing within one year from the balance sheet date, the carrying
amounts approximate fair value due to the short maturity of these instruments.

iii) Derecognition of Financial Instruments :

The company derecognizes a Financial Asset when the contractual rights to the cash flows from the
Financial Asset expire or it transfers the Financial Asset and the transfer qualifies for derecognition
under Ind AS 109. A Financial Liability (or a part of a Financial Liability) is derecognized from the
Company's Balance Sheet when the obligation specified in the contract is discharged or cancelled or
expires.

iv) Offsetting :

Financial Assets and Financial Liabilities are offset and the net amount is presented in the balance
sheet when, and only when, the Company has a legally enforceable right to set off the amount and it
intends, either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

v) Earnings per share :

Basic earnings per share is calculated by dividing the net profit after tax by the weighted average
number of equity shares outstanding during the year adjusted for bonus element in equity share.
Diluted earnings per share adjusts the figures used in determination of basic earnings per share to take
into account the conversion of all dilutive potential equity shares. Dilutive potential equity shares are
deemed converted as at the beginning of the period unless issued at a later date.

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DATA ANALYSIS & INTERPRETATION :

Current Ratio :

= current assets
Current liabilities

Comments :

In Nextbyuing Clothing. the current ratio is 0.12/0 in earns that for one rupee of current liabilities, the
current assets are 0.12 rupee is available to the. In other words the current assets are 0.12 times the
current liabilities. Almost earns current ratio is same but current ratio in 1:8-1:9 is bit higher, which
takes sounder. the consistent increase in the %value of current assets will increase the ability of the
company and to meets its obligations $ therefore from the point of view of creditors the company is
less risk!.
Thus, the current ratio throws light on the companys ability to pay its current liabilities out of its
current assets. the Nextbyuing Clothing. has a good! current ratio.

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PROPRIETARY RATIO :

= shareholders fund
Fixed assets + current liabilities

Saummerizing the project experiance:

The proprietary ratio of the company is 0.66 in the year 2008-2009. It means that the for everyone
rupee of total assets contribution of 66 paisa has come from owners fund & remaining balance 34
paisa is contributed by the outside creditors. This shows that the contribution by owners to total assets
is more than the contribution by outside creditors. As the proprietary ratio is very favorable of the
company. The company‟s long-term solvency position is very sound

35
GROSS PROFIT RATIO :

= gross profit * 100

Net sales

Comments:

The gross profit is the profit made on sale of goods. It is the profit on turnover. In the year
2005-20076the gross profit ratio is 22.7%. It has decreased to 18.14% in the year 2008-2009 due to
increase in sales with corresponding more increase in cost of goods sold. It is continuously declined
from 2005-2006 due to high cost of purchases & overheads. Although the gross profit ratio is
declined during the years 2005-2006 to 2008-2009. The net sales and gross profit is continuously
increasing from the year 2005-2006 to 2008-2009.

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NET PROFIT RATIO :

= NPAT * 100
Net sales

Comments :

The net profit ratio of the company is high in all year but the net profit is increasing order from this
ratio of 4 year it has been observe that the from 2005-2008 the net profit is increased and it decreased
in the year 2008-2009.

Profitability ratio of the company shows considerable increase in 2 years and decreased in the last
year. Company‟s sales have increased in 2 years and decreased in the last year. At the sale time
company has been successful in controlling the expenses i.e. manufacturing & other expenses .It is a
clear index of cost control, #managerial efficiency & sales promotion.

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 3. FINDINGS DURING THE PROJECT

The study was done in order to know the reason for drop in footfalls in Nextbyuing Clothing store at
Mantri mall. Out of 120 respondents 59 i.e., nearly 49% are aware of Nextbyuing Clothing Out of
59 respondents 44 visited store i.e., 75%. Out of 44 respondents 20 shopped at Nextbyuing Clothing
i.e.,
45%.61 respondents out of 120 were not aware of Nextbyuing Clothing store i.e., more than
50%.Amongthose who were aware many of them did not visit or shop at Nextbyuing Clothing store
as there perception about store was not good. This was clear by knowing reason for not visiting store
and not purchasingeven after visiting. Some of the reasons given by them are listed below:
• Too expensive
• Less variety
• Did not like clothes for baby, over pricing
• No stylish dresses available
• Sub-standard quality
• No I never thought of visiting Moreover people are least interested in shopping when they visit
mall. Many of them gave different reasons for visiting mall, some of them are:
• Lunch, To meet friends
• Meeting friends, movie
• Shopping
• To eat out
• To meet friend

• Customers cannot find the T-shirts in small size and medium, very few sizes T-shirts are
available in the small and medium sizes.
• Most of the customers were looking for more well known brands, where Nextbyuing
Clothingconcentrating on their own private label.
• Customers are not being asked by the staff to fill in different types of promo offer application
like Try.
• All the merchandise was not arranged according to their sizes.
• Employees were not well trained in assisting the customers.

38
 • Some types of work like rebranding the different stalls in the store, electric work happening in
the store in the working hours creating disturbance to the customers.

4 SUGGESTIONS FOR IMPROVEMENT :

Promotions :

More promotion needs to be done. Nextbyuing Clothing should establish itself as a brand which can
be done only through heavy promotions because in today‟s scenario to make consumer aware about
thestore promotion plays an important role in it. Nextbyuing Clothing are new unit of reliance retail
so in initial stage promotion is necessary to establish in market.
Introduce wide range and variety :

Customers could be better satisfied with a wide range of apparels designs in clotting lines.

Improve quality of clothing :

Many customers do not get size they are looking for and are disappointed. There should be proper
and timely stock replenishment done at the store level.

39
 7. CONCLUSION

The consumer is more interested in range and price of the products rather than the price. Bringing
customer into store may be easy, but once they enter the store they should get what they want.

Consumers have high expectations from Nextbyuing Clothing regarding pricing, they expect good
collection of clothes at much cheaper price. A lot of awareness programs may help in getting better
footfalls.

After concluding a thorough survey and research on Nextbyuing Clothing it is observed that it
has beenperceived as a good brand. It has good customer loyalty and also attracts large number of
new customers. It also offers its customers a unique shopping experience a few brand can offer.

It also got an advantage of its location situated in commercial locations. There are a good number of
Nextbyuing Clothing stores located across the city which makes it easy for customers to access the
store.Customers seemed to be happy when it came to the layout of the store, the merchandise and
the cleanliness of the store, ambiance, etc.

Customers can have high expectations from Nextbyuing Clothing regarding the pricing, they expect
goodcollection of clothes at much cheaper price. A lot of awareness programs may help in getting
better footfalls.

The future of Nextbyuing Clothing indeed seems to be bright and it should continue to do well as
seems apparent from response of the customers.

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