PROJECT REPORT ON Revenue Model of 12 textile shops in 6 different semi urban areas Submitted in partial fulfillment of the requirements

s of the degree of MASTER OF BUSINESS ADMINISTRATION KANNUR UNIVERSITY BY MOHAMMED SUHAIL 3d Semester MBA (B0GMBA 1057) UNDER THE GUIDANCE OF
Dr. KRISHNA KUMAR

CHINTECH SCHOOL OF MANAGEMENT STUDIES CHINMAYA INSTITUTE OF TECHNOLOGY KANNUR 2011

CHINMAYA INSTITUTE OF TECHNOLOGY-KANNUR

(Affiliated to the Kannur University) Govindagiri, Chala. PO Thottada, Kannur, Kerala-670007

CERTIFICATE
This is to certify that the project entitled Study on revenue Model of 12 textile
shops in 6 different semi urban areas is a bona fide record of work done by

MOHAMMED SUHAIL, 3d Semester MBA and submitted in partial fulfillment of the requirement for the degree of MASTER OF BUSINESS

ADMINISTRATION, of Kannur University under my supervision.

Dr. KRISHNA KUMAR (Supervising guide) Place: Kannur Date:

CHINMAYA INSTITUTE OF TECHNOLOGY-KANNUR

(Affiliated to the Kannur University) Govindagiri, Chala. PO Thottada, Kannur, Kerala-670007

CERTIFICATE
This is to certify that the project entitled Study on revenue Model of 12 textile
shops in 6 different semi urban areas is a bona fide record of work done by

Mohammed Suhail, 3d Semester MBA and submitted in partial fulfillment of the requirement for the degree of MASTER OF BUSINESS ADMINISTRATION, of Kannur University under my supervision.

Dr. K.K. Falgunan DIRECTOR Place: Kannur Date :

DECLARATION

I hereby, declare that the Project report entitled Study on revenue Model of 12
textile shops in 6 different semi urban areas is my original work and it was under the

supervision of Dr. Krishna kumar, faculty of Chinmaya Institute of Technology, Kannur.

I also declare that this report has not been submitted by me fully or partially for the award of any degree, diploma, or any other similar title or recognition before.

MOHAMMED SUHAIL 3d SEMESTER MBA Place: Kannur Date :

ACKNOWLEDGEMENT

I am deeply indebted to Dr K.K Falgunan, Director Chinmaya Institute of Technology for giving me the opportunity to carry out this project.

I express my immense gratitude to my mentor , Dr. Krishna Kumar, Director of School of Management Studies, Chintech who has helped me during the course of my project.

I am also thankful to all other faculty members in the Department of Management Studies and all my friends who have helped me during the course of project.

I also express my sincere gratitude to the owners of all textile shops who took my time from their tight schedule and support me during the whole tenure of the project.

Last but not the least I record my appreciation and thankfulness to my respondents who spared their time to provide me input.

CONTENTS

1.

Chapter I- Introduction & Design of the Study

Introduction Statement of the Problem Objectives of the Study Sample Design Methodology and Data Collection Tools of Analysis Chapter Scheme

2.

Chapter II- Industry Profile and Company Profile Chapter III- Analysis & Interpretation of Data Chapter IV-Findings, Suggestions and Conclusion Bibliography
Appendix

3.

4.

CHAPTER-I INTRODUCTION AND DESIGN OF THE STUDY

INTRODUCTION
This project profile is based on revenue earning on readymade garments such as shirts, trousers and ladies suits . The demand of readymade garments is increasing day by day due to urbanization of the cities. The garments are very simple to manufacture and easily marketable both in urban and rural areas. The market for readymade garments is increasing in India and abroad and has a good scope especially for gents and children garments. The marketing of garments will not be a problem provided the users are made aware of the cost benefit. All over the country significant local market is available for different types of products in garments. As the technology advances each and every sector has been rapidly developed. Each and every person wants to look like a hero and heroine. As the fashion takes place, they want to wear more fashionable cloths. With the increase in fashion every person want to wear latest fashionable cloths. Fashion is growing up day to day. Readymade Garment Shops are opened. People are satisfied from Readymade Garment Shop and people also save their valuable time. Readymade Garment Shop provides better designed dresses to customers. With the change in the trend in fashion market Readymade Garment have become very popular. Most of the people used to wear Readymade materials, Garment Shop have become very popular. Most of the people used to wear Readymade Garment as it is a time saving activity. Especially ladies have taken very much interest in new designs and fashionable garments. New fashion designers made new trend designs to attract customers and mostly to Gents customers. They like to wear new fashion cloths or new look of garment. There are various types of dresses which are very reasonable to general or ordinary people. Readymade Garment Company like gents club, lulu gents park, lulu centre, dress code, Lilz readymade , uomo readymade and dues fashion from semi urban areas of kannur makes garment very attractive and in addition there are various other shops that also work to give better quality product.

STATEMENT OF THE PROBLEM

In this project an attempt has being made to study the revenue model of 12 textile shops in 6 different semi-urban areas for this I am supposed to collect information from textile shops from different semi urban areas of kannur district.

OBJECTIVE OF THE STUDY

1 .To do a comparative study on revenue model of the 12 textile shops in 6 semi urban areas. 2. To study the total sales and seasonal trends of the different shop. 3. To study the cost structure of the shop and profitability.

Research methodology
Primary data was collected through interview schedule and personal discussion with employees. Secondary data were collected from websites.

Sample Design
Two textile shops from each semi urban area were chosen for study on the basis of initial investment not more than twenty lakh.

TOOLS OF ANALYSIS

The data collected were analyzed by way of simple percentage calculation. The analyzed data were presented by way of tables and graphs and also ratio analysis was used.

CHAPTER SCHEME

The project report is presented in 4 chapters:-

The first chapter gives an introduction to the study. It deals with the introduction, statement of the problem, objectives, sample design, tools of data collection, tools of analysis & the chapter scheme. The second chapter highlights the industry profile and company profile The third chapter analysis the data collected. The fourth chapter presents the findings, suggestions & conclusion of the study.

CHAPTER II INDUSTRY PROFILE and COMPANY PROFILE

TEXTILE INDUSTRY-A PROFILE

The textile industry occupies a unique place in our country. One of the earliest to come into existence in India, it accounts for 14% of the total Industrial production, contributes to nearly 20% of the total exports. Being the largest foreign exchange earner, accounting for more than 5 per cent of GDP and providing direct employment to 38 million people, primarily the weaker sections, it is the second most important sector only after agriculture. The industry is composed of handlooms, powerlooms and mills. While the mill sector is wellorganised and modern, the same cannot be said of the powerloom and handloom segments. The mill sector has managed to grab a reasonable share of the world export market. The textile and apparel industry is one of the leading segments of the Indian economy and the largest source of foreign exchange earnings for India. This industry accounts for 4 percent of the gross domestic product (GDP), 20 percent of industrial output, and slightly more than 30 percent of export earnings. The textile and apparel industry employs about 38 million people, making it the largest source of industrial employment in India.

INDIAN TEXTILE INDUSTRY India is a traditional textile -producing country with textiles in general, and cotton in particular, being major industries for the country. India is among the worlds top producers of yarns and fabrics, and the export quality of its products is ever increasing. Textile Industry is one of the largest and oldest industries in India.Textile Industry in India is a self-reliant and independent industry and has great diversification and versatility. The textile industry can be broadly classified into two categories, the organized mill sector and the unorganized decentralized sector.The organized sector of the textile industry represents the mills. It could be a spinning mill or a composite mill. Composite mill is one where the spinning, weaving and processing facilities are carried out under one roof.The decentralized sector is engaged mainly in the weaving activity, which makes it heavily dependent on the organized sector for their yarn requirements. This decentralized sector is comprised of the three major segments viz., powerloom,handloom and hosiery. In addition to the above, there are readymade garments, khadi as well as carpet manufacturing units in the decentralized sector.

The Indian Textile Industry has an overwhelming presence in the economic life of the country. It is the second largest textile industry in the world after China. Apart from providing one of the basic necessities of life i.e. cloth, the textile industry contributes about 14% to the country's industrial output and about 17% to export earnings. Textile Industry contributes around 4% of GDP, 9% of excise collections, 18% of employment in industrial sector, and has 16 % share in the countrys export. The Industry contributes around 25% share in the world trade of cotton yarn. India is the largest exporter of yarn in the international market and has a share of 25% in world cotton yarn export market. India contributes for 12% of the worlds production of textile fibers and yarn. Indian textile industry is second largest after China, in terms of spindle age, and has share of 23% of the worlds spindle capacity. India has around 6% of global rotor capacity. The country has the highest loom capacity, including handlooms, and has a share of 61% in world loom age. The Apparel Industry is one of largest foreign revenue contributor and holds 12% of the countrys total export.

Recent Trends in textile industry

The mood in the Indian textile industry given the phase-out of the quota regime of the MultiFibre Arrangement (MFA) is upbeat with new investment flowing in and increased orders for the industry as a result of which capacities are fully booked up to April 2005. As a result of various initiatives taken by the government, there has been new investment of Rs.500 billion in the textile industry in the last five years. Nine textile majors invested Rs.26 billion and plan to invest another Rs.64 billion. Further, India's cotton production increased by 57% over the last five years; and 3 million additional spindles and 30,000 shuttle-less looms were installed. The industry expects investment of Rs.1,400 billion in this sector in the post-MFA phase. A Vision 2010 for textiles formulated by the government after intensive interaction with the industry and Export Promotion Councils to capitalise on the upbeat mood aims to increase India's share in world's textile trade from the current 4% to 8% by 2010 and to achieve export value of US $ 50 billion by 2010 Vision 2010 for textiles envisages growth in Indian textile economy from the current US $ 37 billion to $ 85 billion by 2010; creation of 12 million new jobs in the textile sector; and modernisation and consolidation for creating a globally competitive textile industry.

COMPANY PROFILE
The researcher undertook a study on the revenue model- comparative study on 12 textile shops in 6 different semi-urban areas .The semi-urban areas mainly includes talap , chakkarakal, payyanur, pazhayangadi, thana and fort road. Since kannur is booming with textile shops both small and big.it was very difficult to select shops. So the amount of investment was regarded as the basis of selection of shops. The shop was selected on the basis of intial investment made on shops that is not more than twenty lakhs. The interesting point to be noted that in the severe competitive market also, these shops are able to reap high profits. The way in which each shop is being presented that is its decor, ambience , layout of the shop is so attractive. That is it is able to draw attention of the customers. Most of the shops are owned by the youngsters. Even the product kept in the shop and the name of the shop reflects the youthfulness. As part of project work, 12 textile shops were chosen. With regard to monthly sales of shops Lulu centre of chakkarakal , M K readymade garments, dues payyannur is making a monthly Sales of more than Rs 100000. The maintenance cost of the shop is around Rs 20000 for almost all the shops. All the shops has a life span of average of 10 years and it was also observed that All the shops irrespective of the capital employed and amount of sales generated by the shop, Almost all the shops charge a huge margin on each of the products. Shops like kari, gents club , DNA , Deus and Mk readymades have taken loan for setting up their textile shops. All the shops purchases goods in bulk from Bombay , banglore and Chennai so that they get goods at discounted rates. Shops like DNA , Deus, Lulu centre ,Uomo and lulu gents is running on partnership basis while shops like Lilz dress code , #2 , M .K readymades and Kari are sole proprietorship . The shops like Kari, DNA ,Deus , Gents club have very fashionable products which is very trendy and suits the taste of youth and teenagers. The Lilz shop is fully concentrated on ladies dresses like churidars and dress materials, that is they are on niche segment. It is during the peak season that is mainly festive season the sales are very high and shops make huge profit. Shops like Uomo textile of payyannur makes sales of around Rs 6 lakh during festive season and it is followed by Deus textile shop having a sales around 5 lakh and gents club

and Uomo makes a sales around 4 lakh and shops like Kari makes 2 lakhs sales during peak season. It was noted that peak season bring such a big bonanza of sales and profit to these Shop. It is interesting to note that there has been a massive change with regard to the way in which shops are designed. As there are numerous textile shops present in kannur having all types of textile product and also some concentrating on niche product still they are able to phase out the competition and tap huge profit out of it.

CHAPTER III DATA ANALYSIS AND INTERPRETATION

Table No 1. Maintenance cost of the shop

MAINTENANCE COST

NO. OF SHOPS

PERCENTAGE

0-20000 20000-40000 40000-60000 TOTAL

10 1 1 12

84% 8% 8% 100%

Chart No 1:

Maintenance cost
10 8 6 Maintenance cost 4 2 0 0-20000 20000-40000 40000-50000

INTERPRETATION
From the chart it can be inferred that 10 out of 12 shops incurs maintenance cost in the range of 0-20000. Lulu centre is the sole company incurring Maintenance cost between 20000-40000 and dues between 40000-60000 rupees respectively.

Table No 2: Capital investment of the shop

CAPITAL INVESTMENT 10 LAKHS 10-15 LAKHS 15-20 LAKHS TOTAL NO. OF SHOPS 7 4 1 12 PERCENTAGE 58% 33% 9% 100%

Chart No 2 :

CAPITAL INVESTMENT
8 7 6 5 4 3 2 1 0 10 LAKHS 10-15 LAKHS 15-20 LAKHS

INTERPRETATION:
From the chart it can be seen that most of the companies have a total initial capital of 10 lakhs. With only 1 company having more than 15 lakhs which is DNA and four in the 1015 lakhs category namely Deus, Gents club Lulu centre and Lilz

Table No 3: Monthly sales of the shop

MONTHLY SALES 0-50000 50000-100000 100000-200000 TOTAL

NO. OF SHOPS 3 9 12

PERCENTAGE 25% 75% 100%

Chart No 3:

Monthly sales of the company

10

5 Monthly sales of the company 0 0-50000 50000-100000 100000-200000

INTERPRETATION:
The sales of the 12 shops are mostly stable. More than 80 % of the shops have a sales target between 1 lakh-2 lakh. None of them seem to have a target less than 50000 rupees in a month.3 companies seem to have sales in between 50000-100000 rupees.

4. Table No 4 : Monthly salaries of the employees

MONTHLY SALARIES 0-5000 5000-10000 ABOVE 10000 TOTAL NO. OF SHOPS 5 7 12 PERCENTAGE 42% 58% 100%

Chart No 4:
7 6 5 4 3 2 1 0 Monthly salaries of the employees 0-5000 5000-10000 above 10000

INTERPRETATION:
From the above data it can be interpreted that the average salaries of the employees in the 12 shops falls between 5000-10000 rupees. Only shops like #2, Dues, DNA, Lilz and Mk readymade pay their employees less than 5000 rupees.

Table No 5: Bonus given to Employees

BONUS TO EMPLOYEES 2000-3000 3000-4000 4000-5000 TOTAL NO. OF SHOPS 10 2 12 PERCENTAGE 83% 17% 100%

Chart No 5:

Bonus given to employees

12 10 8 6 4 2 0 2000-3000 3000-4000 4000-5000 Bonus given to employees

INTERPRETATION:
The table and chart suggest that more than 80 percent of the employees in the above 12 shops get a bonus between rupees 3000-4000.Dues and Lulu centre being the only exceptions.

PROMOTIONAL EXPENDITURE

(Table No: 6)
EXPENDITURE 0-25000 25000-50000 50000-750000 75000-100000 TOTAL NO. OF SHOP 2 6 2 2 12 In Percentage 16% 50% 17% 17% 100%

CHART-6

NO. OF SHOP
0-25000 25000-50000 50000-750000 75000-100000

17%

16%

17%

50%

INTERPRETATION:
From the table and graph it can be inferred that 50% of the shops has promotional expenditure between 25000 and 50000 only two shops namely dues and DNA has incurred promotional expenditure above Rs 75000 and other two shops spent comparatively less on promotion.

TYPES OF SHOPS TABLE NO- 7 TYPES OF SHOPS SOLE TRADERSHIP PARTERNERSHIP TOTAL NO.OF SHOPS 6 6 12 PERCENTAGE 50% 50% 100%

CHART NO-7

TYPES OF SHOPS

50%

50%

PROPRIETORSHIP PARTNERSHIP

INTERPRETATION:
From the table and graph it can be inferred that 50% of the shops are running on partnership basis and rest of the shops the shops are sole trader ship concern.

REGULAR CUSTOMERS OF THE SHOPS TABLE NO- 8 TYPES OF CUSTOMER KIDS ADULTS ELDERLY TOTAL 3 7 2 12 25% 58% 17% 100% NO. OF CUSTOMER PERCENTAGE

CHART NO-8

TYPES OF CUSTOMER
70% 60% 50% 40% 30% 20% 10% 0% KIDS ADULTS ELDERLY

INTERPRETATION:
The above table and graph it can be inferred that major type of customers are adults and is almost 60% , 25% of them is kids and only 15% of them is elders. So it can be concluded that major customers are adults.

BANK LOAN
CHART NO 9

BANK LOAN YES NO TOTAL

NO OF CUSTOMERS 6 6 12

PERCENTAGE 50 50 100

Bank Loan

50%

50% yes no

INTERPRETATION :
It is clear from the above chart that 50 percent of the shops have taken bank loans and the other 50 percent hasnt.

NO OF EMPLOYEES CHART NO 10 EMPLOYEES NUMBER OF CUSTOMERS Only Men Only Women Men and Women TOTAL 9 2 1 12 75% 17% 8% 100 PERCENTAGE

NUMBER OF CUSTOMERS
9 8 7 6 5 4 3 2 1 0 Only Men Only Women Men and Women

NUMBER OF CUSTOMERS

INTERPRETATION :
We can see from the above chart that most of the shops have only male workers. Onyl 17% of them have female workers and the rest have both male and female workers.

TABLE SHOWING GROSS PROFIT , NET PROFIT AND G/P RATIO OF ALL SHOPS

NAME OF THE SHOP KARI #2 DRESS CODE M K READYMADES DEUS FASHION GENTS CLUB DNA LILZ CLUBS UOMO STYLES LULU GENTS PARK LULU CENTRE

GROSS PROFIT 380000 260000 466000 300000 600000 520000 700000 440000 800000 500000 500000 800000

NET PROFIT 250000 156000 280000 232000 280000 266000 575000 362000 672000 395000 342000 640000

GROSS PROFIT RATIO 31.6% 27.3% 35.8% 30% 33.3% 35% 51.8% 44% 53% 46.2% 33.3% 40%

NET PROFIT RATIO 20.8% 16.25% 21.5% 20% 15.5% 22.16% 42.5% 36% 44.8% 36.5% 22.8% 32%

Interpretation: From the above it can be noted that there is much difference in the profitability of each shops based up on the location. Shops like Gents club-payyanur, Lilz-talap, Uomo styles-payangadi and Lulu centre-chakkarakal earns maximum profit.So hence it can be inferred that locational difference greatly influence the profitability of the shops.

Chapter IV FINDINGS, SUGGESTIONS AND CONCLUSION

FINDINGS

1. Variety of stock is to be maintained as the fashion of garment changes too rapidly. 2. Huge investment is required to start a textile shop. 3. Owing to cut throat competition the shop owner needs to keep latest and fashionable stock to attract to large number of customers. 4. The profitability is greatly influenced by locational difference. 5. Huge profits are earned by the shop owner through the margin. 6. The layout and the ambiance of most of the shop are attractive to the eyes of the customers. 7.Most of the retail shops prefer male employees over females 8. They largely depend on bank loans for setting up a textile business. 9. Locations have great influence on the profitability of the shops.

SUGGESTION

1 .Location plays the key role for this business. For a shop in a prime locality would be really a plus point for their business.

2. Take care of customers by providing them various services to be still stand in the market for long time.

3. They should have to know customer value.

4. They have to develop their communication skill in order to influence the customers.

5. People today are more fashion conscious. They prefer to wear more fashionable and well designed dress so owners should see to it that they are equipped with more fashionable materials in order to earn maximum profit.

6.More female workers should be encouraged to join 7.Advertising activities should be made large scale in order to reach all places and all age groups of people.

CONCLUSION

The textile shops is a booming business in India. Inference made from the project is that huge profit is being generated from the sale of textile products, that is the margin fixed by the textile shops is huge. The twelve shops were being brought under study and it was being analyzed that almost all the shops is youth centred. It has fashionable product being kept for sale.Almost all these shops have years of experiences and all the shops are centrally located, so it can be understood that sales of the shops is greatly influenced by location in which it is operating. The project really gives an insight on the revenue models of the different shops and their by comparatively analyzing it. So to conclude it can inferred that these textile shop has greater scope for growth in the future and it will be able to fetch a greater return mainly those shops which are centrally located.

QUESTIONNAIRE

1.Name and Location of the shop: 2. Current owner of the shop: 3. No. of years in Operation: 4. Is the shop building Owned 5. Is it sole proprietorship Rented Partnership No

6. Are the goods purchased in Bulk: Yes 7. What is the maintenance cost of the shop 0-20000 20000 -40000

40000-50000

8. Total capital investment required to set up the shop ? 10 lakh 10lakh-15 lakh More than 20 lakh

9. What is the amount of municipal tax paid by the shop 10. What is the annual income tax paid by the shop 11. What are the monthly sales of the shop 0-50000 50000-100000 100000- 200000

12. No. of employees in the shop: 13. Whether employees are full time employees Yes No

14. Salaries given to the employees: 0-5000 5000-10000 10000-15000

15. Whether any perks or bonus are given to employees Yes 16. No If yes, what is the amount of bonus given to the employees 30000-40000 40000-50000

20000-30000

17. What are the different products sold in the shop 18. What is the price of each product sold in the shop 19. When is the peak sale season? 20. How much sale takes place during peak season 21. Who are the regular customers? Family adults elderly

22. Who are your main competitors? 23. Is advertising key to the success of the shop : 24. What is the promotional expenditure incurred by the shop 23. Are the records up to date Yes NO NO No Done Internally

25. Are all transactions billed: Yes 26. Are your accounts audited: Yes 27. Auditing work is usually Outsourced