Chapter-1

INTRODUCTION

1

PREFACE

The Retail Sector is the largest sector in India after agriculture, accounting for over 10

per cent of the country’s GDP and around 8 per cent of the employment. India has the

most unorganized retail market in the world. Most retailers of the unorganized retail

market have their shop in the front and house at the back. The Retail Industry in India is

today amongst the fastest growing industries with several players entering the market.

Currently, the organized retail sector accounts for only 2 per cent indicating a huge

potential market opportunity. India is being seen as most attractive market by retail

investors from all over the world. Retail is clearly the sector that is poised to show the

highest growth in the next five years. The sector is set for a revolution, as both the

present players and new entrants are gearing up to explore the market. The present size of

the organized retailing sector is approximately 3% and is expected to grow to 25-30% by

the year 2010. There are about 300 new malls, 1500 supermarkets and 325 departmental

stores currently under construction. Many players are coming up with huge investments,

due to which the present 12 million mom-and-pop shops and kirana stores fear losing

their business. Most predictions say that the sector might reach to US$ 400-600 billion by

the year 2010.

Global retail giants such as Wal-Mart, Tesco, Germany's Metro AG and many others are

ready to enter the retail markets. The rising demands of branded products and increase in

purchasing power have lured these companies to enter the market. Modern retail

development in India is focused on the cities like Mumbai, Pune, Ahmedabad, Delhi and

the National Capital Region, Chennai, Banglore, Hyderabad, Kolkata. The leading Indian

retailers are Bata India Ltd, Big Bazaar, Crossword, Vishal Mega Mart., Food Bazaar,

Globus Stores Pvt. Ltd., Liberty shoes Ltd., Music World Entertainment Ltd., Pantaloon

Retail India Ltd., Shoppers Stop, Subhiksha, Titan Industries etc.

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MODERN RETAIL STRUCTURE

It includes-

Malls like Ansal Plaza (New Delhi), Nucleus (Pune), Centre Stage (Noida) etc.

Discount Stores like Brand Factory, Loot, M&B Factory, Subhiksha, Big Apple, and

Reliance Fresh.

Department Stores like Shoppers Stop, Big Shop, and Pantaloons.

Hypermarkets/ Supermarkets like Big Bazaar, Vishal Mega Mart.

Convenience Stores like Spencer’s Daily, Tru Mart, Choupal, More.

Multi Brand Outlets like Globus.

CURRENT SCENARIO

A glimpse of the international retail-

47 global fortune companies & 25 of Asia's top 200 companies are retailers

Dominated by developed countries

US, EU & Japan constitute 80% of world retail sales.

Biggest player in India is Pantaloon Retail India Limited.

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PERCENTAGE OF ORGANIZED RETAIL:-

USA - 85%

Taiwan - 81%

Malaysia - 55%

Thailand - 40%

Brazil - 36%

Indonesia - 30%

Poland - 20%

China - 20%

India - 3%

According to A.T. Kearney GLOBAL RETAIL DEVELOPMENT INDEX, India was

placed at 1st position in the year 2005. However within 2 years of time i.e 2007, it is

being placed at 2nd position jointly with China and after Vietnam.

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GROWTH OF RETAIL SECTOR:-

The following are the reasons for growth of retail sector in India- Increase in disposable

income of consumers, Increase in consuming desire, Low share of organized retailing.

Purchasing power of Indian urban consumer is growing and branded merchandise in

categories like Apparels, Accessories, Food, and even Jewellery, are slowly becoming

lifestyle products. Retailers are taking benefit of this growth and accordingly are aiming

to expand. Indian retail is expanding at a fast pace. India's retail industry, which is

currently valued at nearly $350 billion, is expected to double in size by 2015. The Indian

Retail Industry is gradually moving ahead towards becoming the next boom industry.

Modern Large-Format retail, efficiently connects the producers and the consumers and is

helpful to both in the long run. In India there is a huge wastage of fresh fruits and

vegetables. In this scenario, the Large-Format Retail provides all important

infrastructures to carry the farm produce to the consumers with lesser wastage. In this

way the farmers get better returns and the consumer better quality and price.

KEY TRENDS

The existing players like Big Bazaar, Shoppers' Stop, Piramyd, and Vishal Mega Mart are

expanding to smaller towns and cities. Many other business houses are planning to enter

the retail sector either on their own or through partnerships. New entrants like Bharti Pvt.

Ltd. and Wal-Mart are going to enter the market soon. Even rural areas will provide a

huge opportunity to be explored.

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PURPOSE OF STUDY

1. To study the different software or Technologies used by Vishal Retail.

2. To study the financial health of the organization in the current scenario and its

stock.

3. To study the selection and recruitment process of the employees and also to

analysis the training and development method of the company.

4. To Understand the Marketing Strategies being adopted by the company.

5. To know the production process and plant location and layout of the company.

6. To understand the scope of e-commerce in the context of modern business.

6

RESEARCH METHODOLOGY

Research is a scientific and systematic search for relevant information on a specific topic.

In other words, it is a search for knowledge through objective and systematic method of

finding solution to a problem. Research methodology is a way to systematically solve the

research problem. It includes the various steps that are generally adopted by a researcher

in studying his research problem along with the logic behind.

There are two types of data which are used in research process which are listed

below.

Primary Data - The primary data are those which are collected afresh and for the first

time, and thus happen to be original in character. In the present study primary data has

been collected various methods as such like:

1 Personal interview

2 Telephone interview

3 Questionnaires

Secondary Data - The secondary data are those which have already been collected by

someone else and which have already been passed through the statistical process. In the

present study secondary data has been collected through various as such like:

1 Publications of the central, state and local governments

2 Internet

3 Newspapers

4 Reports

5 Brochures

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The present study is based on secondary data. This data has been collected through

various channels.

PROBLEMS FACED

1. Time available for the project being very short, in-depth study could not be done.

2. The officials interviewed did not give the detailed information on recruitment and

selection policies to maintain confidentiality.

3. Sample size during the survey could not be taken higher due to time constraint.

4. In-depth financial information could not be attained due to the policies of the

company.

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Chapter-2

COMPANY’S

PROFILE

VISHAL RETAIL PVT LTD(VPRL)

9

HISTORY

What started as a humble one store enterprise in 1986 in Kolkata (erstwhile, Calcutta) is

today a conglomerate encompassing around 183 showrooms in 110 cities / 24 states.

India’s first hyper-market has also been opened for the Indian consumer by Vishal.

Situated in the national capital Delhi this store boasts of the singe largest collection of

goods and commodities sold under one roof in India.

VRPL was incorporated on July 23, 2001 under the Companies Act, 1956 as Vishal

Retail Private Limited. VRPL was converted to a public limited company on February

20, 2006. At the time of incorporation, the registered office of VRPL was situated at 4, R.

N. Mukherjee Road, Kolkata 700 001. Subsequently VRPL’s registered office was

shifted to 54/4C, Strand Road, Kolkata 700 006 on August 1, 2001 and on February 14

2004, VRPL’s registered office was shifted to Mouza Kuch Pukur, P.S. Bhangore, 24

Paragnas (South), West Bengal. On December 29, 2005, VRPL’s registered office was

shifted to RZ-A-95 & 96, Road No. 4, Street No. 9, Mahipalpur Extension, New Delhi

110 037, which is the present registered office of the Company. The fresh certificate of

incorporation consequent on change of name was granted to our Company on February

20, 2006 by the Registrar of Companies, West Bengal.

With a business purchase agreement dated November 23, 2001 executed between

VRPL and Mr. Ram Chandra Agarwal (carrying on proprietorship business in the name

of M/s The Vishal Garments) and Mrs. Uma Agarwal (carrying on proprietorship

business in the name of M/s Vishal Garments), VRPL acquired the business of “M/s The

Vishal Garments” and “M/s Vishal Garments”, and the said businesses were transferred

to VRPL as a going concern with effect from December 15, 2001.

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With a business purchase agreement executed between VRPL and M/s Vishal

Fashion Private Limited, they acquired the business of manufacturing of readymade

garments as a going concern with effect from March 31, 2003. VRPL went into backward

integration by acquiring a manufacturing unit for readymade garments.

DETAILS OF DIRECTORS

Mr. Ram Chandra Agarwal, 43 years, is VRPL’s Chairman and Managing Director. He

holds a bachelor’s degree in commerce from St. Xavier’s College, Kolkata. Mr. Agarwal

has more than 20 years of experience in the retail industry and has been with VRPL since

their inception in 1997. He started the business under the name of “Vishal Garment” with

a small store at 9, Lal Bazaar Street, Kolkata. Mr. Agarwal has made efforts for the

development of the value retailing industry in India and is well known for his business

acumen.

Mrs. Uma Agarwal, 33 years, is an executive Director of VRPL. She holds a bachelor’s

degree in arts. Mrs. Agarwal has more than 7 years of experience in the retail industry.

She has been associated with accounts department of VRPL.

Mr. Surendra Kumar Agarwal, 46 years, is an executive Director of VRPL. He holds a

bachelor’s degree in commerce. Mr. Agarwal has more than 17 years of experience in the

retail industry. He has been associated with store development and management at

various locations of VRPL.

Mr. Bharat Jain, 45 years, is an independent Director of VRPL. He holds bachelor’s

degree in commerce. Mr. Jain is engaged in the business of leather garments and

accessories and has more than 23 years of work experience. Mr. Jain joined VRPL Board

on May 8, 2006.

Mr. Rakesh Aggarwal, 44 years, is an independent Director of VRPL. He holds a

master’s degree in commerce. Mr. Aggarwal is currently engaged in roto-moulding

industry has more than 20 years of work experience. Mr. Aggarwal joined VRPL Board

on October 31, 2006.

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Mr. Ram Chandra Aggarwal is the husband of Mrs. Uma Agarwal and brother of Mr.

Surendra Kumar Agarwal. None of our other Directors are related to each other.

VRPL PROMOTERS AND GROUP COMPANIES

The following individuals are the Promoters of the Company:

a). Mr. Ram Chandra Agarwal;

b). Mrs. Uma Agarwal; and

c). Mr. Surendra Kumar Agarwal.

The following companies are the Promoters of the Company:

a). Unicon Marketing Private Limited;

b). Ricon Commodities Private Limited; and

c). Vishal Water World Private Limited.

The company has during the year 2008, established its five new companies by the name

of VRL Foods Ltd., VRL Movers Ltd., VRL Consumer Goods Ltd., VRL Fashions Ltd.

& VRL Infrastructure Ltd., none of the companies have commenced business operations

during the year.

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VRPL’s BUSINESSVRPL started as a retailer of ready-made apparels in Kolkata in 2001. In 2003, VRPL

acquired the manufacturing facilities from Vishal Fashions Private Limited and M/s

Vishal Apparels. Subsequently, with evolution of retail industry in India and change in

consumer aspirations, VRPL diversified their portfolio of offerings to include other retail

goods. Currently, VRPL sell ready-made apparels and a wide range of household

merchandise and other consumer goods such as footwear, toys, watches, toiletries,

grocery items, sports items, crockery, home furnishing, beverages, drinks, gift and

novelties.

VRPL follow the concept of value retail in India. In other words, VRPL’s business

approach is to sell quality goods at reasonable prices by either manufacturing themselves

or directly procuring from manufacturers (primarily from small and medium size vendors

and manufacturers). VRPL endeavor to facilitate one-stop-shop convenience for their

customers and to cater to the needs of the entire family. VRPL believe this concept has

helped them grow to their current size within a short time frame of 8 years.

In order to reduce costs and take advantage of economies of scale VRPL have embarked

on backward integration of their products. VRPL’s apparel manufacturing plant is located

at Gurgaon, Haryana. For ensuring efficiency in supply chain, VRPL have set up seven

regional distribution centers located around Kolkata (West Bengal), Thane

(Maharashtra), Jaipur (Rajasthan), Ghaziabad (Uttar Pradesh), Ludhiana (Punjab),

Gurgaon (Haryana) and Delhi. Further, VRPL have focused on developing a cost and

time efficient distribution and logistics network, which currently comprises seven

distribution centers and a fleet of trucks for transportation.

VRPL achieved total sales of Rs. 1005.31 cr for fiscal 2008, as opposed to a turnover of

Rs.602.65 cr for fiscal 2007 and Rs. 288.46 million for fiscal 2006. During the same

period VRPL’s profit after tax was Rs. 40.64 cr, Rs.25.07 cr and Rs. 12.39 cr,

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respectively.

FINANCIAL MANAGEMENT

OBJECTIVES

1. To understand the financial position of Vishal Mega Mart.

2. To analyise its share in stock market.

Financial management seeks to plan for the future such that a personal or business entity

has a positive flow of cash.

BALANCE SHEET

Vishal Retail

Balance Sheet ------------------- in Rs. Cr. -------------------

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 12 14.82 22.1 18.32 22.4

Equity Share Capital 12 14.82 16.49 18.32 22.4

Share Application Money 8 0.09 0 0 0

Preference Share Capital 0 0 5.61 0 0

Reserves 1.19 15.49 50.6 108.44 248.76

Revaluation Reserves 0 0 0 0 0

Net worth 21.19 30.4 72.7 126.76 271.16

Secured Loans 0.97 19.56 47.61 216.3 448.9

Unsecured Loans 7.13 3.1 7.44 26.91 83.9

Total Debt 8.1 22.66 55.05 243.21 532.8

Total Liabilities 29.29 53.06 127.75 369.97 803.96

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Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds

Gross Block 12.31 24.01 45.99 132.93 262.3

Less: Accum. Depreciation 2.52 5.42 10.6 25.77 53.37

Net Block 9.79 18.59 35.39 107.16 208.93

Capital Work in Progress 0 0 4.64 1.09 20.51

Investments 0.98 0 0 0 0.13

Inventories 20.27 37.4 78.2 249.15 557.47

Sundry Debtors 0 0 0.09 0.12 0

Cash and Bank Balance 2.04 2.2 8.06 14.18 50.17

Total Current Assets 22.31 39.6 86.35 263.45 607.64

Loans and Advances 3.22 6.12 32.59 66.28 122.13

Fixed Deposits 0 0 0.21 0.97 4.79

Total CA, Loans & Advances 25.53 45.72 119.15 330.7 734.56

Deffered Credit 0 0 0 0 0

Current Liabilities 6.48 9.68 23.7 48.51 117.14

Provisions 0.56 1.57 7.74 20.47 43.02

Total CL & Provisions 7.04 11.25 31.44 68.98 160.16

Net Current Assets 18.49 34.47 87.71 261.72 574.4

Miscellaneous Expenses 0.02 0.01 0 0 0

Total Assets 29.28 53.07 127.74 369.97 803.97

Contingent Liabilities 0 0 3.75 4.48 6.98

Book Value (Rs) 10.99 20.45 40.68 69.18 121.06

Source : Asian CERC

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PROFIT & LOSS ACCOUNT

Profit & Loss account ------------------- in Rs. Cr. -------------------

  Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

  12 mths 12 mths 12 mths 12 mths 12 mths

Income

Sales Turnover 88.10 146.31 288.46 602.65 1,005.31

Excise Duty 0.00 0.00 0.00 0.00 0.00

Net Sales 88.10 146.31 288.46 602.65 1,005.31

Other Income 0.11 0.14 0.31 2.39 7.76

Stock Adjustments 8.02 15.37 40.70 226.30 300.45

Total Income 96.23 161.82 329.47 831.34 1,313.52

Expenditure

Raw Materials 66.49 104.77 216.74 573.47 862.68

Power & Fuel Cost 0.00 0.00 8.69 17.28 29.72

Employee Cost 3.02 6.04 15.13 30.01 72.31

Other Manufacturing Expenses 8.84 13.49 12.83 20.48 9.32

Selling and Admin Expenses 0.00 0.00 45.07 109.23 192.21

Miscellaneous Expenses 14.87 28.63 4.06 10.47 17.50

Preoperative Exp Capitalized 0.00 0.00 0.00 0.00 0.00

Total Expenses 93.22 152.93 302.52 760.94 1,183.74

  Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

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  12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 2.90 8.75 26.64 68.01 122.02

PBDIT 3.01 8.89 26.95 70.40 129.78

Interest 0.21 0.98 3.08 15.73 38.99

PBDT 2.80 7.91 23.87 54.67 90.79

Depreciation 1.47 2.92 5.36 15.29 27.60

Other Written Off 0.00 0.00 0.01 0.00 0.00

Profit Before Tax 1.33 4.99 18.50 39.38 63.19

Extra-ordinary items 0.00 0.00 0.10 -0.11 0.00

PBT (Post Extra-ord Items) 1.33 4.99 18.60 39.27 63.19

Tax 0.95 1.98 6.22 14.20 22.55

Reported Net Profit 0.38 3.02 12.39 25.07 40.64

Total Value Addition 26.73 48.16 85.78 187.47 321.06

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 0.00 0.00 0.00 0.00 0.00

Corporate Dividend Tax 0.00 0.00 0.00 0.00 0.00

Per share data (annualized)

Shares in issue (lakhs) 120.00 148.20 164.91 183.25 223.99

Earning Per Share (Rs) 0.32 2.04 7.51 13.68 18.14

Equity Dividend (%) 0.00 0.00 0.00 0.00 0.00

Book Value (Rs) 10.99 20.45 40.68 69.18 121.06

Source : Asian CERC

The Company completed yet another year of strong performance with robust growth and

high quality earnings. All business divisions posted strong growth and revenue and

enhanced their market standing, testifying to the robustness of Corporate Strategy of

creating multiple drivers for the growth. This performance is even more satisfying when

viewed in the light of the challenging business environment of the Retail Industry. Its

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Total revenues rises up 67.43 % from Rs. 6050.42 Million to Rs. 10130.75 Million driven

by addition in retail space, increased footfalls & increased Conversion Ratio.

Daily footfalls increased by 103% from 89,829 to 182,396. Conversion Ratio improved

from 42.2% to 43.1%.At the start of the year, Vishal Retail had planned the addition of

50 Stores to their Portfolio, but the Management exceeded the benchmark set by the

board of directors, and launched 52 Stores and added Approx 1 Million. Sq. Ft. of Retail

Space during the financial year ended March 31, 2008. The relations between the

Company and its employees continued to be cordial and harmonious throughout the year

under review.

However, no dividend has been declared for this year because the directors were of the

opinion that more funds are being required for the growth initiatives of the company.

CASH FLOW

Vishal Retail

Cash Flow

---in Rs. Cr.--- Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths

Net Profit Before Tax 18.82 39.38 63.19

Net Cash From Operating Activities -28.21 -102.41 -197.49

Net Cash (used in)/from

Investing Activities -25.91 -95.18 -114.58

Net Cash (used in)/from Financing Activities 60.38 204.47 356.24

Net (decrease)/increase In Cash and Cash Equivalents 6.06 6.89 44.17

Opening Cash & Cash Equivalents 2.2 8.27 10.79

Closing Cash & Cash Equivalents 8.27 15.15 54.96

Source : Asian CERC

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Vishal Retail Ltd. Stock

BSE: 532867 | NSE: VISHALRET | ISIN: INE945H01013 | Trading

PE ratio 1.79 (24/03/09)

EPS (Rs) 18.17 (Mar, 08)

Sales (Rs crore) 355.45 (Dec, 08)

Face Value (Rs) 10

Gross profit margin (%) 9.39 (Mar, 08)

Net profit margin (%) 4.01 (Mar, 08)

Return on average equity 14.98 (Mar, 08)

Operating Ratio (%) 12.13 ( Mar, 08)

Current Ratio 4.59 (Mar, 08)

Quick Ratio 1.10 (Mar, 08)

Depending upon the success or failure of the Management to role over the debts and

manage additional funds, this share will either zoom or go bust. The company is in talks

to roll over more than Rs 90 crore of debt owed to banks. Company officials say the

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retailer is not generating enough cash. “We have not been able to generate positive cash

flows from our operations in the first two months of this quarter,” said Chief Executive

Manmohan Agarwal. Therefore, the next two quarters will be critical for the company, as

sales are expected to fall further. The company’s third-quarter profit dropped 86 per cent

to Rs 2.15 crore. CARE Rating, while downgrading the retailer’s short-term bank

facilities, said the risk was accentuated due to the company’s inability to carry out a

proposed capital infusion, delay in sanction of working capital limits and higher liquidity

risk.

The company had a net debt, net of cash and other liquid assets, of Rs 765 crore on

December 31, 2008. The company, being charged an average interest rate of 13 per cent,

is negotiating with lenders to reduce the cost of the debt, as its interest outgo is expected

to nearly triple this year. “Increasing interest payment on our balance sheet is a cause for

concern and there is pressure,” Agarwal said.

Vishal Retail is expected to pay interest of nearly Rs 100 crore in FY09 as against Rs 38

crore in FY08.

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MARKETING MANAGEMENT

OBJECTIVES

1. To understand the different marketing strategies being followed by Vishal Mega

Mart.

2. To learn their marketing mix.

Marketing help to define the business for the customer's interests, not your own. It is the

process of learning what customers want or need and determining how to satisfy those

wants or needs. It is also used to confirm whether the customer reacted to a marketing

program as expected. The benefits of market research include:

Learning who your customers are and what they want.

Learning how to reach your customers and how frequently you should try to

communicate with them.

Learning which advertising appeals are most effective and which ones get no

response.

Learning the relative success of different marketing strategies, thus improving

return on investment.

Learning how not to repeat your mistakes.

Vishal Mega Mart has been the pioneer of retail revolution. Its first fight was against

local ‘Kirana’ stores. The task was to change the mindset of consumer to bring about

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changes in their shopping patterns. It wanted people to do bulk shopping for their

monthly ration instead of going to the shop each week.

MARKETING STRATEGY OF VISHAL MEGA MART

ProductVishal Mega Mart offers a wide range of products which starts from apparels to food

items, footwear to home furnishing, crockery to sport items, child care products to toys,

watches, drinks etc. There are many in house brands promoted by Vishal Mega Mart. In

pursuance of their business plan to diversify their portfolio of offerings, FMCG products

play a key role. FMCG products are usually meant to fulfill the daily needs of consumers

and therefore, VRPL believe retailing of FMCG products will bring customers to their

stores on a frequent basis and this may in-turn lead to consumption of their apparels.

VRPL have a number of private labels for apparels such as Zepplin, Paranoia, Chlorine,

Kitaan Studio, Famenne, Fleurier Women and Roseau.

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PriceVishal Mega Mart promises its consumers the lowest available price. The concept of

psychological discounting (Rs. 99, Rs. 49, etc.) is used as promotional tool. Vishal Mega

Mart also caters on Special Event Pricing (Close to Diwali, Christmas, New Year etc.).

Selling combo-packs and offering discount to customers. The combo-packs add value to

customer. Through Bundling, they also reduced the price of the products. In addition to

VRPL’s strategy to continue procurement of goods from small and medium size vendors

and manufacturers which leads to cost efficiencies, VRPL intend to procure FMCG and

apparels from low-cost production centers located outside India. Towards this objective,

VRPL’s propose to increase their procurement of finished and semi-finished goods from

China and thereby realize economies of scale and pass on the benefits so accrued to their

customers. The efforts of VRPL’s retail business are targeted towards families having

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total income which can be classified under the “lower middle” and “middle” income

groups. VRPL follow uniform pricing policy across their stores in respect of private

labels and non-branded products sold by them. This enhances brand loyalty, encourages

customer confidence and results in operational convenience. In relation to the other

products, the prices may vary between stores on account of state-specific taxation and

vendor policies.

PlaceVishal Mega Mart stores are located in 110 cities with more than 180 outlets. Vishal

Mega Mart has presence in almost all the major Indian cities. They are aggressive on

their expansion plans. VRPL intend to increase their penetration in the country by setting

up new stores in cities where they already have presence, as also entering into new areas

in the country. In particular, they intend to focus on expansion in Tier II and Tier III

cities. VRPL target locations with good infrastructural facilities such as easy

accessibility, provision for water, electricity, parking, security and other basic amenities.

Promotion Advertising has played a crucial role in building of the brand. Vishal Mega Mart

advertisements are mainly seen in print media i.e. newspapers, Television with Tina

Parekh as there in advertisement, and sometime road-side bill-boards. VRPL’s category

management system is used to plan promotional schemes. They launch promotional

schemes weekly. Apart from general sales promotion, the category manager formulates

promotional plans for ‘slow movers’. In addition, to promote sales, they focus on layout

of the stores and positioning, presentation and display of merchandise, in order to appeal

to the customer. In addition, VRPL have introduced, in association with SBI Cards &

Payment Services Private Limited, a co-branded credit card. VRPL’s propose to

continuously undertake such initiatives to increase the satisfaction of their customers.

Some of the features of the co-branded card include Rs 250 discount voucher on signing

24

up for the card and a process by which the cardholder earns five reward points on every

Rs 100 spent. A cardholder accumulates points on the basis of purchases made and the

points accumulated can be redeemed for gifts or purchases. In September 2005, VRPL

entered into a long term advertising agreement with Bennett, Coleman & Company

Limited (“BCCL”). Under the agreement, they are entitled to fixed discounts for their

advertisement in print publications of BCCL for a period of five years from the date of

the agreement. In addition, BCCL would also act as a facilitator for other print and non-

print media of the Times Group i.e. internet, radio and television or any other new

medium launched during the tenancy of the agreement. As a part consideration, VRPL

had issued 1,670,605 Equity Shares of Rs. 10 each and 384,190 Preference Shares of Rs.

146 each amounting to an aggregate of Rs. 300 million.

Strong understanding of the ‘value retail’ segmentVRPL’s business plan involves implementation of the concept of the ‘value retailing’,

targeting the middle and lower middle income groups, which constitute majority of the

population in India. VRPL intend to provide quality products at competitive prices.

VRPL sell a vast range of merchandise across apparels and accessories, FMCG products,

food products and consumer durables. VRPL’s emphasis has been to maximize the value

that the customers derive in spending on goods bought in their stores. VRPL endeavor to

continuously reduce their costs through a variety of measures, such as, in-house

production of apparels, procurement of goods directly from the small and medium size

vendors and manufacturers, efficient logistics and distribution systems along with

customized product mix at their stores depending on the regional customer behavior and

25

preferences. Central to their value retail strategy is to pass on the benefits of cost

reduction measures to their customers.

Strong and efficient logistics and distribution networkVRPL’s distribution and logistics network comprises seven distribution centers. Besides,

VRPL have their own fleet of 31 trucks, which helps VRPL to transport and deliver their

products in a cost and time efficient manner. VRPL believe that their distribution and

logistics set up is well networked and allows them to fulfill the store requisition within

short time period of generation and receipt of order, which has helped VRPL to optimize

in-store availability of merchandise and minimize transportation costs. Their strong

distribution and logistics network has enabled them to dispense with the requirement of a

dedicated storage space at every store, which is an industry practice, and instead

undertake periodical replenishment of depleted stock. Due to adoption of an efficient

racking system, they are able to benefit from optimum utilization of the space allocated

for display in their stores. This provides them assistance in maintaining a low working

capital requirement and less carrying cost.

OPERATIONS MANAGEMENT

OBJECTIVES

1. To study the inventory management, transportations system and logistics of

Vishal Mega Mart.

2. To understand the process of plant location and layout of the company.

VRPL Business ProcessesVRPL’s business process can be summarized as below:

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Establishment of Stores

(A.) Selection of location

In selecting location for a new store, VRPL start by identifying the city/town. VRPL

target primarily cities/towns which may be classified as Tier II or Tier III cities. In this

regard, an analysis of the demography, literacy levels, nature of occupation and income

levels. Within a city/town, VRPL target locations with good infrastructural facilities such

as easy accessibility, provision for water, electricity, parking, security and other basic

amenities. VRPL prefer to locate their stores in areas where real estate is available at

reasonable prices. The efforts of VRPL’s retail business are targeted towards families

having total income which can be classified under the “lower middle” and “middle”

income groups. Accordingly, VRPL plan their strategy to search for areas within cities

where such customers are domiciled in large numbers and make efforts to locate

themselves within the reach of such customers.

VRPL believe that adoption of standard formats for their stores has led to their brand

establishment and identification among their customers and will increase their base of

loyal customers. In pursuance of this, they have adopted standard parameters for store

planning and establishment. For ensuring standardized formats of their stores, VRPL

consider various factors, such as internal and external décor and colour schemes,

allocation of store space, stock mix and pricing and accounting methods.

(B.) Insurance

VRPL maintain comprehensive insurance coverage with Tata AIG, Bajaj Allianz, Royal

Sundaram and IFFCO-TOKIO for their existing stores, distribution centers,

manufacturing facilities and trucks. VRPL insurance policies include comprehensive

coverage for electronic equipment, fire and special perils and burglary.

Further, VRPL has filed a claim of Rs. 22.50 million on account of fire in their store at

Meerut as on July 7, 2006. In this regard, they have received Rs. 7.50 million as an

interim payment.

27

(C.) Factories

VRPL’s existing manufacturing facilities are located at Plot No. 224, Phase 1 Udyog

Vihar, Gurgaon, for which they have leasehold interest until May 4, 2009. In addition,

VRPL have recently acquired freehold interest in relation to a land admeasuring 7.24

acres in Dehradun, Uttaranchal, where they are exploring the possibilities for

establishment of another manufacturing facility.

(D.) Other Properties

VRPL have recently acquired freehold interest in relation to a land admeasuring 82,830

square feet in Hubli, Dharwad.

Merchandise Planning

VRPL’s merchandise planning is based on the concept of category management rather

than traditional brand management practices.

(A.) Apparels and Non Apparels

Under category management for, say, apparels, VRPL create and cater to products across

length and breadth of a category at different price points, fabrics, designs, shapes,

seasons, colors and sizes. VRPL formulate annual merchandising plan for each division

of merchandise taking into consideration factors such as past sales data, regional

customer tastes and preferences, number of stores (established and proposed), likely

fashion and trends, in-house production resources, vendor management and price. Each

division is further divided into major categories (for instance, men’s apparel as a division

is further divided into three major categories, namely, upper, lowers and sports and ethnic

wear). These major categories are in turn segregated into various subcategories. For

example, men’s upper as a major category would be further divided into several sub-

28

categories such as formal shirts, casual shirts, party wear etc. Each sub-category consists

of pre-defined SKUs, which are classified on the basis of price point, brand, style, pattern

and size.

VRPL draw annual sales projections for different SKUs and, accordingly, ascertain their

sourcing requirements. Based on such information and lead time estimates for supplies,

purchase orders with delivery schedules are issued. The inventory position for each SKU

is reviewed fortnightly taking into account the actual sales and variations from the

budgeted plans. Regular visits to the stores are made by the category merchandising team

to identify the slow-moving-SKUs and explore the options to expeditiously dispose of

them.

For certain non apparel categories, their merchandise planning and scheduling also

depends on introduction of new products and schemes by the vendors. For instance, if a

branded home appliance manufacturer replaces a product with a new version, then their

planning for the product would need to be reviewed based on the acceptability of the new

version.

(B.) In-house Manufacturing

VRPL benefit from backward integration and in-house manufacturing of part of the

apparel products sold in their stores. Through their manufacturing capabilities, VRPL is

able to attain relative independence from intermediaries with a competitive advantage in

terms of value and cost. VRPL use their manufacturing strengths to focus on enhancing

product knowledge and their experiences from manufacturing enable them to negotiate

better terms from the vendors and job workers.

VRPL currently have an apparels manufacturing plant at Gurgaon, Haryana. The

manufacturing plant is well-equipped with fully automatic machines for fusing,

buttoning, embroidery and welt pocket-making operations. The factory has a capacity to

manufacture 5,000 pieces per day. The plant was commissioned in 2004 and achieved a

capacity utilization of 80%. It has 450 machines and is operated by 500 workers. Further,

VRPL are exploring the possibilities for establishment of another manufacturing facility,

for the purposes of which they have acquired certain portions of land admeasuring 7.24

29

acres in Dehradun, Uttaranchal.

In addition to in-house manufacturing, they have outsourced some parts of the

manufacturing to “job workers” who work in their factory premises. VRPL undertake

quality control measures by way of random sampling to ensure the pre-determined

quality standards are met. To verify that the quantity of supplies is as per the order, they

undertake count-check for every receipt of the goods.

VRPL’s manufacturing team works closely with their design team to understand trends,

develop products, value engineer and finally create season wise collection that cater to

regional tastes.

(C.) Purchasing

Purchasing or vendor management assumes critical importance in retail business where

one has to deal with multiple products. VRPL have in place a vendor management

system, under which they identify vendors all over the country and overseas and seek to

develop alliances and arrangements with them. They regularly interact with the vendors

and share information such that the vendors remain familiar with their goals and targets.

It has been their strategy to procure goods from small and medium sized vendors and

manufacturers, which they believe has led to reduction in the cost of goods they sell and

increase in their profitability.

Upon ascertaining the procurements needs based on each SKU, VRPL explore the

various options for sourcing the products. They continuously strive to procure goods

from the place of origin to reduce the costs and control the quality. For identifying the

vendors, VRPL assess the various possible options on factors such as capacity, credibility

in the market, quality awareness and experience.

After identifying the vendors for the goods, VRPL place purchase orders based on their

SKU-wise plan, estimated lead time of each vendor and quantity to be procured from

each vendor. VRPL follow a policy of ‘payment on delivery’ to negotiate better prices

with the vendors and in certain cases they also release payments in advance. To ensure

quality of supplies, VRPL check quality by way of random sampling at the time of

receipt of the goods. To verify that the quantity of supplies is as ordered, they undertake

30

count-check for every receipt of the goods. For FMCG products, VRPL procure from

large as well as small and medium size manufacturers. For procurement from the large

manufacturers or their distributors, they endeavor to enter into formal arrangements for

supply of products to all VRPL stores, such that they are able to derive fixed margins

from sales of such products, irrespective of the locations. Under these agreements, they

benefit from special discretionary discounts and offers directly from the manufacturers or

their distributors.

Since most of the arrangements with the large manufacturers or their distributors are for

supplies across the country, they facilitate VRPL to expeditiously launch new stores, as

VRPL do not have to identify local sources for supplies of the FMCG products. Such

arrangements also help VRPL in standardizing the promotional schemes across all VRPL

stores.

For some of the FMCG products, such as staples and food grains, they purchase in bulk

and break them down into smaller packages for sales. Further, based on their assessment

of regional tastes and preferences, VRPL purchases some products locally from small and

medium size vendors.

Apparel Manufacture

The basic raw materials required for the manufacturing process of apparels includes

fabrics and accessories. VRPL merchandising teams source fabrics from local

manufacturers in India depending upon their production plan. VRPL also source fabrics

from the place of origin. VRPL source various other components and accessories from

vendors in various parts of the country and also import them from China.

Inventory Management, Distribution Network and Logistics

VRPL’s distribution network and logistics encompasses all activities to ensure that goods

31

are dispatched in right quantities and at right time to reach stores with sufficient time in

hand to promptly cater to customer demands and optimization of inventory position.

They have built a system to monitor the inventory position on a real-time basis at each

store, under which a stock requisition or delivery order is generated when pre-determined

stock or re-order levels are reached. The re-order levels for stores are determined based

on factors such as display levels, lead time for replenishment and average daily sales.

VRPL review these re-order levels on continuous basis to factor in variances in demand

based on seasons, trends and promotional schemes.

VRPL have seven distribution centers over approximately 385,033 square feet. These

distribution centers are located around Kolkata (West Bengal), Thane (Maharashtra),

Jaipur (Rajasthan), Ghaziabad (Uttar Pradesh), Ludhiana (Punjab), Gurgaon (Haryana)

and Mahipalpur (New Delhi). VRPL have clearly demarcated the stores which will be

serviced by each distribution centre. The reorder levels for distribution centers are

ascertained on the basis of factors like average daily sales of all the stores services, lead

time for replenishment and buffer stock, which caters to both the existing and proposed

stores to be fed. As for the stores, they regularly review these re-order levels.

VRPL’s distribution centers and stores are connected through company-wide virtual

network connection through broadband which helps to efficiently manage their network

of stores and distribution centers throughout the country.

They primarily utilise their own vehicles to transport the inventory to their stores from

the distribution centers. In addition, VRPL use the services of logistic solution providers

including low cost transport service providers in order to deliver products on time to

VRPL stores and optimize transportation costs. Distribution centers operations have been

streamlined through the standardisation of racking system, layouts and implementation of

automatic replenishment system.

Under arrangements with some of their merchandise manufacturers, they receive

payment on account of display of their products.

Internal Controls and Cost Reduction Measures:-

32

As a value retail chain, VRPL emphasize on reduction of costs at various stages and

levels. In addition to reduction of costs of procurement and by way of optimization of

inventory, VRPL employ on the following measures to enhance efficiencies and reduce

operational and administrative costs:

(A.) Pilferage Control

VRPL have established three-layer security checks to control losses on account of

pilferages at their stores. At the first level, VRPL employees screen the goods being

carried out of the store by the customers. Professional security guards oversee the

screening process. Lastly, VRPL have deployed electronic sensors to check any

pilferages. In addition, all VRPL stores are covered by closed circuit television

monitoring.

(B.) Resource Utilization

VRPL believe in reducing operating and administrative costs by way of optimum

utilization of their human and other resources. For instance, they determine the staffing

requirement on basis of a matrix containing factors such as store space and footfall

intensity. VRPL also train their employees to assume cross-functional responsibilities. As

a measure for optimum utilization of their space resources, they have adopted an efficient

racking system by deploying relatively higher racks to maximize the space available in a

store. The upper slabs of a rack are utilized for storage and the lower ones for display.

This helps VRPL in eliminating the need of dedicated storage spaces is most of VRPL

stores.

(C.) Efficiency of Processes

VRPL believe in adopting processes which are efficient. For instance, they ensure that

about a quarter of the staff at a new store is deployed by transferring from their existing

stores. This helps in ensuring that a new store is operated efficiently and that the freshly

recruited staff receives on-the job training from the experienced staff. VRPL believe in

continually reviewing and re-engineering various operational and administrative

33

processes to make them both more efficient and cost effective.

(D.) Wastage Monitoring

VRPL endeavor to reduce wastage of goods at various stages. For instance, for

transportation of goods in their trucks, they use iron boxes instead of cardboard cartons to

ensure that the damage in transit is minimized. In addition, iron boxes have a longer life

and have been more cost efficient.

Franchise and Other Arrangements

VRPL have franchise arrangements for three of their stores at Agra, Gwalior and

Lucknow. Under the franchise agreements, the franchisee operates the stores. The

expenditure for establishing the stores and holding the inventory is incurred by the

franchisees subject to an assurance from their Company that there would be a minimum

payment of commission towards the estimated operational expenses incurred by the

franchisee. The sales registered in such stores are accounted for in their books and, as a

consideration, VRPL pay a fixed commission on sales to the franchisees.

VRPL store at Agra, which was operated by a franchisee, has been destroyed by a fire on

November 27, 2006 and is currently not in operation.

In addition, VRPL have entered into commission or joint venture arrangements for one

store each in Bhubaneswar and Siliguri with the owners or lessees of the immovable

properties where such stores are located. For the Siliguri store, VRPL operate the store

and are obligated to pay a commission of 2% of the net sales per month from the store,

subject to a minimum of Rs. 224,000 per month, subject to certain escalation provisions.

Under the joint venture arrangement for VRPL Bhubaneswar store, VRPL operate the

store and are obligated to pay commission of 2% on total monthly turnover of the store

and fixed commission of Rs. 113,300 per month subject to certain escalation provisions.

34

MANAGEMENT OF TECHNOLOGY,

INNOVATION AND CHANGE

OBJECTIVES

1. To study the different software’s or technology being used by the Vishal Mega

Mart.

35

Technology is important to cut costs, improve efficiency, providing value to customers

and increasing the customer experience. IT solutions help in synchronizing activities

across various verticals such as procurement of inventory. Securities from both external

and internal threats are also important when the scale of the operations increases. Most of

their critical functions such as Supply Chain, Operations, Finance & Accounts, and

Customer Loyalty Program & Human Resources are linked through a computer network.

This has enabled them to reduce their time to market and respond to the changing

customer requirements. This has also helped them reduce their costs of operations

through both, reduction in wastages and missed opportunities as well as a consequent

reduction of the overall costs of operations.

VRPL are focused on acquisition and implementation of advanced information

technology systems, processes and business applications in order to handle all store

operations including inventory management and billing. VRPL office processes are also

computerized which support procurement, supply chain logistics, distribution centers

management and inventory control. All the locations are connected through company-

wide virtual network connection which helps to efficiently manage their network of

outlets throughout the country.

VRPL believe that their business requires efficient management and storage of data and

information to utilise for business analysis, research and forecast. Based on VRPL’s

existing information technology systems, they are able to generate detailed daily reports

covering the various aspects of their business such as division wise sales per store,

inventory movement and position at stores and distribution centers and generation of

purchase and delivery orders.

In August 2005, VRPL had entered into a software end-user license agreement with

Systems, Applications and Products in Data Processing Private Limited (“SAP India”)

for grant of a non-exclusive and perpetual license to VRPL to use the SAP software,

documentation and other information related thereto. SAP for Retail provides an

integrated technology platform for retailers and a one point solution for supporting and

managing different business models such as owned stores, franchise stores, shop n shop

36

concepts. Strong business decision and analytical capabilities have enabled retailers of all

sizes the power to make the right decisions quickly and profitably.

Beginning with a computerized cash memo, to use FoxPro for operations & accounting

and, implementation of a complete ERP from JDA (J. D. Armstrong Software Group),

they have gradually extended the Use of technology in their various areas of operations.

In order to increase the speed and traceability to the supply chain management Vishal

Mega Mart introduces Bar Code Technology. Bar code is tried and tested technology—

the “no-brainer” choice for identifying items in the supply chain. Yes, it does have short

comings in that applying it means that everything has to be in line of sight because light

is used to capture and read the bar code. But as goods are handled either by humans or

machines, the goods are always visible, as are their labels—labeling standards mean that

it is virtually impossible to not see the label and its bar code. This means that some form

of scanner is used—the range of available technology is broad—either by an operator

wielding a hand-held device or by a machine-mounted or fixed-position scanner.

Beyond the bar code is RFID (radio frequency identification) where a chip within a tag

carries information and is read using radio waves. Vishal Mega Mart uses the latest

technology to improve its performance Quality as well as Quantity Wise. Bar code

scanners are very sophisticated devices these days. Functionality and reliability is

extremely important. Vishal Mega Mart also uses CCTV to monitor its stores. Various

CCTV’s are being installed in a store, with a room where the entire functioning taking

place in a store can be monitored by a human operator.

VRPL have partly implemented their information technology set up and are currently in

the midst of completing the process of upgrading their information technology set up and

have entered into an agreement dated September 6, 2005 with Tata Consultancy

Services Limited for providing information technology services including

implementation of more advanced ERP applications such as SAP, rendering services inter

alia for management information system on reports related to stock management, receipt

processing, picking and packing, project systems, merchandise assortment management,

pricing and promotion, sales, controlling and financial accounting.

37

Management Information Systems (MIS)

They have strong MIS capabilities that make use of their technological investments to

generate valuable insight for them and help them in improving their operations, as well as

in enhancing their speed of response to what the customers want. They are thus able to

monitor their performance on a day-to-day basis, across stores, departments and product

categories and compare the same with other stores as well as across periods. This helps

them take corrective action on a timely basis, and optimize their stock. They are currently

using Business Objects to analyze data related to the buying trends of their loyalty

customers.

Following are the table which shows the different software used by the organization in

the organization activities, for customer transaction & for employees working in the

organization.

1. “JDA ERP” software

Functional Area:

38

Merchandising Buying,

product ordering, Receipt

confirmation, Stock

transfer, Inventory

Management, Sales

Merchandise event

Comments: JDA is one of the leading ERP systems used by many retailers for multiple

Business models in regards to retailing. The system is fully integrated and takes care of

the Supply chain from a manufacturer to the end customer by using back-end and front-

end systems like MMS (Merchandise Management System) & WinDSS (Windows

Distributed Stores Systems).

2. “Oracle Financial” software

Functional Area:

Financial Accounting

Comments: Completely integrated with their retail ERP- MMS, allows them to get

online integrated financials.

3. “RAMCO HRMS” software

Functional Area:

Human Resources.

39

Comments: Their system supports Personnel Management, Payroll Management,

Employee Benefits Management, Training Management and Executive Information.

4. “WMS” software

Functional Area:

Distribution and Logistics.

Comments: WMS enable the space planning and also integrated SKU location which

enable faster picking and putting of merchandising.

5. “ Arthur Planning” software

Functional Area:

Merchandising Planning.

Comments: An integrated planning and decision making tool.

6. “Microsoft Exchange” software

Functional Area:

Internal/External communication.

Comments: Enterprise wide mailing solution.

40

HUMAN RESOURCE MANAGEMENT

OBJECTIVES

1. To study how the company manages its human resource.

41

2. To try and understand the recruitment and selection process, various training and

development programs for its employees.

3. To understand the management organization system.

Human Resource Management (HRM) means employing people, developing their

resources, utilizing maintaining and compensating their services in tune with the job and

organizational requirement. The industry needs skilled manpower to fit the diverse roles

at the front-end and back-end of the new and complex retail formats. It is estimated that

over 2.5 million jobs will be created in the sector by 2010. The complexity of the

operations requires trained personnel. The modern formats require staff to handle

administration, public relations, advertising, store management, sourcing, and

merchandising and information management. A number of reputed institutes have started

offering specialized courses in retail management.

The Company places a huge emphasis on fostering a culture of innovation and enterprise

that allows people within the Company to realize human beings' infinite potential. The

Company continues to increasingly focus on internal growth and development of its

associates, cutting across levels and functions, through focused developmental efforts and

growth opportunities. For the year under review, the Company has provided 66 hours of

training per associate. Apart from regular training in skills enhancement and customer

engagement, the Company also emphasizes on building a sense of pride, belonging and

self-confidence among its employees working at the stores.

It has been able to employ innovative strategies to attract talent from other industries.

Their human resource policies are targeted at creating an engaged and motivated work

force. They have a fairly young team with the average age of the organization being 26

years as on January 31, 2009. Managing a young team engaged in a service intensive

business with largely repetitive work is one of the challenges that they face. Their human

resource policies are aimed towards creating a skilled and motivated work force. VRPL

have around 7000 employees both employed in their stores as well as in their

manufacturing units and other facilities, as on September 30, 2008. They provide a

conducive work atmosphere and opportunities for their employees to learn and grow.

42

The following table provides a classification of VRPL employees on the basis of their age

and education.

Age No. of Employees

18-24 4,093

25-35 2,013

35 and above 832

Total 6,938

Education No. of Employees

Under Graduates 4,440

Graduates 2,081

Post Graduates 417

Total 6,938

Compensation and Performance Based Incentives

VRPL’s compensation policy is performance based and they believe it is competitive

with industry standards in India. VRPL endeavor to recognize talent and potential in their

employees and encourage them to take additional responsibilities. Based on performance,

VRPL calibrate their employees and reward loyalty by preferring in-house promotions.

Their compensation policy reflects their continuing efforts to build a world class

performance driven culture. They benchmark ourselves on compensation externally

through consultants biannually, and aspire to be on the upper quartile of their target

segment, comprising of FMCG companies and other retail companies and are currently at

the 75 percentile.

Variable pay is an important component of total compensation, with all their associates

covered under their Profit Linked Reward Scheme (PLRS), linking individual

performance and Company profitability. Their part-time and full-time employees are

eligible for PLRS. Almost 60% of Customer Care Associates earned PLRS in the year

ended March 31, 2007. They also have Employee Stock Option Plans (ESOPs).

43

Training

VRPL encourage their employees to be enterprising and expect them to ‘learn on the job’

and contribute constructively to their business, either through ideas, personal networks or

effective knowledge management. In essence, they train their employees to become next

generation entrepreneurs, who can effectively lead the growth of their business. Their

corporate objective is to provide every associate with an average of 5 man days of

training per annum through internal and external resources.

All senior management members are required to contribute 30 hours per annum towards

training.

Recruitment & Selection

For posts of team members the following rounds takes place-

1. Psychometric tests, Behavioral Intelligence Test, Logical thinking and

Comprehension Test.

2. Application blank.

3. Personal Interview, Operations Interview, Regional Manager Interview.

For Area Manager:

1. Collection & review of curriculum vitae

2. Personal interview with Regional HR Manager

3. Personal interview with GM- HR

The salient features of Vishal Mega Mart staff are: -

1. Well-trained staff, the staff employed by Vishal Mega Mart is well-suited for

modern retail.

2. Well-dressed staff improves the overall appearance of store.

3. Employees are motivated to think out-of-the-box. Retail sector is in growth stage,

44

so staff is empowered to take innovative steps.

4. Multiple counters for billing, staff at store to keep baggage and security guards at

every gate, makes for a customer-friendly atmosphere.

5. The employees are motivated to work efficiently and effectively towards the

achievement of organizational goal by satisfying their personal needs.

6. The employees were given bonus and gifts during the festivals like diwali, etc.

Management Organization Structure

45

R.C.AgarwalChairman &

Managing Director

Board of Directors

Category HeadsS.K.AgarwalWhole-time

Director

Chief OperatingOfficer

MerchandiseHead Heads - Zonal

Head-Supply Chain

Management

Head- Retail

Head – Legal &Secretarial Head – IT

Head-Admin & HR

Head-Finance,Accounts & MIS

46

E - COMMERCE

OBJECTIVES

1. To study the different steps taken by VRPL in relation with online shopping.

2. To try and understand the importance of Vishal Mega Mart website.

The uses of computers and internet have been expanding significantly over the years.

Presently internet has been used widely as a means of communication, as a potential

source of information, as a means of entertainment and many more. With in few years

after existence of internet, business men realized the possibilities of using internet as a

medium of business. This idea kick started the first online business ventures. Modern

technology has been developed to the extent that even shopping made possible over the

internet. The process of shopping done over the internet is called online shopping.

Both products and services can be purchased by online shopping. Online shopping is used

for business to business transactions or business to customer transactions with

applications of electronic commerce (ECommerce). Vishal Mega Mart is soon launching

its online shopping website this summer named as www.vishalmegamart.com which

promises to be a boon for its customers.

47

VRPL has its own site named as www.vishalmegamart.net.

Vishalmegamart.net is concerned about the safety and security of their website and

customers. Accordingly, they have put a number of technological protections in place to

ensure that their transaction process is extremely safe and that their customers'

information is secure. They provide a large amount of information to their customers,

suppliers through their website. This information includes their stores in different areas,

cities with correct address and contact no’s, products being offered by them, career

opportunities, enquiry, supplier’s zone etc.

48

Vishal Mega Mart also provides opportunities to its customers by collaborating with

shopping.indiatimes.com and with shopping.rediff.com.

How to Shop

Firstly, you have to register yourself with the shopping.indiatimes.com &

shopping.rediff.com. Place your order through following these 7 quick and easy steps:

1. Find the Items You Want to buy.

2. Add the Items to Your Shopping Bag

3. Proceed to Checkout

4. Sign In/Create a New Account/Choose guest checkout

5. Enter a Shipping Address

6. Provide Payment Information and authorization

7. View or print your Order Acknowledgment and check your Order status.

49

Chapter-3

ANALYSIS

AND

INTERPRETATION

50

ANALYSIS

1. The choice of a store location has a profound effect on the entire business life of a

retail operation. A bad choice may all but guarantee failure, a good choice, and

success.

2. Choosing a retail location is, at best, a risky undertaking. Considering the

consequences of choosing a location that proves to be unsuitable, it pays to get as

much assistance as possible. According to a survey more than 60% of the

customer prefers to shop in a retail store which is easily accessible to them.

3. Advertising plays a very important role in achieving growth for any retail

company. This is evident from the fact that Advertising by Retail Industry

registered a rise of 12 percent during January - May 2008 over January - May

2007.

4. The right location, trained manpower, software assistance, product with a distinct

differentiation, a strong value proposition, efficient supply chain management -

these are the factors that influence the success of a retail outlet. With competition

in this segment increasing, differentiation and a strong value proposition assume

significance. Retail chains are realizing that they cannot be another ‘me-too’

store. The differentiation today among the 5-6 retail chains has come through

private labels, which in some cases account for as much as 70 per cent of the total

merchandise in the outlet.

5. Variety offered by any retail store is of very much important to attract all type of

customers in the stores. A large variety of products caters to each segment of

customers.

6. Shopping experience within a store also has a great impact on selecting a product

51

from a particular retail store. Overall ambience includes infrastructure facilities

provided by the store such as air conditioners, lighting etc.

7. Pricing is in fact a dramatic controller of at least 3 key strategic elements to any

company's success: Company’s image, the product and services company sells

and consumer behavior. The Importance of Pricing their Products' will give them

an insight into developing appropriate costing methods and the impact of getting

it wrong in today's competitive creative market. This topic should be of interest to

anyone who is unsure if they are getting it right. Remember the difference

between over or under-pricing their work can mean a very short future for any

business. Approximately 60% customers think that Price is the most important

factor while they go for shopping in a retail stores

8. Quality in everyday life and business, engineering and manufacturing has a

pragmatic interpretation as the non-inferiority, superiority or usefulness of

something. This is the most common interpretation of the term. The quality of a

product or service refers to the perception of the degree to which the product or

service meets the customer's expectations. Quality has no specific meaning unless

related to a specific function and/or object. Quality is a perceptual, conditional

and somewhat subjective attribute. And in addition to that, more than 90% of

customers place quality as the most important factor than anything else in the list

to shop in a retail store.

9. More than 70% of customers place variety as an important factor to shop in a

particular retail store.

10. Brands name bears an important role while shopping of any type of goods. So

building a brand for a retail store is important as 80% of customer still prefer to

buy branded clothes in the retail store instead of local or unbranded clothes.

52

Road Ahead; Plans of Large Retailers

• Reliance Retail: Investing Rs.30, 000 crore ($6.67 billion) in setting up multiple retail

formats with expected sales of Rs.90, 000 crore-plus ($20 billion) by 2010-11.

• Pantaloon Retail: Plans to occupy 10 mn sq.ft retail space and achieve Rs.12, 000

crore-plus ($2.5 bn) sales by 2011.

• RPG: Planning IPO will have 450-plus Music World, 50-plus Spencer's Hyper covering

4 mn sq.ft by 2011.

• LIFESTYLE: Investing Rs.400 crore-plus ($90 mn) in next five years on Max

Hypermarkets & value retail stores, home and lifestyle centers.

• Raheja's: It Operates Shoppers Stop, Crossword, Inorbit Mall, and 'Home Stop'

formats. Will operate 55 Hypercity hypermarkets with US$100 million sales across India

by 2015.

• Piramyd Retail: Aiming to occupy 1.75-million sq.ft retail space through 150 stores in

next five years.

• TATA (Trent Ltd.): Trent to open 27 more stores across its retail formats adding 1 mn

sq.ft of space in the next 12 DLF malls. Titan industries to add 50-plus Titan and Tanishq

stores in 2011.

53

CONCLUSION

Complaints

1. Low variety of product available and customization of products is not there.

2. Air conditioners are not properly working

3. Prices are not mentioned at all places and at all products.

4. Prices are not competitive as they are assumed to be higher when consumers are

visiting other retail outlets.

5. Grocery items are not sufficient and they are not at all available at many stores.

6. Clothing items of women are priced unreasonably

7. Lack of space in the store while shopping and moving within a store.

54

Chapter-4

RECOMMENDATIONS

AND

SUGGESTIONS 55

RECOMMENDATIONS

1. Customization of clothing should be given an important consideration.

2. Proper packaging and provide contrast labeling in displays of product.

3. Should apply electronic supply chain management for better inventory

management.

4. Proper power back up as air conditioners are not working to their full capacity at

many stores.

5. Proper placements of Gondola in the stores as space between them are very less.

6. Proper display in the gondola and top most rack of the gondola should be used for

storing of inventory rather than display of product.

7. Should provide more festival schemes and at proper time.

8. Should use psychological pricing-more discounts by increasing the price

9. Proper display of cutlery items

10. Clothes should be in sync with fashion.

56

SUGGESTIONS

1. Include more trained sales person to help customers in the store while shopping.

2. Improve quality of the products especially clothes.

3. Play good songs or soothing music in the store rather than cheap filmy songs.

4. Customer care service can be introduced

5. More branded products can be displayed in the store as people still prefer branded

clothes than offered by local venders.

6. Constant reminder of discounts through pamphlets, speakers inside the store for

inducing consumers for impulse buying.

7. Add more cosmetic products as its having a huge market of consumers attached to

it.

8. Display of product should be improved so that the product is easily visible to the

consumers.

9. Proper advertisement in press and outdoor to make Vishal Mega Mart should be

visible in the eyes of consumers.

10. Should have parking spaces in front of every store.

11. Hire more salesgirls as in ladies section its very difficult for both the consumers

and salesman to interact with each other.

12. Regular training to sales person to improve there overall performance.

57

BIBLIOGRAPHY

BIBLIOGRAPHY

Websites Referred http://www.vishalmegamart.net/

http://www.moneycontrol.com/india/news/OTHER%20NEWS/sbi-card-vishal-

mega-mart-launch-co-branded-credit-card/22/46/205965

http://www.cxotoday.com/India/News/

Vishal_Megamart_Deploys_PRILs_Retail_Excel/551-75867-911.html

Search Engineswww.google.com

www.wikipedia.com

Books

58

Kotler Philip; Marketing Management, Twelfth Edition, Prentice Hall of India, New

Delhi, 2008.

ANNEXURE

QUESTIONAIREDear Sir/Madam,

I am doing a survey for my project on customer satisfaction level in Vishal Mega Mart.

The following questionnaire has been drafted to help for understanding the needs and

expectations of the customers. Therefore we request you to kindly spare some time and

give us the following information. We assure you that the results of the study will be kept

confidential. Please tick (√) the followings:-

1. Name: _________________

2. Income:_________________(optional)

3. Gender:__________________

4. Age:__________

5. Occupation:_________________

6. What excites you most for shopping at Vishal Mega Mart?

Promotional offers_____ Any other plz specify___________

59

Variety of products_____

Price of the products_______

7. What do you usually buy from Vishal Mega Mart?

FMCG products______ Child care & Toys______

Apparels_________ Utensils_____

Electronic goods__________

8. ow often do you come at Vishal Mega Mart?

Within a week________ Within 2 week______

Within a month______ Above 1 month____

9. How is your shopping experience at Vishal Mega Mart?

Very Satisfactory_____ Satisfactory_____

Average_____ Unsatisfactory_____

Poor_____

10.Are you satisfied with the quality of the products offered by Vishal Mega Mart?

Yes____ No_____ Somewhat satisfied_____

11.Do you ever face any problem at Vishal Mega Mart?

Billing Problems_____ Heavy Rush_____

Personnel’s lack of knowledge____ Out of stock products____

No problems faced_______

12.How would you rate your overall experience in this retail outlet? (Rate on a 10

point scale)

_______________

13.Any complaints:

_____________________________________________________________________

_____________________________________________________________________

______________________________________________________

60

14.Any suggestions:

_____________________________________________________________________

_____________________________________________________________________

__________________________________________

61