Fab India

STRATEGIC ANALYSIS FABINDIA Group V: Budhaditya Banerjee Sourabh Dhariwal Tarun Daga Uma Balakrishnan AGENDA ? ? ? ? ? ? Timeline Fabindia underneath John Bissell Fabindia underneath William Bissell Competitor Assessment SWOT Assessment Shopping for Behaviour and the Approach Forward ± Natural Meals ± Attire ± Residence Furnishings & Furnishings ? Monetary Comparisons ? Suggestions at a Look TIMELINE FabIndia Indian Economic system Put up 47- govt helps socialism & nationalism 1957- Govt units up KVIC 1960- Incorporation in Delhi 1976- First retail retailer in GK 1977- Contemporarizes design 1981- Introduction of clothes 990- Fiscal deficit reaches eight. 5% 1991- Indian financial system opens up 1992- Liaison with Habitat ends 1994-Second retailer opens in Delhi 1999- William Bissell turns into MD 2003-Imaginative and prescient Plan I originates 2004- Goes on-line 2006- eight% financial development 2005- Imaginative and prescient Plan II is born 2006- Clothes make 70% income 2006- Govt permits overseas single model retailers FABINDIA UNDER JOHN BISSELL ? Based by American, John Bissell to: ± Develop marketplace for hand-woven merchandise ± Present rural employment ? Included in 1960 in Delhi to export upholstery material ? By 1965, revenues of Rs.

million as a consequence of: ± AS Khera, provider of hand-woven rugs and so forth from Panipat ± Habitat, main UK purchaser of Fabindia Panipat merchandise ? 1974 noticed Fabindia s first retail retailer in Higher Kailash with ad-hoc merchandising ? 1977-Featured modern design to draw customers and designers ? Clothes have been launched in 1980s after John Bissell received khadi shirts made for himself ? Habitat was acquired in 1992 and Fabindia may now not proceed promoting to it ? John Bissell dies in 1998, passing the baton to son William Bissell who turns into MD in 1999 FABINDIA UNDER WILLIAM BISSELL Finish of license raj, and liberalization gave textiles responsibility concessions on machine imports ? William s imaginative and prescient included growth, relying much less on exports and establishing retail operations ? India noticed strong financial development, change in client patterns and development of center class by 2006 ? 2003 noticed the delivery of Imaginative and prescient Plan I ± Deliberate to develop to revenues of Rs. 1 b from Rs. 360 m in four years ± Achieved it in two years and Imaginative and prescient Plan II got here alongside ± It deliberate to realize revenues of Rs. 2 b by March 2009 COMPETITOR ANALYSIS ? Organized Retail: Retail Shops (Shopper s Cease, Pantaloons, Globus, and so forth. Weaknesses:1. Product variety missing 2. Inventory as per operating tendencies and serve to fads-inconsistency in direction of churning out high quality choices in hand crafts three. Authenticity of handcrafts-No craftsmark current to validate the crafts as towards the Fabindia choices which have the identical imprinted on them Strengths:1. Sturdy Pan-India presence and consciousness 2. Man-power experience three. Aggressive Pricing four. Sturdy provide chains and quick product improvement life cycles 5. Excessive advertising communications spend 6. High quality consciousness and adherence to requirements COMPETITOR ANALYSIS

Authorities Initiatives ( Cottage Industries Emporium, Khadi Gram Udyog, State Authorities Division) Strengths:1. Supply of funds is fastened and subsidies increase these initiatives over time 2. Tie-ups with overseas governments facilitating everlasting commerce of nationwide handicrafts. Weaknesses:1. Atmosphere-non-attractive to modern-day consumers are ate up the superb ambiences of the retail codecs. 2. Standardization defeats customization hands-down. COMPETITOR ANALYSIS Designer Boutiques: (Ritu Kumar s, Ritu Beri s, Rohit Bal, Manish Malhotra, Sabyasachi Mukherjee, and so forth. ) Strengths:1.

Product customization facilities-extremely excessive 2. Highest stage of buyer intimacyRelationship advertising Weaknesses:1. Exorbitant prices-not meant for lots 2. Not a sturdy provide chainnot meant to be a panIndia operation COMPETITOR ANALYSIS ? Unorganized Sector:Mother-and-pop shops and native tailoring models:- Strengths:1. Efficient in addressing excessive geographical dispersion 2. Customization facility accessible Weaknesses:1. Supply of finance-not safe 2. Subsequent-to-nil model fairness three. Buyer loyalty-low four. Shortage of expert manpowerlack of potential to make use of the same-critical for growth.

COMPETITOR ANALYSIS NGOs & SHGs Strengths:1. Sturdy dedication in direction of native communities 2. Helps in making its shoppers self-reliant three. Encourages girls entrepreneurs and therefore a girls can complement the male s revenue in direction of a household Weaknesses: 1. Lack of know-how on a part of the manpower 2. Lack of ambition to unfold out on a pan-India or perhaps a regional foundation three. Lack scales of financial system SWOT ANALYSIS STRENGTHS ? Quintessential Indianness in material via the years ± In style for authenticity of hand-woven material ? Sourcing system from rural India ± ± ± Sturdy provider relationship Provision of capital loans (in settlement with banks) Leniency on order fulfilment & no-return coverage 100% use of provider s capability ? Sustainable employment alternatives to rural expert poor ? Workers are given autonomy and therefore inducing accountability ? Concentrate on buyer retention as an alternative of era ± Giant chunk of consumers are repeat purchasers ± Product high quality enchancment completed preserving this in thoughts ? Phrase-of-mouth robust sufficient to not require any promoting WEAKNESSES ? Delays in supply from artisans Alternative losses as a consequence of irregularity ± Tough to foretell amount and time of thaan coming from weaver ± Additionally arises as totally different shops are inspired to order totally different inventory ? Insignificant spend on advertising communications ± Dropping out on attracting new clients as an alternative of relying solely on repeat buy ? Not sufficient personnel to push Fabindia to better development ± Unavailability of individuals skilled in retail sector ± Unavailability of individuals believing in the identical mission ± Extra formal processes would face resistance from present staff ? Premature supply of merchandise Transport, storage and shelf-life problems with natural meals ± Suppliers have been unfold pan-India OPPORTUNITIES ? Latent potential of natural meals market ± Leveraging altering client tastes & perceptions ± Consciousness era of advantage in these meals ? Make the most of multi-brand stores and building teams ± Show of Fabindia merchandise in MBOs and malls ? Leverages footfalls of the shop, growing probability of gross sales ± Use of Fabindia residence furnishings in modular flats of buildings ? If client buys this flat or some other, and is impressed, will use Fabindia furnishings ? Leveraging Net 2. instruments and methods ± Tying up with matrimonial websites for designer fancy marriage ceremony put on ± Interactive web site for designing as per particular person necessities ? Customization stage is excessive ? Lead time between fixing of event date and occasion can be utilized for supply THREATS ? Unorganized native operators ± Handloom retail retailers/chains in regional pockets ± Memento retailers offering indigenous merchandise at decrease costs ? Entry of organized manufacturers and corporations into retail ± Excessive anticipated development & entry of enterprise homes in massive methods ± Opponents entry funds from conglomerate companions or markets Tilt of Indian customers in direction of overseas manufacturers ± Overseas manufacturers alter way of life decisions of the goal market ± Imported or designer residence furnishings have better flaunt worth vis-a-vis Fabindia ? Growth of presidency co-operatives ± Enhance in future to KVIC and state handloom models ± Enchancment of their atmosphere and buying expertise ? Rising costs of actual property may hamper development ± Opening new stand-alone shops will probably be robust ± Experimenting with codecs and markets is probably not advisable BUYING BEHAVIOUR & THE WAY AHEAD

Be aware: We opine that Fabindia can not proceed counting on simply buyer retention to struggle off competitors, and should give attention to producing new clients additionally ORGANIC FOOD ? Elevated consciousness about well being, diet and bodily well-being ? Show of value elasticity- Don’t thoughts paying extra for higher well being ? Natural meals perceived as wholesome, nutritious, non-synthetic and detoxifying ? Pure meals inspired by setting savvy customers ? Home manufacturers promoting natural meals are trusted extra as in comparison with multinationals promoting natural meals THE WAY AHEAD ? Capability growth by way of variety of suppliers and amount produced ?

Important investments in provide back-end wanted ? Expert agricultural labour and specialists are required for growing natural meals chain ? We recommend investing in mutually helpful CSR initiatives ± Educating cultivators on soil constructing, pest administration, crop rotation and heirloom selection preservation ± Provision of natural soil vitamins like plant residue, mulch, inexperienced manure and so forth APPAREL ? High quality and prestigious manufacturers are inflicting clients to float ? Normally clothes of various manufacturers are tried whereas buying ? Influencers are primarily of comparable age teams and endorsers ?

Customers now establish with western manufacturers that are excessive priced and are influential in making decisions THE WAY AHEAD ? Capturing consideration and fascinating clients is vital ? Fabindia can safely outclass many established manufacturers in the identical retail area ? We suggest franchise mannequin and promoting in different shops ± Greater model consciousness and attracts customers in direction of handcrafted attire ± Reduces funding in Tier 1 and metros the place actual property costs are excessive ± Customers can immediately evaluate manufacturers in similar phase ? Construct partnerships with matrimonial websites to advertise conventional design as marriage ceremony put on

FURNITURE AND HOME FURNISHINGS ? Customers have a tendency in direction of non-branded gamers and therefore model consciousness is low ? Influencers are usually the relations, particularly the woman within the household ? Builder teams can be utilized as a platform to show furnishings in modular flats ? Customers will therefore get a touch-and-feel of the product as an alternative of going to the Fabindia retailer FINANCIAL COMPARISONS ? Monetary facets of Fabindia have been in contrast with Pantaloons ? Although not a direct competitor, it represents the Indian Retail Trade very effectively ? Financials for its direct rivals resembling Anokhi, Cooptex and so forth. ere not accessible, proscribing comparability ? This Assessment contrasts the efficiency of Fabindia with respect to the largest retailer of India ? Therefore, we get a way of the possible choices accessible with Fabindia to boost funds FabIndia Curiosity Protection Ratio 20. 00 18. 00 17. 35 16. 00 14. 00 three. 00 12. 00 10. 75 10. 00 9. 27 eight. 00 6. 00 four. 00 2. 00 zero. 00 2002 2003 2004 2005 2006 eight. 41 2. 00 1. 50 1. 00 zero. 50 zero. 00 2005 2. 50 16. 54 three. 50 four. 50 four. 00 Pantaloons Curiosity Protection Ratio four. 13 three. 27 three. 31 2. 06 2006 2007 2008 The curiosity protection ratio of Fabindia is way increased than that of Pantaloons.

Therefore, elevating funds via debt shouldn’t be a giant problem. FabIndia Curiosity Price as a Proportion of Gross sales 1. 20 1. 14 1. 09 1. 00 four. 00 Pantaloons Curiosity Price as a Proportion of Gross sales three. 67 three. 50 three. 00 zero. 69 2. 50 2. 00 2. 14 2. 25 zero. 96 zero. 80 zero. 60 zero. 48 zero. 40 1. 50 1. 00 zero. 20 zero. 50 zero. 00 2002 2003 2004 2005 2006 zero. 00 1. 49 2005 2006 2007 2008 The curiosity price as a proportion of gross sales for Fabindia is way lesser than that of Pantaloons. Therefore, elevating funds via debt is once more not a giant problem. FabIndia PAT % 7. 00 6. 30 6. 00 5. 66 5. 00 four. 79 2. 50 four. 00 2. 00 three. 00 1. 50 2. 00 1. 00 1. 00 zero. 50 zero. zero 2002 2003 2004 2005 2006 2005 5. 78 three. 00 6. 02 three. 50 three. 41 four. 00 Pantaloons PAT % three. 63 three. 27 2. 71 zero. 00 2006 2007 2008 The PAT as a proportion of gross sales of Fabindia is increased than that of Pantaloons. Although retail business works at low margins, Fabindia s margins are fairly excessive. Therefore, elevating funds via debt shouldn’t be a giant problem. OPTIONS AVAILABLE ? DEBT FINANCING ± Professionals ? The choice authority stick with them, therefore can keep on with their mission ? Wholesome present ratio (round 2:1 all through years) ? A really wholesome curiosity protection ratio (as excessive as 16 instances) which is kind of increased in comparison with Pantaloons, Buyers Cease and so forth. 1. 5percent2. 5%) ? A really wholesome debt to fairness ratio ? Curiosity price as a proportion of Gross sales may be very low (zero. zero06%) ? Household owned ± Cons ? Debt acquired is probably not large ? Unfastened out on the experience of different organisations which will be introduced in via JVs or investments OPTIONS AVAILABLE ? PRIVATE INVESTORS/ JVs ± Professionals ? Enormous investments will be introduced in ? Skilled experience will be introduced in ± Cons ? Resolution authority will get diluted ? Emphasis might shift to revenue maximisation and therefore Fabindia s mission might get diluted RECOMMENDATIONS AT A GLANCE ? Heavy investments in back-end of worth chain Provide chain improvement for effectivity and high quality administration ? Growth aiding robust regional presence ± Retailers to counter regional competitors ± Sourcing from native suppliers for outlet and different areas will probably be simpler ? Progress via harnessing new clients ± Can not rely on present clients to counter competitors ± Should create new clients in all segments ? Tie up with several types of graduate colleges for expertise ± Rural administration graduates for managing provide chain and rural initiatives ± Administration graduates for serving to development in front-end and retail arms THANK YOU