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.

2
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.

3
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.

4
 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.

5
 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

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

7
 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.

8
 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.

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.

10
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.

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.

11
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.

12
VRPL’s BUSINESS
VRPL 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,
respectively.

13
 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

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

14
 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

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

15
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
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

16
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
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

17
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

18
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.

19
 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

20
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

Product
Vishal 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.

21
Price
Vishal 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
total income which can be classified under the “lower middle” and “middle” income

22
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.

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

23
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’ segment

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

24
reduction measures to their customers.

Strong and efficient logistics and distribution network

VRPL’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 Processes

VRPL’s business process can be summarized as below:

25
  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.

26
(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-
categories such as formal shirts, casual shirts, party wear etc. Each sub-category consists

27
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
acres in Dehradun, Uttaranchal.

28
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 count-
check for every receipt of the goods. For FMCG products, VRPL procure from large as

29
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
are dispatched in right quantities and at right time to reach stores with sufficient time in

30
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:-

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

31
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
processes to make them both more efficient and cost effective.

32
(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.

33
 MANAGEMENT OF TECHNOLOGY,
INNOVATION AND CHANGE

OBJECTIVES

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

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

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

34
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
concepts. Strong business decision and analytical capabilities have enabled retailers of all
sizes the power to make the right decisions quickly and profitably.

35
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.

Management Information Systems (MIS)

36
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:

 Merchandising Buying,
 product ordering, Receipt

37
  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.

Comments: Their system supports Personnel Management, Payroll Management,

Employee Benefits Management, Training Management and Executive Information.

38
 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.

39
 HUMAN RESOURCE MANAGEMENT

OBJECTIVES

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

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

40
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.
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

41
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).

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

42
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,
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.

43
Management Organization Structure

44
 R.C.Agarwal
Chairman &
Managing Director

Board of
Directors

S.K.Agarwal
Category Heads Whole-time
Director

Head-Supply
Merchandise
Heads - Zonal Chain
Head
Management

Head- Retail

Chief Operating
Officer

Head – Legal &

Head – IT
Secretarial

Head-Admin & Head-Finance,

HR Accounts & MIS

45
 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.

46
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.

47
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.

48
 Chapter-3

ANALYSIS
AND
INTERPRETATION

49
 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
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

50
 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.

51
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.

52
 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.

53
 Chapter-4

RECOMMENDATIONS
AND
SUGGESTIONS

54
 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.

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 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.

56
 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 Engines
www.google.com
www.wikipedia.com

Books
Kotler Philip; Marketing Management, Twelfth Edition, Prentice Hall of India, New
Delhi, 2008.

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 ANNEXURE
QUESTIONAIRE
Dear 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___________
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____

58
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:
_____________________________________________________________________
_____________________________________________________________________
______________________________________________________
14. Any suggestions:
_____________________________________________________________________
_____________________________________________________________________
__________________________________________

59