PERFORMANCE ANALYSIS OF

VISHAL MEGA MART

Presented By :-
Sonal Saurav
PGDM(2008-10)
Roll No - 68

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 OBJECTIVES
Knowing each and every cost that incurs in operating the
retail business.

To understand the tendency of customer shifting from one

brand to others.

To identify the importance of services like cash billing, bar

code and giving clear picture about the discount.

To find out the significance of concessionaires in the success of

retail business.

To find out the solution for the waiting line problems.

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 O rg a n iza tio n o ve rvie w
Vishal Retail Ltd is one of India’s leading value retailers promoted by Mr. Ram Chandra
Agarwal.

Total Revenues up 67.1% from Rs 6,564.0mn(2008) to Rs 10,967.6mn(2009).

EBITDA up 55.3% from Rs 910.4mn to Rs 1,413.4mn.
Net Profits down 33.1% from Rs 302.8mn to Rs 202.4mn.

It focuses on Tier II and Tier III cities, catering to the middle and lower middle class consumers.

It has a strong presence in manufacturing and retailing of apparel, non-apparel and a large
variety of branded FMCG products.

It currently operates 183 showrooms in 110 cities / 24 states. Its outlets cater to

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 Industry Overview
The Indian organized retail industry is valued at about $300 billion

The overall retail market in India is likely to grow at a CAGR of 5.5% (at constant
prices) to 1,677,000 Cr in 2015.

The organized retail market is expected to grow much faster at a CAGR of 21.8% (at
constant prices) to Rs. 246,000 Cr.

Major Retailers:

Reliance Retail,Future retail,Shoppers Stop,More Retail

Trent Retail,India Bulls(Pyramid Retail),RPG, Bharti-walmart and
Mahindra & Mahindra

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 Methodology
Firstly, for the first part of my Project, I have studied and obtained
all the costs that are associated with the retail business as Rent,
Administration, and Employee, Furniture, Fixture, Working capital
and Others Cost.

I have surveyed a sample of 100 customers for understanding the

brand shifting behaviour.

I have calculated the mean of reaching the customer to cash billing

counter and the mean of customer who can be served in one hour.

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ESTIMATION OF CASH FLOWS FROM JAN 2009 – DEC 2013 :-
Table – 3

Rs(in lakh)

Particulars/years 0 1 2 3 4 5

Initial investment          

Capital/long term assets 730          

working capital 524.3     350    

Capital investment 1254.3          

Operating cash flows          

(1)Sales 3495.34 4124.5 4866.91 5742.96 6776.69

(2)Expences          

Costs of goods sold 2062.25 2474.7 2968.82 3560.64 4269.31

Rent 216 237.6 261.36 287.5 316.25

Employee cost 96.45 106.1 116.7 128.37 141.21

Administration 10.91 12 13.2 14.53 15.98

Recurring expences 240 276 317 365 420

Promotion 209.17 256.55 314.01 383.44 467.13

Maintenance 18 19.8 21.78 23.96 26.35

Others Expences 15 18 21 24 27

Total 2867.78 3400.75 4033.87 4787.43 5683.23

(3)Others income 54 59.4 65.34 71.88 79.06

EBDT((1)+(3)-(2)) 681.56 783.15 898.38 1027.4 1172.52

-depreciation 146 116.8 93.44 74.75 59.8

Profit before tax 535.56 666.35 804.94 952.65 1112.72

Tax @ 33.99 % 182.04 226.49 273.6 323.81 378.21

Profit after tax 353.52 439.86 531.34 628.85 734.5

+depreciation 146 116.8 93.44 74.75 59.8

Operating cash flows 499.52 556.66 624.78 703.6 794.31

Terminal cash flows         1113.51

Net cash flows 499.52 556.66 624.78 703.6 1807.82

Operating + terminal cash flows

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Pay Back Period :-

Total Capital Investment = (1254.30 + 350) lakh

= 1604.30 lakh

Note – 350 lakh is the Working Capital that will be introduced in the beginning of 3rd
year.
Net Cash Flows for the next five
years=(499.56+556.66+654.78+1703.60+1907.82) lakh.

At the End of 3rd year = 1680.96 lakh

Over recovery of Investment = (1680.96 – 1604.30) lakh.

= 76.66 lakh.
= 1 Month 14 Days.

So, the Pay Back Period = 2 year , 10 month and 17 days.

Internal rate of return = 39%

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Comparison between the sales and areas acquired by all the
section.


 Sales
 Area

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Ø

Conclusions and Recommendations

Ø
Ø
ØConcessionaire is a big concern but still they are not treated well.

ØThe ratio of Vishal product to other brands should be 40 : 60 in

FMCG section.

ØInflate the working capital in Apparel, Life style, and Technomart

section.
Ø
ØTie up with Renowned Brand.
Ø
ØBar coding and Card processer problems have to be taken care of.

Ø Decentralizing the decision making process.

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 Analysis of Brand Shifting for Toothpaste

CURRENT

EARLIER CLOSE UP DABUR RED PEPSODENT COLGATE VISHAL OTHERS

CLOSE UP 0.2 0.2 0.2 0.2 0 0.2

DABUR RED 0 1 0 0 0 0

PEPSODENT 0.2 0 0.1 0.4 0.3 0

COLGATE 0.33 0 0 0.66 0 0

VISHAL 0 0 0.5 0 0 0.5

OTHERS 0 0 0 0.16 0.5 0.34

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 Conclusions and Recommendations

ØFocus on retaining the customers.

Ø
ØAvoid offer marketing.
Ø
ØDo not flood the store with the hyper menu product and its own
product

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 Analysis and Solution for Waiting Line Problem
ARRIVAL RATE DISTRIBUTION OF PEOPLE IN STORE PER HOUR ON DAY BASIS.

DAY AVERAGE
SUNDAY 163
MONDAY 75
TUESDAY 72
WEDNESDAY 64
THURSDAY 73
FRIDAY 71
SATURDAY 103
TOTAL 621

λ = 90 customers per hour.

1/ λ = 2/3 minute or 40 sec.
µ = 18 person per hour.
1/µ = 3 min 20 sec per person.
 

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Monday to Friday :-
µ = 18 person per hour.
1/µ = 3 min 20 sec per person.
λ = 71 customers per hour.
1/ λ = 51 sec.

Total no of server = 4 (10 am to 2 pm).

= 8 ( 2 pm to 7 pm).
= 5 (7 pm to 10 pm).

µ1(10-2) = 72 person per hour.

µ2(2-7) = 144 person per hour.
µ3(7-10) = 90 person per hour.

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 Service Time Distribution
Question :-What percentage of the services will take less than one
minute to process?
Answer : -
Since the units are expressed in hours,
P (T < 1 minute) = P (T < 1/60 hour).
Using the exponential distribution, P (T < t ) = 1 - e-µt .
Hence, P (T < 1/60) = 1 - e-72(1/60)
= 1 - .3021 = .6979 = 69.75%

INTERPRETATION :This is showing that 70% of the customers gets the

service within 60 sec. So what the store can do, It can go for separate
cash billing counter for bulk and less goods.Thiswill help the customer
to get the service in a very few minute.

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Arrival Rate Distribution
Question :-What is the probability that exactly 4 customers approached within a period
of 2 min?
Answer:-

Customers arrive at a mean rate of 90 per hour or one customer

after every 40 sec.

Therefore, in a 120 second interval the average number of customers

arriving will be,
λ = 120/40
= 3 customers
P (x = 4) = (λxe-λ )/x!.
= (34e -3 )/4! = 81/24*19.90 = 81/477.66 = 0.1696 = 16.96%

INTERPRETATION:- This thing we can also get with the help of The Table that is given into
Levin & Rubin book. But still there is problem into that table, It will work until the λ crosses to
20. We are measuring what is the probability of reaching the customers to the cash billing
counter within the given time of frame. If the probability is high and we can go for extra counter.

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 Overall Learning
Understanding of organized retail industry as a
whole.


Practical learning of the concepts that I have

studied in my PGDM curriculum like Estimation of
cash flows, Waiting line problem, and Markov
process.

Operational problems that are faced by the Retail
store and How can it be overcomed.


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
 Thank
you

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