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Background of Founders

One fine day a person doing service in a company where earnings were very low, found that his growth in continuing the job is not going to satisfy or quench his thirst to become affluent. There was somewhere in his mind to start off with some or the other kind of business. He was keen to start the business of mattress at least on a small scale, as he was having good knowledge which he had gained from the relatives who were already in this business. Apart from the good knowledge he was also having good entrepreneurial skills existing in his blood; as we know that “Gujarathis” are known for having their own business. The person’s name was Mr. Jayesh Chandan. Mr. Chandan was a person who was always exited about doing something of his own. He was not the kind of person who would go for the servant kind of job where he would have to follow the orders of someone. He always had dreamed of becoming rich within the shortest possible time. To start of this business all the factors were positive, the only barrier he was having is of the “Capital” which is the basic requirement of any business to start off. He approached many money lenders, relatives and banks where he found that the interest rate and cost of raising capital is high. And being common serviceman he thought that he would not be in position of taking risk at the earlier stage of his small business. Finally he decided to approach his friends to raise the initial capital. While approaching his friends he approached one of his classmates viz. Mr. Chandrakant Patel (Current Owner). Mr. Chandan and Mr. Patel sat to together had discussions for many days, they talked about various parameters opportunities and constraints of the business. Mr. Chandan was very clear about the idea, as he had the knowledge of the business. He also described the amount of profits that could be earned. It did not take much time for him to convince his friend. “I never found Jayesh so excited about anything and I never had doubts on his hard work and ability” said Mr. Patel On the other hand Mr. Chandrakant Patel had ample funds with him but he was not aware where to invest his funds to have a growth of his funds. So when his friend


In this partnership firm Mr. For this purpose he purchased the very next shop from the profit made out of the venture to expand original business. As Mr.000 from his friend Mr. Jayesh Chandan discontinued with the business from 1989. Mr. Mr. Chandrakant Patel fixed the term of getting 30% share in the profit of the business as he had provided the finance.approached him with this business opportunity he was very much excited to start of with this business. Chandan wanted to grow at a faster pace in short period of time. as years passed on business started booming. So finally Mr. Chandrakant Patel tried to convince him to continue with the business together. so he accepted his proposal and decided to invest in the business. He wanted Mr. 35. Mr. Jayesh Chandan decided to exit from the business due to some personal reasons. Chandrakant Patel to invest more money for his plans but he was not ready to invest further funds for his plans due to some family constraints. Jayesh Chandan decided to carry on the business on his own with Mr. Also he had some bigger plans than this. Patel found that business had quite a good potential to grow he decided to expand his retail shop. This retail shop was quite small. Chandrakant Patel acted as a sleeping partner and Mr. 2 . Chandrakant Patel and decided to start the business as a partnership firm. Because of the wide variety of the products and good quality made cushion covers Neelkanth Palace became popular amongst the customers. INITIAL YEARS Actual business was started in the year 1986 and it was named as “Neelkanth Palace” The initial business started was of retail shop of curtains and cushion cover making. CHALLENGES FACED IN INITIAL YEARS After the three successful years of the business Mr. Business was growing at a good pace. So finally he raised capital of Rs. Jayesh Chandan was actual working partner of the business. For the next two year business did well and it captured a good number of customers in the local market.

When this whole process was going on he was in contact with various retailers and had made good relations with them.Now. It is said that Patels are known for their excellent skills and knowledge in construction business. He consulted this with his family members and he came to the conclusion that he would continue with the foam business as there is ample 3 . Because of these. This whole process was carried out for about three to four months. many questions aroused in his mind like. GAINING MOMENTUM While doing this he gained knowledge about the foam and mattresses business. Whether to carry on with this business or not? Whether to carry on the business as a sole proprietor? Should another partner be included who has knowledge about this business? Outside professional should be hired for the business or not? Finally after analysing whole situation he decided to shut down the business. So to meet their demand he started buying some more goods from the suppliers. Here he also came across one more question i. Patel was in great confusion because neither he had much knowledge about the business nor any exposure in this market.e. This was then. Mr. To shut down the business. should he go with this business? Should he discontinue traditional business of construction? As the construction business was started by his forefathers. He had just invested his money in the business and had no idea how to carry on the business. he decided to recover as much money as he can by selling off all the inventories. when he realised that he alone can also continue with this business so he started hiring few workers to assist him in his retail business. In this way he started operating with his retail that time he started getting insight of the retail business. He started selling off the inventories to other retailers but again the problem aroused was retailers were placing the orders in bulk quantity.

Basic activity of the business starts with the procuring materials from the suppliers. The other benefit from this would be on time delivery by a wholesaler at nearby places and elimination in wastage of material in transportation could also be minimized. While selling off his inventory he found that retailers are finding it difficult to obtain goods from the suppliers who were situated at faraway places from Dombivli. so local retailers had to incur more carrying cost. After analyzing this entire retailer’s problem he decided to convert the retailer’s problems in the business opportunity. for which they need to choose suppliers wisely to incur minimum possible cost. ordering cost and manpower cost in purchasing material from them because they had to pay more transportation cost. On the other hand he was getting a small amount of share in the joint family business of construction. They were in need of a local wholesaler at nearby place so that their carrying cost and ordering cost could be minimized and had to pay less transportation cost also. Purchasing materials and inventories from these locations was quite they purchased materials and inventories from these places after long intervals when he wants to purchase in bulk quantity and some specific type of 4 . In financial terms it is said that major cost incurred by the business enterprise is inventory procurement and inventory carrying cost. Neelkanth foam palace obtains materials from many suppliers as per their suitability. There was ample of opportunities in the wholesale business as there was no wholesaler in Dombivli or nearby places so he found that this is right time and right business to get into. The other problem was if their requirement was of one or two sheets they had to pay same transportation cost for it so they used to purchase more material to reduce their transportation cost but this leads to increase in their warehousing cost and there was blockage of money in the inventory. Ahmedabad and Panipat. The major and regular supply comes from the semi urban town “Wada” which is situated beyond Bhivandi. SUPPLIERS OF BUSINESS: Suppliers has very vital role for the organization. So it is very essential for any business to have a good control in purchasing the materials from the suppliers.opportunity in foam business. They also purchased some specific type of materials from the well known areas like Surat.

He and his three brothers got separated. Chandrakant Patel decided to extend its product line. support in sense of responsible person who could be trusted to look after the business in his absence. Therefore their regular supply comes from “Wada” because it is quite easy to purchase inventories from there. PRODUCT LINE EXTENSION As the business started growing and the demand started increasing Mr. Similarly sofas made up of foam and mattresses came into trend. Initially profit margin roused from 5% to 8%. This is how business continued till 1992 where he managed both wholesale as well as retail in the profitable manner. On the other hand as the other retailers were doing well in their business wholesale business of Neelkanth foam palace also started booming. People were ready to shell out money from their pockets for comfortable life. After these successful years of business. To grab the opportunity of this Mr. Earlier they were having products like curtains and cushion covers they also introduced the products like foam and mattresses.e. To increase the profit margin more he started capturing areas nearby Dombivli. This was the time various developments took place in the town with respect to standard of living of the people. which plays important role in the market for attracting customers same was in this case so he used penetrative pricing strategy to gain more market share. Because of this retailers started getting more business from the localities. Here Mr.inventories which can only be purchased from these places only. Here he faced the problem of support. Chandrakant Patel feels: 5 . With the increase number of customers he was able to keep the profit margin up to 15%. For Neelkanth foam palace this was the time to create the good name among the customers. his joint family got separated. in the year 1994 one more problem aroused for Mr. As the price is always the important factor for any business. COMPETITIVE PRICING This wholesale business was started with 5% profit margin only because the retailers existing in the market were aware about the prices of the material and the cost incurred to buy the material. Patel decided to increase his profit margin. Chandrakant Patel i.

foams and mattresses for sofa. Out of the profit made by him he made some good investment. Out of which he uses 3 shops as his warehouse and other shops are given on rent. Now the total worth of the property is millions of rupees and the opportunity to expand the business with these shops. As per him this stage of the business grew at very high rate. 6 . He thought of tying up with the furniture shops situated in the Dombivli and nearby places. Here mentioned that “It was my dream to purchase something every year . Out of the profits made by the business he made investment in properties.“Business can be given to person to whom you can trust”. He feels that the business has great potential to grow and he has the ability to expand his business but he needs support from the people on whom he can trust and such people could be of the family. He purchased 9 shops in these years. Here he wanted to say that to grow the business at higher rate he needs support of family people only on whom he can trust upon. designing cloth for cushion covers etc. This is because the population increased in Mumbai especially due to ample opportunity of business. BOOMING STAGE OF THE BUSINESS In the year 1997 the builders started tapping the areas of Dombivli for construction at higher pace. service industry also provided greater job opportunity. As the construction started taking place in faster pace demand for the furniture also increased at a higher rate. Here Mr. He was able to make the business in six months which used to take time of one year. He made good amount of profit in these years. Chandrakant Patel thought of another opportunity to expand the business. Furniture industry needed more retailers and whole sellers who can provide cushions. So people started coming in. Period from the year 1997 to 2006 was magical for me”. and Dombivli became one of the hot place for people to buy houses.

there are chances that the particular kind of design is not available. Patel said “Customer is the most important person. Many times customer comes in with some design in his mind. In the initial days competition was not the major issue for Mr. Mr. Personal contacts were very important because he was not doing any promotional activities like his competitors so he has to rely upon personal contacts and word of mouth publicity Talking about maintaining relations with the customers he always mentioned that the rapport building with customers is must. Patel realised this opportunity and started making personal contacts with customers. Sometimes it takes more than a hour to deal with the customer but he is still there as customer is the one who is going to shell out the money and he wants the value for his money. but in this case his financial backups did not permit him to go for the paid promotion.Competition Competition is one of the major constraints in the growth of entrepreneur’s business. He will spend only if the product satisfies his desire and requirements. Patel. The most important requirement of any business especially the small scale industries where there is almost no paper work is done not even in purchase or sale of products the only policy that should be carried on was “Trust”. So now customer should be studied well his requirements should be asked and understood. According to him when it comes to make a deal with the customers time factor should not be taken into consideration. Customer is ready to spend only if the quality is as per his expectations. Mahatma Gandhi had said that the customer is the most important visitor in our shop he is not dependent on us we are depended on him” Mr. Although the situation calls for promotion activities to be carried out to capture the market. 7 . Patel is always attentive towards customers and he tries to listen to the customer and treats them as the most important guest. So here the idea is to present him the products with features matching or near to his requirements and that too with minimum price in the market. Now. Mr. Patel realised that not even a single promotional activity was carried out by his competitors and all the business was done by good relation with the customers. As he was the early entrant into the market the competition was almost nil as there were not more than six to seven retailers in his competition in his town. Mr.

My one son should be equal to this 22 people. the time was 2007 and as mentioned above there was no support from his relatives. He has completed his graduation . They started to capture the market and because of which his market share in the town went down and profit were eroding. Chandrakant Patel believes that “there is always the differences between young and old players in the business young players are more enthusiastic and could perform much better. There are some incidents where thefts had been occurred. More the manpower better is the situation in the business and that too if the person is from relatives then would be like ‘adding cherry on the cake’ said Mr. Because of this they are able to expand over the town and they have good number of customer base. Son of the Mr.” From this sentence it is quite clear that Mr. slowly and gradually competitors started creeping into the market. Patel The market was increasing but the competitors were increasing at the faster pace. To expand the business there is a need of trustworthy manpower. The market spread across the town and so the competitors. There were around seven to eight competitors in whole selling by this time. Chandrakant Patel believes that young blood can prove as a boon to the business. He also believes that young people are capable of taking more efforts as he did in his young age and also has an expectation from his son to expand the business further and would fight with the competitors.SLOWDOWN IN THE BUSINESS AND CURRENT SCENARIO Now. Currently he is working in a MNC and also supporting his father as per his best possible capacity. 8 . as in my family I have only one person to support my business. Apart from this he is also doing diploma in Financial Management. The major amongst them were: • • Bombay Foam Komal Foam Among the competitors Bombay foam is the leading firm in the business of foam and mattresses. For this Mr. Patel is Hardik Patel. One of the basic reasons behind the success of the Bombay Foam is the support it is having from his family of 22 people.

FUTURE PLANS AND DIVERSIFICATION Mr. The showroom would be such that the customer could get the furniture like sofa. Other plan is to get a new partner in the business so that the risks and the profits can be shared and could also share the work load of the business. Currently he is having 8% to 10% of margin in wholesale business. Similarly he is giving more attention to the needs of the existing customers. These will be the people on whom he can rely upon. Patel is who is going to be the successor of the business after him. Change is a natural process” said Mr. Patel has a desire to give a boost to the business. He seriously wants to work out new plans for business like bringing new people from his native place and explaining them the process of the business. bed etc under one roof. 9 . For this he is planning to use some of already purchased shops and would apply to have standardized rates in this showroom. He has started keeping imported materials which are mostly available in the malls and big shops. He had some future plans in his mind “Change is the part of life. Chandrakant Patel’s business has affected a lot due to the several reasons: • • • Downturn in the market growth Competitors started getting the momentum with shortage of efficient manpower His business is facing the shortage of efficient manpower to control and expand the business To come out of the problem of competition Mr. Patel now has reduced his profit margin percentage to capture the market share. For retail business he is giving more attention towards having wide variety of the products for the customers. The other plan that excites him is to have a small and attractive furniture showroom.A question in front of Mr. Patel had always been a forward looking person. Patel Mr. whether his son would do up to the expectation of his or not? In these years of recession Mr.

This was the business which he always wanted to be in.He is also willing to go for the forward integration of the business where he will enter into the furniture selling and manufacturing but he adds that it could only happen if there is efficient and desired manpower. He got into this business in early nineties but was not able to carry on due to some reasons. He believes that construction business is one of the business that would provide fast and higher profits. Patel. His current construction site is going on in ‘Badlapur’. Accordingly he recently restarted the construction line business. Now he had a handful capital to go for it. Patel had not increased his foam business to much extent beyond Mumbai. Although Mr. Environment always changes and so the business. Mr. is a kind of person who is always looking for a newness and dynamics in the business career. 10 . Patel is always obsessed with the construction business. again a fast developing area which will fetch escalating profits for Mr.