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ROUND 2: THE MAHAVYOJANA

You have successfully cleared the Chakravyuh and entered the country of Artha Kshetra with pride!
Now it is time for you to build a start-up and grow it to be the biggest business in the country. For that you need to be
the best entrepreneur, because only the best entrepreneur is crowned as the supreme leader of Artha Kshetra- The
ArthaNayaka/Nayika!
But hey! You are just a newbie in this country, you don’t know its ABC…right? But worry not! Because you have found a
new guide who can help you in building your “dreams”. Here you have with you The Krishna Consultancy! He is known
as the world’s best consultant, and has a solution for every question. But he will give you only that information that you
“need” and he won’t give you any information that you “want”
So, he has done a basic research in the country and found out that there is a lot of market potential in the Clothing and
Fashion industry. So, he dug out a little more information, pulled a few strings, and came up with a detailed market
research.

According to the research, the clothing and fashion industry has only 3 players- who are having a big chunk of market
share. But it was observed that all the three of them have the same business model and working style. Literally
everything about them is same.
Mr. Krishna also suggests the name and business model that you can incorporate. He names your venture “Vesh
Clothing”. Cool…right?

Now, he provides you with-

1. A detailed market analysis report which includes both the business models and data points corresponding to the
current working of the industry.
2. A Guide on how to read, understand and apply it.
Any information given about the start-up Vesh Clothing is estimated value. But they can be assumed to be 100%
accurate.

You’re required to brainstorm and build a competent, frugal, and viable financial plan that will pave the way for you to
become the distinguished ARTHANAYAKA.

Here you go, good luck!

VESH CLOTHING BUSINESS MODEL
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GENERIC BUSINESS MODEL

DATA POINTS

1. Country population: 50000000

2. The first pie-chart depicts the percentage age division of the country. The second one depicts the market
share, which refers to the portion of the market secured (fixed customer base) by a particular company.
The 3 competitors have together cashed in 50% of the neutral market through advertising efforts.

Demographic Segmentation Market share & Demographic Share

Above 50 Below 16 Competitor 3
25%
12% 15%
Neutral
<16
10%
0.3

Vesh 16-40
Competitor 2
5%
41 to 50 24% 6%

30%
>40
1%
16 to 40
43% Competitor 1
35%

3. Export:
100% is done by large companies currently.
Government Incentive: 5% reservation to exports will be given to the start-ups from the coming financial year.
Total volume of exports: 5% of total volume of goods sold by all 3 competitors.
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5. Average Cost-curve:
The average cost curve shows the per-unit
cost of goods sold (which includes costs of
raw material and value addition).
Average Cost Curve: Costs of production
of t-shirt and jeans as a function of total
quantity produced (per year)

X-axis represents production (unit in crores)

Y-axis represents cost per unit (₹)
Selling Prices: T-shirt: ₹450, Jeans: ₹1200

Selling prices of the rest of the industry is:

T-Shirt- Rs. 430, Jeans- Rs. 1250

6. Machine-Efficiency Table:
Each machine incurs different costs for producing different quantities of merchandise, each machine requires
different capital investments and requires a different number of laborers (refer to labour-production curve) for
production.
Different Machines have different limits of working hours per day.
Machines Capital Expense (in ₹) Production per hour (units) Recurring Fixed Cost per hour Working hours/ day
(water, electricity, etc.) (in ₹)

Machine 1 38000000 5000 130 9 hours

Machine 2 45000000 8000 220 5 hours

Machine 3 35000000 7000 180 6 hours

● ₹10000/ (1L clothes) is incurred due to green manufacturing.

● Depreciation of machines is 10% of original cost per year.

7. Man Power Required: Sales Executive (5-15), Fashion Designers (10), Daily Wage laborers (depends on
production)
Labour-production curve: This graph relates the number of laborers required with different levels of production
for each machine. After a certain point, when the machine reaches its highest production capacity and all the
resources are occupied, even if we increase
the number of laborers, the production stays
constant.

Labour Salaries (in ₹): Sales Executive (15K/

month), Fashion Designers (20K/month),
Daily Wage laborers (350/ day)

Salary of Management (Per month):

CEO (Rs 5 L), COO (Rs 4L), CFO (Rs 3L), CTO
(Rs 2L), CPO (Rs 1L)

NOTE- This is per-month production.

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8. Marketing-Efficiency Table
This shows the different means of marketing provided by different marketing companies. Each marketing
channel caters to different age groups, has different conversion rates, and has a difference in the amount
charged for using that channel.
Different marketing channels are provided by the 3 different companies, and per marketing channel, only one
marketing company can be chosen. (NOTE- All the expenses are monthly expenses)
Marketing Visibility Marketing Marketing Marketing
Channels Company 1 Company 2 Company 3

Digital Marketing Mostly targets teenagers Reach: 1,00,00,000 Reach: 2,00,00,000 Reach: 50,00,000
(conversion rate: 5%) and youth Expense: ₹12,50,000 Expense: ₹23,50,000 Expense: ₹6,50,000

Outdoor Marketing Targets all age groups Reach: 1,45,00,000 Reach: 1,65,00,000 Reach: 1,90,00,000
(conversion rate: 4%) Expense: ₹27,00,000 Expense: ₹30,00,000 Expense: ₹40,00,000

Tele-Marketing Mostly targets middle- Reach: 2,00,00,000 Reach: 1,75,00,000 Reach: 1,25,00,000
(conversion rate: 2%) aged people and seniors Expense: ₹15,00,000 Expense: ₹14,00,000 Expense: ₹11,00,000

Events & Sponsorships Mostly targets college Reach: 75,00,000 Reach: 50,00,000 Reach: 25,00,000
(conversion rate: 10%) students Expense: ₹20,00,000 Expense: ₹15,00,000 Expense: ₹7,50,000

⇨ Conversion Rate: The conversion rate is the number of conversions divided by the total number of visitors. For example, if
an e-commerce site receives 200 visitors in a month and has 50 sales, the conversion rate would be 50 divided by 200, or
25%. A conversion can refer to any desired action that you want the user to take.

9. Online-Infrastructure Cost Table:

Due to marketing efforts, the company’s online reach increases, and 40% of the total reach visits the website,
which results in web traffic.
Web Traffic Hosting / Server Expenses Maintenance of Online Product Development
(monthly) (monthly)(in ₹) Infrastructure (monthly) (in ₹) (monthly) (in ₹)

<=1Cr 20L 200000 500000 700000

>1Cr 20L & >2 Cr 300000 700000 700000

>=2 Cr & <3 Cr 500000 800000 700000

>=3Cr 700000 900000 700000

10. Innovation-Adoption Curve: The technology adoption lifecycle is a sociological model that describes the
adoption or acceptance of a new product or innovation.
The model indicates that the first group of people to use a new product is called "innovators", followed by "early
adopters". Next, come the early majority and late majority, and the last group to eventually adopt the product
are called "Laggards" or "phobics."

This curve shows the percentage of customers who have

subscribed to the premium services offered by Vesh-Clothing.
The Company is currently at the stage of Early Adopters for
the use of premium services.
(The research concludes that among the customer base, early
adopters and innovators tend to subscribe to premium
services.)
Price of premium services: ₹250/month.
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11. Prospective Location Table:

This table shows the various locations available to the company to establish its units, namely retail stores,
warehouses, and production plants.
Area 1 Area 2 Area 3 Area 4

Population Density: 1000/sq. km 13/sq. km 300/sq. km 750/sq. km

Electricity Costs (Per Commercial: ₹11 Commercial: ₹8 Commercial: ₹6.5 Commercial: ₹8

unit) Residential: ₹8 Residential: ₹5 Residential: ₹5.4 Residential: ₹7

Air Quality Index 250 10 110 145

Proximity to 10 Km 5 Km 7 Km 12 Km
National Highway

Rent per sq. feet 100/sq. feet 20/ sq. feet 35/sq. feet 80/sq. feet
Estimated Space requirement-
Each Warehouse will require- 20,000 sq. ft.
Each Production Plant will require- 40,000 sq. ft.
Each Retail Store will require- 1000 to 5000 sq, ft.
Estimated requirement of Vesh-Clothing-
3 retail stores, 2 warehouses, 1 production plant.

12. Additional Cost incurred by Generic Businesses:

Average monthly cost incurred by Fashion Shows: ₹500000
Extra Monthly cost incurred due to Spacious Stores: ₹250000
Average monthly cost incurred due to free shipping: ₹280000

CHALLENGE STATEMENT
Now that you have all the information, you need to analyse the information and build a detailed financial plan for the
working of the start-up.
The financial plan will be in the form of a Profit and Loss statement. The start-up should be financially viable- meaning
that it should be profitable. Now, the rate of profits cannot be more than that of the industry, because people will not
buy your product, and it cannot be less than that of the industry because you dream to build the largest business in the
country. Analyse the above data, take into consideration every information and build a financial plan by striking a
balance.
We have provided you with a financial statement where you need to fill in information based on the analysis, and you
need to explain the logic behind every analysis in the PPT template we have provided you.

Krishna predicts that you MIGHT get scared looking at words like “financial statement”, “financial model/plan”, etc, but
he is confident that you can ace in this because you have the wit to successfully come out of the Chakravyuh! Don’t
forget to take help for his personal guide!

All the best!