Wholesale Catalog App on low-cost Tablet PCs For retailers in small town India

Everyday merchandise at Wholesale prices Strong fulfillment network

A new customer segment in E-Commerce. 

Traction / Milestones

• Product / Market fit in terms of pricing, quality and supply ability.• Offline Sales of INR 10.00 lakhs across 30 stores in 3 months.• Cash management tie up under negotiation with Suvidhaa

Infoserve to collect cash payments in 55,000 locations across India.• Supply Chain services finalised with TCI XPS.• Distribution confirmed for 280 stores in Gujarat and 30 stores in

Madhya Pradesh on Commission basis.• Tab / Web App development well underway and scheduled to hit

product launch by 15th Jan 2013.

• Our target customer is a small retailer in district centers. • These towns are semi-urban and rural centres with population between 200,000 –

500,000 people. These towns are also centres for adjoining villagers who come on weekly market days to sell their produce and shop for their clothing needs.

• Each centre has between 2 – 10 retail outlets that sell all categories of apparel, accessories, uniforms, and underwear to the local and adjoining village population.

• Local festivals, Marriages, School Openings and Political Events are additional selling opportunities.

CUSTOMER INFORMATION

PAIN POINTS• These retailers travel every week / every month to larger centres (Metros, Tier-1 cities)

located 30-70 Km from their towns to purchase goods for their stores.• They need small quantities in each SKU but a large variety of merchandise.• The retailer has to lay out capital for 4 weeks’ stock including a buffer stock.• These retail stores are promoter-operated hence these trips lead to lost sales.• These retailers buy most of their merchandise on CASH terms.• They usually need to visit multiple Wholesalers to complete their basket of items.• These products are highly price sensitive hence their merchandising is deal-based.

Distribution…

Distributor Prod 1

Distributor Prod 2

Distributor Prod 3Wholesaler

Prod 3

Wholesaler Prod 2

Wholesaler Prod 1

Retail Store

Small Town

Mfg 4

Mfg

5

Mfg

6

Mfg

7

Mfg

8

Mfg

9

Mfg 1

Mfg

2

Mfg

3

Disruption

Mfg

2

Mfg

3

Retail Store

Small Town

Mfg 1

Mfg 4

Mfg

5

Mfg

6

Mfg

7

Mfg

8

Mfg

9

Merchandising Model

Identify Stock Styles

Purchase Items on Consignment

Photograph Salesman Samples

Buyer Orders

No Orders

Add New StylesNo

Orders

Despatch PaymentRe-Order

Pay for Goods Ordered

Pieces Balance

ReleasePieces to Vendor – No LOSS

WHY ENTER THIS BUSINESS?

STRONG MARGINS. CONSISTENT VOLUME.

STRONG MERCHANDISING. NO DESIGNERS.

WORK SMARTER. B2B. PRE-SOLD. CASH PAYMENTS.

STREAMLINE VENDORS, SYSTEMS, LOGISTICS.

THIS IS AN FMCG BUSINESS. STRONG CASHFLOWS.

BUILD A CHANNEL BRAND. NOT A PRODUCT BRAND.

STRONG MARGINS. CONSISTENT VOLUME.

STRONG MERCHANDISING. NO DESIGNERS.

WORK SMARTER. B2B. PRE-SOLD. CASH PAYMENTS.

STREAMLINE VENDORS, SYSTEMS, LOGISTICS.

THIS IS AN FMCG BUSINESS. STRONG CASHFLOWS.

BUILD A CHANNEL BRAND. NOT A PRODUCT BRAND.

THE MARKET

SIZE OF INDIAN APPAREL MARKETMARKET SIZE: USD 33 Billion*ORGANISED: DISORGANISED:

17% / USD 5.6 Bn* 83% / USD 27.4 Bn*

PRICING: ORGANISED RETAIL DISORGANISED RETAIL

ITEM MFG WHOLE RETAIL MFG WHOLE RETAIL

T SHIRTS 80-100 150 - 170 249 - 499 50 - 60 100 – 120 149 – 179

JEANS 450 - 700 650 - 1200 999 - 2999 300 - 450 425 – 600 599 - 799

* Source: Technopak Analysis

THIS IS WHERE WE LIVE. AND THRIVE.

CURRENT CHANNELS V/S OUR CHANNEL

Competitors & Market Forces

I. The unorganised apparel sector currently selling to this market. • No predictable sales patterns• Designs and styles are convenience-based • Sourcing is erratic and random. All sales are in cash and

no accounts are maintained. • Retailers need to visit the bigger metros to buy products

from Wholesalers.

I. Organized Apparel Brands (Small/Medium/Premium) • High Manufacturing Costs lead to high MRPs typically Rs

499 to Rs 1499. This means they cannot supply to our target markets that demand low prices.

• Standardized Distribution Models fall prey to high credit periods leading to constricted cash flows.

• Designs and development ape Western trends of “Spring/Summer” and “Fall/Winter” collections, leading to dead stock / end of season sales.

I. Hypermarts / Cash’n’Carry Stores:• No presence in the target market . Overheads make stores

unviable in these markets• Minimum catchment area limitations which these stores

cannot cater to.

• Location Specific sales.

ORGANISED APPAREL MARKETCASH/CARRY ORG. BRAND HYPERMART E-COMMERCE

(-) CATCHMENT (-) HIGH PRICES (-) LOCATION SPEC (-) FOR NET USERS ONLY(-) NO CRM (-) HIGH OVERHEAD (-) NO LOGISTICS (-) HIGH OVERHEAD

(-) NO LOGISTICS (-) URBAN ONLY (-) OLD DESIGNS (-) NO CRM FOR RURAL(-) OLD DESIGNS (-) NO REDRESSAL (-) HIGH PRICES(-) HIGH PRICES (-) FOR CONSUMER (-) RETAIL ONLY

SO WHAT’S OUR COMPETITION

DISORGANISED MARKETEXISTING eVitaran

(-) NO CRM FOR RURAL (+) FRESH DESIGNS MONTHLY(-) NO GUARANTEE ON DESIGNS (+) LOW PRICES

(-) HIGH MIN.ORDER QTYS (+) DEDICATED CRM(-) NO GUARANTEE ON DESIGNS (+) LOW MINIMUMS

(-) DESIGNS AS /WHEN RECD. (+) LAST MILE LOGISTICS(+) OWN DEVICE / 2G

OUR CLAIM TO FAME

• RIGHT MERCHANDISING / LOWER PRICES• MAINTAINING VARIETY AND DESIGNS• LAST MILE LOGISTICS / FULFILMENT• TECHNOLOGY / CONNECTIVITY• CUSTOMER RELATION MANAGEMENT• SYSTEMATIZING VENDORS / SALES• LOW MINIMUMS / ALL INCLUSIVE PRICE• “CUSTOMER DELIGHT”

TEAM

PRANAY SRINIVASAN: http://in.linkedin.com/in/pranaysrinivasan/

Marketing. Sales. Merchandising. Operations. Finance.

12 years Apparel / Business Experience.

Sparkle. Mfg. Sales. BD. Ops. Finance. Bootstrapped.

ex-Family Business.

TUSHAR BURMAN: http://in.linkedin.com/in/tburman/

Web. Mobile. App. Hardware. Publishing. Interpreter.

12 years Tech Experience.

Network18. Publishing. Apps. Web.

ex-Indian Express; D&B; Jasubhai.

MEHUL MUKATI: http://in.linkedin.com/in/mehulmukati/

Finance. Legal. Compliance. Taxation – Direct / Indirect. CA. Valuation.

14 years Finance Experience.

Axia Advisory. Investment Banking. Finance. Consultancy.

ex-Torrent Power; Oracle; Ambit Capital.

Costing Profitability Analysis

PROFITABILITY ANALYSIS: EXPENSES / TAXES PROFIT PER PIECE

SKU MRP SALE TRANS VAT COMM EXCISE NETT COST PROF

MENS T-SHIRTS 149 110 (-)3.25 (-) 2.20 (-) 3.30 (-) 5.36 96.14 70.00 26.14

MENS POLOS SOLID 199 150 (-)3.25 (-) 3.00 (-) 4.50 (-) 7.16 132.34 110.00 22.34

MENS POLOS Y/D 219 160 (-) 3.25 (-) 3.20 (-) 4.80 (-) 7.88 141.12 115.00 26.12

CASUAL SHIRTS H/S 299 225 (-) 3.25 (-) 4.50 (-) 6.75 (-) 10.76 199.99 167.00 32.99

CASUAL SHIRTS F/S 349 270 (-) 3.25 (-) 5.40 (-) 8.10 (-) 12.56 240.94 189.50 51.44

FORMAL SHIRTS H/S 249 200 (-) 3.25 (-) 4.00 (-) 6.00 (-) 8.96 178.04 150.00 28.04

FORMAL SHIRTS F/S 349 250 (-) 3.25 (-) 5.00 (-) 7.50 (-) 12.56 221.94 187.50 34.44

MENS VESTS 49 32 (-) 0.75 (-) 0.64 (-) 0.96 (-) 1.76 27.89 22.00 5.89

MENS BRIEFS 49 32 (-) 0.75 (-) 0.64 (-) 0.96 (-) 1.76 27.89 22.00 5.89

MENS JEANS 499 360 (-) 4.00 (-) 7.20 (-) 10.80 (-) 17.96 320.04 260.00 60.04

Rotation of Funds

ACTIVITY DAY FROM DAY TO

FABRICS SOURCED: DAY 1 TO 6

SAMPLES MADE: DAY 7 TO 11

SALESMEN PITCH DAY 10 TO 20

ORDERS BOOKING DAY 10 TO 20

PRODN STARTS: DAY 15 TO 25

PRODN ENDS: DAY 35 TO 45

GOODS SHIP: DAY 40 TO 50

PAYMENT RECD: DAY 45 TO 55

Projected Revenue / Investment Proposition

STR: TOTAL NUMBER OF STORES P/S: PIECES PER SIZE T/S TOTAL PIECES ORDERED PER STORE R/S TOTAL REVENUE PER STORE PCS: TOTAL QUANTITY ORDERED BY ALL STORESEXPNS: VAT + EXCISE + COMMISSION + TRANSPORT INCURREDCOST: TOTAL COST OF GOODS INCURRED SELL: TOTAL SALE PROCEEDS OF GOODS REALISEDPROF: TOTAL PROFIT REALISED MRP: TOTAL VALUE OF GOODS AT MAX.RETAIL.PRICE***ALL FIGURES IN RUPEES MILLION. (‘000,000)

PROJECTED REVENUE FOR PERIOD 3 MONTHS DURING PILOT (2 STATES, 80 STORES 28 SKUs)

SKU STR SKUS SIZES P/S T/S R/S PCS COST EXPNS COST SELL PROF MRP

T-SHIRTS 80 8 4 1 32 0.004 2560 0.192 0.056 0.248 0.320 0.072 0.433

POLOS SOLID 80 4 4 1 16 0.003 1280 0.141 0.036 0.177 0.224 0.047 0.293

POLOS Y/D 80 4 4 1 16 0.003 1280 0.152 0.040 0.192 0.243 0.051 0.344

CASUAL H/SLV 80 3 4 1 12 0.003 960 0.160 0.044 0.204 0.269 0.064 0.431

CASUAL F/SLV 80 3 4 1 12 0.004 960 0.182 0.051 0.233 0.307 0.074 0.527

FORMAL H/SLV 80 3 4 1 12 0.003 960 0.144 0.038 0.182 0.240 0.058 0.335

FORMAL F/SLV 80 3 4 1 12 0.004 960 0.180 0.047 0.227 0.298 0.071 0.431

MENS VESTS 80 0 6 1 0 0.000 0 0.000 0.000 0.000 0.000 0.000 0.000

MENS BRIEFS 80 0 6 1 0 0.000 0 0.000 0.000 0.000 0.000 0.000 0.000

MENS JEANS 80 0 4 2 0 0.000 0 0.000 0.000 0.000 0.000 0.000 0.000

28 112 0.024 8960 1.151 0.312 1.463 1.901 0.437 2.794

Projected Revenue / Investment Deployment

PROJECTED REVENUE 18-24 MONTHS (30 DISTRICTS, 3 STATES, 4 STORES PER DISTRICT, 98 SKUs)

SKU STR SKUS SIZES PERSIZE PERSTYLE PER YEAR REVENUE TOTPCS COST EXPNS COST SELL PROF MRP

T-SHIRTS 360 30 4 2 240 1440 0.144 518400 36.288 6.928 43.216 51.840 8.624 77.242

POLOS SOLID 360 12 4 3 144 864 0.130 311040 34.214 5.494 39.709 46.656 6.947 61.897

POLOS Y/D 360 8 4 3 96 576 0.092 207360 24.883 3.766 28.650 33.178 4.528 41.265

CASUAL H/SLV 360 12 4 3 144 864 0.216 311040 51.944 8.169 60.113 77.760 17.647 93.001

CASUAL F/SLV 360 12 4 3 144 864 0.259 311040 58.942 10.066 69.009 93.312 24.303 124.105

FORMAL H/SLV 360 6 4 3 72 432 0.095 155520 23.328 3.739 27.067 34.214 7.147 43.390

FORMAL F/SLV 360 12 4 3 144 864 0.238 311040 58.320 9.454 67.774 85.536 17.762 117.884

MENS VESTS 360 1 6 6 36 216 0.007 77760 1.711 0.495 2.206 2.488 0.283 3.810

MENS BRIEFS 360 1 6 6 36 216 0.007 77760 1.711 0.495 2.206 2.488 0.283 3.810

MENS JEANS 360 4 10 3 120 720 0.259 259200 67.392 10.099 77.491 93.312 15.821 129.341

98 1176 7056 1.447 2540160 358.733 58.707 417.439 520.785 103.345 695.745

STR: TOTAL NUMBER OF STORES PERSIZE: PIECES PER SIZE PERSTYLE TOTAL PIECES ORDERED PER STYLE PERYEAR NO OF PIECES PER YEAR / SELLING PERIOD INDICATEDREVENUE REVENUE PER STYLE TOTPCS: TOTAL QUANTITY ORDERED BY ALL STORESEXPNS: VAT + EXCISE + COMMISSION + TRANSPORT INCURREDCOST: TOTAL COST OF GOODS INCURRED SELL: TOTAL SALE PROCEEDS OF GOODS REALISEDPROF: TOTAL PROFIT REALISED MRP: TOTAL VALUE OF GOODS AT MAX.RETAIL.PRICE***ALL FIGURES IN RUPEES MILLIONS. (‘000,000)

Financial Snap Shot Sparkle Fashion

**Rupees Lakhs Actual Provisional

Year Ended 31-03-2011 31-03-2012

Sales Turnover 160.94 253.90

Other Income 3.94 16.39

Stock Adjustment 34.81 98.38

Total Income 199.69 368.67

Direct Expenses 170.43 300.20

Indirect Expenses 20.21 49.67

Operating Profit 9.05 16.52

Gross Profit 9.05 18.80

Interest 1.42 7.32

PBDT 7.63 11.48

Depreciation 0.47 1.15

PBT 7.16 10.33

Tax 0.55 1.48

Net Profit 6.61 8.85

THANK YOU

WEBSITE: http://shop.evitaran.in/TWITTER: @eVitaranGUST: http://gust.com/c/sparklefashionANGELLIST: http://angel.co/evitaran LOCATION: Mumbai, India.EMAIL: pranay@evitaran.co.in

tushar@evitaran.co.in