Vishal Story

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    VISHAL STORYDefinitely Not acase of once

    bitten twice shy!!!

    Once bitten, not shy: There is always plan B for Vishal Retail

    Presented by-

    Shivani Saxena(2k10MKT28)

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    The Indian organised retail industry is valued atabout 300 $ billion.

    The overall Retail Market in India is likely togrow at a rate of 5.5 % to about 16,77,000 Cr by2015.

    The Organised retail market is expected to grow

    much faster at a rate of 21.8 % to Rs 2,46,000 Cr.

    Major Retailers:(Reliance Retail,Future Retail,ShoppersStop,Westside,Globus)

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    VRPL was incorporated on July 23, 2001 under the CompaniesAct, 1956 as Vishal Retail Private Limited. VRPL was converted toa public limited company on February 20, 2006.

    With a business purchase agreement executed between VRPL andM/s Vishal Fashions Private Limited , the business ofmanufacturing of readymade garments as a going concern with

    effect from March 31, 2003 was also acquired. VRPL went intobackward integration by acquiring a manufacturing unit forreadymade garments.

    Vishal Retail soon came to be known as one of Indias leadingvalue retailers promoted by Mr. Ram Chandra Agarwal.

    Its focus was mainly on Tier 2 and Tier 3 cities and towns,catering to the middle class and lower income level consumers.

    It garnered a strong presence in manufacturing and retailingapparel, non- apparel and a large variety of branded FMCGproducts.

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    In 2001, the Managing director and man behind theoperations Ram Chandra Agarwal moved to New Delhiand started his first supermarket.

    The company expanded sales at an annual growth

    rate of 80 per cent, from Rs 88 crore in 2004 to Rs288 crore in 2007. During the period, net profitjumped from Rs 38 lakhs to Rs 12 crore.

    Meanwhile, Vishal Retail's initial public offering (IPO)

    was a success as it was over-subscribed 81 times.

    Company also witnessed its stock rising 120 per centin a short span of time.

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    Backward integration was emphasized, in order to reduce costs

    and take advantage of economies of scale.

    For ensuring efficiency in supply chain, VRPL had set up sevenregional distribution centres' located around Kolkata (WestBengal), Thane (Maharashtra), Jaipur (Rajasthan), Ghaziabad(Uttar Pradesh), Ludhiana (Punjab), Gurgaon (Haryana) andDelhi.

    Further, VRPL also focused on developing a cost and timeefficient distribution and logistics network. They had their ownfleet of over 31 trucks.

    However the main factors were value for money merchandise and

    stores located in tier 2 and 3 towns . It was a one stop store andeasily a preferred destination for the middle class Indianfamilies.

    Their approach to sell quality goods at reasonable prices byeither manufacturing themselves or directly procuring frommanufacturers also was responsible.

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    The company had a net debt, net of cash and otherliquid assets, of Rs 765 Crores on December 31, 2008.

    The company was being charged an average interestrate of 13 per cent.Increasing interest payment on

    our balance sheet is a cause for concern and there ispressure, Agarwal said during that period.

    Vishal Retail was expected to pay interest of nearlyRs 100 crore in FY09 as against Rs 38 crore in FY08.

    This was the time when Vishal Mega Mart stores werelocated in 110 cities with more than 150 outlets.

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    Ret il st re s vi ti f eap eyandarapidexpansi nplan.

    Banks areals t e lamed f r t is," points outmit upta, director at oral ay , a retail

    advisory firm.

    t er nails in t ecoffin ere t e selectionof

    rong locations anda rongmixofmerchandiseacross the150 stores.

    Economic slowdown in 008- 009alsohadanegativeeffect.

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    In March 2011, the assets and liabilities ofdebt-strapped Vishal Retail were sold to TPGWholesale Pvt. Ltd, a subsidiary of TPG VW

    Ltd, and Airplaza Retail Holdings Pvt. Ltd,owned by the Shriram Group.

    The TPG- Shriram combined paid Rs.70 croreto Agarwal and were allowed to use thebrand names Vishal, Vishal Megamart andVishal Fashion Mart for a period of fivemonths.

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    Vishal founder plans acomebackwithV2

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    V2s USP will be branded-type quality in 50%to 70% less than the branded price , thusdelivering huge value to customers.

    Over all, ambience will be better, productquality will be upgraded and with moreexperience of mistakes and failures , thisventure will be driven more efficiently.

    Will launch 8 stores country wide . Five outof these will be situated in Delhi NCR and 2in Himachal Pradesh and one in Tata Nagar.

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    Due diligence.

    Detailed planning.

    Conservative approach in preparing future

    projections or estimates.

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    Ram Chandra Agarwal sits in a glass-panelledcabin preparing for his second coming inretail at his newly opened Gurgaon store.

    A poster on the reception wall reads:Winners don't do different things, they do

    things differently.

    It seems to capture the thinking of the manwho ran his first retail venture Vishal Retail

    into the ground-and is back for a secondwind in the same business.