EVOK

SECTION A (Group – 5)

UM15006 AkashUM15016 Chandan DasUM15025 Ketan ChoudharyUM15036 Priya Ranjan MohantyUM15048 Somil MalhotraUM15057 Prateek GuptaXIMB | BM-2017

ContentsExecutive Summary.................................................................................................................................2

1. Current Marketing Situation................................................................................................................3

1.1 Current product Situation...............................................................................................................3

1.2 Company Situation.........................................................................................................................3

1.3 Current Market Situation................................................................................................................4

1.4 Consumer Situation........................................................................................................................6

1.5 Macro-Environment Analysis........................................................................................................7

2. SWOT Analysis...................................................................................................................................9

2.1 Strengths.........................................................................................................................................9

2.2 Weakness........................................................................................................................................9

2.3 Opportunities..................................................................................................................................9

2.4 Threats............................................................................................................................................9

3. Objectives..........................................................................................................................................10

3.1 Financial Objectives:....................................................................................................................10

3.2 marketing objectives:...................................................................................................................11

4. Marketing Strategy:...........................................................................................................................12

4.1 Segmenting strategy:-...................................................................................................................13

4.2 Targeting (Demand Estimation):..................................................................................................14

4.3 Positioning Strategy:....................................................................................................................15

4.4 Product Strategy:-.........................................................................................................................17

4.5 Pricing Strategy: -........................................................................................................................17

4.6 Distribution Strategy: -.................................................................................................................17

4.7 Sales & Promotion Strategy: -......................................................................................................18

5. Action Plans....................................................................................................................................19

6. Projected Profit and Loss Statement...............................................................................................20

7. Controls..........................................................................................................................................21

Conclusion.............................................................................................................................................22

1

EXECUTIVE SUMMARY

The project report aims to do the feasibility analysis of marketing a new product in an

untapped market by online players. EVOK’s strategy to start providing furnishing solutions

to corporates has been developed keeping in mind their requirements.

The report assesses the current market situation to give an overall perspective of how well

conditioned the market is for such a product. It gives a detailed description of the product

being offered as well as evaluates few businesses to which it can be marketed and sold.

Cost plus pricing has been adopted to achieving 15-20% market share in long term and also

to be able to provide end-to-end solutions to customers.

The report makes an all-inclusive analysis through various traditional methods like SWOT

and PESTEL analysis. Distribution plan has been made to effectively cater to the platform

and the service needs of the clients. Specific marketing and promotional activities have been

selected keeping in mind its efficacy and revenue benefits. A detailed marketing plan along

with the budget has been developed.

Detailed promotional plan has been developed depending on the touch points of the

consumers to highlight product benefits, business alignment, and eventually brand advocacy

of EVOK. Revenue projections have been made based on market growth and product

adoption expectations. Control methods have been devised to keep a check on the

implementation of the overall plan. 

2

1. CURRENT MARKETING SITUATION

1.1 CURRENT PRODUCT SITUATION

Product description:

Evok Stores showcase over 20000+ world class contemporary products in Soft

Furnishings ,Home Furniture, , Home Décor & Accessories, Wall Fashion, Modular Kitchens

& provide a good assortment of services which include Design to Build (Interior Design

Services), Post Care Services & Turnkey Installation. Evok through its project division will

also work in close association with interior designers, architects, builders & corporate

community utilizing the group networks & relationships for institutional, retail & projects

business.

Target markets:

HHRPL has forayed into Specialty Home Interior business & will focus on Projects business

& Retail to serve B2C & B2B segments. It aspires to be the first-choice partner for customers

searching for stylish home interior solutions.

1.2 COMPANY SITUATION

Hindware Home Retail Private Ltd (HHRPL) has been incorporated as a 100% subsidiary of

HSIL to spearhead the Group's vision to evolve into a Total Home Solutions Enterprise.

Taking the same forward, HHRPL has entered the modern retail sector with Home Interiors

Specialty business, considering growing urbanization & residential landscapes, changing

consumer lifestyle, modern retail sector opportunities & the demand-supply scenarios.

HHRPL shall leverage the core strengths of the group in understanding diverse consumer &

retail distribution network, trade behavior , brand equity, global sourcing & cost effective

supply chain management, which are critical success factors in the sector.

The core vision of HHRPL is "to be the first choice partner of customers aspiring for Value

for Style home interior solutions"

3

1.3 CURRENT MARKET SITUATION

Indian furniture market

The furniture &furnishings market in India is pegged to be around USD 20 billion, with

furniture and furnishing shaving almost an equal split in the market. Within the furniture

market of USD 10 billion, the residential sector accounts for a 70% share (USD 7 billion),

and ~ 6% of this is organized (USD ~400 million).

E-Commerce industry are likely to target:

2020: USD 1.3 billion Indian organised furniture market – target for online players

50% of the market is present in the top 6 cities and more than 80% in top 46 cities

Large items (beds, wardrobes and sofas) account for 80% of the market share

Woods and its derivation accounts for 60% of the market, rest being metal and plastics

9% of the market is made up of imported goods

These are some of the key long term challenges restricting the rapid expansion of offline

organized players in the Indian market. To put things in perspective, only 6% of the overall

Indian residential furniture market is organized, while the same for USA is around 30-40%.

By the time the e-tailing market started to grow in the developed countries, the furniture

market was already organized to the certain extent. Thus the e-tailing market made furniture

players to resort to the omni-channel route.

It is expected that India is going to leapfrog the brick and mortar organized channel and move

to the pure play online market. So while the organized market share in India and other

developed markets would look similar in the long run, omni-channel would have a limited

share in India. RedSeer expects online players to control 3.1% of the overall furniture retail

market (of USD 22 billion) by 2020.

4

Online Furniture Market: Assessment of key competitive areas

Assessment Areas

Horizontal vs.

Vertical (1-5) And why

Sourcing 3:3

Growing share of MDF, plastic, metal and

non-hardwood products in online market by

2020 is likely to reduce importance of

Jodhpur as a sourcing hub. Horizontals with

the their wide reach of seller onboarding

teams can catch up with verticals

Quality Control and Warehouse 3:3

Horizontals are investing aggressively in

warehousing and QC capabilities. Also, as

online market become 20X by 2020, the

sheer high volumes to be managed will allow

horizontals to leverage their skills including

technical capabilities with handling high

volumes and compete effectively with

verticals

Line Haul 2:3

Going forward, horizontals can work equally

well with 3P logistics players to establish

robust furniture line haul operations.

Verticals are unlikely to gain a significant

competitive advantage from their current

line-haul tie-ups1

Delivery Hub management 3:2 Expertise in managing high delivery hub

volumes efficiently is likely to become the

key differentiator going forward.

Additionally, horizontals like Flipkart and

Amazon already have a network of 220+

delivery hubs across India each, which offers

them readymade infrastructure to build upon

5

Online Furniture Market: Assessment of key competitive areas

for shipping furniture

Last mile delivery 3:3

Horizontals like Amazon and Flipkart would

be able to leverage their large appliance

delivery expertise for furniture delivery as

well when the category is launched.

Additionally, horizontal’s expertise in

managing last mile shipment at scale is likely

to help them stay competitive with verticals,

when furniture volumes shipped grow to

~10,000 units per day from 350-400

currently1

Customer – Brand recall 5:2

Unaided brand recall of horizontals is 3-4x

that of horizontals

1.4 CONSUMER SITUATION

Many manufacturers are providing different kinds of offering to give their customers a one-

stop-shopping environment. There has a been an increase in demand of commercial

furniture’s which primarily includes Desks, Chairs, Conference tables, Cabinets, Shelves and

even beddings in hospitality industry. Growing urbanization & residential landscapes,

changing consumer lifestyle and rise in modern retail sector opportunities have led to a rise in

demand of branded and stylish furniture.

Growth in IT and ITES segments has provided a major thrust to commercial furniture

segment. Customers are now aspiring for ‘Value for Style’ interior solutions. In the

commercial space, manufacturers focus on building a strong and reliable brand. The drivers

and challenges to this industry is as below:

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Drivers Challenges

Growth in Real Estate Centre Reduction in Timber Harvest

Growth in organized retail FDI regulations

Rising quality consciousness amongst

customers

Market restricted to cities only

Growth in IT and ITES sector

Reduction in import duties

1.5 MACRO-ENVIRONMENT ANALYSIS

PESTEL Analysis

In this analysis the main political, economic, social, and technological factors that affect the

furniture industry in general are identified. The main objective of this analysis is to assess the

main impact of the external factors on the business and to come up with actions to exploit the

points with positive effect and avoid the points with negative effect.

Political

• Current Government is boosting entrepreneurship and organized business sector and

thus high demand is expected in near future.

Economic

• Indian Economy is the fastest growing economy and thus assures a promising future

• Increase in FDI will also boost this industry

• Inflation rate will reflect on expenses

• Changes in Taxation policies

7

Social

• Companies/People becoming brand and quality conscious.

• The number of company offices and hotels are increasing in all Tier 1 and Tier 2

cities,

• The blend of comfort and luxury in any product leads people to aspire for it. This

product offers the same. So premium, hotels and offices will be willing to provide the

same.

Technological

• Low cost advantage in India will help in reduction in cost

• Availability of automated and semi-automated machinery than can affect production

positively.

• Rapid development of finishing materials & accessories.

Environmental

• Reduction in Timber harvest a major issue.

• Due to National Forest Policy of India, ban on falling of trees in forests.

Legal

• On the production front, labour law compliance is a major consideration.

• Since the company is into production it needs to adhere to stipulations of Factories

Act and if contract labours are employed, then the Contract Labour Regulation Act

(1970) will be of concern.

• As the raw material comes from forest, company also need to adhere to various forest

acts.

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2. SWOT ANALYSIS

2.1 STRENGTHS

Offers a variety of products in different price ranges, much suitable for today’s coming-

up corporates /start-ups

End-to-end solution provider

Leverage the already existing strong distribution network of Hindware for farther reach in

the market

Offers ‘Design to build’ service where the customer will be provided end-to-end solution,

and not just a product

2.2 WEAKNESS

Currently, the business model for EVOK is set for a B2C business, hence the focus is

mostly on not keeping large SKUs of different furniture

Since EVOK deals mostly in ‘customized furniture’ , hence there is an unavailability of

standardized furniture, which is mostly required by corporates

Many corporates prefer low cost rather than specially designed furniture

2.3 OPPORTUNITIES

The market for corporate furnishing is mostly catered by unorganized players, hence there

is a huge untapped market for an online retailer like EVOK

Levering the cash reserves of Hindware, EVOK could easily have some M&A with giant

local players to further accelerate its reach in the market

Real estate sector is experiencing a rapid growth, which directly coincides with the

number of increasing corporates in today’s world, hence creating a good market

opportunity

To lower cost and also promote sales, procurement of sustainable products will be a great

strategy, since currently there are just a few small players dealing with sustainable

furniture

2.4 THREATS

There is a great competition in the market, from existing famous B2C players like

PepperFry, Urban Ladder

The government regulations could post as a challenge to protect the local players from

decreased revenues

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There are a lot of low-cost substitutes available in the market

There is a growing demand for greener products

3. OBJECTIVES

3.1 FINANCIAL OBJECTIVES:

Year Sales Unit Cost Revenue EBITDA Market Share

2016 1000 100000 100 mil 25 mil 10%

2017 1100 100000 110 mil 27.5 mil 11%

2018 1265 90000 113.85 mil 28.46 mil 12.5%

2019 1518 90000 136.62 mil 34.15 mil 13.5%

2020 2000 90000 180 mil 45 mil 15%

Operational Cost Structure (For standard office modular conference table (1) and chair (10) set):

The main operational cost for the product includes material and labour cost. Another major component of the cost is the Selling, Distribution and General Administration Cost accounting for 20% of unit cost.

Serial No.

Cost ElementUnit Cost of each

element (In Rs ‘000)

1 Material 25

2 Production Cost 30

3Selling, Distribution and General Administration Cost

15

4 Promotion & Other Costs 5

5 Total Cost 75

10

Pricing Method:

The pricing method used is COST PLUS PRICING where a margin is added to the cost to give a final price. The margin is kept at 33.33 %. The higher margin would help in increased cash flow in the initial year. In the first phase, we will be keeping the margin constant.

Particulars (In Rs ‘000)

Total Cost per unit 75

Margin (33.33%) 25

Unit Cost (Cost + margin) 100

3.2 MARKETING OBJECTIVES:

Maximize profit margin

Objective of Evok is to provide good quality product and satisfy its customer by product.

That will allow us to charge premium price from customer as compared to our competitors.

Thus we will try to maximize our profit.

Quality leadership

Evok has the responsibility to provide best quality to our customers. It sets main objective

to provide quality products that satiate the customer needs and requirements.

Long term relationship with customer

We will try to provide superior value to our customer that we have promised. So we believe

it will help in generating loyalty in the minds of our customers and will also help in building

long term relationships.

Communication objective

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We will use different sources to attract their customer. The objective of Evok is to create

awareness in our customer about our new product. Evok also tells their customer that they

provide pure wooden furniture to their customers.

Strategy marketing objectives:

To grow and nurture a unique distribution system that provides product at low cost.

To build efficient & vertically integrated manufacturing capabilities to gain lower cost

advantage.

To increase advertisement.

To redesign packaging to be more attractive and familiar.

To make innovation in product so that it become portable and in convenience oriented

form.

To improve product quality.

To maintain positive and consistent growth each month.

To experience an increase in new customers i.e. to ensure that our products have a high

trial rate that will help us to turn new customers into long term customers.

Build brand equity at the markets we are catering to as well as within the supplier and distribution networks.

4. MARKETING STRATEGY:

We focus upon a special kind of consumer, a person who wants high quality office furniture

customized to work coherently with modern technology including scanners, internet

connections, and other high-tech items. The corporates can be in the government institutes,

large corporations, small or medium business, or at a home office. The target market will be

the corporates who wants to have very fine furniture with the latest in technology,

combined with an old fashioned sense of fine woods and woodworking.

Our marketing strategy assumes that we will be needed to go into specialty channels to

address our target customer's needs. The product should be tied in with the high end

quality catalogues, because these catalogues will cater to our kind of customers.

The product strategy should also be based on quality, in this case the amalgam of technical

understanding with high quality woodworking and materials, and workmanship.

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Our most important competitive edge will be our assembly strategy, which is based on

interlocking wood pieces of such a high quality that assembly will not only be a pleasure for

our customers; it will actually be a feature that enhances the sense of quality.

Market Needs:

Our target market will need more than a simple office furniture. The need grows out of the

needs of personal computing, combined with office furniture i.e. keyboards should be at

correct height, of correct weight, uses proper channels for cables etc. The customer wants

to have all of that plus fine furniture. There is a need for high quality, wood and good

workmanship. We don't want to just sell office furniture, we want to sell office environment

and design, plus workmanship.

4.1 SEGMENTING STRATEGY:-

Through the market segmentation process, we will segregate the options so that our

marketing strategies are better targeted at each segment more effectively. We have used

the following method to operationalize the market segmentation process.

1. Defining market boundaries: Our market would consist of all the corporates like

govt. institutes, large corporations, small scale business and home offices,

educational and health institutions, banks, etc.

2. Defining segmentation variables: We have used the following segmentation

variables for our market:

Demographic variables: Through this we gathered information on important

parameters of our target customers like company size etc.

Operating variables: Through this we identified the usage habits of our

customers like whether they are willing to change the infrastructure and the

internal décor as per the latest trends or not.

Purchasing approaches: Through this we tried to explore what criteria were

being considered important by our target customers while making purchase

decisions.

Situational factors: Through this we tried to find out in what order lot do our

target customers normally place the orders and what possible applications

that they can put our products to use.

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3. Collecting and analysing segmentation data: This is done through a cluster analysis

of the data that was gathered through the customer analysis questionnaire.

4. Developing a profile of each segment: Based on the clusters formed, we develop a

profile of the various segments which we would be targeting.

4.2 TARGETING (DEMAND ESTIMATION):

Our segment definition is itself strategic. We are not intending to satisfy all users of office

furniture space intended using with personal computers, but, rather, those who are most

demanding. We definitely want to address the needs of the high-end buyer, which is willing

to pay for quality. But all these will be mainly corporates majorly present in South India. It

will have an advantage for us as our major presence is in South India.

We focus our marketing on five types of target consumers:

1. Major Corporates: There are around 15 million major corporate offices in India, and

that number is growing at 1.6% per year. We estimate the top 1% of that number,

150,000, as our market, and we suggest the number is growing at the same 1.6%

annually.

2. Small Business Enterprises: According to the most recent data available, there are

around 21 million small businesses and MSMEs (500 employees or fewer) in India.

That includes approximately 5.5 mil employers and 11 mil self-employed people. We

take the top 1% of 21 million, to make our potential market of 210,000. We estimate

growth at 2.5%, a composite of different sources.

3. Home Offices: According to Home Office Computing magazine, there are around 40

million home offices in India. Our market is the top 1% of those, 400,000, which we

estimate is growing at 5% per year.

4. Institutions: It includes banks, educational institutions, malls, restaurants, public

libraries and community halls.

5. Others : We will also sell to some buyers outside India and outside of these targeted

market segments. We estimate 100,000 other potential customers, a number that

we estimate will be growing at 5% per year.

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We also seek the buyer who appreciates two main attributes: the high quality of furniture

workmanship and the excellence of design, with the understanding of technology and

ergonomics built inside.

4.3 POSITIONING STRATEGY:

Our product is positioned very carefully: this is high-quality office furniture combining workmanship and ergonomics for the customer who understands quality, is a user of high technology equipment, and is willing to spend money on the best. Unlike the mainstream products, we do not use laminates or cheap manufacturing technology.

Our positioning strategy is designed from the findings of the 3C analysis as below:

Customer: Through our market research we found that our customers lacked quality

furniture. Also, we could see an untapped demand of supplying the customized

furniture designed exactly according to the needs of an office space or institutional

requirements.

Channel: The environment is conducive for the launch of such a product. Convincing

the customers about the relevancy of our offering might be a challenge and hence

utilizing this information to gain insights into the details of purchase processes,

demographics & sale strategies, and customer issues.

Competition: As our product is being offered, we have a lot of direct competition.

There are various office furniture solutions offered by competitors.

1 | Godrej Interio

Corporate HQ – Mumbai, Maharashtra

Business – Home and office furniture

It is one of the top furniture brands in India that has been dominating the market. It

is a strategic business unit of Godrej & Boyce manufacturing ltd. which is part of

Godrej unit. It offers vast range of furniture and interior products for home, office,

kitchen, hotels etc.

2 | USHA Lexus Furniture

Corporate HQ – Gurgaon, Haryana

Business – Home interior and furniture

15

It is a company of Shriram group that is acing furniture brand in India offering

exclusive range for the products for bedroom, kitchen and living room furniture.

3 | Zuari Furniture

Corporate HQ – Chennai, Tamilnadu

Business – Home & office furniture

Zuari furniture is a unit of IFPL (Indian furniture Products limited) company of Birla

group that has more than 450 dealers’ network across the country. It has trained

staff and concepts to manufacture world class furniture which makes them highly

demanded furniture brand in India.

4 | Durian

Corporate HQ – Mumbai, Maharashtra

Business – Residential and office furniture

It is a well-known plywood brand launched with the first furniture retail showroom

in Ahmadabad in 1999. It is an ISO 9001 certified company having dense retail and

distribution network of furniture stores that offers vast range of furniture that

includes home and office.

5 | Damro

Corporate HQ – Chennai, Tamilnadu

Business – Residential and office furniture

It is a multinational furniture brand, that is having 50 stores in India. It offers a wide

range of modern furniture products. It is one of the highest selling furniture brand in

southern India including Kerala and Tamil Nadu states.

6 | Wipro Furniture

Corporate HQ – Bangalore, Karnataka

Business – Furniture and FMCG

It is a strategic business unit of Wipro ltd. and is a part of their FMCG group that has

presence in 40 countries worldwide. It deals in all kind of furniture brands including

home & office furniture.

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7. Pepper fry: It is a furniture and home products’ e-commerce market place having

main office branch in Mumbai, India.

8. Fab furnish: It is an online market for retail of furniture, and home appliances. It is

headquartered in Gurgaon, NCR.

9. Urban Ladder: It is an online furniture seller in Bangalore, India, present in 12

cities across India.

We would be positioning our product as “Customized enhanced sense of quality” based on

the tenets of convenience, experience and luxury.

Value Proposition:-

Evok gives the discriminating traditional office space user, who cares about design and

quality furniture and quality of working environment, a combination of highest quality

furniture and latest technology, at a relatively high price.

4.4 PRODUCT STRATEGY:-

1. Features/ benefits analysis

2. Unique Selling Proposition

3. Product Development

4. Product packaging

4.5 PRICING STRATEGY: -

The objective of the pricing strategy falls in line with the business objective of achieving 15-

20% market share in long term for the company in new product segment of total automated

bathing solutions. We are also targeting a growth rate of 15% every year in sales volume

post implementation phase in order to achieve the desired market share as quoted above

and keeping in line with industry growth in sales units.

4.6 DISTRIBUTION STRATEGY: -

Distributors 155

17

Retailers 1300

Depots 21

Exclusive Distributors 60%

Owing to this strong network it is well equipped to handle the channel distribution of

office furniture.

Owing to increased depots, distributors have now low inventory cycle and efficient

working capital hence making them loyal to Evok brand thus pushing sales from

these distributors.

Evok has implemented ERP and a strong IT platform amongst its distribution network

to keep track of the market and hence leverage this to monitor the demand

requirement in all its regions.

Active brand building and strong network of service centres has helped monitor

interactions and providing good service which is essential for augmenting the added

maintenance and customer support services.

It also plans to increase its distribution network by addition of over 400 distributors

and 3000 retailers in the next 5 years covering almost every town in India with a

population of over 25000. This strong network would be difficult to replicate and

hence leverage channel sales for Evok at the same time protecting its market share.

4.7 SALES & PROMOTION STRATEGY: -

Advertising Strategy:

1.Print Media& Ads – industry-specific, trade and lifestyle magazines such as GQ, Vogue etc.

The print ads also serve to communicate and connect to the customers about importance of

quality durable furniture.

2.Visual Media (TV) – Product features demonstrated through sponsored Programmes, ads,

Company executives’ interviews.

Sales Promotion Strategy:

1.PoP Marketing – Better Point of Purchase (PoP) marketing in the form of better and

stylized catalogues and brochures at the dealers and experience centres

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2.Gifts & Give away – Evok can also come up with Gifts or some goodies to be given to

dealers or retailers on purchase such as gift/discount coupons etc.

3.Dealer Promotion Schemes – Coming up with dealer promotion schemes wherein it can

give some sort of incentives such as foreign trip or complete office makeover on

continuously achieving new targets.

Internet Marketing Strategy:

We chose our preferred social media channels based upon product specific needs on how

B2B Technology Buyers use social media.

1. Online Forums

2. Virtual Trade Shows

3. Ratings & Reviews (Digg, Delicious, etc.)

4. Wikis

5. Private Online Community Sites

6. Open Social Networks - LinkedIn and Face book

7. Interactive and 3D Demonstrations

8. Podcasts (Downloadable Media, Audio & Video)

9. Blogs – Word Press, BlogSpot

10. Online Advertising

11. Online Video

12. Micro Blogs – Twitter

5. ACTION PLANS

Business Objectives Marketing Objectives Tactic Used

Achieve Sales of 10,000 units in

2016

To create an awareness about the product among the distribution companies

Awareness through print media & TV ads about its quality and durability

To initiate a change in the attitude of the B2B client

towards the modular office furniture

Justify the costs to aggressively market the product to the B2B client

through company presentations

19

Achieve sales growth of 10% in

2017

To maximize reach and get as many long term contracts

for supplies from major corporates and institutions

Long term contracts are most suited for this product. Once adopted and

implemented, the product will become a standard in all tier 1 cities & some tier 2 cities. Sales pitch and

tenders should be aggressively bid yet not to allow hurting the bottom line.

Achieve Market Share of 13.5% by

maintaining the CAGR of 15% YoY for next 2

years

Build a consistent brand image and positioning and

consequently target the institutional segment

Competitors are bound to decline the prices competitively hence a strong

brand image becomes very important to prevent them from making a dent

in sales.

Become a market leader in office

furniture space by 2020 (15% market

share)

Ensure product modifications and

customizations according to industry needs

Conducting Needs Gap analysis & incorporating newer technological developments into the products to

keep it competitive.

Have established systems in place to ensure faster go-to-market time. Develop and maintain long term client engagement and hence

relationships.

New developments should be futuristic and anticipate the changes

above. Their time to market should be fast so that, the core competency of

superior technology remains.

6. PROJECTED PROFIT AND LOSS STATEMENT

Table 1: Projected Profit and Loss Statement

Particulars 2016 2017 2018 2019 2020Sales 1,000 1,100 1,265 1,518 2,000Unit Price ₹ 1,00,000 ₹ 1,00,000 ₹ 90,000 ₹ 90,000 ₹ 90,000

Revenue₹

10,00,00,000₹

11,00,00,000₹

11,38,50,000₹

13,66,20,000₹

18,00,00,000

Materials₹

2,50,00,000₹

2,75,00,000₹

3,16,25,000₹

3,79,50,000₹

5,00,00,000

Production Cost₹

3,00,00,000₹

3,30,00,000₹

3,79,50,000₹

4,55,40,000₹

6,00,00,000

S, D, G & A Expenses₹

1,50,00,000₹

1,65,00,000₹

1,89,75,000₹

2,27,70,000₹

3,00,00,000Promotion & Other Costs ₹ 50,00,000 ₹ 55,00,000 ₹ 63,25,000 ₹ 75,90,000

₹ 1,00,00,000

Total Cost₹

7,50,00,000₹

8,25,00,000₹

9,48,75,000₹

11,38,50,000₹

15,00,00,000

PBT₹

2,50,00,000₹

2,75,00,000₹

1,89,75,000₹

2,27,70,000₹

3,00,00,000Tax (@ 32.445%) ₹ 81,11,250 ₹ 89,22,375 ₹ 61,56,439 ₹ 73,87,727 ₹ 97,33,500

20

PAT₹

1,68,88,750₹

1,85,77,625₹

1,28,18,561₹

1,53,82,274₹

2,02,66,500

Assumptions

The Tax Rate is taken as the prevailing tax rate, which is = (30*1.05*1.03) = 32.445%

The Company has not taken any debt. The project will be equity financed. So there is

no Interest Expense.

All the costs are linked to the no. of units sold.

Analysis

The margin has reduced in year 2018 and in subsequent years. This is because the unit

price has been reduced from 1,00,000 rupees to 90,000 rupees. Effective margin after

price reduction= (Unit Price/Unit Cost)-1=(90,000/75,000)-1= 20% margin. Hence

the margins will reduce from 33.33% to 20%. This strategy is aimed at increasing the

sales and enter into new markets because of attractive pricing.

Due to the above reasons, there has been a 31% decrease in PBIT and PAT in 2018

(which is the first year of Phase 2). But the subsequent years will improve the PAT as

the sales will increase. In phase 2 the company expects sales in tier 2 cities along with

tier 1 (which was covered in phase 1)

The PAT Margin that the company is getting is highest in the first two years at

16.89%. After that it falls to 11.26% in 2018, 2019, and 2020.

7. CONTROLS

The main aim here is to monitor the plan and to ensure that we are on the track to achieve the

target. Following will be some control strategies to be implemented throughout the project.

7.1. Annual Plan control

The forecasted figures for sales and costs will be used to set annual plans for various

marketing activities. For each activity the expected result, time constraint and resources

allocated will be clearly mentioned. At the end of the year the achieved figures will be

compared against the projected ones. The deviation will be calculated and corrective

measures would be formulated.

The parameters to be analyses would be

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a. Sales Figure

b. Market Share

c. Total Cost

d. Promotion to sales ratio

e. Profit Margins(PAT and EBIT)

f. Asset Turnover Ratio

7.2. Marketing Efficiency Control

This will be a measure of how effective our marketing plan has been. We will analyse various

parameters like

a. Advertising Efficiency

b. Sales Force Efficiency

c. Distribution Channel Efficiency

d. Customer Relationship Efficiency

e. After sales service/Customer Support Efficiency

CONCLUSION

EVOK is one of India’s leading furnishing solution provider. They will leverage the core

strengths of the group (HSIL) in understanding diverse consumer & trade behaviour, retail

distribution network, brand equity, global sourcing & cost effective supply chain

management, which are critical success factors in this sector. EVOK through its project

division will also work in close association with architects, interior designers, builders &

corporate community utilizing the group networks & relationships for retail, institutional &

projects business.

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