INSTITUTE FOR INTEGRATED LEARNING IN MANAGEMENT

IILM GRADUATE SCHOOL OF MANAGEMENT

PGDM GENERAL 2010-2012

SECTION A

BUSINESS RESEARCH REPORT

ON RETAIL SECTOR

Submitted To

Prof. S.P.KETKAR
Submitted By
Nupur Roy

Prashant Mishra
Radhika Bharadwaj

Rahul Bhattacharya

Rahul Goel
OBJECTIVES:
1. Financial analysis of 5 retail chains in India namely Pantaloons ,
Shopperstop , Piramal Health Care Limited , Reliance Fresh , Titan
Watches.

2. Comparative analysis of FDI inflows of India and China.

3. Comparative analysis of FDI inflows in retail sector in India and China.

Introduction:
retail sector
Retail Sector is the most booming sector in the Indian economy. The retail
industry in India is of late often being hailed as one of the sunrise sectors in the
economy. India is the ‘second most attractive retail destination’ globally from
among thirty emergent markets. With a contribution of 14% to the national GDP
and employing7% of the total workforce in the country, the retail industry is
definitely one of the pillars of the Indian .Although organized retail market is not
so strong as of now, but it is expected to grow manifolds by the year 2011. The
sector is estimated to show 20% annual growth rate by the end of the decade.
There are about 300 new malls, 1500 supermarkets and 325 departmental stores
being built in the cities very soon. The retail boom will face a strong competition
from the 12 million mom-and-pop stores, which are easily accessible and
approachable and provide services like free home delivery and goods at credit.
But buying from Malls, Supermarkets and Department stores like Subhiksha,
Marks & Spencers, etc gives a different feeling and the environment of pick and
choose from a variety of products.

FDI
These three letters stand for foreign direct investment. The simplest explanation
of FDI would be a direct investment by a corporation in a commercial venture in
another country. A key to separating this action from involvement in other
ventures in a foreign country is that the business enterprise operates completely
outside the economy of the corporation’s home country. It usually involves
participation in management, joint-venture and transfer of technology. There are
three types of FDI: inward foreign direct investment and outward foreign direct
investment,resulting in a net FDI inflow (positive or negative) and "stock of
foreign direct investment”. Direct investment excludes investment through
purchase of share. FDI is distinguished from portfolio investment that does not
involve obtaining a degree of control in a company. FDI in retail trading is not
encouraged in any form. Foreign Direct Investment in Retail was taken in the
year 2006. However, under the FIPB route 100% FDI is permitted in case of
trading companies for the following activities:
•exports
•bulk imports with ex-port/ex-bonded warehouse sales
•cash and carry wholesale trading
•other import of goods or services provided at least 75% of it is for procurement
and sale of goods and services among the companies of the same group and not
for third party use or onward transfer/distribution/sales. A few foreign retail
names appearing in the market like Marks & Spencer, Benetton, Lifestyle are in
the nature of franchisee.

FDI IN INDIA’S RETAIL SECTOR

As India is a developing country so India allows the foreign retail company to
enter into India in2006.
The 54 FDI approvals have been granted by the government and the country has
received a cash inflow to the tune of about Rs 901.64 crore.
The scenario at present is:
• 100% FDI is allowed in wholesale cash and carry trade
• 51% FDI in Single Brand Retail
• No FDI in MultiBrand Retail
They are coming with the FDI in India’s retail sector because of some reason
which are mention below:
1. India is a developing country
2. Indian market is a very large market
3. Retail is the top most growing market in India
4. The environmental factor and the political factor is not so bad in India
5. The tax rate is low

Data collection

There are two methods of data collection.

1. Primary data
2. Secondary data

1. Primary data – The data collected or observed from first hand experience is known
as primary data. It is problem specific data collected by the researcher, first time. For
example data collected from field survey is first hand data and have a particular
objective hence it is a primary data.
2. Secondary Data – Secondary data is data collected by someone other than the user. It
is the data that have been collected for some other purpose other than the one at hand.
Common sources of secondary data for social science include censuses, surveys,
organizational records and data collected through qualitative methodologies or
qualitative research.
For this project we are taking secondary data because -
• Time constraints – The collection of secondary is always less time consuming in
comparison to primary data collection. Because for this we are required to go on field
and collect the first hand data.
• Cost constraints – the collection of secondary data is usually less expensive.
• Some it is not possible to take primary data. Since retail is big industry and it is
difficult collect first hand information.
Sources – sources of the secondary data can be different websites like census, books,
research papers, blogs, company's internal sources, external sources, etc. There is possibility
that data presented on the website or other resources may not correct or accurate so we are
supposed to be conscious while selecting the sources of data. Source should be reliable.
For this project we have collected the data from reliable websites. Like official website of
railway ministry, official website of Indian census.

www.wikipedia.com
www.pantaloonretail.in
www.going-global.com
www.sensusindia.com

Although we have collected the data from reliable sources but we have face some problem.
First problem we have faced is that we not any source to verify the data we have collected.
Since we have collected the secondary data which was collected for some other purpose so
the units of measurements were different and also the terms and data are differently defined.
These are some of the problem which we have faced.

RESEARCH DESIGN-
EXPLORATORY RESEARCH DESIGN-Exploratory research is a type of research
conducted for a problem that has not been clearly defined. Exploratory research helps
determine the best research design, data collection method and selection of subjects. It should
draw definitive conclusions only with extreme caution. Given its fundamental nature,
exploratory research often concludes that a perceived problem does not actually exist.
Exploratory research often relies on secondary research such as reviewing available literature
and/or data, or qualitative approaches such as informal discussions with consumers,
employees, management or competitors, and more formal approaches through in-depth
interviews, focus groups, projective methods, case studies or pilot studies. The Internet
allows for research methods that are more interactive in nature.
The results of exploratory research are not usually useful for decision-making by themselves,
but they can provide significant insight into a given situation. Although the results of
qualitative research can give some indication as to the "why", "how" and "when" something
occurs, it cannot tell us "how often" or "how many".
Exploratory research is not typically generalizable to the population at large.
 PANTALOONSPROFIT(INCRORES)
7000
6000
5000
4000 PROFIT(IN CRORES)
3000
2000
1000
0
2009-10 2008-09 2007-08 2006-07 2005-06

PIRAMALHEALTHCAREPROFIT(INCRORES)
30000

25000

20000
PROFIT (IN CRORES)
15000

10000

5000

TITANPROFIT(INCRORES)
5000
4500
4000
3500
3000 PROFIT(INCRORES)
2500
2000
1500
1000
500
0
2009-10 2008-09 2007-08 2006-07 2005-06

RELIANCE FRESH PROFIT(IN CRORES)

35000
30000
25000
20000 PROFIT(IN CRORES)
15000
10000
5000
0
2009-10 2008-09 2007-08 2006-07 2005-06
 SHOPPERSTOPPROFIT(INCRORES)
16000
14000
12000
10000
PROFIT(INCRORES)
8000
6000
4000
2000
0
2009-10 2008-09 2007-08 2006-07 2005-06
CHINA’S AND INDIA FDI
Status of F D I to C hina

T able 2-2, U pper 10 C ountries in R eal

D I F lows to C hina
( U nit: U SD
10,000)
　 1995 2000 2005

No Country FDI Share(%) Country FDI Share(%) Country FDI Share(%)

1 H ong K ong 2,040,183 42.39 H ong K on

g 1,549,998 38.07 H ong K on
g 1,794,879 29.75

2 J apan 511,332 10.62 U SA 438,389 10.77 V irgin Is 902,167 14.96

3 Taiwan 316,516 6.58 V irgin Is 383,289 9.41 J apan 652,977 10.82

4 U SA 313,466 6.51 J apan 291,585 7.16 K orea Rep. 516,834 8.57

5 Singapore 186,061 3.87 Taiwan 229,658 5.64 U SA 306,123 5.07

6 K orea R ep. 119,053 2.47 Singapore 217,220 5.34 Singapore 220,432 3.65

7 U .K 100,931 2.10 K orea R ep. 148,961 3.66 Taiwan 215,171 3.57

8 France 71,626 1.49 U .K 116,405 2.86 Cayman Is 194,754 3.23

9 Canada 61,966 1.29 German 104,149 2.56 Germany 153,004 2.54

10 Italy 54,780 1.14 France 85,316 2.10 Samoa 135,187 2.24

　 Others 1,037,355 21.55 Others 506,541 12.44 Others 940,931 15.60

　 Total 4,813,269 100.00 Total 4,071,481 100.00 Total 6,032,459 100.00

Sour ce: China Statistical Y ear book

REGRESSION ANLYSIS-In statistics, a mathematical method of modeling
the relationships among three or more variables. It is used to predict the value of one variable
given the values of the others. For example, a model might estimate sales based on age and
gender. A regression analysis yields an equation that expresses the relationship.In this
analysis we have choosen FDI as a independent variable and INFLATION as a dependent.

It shows the effect of FDI in INFLATION.Here at the above capital R is used for multiple
correlation and R square which is the proportionate.The other is adjusted R square which is
used for sample size or observation in data which is of 10 years and the predicted variable.
The above test shows how well the regression model fits the data. The F value is 5.498 , its
significance is .047 , sum of squares is 6.692.

The above is the coefficient table,it shows the constant for intercept line which is 4.867. it
means that if the RECESSION is zero then FDI will be around 4.867.It shows when the FDI
has change around the 1.137.

CORRELATION- statistical analysis that defines the variation in one variable by the
variation in another, without establishing a cause-and-effect relationship. The coefficient of
correlation is a measure of the strength of the relationship between the variables; that is, how
well changes in one variable can be predicted by changes in another variable .

The above table shows correlation,two variables FDI and GDP.In first row correlation
coefficient 1 which is absolutely perfect.IN the second row correlation coefficient is .619
which shows that with low FDI inputs in our country their is low decrease in GDP.

T-TEST--

One sample t-test is a statistical procedure that is used to know the mean difference between
the sample and the known value of the population mean,sample size of our data is 9
years.Data shows that mean is 5.65 in the case of FDI and 6.86 in the case of GDP here our
data shows that mean difference in FDI is 56544.4 and in GDP it is 6.86.The T value for FDI
is 2.359 by significance of .043 and for GDP it is 11.703 by significance of .00.The value of
FDI varies from upperlimit 110775.55 to lower value 2313.25 and in the case of GDP value
of upperlimit is 8.186 to lowerlimit is 5.534.

FREQUENCIES--