CIA 3

MANAGERIAL ECONOMICS

Report based on:

Video Interview on Unit Economics for Start-Ups

Submitted to
PROF. TAPAS DAS

Team Members:

ASHIJ RAJESH (Registration No:24221023)

JATIN (Registration No: 24221033)

SUJAN MS (Registration No: 24221015)

VIJAY (Registration No: 24221037)

SANDEEP (Registration No: 24221017)

SOME PHOTOS OF INDIE COTTON ROUTE
 OVERVIEW OF STARTING THE STARTUP

Shalini Saluja started as an Electronics engineer in 1993 in a company called IIGM where SHE
trained people on the CAD/CAM system. HER company sponsored a course in Fashion Design
from Pearl Academy of Fashion to help me understand their client's needs better. This was
the era of Art and Technology coming together which would change the fashion industry
forever.
But soon SHE had a daughter and had to give up HER job as those days maternity leave or
work from home was not an option. Today women have it even tougher as they become
jugglers juggling so many things unless they can pull a trick or two from the multiple hats
they are wearing!
So then with a cute daughter and no job, travelling once a month to the rural villages of
India which were a treasure house of weaving and printing techniques came to my rescue. I
worked with artisans in designing and creating beautiful textiles using ancient techniques
and then stitching them into very wearable and comfortable garments. HER first company
SAMSARA was born and then offers came in for exports of patchwork quilts. THEY did the
most creative and beautiful patchwork quilts which were sold in the same range as DONNA
KARAN's quilts and we got featured on the front cover of magazines in the United States of
America.
Well, that journey again took a turn and INDIE COTTON ROUTE came into being which was a
more evolved version where sustainability and ethical practices became the focus. THEY
have decided to be a small company as small companies do not have to indulge in unethical
practices as we do not have huge white elephants to feed but have the know-how and the
experience of any big company.
Especially in today's times after the Pandemic where small staff works in hygienic conditions
is of prime importance. Also, the citizens have become more conscious of supporting small
entrepreneurs as they ensure equal distribution of wealth across craft clusters rather than
concentrating it in the hands of a few.

VISION, MISSION

Creating employment to the unsung artisans and craftspeople, who are involved in making
handmade indigenous fabrics is one of our aims. We aspire to preserve the age-old techniques that
are fast disappearing in the run-of-the-mill milieu. We are environment-friendly; all our clothes are
made from natural fabrics. Come, experience different Indian styling with us!

WHAT WOMEN WANT

Women don’t want much. We only want to look slim, desirable, someone who can be the envy of
everyone around. And if this can happen every day, then…voila!

WHAT WE GIVE

Our cuts are such that they can make any woman look slim, irrespective of the body type. Whatever
be the problem, the cut of our clothes, specially customized for you, to your measurement, will
flatter you.

And that’s not all. The clothes are designed in such a way that irrespective of the changes or shifts in
fashion, they will never look out of place. We put in a lot of thought there.

We take Indian fabrics—ikkat, shibori, Kota, chanderi, block-prints, handwoven, dabu, silk, variety of
cottons, Maheshwari, bandhini, kalamkari, mangalgiri, etc. – and turn them into contemporary,
classic, fusion, trendy, indo-western styles.

Our USP is that we give good-quality material. In spite of all clothing being handcrafted, our finishing
is clean and our stitching quality, top-notch.

WHY YOU SHOULD COME TO US

Getting a garment stitched from a tailor is a hassle. Plus, they don’t design. Additionally, you have to
buy trims, laces, gota, doris, yokes, and other embellishments; then think of a design and spend
hours trying to explain it to the tailor. Even after all this, and endless wait (tailors hardly ever deliver
on time), you are not sure about the end product. It’s all a gamble of a hit or a miss.

You can eliminate all these problems with us. We design, tailor to your size and taste, and deliver on
time. Every time. Unless there’s an avalanche!
 OVERVIEW

Starting a business often requires a combination of passion, innovation, and effective management.
This report outlines the insights gained from a discussion about initiating a startup with minimal
capital and managing operations effectively.

CAPITAL ARRANGEMENT FOR STARTUP

Passion Over Capital

The belief that passion and a strong idea can drive success is fundamental for many entrepreneurs.
The speaker emphasized that having a compelling idea can attract support and resources, suggesting
that self-belief is crucial in organizing necessary capital. They noted that they did not come from a
business family, which often leads to misconceptions about the necessity of significant financial
backing. Instead, they started with minimal resources—just one machine and one tailor—
highlighting that initial capital requirements can be surprisingly low when focusing on core
competencies.

Building Trust and Customer Base

Initially, the startup faced challenges in gaining customer trust, as potential clients were sceptical
about the quality of goods produced. To overcome this, the entrepreneur opted to take orders for
stitching and embroidery, allowing them to build a customer base while simultaneously gaining
practical experience in the industry. This strategy not only helped in establishing credibility but also
provided valuable insights into customer preferences and market demands.

MANAGING OPERATIONAL BUSINESS

Direct Sourcing and Vendor Relationships

The discussion highlighted a strategic approach to cut out intermediaries like wholesalers. By
working directly with artisans and suppliers, the startup aimed to enhance value along the supply
chain. This model ensures that each participant—from artisans to fabric suppliers—adds unique
value based on their expertise. The entrepreneur emphasized the importance of understanding
market trends and customer preferences to tailor offerings effectively.
Understanding Consumer Preferences

The entrepreneur identified a target market that values comfort and Indian heritage, aiming to
provide unique products that resonate with cultural significance. By maintaining direct
communication with customers, they could adapt their offerings to meet changing preferences,
ensuring relevance in both metropolitan and rural markets.

OPERATIONAL MANAGEMENT STRATEGIES

Resource Optimization

Effective resource management is critical for maximizing productivity while minimizing costs. The
startup focused on understanding the production process thoroughly to allocate resources
intelligently.

Quality Control

Implementing robust quality control measures ensures that products meet customer expectations.
Regular assessments of raw materials and production processes are vital for maintaining high
standards.

Supplier Collaboration

Building strong relationships with suppliers was emphasized as essential for ensuring timely
deliveries and favourable terms. Regular communication helps align procurement strategies with
supplier capabilities.

INVENTORY MANAGEMENT
Utilizing Just-in-Time (JIT) inventory management allows the startup to minimize holding costs while
ensuring that raw materials are available when needed for production. This approach enhances cash
flow and reduces waste.

Continuous Improvement

Fostering a culture of continuous improvement encourages employees to identify inefficiencies and

suggest enhancements in production processes, contributing to overall operational efficiency.

QUESTIONS

? How do you plan to scale the company

1. Customer-Centric Approach to Scaling
• Customer Satisfaction as a Growth Strategy: Rather than prioritizing rapid expansion or aggressive
sales tactics, she has chosen to put the customer at the heart of the business. This means paying
close attention to customer feedback, addressing concerns promptly, and constantly improving the
product based on the needs of her clients. By doing so, she builds loyalty and trust, which leads to
repeat business and long-term relationships.

• Building Trust in a Competitive Market: In a market where buyers often have many options,
especially in textile manufacturing, prioritizing customer satisfaction helps her stand out from
competitors. Customers are likely to return and recommend the product to others if they feel their
needs are being prioritized and that they are receiving a high-quality product.

2. Quality as a Key Driver for Growth

• Continuous Improvement of Product Quality: Her focus on quality indicates that she understands
the importance of delivering a superior product, especially since khaki fabric is often associated with
durability and functionality. By ensuring that her fabric is of the highest standard, she can cater to
industries that require robust materials, such as uniform manufacturers, fashion brands, and
workwear suppliers.

• Investing in Product Innovation: Part of improving product quality likely involves investing in better
manufacturing processes, technological upgrades, and possibly research and development (R&D). By
staying innovative and improving the texture, strength, or sustainability of the fabric, she positions
the company as a leader in quality within the khaki cloth market.

3. Customer-First Culture

• Personalized Service: By making the customer her top priority, she likely aims to offer personalized
service, understanding the unique needs of each client. This could include customization options for
the fabric or tailoring production schedules to meet the deadlines of her customers.

• Feedback Loop: Creating a strong feedback loop with her customers could also be part of her
strategy. This means actively seeking and incorporating feedback from clients about the product’s
performance, durability, or areas for improvement. By being responsive to this input, she can fine-
tune her manufacturing process and ensure her products meet the highest standards.

• Long-Term Relationships: Rather than focusing on short-term gains, this customer-first mindset
builds long-term relationships. As customers grow more satisfied with both the product and service,
the company will benefit from word-of-mouth referrals, brand loyalty, and strong client retention, all
of which are critical for scaling.

4. Sustainable Growth Through Quality and Satisfaction

• Scaling via Reputation: The emphasis on customer satisfaction and product quality suggests that
she is relying on her company’s reputation as a key driver for growth. A good reputation can open
doors to new clients and markets, especially when current customers recommend the product to
others in their industry.

• Organic Growth: Instead of scaling aggressively by expanding production capacity right away, her
focus on quality and customer satisfaction is a more organic approach to growth. This means that as
customer satisfaction rises, so will demand, allowing the company to expand its operations naturally
and sustainably without compromising on the standards it has built.
5. Future-Proofing the Business

• Adapting to Market Needs: With her customer-first approach, she positions the company to adapt
quickly to changing customer preferences and market demands. Whether customers begin to
prioritize sustainability, seek new fabric features, or demand faster service, her focus on their
satisfaction ensures the company will be able to pivot effectively.

• High Standards of Service: Maintaining high standards of customer service will also help her
company withstand fluctuations in the market. In an industry where price competition can be fierce,
superior customer experience and quality can act as key differentiators, allowing the company to
command premium pricing for its products.

6. Focus on Operational Efficiency for Scaling

• Efficiency in Operations: While her priority is on customer satisfaction and quality, scaling will also
require improving operational efficiency to meet growing demand without sacrificing the personal
touch or product excellence. She may look to invest in better machinery, streamlined processes, and
team training to ensure that as production scales, the quality and attention to customer needs
remain intact.

? What motivates you to start the company

She was basically interested in art and creativity. she also came from a background that studies don't
matter.

she was working in the company and she also interested in doing fashion course. the Institute
nearby the company was offering and it was too expensive in that days so she couldn't offer. she asks
for the sponsorship from company to do the fashion course and then she was working in the
company till the marriage.

After marriage she was staying in home. she also goes for all India ride and started exploring more
cultures and art of the states and there comes idea of starting a business at home.

So, she started the business in small level and she also put some stall, exhibition in early stage

? how would you access new market and promote your sales over there
They are in process of doing international exhibition Their product is combination of into western
and they are also receiving queries from West and Eastern countries about their service to
international

Promoting Their creations in social media to reach more customers.

They identify UK climate will match with climate and cotton will make huge success over there

They are planning to give franchise to outside those are having similar mindset of business so that
they can expand over countries
? Are there any government rules regulations for the company
Currently there is no such issues because the company is not that much having high demand. AND
the government is not supporting the entrepreneurs and imposing 5% tax on the khadi makers so
this will discourage the wavers and entrepreneurs in badly manner.

DEFINITION OF UNIT ECONOMICS

Unit economics refers to the revenue and cost associated with producing and selling a single unit of
a product. For INDIECOTTONROUTE Fashion, understanding the unit economics is crucial to
maintaining profitability and ensuring long-term sustainability

Cost Breakdown For each pair of DRESS, the production cost is between ₹300-400. This cost
includes: Fabric procurement: Sourcing high-quality KHADI material.

Labor costs: Workers who are paid on a piece-rate basis for cutting the fabric. The retail price for a of
TOP is approximately ₹1000-2000, giving the company a gross margin of ₹500-600 per unit. This
margin helps cover other expenses, such as administrative costs, marketing, and distribution.

Revenue Model INDIECOTTONROUTE revenue model is based on selling women's CHURIDARS and
TOP through retail channels. The company also explores bulk order opportunities, which allow for
better cost efficiency and higher profit margins.

BREAK-EVEN POINT CALCULATION

The break-even point is the sales volume at which total revenues equal total costs, resulting in
neither profit nor loss. For INDIECOTTONROUTE, the key to achieving break-even is keeping variable
costs low while maintaining a consistent order volume. To calculate the break-even point, we
consider: Fixed costs: These include rent, equipment, and administrative expenses. Variable costs:
These are the per-unit production costs, including labour, material.

Achieving Break-Even Given the cost structure, INDIEROUTECOTTON needs to sell approximately
500-600 units per month to break even. This figure can fluctuate based on factors such as market
demand, price changes, and vendor negotiations.
CONCLUSION
The journey of starting a business with limited capital underscores the importance of passion, trust-
building, and effective operational management. By focusing on direct sourcing, understanding
consumer needs, and optimizing resources, entrepreneurs can successfully navigate the complexities
of launching and sustaining a startup. As demonstrated in this case, innovative strategies can lead to
sustainable growth even without substantial initial investment.