SectionB Group2 Apparel Analysis Final

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    Apparel Industry

    by

    Aman Anshu(13PGP061)

    Minu Pandey(13PGP091)

    Puneet Manot(13PGP102)

    Bhavana

    Ziradkar(13PGP118)

    Indian Institute of Management Raipur Page 1

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    Introduction

    The apparel and textile industry occupies a unique and important

    place in India. One of the earliest industries to come into existence in the

    country, the sector accounts for 14% of the total Industrial production,

    conduces to about 30% of the total exports and is the second largestemployment creator after agriculture.

    The Indian textiles industry that already has an overwhelming

    presence in the economic life of the country has been given a further

    boost with the scrapping of quotas in global trade of textiles and clothing.

    In the post quota period, the size of industry has expanded from US$ 37

    billion in 2004-05 to US$ 49 billion in 2006-07. During this period, while

    the domestic market has grown from US$ 23 billion to US$ 30 billion,

    exports have increased from around US$ 14 billion to US$ 19 billion.As a matter of fact, the apparel and textile is the largest foreign

    exchange earning sector in the country. Being the 2nd highest employer of

    raw labour it gives a direct employment provider to over 35 million people

    and with continuing growth momentum, the role of this sector in Indian

    economy is bound to increase.

    Objective

    1. Collection of sample data of readymade garments producing

    companies.

    2. Descriptive analysis of the data

    3. Preparation of contingency tables for producers as per their Net

    Profit Margin and consumers according to segment classification.

    4. Using stratified random sampling technique to obtain a sample from

    which inferences can be made.

    Brief Summary of Data used

    The sources of our data are:

    www.Crisilresearch.com

    www.wazir.in (Annexure)

    We obtained the Net profit margin of 11 companies (for 5 years each),

    dealing with the manufacture of readymade garments from CrisilResearch. The companies are:

    Indian Institute of Management Raipur Page 2

    http://www.crisilresearch.com/http://www.wazir.in/http://www.crisilresearch.com/http://www.wazir.in/
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    S.N. Name of Company

    1 Arvind Ltd.

    2 Bhandari Hosiery Exports Ltd.

    3 Celebrity Fashions Ltd.

    4 Gokaldas Exports Ltd.

    5 Kewal Kiran Clothing Ltd.

    6 Page Industries Ltd.

    7 Provogue(India) Ltd.

    8 Raymond Ltd.

    9 Samtex Fashions Ltd.

    10 Virat Industries Ltd.

    11 Zodiac Clothing Ltd.

    We obtained the contingency table for the consumption of garments

    according to the following three categories Mens Wear, Womens Wear

    and Kids Wear - based on two types of products Branded and Un-branded

    from a report published by Wazir Advisors a statistics for the year 2011.

    Descriptive Summary Population

    The population size N = 5*11=55

    Population data.xlsx

    Attachment 2: Population data

    Descriptives

    Statistic Std. ErrorMean 3.9271 1.04266

    95% Confidence Interval forMean

    LowerBound

    1.8367

    Indian Institute of Management Raipur Page 3

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    UpperBound

    6.0175

    Std. Deviation 7.73256

    Skewness -.467 .322

    (Skewness)/(Std. Error of Skewness) = -1.45109 (which is greater than -2 and

    less than 2).

    Hence we can apply Empirical Rule to obtain ranges of data and density of

    data.

    Range of Data Empirical Rule

    Density

    Density (calculated from

    Population)Min Maximum

    -3.81 11.66 90% 67%

    -11.54 19.40 95% 95%-19.27 27.12 99% 98%

    Inference: 95% chances that a selected period has a net profit margin in

    between -11.84 and 19.40

    The histogram plot for the population data:

    Using Tests of Normality Kolmogorov-Smirnov Test

    Net Profit Margin

    Kolmogorov-Smirnova Shapiro-Wilk

    Statistic df Sig. Statistic df Sig..101 55 .200* .980 55 .472Ho: The Population is Normal (p> )

    H1: The Population is not normal (p< )

    Here, significant value p= 0.2 Level of significance = 0.05 (95%

    confidence level) As p > : Null Hypothesis (Ho) that population

    is normally distributed is accepted.

    Probability Contingency Table for Net Profit

    MarginThe mean of the population of yearly Net Profit Margins is 3.9271%

    Using this we create a contingency table for mutually exclusive and collectively

    exhaustive criteria

    a) NPM>5 b) NPM

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    Count Contingency Table

    NPM>Mean

    NPMMean

    NPMMean

    MarginalProbabilit JointProbabil Conditional RevisedProbability

    Indian Institute of Management Raipur Page 5

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    y ityProbability

    Arvind Ltd. 0.09091 0.05455 0.00496 0.10714Bhandari HosieryExports Ltd. 0.09091 0.00000 0.00000 0.00000

    Celebrity Fashions Ltd. 0.09091 0.00000 0.00000 0.00000Gokaldas Exports Ltd. 0.09091 0.01818 0.00165 0.03571Kewal Kiran ClothingLtd. 0.09091 0.09091 0.00826 0.17857Page Industries Ltd. 0.09091 0.09091 0.00826 0.17857Provogue(India) Ltd. 0.09091 0.09091 0.00826 0.17857Raymond Ltd. 0.09091 0.00000 0.00000 0.00000Samtex Fashions Ltd. 0.09091 0.00000 0.00000 0.00000Virat Industries Ltd. 0.09091 0.09091 0.00826 0.17857Zodiac Clothing Ltd. 0.09091 0.07273 0.00661 0.14286

    Total 0.04628 1.00000

    NPM

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    Virat Industries Ltd. 0.09091 0.00000 0.00000 0.00000Zodiac Clothing Ltd. 0.09091 0.01818 0.00165 0.03704

    Total 0.04463 1.00000

    The Contingency calculation can be found in the attached excel sheet:

    contingency tablewith pie.xlsx

    Sampling Technique

    Population consisted of all the companies of the textile and apparel

    industry.

    The parameter taken into consideration was the net profit of all these

    companies.

    We could identify data of each company as strata. Random samples

    were taken from each stratum.

    Stratified Random Sampling has been used for normalization of the

    data with net profit of the samples as statistics.

    Stratified randomsample.xlsx

    Attachment 1: Stratified random sample

    Descriptive Summary Sample

    The sample size selected is n =3*11=33

    Indian Institute of Management Raipur Page 7

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    DescriptiveSample NPM

    Statistic Std. Error

    Mean 4.3021 1.39947

    95% Confidence Interval for

    Mean

    Lower Bound 1.4515

    Upper Bound 7.1527

    Std. Deviation 8.03932

    Skewness -.648 .409

    Tests of Normality

    Kolmogorov-Smirnova Shapiro-Wilk

    Statistic df Sig. Statistic df Sig.

    SampleNPM .106 33 .200* .970 33 .489

    Here, significant value p= 0.2

    Level of significance Alpha (a) = 0.05 (95% confidence level)As p > Alpha (a) - Null Hypothesis (Ho) that population is normally

    distributed is accepted.

    Hence t-sample test and Z tests can be carried out for the sample. From the data it can be assumed that:

    o Case 1 H0: the net profit margin (population mean

    ()) 5

    Indian Institute of Management Raipur Page 8

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    H1: the net profit margin (population mean

    ()) < 5

    o Case 2 H0: the net profit margin (population mean ())

    3.92

    H1: the net profit margin (population mean ()) ,

    Hence we may accept Ho

    Asthe probability does not lie within the rejection ratio, Ho is accepted.

    Hence, with 95% confidence, we can say the net profit margin will be greater

    than 5%

    Case 2:

    Tabulated value of z is 1.6449

    Zstat= (x - )/ (^/ n)x=4.3021= 3.9271

    ^ =s= 8.03932

    n= 33

    Zstat= (4.3021 3.9271)/(8.03932/ 33)= (0.375)/ (8.03932/5.744)

    = (0.375)/ (1.399)=.26804Also from the one sample t-test

    One-Sample Test

    Test Value = 3.9271

    t df Sig. (2-tailed) Mean Difference 95% Confidence Interval of the

    Difference

    Lower Upper

    SampleNPM .268 32 .790 .37502 -2.4756 3.2256

    Indian Institute of Management Raipur Page 10

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    We observe that p value is greater than the value of,

    Therefore, |cal z| ,

    Hence we may accept Ho

    Asthe probability does not lie within the rejection ratio, Ho is accepted.

    Hence, with 95% confidence, we can say the net profit margin will be greater

    than 3.92%.

    Indian Institute of Management Raipur Page 11

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    Regression Analysis

    We have done the regression for 10 brands. However the Regression analysis for

    Provogue Industry has only been shown below. Same procedure has been

    followed for the rest of the 9 brands.

    REGRESSION CALCULATION FOR PROVOGUE INDUSTRIES

    MODEL:

    Assumptions:

    a.) Linearity: We assume that the factors are linear.

    b.) Independence of errors: Durbin Value=2.47 which is slightly more than 2.

    Therefore the errors are slightly negatively co-related. However, It is

    accepted.c.) Normality of errors: The PP graph shows that the errors are normal.

    d.) Equal variance: Homoscedasticity found. Therefore accepted.

    Since the equation follows all the assumptions, therefore, we go forward with the

    calculations.

    The calculations are done at 95% confidence level, Therefore =0.05

    Calculations:

    We assume the equation as: PRO NPM = 0 + (1 Pro_Emp) + (2Pro_Sell)+ errors

    From the model Summary, we see that adjusted R2=.942, which indicated

    that these two factors add to 94% of the value of the Pro NPM.

    From the Annova table, we test the validity of the model.

    H0: All Bi=0, ie: model is invalid

    H1: At least 1 Bi is not equal to 0, Model is valid.

    Here from the Annova table, we see the significance (p) = 0.058> =0.05

    Therefore, H0 accepted and so the model is Invalid.

    Significance of Independent Variables:

    o H0: B1=0, Pro_Emp is not a significant value

    H1: B1not equal to 0, Pro_Emp is a significant value

    (p) = 0.207> , Therefore H0 accepted, hence ProEmp is not a

    significant factor.

    Indian Institute of Management Raipur Page 12

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    o H0: B2=0, Pro_Sell is not a significant value

    H1: B1 not equal to 0, Pro_Sell is a significant value

    (p) = 0.465> , Therefore H0 accepted, hence ProSell is not a

    significant factor

    However, we proceed with the further calculations to show the mandated

    process.

    Collinearity Statistics:

    We see the VIF value >10 or 20

    Therefore, It is a matter of concern and hence collinear.

    Getting the Value of the Coefficients from the Co-efficients table, we get

    the final equation as: PRO NPM = 18.250 + (-0.592* Pro_Emp) + (0.238*Pro_Sell)

    This equation tells that:

    a) If there is a 1 unit change in Pro Emp and all the other factors

    remaining constant, average estimated Pro NPM reduces by -0.592.

    b) If there is a change of 1 unit in Pro Sell and all the other factors

    remaining constant, average estimated Pro NPM increases by 0.238.

    c) Also, If Pro Sell and Pro Emp are 0, still, Pro NPM is 18.25, and

    therefore there are other factors also that add to the profit/loss.

    The Regression data for rest of the brands is consolidated in the excel sheet

    attached below.

    Regression forApparel Industry.xlsx

    Indian Institute of Management Raipur Page 13

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    Annexure:

    Probability Contingency Table for Garment

    Categories

    The data available segregates the consumption of Branded and

    Unbranded garments in different exhaustive categories of Mens Wear,Womens Wear and Kids Wear. The probabilities evaluated from the data

    are of the form (marginal):

    o Money Spent on Branded garments

    o Money spent on Un-branded garments

    o Money spent on Mens garments

    o

    Money spent on Womens garments

    o Money spent on Kids garments

    The Contingency table so formed is:

    Event Set (in Billion US

    Dollars) Contingency Table

    Catego

    ry

    Brand

    ed

    Un-

    Branded

    Tot

    al

    Catego

    ry

    Brand

    ed

    Un-

    Branded

    Tot

    alMen 5 11 16 Men 0.125 0.275 0.4

    Women 4 10 14 Women 0.1 0.250.35

    Kidswear 1 9 10

    Kidswear 0.025 0.225

    0.25

    Total 10 30 40 Total 0.25 0.75 1

    The conditional probabilities for different pre-conditions are presented below:

    Branded Category MarginalProbabilit Joint conditional RevisedProbability

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    yMen 0.4 0.125 0.05 0.547945205

    Women 0.35 0.1 0.035 0.383561644Kidswe

    ar 0.25 0.025 0.00625 0.068493151

    Total 0.09125

    UnBranded

    Category

    MarginalProbability Joint conditional

    RevisedProbability

    Men 0.4 0.275 0.11 0.433497537Women 0.35 0.25 0.0875 0.344827586Kidswe

    ar 0.25 0.225 0.05625 0.221674877Total 0.25375

    MensWear

    Marginal Joint

    Conditional Revised Probability

    Branded 0.25 0.125 0.03125 0.131578947Un-

    Branded 0.75 0.275 0.20625 0.8684210530.2375

    Womens Wear

    Marginal Joint Conditional Revised Probability

    Branded 0.25 0.1 0.025 0.117647059Un-

    Branded 0.75 0.25 0.1875 0.882352941

    0.2125

    KidsWear

    Marginal Joint Conditional Revised Probability

    Branded 0.25 0.025 0.00625 0.035714286Un-

    Branded 0.75 0.225 0.16875 0.9642857140.175

    Indian Institute of Management Raipur Page 15