Show simple item record

dc.contributor.authorCraeymeersch, Andreas
dc.contributor.authorJabbarian, Siavash
dc.date.accessioned2021-04-27T19:01:54Z
dc.date.available2021-04-27T19:01:54Z
dc.date.issued2019
dc.identifier.urihttp://hdl.handle.net/20.500.12127/6776
dc.description.abstractFlocart is a Belgian, family-owned, textile producers, which is specialized in the production of blackout and fire retardant curtains. The company is currently led by Denis Verstraete (CEO) who is supported by his brother Charles Verstraete (CFO) and his father Francis Verstraete (CEO Masureel). Flocart has, due to its years of experience, gained a strong position in the market of blackout curtains and is currently one of the only 2 companies which are able to produce the highest standard of fire retardancy. At the moment, Flocart has its manufacturing plants in Wevelgem (BE) and Gullegem (BE). Although the company gained a very good market position due to the years of experience, one can’t ignore the competition (mainly) from Chinese companies. Though, these Chinese companies can’t compete with the high-quality products (fire retardancy level – M1) which Flocart is offering, they are losing market power on those products which require lower quality standards (B1/BS). Feeling the threat of the Chinese companies, they want to maintain and even increase their market position by offering lower prices to the costumers for the B1/BS curtains. To be able to sell their products at a lower price, it speaks for itself that the company should be able to produce the blackout curtains at lower cost, in order to be able to keep a decent margin on its products. As they analyzed the prices of the Chinese competitors, they noticed that they wouldn’t be able to produce at such a low production price in their current manufacturing plants in Belgium. That’s why the management started to search for opportunities abroad. As the company has close contact with some India suppliers in the region of Daman (Gujarat), the idea of opening a production plant in India arose. Via this paper, upon request of the company, a feasibility study was done on the opportunities for Flocart to open a manufacturing unit in India. This is done taking into account different aspects which are essential to sketch an overall picture on the project. The paper is structured in a way that we devote each chapter to a different topic and analyze this topic thoroughly based on online papers and local contacts (FIT and Mundra SEZ). Firstly, we tried to get a grasp on the Indian culture and especially the cultural difference to Belgium, which needed to be kept in mind. As the country was not well known to us, we started by presenting a view on the geographical structure of India and looked at the divisions of the states. Next a view on the business culture is formed followed by an analysis based on the Hofstede model. We hereby noticed that the Indian culture is less individualistic, avoids less the uncertainty and is a more restrained country than Belgium. Besides this, we noticed that the agent culture in which an agent is appointed to deal with the bureaucratic hassle, is also a cultural part which is quite new to Belgians. Secondly, we did a regional analysis of the country in which we looked at the economic and business environment of the different states. We hereby tried to get a view on the industrial developments of each state. We focused on the facilities and on the reliability of the infrastructure. These facilities include the ports, airports and highways in the region, but we also took a look at the governmental investments in the different states as a measure for the infrastructural potential of each state. Based in the information found online, we concluded that we should focus on the 5 industrial states Gujarat, Maharashtra, Tamil Nadu, Karnataka and Uttar Pradesh. Subsequently, legal analysis was done on a national level but we also paid special attention to regional exceptions such as the differences in the Special Economic Zones. It’s represented that among different types of the company limited liability partnership is the best entity type for a foreign investor to establish a manufacturing plant. It’s represented that among different types of the company, limited liability partnership is the best entity type for a foreign investor to establish a manufacturing plant. As taxation is another important part in legal analysis, taxation in India is investigated. A new tax system which includes GST rather than old VAT model is introduced and its advantages are thoroughly explained. As the government of India aims to enhance industrial development in the country, Special Economic Zones have been developed in recent years with special incentives specially tax holidays and exemptions. These incentives together with good infrastructure makes SEZs an interesting option to establish a unit. After examining different SEZs in potential regions, Gujarat state and its SEZs seemed to be the most interesting for Flocart. Therefor more research was done on these SEZs and especially (based on the advice of FIT) on the Mundra SEZ. Afterwards, we needed to take a look at the Human resources aspect of the project. We investigated the labor law which is currently applied in India. We hereby handled the topics recruitment and selection, employee rights and remuneration, wages, pensions, health insurance, other benefits and termination of employment. We noticed that the labor laws aren’t as strict as they are in Belgium so we believe that this aspect shouldn’t form an issue for the company. Although, it will be important for Flocart to achieve the right Visa’s on time. This when the management wants to pay a visit to the manufacturing plant but also in case an employee wants to work in the Indian plant for a longer period. Next, the organizational structure of the Indian plant was analyzed. Based on the meeting we had with Denis and Charles Verstraete, we concluded that the Indian company should operate as a separate entity which should invoice Flocart. Besides this, we listed the number of employees needed for each job together with the skill level required. Lastly, we stated that the company should operate in three 8-hour shifts or two 12-hour shifts in order to produce as efficient as possible. Afterwards a financial feasibility analysis was incorporated in the paper. We hereby calculated how much it would cost to produce one meter of blackout curtain in Gujarat. The different cost drivers were analyzed for the Belgian production site, after which the power tariffs, labor cost, transportation costs and prices of compounds were adjusted to the rates applicable for Gujarat. Doing this we calculated that the company should be able to produce one meter of blackout curtain at a cost of 5,33 EUR. Besides, attention was paid to the allotment prices which were found for the Kandla and Surat SEZ. Based on these prices a calculation was done to get an estimate on the total construction cost of the plant. This calculation resulted in an estimated cost of 800,000 EUR. Finally, we provide some final recommendations and conclusions to Flocart, which could be useful to proceed with the project. We firstly recommended to organize a field trip to the different SEZ regions as the project is now only based on desk research. Secondly, we think it will be important to keep close track on the progress of the construction and the request of the permits as we are now not sure which source gives the correct information about the time span (Mundra SEZ or FIT). Thirdly, we believe that the recruitment of the (preferably local) plant manager should be one of the first steps when going true with the process. This because the manager will be more involved in the whole process and also because he could give some advice when needed. Subsequently, we think it will be important to fix the prices of the compounds as this has a big impact on the production price. Next we also believe that the company should keep close track on how the ecological regulations evolve in the future. This to avoid big expenses in the future.
dc.language.isoen
dc.titleFeasibility study to setup a business unit in India
dc.source.numberofpages87
vlerick.knowledgedomainEntrepreneurship
vlerick.supervisorDillen, Yannick
dc.identifier.vperid134471
vlerick.companynameFlocart
vlerick.companysupervisorVerstraete, Denis
vlerick.programmeMFM
vlerick.typebusresprojectIn-Company Project


This item appears in the following Collection(s)

Show simple item record