ASSIGNMENT(FEM)

(Batch19-21)
Unique International
Total Marks:20

A. India based, Unique Ltd is the manufacturer and distributor of health care products,
including children’s diapers.
a. Unique has been approached by Peter Lewis, the president of Material Upside,
a distributor of health care products throughout US.

b. Peter is interested in distributing Unique’s major diaper product, “MStar”, but

only if an acceptable arrangement regarding pricing and payment terms can be
reached.

c. Considerable competition exists in the USA diaper market, so pricing and

therefore cost control will be critical.

B. Unique’s International Business Manager is Mr Sundarajan

a. Mr Sundarajan followed up the preliminary discussions by putting together an
estimate of export costs and pricing for discussion purposes with Peter.

b. Unique needs to know all of the probable costs and pricing assumptions for
the entire supply and value chain as it reaches the consumer.

c. Mr Sundarajan believes it critical that any arrangement that Unique enters into
results in a price to consumers in the US market place that is both fair to all
parties involved and competitive, given the market niche Unique hopes to
penetrate.

C. Unique also have requests from Peter

a. Financial statements, banking references, foreign commercial references,

descriptions of regional sales forces, and sales forecasts for the “MStar” diaper
line.

b. These last requests by Unique are very important for Unique to be able to
assess Material Upside’s ability to be a dependable, creditworthy, and capable
long-term partner and representative of the firm in the US marketplace.

c. The discussions that follow focus on finding acceptable common ground

between the two parties and working to increase the competitiveness of the
“MStar” diaper in the US marketplace.

D. Proposed next quarterly sale by Unique to Material Upside

a. In total 30 containers and each container having 1000 cases of diapers,

shipment on CIF basis, payable in U.S. dollars

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b. Payment terms are that a confirmed Indian L/C with bid costs plus actual
freight and insurance besides bid cost escalation provision of 20%. The
payment will be based on usance draft of 60 days on presentation to bank in
India.

c. Documents presentation schedule

i. 10 containers each month having 1000 cases of diapers per container

ii. FOB cost of each case US$30 and
iii. Other information, as under
Bill date Invoice Amt Increase Plus Plus
presentation (US$) in bid cost Freight Insurance
1/8/20 CIF FOB As per 20% 1%
Cost Estimate (actual) (actual)
1/9/20 CIF FOB 10% over 22% 1.2%
Cost Estimate (actual) (actual)
1/10/20 CIF FOB 15% Over 24% 1.5%
Cost Estimate (actual) (actual)
CIF=FOB+ Freight+ Insurance

d. Bank’s interest schedule furnished below (Interest is applicable on the days

Bank will be out of fund)

Month ROI
For 1 5%
For 2 6%
For 3 7%
For 4 8%
For 5 9%
For 6 10%
e. Bank’s Exchange Commission (Exchange rate to apply for the month taken
finally to quote the rate)

Month Percentage
1 0.08%
2 0.09%
3 0.10%
4 0.11%
5 0.12%
6 0.13%
f. Interbank US$ rate(Referenced for forward booking as per schedule by
Unique)

SPOT USD1 = 72.6000/6075

1 MONTH 3500/3600

2 MONTHS 5500/5600

3 MONTHS 8500/8600

4 MONTHS 1.1500/1.1600

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 5 MONTHS 1.3500/1.3600

6 MONTHS 1.5500/1.6600

E. Unique Ships
a. Simultaneous with the shipment, in which Unique has lost physical control
over the goods, Unique will present the bill of lading acquired at the time of
shipment with the other needed documents to its bank immediately.
b. Transit period to consider 25 days:

c. Because the export is under a confirmed L/C, assuming all documents are in
order, Unique ’s bank will give Unique two choices;

i. Wait the full time period of the draft i.e.60 days after presentation and
receive the entire payment, as scheduled. Assume forward bill buying
spot rate will coincide with the forward bill buying rate as depicted
above.
ii. To discount all the three bills with applicable interest as instructed
under D(d)
iii. Both the cases(i&ii) Bank will charge Rs1000 as bill handling charges
iv. Assume appropriate forward cover both for i&ii will be made by
Unique with Bank for arriving profitability.

Required:

1. Total amount realised by Unique for both the above options i &
ii.
2. Net profit for both the above options if the production cost is
eqv US$25 per case.

INSTRUCTIONS

1. Do not share your work sheet with any student

2. If found any student copied from other, both will get 0 .
3. Answer to submit to the following E mail ID by 4th July without fail

“ bhattacheryays@yahoo.co.in”