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Case Study of ROI Calculation

M/s Ganesh Enterprises is a well reputed Distribution firm among FMCG Co.’s in Kolhapur City,
being in this business since last 12 years he has also good relations with retails. The owner, Mr.
Satej Patil is Ex. Dabur employee & started this business from home which has 2000Sq.fit area
with Emami Company’s agency Investing of 50:50 bases (Own & Borrowed) for small area of
Kolhapur which has Rs.5 lacs T/O, due to regular market service & good business practices in
short time he earned a very good reputation in the market. Looking to his performance
Company offered him entire Kolhapur city’s business worth Rs.20Lacs T/O pm after one year’s
time. As the business grows he requested his bank to provide addition CC of Rs.10 lacs which
was approved. As business grows & other 2 co.’s dealership added of T/O worth Rs.12 lacs
(after 4 years) Mr.Satej taken a place of 3000 Sq. fit in which he use 800 Sq. fit for office
purpose & rest for go down purpose to full fill the requirement, at the same time he also
increased his CC limit which now stand the ration of 45:55.(Own & Borrowed) Mr. Satej always
maintain 2 weeks of Paid up stocks of Emami & 1 week of Heinz while in Ram Bandu he keep
as per seasonality ( 70% business comes in Diwali season i.e. Oct-Nov.).For Ram Bandhu he
looks after only WS business for which he hires rented vehicle.
In the month of April Mr. Satej start arguing with Heinz’s Co. person for sending extra stocks
in March also market outstanding increase up to 4 weeks which disturbing his entire cycle
because other Co’ having less than week outstanding in the market, this resulted in shortages
in Emami business. Because he reduces the stock due to space/fund issue there by losing
monthly incentive of 1% for Emami which he earns without fails every month. There is
another reason also as Mr.Satej make a loss in Share market & he wants to leave Heinz’s
distribution ship.

Statistical Data of M/s. Ganesh Enterprises – Kolhapur.

Claims
Company T/O pm Margin DBSR's Rs.pm
300000
Emami 0 5.5 5 36500
Heinz 800000 5.5 1 17250
Ram 120000
Bandhu 0 7 1 8000
500000
Total T/O 0   7 61750
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Expenses details
No
A Salaries . Amount Rs.
  DBSR's 7 87500
  Driver 2 16000
  Helper 4 24000
  Go down Manager 1 10000
  Computer Operator 1 9000
  Accountant 1 7000
  Office Boy 1 4000
  Loaders 3 12000
  Sub Total 20 172000
B Rent    
  Office 1 12000
  Sub Total 1 12000
C Unit    
  Delivery Unit (Vehicle) 1 7000
  Diesel 3 9100
  Maintenance 2 1500
  Legal   1000
  Sub Total   18600
D Infrastructure    
  Computer Maintenance 1 1000
  Stationary 1 2000
  Phone bill 1 600
  Internet Bill(O) 1 1200
  Internet Bill(G) 1 1000
  Bank Expense 1 2000
  Electricity & Water ( O ) 1 1200
  Electricity & Water ( G ) 1 1700
  Professional Fees ( CA, Legal) 1 2000
  M 1 2000
  Sub Total   14700
       
A+B+C+
D Grand Total   217300
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IMP Points: -
-Both Delivery Units are more than 6 years’ old which gives 10KM avg.
- 1000Sq.fit for every 10 lacs Business Calculations
- Heinz operated on 7 days’ credit term
- Ram Bandhu & Emami business is on Advance payment
- Last 6 month’s Value stock (Rs.in Lacs) status
in Lacs Emami Ram Bandhu Heinz
Sale Stoc Clai Sale Stoc Clai Sale Stoc Clai
Month s k m s k m s k m
33.1 18.0 51.8 65.8 7.6
Oct 5 0 0.55 0 8 1.90 0 3.40 0.20
31.5 20.0 51.1 11.4 7.9
Nov 5 0 0.28 7 0 0.88 0 3.60 0.31
16.0 8.3
Dec 30.2 0 0.30 8.44 7.88 0.40 3 4.00 0.26
19.0 8.1
Jan 28.4 0 0.27 6.42 6.40 0.10 0 3.80 0.33
18.0 8.9
Feb 29.3 0 0.23 3.80 5.00 0.05 0 3.90 0.22
13.0 7.4
Mar 27.8 0 0.17 4.80 3.80 0.09 0 8.80 0.17
                   
30.0 17.3 21.0 16.7 8.0
Avg. 7 3 0.30 7 3 0.57 4 4.58 0.25

You need to provide following things

1) Calculate the ROI of the firm
a) Overall (Full Year consideration), b) Last month
2) Suggest the solution to Mr. Satej on his current situation.
3) What are the things he needs to correct?

Make sure you prepared your own format, not copy any others format, if
supposed it is found in plagiarism report then will be given “zero marks.
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