[ A HANDBOOK ON FMCG SALES ] Table.4.2.7.A ROI Working Assuming Volume of 12000 CBBs Annually servicing 4000 outlets. Average per month volume =12000/12= 1000 CBBs PM Total Revenue Gross Margin(7%) Costs Rent Electricity Unloading Charges One Sales Man One Warehouse Guy One Helper Transport Cost Total Net profit= Gross Margin - Total Cost Net Profit = 12,000 Average Net Profit Per Annum Investment Total Monthly Sales = 1000 CBBs Investment in Stocks(15 days)= 500 CBBs Investment in Credit (21 days)= 700 CBBS Investment in Claims(5% of Total Sales) Total ROI PM= Net Profit/Total Investment *100 = ROI PA= Net Profit/Total Investment *100 = 1,44,000 Monthly 2,000 500 500 0 0 2,000 7,500 12,500 3,50,000 * 1000 CBBs*350 per CBB price 24,500 Annual Cost 24,000 (***Rent - At 5/sqft for 400sqft) 6,000 6,000 (***@ 50 paisa per carton) 0 0 24,000 Shared resource 90,000 (1 Driver + Auto Running Charges) Shared 1,50,000 (Monthly) 350000 1,75,000 2,45,000 17,500 4,37,500 (per month) 2.74% ( Monthly) 32.91% (Annually) Normally ROI of 20% or above is considered satisfactory. However, it is a function of Net Earnings. For example, If the ROI is 50%, but Net Earnings is Rs. 10,000 then the distributor may not be interested, on the other hand if the ROI is 24% and earning is Rs. 2 Lakhs Per Month then the lower ROI is more acceptable. Hence Net Earnings and ROI have to be carefully balanced. 4.3. At the Super Stockist 4.3.1. Order Generation Process As discussed in the Distributor Order Generation Process, the order of the Super Stockist will depend on the SKU wise closing stock and the Sales to Distributors for the previous period. It will also depend on seasonality, special inputs and competition scenario. 31
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