AAYAM DURABLES

Submitted By:
Group 5

DETAILS OF CASE
Research and Development:1) R&D was merely a testing team and
not working on the new model. Due to
which there was no new model launched
in 2 years.
2) Investment in marketing was negligible
and brand recall was very low.
3) Customer Service needs improvement.
4) Inefficient region sales team.

DETAILS OF CASE
(Contd.)
Software
inefficient
cost. Not
trends and

System:They
were
and had high carrying
able to track customer
there supply chain.

Infrastructure:- From the case it can

be inferred that they should have
better warehouse facility and better
R&D labs.

APPENDIX 8 & APPENDIX

11
Revenue in Growth in
Cr.
%

Profit in Cr. Profit %

2012

800

-8

-1

2013

882

10

-44

-5

2014

842

-4.7

-46

-5.5

2012

2013

2014

Manpower cost
%

16.3

17.3

21.5

Kit cost %

58.7

59.7

56

S &M cost %

19

20

20

Other Expenses 7
%

Appendix 8 Revenue in Growth in

Cr.
%

Profit in Cr. Profit %

2012

800

-8

-1

2013

882

10

-44

-5

2014

842

-4.7

-46

-5.5

2015

860

2.12

-59

-7 of 2014
revenue

Working notes:
Loss of 2015 is calculated on the revenue of 2014 as indicated in the
question.
So loss= 842*7%= Rs. 59
2. Total cost= Revenue + loss incurred
+ 59 = 9192013
Appendix 11 = 860
2012
2014
2015
Manpower
cost %

16.3

Kit cost %

58.7

S &M cost %
Other

19
101
7

130.
4

17.3

469.
6

59.7

152
808
56

20
105
8

152.58 21.5
6

181.0
3

526.55 56
4

471.5
2

176.4
926
70.56

22

189.2

60.52 520.5
0

15.03 129.3
0
20
168.4
105. 888.3 106. 919
8
67.36
9.30
80
5
1
86

To increase sales by 10% raw material unit consumption have to

increased by 7.8% .So there is a absolute change of
(7.82/10)=0.782
For a decrease of 4.7% of sales there was a decline of 14.72% of
raw material . Hence absolute observed is (14.72/4.7)= 3.13
Therefore we take the average of 0.782 and 3.13 i.e., 1.955 and
apply it to the sales growth of 2015 to arrive at the increase in
material unit consumption. Hence (2.12*1.955)=4.14

MANPOWER REDUCTION

S&M
Regional sales

Band

2012

2013

2014

15

15

15

141

141

146(-15)

Total

160

160

165

MANPOWER REDUCTION

HR
Corp hr

Gen Affairs

Regional

Ban
d

2012

3(-2)

10

10

10

5(-2)

Total

15

15

15

10

201 201
3
4
2012

2013

201
201 201
4
2012
3
4

MANPOWER REDUCTION
CFO
Corp

Region

Band

2012

2013

2014

2012

2013

2014

10

10

15(-3)

15

15

15

24

26

29(-2)

Total

42

46

56

19

19

19

MANPOWER REDUCTION

CEO TEAM
Band

2012

2013

2014

2(-1)

DEPARTMENT

2014

2015

Marketing (corp)

Sales (corp)

S&M

CEO

Regional Sales

165

(South-10
150 West- 5)

FPD Team

Refrigerator team

Washing machine team

201

185

Gen affairs

15

15

Region

10

S&M

TOTAL

HR corp

HR

TOTAL

30

26

CFO

Corp

56

50

Region

19

19

75

70

150

150

CFO
Customer service corp
Region

TOTAL

Band

2015

Manpower Cost
Reduction

1 VP R&D

1 crore

2HR corp

50 lakh*2= 1 crore

2 HR region
3 CFO corp
15 region
sales
2 CFO corp

20 lakh*2= 40 lakh
30 lakh*3=90 lakh

15 lakh*15= 2.25 crore

20 lakh*2= 40 lakh

TOTAL = 3.95
crore

MANPOWER COST INCREASE

Manpower cost is increased from 21.5% to 22% from
2014 to 2015.
That means that manpower cost has increased from
181 to 189 crore, an increase of 8 crore.
Also, we have the cost incurred from the salaries of
employees removed i.e. 3.95 crore.
In total, Manpower Cost to be distributed to efficient
positions in the company is 8 + 3.95 = 11.95 crore
The 8 crores we are accumulating from manpower
cost shall be kept as reserve to be invested in
product innovation and marketing and Software
systems and warehousing.
The rest of the manpower cost amount shall be
distributed as-

DISTRIBUTION OF MANPOWER COST

REDUCTION
Band

Total Amount/No. of
Employees

Pending Increments

1 crore/ 5

20 lakhs

1 crore/ 81

1.23 lakhs

1.3 crore/153

85000

2.65 crore/ 310

85000

Bottom line- is a company's income after allexpenseshave been

deducted fromrevenues. Bottom line describes how efficient a
company is with its spending and operating costs and how
effectively it has been controlling total costs.
Top line- refers to a company'sgross salesor revenues. Top line
only indicates how effective a company is at generating sales and
does not take into consideration operating efficiencies which could
Appen
FPDimpact on the bottom
Refrigerator
Washing
have a dramatic
line.
dix 9
machine

Revenue Profit
Profit in
in cr
in cr.
%

Revenue Profit
Profit in cr
in cr.
%

Revenue
Profit
In cr
in %

2012

300
-2.7

405
0

95
0

2013

365
-7

-25

417
-3.6

-15

100
-4

-4

2014

350
-9

-30

401
-3

91
-4

-4

Total

1015
-6.2%

286
-2.98%

-8

-8

-63

1223
-2.21%

-12
-27

Profit
in cr

Since inflation is very high at 7% so it will be difficult for

people to shell out money for flat panel display (FPD)TV
because it seen as a luxury product. But, from the
appendix 9 we can say that refrigerator and washing
machine are seen as more important products
for
customers daily needs. Loss % is the highest in FPD
section both in absolute numbers and % terms (6.2% and
15 crore).
Now, from appendix 7 we can see that there has been an
increase of 100% in band 2 employees of FPD products in
2014. This increase has not shown any substantial increase
in its revenue rather a decrease is seen from 365 crore to
350 crore. So, 2 employees in this band can be laid off. This
will result in saving of 70 lakh rupees (35 lakh*2). This 70
Refrigerator
Machine
lakh can FPD
be used to increase
sales of Washing
refrigerator
and
washing
Revenmachine.
Pro Pro Reven Pro Pro Reven Pro Profi
ue in
fit
fit
ue in
fit
fit % ue in
fit
t%
In 2015,
Cr

2015 350

in
Cr

Cr

in
Cr

30

9%

410

22

5.36
%

Cr

in
Cr

100

8%

THANK YOU