Essay about Vanraj

819 Words Nov 4th, 2013 4 Pages
Vanraj Mini Tractors

1. Calculate the breakeven sales for Vanraj Min-Tractors?
Break even is the volume of goods sold so that
Total Revenue= Fixed cost + Variable Cost (1)
Fixed Cost= Paid up Capital+ Deal Value
Fixed cost= 1.25+10
Variable cost and the total revenue depends on the number of units sold.
Let the number of units sold be x.
Selling price of each tractor= 0.19
Assuming break even in first year itself
0.19*x= (1.25+10) + (0.155*x) + (0.12/300)*x + (0.06/300)*x + (0.504+0.396+0.144+0.143+0.480)
Overhead expenses, Sales expenses, Depreciation, Interest paid, Salary and wages are considered as fixed cost for the first year as these does not vary with the number of units. We consider depreciation also as fixed
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Also, additional revenue can be gained from the tractor if it is let out for farm and non-farm activities to increase capacity utilization and earn additional revenue. Also its Power take off features help irrigation, floor mill etc.
Horticulture: The horticulture segment is a highly growing sector. Total area under the horticulture is about 2615.6 hectares. The use of Vanraj is much more profitable than buying the high end segment. The high end segment lack manoeuvrability. Vanraj because of its smaller wheelbase and turning radius offered better manoeuvrability and control in farming operations.
Also looking into the cost aspect Vanraj is better.
Purchasing price = 1,90,000/
Fuel cost expecting a life of 9 years = 950 X 9 X 1.5 X 30 = 3,84,750/
Service charges= 23,750/
Total Cost = 5, 98, 500/ Purchasing price of high end segment tractor= 3,20,000
Fuel cost expecting a life span of 9 years= 950 X 4 X 9 X 30 = 10,26,000
Service charges = 40000/
Total Cost= 13, 86, 000/
So the price factor is better for Vanraj. But competition is high in this sector with Mahindra and Mahindra having 26.5% market share and the fove big market players having 85% of the market share. There are 12 national competitors and 4 major multinationals.
Industries: It could be used for material handling applications in industries, warehouses,

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