Scribd
Upload
121 views12 pages

Varun Nagar Presentation

1) The cooperative society has 100 tons of stored paddy worth Rs. 5 lakh currently that could be worth Rs. 6.2-7.5 lakh in 6 months, and an offer to buy 2000 bags of fertilizer for Rs. 5 lakh that would be worth Rs. 6 lakh in 6 months. 2) They must decide whether to sell the paddy now or wait 6 months and whether to buy the fertilizer now or not. 3) The recommended action is to wait to sell the paddy and buy the fertilizer now, taking a loan to pay farmers, which would result in a reduced net profit of Rs. 80,000.

Uploaded by

ug8
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
121 views12 pages

Varun Nagar Presentation

1) The cooperative society has 100 tons of stored paddy worth Rs. 5 lakh currently that could be worth Rs. 6.2-7.5 lakh in 6 months, and an offer to buy 2000 bags of fertilizer for Rs. 5 lakh that would be worth Rs. 6 lakh in 6 months. 2) They must decide whether to sell the paddy now or wait 6 months and whether to buy the fertilizer now or not. 3) The recommended action is to wait to sell the paddy and buy the fertilizer now, taking a loan to pay farmers, which would result in a reduced net profit of Rs. 80,000.

Uploaded by

ug8
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 12

VARUN NAGAR AGRICULTURAL

COOPERATIVE SOCIETY
Asmit Das (1511233)
Chitranshu Verma (1511241)
Himansu Sahu (1511249)

Current Scenario
Drawn INR 5 lakh Overdraft in September 1990, interest rate 10% p.a.
100 tons Paddy in store, INR 5 Lakh payment due to farmers
Current Market Price INR 5000 per ton, after 6 months INR 6200 to INR 7500 per ton
Cash Balance of INR 5 lakhs
Offer from NFC to buy 2000 bags of fertilizer @ INR 250 per bag
After 6 months, same fertilizer price INR 300 per bag

Problem Statement
Whether to sell the Paddy or keep it for 6 months more?
Decide the best possible alternate to maximise profit for farmers

Whether to buy the Fertilizer on offer or decline it?


Decide best possible alternate for farmers

Additional Data
Loss of Fertilizer Stock if stored:

5%

Storage and Other Expenses (6 months):

Rs. 48,000

Loan (Interest) against deposit of Rs. 5 Lakh:

0-50 Lakh (Rs 0-5 Lakh PA)

The Choices

Conservative
Take things as they Come

Profit Seeking
No-Pain-No-Gain

BUT.

There is a possible moral hazard involved.

Proft Sensitivity

What should Mr. Agarwal do?

Member Sensitivity

Recommended Action
Profit Seeking WITH Moral Responsibility
Hold Paddy crop till market is favorable
Buy Fertilizer at reduced rates
Take Loan from Bank to PAY MEMBERS
Reduced Net Profit: Rs. 80,000

Thank You

Profit Seeking
Revenue/ Recovery
Expenses
Paddy Sale
Paddy payment to members
6,20,000
5,00,000
Fertilizer Cost from Members
Fertilizer Purchase, April
5,78,000
5,00,000

Net Profit

Fertilizer Purchase, October


30,000
Storage Costs
48,000
Interest Payment to Bank
25,000
Total (Rs.)
11,98,000

10,93,000

1,05,000

You might also like