In the Channel management with respect to handling and managing distributors, we have taken

down the data of Shiwduttray Bholanath Distributors, which is the Distributor for Coca-Cola in the
Puri region. The Revenue earned by this distributor per annum is Rs 101471929 with a margin
of 10% on the Revenue earned.

Below is the calculation for the Return on Investment for Shiwduttray Bholanath Distributors:

 Investment = Rs 91324736
 Revenue= Rs 101471929 p.a
 Margin (10%) = Rs 10147193 P. A
 Expenses by the distributor:

Per annum in
Heads Nos Per Month per unit in Rs Rs
Rent Office+ godown 1 20000 240000
Salary Salesman 4 12000 576000
  Driver 4 6000 288000
  Laborers 20 5000 1200000
  Admin Officer 2 30000 720000
  system operator 1 20000 240000
Vehicle   4 18000 864000
Admin cost Electricity Bill 1 2000 24000
  Internet 1 1200 14400
  Office stationary 1 2000 24000

Here the distributor has 4 vehicles because it has to cover 4 routes of distribution. Each of the
vehicles has a driver and a salesman tagged to it.

The vehicle expense per month for each vehicle is Rs 18000, taking into account the diesel price
to be Rs 70, with a mileage of 10km/liter. Each vehicle has to travel 40km daily. Here we have
considered Rs 10,000 as the depreciation on the vehicle since it is a distributor owned vehicle.

 Total expenses from the table above= Rs 4190400

 Net Profit = Margin- Expenses
= (10147193-4190400) = Rs 5956792.9 p.a
 ROI= Net profit/(investment + expenses)
= {5956792.9/ (10147193+4190400)}*100
= 6.24%
 Here we have not taken into consideration the No credit policy and the number of cycles. Since
the distributors don’t give credits to the retailers so there is a constant cash flow in the system.

Also, we have not taken into consideration the frequency of delivery which is once a week,
which annually gives us 52 cycles of delivery taking the assumption that we get equal orders in
each delivery.

Therefore,

 Effective investment = Rs 91324736/52 = Rs 1751433

 ROI = {5956792.9/ (1751433+4190400)}*100

= 100%

Since the frequency of delivery is high for the distributor, the number of cycles increases that
decreases the investment per cycle which increases the ROI of the distributor. Also, Puri being
tourist spot witnesses high sales by volume thus increasing the revenue which in turn increases
the margin for the distributor. These are the 2 probable reasons for such a high ROI for the
distributor.