Management Accounting Project

Group Number: C21

Group Members

Name Roll No. Mobile No. E-mail Section

Kamini Gohil FT-22-433 8779583058 Kamini.k24@fms.edu C

Nishant FT-22-445 9022205200 Nishant.n24@fms.edu C

Sankalp Mathur FT-22-463 9785214307 Sankalp.m24@fms.edu C

Website of the company: https://www.sanjurajagrochem.com/home

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 5 Management Concepts that can be learned from the Case

There are several management concepts related to the selection of a vendor by comparative
analysis of quotations from alternate vendors, including:

 Vendor Evaluation: This involves analysing each vendor's capabilities, reputation,

financial stability, delivery performance, and other relevant factors to determine their
suitability for the project.

 Cost-Benefit Analysis: This involves comparing the cost of each vendor's quotation
against the benefits they offer, such as quality, reliability, and customer service.

 Risk Management: This involves assessing the potential risks associated with each
vendor, such as delivery delays, quality issues, and financial instability, and taking
steps to mitigate those risks.

 Contract Management: This involves negotiating and drafting contracts with

selected vendors that clearly outline expectations, deliverables, timelines, and other
important terms.

 Performance Monitoring: This involves regularly monitoring and evaluating the

performance of selected vendors to ensure they are meeting expectations and
delivering on their commitments.

Overall, the selection of a vendor by comparative analysis of quotations requires careful

consideration of various management concepts to ensure the chosen vendor is the best fit for
the project and provides the most value for the organization.

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 SASC: Evaluating an Investment in Expansion of Chemical Plant
Case study
I. Timeline (from start of initiative till today in terms of major milestones, numbers, etc.)

Milestone Timeline

Reach out to the firm to understand the case 19th Feb, 2023

Prepare a Project Synopsis 21st Feb, 2023

Collect relevant data for the case from the firm as well as
conduct a secondary 23rd Feb, 2023

Analyse data and support decision making rationale or suggest

26th Feb, 2023
alternative approach
Prepare a final case study report 28th Feb, 2023

II. Historical Background (WHY the decision was needed or what problems it solves) 
Sanjuraj Agrochem & Specialty Chemicals was founded in 2006 by Mr. Sanjay Kumar Sanap
& Pratibha Sanap. The company manufactures lubricant additives for various utilities like
Gear Oil, Cutting Oil, Transparent Water-based Cutting Oil, Knitting Oil, Conning Oil,
Stamping & Drawing Fluids, Hydraulic Oil, Engine Oil. Also, certain requirements related to
Detergents & Dispersants for Lube Oils and other purposes can be fulfilled by our Products.
The company values comprise of believing in the strength of Research & Development,
headed by Mr. Sanjay Kumar Sanap (Ex Castrol, Ex Gulf Oil, M.Sc. in Oils, Fats & Waxes,
ICT-Mumbai), which has been venturing into various sectors of Lubrication & Rust
Prevention. The other value is Customization as they believe in innovating and adapting to
their customers’ needs through variations in utilities of our products. The company’s major
clients are petroleum and motor oil manufacturing companies which require Lubricant
Additives and in order to cater to their customers the company has 3 factories, one of which
was recently acquired in 2021. The current case involved a decision of acquiring a new plant
machinery to be set up at the newly acquired plant.

III. WHAT of the decision (its objective, focus & outcomes)

Case Objective

The objective of the company in the given case was to finalize the high value, low-cost
equipment for their chemical production house, with the vision to increase the production to
cater the increasing demand in specialty chemical market. Following were the key objectives
of the company while taking decisions of procurement of plant machinery.

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 1. Identify the manufacturing needs: The firm needed to identify their manufacturing
needs to ensure the plant and machinery they purchase meet their production
requirements.

2. Evaluate the available options: The firm needed to evaluate the available options for
plant and machinery and determine which is most suitable for their production
requirements. This included considering the cost, efficiency, and functionality of each
option.

3. Assess the financial implications: The chemical manufacturing firm needed to assess
the financial implications of the purchase, including the initial cost of the equipment,
ongoing maintenance costs, and potential return on investment.

4. Evaluate the suppliers: The firm evaluated potential suppliers and considered their
reputation, experience, and track record for providing high-quality equipment and
after-sales service.

5. Develop a purchasing strategy: The firm developed a purchasing strategy that

considered factors such as negotiating the best price, managing risk, and ensuring
timely delivery of the equipment.

6. Implementation and post-implementation review: The firm implemented the

purchasing strategy and ensured that the equipment was installed and operating as
expected. Post-implementation review needed be conducted to identify any areas for
improvement during and after the purchasing process.

Overall, the objective of the case is to study the decision-making process of a chemical
manufacturing firm that will meet their production needs, be financially viable, and lead to
long-term success.

The case study highlighted the significance of carefully weighing several elements such as
cost, quality, and long-term advantages when making a purchasing decision. It helps to
understand the assessment of the costs and advantages of investing in machinery, such as
original capital expenditures, maintenance and operating costs, and prospective returns on
investment. The case study demonstrated the influence of the machinery acquisition choice
on the entire operations of the plant, such as production capacity, quality control, and staff
safety. This information assisted in developing operational abilities and making informed
judgements.

Outcome:
The outcome of a comparative analysis of vendor quotations is typically determined by
evaluating the various quotations received from different vendors and selecting the one that
best met the project or procurement requirements. The following were the steps involved in
determining the outcome of a comparative analysis of vendor quotations:
1. Identified the selection criteria: The first step was to identify the selection criteria
based on which the quotations were to be evaluated. This could include factors such
as price, quality, delivery time, technical specifications, and vendor reputation.

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 2. Evaluated the quotations: Once the selection criteria had been established, the next
step was to evaluate the quotations received from different vendors. This involved
comparing the prices, delivery times, technical specifications, and other relevant
factors provided by each vendor.
3. Scored the vendors: In order to objectively compare the vendors, it was useful to
assign scores to each vendor based on how well they met the selection criteria. This
helped to ensure that the selection process was fair and transparent.
4. Selected the vendor: Based on the scores assigned to each vendor, a decision was
made on which vendor to select for the project or procurement. The selected vendor
was the one that best met the selection criteria and provided the best value for money.
5. Negotiated and finalized the contract: Once the vendor had been selected, negotiations
took place to finalize the contract terms and conditions. This could involve further
discussions on pricing, delivery times, and other relevant factors to ensure that both
parties were satisfied with the agreement.
IV. HOW of the decision (the model of operation, end to end mapping)

V. SWOT 
Strengths:
− Customization: Lubricant additive manufacturing allows for the creation of
customized lubricants that meet specific needs and requirements. This is a significant
advantage over traditional lubricants, which are often produced in large quantities and
have a one-size-fits-all approach.
− Efficiency: Additive manufacturing can produce lubricants with highly efficient and
optimized formulations, resulting in better lubrication performance and longer
equipment life.
− Sustainability: Additive manufacturing can help reduce waste and carbon emissions
by producing lubricants only when needed and in the desired quantities. This is in
contrast to traditional lubricant manufacturing, which often produces excess lubricants
that can go unused and end up as waste.
− Flexibility: Additive manufacturing is highly flexible and can adapt to changes in
demand and product requirements quickly. This allows for greater agility in the
industry and a faster response to customer needs.
Weaknesses:
− Limited material selection: Lubricant additive manufacturing currently has limited
material options compared to traditional manufacturing methods. This can limit the
range of properties and characteristics that can be achieved in lubricants.
− High initial costs: The equipment and technology required for additive manufacturing
can be expensive, which can be a barrier to entry for smaller companies.
− Quality control challenges: Ensuring consistent quality in lubricant additive
manufacturing can be challenging, especially as the process involves complex
chemical reactions and interactions.

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 − Regulatory challenges: The regulatory landscape for lubricant additive manufacturing
is still evolving, and there may be uncertainties and compliance challenges for
companies in the industry.

Opportunities
Changes in Automobile Engines Technology
Modern engines in terms of reliability and efficiency depend directly on the effectiveness of
the lubricating system. lubrication is responsible for cooling internal parts of the engine
which are acting relative to each other creating friction and heat which results in overheating.
With the advancement in passenger car engine technology like Gasoline Direct Injection &
Turbocharge Gasoline Direct Injection, there have been some advancements in lubricant
standards too. For instance, In North America, The International Lubricant Standardization
and Approval Committee in 2020 has implemented ILSAC GF-6 standard which allows
improvement in fuel economy, emission system protection, engine oil robustness. Hence such
implementation will increase demand for lower viscosity index improvers lubricants as they
are used in all vehicles and efficiently reduce engine friction.
Nations effort for Achieving Fuel economy
For improving vehicle efficiency and transition to low carbon vehicles, various initiative has
been launched in nations globally focusing on all automobile sectors like light-duty vehicles,
heavy-duty vehicles, buses, motorcycles, trucks, etc. For instance, the Global Fuel Economy
Initiative launched by United Nations in 70 countries in 2019 aims to improve vehicle fuel
economy and accelerate progress on decarbonizing road transport by 2030. Hence such
initiative will increase the demand for efficient lubricants like bio-based and nanotube-based
lubricants that can be used in new vehicles to achieve low engine friction and fuel economy.
Threats
Growing demand for E-Vehicles
Due to rising environmental concerns and growing technological advancements consumers
have started shifting their demand from fuel combustion vehicles to electric hybrid vehicles.
Various automotive plants for e-vehicles are being set up in countries. For instance, as per
European Automobile Manufacturing Association, the production for e-vehicles increased up
to 11% in 2020 from 3% in 2019 in the EU, and as per the International Energy Agency,
electric car registration increased by 41% in 2020 globally, with China and Europe being the
largest electric vehicle market. And as per International Council for Clean Transportation
report 2021, various motor companies like Xpeng Motors, Nio, Volvo have set up large e-
vehicle factories in central and south-eastern China. Hence such an increase in demand and
production of e-vehicles can ban petrol and diesel vehicles which are the main consumers of
lubricant, thereby negatively impacting the lubricant additive industry.
VI. PESTLE 
Political factors:

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The government policies on trade, tariffs, taxation, and foreign investment would impact the
lubricant additive manufacturing industry in India. Also, regulations on environmental
protection and safety measures in the manufacturing process would impact the industry.
Economic factors:
The economic factors that would impact the industry include the availability of raw materials,
the cost of production, and the price of the final product. In addition, the level of demand for
lubricant additives in the Indian market and the global market would impact the industry.
Sociocultural factors:
The attitudes and preferences of the Indian consumers towards environmentally-friendly and
sustainable products could have an impact on the demand for lubricant additives. Also, the
increasing awareness of the importance of using high-quality lubricants in automobiles could
lead to a higher demand for lubricant additives in the country.
Technological factors:
The technological advancements in the manufacturing process of lubricant additives could
provide a competitive advantage to companies in the industry. Also, the development of
innovative lubricant additives that offer better performance and are environmentally friendly
would be beneficial.
Legal factors:
The regulatory framework for intellectual property rights and patent laws would impact the
lubricant additive manufacturing industry. Also, the industry would have to comply with laws
and regulations on safety and environmental protection.
Environmental factors:
The manufacturing process of lubricant additives could have an impact on the environment.
The industry would have to comply with regulations on pollution control and waste
management. Also, the development of environmentally-friendly and sustainable lubricant
additives could be beneficial for the industry.
Overall, a PESTLE analysis of the lubricant additive manufacturing industry in India would
examine the political, economic, sociocultural, technological, legal, and environmental
factors that impact the industry.

VII. Competitor Analysis (Nationally & Internationally)

The lubricant additives market is expected to witness market growth at a rate of 6.05% in the
forecast period of 2021 to 2028. Data Bridge Market Research report on lubricant additives
market provides analysis and insights regarding the various factors expected to be prevalent
throughout the forecast period while providing their impacts on the market’s growth. The
increase in demand for the product for various industrial applications is escalating the growth
of lubricant additives market.

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Lubricant additives refer to the chemical compounds that are utilized for improving the
performance of lubricants formulations, development of hypoid gears, steam turbines,
marine, rail diesel engines, modern passenger’s car engines, and industrial processing
machinery, among other equipment help to provide performance benefits.
The increase in demand from the automotive sector across the globe acts as one of the major
factors driving the growth of lubricant additives market. The rise in the additive usage in base
oil blending for longer service life and performance, and increase in the government
initiations to decrease price of biomass derived fuels accelerate the market growth. The
development of superior products that adhere to environmental regulations as well as
consumer expectations, and surge in demand for improved quality of industrial lubricants
further influence the market. Additionally, rapid industrialization, use of the product for the
effective use of energy resources and expansion of various end use industries positively
affects the lubricant additives market. Furthermore, rise in demand for renewable energy
extends profitable opportunities to the market players in the forecast period of 2022 to 2029.
On the other hand, inclinations towards alternative fuels and fluctuations in prices of crude
oil are expected to obstruct the market growth. Expensive R&D process for formulating
additive package in compliance with stringent environmental regulations and increase in the
demand for hybrid and electric vehicles are projected to challenge the lubricant additives
market in the forecast period of 2022-2029.
This lubricant additives market report provides details of new recent developments, trade
regulations, import export analysis, production analysis, value chain optimization, market
share, impact of domestic and localized market players, analyses opportunities in terms of
emerging revenue pockets, changes in market regulations, strategic market growth analysis,
market size, category market growths, application niches and dominance, product approvals,
product launches, geographical expansions, technological innovations in the market. To gain
more info on lubricant additives market contact Data Bridge Market Research for an Analyst
Brief, our team will help you take an informed market decision to achieve market growth.
Global Lubricant Additives Market Scope and Market Size
The lubricant additives market is segmented on the basis of lubricant type, function, and end-
user. The growth amongst the different segments helps you in attaining the knowledge related
to the different growth factors expected to be prevalent throughout the market and formulate
different strategies to help identify core application areas and the difference in your target
markets.
On the basis of lubricant type, the lubricant additives market is segmented into engine oil,
hydraulic oil, transmission fluids, general industrial oils, gear oil, metal working fluids,
grease and others.
On the basis of function, the lubricant additives market is segmented into dispersants and
emulsifier, viscosity index improves, detergents, corrosion inhibitors, oxidation inhibitors,
extreme-pressure additives, friction modifiers and others.
On the basis of end-user, the lubricant additives market is segmented into automotive and
others transportation, power generation, heavy equipment, metallurgy and metal working,
food processing and others.

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VIII. Cost Benefit Analysis (CBA) 
A cost-benefit analysis is performed in order to ascertain that whether the costs incurred in
purchasing the new machinery are worth the benefit the company would derive from the
capital investment.
The purchase amount of after a 2nd negotiation with the 3 vendors is considered as the final
initial cost of purchasing the machinery and a one yera depreciation of 15% is charged in
order to obtain the first year expenditure of the company. The highest purchase value is of the
machinery offered by the 2nd Vendor.
The revenue generated from the machinery has been estimated by factoring in the production
capacity and wastage of each machinery. The 2nd machinery has the lowest amount of
wastage and thus produces the highest revenue in a year.
On the basis of parameters such as Life of the Equipment, Salvage Value, Availability of
machine parts, Annual Maintenance Contract etc... The machine offered by the second
vendor has the highest ratings.
Therefore, as per the cost-benefit analysis and after considering the parameters, the
machinery offered by the 2nd vendor, though it has also the highest purchase amount with a
negligible difference from the other 2 machines, is benefiial for the company to purchase.
IX. The Technology dimension 
 Equipment design: The equipment should be designed to meet the specific needs of
the chemical manufacturing plant. It should be capable of handling the types of
materials used in the plant and be compatible with the plant's existing systems.
 Automation: The machinery should be capable of automation and integrate well with
the plant's existing automation system. Automation reduces the need for manual
intervention and can improve efficiency.
 Safety features: Safety is a critical factor in chemical manufacturing plants. The
machinery should have appropriate safety features to protect workers and prevent
accidents.
 Reliability: The machinery should be reliable and have minimal downtime. Downtime
can lead to lost production and revenue.
 Energy efficiency: The machinery should be energy-efficient, reducing energy
consumption and operating costs.
 Environmental impact: The machinery should be designed to minimize the plant's
environmental impact. This includes reducing waste and emissions.
 Maintenance requirements: The machinery should have low maintenance
requirements and be easy to maintain. This reduces the need for expensive repairs and
downtime.
 Scalability: The machinery should be scalable and able to handle future growth or
changes in the manufacturing process.
 Cost: The machinery should be cost-effective, with a reasonable return on investment.

X. Benchmarking (nationally & internationally)

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The Lubricant Additives Market is classified as follows: Product Type (Dispersants and
Emulsifiers, Viscosity Index Improvers, Detergents, Corrosion Inhibitors, Extreme-pressure
Additives, Friction Modifiers, and Other Functions), Lubricant Type (Engine Oil,
Transmission and Hydraulic Fluids, Metalworking Fluid, General Industrial Oil, Gear Oil,
Grease, Process Oil, and Other Lubricant Types), End-user Industry (Asia-Pacific, North
America, Europe, South America, and Middle-East and Africa)
The lubricants market in India is expected to continue growing steadily over the next few
years, driven by several factors such as increased demand from the automotive sector,
infrastructure development, and the growth of the manufacturing industry. However, the
market also faces challenges, including rising competition, increasing costs, and changing
regulations.
According to recent market research reports, the automotive lubricants segment remains the
largest application segment, accounting for more than half of the market share. The growth of
this segment is driven by increasing demand for passenger vehicles and commercial vehicles,
as well as the increasing need for high-performance lubricants to meet the changing needs of
newer vehicles.
Another key growth driver in the Indian lubricants market is the infrastructure development
in the country. Infrastructure development is driving demand for industrial lubricants,
particularly in the construction and mining sectors. Moreover, the growth of the
manufacturing industry is also driving demand for industrial lubricants.
Despite these growth drivers, the Indian lubricants market also faces challenges such as
intense competition, rising raw material costs, and regulatory issues. Furthermore, the
outbreak of the COVID-19 pandemic has impacted the market, with reduced demand for
lubricants in some sectors and supply chain disruptions.
Overall, the Indian lubricants market is expected to continue growing at a steady pace, driven
by increasing demand from the automotive sector, infrastructure development, and the
growth of the manufacturing industry. However, industry players will need to navigate
challenges such as competition, rising costs, and regulatory changes to capitalize on growth
opportunities.

XI. Primary and Secondary Data Analysis

The primary data analysis of comparative analysis of vendor quotations involved reviewing
and comparing the data collected from multiple vendors to identify the best option for a
particular product or service. The following steps were taken to analyze the data:
Reviewed the data: The data collected from each vendor was reviewed to ensure that it was
accurate and complete.
Identified the key parameters: The key parameters that needed to be compared across vendors
were identified. These included price, quality, delivery time, warranty, after-sales service, etc.
Created a comparison matrix: A comparison matrix was created that listed each vendor and
the key parameters to be compared. This helped to compare each vendor's strengths and
weaknesses.
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Analysed the data: The data collected for each vendor was analyzed against the key
parameters identified. Different tools such as graphs, charts, and tables were used to present
the data.
Identified the best vendor: Based on the analysis of the data, the best vendor that met the
required criteria was identified. This helped to make an informed decision about which
vendor to select.
Reviewed the findings: The findings of the comparative analysis were reviewed with the
project team and stakeholders to ensure that everyone was on the same page and agreed with
the decision made.
In summary, the primary data analysis of comparative analysis of vendor quotations involved
reviewing and comparing the data collected from multiple vendors to identify the best option
based on the key parameters identified. This helped to make an informed decision and select
the vendor that met the required criteria.

XII. Impact 

Social Impact:
1. Health and Safety: Chemical manufacturing firms operate in hazardous environments
that can pose risks to employees and nearby communities. Therefore, the company
while purchasing the new equipment took into account the increase in risk to
employee health and safety if the equipment is not properly installed, maintained, or
operated.
2. Community Relations: The purchase of new equipment can impact the relationship
between the chemical manufacturing firm and the surrounding community. The
company communicated and increased the awareness about the potential
environmental and health impacts of the new equipment and how they planned to
mitigate these impacts.

Governance Impact
1. Operational efficiency: The set-up of plant machinery can affect the efficiency and
productivity of the plant. If the machinery is not set up correctly, it could lead to
delays, errors, and reduced output. This, in turn, could affect the governance of the
organization as it may struggle to meet targets and deliver on commitments.
2. Compliance: The set-up of plant machinery can also impact compliance with
regulations and standards. If the machinery is not set up to meet regulatory
requirements or industry standards, the organization may face penalties and
reputational damage. This could impact the governance of the organization as it may
struggle to maintain the trust and confidence of its stakeholders.
3. Health and safety: The set-up of plant machinery is also crucial from a health and
safety perspective. If the machinery is not set up correctly or is not maintained
properly, it could pose a risk to the workers operating it. This could lead to accidents

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 and injuries, which would impact the governance of the organization as it may be
liable for compensation claims and regulatory fines.

Economic Impact
The purchase of new equipment can have an economic impact on the company and the
surrounding community. The cost of the new machinery was analysed by the company in
order to not have a negative impact on the price offered to the customers. The purchase of
new equipment also resulted in the creation of new job opportunities in the form of machine
operators.
Financial Impact

 Capital Expenditure: The cost of buying chemical machinery was a significant capital
expenditure for the company, which impacted its cash flow, balance sheet, and
profitability.

 Depreciation: The machinery was considered a fixed asset and was subject to
depreciation over its useful life, which can impact the company's financial statements
and tax obligations.

 Financing: When the company chose to finance the purchase of the machinery
through debt, it impacted its debt-to-equity ratio and interest expenses.

Environmental Impact
Chemical manufacturing firms use equipment and machinery that can release pollutants and
emissions into the environment. The purchase of new equipment may result in the generation
of more waste and emissions, which can have negative impacts on the environment, including
air and water pollution. While purchasing the machinery, the company considered factors
such as fuel consumption and environmental emissions
XIII. Stakeholders Analysis
1. Shareholders: Shareholders of the company were interested in this decision as it
impacted the company's financial performance and profitability. They wanted to
ensure that the investment in the plant machinery was financially sound and generated
adequate returns. They may have also been concerned about potential risks to the
company's reputation or financial stability.
2. Employees: The employees of the company were impacted by the decision, especially
those involved in the manufacturing process. They wanted to ensure that the new
plant provided safe and healthy working conditions, adequate training and equipment,
and job security. They may have also been concerned about the potential exposure to
hazardous materials and the need for appropriate safety measures.
3. Customers: Customers who relied on the chemical products produced by the new
plant were interested in the decision. They wanted to ensure that the plant machinery
was reliable and efficient, producing high-quality products that met their needs. They

4
 may have also been concerned about the potential impact of the new plant on prices,
availability, or the environment.
4. Local community: The local community surrounding the new plant had concerns
about the potential impact of the plant machinery on the environment, including air
and water pollution, noise, and traffic. They wanted to ensure that the new plant met
all regulatory requirements, minimized negative impacts on the environment, and
contributed positively to the local economy.
5. Regulatory bodies: Regulatory bodies responsible for ensuring compliance with
environmental, health, and safety regulations had a stake in the decision to set up
plant machinery in the new plant. They wanted to ensure that the new plant met all
applicable regulations and standards, including permits, licenses, and inspections.
6. Suppliers: Suppliers of raw materials and equipment necessary for the plant
machinery were interested in the decision. They wanted to ensure that the new plant
created a reliable and sustainable market for their products and services.
Overall, stakeholders involved in the decision to set up plant machinery in a new plant for
chemical manufacturing included shareholders, employees, customers, the local community,
regulatory bodies, and suppliers. Each of these stakeholders had specific interests and
concerns related to the decision, and a stakeholder analysis helped identify and manage those
interests to ensure a successful outcome.

XIV. Appendix Tables (if any)

Ratings (out of 5)

Parameters
Vendor 1 Vendor 2 Vendor 3

Fuel Consumption 3 3 4
Life of the Equipment 3 4 3
Salvage value 4 4 3
Wastage 3 4 4
Materials 3 4 3
Maintenance Charges 3 4 3
Depreciation 3 3 3
Running Costs 3 3 4
Manpower 3 3 3
Availability of machine parts 3 4 4
Space Requirement 3 2 3
Power Efficiency 3 3 4
Warranty Period 4 4 4
Installation & Training 3 3 3
AMC 3 4 3
Production capacity 4 3 3
Total 51 55 54

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 Particulars Vendor 1 Vendor 2 Vendor 3
Purchasing Cost after 2nd 2800033.9
revision 2765000 2933688 6
Depreciation 15% 15% 15%
2380028.8
Machine's Value after a year 2350250 2493634.8 6
1680020.3
Depreciation for next 4 years 1659000 1760212.8 7
691250.000 733422.00 700008.48
Machine's Value after 5 years 1 1 9

Particulars Vendor 1 Vendor 2 Vendor 3

Production capacity (in Kilo
Liters) 100 100 100
Wastage (in %) 5% 4% 6%
Total Net Production 95 96 94
Units 2000 2030 1950
Price 5000 5000 5000
Estimated Revenue per year 10000000 10150000 9750000

1ST
GROSS ORIGINA GROSS
REVISIO
SR NO COMPANY GST ORIGINA L GST ORIGINA
N
L AMT AMOUNT L AMT
AMOUNT
1 Vendor 1 DATE:- 05-01-2020 DATE:- 05-01-2020
₹ ₹
HOMOGENIZE
₹ 2,01,35 ₹ ₹ 1,63,22 ₹
R 5KL
11,18,644 6 13,20,000 9,06,780 0 10,70,000
₹ ₹
MIXER 5KL ₹ 2,19,66 ₹ ₹ 1,78,47 ₹
12,20,338 1 14,39,999 9,91,525 5 11,70,000
TOTAL
₹ ₹
EQUIPMENT
27,59,999 22,40,000
COST
CIVIL WORK ₹ ₹ ₹ ₹ ₹ ₹
COST 4,50,000 - 4,50,000 4,50,000 - 4,50,000
ELECTRICAL ₹ ₹ ₹ ₹
COST 1,80,000 1,80,000 1,80,000 1,80,000
LIAISONING ₹ ₹ ₹ ₹ ₹ ₹
COST 75,000 - 75,000 75,000 - 75,000
BUY BACK ₹ ₹ ₹ ₹ ₹ ₹
AMOUNT -1,80,000 - -1,80,000 -1,80,000 - -1,80,000
₹ ₹
TOTAL COST
5,25,000 5,25,000
₹ ₹
GROSS COST
32,84,999 27,65,000
2 Vendor 2 DATE:- 13-01-2020 DATE:- 20-01-2020
₹ ₹
HOMOGENIZE
₹ 1,95,41 ₹ ₹ 1,87,15 ₹
R 5KL
10,85,642 6 12,81,058 10,39,741 3 12,26,894
₹ ₹
MIXER 5KL ₹ 2,31,41 ₹ ₹ 2,05,15 ₹
12,85,642 6 15,17,058 11,39,741 3 13,44,894

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 TOTAL
₹ ₹
EQUIPMENT
27,98,115 25,71,788
COST
CIVIL WORK ₹ ₹ ₹ ₹ ₹ ₹
COST 2,63,400 - 2,63,400 2,71,900 - 2,71,900
ELECTRICAL ₹ ₹ ₹ ₹
COST 1,81,026 1,81,026 1,80,000 1,80,000
LIAISONING ₹ ₹ ₹ ₹ ₹ ₹
COST 90,000 - 90,000 90,000 - 90,000
BUY BACK ₹ ₹ ₹ ₹ ₹ ₹
AMOUNT -1,50,000 - -1,50,000 -1,80,000 - -1,80,000
₹ ₹
TOTAL COST
3,84,426 3,61,900
₹ ₹
GROSS COST
31,82,541 29,33,688
3 Vendor 3 DATE:- 9-01-2020 28-01-2020
₹ ₹
HOMOGENIZE
₹ 2,09,74 ₹ ₹ 1,84,58 ₹
R 5KL
11,65,254 6 13,75,000 10,25,453 1 12,10,034
₹ ₹
MIXER 5KL ₹ 2,44,06 ₹ ₹ 1,90,67 ₹
13,55,932 8 16,00,000 10,59,322 8 12,50,000
TOTAL
₹ ₹
EQUIPMENT
29,74,999 24,60,034
COST
CIVIL WORK ₹ ₹ ₹ ₹
COST 3,90,000 3,90,000 1,98,000 1,98,000
ELECTRICAL ₹ ₹ ₹ ₹
COST 1,05,000 1,05,000 1,20,000 1,20,000
REDUCTION
₹ ₹ ₹ ₹
CHANNELS IN
1,05,000 1,05,000 1,00,000 1,00,000
B WING
LIAISONING
₹ ₹ ₹ ₹
COST & RCC
1,02,000 1,02,000 1,02,000 1,02,000
CONSU
BUY BACK ₹ ₹ ₹ ₹
AMOUNT -1,80,000 -1,80,000 -1,80,000 -1,80,000
₹ ₹
TOTAL COST
5,22,000 3,40,000
₹ ₹
GROSS COST
34,96,999 28,00,034

XV. References
https://incometaxindia.gov.in/charts%20%20tables/depreciation%20rates.htm
https://www.prnewswire.com/news-releases/lubricants-market-in-india-4-75-y-o-y-growth-
rate-in-2022--growth-trends-and-forecasts-2022---2026-301541801.html
https://www.futuremarketinsights.com/reports/lubricant-additives-market
https://www.openpr.com/news/2047530/lubricant-additives-market-current-trends-swot-
analysis
https://www.databridgemarketresearch.com/reports/global-lubricant-additives-market
XVI. Teaching Note

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Teaching note starting with Case Synopsis
Sanjuraj Agrochem & Specialty Chemicals is a company founded in 2006 by Mr. Sanjay
Kumar Sanap and Pratibha Sanap. The company specializes in manufacturing lubricant
additives for various utilities, such as gear oil, cutting oil, transparent water-based cutting oil,
knitting oil, conning oil, stamping and drawing fluids, hydraulic oil, and engine oil. They also
fulfil certain requirements related to detergents and dispersants for lube oils and other
purposes.
The company places a high value on research and development, headed by Mr. Sanjay Kumar
Sanap, who has vast experience in the sector. They also prioritize customization, innovating
and adapting to their customers' needs through variations in the utilities of their products.
Sanjuraj Agrochem & Specialty Chemicals' major clients are petroleum and motor oil
manufacturing companies that require lubricant additives. To cater to their customers, the
company has three factories, one of which was recently acquired in 2021. The current case
involves the decision to acquire new plant machinery to be set up at the newly acquired plant.
Various Factors such as the efficiency of machinery, the production capacity, depreciation,
and cost-benefits need to be considered in order to advice the company with a purchasing
decision.
This case will enhance the knowledge about applying different measures such as cost-benefit
analysis, analysing different alternatives on the basis of fixed and variable costs, production
capacity, annual maintenance contracts, and manpower requirement.
Teaching plan of case
 Introducing the background, objectives, and values of the company.
 Defining the problem statement and establishing the quotations given by different vendors
and determining a way to match the available machinery with the demand of the company.
 Analysing the production need of the company by referring to the demands of a similar
company with similar production scale and analyzing customer demands in the current
lubricant additives market.
 Performing a cost-benefit analysis and describing the solution based on different parameters.
 Discussing the opportunity costs and consequences of choosing one option over other.
 Concluding the case with an advice on the outcome.

Teaching Note questions

1. What are the different factors that need to be analyzed in order to come to a purchasing
decision?
2. What are the different types of cost associated with a machinery that are need to be taken care
of in order to find the overall cost of a machinery?
3. How could the company have negotiated better with the vendors by pointing out relevant
factors related to the cost of such a machinery?

Teaching note answers

1. The discussion should consider various factors about the machinery such as Fuel
Consumption, Production Capacity, Wastage, Life of the Equipment, Salvage Value, Material
Consumed, Discounts Available, Annual Maintenance Contracts, Depreciation, Running

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 Costs, Manpower Requirements, Availability of Machine Parts, Space Requirements, Power
Efficiency, Warranty Period, and Installation Costs.
2. The various costs need to be considered for the case discussion: Purchase Cost of the
Machinery including the Installation and Delivery Charges, Civil work cost (Variable),
Electrical cost (Variable), Liaisoning cost (Fixed), and Maintenance Charges.
3. The company could have implemented a number of systematic procedures and guidelines, in
order to get the right tools to make a cost-effective transaction. This checklist is an
illustration of one such tool that presents some crucial factors to take into account while
negotiating capital equipment contracts. The genuine life of the equipment, all upcoming
operational costs, a biological review, refurbishment costs, code requirements, and much
more are additional factors to take into account. Qualitative analysis of rival companies is
another important factor. Regardless of the factors, the purchasing agent is in charge of
evaluating the total transaction and carrying out a thorough value study. By engaging in
these activities, the company may avoid incurring unnecessary costs and guarantee that the
capital equipment it buys will provide the greatest possible value.