Valjibhai Stones is an India-based supplier of quality stone chips. A multinational company tapped Valjibhai Stones with regards to supplying quality stone chips over the next eight years. It was faced with deciding whether to accept the order which would necessitate capacity expansion to serve the multinational company but earn great revenue and, at the same time, letting go of all of its existing business which would result in looking for new business after the lapse of the eight years.
Debashis Sanyal, Smita Mazumdar
Ivey Publishing (9B14N009)
April 17, 2014
Case questions answered:
- a) Calculate the ROI and EVA for the relevant period assuming the GCC offer is not accepted and sales display a y-o-y growth of 5%. b) How would you assess the performance of Valjibhai Stones on the basis of the above calculations?
- a) Calculate ROI and EVA for the relevant period assuming the GCC offer is taken. b) What are your suggestions for the offer?
- Calculate the incremental cash flows and assess the feasibility of the proposal taking the time value of money in the account.
- Does the offer fit into the long term strategy of the firm?
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Valjibhai Stones Case Answers
This case solution includes an Excel file with calculations.
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