1:37 PM 1.5KB/s....l Adobe Scan 14-Jan... 31 2 Adonex India: A Case of Alternative Choices and Decision-Making Adoes India Engineering Company was into manufacturing of auto parts-axle shafts-for automo ve industries since 2003. The company was an emerging one concerning manufacturers and exporters. 40ner had been gaining acclamation across the globe because of its quality manufacturing process Farther, the company's products were highly acclaimed in UK, Germany, France and Italy. The price charged for domestic as well as export market has been same so far albeit in the relevant currency With an ever-growing demand for its product and the company's export percentage being 30%. Adonex India Engineering Company had national and international projects contributing to the in rated and technically important projects. In the year 2019, it was operating at 80%-capacity level atering to both domestic and foreign market. The company CEO, Raghavendra had just received an export order from a new market-USA- which he did not want to miss. The order required a capacity utilisation of 40% of the plant capacity. There was no scope for splitting the order; it had to be executed in one lot and that too, as quickly as pos able. The price offered after a lot of negotiation was still 10% less than the current price being charged. He called his Production Manager-Sathya Sathwik, and the Finance Manager-Prabhat Kumar, who were looking after the costing and budgeting of the project; and asked them to submit the details mlated to the current production and possibility of additional capacity utilisation. He was given the following statement with respect to sales and costs: Particulars (For a Pack of 10 units) Sales Direct material Direct labour Factory overheads (20% variable) in lakhs 2,400 1,120 480 360 200 Selling, distribution & administrative overheads (40% fixed) Sathwik told him that variable cost-part of selling, distribution & administrative overheads-will increase by 10% because of the special type of packaging required for exports to the USA. He was of the opinion that the company should reject the export order from the customer from USA as it would result in unnecessary increase in the cost where as revenue from the order would be less thereby im- pacting the profits significantly Prabhat, on the other hand, wanted the company to accept the offer because this would have meant exposure to a new market and possibility of more clients and better pricing in future. For this, he said that the company should be ready to let the domestic sales to fall to the extent required. There was another view proposed by the Marketing Manager-Prakash Sinha. He thought that it was not wise to let go off the domestic market share. Instead the company should create additional plant capacity by installing new machinery. Prakash checked with some suppliers of the machines as well as the finance team and reported that the additional capacity because of new machinery will increase the fixed cost by 220,00,000 per annum. Raghavendra was now in dilemma as to go for which of these proposals given by Sathwik, Prabha and Prakash. QUESTIONS FOR DISCUSSION: 1. Evaluate each of the options given and suggest the best course of action for Raghavendra. 2. Discuss various other factors which have to be considered before taking the decision