A ₹230 Diwali Quote: Costing 200 Boxes of Kaju Katli
A home baker in Nagpur has been asked to quote for a corporate Diwali order: 200 boxes, each holding 16 pieces of kaju katli at 14 g per piece, all delivered on one day. Her costs are cashew ₹860/kg, sugar ₹46/kg and ghee ₹620/kg. One working batch uses 5 kg cashew, 1.5 kg sugar and 200 g ghee, and yields 7 kg of katli after cooking and rolling; she attributes ₹150 of gas and ₹400 of paid labour to each batch. Each printed box, liner and label costs ₹22. She loses about 5 % of pieces to trimming, breakage and tasting, and the trimmings are not sold. A hired helper costs ₹600 a day for 4 days, and the baker has 6 evenings of her own work available. Retail kaju katli in Nagpur sells at ₹1,000–1,200/kg. A competitor has quoted the client ₹230 per box.
1. Work out the direct cost per box and the total contribution if she accepts ₹230. State every assumption.
Read the worked answer
Cost of one batch
| Item | Calculation | Cost |
|---|---|---|
| Cashew | 5 × ₹860 | ₹4,300 |
| Sugar | 1.5 × ₹46 | ₹69 |
| Ghee | 0.2 × ₹620 | ₹124 |
| Gas | given | ₹150 |
| Paid labour | given | ₹400 |
| Total | ₹5,043 |
Yield 7 kg, so cost per kg = 5,043 ÷ 7 = ₹720.43/kg.
Cost per box
- 16 pieces × 14 g = 224 g of sellable katli.
- With 5 % loss, she must make 224 ÷ 0.95 = 235.8 g per box.
- Mithai cost = 235.8 g × ₹720.43/kg = ₹169.85.
- Plus box/liner/label ₹22 → direct cost ≈ ₹191.85 per box.
Total order
- Katli required = 200 × 235.8 g = 47.16 kg → 47.16 ÷ 7 = 6.74, so 7 batches in practice (batches are not split).
- Ingredient + gas + paid labour = 7 × ₹5,043 = ₹35,301; boxes 200 × ₹22 = ₹4,400; helper ₹600 × 4 = ₹2,400.
- Total ≈ ₹42,101, i.e. ₹210.5 per box.
At ₹230: contribution = 230 − 210.5 = ₹19.5 per box, about ₹3,900 for the whole order - for 6 evenings of her own unpaid work, plus delivery and breakage risk. Assumptions: no delivery charge, no wastage allowance for a failed batch, and whole-batch production.
2. The client says ₹230 is firm. Advise: accept, counter, or decline? Support your answer with numbers and name the two biggest cost levers.
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Recommendation: counter, do not simply accept or decline.
The competitor's ₹230 is close to market: at ₹1,000–1,200/kg, a 224 g box 'should' retail at ₹224–269. Her problem is not the price - it is cost, at ₹720/kg against a market that supports roughly ₹900–1,000/kg of honest cost. The quote at ₹230 leaves ₹19.5 a box, which is not a business, it is a favour.
The two biggest levers
- Cashew buying: ₹860/kg is retail. Direct wholesale or a mandi lot at, say, ₹780 saves ₹80 × 5 = ₹400 a batch, i.e. ₹57/kg of katli, about ₹13.5 per box. This alone lifts contribution to about ₹33 a box.
- Piece weight and box spec: 16 × 13 g instead of 14 g saves 16 g of katli a box (₹11.5), and a simpler box at ₹15 instead of ₹22 saves ₹7 - together ₹18.5 a box. Customers count pieces, not grams, but the declared net weight must be printed honestly.
Counter position Offer ₹250 a box with the standard 224 g, or ₹235 with the 13 g piece and the plain box. Either protects about ₹40 a box (₹8,000 for the order) while remaining under the ₹269 market ceiling. If the client refuses both, decline politely and ask to be considered for the smaller premium hampers - a loss-making first order sets a price anchor for every future order.
Do not quietly cut the cashew with sugar or under-fill the box; the client will weigh one box, and the reputation loss costs more than the order.
3. The boxes must survive 10 days without refrigeration in Nagpur heat, including transport. What packaging and storage instructions would you give?
Read the worked answer
Kaju katli is a sugar-and-nut confection with no milk and relatively low moisture, so 10 days is achievable - but only with moisture and heat control, and the biggest risk is the box, not the katli.
Packaging
- Barrier first: each box lined with food-grade butter paper or a PET-coated board; the katli must not touch printed board directly (ink migration and greasiness).
- Rigid, not flexible: a rigid box with a divider or butter-paper interleaves prevents the pieces rubbing and silver leaf (vark) lifting in transit. Vacuum-packed pouches crush the pieces.
- Secondary seal: the filled box in a laminated (metallised) pouch or a shrink sleeve limits moisture pickup and aroma transfer; a silica gel sachet must sit outside the food liner, never touching the mithai.
- Labelling: name, net weight, ingredient list, batch number, manufacturing date and best-before (10 days), FSSAI licence number and the basic registration mark. For a corporate order, add a batch code that lets her trace a complaint to one day's production.
Storage and transport instructions
- Store below 25 °C, dry, away from sunlight and strong-smelling goods; a south-facing shop shelf in May will exceed this.
- Do not refrigerate. Condensation on bringing the box out makes the surface sticky, dulls the vark and speeds spoilage; if she must chill, the box stays sealed until it reaches room temperature.
- Deliver in a closed, shaded vehicle, in the morning; never stack more than four boxes high, and never leave boxes in a parked car.
- Tell the client to open and serve within the stated period and to keep the box closed between servings.