ROI Calculation for Indian Business Decisions — Equipment, Marketing, and Expansion

## When ROI is the right metric ROI is ideal for: - Equipment purchases with clear productivity benefit - Marketing campaign evaluation - Process improvement initiatives - Technology upgrades ROI is less ideal for: - Multi-year investments with irregular cash flows (use NPV/IRR) - Investments with significant non-financial benefits (use balanced scorecard) ## Equipment ROI example Manufacturer considering an ₹8 lakh machine: - Labour saved: ₹15,000/month - Quality improvement (reduced waste): ₹5,000/month - Total monthly benefit: ₹20,000 - Annual benefit: ₹2.4 lakh - Payback: 8 ÷ 2.4 = 3.3 years - 5-year ROI: (12 lakh - 8 lakh) / 8 lakh = 50% - Annualised: 8.4% — barely above FD rate This marginal ROI would make most investors pause. The machine needs to deliver more benefit or cost less. ## Marketing ROI in India For digital marketing, track by channel: - Google Search ads: typically 200–500% ROI for well-optimised campaigns - Meta/Instagram: 100–300% for consumer products - Influencer marketing: harder to measure; track using UTM codes and promo codes Rule: if you can't measure the ROI, you can't manage the spend.