Weaving the path towards profitability at Utkalamrita

Learning outcomes

By the end of this case study, learners should be able to:

1. Identify the key managerial, financial and market challenges faced by Utkalamrita brand;

2. Classify cost, prepare cost sheet, conduct common-size analysis, calculate contribution margin and analyse profitability position;

3. Formulate short-term and long-term strategic initiatives to protect contribution margin and move towards profitability target; and

4. Evaluate the financial impact of external policy shocks on exports and profitability.

Case overview/synopsis

This case examines the costing and profitability challenges faced by handloom entrepreneurs Ms Amrita Sabat and Dr Anita Sabat, co-founders of Utkalamrita, a brand producing Geographical Indication tagged Utkala-Gouraba sarees originating from Odisha, India. While the brand derived cultural value from authentic craftsmanship, fair artisan wages and heritage preservation, these very commitments contributed to a high-cost base and limited pricing flexibility. Operating with low margins, the firm now targeted 12% profitability. A sudden US$100 export duty announcement on all US-bound parcels, effective immediately, eliminated the duty-free threshold that powered international sales for Utkalamrita. A saree order, ready for dispatch to a US client, suddenly became financially unviable. Barely a week before shipment deadline, Amrita had to decide whether to absorb the duty, pass it on to the client or negotiate middle path. Beyond this single order loomed a deeper question, could Utkalamrita survive, achieve 12% profitability and compete amongst dynamic global trade regulations and policies. This case enables students to prepare a cost sheet, conduct common-size analysis and compute contribution margins. Furthermore, students evaluate the financial implications of absorbing the US$100 duty and passing it on to the client through cost–volume–profit analysis. They also explore short-term and long-term strategic initiatives in the face of external shocks. Ultimately, this case integrates cost and managerial accounting with strategic decision-making, encouraging learners to assess how craft-based enterprises navigate external shocks while preserving financial viability and cultural authenticity. The case is grounded in primary data obtained through founders’ interviews.

Complexity academic level

The case is suitable for undergraduate (Bachelor of Business Administration) and postgraduate (Master of Business Administration) students: primarily aimed at students learning cost and management accounting course.

Subject code

CSS 1: Accounting and Finance.