Finance Manager Submission BCS
Preparation of budget and financial plan for the financial year 2019- 20.
Submission Date & Time: 2020-03-21 23:44:15
Event Name:
Solution Submitted By: Aditya Shukla
Assignment Taken
Case Understanding
a.) Overview – Daily Needs Delivery LLP [DND] is an Indian daily need delivery start-up which was started in 2017 and currently has its presence in 3 cities. DND provides app-based services to its customers for hassle free home deliveries. b.) Problems understood from the entire case study – i.) Consumers are not getting deliveries. ii.) Weak feedback mechanism. iii.) Quality of food not up to the mark with consumers being delivered food with bad taste and foul smell. iv.) No after sales services to subscribers in non-dense areas. • Due to this, consumers are deleting app and claiming refund. • Also, competitors have started taking advantage. c.) Problems pertaining to finance department – i.) Annual loss for FY 2018 -19 was Rs. 68,55,000. ii.) Delivery partners not reporting on time which is resulting in business and product losses as all the products are perishable goods. Losses in perishable goods are 0.2% of the sourced inventory quantity.BCS Solution Summary
a.) App must be updated to include the following features – i.) A tracking system with estimated delivery time. ii.) A robust feedback mechanism that can enable customers to give their ratings and comments which can be proven beneficial for future customers. iii.) Communication details must be updated by providing e-mail address and phone number. iv.) Refund policy must be included. b.) In order to tackle the problem of delivery of products with foul smell and bad taste– i.) Delivery personnel must be given a training so that their turnaround time is reduced. ii.) Ensuring that products are delivered only from FSSAI certified suppliers. iii.) Hiring quality controllers. c.) To solve the problem regarding no before and after sales services to consumers in non-dense areas – i.) App must also be updated to offer enhanced services to consumers in non-densely populated areas. d.) To solve the problem regarding late reporting of delivery guys – i.) A robust attendance system must be brought in place with explanations regarding their reason to be late. ii.) Incentives must be given to delivery guys to encourage them to make timely deliveries.Solution
a.) To tackle the issue of increasing annual costs –
i.) Laying off delivery guys.
ii.) Increasing customer base in the 3 cities.
iii.) Increasing product line by including additional products that are to be sold.
iv.) Increasing selling price per product.
v.) Spending on digital advertisement in order to boost sales.
b.) Overview [F.Y 2018-19] -
i.) Selling Price (ltr/kg) -
- Milk (Cow) – Rs. 45/ltr
- Milk (Buffalo) – Rs. 50/ltr
- Curd – Rs. 120/kg
- Paneer – Rs. 250/kg
ii.) Sales in FY 2018-19 (ltr/kg) [ It is assumed that there are 30 days in a month and hence, 360 days in an year] -
- Milk (Cow) – 7,20,000 lts
- Milk (Buffalo) – 14,40,000 lts
- Curd – 90,000 kg
- Paneer – 9000 kg [ This was ordered by 1000 families at 250 gm/family, three times in a month]
iii.) Sales in FY 2018-19 (Rs.) –
- Milk (Cow) – Rs. 3,24,00,000
- Milk (Buffalo) – Rs. 7,20,00,000
- Curd – Rs. 1,08,00,000
- Paneer – Rs. 22,50,000
iv.) Purchase price (ltr/kg) –
- Milk (Cow) – Rs.40/ltr
- Milk (Buffalo) – Rs. 45/ltr
- Curd – Rs. 100/kg
- Paneer – Rs. 225/kg
v.) Purchases in FY 2018-19 (ltr/kg) –
- Milk (Cow) – 7,20,000 lts
- Milk (Buffalo) – 14,40,000 lts
- Curd – 90,000 kg
- Paneer – 9,000 kg
vi.) Personnel in FY 2018-19 –
- Corporate Office – 10
- Delivery boys – 80
vii.) Salary (per person/annum) in FY 2018-19 -
- Corporate office – Rs. 6,00,000
- Delivery boy – Rs. 96,000
viii.) Salary in FY 2018-19 –
- Corporate office – Rs. 60,00,000
- Delivery boy – Rs. 76,80,000
ix.) Advertisement Expenses in FY 2018 -19 – Rs. 24,00,000
x.) Other Overheads in FY 2018-19 – Rs. 36,00,000
xi.) Net loss for FY 2018-19 –
= Rs. 11,74,50,000 (Sales) – Rs. 10,46,25,000 (Purchases) – Rs. 1,36,80,000 (Salary) – Rs. 24,00,000 (Advertisement) – Rs. 36,00,000 (Other Overheads)
= Rs. 68,55,000
|
c.) Calculation of Total Sales (FY 2019-20) - |
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|
S. No |
Particulars |
City |
No. of Families(No.) |
Milk (Cow) |
Milk (Buffalo) |
Curd |
Paneer |
Butter Milk |
Cheese |
Cream |
Butter |
|
1. |
Sales (in lts/kg/units) |
Bengaluru |
1,800 |
3,24,000 lts |
6,48,000 lts |
38,880 kg |
7,200 kg |
1,08,000 units |
72,000 units |
54,000 units |
43,200 units |
|
Hyderabad |
1,000 |
1,80,000 lts |
3,60,000 lts |
21,600 kg |
5,760 kg |
60,000 units |
1,08,000 units |
36,000 units |
24,000 units |
||
|
Delhi |
2,200 |
3,96,000 lts |
7,92,000 lts |
47,520 kg |
4,320 kg |
1,32,000 units |
36,000 units |
18,000 units |
52,800 units |
||
|
2. |
Total Sales (in lts/kg/units) |
- |
|
9,00,000 lts |
18,00,000 lts |
1,08,000 kg |
17,280 kg |
3,00,000 units |
2,16,000 units |
1,08,000 units |
1,20,000 units |
|
3. |
Selling Price (Per kg/ltr/unit) (in Rs.) |
- |
|
50/ltr |
55/ltr |
125/ kg |
265/kg |
20/ unit |
110/unit |
180/ unit |
225/ unit |
|
4. |
Total Sales (2*3) (in Rs.) |
- |
|
4,50,00,000 |
9,90,00,000 |
1,35,00,000 |
45,79,200 |
60,00,000 |
2,37,60,000 |
1,94,40,000 |
2,70,00,000 |
|
5. |
Grand Total Sales (in Rs.) |
- |
23,82,79,200 |
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|
d.) Calculation of Total Purchases (FY 2019-20) - |
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|
S. No. |
Particulars |
City |
No. of Families |
Milk (Cow) |
Milk (Buffalo) |
Curd |
Paneer |
Butter Milk |
Cheese |
Cream |
Butter |
|
|
1. |
Purchases (in units)
|
Bengaluru
|
1,800 |
3,24,000 lts |
6,48,000 lts |
38,880 kg |
7,200 kg |
1,08,000 units |
72,000 units |
54,000 units |
43,200 units |
|
|
Hyderabad
|
1,000 |
1,80,000 lts |
3,60,000 lts |
21,600 kg |
5,760 kg |
60,000 units |
1,08,000 units |
36,000 units |
24,000 units |
|||
|
Delhi
|
2,200 |
3,96,000 lts |
7,92,000 lts |
47,520 kg |
4,320kg |
1,32,000 units |
36,000 units |
18,000 units |
52,800 units |
|||
|
2.
|
Total Purchases (in units)
|
- |
|
9,00,000 lts |
18,00,000 lts |
1,08,000 kg |
17,280 kg |
3,00,000 units |
2,16,000 units |
1,08,000 units |
1,20,000 units |
|
|
3. |
Purchase Price (Per kg/ltr) (in Rs.) |
- |
|
45/ltr |
50/ltr |
110/kg |
235/kg |
10/unit |
95/unit |
165/unit |
210/ unit |
|
|
4. |
Total Purchases (2*3) (in Rs.) |
- |
|
4,05,00,000 |
9,00,00,000 |
1,18,80,000 |
40,60,800 |
30,00,000 |
2,05,20,000 |
1,78,20,000 |
2,52,00,000 |
|
|
5. |
Grand Total Purchases (in Rs.) |
- |
21,29,80,800 |
|||||||||
|
e.) Budget (FY 2019-20) – |
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|
S. No. |
Particulars |
|
|
Rs. |
|||
|
1. |
Total sales
|
- |
- |
23,82,79,200 |
|||
|
|
Less: - Expenses - |
|
|
|
|||
|
2. |
Purchases |
- |
- |
21,29,80,800 |
|||
|
3. |
Salary |
a.) Delivery guys (No.) |
- |
- |
45 |
c.) Salary/ delivery guy (in Rs.) – 8,000 |
10,10,000 [(a*c) + (b*d)] |
|
b.) Corporate personnel (No.) |
Existing |
10 |
13 |
d.) Salary/ Corporate person (in Rs.) – 50,000 |
|||
|
Quality Personnel |
3 |
||||||
|
4. |
Advertisement |
- |
- |
18,00,000 |
|||
|
5. |
Other overheads |
a.) Per month – 4,00,000 |
b.) No. of months – 12 |
48,00,000 (a*b) |
|||
|
6. |
5-day training programme cost |
a.) No. of delivery guys trained – 75 |
b.) Cost of training per person (in Rs.) - 1500 |
1,12,500 [a*b] |
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|
7. |
Incentive based salary |
a.) No. of delivery guys – 75 |
b.) Incentive/ extra delivery (in Rs.) – 10 |
13,50,000 [a*b*e] |
|||
|
c.) Extra deliveries/ delivery guy/ day (No.) – 5 |
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d.) Number of days (No.) – 360 |
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e.) Total extra deliveries in FY 2019-20 (No.) (c*d) – 1800 |
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|
8. |
Cost to update app |
- |
- |
10,50,000 |
|||
|
9. |
Total Expenses (2+3+4+5+6+7+8+9+10) |
- |
- |
22,31,03,300 |
|||
|
10. |
Net Profit |
1,51,75,900 |
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f.) Financial Plan (FY 2019-20) –
1. It is assumed that there are 30 days in a month and hence 360 days in a year.
2. 5 delivery boys were laid off and 3 quality controllers were hired.
3. Cost to update app is considered to be a variable expense.
4. Other overheads, though indirect, were constant every month in FY 2019-20.
5. Advertisement of Rs 18,00,000 included digital advertisement cost of 6,00,000.
6. Product line is to be increased from 4 products to 8 products.
7. Milk (Cow) – Milk is sold at 2,500 lts per day in total in all 3 cities.
So, milk sold throughout the year = 2,500 lts* 30 days* 12 months
= 9,00,000 lts
This milk is distributed in the cities of Bengaluru, Hyderabad and Delhi in the ratio of their population i.e. 9:5:11 respectively. This is distributed to all 5,000 families.
So,
|
Cities |
2019-20 (in lts) |
All families (in lts) |
Each family (in lts) |
|
Bengaluru |
3,24,000 |
900/day |
0.5/day |
|
Hyderabad |
1,80,000 |
500/day |
0.5/day |
|
Delhi |
3,96,000 |
1100/day |
0.5/day |
8. Milk (Buffalo) – Milk is sold at 5,000 lts per day in total in all 3 cities.
So, milk sold throughout the year = 5,000 lts* 30 days* 12 months
= 18,00,000 lts
This milk is distributed in the cities of Bengaluru, Hyderabad and Delhi in the ratio of their population i.e. 9:5:11 respectively. This is distributed to all 5,000 families.
So,
|
Cities |
2019-20 (in lts) |
All families (in lts) |
Each family (in lts) |
|||
|
Bengaluru |
6,48,000 |
1,800/day |
1/day |
|||
|
Hyderabad |
3,60,000 |
1,000/day |
1/day |
|||
|
Delhi |
7,92,000 |
2,200/day |
1/day |
|||
9. Curd – Curd is sold at 300 kg/day in total in all 3 cities.
So, curd sold throughout the year = 300 kg* 30 days* 12 months
= 1,08,000 kg
This curd is distributed in the cities of Bengaluru, Hyderabad and Delhi in the ratio of their population i.e. 9:5:11 respectively. This is distributed to all 5,000 families.
So,
|
Cities |
2019-20 (in kg) |
All families (in kg) |
Each family (in kg) |
|
Bengaluru |
38,880 |
108 |
0.060 |
|
Hyderabad |
21,660 |
60 |
0.060 |
|
Delhi |
47,520 |
132 |
0.060 |
10. Paneer – Paneer is sold to only 1,200 families in total in all 3 cities. It is sold at a constant 0.300 kg/ order. There are 4 order per month per family.
No. of families – Bengaluru – 500
Hyderabad – 400
Delhi – 300
So, ratio = 5:4:3
So, paneer sold throughout the year = 0.300 gm * 1,200 families * 4 times in a month * 12 months = 17,280 kg
This paneer is distributed in the cities of Bengaluru, Hyderabad and Delhi in the ratio of 5:4:3 respectively. This is distributed to 1,200 families.
|
Cities |
2019-20 (in kg) |
All families (in kg) |
Each family (in kg) |
|
Bengaluru |
7,200 |
150/day |
0.300/day |
|
Hyderabad |
5,760 |
120/day |
0.300/day |
|
Delhi |
4,320 |
90/day |
0.300/day |
11. Butter Milk – Butter milk is sold at 5,000 units/ day in total in all 3 cities. Each family ordered 1 unit/order and each family ordered butter milk 4 times in a month.
So, Butter milk sold throughout the year = 5,000 units* 5 times in a month * 12 months
= 3,00,000 units
This butter milk is distributed in the cities of Bengaluru, Hyderabad and Delhi in the ratio of their population i.e. 9:5:11 respectively. This is distributed to all 5,000 families.
|
Cities |
2019-20 (in units) |
All families (in units) |
Each family (in units) |
|
Bengaluru |
1,08,000/day |
1,800/day |
1/day |
|
Hyderabad |
60,000/day |
1,000/day |
1/day |
|
Delhi |
1,32,000/day |
2,200/day |
1/day |
12. Cheese – Cheese is sold to 600 families per day at 1 unit to each family. Families in – Bengaluru = 200 Hyderabad = 300 Delhi = 100 So, cheese is sold at 600 units per day in total in all 3 cities and ratio is 2:3:1 for the cities of Bengaluru, Hyderabad and Delhi respectively.
So, cheese sold throughout the year = 600 units* 30 days* 12 months = 2,16,000 units
|
Cities |
2019-20 (in units) |
All families (in units) |
Each family (in units) |
|
Bengaluru |
72,000 |
200/day |
1/day |
|
Hyderabad |
1,08,000 |
300/day |
1/day |
|
Delhi |
36,000 |
100/day |
1/day |
13. Cream – Cream is sold to 300 families per day at 1 unit to each family.
Families in – Bengaluru = 150
Hyderabad = 100
Delhi = 50
So, cream sold throughout the year = 300 units*30 days* 12 months
= 1,08,000 units
|
Cities |
2019-20 (in units) |
All families (in units) |
Each family (in units) |
|
Bengaluru |
54,000 |
150/day |
1/day |
|
Hyderabad |
36,000 |
100/day |
1/day |
|
Delhi |
18,000 |
50/day |
1/day |
14. Butter – Butter is sold to all 5,000 families 2 times in 1 month at 1 unit/family per order.
So, butter sold throughout the year = 5,000 families* 2 times in 1 month* 12 months
= 1,20,000 units
|
Cities |
2019-20 (in units) |
All families (in units) |
Each family (in units) |
|
Bengaluru |
43,200 |
1,800/day |
1/day |
|
Hyderabad |
24,000 |
1,000/day |
1/day |
|
Delhi |
52,800 |
2,200/day |
1/day |
Conclusion
It is concluded that in comparison to the previous year, the start-up was able to convert its loss of Rs.68,55,000 in FY 2018-19 into a profit of Rs. 1,51,75,900 in FY 2019-20 through the increase in product base and selling price. Hence, the 3 year old start up can also open its avenues to private venture funding in response to the fact that it offers significant growth opportunities in the long-term.Attached File Details
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