NMO S4 SPRINT ONE | BUSINESS CASE SCENARIO - 04 | Airway Delivery: A New Business Opportunity
Submission BCS
DRONE AIRWAYS PROVIDING DOOR AND SERVICES
Submission Date & Time: 2022-02-10 05:40:35
Event Name: NMO S4 Sprint One - SB Patil
Solution Submitted By: Akash. M. Devadiga
Assignment Taken
FINANCIAL PLANNING FOR THE YEAR 2021-22 [BUDGET ]Case Understanding
:- Airdrop delivery is a courier based company, which has branches across india and deliveries to most pin-codes. Company decided to venture into “Hyper Local Delivery Space†and want to conduct local delivery through drones. The company has all the necessary permissionfrom Director General Of Civil Aviation[DCGA], and it is a manatory rule from all the flying objects in india. For the successful kick start of the business,the company has conducted test deliveries trials to check beyond the visual line of sight. Company has decided to start this venture as “short range drones based services†instead of long range drone flight range operations due to high purchase of “long range dronesâ€.Company has intended to build an end-to-end drone operations and amanagement platform through which a rapid scaling of business can be achieved. Company has performed several successful beta testing deliveries for initial participants such as food delivery companies, few pharma chains and internal local deliveries and looking forward to exploring more business areas for cost effective cargo deliveries we need to prepare a budget which can help company reach breakeven within first year of its operation and can expand in future.BCS Solution Summary
The budget for the Financial year 2021-22 is 10 crores. Company needs to make certain number of revenue to reach break even per day. Solution also contain the expansion plan of drone facitities. The key area where most of the budget amount has been spent 1. Digital Marketing 2.Promotional Material 3. Company Website- Website development, Android app development cost, App developers salary. We estimated around 3-4 crores to successfully set up our commercail drone delivery service business. And therefore still we utilized the remaining 6-7 crore in purchasing more long and short range drones ad hiring of employees for drone maintenance and operations.Solution
MULTI-ROTOR DRONE[LONG RANGE]:- Multi-Rotors are UAVs that use more than two rotors with fixed-pitch spinning blades htat generate lift. By changing the speed of the rotors so that the thrust generated is greater than, equal to or less than the forces of gravity and drag acting on the aircraft, the drone can be made to ascend, hover or descend.
QUADCOPTER DRONE[SHORT RANGE]:- These drones have little less carrying capacity than heavy weight carrying drones. None the less, it can also fly over great distances to deliver the package. the body is lighter and can fly up to greater altitude to avoid disturbances and obstacles.
Service act:-
From the 1st of June 2016, service tax is levied at 15% of the value of taxable services under Section 66 of the Service Tax Act. The 15% includes 0.5% Krishi Kalyan Cess and 0.5% Swach Bharat Cess.
Budgeting and forcasting:-
Budgeting, planning and forecasting (BP&F) is a three-step strategic planning process for determining and detailing an organization's long- and short-term financial goals. ... Forecasting uses accumulated historical data and market conditions to predict financial outcomes for future months or years.
DISTRIBUTION OF FUNDS AS PER THE DEPARTMENT
|
DEPARTMENT |
FUNDS |
|
MARKETING |
3,00,00,000. |
|
HUMAN RESOURCE |
2,00,00,000. |
|
IT |
2,00,00,000. |
|
FINANCE |
3,00,00,000. |
|
TOTAL |
10,00,00,000. |
BUDGET ALLOCATION FOR THE FINANCIAL YEAR 2021-22
|
SR.NO |
DESCRIPTION |
VALUE[INR] |
|
A |
Fixed cost |
1,00,00,0000 |
|
B |
No. of services in a year |
6,10,000 |
|
C |
Net sales cost per service [avg order] |
200 |
|
D |
Net sales= [B*C] |
1,22,20,0000 |
|
E |
Variable cost per service |
15 |
|
F |
Total variable cost=[B*E] |
91,50,000 |
|
G |
Contribution= [net sales- variable cost] |
1,12,85,0000 |
|
H |
P/V Ratio[CMR]=[Contribution/Net sales] *100 |
92.5 |
|
I |
Break even point[sales]=[fixed cost/ ‘P/V Ratio’] *100 |
1,08,10,8108 |
|
J |
BEP [Months] |
10.63 Months |
Sustainability and Expansion Strategy:-
One of our major goals of starting Airdrop Delivery is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.
We know that one of the ways of gaining approval and winning customers over is to offer our drone delivery services a little bit cheaper than what is obtainable in the market and we are well prepared to survive on lower profit margin for a while.
Airdrop Delivery will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.
We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
Conclusion
As mentioned above the company’s buget shows surplus and company will not face any loss in the future. More delivery should be done by short range drones. To achieve higher profitability the company should use long range drones. The break even point will be achieved within 10.6 month. The surplus should be invested in the company’s expansion plan and future projects. As Airdrop’s financial situation is very strong, the company will perform its best in the futureAttached File Details
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Article Type: Business Case Scenario, Case Study Solution Submission
Business Case Detail
Title: NMO S4 SPRINT ONE | BUSINESS CASE SCENARIO - 04 | Airway Delivery: A New Business Opportunity
Type: Case Study
Stream: Management
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