Beyond Budgets: Daily Needs Delivery's Financial Vision for FY 2023-24

Assignment Taken

1.Prepare the budget for the next financial year. 2.Prepare a financial plan for the next Financial Year for Daily Need Delivery.

Case Understanding

Daily Needs Delivery LLP (DND) has emerged as a thriving Indian startup since its inception in 2020, founded by Sam Malhotra and Rajish Gupta. With an initial seed capital of INR 15 lakhs, the company has expanded its footprint across Bengaluru, Delhi, and Hyderabad, offering essential products through a convenient app-based ordering system. This financial overview, viewed through the lens of the Finance Head, provides a comprehensive analysis of the company's financial status, operational hurdles, and strategic recommendations for the upcoming fiscal year (FY 2023-24). Financial Overview: DND has witnessed significant growth, boasting a daily sales figure of INR 326,250 as of February 20, 2023. The FY 2021-22 annual sales surged to INR 117,450,000, marking a substantial increase from the previous fiscal year's INR 67,211,000. With a workforce comprising 90 employees, split between 10 in the corporate office and 80 in delivery operations, DND has solidified its position in the competitive daily need delivery market. Operational Challenges: Despite commendable success, DND grapples with operational challenges that directly impact customer satisfaction and financial performance. Delivery issues, including complaints about missing deliveries and absentee delivery partners, contribute to customer dissatisfaction. Quality concerns involving foul smells and taste issues, compounded by the perishable nature of products, result in a 0.2% loss in sourced inventory. Subscriber service challenges in non-dense areas, including unfulfilled services and the risk of app uninstallations, further exacerbate operational complexities. Financial Analysis: Projected daily sales for milk, curd, and paneer indicate a monthly sales projection of INR 9,50,000. Operating costs, totaling INR 17,90,000 monthly, encompass employee costs (INR 11,40,000), purchase costs (INR 3,50,000), advertisement costs (INR 2,00,000), and other overheads (INR 3,00,000). The projected monthly profit stands at INR 20,00,000. Strategic Recommendations: To address operational challenges and foster sustained growth, strategic recommendations include enhancing operational efficiency through real-time tracking systems and delivery partner training. Quality control can be improved by investing in better packaging and regular quality checks. Subscriber services should focus on cautious expansion in non-dense areas and enhanced communication channels. Cost management strategies involve evaluating costs against revenue potential, renegotiating supplier contracts, and implementing cost-effective marketing strategies. Revenue diversification through the introduction of new products, technology enhancements in the app, and comprehensive marketing strategies, including loyalty programs, are crucial. Additionally, a contingency fund and risk management plan are recommended for unforeseen circumstances.

BCS Solution Summary

I. Budget for FY 2023-24: Sales and Marketing: Increased budget for Advertisement (INR 300,000), Referral Programs (INR 100,000), and Marketing Campaigns (INR 200,000) to enhance visibility and customer acquisition. Operations: Allocated funds for training delivery partners (INR 150,000), implementing tracking technology (INR 100,000), introducing a customer feedback system (INR 50,000), and improving quality control measures (INR 75,000). Human Resources: Focused on employee retention, addressing absenteeism, and hiring with budget allocation for Employee Training Programs (INR 200,000), Recruitment Costs (INR 150,000), Incentives for Delivery Partners (INR 100,000), and Employee Welfare Programs (INR 75,000). Quality Control: Allocated funds for quality assurance measures (INR 100,000) and regular quality checks (INR 50,000) to address issues related to foul smells and bad taste. Logistics: Focused on minimizing losses due to perishable nature with Improved Packaging (INR 75,000), Route Optimization Technology (INR 50,000), and Cold Storage Solutions (INR 200,000). Technology and App Development: Increased budget for App Maintenance (INR 150,000), Customer Support System (INR 100,000), and App Development for Non-Dense Areas (INR 300,000) to enhance user experience and reduce uninstallations. Finance: Allocated funds for Financial Software/Tools (INR 50,000) and Internal Auditing (INR 75,000) to streamline financial processes and improve accuracy in budgeting. Miscellaneous/Contingency: Provided a Contingency Fund (INR 200,000) to address unforeseen challenges or opportunities. Total Budget: INR 25,00,000 Financial Projections for FY 2023-24: Projected Annual Sales: INR 130,728,897 Projected Annual Operating Cost: INR 120,000,000 II. Financial Plan for FY 2023-24: Revenue, Expenditure & Profit Projection: Projected Sales: INR 130,728,897 Projected Total Revenue: INR 132,036,185.97 Expenditure: Salary (Delivery Partners and Corporate Employees): For FY 2020-21: INR 736,000 For FY 2021-22: INR 1,140,000 Total Purchase for FY 2022-21: INR 8,718,750 Advertisement: INR 200,000 (Fixed) Overheads: INR 300,000 (Fixed) Profit: For FY 2020-21: INR 56,852,250 For FY 2021-22: INR 115,760,250 For FY 2022-23: INR 130,371,281.52 Financial projections for FY 2023-24 anticipate sales of INR 130,728,897, with a projected total revenue of INR 132,036,185.97. Expenditures include salaries, purchases, advertisement costs, and fixed overheads. The profit trend showcases substantial growth, reaching INR 130,371,281.52. This comprehensive financial plan positions DND for continued success, emphasizing strategic investments in technology, quality control, employee welfare, and market expansion. The proactive approach to addressing operational challenges aligns with market demands and customer satisfaction, fostering sustained growth for the organization.

Solution

A. Budget for next Financial Year

• BUDGET – 2023-24

To prepare the budget for the next financial year for Daily Needs Delivery (DND), we need to consider various departments and their financial needs. Here's a comprehensive budget with coordination across departments:

1. Sales and Marketing:

1. Objective: Increase app installations, retain existing customers, and expand service areas.
2. Budget:
   • Advertisement: INR 300,000 (Increase for more visibility)
   • Referral Programs: INR 100,000
   • Marketing Campaigns: INR 200,000

 2. Operations:

1. Objective: Improve delivery accuracy, reduce missing deliveries, and address customer complaints.
2. Budget:

• Training for Delivery Partners: INR 150,000
• Implement Tracking Technology: INR 100,000
• Customer Feedback System: INR 50,000
• Quality Control Measures: INR 75,000

 

3. Human Resources:

1. Objective: Improve employee retention, address absenteeism issues, and hire additional staff.
2. Budget:

• Employee Training Programs: INR 200,000

• Recruitment Costs: INR 150,000
• Incentives for Delivery Partners: INR 100,000
• Employee Welfare Programs: INR 75,000

4. Quality Control:

1. Objective: Address issues related to foul smells and bad taste.
2. Budget:
   • Quality Assurance Measures: INR 100,000
   • Regular Quality Checks: INR 50,000

 5. Logistics:

1. Objective: Minimize losses due to perishable nature and optimize delivery routes.
2. Budget:

• Improved Packaging: INR 75,000

• Route Optimization Technology: INR 50,000

• Cold Storage Solutions: INR 200,000

 6. Technology and App Development:

1. Objective: Enhance user experience, resolve app-related issues, and reduce uninstallations.
2. Budget:

• App Maintenance: INR 150,000

• Customer Support System: INR 100,000

• App Development for Non-Dense Areas: INR 300,000

7. Finance:

1. Objective: Streamline financial processes and improve budgeting accuracy.
2. Budget:

• Financial Software/Tools: INR 50,000
• Internal Auditing: INR 75,000

 

 8. Miscellaneous/Contingency:

1. Objective: Address unforeseen challenges or opportunities.
2. Budget:

• Contingency Fund: INR 200,000

Total Budget: INR 25,00,000

 

 B. Financial Projections for the Next Fiscal Year (FY 2023-24):

   - Projected Annual Sales: INR 150,000,000

   - Projected Annual Operating Cost: INR 120,000,000

 

1. Financial Plan for the next Financial Year

 

• Revenue, Expenditure & Profit Projection-

• Sales-

FY 21 (A)	FY 22 (A)	FY 23 (P)
67211000.00	117450000.00	130728897.00

 

Sales as per the given case study for the FY 21& 22 are as follows-

FY 2021- 67211000

FY 2022- 117450000

Projected Sales for the FY 23 – 130728897

 

• Total Revenue-

The total estimated revenue for the FY 20,21 & 22 is:

FY 21 (A)	FY 22 (A)	FY 23 (P)
58841000.00	67211000.00	117450000.00

 

Based on this, the projected Total Revenue of FY23- 24 is 132036185.97

• Expenditure for Daily Need Delivery

Following are the estimated expenses as per the rates mentioned in the case study.

 

• Salary ( Delivery Partners and Corporates )

 

                           For FY 2020-21

                            

Delivery Partners	Corporate Employees
336000	400000

 

Delivery Partners

42*8000

= 336000

 

Corporate Employees

8*50000

=400000

 

 

For FY 2021-22

                            

Delivery Partners	Corporate Employees
640000	500000

 

Delivery Partner

80*8000

Corporate Employees

10*50000

 

Purchases

• The Total Purchase for the FY 2022-21 is 8718750
• The total Purchase for the FY 2021-22 is 453750

 

The Purchase is further divided in 3 Subcategories i.e.

Milk Buffalo Cow	260000 180000 80000
Curd	25000
Paneer	453750

 

Milk

• Buffalo 45*4000 = 180000
• Cow 40*2000 = 80000

Curd

• 250 kg * 100 INR = 25000

Paneer

• 750 Kg* 225INR = 453750

Advertisement

• Rs. 200000 (Fixed)

Overheads

• Rs. 300000 (Fixed)

 

 

Profit

FY 2020-21	FY 2021-22	FY 2022-23
56852250.00	115760250.00	130371281.52

 

Conclusion

In conclusion, the comprehensive budget and financial plan for Daily Needs Delivery LLP (DND) for the fiscal year 2023-24 reflect a strategic roadmap for sustained growth and operational excellence. The strategic allocations across various departments, such as Sales and Marketing, Operations, Human Resources, Quality Control, Logistics, Technology, and Finance, signify a holistic approach to addressing operational challenges and capitalizing on market opportunities. The budget's emphasis on increasing app installations, improving delivery accuracy, enhancing employee training, and implementing quality control measures underscores DND's commitment to customer satisfaction. The financial projections for the next fiscal year anticipate a robust performance, with projected annual sales of INR 150,000,000 and a calculated total revenue of INR 132,036,185.97. Addressing operational challenges, including delivery issues, quality concerns, and subscriber service issues, the strategic recommendations aim at improving operational efficiency, ensuring product quality, and expanding services cautiously in non-dense areas. The focus on cost management, revenue diversification, technology enhancement, and contingency planning positions DND for success in a competitive market. The financial plan's profitability trend, showcasing substantial growth over the years, exemplifies the effectiveness of the proposed strategies. With a proactive approach to financial management and operational challenges, DND is poised to strengthen its market position, enhance customer satisfaction, and achieve sustained success in FY 2023-24 and beyond. Regular reviews and adaptability to market dynamics will be crucial for navigating challenges and leveraging opportunities in the dynamic daily needs delivery sector.

Attached File Details

View Attachment file (DND Financial Report.pdf)

Video

Above is the attachment for the Financial Estimations of the Daily Need Delivery and the next year's financial plan projections. The solution for the case is based on the above attached report.