BCS Solution Summary(i) Budget Budget is statement of future expenses and income. So from rising resources and proper allocation to various dept. is very important to operate successfully and smoothly. As at current we are making loss of 5,71,250 INR per month. But industry prospective is looking very good in upcoming years. So I plan to use debt fund as interest rate are low and govt. policy is supportive providing tax concession for start up. So we have taken 1 Cr loan under credit guarantee Scheme. Under this scheme central govt. provides collateral free loan upto 2 Cr. And with coordinate to other dept. and their requirements I have provide funds for their operation and also for capital expenditure is provide. We will incur 36,00,000 as capital expenditure in IT system, Quality.We have deficit of 63,52,875 in FY 2020-21. (ii) Financial Plan As in current FY(2019-20) we are making loss of 5,71,250 INR per month. But as per Estimated P&L Ac shows loss of 5,15,270 per Month. And in this we have taken huge expenditure of Training, Marketing as a revenue expenditure but these expense will benefit in long run. The reason for loss is training and development program expenditure, Marketing activities like free products, coupons, Gift etc for capturing market share. But by the ending of FY 2021-22 we will reach at brake even point or little profit. Then we will look to big investment in cold storage, warehouse, hiring more Human Power, increasing presence in more cities, increasing product portfolio etc. by rising funds from angel investor, Private players, or venture capital as per that market condition.

Solution

(i)Budget for Next Financial Year

Master Annual Budget for 2020-21

Notes:

Revenue from operation: It is based on monthly Sales forecast which is given in below table:

Budgets of respective department.

Marketing Dept.

I consult with Marketing dept. then I allocated fund for above mention purpose.

HR Dept.

Note : Please look at uploaded pdf for the all calculation reference.

Finance/Admin/Accounts Dept.

Note: Please look at uploaded pdf for all calculation.

IT dept.

Business Advisory:

For business advisor we pay 50,000 Rs per Year to our both advisor.

For Purchase of material I calculated 85% of our revenue. So 85% of 15,71,64,750

 is 13,35,90,038. So approx 14Cr I allocated.

Quality Management and Capital expenditure is very essential for any business so I also allocate for this.

(i)Financial Plan

Before moving to our financial plan first we look to our estimated Profit & loss A/c for year ending 2020-21. And plan of capital expenditure in FY 2020-21.

Profit & loss A/c for year ending 2020-21

This is Estimated P&L A/c.

In Previous Year we are making loss of 5,71,250 INR per month but in next financial Year we will make loss 61,83,250/12=5,15,270 INR per month.

Capital expenditure

Notes:

1. Training cost  8,00,000 is taken as revenue expenditure in FY 2020-21 but it will benefit for long term.
2. Same for Marketing.
3. As in IT we will incur 31,00,000 we will benefit for long term.
4. In quality management we will incur  6,00,000 as capital expenditure and 400000 is allocated for it’s maintenance.
5. Material, Employee, Bonus, Training, Recreational, Annual function, Marketing is as per budget.
6. IT expense is Maintenance of Hardware and Software is 3,50,000.

Now as in next financial year(2020-21) we have developed our IT system, Skill full Human resource, Quality management system which lead to more revenue in FY 2021-22 and our company will start making profit little bit at end of FY 2021-22

And also we will reduce our loan to 50,00,000. As on 1 Apr 2020 our loan is 1 Cr and on 31 mar 2021 we will paid 25,00,000 and on 31 mar 2022 will again paid 2500000. So on 1 Apr 2022 our loan is 50,00,000.

Then in 2022-23 we will try to create get funds from angel Investor or from Private player, or venture Capital etc as per market condition at that time. To future expand our business (by increasing product portfolio, reaching to other cities, cold storage, warehouse creation, etc as per of business.

Optional Assignment

ConclusionAs DND LLP is in perfect competition all firm earns normal profit. And all firm are price takers. So operating efficiently, reducing cost, increasing market share is only way to survive in the industry. As DND LLP is in Dairy product quality matters very much, perishable nature of products is big challenge that firm has to face. So to survive in longer run expenditure on quality management, cold storage, etc are needed. Customer grievances need to be solved to retain customer. Expanding business in product as well as cities to serve is going to be very crucial for next 5 Years.

Attached File Details