- INTRODUCTION

FINANCIAL REENGINEERING

Thanks giving seem to be the most pleasant of all jobs but it is none the less difficult when one tries to put them in words. Can these humble words and expressions or gratitude really convey the heart felt acknowledgment that are due to the weak words and the expressions fainter than what it should be. I am thankful to all our faculty members who has inspired and guided for completion of the project. His teaching us has been a milestone for us to complete this project work in a very limited time. Last but not least I am thankful to my friends who directly and indirectly co- operate, encouraged and inspired me to achieve my target.

The business environment of the present day has become so complex that organizations are necessarily to be alert to respond to the new challenges and opportunities. This involves a continuous process of managing the change. The idea that the change is essential, desirable and constructive within the established pattern of organization is realistic. The view that the change has the beginning and an end is no longer tenable in this continuum. Top management in its endeavor of reorienting the organization must recognize the need and set the tone for a change. This kind of change compels either innovation or improvement or both. In such an intricate situation many organizations tend to focus their attention in identifying innovations rather than improvement. However, the latter is considered to be more appropriate in accomplishing the task. Recently, a new concept called Business Process Reengineering (BPR) has emerged as a conspicuous tool for restructuring the organization. In fact, the process of reengineering not only fosters a favorable climate supportive of desirable change but also improves the organizations probability of success

Business Process Reengineering: DEFINITION:

The Business Process Reengineering is a complete life cycle approach. This provides the scope for problem identification and also solutions to implement the successful business operations. There are many new elements in BPR such as extensive use of IT and new perspectives on organisational structure. There is also more about process redesign, quality improvement and so on. It is a comprehensive method of assessing the current business process planning and redesigning the methods and implementing them for business solutions. Hence, the BPR is defined as The fundamental rethinking and radical redesign of the

business systems to achieve the dramatic improvements in critical and contemporary areas such as cost, quality, service and speed. It is a comprehensive and complete method, addressing such activities of organizing the project, assessing the current business process, designing the reengineered business process, and planning and implementing the solution. The origin and scope of BPR is derived from the concept of innovation. While the BPR recognises the process innovation, the innovation concept lays more stress on the product innovation. But, the reengineering efforts on business processes, which will improve the customer service quality, the product value, etc. It is notable that redesigning the processes improve the working life of employees which in turn lead to indirectly improved quality and responsiveness to customers. BPR is done for various business reasons and those could be

What is reengineering:Re-engineering is the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed. Michael Hammer and James Champy Re-engineering is a rapid and radical re-designing of processes, services, policies and the organizational structure of an organization. The purpose of reengineering is to make all processes the best possible. It is an effort to enhance the administrative effectiveness and efficiency. Reengineering is an effective tool for organizations striving to operate as effectively and efficiently as possible Examination and modification of a system to reconstitute it in a new form Financial

Re-engineering is the radical redesign of business processes and organisational structure

in order to achieve significant improvements in performance, such as productivity, cost reduction, cycle time, and quality

According to Michael Hammer and James Champy (1993). The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed. Maximizing customer value and minimizing consumption of resources while delivering the products and services. According to Thomas H. Davenport (1993). Encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human and organizational dimensions.

Business Process Reengineering involves changes in structures and in processes within the business environment. The entire technological, human, and organizational dimensions may be changed in BPR. Information Technology plays a major role in Business Process Reengineering as it provides office automation, it allows the business to be conducted in different locations, provides flexibility in manufacturing, permits quicker delivery to customers and supports rapid and paperless transactions. In general it allows an efficient and effective change in the manner in which work is performed

What is the Business Process Re-engineering The globalization of the economy and the liberalization of the trade markets have

formulated new conditions in the market place which are characterized by instability and intensive competition in the business environment. Competition is continuously increasing with respect to price, quality and selection, service and promptness of delivery. Removal of barriers, international cooperation, technological innovations cause competition to intensify. All these changes impose the need for organizational transformation, where the entire processes, organization climate and organization structure are changed. Hammer and Champy provide the following definitions:

NEED OF THE STUDY

A business involves the interest of various stakeholder who either support it or contradict it. The stake holder in the process of maximizing their wealth, try to get a leverage on every possible front by rewarding the other Each interest group tries its level best to grab maximum possible returns from the business. A win-win situation cannot be expected to turn up every time although attempts are made to bring such a situation about all the time. Inspite of being having a conservative approach to cost control leads to the loss of a good opportunity for making future profit there might be some uncertainty due to which promoters or the owners have to think for the reengineering of all the strategies of the business. The organization will have to use tactics in the short run and strategies in the long run to manage its finances if the ultimate result is to be favourable.for this cost and benefits from every corner must be looked into in the value chain of the organisation.For achieving such a goal there must be a flexible approach for achieving the desired results, with sustainable success . For such a reason the organization should have to use the reengineering processing which the organization creates the new innovative ides to redesign the processes of the organization to get the objective. Each organisation must determine itself when it is appropriate for them to reengineer. Reengineering should be done only if it can help in achieving an enhanced strategic position. Some strategic indicators that require reengineering include:

1. Realization that competitors will have advantage in cost, speed, flexibility, quality or service 2. New vision or strategy: a need to build operational capabilities. 3. Need to reevaluate strategic options, enter new market or redefine products/services. 4. Core operating processes are based on outdated assumptions/technologies 5. Strategic business objectives seem unreasonable. 6. Change in market place in the form of - Loss of market share New basis of competition/new competitors New regulations Shorter product life cycles New technologies in play.

So, if the company is at the cutting edge of an industry that has just undergone major changes reengineering might not be appropriate. However, if the organisation operates with old models instead of new technologies and approaches used by others, reengineeing may be urgently needed. Even if technical performance is adequate, other improvements may be needed such as training, organisational change, leadership development etc. In such circumstances also reengineering is required.

SCOPE OF THE STUDY

In this project, the objective was to establish a confirmed database as per the data requirement for the RE Finance Team which created a base for comparison and preparation of new Agenda packs.

. The implications of this practice would be as follows:

1. To make available capital expenditure information for all 3 formats. 2. To make available information useful in post audit analysis. 3. To make available information useful in trend analysis of commercials such as rental, maintenance 4. To make available information useful in trend analysis of financial such as capital expenditure, sales. 5. To make available easy accessibility of information to the team for reporting higher management

The scope of the project stands valuable for the long lasting the only thing needed is the updating the Database. The database will be directly helping in

1. Estimation of capital expenditure requirement for opening of new Stores in all 3 Formats. 2. To take decision on rentals and maintenance on the basis of past records. 3. To make estimation of sales, gross profit margin & Pre-opening expenses.

With these criteria in focus, we move on towards the methodology that was adopted for this particular project. The Status stands valid for a period till the project is being approved from the date it is being put forward for approval. Along with living standards the consumption pattern also changes so if the project is hold for long duration the demographics may change during the period.

OBJECTIVE OF THE STUDY

Market Comparison is the process which decides the location of the stores. On the basis of City, Trade Area, and Total Retail Sales population. Status of Project Submitted Database represents number of stores operating, number of Stores Approved to be opened & Pending Projects Determining the target market. Estimation of sales density. Determining the profit percentage. Determining the current status of the project. Classifying pending for the project. Help the team in reporting to the top management

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RESEARCH AND METHODOLOGY

The primary step was to understand the business model for this help of Real Estate policies & procedure guide (called as Bible for Real Estate) was taken. This guide illustrates what exactly is to be followed in accordance with Wal-mart International policies & procedures. The guide illustrates the site acquisition process as follows. 1. Selection of site on the priorities basis by Real Estate & Development team. 2. Once the site has been selected going for checking financial feasibility of the site by calculating IRR of the project. This IRR is also known as hurdle rate & currently the hurdle rate is 14%, if the project IRR is less than 14% than the project will be dropped & new site will be selected. 3. After financial feasibility approval estimation of Pre development expenditure is done. This expenditure includes all the paper works, training & development of employees who are going to be employed at the stores after its opening. 4. Once the Pre- Development expenditure is calculated than the project is represented for approval at different stage of Real Estate Committee (REC) Indian Real Estate Committee: The Project is first represented to Indian REC. The meeting of Indian REC is held at Gurgaon. Asian Real Estate Committee: Once the project is approved at Indian REC it is represented to the team of Asian REC. The meeting of Asian REC is held at Hong Kong at the Headquarter. The project upto the budget of $5000000 is approved by Asian REC.

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International Real Estate Committee: The project budget exceeding $5000000 need Approval of International REC. The headquarter of International REC is in ventonvilla U.S

5. Once the project is being approved at the different stage of Real Estate Committee Acquisition of Real Estate Site is done by fulfilling all the legal requirements in Accordance with In-Country Legal Laws. 6. Allocation of excess land. Sometime the seller is ready to sale whole lot of land only so in this case the company needed to purchase whole land &after purchasing it is sale the excess land within a year in order to prevent capital blockage. 7. Design and Construction services contract procedure. For Design & Construction of stores company prefer to outsource this activity through the process of bidding.for the purpose of bidding following is being done: Financial verification of contractor. Licensing verification of contractor. Verification on past performances on similar projects. Invitation for Bidding. Receiving of Bid from contractors. Bid Award.

8. Complying with the guidelines of Facility Planning & Management. Comply with all facility related to laws and regulations.

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Maintain safe environment for associate and customers. Meet customer expectations. Meet associate expectations. Create sustainable retail centers.

9. Budget Reconciliation This Budget is to be prepared on monthly basis once the site has been approved. This budget includes the expenditure like (Land cost, Building construction cost, Capitalized lease value, Fixtures & Equipments) In case of Budget overruns it requires Re-Approval From 5% to 10% Approved by Country CEO. Above 10% New Agenda is required for re-approval by the Regional Committee. Above 25% the project need to be re-approved by the IREC.

In this way complete information about the business model & Real Estate acquisition process was gained that helped a lot in undertaking this project.

5.2 FORMAT DETAILS

For understanding all three operating formats help of team member is taken and comparative study of all three formats were made to make it more clear.

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BASIS

SUPER MARKET COMPACT (SM) HYPER MARKET(CHM)

Cash & Carry (Best Price)

Size

Size of the store varies from 2k to 5k sq.ft.

Size of the stores varies from 30k 50k sq. ft. (Existing) 20k sq. ft. (New)

Size of the store varies from 40k -60k sq. Ft.

Location

Basically these Stores are Stand Alone.

Basically these Stores are the part of Mall. They can be Stand Alone also

Basically these Stores are Stand Alone.

Prototype

Metro-Meat Metro-Non Meat Non Metro-Meat Non Metro-Non Meat

32K sq. ft. (32k & <38.5k) 45k sq. ft. (38.5k 50k)

These stores are similar to godown for business to business operation

Division of Area

The total Area is divided in two categories Net Selling Area (NSA) Back Room (B/R)

The total Area is divided in three categories Net Selling Area (NSA) Back Room (B/R)

The total area is divided in five categories Net Selling Area (NSA) Back Room (B/R)

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Sub Lease Area (SLA)

Sub Lease Area (SLA) Office space Loading area

Rent

Generally Base Rent is Applicable.

Base rent + CAM Charges

Generally Base Rent is Applicable.

Lease period

Minimum Lease period required is for 15 years.

Minimum Lease period required is for 30 Years.

Minimum Lease period required is for 30 Years.

Operating stores

Presently we have 139 Operating & Approved Stores in different parts of Country.

Presently we have 10 Operating Stores in different parts of Country.

Presently we have 6 operating stores in different parts of country.

Now, the information about all three formats is available which created a base for the project. Following information about the stores is now available. Size of the stores which is helpful in calculating per sq. Ft. Rent Division of total area of the stores. Prototype of the stores

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Number of stores currently operating Minimum lease period which is useful in calculating capitalise lease value.

Market Comparison is the process which decides the location of the stores. On the basis of City, Trade Area, and Total Retail Sales population. Status of Project Submitted Database represents number of stores operating, number of Stores Approved to be opened & Pending Projects Determining the target market. Estimation of sales density. Determining the profit percentage. Determining the current status of the project. Classifying pending for the project. Help the team in reporting to the top management

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LIMITATION OF THE STUDY

MYTH It is not rightsizing or downsizing . It is not about reorganizing the organization . It is not the effort of a single leader . Empowered Team members, use of groupware & coexist .

REALITY Cost cuttings often lead to Layoffs, outsourcing & downsizing. Identification of focused business process clusters reorganized the organization Reengineering is often found to be a strategy of a narcissistic style of leadership In fighting communication challenges, survivors management & the resistance for reengineering by the professionals are often underestimated . A database holds all of the information about a record a flat database is very easy to manage. All the information is stored in one source. The limits of a database are not in the number of records you can put in, but in how much information you can track per record. As your organisation grows, and more people need to track a great deal of different information about each record, you may want to change to using a relational or shared database. This allows one of your staff to track meeting attendance and program involvement in detail, while another may search detailed information about each record's donation history. But you do not need this when you are starting up. Go with a simple, reliable data base program. Performance is reduced, due to increased I/O on the source database resulting from a copy-on-write operation to the snapshot every time a page is updated.

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Files cannot be dropped from the source database or from any snapshots. The source database must be online, unless the database is a mirror database within a database mirroring session.

If a source database becomes RECOVERY_PENDING, its database snapshots may become inaccessible. After the issue on the source database is resolved, however, its snapshots should become available again.

Excel worksheet as a database has a limited number of rows or records that you can store. But when you reach the 65k lines limit, you can convert it easily to Access and the rest of the application is can still be used.

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2-DISCRIPTIVE WORK ON SUBTOPIC OF STUDY

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DISCRIPTIVE WORK ON SUBTOPIC OF STUDY

Financial Re-engineering is done for various business reasons and those could be... Poor financial performance, External competition, Erosion of market share, or Emerging market opportunities Financial Re-engineering is not limited to, but also includes Organizing Around Processes:- Formation of teams to perform an entire process - Eliminate/minimize hand-offs Process Improvement:- Opportunity Driven - Incremental Product and Service Opportunities:- Customer:- How can the customers wants and needs be better understood? - Product / Service:- What improvements or added value cabe made to products and services?

Operational Goals:- Quantify the redesigned business process - Address The process as a whole as well as Individual activities Business Process Goals:- Set performance levels for the entire business process in term of:

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(1)Financial:- How much does/will the process cost to perform? (2)Organization:- What will the organizational structure look like? Deliverable Goals:Set performance levels for interim and ultimate process deliverables in terms of: (1)Quality (2)Efficiency (3)Cost

Types of financial Re engineering Corporate Re structuring;- Acquisition Financial Re-structuring:

The cementing of products, system, people, brands and technology has to be done with financial structuring, financial control system, financial benchmarking and financial quantification of every qualitative business variable .such cementing is called Financial Engineering. And the process to change the financial strategy to reconstitute the organization is known as the Financial Reengineering. The fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed in financial aspects is known as financial restructuring Corporate Re-structuring:

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Corporate Re-structuring refers to the job-cuts, divisional closures, focus on core competence, geographical concentration, product identification and strategic business units etc. it also refers to the repositioning. It basically deals with the redefining or researching of the purpose of doing business. It may also be defined as the conscious effort to restructure policies, programmes, products, processes and people. Corporate re-structuring may be held in any of the following situations: 1. Mergers /Acquisitions: when one company acquire or buy the majority share of the other company. That company which acquire the share, is called as holding company and to whom the holding company buy, is called as subsidiary company and all this procedure is called as acquisition. When two company have equally merge together and work out with each other having the same objective, this is called as merger.

e.g. TATA has acquire the corus group plc(steel company) situated in U.K the deal value was 12000 million dollar 2. Divestitures 3. De-mergers: Reengineering the Financial Platform

Summer 1998 - The timeshare industry, or as it is now referred to, the vacation ownership industry, continues to be one of the hottest segments of the hospitality industry. Almost every day, one of the major opportunity funds, Wall Street investment houses, or major hotel companies is looking toward acquiring one of the timeshare companies. By combining the existing infrastructure with high growth opportunities emanating out of their deal pipelines, the companies hope to create a large synergistic component to their hospitality offerings.

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Once acquired, these companies need to be able to transition from an entrepreneurial structure to one with much stronger corporate disciplines.

Nowhere is this more important than in the financial components to the "new" company business. Unfortunately, this is precisely where most vacation ownership companies are deficient. Most developers are long on sales and marketing know-how, but have always treated the financial systems as a corporate stepchild. Most bankers and other financial players are amazed at the un sophistication and inaccuracies which occur as a result of this underdeveloped corporate component. These deficiencies are manifested in the inability to accurately report on the companies financial condition, and also are directly responsible for millions of dollars in annual expenditures resulting from inefficiencies, in

both manpower and information systems.

Vacation Ownership - A Complex Business Model

Anyone who has engaged in or studied vacation ownership companies understands that they are complex business models which are very capital - intensive in their early years, yet throw off considerable cash in the later years. These companies initially start out as real estate development companies; they have all of the depth of those organizations, including feasibility, development and construction, design, etc.

Once the resorts are developed, the companies step into high gear and become sales and marketing entities. Not only is this a complex area, but it represents the single greatest corporate expenditure for the company. In order to properly evaluate programs, the systems and financial tie - ins must be in place for management to make crucial day - to - day decisions on marketing and lead generation programs. Such programs need to track hundreds of variables throughout the marketing and sales process. Once the properties are sold, these

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organizations then need to handle the large amount of mortgages which are generated in the sales generated process.

This complex business environment requires sophisticated management and information systems to not only keep track of the data. but to present it to management in the most efficient and useful fashion. Reengineering the company is the way to accomplish such a task. Value Capture

The deal value of $ 2.3 b is almost equal what Ford paid for the brand of Jaguar alone(approx $ 2b). The opportunity to buy brands like Jaguar and Land Rover ,which are rated among the top luxury brands in their respective segments, for cheap doesnt come knocking every time. Fast Growing Market Segment With about 30% growth rate, the luxury car segment is the top growing segment in India and has already seen the entry of biggies like Audi and Porsche. With established distribution network in India, Tata Motors can offer top-rated products for these segments. Though the absolute numbers may be small and would reduce due to the current downturn, the gains would be huge when the economy turns around and the salaries rise. Deal Financing Tata Motors financed the deal through a bridge loan of $ 3 billion arranged through a consortium of 8 banks. It intended to refinance that loan though a mixture of domestic and international equity issues and debt. However because of the liquidity crunch, a deal now will be more expensive than they'd initially planned for. Key Risk Factors

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The key risk after this acquisition would be the performance of JLR. Any drop in profitability would have an impact on Tata Motors consolidated financials.

A prolonged downturn in commercial vehicle demand would stretch domestic profitability and cash flow.

Further downturn in the global auto industry. Increasing cost of capital and liquidity crunch can hit bottom-line of Tata Motors much more severely.

Tata bought the companies because they believed that these two brands have a lot of growth potential in terms of revenue and sales. In the first 10 months of 2008 Land Rover's US sales fell by 37 per cent to 25,377 compared to the same period in 2007. Jaguar's sales in the same period helped by the new XF sedan were not as badly hit but its sales still fell 3.6 per cent to 12,575. At the same time while Jaguar's UK sales rose 11 per cent against last year's same period, Land Rover's sales fell almost 27 per cent to 30,241 units. Not surprisingly then like GM, Ford Motor, Mercedes and BMW suffering the downturn in the West, China, Russia and India seem bright spots for JLR also. Tata's confidence in JLR may not be misplaced. This year in Russia, Land Rover has turned out to the leading premium brand. Its sales grew 79 percent to 17,439 in the first 10 months of 2008 while Jaguar saw a more than 60 per cent growth to 1,423 units. Tata expects China to be Land Rover's No. 5 market this year and Jaguar's seventh largest, while Russia likely to be Land Rover's No. 3 and Jaguar's No 2 market. JLR's immediate priority is to set up a distribution network in India for both brands and the company feels that it can sell 2,000 to 3,000 units here to come on level with other premium brands such as BMW and Mercedes within two to three years. Process of the reengineering:

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First organization have to recognize the each and every steps of the organization which had been taken earlier to get the objective but was not appropriate to achieve the goal. Second they will have to take some modification in the steps i.e process, technology , structure and the strategy of the firm in order to constitute the organisation into the new form.

MOTIVATION FOR REENGINEERING

The motivations for reengineering are many, including: Reduce costs/expenses (the most cited business-driven reengineering project goal) Improve financial performance Reduce external competition pressure Reverse erosion of market share Respond to emerging market opportunities Improve customer satisfaction Enhance quality of products and services.

Basics of reengineering:
The business environment of the present day has become so complex that organisations are necessarily to be alert to respond to the new challenges and opportunities. This involves a continuous process of managing the change. The idea that the change is essential, desirable and constructive within the Established pattern of organisation is realistic. It is the

examination and change (reform) of five components of the business: that is, 1. Strategy 2. Processes 3. Technology 4. Organization 5. Culture

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Change in strategy:

A strategy has to keep thinking innovatively as an old strategy would be known to be unuseful. It will be necessary to formulate a new business formulae either they are new or old ones with moderate variation. Strategy must have to think of the following innovative concept or formulation:

1. Incremental cost-benefit analysis of every marginal change in the decision or situation. 2. Costing of the product, brands, employees and the enterprise, for long-term strategy formulation 3. Leveraging sunk costs by innovatively using such costs or commitments in future negotiation 4. To arrange for the discounted cash flow analysis of the alternate projects to be supported by multi-angle performance parameters so that the comprehensive assessment of the decision is possible 5. ERP would be possible if internal benchmarking of cost performance is built up. 6. To make national costing for a true application of profit center concept is a must. 7. Combining value chain analysis with segmentel ROI and enterprice portfolio mix theories 8. Forming a U curve relationship with both the vendors and dealers to create a strategic base for a long-term, sustainable and profitable partnership. 9. Making economic value added more meaningful. 10. Innovating network mix

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Change in process:

Realise the potential of your Finance Department. We can map out your processes enabling us to find anything preventing your department from working to its full potential. We can streamline processes to improve the efficiency of your Finance department and help the department become more than just an overhead in your profit and loss, but to start adding value! We can also help you develop controls and standards.

In the reengineering of an organization there is need to change the business processes, which will improve the customer service quality, the product value, etc. It is notable that

redesigning the processes improve the working life of employees which in turn lead to indirectly improved quality and responsiveness to customers. To improve the cost, quality, service and speed, companies are developing new processes to produce the results important to customer. They are looking for ways to become more flexible and responsive Change in the processes causes success in many organisations and has fueled the growth of the Business notables, for e.g.- Ford Motor Company.

Reengineering improved its invoice processing so that the process was accomplished by 75% fewer people and more accurate financial information was produced. - IBM Credit Corporation. A credit issuance process that used to take two weeks to complete now takes only hours with a 100- fold increase in productivity - Taco bell. They reconfigured their restaurants to increase peak capacity for a top unit from $400 per hour to $1500 per hour. At the same time they lowered prices; their average pricing today is about 25% less than nine years ago. In short the change in the processes are designed to be simpler to those they replace, several jobs might be combined into one and the number of checks and controls reduced. In the right

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sense, more frequently, it is the result that work is performed where it makes most sense, and workers can make more decisions themselves.

Change in technology:

In the process of reengineering of an organisation there is need to change the technology if that are not providing a satisfactory performance to implemented such a change new information technology (such as knowledge based, expert system and sophisticated telecommunications equipment) is frequently employed in the design of these processes.

The ultimate success of any activity expansion plan depends upon the quality of the systemprocessess-equipment used at various level of functioning a perceptual and automatic mechanism of technology review and upgradation should be an integrated part of the organization culture

Technology refers to the core technical details of both the main assets and operations because only high quality medical equipments do not make a hospital successful, without efficient doctors and staff handling them with efficient system. therefore technology refers to both core and support activities.

Changes in the technology basically refers to the following:

1. Technology upgradation collaboration: it refers to the innovative financial instrument and technology leasing and subleasing 2. Collaboration for technology funding : it refers to the long term bonds 3. Technological consortium : it includes cost- benefit analysis of alternate combination 4. In house R & D: it includes capital & revenue budgets 5. Employee training budget

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Change in organization:

Transition is a time of "passage", when people are apt to carry around some of the baggage of their past, as well as feel the first stirrings of their future. It is also a time when employees have to face a number of challenges as old processes and ways of doing business make way for the new.

Steps involved in the change of organisation:

1. Profiling the Existing Organization 2. Profiling the Future (Re-engineered) Organization 3. Analyzing the Gap

Results of the gap analysis should include the...

Gap between current and future organization structure, gap between current and future geographic locations, gap between current and future staff levels, staffing and deployment requirements, potential workforce adjustment impacts, organizational and employment adjustment, costs training and re-training requirements, career development requirements backfill requirements and replacement costs target groups and language requirements .

Change in Culture:

Change in culture provides a vehicle to open up communication and improve management practices. It changes the way people work and can create an environment that encourages innovation and change. It provides opportunities for employees to develop and improve their client-oriented approach. Middle managers will be impacted as the role of coach and facilitator takes on greater importance. This will in turn will improve client service, practical and pragmatic business approach management style of openness and consultation continuous

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learning organization employee participation and consultation client and quality service oriented employees continuous performance measurement value-added service and results orientation cross-functional integration

Poor financial performance:

In an organization if the performance of the various department is not upto the satisfactory level i.e. if they are giving poor performance or not according to the expectation of the organization then there would be a need to use the BPR process so that the objective of the firm could be achieved. External competition:

If the strategy of the organization is providing such an output which is not up-to the mark so that it can cope-up with the existing external competition provided by the competitor then there would be a need to change the strategy so that it would be beneficial to stay in the market with the appropriate benefit which would be best drien by the help of BPR .

Erosion of market share:

One of the greatest threat for the organization is the erosion of the market shares and if that happen than the firm will be in a great trouble and than would have to think of how to rise the market shares .for that purpose the organization would have to use the process of reengineering. Emerging market opportunities:

Every of the organization wants to get the opportunity Provided by the market so that it would be beneficial to the organization to spread the way to get the maximum profit and to satisfy the needs of the customer and it is not possible to get the market opportunity in the

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best possible manner without the help of the business process reengineering.Prerequisite essentials for Innovative Financial Engineering are : Needs strategic understanding of benchmarking Creative Thinking Courage to challenge the Traditional thinking Shrewdness to locate and discount individual interests of different stakeholders High ability to use business arithmetic and economical thinking together A strategic approach to combine the intellectual and the Emotional Quotient High ability to relate strategies, notional parameters and financial benchmarks in a holistic manner Maturity in selecting the most reasonable solution to a given problem Ability to work at both the levels of analysis macro and micro Quick grasp of the end result

Reengineering - The Critical Components

When refining processes, the working assumption is that the process is valuable and only requires minor evolutionary changes to achieve peak efficiency. In the case of reengineering, there is no such assumption. Reengineering involves a critical development of the following key components:

Developing a Jointly Committed

Team:

Consultants are an invaluable resource throughout the reengineering process, but change

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won't become a permanent part of the client culture without a project sponsor, employee consensus on the need for change, and involvement from all levels of the client organization.

Strategy

Assessment:

Process reengineering should be done with a contextual understanding of the client's strategy and critical needs. Many vacation ownership companies are cash - constrained due to timing differences among construction expenditures, commission payments, and cash collections. Reducing mortgage banking cycle time is an effective way to improve the velocity of the cash cycle. Baseline Diagnosis:

An objective performance baseline serves several purposes: it identifies gaps between current performance and best-in-class performance, pinpoints problem areas, and helps build client consensus on the need for change. It also establishes cost, quality, and cycle time targets for the reengineered processes.

Determining Scope and

Priority:

When the strategy assessment and baseline diagnosis are completed the project team selects and prioritizes the financial processes to be reengineered.

Process

Design:

In this phase, the project team develops a future state design hypothesis based on best practices from inside and outside the industry.

Impact Assessment / Implementation

Planning:

Reengineering often entails radical organizational, skill set, process, and technological change. Identifying the impact of chance on the client's organization and developing plans to address potential resistance gives the change process a greater chance of success.

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Implementation: During implementation, the client must assume primary responsibility, with guidance from the consultant. This institutionalizes the change process and empowers employees to seek and drive future change opportunities.

Integrated financial systems such as SAP, Oracle, PeopleSoft, or Lawson play an important role in the reengineering process. By replacing non-integrated legacy applications for General Ledger, Purchase Order, A/P, Travel & Entertainment, Human Resources, Payroll, and Inventory, companies can substantially reduce the time spent on manual journal entries, intercompany accounting, accruals, closing, consolidation, and report generation.

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Data Analysis & Interpretation

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Data Analysis & Interpretation

Who: Big Schools with Financial Challenges

Total Tuition Prior to Scholarship

Scholarship( 15% of Net Tuition) Ne t Tuition Incom e Less Uncollectible Tuition(1% of Net Tuition) State Reim bursem ents Net Fund Raising Donations/Grants Other I ncom e

8,346,873 (1,255,297) 7,091,576 (70,916) 280,000 1,150,000 850,000 54,000 9,354,660

Total Income Expenses

Total Salar ie s

6,911,818

Total Salaries/ Salaries related Expenses

Total School Re late d E xpe ns e s Total Office E xpe ns e s Total Building E xpe ns e s Total Othe r E xpe ns e s Total Fle xible E xpe ns e s Fixe d E xpe ns e s Total Re nt Ge ne r al Ins ur ance Tr ans por tation(Ne t) Total Fixe d E xpe ns e s Total OTPS E xpe ns e s Total (PS and OTPS)E xpe ns e s Ne t Pr ofit/(De ficit)

8,066,231
289,430 233,810 463,500 187,460 1,174,200

985,857 107,100 199,500 1,292,457 2,466,657 10,532,896 (1,178,236)

36

630 620 610 600 590 580 570 560 550 540 2005/6 2006/7 Budget 2007/8 Projected 2007/8

Small Schools With Challenges

2007-2008

Budget

SUMMARY
Hard Income Annual Fundraising Grants Total Revenue Expenses Personnel Other than Personnel - Facilities Other than Personnel - Other Total Expenses Operating Surplus (Deficit) - hard income % hard income coverage of expenses Operating Surplus (Deficit) - all income % all income coverage of expenses cost per student Surplus (deficit) per student - all income $1,485,500 $550,000 $101,250 $2,136,750

$1,691,853 $381,252 $224,234 $2,297,339 ($811,839) 64.66% ($160,589) 93.01% $22,745.93 ($1,589.99)

37

Enrollment

140 120 100 80 60 40 20 0 Act.2005/6 Act.2006/7 Budget 2007/8 Actuall 2007/8 Projected 2008/9

Foundation=Know What Your Schools Positioning Is and Program and Process Performance Implications

38

A
X=Our School A=School A B=School B C=School C U=Unserved Population

Must Be Strong on 1-2 And Ballpark On the 3rd

X
Product Leadership Operational Excellence

Customer Intimacy

39

The Schools Processes

THE WORK OF THE SCHOOL

Tuition Setting Financial Aid Process Expense Mgt Cash Flow Management

Recruit Students

Recruit Staff

Teach Students

Develop and Evaluate Teachers Raise Funds Manage Facilities

Develop Curriculum

Manage Finances

Communicate

What is desired investment posture for each process?

Taking Control

3-5 Year Investment Posture (Compound Annual Average Growth in Spending)

Strategic Investment Candidate (+8-10%)
Overall Faculty Compensation

Maintenance Candidate (+4-5%)

Reduced Investment Candidate (0-3%)

Target Departmental Compensation (e.g., Hebrew Language, Math and Science)

Overall Process Investment Target Process Investment Total Budget

Tuition Setting Financial Aid Process

40

41

In Summary Know your schools value proposition Understand the implications of that value proposition for process and program spending Take a long term prospective to financial planning Utilize creative budgeting: Process and Program budgeting to shape a more positive future Respect the Virtuous Cycle wisdom

42

11.1 creation of sample structure for Market Comparison

A sample structure is created as per the requirements of the RE-Finance team for market comparison containing following information:

Sl. No.

Average of INB. Comp Stores

INB. 1 2

INB. 3

INB. 4

INB. 5

INB. 6

Site Name Store Number DEMOGRAPHICS City Population Trade Area Population Total RETAIL SALES (000's) Retail Sales/capita TA Total Income (000's) Avg. HH Income Income per capita % Market Share Economic Levels A B C D& E 2008 Sales 2008 Sales Increase % 2008 Profit % 2nd Year Projections of Approved Agenda Pack 2010 Sales PSF % Increase Gross Profit % Other Income % Total Expense % Profit %

Contains Following Information:

43

Site Name Store Number City Population Total Area Population Total Retail Sales Total income Average House Hold Income Income Per Capita Total Sales Profit Percentage These informations were taken from Agenda Packs

44

11.2 Final Database for Market Comparison

Sl. No.

Comp Stores

1 Dugri

2 Gole Market 1003

3 Bhadson Road 1020

4 Cheema Nagar 1021

5 Simlapuri 1022

6 Leela Bhavan 1025

Site Name Store Number DEMOGRAPHICS City Population Trade Area Population Total RETAIL SALES (000's) Retail Sales/capita TA Total Income (000's) Avg. HH Income Income per capita % Market Share Economic Levels A B C D& E

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

1002

21,20,020 1,72,640 11,50,000 6,661 66,70,116 2,17,242 38,636 3.85% 23.10% 23.10% 20.80% 33.00%

21,20,020 1,93,357 48,40,000 25,031 1,15,50,000 3,36,012 59,734 1.34% 13.45% 13.45% 31.30% 41.80%

3,75,727 71,077 11,57,400 16,284 48,90,949 2,97,261 68,812 3.48% 18.00% 24.00% 33.00% 25.00%

11,42,517 69,691 9,74,844 13,988 42,74,420 2,81,905 61,334 4.83% 17.00% 29.00% 20.00% 34.00%

21,20,972 1,76,891 18,91,501 10,693 58,93,685 1,83,250 33,318 2.10% 11.00% 15.00% 39.00% 35.00%

3,75,727 81,700 10,75,020 13,158 39,90,000 2,10,000 48,837 4.16% 17.00% 27.00% 28.00% 28.00%

2008 Sales 2008 Sales Increase % 2008 Profit % 2nd Year Projections of Approved Agenda Pack 2010 Sales 4,34,65,074 PSF % Increase 31.36% Gross Profit % 11.74% Other Income % 0.23% Total Expense % 19.69% Profit % -7.71%

4,42,89,834 18055.4 14.00% 17.14% 0.20% 18.73% -1.39%

6,49,84,985 21661.0 14.00% 17.14% 0.20% 19.05% -1.71%

4,02,76,800 14540.4 20.00% 18.17% 1.49% 22.80% -3.14%

4,70,64,172 12824.0 20.00% 18.73% 1.17% 21.46% -1.56%

3,98,04,000 10552.5 20.00% 17.34% 1.17% 22.54% -4.03%

4,47,12,960 14025.4 20.00% 17.64% 1.49% 22.31% -3.19%

45

11.3 creation of sample structure for Status of Project Submitted

A sample structure is created as per the specifications of Team for maintaining a Database for Status of Project Submitted:

Snapshot of Sample Structure

Projects Details Sno. Zone 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Site Name City State Team Leaders BDM's Store Layout Status Format Merchandise Movement Completion PPt Date (EZD/EDM/BP/HM) Planner Date
Drawing / Customer

46

Contains the following information: Zone Site Name State City Team Leader Business Development Manger Format of Store Agenda Pack Status Capex Status

47

11.4 Final Database for Market Comparison

Snapshot of the Database for Project Submitted

Projects Details Sno. Zone 1 NORTH Raj Nagar 2 NORTH Sector-3 3 NORTH Gomati Nagar Extension 4 NORTH Rohtak Road 5 NORTH Hansi Gate 6 NORTH Aggarsen Chowk 7 NORTH Bank Road 8 NORTH Hospital Road 9 NORTH Ambala Road 10 NORTH Thana Road 11 NORTH Sohna Road 12 NORTH Rajapuri 13 NORTH Yamuna Colony 14 NORTH Saharanpur Road 15 NORTH Pil ibheet By Pass Road 16 NORTH Bareil y By Pass Road 17 NORTH Dasua 18 NORTH Mukerian 19 NORTH Chhani Himmant 20 NORTH Roop Nagar 21 NORTH Udhampur Site Name City State Team Leaders BDM's

Store Layout Status Format Merchandise Movement Completion PPt Date (EZD/EDM/BP/HM) Planner Date EZD EZD EZD EZD EZD EZD EZD EZD EZD EZD EZD EZD EZD EZD EZD EZD EZD EZD EZD EZD EZD
Drawing / Customer

Ghaziabad UP Ajay Sharma Sumit Ahluwalia Vasundhara UP Ajay Sharma Sumit Ahluwalia Lucknow UP Ajay Sharma Sumit Ahluwalia Bahadurgarh HR Ajay Sharma Manu Bansal Bhiwani-1 HR Ajay Sharma Manu Bansal Bhiwani-2 HR Ajay Sharma Manu Bansal Rampura Phul PB Ajay Sharma Manu Bansal Maur PB Ajay Sharma Manu Bansal Pehowa (Old Site) HR Ajay Sharma Manu Bansal Nazafgarh DL Ajay Sharma Kirti Sharma Dharuhera HR Ajay Sharma Kirti Sharma Dwarka DL Ajay Sharma Kirti Sharma Dehradun UT Ajay Sharma Pawandeep Dehradun UT Ajay Sharma Pawandeep Bareil y kichha Dasua UP Ajay Sharma Pawandeep UT Ajay Sharma Pawandeep PB Ajay SharmaDharminder Randhawa

Mukerian PB Ajay SharmaDharminder Randhawa Jammu J&K Ajay SharmaDharminder Randhawa Jammu J&K Ajay SharmaDharminder Randhawa Udhampur J&K Ajay SharmaDharminder Randhawa

48

5.3 REQUIREMENTS OF DATABASE

After A database allows you to manage and use an incredible variety of information easily. Databases are easy to set-up, easy to manipulate and easy to use. A database allows you to maintain order in what could be a very chaotic environment. There may not be the resources to hire a full-time database manager or a short-term consultant. Initial data base structure can be very basic, easy to use and to maintain. Databases can be expanded and manipulated as your organisation grows and your resources increase. Database is basically a brief information & Reporting of all the stores that are operational & approved to be opened throughout the country. It is easy to access information from the Database because all the information is available at single sheet It is reliable because information in each cell is linked with the original source. The informations that is needed to the team of Real Estate Finance was available in Agenda Packs but the size of one Store Agenda pack is more than 40 pages of excel sheet so it was not easy to access information from there & make comparative study of the stores. A base was needed to be created for preparation and comparison of New Agenda Packs.

5.4 UNDERSTANDING THE AGENDA PACKS

Agenda pack is something that is prepared for every store before its opening by the team of Real Estate Finance. Agenda pack contains all the information regarding the stores and these

49

Agenda packs are represented at different level of Real Estate Committee for Approval. The understanding of agenda pack is needed, as all the information was to be picked from the Agenda pack & information in the Database is needed to be linked from the Agenda pack. Agenda pack contains all the information such as: Store Number Store Name City & State of Store Location Agenda Pack IRR Agenda Pack NPV Type of Lease Rent Escalation after number of years Controllable & Non Controllable Expenses Capital expenditure Real Estate & Non Real Estate Expenses

Along with these informations many other information is used from the Agenda Pack as per the requirement of Database. The Agenda pack contains hundreds of information in around 40 pages of excel sheet so the Database requirement was to pick information from this Agenda Pack as per the requirement of RE-Finance Team.

50

5.5 PREPARED A SAMPLE STRUCTURE OF DATABASE

Wal-Mart India Private Limited

Real Estate Portfolio_ Easy Day Market IREC Approved Financials Sl. No. Store Number Site Name City Applicab Agenda Agenda Backroo Loading Super le area Approval Exchg NSA (Sq. Sublease Box Area State pack IRR pack NPV m (Sq. Area (Sq. Area (Sq. for Land Date Rate ft.) Office (Sq. Ft.) (Sq. Ft.) % ( Rs.'000) ft.) Ft.) Ft.) Rental Area in space Sqft Acres

51

Sample structure for Database

Database contains Following: 1) Store number 2) Site Name 3) City of store 4) State Of Store 5) Prototype of Store 6) Agenda Pack IRR 7) Agenda Pack NPV 8) Exchange Rate 9) Net selling Area 10) Backroom Space 11) Sublease Area 12) Rent Rs/sq.ft/month 13) Approved occupancy cost 14) Actual Occupancy Cost 15) Security Deposit No. of Months 16) Advance Rent no. of months

52

17) Rent Escalation rate 18) Rent Escalation After no. of years 19) Capitalise Lease Value 20) Sales Density Rs/sq.ft/month 21) Sales Per Day 22) Gross Profit 23) Controllable Expenses 24) Capital Expenditure 25) Capital Expenditure Rs/sq.ft/month 26) Yearly Sales 27) Non-Real Estate Expenses 28) Security Deposit No. of months 29) Advance Rent No. of Months 30) Total Rental on Box Area

53

5.6 CALCULATIONS IN DATABASE

In preparation of the Database several calculations were required & also simple applications of mathematical & Financial Formulas for Calculation of following: 1. NPV 2. IRR 3. Rent Rs./Sq.ft./month 4. Sales Density Rs./Sq.ft./month 5. Sales Per Day 6. Net margin 7. Controllable expenses percentage to sales 8. Total Capital Expenditure

NPV =

Where, NPV = net present value CF= cash flow occurring in several years K= the discount rate N= life of project in year

54

IRR= L+
Where,

(H-L)

L = lower discount rate, at which NPV is positive, H = higher discount rate, at which NPV is negative, A=NPV at lower discount rate B = NPV at higher discount rate

Rent

Rs./Sq.ft./month=

Yearly

rent/Super

Area/12
Where, Super Area= Net Selling Area + Backroom +Loading Area

Sales

Density

Rs./Sq.ft./month

Yearly

Sales/NSA/12
Where, NSA= Net Selling Area

Sales per Day = Total Sales * 10^6 / 365

55

Where, 10^6= for converting from million to Rupees

Net Margin = Gross Margin Shrink Controllable expenses percentage to sales

* 100

Where, Controllable Expense = salary + Repair & Maintenance + Utility + outside Services + Merchant Fees + Logistic

Total

Capital

Expenditure

Building

Refrigeration + Fixtures + General Equipments + Signing + Loss & Prevention + ISD

56

QUESTIONAIRE

NAME: ______________________________ OCCUPATION: Business Service:-Private employee Government employee Retired RESIDENCE LOCALITY: ______________________________ ANNUAL INCOME: 2.5-5.00 lakhs 5.00-7.5 lakhs 7.5-10.00 lakhs Above 10.00 lakhs Presently you are having a: a. An apartment b. A home of yours

Q1.> where are you planning to invest your savings now? a. Real Estate

57

b. Fixed Deposits c. Commodities Market d. Any other If in real estate sector then:

Q2>

Preference of opting the sector is due to: a. Lack of time b. Land prices are increasing c. Wants to live in an organized manner d. Facilities available like 24/7 electricity power and water supply, parking, etc. e. All the above

Q3>

In which type of city do you prefer to buy? a. Tier 1(metros) b. Tier 2(developing cities) c. Tier 3(underdeveloped cities)

Q4>

Your preference would be to buy a: a. A land and build a house b. An apartment for better living environment c. Anyone (depends upon income)

58

Q5>

If your reply is an apartment, then what are the parameter that you will go for? a. Finance Availability b. Brands c. Society d. Time duration e. Location

Q6>

Would you be preferring to involve a mediator?

a. Yes b. No Why (for either of the reply)? (__________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ _________________________) Q7> What are the factors that effects your decision in buying an apartment. a. Proximity with education and the health care institution. b. Facilities available c. Society and physical evidence available d. Either of the combinations (mention:____) e. All of these

59

Q8>

From where do you raise the finance for buying the same?

a. Financial Institutions b. Loan from relatives and colleagues c. Adequate savings d. Any other (________)

Q9>

Do you think that proximity with educational and health care institute and other

facilities effects the buying behavior. a. Strongly disagree b. Disagree c. Not disagree nor agree d. Agree e. Strongly agree Q10> Do you think that proximity with the market place effects the buying behavior. a. Strongly disagree b. Disagree c. Not disagree nor agree d. Agree e. Strongly agree

60

Conclusions
The vacation ownership business today is rapidly becoming far more integrated into traditional real estate, hospitality, and financial environments. New participants and industry veterans are reaching the same conclusions regarding the complexity of the business and, more importantly, the inefficiencies which abound. These inefficiencies are most apparent initially in the finance and accounting areas of the vacation ownership organization.

Through self-diagnosis and candid assessments of the current position of the business, as well as its strategic direction, management can assess whether the business is a suitable candidate for reengineering of its finance function. Reengineering can lead to large - scale improvements in the operations of a company, improving its overall cash positions, cycle times, and productivity. All of this leads to substantial increases in profits in a high-growth environment.

The most direct benefit that companies derive from reengineering is significant in the process improvement (50 to 100%). Costs are lowered while speed, quality and service are dramatically improved. Unfortunately, reengineering seldom makes a significant impact on the organizations bottom line (only 20% of the time.) Reengineering has a greater chance of success if it is viewed as leading to growth and value creation. In addition, there are costs to reengineering that must be considered before deciding for such a right strategy for an organization. Wayne Code, President of Vallen Inc. explains, These changes may be

traumatic, but the pain is outweighed by the gains made in the move towards the significant goals set. Change occurs when the pain of change is less than the pain of staying the same.

61