CHAPTER I

INTRODUCTION

1.1 Background

With Competition in Nepalese Market, it is very difficult for a small service provider and
sales concerns to operate within the extent of low budget and low economic growth in
order to cope up with increasing in number of consumer and clients. What is being served
to the client is based upon the needs and utility to be derived by them. Venus
Automobiles and Spares parts basically focus on sales of automobiles and satisfy own
self with good sum of profit derived from consumers. The visional and strategic mind
developed an idea of replicating on private vehicle uses by public and old public
transportation be replaced by new private automobiles established Venus Automobiles
and Spares parts resulting to make a rigid decision on investment of 2-wheelers as
motorcycle has always been the first early comfort choice for general people.
Establishing Venus Automobiles and Spares parts was not only for revenue generation,
but it was also focused to help stakeholders and other related parties to enhance the
degree of confidence of services concerns of Nepal. Development of Automobiles
services represents huge amount of investment, archives making it possible to analyze,
interpret and assess individual and niches demands. It is believed to be one of the reasons
behind exponential growth of service sector inside Nepal.
(Source:http://Nepal/departmentoftransportmanagement/privateautomobiles.com/np)

According to Nepal Automatic Dealer Association (NADA), until 2010, automobile

sector was growing by around 15 percent annually. It has been recording average growth
of 25 percent from 2010 onwards. In the last fiscal year, it was recorded as 40 percent
growth in business. Hence, Vehicles and automobiles owned by general public are
assessed by such sectors like Venus Automobiles and Spares parts and also it offers great
opportunities for growing enterprises, both with respect of technological as well as
services development. However, although many other challenges have continued to
prevail, increase in sales amount to gain apportioned profit has always pinned up as a
important managerial as well as financial aspect. This thesis reports the findings of a
thorough study to establish the factors that have led to the success of Profit plan of it
through Budget analysis, sales implication like BEP and MOS and profit earned in

1
regards of such sales and how such success factors can be applied in coming years for
broader development and upliftment of the venture as well as other similar institutions
focused on these types of Sales. (Source:http://yellowpagesnepal.com/nepal-automobile-
dealers-association-nada/pvt/automobiles)

1.2 Introduction to Venus Automobiles and Spares Parts Pvt. Ltd.

Venus Automobiles and Spares Parts Pvt. Ltd was established in 15th Paush, 2058 B.S
under the supervision of Mr. Mukesh Yadav , a young man who set out on a journey with
little beyond intelligence business, determination and dreams. He believed that people of
city like Kathmandu will need private vehicle rather than public transportation for their
daily work. Also as most of the people live in Kathmandu and nearby cities are medium
class, he believed that motorcycle will be their first choice for their need of own vehicle.

Venus automobiles and spare parts came into being a vision, one that avoided the easy
paths to profitability, and sought instead for ways to make a contribution. A vision
through a small mind and small opportunities has emerged Venus automobiles and spare
parts as services as well as trade concerns. Mukesh Yadav, who have gained knowledge
and skill in automobile operation for Morang Autoworks, Urlabari-7, Morang, Koshi,
Nepal, found it easy to establish such ventures through small investment and handful of
manpower. As a result, after almost 14years of it operation, Venus automobiles and spare
parts has been at the position where Mr.Yadav wanted to reach. Now, it comprises a lot
of chain of manpower working as a network to extend Venus automobiles and spare parts
to much more extent and evenly a phase is expected to reach where small entrepreneurial
venture can rely upon operation of Venus automobiles and spare parts . (source : Article
of association, 2058)

1.2.1 Organizational Structure of Venus automobiles and spare parts

An organization structure refers to the determination of organization system of the

enterprise it determines the programs and procedures by which the administrative
relations of an enterprise are defined and established. No activity of the organization can
go out of this structure. As the policy of the enterprise determines the limits within which
the enterprise has to work. In the same manner organization structure determines and
defines the shape and size of the enterprise according to which the administrative and
organization decisions have to be taken. It is also the framework of activities of the
enterprise, it may also be considered as the map of the building to be constructed.

2
Following structure comprises of all department and their heads and chain of command
been flown as a network:

Figure: 1.1
Organization Structure of Venus Automobiles and Spares parts

Managing
Director

Manager
Manager (workshop
(Showroom) and spare
parts)

Customer Purchase Accounting

service and finance Customer Spare parts
and Sales Maintenance and
Department department service
Department Department Departmen inventory

Customer service
representative Workers
(Mechanics)

In the above diagram Managing Director (MD) Mr. Mukesh Yadav is given at the top,
and then different departments and finally the workers under as subordinates. The
managers of two different departments (Workshop and Showroom) are enlisted below:

Mr. Bikash Singh Manager (showroom)

Mr. Sudip Bhandari Manager (Workshop)

Similarly, people associated with different department under Showroom and Workshop
managers are as follows:

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 Ms. Jyoti Shrestha Custstomer Service (Showroom)

Mr. Amrit Shaud Purchase & Sales Departmaet

Ms. Salina Ghattani Purchase & Sales Departmaent

Mr. Sagar Khadka Accounting and Finance (Showroom)

Ms. Gita Subedi Custstomer Service (Workshop)

Mr. Sanjeev Man Joshi Workshop Incharge

Mr. Nabin Yadav Spare parts & inventory (Workshop)

And workers and mechanics under workshop incharge are as follows:

Mr. Santosh B.K Mr. Parash Chaudhary

Mr. Shyam Das Singh Mr. Naren Majhi.

Mr. GovindaRijal

All these Managers, subordinates, and the mechanics of the organization are performing
their job very well and are successful to attain the organizational objective. We can find a
kind of cohesiveness among all the members of this organization.(Annual report : VASP
2016)

1.2.2 Vision, Mission and Objectives of Venus Automobiles and Spares parts
Venus Automobiles has become one of the leading motorcycle trading
concerns as it offers a comprehensive range of Bajaj brand motorcycles and its spare
parts, more than 10 variants starting from 100 CC to 220CC. It has following vision,
mission and objectives.

 To maintain customer satisfaction and relation

 To help in economic development of the country
 To decrease the problem of unemployment

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  To develop the small business sector in Nepal
 To help in maximum utilization of local resource
 To earn maximum profit for the existence of the org.

1.3 Statement of the Problem

Venus Automobiles and Spares parts have adopted strategic vision to get attention target
market to maximize sales and to reduce the uncertainties faced by them as fast as
possible. Those vision should comprises actions and procedures to increase as much as
consumer as expected.

While presenting the facts about the enterprise operation in market, following queries are
necessarily to be met based upon criteria:

 Does the internal control system maintained by Venus Automobiles and Spares
parts can maintain budgetary analysis of required sales?
 Does the organizational structure and framework of it can forecast future sales
resulting more profit?
 Do customers needs be satisfied efficiently and effectively?
 Do growth of enterprise is acceptable or not?

1.4 Objective of Study

The main objective of the study is to investigate proper budgetary control and its
implication in sale to earn profit of Venus Automobiles and Spare Parts. The Specific
objectives are as follows:

 To Earn Profit forming budget as base for control of the venture

 To Organize relative framework for future forecast of sales
 To satisfy consumer through various means like post sales services, premature
workshops
 To determine basis for growth of enterprise

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1.5 Limitation of Study

Despite of effort to collect all information data for over all analysis of the organization
and indented system there are still some limitations of the study because of various
reasons and they are as follows:

 The study was limited only to the period of last five years.
 Some data’s couldn’t be published because of organization rules
 Only Standard Deviation and Coefficient of Variance as statistical tools are
used to compare between datas.

1.6 Rationale of Study

Venus Automobiles and Spares Parts Pvt. Ltd follow the iterative development approach
till the customer requirement satisfaction. It uses the idea of communicate more and
clearly for the understanding of the customer need and requirement. The day to day task
updating and assessment is the backbone of the operative side of Venus Automobiles and
Spares Parts Pvt. Ltd. Automobiles are an important aspect of modern transportation as
personal vehicles. Thus, services and trading related to such automobiles and their spares
parts have been recognized as prospects for new ventures. Investment in such sectors in
Nepal has broader bases of returns and a long run is secured. Hence, the study of
Automobiles concerns will result as a competitive analysis of future estimation and
ascertainment. Profit plan signifies to critical examination of organizational setups
regarding to profit earning plan of ventures. Firstly, it provides general information about
automobiles and spares parts concerns in Nepal. It will be helpful to form bases for
control to similar entity. Not constraint to this, it also assists GON and other Bodies to
know the condition and status resulting to assessment of focus group on such trade and
services concerns.

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1.7 Report Structure

The study will be carried out in five different stages and procedures for the preparation
of the project work report and it will be organized in the report in the following chapters:

 Chapter one: Introduction.

It includes background, statement of the problem, objectives of the
study, significance of the study, limitation of the study and organization of
the remainder of the study.

 Chapter two: Literature review

It includes conceptual review , empirical review and review of the
related studies.

 Chapter three: Research methods

It include research methodology, design, nature and source
of data, data processing and analysis, terms, tools and technique of
analysis financial tools.

 Chapter four : Results and findings.

It includes presentation of data in tables and figures and their
analysis and major findings of the study.

 Chapter five : Discussion and Conclusion.

It includes discussions, conclusion and implications. Finally,
references and appendices will also be presented at the end of the project
work report.

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 CHAPTER II

LITERATURE REVIEW

2.1 Conceptual Review

Kathmandu is a Capital of Nepal where every organizations and institutions are

established. According to Central Bureau of Statistics (published Statistical Year Book
2016), Kathmandu Valley has 2,912,760+ population and around 1/3rd of population
posses 2-wheelers inside Kathmandu. Hence huge number of user demands proportionate
number of automobiles. Department of Transport Management has stated that, at present,
around 19,500 automobiles are registered on an average every month. According to
DoTM, a total of 1.99 million (1,995,404) vehicles were registered in the past fiscal year
2015-16. About 66.67% of registered vehicle are under 2-wheelers in Nepal. That implies
around 1.18millions 2-wheelers are operated in Nepal and most of them are found in
Kathmandu valley. Hence, 2-wheelers are referred as major income sources inside
Kathmandu valley and it facilitates Venus automobiles and spare parts in such a way.

(source: https://www.dotm.gov.np/en/2wheeler/np/ktm)

2.1.1 Conceptual Framework

The aim of this study is to systematic and critical examination of Budgetary and sales
control to aim on profit plan. The given figure established relationship between different
variables.

Budget

Profit Plan
Sales

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Budget : Budget refers to an estimation of income and expenditure for a set of period of
time. It shows how much can be invested on given product and how much income can be
generated with such investment. Profit plan is an idea related to make an estimation of
profit to be earned for given period of time. Hence , budget of entity and the profit plan
shows direct relationship as budget forms bases of investment and profit plan means
exercise of return. (https://www.merriam-webster.com/finance/budget )

Sales: Sales is an activity of exchanging goods and services by entity to let the product
reach to final consumer through proper marketing. Sales estimation has major impact on
profit plan because what Contribution margin per unit can only be assessed sales
assessment and without contribution margin, required profit under given sales is
impossible to find. Profit planning involves set of rules and acts that governs profit
requirement and sales meant by quantities which generates profit. Hence, sales has major
impact in profit plan because both forms bases of controlling estimation of earning of
entity. (https://www.chloe-megan.com/sales/books )

2.1.2 A brief Introduction to Private Company

As per section 2(b) of Company Act 2063, “Private Company” means a private company
incorporated under Company Act 2063. Under Company act 2063, private company is a
company with private ownership. It implies that private company may issue stock and
have shareholders but their shares do not trade on public exchanges and are not issued
through an IPO. Investment in Paid up share capital of Private Company is not
apportioned by Company Act but Article of Association of such company prescribes
them. There are four main types of private companies: sole proprietorships, limited
liability corporations, S corporations and C corporations. Here, Venus Automobiles and
Spare Parts Pvt. Ltd is a sole proprietorship entity. The President of Private Company is
the one responsible to make his own decision in respect of all shareholders and Those
Charged with Governance and one has to comply with his decisions.

9
2.2 Review of Previous Works

Theoretical review:

Profit planning is the process of developing a plan of operation that makes it possible to
determine how to arrange the operational budget so that the maximum amount of profit
can be generated. There are several common uses for this process, with many of them
focusing on the wise use of available resources. The actual process of profit planning
involves looking at several key factors relevant to operational expenses. Putting together
effective profit plans or budgets requires looking closely at such expenses as labor, raw
materials, facilities maintenance and upkeep, and the budget of sales and marketing
efforts. The major actor on the study and evaluation of profit planning of sales concerns
are Standard Deviation and Coefficient of Variance. Thus, Standard deviation is a
measure of how much a variable tends to swing. Variables that are stable have lower
standard deviations than those that swing wildly. A stock whose price has varied between
$8 and $10 all year will have a lower standard deviation than one that has touched $4
several times over the last 12 months while also going as high as $12 on multiple
occasions. To calculate standard deviation, you need to find the average value of the
variable and compare how each value differs from the average. In case of a stock, this
entails comparing the daily closing price from the average price over the course of the
year. In another angle, coefficient of variance is the parameter used in comparing
dispersion in distribution. It is the ratio between standard deviation and mean and is unit
less.

Bailey (2001) has described about the relationship between standard deviation and return
forming as base for control. According to him, (French Economist and Mathematician)
calculating rate of return and standard deviation is more challenging if one has no past
data to rely on. If entrepreneur is planning to start a new venture, he/she cannot use past
data. Instead, he/she should predict various potential profit figures. Most business owners
start by estimating what they will earn in the most probable case, worst case and best
case. This results in three rate of return figures. He/she can add a "disaster scenario" and
a "miracle scenario," as there is no hard rule about the number of scenarios needed to
calculate a standard deviation for a prospective investment. The availability of data,
number of factors that influence the profit potential and the experience of entrepreneur in
working with financial figures will determine how many scenarios he/she should draft
before starting their calculations.

10
There is tons of review related to the study of profit planning of private enterprise.
According to K. John (2003), the main motive of his study was to identify factors that
possess direct relation with entity budget implication, on what schemes entity prefer to
invest. For collecting qualitative as well as quantitative datas, he has used questionnaire
methods under his study. On the other pace, he has even conducted direct interviews and
one-to-one communication to obtain confirmation for getting datas. The final outcome of
that thesis was irrespective of product plan, higher earning is made through proper
planning of sales and its mixes based on Chinese Concept: “we sell what we produce”.

Japanese Student and Business Enthusiast, A. Akio (2007) on his report, has mentioned
Japanese concept of sale: “Sale of Qualitative product for high return”. This concept
came in Japan in early 70s where production meant by better quality at high cost. Profit is
earned through high sales on high cost with customer satisfaction. Profit is earned
through better plan on high investment which would ultimately return on increase Gross
Profit ratio in bases for net investment. He also identified the relevant factor that are
likely to influence various cost in a manner that high increase in deviation of sales with
low cost of goods earn more profit in long run. He found that automobiles have very high
demands among youngsters who are willing to live a fashionable life. Hence in his study,
he has shown that higher the investment on sales in low consumable cost, the higher were
the return and vice versa . In this way, he conducted that profit planning in respect of
budget and sale of private sale concern in Japan.

In context of Nepal, Khatri (2010) has conducted a study on Dhaulagiri Autoshop Pvt.
Ltd. The main objective of the study is to assess the general lending procedures of sales
and revenue generation of Dhaulagiri Autoshop situated in Urlabari-6,Morang. She had
used interview method with Staffs and CEO of that Autoshop for collecting primary and
secondary data were collected from annual report and issued journals of that entity. She
concluded that Dhaulagiri Autoshop has diversified its investment in different patterns of
automobiles (2-wheelers) like bikes, scooter, mopeds, etc and has increased both : sales
and growth of enterprise. Her major finding was to relate profit with respect of budgeted
data and its deviation from what is expected and what has been achieved with the help of
statistical tools such as co-variance, mean, median, mode and others.

Mathieu (2008)’s paper is indeed thought-provoking and raises many questions for
further study. His study of the relationship between size, strength and profit is thorough
and is based on data painstakingly compiled in such a way as to eliminate the many
shortcomings that so often characterize the data used in studies of profit by size of
company. As he mentions, big companies must have some advantage over deviated
pattern of sales and its mixes or else big companies would not allow themselves to get

11
big. But he shows that the advantage from low standard deviation alone is small and that
other factors are more important. It is evident that small companies are able to succeed
from the very fact that all big companies grew out of small companies that succeeded.
One should take to heart those point that rather than be so concerned with the plight of
the small company with less coefficient of variance with relation to increase in profit.
Apart, one should be more concerned with the weak enterprise, and that it is the small
investor that need to be protected, not the small enterprise. We all realize that the
relationship between size and profit is weak but as yet no attempt has been made to
analyze the exact nature of this relationship. Hence, it is acceptable to believe that it
would be a valuable addition to Mathieu’s paper is important paper to try to develop a
mathematical model for the relationship between size and profit, deviation and changes,
a model which recognizes other important factors in addition to size as suggested by him.
Such a model would enable us to determine how much correlation we might expect. In
another side, Expected profit and standard deviation are connected in the world of
business because a high standard deviation will lessen the likelihood of the entrepreneurs
actually receiving the expected return. The expected profit is measured as an average
earning of the entity over a period of years after allocating all types of cost and expenses.
By contrast, the standard deviation shows the extent to which the returns differed from
the expected profit over that same period of time. Investors must be aware of expected
profit and standard deviation when deciding upon their business sales and cost budget,
since they have to choose whether or not to pursue high profit if the risk attached to those
returns is correspondingly high.

Empirical Review:

Dhimal(2015) conducted the research to assess the budgeting and profit planning of an
autowork. His major objective was to analyze purchase and sales cycle and technics
practiced by the company. The net profit earned were also interpreted and shortages of
profit and other seasonal breakdown and losses were described . Finally, he suggested the
autoworks with a proper suggestion. According to this analysis, it was found that sales of
the autoworks showed increasing trends except for final fiscal year. The absolute gross

12
profit ratio of autoworks is in the increasing trends up to 2012/13 and started to decrease.
The average sales to purchase ratio of the company is 112.73%. It means there remains
huge increment in sales but if purchase is increased in same ratio, huge profit shall be
derived.In an average the projection of standard deviation to net profit of entity for the
study period is 27.82%. Although the high ratio is the sign of sound profit but here the
ratio in each fiscal year is more than 20% which is too huge for a small sales concern. It
indicates that the profit fluctuates in the corporation, which shows that the profit per year
increment is not sound as projected for company. The average sales collection period of
the autowork during the study period has shown decreasing trends. The highest collection
period is 76 days in the fiscal year 2013/14/and the lowest collection period is 29days in
the fiscal year 2010/11. The average collection period of entity is 52 days with 11.59% of
coefficient of variation which indicates the collection period is long enough in all fiscal
year.

Paudyal (2016) conducted a research on a motorcorps based on automobile company. The

major motto of the study is to explore how sales and cost are managed in the motorcorps.
The major objectives of the study were to examine the profit planning and sales
motorcorps through ratio analysis. Cash budgets and earning of the motorcorps were also
examined and analyzed. Finally profitability position and the cash flow statement based
on annual report and financial statement were also assessed. Based on above study, it was
found that cash and bank balance shown greater fluctuation in FY 2068,2069 and 2070
but in other remaining Fiscal Year, fluctuation was quite low in comparison to the
previous years. Holding of optimum cash and bank balance is the rational cash
management practice of a business firm. There is lower coefficient of variation of
motorscorps which signifies that holding cash balance is highly consistence and stable.
The trend line shows positive figure of cash balance in future. In case of gross profit
ratio, the ratios in FY 2071 is near about 33.33% which is satisfactory and in ranging
from 2068-2073 all of the ratios are below 28% which indicates that the company does
not have a sound or satisfactory liquidity position. Proportion of Cash and Bank balance
in its sales budget is very small and the cash balance held shown positive relation to the
amount of current assets of entity. Average ratio of sales to purchase is 109.88%, which
is very good as no idle resources are held. Coefficient of Variance of company in an
average is 10.44. This report has provided as base for the company because those
statistical findings were in a favored pace and hence it increased the confidence of
stakeholders and shareholder since it has shown a positive longer run for a small
investment entrepreneurship.

13
Bajagai (2015) has done analytical examination of an automation which was engaged on
automobile business keeping basis for examination, analysis and comparison among sales
and profit. The main objective of the examination was to compare profit with sales as well
as cost. It helped to analyze the trend of In-out Ratio of Rajesh Automation. Also its
major findings were based on to access and evaluate the pattern of deviation from actual
and expected datas. Further, to compare the sales-purchase of entity, Bajagai made it easy
since report included tools and technics to evaluate results. The major findings of a study
of automation was how the company has extended its operation to increase sales and
purchase on equal paces. On the base of stability, operating trading business of the
automation is acceptable increasing trend. Standard deviation between expected sales
and actual sales where very low that means resources are acceptable towards operation of
sales concern. Both the buying as well as selling network has strong basis for operation
inside to and outside from the automation. The main inclusion in profit planning of
Rajesh Automation is comparison between standard deviation with respect to sales and
earnings and coefficient of variance dealing with mean of all expected datas and actual
datas and those datas are meaningfully assessed in every stages of operation.

Dhungana (2008) has conducted her Master’s thesis on as study of to examine the cash
and cost management practices in Nepal Electricity Authority through ratio analysis. Her
major objective of the study was to examine and analyze the liquidity profitability
position of the Nepal Electricity Authority. To analyze the profitability position of
company, various financial as well as statistical tools were used. She further extended her
procedure to examine the cash flow statement and other books of account of company.
Finally, recommendation were given to the authority along with viable suggestions to
cope up with cash and profit management keeping in the view of short comings in the
enterprise. The major findings of the study are the poor cash and cost management.
Liquidity position is dissatisfactory, Negative profitability of the company adds much to
the worsening financial position of the company. The accumulated amount of account
receivable which is increasing year by year denotes the inefficiency of the authority to
collect its revenue in time. There is the absence of effective utilization of capital
employed and liquidity position is also not satisfactory. Because of the absence of the
competitors, authority has become monopolistic and, hence, it is not alert towards its
possible threats and opportunities. Different statistical tools show the positives
relationship with two variables like cash and sales, cash and account receivable, current
assets and cash, current liabilities and cash.

14
2.3 Research Gap

There are several other studies regarding the profit plan practices of the private sector
enterprise where the most of the outcomes has pointed about opposite findings and poor
financial conditions of the Private Corporations (Giri, 2015). Researcher has to extend
their procedure keeping his/her base on the fluctuating nature of study. How well the
tools and technics are managed provides basis for effective examination and comparison.
Not always what expected will return as a result. The major cohesive force is to answer
each and every wh-question regarding the examination and analysis of datas thus found.
Hence, this gives a better presentation as well as interpretation of result. However, actual
identification cannot be made until and unless the study of most of profit plan of private
enterprises are made. Therefore, research as critical examination of Venus Automobiles
and Spare parts is conducted as the research for the first time whether the conclusions
drawn previously regarding the profit planning and budgetary control are equally
justifiable in all the private enterprises.

15
 CHAPTER III

RESEARCH METHODOLOGY

3.1 Introduction

This chapter consists of the research design, nature, source and collection of data, data
collection procedure and tools & technique of analysis. For reaching to the objective of
the study, the applied methodology is used under this research report. It helps to focus
and emphasize the useful and final meaningful points so that all concerned outcome can
achieved from this study. The research methodology used in the present study is briefly
mentioned below.

3.2 Research Design

A well settled research design is necessary to fulfill the objective of the study. This study
mainly concerned with historical research of VASP. Here, both primary and secondary
data are used and collected study the profit planning of VASP. The relevant and needed
data has been collected from various publications such as annual report of Venus
Automobiles and Spare Parts Pvt. Ltd, NADA (Nepal Automobiles Dealer’s
Association), Journals and periodicals issued in timely manner by VASP. The research
design of this study is analytical as well as descriptive approaches. Basically this study
uses a descriptive statistical analysis to describe, measure, compare, and classify the
budgeting and profit planning of VASP.

3.3 The Population and Sample

The research subject is about profit planning of VASP and in consonance with all other
sales concerns and enterprise, trading concerns engaged in automobiles trading and sales
and various data related to profit and budget of entity are included in the population of
the study and among all of them VASP is taken for research purpose. Due to
unavailability of data from all sectors, only sales and service concerns matters are chosen
for study. Thus, finally VASP is expected to give possible outcome and chosen for the
best result.

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3.4 Sources of Data

For this study, both primary and secondary data are used.

 Primary data: Primary sources are original materials on which research is based.
They are firsthand testimony or direct evidence concerning a topic under
consideration. They present information in its original form, neither interpreted
nor condensed nor evaluated by other writers. These are collected by researcher as
a fresh new search of related datas and theories to comply with them. The sources
are :

 Questionnaire
 Photographs
 Interviews
 Correspondence
 Survey
 Experimental results
 Observation

 Secondary data: Secondary sources offer interpretation or analysis based on

primary sources. They may explain primary sources and often uses them to
support a specific thesis or argument or to persuade the reader to accept a certain
point of view. Such works are one or more steps removed from the event—being
written with the benefit of hindsight. The sources are :

 Newspaper articles
 Journals
 Internet
 Annual report
 Other sources

3.5 Data Collection Procedure

Collecting data is the connecting link to the world of reality for the researcher. The data
collection activity consists of taking ordered information from reality and transferring it
into some recording system so that it can later be examined and analyzed for patterns.

17
Research as a media can be interpreted as having a content of data and process of
methodology.

3.6 Data Analysis Tools

The following financial and statistical tools will used for the analysis of the research
study.

1. Gross profit ratio as financial tools: Gross profit ratio (GP ratio) is a
profitability ratio that shows the relationship between gross profit and total net
sales revenue. It is a popular tool to evaluate the operational performance of the
business. The ratio is computed by dividing the gross profit figure by net sales. It
is given by following formula :

Gross profit ratio = Gross profit/Net Sales * 100

2. Statistical tools: Standard deviation and coefficient of variance are the tools used
as statistical tools.

a. Standard Deviation (S.D): Standard Deviation (S.D) measure scatter,

spread, or variation, and provides idea of homogeneity (compactness) or
heterogeneity (scatter) of the distribution. Out of various methods of
studying dispersion such as Range, Inter quartile range and Quartile
deviation, Mean deviation, Standard deviation, variance and Lorenz curve.
The most popular method is the standard deviation and variance method.

Standard deviation is represented by the symbol sign ‘σ’ and given by,

S.D. (𝜎) ==
1
  ( X  X )) 2

Where,

N= number of observation

X= Variables like sales, cost, profit etc

18
 𝑋̅= Mean

In this thesis work, however, while computing standard deviations, the

above formula has been employed only once manually. For rest of the
computations, Microsoft excels worksheet tools have been employed
directly from computer.

b. Coefficient of variance (C.V): Coefficient of Variance is the relative

measure based on standard deviation and is defined as the ratio of the standard
deviation to the mean expressed in percent. Coefficient of Variation (C.V) is
given by
σ
C.V = ̅
× 100%
X

Where 𝜎 = Standard Deviation

X = Variables

σ
The ratio x is called the coefficient of Standard deviation, C.V has no units,
Distribution with lower C.V. is said to be less variable (or more consistent or
more uniform) and the distribution with higher C.V is indicative of more Variable
(or less consistent or less uniform) The limitation of using C.V. is that when the
distribution being compared have negative observation, it provides unreliable way
to compare variability across data sets.

3.7 Diagrams

Diagram are the simplified drawing showing the appearance, structure, or workings of
something; a schematic representation. These are the effective way of presenting and
analyzing data. Various diagram used in these report are line diagram, pie chart and other
tables. The line diagram represents the data by bars of equal width. The length of the line
represents the given figures and width may be of any size. Those diagrams are described
as below:

19
  Line chart: A line chart or line graph is a type of chart which displays information
as a series of data points called 'markers' connected by straight line segments. It is
a basic type of chart common in many fields. Axes of line diagram represent
equal interval of both time and amount. In this report, line diagram are presented
for describing comparison between budgeted sales and actual sales and same for
cost of automobiles.

 Bar Diagram: A bar diagram or graph is a chart that uses bars to show
comparisons between categories of data. The bars can be either horizontal or
vertical. Bar graphs with vertical bars are sometimes called vertical bar graphs. A
bar graph will have two axes. One axis will describe the types of categories being
compared, and the other will have numerical values that represent the values of
the data. It does not matter which axis is which, but it will determine what bar
graph is shown.

 Table: Tables are the fair and quick method of presenting and analyzing datas. It
helps to summarizes finding in a practical visual manner that allows user to
understand it in very basic level from zero to one basis. It is best method for data
representation because it reduces effort of person who tries to obtain knowledge
about the findings of report as it is made in a tabulated format. In this report,
various table are prepared to present data such as sales amount, cost of
automobiles, profit earned and so on.

3.8 Limitation

Research is a complex process and it takes a lot of competencies and qualities of

researcher as well as tools used by researcher. Professional as well as academic
competencies of researcher are not enough if the tools and technics used are not upto the
mark. There lies lot of limitation of tools used by researcher and those are described as
below:

 Statistical tools are supposed to accept both qualitative as well as quantitative

datas but most of tools are found to have ignored qualitative datas.

20
 Statistical tools deals with samples and not whole population which increases the
sample risk.
 These tool does not deal with isolated measurement
 Some of the tools are not supportive towards heterogeneous data.
 Its take certain expertise to the researcher to operate and handle such tools and
even user of those findings are supposed to have knowledge about those tools.
 Finding actual and suitable tools takes lot of time and man power and also it
reduces personal effort and datas thus obtained are less practical
 Some errors are possible in statistical decisions. Particularly the inferential
statistics involves certain errors. Researcher doesn’t know whether an error has
been committed or not.

21
 CHAPTER IV

RESULTS AND FINDINGS

This chapter deals with the presentation, analysis and interpretation of the data collected
from primary sources and secondary sources and presenting the data in the tables, line
graphs and bar diagram in order to meet the objectives of the study. These tables are
presented to make it easy and quick for analysis and interpretation of datas. The analysis
is made by using different financial and statistical tools namely gross profit ratio,
standard deviation and coefficient of variance on the basis of the annual report and
journals issued by Venus Automobiles and Spare Parts Pvt. Ltd. With the help of this
analysis efforts have been made to highlight credit management profit planning of Venus
Automobiles and Spare Parts Pvt.Ltd.

Semi-Structured Interview Result

An interview was conducted among the administrative and operational staffs of VASP
presenting them with the designed questionnaire (given in Appendix) sheet to make them
aware about the kind of answer expected. The discussion was brought to the matter of
concern to get the answer of the concerned question. A total 15 top authority personnel
was selected altogether. Following results were obtained.

1. Basis of risk in investing on VASP :

Five staffs came on the support of point that investors assumes risk in investing
on VASP because recent trend is not showing in the favor of VASP. Other four
personnel has different view that they don’t think investor should consider risk in
investment. Rest seven personnel gave a neutral opinion and they were not sure
about the position of VASP.

22
 Risk in investing on VASP
7
6
5
4
3
No. Of Employee

2
1
0
Yes No Don't Know

Fig 4.1 : Basis of Risk involved

Source: Appendix

2. Focuses on being satisfied in earning of VASP.

Out of 15 interviewee, eight were happy with the earning of VASP and were in
satisfied state. Two voted for negative proposition. Since operating earning of VASP
were gradually decreasing, there ground for disagreement is valid. Rest five member
claims they don’t know about the level of satisfaction for earning of VASP and hence
clicked for the same. Following bar diagram displays the grid :

Satisfaction on Operating Earning

10
No. Of Employee

8
6
4
2
0
Yes No Don't Know

Fig 4.2 : Satisfaction on Operating Earning

Source : Appendix

23
3. Agreement with high sales pattern of VASP
Ten staffs agreed on the sales pattern of huge scale of VASP as it is good for both the
organization as well as stakeholders. Three expressed disagreement as they were
stressed on selection of capital trend as company is suffering huge loss. Two
personnel chose to be on neutral state.

Sales pattern of VASP

11
10
9
No. Of Employee

8
7
6
5
4
3
2
1
0
agree disagree neutral

Fig 4.3 : Agreement of sales pattern of VASP

Source: Appendix

4. Long Run Possibility:

Since, huge loss has been suffered by VASP, going concern is questioned. Hence, on
the questions asked about long run possibility of VASP, out of 15 personnels, seven
found VASP stronger for longer run, three were on the opinion that entity has weak
prospective. Rest five members were out of ideas as if they did not want to share their
opinion.

24
 Long run possibility
8
7
6
5
4
No. Of Employee

3
2
1
0
Strong Weak no idea

Fig 4.4 : Long run Possibility

Source: Appendix

5. Maintaining Cordial Relationship with customer:

VASP is a customer driven entity. What it meant by customer driven is it does its
best to satisfy customer and maintain cordial relationship with them. On the process
of interview, out of 15 interviewee, ten spersonnel voted on positive answer. They
accepted that VASP maintain cordial relationship with customer. Two members voted
for no that means they don’t think VASP maintain cordial relationship with them.
Rest three members don’t know about the seller-customer relationship.

25
 Maintaining Relation with customer
11
10
9
8
7
6
5
No. Of Employee

4
3
2
1
0
Yes No Don’t know

Fig 4.5 : Maintaining Relation with customer

Source: Appendix

The secondary datas are described as follows :

4.1 Presentation of Data in tables and Figures and their Analysis

Total number of Motorcycle Purchased by VASP and their cost

Venus Automobiles and Spare Parts Pvt.Ltd. is a sales concerns and deals with the sale of
motorcycle. The major activity of VASP is to buy motorcycle and its spare parts from
manufacturer and sale it as a trading concern to general public. It has huge amount of sale
and purchase of motorcycle per year. It is a showroom under Bajaj motorcycles Brand
and serves as a salesperson to other public. VASP invest more almost 11+millions per
year in purchasing 2-wheeler (motorcycle as studied in this research) and has gradually
increased its investment over 5years of interval from 2068-2073. In over 5 years, invest
of VASP has almost doubled it figure as 20+million has been spent on purchase of
motorcycle from companies on FY 2072/73. According to periodical issued by VASP on
25th paush 2073, for the period of 6month, VASP has bought motorcycle worth 14million

26
for this FY 2073/74 but since this report is limited upto 2072/73, items upto last FY are
only included. Following table comprises of budget invested by VASP on motorcycle for
the FY starting from 2068/69 to 2072/73:

Table no 4.1
Models and Numbers of Motorcycles Purchased by VASP

Number of Purchases
Model Name
2068/69 2069/70 2070/71 2071/72 2072/73

Bajaj Avenger 220 3 4 4 6 8

Av

Bajaj Pulsar 220F 5 7 13 15 17

Av 5
Bajaj Pulsar 200NS 7 8 15 21
Av

Bajaj Pulsar DTSi 3 3 6 8 10

180
Av
Bajaj Pulsar DTSi 150 7 6 8 12 14
Av
Bajaj Pulsar 135 1 3 5 5 7
Av

Bajaj Platina 125 5 6 5 2 3

Av
Bajaj Discover 150 2 3 6 2 5
Av
Total 33 37 55 65 85

Source: VASP Annual Reports

27
 The above table includes the different model and number of motorcycle
purchased by VASP for the period of last five FY starting from 2068/69 to 2072/73. It
clearly shows how has VASP increased its number of purchase and how better the
investment has been increased in this short interval of time. In the period of 5
years,VASP has diversified its share in market and a number of purchase 33 to 85 in 5
years is not just a figure but a total growth of VASP as expected by owner.

Table no 4.2

Total Budgeted Cost of VASP

Fiscal Year Cost of Motorbikes(million) Overhead cost Total cost

2068/69 11.00 0.25 11.25

2069/70 13.98 0.37 14.35

2070/71 15.47 0.48 15.95

2071/72 17.5 0.65 18.15

2072/73 19.53 0.77 20.30

Source: VASP Annual Reports

Above table 4.2 summarizes the budgeted and expected cost of total
motorcycle purchased by VASP for that period of time and additions overhead cost to be
incurred in future by VASP such as freight, taxes, duties and other indirect costs in while
buying from among inside and outside of border of our country.

Table no 4.3
Total Actual Cost of VASP
Fiscal Year Cost of Motorbikes(million) Overhead cost Total cost

2068/69 10.58 0.17 10.75

2069/70 12.56 0.29 12.85

28
2070/71 15.63 0.62 16.25

2071/72 17.37 0.78 18.15

2072/73 22.34 0.66 23.00

Source: VASP Annual Reports

This is the table 4.3 that shows the actual cost incurred by VASP
on purchase and import of motorcycle from various Trading houses or from direct
manufacturer for the period of reporting and these datas are collected from annual reports
of VASP and other issued journals as well as periodicals.

Now,

Calculation of Standard Deviation of Budgeted cost and Actual cost

Table no 4.4
Budgeted data
Fiscal Year Cost (X) (X  X ) (X  X )2

2068/69 11.25 -.475 22.5625

2069/70 14.35 -1.65 2.7225

2070/71 15.95 -0.05 0.0025

2071/72 18.15 2.15 4.6225

2072/73 20.30 4.30 18.49

Total ΣX= 80 Σ( X  X ) 2 = 48.4

Source: VASP Annual Reports

 Mean ( X ) = ΣX/n , where n = number of observations i.e. 5

= 80/5
= 16

29
 Standard Deviation (σ) =
1
  ( X  X )) 2

48.4
=√ = 3.112
5

 Coefficient of Variance (C.V) = σ⁄ ̅ * 100 = 3.112⁄16*100 = 19.45%

𝑋
The above table shows the computation of standard deviation, mean and
coefficient of variance between budgeted costs for five FY of VASP. It shows how often
cost expected over period of time has deviated from its base. In case of Budgeted cost,
standard deviation and coefficient of variance are 3.112 and 19.45 % respectively along
with its mean 16.

Table no 4.5
Actual data
Fiscal Year Cost (X) (X  X ) (X  X )2

2068/69 10.75 -4.55 20.7025

2069/70 12.35 -2.95 8.7025

2070/71 16.25 0.95 0.9025

2071/72 17.15 1.85 3.4225

2072/73 20.00 4.70 22.09

Total ΣX= 76.5 Σ( X  X ) 2 = 55.82

Source: VASP Annual Reports

 Mean ( X ) = ΣX/n , where n = number of observations i.e. 5

= 76.5/5
= 15.3

30
 Standard Deviation (σ) =
1
  ( X  X )) 2

55.82
=√ = 3.34
5

 Coefficient of Variance (C.V) = σ⁄ ̅ * 100 = 3.34⁄15.3 * 100 = 21.83%

𝑋

Standard deviation and coefficient of Variance of actual cost incurred by VASP

along with its mean is calculated in above table 4.5. Here, standard deviation and
coefficient of variance of actual cost in the period of five years are 3.34 and 21.83%
respectively along with its mean 15.3

Now, after evaluating budgeted and actual cost of last five fiscal year, further
analysis of budgeted and actual sales occurred inside Venus Automobiles and Spare Parts
Pvt. Ltd. Following table comprises the same:

Table no 4.6
Total Budgeted Sales of VASP
Fiscal Year Total Sales (million)

2068/69 13.25

2069/70 16.50

2070/71 17.55

2071/72 20.45

2072/73 22.25

Source: VASP Annual Reports

Table 4.6 deals with the total budgeted and expected sales of
VASP in millions. It is based on the number of total number of motorcycle to be sold by
VASP on appropriate sales values per motorcycle. On the other hand, dynamic

31
 environment of market resulted in deviated result. Thus, Table 4.7 shows the actual sale
occurred of the reporting periods.

(All sales and cost figures mentioned on these tables are on millions.)

Following table 4.7 consists of all actual sales values of VASP

starting from 2068/69 to 2072/73 in millions:

Table no 4.7

Total Actual Sales of VASP

Fiscal Year Total Sales (million)

2068/69 12.75

2069/70 15.95

2070/71 19.00

2071/72 20.15

2072/73 21.25

Source: VASP Annual Reports

Here, Standard Deviation and Coefficient of Variance between

different budgeted and actual sales datas are obtained and set for comparison.

Calculation of Standard Deviation of Budgeted Sales and Actual sales

Table no 4.8
Budgeted data
Fiscal Year Sale (X) (X  X ) (X  X )2

2068/69 13.25 -.475 22.5625

2069/70 16.50 -1.50 2.25

32
 2070/71 17.55 -0.45 0.2025

2071/72 20.45 2.45 6.0025

2072/73 22.25 4.25 18.0625

Total ΣX= 90 Σ( X  X ) 2 = 49.08

Source: VASP Annual Reports

 Mean ( X ) = ΣX/n , where n = number of observations i.e. 5

= 90/5
= 18

 Standard Deviation (σ) =

1
  ( X  X )) 2

49.08
=√ = 3.133
5

 Coefficient of Variance (C.V) = σ⁄ ̅ * 100 = 3.133⁄18 * 100 = 17.41%

𝑋

Thus, Standard deviation and coefficient of variance of budgeted sales along with
its mean value 18 are 3.133 and 17.41%. It helps to show how budgeted sales over the
time period have deviated irrespective of profit. Table 4.9 calculates the standard
deviation and coefficient of variance of actual sales.

Table no 4.9

Actual data
Fiscal Year Sale (X) (X  X ) (X  X )2

2068/69 12.75 -5.07 25.7049

2069/70 15.95 -1.87 3.4969

2070/71 19.00 1.18 1.3924

2071/72 20.15 2.33 5.4289

33
 2072/73 21.25 3.43 11.7649

Total ΣX= 89.1 Σ (X  X )2 = 47.788

Source: VASP Annual Reports

 Mean ( X ) = ΣX/n , where n = number of observations i.e. 5

= 89.1/5
= 17.82

 Standard Deviation (σ) =

1
  ( X  X )) 2

47.788
=√ = 3.092
5

 Coefficient of Variance = σ⁄ ̅ * 100 = 3.092⁄17.82 * 100 = 17.35%

𝑋

Hence, standard deviation and coefficient of variance between actual sales figures
are 3.092 and 17.35% respectively finding mean 17.82. The mere description and analysis of
these findings are given in next chapters where what has been required and what has being
achieved is discussed.

Diagrammatic Presentation

Line diagram or line graph is a type of chart which displays information as a series of data
points called 'markers' connected by straight line segments. It is a basic type
of chart common in many fields. Axes of line diagram represent equal interval of both time
and amount. In this report actual and budgeted sales and cost are displayed in following line
chart where x-axis denotes fiscal year and y-axis comprises of sales or cost values in million.
It shows how actual result has been deviated from expected and where can a user be able to
give suggestions on betterment. The charts shown are as follows:

34
 Budgeted and actual cost
24

22

20
Cost in Millions

18

budgeted cost
16
actual cost
14

12

10
0
2068/69
1
2069/70
2
2070/71
3
2071/72
4
2072/73
5
Fiscal Years

Fig :4.6

Line diagram showing yearly budgeted and actual cost

In the above line diagram, x-axis denotes year from 2068/69 to 2072/73. Y-axis
denotes cost of purchase in millions Rs with the interval of 2millions per unit. The dotted
line denotes actual cost and straight line denotes budgeted cost. It shows how often
budgeted cost has exceeded actual from 2068/69 to mid 2070/71 and finally actual cost
exceeded budgeted cost by the year 2072/73. Actual cost from this year shows increasing
trend that means costing are not properly done due to which cost has increased gradually
as it fails to cope up with budgeted standards. The figure 4.2 shows the line diagram
describing actual and budgeted sales:

35
 Budgeted and Actual sales
24

22

20

18
Sales in Millions

budgeted sales
16
actual sales

14

12

10
2068/69 2069/70 2070/71 2071/72 2072/73

Fiscal Year

Fig: 4.7

Line diagram showing yearly budgeted and actual sales.

In the above line diagram, x-axis denotes year from 2068/69 to 2072/73.
Y-axis denotes sales value of VASP in millions Rs with the interval of 2millions per unit.
The dotted line denotes actual sales figure and straight line denotes budgeted sales. It
shows how on prior year budgeted sales has exceeded actual sales but finally actual sales
has won over budgeted on around 2070/71. But this fail after some time and now the
same old trend has been occurring as actual sales fails to meet with budgeted sales by last
fiscal year. Both sales shows increasing trend with is very healthy for an sales concerns
but the important part that being actual sales less than budgeted sales is a matter of
concerns where sources are either being idle or underutilized to accept change in
increased volume.

36
Profit and its implication:

Profit planning is a study of profit for the reporting period which deals with how
well has profit been managed or enjoyed by management. In general, profit is the excess
of sales over cost. It is the deviation enjoyed by organization where actual sales less
actual cost is employed as profit earned. Following table comprises the profit earned from
five fiscal years and its percentage increase over previous year :

Table 4.10

Profit Percentage Change Analysis

Year Actual sales – actual cost = Profit % change in profit

2068/69 12.75 - 10.75 = 2.00 -

2069/70 15.95 – 12.85 = 3.10 55%

2070/71 19.00 – 16.25 = 2.75 (11.29) %

2071/72 20.15 – 18.15 = 2.00 (37.5)%

2072/73 21.25 – 23.00 = (1.75) (187.5)%

In fiscal year , the profit company was Rs 2.00M, which is increase by 55%
to Rs 3.10M in the following year. However, it sharply gradually decreased by
11.29% in fiscal year 2070/71 likewise; it declined in the fiscal year 2071/72 by
around 37.5%. If the profit amount of 2072/73 is compared to F/Y 2068/69 then
we find the declination of profit amount 3.75M by which is 187.5% decrement as
loss suffered in final year is 1.75M.

The earned profit for last 5 year has been shown on bar diagram. It shows
how far profit has deviated from indifference point and how much difference it has
aroused from base year datas. The figure is as follows:

37
 Profit
4

1 Profit

0
2068/69 2069/70 2070/71 2071/72 2072/73
-1

-2

Figure : 4.8

Bar diagram showing profit for 5 FY

The above bar diagram consist of profit earned by VASP for last 5year under
study. The x-axis comprises of FY and y-axis comprises of amount of profit in million
Rs. It is clearly shown in this diagram that 2069/70 has the peak point of earning in
VASP which gradually decreased from then and reached to loss of 1.75million Rs by the
year 2072/73. It is material loss and it requires disclosure since it brings question to the
going concern of VASP. On the other hand, the following table shows Gross profit ratio
of VASP earned during the period under study

Table 4.11

Gross profit(GP) Ratio of different year

Year Sales Profit GP Ratio = Profit/Sales*100

2068/69 12.75 2.00 15.68%
2069/70 15.95 3.10 19.43%
2070/71 19.00 2.75 14.47%
2071/72 20.15 2.00 9.925%
2072/73 21.25 (1.75) (8.235)%

38
 Table 4.11 calculates the different gross profit ratio on sales from the profit
earned during FY 2068/69 to 2072/73. Those rate shows decreasing trend and has
reached to negative i.e. loss on last year. It may be due to various reason but
organizational profit planning alongside with its budgeted values are the major
contributor on long term profit earning of organization.

4.2 Major Findings

Based on analysis and interpretation of relevant data obtained from annual report of VASP,
following major findings have been drawn as follows:

o Profit of the automobiles seemed volatile. It has slightly increased in FY 2069/70

and then decreased gradually in following years.

o Standard Deviation of Budgeted cost is 3.112 and coefficient of variance is

19.45%. But, standard deviation of actual cost is 3.34 and coefficient of variance
is 21.83%. Less the standard deviation and coefficient, greater is the result. In
case of budgeted and actual datas, both values of actual datas are higher. It
implies that costing procedure of VASP is not upto the mark. The standard
deviation and Coefficient of variance in case of cost should always be less when
actual data are compared to budget.

o On the other hand, standard deviation and coefficient of variance budgeted sales
are 3.133 and 17.41% respectively. But for actual datas, Standard Deviation is
3.092 and C.V is 17.092%. Here, both values are less than that of budgeted datas
and it signifies better sales placements of VASP. Also for the improvement of the
organization, higher the difference between budgeted and actual sales deviation
and variance, better the result is.

o The company has no details of systematic rules for essential matching of sales
and purchase budget.

o Gross profit ratio of the enterprise are 15.68%, 19.43%, 14.47%, 9.925% and
(8.235)% in the FY 2068/69, 2069/70, 2070/71, 2071/72 and 2072/73.

39
 Decreasing gp ratio indicates that the company is not in strong profitability
position.

o Investment in purchase of motorcycle is seemed to be in increasing trend. It

implies that VASP has increased its share in market and it seems that VASP
wants to increase more in future.

o Sales of VASP are also in increasing trend. It signifies that irrespective of

decreased profit, VASP want not to lose their viable customer and wants to
sustain in the market for longer run.

o Budgeted cost being less than actual cost implies that budgeting was done with
less competencies. Had it been made with greater focus, budgeted cost will be
more and all the expected cost to operation would have been covered. In case of
sales, if budgeted is low than actual, then it give cushion to management as well
as stakeholders for better earning.

o Over the period of 5 years, both sales and cost of VASP has increased and it is
very important as investment and return has both increased. But on the other side,
profit has decreased. It means that return is not up to the mark and hence VASP
should give focus on the matter of earning per investment.

40
 CHAPTER V

DISCUSSION AND CONCLUSION

This chapter highlights some selected actionable conclusion and

recommendations on the basis of the major findings of the study derived from the
analysis of VASP. The study has covered 5 years data from FY 2068/69 to 2072/73. The
major findings of the study based on profit planning are listed in Chapter-4 of this report.
In order to carry out the research, both primary and secondary datas are collected and
interpreted. The overall findings are discussed and conclusion and recommendations are
given below:

5.1 Discussion

There are numbers of automobiles operated inside Nepal. Since Kathmandu is the
capital of our country, major economic activities are carried out here. Automobile
operation is supported with a huge investment and as it is a primary market for both user
of automobiles and operator of them. Industrialization is essential for the socio-economic
development of the nation. Science and technological advancement play vital role in
industrialization. Hence, one of the main lead of IT development is automation sector.
VASP has been a potentially improved entity with gradual increase in overall aspect of
business. Either it be sales or purchase (investment), VASP has shown good sign for a
longer run. During this study, all of the personnel inside VASP were interviewed and
what came out as a result was impressive. The internal control system was full marks
scorer which dealt about smooth run of VASP. The major disaster in there was the
Earthquake which made every Nepalese life harder. Same has occurred in VASP.
Infrastructures such as godown, warehouse, building and other supplies has been quite
hampered by Earthquake. The former profit of organization was due to additional sales as
it has been balance receivable on following year. On the other hand, the loss for last year
was a result of accounts payables on latter phase. The average earning (profit) of VASP is
1.62M per year; most of which has been earned from first 3 years as a base of sale of 2-
wheelers (motorcycles). Majority of young college students wants 2-wheelers so
automobile shops and retails are major winner.

Venus Automobiles and Spare Parts Pvt.Ltd. has a bigger point: the investment.
Increment of investment for more than 100% for last 5 years is a very satisfying result. In
a thorough study, one can see deviation between budgeted and actual cost as well as
sales. This is common since what is expected cannot be always what happens. Standard
deviation is a mean to study deviation among matters. It is used when lots of datas are

41
mixed up and those piles cannot be study with general mean. It needs an expertise to
understand the operation of these financial tools. Additionally, study of standard
deviation helps us to deal with the trending of financial activities. If standard deviation is
of normal distribution is calculated, it helps to point out the percentages of scores which
are within one standard mean and other within second mean. It is proven to be extremely
useful measure of spread in part because it is mathematically tractable. Standard
deviation is the index of measurement which represents how far variables will go. Let’s
consider of standard deviation of budgeted data is 5 and that of actual data is 4, one can
say that actual datas are appropriately placed. Same goes for cost. If standard deviation of
budgeted cost is more than actual cost, it is clear to understand on favorable ground the
operation is going into. In this study, standard deviation of budgeted cost is less than
actual cost, we can say that cost management inside VASP is no so great. They need to
focus on costing part of material and others.

On the other hand, Coefficient of variance is the ratio of standard deviation over
mean. It is unitless and so is measured in %. Lesser the C.V, betters the result. Here, the
C.V of budgeted cost is less than actual cost and hence it is proved that budgeting in the
part of expenses in not wisely done. This brings doubt for further scale of operation of
VASP. C.V is a measure dealing with far from 100% and the value which is nearer to
100% are deemed bad than that which far from it. On contrast, sales has a different story
to tell. VASP has managed itself in such a manner that sales has increased to meet up the
gap between change in purchase or cost of motorcycles. Hence it has better result. Low
standard deviation and coefficient of variance of actual sales than that of budgeted one is
a clear picture of good track of business. Almost every youngster’s wishes to ride a bike
and thus youngsters are the firsthand potential market. So if managed properly, VASP
can come out yet with a better face and act as a winner of Nepalese Economy.

5.2 Conclusion

Venus Automobiles and Spare Parts Pvt. Ltd. have failed to achieve its growth
goal as it has gradually decreased profit. Various profit planning tools like JIT, zero
based budgeting, CVP analysis are not practiced in VASP. Cost segregation into fixed
and variable are not done. The operating and maintenance cost are in rising trend. No
specific technique is used till now to control and reduce cost. On the other side, standard
deviation and coefficient of variance is also not practiced in VASP even it is considered
as major tools for profit planning. VASP is still is behind realistic budget and is not been

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able to practice various analysis as it follows traditional budgeting system and is far
behind from modern ideas and technics.

The study of standard deviation of VASP shows that the corporation has low and
fluctuating sales in comparison to purchase rate affecting profit. Even thought the sales
have been increased, the cost increased rate is ahead and it fails to earn expected profit.
The sensitivity of Coefficient of Variance in response to change in actual and budgeted
cost is higher than that of total sales. It signifies budget has exceeded its rate of change
over revenue while developing investment for growth of VASP.

Rotating through past records, low gp ratio is a weak sign for operating business.
What has expected to return if diverted in actual brings unsatisfied result. The deviation
can always cause of following reasons:

 Inexperience of Project leader.

 Poor management of personnel.

 Loss due to dematerialization and damages.

 Environmental factor and others.

VASP is a sales concern. The secondary function of VASP is to provide services

to automation as post sales service. But for the study of this report, only sales portion is
focused and studied. In circumstances where there are people well informed about the
technology, hundreds new ideas are immersed in one second and the best ideas are
filtered and used for implementation. Development in IT as automobiles industry is very
potential market. So investments in this field are fruitful. Conclusively, it can be stated
that VASP’s profit plan is recent time is not in progressive stage. Standard deviation has
been better side that gives matches for future progress. However, VASP has to be
concerned in increasing growth rate of profit by maintaining proper bases for controlling
cost and profit. Currently, the greater risk of the operation has been created by
haphazardly increasing purchase in Nepal, as VASP has not been able to make expected
trend in sales as well as cost as per industrial standards. The annual report of VASP
2072/73 has mentioned that total share in market of VASP has increased gradually but
the profit is not satisfactory. Table 4.11 and Figure 4.3 have diagrammatically described
which is a challenging and bitter fact to VASP is really. So the entity needs to focus on
the overall market as well as internal control development for ensuring the financial
stability and growth.

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 5.3 Recommendation

Suggestion is the output of the whole study. It helps to take corrective action in their activities in
future. Different analysis were done till arrive this step. On the basis of above analysis, findings
of the study, summary and conclusion, following suggestions may be referred to overcome
weakness, inefficiency. The following suggestions are recommended to improve the formulation
and implementation of profit planning and efficient sales as well as purchase of VASP:

 VASP must follow the definite policy regarding the amount of cash to manage each year
ensuring the cost fluctuation are maintained at acceptable level.
 The gross profit ratio which has been observed in the year 2069/70 is 19.43% and is
required by VASP to maintain the same or plus to that percentage in the Future years to
come.
 VASP should develop efficient system of revenue collection. It should make well defined
rules and regulations in regard of revenue collection and if the customer of any category
delays or denies, it should be charged penalty. In revenue collection, any kind of pressure
and biases should strictly be undermined.
 The enterprise should be well familiar with its strengths and weaknesses and it should not
be indifferent about its competitors because of the liberalized economic policy of the
government. That’s why the enterprise should be aware of effective corporate planning
system and strategic management. Hence, a systematic approach should be developed
towards comprehensive cash management. This can considerable contribute to increase the
profitability of the VASP.
 VASP further needs to prepare a strategic long term plan ensuring the growth of the
organization is maintained and the threats of competitors is minimized by effective
management and quick decision approaches.
 The company should have suitable credit policy to handle the cash and receivable
management effectively. It should adopt liberal credit policy to increase the sales. Next, it
should adopt strength credit policy especially for its staffs and workers for effective credit
and collection performance as low total receivable. One of the reasons of lower profit and
high cost arise due to more investment on accounts payables.
 VASP should emphasis on the maximization of its operational profit. For this, cost control
program can be launched in one respect and the alternative for the replacement of long
term loans should be searched. Further, Corporate financial Re-structuring/Reengineering
can be done for writing-off previous years losses. Corporate Financial re-engineering can
be done by the revaluation of the assets and lands of the corporation

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 Highly qualified, dynamic, energetic and skilled manpower and inventory should be made
available by the authority and staffs should be property and unwisely trained and
motivated.
 VASP should increase the market stake by adding numbers of automobiles types and
brands for both customers and stakeholders.
 Enterprise Resource Planning System (ERP) system needs to be installed in the
organization ensuring that all the elements of the corporation be controlled and perfect MIS
system could be developed which would ensure the overall growth of the corporation.
 There should be timely evaluation of strengths and weaknesses. Different aspects such as
managerial involvement, organizational adoption, responsibility accounting, full
communication, realistic expectations, time dimensions, flexible application, behavioral
point of view and follow up programs should be made more effective, productive and result
oriented for the successful operation of the organization.

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 BIBLIOGRAPHY

 Acharya Khagendra. Entrepreneurship and Small Business Management ,2002

 Agrawal Govinda Ram. Fundamentals of Marketing. Kathmandu, 2005
 Amrit Shaud . Purchase and sales manager. VASP 2072/4/1
 Annual report of VASP for 5 five FY 2068/69 to 2072/73
 Aton A.Akio(2007), Cost management and its practices, Japenese Concept
 Bajhgai,Ramesh(2015) : BEP Analysis of Rajesh Automation
 Chris Mathieu(2015), Financial Analysis Theories and Approaches
 Dhimal, Suman (2015) : Profit planning of Sunsari Autoworks
 Dhungana, Akriti(2008) : Cash and cost Practices of NEA.
 Ghimire,Ramesh (2003), study of cost volume analysis of NEA
 Giri, Nawaraj(2015) : Study of Private Enterprise Development
 Gupta,J.R (2012), BEP study of Manorama Hardwares
 James Bailey (2001) , Practical Analysis of Entity Cost Profit Analysis
 Journal issued by VASP on 25th Paush,2073
 Pant Prem R. Fieldwork Assignment & Report Writing Second Edition. 1998
 Paudyal, Ajay (2016) : Analysis of Bikki motorcorps
 Ramsey K.John(2003),Profit Management, Chinese concept.
 Richardson .SN (2008),analysis of budgeted and actual sales of Dabur corp
 Rinchard, venella (2005), analysis of profitability investment of Punjab bank of India.
 Website : http://Nepal/departmentoftransportmanagement
 Website : http://yellowpagesnepal.com/nepal-automobile-dealers-association
 Website : https://www.chloe-megan.com/sales/books
 Website : https://www.justdial.com/Myadav/Venus-Automobiles/
 Website : https://www.merriam-webster.com/finance/budget

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 APPENDICES

The impact of Profit Planning on Sales and Cost

Appendix:

Section 1: Personal Details

Name of Respondent:

Job Position:

Age (Optional)

Address (Optional)

Contact Number (Optional)

Section 2:

1. Do you know investors assume risk in investment in VASP ?

a. Yes b. No c. Don’t know

2. Is it necessary for VASP to meet one to one needs of consumer ?

a. Yes b. No c. Don’t have any idea

3. Are the stakeholders satisfied with operating earning of VASP ?

a. Yes b. No c. Don’t know

4. What do you think about the huge loss suffered by entity on recent year ?

a. Satisfactory b. beyond capacity c. Worst

5. Do you agree with the heavy sales pattern of VASP?

a. agree b. disagree c. neutral

6. What do you think about the long run possibility of VASP?

a. Strong b. weak c. No idea

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7. How well has VASP developed its internal control system?

a. Satisfactory b. dissatisfactory c. no idea

8. Do you think VASP maintain cordial relationship with customers?

a. yes b. no c. don’t know

9. In your opinion, how sales and purchase plan effect on profit analysis ?

a. positively b. negatively c. no effect on profit

10. What do you think VASP will have high or low earning in future ?

a. high b. low c. normal

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