Professional Documents
Culture Documents
Introductory Part
1.1 Introduction 1.2 Scope of the Study 1.3 Objectives of the Study 1.4 Methodology of the Study 1.5 Limitations of the Study
A Study of Financial Policies and Procedures of Suvastu Development ltd (A Study on Gulshan Branch) by Md. Jahid Hasan
1.1 INTRODUCTION:
Architecture is generally considered an art so the art of space is the heart of architecture. Dhaka, the capital city of Bangladesh, with its long history of political ups & down, economical uncertainty and growing population destroyed the beauty of Architecture for living with space. The gap between the growth of population and expansion of city area is making the crisis of housing thats the fundamental rights of human being. Suvastu Development Ltd. started with that moral binding to create high quality living for healthy, comfortable & green residential building with technique. Suvastu Development Ltd. is creating spaces for your dream, for your future and for your generations. SDL call it HOME; it's not a blend of stone, bricks or concrete but care, responsibilities and sense of balance. Suvastu Development Limited is a private sector real estate company sponsored by the enthusiastic architects. The company started its very modest journey in 1994 with the objective to provide realistic and affordable solutions for housing. During its 17 years' operation, it has completed a good number of projects and handed over a huge number of apartments to its clients, making a considerable contribution during meeting the housing need of city dwellers. Suvastu Development Limited is selects the employee on their intelligence, creativity and innovation. Administration and Logistic - SDL has more than three hundred security guards working to ensure the security of the residents of each apartment building and shopping mall. Logistical services include repair maintenance facilities such as plumbing, electrical and civil. Permanent maintenance personnel ensure that the apartments are in good condition. Accounts and Finance - SDL has an experienced team in this department whom are cost and management accounting professionals. Engineering & Design Suvastu has developed
design team for architectural, structural, planning & electrical design. SDL has one hundred engineers in construction and development team in addition to its Quality Control, Monitoring & Evaluation and Construction management personnel with many senior level professionals, engineers, architects, planners trained at home.
Marketing and Customer Service - One of SDL's strongest points is its efficient Customer Service Department. This department gives personal attention to each client and effective action. A warm, friendly atmosphere is created for the client who can make purchase decisions at his/her rate without feeling hassled. By the involvement of very skilled group of people, including architects, structural designers, supervising engineers, financial experts marketing and management professionals, the company has developed or built a number of projects to its acknowledgment that have drawn wide attention of city people for their specialized features. The list of such project includes Suvastu Nazar Valley, city's biggest housing cum shopping complex at Progoti Sharoni, having a cluster of seven identical towers with state-of-the-art architectural and engineering features. The apartments of the project will be an ideal choice for the numerous people who work in and around Baridhara but have to travel there distant area of the city. Suvastu Nazar Valley will be really affordable for all categories of people. Suvastu Development Limited is committed to ensure comfortable living with affordable range. Various extra interior designing works and additional fittings and fixtures as per choice of allotted may be done at cost basis after approval of the company. As a member of Real Estate and Housing Association of Bangladesh (REHAB), Suvastu Development Ltd. has earned the confidence of home seekers by ensuring timely hand over of its apartments to the buyers. It has become a popular name in every section of housing customers from middle class to affluent class through undertaking customer-oriented projects. The company always strives for excellence through applying its acquired knowledge, experience, expertise and professionalism carefully and meticulously. SDL is not only catering to the housing need of the city dwellers but also contributing to employment generation.
In 1994 Suvastu Development Ltd. was started there business so, there was no completed project of Suvastu in 1994,1995.First completed project of Suvastu is Suvastu Villa finished by 2002.In 2003 Four completed project, in which three are residential and one is commercial purpose. In 2004-2008 this company growing first with there effective project engineers and with there huge capital. In this period Suvastu development Ltd. finished twelve projects. Most of the projects are residential and established in Dhanmondi area. In 2009 Suvastu Development Ltd. handover six residential project at Dhanmondi,Uttra and Gulshan.In 2010 the most high raise building of Suvastu Development Ltd. was established at progati sharini, Shahjadpur, Gulshan, Its apartment Cum Shopping complex Other five projects were handover to the different owner. In 2011 there are three complted projects and six ongoing projects under SDL. There have many agreements with land owners are on processing. Since the Suvastu Development Ltd. is a real estate company so, there current activities involved with land purchase, agreement with land owner for finished the project. The total activities are divided into two parts- internal and external. Under external activities basically included activities is purchase of land sales of finished project and rent of commercial space or on the basis of the contract any kind of sales agreement or rent agreement. Under internal activities basically included activities is decisional on the basis of the different department like Accounts &Finance, Sales & Marketing, Recovery, Purchase, Budget & Budgetary Control, Human Resource dept. Customer Management or Customer Service dept, those activities certified by ISO. Basically the Suvastu Development Ltd.perform or finished there activities focus on there customer and market demand the latest activities involved in SDL, and thats the technology of sunlight for saving the power or energy since the crisis of electricity of our country. The total activities of SDL are finished by the direction of board of directors especially managing director.
The study has been done based on the Exploratory Research. Sources of Data: The data used to prepare this report have been collected from both the secondary sources and primary sources. Among primary and secondary sources, most of the data have been collected from the primary sources for this Study. 1. Secondary Sources: Some written document on financial policies and procedures of that company Published specifications of different products in websites
The Survey (personal interview) Method has been used for the purpose of data collection. A good number of officers of Suvastu Development Ltd., Gulshan Branch were helped me provide the data. Target Population: All the officers of Suvastu Development Ltd. at
Gulshan Branch Sample Size: The data was collected from 10 officers of Suvastu Development Ltd., Gulshan Branch Data Collection Method: Direct interview (Personal Interview) method
Sampling Technique : Non-probability sampling (Judgmental Sampling) method was used to collect data from the 10 officers of Suvastu Development Ltd. Gulshan Branch Data Analysis: A qualitative research was carried out to identify the
Financial Policies and Procedures of Suvastu Development Ltd. . This research is mainly based on primary data that was collected from the officers of First Suvastu Development Ltd., Gulshan Branch.
Chapter: 02
A Study of Financial Policies and Procedures of Suvastu Development ltd (A Study on Gulshan Branch) 8
b. Business Entity: Under the business entity concept, business is conceived to be and is treated as a same entity, because Suvastu Development Ltd. is a partnership business organization.
c. Cost Principle: In SDL, all goods and services purchases are recorded at cost and appear on the statements at cost. In applying the cost principle, costs are measured at the cash or cash equivalent basis, if considered by the board of directors cost is measured at the entire cash outlays made to secure the asset or service. d. Periodicity principle: Under this principle, financial statements must be prepared for yearly basis and as its a partnership business organization it never discloses financial statement publicly. e. Money measurement Principle: Under this principle, transactions must be measured, recorded and reported in the terms of taka which has been treated as a stable unit of measurement.
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cost is incurred if the recognition criteria (future benefits and measurement reliability) are meet. If payment for an item of property, plant, and equipment is deferred, interest at a market rate is recognized or charged.
2.1.6 Inventory:
Suvastu Development Limited inventories include Rod, Brick, Tiles, Stone chips, Sand, Pipe, Cement and other related supplies. Cost of inventory includes three: a. cost of purchase (including taxes, transport, and handling) net of trade discounts received b. cost of conversion (including fixed and variable manufacturing overheads) and c. other costs incurred in bringing the inventories to their present location Inventory cost should not include: (SDL practice) a. Abnormal waste b. Storage cost c. Administrative overheads unrelated to production d. Selling cost e. Foreign exchange differences arising directly on the recent acquisition of inventories invoiced in a foreign currency f. Interest cost when inventories are purchased with deferred settlement terms. 11
Currently, Suvastu Development Limited is using FIFO costing method during issue of inventory. 1. Materials are easily identified as belonging to a particular purchased lot 2. Not more than two or three different receipts of the materials are on a materials card at on time. 3. In periods of rising prices, FIFO costing will result in materials being charged out of lowest cost. 4. Efficient materials control, particularly for materials subject to deterioration, decay, quality or style changes.
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staff and owners of the company are present with their family members. Its occurs annually but on the basis of the situation Suvastu Development Limited offers travel as a motivational factors. These costs incur under the miscellaneous expenses since the costs is not high, because the place is selected inside Dhaka city or around the Dhaka city.
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Capital Expenditure Plan (CEP) - A plan incorporating capital expenditure projects that have been evaluated and satisfy the criteria encompassed by the capital evaluation guidelines. Capital Expenditure Budget - Annual budget derived from the Capital Expenditure Plan including all capital expenditure projects that are to be undertaken during the financial year to which the budget relates. Policy Content 1. Linkages All capital expenditure projects must be clearly linked to the strategic objectives of the company as stated in companys strategic planning documents. 2. Planning Capital expenditure projects are to be planned over a five-year horizon accounting for the renewal of current assets and the investment of resources into new services and markets. The SDLs CEP will be used as a guide for long term financial planning and scheduling of capital expenditures. 3. Plan Approval The companys CEP will be presented to board of director annually for approval as part of the annual budgeting process. Approval of the CEP does not indicate approval of the individual projects that comprise the CEP but reflects agreement with the broad direction of the plan. 4. Capital Expenditure Budget The annual capital expenditure budget is derived from the board of director CEP within budgetary and funding constraints determined by the strategic and financial planning processes. The companys CEP is intended to contain all projects worthy of development. Projects will be selected from that plan for inclusion in the annual capital budget. In selecting projects for incorporation in the annual budget due regard will be given to following criteria: Commercially justifiable projects meeting required rates of return will be funded subject to financing arrangements being satisfactory. Strategically justifiable projects will be ranked and approved subject to the agreed annual capital budget for strategic projects.
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Resource Allocation Policy & procedure of Suvastu Development ltd. is comparatively first-rated then others real estate company because the board of directors is always prioritizing the commitment. Resources allocation is used on the basis of scheduling of all activities like civil works (bricks, tiles, grill), masonry works, electrical works etc. because of smooth operation of business activities. Although this policy is first-rated but sometimes its create some problem because of centralize decision making system. In Suvastu Development Ltd. the head of finance & accounts prepares annual finance & accounts Plan on the basis of annual work Plan, annual budget and products in hand as well as getting necessary information from all the related departments. All over with we can state the financial delegation policy of SDL is good. The basis of accounting of Suvastu development ltd is historical cost basis, which is the one of the most commonly adopted bases as provided in the frame for the preparation and presentation of financial statements which one fastidious. As it is a partnership business the business entity is not separate from the owner as well as only one taxation system exist which one is also pleasant. In SDL, all goods and services purchases are recorded at cost and appear on the statements at cost. In applying the cost principle, costs are measured at the cash or cash equivalent basis, if considered by the board of directors cost is measured at the entire cash outlays made to secure the asset or service.
Suvastu development Ltd. recognizes plant, machinery and equipment (blend machine, brick chips making machine, generator in a particular project and many others) as assets when it is possible to get future benefits. But we know sometimes machinery and equipments fail to provide future benefits if it is misused. According to the policy of SDL we cant includes those as asset if we never get future benefits
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which unrealistic. But Suvastu Development Limited depreciates the value of all property, plant, and equipment separately which is excellent. General purpose of financial statements is to ensure comparability both with the entitys financial statements of previous periods and with the financial statements of other entitles. To meet that objective, financial statements provide information about SDL for internal uses as well as for owner of the organization. In one sense its fine but considering other issue (expansion the business as public ltd. company) its not that much good. Suvastu Development Limited inventories include Rod, Brick, Tiles, Stone chips, Sand, Pipe, Cement and other related supplies. Inventory management policy of SDL is good compare with others. Investment Policy of SDL is good considering current position of the company because before investment it does evaluate the best alternative for taking investment decision. But considering potential competition in real estate industry need to evaluate investment decision more specifically by the expert (by financial analyst) also develop R&D department. Since the Suvastu Development Limited is a real estate company so it follows the customer oriented polices like relationship. According to the goal of the company its emphasizes on customer relationship. For this reason its work on it which is in satisfactory level. Suvastu Development Limited Collects there fund basically from their owners. The capital structure of Suvastu Development ltd. is the combination of equity and debt capital. Its capital amount is not that much enormous because its a partnership business. If it is a public ltd company or listed in capital market may possible to raise more capital from issuing share to the public. On the other hand, Eastern Housing already listed and raised capital form capital market.
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Chapter: 03
Problems
A Study of Financial Policies and Procedures of Suvastu Development ltd (A Study on Gulshan Branch) by Md. Jahid Hasan 17
3.1 PROBLEMS:
After discussions and evaluations of the outcome of the study, on the basis of the financial policies and procedures of Suvastu Development Limited, has some major problems which are as follows:
Resources allocation is on the basis needy activities of SDL. But for allocating resources need to permission from the higher authority and it may create a problem for smooth running the operations.
Suvastu Development ltd is not a listed company in the capital market for this reason there capital is limited where as Eastern Housing raise its capital from capital market.
The communication materials such as booklets or statements are not appealing to attract the customers.
SDL cant include those as asset if its never get future benefits from those asset
which unrealistic. Its a problem of management because they fail to ensure the prefect uses of those assets.
Electricity is one of the major problem in our country, but as a leading real estate
Under the financial policy SDL has no effective planed for the advertisement. No sufficient newspaper flashing, television add, bill board etc.
Some employees are confused about the performance of the service of SDL right at
the first time. That means, it can be said, SDL has lacking to perform the service right at the first time.
Considering potential competition in real estate industry need to evaluate investment
decision more specifically by the expert (by financial analyst) also develop R&D department but which is absent.
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Chapter: 04
A Study of Financial Policies and Procedures of Suvastu Development ltd (A Study on Gulshan Branch) by Md. Jahid Hasan
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4.1 RECOMMENDATIONS:
To become the best service provider in the Real Estate sector, Suvastu Development Ltd. should do the following things:
Decentralize Authority:
The respective departments of Suvastu Development Ltd. assign the available resources on the basis of their own way. Resources allocation is on the basis needy activities of SDL. But for allocating resources need to permission from the higher authority but it create problem in needy time. So for this reason need to decentralize the authority also practice the accountability. By this way, SDL can control the employees who are authorized.
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4.2 CONCLUSION:
Financial policies and procedures, in addition other service quality related to financial policies are the dominant element for the spread out of business. Financial policies and procedures applied based on the board of directors perceptions of the housing outcome provided and the spread out of business. It is the process by which that outcome was delivered, and the company provides the better physical environment for living. For that reason, Suvastu Development Ltd. has to analyze the perception and expectation of the customers to meet the demand of todays business environment. This report is prepared to study of financial policies and procedures of SDL (Gulshan Branch). In the report, some suggestions are also given to Suvastu Development Limited as the growing intuitions. Recommendations will help the Suvastu Development Limited to improve the financial policies and others service in upcoming days. As a new upgraded real estate company, Suvastu Development Limited has a huge scope for development. In spite of everything, SDL holds good position in the market as because of demand of housing sectors increasing day by day. If the SDL focuses more and improve the financial policies and procedures, they can meet up the customers expectation, as well as, customers perception and follow the current market competitors.
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REFERENCES
Malhotra, k., Naresh, Marketing research, 5th edition, 2009-2010, Sampling: Design and Procedures (pg: 333-353),
Glossary
SDL - Suvastu Development Limited REHAB - Real Estate and Housing Association of Bangladesh CEP - Capital Expenditure Plan MTB Mutual Trust Bank
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