Finance, Accounting and Procurement for Development Practice Number of credits: 3 ( ) Number of lectures-tutorial-practical:

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1 Course No.: MPD 128 Course title: Finance, Accounting and Procurement for Development Practice Number of credits: 3 ( ) Number of lectures-tutorial-practical: Course coordinator: Samir Bajpai Course outline Development practitioners must be able to design and manage programs and project budgets with transparency and efficiency. Knowledge of financial markets, development Institutions credit and microfinance is required as well as the procurement, supply chain management and distribution of essential commodities. Course objectives The objective of this course is to familarise the students with concepts of financial management including the elaboration of budgets, grant proposals, and corresponding activity plans Key concepts of commodities management integrating lessons from real-world challenges of production management, procurement, and distribution of, for example, medical supplies Budget-planning processes, international financing structures, and systems of credit and microfinance Procurement and logistical processes in developing countries and resource-poor settings, and the development of effective and appropriate distribution plans Evaluation procedure: Case study & Presentation 30% 3 minor tests (10% each) 30% Mid-term Exam 20% Final exam 20% Details of course content and allotted time No I. An introduction to finance Evolution of finance as a discipline 1 The scope of finance function The financial decision making II. Financial Analysis 1. Financial statement Basic Concepts underlying Financial Accounting and Management Accounting Generally accepted accounting principles and the accounting environment Balance Sheet concepts of share capital, reserves& surplus, secured/unsecured loans, current liabilities, fixed assets, depreciation accounting, investments, miscellaneous expenditure and losses, amortization, current assets, working capital, net worth 3 1

2 No Profit & Loss Account concepts of gross profit, operating profit, PBIDT, PBIT, PBT, PAT, Retained Earnings 2 Volume cost Analysis Break Even analysis 2 1 Break Even analysis applications III. Long Term Investment decision 1. Cost of capital Basic concepts 4 1 Measurement of cost of capital Cost of debt Cost of equity Weighted average cost of capital 2. Investment Criteria Time value of money NPV 4 Cost Benefit ratio IRR Payback 3. Long term financing Capital markets - Capital market efficiency, Primary and secondary markets, Raising capital in capital markets, Securities and exchange board of India Term loans Lease financing Venture capital IV. Budgeting Budgeting Planning and Process management planning, time dimensions, formal Vs Informal budgets Flexible Expense budgets Purpose, Formats, Uses of flexible budgets Planning and control of capital budgets Definition, benefits, cash flows and audit of capital budgets Performance evaluation and management control reports and communications, requirements of users, follow up procedures, performance reporting Analysis of budget variances analysis of variances, uses of analysis, Variance investigation V. Commodities Management 1. Procurement of commodities Purchasing and supply management- functional levels, strategy for buying, operating policies Purchase description and specifications quality and specification, writing specifications, qualified products Sources of supply Importance of source selection, buying locally or internationally, commodity teams

Investment Criteria Time value of money NPV 4 Cost Benefit ratio IRR Payback 3.

3 No Institutional and government purchasing sources of authority, procedures, role of purchasing agencies, contract administration, ethics in procurements, socio economic issues 2. Logistics & distribution Ware housing decisions Nature and importance, Warehousing operations, material Handling 2 1 Transportation system Role of transportation, modes of transport Transportation Management - Management strategy, Documentation, Bases for rates, transportation services VI. Micro Finance Introduction history, products, services 2.5 Supply, Intermediation & Regulation microfinance distribution models, Regulation and supervision Lending models Credit lending models, Transaction cost and time, SHG cluster & federations Risks in microfinance functional risks, financial risks, external risks, strategy for risk mitigation Banking system in India Functioning of banking sector in India 3 Regulatory policies Priority sector lending in India VII. Grant and their allocation Introduction to grants 2.5 Applying for grants objectives, procedure for proposals, formats Monitoring of grants process and applicable regulations Institutions that provide grants for capacity development Total 35 7 Sustainability in the area of Financial Management The aspect of business sustainability in project financing will be brought into the course with the use of examples through the course, and more specifically through the use various case studies on development financing to supplement the teaching. MODULE-WISE TEACHING PLAN Module I: Financial Management encompasses the procurement of funds in the most economic and prudent manner and in the most optimum way to maximize returns for shareholders. In addition, it is imperative for businesses to look at sustainability issues. The introductory lecture will focus on an overview of finance as a discipline and procedures and steps to optimize business decisions. 1) Look at the evolution of finance as a discipline.

Management - Management strategy, Documentation, Bases for rates, transportation services VI. Micro Finance Introduction history, products, services 2.

4 2) Understand the scope of finance as an area of study. 3) Identify the steps in financial decision making. Module II: Usually a firm prepares a balance sheet to show the financial position, profit and loss account to reflect the performance over a period of time and a cash-flow statement to display the sources and uses of cash during a period. This module will provide an overview of financial statements and explain the basic concepts underlining financial accounting. It will go on to discuss balance sheet, profit and loss account and cashflow statements. The students will be introduced to the objectives and uses of financial statement analysis and the various ratios and their interpretations. 1) Understand concepts underlying financial and management accounting 2) Get an exposure to balance sheets and profit and loss account 3) Understand the various financial ratios and their interpretation 4) Define volume-cost-profit analysis Module III: One of the most important issues before a manager is to understand the costs of various sources of financing and an understanding the key criteria that determine investment decision. The students will be exposed to various sources of funding to finance the capital expenditure including new methods of financing like VC &PE. This module examines the cost of capital, financing decisions and it s relationship to accessing the capital market for debt and equity. 1) Determine the cost of debt and equity and hence arrive at an optimal capital structure 2) Understanding the time value of money to make an investment decision 3) Get an exposure to the functioning of the capital markets and the regulatory framework governing them Module IV: Budgets are an important tool for obtaining the allocations for asset formation in the development sector. It is also critical for obtaining grant funding for capacity development of organisations. This module will discuss budgeting as a method of planning. : 1) Understand the planning process in a budget. 2) Understand the meaning and purpose of a budget. 3) Defining the master budget, including the operating budget and the financial budget. 4) Understanding flexible budgeting 5) Moving away from mechanistic budgeting and looking at the human aspects of budgeting. Module V: The buying of goods and services is an essential component for creation of assets in the public and private sector. The management of commodities involves issues related to both storage of goods and efficient distribution to deficit areas. The students will be exposed to the entire supply chain management of commodities. 1) Procurement and buying process in public and private sector 2) Understanding the supply chain issues that pertain to warehousing and distribution of commodities 3) Cost optimization of distribution by efficient use the transportation modes

sources and uses of cash during a period. This module will provide an overview of financial statements and explain the basic concepts underlining financial accounting.

5 Module VI: Microfinance is the provision of financial services to low-income clients, including consumers and the self-employed, who traditionally lack access to banking and related services. Today it is an important tool in the poverty eradication in least developed economies. 1) Understanding the business of micro finance and it s development in India 2) Exposure to the regulations that govern micro finance in India Module VII: Grants are funds by one party (Grant Makers), often a Government Department, Corporation, Foundation or Trust, a nonprofit entity (but not always), educational institution, business or an individual. Grants are typically used in the development sector to fund capacity building and also for enhancing the delivery in social sector 1) Understanding the use of grants in the development sector 2) Developing grant proposals for application of grants 3) Understanding the objectives of various organization providing grants Suggested readings: I. Khan, M. Y. and Jain, P. K. (2004) Financial Management. Text, Problems and Cases (Tata McGraw Hill, New Delhi) II. Dobler & Burt Purchasing and supply Management (Tata McGraw Hill, New Delhi) III. Bardi & Langley The management of Business Logistics ( Thompson Asia, Singapore) IV. Panda D.K Understanding Microfinance, (Wiley India)

1) Understanding the business of micro finance and it s development in India 2) Exposure to the regulations that govern micro finance in India Module VII: Grants are funds by one party (Grant

In this course, the students are introduced to the basic concepts of financial analysis, budgeting, valuation and capital investment.

In this course, the students are introduced to the basic concepts of financial analysis, budgeting, valuation and capital investment. Course No.: PPM 121 Course title: Financial Management - I Number of credits: 3 (2-1-0) Number of lectures-tutorial practicals: 28-14-0 Course coordinator: Dr Rajiv Seth/ Prof G S Gupta Course outline