The document outlines the annual operations planning and budgeting (AOPB) process for HPM Chemicals and Fertilisers. The process involves 4 workshops to develop the annual plan and budget. Workshop 1 is for annual sales planning where the sales team develops the sales plan and identifies any gaps vs management targets. Workshop 2 identifies constraints for production, procurement and gross contribution. Workshop 3 develops the tentative budget and Workshop 4 finalizes the annual plan and budget. The process aims to improve visibility, reliability and control of sales targets, resource allocation and costs through defined activities, roles and timelines.

1. Annual Operations Planning and Budgeting
Process
PROJECT - HIGH
HPM CHEMICALS AND FERTILISERS INITIATIVE FOR GROWTH AND CUSTOMER
HAPPINESS

2. Contents
► Introduction
►Design principles
► To-be process maps
►Responsibility matrix
► Review framework
► Control mechanism
►Annexure – list of cost centers

3. Contents
► Introduction
►Design principles
► To-be process maps
►Responsibility matrix
► Review framework
► Control mechanism
►Annexure – list of cost centers

4. Introduction: Annual operations planning and
budgeting process (AOPB)
Annual operations planning and budgeting process
Annual operations planning Annual budgeting
Definition: Annual operating plan describes
short-term (for the planning period) ways of
achieving strategic goals. It also helps in
identification and justification of operating
budget requirement.
Definition: Annual budget is used for planning
and controlling the cost incurred during business
activities. Equally important is institutionalizing a
framework wherein the costs are controlled
before cost is committed / incurred.
Objectives:
► Defines clear objectives
► Planning of activities in advance
► Defines desired outcomes with measurable
metrics
► Allocates resources efficiently
► Defines timelines
► Defines review and monitoring process
► Participate in review and monitoring of the
plan
Objectives:
► Improved visibility of the costs and its drivers
► Improved ownership of the costs
► Improved control over rising costs
► Provide definite objectives for evaluating
performance
► Greater management awareness of the
entities overall operations

5. Intended benefits of AOPB process for HPM
CHEMICALS AND FERTILISERS
► Management’s
vision and plans
► Internal capabilities
and performance
► Product potential
► Competition
understanding
► Budget of enabling
functions
► Month wise sales
target (SKU wise,
geography wise)
► Annual production
plan
► Annual purchase plan
► Annual budget
Key inputs Key outputs
Annual
operations
planning
Budgeting
Annual operations planning &
budgeting process
Process
Intended benefits of AOPB process: Defined process (activities, roles & responsibilities and timelines) for -
Improved visibility of sales target, profitability target and resource allocation (fund,
manpower, capacity and material) for BUs (Domestic and Institutional), geographies
(zonal and state level), Products (SKUs) and timeline (Month-wise)
Visibility
Improved reliability of sales plan and budget due to better understanding of market,
competition, products and costs and its drivers
Improved control by robust review mechanism, defined roles & responsibilities and
timelines
Reliability
Control

6. Contents
► Introduction
►Design principles
► To-be process maps
►Responsibility matrix
► Review framework
► Control mechanism
►Annexure – list of cost centers

7. Design principles – annual sales planning (1/2)
► Annual sales planning – domestic retail sales
► Management aspiration for the BU to be provided as input
► Region wise focus product and product strategies to be provided as input for annual sales planning
► Depot wise, state wise, zone wise, SKU wise, month wise sales target setting to be done by sales team
which is to be revised to meet management’s aspiration
► Historical sales trend, competition, market potential and profitability to be considered for target setting
► SKU wise price to be provided as input for annual sales planning
► Activities, timelines and clear responsibility & accountability to be defined for annual sales planning
► Annual sales planning – domestic Institutional sales
► Customer classification to be provided as input for annual sales planning
► Customer wise focus product and product strategy to be provided as input
► Identification of focus products based on contribution to sales & sales growth, product potential and
company’s institutional sales strategy
► Customer wise, SKU wise, month wise target setting to be done by sales team for A class customers
► Historical sales trend, customer’s purchase potential, barter benefit evaluation and product profitability
to be considered for sales target setting
► Activities, timelines and clear responsibility & accountability to be defined for annual sales planning

8. Design principles – constraints identification
► Annual production planning
► Production planning to be done based on agreed annual sales plan and stock position
► Month wise, SKU wise production plan to be prepared
► Capacities (formulation/packaging, manpower and space) to be considered for production planning
► Activities, timelines and clear responsibility & accountability to be defined for annual production
planning
► Annual purchase planning
► Month wise, item wise RM & PM requirement to be identified based on production plan and inventory
level
► Single price to be estimated for RM & PM for the year for planning purpose based on estimated market
scenario
► Activities, timelines and clear responsibility & accountability to be defined for annual purchase planning
► Annual Gross contribution planning
► Gross contribution to be calculated based on sales plan
► Variable costs to be considered for the calculation of gross contribution
► Product mix should be determined based on planned gross contribution and management’s aspiration
► Activities, timelines and clear responsibility & accountability to be defined for annual GC planning

9. Design principles – budgeting
► Annual budgeting
► Revenue centers and cost centers to be defined for budgeting process along with revenue center and
cost center owners
► Cost centers design is to enable capturing of cost at lowest possible level of organization and to assist
in monitoring defining accountability of the costs
► Revenue to be considered for all the business units i.e. domestic retail sales, domestic institutional sales,
export sales, seeds and agri-equipment based on sales plan
► Standard templates to be designed for each cost centers with details of expense heads, cost drivers and
month wise expenses
► RM & PM consumption to be considered for material cost for forecasted P&L while purchase budget is
prepared based on purchase plan
► Employee related cost to be budgeted by HO HR team based on current salary, estimated
increase/decrease in salaries and manpower plan
► Inputs to be taken from all relevant cost center owners for budget preparation of any cost center
► Fund constraints to be considered before finalization of budget
► The budget to be reviewed and approved by the finance and accounts team and top management
► Budget amendment process to be defined
► Periodic review mechanism to be defined for budgeting control
► Activities, timelines and clear responsibility & accountability to be defined for annual budgeting

10. Contents
► Introduction
►Design principles
► To-be process maps
►Responsibility matrix
► Review framework
► Control mechanism
►Annexure – list of cost centers

11. To-be AOPB process flow chart legends
Process/sub
process/activity
Decision
point
Input/output
document
Control point
Connector
Page connector
Predefined process
*V1: version 1
*V2: Version 2
*V3: Version 3

12. Instructions
Terms Domestic retail Domestic Institutional
Annual sales plan Depot wise, SKU wise,
Month wise plan
Customer wise, SKU wise,
Month wise plan
HO Sales team Commercial officers
supporting sales directors
Sales team members
supporting Institutional
manager
All plans other than
sales plan
Month wise, SKU wise
Meaning of different terms in this document for different BUs

13. Summary of AOPB Process (1/3)
Workshop 1 – Annual sales planning
Validation of sales volume
with sales heads and analysis
Analysis of historical sales
trend
AOPB Workshop 1 –Tentative
annual sales plan (Volume
and value) discussion
Input Activities Workshop Output
Participants: CMD , MD,
COO, CFO,SALES HEADS
*V1: version 1
By Jan 18
Starts on Dec 15
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
Management’s aspiration for
current year’s target for
► Existing BU, products &
geographies
► New products
► New geographies
► New businesses
Product strategy and marketing
plan
BU wise annual sales plan
agreed with sales heads
Historical sales data
Agreed tentative annual
sales plan (Volume and
value) (V1)

14. Preparation of
tentative
production plan
AOPB Workshop 2 - Mfg.,
material sourcing and GC
constraints mitigation
Participants: CHAIRMAN , MD
, PURCHASE , COO ,CFO, IT ,
REGISTRATION
Preparation of
tentative purchase
plan
Identification of
capacity
constraints
Preparation of
tentative Gross
Contribution plan
Activities Workshop Output
Input
Summary of AOPB Process (2/4)
Workshop 2 – Constraint identification
By Feb 4
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
Agreed tentative annual
sales plan (Volume and
value) (V1)
Machine, manpower
capacity data
SKU wise variable cost
from plant
Agreed tentative annual sales
plan (V2*), production (V1),
purchase (V1) and GC plan (V1)

15. Prepare annual tentative
budget
AOPB Workshop 3– Fund
constraints identification
and mitigation and
profitability
Preparation of final annual
operating plan and budget
AOPB Workshop 4–
Finalization of AOPB
Participants: MD ,COO,
CFO
Participants: Chairman,
MD, All dept. heads
Activities Workshop Output
Input
Summary of AOPB Process (3/4)
Workshop 3 & 4 – Budgeting
By Mar 11
By Mar 27
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
Agreed tentative annual sales
plan (V2*), production (V1),
purchase (V1) and GC plan (V1)
Department wise budget from
department heads
Agreed tentative annual sales
plan (V3), production (V2),
purchase (V2), GC plan (V2) and
budget
Agreed tentative annual sales
plan (V3), production (V2),
purchase (V2), GC plan (V2) and
budget
Final annual plan and
budget document

16. Summary of AOPB Process (4/4)
Budget amendment and review & control
Approval of budget
amendment request
Activities Output
Input
Change in the budget
for approved
amendment requests
Budget amendment process
AOPB review & control
Variance analysis of
the planned value
Identification of high variance
items (sales, production,
purchase, expenses)
Root cause analysis for
high variance
Identification and
implementation of ideas
to control the variance
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
Final annual plan and budget
document
Final annual plan and budget
document
Budget amendment request
Historical data for previous
month
Amended Budget
Action points to control the
variance

17. Proposed to-be AOPB process flow chart (1/18)
Start
Management
Product
managers
Sales
team
1. Send annual sales plan template to
sales managers of domestic retail,
institutional, export, Sprayers and
seeds business units with product
strategy and marketing plan
document
2. Collect BU wise annual sales plan
BU wise annual sales
plan agreed with sales
heads
Management’s aspiration for current year’s
target for
► Existing BU, products & geographies
► New products
► New geographies
► New businesses
Product strategy and marketing
plan
Page 2
Page 2
Page 2
Dec
15
Dec
21
Jan
15
Annual sales plan
validation process (page
16 and 17)
Annual sales
planning
Constraint
identification
Budgeting
Review and
control

18. Proposed to-be AOPB process flow chart (2/18)
AOPB
team
3. Analyze annual sales plan based
on historical sales data, product
strategy and BU wise sales target
Identified gap in
management aspiration
and BU wise sales plan
Page 1
BU wise annual sales plan
agreed with sales heads
Product strategy and
marketing plan
Historical sales data
Management’s aspiration for current
year’s target for
► Existing products & geographies
► New products
► New geographies
► New businesses
4. Identify gap in
management’s aspiration
and BU wise annual sales
plan
Workshop
1
Product strategy and
marketing plan
Identified gap in
management aspiration
and BU wise sales plan MOM with agreed
Changes required in the
BU wise annual sales plan
to meet management’s
aspiration
Page 3
Page 1
Jan
17
Jan
18
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
5a. Product managers
presents strategy for
key products
5b. AOPB team presents
gap in BU wise detailed
sales plan and
management aspiration
5c. Management
reviews the sales plan
and identifies changes
required to bridge the

19. Proposed to-be AOPB process flow chart (3/18)
Annual sales planning
Page 4
HO
sales
team
MOM with agreed Changes
required in the BU wise
annual sales plan to meet
management’s aspiration
Page 3
6. Update the sales plan based on
the discussion in workshop 1 and
inputs from sales heads and send it
to AOPB team, Top management
and HO sales team
Agreed tentative annual
sales plan (Volume and
value) (V1)
Page 6
Jan
20
Annual sales
planning
Constraint
identification
Budgeting
Review and
control

20. Proposed to-be AOPB process flow chart (4/18)
Supply
Chain
7. Prepare annual production plan
based on annual sales plan post
consideration of stock availability
and inventory norms
8. Identify machine and manpower
requirement based on production
plan
Machine and
manpower
requirement for
production
9. Calculate RM and PM
requirement based on annual
sales plan for GC calculation
Page 3
Agreed tentative annual
sales plan (Volume and
value) (V1)
Bill of material from SAP
Stock position of FG
RM and PM requirement
for GC calculation
Production
team
12. Modify production plan as per
discussion with production team
and identify machine manpower
requirement
10..Are there any
resource
constraints?
13. Calculate RM and PM
requirement and send it to
Purchase team for RM and PM
purchase planning
No
Yes
Machine and
manpower
requirement for
production
11. Inform supply chain to modify
production plan to overcome
these resource constraints
Supply
Chain
Machine, manpower
capacity data
RM and PM
requirement for
purchase planning
Bill of material from SAP
Page 5
Page 5
Jan
22
Jan
24
Jan
26
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
Identified capacity
constraints
Page 6

21. Proposed to-be AOPB process flow chart (5/18)
Purchase
team
15. Prepare RM and PM purchase
plan based on the agreed
production plan and planned
prices
16. Identify constraints in RM
and PM purchase
14. Estimate prices of RM and PM
based on the required quantity
from production plan
RM and PM
purchase plan
RM and PM
requirement for
purchase planning
Page 4
Planned RM and PM
prices
Production
team
Planned RM and PM prices
RM and PM requirement
for GC calculation
Freight cost from supply
chain team
Power cost
Page 4
17. Estimate variable cost
SKU wise variable
cost Page 6
Page 6
Jan
28
Jan
30
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
Machine and manpower
cost

22. Proposed to-be AOPB process flow chart (6/18)
AOPB
team
Workshop
2
18. Calculate gross contribution
(GC) based on variable cost
19. Identify gap in GC
plan
SKU wise variable cost
MOM with agreed changes
required in sales plan,
purchase plan to meet
management’s aspiration
of GC
Agreed tentative annual
sales plan (Volume and
value) (V1)
Page 3
Page 5
Management’s aspiration for current year’s
target for
► Existing products & geographies
► New products
► New geographies
► New businesses
Page 1
Gap in GC
Gap in GC
Capacity
constraints
Page 4
Page 5
RM and PM
purchase plan
Page 7
Feb
3
Feb
4
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
20a. AOPB team
present gap in GC
20b. Production
team discusses
capacity constraints
and purchase team
discusses purchase
constraints
20c.
Management
reviews capacity
plan, purchase
plan and sales
plan to meet the
GC target

23. Proposed to-be AOPB process flow chart (7/18)
Updated RM & PM
requirement for purchase
planning
22. Update production plan (V1)
based on discussion in workshop 2
and send it to AOPB and
production team
23. Calculate RM and PM
requirement based on production
plan and send it to Purchase team
Updated production
plan (V1)
Supply
chain
HO
sales
team
MOM with agreed changes
required in sales plan, purchase
plan to meet management’s
aspiration of GC
Page 6
21. Update Agreed tentative annual sales plan
(Volume and value) (V1) based on discussion in
workshop 2 and updated production plan and send
it to AOPB team
Agreed tentative annual
sales plan (V2)
Agreed tentative annual
sales plan (V2)
Bill of material from SAP Page 8
Page 8
Page 8
Feb
5
Feb
7
Annual sales
planning
Constraint
identification
Budgeting
Review and
control

24. Proposed to-be AOPB process flow chart (8/18)
Purchase
team
Updated RM & PM
requirement for purchase
planning
24. Prepare updated purchase plan
based on discussion in workshop 2
and updated RM & PM
requirement
Updated purchase plan (V1)
Page 7
AOPB
team
Page 7
Agreed tentative annual
sales plan (V2)
Updated production plan
(V1)
Updated purchase plan (V1)
25. Collate all documents and
calculate GC plan (V1)
Agreed tentative annual sales
plan (V2*), production (V1),
purchase (V1) and GC plan (V1)
Page 10
Feb
9
Feb
11
Annual sales
planning
Constraint
identification
Budgeting
Review and
control

25. Proposed to-be AOPB process flow chart (9/18)
AOPB
team
Budgeting
head
List of cost centers and
profit centers
26. Update list of cost centers and profit centers
based on current organization
27. Update budget templates with new cost
heads (if any) and cost drivers
28. Send updated list of cost centers,
profit centers and budget templates to
budgeting head for review and
approval
29. Budgeting head reviews and
approves updated list of cost
centers, profit centers and budget
templates
Updated List of cost centers and
profit centers
Updated budget templates
Updated List of cost centers
and profit centers
Updated budget templates
Approved budget templates
Approved List of cost centers
and profit centers
AOPB
team
Approved budget templates
30. Send the templates to different
cost center owners
Agreed tentative annual sales
plan (V2)
Page 8
Page 10
Feb
1
Feb
5
Feb
11
Annual sales
planning
Constraint
identification
Budgeting
Review and
control

26. Proposed to-be AOPB process flow chart (10/18)
AOPB
team
Cost
center
owners
Approved budget templates
Page 9
31. As required, collect
information (e.g. manpower
required) from different cost
centers to estimate values of
cost drivers
32. Estimate unit rate of cost
drivers to calculate the total
expense
33. Estimate total expense based
on value of the cost drivers
and unit rate of cost drivers
34. Estimate monthly expenditure
for the month in which the
expense will be incurred
Cost center wise annual budget
Cost center wise annual budget
35. Collate all budgets
36. Discuss individual budget
with cost center owners to
understand the assumptions
37. Review cost center wise
annual budget based on
historical trend and expected
increase in cost driver value
Cost center wise annual budget
validated by cost center owners
Budgeting
head
Cost center wise annual budget
validated by cost center owners
Cost center wise annual budget
validated by budgeting head Page 11
Feb
26
Feb
28
Mar
3
Agreed tentative annual sales
plan (V2*), production (V1),
purchase (V1) and GC plan (V1)
Page 8
Annual sales
planning
Constraint
identification
Budgeting
Review and
control

27. Proposed to-be AOPB process flow chart (11/18)
Finance
team
AOPB
team
Cost center wise annual budget
validated by budgeting head
Page 10
38. Prepare forecasted P&L 39. Prepare month wise fund
requirement
Fund requirement
Fund requirement
40. Prepare forecasted cash
inflow/outflow
Revenue collection plan from
sales team
41..Is there any
fund
constraint?
Forecasted P&L and
fund constraints
No
Yes
43. Discuss with cost center owners and
budgeting head to revise the budget
42. Can the budgets
be revised without
impacting business
operations?
Yes
Page 12
Mar
8
Mar
10
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
No

28. 44c. Management
reviews and approves
the budgets and
methods to overcome
fund constraints and
meet net profitability
target
Proposed to-be AOPB process flow chart (12/18)
Workshop
3
Page 11
Forecasted P&L and
fund constraints
Management’s aspiration for current year’s
target for
► Existing products & geographies
► New products
► New geographies
► New businesses
Page 1
MOM with agreed
changes required in sales
plan, purchase plan and
fund plan to meet
management’s aspiration
net profit
HO
sales
team
MOM with agreed changes
required in sales plan purchase
plan and fund plan to meet
management’s aspiration net profit
45. Update Agreed tentative annual sales plan
(Volume and value) (V2) based on discussion in
workshop 3 and updated production plan and send
it to AOPB team
Agreed tentative annual
sales plan (V3)
Page 13
Mar
11
Mar
13
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
44a. AOPB team
present gap in
net profitability
44b. Finance
team discusses
the fund
constraints

29. Proposed to-be AOPB process flow chart (13/18)
Updated RM & PM
requirement for purchase
planning
46. Update production plan (V2)
based on discussion in workshop 3
and send it to AOPB and
production team
47. Calculates RM and PM
requirement based on production
plan and send it to Purchase team
Updated production
plan (V2)
Supply
chain
Agreed tentative annual
sales plan (V3)
Bill of material from SAP
Page 14
Mar
16
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
Purchase
team
Updated RM & PM
requirement for purchase
planning
48. Prepares updated purchase plan
based on discussion in workshop 2
and updated RM & PM
requirement
Updated purchase plan (V2)
Mar
18

30. Proposed to-be AOPB process flow chart (14/18)
AOPB
team
Page 7
Agreed tentative annual
sales plan (V3)
Updated production plan
(V2)
Updated purchase plan (V2)
49. Collates all documents and
calculate GC and Net profitability
Agreed tentative annual sales
plan (V3), production (V2),
purchase (V2), GC plan (V2) and
budget
Page 15
Mar
20
Annual sales
planning
Constraint
identification
Budgeting
Review and
control

31. Proposed to-be AOPB process flow chart (15/18)
AOPB
team
50. AOPB team prepares draft AOPB document
Workshop
4
51. AOPB team present final Annual operations plan and budget to top
management and all department heads
Final annual plan and
budget document
Agreed tentative annual sales
plan (V3), production (V2),
purchase (V2), GC plan (V2) and
budget (V1)
Draft AOPB document
Draft AOPB document
Page 14
Mar
26
Mar
27
Review process
Budget amendment
process (page 18)
Annual sales
planning
Constraint
identification
Budgeting
Review and
control

32. Proposed to-be AOPB process flow chart (16/18)
Annual sales plan validation
Domestic
brand
sales
team
Institutional
sales
Regional managers (RMs) receive
annual sales plan template from HO
sales team and send it to the Sales
officers (SO) for data collection
SO collects information from
distributors and market sources of
mandi as per the requirement in the
template
Based on these information SO estimates
SKU wise, month wise sales volume and
send it to RMs for validation
ASM validates the sales plan based
on product strategy and marketing
plan and their understanding of the
market
Post validation ASM sends updated
sales plan to Regional manager
Regional manager validates the sales plan
based on product strategy and marketing
plan and their understanding of the market
B2B sales managers collects SKU
wise month wise purchase plan
from their customers
B2B sales managers validates these
information based on customer
wise historical sales trend, molecule
wise market growth rate
Based on the customer wise purchase
plan, historical sales trend and market
growth rate B2B sales managers
prepare SKU wise, Month wise sales
plan for institutional sales and send it
to HO sales team
Page 1
Zonal managers validate the sales
plan based on product strategy and
marketing plan and their
understanding of the market
Post validation Regional
managers send updated sales
plan to HO sales team
Post validation Zonal
managers send updated
sales plan to HO sales team
B2B sales head validate the annual
sales plan based on customer
profile and market understanding
Post validation sales heads send
updated sales plan to HO sales
team
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
Sales heads validate the sales
plan based on product strategy
and marketing plan and their
understanding of the market
Post validation Sales heads
send updated sales plan to
HO sales team

33. Proposed to-be AOPB process flow chart (18/18)
Budget amendment process Annual sales
planning
Constraint
identification
Budgeting
Review and
control
Cost
center
owners
Budgeting
head
Final annual plan and
budget document
Page 15
Prepare an amendment note along
with justification and forwards it to
budgeting head
Is the
amendment
approved by
budgeting head?
Yes
No
Forward the note to the
management
Management
Is the
amendment
approved by
Management?
No
Yes
Budgeting
head
Amend the budget
Release the revised
budget
Revised budget
document

34. Contents
► Introduction
►Design principles
► To-be process maps
►Responsibility matrix
► Review framework
► Control mechanism
►Annexure – list of cost centers

35. AOPB to-be process responsibility-accountability
matrix
Activity
No.
Activity Timeline Function Responsibility Accountability
1 Send annual sales plan template to sales managers
of domestic retail, institutional,( export, Sprayers IN
FUTURE ) business units with product strategy and
marketing plan document
2 Collect BU wise annual sales plan
3 Analyze annual sales plan based on historical sales
data, product strategy and BU wise sales target from
strategic plan
4 Identify gap in management aspiration and BU wise
annual sales plan
5a Product managers presents strategy for key products
5b AOPB team presents gap in BU wise detailed sales
plan and management aspiration
5c Management reviews the sales plan and identifies
changes required to bridge the
6 Update the sales plan based on the discussion in
workshop 1 and inputs from sales heads and send it
to AOPB team, Top management and HO sales team
7 Prepare annual production plan based on annual
sales plan post consideration of stock availability
and inventory norms
8 Identify machine and manpower requirement based
on production plan
9 Calculate RM and PM requirement based on annual
sales plan for GC calculation
10a Identify capacity constraints for Khushkhera

36. AOPB to-be process responsibility-accountability
matrix
Activit
y No.
Activity Timeline Function Responsibility Accountability
10b Identify capacity constraints for HPM Samba
11 Inform supply chain to modify production plan to
overcome these resource constraints
12 Modify production plan as per discussion with
production team and identify machine manpower
requirement
13 Calculate RM and PM requirement and send it to
Purchase team for RM and PM purchase planning
14 Estimate prices of RM and PM based on the required
quantity from production plan
15 Prepare RM and PM purchase plan based on the
agreed production plan and planned prices
16 Identifies constraints in RM and PM purchase
17 Estimate variable cost
18 Calculate gross contribution (GC) based on variable
cost
19 Identify gap in GC plan
20a AOPB team present gap in GC
20b Production team discusses capacity constraints and
purchase team discusses purchase constraints
20c Management reviews capacity plan, purchase plan
and sales plan to meet the GC target

37. AOPB to-be process responsibility-accountability
matrix
Activity
No.
Activity Timeline Function Responsibility Accountability
Update Agreed tentative annual sales plan (Volume
and value) (V1) based on discussion in workshop 2
and updated production plan and send it to AOPB
team

38. Contents
► Introduction
►Design principles
► To-be process maps
►Responsibility matrix
► Review framework
► Control mechanism
►Annexure – list of cost centers

39. AOPB to-be process review framework
► Timeline: The performance review to happen
every month. The review is scheduled for 4th
day of the month following the reporting
month
► Responsibility: Accounts department shall be
responsible for tracking the proceedings of the
AOPB review meetings in the form of minutes
and responsibilities. These minutes will be
discussed in the subsequent meeting before
discussion of the performance for the next
month
► Accountability: Every aspect of sales,
production, purchase, expense and revenue has
been assigned as a responsibility to every
department heads, profit/cost centre owner
and the owners are expected to track and
explain variances and plan action to address
the variances.
► Review levels: The monthly MIS will provide
three review level-Organizational, BU and cost
center
Reporting
Organization level
review
BU level review
Cost center level
review
Annual sales
planning
Constraint
identification
Budgeting
Review and
control

40. Contents
► Introduction
►Design principles
► To-be process maps
►Responsibility matrix
► Review framework
► Control mechanism
►Annexure – list of cost centers

41. Control mechanism
► Annual operations plan and budget control mechanism is based on MIS generated by MIS
team
► Variance analysis is done by the AOPB team
► Department heads and cost center owners identify root causes for the variance and present to
the management during review meeting
► Departments are required to take action based on discussion in the review meeting
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
•Third alert would be raised when actual
expenditure exceeds the budget.
Low variance (1st level alert)
Medium variance (2nd level
alert)
High
variance
(3rd level
alert)
•Second alert would be raised when only
20% of the total budget is remaining.
•First level alert would be raised if the
monthly variance is more than 20% of the
budget
Budgetary
control
framework

42. AOPB to-be process review and control
mechanism
Final annual plan and budget
document
Historical data for previous
month
AOPB
team
Page 15
Calculate variance from planned
value to actual value
Identify BUs, products, geographies
with high variance. Also identify
expense head with high variance
Department
heads
Variance analysis
Variance analysis
Identify root cause for
the variance
Root cause
analysis for the
variances
Review
meetings
Root cause
analysis for the
variances
Department heads
present variances and
its root causes
Management reviews
and guide on future
activities
MOM with action points
to meet Annual plan and
budget
Status against
MOM from
previous review
meeting
Annual sales
planning
Constraint
identification
Budgeting
Review and
control
1
st
BY
3
rd
BY
4
th

43. Contents
► Introduction
►Design principles
► To-be process maps
►Responsibility matrix
► Review framework
► Control mechanism
►Annexure – list of cost centers

44. For FY21 -22 annual budgeting, overall ---- cost centers have been defined
and expenses have been planned by each cost center owner (1/2)
Cost center is an organizational unit within a controlling area that represents a defined location of cost incurrence. The proposed
cost center design at HPMs is to:
► Enable capturing of cost at lowest accountable level of the organization
► Assist in monitoring and accountability of the cost
Cost Centre Description Cost Centre Owner
Agrochemical: Domestic Retail
Sales
MD
Agrochemical: Institutional
Sales COO
List of cost centers: Business Development

45. For FY21-22 annual budgeting, overall ----cost centers have been defined
and expenses have been planned by each cost center owner (2/2)
Cost Centre Description Cost Centre Owner
Manufacturing COO/CHAIRMAN
Purchase COO/MD
Supply Chain COO/MD
Cost Centre Description Cost Centre Owner
Finance & Accounts CFO/CHAIRMAN
Corporate affairs MD
IT MD
HRD CFO
Administration CFO
Corporate Communication MD
Regulatory affairs COO/CHAIRMAN
Research CHAIRMAN/MD/COO
Registration MD/COO
Trademark & Licenses COO/MD
Legal COO
MD and Chairman office MD
List of cost centers: Operations List of cost centers: Corporate and Regulatory
HPM coordinators:
► Navin , Anita , Rohit
,Dharminder, Poojit,
Gaurav