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A

PROJECT REPORT ON BUDGETARY CONTROL SYSTEM


IN
KESORAM CEMENT INDUSTRIES LIMITED
PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF
THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION


HYDERABAD
2011-2013

TABLE OF CONTENTS

S.NO

CHAPTER NO

CHAPTER -I

NAME OF THE CHAPTER


INTRODUCTION:
-Introduction
-Need for budget
-Objectives of the study
-Methodology of the study
-Limitations

CHAPTER II

CHAPTER III

PAGE NUMBER

PROFILE OF THE ORGANISATION

1-14

15-24

REVIEW OF LITERATURE:
-Essentials of budgetary control
-Requisites for a successful budgetary
control system
-Types of budgets

25-38

CHAPTER - IV

BUDGETING AND BUDGETARY


SYSTEM IN KESORAM CEMENT
3INDUSTRIES LTD.

CHAPTER V

ANALYSIS AND INTERPRETATIONS

52-64

CHAPTER VI

CHARTS

65-71

CHAPTER -VII

ANNEXURES

72-77

CHAPTER - VIII

CONCLUSIONS & SUGGESTIONS

78-80

BIBLIOGRAPHY

39-51

81

CHAPTER-I
INTRODUCTION

INTRODUCTION:
3

It is well recognized that budget are among the essential tools of management of any organization unlike
other management aids, budgets are made use of practically by all functionaries in the organization.
Budgets not only reflect the plan of action for different levels of management but are also useful to
monitor various activates and initiate mid course corrective actions. Budgets just do not reduce the
managerial function to a mere formula but aids as a managerial tool.
Henceeffective use of this art as well science. Thus it needs continuous budget education and creation of
evaluation and performance through budgets. Budgets provide management summarized picture of the
results to be expected, also forms the proposed plan of operations. They enable the management to
determine whether the plan is satisfactory. Budgets serve as a guide to executives and departmental heads.
They measure performance since Budget Deviations reflect either the organization failure to achieve the
planned standards of performance or its ability to better them.
Thus budgeting is a means of obtaining the most productive and profitable use of the companies resources
through planning and control.

Budgets are helpful in coordination the various activities (Such as

production, sales, purchase etc) of the organization with the result that the activities precede according to
the objective.
Budgets are means of communication. Ideas of the top management are given the shape of the
budget and are passed on the subordinates who are to give them the practical shape. As the activities of
various departmental heads are coordinated at the preparation of budget, it is helpful in developing a team
work which is very much needed for the very success of an organization. Thus, a budget is necessary to
plan for the future, to motivate the staff associated, to coordi9nate the activities of different levels. A
budget is an overall blue print of a comprehensive plan of action expressed in physical and financial terms;
it includes plan for each of the activity responsibility centers of the business and provides a link between
the physical and financial plans of various departments of a company. It is also a document to serve as
control for monitoring and review. The budget system should be such that it makes it imperative for
management to establish goals and objectives, define policies, develop programmers both long term and
short term, measure performance against the targets and in the process, revises the part of management. In
a way of budgetary control system has been increasing an enterprises profits, and a goals-achieving
machine for facilitating organizational coordination and planning while achieving the budgeted targets.
4

NEED FOR BUDGETS


The rationales for budgets have five aspects:
1. Authorization: The budget is used to authorize the expenditure and activities contained in it.
2. Evaluation of performance: The planned activities and expenditures contained in the budget
provide a standard against which the actual achievement of the firm can be measured and evaluated.
3. Coordination of activities: The piecemeal budgets of the subunits of the firm are so framed that
each sun-unit is made to contribute to the achievement of the overall budget.
4. Control: The setting up of organizational machinery to direct efforts towards the planned aims.
The budgets sets out the planned activity, subsequent deviations between achievement and plan will
indicate the need for investigation and corrective action.
5. Motivation: The budget is so constructed as to move employees form one target goal to another;
indeed it is bound up with the reward punishment type of organization environment and
bureaucratic decision processes, where employees are given incentives to work towards the
achievement of the firms targets.

WHY COMPARE ACTUAL AND BUDGET?


One of the objectives of budgeting is to provide a base against which actual performance can be
measured. This is only worth doing if action will be taken as a result.
In too many organizations the production of results compared to budget is seen as the end of the process. If
no action is taken on the basis of management accounts then there is little point in producing them and even
less point is wasting management time discussing them.

By identifying progress we are better informed regarding the effects of our actions and have a clear
understanding of the effect of any future action we take. Knowing how much is being spent each month
enables a manager to consider whether action needs to be taken to spend more or less in the future. This
process is only worthwhile if the budget is realistic. Analyzing variances against an unrealistic budget is
pointless.
However in a well runs organization the comparison between actual and budget is used as the basis for
deciding the appropriate action. This paper sets out how the analysis is used to maximum effect. The
process is really part of the normal control process.

WHAT CAUSES BUDGET VARIANCES


There are four key reasons and it is important that good managers recognize the differences, because the
action required is may be completely different in each case.
The four reasons are:
1. Faulty Arithmetic in the Budget figures.
2. Errors in the Arithmetic of the Actual Results
3. Reality is wrong
4. Differences between Budget Assumptions and Actual Outcome
Each of these will be examined in turn.
1) Faulty Arithmetic in the Budget Figures
It is perfectly to have an error in the budget. This includes errors of commission or duplication as well as
pure arithmetic. One action is to make a note to ensure it does not happen again when the next budget is
being done. Other action depends on the error.
Assume the budget stated no overdraft would necessary and it now appears one is required because the
sales forecast was used to predict cash inflows rather than the debtor payments. There are two options: Go
to the bank and ask for an overdraft, or take some other action to improve cash flow to stay within the
6

budget cash figure. The original budget numbers will need to be changed to reflect the new circumstances
and future reporting should be against the revised budget (often called a reforecast or latest estimate.)
Action is required but it may not be within the area where the error was made.

AVOID: The Accounts figures are always different from ours so we ignore them and keep our records.
2) Errors in the arithmetic or the actual results

It is perfectly possible for the actual results to be reported wrongly. This includes the use of the wrong
category omission of costs; double counting of income etc. one well known way of staying within budget is
to throw away any invoices received from Suppliers, or charge them someone elses account code. This
sort of deliberate action makes nonsense of budgetary control and must be avoids. The corrective action
once this is discovered is to prevent it happening again. Improvements in management education and
control procedures are recommended.
One extra consideration is that in order to correct the error the cumulative results will need to be corrected.
This means either putting through a correction in the next period, which will then also be wrong, or
adjusting the past results to correct the error.
Failing to note that the correction can cause misleading results can lead to wrong decisions being made.

AVOID: The accounts figures are always different from ours so we ignore them and keep our own
records.
3) Reality is wrong.
Sometimes the actual results are useless as an indicator. A strike or natural disaster will have an impact on
results. This does not mean that the budget process in future should include an allowance for this
happening again. (However in large organizations it is normal to allow for the impact of a disaster centrally
as a contingency even if it is not budgeted at operating unit level.) If necessary, insurance should be taken
out. If business is disrupted for two weeks, then it is pointless to compare the remaining two weeks of the
month against a full months budget. Produce a realistic budget for only two weeks and compare against
that to establish true performance under normal circumstances.
7

AVOID: The variances are distorted because of ..So its not my fault.
4) Differences between budget assumptions and actual outcome

This is the key issue and the one which involves the use of variance analysis techniques. Remember that
all budgets contain errors in the assumption No one knows the future outcome for certain. The important
thing is not to apportion blame by looking backwards, but to look forwards and take action to improve the
future in the light of experience. The action to be take action to be taken depend s on circumstances.
However, punishing deviation from the budget is the best way of destroying the budget process.
Manages will spend up to budget, conceal data, make the actual fit the budget in order to avoid blame.
This is particularly true in large multi-national organizations. The emphasis must be on what can we do
about it, rather than why the results are different.

AVOID: We are under budget, who can we blame?

HOW ARE VARIANCES CALCULATED


There are two important rules:
1) The level of variance analysis should be decided by the needs of the decision maker, not the
convenience of the reporter.
2) The budget must always be flexed for volume changes to produce realistic Variances.

EXAMPLE:

PARTCULARS

BUDGET
8

TOTAL

SALES VOLUME

100

90

SALES VALUE

1000

990

VARIABLE COSTS

500

495

FIXED COSTS

200

210

PROFIT

300

285

The budget committee wishes to blame someone for the fact that profit is down by 15.
It is obvious who is to blame sales are below target and fixed costs have not been controlled.

PROPER VARIANCE ANALYSIS


The require some through and some simple calculations. It has 4 Stages:
1) Flexing the budget.
2) Analyzing the variances.
3) Identifying the causes.
4) Taking appropriate action.
Since only the last of these is a value adding activity, the first three are only worth doing if step 4 is taken
in time to help future results. This may mean the first three steps have to be done fast even if that reduces
their accuracy.
FLEXING THE BUDGET
In the example it is futile to compare the actual variable costs with the budget. To do so suggests that the
manager is doing better than budget, but actual volume is below budget so costs should be lower. It is vital
to produce a revised budget to use for comparison. This does not mean that the original budget is useless.
It merely means that in order to analyze the 15 difference it is important to start by removing the impact of
volume changes on the various headings which are by it.
PARTICULARS

ORIGINAL BUDGET

REVISED BUDGET

ACTUAL

SALES VOLUME
SALES VALUE
VARIABLE COSTS

100
1000
500

90
900
450

90
990
495

FIXED COSTS (LESS)


200
200
210
PROFIT
300
250
285
This recalculates the budget using actual volume but budget prices and shows that the expected profit for
90 units is 2502. Thus the impact on profit is a reduction of 50 and this can be identified as SALES
VOLUME VARIANCE Rs. (50). A common convention is to put unfavorable variances in brackets.
Now the other variance can be calculated.

ANALYSING THE VARIANCES:

PARTICULARS
SALES VOLUME
SALES VALUE
VARIABLE COSTS
FIXED COSTS (LESS)
PROFIT

ORIGINAL
BUDGET
100
1000
500
200
300

REVISED BUDGET

ACTUAL

VARIANCES

90
900
450
200
250

90
990
495
210
285

90
(45)
(10)
35

The valid set of budget data is to compare against actual. The variance on sales can be due to price. This is
the SALES PRICE VARIANCE of Rs. 90.
The variable costs require further investigation.
Assume that the original budget was to use 2.50 meters of material for each sales unit and that each meter
was expected to cost Rs. 2.00. This gave a budget figure 100 X 2.50 X Rs.2.00=Rs.500.
The Actual result included a price of Rs. 2.75 per meter but only 2.00 meters were used per sales unit. This
gave an actual figure of 90 x 2.50 x Rs.2.00 = Rs. 450.
To identify the cause of the variance of Rs. 45, we need to separate the price impact from the usage
impact.
Price
We expected to pay Rs. 2.00 per meter; we did pay Rs. 2.75 per meter.
Each of the 180 meters we bought cost 0.75 extra .180 x (2.00-2.75) = Rs. (135) this is the MATERIALS
USAGE VARIANCE Rs. (135).

Usage
10

We expected to use 225 meters in total to make 90 units; we did use 180.
At the budget price of Rs. 2.00 we saved ..Rs.2.00 x (180-225) = Rs.90
This is the MATERIAL USAGE VARIANCE Rs.90.
On fixed costs we expected to spend Rs. 200 but we did spend Rs. 210.
The FIXED COST VARIANCE IS Rs. (10).
SUMMARISING THE VARIANCES
SALES VOLUME

(50)

SALES PRICE

90

MATERIALS PRICE

(135)

MATERIALS USAGE

90

FIXED COSTS

(10)
----------(15)
======

IDENTIFING THE CAUSES


This is where politics and blame apportionment must be avoided. Consider these possible Comments on
the above figures.
The price of the raw materials went up so we asked the factory to be careful about waste and told the
manufacturing force to put prices up.

11

OBJECTIVES OF STUDY:

To provide a theoretical framework of budget, and budgetary control.

To describe the profile of the organization as a backdrop for undertaking a study of budgetary
control system.

To analyze the budgetary system in practice in Kesoram cement Industries Limited (hereafter
Kesoram) with particular reference to their objectives and phases of organizational and reappropriation.

In addition to the analysis of the conventional budgetary system in practice in Kesoram cement
Industries limited. The study aims at evaluation and modification to the budgetary system with
reference to the various types of budgets. The scope in the formulation of performance budget is
also studied

METHODOLOGY
SOURCES OF DATA:
A). SOURCES OF THE DATA
There are mainly two important sources through which the whole data is collected.

12

Primary data
The primary data of the topic is collected by personal interaction with the officials of the finance and
accounting department and also from annuals of the company. The financial data relating to the
organization has been collected for the 5 years

Secondary data
The data collected from the other sources.

SCOPE OF THE STUDY:


The data of basanthnagar, kesoram cement industries limited, have been collected mainly from secondary
sources via
1.

From the concerned officers of the kesoram cement industries limited.

2.

Kesoram cement industries limited-journals.

3.

Accounting books, records.

4.

Key books of concerned title.

5.

Statically records.

6.

Kesoram cement industries limited library.

13

LIMITATIONS OF THE STUDY

Estimates are used as basis for budget plan and estimates are based on available facts and best
managerial judgment

Budgetary control cannot reduce the managerial function to a formula. It is only a managerial

Tool which increase effectiveness of managerial control

The use of budget may lead to restricted use of resources.

Efforts may therefore not be made to exceed the performance beyond the budgeted targets.

Frequent changes may be called for in budgets due to fast changing industrial climate.

In order that a system may be successful, adequate budget education should be imparted at least
through the formative period. Sufficient training programs should be arranged to make employees
gibe positive response to budgetary activities.

The study is the limited up to the date and information provided by Kesoram cement industry
Limited and its annual reports

14

CHAPTER-II
PROFILE OF THE ORGANIZATION

15

PROFILE OF THE INDUSTRY:


The 85-year old Indian cement industry is one of the cardinal and basic infrastructure industries which
enjoys core sector status and played crucial role in the economic development and growth of a country.
Being a core sector this industry was subject to price and distribution
from world war-II. When government

controls almost uninterruptedly

of India announced the partial decontrol

manufacturing cement

became increasingly attractive and the industry experienced substantial expansion. As the supply in
response to the 1982 partial decontrol was significant in March 1989, price and distribution control were
finally dispensed with .It was one of the first Major industries in the country to be so deregulated.
OVERVIEW OF THE INDUSTRY:
The word cement means any substance applied for sticking things. But cement is most vital and
important material for modem construction as a binding agent .In the ancient times ,clay ,bricks and
stones have been used for construction work.
The Romans were using a binding or a cementing material that would harden under water. The first
systematic effort was made by SMEATION who under took the erection of a new lighthouse in 1756.he
observed that the production Obtained by burning limestone was the best cementing material for work
under water.
After eighty
ground delay used
hardened
cement

years

branch

chemist

produced

hydraulic cement by burning finely

in the form of paste .cement invented by

Cement paste

JOSEPH ASPDIN in 1824.

resembled Portland stone found in England be named

Since

it a s Portland

A name that has ensured even Portland cement was list manufactured in USA in 1975 In

Portland cement was produced for the

rust time in 1940. By south India industries limited Madras.

This unit had capacity of 30 tonnes per day.


By 1913
capacity

Of

however

three units started their

75000 tones per annum. In

domestic demand

1914

operations

indigenous

with a

production

necessitating an import of 1,65,723 tones .Shipment

16

fees

combined installed
for

difficulties

short

and

of

foreign

Trade during

the

first world war acted as a catalyst for

Industry

by

1924

and

the total installed

capacity

the

development of indigenous

grew to 5,59,800 tones per annum.

In 1963 all the cement companies with the exception of SONE VALLEY PORTLAND

CEMENT

COMPANY LIMITED merged to form the ASSOCIATED CEMENT COMPANIES LIMITED. This has
more

facilitated

a cost reduction

capacity

of the

cement

producing

of 18 units that
3.8million
expansion
capacity
1982.

as

well as uniformly

industry raised to 2.2million tones


units

in

the country went

in quality. By

per annum. After

to Pakistan

remained in India was 1.5 million tonnes per

tones

by 1950-51. In

the three

was between 7-8 million tonnes per

decades
decade

And

the

installed

partition 5 of

total

installed

Annum . This

between
the

1947

is

1950-1980

the

capacity

increased to
the

capacity

target set in respect of additional

generation was released with impetus given by the partial decontrol announced in

Several

units locked

up

project

for

expansion

of capacity and

modernization

which

contributed towards increased production.

DEFINITION OF CEMENT:
Cement
property

may is defined

as a mixture of calcium sulfate and aluminates

which

have

the

of setting and hardening under water .The amount of silica which is present on each

crust are sufficient to combine with calcium oxide to form the corresponding
aluminates

CLASSIFICATION OF CEMENT:
Cement is of 3 types
1. Puzzolantic cement
2. Nature cement and
3. Portland cement

17

calcium

silicate and

Puzzolantic cement:
It consists of mixture of silicate of calcium and aluminum .it shows the hydraulic properties when it is in
the form of powder and being mixed with suitable proportions of suitable Proportion of lime
The rate of hardening is much slower and the comprehensive strength developed is about half of Portland
cement .it is found more resistant to the chemical

action than others.

Natural cement:
This is nature occurring material

it is obtained

claying lime stones

silicates and aluminates of calcium the Selling property of this

containing

cement is more than the Portland cement

from cement

rocks

but the comprehensive

these cement

rocks are

is half of it.

Portland cement:
This is of various kinds
1. ordinary Portland cement
2.

rapid hardening Portland cement

3.

low heat cement

4.

white colored cement

5.

water proof Portland cement

6.

Portland slang cement

7.

port land puzzling cement

8.

sulfate resisting

INDIAN CEMENT INDUSTRY PRESENT STATUS

After the dealing of the industry in July 1991 it reacted positively to the policy changes
new

capacities created and

importing

cement

the

the volume
country

effectiveness after liberalization the


India stands

second largest in the

hand per capita consumption


260kgs

the

government

in India

of

production

started

exploring

black market
cement production
is only

increased

from a situation

due to high

in cement

worldwide after china on the


plants

in

cost
other

world average

the matters of

considers cement as a extreme Focus area. However Indian cement


18

and

also disappeared currently

books as compared To the

industry has S9 companies owning 11S

quality

of

in

exports
the

of
the

global

market
the

is not very

competitive Due to high power and full costs. in order to improve its position in

international market technological up gradation is essential in terms of process

Product diversification cost reduction quality control and energy saying.


ABOUT THE INDUSTRY
This chapter examines a profile of

cement

industries

ltd. i.e. .its history

location organization

structures etc.
LOCATION
Kesoram cement industry is one of the leading manufacturer of cement in India it is a day process
cement plant the plant capacity is 8.25 lakh tones per annum .it is located at basanthnagar in
karimnagar

district of Andhra Pradesh

Basanthnagar is 8km

away

from the

Ramagundam

railway station linking madras to new Delhi. The chairman of the company is syt.B.K.Birla.

19

HISTORY OF THE KESORAM


The first unit at Basantnagar with a capacity or 2.1 lakh tons per annum in corresponding

suspension-

preheated system was commissioned during the year of 1969 the second unit Was setup in year 1971
with a capacity of 2.1 tones per annum and the third unit with a capacity of 2.5lakh tons per annum
went on stream in the year 1978 the coal for this company is being supplied iron singareni
collories and the power is obtained from
APSEB the power demand

for the factory is about

21MW kesoram has got

2DG sets of 4MW each

installed in the year 1987.


Kesoram cement industry has set up a 15kw capacity power plant to facilitate for uninterrupted
power supply for manufacturing of cement starts at 24 august 2008 per hour 12 mw, actual power is 15mw.
Birla supreme in popular brand of kesoram cement from its prestigious plant of Basantnagar
in A.P which has outstanding track record in performance and productivity serving the nation
for the last two and had decades It distinction by Bagging several national awards .It also has
the distinction optimum capacity utilization.
Kesoram offers a choice of top quality portioned cement for light heavy constructions and
allied applications

quality is built every fact of the operations.

The plant layout is rational to begin with the limestone is rich in calcium carbonate a key factor that
influence

the quality of final product

the day process technology used in the latest computerized

monitoring overseas the manufacturing process samples are sent regularly to the bureau of Indian
standards national council of constructions and Building material for certification of derived quality
norms
The company has vigorously undertaking different promotional measures their product
through different media which includes the use of newspapers ,magazines ,hoardings etc
Kesoram cement industry distinguished itself among all the cement factories in India by bagging

the

national productivity award consecutively for two years and the year 1985 -1987.the federation of
Andhra Pradesh chamber of commerce and industries also conferred
20

kesoram cement an award

for the best Industrial promotion expansion efforts in the year 1981.kesoram also bagged FAPCCI
Awarded for best family planning effort in the state for the year 1987-1988.
One among the industrial giants in the country today serving the nation on the industrial
front kesoram industrials Ltd has a cheque red and

eventful history dating

Back to the twenties

when only a textile mill under its banner 1924 it grew from Strength to spread and activities 10
newer fields like Rayan pulp Transport paper spun pipes refractivites types and other products
Looking to the wide gap between the demand and supply of a vital commonly cement Which plays UI
important

role in national building activity the government of India had de-licensed the cement

industry in the year 1966 with a view to attract private entrepreneurs to augment the cement industry
production kesoram rose to the occasion And divided to setup a few cement plants in the country
Kesoram

cement undertaking marketing activities extensively in the states of Andhra Pradesh,

Karnataka, Tamilnadu, kerala, Maharastraha, and Gujarat. In AP sales depots are located in different
areas like karimnagar Warangal Nizambad Vijayawada and Nellore In other states it has opened around
10 depots.

AWARDS WON BY KESORAM


Kesoram cement bagged prestigious awards like national awards for productivity and technology and
conservation and several state awards for year 1984 kesoram cement is best family planning effort in
the federation of Andhra Pradesh chamber of commerce And industry and also national award for two
successive years 1985-86&1986-87.It has also bagged the national award for energy efficiency for the
year 1989-90 for the performance among all cement plants in India .thus award stall-by national council
For cement and building material in association with the government of India.
Kesoram bagged the prestigious Andhra Pradesh state productivity award in 1987-1989 also Annexed
state award for industrial management in 1988-1989.and also Best Industrial promotion expansion
efforts in the state and yajamanya ratna and best efforts an industrial unit in the state to develop
rural economy was bagged for its contribution towards the year 1991.

21

it also bagged the may day award of the government of India For the best management and the Pandit
Jawaharlal Nehru
Pradesh

silver rolling trophy for the industrial productivity effort in the state of Andhra

by FAPCCI and also the Indira Gandhi memorial national award of the government of

Andhra Pradesh for the year 1993.


During the last 3 years the government of Andhra Pradesh has given the following awards Best
awards for the year 1994.
Best industrial relation award for 1994.
To keep the ecological balance they have also undertaken massive tree plantation in the economy and
government of India has nominated township areas and them for VRIKSHMITHRA award Best effort of an
industrial unit in March 1996.
In the year March 2008 Best management award 2008 for the best management practices in kesoram
cement industry presented by chief minister.
CEMENT PRODUCTION WORLDWIDE
Country
China
Japan
U.s.a
India
Italy
Germany

1981
83
88
65
21
43
30

1983
108
85
61
25
40
28

1986
106
73
71
36
36
24

1989
210
82
70
45
4
27

1990
210
87
72
48
41
40

World ranking
1
2
3
4
5
6

Today in the cement industry is producing 58.3 million tones per annum indication surplus conditions
while its demand is 56.7 million tones lies per annum Now The cement market has become buyer
market which was
A selling market till 1970s and so the quality &brand taken an upper edge for cement marketing.
Today installed at the India cement industry is 771lakh tones But in India 106 Major plants
are producing 583lakh tones leaving the balance for exports.
INDIAS LARGEST CEMENT COMPANIES POST ACQUISITION

22

Company

Cement capacity

Cement % of

In TPA

Sales

Larsen& turbo

12.0

20

ACC

11.3

93

GRASIM

9.7

28

INDIAN CEMENT

6.6

92

GUJRATHI AMBHUJA

6.5

100

WEAKNESSES:
The per capita consumption of the cement in India is very low
The transport costs in India are very high
The cement industry is facing with acute power shortage and raw material problem
The industry is also facing major packaging problems
OPPORTUNITIES:
The industry has tremendous potential for growth in India
In near future cement is going

to replace tar for the construction of roads

There are good prospects for export with cement export promotion council
The government polices

of reduction in excise duty

just packaging may act as boon to the industry.


THREATS:
23

and exempting cement

from the

The surplus levels are increasing as the production of the cement is much greater than the
consumption.
In the present scenario of stiff competition there is a declining trend of price
The performance of the smaller unit is badly hit by major takeovers
The crisis situation in south east Asian countries may create problem to the exports of the
industry.

24

CHAPTER-III
REVIEW OF LITERATUTRE

INTRODUCTION TO BUDGET AND BUDGETARY CONTROL:


25

The management is efficient if it is able to accomplish the objectives of the enterprise It is effective when
it accomplish

the objectives with minimum effort and most in attain long-range efficiency and

systematic approach in facilitate effective management performance is profit planning and control or
budgeting .Budgeting is therefore an integral part historical combination of a goal setting machine
for increasing an enterprises profits and a goal achieving machine for facilitating generational
coordination and planning while achieving the budgeted gets

MEANING OF BUDGET:

It is a financial and quantitative statement prepared and approved or to a defined period of time of
policy to be pursued during that period purpose of attaining a given objective it may include income
expenditure and employment capital
In other words it is a pre-defined detailed plan of action development distributed as a guide operations
and as a partial basis for subsequent evolution of performance

PLANING OF BUDGETING:
The process of planning all flows of financial resources into within from an entity during some
specified future period it includes providing detailed allocation

of available future resources to

projects ,responsibilities and time periods


From above definition I it clear that budgeting Is the actual act of caring the

budget it is the process of

evolving the final statement yet is the end product of budgeting

ESSENTIALS OF GOOD BUDGET:


1. it is prepared prior to a defined period of time
2. it is prepared for the definite future period
3. the policy to followed to attain the given objectivities must be laid before the budget is
4.

It is monetary and/or quantitative statements of the policy.

MEANING OF BUDGETARY CONTROL:


26

It is the process of establishing of departmental budget relating the responsibilities of executives to


the requirements of a policy and the continuous comparison of actual with budgeted results either to
secure by individual action the objectives of that policy or to provide a firm basis for revision
First of all budgets are prepared and then actual results are the comparison

of budgeted and actual

figures will enable the management to out discrepancies and take remedial measures at a proper
time the budgetary control is a continuous process which helps in planning and coordination it
provides a method of control too .A budget is means and budgetary control is the end result.
In the words of J.A.scolt budgetary control is the system of management control and accounting in
which all operations are forecast so as possible planned ahead and actual results compared with the
forecast and the planned ones

ESSENTIALS OF BUDGETARY CONTROL:


1. Budgetary of the process of preparing the budget is the starting point for budgetary point for
budgetary control.
2. Distribution of budgets pertaining. To each function to all the relevant section with in organization.
3. Collection of actual data pertaining to all budgeted activities.
4. Continuous comparison of actual performance with

budgeted performance.

5. Analysis of variances in actual performance and budgeted performance


6. Initiation of corrective action

to ensure that actual performance

is inline with budgeted

performance
7. Revision of budgeted if it is felt that the budgets prepared are no longer relevant on account of
unforeseen developments

OBJECTIVITIES OF BUDGETARY CONTROL:


27

The primary objective of budgetary controls to help the management in systematic planning and
controlling the operations of the enterprises the primary objective can be met only if there is proper
communication and coordination amongst different organization thus the objectivities can be stated as:
1. Coordination:

Coordination is a managerial function under which all factors of production and all departmental
activities are departmental are balanced and integrated to achieve the objectivities of the organization
budgeting provides the basis for organization objectivities can be realized executives are forced to
think of the relationship between their

department and the company

as a whole this removes

unconscious biases against other departments it also helps to identify weakness in the organization
structure.

2. Communication:

All people in the organization must know the objectivities polices and

performances of the organizations they must have a clear understanding of their part in the organization
goals this is made possible by ensuring their participation in the budgeting process

3. Controls and performance evaluation:


Control ensures control by continuous comparison of actual performance with the budgeted
performance variances are highlighted and corrective action can be initiated budgets also from the
basis if performance evolution in an organization as they reflect realistic estimates of acceptable

and

expected performance.

BUDGETING AND BUDGETARY CONTROL:


A budget is a blue print of a plan expressed in a quantitative terms budgeting Is a technique
budgetary control terms to the principles procedures and practice of achieving given objectivities
through budgets.

28

From the above definitions we can differentiated the three terms as budgets are the individual
objectivities of a department etc where as budgeting may be said to act of building budgets budgetary
control embraces all and in addition includes the science of
Planning the budgets to effect on overall management tool the business planning and control

ESSENTIALS OF BUDGETARY CONTROL


1. Organization for budgetary control:
The proper organization is essential for the successful preparation maintenance and
administration

of budgets A budgetary committee is formed

which

heads of various departments All the functional heads are entrusted

comprises

the departmental

with the responsibility if ensuring

proper implementation of their respective departmental budgets


The chief executive is the overall in the charge of budgetary system he constitutes a budget
committee for preparing realistic budgets A budget officer is the convener of the budget committee who
co-ordinates the budgets of different departments responsible fro their departmental budgets
2. Budget officer:
The chief executives appoints the budget officer such budget officer also called as
Budget controller or budget Director thus rank should be equal to other functional managers
The Budget officer does not have the direct responsibility of preparing the budgets the
various functional managers prepare the budgets his role is that of a supervisor the budget officer has
the specific duty of the budgeting

activity by various departments and for co-ordination between

them so that there is a proper link between them He is empowered to scrutinize the budgets prepared
by different functional heads and to make changes in them if the situation so demands
The budget officer works as a coordinator among different departments he continuously monitors
the actual performance different departments steps to rectify the defiance if any he also informs the top
management about the performance of different departments
29

The budget officer will be able to carry out his work only if he is versant with the working of all the
departments

he must have technical knowledge of the business and should also process accounting

knowledge
BUDGET COMMITTEE:
A budget committee is formed to assist the budget officer. The heads all the important
departments are made members of this committee. The committee is responsible for preparation and
execution of budgets. The chambers of this committee put up the case of their respective departments to
help the committee to take collective decisions if necessary. The budget committees responsible for
reviewing the budgets prepared by various functional heads coordinate all the budgets and approve the final
budgets. The budget officer acts as a coordinate of this committee all the functional heads are entrusted
with the responsibility of ensuring proper implementation of their respective final departmental budgets.
BUDGET CENTERS:
A budget center is the part of the organization for which the budget is prepared. A budget creator
may be a department section of department or any other part of department ideally, the head of every center
should be a member of the budget committee. However it must be ensured that each budget center at least
has an indirect representation in the budget committee.
The establishment of budget centers is essential for covering all parts of the organization
becomes easy when different centers are established the budget centers are also necessary for cost
control purpose.
BUDGET MANUAL:
1. A budget manual is a document that spells out duties and responsible the various executives
conquered with it specifies among various functional areas A budget manual covers the following
matters.
2. A budget manual clarity defines the objectivities of budgetary control systems it also gives the
benefits and principles of this system.

30

3. the duties and responsibilities of various persons dealing with preparation and execution of
budgets are also given in the budget manual it enables the management

to know the persons

dealing with various aspects to budgets and provides clarity on their duties and responsibilities it
gives the information about the sanctioning authorities of various budgets the financial powers
of sanctioning authorities of various budgets the financial powers of different manages are given
in the manual for enabling the spending amount on various expenses
4. a dropper table for budgets including the sending of performance reports is drawn so that every
work starts in the and a systematic control is exercised
5. the specimen forms and number of copies to be lased fro ore oaring budget reports is also stated
budget centers involved should be clearly stated.
6. the length of various budget periods and control points is clearly given
7. The problem follow all in the centre system clearly stated.
8. A method of accounting to be used for various expenditures is also stated in the manual... A budget
manual helps the documentation the role of every employee his duties responsibilities the ways of
undertaking various tasks etc thus it also helps n reducing ambiguity at any point of time
BUDGET PERIOD:
A budget period is the length of time for which a budget is prepared upon a number of factors the choice of
a budget period depends upon the following considerations the type of budget (long\short).
The nature of demand for the products
The timing for the availability of the finance
The construction situation of the cycles
All the above mentioned factors are taken into account while fixing the period of budgets
The financial manager usually responsible for organizing this budget he must perform the
following functions.

To decide the general polices and guidelines


To offer technical advice.
31

To suggest changes.
To receive and review individual budget estimates.
To reconcile divergent with or without revisions.
To coordinate budgeting activities.
To approve budgets with or without revisions.
To scrutinize control reports later on
To scrutinize to budget reports later on.
To disseminate these guidelines.
After finalizing the budget proposal the budget committee subjects the final budget to the Board of
Directories or Budget Director for approval.

CONTINUOUS BUDGETING SYSTEM:


A continuous budgeting system is a method of having two different budget periods within the sane budget
the purpose of having this system is to have greater control in terms of operational activities without
losing sight is have greater control in terms of it results in incorporating the effect of changes in the
short term on the long-term targets of the organization
DETERMINATION OF KEY FACTOR:
The budgets are prepared for all functional areas these budgets are dependent and inter-related A
proper co-ordination among different budgets is necessary for budgetary control to be successful The
constraints some budgets too A factor which influences all other budgets is known as key factor or
principal factor.
The key factor may not necessarily remain the same the raw materials may be limited at
one time but it may be easily available at another similarly other factors may also improve at different
times. The key factor highlights the limitations of the enterprise. This will enable the management to
improve the working of those departments we here scope for improvement exists.
REQUISITES FOR A SUCCESSFUL BUDGETARY CONTROL SYSTEM.
32

Making budgetary control system successful requisites are required.


1) Clarifying objectives.
The budgets are used to realize objectives of the business. The objectives must be clearly spelt out so that
budgets are properly prepared. In the sense of clear goals, the budgets will also be unrealistic.
2. Proper delegation of authority and responsibilities.
Budget preparation and control is done at every level of management. Even though budgets are finalized at
top level but involvement of persons. In lower levels of management is essential for their success. This
Hesitates proper delegation and responsibility.
3. Proper communications system.
An effective system of communication is required for a successful budgetary control. The flow of
information regarding budgets should be quick so that these are implemented. The upward communication
will help in knowing the difficulties in implementation of budgets. The performance reports of various
levels will help top management in budgetary control.
4. Budget education.
The employees should be educated about the benefits of budgeting system they should be educated
about their roles in the success of this system. Budgetary control may not be taken only as a control device
by the employees but it should be used as a tool to improve their efficiency.
5. Flexibility.
Flexibility in budgets is required to make them suitable under changed circumstances. Budgets are
prepared for the future, which is always uncertain, even though budgets are prepared by considering the
future possibilities but still some adjustments. Flexible makes the budgets more appropriate and realistic.
6. Motivation
33

Budgets are too implemented by human beings. Their successful implementation will depend upon
the interest shown by the employees. All persons should be motivated to improve their working so that
budgeting is successful. A proper system of motivation is introduced for making is system a success.

TYPES OF BUDGETS.
Long term budgets:
The long-term budgets are the budgets prepared for a long period of five to years. They are concerned with
planning the operations of a firm over a considerably long period of time. The financial Controller
exclusively for top management usually prepares long-term budgets. These budgets are useful in terms of
physical units (i.e... quantities) or percentages, the accurate values may be difficult to forecast over such
long period. Initial expenditure, research and development budgets, etc, are examples long-term budgets.
Short term budgets.
Short term budgets are budgets prepared for a short period of one to two is. They are prepared for those
activities the trend in which cannot be seen easily over long periods. These budgets are very useful are very
useful in case of consumer goods industries such as sugar, cotton, textiles, etc. they are generally, prepared
in terms of physical units (i.e., Quantities) as well as monetary units (i.e., values...) Materials budget, cash
budget. Etc are examples of short-term budgets. They are useful to lower level of management for control
purpose.
Current budgets.
Current budgets are a budget, which is established for use over a short period of time and is related
to current conditions. Thus current budgets are essentially short term budgets adjusted to current (i.e.,
present or prevailing) conditions or circumstances. They are prepared, for a very short period. Say, a
quarter or a month. They relate to current activities of the budgets.
Interim budgets:
34

Interim budgets are budgets, which are prepared in between two budgets periods. These budgets may get
integrated with the budgets of the following period.
CLASSIFICATION OF BUDGETS ACCORDING TO CONTENT:
Budget may be classified into budgets in physical terms and into budgets in monetary terms.
A) Budgets in physical terms:
Budgets in physical terms are budgeted that budget in terms of quantities only. They do not include
corresponding rupee value. Long term budgets are usually in prepared in physical terms. Examples of
such budgets are production budget, materials budget, etc.
B) Budgets in monetary terms:
Budgets in monetary terms are budgets that budget in terms of quantities as well as their corresponding
rupee value. Sales budget, purchase budget, etc are examples of such budgets. Budgets such as cash budget
capital expenditure budget, etc that may not have physical quantities also from part of budgets in monetary
terms.

CLASSIFCATION OF BUDGETS ACCORDING TO FUNCTION:


Budgets can be classified into:
1. Operating Budgets
2. Financial Budgets
3. Master Budget

1. Operating Budgets.
35

These budgets relate to different activities or operations of a firm. The number of such budgets
depends upon the size and nature of the business, the commonly used operation budgets are:

i)

Sales Budgets

ii)

Purchase Budget

iii)

Raw Materials Budget

iv)

Lab our Budget

v)

Factory Utilization Budget

vi)

Manufacturing Expenses or Works overhead budget

vii)

Administrative and Selling Expenses Budget etc.

The operating budget for a film may be constructed in terms of programmers or responsibility areas, and
hence may consist of:
A) Programmed Budget
B) Responsibility Budget
A) Programmed Budget:
It Consists of expected revenues and costs of various products or projects that are termed as the major
programmers of the firm, Such a budget can be prepared for each product line or project showing revenues,
Cost and the relative profitability of the various in locating areas where efforts may be required to reduce
COST5 ad increase revenues. They are so useful in determining imbalances and inadequacies in
programmers so at corrective action may be taken in future.

B) Responsibility Budget:
36

Here the operating of a firm is constructed in terms of responsibility areas. Such a budget shows the plan in
terms of persons for achieving them. It is used by the management as a control thus used by the
management as a control device to evaluate the performance of executives who are in charge of various
cost centers. Their performance is compared to the targets (Budgets), set for them and proper taken for
adverse results.
Responsibility areas may be classified under three brand categories:
I.

Cost / expense center

II.

Profit center

III.

Investment center

2) Financial budgets
Financial budgets are concerned with cash receipts and payments, working capital, financial position and
results of business. The commonly used financial budgets include Cash budget, Capital budget, and Income
statement budget, Statement of earnings budget, Budgeted balance sheet or position statement.
3) Master budget
The Master budget is the summary budget incorporating its functional budgets. All the operational
and financial budgets are integrated into the Master budget. The budget officer for the benefits of the toplevel management prepares this budget. This budget is used to coordinate the activities of various
functional departments. It is also used an effective control devices.

CLASSIFICATION ON THE BASIS OF FLEXIBILITY.


37

A) Fixed budget
According to ICMA London a fixed budget is a budget which is designed to remain unchanged
irrespective of the level of activity actually attained. It is based on a fixed volume of activity and shows
one volume of output and related cost. It is not adjusted according to the actual level of activity attained.
A fixed budget is useful only when the actual level of activity corresponds with the budgeted level
of activity. But this, generally, does not happen; as such a fixed budget is not useful for managerial
purposes.
B) Flexible variable sliding scale or control type budget:
According to ICMA, London a flexible budget is a budget which is designed to change in
accordance with the level of activity) actually attained. Thus, a flexible budget changes according to the
change in the level of activity. In other words it provides the budgeted costs at any level of activity.
Business activity cannot be accurately predicted on account of uncertainties of business
environment. A flexible budget contains several estimates for different assume circumstances instead of
just one estimate, it provides for automatic adjustments with changes in the volume of activity. Hence a
situations operating in an unpredictable environment.

38

CHAPTER-IV

BUDGETING AND BUDGETARY SYSTEM IN


KESORAM CEMENT INDUSTRIES LTD

ZERO BASED BUDGETING:


Zero budgeting is the latest technique of budgeting and it has increased use as a material tool. This
technique was first used in America in 1962, by the former president America, Jimmy Carter.
39

As the name suggests, it is starting from a "scratch, the normal technique of


Budgeting is to use previous levels as a base for preparing this year's budget. This method carries previous
years inefficiencies to the present year because we taken last year as a guide, and decide "what is to be
done this year when this much was the performance of the last year.
In the zero based budgeting every year is taken as new year and previous year is not as a base, the
budget for this year will have to be justified according to present situation, zero is taken as base and likely
future activities are decided according to present situations. In zero based budgeting a manager is to justify
why he wants to spend. The performance of spending on various activities will depend upon their
justification and priority for spending will have to be that an activity is essential and the amounts asked for
are really reasonable taking into account the volume of activity.
BUDGET AND BUDGETARY SYSTEM IN KESORAM CEMENT
INDUSTRIES LIMITED, BASANTH NAGAR, KARIMNAGAR
The budgeting process is used in the performance budgeting for the construction of phase which
includes pre commissioning activities. Besides meeting the essential requirements of managerial control the
budgeting exercise also covers the long term capital budgeting, which is presented in the form of annual
plan.

OBJECTIVES OF THE BUDGETARY SYSTEM:

40

To prepare annual budgets in such a manner those managers at various levels in organization carry
out periodical exercise in respect of each contact or responsible centre for physical planning and matching
resources broke up into monthly targets or cash flows.
To introduce and operate responsible for achievement of specified targets with the recourses
allocated for the purpose.
To bring about effective co-ordinate of all activities of the organization and
To gear up service divisions to meet effectively the requirements of project.
BUDGET PERIOD AND PHASING:
The budget period or annual begets should with the financial year. In October every year the budget
should drawn up for the ensuring the financial year in the form of Budget estimates financial year in the
form of Revised Estimates [R.E]...In addition the budgets are to be reviewed on monthly basis by project
review teams, in the light of actual expenditure and projections in the budget period. Budget should
indicate monthly phasing of expenditure and targets for the first and quarterly phasing for the second half
of the year. At the time of review of the budget estimates to frame revised estimates the quarterly phasing
should be broken up into monthly phasing.
While drawing up the actual budget in October every year, the long term capital budget for ongoing and
new schemes should be formulated as apart of exercise as preparation of annual plan. The long term capital
budget should indicate for a period of six years following the budget period of six years following the
budget period of six years following the budget period wise annual phasing of the capital expenditure and
physical schedules recourse based network.

BUDGET HEADS:

41

For uniform accounting, it is essential that costs are collected for each of the factory though this may
involve splitting up of payments against contracts which embrace more than one system. Allocation of the
cost as system wise affords a sound basis for cost accounting, inter-firm comparisons and provides valuable
inputs to the data bank. Budget provisions are related to project estimates and monitoring of actual
expenditure where as control variables for part control and instrumentation system. Factory piping which
includes pipelines, for ash water mains, compressed air system and civil works piping.
Auxiliary pumps for water treatment plant and civil works system. If there are, any contracts not
covered in the budget heads provision for such contracts should be shown against the appropriate system
by head by adding code number.

TYPES OF BUDGETS IN KESORAM CEMENT INDUSTRIES LIMITED:


According to the nature expenditure budget are classified under:
Direct capital outlay on works
Technical consultancy
incidental construction during construction
Employee cost
Other establishment expenses:
Training and recruitment
Preliminary expenses
misc.brought-out assets
cash budget
Township budget

BRIEF EXPLANATION TO THE NATURE OF EXPENDITURE INCLUDED IN EACH BUDGET


IS INDICATED BELOW:
42

Incidental expenditure during construction personal payment:


These comprises of salary,wages,allowance,contribution of PF and other funds and other expenses
such as LIC,medical reimbursement, canteen subsidy etc. any provision of areas of salary D.A.
Office and other expenses:
Expenses incidental to construction and capital works not traceable directly to incidental expenditure,
during contribution equipments, vehicle running expense, office rent.LC and cost of drawings, travelling
expenses, printing and stationary, communication expenses, advertisement for tenders etc. are major items
in the category.
Training recruitment & other deferred revenue expenditure:
The first part of the budget consists of expenses for training executives, and non executive trainees, rent
for training halls and expenses for management development courses. The second part consists of expenses
for recruitment such as advertisement for recruitment, interview expenses, T.A. candidate etc. the third part
combines preliminary expenses including registration fees and research ad development expenses.
Miscellaneous bought out passes:
Vehicles, furniture and fixtures equipments, hospital and medical equipment. Miscellaneous assesses
township figure in the budget.
REVIEW OF PROJECT BUDGET:
Monthly review:
At monthly intervals the budget should be reviewed by project review committee [PRC]. Project budget
should report actual expenditure against budget heads. Work heads and corporate budget by the 7th of
month following the report month. The monthly review should be examined by project review
team[PRC],who should record variations for any variations and proposed for expending works in the
43

minutes of the meetings reasons for any variations in the case of budget heads exceeding 10% of the budget
estimates revised estimates or which ever is Rs.5 lakhs should be analyzed and report upon.
Quarterly review:
PRT should conduct a quarterly budgets review with a view to projecting anticipated expenditure during
the year against approved budget estimates/revised estimates. As time is essence of such review, only a
quick review of anticipated expenditure for individual budget heads involving provisions exceeding Rs.50
lakhs in each case should be made and reported in minutes to PRT. For this purpose, project budget should
furnish all the relevant data to project manager [project] and planning and system by the 10th, of the month
following the quarter project budget committee should review the actual expenditure and assess anticipated
expenditure contract co-ordination/engineers in charge. The assessments of anticipated expenditure should
be furnished by the project budget committee to General Manager [project] by the 30 th of the month
following the quarter under review.
BUDGET OF SERVICE DIVISION CORPORATE BUDGETS:
A review of budgets of service and corporate divisions should be conducted at quarterly intervals by
corporate budget committee[CS'C].For this purpose corporate accounts should report actual expenditure up
to the need of the quarter by the 10th of the month following quarter to corporate budget and budgetcoordination of the remaining period of the year should be sent to the corporate budget should put up a
consolidated report division wise and project wise to corporate budget committee[CBC] by the 15th of the
may, August, November and February every year.

OBJECTIVES OF THE CURRENT BUDGETARY CONTROL SYSTEM IN


KESORAM CEMENT INDUSTRIES LIMITED, BASANTH NAGAR:
The current budgetary control system-operating phase has been compiled to achieve the following
objectives.
To control actual performance with reference to standards/norms adapted in the budget
ascertain the deviations analyze and establish the reasons.
44

To identify constraints in generation and timely action for estimation constraints.


To monitor the generation of internal recourses so as to ensure the availability of adequate
funds.
To prepare the revenue budget so as to forecasting the periodical profitability of the
organization.
To develop standards/norms of performance in the various areas of operation and
maintenance based on the experience.
To ensure effective coordinate planning of all activities so that all the inputs and services
necessary for achieving the physical targets are available at appropriate time.
To create cost consciousness among the managers responsible for decision making
To provide data regarding operational norms and cost for the purpose of formulating tariff.
To provide data basis for assessment of working capital requirements
To control the working capital particularly book debts spares and other items inventory.
To improve profitability and internal resources generation.

SCOPE OF THE PERFORMANCE BUDGET:


45

The budget for operation and maintenance activities will be called performance budget operation. This
in effect means that all financial targets in the budget will be based on performance targets in physical
terms.
The current budgetary control system operation pays envisages generation and transmission line
projects as independents investment centres. It becomes applicable to a project in the year in which it plans
to commercialize its first generation unit. How ever, the budget infer expenses from the date of
synchronization to the date of commercial generation is to be taken case of in the capital budget of the
respective project similarly in the case of transmission line projects the system becomes applicable from
the year in which it plans to commissions its first line along with substation or the date commercial
generation of the first unit of generative project with which this line is associated, which ever is later. For
subsequent lines, the O&M will be prepared from the case generation of energisation.
The system investigates the preparation of operation and maintenance budget for each of the cost
centers as per the requirements of coasting systems.
The performance budget operation will consists of following budgets along with the supporting
schedules:
1. Budget balance sheet.
2. Budget profit and loss account.
3. Revenue budget.

In addition, separate budgets for revenue activities other than operation for research and
development consultancy contracts etc.

46

The expenses respect of developmental expenditure for improvements additions replacement,


renewals, balancing facilities etc. arc of capital nature and will be budgeted for in the construction budget
of budgetary control system-construction pairs.
To facilitate management control the system also investigates, phasing of these budgets into
monthly targets. The actual performance then will be reasons for variation s will be analyzed and
established for taking corrective remedial actions.
STAGES IN THE FORMULATION OF PERFORMANCE BUDGET:
The system provides for a two stages formulation for performance budget operation the stages are
given below:
Initial proposal:
In the initial proposal the project is required to indicate yearly targets. In the addition to
furnishing basic information like synchronization and commercial generation dates.
Constraints and coal operation at less than the designed specification calorific value of raw material
and limestone, material consumptions. In physical terms for items whose consumption value in Rs.5 lakhs
or more planned shutdown for a maintenance and overhauling and norms for serious operating parameters
provided for designs specifications and in the tariff agreements to the corporate budget committee.
In the initial proposals is planned to be submitted after considering else factors and keeping in view the
perspective plan of the organization, as well as norms for various operating parameters. These targets and
terms are then communicated to all stations and transmissions line offices of the last week of July to be
used for formulating detailed budget in the final proposal.
Final proposal:
Budgeted balance sheet. Budgeted profit and loss account and budgets in the form of cash budget
along with the final proposal will consist of detailed supporting schedules for each of the investment
47

centre/cost centre. This final proposal needs to be submitted to corporate centre with in three weeks of
receiving approval for initial proposal.
The final proposal, after approval by board, will become the basis of monitoring performance for
cost centers and investment centers.
The frequency and extent review and monitoring will be done is under:
1. The monitoring of actual performance against budgeted target for investment center/profit center
on monthly basis and for cost centers on quarterly for remedial/corrective action.
2. The review of performance budget on quarterly basis to assess the anticipated profitability.
The first step in the preparation of performance budget, O&M is formulation of maintenance and
overhauling schedules for boiler and TO with generation, then considering the grid demand, the availability
or inputs and factory problems, if any the utilization of capacity will be worked out on month-month basis
for the budget period the gross generation targets can be worked and accordingly.
NET GENERATION:
The sales value will be determined from quantum of net generation [i.e., grass generation aux.
consumption].

AUXILLARY CONSUMPTION/CONSUMPTION BY UTILITIES:


The cement consumption by each of the cost centers for individual unit auxiliaries, station
auxiliaries as well as transformer losses are to be estimated separately based on designed specification and
added in order to work out total auxiliary consumption rather than fixing overall percentage similarly
consumption by utilities will also need to be indicated by concerned cost centers like township and
construction department this will be valued at cost net generation to arrive at the sales values for owns
consumption.
48

CHEMICAL CONSUMPTION:

The chemicals are used by many cost centers by many cost centers for treatment of water. The
consumption of chemicals will be co-related with volume of water certain norms will have to be developed
for different type of chemicals and different type of treatments.
Based on these norms each of the cost centers will indicate consumptions of chemicals in
quantitative as well as financial terms the most centre wise requirement will be consolidated to arrive at
total chemicals consumption to be charged to profit and loss account.
EMPLOYEE COST:
The basis of employee cost will be the approved manpower budget effective of respective years of
budget period. The estimation of employee cost is to be done for each grade considering mid-point as the
scale as basis pay and after reading various allowances like "D.A., H.R.A., C.C.A" project allowance etc.
admissible in respective grades. This is to be worked 49 out or each of the budget periods based on existing
strength (at the time of estimation) in each grade and additions during each quarter (taking 70% satisfaction
for additions).
The provisions of LTC medical reimbursement, PF and other welfare expenses in previous years
are taken into account policies changes, if any the details of welfare expenses like liveries and uniforms,
safety expenses, accident compensation, games & sports, canteen subsidy etc. are to list out as per chart of
account the provisions for incentive, bonus and payments of one time nature are to be shown separately
based on total employee cost for executives, supervisors and non-supervisors and total man power in these
categories ,separates of cost per employee will be worked out for each of theses categories as under.
1. Salaries and allowance
2. Contribution of PF and other funds
3. Welfare expenses
The cost centre of employee cost will be worked out based on these rates separately for theses
executives, supervisors and non-supervisors. This will again be consolidated separately for operations,
49

maintenance and common [service] function. The employee cost of common functions will be appropriated
between construction and O&M budgets in ratio of capital expenditure and sales during respective years.

REPAIRS & MAINTAINENCE:


In line, with costing system following three activities can represent major classification of repairs
and maintenance.
1. Major overhaul
2. Preventive maintenance
3. Breakdown maintenance
Normally, budgeting will be done for the former two; under each activity separate estimates will be
prepared for consumption of materials and maintenance jobs. This estimation will be done at ach of sub
cost centre wise details are required to be mentioned.
The consumption material for repairs and maintenance will be classified into spares, lubricant loose
tools and plants, consumables and others. The cost centre totals separately for three activities will be added
to arrive at summary of material consumption and maintenance jobs, which will be reflected in the profile
& loss account.
The material consumption, especially of spares, can be estimated based on the expected life of
various components/spares in the installed equipment the frequency of breakdowns in the past and the
requirement for preventive maintenance and major overhauls. The actual life of components may be
different from that indicated in the manufacturer's specification. Therefore, it is very difficult to estimate
requirements of spares. But this estimation will become gradually accurate as more experience is gained.
For new stations it will be advisable to collect such information from old stations that have gained
experience in this field.

50

Normally, maintenance of equipment through contractors should be avoided. But in certain areas, if
the expertise and in house capability or sufficient man power is not available, maintenance jobs can be got
done through contractors. Such contracts will need to be listed out separately .If owner supply items are
covered in such contracts the cost of theses items will be included in the material cost.

FACTORY & GENERAL OVERHEADS:


All the items of an expenditures under this head will be estimated based on past trend with due
adjustment for policy changes. The estimates will be given by cost centre needs for items identified with
respective cost centers. The total administrative cost of service cost centers will be allocated between
construction and O&M in the ratio of capital expenditure and sales during respective years.

Depreciation:
This is to be charged as per ES act from the year following the year in which assets have been
capitalized value and, rates of depreciation furnished by the site finance and account for different
categories of assets. Cost centre-wise depreciation will be added to arrive at total deprecation for the
investment centre.

Interest on fixed capital:


As per existing accounting policy, the interest is to be charged to profit & loss account based on
the loan content in the capitalized assets restricted to total accrued interests on actual loans.
For budgeting purposes, interest will be worked on equated loan content or equated loan which
ever is less.

51

CHAPTER-V
ANALYSIS AND INTERPRETATION

52

Kesoram Industries Limited Revenue Budget (2008-09)


Table-I
S.no

Particulars

Budget

Actual

Estimated

Amount(Rs.

Amount(Rs.

Crores)

Variance

Crores)
Sales
1

Fixed and recovery

689

599

90

Variable cost recovery

745

652

93

Fuel price adjustment recovery

784

823

-39

Own consumption

116

128

-12

Total of (14)

2334

2202

132

Average intensives

98

91

Other income

51

43

Grand total(5+6+7)

2483

2336

147

Interpretation:
The data pertaining to the generation and consumption of cement at kesoram Industries Limited
have been obtained from the year 2008-09 and presented in Table-1.The aspect included are total
generation of cement in (cores Rs) and utilization for auxiliary consumption, raw material consumption and
line store respectively.
During the year 2008-09 the sales, fixed cost, variable cost, fuel price, consumption was decreased.
Sales decreased by 132 crores to the estimated budget.
During the year 2008-09 the average intensives are decreased by 7 crores., there income also
decreased by 8 crores respectively.
Finally, with regard to the result in revenue budget of kesoram cement industries limited, totally
decreased by 147 crores in the year 2008-09 respectively.

Kesoram Industries Limited Operational expenditure budget for the year 2008-09
53

Table-II
S.no

Particulars

Budget

Actual

Estimated

Amount(Rs.

Amount(Rs.

Crores)

Variance

Crores)
Variable cost
1

Raw material

400

423

23

Lime stone

430

450

20

Total of (1,2)

830

873

43

Operative
maintained
4

cost
Chemicals and

120

140

20

water
Repairs &

240

275

35

maintenance
6

Employee cost

290

335

45

Stationary &

55

70

15

10
8

12
10

2
2

723

842

119

11

charges
Deprecation

38

11

-27

12

Interest on

18

20

13

fixed capital
Totalof-3
Gland total

31
1746

-25
137

general
8
9

expenses
Rebate
Share of
operating

10

expenses
Total of(4..9)
Finance

56
1609

(3+10+13)
54

Interpretation:
Observed from the above table that the "Operational Expenditure Budget" of kesoram cement
industries Limited in the year 2008-09.
In the year 2008-09 variable cost components, Raw material consumption 23 crores increased
and the lime stone consumption 20 crores also increased.
In operating & maintain aces cost components, chemicals & water, repair & maintenance,
employee cost, stationary & general expenses rebate and share of other expenses in all are fluctuating
expenses of the year 2008-09.how ever the total operating maintenance costs are 119 crores increasing
respectively.
In finance charges depreciation and interest on fixed capital, has been included, the total finance
Charges recording decreasing 25 crores in the year 2008-09 respectively.

Kesoram Industries Limited Revenue Budget (2009-10)


Table-I
S.no Particulars

Budget

Actual Amount(Rs.

Estimated

Crores)

Amount(Rs.
55

variance

Crores)

Sales
Fixed and

689

617

72

recovery
Variable cost

829

735

94

recovery
Fuel price

815

856

-41

adjustment
4

recovery
Own

110

132

-22

consumption
Total of

2443

2340

103

(14)
Average

93

86

intensives
Other income

49

38

11

Grand

2585

2464

121

total(5+6+7)

Interpretation:
The data pertaining to the generation and consumption of cement at kesoram Industries Limited have
been obtained

from the year 2009-10 and presented in Table-1.The aspect included are total generation

of cement in (cores Rs) and utilization for auxiliary consumption, raw material consumption and line store
respectively.
During the year 2009-10 the sales, fixed cost, variable cost, fuel price, consumption was decreased.
Sales consumption is deceased by 103 crores respectively.
During the year 2009-10 the average intensives are decreased by 7 crores and there income also
decreased 11 crores respectively.

56

Finally, with regard to the result in revenue budget of kesoram cement industries limited, totally
decreased by 121 crores in the year 2009-10 respectively.

Kesoram Industries Limited Operational expenditure budget for the year 2009-10
Table-II
S.no

Particulars

Budget

Actual

Estimated

Amount(Rs.

Amount(Rs.

Crores)

variance

Crores)
Variable cost
1

Raw material

419

449

30

Lime stone

420

465

45

Total of(1,2)
Operative maintained

839

914

75

cost
4

Chemicals and water

121

148

27

Repairs & maintenance

232

289

57

Employee cost

314

348

34

Stationary & general

59

77

18

expenses
8

Rebate

11

13

Share of operating

10

745

885

140

expenses
10

Total of(4..9)
Finance charges

11
12

Deprecation
Interest on fixed capital

38
18

14
20

-24
2

13

Total of(11,12)
Grand total

56
1640

34
1833

-22
193

(3+10+13)

57

Interpretation:
Observed from the above table that the "Operational Expenditure Budget" of kesoram cement
industries Limited in the year 2009-10.
In the year 2009-10 variable cost components, Raw material consumption 30 crores increased
and the lime stone consumption 45 crores also increased.
In operating & maintain aces cost components, chemicals & water, repair &
maintainance,employee cost, stationary & general expenses rebate and share of other expenses in all are
fluctuating expenses of the year 2009-10.how ever the total operating maintenance costs are 140crores
increasing respectively.
In finance charges depreciation and interest on fixed capital, has been included, the total
finance charges decreasing by 22 crores in the year 2009-10 respectively.

Kesoram Industries Limited Revenue Budget (2010-11)


Table-I
s.no

Particulars

Budget

Actual

Estimated

Amount(Rs.

Amount(Rs.

Crores)

Variance

Crores)
1

Sales
Fixed and

721

611

recovery
58

110

Variable cost

815

729

86

recovery
Fuel price

810

823

-13

recovery
Own

121

131

-10

5
6

consumption
Total of (14)
Average

2467
97

2294
92

173
5

7
8

intensive
Other income
Grand

53
2617

48
2434

5
183

adjustment

total(5+6+7)

Interpretation:
The data pertaining to the generation and consumption of cement at kesoram Industries Limited
have been obtained from the year 2010-11 and presented in Table-1.The aspect included are total
generation of cement in (cores Rs) and utilization for auxiliary consumption, raw material consumption and
line store respectively.
During the year 2010-11 the sales, fixed cost, variable cost, fuel price, consumption was decreased.
Sales consumption is decreased by 173 crores respectively.
During the year 2010-11 the average intensives are decreased by 5 crores and there income also
decreased 5 crores respectively.
Finally, with regard to the result in revenue budget of kesoram cement industries limited, totally
decreased by 183 crores in the year 2010-11 respectively.

kesoram industries limited operational expenditure budget for the year 2010-11
Table-II
S.no

Particulars

Budget

Actual

Estimated

Amount(Rs.
59

Variance

Amount(Rs.

Crores)

Crores)
Variable cost
1
2
3

Raw material
Lime stone
Total o(1,2)

418
442
860

445
465
910

27
23
50

Operative
maintained cost
4

Chemicals and

128

150

22

water
Repairs &

265

296

31

maintenance
6

Employee cost

316

348

32

Stationary &

63

80

17

11
7

13
10

2
3

790

897

107

general expenses
8
9

Rebate
Share of
operating

10

expenses
Total of(49)
Finance charges

11

Deprecation

41

15

-26

12

Interest on fixed

17

19

13

capital
Total of(11,12)

58

34

-24

1841

133

Grand total

1708

(3+10+13)

Interpretation:
Observed from the above table that the "Operational Expenditure Budget" of kesoram cement
industries Limited in the year 2010-11.
60

In the year 2010-11 variable cost components, Raw material consumption 27 crores increased
and the lime stone consumption 23 crores also increased.
In operating & maintain aces cost components, chemicals & water, repair & maintenance,
employee cost, stationary & general expenses rebate and share of other expenses in all are fluctuating
expenses of the year 2010-11.how ever the total operating maintenance costs are increasing by 107
crores respectively.
In finance charges depreciation and interest on fixed capital, has been included, the total
finance charges recording decreasing by 24 crores in the year 2010-11 respectively.
Finally with regard to the operational expenditure budget of kesoram cement industries limited
the

total

profit

has

increased

by

133

crores

during

the

year

2010-11.

The overall budget results of kesoram cement industry is industries limited is earning more profits.

Kesoram cement industry Revenue Budget (2011-12)


Table-I

S.no Particulars

Budget

Actual

Estimated

Amount(Rs.

Amount(Rs.

Crores)

Variance

Crores)
1

Sales
Fixed and

724

618

106

recovery
Variable cost

840

740

100

recovery
Fuel price

820

863

-43

132
2516

148
2369

-16
147

adjustment
4
5

recovery
Own consumption
Total of (14)

61

Average

102

98

7
8

intensives
Other income
Grand

56
2674

49
2516

7
158

total(5+6+7)

Interpretation:
The data pertaining to the generation and consumption of cement at kesoram Industries Limited
have been obtained

from the year 2011-12 and presented in Table-1.The aspect included are total

generation of cement in (cores Rs) and utilization for auxiliary consumption, raw material consumption and
line store respectively.
During the year 2011-12 the sales, fixed cost, variable cost, fuel price, consumption was decreased.
Sales consumption is decreased by 147 crores respectively.
During the year 2011-12 the average intensives are decreased by 4 crores and, their income also
decreased 7 crores respectively.
Finally, with regard to the result in revenue budget of kesoram cement industries limited, totally
decreased by 158 crores in the year 2011-12 respectively

Table showing operating expenditure of for the year 2011-2012


Table-II
Particulars
S.no

Budget

Actual amount

Estimated amount

(RS. Crores)

Variance

(Rs. Crores)
1
2
3
4
5
6
7

Variable cost
Raw material
Lime stone
Total of (1,2)
Operative maintained cost
Chemicals and water
Repairs & maintenance
Employee cost
Stationary & general expenses

420
450
870

450
470
920

30
20
50

130
280
320
65

150
300
350
80

20
20
30
15

62

8
9
10
11
12
13

Rebate
Share of operating expenses
Total of(4...9)
Finance charges
Deprecation
Interest on fixed capital
Total of(11,12)
Grand total (3+10+13)

11
8
814

13
10
903

2
2
89

42
18
60
1744

15
20
35
1858

-27
2
-25
114

Interpretation:
Observed from the above table that the "Operational Expenditure Budget" of kesoram cement
industries Limited in the year 2011-12.
In the year 2011-12 variable cost components, Raw material consumption 30 crores increased
and the lime stone consumption 20 crores also increased.
In operating & maintainaces cost components, chemicals & water, repair &
maintainance,employee cost, stationary & general expenses rebate and share of other expenses in all are
fluctuating expenses of the year 2011-12.how ever the total operating maintenance costs are 89 crores
increasing respectively.
In finance charges depreciation and interest on fixed capital, has been included, the total
finance

charges

recording

decreasing

by

25

crores

in

the

year

2011-12

respectively

finally with regard to the operational expenditure budget of kesoram cement industries limited the total
profit has increased by 114 crores during the year 2011-12.
The overall budget results of kesoram cement industry is industries limited is earning more
profits.

63

CHAPTER-VI

CHARTS

64

SALES
Table showing total sales of Kesoram cement industry

2008-09

2009-10

2010-11

2011-12

BE

2334

2443

2467

2516

ACT

2202

2340

2294

2369

Figure showing on sale of kesoram cement industry

Interpretation

In the year 2008-09 the actual amount is less compared to budgeted amount as the budget is accurate.
In the 2008-09 it shows a slight change between budgeted amount and actual. In the year 2011-12 budgeted
amount is more compared to actual. It shows that the quantity is more comparing to market. Selling of
cement product less than the estimates.

65

AVERAGE INTENSIVES
Table shown on average intensives of kesoram cement industry

2008-09

2009-10

2010-11

2011-12

BE

98

93

97

102

ACT

91

86

92

98

Figure showing on Average Intensicves of kesoram cement industry

Interpretation
In the year 2008-09 the actual amount is less compared to budgeted amount as the budget is accurate. In the
2008-09 it shows a slight change between budgeted amount and actual. In the year 2011-12 budgeted
amount is more compared to actual. It shows that the quantity is more comparing to market. Selling of
cement product less than the estimates.

66

OTHER INCOME
Table shown on other income of kesoram cement industry

2008-09

2009-10

2010-11

2011-12

BE

51

49

53

56

ACT

43

38

48

49

Figure showing on other income of kesoram cement industry

Interpretation
In the year 2008-09 the actual amount is less compared to budgeted amount as the budget is accurate. In the
2008-09 it shows a slight change between budgeted amount and actual. In the year 2011-12 budgeted
amount is more compared to actual. It shows that the quantity is more comparing to market. Selling of
cement product less than the estimates.

67

VARIABLE COST

Table showing on variable cost of kesoram cement industry

2008-09

2009-10

2010-11

2011-12

BE

830

839

860

870

ACT

873

914

910

920

Figure showing on variable cost of kesoram cement industry

Interpretation

FORM above table it can be under that the estimated amount and actual amount of kesoram cement
was recorded at raw materiel 830 during the year 2008-2009 it is increased to actual raw material 873 in the
year 2008-2009. It shows that there is an increased in budget to the actual. The highest amount in budget
was recorded in year 2011-2012..

68

OPERATIVE MAINTAINED COST


Table showing on operative maintained cost of kesoram cement industry

2008-09

2009-10

2010-11

2011-12

BE

723

745

790

814

ACT

842

885

897

903

Figure showing on operative maintained cost of kesoram cement industry

Interpretation:

1. Form the above table it can be understood that the budget of kesoram cement was recorded the
estimated value 723 during the year 2008-2009 and it is decreased to 842 during the year 2008-2009.
2. It shows that there is on decreased in the budgetary to the actual 2011-12.
3. The lowest investment in budgetary was recorded in year 2011-12.

69

FINANCE CHARGES

Table showing on finance charges of kesoram cement industry

2008-09

2009-10

2010-11

2011-12

BE

56

56

58

60

ACT

31

34

34

35

Figure showing on finance charges of kesoram cement industry

Interpretation:
1. Form the above table it can be understood that the budgetary of kesoram cement was recorded at
56 value of estimation during the year 2008-2009.and it decreased to 31 of actual value in during year
2008-2009.
2. It shows that there is increase in the budgetary the lower value in the 2008-2009.
3. The lowest investment in budgetary was recorded in year 2011-2012.

70

CHAPTER - VII
ANNEXURES

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2012:

71

Cash flow from operating

PARTICULARS

RS:

RS:

activities
Net profit before tax

3,41,78,32,892

80, 92, 92132

Depreciation

58, 30, 64,022

51, 57, 16,762

Adjustments for:

Loss/profit on food 5, 45, 85,229

5, 76, 15,772

assets sold/disable
Loss on sale of long 3, 58,952

-----

term investments
Income from
long term

4,91,46,881

2,61,37,771

investment(other
trader)
Interest paid/payable 33, 50, 30,376

32, 75, 37,771

on loans etc
Interest receivable 2, 50, 55,563

9, 05, 21,426

on loans
Provision for doubtful
Debts/deposits in 3,82,15,119

--------

add
Provision for doubtful
Debts/deposits (net)
Debt/advance/depos

-----------------5, 34, 50,070

93, 92,067
55, 44,394

its written off


Long-term

-----------

7,700

investment

written

off
Unrealized loss/gain on
Foreign

currency 2, 95, 96,073

fluctuation
Provision for diminution
72

19, 16,075

in
Value of investment

---------------

1, 10, 09232

Operating profit before


working capital changes:
Adjustment for:
Inventories
Trade and

(1,21,69,75,334)
other (50, 17, 40, 397)

receivable
Trade payables
Cash

generated

65, 61, 02,594

(24,94,24,615)
2, 92, 62,288
(20,01,35,318)

from

operations
Direct taxes/ refund (93, 49, 80,671)
Net cash from 1,98,37,48,569

(20,01,35,318)
1,10,42,01,672

operating activities

Interpretation:
Observed from the above table that cash flow statement of kesoram cement industries limited in the year
2011-2012. In the year 2011-2012variable net profit before tax, depreciation, loss/profit on food asset
sold/disable, loss on sale of long term investments, interest paid/payable on loans etc have been increased.
In operating profit before working capital changes of inventory, trade receivable and trade payables of
the year 2011-2012. However the total operating profits is increasing respectively.
In cash generated from operations the direct taxes/refund has been included, the total cash generated from
operations increase in the year 2011-2012 respectively.
Finally with regard to the cash flow statement of kesoram cement industries limited the total cash flow
has been increased during the year 2011-2012. The overall budget results of kesoram cement is industries
limited is earning more cash flows.

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING 31stMARCH 2012
PARTICULARS

RS
73

Rs

Schedule Income
Sales
Less excise duty
Net sales
Other income
Expenditure
Finished goods
Manufacturing selling
Deprecation
Rescue of assets
Schedule
Interest
Profit before taxation
Provision for
Current taxation
Provision benefit tax
Profit after taxation
Profit available for

2010-2011
18,17,81,55,294
2,04,63,80,752
16,13,17,74,542
53, 74, 29,621
16,66,92,64,153

2011-2012
25,16,45,89,369
3,07,41,00,000
22,06,9660,339
49, 04, 06,410
22,58,00,66,749

7,61,14,89,922
7,40,51,67,576
59, 52, 33,509
1, 48,449,493
51, 57, 16,762
32, 75, 37,771

9,20,98,35,678
9,03,43,03,781
53, 05, 56,255
1, 21, 74,437
53, 30, 64,022
33,50,30,375

75, 00, 00,000


1, 22, 00,000
45, 70,92,132

34, 00, 00,000


1,10,00,00
2,65,68,32,892

45,70,92,132

2,65,68,32,892

13, 72, 29,954


1, 92, 46,501
--------------

-----------------------------------18, 29, 73,272

--------------5, 00, 00,000


20, 64, 70,455
25, 06, 15,677

2, 56, 62,001
30, 00, 00,000
50, 86, 35,273
2,14,81,97,619

9.99%

58.08%

appropriation
Appropriation
Proposed dividend
Tax on proposed Dividend
In tend Dividend
Tax on in tend
Dividend
General resend
Balance carried to schedule2
Earnings per share

Interpretation:
Observed from the above table that the profit and loss account of kesoram cement industries limited in
the year 2011-2012 In the year 2011-2012.sales and income increased EXPENDITURE of finished goods,
manufacturing selling, and administration expenses are also increased, deprecation, less transfer from
capital, rescue of assets is decreased.

74

Profit before taxation increased from Rs.34, 00, 00,000 to 75, 00, 00,000 and profit after taxation also
increased from Rs.45, 70, 92,132 to 2,65,68,32,892 in the year 2010-2011 respectively.
Finally with regard to the profit and loss account of kesoram cement industries Limited the total profit have
been increased the year 2011-2012. The overall budget result of kesoram cement is industries limited is
earning profits.

FINDINGS:
There is a huge increase in INCOME of the company in 2011-2012, compared to 2010-2011.
Huge increase in earnings per share in 2011-2012, when compared to 2010-2011.
In the year 2007-08, 2010-11 and 2011-12 represents actual are less than budgeted so less purchases
made in every department. In the year 2008-09and 2009-10 actual is more than budgeted it shows
that greater importance given to purchases.
In the year 2006-07 civil expenses are at a very high range. Accruals are high compared to budget
because of construction of cold storage sector, cement plant and bore wells. In the year 2007-08
actual are less compared to budgeted because as the expenses are less. In the year 2011-12 it
incurred high volume of expenses than the budgeted because it incurred heavy expenses.
In the year 2011-12 budgeted amount is more compared to actual. It shows that the quantity is more
compared to market. Selling of cement products, less than the estimates.

75

In the year 2011-2012 sales and income increased EXPENDITURE of finished goods,
manufacturing selling, and administration expenses are also increased, deprecation, less transfer
from capital, rescue of assets is decreased.

CHAPTER-VIII
SUGGESTIONS & CONCLUSIONS

76

SUGGESTIONS
Planning has become the primary function of management most of the planning relates to
individual situations and individual proposals. Budgets are nothing but expressions largely in financial
terms, budgetary control has, therefore become and essential tool of management for controlling and
maximizing profits.
a. Continuous comparison of actual performance with budgeted performance.
b. The company has to maintain super quick assets in order to maintain sound liquidity.
c. A company has to recollect their own standing amount from the debtors regularly.
d. The company has to maintain funds for long-term investment.
e. The company has to monitory from liability position in regular intervals.
f. The company must be conscious about their working capital position.

77

g. There is lot of pretension consistence demand the cement industry as a cement producer the
company can able to source, their funds throw more share holders funds.
h. Company is maintaining the inventories a part from current assets for the entire study period. To
show that excessive inventory level are not good for any organization and any company. Since
the company has it concentrate much more on inventory maintain.
i.

During study period there is negative working capital levels for the company so the company
must maintained enough current assets to keep working capital, figure positively.

CONCLUSIONS

a. Every organization has predetermined set of objectives and goals, but reaching their objectives and
goals by proper planning and executing of these plans economically.
b. The kesoram cement industries Limited objectives of planning and organizing promoting an
integrated development of Cement Company.
c. The corporation machine of kesoram cement industries is to make available and quickly cement in
increasingly small quantities, the company will spear head the process of accelerated development
of cement sector by expeditiously.
d. The organization needs the capable personalities as management makes the plans and implement of
these plans are expressed in terms of budget and budgetary control.
e. The kesoram cement Industries Limited has budget process in two stages. one is the capital
expenditure budget and another is operating maintenance budget, the capital expenditure budget
shows the list of capital projects selected for investment along with their estimated costs, operating
78

maintenance budgets, the medical budgets are rarely used in the organization like long term
budgets, search & development budget for consultancy.
f. The Kesoram cement industries is to make efficient utilization of its resources and implementation
of sophisticated technology to produce available and quality cement and also creating ambience of
collective working of its employees.

BIBLIOGRAPHY
1. Prasanna Chandra, Financial Management: Theory and Practice, 7/e, 2008, Tata McGraw-Hill
Education.
2. I.M.Pandey, financial management: Principles and Practice 9/e, 2005, Vikas publishing.
3. R.K Sharma Shashi K Gupta, financial management: Principal and Management, 7/e, 2002, Kalyani
Publishers.
4. Dr.S N Maheshwari: management Accounting and financial control, 6/e, 1996, sultan chand and sons.
5. M.Y.Khan, and P.K Jain: Basic financial management, 3/e, 1982, Tata McGraw-Hill.
6.

A. W. Willsmore: business budget and budgetary control, 2/e1949, pitman&sons.

7. Edward J Mock: Financial decision making, 2/e, 1969, International Textbook.


8. Eugene F. Brigham: Financial mangament, 12/e, 2008, cengage learning.
9. 88th annual report of kesoram cement industries limited.
10. detailed project report of kesoram cement industries limited

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WEBSITES:

Web site of a companywww.kesoram.com


Web site for cement industrywww.kesoram
Websiteforcementindustrywww.kesoramcement.com
Websiteofacompanywww.kesocorp.com

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