Finance is Lifeblood of Business

INTRODUCTION
Finance is one the basic foundations of all kinds of economic activities. It is the master
key, which provides access to all the sources for being employed in manufacturing. Hence it is
rightly said that finance is lifeblood of any enterprise, besides being the scarcest elements, it is
also the most indispensable requirement. Without finance neither any business can be started nor
successfully run. Provision of sufficient funds at the required time is the key to success of
concern. As matter of fact finance may be said to be the circulatory system of economic body,
making possible the needed co-operation among many units of the activity.
FINANCIAL MANAGEMENT
Financial management emerged as a distinct field of study at the turn of this Century.
Many eminent persons defined it in the following ways.
DEFINITIONS
According to “GUTHMANN AND DOUGHAL” “Business finance can broadly be
defined as the activity concerned with planning, rising, controlling and administering of funds
used in the business.”
According to “BONNEVILE AND DEWEY” “Financing consists in the rising,
providing and managing of all the money, capital or funds of any kind to be used in connection
with the business.”
According to Prof. “EZRA SOLOMAN” “Financial management is concerned with the
efficient use of any important economic resource, namely capital funds.”
FINANCIAL FUNCTIONS
The finance functions of raising funds, investing them in assets and distributing returns
earned from assets to shareholders are respectively known as financing, investment and dividend
decisions. While performing these functions, a firm attempts to balance cash inflows and
outflows. This is called as liquidity decision.
BUDGET AND BUDGETARY CONTROL
BUDGET
Budget is essential in every walk of our life-national, domestic and Business. A budget is
prepared to have effective utilization of funds and for the realization of objective as efficiently as
possible. Budgeting is a powerful tool to the management for performing its functions i.e.,
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formulation plans, coordination activities and controlling operations etc., efficiently. For efficient
and effective management planning and control are two highly essential functions. Budget and
budgetary control provide a set of basic techniques for planning and control.
A budget fixes a target in terms of rupees or quantities against which the actual
performance is measured. A budget is closely related to both the management function as well as
the accounting function of an organization.
As the size of the organization increases, the need for budgeting is correspondingly more
because a budget is an effective tool of planning and control. Budget is helpful in coordinating
the various activities (such as production, sales, purchase etc) of the organization with result that
all the activities precede according to the objective. Budgets are means of communication. Ideas
of the top management are given the practical shape. As the activities of various department
heads are coordinated at the much neede for the very success of an organization. Budget is
necessary to future to motivate the staff associated, to coordinate the activities of different
departments and to control the performance of various persons operating at different levels.
DEFINITIONS OF BUDGET
According to Institute of Charted Management Accountants, England “ A plan quantified
in monetary term prepared and approved prior to a defined period of time usually showing
planned income to be generated and or to be incurred during that period and the capital to be
employed to attain a given objective.”
According to ICMA, England, a budget is, “a financial and or quantitative statement,
prepared and approved prior to a defined period of time, of the policy to be pursed during the
period for the purpose of attaining a given objective.”
It is also defined as, “a blue print of projected plan of a action of a business for a definite
period of time.”
BUDGETARY CONTROL
No system of planning can be successful without having an effective an
efficient system of control. Budgeting is closely connected with control. The exercise of control
in the organization with the help of budgets is known as budgetary control. The process of
budgetary control includes.
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1. Establishment of budget for each function and section of the organization.
2. Executive responsibility in order to perform the specific tasks so that objectives of the
enterprise may be attained.
3. Continues comparison of the actual performance with that of the budget and placing the
responsibility of executives for failure to achieve the desired result a given in the budget.
4. Taking suitable remedial action to achieve the desired objective if there is a variation of
the actual performance from the budgeted performance.
5. Revision of budgets in the light of changed circumstances.
DEFINITIONS OF BUDGETARY CONTROL
According to the Brown and Howard “Budgetary control is the system of controlling costs
which includes the preparation of budgets, coordinating the department and establishing the
responsibilities, comparing the actual performance with the budgeted and acting upon the results
to achieve the maximum profitability”.
According to the J.Betty: “A system which uses budgets as a means of planning and
controlling all aspects of producing and or selling commodities and services”
According to the CIMA, London, “Budgetary control is the establishment of budgets
relating to responsibilities of executives to the requirement of a policy, and the continuous
comparison of actual with budget results, either to secure by individual action the objective of
that policy or to provide a basis for revision.
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INDUSRTY PROFILE
Sugarcane is one of important crops for Indian farmer. Sugar and jiggery are the main
products that we get from sugarcane. Other products such as biogases for industrial use, molasses
for distillery, filter cake. Mud as organic manure and green leaves with tops for cattle feed are
also available as by-products. Because of its multi uses sugarcane has played crucial role in
Indian economy with Rs.20000 crores turnover and width 450 sugar mills providing assistance to
45 million sugarcane farmers and 2 million workmen directly and indirectly.
In Andhra Pradesh sugar industry is an important agro-based industry, occupying the
second position next to textile industry. The annual cultivated area is about 1.99 lakhs hectares
with a yield of 149.45 lakhs of tons during 1996-97. At present, there are 36 sugar factories in
the state have been suffering due to lack of adequate cane irrigation facilities, working capital, by
product utilization, excessive employment etc.
The sugar industries which provide direct employment to about 3 lakhs persons of
sugarcane followed by Brazil and Cuba. Sugarcane existed in India from 3000 B.C. the central
place of origin of sugarcane regarded as northeastern India, from sugarcane seems to have china
and other places by early travelers and no mans between 1800 and 1700 B.C. later. It was
penetrated to Philippines. Actually the word sugar derived from a Sanskrit word “SHAKRA”.
India as the world’s largest producer of sugarcane occupies a very pride place in the
world. In India the cultivation of sugarcane is 10,000 million tones. The average yield being 56
tones per acre of total cultivating land is occupied by sugarcane cultivation. Sugarcane is grown
in almost all part to India, except in colder regions and extreme North Jammu and Kashmir,
Himachal Pradesh.
No. of Areas
Sl. No. Sector
Factories Costal area Rayalaseema Telangana
1 Co-operative 18 12 4 2
2 Public sector 7 1 1 5
3 Total 25 13 5 7
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LIST OF CO-OPERATIVE SUGAR FACTORIES IN A.P.
1. The Chodavaram Co-operative sugars Ltd., Chodavaram.
2. The Anakapalle Co-operative sugars Ltd., Anakapalle.
3. The Etokoppake Co-operative Agricultural of industrial society Ltd., Etokoppake.
4. Sri Vijayawada Gajapathji Co-operative sugars Ltd., SPOK, Venkonda.
5. The Amudalavalasa Co-operative Agricultural industrial society Ltd., Srikakulam
6. The West Godavari Co-operative sugars Ltd., Elude.
7. Palakollu Co-operative Agricultural and industrial society Ltd., Palakollu.
8. The Thandra Co-operative sugars Ltd., Vishakhapatnam.
9. The Chattier Co-operative sugars Ltd., Chattier.
10. Sri Venkateswara Co-operative sugars Ltd., Renigunta.
11. The Cuddapah Co-operative sugars Ltd., Channur.
12. The Nandyal Co-operative sugars Ltd., Ponnapuram.
13. Nizamabad Co-operative sugars Ltd., Nizamabad.
14. The Kovur Co-operative sugars Ltd., Nellore.
15. Nagarjuna Co-operative sugars Ltd., Gurzala.
16. Nannapaneni Venkat Rao Co-operative sugars Ltd., Hanuman Junction.
17. Sri Hanuman Co-operatiPalair Co-operative sugars Ltd., Ammugudem.
NATURE OF SUGAR INDUSTRY
SEASONALITY
The industry is seasonal, with the season starting in November and containing till
April/May, sugarcane is available during these 6 – 7 months and therefore crushing also takes
place during three months.
LICENSING SYSTEM
To protect sugar-producing unit and ensure a sufficient quantity of raw material
(sugarcane), licensing system was introduced. Under this system, each unit had a command area
from where the sugarcane was produced.
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COMPANY PROFILE
Company History
Prudential Sugar Corporation Limited (PSCL) set up its first modern integrated
Sugar Plant in the year 1994 to manufacture white Crystal Sugar. The plant is located near
Village Nindra in Andhra Pradesh (India) with a capacity of 3500TCD.
This is a fully integrated Sugar Complex also with a facility for Power Co-generation
The location of the plant has advantage of two monsoons, the South West and the North
East, which bring in sufficient rain to give a healthy crop over an area of 30000 Acres.
The company has a team of core professional and experts in Sugar Technology to look
after the project.
The plant and equipment is based on latest Technology in the industry and have been
constantly updated.
There are facilities for in-house testing and quality control. A modern Tool Room looks after the
day-to-day need of the plant as well as expansion requirements.
The expansion program for the complex is under implementation and with this, the
capacity of the plant shall increase and also look after the downstream products, which will also
utilize the molasses produced in the process.
The expansion of co-generation power plant shall provide additional power for supplying to
State Grid.
The Sugar produced here is also exported to many countries and has achieved
International Standardization. It also enjoys a very good name in domestic market.
OVERVIEW OF THE COMPANY
NAME OF SUGAR PLANT
Prudential Sugar Corporation Ltd (PSCL), Koppedu (Post), Nindra
(Mandal), Chittoor (Dist), Andhra Pradesh, Indian.
 OWNER OF INDUSTRY: VINODH BAID from West Bengal (W.B)
 CAPITAL INVESTMENT: 50 Cores.
 TYPE OF INDUSTRY: manufacturing of white crystal sugar.
 CRUSHING CAPACITY OF SUGAR PLANT: 3500 TCD
 CRUSHING SEASON: November – April
 SUGAR PRODUCTION: - 3.90 lack qlts
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 UTILITIES REQUIRED FOR PRODUCING SUGAR:-
 Sugar Cane
 Water
 Steam
 Man power
 Machines
 Power
 PRODUCTION METHODS: Mass and Continuous type
 TOTAL NO. OF EMPLOYEES IN CRUSHING SEASON: - 400 employees
 DURING OFF – Season 200 employees
AGRO - CLIMATIC FACTORS AFFECTING SUGAR INDUSTRY
Sugarcane is basically a tropical plant thriving well upper warm sunshine and well-
distributed rainfall.
Sugarcane stands on the field for about 10-12 months and therefore passes through
extreme. Fluctuations of rainfall, temperature, humidity and sunshine. Through sugarcane is
grown in the state largely under assured irrigation, the cane field and also juice quality are
influenced by the patterns of distribution an intensity of rainfall during successive phase of crop
growth.
There are 3 distinctive phases of crop growth in sugarcane:
(1) Formative phase.
(2) Growth phase.
(3) Maturity phase.
The maximum time of sugarcane takes place during growth phase is called "grand
growth period"
Therefore agro economic techniques have to be evolved for maximum utilization of all
inputs in each phase of crop growth depending on soil, rainfall and other factors.
BOARD OF DIRECTORS OF PRUDENTIAL SUGARS Ltd
1. Mr. VINOD BAID
2. Mr. CH.KRISHNA MOORTHI
3. Mr. P.M.NAIR
4. Mr. U.C.BANDARI
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Organizational Chart
CHAIRMAN
General Manager
Asst. General Manager
Production Accounting HR
Department Department Department
Manager Senior Senior

Accounting Personal
Skilled Accountants Skilled
Semi-Skilled Clerks Unskilled
Unskilled
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The Process of Manufacturing of Sugar
Cane
Cane Separate
Diffuser
Milk & Cane Clarification
Clear juice heater
Evaporation
Syrup Sulphitation
Pan boiling
Centrifuging
Sugar drying
Sugar bag to
Godown
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Vision.Statement:
• To be a torchbearer of the sugar industry and re-write the rules of running the sugar business
• To establish itself as a market leader in the sugar industry. To be an archetype of international
quality standards.
• To ensure that the name of the company becomes synonymous with good corporate governance
Mission Statement:
Dwarikesh has its own unique way of moving ahead on its path to achieving its vision.
It’s the way that we have charted in order to.
• Produce sugar of the highest quality and be the benchmark for the industry to follow.
• Achieve growth every year with optimum technical efficiency and minimum cost of
production.
• Ensure maximum customer satisfaction and employee/farmer welfare.
• Protect the environment and uphold the highest standards of integrity, values, along with
passion for excellence and respect for all, while striding towards achieving our objectives.
The Various Details of cane crushing are as follows:
2012-13 2013-14 2014-15 2015-16 2016-17
Sugar Cane (in 322485.56 480233.62 384433 105205.305 78770.44
Metric tons)
Sugar Packed( in 276540 424826 379804 100174 66797
Quintals)
Sugar 8.57% 8.84% 99.88% 9.52% 8.45%
Recover(%)
Sugar Cane Rate 1220 1110 1076 1320 2050
Molasses 160174 236290 170426 44913 38742
Molasses 5.02% 4.92% 4.44% 4.27% 4.91%
recovery
Raw Sugar(MT) 74347 16372.46 11345.8 3857.215 20764.496
Raw Sugar 95% 95% 95% 95% 95%
Recovery
The sugar rates per quintal for various years are as below
2012 Rs.1827
2013 Rs.1316
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2014 Rs.1423
2015 Rs.2066
2016(April) Rs.2800
2016(June) Rs.2450
Water is drawn from 7 bore well drilled in the factory premises. These factory effluent
treatment facilities as required under the law.
Total paid up share capital was Rs.2633.33 Lakhs in 2012-13, Rs.5140.16 in 2014-15,
which is constant during the study. But , the authorized capital is gone up to 7000 crores.
The factory arranges the following loans with are standing against the sugarcane growers
as on 31 march 2000.
1.Seed Loans
2. Factory Loans
3. Pesticides Loans.
System
A system is series of functions or activities within an organization work together for the
aim of the organization. System of an organization refers to all rules, regulations and procedures,
both formal and informal related to different departments. This will specify the powers and
authority of a particular department.
They have HR system, LAN system, Purchase and Stock system is Weighted Average
Method.
Strategy
Strategy rules to a set of decisions actions aimed at gaining competitive advantages. The
concept of strategy includes purpose, mission, objectives, goals, major action plans and policies.
A strategy reflects company’s awareness of how, when and where it should compete, against
whom it should compete and for what purpose it should compete.
Sagar Sugars & Allied Products Limited has the “Low Pricing Strategy” The company
has adopted ‘diffuser technology’, in which they can store the sugar cane juice for a week. With
the help of this technology they can store when they have more raw material and can produce
sugar if they don’t have the sugarcane also. This is the second company in India which has
adopted the diffuser technology. The technology which has used in the organization reduces the
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man power. Hardly two persons can run the entire Distillery with the help of two systems. They
used to operate entire process through these systems.
So with the help of the technology the organization reduced the man power. So they can
reduce the production price. The electric power which the organization is using is produced by
the firm itself as a byproduct while producing the sugar and Extra Neutral Alcohol. By using all
these company reduce the production cost.
Pricing Strategy of the Company

 Raw materials of sugar cane
 Transportation
 Conversation Process
 Packaging material
 Final Product Price
Skill
The skill is one of the most crucial attributes or capabilities of an organization. The term
“skill” includes those characteristics which most people are to describe a company’s distinctive
competence.
In SSAPL all the employees at different levels are following multi disciplinary skills in
order to complete their works successfully and for the development of their organization.
Communication Style:
M.D
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ß
Directors work
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Department Head
ß
Group Head
ß
Head of Department
ß
Manager
ß
Deputy Manager
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Staff
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SWOT ANALYSIS
Strength
 Good Technology
 Dedicated officers and staff
 Fast Communication system
 Modern Technical machinery
 Good Quality of Product
 Customized Products with minimum lead time
Weakness
 Change of technology is difficult to adopt since it cost for single machinery
 Centralized management decision making takes time.
Opportunities
 Getting the quality raw material due to the high competition in the suppliers
 As the demand for the sugar is increasing the company can increase its production and
can increase its sales.
Threats
 Competition from local and regional companies
 Fast change of Technology
 Competitiveness in Pricing
 Unavailability of required number if skilled labour in the respective areas with innovative
skills in technical and similar related fields.
 The cost of the raw material sugar cane ahs been increased in turn of the cost of product
is increased.
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PRODUCT PROFILE
SUGARCANE
Sugarcane cultivated by the growers or promising varieties in terms of sugar content and
yield. Cultivation techniques maturity of (decided by the cane personnel) harvested and supplied
to the factory in trucks fresh less tops and roots. Trucks are weighted with cane on Weigh Bridge
and unloaded on the moving cane carrier. Mechanical un-loaders do unloading. Again empty
truck is weighed to assertion in the weight of cane unloaded.
MILLING
Provided with a tandem of four mills and each mill is provided with three rollers. On the
cane carried for cane preparation cane knives driven by motor and followed by a Fibrizer driven
steam turbine are provided to chop the cane into small pieces and fiber to make the milling move
efficient and to extract maximum juice from the cane. To make this process more effective
assured quantity of water is added to mills. After extraction of juices the waste material is called
bagasse.
BOILERS
Provided with 52 no’s of boilers of each water evaporation capacity of 25 Mts per hour
steam at 300 p sig (21 kg’s). Steam is used for driving the fibrizer, mills by turbines and
generator powered, by steam turbine alternator. For boilers main fuel is bagasse. Surplus bagasse
is sold to paper industries.
SULPHITATION AND SYRUP
The syrup from evaporator last body is again sulphierted to bleach to get white sugar and
sent to pan supply tanks.
CLARIFICATION
Juice extracted from sugarcane in mills is weighted in automatic weighing scale. It is
preheated in juice heater to 50°C - 75°C then it is limed and sulphierted simultaneously. Juices
will be coagulated form and will not settle. To induce settings cheaply and abundantly available
positive is to be added i.e., namely lime in slurry form, also called milk of lime, by using
addition of such alkaline medium is again brought down to natural pH medium by bubbling of
sulphur dioxide gas. This gas is produced in sulphur burners and bubbled in preheated juices by
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the aid of compressed air passing through sulphur burners. As such a juice is kept at slightly
alkaline medium say 701 to 702 then this treated juice is heated again in other raw of juice
heaters to 102°C and send to graver. Graver is a big tank where setting is taking place.
Continuously, such juices is sent and drawn from it with the detention time of juices of about 330
hours, in ‘u’ tube principles.
EVAPORATION
In graver juices will be settled and will have a golden yellow color of 7.0pH (neutral).
This clear juice will contain more than 85% of water and remaining solid (Sugar maximum + a
little sugar). In evaporators about 75% of water is removed and made syrup. This consists of one
vapor cell and is followed by four bodies. Boiling is done under vacuum using exhaust stream
from turbines tubes emerging out through tube plates and above this calandria vapor space of
shell. Stream circulated through calandria and heating the outer point of juices is brought will
below its origin boiling point. In the vapor cell alone exhaust steam is admitted into the calandria
produced vapor to its subsequent body and soon. Vacuum is helping in drawing vapor from the
preceding body and this boiling is emerges out from last body it will be a syrup, losing about
75% of water.
VACUUM FILTER
Mud settled in graver is taken in rotary filters to extract juices from it and waste is called
filter cake sent out and used as manure. Extracted juices are again mixed juices in a cyclic form.
PANS
Pan bodies are similar to evaporators in construction with different design. Materials are
individually boiled in four numbers under vacuum the syrup is further boils in pans. When the
super saturation point reaches crystals come out it is again boiled up by addition kept in pan and
the rest 2 portions sent to receivers then again pan is boiled. This process will help growth or
crystal as desired by us.
CENTRIFUGALS
Such made mass cuties are dropped in crystallizers (a strong tank with stirring
mechanism). From crystallizers taken into centrifugal machines a basket fitted with mesh and
screen of small opening and will not only allow sugar crystals to pass through but also molasses.
When one machine changed with mass cuties and spun at 150 RPM molasses gets out and
collects in a tank. Sugar remains in basket washed and dried by steam. Then dropped on hopper
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(to and or) shaking medium sugar will get dry when flowing and galls on sugar grader (fitted
with meshes) screened and bagged. Bags weighed on P.O. scales of 100kg and sent to go down.
Molasses got from a mass cuties sugar and molasses from B mass cuties and sugar from
C mass cuties (final) are again boiled in pans in cyclic manner. Molasses got from C mass cuties
called final molasses is a waste and sent to accordance and large i.e., S-29, S-30 as the demand in
the market is for S-30 it is made in the factory.
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REVIEW OF LITERATURE
BUDGET AND BUDGETARY CONTROL
BUDGET
Budget is essential in every walk of our life-national, domestic and Business. A budget is
prepared to have effective utilization of funds and for the realization of objective as efficiently as
possible. Budgeting is a powerful tool to the management for performing its functions i.e.,
formulation plans, coordination activities and controlling operations etc., efficiently. For efficient
and effective management planning and control are two highly essential functions. Budget and
budgetary control provide a set of basic techniques for planning and control.
A budget fixes a target in terms of rupees or quantities against which the actual
performance is measured. A budget is closely related to both the management function as well as
the accounting function of an organization.
As the size of the organization increases, the need for budgeting is correspondingly more
because a budget is an effective tool of planning and control. Budget is helpful in coordinating
the various activities (such as production, sales, purchase etc) of the organization with result that
all the activities precede according to the objective. Budgets are means of communication. Ideas
of the top management are given the practical shape. As the activities of various department
heads are coordinated at the much neede for the very success of an organization. Budget is
necessary to future to motivate the staff associated, to coordinate the activities of different
departments and to control the performance of various persons operating at different levels.
Budgets may be divided into two basic classes. Capital and operating budget. Capital
budget are directed towards proposed expenditure for new projects and often require special
financing.
The operating budgets are directed towards achieving short-term operational goals of the
organization for instance, production or profit goals in a business firm. Operating budgets may
be sub-divided into various departmental of functional budgets.
BUDGETARY CONTROL
No system of planning can be successful without having an effective an efficient system
of control. Budgeting is closely connected with control. The exercise of control in the
organization with the help of budgets is known as budgetary control. The process of budgetary
control includes.
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1. Establishment of budget for each function and section of the organization.
2. Executive responsibility in order to perform the specific tasks so that objectives of the
enterprise may be attained.
3. Continues comparison of the actual performance with that of the budget and placing the
responsibility of executives for failure to achieve the desired result a given in the budget.
4. Taking suitable remedial action to achieve the desired objective if there is a variation of
the actual performance from the budgeted performance.
5. Revision of budgets in the light of changed circumstances.
BUDGET, BUDGETING AND BUDGETARY CONTROL

Row land and William in their book entitled Budgeting for management control has given
the difference between budget, budgeting and budgetary control as follows
“Budgets are the individual objectives of a department etc where as budgeting may be said
to be the act of building budgets. Budgetary control embraces all this and in addition includes the
science of planning the budgets themselves and the utilization of such budgets to effect on
overall management tool for the business planning and control”. Thus, a budget is a financial
plan and budgetary control results from the administration of the financial plan.
ESSENTIAL FEATURES OF A BUDGETARY
 Budgetary control defines the objectives and policies of the undertaking as a whole.
 It is an effective method of controlling the activities of various departments of a business
unit. It fixed targets and the various departments have to efficiently to reach the targets.
 It helps the management to fix up responsibility in case the performance is below
expectations.
 It secures proper co-ordination among the activities of various department.
 It helps the management to reduce wasteful expenditure. This leads to reduction in the
cost of production.
 It brings in efficiency and economy by promoting cost consciousness among the
employees.
 It facilitates centralized control with decentralized activity.
 It acts as internal audit by a continuous evaluation of departmental results and costs.
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BUDGET PROCEDURES
Having the budget organization and fixed the period, the actual work or budgetary control can
be taken upon the following pattern.
STEPS IN BUDGETING CONTROL
 ORGANIZATION FOR BUDGETING

The setting up of a definite plan of organization is the first step towards installing
budgetary controlling system in an organization a budget manual should be prepared giving details of the
powers, duties, responsibilities and area of operation of each executive in the organization.
BUDGET MANUAL
A budget manual lays down the details of the organizational set up, the routine
procedures and programmers to be followed for developing budgets for various items and the
duties and responsibilities of the executives the operation of the budgetary control system. CIMA
England defines a budget manual as “a document schedule or Booklet which sets out, inter alia,
the routine of and the forms and records required for budgetary control”. Thus, it is a written
document which guides the executives in preparing various budgets. Budgets are to be drawn
keeping in view the objectives of the organization given in the budget manual. Responsibility
and functions of each executive in regard to budgeting are written down in the budget manual to
avoid any duplication or overlapping of responsibilities. Steps and the methods for developing
various budgets and the methods of reporting performance against the budget are written down in
the budget manual. In short it is a written budget. It should be clear and there should be no
ambiguity in it.
The following are some of the most important matters covered in a Budget manual:
i. Introducing and brief explanation of the objects, benefits and principles of budgetary
control.
ii. Organization chart giving the titles to different personnel’s with full explanation of the
duties of each to operating system and preparation of departmental and functional
budgets.
iii. Length of budget periods and control periods should be clearly stated.
iv. A method of accounting and control of expenditure.
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v. A statement showing the responsibility and of authority given to each manager for
approval of budgets, vouchers and all for granting approval must be clearly stated.
vi. The entire process of budgeting programme including the time table for periodical
reporting. A schedule should be drawn for this.
vii. Purpose, specimen from and number of copies to be used for each report and statement.
Budget centers involved should also be stated clearly.
viii. Outline of main budgets and their accounting relationships.
ix. Explanation of key budgets.
FIXATION OF BUDGET PERIOD
The budget period mean the period for which a budget is prepared and employed. The budget
period will depend upon the type of business and the control aspects.
Budget period mean the period for which a budget is prepared and employed. The budget
period depends upon the nature of the business and the control techniques. For example, in case
of seasonal industries (i.e., food or clothing) the budget period should be a short one and should
cover one season. But in case of industries with heavy capital expenditure such as heavy
engineering works, the budget period should be long enough to meet the requirements of the
business. From control point of view, the budget period should be a short one so that the actual
results may be compared with the budget the budget each week end or month end discussed with
end discussed with the budget committee. Long term budgets should be supplemented by short
term budgets to make the budgetary control successful, as short term budgets will helping
exercising control over day-to-day operations. In short, the budget period should not be too long
so that there may be sufficient time before budget implementation. For most business, annual
budget is quite common because it compares with the financial accounting year.
There should be a regular time plan for budget preparation. It may be on the following lines.
 Long term budget for three to five years should be prepared for expansion and
modernization of the undertaking, introduction of new products or new projects and
undertaking heavy advertisement.
 Annual budgets considering with financial accounting year should be prepared for the
operations activities (i.e., sales, purchases and production etc., of the business).
The responsibility for preparation and implementation of the budgets may be fixed as under.
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BUDGETARY CONTROLLER
Although the chief executive finally responsible for the budgetary programme. It is better
if a large part of the supervisory responsibility is deluged to an official designated as budget
controller or Budget Director. Such a person should have knowledge of the technical details of
the business and report directly to the president or the chief executive.
ROLLING (CONTINUES) BUDGET
This is a budget which is updated continuously by adding a further period (a
month/quarter) and deducting a corresponding earlier period. Budgeting is a continuous process
under these methods of preparation of budget. Once the first period elapses, the forecast for the
period and forecast for the future period beyond the existing could not be predicted and forecast
reliably, this method is useful. However, it is a costly exercise but matched by considerable
reduction in operation variances.
ANNUAL VS CONTINUES BUDGETING SYSTEM
In some organization budgets are prepared on annual basis. But annual budgets may not
help the management to have control because variances due to rapidly changing conditions affect
the sales in quantity and prices, serve rapidly changing conditions affect the sales in quantity
prepared in accordance with this case plant capacity is limited. Therefore, production budget
should be prepared first and other budgets should follow the production budget.
Thus the budget relating to limiting factor should be prepared first and the other budgets
should be prepared in the light of that factor. All budgets should be co-coordinated keeping in
view the principal budget factor if the budgetary control is to achieve the desired results.
DIFFERENT TYPES OF BUDGET

Different types of budgets have been developed keeping in view the different purposes
they serve. Budgets can be classified according to:
 The coverage they encompass;
 The capacity to which they are related;
 The conditions on which they are based; and
 The periods which they cover.
22
FUNCTIONAL BUDGET
A functional budget is a budget which relates to any of the functions of an undertaking e.g.,
sales, production, research and development, cash etc, the following budgets are generally
prepared.
BUDGET PREPARED BY
1. Sales Budget including selling and Sales Manager
Distribution Cost Budget
2. Production Budget Production Manager
3. Material Budget Purchase Manager
4. Labor and personnel Manager Personnel Manager
5. Manufacturing Overheads Production Manager
6. Administration Overheads Finance Manager
7. Plant Utilization Cost Budget Production Manager
8. Capital Expenditure Budget Chief Executive
9. Research and development R & D Manager
Cost Budget
10. Cash Budget Finance Manager
SALES BUDGET
Sales budget is the most important budget and of primary importance. It forms the basis
on which all the budgets are built up. This budget is a forecast of quantities and values of sales to
be achieved in a budget in a budget period. Every effort should be made to ensure that its figures
are as accurate as possible because this is usually the starting budget (sales being limiting factor
on which all the other budgets are built up). The sales Manager should be made directly
responsible to products, sales territories, types of customers; salesmen etc., in the preparation of
the sales budget, the sales manager should take into consideration the following factors:
1. Past Sales Figures and Trends.
2. Salesmen’s Estimation.
3. Plant Capacity.
4. Availability of Raw Material and other Supplies.
5. General Trade Prospects.
6. Orders in Hand.
7. Seasonal Fluctuations.
8. Financial Aspect.
9. Adequate Return on Capital Employed.
23
10. Competition.
11. Miscellaneous Considerations.
PRODUCTION BUDGET
Production budget is a forecast of the total output of the whole organization broken
down into estimates of output of each type of product with a scheduling of operations (by weeks
and months) to be performed and a forecast of the closing finished stock. This budget may be
expressed in quantitative (weight, units etc) financial (rupees) units or both.
This budget is prepared after taking into consideration the estimated opening stock, the
estimated sales and the desired closing finished stock of each product. The works manager is
responsible for the total production budget and the departmental mangers are responsible for the
following factors are considered.
The time lag between the production the production in the factor and sales to the factor
and sales to the customer should be considered so as to allow for the time required or the
dispatch of goods from the factory to the place of the customers.
The stock of goods to be maintained both at the factory’s go gown and at he sales centers.
The level of production needed to meet the sales programmed. Monthly production targets
should be fixed and it should be seen that production is kept more or less at uniform level
throughout the year. The material labor and plant requirements should be ascertained to have the
desired production to meet the sales programme.
The sales and the production are inter dependant because production budget is governed
by the sales budget and the sales budget is largely determined by the production capacity and the
production costs.
COST OF PRODUCTION BUDGET

After determining the volume of output the cost of procuring the output must be obtained
by preparing a cost of production budget. This budget is an estimate of cost of output planned for
a budget period and may be classified into material cost budget, labor cost budget and overhead
budget because cost of production includes material, labor and overheads.
MATERIAL BUDGET
In drawing up the production budget, one of the first requirements to be considered is
material. As we know, materials may be direct or indirect. The materials budget deals with the
requirements and procurement of direct materials. Indirect materials are dealt with under the
24
works overhead budget. The budget should be related to the production budget and the period of
the budget should be of short duration because this budget has an important bearing on the cash
budget.
PURCHASE BUDGET
Purchase Budget is mainly dependent on production budget and material requirement
budget. This budget provides information about the materials to be acquired from the market
during the budget period.
Purchase budget should be prepared by the purchase manager by getting relevant
information about capital items, tools general supplies and direct materials required during the
budget period from other related departments. Like other budgets, the purchase budget has to be
approved by the budget committee. After approval it becomes the responsibility of the purchase
officer to see that purchases are made as per the purchase budget. Sometimes additional
purchases which are not covered by the purchase budget are made under the following
circumstances.
DIRECT LABOR BUDGET
This budget gives as estimate of the requirements of direct labor essential to meet the
production target. This budget may be classified into labor requirements budget of the production
budget. The labor recruitment budget is developed on the basis of requirement of the production
budget given and detailed information regarding he different classes of labor e.g., fitters,
welders, turner, millers, and grinders and drillers etc., required for each deportment, their scales
of pay and hours to be spent. This budget is prepared with a view too enable the personnel
deportment to carry out programmers of training and transfer and to find out sources of labor
needed so that every effort may be made to remove difficulties arising in production the
available workers in each deportment, the expected changes in the labor force during the budget
period due to the labor turnover. This budget gives information about the personnel specification
for the jobs for which workers are to be recruited, the degree for skill and experience required
and the rates of pay. Where standard costing system is applied, the labor cost budget is
developed on the basis of standard labor cost per unit multiplied by the quality of anticipated
production determined in the production in the production budget. If standard costing system is
not being followed in the organization, the information of labor cost may be obtained from past
records or estimated cost.
25
MANUFACTURING OVERHEADS BUDGET
This budget gives an estimate of the works overhead expenses to be incurred in a budget
period to achieve the production target. The budget includes the cost of indirect material, indirect
labor and indirect works expenses. The budget may be classified into fixed cost, variable cost
and semi variable cost. It can be broken into departmental overhead budget to facilitate control.
In preparing the budget, fixed works overhead can be estimated on the basis of past information
after taking into consideration the expected changes which may occur during the budget period.
Variable expenses are estimated on the basis of the budgeted output because these expenses are
bound to change with the change in output.
ADMINISTRATIVE EXPENSES BUDGET
This budget covers the expenses incurred in framing policies, directing the organization
and controlling the business operation. In other words, the budget provides as estimated of the
expenses of the central office and of management salaries. The budget can be prepared with the
help of past experience and anticipated changes. Budget may be prepared be prepared for each
administration department so that responsibility for increasing such expenses. This budget covers
the expenses incurred in framing policies, directing the organization and controlling the business
operations in other words, the budget provides an executive. Much difficulty is not experiences
in developing such budget as most of the administration expenses are of a fixed nature. Although
fixed expenses remain constant and are not related to sale volume in the sort run, they are
dependent upon sales in the long run. With a small change in output, they do not change.
However, if there is persistent fall in output, administration expenses will have to be
reduced by discharging the services of some members of the staff and taking other economy
measures. On the other hand, with persistent increase in output or business activity,
administration expenses will increase but they may lag behind business activity.
BUDGETED INCOME STATEMENT

A budgeted income statement summarizes all the individual budgets i.e., sales budget,
cost of goods sold budget, selling budget, and administrative sales budget. This budget
26
determines income before taxes. If the tax rate is available net income after taxes can also be
computed.
SELLING AND DISTRIBUTION COSTS BUDGET
This budget is the forecast of the cost selling and distribution for budget period and is
clearly related to the sale budget. All expenses related to selling distribution of the various
products as indicated in the sales budget are included in it. These expenses are based on the
volume of sales set in the sales budget and budget and budgets are prepared for each of selling
and distribution overhead. Long term expenses
As advertisement are spread over more than one period. Selling and distribution
overheads are divided into fixed and variable category with reference to volume of sales.
Separate budgets are prepared for variable and fixed items of selling and distribution overheads.
Certain items of selling and distribution costs of transport department are included in the
departmental production cost budget from control point of view rather that including in selling
and distribution costs budget.
PLANT UTILIZATION BUDGET

This budget lays down the requirements of plant capacity to carry out the production as
per the production programme. This budget is terms of convenient physical units as weight or
number of products or working hours. The main functions of this budget are:
 It will show the machine load in each department during the Budget period.
 It will indicate the overloading on some departments, machine or group of machine and
alternative courses of actions as working overtime, off loading, procurement or expansion
of plants, sub-contracting etc., can be taken.
 Idle capacity in some departments may be utilized by making efforts to increase the
demand for the products by providing after sale service, conducting advertisement
campaign, reducing prices, introducting lucky prize coupons, recruiting efficient sales
staff etc.
CAPITAL EXPENDITURE BUDGET
27
The capital expenditure budget gives an estimate of the amount of capital that may be needed for
acquiring the assets required for fulfilling production requirements a specified in the production budget.
The budget is prepared after taking into consideration in the available productive capacities, probable
reallocation of the existing assets such as plant and equipment budget, building budget etc., The capital
expenditure budget is an important budget proving for acquisition of assets, necessitated by the following
factors:
RESEARCH AND DEVELOPMENT COST BUDGET
While developing research and development cost budget, it should be clear in mind that work
relating to research and development is different from that relating to the manufacturing function.
Manufacturing function gives quicker results than research and development which may go on for several
years. Therefore, these budgets are established on a long term basis; say for 5 to 10 years which can be
further subdivided into short term budgets on annual basis.
As a rule research workers are less cost conscious; so they are not susceptible to strict
control. A research and development budget is prepared taking into consideration the research
projects in hand and the new search and development projects to be taken up. Thus this budget
provides an estimate of the expenditure to be incurred on research and development during the
budget period.
After fixation of the research and development cost budget, the research executive fixes
priorities for the various research and development projects and submits research and
development project authorization forms to the budget committee. The projects are finally
approved by the senior executive. Before giving the approval, the expenditure on research and
development is matched against the benefits likely to be available of from the new project, after
the approval of the budget, a close watch is kept on the expenditure so that it may not exceed
budget provisions.
CASH (FINANCIAL) BUDGET
The cash budget can be prepared by any of the following method:
1. Receipts and payments method
2. The adjusted profit and loss method
3. The balance sheet method
RECEIPTS AND PAYMENTS METHOD
28
In case of this method the case receipts from various sources and the cash payments to
various agencies are estimated. The opening balance of cash, estimated cash receipts are added
and from the total of estimated cash payments are deducted to find out of the closing balance.
THE ADJUSTED PROFIT AND LOSS METHOD
In case of this method the cash budget is prepared in the basis of opening cash and bank
balance of the various assets and liabilities.
THE BALANCE SHEET METHOD
With the help of budget balances at end except cash and bank balances, a budgeted
balances sheet can be prepared and the balancing figure would be the estimated closing
cash/bank balances.
Thus under this method, closing balances, other than cash/bank will have to be found
out first to be put in the budget balance sheet. This can be done by adjusting the anticipated.
MASTER BUDGET (FINALIZED PROFIT PLAN)
The master budget is consolidated summary of the various functional budgets. It has
been defined as “a summary of the budget schedules in capsule from made for the purpose of
presenting, in one report, the highlights of the budget forecast”. The definition of this budget
given by the Chartered Institute of Management Accountant, England, is as follows:
“Thus summery budget incorporating its components functional budgets and which are
finally approved and employed”
The master budget is prepared by the budget committee on the basis of coordinated
functional budgets and becomes the target for the company during the budget period when it is
finally approved by the committee. This budget summaries functional budget to produce a
budgeted profit and loss account and a Budget Balance Sheet as at the end of the budget period.
FIXED BUDGET
This budget is drawn for one level of activity one set of conditions. It has been
defined as a budget which is designed to remain unchanged irrespective of the volume of output
or turnover attained. It is rigid budget and is drawn on the assumption that there will be no
change in the budgeted level of activity corresponds to the budgeted level of activity. But in
practice, the level of activity and set conditions will change as a result of materials and power,
acute competition etc. it is hardly of any use as a mechanism of budgetary control because it does
29
not make any distinction between fixed as result of change in cost due to change in level of
activity. It is also not helpful at all in the fixation of price and submission of tenders.
FLEXIBLE BUDGET
The Chartered Institute of Management Accounts, defines a flexible budget also
called sliding scale budget as a budget which, by recognizing the difference in behavior between
field and variable costs in relation to fluctuations in output, turnover, or other variable factors
such a number of employees, is designed to change appropriately with such fluctuations. This, a
flexible budget gives different budgeted costs for different levels of activity. A flexible budget
making an intelligent classification of all expenses between fixed, semi-variable and variable
because the usefulness of such a budget depend upon the accuracy with which the expenses can
be classified. Such a budget is prescribed in the following cases. Where the level of activity
during the year varies from period, either due to the seasonal nature of the industry or to
variation in demand. Where the business is a new one and it is difficult to foresee the demand.
BASIC BUDGET
A basic budget has been defined as a budget which is prepared for use unaltered over a
long period of time. This does not take into consideration current conditions can be attainable
under standard conditions.
CURRENT BUDGET
A current budget can be defined a budget which is related to the current conditions and is
prepared for use over a short period of time. This budget is more useful than a basic budget, as a
target of lays down will be corrected to current conditions.
LONG TERM BUDGET
A long term budget can be defined as a budget which is prepared for periods longer than
a year. These budgets help in business forecasting and forward planning. Capital Expenditure
budget and research and development budget are examples of long term budgets.
SHORT TERM BUDGET
This budget is defined as a budget which is prepared for period less than year and is very
useful to lower levels of management for control purposes.
30
PERFORMANCE BUDGET
Performance budgeting has its origin in U.S.A after Second World War It tries to
rectify some of the shortcoming in the traditional budget. In the traditional budget amount are
earmarked for the objects of expenditures such as salaries , travel, office expenses, grant in aid
etc. in such system of building the money concept was given more prominence i.e. estimating or
projecting rupee value for the various accounting heads or classification of revenue and cost.
Such system of budgeting was more popularly used in government department and many
business enterprises. But is such system of budgeting control of performance in terms of physical
units or the related costs cannot be achieved.
ZERO BASED BUDGETS
This budget is the preparation of budget starting from Zero or from a clean state. As a
new technique it was proposed by Patter Peal of Texas Instruments inc., U.S.A. This technique
was introduced in the budgeting in the state of Georgia by Mr. Jimmy Carter who was then the
Government of that state. ZBB was tried in federal budgeting as a means of controlling state
expenditures.
The use of zero based budgeting as a managerial tool has become increasingly popular
since the early 1970’s it is steadily gaining acceptance in the business world because it is
providing it utility as a tool integrating the managerial function of planning and control. ZBB is
not based on the incremental approach and previous year’s figures are not adopted as a base.
Rather, zero is taken as a base the name goes. Taking zero as a base, a budget is
developed on the basis of likely activities for the future period. In ZBB, by the budget from the
past, the past mistakes are not repeated. Funds required for any for the next budget period should
be obtained by presenting a convincing case. Will Funds will not be available as a matter of
course.
ADVANTAGES OF BUDGETARY CONTROL
The most important advantage of a budgetary control is to enable management to
conduct business in the most effective manner because budgets are prepared are to get the
effective utilization of resources and the realization of objectives as efficiently.
It lies down as objective for the business as a whole. Even though a monetary reward is
not offered the budget becomes a game- a goal to achieve or a target to short at and hence it is
more likely to be achieved or hit that if there was no predetermined goal or target. The budget is
31
an impersonal policeman that maintains ordered effort and brings about efficiency in result. It
ensures effective utilization of men, materials, machines and money because production is
planned according to the availability of these items.
Everyone working in the concern knows what exactly to do because budgetary control
laid emphasis on the staff organization. It ensures that individual responsibilities are clearly
defined and that the required authority commensurate with the responsibility is delegated so that
buck passing is prevented when the budgeted results are not achieved. Budgetary control takes
the help of different levels of management in the preparations of the budget. Budget finally
approved represents the judgment of the entire organization and not merely that of an individual
or a group of individuals. Thus, it ensures team work.
Management by exception is possible because the comparision of actual and budgeted
results points out weak spots so that remedial action is taken against weak spots which are not in
conformity with the budgeted performance.
It is helpful in reviewing current trends in the business and in determining further policy
of the business current and future trends are studied in the preparation of the budget.
DIS-ADVANTAGES OF A BUDGET
While budget may be essential part of activity they do have number of
disadvantages, particularly in perception terms.
32
RESEARCH METHODOLOGY
The study is based entirely on the data that has collected. This data for every study is of 2
types.
1. Primary Data
Primary data as it is known as synonymous to first hand information that is exclusively
collected for the sake of the study.
2. Secondary Data
Secondary data that has been already collected for some other purpose and now which is
being for the study.
 Initially preliminary discussion with the general managers and chief accountant was
carried on.
 Information of the theoretical part was taken from reference book.
 Profit/Loss and Balance Sheets are taken from company's annual reports.
The various concepts covered in the report are calculated by studying Balance Sheet and
Profit/Loss accounts.
33
NEED OF THE STUDY
1. To know about the budget and budgetary control of a “PRUDENTIAL SUGAR

CORPORATION LIMITED”.
2. To know about the status of a company by different financial budgetary policies.
3. To know about the present impact of budgetary control on the financial position of the
company.
4. To know about the fast performance to based on future Estimation of the budgetary
control of the techniques.
5. Budgetary control is a strong tool of business is to maximize profits.
6. The management is therefore always trying to focus on the proper planning, effective
coordination and control in order to maximize profits.
34
OBJECTIVES OF THE STUDY
7. The study is primarily intended to scan the financial health condition of “PRUDENTIAL
SUGAR CORPORATION LIMITED”.
1. To study the financial strength of the firm.

2. To suggest suitable solution based on the findings of the study.
3. To study the budgeted estimates and accruals of the revenue expenditure and revenue
receipts.
4. To study the variations of the accruals from the budgeted estimates.
5. To study variations of components of revenue budget and components of operational
expenditure budget.
6. To analyze and compare the variation of revenue budget and operational budget.
35
SCOPE OF THE STUDY
The scope of the study limited to collecting the data published in the report of the
company and opinions of the employee of the organization with reference to the objective stated
above and theoretical framework of the data. With a view to suggest solutions to various
problems relating to budget and budgetary control. The study is limited based on data provided
by the company’s financial statements. So the limitations of the statements are equally applicable
of this study.
36
LIMITATIONS OF THE STUDY
 The information from annual reports is insufficient to calculate few ratios.

 Detailed analysis could not be carried for the project work because of the limited time
span.
 Since financial matters are sensitive in nature these same could not be acquired easily.
 Estimates are used as basis for budget plan and estimates are based mostly 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 be to
restricted use of resources. Budgets an often taken as limits.
 Efforts may therefore not be made to exceed the performance beyond the budgeted
targets.
37
DATA ANALYSIS
CALCULATION OF REVENUE EXPENDITURE BUDGET FOR THE YEAR
2012-2013
ACTUAL
BUDGET IN VARIANCE IN
S.NO. DESCRIPTION IN CRORES CRORES CRORES
1 Material Consumed 378,868,335 344,425,759 34,442,576

Payment and Benefit to
2 Employees 27,980,039 26,903,884 1,076,155
3 Manufacturing Expenses 37,063,463 35,983,944 1,079,518
4 Administrative Expenses 54,769,581 53,695,668 1,073,913
5 Selling Expenses 54,269,617 52,182,324 2,087,293
6 Financial Charges 36,774,806 35,703,695 1,071,111
7 Depreciation 12,573,897 12,327,350 246,547
Total 602,299,738 561,222,625 41,077,114
CALCULATION OF REVENUE RECEIPTS BUDGET FOR THE YEAR 2012-2013

VARIANCE
BUDGET ACTUAL IN IN
1 Sales & Other Receipts 211,528,170 201,455,400 10,072,770
2 Other Income 39,995,868 38,457,565 1,538,303
3 Increase in Inventors 320,893,473 321,054,000 (160,527)
Total 572,417,511 560,966,965 11,450,546
38
CALCULATION OF REVENUE EXPENDITURE BUDGET FOR THE YEAR
2013-2014
VARIANCE
BUDGET ACTUAL IN IN

2 Employees 30,154,441 28,994,655 1,159,786
7 Depreciation 11,945,202 11,710,983 234,220
Total 648,829,113 604,470,464 44,358,648
CALCULATION OF REVENUE RECEIPTS BUDGET FOR THE YEAR 2013-2014

VARIANCE
BUDGET ACTUAL IN IN
2 Other Income 40,151,868 38,607,565 1,544,303
Total 618,023,226 604,618,585 13,404,641
CALCULATION OF REVENU EXPENDITURE BUDGET

39
FOR THE YEAR 2014- 2015
BUDGET ACTUAL IN VARIANCE
S.NO. DESCRIPTION IN CRORES CRORES IN CRORES


2 Employees 33,328,705 32,046,832 1,281,873
7 Depreciation 11,347,942 11,125,433 222,509
Total 720,866,128 666,282,846 54,583,282
CALCULATION OF REVENUE RECEIPTS BUDGET
FOR THE YEAR 2014- 2015

VARIANCE
BUDGET ACTUAL IN IN
2 Other Income 40,588,931 38,656,125 1,932,806
3 Increase in Inventors 327,801,942 327,507,185 294,756
Total 688,704,959 668,346,410 20,358,549
CALCULATION OF REVENUE EXPENDITURE BUDGET

FOR THE YEAR 2015 - 2016
40

2 Employees 37,021,913 35,597,993 1,423,920
7 Depreciation 10,780,545 10,569,162 211,383
Total 801,144,248 740,328,023 60,816,225

VARIANCE
BUDGET ACTUAL IN IN
2 Other Income 42,024,586 40,023,415 2,001,171
Total 765,966,213 742,490,885 23,475,328
CALCULATION OF REVENUE EXPENDITURE BUDGET

41
1 Material Consumed 519,276,114
560,818,203 41,542,089
2 Payment and Benefit to 40,221,484
Employees 41,428,128 1,206,645
3 Manufacturing Expenses 53,796,235
56,486,046 2,689,812
4 Administrative Expenses 80,275,378
81,078,132 802,754
5 Selling Expenses 78,012,920
81,133,436 3,120,517
6 Financial Charges 53,377,261
54,978,579 1,601,318
7 Depreciation 10,040,704
10,241,518 200,814
Total 835,000,094
886,164,042 51,163,948

VARIANCE
BUDGET ACTUAL IN IN
2 Other Income 41,946,856 40,333,515 1,613,341
Total 863,372,642 839,030,111 24,342,531
MATERIAL CONSUMED
TABLE 1
42
YEAR BUDGETED ACTUALS
2012-2013 378868335 344425759

2013-2014 409640113 372400102
2014-2015 456877657 411601493
2015-2016 509727665 459214113
2016-2017 560818203 519276114
CHART 1
A Graph Showing the Material Consumed
60000000
50000000
40000000
30000000
20000000 BUDGETED
10000000 ACTUALS
INTERPRETATION
The material consumed table shows that the amount of Budget is high when comparing to
actual amounts.
PAYMENT AND BENEFIT TO EMPLOYEES
TABLE 2
43
2012-2013 27980039 26903884

2013-2014 30154441 28994655
2014-2015 33328705 32046832
2015-2016 37021913 35597993
2016-2017 41428128 40221484
CHART 2
A Graph Showing the Payment and Benefit to Employees
45000000
40000000
35000000
30000000
25000000
20000000
15000000 BUDGETED
10000000 ACTUALS
5000000
0
INTERPRETATION
The employee remuneration & benefits are very high. That is in the financial year
2011-12 to 2012-13.
MANUFACTURING EXPENSES
TABLE 3
44
2012-2013 37063463 35983944
2013-2014 39943762 38780351
2014-2015 44577143 42862637
2015-2016 49516809 47612316
2016-2017 56486046 53796235
CHART 3
A Graph Showing the Manufacturing Expenses
60000000
50000000
40000000
30000000
20000000 BUDGETED
ACTUALS
10000000
0
INTERPRETATION
Manufacturing expenses inferred from the table to estimate the budget and actual
amounts are fluctuating year by year.
ADMINISTRATIVE EXPENSES
TABLE 4
2012-2013 54769581 53695668

2013-2014 59025869 57868499
45
2014-2015 65239337 63960135
2015-2016 72468615 71047662
2016-2017 81078132 80275378
CHART 4
A Graph Showing the Administrative Expenses
90000000
80000000
70000000
60000000
50000000
40000000
30000000 BUDGETED
20000000 ACTUALS
10000000
0
INTERPRETATION
Administration and operation expenditure is in the financial year 2008-09 up

to 2012-13 step by step increased.
SELLING EXPENSES
TABLE 5
2012-2013 54269617 52182324

2013-2014 58487052 56237550
2014-2015 65265375 62157500
2015-2016 72497538 69045274
46
2016-2017 81133436 78012920
CHART 5
A Graph Showing the Selling Expenses
90000000
80000000
70000000
60000000
50000000
40000000
30000000 BUDGETED
20000000 ACTUALS
10000000
0
INTERPRETATION
The selling expense based on actual amount was decreased. At The same time
budgeted amount was increased.
FINANCIAL CHARGES
TABLE 6
2012-2013 36774806 35703695

2013-2014 39632673 38478324
2014-2015 44229969 42528816
47
2015-2016 49131164 47241504
2016-2017 54978579 53377261
CHART 6
A Graph Showing the Financial Charges
60000000
50000000
40000000
30000000
20000000 BUDGETED
10000000 ACTUALS
INTERPRETATION
The budgeted amount was increased year by year.
DEPRECIATION
TABLE 7
2012-2013 12573897 12327350

2013-2014 11945202 11710983
2014-2015 11347943 11125433
2015-2016 10780545 10569162
48
2016-2017 10241518 10040704
CHART 7
A Graph Showing The Depreciation
14000000
12000000
10000000
8000000
6000000
4000000 BUDGETED
2000000 ACTUALS
0
INTERPRETATION
Depreciation in Prudential Company is the actual are decreased for 2009-12. It is not
better to the company
SALES & OTHER RECEIPTS

TABLE 8
2012-2013 211528170 201455400

2013-2014 253833804 241746480
2014-2015 320314086 302183100
2015-2016 393986326 371685213
49
2016-2017 487836842 464606516
CHART 8
A Graph Showing the Sales & Other Receipts
60000000
50000000
40000000
30000000
20000000 BUDGETED
ACTUALS
10000000
0
INTERPRETATION
The sale in the prudential company was increased year by year.
OTHER INCOME
TABLE 9
2012-2013 39995868 38457565

2013-2014 40151868 38607565
2014-2015 40588931 38656125
2015-2016 42024586 40023415
50
2016-2017 41946856 40333515
CHART 9
A Graph Showing the Other Income
43000000
42000000
41000000
40000000
39000000
BUDGETED
38000000
ACTUALS
37000000
36000000
INTERPRETATION
The other income in Prudential company is fluctuates year by year.
INCREASE IN INVENTORS
TABLE 10
2012-2013 320893473 321054000

2013-2014 324037555 324264540
2014-2015 327801942 327507185
2015-2016 329955302 330782257
51
2016-2017 333588945 334090080
CHART 10
A Graph Showing the Increase In Inventors
34000000
33500000
33000000
32500000
BUDGETED
32000000
ACTUALS
31500000
31000000
INTERPRETATION
The budgeted amount was increasing year by year at the same time actual amount
also increased.
FINDINGS
1. The material consumed table shows that the amount of Budget is high when comparing to
actual amounts.
2. The employee remuneration & benefits are very high. That is in the financial year 2012-
13 to 2013-14.
3. Manufacturing expenses inferred from the table to estimate the budget and actual
amounts are fluctuating year by year.
52
4. Administration and operation expenditure is in the financial year 2012-13 up to 2014-15
step by step increased.
5. The selling expense based on actual amount was decreased. At The same time budgeted
amount was increased.
6. The budgeted amount was increased year by year.
7. Depreciation in Prudential Company is the actual are decreased for 2012-16. It is not
better to the company
SUGGESTIONS
1. It is recommended to the company that every item to be considered when categorizing the
items into budgets.
2. As company is not using any budget techniques we can suggest the company to follow
budget techniques for better and effective budget and budgetary control.
3. The budget estimations should be made that they will reach with the actual for every year
with very less variation.
53
4. The revenue expenditure will be spent based on the production target irrespective of the
revenue receipts.
5. Employee remuneration and benefits is increased year by year. The company should be
reached the budgeted amount for employee remuneration.
6. The company should maintain the administration expenses budget amount in the
preceding years expect last year.
7. The firm should establish optimum capital structure.
8. Avoid wastage of sources.
CONCLUSION
In concern with overhead expenses, it will also be with minimum variations between
budget estimates and actual. Any changes in the items of expenditure, will lead to the review in
the budget estimates by the account and finance department. It is also suggested to the company
that budget techniques will be very useful to control and manage cost effectively.
54
PROFIT AND LOSS ACCOUNT FOR THE YEAR 2012- 2013
Particulars Rupees
Income
Gross Sales 201,455,400
Total Sales 201,455,400
Less: Exercise duty and taxes 469,391
Net Sales 200,986,009
Other Income 38,457,565
Increase / ( decrease ) in Stock 321,054,000
TOTAL 560,497,574
55

EXPENSES
Material consumed 344,425,759
Payment and Benefits to employees 26,903,884
Manufacturing expenses 35,983,944
Administrative expenses 53,695,668
Selling expenses 52,182,324
Financial charges 35,703,695
Depreciation 12,327,350
Total 561,222,625
Profit / loss before tax (725,050)
Less: provision for taxation
Current year -
Earlier years -
Fringe benefit tax -
Deferred tax -

Profit and loss after tax (725,050)
Loss brought forward from previous year
Balance carreid forward to balance sheet (725,050)

BALANCE SHEET AS ON 31st MARCH 2013

Particulars Rupees Rupees
SOURCES OF FUNDS
Share holder fund 124,500,000
Share Capital -
Share application money
Loan Funds
Secured loans 400,578,455
Unsecured loans 12,545,600
Reserves and Surplus 4,500,000
Deferred tax liablility -
TOTAL 542,124,055
APPLICATION OF FUNDS
Fixed assets :
Gross block 246,547,000
Less: accumulated Depreciation 12,327,350
Net block 234,219,650
Capital Work in progress 2,565,870
Investments
Current assets loans and advances
Inventories 320,370,270
Sundry Debtors 5,856,540
Cash and Bank balances 11,141,776
Other current assets 11,040,485
56
Loans advances & deposits 22,841,200
371,250,271
Less: current liabilities & Provisions 67,452,000
Net current assets 303,798,271

Deferred Tax Asset -
Miscellaneous Expenditure
Deferred Revenue expenditure 815,214
Profit & Loss account 725,050
TOTAL 542,124,055
PROFIT AND LOSS ACCOUNT FOR THE YEAR 2013 - 2014

Particulars Rupees
Income
Net Sales 241,183,211
TOTAL 604,055,316

EXPENSES
Total 604,470,464
Profit / loss before tax (415,148)
Current year -
Earlier years -
Deferred tax -

Profit and loss after tax (415,148)
57
Balance carreid forward to balance sheet (415,148)


SOURCES OF FUNDS
Share Capital -
Loan Funds
Deferred tax liablility -
TOTAL 502,066,210
Fixed assets :
Net block 222,508,668
Investments
58
334,233,305

Deferred Tax Asset
TOTAL 502,066,210
PROFIT AND LOSS ACCOUNT FOR THE YEAR 2014- 2015

Particulars Rupees
Income
Net Sales 301,479,014
TOTAL 667,642,324

EXPENSES
Total 666,282,846
Profit / loss before tax 1,359,478
Current year -
Earlier years -
Deferred tax -

Profit and loss after tax 1,359,478
59
Balance carreid forward to balance sheet 1,359,478


SOURCES OF FUNDS
Share Capital -
Loan Funds
Profit & Loss account 1,359,478
TOTAL 467,373,627
Fixed assets :
Net block 211,383,234
Investments
306,927,645

60
TOTAL 467,373,627

Particulars Rupees
Income
Net Sales 370,819,187
TOTAL 741,624,859

EXPENSES
Total 740,328,023
Current year -
Earlier years -
Deferred tax -


61
SOURCES OF FUNDS
Share Capital -
Loan Funds
TOTAL 451,114,130
Fixed assets :
Net block 200,814,072
Investments
298,871,833

Deferred Tax Asset
TOTAL 451,114,130
62
Particulars Rupees
Income
Less: Exercise duty and taxes 1,082,533
Net Sales 463,523,983
TOTAL 837,947,578

EXPENSES
Total 835,000,094
Current year -
Earlier years -
Deferred tax -


63
SOURCES OF FUNDS
Share Capital -
Loan Funds
TOTAL 419,722,174
Fixed assets :
Net block 190,773,369
Investments
277,484,976

64
TOTAL 419,722,174
BIBLIOGRAPHY
AUTHOR NAME TITLE OF EDITION PUBLISHER

THE BOOK
I.M.Pandey Financial Ninth Edition Vikas Publishing

Management House Pvt.Ltd.
Prasanna Chandra Financial Seventh Edition Tata McGrew-Hill

Management Co.Ltd.
M.Y.Khan Financial Fourth Edition Tata McGrew-Hill

& P.K.Jain Management Co.Ltd.
REPORTS
Annual reports of SV CO-OPERATIVE SUGAR FACTORY LIMITED
WEBSITE
www.google.co.in
www.wikipedia.com
www.svcooperativesugars.com
65
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INTRODUCTION

Asst. General Manager

Manager Senior Senior

Skilled Accountants Skilled

Semi-Skilled Clerks Unskilled

Milk & Cane Clarification

Clear juice heater

Pricing Strategy of the Company

BUDGET, BUDGETING AND BUDGETARY CONTROL

STEPS IN BUDGETING CONTROL

 ORGANIZATION FOR BUDGETING

DIFFERENT TYPES OF BUDGET

COST OF PRODUCTION BUDGET

BUDGETED INCOME STATEMENT

PLANT UTILIZATION BUDGET

CAPITAL EXPENDITURE BUDGET

RESEARCH AND DEVELOPMENT COST BUDGET

1. To know about the budget and budgetary control of a “PRUDENTIAL SUGAR

2. To know about the status of a company by different financial budgetary policies.

5. Budgetary control is a strong tool of business is to maximize profits.

1. To study the financial strength of the firm.

 The information from annual reports is insufficient to calculate few ratios.

1 Material Consumed 378,868,335 344,425,759 34,442,576

3 Manufacturing Expenses 37,063,463 35,983,944 1,079,518

4 Administrative Expenses 54,769,581 53,695,668 1,073,913

5 Selling Expenses 54,269,617 52,182,324 2,087,293

6 Financial Charges 36,774,806 35,703,695 1,071,111

7 Depreciation 12,573,897 12,327,350 246,547

Total 602,299,738 561,222,625 41,077,114

CALCULATION OF REVENUE RECEIPTS BUDGET FOR THE YEAR 2012-2013

1 Sales & Other Receipts 211,528,170 201,455,400 10,072,770

2 Other Income 39,995,868 38,457,565 1,538,303

3 Increase in Inventors 320,893,473 321,054,000 (160,527)

Total 572,417,511 560,966,965 11,450,546

1 Material Consumed 409,640,113 372,400,102 37,240,010

3 Manufacturing Expenses 39,943,762 38,780,351 1,163,411

4 Administrative Expenses 59,025,869 57,868,499 1,157,370

5 Selling Expenses 58,487,052 56,237,550 2,249,502

6 Financial Charges 39,632,673 38,478,324 1,154,350

7 Depreciation 11,945,202 11,710,983 234,220

Total 648,829,113 604,470,464 44,358,648

CALCULATION OF REVENUE RECEIPTS BUDGET FOR THE YEAR 2013-2014

1 Sales & Other Receipts 253,833,804 241,746,480 12,087,324

2 Other Income 40,151,868 38,607,565 1,544,303

3 Increase in Inventors 324,037,555 324,264,540 (226,985)

Total 618,023,226 604,618,585 13,404,641

CALCULATION OF REVENU EXPENDITURE BUDGET

1 Material Consumed 456,877,657 411,601,493 45,276,164

3 Manufacturing Expenses 44,577,143 42,862,637 1,714,505

4 Administrative Expenses 65,239,337 63,960,135 1,279,203

5 Selling Expenses 65,265,375 62,157,500 3,107,875

6 Financial Charges 44,229,969 42,528,816 1,701,153

7 Depreciation 11,347,942 11,125,433 222,509

Total 720,866,128 666,282,846 54,583,282

CALCULATION OF REVENUE RECEIPTS BUDGET

FOR THE YEAR 2014- 2015

1 Sales & Other Receipts 320,314,086 302,183,100 18,130,986

2 Other Income 40,588,931 38,656,125 1,932,806

3 Increase in Inventors 327,801,942 327,507,185 294,756

Total 688,704,959 668,346,410 20,358,549

CALCULATION OF REVENUE EXPENDITURE BUDGET

1 Material Consumed 509,727,665 459,214,113 50,513,552