A Project Report On

“Analysis of Effect of Budgeting and

Budgetary Control in Minimizing the
Cost and Improving the Organizational
Effectiveness”

In Reference to
Balmer Lawrie & Co.Ltd
 Acknowledgement

I pleased to present my project report on “Analysis of effect of budgeting

and budgetary control in minimizing the cost and maximizing the
organizational effectiveness” in the printed form. I feel grateful to
Mr.S.SUNDRA KUMAR Manager of Accounting and Finance Department,
Balmer Lawrie & Co.Ltd for his extended support, valuable suggestions,
comments, and guidance in completing the research study. I would also
like to thank all the workers and employees who had given their valuable
time and guidance, it is a high privilege for me to express my deep sense
of gratitude to my internal guide Mr. Srinivas Gumparthi who helped me
in the completion of the project, especially my internal project guide who
was always there at hour of need.

VIGNESHWARA RAO.B
Reg.no:208001114
 CONTENTS
1. CHAPTER-I COMPANY PROFILE
1.1 CORPORATE SOCIAL RESPONSIBLITY
1.2 VISION MISSION AND OBJECTIVE STATEMENT
1.3 BUDGETING TOWARDS CSR
1.4 DIVIDEND PAYMENT POLICY
1.5 ENVIRONMENT / SUSTAINABLITY POLICY
1.6 ENVIRONMENT
1.7 HISTORY
1.8 NATIONALISATION OF INDUSTRIES
1.9 FORMATION OF BALMER LAWRIE
2. CHAPTER-II BUDGETING AND BUDGETARY CONTROL
2.1 CHARACTERISTICS OF BUDGET
2.2 BUDGETARY CONTROL
2.3 OBJECTIVES
2.4 LIMITATIONS
2.5 TYPES OF BUDGETS
2.6 CLASSIFICATION OF BUDGET
2.7 FUNCTIONS OF CASH BUDGET
2.8. CLASSIFICATION ON FLEXIBLITY
3. CHAPTER-III BUDGETING IN BALMER LAWRIE
3.1 TYPES OF BUDGETS PREPARED IN BALMER LAWRIE
3.2 BUDGET TECHNIQUES
3.3 SBU UNDERTAKEN BY BALMER LAWRIE
4. CHAPTER-IV RESEARCH DESIGN
4.1 RESEARCH PROBLEM
4.2 OBJECTIVE OF THE STUDY
4.3 RESEARCH METHADOLOGY
5. CHAPTER-V DATA ANALYSIS AND FINDINGS
5.2 VARIANCE ANALYSIS AND FINDINGS
6. CONCLUSION
7. CHAPTER VII LIMITATIONS
8. SUGGESTIONS
BIBILOGRAPHY
ANNEXURE: REVENUE BUDGET
 1.CHAPTER-I COMPANY PROFILE

COMPANY: Balmer Lawrie & Co.Ltd

TYPE: Public Sector company under the Ministry of Petroleum & Natural
Gas of India.
INDUSTRY: Petroleum Products
FORMED: 1867
HEADQUATERS: Kolkata (Calcutta)
WEBSITE: www.balmerlawrie.com
Balmer Lawrie & Co. Ltd. (BL) is a government owned Strategic
Business Unit and Explorer and Manufacturer. It is under the ownership of
Ministry of petroleum and Natural Gas, Government of India. It was a
partnership firm founded on 1 February 1867 in Calcutta, British India by
two Scotsmen: George Stephen Balmer and Alexander Lawrie. Today
Balmer Lawrie is a government corporation with a turnover of ₹1612
crores and a profit of ₹232 crores as of 31 March 2020.

It became a private limited company in 1924 with a paid-up share capital

of ₹40 lakhs, a public limited company in 1936 and then a Government
of India Enterprise in 1972 During FY 2020–21, the corporation earned
a revenue of ₹1,528 crore (US$200 million).It has six Strategic Business
Units – Industrial Packaging, Greases & Lubricants, Leather Chemicals,
Travel & Vacations, Logistics and Refinery & Oil Field Services, with
offices spread across the country and abroad. Balmer Lawrie has grown
enormously in the last 153 years and has become the market leader in
Steel Barrels, Industrial Greases & Specialty Lubricants, Corporate
Travel and Logistics Services.

It has responded very well to the demands of an ever-changing

environment and has taken full advantage of every opportunity to
innovate. Balmer Lawrie also grew inorganically through various JVs
over the period.
Department of Investment and Public Asset Management (DIPAM) has a
special focus on the divestment of this company as the government wants
to exit from all the businesses which do not have any strategic importance
and it is not important for the government to run those businesses.

1.1. Corporate Social Responsibility (CSR) of Balmer Lawrie

Balmer Lawrie believes that good financial results are not an end to
assessing the success of any business; it is a means to achieving a higher
socio-economic goal. In pursuance of this belief, Balmer Lawrie’s CSR
initiatives are driven by two Flagship Programs - Balmer Lawrie Initiative
for Self-Sustenance [BLISS] and Samaj Mein Balmer Lawrie [SAMBAL].
While the first Program is directed at providing & improving the long-term
economic sustenance of the underprivileged, the second Program aims at
improving the living standards and quality of life of the population in and
around the Company’s work-centers. Balmer Lawrie has developed this
Corporate Social Responsibility (CSR) and Sustainability Policy in
consonance with the CSR Policy framework enshrined in the section-135
of Companies Act, 2013 (Act) and in accordance with the Companies (CSR
Policy) Rules, 2014 (Rules), Companies (CSR Policy) Amendment Rules,
2021, notified by Ministry of Corporate Affairs. Government of India and
Guidelines on Corporate Social Responsibility and Sustainability for
Central Public Sector Enterprises issued by Department of Public
Enterprises, Government of India (DPE Guidelines, 2014) which are
effective from 1st April 2014.

It shall apply to all CSR Projects Programmes undertaken by Balmer

Lawrie. Any point not covered by this Policy would be interpreted in
accordance with the existing Companies (CSR Policy) Rules and DPE
Guidelines, 2014, with the former taking precedence over the latter in case
of any conflict.

As per section 135 of the Companies Act, the Company will report reasons
for underspending of the allocated CSR budget of the current financial year
in the template provided by the Ministry of Corporate Affairs. As of the
Financial Year of March 2021 Balmer Lawrie & Co.Ltd has Spent
Rs.129.40 Lakhs for the Purpose of CSR activities for Social Development
in and around the Company.

As of the Financial Year of March 2021 Balmer Lawrie & Co.Ltd has
Spent Rs.129.40 Lakhs for the Purpose of CSR activities for Social
Development in and around the Company. Balmer Lawrie has been
undertaking various initiatives to contain the spread of COVID-19 in the
workplace and the communities residing around its plants and offices The
Company contributed Rs 1,28,25,899.00 (Rupees One crore, twenty-eight
lakh, twenty-five thousand and eight hundred and ninety-nine) to the Prime
Minister’s Citizen Assistance and Relief in Emergency Situations (PM
CARES) Fund to help fight the COVID-19 pandemic in the country.
Balmer Lawrie allocated Rs 1 crore from its Corporate Social
Responsibility (CSR) Fund and the rest of the amount was voluntary
contribution of one day’s salary by the employees of the Company. Balmer
Lawrie is also installing Pressure Swing Adsorption (PSA) oxygen plant
of adequate capacity at Government hospitals in the state of Karnataka.

Besides following all COVID-19 protocols in the workplace, masks,

sanitizers, and gloves are being distributed periodically in communities
residing around our units' establishments across the country.

Vaccination programs are being conducted for employees and their

families in units and establishments pan India.
 Department of Investment and Public Asset Management (DIPAM) has
a special focus on the divestment of this company as the government
wants to exit from all the businesses which do not have any strategic
importance and it is not important for the government to run those
businesses. The CSR committee of Balmer Lawrie is responsible for the
implementation of various CSR programmes and projects. Balmer
Lawrie believes in inclusive growth and has entered a partnership with
local authorities or NGOs to implement CSR programmes and projects.
A few partners NGOs/local authorities are listed below:

• Indian Institute of Cerebral Palsy (IICP)

• Integrated Tribal Development Agency (ITDA)
• Ekal Vidyalaya's, One Teacher Schools (OTS) by Friends of Tribal
society
• Kolkata (Calcutta) Rescue, West Bengal
• Ramakrishna Mission
• Saksham Foundation, Navi Mumbai
• SDI- Bhubaneswar, Vishakhapatnam, Rae Bareli, Kochi, Ahmedabad
• Helpage India
• Swadeep Shikshan Sansthan
1.2. VISION, MISSION & OBJECTIVE STATEMENT

Vision
“We are committed to serve the community by empowering it to achieve
its aspirations and improving its overall quality of life.

Mission
To undertake CSR activities in chosen areas through partnerships,
particularly for the communities around us and weaker sections of society
by supporting need-based initiatives.
 Objective

• Improve the health and nutrition status of communities, particularly

vulnerable groups such as women, children, and elderly by improving
health infrastructure and facilitating service provision.
• Focus on quality of education and encourage children from
marginalized sections and girls to complete school education and opt
for higher education.
• To focus on livelihoods and skill development to provide opportunities
to women and youth and make them self-reliant
• Initiate holistic development programs for differently abled children
and orphans with a view to providing them opportunities to lead a
meaningful life.
• To support the national efforts in rehabilitation and relief post
unfortunate natural disasters
• Affirmative action to provide opportunities to marginalized
communities.
1.3. Budgeting towards CSR:
The Company’s Board of Directors shall ensure that in each financial year
the Company spends at least 2% of the average Net Profit made during the
three immediately preceding financial years.
“Net profit” means the net profit as per the financial statement of the
company prepared in accordance with the applicable provisions of the Act,
but shall not include the following:

• Any profit arising from any overseas branch or branches of the company,
whether operated as a separate company or otherwise,
• Any dividend received from other companies in India which are covered
under and complying with the provisions of section 135 of the Act.
• activities undertaken in pursuance of normal course of business of the
company: Provided that any company engaged in research and
development activity of new vaccine, drugs and medical devices in their
normal course of business may undertake research and development
activity of new vaccine, drugs and medical devices related to COVID-19
for financial years 2020-21, 2021-22, 2022-23 subject to the conditions that
such research and development activities shall be carried out in
collaboration with any of the institutes or organizations mentioned in item
(ix) of Schedule VII to the Act.
• details of such activity shall be disclosed separately in the Annual report
on CSR included in the Board’s Report.
• Any activity undertaken by the company outside India except for training
of Indian sports personnel representing any State or Union territory at
national level or India at international level.
• contribution of any amount directly or indirectly to any political party
under section 182 of the Act.
• activities benefiting employees of the company as defined in clause (k) of
section 2 of the Code on Wages, 2019 (29 of 2019).
• activities supported by the companies on sponsorship basis for deriving
marketing benefits for its products or services.
• activities carried out for fulfilment of any other statutory obligations under
any law in force in India.
As per section 135 of the Companies Act, the Company will report reasons
for underspending of the allocated CSR budget of the current financial year
in the template provided by the Ministry of Corporate Affairs.
1.4. Dividend Payment Policy
The philosophy of the Company is to maximiser the shareholders’ wealth
through various means. The Company has consistently delivered value to
its shareholders through its manufacturing and services verticals.
This could be achieved due to harnessing available resources to the
maximum extent and at the same time minimizing risks to maximize
shareholder value.
The Company believes that driving growth creates maximum shareholder
value. Thus, the Company would endeavor to first utilize its profits for its
working capital requirements, capital expenditure required to meet
expansion needs, earmarking reserves for future growth opportunities and
thereafter distributing the surplus profits in the form of dividend to the
shareholders.
This Company being a CPSE, the policy has been framed broadly in line
with the provisions of the Companies Act, 2013, and taking into
consideration, guidelines on “Capital Restructuring of Central Public
Sector Enterprises” issued by Department of Investment.
Upon declaration at the ensuing 104th Annual General Meeting scheduled
on 28th September 2021, dividend shall be paid to those shareholders
(holding shares as on 21st September 2021, End of Day) within statutory
period of 30 days from the date of declaration.
1.5. Health, Safety, Environment (HSE) and Sustainability Policy
Balmer Lawrie is committed to the goal of sustainable development by
balancing social environmental and economic considerations whilst
managing its businesses.
It will develop leadership committed to Health Safety and Environment
(HSE) and strive to adhere to best standards of HSEmanagement system in
its entire operation and contribute thus, contribute to the overall betterment
of our employees, communities, and other Stake Holders. In accordance
Privilege are provided.
1.6. Environment
Balmer Lawrie aims to preserve the ecological balance in its areas of
operations by Adhering to environmental standards & applicable
Environmental legislations thereby minimizing the environmental impacts
of its operations.
Improving energy efficiency, reducing emissions to air, water and land
using best available technology and thereby address to the cause of climate
change.
Work with stakeholders to mitigate the environmental impacts of product
life cycle and supply chain. Balmer Lawrie continuously endeavors to
drive inclusive growth and environment friendly sustainable business
operations in all its business verticals. The Company makes every effort
for protection and restoration of the environment while conducting
business. There was a significant dip in the revenue as compared to the last
year, which was a result of challenging business environment due to
pandemic year significant industry slowdown in FY20-21 and were beyond
the control of business
1.7. HISTORY
Early History-Formation of Balmer Lawrie “Pre-Nationalization”
Driven by the spirit of entrepreneurship, two enterprising Scotsmen
Stephen George Balmer and Alexander Lawrie sowed the seeds of this
company at Kolkata on 1st February 1867.
History goes…a coin was tossed…Balmer won…Balmer’s name preceded
in the Firm incorporated and thus was born Balmer Lawrie.
There was hardly any business where Balmer Lawrie did not delve into in
its formative years, whether it was from Tea to Shipping, Insurance to
Banking or Trading to Manufacturing.
The company has left a mark of its own at every step of its remarkable
corporate journey. Today, Balmer Lawrie is a Mini-Ratna-I Public Sector
Enterprise, under the Ministry of Petroleum & Natural Gas of India.
It has eight Strategic Business Units – Industrial Packaging, Greases &
Lubricants, Chemicals, Travel & Vacations, Logistics Infrastructure,
Logistics Services, Cold Chain and Refinery & Oil Field Services, with
offices spread across the country and abroad.
Balmer Lawrie has grown enormously in the last 155 years and has become
the market leader in Steel Barrels, Industrial Greases & Specialty
Lubricants, Corporate Travel and Logistics Services.
It has very well responded to the demands of an ever-changing
environment and has taken full advantage of every opportunity to innovate.
Balmer Lawrie also grew inorganically through various JVs over the
period.
Balmer is providing a customer centric performance, and this is the reason
why all existing manufacturers rely on the service of the company.

1.8. Nationalization of Industries

Between 1974 and 1976, the Indian government fully took over the three
foreign oil companies, Esso, Burmah-Shell and Caltex, all wholly owned
subsidiaries of the largest oil multinationals, commonly known as the Oil
Majors.
The interesting thing about these takeovers has been the willingness with
which the oil companies complied with the government's plans, a
willingness quite contrary to what would normally have been expected
from the Oil Majors, since in earlier periods these companies had put up
stiff resistance to governmental 'interference' and consistently fought
against attempts to break their monopoly over the Indian petroleum
industry.
This paper examines those changes in the international and Indian oil
industry which are relevant to an understanding of the takeover of the oil
companies.
1.9. FORMATION OF BALMER LAWRIE
Balmer Lawrie & Co. Ltd. is a Government of India Enterprise engaged in
diversified business with presence in both manufacturing and service
businesses. The company is engaged in the business of Industrial
Packaging Greases & Lubricants Leather Chemicals Logistic Services and
Infrastructure Refinery & Oil Field and Travel & Vacation Services in
India. Balmer Lawrie & Co. Ltd. is the market leader in the 210L Mild
Steel (MS) Drum industry a part of the Rigid Industrial Packaging segment
with a market share of more than 34%. The strategic business unit (SBU)
operates through six manufacturing plants on pan India basis which include
the state-of-the-art facility at Navi Mumbai.
The SBU manufactures high quality products ranging from Open Head
Tight Head Plain Lacquered Composite Galvanized Tall Necked-In and
Conical Drums catering to diverse industry segments and the best-in-class
customers in these segments.
These products are utilized for packaging Additives Chemicals Lubricants
Food & Fruit Pulp Edible Oils and various Liquid and Semi Liquid
substances.
The company's Greases & Lubricants SBU has Pan India operation with
three manufacturing plants in Kolkata Silvassa and Chennai.
The SBU is divided into three segments viz. Contract Manufacturing and
Processing Direct Sales and Channel Sales (Automotive and Industrial).
The Leather Chemicals SBU manufactures specialty leather chemicals.
In the Logistics Infrastructure SBU the company has three state-of-the-art
Container Freight Stations (CFS) located at Nhava Sheva (Navi Mumbai)
Chennai and Kolkata.
The company's Warehousing and Distribution facilities are presently
available at Kolkata and Coimbatore. The company is also managing the
Integrated Check Post (ICP) operations at Jogani in Bihar bordering Nepal.
The ICP at Rexul is operational from March 2018 which is also managed
by Balmer Lawrie. In the Logistics Services (LS) SBU air freight services
are a dominant activity for the SBU and accounts for more than 64% of the
SBU's overall top line. Balmer Lawrie & Co. is one of the largest TMC
(Travel Management Company) catering to corporate travel and business
travel of various Central Ministries Banks and PSUs.
2.CHAPTER-II: BUDGETING AND BUDGETARY CONTROL
A Budget is a planned estimate expressed in financial terms for a definite
period of time. CIMA has defined the term budget as "quantitative
expressions of a plan for a defined period of time.

It may include planned sales volume and revenues,resourcequantities,cost

and expenses,assets,liabilities, and cash flows. "A budget is a quantitative
plan used as a tool for deciding which activities will be chosen for a future
time Period. A budget is a predetermined statement of managerial policy
during the given period which provides a standard for comparison with the
results achieved.

Budgeting: Budgeting is a process. This means budgeting is a number of

activities performed in order to prepare a budget. CIMA has explained
budgeting as a means of coordinating the combined intelligence of an entire
organization into plan of action based on the past performance and
governed by rational judgement of factors that will influence the course of
business in the future.

2.1. Characteristics of Budget

➢ A budget is concerned for a definite future period.
➢ A budget is a detailed plan of all the economic activities of Entity.
➢ Budgets helps in planning, coordinating and control.
➢ A budget acts as a business barometer.
➢ Budget is a constant endeavour of the management.

2.2. Budgetary control

Budgetary Control is the process of establishment of budgets relating to
various activities and comparing the budgeted figures with the actual
performance for arriving at deviations, if any. Accordingly, there cannot
be budgetary control without budgets. Budgetary Control is a system which
uses budgets as a means of planning and controlling.
According to I. C. M. A, England, Budgetary control is defined by
terminology as the establishment of budget relating to the responsibilities
of executives to the requirements of a policy and the continuous
comparison of actual with the budgeted results, either to secure by
individual actions the objectives of that policy or to provide a basis for its
revision.
Brown and Howard define budgetary control as “a system of controlling
costs which includes the preparation of budgets, coordinating the
department and establishing responsibilities, comparing actual
performance with the budgeted and acting upon results to achieve
maximum profitability.”

Types of budgets as budgets serve different purpose, different types of

budgets have been developed. The following are the different classification
of budgets developed on the basis of time, functions, and flexibility or
capacity.

2.3. Objectives

♦ Planning:

Planning has been defined as the design of a desired future position for an
entity and it rests on the belief that the future position can be attained by
uninterrupted management action. Detailed plans relating to production,
sales, raw‐material requirements, labour needs, capital additions, are drawn
out. By planning many problems estimated long before they arise, and
solution can be thought of through careful study. In short, budgeting forces
the management to think ahead, to foresee and prepare for the anticipated
conditions. Planning is a constant process since it requires constant
revision with changing conditions. It involves various strategic
requirement that helps to increase the accuracy of the planning Process
with a low risk.
 ♦ Co‐ordination:

Budgeting plays a significant role in establishing and maintaining

coordination. Budgeting assists managers in coordinating their efforts so
that problems of the business are solved in harmony with the objectives of
its divisions. Efficient planning and business contribute a lot in achieving
the targets. Lack of co‐ordination in an organization is observed when a
department head is permitted to enlarge the department on the specific
needs of that department only, although such development may negatively
affect other departments and alter their performances. Thus, co‐ordination
is required at all vertical as well as horizontal levels.

♦ Measurement of Success:

Budgets present a useful means of informing managers how well they are
performing in meeting targets they have previously helped to set. In many
companies, there is a practice of rewarding employees on the basis of their
accomplished low budget targets or promotion of a manager is linked to
his budget success record. Success is determined by comparing the past
performance with a previous period's performance.

♦ Motivation:

Budget is always considered as a useful tool for encouraging managers to

complete things in line with the business objectives. If individuals have
intensely participated in the preparation of budgets, it acts as a strong
motivating force to achieve the goals.

♦ Communication:

A budget serves as a means of communicating information within a firm.

The standard budget copies are distributed to all management people that
provides not only sufficient understanding and knowledge of the
programmes and guidelines to be followed but also gives knowledge about
the restrictions to be adhered to.

♦ Control:

Control is essential to make sure that plans and objectives laid down in the
budget are being achieved. Control, when applied to budgeting, as a
systematized effort is to keep the management informed of whether
planned performance is being achieved or not.

2.4. Limitations

1) It tends to bring about rigidity in operation, which is harmful. As

budget estimates are quantitative expression of all relevant data,
there is a tendency to attach some sort of rigidity or finality to them.
2) It being expensive is beyond the capacity of small undertakings. The
mechanism of budgeting system is a detailed process involving too
much time and costs.
3) Budgeting cannot take the position of management, but it is only an
instrument of management. ‘The budget should be considered not as
a master, but as a servant.’ It is totally misconception to think that
the introduction of budgeting alone is enough to ensure success and
to security of future profits.
4) It sometimes leads to produce conflicts among the managers as each
of them tries to take credit to achieve the budget targets.
5) Simple preparation of budget will not ensure its proper
implementation. If it is not implemented properly, it may lower
morale.
6) The installation and function of a budgetary control system is a
costly affair as it requires employing the specialized staff and
involves other expenditure which small companies may find
difficult to incur.
 7) Preparation of Variance analysis maybe harder.

2.5. Types of budgets

As budgets serve different purpose, diverse types of budgets have been

developed. The following are the different classification of budgets
developed on the basis of time, functions, and flexibility or capacity.

(A) Classification on the basis of Time:

1. Long-Term Budgets

2. Short-Term Budgets

3. Current Budgets

(B) Classification according to Functions:

1. Functional or Subsidiary Budgets

2. Master Budgets

(C) Classification on the basis of capacity:

1. Fixed Budgets

2. Flexible Budgets

There are some distinct factors that classify the budgets into various
categories.

There are,
2.6. Classification of Budget

1.. Functional Classification:

A) Sales Budget

B) Production Budget

C) Raw Materials Budget

D) Purchase Budget

E) Labour Budget

F) Production Overhead Budget

G) Selling & Distribution Budget

H) Administration Cost Budget

I) Capital Expenditure Budget

J) Cash Budget

A) SALES BUDGET:

The sales budget is an estimate of total sales which may be articulated in

financial or quantitative terms. It is normally forms the fundamental basis
on which all other budgets are constructed. In practice, quantitative budget
is prepared first then it is translated into economic terms. While preparing
the Sales Budget, the Quantitative Budget is generally the starting point in
the operation of budgetary control because sales become, more often than
not, the principal budget factor. The factor to be consider in forecasting
sales are as follows:

• Study of past sales to determine trends in the market.

• Estimates made by salesman various markets of company.
• Changes of policy and method.
• Government policy, controls, rules and Guidelines etc.
B) PRODUCTION BUDGET:

The production budget is prepared on the basis of estimated production for

budget period. Usually, the production budget is based on the sales budget.
At the time of preparing the budget, the production manager will consider
the physical facilities like plant, power, factory space, materials and labour,
available for the period. Production budget envisages the production
program for achieving the sales target. The budget may be expressed in
terms of quantities or money or both. Production may be computed as
follows: Units to be produced = Desired closing stock of finished goods +
Budgeted sales – Beginning stock of finished goods.

C) PRODUCTION COST BUDGET:

This budget shows the estimated cost of production. The production budget
demonstrates the capacity of production. These capacities of production
are expressed in terms of cost in production cost budget. The cost of
production is shown in detail in respect of material cost, labour cost and
factory overhead. Thus, production cost budget is based upon Production
Budget, Material Cost Budget, Labour Cost Budget and Factory overhead.

D) RAW‐MATERIAL BUDGET:

Direct Materials budget is prepared with an intention to determine standard

material cost per unit and consequently it involves quantities to be used
and the rate per unit. This budget shows the estimated quantity of all the
raw materials and components needed for production demanded by the
production budget. Raw material serves the following purposes:

• It supports the purchasing department in scheduling the purchases.

• Requirement of raw materials is decided based on production
budget. It provides data for raw material control.
• Helps in deciding terms and conditions of purchase like credit
purchase, cash purchase, payment period etc.
It should be noted that raw material budget generally deals with only the
direct materials whereas indirect materials and supplies are included in the
overhead cost budget.

E) PURCHASE BUDGET:

Strategic planning of purchases offers one of the most important areas of

reduction cost in many concerns. This will consist of direct and indirect
material and services. The purchasing budget may be expressed in terms of
quantity or money.

The main purposes of this budget are:

• It designates cash requirement in respect of purchase to be made

during budget period.
• It is facilitating the purchasing department to plan its operations in
time in respect of purchases so that long term forward contract may
be organized.

F) LABOUR BUDGET:

Human resources are highly expensive item in the operation of an

enterprise. Hence, like other factors of production, the management should
find out in advance personnel requirements for various jobs in the
enterprise. This budget may be classified into labour requirement budget
and labour recruitment budget.

The labour necessities in the various job categories such as unskilled, semi‐
skilled and supervisory are determined with the help of all the head of the
departments.

The labour employment is made keeping in view the requirement of the

job and its qualifications, the degree of skill and experience required and
the rate of pay.
G) PRODUCTION OVERHEAD BUDGET:

The manufacturing overhead budget includes direct material, direct labour

and indirect expenses. The production overhead budget represents the
estimate of all the production overhead i.e., fixed, variable, and semi‐
variable to be incurred during the budget period. The reality that overheads
include many different types of expenses creates considerable problems in:

1) Fixed overheads i.e., that which is to remain stable irrespective of vary

in the volume of output,

2) Apportion of manufacturing overheads to products manufactured, semi

variable cost i.e., those which are partly variable and partly fixed.

3) Control of production overheads.

4) Variable overheads i.e., that which is likely to vary with the output.

The production overhead budget engages the preparation of overheads

budget for each division of the factory as it is desirable to have estimates
of manufacturing overheads prepared by those overheads to have the
responsibility for incurring them. Service departments cost are projected
and allocated to the production departments in the proportion of the
services received by each department.

H) SELLING AND DISTRIBUTION COST BUDGET:

The Selling and Distribution Cost budget is estimating of the cost of

selling, advertising, delivery of goods to customers etc. throughout the
budget period. This budget is closely associated to sales budget in the logic
that sales forecasts significantly influence the forecasts of these expenses.
Nevertheless, all other linked information should also be taken into
consideration in the preparation of selling and distribution budget. The
sales manager is responsible for selling and distribution cost budget.
Naturally, he prepares this budget with the help of managers of sub‐
divisions of the sales department. The preparation of this budget would be
based on the analysis of the market condition by the management,
advertising policies, research programs and many other factors. Some
companies prepare a separate advertising budget, particularly when
spending on advertisements are quite high.

I) ADMINISTRATION COST BUDGET:

This budget includes the administrative costs for non‐manufacturing

business activities like director’s fees, managing directors’ salaries, office
lightings, heating and air condition etc. Most of these expenses are fixed
so they should not be too difficult to forecast.

There are semi‐variable expenses which get affected by the expected rise
or fall in cost which should be considered. Generally, this budget is
prepared in the form of fixed budget.

J) CAPITAL‐ EXPENDITURE BUDGET:

This budget stands for the expenditure on all fixed assets for the duration
of the budget period. This budget is normally prepared for a longer period
than the other functional budgets. It includes such items as new buildings,
land, machinery, and intangible items like patents, etc.

This budget is designed under the observation of the accountant which is

supported by the plant engineer and other functional managers. At the time
of preparation of the budget some valuable information should be
observed:

• Overfilling on the production facilities of certain departments as

revealed by the plant utilization budget.
• Long‐term business policy regarding technical developments.
Potential demand for certain products.
• Efficiency and accuracy are involved.
K) CASH BUDGET:

The cash budget is a sketch of the business estimated cash inflows and
outflows over a specific period of time. Cash budget is one of the most
important and one of the last to be prepared. It is a detailed projection of
cash receipts from all sources and cash payments for all purposes and the
resultants cash balance during the budget. It is a mechanism for controlling
and coordinating the fiscal side of business to ensure solvency and provides
the basis for forecasting and financing required to cover up any deficiency
in cash.

Cash budget thus plays avital role in the financing management of a

business undertaken. Cash budget assists the management in determining
the future liquidity requirements of the firm, forecasting for business of
those needs, exercising control over cash. So, cash budget thus plays a vital
role in the financial management of a business enterprise.

2.7. Function of Cash Budget:

• It makes sure that enough cash is available when it is required.

• It designates cash excesses and shortages so that steps may be taken
in time to invest any excess cash or to borrow funds to meet any
shortages.
• It shows whether capital expenditure could be financed internally.
• It provides funds for standard growth. It provides a sound basis to
manage cash position
• They perform as a tool for identifying the expenditure.

2.8. Classification on Flexibility

1. FIXED BUDGET
2. FLEXIBLE BUDGET
FIXED BUDGET:

A fixed budget is prepared for one level of output and one set of condition.
This is a budget in which targets are tightly fixed. It is known as a static
budget. According to CIMA,''A budget which is designed to remain
unchanged irrespective of the level of the activity attained''.

It is firm and prepared with the assumption that there will be no change in
the budgeted level of motion.

Thus, it does not provide room for any modification in expenditure due to
the change in the projected conditions and activity. Fixed budgets are
prepared well in advance.

This budget is not useful because the conditions go on the changing and
cannot be expected to be firm. The management will not be in a position to
assess, the performance of different heads on the basis of budgets prepared
by them because to the budgeted level of activity.

It is hardly of any use as a mechanism of budgetary control because it does

not make any difference between fixed, semi‐variable and variable costs
and does not provide any space for alteration in the budgeted figures as a
result of change in cost due to change in the level of activity. Fixed budget
can be revised in the light of changing situations, yet the rigidity and
control over costs and expenses would be lost in such cases. Fixed budgets
should be prepared only where sales, production and costs can be
accurately estimated.

FLEXIBLE BUDGET:

This is a dynamic budget. In comparison with a fixed budget, a flexible

budget is one “which is designed to change in relation to the level of
activity attained.”
The underlying principle of flexibility is that a budget is of little use unless
cost and revenue are related to the actual volume of production.

The statistics range from the lowest to the highest probable percentages of
operating activity in relation to the standard operating performance.
Flexible budgets are a part of the feed advance process and as such are a
useful part of planning. An equally accurate use of the flexible budgets is
for the purposes of control.

Flexible budgeting has been developed with the objective of changing the
budget figures so that they may correspond with the actual output achieved.
It is more sensible and practical because changes expected at different
levels of activity are given consideration. Thus, a budget might be prepared
for various levels of activity in accord with capacity utilization. Flexible
budget may prove more useful in the following conditions:

• Where the level of activity varies from period to period.

• Where the business is new and as such it is difficult to forecast the
demand.
• Where the organization is suffering from the shortage of any factor
of production. For example, material, labour, etc. as the level of
activity depends upon the availability of such a factor.
• Where the nature of business is such that sales go on changing.
• Where the changes in fashion or trend affects the production and
sales.
• Where the organization introduces the new products or changes the
patterns and designs of its products frequently.
• Where a large part of output is intended for the export.

Classification on Time

Budget With regard to time, budgets may be classified into four categories:
a) Long‐term Budget:

These budgets are prepared on the basis of long‐term projection and portray
a long‐range planning. These budgets generally cover plans for three to ten
years. In this regard it is mostly prepared in terms of physical quantities
rather than in monetary values.

(b) Short‐term Budget:

In this budget forecasts and plans are given in respect of its operations for
a period of about one to five years. They are generally prepared in
monetary units and are more specific than long‐term budgets.

(c) Current Budgets:

These budgets cover a very short period, may be a month or a quarter or

maximum one year. The preparation of these budgets requires adjustments
in short‐term budgets to current conditions.

(d) Rolling Budgets:

A few companies follow the practice of preparing a rolling or progressive

budget. In this case companies prepare the budget for a year in advance. A
new budget is prepared after the end of each month or quarter for a full
year in advance. The figures for the month or quarter which has rolled
down are dropped and the statistics for the next month or quarter are added.

F) Performance Budgeting (PB):

This term was used for the first time in the United States by the Hoover
Commission. In India, Performance Budgeting was first discussed in 1954
during the Lok‐Sabah debates. But it was only in 1961 that the government
of India issued general orders drawing the attention of the administrative
ministries to the recommendations of the Estimates Committee and
requesting them to consider the issuance of suitable instructions. It was left
to the Administrative Reforms Commission to come out with more
elaborate emphasis on PB in 1967.

Performance budgeting is a budgeting system, which involves the

assessment of the performance of the business, and both its specific and
overall objectives. It gives clarity about organizational objectives and
provides an exact direction to each employee in the business.

Meaning:

The term performance implies results or outputs. ‘A performance budget

is one which presents the purposes and objectives for which funds are
required, the costs of the programmes proposed for achieving those
objectives, and quantitative data measuring the accomplishments and work
performed under programme.

Thus, PB is a technique of presenting budgets for costs and revenues in

terms of functions, programmes and activities and correlating the physical
and financial aspects of the individual items comprising the budget.

As per the National Institute of Bank Management, PB technique is, "the

process of analysing, identifying, simplifying and crystallizing specific
performance objectives of a job to be achieved over a period in the
framework of the organizational objectives, the purpose and objectives of
the job.

The technique is characterized by its specific direction towards the

business objectives of the organization." As a result, performance budget
accentuates the execution of specific goals over a period of time.

Steps in Performing Budgeting (PB):

• Establishment of performance targets

• Establishment of responsibility centre
• Estimating financial requirements
• Comparison of actual with budgeted performance
• Reporting and action
3.CHAPTER III: BUDGETING IN BALMER LAWRIE
The company holds some specific features regarding its nature of
operation. Therefore, the budgetary techniques applied in a
manufacturing unit may not be more suitable and applicable in the same
manner in Balmer Lawrie.

CO-ORDINATING AGENCIES

In Balmer Lawrie, the management of finance is under the control of a

director (finance). At the Department Division level, the Division finance
managers have been deployed to control the financial activities of the
concerning area. For budgetary control, the budgets are prepared in the
Balmer Lawrie every year. The financial performance is reviewed on a
regular basis in which a special emphasis is given under controllable cost
areas. Since all principal functions relating to manufacturing the finished
products and its management are performed by the Division offices
located at various points of the widely spread areas offices plays a key role
in estimating and initiating budget proposals.

3.1. TYPES OF BUDGETS PREPARED IN BALMER LAWRIE

In Balmer Lawrie both revenue and capital budgets are prepared in a

comprehensive form.

(i) REVENUE BUDGET

The revenue budget of the Balmer Lawrie comprises the budget estimates
for the following functionaries:

❖ Production Budget:

The production budget is prepared both in quantitative terms and in

monetary terms. First of all, Headquarters fixes the production targets for
each unit based on the previous year's sales figures. Thereafter, the
management decides the production estimates for the budget year,
subjected to the adjustment of other conditions prevailing at that time.
Keeping this in view, after going through a detailed discussion at the area
level, the unit wise production estimates are finalised and incorporated
into a compact form. Thus, a detailed production budget for a particular
area is prepared and forwarded to the headquaters.By incorporating the
production budget estimates of all the areas, A comprehensive
production plan is prepared at the headquarters level, Matching with the
production target of the budget year. With respect to the policies and
commitment of the company, all necessary adjustment is made at the
top-level management, while finalizing the annual production plan of the
company.

❖ Material cost budget:

Material is the second essential element for which a detailed plan is

prepared by the company. Being a company of manufacturing nature,
materials used in Balmer Lawrie are sourced by various suppliers, the
important materials that are used frequently in this process are Iron
sheets, Chemicals, Petroleum products, manufacturing spares and
machinery cost. The expenses incurred on this item are included in the
material cost budget.

❖ Manpower Budget:

The manpower is the third important segment of budgetary process in

Balmer Lawrie of different categories, For the purpose of manufacturing
the management outsource workers as Apprentice to meet up the
requirement of employees in the organisation, where they are recruited
for a certain period of time of which to undertake the manufacturing
process, this strategy helps the organisation to perform its objectives to
with an minimal usage of funds and with no commitment with the
employees, At the division level, the personnel manager is the controlling
authority of the manpower employed in that division .The amount spent
on their salary, wages and other perquisites is put under the manpower
budget.

❖ Power and Fuel Budget

In Balmer Lawrie huge amount is spent on the Power and Fuel budget of
which for the purpose of manufacturing and transportation of Finished
Products. For this the budget is prepared under a separate head.

❖ Miscellaneous contractual work budget:

Other important functions in Balmer Lawrie are the development of

infrastructure, repairs and maintenance of machinery and building. These
are discharged on a routine basis and the expenses incurred on such
activities are include in the miscellaneous contractual work budget.

❖ Welfare Head:

A number of welfare activities are operated by Balmer Lawrie for its

employees Under the community development programmes, it provides
various facilities like roads,wells,hospitals and schools. It runs
dispensaries at each unit level and regional hospitals covering two to
three divisions. At headquarters level, it runs a central hospital with all
basic facilities and equipment's, it also provides some special grants to
schools and colleges situated under the area. Thus, a large sum is spent
on the welfare head and a separate budgetary provision is made for this
purpose.

❖ Monitoring of sale:

The delivery order of sale is controlled by the headquarters, but the

monitoring of sales/despatches is essential to match it with the sales
targets of the company. At the division level, the area sales manager
monitors all activities regarding the despatch of Finished goods through
appropriate means according to delivery orders.

i) CAPITAL BUDGET

A separate budget under the capital head is also prepared in Balmer

Lawrie, the project officers are directed to submit a list of jobs of capital
nature concerning their areas. It includes the capital items required to
manufacture using machineries (HEMM), other equipment's and cost of
the area wise capital requisitions are procured and by incorporating all
these, a consolidated capital plan is chalked out and finalized at the
headquarters level. the revenue budget constitutes the budget estimates
for both receipt and payment capital budgeting make decisions about the
long-term investment of the company's capital into operations. Planning
the eventual returns on investments in machinery, real estate and new
technology are all examples of capital Budgeting.

3.2. Budget techniques

The company incorporates the following techniques in regard to

preparation of revenue budget,i.e historical budgeting, zero based budget
and performance budgeting.
I.HISTORICAL BUDGETING:

The budget for fixed expenditure is prepared on the basis of the past
experiences and figures. It is assumed that not much more changes take
place in regard to the fixed expenditures. Therefore, the figures are
adjusted with a slight change as per the current needs and concerned
budget is prepared.

II. Zero based budget:

Zero based budget is prepared when previous historical data is not

available. under each item of income and expenditure are re-evaluated
for the budgeted period.

III. Performance budgeting:

The technique of performance budgeting id used to prepare the budget

for revenue and expenditure sides both. On the revenue side the income
is estimated and compared with respect to the actual performance. For
the expenditure side also, the same procedure is followed.

3.3. STRATEGIC BUSINESS UNITS UNDERTAKEN BY BALMER LAWRIE

❖ Balmer Lawrie Industrial Packaging

❖ Balmerol (Grease & Lubricants)

❖ Balmol Leather Chemicals

❖ Balmer Lawrie travels & Vacations

❖ Balmer Lawrie Logistics

❖ Balmer Lawrie Refinery & oil field services

BALMER LAWRIE INDUSTRIAL PACKAGING

Out of 70 players in India, Balmer Lawrie & Co. Ltd. is the market Leader
in the Industrial Packaging industry with a market share of 34%. SBU: IP
operates through six manufacturing plants on pan India basis, which
includes the state-of-the-art facility at Navi Mumbai. Balmer Lawrie’s
Industrial Packaging is acclaimed for superior product quality, high
reliability in supplies, modern manufacturing systems through customer
centric experienced personnel. It enjoys a high brand value, large, diverse
and growing customer base across India and Exports markets. Its focus on
continuous improvement, Quality Assurance, Innovation and sharp focus
on Sustainability & HSE helps in having an edge over competition.

There are different types of high-quality products being manufactured in

this SBU ranging from Open Head, Tight-Head, Plain, Lacquered,
Composite, Galvanized, Tall, Necked-In and Conical Drums catering to
diverse industry segments and to the best-in-class customers in these
segments.

At an estimated market potential of Rs. 2,80,000 Crore, the Indian

Packaging industry is growing with around 5 to 6% CAGR. There are two
broad segments, Industrial and Consumer Packaging and sub-segments
such as Rigid and Flexible. Rigid Industrial Packaging can be further
segmented based on packing size, type of packing, material of construction
etc. Mild steel drum of 210L capacity is a part of Rigid packing and is used
for industrial applications in the chemicals, lubricants, fruits and
transformer oil industries. Steel Drums are utilised for safe packaging and
transportation of liquid and semi-liquid pulp, greases, powders, chemicals
etc. The industry has higher capacity compared to the market demand
leading to intense competition in the marketplace. Lubricants, chemicals,
transformer oils and fruit pulp are the major segments contributing to
approx. 90% of SBU sales.
During the year 2020-21, our Asaoti plant was rated in silver category in
the National Green Manufacturing Challenge 2021. Balmer Lawrie
retained Silver Rating from Ecovadis – a global solutions provider, which
partners with 300+ leading multinational organisations to reduce risk
across the supply chain and drive innovation in their sustainable
procurements. The SBU closed its manufacturing plant at Kolkata due to
low market demand in Eastern India.

SBU: IP has been showing consistent growth in volume, turnover,

profitability and profits. However, COVID-19 led to overall compressed
demand across industry segments with sales volumes under pressure. In
spite of the adverse market situation, the SBU was able to close financial
year 2020-21 with healthy profits. During the year, the SBU maintained
healthy profitability despite decrease in volumes. The SBU improved its
overall efficiency through continuous Operational Excellence across
various manufacturing units.

The COVID-19 pandemic situation and lockdowns are creating general

uncertainty for overall industry growth and market demand. However, it is
expected that the GDP would grow strongly in Financial Year 2021-22
with revival in demand. The SBU expects recovery of business in 2021-22.
The SBU anticipates significant growth in the coming years with the
biggest drivers being the chemicals, transformer oils and lubes segments.
The SBU has plans to aggressively expand in the Exports segment.

BALMEROL (GREASE & LUBRICANTS) G & L

Balmer Lawrie pioneered grease manufacturing in India in 1934 at Sewree

(Mumbai) and in 1937 at Kolkata. With about eight decades of
manufacturing experience Balmer Lawrie’s “Balmerol” greases are the
leaders in their categories. With less than 2% market share, brand
“Balmerol” has an excellent opportunity to grow. The business of SBU:
G&L may be divided into a) Contract Manufacturing b) Direct Sales c)
Channel Sales (Automotive and Industrial) The SBU has witnessed over
30% growth in Channel Sales as compared to last year in spite of a
countrywide lockdown on account of the COVID-19 pandemic in April
and May of the financial year and cut-throat competition and aggressive
brand promotional activity done by the MNC companies, while other PSU
oil companies played on huge discounts to keep their volumes intact.
However, the small pack sales have registered growth over FY 2019-20
and there has been an increase in Retail Outlets selling Balmerol brand,
which has contributed to better profitability. The Balmerol brand was
launched in the Nepal market and the SBU intends to sell 300 KL in FY
2021-22 in this market.

SBU: G&L has pan India operations with three manufacturing plants in
Kolkata, Silvassa and Chennai. Due to long presence in the market, the
brand has a positive brand Image in Greases and Specialties. During the
year under review the SBU has witnessed a marginal de-growth in its top-
line as compared to last year, triggered by the countrywide lockdown on
account of the COVID-19 pandemic in April and May 2020. Consequently,
there has been a de-growth in its bottom-line, which has also been
adversely impacted by an unprecedented spike in base oil prices and other
raw materials in the second half of the year. The SBU has worked out
strategies in the perspective of product substitution, cost effective
formulations, value addition, bio-degradable products, etc., to combat the
challenge of margins in the coming financial year.

BALMOL LEATHER CHEMICALS

Balmer Lawrie entered into the Leather Chemicals business in 1983 by

taking up manufacture of Synthetic Fat Liquors in Chennai. Based on
indigenous technology, Balmer Lawrie manufactures end-to-end leather
chemicals under the brand Balmol, Balsyn, Balchem and Balfin at its
modern manufacturing facility at Chennai. The Company has also forayed
into Finishing Chemicals. Apart from the leather chemical business, the
SBU is also entering into other synergy chemicals such as textile chemicals
and intermediate for agro chemicals business. There are three stages of
leather processing such as beam house, wet end and finishing. The SBU is
stronger in wet end operations, where it is holding considerable market
share among the Indian players in India. This year the SBU entered
finishing chemicals segment and has launched its own manufactured
finishing chemicals. SBU: Chemicals now has an advantage to win more
customers with a wider product basket. There is huge scope in leather
chemicals market and thus, the SBU has its plan to tap the market with both
existing and new products. SBU: Chemicals is a market leader in the Fat
Liquors segment and significant market share holder in the Syntan
segment. This SBU has enough opportunities to grow in other segments
like Finishing and Beam House. In terms of market potential in India, the
Southern Region holds 44%, East is at 23% and North is at 33%. Each
region is manufacturing different products. Safety gloves in East, footwear
and leather articles in South, upholstery and garments in North. The
important new products, which were launched last year are finishing
chemicals - mainly Binders, Lacquers and Hot melt wax. The SBU also
entered into the leather tanning process with marketing of Basic Chrome
Sulphate and based on good response from customers it targeted the high
end of this segment successfully. The SBU also forayed into textile
chemicals by launching synergy products like textile binder, wetting agent
etc. It is in the process of including major range of textile chemicals in its
product basket and is now establishing infrastructure for textile chemicals
SBU:Chemicals has introduced new chemicals in Beam House segment
like Wetting agents, Basic Chrome Sulphate (BCS), etc. SBU: Chemicals
also launched a range of finishing chemicals at its modern manufacturing
facility. The SBU has well equipped ‘Technical Service Center’ in all the
major leather manufacturing clusters in India and renders high quality
technical service to the tanneries. The SBU developed an eco-friendly,
metal free tanning process with Glutaraldehyde, which has been popular
now in the market. With a positive brand image, strong technical service
team and increased product basket, the SBU has got many opportunities to
improve the business in coming years. In spite of low demand of leather /
leather products/ footwear due to the COVID-19 pandemic (Indian Export
down by 27%), this SBU is able to reach 97% volume of previous year.

BALMER LAWRIE (travel & Vacations)

As one of the largest travel and tour operators in the country, Balmer
Lawrie Travel & Vacations provides end-to-end domestic and international
travel services including - ticketing, tourism and MICE related services to
its clients. COVID-19 had a massive impact on the travel industry in FY
2020-21. With travel bans for a substantial period (domestic &
international) along with customer uncertainty, it’s difficult to state just
how much the pandemic has devastated the revenues of airlines. The sector
is expected to become smaller in years to come; as per industry, traffic
won’t return to 2019 levels before 2024. (Source: World Tourism
Organization). The SBU has been the most severely impacted amongst all
businesses under the COVID-19 crisis and travel has come to a complete
standstill effective March 2020. However, despite the SBU facing
challenges in terms of changes in airlines strategy to cut distribution cost,
denial of segment fee by GDS, reduction in commission and stiff
competition by online portals and technology firms, it has strengthened its
operation, sales and software capabilities, increased its clientele, bringing
more clients on SSBT / SBT by offering holistic cost-effective customised
services to corporate clients. In order to reduce our operation cost, we have
also tried to venture in the private sector by delivering superior service to
our customers. During these lean times, the travel vertical has not only
focused on improving the technology backbone but has also been in
constant touch with the Corporates and retail customers to communicate
safe travel policies, destination information and engage with them in the
digital space. The SBU has explored the right network partners and has
leveraged the in-demand technology to offer customers bouquet of services
in the coming years. SBU: T&V has also enhanced its visibility on the
digital platforms and made its B2C site robust with all services available
on the same platform. Various initiatives have been implemented and the
IT team is constantly assessing various tools to help the business stay ahead
of competition. However, in view of future business operations and growth
potential over next 3-5 years, the SBU had undergone major internal
restructuring in terms of creating 4 regional Operational HUBs for a lean
and efficient business structure going forward. As a result of business
restructuring, the SBU has been able to save infrastructure and other fixed
overheads by Rs. 3.40 Crore on annual basis. Going forward, the SBU is
planning to create One HUB (centralized) at Delhi in order to bring more
efficiency and plug in any leakages. This will enable better service delivery
and provision for Relationship Managers in all cities, which will ensure
more sales of various products like Hotel, Cabs, Insurance etc. The SBU
shall be supplementing the traditional strength of Ticketing for
Government & PSUs by penetrating a diverse and much larger corporate
customer base with complementary offerings such as accommodation,
land, MICE services etc. and emerge as a One Stop Solution provider for
an Institution’s travel and hospitality needs.

The COVID-19 pandemic has placed the tourism industry under immense
financial strain. Travel & tourism is undoubtedly one of the worst-hit
sectors. Though there was a significant drop of about 81% in the overall
business compared to the previous year, a relative growth of 20% in
Corporate Business was achieved by Vacations to make up for the shortfall
in Retail & MICE as a result of the challenging business environment /
significant industry slowdown in FY 2020-21. The SBU has undergone
major internal business restructuring and closure of 4 branches for a lean
and efficient business structure, which has yielded a savings of around Rs.
4.54 Crore. Overall economic slowdown, state elections, and higher
airfares owing to the pandemic impacted both retail and B2B sales. In the
current pandemic situation, people are avoiding group tours and continuing
to go on solo trips. Hence there were no GIT tours and FIT was restricted
to few countries as most of the borders were closed during the FY 2020-
21. Corporate business within India was also not stable due to periodic
waves of pandemic hitting various regions. The Vacations vertical tried to
market virtual events and successfully entered in this segment. There were
cancellations of booked tours and highly reduced forward booking
pipelines. To exploit the opportunities, the Vacations vertical is adeptly
putting out domestic as well as international short-haul programmes.
During these testing times, the vertical has researched and accordingly
planned strategic actions to grab the market once it opens. The products
have been designed and manpower have been trained online to deal with
the changes in the industry. Through social media and proactive
collaboration with the Travel vertical, the marketing team is keeping the
interest in the destinations alive so that consumers have a desire to travel
there once the restrictions are lifted.

BALMER LAWRIE LOGISTIC SERVICES

The logistics industry in India, considered to be the lifeline of the country,

holds immense significance as it connects various markets, suppliers and
customers dotted across the country, and has now been firmly embedded
as an integral part of the national GDP value chain. The Indian logistic
industry is highly fragmented with a large number of unorganised players.
The Global Freight Forwarding market contracted by 8.7% in 2020
recording its worst year since the financial crisis as a result of the
pandemic. Despite the segment being highly fragmented with a large
number of unorganised players, Balmer Lawrie’s credibility as a PSU,
strong pan India presence, worldwide network of Associates, robust
technology and the transition of customers towards organised players with
skills, expertise and financial strength, shall help it to remain entrenched in
the market and carry the brand of most reliable service provider. Designing
an adaptive and resilient supply chain shall be key factor to tackle the
COVID-19 butterfly effect. During the year despite severe disruptions on
account of the pandemic, the SBU achieved top line and bottom-line
growth of around 40% and 38% respectively as compared to the previous
year. The growth was driven by incremental business in nearly all activities
of Freight Forwarding notably in Ocean Freight and Air Export activities.
The SBU was able to retain its major GOI and CPSU customers and was
also able to initiate some-new activities from those contracted customers.
The SBU is now focusing on the private sector especially in Air Export and
also eyeing the business of handling project cargo of private customers.
With increased focus on healthcare and Government reforms to boost the
infrastructure and manufacturing units, the SBU aims at pharma and
engineering goods EXIM market in the coming years.

Major focus has been emphasised to enhance ‘Customer Delight’ by

providing one stop logistics solutions aligning Logistics Services along
with Infrastructure and 3PL services.

The SBU is in the process of implementing some new IT initiatives like

online customer survey feedback and customised IT solutions for faster,
dedicated and focused time bound service and delivery. The SBU has been
working closely with its worldwide Agents & Associates. The SBU is
taking adequate steps to mitigate the challenges through its established and
growing global associate network and offering clients single window
logistics solutions under one umbrella. The SBU has revamped its existing
technology and has plans to further upgrade it in the near future to meet
future business challenges. The outlook for Indian freight Forwarders is
positive primarily on account of Government policy like Atmanirbhar
Bharat which is expected to boost exports and the Make in India initiative
that may see several foreign companies setting up manufacturing facilities
in India.

BALMER LAWRIE REFINERY & OIL FIELD SERVICES

The SBU: Refinery & Oilfield Services is engaged in the activity of

Mechanized Oily Sludge Processing and Hydrocarbon Recovery from
Crude Oil Storage tanks and Lagoons. This activity pertaining to pollution
prevention and oily waste recycling through recovery of hydrocarbons, is
a niche segment in the oil & gas industry. Due to the impact of COVID-
19, there was a downturn in demand for sludge processing services in FY
2020- 21. The same can be attributed to several factors such as overall
downturn in demand for petroleum products, lower crude prices in the
international market and a Sludge Processing space through technological
upgradation and incorporation of new technologies for reducing processing
time and manual intervention in sludge processing. Alternative processes
such as chemical cleaning technology is also being explored for
augmentation of service offerings. lso austerity measures employed by
many clients, resulting in cutback in expenditures. The SBU continues to
enjoy approximately 60% market share in the oily sludge processing
segment in India. The renewed focus on energy conservation and
sustainable development is expected to result in stricter pollution control
laws in the long term, acting as a catalyst for increased demand for waste
recycling services such as oily sludge processing, resulting in overall
expansion of market demand. The SBU intends to leverage its experience
in project execution and wide base of satisfied clientele to foray into allied
service areas such as tank overhauling, corrosion prevention services and
tank cleaning through chemical process.

The operational performance was at par with the previous year mainly due
to advance order booking for the SBU. The new order booking was
sluggish due to reduced demand in the market. The demand for sludge
processing services is expected to be lower in the near term. The Market
preference is poised to move towards technologies requiring minimal
manual intervention such as closed loop systems, robotic cleaning
technologies and online tank cleaning through chemical method. The SBU
aims to maintain market leadership in the Sludge Processing space through
technological upgradation and incorporation of new technologies for
reducing processing time and manual intervention in sludge processing.
Alternative processes such as chemical cleaning technology is also being
explored for augmentation of service offerings.
CHAPTER-IV: RESEARCH DESIGN
RESEARCH PROBLEM
The purpose of the study is to analyse the effect of budgeting in
minimizing the total cost and improving the organizational effectiveness
at Balmer Lawrie & Co.Ltd.(Manali).
OBJECTIVE OF THE STUDY
The purpose of the study is to analyse the effect of budgeting and
budgetary control in improving organization effectiveness and
profitability of the business at Balmer Lawrie & Co.Ltd.(Manali).

1) To analyse the effect of budgeting in improving organization

effectiveness at Balmer Lawrie.

2) To understand the role of budgetary control in minimizing the cost and

maximizing the profitability of the business at Balmer Lawrie.
RESEARCH METHODOLOGY

The research study is based on the secondary data (revenue budget 2018-
19 of Balmer Lawrie & Co.Ltd, which was provided to me by Balmer
Lawrie, for the purpose of completing my study.