A

Project Report On

“Analysis of Effect of Budgeting and Budgetary Control in Minimizing the Cost and
Improving the Organizational Effectiveness”

Undertaken At
Central Coalfields Limited, Ranchi

Under the Guidance of Submitted by

MR.A.D WADHWA Mrigank kumar Dutta
Manager Finance, IMBA VIII Semester
Central coalfields Limited, Enrollment no.:IMBA/3005/2011
Ranchi
 Acknowledgement

We are pleased to present the project report on “Analysis of effect of budgeting and
budgetary control in minimizing the cost and maximizing the organizational
effectiveness” in the printed form. We are grateful to Mr. A.D WADHWA,Manager
finance ,CCL,Ranchi, for his support, valuable suggestions, comments and guidance in
completing the research study. I would also like to thank all workers and employees who
had given their valuable time to us.

It is high privilege for me to express my deep sense of gratitude to all the guide MR A.D
WADHWA who helped me in the completion of the project, especially my internal
project guide who was always there at hour of need.

Mrigank kumar Dutta

IMBA/3005/2011

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CONTENTS
CHAPTER-I:COMPANY PROFILE ..................................................................................................... 3
1.1 HIRTORY ........................................................................................................................................ 4
1.2 VISSION .......................................................................................................................................... 7
1.3 MISSION.......................................................................................................................................... 7
1.4 CORPORATE SOCIAL RESPONSIBILITY (CSR) & CCL .................................................... 7
1.5 NATURE OF OPERATIONS ...................................................................................................... 18
CHAPTER-II:BUDGETING AND BUDGETARY CONTROL ....................................................... 19
2.1 CHARACTERISTICS OF BUDGET ......................................................................................... 19
2.2 BUDGETARY CONTROL .......................................................................................................... 19
2.3 TYPES OF BUDGETS ................................................................................................................. 20
CHAPTER III-:BUDGETING IN CCL ............................................................................................... 22
3.1 TYPES OF BUDGET PREPARED IN CCL .............................................................................. 22
3.3 BUDGET TECHNIQUES ............................................................................................................ 24
CHAPTER –IV:RESEARCH DESIGN ................................................................................................ 25
4.1 RESEARCH PROBLEM ............................................................................................................. 25
4.2 OBJECTIVE OF THE STUDY .................................................................................................. 26
4.3 RESEARCH METHODOLOGY ................................................................................................ 27
CHAPTER-V: DATA ANALYSIS AND FINDINGS .......................................................................... 28
5.2 VARIANCE ANALYSIS AND FINDINGS ................................................................................ 32
CHAPTER-VI: CONCLUSION ............................................................................................................ 50
CHAPTER-VII: LIMITATIONS .......................................................................................................... 51
CHAPTER-VIII: SUGGESTIONS ....................................................................................................... 52
BIBLIOGRAPHY ................................................................................................................................... 53
ANNEXURE: REVENUE BUDGET 2013-14 ...................................................................................... 54

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 CHAPTER-I:COMPANY PROFILE
Central Coalfields Limited

Public sector undertaking

Type:
Government-owned
Industry: Coal
Formed: 1st November 1975
Headquarters: Ranchi, Jharkhand

Key people: Mr.GopalSingh(Chairman-Cum-Managing Director CCL)

Website: www.ccl.gov.in

Central Coalfields Limited (CCL) is a subsidiary of Coal India Limited (CIL), an

undertaking of the Government of India. CCL manages the nationalized coal mines of the
Coal Mines Authority, Central division. The registered and corporate office is at
Darbhanga House, Ranchi, Jharkhand.

Central Coalfields Limited is a Category-I Mini-Ratna Company since October 2007.

During 2009-10, coal production of the company reached its highest-ever figure of 47.08
million tones, with net worth amounting to Rs. 2644 crore against a paid-up capital of Rs.
940 crore.

Formed on 1st November 1975, CCL (formerly National Coal Development Corporation
Ltd) was one of the five subsidiaries of Coal India Ltd. which was the first holding
company for coal in the country (CIL now has 8 subsidiaries).

The CMAL, with its three divisions continued upto 1st November 1975 when it was
renamed as Coal India Limited (CIL) following the decision of Govt. of India to
restructure the coal industry. The Central Division of CMAL came to be known as
Central Coalfields Limited and became a separate company with the status of a
subsidiary of CIL, which became the holding company.

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Presently CCL has:-

Number of Mines 58 Operative Mines

(21 Underground & 37 Opencast mines)
Washeries 7 Washeries
4 Coaking Coal Washeries (Kathara,
Rajrappa, Kedla&Sawang)- throughput
capacity of 9.35 MTPA
3 Non-Coking Coal Washeries
(Piparwar, Kargali&Gidi) - throughput
capacity of 11.72 MTPA
Repair/Workshops 1 Central Workshop (ISO 9001) at
Barkakana
5 Regional Repair/Workshops (3 w/s are
ISO 9001) at Jarandih, Tapin North,
Dakra, Giridih&Bhurkunda
Operating Coalfields 6 Coalfields (East Bokaro, West
Bokaro, North Karanpura, South
Karanpura, Ramgarh&Giridih)

1.1 HIRTORY
Early History – Formation of NCDC (Pre-Nationalisation)

CCL had a proud past. As NCDC, it heralded the beginning of nationalization of coal
mines in India.

National Coal Development Corporation Ltd. (NCDC) was set up in October, 1956 as
Government-owned Company in pursuance of the Industrial Policy Resolutions of 1948
and 1956 of the Government of India. It was started with a nucleus of 11 old state
collieries (owned by the Railways) having a total annual production of 2.9 million tonnes
of coal.

Until the formation of NCDC, coal mining in India was largely confined to the Raniganj
coal belt in West Bengal and the Jharia coalfields in Bihar (now in Jharkhand), besides a
few other areas in Bihar (now in Jharkhand) and a part of Madhya Pradesh (now
Chattishgarh also) and Orissa.

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From its very beginning, NCDC addressed itself to the task of increasing coal production
and developing new coal resources in the outlying areas, besides introducing modern and
scientific techniques of coal mining.

In the Second Five Year Plan (1956-1961) NCDC was called upon to increase its
production from new collieries, to be opened mainly in areas away from the already
developed Raniganj and Jharia coalfields. Eight new collieries were opened during this
period and the production increased to 8.05 million tonnes by the end of Second Plan.

During Third Five Year Plan (1961-1966), though the Corporation had built up a much
larger production capacity, it could not be utilized due to a sluggish domestic coal
market. Production had, therefore, to be pegged down and the development of several
collieries undertaken from the early part of the Plan period, had to be suspended. By this
time, the contribution of NCDC to the nation‟s coal production (67.72 million tones)
increased to around 9.6 million tonnes.

With gradual rise in the demand of coal due to commissioning of new power plants and
development of other coal-based industries during Fourth Five Year Plan (1969-1974),
NCDC‟s production increased to 15.55 million tonnes by the terminal year of Fourth Five
Year Plan, i.e, 1973-74.

NCDC played a pioneering role in India‟s coal industry by introducing large-scale

mechanization and modern and scientific methods of coal mining for promoting
conservation of high grades of coal and exploiting deep coking coal seams necessitating
heavy capital investment and sophisticated technical skill. NCDC went in for foreign
collaboration with countries such as Poland and the USSR besides limited collaboration
with Japan, West Germany and France.

NCDC‟s role can be truly assessed by its contribution towards growth of new coal
resources in, what are known as, the outlying areas. The opening of new mines in
Madhya Pradesh, Orissa and Maharashtra brought about a significant change in these
regions by creating new opportunities of industrialization and employment. Development
of the Singrauli coalfields has brought coal almost to the door steps of northern India.

With the development and application of improved mining techniques, emphasis on

planning, design and research; introduction of modern mine management systems and an

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enlightened industrial relations policy, NCDC was able to provide the infrastructure for
the total nationalization of coal industry in the country.

Nationalisation of Coal Mines:

A major event in the history of Indian coal industry during the Fourth Plan Period (1969-
74) was the nationalisation of the erstwhile privately owned coal mines in two phases. In
the first phase, the management of coking coal mines was taken over by the Government
of India on 17th Oct. 1971 and nationalization was effective from 5th January 1972. A
state owned company, Bharat Coking Coal Ltd. was formed for managing coking coal
mines. For convenience of management, BCCL collieries in the East Bokaro coalfields in
Bihar (now Jharkhand) were transferred to NCDC, and its projects in Central Jharia
region viz., Sudamdih and Moonidih deep shaft mines were handed over, in stages to
BCCL.

In the second phase of nationalisation, the management of non-coking coal mines in the
country, excepting the captive coal mines of the two steel plants, viz, TISCO and IISCO,
was taken over by the Government on 31st January 1973. These mines were subsequently
nationalized with effect from 1st May 1973 and another state-owned company, Coal
Mines Authority Ltd. (CMAL) came into being with headquarters at Calcutta (now
Kolkata) to manage and develop NCDC collieries and other newly nationalized units.
NCDC itself, in this process, became a division of CMAL which owned 36 collieries
under commercial production in Bihar, Orissa, Madhya Pradesh and Maharashtra, besides
four coal washeries, one by-product coke oven plant, two large central workshops and
manpower of about 71,000.

The formation of CMAL witnessed regrouping of the coal mines into three divisions,
namely, Western, Central and Eastern. The regrouping had to be done for the
convenience of management, keeping in view the geographical location of the collieries.

As a result, NCDC units located in the States of Maharashtra and Madhya Pradesh, with
the exception of Singrauli coalfields, became a part of the Western Division.

The Central Division consisted of all the old collieries of NCDC in Orissa and Bihar
(except Sudamdih and Moonidih which had been handed over to BCCL) and those
acquired by CMAL after take-over in Giridih, East Bokaro, West Bokaro, South
Karanpura, North Karanpura, Hutar&Daltongunj Coalfields in Bihar. The Central

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Division consisted of 64 collieries, four coal washeries, one by-product coke oven plat,
on bee-hive coke plant and one central workshop having a manpower of 1,11,500.

Formation of CCL

The CMAL, with its three divisions continued upto 1st November 1975 when it was
renamed as Coal India Limited (CIL) following the decision of Govt. of India to
restructure the coal industry. The Central Division of CMAL came to be known as
Central Coalfields Limited and became a separate company with the status of a
subsidiary of CIL, which became the holding company.

1.2 VISSION
"Committed to create eco-friendly mining"

 The Mission of CCL is to produce and market the planned quantity of coal and
coal products efficiently and economically with due regard to safety, conservation
and quality.
 The main thrust of CCL in the present context is to orient its operations towards
market requirements maintaining at the same time financial viability to meet the
resource needs.

1.3 MISSION
"To become a World class, Innovative, Competitive & Profitable Coal Mining
Operation to achieve Customer Satisfaction as top priority."

OBJECTIVES

 Coal Mining through efficiently operated mines.

 Besides fulfilling coal needs of the customer in terms of quantity, focus on
quality, value addition and beneficiation to the satisfaction of the customers.
 Marketing of coal as main product

1.4 Corporate Social Responsibility (CSR) & CCL

Business and industry have come into existence to promote social growth and social
good. They draw resources from the society and add values to generate wealth. Hence,
society and business are interdependent and business must take full account of societal
expectations. A stable social environment is a pre-requisite for business investment and

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industrial operations. So industry needs to facilitate such environment by taking care of
the concerns of the society. This is what Central Coalfields Ltd (CCL) strongly believes
in. The Company is a MiniRatna Category I Central PSU in the family of Coal India Ltd.
Once written off as a loss making CPSU, the Company has made a spectacular
turnaround a couple of years ago and has grown strength to strength by registering record
production, productivity, profit and people care (4 Ps).CCL becoming a MiniRatna
Company is „the dream comes true‟ of its employees, their family members and the
people of Jharkhand – CCL being the largest mining industry in the State. The
community in and around the command areas of the company are having sentimental
attachment with CCL and it enjoys full support of the society, unique amongst mining
industry in India. Sentiment have come to embedded with aspirations and CCL, spreading
as it does in seven districts of the State of Jharkhand, symbolizes not only the industrial
might of the State (Jewel of Jharkhand) but the hopes and aspiration of the people of the
State as well.

In this backdrop, the responsibility of CCL as a Corporate entity addressing socio

economic and environmental concerns of the community becomes quite focused. Such
focus on community can albeit CCL C.S.R. is within the Company philosophy reflecting
in its VMO.

CCL Community Initiatives :

Since the day of its formation in 1975 till date social initiative undertaken by CCL have 3
phases overlapping each other viz.

i. Rehabilitation and Resettlement of Project Affected People (PAP)

ii. Welfare and Community Development and

iii. Comprehensive Community initiative under CSR (2007 onwards.)

Health and Education

World Bank highlights the significance of pro-poor, Government spending on such thing
as education and health as an important element of poverty reduction. CCL has provided
quality education facility in its command areas with a net work of 68 schools like DAV,
KV, Gyanoday, other private schools etc. having students strength of more than 40,000,
out of which 23,000 are non-CCL employee wards. Education expenses of the Company

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has consistently been increasing in 2005-06 it was Rs.430 lakhs and in 2006-07, Rs.446
lakhs and in 2007-08, 501 lakhs. Company incurs per capita student expenses of
Rs.1220/-. Company has now put emphasis on girl child education, interalia, free
schooling for girl children of BPL family in CCL aided schools in command areas, health
care, provision of education kits etc. Under CD programme 125 no. of schools have been
provided with educational accessories like table, bench, dari, sports items etc. School
building/roof have been repaired/constructed, particularly toilets for girl student
constructed.

Health

CCL extends comprehensive health care in its command areas with a network of
Hospitals : 2 Central Hospitals, 8 Regional, 9 Area Hospitals and 63 Dispensaries with
bed strength 892, Doctors – 297 and para medicals -780. Medical expenditure of the
Company has increased from Rs.13.6 crores in 2006-07 to Rs.15.6 crores in 2007-08. All
trauma cases of general public are treated in CCL Hospital. The company extends free
medical treatment to the residents of nearby villages by conducting medical camps. In
2006-07, 205 such camps have been conducted with total beneficiaries of 49,020. In
2007- 08, the number of such camps have gone up to 277 with beneficiaries increasing to
51,747. Beside this, CCL is launching CCL Health Card for the people in command areas
extending free treatment. The Company has also launched “Operation Jyoti”, a
programme to eradicate all cases of reversible blindness in command areas of CCL. The
Company also runs “Aids Control Project” and RNTCP (Revised National Tuberculosis
Programme).

Giving a Voice : Empowerment: CCL command area have facilitated development of

unions, Associations – PAPs, NGOs, Political outfits, SHGs etc. and thus giving a
reasonable voice to the people hitherto not known. The above empherical records indicate
that there is some dent in poverty alleviation. Hence, general observation of mining not
contributing to poverty alleviation may not be true. Moreover, mining provides much
needed revenue to the State to invest in poverty alleviation programmes.

Strategic CSR

During the last couple of years, the Company has not only brought laurels in the field of
production, productivity and profitability, but also taken significant steps in the areas of
Corporate Social Responsibility (CSR). CCL has developed its strategic CSR policy with

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the main objectives to improve the quality of life of the people living in and around the
command areas. It is also a matter of applaud that CCL is now a member of UN Global
Compact.

CSR policy has given special emphasis on triple bottom line – social, economic and
environmental initiatives to make it sustainable

PREAMBLE

The concept of Corporate Social Responsibility is to focus on inclusive growth of the

community in the command areas of CCL through a host of CSR measures making
mining socially sustainable. With the rapidly changing corporate environment, more
functional autonomy, operational freedom etc., CCL has adopted CSR as a strategic tool
by integrating Business processes with Social processes.

INTRODUCTION

The areas and mines of CCL are located in seven districts of Jharkhand which are in
remote areas and affected by Mao activists. Coal Mining has direct impact on the socio
economic and the environmental conditions of the operational areas. Due to the
remoteness, the inhabitants of the peripheral areas are poor, needy and belong to the
section of the society which is below poverty line. As such, the primary beneficiary of
CSR should be land oustees/ PAPs and the poor people staying within the radius of 15
kms. of the command area. The poor and needy people of Jharkhand should be secondary
beneficiaries.

The policy on CSR of CCL is framed taking into account the development of poor, the
villagers residing in and around the command areas and the work force of the company
socially, economically and safeguarding the environment for maintaining the ecological
balance.

OBJECTIVE

The objective of CSR policy is to lay down guidelines for the coal companies to make
CSR a key business process for sustainable development by focusing on overall
development of villagers, workers of the companies and poor people of the society. By
subscribing to the principles of Global Compact.

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AREAS TO BE COVERED

The responsibility of the company shall be to execute CSR within the radius of 5 km, 10
km and 15 Kms in phased and manner for every project and Areas including
Headquarters covering the existing components of Special Corporate Plans (SCP) and
Tribal Sub Plan (TSP) for development of SC and ST population. Further Board of
Directors of the company can approve specific cases of projects beyond mining areas
within the respective State.

FOCUSED AREAS FOR FUTURE ACTIVITIES

For every fiscal years, the CSR should be focused on a specific activity as per the need &
requirement. Considering the gradual lowering of water table in Jharkhand, acute water
crisis is being faced. Keeping in view the above, CCL has focused on catering adequate
drinking water facilities to the needy & accordingly 90% of the total budget of CSR
budget for the year 2012-13, 2013-14, 2014-15 would be spent on drinking water. In the
subsequent years, the focused work areas would be identified & thrust will be given as
per the requirement & need of focused work.

SCOPE:

Education

 Support to Technical/Vocational Institutions like ITI, Polytechnic etc.

 Support to rural educational institutions by providing study materials, sports
material and bench and desk to the students & Academic education by way of
financial assistance to Primary, Middle and High Schools.
 Promotion of Professional Education by setting up educational institutions
offering courses in Engg, Nursing, Management, Medicine and in Technical
subjects etc. CCL will ask for reservation of seats for CCL‟s nominated students
and children of BPL families.
 Provide free education up to +2 level and free coaching for getting admission in
reputed technical institution of the country like IITs, NITs & others to meritorious
students belonging to weaker sections of the society, PAPs/land oustees and
children of the employees residing in and around the command areas. Also to
provide free boarding lodging facilities to such students.

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  For uninterrupted education, provision of fees and scholarship for poor, needy,
children of BPL families & land oustees/ displaced persons, meritorious students
studying in the schools in the command areas of the company, specially for girl
students.
 Awareness programs on girl education &adult literacy amongst the belonging to
BPL.
 Special attention on education, training and rehabilitation of mentally & physically
challenged children/persons.
 Provide cycle to needy girl students who are attending

Drinking Water Facilities

 Installation/Repair of Hand Pumps/Tube Wells/ Deep bore wells with submersible

pumps with storage arrangements.
 Digging/Renovation of Wells.
 Supply of water through pipelines and water tankers.
 Gainful utilization of waste water from Under-ground.
 Mines for cultivation or any other purpose.
 Development/construction of Water Tank/Ponds.
 Rain water-harvesting scheme.
 Empowerment to the villagers for maintenance of the above facilities for
availability of water.

Health Care

 Treatment through CSR clinics and ambulance of critical diseases for poor and
BPL families residing in & around the command areas through Jan Arogya
Kendra.
 Operation Jyoti – for eradication of reversible blindness for the people of the
peripheral areas.
 Organizing health/ health awareness Camps on AIDS,TB and Leprosy, Child and
Mother care , Pre and Post natal care, family welfare, Diabetics detection &
Hypertension Camps, diet and nutrition camps and blood donation camps.
 Healthcare for senior citizens.
 To supplement the different programs local/ state authorities.

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Environment

 Maintaining ecological balance & pollution control.

 Aforestation, Social Forestry development, Green belt Development
 Reclamation of mined out lands.
 Plantation of herbal and fruit bearable plants Silk rearing & lac production

Self Employment Programs

 Self /Gainful Employment Opportunities may be offered by organizing different

training programs on farming & other agricultural practices, animal husbandry ,
fishery. of
 Organizing training programs on enhancing technical skills, imparting motor
driving skills to the rural youth.
 Organizing training programs for women on tailoring, embroidery designs, home
foods/fast foods, pickles, painting and interior decoration and other Vocational
Courses.
 Development of Cooperative societies for generating self employment.

Village Electricity/Solar Light

To develop infrastructural facilities for providing electricity through Solar Lights or

alternative renewal energy to the nearby villages. Recurring expenditure should be borne
by the beneficiaries.

Sports and Culture

 Development of sports & cultural activities in the nearby villages off the
command area by providing sports material to the children & youth & also by
conducting tournaments of games & sports events.
 Identification of rural talents for participating in sports & cultural activities of
state & national level.
 Promotion & development of sports for physically handicapped persons.
 Sponsorship of national sports field events in the coal field areas.
 Financial assistance/ donations/ sponsorship may be given to clubs / institutions
recommended by National/ State/ District forums/ authorities for development of
sports. Proper check measures to be kept for ensuring the utilization of the fund &
publicity is also to be ensured for corporate image building

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Infrastructure Support

 Construction, repair, extension etc. of Auditorium, Educational Institutions,

bridges, culverts, roads, drains check dam, shopping complex to facilitate
business/self employment for local people, Community Centre, SulabhSouchalaya/
Community toilets, Yatri Shed in Bus Stand, Burning Ghat/Crematorium,
Development of Park, Play ground/Sports complex/Good Coaches, Old Age Home
for senior citizens, adoption/ construction of hostels especially those for SC/ ST
and girls.
 Protection of Heritage sites in the CSR purview.
 Relief of victims and Natural Calamities like Earth Quake, Cyclone, Draught and
Flood situation in any part of the country.
 Disaster Management Activities including those related to amelioration/mitigation.
 Collection of old cloths from the employees and distribution in the nearby village
by utilizing the platform of MahilaSabha of the Company, Club (Executives &
Non-executives) and Women in Public Sector.
 Distribution of blanket to needy and poor section of the society and destitute.
 Development of smokeless fuel out of coal and also arrangement for distribution of
efficient Chulha/solar chulha to the villagers.
 Adoption of village for carrying out the activities like infrastructural development
e.g. Road, water supply, electricity and community center and other sustainable
developmental works.

The above list is illustrative and not exhaustive. CMD shall be authorized to consider
CSR activities not falling in this list. The activities will be specific to the village
depending on the need assessed for the people. As far as possible efforts will be made to
co-ordinatewith similar CSR activities that are taken up by the Central or State Govt. in
the areas of CCL. All activities under the CSR activities should be environment friendly
and socially acceptable to the local people and Society.

INSTITUTIONAL ARRANGEMENT :A Corporate Social Responsibility Committee

(CSRC) would be constituted at the HQ level and Area level for identification and
implementation of activities which involve the following:-

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1) The Committee will interact with the concerned MPs, MLAs, and Local
Authorities/Local Bodies, members of the area consultative committee, representatives of
recognized Trade Unions to identify and finalize the activities which are to be taken
under CSR.

2) The Committee will also interact with the concerned State Officials/Govt officials to
confirm the areas for undertaking activities under CSR activities to avoid duplicity of the
job. The Committee will decide the priority of the activities to be undertaken under CSR.

3) The Committee will interact with the CSR Implementing agencies for determining the
activities to be undertaken.

4) The Committee will examine the proposal/requests submitted by CSR implementing

agencies for Grant of donation/Financial Assistance/ Sponsorship etc. And also submit its
recommendation before the Head of the CSR Committee.

5) The Committee will prepare comprehensive action plan for every fiscal year with
special reference to the parameters of the CSR activities as fixed in MOU.

6) The committee at CCL Hq. level would be headed by Director (P&IR), CCL and
would include:

1. GM,(L&R)/CSR
2. CMS/CMO,HQ
3. GM(F)
4. GM(Env.&FOREST)
5. GM(Civil)/DY.GM/Town Administration
6. Representatives of recognized Unions operating at HQ

CSR Department of CCL would act as “NODAL” Deptt. under the guidance of Director
(P), CCL, GM (CSR), CCL would put up all cases to the committee for consideration and
recommendation to the competent authority which shall be Director (P). This “NODAL”
Deptt.Will function as the CSR Cell of the Company.

At Area level, a CSR committee should be constituted headed by CGM/GM of the areas.
The committee will consist of –Staff Officer (Pers.), SO©, AFM, AMO and all the
project officers of the concerned area.

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The finalized CSR action plan of the areas should be sent to HQ by the last week of April
every year. The consolidated CSR plans of area & HQ should be placed before the
competent authority for approval. The approved CSR plans should be sent back to areas
along with the sanctioned budget by June last week of every fiscal year. The
implementation of approved CSR activities should be commenced by 1st week of July of
every fiscal year.

IMPLEMENTATION

a) The investment in CSR should be project based and for every project time framed
periodic mile stones should be finalized at the outset.

b) Project activities identified under CSR are to be implemented by Specialized Agencies

and generally NOT by staff of the organization. Specialized

Agencies could be made to work singly or in tandem with other agencies.

c) Such specialized agencies would include:

i) Community based organization whether formal or informal.

ii) Elected local bodies such as Panchayats.
iii) Voluntary Agencies (NGOs)
iv) Institutes/Academicorganisation
iv) Trusts, Mission etc.
v) Self-help groups
vii) Government, Semi Government and autonomous Organizations.
viii) Standing Conference of Public Enterprises (SCOPE)
ix) MahilaMandals/Samitis
x) Contracted agencies for civil works
xi) Professional Consultancy Organization etc.

(d) Activities related to Sustainable Development will form a significant element of the
total initiatives of CSR. Such activities should come under the 3 UN Global Compact
Principles pertaining to the Environment Business are asked to

i) Support a precautionary approach to environmental challenges.

ii) Undertake initiatives to promote greater environmental responsibility and
iii) Encourage the development and diffusion of environmentally friendly technologies.

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e) Utilization Certificate with statement of expenditure will be submitted by the Areas at
the end of every fiscal year.
f) The Committee will monitor and review the progress of activities
undertaken/completed.

MONITORING

a) The CSR Committee of the areas will prepare the Monthly Report on CSR Activities
undertaken & send it to the HQ by the last week of every month.

b) In every six months Board of Directors of CCL as well as at Area level CGM/GM
should review the implementation of CSR

c) Annual Report on CSR should be sent by each Areas to CCL HQ highlighting the
cumulative outlays and outcomes of the program in specific details for its onward
transmission to CIL Kolkata.

d) CSR Project should also be evaluated by an independent external agency. This

evaluation should be both concurrent and final.

SOURCE OF FUND

The fund for the CSR should be allocated based on 5% of the retained earnings of
previous year subject to minimum of Rs.5/- per tonne of coal production of previous year.
Out of above, 4% would be allocated for CSR activities to be carried out within the
radius of 15 Kms of the project site and balance 1% would be allocated for carrying out
CSR activities by

CCL in the State of Jharkhand.

Approving Authority for the CSR amount to be spent would be the CMD, CCL in
consultation with concerned Functional Directors of the company.

Out of Total CSR Budget, 15% and 8% would be allocated separately and exclusively in
the Annual Plan for undertaking Welfare Activities under CSR for development of
Scheduled Caste and Scheduled Tribes populations respectively and balance 77% Fund
would be utilized for implementation of CSR Activities for the entire population
including SCs and STs.

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The CSR Project should be fixed for each financial year. This funding will not lapse. It
will be transferred to CSR Fund which will accumulate-as in the case of Non lapsable
pool for the North East.

1.5 Nature of Operations

The nature of operation in coal industry differs from a manufacturing unit.The industry
possess some special features as narrated below:

1) in a coal industry the product is not processed from inputs but the raw coal extracted
from mines is termed as the final product.The original form of coal (product) is neither
improved nor altered by men and machines.

2)The industry has two types of mines. one is open cast mines and the other is
underground mines.The open cast mines involves less time and funds to makthem
operative whereas the underground mines require more time and money under the
revenue and capital heads during the course of their development.

3)Geological factors are much more important in a coal industry because a coal mine can
be workable only when it is found favourable in the sense of geological conditions.

18
 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 actually 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 a business
 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.

19
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.”

2.3 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.

(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

20
21
 CHAPTER III-:BUDGETING IN CCL

The company holds some special features in regard to 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 ccl.

Coordinating agencies

In central coal fields limited, the management of finance is under the control of a director
(finance). At the area level, the area finance managers have been deployed to control the
financial activities of the concerning area.For the purpose of budgetary control,the
budgets are prepared in the ccl every year. The financial performance is reviewed on a
regular basis in which a special emphasis is given under controllable cost areas.

Since all important functions relating to extractions of coal mines and its management are
performed by the area offices located at various points of the widely spread mines,these
offices plays a very important role in estimating and initiating budget proposals.

3.1 TYPES OF BUDGET PREPARED IN CCL

In ccl, both revenue and capital budgets are prepared in a comprehensive form.

1. REVENUE BUDGET

The revenue budget of the ccl comprises mainly the budget estimates for the following
functionaries :

1)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 area
based on the previous years figures.Thereafter,the area 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 estimetes 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

22
of the company,all necessary adjustment are made at the top level management,while
finalizing the annual production plan of the company.

2) Material cost budget: Material is the second important element for which a detailed
plan is prepared by the company.Being a company of different nature,materials used in
ccl can not be termed as raw materials. they are used to extract coal from mines. the
important materials that are used frequently in this process are petrol,oil and lubricants
,explosive,heavy earth moving machinery (HEMM) spares and timber. The expenses
incurred on this items are included in the material cost budget.

3)ManpowerBudget:The manpower is the third important segment of budgetary process

in ccl.Mines running under ccl cover not only a very vast area but also involvesthousand
of workers of different categories at both inside and outside of the mines.At the area
level,the area personnel manager is the controlling authority of the manpower employed
in that area .The amount apent on their salary, wages and other prequisites is put under
the manpower budget.

4)Coal transportation budget:In ccl huge amount is spent on the transportation of coal
from the point of extraction to the railway siding.For this the budget is prepared under a
seperate head.

5)Miscellaneous contractual work budget: Other important functions in ccl are the
development of infrastructure,repairs and maintenance of mines,roads, building and
machineries.These are discharged on a routine basis and the expenses incurred on such
activities are include in the miscellaneous contractual work budget.

6)Welfare Head:A number of welfare activities are operated by ccl for its employees as
well as for the people of the mining areas. Under the ommunity 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 areas. At
headquaterslevel,it runs a central hospital with all basic facilities and equipments.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 seperatebudegatary provision is made for thid
purpose.

7)Monitoring of sale: The delivery order of sale are controlled by tehheadquaters.but the
monitoring of sales/despatchesis essential to match it wuth the sales targets of the

23
company .There are two modes of sales in ccl one through road transportand the other
through the rail transport. At the area level, the area sales manager monitors all activities
regarding the despatch of coal through appropriate means according to delivery orders.

.2) CAPITAL BUDGET

A separate budget under the capital head is also prepared in ccl. The project officers are
directed to submit a list of jobs of capital nature concerning their areas.It includes the
capital items required to produce (extract) coal like heavy earth moving machineries
(HEMM), other equipment‟s and cost of buildings for residential as well as rehabilitation
purposes.The expense incurred on the development of the underground mines are also
booked under the capital heads.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.

3.3 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.

1) HISTORICAL BUDGETING:The budget for fixed expenditure is prepared on the

basis of the past experiences and figures. It is assumed that no much more changes takes
place in regard to the fixed expenditures. Therefore ,the figures are adjusted with a slight
changes as per the current needs and concerned budget is prepared.
2) 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.
3) 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.

24
CHAPTER –IV:RESEARCH DESIGN

4.1 RESEARCH PROBLEM

The purpose of the study is to analyze the effect of budgeting in minimizing the total
cost and improving the organizational effectiveness at central coalfields limited ,Ranchi.

25
4.2OBJECTIVE OF THE STUDY
The purpose of the study is to analyze the effect of budgeting and budgetary control in
improving organization effectiveness and profitability of the business at central coalfields
limited, Ranchi.

1) To analyze the effect of budgeting in improving organization effectiveness at

CCL,Ranchi.

2) To understand the role of budgetary control in minimizing the cost and maximizing the
profitability of the business at CCL,Ranchi

26
4.3 RESEARCH METHODOLOGY
The research study is based on the secondary data ( revenue budget 2013-14 of ccl,
ranchi) which was provided to me by central coalfields limited,Ranchi, for the purpose of
completing my study.

27
 CHAPTER-V: DATA ANALYSIS AND FINDINGS

5.1 REVENUE BUDGET 2013-14 VS WORKING RESULT 2013-14

Int Actual Variance Variances

Budget Figure s b/w b/w CPT of
2013- 2013-14 Budg. Budg.
14 &Actu. &Actu.
Dept. coal 424.17 397.64 -26.53
production(LT)
Hired coal 153.83 102.59 -51.24
producton(LT)
Total 578 500.23 -77.77
production(LT)
Revenue 578 500.22 -77.78
production(LT)
Internal 0.06 0 -0.06
consumption
Net saleable 577.94 500.22 -77.72
coal(LT)
Dept. OBR(L.cum) 491.3 359.42 -131.88
Contactual 496.2 205.37 -290.83
OBR(L.cum)
Total Revenue 987.5 564.79 -422.71
OBR(L.Cum)
Overall composite 1397.8 919.95 -477.93
production(L.Cum) 8
Manshifts(L.)Actual 96.6 98.17 1.57
Adj 104.07 107.76 3.69

OMS(Te) 5.55 4.64 -0.91

28
EMS(Rs) 2324.7 2377.57 52.79
8

EXPENDITURE(La Lakh CPT(Rs) Lakh(Rs) CPT(Rs) Lakh(Rs) Variances

kh Rs) Rs b/w CPT of
Budg.
&Actu.
Total salary & 22458 388.592241 233411.2 466.617128 8828.22 78.02488705
wages 3 4 2 5
Admin. Expenses 75263 130.226321 71963.57 143.863839 -3299.43 13.63751884
1 9
Explosive 15757 27.2640758 11867.1 23.7237615 -3889.9 -3.540314311
6 4
Timber 163 0.28203619 129.62 0.25912598 -33.38 -0.022910213
8 5
pol 38126 65.9687856 36491.23 72.9503618 -1634.77 6.981576154
9 4
HEMM and Other 18104 31.3250510 16525.95 33.0373635 -1578.05 1.712312517
spares 4 6
Total stores 72150 124.839948 65013.9 129.970612 -7136.1 5.130664147
8 9
power (Incl. GT 29268 50.6419351 22767.79 45.5155531 -6500.21 -5.126381992
sets) 5 6
Net Transprt coal & -1031 - -621.55 - 409.45 0.54136893
sand 1.78392220 1.24255327
6 7
surface miner 15125 26.1705367 7925.01 15.8430490 -7199.99 -10.32748768
3 6
contractual OBR 14711 25.4541994 12924.44 25.8375114 -1786.56 0.383312097
9
other contracts 9920 17.1644115 10943.42 21.8772140 1023.42 4.712802495
3 3
purchase repairs 5783 10.0062290 5062.75 10.1210467 -720.25 0.114817719
2 4

29
workshop debits 17753 30.7177215 14779.48 29.5459597 -2973.52 -1.171761785
6 8
welfare expenses 15207 26.3124199 10016.23 20.0236495 -5190.77 -6.28877038
7 9
other misc expenses 16238 28.0963421 21376 42.7331973 5138 14.63685521
less receipt 8 9
CSR 0 0 0 0 0 0
Sub total 49497 856.438384 480557.6 960.692515 - 104.2541307
0 6 1 3 14412.39
V.R.S 1060 1.83410042 421.84 0.84330894 -638.16 -0.990791482
6 4
Service charges to 2580 4.46413122 2066.29 4.13076246 -513.71 -0.33336876
CIL 5 5
OBR Adjustment 881 1.52437969 24165.84 48.3104234 23284.84 46.78604372
3 1
Interest 1200 2.07634010 235.21 0.47021310 -964.79 -1.606126998
5 6
Depreciation 23000 39.7965186 23415.36 46.8101235 415.36 7.013604876
7 5
prov. Land reclmtion 10436 18.0572377 9239.97 18.4718124 -1196.03 0.414574627
8
subsidy for stowing -33 - -173 - -140 -0.288748474
0.05709935 0.34584782
3 7
prov. For -149 - 4611.05 9.21804406 4760.05 9.47585629
gratuity(acturial) 0.25781223 1
prov. Leave 10193 17.6367789 -4715.85 - - -27.06433078
encashment 9.42755187 14908.85
(acturial) 7
Sub Total 49168 85.0745752 59266.71 118.481288 10098.71 33.40671302
2 2
TOTAL COST 54413 941.512959 539824.3 1079.17380 -4313.68 137.6608437
8 8 2 4
gross sale value of 83267 1440.75682 718509.5 1436.38705 - -4.36977627
raw coal 1 6 3 114161.4
7
deduction 0 0 0 0 0 0
bonus 0 0 0 0 0 0
net sale value of raw 83267 1440.75682 718509.5 1436.38705 - -4.36977627

30
coal(50+51+52) 1 6 3 114161.4
7
profit/loss on 28853 499.243866 178685.2 357.213246 - -142.03062
coal(53-49) 3 1 1 2 109847.7
9
profit/loss on 34722 29548.73 -5173.27
washeries (coking)
profit/loss on 46831 31806.86 -
washeries (coking) 15024.14
do- on hard coke -557 -447.31 109.69
do- on soft coke 0 0 0
do - on dankuni 0 0 0
operating profit 36952 239593.4 -
9 9 129935.5
Interest on power 200 237.22 37.22
bonds
Interest on surplus 37000 31763.63 -5236.37
fund
profit on sale of coal 0 0 0
block
Rehabilitation of -3468 -2607.35 860.65
ECL,BCCL
Prior period Adj. 0 1127.38 1127.38
cost of mine closure 0 0 0
others 0 2420.44 2420.44
prov. For doubtful -5000 -9185.11 -4185.11
debts / bad debt
provision for NCWA 0 0 0
arreear
accre./decre(stock). 0 - -
10762.56 10762.56
OVERALL PROFIT 39826 252587.1 -
& LOSS 1 4 145673.8
6

31
5.2 VARIANCE ANALYSIS AND FINDINGS
Variance analysis
1) Coal production

PRODUCTION IN LT
578
580

560

540

520
500
500 PRODUCTION IN LT

480

460
budgeted
prod. actual prod.

INFERENCE:

Actual results of coal production 2013-14 is lower than the budgeted one due to some
internal policies and some external factors (Gov. policy, labour strikes, climatic
conditions etc.)

32
2) Revenue production

Revenue prod.(LT)
600
578
580
560
540
520
500 Revenue prod.(LT)
500
480
460
Budgeted Actual rev.
rev. prod prod.

INFERENCE: Actual revenue production 2013-14 is lower than budgeted revenue

production 2013-14 due to total raw coal production.

33
3)TOTAL REVENUE OBR

REVENUE OBR
1200

1000 987.5

800

600 564
REVENUE OBR
400

200

0
BUDGETED REV. ACTUAL REV. OBR
OBR

INFERENCE: Total actual OBR for 2013-14 is lower than the budgeted OBR 2013-
14 because of decrease in production and efficient over burden removal equipment
and machinery.

34
4)MANSHIFTS

MANSHIFTS
98.5
98
98

97.5

97

96.5 MANSHIFTS
96
96

95.5

95
BUDGETED ACTUAL
MANSHIFTS MANSHIFTS

INFERENCE: Actual manshifts 2013-2014 is greater than budgeted manshift 2013-14

because of new recruitments( increase in manpower).

35
 5) Total salary and wages

Total salary & wages

236000
234000 233411
232000
230000
228000
226000 Total salary & wages
224583
224000
222000
220000
budgeted Actual salary
salary & & wages
wages

Inference: Total actual salary and wages for 2013-14 exceeds the budgeted salary and
wages 2013-2014 due to increase in manpower and increase in dearness allowances of
the employees.

36
6) Administrative expenses

Administrative expenses (in lakh Rs)

75263
75500
75000
74500
74000
73500
73000
72500 71963.57
Administrative expenses (in lakh Rs)
72000
71500
71000
70500
70000
Budgeted Actual
admn. admn.
expenes expenses

Inference: The actual administrative expenses for 2013-14 is lower than the budgeted
Admn. Expenses 2013-14 due to standardization in work procedures and by efficient use
of technology( using computers for eliminating paper) by way of digitizing all important
papers and keeping them in well-organized electronic files to save space and
administrative costs.

37
7) welfare expenses

welfare expenses (In lakh Rs)

15207
16000
14000
12000 10016.23
10000
8000
welfare expenses (In lakh Rs)
6000
4000
2000
0
Budgeted Actual
welfare welfare
expenses expenses

Inference: The actual welfare expenses for 2013-14 is less than the budgeted welfare
expenses 2013-14 due to internal policy of the organization.

38
8) Total stores (In lakh Rs) (Including expenditure on explosive,timber,and other spares)

Total store expenditure(in lakh Rs)

74000 72151
72000

70000

68000
65013.9 Total store expenditure(in lakh Rs)
66000

64000

62000

60000
Budgeted Actual total
total stores stores

Inference: The actual total store expenditure for 2013-14 is less than the budgeted total
store expenditure because of reduction in actual coal production and optimum purchase
and efficient utilization of explosive, timber and other spares

39
9) Expenditure on power (incl. GT sets)

Expenditure on power (In lakh Rs)

29268
30000

25000 22767.79

20000

Expenditure on power (In lakh

15000
Rs)
10000

5000

0
Budgeted Actual expd
expd on on power
power

Inference: Actual expenditure in power for 2013-14 is less than budgeted expenditure in
power 2013-14 due to decrease in Total actual production of coal.

40
10) Expenditure on Purchase Repairs

expenditure on purchase repairs(In lakh Rs)

5783
5800

5600

5400

5200 5062.75 expenditure on purchase

repairs(In lakh Rs)
5000

4800

4600
Budgeted Actual
Purchase purchase
Repairs repairs

Inference: The actual expenditure on purchase repairs for 2013-14 is less than the
budgeted expenditure on purchase repairs 2013-14 because of efficient and optimum
purchasing system and standardized evaluation& record keeping system.

41
11) Expenditure in workshop debits ( in lakh Rs)

Expenditure in workshop debits( In lakh Rs)

17753
18000
14779.48
16000
14000
12000
10000
8000 Expenditure in workshop
debits( In lakh Rs)
6000
4000
2000
0
Budgeted Actual
workshop workshop
debit debit

Inference: The actual workshop debit for 2013-14 is less than budgeted workshop debit
2013-14 due to efficient maintenance of equipments and machinery and standardization
of work procedure.

42
12) Expenditure on V.R.S ( In lakh Rs)

Expenditure on V.R.S ( In lakh Rs)

1200 1060

1000

800

600 421.84 Expenditure on V.R.S ( In lakh

Rs)
400

200

0
Budgeted Actual
Expd. on Expd. on
V.R.S V.R.S

Inference: The actual expenditure on V.R.S for 2013-14 is less than the budgeted
expenditure on V.R.S 2013-14 because less number of employees opted for the voluntary
retirement scheme.

43
13) Expenditure on service charges to CIL (In lakh Rs)

Expenditure on service charges to CIL( In lakh

Rs)

3000
2500
2000
1500
Expenditure on service charges
1000
to CIL( In lakh Rs)
500
0
budgeted Actual
service service
charges to charges to
CIL CIL

Inference: Actual expenditure on service charges to CIL for 2013-14 is less than
budgeted expenditure on service charges to CIL 2013-14 due to decrease in actual total
coal production.

44
14) Expenditure on surface mining( In lakh Rs)

Expenditure on surface mining( In lakh Rs)

16000

14000

12000

10000

8000
Expenditure on surface mining( In
6000 lakh Rs)
4000

2000

0
budgeted Actual
expenditure expenditure
on surface on surface
mining mining

Inference: The actual expenditure on surface miming for 2013-14 is less than the
budgeted expenditure on surface mining due decrease in over burden removal and due to
investment in new technology used for extraction of raw coal in open cast mines.

45
15) Total cost (In lakhs Rs)

Total cost( In lakh Rs)

545000 544139
544000
543000
542000
541000 Total cost( In lakh Rs)
539823.67
540000
539000
538000
537000
Budgeted Actual Total
Total cost cost

Inference: Actual total cost for 2013-14 is less than the budgeted total cost 2013-14
because of reduction of expenditure in service charges to CIL, reduction of expenditure
in V.R.S, reduction of expenditure in workshop debits, reduction of expenditure in
explosive, timber, power etc. Therefore we can say that budgeting acts as a tool for
improving the financial performance of the company by way of reducing the costs.

46
16) Net sale value of raw coal (In lakh Rs)

Net sale value of raw coal

840000
820000
800000
780000
760000
740000
720000 Net sale value of raw coal
700000
680000
660000
budgeted Actual net
net sale sale value
value of of raw coal
raw coal

Inference: The actual net sale value of raw coal for 2013-14 is less than budgeted net sale
value of raw coal due decrease in actual total production of raw coal.

47
17) Operating profit ( In lakhs Rs)

Operating profit(In lakh Rs)

400000
350000
300000
250000
200000
Operating profit(In lakh Rs)
150000
100000
50000
0
Budgeted Actual
operating operating
profit profit

Inference: The actual operating profit for 2013-14 is less than the budgeted operating
profit 2013-14 due to decrease in total coal production and decrease in Net saleable coal.

48
18) Overall Profit & Loss (In lakh Rs)

Overall profit and loss (In lakh Rs)

400000
350000
300000
250000
200000
Overall profit and loss (In lakh Rs)
150000
100000
50000
0
Budgeted Actal
overall overall
profit & loss profit & loss

Inference: The actual overall profit & loss for 2013-14 is less than the budgeted overall
profit & loss due to decrease in total coal production, decrease in net saleable coal,
increase in expenditure on salary and wages, and also due to some external factors.

49
 CHAPTER-VI: CONCLUSION

The study discussed the analysis of effect of budgeting and budgetary control in
minimizing the total cost and in improving the organizational effectiveness.The study
also highlights facts about the financial performance,operating profit and overall profit &
loss of central coalfields Limited.Since it is found that in CCL budgets are prepared by
using techniques such as historical budgeting,zero based budgeting and some special
budgeting techniques.As a part of this effort ,necessary policy has been formulated and it
is reflected in the budget.

It is found that budgetary control is practiced in ccl by recording the actual performance
achieved in a proper system,which thereby facilates the comparison between budgeted
and actual performance.The objective for such comparison is to find out the deviation
between the two and provide the base for taking corrective action.

The results of the variance analysis indicates that with the help of budgeting there has
been significant cost control in expenditure on the power,total stores, administrative
expenses,expenditure on purchase repairs ,workshopdebits, expenditure on V.R.S,
Expenditure on service charges to CIL, Expenditure on OBR,expenditure on surface
mining,which has thereby helped in minimizing the total cost,i.e from budgeted total cost
544139(In lakh Rs) to actual Total cost 539823.67(In lakh Rs) for 2013-14. the variance
analysis helped the company to understand the present costs and then to control future
cost. Thus it can be concluded that budgeting and budgetary control helps a lot in
minimizing the total cost and in improving the organizational effectiveness.

50
 CHAPTER-VII:LIMITATIONS

 Trade Unionism : Trade Unionism is rampant in the mines. Every mine has over
six Recognized Trade Unions.
 Poor work culture : On an average employees work for only 4 hours in a eight hour
shift.
 Law and order problems in coal mining areas : The law and order situation in
mining areas is bad. There are frequent bandhs and extremist groups
prevent/interfere with mine development activities. On an average the mines are
closed for about 30 days due to poor law and order condition prevailing in Mining
areas.
 Inordinate delay in release of Forest land : There is inordinate delay in the
processingof Forest land proposals. The State Govt. takes considerable time in
recommending forest land proposals to the MOEF for stage I clearance

51
 CHAPTER-VIII: SUGGESTIONS

 Old mines with Obsolete Technology : Most of the mines in CCL are old with
antiquated equipment. The company has opened a few mines in recent past. State
of the art technology is being used in only few mines. This needs to be improved
and new technology should be adopted in all the mines.
 The application of information technology should be improved in the mines.
 The coal is priced below the international level : at CCL coal price is 30% cheaper
than the International Price, which can be raised for higher profitability.

 However a budget is always prepared for future hence there will be deviation
between the budgeted results and actual results.This deviation can be minimized by
fixing responsibility on proper persons so that they can be held responsible for any
such deviations.

52
 BIBLIOGRAPHY
Books:

1) Cost and management accounting :The Institute of cost and works accountants of
India.
2) Secondary data provided by Central Coalfields Limited , Ranchi
3) Annual Report: CCL, Ranchi
4) Budgeting and Decision making: Larry M. Walther

WEBSITES:

 www.icwai.org
 www.ccl.gov.in

53
 ANNEXURE:REVENUE BUDGET 2013-14

REVENUE BUDGET 2013-14

Int Budget 2013-14

Dept Coal production (LT) 424.17

Hired Coal production (Lt) 153.83
Total production (LT) 578
Revenue prodn (LT) 578
Internal Consumption 0.06
Net Saleable coal (LT) 577.94
Dept OBR(L.Cum) 491.3
Contractual OBR (L.Cum) 496.2
Total Rev. OBR(L.Cum) 987.5
Overall composite prodn(L.Cum) 1397.88
Manshifts (L)Actual 96.6
Adj 104.07
OMS(Te) 5.55
EMS(Rs) 2324.78

EXPENDITURE(Lakh Rs) Lakh(Rs) CPT(Rs)

Total Salary & wages (1 to 6) 224583 388.59
Admin.Expenses 75263 130.23
Explosive 15757 27.26
Timber 163 0.28
Pol 38126 65.97
HEMM and Other Spares 18104 31.32
Total stores (16 to 19) 72151 124.84
power (Incl.Gt sets) 29268 50.64
Net Traspirt- Coal & sand -1031 -1.78
Surface Miner 15125 26.17
Contractual OBR 14711 25.45
Other Contracts 9920 17.16
Purchase Repairs 5783 10.01
Workshop Debits 17753 30.72
Welfare Exapenses 15207 26.31
Other Misc. Expenses Less Recipt 16238 28.1
CSR 0 0
Sub-Total (14+15+20+21+22 to 35) 494971 85643

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V.R.S 1060 1.83
Service Charges to CIL 2580 4.46
OBR Adjustment 881 1.52
Interest 1200 2.08
Depreciation 23000 39.8
Prov- Land Reclmtion 10436 18.06
Subsidy for stowing -33 -0.06
Prov. For Gratuity(Actual) -149 -0.26
prov. For leave Encashment(actl) 10193 17.64
Sub-Total (37 to 48) 49168 85.07
TOTAL COST (36+49) 544139 941.51
Gross sale value of Raw Coal 832671 1440.75
Deduction 0 0
Bonus 0 0
Net sale value of raw coal(51-52+53) 832671 1440.75
Profit/Loss on Washeries (Coking) 34722
profit/Loss on Washeries (non- 46831
coking)
do-on Hard Coke -557
do-on Soft Coke 0
do- on Dankuni 0
operating profit 369528
Interest on power Bonus 200
Interest on surplus fund 37000
profit on sale of coal block 0
Rehabilitation of ECL, BCCL -3468
Prior period Adj. 0
cost of mine closure 0
others 0
prov.for Doubtful Debts/Bad debt -5000
prov. For NCWA arrear 0
Accre/Decre (stock). 0
OVERALL PROFIT & LOSS(55 to 398260
67)

55