Budgetary Control Bcl

7/21/2019 Budgetary Control Bcl

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CHAPTER I

PROFILE OF COMPANY

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BRIEF HISTORY OF THE COMPANY

The company was established on 3.2.1976 as a Pvt. Ltd. Company nde! the name o"

#athinda Chemicals $ #anspati %ills Pvt. Ltd. with &egiste!s o" companies P n'ab( )imachal

P!adesh $ Chandiga!h( at *alandha!. The company initially sta!ted solvent e+t!action with the

capacity o" ,- TP /tones pe! day0 and sta!ted p!ocessing o" &ice #ean.

n 1979( the capacity o" the solvent was do bled to - TP and a 12 TP )yd!ogenation

Plant was installed "o! p!od cing oil which was "inanced by P C.

n 19 -( the company inc!eased its capacity by installing !e"ine!y and oil mill "!om its own

so !ces and the capacity o" solvent e+t!action plant was !aised pto 1-- TP .

n 19 4 the company changed to #athinda Chemicals Pvt. Ltd. t was conve!ted into a

seemed P blic Ltd. Company on 2.1.19 9.

The company " !the! inc!eased the capacity o" solvent e+t!action "!om 1--TP to 14-

TP by !aising te!m loan o" &s. - Lacs "!om P C in the yea! 199-.

n 5 g 1991( the company was sanctioned &s. 12- Lacs "!om P C "o! installation o"

"!esh solvent e+t!action plant o" 2-- TP and the capacity o" )yd!ogenation Plant was !aised

"!om 12 TP to 24 TP .

ith the delicensing o" anaspati 8hee in ew nd st!ial policy anno nced on 24.7.199(

the company stopped man "act !ing ha!d oil and the )yd!ogenation Plant o" company was

modi"ied. o as to "acilitate the man "act !ing o" anaspati.

ACTIVITY

The company is mainly p!od cing anaspati 8hee and &e"ined:edible oil "o! h man

cons mption the p!od cts o" the company a!e being ma!;eted in the pac;ets o" 14 ;g( 4lt( 2lt(

1ltast / ndian tate0 the company is having a well ;nitted deale!s

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netwo!;s "o! ma!;eting p!od cts and having its sale depots sit ated in the states o" ?.P.( P n'ab(

)a!yana( *$@( &a'asthan $ ).P besides the nion te!!ito!y o" ew elhi.

The company is ma!;eting its p!od cts nde! the b!and name o" A&ishiB A ha;tiB and Asta!B

vegetable oil and A% !liB !e"ined oil and the same got a ve!y good !esponse "!om the di""e!ent

sections o" the cons me!s.

RAW MATERIAL

The !aw mate!ials o" the company a!e Cotton eeds( % sta!d eeds( n lowe! eeds(

Palm Dil( oyabean eeds( Paddy &ice #ean and ilm Dil.

PROMOTERS AND THEIR BACKGROUND

#CL was p!omoted by Late h. wa!;a ass %ittal whose is !ecently died and he was

mat!ic pass and having b siness e+pe!ience o" abo t ,- yea!s. )e has been a di!ecto! o" e oiled

olvent nd st!y Pvt. Ltd. @ot;ap !a in the ea!ly yea!s o" his ca!ee!.

&ega!ding o!ganiEation p!o"ile( the management patte!n o" #CL shows a high deg!ee o"

app!eciation. %anagement believes in dignity o" labo! and inc!ease the mo!ale and con"idence to

p t the ma+im m e""o!ts to achieve the ob'ectives by coo!dinating all the ope!ational " nctions o"

the o!ganiEation.

PROCESS OF MAKING OIL

&e"ined oil and anaspati 8hee is p!epa!ed "!om soyabean oil( palm oil( cotton seed oil(

!ice oil etc. n all types o" oil( mainly "!ee "atty acid( colo! pigments( g ms( wa+es etc a!e p!esent

as imp !ities which a!e !emoved d !ing the man "act !e o" !e"ined oil. The p!ocess o" ma;ing oil

is completed in to di""e!ent stages.

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1. C&? ) 8 D >> F:

hen the seeds a!e c! shed( oil o" pto ,-G is p!od ced and a 'oint p!od ct a!o nd 49G to

2G is p!od ced depending pon type o" seeds losses d !ing the p!ocess a!ise between -.24G to

1.4G by p!od ct believes .24 to 1G a!e p!od ced.

2. &> 8 D >> F:

The d!ied oil which is "!ee "!om all imp !ities is nde!gone ope!ation in !e"ine!y plant. The

whole p!ocess desc!iption o" ma;ing o" oil is mainly divided in the th!ee stagesF:

a. e t!aliEation.

b. #leaching.

c. eodo!iEation.

These stages help in !emoving the odo!i"e!o s matte!s and collectively these th!ee stages

a!e called as p!e:hyd!ogenation stage.

a0 >?T&5L 5T D F:

n the ne t!aliEe! vessel c! de oil is heated pto 6- to - c. 5"te! adding ca stic lye $

phospho!ic acid( it is washed with wate! and is ;ept "o! , to 4 ho !s. )eavy pa!ticle i.e. c!ams get

settled nde! the oils is t!ans"e!!ed "o! bleaching.

b0 #L>5C) 8F:

The oil is p mped to the places which consist o" mild steel vessel with dish ends p!ovided with

heating coils( agitato!s $ a!!angement "o! eval ation the vessel is heated pto 12- to 1,- deg!ee

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centig!ade th!o gh steam oil. 5"te! adding bleaching ea!th pto 2.4G to 3G it is settled pto 2

ho !s to !emove odo!s p!esent in this oil "it is pass "o! thi!d stage.

c0 >D &5 H5T D F:

The p !pose o" this ope!ation is to eliminate ob'ectionable odo! and "lowe! ca sed by volatile

constit ents which can be !emoved by steam distillation. The oil is cha!ged in the eodo!iEed

vessel $ heated pto 24- c th!o gh vac m 5 /"!ee "atty acid0 is !emoved. 5"te! this p!ocess

the oil is p!ocessed th!o gh the #5L "ilte! system. This is the !e"ined oil.

3. 55 P5T D LF:

n the anaspati plant( the p !pose o" the p!ocess is the hyd!ogenation o" oils. 5ll the same

p!ocess o" !e"ining the oil a!e cha!ged into the 5 to clave vessel and many types o" oils i.e.

m sta!d oil( palm oil( cotton seed oil( "illi oil etc a!e mi+ed and a!e heated pto 17- deg!ee

centig!ade. ic;el catalyst is added in it and it is sta!ted with the gea! bo+ and moto! system. 5"te!

sometime( the hyd!ogenation oil( now the oil has been conve!ted into anaspati 8hee. 5"te! this

p!ocess the anaspati is "ilte!ed to the post bleache!. #leaching ea!th pto 1G is added in it and

anaspati is "ilte!ed second time th!o gh the "ilte! p!ess then. The tempe!at !e o" anaspati is

!eady and is sent to the pac;ing division

,. P5C@ 8 D 5 5 P5T D LF:

The anaspati is sto!ed in the vessel that is called ICho!anJ and itamin 5d is added in it.

Then it is pac;ed in the tins( canes and po ches and is sto!ed in the sto!e!oom "o! !ed cing the

tempe!at !e "!om 64 to 4 deg!ee centig!ade. ow the anaspati is !eady "o! sale in the ma!;et.

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PURCHASE CONTROL

5 T&D ?CT D

The p !chasing has wide! meaning than me!e b ying. P !chasing is the most impo!tant " nction o"

mate!ial management. 5 s bstantial pa!t o" ente!p!ises "inance is bloc;ed in mate!ials. ts " nction

is to p!od ce mate!ials( s pplies( se!vices machines and tools at the most "avo!able te!ms

consistent with maintaining the desi!ed standa!d o" K ality.

P !chasing is the most impo!tant " nction o" mate!ial management as the moment an o!de!

is placed "o! the p !chase o" mate!ial a s bstantial pa!t o" the companyBs "inance is

committed which a""ects cash "low position o" the company.

P !chasing p!og!ammed sho ld be "!amed so that the !eK i!ements a!e p!oc !ed as and

when needed and at a !easonable p!ice. Th s it siEe o" a b siness conce!n pe!mits( the!e

sho ld be sepa!ate p !chasing depa!tment and the !esponsibility "o! p !chasing all types o"

mate!ial sho ld be ent! sted to this depa!tment. ollowing a!e the basic ob'ectives behind

establishing a sepa!ate p !chasing depa!tment.

1. To p!oc !e p!ope! K ality o" mate!ial so that p!od ction goes on ninte!! ptedly.

2. To develop well s pplies !elationship which will ens !e the best te!ms o" s pply o"

mate!ial

3. To ens !e the s pply o" mate!ial at the time it is needed by p!od ction depa!tment.

,. ched ling o" p !chase by ;eeping in view o" sho!t te!m and long te!m p!od ction

policies o" the conce!n.

4. The wastages o" mate!ial d e to spoilage( obsolescence( d plication etc. a!e ;ept at

minim m.

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PURCHASE PROCEDURE OF RAW MATERIAL

The !aw mate!ial "o! p!od ction in #CL a!e seeds o" di""e!ent types li;e cotton seeds( m sta!d

seeds( soyabean seeds( s n"lowe! seeds and !aw oils li;e m sta!d oil( soyabean( cotton seed oil

and !ice bean oil. The p !chase o" di""e!ent seeds is done in thei! !espective seasons. o

p !chasing is whole yea! p!ocess that is why( a sepa!ate depa!tment I!aw mate!ial depa!tment has

been maintained which !eK i!es speci"ic attention and cont!ol. This depa!tment ens !es that the

seeds a!e p!oc !ed at minim m cost( is o" best K ality and is s pplied to the company as and when

needed with minim m wastage o" time and e""o!ts. n #CL( p !chase is made th!o gh commission

agents. These a!e called Ia!tiesJ who cha!ge commission "o! thei! se!vices. The steps "ollowed "o!

p!oc !ing seeds a!e as nde!F:

1. BARGAINS FOR PURCHASE OF RAW MATERIAL:-

The p !chase o" &.% is made th!o gh a tho!iEed commission agents "!om pa!ties di!ectly th!o gh

telephone. #a!gains a!e w!itten "o! di""e!ent type o" p !chase ba!gain contains K antities o"

commodities to be p !chased and thei! !ates. t also contains whethe! it is .D.&. o! >+ M mill

p !chase. hen the p !chase o" mate!ial is on .D.& basis then all the e+penses o" p !chase a!e

bo!n by the selle! pto the "acto!y o" #CL. hen the p !chase is on >+:mill basis. Then the

e+penses o" p !chase a!e bo!n by the #CL "!om the place o" p !chase pto "acto!y.

2. RECEIPT OF MATERIAL:-

hen the season sta!ts the seeds a!e a!!ived at the main gate o" the "acto!y th!o gh di""e!ent types

o" vehicles li;e tempos( t! c;s( t!olleys etc. t! c; d!ive!s note his t! c; n mbe! to the sec !ity

g a!d cat the main gate the sec !ity g a!d ta;es the vehicle in "acto!y t !n by t !n on p!io!ity

basis.

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3. WEIGHTMENT OF MATERIAL:-

a0 eightment in case o" seedsF

hen seeds th!o gh the vehicles a!e ta;en in the "acto!y p!emises( thei! weightment is done at the

weightment b!idge sit ated nea! the main gate g!oss weight is "illed in the !espective mate!ial

!eceipt and vehicle is sent to 8odown "o! nloading o" seeds. 5t the go downs t! ;s a!e nloaded

by the labo !e!s and vehicle is sent bac; to the weightment b!idge "o! weighing the weight o"

empty vehicle weightment is done and net weight is calc lated by ded cting weight o" empty

vehicles "!om the g!oss weight. 5ll this is done to dete!mine the sho!tage in leans it o" va!io s

types o" seeds. hen the mate!ial is !eceived at the gate 3 copies o" mate!ial !eceipt a!e p!epa!ed.

Pe!"o!ma o" mate!ial !eceipt is shown he!e. Dne copy o" mate!ial !eceipt is ;ept at the gate as a

!eco!d( second is given to the d!ive! o" the vehicle and the thi!d is attached with the bill and sent to

acco nt depa!tment "o! payment.

b0 eightment in case o" c! de oilF

n case o" c! de oil also ' st oil tan;e!s a!e weighted and g!oss weight is meas !ed. Then oil o"

tan;e! is nloaded and empty tan;e!s a!e weighted and ded cted "!om g!oss weight and net weight

o" oil is dete!mined.

4. PAYMENT:-

a0 Payment o" "!eightF

The acco nts depa!tment is !esponsible "o! ma;ing payments o" "!eight. Payment o" "!eights is

made only when the vehicle is nloaded and mate!ial !eceipt is iss ed to them( payment o" "!eights

is made on K antity basis. Payment is calc lated on the mate!ial !eceipt at the "i+ed pe! met!ic ton.

Payment o" sho!tage o" mate!ial is ded cted "!om the d!ive!s. he!e the amo nt o" "!eight e+ceeds

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&s. 2-(---. 5 T is ded cted at the !ate p!esc!ibed at that time i.e. at the !ate o" 2G N s !cha!ge.

!ive!s may himsel" !ecove! payment o" sho!tage "!om the pa!ty.

b0 Payment o" seedsF

The acco nts depa!tment is !esponsible "o! the payments o" all types o" mate!ial li;e seeds and oils.

Payment is made on the basis o" te!ms and conditions made at the times o" p !chasing the mate!ial.

P !chases o" seeds a!e made on 2 basesF one is at l mp s m !ate th!o gh the di""e!ent commission

agents and the othe! is based on oil contents in the seed th!o gh the commission agents and di!ectly

"!om the pa!ties. n case o" l mp s m !ate( payment o" mate!ial is made on the basis o" K antity

!eceived in the "acto!y m ltiply by the ba!gain !ate. n case o" p !chase based on oil contents a

sample is sealed and a sample n mbe! is w!itten on it. 5"te! that it is analyEed in labo!ato!y and a

lab analysis !epo!t is iss ed by the labo!ato!y ncha!ge lab analysis !epo!t shows the name o" the

pa!ty( oil( date o" analysis( tan;e! n mbe! date etc. 5ll payments a!e made at the d e dates. These

dates depend pon the ma!;et conditions p!evailing on di""e!ent states "!om whe!e the mate!ial is

p !chased. hen the payment is made be"o!e the d e date( an amo nt o" cash disco nt is ded cted

on the basis o" days. o! e.g. i" d e date is a"te! 7 days then a"te! ded cting the cash disco nt( it can

be made with in 4 days all payments a!e made th!o gh demand d!a"ts. Payment sheet is maintained

by the acco nts depa!tment which ;eeps the !eco!d o" payment d e o! paid.

c0 Payment o" c! de oilF

n case o" c! de oil payment is made on the basis o" 5 /g ms0 and Contents o" co lo ! / 5:

atty "!ee assets0. n case 5 and contents o" colo ! a!e mo!e incl de oil( the oil is o" poo!

K ality. 5nd i" 5 and contents o" colo ! a!e less then c! de oil is o" bette! K ality samples o" oil

is !eceived and these a!e sealed in small bottles. Then analysis is done in labo!ato!y and a lab

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!epo!t is p!epa!ed and 5 and contents o" colo ! a!e chec;ed and payment is calc lated on this

basis and is made on d e date.

DOCUMENTS TO BE USED FOR PURCHASE OF SEEDS

10 P?&C)5 > #DD@F : t is sed "o! !eco!ding p !chase o" di""e!ent seeds.

20 %5T>& 5L &>C> PTF : t is sed "o! dete!mining the net weight o" seeds. t contains va!io s

col mns pg!ading pa!tic la!s and weight. n pa!tic la!s vehicle no.( ame o" pplie!(

Commodity and O antity a!e !eco!ded. n weight total "a!e( pac;ing and net weight a!e

!eco!ded the Pe!"o!ma o" mate!ial !eceipt is shown he!e 3 copies o" mate!ial !eceipt a!e

p!epa!ed "i!st is ;ept at the weight:ment #!idge. econd is attached with bill and sent to

5cco nts epa!tments and thi!d is sent to pa!ty.

30 L5# 5 5L &>PD&TF : Lab analysis !epo!t is sed "o! !eco!ding the details o" oil

contents chec;ed in samples o" seeds this !epo!t shows the ame o" Pa!ty( mbe!ing o"

Tan;e!s( ate o" 5nalysis etc. pecimen o" the Lab analysis !epo!t sed in #CL.

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PURCHASE PROCEDURE FOR THE ITEMS OF STORES

to!es !e"e!s to the di!ect and the indi!ect mate!ials p !chased "o! stoc; p !pose to be iss ed to

di""e!ent 'obs( wo!; o!de! o! depa!tments as and when !eK i!ed "o! the p !chase "o! the items o"

sto!es the company #CL "ollow "ollowing p!oced !e so that adeK ate K antities o" sto!es has to be

maintained in the company to meet the eme!gency sit ationF:

P !chase &eK isition o! ndenting.

nviting O otations.

P !chase D!de!

&eceipt and nspection o" #ill.

Chec;ing and passing o" bill "o! payment.

10 P !chase &eK isition o! ndentingF : 5 p !chase !eK isition is a "o!m sed as a "o!mal !eK est

to the p !chasing depa!tment to p !chase mate!ial this "o!m is p!epa!ed by the sto!e;eepe! "o!

!eg la! stoc; mate!ials and by the depa!tmental lead "o! special mate!ial not stoc;ed as !eg la!

items. n #CL lead o" depa!tment !eK i!ing speci"ic item o" spa!es ma;e an indent and send it

to sto!e p !chase depa!tment. The p !chase !eK isition is gene!ally p!epa!ed in t!iplicate b t in

#CL the indenting depa!tment p!epa!es , copies o" the same o t o" , copies 2 copies a!e sent

to the p !chase depa!tment and 1 is sent to sto!es depa!tment and 1 is sent to sto!es depa!tment

and 1 is ;ept by the )ead o" epa!tment himsel" the Pe!"o!ma o" sto!e depa!tment is shown

he!e. The indents contain the details abo t the item !eK i!ed. O antity !eK i!ed( ate o"

P !chase etc. &eg la! P !chase !eK isitions a!e p!epa!ed when the item o" mate!ials !each at

the o!de!ing levels i.e. the levels at which the o!de! "o! !eplenishment sho ld be placed this is

done with a view to avoid the sho!tage o" mate!ials and ma;e available ninte!! pted s pply o"

mate!ials to 'obs o! depa!tments.

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20 nviting O otationsF : 5 so !ce o" s pply o" mate!ials m st be selected a"te! the !eceipt o" the

p !chase !eK isition. The p !chase depa!tment s ally maintains "o! eve!y g!o p o" mate!ials

a list o" the s pplie!Bs names and add!esses. O otations may be invited "!om these s pplie!s by

iss ing tende!s to them. Dn !eceipt o" the K otation "!om the s pplie!s( a compa!ative

statement o" va!io s K otations !eceived sho ld be p!epa!ed and the desi!able s pplie!s sho ld

be selected. n #CL( in case o" p !chase o" item whose val e is mo!e than &s. 4---


13/79

o" mate!ials and also sa"e g a!ds against the clos !e o" the "acto!y d e to the non:!eceipt o"

mate!ials. Pe!"o!ma o" the p !chase o!de! in #CL is shown he!e.

,0 &eceipt 5nd nspection D" %ate!ialF: n #CL( the wo!; o" !eceiving the goods is ent! sted to

the sto!e;eepe! when the mate!ial is !eceived at the gates( ent!y is made at the main gate o" the

conce!n and 3 copies o" the nwa!d 8ate Pass a!e iss ed. Dne copy is sent to sto!es and one is

!etained at the gate then the head o" depa!tment chec; the mate!ial !ega!ding its K antity(

K ality and physical condition. Dnly then the give his app!oval to the sto!e p !chase

depa!tment. n case the !eceives mate!ial is not acco!ding to the standa!d !eK i!ed then these

goods a!e !e'ected and sent bac; to the s pplie!. n s ch case th!ee copies o" D twa!d 8ate

Pass a!e p!epa!ed. Dne is sent to the s pplie! Dne is ;ept at gate and one is ;ept in sto!es

specimen o" o twa!d and inwa!d 8ate Pass is shown he!e which contains . o. Pa!tic la!s(

O antity and &ema!;s !ega!ding that pa!tic la! good o! mate!ial. Th s( these doc ments

p!ovide a complete !eco!d o" the all mate!ial !eceived and !e'ected.

40 Chec;ing 5nd Passing D" #ill o! PaymentF : hen sto!e p !chase depa!tment !eceive the

app!oval "!om the )ead o" epa!tments s bmits the bill to 5cco nting epa!tment along with

the o!de! to chec; both the a thenticity as well as the a!ithmetical acc !acy the K antity and

p!ice mentioned is chec;ed as pe! o!de!. )aving th s ve!i"ied the bills in all !espects( the

acco nts section ce!ti"ies and passes the bill "o! the payment and on this basis the cashie! ma;e

the payment. Payment is made acco!ding to the te!ms ag!eed in any pa!tic la!s o!de!. hile

ma;ing the local payment conce!n ma;e the payment th!o gh cheK es and payment o tside

the city is made by the emand !a"t. o( this is the p !chase p!oced !e "o! the items o" sto!es

which the #CL "ollow "o! the smooth " nctioning o" the conce!n and to pe!"o!m " nctions

e""ectively.

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CHAPTER II

OUTLINE OF THE STUDY

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RESEARCH METHODOLOGY

T ! " #$! %!&!'%( "#%) ('* +! ,!&(% +!, * #$$#" */ &0! &: -

R!(#/* 0 #* # * #% '0 #*: - The ve!y "i!st step is the !ecognition o" va!io s types o"

in"o!mation( which is necessa!y "o! the st dy o" b dgeta!y cont!ol.

C#$$!(0 #* # ,'0':- n o!de! to nde!stand the p!esent system o" b dgeta!y cont!ol( data "!om

va!io s depa!tments have been collected by cond cting pe!sonal inte!views.

U*,!%&0'*, */ # %! #%0& +! */ %! '%!, + 0 ! * 0&:- o! nde!standing the va!io s types

o" !epo!ts being sent to "inance depa!tment by di""e!ent sections


16/79

ewspape! Clippings

Pamphlets

REPORT WRITING 5 PRESENTATION

&epo!t >ncompasses F Cha!ts $ iag!ams

OB6ECTIVES OF THE STUDY: -

The main ob'ectives o" the st dy a!e as nde!.

To ;now abo t the need "o! # dgeta!y cont!ol system in the Company.

To be conve!sant with the # dgeta!y cont!ol system $ va!io s types o" planning $ cont!ol

meas !es adopted by the company.

To be "amilia! with the nat !e( types $ p !pose o" b dget to be s bmitted by the va!io s

depa!tments $ get ;nowledge abo t them in a p!actical aspect.

To develop the nde!standing abo t !esponsibility as to why $ by whom it is made.

To ;now abo t the di""e!ent meas !es $ ways to ma;e b dgeta!y cont!ol a s ccess" l

inst! ment "o! planning and cont!ol p !pose.

To st dy $ !eview the p!esent b dgeta!y cont!ol system in #CL( #athinda "o! the p !pose o"

bette! nde!standing o" system $ ma;ing it mo!e e""ective.

SCOPE OF THE STUDY

The st dy is cond cted only at I#CL( #athindaJ P n'ab "o! "o ! wee;s d !ation. The st dy o"

b dget is p !ely based on seconda!y data $ all the in"o!mation is available within the company

itsel" in the "o!m o" !eco!ds which is based on the data collection "o! the yea! 2-12:13. To get

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p!ope! nde!standing o" this concept( have gone th!o gh yea!ly !even e as well as capital

b dget( K a!te!ly b dgets( management !epo!ting /%&0 to Co!po!ate D""ice( monthly cost !eview

data( act al ope!ating data against monthly


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CHAPTER II

MEANING 5 CONCEPT

OF

BUDGETARY CONTROL

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BUDGET AND BUDGETING

INTRODUCTION

To ! n s ccess" lly eve!y o!ganiEation depends on ce!tain management tools. The th!ee

main " nctions o" management a!e planning( ope!ating and cont!ol. Planning !elates to the " t !e(

ope!ating to the p!esent and cont!ol to the past. %ode!n management wants that all ope!ations

sho ld be "o!ecasted and as "a! as possible planned ones. o! assisting the management in the

" nctions o" planning and cont!ol( b dgeta!y cont!ol is one o" the techniK es( which is gene!ally

applied meaning" lly by the management to attain the desi!ed !es lts.

n the conte+t o" b dgeta!y cont!ol( the th!ee common te!ms sed a!e # dget( # dgeting

and # dgeta!y cont!ol.

BUDGET

5 # dget is a detailed plan( e+p!essed in K antitative te!ms( that speci"ies how !eso !ces

will be acK i!ed and sed d !ing a speci"ied pe!iod o" time. 5 # dget is p!epa!ed to have e""ective

tiliEation o" " nds and "o! the !ealiEation o" ob'ectives as e""iciently as possible.

DEFINITION

7A + ,/!0 & ' %!-,!0!% *!, &0'0! !*0 # '*'/! !*0 #$ ( , % */ ' / 8!*

!% #, " ( %#8 ,!& ' &0'*,'%, #% (# '% * " 0 0 ! %!& $0 '(0 '$$ '( !8!, .9

- 6.L. B%#"* 5 L.R. H#"'%,

7A* !&0 '0! # 0 %! *!!,& '%%'*/!, '((#%, */ 0# '* #%,!%$ +'& & (#8!% */ !

#% '$$ 0 ! '(0 8 0 !& # '* !*0!% % &! #% ,! * 0! !% #, # 0 !.9

- G!#%/! R. T!%% .

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ESSENTIALS OF A BUDGET

t is a plan e+p!essed in moneta!y te!ms b t it can also contain physical nits.

t is p!epa!ed p!io! to a de"ined pe!iod o" time d !ing which it will ope!ate.

t is !elated to a de"inite " t !e pe!iod.

t is app!oved by the management "o! implementation.

t s ally shows the planned income to be gene!ated and e+pendit !e inc !!ed.

t also shows capital to be employed d !ing the pe!iod.

t is p!epa!ed "o! the p !pose o" implementing the policy "o!m lated by the management and

the ob'ectives to be achieved d !ing the pe!iod.

t is a "inancial statement( which is p!epa!ed be"o!e the sta!t o" the pe!iod "o! a de"ined pe!iod o"

the policy o" the Company to be p !s ed d !ing the de"ined pe!iod. Th s( a b dget "i+es the ta!get

in te!ms o" ! pees o! K antities against which the act al pe!"o!mance is meas !ed. 5 b dget can(

the!e"o!e( be ta;en as a doc ment( which is closely !elated to both the management " nction as

well as the acco nting " nction o" an o!ganiEation.

BUDGETING

# dgeting !e"e!s to the mechanism o" p!epa!ing b dgets. The p!od ce!s sed to develop a b dget

constit te a b dgeting system. # dgeting system is the most widely sed acco nting system and

"o!mal p!ocess o" "inancial planning sing estimated "inancial and acco nting data.

DEFINITION

7T ! !*0 %! %#(!&& # %! '% */ 0 ! + ,/!0& & )*#"* '& + ,/!0 */.9

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P!epa!ation o! "o!m lation o" b siness b dgets involves ca!e" l st dies o" the conditions o" the

b siness( the ob'ectives o" the management and the capacity o" the b siness conce!n "o! attaining

those ob'ectives. Th s( it can be said that b dgeting involves the enti!e p!ocess o" ma;ing b siness

plans.

B ,/!0 */ %#(!&& *8#$8!& 0 ! #$$#" */ &0! &:-

To "o!ecast sales indicating what K antity and K ality o" goods sho ld be made available.

To dete!mine management policy !ega!ding !ange o" p!od cts( stoc; levels( channels o"

dist!ib tion( investments( etc.

To dete!mine a p!od ction b dget in acco!dance with the "o!ecast $ policies and to plan the

needs "o! mate!ials( labo ! and se!vices along with the costs involved.

To p!epa!e "inancial estimates as !ega!ds cash !eK i!ements "o! planned ope!ation and

investments.

To p!epa!e a I%aste! # dgetJ combining and coo!dinating the individ al b dgets.

B ,/!0 */ & &0! '8! 8! % '% % #&!&-

1. PLANNING:-

The most obvio s p !pose o" a b dget is to K ali"y a plan o" action. The b dgeting p!ocess "o!ces

the individ als who comp!omise as o!ganiEation to plan ahead.

2. FACILITATING COMMUNICATION 5 COORDINATION:-

o! any o!ganiEation to be e""ective( each manage! th!o gho t the o!ganiEation m st be awa!e o"

the plans made by the othe! manage!s.

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3. ALLOCATING RESOURCES:-

8ene!ally( o!ganiEation !eso !ces a!e limited and b dgets p!ovide one means o" allocating

!eso !ces among competing ses.

4. CONTROLLING PROFITS 5 OPERATIONS:-

5 b dget is a plan( $ plans a!e s b'ect to change. eve! the less( a b dget se!ves as a se" l

benchma!; with which act al !es lts can be compa!ed.

;. EVALUATING PERFORMANCE 5 PROVIDING INCENTIVES:-

t is the manage!Bs essential tool to eval ate the pe!"o!mance o" individ als( depa!tments( divisions

o! enti!e company $ is also sed to p!ovide incentive "o! people to pe!"o!m well.

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BUDGETARY CONTROL

# dgeta!y cont!ol is a system whe!e by the b dgets a!e sed as a means o" planning $

cont!olling costs. # dgeting lies down as to what is to be attained $ how it is to be attained( while

cont!ol ens !es that the ob'ectives a!e !ealiEed $ act al !es lts do not deviate "o!m the planned

co !se mo!e than necessa!y. # dgeta!y cont!ol is applied to a system o" management and

acco nting cont!ol by which all ope!ations $ o tp t a!e "o!ecasted "a! ahead as possible $ act al

!es lts when ;nown a!e compa!ed with b dget estimates.

DEFINITION

7B ,/!0'% C#*0%#$ & ,! *!, '& 0 ! !&0'+$ & !*0 # 0 ! + ,/!0& %!$'0 */ 0# 0 !

%!& #*& + $ 0 !& # !

#$ ( #% 0# %#8 ,! ' % +'& & #% 0& %!8 & #*.9

-CIMA LONDON

7B ,/!0'% (#*0%#$ & &0! & ' & &0! # (#*0%#$$ */ (#&0 " ( *($ ,!& 0 ! %! '%'0 #* #

+ ,/!0& (##%, *'0 */ 0 ! ,! '%0 !*0& '*, !&0'+$ & */ %!& #*& + $ 0 !& (# '% */ '(0 '$

!% #% '*(! " 0 0 ! + ,/!0!, '*, '(0 */ #* %!& $0& 0# '( !8! '< %# 0'+ $ 0 .9

- 6.L. B%#"* 5 L.R. H#"'%,.

t "ollows that a # dgeta!y Cont!ol ystem sec !es cont!ol ove! pe!"o!mances and !elated costs in

di""e!ent pa!ts o" a b siness( /i0 by establishing b dgets( /ii0 by compa!ing act al attainments

against the b dgets( and /iii0 ta;ing co!!ective action and !emedial meas !es o! !evision o" the

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b dgets( i" necessa!y. The b dgets p t the plan in a conc!ete "o!m and the "ollow: p action to see

that the plan is adhe!ed to /i.e. the act als do not e+ceed the b dgets0 completes the system o"

cont!ol. n othe! wo!ds( while b dgeting is the a!t o" planning( b dgeta!y cont!ol is the a!t o"

adhe!ing to the plan.

ESSENTIALS OF BUDGETARY CONTROL

Top management s ppo!t is !eK i!ed.

>stablishment o" b dget "o! each " nction and section o" the o!ganiEation.

The goals "i+ed in b dgets sho ld be clea! $ !ealistic.

The!e sho ld be delegation o" a tho!ity and !esponsibility in the o!ganiEation.

C!eation o" di""e!ent !esponsibility cente!s is necessa!y.

Contin o s compa!ison o" the act al pe!"o!mance with that o" the b dget.

The!e sho ld be !esponsibility acco nting system in the o!ganiEation.

ll pa!ticipation o" all the depa!tments $ employees o" the o!ganiEation.

Ta;ing s itable !emedial action to achieve desi!ed ob'ective i" the!e a!e va!iations.

>""ective comm nication o" b dget to di""e!ent depa!tments is !eK i!ed.

>ve!y employee o" the o!ganiEation m st be conve!sant with the ta!gets laid down in the

b dgets.

&evision o" b dgets in the light o" changed ci!c mstances.

&owland and illiam in thei! boo; entitled I# dgeting "o! %anagement Cont!olJ has w!itten( I

# dgeta!y cont!ol is the science o" planning the b dgets themselves and the tiliEation o" b dget

to e""ect an ove! all management tool "o! the b siness planning and cont!ol.J # dgeta!y cont!ol

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!es lts "!om the administ!ation o" the "inancial plan. 5n impo!tant cha!acte!istic o" the b dgeta!y

cont!ol is compa!ing act al pe!"o!mance with p!io! estimates o! ta!gets laid down in the b dget to

ma;e s !e that act al pe!"o!mance is stee!ing in the !ight di!ection and i" any disc!epancy""o!ts a!e concent!ated only ove! a small

po!tion o" the e+pendit !e which is not in con"o!mity with the no!ms. &epo!ts a!e " !nished nde!

the p!inciples o" Amanagement o! cont!ol by e+ceptionB.

/vii0 t p!ovides a motivating "o!ce !ging all conce!ned to wo!; e""iciently.

/viii0 t c!eates in the management the habit o" thin;ing ahead: ma;ing ca!e" l st dy o" the

p!oblems in advance be"o!e ta;ing decisions.

/i+0 t assists delegation o" a tho!ity and is a powe!" l tool o" !esponsibility acco nting.

/+0 t s pplies a basis "o! inte!nal a dit.

/+i0 t c!eates necessa!y conditions to s it setting o" standa!d cost

PRELIMINARIES FOR THE ADOPTION OF A SYSTEM OF BUDETARY CONTROL

o! the s ccess" l implementation o" a system o" b dgeta!y cont!ol( ce!tain p!e:!eK isites a!e to be

" l"illed. These a!e s mma!iEed belowF:

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/i0 The!e sho ld be an o!ganiEation cha!t laying o t in clea! te!ms the !esponsibilities and

d ties o" each level o" e+ec tives( and the delegation o" a tho!ity to the va!io s level.

/ii0 The ob'ectives( plans $ policies o" the b siness sho ld be de"ined in clea! c t and

nambig o s te!ms. The a!eas to be cove!ed by the b dgeta!y system sho ld be clea!ly laid

down.

/iii0 The o tp t level "o! which b dgets a!e "i+ed i.e. the b dgeted o tp t sho ld be stated.

/iv0 The pa!tic la! b dget "acto! which will be the sta!ting point o" the p!epa!ation o" the

va!io s b dgets sho ld be indicated.

/v0 The!e sho ld be an e""icient system o" acco nting to !eco!d and p!ovide data in line with

the b dgeta!y cont!ol system.

/vi0 5 # dget Committee sho ld be set p "o! the establishment and e""icient e+ec tion o" the

plan.

/vii0 The!e sho ld be a p!ope! system o" comm nication and !epo!ting between the va!io s

levels o" management.

/viii0 The!e sho ld be a cha!te! o" p!og!amme which is s ally in the "o!m o" a b dget man al

whe!ein all details !ega!ding the plan and its p!oced !e o" ope!ation a!e given. The man al will

also speci"y the length o" the b dget pe!iod.

/i+0 The b dgets sho ld p!ima!ily be p!oposed by those who a!e !esponsible "o! pe!"o!mance.

/+0 The b dgets sho ld be complete( contin o s and !ealistic.

/+i0 The!e sho ld be an ass !ance "!om the top management e+ec tives o" coope!ation and

acceptance o" the b dgeta!y system.

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TYPES OF BUDGETS

5. Dn the basis o" time pe!iod.

#. Dn the basis o" condition.

C. Dn the basis o" activity levels.

. Dn the basis o" sage.

A. ON THE BASIS OF TIME PERIOD

1. S #%0 R'*/! B ,/!0&:- These b dgets cove! a yea!( a K a!te! o! a month. t cove!s those

activities( the t!end in which is di""ic lt to be "o!eseen ove! longe! pe!iods.

2. L#*/ R'*/! B ,/!0& :- These b dgets cove! pe!iod longe! than a yea!.

3. R#$$ */ B ,/!0&:- &olling b dgets a!e contin ally pdated by pe!iodically adding a new

inc!emental time pe!iod( s ch as K a!te! $ d!opping the pe!iod ' st completed. These b dgets a!e

also called !evolving b dgets o! contin o s b dgets.

B. ON THE BASIS OF CONDITION

1. B'& ( + ,/!0:- >stablished "o! se nalte!ed ove! a long pe!iod o" time i.e. it does not ta;e

into conside!ation c !!ent conditions.

2. C %%!*0 B ,/!0:- >stablished "o! se ove! a sho!t pe!iod o" time and is !elated to c !!ent

conditions.

C. ON THE BASIS OF ACTIVITY LEVELS

1. F

t !nove! attained. t is a !igid b dget with ass mption o" no change in b dgeted level o" activity.

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2. F$!< +$! + ,/!0:- t is designed to give di""e!ent b dgeted costs "o! di""e!ent levels o"

activity. ts compilation !eK i!es the classi"ication o" all costs o! e+penses into "i+ed( va!iable and

semi:va!iable.

D. ON THE BASIS OF USAGE

1. M'&0!% B ,/!0: - 5 maste! b dget( o! p!o"it plan( the p!incipal o tp t o" a b dgeting system(

is a comp!ehensive set o" b dget that ties togethe! all phases o" o!ganiEationBs ope!ations. The

maste! b dget is comp!ised o" many sepa!ate b dgets( o! sched les( that a!e inte!dependent.

2. O !%'0 #*'$ B ,/!0: - Dpe!ational b dget !elates to the planning o" the activities o!

ope!ations o" the ente!p!ise. t encompasses a detailed plan "o! sing the basic "acto!s o"

p!od ction: mate!ial( labo ! and ove!head to p!od ce a p!od ct o! p!ovide a se!vice.

Dpe!ational b dget is composed o" two pa!ts: a p!og!amme o! activity b dget and a

!esponsibility b dget.

a0 P%#/%' !, #% '(0 8 0 + ,/!0:- The p!og!ammed b dget "oc ses on activities !athe!

than pe!sons( it e+hibits the e+pected " t !e in an impe!sonal manne!. t is help" l in

ens !ing balance among va!io s ope!ations o! " nctions o" an ente!p!ise.

b0 R!& #*& + $ 0 B ,/!0: - 5 !esponsibility b dget speci"ies plans in te!ms o" individ al

!esponsibilities. The "oc s is on individ als. The basic p !pose o" this ;ind o" b dget is to

achieve cont!ol by compa!ing the act al pe!"o!mance o" a !esponsible individ al with the

e+pected pe!"o!mance.

3. F *'*( '$ B ,/!0: - These a!e also called p!o"o!ma "inancial statements and show how the

o!ganiEationBs "inancial statements will appea! at a speci"ied time i" ope!ations p!ocessed

acco!ding to plan. The impo!tant components o" "inancial b dget a!e a b dgeted income

statement( a b dgeted balance sheet and a b dgeted statement o" cash "lows.

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SOME IMPORTANT BUDGETS

S'$!& B ,/!0

5 sales b dget is an estimate o" e+pected sales d !ing a b dget pe!iod. 5 sales b dget is ;nown as

a ne!ve cent!e o! bac;bone o" the ente!p!ise. The deg!ee o" acc !acy with which sales a!e

estimated will dete!mine the p!acticability o" ope!ating b dgets. 5 sales b dget is the sta!ting point

on which othe! b dgets a!e also based. The possible "acto!s to be ta;en into acco nt while

p!epa!ing a sales b dget a!e disc ssed as "ollowsF:

P'&0 &'$!& / %! F: The sales "o!ecasts a!e based on past sales "ig !es. The sales "ig !es o" a

n mbe! o" yea!s enable in the dete!mination o" t!ends o" sales. The pwa!d and downwa!d

sales t!ends will be g!eat se in "i+ing " t !e sales. The act al past sales "ig !es will be the

most !eliable c!ite!ion on which sales b dgets sho ld be based. The e+pected seasonal

"l ct ations. Potential demand and position o" t!ade cycle will also be help" l in p!epa!ing

sales b dgets.

A&&!&& !*0 '*, %! #%0& + &'$!& '* F: The salesman a!e the most app!oo!iate pe!sons "o!

estimating " t !e demand. They a!e in to ch with ma!;et and the c stome!s. Thei! e+pe!iencewill enable them to "o!ecast sales "ig !es mo!e !ealistically. The sales manage! sho ld

ca tio sly sc! tiniEe the "ig !es o" salesman so as to eliminate thei! bais. The attit de and

pe!sonal thin;ing o" the salesman may tempt them to nde!estimate o! ove!estimate sales

estimates. The sales manage! gets an idea abo t the ma!;et sit ation "!om salesmanBs estimate.

A8' $'+ $ 0 # %'" '0!% '$& F: the availability o" !aw mate!ials is an impo!tant "acto! in

p!epa!ing a sales b dget. n some cases( !aw mate!ial is a ;ey "acto!. The K ant m o" !aw

mate!ial available to the ente!p!ise will enable the sales manage! to anticipate sales "ig !es.

%o!eove! the smooth s pply o" mate!ials is necessa!y "o! achieving sales ta!gets.

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S!'*'$ $ (0 '0 #*& F: The e""ect o" seasonal "l ct ations sho ld also be conside!ed while

p!epa!ing a sales b dget. The demand o" goods may be mo!e on some pe!iods while they may

be in less demand at othe! times. 5n e""o!t sho ld be made to !ed ce the seasonal e""ect by

giving disco nts o! othe! concessions d !ing o"" seasons.

A8' $'+ $ 0 # *'*(!& F: the availability o" "inances sometimes becomes a limiting "acto!.

The "inances will be !eK i!ed "o! p !chasing va!io s inp ts. The sales b dget is p!epa!ed

alongwith the "inancial b dget. The e+pansion o" the sales e""o!t will need additional capital

o tlay. inancial aspect sho ld be ta;en into conside!ation while p!epa!ing a sales b dget.

P$'*0 (' '( 0 F: The gods will be sold only when they a!e p!od ced( the capacity "i!

p!od cing goods sho ld be ta;en into acco nt. Dn the othe! hand sales e""o!t m st ens !e will

tiliEation o" plant capacity.

PRODUCTION BUDGET

The p!od ction b dget is p!epa!ed in !elation to the sales b dget. hateve! is to be sold sho ld be

p!od ced in time so that it is delive!ed to the c stome!. t is a "o!ecast o" the p!od ction "o! the

b dget pe!iod. P!od ction b dget is p!epa!ed "o! the n mbe! o" nits to be p!od ced and also "o!

the cost to be inc !!ed on mate!ials. Labo ! and "acto!y ove!heads. Two impo!tant conside!ations

a!e involved in the p!epa!ation o" p!od ction b dgetF

/a0. hat is to be p!od ced

/b0. hen is to be p!od ced

The p!epa!ation o" the p!od ction b dget involves the "ollowing stagesF

1. P%#, (0 #* P$'** */ F: a p!ope! p!od ction planning sched le is essential "o! p!epa!ing

p!od ction b dget. The n mbe! o" physical nits to be p!od ced is dete!mined. The tiliEation

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o" optim m plan capacity and avoidance o" bottlenec;s d e to sho!tage o" mate!ials and

labo !( >tc is conside!ed while p!eapa!ing a p!od ction plan. P!od ction Planning will ens !e

a smmoth p!od ction sched le.

2. C#*& ,!%'0 #* # P$'*0 C' '( 0 F: the n mbe! o" nits o" di""e!ent p!od cts to be p!od ced

sho ld be dete!mined an the capacity which the plant will be able to wo!; th!o gho t the

b dgeted pe!iod sho ld be decided. Dne sho ld not "i+ the capacity eithe! too high o! too low.

5 no!mal plan capacity which will be a estimate sho ld be b dgeted.

3. S0#() ? '*0 0 0# +! H!$, F: the K antity o" "inished goods to be ca!!ied "o!wa!d sho ld be

decided. This K antity will depend pon a n mbe! o" "acto!s li;e sales potential( sto!age

"acility( available and cost o" the stoc;. hile "i+ing p!od ction ta!get( the !eK i!ed closing

stoc; "ig !e will be added to the estimated sales and opening stoc; "ig !es will be ded cted

"!om it. The wo!; in p!og!ess will be ta;en into acco nt while "i+ing a p!od ction ta!get.

,. C#*& ,!% */ S'$!& B ,/!0 F: the p!od ction b dget is "i+ed with !e"e!ence to sales b dget. The

sales b dget will p!ovide a g ideline "o! p!od ction planning. " both the b dgets a!e not co:

o!dinated then the!e may a!ise p!oblems o" eithe! selling the whole stoc; o! o" p!od cing it. n

case the sales a!e not nde!ta;en as pe! sched le then p!od ction sho ld be !ed ced o! vice:

ve!sa.

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MATERIALS BUDGET

The mate!ial b dget is conce!ned with dete!mining the K antity o" !aw mate!ials !eK i!ed "o!

p!od ction. The p!og!amme "o! p !chasing !aw mate!ial is ad' sted acco!ding to the p!od ction

b dget. The mate!ials a!e p !chased as pe! the !eK i!ements o" p!od ction depa!tment. The

!eK i!ements o" mate!ials a!e dete!mined p!od ct:wise. The !ates o" cons mption o" !aw mate!ials

a!e also dete!mined. The n mbe! o" nits to be p!od ced m ltiplied by the !ate o" cons mption

will give the "ig !e o" !aw mate!ials !eK i!ed. The stoc;s o" mate!ials !eK i!ed in hand at any time

a!e added to the mate!ials !eK i!ed "o! p!od ction. The !aw mate!ial b dget will se!ve the

"ollowing p !posesF:

1. The P !chase epa!tment will be able to plan the p !chase o" !aw mate!ials at di""e!ent times.

2. t will enable the "i+ation o" minim m stoc; level( ma+im m stoc; level and !e:o!de!ing level.

3. The !aw mate!ial p !chase b dget will be dete!mined.

,. The b dgeted cost o" !aw mate!ial will be dete!mined.

DIRECT LABOUR BUDGET

The labo ! !eK i!ed "o! p!od ction may be classi"ied into di!ect and indi!ect labo !. The labo !

!eK i!ed "o! man "act !ing the p!od ct is ;nown as di!ect labo !. The labo ! which cannot be

speci"ied with p!od ction is called indi!ect labo !. Tho gh two b dgets may be p!epa!ed( di!ect

and indi!ect labo !( b t "!om costing point o" view only di!ect labo ! b dget is p!epa!ed beca se

indi!ect labo ! is made a pa!t o" man "act !ing ove!heads.

The labo ! contents o" each item is dete!mined in te!ms o" g!ades o" wo!;e!s !eK i!ed as pe!

p!od ction b dget. The labo ! time needed "o! each 'ob( p!ocess and ope!ation is dete!mined with

the help o" time nad motion st dy. The !ates o" pay incl ding all allowances a!e m ltiplied by

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this b dget lies with the e+ec tives o" sales depa!tments. The vol me o" these e+penses sho ld be

in di!ect p!opo!tion to e+pected sales "ig !es. The " t !e e+pectation( estimated by the

management .adve!tising policies( !esea!ch p!og!ammes and nat !e o" theses e+penses will

in"l ence the p!epa!ation a selling and dist!ib tion ove!head b dget.

CASH BUDGET

5 cash b dget is an estimate o" cash !eceipts and disb !sements d !ing a " t !e pe!iod o" time .it

p!oceeds va!io s othe! b dgets li;e mate!ials and !esea!ch and development b dget. The cash

b dget is an analysis o" "low o" cash in a b siness ove! a " t !e( sho!t o! long pe!iod o" "o!ecast o"

e+pected cash inta;e and o tlayJ

The cash !eceipts "!om va!io s so !ces a!e anticipated. The estimated cash collections "o! sales(

debts( bills !eceivables( inte!ests( dividends and othe! income and sale o" investments and othe!

assets will be ta;en into acco nt. The amo nts to be spent on mate!ials .payment to c!edito!s and

meeting va!io s so !ces "!om which Cash will be !eceived and the channels in which payments

a!e to be made so that a consolidated cash position is dete!mined. The cash b dget sho ld be co:

o!dinated with othe! activities o" b siness. The " nctional b dgets may be ad' sted acco!ding to

the cash b dget. The available " nds sho ld be "! it" lly sed and the conce!n sho ld not s ""e!

"o! want o" " nds.

CAPITAL E@PENDITURE BUDGET

The b dget lays down the amo nt o" estimated e+pendit !e to be inc !!ed on "i+ed assets d !ing

the b dget pe!iod. 5s the amo nt involved in capital e+pendit !e is s ally high this !eK i!es

ca!e" l attention o" the top management. The b dget is based pon the ann al "o!ecasts o" capital

Page | 34


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e+pendit !e o" va!io s divisions o! depa!tments. >ach division o! depa!tment o" an o!ganiEation

sends the ann al "o!ecast o" capital e+pendit !e o" its own depa!tment to capital >+pendit !e

sanctions committee. The committee a"te! conside!ing the p!o"itability o" the capital e+pendit !e

sanctions the e+pendit !e and amo nt is inco!po!ated in the b dget.

MASTER BUDGET

The maste! b dget is the s mma!y o" va!io s " nctional b dgeted. t is p!epa!ed by integ!ating

va!io s b dgets into one consolidated b dget so as to !ep!esent the b dgeted p!o"it and loss

acco nt and the b dgeted balance sheet as at the end o" the b dget pe!iod.

n the wo!ds o" &owland and illiam ). )a!!( the maste! b dget is( Ia s mma!y o" the b dget

sched les in caps le "o!m made "o! the p !pose o" p!esenting in one !epo!t the highlights o" the

b dget "o!ecast.J The instit te o" %anagement 5cco ntant( London( de"ines it as( ABthe s mma!y

b dget inco!po!ating its component " nctional b dgets and which is "inally app!oved( adopted

and employed .J

The maste! b dget is p!epa!ed by the b dget o""ice! and !eK i!es the app!oval o" the # dget

committee be"o!e it is p t into ope!ation. This b dget is sed to co:o!dinate o" va!io s " nctional

depa!tments and also to se!ve as a cont!ol device.

The va!io s steps involved in the p!epa!ation o" this b dgets incl de o" /10 sales b dget( as the

sta!ting pointQ /20 p!od ction b dget Q /30 cost o" p!od ction Q /,0 cash b dgetQ and /40 the

p!o'ected income statement and the balance sheet.

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ERO BASE BUDGETING BB

He!o base b dgeting is the latest techniK e o" b dgeting and it has an se as a manage!ial Tool.

This techniK e was "i!st sed in 5me!ica in 1962. The "o!me! p!esident o" 5me!ica( 'immy ca!te!

sed this techniK e when he was the, gove!no! o" 8o!gia "o! cont!olling state e+pendit !e.

5s the name s ggests it is sta!ting "!om a sc!atch. The no!mal techniK e o" to se p!evio s yea!Bs

cost levels as a base "o! p!epa!ing this yea!Bs b dget. This method ca!!ies p!evio s yea!B s

ine""iciencies to the p!esent yea! beca se we ta;e yea! as a g ide and decide what is to be done

this yea! when this m ch was the pe!"o!mance o" the last yea! A in Ee!o base b dgeting eve!y yea!

is ta;en as a new yea! and p!evio s yea! is not ta;en as a base the b dget "o! li;ely " t !e

activities a!e decided acco!ding to the p!esent sit ation . n the wo!ds o" pete! 5 pyhe!( I5

planning and b dgeting p!ocess which !eK i!es each manage! to ' sti"y his enti!e b dget !eK est in

detail "!om sc!atch /)ence Ee!o base0and shi"ts the b !den o" p!oo" to each manage! to ' sti"y why

he sho ld spend money at all. The app!oach !eK i!es that all 5ctivities be analysed in Adecision

pac;agesB which a!e eval ated by systematic and !an;ed in o!de! o" impo!tance.J

n Ee!o base b dgeting a manage! is to ' sti"y why he wants to spend .The p!e"e!ence o" spending

on va!io s activities will depend pon thei! ' sti"ication and p!io!ity "o! spending will be d!awn .it

will have to be p!oved that an activity is essential and the amo nts as;ed "o! a!e !eally !eally

!easonable ta;ing into acco nt the vol me o" activity.

PROCESS OF OR STEPS OF INVOLVED IN BB

The "ollowing steps a!e involved in Ee!o base b dgetingF

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/10The ob'ective o" b dgeting sho ld be dete!imined. hen the ob'ective is clea!( then e""o!ts will

be made to achieve that ob'ective. i""e!ent o!ganiEations may have di""e!ent ob'ectives. Dne

conce!n may t!y to !ed ce the e+pendit !e on sta""( anothe! may t!y to discontin e one p!o'ect in

p!e"e!ence to anothe!. o the "i!st step will decide abo t the ob'ect and othe! steps will be possible.

/20The e+tent to which Ee!o base b dgeting is to be applied sho ld be decided. hethe! it sho ld

be sed "o! all ope!ational a!eas o! its sho ld be applied in some a!eas only sho ld be decided

be"o!ehand.

/30The ne+t step in H## is developing o" Adecision pac;agesB. 5 decision pac;age is Ia doc ment

that identi"ies a speci"ic activity in s ch a manne! that management can eval ate and !an; it

against othe! activities competing "o! limited !eso !ces( and decide whethe! to app!ove o!

disapp!ove it.J

/,0Cost and bene"it analysis sho ld be nde!ta;en. e sho ld conside! the cost involved and the

li;ely bene"its to acc! e. Dnly those p!o'ects sho ld be ta;en "i!st whe!e bene"it is mo!e as

compa!ed to the cost involved. Cost bene"it analysis will help in "i+ing p!io!ity "o! va!io s

p!o'ects on the basis o" thei! tility o! !an;ing o" decision pac;ages.

/40The "inal step involved in Ee!o:base b dgeting is conce!ned with selecting( app!oving decision

pac;ages and "inaliEing the b dget.

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BENEFITS OR ADVANTAGES OF ERO BASE BUDGETING

H## is a !evol tiona!y concept and is !elatively a new management tool "o! planning and cont!ol

o" activities. t involves people at all levels in the o!ganiEation and p!omotes team spi!it. The plans

and b dgets based pon H## a!e m ch imp!oved than those based pon t!aditional b dgeting.

The!e a!e a n mbe! o" bene"its that a!ises "!om Ee!o:base b dgeting. ome o" the impo!tant

advantages o" H## a!e en me!ated belowF

/10 t enables management to allocate " nds acco!ding to the ' !isdiction o" the p!og!amme.

The p!io!ity can be "i+ed "o! va!io s activities and thei! implementation will be in the

same o!de!.

/20 He!o:base b dgeting imp!oves e""iciency o" the management. >ve!y manage! will have to

' sti"y the demand "o! !eso !ces. Dnly those activities will be nde!ta;en which will have

' sti"ication and will be essential "o! the b siness.

/30 He!o:base b dgeting will help in identi"ying economical and waste" l a!eas. >mphasis will

be given to economical activities and alte!native co !ses o" action will also be st died.

/,0 The management will be able to ma;e optim m se o" !eso !ces. The e+pendit !e will be

nde!ta;en only when it will have ' sti"ication. 5 list o" p!io!ities is p!epa!ed and cost:

bene"it analysis will be the g iding p!inciple in "i+ing the p!io!ity.

/40 He!o:base b dgeting will be app!op!iate "o! those a!eas whose o tp t is not !elated to

p!od ction. t becomes di""ic lt to eval ate the pe!"o!mance o" those sides which a!e not

di!ectly !elated to p!od ction b t nde!ta;e othe! activities. This techniK e will be help" l

in dete!mining the tility o" each and eve!y activity o" the b siness.

/60 # dgeting will be !elated to o!ganiEational goals. omething will not be allowed on the

plea that it was done in the past. Dnly those things will be allowed which will help in

!ealiEing o!ganistional goals.

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LIMITATIONS OF ERO BASE BUDGETING

ome o" the impo!tant limitations o" H## a!e as belowF

/10 Comp tation o" cost analysis( which is essential "o! H##( is not possible in !espect o"

non:"inancial matte!s.

/20 i""ic lties in "o!m lation and !an;ing o" decision pac;ages as eve!y manage! may not

have the necessa!y e+pe!tise.

/30 The system o" Ee!o:base b dgeting has no scope to ad' st "o! the changes and( th s(

"le+ible b dgeting is not possible.

/,0 t involves a lot o" time and cost o" ope!ating H## is also ve!y high.

ACTIVITY BASES BUDGETINNG ABB

n the t!aditional method o" ma;ing b dgets the p!evio s yea!Bs "ig !e a!e ta;en as the base

and to it ce!tain ove!ages a!e added "o! inc!ease in costs "o! the ne+t pe!iod. This method is

"ollowed pa!tic la!ly "o! indi!ect costs beca se it is ve!y di""ic lt to establish e+act !elationship

between the level o" activities and the indi!ect costs. # t it ma;es the b dgets mo!e o" g estimates

than p!edete!mined statement o" management policy. i!ect cost b dgets( nde! conventional

b dgeting( a!e mo!e acc !ate beca se the !elationship between inp ts and o tp ts can be clea!ly

established. )oweve!( in the changing scena!io whe!e indi!ect costs o tweigh the di!ect p!ocessing

costs in many a sit ations( one cannot be content with !o gh and !eady methods o" yeste!yea!s in

dealing with the indi!ect costs. 5ctivity #ases # dgeting /5##0( also called 5ctivity #ased Cost

%anagement /5#C%0( helps in b!idging this gap o" ;nowledge by enco !aging to ma;e indi!ect

cost b dgets mo!e scienti"ically on the basis o" level o" activities !athe! than a g ess wo!;.

5ctivity based b dgets can be p!epa!ed only i" the o!ganiEation has al!eady completed 5ctivity

#ased Costing /5#C0 identi"ying activities


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CHAPTER III

BUDGETARY CONTROL

5

IT S APPLICATION IN BCL

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BUDGETARY CONTROL IN BCL

The s ccess o" any o!ganiEation depends on ce!tain management tools. # dget


43/79

Those who wo ld be made !esponsible to achieve the b dget sho ld be " lly associated with

the p!ocess o" setting the b dgets and no b dgets sho ld be imposed "!om the top.

ndivid al sho ld be made !esponsible only "o! the costs they can cont!ol.

hile !eal "avo !able va!iances a!e always to be commended( adve!se va!iances sho ld not

inva!iably be viewed as "ail !es o" the individ alBs conce!ned b t as stepping stones towa!ds

" t !e s ccesses.

The e+e!cise o" b dgeta!y cont!ol is ca!!ied o t in the Company since its inception and the!e is a

system in vog e to ;eep a chec; on the b dget p!oposal. hile p!epa!ing the # dget( the

e+ec tives depa!tments ens !e the "ollowingQ :

The b dget estimates a!e p!epa!ed on !ealistic basis.

The ob'ectives o" the company have been ;ept in view while d!awing the b dget estimates.

t is ens !ed that the b dget estimates a!e p!epa!ed ta;ing each division as the cost:cent!e.

The "o!wa!d escalation


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1. R!8!* ! B ,/!0 F The cont!ol o" !even e b dget is the most impo!tant a!ea "o! any

o!ganiEation so as to maintain the p!o"itability as pe! the b dgeted e+pendit !e. " tmost ca!e is

ta;en at the time o" "o!m lating the b dget( the company can achieve its desi!ed goals o"

optimiEing the p!o"it. To optimiEe the p!o"it and minimiEe the e+pendit !e( the cont!ol o"

e+pendit !e is basic necessity. The e+pendit !e nde! &even e # dget is divided as nde!F:

a!iable Cost+pendit !e

i+ed Cost+pendit !e

V'% '+$! C#&0 E< !*, 0 %!

I* 0 M'0!% '$&

a!iable cost inc!eases #ags( Powe!( Coal( el Dil( ate!(

Chemicals $ Catalysts as these a!e dete!mined by the o tside "o!ces. )oweve!( cons mption o"

these items in e+cess o" "i+ed no!ms


45/79

P%#, (0 #* 5 S'$!& B ,/!0

ince P!od ction # dget is p!epa!ed at the level o" 1--G capacity tiliEation d e to cap by the

8ovt. o" ndia( ales Plan /K antity as well as val e the!eo"0 is also d!awn at the level o"

P!od ction Plan. ales Plan being !eg lated nde! >ssential Commodities 5ct( hence cont!ol

the!eo" is not di""ic lt as s bsidy ove! >C5 allocation is not disb !sed by 8ovt. o" ndia. &athe!

they impose penalty "o! e+cess dispatches o" !ea ove! >C5 allocation d !ing the month.

F%! / 0 5 H'*,$ */ C '%/!&

#ased on last yea!Bs act al e+pendit !e on !eight $ )andling Cha!ges and inc!ease

b dget "o! c !!ent yea! $ b dget estimates "o! ne+t yea! in !espect o" "!eight $ handling cha!ges

a!e d!awn. # dgeta!y cont!ol against above !evised estimates and b dget estimates is made and

!easons "o! any e+cess e+pendit !e is analyEed.

FI@ED COST E@PENDITURE

S'$'% !& 5 W'/!& B#* & 5 #0 !% +!*! 0& 0# E $# !!&

hile p!epa!ing the above b dget( the impact o" no!mal inc!ease on acco nt o" basic pay( dea!ness

allowance( pe!sonal pay( special pay( cont!ib to!y p!ovident " nd( leave encashment( g!at ity and

othe! "!inge bene"its ove! last yea!Bs act al is ta;en into acco nt. 5ny addition < !ed ction in sta""

is also conside!ed while d!awing the b dget.

The cont!ol o" e+pendit !e is made against each element o" above head and adve!se va!iances( i"

any( is loo;ed into "o! ta;ing " !the! necessa!y action.

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46/79


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R! ' %& 5 M' *0!*'*(! E< !*, 0 %!

&epai!s $ %aintenance e+pendit !e constit tes the "ollowing heads o" e+pendit !eF:

V'$ ! # & '%!& M The val e o" spa!es iss ed "!om main sto!es and a!e cha!ged to

!epai!s $ maintenance on the basis o" iss e vo che! and ad' sted "o! the spa!es lying at

the site at the end o" the yea!. al e o" sed items !et !ned to sto!es is also ad' sted.

D! '%0 !*0'$ R! ' % : This constit tes "!ee iss e o" mate!ial to cont!acto!s "o! !epai!s

and 'obs get done depa!tmentally.

R! ' % 0 %# / C#*0%'(0#% - This incl des the cost o" mate!ial iss ed to cont!acto!

on cha!geable basis and e+pendit !e on item !ate and man powe! s pply as pe!

cont!act.

F#% '0 #% R! ' %& 5 M' *0!*'*(! B ,/!0

The !elevant "o!mats !elating to above b dget and pe!taining to >lect!ical epa!tment a!e enclosed

as the same have been cove!ed nde! st dy. The >lect!ical epa!tment have " !nished thei!

!eK i!ement "o! p!oc !ement o" spa!es nde! the "o!mat: . hile clea!ing the indents( inance

epa!tment ens !e that necessa!y b dget p!ovision has been made and i" the!e is no b dget

p!ovision( indents a!e !et !ned to the e+ec tive depa!tment. " b dget is available nde! othe!

head o" same g!o p and necessa!y !e:app!op!iation is so ght( the same is allowed a"te! its

app!oval "!om the competent a tho!ity. )oweve!( the ove!all p!oc !ement is allowed within the

app!oved b dget made "o! the same.

?nde! o!mat M IV : 5nn al &ate Cont!acts which a!e e+ec ted by the cont!acto! has been shown

nde! this "o!mat and b dgeta!y cont!ol is e+e!cised against app!oved 5&C.

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48/79

?nde! o!mat: : 5ct al e+pendit !e inc !!ed against o!mat: which !elates to p!evio s

yea!s also in addition to c !!ent yea! is indicated nde! this "o!mat. The act al e+pendit !e will

"o!m &epai!s $ %aintenance e+pendit !e( i" the !elevant spa!es a!e sed in the plant. imila!ly(

act al e+pendit !e against o!mat: towa!ds 5nn al &ate Cont!act is also shown. These two

pa!ts i.e. o!mat: $ "o!m the &epai!s $ %aintenance # dget o" >lect!ical epa!tment and

shown nde! mma!y i.e. o!mat: . o!mat: is details o" s mma!y o!mat: . The boo;ing o"

e+pendit !e against "inancial head is indicated nde! o!mat:S which !econciles with act al

e+pendit !e nde! !epai!s $ maintenance.

W#%) */ C' 0'$ B ,/!0

I*8!*0#%

The cont!ol o" invento!y specially !aw mate!ials( pac;ing mate!ials and sto!es $ spa!es is !eso!ted

at nit level. hile !aising indents "o! all these items( the in"o!mation in !espect o" cons mption o"

these items d !ing the p!evio s yea!s( stoc; available in sto!es


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#CL has no cont!ol ove! s bsidy to be !eceived "!om 8ovt. o" ndia. " " nds a!e available(

!eimb !sement o" s bsidy claim is made within ,4 days.

o "a! !ealiEation o" cons me!Bs p!ice it depends pon policy o" the Company d !ing b sy and o""

season. n case o" p!ivate deale!s( advance is !eceived b t incase o" "inancial instit tions( c!edit

pe!iod is also allowed depending pon ma!;eting "o!ces p!evailing d !ing the pe!iod. )oweve!(

st!ict monito!y cont!ol "o! !ealiEation o" o tstanding amo nt is made by %a!;eting epa!tment.

L#'*& 5 A,8'*(!&

Loans $ advances to employees towa!ds conveyance advance( ho se b ilding advance( ho se

hold advance and othe! misc. advances and also advances to cont!acto!s and s pplie!s a!e made

st!ictly as pe! CompanyBs policies and same is !ecove!ed th!o gh sala!y< cont!acto!s


50/79

schemes d ly !ecommended "o! incl sion by C8% is p!epa!ed by # dget ection. etailed

' sti"ications o" each scheme which a!e being incl ded a!e also " !nished.

The !ecommended schemes


51/79

CHAPTER V

FORMULATION OF

BUDGET

5

VARIANCES W.R.T.

BUDGET

Page | 41


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F#% $'0 #* # B ,/!0

hile "o!m lating the b dget( "ollowing ass mptions have been madeF:

P!od ction $ sales K antity have been ass med as 4(11(4-- %T each based on app!oval

!eceived "!om Co!po!ate D""ice.

Cons mption no!ms have been adopted( d ly app!oved by competent a tho!ity and shown

nde! PP:19.

Latest p!ices o" inp t mate!ials have been conside!ed while p!epa!ing the !evised b dget

estimates "o! 2-12:13 $ b dget estimates "o! 2-12:13.

Closing stoc; o" "inished goods as on 31.3.2--3 and 31.3.2--, has been ta;en the same as was

on 31.3.2--2/act al0.

isco nt and "!eight pe! %T has been conside!ed based on last yea!Bs act al and ma!ginal

inc!ease $ shown nde! PP:7.

@eeping in view the act al o" 2-13:1, and also act al e+pendit !e inc !!ed till 5 g st( 2--2(

b dget in !espect o" sala!ies $ wages( administ!ative( "acto!y and social ove!head has been

p!epa!ed.

P!ovisions "o! !epai!s $ maintenance e+pendit !e have been made based on act al e+pendit !e

inc !!ed till 5 g st( 2--2. !ing the yea! 2-12:13( mo!e p!ovision has been made d e to

ma'o! !eplacement o" eK ipments planned d !ing sh t:down.

The p!ovision "o! allocation o" inte!est on Long Te!m Loans( ho!t Te!m Loans( CD e+penses

and %a!;eting i+ed Cost "o! the yea! 2-12:13 /&>0 and 2-12:13/#>0 has been conside!ed as

intimated by Co!po!ate D""ice.

#eing chemical plant( 33- st!eam days have been ass med "o! smooth ! nning o" the plant and

!est o" the days a!e meant "o! maintenance o" the no!mal


53/79

#ased on above ass mptions( &even e # dget has been p!epa!ed and placed below. The %aste!

P!o"it Plan o" &even e # dget may be seen at PP:1.

V'% '*(!& ".%.0. B ,/!0

a!iances with !e"e!ence to "ollowing b dget have been wo!;ed o t and placed at the end a"te!

&even e # dget i.e. /&> 2-12:130 $ /#> 2-12:130.

5ct al o" 2-13:1, with act al o" 2-12:13

5ct al o" 2-12:13 with o!iginal b dget o" 2-12:13

5ct al o" 2-12:13 with !evised b dget o" 2-12:13

5"te! pe! sal o" the va!iances nde! va!io s s b:head( it is noted that va!iances have been

classi"ied nde! "ollowing main headF:

nc!ease< dec!ease in p!o"it d e to change in sales p!ice.

al ation o" opening and closing stoc;. d e to inc!ease


54/79

Page | 4,


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CHAPTER VI

ANALYSIS OF BUDGET

Page | 44


56/79

ANALYSIS OF BUDGET

5"te! "o!m lation o" b dget and app!oval the!eo"( !epo!ting o" act al e+pendit !e against

the b dgeted allocation is made. 5 monthly Cost &eview %eeting is held to !eview the act al

!easons "o! e+cess e+pendit !e as compa!ed to b dgeted allocation. Cost &eview ata "o! the

month and p to the month o" %a!ch( 2--3 is placed below.

The cost !eview data is ci!c lated to 8%/D$%0( 5ll 8%s $ 5ll )D s be"o!e the

meeting is held on sched led date $ time nde! the chai!manship o" C8%. 5nalysis o" act al

cons mption o" inp t mate!ial is made not only "o! the month b t p to the month with !e"e!ence

to standa!d cost. imila!ly( monthly act al e+pendit !e is also analyEed with !e"e!ence to not only

act al o" ea!lie! yea!s b t with o!iginal b dget $ inte!nal b dget o" the !epo!ting yea! and p to

the month o" !epo!ting also. 5"te! detailed disc ssions with the conce!ned depa!tments( !easons

a!e !eco!ded and !emedial actions a!e s ggested. )oweve!( min tes !eco!ded "o! highe!

cons mption< e+pendit !e have not been p!ovided to me.

The !eco!ded min tes o" Cost &eview %eeting is "o!wa!ded to Co!po!ate D""ice "o!

pe! sal o" C$% . imila! e+e!cise is made by all ?nits o" the #CL. The!ea"te!( a comp!ehensive

statement is p!epa!ed by # dget ection o" Co!po!ate D""ice "o! placing the same be"o!e all

i!ecto!s( ?nitBs )eads( >+ec tive i!ecto!s( 8%s at Co!po!ate level in the monthly Pe!"o!mance

&eview %eeting which is held nde! the chai!manship o" C$% . ?nitBs head e+plains the

!easons "o! highe! cons mption< e+pendit !e to all membe!s p!esent in the %eeting. 8 idelines

a!e iss ed by Co!po!ate D""ice "o! those a!eas whe!e abno!mal e+penses


57/79

BATHINDA CHEMICALS LIMITED BATHINDA

ELECTRICAL DEPARTMENT

R!8!* ! B ,/!0 2 13-14 F#% '0-I D. 2-13:1,

/&s


58/79

FORMAT-III SUMMARY

>L>CT& C5L >P5&T%> T #CL #5T) 5

&even e # dget 2-13:1,

!. o. esc!iption

2-1-:11

/&s. n lacs0

2-12:13

/&s. n lacs0

2-13:1,

&s. n Lacs

1 %& spa!es 1-.4 1-.4- 16.4-

2 Lighting 12.,4 11.,- 1-.74

3 L$T pa!es 14. 4 14. 4 .4-

, *yoti spa!es 3.4 2.44 4.--

4 inding wi!es 7.64 7.64 6.74

6 5


59/79

Page | 49


60/79

E$!(0% ('$ D! '%0 !*0 BCL B'0 *,'R!8!* ! B ,/!0 2 13-14 R& L'(& F#% '0-III

P$'*0 != !*0 '*, 0! " &! ,!0' $&

tem Oty. al e &s. &ema!;s

MRS SPARES 1 .;witch ya!d spa!es Lot 1.74 &o tine !eplacement against b!ea; down $

maintenance.Lighting 5!!este!s and !ge

Co nte!

Lot 1.74

T!ans"o!me! spa!es Lot 1.--T!ans"o!me! oil "o! %& 24@L .-- &eplacement o" oil

%oto! %echanism "o! solato!s 2 os. 3.--%isc. spa!es Lot 1.--LIGHTING 1 . ;Lamps o" di""e!ent !atings Lot 4.-- o! gene!al lighting in plant $ township a!eaCho;es o" di""e!ent !atings Lot -.74ta!te!s< gnite!s


61/79

WORKSHOP SPARES

inding wi!es Lot 3.4- &econditioning o" %oto!s against "ail !es< b!ea;

downPT > ins lated coppe! cables Lot 1.--

* mbo spa!es Lot -.4-)eate! $ 8eyse! spa!es Lot -.34elding %achine pa!es Lot -.4-%iscellaneo s spa!es Lot -.9-A C PLANT SPARES . ;Comp!esso!s $ its spa!es Lot 4.4- &o tine !eplacement against wea! $ tea!

siEe

Lot 2.--

1.1 @ !ating 5l mini m cables Lot 4.--3.3 @ !ating 5l mini m cables Lot 2.--11 @ !ating 5l mini m cables Lot 2.--T!ailing cables Lot -.74Telephone cables Lot 3.--Cable accesso!ies Lot -.4-Cable 'ointing ;its Lot 1.--%iscellaneo s

spa!esnd shield


62/79

%iscellaneo s spa!es Lot 1.4-SIEMENS SPARES 1.JContacto!s and its spa!es Lot -.94 5gainst !eg la! cons mption "o! maintaining the

eK ipmentsDve! load &elays Lot -.24%iscellaneo s spa!es Lot -.6-O H CRANE 5 BLOWER

SPARES

1.3;

Dve! head c!ane spa!es Lot -.6- &eg la! spa!es< #lowe!s spa!es Lot -.74TRANSFORMERS SPARES 2.3T!ans"o!me! oil 2---L -.7- &o tine maintenance spa!esT!ans"o!me!s spa!e Lot -.74Co!; sheets o" di"". .siEes Lot -.24ilica gel Lot -.1-%iscellaneo s spa!es Lot -.4-BATTERY AND CHARGERS

SPARES

3.

* mbo batte!y 3 os. 2.-- &eplacing old sets

spa!es.Chasis "o! va!io s &elays a!io s

items

-.4-

%ete! "o! Panels a!io s

items

-.4-

>ne!gy %ete!s a!io s

items

-.4-

%iscellaneo s spa!es a!io s

items

-.74

SUBMERSIBLE PUMP

SPARES

3. ;

bme!sible p mps spa!es Lot 2.74 &eg la! cons mption%iscellaneo s spa!es Lot 1.--MOV AND SPARES . ;pa!es "o! 5mmonia Panel %D , os. -.24

Page | 62


63/79

%iscellaneo s spa!es Lot -.4-INSULATING MATERIALS 3.;i""e!ent types o" tapes Lot 1.4- &eg la! Cons mablesns lating va!nish $ thinne! Lot -.64ns lation Pape! Lot -.4-P C 5dhesive tape Lot -.34%iscellaneo s spa!es Lot -.4-MISC. ELECTRICAL ITEMS .;#a;elite< Po!celain " se

assembly

Lot -.24 %isc. domestic< nd st!ial gene!al cons mables.

)&C " ses /


64/79

ELECTRICAL DEPARTMENT BCL BATHINDA.

M' *0!*'*(! C#*0%'(0& 5 ARC FORMAT -IV

&even e # dget:2-13:1,

U* 0: BCL B'0 *,'. &s.Lacs1 5&C 34.--

2 Cent!al 5i! Conditioning o" Plants 6.--

3 %aintenance o" Telephone >+changes 2.6-

, %aintenance o" DT li"ts in ?!ea $ CPP 1.,-

4 Dpe!ation $ %aintenance o" ewage P mp )o se ,.4-

6 Painting o" >lect. >K ipments 4.--

7 %isc. &epai! 'obs $ Cont!acts 9.6-

Cable T!ench Cleaning 2.1-

9 %aintenance o" i!e 5la!m ystem 1.74

1- &eplacement o" T8 >+cite! 1.--

11 Testing o" t!ans"o!me! oil 1.4-

12 Dve!ha ling o" T8 n CPP 1-.--

13 &ewinding o" %oto!s( Ceiling ans etc. 1.74

1, &eplacement o" Dil o" 132+cite! tato! 1-.--

TOTAL 11J.

Page | 6,


65/79

Page | 64


66/79

ELECTRICAL DEPARTMENT

&even e # dget:2-13:1, Cont!acts >stimated >+pendit !e F#% '0 -V?nitF #CL #athinda. epa!tmentF >L>CT& C5L

Cont!acts &aw ate! Cooling ate! % ate! lph.&ec. >"". T!eat < >% Loco /T 0 8>

etc.

T

5&C "o! %isc. >lect!ical *obs --.74 --.4- -1.4- --.4- --.4- -9.4- --.-- --.--

Cent!al 5C Plants. --.-- --.-- --.-- --.-- --.-- --.-- --.-- --.--

%tc. o" Telephone >+changes --.2- --.2- --.2- --.2- --.2- --.2- --.-- --.24

%tc. o" DT Li"ts in ?!ea $ CPP --.-- --.-- --.-- --.-- --.-- --.-- --.-- --.--

Dpe!ation $ %aintenance. o" ewage Pp.

)s.

--.-- --.-- --.-- --.-- -,.4- --.-- --.-- --.--

Painting o" >lect!ical >Kpts. --.1- --.4- --.4- --.1- --.1- --.4- --.-- --.--

%isc. !epai!s 'obs $ Cont!acts --.-- --.-- --.-- --.-- -- .-- -1 .1- --.-- --.--

Cable t!ench cleaning. --.2- --.1- --.14 --.-- --.-- --.14 --.-- --.--

%aintenance o" i!e 5la!m ystem --.-- --.-- --.24 --.1- --.1- --.1- --.-- --.--

&eplacement o" T8 >+cite! --.-- --.-- --.-- --.-- --.-- --.-- --.-- --.--

Testing o" T!ans"o!me! Dil --.1- --.-- --.2- --.-- --.-- --.-- --.-- --.--

Dve!ha ling o" T8 in CPP --.-- --.-- --.-- --.-- --.-- --.-- --.-- --.--

&ewinding o" %oto!s( Ceiling ans etc. --.-4 --.1- --.1- --.-4 --.1- --.44 --.-- --.--

&eplacement o" Dil o" 132


67/79

7 Dve!ha ling $ e!vicing o" s --.-- --.-- --.-- --.-- --.-- --.-- --.-- --.--

&epai!< &ewinding o" T8 >+cite! &oto! --.-- --.-- --.-- --.-- --.-- --.-- --.-- --.--

9 &epai!< &ewinding o" T8 >+cite! tato! --.-- --.-- --.-- --.-- --.-- --.-- --.-- --.--

TDT5L 1. ; 1.4 2. . ; ;.; 12.1 . .2; 11J.

Page | 67


68/79

Page | 6


69/79

FORMAT -VIII SUMMARYELECTRICAL DEPARTMENT BCL BATHINDA

P%#( %! !*0 B ,/!0 F#% T ! Y!'% 2 13-14

D!&(% 0 #* R&. I* $'(&.

%& spa!es 16.7-

Lighting 11.24

L$T pa!es 12.2-

*yoti spa!es -,.44

inding wi!es - .9-

5


70/79

Page | 7-


71/79

E$!(0% ('$ D! '%0 !*0 BCL B'0 *,' .F#% '0-VIII

PROCUREMENT BUDGET 2 13-14 PO & 0# +! $'(!, * 2 12-13

T>% Oty. Cost Payment d !ing theea! /&s.Lacs0

2-12:13 2-13:1,MRS SPARES 1 . 12.; 4.2

i. witch ya!d spa!es Lot 2.4- 1.74 -.74ii. Lighting 5!!este!s and !ge Co nte! Lot 2.-- 1.74 -.24iii T!ans"o!me! pa!es Lot 3.-- -.4- 2.4-iv. T!ans"o!me! Dil 27 @L .7- .-- -.7-v. %isc. spa!es Lot -.4- -.4- -.--

LIGHTING 11.2; .2 2. ;i. Lamps o" di""e!ent !atings Lot 4.4- 4.-- -.4-ii. Cho;es o" di""e!ent !atings Lot -.74 -.4- -.24iii. ta!te!s< gnite!s


72/79

v. elding %achine pa!es Lot -.4- -.34 -.14vi. %iscellaneo s spa!es Lot 1.74 1.4- -.24

A C PLANT SPARES 13. 11.1 1.i. Comp!esso!s $ its spa!es Lot 6.3- 4.-- 1.3-ii. ese!t Coole!


73/79

iv. %iscellaneo s spa!es Lot -.64 -.,4 -.2-BATTERY AND CHARGER SPARES 3. 2.J; .1;

i. * mbo batte!y 3 o 2.-- 2.-- -.--ii. pa!e "o! )i!ect #atte!y cha!ge! Lot -.6- -.,4 -.14iii. %iscellaneo s spa!es Lot -.,- -.,- -.--

RELAYS AND METERS 4.; 3.3; 1.1;i. CT%%ne!gy %ete!s Lot -.4- -.34 -.14v. %iscellaneo s spa!es Lot -. - -.6- -.2-

SUBMERSIBLE PUMP SPARES 4. 3. 1.i. bme!sible p mps spa!es Lot 3.-- 2.-- 1.--ii. %iscellaneo s spa!es Lot 1.-- 1.-- -.--

MOV AND SPARES . ; . ; .1i. pa!es "o! 5mmonia Panel %D , os. -.4- -.,- -.1-ii. %iscellaneo s spa!es Lot -.24 -.24 -.--

INSULATING MATERIALS 3. 3.1 .Ji. i""e!ent types o" tapes Lot 2.4- 2.-- -.4-ii. ns lating va!nish $ thinne! Lot -.7- -.6- -.1-iii. %iscellaneo s spa!es Lot -.7- -.4- -.2-

MISC. ELECTRICAL ITEMS .4; 4. 1.;;i. #a;elite< Po!celain " se assembly Lot -.24 -.2- -.-4ii. )&C " ses /


74/79

ELECTRICAL DEPARTMENT BCL BATHINDA

R!8!* ! B ,/!0 2 13-14 FORMAT-@III

F *'*( '$ H!', 5 C#&0 C!*0%!" &! E< !*, 0 %!

U* 0 BCL

BATHINDA

R&.L') &

P$'*0 ID C#,! F *.

H!',

C#&0

C!*0%!

2 11-12 2 13-14 2 12-13 2 11-12

D! '%0 !*0'$ B ,/!0

E$!(0% ('$< hop o!;shop :>: 47-lect!ical

nstallation

acto!y :>: 47-: 47-


75/79

CHAPTER VII

RECOMMENDATIONS

5

CONCLUSIONS

RECOMMENDATIONS

t has been obse!ved that some o" the e+pendit !e and cons mption o" inp t mate!ial a!e on

highe! sidewhich sho ld be a!!ested. n b!ie"( "ollowing s ggestions a!e given "o! pe! sal o" the

%anagement and ta;ing necessa!y actionF:

The cons mption o" methanol is mo!e as compa!ed to Panipat ?nit being the siste! nit o"

#CL.

Page | 74


76/79


77/79

CONCLUSION

The "i+ation o" !etention p!ice and >C5 allocation a!e made by 8ovt. o" ndia. #CL have to

sell the p!od ct specially !ea within the allocated tates and K antity ea!ma!;ed "o! the same.

Tho gh( #athinda ?nit "alls in the tate o" P n'ab whe!e ma+im m se o" !ea is made yet

allocation "!om othe! !ea p!od cing nit o tside the P n'ab is made "o! s pply o" same in the

tate. The!e is no choice "o! #CL to sell !ea within the vicinity o" plant.

The payment o" monthly s bsidy bill in !espect o" !ea and "!eight is !eleased late by the

8ove!nment and conseK ently the b !den o" inte!est d e to late !eceipt o" s bsidy amo nt "alls

on the Company as inte!est on cash c!edit to the e+tent o" amo nt not !eceived is paid by the

Company. imila! position is "o! all !ea p!od cing nits in the co nt!y.

The K a!te!ly escalation claim in !espect o" inp t mate!ials is also settled abno!mally late.

The cons mption o" "eed stoc; pe! tonne o" !ea is less as compa!ed to no!m "i+ed by

8ove!nment


78/79

>+pendit !e on dem !!age is being monito!ed closely and the!e is s bstantial !ed ction d !ing

2-13:1, and 2-12:13.

5sh handling e+penses d !ing 2-13:1,will be less by abo t &s.,4 la;hs d e to s bstantial

!ed ction in pe! %3 !ate.

&oad t!anspo!tation cha!ges a!e compa!atively lowe! as compa!ed to othe! nits o" #CL.

>lect!icity $ wate! cha!ges a!e being !ecove!ed "!om the employees on comme!cial !ates.

The stoc; o" spa!es at the end o" %a!ch( 2--3 is less as compa!ed to ea!lie! yea!Bs. The

Company has planned to !ed ce invento!y by 4G each yea!.

Page | 7


79/79

BIBLIOGRAPHY

1. )ilton &onald F %anage!ial 5cco nting( nte!national >dition( %c8!aw )ill( C.( ew

o!;.

2. Lal *awaha!F Cost 5cco nting( econd >dition:1996( Tata %c8!aw )ill P blishing Company

Ltd.( ew elhi.

3. Pandey .%F inancial %anagement( eventh &evised >dition( &ep!inted:199 ( i;as

P blishing )o se Pvt Ltd.( ew elhi.

,. P!asad .@F P!incipals $ P!actice o" Cost 5cco nting( #oo; yndicate Pvt. Ltd.( Calc tta.

4. 5nn al &epo!ts o" #CLF 1999:2---( 2-11:12 $ 2-13:1,

6. 5nn al &epo!t o" #CL #athindaF 2-12:13

7. # dgets o" #CL #athinda "o! the yea! 2-12:13/&>0 $ 2-13:1,/#>0.

Documents

Budgetary Control Bcl