Project On Budget & Budgetary Control

Project on Budget & Budgetary Control
INTRODUCTION:
Budgetary control is the important aspect for industry development because budgets provide
yard stick against which the actual performance is measured. It always helps to the top
management to take the appropriate decision to motivate and directing their personnel towards
well set plans and policies of the company.By considering the advantage of the budgetary
control the Ranna Sugars also adapted this system. In Ranna Sugars they were maintaining the
monthly budget with the help of daily reports. The daily reports must contain the item like
production efficiency, sugar cane utilization, man power requirement, consumption of
electricity, wages etc. With this the budgetary control manager prepares a monthly profitability
statement of a particular month & submitted that one of the appropriate authority like
production manager. By this statement or submitted report, they will take correct decision about
the organizational activities.A study has been conducted on the BUDGETARY CONTROL
which is most probably adopted in the Ranna Sugars organization.Budgetary control i.e. a most
powerful tool to the management for performing its function i.e. formulating plans,
coordinating activities and controlling operations etc, effectively as well as effectively.Now a
day, the number of companies are compete with each other for the survival in the present
market. Whether it may be other sugars industries .but no one company can comete without
proper planning. So the Cost-Budgetary control may help them to make proper decision in the
number of various fields.Budgetary control is applied to a system of management & accounting
control by which all operations & output are forecasted as for ahead as possible. And actual
results are known that are compared without budget estimates.The budgetary system integrates
key managerial functions as it links top managements planning function with the control
function performed at all the levels in the managerial hierarchy. A more accurate budget can be
developed for those activates where direct relationship exists between inputs & outputs. These
input, output are base for developing budgets & exercising control.

INDUSTRIAL PROFILE
Indian sugar industry
India is the largest consumer & second largest producer of sugar in the world.The Indian sugar
industry second large agro industry Located in the rural India. The Indian sugar has a turnover of
rs.500 billion per annum & it contributes almost rs.22.5 billion to the central & state exchequer as
tax, cess & excise duty every year. Indian sugar industry has been a focal point for a socioeconomic development in the rural areas. About 50 million sugarcane farmers & a large number of
agricultural labors are involved in sugarcane cultivation & ancillary activities, constituting 7.5 %
of the rural population. Besides, the industry provides employment to about 2 million skilled/semiskilled workers & others mostly from the rural areas. The industry not only generates power for its
own requirement but surplus power for export to the grid based on by-product-bagasse. It also
produces ethyl alcohol, which is used for industrial &portable uses,& can be used to manufacture
ethanol, an ecology friendly &renewable fuel for blending with petrol.

CANE DEVELOPMENT DEPARTME
CANE MANAGER
OFFICE MANAGER CANE
CANE PROCUREMENT MANAGER
CANE OFFICERS
FIELD ASSISTANT
CANE DEV MANAGER
CANE OFFICERS
FIELD ASSISTANT

IN CANE DEVELOPMENT
YEAR
DATE
CANE
DAYS
SUGAR
DEVELOPMEN
T
RECOVERY
PRODUCTIO
N
1999 - 00
25/11/1999 TO 28/06/2000
217
407989 510015
12.50
2000 - 01
19/11/2000 TO 15/05/2001
178
352938 436300
11.91
2001 - 02
29/10/2001 TO 05/04/2002
159
354028 424670
11.41
2002 - 03
21/10/2002 TO 29/04/2003
191
503083 585700
11.47
2003 - 04
05/11/2003 TO 13/01/2004
69
115321 127000
10.68
2004 - 05
21/10/2004 TO 18/01/2005
90
105687 115850
10.88
2005 - 06
02/11/2005 TO 21/04/2006
170
351953 400151
11.39
2006 - 07
28/10/2006 TO 09/06/2007
225
520288 608549
11.60
2007 - 08
20/11/2007 TO 26/05/2008
189
379020 446699
11.65
2008 - 09
02/10/2008 TO 25/02/2009
145
238681 255400
10.60

6 )PRODUCTION DEPARTMENT:
To utilize the installed capacity of 3500 in proper manner the following personality the
duty to manage the Production department.
PRODUCTION DEPARTMENT
LABORATORY INCHARGE
LABORATORY CHEMIST
LABORATORY BOYS
DEPUTY CHIEF CHEMIST
MANUFACTURING CHEMIST
STAFF AND WORKERS
The production department is one of the core parts in every process based industry.
In addition, it plays a vital role in the organization for smooth going in every sugar industries;
Production department is divided in to two sections.
a)Engineering department
b)Manufacturing department
a) Engineering Department.

STRUCTURE:
CHIEF ENGINEER
MECHANICAL
SECTION
ELECTRICAL
SECTION
CANE
WEIGHMENT
BOILER SECTION
CANE
UNHOLDING
URANGMENTS
CANE
PREPARATION
MILLING
POWER
GENERATION
WORKSHOP
STORE SECTION

Mechanical section :
This includes all the mechanical process that is right from the cane weighment till milling
( obtaining of sugar juice ) for further processing. This section includes 4 main steps they are..
a. Cane weighment arrangements
b. Cane unloading arrangement
c. Cane preparation
d. Milling
Cane Weighment Arrangements:

Cane weighment is totally computerized process. Hear the cane weightment is carried
through electronic platform called weighs bridge. This electronic platform is of two types. One
with the capacity of 40 tons for lorry and tractors and other with a capacity of 10 tones for only
cart.
Hear after weighing the cane a slip is provided so that particular farmer which has the
details of total weight of the cane, total trips, timing, vehicle number, variety of sugarcane and
other details. And after this when the vehicle comes back after unloading the sugar cane, empty
vehicle weight all their data stored in the computer and final copies are listed for further actions.
Cane unloading arrangements:

Hear the weighed sugar cane is unloaded and sent further for cane preparation. Further
unloading cane there are 2 unloaders with the help of sling attached instruments cane is loading on
the feeding table.
Cane preparation:
After feeding the sugar cane on feeding tables with the help of levelers which avoid
overloading of sugar cane is sent to primary cutter, which cut the sugar canes in to small pieces,
further fine fibers are obtained from there process by passing them in the fibrizer.

Milling:
After fibrizering the cane passing the prepared fiber cane through a set of mills carries on
milling weighted hot water is also added in the course of crushing for better extraction of juice.
After crushing the juice is sent for further process
Power generation
Process chart of Co-generation
Water treatment
Make up water
Feed water tank
Deareator tank
[Heating 1100 C]
Pumping
Stream drum
Turbine
Generator [electricity]
8

Functions of power generation department are given below.
To generate power at high quantity.
To distribute it to different areas, as KPTCL.
To provide better working conditions to their workers for safety.
4 MW, 11 KV turbo alternator using for home consumption.
Around 8.5 MW is exported to KPTCL.
Power production 12.5 MW per hour.
Stores Section
Various section spare parts are stored in stall system and all the units are computerized and
given a code number. Bin card and other system are followed hear. These stores materials are
normally required for preventive maintenance during seasons and off seasons for servicing and
overalling
Function
1) To make the material requisitions for the purpose of knowing the quantity material.
2) To make purchase order or in simple terms the tender.
3) To make approval memo for verification of materials.
4) The main function of store department is to prepare a bin card.
5) The store department issued material with reference with store requisition.
6) To make classification & codification of materials.
7) Receipt of material.
8) Inspect it with ordered quantity, quality & if any other specifications.
9) Some of the material like chemical is to be sent to laboratory for incepatation & testing.
10) Getting indents from departmental head & issuing it.
11) To make purchase return if the material are rejected.
12) To maintain minimum level of materials.
13) Infringing purchase department when material required
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GENERAL OBJECTIVES OF BUDGETARY CONTROL ARE AS
FOLLOWS:
1) Planning:
A budget is a plan of the policy to be pursed during the defined period of timed to attain a
given objectives. The budgetary control will force management at all levels to plan in time all
the activities to be done during the future periods.
A budgeted as a plan of action achieves the following purposes.
Action is guided by well thought out plan because a budget is prepared after a careful study
and research.
The budget serves as a mechanism through which managements objectives and polices are
affected.
It is bridge through which communication is established.
The most profitable course of plan is selected.
Budget is a complete formulation of the policy of the undertaking to be pursed for the
purpose of attaining a given objectives.
2). Co-Ordination:
The common objectives of the firm may be successfully achieved by the way of budgetary control
because it stimulates the co-operation of all concerns with the co-ordinates the various activities.
3) Communication:
It is necessary in an efficient organization that all people be informed about the objectives, polices,
programmers and performance. This is made possible through their Participant in the budgeting
process. Budgets inform each manager of what others have agreed to do. They also inform
managers of the resources available objects and targets.
Thus the budgeting system integrates key managerial functions as it links top managements
planning function with the function performed at all the levels in the managerial hierarchy. But the
efficiency of the budget as a planning and control device depends upon the activity in which it is
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being used. A more accurate budget can be develop for those activities where direct relationship
between inputs and outputs. The basis for developing budgets and exercising control.
CONCEPT OF BUDGETING:
One of the primary objects of cost accounting is to provide information to business management
for planning and control. Budgeting act as a toll of both planning and control. Budgeting is a
formal process of financial planning using estimated and accounting data.
DEFINITION OF THE BUDGET:

The Institute of Cost and Management. Accounts (UK) definesA budget as a a financial and/or
quantities statement, prepaid and approved prior to a defined period of time, of the policy to be
pursed during that period for the purpose of attaining a given object. It may include income,
expenditure and the payment of capital.
RELATION BETWEEN BUDGETING AND FORECASTING:

Budgeting and forecasting are used interchangeably According to the national association of
accountants (USA)forecasting is a process of predicating or estimating a future happening,
Forecasting is an essential part of the budgeting process. Forecasting is estimating future events
and their effects on the budget. Forecasting comes to an end after mere estimating. Budgeting is a
process of preparing budgets and further control aspects are involved in its procedure.
ESSENTIALS OF BUDGET:
It is prepared in advance based on a future plan of action.
It relates to a future period and based on objective to be attained.
It is a statement expressed in monetary and for physical units prepared for the
implementation of policy formulated by the management.
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ADVANTAGES OF BUDGETING
Budgeting plays an important role in the effective use of resources and achieving overall
organizational goals.
Budgeting compels and motivates management to make an early and timely study of its
problem.
budgeting provides a valuable means of controlling income and expenditure of a business
as it is a plan for spreading
Budgeting provides a too through which managerial polices and goals are periodically
evaluated, tested and established as a guidelines for the entire organization.
Budgeting help in directing capital and others resources into the most profitable channels.
Budgeting coordinates and correlates all business activates.
The use of budgeting in an organization develops an attitude of Cost Consciousness,
stimulates the effective use of resources, and creates an environment of profit-mindedness
throughout the organization.
The uppermost point is that budgets provide a discipline that brings planning
to the
fore front as a key managerial responsibility.

Budgeting encourage productive competition.
CLASSIFICATION OF BUDGETS:
A. According to time:
Long term budgets: A budget is designed for a period of 5 to 10yrs.
Short term budgets: A budget is a generally prepared for a period of Not exceeding 5
years
Current Budgets: The budgeted is prepared for a month or a quarter.
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OPERATING AND FUNCTIONAL BUDGETS
1) Sales budget:
The most important budget, which all other budgets are contingent upon, is the sales budget. All
budgets, such as production budget, selling & distribution budget & other all affected by the sales
budgeted & are depended upon the revenue derived from sales.
Forecasting sales:
The three main factors that should be considered by management in forecasting sales.
1) Information concerning past performance.
2) Information about present condition with in the individual company & in each sales territory.
3) Data concerning the industry & generally business.
2) Production budget:
A production budget is stated in physical units. Essentially the production budget is the sales
budget adjusted for inventory changes as follows.
Units produced= Budgeted Sales+ (Desired Closing Inventory of Finished Goods-Beginning
Inventory of Finished Goods.)
3) Production cost budget:

A production cost budgeted summaries the materials budget, lab our budgeted, the factory budget,
and may be expressed and analyzed by departments and or products. It is also known as
manufacturing budget.
4) Direct material budget:

This budget specifies the cost if direct materials used and the Cost of the direct materials
purchased.
Use of direct material budget
1.
It helps the purchasing departments to prepare a schedule to ensure

Delivery of material when needed.
2.
It helps in fixing minimum and maximum levels of inventories in stores

department.
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5. Direct labor budget:

The labor budget estimates the labor, adequate in number and grades, to enable the production
budget to be achieved. It is generally preferable to prepare a separate direct labor budget and to
include indirect labor in the factory over head budget.
6. Factory overhead budget:

This budget is prepared on the basis of chart of accounts which reflects different expenses
accounts & which properly classified expenses accounts and details the cost centers or departments
factory overhead budgeted where in overhead costs have been classified in to fixed and variable
components.
i.
Inventory budget:
An inventory budget can be prepared to find out the values of direct materials & finished goods
inventory.
a.
Selling expenses budget:
It is also known as the marketing expenses budget. The selling cost budget is made up of a
number of cost items, some of which are fixed and some variable. Fixed expenses are salaries and
depreciation; the principal variable expenses are commission, travel advertising and bad debts.
b. Administrative expenses budget

The
Administrative expenses budget covers the administrative costs for non-
manufacturing business activates. The administrative expenses budgets contains expenses like
directors remunerations, legal charges, audit fees, salaries, rent office expenses, interest, property
tax, put etc.
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BUDGETED INCOME STATEMENT
A budgeted income statement summaries all the individual Budgets i.e. sales budgeted, cost of the
goods sold budget, selling budget, and administrative expenses budget. This budget determines
income before taxes (If the tax rate is available, net income after taxes can also be computed).A
system of budgetary control installation in an organization is very much beneficial which may be
result in proper planning & control of activates. It ultimately results in minimizing costs and
maximizing profits. If the company wants to prepare the budgets for future period of time, it is
very much essential that company have to consider the past performance. Thus the past
performance is treated as vital basis for the future period. Suppose in case of past performance is
not available than the company has to follow the following process.
A. DETERMINATION OF THE OBJECTIVES:

The installation of budgetary control system needs to have proper objective i.e. for what
purposes it has been installed. The objective may be
Minimizing costs or maximizing profits.
Co-ordination of activities of different departments.
Controlling the management functions.
B. ORGANIZATION FOR BUDGETING:

Under this process the authorities and responsibilities of each executive are clearly stated.
i.e. delegation of work means dividing the work between departmental heads.
C. BUDGET MANUAL:
The budget manual is a written document, which specifies the objective of the budgeting
organization & procedures.
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SOME IMPORTANT MATTERS COVERED IN A BUDGET MANUAL
A statement related to objectives of the organization & how they can be achieved
through budgetary control.
Reports, statements, forms & other records to be maintained.
Timetables for all stages of budgeting.
A statement related to functions and responsibilities of each executive.
There should be proper classification of accounts, which are lost, revenues and other
financial amounts are to be classified with their respective nature.
D. REPONSIBILITY FOR BUDGETING:

1. Budget controller: The chief executive is ultimately responsible for the budget program
and past of work designated as budget controller. The budget controller should have
knowledge of technical skill of the business and report to chief executive.
2. Budget committee: Budget committers are framed for true delegation of authority and
responsibilities. The work should be divided under different heads i.e. Sales, production,
and finance etc. The duty of budget committee to submit, discuss and finally approve of the
budgeted big figures.
E. FIXATION OF THE BUDGETED PERIOD:

Budgeted period:
The period for which a budget is prepared & employed.
The budget period depend upon:
The nature of the business.
The control techniques.
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F. BUDGETED PROCEDURE:
The procedure followed while designing and operating a budgetary control system depends
upon the nature of the business.
THE PROCEDURE AS FOLLOWS:
1. Determination of key factor:

Key factor is that factor the extent of whose influence must first be assessed in order to
ensure that functioned budgets are reasonably capable of fulfillment.
Ex: Sales, production, purchases, cash etc.
Key factor must be identified & diagnosed. Budget are meaning & unless key factor
identified.
2. Making of forecasts:
Forecast is nothing but estimation of probabilities for a given period. Forecasts are made
regarding sales, production cost and financial requirements of the business.
3. Consideration of alternative combinations of forecasts:

Alternative combination of forecasts is considered for efficient of overall plan with the
motive to maximum profits.
4. Preparation of budgets:
After finalization of forecasts the budgets will be prepared.
17

5. Choice between Fixed & Flexible budgets:
A fixed budget is based on a fixed volume of activity. It is ineffective & meaningless
because of actual capacity utilization may vary from month to month or quarter to quarter.
A flexible budget is prepared for changing levels of activity. The flexible budget considers
the fixed and the variable costs separately.
1. Start with a canned budget worksheet.
2. Go through your check book or bills for the last two to three months and add and delete
categories from the worksheet to fit your expenditures.
3. Think about your hobbies and your habits and be sure to add categories for these expenses.
4. Go through your pay stubs and calculate your average monthly gross pay.
5. Do the same for any interest income, dividends, bonuses, or other miscellaneous income.
6. For each expense category, try to determine a budget amount that realistically reflects your
actual expenses while setting targeted spending levels that will enable you to save money.
7. Once you're comfortable with your expense categories and budgeted amounts, enter
expenditures from your checkbook from the last month.
8. Keep track of cash expenditures throughout the month and total and categorize these at the end
of each month.
9. Subtotal the income and expense categories.
10. Subtract the total expenses from the total income to arrive at your net income.
11. If the number is negative, your expenses are greater than your income. Your situation can
probably be greatly improved by changing your spending habits.
12. If you have a positive net income, transfer most of it to a savings or investment account at the
end of each month. Extra cash left in a regular checking account has a way of getting spent.
18

13. After you've tracked your actual spending for a month or two, analyze your spending to
identify where you can comfortably make cuts.
14. Once you've got the budgeting process in place, take an in-depth look at your largest spending
categories, brainstorm about ways to reduce spending in specific categories, and set realistic
goals
Tips:
1. Don't try to fit your expenses into somebody else's budget categories. Tailor the categories
to fit your own situation.
2. Make your categories detailed enough to provide useful information, but not so detailed
that you become bogged down in trivial details.
3. Think of your budget as a tool to help you get out of debt and save money, not as a
financial diet.
NEED FOR THE STUDY:

To make myself well known about organization structure at Ranna Sugars.
To get the knowledge about budgetary performance through trend analysis and over all
performance of Rona Sugars through primary and secondary data.
So studying the various practices carried out in finance will be helpful to me in my

MBA course.
LIMITATIONS:
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Considering the scope mentioned above, some or few limitations are arising i.e. the Rona
Sugars is big organization. This finance & accounts is also big departments. But due to shortage of
training period, I am concentrating only on the budgetary control of costing departments.
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Time constraints.
Only Three years data is used for the analysis of the study

CONCLUSION:
From the study it can be concluded that to know that budgetary control is treated as one of
the better techniques for minimizing cost and maximizing profit in Ranna Sugars. Budgetary
control technique Plays important role in the profit making or smooth running of the company
It co ordinates all the departments like Finance, Marketing, Production in the company. It
makes the decentralization of authority in the organization which helps organization goal with
in stipulated period of time. Budgetary control acts as safety for an organization because it helps
to identify business risk and necessary steps can be taken to avoid the risk.
Budgetary control techniques help to know how the available monetary resources can be
utilized effectively. This technique focus on efficiency in the allocation of resources in
particular time. As the finance department is the soul of any organization. Budgetary control
helps the organization by making finance department effectives
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BIBOLOGRAPHY
www.infoindia.com
www.7506259405.com
www.sipnsurf.com
www.proindia.com
www.project.co.in
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