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SUMMER INTERNSHIP REPORT ON “PERFORMANCE APPRAISAL” (JETKING CHANDIGARH) 1
SUMMER INTERNSHIP REPORT
ON
“PERFORMANCE APPRAISAL”
(JETKING CHANDIGARH)
1
DECLARATION
I hereby declare that the project report entitled “CAPITAL BUDGETING”submitted in fulfillment of the requirement for the degree of Bachelor of Business Administration is my original work and has not been submitted for the award ofany other degree at this university.
)
2
ACKNOWLEDGEMENTA project is a combination of views, ideas and suggestions and contribution of many
people. The report is the opportunity to thank those who contributed towards its
fulfillment.
Firstly I would like to thank the teachers of my institute for making me able to prepare
this project. I would also like to thank my project guide I would like to thank my parents
who give me encouragement and support.
I conclude by delivering my thanks to the almighty for giving me strength and for
enabling me to understand this project and for everything else.
PREFACE
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BBA is a stepping stone to management career. In order to achieve practical, positive
and concrete results, the classroom needs to be effectively fed to the realities of the
situation exiting outside the classroom this is particle truth of the management.
To develop healthy managerial and administrative skills in the potential managers it is
necessary that the theoretical knowledge must be supplemented with expose of real
environment. Actually it is very vital for the management and it is very in the practical
training that the measuring of management is itself realized.
My project is PERFORMANCE APPRAISAL. If your company is like most companies today,
you're working leaner. You're asking everyone on your staff to work harder and smarter,
often without the support you may have had in the past.
When you're asking so much of your employees, your managers may curb discipline
measures for fear of losing a good worker. However, lean times are when employers
most need employees to fulfill their job duties.
When your managers ask employees to work additional time or take on increased
responsibilities, they often face resistance. When an employee’s pushes back against
working harder, ask you, "Is the resistance a motivation problem or a discipline issue?"
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CHAPTER-1 INTRODUCTION
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INDUSTRY 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 socio-economic 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/semi-skilled 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.
The sugar industry in the country uses only sugarcane as input; hence Sugar
Company’s have been established in large sugarcane growing states like Uttar Pradesh,
Maharashtra, Karnataka, Gujarat, and Tamil Nadu & Andhra Pradesh. In the year 2005-
06 these six states contributed more than 85 % of total sugar production in the country;
Uttar Pradesh, Maharashtra & Karnataka together contribute more than 65 % of total
production.
The sugar industry is the second largest agro-based industry next to textiles in India. In
India, sugarcane is the key raw material for the production of sugar. The sugar is
extracted from two different raw materials sugarcane and beet; both produce identical
refined sugar. Sugarcane is grown in semi-tropical region and accounts for around two-
third of world sugar production.
Sugar is extracted from two raw materials beet root and sugarcane, both produce identical
refined sugar. Sugar cane accounts for two-third of the raw material used for sugar
production in the world and beet root one third balance of the world production.
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Key Characteristics of Sugar industry:
Capital intensive
Government regulated
Seasonal fluctuation in the industry(demand increases during festive season)
Raw materials constitute major cost
No proper substitutes
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COMPANY PROFILE
BACKGROUND AND INCEPTION OF THE COMPANY:
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The RAYATAR SAHAKARI SAKKRE KARKHANE NYIYAMIT (R.S.S.K.N) is a
large scale Agro-based sugar industry. It covers under Co-operative sector.
This factory was registered on 29th July 1982 itself and government has given
licensee for 2,500 TCD (Tone Capacity per day). In the same year government has given
registration number is DSK/REG/182-83 dated: 27/07/1982. From that onwards it started
issuing the shares to the public this issuing of shares comes to end in the year 1997.
During these periods they purchased 200 acres of land at Timmapur (Mudhol Taluka)
village at a cost of Rs.24 lakh. The 1st trial crushing was taken in the month of May from
19/05/1999 to 10/06/1999. The performance of the factory in this period is as under.
Total Cane Crushed 123.28MT
Sugar produced 407989Qtls.
Recovery 12.50
The 1st regular season starts in the yard of 1999-2000, from 25 th NOV 1999 to 28th
June 2000 (217 days). The progress achieved during this season is as follows:
The estimated project cost of R.S.S.K.N Sugar factory was Rs.47.250res as
prepared by the Karnataka State Co-operative sugar Factories, Bangalore. And this report
has been appraised by the IFCI, New Delhi.
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10% Member shares Rs.4,725 corers
30% Government Rs.14,175 corers
60%Term loan from
Financial InstitutionsRs.28,350 crores
Total 47,250 crores
Investment
Member shares10%
Rana Sugars Ltd.
Rana Sugars Ltd. a Rana Group company was founded in 1992 in collaboration with Punjab Agro Corporation. In year 2002 RSL has setup a Demonstration Co-generation Project to produce extra power from the Bagasse (by-product of sugar) and export it to Punjab State Electricity Board.
The Rana Group of Companies made a humble beginning in mid 80’s when Rana Gurjeet Singh, group’s Founder set-up Agro Boards Limited a Kraft Paper unit in Punjab. Success of this maiden venture was duly recognized by apex state owned industrial promotion corporations and this led to Rana Group’s ventures with different state owned corporations.
After the success of Agro Boards, Rana Group diversified into sugar manufacturing by setting its first unit at Buttar Sevian, Punjab in 1993.
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Over the years the group has established itself as a pioneer in the sugar industry. Today, the group is in sugar, alcohol, power generation and textile sector.
Sugar is very vital part of the rural economy and Rana Group supports the cause of the sugar farmers. The group is actively involved with the farming community in order to improve yields and quality of sugarcane.
Quality, consistency and relationships have propelled the group to become one of the most successful industrial houses in north India.
Rana Sugars Limited (RSL) is also a market leader in Punjab Medium Liquor (PML) sector. The company has portfolio of well established liquor brands. RSL is also a preferred bottler of several leading liquor brands.
The alcohol is produced from both Molasses and grain. Molasses is a by-product of sugar that has a certain amount of sugar content that is extracted through a technological process.
Identifying the vast opportunities in the ethanol sector, RSL has proposed to set up an ethanol plant that will use molasses as raw material from RSL’s existing facilities.
Products range of the company-RSL has one of the most diversified sugar facilities in the country. The following categories of sugar are manufactured:
Double Refined White Sulphurless Sugar Plantation White Sugar Raw Sugar Alcohol- Rana Sugars Limited (RSL) is also a market leader in Punjab Medium
Liquor (PML) sector.
Date of Establishment 1991Revenue 112.233 ( USD in Millions )Market Cap 328.6351348 ( Rs. in Millions )Corporate Address Sco 49-50,Sector 8- Madhya Marg Chandigarh-
160009, Punjabwww.ranagroup.com
Management DetailsChairperson - Rana Ranjit Singh MD - Rana Inder Pratap Singh
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Directors - A S Sodhi, A S Sodhi, AS Sodhi, Baljit Singh, Balour Singh, Karan Pratap Singh, M P Singh, M P Singh, Manmohan K Raina, Manmohan K Raina.
Business Operation SugarBackground Rana Sugars Ltd. a Rana Group company was
founded in 1992 in collaboration with Punjab AgroCorporation. In year 2002 RSL has setup a Demonstration Co-generation Project to produce extra power from the Bagasse (by-product of sugar) and export it to Punjab State Electricity Board.
The Rana Group of Companies made a humble beginning in mid 80’s when Rana Gurjeet Singh,
Financials Total Income - Rs. 5553.429 Million ( year ending Mar 2012) Net Profit - Rs. -204.448 Million ( year ending Mar 2012)
Company Secretary Manmohan K RainaBankersAuditors Kansal Singla & Associates
Management
Name Designation
A S Sodhi Director
Baljit Singh Director
Balour Singh Nominee Director
M P Singh Nominee Director
Manmohan K Raina Co. Secretary & Compl. Officer
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Secretary
Chief Financial Officer
CEO
Managing Director
Director
Chairman
Director
Director
SWOT Analysis of the Industry:
The major strengths of the sugar industry in Swaziland lie in its high competitiveness,
due to efficient cane production and technically efficient sugar production plants. This is
further enhanced by premium markets to which the Swazi sugar is sold. So far, the
exposure to the low-paying world market has been minimal, although it is poised to grow
due to a reduction in the quota access to preferential markets and increased production of
sugar.
Strengths
High productivity in cane growing.
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Technical efficiency in sugar production.
Access to preferential markets.
Support from the Government.
Good marketing infrastructure.
Limited exposure to the world market.
Weaknesses
Inefficient infrastructure and high transport costs.
Increasing costs of sugar production.
Increasing inefficiency of smallholder farmers in growing sugar.
Deficiencies and inefficiency of public utilities, with their related high costs.
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Opportunities
Expanded access into the EU and regional preferential markets.
Diversification into other sugar-based products.
Supply of sugar markets previously supplied by Brazil and LDCs.
Temporary nature of problems facing smallholders.
Threats
Preference erosion
EU-RSA TDCA
Expiry of COMESA derogation
Failure of smallholders to run farms efficiently
Low returns to smallholders, and reduced viability of irrigation projects
Price pressures on SACU market
INTRODUCTION TO THE TOPIC
Meaning and definition
Budgeting has come to be accepted as an efficient method of short-term planning and
control. It is employed, no doubt, in large business houses, but even the small businesses
are using it at least in some informal manner. Through the budgets, a business wants to
know clearly as to what it proposes to do during an accounting period or a part thereof. The
technique of budgeting is an important application of Management Accounting. Probably,
the greatest aid to good management that has ever been devised is the use of budgets and
budgetary control. It is a versatile tool and has helped managers cope with many problems
including inflation.
Budget
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Meaning-
A budget is a document that translates plans into money - money that will need to be spent
to get your planned activities done (expenditure) and money that will need to be generated
to cover the costs of getting the work done (income). It is an estimate, or informed guess,
about what you will need in monetary terms to do your work.
On the other hand, if the budget is insufficient to complete a piece of work, additional
funds should be availed so that the project or work is completed. Additional funds in
supplementary estimates should be availed so long as satisfactory reasons are given. This
will facilitate completion of projects on time
.
A budget is not:
Written in stone – where necessary, a budget can be changed, so long as you take
steps to deal with the implications of the changes. So, for example, if you have
budgeted for ten new computers but discover that you really need a generator, you
could buy fewer computers and purchase the generator.
Simply a record of last year’s expenditure, with an extra 15% added on to cover
inflation. Every year is different. (See also the section on different budgeting
techniques.) Organizations need to use the budgeting process to explore what is
really needed to implement their plans.
Definition-
“ A financial and/or quantitative statement, prepared and approved prior to define period of
time, of the policy to be pursued during that period for the purpose of attaining a given
objective.”
--- The Chartered Institute of Management Accountants, England
“A budget is a predetermined statement of managerial policy during the given period which
provides a standard for comparison with the results actually achieved.”
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---- Brown and Howard
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.
It is prepared for a definite future period.
The Budget is monetary and I or quantitative statement of policy.
CONTROL AND PERFORMANCE EVALUATION
Budgeting entries into control at three points:
When a budgeted is being formulated, departments analyze their plans for the future
and submit estimates as per their requirements, justifying each of their demands by
demon string a need.
After budgets of different departments have been reviewed and approved they
become targets that set desirable limits on spending.
At the end of the budget period, a comparison of actual expenditure with budget
expenditure is made as a means of judging performance and fixing responsibility
foe deviations.
ADVANTAGES OF BUDGET
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Budget plays an important role in the effective use of resources and achieving
overall organizational goals.
Budget compels and motivates management to make an early and timely study of its
problem.
Budget provides a valuable means of controlling income and expenditure of a
business as it is a “plan for spreading”
Budget provides a too through which managerial polices and goals are periodically
evaluated, tested and established as a guidelines for the entire organization.
Budget help in directing capital and others resources into the most profitable
channels.
CLASSIFICATION OF BUDGETS
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.
According to flexibility:
Fixed budget: A budget prepared on the basis of fixed or a standard level of
activity. It does not change with respect to level of activity.
Flexible budget: A budget is prepared depend upon the level of the
Activity.
OPERATING AND FUNCTIONAL BUDGETS
Sales budget:
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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:
Information concerning past performance.
Information about present condition with in the individual company & in each sales
territory.
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.)
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.
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
It helps the purchasing departments to prepare a schedule to ensure.
Direct labour 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
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separate direct labor budget and to include indirect labor in the factory over head
budget.
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.
Inventory budget:
An inventory budget can be prepared to find out the values of direct
materials & finished goods inventory.
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.
Administrative expenses budget:
The Administrative expenses budget covers the administrative costs for
non-manufacturing business activates.
BUDGETED INCOME STATEMENT
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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.
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.
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.
Budget manual:
The budget manual is a written document, which specifies the objective of the
budgeting organization & procedures.
Reponsibility for budgeting:
Budget controller :
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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.
Budget committee :
Budget committees 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.
Fixation of the budgeted period:
Budgeted period: “The period for which a budget is prepared &
employed”.
Budgeted procedure:
The procedure followed while designing and operating a
budgetary control system depends upon the nature of the business.
BudgetingBudgeting for a business is a process. It is the process of preparing a detailed statement of
financial results that are expected for a given time period in the future. There are two
keywords in that statement. The first keyword is "expected." Expected means something
that is likely to happen. The second keyword is "future" which is a period in the time to
come. So, budgeting is the process of preparing a detailed statement of financial results
that are likely to happen in a period in a time to come.
Budget PlanningA budget is an important tool which co-ordinates various activities within an
organization. Planning involves selecting objectives and action to achieve them. It is
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looking ahead and preparing for it, which links it to budgeting. Through planning, the
organization is able to assess where it is supposed to be in terms of objectives and goals.
This comes from the information system.
Good planning is characterized by clear objectives. It must be simple and comprehensive.
The plan should be well balanced and flexible so as to incorporate changes in the
resources and should be time bound. Properly covered plans tell what, when and how
something is to be done. Sound planning mentions priorities and the planning control
cycle. Since there are so many activities to be performed, it is imperative that they are
listed in order of preference. These are decision packages.
Despite the differences in definitions and measures of performance among researchers,
most observers would agree that organizations vary in how well they perform.
Budgets co-ordinate the activities of the parts of the organization. Through this, the
objectives of the organization harmonize with objectives of its parts.
Budgets perform the function of control which is the art of comparing where you are
(actual performance) to where you are supposed to be ((plans), so corrective action can
be taken when there is a deviation from the target. It is necessary to ensure that plans as
laid down in the budget are being achieved.
Bu dget Moni to r in g and Control Budget control is the process of comparing actual results with planned results and
reporting on the variations .The aspect of budget control is the most well known and it is
frequently encountered by ordinary staff members. Control compares actual performance
and budgeted, thus helps expenditure to be kept within agreed limits. Control is
constituted by budget evaluation and monitoring.
Budgetary control and standard costing systems are essential
According to Drury (1995), budgetary monitoring and control process is a systematic
and continuous process, which is characterized by the following stages:
Establishing targeted performance or level of activity for each department of the
organization.
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Communicating details of the budgetary policy.
Monitoring of actual revenue or cost data.
Continuous comparison of actual performance with the budgeted performance.
Regular reporting of variances to the responsible officials.
Asserting the reasons for the differences between actual and budgeted
performances.
Organization for Budgetary Control
In order to introduce budgetary control system, the following are essential to be
considered for a sound and efficient organization. The important aspects to be considered
are:
1. Organization Chart
2. Budget Center
3. Budget Officer
4. Budget Committee
5. Budget Manual
6. Budget Period
7. Key Factor
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From the above chart we can observe that the chairman of the company is the overall in
charge of the functions of the Budgeted Committee. A Budget Officer is the convener of
the budget committee, who helps in co-ordination.
Organization Chart:
For the purpose of effective budgetary control, it is imperative on the part of each
entity to have definite "plan of organization." This plan of organization is
embodied in the organization chart. The organization chart explaining clearly the
position of each executive's authority and responsibility of the firm. All the
functional heads are entrusted with the responsibility of ensuring proper
implementation of their respective departmental budgets. An organization chart
for budgetary control is given showing clearly the type of budgets to be prepared
by the functional heads.
1. Budget Center:
A Budget Center is defined by the terminology as "a section of the organization
of an undertaking defined for the purpose of budgetary control." For effective
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budgetary control budget centre or departments should be established for each of
which budget will be set with the help of the head of the department concerned.
2. Budget Officer:
Budget Officer is usually some senior member of the accounting staff who
Controls the budgetary process. He does not prepare the budget himself, but
facilitates and co-ordinates the budgeting activity.
3. Budget Committee:
Budget Committee comprising of the Managing Director, the Production
Manager, Sales Manager and Accountant. The main objectives of this committee
is to agree on all departmental budgets, normal standard hours and allocations. In
small concerns, the Budget Officer may co-ordinate the work for preparation and
implementation of budgets.
4. Budget Manual:
A Budget Manual has been defined as "a document which set out the
responsibilities of persons engaged in the routine of and the forms and records
required for budgetary control." It contains all details regarding the plan and
procedures for its execution. It also specifies the time table for budget preparation
to approval, details about responsibility, cost centers, constitution and
organization of budget committee, duties and responsibilities of budget officer.
5. Budget Period:
A budget is always related to specified time period. The budget period is the
length of time for which a budget is prepared and employed. The period may
depend upon the type of budget. There is no specific period as such. However, for
the sake of convenience, the budget period may be fixed depending upon the
following factors:
Types of Business
Types of Budget
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Nature of the demand of the product
Length of trade cycle
Economic factors
6. Key Factor
Key Factor is also called as "Limiting Factor" or Governing Factor. While
preparing the budget, it is necessary to consider key factor for successful
budgetary control. The influence of the Key Factor which dominates the business
operations in order to ensure that the functional budgets are reasonably capable of
fulfillment. The Key Factors include.
Raw materials may be in. short supply.
Non-availability of skilled labours.
Government restrictions.
Limited sales due to insufficient sales promotion.
Shortage of power.
Underutilization of plant capacity.
Shortage of efficient executives.
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OBJECTIVES OF THE
STUDY
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OBJECTIVES OF THE STUDY
To study the existing budgetary controls method & practices at Ranna Sugars.
To compare the budgeted figures with actual figures.
To find out any loopholes in the budgetary control system.
To Forecast the future and plan to avoid losses but more positively to maximize the profits
To forecast technology development for identifying the requirement of inputs..
For implementations of preferred technology option(s) identify critical inputs such as raw
material, capital goods and human resources required and their availability, investments
required to commercialize, and benefits/returns expected. Maximum possible
quantification is required.
Action Plan for implementation of recommendations alongwith identification
of:
o List of available technologies for Indian industry and
o The agencies/groups/individuals for implementation.
Expected impact of recommendations, if implemented. The study to build upon
the earlier studies of TIFAC and other organizations, with a focus of details for
action.
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CHAPTER-2 RESEARCH METHODOLOGY
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RESEARCH METHODOLOGY
Research Methodology in a way is systematic representation of research or any other
problem. It is a written game plan for conducting research. It tends to describe the step
taken by a researcher in studying the research problem along with a logical background.
It tends to describe methodology for solution of the problem that has been taken for the
purpose of study .This project focuses on the methodology for technique used for the
collection, classification & tabulation of the data. This plan throws light on the research
problem, the objective of the study & Limitation of the study. Therefore, In order to solve
a problem, it is necessary to design a Research Methodology for problem as the same
way differs from problem to problem.
The Project
The Project undertaken during the summer training at “BUDGETING
PLANNING”. The main aim of the study is to understand the “How budgeting is
done in the Industry”.
Nature of the study
The nature of study is that it has an applied base. The statement indicates that results
obtained from the study, inference drawn from the study can actually be applied
practically and can be of great help to the customers to set the budget in industry more
comprehensive way.
Scope of study
The report is based on the findings of mail survey and field visits and the information
collected through desk research. Mail survey and field visits were conducted to elicit the
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views of different categories of respondents such as sugar mills, equipment / know-how
suppliers, R & D organizations, experts and manufacturers' associations.
TYPES OF RESEARCH
Research methodology is a way to systematic solve the Research Problem. It is a
procedure, which is following Red step by step to solve a particular research problem.
There are basically four types of researches:
Explorative research
Descriptive research
Diagnostic research
Hypothesis testing research
Explorative Research:
To gain familiarity with phenomenon or to achieve an insight into it.
Descriptive Research:
To poetry accurately the characteristics of the particular individual situation or a group.
Diagnostic Research:
To determine the frequency with which something occurs or with which it is associated
with something else.
Hypothesis Testing Research:
To test a hypothesis of casual relationship between variables.
The present project is Descriptive in nature. It is done to poetry accurately the
characteristics of a particular individual situation or a group. The major purpose of the
descriptive research is the description of the state of the affairs as it exits at resent. The
main characteristics of this method are that the researcher has no control over the
variables; he can only report what has happened or what is happening.
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RESEARCH PROCESS
There are six steps of designing a research report:-
1. Specifying the Research objective:
The relationship and the importance of the selected subset of technology to be broad
one to which it belongs.
2. Preference the list of needed information:
The second step in designing the project work is the preparation of list of need
information. There is basic information on which the research project is to structure.
In this project, the various information is headed in starting of the project. These are
as follows:-
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Specifying the Research objective
Preference the list of needed information
Research Design
Collection of Data
Analysis of Data
Report Writing
Q: What is the study about?
Ans: Budgeting Planning.
Q. Why is the study being made?
Ans: To understand how to plan Budget.
Q. Where will the study be carried out?
Ans: Chandigarh.
Q. What type of data is required?
Ans: Primary as well as Secondary
Q. Where can the required data be found?
Ans: Primary Data through questionnaire from the customers and also with personal
meting & secondary data through magazines, newspaper etc.
3. Designing the data collection process :
During the data collection process a questionnaire was made for the collection of the data
from the customers personally. Because in the research project both primary as well as
secondary data is required. So primary data was collected with the help of the
questionnaires.
The following types of question were asked from the customers.
Dichotomous
A question with two possible answers says Yes or No.
Multiple Choices
A question with three or more answers.
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Selecting the sample size
Taking the sample of the study was not an easy task. The objective and the limitation of
the study have to be kept in mind before deciding about the sample type.
In the sample type all levels of its customers have been covered. Basically the present
customers as well as prospective customers were questioned with help of the
questionnaire.
5. Analysis of data:
After deciding upon the sample size & preparing the questionnaire, the fieldwork had
to be carried out. In the field work the place had to be chosen where you want to do
your study. The project survey work was carried out in the Bihar City.
6. Analyzing the collected data & reporting the finding:
After the survey work was over & the data had been collected the analysis of the data
was must & its graphical representation was needed. So after the data collection process
step by step analysis of data was done on the basis of the analysis.
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CHAPTER-3 DATA ANALYSIS AND INTERPETATION
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1) COMPARISION OF PREVIOUS BUDGETED FIGURES WITH
SUBSEQUENT YEAR
RECEIPTS
S.No Particular
2006-
2007
At Rs. In
Lakhs
Actual
Income
2007-2008
At Rs. In
Lakhs
Actual
Income
2008-
2009
At Rs. In
Lakhs
Actual
Income
1 Sugar Sales 9487.50 1985.40 7187.50 7189.50 6440.00 1593.86
2
Sale of By
Products1053.50 57.37 1046.36 679.13 909.36 2672.92
3 Dividend 7.55 7550.46 7.55 360.50 3.60 1371.05
4 Interest on Loans 14.40 1285.63 2.00 1003.17 3.02 5619.10
Sl.No Particulars 2006-07
At Rs. In
Lakhs
Actual exp's
At Rs.in
Lakhs
2007-08
At Rs. In
Lakhs
Actual
Exp's At
Rs.in
2008-09
At Rs.
In
Actual
Exp's
At Rs.
37
Lakhs LakhsIn
Lakhs
1 Sugarcane purchased 7250.00 6162.81 5230.00 5230.00 4400.00 5616.18
2 Reconstruction expenses 2.00 79.28 3.00 3.00 3.00 15.13
3 Vehicles management 8.00 114275.50 8.00 80.00 12.00 108,00
4 Interest on loan 1800.00 756040.98 1800.00 18000.00 1600.00 8268.57
5 Salary to staff 264.00 48219.82 264.00 18000.00 338.00 70.49
6 Auditors fees 2.00 1874.94 2.50 2.50 3.00 2.79
7 Rent and taxes 8.00 18723.36 20.00 200.00 20.00 15.98
8 Insurance 10.00 51.71 10.00 100.00 10.00 0.17
9Repairs and maintenance of
machinery200.00 191679.06 300.00 3000.00 300.00 235.84
10Telegram and telephone
charges5.00 2655.46 4.00 40.00 3.00 2.95
11 Bank commission 4.00 2960.78 4.00 ------- 1.50 0.74
Comparisons of Actual expens
2) COMPARISION OF PREVIOUS BUDGETED FIGURES WITH SUBSEQUENT YEAR
38
RECEIPTS
S.No Particulars
2005-
2006
At Rs. In
Lakhs
2006-2007
At Rs. In
Lakhs
2007-2008
At Rs.in
Lakhs
2008-2009
At Rs. In
Lakhs
1 Sugar Sales 6160.00 9487.50 7187.50 6440.00
2 Sale of By Products 877.21 1053.50 1046.36 909.36
3 Dividend 10.00 7.55 7.55 3.60
4 Interest on Loans 3.00 1,44 2.00 3.02
5 Loss 1370.89 1007.51 ------- -------
TOTAL 8421.10 11557.50 8243.41 7355.98
RECEIPTS
0100020003000400050006000700080009000
10000
At Rs.In Lakhs
At Rs. InLakhs
At Rs.inLakhs
At Rs.In Lakhs
2005-2006 2006-2007 2007-2008 2008-2009
YEAR
RUP
EES
Sugar Sales
Sale of By Products
DividendInterest on Loans
Loss
PAYMENTSS.No Particulars 2005-2006
Amt Rs. In
2006-2007
Am Rs. In
2007-2008
Am Rs.IN
2008-2009
Amt Rs.
39
Lakhs Lakhs Lakhs in Lakhs
1 Sugarcane purchased 4900.00 7250.00 5230.00 4400.00
2 Reconstruction expenses 10.10 2.00 3.00 3.00
3 Vehicles management 6.00 8.00 8.0 12.00
4 Interest on loan 1400.00 1800.00 1800.00 1600.00
5 Salary to staff 250.00 264.00 264.00 338.00
6 Auditors fees 3.00 2.00 2.50 3.0
7 Rent and taxes 6.00 8.00 20.00 20.00
8 Insurance 10.00 10.00 10.00 10.00
9
Repairs and maintenance of
machinery 300.00 300.00 300.00
10
Telegram and telephone
charges 4.00 5.00 4.00 3.0
11 Bank commission 1.75 4.00 4.00 1.50
12 Other expenses 1831.00 1904.00 442.50 418.50
13 Net Profit carry forward to C/B 155.41 246.98
TOTAL 8421.10 11557.50 8243.41 7355.98
PAYMENTS
010002000300040005000600070008000
Amt Rs. InLakhs
Am Rs. InLakhs
Am Rs.INLakhs
Amt Rs. inLakhs
2005-2006 2006-2007 2007-2008 2008-2009YEAR
RU
PEES
Sugarcanepurchased
Reconstructionexpenses
Vehiclesmanagement
Interest on loan
Salary to staff
Auditors fees
Rent and taxes
Insurance
Repairs andmaintenance ofmachineryTelegram andtelephone charges
Bank commission
Other expenses
Net Profit carryforward to C/B
40
A) 2006-07 Receipts.
S.No Particulars
2005-2006
At Rs. In
Lakhs
2006-2007
At Rs. in
Lakhs
Increase
In %
Decrease
In%
1 Sugar Sales 6160.00 9487.50 54.00% -------
2 Sale of By Products 877.21 1053.50 20.09% -------
3Dividend
10.00 7.55 ------ 24.50%
4 Interest On Loans 3.00 1.44 ------ 52.00%
5 Loss 1370.89 1007.51 ------ 26.50%
TOTAL 8421.10 11575.10 37.45% -------
41
INTREPRETATION
Sugar sales increased by 54.00% in the year 2006-2007 compared to 2005-2006.
Sales of by product decreased by 20.09% in the year 2006-2007 compared to 2005-
2006
Interest on loans decreased by 52.00% in the year 2007-2008 compared to 2006-
2007
42
PAYMENTS:-2006-2007
S.No Particulars
2005-
2006
At Rs.in
Lakhs
2006-2007
At in
Rs.Lakhs
Increase
In %
Decrease
In %
1 Sugarcane purchased 4900.00 7250.00 47.95% ------
2 Reconstruction expenses 10.10 2.00 ------ 80.20%
3 Vehicles management 6.00 80.00 33.33% ------
4 Interest on loan 1400.00 1800.00 28.57% ------
5 Salary to staff 250.00 264.00 5.60% ------
6 Auditors fees 3.00 2.00 ------ 33.33%
7 Rent and taxes 6.00 8.00 33.00% ------
8 Insurance 10.00 10.00 ------ -------
9
Repairs and maintenance of
machinery 300.00 ------ ------
10 Telegram and telephone charges 40.00 5.00 ----- 87.50%
11 Bank commission 1.00 4.00 350% -----
12 Other expenses 1831.00 1904.50 4.01% ------
13 Net Profit carry forward to C/B ------- ------- ----- ------
TOTAL 8421.10 11557.50 37.24% ------
INTREPRETATION
Sugarcane purchased increased by 47.95% in the year 2006-2007 compared to
43
2005-2006
Reconstruction expenses decreased by 80.20% in the year 2006-2007 compared to
2005-2006.
Auditor fees decreased by 33.33% in the year 2006-2007 compared to 2005-2006.
Bank commission increased by 350% in the year 2006-2007 compared to 2005-
2006
B)2007-2008 Receipts
Sl.No Particulars
2006-2007
At in Rs. In
Lakhs
2007-2008
At Rs. In
Lakhs
Increase
%
Decrease
%
1 Sugar Sales 9487.50 7187.0 -------- 24.24%
2 Sale of By Products 1053.50 1046.36 -------- 0.68%
3 Dividend 7.55 7.55 -------- ------
4 Interest On Loans 1.44 2.00 39.8% ------
5 Loss 1007.51 ------ ------ ------
TOTAL 11557.50 8243.41 ------- 28.67%
INTREPRETATION
Sugar sales decreased by 32% in the year 2007-2008 compared to 2006-2007
Sales of by product decreased by 0.68% in the year 2007-2008 compared to 2006-
2007
Interest on loans increased by 28% in the year 2007-2008 compared to 2006-2007
44
PAYMENT:2007-2008
S.No Particulars
2006-
2007
At Rs. In
Lakhs
2007-2008
At Rs. In
Lakhs
Increase
%
Decrease
%
1 Sugarcane purchased 7250.00 5230.00 ------ 27.87%
2 Reconstruction expenses 2.00 3.00 50% ------
3 Vehicles management 8.00 8.00 ------- ------
4 Interest on loan 1800.00 1800.00 ------ -------
5 Salary to staff 264.00 264.00 ------ ------
6 Auditors fees 2.00 2.50 25% ------
7 Rent and taxes 8.00 20.00 60% -----
8 Insurance 10.00 10.00 ------ ------
9
Repairs and maintenance of
machinery 300.00 300.00 ------ ------
10 Telegram and telephone charges 5.00 4.00 ----- 20%
11 Bank commission 4.00 4.00 ----- ------
12 Other expenses 1904.00 442.50 ----- 77%
13 Net Profit carry forward to C/B 155.41 ----- ------
TOTAL 11557.50 8243.41 ------ 29%
INTREPRETATION
45
Sugar purchased decrease by 27.87% in the year 2007-2008 compared to 2006-
2007
Reconstruction expenses increase by 50% in the year 2007-2008 compared to
2006-2007
Rent and taxes increased by 60% in the year 2007-2008 compared to 2006-200
C)2008-2009 Receipts
S.No Particulars
2007-
2008
At Rs. In
Lakhs
2008-2009
At Rs. In
Lakhs
Increase
%
Decrease
%
1 Sugar Sales 7187.00 6440.00 ----- 10.40%
2Sale of By Products 1046.36 909.36 ------ 13.10%
3 Dividend 7.55 3.60 ------ 52.32%
4 Interest On Loans 2.00 3.02 33.78% -----
5 Loss ------ -----
TOTAL 8243.41 735598000 ------ 10.77%
INTREPRETATION
46
Sugar sales decreased by 10.40% in the year 2008-2009 compared to 2007-2008
Sales of by product decrease by 13.10% in the 2008-2009 compared to 2007-2008
Interest on loan increased by 33.78% in the 2008-2009 compared to 2007-2008
PAYMENTS:-2008-2009
S.No Particulars
2007-2008
At Rs. In
Lakhs
2008-2009
At Rs. In
Lakhs
Increase
%
Decrease
In %
1 Sugarcane purchased 5230.00 4400.00 ----- 16%
2 Reconstruction expenses 3.00 3.00 ----- -----
3 Vehicles management 8.00 12.00 50% ------
4 Interest on loan 1800.00 1600.00 ------ 11.11%
5 Salary to staff 264.00 338.00 22% -----
6 Auditors fees 2.50 3.00 17% -----
7 Rent and taxes 20.50 20.00 ------ 2.43%
8 Insurance 10.50 10.50 ------ -----
9
Repairs and maintenance of
machinery 300.50 300.00 ------ 0.16%
10
Telegram and telephone
charges 4.50 3.00 ------ 33.33%
11 Bank commission 4.00 1.50 ------ 63%
12 Other expenses 442.50 418.50 ----- 5.00%
13
Net Profit carry forward to
C/B 155.41 246.98 58.92% ----
47
TOTAL 8243.41 7355.98 ------ 11%
INTREPRETATION
Sugarcane consumption is decreased by 16%in the year 2008-2009
compared to 2007-2008
Vehicles management cost’s are increased by 50% in the year 2008-2009
compared to 20007-2008
Bank commission is decreased by 63% in the year 2008-2009 compared to
2007-2008
Chapter-4FINDING
AND
SUGGESTION
48
FINDINGS:
In Rana Sugars both monthly operation plan and annual operation plan are
prepared ascertaining the budgeting performance with actual performance.
Budgetary control system is adopted for checking the industrial performance
Sugar sales increased by 54.00% in the year 2006-2007 compared to 2010-2011
Interest on loans decreased by 39.8% in the year 2007-2008 compared to 2011-
2012
Sugarcane purchased increased by 47.95% in the year 2011-2012 compared to
2010 – 2011
Sugar purchased decrease by 27.87% in the year 2012-2013 compared to
2011- 2012
Vehicles management cost’s are increased by 50% in the year 2013-2014
compared to 20012-2013
Sugarcane consumption is decreased by 16%in the year 2013-2014 compared to
2012-2013
49
SUGGESTIONS
Accurate position of the business cannot be estimated.
It arises due to inflationary pressure and change in Government policies all these
affect the budgeting performance.
Rana Sugars can carry out some promotional activities, so as to increase its
sales and beat the competition
Use of quarter Budget it leads to chances of improvement or modification.
Quarter Budget helps industrial concerns to checks its actual performance. After
ascertaining the actual performance if any modification requires that can be
adjusted in next quarter.
Rana Sugars may appoint specialized and experienced finance manager to
improve its finance performance.
The company should have proper co-ordination between finance and marketing
department.
The company should have close watch on the market which helps to make new
strategies.
50
CONCLUSION
From the study it can be concluded that budgetary control is treated as one of the
better techniques for minimizing cost and maximizing profit in Rana 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 .
51
BIBLIOGRAPHY
52
BIBLIOGRAPHY
BOOKS
Financial management by M.Y. Khan
Financial management by I.M. Pandey
Websites
www.google.co.in www.ranasugars.com http://en.wikipedia.org/wiki/History_of_sugar http://www.sugarindustry.com/ http://www.moneycontrol.com http://economictimes.indiatimes.com/rana-sugars-ltd/stocks/companyid-
10661.cms http://biztaxlaw.about.com/od/glossaryb/g/Budget.htm
53
ANNEXURE
54
BALANCE SHEET OF RANA SUGAR LIMITED (Rs Crore)
Mar' 05 Mar' 06 Mar ' 07 Mar ' 08 Mar ' 09
Sources of funds
Owner's fund
Equity share capital 76.59 76.59 153.54 153.54 153.54
Share application money 9.57 9.57 - - 9.57
Preference share capital 41.09 41.09 41.09 41.09 41.09
Reserves & surplus 89.77 132.62 66.83 61.42 81.87
Loan funds
Secured loans 411.04 345.32 557.76 530.85 554.31
Unsecured loans 63.59 37.73 87.41 74.66 57.45
Total 691.65 642.92 906.64 861.57 897.83
Uses of funds
Fixed assets
Gross block 562.63 324.18 668.44 661.17 640.46
Less : revaluation reserve - - - - -
Less : accumulated depreciation 77.88 55.04 214.36 181.89 151.03
Net block 484.75 269.14 454.08 479.28 489.44
Capital work-in-progress 85.00 294.02 39.56 24.51 34.09
55
Mar' 05 Mar' 06 Mar ' 07 Mar ' 08 Mar ' 09
Investments - - 0.09 0.09 1.29
Net current assets
Current assets, loans & advances 261.37 146.22 755.36 683.20 545.01
Less : current liabilities & provisions 139.47 66.79 342.45 325.51 172.00
Total net current assets 121.90 79.43 412.91 357.69 373.02
Miscellaneous expenses not written - 0.32 - - -
Total 691.65 642.92 906.64 861.57 897.83
Notes:
Book value of unquoted investments - - - - 1.29
Market value of quoted investments - - 0.11 - -
Contingent liabilities 58.04 97.47 8.75 0.08 2.39
Number of equity sharesoutstanding (Lacs) 766.18 766.18 1535.68 1535.68 1535.68
PROFIT & LOSS ACCOUNT OF RANA SUGAR LIMITED (Rs Crore)
Mar' 05 Mar' 06 Mar ' 07 Mar ' 08 Mar ' 09
Income
Operating income 199.87 233.19 703.68 550.78 776.51
Expenses
Material consumed 123.26 159.38 513.97 387.23 650.55
Manufacturing expenses 24.72 21.02 13.84 27.69 21.72
Personnel expenses 18.14 14.60 27.73 25.39 23.74
Selling expenses 6.64 7.16 - - 11.65
Adminstrative expenses 18.48 9.10 36.60 22.12 13.29
Expenses capitalised - - - - -
Cost of sales 191.24 211.25 592.14 462.42 720.94
Operating profit 8.63 21.94 111.55 88.36 55.57
Other recurring income 1.99 10.39 -0.07 1.51 3.96
Adjusted PBDIT 10.63 32.33 111.47 89.87 59.53
Financial expenses 44.83 23.02 72.51 77.98 64.23
Depreciation 23.28 15.69 32.92 32.22 31.67
56
Mar' 05 Mar' 06 Mar ' 07 Mar ' 08 Mar ' 09
Other write offs 0.32 1.13 - - -
Adjusted PBT -57.80 -7.51 6.05 -20.33 -36.38
Tax charges -9.64 -0.84 0.04 0.02 -2.17
Adjusted PAT -48.16 -6.67 6.01 -20.36 -34.21
Non recurring items 10.19 11.61 -0.60 -0.09 -4.03
Other non cash adjustments -4.89 0.18 - - 1.48
Reported net profit -42.85 5.12 5.41 -20.44 -36.76
Earnigs before appropriation -22.23 34.26 -34.66 -40.07 -19.62
Equity dividend - - - - -
Preference dividend - - - - -
Dividend tax - - - - -
Retained earnings -22.23 34.26 -34.66 -40.07 -19.62
CASH FLOW OF RANA SUGAR LIMITED (Rs Crore)
Mar' 05 Mar' 06 Mar ' 07 Mar ' 08 Mar ' 09
Profit before tax -47.61 -9.54 6.05 -20.33 -39.46
Net cashflow-operating activity -13.50 1.50 54.31 69.75 -1.68
Net cash used in investing activity -29.62 -375.11 -23.56 -21.18 -5.48
Netcash used in fin. activity 49.33 365.30 -32.85 -45.05 -35.36
Net inc/dec in cash and equivlnt 6.21 -8.31 -2.10 3.52 -42.51
Cash and equivalnt begin of year 4.72 13.03 22.12 18.60 61.04
Cash and equivalnt end of year 10.92 4.72 20.03 22.12 18.53
57
