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budgeted results, either to secure by individual action the objective of that policy, or
to provide a basis for its revision. Budget is a formal statement of the financial
resources set aside for executing specific activities in a given period of time. It helps
operational plan of management for the budget period. A plan expressed in money. It
is prepared and approved prior to the budget period and may show income,
budgeting. Budget and Budgetary control. The terms budget and budgetary control
monetary term prepared and approved prior to a defined period of time usually
showing planned income to be generated and or to be incurred during that period and
policy and the continuous comparison of actuals with budgeted results either to secure
individuals action the objective of policy or to provide a basic for its revision.
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1.2 Need for the Study
policies in the year 2009 to 2013. To know about the present scenario of
Manufacturing companies Investment estimation that are existed in the market and
about the present impact of budgetary control on the Financial position of the
company. To know about the fast performance to based on future Estimation of the
The scope is confined to study and analyse the Budget Control LANCO Infratech
Secondary data
The data colleted from the secondary data
Annual reports of LANCO Infratech Limited.
Financial management text books.
Printed Materials.
Journals and magazines
News papers.
2
1.6 Limitations
1. The study is purely based on the information provided by the company and the
data is collected from the reports, annual reports, and magazines of the
company.
2. Estimates are used as basis for budget plan and estimates are based mostly on
available facts and best managerial judgment
3. To study is restricted to limited period i.e 2009-13.
3
Industry Profile
About Industry
Manufacturing is the use of machines, tools and labor to produce goods for use or
sale. The term may refer to a range of human activity, from handicraft to high tech,
but is most commonly applied to industrial production, in which raw materials are
transformed into finished goods on a large scale. Such finished goods may be used for
or automobiles, or sold to wholesalers, who in turn sell them to retailers, who then sell
them to end users the "consumers"Manufacturing takes turns under all types of
components. Some industries, such as semiconductor and steel manufacturers use the
America include General Motors Corporation, General Electric, and Pfizer. Examples
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History and development
In its earliest form, manufacturing was usually carried out by a single skilled
artisan with assistants. Training was by apprenticeship. In much of the pre-
industrial world the guild system protected the privileges and trade secrets of
urban artisans.
Before the Industrial Revolution, most manufacturing occurred in rural areas,
where household-based manufacturing served as a supplemental subsistence
strategy to agriculture (and continues to do so in places). Entrepreneurs
organized a number of manufacturing households into a single enterprise
through the putting-out system.
Toll manufacturing is an arrangement whereby a first firm with specialized
equipment processes raw materials or semi-finished goods for a second firm.
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Economics of manufacturing
Manufacturing provides important material support for national infrastructure and for
national defense.On the other hand, most manufacturing may involve significant
social and environmental costs. The clean-up costs of hazardous waste, for example,
may outweigh the benefits of a product that creates it. Hazardous materials may
with labor laws and environmental laws. Across the globe, manufacturers can be
manufacturing activities. Labor Unions and craft guilds have played a historic role in
the negotiation of worker rights and wages. Environment laws and labor protections
that are available in developed nations may not be available in the third world. Tort
Surveys and analyses of trends and issues in manufacturing and investment around the
world focus on such things as
the nature and sources of the considerable variations that occur cross-
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competitiveness; and
In addition to general overviews, researchers have examined the features and factors
Manufacturing industries came into being with the occurrence of technological and
This was widely known as industrial revolution. It began in Britain and replaced the
Manufacturing industries are the chief wealth producing sectors of an economy. These
huge share of the labor force and produce materials required by sectors of strategic
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World Manufacturing Industry
Owing to the emerging technologies world wide, the world manufacturing industry
has geared up and has incorporated several new technologies within it's purview.
from shipments etc., have put the world manufacturing industry in a favorable
position.
Capitalist economy
Collectivist Economy
Modern Economy
Paints
Demand for paints comes from two broad categories
Decoratives: Major segments in decoratives include exterior wall paints, interior wall
paints, wood finishes and enamel and ancillary products such as primers, putties etc.
Decorative paints account for over 72% of the overall paint market in India. Asian
Paints is the market leader in this segment. Demand for decorative paints arises from
household painting, architectural and other display purposes. Demand in the festive
season (September-December) is significant, as compared to other periods. This
segment is price sensitive and is a higher margin business as compared to industrial
segment.
Industrial: Three main segments of the industrial sector include automotive coatings,
powder coatings and protective coatings. Kansai Nerolac is the market leader in this
segment. User industries for industrial paints include automobiles engineering and
consumer durables. The industrial paints segment is far more technology intensive
than the decorative segment. The paints sector is raw material intensive, with over
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300 raw materials (30% petro-based derivatives) involved in the manufacturing
process. Since most of the raw materials are petroleum based, the industry benefits
from softening crude prices.
Key Points
Supply
Supply exceeds demand in both the decorative as well as the industrial paints
segments. Industry is fragmented.
Demand
Demand for decorative paints depends on the housing sector and good monsoons.
Industrial paint demand is linked to user industries like auto, engineering and
consumer durables.
Barriers to entry
Brand, distribution network, working capital efficiency and technology play a crucial
role.
Price increase constrained with the presence of the unorganised sector for the
decorative segment. Sophisticated buyers of industrial paints also limit the bargaining
power of suppliers. It is therefore that margins are better in the decorative segment.
Competition
In both categories, companies in the organised sector focus on brand building. Higher
9
FY11 was a mixed bag for the paint companies. While all the 3 players viz. Asian
Paints, Kansai Nerolac and Berger Paints reported strong growth in sales, operating
margins came under severe pressure due to raw material price inflation. Top-line
growth was boosted by strong demand from the decorative paints segment.
challenging due to rising interest rates. Performance on the margins front was a big
disappointment. Rising prices of crude oil and titanium dioxide increased the overall
a complete pass on of raw material price increase is not possible in the industrial
Prospects
The market for paints in India is expected to grow at 1.5 times to 2 times GDP in the
next five years. With GDP growth expected to be over 7% levels, the top three players
are likely to clock above industry growth rates, especially given the fact that
protection that was available to unorganised players has come down significantly.
Decorative paints segment is expected to witness higher growth going forward. The
fiscal incentives given by the government to the housing sector have benefited the
housing sector immensely. This will benefit key players in the long term.Although the
Increased industrial paint demand, especially powder coatings and high performance
coatings will also propel topline growth of paint majors in the medium term.
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Company Profile
About LANCO
As one of India's leading business entities, LANCO Infratech Limited has been
Power, Solar, Natural Resources and Infrastructure over the last two-and-a-half
decades. Its continuous focus on innovation and expansion together with its
that the company has made over a short span of time. The 25-year-old LANCO group
is, today, uniquely poised to attain leadership position in its areas of operation.
for the business verticals that it operates in. LANCO Infratech Limited became a
listed entity in November 2006 following the Initial Public Offering of shares.
Crores (USD 3.07 billion) .Seamless integration of its core business competence and
strength, EPC, with other domains such as infrastructure, construction and power, has
borne rich dividends for LANCO. The organisation's expertise in building large civic
and urban infrastructure projects has been deployed in constructing thermal and hydro
power projects across the country. In a bid to find cost-effective, sustainable and
green solutions to the county's energy requirements, LANCO has made its presence
felt in the area of solar power as well. LANCO is fast emerging as one of the top three
private sector power developers in India with 4480 megawatt (MW) under
development.
11
In a strategic move that provides increased fuel security for its current power
generating assets and its future power portfolio expansions, LANCO through its
Mining Company and Carpenter Mine Management. Griffin Coal owns the largest
tonnes per annum (mtpa) of coal which can be ramped up to upto 20 mtpa in the near
term, post development of evacuation infrastructure. LANCO also has strategic global
With a team strength of over 8,000 people, LANCO, headquartered in Gurgaon close
to New Delhi, has a pan India presence in strategic locations and an expanding
footprint in the emerging global markets. Currently, its international operations are
Forum and has been acknowledged as an elite member of the top 200 "Global Growth
1960-76
In 1960, brothers Amarappa Naidu, Venkata Rama Naidu and Venkata Ratnam Naidu
laid the foundation of LANCO by starting a transport business with one truck (a
converted bus) inherited from their father L.V. Subba Naidu. Amarappa Naidu's
business acumen and the brothers' commitment soon led to orders pouring in from
12
construction sites. By 1976, the thriving business boasted of a fleet of 100 trucks that
1977-85
Having succeeded beyond imagination, the Naidu brothers planned to enter the
construction business themselves. In 1980, Uma Maheshwar Rao and Company was
established and soon made a name for itself in the construction industry by delivering
several prestigious turnkey projects in Andhra Pradesh and Karnataka. By 1980, the
company's assets included 150 trucks, eight excavators, 10 bulldozers and 15 drilling
machines. In 1985, L.V. Rama Naidu's son, L. Rajagopal, a mechanical engineer, was
1986-90
Overcoming Adversity
In 1986, when the company went through some tough circumstances, L. Rajagopal's
resolve to succeed even got firmer. He acquired a new construction firm, S.V.
engineer. The first year of operation saw a profit of Rs. 1 crore; by 1990 the
1991-94
Seizing Opportunities
Taking advantage of the new opportunities offered by the liberalisation of the Indian
setting up a pig iron plant of 90,000 tpa. He took inspiration from his uncle
13
Lagadapati Amarappa Naidu and named this new business as LANCO Ferro. LANCO
is an acronym for Lagadapati Amarappa Naidu and Company and is tribute to his
Madhusudhan Rao, to manage the business at LANCO Ferro, which was renamed as
Ferro into a fully-integrated plant producing cement,ductile iron pipes and pig iron.
1995-1999
Diversifying to Grow
Diversification through joint venture partnerships became the key word at LANCO as
the organisation embarked on an aggressive growth path. In 1995, the Andhra Pradesh
government opened the power sector to private players. LANCO entered the power
sector against a power purchase agreement with the state government with a 368 MW
Ltd. (LKPL), a joint venture between LANCO and the Genting Group of Malaysia
producer.
2000-05
In 2002, L. Rajagopal retired from the business to pursue public life, and L.
Madhusudhan Rao took over as the Chairman of the organisation. This was a period
new century. LANCO also consolidated its position in the power sector by
commissioning large projects, winning bids for several others, and winning a range of
14
business and industry awards and prestigious recognition forums.
2005-10
LANCO Infratech Limited, a new holding corporate entity, was created in 2006 to
focus on its core business - energy and construction - and enter the infrastructure and
property development sectors. As part of its business strategy, the organisation has
chalked out an ambitious growth plan - in Power and Solar energy. LANCO also
envisages aggressive growth plans for EPC with a strong order book growth.
Our Mission
Our Vision
Our Values
Integrity
We choose to be honest in all our Business Interactions and Transactions and remain
steadfast even when challenged. We strive for consistency between - what we Think,
We are consistently humble in our approach to and interactions with people. We treat
goals. In all our decisions, actions and dealings we put the Organization before self.
Achievement Drive
15
We have an urge that drives us to intensely focus on performance and act decisively
Positive Attitude
Accountability
Teamwork
Trust, Listen to, Share with and Empower team members and take collective
Continuous learning
We learn together on a day-to-day basis from each of our stakeholders, both internal
and external. We change to learn, and learn to change at a fast pace in order to excel;
Financial Performance
elimination) of 36% up from Rs. 11,305 crore in the previous year to Rs. 15,398 crore
in FY12. This growth can be attributed to the development in EPC and Resources
business. EPC revenue grew primarily on account of Babandh, Vidarbha, Moser Baer,
Amarkantak (Unit III & IV) and Kondapalli (Unit III) power projects. On the other
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hand, the Resources business witnessed a fi rst full year of operation at Griffi n after
its acquisition. PAT including profi t Eliminated witnessed a decrease of 27.6% for
the full year from Rs. 945 crore to Rs. 684 crore in FY12. Your company achieved a
growth of 13% in Cash profi t for the full year from Rs. 1218 crore to Rs. 1378 crore.
Your company operates in a capital intensive industry where there is constant need for
both debt and equity to maintain the pace of execution of on-going projects as well as
for the future projects. Your company is taking active steps to raise capital to help
maintain the growth momentum as well as to handle the various issues that the entire
Power Business
basis. A number of reforms have been proposed to push growth. Once implemented,
these reforms will positively impact the overall situation of the sector.
Firstly, steps have been taken by the electricity appellate tribunal towards the tariff fi
revision. Following this, several states have adopted revisions in power tariffs.
that were aimed at improving the fi nancial health of state-owned power distribution
companies.The government has also persuaded Coal India Limited to enter into new
fuel supply agreements. Despite many challenges, the outlook for the sector appears
encouraging. The 12th Plan (2012-17) proposes to add around 76GW of power
17
capacity with the private sector estimated to contribute 56% towards the capacity
addition.
Solar
Over the past seven years, the global solar industry has experienced unprecedented
growth. The key reasons being increasing concerns over climatic change and the need
for green and clean energy. The Government is keen to increase the share of
renewable energy in the total generation capacity of power in the country. Thus,
2015, and 15% by 2020.Your company has set up an integrated model in solar power
establishment..
Resources
Your companys Natural Resources business consists of 2 key assets, namely Griffi n
Coal Mines located in Western Australia and the Mahatamil Project in Chhattisgarh.
With a resource base of 1.1 Bn ton, Griffi n has been producing coal and supplying to
the domestic Australian market and to the export market. It produced 3.16 MT of Coal
during FY12, of which 0.59 MT was exported and 2.57 MT was sold in the domestic
planning phase.
Infrastructure Projects
projects of 440 km length, for which the Concession Agreements are signed with the
NHAI. For the 82 km NH48 project in Karnataka and the 81 km NH4 project also in
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Karnataka, construction was completed during the year. The fi nancial closure for the
Human Resources
People have always been the key assets for your company and the company has
environment, a need was felt to look at the organization critically. Your company has
taken steps towards consolidation and restructuring of its EPC and Construction arms,
leaders.
Your Company has always considered Corporate Social Responsibility a core vertical
within the Company. The focus of our CSR initiatives is towards triple bottom line
villages and directly helping over 300,000 people. All these programmes are delivered
Our ability to generate greater value for the organisation and its shareholders
19
amalgamation of the values and ethics, human resources policies, business practices,
systems and beliefs our core business philosophy -- that we have put into place over
the years, which allows us to gain and retain an incisive advantage in todays
competitive market place. We seek to remain always inspiring and attain the Lanco
At LANCO, our objective is to create value for our stakeholders, including our
shareholders, clients, employees, and communities. Good corporate governance
standards that promote the principles of integrity, transparency, and accountability
will protect and likely enhance our stakeholder value. Thus, we believe that good
business practices, transparency in corporate financial reporting, and the highest
levels of corporate governance are essential components of our success.
Consistent with this belief, today at LANCO:
Our bylaws have recently been updated to provide for majority voting in uncontested
director elections.The company will continue to take any steps the Board believes will
"LANCO's corporate governance has been, and continues to remain, an important area
of focus for LANCO's senior executives and Board of Directors. We have a track
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investors. We will not only run our operations in accordance with Government of
Corporate governance needs and practices continue to change, and I am proud that
LANCO proactively amends its policies and oversight to keep current with, or remain
ahead of, such change. We believe that keeping our policies and practices current and
Lanco Kondapalli Power Ltd has bagged "EHS Excellence Award 2011"
instituted by Corporate Sustainability Initiative Forum, CII- SR in
Infrastructure/Power Sector for Best Practices ON EHS
CM Leadership and Excellence in Safety, Health and Environment Award,
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2002
Corporate Communications
22
Theoretical Review
Budget
Budget is essential in every walk of our life national, domestic and Business. A
budget is prepared to have effective utilization of funds and for the realization of
for performing its functions i.e., formulation plans, coordination activities and
planning and control are tow highly essential functions. Budget and budgetary control
provide a set of basic techniques for planning and control.A budget fixes a target in
budget is closely related to both the management function as well as the accounting
function of an organization.
As the size of the organization increases, the need for budgeting is correspondingly
more because a budget is an effective tool of planning and control. Budget is helpful
in coordinating the various activities (such as production, sales, purchase etc) of the
organization with result that all the activities precede according to the objective.
Budgets are means of communication. Ideas of the top management are given the
practical shape. As the activities of various department heads are coordinated at the
much needed for the very success of an organization. Budget is necessary to future to
Definitions of Budget
quantified in monetary term prepared and approved prior to a defined period of time
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The process of budgetary control includes.
3. Continues comparison of the actual performance with that of the budget and
placing the responsibility of executives for failure to achieve the desired result
According to the Brown and Howard Budgetary control is the system of controlling
costs which includes the preparation of Budgets, co-coordinating the department and
establishing the responsibilities, comparing the actual performance with the budgeted
Row land and William in their book entitled Budgeting for management control has
may be said to be the act of building budgets. Budgetary control embraces all this and
in addition includes the science of planning the budgets themselves and the utilization
of such budgets to effect on overall management tool for the business planning and
control. Thus, a budget is a financial plan and budgetary control results from the
24
Budgetary control defines the objectives and policies of the undertaking as a
whole.
a business unit. It fixed targets and the various departments have to efficiently
below expectations.
the employees.
osts.
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There will be active and passive resistance to budgetary control as it points out
The success of budgetary control depends upon wiling co-operation and team
Frequent changes maybe called for in budgets due to fast changing industrial
climate. It may be difficult for a company to keep pace with these fast
Planning
Co-ordination
Control
Approved Plan
Communication
Budget procedures
Having the budget organization and fixed the period, the actual work or budgetary
The setting up of a definite plan of organization is the first step towards installing
giving details of the powers, duties, responsibilities and areas of operation of each
Budget Manual
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A Budget manual lays down the details of the organizational set up, the routine
procedures and programmers to be followed for developing budgets for various items
and the duties and responsibilities of the executives regarding the operation of the
schedule or Booklet which sets out, inter alia, the routine of and the forms and records
regard to budgeting are written down in the budget manual to avoid any duplication or
overlapping of responsibilities. Steps and the methods for developing various budgets
and the methods of reporting performance against the budget are written down in the
budget manual. In short it is a written document which gives everything relating to the
preparation and execution of various budgets. It should be clear and there should be
no ambiguity in it.
The following are some of the most important matters covered in a Budget manual:
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i) Explanation of key budgets.
The budget period mean the period for which a budget is prepared and employed. The
budget period will depend upon the type of business and the control aspect.Budget
period mean the period for which a budge is prepared and employed. The budget
period depends upon the nature of the business and the control techniques. For
example, in case of seasonal industries (i.e., food or clothing) the budget period
should be a short one and should cover one season. From control point of view, the
budget period should be a short one so that the actual results may be compared with
the budget each week end or month end and discussed with and discussed with the
Budget committee. There should be a regular time plan for budget preparation. It may
Long-term budgets for three to five years should be prepared for expansion
for the operations activities (i.e., sales, purchases, and production etc, of the
business)
Budgetary controller
Although the chief executive l finally responsible for the budgetary programme. It is
28
knowledge of the technical details of the business and report directly to the president
continuous process under these methods of preparation of budget. Once the first
period elapses, the forecast for that period is dropped and the forecast for the future
period beyond the existing could not be predicted and forecast reliably, this method is
operational variances.
In some organizations budgets are prepared on annual basis. But annual budgets may
not help the management to have control because variances due to rapidly changing
conditions affect the sales in quantity and prices, severe rapidly changing conditions
affect the sales in quantity and prices, severe inflationary conditions exist resulting
fast increase in the prices of inputs without reflecting in sales prices immediately and
wide range of products being produced making it not feasible to have precise estimate
of levels of activity for a year. The procedure in continuous budgeting will be that a
year will be divided into four quarters. Monthly budgets for the first quarter and three
quarterly budgets for the next year can be prepared. For the first quarter precise
estimates can be drawn up monthly. The budget estimates for the second quarter may
be revised working out separately monthly estimates on more precise basis for control
purposes before the starting of the second quarter. Similarly procedure may be
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Principal budget factor is such an important factor that it would affect all the
functional budgets to a large extent. The extent of its influence must be assessed first
in order to ensure that functional budgets are reasonably capable of fulfillment. This is
the factor in the activities of an undertaking which at a particular point in time or over
a period will limit the volume of output. It is essential to locate the limiting factor
Different types of budgets have been developed keeping in view the different
Functional Budget
undertaking e.g., sales, production, research and development, cash etc, the following
Budget prepared by
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7. Plant Utilization Budget Production Manager
Sales Budget
Sales budget is the most important budget and of primary importance. It forms the
basis on which all the budgets are built up. This budget is a forecast of quantities and
values of sales to be achieved in a budget in a budget period. The sales Manger should
be made directly responsible for the preparation and execution of the budget. The
customers; salesmen etc., in the preparation of the sales budget, the sales manager
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Production Budget
Production budget is a forecast of the total output of the whole organization broken
down into estimates of output of each type of product with a scheduling of operations
(by weeks and months) to be performed and a forecast of the closing finished stock.
This budget may be expressed in quantitative (weight, units etc) r financial (rupees)
units or both. This budget is prepared after taking into consideration the estimated
opening stock, the estimated sales and the desired closing finished stock of each
product. The works manger is responsible for the total production budget and the
preparing the production budget, the following factors are considered. The time lag
between the production in the factor and sales to the customer should be considered so
as to allow for the time required or the dispatch of goods from the factory to the place
of the customers.
After determining the volume of output the cost of procuring the output must be
of output planned for a budget period and may be classified into material cost budget,
labor cost budget and overhead budget because cost of production includes material,
Materials Budget
material. As we know, materials may be direct or indirect. The materials budget deals
with the requirements and procurement of direct materials. Indirect materials are dealt
with under the works overhead budget. The budget should be related to the production
32
budget and the period of the budget should be of short duration because this budget
Purchase Budget
budget. This budget provides information about the materials to be acquired from the
market during the budget period.Purchase budget should be prepared by the purchase
manger by getting relevant information about capital items, tools, general supplies
and direct materials required during the budget period from other related departments.
Like other budgets, the purchasebudget has to be approved by the budget committee.
purchases are made as per the purchase budget. Sometimes additional purchases
which are not covered by the purchase budget are made under the following
circumstances.
This budget gives as estimate of the requirements of direct labor essential to meet the
production target. This budget may be classified into labor Requirements budget and
different classes of labor e.g., fitters, welders, turner, millers, and grinders and drillers
etc., required for each department, their scales of pay and hours to be spent. This
budget is prepared with a view to enable the personnel department to carry out
programmers of training and transfer and to find out sources of labour needed so that
every effort may be made to remove difficulties arising in production the available
workers in each department, the expected changes in the labour force during the
budget period due to the labour turnover. This budget gives information about the
33
personnel specification for the jobs for which workers are to be recruited, the degree
for skill and experience required and the rates of pay. Where standard costing system
is applied, the labor cost budget is dev eloped on the basis of standard labor cost per
budget.
budget period to achieve the production target. The budget includes the cost of
indirect material, indirect labour and indirect works expenses. The budget may be
classified into fixed cost, variable cost and semi-variable cost. It can be broken into
works overhead can be estimated on the basis of past information after taking into
consideration the expected changes which may occur during the budget period.
This budget covers the expenses incurred in framing policies, directing the
organization and controlling the business operations. In other words, the budget
provides as estimate of the expenses of the central office and of management salaries.
The budget can be prepared with the help of past experience and anticipated changes.
responsibility for increasing such expenses. This budget covers the expenses incurred
in framing policies, directing the organization and controlling the business operations.
In other words, the budget provides an executive. Much difficulty is not experiences
nature.
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Budgeted Income Statement
A budgeted income statement summarizes all the individual budges i.e., sales budget,
cost of goods sold budget, selling budget, and administrative sales budget. This
budget determines income before taxes. If the tax rate is available net income after
This budget is the forecast of the cost selling and distribution for budget period and is
clearly related to the sale budget. All expenses related to selling and distribution of
the various products as indicated in the sales budget are included in it. These expenses
are based on the volume of sales set in the sales budget and budget and budgets are
This budget lays down the requirements of plant capacity to carry out the production
as per the production programme. This budget is terms of convenient physical units as
weight or number of products or working hours. The main functions of this budget
are:
Budget period.
increase the demand for the products by providing after sale service,
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Capital Expenditure Budget
The capital expenditure budget gives an estimate of the amount of capital that may be
needed for acquiring the assets required for fulfilling production requirements a
specified in the production budget. The budget is prepared after taking into
existing assets such as plant and equipment budget, building budget etc. The capital
While developing research and development cost budget, it should be clear in mind
that work relating to research and development is different from that relating to the
and development which may go on for several years. Therefore, these budgets are
established on a long term basis; say for 5 to 10 years which can be further subdivided
into short-term budgets on annual basis. As a rule research workers are less cost
1. Receipts and payments method: In case of this method the cash receipts from
various sources and the cash payments to various agencies are estimated. In
the opening balance of cash, estimated cash receipts are added and from the
36
total of estimated cash payments are deducted to find out of the closing
balance.
2. The adjusted profit and loss method: In case of this method the cash budget is
prepared n the basis of opening cash and bank balance of the various assets an
liabilities.
3. The balance sheet method: With the help of budget balances at end except cash
and bank balances, a budgeted balance sheet can be prepared and the balancing
Thus under this method, closing balances, other than cash\bank will have to be found
out first to be put in the budget balance sheet. This can be done by adjusting the
anticipated.
The Master Budget is consolidated summary of the various functional budgets. It has
been defined as a summary of the budget schedules in capsule form made for the
purpose of presenting, in one report, the highlights of the budget forecast. The
England, is as follows:
Thus summary budget incorporating its components functional budgets and which
Fixed Budget
This budget is drawn for one level of activity and one set of conditions. It has been
that there will be no change in the budgeted level of activity. A fixed budget will,
therefore, be useful only when the actual level of activity corresponds to the budgeted
37
level of activity. A master budget tailored to a single output level of (say) 20,000
units of sales is a typical example of a fixed budget. But in practice, the level of
activity and set conditions will change as a result of internal limitations and external
factors like changes in demand and price, shortage of materials and power, acute
competition etc.
Flexible Budget
classification of all expenses between fixed, semi-variable and variable because the
usefulness of such a budget depend upon the accuracy with which the expenses can be
Where the level of activity during the year varies from period, either
demand.
38
Where the business units keep on introducing new products or make
shipbuilding.
Basic Budget
A Basic budget has been defined as a budget which is prepared for use unaltered over
a long period of time. This does not take into consideration current conditions and
Current Budget
Long-Term Budget
Performance Budget
conduct business in the most efficient manner because budgets are prepared to get the
down as objective for the business as a whole. Even though a monetary reward is not
offered the budget becomes a game a goal to achieve or a target to shoot at and
hence it is more likely to be achieved or hit that if there was no predetermined goal or
target. The budget is an impersonal policeman that maintains ordered effort and
these items. Everyone working in the concern knows what exactly to do because
budgetary control laid emphasis on the staff organization. It ensures that individual
39
responsibilities are clearly defined and that the required authority commensurate with
the responsibility is delegated so that buck passing ay is prevented when the budgeted
results are not achieved. Budgetary control creates conditions for setting up a system
determining further policy of the business because current and future trends are
Dis-Advantages Of A Budget
Budgets can be seen pressure devices imposed by management, thus resulting in:
b) Inaccurate record-keeping.
adopt the view, we had better sped it or we will lose it. This is often coupled with
versus controlling, i.e. some costs are under the influence of more than one person,
40
Data Analyses and Interpretation
Calculation of Revenue Receipts Budget For The Year 2012-2013
(Cr)
S.No Description Budgeted Actuals Variance
Table 1.1
Interpretation
In this year it can be seen that every item actual are bellow the budget estimate which
estimates due to revision in pay scales. This can be ignored, because in total budget
In revenue receipts, the actual are below the budgeted. Except in increase in inventory
41
Calculation of Revenue Expenditure Budget for the Year 2012-2013
(Cr)
Administrative &Operation
4. Expenses ----- ---- -----
Table1.2
42
Calculation of Revenue Receipts Budget for the Year 2011-2012
(Cr)
S.No Description Budgeted Actual Variance
Table1.3
Interpretation
In this year it can be seen that every item actuals are bellow the budget estimate which
estimates due to revision in pay scales. Which can be ignored, because in total budget
In revenue receipts, the actuals are below the budgeted. Except in increase in
inventory value is negative. The budget estimates with a good variation percentage.
43
Calculation of Revenue Expenditure Budget For The Year 2011-2012
(Cr)
Administrative &Operation
4. Expenses ----- ---- -----
Table 1.4
44
Calculation Of Revenue Receipts Budget For The Year 2010-2011
(Cr)
S.No Description Budgeted Actuals Variance
3.
Table1.5
Interpretation
In this year, the budgeted are above the actuals. Interested Earned is high value the
budget estimates among all items and in total that shows a good budgeting effort
In revenue receipts, the budgeted are above the actuals, but with a minimum
45
Calculation Of Revenue Expenditure Budget For The Year 2010-2011
Administrative &Operation
4. Expenses ---- ----- -----
(Cr)
Table1.6
46
Calculation Of Revenue Receipts Budget For The Year 2009-2010
(Rs)
S.No Description Budgeted Actuals Variance
3.
Table1.7
Interpretation
During this year budget estimates are above actuals are below. The budgets and
actuals increasing in compared to previous year.In revenue receipts budget estimates
are above the actuals which indicates a good variation.
47
Calculation Of Revenue Expenditure Budget For The Year 2009-2010
(Rs)
Administrative &Operation
4. Expenses 10.25 2.24 8.01
Table1.8
48
Calculation Of Revenue Receipts Budget For The Year 2008-2009
(Rs)
S.No Description Budgeted Actuals Variance
3.
Table1.9
Interpretation
This year budgets and actuals estimates are below compared to the 2008-2009 except
in employee remuneration and benefits. In revenue receipts, the budgeted are above
the actuals. Increase in inventors value in negative the budget estimates with a good
percentage of variation.
49
Calculation Of Revenue Expenditure Budget For The Year 2008-2009
(Rs)
Administrative &Operation
4. Expenses 2.06 0.65 1.41
Table1.10
50
Calculation Of Revenue Receipts Budget For The Year 2007-2008
(Rs)
S.No Description Budgeted Actuals Variance
3.
Table1.11
Interpretation
In this year the budgets are above the previous year and all expenditures and in all it
budget are above the actual, with minimum difference. Increase in inventory total five
51
Calculation Of Revenue Expenditure Budget For The Year 2008
(cr.
Administrative &Operation
4. Expenses 60.21 42.77 17.44
.)
Table1.12
52
Interested Expanded
(Cr..)
Year Budgeted Actuals
2007-2008 15.21 08.30
2008-2009 102.58 88.48
2009-2010 204.69 173.53
2010-2011 215.68 169.64
2011-2012 421.25 340.26
Table1.13
450
400
350
300
250
BUDGETED
200
ACTUALS
150
100
50
0
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Digram1.1
Interpretation
By observing the above graph the materiel consumption is fluctuating from 2008-
2012. The interested expenditure the state at which the implementation of the need
and the elements of the company is 340.26 cr so the company needs effective budget
53
Provisions and Contingences
(Cr..)
Year Budgeted Actuals
2007-2008 390.21 314.32
2008-2009 648.69 567.12
2009-2010 916.37 866.29
2010-2011 902.67 818.65
2011-2012 763.91 648.57
Table 1.14
1000
900
800
700
600
500 BUDGETED
400 ACTUALS
300
200
100
0
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Digram 1.2
Interpretation
By observing the above graph the consumable stores is fluctuating from 2008-2012.
The value is increased from 314.32 in 2008 to 648.57 in 2012 so the company needs
54
Employee Remuneration & Benefits
(Cr..)
Table1.15
4000
3500
3000
2500
2000 BUDGETED
ACTUALS
1500
1000
500
0
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Digram 1.3
Interpretation
By observing the above graph the employee remuneration and benefits are fluctuating
from 2008 to 2012. There is an increase in the values from 2078.90 in 2008 to
3515.28 in 2012. So the company should follow the same technique and also improve
55
Administrative & Operation Expenses
(Cr..)
Table1.16
70
60
50
40
BUDGETED
30 ACTUALS
20
10
0
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Digram 1.4
Interpretation
By observing the above graph the administrative and operation expenses are
fluctuating from 2008 to 2012. There is a decrease in the values from 42.77 in 2008 to
2.24 in 2010 so the company needs effective budget techniques to get targeted actual.
56
Tax
Table 1.17
350
300
250
200
BUDGETED
150
ACTUALS
100
50
0
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
-50
Digram 1.5
Interpretation
By observing the above graphs the Tax are fluctuating from 2008-2012 there is an
decrease in the values from 96.91 in 2008 to -9.41 in 2012. So the company should
follow the same technique and also improve to get targeted actual.
57
Depreciation
Table 1.18
180
160
140
120
100
BUDGETED
80
ACTUALS
60
40
20
0
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Digram 1.5
Interpretation
By observing the above graph the depreciation values are fluctuating from 2008-2012.
There is an increase in the values from 11.62 in 2008 to 101.44 in 2012 so the
58
Assets
Table 1.19
9000
8000
7000
6000
5000
BUDGETED
4000
ACTUALS
3000
2000
1000
0
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Digram 1.6
Interpretation
By observing the above graph the Assets are fluctuating from 2008-2012.there is an
increase in the values from 2145.27 in 2008 to 6988.33 in 2012. There is an increase
in the actual so the company need effective budget techniques to increase the sale of
targeted actual.
59
Other Income
(Cr..)
Year Budgeted Actuals
2007-2008 37.17 28.03
2008-2009 31.02 15.06
2009-2010 184.57 111.52
2010-2011 18.69 11.47
2011-2012 75.35 64.26
Table 1.20
200
180
160
140
120
100 BUDGETED
80 ACTUALS
60
40
20
0
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Digram 1.6
Interpretation
By observing the above graph the other incomes are also fluctuating from 2008-2012
there is a increase in the value 28.03 in 2008 to 64.26 in 2012 so the company need
effective budget techniques to get targeted actual in the year 2009-2010 the company
plant location was sold out and the income earned in that year is high i.e. 111.52 Cr.
60
Capital Work in Programs
(Cr..)
Year Budgeted Actuals
2007-2008 102.54 81.42
2008-2009 36.69 22.37
2009-2010 48.91 33.44
2010-2011 185.64 102.08
2011-2012 41.27 24.39
Table 1.21
200
180
160
140
120
100 BUDGETED
80 ACTUALS
60
40
20
0
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Digram 1.7
Interpretation
By observing the above graph the decrease in working process values. The values are
in positive. The company should concentrate on this to improve the increasing in the
inventory and in the year 2010-2011 the valuation is high berceuse the increase in the
61
Findings
The budget and budgetary control of LANCO Infratech Limited. Was found to
In the 2008-2012 the total budgets value was high. Where was in the next two
In all the five years budget expenditure was of high consumption a value.
It is also found that the reasons for maintaining huge stock of Banking
well as the sales is also high in the year of 2008-2012 compared to other year.
62
Suggessions
The budget estimations should be made that they will reach with the
in the organization
63
Conclusions
Since, all the production units in LANCO Infratech Limited. Will run perpetually
throughout the year, there will be minimum variations in the revenue expenditure
budget estimates and actual. As the expenditure will be incurred more or less to the
estimations made by the organization.In concern with overhead expenses, it will also
be with minimum variations between budget estimates and actual. Since the
production process will be consistent. Any change in the items of expenditure, will
lead to the review in the budget estimates by the accounts and finance department. It
is also suggested to the company that budget techniques will be very useful to control
64