Megha Project.m PDF

Shimoga Milk Union Limited
1. INDUSTRY PROFILE:
1.1 Introduction to Indian Dairy industry:
The Department of Animal Husbandry, Dairying, and Fisheries, which falls under
the central Ministry of Agriculture, is responsible for all the matters relating to dairy
development in the country. This department provides advice to the state governments
and Union Territories in formulating programs and policies for dairy development. It also
looks after all the matters relating to production and preservation of livestock farms
(cattle and sheep).
Milk production is important in India, as milk is one of the main sources of
protein and calcium for a large vegetarian population. Dairying provides a livelihood for
more than 72 million Indian farmers as well as an additional income for a large number of
rural families. It is also a means for women to participate in the economic activities in the
rural areas.
The highest milk producer in the entire globe – India boasts of that status. India is
otherwise known as the ‘Oyster’ of the global dairy industry, with opportunities galore to
the entrepreneursglobally.It is the world’s largest consumer of dairyproducts,
consuming almost 100% of its own milkproduction.Dairy products are a major source
ofcheap and nutritious food to millions of people inIndia and the only acceptable source
of animalprotein for large vegetarian segment of Indianpopulation, particularly among the
landless, smalland marginal farmers and women.
Anyone might want to capitalize on the largest and fastest growing milk and milk
products’ market. The dairy industry in India has been witnessing rapid growth. The
liberalized economy provides more opportunities for MNCs and foreign investors to
release the full potential of this industry.The dairy industry plays an important role in the
socio-economic development of India.
The dairy industry in India is instrumental in providing cheap nutritional food to
the vast population of India and also generates huge employment opportunities for people
in rural places.
The main aim of the Indian dairy industry is only to better manage the national
resources to enhance milk production and upgrade milk processing using innovative
technologies.
INSTITUTE OF MANAGEMENT STUDIES DAVANAGERE UNIVERSITY, DAVANAGERE 1

1.2 Origin oftheIndustry:

In 1937,“Lucknow Milk Products co-operative Union limited” has set up National
Dairy Development Board (N.D.D.B) was established on 25 September 1965 under the
society’s registration Act 1950. It was a non-profit making organization.
Operation Flood was a rural development program started by India's National
Dairy Development Board (N.D.D.B.) in 1970. One of the largest of its kind, the program
objective was to create a nationwide milk grid. It resulted in making India the largest
producer of milk and milk products, and hence is also called the White Revolution of
India. It also helped reduce malpractices by milk traders and merchants.
Operation Flood has helped dairy farmers, direct their own development, placing
control of the resources they create in their own hands. A 'National Milk Grid', links milk
producers throughout India with consumers in over 700 towns and cities, reducing
seasonal and regional price variations while ensuring that the producer gets a major share
of the price consumers pay.
The bedrock of Operation Flood has been village milk producers' cooperatives,
which procure milk and provide inputs and services, making modern management and
technology available to members. Operation Flood's objectives included:
 Increase milk production ("a flood of milk").
 Augment rural incomes.
 Fair prices for consumers.
Program implementation as below:
Gujarat-based cooperation "Anand Milk Union Limited", often calledAMUL, was
the engine behind the success of the program, and in turn became a mega company based
on the cooperative approach. Tribhuvandas Patel was the founder Chairman of AMUL,
while VergheseKurien was the chairman of N.D.D.B at the time when the program was
implemented. VergheseKurien, gave the professional management skills and necessary
thrust to the cooperative, and is considered the architect of India's 'White Revolution'
(Operation Flood).
The National Dairy Development Board thus was created to promote, finance and
support producer-owned and controlled organizations. N.D.D.B's programs and activities
seek to strengthen farmer cooperatives and support national policies that are favorable to
the growth of such institutions. Fundamental to N.D.D.B's efforts are cooperative
principles and cooperative strategies. The main aim to set up the board was to accelerate

the pace of dairy development in the country and attract new investments. In 1999 India
became the largest producer of milk primarily due to the efforts of the co-operative
movement initiated by the National Dairy Development Board (N.D.D.B).
1.3 Overview ofthe Indian Dairy sector:

Reach:
The Dairy Cooperative Network (As on March 2017)
 includes 177 milk unions
 operates in over 346 districts
 covers 1,33,349 village level societies
 Is owned by around 13.9 million farmer members of whom 3.9 million were
women.
Milk Production:
 India's milk production increased from 21.2 million MT in 1968-69 to 104.8
million MT in 2017-18 and to 110 million MT in 2017-18(Anticipated).
 Per capita availability of milk was 252 grams per day in 2017-18increased from
241grams per day in 2017-18, up from 112 grams per day in 1968-69.
 India's 3.8 percent annual growth of milk production between 1997-98 and 2017-
18 surpasses the 1.8 per cent growth in population; the net increase in availability
is around 2 per cent per year.
Innovation:
 Bulk-vending - saving money and the environment.
 Milk travels as far as 2,200 kilometers to deficit areas, carried by innovative rail
and road milk tankers.
 Automatic Milk Collection Unit (AMCU) and Bulk Milk Cooler (BMC) at grass
root level – preserve quality and reduce post-procurement losses.
Macro Impact:
 The annual value of India's anticipated milk production amounts to more than
Rs.1,430 billion in 2017-18.
 Dairy cooperatives generate employment opportunities for around 13.9 million
farm families.
 Livestock contributes about 25.6 per cent to the GDP from agriculture.

 About 22.45 million people work in livestock sector, which is around 5.8% of the
total work force in the country.
Source: National Dairy Development Board (N.D.D.B)as on March, 2017.
1.4Indian (Traditional) milk products:

There are a large variety of traditional Indian milk products such as:
Makkhan - unsalted butter.
Ghee - butter oil prepared by heat clarification, for longer shelf life.
Kheer - a sweet mix of boiled milk, sugar and rice.
Basundi - milk and sugar boiled down till it thickens.
Rabdi - sweetened cream.
Dahi - a type of curd.
Lassi - curd mixed with water and sugar/ salt.
Channa/Paneer - milk mixed with lactic acid to coagulate.
Khova - evaporated milk, used as a base to produce sweet dishes.
The market for indigenous based milk food products is difficult to estimate as
most of these products are manufactured at home or in small cottage industries catering to
local areas.
1.5India's milk product mix:

Fluid Milk 46.0%
Ghee 27.5%
Curd 7.0%
Butter 6.5%
Khoa (Partially Dehydrated Condensed Milk) 6.5%
Milk Powders, including IMF 3.5%
Paneer&Channa (Cottage Cheese) 2.0%
Others, including Cream, Ice Cream 1.0%
Source: www.mapsofindia.com

1.6Major players of Dairy industry:

Company Brands Major products
Nestle India Limited Milkmaid, Cerelac, Sweetened condensed milk, malted
Lactogen, Milo, foods, milk powder and dairy
Everyday whitener
Milkfood Limited Milkfood Ghee,ice cream, and other milk
products
SmithKline Beecham Limited Horlicks, Maltova, Malted Milkfood, ghee, butter,
Viva, Boost powder milk, milk fluid and
otherMilk based baby foods.
Indodan Industry Limited Indana Condensed milk, skimmed milk
powder, whole milk powder, dairy
milk whitener, chilled and
processed milk
Gujarat Co-operative milk Amul Butter, Cheese and other products
Marketing Federation Limited
H.J. Heinz Limited Farex, Complan, Infant milkfood, Malted milkfood
Gluctose,
VitamilkBonniemix,
Britannia Milkman Flavoured milk, Cheese, Milk
powder, Ghee
Cadbury Bourvita Malted food
Source: aavinmilk.com
1.7Future prospects of the industry:

India is the world's highest milk producer and all set to become the world's largest
food factory. In celebration, Indian Dairy sector is now ready to invite NRIs and Foreign
investors to find this country a place for the mammoth investment projects. Be it
investors, researchers, entrepreneurs, or the merely curious – Indian Dairy sector has
something for everyone.
India contributes to world milk production rise from 12-15%& it will increase up
to 30-35% by the year 2020.

2. COMPANY PROFILE:
2.1Introduction:
ShimogaDistrictCo-operative Milk producers’ Societies’ Union Limited
(SHIMUL) is located in Machenahalli, 12 kms from Shivamogga and 6 kms from
Bhadravathi.
The Union is located in the central part of the state of Karnataka and the milk shed
has got the varied ranging from tropical to temperate.
It produces about 8 dairy products and distributes or sells other products of KMF
in its jurisdiction.
Speciality of the Union: Union which has promoted growing herbal medicinal plants by
women farmers.
2.2Background and Inception ofthe company:

Under the World Bank aided Karnataka Dairy Development Projects, the
activities on Dairy development were taken up in the year 1975. The SHIMUL was
established on 25.11.1987 & registered under Karnataka co-operative act, having the
jurisdiction to the entire Shivamogga, Davangere district, & five taluks of Chitradurga
district. Later the union was extended to entire Chitradurga district. Its initial investment
is 24.17 lakhs with 10 TLPD.
The union undertook the work of organization of milk co-operatives in ‘AMUL
Pattern’ with the main objective of socio-economic reformation of the farmers in the rural
areas through dairying as subsidiary occupation.
The main goal of these co-operative milk producers is to avoid the exploitation of
producers, by the middlemen. Achieve economies of scale of rural milk producers by
ensuring maximum returns and at the same time providing wholesale network of co-
operative organization should build a strong bridge between masses of rural producers
and millions of urban consumers and achieve a socio-economic revolution in the village
community.
2.3Present status of the company:

Dairy Co-operative Societies 1294
Members 1,46,239
Daily Procurement of milk 5,17,432 LPD
Milk sales 1,97,492 LPD

2.4Nature of business carried:

 Milk procurement:
Presently thereare 182 milk procurement routes operating through which Union is
procuring an average of5,17,432LPD.
To increase milk production and productivity, technical input services are being
provided to producer member of the union.
 Manufacturing and distribution:
It manufactures for about 13 products such as milk, curds, butter milk, ghee,
peda, cashewburfi, kova,nandiniladdu,nandinibite,mysorepak,paneer,coconutburfi,
in two production centers that is Shivamogga,Davangere and chitradurga.
The production capacity of the Union in Shivamogga unit is 1,00TLPD
&Davangere is 60TLPD along with seven chilling centers in Honnali with
60TLPD, Anandapurwith 30TLPD, Chitradurga 50TLPD, Tadaganiwith40TLPD
each, B.G.kere 05TLPD, Challakere with 10TLPD each.
It also sells other Nandini products such as Mysore pak, Good life milk,
Gulabjamoon mix, Dharwadpeda, Flavoured milk, Khova, Kunda& other Nandini
products by procuring from other Unions of KMF.
Presently it has 1351 dealers, 13parlors, 2 A.T.M (All Time Milk)parlors, 32
franchisee parlors, 36 milk distribution vehicles, 11 day counter sales vehicles.
It distributes milk with totally 46routes; 23 routes in Shivamogga,14 routes in
Davangere including a adock route,09routes in Chitradurga.
Milk procurement and Sales at present:
 Milk procurement:5,17,432 LPD
 Liquid milk sales: 1,97,492 LPD
 Curds sales: 23,574 LPD
 Peda sales: 1,655Kgs per day
 Ghee sales: 70,365 LPD
 Veterinary facilities for cattle:
There are 15veterinary routes operating and attending emerging cases.
 Artificial animal breeding:
Artificial insemination (AI) is being done through AI centers.
 Feed and fodder development programme:

Cattle feed and high yielding varieties of fodder being supplied to producer along
with technical advice.
 Step training programme:
Supportive to training and employment programmme for women- to those women
who interested in dairying.
2.5 Vision, Mission and Quality Policy:

Vision Statement:
To consolidate the gains of dairying achieved in the state of Karnataka and with a
view of efficient chill, process and market ever development and increasing milk
procurement with an utmost emphasis on the quality and in the process conserve the
socio-economic interest of rural milk producer, the Government of Karnataka through
KMF has proposed to undertake several project with financial and technical support of
N.D.D.B for which an MOU was signed between Government of Karnataka and
N.D.D.B.
Mission statement:
Shimoga district Co-operative Milk producers’ Societies’ Union Limited
(SHIMUL) is committed to provide maximum possible price for the milk supplied by its
members and provide necessary inputs to enhance milk production while ensuring
economic viability of the union and is also committed to provide quality milk and milk
products to consumers and emerge as one of the top most Milk unions of the co-operative
dairy industry in the country.
SHIMUL’s Quality policy:

SHIMUL is committed to producer’s welfare through customer delight adopting
continuous improvement and ensures pure and hygienic milk & milk products.
2.6 Products’ profile:

Brand name of products:
Logo of Nandini:

Tag line of Nandini: “A Milk Brand Trusted by Millions”

Motto of KMF products: “Quality Excellence from Cow to Consumer”
Pasturised toned milk:
Karnataka’s most favourite milk. Nandini toned fresh milk
containing 3.0% fat & 8.5% SNF is the best choice for all
purposes. Available in 200ml, 500ml and 1 litre pouches.
ShubhamMilk:
Nutritious creamy milk with 4.5% fat & 8.5% SNF. Suitable for
all purposes. Available in 500ml & 1 litre pouches.
Homogenised cow’s milk:

Nutrient-rich homogenised milk with 3.5% fat & 8.5% SNF.
Enjoy uniform thickness and extra creamy feel till the last drop,
thus preparing more cups of tea/coffee out of every pack.
Available in 500ml & 1 litre pouches.
Curd:
Fresh curd that tastes just like traditional home-made curd. Can be
consumed as such or in combination with cooked rice or added as
an ingredient in certain dishes. Available in 200 gms& 500gms
pouches.
Spicy Butter milk:

Fresh butter milk blended with quality spices to give that

enlivening spicy tang of traditional spiced butter milk. A drink
recommended after meals, for easy digestion. Available in 200ml
tetra brick packs and 200ml pouches.
Ghee:
A taste of purity, Nandini ghee, made from pure butter. It is fresh and pure with a
delicious flavour. Hygienically manufactured and packed in a special pack to retain
thegoodness of Pure Ghee. Available in 50ml, 100ml, 200ml, 500ml, & 1litre sachets &
in 200ml standy pouches & in 200ml, 500ml, 1 litre& 5 litre pet jars& also in 15 kg tins.
Ghee in Standy Pouches Ghee in Pet Jar Ghee in Sachet
Milk Peda:
Mouth-watering peda made from pure milk. One bite is enough to
fill the heart with its creamy milk flavour. Available in 25gms,
50gms sachets and in 100gms, 250gms packs.paneer, mysorepak,
Cashweburfi ,nandinibite,
Khova:
Add khova to preparations like carrot halwa, gulabjamoonetc and

increase the richness of its taste. Available in 200gms packs. Can
be stored for 30 days when kept frozen.
Product price chart (as on December 2017):

Product name MRP(Rs)

Toned milk-1000ml 35.00
Shubam-1000ml 41.00
Shubam-500ml 21.00
Curd-500gm 21.00
Curd-200gm 10.00
Butter milk-200 ml 6.00
Ghee-1000ml 450.00
Ghee-200ml 96.00
Ghee-tin(15kg) 7200.00
Nandini goodlife-1000ml 46.00
Nandini goodlife-500ml 23.00
Peda-250grams 85.00
Peda-10grams 36.00
Kova bulk 300.00
Dharwadpeda 85.00
Kundha 100.00
Mysore pak-250 grams 100.00
Jamoon mix-200grams 40.00
Source: Productbrochuresof SHIMUL.
2.7 Area of operation:

Although SHIMUL is predominently operting in its region. It also supplies milk to
other states of India and exports some of its products to neighbouring foreign countries.
Regional:
SHIMUL is operating in 19 taluks of 3 districts that is 7 taluks inShivamogga, 6
taluks in Davangere and Chitradurga each. It distributes milk with totally 43 routes;16
routes in Shivamogga,13routes in Davangere including a adock route, 14 routes in
Chitradurga.
National:

On the basis of availability, the excess milk will be sent to the states like
Maharastra, Goa, Andhra Pradesh and Delhi.
Global:
In rainy season, the milk production will convert milk into milk powder. The milk
powder will be exported to the countries like Burma, Srilanka and Singapore through
KMF.
2.8 Ownership pattern:
Source:www.kmfnandini.coop
The dairy co-operatives were established under the ANAND pattern in a three tier
structure with the Village Level Dairy Co-operatives forming the base level, the District
Level Milk Unions at the middle level to take care of the procurement, processing and
marketing of milk and the Karnataka Milk Federation as the Apex Body to co-ordinate
the growth of the sector at the State level. KMF has 13 Milk Unions throughout the State
which procure milk from Primary Dairy Cooperative Societies (DCS) and distribute milk
to the consumers in various Towns/Cities/Rural markets in Karnataka. SHIMUL- a
District Level Milk Union at the middle level is one among the 13 milk unions of KMF.
SHIMUL is a district level milk union of 772 village level co-operative societies
affiliated to it and 1,16,602number of members for the milk union.The milk producers are
the members or owners of the co-operative societies’ union.
2.9 Competitors’ information:
 Sri Krishna Milks Private Limited:

 Situated at: Kirwatti, YellapurTaluk, Karnataka.

 Established: 1989.
 Own Funds: Rs. 18.80 millions (as on 31.03.2004).
 Gross Block: Rs. 56.03 millions (as on 31.03.2004).
 Turnover: Rs. 211.27 millions (during the year 2003-04).
 Products: Branded sachet milk, Ghee, Flavored milk, Butter, Lassi, Curds,
Butter Milk
 Market: North Kanara, Hubli-Dharwad, Belgaum, Bagalkot, Hospet,
Davangere and Goa.
 Production capacity: This plant handles about 50000 liters milk per day.
 Arokya milk:
 HatsunCompany, India’s largest private dairy.
 Hatsun started marketing fresh milk in pouches from 1993.
 Hatsun is a USD 250 million company, listed in the Mumbai Stock
Exchange.
 It started as a creamy dream in 1970: Arunice-creamsin Chennai.
 Hatsun handles a total 1.8 million litre a day.
 Arokya milk is fortified with 4.5% butterfat.
 Distribution Stockists/Agents. They have a network of 30 Distribution
Stockists and over 1500 Agents in Tamilnadu / Bangalore.
 Loose milk sale:

 Market share is next to Nandini.
 Sale in union junction 60 TLPD.
 Majority of the milk is heavily adulterated and no uniform quality.
 Flexible payment system.
Price comparison of milk & curds of Nandini with Private Dairies:

(As printed on half litre packet-MRP in Rs)
Sl no. Type of milk Nandini Sri Krishna Arokya
1 Toned milk 10.00 12.00 12.00
2 Homogenized milk 11.00 _ _

3 Shubam milk 12.00 14.00 14.00

4 Curds(200ml) 06.00 8.00 8.00
5 Curds(500ml) 12.00 15.00 15.00
Source: Price comparison chart of SHIMUL
2.10 Infrastructural facilities:

SHIMUL has its corporate office at Machenahalli, Shivamogga. Its manufacturing
unit is located behind the office premises. The total area of SHIMUL is 21,09,542 sq.ft
being 11,26,026 sq.ft in Machenahalli, 52,272 sq.ft in Jedikatte, 2,17,800 sq.ft in Honnali,
1,43,740 sq.ft in Davangere, 1,30,680 sq.ft in Chitradurga, 2,17,800 sq.ft in Anandapur,
3424 sq.ft in Sagar and 2,17,800 sq.ft in Shikaripur.
Manufacturing plant is quite spacious with different divisions in it. Namely- Milk
division, Butter division, Peda making division, Ghee making division, Butter milk
division.It has two cars for office use.
2.11 Achievements and awards:

Milestones of SHIMUL:
 A Pilot Project was started to supply milk to Shivamogga and Bhadravathi towns
on 1963.
 Government Dairy at Shivamogga was started on 21-5-1971.
 KMF Procurement and Input (P&I) Wing was started on 1-4-1985.
 1985 – KMF has taken over the dairy.
 First Milk Procurement Route, Sahyadri, HonnaliTaluk was started on Aug-1985.
 The Shimoga Milk Union was registered on 25-11-1987.
 Co-operative Development Programme was in operation between 1990 & 1997
and it was funded by N.D.D.B.
 Step (Support to Training & Employment Programme for women) a pilot project
was started during Oct-1997 & it was funded by women & Child Development
Dept., GOI.
 The installation of LN2 distribution system-Oct 1999
 Launch of products:
 Ghee-1985
 Peda-1988
 Butter milk & Curds-1997

 Launch of Standardized Milk in 1993

 Launch of Toned Milk in 200ml sachet in 2000
 Chilling Centers/Dairies established:
 Chitradurga C.C – 16.09.1984
 Shivamogga Dairy – 01.08.1991
 Honnali C.C – 29.07.1991
 Anandapur C.C – 16.04.1991
 Tadagani C.C – 02.02.1999
 B.G.Kere C.C – 28.08.2004
 Sagar C.C – 05.01.2005
 Davangere Dairy:
 Bathi co-operative dairy : 10.08.1969
 Handing over Co-operative dairy to KMF : 05.04.1986
 Expansion of capacity to 30,000LPD : 08.04.1993
 Milk Pasteurization started from : 11.05.1998
 MMPO Certification in 1993.
 ISO 9001:2008 Certification in Nov 2008 applicable for processing, manufacturing,
marketing of milk and milk products (Excluding design and development).
Awards:
 Best NGO award by Ministry of non-conservational energy in the year 1995-96
and also in the year 1996-97.
 Excellence award by the Institute of Economic studies, New Delhi in the year
1998.
 Quality mark – 2016 - 2017
 National energy conservation award in the year 2010.
 NDDB Excellence Award – 2016 - 2017
Shimoga Milk Union Conferred For National Energy Conservation Award

Source: The Hindu e-news paper of Dec 16th,2010

Dr.G.T.Gopal, Managing Director, Shimoga Milk Union receiving "National Energy
Conservation Award for the year 2010" by the union minister for power Mr.Sushil
Kumar Shinde on the occasion of "National energy conservation day" in New Delhi on
Dec-14th.
2.12 Work Flow Model:
Flow chart of milk

Chilling of Milk at 4 C to 120 C using a plate chiller
0
Pumping of chilled milk into insulated milk silo/road milk tanker
Storage of chilled milk in insulated tankers, milk in silo till it is taken for pasteurization
Pumping of chilled milk into Full Cooler Bulk Tanker (FCBT)
Pumping of milk into Hot Temperature at Short Time (HTST) pasteurize through flow controller
heating to 720C to 800C for 15 sec immediate chilling to 40C
Standardization/Separation of milk to required fat and SNF using cream separator during HTST
pasteurization
Pumping of pasteurized milk in to insulated milk silo
Quality analysis
Pumping of milk in sterilized stamped pouches in FFS machines (1/2 ltr and 1 ltr)
Loading of pouches into washed clean creator
Storage of milk creates in cold store at 60C
Quality analysis-COB and Acidity
Dispatch
Figure 1: Work flow model
2.13 Future growth and prospectus forthe company:

The long term objective- 2015 i.e., for the five years from 2017-18 to 2017-18is to
increase the milk procurement by 10.97% and milk sales by 11.2%.
Goals by 2010-11:
 To build 922 co-operative societies at the end of the year.
 To invest Rs. 18.94 lakhs in STEP program-a training program for women.
 Training program for 666 candidates with a cost of Rs.12.47 lakhs.
 Provide cross-breed cattle at 25% deduction and cattle insurance worth Rs.5.18 lakhs.
 To increase the artificial animal breeding to 1,13,300 during the year.
 To provide animal feeding of 24000 metric tonnes.
 Under the Fodder Development Program350 units of urea is scheduled to produce
nutrient dry fodder.
 To improve processing and quality of production it has planned to spend Rs.1483.50
lakhs.
 Planned to expand the Davangere dairy capacity by 1TLPD with an expenditure of 10
crores and other programs with Rs. 1109 lakhs.
 Aimed to increase the sales:
Milk to 152,000 LPD, Curds to 12000 Kg per day, Peda to 210 Kg per day, Butter
milk to 1100 LPD.
 Aimed at establishing milk parlors in Shivamogga and Bhadravathi Railway stations.
 Aimed to increase milk dealers to 169, franchisee parlors to 15and day counters to
560.

3. MCKINSEY’S 7S FRAME WORK WITH SPECIAL

REFERENCE TO SHIMUL:
McKinsey’s 7s model:
The 7s Framework of McKinsey is a management model that describes 7 factors
to organize a company in a holistic and effective way. Together these factors determine
the way in which a corporation operates.
There are 7 basic dimensions, which represent the core of managerial activities.
These are the ‘levelers’, which executes use to influence complex and large organizations.
Obviously, there was a concerned effort on the part of the originators of the model to coin
the managerial variables with words beginning with the letter S. So as to increase the
communications power of the model.
Source:McKinsey 7-S Framework,fromthe book ‘In search of Excellence’ by Thomas J

Peters and Robert H Waterman
Application of 7s Model:
1. Structure:
The organization chart and accompanying baggage that show who reports to
whom and how tasks are both divided and integrated.

Since SHIMUL is a co-operative sector unit. The structure of the organization is

democratic. Major decision however is taken is at top-level management of the company.
Organization Chart:
Figure 2: Organization structure of SHIMUL

2. Strategy:
The strategies being adopted by the company:
 Encouraging rural farmers to engage in dairy farming and producing more
milk at less cost.
 Providing market for the milk produced in rural areas by purchasing milk
at a fair rate throughout the year.
 Providing good quality of milk and milk products to the people of urban
area by scientifically processing the milk obtained from rural area.
 Creating harmonious environment where the human resources of the union
can perform at its best and being a communication bridge between
producers and consumers.
3. System:
MIS in SHIMUL:
Public enterprises like dairies are primarily meant to achieve socio-economic
objectives like fulfilling social needs for efficient management an efficient information
system is essential. Information is the lifeblood of an organization. Decision making and
planning at every level of management requires constant information.
MIS in SHIMUL performs five functions, which help the management to run the
organization without any problems. The functions are as follows:
 Collection of data
 Analysis of collected data
 Converting data into real and meaning information
 Providing all sections with necessary information
Quality system in SHIMUL:

The process for continuous improvement of the quality management system:
 Management responsibility for quality improvement
 Resource management
 Product realization
 Measurement, analysis, improvement of quality.

4. Style:
Style is one which top managers can use to bring about organization change. The
aspects of business most emphasized by members of the top management tend to be given
more attention by people down in organization. Reporting relationship may also convey
the style of the organization.
The reasons to support this are as follows:
 Whenever important decision are to be made, the whole staff is allowed to

participative in the decision making where by suggestions are sought and if found
appropriate are accepted and implemented.
 In SHIMUL instead of ‘Boss-Subordinate’ relationship among the employees of
the organization, superior acts as a guide and facilitator for his subordinates.
 The top management always encourages changes in the organization provided
they happen to be always ready to cope with different situation.
5. Staff:
Presently there are about 238 in SHIMUL.Employees are the functional unit of
any organization. The company contributes to the prosperity of the society as whole by
providing equal opportunities to all. The company provides training to get gainful, high
performance employees.
6. Skill:
The qualified personnel with required skills and competency are recruited and
selected for the required designation.
For example: for recruiting and selecting the manpower required by the
production department the criteria would be B.Tech (Dairy Technology) and Bachelor of
Engineering for maintenance of boilers, who have the capabilities and competencies to
handle the functioning of work smoothly.

7. Shared values:
The common feeling among the people in the SHIMUL is that they are meeting
the demands of the customers and fulfilling the expectations in the form of productions
and its variability. The employee also have belief that they are giving at the best possible
price to milk they procure from farmers. Value of SHIMUL:
 Honesty
 Discipline
 Transparency
 Cleanliness
 Total quality
 Self-reliance
 Co-operative free politics
 Respecting others opinions, emotions, thoughts, and feelings.

4. SWOT ANALYSIS:
SWOT Analysis with reference to SHIMUL:
Strength:
 Good procurement potential.
 Nandini products have a good brand in the market.
 Better quality of raw milk.
 Geographical location of co-operatives/ Dairies.
 ISO 9001:2008 & MMPO certified dairy.
 Wide range of operation - 19 taluks covered in 3 districts of milk shed area.
 Insulated distribution vehicles.
 Varied climatic conditions.
Weakness:
 Wide gap between procurement and sales.
 Absence of separate product block.
 Poor advertisement and promotion.
 Lacking in training and development programs.
 Initiatives to open a separate Milk Union in Davangere district.
 Has not up to World Trade Organization standards.
Opportunities:
 Trappingloose milk sales.
 Growing demand for full cream milk.
 The Milk Union can produce still more products of KMF.
 Milk Union can go for technological advancements.
Threats:
 Private dairy competition in Procurement and Sales.
 Increased local loose milk sales.

5. ANALYSIS OF FINANCIAL STATEMENT ANALYSIS:

5.1 Financial Statements ofSHIMUL:
Manufacturing and trading account:
Purchases 2017-18 2016-17

Opening stock 2,68,95,931.40 232106655.45
Purchase of milk 74,97,79,553.91 4156765611.72
Fodder & other expenses 14,54,29,681.44 9096473770.55
Storage & transportation expenses 4,59,74,064.92 179900951.69
Processing & manufacturing expenses 8,01,73,076.90 327400002.52
Selling & distribution expenses 1,59,50,601.22 67501939.09
Trade profit 8,71,26,701.41 348233924.31
Total 1,15,13,29,611.20 6221556455.33
Sales 2017-18 2016-17

Milk & milk products sales 1,02,59,23,523.63 4894492382.76
Milk & milk products sales(through KMF) 7,75,08,594.80 1211552866.98
Closing stock 4,78,97,492.77 115511205.59
Total 1,15,13,29,611.20 115511205.59
Profit and loss account:

Expenditure 2017-18 2016-17
Staff expenses 6,15,42,708.10 181883854.94
Administration expenses 1,03,83,458.46 39484431.34
Taxes 31,43,808.00 38282298.51
Interest & bank commission 25,90,218.54 6352001.11
Technical expenses 67,63,239.00 38218701.50
Depreciation 1,21,37,958.00 39274581.00
Net profit 16,27,331.98 72597691.60
Total 9,81,88,722.08 416093566.00

Income 2017-18 2016-17

Trade profit 8,71,26,701.41 348233924.30
Other incomes 45,88,659.67 39078033.10
Interest & dividends on investment 61,22,361.00 28781608.50
Grants ---
Total 9,81,88,722.08 416093566.00
Balance sheet:
Liabilities 2017-18 2016-17
Share capital 4,86,29,000.00 416093566.00
Reserves and surplus 3,21,63,805.64 887882277.41
Loans 3,47,05,382.36 53685662.36
Grants 2,97,35,604.00 3263190.19
Current liabilities 22,44,95,391.45 761306168.81
P & l a/c 31,28,241.94 72597691.60
Total 37,28,57,425.39 1920412990.37
Assets 2017-18 2016-17

Fixed assets 12,56,45,959.11 62247090.94
Investments 6,79,16,207.00 421479960.46
Current assets: 17,92,95,259.28 10366859338.97
Stock in hand 4,78,97,492.77 115511205.59
Sundry debtors 21,97,182.11 4426106.47
Cash & bank balance 1,69,29,261.69 475278828.04
Loans & advances 11,22,71,322.71 441469798.87
Total 37,28,57,425.39 1920412990.37
Source: Annual reports of SHIMUL

5.2 Ratio Analysis:

 Current ratio:
Currentratio= Current assets/Current liabilities
Year Current assets Current liabilities Current ratio
2017-18 17,92,95,259.28 22,44,95,391.45 0.79:1
2016-17 15,75,63,204.26 25,01,23,545.27 0.63:1
Inference: The above table shows the current ratio of the organization in the year 2017-
18 and 2017-18is 0.79:1 and 0.63:1 respectively. The current ratio has decreased from
2017-18 to 2016-17. Its shows the organization’sshort term solvency hasworseneddueto
decrease in current assets and increase in current liabilities of the organization.
 Quick ratio:
Quick ratio=Liquid assets/Current liabilities
Year Liquid assets Current liabilities Quick ratio
2017-18 13,13,97,766.51 22,44,95,391.45 0.59:1
2016-17 11,13,08,011.19 25,01,23,545.27 0.45:1
Inference: The above table shows the quick ratio of the company in the year 2017-18 and
2017-18was 0.59:1 and 0.45:1 respectively. Thus the quick ratio of the company has
declined because of the decrease in liquid assets. This shows the SHIMUL’s liquidity
position has declined.
 Debt Equity ratio:

Debt Equity ratio=Debt/Equity
Year Debt Equity Debt Equity ratio
2017-18 3,47,05,382.36 4,86,29,000.00 0.71:1
2016-17 3,73,91,513.36 5,2152,000.00 0.72:1
Inference: As per the above table the organization’s debt equity ratio has slightly
increased from 0.71:1 in the year 2017-18 to 0.72:1 in the year 2016-07. It can be
interpreted that the organization’s financial structure is deteriorating as the increase in
debt will put the companyin risk.

 Gross profit ratio:

Gross profit ratio=Gross profit/Net sales X 100
Year Gross profit Net sales Gross profit ratio
2017-18 8,71,26,701.41 1,10,34,32,118.43 7.9%
2016-17 9,89,22,911.14 1,37,70,57,002.01 7.18%
Inference:Theabove table depicts the company’s gross profit ratio in the year 2017-18
and 2017-18is 7.9% and 7.18% respectively. There is a decline in the ratio. This shows
that the SHIMUL’s ability to cover operating costs has been decreased, which in not a
good sign to the company.
 Net profit ratio:

Net profit ratio=Net profit /Net sales X 100
Year Net profit Net sales Net profit ratio
2017-18 16,27,331.98 1,10,34,32,118.43 0.15%
2016-17 87,11,667.12 1,37,70,57,002.01 0.63%
Inference: As observed from the above tabulation the net profit ratio of the organization
in the year 2017-18 and 2017-18is 0.15% to 0.63% respectively. There is a significant
increase in the net profit ratio, which is a good sign. This is an indication of decreasing
indirect expenses in the company.
 Operating cost ratio:

Operating cost ratio=Operating cost/Net sales X 100
Year Operating cost Net sales Operating cost ratio
2017-18 1,09,49,94,822.58 1,10,34,32,118.43 99.24%
2016-17 1,36,77,41,407.67 1,37,70,57,002.01 99.32%
Inference:As observed from the above table the operating cost ratio of the organization
in the year 2017-18 and 2017-18is 99.24% and 99.32% respectively.This can be
interpreted the organization is maintaining a stable operating ratio.

 Return on assets:
Return on assets=Profit before interest and tax (PBIT)/Total assets X 100.
Year PBIT Total assets Return on assets
2017-18 73,61,358.52 37,28,57,425.39 1.97%
2016-17 1,46,58,754.19 38,61,04,323.37 3.8%
Inference:It is shown in the above table that the company’s return on assets in the year
2017-18 and 2017-18is 1.97% and 3.8% respectively. The ratio has increased due to a
significant increase in PBIT. This indicates that there is an improvement in
effectiveutilization of the SHIMUL’s assets to generate profit.
 Return on capital employed(ROCE):

ROCE=Adjusted net profit/Capital employed X 100.
Year Adjusted net profit Capital employed ROCE
2017-18 12,38,997.52 14,83,62,033.94 0.84%
2016-17 78,15,781.64 13,59,80,778.10 5.75%
Inference: From the table it is known that the company’s ROCE in the year 2017-18 and
2017-18is 0.84% and 5.75% which has drastically increased. This is because of the
increase in adjusted net profit. This is a good sign to the organization as it is yielding
more return for the capital employed in the business.
 Earnings per share(EPS):

EPS=Profit after tax/Number of shares.
Year Profit after tax No. of shares EPS
2017-18 16,27,331.98 48,629 Rs 33.46
2016-17 87,11,667.12 52,152 Rs 167.04
Inference: As per the above table the company’s Earnings per share (EPS) in the year in
2017-18 and 2017-18is Rs 33.46 and Rs 167.04 respectively. Thus there is a huge
increase in the EPS of the company. This is a good sign to the company as the earnings of
each share have been increased. This is due to significant increase in net profit of the
company.

6. LEARNING EXPERIENCE:
 I got a practical experience about the working of an organization.

 I learnthow to relate the theoretical concepts learnt in classroom to the
organizational functioning.
 I learnt how managerial concepts are applied in an organization.
 I have observed and realized the importance of division of work among various
personnel according to their skills, ability and experience.
 I have learnt that unity of command is important for attainment of any task
effectively. The company follows this approach whereby a subordinate receives
instructions only from one superior. This ensures that the job is done with
minimum confusion.
 I have observed the necessity of team spirit for a successful organization. In any
organization, employees have to work in unity. In this organization, a have seen
employees sharing a high level of team spirit, understanding and coordinating
which have contributed to its success.
 I have observed how important one’s attitude is in an organizational context. If
one has a positive attitude, that employee will excel in work and if one has a
negative attitude, that employee will be dissatisfied and will not be successful and
contribute to organizational interests.
 I have realized that finance department of the organization has got the
responsibility of careful planning, utilization of the financial resources, and well-
structured approach in raising funds and systematic design in undertaking several
schemes, projects and investments. These activities have helped the organization
in continued profit and progress.

1. GENERAL INTRODUCTION:
1.1 Introduction toBudgetand Budgetary Control:
Finance is the life blood of a business. Therefore, financial planning is of utmost
significance to a businessman. Financial planning is concerned with raising funds and
their effective utilizations with a view to maximize the wealth of the company.
In spite of good financial plan, the desired results may not be achieved if there is
no effective control to ensure its implementation. A budget is an important tool for
financial planning and control. The budget represents a set of yardsticks or guidelines for
use in controlling internal operations of an organization. The management through budget
can evaluate the performance of every level of the organization. The discrepancy between
planned performance and actual performance is highlighted through budgets.
Budget:
A budget is a list of all planned expenses and revenues. It is a plan for saving and
spending. A budget is an important concept in management accounting. In other terms, a
budget is an organizational plan stated in quantitative, usually monetary terms, covering a
specific period of time, usually one year.
In summary, the purpose of budgeting is to:
1. Provide a forecast of revenues and expenditures i.e. construct a model of how our
business might perform financially speaking if certain strategies, events and plans
are carried out.
2. Enable the actual financial operation of the business to be measured against the
forecast.
Different types of budgets are prepared for different purposed e.g. Sales Budget,
Production Budget, Expenditure Budget, Revenue Budget etc. All these sectional budgets
are afterwards integrated into a master budget, which represents an overall plan of the
organization.
Budgetary control:
Budgetary Control is defined as “The establishment of budgets, relating the
responsibilities of executives to the requirements of a policy, and the continuous
comparison of actual with budgeted results either to secure by individual action the
objective of that policy or to provide a base for its revision”.

Salient features of budgetary control:

a. Objectives: Determining the objectives to be achieved, over the budget period, and the
policy or policies that might be adopted for the achievement of these ends.
b. Activities: Determining the variety of activities that should be undertaken for
achievement of the objectives.
c. Plans: Drawing up a plan or a scheme of operation in respect of each class of activity,
in physical as well as monetary terms for the full budget period and its parts.
d. Performance Evaluation: Laying out a system of comparison of actual performance
by each person section or department with the relevant budget and determination of
causes for the discrepancies, if any.
e. Control Action: Ensuring that when the plans are not achieved, corrective actions are
taken and when corrective actions are not possible, ensuring that the plans are revised and
objective achieved.
Budgetary controltechniques:
Budgetary Control is an integral part of management. It consists in comparisons
between the results of actual performance and budgeted performance. Central to this kind
of comparison is Standard Costing and Variance Analysis. Following explains the
Budgetary Control Techniques:
a. Variance Analysis:
In a well run organization the comparison between actual and budget is used as
the basis for deciding the appropriate action. This document sets out how the analysis is
used to highest effect. The procedure is actually part of the normal control process. Any
variation from expected performance, in terms of budgets, where income or expenditure
did not occur as expected. Variance analysis is the act of determining the drivers for
those variations. Variances (differences between the budget and actual results) are noted
and accounted for. A decision can be made to reduce expenses or reallocate resources.
This technique greatly reduces the need for comprehensive review cycles.
Types of variances:
Variances can be divided according to their effect or nature of the underlying
amounts.

When effect of variance is concerned, there are two types of variances:

 When actual results are better than expected results given variance is described as
favorable variance.
 When actual results are worse than expected results given variance is described as
adverse variance, or unfavorable variance. In common use adverse variance is
denoted by parentheses.
b. Responsibility Centers:
Control systems can be created to monitor organizational functions or
organizational projects. Controlling, a function involves making sure that a specified
activity is properly carried out. Controlling a project involves making sure that a specified
end result is achieved.
There are four types of responsibility centers:
 Revenue Center
 Cost Center
 Profit Center
 Investment Center
c. Forecasting:
The most important budgetary technique is forecasting, or the ability to set out a
detailed plan for the future. This forecast is a dialogue about what to look for in the
future. Predicted income and expenditure, split over periods of the financial year, based
upon known, or expected activity. The forecast gives an indication as to the financial
position at the year end.
1.2 Statement of the Problem:

Since the budget of the organization is varying from the actual income and
expenditure. A suitable budgetary control system is requiredto adopt and implement so as
to use the organization’s resources effectively. Hence “A Study on Budgetary Control
System with special reference to SHIMUL, Shivamogga” is undertaken to analyze the
budgetary items of the organization and control variances.

1.3Objectives of the Study:

 To study the budget of the organization.
 To analyze individual entries in the budget for the year 2015-016, 2016-17.
 To study the budgetary control system of the organization.
 To compute and analyze the variances for the purpose of budgetary control.
 To exercise control on cost through comparison of actual results with the budgeted
values.
 To control the variance in the budget and bring out an appropriate budget for the
year 2016-2017.
1.4 Scope of the Study:

The organization under study SHIMUL geographically, this study is limited to 3
districts that is- Shivamogga, Davangere, Chitradurga. The data undertaken for the study
is from the financial year 2017-18 and 2016-17. The study was conducted on Budgetary
Control of SHIMUL covering all the financial aspects from different departments-
Finance, Marketing, Production etc.,
1.5 Methodology:
Data collection and analysis:
The data has been collected through two sources Viz., Primary and Secondary.
Primary data was collected through staff members of the organization and the
budgetary analysis is based on scheduled interview of 5 experts of Finance Department of
SHIMUL. The sampling method used for this is Non-probability sampling, Expert
opinion method.
Secondary data was obtained through the company’s annual reports of the year
2017-18, 2017-18and 2017-18 and company books and other documents.
Research design:
Research design is a master plan or frame work of the action. It specifies pattern
of framework for controlling the collection of data accurately and economically. It
specifies methods and procedures to be followed for the research.
Types of research design are as follows:

1. Exploratory research design:It is an initial research conducted to clarify and define

the nature of the problem. It does not provide conclusive evidence. It expects
subsequent research.
2. Descriptive research design:It can describe the characteristics of a group such as
customers, employees, organization, market competition etc. descriptive research
requires clear specifications of ‘whom?, Why?, when?, where?, what?, how?’ of the
research.
3. Causal research design:It is a research investigations in which condition are
controlled. One independent variable is manipulated (sometimes more than one). Its
effect on dependent variable is measured.
This study is anexploratoryresearch, carried out to analyze and control the
variance.
1.6 Statistical Tools and Techniques:

 Bar chart:The actual and budgeted amount of each budgetary item is represented
by bar chart.
 Percentage:The variation in percentage is calculated as percentage of variation
amount divided by budgeted amount of the respective year.
 Weighted average:The weighted average variation percentage for the year 2017-
18 is calculated taking the weights for the variation in percentage as- 2 for the
recent year i.e., 2017-18and 1 for the year 2017-18.
1.7 Limitations of the Study:

 Non-availability of audited financial data for the year 2016-17.
 The study was analyzed on the basis of scheduled interview of 5 experts which
is subjective.
 Proposed project is limited to only one organization; hence the observation of
this study cannot generalize to other district level milk unions of KMF.
 No matter how well the budget is prepared, it will never be able to reflect truly
the reality/complexities faced by the organization.
 The study cannot replace the managerial judgments in decision making.
 The study is limited to the available information in the department.
 Time constraint where the study was conducted only for 10 weeks.

2.ANALYSIS AND INTERPRETATION OF DATA:

Budgetedincome and expenditure for the period 2017-18 and 2016-17:
(Rupees in lakhs)
Sl. No. Expenditure 2017-18 2016-17
1. Opening stock of milk and milk products 360.06 284.25

2. Milk purchase from D.C.S 9,141.37 9,577.79
3. Milk procurement, processing and production
expenses 1,499.74 1,339.66
4. Cattle feed & fodder development expenses 1,980.45 2,595.35
5. Administration expenses & staff salary 803.23 852.61
6. Taxes 90.05 83.94
7. Milk sales distribution & transportation expenses 223.05 269.55
8. Milk & milk products’ packing expenses 291.34 275.53
9. N.D.D.B loan repayment and bank commission 56.50 69.00
10. Depreciation 48.00 45.00
11. Cattle health program expenses 62.02 73.23
12. Expenses of A.I, first aid & training programs 117.79 122.35
13. Expansion program to D.C.S and Quality
control and plant management program
fund(M.P.C.S) 593.14 322.57
14. Investment and advances 948.80 921.20
15. Diesel purchases 100.00 140.00
16. National information program & STEP program
expenses 48.18 49.36
17. Integrated Dairy Development Program(I.D.D.P)
expenses 300.00 299.28
Surplus 18.16 19.36

Source: Annual reports of SHIMUL

Variance analysis of incomes:
Table 1: Milk and milk products sales:

Year Budgeted amount Actual amount Variation amount Variation
(Rupees in lakhs) (Rupees in lakhs) (Rupees in lakhs) (in %)
2016-17 12,129.74 11,809.72 (320.02) (2.64)
2017-18 12,522.54 12,471.89* (50.65) (0.40)
Note:* represents unaudited financial data of the respective year.
Figure 1: Milk and milk products sales

15000
Rs in lakhs
10000
Budgeted amount
5000 Actual amount
0
Year 2017--2018
Reason/s for the trend variance in budget: The increase in milk and milk products sales
in the budget is because of the expectation of reduced competition and organization of
new Dairy Co-operative Societies (DCS). This trend is expected to continue for the next
year that is 2016-17. Hence considering the weighted average percentage variation the
appropriate budget for the year 2017-18is as below:
As per the trend milk and milk products sales is (Rupees in lakhs) 12,915.34
Weighted average variation in the budget (in percentage) (1.15)
The corrected budget is (Rupees in lakhs) 12,766.81
Analysis and interpretation: Since the percentage variance is unfavorable for the year
2017-18 and 2017-18that is 2.64 and 0.40 respectively and hence the weighted average
variation percentage is unfavorable that is 1.15. As the trend is expected to remain same

for the year 2016-17. The corrected budget for the year 2017-18is Rupees 12,766.81
lakhs.
Table 2: Income from Cattle feed, fodder sales & A.I programs:
2016-17 2,033.17 1,764.71 (268.46) (13.2)
2017-18 2,664.49 2,653.42* (11.07) (0.42)
Figure 2: Income from Cattle feed, fodder sales & A.I programs
3000
2500
Rs in lakhs
2000
1500 Budgeted amount
1000 Actual amount
500
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The increase in Income from Cattle feed,
fodder sales & A.I programs in the budget is because of the expectation of
implementation of many Government Schemes for purchase of Cross-breed cows, Widow
Scheme, Vidharba package, etc., The trend is expected to remain unchanged for the next
appropriate budget for the year 2017-18is as below:
As per the trend Income from Cattle feed, fodder sales & A.I programs is
(Rupees in lakhs) 3,295.81
variation (in percentage) percentage is unfavorable that is 4.68. As the trend is expected

to remain same for the year 2016-17. The corrected budget for the year 2017-18is Rupees
3,143.57 lakhs.
Table 3: Other incomes:
2016-17 70.95 50.63 (20.32) (28.64)
2017-18 69.10 56.06* (13.04) (18.87)
Figure 3: Other incomes

80
70
60
Rs in lakhs
50
40 Budgeted amount
30 Actual amount
20
10
0
Year 2016-17 2017-18
Reason/s for thetrend variance in budget: The decrease in other incomes in the budget
is because of the expectation of decrease in scrap and its sales. This trend is expected to
remain samefor the next year that is 2016-17, Hence considering the weighted average
percentage variation the appropriate budget for the year 2017-18is as below:
As per the trend other incomes is (Rupees in lakhs) 67.25

The corrected budget is (Rupees in lakhs) 52.37

for the year 2016-17. The corrected budget for the year 2017-18is Rupees 52.37 lakhs.
Table 4: Interest on depreciation reserves:

2016-17 50.00 56.41 6.41 12.82
2017-18 55.00 62.78* 7.78 14.15
Figure 4: Interest on depreciation reserves

70
60
50
Rs in lakhs
40
Budgeted amount
30
Actual amount
20
10
0
Year 2016-17 2017-18
Reason/s for thetrend variance in budget: The increase in interest on depreciation

reserves in the budget is because of the expectation of increase in interest rates for the
reserves. This trend is expected to remain unchanged for the next year that is 2017-18.
Hence considering the weighted average percentage variation the appropriate budget
for the year 2017-18 is as below:
As per the trend interest on depreciation reserves is (Rupees in lakhs) 60.00

Weighted average variation in the budget (in percentage) 13.70
Analysis and interpretation: Since the percentage variance is favorable for the year

variation percentage is favorable that is 13.70. As the trend is expected to remain same
for the year 2017-18. The corrected budget for the year 2017-18 is Rupees 68.22 lakhs.
Table 5: Issue of new shares:

2016-17 35.69 35.23 (0.46) (1.29)
2017-18 39.42 33.29* (6.13) (15.55)
Figure 5: Issue of new shares

45
40
35
30
Rs in lakhs
25
Budgeted amount
20
Actual amount
15
10
5
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The increase in issue of new shares in the
budget is because of the expectation of organization of new Dairy Co-operative Societies
(DCS) and increased milk producers in the societies. The trend is expected to continue for
the next year that is 2017-18. Hence considering the weighted average percentage
variation the appropriate budget for the year 2017-18 is as below:
As per the trend issue of new shares is (Rupees in lakhs) 43.15


Table 6: Income from cattle health programs:

2016-17 6.66 3.13 (3.53) (53.00)
2017-18 7.10 7.49* 0.39 5.49
Figure 6:Income from cattle health programs

8
6
Rs in lakhs
4 Budgeted amount
Actual amount
2
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The increase in income from cattle health
programs in the budget is because of the expectation of increase in schemes funded by
government and increase in input activities. This trend is expected to remain same for the
next year that is 2017-18. Hence considering the weighted average percentage variation
the appropriate budget for the year 2017-18 is as below:
As per the trend income from cattle health programs is (Rupees in lakhs) 7.54
Analysis and interpretation:Since the percentage variance is unfavorable for the year
2017-18 and favorable for the year 2017-18that is 53 and 5.49 respectively and hence the
weighted average variation percentage is unfavorable that is 14.01. As the trend is

expected to remain same for the year 2017-18. The corrected budget for the year 2017-18
is Rupees 6.48 lakhs.
Table 7: D.C.S material sales:
2016-17 120.91 63.96 (56.95) (47.10)
2017-18 181.53 174.51* (7.02) (3.87)
Figure 7: D.C.S material sales

200
150
Rs in lakhs
100 Budgeted amount

Actual amount
50
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The increase in D.C.S material sales in the
budget is because of the expectation of organization of new Dairy Co-operative Societies
(DCS). This trend is expected to continue for the next year that is 2017-18. Hence
considering the weighted average percentage variation the appropriate budget for the
year 2017-18is as below:
As per the trend D.C.S material sales is (Rupees in lakhs) 242.15


variation percentage is unfavorable that is18.28. As the trend is expected to remain same
Table 8: Income from quality control and plant management programs:

2016-17 248.21 215.30 (32.91) (13.26)
2017-18 84.00 79.00* (5.00) (5.95)
Figure 8: Income from quality control and plant management

programs
300
250
200
Rs in lakhs
150 Budgeted amount

Actual amount
100
50
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The decrease in income from quality control
and plant management programs in the budget is because of the expectation of non-
availability of many government schemes. The trend is expected to change for the next
year that is 2017-18 as it is expected that the organization is funded by government for
some schemes. Hence considering the change in the trend as per the experts’ opinion the
appropriate budget for the year 2017-18 is as below:
2017-18 and 2017-18that is 13.26 and 5.95 respectively. As the trend is expected to

change for the year 2017-18. The corrected budget for the year 2017-18 is Rupees 150.00
lakhs.
Table 9: Grants from government, Zillapanchayath, STEP and N.D.D.B:

2016-17 466.35 443.91 (22.44) (4.81)
2017-18 555.35 550.35* (5.00) (0.90)
Figure 9: Grants from government, Zilla panchayath, STEP and

N.D.D.B
600
500
Rs in lakhs
400
300 Budgeted amount
200 Actual amount
100
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The increase in Grants from government,
Zillapanchayath, STEP and N.D.D.B in the budget is because of the expectation of
sufficient funds available by government, Zillapanchayath, STEP and N.D.D.B. The trend
is expected remain same for the next year that is 2017-18. Hence considering the
weighted average percentage variation the appropriate budget for the year 2010-11 is
as below:
As per the trend Grants from government, Zillapanchayath, STEP and

N.D.D.B is (Rupees in lakhs) 644.35

Table 10:Union revolving fund and depreciation fund:

2016-17 598.64 352.30 (246.34) (41.15)
2017-18 77.00 78.00* 1.00 1.30
Figure 10: Union revolving fund and depreciation fund

700
600
500
Rs in lakhs
400
Budgeted amount
300 Actual amount
200
100
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The decrease in Union revolving fund and
depreciation fund in the budget is because already many facilities are fulfilled for the
Dairy Co-operative Societies (DCS). This trend is expected to change for the next year
that is 2017-18 as it is estimated that some facilities are required to be funded. Hence
considering the experts’ opinion the appropriate budget for the year 2017-18 is as
below:

2017-18 and favorable for the year 2017-18that is 41.15 and 1.30 respectively. As the
trend is expected to change for the year 2017-18. The corrected budget for the year 2017-
18is Rupees 74.00 lakhs.
Table 11: Closing stock of milk and milk products:

2016-17 386.56 341.42 (45.14) (11.68)
2017-18 313.00 288.53* (24.47) (7.82)
Figure 11: Closing stock of milk and milk products

500
400
Rs in lakhs
300
Budgeted amount
200 Actual amount
100
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The decrease in closing stock of milk and
milk products in the budget is because of the expectation of increase in sales and also in
demand for the products. This trend is expected to remain same for the next year that is
2017-18. Hence considering the weighted average percentage variation the appropriate
budget for the year 2017-18 is as below:
As per the trend closing stock of milk and milk products is (Rupees in
lakhs) 239.44

Table 12: Diesel expenses recovery:

2016-17 100.00 100.00 -- --
2017-18 140.00 143.00* 3.00 2.14
Figure 12: Diesel expenses recovery

160
140
120
Rs in lakhs
100
80 Budgeted amount
60 Actual amount
40
20
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The increase in diesel expenses recovery in
the budget is because of the expectation of hike in diesel rates and increase in the number
of transportation vehicles. This trend is expected remain unchanged for the next year that
is 2017-18. Hence considering the weighted average percentage variation the
As per the trend diesel expenses recovery is (Rupees in lakhs) 180.00


Analysis and interpretation: Since the percentage variance for the year 2017-18 is nil
and favorable for the year 2017-18that is 2.14 and hence the weighted average variation
percentage is favorable that is 1.43. As the trend is expected to remain same for the year
2017-18. The corrected budget for the year 2017-18 is Rupees 182.57 lakhs.
Table 13: N.D.D.B’s loan and interest:
2016-17 435.00 311.48 (123.52) (28.39)
2017-18 631.50 627.45* (4.05) (0.64)
Figure 13: N.D.D.B’s loan and interest

700
600
500
Rs in lakhs
400
Budgeted amount
300
Actual amount
200
100
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The increase in N.D.D.B’s loan and interest
in the budget is because of the expectation of requirement of funds for the purchase of
new plant and machinery and for the expansion of dairies. The trend is expected to
continue for the next year that is 2017-18. Hence considering the weighted average
percentage variation the appropriate budget for the year 2017-18 is as below:
As per the trend N.D.D.B’s loan and interest is (Rupees in lakhs) 828.00

Variance analysis of expenditures:
Table 14: Opening stock of milk and milk products:

2016-17 360.06 380.20 (20.14) (5.59)
2017-18 284.25 341.42* (57.17) (20.11)
Figure 14: Opening stock of milk and milk products

400
300
Rs in lakhs
200 Budgeted amount

Actual amount
100
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The decrease in opening stock of milk and
milk products in the budget is because of the expectation of increased demand for
products and increase in sales. This trend is expected to remain unchanged for the next
As per the trend opening stock of milk and milk products is (Rupees in
lakhs) 208.44

Table 15: Milk purchase from D.C.S:
2016-17 9,141.37 9,140.53 0.84 0.01
2017-18 9,577.79 9,541.97* 35.82 0.37
Figure 15: Milk purchase from D.C.S

12000
10000
8000
Rs in lakhs

Actual amount
4000
2000
0
Year 2016-17 2107-18
Reason/s for the trend variance in budget: The increase in milk purchase from D.C.S
in the budget is because of the expectation of increase in rates by the government and
other milk unions. This trend is expected to remain same for the next year that is 2017-18.
Hence considering the weighted average percentage variation the appropriate budget
for the year 2017-18 is as below:
As per the trend milk purchase from D.C.S is (Rupees in lakhs) 10,014.21

variation percentage is favorable that is 0.25. As the trend is expected to remain same for
the year 2017-18. The corrected budget for the year 2017-18 is Rupees 9,989.17 lakhs.
Table 16: Milk procurement, processing and production expenses:

2016-17 1,499.74 1,485.48 14.26 0.95
2017-18 1,339.66 1,442.15* (102.49) (7.65)
Figure 16:Milk procurement, processing and production expenses

2000
1500
Rs in lakhs

Actual amount
500
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The decrease in milk procurement,
processing and production expenses in the budget is because of the expectation of use in
high-level advanced technology. The trend is expected to remain unchanged for the next
As per the trend milk procurement, processing and production expenses is

(Rupees in lakhs) 1,179.58

2017-18 that is 0.95 and unfavorable for the year 2017-18that is 7.65 and hence the
is Rupees 1,235.96 lakhs.
Table 17: Cattle feed & fodder development expenses:
2016-17 1,980.45 1,751.30 229.15 11.57
2017-18 2,595.35 1,994.32* 601.03 23.16
Figure 17: Cattle feed & fodder development expenses

3000
2500
2000
Rs in lakhs

Actual amount
1000
500
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The increase in cattle feed & fodder
development expenses in the budget is because of the expectation of organization of new
Dairy Co-operative Societies(DCS) and increase in demand for their products. This trend
is expected to continue for the next year that is 2017-18. Hence considering the weighted
average percentage variation the appropriate budget for the year 2017-18 is as below:
As per the trend cattle feed & fodder development expenses is (Rupees in
lakhs) 3,210.25

for the year 2017-18. The corrected budget for the year 2017-18 is Rupees 2,590.67 lakhs.
Table 18: Administration expenses & staff salary:

2016-17 803.23 844.06 (40.83) (5.08)
2017-18 852.61 966.43* (113.82) (13.35)
Figure 18: Administration expenses & staff salary

1200
1000
800
Rs in lakhs
600 Budgeted amount

Actual amount
400
200
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The increase in administration expenses &
staff salary in the budget is because of the expectation of increase in Dearness Allowance,
Interim Relief, House Rent Allowance, etc., as per government order. This trend is
expected to continue for the next year that is 2017-18. Hence considering the weighted
As per the trend administration expenses & staff salary is (Rupees in

lakhs) 901.99

Table 19: Taxes:

2016-17 90.05 32.00 58.05 64.46
2017-18 83.94 25.43* 58.51 69.70
Figure 19:Taxes
100
90
80
70
Rs in lakhs
60
50 Budgeted amount
40 Actual amount
30
20
10
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The decrease in taxes in the budget is
because of the expectation of change in tax structure by the Government of Karnataka.
This trend is expected remain unchanged for the next year that is 2017-18. Hence
year 2017-18 is as below:
As per the trend taxes is (Rupees in lakhs) 77.83


Table 20: Milk sales distribution & transportation expenses:

2016-17 223.05 248.50 (25.45) (11.41)
2017-18 269.55 280.96* (11.41) (4.23)
Figure 20: Milk sales distribution & transportation expenses

300
250
200
Rs in lakhs
150 Budgeted amount

Actual amount
100
50
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The increase in milk sales distribution &
transportation expenses in the budget is because of the expectation of hire of more
vehicles for transportation and increase in sales. This trend is expected to remain same for
the next year that is 2017-18. Hence considering the weighted average percentage
variation the appropriate budget for the year 2017-18 is as below:
As per the trend milk sales distribution & transportation expenses is

(Rupees in lakhs) 316.05

Table 21: Milk & milk products’ packing expenses:

2016-17 291.34 251.69 39.65 13.61
2017-18 275.53 305.23* (29.70) (10.78)
Figure 21: Milk & milk products’ packing expenses

400
300
Rs in lakhs
200 Budgeted amount

Actual amount
100
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The decrease in milk & milk products’
packing expenses in the budget is because of the expectation of decrease in scrap packing
materials and procurement of good quality packing materials at a reasonable rate. This
trend is expected to continue for the next year that is 2017-18. Hence considering the
weighted average percentage variation the appropriate budget for the year 2017-18 is
as below:
As per the trend milk & milk products’ packing expenses is (Rupees in
lakhs) 259.72

Table 22: N.D.D.B loan repayment and bank commission:
2016-17 56.50 96.74 (40.24) (71.22)
2017-18 69.00 67.00* 2.00 2.90
Figure 22: N.D.D.B loan repayment and bank commission

120
100
Rs in lakhs
80
60 Budgeted amount
40 Actual amount
20
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The increase in N.D.D.B loan repayment
and bank commission in the budget is because of the expectation of non-repayment of a
part of N.D.D.B loan and increase is bank commission. This trend is expected to remain
unchanged for the next year that is 2017-18. Hence considering the weighted average
As per the trend N.D.D.B loan repayment and bank commission is

(Rupees in lakhs) 81.5


2017-18 that is 71.22 and favorable for the year 2017-18that is 2.90 and hence the
Table 23: Depreciation:
2016-17 48.00 65.63 (17.63) (36.73)
2017-18 45.00 79.78* (34.78) (77.29)
Figure 23: Depreciation

90
80
70
60
Rs in lakhs
50
Budgeted amount
40
Actual amount
30
20
10
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The decrease in depreciation in the budget is
because of the expectation of replacement of old machinery and purchase of new
machinery. This trend is expected to remain same for the next year that is 2017-18. Hence

As per the trend depreciation is (Rupees in lakhs) 42.00

Table 24: Cattle health program expenses:

2016-17 62.02 52.02 10.00 16.12
2017-18 73.23 64.94* 8.29 11.32
Figure 24: Cattle health program expenses

80
70
60
Rs in lakhs
50
40 Budgeted amount
30 Actual amount
20
10
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The increase in cattle health program
expenses in the budget is because of the expectation of implementation of many schemes
sponsored by the government to purchase of more cross-breed cows. The trend is
expected to continue for the next year that is 2017-18. Hence considering the weighted

As per the trend cattle health program expenses is (Rupees in lakhs) 84.44
for the year 2017-18. The corrected budget for the year 2017-118is Rupees 73.53 lakhs.
Table 25: Expenses of A.I, first aid & training programs:

2016-17 117.79 74.47 43.32 36.78
2017-18 122.35 95.27* 27.08 22.13
Figure 25: Expenses of A.I, first aid & training programs

140
120
100
Rs in lakhs
80
Budgeted amount
60
Actual amount
40
20
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The increase in expenses of A.I, first aid &
training programs in the budget is because of the expectation of organization of new A.I
centers for procurement of more milk. The trend is expected to remain unchanged for the
next year that is 2017-18. Hence considering the weighted average percentage variation
the appropriate budget for the year 2017-18 is as below:

As per the trend expenses of A.I, first aid & training programs is (Rupees
in lakhs) 126.91
Table 26: Expansion program to D.C.S and Quality control and plant management
program fund:

2016-17 593.14 462.50 130.64 22.03
2017-18 322.57 337.63* (15.06) (4.67)
Figure 26: Expansion program to D.C.S and Quality control and

plant management program fund
800
Rs in lakhs
600
400 Budgeted amount
200 Actual amount
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The decrease in expansion program to
D.C.S and Quality control and plant management program fund in the budget is because
of the expectation already many facilities are fulfilled for Dairy Co-operative Societies
(DCS). This trend is expected to remain same for the next year that is 2017-18. Hence

As per the trend expansion program to D.C.S and Quality control and
plant management program fund is (Rupees in lakhs) 52.00
weighted average variation percentage is favorable that is 4.23. As the trend is expected
to remain same for the year 2017-18. The corrected budget for the year 2017-18 is Rupees
49.80 lakhs.
Table 27: Investment and advances:

2016-17 948.80 300.00 648.80 68.38
2017-18 921.20 415.11* 506.09 54.94
Figure 27: Investment and advances

1000
900
800
700
Rs in lakhs
600
500 Budgeted amount
400 Actual amount
300
200
100
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: The decrease in investment and advances in
the budget is because of the expectation of decrease in advances. This trend is expected to

As per the trend investment and advances is (Rupees in lakhs) 893.60

Table 28: Diesel purchases:

2016-17 100.00 100.00 -- --
2017-18 140.00 143.00* (3.00) (2.14)
Reason/s for the trend variance in budget:

The increase in diesel purchases in the budget is because of the expectation of hike in
diesel rates and increase in the number of transportation vehicles. This trend is expected
to remain unchanged for the next year that is 2017-18. Hence considering the weighted
As per the trend diesel purchases is (Rupees in lakhs) 180.00

Analysis and interpretation: Since the percentage variance for the year 2017-18 is nil
and unfavorable for the 2017-18that is 2.14 and hence the weighted average variation

percentage is unfavorable that is 1.43. As the trend is expected to remain same for the
year 2017-18. The corrected budget for the year 2017-18 is Rupees 182.57 lakhs.
Table 29: National information program & STEP program expenses:

2016-17 48.18 42.12 6.06 12.58
2017-18 49.36 44.58* 4.78 9.68
Figure 29: National information program & STEP program expenses

60
50
40
Rs in lakhs
30 Budgeted amount
Actual amount
20
10
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget:

The increase in National information program & STEP program expenses in the budget is
because of the expectation of increase in grants by government. The trend is expected to
As per the trend National information program & STEP program expenses
is (Rupees in lakhs) 50.54

Table 30: Integrated Dairy Development Program (I.D.D.P) expenses:

2016-17 300.00 --- 300.00 100.00
2017-18 299.28 ---* 299.28 100.00
Figure 30: Integrated Dairy Development Program (I.D.D.P)

expenses
400
300
Rs in lakhs
200 Budgeted amount

Actual amount
100
0
Year 2016-17 2017-18
Reason/s for the trend variance in budget: There is aslightdecrease in Integrated Dairy
Development Program (I.D.D.P) expenses in the budget is because of the expectation of
same amount of funds requirement to conduct Integrated Dairy Development Program.
This trend is expected to remain unchanged for the next year that is 2017-18. Hence
As per the trend Integrated Dairy Development Program (I.D.D.P)

expenses is (Rupees in lakhs) 298.56
Analysis and interpretation: Since the percentage variance is favorable that is 100 for
both the years that is 2017-18 and 2017-18and hence the weighted average variation

percentage is favorable that is 100. As the trend is expected to remain same for the year
2017-18. The corrected budget for the year 2017-18 is nil.
3. FINDINGS OF THE STUDY:
 The actual incomes and expenditures are varying from the budgeted incomes and
expenditures.
 Some of the actual incomes and expenditure are far away from budgeted one in
the organization.
 There is no effective budgetary control system in the organization.
 It is found that milk and milk products sales is having the unfavorable percentage
of variance for the year 2017-18 and 2017-18i.e., 2.64% and 0.40% respectively.
 It came to light that income from cattle feed, fodder sales & A.I programs is
having unfavorable percentage of variance for the year 2017-18 and 2017-18that
is 13.2% and 0.42% respectively.
 It is found that actual other income is varying from the budgeted other incomes
unfavorably in the year 2017-18 and 2017-18by 28.64% and 18.87% respectively.
 It is found that Interest on depreciation reserves is having favorable percentage of
variance for the year 2017-18 and 2017-18i.e., 12.82% and 14.15% respectively.
 It came to light that issue of new shares is having unfavorable percentage of
variance for the year 2017-18 and 2017-18that is 1.29% and 15.55% respectively.
 It is found that actual income from cattle health programs is varying from the
budgeted income from cattle health programs unfavorably for the year 2017-18 by
53% and favorably for the year 2017-18by 5.49 %.
 It is found that D.C.S material sale is having unfavorable percentage of variance
for the year 2017-18 and 2017-18that is 47.1% and 3.87% respectively.
 It came to light that income from quality control and plant management programs
is having unfavorable percentage of variance for the year 2017-18 and 2017-
18that is 13.26% and 5.95% respectively.
 It is found that actual grants from government, Zillapanchayath, STEP and
N.D.D.B is varying from budgeted amount unfavorably for the year 2017-18 and
2017-18by 4.81%and 0.9% respectively.

 It is found that union revolving fund and depreciation fund is having unfavorable
percentage of variance for the year 2017-18 and favorable for the year 2017-
18that is 41.15% and 1.30% respectively.
 It came to light that closing stock of milk and milk products is having unfavorable
percentage of variance for the year 2017-18 and 2017-18that is 11.68% and 7.82%
respectively.
 It is found that actual diesel expenses recovery is varying from the budgeted diesel
expenses favorably for the year 2017-18by 2.14% and found nil for the year 2017-
18.
 It is found that N.D.D.B’s loan and interest is having unfavorable percentage of
variance for the year 2017-18 and 2017-18that is 28.39% and 0.64% respectively.
 It came to light that opening stock of milk and milk products is having
unfavorable percentage of variance for the year 2017-18 and 2017-18that is 5.59%
and 20.11% respectively
 It is found that actual milk purchase from D.C.S is varying from the budgeted
milk purchase from D.C.S favorably for the year 2017-18 and 2017-18by 0.01%
and 0.37% respectively
 It is found that milk procurement, processing and production expenses is having
favorable percentage of variance for the year 2017-18 that is 0.95% and
unfavorable for the year 2017-18that is 7.65%.
 It came to light that Cattle feed & fodder development expenses is having
favorable percentage of variance for the year 2017-18 and 2017-18that is 11.57%
and 23.16% respectively.
 It is found that actual administration expenses & staff salary is varying from the
budgeted administration expenses & staff salary unfavorably for the year 2017-18
and 2017-18by 5.08% and 13.35% respectively.
 It is found that taxes are having favorable percentage of variance for the year
2017-18 and 2017-18that is 64.46% and 69.70% respectively.
 It came to light that milk sales distribution & transportation expenses is having
unfavorable percentage of variance for the year 2017-18 and 2017-18that is
11.41% and 4.23% respectively.
 It is found that actual milk & milk products’ packing expenses is varying from the
budgeted milk & milk products’ packing expenses favorably for the year 2017-18
by 13.61% and unfavorably for the year 2017-18by 10.78%.

 It is found that N.D.D.B loan repayment and bank commission is having

unfavorable percentage of variance for the year 2017-18 that is 71.22% and
favorable for the year 2017-18that is 2.90%.
 It came to light that depreciation is having unfavorable percentage of variance for
the year 2017-18 and 2017-18that is 36.73% and 77.29% respectively.
 It is found that actual cattle health program expenses is varying from the budgeted
cattle health program expenses favorably for the year 2017-18 and 2017-18by
 It is found that expenses of A.I, first aid & training programs is having favorable
percentage of variance for the year 2017-18 and 2017-18that is 36.78% and
22.13% respectively.
 It came to light that expansion program to D.C.S and Quality control and plant
management program fund (M.P.C.S) is having favorable percentage of variance
for the year 2017-18i.e., 22.03% and unfavorable for the year 2017-18i.e.,4.67%.
 It is found that actual Investment and advances is varying from the budgeted
Investment and advances favorably for the year 2017-18 and 2017-18by 68.38%
and 54.94% respectively.
 It is found that diesel purchases are having unfavorable percentage of variance for
the 2017-18that is 2.14%.
 It came to light that National information program & STEP program expenses is
having favorable percentage of variance for the year 2017-18 and 2017-18that is
 It is found that Integrated Dairy Development Program (I.D.D.P) expenses were
not at all incurred in both the years that is 2017-18 and 2017-18and hence the
percentage of variance is favorable that is 100%.

4. SUGGESTIONS AND CONCLUSION:

Suggestions:
 The organization can adopt an effective budgetary control system that is variance
analysis so as to minimize the variance of budgeted income and expenditure from
actual income and expenditure.
 Thus an appropriate income and expenditure budget suggested for the year 2017-
18considering variance analysis is as follows:

Conclusion:
SHIMUL (ShimogaDistrictCo-operative Milk producers’ Societies’ Union

Limited) - a District Level Milk Union at the middle level is one among the 13 milk
unions of KMF.It islocated in Machenahalli, 12 kms from Shivamogga and 6 kms from
Bhadravathi. It is ISO 9001:2008 and MMPO certified dairy. It has thejurisdiction to 3
districts that is Shivamogga, Davangere and Chitradurga. It produces about 8 dairy
products under the brand name- ‘Nandini’ and distributes and sells other dairy products of
KMF.
The budgetary control system plays an important role in the organizations to

control the income and expenditure of the organization so as to utilize it resources
effectively. As the income and expenditure budget of the organization is varying from
actual income and expenditure. The study undertaken in SHIMUL to analyze and control
the variances to a greater extent.Thusthe income and expenditure budget of the
organization of 2 financial year i.e., 2017-18 and 2017-18were analyzed based on the
secondary data available in the organization and a study was conducted on budgets under
the budgetary control system namely, variance analysis to analyze the variance and
predict the future trend of income and expenditure for the following financial year i.e.,
2017-18. To know the reasons for the variances and predict the trends of each budgetary
ca new budget for the year 2017-18 was prepared to control variance of the budget from
the actual income and expenditure.
To conclude the study was brought out to introduce an effective budgetary control
system in the organization which helps the organization in controlling the variances and
bring out a budget which is almost nearer to the actual income and expenditure.

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Shimoga Milk Union Limited

INSTITUTE OF MANAGEMENT STUDIES DAVANAGERE UNIVERSITY, DAVANAGERE 1

1.2 Origin oftheIndustry:

INSTITUTE OF MANAGEMENT STUDIES DAVANAGERE UNIVERSITY, DAVANAGERE 2

1.3 Overview ofthe Indian Dairy sector:

INSTITUTE OF MANAGEMENT STUDIES DAVANAGERE UNIVERSITY, DAVANAGERE 3

1.4Indian (Traditional) milk products:

1.5India's milk product mix:

INSTITUTE OF MANAGEMENT STUDIES DAVANAGERE UNIVERSITY, DAVANAGERE 4

1.6Major players of Dairy industry:

1.7Future prospects of the industry:

INSTITUTE OF MANAGEMENT STUDIES DAVANAGERE UNIVERSITY, DAVANAGERE 5

2.2Background and Inception ofthe company:

2.3Present status of the company:

INSTITUTE OF MANAGEMENT STUDIES DAVANAGERE UNIVERSITY, DAVANAGERE 6

2.4Nature of business carried:

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2.5 Vision, Mission and Quality Policy:

SHIMUL’s Quality policy:

2.6 Products’ profile:

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Tag line of Nandini: “A Milk Brand Trusted by Millions”

Homogenised cow’s milk:

Spicy Butter milk:

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Fresh butter milk blended with quality spices to give that

Ghee in Standy Pouches Ghee in Pet Jar Ghee in Sachet

Add khova to preparations like carrot halwa, gulabjamoonetc and

Product price chart (as on December 2017):

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Product name MRP(Rs)

2.7 Area of operation:

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2.8 Ownership pattern:

2.9 Competitors’ information:

 Sri Krishna Milks Private Limited:

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 Situated at: Kirwatti, YellapurTaluk, Karnataka.

 Loose milk sale:

Price comparison of milk & curds of Nandini with Private Dairies:

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3 Shubam milk 12.00 14.00 14.00

2.10 Infrastructural facilities:

2.11 Achievements and awards:

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 Launch of Standardized Milk in 1993

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Source: The Hindu e-news paper of Dec 16th,2010

Flow chart of milk

Pumping of chilled milk into insulated milk silo/road milk tanker

Pumping of chilled milk into Full Cooler Bulk Tanker (FCBT)

Loading of pouches into washed clean creator

Storage of milk creates in cold store at 60C

Quality analysis-COB and Acidity

Figure 1: Work flow model

2.13 Future growth and prospectus forthe company:

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3. MCKINSEY’S 7S FRAME WORK WITH SPECIAL

Source:McKinsey 7-S Framework,fromthe book ‘In search of Excellence’ by Thomas J

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Since SHIMUL is a co-operative sector unit. The structure of the organization is

Figure 2: Organization structure of SHIMUL