BUDGETARY CONTROL SYSTEM IN NATIONAL INSURANCE COMPANY LIMITED

(Palarivattom Branch)
Dissertation submitted to Mahatma Gandhi University, in partial fulfillment of the requirements for the award of Degree of BACHELOR OF COMMERCE By TONY G MALAYIL Reg: No: SCAA09133449 Under the Guidance of Mrs. Raghi Manoharan

BHARATA MATA COLLEGE, THRIKKAKARA Kochi - 682021, Kerala 2009-2012

BHARATA MATA COLLEGE, THRIKKAKARA DEPARTMENT OF COMMERCE Affiliated to Mahatma Gandhi University - Kottayam THRIKKAKARA P.O., COCHIN-682021

Date: 12th March 2012

CERTIFICATE
This is to certify that this dissertation entitled BUDGETORY CONTROL IN NATIONAL INSURANCE COMPANY (Palarivattom Branch) has been prepared by Tony G Malayil under my supervision and guidance in partial fulfillment of the requirements for the award of Degree of Bachelor of Commerce of the Mahatma Gandhi University. It has not previously formed the basis for the award of any Degree, Fellowship, Associateship etc. He is allowed to submit this dissertation.

Mrs. Raghi Manoharan

(Academic Guide)

Mrs. Bindu Achamma Koshy

Head of the Department B.Com (Self Financing) Bharata Mata College, Thrikkakara

Declaration
I, TONY G MALAYIL, do hereby declare that this Dissertation entitled BUDGETORY CONTROL IN NATIONAL INSURANCE COMPANY LIMITED (Palarivattom Branch) has been prepared by me under the guidance of Mrs. Raghi Manoharan, Lecturer, Department of Commerce (Self-Financing), Bharata Mata College, Thrikkakara. I also declare that this dissertation has not been submitted by me fully or partly for the award of any Degree, Diploma, Title or recognition before.

TONY G MALAYIL

Place: Thrikkakara Date: 05-03-2012

Acknowledgment
I wish to place on record my deep gratitude to Mrs. Raghi Manoharan, Lecturer, Department of Commerce (Self-Financing), Bharata Mata College, Thrikkakara for her invaluable guidance and supervision. It was a great privilege to be associated with her. I am greatly indebted to Sri. M. Balan, Branch Manager, National Insurance Company Limited (Palarivattom), for giving me kind permission to undertake this study on 'Budgetary Control System' in his organization. I also extend my thanks to Sri. M S Suresh Babu, Administrative Officer Marketing for providing necessary facilities to undergo this project. Also to all the staff of National Insurance Company Limited. I am also thankful to Mrs. Bindu Achamma Koshy, Head of the Department of Commerce (Self-Financing), Bharata Mata College, Thrikkakara and all other staff members of the faculty of Commerce. I am deeply indebted to my parents and all my friends who in one way or another helped me in this work.

TONY G MALAYIL

Contents
Chapters Chapter I Chapter II Chapter III Chapter IV Chapter V Title Introduction Company Profile Theoretical Study Analysis of Data Findings, Suggestions & Conclusion Page No: 1 6 __16 25 36

List of Tables & Charts

Title Commission Brokerage Other Selling and Distribution Expenses Policy Stamp Expenses Salary Other Office and Administrative Expenses Estimated Expenditures Budget Marine Policy Motor Policy Estimated Production Budget for Marine Policy Estimated Production Budget for Motor Policy Table No: 4.1 4.2 ....4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 Chart No: 4.1 4.2 _ _ 4.3 4.4 4.5 4.6 4.7 4.8 Page No: 26 27 ....28 29 30 31 32 33 34 35 35

Chapter I Introduction

Introduction
In the highly competitive and changing economic world every business enterprise needs a good management control system for surviving . An organization can attain success and reach the heights of prosperity through proper planning and efficient controlling of the resources it possess. Budgetary control system is the most important techniques adopted by business concerns for planning and control of activities to achieve best possible results. Budgetary control is applied to a system of management and accounting control by which all operations and output are forecasted as far as possible and actual result when known are compared with budget estimates. It is a plan to assist the management in the allocation of responsibilities and authority to aid in making estimates and plans for future, to assist in analysis of variations between the estimated and actual result and to develop basis of measurement or standards with which to evaluate the efficiency of operations. The budgetary control will force the management at all levels to plan in time all the activities to be done during the future period. So it coordinates the various activities of the firm and secures cooperation of all concerned, so that common objectives of the firm may be successfully achieved. For the purpose of study National Insurance Company's Palarivattom branch is selected and for analyzing the performance the Production Budget and Expenditure Budget is prepared.

Objectives of the Study

For the study titled Budgetary Control in National Insurance Company the following are the main objectives. 1.To find out how much the company have to produce in order to achieve the existing demand and sales. 2.To provide the management a clear idea, regarding how much the company concentrate on expenses. 3. To show the projection budget for 2012-13.

Methodology of the Study

Primary data collection are done through personal interviews. In order to get the exact and absolute information regarding company's position , the books regarding the company's performance for last four financial report, journals, ledger and books of accounts etc are used as secondary resources for collection of data. The data are analyzed through trend analysis and simple percentage method. Using these methods, budgets like production and expenses are projected for 2012-13.

Limitation of the Study

For the study titled the following are the major limitations. 1.To forecast the sales for the future, moving average method is used and here average of the previous sales by giving some percentage weight is taken as actual sales, it may not show exact sales as it may be. 2.In order to forecast the future sales only limited information and books of accounts are used. 3. Since study is based on technical method, the result may not compare with the real. 4. The cash position of the company is showing fluctuations of and the real position may vary because of moving average is used to estimate receipt and payments.

Significance of the Study

One purpose of budget is to state expectations in formal terms so that most of the budgeting assumption may be identified. A firm has a basic objective of optimized long term profits. Its long range goals also include survival, customer satisfaction, employee welfare, personal power and prestige. These long range objectives can be achieved in successive phases over a period of time. In other words, long range objectives have to be split into short term operational plans. Thus a budget can be said to be a device to express goals which are sought to be achieved in a short period of time. In other words, it is a means to establish congruence between short term goals and their long term objectives of the company. Therefore budget formulates targets of expected performance. The advantage is that by laying down targets, budgets contains an explicit statement of expectations. These targets help direct their operations, identify problems, help motivate lower level 4

employees and clarify the relationship between current activities and future policies. Another implication is that budget explicitly states the underlying assumption goal and or the means of attaining it. The explicit statement of assumption is one of the most important contributing of budgeting for managerial planning and control.

Scope of the Study

The study of budgetary control is important because it analyzes the way the cash is used in the business and how the policies are issued to raise funds. The study is conducted on the financial statement of last four years from 2007-08 to 2011-12 and is limited to Palarivattom branch of National Insurance Company Limited.