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ABSTRACT Budgeting is closely connected with control the excise of control in the organization with the help of budget

is known as budgetary control The objective of the study seeks to review and evaluate the existing frame work of budgetary control with preparation and implementations the processed study itself could confined the following a specific objective: To analyze the budget preparation in Heritage DAIRY Products To review the process of budget control system in Heritage DAIRY Products The suggest the ways for providing effective budgetary control system in Heritage DAIRY Products The source of data used for the study collected and compiled frame published and unpublished data of source the main source under published data is annual report of Heritage DAIRY Products The involvement of technical department in preparation and allotment operations and maintenance budget is more applicable since the operations and maintenance work basically involves technical knowledge. To prepare annual budgets in such a manner those managers at various levels in organization carry out periodical exercise in respect of each contact or responsible centre for physical planning and matching resources broke up into monthly targets or cash flows. To introduce and operate responsible for achievement of specified targets with the recourses allocated for the purpose.

The budget period or annual begets should with the financial year. In October every year the budget should drawn up for the ensuring the financial year in the form of Budget estimates financial year in the form of Revised Estimates [R.E].In addition the budgets are to be reviewed on monthly basis by project review teams, in the light of actual expenditure and projections in the budget period. Budegt should indicate monthly phasing of. Expenditure and targets for the first and quarterly phasing for the second half of the year. At the time of review of the budget estimates to frame revised estimates the quarterly Phasing should be broken up into monthly phasing.



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Budget is essential in every walk of our life national, domestic and Business. A budget is prepared to have effective utilization of funds and for the realization of objective as efficiently as possible. Budgeting is a powerful tool to the management for performing its functions i.e., formulation plans, coordination activities and controlling operations etc., efficiently. For efficient and effective management planning and control are tow highly essential functions. Budget and budgetary control provide a set of basic techniques for planning and control. A budget fixes a target in terms of rupees or quantities against which the actual performance is measured. A budget is closely related to both the management function as well as the accounting function of an organization. As the size of the organization increases, the need for budgeting is correspondingly more because a budget is an effective tool of planning and control. Budget is helpful in coordinating the various activities (such as production, sales, purchase etc) of the organization with result that all the activities precede according to the objective. Budgets are means of communication. Ideas of the top management are given the practical shape. As the activities of various department heads are coordinated at the much needed for the very success of an organization. Budget is necessary to future to motivate the staff associated, to coordinate the activities of different departments and to control the performance of various persons operating at different levels. Budgets may be divided into two basic classes. Capital and operating budgets. Capital budget are directed towards proposed expenditure for new projects and often require special financing.

The operating budgets are directed towards achieving short-term operational goals of the organization for instance, production or profit goals in a business firm. Operating budgets may be sub-divided into various departmental of functional budgets. Definitions of Budget: According to Institute of Charted Management Accountants, England A plan

quantified in monetary term prepared and approved prior to a defined period of time usually showing planned income to be generated and / or to be incurred during that period and the capital to be employed to attain a given objective. According to ICMA, England, a budget is, a financial and/or quantitative statement, prepared and approved prior to a defined period of time, of the policy to be pursed during the period for the purpose of attaining a given objective. It is also defined as, a blue print of projected plan of a action of a business for a definite period of time.

BUDGETARY CONTROL: No system of planning can be successful without having an effective and efficient system of control. Budgeting is closely connected with control. The exercise of control in the organization with the help of budgets is known as budgetary control. The process of budgetary control includes. 1. Establishment of budget for each function and section of the organization. 2. Executive responsibility in order to perform the specific tasks so that objectives of the enterprise may be attained.

3. Continues comparison of the actual performance with that of the budget and placing the responsibility of executives for failure to achieve the desired result a given in the budget. 4. Taking suitable remedial action to achieve the desired objective if there is a variation of the actual performance from the budgeted performance. 5. Revision of budgets in the light of changed circumstances.

Definitions of Budgetary Control: According to the Brown and Howard Budgetary control is the system of controlling costs which includes the preparation of Budgets, co-coordinating the department and establishing the responsibilities, comparing the actual performance with the budgeted and acing upon the results to achieve the maximum profitability According to the J.Betty: A system which uses budgets as a means of planning and controlling all aspects of producing and / or selling commodities and services According to the CIMA, London, Budgetary control is the establishment of budgets relating to responsibilities of executives to the requirement of a policy, and the continuous comparison of actual with budged results, either to secure by individual action the objective of that policy or to provide a basis for revision.


THE STUDY HAS THE FOLLOWING: To provide a theoretical framework of budget, and budgetary control. To describe the profile of the organization as a backdrop for undertaking a study of budgetary control system. To analyze the budgetary system in practice in Heritage Foods India Limited with particular reference to their objectives and phases of organizational and reappropriation. In addition to the analysis of the conventional budgetary system in practice in Heritage DAIRY PRODUCT Industries limited. The study aims at evaluation and modification to the budgetary system with reference to the various types of budgets. The scope in the formulation of performance budget is also studied.

SOURCES OF DATA: The data of Basant Nagar, HERITAGE FOODS (INDIA) LIMITED, have been collected mainly from secondary sources viz From the concerned officers of the Heritage Foods India Limited Heritage Foods India Limited Journals. Accounting books, records Key books of concerned title. Statistical records Heritage Foods India Limited library.


The study is based on the both primary and secondary data The primary data has been collected through structured questionnaire reflecting budget management practice of Heritage DAIRY Products The collected data is tabulated and suitable interpretation has been made by considering the data collection through secondary data like annual reports.

LIMITATIONS: Estimates are used as basis for budget plan and estimates are based on available facts and best managerial judgment Budgetary control cannot reduce the managerial function to a formula. It is only a managerial Tool which increase effectiveness of managerial control The use of budget may lead to restricted use of resources. Efforts may therefore not be made to exceed the performance beyond the budgeted targets. Frequent changes may be called for in budgets due to fast changing industrial climate. In order that a system may be successful, adequate budget education should be imparted at least through the formative period. Sufficient training programs should be arranged to make employees gibe positive response to budgetary activities. The study is the limited up to the date and information provided by Heritage Foods India Limited and its annual reports


INTORDUCTION TO BUDGET IN BUDGETORY CONTROL: The management is efficient if it is able to accomplish the objectives of the enterprise It is effective when it accomplish the objectives with minimum effort and most in attain long-range efficiency and systematic approach in facilitate effective

management performance is profit planning and control or budgeting .Budgeting is therefore an integral part historical combination of a goal setting machine for increasing an enterprises profits and a goal achieving machine for facilitating generational coordination and planning while achieving the budgeted gets EARNING OF BUDGET: It is a financial and quantitative statement prepared and approved or to a defined period of time of policy to be pursued during that period purpose of attaining a given objective it may include income expenditure and employment capital In other words it is a pre-defined detailed plan of action development distributed as guide operations and as a partial basis for subsequent evolution of performance

PLANNING OF BUDGETING: The process of planning all flows of financial resources into within from an entity during some specified future period it includes providing detailed allocation available future resources to projects ,responsibilities and time periods From above definition I it clear that budgeting Is the actual act of caring the budget of

it is the process of evolving the final statement yet is the end product of budgeting

ESSENTIALS OF GOOD BUDGET: 1. It is prepared prior to a defined period of time 2. It is prepared for the definite future period 3. The policy to followed to attain the given objectivities must be laid before the budget. 4. It is monetary and/or quantitative statements of the policy

MEANING OF BUDGETARY CONTROL: It is the process of establishing of departmental budget 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 objectives of that policy or to provide a firm basis for revision First of all budgets are prepared and then actual results are the comparison of budgeted and actual figures will

enable the management to out discrepancies and take remedial measures at a proper time the budgetary control is a continuous process which helps in planning and coordination it provides a method of control too .A budget is means and

budgetary control is the end result. In the words of J.A.scolt budgetary control is the system of management control and accounting in which all operations are forecast so as possible planned ahead and actual results compared with the forecast and the planned ones ESSENTIALS OF BUDGETARY CONTROL: 1. Budgetary of the process of preparing the budget is the starting point for budgetary point for budgetary control.

2. Distribution of budgets pertaining to each function to all the relevant section with in organization 3. Collection of actual data pertaining to all budgeted activities 4. Continuous comparison of actual performance with budgeted performance 5. Analysis of variances in actual performance and budgeted performance 6. Initiation of corrective action to ensure that actual performance is inline with budgeted performance 7. Revision of budgeted if it is felt that the budgets prepared are no longer relevant on account of unforeseen developments

OBJECTIVES OF BUDGETARY CONTROL: The primary objective of budgetary controls to help the management systematic planning and controlling in

the operations of the enterprises the primary

objective can be met only if there is proper communication and coordination amongst different organization thus the objectivities can be stated as:

1. COORDINATION: Coordination is a managerial function under which all factors of production and all departmental activities are departmental are balanced and integrated to achieve the objectivities of the organization budgeting provides the basis for organization objectivities can be realized executives are forced to think of the relationship between their department and the company as a whole this removes unconscious

biases against other departments it also helps to identify weakness in the organization structure. 2. COMMUNICATION: All people in the organization must know the objectivities polices and

performances of the organizations they must have a clear understanding of their part in the organization goals this is made possible by ensuring their participation in the

budgeting process.

3. CONTROLS AND PERFORMANCE EVALUTION: Control ensures control by continuous comparison of actual performance with the budgeted performance variances are highlighted and corrective action initiated can be

budgets also from the basis if performance evolution in an organization as

they reflect realistic estimates of acceptable and expected performance.

BUDGET BUDGETING AND BUDGETRY CONTROL: A budget is a blue print of a plan expressed in a quantitative terms budgeting Is a technique budgetary control terms to the principles procedures and practice of achieving given objectivities through budgets. From the above definitions we can differentiated the three terms as budgets are the individual objectivities of a department etc where as budgeting may be said to act of building budgets Budgetary control embraces all and in addition includes the science of Planning the budgets to effect on overall management tool the business planning and control.

ESSENTIALS OF BUDEGTRY CONTROL 1. ORGANISATION FOR BUDGETRY CONTROL: The proper organization is essential for the successful preparation maintenance and administration of budgets A budgetary committee is formed which comprises

the departmental heads of various departments All the functional heads are entrusted with the responsibility if ensuring proper departmental budgets. The chief executive is the overall in the charge of budgetary system he implementation of their respective

constitutes a budget committee for preparing realistic budgets A budget officer is the convener of the budget committee who co-ordinates the budgets of different

departments responsible fro their departmental budgets.

2. BUDGET OFFICER: The chief executives appoints the budget officer such budget officer also called as Budget controller or budget Director thus rank should be equal to other functional managers. The Budget officer does not have the direct responsibility of preparing the budgets the various functional managers prepare the budgets his role is that of a supervisor the budget officer has the specific duty of the budgeting activity by

various departments and for co-ordination between between them He is empowered to scrutinize

them so that there is a proper link

the budgets prepared by different

functional heads and to make changes in them if the situation so demands.

The budget officer works as a coordinator among different departments he continuously monitors the actual performance different departments steps to rectify the defiance if any he also informs the top management about the performance of different departments. The budget officer will be able to carry out his work only if he is versant with the working of all the departments he must have technical knowledge of the business and

should also process accounting knowledge.

BUDGET COMMITTEE: A budget committee is formed to assist the budget officer. The heads all the important departments are made members of this committee. The committee is responsible for preparation and execution of budgets. The chambers of this committee put up the case of their respective departments to help the committee to take collective decisions if necessary. The budget committees responsible for reviewing the budgets prepared by various functional heads coordinate all the budgets and approve the final budgets. The budget officer acts as a coordinate of this committee all the functional heads are entrusted with the responsibility of ensuring proper implementation of their respective final departmental budgets. BUDGETS CENTERS: A budget center is the part of the organization for which the budget is prepared. A budget creator may be a department section of department or any other part of department ideally, the head of every center should be a member of the budget committee. However

it must be ensured that each budget center at least has an indirect representation in the budget committee. The establishment of budget centers is essential for covering all parts of the organization becomes easy when different centers are established the budget centers are also necessary for cost control purpose.

BUDGET MANUAL: A budget manual is a document that spells out duties and responsible the various executives conquered with it specifies among various functional areas A budget manual covers the following matters. 1. A budget manual clarity defines the objectivities of budgetary control systems it also gives the benefits and principles of this system. 2. the duties and responsibilities of various persons dealing with preparation and execution of budgets are also given in the budget manual it enables the

management to know the persons dealing with various aspects to budgets and provides clarity on their duties and responsibilities it gives the information about the sanctioning authorities of various budgets the financial powers of sanctioning authorities of various budgets the financial powers of different manages are given in the manual for enabling the spending amount on various expenses 3. A dropper table for budgets including the sending of performance reports is drawn so that every work starts in the and a systematic control is exercised.

4. the specimen forms and number of copies to be lased fro ore oaring budget reports is also stated budget centers involved should be clearly stated. 5. the length of various budget periods and control points is clearly given 6. The problem follow all in the centre system clearly stated. 7. A method of accounting to be used for various expenditures is also stated in the manual. 8. A budget manual helps the documentation the role of every employee his duties of undertaking various tasks etc thus it also helps n

responsibilities the ways

reducing ambiguity at any point of time

BUDGET PERIOD: A budget period is the length of time for which a budget is prepared upon a number of factors the choice of a budget period depends upon the following considerations the type of budget (long\short). The nature of demand for the products The timing for the availability of the finance The construction situation of the cycles All the above mentioned factors are taken into account while fixing the period of budgets In this budgeting process the financial decision on the budgets The financial manager usually responsible for organizing this budget he must perform the following functions. To decide the general polices and guidelines To offer technical advice.

To suggest changes. To receive and review individual budget estimates. To reconcile divergent with or without revisions. To coordinate budgeting activities. To approve budgets with or without revisions. To scrutinize control reports later on To scrutinize to budget reports later on. To disseminate these guidelines.

After finalizing the budget proposal the budget committee subjects the final budget to the Board of Directories or Budget Director for approval.

CONTINUOUS BUDGETING SYSTEM: A continuous budgeting system is a method of having two different budget periods within the sane budget the purpose of having this system is to have greater control in terms of operational activities without losing sight is have greater control in terms of it results in incorporating the effect of changes in the short term on the long-term targets of the organization

DETERMINATION OF KEY FACTOR: The budgets are prepared for all functional areas these budgets are dependent and inter-related A proper co-ordination among different budgets is necessary for

budgetary control to be successful The constraints some budgets too A factor which influences all other budgets is known as key factor or principal factor. The key factor may not necessarily remain the same the raw materials may be limited at one time but it may be easily available at another similarly other factors may also improve at different times. The key factor highlights the limitations of the enterprise. This will enable the management to improve the working of those departments we here scope for improvement exists.

1. OUISITES FOR A SUCCESSFUL BUDGETARY CONTROL SYSTEM. Making budgetary control system successful requisites are required.

2. CLARIFYING OBJECTIVES. The budgets are used to realize objectives of the business. The objectives must be clearly spelt out so that budgets are properly prepared. In the sense of clear goals, the budgets will also be unrealistic.

3. PROPER DELEGATION OF AUTHORITY AND RESPONSIBILITY. Budget preparation and control is done at every level of management. Even though budgets are finalized at top level but involvement of persons. In lower levels of management is essential for their success. This Hesitates proper delegation and responsibility.

4. PROPER COMMUNICATIONS SYSTEM. An effective system of communication is required for a successful budgetary control. The flow of information regarding budgets should be quick so that these are implemented. The upward communication will help in knowing the difficulties in implementation of budgets. The performance reports of various levels will help top management in budgetary control.

5. BUDGET EDUCATION. The employees should be educated about the benefits of budgeting system the should be the benefits of budgeting system they should be educate about their roles in the success of this system. Budgetary control may not be taken only as a control device by the employees but it should be used as a tool to improve their efficiency.

6. FLEXIBILITY. Flexibility in budgets is required to make them suitable under changed circumstances. Budgets are prepared for the future, which is always uncertain, even though budgets are prepared by considering the future possibilities but still some adjustments. Flexible makes the budgets more appropriate and realistic.

7. MOTIVATION Budgets are implemented by human beings. Their successful implementation will depend upon the interest shown by the employees. All persons should be motivated to

improve their working so that budgeting is successful. A proper system of motivation be introduced for making is system a success.

8. TYPES OF BUDGETS. LONG TERM BUDGETS: The long-term budgets are the budgets prepared for a long period of five to years. They are concerned with planning the operations of a firm over a considerably long period of time. The financial Controller exclusively for top management usually prepares long-term budgets. These budgets are useful in terms of physical units (i.e... quantities) or percentages, the accurate values may be difficult to forecast over such long period. Initial expenditure, research and development budgets, etc, are examples longterm budgets.

SHORT TERM BUDGETS. Short term budgets are budgets prepared for a short period of one to two is. They are prepared for those activities the trend in which cannot be seen easily over long periods. These budgets are very useful are very useful in case of consumer goods industries such as sugar, cotton, textiles, etc. they are generally, prepared in terms of physical units (i.e., Quantities) as well as monetary units (i.e., values..) Materials budget, cash budget. Etc are examples of short-term budgets. They are useful to lower level of management for control purpose.

CURRENT BUDGETS. A current budget is a budget, which is established for use over a short period of time and is related to current conditions. Thus current budgets are essentially short term budgets adjusted to current (i.e., present or prevailing) conditions or circumstances. They are prepared, for a very short period. Say, a quarter or a month. They relate to current activities of the budgets.

INTERIM BUDGETS: Interim budgets are budgets, which are prepared in between two budgets periods. These budgets may get integrated with the budgets of the following period.

CLASSIFICATION OF BUDGETS ACCORDING TO CONTENT: Budget may be classified into budgets in physical terms and into budgets in monetary terms. A) BUDGETS IN PHYSICAL TERMS: Budgets in physical terms are budgeted that budget in terms of quantities only. They do not include corresponding rupee value. Long term budgets are usually in prepared in physical terms. Examples of such budgets are production budget, materials budget, etc.

B) BUDGETS IN MONETAY TERMS: Budgets in monetary terms are budgets that budget in terms of quantities as well as their corresponding rupee value. Sales budget, purchase budget, etc are examples of

such budgets. Budgets such as cash budget, capital expenditure budget, etc that may not have physical quantities also from part of budgets in Monetary terms.

CLASSIFCATION OF BUDGETS ACCORDING TO FUNCTION: Budgets can be classified into: 1. Operating Budgets 2. Financial Budgets 3. Master Budget

1) OPERATING BUDETS. These budgets relate to different activities or operations of a firm. The number of such budgets depends upon the size and nature of the business, The commonly used operation budgets are: i) ii) iii) iv) v) vi) vii) Sales Budgets Purchase Budget Raw Materials Budget Lab our Budget Factory Utilization Budget Manufacturing Expenses or Works overhead budget Administrative and Selling Expenses Budget etc.

The operating budget for a film may be constructed in terms of programmers or responsibility areas, and hence may consist of:

A) Programmed Budget B) Responsibility Budget

A) PROGRAMME BUDGET It Consists of expected revenues and costs of various products or projects that are termed as the major programmers of the firm, Such a budget can be prepared for each product line or project showing revenues, Cost and the relative profitability of the various in locating areas where efforts may be required to reduce COST5 ad increase revenues. They are so useful in determining imbalances and inadequacies in programmers so at corrective action may be taken in future.

Responsibility Budgets: Here the operating of a firm is constructed in terms of responsibility areas. Such a budget shows the plan in terms of persons for achieving them. It is used by the management as a control thus used by the management as a control device to evaluate the of executives who are in charge of various cost centers. Their is compared to the targets (Budgets), set for them and proper taken for adverse results.

Responsibility areas may be classified under three brand categories: I. II. III. Cost / expense center Profit center Investment center

2) FINANCIAL BUDGETS Financial budgets are concerned with cash receipts and payments, working capital, financial position and results of business. The commonly used financial budgets include Cash budget, Capital budget, and Income statement budget, Statement of earnings budget, Budgeted balance sheet or position statement.

3) MASTER BUDGET The Master budget is the summary budget incorporating its functional budgets. All the operational and financial budgets are integrated into the Master budget. The budget officer for the benefits of the top-level management prepares this budget. This budget is used to coordinate the activities of various functional departments. It is also used an effective control devices.

CLASSIFICATION ON THE BASIS OF FLEXIBILITY. A) FIXED BUDGET According to ICMA, London a fixed budget is a budget which is designed to remain unchanged irrespective of the level of activity actually attained. It is based on a fixed volume of activity and shows one volume of output and related cost. It is not adjusted according to the actual level of activity attained. A fixed budget is useful only when the actual level of activity corresponds with the budgeted level of activity. But this, generally, does not happen; as such a fixed budget is not useful for managerial purposes.


According to ICMA, London a flexible budget is a budget which is designed to change in accordance with the level of activity) actually attained. Thus, a flexible budget changes. According to the change in the level of activity. In other words it provides the budgeted costs at any level of activity. Business activity cannot be accurately predicted on account of uncertainties of business environment. A flexible budget contains several estimates for different assume circumstances instead of just one estimate, it provides for automatic adjustments with changes in the volume of activity. Hence, a situations operating in an unpredictable environment.


India is the world's second largest producer of food next to China, and has the potential of being the biggest with the food and agricultural sector. The total food production in India is likely to double in the next ten years and there is an opportunity for large investments in food and food processing technologies, skills and equipment, especially in areas of Canning, Dairy and Food Processing, Specialty Processing, Packaging, Frozen Food/Refrigeration and Thermo Processing. Fruits & Vegetables, Fisheries, Milk & Milk Products, Meat & Poultry, Packaged/Convenience Foods, Alcoholic Beverages & Soft Drinks and Grains are important sub-sectors of the food processing industry. Health food and health food supplements is another rapidly rising segment of this industry which is gaining vast popularity amongst the health conscious. India is one of the worlds major food producers but accounts for less than 1.5 per cent of international food trade. This indicates vast scope for both investors and exporters. Food exports in 1998 stood at US $5.8 billion whereas the world total was US $438 billion. The Indian food industries sales turnover is Rs 140,000 crore (1 crore = 10 million) annually as at the start of year 2000. The industry has the highest number of plants approved by the US Food and Drug Administration (FDA) outside the USA. India's food processing sector covers fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa products, Soya-based products, mineral water, high protein foods etc. We cover an exhaustive database of an array of suppliers, manufacturers, exporters and importers widely dealing in sectors like

the -Food Industry, Dairy processing, Indian beverage industry etc. We also cover sectors like dairy plants, canning, bottling plants, packaging industries, process machinery etc. The most promising sub-sectors includes -Soft-drink bottling, Confectionery manufacture, Fishing, aquaculture, Grain-milling and grain-based products, Meat and poultry processing, Alcoholic beverages, Milk processing, Tomato paste, Fast-food, Ready-to-eat breakfast cereals, Food additives, flavors etc.

Food processing
The food industry is the complex, global collective of diverse businesses that together supply much of the food energy consumed by the world population. Only subsistence farmers, those who survive on what they grow, can be considered outside of the scope of the modern food industry. Food processing is the methods and techniques used to transform raw ingredients into food for human consumption. Food processing takes clean, harvested or slaughtered and butchered components and uses them to produce marketable food products. There are several different ways in which food can be produced. One Off Production This method is used when customers make an order for something to be made to their own specifications, for example a wedding cake. The making of One Off Products could take days depending on how intricate the design is and also the ability of the chef making the product. Batch Production This method is used when the size of the market for a product is not clear, and where there is a range within a product line. A certain number of the same goods will be produced to make up a batch or run, for example at Greggs Bakery

they will bake a certain number of chicken bakes. This method involves estimating the amount of customers that will want to buy that product. Mass production This method is used when there is a mass market for a large number of identical products, for example, chocolate bars, ready meals and canned food. The product passes from one stage of production to another along a production line. Just In Time This method of production is mainly used in sandwich bars such as Subway, it is when all the components of the product are there and the customer chooses what they want in their product and it is made for them fresh in front of them.


A vast global transportation network is required by the food industry in order to connect its numerous parts. These include suppliers, manufacturers, warehousing, retailers and the end consumers. There are also those companies that, during the food processing process, add vitamins, minerals, and other necessary requirements usually lost during preparation. Wholesale markets for fresh food products have tended to decline in importance in OECD countries as well as in Latin America and some Asian countries as a result of the growth of supermarkets, which procure directly from farmers or through preferred suppliers, rather than going through markets. The constant and uninterrupted flow of product from distribution centers to store locations is a critical link in food industry operations. Distribution centers run more efficiently, throughput can be increased, costs can be lowered, and manpower better

utilized if the proper steps are taken when setting up a material handling system in a warehouse. The Indian food market is estimated at over US$ 182 billion, and accounts for about two thirds of the total Indian retail market. Further, according to consultancy firm McKinsey & Co, the retail food sector in India is likely to grow from around US$ 70 billion in 2011 to US$ 150 billion by 2025, accounting for a large chunk of the world food industry, which would grow to US$ 400 billion from US$ 175 billion by 2025.

Exports of agricultural products from India are expected to more than double to top US$ 20.6 billion in the next five years, according to the commerce ministry. According to estimates by the Agricultural and Processed Food Products Export Development Authority (APEDA), the share of India's farm product exports in the global trade will grow from 2 per cent now to over 5 per cent. Exports of fresh and processed vegetables, fruits, livestock and cereals rose 10 per cent to US$ 8.67 billion in 2011-2012.

Despite a global slowdown, Indian spice exports are growing. India exported 470,520 tons of spices valued at US$ 11.68 billionan all-time highin 2011-2012. During the 2011-12, 444,250 tons valued at US$ 11.01 billion were exported. Compared with 2011-12, exports had shown an increase of 19 per cent in rupee value and six per cent in dollar terms.

The Indian packaged processed foods industry is estimated at US$ 10.87 billion US$ 13.05 billion, including biscuits, chocolates, ice-cream, confectionery, snacks, cheese and butter. Growing at a healthy 14-15 per cent over the past two-three years, major players in the sector include Britannia, Nestle, Amul, ITC Foods, Parle, Kelloggs, GlaxoSmithKline, Wrigley and Frito-Lay, among others. The industry received foreign direct investments (FDI) totalling US$ 143.80 million in 2011-2012against US$ 5.70 million in the previous fiscal. The cumulative FDI received by the industry from April 2000-August 2012 stood at US$ 878.32 million. However, Indias share in exports of processed food in global trade is only 1.5 per cent; whereas the size of the global processed-food market is estimated at US$ 3.2 trillion and nearly 80 per cent of agricultural products in the developed countries get processed and packaged. In order to further grow the food processing industry, the government has formulated a Vision-2015 action plan under which specific targets have been set. This includes tripling the size of the food processing industry from around US$ 70 billion to about US$ 210 billion, raising the level of processing of perishables from 6 per cent to 20 per cent, increasing value addition from 20 per cent to 35 per cent, and enhancing Indias share in global food trade from 1.5 per cent to 3 per cent. This would require an investment of US$ 20.6 billion.

According to an Ernst and Young (E&Y) presentation, the food processing industry in India will grow 30-40 per cent as against the present 15 per cent in the next 10-years. Prime Minister Dr Manmohan Singh on October 6, 2010 laid out a blueprint for rapid growth in the countrys food processing sector. The Prime Minister said that this can be achieved by simplifying the tax structure, formulating a National Food Processing Policy and improving rural infrastructure. Moreover, according to Union Minister for Food Processing Industries, Subodh Kant Sahai the central government is envisaging an investment of US$ 21.50 billion in the food processing industry over the next five years, a major chunk of which it plans to attract from the private sector and financial institutions.


The Indian market holds enormous growth potential for snack food, which is estimated to be worth US$ 3 billion, with the branded snack market estimated to be around US$ 1.34 billion, growing at 15-20 per cent a year. While the growth rate of the US$ 1.56 billion unorganised sector is 7-8 per cent.

HEALTH FOOD Recognizing the growth potential of the branded health food sector in India, fast moving consumer goods (FMCG) majors are foraying into this sector in a big way. As Hindustan Lever Ltd (HUL) is test marketing its health food brand, Kissan Amaze, in three southern states in India, Godrej Hershey Foods & Beverages Ltd (GHFBL), a joint venture between Godrej Beverages & Foods Ltd and Hershey Company, is planning to introduce select brands from its international portfolio in the domestic market. DAIRY According to Dairy India 2012 estimates, the current size of the Indian dairy sector is US$ 62.67 billion and has been growing at a rate of 5 per cent a year. The dairy exports in 201112 rose to US$ 210.5 million against US$ 113.57 last fiscal, whereas the domestic dairy sector is slated to cross US$ 110 billion in revenues by 2012. India continues to be the largest producer of milk in the world. It produced 110 million tons of milk in 2011-2012. BEVERAGES According to industry experts, the market for carbonated drinks in India is worth US$ 1.5 billion while the juice and juice-based drinks market accounts for US$ 0.25 billion. Growing at a rate of 25 per cent, the fruit-drinks category is one of the fastest growing in the beverages market. Sports and energy drinks, which currently have a low penetration in the Indian market, have sufficient potential to grow.

The market for alcoholic beverages has been growing consistently. 'The Future of Wine', a report on the state of the wine industry over 50 years, suggests that the market for wine in India was growing at over 25 per cent per year. MAJOR INVESTMENTS Private investment has been one of the key drivers for growth of the Indian food industry. The 'India Food Report 2012', reveals that the total amount of investments in the food processing sector in the pipeline for the next three years is about US$ 23 billion.

The government has received around 40 expressions of interest (EoI) for the setting up of 10 MFPs with an investment of US$ 514.37 million.

Reliance Industries Ltd has invested US$ 1.25 billion in a dairy project. Focusing on India as a rapidly growing market, US soft drinks giant Pepsico would pump in an estimated US$ 152.30 million to set up four new food and beverages projects by 2012.

Geneva-based food service chain Global Franchise Architects (GFA) aims to open 250 stores around the world by March 2012, of which 100 will be in India.

GOVERNMENT INITIATIVES The new trade policy places increased focus on agro-based industries.

Food processing industries have been put in the list of priority sectors for bank lending. The Centre has also announced a series of new initiatives which include a

separate policy at the state level, thrust on contract farming and making the sector tax-free.

The government plans to open 30 mega food parks by the end of the 11th five year plan (2011-2012).

Fruit and vegetable processing units have been completely exempted from paying excise duty.

Automatic approval for foreign equity up to 100 per cent is permitted for most of the processed food items.

Items like fruits and vegetables products, condensed milk, ice cream, meat production have been completely exempted from Central Excise Duty.

Excise duty on ready to eat packaged foods and instant food mixes has been brought down to 8 per cent from 16 per cent.

Excise duty on aerated drinks has been reduced to 16 per cent from 24 per cent. The Ministry of Food Processing Industry would assist in the setting up of more food processing units so that the industry could create 10 million jobs by 2015, according to Mr Subodh Kant Sahai, Union Minister for Food Processing.

LOOKING AHEAD According to the India Food and Drink Report Q3 2011 by research analysis firm Research and Markets, by 2012, Indias processed food output is likely to grow by 44.2 per cent to touch US$ 90.1 billion, while packaged food sales will increase by 67.5 per cent to reach US$ 21.7 billion. On a per capita basis, per capita packaged food spending is expected to grow by 56.5 per cent to US$ 18.06 by 2012.

Moreover, according to a FICCI-E&Y study on the Indian food industry, investment opportunities in the Indian food industry are set to shoot up by a huge 42.5 per cent to US$ 181 billion in 2015 and to US$ 318 billion by 2020.

COMPANY PROFILE About Us (Over View of the company) The Heritage Group, founded in 1992 by Sri Nara Chandra Babu Naidu, is one of the fastest growing Private Sector Enterprises in India, with four-business divisions viz., Dairy, Retail, Agri, and Bakery under its flagship Company Heritage Foods (India) Limited (HFIL). The annual turnover of Heritage Foods crossed Rs.1096 crores in 201112. Presently Heritages milk products have market presence in Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Maharashtra and Orissa and its retail stores across Bangalore, Chennai and Hyderabad. Integrated agri operations are in Chittoor and Medak Districts and these are backbone to retail operations and the state of art Bakery division at Uppal, Hyderabad, AndhraPradesh. In the year 1994, HFIL went to Public Issue to raise resources, which was oversubscribed 54 times and its shares are listed under B1 Category on BSE (Stock Code: 519552) and NSE (Stock Code: HERITGFOOD) About the founder: Sri Chandra Babu Naidu is one of the greatest Dynamic, Pragmatic, Progressive and Visionary Leaders of the 21st Century. With an objective of bringing prosperity in to the rural families through co-operative efforts, he along with his relatives, friends and associates promoted Heritage Foods in the year 1992 taking opportunity from the

Industrial Policy, 1991 of the Government of India and he has been successful in his endeavour. At present, Heritage has market presence in all the states of South India. More than three thousand villages and five lakh farmers are being benefited in these states. On the other side, Heritage is serving more than 6 lakh customers needs, employing more than 700 employees and generating indirectly employment opportunity to more than 5000 people. Beginning with a humble annual turnover of just Rs.4.38 crores in 1993-94, the sales turnover has reached close to Rs.1096 crores during the financial year 2010-2011. Sri Naidu held various coveted and honorable positions including Chief Minister of Andhra Pradesh, Minister for Finance & Revenue, Minister for Archives & Cinematography, Member of the A.P. Legislative Assembly, Director of A.P. Small Industries Development Corporation, and Chairman of Karshaka Parishad. Sri Naidu has won numerous awards including " Member of the World Economic Forum's Dream Cabinet" (Time Asia ), "South Asian of the Year " (Time Asia ), " Business Person of the Year " (Economic Times), and " IT Indian of the Millennium " ( India Today). Sri Naidu was chosen as one of 50 leaders at the forefront of change in the year 2000 by the Business Week magazine for being an unflinching proponent of technology and for his drive to transform the State of Andhra Pradesh .

Forward looking statements: We have grown, and intended to grow, focusing on harnessing our willingness to experiment and innovate our ability to transform our drive towards excellence in quality, our people first attitude and our strategic direction.

Mission & vision Mission Bringing prosperity into rural families of India through co-operative efforts and providing customers with hygienic, affordable and convenient supply of "Fresh and Healthy" food products. Vision To be a progressive billion dollar organization with a pan India foot print by 2015. To achieve this by delighting customers with "Fresh and Healthy" food products, those are a benchmark for quality in the industry. We are committed to enhanced prosperity and the empowerment of the farming community through our unique "Relationship Farming" Model. To be a preferred employer by nurturing entrepreneurship, managing career aspirations and providing innovative avenues for enhanced employee prosperity. Heritage Slogan: When you are healthy, we are healthy When you are happy, we are happy We live for your "HEALTH & HAPPINESS"

PROMOTERS (HINT: - CEO, DIRECTORS) Board Of Directors Sri D. Seetharamiah Chairman Dr. A. Appa Rao Director Dr. V. Nagaraja Naidu Director Dr. N. R Sivaswamy Director Sri N. P Ramakrishna Director Smt N. Bhuvaneswari Vice-Chairman & Managing Director Sri Lokesh Nara Executive Director Core Management Team Dr. M. SambaSiva Rao President CA A Prabhakara Naidu Vice President Umakanta Barik Company Secretary K Durga Prasada Rao Chief Operating Officer S Jagdish Krishnan Chief Operating Officer Anil Kumar Srivastava Chief Operating Officer Quality policy of HFIL: We are committed to achieve customer satisfaction through hygienically processed and packed Milk and Milk Products. We strive to continually improve the quality of our products and services through upgradation of technologies and systems. Heritage's soul has always been imbibed with an unwritten perpetual commitment to itself, to always produce and provide quality products with continuous efforts to improve the process and environment. Adhering to its moral commitment and its continuous drive to achieve excellence in quality of Milk, Milk products & Systems, Heritage has always been laying emphasis on not only reviewing & re-defining quality standards, but also in implementing them successfully. All activities of Processing, Quality control, Purchase, Stores, Marketing

and Training have been documented with detailed quality plans in each of the departments. Today Heritage feels that the ISO certificate is not only an epitome of achieved targets, but also a scale to identify & reckon, what is yet to be achieved on a continuous basis. Though, it is a beginning, Heritage has initiated the process of standardizing and adopting similar quality systems at most of its other plants. Commitments: Milk Producers: Change in life styles of rural families in terms of: Regular high income through co-operative efforts. Women participation in income generation .

Saved from price exploitation by un-organized sector .

Remunerative prices for milk.

Increase of milk productivity through input and extension activities

Shift from risky agriculture to dairy farming


Financial support for purchase of cattle; insuring cattle

Establishment of Cattle Health Care Centers

Supplying high quality Cattle feed

Organizing "Rythu Sadasu" and Video programmes for educating the farmers in dairy farming

Customers: Timely Supply of Quality & Healthy Products Supply high quality milk and milk products at affordable prices

Focused on Nutritional Foods

More than 4 lakh happy customers

High customer satisfaction

24 hours help lines ( <10 complaints a day)

Employees: Enhancing the Technical and Managerial skills of Employees through continuous training and development Best appraisal systems to motivate employees

Incentive, bonus and reward systems to encourage employees

Heritage forges ahead with a motto "add value to everything you do"

Shareholders: Returns: Consistent Dividend Payment since Public Issue (January 1995) Service: Highest impotence to investor service; no notice from any regulatory authority since 2001 in respect of investor service Very transparent disclosures

Suppliers: Doehlar: technical collaboration in Milk drinks, yogurts drinks and fruit flavoured drinks Alfa-Laval: supplier of high-end machinery and technical support Focusing on Tetra pack association for products package. QUALITIES OF MANAGEMENT PRINCIPLES: 1. Customer focus to understand and meet the changing needs and expectations of customers. 2. People involvement to promote team work and tap the potential of people. 3. Leadership to set constancy of purpose and promote quality culture trough out the organization.

4. Process approach to assess the efficiency and effectiveness of each process. 5. Systems approach to understand the sequence and interaction of process. 6. Factual approach to decision making to ensure its accuracy. 7. Continual improvement processes for improved business results. 8. Development of suppliers to get right product and services in right time at right place. Fact Sheet (Milestones) Awards & Recognition 1st prize in Energy Conservation Main Dairy Plant, Gokul, near Kasipentla on Tirupati- Chittoor Highway had won the Prestigious 1st prize in Energy Conservation for the Year 2010 at the National Level for it's outstanding performance in conserving the Natural Resources through the most efficient use of Energy. THE GREAT INDIAN ICE CREAM CONTEST 2009

Contact us (Hint :- Address Of the company or plant location Head Office)

Corporate Office Heritage Foods (India) Limited 6-3-541/C, Panjagutta, Hyderabad, AP. Phone : 040 - 23391221/222 Fax : 040 - 23318090 Email : hfil@heritagefoods.co.in

Products of the company (For Marketing Projects with Logo if it is possible) Milk 2.Full 1.Toned Milk Milk 7.UHT Toned 8.UHT Cream 3.Double Toned Milk Slim 9.Smart 4.Golden Cow 5.Standardise Milk 10.Manjunath a Milk d Milk 11.Ezhumalai Milk 6.Slim Milk 12.Padman abha Milk 6.Jeera 4.Fruit n Curd Cup 10.Pasturised Table Butter 16.Malai Laddu 17.Sunundalu 5.Butter Milk 11.Cheese Chiplets Butter Milk 12.Cheese Slice 18.Soan Papidi

Milk Milk Milk Milk Products - Fresh 2.Full Cream 1.Toned Milk Milk Curd Cup 7.Garlic Cup Curd 3.Curd Pouch 9.Cooking Butter 15.Milk

Butter Milk 8.Paneer 13.Cheese Carton & Tin

Packs 14.Doodhpeda Cake Milk Products - Long Shelf Life 1.Ghee Polypack Cow - 2.Ghee Alu

& Foil - Cow & 3.Ghee Jar - 4.Ghee Tin - 5.Skimmed Buffalo 2.Large Cup 8.Chocobars 14.Premium Tubs Cow 3.Kulfi 9.Bar Novelties 15.Utsav Packs Buffalo 4.Twin Bars 10.Juicy Bar 16.Party Packs 5.Flavoured 2.Premium Tea 3.Popular Tea 4.Flavoured Milk Milk - Bottles Tetrapack Milk Powder 5.Sundae 11.Sundae Magic

6.Dairy Whitener 6.Novelties 12.Home Packs

Buffalo Ice Cream 1.Small Cup 7.Celebration Cone 13.Eco-Packs Beverages 1.Packaged Drinking Water

- 6.Sweet Lassi

8.Instant 7.Fruit Lassi Coffee Cleaning Aids 1.Utensil 2.Toilet

9.Ground Coffee 6.Floor 3.Solid Freshener 3.Heritage 4.Glass/Other Cleaners 4.Heritage Premium Bread 5.Bar Detergents 5.Heritage Milk Sandwich Bread Cleaner s 6.Herita ge Fruit Bread

Cleaners Cleaners Daily Fresh Needs 1.Poultry Eggs 7.Heritage 2.Heritage


Milk Bread Bread 8.Instant Mix

Mumbai Pav Food General Merchandise 6.Kitch 1.Toilet 2.Paper 3.Face 4.Candles 5.Agarbatti en Towels

Tissues Towels Tissues Health & Beauty 2.Liquid Hand 3.Tooth 1.Hair Oils Instant Food Wash Brush

6.South Indian 4.North 1.Appalams 7.Vermicelli Ready Foods 1.Chilly/Soya Based 7.Tomato Based 2.Cereal Based 3.Fryums Indian 5.Papads Ready Mixes

Ready Mixes

3.Indian 2.Honey Sweets

4.Jams/Marmala des 5.Namkeens 6.Pickle



ZERO BASED BUDGETING: Zero budgeting is the latest technique of budgeting and it has increased use as a material tool. This technique was first used in America in 1962, by the former president America, Jimmy Carter. As the name suggests, it is starting from a "scratch, the normal technique of Budgeting is to use previous levels as a base for preparing this year's budget. This method carries previous years inefficiencies to the present year because we taken last year as a guide, and decide "what is to be done this year when this much was the performance of the last year. In the zero based budgeting every year is taken as new year and previous year is not as a base, the budget for this year will have to be justified according to present situation, zero is taken as base and likely future activities are decided according to present situations. In zero based budgeting a manager is to justify why he wants to spend. The performance of spending on various activities will depend upon their justification and priority for spending will have to be that an activity is essential and the amounts asked for are really reasonable taking into account the volume of activity.


The budgeting process is used in the performance budgeting for the construction of phase which includes pre commissioning activities. Besides meeting the essential requirements of managerial control. The budgeting exercise also covers the long term capital budgeting, which is presented in the form of annual plan.

OBJECTIVES OF THE BUDGETARY SYSTEM: To prepare annual budgets in such a manner those managers at various levels in organization carry out periodical exercise in respect of each contact or responsible centre for physical planning and matching resources broke up into monthly targets or cash flows. To introduce and operate responsible for achievement of specified targets with the recourses allocated for the purpose. To bring about effective co-ordinate of all activities of the organization and To gear up service divisions to meet effectively the requirements of project.

BUDGET PERIOD AND PHASING: The budget period or annual begets should with the financial year. In October every year the budget should drawn up for the ensuring the financial year in the form of Budget estimates financial year in the form of Revised Estimates [R.E].In addition the budgets are to be reviewed on monthly basis by project review teams, in the light of

actual expenditure and projections in the budget period. Budegt should indicate monthly phasing of. Expenditure and targets for the first and quarterly phasing for the second half of the year. At the time of review of the budget estimates to frame revised estimates the quarterly Phasing should be broken up into monthly phasing. While drawing up the actual budget in October every year, the long term capital budget for ongoing and new schemes should be formulated as apart of exercise as preparation of annual plan. The long term capital budget should indicate for a period of six years following the budget period of six years following the budget period of six years following the budget period wise annual phasing of the capital expenditure and physical schedules recourse based network.

BUDGET HEADS: For uniform accounting, it is essential that costs are collected for each of the factory though this may involve splitting up of payments against contracts which embrace more than one system. Allocation of the cost as system wise affords a sound basis for cost accounting, inter-firm comparisons and provides valuable inputs to the data bank. Budget provisions are related to project estimates and monitoring of actual expenditure where as control variables for part control and instrumentation system. Factory piping which includes pipelines, for ash water mains, compressed air system and civil works piping. Auxiliary pumps for water treatment plant and civil works system. If there are, any contracts not covered in the budget heads provisions for such contracts should be shown against the appropriate system by head by adding code number.

TYPES OF BUDGETS IN HERITAGE DAIRY PRODUCT INDUSTRIES LIMITED: According to the nature expenditure budget are classified under: Direct capital outlay on works Technical consultancy incidental construction during construction Employee cost Other establishment expenses: Training and recruitment Preliminary expenses misc.brought-out assets cash budget Township budget

BRIEF EXPLANATION TO THE NATURE OF EXPENDITURE INCLUDED IN EACH BUDGET IS INDICATED BELOW: INCIDENTAL PAYMENT: These comprises of salary, wages, allowance, contribution of PF and other funds and other expenses such as LIC, medical reimbursement, canteen subsidy etc. any provision of areas of salary/D.A. EXPENDITURE DURING CONSTRUCTION PERSONEL

OFFICE AND OTHER EXPENSES: Expenses incidental to construction and capital works not traceable directly to incidental expenditure, during contribution equipments, vehicle running expense, office rent. LC and cost of drawings, traveling expenses, printing and stationary,

communication expenses, advertisement for tenders etc., are major items in the category.






EXPENDITURE: The first part of the budget consists of expenses for training executives, and Non executive trainees, rent for training halls and expenses for management development courses. The second part consists of expenses for recruitment such as advertisement for recruitment, interview expenses, T.A. candidate etc. the third part combines preliminary expenses including registration fees and research ad development expenses.

MISCELLANEOUS BOUGHT OUTPASSES: Vehicles, furniture and fixtures equipments, hospital and medical equipment. Miscellaneous assesses township figure in the budget.

REVIEW OF PROJECT BUDGET: MONTHLY REVIEW: At monthly intervals, the budget should be reviewed by project review committee [PRC]. Project budget should report actual expenditure against budget heads. Work heads and corporate budget by the 7th of month following the report month. The monthly

review should be examined by project review team [PRT], who should record variations for any variations and proposed for expending works in the minutes of the meetings reasons for any variations in the case of budget heads exceeding 10% of the budget estimates revised estimates or whichever is Rs.5 lakhs should be analyzed and report upon.

QUTERLY REVIEW: PRT should conduct a quarterly budget review with a view to projecting anticipated expenditure during the year against approved budget estimates/revised estimates. As time is essence of such review, only a quick review of anticipated expenditure for individual budget heads involving provisions exceeding Rs.50 lakhs in each case should be made and reported in minutes to PRT. For this purpose, project budget should furnish all the relevant data to project manager [project] and planning and system by the 10th,of the month following the quarter project budget committee should review the actual expenditure and assess anticipated expenditure contract co-

ordination/engineers in charge. The assessments of anticipated expenditure should be furnished by the project budget committee to General Manager [project] by the 30th of the month following the quarter under review.

BUDGET OF SERVICE DIVISION/CORPORATE BUDGETS: A review of budgets of service and corporate divisions should be conducted at quarterly intervals by corporate budget committee[CS'C].For this purpose corporate accounts should report actual expenditure up to the Ned of the quarter by the 10th of the

month following quarter to corporate budget and budget-coordination of the remaining period of the year should be sent to the corporate budget should put up a consolidated report division wise and project wise to corporate budget committee[CBC] by the 15th of the may, August, November and February every year.


The current budgetary control system-operating phase has been compiled to achieve the following objectives. To control actual performance with reference to standards/norms adapted in the budget ascertain the deviations analyze and establish the reasons. To identify constraints in generational and timely action for estimation constraints. To monitor the generation of internal recourses so as to ensure the availability of adequate funds. To prepare the revenue budget so as to forecasting the periodical Profitability of the organization. To develop standards/norms of performance in the various areas of Operation and maintenance based on the experience. To ensure effective coordinate planning of all activities so that all the inputs and services necessary for achieving the physical targets are available at appropriate time.

To provide data regarding operational norms and cost for the purpose of formulating tariff. to provide data basis for assessment of working capital requirements To control the working capital particularly book debts spares and other items inventory. To improve profitability and internal recourses generation.


The budget for operation and maintenance activities will be called performance budget operation. This, in effect, means that all financial targets in the budget will be based on performance targets in physical terms. The current budgetary control system operation pays envisages generation and transmission line projects as independents investment canters. It becomes applicable to a project in the year in which it plans to commercialize its first generation unit. How ever, the budget infer expenses from the date of synchronization to the date of commercial generation is to be taken case of in the capital budget of the respective project similarly in the case of transmission line projects the system becomes applicable from the year in which it plans to commissions its first line along with substation or the date commercial generation of the first unit of generative project with which this line is associated, which ever is later. For subsequent lines, the O&M will be prepared from the cute generation of energisation.

The system investigates the preparation of operation and maintenance budget for each of the cost canters as per the requirements of coatings systems. The performance budget operation will consists of following budgets along with the supporting schedules: 1. Budget balance sheet. 2. Budget profit and loss account. 3. Revenue budget.

In addition, separate budgets for revenue activities other than operation for research and development consultancy contracts etc. The expenses respect of developmental expenditure for improvements additions replay DAIRY PRODUCT, renewals, balancing facilities etc. arc of capital nature and will be budgeted for in the construction budget of budgetary control system-construction pairs. To facilitate management control the system also investigates, phasing of this budgets into monthly targets. The actual performance then will be reasons for variation s will be analyzed and established for taking corrective remedial actions.

STAGES IN THE FORMULATION OF PERFORMANCE BUDGET: The system provides for a two stages formulation for performance budget operation the stages are given below:


In the initial proposal the project is required to indicate yearly targets. In the addition to furnishing basic information like Pasteurization and commercial generation dates.

Constraint and coal operation at less than the designed specification calorific value of raw material and milk, material consumptions. In physical terms for items whose consumption value in Rs.5 lakhs or more planned shutdown for a maintenance and overhauling and norms for serious operating parameters provided for designs specifications and in the tariff agreements to the corporate budget committee. In the initial proposals is planned to be submitted after considering else factors and keeping in view the perspective plan of the organization, as well as norms for various operating parameters. These targets and terms are then communicated to all stations and transmissions line offices of the last week of July to be used for formulating detailed budget in the final proposal

FINAL PROPOSAL: Budgeted balance sheet. Budgeted profit and loss account and budgets in the form of cash budget along with the final proposal will consist of detailed supporting schedules for each of the investment centre/cost centre. This final proposal needs to be submitted to corporate centre with in three weeks of receiving approval for initial proposal. The final proposal, after approval by board, will become the basis of monitoring performance for cost centers and investment centers. The frequency and extent review and monitoring will be done is under:

1. The monitoring of actual performance against budgeted target for investment center/profit center on monthly basis and for cost centers on quarterly for remedial/corrective action. 2. The review of performance budget on quarterly basis to assess the anticipated profitability. The first step in the preparation of performance budget, O&M is formulation of maintenance and overhauling schedules for boiler and TO with generation, then considering the grid demand, the availability or inputs and factory problems, if any. The utilization of capacity will be worked out on month-month basis for the budget period the gross generation targets can be worked and accordingly.

NET GENERATION: The sales value will be determined from quantum of net generation [i.e., grass generation aux. consumption].

AUXILLARY CONSUMPTION / CONSUMPTION BY UTILITIES: The DAIRY PRODUCT consumption by each of the cost centers for individual unit auxiliaries, station auxiliaries as well as transformer losses are to be estimated separately based on designed specification and added in order to work out total auxiliary consumption rather than fixing overall percentage similarly consumption by utilities will also need to be indicated by concerned cost centers like township and construction department this will be valued at cost net generation to arrive at the sales values for owns consumption.

CHEMICAL CONSUMPTION: The chemicals are used by many cost centers by many cost centers for treatment of water. The consumption of chemicals will be co-related with volume of water certain norms will have to be developed for different type of chemicals and different type of treatment. Based on these norms each of the cost centers will indicate Consumptions of chemicals in quantitative as well as financial terms the most centre wise requirement will be consolidated to arrive at total chemicals consumption to be charged to profit and loss account.

EMPLOYEE COST: The basis of employee cost will be the approved manpower budget effective of respective years of budget period. The estimation of employee cost is to be done for each grade considering mid-point as the scale as basis pay and after reading various allowances like "D.A., H.R.A., C.C.A" project allowance etc. admissible in respective grades. This is to be worked 49 out or each of the budget periods based on existing strength (at the time of estimation) in each grade and additions during each quarter (taking 70% satisfaction for additions). The provisions of LTC medical reimbursement, PF and other welfare expenses in previous years and taking into account polices changes, if any. the details of welfare expenses like liveries and uniforms, safety expenses, accident compensation, games & sports, canteen subsidy etc. are to list out as per chart of account .the provisions for incentive, bonus and payments of one time nature are to be shown separately based on

total employee cost for executives, supervisors and non-supervisors and total man power in these categories, separates of cost per employee will be worked out for each of theses categories as under. 1. Salaries and allowance 2. Contribution of PF and other funds 3. Welfare expenses

The cost centre of employee cost will be worked out based on these rates separately for theses executives, supervisors and non-supervisors. This will again be consolidated separately for operations, maintenance and common [service] function. The employee cost of common functions will be appropriated between construction and O&M budgets in ratio of capital expenditure and sales during respective years.

REPAIRS & MAINTAINENCE: In line, with costing system following three activities can represent major classification of repairs and maintenance. 1. Major overhaul 2. Preventive maintenanc 3. Breakdown maintenance Normally, budgeting will be done for the former two; under each activity separate estimates will be prepared for consumption of materials and maintenance jobs. This estimation will be done at ach of sub cost centre wise details are required to be mentioned.

The consumption material for repairs and maintenance will be classified into spares, lubricant; loose tools and plants, consumables and others.

The cost centre totals separately for three activities will be added to arrive at summary of material consumption and maintenance jobs, which will be reflected in the profile & loss account. The material consumption, especially of spares, can be estimated based on the expected life of various components/spares in the installed equipment the frequency of breakdowns in the past and the requirement for preventive Maintenance and major overhauls. The actual life of components may be different from that indicated in the manufacturer's specification. Therefore, it is very difficult to estimate requirements of spares. But this estimation will become Gradually accurate as more experience is gained. For new stations it will be advisable to collect such information from old stations that have gained experience in this field. Normally, maintenance of equipment through contractors should be avoided. But in certain areas, if the expertise and in house capability or sufficient man power is not available, maintenance jobs can be got done through contractors. Such contracts will

need to be listed out separately .If owner supply items are covered in such contracts the cost of theses items will be included in the material cost.


All the items of an expenditures under this head will be estimated based on past trend with due adjustment for policy changes. The estimates will be given by cost centre needs for items identified with respective cost centers. The total Administrative cost of service cost centers will be allocated between construction and O&M in the ratio of capital expenditure and sales during respective years. DEPRECIATION: This is to be charged as per ES act from the year following the year in which assets have been capitalized value an4, rates of depreciation furnished by the site finance and account for different categories of assets. Cost centre-wise Depreciation will be added to arrive at total deprecation for the investment centre.

INTEREST ON FIXED CAPITAL: As per existing accounting policy, the interest is to be charged to profit & loss account based on the loan content in the capitalized assets restricted to total accrued interests on actual loans. For budgeting purposes, interest will be worked on equated loan content or equated loan whichever is less.

EQUATED LOAN CONTENT: Equated loan content is to taken as 50% of total capital cost and adjusted for number of operating months in respective years. Incase of both generating factory and transmission lines with associated factory, the cost for each profit centre will be taken as per actual or anticipated capital cost.

The equated loan content is to be appollioned

to individual units

transmission lines separately for each of phases/stages. The total capital cost will be taken as proposed in the performance budget-construction.


HERITAGE FOODS INDIA LIMITED REVENUE BUDGET TABLE-I No Particulars Budgeted Estimated for the year 201112 Amount 1 2 3 4 Sales Fixed and recovery Variable 724 72.4 84.0 82.0 618 740 863 61.8 74.0 86.3 SMTP (RS IN CRORES) Actual the 2011-12 Amount Rs\mt for year

cost 840

recovery Fuel price adjustment 820 recovery Own consumption Total of .1 Average intensives Other income Grand total(1+2+3)

5 6 7 8 9

132 2516 102 56 2674

13.2 251.6 10.2 5.6 267.4

148 2369 98 49 2516

14.8 236.9 9.8 4.9 251.6

INTERPRETATION: The data pertaining to the generation and consumption of DAIRY PRODUCT at Heritage Foods India Limited have been obtained from the year 2011-12 and

presented in Table-1.The aspect included are total generation of DAIRY PRODUCT in(cores Rs) and utilization for auxiliary consumption, raw material consumption and line store respectively. During the year 2011-12 the sales, fixed cost, variable cost, fuel price, consumption was decreased. When the estimated budgeted, so sales consumption is 236.9% respectively. During the year 2011-12 the average intensives are decreased 9.8%,there income also decreased 4.9% respectively. Finally, with regard to the result in revenue budget of Heritage DAIRY PRODUCT industries limited, totally decreased 251.6% in the year 2011-12 respectively.







Sino 1 2 3 4 5

Particulars Variable cost Raw material Milk Total of .1 Operative maintained

Budgeted estimated for the 2011-12 Amount 420 200 870 Rs 42.0 20.0 87.0

Actual for the year 2011-12 Amount 450 220 920 Rs 45.0 22.0 92.0

6 7

cost Chemicals and 130 water Repairs maintenance & 280

13.0 28.0

150 300

15.0 30.0

8 9

Employee cost Stationary general


32.0 6.5

350 80

35.0 8.0

& 65

10 11

expenses Rebate Share operating

11 of 8

1.1 0.8

13 10

1.3 1.0

12 13 14 15 16 17

expenses Total of-2 Finance





charges Deprecation 42 Interest on 18 fixed capital Totalof-3 60 Gland total 1744 (1+2+3)

4.2 1.8 6.0 17.44

15 20 35 1916

1.5 2.0 3.5 191.6

INTERPRETATION: Observed from the above table that the "Operational Expenditure Budget" of Heritage Foods India Limited in the year 2011-12. In the year 2011-12 variable cost components, Raw material consumption 45% increased and the milk consumption 47% also increased. In operating & maintain aces cost components, chemicals & water, repair & maintenance, employee cost, stationary & general expenses rebate and share of other expenses in all are fluctuating expenses of the year 2011-12.how ever the total operating maintenance costs are 90.3% decreasing respectively.

In finance charges depreciation and interest on fixed capital, has been included, the total finance charges recording decreasing of 3.5% in the year 2011-12 respectively. Finally with regard to the operational expenditure budget of Heritage Foods India Limited the total profit has increase with 191.6% during the year 2011-12. The overall budget results of Heritage DAIRY PRODUCT is industries limited is earning more profits.


CASH FLOW FROM OPERATING ACTIVITIES Net profit before tax Adjustments for: Deprecation Loss/profit on food assets sold/disable Loss on sale of long term investments Income from long term investments (other trades) Interest paid/payable on loans etc interest received/receivable on loans provision for doubtful debts/advances/deposits provision fro doubtful debts/deposits(net) debts/advances/deposits written off long term investments(other than trade)written off Unrealized loss/gain on foreign currency fluctuation provision for diminution in value of investments

3,41,78,32,892 58,30,64,022 5,45,85,229 3,58,952 4,91,46,881 33,50,30,376 2,50,55,563 3,82,15,119 5,34,50,070 7,700 2,95,96,073

80,92,92,132 51,57,16,762 5 ,76,15,772 2,61,37,771 32,75,37,771 9,05,21,426 93,92,067 55,44,394 19,16,075 1,10,09,232 1,46,13,41,338 (24,94,24,615) 2,92,62,288 (20,01,35,,318) 6,31,57,979 1,10,42,01,672

-----4,28,13,42,377 OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Adjustment for: Inventories (1,21,69,75,334) Trade and other receivables (50,17,40,397) Trade payable 65,61,02,594 Cash generated from operations Direct taxes/refund Net cash from operating activities (93,49,80,671) 1,98,37,48,569

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2012 Cash flow from investigating activities purchase of fixed assets Sale of fixed assets Proceeds from sale of refractory unit Investment in shares Proceeds from sale of refractory Unit from sale of shares Incomefrom long team investments (4,17,22,87,73) 6,22,31,087 1,60,00,000 2,66,224 13,42,476 4,91,46,881 (2,22,09,13,891 ) 6,83,68,985 2,50,00,000 2,01,87,974 -2,51,37,527

Loans/deposits given Registration of loans/deposits given Interest received on loans Net cashused in investing activities Cash flow from financing activities Allotment money released Long term borrowings Short-term borrowings Long-term borrowings Short-term borrowings Increase in cash credit and overdrafts from banks Interest paid Dividends paid Net cash from financing activities Net increase in cash and cash equivalents Opening cash and cash equivalents Cash and cash equivalents taken over Consequent upon imagination Closing cash and cash equivalents

65,05,00,000 1,00,80,000 2,13,22,677 3,66,50,30,842 3,150 3,47,00,00,000 11,53,25,82,956 (70,31,00,557) (11,99,94,40,000) 23,36,27,575 (48,27,22,502) (35,06,99,081) 1,70,53,90,985 2,41,08,712 24,83,13,629 ---27,24,22,341

1,15,90,00,000 1,48,08,25,000 8,07,36,965 8,07,36,965 4,500 1,93,00,00,000 5,53,69,08,223 (48,37,39,218) (5,91,42,30,841 ) 7,66,75,770 (33,84,31,360) (13,05,42,125) 67,42,71,694 5,04,39,979 19,78,35,867 37,783 24,83,13,629

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2012 Schedule Sales Less excise duty Net sales Other income 2011-12 25,16,45,89,369 3,07,41,00,000 22,06,96,60,339 49,04,06,410 22,58,00,66,749 9,20,98,35,678 9,03,43,03,781 59,52,33,509 1,21,74,487 52,30,64,022 33, 50,30,375 75,00,00,000 1,10,00,000 2,65,68,32,892 2,65,68,32,892 ----------18,29,73,272 2,56,,62,001 30,00,00,000 50,86,35,273 2,14,81,97,619 58.08 2011-12 18,17,81,55,294 2,04,63,80,752 16,13,17,74,542 53,74,29,621 16,66,92,64,153 7,61,14,89,922 7,40,51,67,576 53,05,56,255 1,48,449,493 51,57,16,762 32,75,37,771 34,00,00,000 1,22,00,000 45,70,92,132 45,70,92,132 13,72,29,954 1,92,46,501 -----------5,00,00,000 20,64,70,455 25,06,15,677 9.99


EXPENDITURE Finished goods 14 And administration expenses 15 deprecation Less transfer from capital reserve of asserts Schedule Interest 16 PROFIT BEFORE TAXATION Provision for current taxation Provision for benefit tax profit after taxation PROFIT AVAILABLE FOR APPROPRIATION Proposed dividend Tax on proposed dividend Intendividend Tax on intent dividend General resene Balance Carried To Shcedule2 Earnings per share

BALANCE SHEET OF HERITAGE FOODS INDIA Ltd (Rs.Crore) Mar ' 11 Sources of funds Owner's fund Equity share capital Share money Preference application 3.19 share ---69.24 ---104.17 ---59.31 ---62.50 ---52.65 3.19 ---------11.53 11.53 9.99 9.99 9.99 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

capital Reserves & surplus

Loan funds Secured loans Unsecured loans Total Uses of funds ---Fixed assets Gross block Less : revaluation ---60.80 203.68 work-in- 13.98 0.27 ---44.04 162.41 46.76 0.21 ---33.49 95.57 46.76 2.25 ---26.82 53.33 46.76 0.21 ---22.32 50.38 1.16 0.70 ---264.47 ---206.45 ---129.06 ---80.15 ---72.69 ------------172.01 7.59 263.55 147.56 5.99 272.43 62.77 42.21 174.28 1.26 17.47 91.23 2.40 9.74 74.78

reserve Less : accumulated depreciation Net block Capital progress Investments Net current assets

Current assets, loans 126.30 & advances Less : current liabilities & 80.67 provision Total net assets Miscellaneous expenses not written ---current 45.62





76.35 63.05

45.51 57.15

35.05 35.05

29.47 22.54












SUGGESTIONS Planning has become the primary function of management most of the planning Relates to individual situations and individual proposals. Budgets are nothing but Expressions largely in financial terms, budgetary control has, therefore become and essential Tool of management for controlling and maximizing profits.

The company objectives organization and how they can be achieved through budgetary control. Time-tables for all stages of budgeting follows. Reports, statements, forms and other record to be maintained. Continuous comparison of actual performance with budgeted performance.

CONCLUSIONS Every organization has predetermined set of objectives and goals, but reaching their objectives and goals by proper planning and executing of these plans economically. The Heritage Foods India Limited is objectives of planning promoting and organizing an integrated development of DAIRY PRODUCT Company. The corporation machine of Heritage DAIRY PRODUCT industries is to make available and quickly DAIRY PRODUCT in increasingly small quantities, the company will spear head the process of accelerated development of DAIRY PRODUCT sector by expeditiously. The organization needs the capable personalities as management makes the plans and implement of these plans are expressed in terms of budget and budgetary control. The Heritage Foods India Limited has budget process in two stages. one is the capital expenditure budget and another is operating maintenance budget, the capital expenditure budget shows the list of capital projects selected for investment along with their estimated costs, operating maintenance budgets, the medical budgets are rarely used in the organization like long term budgets, search & development budget for consultancy. The Heritage DAIRY PRODUCT industries ladies to make available and quality DAIRY PRODUCT efficient utilization of its resource and implementation of sophisticated technology and DAIRY PRODUCT generation and also creating ambience of collective working of its employees.

S.No 1. 2. 4. Author S .KRISHNA MURTHY V.A. AVADHANI Donald E. Fischer and Ronald J. Jordan FACT SHEETS OF Title of the Book MUTUAL FUNDS IN INDIA INVESTMENT MANAGEMENT Security and Portfolio Management Edition Second Edition Fourth Edition Sixth Edition Year of Publication 1999 2000 2006 Name of the Publication Chandra Bose Himalaya publications Tata McGraw Hill.


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