INTRODUCTION

Finance is regarded as THE LIFE BLOOD OF BUSINESS

ENTERPRISE. Finance function has become so important that it has given
birth to financial management as a separate subject. So, this subject is acquiring
universal applicability. Financial Management is that managerial activity which
is concerned with the planning and controlling and of the firms financial
resources. As a separate activity or discipline is of recent origin it was a branch
of economics till 1890. Still today it has no unique today of knowledge of its
own, and it draws heavily on economy for its theoretical concepts.
The subject of Financial Management is of immense interest
to both academicians and practicing managers.

It is of great interest to

academicians because the subject is still developing, and there are still certain
areas where controversies exist for which no unanimous solutions have been
reached as yet. Practicing Managers are interested in this subject because
among the most crucial decisions of the firm are those which relate to finance
and an understanding of the theory of financial management provides them with
conceptual and analytical insights.

OBJECTIVES OF THE STUDY

This project work is aimed to attain the following major objectives. The
objectives are:
1. To know about the fertilizer industry and business activities of M/s.
Nagarjuna Fertilizers and Chemicals Limited, Kakianda
2. To study the ability of the firm to meet its current requirements.
3. To study the extent to which the firm has used its long-term solvency by
borrowing funds.
4. To study the overall operating efficiency in performance of M/s.
Nagarjuna Fertilizers and Chemicals Limited, Kakianda.
5. To study the efficiency with which the firm is utilizing its various assets
in generating sales.

6. To suggest guidelines to the company for improving its financial position.

METHOLOGODY OF THE STUDY

The required for this study would be collected through two sources i.e.,
METHODS

PRIMARY DATA

SECONDARY DATA

1. Primary Data:
The primary data comprises information obtained by the candidate during
discussions with Heads of Departments and from the meeting with officials and
staff.
2. Secondary Data:
The secondary data has been collected from information through Annual
Reports, Public Report, Bulleting and other Printed Materials supplied by the
Company.
In the present study 1/4th of the total information of time is from primary
data and the rest is from the secondary data.

LIMITATIONS OF STUDY
1. The study is limited to NFCL, Kakinada; it does not relate to any other
company of Nagarjuna Group or other firms of Fertilizer Industry.
2. The smaller time frame for understanding this study is also a significant
limitation.
3. The ratios are calculated on the basis of past data; these are not future
indicators.
4. The scope of study is limited to the last five years balance sheets.
5. The analysis is made basing only on the Annual Reports of NFCL.

INDUSTRY PROFILE
India has been predominantly considered as an agricultural dependent
economy. Agriculture plays a very dominant role as more than one-fourth of
our GDP come from this sector. Nearly 70.6% of population depends on the
agriculture for their lively-hood. The basic need for an agricultural dependant
economy is fertilizers and urea is one of the main fertilizers. India is the second
largest manufacturing country in the world.
All fertilizers consist of three main ingredients.
Nitrogen

(N)

which promotes general plant

growth

Phosphorous

(P)

which promotes flowering

Potassium

(K)

which promotes strong roots.

The ingredients are mixed in various combinations because plants

have different needs.
The combinations are indicated by a three number code:
The first number is the percent of Nitrogen

- (N)

The second number is the percent of Phosphorus - (P)

The third number is the percent of Potassium

- (K)

About Fertilizer:
Fertilizer is simply, plant food. Just like the human body needs vitamins
and minerals, plants need nutrients in order to grow. Plants need large amounts

of three nutrients nitrogen, phosphorus, and potassium. These are commonly

referred to as macronutrients. Fertilizer makers take those three nutrients from
nature and put them into soluble forms that plants can easily use.
There are a number of other nutrients plants need in small amounts.
These are referred to as the minor nutrients, or micronutrients. These many
nutrients are typically produced separately, but end up being mixed together in
varying amounts to match the needs of a particular crop. The analysis found on
each bag or bulk shipment of fertilizer tells the farmer or consumer the amount
of nutrients being supplied. States have a system of laws and regulations that
ensure the fertilizer is properly labeled and delivers the amount for nutrients
stated on the bag.
Our world would be vastly different without commercial fertilizers.
Following World War II, new technologies allowed for the rapid expansion of
fertilizer production. Coupled with growing food demand and the development
of higher-yielding crop varieties, fertilizer helped fuel the Green Revolution.
Today, the abundance of food we enjoy is just one way fertilizers help enrich the
world around us.
While fertilizers provide many important benefits that are necessary for
our way of life, the improper use of fertilizers can harm our environment.
Weve used the most recent developments in science to study our products and
make sure safety comes first.
FERTILIZER:
Fuel for growing plants just like humans and animals, plants need
adequate water, sufficient food, and protection from diseases and pests to be
healthy.

COMPANY PROFILE

NAGARJUNA GROUP - FOUNDER

Our founder Sri K.V.K.Raju (28.11.1928 16.06.1993) laid the

foundation of the Nagarjuna Group in 1974 with an investment of 50 millions.
He was a visionary and a professional technocrat entrepreneur who realized the
importance of Core Sectors to an economy like ours. He has guided the group
with his philosophy.
SERVING SOCIETY THROUGH INDUSTRY
Nagarjuna Fertilizers and Chemicals Limited (NFCL) is the first gas
based fertilizer factory in South India. The plant is based on the latest fertilizer
technology from M/s. Snamprogetti, Italy for Urea process with an installed
capacity of 1500 Mt/day for each unit. The ammonia process is based on
technology from M/s. Haldor Topsoe, Denmark with an installed capacity of
900 MT/day per each unit.
NFCLS VISION STATEMENT
SERVING SOCIETY THROUGH INDUSTRY
For close to two decades, the employees at NFCL have predominantly
been in the business of manufacturing and marketing Urea, a segment of the
plant Nutrition business space. Given our cumulated experience and strengths
in understanding the farmer, the agriculture, various initiatives taken in the past,

the exposure of Indian agriculture to global economy and therefore the need for
Indian farmers to be globally competitive, have realized the need to provide
innovative and comprehensive Plant Nutrition Solutions.
The leadership they refer to in our Vision Statement is in terms of
providing innovative and creative solutions.
NFCLS MISSION STATEMENT
They shall:
- Pioneer transformation in the approach to plant nutrition
- Deliver holistic plant nutrition solutions to the farmers
- Be the most preferred organization to be associated with
Pioneer transformation in the approach to plant nutrition they shall
develop crop, site and stage specific wholesome plant nutrition solutions.
NFCL shall focus on all necessary initiatives towards this be it manufacturing
technology, regulatory, logistics and using a mix of several sciences and skills.
The most preferred organization to be associated with in the process of
providing these solutions, NFCL shall delight all the stakeholders employees,
investors, suppliers, customers and society at large. The stakeholders would
prefer to be associated with us not only for the higher value they offer, but also
shall cherish their relationship with us due to the way they deal with them
with full commitment, responsibility and accountability.
NFCLs aim to have the most satisfied employee base by the turn of the
century through its commitment to Personal and professional development of
the individual.
Rewarding teamwork, innovation and quality behavior
Through job satisfaction

 Creating and sustaining a close-knit family culture wherein every

individual experience a sense of belonging.
AWARDS AND HONOURS
EPIC Award for Anti-Pollution measures taken by the Industry by
Environment Public interest Committee, Kakinada in 1993.
Good Housekeeping Award for 1994 by National Safety Council, A.P.
Chapter.
Best Industrial Canteen Award for 1994 by National Safety Council, A.P.
Chapter.
Indian Chemical Manufacturers Association (ICMA) Award for
Environmental Control Strategies and Safety in Chemical Plants for the
year 1994.
Award of Merit for 1994-95 by National Safety Council, U.S.A. for
completing 2 Million Accident Freeman Hours.
ISO 9002 Certification from Bureau Verities Quality International (BVQI),
Netherlands, in 1995.
FUTURE PLANS OF THE COMPANY
1) To improve the capacity utilization and energy efficiency through
technology up gradation.
2) Switching over to 100% natural gas as raw material instead of Naphtha in
Ammonia plant II
3) To continue to improve environmental performance under the framework
of ISO 14000 EMS.

4) To enhance the standards in the present quality management system (ISO

9002) by adopting the ISO 9001-2000 revision.
5) To widen the scope and offer technical services to various external
agencies including overs as a excitement.

THEORITICAL FRAME WORK

BUDGET

A budget is a financial and /or quantities a statement prepared prior to a

definite period of time, of the policy to be pursed during that period
that for the purpose of attaining a given objective.

A budget is a pre determined statement of management policy during

a given period which provides a standard for comparison with the
results actuality achieved.

BUDGETING:

Budgeting is the technique for formulation begets.

Budgets are the individual objectives of a department, whereas

budgeting is the act of building budgets

BUDGETARY CONTROL
Budgetary control involves the use of budget and budgetary reports, throughout
the period to co-ordinate, evaluate and control day to day operations in
accordance with the goals specified by the budget.
ESSENTAIL OF EFFECTIVE SYSTEM OF BUDGETARY CONTOL:

There are certain steps which are necessary for the successful
implementation of a budgetary control system. They are as follows:
1. Organization for budgetary control
2. Budget centers
3. Budget officer
4. Budget manual
5. Budget committee
6. Budget period
7. Determination of key factor.

ORGANISITION CHART
FOR
BUDGETARY CONROL

ADVATAGES OF BUDGETARY CONTROL:

The budgeting control system helps in fixing the goals for the
organization as a whole and concerted efforts are made for its achievements. It
enables economies in the enterprise. Some of the advantages of budgetary
control are:

Maximization of profits :
The budgetary control aims at the maximization of profits

of the

enterprise. To achieve this aim, a proper planning and coordination of

different functions is undertaken.

co ordination:
The working of different departments and sectors is properly coordinated.

The coordination of various executives and sub ordinates is necessary to for

achieving budgeted targets.

S.NO

A/c Description

Budget
2010-2011

Budget
2011 - 2012

Consumption of consumables and utilities

1.50

Direct Charges - Roads & Buildings Repair

36.90

27.00

Direct Charges - Plant & Machinery Repairs

228.03

145.00

Consumption of Stores & Spares Other

24.67

18.00

5
6
7

Repairs Others
Technical Consultancy
PR Gifts
Total

4.50
4.60
0.50
300.70

0.50
190.50

CHAPTER-IV
DATAANALYSIS & ITS iNTERPRETATION
Nagarjuna Fertilizers and Chemicals Limited - Kakinada Revenue
Budget of CIVIL Department for the year ended 2011 2012
(Rupees in Lakhs

Nagarjuna Fertilizers and Chemicals Limited - Kakinada Revenue Budget of ELECTRICAL

Department for the year ended 2011 2012.

(Rupees in Lakhs)
S.NO

A/c Description

1
2
3
4

Consumption of Chemicals
Consumption of Consumables and Utilities
Direct Charges - Plant & Machinery repairs
Consumption of Stores & spares - Imported
Plant
Consumption of Stores & Spares - Other
Repairs Others
Stationery
Rates and Taxes Others
Other Welfare Expenses
License Fee
TOTAL

5
6
7
8
9
10

Budget
2010-2011
0.10
13.20
45.50
0.06

Budget
2011 - 2012
15.35
41.22
0.48

47.86 36.93
0.01
0.01
0.60
0.10
0.01 0.65
107.45 94.63

Nagarjuna Fertilizers and Chemicals Limited - Kakinada Revenue Budget of

INSTRUMENTATION Department for the year ended 2011 - 2012

S.NO

A/c Description

Consumption of Consumables and

Utilities
Direct Charges - Plant & Machinery
repairs
Consumption of Stores & Spares Other
Consumption of Stores & Spares Imported - Plant
Technical Consultancy
Furniture, Fittings & Office Equipment
Repairs
Employee Travel Fares
TOTAL :

2
3
4
5
6
7

Budget
2010-2011

(Rupees in Lakhs)
Budget
2011 - 2012
0.73
17.40
31.30

14.66

95.70

81.60

40.00

11.50
2.30

0.06
0.30
168.09

127.46