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INTRODUCTION
INTRODUCTION
lBudgetlislessentiallinleverylwalkloflourllifel–
lnational,ldomesticlandlbusiness.lAlbudgetlislpreparedltolhaveleffectivelutilizationloflfu
ndslandlforlthelrealizationloflobjectiveslaslefficiently,laslpossible.lBudgetlislalwidelylpra
cticedltechniquelandlmostloflusluselbudgetslinlsomelwaylorlthelother.
lBudgetlisloneloflthelemphasizedltermslusedlinlefficientlmethodsloflplanninglandlcontrol
.lItlislemployed,lnoldoubt,linllargelbusinesslhouses,lbutlevenlthelsmalllbusinesseslarelusi
nglit,linlsomelinformallmanner.lBudgetlinlcommonlparlancelislunderstoodlaslplanninglf
orlexpenditure.
lAlbudgetlisldefinedlaslalcomprehensivelandlCo-
ordinatelplanlexpressedlinlfinanciallterms,lforltheloperationslandlresourcesloflanlenterpr
iselforlsomelspecifiedlperiodlinlthelfuture.
lInlthelviewsloflE.lH.lGrahamloflthelChryslerlCorporation,l“Oflthelmanagementltoolslus
edlbylChryslerlCorporation,lincludinglcomputers,lPERT,lOperationslResearchl(OR)lan
dlsystemlanalysislandlsolon,lbudgetslarelunldoublylthelmostlimportantltool”.
lBudgetlislalwayslexpressedlinltermsloflmoneylandlquantity.lTheltechniquesloflbudgetin
glarelimportantlapplicationsloflManagementlaccounting.
lBudgetslarelsetlinllargelbusinesslhouseslaslwelllaslinlfamilies.lItlislbasicallylalstatementl
oflexpectedlincomel&lexpenselunderlcertainlanticipatedloperatinglconditions.
OBJECTIVESlOFlTHElSTUDY
1. Tolstudylthelvariouslaspectsloflbudgetlandlbudgetarylcontrol.
2. Tolstudylthelperformanceloflthelorganizationlinltermsloflprofitability.
3. Tolstudylrevenuelreceiptlandlrevenuelexpenditureloflthelorganization
4. Tolstudylthelactuallperformancelwithlbudgetlperformance.
5. Tolfacilitatelcentralizedlcontrollwithldelegatedlauthoritylandlresponsibility.
SCOPElOFlTHElSTUDY
lThelscopeloflthelstudylislverylwidelaslitlrangeslfromlthelvariouslspecificlbudgetslofleac
hldepartmentltolthelMasterlBudgetlandlPerformancelBudgetloflthelorganization.
lMasterlBudgetlislal“Summaryloflthelbudgetlscheduleslinlcapsulelformlmadelforlthelpu
rposeloflpresentinglinlonelreportlthelhighlightsloflthelbudgetlforecast”.lPerformancelB
udgetlinvolveslevaluationloflthelperformanceloflthelorganizationlinlthelcontextloflbothls
pecificlaslwelllasloveralllobjectivesloflthelorganization.lAccordingltolthelNationallInstit
uteloflbanklManagementlPerformancelBudgetingltechniquelis,l“Thelprocessloflanalyzin
g,lidentifying,lsimplifyinglandlcrystallizinglspecificlperformancelobjectivesloflaljobltolb
elachievedloverlalperiodlinlthelframelworkloflthelorganizationlobjectives,lthelpurposelan
dlobjectiveslofltheljob.lTheltechniquelislcharacteristiclbylitslspecificldirectionsltowardslt
helbusinesslobjectivesloflthelorganization”.
METHODOLOGYlOFlTHElSTUDY
lCaselstudylmethodlhaslbeenladoptedltolcarryloutlthelstudy.lBothlprimarylandlsecondary
ldatalhavelbeenlusedltolcompletelthelstudy.lPrimaryldatalwaslcollectedlthroughlinterac
tionlwithlpersonnellwholarelworkinglinlfinancelandlAccountslDepartmentsloflthelorgani
zation.
lSecondaryldatalwaslcollectedlfromlthelcompanylannuallreportsl&lotherlrelevantlrecor
ds.lAfterwards,ltheldatalcollectedlislprocessedlandlanalyzedlbylusinglappropriatelanalyti
calltoolslandltechniqueslsolasltolexaminelthelefficiency.lThelpresentlstudylwaslcarriedlo
utlforlalperiodloflthirtyldayslinlalprestigiouslorganizationli.e.lVISAKAlINDUSTRIESlLIMI
TED.
LIMITATIONSlOFlTHElSTUDY
lThislcomparativelstudyllimitslitslcoverageltol7lyears.lInformationlpresentedlisllimitedlt
olthelsecondaryldatalinlthelformloflannuallreportslgeographically;lthelfieldlresearchlislli
mitedltolthelcitylHyderabadlandlSecunderabad.
lThelproposedlstudylmaylnotlbelfreelfromlcertainllimitation.lForlinstancelthellimitationl
ofltimelandlcostlcannotlbelignored.lAtltheltime,lthelfindingsloflthelstudylcanlbelappliedlt
olcomparablelfirmslandlnotltolincomparablelones.lBesideslthis,lbudgetedlamountslcalcu
latedlatlonelpointlofltimelmaylnotlbelinformativelasltheylsufferlfromlshort-lfluctuations.
CHAPTERi–iII
REVIEWiOFiLITERATURE
i
REVIEWiOFiLITERATURE
DEFINITIONiOFiBUDGET
iTheitermi“Budget”iappearsitoihaveibeeniderivedifromitheiFrenchiwordi“Baguette”iwh
ichimeansi“LittleiBag”ioriaicontaineriofidocumentsiandiaccounts.iAibudgeticanibeiseeni
asiani“Economiciplan”iforiaigiveniperiodiofitime.
CONCEPTiOFiBUDGET
iBudgetiisiasiquantifiediplaniforifutureiactivitiesi–
iquantitativeiblueprintiforiaction.iItiisireferrediasiaiplanirelatingitoiperiodiofitimeiexpress
ediinimonetaryiandiiniquantitativeiterms.
iTheiChartediinstituteiofiManagementiAccountants,i(CIMA)idefinedibudgetiasifollows:i
-i
iAiplaniexpressediinimoney.iItiisipreparediandiapprovediprioritoitheibudgetiperiodiandi
mayishowiincome,iexpenditureiofitheicapitalitoibeiemployed,imayibeidrawniupishowing
iincrementalieffectsiaiformeribudgetedioriactualifigures.
iAccordingitoiGordonishillingilaw,i“Aibusinessibudgetiisipre-
determinedidetailediplaniofiaction,idevelopediandidistributediasiaiguideitoicurrentiopera
tionsiandiasiaipartialibasisiforisubsequentievaluationiofiperformance”.
TheiEssentialsiofiaiBudgetiare:
Financialiandiquantitativeistatementiofitheiactioniplan.
Itiisiplanningideviceiandialsoiservesiasiaibasesiforiperformanceievaluationiandic
ontrol.
Itiisilaididowniprioritoitheibudgetiperiodiduringiwhichiitiisifollowediandibasedio
nirightsipolicy.
BUDGETiMANUAL
iAibudgetiManualilaysidownitheidetailsiofitheiorganizationalisetiup,itheiroutineiprocedu
resiandiprogrammersitoibeifollowediforidevelopingibudgetsiforivariousiitemsianditheidu
tiesiandiresponsibilitiesiofitheiexecutivesiregardingitheioperationiofitheibudgetaryicontr
olisystem.
iAibudgetimanualiisidefinediasiaidocumentischeduleioribookletiwhichisetsiout,iinterialia,
itheiresponsibilitiesioritheipersonsiengagediinitheiroutineiofianditheiformsiandirecordsire
quirediforibudgetaryicontrol.iBudgetsiareitoibeidrawnikeepingiiniviewitheiobjectivesiofit
heiorganizationigiveniinitheibudgetimanual.
iTheifollowingiareisomeiofitheimostiimportantimattersicoverediiniaiBudgetiManual.
Introductioniandibriefiexplanationiofitheiobjectives,ibenefitsiandiprinciplesiofib
udgetaryicontrol.
Organizationichartigivingitheititlesiofidifferentipersonnel’siwithifulliexplanatio
niofitheidutiesiandieachitoioperatingisystemsiandipreparationiofidepartmentalian
difunctionalibudgets.
Theientireiprocessiofibudgetingiprogrammeriincludingitheitimetableiforiperiodi
calireporting.
Lengthiofibudgetiperiodsiandicontroliperiodsishouldibeiclearlyistates.
Proceduresitoibeifollowedithroughoutitheisystemishouldibeiexplainediiniclearite
rms.
Outlineiofimainibudgetsianditheiriaccountingirelationships.
ExplanationiofiKeyibudgets.
Theiadvantagesitoibeiderivedifromitheiuseiofibudgetimanualiare:
Everyioneiknowsiiniwritingithatiwhatiisihisirole,iwhatiisitoibeidoneiandihowiitiisi
toibeidoneiinitheisystemiofibudgetaryicontrol.
Asieveryithingiisiiniwriting.iAmbiguityiisiavoidediandirelianceionimemoryiisieli
minated.
Asioneiofitheiobjectivesiofibudgetingiisicommunication,iitiisiimportantitoihaveib
udgetimanualisoithatieveryoneiinitheiorganizationicanireferitoiitiforiguidanceian
diinformationiaboutitheibudgetaryiprocess.
ADMINISTRATIONiOFiBUDGETS
iBudgetingitakesiupiailotiofimanagementitime.iTopimanagersiwantilowerilevelimanager
sitoiparticipateiinitheibudgetiprocess,ibecauseiloweri–
ilevelimanagersihaveivaluableiknowledgeiaboutitheidayi–itoi–
idayiaspectsiofirunningitheibusiness.iParticipatorialso.iCreatesigreatericommitmentiandi
responsibilityitowardsitheibudgetiamongilowerilevelimanages.
iTheiwidespreadiprevalenceiofibudgetsiindicatesithatitheiadvantagesiofibudgetingisyste
msioutweighitheiricost.iToigainitheibenefitsiofibudgeting.iManagementiatiallilevelsiofith
eicompanyishouldiunderstandiandisupportitheibudgetiandialliaspectsiofitheimanagement
icontrolisystem.
iBudgetsishouldinotibeiadministeredirigidly.iChangingiconditionsiusuallyicalliforichang
esiiniplans.iAimanagerimayicommititoitheibudget,ibutiaisituationimightidevelopiiniwhic
hisomeiunplannedirepairsiorianiunplannediadvertisingiprogramiwouldibetteriserveitheiin
iinterestiofitheicompany.iTheimanagersishouldinotideferitheirepairsiofitheiadvertisingiasi
aiwayiofimeetingitheibudgeti–
inotiifidoingisoiwillihartitheicompanyiinitheilongirun.iAttainingitheibudgetishouldinotibei
aniendiiniitself.
BUDGETING
iItiisiconcernediwithitheiimplementationiofitheiapprovediprogrammediwithinitheilong-
rangeiplan.iItiisitheiactiofipreparingibudgets.iBudgetingiisiaiwayiofimanagingiBusinessia
ndiIndustry.
CLASSIFICATIONiANDiTYPESiOFiBUDGETS
iTheibudgetsiareiusuallyiclassifieditoitheirinature.iTheifollowingiareitheitypesiofibudget
s,iwhichiareicommonlyiused.
1. ClassificationiaccordingitoiTime
Longi–itermiBudgets
Shorti–itermiBudgets
CurrentiBudgets
2. ClassificationionitheibasisiofiFunctions
OperatingiBudgets
FinancialiBudgets
MasteriBudgets
3. ClassificationsionitheibasisiofiFlexibility
FixediBudgets
FlexibleiBudgets
1) CLASSIFICATIONiACCORDINGiTOiTIME
Longi–itermiBudgets:itheibudgetsiareiprepareditoidepictilong-
termiplanningiofitheibusiness.iTheiperiodiofilong-
termibudgetsivariesifromifiveitoiteniyears.iTheilong-
termiplanningiisidoneibyitopilevelimanagement.iLongitimeibudgetsiareipreparedifori
someisectorsiofitheiconcernisuchiasicapitaliexpenditure,iresearchiandidevelopment,il
ong-
termifinancesietc.iTheseibudgetsiareiusefuliforithoseiindustriesiwhereigestationiperi
odiisilingii.e.imachinery,ielectricity,iengineeringietc.
Short-
termiBudgets:iTheseibudgetsiareigenerallyiforioneioritwoiyearsiandiareiinitheifo
rmiofimonetaryiterms.iTheiconsumer’sigoodsiindustriesilikeisugar,icotton,ietc.i
Useishort-termibudgets.
CurrentiBudgets:iTheiperiodioficurrentibudgetiisigenerallyiofimonthsiandiwee
ks.iTheseibudgetsirelateitoitheicurrentiactivitiesiofitheibusiness.iAccordingitoiIn
stituteioficostiandiWorksiAccounts,iLondoni“CurrentiBudgetiisiaibudgetiwhichii
siestablishediforiuseioveriaishortiperiodiofitimeiandiisirelateditoicurrenticonditio
ns.
2) CLASSIFICATIONiONiTHEiBASISiOFiFUNCTIONS
OperatingiBudget:iTheseibudgetsirelateitoidifferentiactivitiesiorioperationsiofiaifir
m.iTheinumberiofisuchibudgetidependsiuponitheisizeiandinatureiofitheibusiness.iThe
icommonlyiusedioperatingibudgetsiare:
SalesiBudget
ProductioniBudget
ProductionicostiBudget
PurchaseiBudget
RawiMaterialiBudgeti
LaboriBudget
PlaniUtilizationiBudget
ManufacturingiExpenseioriWorksiOverheadiBudget
AdministrationiandiSellingiExpensesiBudgetietc.
iTheiOperatingiBudgetiforiaifirmimayibeiconstructediinitermsiofiprogrammeioriresponsi
bilityiareas,iandihenceiconsistsiof:
ProgrammeiBudget
ResponsibilityiBudget.
ProgrammeiBudget:iIticonsistsiofiexpectedirevenueiandicostsiofivariousiproductsioripr
ojectsithatiareitermediasitheimajoriprogrammesiofitheifirmisuchiasibudgeticanipreparedif
orieachiproductilineioriprojectishowingirevenues,icostsianditheirelativeiprofitabilityiofit
heivariousiprogrammes.iProgrammeiBudgetsiare,ithus,iusefuliinilocatingiareasiwhereief
fortsimayibeirequireditoireduceicostsiandiincreaseirevenues.iTheyiareialsoiusefuliinidete
rminingiimbalancesiandiinadequaciesiiniprogrammeisoithaticorrectiveiactionimayibeitak
eniinifuture.
ResponsibilityiBudget:iWhenitheibudgetiofiaifirmiisiconstructediinitermsiofiresponsibi
lityiareasiitiisicalleditheiresponsibilityibudget.iSuchishowsitheiplaniinitermsiofipersonsir
esponsibleiforiachievingithem.iItiisiusedibyitheimanagementiasiaicontrolideviceitoievalu
ateitheiperformanceiofiexecutivesiwhoiareiini–
ichargeiofivariousicosticenters.iTheiriperformanceiisicompareditoitheitargetsi(Budgets),i
setiforithemiandiproperiactioniisitakeniforiadverseiresult,iifiany.iTheikindsiofiresponsibil
ityiareasidependiuponitheisizeiandinatureiofibusinessiactivitiesianditheiorganizationalistr
ucture.iHowever,iresponsibilityiareaimayibeiclassifiediunderithreeibroadicategories:
Costi/iExpenseiCentre
ProfitiCentre
InvestmentiCentre
FinancialiBudget:iFinancialiBudgetsiareiconcernediwithicaseireceiptiandidisbursement
s,iworkingicapitaliexpenditure,ifinancialipositioniandiresultsiofibusinessioperations.iThe
icommonlyiusedifinancialibudgetsiare:
CashiBudget
WorkingiCapitaliBudget
CapitaliExpenditureiBudget
IncomeistatementiBudget
StatementioriRetainediEarningsibudget
BudgetediBalanceiSheetioripositionistatementiBudget
MasteriBudget:iVariousifunctionalibudgetsiareiintegratediintoiMasteriBudget.i
TheiBudgetiisipreparedibyitheiultimateiintegrationiofiseparateifunctionaliBudget
.iAccordingitoiInstituteiofiCostiandiWorksiAccounts,iLondon,i“TheiMasteriBud
getiisitheisummaryiBudgetiincorporatingiitsifunctionaliBudget”.iTheiBudgetiOff
iceripreparesiMasteriBudgetiandiitiremainsiwithitheitop-
levelimanagement.iThisibudgetiisiuseditoico-
ordinateitheiactivitiesiofivariousifunctionalidepartmentiandialsoitoihelpiasiaicont
rolidevice.
3) CLASSIFICATIONiONiTHEiBASISiOFiFLEXIBILITY
FixediBudget:iTheifixedibudgetsiareipreparediforiaigivenileveliofiactivity;itheib
udgetiisipreparedibeforeibeginningiofitheifinancialiyear.iIfitheifinancialiyearistar
tsiiniJanuaryithenibudgetiwillibeiprepareiaimonthioritwoiearlier,iNovemberioriD
ecember.iTheichangesiiniexpenditureiarisingioutiofitheianticipateichangesiwillin
otibeiadjustediinitheiBudget.iTheseiisiaidifferenceiofiaboutitwelveimonthsiinithei
budgetedianiactualifigures.iAccordingiInstituteiofiCostiandiworksiAccounts,iLo
ndon,i“FixediBudgetiisiaibudgetiwhichiisidesigneditoiremainiunchangediirrespe
ctiveiofitheileveliofitheilevelifiactivityiactuallyiattained”.iFixedibudgetiareisuitab
leiunderistaticiconditions.iIfisalesiexpensesiandicostsicanibeiforecastediwithigrea
teriaccuracyithenithisibudgeticanibeiadvantageouslyiused.
FlexibleiBudget:iAiflexibleibudgeticonsistsiofiseriesiofiBudgetsiforidifferenceil
eveliofiactivity.iItitherefore,ivariesiwithitheileveliofiactivityiattained.iAiflexiblei
Budgetiisipreparediafteritakingiintoiconsiderationiunforeseenichangesiinitheicon
ditionsiofitheibusiness.
i
iAiflexibleiBudgetiisidefinediasiBudgetiwhichibyirecognizingitheidifferenceibetweenifix
ed,isemi-
fixediandivariableicostiisidesigneditoichangeiinirelationitoitheileveliofiactivity.iTheiflexi
bleibudgetsiwillibeiusefuliwhereileveliofiactivityichangesiformitimeitoitime.iWhenitheif
orecastingiofidemandiisiuncertainianditheiundertakingioperateiunderishortageiofimateria
ls,ilaborietc.ithisiBudgetiwillibeimoreisuited.
OPERATINGiBUDGETS
1)iSalesiBudget:iAiSalesiBudgetiisianiestimateiofiexpectedisalesiduringiaiBudgetiperio
d.iAisalesiBudgetiisiknowniasiainerveicenterioribackboneiofitheienterprise.iTheidegreeio
fiaccuracyiwithiwhichisalesiareiestimatediwillidetermineitheipracticabilityiofioperatingi
Budgets.iAisalesiBudgetiisitheistartingipointsioniwhichiotheribudgetsiareialsoibases.iAis
alesiBudgetilayidownipotentialisalesifiguresiinivalueiasiiniquantity.iItilaysidowniaicompr
ehensiveiplaniandiprogrammeiforisalesidepartment.iTheisalesimangeriisimadeiresponsib
leiforipreparingiSaleiBudget.iHeiusesiallipossibleifactorsitoibeitakeniintoiaccountiwhilei
preparingiaisalesiBudget.
2)iProductioniBudget:iProductioniBudgetiisibuiltiupiinitermsiofiquantitiesiandimoney.i
TheiquantitiesiareienterediatitheibeginningsiandiwhenitheiremainderiofitheiBudgetihasib
eenibuiltiupianditheicostiofiproductionicalculateditheicostsiareientereditoicompileiaiprod
uctionicostiBudget.iInipreparingitheiproductioniBudgetitheifollowingifactorsishouldibei
considered.
PrincipaliBudgetifactor,ie.g.iifitheisalesibeitheikeyifactorithenisalesiBudget,iothe
rwiseiotheriBudget.
Productioniplanningiandideterminationiofioptimumicapacity.
Theiopeningiandiclosingistocks.
Managementipolicyiregardingimakeioribuyioficomponents.
3)iProductioniCostiBudget:iAipurchaseiBudgetigivesitheidetailsiofitheipurchasesiwhic
himustibeimadeitoimeetitheineedsiofitheibusiness.iItiincludesialliitemsiofipurchase,isuchi
asirawimaterials,iindirectimaterialsiandiotheriequipment.iHowever,ipurchaseiBudgetifor
irawimaterialsiisitheimostiimportantianditheifollowingiareirequireditoibeiconsideringiinip
reparingithisiBudget.
4)iPurchaseiBudget:iAiPurchaseibudgetigivesitheidetailsiofitheipurchasesiwhichimusti
beimadeitoimeetitheineedsiofitheibusiness.iItiincludesialliitemsiofipurchase,isuchiasirawi
materials,iindirectimaterialsiandiotheriequipments.iHowever,ipurchaseiBudgetiforirawi
materialsiisitheimostiimportantianditheifollowingifactorsiareirequireditoibeiconsideringii
nipreparingithisiBudget.
Openingiandiclosingistocks
Unfulfillediordersiatitheibeginningiofitheibudgetiperiod.
Storageispace,ieconomicibuyingiquantityiandifinancialiresources.
Theipricesitoibeipaid.
4) MaterialiBudget:iAiMaterialsiBudgetishowsitheiestimatediquantitiesiasiwellicostsi
ofirawimaterialsiandicomponentsirequirediforiproducingigoodsiasiperiproductioniBu
dget.iAtitheistageiofipreparationiofimaterialsiBudgetiisiuseditoiobtainitheicostiofieac
himaterialiconsumed.iItiservesitheifollowingipurposes.
Itiassistsipurchasingidepartmentiiniplanningitheipurchases.
ItihelpsiinitheipreparationiofipurchaseiBudget
Itiprovidesidataiforirawimaterialsicontrol.
.6)iLabouriBudget:iThisiBudgetigivesiandiestimatesitheirequirementsiofidirectsilabouri
essentialitoimeetitheiproductionitarget.iThisiBudgetimayibeiclassifiediintoi“Labourirequ
irementibudget”iandi“LabouriRequirementiBudget”.iTheipurposeiofiLabouriBudgetiisit
oiassistiinitheiprovisioniofitheicorrectinumberianditypeiofi
Employeeiforitheiprojectedioutput.iOnceitheipreliminaryiclassificationiofilabouriintoiitsi
principaligradesihasibeenicarriediout,itheilabourirequirementsiforieachiproductiareitheni
setiwithitheihelpiofitimeiandimotionistudies.iFromitheitotalimean-
hourirequirediforiproductionilabourirequirementsiareiascertainediandifromitheiestimate
dirateiperihour,ilabouricostiperihour,ilabouricostiperiunitiisidetermined.
7)iPlantiUtilizationiBudget:iThisibudgetiindicatesithatitheiplaniandimachineryirequire
mentitoimeetitheibudgetediproductioniduringitheiperiod.iSuchiaibudgetiwillidetailitheim
achineiloadiinieveryidepartmentiandiindicateitheiextentiofiunderiorioveriloading.iThusi
managementimayigetiusefuliinformationiregardingitheieffectiveiutilizationiofiplantsiand
imachineryiinianiorganization.
8)iManufacturingiOverheadsiBudget:iThisiBudgetigivesianiestimateiofitheiworksiove
rheadiexpensesitoibeiincurrediiniaibudgetiperioditoiachieveitheiproductionitarget.iTheib
udgetiincludesitheicostiofiindirectimaterials,iindirectilabouriandiindirectiworksiexpenses
.iTheibudgetimayibeiclassifiediintoifixedicost,ivariableicostiandisemi-
variableicost.iIticanibeibrokeniintoidepartmentalioverheadicanibeiestimatedionitheibasisi
ofipastiinformationiafteritakingiintoiconsiderationitheiexpectedichangesiwhichimayiocc
uriduringitheiBudgetiperiod.iVariableiexpensesiareiestimatedionitheibasisiofitheibudgete
dioutputibecauseitheseiexpensesiareibounditoichangeiwithitheichangesiinioutput.
9)iAdministrationiCostiBudget:iAllitheiadministrationicostsirelatingitoieachiBudgetic
enterishouldibeiseparatelyianditheniincorporatediinitheiadministrationicostiBudget.iAive
ryiimportantiaspectiofipredeterminingiadministrationicostsiisitoimakeisureithatialliadmi
nistrativeifunctionsiareicarriedioutiasieffectivelyiasipossible.iThus,ithisibudgetirepresent
siforecastiofitheicostiofisellingiandiDistributioniforiBudgetirepresentsiforecastiofitheicos
tiofisellingiandidistributioniofibudgetiperiodiandiisiclearlyirelateditoitheisalesiBudget.iAl
liexpensesirelatingitoisellingiandidistributioniofitheivariousiproductsiasiindicatediinitheis
alesibudgetiareiincludediiniit.iTheseiexpensesiareibasedionitheivolumeiofisalesidistributi
onioverhead.iLong-
termiexpensesiadvertisementiareidividediintoifixediandivariableicategoriesiwithireferen
ceitoivolumeiofisale,iseparateiBudgetsiareiofisellingiandidistributionicostsiasicostiofitran
sportidepartmentiarei
includediinitheidepartmentaliproductionicostiBudgetiformicontrolipointiviewiratherithan
iincludingiinisellingiandidistributionicostsiBudget.
FINANCIALiBUDGET
1)iCashiBudget:iThisiBudgetigivesiandiestimateiofitheianticipatedireceiptsiandipaymen
tiofieachiduringitheiBudgetiperiod.iSo,ithisiBudgetiisidividediintoitwoiparts,ioneishowin
githeiestimatedicashireceiptioniaccountioficashisales,icrediticollectionsiandimiscellaneo
usireceiptianditheiotherishowingitheiestimateidisbursementioniaccountioficashipurchase
s,iamountipayableitoicreditors,iwagesipayableitoiworkers,iindirectiexpensesipayable,iBu
dgeted,iwagesipayableitoiworkers,iindirectiexpensesipayable,ibudgetedicapitaliexpendit
ureietc.iInishort,ieveryifactoriwhichiaffectsitheireceiptsiandipaymentsioficashiareitakenii
ntoiaccountsiinitheipreparationiofithisiBudget.
2)iCapitaliExpenditureiBudget:iTheiCapitaliExpenditureiBudgetigivesianiestimateiofi
theiamountioficapitalithatimayibeineedediforiacquiringitheifixediassetsirequirediforifulfil
lingiproductionirequirementsiasispecifiediinitheiproductionibudget.iTheiBudgetiisiprepa
rediafteritakingiintoiconsiderationitheiavailableiproductiveicapacities,iprobableirealloca
tioniofitheiexistingiassetsiandipossibleiimprovementiiniproductionitechniques.iSeparate
siBudgetimayibeipreparediforidifferentiitemsiofiassetsisuchiasiplantiandiequipmentiBud
get,ibuildingibudget,ietc.i
iTheicapitaliexpenditureiBudgetiisianiimportantiBudgetiprovidingiforiacquisitioniofiasse
ts,inecessitatedibyitheifollowingifactors:
Replacementiofiexistingiassets.
Purchaseiofiadditionaliassetsibecauseiofistartingiupiofinewilinesiofiprodu
ction.
Purchaseiofiadditionaliassetsitoimeetiaiproposediincreasesiiniproductioni
dueitoiincreaseiinidemand.
Installationiofianiimproveditypeiofimachineryisoiasitoireduceicostiofipro
duction.
Thus,iCapitaliExpenditureiBudgetienablesioneitoiknowiwhatinewifixediassetsiar
eineedediandiwhatiwillitheiricostsirateiofireturn.
Purposes:iTheiobjectivesiofiCapitaliExpenditureiBudgetiareistatedibelow:
Toienableitheicompanyitoiestablishisystemiofiprioritiesiiniexpenditure
Toicorrecticapacityiimbalances.
Toiprovideiaitooliforicontrollingicapitaliexpenditure.
Toimakeiproperifinancialiprovisionitoimeetiplannediexpenditure.
ToiprovideiBudgetiofidepreciationiandimaintenanceicostsiforiinclusionii
nitheidepartmentiexpenseiBudgets.
PERFORMANCEiBUDGETING:
i“PerformanceiBudgeting”ihadiitsioriginiinitheiU.S.AiafteriSecond
iWorldiWar.iItitriesitoirectifyisomeiofitheishortcomingsiinitheitraditionaliBudget.iInitheit
raditionaliBudgetsiamountsiareiearmarkediforitheiobjectsiofiexpendituresisuchiasisalarie
s,itravel,iofficeiexpenses,igrant-in-
aidietc.iInisuchisystemiofiBudgetingitheimoneyiconceptiwasigivenimoreiprominenceii.e.
iestimatingioriprojectingirupeeivalueiforitheivariousiaccountingiheadsioriclassificationio
firevenueiandicost.iSuchisystemiofibudgetingiwasimoreipopularlyiusediinigovernmentid
epartmentiandimanyibusinessienterprises.iButisuchisystemiBudgetingicontroliofiperfor
manceiinitermsiofiphysicaliunitsioritheirelatedicostsicannotibeiachieved.
iTheseidaysiBudgetsiareiestablishediinisuchiaiwayisoithatiitemiofiexpenditureiisirelatedit
oispecificiresponsibilityicenteriandiisicloselyilinkediwithiperformanceiofithatistandard.i
Developingiworkiprogramsiandiperformanceiexpectationsibyiassignediresponsibilityiisi
theiachievementiandiobjectsiofitheienterprise.iThus,iiniperformanceiBudgetingiclassific
ationiofiexpenditureifollowsiaithree-tieripatterniviz.iFunction-Programme-Activity.
AdvantagesiofiPerformanceiBudgeting:iTheifollowingiareitheimainiadvantagesiofiper
formanceiBudgeting.
Itipresentsiclearlyitheipurposeiandiobjectivesiforiwhichifundsiareirequired.i
ItigivesibetteriappreciationiofiBudgetingibyilegislature.
ItiimprovesiBudgetiformulationiprocess.
Itienhancesiaccountabilityiofitheiexecutives.
i
AiSystematiciApproachitoidevelopitheiperformanceibudget
ObjectiveiStru
cture
Organizational
Reviewi Structure
&
Control
Execution Develop
&i Function
RecordiKeeping Programs
DevelopiPhysicaliTar
getsi&iResourcesiInv
olvement:iPerforman
ceiRatios
ZEROiBASEiBUDGETING
iUnderiZeroiBaseiBudgetingimethods,ibeforeipreparingiaiBudgetiaibaseideterminedifor
miwhichitheiBudgetiprocessibegins.iQuiteioftenicurrentiyear’siBudgetiisitakeniasitheiba
seioritheistartingipointiforipreparingitheinextiyear’siBudget.iTheifiguresiinitheibaseiareic
hargediasiperitheiplaniforitheinextiyear.iThisiapproachiofipreparingiBudgetiisicalledi“Inc
rementaliBudgeting”isinceitheiBudgetiprocessiisiconcernedimainlyiwithitheiincreasesior
ichangesiinioperationsithatiareilikelyitoioccuriduringitheiBudgetiperiod.iForiexample,isal
esiofitheicurrentiyear’siBudgetiforisalesiwillibeicurrentiyear’sisalesiplusiandiallowanceif
oripriceiincreasesiandiexpectedichangesiinisalesivolumes.iTheimanidrawbackiofithisiapp
roachiisithatiitiperpetuatesitheipastiinefficiencies.
iZeroiBaseiBudgetingiisianialternativeitoiIncrementaliBudgeting.iItiwasiintroducediatiTe
xasiInstrumentsiiniUSAiini1969ibyipeteriphyrr,iwhoiisiknowniasitheifatheriofiZeroiBasei
Budgeting.iItiisimanagerialitooliandiisisteadilyigainingiacceptanceiinitheibusinessicomm
unity.iZeroiBaseiBudgetingiisinotibasedioniIncrementaliapproachiandipreciousifiguresia
reinotitakeniasitheibaseiforipreparinginextiyear’sibudget.iInstead,itheiBudgetifiguresiarei
developediwithizeroiasitheibase,iwhichimeansithatiaibudgetiwillibeipreparediasiifiitiisibei
ngiprepareiforiainewicompanyiforitheifirstitime.
iIniZeroiBaseibudgeting,ibudgetirequestsiforiappropriationiareiacceptedionitheibasisiofic
osti/ibenefitiapproach,iwhichiensuresivaleiforimoney.iIfiquestionilong-
standingiassumptionsiandisystematicallyiexaminesiandiperhapsiabandonsianyiunproduc
tiveiprojects.
iThisimeansithatithoseiactivitiesiwhichiareiofinoivalueifindinoivalueiinitheiforthcomingi
Budgetievenithoughitheseimightihaveibeenianiintegralipartiofitheipastibudgetipreparediu
nderitheitraditionaliapproach.iZeroiBaseibudgetingiiniwayiareitriesitoilocateithoseiactivit
iesinotiessential.
TheiimportantistepsiiniZeroiBaseiBudgetingiare:
IdentificationiofidecisioniunitsiiniorderitoijustifyiexpenditureiinitheiriproposediB
udget.
PreparationiofiDecisioniPackages.iEachipackageiisiaiseparateiandiidentifiablei
iactivity.iTheseipackagesiareilinkediwithicorporateiobjectives.
Rankingiofidecisionipackagesibasedionicostibenefitianalysis
Allotmentiofifundsibasedionitheiaboveiresultingibyifollowingipyramid-
rankingisystemitoiensureioptimumiresults.
ZEROiBASEDiBUDGETING
Thisiisimyipreviousileveliofiexpenditure
ThisiisiwhatiIiwantifo
riforthicomingiperiod
,iforireasonsienumera
MANAGER ted.
TheseiareitheiAdditionsirequiresitoim
eetitheiinflationaryieffectsiandiexpan
sioniprograms.
TOPiMANAGEMENT
i
TRADITIONALiBUDGETING
AiCertainiamountitoiSanctioniforiai
decisioniUnit.
T
O
P
i
M
M A
A N
N ThisiExpenditureiwillileaditoithese A
A iAdvertisements
G
G E
E M
R E
N
T
IfitheiProposaliisidiscarded,itheiresult
ORGANIZATIONiCHARTiFORiBUDGETARYiCONTROL
MANAGINGiDIRECTOR
BUDGETiCOMMITEE
BUDGETiDIRECTOR
Advertisingi MaseriBudge
Budget PlantiUtilizat t
ioniBudget
SellingiCost CapitaliExpe
nditureiBudg
et
Distributioni
Budget
PRELIMINARIESiINiTHEiINSTALLATIONiOFiBUDGETiSYSTEM
iPrerequisitesiforitheisuccessfuliimplementationiofiaibudgetaryicontrolisystemiareifollo
ws:i
1)iEstablishmentiofiBudgetiCenters:iAiBudgeticenteriisiaisectioniofientityiforiwhichic
ontroliofiexercisediandibudgetiprepared.iAiBudgeticenterimayibeiaidepartmentioripartith
ereiof.iBudgeticenterimustibeiclearlyidefinedibecauseiaiseparateiBudgetihasitoibeisetifori
eachisuchicenteriwithitheihelpiofitheidepartmenticoncerned.
2)iLinkingiofiBudgetirequirementsiwithichartiofiAccounts:iBudgetsiforidifferentibu
dgeticentersiareipreparedionistandardiforms.iIfirequirementsiofiformsiareilinkediwithich
artiofiaccountsiinformationiofidifferentiBudgeticentersiwhichiisiconsistentlyicompiledii
nvolvingiminimumilossiofitime.iSupposeiadvertisementiBudgetiisibeingicompilediandii
nformationiforimiscellaneousiexpenditureiisitoibeicollected.iItiwillibeianiessayiexerciseit
ogetherithisiinformation,iificodeiheadsitoibeireferreditoiinithisiconnectioniareispecifiedii
nitheiformioniwhichiinformationiforiBudgetsiisibeingicollected.
3)iPreparationiofiOrganizationaliChart:iAniOrganizationiChartishouldibeipreparedi
whichiclearlyishowsitheiplaniofitheiorganization.iEachimemberiofimanagementishouldi
knowitheiexactiscopeiofihisiauthorityiandiresponsibilityiandihisirelationshipitoiothersim
embers.iAniorganizationalichartiisistatementidefiningifunctionaliresponsibilitiesiofiexec
utives.iEachimemberiofimanagementishouldiknowitheiexactiscopeiofihisiauthorityiandir
esponsibilityiandihisirelationshipiwithiotherimembers.
TheiOrganizationiChartishows:i
Functionaliresponsibilityiofiaiparticulariexecutive
Delegationiofiauthorityitoivariousilevels,iand
Relativeipositioniofiaifunctionaliheadiwithiheadsiofiotherifunctions.
4)iEstablishmentiofiBudgetiCommittee:iInismalliorganizationiandiinibigiorganization
sihavingidifferentiunitsiatidifferentiplaces,iaiBudgeticommitteeiisiformedihavingireprese
ntationihavingidifferentiunitsiatidifferentiplaces.,iexecutive,ibudgetiofficeriandiheadsiofi
alliBudgetsicenters.iTheiBudgetiOfficeriactsiasiaisecretaryitoichairman.iOtherimembersi
ofitheiBudgeticommitteeiusuallyicompriseivariousiheadsiofifunctionalidepartments,ilike
isalesimanager,ipurchaseimanager,iproductionimanager,ichiefiaccountantietc.iasishownii
nitheiaboveiOrganizationaliChart.
5)iPreparationiofiBudgetiManual:iAiBudgetimanualihasibeenidefinedibyiC.I.M.A.iL
ondoniasi“Aidocumentiwhichisetsioutitheiresponsibilitiesiforitheipersonsiengagediinithe
iroutineiofitheiformsiandirecordsirequirediforibudgetaryicontrol”.iAibudgetimanualiisith
usiaistatementiofibudgetipolicies.iItilayidownitheidetailsitheiorganizationalisetiupiwithid
utiesiandiresponsibilitiesiofiexecutivesiincludingitheiBudgeticommitteeiandibudgetiDire
ctorianditheiproceduresiandiprogrammesitoibeifollowediforidevelopingiBudgetsiforivari
ousiactivities.iTheicontentsiofiaibudgetimanualiareisummarizediasifollows:i
Descriptioniofitheibudgetisystemiandiitsiobjectives.
Procedureiandiformsitoibeiusediinibudgetipreparation.
ResponsibilitiesiofiOperationaliExecutives,iBudgetiCommitteeiandibudgetiDire
ctor.
Budgeticalendar,ispecifyingidefiniteidatesiforicompletioniofieachipartiofitheiBu
dgetiandisubmissioniofitheireport.
Methodsiofiaccountingiandiaccounticodesiiniuse.
Procedureitoibeiadoptediinioperatingitheisystem.
Followi–iupiprocedure.
6)iBudgetiPeriod:iBudgetiperiodiisitheilengthiofitimeiforiwhichiaiBudgetiisipreparedian
dioperated.iBudgetiperiodsivaryibetweenishort-termiandilong-
termiandinoispecificiperiodicanibeilaididowniforiallibudgets.iItivariesiamongiconcernsia
ndiindustriesiforiseveralifactors.iWhetheriaibudgetiisilong-termediorishort-
termed,iitiisitoidecideiprimaryitheseitwoifactors:i
Typeiofibusiness.
Amountioficontrolirequired.
7)iDeterminationiofitheikeyiFactor:iAlsoiknowniasilimitingifactor,igoverningifactoria
ndiprincipaliBudgetifactor,itheikeyifactorimeansitheifactor,iwhichilimitsitheisizeiofioutp
ut.iItiisidefinediasi“theifactoritheiextentiofiwhoseiinfluenceimustifirstibeiassessediiniorde
ritoiensureithatifunctionaliBudgetsiareicapableiofifulfillment”.iSuchiaifactoriisiofivitalii
mportantiandieffectsialliBudgetsitoilargeiextent.
8)iBudgetiOfficer:iTheiChiefiExecutive,iwhoiisiatitheitopiofitheiorganization,iappointsi
someipersoniasiaibudgetiOfficer.iTheiBudgetiOfficeriisiempowereditoiscrutinizeitheiBu
dgetsiprepareibyidifferentifunctionaliheadsianditoimakeichangesiinithem,iifitheisituationi
soidemands.iTheiactualiperformanceiofidifferentidepartmentsiisicommunicateditoitheib
udgetiOfficer.iHeideterminesitheidepartmentsiareicommunicateditoitheiBudgetiOfficer.i
HeideterminesitheideviationsiinitheiBudgetsianditakesinecessaryistepsitoirectifyitheidefi
cienciesiifiany.iHeiworksiasico-
coordinatoriamongidifferentidepartmentsiandimonitorsitheirelevantiinformation.iHeials
oiinformsitheitopimanagementiaboutitheiperformanceiofidifferentidepartments.iTheiBud
getiOfficeriwillibeiableitoicarryioutihisiworkifullyiwellionlyiifiheiisiconversantiwithithei
workingiofitheidepartment.
9)iPatronageifromiTopiManagement:iForitheitrueisuccessiofibudgetaryiactivities,iim
petusiandidirectionimusticomeifromitheitopimanagement.iIfiinvolvementiofitopimanage
mentiisimissing,iitiwillibeidifficultiforiBudgetiOfficeritoibringirounditheireluctantilineim
anagersitoithisiwayiofithinking.iThus,irightiformitheistart,iactivitiesishouldibeiinitiatedii
nisuchiaimannerithatiinvolvementiofitopimanagementiinibudgetaryiactivitiesibecomesia
pparent.i
CONCEPTiOFiBUDGETARYiCONTROL
iBudgetaryiControliandiBudgetingiareiofteniusediinterichangeablyitoireferitoiaisystemiof
imanagementicontrol.i“BudgetaryiControl”iimpliesitheiuseiofiaicomprehensiveisystemi
ofibudgetingitoiaidimanagementiinicarryingioutiitsifunctionsilikeiplanning,ico-
ordinationiandicontrol.iAccordingitoiC.I.M.A,iLondoni“BudgetaryiControliisitheiestabli
shmentiofibudgetirelatingitoitheiresponsibilitiesiofiexecutiveiofiaipolicyianditoicontinuo
usicomparisoniofitheiactualiwithitheibudgetediresults,ieitheritoisecureibyiindividualiacti
onitheiobjectioniofipolicyioritoiprovideiaibasisiforiitsirevision”.
iAccordingitoiBrowniandiHowardi“BudgetaryiControliisiaisystemioficontrollingicostsiw
hichiincludesitheipreparationiofibudgets,ico-
ordinatingitheidebtsiandiestablishingiresponsibilities,icomparingiactualiperformanceiwi
thitheiBudgetiandiactingiuponiresultsitoiachieveimaximumiprofitability.
CharacteristicsiofiBudgetaryiControl:iTheimainicharacteristicsiareiasifollows:i
EstablishmentiofiBudgetsiforieachifunctionioridepartmentifitheiorganization.
ComparisoniofiactualiperformanceiwithitheiBudgetsionicontinuousibasis.
Analysisiofivariationsiofiactualiperformanceiformithatiofitheibudgetediperfo
rmanceitoiknowitheireasonsithereiof.
Co-OrdinaliFeatures:iTheithreeico-
ordinalifeaturesiofiai“BudgetaryiControl”iareiasifollows:i
Planning
Co-ordination
Control
iTherefore,iBudgetaryicontroliembracesialliandiiniadditioniincludesisciencesiofiplannin
githeiBudgetsitoieffectsianioverallimanagementitooliforitheibusinessiplanningiandicontr
ol,iquotesiRowlandiandiWilliam.
ObjectiveiofiBudgetingiControl
iBudgetaryicontroliimprovesiplanningiandiinico-
ordinationiandihelpsiinicontrol.iTheireasonsiforiproducingibudgetsiareiasifollows:
1) Toiaidiplanningiofiannualioperation.i
2) Toico-
ordinateitheiactivitiesiofivariousipartsianditoiensureiharmoniousiconditionsiprev
ailsiinitheiorganizationiwithieachiother
3) Toicommunicatesiplansitoitheivariousiresponsibilityicenterimanagers.
4) Toimotivateimanagersitoistriveitoiachieveitheiorganizationaligoals.
5) Toicontroliactivities.
6) Toievaluateitheiperformanceiofimanagers.
Characteristicsiofiaigoodibudgeting
1) Budgetingiprocessishouldibeibackediandisupportedibyitheichiefiexecutiveiofiani
organization.i
2) TheiOrganizationigoalishouldibeiqualifiediandiclearlyistated.iTheseigoalsishould
ibeiwithinitheiframeiworkiofiorganizationiiniplans.
3) Thereishouldibeiproperifixationiandidelegationiofiauthorityiandiresponsibility.
4) Theipersonsiforiexecutioniofibudgetishouldiparticipateiinibudgetipreparation.i
5) TheiBudgetishouldibeirealistic.iItishouldipresentigoalsithatiareireasonablyiattain
able.
6) Aigoodisystemiofiaccountingiisialsoiessentialitoimakeitheibudgetingisuccessful.
7) Theibudgetishouldicoveriallitheiphasesiofitheiorganizationiandibeicontinuousiex
ercise.
8) Periodicireportishouldibeiprepared.iComparingibudgetiandiactualiresultsii.e..,ith
ereishouldibeieffectiveifollowiup.
9) Clear-
cutiorganizationalilinesishouldibeiestablishedianditheiemployeesishouldibeiimpa
iredibudgetingieducation.
10) Theibudgetingisystemishouldibeibasesioniinformation,icommunicationiandiparti
cipation.
RequisitesiforiaiSuccessfuliBudgetaryiControliSystem
1) Theibudgetsiareiuseditoirealizeiobjectivesiofitheibusiness.iInitheiabsenceioficlear
igoals,itheibudgetsiwillialsoibeiunrealistic.
2) Budgetipreparationiandicontroliisidoneiatieveryileveliofimanagement.iEveryitho
ughibudgetsiareifinalizediatitopilevelibutitheiinvolvementiofipersoniformiloweril
evelsiofimanagementiisiessentialiforitheirisuccess.iThisinecessitatesiproperidele
gationsiofiauthorityiandiresponsibility.
3) Anieffectiveisystemioficommunicationiisirequirediforiaisuccessfulibudgetaryico
ntrol.
4) Budgetaryicontrolimayinotibeitakenionlyiasicontrolideviceibyitheiemployeesibuti
itishouldibeiusediasiaitooliimprovesitheiriefficiency.
5) Budgetingiisidone4iforieveryisegmentiofitheibusiness.iItiwillialsoirequireitheiacti
veiparticipationiandiinvolvementiofialliemployees.iTheisuccessiofibudgetaryico
ntrolisystemsidependsiuponitheiparticipationiofialliemployeesiofitheiorganizatio
ns.
6) Flexibilityiinibudgetsiisirequireditoimakeithemisuitableiunderichangedicircumst
ances.iBudgetsiareipreparediforitheifuture,iwhichiisialwaysiuncertain.iFlexibility
iwillimakeitheibudgetsimoreiappropriateiandirealistic.
7) Allipersonsishouldibeimotivateditoiimproveitheiriworkingisoithatibudgetingiisisu
ccessful.iAiproperisystemiofimotivationishouldibeiintroducediforimakingithisisy
stemiaisuccess.
AdvantagesiofiBudgetaryiControl
TheiBudgetiprogrammeiforcesitheimanagersiintoiplaniahead.
Iniforcesiearlyiconsiderationiofibasicipolicies.
Allimembersiofitopimanagementiparticipateiinibudgeticommittee.iForithisireaso
nieveniplanningiaidepartmentalileveligetsibenefitsiofiexperienceiofiseasonediexe
cutives.
Managementiisiforcesitoiputidowniinicoldifigures,iwhatiisimeansibyisatisfactoryi
results.
Itidemandsitheimostieconomicaliuseiofilabour,imaterials,ifacilitiesiandicapital.
Iniinculcatesiaihabitiofitimely,icareful,iadequateiconsiderationsiofiallifactorsibef
oreireachingiimportantidecisions.
Theiuseiofibudgetipromotesiunderstandingiofitheiproblemsiofico-workers.
Itifacilitatesiperiodiself-analysisiofitheiorganization.
Theiuseiofibudgetsiremovesicloudsiofiuncertaintiesiforilowerilevelsiofimanagem
entiregardingibasicipoliciesiandiobjectives.
Managementiisiforceditoigiveitimelyiandiadequateiattentionitoitheieffectiofichan
gingibusinessiconditions.
Budgetingico-
ordinatesitheiactivitiesiofivariousidepartmentiandifunctionsiofitheibusiness.
Budgetingicontroliaimsiatimaximizationiofiprofitsithroughicarefuliplanningiandi
control.
Itidirectsicapitaliexpenditureiinimaximizationiofiprofitsithroughicarefuliplanning
iandicontrol
Itidirectsicapitaliexpenditureiinitheimostiprofitableidirection.
Budgetaryicontrolisystemicreatesinecessaryiconditionsiforitheiintroductioniofist
andardicastingitechniques.
Aibudgetaryicontrolisystemiassistsiinidelegationiofiauthorityiandiassignmentiofir
esponsibility.
LimitationsiofiBudgeting
Budgetingicannotitakeiplaceiofimanagementibutiisionlyiaitooliofimanagementith
eibudgetishouldibeiregardedinotiasiaimaster,ibutiasiaiservant.
Aibudgetiprogrammeimustibeidynamiciandicontinuouslyidealiwithitheichainingi
businessiconditions.iBudgetsiwilliloseimuchiofitheiriusefulnessiifitheyiacquireiri
gidityiandiareinotirevisediwithitheichangingicircumstances
Budgetingiisianiexpensiveitechnique.iTheiinstallationiandioperationiofitheibudg
etaryicontrolisystemiisicostlyiaffairiasiitirequiresitheiemploymentiofispecializedi
staffiandiinvolvesiotheriexpenditureiwhichismalliconcernimayifindidifficultitoiin
cur.
Estimatesiareiusediasibasisiforibudgetiplaniandiestimatesiareibasedimostlyioniav
ailableifactsiandibesetimanagerialijudgments.iSinceiailotiofihumanielementiisiin
volvediiniexercisingimanagerialijudgment.iItiisibutinaturalitoigiveisomeiallowan
ceiinterpretationiandiutilizationiofiestimatediresults.iBudgetingibasedioniinaccur
ateiforecastsiisiuseilessiasiaiyardstickiforitheimeasuringiofitheiactualiperformanc
e.
Theicircumstancesiareiconstantlyichangingiandithereforeibudgetsiandibudgetary
itechniquesiwillinotibeiuseful,itillitheyiareicontinuallyiadapted.
Budgetaryicontrolicannotireduceitheimanagerialifunctionitoiformals.iItiisionlyiai
managerialitool,iwhichiincreaseieffectivenessiofimanagerialicontrol.
Theiuseiofibudgetsimayileaditoirestrictediuseiofiresources.iBudgetsiareioftenitak
eniasilimits.iEffortsimay,itherefore,inotibeimadeitoiexceeditheiperformanceibeyo
nditheibudgeteditargets,ievenithoughiitimayibeiphysicallyipossible.
THEiBUDGETINGiPROCESSiINiNON-PROFITiMAKINGiORGANIZATION
iItinormallyibeginsiwithitheimangersiofitheivariousiactivitiesicalculatingitheiexpectedico
stiofimaintainingicurrentiongoingiactivitiesianditheniaddingitoithose,iwhichiareiconsider
edidesirable.i
iChurches,ihospitals,icharitiesiandiotherino-
profitimakingiorganizationsiproduceiestimatesiforiunderstandingiactivitiesiandilaterifin
ditheimeansitoifinancesithen,iorieveniadjustitheiactivitiesitoitheiavailableifinancialiresou
rces.iOnceidifficultyiiniitiisithatioutputicannotibeimeasurediinimonetaryitermsii.e.,iweica
nnotimeasureiqualityiamountiandiservicesirendered.
predominantly in material and veneer items in view of its quality and strength.
portrayal The expression "concrete" begins from the Latin word "Caementum", which
implies cleaved stone. Bond depicts a substance, which will respond synthetically
In fiber concrete there is a fiber support, which adds to influencing the fiber-to bond
material much more grounded. Together with a precisely arranged creation process,
It is basically because of its capacity, execution and business value.[2] Fiber concrete
sheets which are proposed for applications where they might be liable to warm, high
research center in Europe, some fiber concrete sheets just accompany Fire
Material history Fiber-fortified bond items were designed in the late nineteenth
century by the Austrian Ludwig Hatschek. He blended 90% bond and 10% asbestos
strands with water and ran it through a cardboard machine, framing solid thin sheets.
Initially, the fortifying strands were of asbestos and the material was regularly utilized
(stomach area). Thus, asbestos utilize was dynamically precluded and more secure
fiber options were created, basically cellulose, to permit proceeded with misuse of the
generally recognized focal points of fiber concrete. Fiber concrete items were among
thought to be immobilized in the bond and hence less inclined to be discharged in the
earth, suspended noticeable all around, and breathed in the lung than in different
fiber-bond items, and by long haul disintegration of the material after it has been
presented to air weathering and wind, which makes the concrete corrupt. Word related
wellbeing concerns and the security of specialists in the fiber-concrete plants have at
long last prompted the dynamic disposal of asbestos from these products.[1] Clients
of fiber concrete sheets looking for elite and solid green building materials should
source items having been tried by authorize research centers and demonstrated that
they are 100% free from asbestos or other hurtful materials, for example, sepiolite,
materials. The principle application zones are material and cladding. The rundown
applications – tile supporter sheets • Fire security • Partition dividers • Window ledges
• Ceilings and floors Outside cladding: • Flat sheets as base as well as compositional
wind shields, divider copings, and soffits • Corrugated sheets • Slates as building full
and incomplete confronting • Underroof • Planks Material: • Slates • Corrugated
connections (what has a place with what) • List of scholastic teaches and sub-
of Roget's Thesaurus—articles sorted out into a framework in light of six classes, with
of arrangements of related (things) • Two of the broadest thing list accumulations are:
o Lists of nations and regions and numerous rundowns by nation o Lists of individuals
commemorations—e.g.
2015—records eminent individuals who kicked the bucket this year WEHRHAHN
The fiber concrete creation process has persistently been additionally created to
diminish material and vitality utilization figures. Process related cut-off materials and
rejects are promptly reused all the while. Surplus water goes through a treatment plant
and returns into the creation procedure. For the creation of the substantial assortment
of sheets, two innovations have ended up being reasonable: Air cured (CC) fiber bond
sheets are ideal for material items and all applications where the sheets are
Autoclaved (CCA) sheets are the decision for façades, cladding and every single
concrete and fillers. A mix of virgin cellulose and manufactured strands, for example,
• CCA = Cellulose Cement Autoclaved Sheets CCA sheets are produced from
concrete, finely ground silica sand and a few added substances. Virgin cellulose is
compacted in a solitary sheet or stack press. Squeezing expands the sheet thickness
Squeezing gives an exceptionally smooth surface wrap up. Which innovation for
which item? CC sheets for CCA sheets for Material (ridged or level) Lap siding (with
timber design, wood grain or smooth) Façades Façades Fencing Fencing - External
base for mortar - All inside applications Plant limit extend Market Capacities t/hour
Number of sheeting machine barrels Sheeting machine width Small 2 - 3 2 single
items, for example, fiber-concrete sheets, circulated air through solid pieces and
Sand pounding, sand slurry dosing and also autoclaves, programmed weight control
Company was fused under the Indian organizations Act, 1956 on eighth June.1985 As
Visaka Asbestos concrete items Limited. With influence from ninth August 1990, the
The organization is a Rs.135 Crores turnover, profit paying Company occupied with
the matter of Building Products and Synthetic Blended Yearns. PROMOTERS: The
PROCESS AND TECHNOLOGY: The Company's Spinning unit utilizes the most
recent turning machines reporting in real time Jet Spinning Technology obtained from
Murata of Japan and Visaka is the greatest pioneer of Air Jet Spinning on the planet
with the most elevated Productivity and effectiveness. The Company two Asbestos
Cement Sheet Manufacturing Units working at over 125% of limit use with ISI
aceditation.These units utilize a constant innovation.
Area : The Company's Building Product plants are situated at Yelumala town,
COMPANYiPRODUCTS
iVisakaiIndustriesiainameithatiisiSynonymousiwithiqualityiandiStrength.
AiCompanyithatipridesiitselfionitheiexcellenceiofiitsiproducts,iitsisuperioritechno
logy.iAndimostiosialliitsiprofessionaliexertise.iAllithisicombinesitoiconfirmitheiu
ndisputedifactithatiVisakaiproductsiareihighlyiappreciatediforitheirieconomyiandi
durabilityiandiprotectioniforiallikindsiofiseasons.iTheyiManufactureiAsbestosishe
etsitoiinternationalistandardsiatianiaffordableicost.
Sheetiprofile:
iISIiSPECIFICATIONiTECHNICALiDATA
iPitchi:146imm MaximumiRailispacingifor
i-0.5 verticalicladdingi:1.7iM
iDepthi:48imm i+6 SelectioniModulusi
3
i:ZBi:75icm
i
i-2
3
iZTi85icm
i+3
iOveralliWidthi:1050imm MomentiofiRupture
2
i-5 i:200kg/cm
i+10
i-5
Technologyi&iQualityicontroli:
iVisaka’sihigh-
techiAsbestosiCementiplantiisiaifullyiautomatedifactoryiincorporatingitheilargesti
andimostisophisticateditecjnology.iResultingiiniconsistencyiiniphysicalipropertiesi
andistrength,iwhichifariexceedsitheistandardsiprescribedibyiI.S.I
CustomeriServicei:
iTheiVisakaipersonalisedicustomeriserviceiisigeareditoiensureicustomeris
atisfication.iTheimarkettingianditechnicaliteamiworksicloselyiwithitheicusto
mer,iidentifyingihisineeds,ihelpingiiniRoofiDesign-
Installationiandikeepiniinicloseicontactibeforeiandiafteriheibuysitheiprodu
cts.iVisaka’sicustomeriserviceiisifurtherisupportedibytheiristockistsiwhoiar
eiselectediforitheiriintegrityiandirepute.iTheyiareialsoitraineditoiprovideite
chnicaliadviceitoiclients,isuchiasiadviceioniEstimating,iInstallationietc.,itot
allyifreeioficost.
BudgetiDepartmentiofiVisaka’s
iAiconcernimustihaveianiorganizationichart.iThisinecessaryiiniorderitoihaveiclea
riideaiofiauthorityiandiresponsibilityiofiChiefiExecutiveisoithatitheyimayibeinoic
onflictsiamongiFunctioniExecutiveiforishrinkingiresponsibilityiandimakingiother’s
iresponsibilitiesiforipooriperformances.iInipreparingiMaintainingiandiadministratin
githeiBudgetisectioniatiSSEiconsistsiofianiAccountsiOfficerianditwoiassistantsig
uidedibyioneiDeputyiControlleriofiAccountsiwhoiwillibeisupervisedibyijointicont
rolleri(F&A)iwhoiisitheiresponsibleipersonifromiFinanceiWingitoipresentitheiBu
dgetitoitheiExecutiveiCommitteeianditheiHeadiofiUnitiViz,iChiefiExecutive.
iAfteritheiapprovaliofitheiChiefiExecutive,itheiBudgetiproposalsiwillibeiplacedib
eforeivisakaiBoarditheiBudgetiproposalsiwillibeisubmitteditoitheiDepartmentiofi
AtomiciEnergy,iMumbaiiforiapproval.
iTheiDepartmentiafterireceiptiofiproposalsiscrutinizeitheirequirementsiofieachiuni
tiandiafteriaidetailedidiscussion,icompilediproposaliofitheidepartmentiasiaiwholei
willibeiplacesibeforeiAtomiciEnergyiCommission.iInirespectiofitheicapitaliprojec
tsitheiapprovaliofitheiplanningiCommission.iInirespectiofitheicapitaliprojectsithei
approvaliofitheiplanningiCommissionihasitoibeiobtainedibeforeiexecutioniofianyi
ongoingiforinewiproject.
FunctioniofiBudgetiWingiatiSSE
IssueiofiBudgetiCircular.
CollectioniofidatairelatingitoiactualiReceiptsiandiExpenditureiofipreviousi
year.
CompilationiofiestimatesiofiReceiptsiandiExpenditureireceivedifromivario
usiauthorities
Preparationiofivariousisupportingibreak-
upistatementiofiReceiptsiandiExpenditure
CompilationiofibudgetiEstimatesiinirespectiofiReceipts,iRevenueiExpendit
ure,iCapitaliExpenditure,iLoansiandiadvances,iProvidentiFundi(Receiptsian
diPayments)ietc.
Monthly/Quarterlyiphasingiofireceiptsiandiexpenditureiforiperiodicalirevie
wiandifinancialicontrol.
PreparationiofimonthlyireportiofiReceiptsiandiExpenditureiwithisupportive
ibreakupistatements.
PreparationiofiAnnualiplaniproposalsiinirespectiofiCapitaliProjectsi(bothio
ngoingiandinew)iforiapprovaliofiDepartmentiasiwelliasiplanningiCommiss
ion.
IntimationiofiprogressiofiexpenditureiinirespectiofiCapitaliProjectsitoithei
concernediprojectiCo-ordinates.
ReviewiofireceiptsiExpenditureiforifinaligrantiofiexpenditureiandisurrende
riofifunds.iIfiany.
PreparationiofiAppropriationiAccounti(budgetiEstimateiandiActualiExpend
itureiandiVariationsianditheireasonsithereiof)
Correspondenceiwithiconcernediauthoritiesiinirespectiofiallitheiabove.i
PreparationiofibudgetiatiVisaka’si
iTheiBudgetiofitheiorganizationiisibeingipreparediforitheifollowing.iAidetailedie
stimateiofitheifollowingiisitakeniintoiconsideration.
Receipts
ExpenditureioniRevenueiAccount
TheiExpenditureioniCapitaliAccount
TheiBudgetiestimatesishalligiveitheianticipatedireceiptsiandiexpenditureifo
ritheiensuringifinancialiyeariunderieachimajor,iminor,isubiandidetailediheadsi
ofiaccounts.
BudgetiProposaliatiVisaka’si
i
iTheiproposalsiforitheiensuringiyearihaveitoibeisubmitteditoitheidepartmentibyi
middleiofiAugustieveryiyeariunderivariousiprescribediformatsitoienableitheidepar
tmentsitoiconsolidateitheiproposalsiofiallitheiunitsiofiDepartmentiofiAtomiciEner
gyiandisubmissionitoitheiunitsiofiDepartmentiofiAtomiciEnergyiandisubmissionit
oitheibudgetiandiplanningiDivision.iMinistryiofifinance,iNewiDelhiibyitheiendio
fiNovember.iAfteriscrutinyiandidiscussions,ibudgetiandiplanningiDivisioniwillifin
alizeitheioverallibudgetiforitheidepartmentitentativelyithisihasitoibeivoteibyithei
parliament,iMinistry-wise.
iWhileisubmittingitheibudgetiproposals,ireviewiofitheicurrentiyear’siexpenditurei
withiregarditoiallocatedifundsi(votedibyitheiparliament)ihasitoibeimadeibyieachi
unitiandiassess:i
1)iWhetheritheiprovisionsiapprovediareisufficientitoimeetitheiexpenditureiunderie
achiobjectihead.
2)iWhetherianyiadditionaliprovisionsirequiredidueitoiunforeseenicircumstancesilik
eisteepihikeiinipricesiofisuppliesiandimaterials,iAdditionaliexpenditureioniaccoun
tiofirevisioniinipayiscaleietc.iOrianyiurgentirequirementiofimachineryioriequipm
entiorisuppliesihasiariseniwhichiwasinoticontemplatediearlieriandiwhichiisinowii
nevitableiforirunningitheiunitietc.
3)iWhetherianyisavingiisipossibleifromitheiapprovediprovisionidueitoidelayiiniar
rivaliofianyiofitheimachineryioritheimaterial,ipostponementiofianyimajoriexpendi
tureioriprojectiimplementationietc.
4)iReviseitheiprovisioniaccordinglyiandireviseirequirementiunderieachiobjectihea
dilikeisalaries,iover-
timeitravel,imachineryisuppliesiandimaterialsietc..,ihasitoibeimadeiandisubmitted
itoitheidepartmentiforiapproval.iThisiisicallediRevisediEstimatesiofitheicurrenti
year.
iTheidepartmentiafterireceivingiofiproposalsiscrutinizeitheirequirementsiofiea
chiunitiandiafteridiscussionsiprovisionallyiapprovesitheirevisediestimatesiandi
allocatesieitheribyitransferringitheiunspentiamountifromiotheriunitsiifiavailabl
eioriifinoifundsicouldibeiaugmentediwithinitheidepartmentirequestsitheiMinis
tryioriFinanceiforigrantiofiadditionalifundsigivingitheivalidireasonsiforirevise
diEstimatesiofitheidepartment
iTheiministryiafteridueiscrutinyiallocatesiadditionaliprovisionitoitheidepartme
ntibyimakingitheioveralliadjustmentsiinitheivotedibudgetiofitheiUnioniGover
nment’siprovisionsiandigetsitheiapprovaliofitheiparliamentiaftericompletioniof
itheiyearibeforeisubmissioniofitheicurrentiyear’siBudgetitoitheiparliament.iTh
isiisiknowniasi“AppropriationiBill”i(Reappropriationiofifunds)iwhichiwillibei
approvedibyitheipresidentionipassingiofitheibillibyitheiparliament.
iSeparateibudgetiproposalsiwillibeisubmittediunderiresearchisectorsiViz..,iInd
ustryiandiMineraliSectors,iseparatelyiforibothiplaniExpenditurei(CapitaliProje
cts)iandiNon-
Plani(Revenue)iExpenditure.iTheiplaniExpenditureiprovisionsiareitoibeiappro
vedibyitheiplanningiCommissioniforiutilizationiofifundsiasiproposedibyitheiu
nitsioritheidepartmentiwelliiniadvance.
iTheiplanningiCommissioniwilliscrutinizeialliplaniproposalsiduringiDecember
ioriJanuaryiforitheiensuringiyearitakingiintoiaccountitheinecessityiofiprojecti(
Forinewiones)iandistatusiofitheiprojectiinirespectiofion-
goingiproject.iDepartmenti/iMinistryi–
iwiseiforiwhichidifferentiformatsiwereiprescribed.
BudgetiPeriodiiniVisaka’si
iBudgetiperiodiisitheiperiodiforiwhichiaibudgetiisipreparediandiemployed.iIniter
msiofitime,ibudgeticanibeishortiandiLong-termsiBudget.iShort-
termiBudgetiisipreparedionitheibasisiofiday-to-
dayiadministrations.iTheyiareigenerallyipreparediiniphysicaliasiwelliasiinimonitor
y.iLong-
termiBudgetiisidesignediforiailongiperiod.iThisiisipreparediinitheicaseiofimajori
projectsischemesitoiknowiiniadvancesitheiprobableicapitalicommitments.
iIniSSE,iBudgetiisipreparediforibothiLong-termi(Fiveiyearsiplan),ishort-
termi(OneiyeariPlan)iandiisireviewediperiodically.
TheiLong-
termsiBudgetiisimadeigenerallyiforitheicapitaliprojectsibothiforiongoingia
ndinewiprojectsiandiactioniplansiwillibeidrawniupiforisettingiupiofinewi
projectsiwithiaiviewitoiattainitheipredeterminediobjectsitoimeetitheifuture
irequirements.iTheiplaniproject,ihaveitoibeifirstiapprovediforitheiprojects,
iwillibeiasineedibasediandirevisediasiperitheiavailabilityiofifunds.
WhileipreparingitheiBudgetiestimatesiforitheiensuringiyear,iaireviewiofiB
udgetiproposalsimadeiforitheicurrentiyeariwillibeitakeniupiduringimidiJul
yiandiAugustiorieachiyear.iAnyirevisioniinitheiestimatesiwillibeiproposed
ibasedionitheianticipatediexpenditureitilliendiofifinancialiyear,ithisiisikno
wniasiRevisediEstimatesiforitheicurrentiyear.
Pre-requisitesiMetiByiVisaka’siforiEffectiveibudgetaryiControliSystem
iIniorderitoiensureieffectiveiandisuccessfuliimplementationiofibudgetaryicontrolis
ystemiiniorganization,ivisakaiManagementihasifulfilleditheifollowingipre-
requisites.
Theiobjectives,iplansiandipolicesiofitheiorganizationiareispeltioutiinicleari
cutitermsiwithoutiambiguity.
TheiorganizationichartiiniSSE,iclearlyidefinesitheidutiesiandiresponsibiliti
esiforieachileveliofiexecutives.
IniBevconitheioutputileveliforiwhichiBudgetsiareifixediareispellediouticle
arly.i
AiBudgeticommitteeiisiconstitutediforieffectiveifunctioningiofiBudgetingia
ndibudgetaryicontrolisystem.
Thereiisiaiwellidefinedisystemioficommunicationiandireportingibetweeniv
ariousilevelsiofimanagementsi
ManagementihasinominatediHeadiofiFinanceiasiBudgetiControlleriwhoiisi
capableitoishareihisiideasiwithivariousiauthoritiesiand.iCo-
ordinatesitheiactivities.
ThereiisiaiBudgetimanualiinivisaka,iclearlyidefiningitheiplans,iprocedures
ietc.,iforioperationiofiBudgetiandicontrol.
TheiBudgetiwillibeipreparediforiallirelatediactivatesitasksiinitheifirm,ithat
itheyirepresenticompleteness.
Budgetsiareipreparediforiallirelatediactivitiesi/itasksiinitheifirm,itatitheyir
epresenticompleteness.
Supportiofitopimanagementiforieffectiveiimplementationiofibudgetaryisyst
emiandicontrolsialsoiexistsiatiVisaka’si.
TypesiofiBudgetsiPreparediiniVisaka’si
iTypesiofiBudgetsipreparediiniVisaka’si,iHyderabadiare:
1)iCapitalibudget
2)iRevenueibudgetiandiReceiptiBudget.
3)iPubliciAccountsiBudget.
1.iCapitaliBudget:iThisiconsistsiofiexpenditureiinicapitaliprojectsiproposalsibyiv
isaka.iTheiCapitaliBudgetiisipreparedibasedionitheisanctionedicostiofitheiprojecti
approvediinitheifiveiyeariplaniquality.iCapitalipaymentsiconsistioficapitaliexpend
itureioniacquisitioniofiassetsilikeiland,ibuilding,imachinery,iequipmentiandiotheri
establishmenticharges.iForiCapitaliProjectsitheiapprovaliofitheiplanningiCommiss
ionihasitoibeiobtainedibeforeiexecutioniofianyiOngoing/NewiProject.
iTheiBudgetiEstimatesiunderitheiCapitaliHeadiwillihaveitoibeimadeiseparatelyif
orieachiprojectiaccordingitoitheiaimsiandiobjectsiofitheiprojectiandinecessaryireq
uirementsiforitheisame.iTheiallocationiofifundsiwillidependingiuponitheiprogress
iofithei
2.iRevenueiandiReceiptiBudget:iRevenueiBudgeticonsistsiofitheiexpenditureiini
connectioniwithioperatingitheiplants.iIticonsistsiofitheiexpenditureirelatingitoithei
followingiitems:
Purchaseiofirawimaterials.i
PurchaseiofiConsumables
PurchaseiofiSparesianditools.
EstablishmentiCharges.
CostiofifueliandimaintenanceiofiVehicles.
Depreciation.
Interest.
iRevenueibudgetiisiproposedioniaiyearlyibasis.iItiisipreparedibasedionitheipr
oductionischeduleiforiaiparticulariyear.
iIniBevcon,itheiRevenueiExpenditureiisimadeiforivariousioperationalifacilities
,itheyiare:
FuelifabricationiFacilities:iThisidealsiwithimanufactureiofiFuelicomp
onents.
Tubeiplants:i-
iWhichidealsiwithimanufactureiofiZircalloyiandiStructuraliTubesiforit
heifuelirequirements.
EstateiManagement:i-
iThisidealsiwithitheiexpenditureitoiwaresimaintenanceiofiHousingiCol
onyiofitheiemployees.
DepartmentiCanteen:i-
itheiexpenditureitoiwaresimanpoweriandiotherirelatediexpenditureiBud
getiinimaintainingicanteeniforitheiemployeesiwillibeiclassifiediunderit
hisihead.
iIniadditionitoitheiabove,iexpenditureitowardsisecurityianditransportationiofitheie
mployeesietc.,iwillifalliunderiRevenueiHeadiofitheiOrganization.
RevenueiReceipts:iRevenueiReceiptsiBudgetiisipreparedibasedionitheiproduction
ischeduleiandianticipatediscaleiofiproductsiforitheiyear.iTheireceiptsiareiprojecte
dibasedionitheirequirementiofitheifueliboundlessi(PHWRi&iBWR)ibyitheioperat
ingireactorsiofiNucleariPoweriCorporationiandilikelyijobiworksifromiprivateipart
iesiandisaleiofieffluents,ispecialimaterialietc.
3.iPubliciAccountibudget:iBesidesitheinormaliReceiptsiandiExpenditure,iGovern
mentiofiIndiaiactsiasicustodianiinirespectiofifundsicollectediformiitsiemployeesia
ndialsoifromipublic.
iForiexample,itransactionirelatingitoiprovidentifunds,ismallisavingsicollectionsian
diotherisecurityidepositsietc.,itheimoneyithusireceivediisikeptiinitheipubliciaccou
ntitillitheirifinalisettlementiasitheimoney,igenerallyispeaking,idoesinotibelongitoi
theigovernmentiandihasitoibeipaidibackisometimeioritheiotheritoitheipersoniandi
authoritiesiwhoidepositedionifulfillmentsiofitheirulesiandiregulationilaididowniby
itheigovernment.
ActioniatiBevconiatiUnitiLevel
iSinceitheitimeiofisubmissioniofitheiBudgetiproposalsiisistandard,itheiunitihasito
iinitiateiactioniwelliiniadvanceibyicallingiforitheirequirementsiforitheivariousiag
enciesiduringiJuneiofieachiyeariandicollectitheidataibyitheiendiofitheimonth.iVa
riousiperformsiareidesignediforitheicollectionidata.iTheiimportantionesiare:i
i1)iManiPoweriBudget
i2)iMachineryiandiEquipment
i3)iSuppliesiandimaterials
i4)iMotoriVehicles
i5)iMinor/MaintenanceiWorks
i6)iMajoriCivil/ElectricaliWorksiforiconstructionioficapitaliprojects.
i7)iOfficeiandiotheriadministrativeiexpenditure.
i8)iInterestiandiDepreciationiReservesietc.
iTheirequirementiofidataiinirespectiofimachineryiitems,isuppliesiandimaterials,im
ajoriworksiareibeingiobtainediformiplantsithroughionlineiinivariousiformats,iwhic
hiwillibeicompileditoiassessitheitotaliexpenditureiunderitheseiheadsiforitheiuniti
asiwhile.iAllitheiinformationioniplaniprojectsiisidistinctiveiandiwillibeiscrutinize
diforiutilization.i
st
iTheiRevenueiExpenditureiisigrantediforiutilizationsiwithinitheiyeariendingi31 i
Marchiofieveryiyeariandianyiunspentiamountiwillilapseiandinotiavailableiforithe
inextiunlessiprovidediafreshiwhileisubmissioniofirevisediproposals.
iWhereasiinirespectioficapitaliprojectitheiprojecticostiisisanctionediforicompletio
niofitheiprojectianditheiunspenticouldibeispilledioveritoinextiyearibyimakingipr
ovisioniiniRevisediEstimates.iTheirevenueiExpenditureidependsiuponitheirequire
mentiduringitheiyearitowardsitheioperationalicostiofitheicompleteiprojectsiandith
ereiareinoilowerioriupperilimitsiwhereasitheiCapitaliExpenditureiisilimiteditoithe
isanctionedicostiofitheiprojectiasiwelliasitheiapprovedioutlayiduringitheiFiveiyea
riperiod.
Compilationiofiallitheiinformationiobject-
wiseianditheidraftiproposalsiofiprovisionsirequiredibyieachiplantiwithireferenceit
oitheidraftiproposalsiofiprovisionirequiredibyieachiplantiwithireferenceitoitheipr
oposediproductioniandioverallirequirementiforitheiunitiwillibeisubmittediforiappr
ovaliofiChiefiExecutive.
Theimajorirequirementsiforitheiunitiare:
Rawimaterialsiforiproduction.
TowardipoweriandiWateriexpenditureipayableitoitheilocalimunicipal.
TowardsiTransportationiofistaff,ipaymentiofiAPSRTC/PVTitransporters.i
TowardsiDieseliOilirequirediforibothiplants,ipoweriunitiandialsoiforivehic
les.
Magnesium,izirconiSand,iZirconiumiSpongeietc.
iProvisioniforitheseiitemsiwillibeicrossimatchediwithitheiproductionitargets,iprev
iousiyear,istockiavailable,iprevailingiratesiandilikelyitimeitakeniforideliveryiofiit
emsietc.iAlligeneraliexpenditureilikeiofficeiandiadministrativeiexpenditure,itaxedi
etc.,iWillibeiassessedibasedionitheiactualirequirementiforitheifinancialiyeariandic
omparisoniwillialsoibeimadeiwithitheiactualiexpenditureiduringitheipreviousifina
ncialiyear.
iRequirementiofiovertimeiwillibeiprovidediasiperitheiproductionitargetsiandiman
poweriavailabilityiandiwillibeirestrictedibasedionitheidirectioniofitheiMinistryiof
iFinanceietc.iTheirequirementiofieachiplantiwillibeireviewediandidiscussediwithi
theiconcernediauthorities,ipossibilityiofiincurringiexpenditure,ipostponementiofire
quirementiofinextiyearietc.,iandifinallyitheientireirequirementitheiunitiwillibeifor
mulated.i
iManufactureiseamlessistainlessisteelianispecialialloyitubesiforiatomiciEnergy,iD
efense,ispaceiandiotheriprivateiindustries,iZirconiumiAlloyiComponentsiforiNon-
Nucleariapplicationisuchiasifertilizeriandiheavyichemicaliindustriesiandialsoihigh
ipurityiandiadvancedimaterialsiforivariousihi-techiapplications
iNearlyidecadesiofiexperienceiinitheimanufactureiofiproductsimeetingistringentiq
ualityirequirementiandicontinuousiinihouseitechnologyiup-
gradationihasidevelopediexpertiseiinidesign,ihasibuildiainumberiofisophisticatedi
equipmentisuchiasispecialichemicaliprocessireactorihighitemperatureisinteringifin
ancesiandipilgerimills,imadeirapidistridesifurnacesiinitheifieldiofimechanicalimat
erialihandlingiandiprocessiautomation.iAifewiofithisiequipmentihaveibeenisuppli
editoiinterestedicustomers.
Visaka’sihasiaicontinuousiHRDiprogrammesiforiupgradingitheiskillsiandi
knowledgeiofimanpower.iItihasievolvediandiimplementedisoundioccupationalihea
lth,isafetyiandienvironmentimanagementisystems.iTheigreenienvironsiofitheiprem
isesievolvediandiimplementedisoundioccupationalihealth,isafetyiandienvironmenti
managementisystems.iAsianiemployer,iprovidesihousingiassistance,imedicalicarei
andieducationalifacilities
ItihasidrawniupiplansiforistrengtheningicorporateiR&Diandiisipasseditoi
meetitheifutureirequirementiofitheiPoweriProgamme.iAsiregardsicapitaliprojects,i
reviewiofitheiexpenditureiupitoidateiwillibeitakeniasibaseiforirevisioniinitheireq
uirementiandiprogressiofiworkiandiarrivaliofimajoriequipmentishipmentiwillibeid
iscussedianditheiprovisioniwillibeiformulatediproject-wise.
Revenueireceiptsiofitheiunitifromitheisaleiofiproductsiproducediwillibeias
sessedibasedionirequirementiofivariousiunits,iandiotheriprivateiparties.iTheirequir
ementiofitheiunitiasiaiwholeiunderibothiRevenueiandiCapitaliheadsiwouldibeisu
bmitteditoitheiBoardiandioniapprovaliofitheisameiproposaliwillibeisentitoidepart
mentiforiconsideration.
CHAPTER-4
DATA ANALYSIS
AND
INTERPRETATION
TABLE NO.1
SHOWING REVENUE EXPENDITURE BUDGET
2010-2011
(Rupees in
Lakhs)
S.No. Item Budget Actual Variation Variation
Estimates (Amount) (Percentage)
50000
45000 Budget Estimates 6231
40000 100.1 19421 1984.1 16
35000
30000
25000
20000 Actual 5918.98 48.45
15000 18558.61 1922.61 16
10000
5000
0 Variation (Amount)
-5000
Others
Depreciation
Administrative
Motor Vehicle
Expenses
Expenses
And Taxes
Rent, Rates
Totals
312.02 41.65 862.39
61.49 -
Variation (Percentage) 5
41.55 4.44 3.09 -
6 7 8 9 10
Reasons for Differences between Budget estimate & Actual Spending 2010-2011
Increase in the cost of raw materials/prime consumables.
Download revision in the power-tariff by state.
Saving on account of deferment of Leave Concession for employees by the
Government.
TABLE NO. 2
SHOWING REVENUE EXPENDITURE BUDGET
2011-2012
(Rupees in
Lakhs)
S.No. Item Budget Actual Variation Variation
Estimates (Amount) (Percentage)
50000
40000
30000 Budget Estimates 6274
100 19515 2481 16000
20000
Actual 6087.9 61.26
10000 16744.6 2057.72 16000
0 Variation (Amount) 186.1
Others
Motor Vehicle
Expenses
Expenses
Depreciation
And Taxes
Administrative
Totals
Rent, Rates
6 7 8 9 10
Reasons for Variations between Budget Estimate & Actual Expenditure 2011-
2012
Non-revisions of the rate of prime raw materials which was anticipated and
also short supply of the same by the supplier.
Partial withdrawal of increased power tariff by the State Government Non-
filling of vacant and new posts as per policy of the Government
TABLE NO. 3
SHOWING REVENUE EXPENDITURE BUDGET
2012-2013
(Rupees in
Lakhs)
S.No. Item Economical Genuine Difference Difference
Estimates (Amount) (Percentage)
70000
60000 Economical Estimates
50000 6241 120 21162 2234
40000 28200
30000 Genuine 6686.2 72.88
20000 20844.36 1889.79
10000 28200
0 Difference (Amount) -
Motor Vehicle
Others
Expenses
Expenses
Administrative
Depreciation
And Taxes
Totals
-10000 Rent, Rates 445.2 47.12 317.64
344.21 -
Difference
(Percentage) -7.13
39.26 1.5 15.4 -
6 7 8 9 10
Reasons for Variations between Budget Estimate & Actual Expenditure 2012-
2013
Reasons for Variations between Budget Estimate & Actual Expenditure (2015-
2016)
Increase in salaries on Account of liberated LTC provision
Increase in Office Expenses on Account of increases Transport and issue of
Uniform for Ministerial Staff
Increase in Rent, Rates & Taxes as per demand for property Tax.
TABLE NO. 7
SHOWING REVENUE EXPENDITURE BUDGET
2016 - 2017
(Rupees in Lakhs)
S.No. Item Budget Actual Variation Variation
Estimates (Amount) (Percentage)
Office Expenses
20000
Administrative Expenses
15000
Rent, Rates And Taxes
10000
Others
5000
Totals
0
Budget Actual
Estimates
Reasons for Variation between Budget Estimate & Actual Expenditure (2016-
2017)
Variation
Percentage 5 2.96 -7.13 8.8 -1.9 -1.4 1.64
Interpretation
The variations that need to be commented are those falling in a range above +(or) 5
percentage The years in which such variations occurred are 2010-11 where the
variation is +5 percentage on account of liberated LTC provisions and it has increased
to 8.8% in 2013-14.
Travel expenses
Year 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Variation amount 41.65 38.74 47.12 42.47 48.9 2.17 -4.4
Variation
Percentage 41.6 38.74 39.26 36.61 58.91 2.78 -6.28
Interpretation
The travel expenses had over short the budget consistently five out of seven years
under study. The range was 36 percent to 59 percent which indicated lack of control
and absence of economy measures. The company realized these facts in 2010-2011
and put in place a package of economy measures which raised the bar for out of
budget expenditure. The measures have worked well and as a result the variance of
travel expenses over and above budget was controlled almost in 2012-2013 and more
than expected 2014-2015. The control was so effective that a negative variance have
set in year 2016-2017of the order of -6.28
Supplies and materials
Year 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Amount
Variation 4.44 14.19 1.5 -15.28 10.05 2863 4439.46
Percentage
Interpretation
It signifies that the trend of increase in the negative variation in last 2 years is on
2012, 2012- 2013 which is not a healthy sign. Under procurements of materials points
Minor works
Interpretation
The acceptable range is + (or) - 5%. In general the variation was with in the rage only
in 2 out of 7 years. In 4 out of 7 years it was positive variation of 15% to 31% which
is indicative of the fact that the budgetary process was not being diligently adhered to
in the case of budgets for minor works. There is thus a need to fine-tune budgetary
process implementation in this category.
Interpretation
Acceptable range is + (or) - 10%. The variation beyond the above range is observed in
case of 2010-2011 and 2013-2014. The reason was on account of general and rapid
reduction in rates of interest charged by banks
Motor vehicle
Year 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Variation
Amount 43.36 -19.2 83.04 78.24 71.08 50.53 83.83
Variation
Percentage 36.13 -21.33 61.5 62.59 56.86 49.05 55.88
Interpretation
The acceptable range is + (or) – 25%., As the age of vehicles stock is more, allowing
for increased expenditure in repairs and maintenance on account of age of vehicle
stock it was found that the expenditure under the head was “uncontrollable”. With the
range of over expenditure being from 36% to 63%. There is and urgent need to
formulate and implement a cost reduction program.
Office Expenses
Year 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Variation
Amount 11.96 -14.34 29.02 81.65 60.1 -28.69 -1.53
Variation
Percentage 2.88 -3.35 5.8 16.13 11.87 -6.04 -4.37
Interpretation
The acceptable range is + (or)-5%. The variation above the range was found to be
sizable in the case of 2010-2011 and 2011-2012 due to issue of uniform to ministerial
staff and increase transport
Administrative Expenses
Interpretation
The acceptable range is + (or)-5%. It was observed that the budget for administrative
expenses was periodically increased to accommodate the positive variation in
previous year during period 2010-2011. Thus the budget peaked in year 2011-2012,
while the variation is high in 2010-2011 and 2011-2012.
Rent, Rates and Taxes
Interpretation:
The acceptable range is + (or) - 20%. The abnormal years were observed to be 2010-
2017 which a positive variation of 58% in 2011-2012 to negative variation of around
50% in 2010-2011 and 2012-2013. This is and account of changes in government /
taxes / municipal polices and changes in valuations during the relevant years.
Others
Interpretation:
The changes emerging out of each factor ought to be effectively isolated, and
Controllable differences ought to be accounted for quickly, with the goal that
obligation can be settled and move made against the people dependable.
movement costs and in viable in the event of engine vehicle repairs and upkeep and
minor works.
Budget process has functioned admirably in controlling travel costs
Recommendations
process and how every trough can draw out of the budgetary arranging and control
framework solid target to enhance the working execution and benefit of the business.
Control reports and methods that driving administration to guarantee that such
Additionally pushed was the significance of wide investment on a grass root premise
that, in reality the part of the spending executive and of bookkeeping staff is to a great
extent one of the part of the Budget chief and of bookkeeping individual is to a great
extent one of authoritative and facilitate direction, joined with the fairly routine
activity of making an interpretation of working designs comes about into the dialect
of the dollar.
CONCLUSION
generation year throughout the year by saving the comparing use and achieved no
exclusive independence yet in addition been steady to the atomic power Plants spread
visaka has possessed the capacity to enhance working execution and gainfulness of
the Organization.
The budgetary framework in visaka has been speedy and very much arranged
The association have taken after powerful spending framework and control for
keeping up the consumption inside the showed up Budget and it likewise kept the
profile high and accomplishing the focused on creation inside the showed up Budget
and it additionally kept the profile high and accomplishing the focused on generation
by least use which use which is apparent shape the most recent seven years Revenue
Expenditure Budget.
Form the varieties between Budget Estimates and Actual Expenditure of most
recent five years it might be seen that the level of variety is getting to be peripheral
from year to year which reflects enhanced arrangement of Budgeting and additionally
control of Expenditure.
BIBLIOGRAPHY
Publishers.
Publishers.
Hill Ltd.,
Publishers.
5. Websites:
www.visaka .com