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A

STUDY ON

BUDGETARY CONTROL PRACTICES

OF

NAGARJUNA FERTILIZERS AND CHEMICALS LTD

Dissertation submitted in partial fulfillment of the

requirement for the award of the degree of PGDM

BY

T.CHANDRA SHEKAR

(08M004)

(FINANCE AND MARKETING)

DHRUVA COLLEGE OF MANAGEMENT


APPROVED BY AICTE, MINISTRY OF HRD, GOVT. OF INDIA
MEDCHAL, HYDERABAD-501401
(2008-2010)
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DECLARATION

I hereby declare that the dissertation titled A STUDY ON BUDGETARY CONTROL


PRACTICES OF NFCL that is being submitted by me in partial fulfillment of the
requirements for the award of the degree of PGDM in FINANCE and MARKETING to
DHRUVA COLLEGE OF MANAGEMENT is a record of a bonafide work carried out by me.

The results embodied in this dissertation have not been submitted to any other University or
Institution for the award of any Degree or Diploma.

Date:
Signature of the student
Place:

Internal Supervisor Examiner(s)


1……………………………
2……………………………

Chairman
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ACKNOWLEGEMENT

I express my deep sense of gratitude to the management of NFCL for giving me an opportunity
to carry out my summer internship in their esteemed organization.

I sincerely thank Mr. ACHARYA, Charted Accountant at NFCL for giving me his valuable
guidance and helping me in completion of the project.

I also thank my internal supervisor Prof. Seethapathi, Narsimhulu Dhruva College of


Management who guided me through out my project analysis.

I convey my special thanks to Dr. S. Pratap Reddy, Chairman, Dhruva College of


Management for providing all the necessary facilities in bringing out this project report
successfully.

Chandrashekar.Tirumal
a
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TABLE OF CONTENT

1. INTRODUCTION ---------------------------------------------------------------
1.1 INTRODUCTION TO THESTUDY
1.2 REVIEW OF LITERATURE
1.3 NEED OF THE STUDY
1.4 OBJECTIVES OF THE STUDY
1.5 SCOPE OF THE STUDY
1.6 PROFILE OF THE COMPANY

2. DESIGN OF THE STUDY--------------------------------------------------------------


2.1 RESEARCH METHODOLOGY
2.2 SOURCES OF DATA
2.3 LIMITATIONS OF THE STUDY

3. CONCEPTUAL ANALYSIS OF BUDGET AND BUDGETARY CONTROL

4. ANALYSIS---------------------------------------------------------------------
4.1 BUDGET PROJECTION
4.2 VARIANCE ANALYSIS
4.3 COMPARTIVE STATEMENTS

5. FINDINGS AND SUGGESTIONS----------------------------------------------------

BIBLIOGRAPHY--------------------------------------------------------------------------------

ANNEXURE--------------------------------------------------------------------
TABLE & GRAPH REGARDING PRODUCTION BUDGET OF NFCL FOR
2007-08AND 2008-09
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TABLE REGARDING P&L A/C OF DIFFERENT FERTILIZER


COMPANIES
TABLE REGARDING BALANCE SHEET OF DIFFERENT FERTILIZER
COMPANIES
TABLE & GRAPH REGARDING VARIENCE OF P&L A/C FOR
2007-08 AND 2008-09
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EXECUTIVE SUMMARY:

BUDGETARY CONTROL PRACTICES

Budget is one of the important and powerful tools available to the organization to have
estimates about expenses and income for a definite period of time. 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. In this
present scenario it is very necessary to reduce the cost in regard of all terms to sustain in the
market. So i have taken budgetary control as my study, which carries huge weight age to
reduce the wastages and does the process efficiently.

The following are the objectives of the study


1. To evaluate the budgetary control practices followed in NFCL.
2. To make a prediction about capital expenditure for NFCL.
3. To have comparative analysis among different fertilizer companies.

The findings that I have come out of study


1. The demand towards fertilizers and its byproducts is more.
2. Apart from this the expenses regarding the raw materials is growing at higher rate when
compared previous years (2007-08).
3. Subsidy towards the agriculture and fertilizers is more in this financial year (2008-09) and
appeared to grow at 15% in the next year and ultimately benefited by the farmers
4. Net sales variance NFCL is showing very low from 2007-08 to 2008-09 .Which shows that
sales of the company is increased but in less quantity when compared others
5. The net worth of the NFCL is showing a good figures when compared to others and it also
made huge investments in other companies and carrying a good name in the minds of investors
and as well as the suppliers etc,.
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1.1 INTRODUCTION TO THE STUDY:


In the past liberalization environment, the subject of budgetary control has become far more
complex than what it was in the last century. Now-a- days, budgetary control is one of the most
vital and critical area of business management. The content of budgetary control are also
changing at a rapid pace and quantitative techniques are also incorporated in its field which
have shifted emphasis from the episodic cost control and cost reduction.

Budgetary control is a tool of management used to plan, carry out and control the operations of
the business. The entrepreneur finds it quite handy in planning the growth of his business or
enterprise.

The concept and procedures under budget plan and control have wide application not only in
profits- oriented enterprises but in every enterprise where the resource are limited and have to be
properly applied. This, in a sense is ‘managerial budgeting’. It applies to public and private
enterprises, government departments and charitable organizations.

The modern approach is towards a comprehensive budget plan and control. Of all business
activities, budgeting is one of the most important aspects and, therefore requires detailed
attention.
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1.2 REVIEW OF LITERATURE:


An Examination of the Effects of Budgetary Control on Performance
November, 2007
Carolyn M. Callahan,
Doris M. Cook Professor,
Tammy R. Way mire,
University of Arkansas-Fayetteville.
This study represents the first which suggests that tight budgetary control may not be as
effective in improving performance as assumed both in public sector and private sector
entities. While it would be premature to conclude that tight budgetary control is not related to
Performance, it can be concluded that the effective level of budgetary control will vary based
on contextual factors. In this study, it appears that the effective level of budgetary control is
at the net level for the funds within governmental entities.

Budget and Budgetary Control for Improved Performance: A Consideration for


Selected Food and Beverages Companies in Nigeria
Ishola Rufus Akintoye
Department of Economics, Faculty of the Social Sciences,
University of Ibadan, Oyo State, Nigeria, West Africa.
This study examines how budget and budgetary control can impact on the performance of the
selected food and beverages companies in Nigeria, as considered in this study, being a sample
of the entire population of the firms in the Nigerian Manufacturing Industry. We reviewed the
performance of the Nigeria manufacturing industry in previous and recent times. We found
out that the performance of this industry leaves much to be desired due to factors such as
neglect of the industry due to over dependence on crude oil, epileptic power supply,
collapsing infrastructures, unfavorable sectoral reforming among others and have resulted in
low capacity utilization of the manufacturing industry. An empirical investigation was
undertaken, using the simple correlation analytics technique specifically the Pearson product
movement correlation coefficient. In most of cases considered, established the presence of
strong relationship between turnover as a variable of budget and performance indicators –
EPS, DPS and NAS, of the selected food and beverages companies. Following our findings,
we advise managers and business operators to pay more attention to their budgetary control
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systems, for those without an existing budgetary control system, they should put one in place,
and those with a dummy or passive budgetary control system, it is time they re-established a
result-oriented budgetary control system as it goes a long way in repositioning the
manufacturing industry from its creeping performance level to an improved high capacity
utilization point.
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1.3INTRODUCTION TO BUDGET AND BUDGETARY CONTROL:


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.

Advantages of budgets:
A budget helps us in the following ways:

1. It brings about efficiency and improvement in the working of the organization.

2. It is a way of communicating the plans to various units of the organization. By establishing


the divisional, departmental, sectional budgets, exact responsibilities are assigned. It thus
minimizes the possibilities of buck passing if the budget figures are not met.

3. It is a way or motivating managers to achieve the goals set for the units.

4. It serves as a benchmark for controlling on-going operations.

5. It helps in developing a team spirit where participation in budgeting is encouraged.

6. It helps in reducing wastage and losses by revealing them in time for corrective action.

7. It serves as a basis for evaluating the performance of managers.

8. It serves as a means of educating the managers

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:
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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.
Budgetary control techniques:

I. Accounting techniques
a. Standard costing
b. Overhead and Sales variance,
c. Marginal costing,
d. Business Forecasting,
e. Zero Base Budgeting

Advantages of budgeting and budgetary control :


There are a number of advantages to budgeting and budgetary control:

1. Compels management to think about the future, which is probably the most important feature
of a budgetary planning and control system. Forces management to look ahead, to set out
d`etailed plans for achieving the targets for each department, operation and (ideally) each
manager, to anticipate and give the organization purpose and direction.

2. Promotes coordination and communication.

3. Clearly defines areas of responsibility. Requires managers of budget centers to be made


responsible for the achievement of budget targets for the operations under their personal control.

4. Provides a basis for performance appraisal (variance analysis). A budget is basically a


yardstick against which actual performance is measured and assessed. Control is provided by
comparisons of actual results against budget plan. Departures from budget can then be
investigated and the reasons for the differences can be divided into controllable and non-
controllable factors.

5. Enables remedial action to be taken as variances emerge.

6. Motivates employees by participating in the setting of budgets.


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7. Improves the allocation of scarce resources.

8. Economizes management time by using the management by exception principle.

Problems in budgeting:
Whilst budgets may be an essential part of any marketing activity they do have a number of
disadvantages, particularly in perception terms.

1. Budgets can be seen as pressure devices imposed by management, thus resulting in:
a. Bad labor relations
b. Inaccurate record-keeping.

2. Departmental conflict arises due to:


a. Disputes over resource allocation
b. Departments blaming each other if targets are not attained.

3. It is difficult to reconcile personal/individual and corporate goals.


a. Waste may arise as managers adopt the view, "we had better spend it or we will lose it". This
is often coupled with "empire building" in order to enhance the prestige of a department
b. Responsibility versus controlling, i.e. some costs are under the influence of more than one
person, e.g. power costs.
c. Managers may overestimate costs so that they will not be blamed in the future should they
overspend.

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
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7. Determination of key factor.

Budget centers:
A budget center is that part of the organization for which the budget is prepared. A budget
center may be a department, section of department or any other part of the department

Budget manual:
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A budget manual is a document which spells out the duties and also the responsibilities of the
various executives concerned with the budgets. It specifies the relations among various
functionaries.

Budget officer:
The chief executive, who is at the top of the organization, appoints some persons as budget
officer. The budget officer empowered to scrutinize the budgets prepared by the various
departmental heads and too many changes in them, if the situation so demands. The actual
performance of different departments is communicated to the budget officer. He determines the
deviations in the budget and takes necessary steps to rectify the deficiencies, if any.

Budget committee:
In a small scale concerns, the accountant is made responsible for preparation and
implementation of budget. In large scale concerns a committee is known as a budget
committee is formed. The heads of all important departments are made members of this
committee. The committee is responsible for preparation and execution of budgets. The budget
officer acts as so coordinator of this committee.

Budget period:
A budget period is the length of time for which a budget is prepared. The budget period
depends upon a number of factors. It may be different for different industries or even it may be
different in the same industries or business.

Determination of key factor:


A factor which influences all other budget is known as key factor or principle factor. There
may be limitations on the quantity of goods concern may sell. In this case sales will be a key
factor and all other budgets will be prepares by keeping in view the amount of the goods the
concerns will be able to sell.
The raw material supply may be limited, so production, sales and cash budgets will be
decided according to raw materials budget. Similarly, plant capacity may be a key factor if the
supply of other factors is easily available.

Advantages of budgetary control:


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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.

Specific aims:
The plans, policies, and goals are decided by the top management. All efforts are together to
reach the common goal of the organization. Every department is given a target to be achieved.
The efforts are directed towards achieving some specific aims
.
Tool for measuring of performance:
By providing targets to various budgetary control provides a tool for measuring performance.
The budgeted targets are compared to actual reasons and deviations are determined. The
performance of the each department is reported to the top management
.
Economy:
The planning of expenditure will be systematic and there will be economy in spending. The
finance will be put to optimum use.

Determining weakness:
The deviations in budgeted and actual performance will enable the determination of weak
ports. Efforts are concentrated on those aspects where performance is less than the stipulated.

Corrective action:
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The management will be able to take corrective measures whenever there is discrepancy in
performance.

Reduce costs:
In the present day competitive world budgetary control has a significant role to play. Every
business man tries to reduce the cost of production for increasing sales.

Introduction of incentive schemes:


Budgetary control system also enables the introduction of incentive schemes of remuneration.
The comparison of budgeted and actual performance will enable the use of such schemes.

LIMITATIONS:
Uncertain futures:
The budgets are prepared for the future period. Despite best estimates made for the future, the
prediction may not always come true. The future is always uncertain and the situation which is
presumed to prevail in future may change.

Budgetary revisions required:


Budgets are prepared on the assumptions that certain conditions will prevail. Because of future
uncertainties, assumed conditions may not prevail necessitating the re vision of budgetary
targets. The frequent revision of targets will reduce the value of budgets and revisions involve
huge expenditure too.

Problem of co ordination:
The success of budgetary control depends upon the co-ordination among different departments.
The performance of one department affects the results of other departments.

Conflict among different departments:


Budgetary control may lead to conflicts among functional departments. Every departmental
head worries his department goals without thinking of business goal. Every department tries to
get maximum allocation of funds and this raises a conflict among different departments.

TYPES OF BUDGETS:
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BASED ON TIME:
Long term budgets:
The budgets are prepared to depict long term planning of the business. The period of long term
budgets varies between 5 to 10 years. Long term budgets are prepared for some sector of the
forms concern such as capital expenditure, research and development, long term finance, etc.

Short term budgets:


These budgets are generally one or two years are in the form of monitory terms. The
consumers’ goods industries like sugar, cotton, textile, etc. use short term budgets.

Current budgets:
The periods of current budget is generally of months and weeks. These budgets related to the
current activities of the business.

BASED ON FUNCTION:
Operating budgets:
These budgets are related to the different activities or operations of a firm. The no. of such
budgets depends upon the size and nature of business. The commonly used operating budgets
are:
1. Sales budget
2. Production budget
3. Production cost budget
4. Purchase budget
5. Raw material budget
6. Labor budget
7 plant utilization budget
8. Manufacturing expenses or workers over head budget
9. Administrative and selling expenses budget

Financial budget:
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Financial budgets are concerned with cash receipts and disbursements, working capital, capital
expenditure, financial position and results of business operations. The commonly used
financial budgets are:
1. Cash budgets
2. Working capital budget
3. Capital expenditure budget
4. Income statement budget
5. Statement of retained earnings
6. Budgeted balance sheet or position statement budget

BASED ON THE FLEXBILITY:


Fixed budget:
Fixed budgets are prepared for a given level of activity,; the budget is prepared before the
beginning of financial year. The changes in expenditure arising out of the anticipated changes
will not be adjusted in the budget.

Flexible budget:
A flexible budget consists of a series of budgets for different level of activities. Therefore,
varies with the level of activity attained. A flexible budget is prepared after taking into
consideration unforeseen changes in the conditions of the business. A flexible budget is
defined as a budget which by recognizing the difference between fixed, semi fixed and variable
cost is designed to change in relation to the level of activity.

Master budget:
Various functional budgets are integrated info master budgets. The budget is prepared by the
ultimate integration of separate functional budgets.
Definition:
The master budget is the summary budget incorporating its functional budgets-----------ICMA.
Master budget is prepared by the budget officer and it remains with the top level management.
This budget is used to co ordinate the activities of various functional departments and also to
help as control device.
The various steps involved in the preparation of this budget is the preparation of the budget
include the construction of sales budget, production budget, cost of production budget, cash
budget and the projected income statement and the balance sheet.
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Zero based budgets:


Before preparing a budget, a base is determined from which the budget process begin. Quite
often current year’s budget is taken as the base or the starting point for preparing the next
year’s budget. The figures in the base are changed as per the plan for the next year. This
approach of preparing a budget is called incremental budgeting since the budget process is
concerned mainly with the increase or changes in operations that are likely to occur during the
budget period. For example, sales of the current year’s budget may be taken as the base and
next year’s budget for sales will be current year’s budget may be taken as the base and next
year’s budget for sales will be current year’s sales plus allowance for price increases and
expected changes in sales volumes. The main drawback of this conventional approach is that it
perpetuates the past inefficiencies.
Zero bases budgeting (ZBB) is an alternative to conventional or incremental budgeting.
ZBB was introduced at Texas Instruments in USA in 1960 by Peter Phyrr, who is known as the
father of ZBB. It is a managerial tool and is steadily gaining acceptance in the business
community. ZBB not based on incremental approach and previous year’s figures are not taken
as the base, for preparing next year’s budget. Instead, the budget figures are developed with
zero as the base, which means that a budget will be prepared as if it is being prepared for a new
company for the first time.

Advantages of zero based budgets:


 In ZBB all activities included in the budget are justified on cost benefit consideration
which promotes more effective allocation of resources.
 ZBB discards the attitude of accepting the current position in favour of an attitude of
questioning and challenging each item of budget.
 It is an educational process and can promote a management team of talented and skilful
people who tend to promptly respond to changes in the business environments.
 It facilitates identification of inefficient and unnecessary activities and avoid wasteful
expenditure.
 Cost behavior patterns are more closely examined.

Disadvantages of zero based budgets:


 ZBB involves high cost of preparing budgets every year.
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 It also requires high volume of paper work.


 In ZBB there is danger of emphasising short-term gains at the expense of long-term
ones.
 It has a tendency to regard any activity not foreseen and sanctioned in the most recent
ZBB as illegitimate.

BUDGET PREPARATION:
The company prepares its master budget along with budgets for major important functions like
sales, production, cash, labor, etc. the budget is prepared by Budget Control and Cost Accounts
(BCCA) department in consultation with the chief executive, departmental heads. After the
initial budget preparation, it is approved by budget committee and finally, it is sent for the
approval of Board of Directors at its head office at Mumbai. Normally the standards of last
year are used as the basis for budget preparation with suitable adjustment. For example, rates
of materials are adjusted according to the prevailing rates in the market. Similarly adjustment
is made in labor cost depending on the budget period. Dearness is paid on the basis of All India
cost of Living Index. Overheads are changed on percentage basis. When budgets are prepared
and approved, these are communicated to respective heads of departments/ sections for
implementation

COMPARISON WITH ACTUAL PERFORMANCE OF PREVIOUS YEAR:


It will be more meaningful, if the comparison of the current year actual is made with the
previous year actual, in addition to the comparison of actual performance of the current year
with the budgets. For this purpose, the profit and loss account and balance sheet as per the
companies act, 1956 can be made use of. On the similar lines, reasons for variance are submitted
to the management for taking appropriate actions.

PREPARTION OF CASH BUDGET:


A cash budget is an estimate of cash receipts and disbursements during a future period of time. It
precedes various other budgets like material budgets research and development budget.

Definition:
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“The cash budget is an analysis of flow of cash in a business over a future, shot or long period of
time. It is a forecast of expected cash intake and outlay”
The cash receipts from various sources are anticipated. The estimated cash collections for sales,
debts, bills receivables, interest, dividends and other incomes and sale of investments and other
assets will be taking into account. The amount to be spent on purchase of materials, payment to
creditors and meeting various other revenue and capital expenditure needs should be considered.
Cash forecasts will include all possible sources from which cash will be received and the
channels in which payments are to be made so that a consolidated cash position is determined.
The cash budget should be coordinated with other activities of the business. The functional
budget may be adjusted according to the cash budget. The available funds should be fruitfully
used and the concern should not suffer for want of funds.

Objectives of setting budgets:


a. It is a plan of action and serves as a declaration of policies.
b. It defines the objectives for all the executives.
c. It provides a means of co-ordination and communication.
d. Budgets facilitate centralized control with delegated authority and responsibility.
e. It provides comparison of actual performance with budgets
f. Only the exceptions are reported to the management so that corrective action can be taken in
order to achieve the objectives laid down by the management
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1.4 NEED OF THE STUDY:

NFCL is a manufacturing concern relating to the fertilizers; it has two plants


which involves a lot of direct and indirect costs towards operating it. As
there is a heavier competition in the market of fertilizers in order to cope
up and sustain in the market, it has to operate effectively by reducing the
cost and by avoiding the wastages which are involved in it. So I have
choosen one of the best and popular cost control technique budgetary
control to have effectiveness and removal of wastages from its operations
and such that it runs competitively.
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1.5 ABOUT THE COMPANY

VISION:

Global “Leadership” in Plant Nutrition Excellence in products/performance, processes/costs


and relationships

VALUES:
Deliver solutions that will please our customers Deliver returns that motivate our investors Take
actions that strengthen us and inspire the best in others (by setting an example in relationships,
integrity, honesty, humility and hard work) by understanding the deep and fundamental needs of
Our People, Our Customers, Our Investors and Our Ecosystem (Alliances, Community and
Environment)

THE GROUP:
Founded in 1973 by Shri K V K Raju with a modest investment of US$ 23 million, the
Nagarjuna Group today is a prominent industrial house in India with an asset base of US$ 2.5
billion.

 1974: Birth of a business group that pioneered several core sector enterprises in the
coming decades. Starting with manufacturing steel, Nagarjuna Steels Limited was
launched.
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 1985: With focus on agriculture input business started plant nutrition business with
Nagarjuna Fertilizers and Chemicals Limited.

 1992: Forayed into the Crop Protection Business with investments in Pesticide
Formulations manufacturing followed by Technical Grade Manufacturing in the year
1994.

 1994: Micro irrigation business started to address the irrigation problems of farmers
living in water and energy scarce regions.

 1995: Ventured into Energy sector. Entered into power generation by setting up
Nagarjuna Power Corporation Limited.

 1997: Entered into petroleum by setting up Nagarjuna Oil Corporation Limited.


Consolidating its core activities, today the Group’s major operations cover Agri and
Energy sectors.

FOUNDER:

SHRI K V K RAJU - AN ETERNAL SOURCE OF INSPIRATION

Nagarjuna Group is a dream willed into reality by its visionary Founder Shri KVK Raju. Shri
KVK Raju a first generation technopreneur was born in a humble agricultural family in
Andhra Pradesh on November 28, 1928. On graduating from Banaras Hindu University and
the Madras Institute of Technology he went on to complete his Master's in Mechanical and
Industrial Engineering from Michigan State University and the University of Minnesota,
USA. After a short stint in the American Industry he returned to India and worked for short
periods at Caltex Oil Refinery, Orient General Industries and Associated Electrical Industries.
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Finally, he joined Union Carbide of India and worked with them for 15 years. While working
with Union Carbide, KVK's deep-rooted urge to serve society through industry impelled him
to start out on his own. Thus was born Nagarjuna Group in 1973 with an investment of US$
23 million. The Group has since then come a long way to become a diversified conglomerate
with an asset base of US$ 2.5 billion.

A recipient of various awards for his outstanding contribution to the industry and society,
KVK, was a firm believer in the adage "practice what you preach". A self-made man KVK
practiced simple living and high thinking. He dreamt big and worked with an unstinted focus
of mind and body to make his dreams come true. KVK was a visionary with firm belief in
his mission to serve society through industry. It is this belief, which continues today to be
the guiding light of Nagarjuna Group

ABOUT COMPANY:

The flagship company of the Nagarjuna Group, Nagarjuna Fertilizers and Chemicals Limited is
a leading manufacturer and supplier of plant nutrients in India. Commencing operations in 1985,
today our asset base is around Rs. 21 billion. We have the distinction of being the single largest
private sector investment in Southern India. An ISO 9001:2000 certified company; our
operational profits are one of the highest in the industry. We assume market leadership in the
markets we operate.

Our broad portfolio of products and services include:

• Nutrition solutions: Macro and Micro fertilizers and Farm Management services
• Micro Irrigation solutions

We offer our expertise for the management of chemical process plants, which include
Specialist Services and Total Project Management.
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Our operations and offerings have been aligned into three strategic business units:

• Straight Nutrition Business


• Nutrition Solutions Business
• Nagarjuna Management Services

To survive, grow and attain leadership position in our areas of operation it is essential for us
to identify and capitalize on emerging opportunities.

Preparing for the future, proactively, we are addressing the most important aspects of our
organization:

Strategy – Having a long term vision for the company

Structure – To facilitate achieve our strategy

People – Aligning related policies with Strategy and Structure. In turn to build the right
capability, attitude and behavior in employees Process – To enable employees to work more
efficiently and effectively, to have the best in class internal business processes.

Our Endeavour is to unlock the full potential of our people by transforming into a
performance driven organization that attracts the best talent, nurtures a more productive and
results-focused workforce and implements initiatives, which align people strategies with
organizational objectives.

The key action areas in this road map are:

• Facilitating redefinition of organization structure to support NFCL’s business


direction, goals and priorities.
• Evolving a people management philosophy and institutionalizing systems and policies
that reflect uniformity, fairness and transparency.
• Establishing Best in Class HR systems and processes, in line with organizational
requirements.
• Facilitating creation of a performance based culture with clear linkages to rewards and
careers.
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Defining the organization capability framework and assessing organizational people capability
to support NFCL’s vision.

1.6 OBJECTIVES OF THE STUDY:

1. To evaluate the budgetary control practices followed in NFCL.


2. To make a prediction about capital expenditure for NFCL.
3. To have comparative analysis among different fertilizer companies.

1.7 SCOPE OF THE STUDY:

1. The time period considered in the study is two financial years i.e., from 2007-08 to 2008-09.
2. The study is confined to the manufacturing costs and details of NFCL.
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2. DESIGN OF THE STUDY:

2.1 RESEARCH METHODOLOGY:


The present study is mainly about the measuring the effectiveness of budgets at NFCL and the
following methodology was adopted:
1. Understanding the concept of budgeting.
2. Preparing budgeting reports.
3. Projection of budget for 2009-10 basing on assumptions
4. Finding out the deviations between actual and estimated figures.
5. Giving the appropriate reasons for such variances.
6. Comparison of P&L account and Balance sheet of various fertilizer companies

2.2 DATA COLLECTION:


The data needed for the study was collected from the following sources:

METHODS

PRIMARY DATA SECONDARY DATA

A) Primary source:
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Collected information through interactions from various personnel (at different hierarchies) in
the departments of Finance and Accounts at NFCL

B) Secondary source:
The data is collected from the following secondary sources:
1. Annual reports of the company
2. Books (relating to budgeting) and
3. Internet

2.3 LIMITATIONS OF THE STUDY:

1. The study is confined to NFCL only.


2. The lesser time frame for understanding this study is also a significant limitation.
30

3. ANALYSIS:

3.1 BUDGET PROJECTION FOR 2009-2010: (In crores)


BUDGET BUDGET PROJECTION FOR
SL.NO PARTICULARS
2007-2008 2008-2009 2009-2010
INCOME
31
1 Capacity 11.946 11.946 11.946

2 P1 7.527 7.566 7.5465

3 P2 5.973 6.733 6.353

4 Production (urea) 13.5 14.298 15.58482

5 Production (mi) 389.44 0 424.4896

6 Sales(urea) 13.5 14.298 15.58482

Sales(mi) 375.36 584.86 637.4974

7 Manufactured urea
Plant 1
Specific energy 5.535 5.534 221.36
Variable cost 3520 3827 3445
Fixed cost 3095 3095 3095
Group concession 6615 6922 6928.922

Plant 2
Specific energy 5.627 5.621 281.05
Variable cost 12839 11515 103635
Fixed cost 2712 2712 2712
Group concession 15551 14227 156497

8 Freight subsidy 700 900 1215

9 Sales 66243.56 71545.4 77984.45

10 Subsidy
Normal production
Urea P1 11375.09 13569.75 16012.305
P2 65111.08 57205.73 67502.7614
Additional production
Urea P1 3026.07 3456.34 4078.48
P2 0 6523.47 7697.69

11 Other income 480 117.5 129.25

EXPENDITURE
1 Purchases (raw materials) 73815.99 77294.1 82704.687

2 Power and fuel 26781.82 26769.76 27305.1552

3 Salaries ,wages and benefits 5883.12 6987.38 82947.7188

4 Packing materials consumed 6398.02 6341.44 6595.0976

5 Distribution expenses 765 532.95 586.245

6 Other expenses 8267.38 8122.63 8528.76


32

Budget Projection for 2009-2010

ASSUMPTIONS:
1. Plant utilization up to 100%.

2. Book value of plant 1 and 2 i.e. 7.5465 crores and 6.353 crores is taken under the
condition of 100% capacity and these are the values taken on the basis of average of
previous years.

3. Here the growth rate is taken is 9% for both production of UREA and MI and sales on
the basis of following factors.

Area coverage under sown is 638.33 lakhs hector which increased a lot when
Compared to the previous year (10%). Irrigational potential has Increased 81.1
to 102.08 % up to previous year and more over the govt has come with improved
accelerated irrigation benefit program (alibi)-special grant extension programs for
pending projects, increased international demand for fertilizers about (11%), And
fertilizer consumption compared to previous year and apart from this growth
33

observed is (6%), Rain falls are expected according to predications.

4. As this year, The Company is going to use gas as raw material, the expenses relating to
the specific energy is increased because previously the company is used naphtha as
major raw material for the production which incurs more cost than gas. At the same
time variable cost of naphtha raw materials is reduced to larger extent. And fixed cost
of production is kept as same as it is observed from previous budget. Group concession
is shown at a normal growth of previous budget.

5. The subsidy towards agriculture and fertilizers this year is shown a good growth from
previous years and is about 99456 crores. As keeping this in the mind growth relating
to subsidy is observed 29% previously, so this time it is more than that. Hence
considered 35%as growth rate (huge govt support this time for fertilizer industry to
increase the production and productivity).

6. Hence the demand, subsidy, support price, grown sown area, good rain fall prediction
and many other programs may lead to good growth rate when compared to the previous
(8%). On basis of above things 2% growth rate is taken on previous year percentage.

7. As earlier mentioned that the subsidy towards the agriculture and fertilizers is in this
financial year is more compared to the previous years i.e,15% growth rate ,Hence
applied better rate than that of previous years and it is about 18%.

8. As keeping in the mind regarding inflation rate, market trends and other variable
conditions, The expenditure relating to the purchase of raw materials for future may be
expected to be more than previous years and apart from this supply of raw materials in
regard of manufacturing is falling short that of demand .Hence they need to pay more
for the suppliers to get the required things.

9. In the previous budget there is decline in the growth rate of expenditure on fuel and
power ,But as on present conditions of market in regard of fuel and power is increasing
rather than decrease .Hence in that view, Increased 2% on previous year budget.

10. The growth rate relating to the salaries, wages and benefits are applied as same as the
previous year. Such that the employees, workers and others work dedicatedly and
34

loyally towards the organizational goal.

11. As on the basis of increasing production of units, packaging materials required will be
also be more .So, 4% is taken as growth rate on previous year.

12. They have taken 10% growth rate which normally which prevails in the market rent
deeds but where as in the previous year budget they have shown declined growth rate.

13. In the present situation, expenses, rates, taxes, and maintained relating have been
increased (inflation).In the same line, some nominal growth rate is applied, which is
normally observed in the market every year due to various factors.

14. As the present market is slowly recovering, and flow of funds in market is low so as per
assumptions, banks and other institutional lenders may provide at lesser interest rate
when compared to previous years and it would be very beneficial to the company in
financial terms.

15. As per the norms of the companies act and company, depreciation % and method will
be depending. As per that, it had been applied.

3.2VARIANCE ANALYSIS:
(Inlakhs)

RS IN LAKHS
PARTICULARS BUDGET ACTUALS VARIANCE BUDGET ACTUALS VARIANCE
2007-08 2007-08 2007-08 2008-09 2008-09 2008-09

Net sales 65100.69 66190.91 1090.22 70058.91 237191 167132.O9

Other income 480 1984.33 1504.33 117.5 1199 1081.5

Total expenditure 8267.38 6600.4 -1666.98 8122.63 204334 196211.37

Interest and
14992.65 16296.63 1303.98 12916.5 16932 4015.5
Financing charges

Depreciation 12567.5 12015.21 -552.29 12229.94 12096 133.94

PBT 6940.71 4013.03 -2927.68 2251.29 5028 2776.71

Variance analysis 2007-2008


35

Variance analysis 2008-2009


36

ANALYSIS:

1.Net sales
The amount appear in budget2007-08 is 65100.69 lakhs and in actual is 66190.91 lakhs. Which
is almost having a variance of 1090.22 lakhs, It had little variance when compared to the
budget 2008-09, which had huge variance i.e., 167132.09 lakhs (app)because the forecasting
regarding the wheather is favorable towards farmers

2.Other income
The amounts which the company is taken as other income for both the budgets is 480 and
117.5 lakhs which are very low when compared to the actual generated i.e,1984.33 and 1199
lakhs respectively. This shows that company’s effectiveness and efficiency in investing and
other related activities

3.Total expenditure
When coming to expenditure it had been observed that the budgeted amount for year 2007-08
is more than the actual generated i.e., 8267.38 lakhs in budget and where the actual is 6600.4
and having a variance about -1666.98 lakhs in the next budget i.e,2008-09,Once again there
exists a broad variance of 196211.37 lakhs among budgeted amounts and actual. which
explains that the company is unable to meet their expenditure according to planned budget. By
this we say that they need to improve their standards regarding the budget.

4.Interest and financing charges


Amounts scattered in interest and financing charges of budgets 2007-08 and 2008-09 are
somewhat low than the actual of that particular year and comparative variances of other heads
such as total expenditure, sales etc,

5.Depreciation
In budget 2007-08 the amount allocated towards depreciation is more of 552 lakhs than of
actual and in later budget i.e., 2008-09 it is more of 133.94 lakhs forecasted than of actual of
that particular year.

6.Pbt
Figures in the budget 2007-08 relating to the PBT are over casted of 2927.68 lakhs of actual
and under casting of 2776.71 lakhs of the actual 2008-09.
37

3.3COMPARATIVE STATEMENT FOR 2008-2009:


PARTICULARS NFCL BHARTH CHAMBAL DEEPAK MFCL CORMONANDEL
amt amt Amt amt Amt Amt
INCOME
Sales turn over 2193.59 1.43 2728.78 11,142.71 1627.67 3844.09
Excise duty 0 0.12 0.52 90.57 2.28 44.31
Net sales 2193.59 1.31 2728.28 1052.14 1625.39 3799.78
Other income -29.07 0.09 74.73 32 -3.5 20.89
Stock adjustments 100.98 -0.06 -71.13 -27.01 -0.6 -65.7
Total income 2265.5 1.34 2731.86 1057.13 1621.29 3754.97

EXPENDITURE
1,130.0
Raw materials 1341.04 0.59 1130.48 699.75 2818.28
3
Powerful cost 311.59 0.15 560.82 18.56 259.61 66.18
Employee cost 59.33 0.6 72.46 57.86 40.87 97.66
Other
14.62 0.18 79.63 10.24 17.34 30.84
manufacturing exp
Selling and admin
255.85 0 314.32 30.39 66.24 239.97
exp
Miscellaneous
8.66 3.02 18.35 28.17 17.52 44.86
expenses
Total expenses 1991.09 4.54 2176.06 844.97 1531.61 3297.79
Operating profit 303.48 -3.29 481.07 180.16 93.18 436.29
38

PBDIT 274.41 -3.2 555.8 212.16 89.68 457.18


Interest 162.97 0.78 102.67 15.95 15.43 71.65
PBDT 111.44 -3.98 453.13 196.21 74.25 385.53
Depreciation 120.15 0.9 184.94 44.71 15.91 52.13
Other written off 0 0 1.09 0 0 0
Profit before tax -8.71 -4.88 267.1 151.5 58.34 333.4
Extra ordinary
0.27 -0.28 2.78 0 -1.73 -1.2
items
PBT(post extra-ord
-8.44 -5.16 269.88 151.5 56.61 332.2
items)
Tax 13.31 0.01 64.28 51.25 20.65 122.46
Reported net profit 22.49 -5.18 203.8 100.27 40.46 209.76
Total value
650.05 3.95 1045.57 145.22 401.58 479.51
addition
Preference dividend 0 0 0 0 0 0
Equity dividend 0 0 74.92 30.87 7.11 48.96
Corporate dividend
0 0 12.73 5.25 1.21 8.32
tax
Shares in issue 4281.82 4162 882.05 1185.15 1398.97
Earnings per share 0.53 -9.81 4.9 11.37 3.41 14.99
Equity dividend 0 0 18 35 6 175
Book value 20.3 4.58 27.35 79.23 23.64 56.79

ANALYSIS:
1. The lion share in sales turnover is occupied by Coromandel fertilizers (3844.09 crores) and
next to it is Nagarjuna fertilizers with 2193.59 crores, followed by Chambal, Mangalore,
Deepak and Bharth fertilizers respectively.

2. Some slight variations appeared from sales turnover to net sales in the following companies
Bharth fertilizers (-0.12 crores), Deepak fertilizers (-90.57 crores), Mangalore fertilizers (-2.28
crores), coromandel fertilizers (-44.31 crores).

3.The highest other income is shown by Chambal fertilizers(74.73 crores),next to it is Deepak


fertilizers with(32 crores)and Bharth fertilizers is (0.09 crores).where as the other two
companies are showing negative other income.

4.Once again coromandel is having highest share in total income of 3754.97 crores, later it
followed by Chambal fertilizer with 2731.86 crores and nagarjuna fertilizer with 2265.5 crores,
Bharth fertilizer with least amount of 1.34 crores.

5. Nagarjuna fertilizer is making an expense of 1652.63 crores towards its raw materials and
power & fuel with 3rd in its position. Whereas coromandel fertilizer is having a variance of
39

1100 crores from NFCL and placing it as 1st position in expenses.

6. Coromandel fertilizer is incurring highest employee cost of 97.66 crores when compared to
the other companies.

7. Chambal fertilizer is making higher expenses towards selling and distribution of 314.32
crores but where as coromandel which is having highest sales turnover is making lower than it
i.e, 239.97 crores. And when coming to NFCL it is also making a higher amount of money
towards S&D expenses comparing to its sales turn over.

8. Chambal fertilizer is recorded with highest operating profit of 481.07 crores, coromandel
fertilizer with 436.29 crores and nagarjuna fertilizer with 303.48 crores and it is good sign to
the companies.

9. NFCL is a company which is spending huge amount in the terms of interest towards their
borrowing i.e,162.97 crores and it is higher amount when compared to other companies ,it is
not a good sign to the company that more financial risk.

10. PROFIT before tax of NFCL and Bharth fertilizer is showing a negative sign and where as
coromandel fertilizer is showing is showing a good figure of 333.4 crores.

11. Earnings per share available to the investors is higher in the coromandel fertilizers i.e.,
14.99 crores when we make comparisons with others and where Bharth fertilizers is showing a
negative value.
40

3.4 COMPARATIVE BALANCE SHEET FOR 2008-2009


BALANCE SHEET NFCL BHARTH CHAMBAL DEEPAK MFCL COROMANDEL
Amt amt Amt amt amt Amt
Sources of funds
Total share capital 465.18 5.29 416.21 88.2 118.55 27.98
Equity share capital 427.97 5.29 416.21 88.2 118.55 27.98
Share application money 6.53 0 0 0 0 0
Preference share capital 37.2 0 0 0 0 0
Reserves 441.03 -2.86 722.06 610.6 161.61 766.46
Revaluation reserves 760.94 0 0 0 92.65 0
1673.6
Net worth 2.43 1138.27 698.8 372.81 794.44
8
1391.3
Secured loans 2.6 1612.98 198.39 355.75 512.27
1
Unsecured loans 62.42 2.03 280.65 150.99 24.25 400.41
1443.7
Total debt 4.63 1893.63 349.38 380 912.68
3
3127.4
Total liabilities 7.06 3031.9 1048.18 752.81 1707.12
1

Application of funds
3892.7
Gross block 28.73 3213.86 1039.22 581.24 1125.93
8
Less: Accum. 1835.9
21.69 1593.03 487.68 272.21 401.38
Deprecation 1
2056.8
Net block 7.04 1620.83 551.54 309.03 724.55
7
Capital work in progress 30.23 0 709.58 248.19 15.57 10.84
Investments 722.46 0.02 307.41 142.75 0.05 351.34
Inventories 189.24 6 302.6 79.24 170.68 864.87
Sundry debtors 298.14 0.35 163.1 216.81 17.01 102.59
Cash and bank balance 21.66 0.41 58.57 11.76 59.91 52.95
Total current assets 509.04 6.76 524.27 307.81 247.6 1020.41
Loans and advances 416.87 1.71 472.03 96.31 514.65 606.93
41

Fixed deposits 9.54 0 4.1 18.29 0 13.37


Total ca, loans
935.45 8.47 1000.4 422.41 762.25 1640.71
&advances
Differed credit 0 0 0 0 0 0
Current liabilities 470.62 8.32 468.92 274.68 276.01 916.66
Provisions 146.97 0.15 138.78 43.22 58.08 103.66
Total Cl &provisions 617.59 8.47 607.7 317.9 334.09 1020.32
Net current assets 317.86 0 392.7 104.51 428.16 620.39
Miscellaneous expenses 0 0 1.36 1.21 0 0
3127.4
Total assets 7.06 3031.88 1048.2 752.81 1707.12
2
Contingent liabilities 231.65 0.51 854.68 184.05 35.67 64.25
book value 20.3 4.58 27.35 79.23 23.64 56.79

ANALYSIS
1. The amount raised through share capital in nagarjuna fertilizers is appearing higher
amount when compared to the others i.e, 465.18 crores and in Bharth fertilizers it is
only about 5.29 crores.

2. When coming to reserves, Coromandel, Chambal and Deepak are maintaining huge
amounts as reserves from the part of their profits .NFCL is also showing the reserves
but not in the proportion of coromandel, Chambal and Deepak fertilizers.

3. Net worth of the NFCL is showing a good figure i.e., 1673.68 crores, Where the other
companies showing below 1000 figure. It shows the soundness of the organization and
creates a good image in minds of the people.

4. Investments made by the company also carries a good name in the view of investors
and NFCL is the which made huge investments in the name of company in other
companies i.e,722.46 crores and where as other companies have not invested 50% of
NFCL also.

5. Coming to total current assets NFCL is maintaining a good proportion to other


companies i.e., 509.04 crores where as Chambal is 524.27 crores and coromandel
fertilizer is 1020.41 crores.

6. Current liabilities to be paid to the lenders is more appearing in coromandel and


Chambal fertilizers while others are somewhat less when compared highest possessing
42

assets company is nagarjuna fertilizers with 3127.42 crores when compared to the
companies like Bharth, coromandel, Deepak, Mangalore, and Chambal fertilizers .it is a
health sign to the company and trustee sign in the minds of investors.

FINDINGS

1. More demand for urea and its byproducts. (According to economic survey 2008-2009)

2. The subsidy and govt support towards the agriculture and fertilizers industry is showing
good growth rate. (According to economy survey 2008-2009)

3. Expenditure relating to the raw material is showing fast growth rate for NFCL.

4. As production of fertilizers is showing a growth, packing materials required is also more.

5. Variance in the net sales of NFCL is showing low when compared to other fertilizer
companies for two financial year’s i.e. 2008 and 2009.

6. Amounts scattered in interest and financing charges of budgets 2007-08 and 2008-09 are
somewhat lower than actual of that particular year. This shows that company is going for more
debts from outside than what it expected.

7.In budget 2007-08 the amount allocated towards depreciation is more of 552 lakhs than of
actual and in the later budget 2008-09 it is more of 133.94 lakhs forecasted than of actual of
that particular year.

8. Chambal fertilizer is making higher expenses towards selling and distribution is standing
first with 314.32 and NFCL is standing in third position, it may act as good sign for NFCL as it
is fewer amounts.
43

9. Coromandel fertilizer is occupying lion share in sales turn over and next to it is nagarjuna
fertilizer with 2193.59 crores.

10. Earnings per share available to the investor is higher in coromandel fertilizers
i.e.14.99crores Where NFCL is standing at 4th position with very less amount i.e.53 crores.

11. Net worth of the NFCL is showing a good figure i.e. 1673.68crores where other companies
showing below 1000 crores.

12. Investments made by the NFCL is huge and which played a vital role in carrying good
name and fame in the mind of investor, suppliers etc,

13. Highest possessing of assets is NFCL among all the fertilizer companies compared.
44

SUGGESTIONS:

A budget is treated as an important tool by organization in the management of its financial


resources. With the help of proper maintenance of budget and budgetary control, can allocate
funds for appropriate purpose; keep spending within bounds and better use of its funds. The
following are the things which help in increase effectiveness of budgetary control.

a. Budgetary control avails huge benefits if it properly applied. But it is not possible in the
NFCL because it does not have proper structure and pattern of organization, as knowledge also
lies in the lines of authority and it is possible to get full advantage only the structure is proper.

b. NFCL needed to divide the organization into sub units. Such that decision centers and
profit centers. Which will be also used as investment, profit, cost centres and improves
responsibility and accountability of employees towards their work.

c. NFCL is required to maintain a systematic way of recording budgets. They must be


flexible enough for making monthly or quarterly budgets and for facing any future
consequences. They can estimate the budgets logically basing not only on the past
estimated/actual figures but also the considerations affecting the future profits of the concern.
Further, employing various budgetary control techniques are Accounting Techniques like
Standard costing (comprising Overhead and Sales variance), Marginal costing, Business
Forecasting, Zero Base Budgeting and.
45

Conclusion:

NFCL is one of the leading manufacturer of fertilizers, it has given many subsidies by the
government in regard to provide the fertilizers at lower price to farmers. NFCL has a
huge capacity to produce UREA and MI in their respected plants when compared to
other fertilizer companies such as Deepak, Bharth, Chambal fertilizers. Expenditure
relating to the raw materials is showing the faster growth in NFCL and along with they
are also going for more borrowings from outside then what they have expected. Apart
from this company is also possessing huge investments and returns on it when compared
to all other companies (as per the study). NFCL is also incurring less amount towards its
distribution channel and it has huge assets in its hand, which shows the soundness of the
company.
46

BIBLIOGRAPHY:

Websites:
http://www.allbusiness.com/government/3568664-1.html
http://www.fao.org/docrep/W4343E/w4343e05.htm
http://findarticles.com/p/articles/mi_hb5951/is_200201/ai_n24060105?tag=rel.res1
http://findarticles.com/p/articles/mi_hb5951/is_200201/ai_n24060105?tag=rel.res1
http://www.laynetworks.com/Accounting%20and%20Finance%20on%20Computers.htm
http://www.centage.com/partners/programs-prn.asp
http://www.centage.com/products/reporting-and-analysis-prn.asp
Books:

 P.V.Rathnam., Budgeting, Bombay, Himalaya publishing house, 1994


 Cost and management by Maheshwari.
 Cost accounting R.S.N. Pillai V. Bagavathi.
 COLIN DRURY, Cost and management accounting, sixth edition, Thomson Learning,
2004
47

ANNEXURE

Table
48

BUDGET BUDGET 2008-


SL.NO PARTICULARS
2007-2008 2009
INCOME
1 Capacity 11.946 11.946

2 P1 7.527 7.566

3 P2 5.973 6.733

4 Production (urea) 13.5 14.298

5 Production (mi) 389.44 0

6 Sales(urea) 13.5 14.298

Sales(mi) 375.36 584.86

7 Manufactured urea
Plant 1
Specific energy 5.535 5.534
Variable cost 3520 3827
Fixed cost 3095 3095
Group concession 6615 6922

Plant 2
Specific energy 5.627 5.621
Variable cost 12839 11515
Fixed cost 2712 2712
Group concession 15551 14227

8 Freight subsidy 700 900

9 Sales 66243.56 71545.4

10 Subsidy
Normal production
Urea P1 11375.09 13569.75
P2 65111.08 57205.73
Additional production
49

Urea P1 3026.07 3456.34


P2 0 6523.47

11 Other income 480 117.5

EXPENDITURE
1 Purchases (raw materials) 73815.99 77294.1

2 Power and fuel 26781.82 26769.76

3 Salaries ,wages and benefits 5883.12 6987.38

4 Packing materials consumed 6398.02 6341.44

5 Distribution expenses 765 532.95

6 Other expenses 8267.38 8122.63

7 Interest and financial charges 14992.65 12916.5

8 Depreciation 12567.5 12229.94


50

Table
PARTICULARS NFCL BHARTH CHAMBAL DEEPAK MFCL CORMONANDEL
amt amt Amt Amt Amt Amt
INCOME
Sales turn over 2193.59 1.43 2728.78 11,142.71 1627.67 3844.09
Excise duty 0 0.12 0.52 90.57 2.28 44.31
Net sales 2193.59 1.31 2728.28 1052.14 1625.39 3799.78
Other income -29.07 0.09 74.73 32 -3.5 20.89
Stock adjustments 100.98 -0.06 -71.13 -27.01 -0.6 -65.7
Total income 2265.5 1.34 2731.86 1057.13 1621.29 3754.97

EXPENDITURE
1,130.0
Raw materials 1341.04 0.59 1130.48 699.75 2818.28
3
Powerful cost 311.59 0.15 560.82 18.56 259.61 66.18
Employee cost 59.33 0.6 72.46 57.86 40.87 97.66
Other
14.62 0.18 79.63 10.24 17.34 30.84
manufacturing exp
Selling and admin
255.85 0 314.32 30.39 66.24 239.97
exp
Miscellaneous
8.66 3.02 18.35 28.17 17.52 44.86
expenses
Total expenses 1991.09 4.54 2176.06 844.97 1531.61 3297.79
Operating profit 303.48 -3.29 481.07 180.16 93.18 436.29
PBDIT 274.41 -3.2 555.8 212.16 89.68 457.18
Interest 162.97 0.78 102.67 15.95 15.43 71.65
PBDT 111.44 -3.98 453.13 196.21 74.25 385.53
Depreciation 120.15 0.9 184.94 44.71 15.91 52.13
Other written off 0 0 1.09 0 0 0
Profit before tax -8.71 -4.88 267.1 151.5 58.34 333.4
Extra ordinary
0.27 -0.28 2.78 0 -1.73 -1.2
items
PBT(post extra-ord
-8.44 -5.16 269.88 151.5 56.61 332.2
items)
Tax 13.31 0.01 64.28 51.25 20.65 122.46
Reported net profit 22.49 -5.18 203.8 100.27 40.46 209.76
Total value
650.05 3.95 1045.57 145.22 401.58 479.51
addition
Preference dividend 0 0 0 0 0 0
Equity dividend 0 0 74.92 30.87 7.11 48.96
Corporate dividend
0 0 12.73 5.25 1.21 8.32
tax
Shares in issue 4281.82 4162 882.05 1185.15 1398.97
Earnings per share 0.53 -9.81 4.9 11.37 3.41 14.99
Equity dividend 0 0 18 35 6 175
51

Book value 20.3 4.58 27.35 79.23 23.64 56.79

Table
BALANCE SHEET NFCL BHARTH CHAMBAL DEEPAK MFCL COROMANDEL
Amt amt amt amt Amt Amt
Sources of funds
Total share capital 465.18 5.29 416.21 88.2 118.55 27.98
Equity share capital 427.97 5.29 416.21 88.2 118.55 27.98
Share application money 6.53 0 0 0 0 0
Preference share capital 37.2 0 0 0 0 0
Reserves 441.03 -2.86 722.06 610.6 161.61 766.46
Revaluation reserves 760.94 0 0 0 92.65 0
1673.6
Net worth 2.43 1138.27 698.8 372.81 794.44
8
1391.3
Secured loans 2.6 1612.98 198.39 355.75 512.27
1
Unsecured loans 62.42 2.03 280.65 150.99 24.25 400.41
1443.7
Total debt 4.63 1893.63 349.38 380 912.68
3
3127.4
Total liabilities 7.06 3031.9 1048.18 752.81 1707.12
1

Application of funds
3892.7
Gross block 28.73 3213.86 1039.22 581.24 1125.93
8
Less: Accum. 1835.9
21.69 1593.03 487.68 272.21 401.38
Deprecation 1
2056.8
Net block 7.04 1620.83 551.54 309.03 724.55
7
Capital work in progress 30.23 0 709.58 248.19 15.57 10.84
Investments 722.46 0.02 307.41 142.75 0.05 351.34
Inventories 189.24 6 302.6 79.24 170.68 864.87
Sundry debtors 298.14 0.35 163.1 216.81 17.01 102.59
Cash and bank balance 21.66 0.41 58.57 11.76 59.91 52.95
Total current assets 509.04 6.76 524.27 307.81 247.6 1020.41
Loans and advances 416.87 1.71 472.03 96.31 514.65 606.93
Fixed deposits 9.54 0 4.1 18.29 0 13.37
Total ca, loans
935.45 8.47 1000.4 422.41 762.25 1640.71
&advances
Differed credit 0 0 0 0 0 0
Current liabilities 470.62 8.32 468.92 274.68 276.01 916.66
Provisions 146.97 0.15 138.78 43.22 58.08 103.66
Total Cl &provisions 617.59 8.47 607.7 317.9 334.09 1020.32
Net current assets 317.86 0 392.7 104.51 428.16 620.39
Miscellaneous expenses 0 0 1.36 1.21 0 0
3127.4
Total assets 7.06 3031.88 1048.2 752.81 1707.12
2
Contingent liabilities 231.65 0.51 854.68 184.05 35.67 64.25
52

book value 20.3 4.58 27.35 79.23 23.64 56.79

VARIENCE ANALYSIS
PARTICULARS VARIANCE VARIANCE
2007-08 2008-09
Net sales 1090.22 167132.O9
Other income 1504.33 1081.5
Total expenditure -1666.98 196211.37
Interest and Financing
4015.5
charges 1303.98
Depreciation -552.29 133.94
Pbt -2927.68 2776.71
53

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