A

PROJECT REPORT ON BUDGETARY CONTROL SYSTEM

IN
KESORAM CEMENT INDUSTRIES LIMITED
By
Mr. .
(.)
PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF
THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
college
(Affii!"#$ "% .)
HYDERABAD
&'(()&'(*

TABLE OF CONTENTS
1
S.NO CHAPTER NO NAME OF THE CHAPTER PAGE NUMBER
( CHAPTER )I INTRODUCTION+
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& CHAPTER 7II PROFILE OF THE ORGANISATION (8)&6
* CHAPTER 7 III RE9IEW OF LITERATURE+
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&8)*<
6 CHAPTER ) I9
BUDGETING AND BUDGETARY
SYSTEM IN KESORAM CEMENT
*INDUSTRIES LTD.
*=)8(
8 CHAPTER 7 9 ANALYSIS AND INTERPRETATIONS 8&)>6
> CHAPTER 7 9I CHARTS

>8)?(
? CHAPTER )9II

ANNE@URES ?&)??
< CHAPTER ) 9III CONCLUSIONS A SUGGESTIONS ?<)<'
= ) BIBLIOGRAPHY

<(
2
CHAPTER)I
INTRODUCTION

INTRODUCTION+
3
It is well recognized that budget are among the essential tools of management of any organization unlike
other management aids, budgets are made use of practically by all functionaries in the organization.
Budgets not only reflect the plan of action for different leels of management but are also useful to
monitor arious actiates and initiate mid course correctie actions. Budgets !ust do not reduce the
managerial function to a mere formula but aids as a managerial tool.
"ence#effectie use# of this art as well science. $hus it needs continuous budget education and creation of
ealuation and performance through budgets. Budgets proide management summarized picture of the
results to be e%pected, also forms the proposed plan of operations. $hey enable the management to
determine whether the plan is satisfactory. Budgets sere as a guide to e%ecuties and departmental heads.
$hey measure performance since# Budget &eiations# reflect either the organization failure to achiee the
planned standards of performance or its ability to better them.
$hus budgeting is a means of obtaining the most productie and profitable use of the companies' resources
through planning and control. Budgets are helpful in coordination the arious actiities ()uch as
production, sales, purchase etc* of the organization with the result that the actiities precede according to
the ob!ectie.
Budgets are means of communication. Ideas of the top management are gien the shape of the
budget and are passed on the subordinates who are to gie them the practical shape. +s the actiities of
arious departmental heads are coordinated at the preparation of budget, it is helpful in deeloping a team
work which is ery much needed for the ery success of an organization. $hus, a budget is necessary to
plan for the future, to motiate the staff associated, to coordi,nate the actiities of different leels. +
budget is an oerall blue print of a comprehensie plan of action e%pressed in physical and financial terms-
it includes plan for each of the actiity responsibility centers of the business and proides a link between
the physical and financial plans of arious departments of a company. It is also a document to sere as
control for monitoring and reiew. $he budget system should be such that it makes it imperatie for
management to establish goals and ob!ecties, define policies, deelop programmers' both long term and
short term, measure performance against the targets and in the process, reises the part of management. In
a way of budgetary control system has been increasing an enterprise's profits, and a goals.achieing
machine for facilitating organizational coordination and planning while achieing the budgeted targets.
/
NEED FOR BUDGETS
$he rationales for budgets hae fie aspects0
1. A-"4%riB!"i%,+ $he budget is used to authorize the e%penditure and actiities contained in it.
2. E2!-!"i%, %f ;#rf%r5!,.#+ $he planned actiities and e%penditures contained in the budget
proide a standard against which the actual achieement of the firm can be measured and ealuated.
3. C%%r$i,!"i%, %f !."i2i"i#3+ $he piecemeal budgets of the subunits of the firm are so framed that
each sun.unit is made to contribute to the achieement of the oerall budget.
/. C%,"r%+ $he setting up of organizational machinery to direct efforts towards the planned aims.
$he budgets sets out the planned actiity, subse1uent deiations between achieement and plan will
indicate the need for inestigation and correctie action.
2. M%"i2!"i%,+ $he budget is so constructed as to moe employees form one target goal to another-
indeed it is bound up with the reward punishment type of organization enironment and
bureaucratic decision processes, where employees are gien incenties to work towards the
achieement of the firm's targets.
WHY COMPARE ACTUAL AND BUDGETC
3ne of the ob!ecties of budgeting is to proide a base against which actual performance can be
measured. $his is only worth doing if action will be taken as a result.
In too many organizations the production of results compared to budget is seen as the end of the process. If
no action is taken on the basis of management accounts then there is little point in producing them and een
less point is wasting management time discussing them.
2
By identifying progress we are better informed regarding the effects of our actions and hae a clear
understanding of the effect of any future action we take. 4nowing how much is being spent each month
enables a manager to consider whether action needs to be taken to spend more or less in the future. $his
process is only worthwhile if the budget is realistic. +nalyzing ariances against an unrealistic budget is
pointless.
"oweer in a well runs organization the comparison between actual and budget is used as the basis for
deciding the appropriate action. $his paper sets out how the analysis is used to ma%imum effect. $he
process is really part of the normal control process.
WHAT CAUSES BUDGET 9ARIANCES
$here are four key reasons and it is important that good managers recognize the differences, because the
action re1uired is may be completely different in each case.
T4# f%-r r#!3%,3 !r#+
1. 5aulty +rithmetic in the Budget figures.
2. 6rrors in the +rithmetic of the +ctual 7esults
3. 7eality is wrong
/. &ifferences between Budget +ssumptions and +ctual 3utcome
6ach of these will be e%amined in turn.
() F!-"y Ari"45#"i. i, "4# B-$0#" Fi0-r#3
It is perfectly to hae an error in the budget. $his includes errors of commission or duplication as well as
pure arithmetic. 3ne action is to make a note to ensure it does not happen again when the ne%t budget is
being done. 3ther action depends on the error.
+ssume the budget stated no oerdraft would necessary and it now appears one is re1uired because the
sales forecast was used to predict cash inflows rather than the debtor payments. $here are two options0 8o
to the bank and ask for an oerdraft, or take some other action to improe cash flow to stay within the
9
budget cash figure. $he original budget numbers will need to be changed to reflect the new circumstances
and future reporting should be against the reised budget (often called a reforecast or latest estimate.*
+ction is re1uired but it may not be within the area where the error was made.
A9OID+ :$he +ccounts figures are always different from ours so we ignore them and keep our records#.
&) Err%r3 i, "4# !ri"45#"i. %r "4# !."-! r#3-"3
It is perfectly possible for the actual results to be reported wrongly. $his includes the use of the wrong
category omission of costs- double counting of income etc. one well known way of staying within budget is
to throw away any inoices receied from )uppliers, or charge them someone else's account code. $his
sort of deliberate action makes nonsense of budgetary control and must be aoids. $he correctie action
once this is discoered is to preent it happening again. Improements in management education and
control procedures are recommended.
3ne e%tra consideration is that in order to correct the error the cumulatie results will need to be corrected.
$his means either putting through a correction in the ne%t period, which will then also be wrong, or
ad!usting the past results to correct the error.
5ailing to note that the correction can cause misleading results can lead to wrong decisions being made.
A9OID+ :$he accounts figures are always different from ours so we ignore them and keep our own
records.#
*) R#!i"y i3 Dr%,0.
)ometimes the actual results are useless as an indicator. + strike or natural disaster will hae an impact on
results. $his does not mean that the budget process in future should include an allowance for this
happening again. ("oweer in large organizations it is normal to allow for the impact of a disaster centrally
as a contingency een if it is not budgeted at operating unit leel.* If necessary, insurance should be taken
out. If business is disrupted for two weeks, then it is pointless to compare the remaining two weeks of the
month against a full month's budget. ;roduce a realistic budget for only two weeks and compare against
that to establish true performance under normal circumstances.
<
A9OID+ :$he ariances are distorted because of ..)o it's not my fault#.
6) Diff#r#,.#3 /#"D##, /-$0#" !33-5;"i%,3 !,$ !."-! %-".%5#
$his is the key issue and the one which inoles the use of ariance analysis techni1ues. 7emember that
all budgets contain errors in the assumption =o one knows the future outcome for certain. $he important
thing is not to apportion blame by looking backwards, but to look forwards and take action to improe the
future in the light of e%perience. $he action to be take action to be taken depend s on circumstances.
"oweer, punishing deiation from the budget is the best way of destroying the budget process.
>anages will spend up to budget, conceal data, make the actual fit the budget in order to aoid blame.
$his is particularly true in large multi.national organizations. $he emphasis must be on what can we do
about it, rather than why the results are different.
A9OID+ :?e are under budget, who can we blame@#
HOW ARE 9ARIANCES CALCULATED
T4#r# !r# "D% i5;%r"!," r-#3+
1* $he leel of ariance analysis should be decided by the needs of the decision maker, not the
conenience of the reporter.
2* $he budget must always be fle%ed for olume changes to produce realistic Aariances.
E@AMPLE+
PARTCULARS BUDGET TOTAL
B
)+C6) A3CD>6 1EE ,E
)+C6) A+CD6 1EEE ,,E
A+7I+BC6 F3)$) 2EE /,2
5IG6& F3)$) 2EE 21E
PROFIT *'' &<8
$he budget committee wishes to blame someone for the fact that profit is down by 12.
:It is obious who is to blame sales are below target and fi%ed costs hae not been controlled#.
PROPER 9ARIANCE ANALYSIS
$he re1uire some through and some simple calculations. It has / )tages0
1* 5le%ing the budget.
2* +nalyzing the ariances.
3* Identifying the causes.
/* $aking appropriate action.
)ince only the last of these is a alue adding actiity, the first three are only worth doing if step / is taken
in time to help future results. $his may mean the first three steps hae to be done fast een if that reduces
their accuracy.
FLE@ING THE BUDGET
In the e%ample it is futile to compare the actual ariable costs with the budget. $o do so suggests that the
manager is doing better than budget, but actual olume is below budget so costs should be lower. It is ital
to produce a reised budget to use for comparison. $his does not mean that the original budget is useless.
It merely means that in order to analyze the 12 difference it is important to start by remoing the impact of
olume changes on the arious headings which are by it.
PARTICULARS ORIGINAL BUDGET RE9ISED BUDGET ACTUAL
)+C6) A3CD>6 1EE ,E ,E
)+C6) A+CD6 1EEE ,EE ,,E
A+7I+BC6 F3)$) 2EE /2E /,2
,
5IG6& F3)$) (C6))* 2EE 2EE 21E
PROFIT *'' &8' &<8
$his recalculates the budget using actual olume but budget prices and shows that the e%pected profit for
,E units is 22E2. $hus the impact on profit is a reduction of 2E and this can be identified as )+C6)
A3CD>6 A+7I+=F6 7s. (2E*. + common conention is to put unfaorable ariances in brackets.
=ow the other ariance can be calculated.
ANALYSING THE 9ARIANCES+
PARTICULARS
ORIGINAL
BUDGET
RE9ISED BUDGET ACTUAL 9ARIANCES
)+C6) A3CD>6 1EE ,E ,E .
)+C6) A+CD6 1EEE ,EE ,,E ,E
A+7I+BC6 F3)$) 2EE /2E /,2 (/2*
5IG6& F3)$) (C6))* 2EE 2EE 21E (1E*
PROFIT *'' &8' &<8 *8
$he alid set of budget data is to compare against actual. $he ariance on sales can be due to price. $his is
the )+C6) ;7IF6 A+7I+=F6 of 7s. ,E.
$he ariable costs re1uire further inestigation.
+ssume that the original budget was to use 2.2E meters of material for each sales unit and that each meter
was e%pected to cost 7s. 2.EE. $his gae a budget figure 1EE G 2.2E G 7s.2.EEH7s.2EE.
$he +ctual result included a price of 7s. 2.<2 per meter but only 2.EE meters were used per sales unit. $his
gae an actual figure of ,E % 2.2E % 7s.2.EE H 7s. /2E.
T% i$#,"ify "4# .!-3# %f "4# 2!ri!,.# %f R3. 68E D# ,##$ "% 3#;!r!"# "4# ;ri.# i5;!." fr%5 "4# -3!0#
i5;!.".
Pri.#
?e e%pected to pay 7s. 2.EE per meter- we did pay 7s. 2.<2 per meter.
6ach of the 1BE meters we bought cost E.<2 e%tra .1BE % (2.EE.2.<2* H 7s. (132* this is the >+$67I+C)
D)+86 A+7I+=F6 7s. (132*.
U3!0#
1E
?e e%pected to use 222 meters in total to make ,E units- we did use 1BE.
+t the budget price of 7s. 2.EE we saed ..7s.2.EE % (1BE.222* H 7s.,E
$his is the >+$67I+C D)+86 A+7I+=F6 7s.,E.
3n fi%ed costs we e%pected to spend 7s. 2EE but we did spend 7s. 21E.
$he 5IG6& F3)$ A+7I+=F6 I) 7s. (1E*.
SUMMARISING THE 9ARIANCES
)+C6) A3CD>6 (2E*
)+C6) ;7IF6 ,E
>+$67I+C) ;7IF6 (132*
>+$67I+C) D)+86 ,E
5IG6& F3)$) (1E*
...........
(12*
HHHHHH
IDENTIFING THE CAUSES
$his is where politics and blame apportionment must be aoided. Fonsider these possible Fomments on
the aboe figures.
:$he price of the raw materials went up so we asked the factory to be careful about waste and told the
manufacturing force to put prices up#.
11
OBJECTI9ES OF STUDY+
$o proide a theoretical framework of budget, and budgetary control.
$o describe the profile of the organization as a backdrop for undertaking a study of budgetary
control system.

$o analyze the budgetary system in practice in 4esoram cement Industries Cimited (hereafter
4esoram* with particular reference to their ob!ecties and phases of organizational and re.
appropriation.
In addition to the analysis of the conentional budgetary system in practice in 4esoram cement
Industries limited. $he study aims at ealuation and modification to the budgetary system with
reference to the arious types of budgets. $he scope in the formulation of performance budget is
also studied
METHODOLOGY
SOURCES OF DATA+
A). SOURCES OF THE DATA
$here are mainly two important sources through which the whole data is collected.
12
Pri5!ry $!"!
$he primary data of the topic is collected by personal interaction with the officials of the finance and
accounting department and also from annuals of the company. $he financial data relating to the
organization has been collected for the 2 years
I S#.%,$!ry $!"!
$he data collected from the other sources.
SCOPE OF THE STUDY+
$he data of basanthnagar, kesoram cement industries limited, hae been collected mainly from secondary
sources ia
1. 5rom the concerned officers of the kesoram cement industries limited.
2. 4esoram cement industries limited.!ournals.
3. +ccounting books, records.
/. 4ey books of concerned title.
2. )tatically records.
9. 4esoram cement industries limited library.
13
LIMITATIONS OF THE STUDY
6stimates are used as basis for budget plan and estimates are based on aailable facts and best
managerial !udgment
Budgetary control cannot reduce the managerial function to a formula. It is only a managerial
$ool which increase effectieness of managerial control
$he use of budget may lead to restricted use of resources.
6fforts may therefore not be made to e%ceed the performance beyond the budgeted targets.
5re1uent changes may be called for in budgets due to fast changing industrial climate.
In order that a system may be successful, ade1uate budget education should be imparted at least
through the formatie period. )ufficient training programs should be arranged to make employees
gibe positie response to budgetary actiities.
$he study is the limited up to the date and information proided by 4esoram cement industry
Cimited and its annual reports
1/
CHAPTER)II
PROFILE OF THE ORGANIFATION
12
PROFILE OF THE INDUSTRY+
$he B2.year Jold Indian cement industry is one of the cardinal and basic infrastructure industries which
en!oys core sector status and played crucial role in the economic deelopment and growth of a country.
Being a core sector this industry was sub!ect to price and distribution controls almost uninterruptedly
from world war.II. ?hen goernment of India announced the partial decontrol manufacturing cement
became increasingly attractie and the industry e%perienced substantial e%pansion. +s the supply in
response to the 1,B2 partial decontrol was significant in >arch 1,B,, price and distribution control were
finally dispensed with .It was one of the first >a!or industries in the country to be so deregulated.
O9ER9IEW OF THE INDUSTRY+

$he word cement means any substance applied for sticking things. But cement is most ital and
important material for modem construction as a binding agent .In the ancient times ,clay ,bricks and
stones hae been used for construction work.

$he 7omans were using a binding or a cementing material that would harden under water. $he first
systematic effort was made by )>6+$I3= who under took the erection of a new lighthouse in 1<29.he
obsered that the production 3btained by burning limestone was the best cementing material for work
under water.

+fter eighty years branch chemist produced hydraulic cement by burning finely
ground delay used in the form of paste .cement inented by K3)6;" +);&I= in 1B2/. )ince
hardened Fement paste resembled ;ortland stone found in 6ngland be named it a s ;ortland
cement + name that has ensured een ;ortland cement was list manufactured in D)+ in 1,<2 In
;ortland cement was produced for the rust time in 1,/E. By south India industries limited >adras.
$his unit had capacity of 3E tonnes per day.
By 1,13 howeer three units started their operations with a combined installed
capacity 3f <2EEE tones per annum. In 1,1/ indigenous production fees for short of
domestic demand necessitating an import of 1,92,<23 tones .)hipment difficulties and foreign
19
$rade during the first world war acted as a catalyst for the deelopment of indigenous
Industry and by 1,2/ the total installed capacity grew to 2,2,,BEE tones per annum.
In 1,93 all the cement companies with the e%ception of )3=6 A+CC6L ;37$C+=& F6>6=$
F3>;+=L CI>I$6& merged to form the +))3FI+$6& F6>6=$ F3>;+=I6) CI>I$6&. $his has
more facilitated a cost reduction as well as uniformly in 1uality. By 1,/< the installed
capacity of the industry raised to 2.2million tones per annum. +fter partition 2 of the
cement producing units in the country went to ;akistan +nd total installed capacity
of 1B units that remained in India was 1.2 million tonnes per +nnum . $his is increased to
3.Bmillion tones by 1,2E.21. In the three decades between 1,2E.1,BE the capacity
e%pansion was between <.B million tonnes per decade the target set in respect of additional
capacity generation was released with impetus gien by the partial decontrol announced in
1,B2. )eeral units locked up pro!ect for e%pansion of capacity and modernization which
contributed towards increased production.

DEFINITION OF CEMENT 0
Fement may is defined as a mi%ture of calcium sulfate and aluminates which hae the
property of setting and hardening under water .$he amount of silica which is present on each
crust are sufficient to combine with calcium o%ide to form the corresponding calcium silicate and
aluminates
CLASSIFICATION OF CEMENT+
C#5#," i3 %f * "y;#3
1. ;uzzolantic cement
2. =ature cement and
3. ;ortland cement
1<
P-BB%!,"i. .#5#,"+
It consists of mi%ture of silicate of calcium and aluminum .it shows the hydraulic properties when it is in
the form of powder and being mi%ed with suitable proportions of suitable ;roportion of lime
$he rate of hardening is much slower and the comprehensie strength deeloped is about half of ;ortland
cement .it is found more resistant to the chemical action than others.
N!"-r! .#5#,"+
$his is nature occurring material it is obtained from cement rocks these cement rocks are
claying lime stones containing silicates and aluminates of calcium the )elling property of this
cement is more than the ;ortland cement but the comprehensie is half of it.
P%r"!,$ .#5#,"+
$his is of arious kinds
1. ordinary ;ortland cement
2. rapid hardening ;ortland cement
3. low heat cement
/. white colored cement
2. water proof ;ortland cement
9. ;ortland slang cement
<. port land puzzling cement
B. sulfate resisting
INDIAN CEMENT INDUSTRY PRESENT STATUS
+fter the dealing of the industry in Kuly 1,,1 it reacted positiely to the policy changes
new capacities created and the olume of production increased from a situation of
importing cement the country started e%ploring due to high 1uality and cost
effectieness after liberalization the black market in cement also disappeared currently
India stands second largest in the cement production worldwide after china on the other
hand per capita consumption in India is only books as compared $o the world aerage of
29Ekgs the industry has ), companies owning 11) plants in the matters of e%ports the
goernment considers cement as a e%treme 5ocus area. "oweer Indian cement in the global
1B
market is not ery competitie &ue to high power and full costs. in order to improe its position in
the international market technological up gradation is essential in terms of process
;roduct diersification cost reduction 1uality control and energy saying.
ABOUT THE INDUSTRY
$his chapter e%amines a profile of cement industries ltd. i.e. .its history location organization
structures etc.
LOCATION
4esoram cement industry is one of the leading manufacturer of cement in India it is a day process
cement plant the plant capacity is B.22 lakh tones per annum .it is located at basanthnagar in
karimnagar district of +ndhra ;radesh Basanthnagar is Bkm away from the 7amagundam
railway station linking madras to new &elhi. $he chairman of the company is syt.B.4.Birla.
1,
HISTORY OF THE KESORAM
$he first unit at Basantnagar with a capacity or 2.1 lakh tons per annum in corresponding suspension.
preheated system was commissioned during the year of 1,9, the second unit ?as setup in year 1,<1
with a capacity of 2.1 tones per annum and the third unit with a capacity of 2.2lakh tons per annum
went on stream in the year 1,<B the coal for this company is being supplied iron singareni
collories and the power is obtained from
+;)6B the power demand for the factory is about 21>? kesoram has got 2&8 sets of />? each
installed in the year 1,B<.

4esoram cement industry has set up a 12kw capacity power plant to facilitate for uninterrupted
power supply for manufacturing of cement starts at 2/ august 2EEB per hour 12 mw, actual power is 12mw.
Birla supreme in popular brand of kesoram cement from its prestigious plant of Basantnagar
in +.; which has outstanding track record in performance and productiity sering the nation
for the last two and had decades It distinction by Bagging seeral national awards .It also has
the distinction optimum capacity utilization.
4esoram offers a choice of top 1uality portioned cement for light heay constructions and
allied applications 1uality is built eery fact of the operations.
$he plant layout is rational to begin with the limestone is rich in calcium carbonate a key factor that
influence the 1uality of final product the day process technology used in the latest computerized
monitoring oerseas the manufacturing process samples are sent regularly to the bureau of Indian
standards national council of constructions and Building material for certification of deried 1uality
norms
$he company has igorously undertaking different promotional measures their product
through different media which includes the use of newspapers ,magazines ,hoardings etc
4esoram cement industry distinguished itself among all the cement factories in India by bagging the
national productiity award consecutiely for two years and the year 1,B2 .1,B<.the federation of
+ndhra ;radesh chamber of commerce and industries also conferred kesoram cement an award
2E
for the best Industrial promotion e%pansion efforts in the year 1,B1.kesoram also bagged 5+;FFI
+warded for :best family planning effort in the state : for the year 1,B<.1,BB.
3ne among the industrial giants in the country today sering the nation on the industrial
front kesoram industrials Ctd has a che1ue red and eentful history dating Back to the twenties
when only a te%tile mill under its banner 1,2/ it grew from )trength to spread and actiities 1E
newer fields like 7ayan pulp $ransport paper spun pipes refractiites types and other products
Cooking to the wide gap between the demand and supply of a ital commonly cement ?hich plays DI
important role in national building actiity the goernment of India had de.licensed the cement
industry in the year 1,99 with a iew to attract priate entrepreneurs to augment the cement industry
production kesoram rose to the occasion +nd diided to setup a few cement plants in the country
4esoram cement undertaking marketing actiities e%tensiely in the states of +ndhra ;radesh,
4arnataka, $amilnadu, kerala, >aharastraha, and 8u!arat. In +; sales depots are located in different
areas like karimnagar ?arangal =izambad Ai!ayawada and =ellore In other states it has opened around
1E depots.
AWARDS WON BY KESORAM
4esoram cement bagged prestigious awards like national awards for productiity and technology and
conseration and seeral state awards for year 1,B/ kesoram cement is best family planning effort in
the federation of +ndhra ;radesh chamber of commerce +nd industry and also national award for two
successie years 1,B2.B9M1,B9.B<.It has also bagged the national award for energy efficiency for the
year 1,B,.,E for the performance among all cement plants in India .thus award stall.by national council
5or cement and building material in association with the goernment of India.
4esoram bagged the prestigious +ndhra ;radesh state productiity award in 1,B<.1,B, also +nne%ed
state award for industrial management in 1,BB.1,B,.and also :Best Industrial promotion e%pansion
efforts : in the state and ya!amanya ratna and best efforts an industrial unit in the state to deelop
rural economy was bagged for its contribution towards the year 1,,1.
21
it also bagged the :may day award# of the goernment of India 5or the best management and the ;andit
Kawaharlal =ehru siler rolling trophy for the industrial productiity effort in the state of +ndhra
;radesh by 5+;FFI and also the Indira 8andhi memorial national award of the goernment of
+ndhra ;radesh for the year 1,,3.
&uring the last 3 years the goernment of +ndhra ;radesh has gien the following awards Best
awards for the year 1,,/.
Best industrial relation award for 1,,/.
$o keep the ecological balance they hae also undertaken massie tree plantation in the economy and
goernment of India has nominated township areas and them for A7I4)">I$"7+ award Best effort of an
industrial unit in >arch 1,,9.
In the year >arch 2EEB :Best management award 2EEB# for the best management practices in kesoram
cement industry presented by chief minister.
CEMENT PRODUCTION WORLDWIDE
C%-,"ry (=<( (=<* (=<> (=<= (==' W%r$ r!,Gi,0
C4i,! B3 1EB 1E9 21E 21E 1
J!;!, BB B2 <3 B2 B< 2
U.3.! 92 91 <1 <E <2 3
I,$i! 21 22 39 /2 /B /
I"!y /3 /E 39 / /1 2
G#r5!,y 3E 2B 2/ 2< /E 9
$oday in the cement industry is producing 2B.3 million tones per annum indication surplus conditions
while its demand is 29.< million tones lies per annum =ow $he cement market has become Nbuyer
market' which was
+ Nselling market' till 1,<E's and so the 1uality Mbrand taken an upper edge for cement marketing.

$oday installed at the India cement industry is <<1lakh tones But in India 1E9 >a!or plants
are producing 2B3lakh tones leaing the balance for e%ports.
INDIAHS LARGEST CEMENT COMPANIES POST ACIUISITION
22
Fompany Fement capacity
In $;+
Fement O of
)ales
CarsenM turbo 12.E 2E
+FF 11.3 ,3
87+)I> ,.< 2B
I=&I+= F6>6=$ 9.9 ,2
8DK7+$"I +>B"DK+ 9.2 1EE
WEAKNESSES+
$he per capita consumption of the cement in India is ery low
$he transport costs in India are ery high
$he cement industry is facing with acute power shortage and raw material problem
$he industry is also facing ma!or packaging problems
OPPORTUNITIES+
$he industry has tremendous potential for growth in India

In near future cement is going to replace tar for the construction of roads

$here are good prospects for e%port with cement e%port promotion council
$he goernment polices of reduction in e%cise duty and e%empting cement from the
!ust packaging may act as boon to the industry.
THREATS+
23

$he surplus leels are increasing as the production of the cement is much greater than the
consumption.
In the present scenario of stiff competition there is a declining trend of price
$he performance of the smaller unit is badly hit by ma!or takeoers
$he crisis situation in south east +sian countries may create problem to the e%ports of the
industry.
2/
CHAPTER)III
RE9IEW OF LITERATUTRE
INTRODUCTION TO BUDGET AND BUDGETARY CONTROL+
22
$he management is efficient if it is able to accomplish the ob!ecties of the enterprise It is effectie when
it accomplish the ob!ecties with minimum effort and most in attain long.range efficiency and
systematic approach in facilitate effectie management performance is profit planning and control or
budgeting .Budgeting is therefore an integral part historical combination of a# goal setting machine
for increasing an enterprises profits and a goal achieing machine for facilitating generational
coordination and planning while achieing the budgeted gets#
MEANING OF BUDGET+
It is a financial and 1uantitatie statement prepared and approed or to a defined period of time of
policy to be pursued during that period purpose of attaining a gien ob!ectie it may include income
e%penditure and employment capital
In other words it is a pre.defined detailed plan of action deelopment distributed as a guide operations
and as a partial basis for subse1uent eolution of performance
PLANING OF BUDGETING+
$he process of planning all flows of financial resources into within from an entity during some
specified future period it includes proiding detailed allocation of aailable future resources to
pro!ects ,responsibilities and time periods
5rom aboe definition I it clear that budgeting Is the actual act of caring the budget it is the process of
eoling the final statement yet is the end product of budgeting
ESSENTIALS OF GOOD BUDGET+
1. it is prepared prior to a defined period of time
2. it is prepared for the definite future period
3. the policy to followed to attain the gien ob!ectiities must be laid before the budget is
/. It is monetary andPor 1uantitatie statements of the policy.
MEANING OF BUDGETARY CONTROL+
29
It is the process of establishing of departmental budget relating the responsibilities of e%ecuties to
the re1uirements of a policy and the continuous comparison of actual with budgeted results either to
secure by indiidual action the ob!ecties of that policy or to proide a firm basis for reision
5irst of all budgets are prepared and then actual results are the comparison of budgeted and actual
figures will enable the management to out discrepancies and take remedial measures at a proper
time the budgetary control is a continuous process which helps in planning and coordination it
proides a method of control too .+ budget is means and budgetary control is the end result.
In the words of K.+.scolt :budgetary control is the system of management control and accounting in
which all operations are forecast so as possible planned ahead and actual results compared with the
forecast and the planned ones
ESSENTIALS OF BUDGETARY CONTROL+
1. Budgetary of the process of preparing the budget is the starting point for budgetary point for
budgetary control.
2. &istribution of budgets pertaining. $o each function to all the releant section with in organization.
3. Follection of actual data pertaining to all budgeted actiities.
/. Fontinuous comparison of actual performance with budgeted performance.
2. +nalysis of ariances in actual performance and budgeted performance
9. Initiation of correctie action to ensure that actual performance is inline with budgeted
performance
<. 7eision of budgeted if it is felt that the budgets prepared are no longer releant on account of
unforeseen deelopments
OBJECTI9ITIES OF BUDGETARY CONTROL+
2<
$he primary ob!ectie of budgetary controls to help the management in systematic planning and
controlling the operations of the enterprises the primary ob!ectie can be met only if there is proper
communication and coordination amongst different organization thus the ob!ectiities can be stated as0
(. C%%r$i,!"i%,+

Foordination is a managerial function under which all factors of production and all departmental
actiities are departmental are balanced and integrated to achiee the ob!ectiities of the organization
budgeting proides the basis for organization ob!ectiities can be realized e%ecuties are forced to
think of the relationship between their department and the company as a whole this remoes
unconscious biases against other departments it also helps to identify weakness in the organization
structure.
&. C%55-,i.!"i%,+ +ll people in the organization must know the ob!ectiities polices and
performances of the organizations they must hae a clear understanding of their part in the organization
goals this is made possible by ensuring their participation in the budgeting process
*. C%,"r%3 !,$ ;#rf%r5!,.# #2!-!"i%,+

Fontrol ensures control by continuous comparison of actual performance with the budgeted
performance ariances are highlighted and correctie action can be initiated budgets also from the
basis if performance eolution in an organization as they reflect realistic estimates of acceptable and
e%pected performance.
BUDGETING AND BUDGETARY CONTROL+
+ budget is a blue print of a plan e%pressed in a 1uantitatie terms budgeting Is a techni1ue
budgetary control terms to the principles procedures and practice of achieing gien ob!ectiities
through budgets.

2B
5rom the aboe definitions we can differentiated the three terms as budgets are the indiidual
ob!ectiities of a department etc where as budgeting may be said to act of building budgets budgetary
control embraces all and in addition includes the science of
;lanning the budgets to effect on oerall management tool the business planning and control
ESSENTIALS OF BUDGETARY CONTROL
(. Or0!,iB!"i%, f%r /-$0#"!ry .%,"r%+
$he proper organization is essential for the successful preparation maintenance and
administration of budgets + budgetary committee is formed which comprises the departmental
heads of arious departments +ll the functional heads are entrusted with the responsibility if ensuring
proper implementation of their respectie departmental budgets
$he chief e%ecutie is the oerall in the charge of budgetary system he constitutes a budget
committee for preparing realistic budgets + budget officer is the conener of the budget committee who
co.ordinates the budgets of different departments responsible fro their departmental budgets
&. B-$0#" %ffi.#r+

$he chief e%ecuties appoints the budget officer such budget officer also called as
Budget controller or budget &irector : thus rank should be e1ual to other functional managers#
$he Budget officer does not hae the direct responsibility of preparing the budgets the
arious functional managers prepare the budgets his role is that of a superisor the budget officer has
the specific duty of the budgeting actiity by arious departments and for co.ordination between
them so that there is a proper link between them "e is empowered to scrutinize the budgets prepared
by different functional heads and to make changes in them if the situation so demands
$he budget officer works as a coordinator among different departments he continuously monitors
the actual performance different departments steps to rectify the defiance if any he also informs the top
management about the performance of different departments
2,
$he budget officer will be able to carry out his work only if he is ersant with the working of all the
departments he must hae technical knowledge of the business and should also process accounting
knowledge
BUDGET COMMITTEE +

+ budget committee is formed to assist the budget officer. $he heads all the important
departments are made members of this committee. $he committee is responsible for preparation and
e%ecution of budgets. $he chambers of this committee put up the case of their respectie departments to
help the committee to take collectie decisions if necessary. $he budget committees responsible for
reiewing the budgets prepared by arious functional heads coordinate all the budgets and approe the final
budgets. $he budget officer acts as a coordinate of this committee all the functional heads are entrusted
with the responsibility of ensuring proper implementation of their respectie final departmental budgets.
BUDGET CENTERS+
+ budget center is the part of the organization for which the budget is prepared. + budget creator
may be a department section of department or any other part of department ideally, the head of eery center
should be a member of the budget committee. "oweer it must be ensured that each budget center at least
has an indirect representation in the budget committee.
$he establishment of budget centers is essential for coering all parts of the organization
becomes easy when different centers are established the budget centers are also necessary for cost
control purpose.
BUDGET MANUAL+

1. + budget manual is a document that spells out duties and responsible the arious e%ecuties
con1uered with it specifies among arious functional areas + budget manual coers the following
matters.
2. + budget manual clarity defines the ob!ectiities of budgetary control systems it also gies the
benefits and principles of this system.
3E
3. the duties and responsibilities of arious persons dealing with preparation and e%ecution of
budgets are also gien in the budget manual it enables the management to know the persons
dealing with arious aspects to budgets and proides clarity on their duties and responsibilities it
gies the information about the sanctioning authorities of arious budgets the financial powers
of sanctioning authorities of arious budgets the financial powers of different manages are gien
in the manual for enabling the spending amount on arious e%penses
/. a dropper table for budgets including the sending of performance reports is drawn so that eery
work starts in the and a systematic control is e%ercised
2. the specimen forms and number of copies to be lased fro ore oaring budget reports is also stated
budget centers inoled should be clearly stated.
9. the length of arious budget periods and control points is clearly gien
<. $he problem follow all in the centre system clearly stated.
B. + method of accounting to be used for arious e%penditures is also stated in the manual... + budget
manual helps the documentation the role of eery employee his duties responsibilities the ways of
undertaking arious tasks etc thus it also helps n reducing ambiguity at any point of time
BUDGET PERIOD+
+ budget period is the length of time for which a budget is prepared upon a number of factors the choice of
a budget period depends upon the following considerations the type of budget (longQshort*.
$he nature of demand for the products
$he timing for the aailability of the finance
$he construction situation of the cycles
+ll the aboe mentioned factors are taken into account while fi%ing the period of budgets
$he financial manager usually responsible for organizing this budget he must perform the
following functions.
$o decide the general polices and guidelines
$o offer technical adice.
31
$o suggest changes.
$o receie and reiew indiidual budget estimates.
$o reconcile diergent with or without reisions.
$o coordinate budgeting actiities.
$o approe budgets with or without reisions.
$o scrutinize control reports later on
$o scrutinize to budget reports later on.
$o disseminate these guidelines.
+fter finalizing the budget proposal the budget committee sub!ects the final budget to the Board of
&irectories or Budget &irector for approal.
CONTINUOUS BUDGETING SYSTEM+
+ continuous budgeting system is a method of haing two different budget periods within the sane budget
the purpose of haing this system is to hae greater control in terms of operational actiities without
losing sight is hae greater control in terms of it results in incorporating the effect of changes in the
short term on the long.term targets of the organization
DETERMINATION OF KEY FACTOR+
$he budgets are prepared for all functional areas these budgets are dependent and inter.related +
proper co.ordination among different budgets is necessary for budgetary control to be successful $he
constraints some budgets too + factor which influences all other budgets is known as :key factor or
principal factor#.
$he key factor may not necessarily remain the same the raw materials may be limited at
one time but it may be easily aailable at another similarly other factors may also improe at different
times. $he key factor highlights the limitations of the enterprise. $his will enable the management to
improe the working of those departments we here scope for improement e%ists.
REIUISITES FOR A SUCCESSFUL BUDGETARY CONTROL SYSTEM.
32
>aking budgetary control system successful re1uisites are re1uired.
() C!rifyi,0 %/1#."i2#3.
$he budgets are used to realize ob!ecties of the business. $he ob!ecties must be clearly spelt out so that
budgets are properly prepared. In the sense of clear goals, the budgets will also be unrealistic.
&. Pr%;#r $##0!"i%, %f !-"4%ri"y !,$ r#3;%,3i/ii"i#3.
Budget preparation and control is done at eery leel of management. 6en though budgets are finalized at
top leel but inolement of persons. In lower leels of management is essential for their success. $his
"esitates proper delegation and responsibility.
*. Pr%;#r .%55-,i.!"i%,3 3y3"#5.
+n effectie system of communication is re1uired for a successful budgetary control. $he flow of
information regarding budgets should be 1uick so that these are implemented. $he upward communication
will help in knowing the difficulties in implementation of budgets. $he performance reports of arious
leels will help top management in budgetary control.
6. B-$0#" #$-.!"i%,.

$he employees should be educated about the benefits of budgeting system they should be educated
about their roles in the success of this system. Budgetary control may not be taken only as a control deice
by the employees but it should be used as a tool to improe their efficiency.
8. F#Ji/ii"y.
5le%ibility in budgets is re1uired to make them suitable under changed circumstances. Budgets are
prepared for the future, which is always uncertain, een though budgets are prepared by considering the
future possibilities but still some ad!ustments. 5le%ible makes the budgets more appropriate and realistic.
>. M%"i2!"i%,
33
Budgets are too implemented by human beings. $heir successful implementation will depend upon
the interest shown by the employees. +ll persons should be motiated to improe their working so that
budgeting is successful. + proper system of motiation is introduced for making is system a success.
TYPES OF BUDGETS.
L%,0 "#r5 /-$0#"3+
$he long.term budgets are the budgets prepared for a long period of fie to years. $hey are concerned with
planning the operations of a firm oer a considerably long period of time. $he financial :Fontroller#
e%clusiely for top management usually prepares long.term budgets. $hese budgets are useful in terms of
physical units (i.e... 1uantities* or percentages, the accurate alues may be difficult to forecast oer such
long period. Initial e%penditure, research and deelopment budgets, etc, are e%amples long.term budgets.
S4%r" "#r5 /-$0#"3.
)hort Jterm budgets are budgets prepared for a short period of one to two is. $hey are prepared for those
actiities the trend in which cannot be seen easily oer long periods. $hese budgets are ery useful are ery
useful in case of consumer goods industries such as sugar, cotton, te%tiles, etc. they are generally, prepared
in terms of physical units (i.e., Ruantities* as well as monetary units (i.e., alues...* >aterials budget, cash
budget. 6tc are e%amples of short.term budgets. $hey are useful to lower leel of management for control
purpose.
C-rr#," /-$0#"3.
Furrent budgets are a budget, which is established for use oer a short period of time and is related
to current conditions. $hus current budgets are essentially short term budgets ad!usted to current (i.e.,
present or preailing* conditions or circumstances. $hey are prepared, for a ery short period. )ay, a
1uarter or a month. $hey relate to current actiities of the budgets.
I,"#ri5 /-$0#"3+
3/
Interim budgets are budgets, which are prepared in between two budgets periods. $hese budgets may get
integrated with the budgets of the following period.
CLASSIFICATION OF BUDGETS ACCORDING TO CONTENT+
Budget may be classified into budgets in physical terms and into budgets in monetary terms.
A) B-$0#"3 i, ;4y3i.! "#r53+
Budgets in physical terms are budgeted that budget in terms of 1uantities only. $hey do not include
corresponding rupee alue. Cong Jterm budgets are usually in prepared in physical terms. 6%amples of
such budgets are production budget, materials budget, etc.
B) B-$0#"3 i, 5%,#"!ry "#r53+
Budgets in monetary terms are budgets that budget in terms of 1uantities as well as their corresponding
rupee alue. )ales budget, purchase budget, etc are e%amples of such budgets. Budgets such as cash budget
capital e%penditure budget, etc that may not hae physical 1uantities also from part of budgets in monetary
terms.
CLASSIFCATION OF BUDGETS ACCORDING TO FUNCTION+
Budgets can be classified into0
1. 3perating Budgets
2. 5inancial Budgets
3. >aster Budget
(. O;#r!"i,0 B-$0#"3.
32
$hese budgets relate to different actiities or operations of a firm. $he number of such budgets
depends upon the size and nature of the business, the commonly used operation budgets are0
i* )ales Budgets
ii* ;urchase Budget
iii* 7aw >aterials Budget
i* Cab our Budget
* 5actory Dtilization Budget
i* >anufacturing 6%penses or ?orks oerhead budget
ii* +dministratie and )elling 6%penses Budget etc.
$he operating budget for a film may be constructed in terms of programmers or responsibility areas, and
hence may consist of0
+* ;rogrammed Budget
B* 7esponsibility Budget
A) Pr%0r!55#$ B-$0#"+
It Fonsists of e%pected reenues and costs of arious products or pro!ects that are termed as the ma!or
programmers of the firm, )uch a budget can be prepared for each product line or pro!ect showing reenues,
Fost and the relatie profitability of the arious in locating areas where efforts may be re1uired to reduce
F3)$2 ad increase reenues. $hey are so useful in determining imbalances and inade1uacies in
programmers so at correctie action may be taken in future.
B) R#3;%,3i/ii"y B-$0#"+
39
"ere the operating of a firm is constructed in terms of responsibility areas. )uch a budget shows the plan in
terms of person's for achieing them. It is used by the management as a control thus used by the
management as a control deice to ealuate the performance of e%ecuties who are in charge of arious
cost centers. $heir performance is compared to the targets (Budgets*, set for them and proper taken for
aderse results.
7esponsibility areas may be classified under three brand categories0
I. Fost P e%pense center
II. ;rofit center
III. Inestment center

2* Fi,!,.i! /-$0#"3
5inancial budgets are concerned with cash receipts and payments, working capital, financial position and
results of business. $he commonly used financial budgets include Fash budget, Fapital budget, and Income
statement budget, )tatement of earnings budget, Budgeted balance sheet or position statement.
*) M!3"#r /-$0#"
$he >aster budget is the summary budget incorporating its functional budgets. +ll the operational
and financial budgets are integrated into the >aster budget. $he budget officer for the benefits of the top.
leel management prepares this budget. $his budget is used to coordinate the actiities of arious
functional departments. It is also used an effectie control deices.
CLASSIFICATION ON THE BASIS OF FLE@IBILITY.
3<
A) FiJ#$ /-$0#"
+ccording to IF>+ Condon :a fi%ed budget is a budget which is designed to remain unchanged
irrespectie of the leel of actiity actually attained#. It is based on a fi%ed olume of actiity and shows
one olume of output and related cost. It is not ad!usted according to the actual leel of actiity attained.
+ fi%ed budget is useful only when the actual leel of actiity corresponds with the budgeted leel
of actiity. But this, generally, does not happen- as such a fi%ed budget is not useful for managerial
purposes.
B) F#Ji/# 2!ri!/# 3i$i,0 3.!# %r .%,"r% "y;# /-$0#"+
+ccording to IF>+, Condon :a fle%ible budget is a budget which is designed to change in
accordance with the leel of actiity* actually attained#. $hus, a fle%ible budget changes according to the
change in the leel of actiity. In other words it proides the budgeted costs at any leel of actiity.
Business actiity cannot be accurately predicted on account of uncertainties of business
enironment. + fle%ible budget contains seeral estimates for different assume circumstances instead of
!ust one estimate, it proides for automatic ad!ustments with changes in the olume of actiity. "ence a
situations operating in an unpredictable enironment.

3B
CHAPTER)I9
BUDGETING AND BUDGETARY SYSTEM IN
KESORAM CEMENT INDUSTRIES LTD
FERO BASED BUDGETING+
Sero budgeting is the latest techni1ue of budgeting and it has increased use as a material tool. $his
techni1ue was first used in +merica in 1,92, by the former president +merica, Kimmy Farter.
3,
+s the name suggests, it is starting from a Tscratch#, the normal techni1ue of
Budgeting is to use preious leels as a base for preparing this yearUs budget. $his method carries preious
years inefficiencies to the present year because we taken last year as a guide, and decide Twhat is to be
done this year when this much was the performance of the last year.
In the zero based budgeting eery year is taken as new year and preious year is not as a base, the
budget for this year will hae to be !ustified according to present situation, zero is taken as base and likely
future actiities are decided according to present situations. In zero based budgeting a manager is to !ustify
why he wants to spend. $he performance of spending on arious actiities will depend upon their
!ustification and priority for spending will hae to be that an actiity is essential and the amounts asked for
are really reasonable taking into account the olume of actiity.
BD&86$ +=& BD&86$+7L )L)$6> I= 46)37+> F6>6=$
I=&D)$7I6) CI>I$6&, B+)+=$" =+8+7, 4+7I>=+8+7
$he budgeting process is used in the performance budgeting for the construction of phase which
includes pre commissioning actiities. Besides meeting the essential re1uirements of managerial control the
budgeting e%ercise also coers the long term capital budgeting, which is presented in the form of annual
plan.
OBJECTI9ES OF THE BUDGETARY SYSTEM+

/E
$o prepare annual budgets in such a manner those managers at arious leels in organization carry
out periodical e%ercise in respect of each contact or responsible centre for physical planning and matching
resources broke up into monthly targets or cash flows.
$o introduce and operate responsible for achieement of specified targets with the recourses
allocated for the purpose.
$o bring about effectie co.ordinate of all actiities of the organization and
$o gear up serice diisions to meet effectiely the re1uirements of pro!ect.
BUDGET PERIOD AND PHASING+

$he budget period or annual begets should with the financial year. In 3ctober eery year the budget
should drawn up for the ensuring the financial year in the form of Budget estimates financial year in the
form of 7eised 6stimates V7.6W...In addition the budgets are to be reiewed on monthly basis by pro!ect
reiew teams, in the light of actual e%penditure and pro!ections in the budget period. Budget should
indicate monthly phasing of e%penditure and targets for the first and 1uarterly phasing for the second half
of the year. +t the time of reiew of the budget estimates to frame reised estimates the 1uarterly phasing
should be broken up into monthly phasing.
?hile drawing up the actual budget in 3ctober eery year, the long term capital budget for ongoing and
new schemes should be formulated as apart of e%ercise as preparation of annual plan. $he long term capital
budget should indicate for a period of si% years following the budget period of si% years following the
budget period of si% years following the budget period wise annual phasing of the capital e%penditure and
physical schedules recourse based network.

BUDGET HEADS+

/1
5or uniform accounting, it is essential that costs are collected for each of the factory though this may
inole splitting up of payments against contracts which embrace more than one system. +llocation of the
cost as system wise affords a sound basis for cost accounting, inter.firm comparisons and proides aluable
inputs to the data bank. Budget proisions are related to pro!ect estimates and monitoring of actual
e%penditure where as control ariables for part control and instrumentation system. 5actory piping which
includes pipelines, for ash water mains, compressed air system and ciil works piping.
+u%iliary pumps for water treatment plant and ciil works system. If there are, any contracts not
coered in the budget heads proision for such contracts should be shown against the appropriate system
by head by adding code number.
TYPES OF BUDGETS IN KESORAM CEMENT INDUSTRIES LIMITED+
A..%r$i,0 "% "4# ,!"-r# #J;#,$i"-r# /-$0#" !r# .!33ifi#$ -,$#r+
&irect capital outlay on works
$echnical consultancy
incidental construction during construction
6mployee cost
O"4#r #3"!/i345#," #J;#,3#3+
$raining and recruitment
;reliminary e%penses
misc.brought.out assets
cash budget
$ownship budget

BRIEF E@PLANATION TO THE NATURE OF E@PENDITURE INCLUDED IN EACH BUDGET
IS INDICATED BELOW+
/2
I,.i$#,"! #J;#,$i"-r# $-ri,0 .%,3"r-."i%, ;#r3%,! ;!y5#,"+

$hese comprises of salary,wages,allowance,contribution of ;5 and other funds and other e%penses
such as CIF,medical reimbursement, canteen subsidy etc. any proision of areas of salary &.+.
Offi.# !,$ %"4#r #J;#,3#3+

6%penses incidental to construction and capital works not traceable directly to incidental e%penditure,
during contribution e1uipments, ehicle running e%pense, office rent.CF and cost of drawings, traelling
e%penses, printing and stationary, communication e%penses, adertisement for tenders etc. are ma!or items
in the category.
Tr!i,i,0 r#.r-i"5#," A %"4#r $#f#rr#$ r#2#,-# #J;#,$i"-r#+
$he first part of the budget consists of e%penses for training e%ecuties, and non e%ecutie trainees, rent
for training halls and e%penses for management deelopment courses. $he second part consists of e%penses
for recruitment such as adertisement for recruitment, interiew e%penses, $.+. candidate etc. the third part
combines preliminary e%penses including registration fees and research ad deelopment e%penses.
Mi3.#!,#%-3 /%-04" %-" ;!33#3+
Aehicles, furniture and fi%tures e1uipments, hospital and medical e1uipment. >iscellaneous assesses
township figure in the budget.
RE9IEW OF PROJECT BUDGET+
M%,"4y r#2i#D+
+t monthly interals the budget should be reiewed by pro!ect reiew committee V;7FW. ;ro!ect budget
should report actual e%penditure against budget heads. ?ork heads and corporate budget by the <th of
month following the report month. $he monthly reiew should be e%amined by pro!ect reiew
teamV;7FW,who should record ariations for any ariations and proposed for e%pending works in the
/3
minutes of the meetings reasons for any ariations in the case of budget heads e%ceeding 1EO of the budget
estimates reised estimates or which eer is 7s.2 lakhs should be analyzed and report upon.
I-!r"#ry r#2i#D+
;7$ should conduct a 1uarterly budgets reiew with a iew to pro!ecting anticipated e%penditure during
the year against approed budget estimatesPreised estimates. +s time is essence of such reiew, only a
1uick reiew of anticipated e%penditure for indiidual budget heads inoling proisions e%ceeding 7s.2E
lakhs in each case should be made and reported in minutes to ;7$. 5or this purpose, pro!ect budget should
furnish all the releant data to pro!ect manager Vpro!ectW and planning and system by the 1Eth, of the month
following the 1uarter pro!ect budget committee should reiew the actual e%penditure and assess anticipated
e%penditure contract co.ordinationPengineers in charge. $he assessments of anticipated e%penditure should
be furnished by the pro!ect budget committee to 8eneral >anager Vpro!ectW by the 3E
th
of the month
following the 1uarter under reiew.
BUDGET OF SER9ICE DI9ISION CORPORATE BUDGETS+
+ reiew of budgets of serice and corporate diisions should be conducted at 1uarterly interals by
corporate budget committeeVF)UFW.5or this purpose corporate accounts should report actual e%penditure up
to the need of the 1uarter by the 1Eth of the month following 1uarter to corporate budget and budget.
coordination of the remaining period of the year should be sent to the corporate budget should put up a
consolidated report diision wise and pro!ect wise to corporate budget committeeVFBFW by the 12th of the
may, +ugust, =oember and 5ebruary eery year.
OBJECTI9ES OF THE CURRENT BUDGETARY CONTROL SYSTEM IN
KESORAM CEMENT INDUSTRIES LIMITEDE BASANTH NAGAR +
$he current budgetary control system.operating phase has been compiled to achiee the following
ob!ecties.
$o control actual performance with reference to standardsPnorms adapted in the budget
ascertain the deiations analyze and establish the reasons.
//

$o identify constraints in generation and timely action for estimation constraints.
$o monitor the generation of internal recourses so as to ensure the aailability of ade1uate
funds.
$o prepare the reenue budget so as to forecasting the periodical profitability of the
organization.
$o deelop standardsPnorms of performance in the arious areas of operation and
maintenance based on the e%perience.

$o ensure effectie coordinate planning of all actiities so that all the inputs and serices
necessary for achieing the physical targets are aailable at appropriate time.
$o create cost consciousness among the managers responsible for decision making
$o proide data regarding operational norms and cost for the purpose of formulating tariff.

$o proide data basis for assessment of working capital re1uirements

$o control the working capital particularly book debts spares and other items inentory.
$o improe profitability and internal resources generation.
SCOPE OF THE PERFORMANCE BUDGET+
/2
$he budget for operation and maintenance actiities will be called performance budget operation. $his
in effect means that all financial targets in the budget will be based on performance targets in physical
terms.
$he current budgetary control system operation pays enisages generation and transmission line
pro!ects as independents inestment centres. It becomes applicable to a pro!ect in the year in which it plans
to commercialize its first generation unit. "ow eer, the budget infer e%penses from the date of
synchronization to the date of commercial generation is to be taken case of in the capital budget of the
respectie pro!ect similarly in the case of transmission line pro!ects the system becomes applicable from
the year in which it plans to commissions its first line along with substation or the date commercial
generation of the first unit of generatie pro!ect with which this line is associated, which eer is later. 5or
subse1uent lines, the 3M> will be prepared from the case generation of energisation.
$he system inestigates the preparation of operation and maintenance budget for each of the cost
centers as per the re1uirements of coasting systems.
$he performance budget operation will consists of following budgets along with the supporting
schedules0
1. Budget balance sheet.
2. Budget profit and loss account.
3. 7eenue budget.
In addition, separate budgets for reenue actiities other than operation for research and
deelopment consultancy contracts etc.
/9
$he e%penses respect of deelopmental e%penditure for improements additions replacement,
renewals, balancing facilities etc. arc of capital nature and will be budgeted for in the construction budget
of budgetary control system.construction pairs.
$o facilitate management control the system also inestigates, phasing of these budgets into
monthly targets. $he actual performance then will be reasons for ariation s will be analyzed and
established for taking correctie remedial actions.

STAGES IN THE FORMULATION OF PERFORMANCE BUDGET+

$he system proides for a two stages formulation for performance budget operation the stages are
gien below0
I,i"i! ;r%;%3!+

In the initial proposal the pro!ect is re1uired to indicate yearly targets. In the addition to
furnishing basic information like synchronization and commercial generation dates.
Fonstraints and coal operation at less than the designed specification calorific alue of raw material
and limestone, material consumptions. In physical terms for items whose consumption alue in 7s.2 lakhs
or more planned shutdown for a maintenance and oerhauling and norms for serious operating parameters
proided for designs specifications and in the tariff agreements to the corporate budget committee.
In the initial proposals is planned to be submitted after considering else factors and keeping in iew the
perspectie plan of the organization, as well as norms for arious operating parameters. $hese targets and
terms are then communicated to all stations and transmissions line offices of the last week of Kuly to be
used for formulating detailed budget in the final proposal.
Fi,! ;r%;%3!+

Budgeted balance sheet. Budgeted profit and loss account and budgets in the form of cash budget
along with the final proposal will consist of detailed supporting schedules for each of the inestment
/<
centrePcost centre. $his final proposal needs to be submitted to corporate centre with in three weeks of
receiing approal for initial proposal.
$he final proposal, after approal by board, will become the basis of monitoring performance for
cost centers and inestment centers.
$he fre1uency and e%tent reiew and monitoring will be done is under0
1. $he monitoring of actual performance against budgeted target for inestment centerPprofit center
on monthly basis and for cost centers on 1uarterly for remedialPcorrectie action.
2. $he reiew of performance budget on 1uarterly basis to assess the anticipated profitability.

$he first step in the preparation of performance budget, 3M> is formulation of maintenance and
oerhauling schedules for boiler and $3 with generation, then considering the grid demand, the aailability
or inputs and factory problems, if any the utilization of capacity will be worked out on month.month basis
for the budget period the gross generation targets can be worked and accordingly.

NET GENERATION+
$he sales alue will be determined from 1uantum of net generation Vi.e., grass generation au%.
consumptionW.
AU@ILLARY CONSUMPTIONKCONSUMPTION BY UTILITIES+

$he cement consumption by each of the cost centers for indiidual unit au%iliaries, station
au%iliaries as well as transformer losses are to be estimated separately based on designed specification and
added in order to work out total au%iliary consumption rather than fi%ing oerall percentage similarly
consumption by utilities will also need to be indicated by concerned cost centers like township and
construction department this will be alued at cost net generation to arrie at the sales alues for owns
consumption.
/B
CHEMICAL CONSUMPTION +

$he chemicals are used by many cost centers by many cost centers for treatment of water. $he
consumption of chemicals will be co.related with olume of water certain norms will hae to be deeloped
for different type of chemicals and different type of treatments.
Based on these norms each of the cost centers will indicate consumptions of chemicals in
1uantitatie as well as financial terms the most centre wise re1uirement will be consolidated to arrie at
total chemicals consumption to be charged to profit and loss account.
EMPLOYEE COST+

$he basis of employee cost will be the approed manpower budget effectie of respectie years of
budget period. $he estimation of employee cost is to be done for each grade considering mid.point as the
scale as basis pay and after reading arious allowances like T&.+., ".7.+., F.F.+T pro!ect allowance etc.
admissible in respectie grades. $his is to be worked /, out or each of the budget periods based on e%isting
strength (at the time of estimation* in each grade and additions during each 1uarter (taking <EO satisfaction
for additions*.
$he proisions of C$F medical reimbursement, ;5 and other welfare e%penses in preious years
are taken into account policies changes, if any the details of welfare e%penses like lieries and uniforms,
safety e%penses, accident compensation, games M sports, canteen subsidy etc. are to list out as per chart of
account the proisions for incentie, bonus and payments of one time nature are to be shown separately
based on total employee cost for e%ecuties, superisors and non.superisors and total man power in these
categories ,separates of cost per employee will be worked out for each of theses categories as under.

1. )alaries and allowance

2. Fontribution of ;5 and other funds

3. ?elfare e%penses

$he cost centre of employee cost will be worked out based on these rates separately for theses
e%ecuties, superisors and non.superisors. $his will again be consolidated separately for operations,
/,
maintenance and common VsericeW function. $he employee cost of common functions will be appropriated
between construction and 3M> budgets in ratio of capital e%penditure and sales during respectie years.
REPAIRS A MAINTAINENCE+

In line, with costing system following three actiities can represent ma!or classification of repairs
and maintenance.
1. >a!or oerhaul

2. ;reentie maintenance

3. Breakdown maintenance
=ormally, budgeting will be done for the former two- under each actiity separate estimates will be
prepared for consumption of materials and maintenance !obs. $his estimation will be done at ach of sub
cost centre wise details are re1uired to be mentioned.

$he consumption material for repairs and maintenance will be classified into spares, lubricant loose
tools and plants, consumables and others. $he cost centre totals separately for three actiities will be added
to arrie at summary of material consumption and maintenance !obs, which will be reflected in the profile
M loss account.
$he material consumption, especially of spares, can be estimated based on the e%pected life of
arious componentsPspares in the installed e1uipment the fre1uency of breakdowns in the past and the
re1uirement for preentie maintenance and ma!or oerhauls. $he actual life of components may be
different from that indicated in the manufacturerUs specification. $herefore, it is ery difficult to estimate
re1uirements of spares. But this estimation will become gradually accurate as more e%perience is gained.
5or new stations it will be adisable to collect such information from old stations that hae gained
e%perience in this field.
2E
=ormally, maintenance of e1uipment through contractors should be aoided. But in certain areas, if
the e%pertise and in house capability or sufficient man power is not aailable, maintenance !obs can be got
done through contractors. )uch contracts will need to be listed out separately .If owner supply items are
coered in such contracts the cost of theses items will be included in the material cost.
FACTORY A GENERAL O9ERHEADS+

+ll the items of an e%penditures under this head will be estimated based on past trend with due
ad!ustment for policy changes. $he estimates will be gien by cost centre needs for items identified with
respectie cost centers. $he total administratie cost of serice cost centers will be allocated between
construction and 3M> in the ratio of capital e%penditure and sales during respectie years.
D#;r#.i!"i%,+

$his is to be charged as per 6) act from the year following the year in which assets hae been
capitalized alue and, rates of depreciation furnished by the site finance and account for different
categories of assets. Fost centre.wise depreciation will be added to arrie at total deprecation for the
inestment centre.
I,"#r#3" %, fiJ#$ .!;i"!+

+s per e%isting accounting policy, the interest is to be charged to profit M loss account based on
the loan content in the capitalized assets restricted to total accrued interests on actual loans.

5or budgeting purposes, interest will be worked on e1uated loan content or e1uated loan which
eer is less.
21
CHAPTER)9
+=+CL)I) +=& I=$67;76$+$I3=
22
K#3%r!5 I,$-3"ri#3 Li5i"#$ R#2#,-# B-$0#" (&''<)'=)
T!/#)I
S.,% P!r"i.-!r3 B-$0#"
E3"i5!"#$
A5%-,"(R3.
Cr%r#3)
A."-!
A5%-,"(R3.
Cr%r#3)
9!ri!,.#
S!#3
1 5i%ed and recoery 9B, 2,, ,E
2 Aariable cost recoery </2 922 ,3
3 5uel price ad!ustment recoery <B/ B23 .3,
/ 3wn consumption 119 12B .12
2 $otal of (1/* 233/ 22E2 132
9 +erage intensies ,B ,1 <
< 3ther income 21 /3 B
8rand total(2X9X<* 2/B3 2339 1/<
I,"#r;r#"!"i%,+
$he data pertaining to the generation and consumption of cement at kesoram Industries Cimited
hae been obtained from the year 2EEB.E, and presented in $able.1.$he aspect included are total
generation of cement in (cores 7s* and utilization for au%iliary consumption, raw material consumption and
line store respectiely.
&uring the year 2EEB.E, the sales, fi%ed cost, ariable cost, fuel price, consumption was decreased.
)ales decreased by 132 crores to the estimated budget.
&uring the year 2EEB.E, the aerage intensies are decreased by < crores., there income also
decreased by B crores respectiely.
5inally, with regard to the result in reenue budget of kesoram cement industries limited, totally
decreased by 1/< crores in the year 2EEB.E, respectiely.
K#3%r!5 I,$-3"ri#3 Li5i"#$ O;#r!"i%,! #J;#,$i"-r# /-$0#" f%r "4# y#!r &''<)'=
23
T!/#)II
S.,% P!r"i.-!r3 B-$0#"
E3"i5!"#$
A5%-,"(R3.
Cr%r#3)
A."-!
A5%-,"(R3.
Cr%r#3)
9!ri!,.#
9!ri!/# .%3"
1 7aw material /EE /23 23
2 Cime stone /3E /2E 2E
3 $otal of (1,2* B3E B<3 /3
O;#r!"i2#
5!i,"!i,#$
.%3"
/ Fhemicals and
water
12E 1/E 2E
2 7epairs M
maintenance
2/E 2<2 32
9 6mployee cost 2,E 332 /2
< )tationary M
general
e%penses
22 <E 12
B 7ebate 1E 12 2
, )hare of
operating
e%penses
B 1E 2
1E $otal of(/..,* <23 B/2 11,
Fi,!,.#
.4!r0#3
11 &eprecation 3B 11 .2<
12 Interest on
fi%ed capital
1B 2E 2
13 $otalof.3 29 31 .22
G!,$ "%"!
(*L('L(*)
19E, 1</9 13<
2/
I,"#r;r#"!"i%,+

3bsered from the aboe table that the T3perational 6%penditure BudgetT of kesoram cement
industries Cimited in the year 2EEB.E,.
In the year 2EEB.E, ariable cost components, 7aw material consumption 23 crores increased
and the lime stone consumption 2E crores also increased.

In operating M maintain aces cost components, chemicals M water, repair M maintenance,
employee cost, stationary M general e%penses rebate and share of other e%penses in all are fluctuating
e%penses of the year 2EEB.E,.how eer the total operating maintenance costs are 11, crores increasing
respectiely.
In finance charges depreciation and interest on fi%ed capital, has been included, the total finance
Fharges recording decreasing 22 crores in the year 2EEB.E, respectiely.
K#3%r!5 I,$-3"ri#3 Li5i"#$ R#2#,-# B-$0#" (&''=)(')
T!/#)I
).no ;articulars Budget
6stimated
+mount(7s.
+ctual +mount(7s.
Frores*
ariance
22
Frores*
S!#3
1 5i%ed and
recoery
9B, 91< <2
2 Aariable cost
recoery
B2, <32 ,/
3 5uel price
ad!ustment
recoery
B12 B29 ./1
/ 3wn
consumption
11E 132 .22
2 $otal of
(1/*
2//3 23/E 1E3
9 +erage
intensies
,3 B9 <
< 3ther income /, 3B 11
B Gr!,$
"%"!(8L>L?)
22B2 2/9/ 121
I,"#r;r#"!"i%,+
$he data pertaining to the generation and consumption of cement at kesoram Industries Cimited hae
been obtained from the year 2EE,.1E and presented in $able.1.$he aspect included are total generation
of cement in (cores 7s* and utilization for au%iliary consumption, raw material consumption and line store
respectiely.
&uring the year 2EE,.1E the sales, fi%ed cost, ariable cost, fuel price, consumption was decreased.
)ales consumption is deceased by 1E3 crores respectiely.
&uring the year 2EE,.1E the aerage intensies are decreased by < crores and there income also
decreased 11 crores respectiely.
29
5inally, with regard to the result in reenue budget of kesoram cement industries limited, totally
decreased by 121 crores in the year 2EE,.1E respectiely.
K#3%r!5 I,$-3"ri#3 Li5i"#$ O;#r!"i%,! #J;#,$i"-r# /-$0#" f%r "4# y#!r &''=)('
T!/#)II
S.,% P!r"i.-!r3 B-$0#"
E3"i5!"#$
A5%-,"(R3.
Cr%r#3)
A."-!
A5%-,"(R3.
Cr%r#3)
2!ri!,.#
9!ri!/# .%3"
1 7aw material /1, //, 3E
2 Cime stone /2E /92 /2
3 $otal of(1,2* B3, ,1/ <2
O;#r!"i2# 5!i,"!i,#$
.%3"
/ Fhemicals and water 121 1/B 2<
2 7epairs M maintenance 232 2B, 2<
9 6mployee cost 31/ 3/B 3/
< )tationary M general
e%penses
2, << 1B
B 7ebate 11 13 2
, )hare of operating
e%penses
B 1E 2
1E $otal of(/..,* </2 BB2 1/E
Fi,!,.# .4!r0#3
11 &eprecation 3B 1/ .2/
12 Interest on fi%ed capital 1B 2E 2
13 $otal of(11,12* 29 3/ .22
Gr!,$ "%"!
(*L('L(*)
(>6' (<** (=*
2<
I,"#r;r#"!"i%,+

3bsered from the aboe table that the T3perational 6%penditure BudgetT of kesoram cement
industries Cimited in the year 2EE,.1E.

In the year 2EE,.1E ariable cost components, 7aw material consumption 3E crores increased
and the lime stone consumption /2 crores also increased.
In operating M maintain aces cost components, chemicals M water, repair M
maintainance,employee cost, stationary M general e%penses rebate and share of other e%penses in all are
fluctuating e%penses of the year 2EE,.1E.how eer the total operating maintenance costs are 1/Ecrores
increasing respectiely.
In finance charges depreciation and interest on fi%ed capital, has been included, the total
finance charges decreasing by 22 crores in the year 2EE,.1E respectiely.

K#3%r!5 I,$-3"ri#3 Li5i"#$ R#2#,-# B-$0#" (&'(')(()
T!/#)I
3.,% P!r"i.-!r3 B-$0#"
E3"i5!"#$
A5%-,"(R3.
Cr%r#3)
A."-!
A5%-,"(R3.
Cr%r#3)
9!ri!,.#
S!#3
1 5i%ed and
recoery
<21 911 11E
2B
2 Aariable cost
recoery
B12 <2, B9
3 5uel price
ad!ustment
recoery
B1E B23 .13
/ 3wn
consumption
121 131 .1E
2 $otal of (1/* 2/9< 22,/ 1<3
9 +erage
intensie
,< ,2 2
< 3ther income 23 /B 2
B 8rand
total(2X9X<*
291< 2/3/ 1B3
I,"#r;r#"!"i%,+
$he data pertaining to the generation and consumption of cement at kesoram Industries Cimited
hae been obtained from the year 2E1E.11 and presented in $able.1.$he aspect included are total
generation of cement in (cores 7s* and utilization for au%iliary consumption, raw material consumption and
line store respectiely.
&uring the year 2E1E.11 the sales, fi%ed cost, ariable cost, fuel price, consumption was decreased.
)ales consumption is decreased by 1<3 crores respectiely.
&uring the year 2E1E.11 the aerage intensies are decreased by 2 crores and there income also
decreased 2 crores respectiely.
5inally, with regard to the result in reenue budget of kesoram cement industries limited, totally
decreased by 1B3 crores in the year 2E1E.11 respectiely.
G#3%r!5 i,$-3"ri#3 i5i"#$ %;#r!"i%,! #J;#,$i"-r# /-$0#" f%r "4# y#!r &'(')((
T!/#)II
S.,% P!r"i.-!r3 B-$0#"
E3"i5!"#$
A."-!
A5%-,"(R3.
9!ri!,.#
2,
A5%-,"(R3.
Cr%r#3)
Cr%r#3)
9!ri!/# .%3"
1 7aw material /1B //2 2<
2 Cime stone //2 /92 23
3 $otal o(1,2* B9E ,1E 2E
O;#r!"i2#
5!i,"!i,#$ .%3"
/ Fhemicals and
water
12B 12E 22
2 7epairs M
maintenance
292 2,9 31
9 6mployee cost 319 3/B 32
< )tationary M
general e%penses
93 BE 1<
B 7ebate 11 13 2
, )hare of
operating
e%penses
< 1E 3
1E $otal of(/,* <,E B,< 1E<
Fi,!,.# .4!r0#3
11 &eprecation /1 12 .29
12 Interest on fi%ed
capital
1< 1, 2
13 $otal of(11,12* 2B 3/ .2/
Gr!,$ "%"!
(*L('L(*)
(?'< (<6( (**
I,"#r;r#"!"i%,+

3bsered from the aboe table that the T3perational 6%penditure BudgetT of kesoram cement
industries Cimited in the year 2E1E.11.
9E

In the year 2E1E.11 ariable cost components, 7aw material consumption 2< crores increased
and the lime stone consumption 23 crores also increased.
In operating M maintain aces cost components, chemicals M water, repair M maintenance,
employee cost, stationary M general e%penses rebate and share of other e%penses in all are fluctuating
e%penses of the year 2E1E.11.how eer the total operating maintenance costs are increasing by 1E<
crores respectiely.
In finance charges depreciation and interest on fi%ed capital, has been included, the total
finance charges recording decreasing by 2/ crores in the year 2E1E.11 respectiely.

5inally with regard to the operational e%penditure budget of kesoram cement industries limited
the total profit has increased by 133 crores during the year 2E1E.11.
$he oerall budget results of kesoram cement industry is industries limited is earning more profits.
K#3%r!5 .#5#," i,$-3"ry R#2#,-# B-$0#" (&'(()(&)
T!/#)I
S.,% P!r"i.-!r3 B-$0#"
E3"i5!"#$
A5%-,"(R3.
Cr%r#3)
A."-!
A5%-,"(R3.
Cr%r#3)
9!ri!,.#
S!#3
1 5i%ed and
recoery
<2/ 91B 1E9
2 Aariable cost
recoery
B/E </E 1EE
3 5uel price
ad!ustment
recoery
B2E B93 ./3
/ 3wn consumption 132 1/B .19
2 $otal of (1/* 2219 239, 1/<
91
9 +erage
intensies
1E2 ,B /
< 3ther income 29 /, <
B Gr!,$
"%"!(8L>L?)
&>?6 &8(> (8<
I,"#r;r#"!"i%,+
$he data pertaining to the generation and consumption of cement at kesoram Industries Cimited
hae been obtained from the year 2E11.12 and presented in $able.1.$he aspect included are total
generation of cement in (cores 7s* and utilization for au%iliary consumption, raw material consumption and
line store respectiely.
&uring the year 2E11.12 the sales, fi%ed cost, ariable cost, fuel price, consumption was decreased.
)ales consumption is decreased by 1/< crores respectiely.
&uring the year 2E11.12 the aerage intensies are decreased by / crores and, their income also
decreased < crores respectiely.
5inally, with regard to the result in reenue budget of kesoram cement industries limited, totally
decreased by 12B crores in the year 2E11.12 respectiely
T!/# 34%Di,0 %;#r!"i,0 #J;#,$i"-r# %f f%r "4# y#!r &'(()&'(&
T!/#)II

S.,%
P!r"i.-!r3 B-$0#"
E3"i5!"#$ !5%-,"
(R3. Cr%r#3)
A."-! !5%-,"
(RS. Cr%r#3)
9!ri!,.#
9!ri!/# .%3"
1 7aw material /2E /2E 3E
2 Cime stone /2E /<E 2E
3 $otal of (1,2* B<E ,2E 2E
O;#r!"i2# 5!i,"!i,#$ .%3"
/ Fhemicals and water 13E 12E 2E
2 7epairs M maintenance 2BE 3EE 2E
9 6mployee cost 32E 32E 3E
< )tationary M general e%penses 92 BE 12
92
B 7ebate 11 13 2
, )hare of operating e%penses B 1E 2
1E $otal of(/...,* B1/ ,E3 B,
Fi,!,.# .4!r0#3
11 &eprecation /2 12 .2<
12 Interest on fi%ed capital 1B 2E 2
13 $otal of(11,12* 9E 32 .22
Gr!,$ "%"! (*L('L(*) (?66 (<8< ((6
I,"#r;r#"!"i%,+
3bsered from the aboe table that the T3perational 6%penditure BudgetT of kesoram cement
industries Cimited in the year 2E11.12.
In the year 2E11.12 ariable cost components, 7aw material consumption 3E crores increased
and the lime stone consumption 2E crores also increased.
In operating M maintainaces cost components, chemicals M water, repair M
maintainance,employee cost, stationary M general e%penses rebate and share of other e%penses in all are
fluctuating e%penses of the year 2E11.12.how eer the total operating maintenance costs are B, crores
increasing respectiely.
In finance charges depreciation and interest on fi%ed capital, has been included, the total
finance charges recording decreasing by 22 crores in the year 2E11.12 respectiely
finally with regard to the operational e%penditure budget of kesoram cement industries limited the total
profit has increased by 11/ crores during the year 2E11.12.
$he oerall budget results of kesoram cement industry is industries limited is earning more
profits.

93
F"+;$67.AI
F"+7$)
9/
)+C6)
T!/# 34%Di,0 "%"! 3!#3 %f K#3%r!5 .#5#," i,$-3"ry
&''<)'= &''=)(' &'(')(( &'(()(&
BE 233/ 2//3 2/9< 2219
ACT 22E2 23/E 22,/ 239,
Fi0-r# 34%Di,0 %, 3!# %f G#3%r!5 .#5#," i,$-3"ry
Interpretation
In the year 2EEB.E, the actual amount is less compared to budgeted amount as the budget is accurate.
In the 2EEB.E, it shows a slight change between budgeted amount and actual. In the year 2E11.12 budgeted
amount is more compared to actual. It shows that the 1uantity is more comparing to market. )elling of
cement product less than the estimates.
92
+A67+86 I=$6=)IA6)
T!/# 34%D, %, !2#r!0# i,"#,3i2#3 %f G#3%r!5 .#5#," i,$-3"ry
&''<)'= &''=)(' &'(')(( &'(()(&
BE ,B ,3 ,< 1E2
ACT ,1 B9 ,2 ,B
Fi0-r# 34%Di,0 %, A2#r!0# I,"#,3i.2#3 %f G#3%r!5 .#5#," i,$-3"ry

Interpretation
In the year 2EEB.E, the actual amount is less compared to budgeted amount as the budget is accurate. In the
2EEB.E, it shows a slight change between budgeted amount and actual. In the year 2E11.12 budgeted
amount is more compared to actual. It shows that the 1uantity is more comparing to market. )elling of
cement product less than the estimates.
99
3$"67 I=F3>6
T!/# 34%D, %, %"4#r i,.%5# %f G#3%r!5 .#5#," i,$-3"ry
&''<)'= &''=)(' &'(')(( &'(()(&
BE 21 /, 23 29
ACT /3 3B /B /,
Fi0-r# 34%Di,0 %, %"4#r i,.%5# %f G#3%r!5 .#5#," i,$-3"ry
Interpretation
In the year 2EEB.E, the actual amount is less compared to budgeted amount as the budget is accurate. In the
2EEB.E, it shows a slight change between budgeted amount and actual. In the year 2E11.12 budgeted
amount is more compared to actual. It shows that the 1uantity is more comparing to market. )elling of
cement product less than the estimates.
9<
A+7I+BC6 F3)$
T!/# 34%Di,0 %, 2!ri!/# .%3" %f G#3%r!5 .#5#," i,$-3"ry
&''<)'= &''=)(' &'(')(( &'(()(&
BE B3E B3, B9E B<E
ACT B<3 ,1/ ,1E ,2E
Fi0-r# 34%Di,0 %, 2!ri!/# .%3" %f G#3%r!5 .#5#," i,$-3"ry
Interpretation
537> aboe table it can be under that the estimated amount and actual amount of kesoram cement
was recorded at raw materiel B3E during the year 2EEB.2EE, it is increased to actual raw material B<3 in the
year 2EEB.2EE,. It shows that there is an increased in budget to the actual. $he highest amount in budget
was recorded in year 2E11.2E12..
9B
3;67+$IA6 >+I=$+I=6& F3)$
T!/# 34%Di,0 %, %;#r!"i2# 5!i,"!i,#$ .%3" %f G#3%r!5 .#5#," i,$-3"ry
&''<)'= &''=)(' &'(')(( &'(()(&
BE <23 </2 <,E B1/
ACT B/2 BB2 B,< ,E3
Fi0-r# 34%Di,0 %, %;#r!"i2# 5!i,"!i,#$ .%3" %f G#3%r!5 .#5#," i,$-3"ry
Interpretation0
1. 5orm the aboe table it can be understood that the budget of kesoram cement was recorded the
estimated alue <23 during the year 2EEB.2EE, and it is decreased to B/2 during the year 2EEB.2EE,.
2. It shows that there is on decreased in the budgetary to the actual 2E11.12.
3. $he lowest inestment in budgetary was recorded in year 2E11.12.
9,
5I=+=F6 F"+786)
T!/# 34%Di,0 %, fi,!,.# .4!r0#3 %f G#3%r!5 .#5#," i,$-3"ry
&''<)'= &''=)(' &'(')(( &'(()(&
BE 29 29 2B 9E
ACT 31 3/ 3/ 32
Fi0-r# 34%Di,0 %, fi,!,.# .4!r0#3 %f G#3%r!5 .#5#," i,$-3"ry
Interpretation0
1. 5orm the aboe table it can be understood that the budgetary of kesoram cement was recorded at
29 alue of estimation during the year 2EEB.2EE,.and it decreased to 31 of actual alue in during year
2EEB.2EE,.
2. It shows that there is increase in the budgetary the lower alue in the 2EEB.2EE,.
3. $he lowest inestment in budgetary was recorded in year 2E11.2E12.
<E
F"+;$67 . AII
+==6GD76)
CASH FLOW STATEMENT FOR THE YEAR ENDED *(
ST
MARCHE &'(&+
<1
C!34 f%D fr%5 %;#r!"i,0
!."i2i"i#3
PARTICULARS RS+ RS+
=et profit before ta% 3,/1,<B,32,B,2 BE, ,2, ,2132
A$1-3"5#,"3 f%r+
&epreciation 2B, 3E, 9/,E22 21, 2<, 19,<92
CossPprofit on food
assets soldPdisable
2, /2, B2,22, 2, <9, 12,<<2
Coss on sale of long
term inestments
3, 2B,,22 .....
I,.%5# fr%5
long term
inestment(other
trader*
/,,1,/9,BB1 2,91,3<,<<1
Interest paidPpayable
on loans etc
33, 2E, 3E,3<9 32, <2, 3<,<<1
Interest receiable
on loans
2, 2E, 22,293 ,, E2, 21,/29
Pr%2i3i%, f%r $%-/"f-
&ebtsPdeposits in
add
3,B2,12,11, ........
Pr%2i3i%, f%r $%-/"f-
&ebtsPdeposits (net* .................. ,3, ,2,E9<
&ebtPadancePdepos
its written off
2, 3/, 2E,E<E 22, //,3,/
Cong.term
inestment written
off
........... <,<EE
U,r#!iB#$ %33K0!i, %,
5oreign currency
fluctuation
2, ,2, ,9,E<3 1,, 19,E<2
Pr%2i3i%, f%r $i5i,-"i%,
<2
i,
Aalue of inestment ............... 1, 1E, E,232
O;#r!"i,0 ;r%fi" /#f%r#
D%rGi,0 .!;i"! .4!,0#3+
A$1-3"5#," f%r+
Inentories (1,21,9,,<2,33/* (2/,,/,2/,912*
$rade and other
receiable
(2E, 1<, /E, 3,<* 2, ,2, 92,2BB
$rade payables 92, 91, E2,2,/ (2E,E1,32,31B*
C!34 0#,#r!"#$ fr%5
%;#r!"i%,3
&irect ta%esP refund (,3, /,, BE,9<1* (2E,E1,32,31B*
N#" .!34 fr%5
%;#r!"i,0 !."i2i"i#3
(E=<E*?E6<E8>= (E('E6&E'(E>?&
I,"#r;r#"!"i%,+
3bsered from the aboe table that :cash flow statement :of kesoram cement industries limited in the year
2E11.2E12. In the year 2E11.2E12ariable net profit before ta%, depreciation, lossPprofit on food asset
soldPdisable, loss on sale of long term inestments, interest paidPpayable on loans etc hae been increased.
In operating profit before working capital changes of inentory, trade receiable and trade payables of
the year 2E11.2E12. "oweer the total operating profits is increasing respectiely.
In cash generated from operations the direct ta%esPrefund has been included, the total cash generated from
operations increase in the year 2E11.2E12 respectiely.
5inally with regard to the cash flow statement of kesoram cement industries limited the total cash flow
has been increased during the year 2E11.2E12. $he oerall budget results of kesoram cement is industries
limited is earning more cash flows.
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING *(
3"
MARCH &'(&
PARTICULARS RS R3
<3
S.4#$-# I,.%5# 2E1E.2E11 2E11.2E12
)ales 1B,1<,B1,22,2,/ 22,19,/2,B,,39,
Cess e%cise duty 2,E/,93,BE,<22 3,E<,/1,EE,EEE
=et sales 19,13,1<,</,2/2 22,E9,,99E,33,
3ther income 23, </, 2,,921 /,, E/, E9,/1E
(>E>>E=&E>6E(8* &&E8<E''E>>E?6=
EJ;#,$i"-r#
5inished goods <,91,1/,B,,,22 ,,2E,,B,32,9<B
>anufacturing selling <,/E,21,9<,2<9 ,,E3,/3,E3,<B1
&eprecation 2,, 22, 33,2E, 23, E2, 29,222
7escue of assets 1, /B,//,,/,3 1, 21, </,/3<
)chedule 21, 2<, 19,<92 23, 3E, 9/,E22
Interest 32, <2, 3<,<<1 33,2E,3E,3<2
Pr%fi" /#f%r# "!J!"i%,
;roision for
Furrent ta%ation <2, EE, EE,EEE 3/, EE, EE,EEE
;roision benefit ta% 1, 22, EE,EEE 1,1E,EE,EE
Pr%fi" !f"#r "!J!"i%, 68E ?'E=&E(*& &E>8E><E*&E<=&
Pr%fi" !2!i!/# f%r
!;;r%;ri!"i%,
68E?'E=&E(*& &E>8E><E*&E<=&
A;;r%;ri!"i%,
;roposed diidend 13, <2, 2,,,2/ ..................
$a% on proposed &iidend 1, ,2, /9,2E1 ...................
In tend &iidend .............. 1B, 2,, <3,2<2
$a% on in tend
&iidend ............... 2, 29, 92,EE1
8eneral resend 2, EE, EE,EEE 3E, EE, EE,EEE
Balance carried to schedule2 2E, 9/, <E,/22 2E, B9, 32,2<3
&8E '>E (8E>?? &E(6E<(E=?E>(=
E!r,i,03 ;#r 34!r# =.==M 8<.'<M
I,"#r;r#"!"i%,+
3bsered from the aboe table that the# profit and loss account :of kesoram cement industries limited in
the year 2E11.2E12 In the year 2E11.2E12.sales and income increased 6G;6=&I$D76 of finished goods,
manufacturing selling, and administration e%penses are also increased, deprecation, less transfer from
capital, rescue of assets is decreased.
</
;rofit before ta%ation increased from 7s.3/, EE, EE,EEE to <2, EE, EE,EEE and profit after ta%ation also
increased from 7s./2, <E, ,2,132 to 2,92,9B,32,B,2 in the year 2E1E.2E11 respectiely.
5inally with regard to the profit and loss account of kesoram cement industries Cimited the total profit hae
been increased the year 2E11.2E12. $he oerall budget result of kesoram cement is industries limited is
earning profits.
FINDINGS+
$here is a huge increase in I=F3>6 of the company in 2E11.2E12, compared to 2E1E.2E11.
"uge increase in earnings per share in 2E11.2E12, when compared to 2E1E.2E11.
In the year 2EE<.EB, 2E1E.11 and 2E11.12 represents actual are less than budgeted so less purchases
made in eery department. In the year 2EEB.E,and 2EE,.1E actual is more than budgeted it shows
that greater importance gien to purchases.
In the year 2EE9.E< ciil e%penses are at a ery high range. +ccruals are high compared to budget
because of construction of cold storage sector, cement plant and bore wells. In the year 2EE<.EB
actual are less compared to budgeted because as the e%penses are less. In the year 2E11.12 it
incurred high olume of e%penses than the budgeted because it incurred heay e%penses.
In the year 2E11.12 budgeted amount is more compared to actual. It shows that the 1uantity is more
compared to market. )elling of cement products, less than the estimates.
<2
In the year 2E11.2E12 sales and income increased 6G;6=&I$D76 of finished goods,
manufacturing selling, and administration e%penses are also increased, deprecation, less transfer
from capital, rescue of assets is decreased.
F"+;$67.AIII
)D886)$I3=) M F3=FCD)I3=)
<9

SUGGESTIONS
;lanning has become the primary function of management most of the planning relates to
indiidual situations and indiidual proposals. Budgets are nothing but e%pressions largely in financial
terms, budgetary control has, therefore become and essential tool of management for controlling and
ma%imizing profits.
a. Fontinuous comparison of actual performance with budgeted performance.
b. $he company has to maintain super 1uick assets in order to maintain sound li1uidity.
c. + company has to recollect their own standing amount from the debtors regularly.
d. $he company has to maintain funds for long.term inestment.
e. $he company has to monitory from liability position in regular interals.
f. $he company must be conscious about their working capital position.
<<
g. $here is lot of pretension consistence demand the cement industry as a cement producer the
company can able to source, their funds throw more share holders funds.
h. Fompany is maintaining the inentories a part from current assets for the entire study period. $o
show that e%cessie inentory leel are not good for any organization and any company. )ince
the company has it concentrate much more on inentory maintain.
i. &uring study period there is negatie working capital leels for the company so the company
must maintained enough current assets to keep working capital, figure positiely.
CONCLUSIONS

a. 6ery organization has predetermined set of ob!ecties and goals, but reaching their ob!ecties and
goals by proper planning and e%ecuting of these plans economically.
b. $he kesoram cement industries Cimited ob!ecties of planning and organizing promoting an
integrated deelopment of Fement Fompany.
c. $he corporation machine of kesoram cement industries is to make aailable and 1uickly cement in
increasingly small 1uantities, the company will spear head the process of accelerated deelopment
of cement sector by e%peditiously.
d. $he organization needs the capable personalities as management makes the plans and implement of
these plans are e%pressed in terms of budget and budgetary control.
e. $he kesoram cement Industries Cimited has budget process in two stages. one is the capital
e%penditure budget and another is operating maintenance budget, the capital e%penditure budget
shows the list of capital pro!ects selected for inestment along with their estimated costs, operating
<B
maintenance budgets, the medical budgets are rarely used in the organization like long term
budgets, search M deelopment budget for consultancy.
f. $he 4esoram cement industries is to make efficient utilization of its resources and implementation
of sophisticated technology to produce aailable and 1uality cement and also creating ambience of
collectie working of its employees.
Q
BIBLIOGRAPHY

1. ;rasanna Fhandra, 5inancial >anagement0 Theory and Practice, <Pe, 2EEB, $ata >c8raw."ill
6ducation.
2. I.>.;andey, financial management0 ;rinciples and ;ractice ,Pe, 2EE2, Aikas publishing.
3. 7.4 )harma )hashi 4 8upta, financial management0 ;rincipal and >anagement, <Pe, 2EE2, 4alyani
;ublishers.
/. &r.) = >aheshwari0 management +ccounting and financial control, 9Pe, 1,,9, sultan chand and sons.
2. >.L.4han, and ;.4 Kain0 Basic financial management, 3Pe, 1,B2, $ata >c8raw."ill.
9. +. ?. ?illsmore0 business budget and budgetary control, 2Pe1,/,, pitmanMsons.
<. 6dward K >ock0 5inancial decision making, 2Pe, 1,9,, International $e%tbook.
B. 6ugene 5. Brigham0 5inancial mangament, 12Pe, 2EEB, cengage learning.
,. BBth annual report of kesoram cement industries limited.
1E. detailed pro!ect report of kesoram cement industries limited
<,
?6B)I$6)0

?eb site of a companywww.kesoram.com
?eb site for cement industrywww.kesoram
?ebsiteforcementindustrywww.kesoramcement.com
?ebsiteofacompanywww.kesocorp.com
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