Budgeting

1
Summer Training Report

On
BUDGETING
Undertaken at
LAKSHMI PRECISION SCREWS LTD., ROHTAK
Submitted in partial fulfillment of the requirement

of the award of degree of
MASTER OF BUSINESS ADMINISTRATION
Session
2005-2007
UNDER THE GUIDENCE OF SUBMITTED BY
MR. AJAY GOYAL MUKESH SAINI
MBA/05/32
N.C. COLLEGE OF ENGINEERING, ISRANA

(Kurukshetra University, Kurukshetra)
2
3
ACKNOWLEDGEMENTS
I am very grateful to all the employees of Lakshmi PrecesionScrews Limited

Rohtak, who made me understand various aspects of budgeting during my summer
training at their office.
Their co-operation and help during my training at their office can be highlighted
by the fact that they not only provide me with the required literature but also guided
me how the budgets are prepared in their organization.
The credits for helping me undergo this employable experience goes to all
employees ofLPS Rohtak especially Mr. Ajay Goyal
I am thankful to Mrs. Puja walia Mann (H.O.D) of M.B.A department and Mr

Sandeep Jaglan who help me to complete my project report.
(Mukesh saini)
4
INDEX
Sr. No. Contents Page No.
1 Executive Summary 5
2 Industry profile 6 -13
3 Introduction of the Company profile 14 -34
4 Budgeting An Introduction 34-47
5 Objective of the study 48-49
6 Research Methodology 50 -53
7 Analysis & Interpretation 54 -61
8 Conclusions & Findings 62 -64
9 Suggestions & Recommendations 65 -66
10 Limitations 67 -68
11 Annexure 69 -77
12 Bibliography 78 -79
5
EXECUTIVE SUMMARY
The main objective of my study is to learn how to prepare budget and their successful
implementation in an organization. L.P.S Company controls its financial operation by
preparing budget.
I am doing my project of the topic budget. L.P.S the nut bolt company prepare budget.
Company make different budget for different departments. On the basis of these budget
master budget is prepare.
I started my Project on budgeting in beginning of the June. Mr. S.M. Sangwan gave me
lots of its time for my research I used secondary as well as primary data. He show me the
companys cash voucher, Cash Book, Purchase and Sales Book. I visited the entire
department of LPS Ltd. But my Project is basically related with finance department. Mr.
S. M. Sangwan (DGM Costing) helped me a lot. My summer training duration is 8
weeks.
During the study period of my project. I found that current assets are 61.39 % of total
investment in assets of company. In respect of inventory Management Company has no
proper strategy. But in overall company position is satisfactory and running well.
6
Industry profile
Meaning of fasteners & types

Uses
Improved input front
Production
Export opportunity
7
INDUSTRY PROFILE
MEANING OF FASTENERS AND TYPES

A fastener is a broad term for nut, bolds & screws. It is an alternate of welding
and riveting. Fasteners can be classifying broadly in to two categories: -
1. Depending on their tensile
2. Mild Steel (MS) & high tensile fasteners.
SES
Mile steel fasteners are used in general application & produced by the SSI &
unorganized sector.
On the other trend (HT) fasteners that are relatively technology advance, are
manufactured by organized sector.
In India fasteners are used in textiles, machine tools, pumps automobiles & general
engineering largest consumer 50% HT fasteners.
MAJOR MANUFACTURES
In India there are 4 major players in fasteners industries:
1. Sundaram fasteners
2. Sterling tools
3. Precision fasteners
4. LPS
A Sundaram fastener Industries (SFI) is a leader of automotive fasteners. While,

precision fasteners limited (PFL) leads in industrial fasteners. Both are trying to enter in
the each other segment industry.
8
IMPROVED INPUT FRONT
Until a few years ago producer of HT fasteners had to input as much as 60% of
their Raw Material like careful steel & cold heading quality steel due to poor quality. But
availability of good steels in India also has changed the scenario. Now days Bihar alloys,
ShriSR alloys, Steel Authority of India Ltd, Salam Steel Corporation are producing the
special steel for fasteners.
The automobile boom is the major reason for continuous growth of fasteners
industry because th total sale of automobile (passenger cars, 2& 3 wheelers, multiutility
vehicles, sport utility vehicles) has achieved the total figure of 10 lakhs figures and
commercial vehicles sales has also earned a growth of continuous increase in total sale.
The engineering segment has also registered 25 % growth, which is also a major
consumer of fasteners.
PRODUCTION
Near about 200000 metric ton of fasteners are being produced by various fasteners
manufactures in organized and unorganized sector.
Sundaram fastener is the largest manufacturer of HT fasteners. Which produces
approximately 48000 metric tons of high quality HT fasteners and it crossed the sales
figures of Rs. 800 core in year 2000-2001.
Precision fasteners also have done well. Its sales went up 32% to Rs. 251 Core in
2000-2001.
LPS has also come in a long way. It crossed the 4475 tones mark of production in
2000-2001 years and total sales of 8640 Lakh.
9
EXPORT OPPORTUNITY
The concept of outsourcing fasteners is under going a sea change globally. Auto
giants around the world have identified countries to buy a particular component
depending upon technology and cost. Arun Sharma, president PFL explains India has
very good scope in this of globalize purchase and many auto giants are looking at India as
a sourcing lease.
Quality is an important factor in export but not the only criterion; what is more
important is timely deliveries and after sales service through there is a vast potential to
export fasteners to DEMs abroad, it has not been exploited due to difficulties in setting up
service points near each of the DEM manufacture. Hence the domestic producer foray
abroad is limited to the replacement market.
To the successful in exports, Indian companies dont require foreign technical
collaboration, as a fastener is not a very hi-tech item. What is required is a foreign tie up
for marketing and after sales service. This is evident from the fact that recently the
market leader, Sundaram fastener tied up with kamax were Rudolf Kellies, Germany
for marketing. As India prepares to join the international economic mainstream, there will
be many such tie-ups.
10
PRODUCTION PROCESS
CHART
Wire from the bent or coils
Cutting of wire
Forging
Heat treatment
Rolling
Grinding
Plating Phosphate
Finishing
Oiling
11
Packing
Storing
PRODUCTION AND SALES OF THE COMPANY
YEAR PRODUCTION (IN SALES (IN MILLIONS)
TONES)
92-93 3016 309
93-94 3556 404
94-95 4897 552
95-96 6529 735
96-97 6385 696
97-98 5753 684
98-99 5607 706
99-00 6556 816
00-01 6165 834
01-02 7600 900
02-03 7450 896
03-04 8200 1123
04-05 8325 1200
12
SALES
1400
1200
1000
800
600 SALES
400
200
0
92- 93- 94- 95- 96- 97- 98- 99- 00- 01- 02- 03- 04-
93 94 95 96 97 98 99 00 01 02 03 04 05
Figure showing about Sale of LPS Products

13
P RODUCTION
9000
8000
7000
6000
5000
P RODUCTION
4000
3000
2000
1000
0
92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05
Figure showing about production of LPS Production

14
Company
Profile
15
COMPANY PROFILE
2006
LAKSHMI PRECISION SCREWS LTD.
46/1 MILE STONE, HISSAR ROAD

ROHTAK-124001, HARYANA
Tel.: +91-1262-248288/248289/249920/249921
Fax. +91-1262-248297/249922
Email: corp_aff@lpsboi.com /mktg@lpsboi.com
Website: www.lpsindia.com
16
SWOT ANALYSIS OF THE LPS
STRENGHT OF THE COMPANY

LPS has good manufacturing capability. It has annual capacity of
producing over 1200 metric ton so it can meet the demand of large
quantity
It has good laboratory facilility certified by international institution

enabling it to manufacture fasteners of international quality.
LPS is situated in India where labors are cheaply available. so it can

make products at lower cost than its than counterpart situated in
Europe America
Technological
Economical
Wide circle area
Reputed company
R- world
17
WEAKNESS OF THE COMPANY
The company though closer to OEMs in its home market, it doesnt

enjoy that much closeness in the market outside India in
international market it sells its product to distributors then this
product goes to the OEMs though these distributors give high
volume of business they reduce the margin of the company
Lack of coordination
Weak signal
Confusing tariff plans
Lack knowledge of market.

18
OPPORTUNITES TO THE COMPANY
Currently most of the American countries are sourcing their

products from low cost region of south-east Asia this tread was not
there in the Europe. Though lately but the Europe OMEs due to
pressure of reducing the cost starting to source parts from Asian
countries. there are on the look out for supplier from Asia so there
lies a huge opportunity to cash on it
Also foreign countries are aware of Indias bright economy situation
and are willing to establish business relationship with India. The
company should ride on this favorable situation and should use this
point to woo customer
The company can capture the whole market.
The company can be number one in the whole world.
THREATS TO THE COMPANY
Currently Indonesia, Malaysia and other south East Asian countries

are compete ting with Indian countries to cash on the sourcing
from Asia trend. They know lagging behind little in quality aspect
so they either providing fastener at very low cost if become
successful in their attempt it will means loose to Indian company
i.e. LPS and similar other.
Existing competitors
Illegal price- cut by some agents
Delivering wrong information by some agents.
19
BRIEF INTRODUCTION OF COMPANY
LPS Limited was promoted by Late Sh. Bimal Parsad Jain. LPS was incorporated as a
Pvt. Limited Company on 27th Dec., 1968. It was converted into a Public Limited
Company in August 1971. At present it is operating as LPS Limited.
LPS Plant-II is another step forward in progress of the company.
The company has started with only one machine 3/8 Bolt Maker. Now it has
wide range of machine producing a wide range of products. Today the company is the
leading manufacturer of High Tensile Fasterners in India. The Quality of the product is
well accepted in the market so demand is growing very fast and to meet the demands and
expand its production range the company is adding more production facilities.
Besides LPS the other leading companies are Sundram Fastners of TVC group,
Un-Brako and Guest Keen Williams. Recently Pandatogon Screws and Fasteners Limited
have also been introduced.
The installed capacity at present is about 8795 mt and annual turnover of the
company is 74 cores approximately. The number of employee are 2000 which only 20 at
the time of installation.
Company has covered 23500 sq. yards. The screws, nuts and bolts range from
3mm to 24mm in diameter. The products are marked under name and style of LPS.
20
21
ORGANIZATION STRUCTURE OF LPS
Board of Directors
Mr. L.K. Jain Chief Managing Director

Overall
Mr. D.K. Jain vice Chief Managing Director
Commercial
Mr. V.K. Jain Director (Whole time)
Purchase / Project
Mr. R.K. Jain Director of Export
Department wise Position

Mr. S.K. Jain Marketing Department
Mr. R.K. Jain Export Marketing
Mr. D.K. Jain A/c Excise, Sales, Store
Mr. R.C. Garg Production, Planning & Control
Mr. V.K. Jain Purchase
Mr. J.L. Gupta Personal, A/C and Finance
Mr. Dhawan Manufacturing (Plant)
Mr. A.K. Jain Information Technology

22
AGM (FINANCE) & COMPANY SECRETARY
H.P.S. Chugh
AUDITORS
N.G. Gupta & Co.

Chartered Accountants
Delhi
BANKER
Canara Bank
Regd. Office Factory & Corporate Office
46/1, Mile Stone,

Hissar Road,
Rohtak 124001 (HARYANA)
Tel.: 01262-48790 & 48287
Fax. : 01262-48297
23
OUTLINE
1) Name of the Company : LAKSHMI PRECISION SCREWS LTD.
2) Founded on : March 10, 1972
3) Head Office & Factory : 46/1, Mile Stone

Rohtak - 124 001
Haryana (India)
4) Chairman & Managing Director: Lalit Kumar Jain
5) Total Assets : 978 Mill. INR (March 2004)

($19 Million)
7) Annual Sales : 1123 Mill. INR (March 2004)

($24 Million)
8) Employees
Production Office QC R&D Others Total

372 90 48 60 54 624
55% 14% 8% 10% 9% 100%
9. Factory
(Unit: m x m)
SECTION PLANTS TOTAL
PLANT I PLANT II
w.e.f. 1972-73 1993-94
LAND 19,000 44,000 63,000
BUILDING 16,000 23,000 39,000
24
COMPANY ORGANISATION
Board of Directors
Chairman & Managing Director
Quality Management
Corporate Strategy
Marketing R&D Planning Production QA General
D S D L C P P P P P F H E
E A E A E R L L L U I R D
V L V B N O A A A R N D P
E E E O T D N N N C A
L S L R R U N T T H N
O O A A C I A C
P P T L T N I II S E
M M O I G E
E E R O
N N Y N
T T
CHRONOLOGICAL HISTORY OF LPS

25
1959 Established Nav Bharat Industries as small parts

Manufacturer.
1972 Established Lakshmi Precision Screws Pvt Ltd as Socket Head Screws
Manufacturer
1973 Technical tie-up with the German firm M/s Richard Bergner.
1977 Acknowledged quality source of fastener.
1978 Technical tie-up with M/s Richard Bergner expires.
1983 Secured self certification status from FORD.
1984 Declared Public Limited Company.
1986 Secured self certification status from M/s Lakshmi Machine Works.
1988 Established as manufacturer-exporter.
1991 Received Regional Export Award from Engineering Export Promotion

Council, (EEPC) India.
1992 Received Regional Export Award from EEPC for the second Consecutive
year.
1993 Received Regional Export Award from EEPC for the third consecutive
year.
26
1993 Established Plant - II.

1994 Received Employment Generation Award from Director of Industries,
Haryana State.
1995 Accredited in Mechanical & Chemical Testing by A2LA, USA to meet

Fastener Quality Act of US.
1995 Accredited in Mechanical Measurement, Mechanical & Chemical

Testing by National Accreditation Board for Calibration & Testing
Laboratories (NABL). Government of India.
1996 Certified to ISO-9002.
1998 Installed Bolt Maker (AF 2525) to add production capacity

to 12200 MT.
- Self Certification status from TELCO.
- Technical Tie-up with Sunil Machinery Corporation, Korea.
- Joint Venture with Brossard AG-Switzerland.
1999 Licensed Manufacturers of TORX Screw from Cam car Co. USA.
2000
2001 QS 9000 Certification.
2001 ISO/TS-16949 Certification.

- ISO-14001 Certification.
2002 Implemented ERPSAP R/3.

- Golden Peacock Award.
2003 Approved Volvo Global Suppliers.

27
1- BOLT & NUTS FOR AUTOMOBILES
A ENGINE PARTS
Con Rod
Cylinder Studs
Counter Weights
Cylinder Head
Rocker Arm
Engine Mounting
Main Bearing etc.
B CHASIS PARTS
Wheel Bolts
Wheel Hub Bolts & Nuts
Axle Bolts/ Pin
Flanged Bolts
Collar Bolt
Shock Absorber Mounting Pins etc.
2. FASTENERS
A Construction Parts (Fraction Grip)
Bolts & Nuts for Agriculture Industry
Bolts & Nuts for Industrial Machinery

28
B Cold Formed Parts for Automobile
Piston Pins
Switch body
Ball Joints
Gear Blanks
Rocket Shaft etc.
There are mainly two types of Products:
A Standard Fasteners:-
Socket head Cap Screw
Low Head Socket Bolt
Shoulder Bolt
Button Head
CSK
Hex Wrench Keys
Hex Head Bolt
Dowel Pin
Nuts
Friction Grip Bolts
Track Shoe Bolts
Stainless Steel Hex Head
Stainless Steel Socket Head Cap Screws
B Special Fasteners
These are the products that are made on special order:-
Round Head Bolts

29
Hang Bolts
MAIN PRODUCTS
Division Products
Precision Cold Forming parts for Automobile
Engine Parts ( Con Rod, Cylinder Studs,
Counter Weights, Cylinder Head, Rocker Arm, Engine
Mounting, Main Bearing etc.)
Bolts & Nuts Chassis Parts (Wheel Bolts, Wheel Hub Bolts & Nuts,
for Axle Bolts/Pin, Flanged Bolts, Collar Bolt, Shock
Automobiles Absorber Mounting Pins etc.)
Washer Assemblies Bolts
The other critical & safety parts bolts
Construction parts (Friction Grip)
Bolts & Nuts for Agriculture Industry
FASTENERS Bolts & Nuts for Industrial Machinery
Cold formed parts for Automobile (Piston Pins, Switch Body, Ball Joints,
Gear Blanks, Rocket Shaft, Ball Pins, Plunger etc.)
Pins for Hydraulics & Pumps
Bolt for Refrigeration Compressor
Friction Grip Bolts & Nuts for Construction Industry
Socket Head Cap Screw
Low Head Socket Bolt
Shoulder Bolt
Button Head
CSK
Standard Set Screws
Fasteners Hex Wrench Keys
Hex Head Bolt
Dowel Pin
Nuts
Friction Grip Bolts
Track Shoe Bolts
Stainless Steel Hex Head
Stainless Steel Socket Head Cap Screws
MISSION OF LPS
To be a growth-oriented professional company promoting high standards of business

ethics and producing best quality products thereby achieving international standards
of excellence.
30
To establish a strong R & D facility to fulfill the demands of the automotive industry
as comprehensively as possible.
To make each member of the company feel proud and empowered by fostering a
culture of participation and innovation.
To strive for reduction in defects and achieve 6 sigma and beyond so as to make
quality a way of life in LPS.
To reduce cycle time in all processes as a step towards over-all improvement.
To provide prompt and excellent service to customers anywhere in the world.
To maximize shareholders wealth.
VISION OF LPS: -
Be recognized as the best and preferred supplier of national/international standard.
MOTTO: -
Total customer satisfaction and market leadership.
TARGET: -
Annual growth rate of 30% out of which export should contribute up to 50%
PLAN: -
Continuous up gradation of process and technology and development of new products.
FUNCTION: -
System oriented approach.
PEOPLE: -
The driving force behind it.
IMAGE: -To build up a high degree of customer confidence by sustaining international

standards of excellence in product quality, performance and service. To fulfill the
expectations which shareholders, employees, customers and country have from LPS?
OBJECTIVES OF LPS
31
BUSINESS MISSION: -
To achieve and maintain a leading position as supply of quality (precision)
fasteners and to serve the national and international market in th3 field of fasteners.
GROWTH: -
To ensure a steady growth in business to as to fulfill national expectation and

expand international operations.
PROFITABILITY: -
To provide a reasonable and adequate return on Capital employed primarily

through improvements in operational efficiency, capacity utilization and producing &
generating efficiency, capacity utilization and producing & generating adequate internal
resource to finance the companys growth.
GROWTH IN PRODUCTION & SALES
YEAR/ SECTION 95-96 96-97 97-98 98-99 99-00 00-01 01-02
PRODUCTION, TONNES
6529 6385 5753 5607 6656 6165 6424
PER YEAR
SALES, MILLIONS INR

735 691 684 706 816 834 816
(TOTAL)
32
472
DOMESTIC MILLIONS INR 440 403 335 358 439 508
EXPORT MILLIONS INR 295 288 348 348 378 362 308
MAIN MARKETS
A) DOMESTIC (USER INDUSTRIES)
Automotive
Aviation
Heavy & Light Machinery
Hydraulic/Pneumatic Pumps
Machine Tools, Jigs & Fixtures
Railways
Refrigeration & Air Conditioning
B) INTERNATIONAL (COUNTRIES)
Australia
33
Germany
Holland
Hong Kong
Japan
Singapore
South Africa
South Korea
Sweden
Switzerland
United Kingdom
United States of America
CERTIFICATES
1. NABL
2. ISO / TS 16949
34
3. ISO 14001
4. Volvo Global Supplier Certificate

35
Introduction
to
Project
Budget
Need & Importance of Budget
Essential to Successful Budgeting
Principal factor of Budget
Limitations of Budget
Classification of Budget
Process of Budget Preparation
36
BUDGET
BUDGET: - A Budget is a blueprint of the project plan of action expressed in quantitative

terms for a specified period of time.
NEED & IMPORTANCE OF BUDGETING
1. Early study of problems: - Budgeting instills into the organization the habit of
thorough study before decision is put to action.
2. Combined judgment of entire organization: - The budgeting process takes the

assistance of the entire organization in determining the most profitable course.
3. Fixation of objectives: - When the objectives are not the product of hope rather the
logical sequence of carefully laid plans, the executives can command the cooperation
and loyalty of their associates.
4. Elimination of uncertainty: - The budget procedure provides a vehicle through which

basic policies are periodically re-examined, restated and set forth as guiding
principles for the organization at large
5. Optimum use of available facilities: - It helps in checking waste related to their

uneconomical use.
6. Employment stability: - Intelligent budgeting offers the greatest hope for providing
stability of employment.
7. Correlation of human effort within business structure: - Budgeting helps in achieving

co-ordination of human effort within the organization.
37
8. Relation of business activities to general economic trend: - Budgeting assists the

management to co-ordination the activities of the business to the signals or high and
low economics trends.
9. Most profitable channelisation of capital and effort: - Budgeting leads to a balanced

and unified programme and through it the capital and effort are directed into the most
profitable channels.
10. Curtain-raiser over weakness: - Budgeting reveals the weaknesses in the organization,
since the responsibility for the execution of budget is delegated.
11. Prevention of waste: - A searching inquiry into every contemplated expenditure and
the reason will constitute an effective prevention of waste.
12. Control of specific operation: - The budget provides a valuable tool of control over
certain business operation, e.g., investment in plant, quantity to be produced, quantum
of expenditure to be incurred for sales promotion etc.
38
ESSENTIALS TO SUCCESSFUL BUDGETING
1. Sound organization: - The first and foremost essential of successful budgeting is the
establishment of a satisfactory organization system.
2. Satisfactory accounting: - The historical facts must be made available in such a

manner so as to determine the relationships of costs and results and the efficiency of
individual division and functional performance.
3. Responsibility accounting: - The transactions or events should be recorded in such a

manner as to identify them with the individual in the organization who controls the
activity and is to be held accountable for it.
4. Support of top executives: - For the most effective budgeting, the most human
engineering is needed.
5. Motivation: - Budget is a device to control costs through people; hence human

relations aspects are of paramount importance in dealing with the subject.
6. Co-operation: - One of the importance pre-requisites in effective budgeting is

willingness on the part of each echelon of management to participate in the
preparation of a budget and to be judged against it.
7. Ascertainment of reason of variations: - Particularly when there are adverse

variations, the reasons are to be investigated in detail so that persons/centers may be
held responsible for inefficiencies.
8. Recognition of people: - The transactions or events should be recorded in such a

manner as to identify them with the individual in the organization who controls the
activity and is to be held accountable for it. The business plan must be developed by
the responsibility centers.
39
9. Taking corrective action: - Management takes remedial action on the basis of

principle of the part of some department\personnel, suitable action is taken to correct
the situation so that wastes, losses, inefficiencies, in economies etc. are removed and
targets are fulfilled in future.
10. Revision of budgets: - if the reasons for deviations are beyond the control of
management, the budget targets may be revised also so as to have more realistic
comparisons in future. Un-duly high targets, if fixed, sometimes prove as ant reactors
and they need be changed in the light of changed circumstances.
40
LIMITATIONS OF BUDGETING
1. Lack of support from top management: - If the top executives do not support the
technique adequately, the system is bound to wreck.
2. Lack of co-operation and co-ordination within the organization: - Co-operation of

everyone involved in the organization is a must. There must be perfect
synchronization of activities.
3. Not a substitute for management: - People mistake the technique as one, which can
replace management. This however, is simply a misnomer and such a wrong notion, if
not corrected; the desired results cannot be achieved.
4. Ineffective accounting structure: - If the accounting system, which is the bedrock of

successful budgeting, is not effective, the control technique would not work.
5. Weak organizational structure: - The entire organizational structure should be very

solid and sound. Wherever there are inherent weaknesses in the organizational
structure, no control system would prove to be effective.
6. No action or delayed action: - If even after knowing that a particular person or

department is responsible for off-budget performance, no action is taken or the action
is delayed, the technique of budgetary control could be blamed unnecessarily for
unsatisfactory achievements of targets in future also.
7. Misplacement of motivation: - Managers may be satisfied with budget performance

when better performance is possible and could reasonably be attained if a low level of
attainment had not been agreed in the budget.
41
8. Thinking too ahead: - If forecasting is practiced too far into the future, the budgetary
control technique may not be that fruitful.
9. Change in condition: -If the conditions that are anticipated are changed, the budgetary
targets cannot be achieved.
10. Gestation period not allowed: - The system, itself, demands some time to be
developed fully within the organization. The required experience, if not there, can
lead to failure of the system in its initial stages.
42
PRINCIPLE FACTORS OF BUDGET
INTERNAL FACTORS: -
(a) Materials
(1.) Non-availability of supply in terms of quality

(2.) Non-availability of supply in terms of quantity due to restrictions imposed by
licenses, quotas etc.
(b) Labour
(1.) Non-availability of skilled labour.

(2.) Problem of high labour turnover.
(3.) Non-availability of labour in required quality.
(c) Plant
(1.) Constraints of space.

(2.) Constraints of space.
(d) Sales
(1.) Low demand due to tough competition.

(2.) Shortage of trained sales personnel.
(3.) Poor and ineffective advertisement.
(e) Management
(1.) Inefficient/inexperienced executives.

43
(2.) Lack of adequate research into methods and product-designs.
EXTERNAL FACTORS
(1.) General business conditions

(2.) Government policy
(3.) Fiscal measures
(4.) Change in fashions
(5.) Buying behavior of consumers
(6.) Purchasing capacity of consumers.
CLASSIFICATION OF BUDGETS
The classification of budget may be made on different bases as under:

(1) Time
(2) Function
(3) Flexibility
Classification according to time
(a) Long-term budget: - A budget covering a long period, say, from 5 to 10 years
is known as a long-term budget. The budget is prepared mainly for planning the
long-term operation of a business.
(b) Short-term budget: - The budget prepared for a period of less than 5 years is
a short-term budget. Generally short-term budgets are prepared for a period of one
to two years.
44
(c) Current budget: - The budget prepared for a period of a week, a month or a
quarter is termed as a current budget. They are essentially short-term budgets
adjusted for current conditions.
Classification according to flexibility
(a) Fixed Budget: - A Fixed budget is a budget prepared on the basis of a standard or a
fixed level of activity. If the output and sales do not fluctuate from year to year or if
an accurate prediction of the same can be made, a fixed budget can be prepared.
(b) Flexible budget: - A flexible budget is a budget designed in a manner so as to

gives the budget cost of any level of activity. Such a budget is prepared after
considering the fixed and variable elements of cost and the changes that may be
expected for each item at various levels of operation.
Classification according to function
(a) Sales budget: - The sales budget is prepared in quantitative terms of units expected
to be sold and the value expected to be realized. The sales forecasting can be long-
range as well as short-range. Sales budget is to be developed according to the
requirements of the business, the classification commonly useful may be products,
territories, channels of distribution, customers, salesmen, size of orders, size of units
of products, organization division, terms of sales, method of sale, method of delivery
etc.
The following factors may be taken into consideration while preparing the sales budget.
45
1) Salesmens estimates
2) Orders in hand
3) General trade prospects

4) Past behavior
5) Proposed management policies
6) Seasonal Fluctuations
7) Availability of materials
8) Plant capacity
9) Availability of finance
10) Potential market
11) Other factors
Extent of competition
Selling and distribution overheads
Government policies
National and international political and economic scene
(b) Production budget: - The production budget is a forecast of the production for the
budget period. It provides an estimate of the total volume of production product wise
with the scheduling of operations by days, weeks and months. The budget also
includes a forecast of the closing finished goods inventory. The preparation of
production budget is generally taken up after the sales budget is completed. The
factory manager is the person generally made responsible for its preparation,
administration and execution.
The following factor must be considered while preparing a production budget.
1) Inventory policies
2) Sales requirements
3) Uniformity of production
46
4) Plant capacity
5) Availability of inputs
6) Duration of production
(c) Cash Budget: - Cash budget is based on cash forecast. Cash forecast is an estimate
showing the amount of cash, which would be available in a future period. Cash
forecast includes all the sources from which cash is to be received and the channels in
which payment are to be made during the budget period. The cash budget forms an
important part in co-ordination efficient working of the company. The cash budget
may be prepared for a long-term as well as a short-term period. The trend of inflow
and outflow of funds will determine the length of the budget period.
The cash budget forms an important part in co-urinating efficient working of the
company. The main objectives of preparing cash budgets are as under:
1) The probable cash position as a result of planned operations is indicated and thus the
excess or shortage of cash is known. This helps in arranging short-term borrowing in
advance to meet the situation of shortage of cash or making investments in times of
cash excesses.
2) Cash can be co-ordinates in relation to total working capital, sales, investment and
debt.
3) A sound basis for credit and for current control of cash position is established.
4) The effect of sudden and seasonal requirements, large stocks, delay in collection of
receipts etc. on the cash position of the concern is revealed.
(d) Materials Budget: - First of all, the requirements of material to be consumed are
estimated on the basis of quantity to be produced. The purchase requirements are,
then planned further on the basis of estimated inventory levels, together with the
estimated to production departments are not interrupted at all. Material requirements
are estimated regarding each class of products by multiplying the exact material
requirement for each class of product by the number of units of that class. The total
47
quantity required for the budget period is first estimated and then is further broken
down and length of the period should be in uniformity with the production budget.
(e) Materials budget can be prepared on the basis of standards or historical data regarding
percentage of raw materials to total cost, adjusted for current price and normal wastage of
materials.
Administration Overhead Budget: - Administration overhead is a separate

element of overhead cost. The cost is estimated item-wise for each department. It
includes the costs of framing policies, directing the organization and controlling the
business operations.
(e) Selling and distribution Overhead Budget : - Selling and distribution

overheads from a distinct part of overheads classified according to function. The total
amount of expenditure may be estimated after individually listing the likely quantum
of expenditure under each head and subhead. The overheads may be determined on
the basis of sales targets being allocated to different territories or salesmen etc.
(f) Capital Expenditure Budget: - The budget is the plan of the proposed outlay
on fixed assets such as land, buildings, plant and machinery. The available production
capacities, probable reallocation of existing assets and possible improvement in
production techniques affect the preparation of this budget.
(g) Master Budget: - Master budget is a combination of all other budgets prepared for
a specific period. It shows the overall budget plan. All the budgets are co-ordinates
into one harmonious unit. As has been pointed out earlier also, the chartered Institute
of Management Accountants, England Defines master budget as the summary
budget, incorporating its component functional budgets, which is finally approved,
adopted and employed. The master budget can be prepared in the form of forecast
profit and loss account and forecast balance sheet.
48
(h)
The master budget requires the approval of the budget committee before it is put
into operation. It may happen, sometimes that a number of master budgets have to be
prepared before the final one is agreed upon. The budget may be prepared in the
Process of Budget preparation
1) Guidelines (Directing Policies)

2) Preparation of Budget estimates (According to Different Department)
3) Co-ordination & Review
4) Final Approval
This Budget only provides the right to every department to do necessary work and
expenditure.
49
Objective of
Study
50
OBJECTIVE OF THE STUDY
The main objective is to study the various Budget i.e., Cash budget, Production
budget, Sales budget, Raw material budget etc. of LPS.
To study the purpose of preparing various types of Budgets that how these budgets
can help LPS to obtain its objective & to save the time and money required for
various operations.
And also to study how the various budget are helpful in controlling the activities &
to increase the efficiency of the employees.
51
Research
Methodology
52
RESEARCH METHODOLOGY
The procedure adopted for conducting the research requires a lot of attention as it
has direct bearing on the accuracy, reliability and adequacy of results obtained. It is due
to this reason that research methodology, which we used at the time of conducting; the
research needs to be elaborated upon. It provides the researcher criteria by which we can
decide which techniques and procedures will be applicable to a given problem. At the
same times it helps the researcher to clearly state what course of action he selects at the
time of conducting the research and why he select then so that they can be evaluated by
others also.
RESEARCH PROBLEM: -
In research process, the first and foremost step happens to be that of selecting and
properly defining a research problem. Research problems, in general refer to some
difficulty which a researcher experiences in the context of either a theoretical or
practical situation and wants to obtain a solution for the same.
The present project has been undertaken to analyses the various type of budget i.e.
sale budget variable/semi variable expenses budget, depreciation budget. Also to see
whether, there is deviation between budget and actual if yes, than what cause behind
this.
RESEARCH DESIGN: -
A research design is the arrangement of conditions for collection and analysis of

data in a manner that aims to combine relevance to the research purpose with economy
in procedure. In fact research is the conceptual structure within which research is
conducted; it constitutes the blueprint for the collection, measurement and analysis of
data.
53
Different research designs can be categorized as: -
Research design in case of exploratory research studies

Research design in case of descriptive research studies
Research design in case of diagnostic research studies
Research design in case of hypothesis-testing research studies
The present study is Descriptive in nature. Descriptive research studies are those
studies, which are concerned with describing the characteristics of a particular
individual, or of a group. Studies concerned with specific predictions, with narration of
facts and characteristics concerning individual, group or situations are all examples of
descriptive research studies. The design in such studies must be rigid and not flexible
and must focus attention on the following: -
Formulating the objective of study
Selecting the sample (how much material will be needed)
Collecting the data (where can the required data be found)
Analyzing the data
Reporting the findings
SAMPLE DESIGN: -
A sample design is a definite plan determined before any data are actually
collected for obtaining a sample from a given population. The amount of research
work is always limited by shortage of time and resources. Due to these limitations
information should be such that it may be representative of entire universe. So only
alternative is of sampling.
In present project a sample size of past two years (2003-2004 and 2004-2005) is
taken to study the problem. It has been done due to the time constraint.
54
DATA COLLECTION: -
In dealing with any real life problem it is often found that data at hand are
inadequate, and hence, it becomes necessary to collect data that are appropriate. The
task of data collection begins after a research problem has been defined and research
design chalked out. While deciding about the method of data collection to be used for
the study, the researcher should keep in mind two types of data viz., primary and
secondary.
In present study we have made use of secondary data collected from accounts of
LPS.
ANALYSIS AND INTERPRETATION OF DATA: -
After the data have been collected, the task of analysis them are done. The
analysis of data requires a number of closely related operations such as establishment
of categories, the application of these categories to raw data through coding, tabulation
and then drawing statistical inferences.
In present study we have critically examined the accounting data in detail. It helps
us to obtain better understanding of firms position and performance.
Interpretation means drawing inferences and conclusion after conducting detailed
analysis.
55
Detailed Analysis
Of
Budgeting of LPS
56
Budget Vs. Actual from 2004-2005 to 2005-2006
PARTICULARS Budget 2004-2005 Actual 2004-2005 Budget 2005-2006 Actual 2005-2006
3374 3729 4956 4977
ValueRs./Ton %Sales Value Rs./Ton %Sales Value Rs./Ton %Sales Value Rs./Ton %Sales
(Lks)
Sales
Domestic- 1716.70 414.06 718.58 456.51
Mkt. I 245.66 1854.77 3455.23 2985.49
Domestic-Mkt.II 775.67 -
Job wok 1230.50 1593.07 2655.99
Exports
Inter Plant Transfer 2738.03 3499.33 756.89 6097.99
Export Incentives
118.98 - 80.00 -
BOSSARD
- - - -
Other Income
16.45 - 21.70 -
Less :Trade Discounts/
- - - -
Commissions
135.43 - - - - 101.70
- - - - - -
Special Discount
- - - 17.52
- - - -
Net Sales 2873
851 69 100.0% 3499 93852 100% 5858 118211 100.0% 6080 122180 100.0%
Cost of Sales 1214.2 35988 42.3% 1166 1283 33.3% 2108 42547 36.0% 2215 44526 36.4%
Raw Material - - 0.0% - - 0.0% - - 0.0% - - 0.0%
Product Dispatch
1214 35988 42.3% 1166 31283 33.3% 2108 42547 36.0% 2215 44526 36.4%
I/U Transfers
Distribution Variable 7.31 16.67 0.3% 6.44 172.72 0.2% 52.34 1056.09 0.9% 106.68 2143.59 1.8%
Freight out-wards 26.32 780.12 0.9% 26.62 713.95 0.8% 32.19 649.51 0.5% 115.85 2327.86 1.9%
Packing Material
33.63 996.79 1.2% 3.06 886.67 0.9% 84.53 1705.60 1.4% 222.53 4471.44 3.7%
57
Margins after 625.63 2299.84 3665.38
RM & Distribution 48183.52 64682.05 73957.77 3642.02
Variables 56.6% 65.7% 62.6% 73182.37
59.9%
Budget 2004-2005 Actual 2004-2005 Budget 2005-2006 Actual 2005-2006
3374 3729 4956 4977

PARTICULARS
Value Rs./Ton %Sales Value Rs./Ton %Sales Value Rs./Ton %Sales Value Sale
(lacs) (lacs) (lacs) (Lacs)
Other Variable / 89.48 2652.18 3.1% 88.53 2384.39 2.5% 103.28 2083.92 1.8% 84.09 1689.70 1.4%
Semi- 56.89 1686.21 2.0% 81.23 2178.60 2.3% 96.41 1945.30 1.6% 98.07 1970.61 1.6%
Variable 130.25 3860.60 4.5% 135.13 3624.21 3.9% 223.98 4519.33 3.8% 360.47 7243.25 5.9%
Manufacturing 7.79 230.89 0.9% 9.27 248.62 0.3% 13.84 279.26 0.2% 5.06 101.68 0.1%
Exp. - - 0.0% 7.40 198.47 0.2% 236.83 4778.61 4.0% 149.83 3010.67 2.5%
Tooling
Maintenance
Stores \ Consumables
Gauges and Msg Inst-
Rumens QA/ Lab
Bought-out Service
Washers
284.41 8429.89 9.9% 314.16 8624.29 9.0% 674.34 13606.43 7.5% 697.52 14015.89 9.0%
Other Expenses 108.90 3227.79 3.8% 156.08 4186.09 4.5% 217.20 4382.53 3.7%
Sub Contract / Job work 13.05 386.80 0.5% 5.19 139.20 0.1% 9.33 188.26 0.2% 330.59 6642.84 5.4%
Testing/Tech Know- 173.42 5140.15 6.0% 2.00 40.19 0.0%
How 11.27 334.04 0.4% 194.14 5206.86 5.5% 239.70 4836.52 4.1%
/ Royalty 12.00 355.68 0.4% 3.46 92.80 0.1% 9.71 195.92 .2% 240.10 4824.54 3.9%
Power 95.19 - 3.3% 18.22 488.66 0.5% - 0.00 0.0% 0.47 9.44 0.0%
Design & Development 64.00 1.1% - 0.00 0.0%
AMC SIG - - 0.0%
Inc / (Dec) of Stocks
413.83 9444.46 14.6% 377.09 10113.61 10.8% 539.94 9603.23 9.2% 573.94 11517.02 9.4%
Margins after RM 927.39 1608.59 2451.10 2371.34

& 30309.17 42944.16 50748.12 47649.46
variable Expenses 32.3% 46.0% 45.9% 41.5%
58
PARTICULARS Budget 2004-2005 Actual 2004-2005 Budget 2005-2006
Actual 2005-2006
3374 3729 4956 4977
Value Rs./Ton %Sales Value Rs./Ton %Sales Value Rs./Ton %Sales Value Rs./Ton %Sales
(Lacs)
Fixed Expenses
Wages & Salaries 457.45 13558.77 15.9% 533.19 14300.24 15.2% 619.75 12504.94 10.6% 608.40 12225.13 10.0%
Contractual Salary 15.60 462.38 0.5% 9.20 246.75 0.3% 63.29 1277.03 1.1% 95.78 1924.58 1.6%
Bonus / Ex-gratin 11.80 349.75 0.4% 16.17 433.68 0.5% 20.46 412.83 0.3% 23.16 465.42 0.4%
Welfare Expenses 7.88 233.56 0.3% 9.63 258.28 0.3% 22.12 446.32 0.4% 14.40 289.30 0.2%
Rent, Rates & Taxes 0.00 0.0% 5.81 155.83 0.2% 5.81 117.23 0.1% 16.69 335.41 0.3%
Insurance 0.00 0.0% 11.04 296.09 0.3% 11.04 222.76 0.2% 18.75 376.76 0.3%.
Entertainment Expenses 0.00 0.0% 9.37 251.30 0.3% 8.62 173.93 0.1% 9.52 191.27 0.2%
Recruitment/Training Ex. 0.00 0.0% 10.21 273.83 0.3% 10.06 202.98 0.2% 54.53 1095.76 0.9%
Repair & Maintenance 0.00 0.0% 38.37 1029.09 1.1% 35.37 713.67 0.6% 30.97 622.30 0.5%
Postage, & Telephone 0.00 0.0% 17.86 479.01 0.5% 16.57 334.34 0.3% 24.35 489.34 0.4%
Printing & Stationery 0.00 0.0% 12.91 346.25 0.4% 18.98 382.97 0.3% 0.00 0.0%
Book & Periodicals 0.00 0.0% 3.50 93.87 0.1% 0.0 0.0% 217.17 4363.78 3.6%
Traveling & Conveyance 0.00 0.0% 81.39 2182.89 2.3% 119.13 2403.73 2.0% 5.70 114.51 0.1%
Vehicle Maintenance 0.00 0.0% 4.30 115.33 0.1% 4.52 91.20 0.1% 62.98 1265.60 1.0%
Legal & Professional 0.00 0.0% 0.00 11.73 236.68 0.2% 0.00 0.0%
Contribution & Subscription0.00 0.0% 3.60 96.55 0.1% 0.0 0.0% 24.79 498.16 0.4%
Watch & Ward 0.00 0.0% 21.07 565.10 0.6% 22.12 446.32 0.4% 69.11 1388.75 1.1%
Misc. / General Expenses 0.00 0.0% 27.73 743.72 0.8% 58.58 1181.99 1.0% 2.59 52.02 0.0%
Floriculture 157.20 6.11 163.87 0.2% 5.74 115.82 0.1%
Lump-Sum
649.93 14604.47 17.1% 821.46 22031.68 23.5%1053.89 21264.760 18% 1278.90 25698.11
21%
Margins 277.46 15704.70 15.1% 787.13 20912.48 22.5% 1397.21 29483.36 27.9% 1092.44 21951.35 20.4%
Sales & Distribution 56.42 1672.28 2.0% 63.32 1698.25 1.8% 31.61 637.81 0.5% 38.30 769.64 0.6%
Corporate Overheads 0.0% 0.0%
56.42 1672.28 2.0% 63.32 1698.25 1.8% 31.61 637.81 0.5% 38.30 769.64 0.6%
59
Budget 2004-2005 Actual 2004-2005 Budget 2005-2006 Actual 2005-2006
3374 3729 4956 4977

PARTICULARS Value Rs./Ton %Sales Value Rs./Ton %Sales Value Rs./Ton %Sales Value Rs./Ton %Sales
(Lacs)
Margins before 221.04 14032.42 13.2% 723.81 19214.22 20.7% 1365.60 28845.55 27.4% 1054.14 21181.71 19.8%
Interest &
Depreciation
Interest 365.00 10551.81 12.4% 138.34 3710.30 4.0% 284.85 5747.46 4.9% 371.17 7458.27 6.1%
365.00 10551.81 12.4% 138.34 3710.30 4.0% 284.85 5747.46 4.9% 371.17 7458.27 6.1%
Margins Before (134.96) 3480.61 0.8% 585.47 15503.92 16.7% 1080.75 23098.09 22.5% 682.97 13723.44 13.7%
Dep.
Depreciation - SLM 362.00 10729.65 12.6% 348.84 9355.94 10.0% 364.35 7351.64 6.2% 371.60 7466.82 6.1%
Margins after SLM Dep.

(496.96) (7249.03) 11.8% 236.63 6147.98 6.8% 716.40 15746.46 16.3% 311.37 6256.62 7.6%
60
ANALYSIS
This present table shows the various budgets like sales budget, Expenses budget, Cost of
sales budget. Now we will analysis all these budget one by one.
Analysis of sales budget
Sales budget in domestic Mkt-I decreased from 2004-2005 to 2005-2006.

Because the deviation between budget and sales of 2005-06 is very high due to less
production thats why they purchased another machinery and labor for increasing the
production.
They prepared job work budget in 2004-05 but due to the competition and
unfavorable market conditions LPS decided not to go for job work. Thats why the
actual data has been shown nil in tables.
Export have been done more than the target shown by the export budget for every
year, the reason behind that was LPS extended its marketing channel in foreign
markets. And they provide the good and beneficiary term for purchaser.
Analysis of Cost of Sales Budget
They have made use of R/M in actual as compared to budget this is because LPS
was able to acquire the R/M at lower prices as compare to budget prices, as a result of
these the overall cost R/M has come down in comparison of budgeted cost of R/M.
61
Distribution Variable Budget
Cost of distribution variables i.e. freight & packing material have been
decreased in actual in the year 2004-2005 but in the next year i.e. 2005-2006 the cost
of these distribution variables have been increase to a great extent. This is because of
the change in the sales volume.
Other Variable Budget
If we talk about the other variable/semi variable manufacturing expenses i.e.

tooling, maintenance, stores etc. and also the other expenses like sub contract, power,
design & development, royalty etc. have been decreased in actual in 2004-2005 as
compared to budgeted value but on the other hand these have been increased in actual
as compared to budgeted value in year 2005-2006. This is because due to variability of
sales volumes and production. If we talk about the main other budget of LPS i.e.
power budget than it can be inferred from the table that the budgeted value of power
was 173.42 lacs in 2004-2005 but the actual value was 194.14 lacks. This value
increased because of limited supply of electricity from HSEB. So, they have to use
electricity from their own generation, which is quite expensive than HSEB. Thats why
they increased the budget amount of power in 2005-2006.
The amount of sub contract/job work budget was 108.90 lacks in 2004-
2005 but the actual amount was 156.08 lacks. Because the some work did in cheapest
rate from outside. So, they prefer to job work and sub contract. Thats why increased
in the amount of budget of job work in 2005-2006
62
Fixed Expenses Budget
Fixed expenses have been increased in overall as compared to the budget amount
in both years. This is because LPS had to appoint new employees, increase in their
salary and provide the bonus facilities to achieve the goal of more production.
Interest
Above table shows that LPS has paid more interest in actual as compared to
budgeted amount in 2004-2005. This is because in 2005-2006 LPS has repaid its term
loan taken from IDBI. And they have paid less in 2005-2006because they taken loan from
bank for the expansion. Thats why LPS have paid more interest in 2005-2006.
63
Conclusions
64
CONCLUSION
We have studied about the Budgeting of LPS in depth. After review of exposure of
budgeting of LPS for the 2 year (i.e. 2015-2016) various conclusions about different
matters can be inferred which as follows:
Net Sales is increasing in every year and actual amount of sale is more than budgeted
amount of sale, this is because of adopting better selling policies and efficiency of
management.
The amount of product dispatches decreased in 2015-2016, but increased in year

2004-2005, Because of the more production.
Distribution variable (i.e. freight out-wards and packing material) have also been
decreased than increased in next year in the proportion of production.
Overall other variable/semi variable manufacturing expenses have been increased in

both year and actual value of these expenses is more than the budgeted value.
Because of the policy of LPS to achieve the target of more production. But some
expenses like tooling have been decreased in both years because these expenses have
not increased in the proportion of more raw material and production.
65
The actual value of other expenses is more than budgeted value in 2015-2016. But
less than the budgeted value in 2015-2016 in overall, But in these there are some
expenses i.e. sub contract/job work and power, in which LPS have paid more than the
budgeted value. Because in case of job work, some operation cheaper from outside
source than own source. And on the other hand power expenses are depending on the
volume of production. But due to the limited electricity, they have to generate own
electricity, thats why actual value of power more than the budgeted.
Fixed expenses have been increase as compared to the budget amount in both years;
this is because of increasing in the production volume.
LPS has paid less interest in actual as compared to budgeted amount in 2015-2016 but
has paid more in 2005-2006, this is because in 2015-2016 LPS has repaid its term
loan taken from IDBI. And in 2005-2006 LPS taken loan from banks for the
expansion.
The actual value of depreciation is less than budgeted value in 2015-2016, because
sale of fixed asset from any particular block of asset. But actual value is more than
budgeted value in 2015-2016, because they purchased new fixed asset.
66
Suggestions
67
SUGGESTIONS
LPS should have control over the cost of sale. To do this LPS should go through the
cost effective management.
They had to pay more amounts on sub contract/job work as compare of budgeted
value. So, they should have installed other new machines.
They should control over the fixed expenses. Because in every year actual value
founded more than budgeted value and there is high deviation between actual &
budgeted.
They should select right channel of sales & distribution. It means they should curb the
size of mediators.
They should be less dependent on the outside borrowings otherwise they have to pay
more amounts in the form of interest.
They should increase in sale especially in Domestic-mkt. I and Domestic-mkt. II.

Thus actual margins would be more than budget margins.
68
Limitations
69
LIMITATIONS
The study of competitive firms could not be made. Thus comparative study could
not be possible.
The data could have been analyzed and probed form different angles, interpreted
and studied more deeply, but it could be studied unto a limit. A deeper insight
could have revealed more and better results.
The scope of the present study had to be limited due to paucity of time.
The secret policies of LPS dont allow us to use more data.
It is only the study of interim of reports.

70
Annexure
71
BALANCE SHEET AS AT 31ST MARCH 2002
Particulars Schedule As on At on
No. 31.03.02 31.03.01
(Rs.) (Rs.)
Shareholders Funds
Share Capital 1 60250000 60250000
Reserves and Surplus 2 249924904 271698566
310174904 331948566
Loan Funds 3
Secured Loans 4 536869279 467655441
Unsecured Loans 116192749 84320163
653062028 551975604
Deferred Tax Liabilities 27175664 -------------
Total 990412596 883924170
APPLICATION OF FUNDS
Fixed Assets
Gross Block 602991947 573979843
Less: Depreciation 5 364404218 327327783
Net Block 238587729 246652060
Add: Capital Work in Progress 11143843 17205064
249734572 263857124
Investments 6 37643580 32843580
Current assets, Loans 7
& Advances
Inventories 514768324 413564909
Sundry Debtors 245456439 2384496949
Cash & Bank Balance 55574019 46217634
Other current assets 7101197 9806418
Loans & Advances 52349425 48974375
52349425 48974375
Less: Current Liabilities &

Provisions
Current Liabilities 8 174943130 166767217
Provisions 10850000 8000000
Total Current Liabilities 18593130 174767217
Net Current Assets 689456274 582293068
Misc. Expenditure 13575170 4930398
Total 990412596 883924170
72
PROFIT & LOSS A/C FOR THE YEAR ENDING 31ST

MARCH 2002
Particulars Schedule Year ending Year ending

No. 31.03.02 31.03.01
(Rs.) (Rs.)
INCOME
Sales 815756714 833962963
Job Work Receipts 2935272 0
Other Income 10 21042098 15520987
839734084 849483950
EXPENDITURE
Material & finished goods 11 238179292 248691413
Manufacturing 12 204301737 218055601
Personnel 13 140668436 128630181
Office & Administrations 14 57801441 53750561
Selling & Distribution 15 55386933 51324336
Interest & Financial Charges 16 81635370 74727634
Managerial Remunerations 17 5918400 2466000
Misc. Expenditure WO 18 294520 294520
Depreciation 39237816 38555608
Income Tax
Current Tax 4883137 8386439
Deferred Tax 1148849 ------------
829455931 824782293
Profit for the year carried down 10278153 24701657
Profit for Appropriation
Balance as per last Balance Sheet 172767374 148065717
Profit for the year brought down 10278153 24701657
183045527 172767374
Transfer to General Reserve 27500000 0
Proposed Dividend 6025000 0
Balance carried over to Balance Sheet 149520527 172767374
73
BALANCE SHEET AS AT 31ST MARCH 2003
Particulars Schedule As at At at
No. 31.03.03 31.03.02
Rs. Rs.
SOURCES OF FUNDS
Shareholders Funds
Share Capital 1 60250000 60250000
818754147 310174904
Loan Funds 3
Secured Loans 4 483268448 536869279
Unsecured Loans 168770749 1161927498
652039197
653062028
Deferred Tax Liabilities 26482576 27175664
Total 997275917
990412596
Fixed Assets
Gross Block 645389382 602991947
Net Block 242206983 238587729
246980828 249734572
Investments 6 37643580 37643580
& Advances
Inventories 652468598 514768324
Sundry Debtors 243644187 245456439
Loans & Advances 59507959 52349425
969157371 52349425

Provisions
Provisions 14296953 10850000
Total 997275917 990412596
74

MARCH 2003

No. 31.03.03 31.03.02
(Rs.) (Rs.)
INCOME
Sales 895431153 815756714
Other Income 10 9028035 21042098
Deferred Tax Liability WB 693088 -------------
906212269 839734084
EXPENDITURE
Manufacturing 12 254830103 204301737
Personnel 13 160722486 140668436
Wealth Tax 113862 0
Income Tax
Current Tax 7426388 4883137
Deferred Tax ------------- 1148849
890836076 829455931
164896720 183045527
Corporate Dividend Tax 771953 0
164896720 183045527
75
BALANCE SHEET AS AT 31ST MARCH, 2004
Particulars Schedule As at At
No. 31.03.04 31.03.03
Rs. Rs.
SOURCES OF FUNDS
Shareholders Funds
Share Capital 1 60250000 60250000
347410706 318754147
Loan Funds 3
Secured Loans 4 456051843 483268448
629822592
652039197
Total 1002431674
997275917
Fixed Assets
Gross Block 708556847 645389382
Net Block 260008180 242206983
264942268 246980828
Investments 6 37643580 37643580
& Advances
Inventories 646223937 652468598
Sundry Debtors 286608097 243644187
Loans & Advances 64297524 59507959
104630146 969157371

Provisions
Provisions 23738504 14296953
Total 1002431674 997275917
76

MARCH, 2004

No. 31.03.04 31.03.03
(Rs.) (Rs.)
INCOME
Sales 1119679570 895431153
Other Income 10 7800087 9028035
Deferred Tax Liability WB 1284200 693088
1131877515 906212269
EXPENDITURE
Manufacturing 12 315388617 254830103
Personnel 13 180417518 160722486
Wealth Tax 82160 113862
Income Tax
Current Tax 15783616 7426388
Deferred Tax 0 0
1101861562 890836076
Corporate Tax of earlier year WB 771953 0
6025000 164896720
194912673 164896720
77
BALANCE SHEET AS AT 31ST MARCH, 2005
Particulars Schedule As at As at
No. 31.03.04 31.03.05
Rs. Rs.
SOURCES OF FUNDS
Shareholders Funds
Share Capital 1 60250000 60250000
347410706 377502093
Loan Funds 3
Secured Loans 4 456051843 519018919
629822592
707315611
Total 1002431674
1112692489
Fixed Assets
Gross Block 708556847 792706950
Net Block 260008180 298036176
264942268 313427255
Investments 6 37643580 38361580
& Advances
Inventories 646223937 686863367
Sundry Debtors 286608097 336848256
Loans & Advances 64297524 97339897
104630146 1163300174

Provisions
Provisions 23738504 32120218
Total 1002431674 1112692489
78

MARCH 2005

No. 31.03.04 31.03.05
(Rs.) (Rs.)
INCOME
Sales 1119679570 1380687644
Other Income 10 7800087 10770118
Deferred Tax Liability WB 1284200 0
1131877515 1392324659
EXPENDITURE
Manufacturing 12 315388617 368218286
Personnel 13 180417518 199559107
Wealth Tax 82160 101630
Income Tax
Current Tax 15783616 23474888
Deferred Tax 0 2676409
1101861562 1352014684
Profit for the year brought down
Proposed Dividend for earlier year WB 6025000 0
Corporate Tax of earlier year WB 771953 0
194912673 226266304
194912673 226266304
79
Bibliography
80
BIBLIOGRAPHY
Mittal, Maheshwari, Cost Accounting and financial Management,Shree

Mahavir Book Depot
Kothari, C.R., Research Methodology-Methods and Techniques, New

Delhi, Wishwa Prakashan Pvt. Ltd.
Aggarwal, M.D., Aggarwal, N.P., Financial Management, Jaipur,

Ramesh Book Depot
Company
Magazines,
Manuals
Website: WWW.lpsindia.com

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1

Summer Training Report

LAKSHMI PRECISION SCREWS LTD., ROHTAK

Submitted in partial fulfillment of the requirement

N.C. COLLEGE OF ENGINEERING, ISRANA

I am very grateful to all the employees of Lakshmi PrecesionScrews Limited

I am thankful to Mrs. Puja walia Mann (H.O.D) of M.B.A department and Mr

Sr. No. Contents Page No.

2 Industry profile 6 -13

3 Introduction of the Company profile 14 -34

4 Budgeting An Introduction 34-47

5 Objective of the study 48-49

6 Research Methodology 50 -53

7 Analysis & Interpretation 54 -61

8 Conclusions & Findings 62 -64

9 Suggestions & Recommendations 65 -66

Meaning of fasteners & types

MEANING OF FASTENERS AND TYPES

A Sundaram fastener Industries (SFI) is a leader of automotive fasteners. While,

IMPROVED INPUT FRONT

Wire from the bent or coils

PRODUCTION AND SALES OF THE COMPANY

YEAR PRODUCTION (IN SALES (IN MILLIONS)

Figure showing about Sale of LPS Products

Figure showing about production of LPS Production

LAKSHMI PRECISION SCREWS LTD.

46/1 MILE STONE, HISSAR ROAD

SWOT ANALYSIS OF THE LPS

STRENGHT OF THE COMPANY

It has good laboratory facilility certified by international institution

LPS is situated in India where labors are cheaply available. so it can

Wide circle area

WEAKNESS OF THE COMPANY

The company though closer to OEMs in its home market, it doesnt

Confusing tariff plans

Lack knowledge of market.

OPPORTUNITES TO THE COMPANY

Currently most of the American countries are sourcing their

THREATS TO THE COMPANY

Currently Indonesia, Malaysia and other south East Asian countries

BRIEF INTRODUCTION OF COMPANY

ORGANIZATION STRUCTURE OF LPS

Mr. L.K. Jain Chief Managing Director

Mr. R.K. Jain Director of Export

Department wise Position

Mr. R.K. Jain Export Marketing

Mr. D.K. Jain A/c Excise, Sales, Store

Mr. R.C. Garg Production, Planning & Control

Mr. V.K. Jain Purchase

Mr. J.L. Gupta Personal, A/C and Finance

Mr. Dhawan Manufacturing (Plant)

Mr. A.K. Jain Information Technology

AGM (FINANCE) & COMPANY SECRETARY

N.G. Gupta & Co.

Regd. Office Factory & Corporate Office

46/1, Mile Stone,

1) Name of the Company : LAKSHMI PRECISION SCREWS LTD.

2) Founded on : March 10, 1972

3) Head Office & Factory : 46/1, Mile Stone

5) Total Assets : 978 Mill. INR (March 2004)

7) Annual Sales : 1123 Mill. INR (March 2004)

Production Office QC R&D Others Total

Chairman & Managing Director

Marketing R&D Planning Production QA General