Summer Training Report

A STUDY OF BUDGETING SYSTEM

At

VARDHMAN POLYTEX LIMITED, BATHINDA

Submitted To
PUNJAB TECHNICAL UNIVERSITY JALANDHAR BABA FARID COLLEGE OF MGT & TECH BATHINDA(PUNJAB)

In partial fulfillment of requirement for the award of degree in

MASTER OF BUSINESS ADMINISTRATION Session 2008 2010

Submitted By DEEPAK BANSAL M.B.A. (FINANCE) ROLL NO 8011

CONTENTS

TEXTILE INDUSTRY-AN OVERVIEW

PROFILE OF THE GROUP AND UNIT HISTORY OF THE GROUP COMPANY STRUCTURE HIGHLIGHTS OF VPL BATHINDA SWOT ANALYSIS OF THE UNIT MANUFACTURING PROCESS OF THE UNIT OBJECTIVES & SCOPE OF THE STUDY LIMITATIONS OF THE STUDY INTRODUCTION TO THE BUDGETS BUDGET FORMULATION BUDGET ANALYSIS & BUDGETARY CONTROL BUDGETING SYSTEM IN VARDHMAN POLYTEX LTD. BUDGETARY CONTROL IN VARDHMAN POLYTEX LTD. PERFORMANCE & ACHIEVEMENT REVIEW DIRECTIONS FOR FUTURE RESEARCH FINDINGS

SUGGESTIONS & CONCLUSION SUMMARY AND FINDINGS BIBLIOGRAPHY

ACKNOWLEDGEMENT
I wish to place on record my sincere thanks to various individuals who have helped in carrying out this project. I am grateful to Management of Vardhman Polytex Limited, Bathinda to allow me to have the summer training in their industry. First of all I wish to express my gratitude and sincere thanks to Miss Ritu Sharma (training & placement officer) who allowed me to join summer training at VPL. It gives me immense pleasure to acknowledge my deep sense of gratitude and sincere thanks to Mr Rajinder Pal (Executive HRD ) for agreeing for the training. I am specially grateful to Mr. Sandeep Goyal for his support and guidance and inspiration all through this project. I would like to express my appreciation for the discussion and constructive criticism from my friends during the course of this project. Last but not the lest I am obliged to my family whose his moral support has been major source of strength to carry out this project.

Deepak bansal Date :

TEXTILE INDUSTRY-AN OVERVIEW

Cotton textile in India is a well-established manufacturing industry and employ more workers than any other sector. In Indian textile mills, yarn is spun, woven into fabrics, and processed under one roof. The textile industry occupies a unique place in our country. Textile industry is providing one of the most basic needs of people and maintaining sustained growth for improving quality of life. It has a unique position as a self-reliant industry. From the production of raw materials to the delivery of finished products, with substantial value-addition at each stage of processing; it is a major contributor to the countrys economy. India accounts for 25 percent of the world installed capacity of spindles and is one of the largest exporters of yarns in international market. It has second highest spindlage in the world after China with an installed capacity of 38.60 million. India has several advantages in the textile sector, including abundant availability of raw material and labour. It is the second largest player in the world cotton trade. It has the largest cotton acreage, of about nine million hectares and is the third largest producer of cotton fibre in the world. The textile industry is also labour intensive, thus India has an advantage.

PROFILE OF THE GROUP

The industrial hub of the northern region - Ludhiana nestles the corporate Headquarters of the Oswal Group of industries. The Oswal Empire expands from Anshupati Textiles Limited to Vinayak Textile Mills both situated in Ludhiana to Vardhman Polytex Limited in Bathinda . The Company has entered into a joint venture agreement with F.M. Hammerle Group, Austria for setting up a Rs.255 crore green field project for manufacture of quality yarn & piece dyed shirting fabric with annual capacity of 12 million meters. For this purpose, a new company in the name of 'Oswal F.M. Hammerle Textiles Ltd.' has been floated which has set-up its plant at Village Kagal, Dist. Kolhapur (Maharashtra). Vardhman Polytex hold a 76% stake in the the said joint venture company and 24% equity is held by F.M. Hammerle Group. This project will definitely decide the success of the group in the future. Oswal group is earning laurels by selling

yarn of international quality both indigenously and exporting it to several countries. Its market share is increasing day by day.

HISTORY OF THE COMPANY: M/s Punjab Mohta Polytex limited was set up in 1983 and started production in 1984. In1987; it was taken over by Vardhman group and was named Vardhman Polytex Limited. But after the family settlement in 2002, the unit came under Oswal group. The group has very good potential and high presence in the textiles industry with well set manufacturing set up for 100% cotton, Polyester cotton, Acrylic and other blended yarns. New qualities of yarn added are Lycra and Slub yarn. All the group units are well equipped with machinery imported from Europe, Japan, China and many other countries. Continuous efforts are always being made to further improve the quality and match the industry standard to meet the demand of its customers.
After the family settlement, in January 2003, the company is ushering under the newly formed Oswal Group. The company has set up a state of the art technology-spinning project at Focal Point Ludhiana with an installed capacity of 24,288 spindles in January, 2004. Further, a new state of the art Dye House has been installed at the same site with an installed capacity of 13 MT / day which has been increased to 15 MT/day. The company has also set up a state of the art technology-spinning project at Bathinda with an installed capacity of 25,344 spindles for the manufacture of Cotton yarn/Blended yarn, which has started its commercial production in May, 2005. Thereafter, the company has expanded its capacity at Focal Point, Ludhiana with an installed capacity of 25,315 spindles for the manufacture of Cotton yarn/Blended yarn which has started its commercial production in October, 2006. In 2006, the Company has joined hands with one of the leading European shirting fabric manufacturer namely F.M. Haemmerle estd. 1836 for setting up of a green field project of dyed yarn shirting fabric. The said project has been undertaken in the newly formed subsidiary company namely "Oswal F. M. Haemmerle Textiles Ltd." at Kolhapur (Maharashtra) with annual capacity of 12 million meters. The dyed yarn shirting fabric plant of OSWAL GROUP is one of the best plant in India with latest state-of-art machinery and equipments. The commercial production is started in the mid of the year 2008-09. In 2008, the Company completed another expansion of 30,000 spindles at its existing location in Bathinda and with this expansion, the total spinning capacity with OSWAL GROUP stands increased to 1,65,872 spindles.

Vision: We at Oswal Group will achieve a turnover of Rs 1,000 crore by the year 2012 by strengthening its core competencies and capacities in Textiles and diversified businesses to create value for its Stakeholders. Mission: Oswal Group on a learning curve will expand capacities in Textiles and reinforce Customerdelight by manufacturing world-class quality using state-of-the-art technology.

Core values

Total Customer Delight Competing with the best Total Quality People High Product Quality is a Way of Life Continued Improvement through Innovation and Creativity State of Art Technology with ultra-modern R&D Facilities Respect of Every Oswal Group Parivar Member Achieving Excellence through Culture Integration Change is a Way of Life Act as responsible corporate citizen and discharge our social responsibilities

Quality policy Quality is built into the company's products to not only meet customer requirements continuously, but exceed them. The company will achieve this through an interface with the market place, access to state of the art technology, continuous R&D, Process Development and adoption of innovative manufacturing and marketing strategies.

The quality policy is integrated with the company's main objectives:-

To remain market leader in quality. Increase market share with focus on niche segments. Improve productivity Cost reduction Reduction in percentage of seconds.

The management is committed to provide resources and comply with all requirements needed for fulfillment and continual improvement of quality management system.

Quality culture is created throughout the organisation through training and motivation of people at all levels. The quality policy is implemented through a network of systems and procedures understood and followed throughout the company.

COMPANY STRUCTURE

OSWAL GROUP

VARDHMAN POLYTEX LIMITED

OSWAL F.M HAMMERLE TEXTILE LIMITED

VARDHMAN POLYTEX LTD.,BATHINDA (SPINNING)

VTM,LUDHIANA (SPINNING & DYEING)

ANSHUPATI, LUDHIANA (SPINNING )

A.M.KRYON, LUDHIANA (READYMADE GARMENTS)

ANSHUPATI TEXTILES LIMITED, based at Ludhiana(Punjab), was setup in

1991 with an installed capacity of 8000 spindles to manufacture Grey/Dyed Acrylic Yarn, Fancy yarn. The Acrylic Yarn is used in the manufacturing of Hosiery & Knitted Garments. This Unit also manufactures the Acrylic Yarn which is used in manufacturing of Mink Blankets. Presently it has the capacity of 12000 spindles. The quality yarn in this unit is manufactured using technology imported from Europe, which is fully backed with ultra modern R&D equipment for consistent quality. The yarn manufactured from this unit has demand both in domestic and international market. The present capacity in terms of production is approximately 7.5 ton/Day.

VINAYAK TEXTILE MILLS, The Company has setup this Unit in 2004 at
Ludhiana with an installed capacity of 25000 spindles. The Unit has latest state-of-theart-technology imported from Rieter (Switzerland), Murata (Japan) & Uster (Switzerland). The Company has also installed a Dye House at the same location having capacity of 13.2 MT per day with latest machinery imported from Fongs (China).Company under this unit is manufacturing 100% cotton yarn with vast range of count selection varies from NE 20 to 40 both in carded and combed varieties.Presently,It has installed capacity of 50000 spindles. The present production capacity is around 30mt/Day and 13-mt dyeing /day. Oswal F. M. Hammerle Textiles Limited -:
is a joint venture company

promoted by Oswal Group, primarily engaged in textile manufacturing right from spinning to garmenting in India. OFMHTL is a flag-ship company of Oswal Group and is aiming to cater the market of premium shirting segment by providing finest quality top of the line shirting fabrics for dress wear. OFMHTL is a joint venture between F. M. Hmmerle, Austria and Oswal Group, who has a formidable presence in global textile business since long. By clearly defining assignments in the management of the company, Dr. R. Mittal is Group CEO responsible for entire business, A. K. Joshi, Unit Head for managing the entire Unit, B. Ghosh, Manufacturing Head, Dr. A. Thakare is TQM Head, and G. Natarajan, Chief Engineer, a strong synergy exists between the individual departments with a dynamic approach to decision making. This leads to a very quick response to the wishes of customers, a great deal of creativity in fabric development and styling and provides a decisive impulse also in plant operations. As a matter of fact during the last two years, in other words between 2006 and 2007, some 66 million USD has been invested into this new project so far. This has meant not only the entire complement of machines has been commissioned, but also emphasis was focused on new storage facilities, information systems, logistics and an intensive and comprehensive personnel training program. Manufacturing capacity is 12 million meters per annum in Premium Quality Shirting Fabric for dress wear. Our product is made

from 100% Giza cotton and that too with VAT dyeing. Primarily our yarn count range is from 40s Ne to 80s Ne in single and from 2/80s Ne to 2/140s Ne in two ply yarn for 180 ~ 200 average GSM of finished fabric.

VARDHMAN POLYTEX LIMITED, a unit based at Bathinda(Punjab) The company has completed its expansion project and with this, the total capacity of the company has increased to over 1 lakh spindles making it one of the largest in Northern India. with Present installed capacity of 1,04,592 spindles, is manufacturing 100% cotton yarn, Polyster cotton yarn, lycra, slub and viscose yarn with vast range of count selection varies from NE 10 to 40 both in carded and combed varieties. The Unit is situated in the hub of COTTON BELT and derives the advantage of procuring its basic raw material of best quality at lower cost from nearby locations. the Company has also set up an independent Cotton Purchase Office in Bathinda for the selection & procurement of Cotton to meet out its requirement in all the Units The company had been awarded the Export House status by the Government of India. The present capacity in term of production is around 65000 Kg/day.

CURRENT SET UP: Presently the Company has its corporate office situated at Chandigarh Road, village Mundian, Ludhiana and works at Bathinda &Ludhiana. The day to day operations are looked after by qualified technocrats/professional at plant/work as well as at corporate office having experience in their respective fields of management. Presently Mr.Ashok Goyal is the Chief Executive of Vardhman Polytex limited.

PRESENT CAPACITIES Presently the group has following production capacity and product range at its different manufacturing facilities. Location Installed Capacity Bathinda (VPL) (spindles) 1,04,592 Production Capacity 65000kg/Day Cotton, synthetic, Blended Ludhiana 12000 7.50 MT/Day 30-MT/Day 13-MT dyeing/Day yarn,lycra,slub Acrylic Yarn 100% Cotton yarn Product Range

(Anshupati Textile) Ludhiana (VTM) (spinning & 50000 dyeing)

HIGHLIGHTS OF VPL- BATHINDA

COMPUTERISATION
Presently the unit is operating under SAP. The system work completed & come into working from April 2007. This system is well structured keeping in view the present tax regime like VAT, SERVICE TAX, and TDS etc. The Server for this is situated at LUDHIANA. The feature of system is that data related to all units are available at different units & branches. Each department can access data related to different units at there own site subject to authorization. Personal computers have also been provided separately for each department like administration, costing, R&D, Maintenance as well as the production areas.

RESEARCH AND DEVELOPMENT

VPL has a well-established R&D department to assure quality and supervise yarn manufacturing from the very first stage of raw material procurement i.e. cotton purchasing to the final stage of finished good manufacturing i.e. yarn. All the stages have pre-established standards and the output of every step is tested in comparison to these standards in the ultra modernized machines like HVI-(Higher Volume Instrument), AFIS, UT-3- (Uster Tester) and the deviations reported at the earliest .All of this machinery is totally imported and checks for the various parameters of yarn like Its strength, elongation, trash, length, color, fineness, moisturizer etc is done. At the End, fabric produced is also tested and graded so that the quality could be assured and Contamination is reduced. VPL also has a Process Developmental Cell to improve processes and gain efficiency.

I.S.O. CERTIFICATION
The unit had been awarded ISO-9002 certificate by Bureau of India standards. The ISO certification is an assurance of good quality of the product. At present, unit had been awarded ISO-9001 2000 by bureau of India Standard.

PROCUREMENT OF COTTON
The raw material required for yarn manufacturing is cotton and the cotton requisite of VPL is sent to the corporate office which purchases it by its COTTON PURCHASE OFFICE located in Bathinda .The selectors of COTTON PURCHASE OFFICE visits the local cotton markets in the towns of Punjab, Haryana, Rajasthan where they with the help of cotton brokers enter in the agreement with Ginning factory owners. Along with the selector of CPO, ginning factory owner goes to the cotton market and selects the cotton in the unit of bales. After ginning this cotton is dispatched and payment made with the help of commission agent. MARKETING For Marketing of different product, the unit is having a modern marketing department headed by experienced team that covers all the activities for conversion of finished goods into cash. It keeps vigil on the market feed-back on the level competition, market, trend, changing customer needs and modifications. The marketing department deals with domestic sales, while export department of the group manages export sales. The VPLs having the export and domestic ratio is 18:82. The unit is having different channels for distribution of its products. 1. 2. 3. Selling agents at Ludhiana, Amritsar, Delhi, Mumbai and Tirupur. Branches at Delhi and Ludhiana. Direct Dispatches are also made by the units.

PRODUCTION
The unit is producing difference types of yarn both for Domestic consumption and Export purpose. The production department is headed by Assistant General Manager (A.G.M.). The department has four units. The unit I is related to the production of cotton yarn and Lycra. The unit II is for the production of cotton yarn, slub & unit-II expansion is for the production of Polyester, Cotton yarn, blended yarn & unit III partially Polyester & 100% Cotton yarn . Unit IV is related to the production of cotton yarn.

EXPORTS
The exports at the group level started in 1985-86 due to increased govt. attention during that period. For promoting the export govt. has also assigned the export house status to the group in the late eighties.Export and Domestic ratio of VPL is 18:82. Company has been awarded two stars with EXPORT HOUSE Certificate . VPL exports yarn to countries like BANGLADESH, HONGKONG, KOREA, MALAYSIA, PHILLIPINES, SINGAPORE, SRI LANKA, VIETNAM, PORTUGAL.

INDIGENEOUS CUSTOMERS
The indigenous customers of VPL, Bathinda; are industries like RAYMOND, SURYA LAKSHMI, and cities like DELHI AND LUDHIANA in the North, TRIPURA in the South etc.

COMPETITORS
VPL is in tough competition with VARDHMAN GROUP; NAHAR GROUP, LUDHIANA; TRIDENT etc.

SWOT ANALYSIS
STRENGTHS 1. Adequate competency and confidence in all dep. 2. Committed team members from top of bottom. 3. Core competency for textiles 4. Capability for troubleshooting and crisis management. 5. Creative and innovative thinking. 6. Peaceful industrial environment 7. Strong discipline and positive attitude culture 8. Relatively advanced technology and reliable captive power 9. Strong HRD and development tools for work force. WEAKNESS 1. Economies of scale 2. Slow acceptance to changes / rigidity to some extent 3. Locational factors like away from textile / financial hub. 4. Technology up gradation particularly in engineering end computerization / communication. 5. Professional depth in few places / areas. OPPORTUNITIES 1. Globalization 2. Liberalization in govt. policies and tax laws. 3. Availability of latest / state of art technology and know how / communication. 4. Availability of easy finance 5. Availability of good professionals

THREATS
1) 2) 3) 4) 5) 6) WTO VAT Unpredictability about cost of input like raw cotton fuel for CPP, Shorter life span of imported technology Instability of production work force Squeezing margins of profit in textiles specially in spinning.

imported spares.

MANUFACTURING PROCESS FLOW CHART

100% COTTON CARDED/COMBED YARN
Issue of Cotton Bales Laying Down Blow Room Card Breaker Draw Frame Finisher Draw Frame Speed Frame Ring Frame Winding Cheese Winding T.F.O Conditioning Packing for Single Yarn Conditioning Packing for Double Yarn Unilap Comber

Storage & Despatch

MANUFACTURING PROCESS IN VARDHMAN POLYTED LIMITED, BATHINDA Raw cotton is used as a basic raw material for producing 100% cotton yarn for ring spun. 1. MIXING The different varieties of cotton are issued as per product mix from the raw material section in bale from. The different varieties of cotton and different lots are mixed together as per the requirement of end product and standard recommended mixings. The material is conditioned in mixing for 24 hours. 2. BLOW ROOM In this process, the cleaning and opening of fibers is done in a sequence of beaters. Main purpose is to reduce tuft size, remove the trash particles and foreign matter etc, which often comes in the bales. 3. CARDING In this process, further cleaning of fibers is done and the fibers are opened unto single fibers extent i.e. the main purpose is further removal of trash in cotton and the industrialization and parllelosation of fibers. From the carding machine, the material is delivered in the form of silver. 4. DRAW FRAME The purpose of this process is to reduce the wt/yard in the card sliver 6 to 8 end of card slivers are doubled together in this process to reduce variations and further drafting is done to reduce the wt/yard of delivered sliver. Two passages are given at the draw frame stage. In case of combed counts, the card sliver is fed to the precombing draw frame. The purpose of combing draw frame is to reduce the wt/yard variations in the card sliver and to parllelise the fibers. Singles passage is given at the precombing stage. 5. LAP FORMER 20-25 precombed draw slivers are fed together to produce a lap sheets of fibers, which is wound on the spools.

6. COMBERS The laps prepared on lap former are fed to combers. The main purpose of combing process is to remove the short fibers from the material in the form of noil. The average noil percentage caries from 15% to 18%. The material is delivered in the form of silver. 7. SPEED FRAME The finisher draw frame sliver is fed to the speed frames for conversion into the roving form. In this process the wt/yard of the sliver is reduced, slight twist is given to the fleece and the material delivered in the form of roving, wound on the plastic bobbins. 8. RING FRAME The roving is fed to ring frame for conversion into yarn. In the process, the weight / yd of roving is reduced as per requirement of ultimate user and the delivered yarn is wound on the plastic bobbins. 9. WINDING In this process, the yarn is wound on paper cones to produce bigger package, as per requirement of the market. The weight / package varies from 1.2 kilogram to 2.1 kilogram. During the process, in addition to the formation of bigger packages, the yarn faults are also removed with help of electronic yarn cleaner. 10. DOUBLING In the case of type cord the process is same upto cone winding. After cone winding the yarn is fed into Cheese Winding. In the process 2 ply or 4 ply is to be done as per requirement. After the yarn is fed into ring doubling and required T.P.I. is given in 2 ply or 4 ply yarn. In the next process in assembly cheese winding is get the package in the package in the required from to be fed into T.F.O. in T.F.O. final yarn is prepared in theform of cheese and required T.P.I. is given to the final yarn in process.

11. PACKING In this process, the cones / cheese are packed in bags or cartoons as per the requirement of the market. In addition to the packing the material is checked thoroughly to avoid mixing of different materials.

OBJECTIVES OF THE STUDY

The main objectives of the study are as under : To be conversant with budgetary control system in any large business To develop the understanding about responsibility as to why and by whom To be familiar with nature, type and purpose of budget to be submitted by To have better understanding about the budgetary control system through To study and review the present budgetary control system in VPL, organization. it is made. the various department. different departments of organization. Bathinda for the purpose of better understanding of system and making it more effective.

SCOPE OF THE STUDY

To study the concept of budgetary control and for proper understanding of this concept, I have done the study of annual budget, monthly budget, annual review, monthly review and commercial review. And then from review, reasons for variances are found out from control point of view.

LIMITATIONS OF THE STUDY

As budgets are prepared for the future period so situation which, is Time to study concept of budgetary control is very limited. Identification of the persons, involved in Budgeting.

presumed to prevail in future may change.

INTRODUCTION
Budgets can be prepared for and used by anyone and anything. That is, we can prepare and use personal budgets and organisations, ministries and non profit making organisations can all use them. Budgets, by definition, have to be prepared in advance; and for this reason, they are often referred to in terms of their being part of a feedforward system. Feedback is a term frequently heard both in accounting and ordinary use. Feedforward, on the other hand tends to be less frequently heard, yet this word incorporates the most important aspect of budgeting: looking at situations in advance, thinking about the impact and implications of things in advance, attempting to take control of situations in advance.

BUDGET
A budget is quantitative expression of a plan. It is commonly used by business firms, government agencies, non-profit institutions, and even households. Budget is a financial statement, prepared prior to a defined period of time of the policy to be pursued during that period for the purpose of attaining a given objective. Budgets quantity the planned financial effects of activities aimed at continuous improvement and cost reduction. Well managed organizations usually have the following budgeting cycle : 1. Planning the performance of the organization as a whole as well as its submits. The entire management team agree as to what is expect. 2. Providing a frame of reference, a set of specific expectations against which actual results can be compared. 3. Investigation variations from plans if necessary, corrective action follows investigation. 4. Planning again, considering feedback and changed conditions.

OBJECTIVES OF SETTING BUDGET

1. A budget is a blue print of the desired plan of action or operation plans covering the entire organization and all its functions like purchases, production, sales, financial requirements, research and development are expressed through budgets. The budget serves as a declaration of policies and also defines the objectives fro executives at all levels of management. 2. Budgets provide a means of co-ordination of business as a whole. In the process of establishing budgets, the various factors like production capacity, sales, possibilities and procurement of material, labour etc. are balanced and coordinated so that all the activities proceed according to the objectives. Budgets inculcate team spirit and are like putting so man people together to solve a common problem. 3. Budgets are means of communication. Complex plan laid down by the top management are passed on to those who are responsible for putting them into action. 4. Budget facilities centralized control with delegated authority and responsibility as they are grouped according to the responsibilities of different executive levels, they facilitate decentralization of work. Hence budgets are instruments of managerial control by means of which the management can measure performance in every part of the concern and take corrective action as soon as any variation from budget emerges.

CLASSIFICATION OF BUDGETS
Budgets are classified according to the different purposes they serve. The budgets can be classified according to : 1. The coverage they encompass 2. The capacity to which they are related 3. The condition on which they are based 4. The period which they cover

BUDGET
COVERAGE
1) Financial budgets a) Sales Budget b) Production budget c) Administration budget d) Capital Exp. budget

CAPACITY
1) Fixed budget 2) Flexible budget

CONDITION
1) Basic budget 2) Current budget

PERIOD
1) Long-term budget 2) Short-term budget

e) Research & Dev. Budget

f) Cash budget 2) Master Budget

CHARACTERISTICS OF A BUDGET
A good budget is characterized by the following : Participation : involve as many people as possible in drawing up a budget. Comprehensiveness : embrace the whole organization. Standards : base it on established standards of performance. Flexibility : allow for changing circumstances. Feedback : Constantly monitor performance. Analysis of costs and revenues : this can be done on the basis of product

lines, departments or cost centers.

ADVANTAGES OF BUDGETING AND BUDGETARY CONTROL

There are a number of advantages to budgeting and budgetary control: Compels management to think about the future, which is probably the most important feature of a budgetary planning and control system. Forces management to look ahead, to set out detailed plans for achieving the targets for each department, operation and (ideally) each manager, to anticipate and give the organisation purpose and direction. Promotes coordination and communication. Clearly defines areas of responsibility. Requires managers of budget

centres to be made responsible for the achievement of budget targets for the operations under their personal control. Provides a basis for performance appraisal (variance analysis). A budget is basically a yardstick against which actual performance is measured and assessed. Control is provided by comparisons of actual results against budget plan. Departures from budget can then be investigated and the reasons for the differences can be divided into controllable and noncontrollable factors. Enables remedial action to be taken as variances emerge. Motivates employees by participating in the setting of budgets.

Improves the allocation of scarce resources. Economies management time by using the management by exception

principle.

PROBLEMS IN BUDGETING
Budgets may be an essential part of any marketing activity they do have a number of disadvantages, particularly in perception terms. Budgets can be seen as pressure devices imposed by management, thus a) b) a) b) attained. It is difficult to reconcile personal / individual and Waste may arise as managers adopt the view, we Bad labour relations Inaccurate record keeping Departmental conflict arises due to : Disputes over resource allocation Departments blaming each other if targets are not resulting in :

corporate goals.

had better spend it or we will lose it. This is often coupled with Empire building in order to enhance the prestige of a department. Responsibility versus controlling, i.e. some costs are Managers may over-estimate costs so that they will under the influence of more than one person, e.g. power costs. not be blamed in the future should they overspend.

BUDGET FORMULATION
KEY FACTORS
The starting point for preparing budget at unit level is to determine companies limiting factor e.g. Sales forecasts, raw-material availability. In case of VPL unit, the production capacity is taken as the limiting factor. Therefore the units production budget is the pivot around which all functional budgets are prepared. The budget factor constitutes the starting point for the preparation of many budgets. The budget factor highlights the limitation of the undertaking as for e.g. Production capacity is the limiting factor of VPL.

INTERPRETATION OF DIFFERENT BUDGETS PREPARED BY VPL

BUDGET AT GLANCE Budget at glance shows the overall structure of organizations. It shows the sale value of production for different quarters and its total value. The various expenses like raw material, manufacturing expenses, personnel expenses, administration expenses, selling expenses and excise duty are deducted from sale value to arrive the profits. Budget at a glance shows Quarter wise PBDIT.

MAJOR ASSUMPTIONS
The budget deals with the future, which is full of uncertainties. The major underlying assumptions forecasted are: PERIOD ALLOCATION: whole annual budget is divided into four semesters: April to June. July to Sept. Oct to Dec. Jan to march. It indicates the utilization %age of various m/cs during four

quarters. Sales rate (provided by Central Marketing). Power rate purchased and own generation. Hike in wage rate / salary, manpower recruitment. Working days etc. Waste %age: it indicates the rates taken for the purchased of Cotton and PSF prices. Exchange rate for Exports.

cotton.

BUDGETED CONTRIBUTION STATEMENT Budgeted contribution statement shows the sales value minus variable cost. Total variable cost is calculated by adding raw material cost, wages, power, packing material, selling expenses and excise duty. This variable cost is deducted from sales to give contribution per count. To make it more analytical count wise contribution P/S/S is calculated. RAW MATERIAL BUDGET Production budget is the base for Raw material budget. On the basis of production and yarn recovery % raw material requirement is calculated. The estimated quality of raw material is then multiplied by the pre anticipated cotton prices. For 1st half of the budget year actual book prices are

considered while for 2nd half budgeted rates are considered which are provided by cotton purchase office. BUDGET WASTE REALIZATION STATEMENT This report shows the various types of cotton waste to be generated by the various cost centers starting from blow room to packing. Department wise waste percentage is provided by the production department. Quality wise waste is then multiplied by expected rate, which are being provided by commercial department. MANUFACTURING EXPENSES BUDGET All the variable and fixed expenses, which relates to manufacturing process are considered under the head of manufacturing expenses in annual budget. The major expenses covered in this budget are: energy charges, packing charges, and maintenance charges, which comprises: - machinery repairs, planned replacement, stores consumables, oil & lubricant and electrical / electronics cost departments. POWER AND FUEL BUDGET This report indicates the cost of power and the fuel used for operating D.G. sets keeping in view the requirement and supply of power, units of power per unit cost of power is calculated. Similarly keeping in view the use of D.G. sets cost of H.S.D./ HPS is calculated. Units to be consumed in each department are given by electrical department. As the unit have 80% power of its own generation. Expenses like maintenance cost, oil & lubricant of WARTSILA and other D.G set are provided by power house. PERSONNEL EXPENDITURE BUDGET This report shows the fact based on anticipated expenses relating to the personnel. It comprises department wise wages. Head wise various personnel expenses such as Basic salary, H.R.A., conveyances, medical, LTA, ESI, P.F., Bonus, welfare expenses and other incentives etc. Detail department wise manpower is given by respective department to I.R

department. on the basis of department wise personnel budget is being prepared by Industrial relation department.

ADMINISTRATION EXPENDITURE BUDGET The expenses relating to general administration are considered under the head of administration. The expenses comprised in this report are insurance, rent, traveling, vehicle expenses, printing & stationery, postage & telegraphs, electricity & water charges, books & magazines, legal & professional, rates & taxes, general repairs, auditor expenses, charity & donations, general charges, survey fees etc. INSURANCE EXPENSES BUDGET Budget would show the sum insured and rate of premium for different type of assets. Major insurance policies under taken as follows: i. Policy of fixed assets: for plant & machinery and building (insurance expenses allocated to different department on the basis of P & M value and building expenses. Are allocated on the basis of covered area.) ii. iii. iv. Marine policy: state of finished goods, purchase of raw material, Policy of stock: For stock of finished goods, raw material and Other policies: it covers the other misc. policies. purchase of stores, cash in transit and machinery breakdowns etc. stores and spares.

BUILDING REPAIR BUDGET It is prepared by Civil Department. This report indicates the expenses to be incurred on building repair. The repairing expenses are divided in three parts: Factory building repairs Non factory building repairs Colony building repairs.

SELLING EXPENSES BUDGET All the expenses relating to sales are comprised in this report. The major expenses covered in this report are: Commission of sales (exports & domestic) Cash discount and quantity discount Freight, octroi & other forwarding expenses Advertisement and other promotional expenses Rebate & claims Cess on yarn & truck expenses: not on exports but on Cash discount Quantity discount

domestic sales.

FINANCIAL EXPENDITURE BUDGET It includes the following expenses: i. ii. iii. iv. v. Interest on Working Capital Fixed at Corporate Office, Interest on Term Loan. Interest on Suppliers if the payment is made with in 72 hours Interest on trade deposit and other bank charges. Interest on Head office investment. Ludhiana.

from time of pressing of bales the supplier give interest of 24%.

BUDGETED CONVERSION COST This report indicates all the expenses, which are incurred on converting Raw Material Goods into Finished goods. All the expenses are allocate in following parts. Manufacturing expenses, Personnel expenses, Administration expenses and spd. Shift is calculated. BUDGETED RING FRAME ALLOCATION: -

It comprises the complete production programme for the budgeted period. It indicates the quarter wise machine allocation for production of various quality of yarn.

BUDGETED PRODUCT MIX This report indicates the combination of various quality of yarn to be produced during the budgeted period. Combed Export Combed Domestic Carded Export Carded Domestic Tyre Cord Domestic PC Combed PC Carded Export as well as domestic

BUDGETED STOPPAGE REPORT This report indicates the department wise & head wise reasons of stoppage of machines. All these reason are divided into two parts : Avoidable Non-avoidable.

Each concerned department provides budgeted stoppage of his department. A compiled report is prepared by production department. TARGET MAN MINUTES PER KG Based upon the budgeted production and manpower deployment, budget man-minute are being calculated. This report shown man-minute required to provide one kg of yarn. MAINTENANCE BUDGET As the name implies maintenance budget, this is report is concerned with indicating the total expenses to be incurred on maintenance of machines and

parts during the year. It comprises department wise expenses of various machines. STANDARD PACKING MATERIAL COST / KG This comprises the mode of packing, standard Weight material cost, wages costs, packing material cost per kg. (With 1% waste) Different type of packing Export KH CH TC Domestic SALES BUDGET Sales budget involves a realistic sales forecast. This is prepared in units of each product and also in sales value. Methods of sales forecasting include: Sales force opinions Market research Statistical methods (correlation analysis and examination of trends) Mathematical models. KH& CH PC 44.10 45.36 65kg 42.50 45.36

In using these techniques consider: Company's pricing policy General economic and political conditions Changes in the population Competition Consumers' income and tastes Advertising and other sales promotion techniques After sales service Credit terms offered.

SALES BUGET IN VPL

Sales budget at group level is prepared by the Central marketing department as part of the annual marketing budget taking into consideration organizational objectives, forecasted market scenario, capacities and capabilities. The unit sales budget is prepared on the basis of the group sales plan. At the unit level in VPL, the planned product mix is arrived at in consultation with Central Marketing Department. The central marketing at unit level would however jointly work to finalize the optimal product mix for the unit keeping in view production capacity and capabilities, expected products, prices, market demand, customers requirements.

MAIN POINTS TO BE CONSIDERED:Sales budget is prepared by PPC (production planning and control), where EXPORT MARKETING, LUDHIANA BRANCH and DELHI BRANCH sends their sales requirement i.e. quantity required, what should be the sales price (in USD) and in Rs. and they do this by doing sales forecasting through historical data, production constraint, trends and destinations. PRODUCTION BUDGET FOR in quantitative terms only and is geared to the sales budget. The production manager's duties includes analysis of plant utilization If requirements exceed capacity he may: Subcontract Plan for overtime Introduce shift work Hire or buy additional machinery The materials purchases budget's both quantitative and financial.

PRODUCTION BUDGET IN VPL The production budget is prepared taking into consideration the installed capacity and new capacity/balancing machines plan during the year with the objective of optimum utilization of production facilities available in the unit and would include production programme. Production programme shows count wise spindle speed, front roller speed, twist per inch, efficiency percentage to calculate production per spindle in gms.

BUDGET ANALYSIS
The basic objective of budget analysis is to modulate the goal-oriented behavior of the units and help them formulate and achieve right objectives. The unit budgets would be analyzed at the unit / corporate level on the following parameters. 1. PRODUCTION For determining a units performance production budget is the key variable i.e. the variable whose performance will have most significant impact on the units working. The units production budget would be analyzed on the following basis. 2. CAPACITY UTILIZATION Capacity utilization budged for Ring Frame and other balancing machines Combers and Autoconers shall be analyzed with respect to Past performance Performance by other units Bench marks

Inconsistencies and deviations would be worked out and reasons there of like power, labour machine balancing, raw material etc. shall be examined. 3. PRODUCTIVITY The account wise budgeted productivities of Ring Frame would be analyzed on the basis of Past Performance Performance By Other Units Productivity Norms Actual count Mixing Composition Health Of Machines Ring Diameter Environment Conditions

4. WASTE Another key variables for analyzing production budget of a unit is waste budget. The budgeted waste determine how effectively the process control measures have been designed by the unit. The waste budget shall be evaluated keeping in view the following : Department wise process wise waste generation carded, combed Past performance Other units performance Bench marks Trash content in cotton

5. EXPENSES The analysis of expenses is essential to determine the impact of these on cost of production. The parameters to be analyzed are : RAW MATERIALS The raw material cost needs to be closely examined because 70% of total cost is on account of raw material. The raw material purchase is undertaken at the group level and the raw material department indicates the budgeted prices. However, at the unit level, the raw material budget would be analyzed in term of. Raw material mix Yarn realization Waste recovery Clean cotton cost

In analyzing raw material mix, group standards and mixings used by other units &target given by Corporate can be taken into consideration. MANUFACTURING EXPENSE The analysis of various direct expenses budgeted by the unit shall be done to as certain cost effectiveness.

A. POWER : Power significance as it is the second highest cost of input next to Raw material cost. Power cost shall be analyzed keeping in view the following parameters. No. of units per spindle shift Cost of generation of power Proposed hike in P.S.E.B rates. Trends of fuel prices. Maintenance schedule of own generated set.

The analysis shall be done taking into consideration the previous year consumption and consumption and consumption levels of other units having similar count patterns. MAINTENANCE COST In this analysis of maintenance, engineering and production budget is done. The analysis of various indirect expenses shall be made to ascertain their impact on production cost. The various indirect expenses which are to be analyzes are: a) SELLING EXPENSES : Budgeted cost of advertising, sales promotion, freight and commission shall be studied in relation to previous years expenses and new requirements etc. b) PERSONNEL EXPENSES WAGES : The total budgeted wage cost shall be analyzed in terms of previous years cost and experience of other units and also other factors like statutory wage revision and wage agreement etc. The wage cost shall also be analyzed with reference to process wise, category wise deployment of man power along with workloads. SALARY : Department wise deployment of officers and staff shall be analyzed keeping in view the following : o Sanctioned strength o Past record o Deployment in other units

FIXED WAGES COST Wage cost incurred on Overlookers and other personnel engaged in service departments shall be analyzed on the basis of past experience, per spindle cost and possibility of cost reduction.

c) EXPENSES TRAINING EXPENSES Budgeted training activities and associated cost like wages during training period, faculty cost, study material cost, etc. shall be analyzed taking into consideration capacity plan expansion and normal turnover. Deployment of trainees shall be studied against bench marks and previous years deployment. In using budget as an instrument of control, actual result will be compared with the budgeted on monthly / quarterly basis to prepare periodic performance report and to identify deviation. An analysis of variances can help understand the problem better and take appropriate corrective action. The variances can occur on account of the following : a) Caused by un-controllable facts like government policies, raw material prices, production, marketing problems etc. b) Caused by managerial decisions not initially planned e.g. product mix change. Controllable factors, which need to be carefully investigated.

BUDGETARY CONTROL
Control activity is fundamental to all living systems. In the context of organization it is crucial to the achievement of goals and objectives. The control process essentially involves measurement of the actual state and comparison with desired state. Budgetary control system is one of the important control system employed in an organization. It includes preparation of budgets which means the setting out the desired state and comparison with actual state. (Budgetary Control).

IDENTIFICATION OF KEY FACTORS

In every firm, there are critical factor which sets a limit to its level of activity. Often, the expected demand, production capacity of the firm, availability of power, raw material availability and some time finance for the budgeting, as it determines the scope and level of operations. Budgetary Control : It is the process of determining various budgeted figures for the enterprises for the future period and then comparing the budgeted figures with the actual performance for calculating variance, if any. First of all the budgets are prepared and then actual are recorded. The comparison of budgeted and actual figures will enable the management to find out the discrepancies and take remedial measures at a proper time. The budgetary control is a continuous process which help in planning and coordination. It provides a method of control too. A budget is a means and budgetary control is the end-result. Budgetary control refers to the principles, procedures and practices of achieving given objectives through budgets.

DEFINITION
Budgetary control involves the use of budget and budgetary reports, throughout the period to coordinate, evaluate and control day operation in accordance with the goals specified by the budget. Budgetary control involves preparation of budgets and business is divided into various responsibility centers for preparing the various budgets. The budgeted and actual figures compared for studying the performance of different cost centers if actual performance is less than the budgeted norms a remedial action is taken immediately management information system is used in finance and accounting for budgetary control purposes.

BUDGETARY SYSTEM IN VARDHMAN POLYTEX LTD.

NEED OF BUDGETING IN VPL
It integrates the objectives of all sub-units Marketing, Production, Quantify expectations regarding future income, cash flows, financial Comparing performance with plans Foreseeing and avoiding prospective difficulties Identifying control factors, indicating deviations in resource utilization, Locating areas for improvement Communicating, motivating and authorizing actions Finance, Human Resources, Research & Development. position etc.

productivitys expenses, wastages.

DEVELOPMENT OF BUDGETS
The preparation of individual budget deciding upon scope of budgets, suitable time to start budgeting scheme, requirement of budgets. In VPL, costing department is responsible for compilation of the budgets in set forms. All departments prepare their budgeted requirements and achievements based on the standard norms, past performance, capacity utilization, guarantee of the supply and many others. The costing department finally checks the final budgets and send to the corporate Head Office, Ludhiana for its approval.

PROCEDURE FOR PREPARING BUDGETS IN VPL

1. Functional budgets are prepared at each departmental level. Each head of department prepares budget estimates of items of expense controllable at its level. 2. After the functional budgets are compiled, master budget is prepared and analysis by the costing department. Master budget provides an overall view of the structure of the unit.

3. Master budget is discussed at unit level by unit head alongwith all departments heads. A representation is made by the costing head. For future analysis the budgets are sent to corporate MIS, Ludhiana. 4. Actual of last years and budgeted of this year are analysed. The Chairman thoroughly analysis these budget. The budget is compared with budgeted figures of other units. 5. A final meeting at the corporate level is held where budget is discussed. The meeting at Corporate level is chaired by CMD and members from unit level as well as from corporate also participates in Budget meeting. Finally, it is approved and send to Bathinda Unit for its implementations. Any alternations are recommendations suggested in meeting if necessary are incorporated.

BUDGETARY CONTROL IN VARDHMAN POLYTEX LTD.

In using budget as an instrument of control, the actual results will be compared with the budgeted an monthly / quarterly basis to prepare periodic performance report and to identify deviations. An analysis of variations can help to understand the problem better and appropriate corrective action can be taken. The variances can occur on account of the following : a) Caused by uncontrollable facts like Govt. policies, raw material prices, production, marketing problems etc. b) Caused by managerial decisions not initially planned e.g. product exchange. c) Controllable factors, which need to be carefully investigated. The various analysis also helps and isolate the impact of each important variable leading to useful insights in the underlying causes and fixing responsibilities. As I have already mentioned that Vardhman Polytex Limited, Bathinda belongs to Oswal Group of Industries. The corporate office of the organization is situated at Ludhiana. All the information relating to various departments flow from units to corporate office. The corporate office analyze the information and data supplied by the units and convey the facts to the top management for the purpose of planning, coordinating and controlling. In Vardhman Polytex Limited, budgets are prepared by different cost centers for the purpose of budgetary control. Budget preparation and control is done at every level of management. Even though budgets are finalized at top level but involvement of persons from lower levels of management is essential for their success. The budgets are prepared on the basis of key factor, a factor which influences all other budgets and key factor is sales, and production, raw material and power cost. Budgets are prepared on the sales factor. Costing department is empowered to scrutinize the budgets prepared by different functional heads and to make changes them, if the situation so demands. Annual budget is prepare before the start of every financial year. Then the actual performance of different

departments is collected and analyzed by costing and MIS Department. He determines the deviations in the budgets and suggests necessary steps to rectify the deficiencies, if any. He works as a coordinate among different department and monitor the relevant information. To prepare budget for next year, a meeting is called to know what to do in future and the various departments are informed about the meeting. Different department give information and projections relating to their department. As mentioned periodic reports are prepared and analyzed by costing department. A presentation on monthly performance is given by costing department in monthly review. Any deviation found are highlighted and conveyed to concerned department for corrective action.

BUDGETING SYSTEM IN VPL

Master Budget

Sales Budget

Production Budget a) Utilization b) Productivity c) Total R/F Production d) Packed Production

Expenditure Budget

Raw Material Budget

Manufacturing Expenses

Personal Expenses

Administration Exp. Budget

Selling Exp. Budget

Other Income Budgets

n ester

Cotto Poly

Power Packing Material Maintenan ce Bdgt. R&D Exp.

Wages Trainee Stipend Salary Perks & Allowances Welfare & Other exp. etc.

Taxes e

Rent Rates & Telephon Postage & telegram Vehicle Local conveyance Traveling

Freig ht, forwarding & octroi Expor t exp. Com mission Export & Domestic Cash & Quantity

S crap sale D EPB Benefit

Printing & Stationery Audit fee Audit exp. Legal & profession fee

Discount

PERFORMANCE / ACHIEVEMENT REVIEW

Annual review is complete review of the performance of the unit activities and the actual results are compared with budgets. The variances are noted and analysis is done. Annual review is divided in to two parts:1. Technical Performance 2. Financial Performance 3. Achievement / Activity Performance 1. TECHNICAL REVIEW Technical review includes the following: BUDGETED UTILIZATION RING FRAME PRODUCTION / PRODUCTIVITY a) YARN RECOVERY WASTE PERCENTAGE MAN POWER DEPLOYMENT MAN MINUTES PER KG MAINTENANCE COST P/S/S ENERGY REPORT MOTOR BURNING In this review, given all the above heads actual cost in each head for whole of the process is calculated and then compared with budgeted cost in each head assumed at the beginning to check whether there is any deviation between them or not. If there is any deviation then required steps are taken to remove that deviation between them.

FINANCIAL REVIEW
In this review first of all actual PBDIT for current year is calculated and then it is compared with last years PBDIT to check whether there is any difference between them or not. If there is any difference between them then what are the reasons for differences are calculated. For this following steps are taken; SALE In this total actual sale, domestic as well as export both are calculated at the end of the period and compared with budgeted sale to check whether there is any deviation between them or not. If there is any deviation between them then what are the reasons for the deviations. In this we check whether the deviations are due to the change in demand or due to the change in sale rate. RAW MATERIAL In this comparison between actual raw material consumed and budgeted raw material is done to check whether there is any deviation between them. And if there is any deviation between them then what are the reasons for the deviations. The reason may be change in rates or due to change in mixing. MANUFACTURING COST In this comparison between actual manufacturing cost incurred and budgeted manufacturing cost is done to check whether there is any deviation between them. And if there is any deviation between them then what are the reasons for the deviations. The reason may be change in power rates, due to the shortage of supply of raw material etc. PERSONNEL EXPENSES In this comparison between actual personnel expenses incurred and budgeted personnel expenses is done to check whether there is any deviation between them. And if there is any deviation between them then what are the reasons for

the deviations. The reason may be change in basic salary, change in wages, change in other perks etc. ADMINISTRATION EXPENSES In this comparison between actual administrative expenses incurred and budgeted administrative expenses is done to check whether there is any deviation between them. And if there is any deviation between them then what are the reasons for the deviations. The reason may be change in insurance charges, change in telephone expenses, change in traveling expenses etc. SELLING EXPENSES In this comparison between actual selling expenses incurred and budgeted selling expenses is done to check whether there is any deviation between them. And if there is any deviation between them then what are the reasons for the deviations. The reason may be change in commission on domestic as well as export sales, change in cash discount, change in rebate and claim etc.

ACHIEVEMENT & MAJOR ACTIVITIES

Major achievements are highlighted by the respective department. Modifications done for system improvement or for cost saving are also being discussed during review.

DIRECTIONS FOR FUTURE RESEARCH FINDINGS

1)

Due to avoidable and non-avoidable circumstances, variance is noted in actual and budgets.

2)

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

3)

Every department head worries for his departmental goals without thinking of the business goals. Every department tries to get maximum allocations of funds and this raises a conflict among different department.

SUGGESTIONS
1. An effective system of communication is required for successful budgetary control. The flow of information regarding budget should be quick so that these are implemented. The performance reports of various levels will help top management in budgetary control. 2. Flexibility in budgets is required to make them suitable under changed circumstances. 3. The proper organization is essential for successful preparation, maintenance and administration of budgets. A budgetary committee must be formed which comprises the departmental heads of various departments. 4. Though annual budgets are prepared and are discussed in length. Monthly budgets should also be discussed with respective heads and at corporate level. 5. Budgets are normally based on conventional basis. Concept of Zero base budgeting should be adopted wherever possible. 6. As the actual results are collected from accounts books, which sometimes provide difficulties in analysis because of common head for difference type of expenses. 7. Activity based costing system should be used where the same can be used to provide better monitoring.

8.

Variance reports are prepared on monthly basis and are being communicated to respective department head but no action plan is provided by the department to overcome with variances.

9.

In the present era, rapid changes are being observed on day to day basis. While preparing annual budget a deep forecasting based on historical data and likely future trend is required which normally doesnt happen.

10.

Budgeting exercise is confined to arrive at PBDIT only. Other financial expenses are not being considered to arrive at cash accruals / net profit and depreciation.

CONCLUSION

Various reports such as annual budget, monthly budget, annual review, monthly review and commercial review are studied for control purposes. The variances are due to the assumptions which are considered during the preparation of budgets. Moreover, variances are there due to change in rate and quantity, staff turnover e.g. as company purchases cotton in bulk during August to March so the value of raw material gets affected. The deviation in actual and budgeted reports helps the head of costing and MIS departments to control over various capital and revenue expenditure and budgetary control aims at the maximization of profits of the organization. The budgetary control helps in the co-ordination among different departments of the organization. Reviews are prepared so that necessary actions are taken at the earliest time and it will help in the determination of weak spots. Control is continuous process.

SUMMARY AND FINDINGS

After the analysis of various costs, procedures and reports we can find that cost accounting system adopted by Vardhman Polytex Ltd. Bathinda for reflecting the accurate cost of production of the final product i.e. yarn is adequate. Efforts for controlling cost of vigorous cost control is a guidance and regulation of the cost of operating and undertaking. Here is control cost by the respective department heads. Budgetary control system is adopted. Budgetary control includes preparation of for planning and comparison of actual with budgeted figures for control purposes. Proper presentation and reporting the information to the Management and Head Office. The reports are filed on the daily, weekly, monthly quarterly and annually namely : 1. Annual Budget 2. Monthly Budget 3. Annual Review 4. Monthly Review 5. Commercial Review 6. Trends Report 7. Daily Cost Sheet 8. Other reports Annual review and monthly review are complete reviews of the performance of units activities. Actual results are compared with budgets. Variances are noted and analysis is done. These reviews contains various reports. Daily cost sheet monitors the cost and profitability on daily basis. It reflects the changing in cost and cash profit. Monthly meeting are held to discuss the monthly reviews. Corrected actions are suggested by various heads of departments in case of variances. The Head Office also analyses the reports and sends suggestions

BIBLIOGRAPHY
Chandra Prosana, Financial Management, Theory and Practice, McGraw Hill, Publishing Company, 1993. VAN Hourne, J.C, Financial Management and Policy, Prantice Hill of India, New Delhi, 1993. Websites : www.texprocil.com www.texmil.nic.in www.careratings.com www.sga.tamu.edu www.abilityforum.com www.oswalgroup.com

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