In the modern world, all the activities are concerned with the economic activities and
very particular to earning profit through any venture or activities. The entire business activities
are directly related with making profit. (According to the economics concept of factors of
production, rent given to landlord, wage given to labor interest given to capital and profit given
to share holders or proprietors), a business concern needs finance to meet all the requirements.
Hence finance may be called as capital, investment, fund etc.., but each term is having different
meanings and unique characters .Increasing the profit is the main aim of any kind of economic
activity.
NATURE OF FINANCIAL MANAGEMENT:
Financial Management is that managerial activity which is concerned with the planning
and controlling of the firms financial resources. As a separate activity or discipline it is of
recent origin it was a branch of economics till 1890. Still today it has no unique body of
knowledge of its own, and it draws heavily on economics for its theoretical concepts.
DEFINITION:
The subjects of financial management are of immerse interest to both academicians and
practicing managers. It is of great interest to academicians because the subject is still
developing, and there are still certain areas where controversies exist for which no unanimous
solutions have been reaching as yet. Practicing managers are interested in this subject because
among the most crucial decisions of the firms are those which relate to finance and an
understanding of the theory of financial management provides them with conceptual and
analytical insights to make those decisions skillfully.
SCOPE OF FINANCE FUNCTIONS
Three most important activities of a business firm are:
1
Finance
Production
Marketing.
The firm secures capital it needs and employs it in activities, which generate returns on
invested capital. A business firm thus is an entity that engages in activities to perform the
functions of finance, production and marketing.
The raising of capital funds and using them for generating returns and paying returns to
the suppliers of funds is called the finance function of the firm. The main functions of the
financial managers are to plan for analyzing and utilizing funds to make the maximum
contribution for the operation of the organization.
It realizes knowledge of the financial market from which the funds are drawn. It
realizes knowledge of how to make sound investment decisions and to simulate efficient
operations in the organization.
A large number of alternative choices involved in financial decisions. The choices
include the use of internal resources, external funds, Long-term funds a higher rate of growth
or lower rate of growth and soon.
FUNCTIONS OF FINANCE
1. Investment Decision
2. Working Capital Management
3. Financing Decision
4. Dividend Policy Decision
THE CHANGING ROLE OF FINANCIAL MANAGEMENT
As with many things in the contemporary world financial management has undergone
significant changes over the years. The financial management had a very limited role in a business
enterprise. Finance manager is responsible only for maintaining financial records, preparing
reports of the companys status, performance and arranging funds recorded by the company so that
it would meet its obligation in time.
The financial manager as a matter of fact, was regarded as a specialized staff officer in
the company concerned only with administering sources of funds. He was called upon only when
the company experienced the problem of shortage of funds. The management relates the financial
manager to locate suitable continued in recent years.
First there was been increased belief that source of capital produce requires accurate
measurements of the cost of capital. Secondly capital has been in short supply the old interest in
the ways of raising funds.
Third, there has been a continued activity that has led to revealed interest in takeovers.
Fourth accelerated progress in transportation and communication has brought the countries of the
world close together. They in turn have stimulated interest in the international finance. Finding the
firms appropriate role in efforts they solve these problems, demanding on increasing proportion of
these items of financial managers.
The financial system is possibly the most important institutional and functional vehicle
for economic transformation. Finance is a bridge between the present and the future and whether
the mobilization of savings or their efficient, effective and equitable allocation for investment, it
the access with which the financial system performs its functions that sets the pace for the
achievement of broader national objectives.
According to Christy, the objective of the financial system is to supply funds to various
sectors and activities of the economy in ways that promote the fullest possible utilization of
resources without the destabilizing consequence of price level changes or unnecessary
interference with individual desires.
According to Robinson, the primary function of the system is to provide a link between
savings and investment for the creation of new wealth and to permit portfolio adjustment in the
composition of the existing wealth.
A financial system or financial sector functions as an intermediary and facilitates the flow
of funds from the areas of surplus to the deficit. It is a composition of various institutions,
markets, regulations and laws, practices, money manager analyst, transactions and claims and
liabilities.
The word system implies a set of complex and interrelated factors organized in a
particular form. These factors are mostly interdependent but not always mutually exclusive. The
financial system of any country consists of several ingredients. It includes financial institutions,
markets, financial instruments, services, transactions, agents, claims and liabilities in the
economy.
Financial system is a system to canalize the funds from the surplus units to the deficit
units. Deficit units is a case where current expenditure exceeds their current income. There are
other entities whose current income exceeds current expenditure which is called as Surplus
Units. An efficient financial system not only encourages savings and investments, it also
efficiently allocates resources in different investment avenues and thus accelerates the rate of
economic development.
The financial system of a country plays a crucial role of allocating scarce capital
resources to productive uses. Its efficient functioning is of critical importance to the economy. It
is a system for the efficient management and creation of finance. The economic development of
a nation is reflected by the progress of the various economic units, broadly classified into
corporate sector, government and household sector. While performing their activities these units
will be placed in a surplus/deficit/balanced budgetary situations.
Definitions
According to Robinson, financial system provides a link between savings and
Investment for the creation of new wealth and to permit portfolio adjustment in the position of
the existing wealth.
According to Van Horne, financial system is defined as the purpose of financial Markets
to allocate savings efficiently in an economy to ultimate users either for investment in real
assets or for consumption.
Thus the financial system mainly stands on three factors:
1) Money is the unit of exchange or medium of payment. It represents the value of
financial transactions in qualitative terms.
2) Credit, on the other hand, is a debt or loan which is to be returned normally with
interest.
3) Finance is monetary wealth of the state, an institution or a person. Comprising these
factors in a systematic order forms a financial system.
Objectives of the financial system
Accelerating the growth of economic development.
Encouraging rapid industrialization.
Acting as an agent to various economic factors such as industry, agricultural sector,
government etc.
Accelerating rural development.
Providing necessary financial support to industry
Financing housing and small scale industries.
Development of backward areas, infrastructure and livelihood.
Imposing price control in need.
Protecting environment.
The evolution of the financial system in India is nothing but the reflections of its political
and economic history. The evolution process has been influenced by the factors of urbanization
of society, advent or large scale industrialization, introduction of railways and telegraphic
communications in the 19th century, nationalization of financial institutions in 20th century and
implementation of information technology on the eve of the 21st century. Government policies
have greatly influenced the interest rates, credit control and functions of financial intermediaries.
for revision. First of all budgets are prepared and then actual results are the
comparison of budgeted and actual figures will enable management to out discrepancies and take
remedial measure at a proper time the budgetary controls a continuous process which helps in
planning and coordination it provides method of control to a budget is means and budgetary
control is the end results.
In the words of J.A. scolt budgetary control is the system of management control and
accounting in which all operations are forecast so as possible planned a head and actual results
compared with the forecast and the planned once
OBJECTIVES OF BUDGETORY CONTROL
The primary of budgetary controls to help the management a systematic planning controlling the
operations of enterprises the primary objective can be meat only if there is proper
communication and coordination among different organization. Thus the objectives can be stated
as;
Coordination
Communication
Controls and performance evolution.
BUDGET, BUDGETING AND BUDGETORY CONTROL
A budget is a blue print of a plan expressed in a quantitative terms budgeting is a
technique budgetary terms to the principles procedures and practice of achieving given
objectivities through budgets. Form the above definition we can differentiated the three terms as
budgets are the individual objectivities of a department etc where as budgeting may be said to
act of building budgets budgetary control embraces all and in addition includes the science of
planning the budgets to effect on overall management tool the business planning and control.
It is well recognized that budget are among the essential tools of management of any
organization unlike
functionaries in the organization. Budgets not only reflect the plan of action for different levels
of management but are also useful to monitor various activates and initiate mid course
corrective actions. Budgets just do not reduce the managerial function to a mere formula but
aids as a managerial tool.
Hence effective use of this art as well science. Thus it needs continuous budget
education and creation of evaluation and performance through budgets.
Budgets provide
management summarized picture of the results to be expected, also forms the proposed plan of
operations. They enable the management to determine whether the plan is satisfactory. Budgets
serve as a guide to executives and departmental heads. They measure performance since
Budget Deviations reflect either the organization failure to achieve the planned standards of
performance or its ability to better them.
Thus budgeting is a means of obtaining the most productive and profitable use of the
companies resources through planning and control. Budgets are helpful in coordination the
various activities (Such as production, sales, purchase etc) of the organization with the result that
the activities precede according to the objective.
Budgets are means of communication. Ideas of the top management are given the
shape of the budget and are passed on the subordinates who are to give them the practical shape.
As the activities of various departmental heads are coordinated at the preparation of budget, it is
helpful in developing a team work which is very much needed for the very success of an
organization. Thus, a budget is necessary to plan for the future, to motivate the staff associated,
to coordi9nate the activities of different levels.
comprehensive plan of action expressed in physical and financial terms; it includes plan for each
of the activity responsibility centers of the business and provides a link between the physical and
financial plans of various departments of a company. It is also a document to serve as control for
monitoring and review.
The budget system should be such that it makes it imperative for management to establish
goals and objectives, define policies, develop programmers both long term and short term,
measure performance against the targets and in the process, revises the part of management. In a
way of budgetary control system has been increasing an enterprises profits, and a goalsachieving machine for facilitating organizational coordination and planning while achieving the
budgeted targets.
The budgets sets out the planned activity, subsequent deviations between
achievement and plan will indicate the need for investigation and corrective action.
5) Motivation: The budget is so constructed as to move employees form one target goal to
another; indeed it is bound up with the reward punishment type of organization
environment and bureaucratic decision processes, where employees are given incentives
to work towards the achievement of the firms targets.
10
11
This project gives an insight of the various tools to ascertain and evaluated the financial
performance of the KESORAM CEMENT.
3. This study is undergone through the financial data published in the annual report of
company.
4. This study exhibits the overall financial performance of KESORAM CEMENT.
Different type of research designs is available depending upon the nature of research
project, availability of able manpower and circumstances. The study about Trends and future of
derivatives in India is descriptive in nature. So survey method is used for study.
Sampling Procedure:
The small representative selected out of large population is selected at random is called
sample. Well-selected sample may reflect fairly, accurately the characteristic of population. The
chief of sampling is to make an INTERPRETATION about unknown parameters from a
measurable sample statistics. The statistical hypothesis relating population.
Sources of Data:
The sources of data include both primary sources and secondary data sources.
Primary Data:
The
primary data was collected through observation, personal interview and observation methods.
14
Secondary Data:
The secondary data was collected from Journals, Magazines and Project reports,
Management Books, Management Journals, Publications and Internet.
The secondary data include material collected from:
Newspapers
Magazine
15
16
INDUSTRY PROFILE
India, the worlds second largest producer of cement, the recent boom in infrastructure and the
housing market has only boosted its cement industry. Add to that an increasing global demand
and a flurry of activity in infrastructure projects highway roads, bridges, ports and houses has
sparked off a spate of mergers and acquisitions in the sector. Furthermore, the countrys Finance
Minister, P. Chidambaram, has stated that India would double spending on infrastructure over the
next five years to sustain its record economic growth and modernize its infrastructure.
Cement has been used in construction field with a historical record of change, from the
dwelling of early man through the celebrated monuments of ancient civilizations to the marvel of
modern times. It is required not only for the construction of commercial building like factories
but also roads, bridges, airfields, railway sleepers and so on. Cement constitutes around 10% of
total cost for them.
The production and availability of high quality cement makes an important chapter in the
history of construction. In cement industry two types of plants are available. They are mini
plants and major plants. Different types of cement are being produced in this industry.
Manufacture of cement was first started in Chennai in 1904. A real beginning was,
however, made in 1912-13 when three companies were formed by the time the plants started.
There were 21 factories with an ideal capacity of 3.26 million tons. The Government had a
complete control on the production, distribution and price of cement and the growth of the
cement industry. In 1977 the Government announced that 12% post return on net worth was fair
enough and retention prices would be fixed to ensure this industry. The real impetus was
17
provided when partial decontrol was announced in 1982, under this policy all existing cement
units were required to give up to 66.6% of their installed capacity as levy at controlled price.
(For new and sick units the requirement was kept at 50% of installed capacity.)
The balance production was treated as non levy cement and was allowed to be sold in
the market at the ruling prices. The 1989 budget announced total decontrol of cement. The
industry responded favorably to the new Government initiatives and the million tons by the end
of the 7th plan. As a result there was an unprecedented million tons in 1989-90, the cement
experienced recession in 1991. The production of cement rose to 48.6 million tons in 1990-91
and further 62.4 million tons in 1994-95. Statistics reveal that there are 54 large cement
companies having 106 plants in all the total installed capacity is of 77 million tons of which 67.5
million tons (88%) is with the private sector and only 9.5 million tons (12%) is with the public
sector.
SOME MILE STONS IN INDIAN CEMENT INDUSTRY:
1. By 1924 the installed capacity increased to 3, 60,000 tpa.
2. In 1935 A.C.C. Ltd., is formed by amalgamation of 11 existing companies with total
capacity of 14.6 lakh tpa.
3. In 1937 Dalmia and Jain group entered into the industry.
4. By 1947 the total capacity raised to 2.12 mtpa.
5. In 1951 the cement control order was promoted under INDUSTRIES DEVELOPMENT
AND REGULATIO ACT 1951, capacity was 3.2 mtpa.
6. In 1982 Government introduced partial decontrol under which companies were to
handover 2/3 of their capacity as Levy Cement.
7. Now, India reached to 4th largest cement producing country with the installed capacity of
95.25 mtpa.
CONSUMPTION OF DIFFERENT VARIETIES:
The quality of Indian cement is equivalent to the best in the world. With increased
production and the urge to go global, quality assumes paramount importance. The physical and
chemical characteristics are equivalent to most of International specifications.
The Indian
industry today produces 11 varieties of cement including ordinary Portland cement which
18
occupies 71% of total, Portland puzzling cement at 18%, Portland blast slag cement at 10% and
the balance of 1% is off oil well cement, IRST 40 cement, High Alumina cement and low heat
cement.
PRESENT STATUS:
The perception consumption of cement in India is very low when compared to some
developed countries. Now, production capacity utilizations have reached a satisfactory level,
prices have risen like never before not only to add higher margins to returns of company but also
to improve the bottom line of the manufacturers.
INDUSTRY PERFORMANCE:
When we look at past 8 years the cement industry in India is performing well. The
installed capacity increased from 61.55 million tons per annum in 1989 to 97.25 million tons per
annum in 1998. The industry had shown a growth rate of 12% during 96 and increased to 14%
in 97 respectively.
CEMENT INDUSTRY IN INDIA:
The INDIAN CEMENT INDSUTRY is the fourth largest in the world and by 2010; it
expects to be next to China. With a total of 54 million tons during 1993 from both large and mini
plants, cement consumption in India is equal to that of wheat. This makes cement the largest
consumed commodity in the country after rice and wheat.
Innumerable technological
development has been taken place in cement production. The wet kilns of seven ties were
replaced by dry kilns, reducing fuel cost of 30%. Further improvement in the thermal efficiency
was obtained by installation of preheats and further by addition of precalcinators. Finally
computerization and quality control of raw material in optimal usage of fuel and power.
CEMENT INDUSTRY IN ANDHRA PRADESH:
Andhra Pradesh, a south Indian state has a huge reserve of limestone and these are being
exploited by major plants and mini plants. Limestone the prime raw material for cement industry
is available inexhaustible quantities in Andhra Pradesh. Raw material required for cement
manufacture is coal, bauxite; gypsum and fly ash are available in Andhra Pradesh. One fourth of
the total cement grade reserves of the country are from Andhra Pradesh.
19
Coming to the production Madhya Pradesh is largest cement producing state in India next
stands Andhra Pradesh, which is 18% of total country production.
REGION WISE CAPACITY PRODUCTION:
The manufacturing of cement requires weight-loosing materials like lime stone, clay and
gypsum. The industry has the tendency to be attracted at point of minimum transportation costs
in relation to raw materials. 74% of the total raw material reserves are mainly in states of
ANDHRA PRADESH, MADHYA PRADESH.
contributes 51.7% of total capacity. The rest of country dominates 40.17% of total production
followed by southern region 33.72% of the production. The western and southern regions are
provided with surplus production whereas the northern and eastern regions consumes more than
the production.
FORECAST OF CEMENT DEMAND:
The Indian Institute of Management has forecasted a minimum demand of 84-81 million
tons and a maximum demand of 107.5 million tons by 2000-02. The corresponding forecasts by
the National Council of Applied Economic Research are 93.89 million tons and 111.35 million
tons respectively. If economic growth shows further accelerates, the demand for the cement
could be even higher than the projected levels.
REVENUE FOR GOVERNMENT THROUGH CEMENT INDUSTRY:
Cement is a major contribution to the exchequer. The excise revenue during 1996-97 is
at 2,500 crores. Duty on integrated plants is Rs.350 tons while it is R s. 200 per mini plant.
MAJOR AND MINI CEMENT PLANTS:
Many major plants and mini plants are present. Mainly three plants are under public
sector and all other private sectors like Raasi Cement, Coromandel Cement, for the country as a
whole, the demand and supply will be balanced as the infrastructure constraints of power and
transportation, coal shortages shows no signs of easing. These will lead to lower capacity
utilization. The over demand growth rat e is expected to be in the region of 8.5 to 9.5%.
20
There is no cheap alternative to cement and construction in and indispensable activity for
growth, the producers can afford to pass on at least a part of these cost increases. The companies
in north and east will feel the heat while those in the west will perform at an average. The south
based companies will be the best performance.
With the Govt. continuing its thrust on infrastructure development, improving economic
activity and housing units the long-term output for the industry remains positive. Andhra Pradesh
has provided scope for mini plants to come up in large numbers.
Two advantages of mini plants are:
1. CAPITAL COST PER TON OF OUTPUT IS LOW AND
2. THEY CAN BE LOCATED IN INACCESSIBLE ACCESS.
MAJOR CEMENT PLANTS IN ANDHRA PRADESH
PLANT
RAASSI CEMENT
ANDHRA CMENT
COR OMANDEL
MADRAS CEMENT
PRIYADARSHINI
PANYAM CEMENTS
SRI VISHNU CEMENT LTD
TEXMACO
ORIENT
KCP
LOCATION
VADAPALLI
VISAKHAPATNAM DURGAPUR
YERRAGUNTALA
JAYANTHIPURAM
RAMAPURAM
CEMENT NAGAR
DONDAPADU
YER RAGUNTALA
DEVAPUR
MACHERLA
CAPACITY
17,00,000
5,00,000
10,00,000
12,00,000
6,00,000
5,31,000
13,00,000
22,00,000
4,50,000
2,54,000
LOCATION
MATTAMPALLI
VEDADRI
MATTAMPALLI
HUZUR NAGAR
DONDAPADU
RAMAPURAM
PRODUCT DESCRIPTION:
21
CAPACITY
2,16,000
2,50,000
3,00,000
3,00,000
3,00,000
1,20,000
The product is a complex of tangible and intangible attributes, including packing, color,
price, manufacturers, prestige of retailers, manufacturers and services which buyer may accept as
offering satisfaction of wants and needs.
A product is simply a set of physical and chemical attributes assembled in recognized form.
TYPES OF CEMENT:
There are mainly eight varieties of cement. They vary from each other in chemical
composition and other properties. They are
1.
2.
3.
4.
5.
6.
7.
8.
23
oils and greases. It is used for binding and joining acid proof bricks and tiles and in construction
of acid resistant industrial floorings.
Cement Production Process
1) Quarry: Typically limestone, marl and clays as well as other materials containing the required
proportions of calcium, silicon, aluminum and iron oxides are extracted using drilling and
blasting techniques.
2) Crusher: The quarried material is then reduced in size by compression and/or impact in
various mechanical crushers. Crushed rock is reduced in size from 120 cm to between 1.2
and 8 cm. Drying of raw material may also be necessary for efficient crushing and preblending.
3) Conveyor: Raw material is then transported from the quarry using conveyors, rail wagons or
other suitable logistics solutions specific to the cement plant.
4) Mixing bed: The crushed limestone and clay is homogenized by stacking and reclaiming in a
long layered stockpile. This material is then ready for milling and drying in the kiln.
5) Raw mill: The raw materials are milled and dried in a roller mill. Heavy roller are held over a
rotating table and the course material is milled unit it is fine enough to be carried by air to a
homogenizing silo.
6) Filter: Bag filters comprise filters of either woven fabric or needle felts to remove particles
from kiln exhaust. The exhaust gas from many kilns is used for drying raw materials, thus
improving the energy efficiency of the plant.
7) Presenters: Cyclone presenters enable the raw material of cement production to be preheated
before entry into the kiln. This increases the energy efficiency of the kiln as the material is
20-40% claimed at the point of entry into the kiln.
8) Kiln: The kiln is designed to maximize the efficiency of that transfer from fuel burning to the
raw material. In the preheated tower the raw materials are heated rapidly to a temperature of
about 10000C, where the limestone forms burnt lime In the rotating kiln, the temperature
24
teaches up to 20000C, At this high temperature, minerals fuse together to form predominantly
calcium silicate crystals cement clinker.
9) Cooler: The molten cement clinker is then cooled as rapidly as possible. The ambient air used
to cool the clinker is then fed into the kiln as combustion air ensuring high utilization of the
heat produced.
10) Clinker silo: Clinker may be either stored on site in preparation for grinding to form cement,
or transported to other sites.
11) Cement mill: Finish milling is the grinding together of cement clinker, with around 5% of
natural or synthetic gypsum. Other cementations materials such as slag, flash or other
pozzolans may also be incorporated into the final cement power.
12) Logistics: Final cement may be transported pre-bagged or as a bulk powder. The method of
transport selected varies according to location - and may include transport via truck, rail or
ship.
ENERGY CONSERVATION PROJECTS
1. ESP Dust Transport system:
Investment: Rs 65 Lakhs
Savings: 2.6 KWH / MT
Fly ash handling system incorporated with latest solid flow feeder.
25
Investment: Rs 1 Lakhs
Savings: 0.14 KWH / MT
The motor is 75 KW and it was running with less load (below 50%). The same KW motor
is necessary for critical load conditions (cooler jam). Hence we are arranged Delta star Delta
starter. It will works on motor load conditions, like when there is a load it will automatically
changes to delta connection, and when there is no load it will come back to star connection. It
leads to energy saving. Normally motor always running in star connection only. (as per
theoretical aspects, energy savings can be achieved when a motor working in below 50% of its
full load by star connection)
COMPANY PROFILE
HISTORY OF THE KESORAM
The first unit at Basantnagar with a capacity or 2.1 lakh tons per annum in corresponding
suspension-preheated system was commissioned during the year of 1969 the second unit Was
setup in year 1971 with a capacity of 2.1 tons per annum and the third unit with a capacity of
2.5lakh tons per annum went on stream in the year 1978 the coal for this company is
being supplied iron singareni collieries and the power is obtained from APSEB the power
27
demand for the factory is about 21MW kesoram has got 2DG sets of 4MW each installed in
the year 1987.
Kesoram cement industry has set up a 15kw capacity power plant to facilitate for
uninterrupted power supply for manufacturing of cement starts at 24 august 2008 per hour 12
mw, actual power is 15mw.
Birla supreme in popular brand of kesoram cement from its prestigious plant of
Basantnagar
serving the nation for the last two and had decades It distinction by Bagging several
national awards .It also has the distinction optimum capacity utilization.
Kesoram
The plant layout is rational to begin with the limestone is rich in calcium carbonate a key
factor that influence the quality of final product the day process technology used in the
latest computerized monitoring
are sent
regularly to the bureau of Indian standards national council of constructions and Building
material for certification of derived quality norms
The company has vigorously undertaking different promotional measures their
product
through
,hoardings etc
Kesoram cement industry distinguished itself among all the cement factories in India
by bagging
the national productivity award consecutively for two years and the year 1985
-1987.the
federation
of Andhra Pradesh
chamber
of commerce
and
industries
also
conferred
kesoram cement an award for the best Industrial promotion expansion efforts
in the year 1981.kesoram also bagged FAPCCI Awarded for best family planning effort in
the state for the year 1987-1988.
28
One among the industrial giants in the country today serving the nation on the
industrial front kesoram industrials Ltd has a cheque red and eventful history dating Back
to the twenties when only a textile mill under its banner 1924 it grew from Strength to
spread and activities
10 newer fields
pipes
the cement
industry
in the
year 1966
with
a view
to attract
private
entrepreneurs to augment the cement industry production kesoram rose to the occasion And
divided to setup a few cement plants in the country
Kesoram cement undertaking marketing activities extensively in the states of Andhra Pradesh,
Karnataka, Tamilnadu, Kerala, Maharashtra, and Gujarat. In AP sales depots are located in
different areas like karimnagar, Warangal, Nizamabad, Vijayawada and Nellore .In other states
it has opened around 10 depots.
29
Kesoram bagged the prestigious Andhra Pradesh state productivity award in 1987-1989
also Annexed state award for industrial management in 1988-1989.and also Best Industrial
promotion expansion efforts in the state and yajamanya ratna and best efforts an industrial
unit in the state to develop rural economy was bagged for its contribution towards the year
1991.
It also bagged the may day award of the government of India For the best management and
the Pandit Jawaharlal Nehru silver rolling trophy for the industrial productivity effort in the
state of Andhra Pradesh
1981
83
88
65
21
43
30
1983
108
85
61
25
40
28
1986
106
73
71
36
36
24
30
1989
210
82
70
45
4
27
1990
210
87
72
48
41
40
World ranking
1
2
3
4
5
6
Today in the cement industry is producing 58.3 million tons per annum indication surplus
conditions while its demand is 56.7 million tones lies per annum Now The cement market
has become buyer market which was A selling market till 1970s and so the quality &brand
taken an upper edge for cement marketing.
Today installed at the India cement industry is 771lakh tones But in India 106
Major plants are producing 583lakh tones leaving the balance for exports.
INDIAS LARGEST CEMENT COMPANIES POST ACQUISITION
Company
Cement capacity
Cement % of
In TPA
Sales
Larsen& turbo
12.0
20
ACC
11.3
93
GRASIM
9.7
28
INDIAN CEMENT
6.6
92
GUJRATHI AMBHUJA
6.5
100
WEAKNESSES:
The per capita consumption of the cement in India is very low
The transport costs in India are very high
The cement industry is facing with acute power shortage and raw material
problem
The industry is also facing major packaging problems
31
OPPORTUNITIES:
The industry has tremendous potential for growth in India
In near future cement is going
There are good prospects for export with cement export promotion council
The government polices of reduction in excise duty and exempting cement from
the just packaging may act as boon to the industry.
AIMS:
1)
2)
3)
4)
5)
STATE
01
Assam
02
Andhra Pradesh
19
03
Bihar
04
Delhi
05
Gujarat
13
06
Haryana
07
Himachal Pradesh
08
09
Karnataka
10
Kerala
1
32
11
Meghalaya
12
Maharashtra
13
Madhya Pradesh
23
14
Orissa
15
Rajasthan
15
16
Tamilnadu
17
Uttar Pradesh
18
West Bengal
TOTAL
123
DIRECTORS
1. Smt. K.G. Maheshwari
2. Shri. Pramod Khaitan
3. Shri. B.P. Bajoria
4. Shri. P.K. Chokesy
5. Smt. Neeta Mukerji
6. (Nominee of I.C.I.C.I.)
7. Shri. D.N Mishra
8. (Nominee of L.I.C.)
9. Shri Amitabha Ghosh
10. (Nominee of U.T.I.)
33
SENIOR EXECUTIVES
Shri K.C.Jain (Manager of the company)
Shri J.D. Poddar
Shri O.P. Poddar
Shri P.K. Goyenka
Shri D.Tandon
AUDITORS - Messrs Price Waster house
34
THEORETICAL FRAMEWORK
Everyone is familiar with the idea of a budget because as it is essential in every walk of
our life national, domestic & business. Business budgets help managers in developing financial
plan to guide them in allocating their resources over a specific future period.
Dont be intimidated by the B word. Its simply an organized way of managing your
finances. A budget can be as simple or as complicated as you wish. Basically, it gives you an
overall picture of where your money is coming from, when its coming in and how its being
spent. Above all, a budget should be flexible, and always changing according to your situation.
MEANING OF BUDGETBudget can be defined as followsAccording to CIMA Budget is a financial and for quantitative statement, prepared, and
approved prior to a period of time of policy to be pursued during that period for the purpose of
attaining a given objective
35
Classification of budgetsDifferent types of budgets have been developed keeping in view the different purposes they
serve.
It can be as follows.
Long term
Time
Types of
budgets
These can b
Medium term
Flexibility
Short term
Functions
Fixed
Flexible
36
Operating
Financial
Master
37
ACCORDING TO TIMEOn the basis of time budgets can be as followsa) Long term budget - they are concerned with long term planning of business. its period
varies between 5 to 10 years
b) Medium term budget - it is also called as current budgets. it is prepared for months
and weeks ranging to 1 year
c) Short term budget- these are usually prepared for one two years.
ACCORDING TO FLEXIBILITYBased on level of activity (or) capacity utilization, budgets are classified into fixed and
flexible budget.
1) Fixed budget - it is also called as static budget (or) constant budget. A fixed
budget is designed to remain unchanged irrespective of volume of output (or)
turnover attained. This budget has limited practical application as it does not deal
with comparison with actual performance. It is rigid and drawn on assumption that
there will be no change in budgeted level of activity.
2) Flexible budget- it is also called asvariable budget. It designed to furnish
budgeted cost at any level of activity actually attained it is prepared after taking into
consideration unforeseen changes in business conditions.
ACCORDING TO FUNCTIONBudget can be classified on basis of various functions performed in the undertaking. The
usual functional budgets are
Operating budgets
Financial budgets
Master budgets
38
a) Operating budgetsThe budgets which relate to operations of firm are operating budgets these are
availability of funds
39
Production budget- It is a forecast of the production for the budget period expressed in terms of
units, hours. Production budget is the initial step in budgeting manufacturing operations.
Factors-in preparing the production budget, consideration should be given on following
Policy of management regarding manufacturer (or) purchase of different components.
Policy of finished stock caring from one budget period to another budget period.
Optimum plant capacity, storage facilities
Determining annual production.
Budgeted quantity of production can be ascertained with the help of following formula
Sales
Closing stock
Opening stock
Financial budgetsThe sales and production budgets are inter dependent because production budget is
governed by sales budget and sales budget is largely determined by production capacity.
Kinds of financial budgets1. Cash budget
2. Working capital budget
3. Capital expenditure budget
4. Income statement budget
5. Statement of retained earnings budget
6. Budgeted balance sheet
40
7.
Master budgetDefinition- Master budget is the summary budget incorporating its functional budgets.
-------CIMA.
This budget summaries functional budget to produce a budgeted profit and loss account and a
balance sheet as an end of budgeted period.
When all functional budgets have been drawn then a final budget incorporating figures
from various functional budgets is prepared which is known as master budget (or) summarized
budget (or) finalized profit plan it is useful mostly for top level management.
Zero based budgetingIt is a recent development in the area of management control system and is steadily
gaining importance in the business world. It is prepared starting from zero (or) from a clean state.
Origin It was first used in 1924 by a British budgeting officer E.HILTON YOUNG. It was
proposed by PETER A.PHYRR at company TEXAS INSTRUMENTS and he right known
as the father of ZBB. He published it in famous HARWARD BUSINESS REVIEW
magazine.
Definition
Zero based budgeting is defined as a method of budgeting where by all activities
formulated CIMA.LONDON.
FEATURES OF ZBB
42
BUDGETARY CONTROLThe act of preparing budgets is called budgeting. Budgetary control is a system of
controlling costs through preparation of budgets. The use of budgets to monitor and regulate the
operational activity of the origination in a systematic manner is called budgetary control.
DefinitionThe term budgetary control cal be defined as follows.
Budgetary control is a system which uses budget as a means of planning and
controlling all aspects of producing and for selling commodities (or) services.
CHARACTERSTICS OF BUDGETARY CONTROLThe main features of budgetary control are.
Establishing budgets for each department of firm
Taking remedial action where necessary
It compares actual with budgets
It is a device to control performance of employees by preparing different types of
budgets.
OBJECTIVES OF BUDGETARY CONTROLIt is a technique of control which help in other functions of management. Its main objectives are
as follows.
To provide a detailed plan of action for a business over a period of time
To coordination the different units and activities of the organization
To motivate organizational members to perform well
Management can identify areas of weaknesses and control to reduce cost
It improves efficiency in organization as a whole
43
The above steps should be implemented for budgeting system as to control expenses and
fro continuous comparison of actual with budgets to judge degree of achievement of budgets.
44
Estimates future
Advantages of
budgetary control
45
Expensive technique
Danger of rigidity
Limits performance of employees
Organization for budgetary controlIt is a necessary that a concern must have a definite plan of organization for
preparing, maintaining and administering the budget. The following steps should be considered.
I.
Establishment of budget centersIt is a section of the organization for which separate budgets can be prepared and
control exercised each functional section can be technically called as budgets centre.
II. Preparation of budget manualIt is a written document (Or) booklet containing standing instructions regarding the
procedures to be followed and time schedules to be observed.
46
III. Established of budget committeeBudget committee should be set up for established and execution of the plan. It
contains to help departmental managers by submitting past information fixing of individual
responsibilities, to participate in discussion for evaluating the different projects.
IV. Fixation of budget periodA budget period is time period for which a budget is prepared and acted upon. The
length of the budget period is usually determined by
V. Determination of key factorKey factor is also known as limiting factor (or) governing factor (or) principal
budget factor.
It is the factor to extent of whose influence must be first assessed in order to ensure
that all budgets are reasonably capable of fulfillment. It is essential to locate limiting factor as it
influences almost all budgets.
The limiting factor may be
a) Sales activity
b) Plant capacity
c) Raw materials
d) Labor
e) Management etc.
47
VI. Budget reportEstablishing budgets is in itself of on use unless a comparison is made regularly
between actual performance, and the results brought to the notice of management through
reports.
Organization chart
Managing director
Budget officer
Budget committee
Purchase
Manager
Purchase
Budget
Production
Manager
Production
&
Plant
budget
Sales
Manager
Sales
Budget
Personnel
Manager
Research
Manager
Finance
Manager
Labor
Budget
R&d
Budget
Cash
Budget
MASTER BUDGET
48
4) Budget Education
The employees should be properly educated about the benefits at budgetary system. They
should be educated about their role in the success of this system. The employees may not
take budgetary control only as control only as a control device but it should be used as a tool
to improve their efficiency.
49
6) Flexibility
Flexibility in budgets is required to make them suitable under changed circumstances
budgets are prepared for the future, which is always uncertain. Even though budgets are
prepared by considering the future possibilities but still some occurrences late on may
necessitate more appropriate and realistic.
comprises the
departmental heads of various departments All the functional heads are entrusted
with the
2. Budget officer:
50
fro
The chief executives appoints the budget officer such budget officer also called as
Budget
rank should
be equal to other
functional
managers.
The Budget officer does not have the direct responsibility of preparing the budgets the
various functional managers prepare the budgets his role is that of a supervisor the budget
officer has the specific duty of the budgeting activity by various departments and for coordination between
scrutinize the budgets prepared by different functional heads and to make changes in them if
the situation so demands.
The budget officer works as a coordinator among different departments he continuously
monitors the actual performance different departments steps to rectify the defiance
if any he
also informs the top management about the performance of different departments
The budget officer will be able to carry out his work only if he is versant with the working of all
the departments
he must have technical knowledge of the business and should also process
accounting knowledge
BUDGET COMMITTEE:
A budget committee is formed to assist the budget officer. The heads all the important
departments are made members of this committee. The committee is responsible for preparation
and execution of budgets. The chambers of this committee put up the case of their respective
departments to help the committee to take collective decisions if necessary. The budget
committees responsible for reviewing the budgets prepared by various functional heads
coordinate all the budgets and approve the final budgets. The budget officer acts as a coordinate
of this committee all the functional heads are entrusted with the responsibility of ensuring proper
implementation of their respective final departmental budgets.
BUDGET CENTERS:
51
A budget center is the part of the organization for which the budget is prepared. A
budget creator may be a department section of department or any other part of department
ideally; the head of every center should be a member of the budget committee. However it must
be ensured that each budget center at least has an indirect representation in the budget
committee.
The establishment of budget centers is essential for covering all parts of the
organization becomes easy when different centers are established the budget centers are also
necessary for cost control purpose.
BUDGET MANUAL:
1. A budget manual is a document that spells out duties and responsible the various
executives conquered with it specifies among various functional areas A budget manual
covers the following matters.
2. A budget manual clarity defines the objectivities of budgetary control systems it also
gives the benefits and principles of this system.
3. The duties and responsibilities of various persons dealing with preparation and execution
of budgets are also given in the budget manual it enables the management to know the
persons dealing with various aspects to budgets and provides clarity on their duties and
responsibilities it gives the information about the sanctioning authorities of various
budgets the financial powers of sanctioning authorities of various budgets the financial
powers of different manages are given in the manual for enabling the spending amount
on various expenses.
4. A dropper table for budgets including the sending of performance reports is drawn so that
every work starts in the and a systematic control is exercised.
5. the specimen forms and number of copies to be lased fro ore oaring budget reports is
also stated budget centers involved should be clearly stated.
6. the length of various budget periods and control points is clearly given
52
After finalizing the budget proposal the budget committee subjects the final budget to the
Board of Directories or Budget Director for approval.
CONTINUOUS BUDGETING SYSTEM:
A continuous budgeting system is a method of having two different budget periods
within the sane budget the purpose of having this system is to have greater control in terms
of operational activities without losing sight is have greater control in terms of it results in
incorporating the effect of changes in the short term on the long-term targets of the
organization
DETERMINATION OF KEY FACTOR:
The budgets are prepared for all functional areas these budgets are dependent and
inter-related A proper co-ordination among different budgets is necessary for budgetary
control to be successful The constraints some budgets too A factor which influences all other
budgets is known as key factor or principal factor.
The key factor may not necessarily remain the same the raw materials may be limited
at one time but it may be easily available at another similarly other factors may also
improve at different times. The key factor highlights the limitations of the enterprise. This will
enable the management to improve the working of those departments we here scope for
improvement exists.
54
55
BUDGET HEADS:
For uniform accounting, it is essential that costs are collected for each of the factory
though this may involve splitting up of payments against contracts which embrace more than one
system. Allocation of the cost as system wise affords a sound basis for cost accounting, inter-firm
comparisons and provides valuable inputs to the data bank. Budget provisions are related to
project estimates and monitoring of actual expenditure where as control variables for part control
and instrumentation system. Factory piping which includes pipelines, for ash water mains,
compressed air system and civil works piping.
Auxiliary pumps for water treatment plant and civil works system. If there are, any
contracts not covered in the budget heads provision for such contracts should be shown against
the appropriate system by head by adding code number.
56
57
59
60
3. Revenue budget.
In addition, separate budgets for revenue activities other than operation for research and
development consultancy contracts etc.
The expenses respect of developmental expenditure for improvements additions
replacement, renewals, balancing facilities etc. arc of capital nature and will be budgeted for in
the construction budget of budgetary control system-construction pairs.
To facilitate management control the system also investigates, phasing of these budgets
into monthly targets. The actual performance then will be reasons for variation s will be analyzed
and established for taking corrective remedial actions.
STAGES IN THE FORMULATION OF PERFORMANCE BUDGET:
The system provides for a two stages formulation for performance budget operation the
stages are given below:
Initial proposal:
In the initial proposal the project is required to indicate yearly targets. In the addition to
furnishing basic information like synchronization and commercial generation dates.
Constraints and coal operation at less than the designed specification calorific value of
raw material and limestone, material consumptions. In physical terms for items whose
consumption value in Rs.5 lakhs or more planned shutdown for a maintenance and overhauling
and norms for serious operating parameters provided for designs specifications and in the tariff
agreements to the corporate budget committee.
In the initial proposals is planned to be submitted after considering else factors and
keeping in view the perspective plan of the organization, as well as norms for various operating
parameters. These targets and terms are then communicated to all stations and transmissions line
offices of the last week of July to be used for formulating detailed budget in the final proposal.
61
Final proposal:
Budgeted balance sheet. Budgeted profit and loss account and budgets in the form of cash
budget along with the final proposal will consist of detailed supporting schedules for each of the
investment centre/cost centre. This final proposal needs to be submitted to corporate centre
within three weeks of receiving approval for initial proposal.
The final proposal, after approval by board, will become the basis of monitoring
performance for cost centers and investment centers.
The frequency and extent review and monitoring will be done is under:
a. The monitoring of actual performance against budgeted target for investment
center/profit center on monthly basis and for cost centers on quarterly for
remedial/corrective action.
b. The review of performance budget on quarterly basis to assess the anticipated
profitability.
The first step in the preparation of performance budget, O&M is formulation of
maintenance and overhauling schedules for boiler and TO with generation, then considering the
grid demand, the availability or inputs and factory problems, if any the utilization of capacity
will be worked out on month-month basis for the budget period the gross generation targets can
be worked and accordingly.
NET GENERATION:
The sales value will be determined from quantum of net generation [i.e., grass generation
aux. consumption].
62
63
and non-supervisors and total man power in these categories ,separates of cost per employee will
be worked out for each of these categories as under.
1. Salaries and allowance
2. Contribution of PF and other funds
3. Welfare expense
The cost centre of employee cost will be worked out based on these rates separately for
theses executives, supervisors and non-supervisors. This will again be consolidated separately for
operations, maintenance and common [service] function. The employee cost of common
functions will be appropriated between construction and O&M budgets in ratio of capital
expenditure and sales during respective years.
64
The material consumption, especially of spares, can be estimated based on the expected
life of various components/spares in the installed equipment the frequency of breakdowns in the
past and the requirement for preventive maintenance and major overhauls.
The actual life of components may be different from that indicated in the manufacturer's
specification. Therefore, it is very difficult to estimate requirements of spares. But this estimation
will become gradually accurate as more experience is gained. For new stations it will be
advisable to collect such information from old stations that have gained experience in this field.
Normally, maintenance of equipment through contractors should be avoided. But in
certain areas, if the expertise and in house capability or sufficient man power is not available,
maintenance jobs can be got done through contractors. Such contracts will need to be listed out
separately .If owner supply items are covered in such contracts the cost of these items will be
included in the material cost.
Depreciation:
This is to be charged as per ES act from the year following the year in which assets have
been capitalized value and, rates of depreciation furnished by the site finance and account for
different categories of assets. Cost centre-wise depreciation will be added to arrive at total
deprecation for the investment centre.
For budgeting purposes, interest will be worked on equated loan content or equated loan
whichever is less.
Table-I
S.no
Particulars
Budget
Actual
Estimated
Amount(Rs.
Amount(Rs.
Crores)
Variance
Crores)
Sales
1
689
599
90
745
652
93
784
823
-39
Own consumption
116
128
-12
Total of (14)
2334
2202
132
Average intensives
98
91
Other income
51
43
Grand total(5+6+7)
2483
2336
147
Interpretation:
The data pertaining to the generation and consumption of cement at kesoram Industries
Limited have been obtained from the year 2011-12 and presented in Table-1.The aspect included
are total generation of cement in (cores Rs) and utilization for auxiliary consumption, raw
material consumption and line store respectively.
During the year 2011-12 the sales, fixed cost, variable cost, fuel price, consumption was
decreased. Sales decreased by 132 crores to the estimated budget.
During the year 2011-12 the average intensives are decreased by 7 crores. There income
also decreased by 8 crores respectively.
66
Finally, with regard to the result in revenue budget of kesoram cement industries limited,
totally decreased by 147 crores in the year 2011-12 respectively
Kesoram Industries Limited Operational expenditure budget for the year 2011-12
Table-II
S.no
Particulars
Budget
Actual
Estimated
Amount(Rs.
Amount(Rs.
Crores)
Variance
Crores)
Variable cost
1
Raw material
400
423
23
Lime stone
430
450
20
Total of (1,2)
830
873
43
Operative
maintained cost
4
Chemicals and
120
140
20
water
Repairs &
240
275
35
maintenance
6
Employee cost
290
335
45
Stationary &
55
70
15
10
8
12
10
2
2
723
842
119
11
charges
Deprecation
38
11
-27
12
Interest on fixed
18
20
general expenses
8
9
Rebate
Share of
operating
10
expenses
Total of(4..9)
Finance
capital
67
13
Totalof-3
Gland total
56
1609
31
1746
-25
137
(3+10+13)
Interpretation:
Observed from the above table that the "Operational Expenditure Budget" of kesoram cement
industries Limited in the year 2011-12.
In the year 2011-12 variable cost components, Raw material consumption 23 crores increased
and the lime stone consumption 20 crores also increased.
In operating & maintain aces cost components, chemicals & water, repair & maintenance,
employee cost, stationary & general expenses rebate and share of other expenses in all are
fluctuating expenses of the year 2011-12.how ever the total operating maintenance costs are 119
crores increasing respectively.
In finance charges depreciation and interest on fixed capital, has been included, the total
finance charges recording decreasing 25 crores in the year 2011-12 respectively.
68
Particulars
Budget
Actual Amount(Rs.
Estimated
Crores)
Variance
Amount(Rs.
Crores)
1
Sales
Fixed and
689
617
72
recovery
Variable cost
829
735
94
recovery
Fuel price
815
856
-41
adjustment
4
recovery
Own
110
132
-22
consumption
Total of
2443
2340
103
(14)
Average
93
86
intensives
Other income
49
38
11
Grand
2585
2464
121
total(5+6+7)
Interpretation:
The data pertaining to the generation and consumption of cement at kesoram Industries
Limited have been obtained from the year 2012-13 and presented in Table-1.The aspect included
69
are total generation of cement in (cores Rs) and utilization for auxiliary consumption, raw
material consumption and line store respectively.
During the year 2012-13 the sales, fixed cost, variable cost, fuel price, consumption was
decreased. Sales consumption is deceased by 103 crores respectively.
During the year 2012-13 the average intensives are decreased by 7 crores and there
income also decreased 11 crores respectively.
Finally, with regard to the result in revenue budget of kesoram cement industries limited,
totally decreased by 121 crores in the year 2012-13 respectively.
Kesoram Industries Limited Operational expenditure budget for the year 2012-13
Table-II
70
S.no
Particulars
Budget
Actual
Estimated
Amount(Rs.
Amount(Rs.
Crores)
Variance
Crores)
Variable cost
1
Raw material
Lime stone
419
449
30
420
465
45
Total of(1,2)
Operative maintained cost
839
914
75
121
148
27
232
289
57
Employee cost
314
348
34
59
77
18
expenses
8
Rebate
11
13
Share of operating
10
745
885
140
38
18
14
20
-24
2
34
1833
-22
193
expenses
10
Total of(4..9)
Finance charges
11
12
Deprecation
Interest on fixed capital
13
Total of(11,12)
Grand total (3+10+13)
56
1640
Interpretation:
71
Observed from the above table that the "Operational Expenditure Budget" of kesoram cement
industries Limited in the year 2012-13.
In the year 2012-13 variable cost components, Raw material consumption 30 crores
increased and the lime stone consumption 45 crores also increased.
In operating & maintain aces cost components, chemicals & water, repair & maintenance,
employee cost, stationary & general expenses rebate and share of other expenses in all are
fluctuating expenses of the year 2012-13.how ever the total operating maintenance costs are
140crores increasing respectively.
In finance charges depreciation and interest on fixed capital, has been included, the total
finance charges decreasing by 22 crores in the year 2012-13 respectively.
s.no
Particulars
Budget
Actual
Estimated
Amount(Rs.
Amount(Rs.
Crores)
Variance
Crores)
1
Sales
Fixed and recovery
721
611
110
Variable cost
815
729
86
recovery
Fuel price
810
823
-13
recovery
Own consumption
121
131
-10
5
6
Total of (14)
Average intensive
2467
97
2294
92
173
5
7
8
Other income
Grand total(5+6+7)
53
2617
48
2434
5
183
adjustment
Interpretation:
The data pertaining to the generation and consumption of cement at kesoram Industries
Limited have been obtained from the year 2013-14 and presented in Table-1.The aspect included
73
are total generation of cement in (cores Rs) and utilization for auxiliary consumption, raw
material consumption and line store respectively.
During the year 2013-14 the sales, fixed cost, variable cost, fuel price, consumption was
decreased. Sales consumption is decreased by 173 crores respectively.
During the year 2013-14 the average intensives are decreased by 5 crores and their
income also decreased 5 crores respectively.
Finally, with regard to the result in revenue budget of kesoram cement industries limited,
totally decreased by 183 crores in the year 2013-14 respectively.
Kesoram industries limited operational expenditure budget for the year 2013-14
Table-II
74
S.no
Particulars
Budget
Actual
Estimated
Amount(Rs.
Amount(Rs.
Crores)
Variance
Crores)
Variable cost
1
2
3
Raw material
Lime stone
Total o(1,2)
418
442
860
445
465
910
27
23
50
Operative
maintained cost
4
Chemicals and
128
150
22
water
Repairs &
265
296
31
maintenance
6
Employee cost
316
348
32
Stationary &
63
80
17
11
7
13
10
2
3
790
897
107
general expenses
8
9
Rebate
Share of operating
expenses
10
Total of(49)
Finance charges
11
Deprecation
41
15
-26
12
Interest on fixed
17
19
13
capital
Total of(11,12)
58
34
-24
1841
133
Grand total
1708
(3+10+13)
Interpretation:
75
Observed from the above table that the "Operational Expenditure Budget" of kesoram
cement industries Limited in the year 2013-14.
In the year 2013-14 variable cost components, Raw material consumption 27 crores
increased and the lime stone consumption 23 crores also increased.
In operating & maintain aces cost components, chemicals & water, repair &
maintenance, employee cost, stationary & general expenses rebate and share of other
expenses in all are fluctuating expenses of the year 2013-14.how ever the total operating
maintenance costs are increasing by 107 crores respectively.
In finance charges depreciation and interest on fixed capital, has been included, the
total finance charges recording decreasing by 24 crores in the year 2013-14 respectively.
Finally with regard to the operational expenditure budget of kesoram cement
industries limited the total profit has increased by 133 crores during the year 2013-14.
The overall budget results of kesoram cement industry is industries limited is earning more
profits.
76
S.n
Particulars
Budget
Actual
Estimated
Amount(Rs.
Amount(Rs.
Crores)
Variance
Crores)
1
Sales
Fixed and
724
618
106
recovery
Variable cost
840
740
100
recovery
Fuel price
820
863
-43
4
5
6
recovery
Own consumption
Total of (14)
Average
132
2516
102
148
2369
98
-16
147
4
7
8
intensives
Other income
Grand
56
2674
49
2516
7
158
adjustment
total(5+6+7)
Interpretation:
The data pertaining to the generation and consumption of cement at kesoram Industries
Limited have been obtained from the year 2014-15 and presented in Table-1.The aspect included
are total generation of cement in (cores Rs) and utilization for auxiliary consumption, raw
material consumption and line store respectively.
77
During the year 2014-15 the sales, fixed cost, variable cost, fuel price, consumption was
decreased. Sales consumption is decreased by 147 crores respectively.
During the year 2014-15 the average intensives are decreased by 4 crores and, their
income also decreased 7 crores respectively.
Finally, with regard to the result in revenue budget of kesoram cement industries limited,
totally decreased by 158 crores in the year 2014-15 respectively
Budget
Actual amount
Estimated amount
(RS. Crores)
Variance
(Rs. Crores)
1
Variable cost
Raw material
420
78
450
30
2
3
4
5
6
7
8
9
10
11
12
13
Lime stone
Total of (1,2)
Operative maintained cost
Chemicals and water
Repairs & maintenance
Employee cost
Stationary & general expenses
Rebate
Share of operating expenses
Total of(4...9)
Finance charges
Deprecation
Interest on fixed capital
Total of(11,12)
Grand total (3+10+13)
450
870
470
920
20
50
130
280
320
65
11
8
814
150
300
350
80
13
10
903
20
20
30
15
2
2
89
42
18
60
1744
15
20
35
1858
-27
2
-25
114
Interpretation:
Observed from the above table that the "Operational Expenditure Budget" of kesoram
cement industries Limited in the year 2014-15.
In the year 2014-15variable cost components, Raw material consumption 30 crores
increased and the lime stone consumption 20 crores also increased.
In operating & maintenances cost components, chemicals & water, repair &
maintainance,employee cost, stationary & general expenses rebate and share of other expenses in
all are fluctuating expenses of the year 2014-15.how ever the total operating maintenance costs
are 89 crores increasing respectively.
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In finance charges depreciation and interest on fixed capital, has been included, the total
finance charges recording decreasing by 25 crores in the year 2014-15respectively
finally with regard to the operational expenditure budget of kesoram cement industries limited
the total profit has increased by 114 crores during the year 2014-15.
The overall budget results of kesoram cement industry is industries limited is earning
more profits.
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CHARTS
81
SALES
Table showing total sales of Kesoram cement industry
2011-12
2012-13
2013-14
2014-15
BE
2334
2443
2467
2516
ACT
2202
2340
2294
2369
2600
2500
2400
BE
2300
ACT
2200
2100
2000
2011-12
2012-13
2013-14
2014-15
Interpretation:
In the year 2011-12 the actual amount is less compared to budgeted amount as the budget
is accurate. In the 2011-12 it shows a slight change between budgeted amount and actual. In the
year 2014-15 budgeted amount is more compared to actual. It shows that the quantity is more
comparing to market. Selling of cement product less than the estimates.
82
AVERAGE INTENSIVES
Table shown on average intensives of kesoram cement industry
2011-12
2012-13
2013-14
2014-15
BE
98
93
97
102
ACT
91
86
92
98
90
ACT
85
80
75
2011-12
2012-13
2013-14
2014-15
83
Interpretation:
In the year 2011-12 the actual amount is less compared to budgeted amount as the budget
is accurate. In the 2011-12 it shows a slight change between budgeted amount and actual. In the
year 2014-15 budgeted amount is more compared to actual. It shows that the quantity is more
comparing to market. Selling of cement product less than the estimates.
OTHER INCOME
Table shown on other income of kesoram cement industry
2011-12
2012-13
2013-14
2014-15
BE
51
49
53
56
ACT
43
38
48
49
30
ACT
20
10
0
2011-12
2012-13
2013-14
84
2014-15
Interpretation:
In the year 2011-12 the actual amount is less compared to budgeted amount as the budget
is accurate. In the 2011-12 it shows a slight change between budgeted amount and actual. In the
year 2014-15 budgeted amount is more compared to actual. It shows that the quantity is more
comparing to market. Selling of cement product less than the estimates.
VARIABLE COST
Table showing on variable cost of kesoram cement industry
2011-12
2012-13
2013-14
2014-15
BE
830
839
860
870
ACT
873
914
910
920
85
940
920
900
880
BE
860
ACT
840
820
800
780
2011-12
2012-13
2013-14
2014-15
Interpretation
FORM above table it can be under that the estimated amount and actual amount of
kesoram cement was recorded at raw materiel 830 during the year 2011-2012 it is increased to
actual raw material 873 in the year 2011-2012. It shows that there is an increased in budget to the
actual. The highest amount in budget was recorded in year 2014-2015.
2011-12
2012-13
2013-14
2014-15
BE
723
745
790
814
ACT
842
885
897
903
1000
900
800
700
600
500
BE
400
ACT
300
200
100
0
2011-12
2012-13
2013-14
2014-15
Interpretation:
1) Form the above table it can be understood that the budget of kesoram cement was
recorded the estimated value 723 during the year 2011-2012 and it is decreased to 842
during the year 2011-2012.
2) It shows that there is on decreased in the budgetary to the actual 2014-15.
3) The lowest investment in budgetary was recorded in year 2014-15.
87
FINANCE CHARGES
Table showing on finance charges of kesoram cement industry
2011-12
2012-13
2013-14
2014-15
BE
56
56
58
60
ACT
31
34
34
35
ACT
20
10
0
2011-12
2012-13
2013-14
2014-15
Interpretation:
1) Form the above table it can be understood that the budgetary of kesoram cement was
recorded at 56 value of estimation during the year 2011-2012.and it decreased to 31 of
actual value in during year 2011-2012.
2) It shows that there is increase in the budgetary the lower value in the 2011-2012.
3) The lowest investment in budgetary was recorded in year 2014-2015.
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2015
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PARTICULARS
RS:
RS:
activities
Net profit before tax
3,41,78,32,892
Depreciation
Adjustments for:
5, 76, 15,772
assets sold/disable
Loss on sale of long 3, 58,952
-----
term investments
Income from
long term
4,91,46,881
2,61,37,771
investment(other
trader)
Interest
paid/payable
on
loans etc
Interest receivable 2, 50, 55,563
9, 05, 21,426
on loans
Provision for doubtful
Debts/deposits in 3,82,15,119
--------
add
Provision for doubtful
Debts/deposits (net)
Debt/advance/depos
93, 92,067
55, 44,394
-----------
7,700
investment
written
off
89
Unrealized loss/gain on
Foreign
19, 16,075
fluctuation
Provision for diminution
in
Value of investment
---------------
1, 10, 09232
(1,21,69,75,334)
other (50, 17, 40, 397)
receivable
Trade payables
Cash
generated
(24,94,24,615)
2, 92, 62,288
(20,01,35,318)
from
operations
Direct taxes/ refund (93, 49, 80,671)
Net cash from 1,98,37,48,569
(20,01,35,318)
1,10,42,01,672
operating activities
Interpretation:
Observed from the above table that cash flow statement of kesoram cement industries
limited in the year 2014-2015. In the year 2014-2015variable net profit before tax, depreciation,
loss/profit on food asset sold/disable, loss on sale of long term investments, interest paid/payable
on loans etc have been increased.
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In operating profit before working capital changes of inventory, trade receivable and
trade payables of the year 2014-2015. However the total operating profits is increasing
respectively.
In cash generated from operations the direct taxes/refund has been included, the total cash
generated from operations increase in the year 2014-2015 respectively.
Finally with regard to the cash flow statement of kesoram cement industries limited the
total cash flow has been increased during the year 2014-2015. The overall budget results of
kesoram cement is industries limited is earning more cash flows.
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING 31stMARCH 2015
PARTICULARS
Schedule Income
Sales
Less excise duty
Net sales
RS
2013-2014
18,17,81,55,294
2,04,63,80,752
16,13,17,74,542
91
Rs
2014-2015
25,16,45,89,369
3,07,41,00,000
22,06,9660,339
Other income
7,61,14,89,922
7,40,51,67,576
59, 52, 33,509
1, 48,449,493
51, 57, 16,762
32, 75, 37,771
9,20,98,35,678
9,03,43,03,781
53, 05, 56,255
1, 21, 74,437
53, 30, 64,022
33,50,30,375
45,70,92,132
2,65,68,32,892
2, 56, 62,001
30, 00, 00,000
50, 86, 35,273
2,14,81,97,619
9.99%
58.08%
Expenditure
Finished goods
Manufacturing selling
Deprecation
Rescue of assets
Schedule
Interest
Profit before taxation
Provision for
Current taxation
Provision benefit tax
Profit after taxation
Profit available for
appropriation
Appropriation
Proposed dividend
Tax on proposed Dividend
In tend Dividend
Tax on in tend
Dividend
General resend
Balance carried to schedule2
Earnings per share
Interpretation:
Observed from the above table that the profit and loss account of kesoram cement
industries limited in the year 2014-2015 In the year 2014-2015.sales and income increased
EXPENDITURE of finished goods, manufacturing selling, and administration expenses are also
increased, deprecation, less transfer from capital, rescue of assets is decreased.
Profit before taxation increased from Rs.34, 00, 00,000 to 75, 00, 00,000 and profit after
taxation also increased from Rs.45, 70, 92,132 to 2,65,68,32,892 in the year 2013-2014
respectively.
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Finally with regard to the profit and loss account of kesoram cement industries Limited
the total profit has been increased the year 2014-2015. The overall budget result of kesoram
cement is industries limited is earning profits.
FINDINGS
1) There is a huge increase in INCOME of the company in 2014-2015, compared to 20132014.
2) Huge increase in earnings per share in 2014-2015, when compared to 2013-2014.
3) In the year 2013-14 and 2014-15 represents actual are less than budgeted so less
purchases made in every department. In the year 2011-12 and 2012-13 actual is more
than budgeted it shows that greater importance given to purchases.
4) In the year 2011-12 civil expenses are at a very high range. Accruals are high compared
to budget because of construction of cold storage sector, cement plant and bore wells. In
the year 2013-14 actual are less compared to budgeted because as the expenses are less.
In the year 2014-15 it incurred high volume of expenses than the budgeted because it
incurred heavy expenses.
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5) In the year 2014-15 budgeted amount is more compared to actual. It shows that the
quantity is more compared to market. Selling of cement products, less than the estimates.
6) In the year 2014-2015 sales and income increased EXPENDITURE of finished goods,
manufacturing selling, and administration expenses are also increased, deprecation, less
transfer from capital, rescue of assets is decreased.
SUGGESTIONS
Planning has become the primary function of management most of the planning relates to
individual situations and individual proposals. Budgets are nothing but expressions largely in
financial terms, budgetary control has, therefore become and essential tool of management for
controlling and maximizing profits.
a. Continuous comparison of actual performance with budgeted performance.
b. The company has to maintain super quick assets in order to maintain sound liquidity.
c. A company has to recollect their own standing amount from the debtors regularly.
d. The company has to maintain funds for long-term investment.
e. The company has to monitory from liability position in regular intervals.
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During study period there is negative working capital levels for the company so the
company must maintained enough current assets to keep working capital, figure
positively.
CONCLUSION
a. Every organization has predetermined set of objectives and goals, but reaching their
objectives and goals by proper planning and executing of these plans economically.
b. The kesoram cement industries Limited objectives of planning and organizing promoting
an integrated development of Cement Company.
c. The corporation machine of kesoram cement industries is to make available and quickly
cement in increasingly small quantities, the company will spear head the process of
accelerated development of cement sector by expeditiously.
d. The organization needs the capable personalities as management makes the plans and
implement of these plans are expressed in terms of budget and budgetary control.
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e. The Kesoram cement Industries Limited has budget process in two stages. one is the
capital expenditure budget and another is operating maintenance budget, the capital
expenditure budget shows the list of capital projects selected for investment along with
their estimated costs, operating maintenance budgets, the medical budgets are rarely used
in the organization like long term budgets, search & development budget for consultancy.
f. The Kesoram cement industries is to make efficient utilization of its resources and
implementation of sophisticated technology to produce available and quality cement and
also creating ambience of collective working of its employees.
BIBLIOGRAPHY
1. Prasanna Chandra, Financial Management: Theory and Practice, 7/e, 2008, Tata McGrawHill Education.
2. I.M.Pandey, financial management: Principles and Practice 9/e, 2005, Vikas publishing.
3. R.K Sharma Shashi K Gupta, financial management: Principal and Management, 7/e, 2002,
Kalyani Publishers.
4. Dr.S N Maheshwari: management Accounting and financial control, 6/e, 1996, sultan chand
and sons.
5. M.Y.Khan, and P.K Jain: Basic financial management, 3/e, 1982, Tata McGraw-Hill.
6.
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WEBSITE
www.kesoram.com
www.kesoramcement.com
www.kesocorp.com
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