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Declaration

I, the undersigned, Meghna Date student of MBA 2nd Semester,hereby declare that the project work presented in this report is my ownwork and has been carried out under the supervision of Professors of CPIMR.

This work has not been previously submitted to any otheruniversity for any examination.

Date: - July, 2010

Place: -Ahmedabad

(Meghna Date)

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PREFACE

Practical training bridges between theoretical knowledge and the practical knowledge. Practical

studies also help in developing the ability. In other words Practical experience is one of the best

types of learning that one can remember throughout the life. After passing through two semesters

and learning theoretical and practical aspects of management the day came to apply this

knowledge in corporate world in context of modern industrial enterprise that has to go through

its different terminal to achieve that corporate goal. The main objective of practical training is to

develop partial knowledge and awareness about industrial environment and business practices in

the student as a supplement to theoretical studies of Administration and Management in specific

area like Finance, Marketing, HRM, System Management etc. It increases the skill, ability andattitude of a student to perform specific job in industrial environment.

Fortunately I got golden opportunity to visit and complete my six week training at MUNDRA

PORT AND SPECIAL ECONOMIC ZONE Here I got chance to see the functioning of

Finance Department and imbibe a lot learning of the subjects.

During this training I had undergone on a project Capital budgeting And Revenue budgeting at

Mundra Port

This training has certainly helped me in increasing my knowledge in the subject of Finance.

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ACKNOWLEDGEMENT

Here is the golden opportunity for me to express my heartfelt gratitude to all who supported me,

given me their precious time, opinions and suggestions to complete my project. First of all, I

would like to thank Dr. vidyut joshi Director of our Institute for giving me this great

opportunity to undergo training at one of the most reputed organization like ADANI Group of

Companies at MUNDRA PORT.

I would like to thanks Mr. Janmeyjay Bhatt (MIS Executive Mundra Port), and Mr Jaimeen

patel (MIS executiveMundra Port) whose effort helped me come out from my doubts and their

way of explanations help me understand the process of the whole organization.

I would like to thanks Ms. Charmi shah my Project Guide for providing me indent guidelines

without whom I would have been lost in jungle of knowledge where I am just a toddler.

I would also like to thanks Mr. Purshotham Mantri, Mr. Rajesh Patro, Mr.Bimal Vaidya,

Mr. Parin Mehta, Miss. Purvi Kotak, Mr. Rajesh Tanwar, Mr. Vivek Singh, Mr. Praveen

Mange, Mr. Vivek Tiwari , and other staff member of Mundra Port and Special Economic Zone

as well as management trainee for their valuable suggestions, which were helpful to me in many

ways.

Through the training phase during May June 2008 I have learnt a lot about the industry and

would be glad to share this experience with others. This training has made me grow as

management student.

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Executive Summary

Mundra port and special economic zone ltd. is one of the major ports in India. It providesport services to the major companies like AWL, CAPL, IOC, NIRMA, RELIANCE,

NOBLE FUEL, etc.. in India. From my research I found that the company has manycompetitors like KANDLA port, JNPT port, PIPAVAV, PARADIP etc To competewith them MPSEZ tries to provide better services to the customers with the help of newmachineries and improving the infrastructure facilities. Company also tries to minimizethe time of services like loading, unloading, d welling time etc

MPSEZ is trying to attract the new customers in many ways like new & betterinfrastructure. And also by providing lower services cost & lower Tariff rates to them ascompare to other companies and competitors. Company is always trying to update its dataregarding the market condition & economic condition so they can decide their volumes,rates & service time.

In case of the service business customers wants better & on time services. MPSEZ triesto provide the highest satisfaction to the customers.

In this project I came to know that for the capital budgeting company follows major

techniques like NPV, IRR, B/C ratio and Pay Back Period. In the AWL case study all the

major techniques are fulfilled by the company and the company has accepted the project

on the bases of above criteria. By studding revenue budgeting I observed and concluded

that a company can reduce their expense by studding and analyzing company controllable

variances a company can minimize their extra expenses and utilize it in the further

growth of the company through this kind of analysis.

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Table of content

SR.NO

PARTICULARS PAGENO

1 Introduction 62 About the company 93 Ranking of Indian ports 144 Competition 155 Mundra port Facilities 166 Finance Department 187 Expansion criteria 198 Research methodology 269 Case study of AWL 30

10 Investment evaluation criteria 3211 Conclusion of the case study 3612 Introduction of revenue Budget 3813 Primary survey questions 4314 Calculation of variances in Revenue Budget (eg.) 4515 Findings 56

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INTRODUCTION

The Adani Group is one of India s most dynamic business houses in India with an annualturnover of INR 17,000 Crore (US$4.3bilion). A leader in international trading and infrastructuredevelopment, the Adani Group is engaged in a continuous Endeavour to maximize potentialities,and break new ground, by synergizing the multiple core competencies of the Group. Innovationand sustainable growth are the buzzwords of the Adani Group.

Founded in 1988 by Chairman & Managing Director Mr. Gautam Adani, the Adani Group hasgrown from being a trading house to a well-diversified group with interests from infrastructuraldevelopment to FMCGs. Through time-conscious delivery, quality-driven process systems, total

reliability and uncompromising commitment to customer satisfaction, Adani Group has foundsuccess around the world, and a reputation as a responsible international business house.

The Adani Groups business activities operate primarily in two business sectors, namely:

Global trading, manufacturing and services Private infrastructure

Apart from Mundra Port and Special Economic Zone Ltd, formerly known as GujaratAdani Port Ltd. (GAPL), the other group companies include:

Adani Exports Ltd.:

The flagship company of the Adani Group and is actively involved in the Global TradingBusiness.

Adani Wilmar Ltd.:

It is a 50:50 joint venture between Adani Group and Wilmar Holdings Pvt. of Singapore(world s second largest player in trading and refining of edible oils). AWL owns one of India slargest and most sophisticated oil refineries at Mundra.

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Adani Global:

It is a wholly owned subsidiary company of Adani Exports Limited. The principal activity of thecompany is to invest in other overseas ventures of the Adani Group.

Gujarat Adani Energy Ltd.:

Adani Group has set up natural gas distribution network at Ahmedabad and Vadodara for whichit has formed a separate company Gujarat Adani Energy Limited (GAEL) to implement theproject. The project aims to service the natural gas demand of industrial, commercial, domesticand transport sector in these two cities of the state.

Call India, Adani Logistics Ltd, Adani Agrifresh are other Adani Group undertakings Blessed byNature. Bettered by human ingenuity. Explorers, down the centuries, made complexcalculations on the best route to set forth. This side of the earth, nature shows the way. Protectedby Saurashtra from the strong South West seas, Mundra is one of the deepest ports on theWestern Coast. Its why Mundra rose as the natural trade route with the Middle East, Africa andother countries of the globe 4000 years ago. Now, a joint venture between the Government of Gujarat and the Rs. 35 billion Adani Group is establishing Mundra Port as a world classcommercial port facility. A multi-purpose all weather port that can receive dry, liquid cargo andcontainer ships up to 1,30,000 DWT with a clear and deep water approach and a minimumnatural depth of 18 Mts. at any state of the tide.

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"How far will your vision take you?

Depends on where your world ends."

To evolve as an international caliber business port on the foundations of technological excellence,state-of the-art back up infrastructure and logistics, and a competitive customer focus.

MMuu nn dd rr aa PPoorr tt aa nn dd SSpp ee cc iiaa ll EEcc oonn oomm iicc ZZoonn ee LLtt dd ..

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ABOUT THE COMPANY

The company was incorporated as Gujarat Adani Port Limited on May 26, 1998, and commencedphased operations at Mundra Port in October 1998 with commercial operations beginning in October2001. The company has initially promoted by Adani Port Limited and Gujarat Port InfrastructureDevelopment Company Limited, an undertaking of the Government of Gujarat.

The company has entered into a Concession Agreement with the Gujarat Maritime Board and theGovernment of Gujarat on February 17, 2001 pursuant to the agreement the company has beengranted the right to develop and operate Mundra Port located at the Navinal Island in the Kutchregion for a period of 30 years.

In April 2003, Adani Port Limited merged with company and Further, Mundra Special EconomicZone Limited and Adani Chemicals Limited were merged with company with effect from April 1,2006.

The company has received approval as a developer of a multi-product SEZ at Mundra and thesurrounding areas from the Government of India on April 12, 2006. The company has alreadyreceived notification from the Government of India with respect to land covering 2,406.8 hectares(approximately 5,947 acres) on June 23, 2006. On July 3, 2007, we received a subsequentnotification with respect to an additional 251.4 hectares of land, resulting in a total of 2,658.2hectares (approximately 6,568 acres). Such notification is granted only once land is in the possessionof a developer. In order to reflect the significance of the SEZ status and the changing nature of ourbusiness, the company has changed its name from Gujarat Adani Port Limited to Mundra Port andSpecial Economic Zone Limited with effect from July 7, 2006.

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What is Special Economic Zone (SEZ)?

What is SEZ ? SEZ can be defined as an industrial zone with special incentives , Set up to attractforeign investors Special economic zone is a particular area inside a state which acts as foreign

territory for tariff and trade operations. Govt. provides tax exemption (IT, Excise, customs, salesetc.), subsidised water and electricity etc.

Why SEZ in India?

India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ)model in promoting exports, with Asia's first EPZ set up in Kandla in 1965. With a view toovercome the shortcomings experienced on account of the multiplicity of controls and clearances;

absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract largerforeign investments in India, Experience with EPZ For exclusive growth To increase share in worldtrade WTO regime For employment the government of india announced the special economic zonespolicy in April 2000.

What is the objective of SEZ

Objectives of SEZ can be stated in brief as follows

1. Earn Foreign exchange2. Create infrastructure3. Increase export4. Create job opportunities5. Infusion of modern technologies

SEZ can be sector specific or multi product sez. It helps in the development of infrastructure of thearea around the SEZ, provides employment to people, makes the exports more viable. All this willhelps the country's products to become more competitive vis-a-vis providing all round developmentof region.

It should be noted that if 100 acres are allotted for SEZ, then only 30-35% of area is used for settingup plants. rest of the area is used to provide housing facilities, malls, multiplexes etc.

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Advantages

1. Attracts FDI (foreign direct investment) and exchange earnings2. It creates job opportunities3. When the special economic zone is a success, it increases the GDP, and acts as a good

economic model for the policy makers to mimic.4. 100 % income tax exemption External commercial borrowings Benefits to local supplier

Exemption from Central Excise Duty on capital goods 100% FDI investment single -window clearance

Disadvantages

1. Labour and environmental standards become lower to attract foreign investment.2. Companies would like to relocate to the special economic zone to take advantage of the tax

concessions being offered. This will bring about a significant revenue loss to the governmentand will result in a kind of 'disguised industry' just as 'disguised employment.

Conclusion

From above stated advantages and disadvantages it is clear that SEZ can play a great role to increase Indiasexport and in process help the country in earning foreign exchange. But interest of others must be considered.Trade leads to peace as well as economic growth .

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Mundra Port & SEZ Ltd.

Mundra Port & SEZ Ltd. is Mundra Port's terminal operator company. It offers fully mechanized, efficient Cargo Handling Facilities. It has developed the largest privately owned liquid storage facility within the part complex

certified for all classes of chemicals, petroleum products and edible oils. Also, largely privately owned dry bulk cargo storage facility within the port complex. Closed and open space for dry cargo storage. A single window operating system works to benefit and satisfy the customer.

Gujarat Adani Port Ltd.

Gujarat Adani Port (GAPL) is a joint venture company between Mundra port Ltd. andGovernment of Gujarat represented by Gujarat Port Infrastructure Development CompanyLtd.

It is in charge of overall development of the Mundra port and conservancy functions. It hasconstructed a state-of-the-art multipurpose terminal and has provided all the necessary basicinfrastructure facilities.

Mundra Special Economic Zone

Mundra Special Economic Zone (MSEZ) is a state-of-the art zone conceived on internationalstandards of design and vision. Spread over 10,000 hectares, the Mundra SEZ is designed facilitatenew age business norms. With features like duty free enclave, exemptions in key areas like licensing,levies and duties, tax holidays, business friendly foreign exchange policies and minimaldocumentation requirements. In the initial phase, 1000 ha of port, warehousing facilities, powersupply and other allied infrastructure will be ready by early 2003.

Promoters

The Government of Gujarat and the Adani Group has jointly promoted GAPL. The Government of Gujarat is represented by Gujarat Port Infrastructure Development

Company Limited (GPIDCL), which is promoted by Gujarat Maritime Board and GujaratIndustrial Investment Corporation Limited (GIIC).

The Rs. 35 billion Adani Group is represented by Adani Port Limited which is also aterminal operating company at Mundra Port

http://www.adanigroup.com/http://www.adanigroup.com/http://www.adanigroup.com/http://www.adanigroup.com/

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Strategic Location

Mundra is located in the Gulf of Kutch on the Western Coast of India at 22 44 24 N and 69 4713E. Indian Hydrographic Chart no. 2021, 203, 2068. Mundra Port is strategically located as Indiasnatural gateway to the West. It is the nearest deep water Indian port for the vast landlocked andproductive hinterland of Northern, Western and Central Indian state which contribute 38% of thecountrys trade. It is over 300 kms. closer than Mumbai and JNPT for this hinterland. It is the closestIndian port to the international navigation route leading to the Middle East, European, African,Scandinavian countries and the Americas.

Strong Growth in Traffic

India is emerging as a modern economy. Over the period of 1993-2003, the Indian economy grew ata CAGR of 6.2%, with above 8.0% growth subsequently. The strong economic growth driven byliberalization policies has led to Indias trade in goods increasing at a five -year CAGR of 22.9% toUS$ 261.6 billion In fiscal 2006. It stood at US$ 156 billion for the first half of fiscal 2007. Whileexports have increased at a five-year CAGR of 17.7%, imports have increased at a five-year CAGRof 22.6%. There has been sustained rise in volume of exports with revival of growth in themanufacturing sector and improved export competitiveness. The significant increase in Indiasinternational trade during the recent years has resulted in traffic handled at Indian ports increasing ata five-year CAGR of 11.1% to approximately 649 million tonnes in fiscal 2007. The strong growthin Indias port tr affic is expected to be sustained, with growth of approximately 12% to 15% peryear expected during the next two to three years.

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Ranking of Indian Ports -2007

56 5553 53 52

45

39

3432

2018

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Mundra Port Ranks 10th in comparison to other Indian Major Ports in terms

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Competition

Competition within the port industry is primarily driven by the characteristics and location of theports, such as the ability to berth large vessels, proximity and connectivity to inland cargo centers.Other key competitive factors include, among others, the number of berths, the size and quantityof port facilities and equipment, and the efficiency of cargo handling and transportation.Compete primarily against :

Non-Major Ports and Major Ports located on the northwest coastline of India, such asPipavav Port, Kandla Port, Mumbai Port, JNPT and GMB-managed ports;

Global port operators with a presence in India, such as the Port of Singapore Authority,Stevedoring Services of America and AP Moller; and Port service providers andintermediaries that operate at existing ports such as handling, Stevedoring, clearing andforwarding agents.

Compete against these entities through integrated port infrastructure facilities, domain expertise inthe port services industry, established customer relationships, available land resources and ability tofacilitate port-based development, consistent high-quality service and ability to flexibly meetcustomers requirements including flexibility in tariffs.

One of key competitive advantages has been cost advantage relative to other ports in the regionbecause of the location of port, with good proximity and connectivity to inland cargo centers,particularly in north and northwestern India, and its natural characteristics such as deep draftscapable of handling large vessels. Are a private enterprise compared to the government-operatedmajor ports. Believe this is another advantage as well as ability to attract and retain highlyexperienced and skilled employees. They expect that competition may increase through thedevelopment of new ports that may compete with them and port operator companies from othercountries that are more efficient and have lower cost structures through savings like better or cheaperaccess to skilled manpower.

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Mundra Port Facilities

BULK (DRY & LIQUID) 8 Berths CONTAINER 4 Berths

Terminal 1 & 2

- 8 cargo berths & 1 barge berth - handling both dry &liquid bulk

Mechanised system for cargo handling

Storage about 800,000 sq.mts. ; 342,000 Kilo Ltrs liquid

Container Terminal 1- Sub-concessioned to MICT

- Can handle 1.25 million TEUsp.a.

Container Terminal 2- With two berths will handle

1.25 million TEUs p.a

- Trial Run Operations from

Single Point Mooring- Commercial operations in

December 2005

- Long term contract withIndian Oil Corporation for itsPanipat Refinery expansions.

- Panipat refinery beingexpanded to 15MT from 12MT by June 2009.

CRUDE

1 SPM

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Coal

Leading port on upper West coast for Coal handling. Discharge rate of about 30,000 TPD.

Fertilizers

Only port to provide direct berthing to post Panamax vessels carrying

fertilizers. Providing Value added services like blending and bagging for the

fertilizer industry.Food Grains

Preferred Port to import wheat in Post Panamax size Vessels Offers Ocean freight savings of USD 11 -20 per Ton

Metal & Minerals

Emerging as a logistics hub for Pipe Making Industry (Jindal SawPipe, Welspun Man, Etc.)

Firm contractual arrangements with pipe making industriesPOL

Emerging as an important destination for bunkering cargo. Tankage capacity of about 500,000 Kilo Ltr for POL product.

Crude

Port having the SPM at the shortest distance from the shore; TankageCapacity of about 800,000 KL

Eventually would cater to the 15 MT IOCs Panipat refinery.Container

Longest Continuous berth length for Container Cargo in India Emerging as an Auto Export (RORO Cargo).

Mundra Port Competitive Advantage

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FINANCE DEPARTMENT

Accounting Method Used:SAP Accounting Software is been used for the purpose

Receivables:

Credit differs from customer to customer which is been mentioned in the contract with the company.

Taxes:

12.36% Service Tax is charged on invoice amount

TDS (Tax Deducted at Source) at 2.266% for contractor

Section 94(J) Professional tax at 11.33%

Work is been divided among the employees and the Key Result Areas is been defined and targets arebeen set by the high level of management.

All the activities such as preparation of the cash flow statement, bank reconciliation, interestcalculation and accounting, foreign remittance, filing of return, letter of credit and bank guarantee,

bank transactions, bills payable, bills receivable are carried out in the finance department.

Communication & Connectivity

Mundra Port is totally networked with the world through V-Sat connectivity linking the port and its

offices in India, enabling read time response to customers. Mundra remains in constant touch withcustomers, business associates and its team all across the globe to provide information and servicesat the push of a button or the click of a mouse. Their latest navigation information system and shore-to-ship communications facility smothers the passage of vessels and cargo, to and from the portoptimally. Advanced communication systems and the professional culture empower it to meetcustomer expectations faster and better.

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BUSINESS EXPANSION.

It is very important that you plan your business expansion carefully, and implement it in slow,controlled stages so that your customers and staff feel very little of the effects.

Business growth needs to be managed or it will affect your business negatively losing you many of orders that promote you to consider expansion in the first place. So it is very important for you toplan your expansion very carefully, and implement it in slow, controlled stages so that your customerand staff feel very little of the effect.

Following are the some of the issue you need to consider when make you expansion plans:

1) EXPANDING IN THE EXISTING MARKET.

One of the feature of business expansion is growing the existing market . you alreadyknow who your current market is. A geographical area may define them. Or they maybe defined by a certain demographic data. When you expand in existing market itmeans the you are shifting the parameters. It may means opening another outlet and

catering to the same demographic group. Or you may be planning to attract a new anddifferent group of customer. The key to success when you expand your market is tomake sure that YOU CONTINUE TO MEET THE NEEDS OF YOUR EXISTINGMARKET. SO THAT YOU DONT LOSS THEM IN THE PROC ESS. Know whatthey need and market it clear that you will continue to give them the same productthat made them your customer in the first place.

2) DIVERSIFYING PRODUCTS.

There are many reasons you may be consider diversifying your products. It may bebecause you believe that you have taken your existing product as far as you can go,and need to explore other possibilities. Or perhaps there has been a demand for newproducts in addition to what you offer and you wonder if you are wastingopportunities when you turning potential customer away. Regardless of the reasons,diversification needs very careful management.

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3) STARTING A SECOND BUSINESS.

On of the ways of expanding your business is to actually start a second business. Inthis case you will need to follow the steps you already did in establishing the first, your majorissues in this case are,a) Resources: do you have enough financing and manpower to run both businesses?

b)have a plan in place to make sure that your current customers employees and businessassociates understand that you are not abandoning your original business instead you arespreading your business wings and exploring other opportunities.

4) RESOURCES NEEDED.

Once you know what needs to be done to expand your business. You need to asses s your existingresources as well as determining where else you will find more. it is very important that you takeresponsible risks with your existing resources. So that you can keep running the business painlesslyduring the expansion.

In any expansion plan, the following resources need to be reassessed:

a) Financeb) human resourcesc) time

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EXPANSION IN MUNDRAPORT SPECIAL ECONOMICZONE.

Mundra Port is one of the most facilitated ports for the off-loading and warehousing

of bulk liquid cargo with the following facilities:

1) 9 Nos. Dock Pipelines with diameters ranging from 8 inch to 24 inch (including8" dia Stainless Steel line)connecting liquid berths to the shore tanks.

2) 2Dedicated pump with individual tank for road tanker loading (78 pumps)

3) 78 loading bays for uninterrupted delivery from every tank i.e. 3 road tankersimultaneous loading fromindividual tank and 12 unloading bays.

4) Bulk Bitumen storage tank facility inside port. 2 tanks each of 3000 Kiloliterand one service tank of 430 KL

5) Fire fighting, nitrogen, hot water circulation, effluents treatment plant (ETP)and oil-water separator systems

6) 8 pump houses and 5 Weighbridges in the liquid terminal

7) Tank terminal with 81 tanks with total storage volume of 3,45,624 kiloliter forstorage of various liquids likeedible oils, petroleum products, bitumen in bulk and chemicals.

8) All Pipelines with cup pigging system for pushing pipe line product andeffective cleaning of pipe line.

9) Export pumps installed 300x4 Nos. and 500x 3 Nos. cu.m/HR for export fromtank to vessel.

10) Encl-9 tanks (16 nos.) with Radar Gauges and Mass flow meters at deliveryend.

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Mundra port handled 28% of the liquid cargo business. In liquid cargo business it includesvegetable oil, (sunflower oil, palm oil, soya oil etc.. ) mundra port handled 4,19784 MTSvegetable oil in 2008-09. The major clients of the mundra port for the vegetable oil is AWL,HUL,NIRMA,BUNGE, OLAM & GODREJ.

From all this clients AWL is the biggest client for the vegetable oil.in 2008-09 AWL import3,59,550 MTs vegetable oil. Now AWL is planning for expanding their refinery capacity. It isexpected that AWL will have an installed capacity of 2400 MTs/day(7,20,0000MTs/yr)by august2009 and will have a further expansion which will take their capacity to3400MTs/day(10,20,000MTs/yr) by march2010.

Awl is also putting up refinery in other parts of India like Kanpur , nimach, bibisar, JNPT, Manglore.Of the aforementioned, it is felt that the crued oil of the Kanpur can be imported via mundra.

AWL s Kanpur refinery have the capacity of 1200 MTs per day. In addition 60000 MTS palmole inand 48000 sunflower oil is also expected to be imported by AWL. Totally AWL import from mundraabout 1450800 MTS/yr, and this figure does not include their trading volume.

The total import of the vegetable oil into India during the period of NOV08 to APRIL09 jumped64% as compare to the same period in the previous year. Though this may be temporary aberrationdue to the zero duty regime, it confirms the firm upward trend in the import. Studies show agrowing demand supply gap, insuring constant import. With the growing economy and moredisposable income in the hands of the middle and lower class. We can expect consumption toincrease gradually in the coming year.

According to the above data & future estimation company planning to build the new tanks to meetthe future requirements of the customers. Because companys existing capacity is not enough tofulfill the future requirements.

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MUNDRA PORT CURRENT SCENARIO

Encl.no.

Tank NO.

No. of tanks

Encl.Cap.In kL

No. of tanks &tank nos.

Cap. Utilizedby

Remark

1 1to18

18 39709 5(1,3,10,14,16) 1071213757306891403030

HulAwlNIRMACAPLAQUAGL

FOR HEATEDVEGETABLEOIL &

CAMICALS

7(2,4,9,11,12,13,18)2(15,17,)3(6,7,8)1(5)

2 19TO40

22 29808 1(22) 10341042359610301529153210321042206545951537

51361535

AENSEZ

AQAGEL

ARDOEAWLBUNGEHULOLAMPETROCHEM

ROHITIOCLMARICO

FOR CHEMICALNON HEATEDVEGETABLEOILS

1(36)

3(19,25,32)

1(37)1(24)1(26)1(27)

1(33)

2(20,30)

2(34,35)

1(28)3(29,38,40)1(39)

6 51TO56

6 30412 6(51 TO 56) 30412 AWL EDIBLE OIL

7 57TO

59

3 15374 3() 15374 AWL EDIBLE OIL

4 101TO104

4 61394 2(102,104)2(101,103)

3129630098

AWLCAPL/ AENL

TO BECONVERTEDFOR CAPL

3 41TO45

5 34303 ALL TANKS 34303 FOR CBFS

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AS seen from above we can use only enclosure 1,2,6,7 for the storage of vegetable oils. The tank capacity available for the AWL is 45000kl in encl. 6 & 7 and there is a very little scope for themarketing existing tanks to the new clients.

We have the 9 tanks for AWL in encl. 6 & 7 with the total capacity of 45000 kls which is not able tomeet the present & future capacity of AWL. To meet there present requirements we are using thevacant tanks. However these tanks are being use as a stop gap measures.

As projected by the AWL they are planning to import 85000MTS /month by April 2010, for themundra refinery & for the Kanpur refinery 27500MTs/month. In this they are not included theretrading volume. On an average approximately 5% of their total volume imported can be consider

their trading volume from mundra port.

To meet the future market situation there is plan to build the new tanks under the enclosure 15 &enclosure 16. It has a provision for 12x5000 KLS tanks in enclosure 15 and 4x5000 KLs tanks inenclosure 16. Totally 40000 capacity is proposed to be constructed.

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Enclosure 15.

1. construct 4 tanks with 5000 capacity2. pump house with pumps

3.

tank lorry felling points4. connectivity for existing dock line5. connectivity to cross country pipeline6. radar gauges for tanks7. insulation on all tanks8. rake loading connectivity.

Enclosure 16.

1. construct 4 tanks with 5000 capacity2. pump house with pumps3. tank lorry felling points4. connectivity for existing dock line5. connectivity to cross country pipeline6. radar gauges for tanks7. insulation on all tanks8. rack loading connectivity.

It is also proposed that we have a separate control room for vegetable oil tanks in keeping with themaster plan providing a large vegetable oil tank farm in the future. Full automation is also proposedto eliminate manpower difficulties. Additional cost of automation is 2.75 crore.

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INTRODUCTION

A Research Design is the framework or plan for a study which is used as a guide in collecting andanalyzing the data collected. It is the blue print that is followed in completing the study. The basicobjective of research cannot be attained without a proper research design. It specifies the methodsand procedures for acquiring the information needed to conduct the research effectively. It is theoverall operational pattern of the project that stipulates what information needs to be collected, fromwhich sources and by what methods.

STATEMENT OF THE PROBLEM

in case of the capital budgeting to understand the techniques of capital budgeting to

analyse the case study of AWL

In revenue budgeting why variances arises in the revenue budget. The major reasons

for the variances.

RESEARCH OBJECTIVES OF THE STUDY

To understand the techniques of capital budgeting for the analysis of various projects.

The main objective to study the revenue budget is, to understand how to minimize theexpenses/cost & improve the income & to know the causes for the variances in the revenuebudget.

SUB OBJECTIVE OF THE STUDY

To under stand the capital budgeting decisions like expansion ,modernization, replacement& diversification

To concentrate on capex investment for the improvement of the infrastructure & automationfor better services to the customers.

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RESEARCH PLAN

SAMPLING UNIT

Sampling refers to the method of selecting a sample from a given universe with a view to drawconclusions about that universe. A sample is a representative of the universe selected for study.

Major ports like mundra JNPT , KANDLA, PIPAVAV, MORMUGAO etc........... are available inindia.

SOURCE OF DATA

There are two types of data used. They are primary and secondary data. Primary data isdefined as data that is collected from original sources for a specific purpose. Secondary data is datacollected from indirect sources.

Primary data:

Interview of the executive MIS

Secondary data:

Balance sheet, business magazines & from executives interviews(media interview)

basicaly, these research is based on the secondary data, provided by the company and other financialtools.

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TYPE OF RESEARCH

EXPLORATORY RESEACH (EXPERIANCE SURVEY)

This study conducted without having any specific end objective except to establishedas many relationships as possible between the different variables of the study.

Experiance survey is a survey of experiances of experts in a particular field which actas a data base for future research. In this project the experiance of the MIS executivesare used for the research.

In these project the case study of the AWL is providing the knowledge of techniques used inthe capital invest ment. In these case study to build the new tanks for the AWL are analyse theproject by the capital budgeting techniques like Net present value, Internal rate of return, Payback period & Benefit cost ratio. By the use of these major techniques we found that the proposed projectis profitable to the company.

DESCRIPTIVE RESEARCH

Descriptive research is carried out with specific objectives and hence its result in definiteconclusion. This research tries to explain the characteristics of the particular project.

In these project we are using the descriptive research to know the reasons whyvariances arises in the revenue budgeting. After the interview of the MIS executive we are found thatrevenue budget is the major procedure in which they collects the data from the various units and thancombined them. The major reasons for the variances are it may be controllable like variances arisedue to the companys poor service quality or delay in the services. Or in case of the non controllableit may be due to change in the economical condition ,due to change in the nnatural conditions or it

may be change in the market condition. So there are majorly two resons for the variances.

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CONTRIBUTION OF THE STUDY

During the tenure of training I was involved in the project title Capital Budgeting & Revenue

Budgeting at Mundra port of Mr. Janmayjay Bhatt & Jaimin Patel (MIS Executives).

My roles throughout the project were as follows:

Studied about the post business.

Collected the information about Mundra Port.

Studied techniques of capital budgeting throughout the project.

Created Hypothetical project on Capital Budgeting.

Collected information on revenue budget.

Studied the variances of revenue budget.

BENEFICIARY OF THE STUDY This study project will help me to understand the various capital budgeting techniques for the

analysis of new capital budgeting.

Gained the knowledge of port business.

Came to know about why do variances occurs in the capital budgeting.

LIMITATION OF STUDYThis study having some limitation as under

Competitor data can only be availed by internet and that is also in the limited resources (i.e.

tariff rates and services).

Due to company policy no managerial data is available.

Analyses and interpretation may have some variation.

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FINANCIAL ASSUMPTION

IN THE FINANCIAL ASSUMPTION A STORAGE RATE OF 140KL/MONTH HAS BEENASSUMED IN LIEU OF EXISTING 130KL/MONTH.

ANNUAL ESCALATION OF 5% HAS BEEN CONSIDER FOR THE STORAGE REVENUE &CCPL REVENUE.

FINANCIAL PROJECTION SUMMARY.

Detailed calculation for this are attached to

Description Financial parametersincluding marine incomeand water front royalty

Total cost* 35.5 CRROI 25.44%Payback period 6.32

NPV 1319IRR 20.01DSCR 1.34

*The sunk cost has not been included in the above projection which is 3.75 crores.

CASE STUDY OF AWL

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BERTH ANALYSIS.

A berth analysis has been done and it has been determine that no new berths will be required onaccount of the new AWL vegetable oil cargo.

BACKUP BUSINESS STRATEGY:

In the eventuly that few tanks of vegetable oil have lesser occupancy, we would have the followingoption:

Other vegetable oil clients:Clients in Kanpur like Kanpur edible, Mantora & Dinesh import a total amount of 15000mts

from kandla. Similarly we can also target the Cargill and Louis dreyfuss. So far we have not beenable to market them since we do not have any spare tanks.

A strategy for the same has been discussed with the AWL wherein bigger parcels can be brought inthus making the total logistic cost lesser.

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INVESTMENT EVALUATION CRITERIA.

Three steps are involved in the evaluation of the investment

1. Estimation of cash flow2. Estimation of the required rate of return3. Application of the decision rule for making a choice.

INVESTMENT DECISION RULES OR CAPITAL BUDGETINGTECHNIQUES

The essential property of a sound technique is that it should maximize the shareholders wealth.Following are the other characteristics should be possessed by the sound investment criteria.

It should consider the all cash flows to determine the true profitability of the project. It should provide for an objective and unambiguous way of separating good projects from bad

projects. It should recognize that bigger cash flows are preferable to smaller ones and early cash flows

are preferable to early ones. It should be a criterion which is applicable to any conceivable investment project independent

to others.

Evaluation criteria.

There are majorly two categories

1. Discounted cash flow criteria.

Net present value Internal rate of return

2. Non discounted cash flow criteria.

Payback period Discounted payback period Accounting rate of return

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For the evaluation of the project we are considering all the criteria.

1) NET PRESENT VALUE.

The net present value method is the classic economic method of evaluating theinvestment proposals. it is the technique that recognizes the time value of money. A rupee received today is worth more than a rupee received tomorrow.Following steps are involved in the calculation of NPV.

Cash flow of the investment project should be forecasted based on therealistic assumption.

The appropriate discount rate is equal to the required rate of returnexpected by the investor on the investment of equivalent risk.

Net present value should be found out by subtracting present value of cash outflow from present value of cash inflow.

Acceptance rule.

It should be clear that acceptance rule using the NPV method is to accept the investmentproject if its net present value is positive and to reject it if the net present value is negative.The net present value will result only if the project generates cash inflow at a rate higher than

the opportunity cost of capital.

In this project initially we are investing rupees 35.5 crores at 12% rate for theperiod of 10 years. In this case the present value after 10 years will be 48.7 cr. Which ishigher than the net present value of inflow. It is fulfill the acceptance rule of the NPV.

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2) INTERNAL RATE OF RETURN.

Term used to describe the IRR method are yield on an investment, marginalefficiency of capital, rate of return over the cost. The IRR is the rate thatequates the investment outlay with the present value of cash inflow receivedafter the investment period. Under the IRR rule the project will be accepted if the IRR > k. where k is opportunity cost of capital.

Evaluation of IRR.

Time value: it recognizes the time value of money. Profitability measures: it considers all cash inflow from the entire life

of the project. to calculate its rate of return

Acceptance rule :

It generally gives the same acceptance rule as the NPV method.

In our project IRR is 20.01% where opportunity cost of capital is 12%. HereIRR is greater than the opportunity cost of capital.

3) PAY BACK PERIOD.

The payback is one of the most widely popular and widely used methods of evaluating investment proposals. payback is the number of years required torecover the original cash outlay invested in the project.

Formula to calculate the payback period.

Payback= Initial investment Annual cash inflow

Acceptance rule.

The project would be accepted if its payback period is less than the maximumor the standard payback period set by the management.

In our project the life of the project is 10 years and our payback period is 6.32.which is less than the management standard. Management standard is 7 years.Here payback is less than 7 years.

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4) BENEFIT/COST RATIO.

Like the NPV & IRR method benefit cost ratio is conceptually sound method of apprisinginvestment projects. Benefit cost ratio is the ratio of the present value of cash inflows at therequired rate of return. To the initial cash out flow of the investment. It considers all cashflows & recognize the time value of money. it generally consistent with the wealthmaximization principle.

Formula to calculate the benefit cost ratio

Benefit cost ratio=Present value of cash flow/ Initial investment

Acceptance rules.

In the benefit cost ratio if B/C ratio is greater than one(B/C > 1) than project is acceptable.The project with the positive NPV will have B/C ratio greater than one. If B/C ratio is lessthan one it means the projects NPV is negative.

In our project benefit cost ratio is 1.37 which is greater than one. It full fill the acceptance

criteria. In our project NPV is greater than initial the initial investments so our B/C ratio isgreater than one

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SUMMERY/ CONCLUSION

Studies show that there is a growing demand of vegetable oil in India which needs to bebridge by imports. our present tank capacity are inadequate to cater to the business at hand. We willrequire the additional tank capacity to grow our business.

Consid ering that Awls volume increase is anticipated first in august 2009, it is imperative that westarted construction of the tanks at the earliest. The total capex for the project would be Rs. 35.5CR(excluding sunk cost). The financial parameters for the project including marine income andwater front royalty would be : ROI 25.44% , Payback period 6.32 yrs, NPV 13.19 cr,IRR 20.01%

Having considering the various business scenario it is recommended that the construction of thetanks be carried out expeditiously. The occupancy of the vegetable oil tanks would be closelymonitored.

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Revenue Budget

A revenue budget identifies each of the individual revenue sources for which the organization is tobe responsible; estimates the amount of revenue each is to "earn" in the budget year; documents thebasis for the estimate and other important information about each source; and assigns responsibilityfor revenue management (including estimate updating) to a specific organization unit/manager. Amanagement responsibility to be associated with revenue budgeting is the development of monthlyplans for revenue recognition and collection.

Revenue=Sales

Revenues are the amount of money charged for the usual product or services sold by a business.

Budgeting is detailed planning for the allocation of funds in a business. It is sometimes referred to asthe financial picture of the business; i.e, how the business plans to spend its financial resources.

Whether your business plan is for next year, for the next three years, or for the next five years,budgeting can help you keep on the right road. Once you've developed your business plan, preparingthe first budget is easy -- think of your budget as the financial picture of your future.

Your budget gives you answers to questions such as:

1. What sales will be needed to achieve the desired profit?2. What will the equipment that is needed cost?3. Can you afford the marketing and advertising that you outlined in your plan?

When you complete your budget you will have one of the most effective management tools of all -- abenchmark that you can use each and every month to check your progress towards your businessgoals.

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Essentially, a budget is a translation of your business plan into numbers. In its simplest form abudget is a detailed plan of future receipts and expenditures - a projected income statement. Rightfrom the beginning you can use your budget to validate the activities you have planned for thecoming year. Will you be able to afford additional staff? Do you need to expand your facilities or

equipment? When will be the best time to start your new sales campaign? Do you have a periodwhere sales are slow and making ends meet is a challenge? Knowing what all your business activitieswill cost and when such expenses will occur will help prevent any unexpected surprises that couldlead to financial problems down the road.

Once the period for which you have budgeted is completed, you can compare actual results withanticipated goals. Get into the habit of making this a regular part of your business routine. You mayfind it takes discipline at first, but the rewards are high. You don't have to do anything elaborate -

just compare your budgeted figures to your actual results. Then, ask yourself why the numbers aredifferent. If some of your expenses, for instance, are higher than you expected, do you need to look

for ways to cut them or has business increased? If your sales aren't on track, what has happened tocause the difference? Use the information constructively so that you can make adjustmentsimmediately, if needed, and improve your next budget.Your budget can also be used to assesswhether your present profit adequate. In a small business, the year end profit should be large enoughto make a return on your investment and return on your own work, i.e., pay you a salary.

Your Targeted Income

After you know what you made last year, you can set a profit goal for next year. Be sure that yourgoal includes payment for your services and a return on your investment as noted above. Considereach expense category listed and estimate the amount that you will spend for this category in the nextyear. Last year's income statement is a good reference point, but don't rely entirely on it -- considerchanges in your markets, price changes, and cost increases, always going back to your business planto make sure you are addressing all the goals and activities you want to accomplish.

Once you have reasonable estimates of your expenses, you need to determine and evaluate yourrequired revenues from sales. Calculate revenue from the ROI and expense estimates. Then take arealistic look at the revenues you will have to generate in order to make your targeted profits. If you're a service business, After your budget is set, it becomes a marvelous tool to keep on top of

what is happening in your business. Break your budget down into monthly amounts. This allows youto check for any discrepancies that may not show up readily in the annual figures. When many itemsare added together, it is easy for an error to creep into the totals or for you to overlook items.

During the year, the monthly budget provides you with an important financial management tools. Bylooking ahead at the coming months' budget you can anticipate peak periods and schedule stock andlabor to handle sales volume. You can also plan vacations, special promotions, and inventory-takingfor the slow periods. Once you have the annual budget, projecting it monthly makes it even a moreuseful tool for monitoring throughout the year. Many financial software packages will provide youwith templates to fill in for your budgets and reports to keep you on top of how you are doing atmeeting your projections.

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PROCEDURE OF REVENUE BUDGET

In the procedure of the revenue budgeting, firstly we have to start to prepare the budgetbefore the 3 months. Like if we want a budget of the financial year 2010-11 than we have tostart the procedure from January 2010.

Firstly the executive MIS collects the data from all the units and SBUs.

Second step is to collect the data from the marketing and human resource department todecide the volume of the cargos and to estimate the capacity after they made the research incurrent market and research on the current economic condition.

After the second step executive MIS decide the volume of the cargo and requirement of thehuman resource.

The executive MIS also collect the data from the human resource department to know theavailable human resource.

On the basis of this an d previous years data Executive MIS decides the total expenses andincomes.

If executive MIS found any fake data or if there is any uncertainty he/she has a right to getthe explanation from the particular units.

If there is any chances to change the market condition or economic condition they have tomake another support plan to meet the estimated data.

After collect the finalized data from the various units the executive MIS merge all data andmake a estimated revenue budget and present to the management..

If management satisfies with the budget they have to follow the estimated budget, and try to

meet that data. Every units have to compare the data with estimated data every month.

If there is any major variances found in that , they have to give the explanation to themanagement. And try to minimize the variances.

If there is any controllable variances they have to try to improve there performance

But if there is any unmanageable variances like there is any change in economic condition

than try to shift the support plan or try to regulate with the condition.

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Every units have to report to the management in every quarter and give the explanation aboutthe business.

Basically every units try to meet there estimated business but if there is any major variancesfound they can change their data after six month.

After six months executive MIS collects the data from every units and compare it with thebudget.

Thus this is a constant process to improve the performance of every units and to improve theoverall performance of the company.

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REVIEW SERVICESIMPLICATION FEES AND

CHARGES REVIEW

(WHERE POSSIBLE)

PRODUCE FORWARDYEARS BUDGET FOR

BUSINESS PLAN

REVIEW BUDGET

FOR

BUSINESS PLAN

FINALISED BUDGET

MONTHLY REVENUE

BUDGET MONITORING

QUATERLY REVENUEBUDGET & CAPITAL

BUDGET MONITORING

STATEMENTS OF

ACCOUNTS

REVENUE BUDGETPREPARATION

BUDGET MONITORING

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PRIMARY SURVEY QUESTIONSFOR THE PRIMARY SURVEY I ASKED FOLLOWING QUESTION TO THE MIS EXECUTIVE

Q. Process of revenue budget

Ans. Start budgeting before three months collects data from all the units compile

it and present to the management.

Q. How they collect all the data from various units

Ans. MIS executive visits all the account manager of the units and collects the data

of past date and budgeted date.Q. what is the major benefit of revenue budget

Ans. It shows the future position of the company to the management and behelpful in capital budgeting as well as expansion of the company.

Q. How company decides the human resource requirement.

Ans. Human resource requirement is mainly depend on the particular project.

Q. how they calculate the charges like on which basis

Ans. By referring competitors rates, service provided expenses, governmentexpenses, market rates etc.

Q. if there is major variances then which steps they followed

Ans. Explain the reason of variances to the management and if they are not

satisfied use the backup procedure.

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Q. what is the major criteria for the budget

Ans. The major criteria of the budget is to meet the budgeted data, it means try to

collect the business on the basis of the budget.

Q. if there is any economical or natural problems arise than how they manage theirbudget

Ans. Budget could not be managed in case of natural issues. In case of economical

changes, explain the case to management and if the management is satisfied

update the new rates.

Q. how they conduct the marketing survey for the estimeted budget, means whichcriteria they follow

Ans. They analyze the competitors data, major customers data and analyze the

market revue.

Q. How they decide the volume of cargo

Ans. By the analyses of past market values, customer requirement and economical

conditions.

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Primary Objective:The main objective to study the revenue budget is, to understand how to minimize the expenses/cost

& improve the income & to know the causes of the variances in the revenue budget.

Sub objective:

To concentrate on capex investment for the improvement of the infrastructure & automation.

FLOW OF INFORMATION

CALCULATION OF VARIANCES IN REVENUE BUDGET

AZAD SOMANI

(VP FINANCE)

JAYMEEN PATEL

(MIS executive)

PARESHBUDHIYA(MIS executive)

DRY CARGO

MR. AANAND

LIQUID

PIYUSHGANDHI

MARINE

MR. AJAY PATEL

CONTAINER

PIYUSH SHAH

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VARIOUS UNITS IN MUNDRA PORT

Dry (excluding marine)

Dry (including marine ) Liquid (excluding marine) Liquid (including marine) HPCL HMEL SPM CT2() CT2() RORO Railway Marine(dry + liquid) Marine Mpt(excluding SPM) MICT Comparision MPSEZ CT vs MICT

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REASONS FOR THE VARIANCES

COMPANY

CONTROL

NON CNTROL

NATURALCHANGES

ECONOMICS

POLICY CHNGES

CHANGES IN

MKTCONDITION

COMPETITION INFRASTRUCTUREPROBLEM

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Mundra Port and Special Economic Zone Limited

NOTE ON ACCOUNTS FOR THE QUARTER ENDING 30TH JUNE , 2009

A. Performance Review between Apr-Jun 2009 v/s Apr-Jun 2008

1. Physical

The total quantity of Cargo Handled during the quarter under review was 9.89 MMT as compared to7.98 MMT in the corresponding quarter of 2008-09. (up by 24%).The major break-up of cargo is asunder:

Particulars Q1 -2009-10 Q1 -2008-09

Variance Q1 09-10 VsQ1 08-09

Absolute %

No. of Vessels 590 478 112 23%

Cargo (in MMT)

Dry 3.63 2.44 1.19 49%

Liquid (incl. HPCL) 1.60 0.94 0.66 70%

Crude 2.02 2.00 0.02 1%

Container MICT 1.89 2.41 -0.52 -22%

Container MPSEZ 0.72 0.19 0.53 279%

RORO / STS 0.03 0 0.03

Total Cargo (in MMT) 9.89 7.98 1.91 24%

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2. Financial

The total turnover of the company during the quarter under review was Rs.321.35 Cr. as comparedto Rs.270.99 Cr. in the corresponding quarter of 2008-09.(up by 19 %) . Break up as under:

(Rs. in Cr.)

Particulars Q1 -2009-10 Q1 -2008-09

Variance Q1 09-10 VsQ1 08-09

Absolute %

A. Turnover

(a) Port Income

- Marine 84.40 62.47 21.93 35%

- SPM 21.05 20.48 0.57 3%

- Container 23.22 4.20 19.02 453%

- Railway 37.74 16.94 20.80 123%

- Dry 94.79 89.15 5.64 6%

- Liquid 20.38 11.76 8.62 73%

- Deferred Infrastructure 12.49 10.67 1.82 17%

Total Port Income 294.07 215.67 78.40 36%

(b) SEZ 4.65 38.06 -33.41 -88%

(c) Construction Contract 8.05 - 8.05

(d) Other Income 14.58 17.26 -2.68 -16%Gross Turnover (a to d) 321.35 270.99 50.36 19%

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The major reason:

Increase in port income by Rs.78.40 crs

Partially off set by reduction in SEZ income by Rs.33.41 crs.

There is a total increase in port income by 36%. The increase is due to

Rs. /Cr.

Volume/ Mix variance +ve 71.44 ( up by 1.91 MMT) Price variance - +ve 6.96 Net -ve 78.40

3. EBIDTA

EBIDTA for the quarter under review for Port is at Rs. 211.00 Cr. higher by Rs.69.19 Cr. ascompared to the corresponding quarter of 2008-09 EBIDTA of Rs. 141.81 Cr.

EBIDTA for the quarter under review for the company as a whole is at Rs. 234.68 Cr. higher byRs.37.55 Cr. as compared to the corresponding quarter of 2008-09 EBIDTA of Rs.197.13 Cr.

The major reasons for increase are:

Rs.CrIncrease in Income 50.36

Increase in Operating Expenses (incl admin) 12.81

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A. Performance Review between Apr-Jun 2009 v/s Jan-Mar 2009

1. Physical

The total quantity of Cargo Handled during the quarter under review was 9.89 MMT as compared to9.51 MMT in the fourth quarter of 2008-09 (up by 4%). The major break-up of cargo is as under:

Particulars Q1 -2009-10

Q4 -2008-09

Variance Q1 09-10Vs Q4 08-09

Absolute %

No. of Vessels 590 604 -14 -2%

Cargo (in MMT)

Dry 3.63 4.07 -0.44 -10%

Liquid (incl. HPCL) 1.60 1.39 0.21 15%

Crude 2.02 1.77 0.25 14%

Container MICT 1.89 1.78 0.11 6%

Container MPSEZ 0.72 0.48 0.24 50%

RORO / STS 0.03 0.02 0.01 50%

Total Cargo (in MMT) 9.89 9.51 0.38 4%

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2. Financial

The total turnover of the company during the quarter under review was Rs.321.35 Cr. as compared

to Rs.301.40 Cr. in the fourth quarter of 2008-09 (up by 7%). Break up as under:

(Rs. in Cr.)

Particulars Q1 -2009-10 Q4 -2008-09

Variance Q1 09-10 VsQ4 08-09

Absolute %

A. Turnover

(a) Port Income

- Marine 84.40 85.57 -1.17 -1%

- SPM 21.05 22.28 -1.17 -6%

- Container 23.22 15.54 7.68 49%

- Railway 37.74 32.21 5.53 17%

- Dry 94.79 98.05 -3.26 -3%

- Liquid 20.38 21.81 -1.43 -7%

- Deferred Infrastructure 12.49 12.59 -0.10 -1%

Total Port Income 294.07 288.05 6.02 2%

(b) SEZ 4.65 (7.48) 12.13 -162%

(c) Construction Contract 8.05 3.93 -4.12 -105%

(d) Other Income 14.58 16.90 -2.32 -14%

Gross Turnover (a to d) 321.35 301.4019.95

7%

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The major reason:

Increase in port income by Rs.6.02 Cr.

Increase in SEZ income by Rs.12.13 Cr.

There is a total increase in port income by 2%. The increase is due to

Rs. /Cr.

7. Volume variance +ve 1.25 ( up by 0.38 MMT)8. Price variance - +ve 4.779. Net -ve 6.02

3. EBIDTA

EBIDTA for the quarter under review for Port is at Rs. 211.00 Cr. higher by Rs.18.00 Cr. ascompared to the fourth quarter of 2008-09 EBIDTA of Rs. 193.00 Cr.

EBIDTA for the quarter under review for the company as a whole is at Rs. 234.68 Cr. higher byRs.30.44 Cr. as compared to the fourth quarter of 2008-09 EBIDTA of Rs.204.24 Cr.

The major reasons for increase are:

Rs.Cr

Increase in Income 19.95

Decrease in Operating Expenses (incl admin) 10.49

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The decrease in Operating expenses is due to following reasons:

1. Lower donation Rs.2.76 Cr.2. Lower advertisement expenses Rs.1.87 Cr.3. Lower R&M expenses Rs.7.50 Cr.4. Lower legal and professional expenses Rs.2.18 Cr.5. Above reduction is partially offset by increase in Contract construction expense & Power &

fuel expense by Rs.1.49 Cr. & Rs.2.11 Cr respectively.

4. Interest Expenses

The interest expenses for the quarter under review for the company is at Rs.13.35 Cr. higher byRs.24.69 Cr. as compared to the fourth quarter of 2008-09. The major reasons for increase is :

Reversal of exchange variation of 1st 3 Quarters of 2008-09 of Rs.65 Cr. offset by derivativeprovision of Rs.32 Cr. as against reversal of provision for derivative contracts of Rs. 8 Cr. in Q1 Cy.

5. Depreciation:

Down by Rs.3.36 Cr.

6. Taxation :

Increase in current tax by Rs.18.79 Cr. mainly due to excess provision for earlier quarters and

previous year based on opinion. Lower deferred tax by Rs.7.50 Cr. Further no provision of FBT in the current year.

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FINDING

There are majorly two reasons where variances occur in revenue budgeting.

1. Company controllable variances.

In case of company controllable variances the unit in which variance occurred has to explain why

variance occurred to the management. If management is satisfied with the explanation, they can use

the backend support to clear the variance.

Below listed are the company controllable variances:

Change in the total volume and change in price Exchange variation. Change in the policy of debt payments. Decrease or increase in depreciation. Change in admin cost. Improper utilization. Change in power expanse. Decrease or increase in miscellaneous expenses like donation, advertisement cost, cost of

R&D, legal expenses etc.

Change in TAX amount. Additional expenses of machinery like repair & maintenance, contractual machinery. Delay in services.

All of the above variances are company controllable, they can be controlled by the proper

management, by getting updated in market survey, referring past data expanse, referring monthly

expense, by creating budget every half yearly and referring by competitors data.

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2. Non controllable variances.

The variances which are not in the control of company are known as non controllable variances.

Below listed are the non controllable variances.

Change in economic condition like change in government policy, change in market rate due

to recession and/or inflation,

Change in market condition like change in rates of fuel, change in power rates, change in

service rates, and change in tariff rates of the competitors.

Natural changes like high tide and low tide cargo could not be loaded to the ship.

These non controllable variances can be controlled up to some extend by studding and getting

updated on the resent market values, government policies. If there are major changes in market rates

then follow the past rates. And company cannot control the natural changes.