SUMMER TRAINING REPORT
ON
Budget Procedure And Analysis
Of Heinz India Pvt. Ltd. (Aligarh)
SUBMITTED IN THE PARTIAL FULLFILMENT OF THE
REQUIRMENT FOR THE AWARD OF THE DEGREE
BACHELOR OF BUSINESS ADMINISTRATION
BY
VISHAL KALRA
Roll No- 4633
(2006-2009)
GLA INSTITUTE OF PROFESSIONAL STUDIES, MATHURA (UP)
(AFFILIATED TO DR.B. R. AMBEDKAR UNIVERSITY, AGRA)
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CERTIFICATE
This is to certify that the dissertation entitled “BUDGET PROCEDURE
AND ANALYSIS OF HEINZ INDIA PVT LTD”, submitted by Mr.
VISHAL KALRA is an original and independent work done by him
under my supervision.
Place: Mathura
Date:
Name Pragalbh Sharma
Lecturer
G.L.A.Institute of Professional Studies
17th K.M. Milestone. NH#2
Mathura (U.P.) -281 406
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DECLARATION
I hereby declare that the following documented Project Report titled
“BUDGET PROCEDURE AND ANALYSIS OF HEINZ INDIA PVT
LTD. is an authentic work done by me.
The Study was undertaken as a part of the course curriculum of BBA Full
Time Program of AGRA University, MATHURA.
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ACKNOWLEDGEMENT
Survey is an excellent tool for learning and exploration. No classroom
routine can substitute which is possible while working in real situations.
Application of theoretical knowledge to practical situations is the
bonanzas of this survey.
Without a proper combination of inspection and perspiration, it’s not easy
to achieve anything. There is always a sense of gratitude, which we
express to others for the help and the needy services they render during
the different phases of our lives. I too would like to do it as I really wish
to express my gratitude toward all those who have been helpful to me
directly or indirectly during the development of this project.
First of all I wish to express my profound gratitude and sincere thanks to
my esteemed learned Director Dr. Anup Gupta, GLAIPS, Mathura who
allowed me to conduct the survey.
I would like to thank my Lecturer Mr.Pragalbh Sharma who was always
there to help and guide me when I needed help. Her perceptive criticism
kept me working to make this project more full proof. I am thankful to
her for her encouraging and valuable support. Working under her was an
extremely knowledgeable and enriching experience for me. I am very
thankful to her for all the value addition and enhancement done to me.
Vishal Kalra
BBA 6th sem
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PREFACE
For the Compulsory training required for my course i.e.
BBA (Bachelor of Business Administration). I have
selected HEINZ INDIA PRIVATE LIMITED
MANZUR GARHI, ALIGARH. HEINZ international
company is one of the American paradigms. H.J.HEINZ
Company is a well known player in FMGC category. It
stands second in the world among food product
companies next to nestle. It has been certified by ISO-
9000.
During my training I have been associated with different
areas of finance & accounts division of HEINZ INDIA
PRIVATE LIMITED & learned about how to bridge up
gap between theoretical knowledge & practical working.
Mainly I have experienced the preparation of Capital
Budget. Other than budgeting I have explored many other
areas of Finance & Accounts division.
I would like to extend my sincere thanks to the Factory
authority for allowing me for this training, Section Head
of Finance& Accounts division Mr. DEVENDRA
BANSAL(Assistant Manager -Finance)& my instructor
Mr.Pragalbh Sharma for sparing there valuable time for
this purpose.
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TABLE OF CONTENT
Title Page
Certificate
Declaration
Preface
Acknowledgement
CHAPTERS
1 HEINZ, an Introduction 9
2 History changing Glaxo to Heinz 13
3 Product Range of company 20
4 Aligarh Factory a Insight 24
5 Heinz Vision 28
6 Function of different department 32
7 Introduction to Finance 51
8 Supply Chain Management 65
9 Objective of the Study 71
10 Budget and Budgetary Control 74
11 Analysis of Budget Variance 90
12 Capital budget at Heinz 96
Conclusion 104
Suggestions and Recommendations 106
Bibliography 108
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INTRODUCTION TO HEINZ INTERNATIONAL
7
HEINZ international company is one of the American paradigms. It
began shortly after the civil war was in a family garden near
Pittsburgh Pennsylvania. In the year 1869, its founder HENRY JOHN
HEINZ was a pioneer in food processing and product marketing. He
was a remarkable man, an energetic entrepreneurial boy from a
pastor and village near Pittsburgh, who was not only a business
genius, but also a man of high moral, principles and personal
rectitude, set a new standard for an entire world.
H.J.HEINZ Company is a well known player in FMGC category. It
stands second in the world among food product companies next to
nestle. It has been certified by ISO-9000 the company began shortly
after the civil war in a family garden near Pittsburgh, Pennsylvania.
Its founder, HENRY JOHN HEINZ was a pioneer in a food processing
and product marketing. HEINZ is the company known as “good
place to Work” since 1869 and is still known by this name Heinz
follows “good food manufacturing practices”.
1994 was a significant year in the life of the H.J.HEINZ Company. It
marks the 125th anniversary of the company. It also marks HEINZ in
the mid 1990’s vigorous and “full of beans” both executing today’s
strategies and forgoing those that will become the foundation of
HEINZ in the 21st century the HEINZ of tomorrow.
The H.J.HEINZ Company is constantly looking backward into the
future and forward into the past. By U.S. standard, the HEINZ
company. At 125 is also one of the dwindling numbers of surviving
companies. Fewer and fewer since the takeover day of the 1980’s
to still bear the name of its founder. But by any standards, it is a
remark. Arable distinguished and successful company genuinely
beloved by the citizens of its hometown, as well as by the loyal
8
employees and customers around the global, its brand name has
increased in stature and value over the year, as has
its reputation for world class employees.
HENRY JHON was different “he treated its factory as his mother’s
spotless kitchen given importance to hygiene and cleanliness. “ He
insisted one the best ingredients and clear jars to display the purity
of HEINZ products. He also treated his employees as though they
were members of his family.
Of course, like any family, HEINZ has had its ups and downs. Its
successful and lies-successful ventures, inspired ideas lucky
accidents, missed opportunity, fiascoes and funny stories.
The HEINZ corporate office of HEINZ INDIA PVT LTD is situated at
DR. ANNIE BESANT ROAD, WORLI, MUMBAI, and MR. NELESH
PATEL
is the M.D. of this company.
Succeeding generations sustained the company and maintained its
public following throughout a period of enormous social, political
and economic upheaval, the constancy of HEINZ proved a great
comfort in time of depression and world war. A global economy is
emerging, uneven but inexorable. In the course of the 125 years,
HEINZ has grown from an American dream to a global brand. That
achievement is treatment to the universal appeal of the HEINZ ideal
of pure food and healthful, affordable nutrition. It is also a tribute
to the tenacity, inventiveness world. As a new generation of
consumer enters a widening world market place the appeal of the
HEINZ ideal remains unceasingly durable and filled with promise.
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HISTORY CHANGING NAME GLAXO TO HEINZ
10
The GLAXO INDIA LTD was incorporated in India on november,
1924 as an agency house for distributing. The well known baby
food “GLACTO” of a British co. it was recognized internationally 5
one of the leading manufactures of the research based
pharmaceuticals and food products.
In early 1990’s Glaxo was going in losses in the manufacturing of
food products all over the world. Glaxo asked to close all its food
products over the entire globe.
However, Aligarh plant was running in profits so it did not want
to close the unit and hence asked the Glaxo Headquarters at
Britain to permit her to continue the production. The headquarters
agreed on a condition to continue the food products after
changing the name. so Glaxo India Ltd Was remaining as Glaxo
Laboratories India Ltd (GLINDIA).
This change in name caused a negative effect on the sales of
pharmaceutical products so GLINDIA further enquired the
Headquarter again to allow using the old name of Glaxo India
Ltd. The permission was hence forth granted. But due to
competition in food products market Glaxo India ltd though that
as the Headquarter is not facilitating R&D programme regarding
food products so it would become difficult in the near future to
survive in the growing stiff competition.
Heinz India private ltd by 1999 has become “Deemed Public
co.” as it has crossed the average annual turnover of Rs. 10 corers
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for three consecutive years. A limit set by company’s Act, 1956
which permits a co. to omit writing the word “private” in its name.
THE NEW HEINZ
In February 1992, a worldwide growth forum attended by the
company’s top 35 managers, O’RELLY and his senior advisors
presented the two and his senior advisor presented the
improvement in the market share and profit and implement radical
change. A revolutionary idea emerged to replace the company
decentralized purchasing system with a centralize negotiation
strategy. The leveraging the company’s global strength made an
eminent financial sense it would save the company’s millions
over the next decade.
Procurement of key materials was centralized. In the
area of marketing, HEINZ began to challenge to conventional
wisdom about media spending. Tacking a more fixable and timely
approach to trade, consumer and point of purchase promotions as
well as media buys, affiliated aimed to move their marketing
dollar towards consumer promotions self-pricing. HEINZ already
enjoying $2billion business in the European community targeted
further growth.
During 1992 and 1993, O’RELLY and senior management
hammered out new reasonable and demanding goals for each
affiliate and successfully led the company out the complacency
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and mentality that inevitably accompanies two decades of
unparallel financial growth and profitability.
In October 1922, with an eye of dynamic Asia pacific
market HEINZ made its largest offshore, acquisition. Purchasing
Watties limited a min HEINZ In newzeland for $300 million. An
excellent complement to existing HEINZ operations in Australia,
japan and china, significantly strengthened its presence in this fast
growing region of world.
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HEINZ CULTURE
World’s no 2 food product company, Heinz has a conductive
environment which is not only integrates and motivates all the
employees towards achieving high standard but also makes
sufficient room for everybody’s growth. People are a value asset
as at Heinz, main emphases ate on task. Efforts are toward
satisfying the customer’s and expanding the market share. A good
blend of behavioral and skill development programmes provide
stimulus for growth and career development. Over the years
Heinz has concentrated on developing internal relationship so that
external relationships are enhanced.
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Heinz today a global player
Heinz today a global player in the food business specialized in
providing processed food products and nutritional services. Heinz
is famous in over 200 Countries. It is well balanced geographic
with above 43% of its same coming from non U.S. operations
with business and territories, has employees approximately plus
thousands of part time workers during seasonal peaks. In fruit
business brands dominance is sure co. it earns for quality.
15
PRODUCT RANGE OF HEINZ INDIA PVT. LTD.
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HEINZ is ranked as a second largest food company in the world. It
has a total 3500 products in the world market. In India it offers 5
products:
1:- Instant Energy Drink
Glucon-D (plain)
Glucon-D (orange)
Glucon-D (mango)
Glucon-D (lime-lemon)
Glucon-D is manufactured at Aligarh plant. Right now glucon-D
(Plain) and Glucon-D (Orange) is manufactured because more
demand of these two tastes.
2:- Energy Rich Health Drink
Vitamin rich under the brand name of complan is available in
following three flavors:
Natural
Chocolate
Mango
Complan is manufactured in Aligarh plant.
3:- Ghee
As a by product of milk is manufactured under the brand name of
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sampriti. It is manufactured at Aligarh plant.
4:- Prickly Heat Powder
Prickly heat powder is manufactured under the brand name of
nycil. This is available in following three fragrances:
Plain
Sandal
Lavender
Nycil is manufactured by a third party.
5:- Heinz ketchup
Recently HEINZ has come up with a new product (HEINZ
KETCHUP). Although HEINZ is primary a ketchup manufacturing
company, this is new first every ketchup produced by HEINZ for
Indian market.
Heinz ketchup is manufactured at Bangalore by a third party.
6:- complan crunch timer
Milk cream
Chocolate
These two flavors are available in these biscuits.
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ALIGARH FACTORY A BRIEF INSIGHT
HEINZ took from glaxo on 1st October 1994.
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They continue with the same brand name.
It now manufactures complan and glucon c.
Glucon-D at its Aligarh unit. Sampriti ghee being a by- product.
Third party manufactures rest nycil and biscuits.
Factory is located 10 kms away from Aligarh city at a place known
as manzoorgarhi.
Factory has an area of 41.7 acres. One-third of the area is vacant
and rest has permanent infrastructure.
Main office is situated at Annie Basant road, worli,Mumbai.
There are no interfaces from outside unions. Its has its
three manufacturing unit located at Bangalore, Ankleshwar and
Goa.
HEINZ centers from its centers, bulk suppliers and private
contractors.
HEINZ centers are locked in a radius of 125kms around Aligarh
district, Part of Bulandshear district and Mathura.
HEINZ has collected 80000-90000 tones of milk/annum costing,
around Rs.90-100 crores.
Its total milk holding capacity is 4 lakh liters.
In flush session (April - July) the milk collection is 4 lakh liters
per day.
The factory is connected both by both by roadways and railways.
It has a turnover of Rs. 468 corers.
HEINZ has only one trade union H.S.A. (Heinz Staff Association).
Zone Department
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A Administration block, MPO office, analytical lab,
godown nos. 17 officers colony, area new boundary
well.
B Engineering office, stores, workshop platforms, and
generator house, old and new boiler.
C Production departments, old lab, spray drier no.1
and no.2, factory stores.
D R.P.U.1, 2, 3 all eastern wings godown and acid
stores.
E Change and rest rooms, dispensary, fumigation
godown, guest house.
HEINZ INDIA PVT. LTD.
S.
no.
Department Skilled
staff
Attendants Clerical Others Total
21
(drivers
asst
chemical
etc)
1 V.P.Office
2 Production 17 94 111
R.P.U 16 113 129
Total 33 207 240
3 Perconnel,I.R.Canteen
Security & OHC 8 34 4 46
F.S.U 5 12 17
Total 13 46 4 63
4 Factory stores 3 9 4 16
Planning & Distribution
Total
5 Purchase andmilkcollection 31 11 2 44
M.P.O 1 1
Total 31 11 3 45
6 Quality assurance 8 5 7 20
7 Account / c.s.u 1 8 9
8 Engineering 46 13 2 61
9 Transport 7 4 11
10 Driver 15 15
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Heinz vision
Delivering high quality products.
Adhering to standards.
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Be a company with a strong and mo9tivated workforce.
Satisfying customer’s needs.
To become renounced in commercial as well as social.
Heinz Premier Values
Passion
Risk Tolerance
Excellence
Motivation
Innovation
Empowerment
Respect
Chairmen’s Four Imperatives
Drive Profitable Growth
Remove the Clutter
Squeeze out Cost
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Measure and Recognize Performance
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FUNCTIONS OF VARIOUS DEPARTMENTS IN THE
COMPANY
1. FINANCE DEPARTMENT
It is concerned with the accounts and budgets Preparation. Its
functions are:
o Fund management and budgetary control.
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o Purchases and sales account control.
o Statutory and audit compliance.
o Wages administration.
o Variance analysis and information technology.
O Revenue budgeting and sending it to the main corporate
office.
2. PRODUCTION DEPARTMENT : -Its functions are:
(A)-Processing Area
o To conduct the dairy activities effectively.
o To separate fat from milk for the preparation of ghee.
o To dry up the skimmed milk for the preparation of
Complain.
(B)- R.P.U.:- this unit is setup for the purpose of the packing
the products.
3. PERSONNEL DEPARTMENT :- its functions are :
o Selection and recruitment of employees.
o Maintaining the personnel record
o Provision of training, promotion and job rotation.
o Maintaining the record of temporary casual, contract, and
apprentice workmen.
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4. F.S.U.:- HEINZ has a wide range of products, which are
mainly the food products. The co. has F.S.U., which
mainly looks after the safe delivery of the goods to the
customer’s since the factory is located at a far away
distance from the city.
o Cleaning the production units, machines, godown and
other places in the factory.
o Pests control and infestation control.
o To provide fumigation to the raw material and packed
products.
o Maintaining temperature for different goods.
o Maintaining account for incoming and outgoing materials.
5. ENGINEERING DEPARTMENT :- its main functions are as
Follow :
o To help in the operation and maintenance of various
equipment used in production process.
o To provide effluent treatment and pollution control.
6. TRANSPORT DEPARTMENT :- it chief functions are as
follows
o To provide tankers for carrying milk from milk collection
centers.
o Provision of transportation of raw materials and finished
products to the distributor.
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o Provision of contract based conveyance facility to the
employees.
7. QUALITY ASSURANCE DEPARTMENT :- As the name
indicates quality is just not an accident, it is a collective
work of intelligent people with a team of well trained and
experienced people in quality assurance department.
Quality Policy :
Heinz India private Ltd. Is committed to :
1. procurement, development, production, and marketing of safe
clean wholesome foods of high quality, keeping
focus on needs of customer by establishing and maintaining proper
facilities necessary for controlled production consistency in a
sanitary manner, so as to ensure that customers confidence is
generated and maintained consistently.
2. Establishing and maintaining appropriate operating and monitoring
procedures necessary for control appropriate production.
Establishing and maintaining training programmed so that every
person responsible for product integrity and safeguarding quality
environments competent to carry out his responsibilities.
Its main functions are:
o Maintenance of quality assurance department and lab
equipments.
o To conduct quality assurance test of raw materials and
packing materials.
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8. MILK COLLECTION CENTER AND MILK PROCUREMENT
UNIT:-
Its main functions are:
o Collection of milk from the various collecting centers.
o To conduct milk purity test.
o To provide storage and refrigeration to the milk.
o Safe transportation of milk from milk collecting centers to
the company.
9. PURCHASE DEPARTMENT :-
Its main functions are:
o material procurement.
o Asking for quotations and their evaluation.
o Order to the suppliers and procurement of order.
10.INVENTORY DEPARTMENT
Its main functions are:
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o Ensure storage of material under hygienic conditions
and meet good food manufacturing practices
standards.
o Ensure compliance of ISO norms.
o Ensure safe unloading of stocks and no discrepancy
with ledger balance.
11: SAFETY AND SECURITY DEPARTMENT
o Every department in the company has been equipped
with fire.
o Extinguishers and first aid boxes. At the time of any
contingency, the security officers appointed for
different zones perform their responsibilities.
Their main functions are:
o Safety of employee and company’s property.
o Companies own staff is engaged for security.
o Controlling and guarding the movement of guards at
the gate.
o Security alert around the factory/boundary wall.
WELFARE
1- CANTEEN : canteen here is providing food on highly
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subsidies rates co. almost bears a loss of Rs. 20 lakes per
annum. It has different timing for launch of management staff
and workers and is situated in one building only. Companies
own staff is running canteen.
Activities are also coordinated by members of canteen it caters
approx, 500 persons daily.
2-REST ROOMS: There are four rest rooms to facilitate the
workers in the evening and night shift both.
3-SPORTS CLUB: This committee there is 14 members.
The committee coordinates the activities of sports club
members like annual sports, games, picnic tours. Annual
function of cultural programmer. V P/director is the president
of the sport club.
ASPECTS OF FINANCE
“Money is all about” goes the famous saying. This is also
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said about finance that money is a life blood of human
body in any that a company is also will be fail without
finance. It is very important that this department works
very efficiently. Thus it can be said that success of any
organization largely depends upon the optimum
utilization of funds. The main finance department of
HEINZ is in Mumbai .Aligarh factory has a finance
department which handles the daily affairs of the factory.Finance
and accounts department is the backbone of any
department.Almost all kinds of business activities directly or
indirectly, involve the acquisition and use of fund. For
example: promotion of employees in production is clearly
a responsibility of the production department but it
requires payment of wages & salaries and other benefits
and thus involve finance department. Similarly, buying a
new machine or replacing an old machine for the purpose
of productive capacity affects the flow of funds.
The account department at Aligarh factory also controls the
computer department. Coding is the soul of computer output to
avoid this problem, the new technique has been developed which
is called “coding is defined in numbers as well as in alphabets”. it
can be either in numeric value or in alphabetical only .it can also
be a combination of alphabet and numeric value.
Different companies use different type of coding structure.
The coding structure of a company is designed as per their
own convenience and the requirement of company. computer is
an electronic device and it is unable to understand the “HUMAN
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LANGUAGE”. In order to overcome this problem we use the
language, which can be understood by computer, which is called
coding.
Milk Procurement Department
Two aspects come under this department.
1:-Milk purchases
2:- Other then milk
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1:- Milk purchases
As you can understand by see the name the main activity of this
department is to collect the mild from its own centers of collect from
private dairy. The another essential requirement of Heinz is that of
purchases of milk. The main supply of milk is from the operating centers
of Heinz but if the requirement is not fulfill then milk is also taken from
the private of bulk suppliers. Although Heinz have 60 milk collective
centers in 6 distt, but now only 33 centers are operating. The supply of
milk is mainly from Aligarh, Badayun and Mathura, the major supply is
from badayun. Heinz has the storage capacity of 4 lakh liters of milk per
day during season, but this quantity get reduced during the flush season
of the off production period. Now days it is consume 90,000 liter milk per
day.
The responsibility of purchases of milk is basically on thepurchase
department. The milk procurement officer (m.p.o.) adjusts the rates of the
milk which are then approved by the director. The payment is depending
upon the fat & s.n.f. in the milk. Milk has three combinations in the milk,
which are water, fat, & s.n.f. The price is depending on fat & s.n.f. if fat
is more then 60% and remaining is s.n.f. the price is simple rate if fat is
more the 60% then pricing is increasing according to fat.
The storage and refrigeration to the milk is the responsibility of this
department, this is conduct milk purely milk test.That is collecting the
milk from its centers by safe transport of milk to the company. For this
purpose company have its 11 own trucks. Which are take the milk to the
company from centers, if it is necessary to take more trucks in the season
that is hair. Payment is made after every 3-4 days.
2:- Other then milk
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Activity of this department.
1:- purchases if raw and packing material.
2:- boiler fuel purchases.
3:- chemical purchases
4:- there are two stores
A)-factory store B)-engineer store
Whenever, production department requires raw material it
Asks to the factory stores purchase department issues
purchases order to suppliers. Account department and factory
Store/engineering stores.
Cash payment -:
The supplier delivers the goods to the factory Stores/engineering stores
and then the factory Stores/engineering stores issues G.R.N. (goods
receipts notes).
After receiving the goods, the concerned store sends the same to the user
department if the goods are raw material/packing material, the concerned
store, sends the sample of the goods to the quality assurance department
together with 4 copies of G.R.N.
SAFETY & HEALTH
Aim:-
For the purpose of providing safety and security to the company. Every
department in the company has been equipped with fire Extinguishers and
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first aid boxes. At the time of any contingency, the security officers
appointed for different zone perform there responsibilities.
1:- Its aim to make safety and health working condition to the employees
in the organization.
2:-The working condition of the organization is obeying the factory act
1948.
3:- The company is also obeying the rule of U.P state factory act 1950.
4:- watch the working condition like water facility, food facility etc.
5:- safety of employee and company’s property.
6:- company own staff is engaged for security.
7:- controlling and guarding the movement of guards at the gate.
8:- security alert around the factory hours.
Relation with finance:
1:-attendance of temporary and permanent.
2:-short of loss by reduce of accident.
3:-he sees that salary is paid double by the organization for their
overtime.
4:- job appointment make by them.
5:- how much annual leave provided by organization.
6:-how much minimum wages paid by organization
QUALITY ASSURANCE DEPARTMENT : - (Q.A)
As the name indicates quality is just not an accident, it is a
collective work of intelligent people with a team of well trained and
experienced people in quality assurance department.
Quality policy:-
37
Heinz India pvt. Ltd. Is committed to:
1:- procurement development, production, marketing of safe clean,
factory/ boundary wall area.For controlled production consistency in a
sanitary manner, so as to ensure that customer’s confidence is generated
and maintained consistently.
2:- establishing and maintaining appropriate operating and monitoring
procedures necessary for controlled production.Establishing and
maintaining appropriate training programmed so that every person
responsible for product integrity and safeguarding quality environments
competent to carry out his responsibilities.
3:- achieving high safety, occupations health and environment standards
establishing internal review procedures to ensure compliance of
applicable laws and regulation.
a)- Maintenance of quality assurance department and lab
equipment.
b) - To conduct quality assurance test of raw materials and
packing materials.
A ctivities:-
1:- Analysis of raw material finish goods and semi finish
goods.
2:- Cost of chemical, glass ware, media, Equipment machines.
3:- Assure of quality of consumer end.
4:- Outgoing & incoming of material complying.
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5:-This is responsible for quality of goods in the
organization.
6:- It is sampling of material outgoing and incoming.
7:- Require for new equipment & machinery to give the
best quality product & safely product for competitive
marketing and this requirement is completed by finance
department.
Finance department
Finance manager operation
39
Assistant Manager Finance (2)
Account officer Account officer Account officer Account officer
Section head Section head
Clerical staff Clerical head
40
INTRODUCTION TO FINANCE
Finance is the circulatory system of the economic body
of a firm. The term finance is used synonymously with
money.
In an organism composed of a number of separate
activities, each working for its own end but
41
simultaneously making a contribution to the system as a
whole, some force is necessary to bring about direction
and coordination of economic activity and facilitate its
smooth operation.
Financial management is the agent that produces this
result. Financial management is viewed as an integral part
of over all management rather than as a staff especially
concerned with the fund raising operation only.
Though all the important financial decisions are make by
the top management, the financial executive is deeply
involved in this process.
His main responsibility is to provide all the necessary
accounting information, analyses and discuss the various
alternatives and to suggest suitable solutions.
FINANCIAL FORECASTING: - it is the chief responsibility of
financial executive to make a sound financial forecast and
then to plan for achievement. He sees that the sufficient
supply of cash is available at the proper time for the smooth
flow of firms activities. He tries for an efficient flow of
firms activities. Experience financial crisis and defer its
payments.
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RAISING OF NECESSARY FUNDS :-Another main responsibility of
financial management is to supply adequate funds to the firm
for its various operations. A cost benefit analysis of various
alternative sources must be made before raising funds from
any particular source. If the company decides to raise the
needed funds by means of security issues, the finance
manager has to arrange the issue of prospects for the flotation
of issues. Where a company decides to borrow money from
financial institutions including commercial banks and specia
financial corporation, the finance manager has to negotiate
with the authorities.
ALLOCATION OF FUNDS: - In allocating the funds, consideration
must be given to the factors such as immediate requirements,
management of assets, profit prospects and overall management
plans. The finance manager has to ensure proper utilization of
cash funds by taking such steps as to help in speeding up the
cash inflows on one hand and slowing cash outflows on the
other hand.
ALLOCATING INCOME:- Income may be retained for financing
expansion of business or it may be utilized for retiring
outstanding debt or it may be distributed to the owners as
dividends as to return of capital.
DISPOSITION OF PROFIT : - The proper disposition of profit is
also an important responsibility of financial management.
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regarding the allocation of net profit after payment of takes a
typical firm may be said to have two choices:
(A)To pay dividends to the shareholders as a return upon their investment
and
(B)To retain earnings for the expansion of business. The financial
manager balances the expectations of investors and the need of retained
earnings to acquire additional assets.
Heinz India private ltd. Aligarh is the main manufacturing unit. The
stock is transferred from Aligarh factory to Varanasi, Ghaziabad and
Unnau (near Lucknow) Unnau is now known as Suklaganj, Delhi branch
of HEINZ INDIA PRIVATE LTD. Deals with the operations regarding
sales. It prepare monthly sales report regarding 3 locations (Varanasi,
Gaziabad and Suklaganj). This report is checked at Aligarh factory.
The central sales tax rules, 1975 prescribe use of various forms for the
purpose of central sales tax 1956. if the goods are send to outside U.P.
than from c is taken by the company. It is the responsibility of a/c
department to receive form c. it form is received then 4% sales
charges is taken by the company otherwise 10% is charged if
form c is not received. Form f- transfer otherwise then by sale.
44
Sources of Funds
45
CASH MANAGEMENT IN THE COMPANY
This Company follows the centralized management of cash.
Every Document relating to the payment of cash needs the
official authorization of the accounts executives.
Simplified Cash Cycle
DEBTORS
CASH INVENTORY
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1: FACTS OF CASH MANAEMENT IN THE
COMPANY:-
A.BUDGET PREPARATION: The cash budget is
prepared in the Company on the basis of sales and capital
budget. The period of cash Budget is one year. It is prepared
usually in the month of February of every financial year. This
budget is based on the actual sales up to Dec plus expected
sales in the next three months. This budget is a flexible budget
which allows the suitable modification from time to time.
These changes in the budget are due to the changes in the
inventories requirements or due to any emergency.
In addition to preparation of cash budget it also
prepares. A statement of cash requirement”. This statement is
prepared on monthly bases. Before the commencement of
every month, every department in the company presents its
expected funds requirement for the coming month after
consolidating these funds requirements pertaining to various
departments in the company. The finance department prepares
a consolidated statement of cash Requirement for a
particular month. The head office in turn sends the amount
required by the company through canara bank. The amount is
remitted to the bank twice a week. If the funds come in surplus
then the balance is adjusted in the next remittance.
47
B. F. F: The Control report is also prepared in the company
on the monthly bases which facilities in comparing the actual
development with forecast Figures. This report shows the
payments and recipients of the company during a particular
month, the actual figures are compared with the budget figures
and variance is calculated.
C.MONITORING COLLECTIONS AND
RECEIVABLES: The Company follows efficient cash
Collection policies. With regard to the collection of receivables
from the sales, it has adopted a policy of “advance receipts”.
The sales of goods are made through the carrying and
forwarding agents.
D. CONTROL OF PAYABLE: With regard to the
payment of goods received. The company makes the payments
only when they fall due.
E. CASH PAYMENTS: whenever, production department
requires raw material it asks to the factory stores/engineering
stores. The factory stores/engineering stores issues purchase
requisition to the purchase department. The purchase
department issues purchase requisition to the purchase
department. The purchase department issues purchase order to
suppliers, account department and factory stores/engineering
stores.
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The supplier delivers the goods to the factory
Stores/engineering stores and then the factory
Stores/engineering stores issues G.R.N
(Goods Receipts Notes). After receiving the goods, the
concerned stores and sends the same to the users department if
the goods are raw material/packing material, the concerned
store, sends the sample of the goods to the quality assurance
department together
with 4 copies of G.R.N, retaining one copy of G.R.N with
itself. After receiving the samples together with all 4 copies of
G.R.N, the quality assurance test the quality of goods, G.R.N
becomes G.A.N (Goods Acceptance Notes). There after Q.A.D
sends one copy of G.A.N to accounts department, after
receiving the involve from suppliers, G.A.N from the quality
assurance department. The accounts department tallies the
amount, rates and volume of goods supplied and then makes
the final payment to the suppliers.
F. INVESTMENT OF THE SURPLUS CASH:
Surplus cash for the company is a rate term but,
whenever any surplus cash remains with the company,
it is adjusted in the next remittance.
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RATIO ANALYSIS
Ratio analysis is a widely used tool of financial analysis. It is
defined as the systematic use of ratio to interpret the financial
statement so that the strength and weakness of a company as
well as its historical and current financial condition can be
determined the term ratio refers to the numerical quantitative
relationship between the two variables.
The relationship can be express as:
• Percentage.
• Fraction.
• Propionate.
The alternative methods of expressing items which are
relative of each other are, for purpose of financial
analysis, referred as ratio analysis. Financial ratios have
been classified into several bases: for our purpose
following ratios are important.
CURRENT RATIO:
It is defined as: Current Assets
Current Liabilities
The current ratio measures the ability of the firm to
meet its current liabilities, apparently, the higher the
ratio the greater the sort term solvency.
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ACID TEST RATIO:
It is defined as: Quick Assets
Current Liabilities
The acids test ratio is a fairly measures of liquidity. It is based
on those current assets which are highly liquid.
INVENTORY TURNOVER:
It measures how fast the inventory is moving through the firm
and generating sales.
It is defined as: Cost of goods sold
Average Inventory
ACCOUNTS RECEIVBLE TURNOVER:
This ratio shows how many times accounts receivable turnover
during the year.
It is defined as: Net credit sales
Average Account Receivable
AVERAGE COLLECTION PERIOD:
The average collection period shows, the number of days worth
of credit sales that is locked in debtors.
It is defined as:
Average collection period: 365
Accounts receivable turnover
This ratio may be compared with the firm’s credit terms to
judge the efficiency of credit management.
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52
CHAPTER
8
53
SUPPLY CHAIN MANAGEMENT
A Supply chain consists of all parties involved,
directly or indirectly, in fulfilling a customer request. It
not only includes manufactures and suppliers, but also
transporters, warehouses, retailers and customers
themselves.
Whereas marketing channels connect the marketer to
the target buyers, the supply chain descries a longer
channel stretching from raw material to components to
final products that are carried to final buyers. The
supply chain represents a value delivery system.
Each company captures only a certain percentage of the
total value generated by the supply chain. When a
company acquires competitors or moves upstream or
downstream, its aim is to capture a higher percentage
of supply chain value.
A Value network is a system of partnerships and
alliances that a firm creates to source, augment, and
deliver its offerings.
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Marketers, for their part, have traditionally focused on
the side of the value network that looks forward toward
the customer. Hopefully, they will increasingly
participate in and influence their companies, upstream
activities and become network managers, not only
product and customer managers. Most producers do not
sell their goods directly to the final users; between
them stands an asset of intermediaries performing a
variety of functions. These intermediaries constitute a
Marketing channel (Trade Channels or Distribution
Channel).
Some intermediaries- such as wholesalers and retailers-
buy, take title to, and resell the merchandise; they are
called merchants. Others – brokers, manufacturers,
representatives, and sales agents – search for customers
and negotiate on the producer’s behalf but do not take
title to the goods; they are called agents. Still others –
transportation companies, independent warehouses,
banks, advertising agencies – assist in the distribution
process but neither takes title to goods nor negotiates
purchases or sales; they are called facilitators.
Marketing channels are sets of interdependent
organizations involved in the process of making a
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product or service available for use or consumption.
Marketing channel decisions are among the most
critical decisions facing management. The channels
chosen intimately affect all the other marketing
decisions. The company’s pricing depends on whether
it uses mass merchandisers or high quality boutiques.
The firm’s sales force and advertising decisions depend
on how much training and motivation dealers need. The
company decisions involve relatively long term
commitments to other firms.
A distribution system is a key external resource.
Normally it takes years to build, and it is not easily
changed.
It ranks in importance with key internal resources such
as manufacturing research, engineering, and field sales
personnel and facilities. It represents a significant
corporate commitment to large number of independents
companies whose business is distribution and to the
particular markets they serve. It represents, as well, a
commitment to as set of policies and practices that
constitute the basic fabric on which is woven and
extensive set of long term relationships.
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57
Supply Chain for Heinz
Factory
C&FA’S (DEPOTS)
Billing Distributors
Retailers
Consumers
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CHAPTER
9
59
OBJECTIVE OF THE STUDY
1 To acquaint ourselves with the budget processes and
procedures and system of financial accounting.
2 To assess the monitoring and control system in
Heinz.
3 To gain awareness about the budget allocation and
feasibility study.
4 To evaluate the operations of the financial planning
and
monitoring section in the corporation.
5 To assess the effectiveness of the budgeting system
in
the corporation.
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RESEARCH METHODOLOGY
The methodology employed for the study of project
“Budget Procedure & Analysis” is through the
collection of primary and secondary data. Primary data
is obtained through the observation, interviews and
discussion with the officers of the Heinz.
Secondary data is derived from the published and
unpublished sources, like company publications such as
annual reports, annual plan, magazines and
publications from Department Of Heinz Ltd.
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CHAPTER
10
62
"BUDGET", WHAT IT MEANS:
Budget may simply be stated a plan expressed in
money. It is prepared and approved prior to the budget
period and may show income, expenditure & the
capital to be employed. It may be drawn up showing
incremental effects on former budgeted or actual
figures or be compiled from zero bases i.e. starting
from scratch.
In other words, it is a quantitative expression of a plan
of action relating to the forthcoming budget period. It
represents a written operational plan of management
for the budget period. It is always expressed in terms of
money and quantity. It is the policy to be followed
during the budget period.
From the above explanation, it may be noticed that the
following are the essential features that a budget has:
Financial & quantitative statement of the plan of
action.
Laid down prior to the budget period.
Based on Management policy &
Prepared for specified objectives.
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WHAT THE BUDGETARY CONTROL
IS?
Budgetary control implies the use of comprehensive
system of budgeting to aid management in carrying out
its functions like planning, co-ordination & control, etc.
However budgeting is a way of managing business &
industry. It emphasizes that management should
anticipate problems & difficulties. Advance decision
should be taken for the course of activities during the
forthcoming budget period.
Thus budgetary control denotes the establishment
of budgets relating to responsibilities of executives for
the achievement of predetermined target, & the
continuous comparison of actual with the budgeted
results to ensure achievement of the target, identify the
variance, & to provide a basis for revision if required.
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WHY ‘BUDGETORY CONTROL’ IS REQUIRED
Budgets keep different sections of the organization
informed about the contribution of different sub-units
in the attainment of overall organizational objectives.
A comprehensive system of budgeting helps to co-
ordinate different functional budgets.
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Budgeting is an important planning device.
Planning is an important managerial function.
Planningaimportanmanagerffunfffuncfunction
Manager to plan ahead is driven by budget
preparation.
Budget plays an important role to motivate the
employees, depends purely on how the employees have
been mentally & physically involved with the process
of budgeting.
Since a lot of 'cuts' and 'adjustments' are to be made
to make functional budgets fit in the organizational
objectives. Thus the in built mechanism of the routine
of budgetary control is bound to precipitate to an
operational control.
It concerns all functions of an organization and
serves as a guide to executives & departmental heads,
responsible for various departmental objectives.
HOW ‘BUDGETARY CONTROL’ IS
OPERATED:
Broad objectives of organization are specified before
the plan is stated, which involves expressing the
mission, vision & ethical tone of organization.
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An organization is divided into different budget
centers linked with the responsibility of concerned
departmental head.
An organizational chart is prepared defining
functional responsibilities of executives responsible for
accomplishment of organizational goal. Authority at
the different level is delegated.
Budgets for different budget centers are prepared in a
standard format as per predetermined guidelines.
Normally a budget committee is constituted having
representation of Chief Executive & Heads of all
budget centers. The departmental heads of budget
centers form a group that passes judgment over the
issue presented to Budget Committee for deliberation.
The above is followed by the preparation of budget
manual, which contains standardized forms, which
become input resources for compilation of budgets.
Budget period is determined for which a budget is
prepared and used, then may be sub-divided into
control periods. Whether a budget is to be a long term
budget or a short term budget, is to be decided
primarily with reference to the following to factors:
(a) Type of business.
(b) Amount of control required.
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A budget period should normally coincide with the
financial accounting period in order to compare actual
results with the budget estimates.
Budgets are kept under periodic review and revised, if
necessary, to minimize the variances.
CLASSIFICATION OF BUDGET:
FIXED BUDGET :
A budget, which remains unaltered during the budget
period, is called fixed budget. It is prepared for a
particular activity level and it does not change with the
actual activity level being higher or lower than
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budgeted activity level. This budget does not highlight
the ‘activity variance’.
FLEXIBLE BUDGET:
A flexible budget, which by recognizing different cost
behavior patterns, is designed to change as volume of
output changes. It is also termed as Variable or Sliding
Scale budget. It provides a logical comparison of
budget allowance with actual cost. When flexible
budget is prepared, actual cost at actual activity level is
compared with budgeted cost at actual activity level. It
helps both in profit planning and operating cost control.
Therefore, in-depth cost analysis and cost identification
is required for preparation of flexible budget. Actually
a flexible budget constitutes a series of fixed budgets,
i.e., one fixed budget for each level of activity.
BASIC BUDGETS:
These budgets are made for a long period of time and
remain unaltered due to small reasons. Like, revision of
pay scales or changes in price of material will not lead
to changes in these budgets.
CURRENT BUDGETS :
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These budgets are established for use over a short
period of time and are related to current conditions and
dominantly highlight operating variances.
CAPITAL EXPENDITURE BUDGET:
It is a plan for proposed capital outlays. Hence these
are long-term budgets. Large risk & uncertainties are
associated with capital investment decisions.
WHY WE GO FOR ‘CAPITAL EXPENDITURE
BUDGET’:
(a) To evaluate capital expenditure proposals.
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(b) To establish priorities in the proposed plan.
(c) To control capital expenditure.
(d) To appraise the profitability performance
projects.
HOW WE GO FOR ‘CAPITAL
EXPENDITURE BUDGET’:
Proposal for capital expenditure may be initiated by
anyone from operating level to top level of
management. The concerned department head, first
appraises the request.
If the project / proposal appears to be sound and
reasonable, formal request for ‘capital appropriation’ to
top management is made.
Recommendation of Engineering Department for its
technical strength and Finance & Accounts Department
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for its financial strength plays important role for final
sanction on the proposals.
A request for ‘capital appropriation’ for the particular
project must contain:
(a) Description of the project.
(b) Reasons calling for proposed change or
addition.
(c) Estimates for cost of proposal.
(d) Estimates about life of the project.
(e) Advantages to be gained by accepting the
proposal.
(f) Disadvantages of not accepting the proposal.
(g) An idea of how the proposal can be financed.
Capital expenditure budget is coordinated with cash
budget. After ensuring that sufficient funds are either
available already or will be available when required or
can be raised as and when desired, authorization /
sanction for proposed expenditure can be granted by
the sanctioning authorities. Depending on the
availability of financial support there may be capital
rationing and according to the profitability, priority and
necessity some of the proposals may be postponed for
future.
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FUNCTIONAL BUDGETS:
A budget of income and/or expenditure applicable to a
particular function is termed as Functional Budget.
Important functional budgets are:
(a) Sales budget.
(b) Production budget
(c) Production cost budget.
(d) Material budget.
(e) Purchase budget.
(f) Labor budget.
(g) Overhead budget.
(h) Administration cost budget.
(I) Research & development budget.
(j) Capital expenditure budget.
(k) Selling & Distribution cost budget
(l) Cash budget.
OPERATING BUDGET:
Operating budget is a budget for a given level of
operation during a given period of time based on which
projected profit and loss statement is prepared.
SUMMARY BUDGET:
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A summary budget summarizes all functional budgets
that results the budgeted profit & loss account & the
budgeted balance sheet.
MASTER BUDGET:
Master budget is the summary budget, which has been
formally accepted by top management after proper
review & re-adjustment. It is an integrated form of all
functional budgets bearing approval of top
management. It is a complete financial presentation of
all operating plans of the company for the budget
period.
Master budget is the best media of understanding the
company’s microeconomics relating to the forth-
coming budget period. Master budget represents the
final product of activities relating to budget
preparation.
ZERO BASE BUDGETING:
A method of budgeting whereby all activities are re-
evaluated each time, whenever a budget is prepared.. It
has gained worldwide eminence after Peter Pyhr used it
in Texas Instruments Inc., a U.S. based computer &
electronic manufacturer. In zero-base budgeting no
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reference is made to previous level of expenditure. A
convincing case study is made for each decision unit to
justify the budget allotment for that unit during that
period.
Thus it is a technique, by which manager of each
decision unit is to justify his entire budget request in
complete detail with a zero-base.
CASH BUDGET :
This is also referred as ways & means budget.
It is a forecast of cash flows. Preparation of cash
budget is based primarily on following information.
(a) Detailed estimates of cash disbursements.
(b) Time lag induced by credit transactions &
(c) Time lag in items of revenue & expenditure.
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WHY WE GO FOR CASH BUDGET:
(a) To ensure whether sufficient cash is available
for revenue & capital expenditure.
(b) To show when & how much additional finance
is needed.
(c) To show when surplus funds are available in
business & its deployment.
(d) To plan the cash position in such a way that
maximum utilization can be planned.
Keeping company’s liquidity position sufficiently
sound, to meet its daily obligation is the main object of
preparing these budgets. Three ways of preparing cash
budget are as follows-
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(a) Receipt & payment method.
(b) Adjusted profit & loss account method.
(c) Balance sheet method.
CHAPTER
11
77
ANALYSIS OF BUDGET VARIANCE
A comparison of actual result with budgeted results is
basic need behind Budgeting. All the factors with
negative variance must attract special attention in
evaluating & investigating the variances to determine
the underlying causes for the same.
At the time of variance analysis, facts need to be
considered are:
(a) Analysis should not be selective, both
favorable & adverse variation should be investigated.
(b) It should be insured that variation is not due to
reporting or clerical error.
(c) It should be noted whether variation was
due to special managerial decision in order to improve
efficiency or meet certain exigencies.
(d) Whether variance is controllable or
uncontrollable.
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(e) The maximum attention should be focused
towards the variation for which precise underlying
causes are not known.
BUDGET FOLLOW-UP:
The final phase of Budgeting is budget follow-
up. It is the action taken up to see that budgets are
properly used & focused towards achievement of the
required target.
TYPES OF BUDGET:
There may be different kinds of Budget
depending on the different specified objectives. As far
as NPCIL is concerned mainly two types of Budget are
being prepared: -
(1) CAPITAL BUDGET:
It is a plan for proposed outlay on fixed assets like
Land, Building, Plant & Machinery, and Furniture &
Fixture & Vehicles. It represents the expected
expenditure on fixed assets during the budget period.
(2) REVENUE BUDGET:
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Revenue Budget is the estimated profit & loss account
for the budget period. It is a plan for all expected
income & expenditure of revenue nature directed
towards attainment of any specified objective.
IDENTIFICATION OF CAPITAL &
REVENUE:
Broadly all the commercial transaction including
expenditure, income, payment, receipts, profit & loss
can be classified in two heads:
1. Capital items
2. Revenue items
As far as our day today working is concerned our
emphasis is on proper distinction between capital &
revenue expenses.
Following rules may serve as a guideline in this regard:
Capital Expenditure:
It consists of expenditure the benefits of which is not
fully Consumed in one period but spread over in
periods. Any expenditure will be termed as capital
expenditure if
(a) Benefits of the expenditure are spread over years.
(b) Assets acquired for the purpose of earning & not for
resale.
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(c) Improving & extending fixed assets.
(d) Increasing the earning capacity of the business.
(e) Increasing the useful life of ting assets.
(f) Reducing working expenses of the business.
(g) Raising capital for the business.
(h) Incidental expenses incurred for the purpose of
acquiring any fixed assets.
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Revenue Expenditure:
It consists of expenses incurred in one period of
account, the full benefits of which are consumed in that
period. Any expenditure will be termed as revenue
expenditure if:
(a) Assets have been acquired for resale with profit
motive.
(b) Expenditure is made in saleable goods with profit
motive.
(c) Expenditure is made for maintaining fixed assets in
a
good working order.
(d) Replacements of any part of fixed assets due to
wear
& tear.
(e) Meeting the day today expenses of carrying on
business.
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Revenue expenditure treated as Capital
expenditure:
Any expenditure of revenue nature becomes capital
expenditure if the same is incurred in connection with
any capital expenditure.
CHAPTER
12
83
CAPITAL BUDGET AT HEINZ
Budget Preparation :
The cash budget is prepared in the Company on the
basis of sales and capital budget. The period of cash
Budget is one year. It is prepared usually in the month
of February of every financial year. This budget is
based on the actual sales up to Dec plus expected sales
in the next three months. This budget is a flexible
budget which allows the suitable modification from
time to time. These changes in the budget are due to the
changes in the inventories
requirements or due to any emergency.
In addition to preparation of cash budget it also
prepares.” A statement of cash requirement”. This
statement is prepared on monthly bases. Before the
commencement of every month, every department in
the company presents its expected funds requirement
for the coming month after consolidating these funds
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requirements pertaining to various departments in the
company.
The finance department prepares a consolidated
statement of cashRequirement for a particular month.
This consolidated statement is sent to the Mumbai head
office: the head office in turn sends the amount
required by the company through canara bank. The
amount is remitted to the bank twice a week. If the
funds come in surplus then the balance is adjusted in
the next remittance.
Steps involved:
While preparing RE & BE for the budget period
following
Steps should be taken:
(1) Critical review of the completed items involved in
the previous year budget.
(2) Delete the fully completed items.
(3) Up-date the ongoing items, to reach at anticipated
completion cost.
(4) Add the new requirement in the format to be
submitted to Budget department i.e. planning cell.
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FORMATS DEVISED FOR CAPITAL
BUDGET PREPARATION:
(1) For projects-
(a) Capital budget input pro-forma.
(b) Item lists of office equipments & overhead
expenditure.
(c) Financial sanctions pro-forma.
Financial sanction:
(a) For small value items up to lacs financial
planning & monetary section (FPMS) will seek the
financial sanction from the board along with the
Capital Budget.
(b) For the value item above lacs, financial
sanction is to be got separately.
Guidelines to be followed:
(1) Use the standard format developed for Budget
proposal.
(2) In case of voluminous data use Excel with the
same database structure & provide soft copy with the
hard copy.
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(3) Fill the format carefully & completely.
(4) Budget for spare parts procurement should be
given in revenue Budget irrespective of the value.
(5) Reasons for variation between BE & RE is to
be specified if variation is for more than 25 lacs.
(6) For the items above 1 lacs budget provision is
to be made individual:
(a) Purchase order (PO) / indent wise.
(b) Work order (WO) / Technical Sanction wise.
(7) All small value items below RS.1 lacs can be
proposed in consolidated manner under the head
“Small Value Items”.
(8) Proper Universal Standard Index (USI) no.
Account Code in case of station should be used in the
format.
(9) Budget for Advance Payments is to be
prepared only when it is ensured.
(10) Budget for balance payments need not be
repeated as spillover unless the amount involved is
RS.25 lacs or more.
(11) Adhere to the time limit specified in the Budget
circular to avoid late submission of final budget
to
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Head Office.
88
In the company the financial budget prepared as
segment
wise:-
Firstly Finance and operation head ask different
department to submit their Individual future expected
expenditure for next financial year.
There are 24 Different departments in the company
which give their future expected expenditure under
different Head. These different Heads are:-
Head
Workmen Costs
Management Costs
Electricity & Fuel
Depreciation
Plant Maintenance
Building Maintenance
Staff Welfare
Consumables
Vehicle Expenses
Outside Charges
Travel
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Vehicle hiring charges
Insurance
Rent
Postage & Comm.
Licenses etc.
Others
Grand Total
Action by planning cell:
If all details are not provided in the capital budget
input pro-forma Planning Cell/Financial Planning &
Management Section should reject the proposal
because the same will ensure proper utilization of
Budget proposal or will avoid under Utilization of
Budget proposal.
Budget department (Planning Cell) of the Unit
should allot unique budget control number for each
item included in the Budget before its submission to
Financial Planning & Management section (FPMS).
Original Budget control number allotted at the time
of inclusion of the item in the Budget is to be retained
till the item is completed/deleted from the budget.
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CONCLUSION
Budgeting is an effective tool for planning,
setting performance target and its achievement on any
front whether it is private business activity, social work
or govt. operation. Even an individual has to budget his
monthly expenditure in order to save a particular
amount of meeting requirement of future plan.
Due to fast changing operational and financial
environment budgeting requires the application up-to-
date rational and practical techniques. It requires the
use of simple and methodical approaches to the
problem on head for arriving at a quick solution. The
process of budgeting needs to be reviewed periodically
and changed according to the changes in situation and
needs.
The company follows techniques like zero-based
budgeting. It goes to show that there is still a room for
improvement in the budget formulation and monitoring
part, which is a bit of concern for the management. It
should be noted that the company is making constant
efforts to improve the system, in making the forecasts
more accurately and timely.
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Further, there is substantial innovation in the ranks of
the employees in the section that has helped boost the
budgeting policies and procedure over a period of time.
The organization has a very good system of accounting
and all the accounts of various sections are well
maintained here by office members. As discussed
above various vouchers and documents are prepared to
regulate the day-to-day work of the organization.
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SUGGESTIONS &
RECOMMENDATIONS
1) The periodic appraisals in the budgeting processes
and techniques with aid the system to be more effective
and efficient, by overcoming shortcomings, if any, at
the right time.
2) Sophisticated technology should be incorporated
into the budgeting exercise, by implementing budgeting
software packages which would help to establish the
relationship between budget estimates and cost
estimates in a more solid and authentic manner, and to
set specific financial targets which are realistic and
achievable.
3) Developing integrated computer software for online
budget monitoring and updating the budget database as
and when pre-commitment is entered by way of
registering indents/technical sanctions/expenditure
proposal in the budget section.
4) Budget utilization should be monitoring by way of
updating payments released against a specific budget
93
head, to avoid bottlenecks and deadlocks in the overall
budgeting system.
5) A system of fixing responsibility for the under
utilization of allocated budget will help to enhance the
overall budgeting procedure.
6) Budget is considered as a strategic financial plan,
which should be supported by devising tactical plans,
i.e. short-term financial plans, to enhance and ensure
smooth control. This will help to check and correct
deviations that may occur at different stages of
implementation.
7) Periodic reviews should be carried out in estimating
the revised estimates, and the results should be
communicated to the company, at large to bring in
transparency and credibility to the system.
94
BIBLIOGRAPHY
REFERENCES:-
1.Management Accounting Books.
(a) Bhattacharyya.
(b) Pandey.
(c) Horngren.
2.Company Records
3.Data from the past record from the company.
4.Company web Sites.
(1) www.heinzindia.com
(2) www.heinz.in.co
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