Professional Documents
Culture Documents
INTRODUCTION
motivate the staff associated, to coordinate the activities of different departments and to
control the performance of various persons operating at different levels.
Budgets may be divided into two basic classes. Capital and operating budgets.
Capital budget are directed towards proposed expenditure for new projects and often
require special financing.
The operating budgets are directed towards achieving short-term operational goals
of the organization for instance, production or profit goals in a business firm. Operating
budgets may be sub-divided into various departmental of functional budgets.
Definitions of Budget:
According to Institute of Charted Management Accountants, England
A plan
quantified in monetary term prepared and approved prior to a defined period of time
usually showing planned income to be generated and / or to be incurred during that
period and the capital to be employed to attain a given objective.
According to ICMA, England, a budget is, a financial and/or quantitative
statement, prepared and approved prior to a defined period of time, of the policy to be
pursed during the period for the purpose of attaining a given objective.
It is also defined as, a blue print of projected plan of a action of a business for a
definite period of time.
BUDGETARY CONTROL:
No system of planning can be successful without having an effective and efficient
system of control. Budgeting is closely connected with control. The exercise of control in
the organization with the help of budgets is known as budgetary control. The process of
budgetary control includes.
OBJECTIVES OF STUDY
SOURCES OF DATA:
The data of Basant Nagar, HERITAGE FOODS (INDIA) LIMITED, have been
collected mainly from secondary sources viz
Statistical records
LIMITATIONS:
Estimates are used as basis for budget plan and estimates are based on available
facts and best managerial judgment
Efforts may therefore not be made to exceed the performance beyond the
budgeted targets.
Frequent changes may be called for in budgets due to fast changing industrial
climate.
The study is the limited up to the date and information provided by Heritage
Foods India Limited and its annual reports
The budget for operation and maintenance activities will be called performance
budget operation. This, in effect means that all financial targets in the budget
will be based on performance targets in physical terms.
The current budgetary control system operation pays envisages generation and
transmission line projects as independents investment centers. It becomes
applicable to a project in the year in which it plans to commercialize its first
generation unit.
CHAPTER-II
REVIEW OF LITERATURE
INTORDUCTION TO BUDGET IN BUDGETORY CONTROL:
The management is efficient if it is able to accomplish the objectives of the enterprise It
is effective when it accomplish the objectives with minimum effort and most in
attain
long-range efficiency
and systematic
approach
in facilitate
effective
PLANNING OF BUDGETING:
The process of planning all flows of financial resources into within from an entity
during some specified future period it includes providing detailed allocation
of
budget
it is the process of evolving the final statement yet is the end product of budgeting
ESSENTIALS OF GOOD BUDGET:
1. It is prepared prior to a defined period of time
2. It is prepared for the definite future period
3. The policy to followed to attain the given objectivities must be laid before the
budget.
4. It is monetary and/or quantitative statements of the policy
In the words of J.A.scolt budgetary control is the system of management control and
accounting in which all operations are forecast so as possible planned ahead and
actual results compared with the forecast and the planned ones
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objective can be met only if there is proper communication and coordination amongst
different organization thus the objectivities can be stated as:
1. COORDINATION:
Coordination is a managerial function under which all factors of production and
all departmental activities are departmental are balanced and integrated to achieve the
objectivities of the organization budgeting provides the basis for organization
objectivities can be realized executives are forced to think of the relationship
between their
biases against other departments it also helps to identify weakness in the organization
structure.
2. COMMUNICATION:
All people in the organization
polices and
performances of the organizations they must have a clear understanding of their part in
the organization
budgeting process.
can be
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comprises
the departmental heads of various departments All the functional heads are entrusted
with the responsibility if ensuring proper
departmental budgets.
The chief executive is the overall in the charge of budgetary
system
he
constitutes a budget committee for preparing realistic budgets A budget officer is the
convener
of the budget
committee
who co-ordinates
2. BUDGET OFFICER:
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the budgets
of different
The chief executives appoints the budget officer such budget officer also called as
Budget controller or budget Director thus rank should be equal to other functional
managers.
The Budget officer does not have the direct responsibility of preparing the
budgets the various functional managers prepare the budgets his role is that of a
supervisor the budget officer
activity by
BUDGET COMMITTEE:
A budget committee is formed to assist the budget officer. The heads all the
important departments are made members of this committee. The committee is
responsible for preparation and execution of budgets. The chambers of this committee put
up the case of their respective departments to help the committee to take collective
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decisions if necessary. The budget committees responsible for reviewing the budgets
prepared by various functional heads coordinate all the budgets and approve the final
budgets. The budget officer acts as a coordinate of this committee all the functional heads
are entrusted with the responsibility of ensuring proper implementation of their respective
final departmental budgets.
BUDGETS CENTERS:
A budget center is the part of the organization for which the budget is prepared. A
budget creator may be a department section of department or any other part of department
ideally, the head of every center should be a member of the budget committee. However
it must be ensured that each budget center at least has an indirect representation in the
budget committee.
The establishment of budget centers is essential for covering all parts of the organization
becomes easy when different centers are established the budget centers are also
necessary for cost control purpose.
BUDGET MANUAL:
A budget manual is a document that spells out duties and responsible the various
executives conquered with it specifies among various functional areas A budget manual
covers the following matters.
1. A budget manual clarity defines the objectivities of budgetary control systems it
also gives the benefits and principles of this system.
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2. the duties and responsibilities of various persons dealing with preparation and
execution
manual it enables
the
management to know the persons dealing with various aspects to budgets and
provides clarity on their duties and responsibilities it gives the information
about the sanctioning authorities of various budgets the financial powers of
sanctioning authorities of various budgets the financial powers of different
manages are given in the manual for enabling the spending amount on various
expenses
3. A dropper table for budgets including the sending of performance reports is drawn
so that every work starts in the and a systematic control is exercised.
4. the specimen forms and number of copies to be lased fro ore oaring budget
reports is also stated budget centers involved should be clearly stated.
5. the length of various budget periods and control points is clearly given
6. The problem follow all in the centre system clearly stated.
7. A method of accounting to be used for various expenditures is also stated in the
manual.
8.
A budget manual helps the documentation the role of every employee his duties
of undertaking
BUDGET PERIOD:
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A budget period is the length of time for which a budget is prepared upon a number of
factors the choice of a budget period depends upon the following considerations the type
of budget (long\short).
The nature of demand for the products
The timing for the availability of the finance
The construction situation of the cycles
All the above mentioned factors are taken into account while fixing the period of budgets
In this budgeting process the financial decision on the budgets
The financial manager usually responsible for organizing this budget he must
perform the following functions.
To decide the general polices and guidelines
To offer technical advice.
To suggest changes.
To receive and review individual budget estimates.
To reconcile divergent with or without revisions.
To coordinate budgeting activities.
To approve budgets with or without revisions.
To scrutinize control reports later on
To scrutinize to budget reports later on.
To disseminate these guidelines.
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After finalizing the budget proposal the budget committee subjects the final budget to the
Board of Directories or Budget Director for approval.
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2. CLARIFYING OBJECTIVES.
The budgets are used to realize objectives of the business. The objectives must be clearly
spelt out so that budgets are properly prepared. In the sense of clear goals, the budgets
will also be unrealistic.
5. BUDGET EDUCATION.
The employees should be educated about the benefits of budgeting system the
should be the benefits of budgeting system they should be educate about their roles in the
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success of this system. Budgetary control may not be taken only as a control device by
the employees but it should be used as a tool to improve their efficiency.
6. FLEXIBILITY.
Flexibility in budgets is required to make them suitable under changed
circumstances. Budgets are prepared for the future, which is always uncertain, even
though budgets are prepared by considering the future possibilities but still some
adjustments. Flexible makes the budgets more appropriate and realistic.
7. MOTIVATION
Budgets are implemented by human beings. Their successful implementation will
depend upon the interest shown by the employees. All persons should be motivated to
improve their working so that budgeting is successful. A proper system of motivation be
introduced for making is system a success.
8. TYPES OF BUDGETS.
LONG TERM BUDGETS:
The long-term budgets are the budgets prepared for a long period of five to years.
They are concerned with planning the operations of a firm over a considerably long
period of time. The financial Controller exclusively for top management usually
prepares long-term budgets. These budgets are useful in terms of physical units (i.e...
quantities) or percentages, the accurate values may be difficult to forecast over such long
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period. Initial expenditure, research and development budgets, etc, are examples longterm budgets.
CURRENT BUDGETS.
A current budget is a budget, which is established for use over a short period of
time and is related to current conditions. Thus current budgets are essentially short term
budgets adjusted to current (i.e., present or prevailing) conditions or circumstances. They
are prepared, for a very short period. Say, a quarter or a month. They relate to current
activities of the budgets.
INTERIM BUDGETS:
Interim budgets are budgets, which are prepared in between two budgets periods.
These budgets may get integrated with the budgets of the following period.
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1) OPERATING BUDETS.
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Sales Budgets
ii)
Purchase Budget
iii)
iv)
v)
vi)
vii)
A) Programmed Budget
B) Responsibility Budget
A) PROGRAMME BUDGET
It Consists of expected revenues and costs of various products or projects that are termed
as the major programmers of the firm, Such a budget can be prepared for each product
line or project showing revenues, Cost and the relative profitability of the various in
locating areas where efforts may be required to reduce COST5 ad increase revenues.
They are so useful in determining imbalances and inadequacies in programmers so at
corrective action may be taken in future.
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Responsibility Budgets:
Here the operating of a firm is constructed in terms of responsibility areas. Such a budget
shows the plan in terms of persons for achieving them. It is used by the management as a
control thus used by the management as a control device to evaluate the of executives
who are in charge of various cost centers. Their is compared to the targets (Budgets), set
for them and proper taken for adverse results.
II.
Profit center
III.
Investment center
2) FINANCIAL BUDGETS
Financial budgets are concerned with cash receipts and payments, working
capital, financial position and results of business. The commonly used financial budgets
include Cash budget, Capital budget, and Income statement budget, Statement of earnings
budget, Budgeted balance sheet or position statement.
3) MASTER BUDGET
The Master budget is the summary budget incorporating its functional budgets.
All the operational and financial budgets are integrated into the Master budget. The
budget officer for the benefits of the top-level management prepares this budget. This
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situations. In zero based budgeting a manager is to justify why he wants to spend. The
performance of spending on various activities will depend upon their justification and
priority for spending will have to be that an activity is essential and the amounts asked for
are really reasonable taking into account the volume of activity.
The budgeting process is used in the performance budgeting for the construction
of phase which includes pre commissioning activities. Besides meeting the essential
requirements of managerial control. The budgeting exercise also covers the long term
capital budgeting, which is presented in the form of annual plan.
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To bring about effective co-ordinate of all activities of the organization and To gear
up service divisions to meet effectively the requirements of project.
BUDGET HEADS:
For uniform accounting, it is essential that costs are collected for each of the
factory though this may involve splitting up of payments against contracts which embrace
more than one system. Allocation of the cost as system wise affords a sound basis for cost
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accounting, inter-firm comparisons and provides valuable inputs to the data bank. Budget
provisions are related to project estimates and monitoring of actual expenditure where as
control variables for part control and instrumentation system.
Factory piping which includes pipelines, for ash water mains, compressed air
system and civil works piping. Auxiliary pumps for water treatment plant and civil works
system. If there are, any contracts not covered in the budget heads provisions for such
contracts should be shown against the appropriate system by head by adding code
number.
TYPES OF BUDGETS IN HERITAGE DAIRY PRODUCT INDUSTRIES
LIMITED:
According to the nature expenditure budget are classified under:
Direct capital outlay on works
Technical consultancy
incidental construction during construction
Employee cost
Other establishment expenses:
Training and recruitment
Preliminary expenses
misc.brought-out assets
cash budget
Township budget
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EXPENDITURE
DURING
CONSTRUCTION
PERSONEL
PAYMENT:
These comprises of salary, wages, allowance, contribution of PF and other funds
and other expenses such as LIC, medical reimbursement, canteen subsidy etc. any
provision of areas of salary/D.A.
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communication expenses, advertisement for tenders etc., are major items in the category.
TRAINING
RECRUITMENT
&
OTHER
DEFFEREDREVENUE
EXPENDITURE:
The first part of the budget consists of expenses for training executives, and Non
executive trainees, rent for training halls and expenses for management development
courses. The second part consists of expenses for recruitment such as advertisement for
recruitment, interview expenses, T.A. candidate etc. the third part combines preliminary
expenses including registration fees and research ad development expenses.
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review should be examined by project review team [PRT], who should record variations
for any variations and proposed for expending works in the minutes of the meetings
reasons for any variations in the case of budget heads exceeding 10% of the budget
estimates revised estimates or whichever is Rs.5 lakhs should be analyzed and report
upon.
QUTERLY REVIEW:
PRT should conduct a quarterly budget review with a view to projecting
anticipated expenditure during the year against approved budget estimates/revised
estimates. As time is essence of such review, only a quick review of anticipated
expenditure for individual budget heads involving provisions exceeding Rs.50 lakhs in
each case should be made and reported in minutes to PRT. For this purpose, project
budget should furnish all the relevant data to project manager [project] and planning and
system by the 10th,of the month following the quarter project budget committee should
review the actual expenditure and assess anticipated
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To provide data regarding operational norms and cost for the purpose of
formulating tariff.
to provide data basis for assessment of working capital requirements
To control the working capital particularly book debts spares and other
items inventory.
To improve profitability and internal recourses generation.
The budget for operation and maintenance activities will be called performance
budget operation.
This, in effect, means that all financial targets in the budget will be based on performance
targets in physical terms.
The current budgetary control system operation pays envisages generation and
transmission line projects as independents investment canters. It becomes applicable to a
project in the year in which it plans to commercialize its first generation unit. How ever,
the budget infer expenses from the date of synchronization to the date of commercial
generation is to be taken case of in the capital budget of the respective project similarly in
the case of transmission line projects the system becomes applicable from the year in
which it plans to commissions its first line along with substation or the date commercial
generation of the first unit of generative project with which this line is associated, which
ever is later. For subsequent lines, the O&M will be prepared from the cute generation of
energisation.
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The system investigates the preparation of operation and maintenance budget for
each of the cost canters as per the requirements of coatings systems.
The performance budget operation will consists of following budgets along with
the supporting schedules:
1. Budget balance sheet.
2. Budget profit and loss account.
3. Revenue budget.
In addition, separate budgets for revenue activities other than operation for
research and development consultancy contracts etc.
The expenses respect of developmental expenditure for improvements additions
replay DAIRY PRODUCT, renewals, balancing facilities etc. arc of capital nature and
will be budgeted for in the construction budget of budgetary control system-construction
pairs.
To facilitate management control the system also investigates, phasing of this
budgets into monthly targets. The actual performance then will be reasons for variation s
will be analyzed and established for taking corrective remedial actions.
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INITIAL PROPOSAL:
In the initial proposal the project is required to indicate yearly targets. In the
addition to furnishing basic information like Pasteurization and commercial generation
dates.
Constraint and coal operation at less than the designed specification calorific value
of raw material and milk, material consumptions. In physical terms for items whose
consumption value in Rs.5 lakhs or more planned shutdown for a maintenance and
overhauling and norms for serious operating parameters provided for designs
specifications and in the tariff agreements to the corporate budget committee.
In the initial proposals is planned to be submitted after considering else factors and
keeping in view the perspective plan of the organization, as well as norms for various
operating parameters. These targets and terms are then communicated to all stations and
transmissions line offices of the last week of July to be used for formulating detailed
budget in the final proposal
FINAL PROPOSAL:
Budgeted balance sheet. Budgeted profit and loss account and budgets in the form of
cash budget along with the final proposal will consist of detailed supporting schedules for
each of the investment centre/cost centre. This final proposal needs to be submitted to
corporate centre with in three weeks of receiving approval for initial proposal.
The final proposal, after approval by board, will become the basis of monitoring
performance for cost centers and investment centers.
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The frequency and extent review and monitoring will be done is under:
1. The monitoring of actual performance against budgeted target for investment
center/profit center on monthly basis and for cost centers on quarterly for
remedial/corrective action.
2. The review of performance budget on quarterly basis to assess the anticipated
profitability.
The first step in the preparation of performance budget, O&M is formulation of
maintenance and overhauling schedules for boiler and TO with generation, then
considering the grid demand, the availability or inputs and factory problems, if any. The
utilization of capacity will be worked out on month-month basis for the budget period the
gross generation targets can be worked and accordingly.
NET GENERATION:
The sales value will be determined from quantum of net generation
[i.e., grass generation aux. consumption].
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department this will be valued at cost net generation to arrive at the sales values for owns
consumption.
CHEMICAL CONSUMPTION:
The chemicals are used by many cost centers by many cost centers for treatment of
water. The consumption of chemicals will be co-related with volume of water certain
norms will have to be developed for different type of chemicals and different type of
treatment.
Based on these norms each of the cost centers will indicate
Consumptions of chemicals in quantitative as well as financial terms the most centre wise
requirement will be consolidated to arrive at total chemicals consumption to be charged
to profit and loss account.
EMPLOYEE COST:
The basis of employee cost will be the approved manpower budget effective of
respective years of budget period. The estimation of employee cost is to be done for each
grade considering mid-point as the scale as basis pay and after reading various
allowances like "D.A., H.R.A., C.C.A" project allowance etc. admissible in respective
grades. This is to be worked 49 out or each of the budget periods based on existing
strength (at the time of estimation) in each grade and additions during each quarter
(taking 70% satisfaction for additions).
The provisions of LTC medical reimbursement, PF and other welfare expenses in
previous years and taking into account polices changes, if any. the details of welfare
expenses like liveries and uniforms, safety expenses, accident compensation, games &
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sports, canteen subsidy etc. are to list out as per chart of account .the provisions for
incentive, bonus and payments of one time nature are to be shown separately based on
total employee cost for executives, supervisors and non-supervisors and total man power
in these categories, separates of cost per employee will be worked out for each of theses
categories as under.
1. Salaries and allowance
2. Contribution of PF and other funds
3. Welfare expenses
The cost centre of employee cost will be worked out based on these rates
separately for theses executives, supervisors and non-supervisors. This will again be
consolidated separately for operations, maintenance and common [service] function. The
employee cost of common functions will be appropriated between construction and O&M
budgets in ratio of capital expenditure and sales during respective years.
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estimation will be done at ach of sub cost centre wise details are required to be
mentioned.
The consumption material for repairs and maintenance will be classified into
spares, lubricant; loose tools and plants, consumables and others.
The cost centre totals separately for three activities will be added to arrive at
summary of material consumption and maintenance jobs, which will be reflected in the
profile & loss account.
The material consumption, especially of spares, can be estimated based on the
expected life of various components/spares in the installed equipment the frequency of
breakdowns in the past and the requirement for preventive Maintenance and major
overhauls. The actual life of components may be different from that indicated in the
manufacturer's specification. Therefore, it is very difficult to estimate requirements of
spares. But this estimation will become Gradually accurate as more experience is gained.
For new stations it will be advisable to collect such information from old stations that
have gained experience in this field.
Normally, maintenance of equipment through contractors should be avoided. But
in certain areas, if the expertise and in house capability or sufficient man power is not
available,
maintenance jobs can be got done through contractors. Such contracts will
need to be listed out separately .If owner supply items are covered in such contracts the
cost of theses items will be included in the material cost.
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to individual units
transmission lines separately for each of phases/stages. The total capital cost will be taken
as proposed in the performance budget-construction.
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CHAPTER-III
INDUSTRY PROFILE & COMPANY PROFILE
INDUSTRY PROFILE
India is the world's second largest producer of food next to China, and has the
potential of being the biggest with the food and agricultural sector. The total food
production in India is likely to double in the next ten years and there is an opportunity for
large investments in food and food processing technologies, skills and equipment,
especially in areas of Canning, Dairy and Food Processing, Specialty Processing,
Packaging, Frozen Food/Refrigeration and Thermo Processing. Fruits & Vegetables,
Fisheries, Milk & Milk Products, Meat & Poultry, Packaged/Convenience Foods,
Alcoholic Beverages & Soft Drinks and Grains are important sub-sectors of the food
processing industry. Health food and health food supplements is another rapidly rising
segment of this industry which is gaining vast popularity amongst the health conscious.
India is one of the worlds major food producers but accounts for less than 1.5 per
cent of international food trade. This indicates vast scope for both investors and
exporters. Food exports in 1998 stood at US $5.8 billion whereas the world total was US
$438 billion. The Indian food industries sales turnover is Rs 140,000 crore (1 crore = 10
million) annually as at the start of year 2000. The industry has the highest number of
plants approved by the US Food and Drug Administration (FDA) outside the USA.
India's food processing sector covers fruit and vegetables; meat and poultry; milk
and milk products, alcoholic beverages, fisheries, plantation, grain processing and other
consumer product groups like confectionery, chocolates and cocoa products, Soya-based
41
products, mineral water, high protein foods etc. We cover an exhaustive database of an
array of suppliers, manufacturers, exporters and importers widely dealing in sectors like
the -Food Industry, Dairy processing, Indian beverage industry etc. We also cover sectors
like dairy plants, canning, bottling plants, packaging industries, process machinery etc.
The most promising sub-sectors includes -Soft-drink bottling, Confectionery
manufacture, Fishing, aquaculture, Grain-milling and grain-based products, Meat and
poultry processing, Alcoholic beverages, Milk processing, Tomato paste, Fast-food,
Ready-to-eat breakfast cereals, Food additives, flavors etc.
Food processing
The food industry is the complex, global collective of diverse businesses that
together supply much of the food energy consumed by the world population.
Only subsistence farmers, those who survive on what they grow, can be considered
outside of the scope of the modern food industry.
Food processing is the methods and techniques used to transform raw ingredients
into food for human consumption. Food processing takes clean, harvested or slaughtered
and butchered components and uses them to produce marketable food products. There are
several different ways in which food can be produced.
One Off Production This method is used when customers make an order for
something to be made to their own specifications, for example a wedding cake. The
making of One Off Products could take days depending on how intricate the design is and
also the ability of the chef making the product.
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Batch Production This method is used when the size of the market for a product
is not clear, and where there is a range within a product line. A certain number of the
same goods will be produced to make up a batch or run, for example at Greggs Bakery
they will bake a certain number of chicken bakes. This method involves estimating the
amount of customers that will want to buy that product.
Mass production this method is used when there is a mass market for a large
number of identical products, for example, chocolate bars, ready meals and canned food.
The product passes from one stage of production to another along a production line.
Just In Time This method of production is mainly used in sandwich bars such as
Subway, it is when all the components of the product are there and the customer chooses
what they want in their product and it is made for them fresh in front of them.
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The constant and uninterrupted flow of product from distribution centers to store
locations is a critical link in food industry operations. Distribution centers run more
efficiently, throughput can be increased, costs can be lowered, and manpower better
utilized if the proper steps are taken when setting up a material handling system in a
warehouse.
The Indian food market is estimated at over US$ 182 billion, and accounts for
about two thirds of the total Indian retail market. Further, according to consultancy firm
McKinsey & Co, the retail food sector in India is likely to grow from around US$ 70
billion in 2011 to US$ 150 billion by 2025, accounting for a large chunk of the world
food industry, which would grow to US$ 400 billion from US$ 175 billion by 2025.
EXPORTS
Exports of agricultural products from India are expected to more than double to top US$
20.6 billion in the next five years, according to the commerce ministry.
According to estimates by the Agricultural and Processed Food Products Export
Development Authority (APEDA), the share of India's farm product exports in the global
trade will grow from 2 per cent now to over 5 per cent.
Exports of fresh and processed vegetables, fruits, livestock and cereals rose 10 per cent to
US$ 8.67 billion in 2011-2014.
SPICES
Despite a global slowdown, Indian spice exports are growing. India exported
470,520 tons of spices valued at US$ 11.68 billionan all-time highin 2011-2014.
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During the 2013-14, 444,250 tons valued at US$ 11.01 billion were exported. Compared
with 2013-14, exports had shown an increase of 19 per cent in rupee value and six per
cent in dollar terms.
FOOD PROCESSING
The Indian packaged processed foods industry is estimated at US$ 10.87 billion
US$ 13.05 billion, including biscuits, chocolates, ice-cream, confectionery, snacks,
cheese and butter. Growing at a healthy 14-15 per cent over the past two-three years,
major players in the sector include Britannia, Nestle, Amul, ITC Foods, Parle, Kelloggs,
GlaxoSmithKline, Wrigley and Frito-Lay, among others.
The industry received foreign direct investments (FDI) totalling US$ 143.80
million in 2011-2014against US$ 5.70 million in the previous fiscal. The cumulative
FDI received by the industry from April 2000-August 2014 stood at US$ 878.32 million.
However, Indias share in exports of processed food in global trade is only 1.5 per
cent; whereas the size of the global processed-food market is estimated at US$ 3.2 trillion
and nearly 80 per cent of agricultural products in the developed countries get processed
and packaged.
In order to further grow the food processing industry, the government has
formulated a Vision-2015 action plan under which specific targets have been set. This
includes tripling the size of the food processing industry from around US$ 70 billion to
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about US$ 210 billion, raising the level of processing of perishables from 6 per cent to 20
per cent, increasing value addition from 20 per cent to 35 per cent, and enhancing Indias
share in global food trade from 1.5 per cent to 3 per cent. This would require an
investment of US$ 20.6 billion.
According to an Ernst and Young (E&Y) presentation, the food processing
industry in India will grow 30-40 per cent as against the present 15 per cent in the next
10-years.
Prime Minister Dr Manmohan Singh on October 6, 2010 laid out a blueprint for
rapid growth in the countrys food processing sector. The Prime Minister said that this
can be achieved by simplifying the tax structure, formulating a National Food Processing
Policy and improving rural infrastructure.
Moreover, according to Union Minister for Food Processing Industries, Subodh
Kant Sahai the central government is envisaging an investment of US$ 21.50 billion in
the food processing industry over the next five years, a major chunk of which it plans to
attract from the private sector and financial institutions.
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HEALTH FOOD
Recognizing the growth potential of the branded health food sector in India, fast
moving consumer goods (FMCG) majors are foraying into this sector in a big way. As
Hindustan Lever Ltd (HUL) is test marketing its health food brand, Kissan Amaze, in
three southern states in India, Godrej Hershey Foods & Beverages Ltd (GHFBL), a joint
venture between Godrej Beverages & Foods Ltd and Hershey Company, is planning to
introduce select brands from its international portfolio in the domestic market.
DAIRY
According to Dairy India 2014 estimates, the current size of the Indian dairy
sector is US$ 62.67 billion and has been growing at a rate of 5 per cent a year. The dairy
exports in 201112 rose to US$ 210.5 million against US$ 113.57 last fiscal, whereas the
domestic dairy sector is slated to cross US$ 110 billion in revenues by 2014.
India continues to be the largest producer of milk in the world. It produced 110
million tons of milk in 2011-2014.
BEVERAGES
According to industry experts, the market for carbonated drinks in India is worth
US$ 1.5 billion while the juice and juice-based drinks market accounts for US$ 0.25
billion. Growing at a rate of 25 per cent, the fruit-drinks category is one of the fastest
growing in the beverages market. Sports and energy drinks, which currently have a low
penetration in the Indian market, have sufficient potential to grow.
47
The market for alcoholic beverages has been growing consistently. 'The Future of
Wine', a report on the state of the wine industry over 50 years, suggests that the market
for wine in India was growing at over 25 per cent per year.
MAJOR INVESTMENTS
Private investment has been one of the key drivers for growth of the Indian food
industry. The 'India Food Report 2014', reveals that the total amount of investments in the
food processing sector in the pipeline for the next three years is about US$ 23 billion.
The government has received around 40 expressions of interest (EoI) for the
setting up of 10 MFPs with an investment of US$ 514.37 million.
Reliance Industries Ltd has invested US$ 1.25 billion in a dairy project.
Geneva-based food service chain Global Franchise Architects (GFA) aims to open
250 stores around the world by MARCH 2014, of which 100 will be in India.
GOVERNMENT INITIATIVES
The new trade policy places increased focus on agro-based industries.
Food processing industries have been put in the list of priority sectors for bank
lending. The Centre has also announced a series of new initiatives which include a
48
separate policy at the state level, thrust on contract farming and making the sector
tax-free.
The government plans to open 30 mega food parks by the end of the 11th five
year plan (2011-2014).
Fruit and vegetable processing units have been completely exempted from paying
excise duty.
Automatic approval for foreign equity up to 100 per cent is permitted for most of
the processed food items.
Items like fruits and vegetables products, condensed milk, ice cream, meat
production have been completely exempted from Central Excise Duty.
Excise duty on ready to eat packaged foods and instant food mixes has been
brought down to 8 per cent from 16 per cent.
Excise duty on aerated drinks has been reduced to 16 per cent from 24 per cent.
The Ministry of Food Processing Industry would assist in the setting up of more
food processing units so that the industry could create 10 million jobs by 2015,
according to Mr Subodh Kant Sahai, Union Minister for Food Processing.
LOOKING AHEAD
According to the India Food and Drink Report Q3 2011 by research analysis firm
Research and Markets, by 2014, Indias processed food output is likely to grow by 44.2
per cent to touch US$ 90.1 billion, while packaged food sales will increase by 67.5 per
cent to reach US$ 21.7 billion. On a per capita basis, per capita packaged food spending
is expected to grow by 56.5 per cent to US$ 18.06 by 2014.
49
50
COMPANY PROFILE
About Us (Over View of the company)
The Heritage Group, founded in 1992 by Sri Nara Chandra Babu Naidu, is one of
the fastest growing Private Sector Enterprises in India, with four-business divisions viz.,
Dairy, Retail, Agri, and Bakery under its flagship Company Heritage Foods (India)
Limited (HFIL). The annual turnover of Heritage Foods crossed Rs.1096 crores in 201314.
Presently Heritages milk products have market presence in Andhra Pradesh,
Karnataka, Kerala, Tamil Nadu, Maharashtra and Orissa and its retail stores across
Bangalore, Chennai and Hyderabad. Integrated agri operations are in Chittoor and Medak
Districts and these are backbone to retail operations and the state of art Bakery division at
Uppal, Hyderabad, Telangana.
In the year 1994, HFIL went to Public Issue to raise resources, which was
oversubscribed 54 times and its shares are listed under B1 Category on BSE (Stock Code:
519552) and NSE (Stock Code: HERITGFOOD)
About the founder:
Sri Chandra Babu Naidu is one of the greatest Dynamic, Pragmatic, Progressive
and Visionary Leaders of the 21st Century. With an objective of bringing prosperity in to
the rural families through co-operative efforts, he along with his relatives, friends and
associates promoted Heritage Foods in the year 1992 taking opportunity from the
51
Industrial Policy, 1991 of the Government of India and he has been successful in his
endeavour.
At present, Heritage has market presence in all the states of South India. More
than three thousand villages and five lakh farmers are being benefited in these states. On
the other side, Heritage is serving more than 6 lakh customers needs, employing more
than 700 employees and generating indirectly employment opportunity to more than 5000
people. Beginning with a humble annual turnover of just Rs.4.38 crores in 1993-94, the
sales turnover has reached close to Rs.1096 crores during the financial year 2010-2011.
Sri Naidu held various coveted and honorable positions including Chief Minister
of Andhra Pradesh, Minister for Finance & Revenue, Minister for Archives &
Cinematography, Member of the A.P. Legislative Assembly, Director of A.P. Small
Industries Development Corporation, and Chairman of Karshaka Parishad.
Sri Naidu has won numerous awards including " Member of the World Economic
Forum's Dream Cabinet" (Time Asia ), "South Asian of the Year " (Time Asia ), "
Business Person of the Year " (Economic Times), and " IT Indian of the Millennium "
( India Today).
Sri Naidu was chosen as one of 50 leaders at the forefront of change in the year
2000 by the Business Week magazine for being an unflinching proponent of technology
and for his drive to transform the State of Andhra Pradesh .
52
53
54
and Training have been documented with detailed quality plans in each of the
departments.
Today Heritage feels that the ISO certificate is not only an epitome of achieved
targets, but also a scale to identify & reckon, what is yet to be achieved on a continuous
basis. Though, it is a beginning, Heritage has initiated the process of standardizing and
adopting similar quality systems at most of its other plants.
Commitments:
Milk Producers:
Change in life styles of rural families in terms of:
Heritage
Organizing "Rythu Sadasu" and Video programmes for educating the farmers in
dairy farming
Customers:
Employees:
56
Heritage forges ahead with a motto "add value to everything you do"
Shareholders:
Returns: Consistent Dividend Payment since Public Issue (January 1995)
Service:
Suppliers:
Doehlar: technical collaboration in Milk drinks, yogurts drinks and fruit
flavoured drinks Alfa-Laval: supplier of high-end machinery and technical support
Focusing on Tetra pack association for products package.
QUALITIES OF MANAGEMENT PRINCIPLES:
1. Customer focus to understand and meet the changing needs and expectations of
customers.
2. People involvement to promote team work and tap the potential of people.
3. Leadership to set constancy of purpose and promote quality culture trough out the
organization.
4. Process approach to assess the efficiency and effectiveness of each process.
57
6-3-541/C, Panjagutta,
Hyderabad, AP.
Phone : 040 - 23391221/222
Fax : 040 - 23318090
Email : hfil@heritagefoods.co.in
59
Cream 3.Double
Toned Milk
Slim 9.Smart
Milk
Milk
Milk
Milk Products - Fresh
2.Full Cream
1.Toned Milk Milk
Curd Cup
7.Garlic
6.Slim
Milk
10.Manjunath
d Milk
11.Ezhumalai
Milk
12.Padman
a Milk
Milk
abha Milk
6.Jeera
Curd 3.Curd
Cup
4.Fruit n Curd
Butter
Pouch
9.Cooking
Cup
10.Pasturised
5.Butter Milk
11.Cheese
Milk
12.Cheese
Butter Milk
8.Paneer
13.Cheese -
Butter
Table Butter
Chiplets
Slice
15.Milk
16.Malai
Packs
14.Doodhpeda Cake
Milk Products - Long Shelf Life
1.Ghee
Polypack
Cow
- 2.Ghee
Laddu
18.Soan
17.Sunundalu
Papidi
Alu
6.Dairy
Buffalo
Ice Cream
1.Small Cup
7.Celebration
Buffalo
Cow
Buffalo
Milk Powder
Whitener
2.Large Cup
3.Kulfi
9.Bar
4.Twin Bars
5.Sundae
11.Sundae
6.Novelties
12.Home
Cone
8.Chocobars
14.Premium
Novelties
15.Utsav
10.Juicy Bar
16.Party
Magic
Packs
13.Eco-Packs
Beverages
1.Packaged
Tubs
Packs
Packs
Drinking
2.Premium
3.Popular
Water
Tea
Tea
- Bottles
5.Flavoured
60
Tetrapack
- 6.Sweet
Lassi
8.Instant
7.Fruit Lassi
Coffee
Cleaning Aids
9.Ground
Coffee
6.Floor
1.Utensil
2.Toilet
Cleaners
Cleaners
Daily Fresh Needs
3.Solid
4.Glass/Other
5.Bar
Cleaner
Freshener
Cleaners
Detergents
3.Heritage
4.Heritage
5.Heritage
6.Herita
Brown
Premium
Milk Sandwich
ge Fruit
1.Poultry
2.Heritage
Eggs
7.Heritage
Milk Bread
Bread
8.Instant Mix
Bread
Bread
Bread
Mumbai Pav
Food
General Merchandise
6.Kitch
1.Toilet
2.Paper
3.Face
en
Tissues
Towels
Tissues
Health & Beauty
2.Liquid Hand 3.Tooth
1.Hair Oils
Instant Food
Wash
4.Candles
5.Agarbatti
Towels
Brush
6.South
Indian
4.North
1.Appalams
7.Vermicelli
Ready Foods
1.Chilly/Soya
Based
7.Tomato
2.Honey
Indian
Ready Mixes
3.Indian
4.Jams/Marmala
Sweets
des
Based
61
Ready
5.Papads
Mixes
5.Namkeens
6.Pickle
62
CHAPTER-IV
63
Particulars
(RS IN CRORES)
Budgeted
Estimated
Actual
for
the
for
year
SMTP
2015-16
Amount
Rs\mt
Sales
724
72.4
618
61.8
840
84.0
740
74.0
82.0
863
86.3
recovery
Own consumption
132
13.2
148
14.8
Total of .1
2516
251.6
2369
236.9
Average intensives
102
10.2
98
9.8
Other income
56
5.6
49
4.9
Grand total(1+2+3)
2674
267.4
2516
251.6
INTERPRETATION:
64
65
TABLE-II
Sino
(RS IN CRORES)
Particulars
Budgeted estimated
Variable cost
Rs
2015-16
Amount
Rs
2
3
4
5
Raw material
Milk
Total of .1
Operative
420
200
870
42.0
20.0
87.0
450
220
920
45.0
22.0
92.0
cost
Chemicals and 130
13.0
150
15.0
water
Repairs
28.0
300
30.0
32.0
350
35.0
& 65
6.5
80
8.0
11
of 8
1.1
0.8
13
10
1.3
1.0
168.4
903
90.3
maintained
& 280
maintenance
8
Employee cost
Stationary
320
general
10
11
expenses
Rebate
Share
operating
12
13
expenses
Total of-2
Finance
14
15
charges
Deprecation
42
Interest
on 18
4.2
1.8
15
20
1.5
2.0
16
fixed capital
Totalof-3
6.0
35
3.5
1684
60
66
17
Gland
total 1744
17.44
1916
191.6
(1+2+3)
INTERPRETATION:
Observed from the above table that the "Operational Expenditure Budget" of Heritage
Foods India Limited in the year 2015-16.
In the year 2015-16 variable cost components, Raw material consumption 45%
increased and the milk consumption 47% also increased.
In operating & maintain aces cost components, chemicals & water, repair &
maintenance, employee cost, stationary & general expenses rebate and share of other
expenses in all are fluctuating expenses of the year 2015-16.how ever the total operating
maintenance costs are 90.3% decreasing respectively.
In finance charges depreciation and interest on fixed capital, has been included, the
total finance charges recording decreasing of 3.5% in the year 2015-16 respectively.
Finally with regard to the operational expenditure budget of Heritage Foods India
Limited the total profit has increase with 191.6% during the year 2014-16.
The overall budget results of Heritage DAIRY PRODUCT is industries limited is
earning more profits.
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2016
3,41,78,32,892
80,92,92,132
58,30,64,022
51,57,16,762
5,45,85,229
3,58,952
4,91,46,881
2,61,37,771
33,50,30,376
2,50,55,563
3,82,15,119
5,34,50,070
7,700
2,95,96,073
32,75,37,771
9,05,21,426
fluctuation
provision for diminution in value of investments
5 ,76,15,772
-
93,92,067
55,44,394
19,16,075
-----4,28,13,42,377
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES
Adjustment for:
Inventories
(1,21,69,75,334)
Trade and other receivables
(50,17,40,397)
Trade payable
65,61,02,594
(24,94,24,615)
2,92,62,288
(20,01,35,,318)
6,31,57,979
1,10,42,01,672
(93,49,80,671)
1,98,37,48,569
1,10,09,232
1,46,13,41,338
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2016
Cash flow from investigating activities
purchase of fixed assets
Sale of fixed assets
Proceeds from sale of refractory unit
Investment in shares
Proceeds from sale of refractory
Unit from sale of shares
Incomefrom long team investments
Loans/deposits given
Registration of loans/deposits given
Interest received on loans
Net cashused in investing activities
Cash flow from financing activities
68
(4,17,22,87,73)
(2,22,09,13,891
6,22,31,087
1,60,00,000
2,66,224
)
6,83,68,985
2,50,00,000
2,01,87,974
13,42,476
4,91,46,881
65,05,00,000
1,00,80,000
2,13,22,677
3,66,50,30,842
-2,51,37,527
1,15,90,00,000
1,48,08,25,000
8,07,36,965
8,07,36,965
Allotment money
released
Long term borrowings
Short-term borrowings
Long-term borrowings
Short-term borrowings
3,150
3,47,00,00,000
11,53,25,82,956
(70,31,00,557)
(11,99,94,40,000)
4,500
1,93,00,00,000
5,53,69,08,223
(48,37,39,218)
(5,91,42,30,841
23,36,27,575
(48,27,22,502)
)
7,66,75,770
(33,84,31,360)
Dividends paid
Net cash from financing activities
Net increase in cash and cash equivalents
Opening cash and cash equivalents
(35,06,99,081)
1,70,53,90,985
2,41,08,712
24,83,13,629
(13,05,42,125)
67,42,71,694
5,04,39,979
19,78,35,867
---27,24,22,341
37,783
24,83,13,629
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2016
Schedule
Sales
Less excise duty
Net sales
Other income
13
EXPENDITURE
Finished goods
14
And administration expenses
15
deprecation
Less transfer from capital
reserve of asserts
Schedule
Interest
16
PROFIT BEFORE TAXATION
Provision for current taxation
Provision for benefit tax
profit after taxation
PROFIT
AVAILABLE
FOR
2014-15
25,16,45,89,369
3,07,41,00,000
22,06,96,60,339
49,04,06,410
22,58,00,66,749
2015-16
18,17,81,55,294
2,04,63,80,752
16,13,17,74,542
53,74,29,621
16,66,92,64,153
9,20,98,35,678
9,03,43,03,781
59,52,33,509
7,61,14,89,922
7,40,51,67,576
53,05,56,255
1,21,74,487
52,30,64,022
33, 50,30,375
1,48,449,493
51,57,16,762
32,75,37,771
75,00,00,000
1,10,00,000
2,65,68,32,892
2,65,68,32,892
34,00,00,000
1,22,00,000
45,70,92,132
45,70,92,132
APPROPRIATION
69
Proposed dividend
Tax on proposed dividend
Intendividend
Tax on intent dividend
General resene
Balance Carried To Shcedule2
Earnings per share
----------18,29,73,272
2,56,,62,001
30,00,00,000
50,86,35,273
2,14,81,97,619
58.08
13,72,29,954
1,92,46,501
-----------5,00,00,000
20,64,70,455
25,06,15,677
9.99
70
Mar '12
12 mths
Sources Of Funds
Total Share Capital
23.20
11.60
11.53
11.53
11.53
23.20
11.60
11.53
11.53
11.53
0.00
0.00
0.00
3.19
3.19
0.00
0.00
0.00
0.00
0.00
Reserves
155.79
130.29
81.60
71.82
72.16
Networth
178.99
141.89
93.13
86.54
86.88
Secured Loans
127.42
98.18
129.37
176.61
175.53
0.00
0.00
11.00
9.45
8.92
Total Debt
127.42
98.18
140.37
186.06
184.45
Total Liabilities
306.41
240.07
233.50
272.60
271.33
Mar '11
12 mths
Unsecured Loans
Application Of Funds
Gross Block
408.41
353.48
337.29
317.50
294.24
0.00
0.00
0.00
0.00
0.00
136.93
116.69
107.03
95.78
79.00
Net Block
271.48
236.79
230.26
221.72
215.24
11.12
8.27
8.92
11.98
8.71
0.99
1.12
1.12
1.02
0.92
108.55
82.09
93.45
66.07
76.31
Sundry Debtors
16.61
15.07
11.20
14.44
12.08
44.42
32.95
29.99
26.58
22.25
130.11 134.64
107.09
110.64
33.41
36.05
Less: Revaluation
Reserves
169.58
38.88
71
34.49
34.13
Fixed Deposits
0.00
0.00
0.00
3.86
2.39
208.46
164.60
168.77
144.36
149.08
0.00
0.00
0.00
0.00
0.00
171.82
161.54
165.56
100.41
95.01
13.81
9.19
10.03
6.08
7.60
185.63
170.73
175.59
106.49
102.61
22.83
-6.13
-6.82
37.87
46.47
0.00
0.00
0.00
0.00
0.00
306.42
240.05
233.48
272.59
271.34
Contingent Liabilities
52.04
55.90
56.00
14.63
8.49
77.16
122.32
80.77
72.29
72.59
Miscellaneous Expenses
Total Assets
CHAPTER-VI
72
The company objectives organization and how they can be achieved through
budgetary control.
Time-tables for all stages of budgeting follows.
Reports, statements, forms and other record to be maintained.
Continuous comparison of actual performance with budgeted performance.
CONCLUSIONS
73
Every organization has predetermined set of objectives and goals, but reaching
their objectives and goals by proper planning and executing of these plans
economically.
The Heritage Foods India Limited is objectives of planning promoting and
organizing an integrated development of dairy product Company.
The corporation machine of Heritage Dairy Product industries is to make
available and quickly dairy product in increasingly small quantities, the company will
spear head the process of accelerated development of dairy product sector by
expeditiously.
The organization needs the capable personalities as management makes the
plans and implement of these plans are expressed in terms of budget and budgetary
control.
The Heritage Foods India Limited has budget process in two stages. one is the
capital expenditure budget and another is operating maintenance budget, the capital
expenditure budget shows the list of capital projects selected for investment along
with their estimated costs, operating maintenance budgets, the medical budgets are
rarely used in the organization like long term budgets, search & development budget
for consultancy.
The Heritage dairy product industries ladies to make available and quality dairy
product efficient utilization of its resource and implementation of sophisticated
technology and dairy product generation and also creating ambience of collective
working of its employees.
BIBLIOGRAPHY
74
S.No
Author
1.
S .KRISHNA
MURTHY
2.
V.A. AVADHANI
4.
MUTUAL
FUNDS IN
INDIA
INVESTMENT
MANAGEMENT
Security and
Portfolio
Management
FACT SHEETS OF
Edition
Year of
Publication
Name of the
Publication
Second
Edition
1999
Chandra Bose
Fourth
Edition
2000
Sixth
Edition
2006
Himalaya
publications
Tata McGraw
Hill.
75