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A STUDY ON BUDGETARY CONTROL OF SHIMUL

(A STUDY CONDUCTED AT SHIMOGA Milk UNION LTD., SHIMOGA)
A Project report Submitted to the University of Mysore, Mysore.
in partial fulfillment of the requirement for the award of the
Degree in Master of Business Administration.
by

Guide

HARANAHALLI RAMASWAMY
INSTITUTE OF HIGHER EDUCATION, HASSAN
2009-10
HARANAHALLI RAMASWAMY INSTITUTE OF
HIGHER EDUCATION
HASSAN
CERTIFICATE
 Certified that, the project entitled A STUDY ON BUDGETARY
CONTROL OF SHIMUL conducted at SHIMOGA MILK UNION LTD.,,
SHIMOGA is a bonafide work carried out by ________ in partial fulfillment for
the award of degree in Master of Business Administration of the University of
Mysore, Mysore during the year 2009-10.

(____________) (____________)
Guide Principal
DECLARATION
I hereby declare that, this project report entitled A STUDY
ON BUDGETARY CONTROL OF SHIMUL conducted at Shimoga Milk Union Ltd.,
Shimoga prepared by me under the guidance of ______________, Department of
Business Administration, Haranahalli Ramaswamy Institute of Higher Education,
Hassan. In partial fulfillment of the requirement for the award Master of Business
Administration.
I further declare that this project report is prepared from the information
collected from the SHIMOGA MILK UNION LTD., SHIMOGA., and that the same is
purely for academic purpose and that the report has not been submitted to any other
institution of higher learning for the award of any degree, diploma or other similar
title.
Date: 07-5-2010
Place: Hassan Reg. No.
ACKNOWLEDGEMENT
I, express my deep sense of gratitude and sincere thanks to _______________,
department of head, SHIMOGA MILK UNION LTD who gave me an opportunity to
conduct this Research Project. I state with great pleasure this report would not have
been possible without the wonderful help from various quarters, the list of which is
quite too long.
 I will take this opportunity to express my deep sense of gratitude to

______________. ______________ for his guidance, continuous encouragement and

valuable suggestions at every stage of the Project.

I would also like to extend my deep sense of gratitude to my parents and all my

family members, friends, who have directly or indirectly supported and helped me in

the completion of my project successfully

Last, but not the least I would like to extend my thanks to all the unseen hands

that have made this project possible.

Date:
Place: Hassan Reg. No.

LIST OF THE TABLES

Table No Title of the table Page No

1.6.3 Key activities of Financial 18

management
1.6.4 Organizational of the 20
financial department
1.6.5 Financial Management 21
Process
1.6.6 Decisions, Return, Risk & 22
trade off
1.7 Procedure for test & 23-24
analysis for Milk & Milk
products
1.8 Summary of last annual 26
report
1.8.2 Extract of Profit/Loss a/c 27

1.8.3 Extract of Trading & 28

Manufacturing a/c
2.3.1 Organizational structure 41
2.4 Milk & Milk products price 43
list

CONTENTS

Sl. No Particulars Page. No

Executive Summary
Chapter 1 INTRODUCTION
1.1 Statement of the Problem 01
1.2 Objective of Study 01

1.3 Scope of the Study 02

1.4 Methodology 02
1.5 Limitations of Study 04

Chapter 2 REVIEW OF LITERATURE 05 - 28

Chapter 3 INDUSTRY AND COMPANY PROFILE 29 - 50

Industry Profile 29 - 36

Company Profile 37-40

Organization Structure 41
Achievements 44-49
SWOT Analysis 50

Chapter 4 DATA COLLECTION AND 51 - 64

INTREPETATION
Chapter 5 SUMMARY OF FINDINS, SUGGESSIONS 65 67
AND
CONCLUSION
BIBLIOGRAPHY 68

Executive Summary
Shimoga Milk Union Limited is a cooperative sector undertaking, engaged in the
processing of Milk & manufacturing the Milk products, it recently launched three new
variants of Nandini Milk. The Shimoga milk union is located in the central part of Karnataka.
The corporate office of the union is based at Machenalli, covering three districts of Shimoga,
Davangere and Chitradurga.
The Budgetary Control is playing a vital role in the organization. The role of
Budgetary Control is the essence of a business. The information is the blood and Budgetary
Control is the heart. In the body the hart plays the role of supplying pure blood to all the
elements of the body including the brain. The Budgetary Control plays exactly the same role
in the organization. The system ensures that an appropriate data is collected from the various
sources, processed and sent further to all the needy destinations.
The system is expected to fulfill information needs of an individual, a group of
individual, a group of financial functionaries, the managers and the top management. So the
Budgetary Control is very important in modern organizations.
Thus, I have been chosen the Budgetary Control as the specific area of the study.
 Therefore, a study has been taken up on A STUDY ON BUDGETARY CONTOL
OF SHIMUL.
The study is taken for Shimoga milk Union ltd wherein an attempt has been made
to understand the Budgetary Control and a small study has been under taken. So as to get an
insight into Budgetary control.

1.1 Problem statement

A STUDY ON BUDGETARY CONTROL was conducted through a structured
questionnaire so as to

To analyze how Budgetary Control helps the milk union to select best course of action.
To provide a detailed plan of action for a business over a period of time.
To coordinate the different units & activities of the organization with a view to utilize the
resources judiciously.
To revise the budgets in the light of changed circumstances.
To exercise control and on cost through comparison of actual results with the budgeted
one.
To know the role of BC.

The purpose of the study is to estimate of receipts and payments of revenue and
capital items in future. Hence the study has been entitled as A BUDGETARY CONTROL
OF SHIMUL.
1.2 Objectives of the Study
To know the role of Budgetary Control in SHIMUL.
To analyze how Budgetary Control helps the milk union to select best course
factors.
To revise the budgets in the light of changed circumstances.
To exercise control and on cost through comparison of actual results with the
budgeted one.
It shows the relationship between the actual number of working hours and the
maximum possible number of working hours in a budget period.
To provide a detailed plan of action for a business over a period of time.
A Budgetary Control department fulfill the needs of organizations

1.3 Scope of the Study

This study report will be very handy to SHIMUL in terms of understanding the level
of the Budgetary Control of SHIMUL. The study conducted on Budgetary Control of
SHIMUL is cover the all financial area of Budgetary Control department including how it
collects informations from other department like production, sales, finance etc
How Budgetary Control support the top level of management to take a good decision, the
work of application software SAMRUDHI, in the financial area of Budgetary Control
department.
1.4 Research methodology
Need for the study
BUGETARY CONTROL is the essence of a business. Therefore, financial planning
is of utmost significance to a businessman. Financial planning is concerned with raising funds
and their effective utilization with a view to maximize the wealth of the company.
 In spite of good financial plan, the desired may not be achieved if there is no effective
control to ensure its implementation. A budget is an important tool for financial planning and
control. The budget represents a set of yardsticks or guidelines for use in controlling internal
operations of an organization. The management through budget can evaluate the performance
of every level of the organization. The discrepancy between planned performance & actual
performance is highlighted through budgets.
The concept therefore is a blend of principles theories and practice of the Budgetary
Control giving rise to single product known as Budgetary Control.
METHODOLOGY OF DATA COLLECTION
SOURCES OF DATA
There are 2 types of data

1. Secondary data
2. Primary data

1. Secondary data

On the other hand it includes those data which are collected from some earlier research
work and used in the study, researcher has presently undertaken.
Sources of Secondary data
Use of internet
Annual report of Shimoga Milk Union ltd
Standard reference text books
KMF website, KMF co-orp
NDDB.com
Data provided by Shimoga Milk Union

2. Primary data
Primary data are generated when the researcher employing mail questionnaire, telephone
surveys. Personal interviews observation and experiment investigation particular problem at
hand
Sources of primary data
Personal interview method

In this research, researcher has conducted survey in personal interview method; this
type of survey researcher has met the department head.
Operational Definitions
OFFICE AUTOMATION SYSTEM:
Office automation system includes new hardware and software packages like word
processing, spreadsheets etc., it makes office employees more productive in addition to the
attended situation created office automation technology and the people that use that
technology.
Research Design
 Research Design is the basic framework, which provides guidelines for the rest of the
research process. It is map or blueprint according to which the research has to be conducted.
The Research Design specifies the method of data collection and data analysis.
Here the researcher has used exploratory method of research. It includes both open
end type of questionnaire. It is helpful in knowing general information about any aspect of
the organization.
1.5 Limitations of the Study
Despite of tall the effort to make the analysis more comprehensive and scientific, a
study of present kind is bound to have certain limitations. Researcher humbly requests the
respondent to submit them at this stage.
The present study is an attempt made to understand the management information
system of SHIMUL. The present study is an empirical work presented in a descriptive
manner. Since the objective of the study may be a kind of analysis. Attempt has been made to
provide more comprehensive conceptual analysis.

The study cannot replace the managerial judgments in decision making

The study is only limited to the available information in the department
The study is limited to the financial area of Budgetary Control department.

Literature of Review
2.1 Budgeting & Budgetary Control:
Definition
Finance is the Life blood of a business. Therefore, financial planning is off almost
significance to a businessman. Financial planning is concerned with raising funds and their
effective utilizations with a view to maximize the wealth of the company.
In spite of good financial plan, the desired results may not be achieved if there is no
effective control to ensure its implementation. A budget is an important tool for financial
planning and control. The budget represents a set of yardsticks or guidelines for use in
controlling internal operations of an organization. The management, through budget, can
evaluate the performance of every level of the organization. The discrepancy between
planned performance & actual performance is highlighted through budgets.
Budgeting: Definition
A budget is a statement, which shows forecasts of the financial activities of a business
to achieve a specific purpose. A budget is basically an estimate of receipts and payments of
revenue and capital items in future.
2.2 Budgetary control: Objectives
To provide a detailed plan of action for a business over a period of time.
To coordinate the different units & activities of the organization with a view to utilize
the resources judiciously.
To revise the budgets in the light of changed circumstances.
To exercise control and on cost through comparison of actual results with the budgeted
one.

2.3 Budgetary control:

There are 5 types of budgetary control.

1. Master budget
2. Financial budget
 3. Fixed budget
4. Flexible budget
5. Zero-based budgeting

1. Master budget:

Master budget (also known as summary budget or finalized profit plan) combines
all the budgets for a period into one harmonious unit and thus, it show the overall budget
plan. As profit planning is the main objective of a budget program, it is but natural that all the
subsidiary budgets should be co-ordinated and projected into a master or summary budget,
which should show the final projected results of the plan. The master incorporates all the
subsidiary functional budgets and the budgeted Profit & Loss Account and Balance Sheet.
Before the budget plan is put into operation, the master budget is considered by the top
management and revised if the position of profit disclosed there is not found to be
satisfactory. After suitable revision is made, the master budget is finally approved and put
into action.
Another view regards the budgeted Profit and Loss account and the Balance sheet as
the master budget. The Profit and Loss account is built up from the other budgets already set,
and no fresh estimates are necessary. The operating profit is obtained by further deduction of
the budgeted income and expenditure items give the budgeted net profit.
Advantages of a forecast Profit and Loss Account are as follows:
1. It presents an overall projected profits position of the concern.
2. It enables the planning and control of the profits of the business.
3. It enables the investigation of causes for variances.
4. The accuracy of all the budgets is automatically checked.

2. Financial budget:

Financial budget is a summary statement for the future that shows the estimated
requirements of the cash inflow an outflow.
According to Walker, A financial budget is a comparison of estimated cash inflows
and outflows for particular period i.e. a quarter or year.
According to Guttmann and Dougal, financial budget is an estimate of cash receipts
and disbursements for a future period of time.
Financial budget may be prepared any of the following three methods:
1. The receipts and payment method
2. The adjusted profit & loss method
3. The balance sheet method

Receipts and payment method:

Under receipts and payment method estimate of cash receipts and cash payments is
worked out during the budgeted period. Estimated cash receipts are added to opening cash
balance and estimated cash payments are deducted out of the total. Thus, the closing cash
balance is worked out. Estimates regarding sales are indicated by the sales department that
also points out the general trend of credit allowed to customers. Purchase department makes
forecast about the cash and credit purchases and also points out the period after which the
credit purchases are met.
Adjusted Profit & Loss Method:
Financial budget under this method is also known as cash flow statement. This
method is useful for long term planning; therefore under this method cash inflow and outflow
are estimated for a year
Balance Sheet Method:
Under this method the business concern prepares a budgeted balance sheet. Cash and
Bank Balance (or overdraft) is computed with this budgeted balance sheet. Budgeted balance
sheet is prepared with all assets items (excluding cash and bank balance) and all liabilities
(excluding bank overdraft).
3. Fixed budget:
A fixed budget is designed to remain unchanged irrespective of the level of activity.
This budget is prepared on the basis of a standard or fixed level of activity. This budget
becomes an unrealistic yardstick in case the level of activity actually attained does not
conform to the one assumed for budgeting purposes. Due to the limitations of fixed
budgeting, firms whose sales and production cannot be accurately estimated have given up
the practice of fixed budgeting.

4. Flexible Budget:

A budget that is designed to change in accordance with the level of activity attained is
called a flexible budget. This budget is prepared after considering the fixed and variable
elements of cost and the changes that may be expected for each item at various levels of
operations.
Flexible is desirable in the following cases:
Sales are unpredictable, e.g., luxury or semi-luxury products.
The venture is new & it is difficult to foresee the demand, e.g., fashion products.
Where the business is subject to the vagaries of nature, such as soft drinks.

5. Zero-based budgeting:

The technique of zero base budgeting provides a solution for overcoming the
limitations of traditional budgeting by enabling top management to focus on priorities, key
areas and alternatives of action throughout the organization.
Some of the problems, which top management has to face are:
1. Programs and activities involving wasteful expenditure are not identified, resulting in
avoidable financial and other costs.
2. Inefficiencies of a prior year are carried forward in determining subsequent years
levels of performance.
3. Manages are not encouraged to identify and evaluate alternative means of
accomplishing the same objectives.
4. Decision-making is irrational in the absence of rigorous analysis of all proposed costs
and benefits.
5. Managers tend to inflate their budget requests resulting in more demand for funds
than their availability. This results in recycling the entire budgeting process.

2.4 Process of zero-Based Budgeting:

 The following steps are involved in zero based budgeting:
Determining the objectives of budgeting:
The objective may be to effect cost reduction in staff overheads or it may be to drop,
after careful analysis, projects which do not fit into achievement of the organizations
objectives etc.
Deciding on scope of application:
The extent to which the zero base budgeting is to be introduced has to be decided, i.e.
whether it will be introduced in all areas of the organizations activities or only in a few
selected areas on trial basis.
Developing decision units:
Decision units for which cost- benefit analysis is proposed have to be developed so as
to arrive at decisions whether they should be allowed to continue or be dropped. Each
decision unit, as far as possible should be independent of other units so that it can be dropped
if the cost analysis proves to be unfavorable for it.
Developing decision packages:
A decision package for each unit should be developed. While developing a decision
package, answers to the following questions would be desirable.

1. Is it necessary to perform a particular activity at all? If the answer is in the negative,

there is no need to proceed further.
2. How much has been the actual cost of the activity and what has been the actual
benefit both in tangible as well as intangible forms?
3. What should be the estimated cost of the level of activity and the estimated benefit
from such activity?
4. Should the activity be performed in the way in which it is being performed and what
should be the cost?
5. If the project or activity is dropped, can the unit be replaced by an outside agency?

Advantages of zero based budgeting:

1. It provides the organization with a systematic way to evaluate different operations and
programs undertaken. It enables management to allocate resources according to
priority of the programs.
2. It ensures that each and every programmed undertaken by managers is really essential
for the organization, and is being performed in the best possible way.
3. It enables the management to approve departmental budgets on the basis of cost-
benefit analysis. No arbitrary cuts or increases in budget estimates are made.
4. It links budgets with the corporate objectives. Nothing will be allowed simply because
it was being done in the past. An activity may be shelved if it does not help in
achieving the goals of the enterprises.
5. It helps in identifying areas of wasteful expenditure and, if desired, it can also be used
for suggesting alternatives courses of action.
6. It facilitates the introduction and implementation of the system of management by
objectives. Thus, it can be used not only for fulfillment of the objectives of
traditional budgeting, but also for a variety of other purposes.

2.5 BUDGET:
A budget is a plan expressed in quantitative, usually monetary term, covering a
specific period of time, usually one year. In other words a budget is a systematic plan for the
utilization of manpower and material resources. In a business organization, a budget
represents an estimate of future costs and revenues.
Budgets may be divided into 2 basic classes:
Capital budget & operating budget
Capital budgets are directed towards proposed expenditures for new projects and
often require special financing.
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.
The main characteristics of a budget are:
1. It is prepared in advance and is derived from the long-term strategy of the
organization.
2. It relates to future period for which objectives or goals have already been laid down.

It is expressed in quantitative form, physical or monetary units, or both. Different

types of budgets are prepared for different purposed e.g, sales Budget, production Budget,
administrative Expenses Budget, Raw-material Budget etc. All these sectional budgets are
afterwards integrated into a master budget, which represents an overall plan of the
organization.
2.6 Advantages of Budget:
A budget helps us in the following ways:
1. It brings about efficiency and improvement in the working of the organization.
2. It is a way or motivating managers to achieve the goals set for the units.
3. It serves as a benchmark for controlling on-going operations.
4. It helps in developing a team spirit where participation in budgeting is encouraged.
5. It helps in reducing wastage and losses by revealing them in time for corrective
action.
6. It serves as a basis for evaluating the performance of managers.
7. It serves as a means of educating the managers.

2.7 Production Budget:

This budget provides an estimate of the total volume of production distributed
product-wise with scheduling of operations by days, weeks and months, and a forecast of the
inventory of finished products. Generally, the production budget on the sales budget. The
responsibility for the overall production budget ties with works manager and that of with
departmental works managers.
Production budget may be expressed is physical or financial terms or both in relation
to production. The production budgets attempt to answer questions like

1. What is to be produced?
2. When is to be produced?
3. How is to be produced?
4. Where is to be produced?

The production budget envisages the production program for achieving the sales
target. It serves as a basis for preparation of related cost budgets, e.g., materials cost budget,
Labour cost budget, etc. it also facilities the preparation of a cash budget. The production
budget is prepared after taking into consideration several factors like- Inventory policies,
sales requirements, production stability, plant capacity, availability of materials and Labour,
time taken in production process etc.
Production costs budgets: Basically, there are 3 elements of costs, namely direct
material, direct Labour and overheads. Separate budgets for each of there elements has to be
prepared.
The direct materials budget has 2 components,

1. Materials Requirement budget

2. Materials procurement or purchase budget. The former deals with the total quantity of
materials required during the budget period, while the latter deals with the materials to
be acquired from the market during the budget period. Materials to be acquired are
estimated after taking account the closing and the opening inventories and the
materials from which orders have already been placed.

Overhead budget:
The overheads may relate to factory, general administration, sales and distribution
function. Separate budgets may, therefore, be prepared for factory overheads, administrative
overheads and selling and distribution overheads.
Manufacturing overheads budget:
Factory or manufacturing overheads includes the cost of indirect material, indirect
Labour and indirect expenses.
Manufacturing overheads may be classified into:
1. Fixed overheads i.e., which tend to remain constant irrespective of change in the
volume of output.
2. Variables overheads i.e., which tend to vary with the output,
3. Semi-variable overheads i.e., which are partly variable and partly fixed. The
manufacturing overhead budget will provide an estimate of these Overheads to be
incurred during the budget period.

Fixed manufacturing overheads can be estimated on the basis of past information

and knowledge of any changes which may occur during the ensuring budget period
Variable.
2.8 Budgetary Control Rations:
Activity ratio: It is a measure of the level of activity attained over a period of time. It is
obtained by expressing the number of standard hours equivalent to the work produced as a
percentage of the budgeted hours.
Mathematically:
Standard hours for actual production X 100
Budgeted hours
Capacity Ratio:
This ratio indicates whether and to what extent budgeted hours of activity are actually
utilized. It shows the relationship between the actual number of working hours and the
maximum possible number of working hours in a budget period.
Mathematically:
Actual hours worked X100
Budgeted hours
Efficiency Ratio:
 It indicates the degree of efficiency attained in production. It is obtained by
expressing the standard hours equivalent to the work produced as a percentage of the actual
hours spent in producing that work.
Mathematically:
Standard hours for actual production X 100
Actual hours worked
2.9 Meaning of Financial Management:
Financial management is broadly concerned with the acquisition & of funds by a
business firm. Its scope may be defined in terms of the following question.

How large should the firm be & how fast should it grow?
What should be the composition of the firms assets?
What should be the mix of the firms financing?
How the firm should analyze, plane and control its financial affairs?

Importance of Financial Management:

Financial Management is indeed the key to successful business operations. Without
proper administration and effective utilization of finance. The importance of financial
management can be ascertained from the study of the following point.

1. Successful promotion: Successful promotion of a business concern depends

upon efficient financial management. If the plan adopted fails to provide adequate
capital to meet the requirements of fixed and working capital and particularly the
latter.
2. Smooth Running: Since finance is required at each stage of the business such as
promotion, incorporation, development, expansion and management of day-to-day
expenses.
3. Decision Making: Financial management provides scientific analysis of all facts
and figures through financial tools such as ratio analysis, variances analysis, budgets
etc.
4. Solution to Finance Problem: The efficient of Finance management helps the
top management by providing solutions to the various financial problems faced by it.
5. Measure of performance: Financial management is considered as a yard stick to
measure the performance of the firm.

2.10 Scope and function of financial management:

The approach to the scope and functions of financial management is divided, in order
to have a better exposition, into 2 board categories

1. Traditional approach
2. Modern approach

Traditional approach: The Traditional approach which was popular in early stage,
limited the role of financial manager to rising and administering of funds needed by the
corporate enterprises to meet their financial needs. It deals with the following aspects:

1. Arrangement of funds from financial institutions.

2. Arrangement of funds through financial institutions likes share, bonds etc.
 3. Looking after the legal and accounting relationship between a corporation and its
source of funds.

Modern approach: According to modern approach the firm financial, management

provides a conceptual and analytical frame work for financial decision making.
The main contents of the modern approach are as follows:
1. What is the total volume of funds an enterprise should commit?
2. What specific assets should an enterprise acquire?
3. How should the funds required be financed?

The functions of financial management may be classified on the basis of liquidity,

Profitability and management.

Liquidity: It is ascertained on the basis of three important considerations.

1. Forecasting cash flow: Matching the inflows against cash outflows.

2. Raising funds: Financial manager will have to ascertain the sources from which
funds may be raised and the time when these funds are needed.
3. Managing the flow of internal funds.

Profitability: While ascerting profitability, the following factors are taken into
account.

1. Cost control
2. Pricing
3. Forecasting future profits
4. Measuring cost of capital

Management: Assets management has assumed an important role in financial

management.

1. The management of long term funds.

2. The management of short term funds

2.11 Key Activities of Financial management:

The three board activities financial management are:

1. Financial analysis
2. Management of firms asset structure
3. Management of the firms financial structure.

These activities are related to the balance sheet of the firm:

2.12 Organizational of the Finance Functions
Like any functional management in a firm finance is a vital functional organ of the
firm. If finance function does not operate well, the whole organizational activity will be
ruined. So inefficient financial management paralyses the activity of the firm.
The finance function can be broadly classified into 2 parts.
Routine financial matters like custody of cash and bank accounts, collection or loans,
payment of cash.
 Special financial functions like financial planning and budgeting, profit analysis,
investment decision.

The following chart will give an idea about the financial department
Organizational of the Financial Department
2.13 The Financial Management Process

Information Information

Information Information

1. Financial Analysis: This is preliminary, diagnostic stage and will include a

financial analysis and review to determine the current financial performance and
condition of the business. An identifical of any particular financial problem, risks,
constraints or limitations. An assessment of finance strength, weakness, opportunities
and threats.
2. Financial Decision- Making: Based on the findings of the review stage, financial
decisions and choices will have to be made.
3. Financial Planning: The essence of financial planning is to ensure that the right
amount of funds is available at the right cost for the level of risk involved.
4. Financial Control: The final stage of the process will require throughout the
organization.

2.14 Decisions, Return, Risk and Trade Off:

The inter-relationship between market value, financial decisions, risk-return and trade off is

depicted in the chart.

 2.15 Procedure for Test and Analysis for Milk & Milk Products:
The purpose is to define & document a procedure for tests and analysis conducted for milk
& milk products.
The procedure is explained in the below table
Sl Product Parameter Instrument/Method
no
1 Milk a. Temperature 1. Thermometer
1. Organoleptic Evaluation 2. Sensory Organs
2. clot on boiling test 3. Boiling
3. Acidity 4. Titration
4. Fat 5. Garber/EMT
5. CLR & SNF 6. Lacto meter
6. MBRT 7. Hot Water Bath
7. Phosphates 8. Hot Water Bath
8. SPC 9. Plating
9. Chloroform 10. Plating

2 Cream Temperature Thermometer

Fat% Garber method
Acidity Titration
MBRT Ref. Wi (C.3.7)
Phosphates Hot Water Bath
SPC Plating
Chloroform Plating
3 Butter Moisture Gravimetric Method
Fat Garber method
Acidity Titration
Yeast and Moulds Plating
4 Ghee Organoleptic test Sensory Organs
Moisturey Gravmetric Test
FFA Titration
BR Index Butyrate Refractometer
Adulteration Baudin test
RM Value RM Apparatus
Polenske Titration
5 Peda Moisture Gravimetric Method
Fat% Garber method
6 Curd Physical Characteristics Titration
Acidity Plating
Coli form Plating
Yeast &Moulds

7 Lassi Sweet Fat% Gravimetric Method

SNF% Garber method
Acidity Titration
8 Lassi Khara Fat% Garber method
Acidity Titration
9 Skim Milk Organoleptic test Sensory Organs
Powder Moisturey Gravmetric Test
Acidity Titration
Fat% Garber method
Solubility Index Centrifuging
SPC Plating
Coli form Plating
10 Bacteriological SPC Common Procedure
test Coli Form
Yeast &mould
Total Bacterial Count
11 Other 1. Hardness of water Common procedure
2. Detergent strength can wash Titration
3. Detergent strength crate wash Titration
4.Detergent strength process Titration
equipment Detection
5. Adulterants & preservatives in
milk

Test and Analysis of Milk & Milk Products

Procedure for Internal Quality Audit:
The purpose of this document is to define & document internal quality audit to
ensure that OMS conforms to planned requirements and is effectively implemented and
maintained.
 Procedure for Maintenance:
The purpose of this document is to define and document a procedure for maintenance
of spare parts.
Procedure for Critical Product Purchasing:
The purpose of this document is to define and document a procedure for CPC
purchasing of required materials periodically.
The procedure is limited to purchase of packing materials, consumables, veterinary
durgs, milk cans.
Procedure for Regular Purchasing:
The purpose of this document is to define and document a procedure for regular
purchasing of required materials periodically.
The procedure is limited to purchase of items require for Dairy excluding milk & CPC
purchase at Shimoga Milk Union.
Procedure of Control of Non-Conforming Products:
The purpose of this document is to define and document a procedure for control of
non conforming product to ensure the product, which does not conform to specified
requirements is identified and controlled to prevent its unintended use or delivery.
2.16 Summary of Last Annual Report
Extract of balance sheet
Balance sheet of Shimoga Milk Union Ltd As on 31-3-2009
Liabilities Amount Asset Amount

Share Capital 44029200.00 Fixed asset 325559448.58

Reserves & surplus 38028771.20 Investment 69044986.00

Loans 37573970.98 Working capital 119630375.10

Grants 198225.00 Current asset

Current liabilities Stock in hand 26895931.40

P/L A/c 6513784.72 Sundry debtors 2289252.22

Cash & bank bal 39499267.53

Loans and advances 50945923.95

Total 221231309.68 total 221231309.68

2.17 Extract of Profit and loss a/c

Profit and loss account of Shimoga Milk Union Ltd As on 31-3-2009
Expenditure Amount Income Amount
Staff expenses 48328724.73 Trade profit 91207873.65
Administrative
expenses 10822722.95 Other income 3386560.35

Transport expenses Interest on

6151235.90 investment and 4738854.21
deposits
Tax 1579683.00 Grants 930606.00
Milk sales expenses
204349015.00
Packing
4614915.00
Interest and bank
commission 1817926.45

Profit
6513784.72
Total
100263894.21 Total 100263894.72

2.18 Extract of Trading and Manufacturing A/c

Trading and manufacturing account of Shimoga Milk Union Ltd
As on 31-3-2009
Particulars Amount Particulars Amount

Milk and milk

Opening stock 16156452.85 706631645.34
products

Milk & milk products

Purchase of milk 534903008.75 112466857.39
(dairy sales)

Fodder and other

106835008.00 Closing stock 26895931.30
expend

Storage and
3963598.18
transportation exp

Processing and
manufacturing 37938944.60
expenses
Purchase packed
19689548.00
things

Trade profit 91207873.65

Total 845994434.03 Total 845994434.03

3.1 Industry Profile
The concepts of the Budgetary control have evolved over a period of time comprising
many different facts of financial functions. Budgetary control is necessity of all the
organization
The initial concept of Budgetary control was to process to data from the
organization and present it in the form of report at regular intervals. The system was largely
capable of handling the data from collection to processing. It was more impersonal, requiring
each individual to pick and choice the proposed data and uses it for his requirements. This
concept was further modified when a decision was made between data and information the
information is the product of an analysis of data. This concept is similar to a raw material and
finished products. The concepts of Budgetary control gives high regards to the individual and
his ability to use the information. A Budgetary control gives information through data
analysis.
Budgetary control study associates with the above said objectives. It is concerned
with collection of data and interpretation of data.
This Budgetary control study particularly on Shimoga Milk Union limited focuses
on mainly itsOrganizational study & a glance on all of its financial departments. This report
hopes to understand the functions of Budgetary control of Shimoga Milk Union limited in a
real working condition & give real working experience while study.
Industrial Background of the Study
The birth of milk industry In India can be traced back in 1965. At that time, the
prime minister of India, Lal Bahadur Shastri combined the wisdom & energy of farmers with
professional management to successfully capture liquid milk and milk product markets while
supporting farmer investment with input and services and it give way to N.D.D.B. National
Dairy Development Board
The N.D.D.B was formed to replace exploitation with empowerment, tradition with
modernity, stagnation with growth, transforming dairying into an instrument for the
development of Indias rural people.
N.D.D.B. began its operations with the mission of making dairying a vehicle to a better
future for Million of grassroots milk products. The mission achieved thrust and direction with
the launching of operation flood a program emergence as the worlds largest milk
producing nation. Operation floods third phase was completed in 1996 and has to its credit a
number of significant achievements.
In June 1974, an integrated project was launched in Karnataka to restructuring &
reorganizes the dairy industry on the co-operative principal 7 to lay foundation for a new
direction in dairy development.Work on the first ever, World Bank aided dairy development
project was initiated in 1975.
At the end of September 1984 the World Bank- aided project ended and the dairy
development activities were extended to cover the entire state except coastal taluks Kannada
district & the process of dairy development was continued in the second phase from
April1984.
 As on March 2001, Indias 96,000 dairy co-operatives integrated through a co-
operative structure the Anand pattern owned by more than ten million farmers. It procures
an average of 16.5 million liters of milk everyday. The milk is processed & marketed by 170
milk producers, co-operative unions which in turn own 15 states co-operative milk-marketing
federations.
Since its inspection, the dairy board has planned and spearheaded Indias dairy
programs by placing dairy development in the hands of milk producers and the professionals
they employ to manage their co-operative allied industries N.D.D.B also promotes other
commodity based co-operative allied industries and veterinary biological on an national wide
basis.
Functions of the Unions:
DCS are grouped at district level into co-operative milk producers unions. The
unions organize new DCS, assist DCS with their management including audit of accounts,
supervise, purchase, process & market the liquid milk. Provision of input facilities are also
organized by the union 7 channelised to the dairy farmers through DCS. The input facilities
include supply of cattel feed, fodder, AI, Veterinary services, training & know how on
scientific animal husbandry.
N.D.D.B and 2010 goals:
In state Milk federation & the Milk producers co-operative union in consultation with dairy
board/NDDB has drawn 2010 goals & strategies as fallows.

Production enhancement
Assuring quality and creating a national framework
Setting realistic goals for strengthening co-operative business.

Origin of the Industry

In 1986, British government to meet the requirements of army personnel established
military dairy forms. In 1937, first Shimoga Milk Union Luck now Milk Products co-
operative Union limited has set up National Dairy Development Board (NDDB) was
established on 25 September 1965 under the societys registration Act 1950. It was a non-
profit making organization.
Milk:
What is Milk?
Milk white liquid secreted by the mammary glands of female mammals to nourish
their young for a period beginning immediately after birth. Man has used the milk of animals
as food from before recorded history began. Now most milk is consumed by humans as a
result the cow and milk & milk products have become important articles of commerce. Milk
is a mixture of water, fat, protein, sugar and inorganic salts.
Major Constituents of Milk are:
Water
Proteins
Lactose
Mineral Constituents
Minor Constituents
Milk comprises of water, fat and solid-not-fat (SNF) Milk is nutritionally balanced
when fat and SNF are in the right proportions. SNF is made up of proteins, lactose and
minerals. Normal cow milk contains about 4% fat and 8.5% SNF buffalo milk contains about
7% fat and 9% SNF.
What is Pasteurized Milk?
 Milk is good nutritive medium for the growth of bacteria. After the milk is drawn,
from the udder. It is likely to be contaminated with bacteria during handing, transportation,
etc, pasteurization is of process which ensures the destruction of pathogenic or disease
causing bacteria and makes the milk safe for human consumption. Loose milk sold in the
market is generally not pasteurized. Sometimes un-pasteurized milk may also be packed in
sachets for sale. Consumers need to ensure that they purchase pasteurized milk only by
examining the label on the packet.
Importance of Packed Milk:
Fresh milk drawn from a healthy animal contains very few microorganisms,
improper handling subsequently results in its contamination and spoilage increased acidity of
milk, because of the activity of microorganisms, causes the milk to curdle on heating. Milk
can remain in a good condition for 24 hours it is properly handled and pasteurized. Packed
milk is procured under hygienic conditions scientifically handled, pasteurized at 720C for 15
seconds to destroy pathogenic organisms and chilled to 40C to restrict the growth of other
organisms. Such milk is healthy and can remain good condition for longer period when stored
under refrigerated condition. Packed milk is therefore safe and healthy, and choose only the
packed milk of a name you can trust.
Butter:
Yellow to white fatty food obtained from cows milk or cream by churning it to
flocculate the fat globules into a solid emulsion that also contains some water, curd milk
sugar and inorganic salts. Butter is high-energy food containing approximately 715 calories
per 100 gms and has substantial amount of vitamins A and D but is low in other vitamins. It
contains phosphorus but is low in protein. The color of butter is caused by carotene and other
fat-soluble pigments contained in the fat. Butter has been relished as a spread and as a
cooking fat. It is an important edible fat in northern Europe, North America oceanic and other
places to which Europeans have migrated.
Ghee:
Semi-fluid butterfat made by the evaporation of water and clarification of butter from
the milk of cow buffaloes, goats or sheep. It can be many months and is a stable food on the
Indian subcontinent used for cooking and medicinally and in Hindu religious ceremonies.
Peda:
Peda refers to the partially dehydrated whole milk product prepared by direct heating
milk in a pan with constant stirring and scrapping till it reaches a semi solid consistency
under PFA rules the fat contents in Peda shall not be less than 20% of the dry matter in the
finished products. Peda constitutes a base for the manufacture of most Indian milk sweets it
has been estimated that nearly 4.5% of our milk production is utilized for Peda making.
Milk assembly, its modernized processing into bulk and its products and efficient
selling and distribution to urban consumers. The marketing system in the rural areas and the
consumers are in urban areas. High efficiency is essential to achieve the goal set for the dairy
industry. It is an instrument of economic change. Considerable interest was being shown by
farmers in India to affect consistent economic viability in the dairy industry through
optimizing organized milk marketing process, such as procurement, processing and
distribution and various independent operations of the dairy plant, to achieve the desired
objectives. To achieve the above desired objectives and to foster the needs of milk production
and its marketing in an organization way, the following institutions play important role.
They are:
Anand pattern dairying
Operation Flood
Anand Pattern Dairying:
 In 1940, the government of India contracted a private milk dairy to purchase milk
from kariya, one of the 19 districts of Gujarat and supply pasteurized chilled milk to Bombay.
But the milk procurement price was not fixed and milk products continued to receive low and
fluctuating prices. The dairy farmers resented the system but trapped by their own resources.
The small dairy farmers, who were engaged only in these trades, went on strike and they
formed the primary level with co-operative in 1946. The co-operative was first attempted by
rural producers to reach on their own for the bulk urban market. This gave birth to AMUL as
organizational instrument that serves the rural dairy functions both production as well as
marketing. AMUL is abbreviation of Anand Milk Union Limited.
Operation Flood:
One of the aims of the dairy development of government of India was to flood
India with milk. One such program is the operation Flood designed by national dairy
development board (NDDB) to create a vertical flood of rurally produced milk in India.
This has been in operation since 1970.
Growth and development of the Milk Industry:
The sale of milk in the form of sachet is estimated to be 36mn MT valued at Rs 470
billion per year. The market is currently growing at round 4% pa in volume terms. The milk
surplus states in India are Uttar Pradesh, Punjab, Hariyana, Rajasthan, Gujarat,
Andrapradesh, Maharastra, Karnataka and Tamilnadu. The manufacturing of milk products is
concentrated in these milk surplus states. The top 6 states viz., Uttar Pradesh, Punjab,
Madhya Pradesh, Rajasthan, Tamilnadu, and Gujarat together account for 58% of National
production. Milk products grew by mere 1% pa between 1947 and 1970. Since early 70s
under operation flood. Production growth increased significantly averaging over 5% per
annum. About 75% of milk is consumed at the household level, which is not a part of
commercial dairy industry. Loose milk has a larger market in India as it is perceived to be
fresh by most consumers in reality however; it poses a higher risk of adulteration and
contamination.
Although milk production has grown at a fast pace during the last 3 decades, milk yield per
animal is very low. The main reasons for the low yield are

Lack of use of scientific practices in rearing cattle

Inadequate availability of fodder in all seasons
Unavailability of veterinary health services
Not raring the hybrid cattle

Present Status of the Industry:

Dairy co-operative network

Includes 170 Shimoga Milk Unions

Operates in over 285 districts
Covers nearly 103281 village level societies
Is owned by nearly 11 million farmer members

Milk Production:
Indias milk production increase from 21.2 million Mt in 1968 to 84.6
million Mt in 2001-02.
Per capita availability of milk presently is 226gms per day, up from 122gms
per day in 1968-1969.
 Indias 4% annual growth of Milk production surpasses the 2% growth in
population.
The net increase in availability is around 2% per year

Study of the Functional Department of the Shimul Industry

Finance Department
Finance is the lifeblood of any organization finance mainly focuses on wealth
maximization it mainly focuses on minimizing the cost and maximizing the cost and
maximizing the profit.
Auditing
Auditing will be carried on as per co-operative audit department (government of
Karnataka) under sec rule 441, once in a year.
Monthly Audit:
Private chartered accountant will do pre-auditing once in a month appointed by
SHIMOGA MILK UNION LTD and he has to submit a monthly report to the finance
department.
Records:
Records are maintained in ledger as per the standing orders of Shimoga Milk Union.
Various accounts and details accounts are processed using an excel spreadsheet software and
all the details are stored in a computer and hard copies are stored and maintained in the
respective files.
3.2 COMPANY PROFILE
Origin of Shimoga Milk Union:
SHIMOGA MILK UNION LTD started its operations on 21st may 1971, with a
initial investment of 24.17 lakhs with the capacity of 10,000 (TLPD) thousands liters per day.
SHIMOGA MILK UNION LTD is located in Machennahalli, 12Kms from Shimoga and
6Kms from Bhadravathi. The dairy is located in an elevated place on Survey No.72 having 25
acres of land.
The Shimoga milk Union is located in central part of the state of KARNATAKA.
The corporate office of the union is based at Machenahalli, covering three districts of
Shimoga, Davangere and Chitradurga.
Growth and Development of Shimoga Milk Union:
Shimoga dairy is one of the important dairies in Karnataka in the year 1963, first in
city a pilot project scheme was started to supply milk to consumers of Shimoga and
Bhadravathi and provide additional income to the rural farmers of district. In the initial
period, the milk used to be sold in bulk. Dairy came into existence on 21 may 1971, it
extended its operations with the help of the Government. In order to expand its business, it
started manufacturing ghee. Earlier than 1985, it was named as government dairy, because it
was control of the Government. On Feb 1985, the dairy was taken over by KMF and named
as Shimoga dairy.
In the initial stage, milk was distributed only to Shimoga and Bhadravathi cities
only. It was supplying the milk in bottles and in July 1985. It started supplying milk in
polythene bags to the consumers. In August 1985, there was a paradigm shift in the working
pattern. Dairy adopted AMUL pattern.
A new dairy was established in Jan 1991, with a capacity of (ILLKPD) was taken
over by SHIMOGA MILK UNION LTD. At the same time the chilling centers of
Davanagere, Chitradurga, Honnali and Anandapura was handed over to SHIMOGA MILK
UNION LTD. A new Dairy has been established with a capacity of 1.0 Lakhs Liters per day
 under the Operation Flood II & III with NDDB assistance. The Union has five chilling
centers located at Honnali, Anandapura, Chitradurga, Hosadurga, & Tadagani with chilling
capacity of 0.95 Lakhs Liters per Day. The union has a Dairy at Shimoga and a mini dairy at
Davangere, processing, packing and selling 25,000 liters per day. The union procures on an
average 1.32 Lakhs Kgs. of milk per day and sells 0.93 Lakhs liters per day. The union, apart
from selling toned milk, also produces Butter, Ghee, Peda, Butter Milk and Curds.
Present Status of the Company:
DCS 818
Members 107369
Dairy Procurement of 1, 49,500 LPD
Milk
Milk Sales 91,194 LPD
Artificial Insemination Centers 209
Artificial Insemination 679310
Vaccines 421
Fodder in Tones 14201
Organization Structure of Shimoga Milk Union Ltd:
SHIMOGA MILK UNION LTD functions same as the AMUL organization structure.
In this pattern the milk producers themselves control all the functions of dairying milk
production, procurement, processing and marketing, this structure consist of 3- tire systems.
First Tire:
The basic unit in the Anand pattern is the village milk producers co-operative a
voluntary association of milk producers in a village, who wish to market their milk
collectively. Those who have a permanent residence and who own a milk animal can become
a member by paying a share capital to DCS.
Management:
The members of society in general meeting elect a managing committee of nine
members democratically. The chairperson of the committee retires every year. The managing
committee sets the co-operative policies and selects the society staff including a secretary, a
milk collector, a Fat Tester, a clerk, inseminator, Accountant and helper to perform the
societys administration depending upon the size of the business.
Among the managing committee members one will be elected as a president of DCS
for one-year term that is the administrative head of the DCS.
Second Tire:
A key element in the Anand pattern DCS is that all registered village milk societies
are members of a DCS milk producers union that enable them jointly to own a dairy
processing factory and a cattle feed plant.
Management:
The union is controlled by Board of Directors consisting of 16 to 17 members of
which 12 are democratically elected from among the representative of the village societies,
the remaining five comprises of Managing Director as a member secretary, one or two
representative of the federation. There 5 members are not eligible for contesting to the post of
chairman. The chairman is elected by the board members retire every year by rotation so that
each member functions for 3 years, the board employs the Managing Director who makes the
appointment of junior staff. A sound code of conduct and the administrators of the union.
Third tire:
 The union members of a co-operative milk marketing federation by subscribing to it at
least 20,000 each as a share capital, the federation is responsible for evolving and
implementation of policies on cooperative marketing liquid milk and milk products.
Management:
The federation board consists mainly of the elected chairman of all the members of the
union and the federations managing director. Each member has voting right. The members
elect a chairman of the board. The board evaluates the federations policies on all its
functions.
Functions of Shimoga Milk Union Ltd:
DCS are grouped at district level into co-operative milk producers union. The unions
organize new DCS and assist DCS with their management including audit of accounts,
Purchases, processing and marketing of liquid Milk.
3.3 Organizational structure:
Board of Directors

President

Managing Director
3.4 Profile of the Company:
Shimoga Milk Union manufactures the following products:
1. Toned Milk
2. Double toned Milk
3. Standardized Milk
4. Full Cream Milk
5. Ghee
6. Butter Milk
7. Homogenized Milk
8. Peda
9. Curd

Shimoga Milk Union Markets the following products

1. Gulab Jamoon Mix

2. Flavoured Milk
3. Mysore pak
4. Panner
5. Badam Powder
6. Good life Milk

Milk & milk Products Price List:

Price List if Nandini Milk & Milk Products
No
Selling price in
Products name Kgs/Liters/grams
(Rs)

1
500 ML 8.50
Toned Milk
1000 ML 17.00

2
500 ML 9.00
Double toned milk
1000 ML 18.00

3
500 ML 10.00
Standardized Milk
1000 ML 20.00

4
500 ML 11.50
Full cream Milk
1000 ML 23.00

5
200 ML 37.00
Ghee 500 ML 82.50
1000 ML 158.00

6
Butter Milk 4.50

7 Homogenized Milk 1000 ML 15.00

8 Peda 250 ML 50.00
9 Curd 500ML 8.50
10 Gulab Jamoon Milk 200 gms 45.50
11 Flavoured Milk 200 ML 13.00
12 Mysore pak 250 gms 55.00
13 Badam powder 200 gms 40.50

3.5 Achievements
Mile Stones:
1963- A Pilot project was started to supply milk to Shimoga and Bhadravathi
1971- Government dairy at Shimoga was started with the capacity of 10,000
1985- Opening of KMF P and I wing.
1985- First milk procurement rout was started
1985-KMF has taken over the dairy.
1987-Registrations of SHIMOGA MILK UNION LTD.
90-97-NDDB funded for co-operative development program
1997-Grands from Government of India for women and Child development program
1999-Installation of LNZ distribution system
2005-Set upping of 24 ATM parlors and customer grievance cell in Chitradurga and
Davanagere
2007-Set upping of 3 ATM parlors and 687 dealers
2009-In this year 38 new societies started, in this bulk milk coolers are adopted for best
quality of milk. From each society 220 Kg milk has proposed to collect. In this year planned
to increase the milk by decreasing the amount to produced milk like artificial insemination,
fodder and providing 50% of concision to the formal.
Introduction of New products
1985- Ghee
1988- Peda
1993- Standard Milk
1997- Butter Milk and curds
1999- Lassi
2000- Introduction of tonned milk in 200ml sachet.
2006- Toned milk, Homogenized milk, sterilized milk and Full cream milk
2007- Skim milk powder, Cheese, Badam powder, Paneer and Mysore Pak
2009- Burfi, Jamoon, khova, flavored milk and Ice cream.
Chilling Centers\ Dairies Established
1984- Chitradurga
1991- Dairy
1991- Honnali
1991- Anandapura
1999- Tadagani
2007- Davangere
2009- Harihara
3.6 Mission Statement:
Shimoga Milk Union is provide maximum possible price for the milk supplied by its
members and provide necessary inputs to enhance milk production while ensuring economic
viability of the union and is also committed or provide quality milk and milk products to
consumers and emerge as one of the top most Milk Unions of the co-operative dairy industry
in the country.
Goals by 2008:
Organizing 700 functional DCS.
Procuring of LKPD of Milk.
Marketing of 1.75 LLPD of Milk.
Introducing concept of clean milk production.
Collecting 6 corers as share capital Distributing 80% of the Income earned from sales
to farmers, producers, and members.
Increasing processing capacity to 1.9 LLPD
Reducing Recover Period from 17 days to 7 days
Paying Payments after 14days
Training staff to enhance QMS
Adoption of ISO\HACCP

Goals by 2009:
Establishment of 856 milk dairys.
 10% to 5% increase in selling.
Dividing the milk union into four groups.
To open 38 new societies.
Planning to insert new bulk milk coolers to get good quality of milk.
Tetra packing and making good milk products.
Giving good price to the farmers.
Planning to preserve 220kg of milk.

The Main Activities of the Union

DCS membership:
At the end of March 2008, a Network of 818 DCS have been organized and over in
175 Taluks in all three districts of milk-shed area and there are around 107369 members of
DCS out of which 50863 are women.
Milk Chilling Centers:
There are 5 chilling centers situated at Anandpura with 100 TLPD (Thousand Liters
per Day), Chitradurga with 10 TLPD, Hosadurga with 8 TLPD, Tadagani-30 TLPD, and the
main dairy is situated in Machenahally having a capacity of 40,000 TLPD and processing
capacity of 5 LLPD.
There are 80 milk procurement routes operating from union and is collecting milk on an
average of 3, 50,000 KGPD during the year march-08. The Milk procurement routs are not
constant. It keeps on fluctuating according to the availability of milk.
Animal Health Facilities:
There are 7 veterinary routes operating and conducting health camps and attending
emergency cases.
Animal Breeding:
Artificial Inseminations are being done through AI centers.
Feed and Fodder Development:
Cattle feed and high yielding varieties of fodder being supplied to producer along
with technical advice.
Milk & Milk Products Marketing:
The pasteurized milk being distributed to three districts i.e., Davanagere, Shimoga
and Chitradurga through 8 parlous, 3 A.T.M parlors, 687 milk dealers. On an average every
day 1, 02,000 litter being sold in 65 towns. In addition to milk, milk products like Peda, curds
and butter milk are sold in the milk shed area.
Shimoga milk Union Ltd Objectives
Providing remunerative and assured market for the milk product by the farmers.
Providing quality milk to urban consumers.
To build village level institutions in co-operative sector to manage dairy activities.
To ensure provision of milk production inputs processing faculties and dissemination.

Shimoga milk Union Ltd Quality Objectives:

To train our workmen from time to time for exposure to advance technology for
efficient operations.
To provide adequate infrastructure facility for improving the work environment.
To set goals/targets at all level to achieve continuous improvement.
Shimoga milk Union Quality Policy:
SHIMOGA MILK UNION LTD is committed to producers welfare through
customer delight by adopting continuous improvement and ensures pure and hygienic milk
and milk products.
New Projects in Shimul
30TLPD new milk chilling center cum packing center at Chitradurga
Installation of Bulk Coolers of Chilling Centers from 20,000 LPO to 60,000LPD.
Network based dairy into system.
Expansion of Ice Cream Plant from 5000 Liters, to 15,000 Liters capacity at an outlay
of Rs.5.69 crores.
Launching of New Milk Products at Nandini Milk Products Unit

3.7 SWOT ANALYSIS

STRENGTH
Procurement and Input (Net work)
Goodwill
ISO 9001-2000 certified
Second larger producer
Vast Market

WEAK
World trade organization standards
Advertisement execution in its early
Early stages of automation of computerization

OPPORTUNITIES
Enter rural market
Exports

THREATS
Entry of big players
WTO standards
Government policies

DATA COLLECTION AND INTERPRETATION

SHIMOGA DISTRICT MILK PRODUCERS SOCIETIES UNION
LIMITED Shimoga Dairy, Machenahalli,
Nidige Post, SHIMOGA 577222
2007-2008, 2008-2009, & 2009-2010 Financial year Estimated expenditure
Sl Particulars 12-09- 15-09- 10-09-2009
no 2007 2008 2009-2010
2007-2008 2008-2009 Lakhs
Lakhs Lakhs
1 Opening products of milk products 185.6 66.75 103.29
2 Purchase of milk from milk unions 6366.25 5667.57 6184.39
3 Milk storage & transportation expenses 577.47 610.38 404.56
4 Transportation expenses (others) 22 23 19.5
5 Cattle feeds & development expenses 914.97 1009.04 1294.08
6 Milk processing & manufacturing expenses 550.41 570.83 535.57
7 Employees salary & allowances 559.66 556.45 594.9
8 Administrative expenses 72.99 76.5 101.86
9 Taxes & rates & rent 24.5 31.5 32
10 Milk distribution expenses 163.3 166.87 165.02
11 Milk & milk products packing charges 230.06 211.25 238.53
12 NDDB loan repayment with bank
86.34 82.5 62
commission
13 Depreciation or asset 45 58 45
14 Cattel animal health program & expenses
26.91 36.82 34.34
income from artificial insemination
15 Program 62.04 56.19 62.73
16 Training program expenses 4.3 6.94 23.22
17 Fir staid program expenses
18.74 3.89 26.93
18 Extension of facilities for co-operatives
51 55.61 111.73
unions
19 Capital investment & advances quality
1174.45 376.75 763.15
control & plant management
20 Expenses (NPCS) 376.5 345.12 324.22
21 National information system 12.8 12.8 12
22 Purchase of diesel (contractors vehicles) 135 108 108
23 Staff program expenses 84.51 11.32 49.75
24 Savings 20.5 21.07 11.58
Total 11765.3 10165.15 11308.35
4.1 Opening products of milk products
 The above table shows that opening product of milk in 2007-08, 2008-09, 2009-10 is
190 lacks, 70 lacks and 110 lacks respectively. Opening products of milk 2008-09 decreased
by 118.85 lakhs. Due to the manufacturing inability and the mismanagement in the
organization. 2009 2010 it increased 36.54lakhs due to the management change.
4.2 Purchase of milk from milk unions
 The above table shows that purchase of milk from milk unions in 2007-08, 2008-09,
2009-10 is 6350, 5670 and 6200 respectively. Purchase of milk from milk unions 2008-09
decreased by 698.5 lakhs and 2009-10 516.82 lakhs increase.. Due to the financial inability in
2009-10 it increases due to the financial restructuring.
4.3 Milk storage & transportation expenses
 The above table shows that Milk storage & transportation expenses in 2007-
08, 2008-09, 2009-10 is 575, 610 and 400 respectively. Milk storage &
transportation expenses 08-09 increased 32.91 lakhs and 09-10 decreased 205.82lakhs.
4.4 Cattle feeds & development expenses
 The above table shows that cattle feeds and development expenses in 2007-08,2008-
09,2009-10 is 900, 1000 and 1300 respectively. Cattle feeds & development expenses in the
year 08-09 increased 94.1 lakhs and in 09-10 increased 285.04 lakhs.
4.5 Milk processing & manufacturing expenses
 The above table shows that milk processing and manufacturing expenses in 2007-
08, 2008-09, 2009-10 is 550, 570 and 535 respectively. Milk processing & manufacturing
expenses in the year 08-09 increased 20.42 lakhs and in 09-10 decreased by 35.26 lakhs.
.
4.6 Employees salary & allowances
 The above table shows that Employees salary and allowances in 2007-08, 2008-
09,2009-10 is 560, 555 and 595 respectively. Employees salary & allowances in the year
08-09 decreased by 3.21 lakhs and in 09-10 increased 38.45 lakhs.
.
4.7 Administrative expenses
 The above table shows that Administrative expenses in 2007-08, 2008-09, 2009-10
is 75, 79 and 110 respectively. Administrative expenses in the year 08-09 increased 3.51
lakhs and in 09-10 increased 25.36 lakhs.
4.8 Taxes, Rates & Rents
 The above table shows that tax, rent and rates in 2007-08, 2008-09, 2009-10 is 24, 32 and
33 respectively. Taxes, Rates & Rents in the year 08-09 increased 7 lakhs and in the year 09-
10 increased 1.50 lakhs

9. Milk distribution expenses

 The above table shows that milk distribution expenses in 2007-08, 2008-09, 2009-10 is
163.5, 166.8 and 165 respectively. Milk distribution expenses in the year 08-09
increased 3.57 lakhs and in the year 09-10 decreased by 1.85 lakhs.
.

10. Milk & milk products packing charges

 The above table shows that milk and milk product packing charges in 2007-
08, 2008-09, 2009-10 is 230, 211 and 237 respectively. Milk & milk products packing
charges in the year 08-09 decreased 18.81 lakhs and in the year 09-10 increased 27.28 lakhs.
4.11 Capital investment & advances quality control & plant management
 The above table shows that capital investment and advance quality control in 2007-
08, 2008-09, 2009-10 is 1190, 390 and 790 respectively. Capital investment & advances
quality control & plant management in the year 08-09 decreased 797.70 lakhs and in the year
09-10 increase 386.40 lakhs.
.
4.12 Staff program expenses
 The above table shows that staff program expenses in 2007-08, 2008-09, 2009-10 is
85,10 and 50 respectively. Staff program expenses in the year 08-09 decrease 73.19 lakhs
and in the year 09-10 increase 38.43 lakhs.
4.13 Grand Total
Financial Expenditure
 The above table shows that grand total in 2007-08, 2008-09, 2009-10 is
11700,11000 and 11560 respectively. Financial expenditure in the year 08-09 decrease
1600.15 lakhs and in the year 09-10 increase 1143.2 lakhs.
Findings
5.1 Summary of Findings:
As my study conducted on the Budgetary Control of SHIMUL was finding the following
points. The department generated the following types of reports
 Section wise report
Management report
Board meeting report
NDDB report
Section head meeting report

1. The opening products of milk products 2009-10 it increased 36.54lakhs compare to the
previous year.
2. Purchase of milk from milk unions 2009-10 516.82 lakhs increase compare to the
previous year.
3. Milk storage & transportation expenses 2009-10 decreased 205.82lakhs.
4. Cattle feeds & development expenses in the year 2009-10 increased 285.04 lakhs.
5. Milk processing & manufacturing expenses in the year2009-10 decreased by 35.26 lakhs
compare to the previous year.
6. Employees salary & allowances in the year 2009-10 increased 38.45 lakhs.
7. Administrative expenses in the year 2009-10 increased 25.36 lakhs.
8. Taxes & Rates & rents in the year 2009-10 increased 1.50 lakhs.
9. Milk distribution expenses in the year 2009-10 decreased by 1.85 lakhs.
10. Milk & milk products packing charges in the year 2009-10 increased 27.28 lakhs.
11. Capital investment & advances quality control & plant management in the year 2009-10
increase 386.40 lakhs.
12. Staff program expenses in the year 2009-10 increase 38.43 lakhs.
13. Financial expenditure in the year 2009-10 increase 1143.2 lakhs

5.2 Suggestions
As the result of study on Budgetary Control of SHIMUL the given the following
suggestions

Maintain the good management control

Always maintain the good working capital in the organization
Maintain the good corporate governance
Fluctuations are common in every organization but sustain is very important so main
the stability
Use of knowledge based system like artificial intelligence expert systems
Develop own web site for SHIMUL
Use SAMRUDHI in societies and chilling center also
The processes of indent taking and billing through on line transaction processing
system
Use of new technologies to maximize the quality of output

Conclusion
The corporate exposure and learning gives a very good exposure in terms of
understanding the company in details knowing its activities and the specific roles played by
each functional department.
It is interesting to note that SHIMOGA MILK UNION is doing well and growing
phenomenally. Based on the findings and experience the researcher had while conducting the
study on BUDGETARY CONTROL DEPARTMENT as a researcher come to the
following conclusion.
 Budgetary Control department works as a back bone of top management
Budgetary Control department collected data from each department and convert that
data in to information
With the support of good Budgetary Control the management of marketing finance
production and personnel become more efficient.
The Budgetary Control of SHIMUL relies heavily on the hardware and software
capacity of the computer.
The Budgetary Control of SHIMUL is purely based on data base and use the database
for generating information
The Budgetary Control of SHIMUL operates at all level of management hierarachy
The Budgetary Control of SHIMUL makes union seem less by removing all the
communication barriers
The man power in Budgetary Control is very less but it achieve more and more
SHIMUL has well stature application software named SAMRUDHI. It works as a
blood of organization
It has a new project to develop to develop the application software named

FINANCIAL RECEPTION DOCK. The researcher feels of having contributed to the

company by conducting the study and providing them with the necessary information.
BIBILOGRAPHY
1.S.N. Maheshwari and S.K.Maheshwari, Accounting for Management, First Edition,
Vikas Publication House Pvt Ltd, Pg no 4.3-4.7
2.Jawahar Lal, Cost Accounting, Third Edition, Tata McGraw-Hill Publishing
Company Limited, Pg no- 775-784 and 798-807
3.I.M Pandey, Financial Management, Ninth Edition, Vikas Publication House Pvt
Ltd pg no 754-758
4.Websites and Articals

KMF website KMF.corp

NDDB.com
www.google.com
Annual report