Finance Report

SUMMER TRAINING REPORT

ON

Budget Procedure And Analysis

Of Heinz India Pvt. Ltd. (Aligarh)

SUBMITTED IN THE PARTIAL FULLFILMENT OF THE

REQUIRMENT FOR THE AWARD OF THE DEGREE

BACHELOR OF BUSINESS ADMINISTRATION

BY

VISHAL KALRA

Roll No- 4633

(2006-2009)

GLA INSTITUTE OF PROFESSIONAL STUDIES, MATHURA (UP)

(AFFILIATED TO DR.B. R. AMBEDKAR UNIVERSITY, AGRA)

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CERTIFICATE

This is to certify that the dissertation entitled “BUDGET PROCEDURE

AND ANALYSIS OF HEINZ INDIA PVT LTD”, submitted by Mr.

VISHAL KALRA is an original and independent work done by him

under my supervision.

Place: Mathura

Date:

Name Pragalbh Sharma

Lecturer

G.L.A.Institute of Professional Studies

17th K.M. Milestone. NH#2

Mathura (U.P.) -281 406

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DECLARATION

I hereby declare that the following documented Project Report titled

“BUDGET PROCEDURE AND ANALYSIS OF HEINZ INDIA PVT

LTD. is an authentic work done by me.

The Study was undertaken as a part of the course curriculum of BBA Full

Time Program of AGRA University, MATHURA.

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ACKNOWLEDGEMENT

Survey is an excellent tool for learning and exploration. No classroom

routine can substitute which is possible while working in real situations.

Application of theoretical knowledge to practical situations is the

bonanzas of this survey.

Without a proper combination of inspection and perspiration, it’s not easy

to achieve anything. There is always a sense of gratitude, which we

express to others for the help and the needy services they render during

the different phases of our lives. I too would like to do it as I really wish

to express my gratitude toward all those who have been helpful to me

directly or indirectly during the development of this project.

First of all I wish to express my profound gratitude and sincere thanks to

my esteemed learned Director Dr. Anup Gupta, GLAIPS, Mathura who

allowed me to conduct the survey.

I would like to thank my Lecturer Mr.Pragalbh Sharma who was always

there to help and guide me when I needed help. Her perceptive criticism

kept me working to make this project more full proof. I am thankful to

her for her encouraging and valuable support. Working under her was an

extremely knowledgeable and enriching experience for me. I am very

thankful to her for all the value addition and enhancement done to me.

Vishal Kalra

BBA 6th sem

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PREFACE

For the Compulsory training required for my course i.e.

BBA (Bachelor of Business Administration). I have

selected HEINZ INDIA PRIVATE LIMITED

MANZUR GARHI, ALIGARH. HEINZ international

company is one of the American paradigms. H.J.HEINZ

Company is a well known player in FMGC category. It

stands second in the world among food product

companies next to nestle. It has been certified by ISO-

9000.

During my training I have been associated with different

areas of finance & accounts division of HEINZ INDIA

PRIVATE LIMITED & learned about how to bridge up

gap between theoretical knowledge & practical working.

Mainly I have experienced the preparation of Capital

Budget. Other than budgeting I have explored many other

areas of Finance & Accounts division.

I would like to extend my sincere thanks to the Factory

authority for allowing me for this training, Section Head

of Finance& Accounts division Mr. DEVENDRA

BANSAL(Assistant Manager -Finance)& my instructor

Mr.Pragalbh Sharma for sparing there valuable time for

this purpose.

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TABLE OF CONTENT

Title Page

Certificate

Declaration

Preface

Acknowledgement

CHAPTERS

1 HEINZ, an Introduction 9

2 History changing Glaxo to Heinz 13

3 Product Range of company 20

4 Aligarh Factory a Insight 24

5 Heinz Vision 28

6 Function of different department 32

7 Introduction to Finance 51

8 Supply Chain Management 65

9 Objective of the Study 71

10 Budget and Budgetary Control 74

11 Analysis of Budget Variance 90

12 Capital budget at Heinz 96

Conclusion 104

Suggestions and Recommendations 106

Bibliography 108

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INTRODUCTION TO HEINZ INTERNATIONAL

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HEINZ international company is one of the American paradigms. It

began shortly after the civil war was in a family garden near

Pittsburgh Pennsylvania. In the year 1869, its founder HENRY JOHN

HEINZ was a pioneer in food processing and product marketing. He

was a remarkable man, an energetic entrepreneurial boy from a

pastor and village near Pittsburgh, who was not only a business

genius, but also a man of high moral, principles and personal

rectitude, set a new standard for an entire world.

H.J.HEINZ Company is a well known player in FMGC category. It

stands second in the world among food product companies next to

nestle. It has been certified by ISO-9000 the company began shortly

after the civil war in a family garden near Pittsburgh, Pennsylvania.

Its founder, HENRY JOHN HEINZ was a pioneer in a food processing

and product marketing. HEINZ is the company known as “good

place to Work” since 1869 and is still known by this name Heinz

follows “good food manufacturing practices”.

1994 was a significant year in the life of the H.J.HEINZ Company. It

marks the 125th anniversary of the company. It also marks HEINZ in

the mid 1990’s vigorous and “full of beans” both executing today’s

strategies and forgoing those that will become the foundation of

HEINZ in the 21st century the HEINZ of tomorrow.

The H.J.HEINZ Company is constantly looking backward into the

future and forward into the past. By U.S. standard, the HEINZ

company. At 125 is also one of the dwindling numbers of surviving

companies. Fewer and fewer since the takeover day of the 1980’s

to still bear the name of its founder. But by any standards, it is a

remark. Arable distinguished and successful company genuinely

beloved by the citizens of its hometown, as well as by the loyal

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employees and customers around the global, its brand name has

increased in stature and value over the year, as has

its reputation for world class employees.

HENRY JHON was different “he treated its factory as his mother’s

spotless kitchen given importance to hygiene and cleanliness. “ He

insisted one the best ingredients and clear jars to display the purity

of HEINZ products. He also treated his employees as though they

were members of his family.

Of course, like any family, HEINZ has had its ups and downs. Its

successful and lies-successful ventures, inspired ideas lucky

accidents, missed opportunity, fiascoes and funny stories.

The HEINZ corporate office of HEINZ INDIA PVT LTD is situated at

DR. ANNIE BESANT ROAD, WORLI, MUMBAI, and MR. NELESH

PATEL

is the M.D. of this company.

Succeeding generations sustained the company and maintained its

public following throughout a period of enormous social, political

and economic upheaval, the constancy of HEINZ proved a great

comfort in time of depression and world war. A global economy is

emerging, uneven but inexorable. In the course of the 125 years,

HEINZ has grown from an American dream to a global brand. That

achievement is treatment to the universal appeal of the HEINZ ideal

of pure food and healthful, affordable nutrition. It is also a tribute

to the tenacity, inventiveness world. As a new generation of

consumer enters a widening world market place the appeal of the

HEINZ ideal remains unceasingly durable and filled with promise.

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HISTORY CHANGING NAME GLAXO TO HEINZ

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The GLAXO INDIA LTD was incorporated in India on november,

1924 as an agency house for distributing. The well known baby

food “GLACTO” of a British co. it was recognized internationally 5

one of the leading manufactures of the research based

pharmaceuticals and food products.

In early 1990’s Glaxo was going in losses in the manufacturing of

food products all over the world. Glaxo asked to close all its food

products over the entire globe.

However, Aligarh plant was running in profits so it did not want

to close the unit and hence asked the Glaxo Headquarters at

Britain to permit her to continue the production. The headquarters

agreed on a condition to continue the food products after

changing the name. so Glaxo India Ltd Was remaining as Glaxo

Laboratories India Ltd (GLINDIA).

This change in name caused a negative effect on the sales of

pharmaceutical products so GLINDIA further enquired the

Headquarter again to allow using the old name of Glaxo India

Ltd. The permission was hence forth granted. But due to

competition in food products market Glaxo India ltd though that

as the Headquarter is not facilitating R&D programme regarding

food products so it would become difficult in the near future to

survive in the growing stiff competition.

Heinz India private ltd by 1999 has become “Deemed Public

co.” as it has crossed the average annual turnover of Rs. 10 corers

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for three consecutive years. A limit set by company’s Act, 1956

which permits a co. to omit writing the word “private” in its name.

THE NEW HEINZ

In February 1992, a worldwide growth forum attended by the

company’s top 35 managers, O’RELLY and his senior advisors

presented the two and his senior advisor presented the

improvement in the market share and profit and implement radical

change. A revolutionary idea emerged to replace the company

decentralized purchasing system with a centralize negotiation

strategy. The leveraging the company’s global strength made an

eminent financial sense it would save the company’s millions

over the next decade.

Procurement of key materials was centralized. In the

area of marketing, HEINZ began to challenge to conventional

wisdom about media spending. Tacking a more fixable and timely

approach to trade, consumer and point of purchase promotions as

well as media buys, affiliated aimed to move their marketing

dollar towards consumer promotions self-pricing. HEINZ already

enjoying $2billion business in the European community targeted

further growth.

During 1992 and 1993, O’RELLY and senior management

hammered out new reasonable and demanding goals for each

affiliate and successfully led the company out the complacency

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and mentality that inevitably accompanies two decades of

unparallel financial growth and profitability.

In October 1922, with an eye of dynamic Asia pacific

market HEINZ made its largest offshore, acquisition. Purchasing

Watties limited a min HEINZ In newzeland for $300 million. An

excellent complement to existing HEINZ operations in Australia,

japan and china, significantly strengthened its presence in this fast

growing region of world.

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HEINZ CULTURE

World’s no 2 food product company, Heinz has a conductive

environment which is not only integrates and motivates all the

employees towards achieving high standard but also makes

sufficient room for everybody’s growth. People are a value asset

as at Heinz, main emphases ate on task. Efforts are toward

satisfying the customer’s and expanding the market share. A good

blend of behavioral and skill development programmes provide

stimulus for growth and career development. Over the years

Heinz has concentrated on developing internal relationship so that

external relationships are enhanced.

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Heinz today a global player

Heinz today a global player in the food business specialized in

providing processed food products and nutritional services. Heinz

is famous in over 200 Countries. It is well balanced geographic

with above 43% of its same coming from non U.S. operations

with business and territories, has employees approximately plus

thousands of part time workers during seasonal peaks. In fruit

business brands dominance is sure co. it earns for quality.

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PRODUCT RANGE OF HEINZ INDIA PVT. LTD.

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HEINZ is ranked as a second largest food company in the world. It

has a total 3500 products in the world market. In India it offers 5

products:

1:- Instant Energy Drink

Glucon-D (plain)

Glucon-D (orange)

Glucon-D (mango)

Glucon-D (lime-lemon)

Glucon-D is manufactured at Aligarh plant. Right now glucon-D

(Plain) and Glucon-D (Orange) is manufactured because more

demand of these two tastes.

2:- Energy Rich Health Drink

Vitamin rich under the brand name of complan is available in

following three flavors:

Natural

Chocolate

Mango

Complan is manufactured in Aligarh plant.

3:- Ghee

As a by product of milk is manufactured under the brand name of

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sampriti. It is manufactured at Aligarh plant.

4:- Prickly Heat Powder

Prickly heat powder is manufactured under the brand name of

nycil. This is available in following three fragrances:

Plain

Sandal

Lavender

Nycil is manufactured by a third party.

5:- Heinz ketchup

Recently HEINZ has come up with a new product (HEINZ

KETCHUP). Although HEINZ is primary a ketchup manufacturing

company, this is new first every ketchup produced by HEINZ for

Indian market.

Heinz ketchup is manufactured at Bangalore by a third party.

6:- complan crunch timer

Milk cream

Chocolate

These two flavors are available in these biscuits.

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ALIGARH FACTORY A BRIEF INSIGHT

HEINZ took from glaxo on 1st October 1994.

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They continue with the same brand name.

It now manufactures complan and glucon c.

Glucon-D at its Aligarh unit. Sampriti ghee being a by- product.

Third party manufactures rest nycil and biscuits.

Factory is located 10 kms away from Aligarh city at a place known

as manzoorgarhi.

Factory has an area of 41.7 acres. One-third of the area is vacant

and rest has permanent infrastructure.

Main office is situated at Annie Basant road, worli,Mumbai.

There are no interfaces from outside unions. Its has its

three manufacturing unit located at Bangalore, Ankleshwar and

Goa.

HEINZ centers from its centers, bulk suppliers and private

contractors.

HEINZ centers are locked in a radius of 125kms around Aligarh

district, Part of Bulandshear district and Mathura.

HEINZ has collected 80000-90000 tones of milk/annum costing,

around Rs.90-100 crores.

Its total milk holding capacity is 4 lakh liters.

In flush session (April - July) the milk collection is 4 lakh liters

per day.

The factory is connected both by both by roadways and railways.

It has a turnover of Rs. 468 corers.

HEINZ has only one trade union H.S.A. (Heinz Staff Association).

Zone Department

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A Administration block, MPO office, analytical lab,

godown nos. 17 officers colony, area new boundary

well.

B Engineering office, stores, workshop platforms, and

generator house, old and new boiler.

C Production departments, old lab, spray drier no.1

and no.2, factory stores.

D R.P.U.1, 2, 3 all eastern wings godown and acid

stores.

E Change and rest rooms, dispensary, fumigation

godown, guest house.

HEINZ INDIA PVT. LTD.

S.

no.

Department Skilled

staff

Attendants Clerical Others Total

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(drivers

asst

chemical

etc)

1 V.P.Office

2 Production 17 94 111

R.P.U 16 113 129

Total 33 207 240

3 Perconnel,I.R.Canteen

Security & OHC 8 34 4 46

F.S.U 5 12 17

Total 13 46 4 63

4 Factory stores 3 9 4 16

Planning & Distribution

Total

5 Purchase andmilkcollection 31 11 2 44

M.P.O 1 1

Total 31 11 3 45

6 Quality assurance 8 5 7 20

7 Account / c.s.u 1 8 9

8 Engineering 46 13 2 61

9 Transport 7 4 11

10 Driver 15 15

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Heinz vision

Delivering high quality products.

Adhering to standards.

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Be a company with a strong and mo9tivated workforce.

Satisfying customer’s needs.

To become renounced in commercial as well as social.

Heinz Premier Values

Passion

Risk Tolerance

Excellence

Motivation

Innovation

Empowerment

Respect

Chairmen’s Four Imperatives

Drive Profitable Growth

Remove the Clutter

Squeeze out Cost

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Measure and Recognize Performance

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FUNCTIONS OF VARIOUS DEPARTMENTS IN THE

COMPANY

1. FINANCE DEPARTMENT

It is concerned with the accounts and budgets Preparation. Its

functions are:

o Fund management and budgetary control.

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o Purchases and sales account control.

o Statutory and audit compliance.

o Wages administration.

o Variance analysis and information technology.

O Revenue budgeting and sending it to the main corporate

office.

2. PRODUCTION DEPARTMENT : -Its functions are:

(A)-Processing Area

o To conduct the dairy activities effectively.

o To separate fat from milk for the preparation of ghee.

o To dry up the skimmed milk for the preparation of

Complain.

(B)- R.P.U.:- this unit is setup for the purpose of the packing

the products.

3. PERSONNEL DEPARTMENT :- its functions are :

o Selection and recruitment of employees.

o Maintaining the personnel record

o Provision of training, promotion and job rotation.

o Maintaining the record of temporary casual, contract, and

apprentice workmen.

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4. F.S.U.:- HEINZ has a wide range of products, which are

mainly the food products. The co. has F.S.U., which

mainly looks after the safe delivery of the goods to the

customer’s since the factory is located at a far away

distance from the city.

o Cleaning the production units, machines, godown and

other places in the factory.

o Pests control and infestation control.

o To provide fumigation to the raw material and packed

products.

o Maintaining temperature for different goods.

o Maintaining account for incoming and outgoing materials.

5. ENGINEERING DEPARTMENT :- its main functions are as

Follow :

o To help in the operation and maintenance of various

equipment used in production process.

o To provide effluent treatment and pollution control.

6. TRANSPORT DEPARTMENT :- it chief functions are as

follows

o To provide tankers for carrying milk from milk collection

centers.

o Provision of transportation of raw materials and finished

products to the distributor.

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o Provision of contract based conveyance facility to the

employees.

7. QUALITY ASSURANCE DEPARTMENT :- As the name

indicates quality is just not an accident, it is a collective

work of intelligent people with a team of well trained and

experienced people in quality assurance department.

Quality Policy :

Heinz India private Ltd. Is committed to :

1. procurement, development, production, and marketing of safe

clean wholesome foods of high quality, keeping

focus on needs of customer by establishing and maintaining proper

facilities necessary for controlled production consistency in a

sanitary manner, so as to ensure that customers confidence is

generated and maintained consistently.

2. Establishing and maintaining appropriate operating and monitoring

procedures necessary for control appropriate production.

Establishing and maintaining training programmed so that every

person responsible for product integrity and safeguarding quality

environments competent to carry out his responsibilities.

Its main functions are:

o Maintenance of quality assurance department and lab

equipments.

o To conduct quality assurance test of raw materials and

packing materials.

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8. MILK COLLECTION CENTER AND MILK PROCUREMENT

UNIT:-

Its main functions are:

o Collection of milk from the various collecting centers.

o To conduct milk purity test.

o To provide storage and refrigeration to the milk.

o Safe transportation of milk from milk collecting centers to

the company.

9. PURCHASE DEPARTMENT :-

Its main functions are:

o material procurement.

o Asking for quotations and their evaluation.

o Order to the suppliers and procurement of order.

10.INVENTORY DEPARTMENT

Its main functions are:

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o Ensure storage of material under hygienic conditions

and meet good food manufacturing practices

standards.

o Ensure compliance of ISO norms.

o Ensure safe unloading of stocks and no discrepancy

with ledger balance.

11: SAFETY AND SECURITY DEPARTMENT

o Every department in the company has been equipped

with fire.

o Extinguishers and first aid boxes. At the time of any

contingency, the security officers appointed for

different zones perform their responsibilities.

Their main functions are:

o Safety of employee and company’s property.

o Companies own staff is engaged for security.

o Controlling and guarding the movement of guards at

the gate.

o Security alert around the factory/boundary wall.

WELFARE

1- CANTEEN : canteen here is providing food on highly

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subsidies rates co. almost bears a loss of Rs. 20 lakes per

annum. It has different timing for launch of management staff

and workers and is situated in one building only. Companies

own staff is running canteen.

Activities are also coordinated by members of canteen it caters

approx, 500 persons daily.

2-REST ROOMS: There are four rest rooms to facilitate the

workers in the evening and night shift both.

3-SPORTS CLUB: This committee there is 14 members.

The committee coordinates the activities of sports club

members like annual sports, games, picnic tours. Annual

function of cultural programmer. V P/director is the president

of the sport club.

ASPECTS OF FINANCE

“Money is all about” goes the famous saying. This is also

32

said about finance that money is a life blood of human

body in any that a company is also will be fail without

finance. It is very important that this department works

very efficiently. Thus it can be said that success of any

organization largely depends upon the optimum

utilization of funds. The main finance department of

HEINZ is in Mumbai .Aligarh factory has a finance

department which handles the daily affairs of the factory.Finance

and accounts department is the backbone of any

department.Almost all kinds of business activities directly or

indirectly, involve the acquisition and use of fund. For

example: promotion of employees in production is clearly

a responsibility of the production department but it

requires payment of wages & salaries and other benefits

and thus involve finance department. Similarly, buying a

new machine or replacing an old machine for the purpose

of productive capacity affects the flow of funds.

The account department at Aligarh factory also controls the

computer department. Coding is the soul of computer output to

avoid this problem, the new technique has been developed which

is called “coding is defined in numbers as well as in alphabets”. it

can be either in numeric value or in alphabetical only .it can also

be a combination of alphabet and numeric value.

Different companies use different type of coding structure.

The coding structure of a company is designed as per their

own convenience and the requirement of company. computer is

an electronic device and it is unable to understand the “HUMAN

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LANGUAGE”. In order to overcome this problem we use the

language, which can be understood by computer, which is called

coding.

Milk Procurement Department

Two aspects come under this department.

1:-Milk purchases

2:- Other then milk

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1:- Milk purchases

As you can understand by see the name the main activity of this

department is to collect the mild from its own centers of collect from

private dairy. The another essential requirement of Heinz is that of

purchases of milk. The main supply of milk is from the operating centers

of Heinz but if the requirement is not fulfill then milk is also taken from

the private of bulk suppliers. Although Heinz have 60 milk collective

centers in 6 distt, but now only 33 centers are operating. The supply of

milk is mainly from Aligarh, Badayun and Mathura, the major supply is

from badayun. Heinz has the storage capacity of 4 lakh liters of milk per

day during season, but this quantity get reduced during the flush season

of the off production period. Now days it is consume 90,000 liter milk per

day.

The responsibility of purchases of milk is basically on thepurchase

department. The milk procurement officer (m.p.o.) adjusts the rates of the

milk which are then approved by the director. The payment is depending

upon the fat & s.n.f. in the milk. Milk has three combinations in the milk,

which are water, fat, & s.n.f. The price is depending on fat & s.n.f. if fat

is more then 60% and remaining is s.n.f. the price is simple rate if fat is

more the 60% then pricing is increasing according to fat.

The storage and refrigeration to the milk is the responsibility of this

department, this is conduct milk purely milk test.That is collecting the

milk from its centers by safe transport of milk to the company. For this

purpose company have its 11 own trucks. Which are take the milk to the

company from centers, if it is necessary to take more trucks in the season

that is hair. Payment is made after every 3-4 days.

2:- Other then milk

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Activity of this department.

1:- purchases if raw and packing material.

2:- boiler fuel purchases.

3:- chemical purchases

4:- there are two stores

A)-factory store B)-engineer store

Whenever, production department requires raw material it

Asks to the factory stores purchase department issues

purchases order to suppliers. Account department and factory

Store/engineering stores.

Cash payment -:

The supplier delivers the goods to the factory Stores/engineering stores

and then the factory Stores/engineering stores issues G.R.N. (goods

receipts notes).

After receiving the goods, the concerned store sends the same to the user

department if the goods are raw material/packing material, the concerned

store, sends the sample of the goods to the quality assurance department

together with 4 copies of G.R.N.

SAFETY & HEALTH

Aim:-

For the purpose of providing safety and security to the company. Every

department in the company has been equipped with fire Extinguishers and

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first aid boxes. At the time of any contingency, the security officers

appointed for different zone perform there responsibilities.

1:- Its aim to make safety and health working condition to the employees

in the organization.

2:-The working condition of the organization is obeying the factory act

1948.

3:- The company is also obeying the rule of U.P state factory act 1950.

4:- watch the working condition like water facility, food facility etc.

5:- safety of employee and company’s property.

6:- company own staff is engaged for security.

7:- controlling and guarding the movement of guards at the gate.

8:- security alert around the factory hours.

Relation with finance:

1:-attendance of temporary and permanent.

2:-short of loss by reduce of accident.

3:-he sees that salary is paid double by the organization for their

overtime.

4:- job appointment make by them.

5:- how much annual leave provided by organization.

6:-how much minimum wages paid by organization

QUALITY ASSURANCE DEPARTMENT : - (Q.A)

As the name indicates quality is just not an accident, it is a

collective work of intelligent people with a team of well trained and

experienced people in quality assurance department.

Quality policy:-

37

Heinz India pvt. Ltd. Is committed to:

1:- procurement development, production, marketing of safe clean,

factory/ boundary wall area.For controlled production consistency in a

sanitary manner, so as to ensure that customer’s confidence is generated

and maintained consistently.

2:- establishing and maintaining appropriate operating and monitoring

procedures necessary for controlled production.Establishing and

maintaining appropriate training programmed so that every person

responsible for product integrity and safeguarding quality environments

competent to carry out his responsibilities.

3:- achieving high safety, occupations health and environment standards

establishing internal review procedures to ensure compliance of

applicable laws and regulation.

a)- Maintenance of quality assurance department and lab

equipment.

b) - To conduct quality assurance test of raw materials and

packing materials.

A ctivities:-

1:- Analysis of raw material finish goods and semi finish

goods.

2:- Cost of chemical, glass ware, media, Equipment machines.

3:- Assure of quality of consumer end.

4:- Outgoing & incoming of material complying.

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5:-This is responsible for quality of goods in the

organization.

6:- It is sampling of material outgoing and incoming.

7:- Require for new equipment & machinery to give the

best quality product & safely product for competitive

marketing and this requirement is completed by finance

department.

Finance department

Finance manager operation

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Assistant Manager Finance (2)

Account officer Account officer Account officer Account officer

Section head Section head

Clerical staff Clerical head

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INTRODUCTION TO FINANCE

Finance is the circulatory system of the economic body

of a firm. The term finance is used synonymously with

money.

In an organism composed of a number of separate

activities, each working for its own end but

41

simultaneously making a contribution to the system as a

whole, some force is necessary to bring about direction

and coordination of economic activity and facilitate its

smooth operation.

Financial management is the agent that produces this

result. Financial management is viewed as an integral part

of over all management rather than as a staff especially

concerned with the fund raising operation only.

Though all the important financial decisions are make by

the top management, the financial executive is deeply

involved in this process.

His main responsibility is to provide all the necessary

accounting information, analyses and discuss the various

alternatives and to suggest suitable solutions.

FINANCIAL FORECASTING: - it is the chief responsibility of

financial executive to make a sound financial forecast and

then to plan for achievement. He sees that the sufficient

supply of cash is available at the proper time for the smooth

flow of firms activities. He tries for an efficient flow of

firms activities. Experience financial crisis and defer its

payments.

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RAISING OF NECESSARY FUNDS :-Another main responsibility of

financial management is to supply adequate funds to the firm

for its various operations. A cost benefit analysis of various

alternative sources must be made before raising funds from

any particular source. If the company decides to raise the

needed funds by means of security issues, the finance

manager has to arrange the issue of prospects for the flotation

of issues. Where a company decides to borrow money from

financial institutions including commercial banks and specia

financial corporation, the finance manager has to negotiate

with the authorities.

ALLOCATION OF FUNDS: - In allocating the funds, consideration

must be given to the factors such as immediate requirements,

management of assets, profit prospects and overall management

plans. The finance manager has to ensure proper utilization of

cash funds by taking such steps as to help in speeding up the

cash inflows on one hand and slowing cash outflows on the

other hand.

ALLOCATING INCOME:- Income may be retained for financing

expansion of business or it may be utilized for retiring

outstanding debt or it may be distributed to the owners as

dividends as to return of capital.

DISPOSITION OF PROFIT : - The proper disposition of profit is

also an important responsibility of financial management.

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regarding the allocation of net profit after payment of takes a

typical firm may be said to have two choices:

(A)To pay dividends to the shareholders as a return upon their investment

and

(B)To retain earnings for the expansion of business. The financial

manager balances the expectations of investors and the need of retained

earnings to acquire additional assets.

Heinz India private ltd. Aligarh is the main manufacturing unit. The

stock is transferred from Aligarh factory to Varanasi, Ghaziabad and

Unnau (near Lucknow) Unnau is now known as Suklaganj, Delhi branch

of HEINZ INDIA PRIVATE LTD. Deals with the operations regarding

sales. It prepare monthly sales report regarding 3 locations (Varanasi,

Gaziabad and Suklaganj). This report is checked at Aligarh factory.

The central sales tax rules, 1975 prescribe use of various forms for the

purpose of central sales tax 1956. if the goods are send to outside U.P.

than from c is taken by the company. It is the responsibility of a/c

department to receive form c. it form is received then 4% sales

charges is taken by the company otherwise 10% is charged if

form c is not received. Form f- transfer otherwise then by sale.

44

Sources of Funds

45

CASH MANAGEMENT IN THE COMPANY

This Company follows the centralized management of cash.

Every Document relating to the payment of cash needs the

official authorization of the accounts executives.

Simplified Cash Cycle

DEBTORS

CASH INVENTORY

46

1: FACTS OF CASH MANAEMENT IN THE

COMPANY:-

A.BUDGET PREPARATION: The cash budget is

prepared in the Company on the basis of sales and capital

budget. The period of cash Budget is one year. It is prepared

usually in the month of February of every financial year. This

budget is based on the actual sales up to Dec plus expected

sales in the next three months. This budget is a flexible budget

which allows the suitable modification from time to time.

These changes in the budget are due to the changes in the

inventories requirements or due to any emergency.

In addition to preparation of cash budget it also

prepares. A statement of cash requirement”. This statement is

prepared on monthly bases. Before the commencement of

every month, every department in the company presents its

expected funds requirement for the coming month after

consolidating these funds requirements pertaining to various

departments in the company. The finance department prepares

a consolidated statement of cash Requirement for a

particular month. The head office in turn sends the amount

required by the company through canara bank. The amount is

remitted to the bank twice a week. If the funds come in surplus

then the balance is adjusted in the next remittance.

47

B. F. F: The Control report is also prepared in the company

on the monthly bases which facilities in comparing the actual

development with forecast Figures. This report shows the

payments and recipients of the company during a particular

month, the actual figures are compared with the budget figures

and variance is calculated.

C.MONITORING COLLECTIONS AND

RECEIVABLES: The Company follows efficient cash

Collection policies. With regard to the collection of receivables

from the sales, it has adopted a policy of “advance receipts”.

The sales of goods are made through the carrying and

forwarding agents.

D. CONTROL OF PAYABLE: With regard to the

payment of goods received. The company makes the payments

only when they fall due.

E. CASH PAYMENTS: whenever, production department

requires raw material it asks to the factory stores/engineering

stores. The factory stores/engineering stores issues purchase

requisition to the purchase department. The purchase

department issues purchase requisition to the purchase

department. The purchase department issues purchase order to

suppliers, account department and factory stores/engineering

stores.

48

The supplier delivers the goods to the factory

Stores/engineering stores and then the factory

Stores/engineering stores issues G.R.N

(Goods Receipts Notes). After receiving the goods, the

concerned stores and sends the same to the users department if

the goods are raw material/packing material, the concerned

store, sends the sample of the goods to the quality assurance

department together

with 4 copies of G.R.N, retaining one copy of G.R.N with

itself. After receiving the samples together with all 4 copies of

G.R.N, the quality assurance test the quality of goods, G.R.N

becomes G.A.N (Goods Acceptance Notes). There after Q.A.D

sends one copy of G.A.N to accounts department, after

receiving the involve from suppliers, G.A.N from the quality

assurance department. The accounts department tallies the

amount, rates and volume of goods supplied and then makes

the final payment to the suppliers.

F. INVESTMENT OF THE SURPLUS CASH:

Surplus cash for the company is a rate term but,

whenever any surplus cash remains with the company,

it is adjusted in the next remittance.

49

RATIO ANALYSIS

Ratio analysis is a widely used tool of financial analysis. It is

defined as the systematic use of ratio to interpret the financial

statement so that the strength and weakness of a company as

well as its historical and current financial condition can be

determined the term ratio refers to the numerical quantitative

relationship between the two variables.

The relationship can be express as:

• Percentage.

• Fraction.

• Propionate.

The alternative methods of expressing items which are

relative of each other are, for purpose of financial

analysis, referred as ratio analysis. Financial ratios have

been classified into several bases: for our purpose

following ratios are important.

CURRENT RATIO:

It is defined as: Current Assets

Current Liabilities

The current ratio measures the ability of the firm to

meet its current liabilities, apparently, the higher the

ratio the greater the sort term solvency.

50

ACID TEST RATIO:

It is defined as: Quick Assets

Current Liabilities

The acids test ratio is a fairly measures of liquidity. It is based

on those current assets which are highly liquid.

INVENTORY TURNOVER:

It measures how fast the inventory is moving through the firm

and generating sales.

It is defined as: Cost of goods sold

Average Inventory

ACCOUNTS RECEIVBLE TURNOVER:

This ratio shows how many times accounts receivable turnover

during the year.

It is defined as: Net credit sales

Average Account Receivable

AVERAGE COLLECTION PERIOD:

The average collection period shows, the number of days worth

of credit sales that is locked in debtors.

It is defined as:

Average collection period: 365

Accounts receivable turnover

This ratio may be compared with the firm’s credit terms to

judge the efficiency of credit management.

51

52

CHAPTER

8

53

SUPPLY CHAIN MANAGEMENT

A Supply chain consists of all parties involved,

directly or indirectly, in fulfilling a customer request. It

not only includes manufactures and suppliers, but also

transporters, warehouses, retailers and customers

themselves.

Whereas marketing channels connect the marketer to

the target buyers, the supply chain descries a longer

channel stretching from raw material to components to

final products that are carried to final buyers. The

supply chain represents a value delivery system.

Each company captures only a certain percentage of the

total value generated by the supply chain. When a

company acquires competitors or moves upstream or

downstream, its aim is to capture a higher percentage

of supply chain value.

A Value network is a system of partnerships and

alliances that a firm creates to source, augment, and

deliver its offerings.

54

Marketers, for their part, have traditionally focused on

the side of the value network that looks forward toward

the customer. Hopefully, they will increasingly

participate in and influence their companies, upstream

activities and become network managers, not only

product and customer managers. Most producers do not

sell their goods directly to the final users; between

them stands an asset of intermediaries performing a

variety of functions. These intermediaries constitute a

Marketing channel (Trade Channels or Distribution

Channel).

Some intermediaries- such as wholesalers and retailers-

buy, take title to, and resell the merchandise; they are

called merchants. Others – brokers, manufacturers,

representatives, and sales agents – search for customers

and negotiate on the producer’s behalf but do not take

title to the goods; they are called agents. Still others –

transportation companies, independent warehouses,

banks, advertising agencies – assist in the distribution

process but neither takes title to goods nor negotiates

purchases or sales; they are called facilitators.

Marketing channels are sets of interdependent

organizations involved in the process of making a

55

product or service available for use or consumption.

Marketing channel decisions are among the most

critical decisions facing management. The channels

chosen intimately affect all the other marketing

decisions. The company’s pricing depends on whether

it uses mass merchandisers or high quality boutiques.

The firm’s sales force and advertising decisions depend

on how much training and motivation dealers need. The

company decisions involve relatively long term

commitments to other firms.

A distribution system is a key external resource.

Normally it takes years to build, and it is not easily

changed.

It ranks in importance with key internal resources such

as manufacturing research, engineering, and field sales

personnel and facilities. It represents a significant

corporate commitment to large number of independents

companies whose business is distribution and to the

particular markets they serve. It represents, as well, a

commitment to as set of policies and practices that

constitute the basic fabric on which is woven and

extensive set of long term relationships.

56

57

Supply Chain for Heinz

Factory

C&FA’S (DEPOTS)

Billing Distributors

Retailers

Consumers

58

CHAPTER

9

59

OBJECTIVE OF THE STUDY

1 To acquaint ourselves with the budget processes and

procedures and system of financial accounting.

2 To assess the monitoring and control system in

Heinz.

3 To gain awareness about the budget allocation and

feasibility study.

4 To evaluate the operations of the financial planning

and

monitoring section in the corporation.

5 To assess the effectiveness of the budgeting system

in

the corporation.

60

RESEARCH METHODOLOGY

The methodology employed for the study of project

“Budget Procedure & Analysis” is through the

collection of primary and secondary data. Primary data

is obtained through the observation, interviews and

discussion with the officers of the Heinz.

Secondary data is derived from the published and

unpublished sources, like company publications such as

annual reports, annual plan, magazines and

publications from Department Of Heinz Ltd.

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CHAPTER

10

62

"BUDGET", WHAT IT MEANS:

Budget may simply be stated a plan expressed in

money. It is prepared and approved prior to the budget

period and may show income, expenditure & the

capital to be employed. It may be drawn up showing

incremental effects on former budgeted or actual

figures or be compiled from zero bases i.e. starting

from scratch.

In other words, it is a quantitative expression of a plan

of action relating to the forthcoming budget period. It

represents a written operational plan of management

for the budget period. It is always expressed in terms of

money and quantity. It is the policy to be followed

during the budget period.

From the above explanation, it may be noticed that the

following are the essential features that a budget has:

Financial & quantitative statement of the plan of

action.

Laid down prior to the budget period.

Based on Management policy &

Prepared for specified objectives.

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WHAT THE BUDGETARY CONTROL

IS?

Budgetary control implies the use of comprehensive

system of budgeting to aid management in carrying out

its functions like planning, co-ordination & control, etc.

However budgeting is a way of managing business &

industry. It emphasizes that management should

anticipate problems & difficulties. Advance decision

should be taken for the course of activities during the

forthcoming budget period.

Thus budgetary control denotes the establishment

of budgets relating to responsibilities of executives for

the achievement of predetermined target, & the

continuous comparison of actual with the budgeted

results to ensure achievement of the target, identify the

variance, & to provide a basis for revision if required.

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WHY ‘BUDGETORY CONTROL’ IS REQUIRED

Budgets keep different sections of the organization

informed about the contribution of different sub-units

in the attainment of overall organizational objectives.

A comprehensive system of budgeting helps to co-

ordinate different functional budgets.

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Budgeting is an important planning device.

Planning is an important managerial function.

Planningaimportanmanagerffunfffuncfunction

Manager to plan ahead is driven by budget

preparation.

Budget plays an important role to motivate the

employees, depends purely on how the employees have

been mentally & physically involved with the process

of budgeting.

Since a lot of 'cuts' and 'adjustments' are to be made

to make functional budgets fit in the organizational

objectives. Thus the in built mechanism of the routine

of budgetary control is bound to precipitate to an

operational control.

It concerns all functions of an organization and

serves as a guide to executives & departmental heads,

responsible for various departmental objectives.

HOW ‘BUDGETARY CONTROL’ IS

OPERATED:

Broad objectives of organization are specified before

the plan is stated, which involves expressing the

mission, vision & ethical tone of organization.

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An organization is divided into different budget

centers linked with the responsibility of concerned

departmental head.

An organizational chart is prepared defining

functional responsibilities of executives responsible for

accomplishment of organizational goal. Authority at

the different level is delegated.

Budgets for different budget centers are prepared in a

standard format as per predetermined guidelines.

Normally a budget committee is constituted having

representation of Chief Executive & Heads of all

budget centers. The departmental heads of budget

centers form a group that passes judgment over the

issue presented to Budget Committee for deliberation.

The above is followed by the preparation of budget

manual, which contains standardized forms, which

become input resources for compilation of budgets.

Budget period is determined for which a budget is

prepared and used, then may be sub-divided into

control periods. Whether a budget is to be a long term

budget or a short term budget, is to be decided

primarily with reference to the following to factors:

(a) Type of business.

(b) Amount of control required.

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A budget period should normally coincide with the

financial accounting period in order to compare actual

results with the budget estimates.

Budgets are kept under periodic review and revised, if

necessary, to minimize the variances.

CLASSIFICATION OF BUDGET:

FIXED BUDGET :

A budget, which remains unaltered during the budget

period, is called fixed budget. It is prepared for a

particular activity level and it does not change with the

actual activity level being higher or lower than

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budgeted activity level. This budget does not highlight

the ‘activity variance’.

FLEXIBLE BUDGET:

A flexible budget, which by recognizing different cost

behavior patterns, is designed to change as volume of

output changes. It is also termed as Variable or Sliding

Scale budget. It provides a logical comparison of

budget allowance with actual cost. When flexible

budget is prepared, actual cost at actual activity level is

compared with budgeted cost at actual activity level. It

helps both in profit planning and operating cost control.

Therefore, in-depth cost analysis and cost identification

is required for preparation of flexible budget. Actually

a flexible budget constitutes a series of fixed budgets,

i.e., one fixed budget for each level of activity.

BASIC BUDGETS:

These budgets are made for a long period of time and

remain unaltered due to small reasons. Like, revision of

pay scales or changes in price of material will not lead

to changes in these budgets.

CURRENT BUDGETS :

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These budgets are established for use over a short

period of time and are related to current conditions and

dominantly highlight operating variances.

CAPITAL EXPENDITURE BUDGET:

It is a plan for proposed capital outlays. Hence these

are long-term budgets. Large risk & uncertainties are

associated with capital investment decisions.

WHY WE GO FOR ‘CAPITAL EXPENDITURE

BUDGET’:

(a) To evaluate capital expenditure proposals.

70

(b) To establish priorities in the proposed plan.

(c) To control capital expenditure.

(d) To appraise the profitability performance

projects.

HOW WE GO FOR ‘CAPITAL

EXPENDITURE BUDGET’:

Proposal for capital expenditure may be initiated by

anyone from operating level to top level of

management. The concerned department head, first

appraises the request.

If the project / proposal appears to be sound and

reasonable, formal request for ‘capital appropriation’ to

top management is made.

Recommendation of Engineering Department for its

technical strength and Finance & Accounts Department

71

for its financial strength plays important role for final

sanction on the proposals.

A request for ‘capital appropriation’ for the particular

project must contain:

(a) Description of the project.

(b) Reasons calling for proposed change or

addition.

(c) Estimates for cost of proposal.

(d) Estimates about life of the project.

(e) Advantages to be gained by accepting the

proposal.

(f) Disadvantages of not accepting the proposal.

(g) An idea of how the proposal can be financed.

Capital expenditure budget is coordinated with cash

budget. After ensuring that sufficient funds are either

available already or will be available when required or

can be raised as and when desired, authorization /

sanction for proposed expenditure can be granted by

the sanctioning authorities. Depending on the

availability of financial support there may be capital

rationing and according to the profitability, priority and

necessity some of the proposals may be postponed for

future.

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FUNCTIONAL BUDGETS:

A budget of income and/or expenditure applicable to a

particular function is termed as Functional Budget.

Important functional budgets are:

(a) Sales budget.

(b) Production budget

(c) Production cost budget.

(d) Material budget.

(e) Purchase budget.

(f) Labor budget.

(g) Overhead budget.

(h) Administration cost budget.

(I) Research & development budget.

(j) Capital expenditure budget.

(k) Selling & Distribution cost budget

(l) Cash budget.

OPERATING BUDGET:

Operating budget is a budget for a given level of

operation during a given period of time based on which

projected profit and loss statement is prepared.

SUMMARY BUDGET:

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A summary budget summarizes all functional budgets

that results the budgeted profit & loss account & the

budgeted balance sheet.

MASTER BUDGET:

Master budget is the summary budget, which has been

formally accepted by top management after proper

review & re-adjustment. It is an integrated form of all

functional budgets bearing approval of top

management. It is a complete financial presentation of

all operating plans of the company for the budget

period.

Master budget is the best media of understanding the

company’s microeconomics relating to the forth-

coming budget period. Master budget represents the

final product of activities relating to budget

preparation.

ZERO BASE BUDGETING:

A method of budgeting whereby all activities are re-

evaluated each time, whenever a budget is prepared.. It

has gained worldwide eminence after Peter Pyhr used it

in Texas Instruments Inc., a U.S. based computer &

electronic manufacturer. In zero-base budgeting no

74

reference is made to previous level of expenditure. A

convincing case study is made for each decision unit to

justify the budget allotment for that unit during that

period.

Thus it is a technique, by which manager of each

decision unit is to justify his entire budget request in

complete detail with a zero-base.

CASH BUDGET :

This is also referred as ways & means budget.

It is a forecast of cash flows. Preparation of cash

budget is based primarily on following information.

(a) Detailed estimates of cash disbursements.

(b) Time lag induced by credit transactions &

(c) Time lag in items of revenue & expenditure.

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WHY WE GO FOR CASH BUDGET:

(a) To ensure whether sufficient cash is available

for revenue & capital expenditure.

(b) To show when & how much additional finance

is needed.

(c) To show when surplus funds are available in

business & its deployment.

(d) To plan the cash position in such a way that

maximum utilization can be planned.

Keeping company’s liquidity position sufficiently

sound, to meet its daily obligation is the main object of

preparing these budgets. Three ways of preparing cash

budget are as follows-

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(a) Receipt & payment method.

(b) Adjusted profit & loss account method.

(c) Balance sheet method.

CHAPTER

11

77

ANALYSIS OF BUDGET VARIANCE

A comparison of actual result with budgeted results is

basic need behind Budgeting. All the factors with

negative variance must attract special attention in

evaluating & investigating the variances to determine

the underlying causes for the same.

At the time of variance analysis, facts need to be

considered are:

(a) Analysis should not be selective, both

favorable & adverse variation should be investigated.

(b) It should be insured that variation is not due to

reporting or clerical error.

(c) It should be noted whether variation was

due to special managerial decision in order to improve

efficiency or meet certain exigencies.

(d) Whether variance is controllable or

uncontrollable.

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(e) The maximum attention should be focused

towards the variation for which precise underlying

causes are not known.

BUDGET FOLLOW-UP:

The final phase of Budgeting is budget follow-

up. It is the action taken up to see that budgets are

properly used & focused towards achievement of the

required target.

TYPES OF BUDGET:

There may be different kinds of Budget

depending on the different specified objectives. As far

as NPCIL is concerned mainly two types of Budget are

being prepared: -

(1) CAPITAL BUDGET:

It is a plan for proposed outlay on fixed assets like

Land, Building, Plant & Machinery, and Furniture &

Fixture & Vehicles. It represents the expected

expenditure on fixed assets during the budget period.

(2) REVENUE BUDGET:

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Revenue Budget is the estimated profit & loss account

for the budget period. It is a plan for all expected

income & expenditure of revenue nature directed

towards attainment of any specified objective.

IDENTIFICATION OF CAPITAL &

REVENUE:

Broadly all the commercial transaction including

expenditure, income, payment, receipts, profit & loss

can be classified in two heads:

1. Capital items

2. Revenue items

As far as our day today working is concerned our

emphasis is on proper distinction between capital &

revenue expenses.

Following rules may serve as a guideline in this regard:

Capital Expenditure:

It consists of expenditure the benefits of which is not

fully Consumed in one period but spread over in

periods. Any expenditure will be termed as capital

expenditure if

(a) Benefits of the expenditure are spread over years.

(b) Assets acquired for the purpose of earning & not for

resale.

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(c) Improving & extending fixed assets.

(d) Increasing the earning capacity of the business.

(e) Increasing the useful life of ting assets.

(f) Reducing working expenses of the business.

(g) Raising capital for the business.

(h) Incidental expenses incurred for the purpose of

acquiring any fixed assets.

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Revenue Expenditure:

It consists of expenses incurred in one period of

account, the full benefits of which are consumed in that

period. Any expenditure will be termed as revenue

expenditure if:

(a) Assets have been acquired for resale with profit

motive.

(b) Expenditure is made in saleable goods with profit

motive.

(c) Expenditure is made for maintaining fixed assets in

a

good working order.

(d) Replacements of any part of fixed assets due to

wear

& tear.

(e) Meeting the day today expenses of carrying on

business.

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Revenue expenditure treated as Capital

expenditure:

Any expenditure of revenue nature becomes capital

expenditure if the same is incurred in connection with

any capital expenditure.

CHAPTER

12

83

CAPITAL BUDGET AT HEINZ

Budget Preparation :

The cash budget is prepared in the Company on the

basis of sales and capital budget. The period of cash

Budget is one year. It is prepared usually in the month

of February of every financial year. This budget is

based on the actual sales up to Dec plus expected sales

in the next three months. This budget is a flexible

budget which allows the suitable modification from

time to time. These changes in the budget are due to the

changes in the inventories

requirements or due to any emergency.

In addition to preparation of cash budget it also

prepares.” A statement of cash requirement”. This

statement is prepared on monthly bases. Before the

commencement of every month, every department in

the company presents its expected funds requirement

for the coming month after consolidating these funds

84

requirements pertaining to various departments in the

company.

The finance department prepares a consolidated

statement of cashRequirement for a particular month.

This consolidated statement is sent to the Mumbai head

office: the head office in turn sends the amount

required by the company through canara bank. The

amount is remitted to the bank twice a week. If the

funds come in surplus then the balance is adjusted in

the next remittance.

Steps involved:

While preparing RE & BE for the budget period

following

Steps should be taken:

(1) Critical review of the completed items involved in

the previous year budget.

(2) Delete the fully completed items.

(3) Up-date the ongoing items, to reach at anticipated

completion cost.

(4) Add the new requirement in the format to be

submitted to Budget department i.e. planning cell.

85

FORMATS DEVISED FOR CAPITAL

BUDGET PREPARATION:

(1) For projects-

(a) Capital budget input pro-forma.

(b) Item lists of office equipments & overhead

expenditure.

(c) Financial sanctions pro-forma.

Financial sanction:

(a) For small value items up to lacs financial

planning & monetary section (FPMS) will seek the

financial sanction from the board along with the

Capital Budget.

(b) For the value item above lacs, financial

sanction is to be got separately.

Guidelines to be followed:

(1) Use the standard format developed for Budget

proposal.

(2) In case of voluminous data use Excel with the

same database structure & provide soft copy with the

hard copy.

86

(3) Fill the format carefully & completely.

(4) Budget for spare parts procurement should be

given in revenue Budget irrespective of the value.

(5) Reasons for variation between BE & RE is to

be specified if variation is for more than 25 lacs.

(6) For the items above 1 lacs budget provision is

to be made individual:

(a) Purchase order (PO) / indent wise.

(b) Work order (WO) / Technical Sanction wise.

(7) All small value items below RS.1 lacs can be

proposed in consolidated manner under the head

“Small Value Items”.

(8) Proper Universal Standard Index (USI) no.

Account Code in case of station should be used in the

format.

(9) Budget for Advance Payments is to be

prepared only when it is ensured.

(10) Budget for balance payments need not be

repeated as spillover unless the amount involved is

RS.25 lacs or more.

(11) Adhere to the time limit specified in the Budget

circular to avoid late submission of final budget

to

87

Head Office.

88

In the company the financial budget prepared as

segment

wise:-

Firstly Finance and operation head ask different

department to submit their Individual future expected

expenditure for next financial year.

There are 24 Different departments in the company

which give their future expected expenditure under

different Head. These different Heads are:-

Head

Workmen Costs

Management Costs

Electricity & Fuel

Depreciation

Plant Maintenance

Building Maintenance

Staff Welfare

Consumables

Vehicle Expenses

Outside Charges

Travel

89

Vehicle hiring charges

Insurance

Rent

Postage & Comm.

Licenses etc.

Others

Grand Total

Action by planning cell:

If all details are not provided in the capital budget

input pro-forma Planning Cell/Financial Planning &

Management Section should reject the proposal

because the same will ensure proper utilization of

Budget proposal or will avoid under Utilization of

Budget proposal.

Budget department (Planning Cell) of the Unit

should allot unique budget control number for each

item included in the Budget before its submission to

Financial Planning & Management section (FPMS).

Original Budget control number allotted at the time

of inclusion of the item in the Budget is to be retained

till the item is completed/deleted from the budget.

90

CONCLUSION

Budgeting is an effective tool for planning,

setting performance target and its achievement on any

front whether it is private business activity, social work

or govt. operation. Even an individual has to budget his

monthly expenditure in order to save a particular

amount of meeting requirement of future plan.

Due to fast changing operational and financial

environment budgeting requires the application up-to-

date rational and practical techniques. It requires the

use of simple and methodical approaches to the

problem on head for arriving at a quick solution. The

process of budgeting needs to be reviewed periodically

and changed according to the changes in situation and

needs.

The company follows techniques like zero-based

budgeting. It goes to show that there is still a room for

improvement in the budget formulation and monitoring

part, which is a bit of concern for the management. It

should be noted that the company is making constant

efforts to improve the system, in making the forecasts

more accurately and timely.

91

Further, there is substantial innovation in the ranks of

the employees in the section that has helped boost the

budgeting policies and procedure over a period of time.

The organization has a very good system of accounting

and all the accounts of various sections are well

maintained here by office members. As discussed

above various vouchers and documents are prepared to

regulate the day-to-day work of the organization.

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SUGGESTIONS &

RECOMMENDATIONS

1) The periodic appraisals in the budgeting processes

and techniques with aid the system to be more effective

and efficient, by overcoming shortcomings, if any, at

the right time.

2) Sophisticated technology should be incorporated

into the budgeting exercise, by implementing budgeting

software packages which would help to establish the

relationship between budget estimates and cost

estimates in a more solid and authentic manner, and to

set specific financial targets which are realistic and

achievable.

3) Developing integrated computer software for online

budget monitoring and updating the budget database as

and when pre-commitment is entered by way of

registering indents/technical sanctions/expenditure

proposal in the budget section.

4) Budget utilization should be monitoring by way of

updating payments released against a specific budget

93

head, to avoid bottlenecks and deadlocks in the overall

budgeting system.

5) A system of fixing responsibility for the under

utilization of allocated budget will help to enhance the

overall budgeting procedure.

6) Budget is considered as a strategic financial plan,

which should be supported by devising tactical plans,

i.e. short-term financial plans, to enhance and ensure

smooth control. This will help to check and correct

deviations that may occur at different stages of

implementation.

7) Periodic reviews should be carried out in estimating

the revised estimates, and the results should be

communicated to the company, at large to bring in

transparency and credibility to the system.

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BIBLIOGRAPHY

REFERENCES:-

1.Management Accounting Books.

(a) Bhattacharyya.

(b) Pandey.

(c) Horngren.

2.Company Records

3.Data from the past record from the company.

4.Company web Sites.

(1) www.heinzindia.com

(2) www.heinz.in.co

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