3introduction To Budget and Budgetary Control

BUDGETARY CONTROL ON CADBURY INDIA LTD
CHAPTER - 1
INTRODUCTION ON
CADBURYINDIA LIMITED
COMPANY PROFILE
1.1 HISTORY
The Cadbury family It was John Cadbury, a young Quaker, who first set things in motion
when he opened a shop in Birmingham, UK in 1824. His original focus was the trade of tea
and coffee, but he soon spotted a new opportunity in cocoa beverages and laid the
foundations for Cadbury's move into chocolate and then confectionery.
Cadbury's was a business founded on values and a sense of social responsibility. As a
Quakers the Cadbury family believed tea, coffee, cocoa beverages could serve as an
alternative to alcohol, seen to be a cause of poverty and deprivation amongst the working
classes.
More broadly, they were active across other Quaker campaigns for 'justice, equality and
social reform, putting an end to poverty and deprivation.' For example, Cadbury
were involved in the early anti-slavery movement, calls for better housing and sanitation, and
inner city smoke abatement.
Across UK society Quakers were excluded from universities (which were closely tied to the
established church) and therefore entry into the professions. They were also unwilling to
enter the military due to their pacifist principles, so turned their energies and talents towards
business and social reform. You could say the legal profession's loss was confectionery's
gain...
So starting with cocoa hand-ground with a mortar and pestle in the back room of his shop,
then renting an former malthouse, John Cadbury became a manufacturer of drinking
chocolate and cocoa, laying the foundation of Cadbury's business of creating brands people
love.
VIVEK COLLEGE OF COMMERCE
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1.2 INTRODUCTION
Cadbury began its operations in 1948 by importing chocolates and then re-packing them
before distribution in the Indian market. After 59 years of existence, it today has five
company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior),
Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkota
and Chennai). The corporate office is in Mumbai.
We are currently the worlds biggest confectionery company with a number one or number
two position in 20 of the 50 largest confectionery markets across the globe.
We make, market and sell unique brands which give pleasure to millions of people around the
world every day. We are recognised as a highly respected company and an employer of
choice with over 50,000 staff worldwide.Currently With origins stretching back over 200
years, today our products - which include brands such as Cadbury, Halls, Trident, Dentyne
and Bubbaloo - are enjoyed in almost every country around the world. Since then we have
expanded our business throughout the world by a programme of organic and acquisition led
growth..With origins stretching back over 200 years, today our products - which include
brands such as Cadbury, Schweppes, Halls, Trident, Dr Pepper, Snapple, Trebor, Dentyne,
Bubblicious and Bassett - are enjoyed in almost every country around the world. We employ
around60,000people.
Our heritage starts back in 1783 when Jacob Schweppe perfected his process for
manufacturing carbonated mineral water in Geneva, Switzerland. And in 1824 John Cadbury
opened in Birmingham selling cocoa and chocolate.
These two great household names merged in 1969 to form Cadbury Schweppes plc. Since
then we have expanded our business throughout the world by a programme of organic and
acquisition led growth. Concentrating on our core brands in beverages and confectionery
since the 1980s, we have strengthened our portfolio through almost fifty acquisitions,
including brand icons such as Mott's, Canada Dry, Halls, Trident, Dentyne, Bubblicious,
Trebor, Bassett, Dr Pepper, 7 Up and Snapple.
Registered Office
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Cadbury India Ltd, Cadbury House
19, B Desai Road
Mumbai 400 026
Maharashtra-400026
India
SOME KEY POINTS
We make and sell three kinds of confectionery: chocolate, gum and candy
We operate in over 60 countries
John Cadbury opened for business in 1824 - making us nearly 200 years young
We work with around 35,000 direct and indirect suppliers
Every day millions of people around he world enjoy our brands.
PURPOSE
Cadbury core purpose is "Working together to create brands people love". The core purpose
captures the spirit of what we are trying to achieve as a business.We collaborate and work as
teams to convert product, our purpose continues to be to work together to create brands
people love. You are sure to be fans of at least some of our famous brands products into
brands.
VISSION
To align with our core purpose, Cadbury India has defined its Vision as "Life Full Of
Cadbury and Cadbury Full of Life".
Cadbury India will participate in many spaces of consumer life through a cache of product
offerings - be it chocolates or snacks or gum.
We believe that work and fun can co-exist beautifully. Therefore at Cadbury India, it's all
about work hard, play harder!. We bring moments of delight to our consumers everyday and
every time. Therefore, we strongly believe that the people who create these products should
also have fun while doing so.
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VALUES
Performance
Cadbury is passionate about winning. They compete in a tough but fair way. They are
ambitious, hardworking and make the most of our abilities. They are prepared to take risks
and act with speed.
Quality
Cadbury put quality and safety at the heart of all of their activities - their products, their
people, their partnerships and their performance.
Respect
Cadbury genuinely care for their business and their colleagues. Cadbury listen, understand
and respond. they are open, friendly and welcoming. They embrace new ideas and diverse
customs and cultures.
Integrity
Cadbury always strive to do the right thing. Honesty, openness and being straightforward
characterise the way we do business. They have clear principles and do what they say they
will do.
Responsibility
Cadbury take accountability for our social, economic and environmental impact. In this way
Cadbury aim to make their business, their partners and their communities better for the
future.
Cadburys Business Principles are there code of conduct and also take account of global and
local cultural and legal standards. They confirm our commitment to the highest standards of
ethics and business conduct. Core purpose and vision section: Core purpose: Our core
purpose is creating brands people love. The core purpose captures the spirit of what we are
trying to achieve as a business.
Cadbury collaborate and work as teams to convert products into brands.
Non-formal school set up by Cadbury for children of migrant workers in Baddi
Thanks to the efforts of the Baddi factory team over 50 children of migrant workers living in
and around our Baddi factory will now have daily access to non-formal education. Cadbury
has set up a non-formal school as part of our commitment to create prosperous, inclusive and
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healthy communities.
This is the first phase of Project SAHYOG an 18 month project which commenced in January
this year in partnership with an NGO RUCHI. The project reaches out to over 400 poor &
marginalized families in Sandholi village near our Baddi factory and apart from education,
the other key interventions will be on village health, sanitation, education & water harvesting.
The project was recently inaugurated by Mr B R Verma, Labour Commissioner cum Chief
Inspectorate of Factories & Directorate of Employment; Himachal Pradesh in the presence of
Mr Sudhir Sharma, Dy Director Industries and senior officials of BBN Industries Association.
The Chief Guest appreciated Cadbury's effort to make a difference in the community and
encouraged the villagers to come forward and support the initiative.
In the coming months the project through a group of 12 SAHYOG CHAMPIONS (colleagues
from the Baddi factory) will undergo an orientation program with the NGO RUCHI and will
subsequently mobilize Baddi colleagues to volunteer their time in the community on aspects
of village health, sanitation and education.
PRIORITIES
We have a clear business plan called our Vision Into Action (VIA). This aligns the energies
and efforts of our teams behind the brands, markets and projects that will make the most
impact on our revenue, our margin, and our market performance. We organize across three
priorities:
Growth: Fewer, faster, bigger, better Using our size, focus and sustainable approach
to create brands which are consumer favourites. Building strong partnerships with
retailers, so we grow profitably across chocolate, gum and candy.
Efficiency: Relentless focus on price, cost and efficiency Simplifying our
organization to reduce costs and increase speed and our ability to compete.
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Managing our use of financial and natural resources to increase profit margins and
improve our environmental impact
.
Capability: Ensure world-class quality Developing world-class skills, processes and
ways of working. Motivating our people and reward winning performance.
They are underpined by our Sustainability Commitments which have been carefully selected
to both improve our business and our impact on the wider.
1.3 SUSTAINABILITY COMMITMENTS
We see corporate social responsibility and sustainability as key to our future success - helping
us create a world in which we can grow and thrive.
We have identified six commitments to ensure we grow in a responsible and sustainable way
for the long-term.
Commitments:
Promoting responsible consumption through thoughtful marketing, product
innovation and better nutritional labeling.
Ensuring ethical and sustainable sourcing including the Cadbury Cocoa Partnership
to support farmers and their communities.
Prioritizing quality and safety
Cutting carbon, packaging and water use as part of our Purple Goes Green campaign.
Nurturing and rewarding colleagues, and embracing diversity.
Investing in communities - our money, our time, our capability.
As well as being the right thing to do, they also create value and competitive advantage,
helping to strengthen our business, build our reputation, and motivate our people.
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1.4 COST & EFFICIENCY

Relentless Focus on Cost and Efficiency
Cadbury recognize that we can be much more profitable by simplifying the way we do things
across all aspects of our business. Because of the way we have organised ourselves in the past
and the number of acquisitions we have made, we are a complex business. Our total cost
base is higher and our margins are currently below our peer group average. Our goal of
increasing our underlying operating margins from around 10% in 2007 to mid-teens by end of
2011, has three core elements: A major group-wide cost and efficiency programme across all
aspects of our business - in sales and administration, in the supply chain, in the regions and at
the group centre. We are aiming to reduce the complexity in our business and minimize
duplicated activities; Improving the performance in three key underperforming emerging
markets Russia, China and Nigeria; and Focusing relentlessly on profitable growth and
where necessary, rationalizing our portfolio. Examples of the ways in which we are
simplifying our business to reduce costs include: Managing our chocolate, candy and gum
categories and biggest brands on a global basis rather than on an individual market or region
basis.
Combining local market and regional head offices, including in the UK where we are colocating our central head office team with the BIMA management team in a single office;
Combining or clustering a number of markets into a single commercial organization with
greater scale and lower overall costs such as Canada and the USA; Outsourcing certain
financing, accounting, IT and human resource processes to specialist third party operators;
This will allow us to reduce costs and invest in new state of the art factories to support our
growth agendas.
1.5 BRANDS
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Our brands include many global, regional and local favourites. Our three largest brands are
Cadbury in chocolate, Trident in gum and Halls in candy. Other important brands include: in
chocolate, Crme Egg, Flake and Green & Blacks; in gum, Hollywood, Stimorol, Dentyne,
Clorets and Bubbaloo; and in candy, clairs and the Natural Confectionery Company.
Cadbury Dairy Milk:
When Cadbury Dairy Milk chocolate with its deliciously smooth texture and unique creamy
taste, was first introduced in the early 1900s, it made an immediate impact quickly becoming
the market leader. The success story has continued until today when it is still the top selling
chocolate brand in the country. The Cadbury Mega Brand's broad family
of products has
an international retail value approaching US $1billion. As an international brand, Cadbury

Dairy Milk carries the same distinctive image all over the world.Cadbury Dairy Milk
emerged as the No. 1 most trusted brand in Mumbai for the 2005 edition of Brand Equity's
Most Trusted Brands survey. During the 1st World War, Cadbury Dairy Milk supported the
war effort. Over 2,000 male employees joined the armed forces and Cadbury sent books,
warm clothes and chocolates to the front.
Cadbury 5star
Chocolate lovers for a quarter of a century have indulged their taste buds with a Cadbury 5
Star. A leading knight in the Cadbury portfolio and the second largest after Cadbury Dairy
Milk with a market share of 14%, Cadbury 5 Star moves from strength to strength every year
by increasing its user base.
Cadbury 5 Star & Cadbury 5 Star Crunchy now aim to continue the upward trend.
This different and delightfully tasty chocolate is well poised to rule the market as an
extremely successful brand. Cadbury 5 Star played an adept cupid for young couples in love
in the 70's. In fact, Cadbury 5 Star was a way of professing undying love for the significant
other.
Cadbury Perk:
A pretty teenager; a long line, and hunger! Rings a bell? That was how Cadbury launched its
new offering; Cadbury Perk in 1996. With its light chocolate and wafer construct, Cadbury
Perk targeted the casual snacking space that was dominated primarily by chips & wafers.
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With a catchy jingle and tongue in cheek advertising, this 'anytime, anywhere' snack zoomed
right into the hearts of teenagers.In 2004, with an added dose of 'Real Cadbury Dairy Milk'
and an 'improved wafer', Perk became even more irresistible.
The product was supported in the market with a new look and a new campaign. The
advertisement spoke of the irresistible aspect of the brand, with 'Baaki sab Bhoola de'
becoming the new mantra for Cadbury Perk. Cadbury Perk advertising has been a launch pad
for Bollywood stars - Preity Zinta, Raageshwari, Gayatri Joshi and Amrita Rao, were all Perk
models before they made it big on cinema screens.
Cadbury Celebrations:
Cadbury Celebrations was aimed at replacing traditional gifting options like Mithai and dryfruits during festive seasons. Cadbury Celebrations is available in several assortments: An
assortment of chocolates like 5 Star, Perk, Gems, Dairy Milk and Nutties and rich dry fruits
enrobed in Cadbury dairy milk chocolate in 5 variants, Almond magic, raisin magic, cashew
magic, nut butterscotch and caramels.The super premium Celebrations Rich Dry Fruit
Collection which is a festive offering is an exotic range of chocolate covered dry fruits and
nuts in various flavours and the premium dark chocolate range which is exotic dark chocolate
in luscious flavours.
Cadbury Celebrations has become a popular brand on occasions such as Diwali, Rakhi,
Dussera puja. It is also a major success as a corporate gifting brand. The communication is
based on the emotional route and the tag line says "rishte pakne do" which fits with the brand
purpose of strengthening your relationships with something sweet
The "Rishte Pakne do" jingle was penned by noted writer Gulzar.
Cadbury Temptations
Ever see people hide away their chocolate since they dont want to share it! If you have, then
its likely to be a bar of Cadbury Temptations! Cadbury Temptations is a range of delicious
premium chocolate in five flavours.Research revealed a niche segment of chocoholicsthose exposed to international chocolates and those who love a variety of chocolates but
possibly find the price of international chocolates too high. Cadbury Temptations is a range
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targeted
at
this
segment
of
discerning
chocolate
lovers.
The Cadbury Temptations range is available in 5 delicious flavour variants - Roast

Almond Coffee, Honey Apricot, Mint Crunch, Black Forest and Old Jamaica. With its
international quality chocolate Temptations soon became a popular brand for "chocoholics".
Cadbury Dairy Milk clairs
Eclairs was first discovered by a local confectionery firm in London, England in the 1960s.
The firm then became part of Cadbury in 1971 making Cadbury Eclairs the second largest
brand in the company. T
he experience of eating a Cadbury Dairy Milk Eclair is truly unique because of its creamy
caramel exterior and rich Cadbury Dairy Milk chocolate at the center. In 2006 Cadbury Dairy
Milk Eclairs launched a crunchy Eclair with a hard caramel outside and delicious Cadbury
Dairy
Milk
chocolate
inside
called
Cadbury
Dairy
Milk
Eclairs
Crunch.
Gems
The saying "Good things come in small packets" has been proven right many a times and it
couldn't have been truer for the pretty chocolate buttons called Gems. Who can forget the
unique, brightly colored chocolate buttons with crispy shells, encased in a pack that's as
colorful as the product itself? Unrivalled in all these years, Cadbury Gems has captured every
consumer's fantasy for almost 4 decades. Little wonder that Cadbury Gems, the brand that
came into India in 1968 is still going strong. Today, Cadbury Gems has established itself as
one of the leading brands in its segment. With the single-minded purpose to delight every
consumer and help them discover the fun, exciting and adventurous side of life, Cadbury
Gems will continue to be the leading brand in Cadbury India's portfolio. The colourful world
of Cadbury Gems does not include the colour black.
Cadbury Bourn vita
The brand has been an enduring symbol of mental and physical health ever since it was
launched in 1948. It is hardly surprising then, that Bournvita enjoys a major presence in the
Malt Food market. Given its market share of 17%, Cadbury Bournvita reaches across
hundreds of cities, towns and villages through 3,50,000 outlets in India.
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In the new millennium, keeping pace with the evolving mindsets of the new age consumers,
Cadbury Bournvita is about arming consumers with Confidence to take on physical and
mental challenges that nobody else can, resulting in one of the most successful advertising
campaigns which is based on 'Real Achievers who have grown up on Bournvita'. The
Cadbury Bournvita Quiz Contest, which started airing on April 12th 1972, is India's longest
running national school quiz contest. Starting out as a contest held in cities, and then on
radio, the contest currently has been running for over 10 years on satellite television. It has
over 500 episodes to its credit, and today the contest directly reaches more than 11,25,000
students, in 4000 schools across 66 cities and 7 countries - UAE, Kuwait, Qatar, Oman,
Bahrain, Nepal and India.
Halls
Halls accounts for more than 50% of international cough drop sales, andis the leading
sugarconfectionery brand in the world with 2% of the market.Halls is also the clear leader of
the medicated confectionery market with 22%.Halls is sold as a cold relief product and has
licensed medicated status in markets such asthe US, the UK and Canada. In hotter and drier
countries however, Halls is bought
for mouth refreshment.
Halls is marketed in 24 different countries around the world & is offered in over 26 flavours.
Halls produced the largest sweet in the world in 1964. Weighing 76kilos, the sweet was put
on exhibition in New York. Halls accounts for more than 50% of international cough drop
sales.
Eclairs
Eclairs are now one of Cadburys top brands and is sold across five continents and in more
than 23 countries.Cadbury Eclairs take you on a delicious journey through a layer of pure
caramel to a heart of rich Cadburys chocolate. The two classic ingredients of toffee and
chocolate combine together to create a truly unique experience that has made Cadburys
Eclairs the number one clair in the world.
Dentyne
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Dentyne was first introduced in 1899 by Frankling V Canning (the manager of a drug store in
New York) and was the the first pinkish-colored gum available in a slab format. Dentynes
name is a combination of dental and hygiene as it was the first gum promoted as an aid to
oral hygiene.
Dentyne was first advertised in 1956 and for over 40 years was positioned as the gum that
brushes your breath clean with a refreshingly tingle of cinnamon. During those 40 years,
over 25 successful TV advertising campaigns took place, cementing Dentyne as a market
leader in the USA
1.6 AWARDS
Asian Marketing Effectiveness Awards 08
Asian Marketing Effectiveness Awards 2008 for Bournvita Folk/Fusion campaign - GOLD
award for the "Best Insights and Strategic Thinking" and SILVER award for the 'Most
Effective Use of Advertising'.
The Asian Marketing Effectiveness Awards are the region's most prestigious awards that
celebrate resourceful Asian marketing. They are designed to set the standard for effective
marketing within the region, and aim to uncover the campaigns that show results through
innovative spirit and combining creativity with effectiveness to build world class brands.
Cadbury India ranked 7th Great Place to Work in India No. 1 FMCG Company
Cadbury India has been ranked as the 7th Great Place to Work and the No. 1 FMCG company
in
India
in
2008,
by
the
Great
Place
to
Work
Institute.
This study, in its fifth year in India , has a presence in 30 countries and is the oldest, most
comprehensive and respected workplace study worldwide. Over two hundred companies
throughout India participated in the survey, which measured the degree of satisfaction of
employees with their place of work and picked out the best working environments. This is the
fourth time we have featured amongst the Great Places to Work in India . We were ranked
10th in 2003, and were among the top 25 in 2004 and 2005.
Great Place to Work 2007
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'Cadbury India' has been awarded the "Bronze Award for Excellence in People Management"
in the 'Great Place to Work 2007' survey conducted by Grow Talent Company Limited and
Businessworld. The award recognizes Cadbury India as a national leader in the area of
Human Resource Management.
Business World along with Grow Talent has been carrying out the 'Great Place to Work'
survey for the past 4 years. This award is based on the ranks received in top 25 list of the
Great Place to Work India studies conducted in the last four years.
ABBY Award wins for India.
The prestigious ABBY awards, held in March, recognise creative excellence in the Indian
Advertising Industry. The Ulta Perk campaign won four Silver Awards in total and the
Cadbury Dairy Milk Campaign, Miss Palampur, also won a Silver Award. This year Cadbury
also sponsored the new 'Young ABBY' Award.
Bournvita won the Emmvie Gold for the Best Media Innovation - TV.
Cadbury won the Emmvie Gold for the Best Media Innovation - TV, for brand Bournvita, for
the entry Physical symbol of Confidence.
Cadbury Dairy Milk & Bournvita crowned as Consumer Superbrands
Cadbury
Dairy
Milk
&
Bournvita
have
done
it
again.
For
the
second time running, Cadbury Dairy Milk & Bournvita have been declared a `Consumer
Superbrand' for 2006-7 by Superbrands India.
Cadbury- Ranked among India's most respected companies
Cadbury India has been ranked 5th in the FMCG sector, in a survey on India's most respected
companies by sector conducted by Business World magazine in 2007.
Cadbury wins the Effies 2006
Pappu does it again!
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At the recent Effie 2006 awards organized by The Advertising Club of Mumbai, our 'Pappu
Pass Ho Gaya' advertising campaign bagged two more awards - Gold in the Consumer
Products category and Silver in the Integrated advertising campaign category.
Cadbury India roars at Cannes
Cadbury India received a bronze award at the Cannes Lions International Advertising Festival
for partnering with a mobile phone operator in 2005 to provide exam results via SMS to
school children.
Cadbury India is a Great Place to Work
The 'Great Place to Work' Institute study listed Cadbury India as a Great Place to work in
2005 for the third time in a row. Incidentally, Cadbury was in the Top 25 in 2003, 2004 and
2005 too.
Reader's Digest Award recognizes Bournvita
Bournvita won the 'Reader's Digest Trusted Brands' Gold Award for the vitamin health
supplement category in Indian in 2006. The merit was based on 7000 responses from
questionnaires and telephone interviews across Asia.
Suraksha Puraskar Award 2005
Cadbury India's Bangalore factory has received the "Suraksha Puraskar" safety award from
the National Safety Council - Karnataka chapter.
National Safety Council (NSC) was set up by the Ministry of Labour, Government of India in
1966, as an autonomous body to generate, develop and sustain a voluntary movement on
Environment, Health and Safety.
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CHAPTER 2
INDUSTRY SCENARIO
Today, we are poised in our leap towards quantum growth. We are a part of the Cadbury
Schweppes Group, world's No.1 Confectionery Company. Yes, like we said we will continue
to spread happiness
2.1 GROWTH OPPORTUNITY
We have a strong presence in faster growing categories and markets. Gum, 29% of our
revenue, is a prime example. We also have the largest (by value) and most broadly spread
emerging markets business of any confectionery group, which in 2007 accounted for
approximately one-third of our confectionery revenue. From 2004 to 2007, the revenue of our
emerging markets confectionery businesses grew on average by 12% p.a. on a like-for-like
basis.
As a total confectionery business we have a natural growth path. In many
markets we are already leaders in one or two categories and can expand into a second or third
by making the most of our global capabilities.
Between 2004 and 2007, our organic revenue growth averaged 6% a year, a significant
increase on the previous four years, when Cadburys confectionery growth averaged less than
3%, and the Adams business, which we brought in 2003, barely grew. We have significantly
accelerated our growth since 2004 by unlocking the potential of the Adams business and by
substantially increasing our investment in innovation, marketing and sales.
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Our revenue ambition of between 4% and 6% annual organic growth for the 2008-2011 is
underpinned by:
The strength of our brands and market positions;
The increased investment we have made in innovation, marketing and sales;
Our greater exposure to faster growing categories (such as gum) and markets (such as
emerging markets); and
Healthy demand for confectionery: the market has grown consistently at around 5% every
year for the last four years.
Our revenue ambition allows for some rationalisation of our portfolio as we redouble our
efforts to grow more profitably.
2.2 COMPETITION
By participant, the market is relatively fragmented, with the five largest confectionery
companies accounting for less than 40% of the market. There are a large number of
companies which participate in the markets on only a regional or local basis. We compete
against multinational, regional and national companies.
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Our chocolate share is built on regional strengths as is the case for the other top five
chocolate groups. We command strong positions in the UK, Ireland, Australia, New Zealand,
South Africa and India.
Our number two position in gum is built on strong market shares throughout the Americas, in
parts of Europe (including France, Spain and Turkey), and in Japan, Thailand and South
Africa.
In candy, we have a number one position. Halls is our largest brand in candy and our position
is supported by other significant regional and local brands.
We have number one and number two confectionery market positions in 20 of the worlds 50
largest confectionery markets by retail sales value. These markets accounted for around three
quarters of our revenue in 2007
MAJOR KEY PLAYERS
Hindustan Unilever Ltd
ITC (Indian Tabacco Company)
Nestle India
GCMMF (Amul)
Dabur India
Asian Paints India
Britannia Industries
Procter & Gamble Hygenic and health Care
Marico Industries
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CHAPTER 3
SWOT ANALYSIS OF CADBURY
Strength:
Cadbury Schweppes plc is a very profitable organization, generated revenue of more
than 6,508 billion (2005).
It is a global chocolate brand built upon a reputation for fine products and services.
Cadbury Schweppes plc was one of the Fortune Top 100 Companies to Work For in
2005. The company is a respected employer that values its workforce.
The organization has strong ethical values and an ethical mission statement
Weakness:
Cadbury has a reputation for new product development and creativity. However, they
remain vulnerable to the possibility that their innovation may falter over time.
The organization has a strong presence in the United States of America, UK and India.
It is often argued that they need to look for a portfolio of countries, in order to spread
business risk.
Cadbury's recall over 1 million chocolate bars over salmonella fears
The organization is dependant on a main competitive advantage, the retail of coffee.
This could make them slow to diversify into other sectors should the need arise.
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The company has no apprehensions of cannibalization of its chocolate brands.
Opportunity:
Cadbury Company is very good at taking advantage of opportunities.
The company has the opportunity to expand its global operations. New markets with
new products which are limited in particular region.
Cadbury has decided to focus on a few of its key brands such as Cadbury Dairy Milk,
Bournvita, Eclairs and Halls to drive growth for the company.
Cadbury India is attempting to increase the declining market for chocolate with
innovation, one of which is its sweet snack, Bytes.
Brand ambassador Amitabh Bachchan for advertising there new products.
Threats:
Who knows if the market for Cadbury will grow and stay in favour with customers, or
whether another type of beverage or leisure activity will replace coffee in the future?
Health organization have so many barriers for new development
Cadburys are exposed to rises in the cost of chocolate and dairy products.
Entry into salted snacks was ruled out so it is important to do new innovation and
marketing research.
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CHAPTER 4
INTRODUCTION BUDGET AND BUDGETORY CONTROL
1.1 INTRODUCTION TO BUDGET AND BUDGETARY CONTROL:
BUDGET:
A budget is a financial and /or quantities a statement prepared prior to a definite period of time,
of the policy to be pursed during that period that for the purpose of attaining a given objective.
A budget is a pre determined statement of management policy during a given period which
provides a standard for comparison with the results actuality achieved.
Advantages of budgets:
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 of communicating the plans to various units of the organization. By establishing
the divisional, departmental, sectional budgets, exact responsibilities are assigned. It thus
minimizes the possibilities of buck passing if the budget figures are not met.
3. It is a way or motivating managers to achieve the goals set for the units.
4. It serves as a benchmark for controlling on-going operations.
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5. It helps in developing a team spirit where participation in budgeting is encouraged.
6. It helps in reducing wastage and losses by revealing them in time for corrective action.
7. It serves as a basis for evaluating the performance of managers.
8. It serves as a means of educating the managers
BUDGETING:
Budgeting is the technique for formulation begets.
Budgets are the individual objectives of a department, whereas budgeting is the act of building
budgets
BUDGETARY CONTROL:
Budgetary control involves the use of budget and budgetary reports, throughout the period to
co-ordinate, evaluate and control day to day operations in accordance with the goals specified
by the budget.
Budgetary control techniques:
I.
Accounting techniques
a. Standard costing
b. Overhead and Sales variance,
c. Marginal costing,
d. Business Forecasting,
e. Zero Base Budgeting
Advantages of budgeting and budgetary control :
There are a number of advantages to budgeting and budgetary control:
1. Compels management to think about the future, which is probably the most important feature
of a budgetary planning and control system. Forces management to look ahead, to set out
d`etailed plans for achieving the targets for each department, operation and (ideally) each
manager, to anticipate and give the organization purpose and direction.
2. Promotes coordination and communication.
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3. Clearly defines areas of responsibility. Requires managers of budget centers to be made
responsible for the achievement of budget targets for the operations under their personal control.
4. Provides a basis for performance appraisal (variance analysis). A budget is basically a
yardstick against which actual performance is measured and assessed. Control is provided by
comparisons of actual results against budget plan. Departures from budget can then be
investigated and the reasons for the differences can be divided into controllable and noncontrollable factors.
5. Enables remedial action to be taken as variances emerge.
6. Motivates employees by participating in the setting of budgets.
7. Improves the allocation of scarce resources.
8. Economizes management time by using the management by exception principle.
Problems in budgeting:
Whilst budgets may be an essential part of any marketing activity they do have a number of
disadvantages, particularly in perception terms.
1. Budgets can be seen as pressure devices imposed by management, thus resulting in:
a. Bad labor relations
b. Inaccurate record-keeping.
2. Departmental conflict arises due to:
a. Disputes over resource allocation
b. Departments blaming each other if targets are not attained.
3. It is difficult to reconcile personal/individual and corporate goals.
a. Waste may arise as managers adopt the view, "we had better spend it or we will lose it". This
is often coupled with "empire building" in order to enhance the prestige of a department
b. Responsibility versus controlling, i.e. some costs are under the influence of more than one
person, e.g. power costs.
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c. Managers may overestimate costs so that they will not be blamed in the future should they
overspend.
CHAPTER 5
ESSENTAIL OF EFFECTIVE SYSTEM OF BUDGETARY
CONTOL
5.1 There are certain steps which are necessary for the successful implementation of a
budgetary control system. They are as follows:
1. Organization for budgetary control
2. Budget centers
3. Budget officer
4. Budget manual
5. Budget committee
6. Budget period
7. Determination of key factor.
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2.Budget centers:
A budget center is that part of the organization for which the budget is prepared. A budget
center may be a department, section of department or any other part of the department
3.Budget manual:
A budget manual is a document which spells out the duties and also the responsibilities of the
various executives concerned with the budgets. It specifies the relations among various
functionaries.
4.Budget officer:
The chief executive, who is at the top of the organization, appoints some persons as budget
officer. The budget officer empowered to scrutinize the budgets prepared by the various
departmental heads and too many changes in them, if the situation so demands. The actual
performance of different departments is communicated to the budget officer. He determines the
deviations in the budget and takes necessary steps to rectify the deficiencies, if any.
5.Budget committee:
In a small scale concerns, the accountant is made responsible for preparation and
implementation of budget. In large scale concerns a committee is known as a budget
committee is formed. The heads of all important departments are made members of this
committee. The committee is responsible for preparation and execution of budgets. The budget
officer acts as so coordinator of this committee.
6.Budget period:
A budget period is the length of time for which a budget is prepared. The budget period
depends upon a number of factors. It may be different for different industries or even it may be
different in the same industries or business.
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7.Determination of key factor:
A factor which influences all other budget is known as key factor or principle factor. There
may be limitations on the quantity of goods concern may sell. In this case sales will be a key
factor and all other budgets will be prepares by keeping in view the amount of the goods the
concerns will be able to sell.
The raw material supply may be limited, so production, sales and cash budgets will be
decided according to raw materials budget. Similarly, plant capacity may be a key factor if the
supply of other factors is easily available.
5.2 ADVANTAGES OF BUDGETARY CONTROL:

The budgeting control system helps in fixing the goals for the organization as a whole and
concerted efforts are made for its achievements. It enables economies in the enterprise. Some
of the advantages of budgetary control are:
Maximization of profits:
The budgetary control aims at the maximization of profits of the enterprise. To achieve this
aim, a proper planning and coordination of different functions is undertaken.
Co-ordination:
The working of different departments and sectors is properly coordinated. The coordination of
various executives and sub ordinates is necessary to for achieving budgeted targets.
Specific aims:
The plans, policies, and goals are decided by the top management. All efforts are together to
reach the common goal of the organization. Every department is given a target to be achieved.
The efforts are directed towards achieving some specific aims
.
Tool for measuring of performance:
By providing targets to various budgetary control provides a tool for measuring performance.
The budgeted targets are compared to actual reasons and deviations are determined. The
performance of the each department is reported to the top management
.
Economy:
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The planning of expenditure will be systematic and there will be economy in spending. The
finance will be put to optimum use.
Determining weakness:
The deviations in budgeted and actual performance will enable the determination of weak
ports. Efforts are concentrated on those aspects where performance is less than the stipulated.
Corrective action:
The management will be able to take corrective measures whenever there is discrepancy in
performance.
Reduce costs:
In the present day competitive world budgetary control has a significant role to play. Every
business man tries to reduce the cost of production for increasing sales.
Introduction of incentive schemes:
Budgetary control system also enables the introduction of incentive schemes of remuneration.
The comparison of budgeted and actual performance will enable the use of such schemes.
5.3 LIMITATIONS OF BUDGETORY CONTROL:
Uncertain futures:
The budgets are prepared for the future period. Despite best estimates made for the future, the
prediction may not always come true. The future is always uncertain and the situation which is
presumed to prevail in future may change.
Budgetary revisions required:
Budgets are prepared on the assumptions that certain conditions will prevail. Because of future
uncertainties, assumed conditions may not prevail necessitating the re vision of budgetary
targets. The frequent revision of targets will reduce the value of budgets and revisions involve
huge expenditure too.
Problem of co ordination:
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The success of budgetary control depends upon the co-ordination among different departments.
The performance of one department affects the results of other departments.
Conflict among different departments:
Budgetary control may lead to conflicts among functional departments. Every departmental
head worries his department goals without thinking of business goal. Every department tries to
get maximum allocation of funds and this raises a conflict among different departments.
5.4 TYPES OF BUDGETS:

BASED ON TIME:
Long term budgets:
The budgets are prepared to depict long term planning of the business. The period of long term
budgets varies between 5 to 10 years. Long term budgets are prepared for some sector of the
forms concern such as capital expenditure, research and development, long term finance, etc.
Short term budgets:
These budgets are generally one or two years are in the form of monitory terms. The
consumers goods industries like sugar, cotton, textile, etc. use short term budgets.
Current budgets:
The periods of current budget is generally of months and weeks. These budgets related to the
current activities of the business.
BASED ON FUNCTION:
Operating budgets:
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These budgets are related to the different activities or operations of a firm. The no. of such
budgets depends upon the size and nature of business. The commonly used operating budgets
are:
1. Sales budget
2. Production budget
3. Production cost budget
4. Purchase budget
5. Raw material budget
6. Labor budget
7 plant utilization budget
8. Manufacturing expenses or workers over head budget
9. Administrative and selling expenses budget
Financial budget:
Financial budgets are concerned with cash receipts and disbursements, working capital, capital
expenditure, financial position and results of business operations. The commonly used
financial budgets are:
1. Cash budgets
2. Working capital budget
3. Capital expenditure budget
4. Income statement budget
5. Statement of retained earnings
6. Budgeted balance sheet or position statement budget
BUDGET TYPES
1. Sales budget: The sales budget is an estimate of future sales, often broken down into
both units and dollars. It is used to create company sales goals.
2. Production budget: Product oriented companies create a production budget which
estimates the number of units that must be manufactured to meet the sales goals. The
production budget also estimates the various costs involved with manufacturing those
units, including labor and material.
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3. Cash Flow/Cash budget: The cash flow budget is a prediction of future cash receipts
and expenditures for a particular time period. It usually covers a period in the short
term future. The cash flow budget helps the business determine when income will be
sufficient to cover expenses and when the company will need to seek outside
financing.
4. Marketing budget: The marketing budget is an estimate of the funds needed for
promotion, advertising, and public relations in order to market the product or service.
5. Project budget: The project budget is a prediction of the costs associated with a
particular company project. These costs include labor, materials, and other related
expenses. The project budget is often broken down into specific tasks, with task
budgets assigned to each.
6. Revenue budget: The Revenue Budget consists of revenue receipts of government
and the expenditure met from these revenues. Tax revenues are made up of taxes and
other duties that the government levies.
7. Expenditure budget: A budget type which include of spending data items.
BASED ON THE FLEXBILITY:

1. Fixed Budget:
Fixed budgets are prepared for a given level of activity,; the budget is prepared before the
beginning of financial year. The changes in expenditure arising out of the anticipated changes
will not be adjusted in the budget.
2.Flexible budget:
A flexible budget consists of a series of budgets for different level of activities. Therefore,
varies with the level of activity attained. A flexible budget is prepared after taking into
consideration unforeseen changes in the conditions of the business. A flexible budget is defined
as a budget which by recognizing the difference between fixed, semi fixed and variable cost is
designed to change in relation to the level of activity.
Page 29

3.Master budget:
Various functional budgets are integrated info master budgets. The budget is prepared by the
ultimate integration of separate functional budgets.
Definition:
The master budget is the summary budget incorporating its functional budgets-----------ICMA.
Master budget is prepared by the budget officer and it remains with the top level management.
This budget is used to co ordinate the activities of various functional departments and also to
help as control device.
The various steps involved in the preparation of this budget is the preparation of the budget
include the construction of sales budget, production budget, cost of production budget, cash
budget and the projected income statement and the balance sheet.
4.Zero based budgets:
Before preparing a budget, a base is determined from which the budget process begin. Quite
often current years budget is taken as the base or the starting point for preparing the next
years budget. The figures in the base are changed as per the plan for the next year. This
approach of preparing a budget is called incremental budgeting since the budget process is
concerned mainly with the increase or changes in operations that are likely to occur during the
budget period. For example, sales of the current years budget may be taken as the base and
next years budget for sales will be current years budget may be taken as the base and next
years budget for sales will be current years sales plus allowance for price increases and
expected changes in sales volumes. The main drawback of this conventional approach is that it
perpetuates the past inefficiencies.
Zero bases budgeting (ZBB) is an alternative to conventional or incremental budgeting.
ZBB was introduced at Texas Instruments in USA in 1960 by Peter Phyrr, who is known as the
father of ZBB. It is a managerial tool and is steadily gaining acceptance in the business
community. ZBB not based on incremental approach and previous years figures are not taken
as the base, for preparing next years budget. Instead, the budget figures are developed with
zero as the base, which means that a budget will be prepared as if it is being prepared for a new
company for the first time.
Advantages of zero based budgets:
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In ZBB all activities included in the budget are justified on cost benefit consideration
which promotes more effective allocation of resources.
ZBB discards the attitude of accepting the current position in favour of an attitude of
questioning and challenging each item of budget.
It is an educational process and can promote a management team of talented and skilful
people who tend to promptly respond to changes in the business environments.
It facilitates identification of inefficient and unnecessary activities and avoid wasteful
expenditure.
Cost behavior patterns are more closely examined.
Disadvantages of zero based budgets:
ZBB involves high cost of preparing budgets every year.
It also requires high volume of paper work.
In ZBB there is danger of emphasising short-term gains at the expense of long-term
ones.
It has a tendency to regard any activity not foreseen and sanctioned in the most recent
ZBB as illegitimate.
CHAPTER 6
BUDGET PREPARATION
BUDGET PREPARATION:
The company prepares its master budget along with budgets for major important
functions like sales, production, cash, labor, etc. the budget is prepared by Budget Control and
Cost Accounts (BCCA) department in consultation with the chief executive, departmental
heads. After the initial budget preparation, it is approved by budget committee and finally, it is
sent for the approval of Board of Directors at its head office at Mumbai. Normally the
standards of last year are used as the basis for budget preparation with suitable adjustment.
For example, rates of materials are adjusted according to the prevailing rates in the
market. Similarly adjustment is made in labor cost depending on the budget period. Dearness is
paid on the basis of All India cost of Living Index. Overheads are changed on percentage basis.
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When budgets are prepared and approved, these are communicated to respective heads of
departments/ sections for implementation
COMPARISON WITH ACTUAL PERFORMANCE OF PREVIOUS YEAR:
It will be more meaningful, if the comparison of the current year actual is made with the
previous year actual, in addition to the comparison of actual performance of the current year
with the budgets. For this purpose, the profit and loss account and balance sheet as per the
companies act, 1956 can be made use of. On the similar lines, reasons for variance are submitted
to the management for taking appropriate actions.
PREPARTION OF CASH BUDGET:
A cash budget is an estimate of cash receipts and disbursements during a future period of time. It
precedes various other budgets like material budgets research and development budget.
Definition:
The cash budget is an analysis of flow of cash in a business over a future, shot or long period of
time. It is a forecast of expected cash intake and outlay
The cash receipts from various sources are anticipated. The estimated cash collections for sales,
debts, bills receivables, interest, dividends and other incomes and sale of investments and other
assets will be taking into account. The amount to be spent on purchase of materials, payment to
creditors and meeting various other revenue and capital expenditure needs should be considered.
Cash forecasts will include all possible sources from which cash will be received and the
channels in which payments are to be made so that a consolidated cash position is determined.
The cash budget should be coordinated with other activities of the business. The functional
budget may be adjusted according to the cash budget. The available funds should be fruitfully
used and the concern should not suffer for want of funds.
Objectives of setting budgets:
a. It is a plan of action and serves as a declaration of policies.
b. It defines the objectives for all the executives.
c. It provides a means of co-ordination and communication.
d. Budgets facilitate centralized control with delegated authority and responsibility.
e. It provides comparison of actual performance with budgets
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f. Only the exceptions are reported to the management so that corrective action can be taken in
order to achieve the objectives laid down by the management
Particulars
Dec-11
Share Capital
31.07
Reserves Total
991.12
Total Shareholders Funds
1,022.19
Secured Loans
0.00
Unsecured Loans
7.23
Total Debt
7.23
Total Liabilities
1,029.42
CHAPTER 7
FINANCIAL ANALYSIS OF CADBURY INDIA LTD
1.1 BALANCE SHEET OF CADBURY INDIA LTD
SOURCES OF FUNDS:
Page 33
APPLICATION OF FUNDS :
Gross Block
964.44
Less : Accumulated Depreciation
455.13
Less:Impairment of Assets
3.41
Net Block
505.90
Lease Adjustment
0.00
Capital Work in Progress
245.64
Investments
39.03
Current Assets, Loans & Advances

Inventories
427.04
Sundry Debtors
58.61
Cash and Bank
489.37
Loans and Advances
79.22
Total Current Assets
1,054.24
Less : Current Liabilities and Provisions

Current Liabilities
769.09
Provisions
65.21
Total Current Liabilities
834.30
Net Current Assets
219.94
Miscellaneous Expenses not written off
0.00
Deferred Tax Assets

1.2 CASH FLOW:
Deferred Tax Liability
40.35
Net Deferred Tax

Total Assets
18.91
Page 34
1,029.42
Contingent Liabilities
176.04
21.44
Particulars
Dec-11
Cash and Cash Equivalents at Begining
410.56
of the year
Net Cash from Operating Activities
271.06
Net Cash Used In Investing Activities
-179.53
Net Cash Used In Financing Activities
-12.72
Net Inc/(Dec) In Cash And Cash
78.81
Cash And Cash Equivalents At End Of
489.37
The Year
CHAPTER 8
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CONCLUSION
To maintain organizational integrity, senior-level managers need to be careful to provide
realistic budget directives. Lower-level managers need to be truthful in reporting "bad news"
relative to performance against a budget, even if they find fault with the budget guidelines.
The formal budgeting system has the following major benefits.
1. Budgeting due to its formal time table or schedule compels managers to think ahead apart
from taking care of their current activities.
2. Budgeting, due to its approval and authorization by the superiors, provides definite
expectations that are the best framework for judging subsequent performance.
3. Budgeting helps in coordinating the various departments of the organization. The budget
harmonizes the goals (objectives) of the individual departments into the organization wide
goals (objectives).
Cadbury Ltd. is one of the leading comapny,. Cadbury Ltd has a huge capacity to produce
chocolates when compared to other ompanies such as Dabur Expenditure relating to the raw
materials is showing the faster growth in a company and along with they are also going for
more borrowings from outside then what they have expected.
Apart from this company is also possessing huge investments and returns on it when compared
to all other companies (as per the study).
CHAPTER 9
Page 36
BIBILOGRAPHY
Financial Management-Arvind.A.Dhond
www.cadburyindia.com
www.indianfoline.com
http://www.allbusiness.com/government/3568664-1.html
http://www.fao.org/docrep/w4343e/w4343e05.htm
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BUDGETARY CONTROL ON CADBURY INDIA LTD

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1.4 COST & EFFICIENCY

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an international retail value approaching US $1billion. As an international brand, Cadbury

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The Cadbury Temptations range is available in 5 delicious flavour variants - Roast

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5.2 ADVANTAGES OF BUDGETARY CONTROL:

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Introduction of incentive schemes:

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5.4 TYPES OF BUDGETS:

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BASED ON THE FLEXBILITY:

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Total Shareholders Funds

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Less : Accumulated Depreciation