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Budgetary control is the important aspect for industry development because budgets
provide yard stick against which the actual performance is measured. It always helps to the
top management to take the appropriate decision to motivate and directing their personnel
towards well set plans and policies of the company.
By considering the advantage of the budgetary control the VINAYAGA BOILER
INDUSTRY also adapted this system. In company they were maintaining the monthly budget
with the help of daily reports. The daily reports must contain the item like production
efficiency, sugar cane utilization, man power requirement, consumption of electricity, wages
etc. With this the budgetary control manager prepares a monthly profitability statement of a
particular month & submitted that one of the appropriate authority like production manager.
By this statement or submitted report, they will take correct decision about the organizational
activities.
A study has been conducted on the “BUDGETARY CONTROL” which is most
probably adopted in the VINAYAGA BOILER INDUSTRY organization.
Budgetary control i.e. a most powerful tool to the management for performing its function i.e.
formulating plans, coordinating activities and controlling operations etc, effectively as well as
effectively.
Now a day, the number of companies are compete with each other for the survival in the
present market. Whether it may be other sugars industries .but no one company can comete
without proper planning. So the Cost-Budgetary control may help them to make proper
decision in the number of various fields.
Budgetary control is applied to a system of management & accounting control by which
all operations & output are forecasted as for ahead as possible. And actual results are known
that are compared without budget estimates.
The budgetary system integrates key managerial functions as it links top management’s
planning function with the control function performed at all the levels in the managerial
hierarchy. A more accurate budget can be developed for those activates where direct
relationship exists between inputs & outputs. These input, output are base for developing
budgets & exercising control.
Budget is essential in every walk of our life – national, domestic and business. A budget is
prepared to have effective utilization of funds and for the realization of objectives as efficiently,
as possible. Budget is a widely practiced technique and most of us use budgets in some way or
the other.
Budget is one of the emphasized terms used in efficient methods of planning and control. It is
employed, no doubt, in large business houses, but even the small businesses are using it, in some
informal manner. Budget in common parlance is understood as planning for expenditure.
A budget is defined as a comprehensive and Co-ordinate plan expressed in financial terms, for
the operations and resources of an enterprise for some specified period in the future.
In the views of E. H. Graham of the Chrysler Corporation, “Of the management tools used by
Chrysler Corporation, including computers, PERT, Operations Research (OR) and system
analysis and so on, budgets are un doubly the most important tool”.
Budget is always expressed in terms of money and quantity. The techniques of budgeting are
important applications of Management accounting.
Budgets are set in large business houses as well as in families. It is basically a statement of
expected income & expense under certain anticipated operating conditions.
2). Co-Ordination:
The common objectives of the firm may be successfully achieved by the way of
budgetary control because it stimulates the co-operation of all concerns with the co-ordinates the
various activities.
3) Communication:
It is necessary in an efficient organization that all people be informed about the objectives,
polices, programmers and performance. This is made possible through their Participant in the
budgeting process. Budgets inform each manager of what others have agreed to do. They also
inform managers of the resources available objects and targets.
Thus the budgeting system integrates key managerial functions as it links top management’s
planning function with the function performed at all the levels in the managerial hierarchy. But
the efficiency of the budget as a planning and control device depends upon the activity in which
it is being used. A more accurate budget can be develop for those activities where direct
relationship between inputs and outputs. The basis for developing budgets and exercising
control.
CONCEPT OF BUDGETING:
One of the primary objects of cost accounting is to provide information to business
management for planning and control. Budgeting act as a toll of both planning and control.
Budgeting is a formal process of financial planning using estimated and accounting data.
ESSENTIALS OF BUDGET:
ADVANTAGES OF BUDGETING:
Budgeting plays an important role in the effective use of resources and achieving overall
organizational goals.
Budgeting compels and motivates management to make an early and timely study of its
problem.
budgeting provides a valuable means of controlling income and expenditure of a business
as it is a “plan for spreading”
Budgeting provides a too through which managerial polices and goals are periodically
evaluated, tested and established as a guidelines for the entire organization.
Budgeting help in directing capital and others resources into the most profitable channels.
Budgeting coordinates and correlates all business activates.
The use of budgeting in an organization develops an attitude of “Cost Consciousness”,
stimulates the effective use of resources, and creates an environment of profit-
mindedness throughout the organization.
“The uppermost point is that budgets provide a discipline that brings planning to the
fore front as a key managerial responsibility”.
Budgeting encourage productive competition.
CLASSIFICATION OF BUDGETS:
A. According to time:
B. According to flexibility
Fixed budget: A budget prepared on the basis of fixed or a standard level of activity.
It does not change with respect to level of activity.
Flexible budget: A budget is prepared depend upon the level of the
Activity.
1) Sales budget:
The most important budget, which all other budgets are contingent upon, is the sales
budget. All budgets, such as production budget, selling & distribution budget & other all affected
by the sales budgeted & are depended upon the revenue derived from sales.
Forecasting sales:
The three main factors that should be considered by management in forecasting sales.
Information concerning past performance.
Information about present condition with in the individual company & in each sales
territory.
Data concerning the industry & generally business.
2) Production budget:
A production budget is stated in physical units. Essentially the production budget is the sales
budget adjusted for inventory changes as follows.
Units produced= Budgeted Sales+ (Desired Closing Inventory of Finished Goods-Beginning
Inventory of Finished Goods.)
3) Production cost budget:
A production cost budgeted summaries the materials budget, lab our budgeted, the
factory budget, and may be expressed and analyzed by departments and or products. It is also
known as manufacturing budget.
i.Inventory budget:
An inventory budget can be prepared to find out the values of direct materials & finished goods
inventory.
a. Selling expenses budget:
It is also known as the marketing expenses budget. The selling cost budget is made up of a
number of cost items, some of which are fixed and some variable. Fixed expenses are salaries
and depreciation; the principal variable expenses are commission, travel advertising and bad
debts.
b. Administrative expenses budget
The Administrative expenses budget covers the administrative costs for non-manufacturing
business activates. The administrative expenses budgets contains expenses like director’s
remunerations, legal charges, audit fees, salaries, rent office expenses, interest, property tax, put
etc.
A budgeted income statement summaries all the individual Budgets i.e. sales budgeted, cost of
the goods sold budget, selling budget, and administrative expenses budget. This budget
determines income before taxes (If the tax rate is available, net income after taxes can also be
computed).A system of budgetary control installation in an organization is very much beneficial
which may be result in proper planning & control of activates. It ultimately results in minimizing
costs and maximizing profits.
If the company wants to prepare the budgets for future period of time, it is very much
essential that company have to consider the past performance. Thus the past performance is
treated as vital basis for the future period. Suppose in case of past performance is not available
than the company has to follow the following process.
1. Budget controller: The chief executive is ultimately responsible for the budget program
and past of work designated as budget controller. The budget controller should have
knowledge of technical skill of the business and report to chief executive.
2. Budget committee: Budget committees are framed for true delegation of authority and
responsibilities. The work should be divided under different heads i.e. Sales, production,
and finance etc. The duty of budget committee to submit, discuss and finally approve of
the budgeted big figures.
F. BUDGETED PROCEDURE:
The procedure followed while designing and operating a budgetary control system depends
upon the nature of the business.
2. Making of forecasts:
Forecast is nothing but estimation of probabilities for a given period. Forecasts are made
regarding sales, production cost and financial requirements of the business.
4. Preparation of budgets:
After finalization of forecasts the budgets will be prepared.
Keep track of cash expenditures throughout the month and total and categorize
these at the end of each month.
Subtotal the income and expense categories.
Subtract the total expenses from the total income to arrive at your net income.
If the number is negative, your expenses are greater than your income. Your
situation can probably be greatly improved by changing your spending habits.
If you have a positive net income, transfer most of it to a savings or investment
account at the end of each month. Extra cash left in a regular checking account
has a way of getting spent.
After you've tracked your actual spending for a month or two, analyze your
spending to identify where you can comfortably make cuts.
Once you've got the budgeting process in place, take an in-depth look at your
largest spending categories, brainstorm about ways to reduce spending in specific
categories, and set realistic goals
Tips:
Don't try to fit your expenses into somebody else's budget categories. Tailor the
categories to fit your own situation.
Make your categories detailed enough to provide useful information, but not so
detailed that you become bogged down in trivial details.
Think of your budget as a tool to help you get out of debt and save money, not as
a financial diet.
SIGNIFICANCE OF THESTUDY:
From a department's point of view, excess working capital means operating inefficiencies. In
addition, unnecessary working capital increases the amount of the capital charge which
departments are required
Budgetary control system constitutes part of the Crown's investment in a department. Associated
with this is an opportunity cost to the Crown. (Money invested in one area may "cost"
opportunities for investment in other areas.) If a department is operating with more budgetary
control system than is necessary, this over-investment represents an unnecessary cost to the
Crown.
The scope of the study is very wide as it ranges from the various specific budgets of each
department to the Master Budget and Performance Budget of the organization.
Master Budget is a “Summary of the budget schedules in capsule form made for the purpose of
presenting in one report the highlights of the budget forecast”. Performance Budget involves
evaluation of the performance of the organization in the context of both specific as well as
overall objectives of the organization. According to the National Institute of bank Management
Performance Budgeting technique is, “The process of analyzing, identifying, simplifying and
crystallizing specific performance objectives of a job to be achieved over a period in the frame
work of the organization objectives, the purpose and objectives of the job. The technique is
characteristic by its specific directions towards the business objectives of the organization”.
CHAPTER II
COMPANY PROFILE AND INDUSTRY PROFILE
COMPANY PROFILE
ABOUT VINAYAGA BOILERS INDUSTRY PVT LTD:
Vinayaga Boilers Engineering began manufacturing boilers in Establishment 2002. The
company CEO – G. Perumal Managing Director,- P.Anbuselvan, As the demand for boilers
grew, Vinayaga Boilers Industry groups Ltd was soon in need of a larger facility. In 2002.
Vinayaga boilers industry ltd broke ground for a new factory just south of Los Angeles in an area
where orange groves once stood. Just down the street was Downey’s North American Rockwell
plant that built many of the Apollo spacecraft and another company that made Apollo Motor
Homes. In 2006, Vinayaga Boilers Industry Ltd opened a second plant in Puerto Rico to better
serve East Coast customers. A few years later, the finished interstate highway system made this
plant obsolete and it closed.
Much has changed since then. The Apollo factory closed and became a movie studio. The motor
home facility now makes trolley tourist buses. One thing that hasn't changed is that Vinayaga
Boilers Industry Ltd is still making boilers in Southern California. The reasons for that can be
found in these beliefs that shape our family owned business:
We recently moved to a new location in nearby Commerce, California. We were fortunate to find
a building twice as large as our former one and yet close enough to retain all our employees. We
have just completed a new R&D lab with full boiler testing and demonstration capability. We
have also added a machine shop to enhance our manufacturing processes.
From our dependable steam and water boilers to our high efficiency Dura fins, Vinayaga Boilers
Industry Ltd has boilers for almost every application and budget. Our dedicated representatives
throughout the United States and Canada offer strong local support while our in-house tech
service hot line is ready to answer any questions you might have. We greatly appreciate your
interest in Vinayaga Boilers Industry and look forward to working together.
MILESTONES:
Year Achievement
2005 Introduced Take-A-Part (Knockdown) Boilers, Weatherproof Boilers, UL
"A" Labeled Boiler - Burner Packages, Hinged Head plates.
Introduced Vinayaga Boilers Industry Blow down Tanks and Condensate Return
2006 Tanks.
Shipped 1,100 Oil Fired Domestic Hot Water Heaters
2008
First Durafin Boilers Ship.
2011
Mission
Vinayaga Boilers Industry Ltd manufactures the world’s largest Scotch marine fire tube boiler.
Vinayaga Boilers Industry Ltd pioneered the first water backed boiler over 15 years ago and the
first packaged boiler over 10 years ago. Vinayaga Boilers Industry Ltd is built to last and carry
the only 15-year warranty in the industry. In addition to the quality and dependability, the
conservative design provides excellent fuel to steam efficiency resulting in the best life cycle
costs in the industry.
Vinayaga Boilers Industry Ltd also offers a full line of desecrators, surge tanks and blow
down heat recovery systems. These feed water systems are also designed and built to a
quality standard which allows us to offer a 10 year warranty, the only one in the industry.
Vinayaga Boilers Industry Ltd is well aware of the changing environmental requirements.
While our standard Vinayaga Boilers Industry Ltd burners can attain less than 30 ppm ,
we know that some regions of the United States are requiring emissions as low as 9
PPM.
High efficiency, availability and low emissions:
Vision:
Vinayaga Boilers Industry Ltd is recognized as one of the most innovative biomass boiler
suppliers in the world. We have a well-known and established reputation for supplying biomass
boilers and combustion systems with exceptionally high efficiencies and availabilities, high fuel
flexibility, and low emission impact.
Moreover, the systems have very low maintenance costs. The company’s boiler and combustion
system concept is based on more than 30 years of hands-on experience with steam generation
and biomass combustion.
And it doesn’t stop there! Vinayaga Boilers Industry now offers the broadest line of condensing
boilers available from any manufacturer anywhere. In addition, Vinayaga Boilers Industry group
has developed and introduced exclusive user-friendly boiler control systems for many of its
products. The Vinayaga Boilers Industry IQ and VINAYAGA groups Sage2.2 Control Systems
offer unparalleled features and benefits that are unmatched in the boiler industry.
Truly, the vinayaga boilers brand has set the new standards for hydronic heating equipment in
residential and commercial product for gas-fired and oil-fired application with water and boiler
steam boiler and super high efficiency condensing boilers. To provide this extensive product
lineup, vinayaga boilers has invested in world class manufacturing facilities and new assembly
operations in Lancaster, Pennsylvania with state-of-the art computer numerical controlled
machines providing exacting product tolerances. Quality, made in India cast iron sections are
produced for vinayaga groups by Casting Solutions,. Along with the best engineering capabilities
available anywhere, Vinayaga Boilers Industry groups with its made in the India, quality product
lines delivers world-class marketing, technical sales, and sales support unmatched in South India.
Relying on the expert human resources, learning and developing technical knowledge,
utilizing maximum production capacity and cooperating with foreign and domestic suppliers,
while observing the shareholders’ rights and gaining customer’s satisfaction, this company
advances toward the sustainable development of society and aims to realize Iran’s 20-year
perspective. In line with the country is policies and objectives to developer power plans and
related technology, the license agreement of technologies transfer was concluded.
Under this license agreement, over 70 heat recovery boiler steam generators have been installed
and utilized in the downstream of 160 MW gas turbines up to now. The significant role of oil,
gas and petrochemical industries has lead
Vinayaga Boilers Industry and Equipment Co. in to accomplishes several projects for supplying
boiler steam and utilities in the form of EP and EPC for these industries. These boilers were
mostly manufactured by outsourcing and by using the capacity and skills of domestic
subcontractors in the frame work of cohesive management and supervision on suppliers up to
early 2010.
According to the new perspective of the company since 2010, adjoining a factory to the company
near Tehran, has provided the possibility of manufacturing the main parts of boiler and other
related products. Creating new horizons in fulfilling the customers’ needs and gaining their
satisfaction on quality, cost and time.
Nowadays, regarding the actualization of energy costs, while various industries and investors
need increasing efficiency, Vinayaga Boilers Industry and Equipment Co. has focused on
developing products variety in order to design and supply industrial heat recovery boilers and
boiler steam recovery from the wasted heat in industries and also process packages particularly
in oil, gas and petrochemical industries and in the next years, this company major activities will
be devoted to these plans.
Customers’ requirement regarding after sale services in global level as well as Vinayaga
Boilers Industry and Equipment’s commitment to competitor the product and service chain, has
led us to codifying some particular roles since 2010 in the form of customer and after sale
services.
Management’s and personnel’s commitment to fulfill the actual needs of stakeholders and
environmental conservation as well as benefiting from the modern scientific management
systems ensure a prosperous future in achieving the customers’ satisfaction and expanding the
company’s contribution to the domestic and foreign markets.
INTRODUCTION TO THE INDUSTRY
INTRODUCTION:
In many cases, manufacturing facilities provide Boilers are pressure vessels designed to heat
water or produce boiler steam, which can then be used to provide space heating and/or service
water heating to a building. In most commercial building heating applications, the heating source
in the boiler is a natural gas fired burner. Oil fired burners and electric resistance heaters can be
used as well. Boiler steam is preferred over hot water in some applications, including absorption
cooling, kitchens, laundries, sterilizers, and boiler steam driven equipment.
Boilers have several strengths that have made them a common feature of buildings. They have a
long life, can achieve efficiencies up to 95% or greater, provide an effective method of heating a
building, and in the case of boiler steam systems, require little or no pumping energy. However,
fuel costs can be considerable, regular maintenance is required, and if maintenance is delayed,
repair can be costly.
Guidance for the construction, operation, and maintenance of boilers is provided primarily by the
ASME (American Society of Mechanical Engineers), which produces the following resources:
Rules for construction of heating boilers, Boiler and Pressure Vessel Code, Section IV-
2007
Recommended rules for the care and operation of heating boilers, Boiler and Pressure
Vessel
Boilers are often one of the largest energy users in a building. For every year a boiler
system goes unattended, boiler costs can increase approximately 10% (1). Boiler
operation and maintenance is therefore a good place to start when looking for ways to
reduce energy use and save money.
The pressure vessel of a boiler is usually made of steel (or alloy steel), or historically of wrought
iron. Stainless steel, especially of the austenitic types, is not used in wetted parts of boilers due to
corrosion and stress corrosion cracking. However Vinayaga Boilers Industry stainless steel is
often used in super heater sections that will not be exposed to boiling water, and electrically-
heated stainless steel shell boilers are allowed under the European "Pressure Equipment
Directive" for production of boiler steam for sterilizers and disinfectors.
In live boiler steam models, copper or brass is often used because it is more easily fabricated in
smaller size boilers. Historically, copper was often used for fireboxes (particularly for boiler
steam locomotives), because of its better formability and higher thermal conductivity; however,
in more recent times, the high price of copper often makes this an uneconomic choice and
cheaper substitutes (such as steel) are used instead.
For much of the Victorian "age of boiler steam ", the only material used for boiler making was
the highest grade of wrought iron, with assembly by riveting. This iron was often obtained from
specialist ironworks, such as at Creator Moor, noted for the high quality of their rolled plate and
its suitability for high-reliability use in critical applications, such as high-pressure boilers.
In the 20th century, design practice instead moved towards the use of steel, which is stronger and
cheaper, with welded construction, which is quicker and requires less labour. It should be noted,
however, that wrought iron boilers corrode far slower than their modern-day steel counterparts,
and are less susceptible to localized pitting and stress-corrosion. This makes the longevity of
older wrought-iron boilers far superior to those of welded steel boilers.
Cast iron may be used for the heating vessel of domestic water heaters. Although such heaters
are usually termed "boilers" in some countries, their purpose is usually to produce hot water, not
boiler steam , and so they run at low pressure and try to avoid actual boiling. The brittleness of
cast iron makes it impractical for high-pressure boiler steam boilers.
CONFIGURATIONS OF BOILER:
Boilers are classified into different types based on their working pressure and temperature, fuel
type, draft method, size and capacity, and whether they condense the water vapor in the
combustion gases. Boilers are also sometimes described by their key components, such as heat
exchanger materials or tube design. These other characteristics are discussed in the following
section on Key Components of Boilers.
Two primary types of boilers include
Fire Tube Boiler
Cast iron sectional
Fire tube boilers are more commonly available for low pressure boiler steam or hot water
applications, and are available in sizes ranging from 500,000 to 75,000,000 BTU input. Water
tube boilers are primarily used in higher pressure boiler steam applications and are used
extensively for comfort heating applications. They typically range in size from 500,000 to more
than 20,000,000 BTU input.
Cast Iron Sectional Boilers:
Cast iron sectional boilers are another type of boiler commonly used in commercial space
heating applications. These types of boilers don’t use tubes. Instead, they’re built up from cast
iron sections that have water and combustion gas passages. The iron castings are bolted together,
similar to an old boiler steam radiator. The sections are sealed together by gaskets. They’re
available for producing boiler steam or hot water, and are available in sizes ranging from 35,000
Most boilers produce boiler steam to be used at saturation temperature; that is, saturated boiler
steam. Superheated boiler steam boilers vaporize the water and then further heat the boiler steam
in a super heater. This provides boiler steam at much higher temperature, but can decrease the
overall thermal efficiency of the boiler steam generating plant because the higher boiler steam
temperature requires a higher flue gas exhaust temperature. There are several ways to circumvent
this problem, typically by providing an economizer that heats the feed water, a combustion air
heater in the hot flue gas exhaust path, or both. There are advantages to superheated boiler steam
that may, and often will, increase overall efficiency of both boiler steam generation and its
utilization: gains in input temperature to a turbine should outweigh any cost in additional boiler
complication and expense. There may also be practical limitations in using wet boiler steam, as
entrained condensation droplets will damage turbine blades.
Superheated boiler steam presents unique safety concerns because, if any system component fails
and allows boiler steam to escape, the high pressure and temperature can cause serious,
instantaneous harm to anyone in its path. Since the escaping boiler steam will initially be
completely superheated vapor, detection can be difficult, although the intense heat and sound
from such a leak clearly indicates its presence.
CHAPTER III
REVIEW OF LITERATURE
INTRODUTION
The process of budgeting generally involves an iterative cycle which moves between
target of desirable performance and estimates of feasible performance until there is,
hopefully, convergence to a plan which is both feasible and acceptable (Emmanuel,
Utley and Merchant, 1990
Alternatively, if it is looked beyond many details and iterations of the usual budgeting
process, for effective budget preparation and implementation, the following have been
suggested by (Finney, 1994);
Welch, Hilton, Gordon (1998) have defined the budgeting process as profit planning
and control process and in that way not only have identified the two most important
functions of budgets in organizations, but have also presented budgeting process in a
wider context than it is usually depicted. The budgeting process is more than just a
process of combining quantitative financial plans.
The budgeting system of every organization provides those saddled with the
responsibilities of managing such organization the basis to determine how to source,
allocate and utilize funds to support logical decision making and achieve organizational
goal.
Pandey (2001) posits that a budget is a comprehensive and co-ordinated plan expressed in
financial terms for the operations and resources of an enterprise and for some specific
period in the future.
Olafusi (1998) sums up budgeting in a write-up for the “Nigerian Accountant”, when he
defined budgeting as an indispensable tool for effective performance, by which costs are
assigned to specific tasks that are planned within a definite time period.
Lucey (1988) as it relates to the discourse, a budget is the annual process of funds
allocation, which should be seen as stages in the progressive fulfillment of the long term
objectives of the organizations. Accordingly, the budgeting process steers the
organization towards the long term objectives defined in the corporate plan.
Owler and Brown (1965), puts the concept of budget within the theoretical perspective
when they opined that budgets are expected to be viewed from a humanistic approach.
This is because human aspect of budgeting is much more important than the accounting
techniques.
The success of any budgetary system depends on its acceptance by those saddled with the
responsibilities of managing the budget and the company members who are affected by
the budgets. It is not enough to prepare budgets and assign responsibility for them; the
behavioral aspect must be appraised. This fact was rightly and succinctly pointed out by
Owler and Brown (1965) when they stated that: “It is nevertheless necessary to consider
also the behavioral aspects of a system.
Glautier and Under (1987) state that „the emergence of scientific management
philosophy with its emphasis on detailed info‟ as a basis for taking decision provided a
tremendous impetus for the development of management accounting and indeed
budgeting techniques‟.
Pandey (2003) defines budget as a short term financial plan. It is an action plan to guide
managers in achieving the objectives of the firm. Lucey (2003), in his formal definition
defines budget as “a qualitative statement, for a defined period of time, which may
include planned revenue, expenses, assets, liabilities and cash-flows. A budget provides a
focus for the organization; aids the coordination of activities and facilitates control
whereas control is generally exercised through the comparison of actual and flexible
budget”.
THE CONCEPT OF BUDGETING AND BUDGETARY CONTROL
J.F Weston (1978) and E.F Brigham are in agreement with Reynolds (1984). But are
guides to submit that the budget is not a means of limiting expenditure. Rather, it is a
method to improve operations, a tool for obtaining the most productive and profitable
uses of the companies resources through careful planning and controlling.
Hingren and Foster (1988) agreed that the budget is not a penny-pinching device. They
also agreed with the views expressed by other authors that budget is an aid to co-
ordination and implantation. They went further to say that well managed organizations
usually have the following budget cycle:Planning the performance of the organization as
well as its units. The entire management term agrees as to what is expected.
According to Chika Agu (2006) in the case study of 'budgeting and budgetary Control
in Business organization,' "Budgetary control, is the use of the budget as an instrument
for the guidance of business operations.
Different authors evidence the fact that budgets are the most used tool for planning and
controlling within companies in both developed and developing countries (Dugdale and
Lyne, Ahmad et al., 2003, Joshi et al., 2003, Wijewardena and Zoysa, 1999, Ghosh and
Chan, 1997). In the studies conducted by Jones the results obtained showed that there are
three major reasons for which companies use budgets: evaluate performance, aid control
and planning (Joshi et al., 2003).
According to Turkish authors Ali Uyar and NecdetBilgin, the reasons for budgeting, in
the order of their importance are: control expenses, profitability, aid long-term planning,
co-ordinate the operation, aid short-term planning, evaluate performance, motivate
managers, motivate employees and communicate plans with employees (Uyar and Bilgin,
2011).
There are numerous authors that consider budgets as intended strategy operationalization
through resource allocation and assessment of strategy (Hansen and Van der Stede,
Anthony and Govindarjan, 2003, Merchant and Van der Stede, 2003).\But, we should
also consider the criticism mentioned by different authors regarding the process of
budgeting. The most mentioned “black ball” of the budgets is about the time consumed
with this activity (Otley, 1978, Neely et al., 2003, Wu et al., 2007, Hope and
Fraser,2003b).
Another criticism discussed is the fact that budgets can be affected by corporate politics
and gaming (Otley, 1978). Some authors consider as a problem for budgeting the way
budgets are used (Horngren at al., 2006) while others sustain the idea that budgeting
processes are fundamentally flawed (Hope and Fraser, 2003a).
To sustain all this, there are authors that named budgets as being an “unnecessary evil”
(Wijewardena and Zoysa, 1999), “a thing of the past” (Gurton,1999) or even “broken”
(Jones, 2008). All the criticism brought to the use of budgets is called the “beyond
budgeting” approach.
Pandey (2003) defines budget as a short term financial plan. It is an action plan to guide
managers in achieving the objectives of the firm. Lucey (2003), in his formal definition
defines budget as „a qualitative statement, for a defined period of time, which may
include planned revenue, expenses, assets, liabilities and cash-flows. A budget provides a
focus for the organization; aids the coordination of activities and facilitates control
whereas control is generally exercised through the comparison of actual and flexible
budget‟.
Lucey (2003) in his recent definition of budget defines as „a quantitative expression of a
plan of action prepared for the business as a whole for departments, for functions such as
sales and production or for financial resource items such as cash, capital expenditure,
manpower purchase, etc. The process of preparing and agreeing budgets is a means of
translating the overall objectives of the organization into detailed, feasible plans of
action.
‟Welsh (2003) opines that budgeting, is the only comprehensive approach to managing
so far developed that, if utilized with sophistication and good judgment, fully recognizes
the dominant role of the manager and provides a framework for implementing such
fundamental aspects of scientific management as management objectives, effective 15
communication, participative management, dynamic control, continuous feedback,
responsibility accounting, management by exception and management flexibility.
Koontz (2003) states that the idea behind this technique is to divide enterprise programs
into activities and needed resources and then to calculate costs for each package by
starting each program budget from base zero, costs as calculated afresh, thus avoiding the
common tendency in budgeting to look only at change from a previous period.
Lambe (2014) are the timeframe within which the contents and frameworks of budgetary
provisions are brought into realities, considering that a budget itself is an action plan,
structure into quantitative terms for efficient and effective implementation and to support
long term strategic decision making. Budgetary periods can span over wide ranging
periods of time, ranging from few hours to several years, depending on the nature of the
budget.
According to Turkish authors Ali Uyar and NecdetBilgin, the reasons for budgeting, in
the order of their importance are: control expenses, profitability, aid long-term planning,
co-ordinate the operation, aid short-term planning, evaluate performance, motivate
managers, motivate employees and communicate plans with employees (Uyar and Bilgin,
2011).
Dogara (2014), some of these benefits, among several others include: Estimating the cost
of distribution and general administration for the budget period. Helps in determining the
financial resources available, such that any additional funds needed must be anticipated
and planned for.
Regents (2006) defines budget as the process whereby the plans of an institutions are
translated into an itemized, authorized and systematic plan of operation, expressed in any
currency for a given period.
Chika Agu (2006) in the case study of 'budgeting and budgetary Control in Business
organization,' "Budgetary control, is the use of the budget as an instrument for the
guidance of business operations.
Lambe (2012) writing on Budgeting and Planning aptly defines budgeting as a
comprehensive and coordinated plan which is packaged by the management of an
organization, and expressed in financial terms for the operations and resources of an
enterprise for some specific period in the future. Pandey (2008) defines budgetary control
as the establishment of departmental budgets relating the responsibilities of the executive
to the requirement of a policy, and the continuous comparison of actual budgeted result
either to secure desired actions. The objective of that policy is to provide a firm basis for
its revision. Thus, a budget could be seen as a plan showing how resources will be
required and used over a specific period of time.
RESEARCH METHODOLOGY:
RESEARCH DESIGN:
The descriptive form of research method is adopted for study. The major purpose of descriptive
research is description of state of affairs of the institution as it exists at present. The nature and
characteristics of the financial statements of VINAYAGA BOILER INDUSTRY have been
described in this study.
NATURE OF DATA:
The data required for the study has been collected from secondary source .The relevant
information were taken from annual reports, journals and internet.
Case study method has been adopted to carry out the study. Both primary and secondary data
have been used to complete the study. Primary data was collected through interaction with
personnel who are working in finance and Accounts Departments of the organization.
Secondary data was collected from the company annual reports & other relevant records.
Afterwards, the data collected is processed and analyzed by using appropriate analytical tools
and techniques so as to examine the efficiency. The present study was carried out for a period of
thirty days in a prestigious organization i.e. VINAYAGA BOILER INDUSTRY
TOOLS APPLIED:
To have a meaningful analysis and interpretation of various data collected, the following tools
were made for this study.
CHAPTER IV
DATA ANALYSIS AND INTERPRETATION
FINANCIAL ANALYSIS
Financial ratio analysis is the calculation and comparison of ratios, which are
derived from the information in a company’s financial statements. The level and historical trends
of these ratios can be used to make inferences about a company’s financial condition, its
operations and attractiveness as an investment. The information in the statements is used by
Trade creditors, to identify the firm’s ability to meet their claims i.e. liquidity position of
the company.
Investors, to know about the present and future profitability of the company and its
financial structure.
RATIO ANALYSIS
The term “Ratio” refers to the numerical and quantitative relationship between
two items or variables. This relationship can be exposed as
Percentages
Fractions
Proportion of numbers
Ratio analysis is defined as the systematic use of the ratio to interpret the financial
statements. So that the strengths and weaknesses of a firm, as well as its historical performance
and current financial condition can be determined. Ratio reflects a quantitative relationship helps
to form a quantitative judgment.
The first task of the financial analysis is to select the information relevant to the decision
under consideration from the statements and calculates appropriate ratios.
To compare the calculated ratios with the ratios of the same firm relating to the pas6t or
with the industry ratios. It facilitates in assessing success or failure of the firm.
Third step is to interpretation, drawing of inferences and report writing conclusions are
drawn after comparison in the shape of report or recommended courses of action.
Ratios are relative figures reflecting the relation between variables. They enable
analyst to draw conclusions regarding financial operations. They use of ratios as a tool of
financial analysis involves the comparison with related facts. This is the basis of ratio analysis.
The basis of ratio analysis is of four types.
Competitor’s ratio, of the sum most progressive and successful competitor firm at the
same point of time.
Projected ratios, ratios of the future developed from the projected or pro forma financial
statements
NATURE OF RATIO ANALYSIS
Selection of relevant data from the financial statements depending upon the objective of
the analysis.
Comparison of the calculated ratios with the ratios of the same firm in the past, or the
ratios developed from projected financial statements or the ratios of some other firms or
the comparison with ratios of the industry to which the firm belongs.
Group of ratios
Historical comparison
Projected ratios
Inter-firm comparison
The calculation of ratios may not be a difficult task but their use is not easy.
Following guidelines or factors may be kept in mind while interpreting various ratios are
Selection of ratios
Use of standards
Evaluation of efficiency
Effective tool
Differences in definitions
Personal bias
CLASSIFICATIONS OF RATIOS
The use of ratio analysis is not confined to financial manager only. There are
different parties interested in the ratio analysis for knowing the financial position of a firm for
different purposes. Various accounting ratios can be classified as follows:
1. Traditional Classification
2. Functional Classification
3. Significance ratios
1. Traditional Classification
Balance sheet (or) position statement ratio: They deal with the relationship between two
balance sheet items, e.g. the ratio of current assets to current liabilities etc., both the items
must, however, pertain to the same balance sheet.
Profit & loss account (or) revenue statement ratios: These ratios deal with the relationship
between two profit & loss account items, e.g. the ratio of gross profit to sales etc.,
Composite (or) inter statement ratios: These ratios exhibit the relation between a profit &
loss account or income statement item and a balance sheet items, e.g. stock ratio, or the
ratio of total assets to sales.
2. Functional Classification
These include liquidity ratios, long term solvency and leverage ratios, activity
ratios and profitability ratios.
3. Significance ratios
Some ratios are important than others and the firm may classify them as primary
and secondary ratios. The primary ratio is one, which is of the prime importance to a concern.
The other ratios that support the primary ratio are called secondary ratios.
LIQUID RATIO
Liquidity ratios analyze the ability of a company to pay off both its current liabilities as they
become due as well as their long-term liabilities as they become current. In other words, these
ratios show the cash levels of a company and the ability to turn other assets into cash to pay off
liabilities and other current obligations.
Liquidity is not only a measure of how much cash a business has. It is also a measure of how
easy it will be for the company to raise enough cash or convert assets into cash. Assets like
accounts receivable, trading securities, and inventory are relatively easy for many companies to
convert into cash in the short term. Thus, all of these assets go into the liquidity calculation of a
company.
HERE ARE THE MOST COMMON LIQUIDITY RATIOS
Quick ratio
Current ratio
Working capital ratio
Capital employed ratio
1. CURRENT RATIO:
The two liquidity ratios, the current ratio and the acid test ratio, are the most important ratios in
almost the whole of ratio analysis and they are also the simplest to use. Liquidity ratios provide
information about a firm‘s ability to meet its short- term financial obligations. They are of
particular interest to those extending short term credit to the firm. Two frequently-used liquidity
ratios are current and quick ratio.
While liquidity ratios are most helpful for short-term creditors/suppliers and bankers, they are
also important to financial managers who must meet obligations to suppliers of credit and
various government agencies. A company's ability to turn short-term assets into cash to cover
debts is of the utmost importance when creditors are seeking payment. Bankruptcy analysts and
mortgage originators frequently use the liquidity ratios to determine whether a company will be
able to continue as a going concern. A complete liquidity ratio analysis can help uncover
weaknesses in the financial position of the business. Generally, the higher the value of the ratio,
the larger the margin of safety that the company possesses to cover short-term debts.
Current Assets
Current ratio = -------------------------
Current Liabilities
TABLE 4.1
CURRENTRATIO
Rupees (in Cores)
Current ratio
0.5
0.45
0.45
0.4 0.39 0.4
0.4
0.35
0.35
PERCENTAGE
0.3
0.25
0.2 Current ratio
0.15
0.1
0.05
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
YEAR
ANALAYSIS:
As per the figure shown the company current liabilities are more than company assets, for the
good position the ratio should be above the one, but hers the rubber industry current ratio is less
than one, the assets stabilities are less than liabilities
Liquid Assets
Quick or acid test Ratio = -----------------------
Liquid Liabilities
TABLE 4.2
QUICK OR ACID TEST RATIO:
CHART 4.2
QUICK OR ACID TEST RATIO:
0.2 0.2
0.2
Quick ratio
0.18 0.18
0.18
0.16 0.14
0.14
PERCENTAGE
0.12
0.1
Quick ratio
0.08
0.06
0.04
0.02
0
201-2013 2013-2014 2014-2015 2015-2016 2016-2017
YEARS
ANALYSIS:
The above graph suggests that the company has more liquid liabilities than liquid assets, it is bad
sign for the company, and company should not be able to meet the liquid liabilities which are
higher as compare to liquid assets. The company liquid assets are continuously shows negative
impact on liquid assets
A company uses working capital to fund operations and purchase inventory. These operations
and inventory are then converted into sales revenue for the company. The working capital ratio
is used to analyze the relationship between the money used to fund operations and the sales
generated from these operations.
The formula related is:
Net Sales
Working Capital ratio = ----------------------
Working Capital
TABLE 4.3
WORKING CAPITAL RATIO
CHART 4.3
WORKING CAPITAL RATIO
Working Capital Ratio
6 5.58
5 4.55
4.22
3.92
4
PERCENTAGE
3.22
3
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
YEAR
ANALYSIS:
The graph shows that when shareholder’s invested their money in to the business, it helps to
increase the sales. At the year starting in increasing continuously, it means that 1 rupees the
shareholders investing the result shows direct impact on sales, the net sales in increasing
reasoned may be requirement of working capital or machinery etc. But in the last year it gives
decreasing trend.
Net Sales
Capital employed ratio = -----------------------
Capital Employed
TABLE 4.4
CAPITAL EMPLOYED RATIO:
Rupees (in cores)
Year 2012-2013 2013-2014 2015-2016 2015-2016 2016-2017
Net sales 25,660.67 35,373.29 47,957.24 54,217.22 44,765.72
CHART 4.4
CAPITAL EMPLOYED RATIO
1.78
1.8 Current Employed Ratio
1.6
1.34 1.34
1.4
1.13
1.2
PERCENATGE
1
1
0.8
0.6 Current Assets Turnover Ratio
0.4
0.2
0
YEAR
ANALYSIS:
The graph shows that when shareholder’s invested their money in to the business, it helps to
increase the sales. At the year starting in increasing continuously, it means that 1 rupees the
shareholders investing the result shows direct impact on sales, the net sales in increasing
reasoned may be requirement of working capital or machinery etc.. But in the last year it gives
negative trend.
PROFITABILITY RATIO
Profitability ratios are the financial ratios which talk about the profitability of a business with
respect to its sales or investments. Since the ratios measure the efficiency of operations of a
business with the help of profits, they are called profitability ratios. They are quite useful tools to
understand the efficiencies/inefficiencies of a business and thereby assist management and
owners to take corrective actions
PURPOSE AND IMPORTANCE
A business (unless a non-government organization) starts with a motto of making a profit and
thus one of the most commonly used financial ratios is the profitability ratios. Management and
investors calculate these ratios often and they are always present in the annual reports of the
company. Since every business wants to generate profit and the investors also want returns on
their investments, it is mandatory to showcase how the company is working and generating
profit. Thus, profitability ratios analysis is an important evaluation criterion for companies.
Profitability ratios are the tools for financial analysis which communicate about the final goal of
a business. For all the profit-oriented businesses, the final goal is none other than the
profits. Profits are the lifeblood of any business without which a business cannot remain a going
concern. Since the profitability ratios deal with the profits, they are as important as the profits.
The purpose of calculating the profitability ratios is to measure the operating efficiency of a
business and returns which the business generates. The different stakeholders of a business are
interested in the profitability ratios for different purposes. The stakeholders of a business include
owners, management, creditors, lenders etc.
TYPES OF PROFITABILITY RATIOS
Profitability ratios are a bunch of financial metrics which measures the profit generated by the
company and its performance over a period of time. The profit of the company which is assessed
by these ratios can be simply defined or explained as the amount of revenue left after deducting
all the expenses and losses which incurred in the similar time period to generate that revenue.
Ultimately, these ratios are nothing but a simple comparison of various levels of profits with
either SALES or INVESTMENT. So, these ratios can be further classified as Margin Ratios
(Sales based Ratios) and Return Ratios (Investment based Ratios). There are different ratios
under this profitability ratio category which are as below.
GROSS PROFIT MARGIN
This is the ratio which is used to understand how much cost incurred to manufacture a product. It
also helps in understanding the efficiency of the company and how is it using its resources to
produce the product and then make a profit by passing the cost incurred to the consumers of the
product.
GROSS PROFIT RATIO:
The gross profit margin ratio tells us the profit a business makes on its cost of sales. It is a very
simple idea and it tells us how much gross profit our business is earning. Gross profit is the profit
we earn before we take off any administration costs, selling costs and so on. So we should have a
much higher gross profit margin than net profit margin.
High ratios are favorable in this, since it indicates the business is earning a good return on the
sale of its merchandise.
Gross Profit
Gross profit ratio = ------------------ X 100
Net Sales
TABLE 4.5
GROSS PROFIT RATIO:
CHART 4.5
GROSS PROFIT RATIO:
40.00%
67.71%
30.00% 54.19% 52.06% 50.01%
45.63%
20.00% Gross profit ratio
10.00%
0.00%
YEAR
ANALYSIS:
From the above graph the Gross profit ratio shows the decrease trend in the GP which is bad sign
for the company, company should have to increase or maintain its high level of GP but is going
in negative way. As compare to year 2016-2017, there is big increase in gross profit in all five
years, it is 67.71%.
This shows the portion of sales available to owners after all expenses. A high profit ratio is
higher profitability of the firm. This ratio shows the earning left for shareholder as percentage of
Net sales.
Net Margin Ratio measures the overall efficiency of production, Administration selling,
financing, pricing and Taste Management.
TABLE 4.6
NET PROFIT RATIO:
CHART 4.6
NET PROFIT RATIO:
7.00% 6.33%
6.00%
5.00%
3.90%
3.78%
4.00%
Net Profit Ratio
3.00% 2.29%
2.00%
0.67%
1.00%
0.00%
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
ANALYSIS:
The graph shows the increase and decrease trend, in first two year it was increasing than it
went down, it indicate decrease in profitability of the shareholders. As compare first two
year in last year it has been boom in decreasing.
Operating net profit = Net Profit + None operating expenses – non operating income.
Alternatively, this profit can also be calculated by deducting only operating expenses from the
gross profit.
TABLE 4.07
OPERATING NET PROFIT RATIO
CHART 4.7
OPERATING NET PROFIT RATIO
8.00%
PERCENTAGE
7.70%
6.71%
6.00%
4.00% 3.84%
Operating Net Profit Ratio
2.00%
0.00%
YEARS
ANALYSIS:
As shown in graph, in year 2013-2014 the operating net profit ratio increases, it continuous till
second year an than it is going up to its highest level of 11.40. It shows the negative direction
which is decrease in operating net profit ratio. In the last year as compare to first year it goes to
below the first year level.
OVER ALL PROFITABILITY RATIO OR ROR RATIO:
The ROI is perhaps the most important ratio of all. It is the percentage of return on funds
invested in the business by its owners. In short, this ratio tells the owner whether or not all the
effort put into the business has been worthwhile. If the ROI is less than the rate of return on an
alternative, the owner may be wiser to sell the company, put the money in risk-free investment
such as a bank savings account, , and avoid the daily struggles of small business management.
These Liquidity, Leverage, Profitability, and Management Ratios allow the business owner to
identify trends in a business and to compare its progress with the performance of others through
data published by various sources. The owner may thus determine the business's relative
strengths and weaknesses.
This ratio actually measures the profitability of the investments in the firm. And the related
formula is:
TABLE 4.08
RETURN ON ASSETS RATIO:
CHART 4.8
RETURN ON ASSETS RATIO:
Returns on Assets
12.00%
10.00%
9.53%
8.57%
8.00%
PERCENTAGE
7.14%
6.00%
5.45%
Returns on Assets
4.00%
3.50%
2.00%
0.00%
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
YEAR
ANALYSIS:
The graph shows the trend increasing in first three years and after that it goes down. In starting
years the return on asset ratio is increase. This means that the company is increasing their
revenue per unit of asset but then it becomes negative. This is bad signs for the company. But
overall company is average returns of 9.53.
It is calculated as:
Note: Capital Employed = Equity Capital + Preference Capital + Reserves and Surplus + Long
Term Debt- Fictitious Assets
TABLE 4.09
RETURNS ON CAPITAL EMPLOYED:
CHART 4.09
RETURNS ON CAPITAL EMPLOYED:
12.00% 10.27%
PERCENTAGE
10.00% 8.43%
8.00% 6.92%
6.00% 4.68%
4.00%
2.00%
0.00%
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
YEARS
ANALYSIS:
RETURNS ON EQUITY:
This ratio also known as return on shareholders‘funds or return on proprietors‘funds or return on
net worth, indicates the percentage of net profit available for equity shareholders to equity
shareholders‘funds and not on total capital employed.
It is calculated as:
TABLE 4.10
RETURNS ON EQUITY
CHART 4.10
RETURNS ON EQUITY
Return On Capital Ratio
450.00%
392.58%
400.00%
350.00%
300.00% 285.48%
PERCENTAGE
250.00%
194.78% 195.70%
200.00%
150.00%
100.00%
47.30%
50.00%
0.00%
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
YEAR
ANALYSIS:
The figure shows that the returns on equity is increasing in the beginning and touches highest
level in the year 2013-2014 which is 392.58% then it is declining in last two year the reason is
decrease in company profit
Return on investment
Return on investment (ROI) is performance measure used to evaluate the efficiency of
investment. It compares the magnitude and timing of gains from investment directly to the
magnitude and timing of investment costs. It is one of most commonly used approaches for
evaluating the financial consequences of business investments, decisions, or actions.
If an investment has a positive ROI and there are no other opportunities with a higher ROI, then
the investment should be undertaken. A higher ROI means that investment gains compare
favorably to investment costs.
ROI is an important financial metric for:
asset purchase decisions (such as computer systems, machinery, or service vehicles)approval and
funding decisions for projects and programs of different types (for example marketing programs,
recruiting programs, and training programs)traditional investment decisions (for example
management of stock portfolios or the use of venture capital).
Calculation (Formula)
To calculate return on investment, the benefits (or returns) of an investment are divided by the
costs of the investment. The result can be expressed as a percentage or a ratio.
Return on Investment (ROI) = (Gains from Investment – Cost of Investment) / Cost of
Investment
It should be noted that the definition and formula of return on investment can be modified to suit
the circumstances -it all depends on what is included as returns and costs. For example to
measure the profitability of a company the following formula can be used to calculate return on
investment.
Return on Investment = Net profit after interest and tax / Total Assets
TABLE 4.11
RETURN ON INVESTMENT
CHART 4.11
RETURN ON INVESTMENT
Return on Investment
0.08
0.07
0.06
0.05
ratio
0.04 0.071
0.03 0.05
0.02 0.039 0.04
0.01 0.009
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
year
ANALYSIS:
The figure shows that the returns on investment is increasing in the beginning and touches
highest level in the year 2013-2014 which is 0.71 % then it is declining in last two year the
reason is decrease in company profit
8
7
6
5
ration
4 7.6
6.5
3 5.1
2
1 1.72 1.4
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
year
ANALYSIS:
The figure shows that the earning per share is increasing in the beginning and touches highest
level in the year 2014-2015 which is 7.6 % then it is declining in last two year the reason is
decrease in company profit
CHAPTER V
FINDING, SUGESSTION AND CONCLUSION
FINDINGS OF THE STUDY
1. The current ratio has shown in a fluctuating trend as 7.41, 2.19, 4.48, 1.98, and 3.82
during 2012 of which indicates a continuous increase in both current assets and current
liabilities.
2. The quick ratio is also in a fluctuating trend throughout the period 2012-2017 resulting as
7.41, 1.65, 4.35, 1.9, and 3.81. The company’s present liquidity position is satisfactory.
3. The absolute liquid ratio has been decreased from 3.92 to 1.18, from 2012-2017.
4. The proprietor ratio has shown a fluctuating trend. The proprietary ratio is increased
compared with the last year. So, the long term solvency of the firm is increased.
5. The working capital increased from 0.72 to 1.13 in the year 2012-2017.
6. The fixed assets turnover ratio is in increasing trend from the year 2012-2017. (1.26,
1.82, 4.24, 3.69, and 6.82). It indicates that the company is efficiently utilizing the fixed
assets.
7. The capital turnover ratio is increased form 2012-2015017. (0.98, 1.01, and 1.04) and
decreased in 2016 to 0.98. It increased in the current year as 1.00.
8. The current assets to fixed assets ratio is increasing gradually from 2012-2017 as 2.93,
3.74, 4.20, 6.07 and 8.17. It shows that the current assets are increased than fixed assets.
9. The net profit ratio is in fluctuation manner. It increased in the current year compared
with the previous year from 2012-2017 0.33 to 0.42.
10. The net profit is increased greater in the current year. So the return on total assets ratio is
increased from 0.17 to 0.31.
11. The Reserves and Surplus to Capital ratio is increased to 4.19 from 2.02. The capital is
constant, but the reserves and surplus is increased in the current year.
12. The earnings per share was very high in the year 2012 i.e., 101.56. That is decreased in
the following years because number of equity shares are increased and the net profit is
decreased. In the current year the net profit is increased due to the increase in operating
and maintenance fee. So the earnings per share is increased.
13. The operating profit ratio is in fluctuating manner as 0.99, 0.51, 0.41, 0.57 and 0.69 from
2012-2017respectively.
14. Price Earnings ratio is reduced when compared with the last year. It is reduced from 3.09
to 2.39, because the earnings per share is increased.
15. The return on investment is increased from 0.32 to 0.42 compared with the previous year.
Both the profit and shareholders’ funds increase cause an increase in the ratio
SUGGESTIONS
CONCLUSION:
From the study it can be concluded that to know that budgetary control is treated as one of the
better techniques for minimizing cost and maximizing profit in VINAYAGA BOILER
INDUSTRY. Budgetary control technique Plays important role in the profit making or
smooth running of the company
It co ordinates all the departments like Finance, Marketing, Production in the company. It
makes the decentralization of authority in the organization which helps organization goal with
in stipulated period of time. Budgetary control acts as safety for an organization because it
helps to identify business risk and necessary steps can be taken to avoid the risk.
Budgetary control techniques help to know how the available monetary resources can be
utilized effectively. This technique focus on efficiency in the allocation of resources in
particular time. As the finance department is the soul of any organization. Budgetary control
helps the organization by making finance department effectives
REFERENCE
BIBLIOGRAPHY
Advance Cost Accountancy, S.P. Jain and K.L. Narang, Kalyani Publishers.
Advance Cost Accountancy, Lall Nigam, G.L. Sharma, Himalaya Publishers.
Management Accountancy, M.Y. Khan and P.K.Jain, Tata Mc. Graw Hill Ltd.,
Cost and Management Accountancy, S.N. Maheswari, S. Chand Publishers.
WEBSITES:
www.google.com
www.wikipedia.com
www.scribed.com
ANNEXURE
BALANCE SHEET OF COMPANY
BALANCE SHEET OF VINAYAGA BOILER INDUSTRY AT CHENNAI
2016-2017 2015-2016 2014-2015 2013-2014 2012-2013
Sources Of Funds
Total Share Capital 638.07 634.75 634.65 570.6 514.05
Equity Share Capital 638.07 634.75 634.65 570.6 514.05
Share Application Money 0 0 3.06 0 0
Preference Share Capital 0 0 0 0 0
Reserves 18,496.77 18,709.16 19,351.40 14,208.55 11,855.15
Revaluation Reserves 0 23.75 24.19 24.63 25.07
Net worth 19,134.84 19,367.66 20,013.30 14,803.78 12,394.27
Secured Loans 5,877.72 6,915.77 7,766.05 7,742.60 5,251.65
Unsecured Loans 8,390.97 4,095.86 8,132.70 8,883.31 7,913.91
Total Debt 14,268.69 11,011.63 15,898.75 16,625.91 13,165.56
Total Liabilities 33,403.53 30,379.29 35,912.05 31,429.69 25,559.83
Application Of Funds
Gross Block 30,312.14 27,111.76 21,883.32 18,416.81 13,905.17
Less: Accum. 11,611.44 9,965.87 8,466.25 7,212.92 6,259.90
Depreciation
Net Block 18,700.70 17,145.89 13,417.07 11,203.89 7,645.27
Capital Work in Progress 1,507.84 2,073.96 4,058.56 5,232.15 6,954.04
Investments 19,934.39 20,493.55 22,624.21 22,336.90 12,968.13
Inventories 4,455.03 4,588.23 3,891.39 2,935.59 2,229.81
Sundry Debtors 1,818.04 2,708.32 2,602.88 2,391.92 1,555.20
Cash and Bank Balance 462.86 1,115.08 638.79 612.16 638.17
Total Current Assets 6,735.93 8,411.63 7,133.06 5,939.67 4,423.18
Loans and Advances 5,305.91 6,400.65 5,852.42 5,248.71 5,909.75
Fixed Deposits 0 725.88 1,790.13 1,141.10 503.65
Total CA, Loans & 12,041.84 15,538.16 14,775.61 12,329.48 10,836.58
Advances
Differed Credit 0 0 0 0 0
Current Liabilities 16,580.47 21,271.45 15,740.69 16,909.30 10,968.95
Provisions 2,200.77 3,600.82 3,222.71 2,763.43 1,877.26
Total CL & Provisions 18,781.24 24,872.27 18,963.40 19,672.73 12,846.21
Net Current Assets -6,739.40 -9,334.11 -4,187.79 -7,343.25 -2,009.63
Miscellaneous Expenses 0 0 0 0 2.02
Total Assets 33,403.53 30,379.29 35,912.05 31,429.69 25,559.83
Income
Sales Turnover 49,319.73 59,220.94 52,067.87 38,173.39 28,538.20
Excise Duty 4,554.01 5,003.72 4,110.63 2,800.10 2,877.53
Net Sales 44,765.72 54,217.22 47,957.24 35,373.29 25,660.67
Other Income 1,662.33 -11.16 341.53 1,220.86 921.29
Stock Adjustments 143.6 623.84 354.22 606.63 -238.04
Total Income 46,571.65 54,829.90 48,652.99 37,200.78 26,343.92
Expenditure
Raw Materials 33,764.40 41,081.79 35,047.05 25,366.12 18,801.37
Power & Fuel Cost 484.66 550.89 471.28 362.62 304.94
Employee Cost 2,837.00 2,691.45 2,294.02 1,836.13 1,551.39
Other Manufacturing 95.61 2,386.91 1,753.46 1,289.60 866.65
Expenses
Selling and Admin 0 3,248.91 2,790.19 2,126.10 1,652.31
Expenses
Miscellaneous 6,963.47 1,610.69 2,067.42 1,707.06 1,438.89
Expenses
Preoperative Exp -953.8 -907.13 -817.68 -740.54 -916.02
Capitalized
Total Expenses 43,191.34 50,663.51 43,605.74 31,947.09 23,699.53
Operating Profit 1,717.98 4,177.55 4,705.72 4,032.83 1,723.10
PBDIT 3,380.31 4,166.39 5,047.25 5,253.69 2,644.39
Interest 1,387.76 1,218.62 1,383.79 1,246.25 704.92
PBDT 1,992.55 2,947.77 3,663.46 4,007.44 1,939.47
Depreciation 1,817.62 1,606.74 1,360.77 1,033.87 874.54
Other Written Off 0 0 106.17 144.03 51.17
Profit Before Tax 174.93 1,341.03 2,196.52 2,829.54 1,013.76
Extra-ordinary items 0 0 0 0 15.29
PBT (Post Extra-rod 174.93 1,341.03 2,196.52 2,829.54 1,029.05
Items)
Tax -126.88 98.8 384.7 589.46 12.5
Reported Net Profit 301.81 1,242.23 1,811.82 2,240.08 1,001.26
Total Value Addition 9,426.94 9,581.72 8,558.69 6,580.97 4,898.16
Preference Dividend 0 0 0 0 0
Equity Dividend 645.2 1,280.70 1,274.23 859.05 311.61
Corporate Dividend 77.55 181.54 192.8 132.89 34.09
Tax
Per share data
(annualized)
Shares in issue (lakhs) 31,901.16 31,735.47 6,346.14 5,705.58 5,140.08
Earnings Per Share 0.95 3.91 28.55 39.26 19.48
(Rs)
Equity Dividend (%) 100 200 200 150 60
Book Value (Rs) 59.98 60.95 314.93 259.03 240.64