A Study On Budgetary Control At Mother Dairy Fruit & Vegetable Pvt Ltd.

A Project is submitted for the partial fulfillment of MBA Project course titled “A
study on budgetary control” in the Academic year 2011-12.
Submitted by
G.VEERANJANEYULU
MBA
Reg.No:107X1E0055
Project Guide
Mr. Hari Krishana
Asso. Professor
Department of Master of Business Administration
S.V.V.S.N ENGINEERING COLLEGE
(Affiliated to JNTU, Kakinada and Approved by AICTE)
KURNOOL ROAD, ONGOLE, PRAKASAM DISTRICT,A.P-523001

FEBREARY 2012.
SRI VEERA VENKATA SATYA NARAYANA
ENGINEERING COLLEGE
KURNOOL ROAD, ONGOLE, PRAKASAM DISTRICT, A.P-523 255.
(Approved by AICTE, New Delhi & Affiliated to JNTU, Kakinada)
Ph: (08592) 653811, 653911 Cell: 94402 65707
Date :
CERTIFICATE
This is certify that the mini-project report entitled “A study on budgetary
control”submitted by Mr. G.VEERANJANEYULU (Reg.No: 107X1E0055) in
partial fulfillment of M.B.A is an independent work undertaking by him during the
academic year 2011-12.
Dr.P.SUBBAIAH Mr. Hari Krishana
HEAD OF THE DEPARTMENT PROJECT GUIDE

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INTRODUCTION
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 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 specifies period in the
future. 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 operations conditions.
The Federation has drawn up more comprehensive system for procurement and
processing of milk.
A dedicated research cell is actively pursuing way and means of bettering quality.
Collaborations with global experts are also being sought, all in an attempt to remain at the
forefront of moderen dairying in India where Quality will be the watchword.
Finance means a State of being busy’. All creative human the word business Literally
means activities relating to the production and distribution of goods and services for
satisfying human wants are known as business. It also includes all those activities indirectly
help in production and exchange goods, such as transport insurance banking and warehousing
etc.

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SCOPE OF THE STUDY
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 from 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”.
NEED OF THE STUDY
The significance of choosing budget and budgetary control as a study is because of
its important i.e. Budgetary control is the process of determining various budgeted figures for
the enterprises for the future period and then comparing a budget figures with the actual
performance for calculating variances ,if any and also to ensure planning for future by setting
up various budgets the requirements and expected performance of the enterprise are
anticipated to coordinate the activities at different deportments fixation of responsibilities on
various individuals in the organization.
.

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OBJECTIVIES OF THE STUDY
1. To understand the importance of budget and budgetary control
2. To apply various theoretical aspects of budget and budgetary control
3. To ascertain how budgetary control helps in planning and
coordination of various operation in an enterprise
4. To ascertain how budgetary control helps in controlling the all
operations of the business enterprise
5. To know whether there is influence of budgets in profit make .
6. To study the various aspects of budget and budgetary control.
7. To study the performance of the organization in terms of profitability.
8. To study revenue receipt and revenue expenditure of the organization.
9. To study the actual performance with budget performance.
10. To facilitate centralized control with delegated authority and responsibility.

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RESEARCH METHODOLOGY
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.
LIMITATIONS
1. The period of study that is four weeks was not enough to go into the detailed aspects
of the study
2. The study is carried basing on the information and documents provided by the
organization and based on the interaction with the various employees of the respective
departments
3. Most of the matters related to budgets ware confidential .so it is not possible to gather
much information.
4. Budgeting process is vary dynamic
5. Budget that ware prepared are only based upon trend at the time preparation.
6. Flexibility with in the budget is not possible.

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HISTORY OF “PDMPMACU Ltd”
The milk collection in Prakasam District started with the commissioning of the Milk
chilling center of Ongole in 1975, majority of milk producers in the district are from the
categories of the land less agricultural labors, marginal and small farmers most of whom are
from socially economically backward classes. While dairying is an essential side income to
agriculture, majority of the milk producer farmers, slowly it took an important turn as a
prominent contribution to the rural economy.
To the economically backward community it is emerging as the dependable source of
income and in turn boosts up total economy the cotton to take up dairying as a dependable
source of income. The awareness to maintain better breef many cattle among the farmers has
also increased.
The parkasam District co-operative milk producer union established in the year 1986
with the affiliation of the mild producer dairy co-operative formed. The investment from
operation flood project strengthened the processing capacity built up besides introduction of
technical inputs for milk production enhancement of milk producer co-operative doorsteps.
Due to constant affords of this dairy and involvement of milk producers the milk
collection of 500LPD in 1975 increased to 95,000LPD by 1994 on an average, in he recent
years, as a result of central gov, liberalization policy, more than 25 private dairies came into
existence in Prakasam district, and as such the average milk collection fell down to some
extent.
Salient Features of Milk Procedures Factory: Ongole:
Prakasam District is the native tract of the world famous Ongole breed of cattle. The
district has good potentialities for milk productions, due to the irrigation facilities available
from Nagarjuna Sagar and water sources from tubular wells and tanks. The milk procurement
in the district was started in 1975 with 12.00Lts. Capacity milk chilling center at Ongole. The
capacity has been increased to 80,000Lts. Per day by 1982 in as pan of 10 years.

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The procurement has increased to 1.45 lakh liter, per day in the peak of 1986
observing the trend increase of milk production it was proposed to establish a milk products
factory of capacity of 3.5 lakh its. Per day under operation Flood-III with financial assistance
from NDDB on 30% grant and 70% loan basis.
The project was contemplated to handle the surplus milk from Nellore District
also. The execution of the project was entrusted NDDB on turnkey Basis.
1. Products Manufacture in the Company
i) Milk
ii) Butter milk
iii) Ghee
iv) Kova
v) Flavoured milk
2. Milk handling capacity : 3.50 Lakh lts. Per day
3. Date of work capacity : 16.09.1987
4. Capital out lay : 19.25 Crores
5. Extent of land : 89.69 acres
6. Date of commitment of trail runs : 16.1.1995
7. Milk products capacity :
a) Milk in sachets : 30,000lrs. Per day
b) Butter : 20 Mt/ Day
c) Ghee : 10 Mt/ Day
d) Milk powder : 30 Mt/ Day
Milk chilling centers in Prakasam District :

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Milk Chilling center, Kondamanjulur 0.40 Lakh lts. Cap
Milk Chilling center, Kanigiri 0.20 Lakh lts. Cap
Milk Chilling center, Yerragondapalem 0.12 Lakh lts. Cap
Milk Chilling center, Cumbum 0.12 Lakh lts. Cap
Milk Chilling center, Venkataschalempalli 0.05 Lakh lts. Cap
Dairy Co-operative societies in Prakasam District:
Co-operative groups of milk producers 448
Working of Co-operative groups of milk producers 269
Association centers of milk producers 424
Milk producers 27987
Milk retailing centers 150
Dairy parlors 10
Animal first AID centers 268
A.I centers 30

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No. of Beneficiaries (Directly and indirectly)
Framers of S.C community 11,698
Framers of S.T community 3,190
Framers of B.C community 22,335
Framers of Others community 69,128
Total Beneficiaries 1,06,351
Milk production Enhancement and Inputs Activities:
Milk production Enhancement inputs broadly the following:
1. Animal Breed Improvement:
A center was started at 30 societies with societies AI workers through which AI
program is being implemented. In addition to AI centers 441 breeding bulls were also
supplied for natural service in the district for convenience of village, which is interiorly
located in specific. However the AI activity will be taken up by ALDA in future.
2. Animal Health Care’s:
First AID centers were started by the union through which first aid medicines and de-
working drugs are being supplied free of cost. More attention is paid to foot and HS
vaccinations. FMD vaccine supplied at 50% cost and HS vaccine PM free of cost. For FMD
vaccination on inception on incentive of Rs.11-for each vaccination has been paid. This union
has already engaged 4 members of retried veterinarians and utilized their services by keeping
them each at Kondamanjulur and Yerragondapalem and two at Ongole.
Further, the cattle insurance activity is also under implementation and the 3-year premium
will be shared by the beneficiary, society and union in the ratio of 40:30 respectively.

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3. Improved powder production:
Improved powder seed of different verities has been supplied to the dairy on 50% cost
powder slips at free of cost.
4. Balanced Cattle Feed Supply:
Cattle feed is being supplied by getting the feed from Sangam Dairy. Gadwall market
Nandyla mineral mixture is also supplied at 50% cost.
5. Supply Of Election Milk- Authorities:
In the year 2003-2004 and 2005-2006 634 members of electronic milk testers are
supplied to the societies at 25% subsidy in order to stabilize the producer’s
Confidence prior to this there is about 300 EMT in the societies which were supplied
by NDDS under of-II and III.
6. Former Introduction Programme:
Farmers from each village society were sent to visit the different societies in other
District sister unions like Krishna, Guntur, Visakha, Nandyal & Kurnool, exposure
programs were also conducted calmingly and separately to the society presidents and paid
secretaries to improve the knowledge in the area of animal health, hygiene, quality of
milk and accounting through regular zonal meeting. MPF tips of milk producers
especially women have been arranged.
7. Gopal Raksha Scheme:
The special insurance program has been introduced during March 2000ssViz. Gopal
raksha insurance scheme 7,538 beneficiaries are covered under this scheme total premium
of Rs.17, 000 lakhs. The premium will be borne by the union, society and beneficiary in
the ratio 30:30:40 respectively. In this scheme in addition to buffaloes insurance the
beneficiary is also benefited by the coverage of accident and dwelling shed.
8. Relief Measure to The Fire Victims:
An amount (in Rs.) of Rs.500 will be paid as relief measure to the milk producers of
this union for purchase of powder where paddy straw stalks are destroyed during the fire
accident.

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9. Padi Prakasam:
This is exclusive scheme in which only union milk producers are financed by the
nationalized banks under tic-up arrangement. In this scheme beneficiary will bear the
margin money of Rs.2, 500/- and bank finance id Rs.7, 500/- so for, nearly 10000/-
producers are benefited.
10.Women Dairy Project:
The government of India under ministry of Human resources development under
“Support to training and employment program for women step” sanctioned women dairy
Co-op societies with 25,760 women members during the project period of 3 year in AP
state and 60 women dairy Co-operative societies with 2400 women members in Prakasam
Dist.
Milk procurement procedure of P.D.P.M.A.C.U.LTD :
For the purpose of procuring raw milk. There is a separate procurement section. There are
about 22 persons working in the head office to control the procurement activity to
argument with the quality of milk.
Milk is received at Prakasam Dairy through direct routes, road tankers from chilling
centers.
Direct Routes:
Milk is collected both I the morning and evening from 30 centers in the district, Vehicles
used for direct route collection of milk are hired by the dairy on contract basis. The mode
of collection is similar to any other collection center whether it is a co-operative society
(or) not.
From Chilling Centers:
The chills milk fro the chilling centers is transferred to Ongole dairy by road milk tankers
owned the sister unions.
E.G: Vijayawada, Hyderabad, Guntur, by own and or hired tankers for city marketing on
conversion on behalf of the union on custom hiring basis.

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Financial Activities:
The department undertakes accounting and payments of DCS bills purchase bills.
Reconciliation of accounts departments undertake the statutory functioned like G.P.F,
E.P.F, E.S.I, P.T, G.I.S, L.I.C, income Tax etc.,
Personal Administration Activities:
The Personal administration activities a department undertake the function like
maintenance of leave records, transfers, promotion, graduation, maintenance of personnel,
fields. Industrious relations general administrative and functions related to contract
labour. The department looks after the security of the estate through hire agency.
Marketing Activities:
Ongole dairy started its liquid milk sales 1984 since then up to 1999 there was no separate
sale wing from in 1989 taking marketing as the main thing, Ongole dairy had divided its
sales pattern as.
1. Liquid milk sales
2. Milk bi-products sales
Liquid Milk Sales:
Ongole dairy started its liquid milk sales in 1975 in 12,000 liters. Per day and at present
sales 30,000 liters. Per day.
Milk Bi-Products Sales:
The company produces bi-products sales are milk powder 30Mt/day, Butter 20 Mt/day
and Ghee 10 Mt/day.
Distribution System of Milk in Ongole Dairy
The Distribution system of P.D.M.P.M.A.C.ULTD. is shown below.
Direct supply on bulk indirect commission Basis
Own Parlors agents retailers

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The above chart reveals that the factory distribution system is directed as well as indirect.
The factory has its own parlor through which it sells the milk to ultimate consumer who
orders for milk. On bulk basis will ge4t milk directly from the company provided that
minimum order in 40 liters.
The factory also sells milk through indirect distribution for instance the factory has
appointed number of commission agents in Ongole District who self liter sachets in the
vacant part the factory has introduced U.H.T milk in sachets, which are being districted
through retailers, The factory gives them reasonable margin on but milk.
Promoters of The Company:
Chairman ….. Challa Srinivasulu
Dairy director ….. Pamidi Venkatrao
Managing director …... SK.Vali
Board of directors of the company:
Chanchu Prasad
Bachina Nageswararao
Chunduru Nageswararao
Kilaree Venkateswarlu
Puli Venkateswara reddy

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ORGANIZATION CHART
Board of director
Chairman
Managing Director
Deputy Director
Dairy Managers Junior
Engineer
AQC Supervisors PCM
Lab Assistant
Driver Mechanic
Boiler
Workers
PCM: Plant charge man
AQC: Assistant quality control

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DAIRY DEVELOPMENT IN INDIA:
India is an agricultural country over 70% of the people depend on agricultural and
50% of the total income is devised from agriculture and allied activities such as Dairy
farming poultry framing etc.,
Evolution of Dairying was largely an unorganized activity. By and large land holding
farmers kept cattle mainly for bullock, production of milk was essentially la by product, the
surplus after domestic consumption was either converted into conventional products mainly
ghee and sold to middleman or catering to the nearby market.
The origin of dairy farms under public management goes back to 1866 when the
department established a few dairy forms in the year to supply milk products to the British
troops. The next step was initialed during the First World War. In 1914, the department of
defense, on the advice of the3 board of agriculture, conducted a preliminary study to access
the population of cows and buffaloes. The board of agriculture advised the government in
1916, to appoint an imperial dairy, export. The next important step was the decision to
conduct a census on livestock. The livestock census was carried out in 1919 as a preparatory
action for planed dairy development by the board of agriculture. In 1920 the imperial dairy
expert recommended to the government the man power requirement for managing the defense
dairy farms by this there were three dairy farms and until 1923. The British Government‘s
approach to Dairying was confined to milk required of the military only. After 1923 diploma
course in Dairying was started at Bangalore.
Dr. N.C.Wright director, dairy Research institute, Scotland who was invited to India
in 1936 for reviewing the progress of dairy in the country made few important
recommendations.
As India is a country of Village, of which most inhabitants are small and marginal
farmers and landless laborers dairy development should be promoted only on cooperated
lines to cover wide areas
In 1937 the Lucknow milk products cooperative union limited was established paving
the way for the organization of such unions at district and state levels.

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In 1945 the Famine enquiry commission in its report embalmed the need for la
developing and folders supply for in creasing milk production and recommended the adoption
of mixed farming. The commission also made our a case for increasing the milk production
and consumption in the villages as well as the need for milk supply to urbaneness. As a
sequel to this, under the greater Bombay milk scheme, array milk colony has been set up.
Similarly in Bengal the greater Calcutta milk scheme has been initiated two years there after.
The beginning of Bombay milk scheme to procure milk from Cairo district in Gujarat through
a private diary land the resultant exploitation point that led to the idea of creating an
institutions structure for Dairying on cooperative lines.
In 1946 the Frames integrated Dairy cooperative unit (Amul) was established at
Anand District, in Gujarat. Amul and the greater Bombay milk scheme helped the dairy
industry in India to develop at faster rate.
There were no significant development by the government as a separate head, but it
was treated only as a part of animal husbandry, however the government had taken steps in
this direction from the second five-year s plan.
NATIONAL MILK GRID:
In 1970, the national grid was a distant seeming concept, but the next decade how lit
taking shape. The benefits from such as arrangement to both producers and consumers are
clear; to consumers the gird means more level supply of milk throughout the year. To
producers grid brings more rational prices through out the season in rural areas and also in
urban areas.
DAIRY DEVELOPMENT PROGRAMS:
In order to build a viable land self-sustaining nation dairy industry on cooperative
line, nation Dairy development board launched a project called operation flood in 1970. This
constitutes a significant step in promoting rural development.
Operation Flood –1 :
It was launched in 1970. The estimated outlay was Rs.1164 Millions the Indian dairy
Corporation (IDC), a government of India under taking was set up at Baroda, to advance

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funds for the various dairy projects. Provided by Indian Dairy Corporation are usually on
70% loan cum 30% subsidy basis
The national diary development board dairy schemes have four major objectives;
1. They aim at bringing about an increase in the production of milk through supply of technical
inputs.
2. National dairy development board intends to develop infrastructure for marketing of milk
from rural to urban areas.
3. It attempts to promote rural development by increasing the income of rural poor.
4. Build a cooperative organization for each dairy. The milk producers must own lit them with
only limited control buy the state government.
The gross roof –operative organization was first introduced at Amul dairy, Anand
(Gujarat)
During operation flood –1 program major diaries were started in Indian in 10 states
covering 1.3 million families. Within 10 years the income of milk producers had been
doubled.
Dairy co-operatives at village levels are expected to play a vital role in educating the
milk producer’s and eliminating the money ender land the milk men has been witnessed over
the decades in Gujarat.
Operation Flood –II :
The major objectives are as follows.
1. Coverage of layout 10 million families of rural milk producers.
2. Additional 16million cross – breed cows and buffaloes.
3. Development of the original milk grids, with likages to the national milk grid major urban
centers.
4. Development of the processing capacity of the various dairies providing additional plants.
5. Improving the infrastructure facilities l concerned with the dairy industry.

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FUNDS :
Funds for operation flood where I initially modernized form the scale of products
based on foreign food donation in the form of skim power and buffer. With its pledge to
provide milk to one land all it was considered world’s largest dairy development programme.
It spurred Indian dairy industry to launch white revolution.
Dairy co-operatives:
Co-operative type of organization for development has envisaged many advantages.
1. It can consider needs of the producers and frame laws accordingly.
2. It is possible to development rural leadership to help the milk producers.
3. It is expected lt. reduce the exploitation of private middlemen besides assuring uniform
price land prompt payment.
Federal from of co-operative system is intended to ensure unbroken link for village
level to state level and safeguard interests of milk producer
In our country, the co-operative movement developed due to the initiative of the
government. The members of co-operative organization could not contribute fully
contributing a substantial part of the share capital.
It was only during the 1950`s that Tamilnadu, Gujarat, and Utter Pradesh took some
important steps in organizing dairy co-operatives. Amul, the most significant and prestigious
venture in the dairy cooperative sector, provided a model for the milk producer’s cooperative
in Gujarat and other states, such co-operative played an important role in creasing milk
production as well.
To provide guidance and policy direction states level federation of co-operatives have
been formed in different states.
In the sphere of co-operation the number of Amul pattern organized societies under
operation flood. The milk produced and sold through co-operatives fetched around 8.2 cores
a day adding up to 2067 cores per year.

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Credit Supply for Dairy co-operation:
The national co-operative Development Corporation has been providing financial
assistance to dairy cooperatives for organizing medium and small sized dairy processing
plants and milk chilling centers. The corporation has sanctioned a total loan assistance of
Rs.633 lakh for establishment of 29 cooperative dairy units.
In addition to small framers development agency (SFDA) marginal framers and
agricultural labour agency (MFAL) Integrated rural development (IRD) which have are
special providing incentives to lending agencies, the cooperative credit structure has provided
for medium term loans for purchase of milk cattle.
Growth of Dairy Development:
The dairy development contributed to the Indiana development also:
1. India ranks number one in milk production.
2. It achieved its target with 4.6% annual compound growth rate against 4.2% envisaged in
seventh plan.
3. It has achieved the targets of l63 million tons plan.
4. The per capital availability of milk i9s anticipated to increase from 1995 to 1998 for human
population 908 millions.
5. Besides this milk operations food programme has achieved success in other fronts also.
Import of milk solids has been already ended and India recently exported 80,000 tons of milk.
6. India refused commodity laid of about l35 cores from European Economic Community,
which gives an assuring picture of total self-reliance and near self-sufficiency in milk
productions.
Need for Dairy Development:
The serous constraint is that Indian agriculture faces the problem of disguised
unemployment and the resultant problem of poverty and inequality of income distribution.
Hence the superman tall of planning is to train about reservoir by creating employment
opportunities and by analyzing the employed and unemployed into productive works. Dairy
forming is of such important in serving the purpose.

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Dairy forming can also absorb large number of agricultural labour and rural poor and
it provides large-scale employment opportunities throughout the year. The subsidiary
occupation is playing a vital role in improving rural economy which is mainly agriculture,
based. The advantage of dairy industry is that, gestation period is very short and the benefits
of development activities can be reaped soon.
The dairy development activities were carried on the government through the dairy
development. Though dairy industry started as a service organization land recognized as
development in to a commercial organization
Dairy Development in Andhra Pradesh:
A dairy industry program was primarily carried out with the help of united
international children’s emergency fund. Food and agriculture organization and freedom
from hunger champion organization of United Kingdom, besides they assisted a lot for the
establishment of dairy units at Hyderabad and Vijayawada in 1969 which led to pioneer dairy
development in Andhra Pradesh.
Andhra Pradesh has an excellent potential for milk production with progressive
farmers who are more reception to the new technology land scientific practices. The
estimated milk production is 40 lakh liters per day. Today a strong wave of white revolution
is sweeping crating New Hope of eliminating socioeconomic imbalance. Andhra Pradesh is
poised to be the dairy land of India playing an important role in national milk gird.
Genesis of Andhra Pradesh Dairy Industry:
Planning for organized dairy industry in Andhra Pradesh was conceived in 1956 and a
pilot milk supply scheme was started in 1960 –61 as prelude for an integrated milk project,
Hyderabad and Vijayawada for which the UNICEF gifted dairy equipment valued at Rs.1
core with the main objective of linking up and supplying surplus from producing area to
consuming area.
Andhra Pradesh dairy development corporation was formed on 02-04-1974 as a state
government understanding for the application of commercial principles with the mission of

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industrial rural during land extensive infrastructure was developed to procure milk from nook
and corner of the state to top-hitter to untapped milk with main objective of generating la
greater employment opportunity to rural people on “ as they are where they are and where
they are basis ” . it provides employment to nearly 20,000 employees and organized as many
as 81 dairy units including 7 milk products factories, 13 district and 61` chilling centers.
More than 7 lakhs milk producers get Rs.58 crores per annum for supplying milk of
which 78% of total beneficiaries belong to small and marginal farmer, agricultural labours
and other worker sections of rural community. Every day around 10 lakh liters of milk
collected. Every 10 liters of milk produced in the country comes from Andhra Pradesh.
Arresting the oscillation in milk price as well as supply of toned milk for every needy
are accelerating the programs of dairy development to a peak period. The turnover of milk
increased by 50 percent as a result today per capital availability of cow milk is doubled.
Co-Operative Federation:
Andhra Pradesh Dairy development cooperation was constituted in October 1981 to
implement operation flood-II program through active involvement of producer in organizing
milk production, milk procurement. Processing and marketing on” 3- tier” co-operative
structure is as per the national policy of Government of India.
The 3 Types of System Consists:
1. Primary dairy cooperative societies at village level
2. Cooperative unions at district milk shed travels and
3. Federation at state levels
The Indian Dairy co-operation offered financial assistance of Rs. 7851 crores for
dairy development programs in Andhra Pradesh with 30% grant and 70% on loan basis.
The National Dairy development board identified the project area for implementation
of operation flood – II program in 16 districts out of 23 districts in the state. The dairy
federation is marching with dairy cooperatives to herald a new era of rural prosperity.

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Main Aim of Setting up a Dairy Industry in Andhra Pradesh:
The majority of area of Prakasam district in our state is having agriculture to be main
Livelihood, Dairy industry occupies fifth place in earning livelihood next to agriculture. This
is an undoubted fact. After concluding that, the cattle wealth of district is high. The surveys
were conducted on this aspect and the result was the development of dairy development
union.
After changing under different management systems, it is new stoping into the co-
operative sector, the dairy industry stepped in to the co-operative sector to help the small and
backward farmer by making them the partners of the industry. The then governer of Andhra
Pradesh also explained this fact.
“The expansion of this to meet the needs of the people and help the farmers and
villages because many cattle are source of income to them who supply milk”
Main Aims of Dairy Industry in Co-operative Sector:
1. Formation of Cooperative units of milk producers in every village.
2. To improve cattle wealth of good bread which are important for milk Production.
3. To avoid contaminated diseases by using disease distortable medicines and injections
4. Providing the availability of good breed seed o as to improve the cattle feed.
5. Introducing mobile hospitals to provide free medical facilities to the cattle of the Dairy and
avoid disease.
6. To bring down the expenses of milk production.
7. As producers are maintaining the milk producers co-operative union and profits gained are
used for the development of the producer, which ultimately results in development of the
village.
So from the above aims of the cooperative union it is crystal clear that, developing the
cooperative sector would bring profits.
To put the above programs to action in our district with the co-operative of national
dairy development board, a three tier program w3als started in 1980 in relation to it, 198 milk
producers co-operative unions have been set up at village level.

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On 1975 Prakasam Zillah dairy industry management was given to Zillah milk
produce co-operative union. Well breed seeds and disease avoidable injections were given at
half rate. Required steps are taken to set up government cattle hospitals.
PROBLEMS OF THE INDUSTRY
1. Fluctuations in The Supply of Milk:
The first problems of this industry are the securities of fluid milk, the demand for milk
production in almost uniform throughout the country in all season of the years. Where as, by
and large milk production is a small and seasonal. The summer months of April to July
record acute shortage of milk. While in winter month of November to February supply of
milk would be 200 to 300percent higher so the industry required diversification for
production of milk power, condensed milk. Captain ceases cheese instant milk foods and
other products, which can be preserved and sold throughout the year
2. Lack of Assistance from Government to Milk Producers:
During the past three decades the dairy industry in India has undergone revolutionary
changes in its structures. The methods of collection, marketing and utilization of milk for
manufacturing a product have been considerate. Conditions of milk production in rural areas
continue to the unsatisfactory. Is the one of the major advantage to the country. But the
government didn’t encourage to such dairy exports. It is the one of the draw to the dairy.
3. Irritation Pricing Policy:
The price of milk is determined on the basis of price in the open market, which in turn
determines the prices of milk products. Such a make soft pattern does not help to build a
permanent, workable relationship between the milk schemes and the producers. Unless the
producers are guaranteed a reasonable price on a long-term basis their economy was brought
to be affected adversely. Thus the industry should provide an incentive price for milk to the
rur4al producers over and above their cost of milk production

27
4. Poor Means of Transportation:
The inadequacy of suitable marketing structure and the absence of necessary
infrastructure for its transaction is another problem of the milk. This is more in the rural areas
where for want of quick transport and marketing infrastructure, milk is marketed in the form
of ghee, which does not bring proper return to the farmers.
5. De-licensed The Dairy Products:
In the recent EXIM policy 717 agriculture products including dairy products are declined.
The Indian dairy industry has been facing the problems of the MNCS competitions.
Dairy Development in A.P during 2009 - 2010
S.No Particulars 2009 – 2010
1 Milk product factori8es 07
2 District dairies 12
3 Milk chilling centers 59
4 Milk cooling centers 16
5 Milk collection centers 14,000
6 Village milk production cooperative societies 5,200
7 Milk collection rotes 267

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8 Milk producers (80%of milk producer belongs to
Belongs to small and agricultural workers)
10,000
9 Village covered for collection of milk 6,50,000
10 Milk consumers 6.2 cores
11 Cash paid to milk producers 06
12 Women members in union 5,000
Source : Andhra Pradesh Year book 2009 – 2010

30
Budget is a quantified plan for future activities – quantitative blueprint for action. It is
referred as a plan relating to period of time expressed in monetary and in quantitative terms.
The Charted institute of Management Accountants, (CIMA) defined budget as
follows:-
A Plan expressed in money. It is prepared and approved prior to the budget period and
may show income, expenditure of the capital to be employed, may be drawn up showing
incremental effects a former budgeted or actual figures. According to Gordon shilling law,
“A business budget is pre-determined detailed plan of action plan of action, developed and
distributed as a guide to current operations and as a partial basis for subsequent evaluation of
performance”.
BUDGET MANUAL
A budget Manual lays down the details of the organizational set up, the routine
procedures and programmers to be followed for developing budgets for various items and the
duties and responsibilities of the executives regarding the operation of the budgetary control
system.
A budget manual is defined as a document schedule or booklet which sets out, inter
alia, the responsibilities or the persons engaged in the routine of and the forms and records
required for budgetary control.
Budgets are to be drawn keeping in view the objectives of the organization given in
the budget manual.
The following are some of the most important matters covered in a budget Manual:-
 Introduction and brief explanation of the objectives, benefits and principles of
budgetary control.
 Organization chart giving the titles of different personnel’s with full explanation of
the duties and each to operating systems and preparation of departmental and
functional budgets.
 The entire process of budgeting programmer including the timetable for periodical
reporting.

31
 Length of budget periods and control periods should be clearly states.
 Procedures to be followed throughout the system should be explained in clear terms.
 Outline of main budgets and their accounting relationships.
 Explanation of Key budgets.
The advantages to be derived from the use of budget manual are:
 Everyone knows in writing that what is his role, what is to be done and how it is to be
done in the system of budgetary control.
 As everything is in writing .Ambiguity is avoided and reliance on memory is
eliminated.
 As one of the objectives of budgeting is communication, it is important to have
important to have budget manual so that everyone in the organization can refer to it
for guidance and information about the budgetary process.
ADMINISTRATION OF BUDGETS
Budgeting takes up a lot of management time. Top managers want lower level
managers to participate in the budget process, because lower-level managers have valuable
knowledge about the day-to-day aspects of running the business. Participator also. Creates
greater commitment and responsibility towards the budget among lower level manages.
The widespread prevalence of budgets indicates that the advantages of budgeting
systems outweigh their cost. To gain the benefits of budgeting. Management at all levels of
the company should understand and support the budget and all aspects of the management
control system.
Budgets should not be administered rigidly. Changing conditions usually call for
changes in plans. A manager may commit to the budget, but a situation might develop in
which some unplanned repairs or an unplanned advertising program would better serve them
in interest of the company. The managers should not defer the repairs of the advertising as a
way of meeting the budget- not if doing so will hart the company in the long run. Attaining
the budget should not be an end in itself.

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BUDGETING
It is concerned with the implementation of the approved programmed within the long-
range plan. It is the act of preparing budgets. Budgeting is a way of managing Business and
industry.
CLASSIFICATIONS AND TYPES OF BUDGETS
The budgets are usually classified to their nature. The following are the types of
budgets, which are commonly used.
1. Classification according to time
 Long – term Budgets
 Short – Term Budgets
 Current Budgets
2. Classification on the basis of Functions
 Operating Budgets
 Financial Budgets
 Master Budgets
3. Classifications on the basis of Flexibility
 Fixed Budgets
 Flexible Budgets
1) CLASSIFICATION ACCORDING TO TIME
 Long – Term Budgets :
The budgets are prepared to depict long – term planning of the business. The
period of long – term budgets varies from five to ten years. The long-term planning is done
by top level management. Long time budgets are prepared for some sectors of the concern
such as capital expenditure, research and development, long-term finances etc. These

33
budgets are useful for those industries where gestation period is ling i.e. machinery,
electricity, engineering etc.
 Short – term Budgets:
These budgets are generally for one or two years and are in the form of
monetary terms. The consumer’s goods industries like sugar, cotton, etc., Use short –term
budgets.
 Current Budgets :
The period of current budget is generally of months and weeks. These budgets
relate to the current activities of the business. According to institute of Cost and Works
Accounts, London “Current Budget which is established for use over a short period of time
and is related to current conditions.
2) CLASSIFICATION ON THE BASIS OF FUNCTIONS
 Operating Budget:
These budgets relate to different activities or operations of a firm. The number
of such budget depends upon the size and nature of the business. The commonly used
operating budgets are:
 Sales Budget
 Production Budget
 Production cost Budget
 Purchase Budget
 Raw material Budget
 Labour Budget
 Plan Utilization Budget
 Manufacturing Expense or Works Overhead Budget
 Administration and Selling Expenses Budget etc.

34
The operating Budget for a firm may be constructed in terms of programme or
responsibility areas, and hence consists of
 Programme Budget
 Responsibility Budget
Programme Budget
It consists of expected revenues and costs of various products or projects that are
termed as the major programmes of the firm such as budget can prepared for each product
line or project showing revenues, costs and the relative profitability of the various
programmes. Programme Budgets are, thus, useful in locating areas where efforts may be
required to reduce costs and increase revenues. They are also useful in determining
imbalances and inadequacies in programme so that corrective action may be taken in future.
Responsibility Budget
When the budget of a firm is constructed in terms of responsibility areas it is called
the responsibility budget. Such shows the plan in terms of persons responsible for achieving
them. It is used by the management as a control device to evaluate the performance of
executives who are in-charge of various cost centers. Their performance is compared to the
targets (Budgets), set for them and proper action is taken for adverse result, if any. The kinds
of responsibility areas depend upon the size and nature of business activities and the
organizational structure. However, responsibility area may be classified under three broad
categories:
 Cost /Expense Centre
 Profit Centre
 Investment Centre

35
Financial Budget:
Financial Budgets are concerned with case receipt and disbursements, working capital
expenditure, financial position and results of business operations.
The commonly used financial budgets are:
Cash Budget
Working Expenditure Budget
Capital Expenditure Budget
Income statement Budget
Statement or Retained Earnings budget
Budgeted Balance Sheet or position statement Budget
Master Budget
Various functional budgets are integrated into Master Budget. The Budget is prepared
by the ultimate integration of separate functional Budget. According to institute of cost and
works Accounts, London, “The Master Budget is the summary Budget incorporation its
functional Budget”. The Budget officer prepares Master Budget and it remains with the top-
level management. This budget is used to co-operative the activities of various functional
department and also to help as a control device.
OPERATING BUDGETS
 Sales budget:
A sales Budget is an estimate of expected sales during a Budget period. A sales
Budget is known as a nerve center or backbone of the enterprise. The degree of accuracy with
which sales are estimated will determine the practicability of operating Budgets. A sales
Budget is the starting points on which other budgets are also bases. A sales Budget lay down
potential sales figures in value as in quantity, it lays sown a comprehensive plan and
programme for sales department. The sales manager is made responsible for preparing Sale
Budget. He uses all possible factors to be taken into taken into account while preparing a
sales Budget.

36
 Production Budget:
Production Budget is built in terms of quantities and money. The quantities are
entered at the beginnings and when the remainder of the Budget has been built up and the
cost of production calculated the costs are entered to compile a production cost Budget, In
preparing the production Budget the following factors should be considered.
 Principal Budget factor, e.g. if the sales be the key factor then sales Budget,
otherwise other Budget.
 Production planning and determination of optimum capacity.
 The opening and closing stocks.
 Management policy regarding make or buy of components.
 Production Cost Budget:
A purchase Budges gives the details of the purchases which must be made to meet
the needs of the business. It includes all items of must be made to meet the needs of the
business. It includes all items of purchase, such as raw materials, indirect materials and other
equipment. However, purchase Budget for raw materials is the most important and the
following are requires to be considering in preparing the Budget.
 Purchase Budget:
A Purchase budget gives the details of the purchases which must be made to meet the
needs of the business. It includes all items of purchase, such as raw materials, indirect
materials and other equipments. However, purchase Budget for raw materials is the most
important and the following factors are requires to be considered in prepared this Budget.
 Opening and closing stocks
 Unfulfilled orders at the beginning of the budget
 Storage space, economic buying quantity and financial resources.
 The prices to be paid.

37
 Material Budget:
A Materials Budget shows the estimated quantities as well costs of raw materials and
components required for producing goods as per production Budget. At the stage of
preparation of materials Budget is used to obtain the cost of each material consumed. It
serves the following purposes.
 It assists purchasing department in planning the purchases.
 It helps in the preparation of purchase Budget.
 It provides data for raw materials control.
 Labour Budget:
This Budget gives and estimates the requirements of directs labour essential to meet
the production target. This Budget may be classified into “Labour requirement Budget” and
“Labour Requirements Budget”. The purpose of Labour Budget is to assist in the provision
of the correct number and type.
Employee for the projected output. Once the preliminary classification of labour into
its principal grades has been carried out, the labour requirements for each product are then set
with the help of time and motion studies. From the total mean-hour required for production
labour requirements are ascertained and from the estimates rate per hour, labour cost per
hour, labour cost per unit is determined.
 Plant Utilization Budget:
This budget indicates that the plan and machinery requirement to meet the budgeted
production during the period. Such a budget will detail the machine load in every department
and indicate the extent of under or over loading. Thus management mat get useful
information regarding the effective utilization of plants and machinery in an organization.

38
 Manufacturing Overheads Budget:
This Budget gives and estimate of the works overhead expenses to be incurred in a
budget period to achieve the production target. The budget includes the cost of indirect
materials, indirect labour and indirect works expenses. The budget may be classified into
fixed cost, variable cost and semi-variable cost. It can be broken into departmental overhead
can be estimated on the basis of past information after taking into consideration the expected
changes which may occur during the Budget period. Variable expenses are estimated on the
basis of the budgeted output because these expenses are bound to change with the changes in
output.
 Administration Cost Budget:
All the administration costs relating to each Budget center should be separately and
then incorporated in the administration cost Budget. A very important aspect of
predetermining administration costs is to make sure that all administrative functions are
carried out as effectively as possible. Thus, this budget represents forecast of the cost of
selling and Distribution for Budget represents forecast of the cost of selling and distribution
of period and is clearly related to the sales Budget. All expenses relating to selling and
distribution of the various products as indicated in the sales budget are included in it. These
expenses are based on the volume of sales distribution overhead. Long-term expenses
advertisement are divided into fixed and variable categories with reference to volume of sale,
separate Budgets are of selling and distribution costs as cost of transport department are
included in the departmental production cost Budget form control point view rather than
including in selling and distribution costs Budget.

39
3) CLASSIFICATION ON THE BASIS OF FLEXIBILITY
 Fixed Budget:
The fixed budgets are prepared for a given level of activity, the budget is budget is
prepared before beginning of the financial year. If the financial year starts in January then
budget will be prepare a month or two earlier, November or December. The changes in
expenditure arising out of the anticipate changes will not be adjusted in the Budget. These is
a difference of about twelve months in the budgeted an actual figures.
According Institute of Cost and works Accounts, London, “Fixed Budget is a
budget which is designed to remain unchanged irrespective of thee level of the level activity
actually attained”. Fixed budget are suitable under static conditions. If sales expenses and
costs can be forecasted with greater accuracy then this budget can be advantageously used.
 Flexible Budget:
A Flexible budget consists of series of Budgets for difference level of activity. It
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 Budget which by recognizing the difference between
fixed, semi-fixed and variable cost is designed to change in relation to the level of activity.
The flexible budgets will be useful where level of activity changes from time to time. When
the forecasting of demand is uncertain and the undertaking operate under shortage of
materials, labour etc. This Budget will be more suited.

40
FINANCIAL BUDGET
 Cash Budget:
This Budget gives and estimates of the anticipated receipts and payment of each
during the Budget period. So, this Budget is divided into two parts, one showing the
estimated cash receipt on account of cash sales, credit collections and miscellaneous receipt
and the other showing the estimate disbursement on account of cash purchases, amount
payable to creditors, wages payable to workers, indirect expenses payable, Budgeted, wages
payable to workers, indirect expenses payable, budgeted capital expenditure etc. In short,
every factor which affects the receipts and payments of cash are taken into accounts in the
preparation of this Budget.
 Capital Expenditure Budget:
The capital Expenditure budget gives an estimate of the amount of capital that may
be needed for acquiring the fixed assets required for fulfilling production requirements as
specified in the production budget. The Budget is prepared after taking into consideration the
available productive capacities, probable reallocation of the existing assets and possible
improvement in production techniques. Separates Budget may be prepared for different items
of assets of assets such as plant and equipment Budget, building budget, etc.
The capital expenditure Budget is an important Budget providing for acquisition of
assets, necessitated by the following factors:
 Replacement of existing assets.
 Purchase of additional assets because of starting up of new lines of
production.
 Purchase of additional assets to meet a proposed increases in production due
to increase in demand.
 Installation of an improved type of machinery so as to reduce cost of
production.

41
Thus, Capital Expenditure Budget enables one to know what new fixed assets are
needed and what will their costs rate of return.
Purposes:
The objectives of capital Expenditure Budget are stated below:
 To enable the company to establish system of priorities in expenditure.
 To correct capacity imbalances.
 To provide a tool for controlling capital expenditure.
 To make proper financial provision to meet planned expenditure.
 To provide Budget of depreciation and maintenance costs for inclusion in the
department expense Budgets.
PERFORMANCE BUDGETING
“Performance Budgeting” had its origin in the U.S.A after Second World War. It tries
to rectify some of the shortcomings in the traditional Budget. In the traditional Budgets
amounts are earmarked for the objects of expenditures such as salaries, travel, office
expenses, grant-in-aid etc. In such system of Budgeting the money concept was given more
prominence i.e. estimating or projecting rupee value for the various accounting wad more
popularly used in government department and many business enterprises. But such system
Budgeting control of performance in terms of physical units or the related costs cannot be
achieved.
These days Budgets are established in such a way so that item of expenditure is
related to specific responsibility center and is closely linked with performance of that
standard. Developing work programs and performance expectations by assigned
responsibility is the achievement and objects of the enterprise. Thus, in performance
Budgeting classification of expenditure follows a three-tier pattern viz. Function Programme-
Activity.

42
A Systematic Approach to develop the performance budget.
Objective
Structure
Execution
&
Record Keeping
Organizational
.Structure
Develop physical
Targets &
Resources
Involvement:
Performance
Rations
Review &
Control
Develop
Functions
Programs

43
ZERO BASE BUDGETING
Under Zero Base Budgeting methods, before preparing a Budget a base determined
form which the Budget process begins. Quite often current year’s Budget is taken as the base
or the starting point for preparing the next year’s Budget. The figures in the base are charged
as per the plan for the next year. This approach of preparing Budget is called “Incremental
Budgeting” since the Budget process is concerned mainly with the increases or changes in
operations that are likely to occur during the Budget period. For example, sales of the current
year’s Budget for sales will be current year’s sales plus and allowance for price increases and
expected changes in sales volumes. The man drawback of this approach is that it perpetuates
the past inefficiencies.
Zero Base Budgeting is an alternative to incremental Budgeting. It was introduced at
Texas Instruments in USA in 1969 by peter pyre, who is known as the father of Zero base
Budgeting. It is managerial tool and is steadily gaining acceptance in the business
community. Zero Base Budgeting is not based on Incremental approach and precious figures
are not taken as the base for preparing next year’s 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
for a new company for the first time.
In Zero Base budgeting, budget requests for appropriation are accepted on the basis of
cost/benefit approach, which ensures value for money. If question long-standing assumptions
and systematically examines and perhaps abandons any unproductive projects.
This means that those activities which are of no value find no value in the
forthcoming Budget even though these might have been an integral part of the past budget
prepared under the traditional approach. Zero Base budgeting in way are tries to locate those
activities not essential.

44
The important steps in Zero Base Budgeting are:-
 Identification of Decision units in order to justify expenditure in their proposed
Budget.
 Preparation of Decision Packages. Each package is a separate and Identifiable
activity. These Packages are linked with corporate objectives.
 Ranking of decision packages based on cost benefit analysis.
 Allotment of funds based on the above resulting by following pyramid-ranking
system to ensure optimum results.
ZERO BASED BUDGETING
This is my previous level of expenditure
MANAGER
These are the additions requires
to meet the inflationary effects
and expansion programs.
This is what I want
for forthcoming
period, for reasons
enumerated.
TOP MANAGEMENT

45
TRADITIONAL BUDGETING
M
A
N
A
G
E
R
A Certain amount to Sanction for a
decision Unit.
This Expenditure will lead to
these Advertisements
If the Proposal is discarded, the result
T
O
P
M
A
N
A
G
E
M
E
N
T

46
ORGANIXATION CHART FOR BUDGETARY CONTROL
MANAGING DIRECTOR
BUDGET COMMITEE
BUDGET DIRECTOR
SALES
MANAGER
PURCHASE
MANAGER
PRODUCTION
MANAGER
PERSONAL
MANAGER
CHIEF
MANAGER
Sales Budget
Advertising
Budget
Selling Budget
Purchase
Budget
Material
Budget
Production
Budget
Plant
Utilization
Budget
Labor Cost
Budget
Cost Budget
Master
Budget
Capital
Expenditure
Budget

47
PRELIMINARIES IN THE INSTALLATION OF BUDGET SYSTEM
Prerequisites for the successful implementation of a budgetary control system are
follows:
1. Establishment of Budget Centers :
A Budget centre is a section of entity for which control of exercised and budget
prepared. A budget center may be a department or part thereof. Budget center must be clearly
defined because a separate Budget has to be set for each such center with the help of the
department has to be set for each such center with the help of the department concerned.
2. Linking of Budget requirements with chart of Accounts:
Budgets for different budget centers are prepared on standard forms. If
requirements of forms are linked with chart of accounts information of different Budget
centers which is consistently compiled involving minimum loss of time. Suppose
advertisement Budget is being compiled and information for miscellaneous expenditure is to
be collected. It will be an essay exercise together this information, if code heads to be
referred to in this connection are specified in the form on which information for Budgets is
being collected.
3. Preparation of Organizational Chart:
An Organization Chart should be prepared which clearly shows the plan of the
organization. Each member of management should know the exact scope of the authority and
responsibility and his relationship to others members. An organizational chart is statement
defining functional responsibilities of executives. Each member of management should know
the exact scope of the authority and responsibility and his relationship with other members.
The Organization Chart shows:
 Functional responsibility of a particular executive.
 Delegation of authority to various levels, and
 Relative position of a functional head with heads of other functions.

48
4. Establishment of Budget Committee:
In small organization and in big organizations having different units at different
places, a Budget committee is formed having representation having different units at different
places. Executive, budget officer and heads of all Budgets centre. The Budget Officer acts as
a secretary to chairman. Other members of the Budget committee usually comprise various
heads of functional departments, like sales manager, purchase manager, production manager,
chief accountant etc. as shown in the above Organizational Chart.
5. Preparation of Budget Manual:
A Budget manual has been defined by C.I.M.A. London as “A document which sets
out the responsibilities for the persons engaged in the routine of the forms and records
required for budgetary control”. A budget manual is thus a statement of budget polices. It lay
down the details the organizational set up with duties and responsibilities of executives
including the Budget committee and budget Director and the procedures and programmes to
be followed for developing Budgets for various activities. The contents of a budget manual
are summarized as follows:
 Description of the budget system and its objectives.
 Procedure and forms to be used in budget preparation.
 Responsibilities of Operational Executives, Budget Committee and budget
director.
 Budget calendar, specifying definite dates for completion of each part of the
Budget and submission of the report.
 Methods of accounting and account codes in use.
 Procedure to be adopted in operating the system.
6. Budget Period:
Budget period is the length of time for which a Budget is prepared and operated.
Budget periods vary between short-term and long-term and no specific period can be laid
down for all budgets. It varies among concerns and industries for several factors. Whether a
budget is long-termed or short-termed, it is to decide primary these two factors:
 Type of business.
 Amount of control required.

49
7. Determination of the key Factor:
Also known as limiting factor, governing factor and principal Budget factor, the key
factor means the factor, which limits the size of output. It is defined as “the factor the extent
of whose influence must first be assessed in order to endure that functional Budgets are
capable of fulfillment”. Such a factor is of vital important and affects all Budgets to large
extent.
8. Budget Officer:
The chief Executive, who is at the top of the organization, appoints some person as
budget officer. The Budget Officer is empowered to scrutinize the Budgets prepare by
different functional heads and to make changes in them, if the situation so demands. The
actual performance of different departments is communicated to the budget Officer. He
determines the departments are communicated to the Budget Officer.
He determines the deviations in the Budgets and takes necessary steps to rectify the
deficiencies if any. He works as Co-coordinator among different departments and monitors
the relevant information. He also informs the top management about the performance of
different departments. The Budgets Officer will be able to carry out his work fully well only
if he is conversant with the working of the department.
9. Patronage from Top Management:
For the true success of budgetary activities, impetus and direction must come from
the top management. If involvement of top management is missing, it will be difficult for
budget Officer to bring round the reluctant line managers to this way of thinking. Thus, right
from the start, activities should be initiated in such a manner that involvement of top
management in budgetary activities becomes apparent.

50
CONCEPT OF BUDGETARY CONTROL
Budgetary Control and Budgetary are often used inter changeably to refer to a system
of management control. “Budgetary Control” implies the use of a comprehensive system of
budgeting to aid management in carrying out its functions like planning, co-ordination and
control. According to C.I.M.A, London “Budgetary Control is the establishment of budget
relating to the responsibilities of executive of a policy and to continuous comparison of the
actual with the budgeted results, either to secure by individual action the objection of policy
or to provide a basis for its revision”.
According to Brown and Howard “Budgetary Control is a system of controlling costs
which includes the preparation of budgets, co-ordination the debts and establishing
responsibilities, comparing actual performance with the Budget and acting upon results to
achieve maximum profitability.
Characteristics of Budgetary Control:
The main Characteristics are as follows:
Establishment of Budgets for each function or department of the organization.
 Comparison of actual performance with the Budgets on continuous basis.
 Analysis of variations of actual performance form that of the budgeted performance to
know the reasons there of.
Co-Ordinal Features:
The three Co-Ordinal features of a “Budgetary Control” are as follows:
 Planning
 Co-ordination
 Control
Therefore, Budgetary control embraces all and in addition includes sciences of planning
the Budgets to effects an overall management tool for the business planning and control,
quotes Rowland and William.

51
Objective of Budgeting Control
Budgetary control improves planning and in co-ordination and helps in
control. The reasons for producing budgets are as follows:
1. To aid planning of annual operation.
2. To co-ordinate the activities of various parts and to ensure harmonious conditions
prevails in the organization with each other.
3. To communicates plans to the various responsibility center managers.
4. To motivate managers to strive to achieve the organizational goals.
5. To control activities.
6. To evaluate the performance of managers.
Characteristics of a good budgeting
1. Budgeting process should be backed and supported by the chief executive of an
organization.
2. The Organization goal should be qualifies and clearly stated. These goals should be
within the frame work of organization in plans.
3. There should be proper fixation and delegation of authority and responsibility.
4. The persons for execution of budget should participate in budget preparation.
5. The Budget should be realistic. It should present goals that are reasonably attainable.
6. A good system of accounting is also essential to make the budgeting successful.
7. The budget should cover all the phases of the organization and be continuous
exercise.
8. Periodic report should be prepared. Comparing budget and actual results i.e., there
should be effective follow up.
9. Clear- cut organizational lines should be established and the employees should be
impaired budgeting education.
10. The budgeting system should be bases on information, communication and
participation.

52
Requisites for a successful Budgetary Control System.
1. The budgets are used to realize objectives of the business. In the absence of clear
goals, the budgets will also be unrealistic.
2. Budget preparation and control is done at every level of management. Every though
budgets are finalized at top level but the involvement of person form lower levels of
management is essential for their success. This necessitates proper delegations of
authority and responsibility.
3. An effective system of communication is required for a successful budgetary control.
4. Budgetary control may not be taken only as control device by the employees but it
should be used as a tool improves their efficiency.
5. Budgeting is done 4 for every segment of the business. It will also require the active
participation and involvement of all employees.
6. Flexibility in budgets is required to make them suitable under changed circumstances.
Budgets are prepared for the future, which is always uncertain. Flexibility will make
the budgets more appropriate and realistic.
7. All persons should be motivated to improve their working so that budgeting is
successful. A proper system of motivation should be introduced for making this
system a success.
Advantages of Budgetary Control
 The Budget programme forces the managers into plan ahead.
 In forces early consideration of basic policies.
 All members of top management participate in budget committee. For this reason
even planning a departmental level gets benefits of experience of seasoned executives.
 Management is forces to put down in cold figures, what is means by satisfactory
results.
 It demands the most economical use of labour, materials, facilities and capital.
 In inculcates a habit of timely, careful, adequate consideration of all factors before
reaching important decisions.
 The use of budget promotes understanding of the problems of co-workers.

53
 It facilitates period self- analysis of the organization.
 The use of budgets removes clouds of uncertainties for lower levels of management
regarding basic policies and objectives.
 Management is forced to give timely and adequate attention to the effect of changing
business conditions.
 Budgeting co-ordinates the activities of various department and functions of the
business.
 Budgeting control aims at maximization of profits through careful planning and
control.
 It directs capital expenditure in maximization of profits through careful planning and
control.
 It directs capital expenditure in the expenditure in maximization of profits through
careful planning and control.
 It directs capital expenditure in the most profitable direction.
 Budgetary control system creates necessary conditions for the introduction of standard
casting techniques. A budgetary control system assists in delegation of authority and
assignment of responsibility.
Limitations of Budgeting
 Budgeting cannot take place of management but is only a tool of management the
budget should be regarded not as a master, but as a servant.
 A budget programme must be dynamic and continuously deal with the chaining
business conditions. Budgets will lose much of their usefulness if they acquire rigidity
and are not revised with the changing circumstances.
 Budgeting is an expensive technique. The installation and operation of the budgetary
control system is costly affair as it requires the employment of specialized staff and
involves other expenditure which small concern may find difficult to incur.
 Estimates are used as basis for budget plan and estimates are based mostly on
available facts and beset managerial judgments. Since a lot of human element is
involved in exercising managerial judgment. . .

54
 The circumstances are constantly changing and therefore budgets and budgetary
techniques will not be useful, till they are continually adapted.
 Budgetary control cannot reduce the managerial function to formals. It is only a
managerial tool, which increase effectiveness of managerial control.
 The use of budgets may lead to restricted use of resources. Budgeted are often taken
as limits. Efforts may therefore, not be made to exceed the performance beyond the
budgeted targets, even though it may be physically possible.
THE BUDGETING PROCESS IN NON-PROFIT MAKING
ORGANIZATION
It normally begins with the managers of the various activities calculating the
expected cost of maintaining current ongoing activities and then adding to those, which are
considered desirable.
Churches, hospitals, charities and other no-profit making organizations produce
estimates for understanding activities and later find the means to finance then, or even adjust
the activities to the available financial resources. Once difficulty in it is that output cannot be
measured in monetary terms i.e., we cannot measure quality amount and services rendered.
Budget Department of Mother Dairy Milk
A Concern must have an organization chart. This necessary in order to have clear
idea of authority and responsibility of Chief Executive so that they may be no conflicts
among Functions Executive for shrinking responsibility and making other’s responsibilities
for poor performances. In preparing Maintaining and administrating the Budget section at
Mother Dairy Milk consists of an Accounts Officer and two assistants guided by one Deputy
Controller of Accounts who will be supervised by joint controller (F&A) who is the
responsible person from Finance Wing to Present the Budget to the Executive Committee and
the Head of Unit Via, Chief Executive.

55
Function of Budget Wing at Mother Dairy Milk
 Issue of Budget Circular.
 Collection of data relating to actual Receipts and Expenditure of previous year.
 Compilation of estimates of Receipts and Expenditure received from various
authorities.
 Preparation of various supporting break-up statement of Receipts and Expenditure.
 Compilation of budget Estimates in respect of Receipts, Revenue Expenditure, Capital
Expenditure, Loans and advances, Provident Fund ( Receipts and Payments) etc.
 Monthly / quarterly phasing of receipts and expenditure for periodical review and
financial control.
 Preparation of monthly report of Receipts and Expenditure with supportive breakup
statements.
 Preparation of Annual plan proposals in respect of Capital Projects (both ongoing and
new) for approval of Department as well as planning Commission.
 Intimation of progress of expenditure in respect of Capital Projects to the concerned
project Co-Ordinates.
 Review of receipts Expenditure for final grant of expenditure and surrender of funds.
If any.
 Preparation of Appropriation Account (budget Estimate and Actual Expenditure and
Variations and the reasons there of) Correspondence with concerned authorities in
respect of all the above.
Preparation of budget at Mother Dairy Milk
In Mother Dairy Milk, the Budget of the organization is being prepared for the
following. A detailed estimate of the following is taken into consideration.
 Receipts
 Expenditure on Revenue Account
 The Expenditure on Capital Account

56
The Budget estimates shall give the anticipated receipts and expenditure for the
ensuring financial year under each major, minor, sub and detailed heads of accounts.
Budget Period in Mother Dairy Milk
Budget period is the period for which a budget is prepared and employed. In terms
of time, budget can be short and long – terms Budget. Short-term is prepared on the basis of
day-to-day administrations. They are generally prepared in physical as well as in monitory.
Long-term Budget is designed for a long period. This is prepared in the case of major projects
schemes to know in advances the probable capital commitments.
In Mother Dairy Milk, Budget is prepared for both Long-term (Five years plan),
Short-term (One year plan) and is reviewed periodically.
 The Long-terms Budget is made generally for the capital projects both for ongoing
and new projects and action plan will be drawn up for setting up of new projects with
a view to attain the predetermined objects to meet the future requirements. The plan
project, have to be first approved for the projects, will be as need based and revised as
per the availability of funds.
 While preparing the Budgeting estimates for the ensuring year, a review of Budget
proposals made for the current year will be taken up during mid July and August or
each year. Any revision in the estimates will be proposed based on the anticipated
expenditure till end of financial year; this is known as Revised Estimates for the
current year.
Pre-requisites Met by Mother Dairy Milk for Effective Budgetary Control
System
In order to ensure effective and successful implementation of budgetary
control system in organization, Mother Dairy Milk Management has fulfilled the following
pre-requisites.
 The objectives, plans and polices of the organization are spelt out in clear cut terms
without ambiguity.

57
 The organization chart, clearly, clearly defines the duties and responsibilities for each
level of executives.
 In Mother Dairy Milk the output level for which Budgets are fixed are spelled out
clearly.
 A budget committee is constituted for effective functioning of Budgeting and
budgetary control system.
 There is a well defined system of communication and reporting between various
levels of managements.
 Management has nominated Head of Finance as Budget Controller who is capable to
share his ideas with various authorities and. Co-ordinates the activities.
 There is a Budget manual in Mother Dairy Milk, clearly defining the plans,
procedures etc., for operation of Budget and control.
 The Budget will be prepared for all related activities tasks in the firm, they represent
completeness.
Types of Budgets Prepared in Mother Dairy Milk
Types of Budgets Prepared in Mother Dairy Milk Nellore are:
1. Capital Budget.
2. Revenue budget and Receipt Budget.
3. Public Accounts Budget.
Capital Budget:
This consists of expenditure in capital projects proposals. The Capital Budget is
prepared based is prepared based on the sanctioned cost of the project approved in the five
year plan quality. Capital payments consist of capital expenditure on acquisition of assets like
land, building, machinery, equipment and other establishment charges. For Capital Projects
the approval of the planning Commission has to be obtained before execution of any
Ongoing/ New Project.
The Budget Estimates under the Capital Head will have to be made separately for
each project according to the aims and objects of the project and necessary requirements for
the same. The allocation of funds will depending upon the progress of the

58
Revenue and Receipt Budget:
Revenue Budget consists of the expenditure in connection with operating the plants.
It consists of the expenditure relating to the following items:
1. Purchase of raw materials
2. Purchase of Consumables
3. Purchase of Spares and tools.
4. Establishment Charges.
5. Cost of fuel and maintenance of Vehicles.
6. Depreciation.
7. Interest.
Revenue budget is proposed on a yearly basis. It is prepared based on the production
schedule for a particular year.
In Mother Dairy Milk, the Revenue Expenditure is made for various operational
facilities, they are:
 Estate Management: this deals with the expenditure to wares maintenance of
Housing Colony of the employees
 Department Canteen: The expenditure to wares manpower and other related
expenditure Budget in maintaining canteen for the employees will be
classified under this head.
In addition to the above, expenditure towards security and transportation of the
employees etc., will fall under Revenue Head of the Organization.
Revenue Receipts:
Revenue Receipts Budget is prepared based on the production schedule and
anticipated scale of products for the year.

59
Public Account Budget:
Besides the normal Receipts and Expenditure, Government of India acts as
custodian in respect of funds collected from its employees and also from public.
For example, transaction relating to provident funds, small savings collections and
other security deposits etc., the money thus received is kept in the public account till their
final settlement as the money, generally speaking, does not belong to the government and has
to be paid back sometime or the other to the person and authorities who deposited on
fulfillments of the rules and regulation laid down by the government.
Action at Mother Dairy Milk at Unit Level
Since the time of submission of the Budget proposals is standard, the unit has to
initiate action well in advance by calling for the requirements for the various agencies during
June of each year and collect the data by the end of the month. Various performs are designed
for the collection data.
The requirement of data in respect of machinery items, supplies and materials,
major works are being obtained from plants through online in various formats, which will be
compiled to assess the total expenditure under these heads for the unit as while. All the
information on plan projects is distinctive and will be scrutinized for utilization.
The Revenue Expenditure is granted for utilization within the year ending 31st
March of every year and any unspent amount will lapse and not available for the next unless
provided afresh while submission of revised proposals.
Where of capital project the project cost is sanctioned for completion of the project
and the unspent could be spilled over to next year by making provision in Revised Estimates.
The revenue Expenditure depends upon the requirement during the year towards the
operational cost of the complete projects and there are no lower or upper limits whereas the
Capital Expenditure is limited to the sanctioned cost of the project as well as the approved
outlay during the Five year period.

60
Compilation of all the information object-wise and the draft proposals of provisions
required by each plant with reference to the draft proposals of provision required by each
plant with reference to the proposed production and overall requirement for the unit will be
submitted for approval of chief Executive.
Provision for these items will be cross matched with the production targets, previous
year, stock available, prevailing rates and likely time taken for delivery of items etc. All
general expenditure like office and administrative expenditure, taxed etc., Will be assessed
based on the actual requirement for the financial year and comparison will also be made with
the actual expenditure during the previous financial year.

61
CHAPTER-4
DATA ANALYSIS
&
INTERPRETATIION

62
Requirement of overtime will be provided as per the production targets and
manpower availability and will be restricted based on the direction of the Ministry of Finance
etc. The requirement of each plant will be reviewed and discussed with the concerned
authorities, possibility of incurring expenditure, postponement of requirement of next year
etc., and finally the entire requirement the unit will be formulated.
STUDY ON BUDGET PREPARATION AT MOTHER
DAIRY MILK
The Study involves various aspects of budgetary done at Mother Dairy Milk, which
consists of Revenue Expenditure for the past seven years and to identify the process involved
in control of expenditure to maximize the efficiency of Revenue Expenditure.
The Revenue Expenditure on Mother Dairy Milk for the past five years with break-
up under expenditure are tabulated below form.

63
TABLE NO: 4.1.
SHOWING REVENUE EXPENDITURE BUDGET 2006-2007
S.No Item Budget
Estimates
Actual Variation
(Amount)
Variation
(Percentage)
1.
Salaries
and Other
Establishment Charges
6231 5682.13 548.87 8.8
2.
Travel Expenses
(Foreign Trips)
116 73.53 42.47 36.61
3. Supplies and Materials 22078 25452.56 -3374.56 -15.28
4. Minor Works 2288 1560.31 727.69 31.80
5.
Interest and
Depreciation
7500 9850 -2350 -31.33
6. Motor Vehicle 125 46.76 78.24 62.59
7. Expenses 506 424.35 81.65 16.13
8.
Administrative
Expenses
35 33.58 1.42 4.05
9. Rent, Rates And Taxes 18 26.80 -8.8 -48.88
10. Others 1289 1303.07 -14.07 -1.09
Totals 40,1866 44,453.09 -4267.09 -10.61

64
Chart No: 4.1.
REVENUE EXPENDITURE BUDGET FOR YEAR 2006-2007
Reasons for Variations between Budget Estimate & Actual Expenditure (2006-2007)
 Saving under the head Salaries due to shifting due to shifting of provision to new
cities head.
 Savings under the Head Travelling Expenses, Office Expenses, foreign Expenses, due
to economy.
 Increase under supplies and materials due to upward revision of manuals
 Savings under the head of motor vehicles due to postponement of replacement of
same vehicles for the next year.
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
Budget Estimates Actual

65
TABLE NO: 4.2
S.No Item Budget
Estimates
Actual Variation
(amount)
Variation
(Percentage)
1.
Salaries and Other
Establishment Charges
6100 6216.18 -116.18 -1.90
2.
Travel Expenses
(Foreign Trips)
83 34.1 48.90 58.91
3. Supplies and Materials 28349 25497.79 2851.21 10.05
4. Minor works 2040 2102.44 -62.44 -3.06
5.
Interest and
Depreciation
9850 8896 954 9.68
6. Motor Vehicle 125 53.92 71.08 58.86
7. Office Expenses 506 445.90 60.1 11.87
8.
Administrative
Expenses
35 35.31 -0.31 -0.88
9. Rent, Rates and Taxes 26 26.20 -0.2 -0.76
10 Others 1286 1335.27 -49.27 -3.83
Totals 48,400 44,643.11 3,756.89 7.76

66
Chart No: 4.2
 Increase in Salaries due to merger of 50% of Dearness allowance on 01-04-2005
 Saving under the head traveling Expenses, Office expenses due to Economy measure.
 Decrease is mainly due to MDU supply and other materials based on production
schedule.
 Savings under Motor Vehicles due to non-receipt of sanctions.
 Rent, Rates and Taxes, Others were incurred more than the actual amount.
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000

67
TABLE NO: 4.3
S.No Item
Budget
Estimates
Actual
Variation
(Amount)
Variation
(Percentage)
1.
Salaries and Other
Establishment
Charges
6650 6743.42 -93.42 -1.40
2.
Travel Expenses
(Foreign Trips)
78 75.83 2.17 2.78
3.
Supplies and
Materials
27052 30947 -3985 -14.39
4. Minor Works 2102 2373.98 -271.98 -12.93
5.
Interest and
Depreciation
7300 5500 1800 24.65
6. Motor Vehicle 103 52.47 50.53 49.05
7. Office Expenses 475 503.69 -28.69 -6.04
8.
Administrative
Expenses
35 36.53 -1.53 -4.37
9.
Rent, Rates And
Taxes
35 38.5 -3.5 -4.37
10. Others 1507 1544.82 -37.82 -2.50
Totals 45,337 47,816.24 -2,479.24 -5.46

68
CHART: 4.3
Interpretation
 Increase in salaries on Account of liberated LTC provision
 Increase in Office Expenses on Account of increases Transport and issue of Uniform
for Ministerial Staff
 Increase in Rent, Rates & Taxes as per demand for property Tax.
 Increase in supplies and materials, Minor works.
 Increase in other expenses.
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000

69
TABLE NO: 4.4
S.No Item Budget
Estimates
Actual Variation
(Amount)
Variation
(Percentage)
1. Salaries Other
Establishment
Charges
7150 7032.21 117.79 1.64
2.
Travel Expenses
(Foreign Trips)
70 74.40 -4.4 -6.28
3.
Supplies and
Materials
26872 37477.15 -10605.15 -39.46
4.
Minor Works 2600 2191.55 408.45 15.70
5.
Interest and
Depreciation
2000 2000 0 0
6.
Motor Vehicle 150 66.17 83.83 55.88
7.
Office Expenses 35 36.53 -1.53 -4.37
8.
Administrative
Expenses
35 36.53 -1.53 -4.37
9.
Rent, Rates And
Taxes
35 28.60 6.4 18.28
10.
Others 39 33.31 5.69 14.58
Totals 39,489 49,495.88 -10,006.88 -25.34

70
Chart: 4.4
Interpretation:
 Saving under the Head Salaries due to shifting of provision of shifting of provision to
new cities head.
 Increase under supplies and materials due to upwards revision of manuals.
 Saving under the head of motor vehicles due to postponement of replacement of same
vehicles for the next year.
 Increase in the travel expenses in the plan of expansion of business.
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000

71
Budget Expenditure of Mother Dairy Milk of Salaries
Salaries
Year 2006-07 2007-08 2008-09 2009-10
Variation
Amount
548.87 116.18 -93.42 111.79
Variation
Percentage
8.8 -1.9 -1.4 1.64
Interpretation :
The variations that to be commented are those falling in a range above +(or) 5
percentage The Years in which such variations occurred are 2002-03 where the variation is
+5 percentage on account of liberated LTC provisions and it has increased to 8.8% in
2004-05

72
Budget Expenditure of Mother Dairy Milk of Travel Expenses
Travel Expenses
Year 2006-07 2007-08 2008-09 2009-10
Variation
amount
42.47 48.9 2.17 -4.4
Variation
Percentage
36.61 58.91 2.78 -6.28
Interpretations:
The travel expenses had over short the budget consistently five out of seven years
under study. The range was 36 percent to 59 percent which indicated lack of control and
absence of economy measures. The company realized these facts in 2005-2006 and put in
place a package of economy measures which raised the bar for out of budget expenditure.
The measures have worked well and as result the variance of travel expenses over and above
budget was controlled almost in 2006-2007 and more than expected 2007-2008. The control
was so effective that a negative have set in year 2008-2009 of the order of -6.28.

73
Budget Expenditure of Mother Dairy Milk of Supplies and Materials
Supplies and materials
Year 2006-07 2007-08 2008-09 2009-10
Variation
Amount
3374.56 2851.21 1853 0605.2
Variation
Percentage
-15.28 10.05 2863 4439.46
Interpretation:
It signifies that the trend of increase in the negative variation in last 2 years is on
account of postponement of procurement of materials in the year 2004-2005, 2006-2007-
2007-2008 which is nor a healthy sign. Under procurements of materials points out to delay
in implementation of projects and impartial negative effects on profitability which needs to
be probed into in detail.

74
Budget Expenditure of Mother Dairy Milk of Minor Works
Minor Works
Year 2006-07 2007-08 2008-09 2009-10
Variation
Amount
727.69 -62.44 -271.98 408.45
Variation
Percentage
31.8 -3.06 -12.93 15.7
Interpretations:
The acceptable range is + (or) -5%. In general the variation was within the rage only
in 2 out of 7 years. In 4 out of 7 years it was positive variation of 15% to 31% which is
indicative of the fact that the budgetary process was not being diligently adhered to in the
case of budgets for minor works. There is thus a need to fine-tune budgetary process
implementation in this category.

75
Budget Expenditure of Mother Dairy Milk Interest and Depreciation
Interest and Depreciation
Year 2006-07 2007-08 2008-09 2009-10
Variation
Amount
-2350 954 1800 0
Variation
Percentage
-31.33 9.68 24.65 0
Interpretation:
Acceptable range is + (or) -10%. The variation beyond the above range is observed in
case of 2004-2005 and 2006-2007. The reason was on account of general and rapid reduction
in rates of interest charged by banks.

76
Budget Expenditure of Mother Dairy Milk Motor vehicle
Motor Vehicle
Year 2006-07 2007-08 2008-09 2009-10
Variation
Amount
78.24 71.08 50.53 83.83
Variation
Percentage
62.59 56.86 49.05 55.88
Interpretation:
The acceptable range is + (or) -25%., As the age of vehicles stock is more, allowing
for increased expenditure in repairs and maintenance on account of age of vehicle stock it
was found that the expenditure under the head was “uncontrollable”. With the range of over
expenditure being from 36% to 63%. There is an urgent need to formulate and implement a
cost reduction program.

77
Budget Expenditure of Mother Dairy Milk Office Expenses
Office Expenses
Year 2006-07 2007-08 2008-09 2009-10
Variation
Amount
78.24 71.08 50.53 83.83
Variation
percentage
62.59 56.86 49.05 55.88
Interpretation:
The acceptable range is + (or) -5%. The variation above the range was found to be
sizable in the case of 2004-2005 and 2005-2006 due to issue of uniform to ministerial staff
and increase transport.

78
Budget Expenditure of Mother Dairy Milk Administrative Expenses
Administrative Expenses
Year 2006-07 2007-08 2008-09 2009-10
Variation
Amount
1.42 -0.31 -1.53 -1.53
Variation
Percentage
4.05 -0.88 -4.37 -4.3
Interpretation:
The acceptable range is + (or) -5%. It was observed that the budget for administrative
expenses was periodically increased to accommodate the positive variation in previous year
during period 2000-2003. Thus the budget peaked in year 2002-2003, while the variation is
high in 2001-2001 and 2001-2002.

79
Budget Expenditure of Mother Dairy Rent, Rates and Taxes
Rent, Rates and Taxes
Year 2006-07 2007-08 2008-09 2009-10
Variation
Amount
-8.8 -0.2 -3.5 6.4
Variation
Percentage
-48.88 -0.76 -10 18.28
Interpretation:
The acceptable range is + (0r) – 20%. The abnormal years were observed to be 2002-
2005 which a positive variation of 58% in 2002-2003 to negative variation of around 50% in
2003-2004 and 2004-2005. This is and account of changes in Government/ taxes/ municipal
polices and changes in valuations during the relevant years.

80
Budget Expenditure of Mother Dairy Milk other expenses
Year 2006-07 2007-08 2008-09 2009-10
Variation
Amount
-14.07 -49.27 -37.82 5.69
Variation
Percentage
-1.09 -3.83 -2.5 14.58
Interpretation:
The acceptable range is + (or) -20% as the item indicates miscellaneous of
expenditure the various is found to be within the acceptable range.

82
FINDINGS
 The Organization have followed effective budget system and control for maintaining
the expenditure within the appeared Budget and it also kept the profile high and
achieving the targeted production within the appeared Budget.
 The Company has controlled travelling, rent, taxes expenses by the due in the overall
budgets in the year 2005-2010.
 Budgetary process has been effective in case of travel expenses and in effective in
case of motor vehicle repairs and maintenance and minor works.
 The financial system in Mother Dairy Milk has been very quick and well planned one,
which could be implemented in other organizations. Because it has goodwill in
Nellore.
 Mother Dairy Milk has been achieving highest production year over the year by
reducing the corresponding expenditure and attained not only self sufficiency but also
been supportive to the spread all over India.

84
SUGGESTIONS
 There is an urgent need to formulate and implement cost reduction program in the
dairy.
 Uncontrollable variances are beyond the control of the organization.
 Controllable variances should be reported immediately, so that responsibility can be
fixed and action taken against the individuals responsible.
 The Variances arising out of each factor should be correctly segregated, and reported
to the management.
 There is under procurement or materials with consequences for profitability, which
needs to be proved into in detail analysis.
 It is important to have budget manual so that everyone in the organization can refer to
it for guidance and information about the budgetary process.
 The given below are the suggestions which are followed by general findings.

86
CONCLUSION
This can be concluded that the budget and budget and budgetary control process and
how each manger can draw out of the budgetary planning and control system concrete
objective to improve the operating performance and profitability of the business. The evident
that the effect of this is to enlarge the abilities of all levels of management to carry out their
basic management functions because with the help of proper budgetary planning and control
system, Mother Dairy Milk has been able to improve operating performance and profitability
of the Organization.

A Study On Budgetary Control At Mother Dairy Fruit & Vegetable Pvt Ltd.

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