MBA Program Shivaji University, Kolhapur

MBA Program Shivaji University, Kolhapur

INTRODUCTION OF THE STUDY AND METHODOLOGYIntroduction:- The Budget is mainly concerned with the sales, products& purchase of material.Budget is themost useful ideal resource. India is the fourth major sugar producing country in the world. Therefore the budget of such large sugar factories is important. There are 420 sugar factories in India with a total installed capacity of fifteen million tones. Against this 400 factories were in actual production of which 120 in the private sector,60 in public sectors &220 in co-operative sector.The established of budgets relating to the responsibilities of executives to the requirements of a policy & the continuous comparison of actual with the budgets results, either to secure by individual action the objectives of that policy or to provide a basis for its revision. The term budgeting is frequently used for preparing budgets and other concerting procedure in their use in planning control of the business enterprises in all budgets; cash budget is more useful as it is prepared strictly on a cash basis & not on accrual basis unlike other budgets.

1.1 Objectives of study:-Budgets are the basis of performance evaluation in an organization. Hence, theobjective is to examine the usefulness of budgets in the measurements of current performance as against a budgeted of performance.1) To understand how budgeting influence the formulation of business objective and strategies.2) To understand the receipt and payment of organization used to form the cash budget.3) To the study how the firm has utilized budgeting process in learning in consistencies among the goal and action of each department to accomplishoverall objective of the firm.4) To examine the participation and improvementof all concern manager in the process of budgeting.5) To observe findings and give suggestions. 1.2 Importance of the StudyThe cash budget is help in building the economic viability of company in all departments. To understand the overall fiscal health of the company it is necessary to know the adequate knowledge of the subject .help in the financial condition of the company.

Scope of the study:-The scope of the study extends to prepaid the financial performance of shri. DattaShetakrii.SahakariSakharKarakhana Ltd, Shirol. by the cash budget. The data used for the study is of past three years I e. 2012 to 2014.

1.3 Research MethodologyFor any study collection of data is necessary. Unless data is collected and analyzed one is not able to achieve the target. The data is collected under this heading mainly based upon the report and recordData collection:- The data used for the present study is of two types:1) Primary Data2) Secondary Data1) Primary Data:-

The primary data used in the study is obtained by following sources.Primary Data:-Observation:- In these, researcher has personally attempted to look around and see how things are done and pass judgment as an individual. At times used the direct and indirect observation of facts.Interview:- During the process of data collection the researcher has also discussed &interviewed concerned officers. IT was not structured but just in an unstructured manner.

Secondary Data:-a)Company records:- The information mainly depends upon company records and reports.

1.4 Limitation of the study:-The study covers data collection of three years i.e. 2012-2014.1) Study is limited to the latest 3years period from 2011-12 2012-13 2013-14.2) It is also experienced that most of the person individual are not positive to provide the detail information &business statistics for the study.3) Study is limited to Shri. DattaShetakariSakhariSakharKarkhana. Ltd, Shirol.4) The study may not sufficient to forecasting & estimation of all aspects in entire firm.

INTRODUCTION OF THE ORGANIZATIOIntroduction: -ShriDattaShetkariSahakariSakharKarkhana Ltd., Shirol.2.1Origin:The co-operative movement started long ago in many countries on relatively limited scale and with rather limited objectives. Today it has grown big in every country, whether it is a communist, a socialist or a capitalist, because it has met the cases of socio economic, to uplift the common people. A pioneering effort of starting an agro-industrial in the co-operative an agro-industrial project in the co-operative filed for achieving social empowerment through rural development was made for the first time in Ahmadnagar District in the year 1950 by PravaraSahakariSakharKarkhanaLtd., Under the guidance of distinguished co- operative leaders likes Sarvashri Dr. DhananjayraoGadgil ,ShriVaikunthbhiMehta and shri.VitthalraoVikhe- Patilandit proved to be very successful venture mainly on account of efforts of the rural co-operative leaders .This has ushered in an era of sugar co-operative in Maharashtra which has resulted in transforming rural economy in the vicinity of sugar factories by ensuring stability & better return to the cultivators.ShirolTalukaof Kolhapur district is gifted by the presence of natural irrigation potential on account of 5 rivers viz. Krishna, Panchaganga, Warana, Dudhganga&Vedhagangaand very eager to have a sugar factory so as to ensure all round development and economic prosperity to the higher to poor and marginal farmers. A preliminary meeting was, therefore held at Kurundwad, In ShirolTaluka on 31st December 1960 for organizing a sugar factory after collecting requisite among of share capital,an application for industrial licence was forwarded to the Government of India.The persistent efforts put fourth by the promoters of the proposedShriDattaShetkariSahakariSakharKarkhana Ltd., Shirolultimately proved to be successful and the Government of India issued a later of intent in the month of May 1969. In accordance with its enlightened agro-industrial policy.

2.2Introduction to the Organization

Shri.D.S.S.S.K Ltd.,Shirol was registered as a co-operative society under the Maharashtra co-operative societies Act,1960 on 9thjune, 1969 vide registration No: KPR/PRG(A)I.An industrial license for establishing a sugar factory on co-operative basis with initial crushing capacity of 1250 Metric Tons per day was issued.On 9th March 1989 for factory got the registered under the multi-sate co-operative societies act and its area of operation was extended to BelgaumDistrict in Karnataka state. The crushing capacity was increased to 7000 Mts per day from 1st August, 2001.

1.General

a)Name & Address of the co-operative sugar factoryShree DattaShetakariSahkariSakharKarkhanaLtd.Shirol PO: Dattanagar,TalukaShirol, Dist:Kolhapur 416 120(MS)

b)Telephone No(02322)236551(6 lines)

c)Fax No(02322)236600)

d)TelegraphicAddressDATTA SAKAR SHIROL

e)Email Addressklp_dattsssk@sancharnet.in

2.Registration

a)Registration Number & DateKPR/PRG(A)-1 DATED 9TH JUNE,1969

b)Turnover of 2013-2014Rs. 450 Crore

2.3Area of the operationThe area of operation of ShirolSugar Factory comprises of 117 villages and shown in table.

Sr.NoName of the TalukaName of DistrictName of StateNo.of Villages

01ShirolKolhapurMaharashtra50

02HatkanangleKolhapurMaharashtra32

03KarveerKolhapurMaharashtra02

04KagalKolhapurMaharashtra03

05ChikodiBalgaumKarnataka21

06AthaniBalgaumKarnataka07

Sugar Project Implementation:-Shri.DattaShetakariSahakariSakharKarkhanaLtd.Shirolis situated in the industrially backward area of the Kolhapur district near villageShirol and is the first co-operative sugar factory in the state to go into production amongst the 12 contemporary licensees licensed in the year 1969.

Distillery & Ethanol plan:-The capacity of distillery was 30000 Liters day capacity based on the continuous fermentation &multipressure vacuum distillation technology has been installed & commission from 25th May 2002. Co-Generation:-During the inaugural address by the then Honble chief minister ,He appealed to all the co-operative sugar factories to go in for co-generation & produce extra power, Which will be supplied to state electricity board so as to overcome the short supply of the power through co-Generation in the state.We are the proud mention here that a part from providing electricity to over by product units through co-Generation, We have already started providing surplus power generated to MSEB grid from the year 1990-1991 Onwards to the extent of 1.5mw. The management of the factory considered present scenario of electricity & decided to go in co- generation project of 36 mw.The project under construction on boot basis with UrjaankurNidhitrust of Government of Maharashtra & will be completed before ensuing crushing season i.e.2011-2012. Environment Department:-The factory management has established a separate Environment Management cell to look after all the related issue of pollution control.It has a task to look after the effluent treatment of sugar factory and Distillery. Due to the efforts of department effluent quality has reduced to meager 300 M3/Day of crushing of 7500TCD. The effluent was treated in the full-fledged ETP.Based on activated sludge process. The process has now been modified to anaerobic filter followed by activated sludge process. The results are found to be one of the best. The treated effluent is used for irrigation of about 40Ha of land.The Distillery effluent is on of the most polluted item. The factory management has adopted composting technique for the treatment and disposal of spend wash.Presumed, Bagasse and Ash are mixed in definite proportion with the spent wash and aerated for about 21 days to get good quality of compost. The ready compost is distributed to the member farmers at a rate of Rs.125/ ton. The compost is good in Human contest and bacterial content. The application of compost has helped to improve the yield of crop along with soil quality.

Water Management:-It is clear that due to reduction in water consumption the savings in the savings in the electricity for jack well is in the tune of Rs.11.00 Lakhs.The savings in the water bill of irrigation department is in the tune of Rs.55.00. Lakhs per year. Besides this the load on effluent treatment plant is also reduced considerably and the disposal problem was totally finished.

2.3 Features of the organization: Co-operative industrial complex has undertaken various socio economic activities for improving the economic conditions and standard of living of the villagers in the area of operation are as follows: Soil Testingalong with Proper Tillage Operation, Supply of Chemical Fertilizers, Organic Manure, Sugarcane Seeds, Bio- Fertilizers Horticulture development schemes GobarGas plant Scheme Consumer co-operative stores Firefighting unit Medical Facilities Socio Economic Activities Industrial Training Center Education Field Employees Co-Operative Credit Society

Achievements ofSugarcane Development Work:1) By implementing various cane development activities, the crop yield increased by 23 MT/HA. Five farmers are awarded by VIS, Pune as OOS BHUSHAN for taking highest yield per hectare in the state of Maharashtra. 2) For implementing various cane development activities on large area, factory awarded by VasantDada Sugar Institute, Pune VGSIO for Best cane Development Activity for the year from 2000-2001, 2001-2002 and 2006-2007. 3) For Best cane Development and its Management, Factory Awarded by National Federation of co-op. Sugar Factories Ltd. New Delhi in 2007-2008. 4) For implementing cane development activities on large area with positive results in yield, VSI awarded our cane Development officer as BEST CANE DECLELOPMENT OFFICER in Maharashtra state sugar Factory level.

2.5Organizations Chart Management of the Factory is as follows:ShriDattaShetkariSahakariSakharKarkhana Ltd., Shirolis managed by the board of the director & top level officer.Board of director (2009-2014): Chairman- HonbleShri-Appasaheb Alias S.R.Patil and Vice chairman-HonbleShriSidgaudaGurasidgaudaPatil.The Organizations chart is as follows:-

Introduction Cash budget is the most significant device to plan for and payments. A cash budget is a summary statement of the firms expected cash inflows and outflow over a projected time period. It gives information on the timing and magnitude of expected cash flows and cash balances over the projected period. This information helps the financial manager to determine the future cash needs of the firm, plan for the financing of these needs and exercise control over the cash and liquidity of the firm.The time horizon of a cash budget may differ from firm to firm. A firm whose business is affected by seasonal variations may prepare monthly cash budgets. Daily or weekly cash budgets should be prepare for determining cash requirement if cash flows show extreme fluctuations. Cash budgets for a longer intervals may be prepared if cash flows are relatively stable. Cash budgets help management to avoid having unnecessary idle cash on the on hand unnecessary cash deficiencies on the other. A well-managed financing program keep cash balance maintained not too large or too small. The cash a budget is having affected by the level of operation summarized in the budgets income statements. The cash budget is one of the most important and one of the last to be prepared. It is a detailed estimate of the cash receipt from all sources and cash payment for all purpose and the resultant cash balance during the budget period. It makes certain that the business has sufficient cash available to meet its need as and when these arise. It is a device for coordinating and controlling the financial side of the business to ensure solvency and provide basic for planning and financing required covering up any deficiency in cash. Cash budget thus plays an important role in the financial management of a business undertaking.

3.1 MeaningCash budget is nothing but a written form of various forecasts relating to cash receipt and cash payment. In other words, to meet future obligation, forecasting the expected receipt and expected payment of cash is known. Cash budget is mere forecast of cash position of an undertaking for a definite period. In cash budget, the budget period is normally daily, weekly monthly or quarterly etc. There are two distinct parts of cash budgeting, one is for forecasting the cash receipt and the second for forecasting the cash disburse.

3.1.1 Uses of the cash budgets:- Within the broad category of business budget, the owner of the small business may want to do some specialized budgeting with regard to cash flow. Cash budget is mostly used to estimate whether or not a company has a sufficient amount of cash to fulfill regular operations. Cash budget requires the following main of our accounting function planning & proactively for the uses of cash. Cash budget is the most accurate method. It is a core, very simple procedure.

3.1.2 Purpose of the cash budget:- It ensures that sufficient cash is availed when required. It indicates cash excesses and shortage so that action may be taken in time to invest any excess. Cash or to borrow fund to meet any shortage. It establishes a sound basis for credit. It shows whether capital expenditure may be financed internally. It establishes a sound basis control cash position.

3.1.3 Characteristics of cash budget Cash budget is a statement of anticipated cash receipt and payment. Cash budgeted is related to predetermine the future period. Cash budget is expressed in terms of monetary values. Cash budget is a fore cast of the financial aspirations of an enterprise Cash budget is an outline of future plans, polices and action of the management.

3.2 Importance of cash budget

(1) Helpful in Planning:Cash budget helps planning for the most efficient use of cash. It points out cash surplus or deficiency at selected point of time and enables the management to arrange for the deficiency before time or to plan for investing the surplus money as profitable as possible without any threat to the liquidity.

(2) Forecasting the future needs:Cash budget forecasts the future needs of funds, its time and the amount well in advance. It, thus, helps planning for raising the funds through the most profitable sources at reasonable terms and costs.

(3) Maintenance of ample cash balance:Cash is the basis of liquidity of the enterprise. Cash budget helps in maintaining the liquidity. It suggests adequate cash balance for expected requirements and a fair margin for the contingencies.

(4) Controlling cash expenditure:Cash budget acts as a controlling device. The expenses of various departments in the firm can best be controlled so as not to exceed the budgeted limit.

(5) Evaluation of Performance: Cash budget acts as a standard for evaluating the financial performance.

(6) Testing the influence of proposed expansion programmer:Cash budget forecasts the inflows from a proposed expansion or investment programmers and testify its impact on cash position.

(7) Sound dividend policy:Cash budget plans for cash dividend to shareholders, consistent with the liquid position of the firm. It helps in following a sound consistent dividend policy.

(8) Basis of long-term planning and co-ordination:Cash budget helps in co-coordinating the various finance functions, such as sales, credit, investment, working capital etc. it is an important basis of long term financial planning and helpful in the study of long term financing with respect to probable amount, timing, forms of security and methods of repayment

3.3Advantages and Disadvantages of Cash Budget:-Below is a free essay on "Disadvantages and Advantages of Cash Budget" from Anti Essays, your source for free research papers, essays, and term paper examples. Advantages of Budgeting

1) Budgeting forces early consideration.

2) Budgeting compels all the members of management to participate in the establishment of goals and plans.

3) Budgeting compels departmental managers to make plans in harmony with the other departments and of the entire enterprise.

4) Budgeting helps the management to put down in figures what is necessary for a satisfactory performance.

5) Budgeting helps the management to plan for the most economical use of labour, material and capital.

6) Budgeting tends to remove the uncertainty that exists in many organizations, especially among lower levels of management, relative to basic policies and objectives.

7) Budgeting promotes an understanding among members of management of their co-workers' problems.

8) Budgeting force management to give adequate attention to the effects of general business conditions.

9) Budgeting aids in obtaining bank credit as banks commonly require a projection of future operations and cash flows to support loans.

10) Budgeting checks progress towards the objectives of the enterprise.

11) Budgeting rewards high performance and seeks to correct unfavorable performance.

12) Budgeting forces management to consider expected future trends and conditions.

13) Budget provides tool for corrective action through reallocations.

3.4 Disadvantages of Budgeting

1) It can be very time-consuming to create a cash budget, especially in a poorly-organized environment where many iterations of the budget may be required.2) Cash budgets may also cause distortions. Cash inflows do not equate to profit. Cash inflows resulting from security deposits, fines, the sale of capital assets, or any other one-off, non-sustainable activity do not necessarily represent reliable on-going sources of revenue.3) Major problems factor would occur when budgets are applied mechanically and rigidly.

3.5 Types of the budgetA) Functional budget B) Fixed and flexible budget

A) Functional budget A functional budget is related to the function of the business, e g. sales budget, production budget purchase budget, etc there are many types of functional budgets.Function of the cash budget are: To ensure that sufficient cash is available when required. To get the working capital easily from the banks and for smooth running of business. To invest the excess. To know the exact amount if cash required for business. To reveal any expected surplus of cash may be invested or loaned. To reveal any expected shortage cash so that action can be taken to Procure fianc by way of bank overdraft or loan etc.

Sales budget In the most companies, the sales budget is notonlyimportant:but also the most difficult budget to prepay. The importance of this budget arises from the fact that if the sales figures is incorrect than all practically allother budget will be affected. The difficulties in the preparation of this budget arise because it is not easy to estimate consumer demand, particularly when a new product is introduced. The sales budget is a statement of planned sales in terms of quantity and value .it forecast what the company can reasonably expect to the sale to its customers during the Budget period .the sales budget can be prepared to show sales classified according to product salesmen, customers, territories,and period. Production budget:The production budget is an estimate of production for the budget period. It is a first drawn up in quantities of each product and when the remaining budgets have been prepared and cost of production calculated, and then the quantities of production cost are translated into many terms, what in effect becomes a production cost budget. The production budget is the initial step in budgeting manufacturing operations. In addition to production budget, there are three other budgets relation to manufacturing activates of a company. These are raw material budget, labor budget, and production over head budget. Production cost budget:This budget is shows the estimated cost of production. The production budge shows the quantity of production .these quantities of production are expressed in terms of the cost of production budget. The cost of production is shown in detail in respect of material cost, laborcost,and factoryover head. Thus production cost budget is based upon production budget material cost budget, labour cost budget and factory over head budget. Raw material budget:This budget shows the estimated quantities of all the raw material and components needed for production budget. .raw material budget serve the following purpose.a. It assists the purchasing department in planning the purchase.b. It helps in the preparation of purchase budget.c. It provides data for raw material control.

Purchase budget:Carefully planning of purchase offer one of the most significant areas of cost saving in many concern. The purchase manager should be assigned the direct responsibility for preparing a detailed plan of purchase for the budget period and the submitting plan in the form of purchase budget. The purchase budget provides the detail of purchase s which are planned to be made during the period to meet the need of the business it indicates.The quantities of each type of the raw material and other items to purchased.The time of purchases and the estimated cost of material purchase.

Labour BudgetLabour cost is classified into direct and indirect. Some concerns prepare a labour budget that includes both direct and indirect labour, while others include only direct labour cost and include indirect labour in the overhead cost budget.

Production overhead Budget:After budgeting of material and labour cost, the next logical step is to prepare a budget for production overheads. The production overhead budget represents the forecast of all the production overheads to be incurred the budget period. Selling and Distribution cost Budget:This is closely related with the sales budget and represents the forecast of all costs incurred in selling and distributing the companys products during the budget period. As a general rule, the sales budget and the selling and distribution cost budgets are prepared simultaneously, since each has a definite impact on the other. Administration Cost Budget:This budget represents forecast of all administration expenses like directors fees, managing directors salary, office lighting, heating and air conditioning, etc. Most of these expenses are fixed, so they should not be too difficult to forecast. Capital Expenditure Budget:This budget represents the expenditure on all fixed assets during the budget period. It includes such items as new buildings, machinery, land and intangible items like patents etc.

B) Fixed Budget:A fixed budget is one which is prepared keeping in mind one level of output. It is defined as a budget Which is designed to remain unchanged irrespective of the level of activity attained.* If actual output differs from budgeted level of output, variances will arise. Fixed budget is prepared on the assumption that output and sales can be estimated with a fair degree of accuracy. This means that in those situations where sales and output cannot be accurately estimated, fixed budget does not suit.Flexible Budget:In contrast to a fixed budget, a flexible budget is one which is designed to change in relation to the level of activity attained.* The underlying principle of flexible budget is that a budget is of little use unless cost and revenue to the actual volume of production. Flexible budgeting has been developed with the objective of changing the budget figures to correspond with the actual output achieved. Thus a budget might be prepared for various levels of activity, say, and 70%, 80%, 90% and 100% capacity utilization. Then whatever the level of output actually reached, it can be compared with an appropriate level.

3.6 Preparation of Cash Budgets:Cash budget represents the cash receipts & payments & the cash balance each month of the budget period. Whatever method of preparing cash budget is adopted, its basis concept will be the same i.e. cash receipts & payments thus, cash budget shows the position during the various stages of a budget period as well as after its expiry. The contents of cash budget are total receipts & payments over a period of time. Cash payments are shown by way of deduction from cash receipts to show surplus or deficiency. In order to develop a realistic cash budget it is necessary that detailed and pragmatic for casts of sales, production, expenses, purchases & other operations are available it means for preparation of reliable cash budget other functional budgets supplying reliable data are essential as entries in the cash budget are based on the information recorded in other budgets. A cash budget is prepared strictly on a cash basis & not on accrual basis unlike other budgets. It starts with opening balance of cash in hand and at bank to this, receipts are added and payments are deducted there from resulting in the balance i.e. deficiency or surplus.There are three methods for preparation of cash budget.A. Receipts & payments methods.B. Adjusted earnings or adjusted profit & loss method.C. Balance sheet changes methods.

A) Receipts & payments methods.1) Estimating Cash Receipt:-It is on estimate or prediction of cash receipt from sales, accounts. Receivable non-operating incomes, capital transaction such as sales of assets, issue of shares, debentures etc.In the case of credit sales, there is a long between credit sales & recovery of cash hence due consideration must be given to this factor, which estimating cash receipts from credit sales. The non-operating receipts include interests, dividend, rent, discount, commission, royalty etc. As their period of receipt & amounts are definite there is no problem in estimating them.The sale of assets, shares, debenture etc. is largely a matter of a management decision. Only net receipt from sale of shares & debentures should be taken i.e. their expenses should be debuted from their receipts.

2) Cash Disbursement:-The Disbursement may also be for-1. Operating expenses.2. Non-operating expenses.3. Capital transaction-porches of assets, investment etc.The payments for expenses should be provided for in the month when they will be actually paid & not when they were incurred.

B) Adjusted Profit & Loss Method:-If cash balance at the end of each month is not required to be known & if it is sufficient to know cash at the end of budget period, this method may be followed. This Method gives simply broad idea of cash position & does not gives maximum possible details unlike the first method. The net profit is adjusted with non cash items, which are taken into consideration while arriving at net profit.

C) Balance Sheet Changes Method: If it is desired to prepare a cash budget for the several years ahead, then this method is followed. For this method, figures of assets & liabilities for more than one year are necessary.The operating balance of cash is taken as starting point & it is adjusted with changes in assets & liabilities involving cash receipts & payments.

3.7 Format of Cash Budgets:-CASH BUDGET (IN LAKHS)ParticularFinancial Year/ Half Year/Quarter

Opening BalanceXXXX

Receipts:-XXXX

Cash salesXXXX

Credit salesXXXX

Dividend income)XXXX

Interest incomeXXXX

Other incomeXXXX

Issue of shares and debenturesXXXX

Central Govt. ExportXXXX

Ocean Transport SubsidyXXXX

Other IncomeXXXX

TOTAL(A)XXXX

Payments:-XXXX

Cash purchases.XXXX

Salary & wagesXXXX

Stores & RepairsXXXX

Manufacturing expenses.XXXX

Excise DutyXXXX

Administrative expenses.XXXX

InterestXXXX

DepreciationXXXX

ProvisionXXXX

Selling and distribution expensesXXXX

TOTAL(B)XXXX

Balance(A-B)XXXX

Data Analysis and Interpretation

By preparing cash budget it becomes possible for the organization to predict whether at any point of time there will be excess or shortage of cash.The Cash Budget is a method, under is a statement projectingthe cash inflows & outflows (receipt & disbursements) of the firm over various interim periodof the budget period.Here the cash budget is analyzed for three consecutive financial years: 2011-12, 2012-13 and 2013-14.

1. Receipt 2011-2012 : Budgeted and Actual ( Rs in Lakh)Table No:IParticulars BudgetedActual

Variance

Sugar sales430.50435.841.24%

Sales of by product215.20205.12-4.68%

Other income145.50151.854.36%

Petrol pump60.5072.7320.21%

Total851.7865.541.62%

Chart No:-I

INTERPREATION: The sugar sales in the year 2011-12 areRs435.84Lakhs. The variance of budgeted & Actual is only 1.24% The sales of by product actual receipt side isRs205.12 Lakhs where variance is -4.68%. In the other income a variance of 4.36%. Can be seen this is slight increase an actual other income than the Budgeted other income. Petrol pumps income for Budget while the actual income is 72.73 Lakh and increase of 20.21% is seen. These we can see the total variance in budgeted & Actual is 21.13%.

2. Payment 2011-2012 (Rs. in Lakh)Table No:II

ParticularsBudgetedActualVariance

Sugar can purchased &related expenses380.50394.470.036%

Salary & wages20.5625.9926.41%

Store & repairs70.5264.12-9.07%

Production& sale expenses30.8524.71-6.14%

Administrative expenses70.0064.24-8.22%

Interest on loan50.1455.2410.17%

Depreciation70.8564.01-9.65%

Total693.37637.54-8.05%

Chart No:-II

INTERPRETATION: The Budgeted sugar cane purchased and related expenses areRs 38.50 Lakh whereas the actual expense shows Rs 39.47 the variances is -0.6%. The Budgeted salary and wages amount is 20.56 Lakh. The store and repairs expenses have decreased in Rs. 64.12 Lakh in actual Administrative expenses have decreased in actual which isRs64.24 Lakh. Interest on lone has increased byRs55.24 Lakh. Depreciationhas decreased by Rs. 64.01 Lakh.

3. Receipt 2012-2013 (Rs in Lakh)

Table No:IIIParticularsBudgetedActualVariance

Sugar sales414.69450.678.67%

Sales of by product347.96264.30-24.04%

Other income105.791.32-13.60%

Petrol pump9.0013.4949.88%

Total877.35819.78-6.61%

Chart No:-III

INTERPREATION: The sugar sales in the year 2012-13 areRs. 450.67 Lakh. The variance of Budgeted& Actual is only 8.67%. The by product in the actual data is 264.30 Lakh. Where the variance is 24.04%. In the other income a variance of 13.60 % can be seen and slight decrease in actual income than the budgeted other income. Petrol pump income shows increase in the actual income which is Rs. 13.49 Lakh.

4. Payment 2012-2013 (Rs. in Lakh)Table No: IVParticularsBudgetedActualVariance

Sugar can purchased &related expenses666.27394.47-40.7943%

Salary & wages27.4325.99-5.24973%

Store & repairs23.5422.46-4.58794%

Production& sale expenses30..0036.5421.8%

Administrative expenses79.0076.42-3.26582%

Interest on loan69.2448.40-30.0982%

Depreciation63.0074.7618.66667%

Total958.48679.04-29.01%

Chart No:-IV

INTERPREATION: The budgeted sugar cane purchased and related expenses isRs. 666.27 Lakh were as the actual expenses showsRs 394 47 the Variances is -0.48%. The budgeted salary and wages amount is Rs 27.43 Lakh however the actual expenses on salary and wages are Rs. 25.99 Lakh. The store and repairs expenses have Rs 22.46 Lakh in actual which occurred less than the budgeted. The production and sales expenses has increased by at Rs 36.54 Lakh. The actual administrative expenses decreased by Rs.66.42 Lakh. Interest on Lone has increased by Rs 48.40 Lakh. Depreciation in actualexpenditure is increased by Rs 74.76 Lakh.

5. Receipt 2013-2014 (Rs. in Lakh)Table No:VParticularsBudgetedActualVariance

Sugar sales427.33403.81-5.50%

Sales of by product236.64230.53-2.58%

Other income508.75512.310.69%

Petrol pump6.00000.00%

Total1178.721146.65-2.73%

Chart No:-V

INTERPREATION: The sugar sales in the year 2013-14 areRs. 403.85 Lakh and the variance of budgeted and actual is-5.50%. The sales of by product in the actual is Rs. 230.53 Lakh while the variance is 2.58% In the other income a variance of 0.69% can be seen. This shows a slight increase in actual other income than the budgeted other income. Petrol pumpincomein actual income is zero.

6. Payment 2013-2014 (Rs. in Lakh)Table No:VI

ParticularsBudgetedActualVariance

Sugar can purchased &related expenses666.27344.96-0.48%

Salary & wages274.35288.405.12%

Store & repairs237.55265.7511.87 %

Production& sale expenses216.60254.5517.52%

Administrative expenses11.7266.6166.3447%

Interest on loan87.3139.07-55.2514

Depreciation51.9044.48-16.68%

Total1545.71304.12-18.62%

Chart No:-VI

INTERPREATION: The budgeted sugarcane purchased and related expenses are666.27Lakh whereas the actual expense showsRs. 344.96Lakh and the variance is -0.48%. The budgeted salary and wages amount is Rs. 274.35 Lakh however the actual expenses on salary and wages are Rs. 288.40 Lakh. The store and repairs actual expenses increased byRs. 265.75 Lakh. Production and sales expenses increased by actual expenditure are Rs. 254.55 Lakh. Actual administrative expenses are increased which isRs. 66.61 Lakh. Interest on lone isdecreased by RS 39.07 Lakh. Depreciation is actual expenditure is Rs 44.48 Lakh.

7. Receipt:Budgeted and Actual (Rs. in Lakh)Table No:VII

YearBudgeted(Total)Actual(Total)Variance

2011-2012851.7865.541.59%

2012-2013877.35819.78-6.56%

2013-20141178.721146.65-2.73%

Chart No: VII

INTERPREATION: The year 2011-12 in budgeted total income isRs851.7 lakh but compared the actual income is increased to 865.54 Rs. Lakh. The year 2012-13 in increased the budgeted total income is Rs.877.35 Lakh but the actual income is decreased to Rs.819.78 lakh. The year 2013-14 in budgeted total income isincreasedRs. 1178.72 Lakh but actual total income is decreased 1146.65 Rs. lakh.

8. Payment:Budgeted and Actual (Rs. in Lakh)Table No:VIII

YearBudgeted(Total)Actual(Total)Variance

2011-2012693.37637.54-8.05%

2012-2013958.48679.04-29.15%

2013-20141545.71304.12-18.62%

Chart No: VIII

INTERPREATION: In the year 2011-12 total budgeted purchases isto Rs.693.37 Lakhs but actual expenditure is decreased to Rs.637.54 Lakh. The year in 2012-13 budgeted totalsis Rs.958.48 Lakh but the actual expenditure is decreased to 679.04 Rs Lakh. The year in 2013-14 budgeted total is increased 1545.7 Rs. Lakh but the total actual expenditure decreased to Rs304.12Lakh.

Findings and Suggestions:Findings:The findings are given below on the basis of data analysis and interpretation: The cash budget is prepared for the current financial year byconsidering the previous financial year of. Organizationsincome is compared to the budgeted and actual. In the financial year 2011-2012, the actual income is more than the budgeted one. The variance is of 1.59%. Whereas the expenditure is decreased by -8.05%. (Table No VII and VIII) In thefinancial year 2012-2013the actualincome is decreased than the budgeted one giving a negative variance of 6.56%. The actual expenditure is decreased in the same year showing negative variance of 8.05%.(Table No VII and VIII) For the financial year 2013-2014 the actual income is increased compared to previous financial year but it is less than the budgeted one showing negative variance of 2.73%. (Table No VII and VIII) In financial year 2013-2014, the actual sugar sales have decreased as compared to the other two years.(Table No I, III and V) The sale from byproducts has always shown decrease in actual sales.Also there is no income from Petrol pump in the year 2013-2014 (Table No I, III and V). The purchases related to sugarcane are the same for consecutive two years and it has decreased in the year 2013-2014.(Table no II, V and VI) The salary and wages, interest on loan and depreciation are on the increasing side.(Table no II, V and VI) The administrative expenses in the year 2013-2014 are decreased. (Table no II, V and VI)

Suggestions:On the basis of findings, suggestions are as follows:

The factory should continue in preparing cash budget in the future.

It may be noted that the preparation of cash budget (as per receipt & payments method) require forecast of different receipt and disbursement by the firm during each of the interim period.

For improvement and the modifications it is suggested thatthe factory can carry out a yearly or quarterly bases, receipt and payment analysis.

The factory can improve the financial position in future consequences.

The factory should increase their investments, to increase profit maximization.

It is suggested that factory try to reduce its operating costs, so that it will result in increase their receipt.

The factory should have proper co-ordination between all the departments to make new strategies.

Conclusion:

From the study, it can be concluded that:

It can be concluded that the budgetary control is treated as one of the better techniques for minimizing cost and maximizing profit in the factory.

A study of cash budget is very essential to understand the receipt and payment of the factory where cash transactions are considered.

Here, the financial position of the factory is in good condition due to increase in the sugar sales.

It indicates the budgeted and actual performance vary with each other for a particular year but not for all the financial years.

As the finance department is the soul of any organization, budgetary control helps the organization by making finance department effective.

Bibliography

Books: Financial Management Khan M. Y & Jain P. K., 2007 by Tata McGraw Hill Publishing Company Limited New Delhi. Fifth Edition

Financial Management Pandey I. M. 2005 by Vikas Publishing House Pvt. Ltd. Ninth Edition

Research Methodology - Kothari C.R. & Garg Gaurav, 2014 by New Age International Publishers, New Delhi.Third Edition

Cost & Management Accounting Arora M.N. , 2011 by Himalaya Publishing House, New DelhiThird Edition

Financial Reports: Financial reports from the year 2011-2013 of ShriDattaShetkariSahakariSakharKarkhana Limited Shirol.

Websites: www.investopedia-cash budget/meaning.com

Profit & Loss Account

Expenditure2010-112011-122012-13Receipts2010-112011-122012-13

Cane purchase & related expenses3241893012.1239447186173956666366.58Sugar Production Value (including Duties)3786688870.9543584700124506728123.22

Salary & Wages275437837.01259986237264893815.29By-product Production value (including duties)196103013.23205122348264308726.05

Stores & repairs212879701.49232663914222149586.30Co-generation Receipts45830239.506691414332109097.90

Production & sales expenses23596006.722471697722463513.06Other Income81841807.4515185771891321871.99

Excise Duty162871647.92155107146153919561.23By-product Profit (Distillery)23639856.5710295326132768.28

Administrative expenses54134776.256424209976427087.01Petrol Pump Profit1222922.19727338361349201.14

Interest63474650.005524314548405111.00

Depreciation

50608547.006401389774761966.00

Price Fluctuation Fund

15000000.003000000040000000.00

Project Fund21277000.002000000040000000.00

Provision for loan repayment

Net profit14153531.3854355572262782.11

Total4135326709.8948561275894901949788.58Total4135326709.8948561275894901949788.58

A.G.I.M.S.,SangliPage 44