A

STUDY ON

BUDGETARY CONTROL PRACTICES

OF

NAGARJUNA FERTILIZERS AND CHEMICALS LTD

Dissertation submitted in partial fulfillment of the

requirement for the award of the degree of PGDM

BY

T.CHANDRA SHEKAR

(08M004)

(FINANCE AND MARKETING)

DHRUVA COLLEGE OF MANAGEMENTAPPROVED BY AICTE, MINISTRY OF HRD, GOVT. OF INDIA

MEDCHAL, HYDERABAD-501401(2008-2010)

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DECLARATION

I hereby declare that the dissertation titled A STUDY ON BUDGETARY CONTROL

PRACTICES OF NFCL that is being submitted by me in partial fulfillment of the

requirements for the award of the degree of PGDM in FINANCE and MARKETING to

DHRUVA COLLEGE OF MANAGEMENT is a record of a bonafide work carried out by me.

The results embodied in this dissertation have not been submitted to any other University or

Institution for the award of any Degree or Diploma.

Date:

Signature of the student

Place:

Internal Supervisor Examiner(s)

1……………………………

2……………………………

Chairman

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ACKNOWLEGEMENT

I express my deep sense of gratitude to the management of NFCL for giving me an opportunity

to carry out my summer internship in their esteemed organization.

I sincerely thank Mr. ACHARYA, Charted Accountant at NFCL for giving me his valuable

guidance and helping me in completion of the project.

I also thank my internal supervisor Prof. Seethapathi, Narsimhulu Dhruva College of

Management who guided me through out my project analysis.

I convey my special thanks to Dr. S. Pratap Reddy, Chairman, Dhruva College of

Management for providing all the necessary facilities in bringing out this project report

successfully.

Chandrashekar.Tirumal

a

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TABLE OF CONTENT

1. INTRODUCTION ---------------------------------------------------------------

1.1 INTRODUCTION TO THESTUDY

1.2 REVIEW OF LITERATURE

1.3 NEED OF THE STUDY

1.4 OBJECTIVES OF THE STUDY

1.5 SCOPE OF THE STUDY

1.6 PROFILE OF THE COMPANY

2. DESIGN OF THE STUDY--------------------------------------------------------------

2.1 RESEARCH METHODOLOGY

2.2 SOURCES OF DATA

2.3 LIMITATIONS OF THE STUDY

3. CONCEPTUAL ANALYSIS OF BUDGET AND BUDGETARY CONTROL

4. ANALYSIS---------------------------------------------------------------------

4.1 BUDGET PROJECTION

4.2 VARIANCE ANALYSIS

4.3 COMPARTIVE STATEMENTS

5. FINDINGS AND SUGGESTIONS----------------------------------------------------

BIBLIOGRAPHY--------------------------------------------------------------------------------

ANNEXURE--------------------------------------------------------------------

TABLE & GRAPH REGARDING PRODUCTION BUDGET OF NFCL FOR

2007-08AND 2008-09

TABLE REGARDING P&L A/C OF DIFFERENT FERTILIZER

COMPANIES

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TABLE REGARDING BALANCE SHEET OF DIFFERENT FERTILIZER

COMPANIES

TABLE & GRAPH REGARDING VARIENCE OF P&L A/C FOR

2007-08 AND 2008-09

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EXECUTIVE SUMMARY:

BUDGETARY CONTROL PRACTICES

Budget is one of the important and powerful tools available to the organization to have

estimates about expenses and income for a definite period of time. Budgetary control involves

the use of budget and budgetary reports, throughout the period to co-ordinate, evaluate and

control day to day operations in accordance with the goals specified by the budget. In this

present scenario it is very necessary to reduce the cost in regard of all terms to sustain in the

market. So i have taken budgetary control as my study, which carries huge weight age to

reduce the wastages and does the process efficiently.

The following are the objectives of the study

1. To evaluate the budgetary control practices followed in NFCL.

2. To make a prediction about capital expenditure for NFCL.

3. To have comparative analysis among different fertilizer companies.

The findings that I have come out of study

1. The demand towards fertilizers and its byproducts is more.

2. Apart from this the expenses regarding the raw materials is growing at higher rate when

compared previous years (2007-08).

3. Subsidy towards the agriculture and fertilizers is more in this financial year (2008-09) and

appeared to grow at 15% in the next year and ultimately benefited by the farmers

4. Net sales variance NFCL is showing very low from 2007-08 to 2008-09 .Which shows that

sales of the company is increased but in less quantity when compared others

5. The net worth of the NFCL is showing a good figures when compared to others and it also

made huge investments in other companies and carrying a good name in the minds of investors

and as well as the suppliers etc,.

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1.1 INTRODUCTION TO THE STUDY:

In the past liberalization environment, the subject of budgetary control has become far more

complex than what it was in the last century. Now-a- days, budgetary control is one of the most

vital and critical area of business management. The content of budgetary control are also

changing at a rapid pace and quantitative techniques are also incorporated in its field which

have shifted emphasis from the episodic cost control and cost reduction.

Budgetary control is a tool of management used to plan, carry out and control the operations of

the business. The entrepreneur finds it quite handy in planning the growth of his business or

enterprise.

The concept and procedures under budget plan and control have wide application not only in

profits- oriented enterprises but in every enterprise where the resource are limited and have to be

properly applied. This, in a sense is ‘managerial budgeting’. It applies to public and private

enterprises, government departments and charitable organizations.

The modern approach is towards a comprehensive budget plan and control. Of all business

activities, budgeting is one of the most important aspects and, therefore requires detailed

attention.

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1.2 REVIEW OF LITERATURE:

An Examination of the Effects of Budgetary Control on Performance

November, 2007

Carolyn M. Callahan,

Doris M. Cook Professor,

Tammy R. Way mire,

University of Arkansas-Fayetteville.

This study represents the first which suggests that tight budgetary control may not be as

effective in improving performance as assumed both in public sector and private sector

entities. While it would be premature to conclude that tight budgetary control is not related to

Performance, it can be concluded that the effective level of budgetary control will vary based

on contextual factors. In this study, it appears that the effective level of budgetary control is

at the net level for the funds within governmental entities.

Budget and Budgetary Control for Improved Performance: A Consideration for

Selected Food and Beverages Companies in Nigeria

Ishola Rufus Akintoye

Department of Economics, Faculty of the Social Sciences,

University of Ibadan, Oyo State, Nigeria, West Africa.

This study examines how budget and budgetary control can impact on the performance of the

selected food and beverages companies in Nigeria, as considered in this study, being a sample

of the entire population of the firms in the Nigerian Manufacturing Industry. We reviewed the

performance of the Nigeria manufacturing industry in previous and recent times. We found

out that the performance of this industry leaves much to be desired due to factors such as

neglect of the industry due to over dependence on crude oil, epileptic power supply,

collapsing infrastructures, unfavorable sectoral reforming among others and have resulted in

low capacity utilization of the manufacturing industry. An empirical investigation was

undertaken, using the simple correlation analytics technique specifically the Pearson product

movement correlation coefficient. In most of cases considered, established the presence of

strong relationship between turnover as a variable of budget and performance indicators –

EPS, DPS and NAS, of the selected food and beverages companies. Following our findings,

we advise managers and business operators to pay more attention to their budgetary control

systems, for those without an existing budgetary control system, they should put one in place,

and those with a dummy or passive budgetary control system, it is time they re-established a

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result-oriented budgetary control system as it goes a long way in repositioning the

manufacturing industry from its creeping performance level to an improved high capacity

utilization point.

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1.3INTRODUCTION TO BUDGET AND BUDGETARY CONTROL:

BUDGET:

A budget is a financial and /or quantities a statement prepared prior to a definite period of time,

of the policy to be pursed during that period that for the purpose of attaining a given objective.

A budget is a pre determined statement of management policy during a given period which

provides a standard for comparison with the results actuality achieved.

Advantages of budgets:

A budget helps us in the following ways:

1. It brings about efficiency and improvement in the working of the organization.

2. It is a way of communicating the plans to various units of the organization. By establishing

the divisional, departmental, sectional budgets, exact responsibilities are assigned. It thus

minimizes the possibilities of buck passing if the budget figures are not met.

3. It is a way or motivating managers to achieve the goals set for the units.

4. It serves as a benchmark for controlling on-going operations.

5. It helps in developing a team spirit where participation in budgeting is encouraged.

6. It helps in reducing wastage and losses by revealing them in time for corrective action.

7. It serves as a basis for evaluating the performance of managers.

8. It serves as a means of educating the managers

BUDGETING:

Budgeting is the technique for formulation begets.

Budgets are the individual objectives of a department, whereas budgeting is the act of building

budgets

BUDGETARY CONTROL:

Budgetary control involves the use of budget and budgetary reports, throughout the period to

co-ordinate, evaluate and control day to day operations in accordance with the goals specified

by the budget.

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Budgetary control techniques:

I. Accounting techniques

a. Standard costing

b. Overhead and Sales variance,

c. Marginal costing,

d. Business Forecasting,

e. Zero Base Budgeting

Advantages of budgeting and budgetary control :

There are a number of advantages to budgeting and budgetary control:

1. Compels management to think about the future, which is probably the most important feature

of a budgetary planning and control system. Forces management to look ahead, to set out

d`etailed plans for achieving the targets for each department, operation and (ideally) each

manager, to anticipate and give the organization purpose and direction.

2. Promotes coordination and communication.

3. Clearly defines areas of responsibility. Requires managers of budget centers to be made

responsible for the achievement of budget targets for the operations under their personal control.

4. Provides a basis for performance appraisal (variance analysis). A budget is basically a

yardstick against which actual performance is measured and assessed. Control is provided by

comparisons of actual results against budget plan. Departures from budget can then be

investigated and the reasons for the differences can be divided into controllable and non-

controllable factors.

5. Enables remedial action to be taken as variances emerge.

6. Motivates employees by participating in the setting of budgets.

7. Improves the allocation of scarce resources.

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8. Economizes management time by using the management by exception principle.

Problems in budgeting:

Whilst budgets may be an essential part of any marketing activity they do have a number of

disadvantages, particularly in perception terms.

1. Budgets can be seen as pressure devices imposed by management, thus resulting in:

a. Bad labor relations

b. Inaccurate record-keeping.

2. Departmental conflict arises due to:

a. Disputes over resource allocation

b. Departments blaming each other if targets are not attained.

3. It is difficult to reconcile personal/individual and corporate goals.

a. Waste may arise as managers adopt the view, "we had better spend it or we will lose it". This

is often coupled with "empire building" in order to enhance the prestige of a department

b. Responsibility versus controlling, i.e. some costs are under the influence of more than one

person, e.g. power costs.

c. Managers may overestimate costs so that they will not be blamed in the future should they

overspend.

ESSENTAIL OF EFFECTIVE SYSTEM OF BUDGETARY CONTOL:

There are certain steps which are necessary for the successful implementation of a budgetary

control system. They are as follows:

1. Organization for budgetary control

2. Budget centers

3. Budget officer

4. Budget manual

5. Budget committee

6. Budget period

7. Determination of key factor.

Chief executive

Accounts

manager

Budget committee

Production

manager

Sales

manager

Finance

manager

Budget officer

Personnel

manager

R&D

manager

•Production budget •Plant utilization Budget

• Sales budget•Advertisement budget

• Receipts budget

• Payment Budget

Cost budget

Labor budget R & D

Budget

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Budget centers:

A budget center is that part of the organization for which the budget is prepared. A budget

center may be a department, section of department or any other part of the department

Budget manual:

A budget manual is a document which spells out the duties and also the responsibilities of the

various executives concerned with the budgets. It specifies the relations among various

functionaries.

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Budget officer:

The chief executive, who is at the top of the organization, appoints some persons as budget

officer. The budget officer empowered to scrutinize the budgets prepared by the various

departmental heads and too many changes in them, if the situation so demands. The actual

performance of different departments is communicated to the budget officer. He determines the

deviations in the budget and takes necessary steps to rectify the deficiencies, if any.

Budget committee :

In a small scale concerns, the accountant is made responsible for preparation and

implementation of budget. In large scale concerns a committee is known as a budget

committee is formed. The heads of all important departments are made members of this

committee. The committee is responsible for preparation and execution of budgets. The budget

officer acts as so coordinator of this committee.

Budget period:

A budget period is the length of time for which a budget is prepared. The budget period

depends upon a number of factors. It may be different for different industries or even it may be

different in the same industries or business.

Determination of key factor:

A factor which influences all other budget is known as key factor or principle factor. There

may be limitations on the quantity of goods concern may sell. In this case sales will be a key

factor and all other budgets will be prepares by keeping in view the amount of the goods the

concerns will be able to sell.

The raw material supply may be limited, so production, sales and cash budgets will be

decided according to raw materials budget. Similarly, plant capacity may be a key factor if the

supply of other factors is easily available.

Advantages of budgetary control:

The budgeting control system helps in fixing the goals for the organization as a whole and

concerted efforts are made for its achievements. It enables economies in the enterprise. Some

of the advantages of budgetary control are:

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Maximization of profits:

The budgetary control aims at the maximization of profits of the enterprise. To achieve this

aim, a proper planning and coordination of different functions is undertaken.

Co-ordination:

The working of different departments and sectors is properly coordinated. The coordination of

various executives and sub ordinates is necessary to for achieving budgeted targets.

Specific aims:

The plans, policies, and goals are decided by the top management. All efforts are together to

reach the common goal of the organization. Every department is given a target to be achieved.

The efforts are directed towards achieving some specific aims

.

Tool for measuring of performance:

By providing targets to various budgetary control provides a tool for measuring performance.

The budgeted targets are compared to actual reasons and deviations are determined. The

performance of the each department is reported to the top management

.

Economy:

The planning of expenditure will be systematic and there will be economy in spending. The

finance will be put to optimum use.

Determining weakness:

The deviations in budgeted and actual performance will enable the determination of weak

ports. Efforts are concentrated on those aspects where performance is less than the stipulated.

Corrective action:

The management will be able to take corrective measures whenever there is discrepancy in

performance.

Reduce costs:

In the present day competitive world budgetary control has a significant role to play. Every

business man tries to reduce the cost of production for increasing sales.

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Introduction of incentive schemes:

Budgetary control system also enables the introduction of incentive schemes of remuneration.

The comparison of budgeted and actual performance will enable the use of such schemes.

LIMITATIONS:

Uncertain futures:

The budgets are prepared for the future period. Despite best estimates made for the future, the

prediction may not always come true. The future is always uncertain and the situation which is

presumed to prevail in future may change.

Budgetary revisions required:

Budgets are prepared on the assumptions that certain conditions will prevail. Because of future

uncertainties, assumed conditions may not prevail necessitating the re vision of budgetary

targets. The frequent revision of targets will reduce the value of budgets and revisions involve

huge expenditure too.

Problem of co ordination:

The success of budgetary control depends upon the co-ordination among different departments.

The performance of one department affects the results of other departments.

Conflict among different departments:

Budgetary control may lead to conflicts among functional departments. Every departmental

head worries his department goals without thinking of business goal. Every department tries to

get maximum allocation of funds and this raises a conflict among different departments.

TYPES OF BUDGETS:

BASED ON TIME :

Long term budgets:

The budgets are prepared to depict long term planning of the business. The period of long term

budgets varies between 5 to 10 years. Long term budgets are prepared for some sector of the

forms concern such as capital expenditure, research and development, long term finance, etc.

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Short term budgets:

These budgets are generally one or two years are in the form of monitory terms. The

consumers’ goods industries like sugar, cotton, textile, etc. use short term budgets.

Current budgets:

The periods of current budget is generally of months and weeks. These budgets related to the

current activities of the business.

BASED ON FUNCTION:

Operating budgets:

These budgets are related to the different activities or operations of a firm. The no. of such

budgets depends upon the size and nature of business. The commonly used operating budgets

are:

1. Sales budget

2. Production budget

3. Production cost budget

4. Purchase budget

5. Raw material budget

6. Labor budget

7 plant utilization budget

8. Manufacturing expenses or workers over head budget

9. Administrative and selling expenses budget

Financial budget:

Financial budgets are concerned with cash receipts and disbursements, working capital, capital

expenditure, financial position and results of business operations. The commonly used

financial budgets are:

1. Cash budgets

2. Working capital budget

3. Capital expenditure budget

4. Income statement budget

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5. Statement of retained earnings

6. Budgeted balance sheet or position statement budget

BASED ON THE FLEXBILITY:

Fixed budget:

Fixed budgets are prepared for a given level of activity,; the budget is prepared before the

beginning of financial year. The changes in expenditure arising out of the anticipated changes

will not be adjusted in the budget.

Flexible budget:

A flexible budget consists of a series of budgets for different level of activities. Therefore,

varies with the level of activity attained. A flexible budget is prepared after taking into

consideration unforeseen changes in the conditions of the business. A flexible budget is

defined as a budget which by recognizing the difference between fixed, semi fixed and variable

cost is designed to change in relation to the level of activity.

Master budget:

Various functional budgets are integrated info master budgets. The budget is prepared by the

ultimate integration of separate functional budgets.

Definition:

The master budget is the summary budget incorporating its functional budgets-----------ICMA.

Master budget is prepared by the budget officer and it remains with the top level management.

This budget is used to co ordinate the activities of various functional departments and also to

help as control device.

The various steps involved in the preparation of this budget is the preparation of the budget

include the construction of sales budget, production budget, cost of production budget, cash

budget and the projected income statement and the balance sheet.

Zero based budgets:

Before preparing a budget, a base is determined from which the budget process begin. 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 changed as per the plan for the next year. This

approach of preparing a budget is called incremental budgeting since the budget process is

concerned mainly with the increase or changes in operations that are likely to occur during the

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budget period. For example, sales of the current year’s budget may be taken as the base and

next year’s budget for sales will be current year’s budget may be taken as the base and next

year’s budget for sales will be current year’s sales plus allowance for price increases and

expected changes in sales volumes. The main drawback of this conventional approach is that it

perpetuates the past inefficiencies.

Zero bases budgeting (ZBB) is an alternative to conventional or incremental budgeting.

ZBB was introduced at Texas Instruments in USA in 1960 by Peter Phyrr, who is known as the

father of ZBB. It is a managerial tool and is steadily gaining acceptance in the business

community. ZBB not based on incremental approach and previous year’s 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 prepared for a new

company for the first time.

Advantages of zero based budgets:

In ZBB all activities included in the budget are justified on cost benefit consideration

which promotes more effective allocation of resources.

ZBB discards the attitude of accepting the current position in favour of an attitude of

questioning and challenging each item of budget.

It is an educational process and can promote a management team of talented and skilful

people who tend to promptly respond to changes in the business environments.

It facilitates identification of inefficient and unnecessary activities and avoid wasteful

expenditure.

Cost behavior patterns are more closely examined.

Disadvantages of zero based budgets:

ZBB involves high cost of preparing budgets every year.

It also requires high volume of paper work.

In ZBB there is danger of emphasising short-term gains at the expense of long-term

ones.

It has a tendency to regard any activity not foreseen and sanctioned in the most recent

ZBB as illegitimate.

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BUDGET PREPARATION:

The company prepares its master budget along with budgets for major important functions like

sales, production, cash, labor, etc. the budget is prepared by Budget Control and Cost Accounts

(BCCA) department in consultation with the chief executive, departmental heads. After the

initial budget preparation, it is approved by budget committee and finally, it is sent for the

approval of Board of Directors at its head office at Mumbai. Normally the standards of last

year are used as the basis for budget preparation with suitable adjustment. For example, rates

of materials are adjusted according to the prevailing rates in the market. Similarly adjustment

is made in labor cost depending on the budget period. Dearness is paid on the basis of All India

cost of Living Index. Overheads are changed on percentage basis. When budgets are prepared

and approved, these are communicated to respective heads of departments/ sections for

implementation

COMPARISON WITH ACTUAL PERFORMANCE OF PREVIOUS YEAR:

It will be more meaningful, if the comparison of the current year actual is made with the

previous year actual, in addition to the comparison of actual performance of the current year

with the budgets. For this purpose, the profit and loss account and balance sheet as per the

companies act, 1956 can be made use of. On the similar lines, reasons for variance are submitted

to the management for taking appropriate actions.

PREPARTION OF CASH BUDGET:

A cash budget is an estimate of cash receipts and disbursements during a future period of time. It

precedes various other budgets like material budgets research and development budget.

Definition:

“The cash budget is an analysis of flow of cash in a business over a future, shot or long period of

time. It is a forecast of expected cash intake and outlay”

The cash receipts from various sources are anticipated. The estimated cash collections for sales,

debts, bills receivables, interest, dividends and other incomes and sale of investments and other

assets will be taking into account. The amount to be spent on purchase of materials, payment to

creditors and meeting various other revenue and capital expenditure needs should be considered.

Cash forecasts will include all possible sources from which cash will be received and the

channels in which payments are to be made so that a consolidated cash position is determined.

The cash budget should be coordinated with other activities of the business. The functional

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budget may be adjusted according to the cash budget. The available funds should be fruitfully

used and the concern should not suffer for want of funds.

Objectives of setting budgets :

a. It is a plan of action and serves as a declaration of policies.

b. It defines the objectives for all the executives.

c. It provides a means of co-ordination and communication.

d. Budgets facilitate centralized control with delegated authority and responsibility.

e. It provides comparison of actual performance with budgets

f. Only the exceptions are reported to the management so that corrective action can be taken in

order to achieve the objectives laid down by the management

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1.4 NEED OF THE STUDY:

NFCL is a manufacturing concern relating to the fertilizers; it has two plants which

involves a lot of direct and indirect costs towards operating it. As there is a heavier

competition in the market of fertilizers in order to cope up and sustain in the market, it

has to operate effectively by reducing the cost and by avoiding the wastages which are

involved in it. So I have choosen one of the best and popular cost control technique

budgetary control to have effectiveness and removal of wastages from its operations and

such that it runs competitively.

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1.5 ABOUT THE COMPANY

VISION:

Global “Leadership” in Plant Nutrition Excellence in products/performance, processes/costs

and relationships

VALUES:

Deliver solutions that will please our customers Deliver returns that motivate our investors Take

actions that strengthen us and inspire the best in others (by setting an example in relationships,

integrity, honesty, humility and hard work) by understanding the deep and fundamental needs of

Our People, Our Customers, Our Investors and Our Ecosystem (Alliances, Community and

Environment)

THE GROUP:

Founded in 1973 by Shri K V K Raju with a modest investment of US$ 23 million, the

Nagarjuna Group today is a prominent industrial house in India with an asset base of US$ 2.5

billion.

1974: Birth of a business group that pioneered several core sector enterprises in the

coming decades. Starting with manufacturing steel, Nagarjuna Steels Limited was

launched.

1985: With focus on agriculture input business started plant nutrition business with

Nagarjuna Fertilizers and Chemicals Limited.

1992: Forayed into the Crop Protection Business with investments in Pesticide

Formulations manufacturing followed by Technical Grade Manufacturing in the year

1994.

1994: Micro irrigation business started to address the irrigation problems of farmers

living in water and energy scarce regions.

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1995: Ventured into Energy sector. Entered into power generation by setting up

Nagarjuna Power Corporation Limited.

1997: Entered into petroleum by setting up Nagarjuna Oil Corporation Limited.

Consolidating its core activities, today the Group’s major operations cover Agri and

Energy sectors.

FOUNDER:

SHRI K V K RAJU - AN ETERNAL SOURCE OF INSPIRATION

Nagarjuna Group is a dream willed into reality by its visionary Founder Shri KVK Raju. Shri

KVK Raju a first generation technopreneur was born in a humble agricultural family in

Andhra Pradesh on November 28, 1928. On graduating from Banaras Hindu University and

the Madras Institute of Technology he went on to complete his Master's in Mechanical and

Industrial Engineering from Michigan State University and the University of Minnesota,

USA. After a short stint in the American Industry he returned to India and worked for short

periods at Caltex Oil Refinery, Orient General Industries and Associated Electrical Industries.

Finally, he joined Union Carbide of India and worked with them for 15 years. While working

with Union Carbide, KVK's deep-rooted urge to serve society through industry impelled him

to start out on his own. Thus was born Nagarjuna Group in 1973 with an investment of US$

23 million. The Group has since then come a long way to become a diversified conglomerate

with an asset base of US$ 2.5 billion.

A recipient of various awards for his outstanding contribution to the industry and society,

KVK, was a firm believer in the adage "practice what you preach". A self-made man KVK

practiced simple living and high thinking. He dreamt big and worked with an unstinted focus

of mind and body to make his dreams come true. KVK was a visionary with firm belief in

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his mission to serve society through industry. It is this belief, which continues today to be

the guiding light of Nagarjuna Group

ABOUT COMPANY:

The flagship company of the Nagarjuna Group, Nagarjuna Fertilizers and Chemicals Limited is

a leading manufacturer and supplier of plant nutrients in India. Commencing operations in 1985,

today our asset base is around Rs. 21 billion. We have the distinction of being the single largest

private sector investment in Southern India. An ISO 9001:2000 certified company; our

operational profits are one of the highest in the industry. We assume market leadership in the

markets we operate.

Our broad portfolio of products and services include:

Nutrition solutions: Macro and Micro fertilizers and Farm Management services

Micro Irrigation solutions

We offer our expertise for the management of chemical process plants, which include

Specialist Services and Total Project Management.

Our operations and offerings have been aligned into three strategic business units:

Straight Nutrition Business

Nutrition Solutions Business

Nagarjuna Management Services

To survive, grow and attain leadership position in our areas of operation it is essential for us

to identify and capitalize on emerging opportunities.

Preparing for the future, proactively, we are addressing the most important aspects of our

organization:

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Strategy – Having a long term vision for the company

Structure – To facilitate achieve our strategy

People – Aligning related policies with Strategy and Structure. In turn to build the right

capability, attitude and behavior in employees Process – To enable employees to work more

efficiently and effectively, to have the best in class internal business processes.

Our Endeavour is to unlock the full potential of our people by transforming into a

performance driven organization that attracts the best talent, nurtures a more productive and

results-focused workforce and implements initiatives, which align people strategies with

organizational objectives.

The key action areas in this road map are:

Facilitating redefinition of organization structure to support NFCL’s business

direction, goals and priorities.

Evolving a people management philosophy and institutionalizing systems and policies

that reflect uniformity, fairness and transparency.

Establishing Best in Class HR systems and processes, in line with organizational

requirements.

Facilitating creation of a performance based culture with clear linkages to rewards and

careers.

Defining the organization capability framework and assessing organizational people capability

to support NFCL’s vision.

1.6 OBJECTIVES OF THE STUDY:

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1. To evaluate the budgetary control practices followed in NFCL.

2. To make a prediction about capital expenditure for NFCL.

3. To have comparative analysis among different fertilizer companies.

1.7 SCOPE OF THE STUDY:

1. The time period considered in the study is two financial years i.e., from 2007-08 to 2008-09.

2. The study is confined to the manufacturing costs and details of NFCL.

2. DESIGN OF THE STUDY:

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2.1 RESEARCH METHODOLOGY:

The present study is mainly about the measuring the effectiveness of budgets at NFCL and the

following methodology was adopted:

1. Understanding the concept of budgeting.

2. Preparing budgeting reports.

3. Projection of budget for 2009-10 basing on assumptions

4. Finding out the deviations between actual and estimated figures.

5. Giving the appropriate reasons for such variances.

6. Comparison of P&L account and Balance sheet of various fertilizer companies

2.2 DATA COLLECTION:

The data needed for the study was collected from the following sources:

A) Primary source:

Collected information through interactions from various personnel (at different hierarchies) in

the departments of Finance and Accounts at NFCL

B) Secondary source:

The data is collected from the following secondary sources:

1. Annual reports of the company

2. Books (relating to budgeting) and

3. Internet

METHODS

PRIMARY DATA SECONDARY DATA

29

2.3 LIMITATIONS OF THE STUDY:

1. The study is confined to NFCL only.

2. The lesser time frame for understanding this study is also a significant limitation.

3. ANALYSIS:

30

3.1 BUDGET PROJECTION FOR 2009-2010: (In crores)

SL.NO PARTICULARSBUDGET 2007-2008

BUDGET 2008-2009

PROJECTION FOR 2009-2010

INCOME

1 Capacity 11.946 11.946 11.946

2 P1 7.527 7.566 7.5465

3 P2 5.973 6.733 6.353

4 Production (urea) 13.5 14.298 15.58482

5 Production (mi) 389.44 0 424.4896

6 Sales(urea) 13.5 14.298 15.58482

Sales(mi) 375.36 584.86 637.4974

7 Manufactured urea

Plant 1

Specific energy 5.535 5.534 221.36

Variable cost 3520 3827 3445

Fixed cost 3095 3095 3095

Group concession 6615 6922 6928.922

Plant 2

Specific energy 5.627 5.621 281.05

Variable cost 12839 11515 103635

Fixed cost 2712 2712 2712

Group concession 15551 14227 156497

8 Freight subsidy 700 900 1215

9 Sales 66243.56 71545.4 77984.45

10 Subsidy

Normal production

Urea P1 11375.09 13569.75 16012.305

P2 65111.08 57205.73 67502.7614

Additional production

Urea P1 3026.07 3456.34 4078.48

P2 0 6523.47 7697.69

11 Other income 480 117.5 129.25

31

EXPENDITURE

1 Purchases (raw materials) 73815.99 77294.1 82704.687

2 Power and fuel 26781.82 26769.76 27305.1552

3 Salaries ,wages and benefits 5883.12 6987.38 82947.7188

4 Packing materials consumed 6398.02 6341.44 6595.0976

5 Distribution expenses 765 532.95 586.245

6 Other expenses 8267.38 8122.63 8528.76

7 Interest and financial charges 14992.65 12916.5 12342

8 Depreciation 12567.5 12229.94 12567.5

Budget Projection for 2009-2010

ASSUMPTIONS:

1. Plant utilization up to 100%.

32

2. Book value of plant 1 and 2 i.e. 7.5465 crores and 6.353 crores is taken under the

condition of 100% capacity and these are the values taken on the basis of average of

previous years.

3. Here the growth rate is taken is 9% for both production of UREA and MI and sales on

the basis of following factors.

Area coverage under sown is 638.33 lakhs hector which increased a lot when

Compared to the previous year (10%). Irrigational potential has Increased 81.1

to 102.08 % up to previous year and more over the govt has come with improved

accelerated irrigation benefit program (alibi)-special grant extension programs for

pending projects, increased international demand for fertilizers about (11%), And

fertilizer consumption compared to previous year and apart from this growth

observed is (6%), Rain falls are expected according to predications.

4. As this year, The Company is going to use gas as raw material, the expenses relating to

the specific energy is increased because previously the company is used naphtha as

major raw material for the production which incurs more cost than gas. At the same

time variable cost of naphtha raw materials is reduced to larger extent. And fixed cost

of production is kept as same as it is observed from previous budget. Group concession

is shown at a normal growth of previous budget.

5. The subsidy towards agriculture and fertilizers this year is shown a good growth from

previous years and is about 99456 crores. As keeping this in the mind growth relating

to subsidy is observed 29% previously, so this time it is more than that. Hence

considered 35%as growth rate (huge govt support this time for fertilizer industry to

increase the production and productivity).

6. Hence the demand, subsidy, support price, grown sown area, good rain fall prediction

and many other programs may lead to good growth rate when compared to the previous

33

(8%). On basis of above things 2% growth rate is taken on previous year percentage.

7. As earlier mentioned that the subsidy towards the agriculture and fertilizers is in this

financial year is more compared to the previous years i.e,15% growth rate ,Hence

applied better rate than that of previous years and it is about 18%.

8. As keeping in the mind regarding inflation rate, market trends and other variable

conditions, The expenditure relating to the purchase of raw materials for future may be

expected to be more than previous years and apart from this supply of raw materials in

regard of manufacturing is falling short that of demand .Hence they need to pay more

for the suppliers to get the required things.

9. In the previous budget there is decline in the growth rate of expenditure on fuel and

power ,But as on present conditions of market in regard of fuel and power is increasing

rather than decrease .Hence in that view, Increased 2% on previous year budget.

10. The growth rate relating to the salaries, wages and benefits are applied as same as the

previous year. Such that the employees, workers and others work dedicatedly and

loyally towards the organizational goal.

11. As on the basis of increasing production of units, packaging materials required will be

also be more .So, 4% is taken as growth rate on previous year.

12. They have taken 10% growth rate which normally which prevails in the market rent

deeds but where as in the previous year budget they have shown declined growth rate.

13. In the present situation, expenses, rates, taxes, and maintained relating have been

increased (inflation).In the same line, some nominal growth rate is applied, which is

normally observed in the market every year due to various factors.

14. As the present market is slowly recovering, and flow of funds in market is low so as per

assumptions, banks and other institutional lenders may provide at lesser interest rate

when compared to previous years and it would be very beneficial to the company in

34

financial terms.

15. As per the norms of the companies act and company, depreciation % and method will

be depending. As per that, it had been applied.

3.2VARIANCE ANALYSIS:

(Inlakhs

)

RS IN LAKHSPARTICULARS BUDGET ACTUALS VARIANCE BUDGET ACTUALS VARIANCE

2007-08 2007-08 2007-08 2008-09 2008-09 2008-09

Net sales 65100.69 66190.91 1090.22 70058.91 237191 167132.O9

Other income 480 1984.33 1504.33 117.5 1199 1081.5

Total expenditure 8267.38 6600.4 -1666.98 8122.63 204334 196211.37

Interest and Financing charges

14992.65 16296.63 1303.98 12916.5 16932 4015.5

Depreciation 12567.5 12015.21 -552.29 12229.94 12096 133.94

PBT 6940.71 4013.03 -2927.68 2251.29 5028 2776.71

Variance analysis 2007-2008

35

Variance analysis 2008-2009

ANALYSIS:

1.Net sales

The amount appear in budget2007-08 is 65100.69 lakhs and in actual is 66190.91 lakhs. Which

is almost having a variance of 1090.22 lakhs, It had little variance when compared to the

budget 2008-09, which had huge variance i.e., 167132.09 lakhs (app)because the forecasting

regarding the wheather is favorable towards farmers

2.Other income

The amounts which the company is taken as other income for both the budgets is 480 and

117.5 lakhs which are very low when compared to the actual generated i.e,1984.33 and 1199

lakhs respectively. This shows that company’s effectiveness and efficiency in investing and

other related activities

3.Total expenditure

When coming to expenditure it had been observed that the budgeted amount for year 2007-08

36

is more than the actual generated i.e., 8267.38 lakhs in budget and where the actual is 6600.4

and having a variance about -1666.98 lakhs in the next budget i.e,2008-09,Once again there

exists a broad variance of 196211.37 lakhs among budgeted amounts and actual. which

explains that the company is unable to meet their expenditure according to planned budget. By

this we say that they need to improve their standards regarding the budget.

4.Interest and financing charges

Amounts scattered in interest and financing charges of budgets 2007-08 and 2008-09 are

somewhat low than the actual of that particular year and comparative variances of other heads

such as total expenditure, sales etc,

5.Depreciation

In budget 2007-08 the amount allocated towards depreciation is more of 552 lakhs than of

actual and in later budget i.e., 2008-09 it is more of 133.94 lakhs forecasted than of actual of

that particular year.

6.Pbt

Figures in the budget 2007-08 relating to the PBT are over casted of 2927.68 lakhs of actual

and under casting of 2776.71 lakhs of the actual 2008-09.

37

3.3COMPARATIVE STATEMENT FOR 2008-2009:

PARTICULARS NFCL BHARTH CHAMBAL DEEPAK MFCL CORMONANDELamt amt Amt amt Amt Amt

INCOMESales turn over 2193.59 1.43 2728.78 11,142.71 1627.67 3844.09Excise duty 0 0.12 0.52 90.57 2.28 44.31Net sales 2193.59 1.31 2728.28 1052.14 1625.39 3799.78Other income -29.07 0.09 74.73 32 -3.5 20.89Stock adjustments 100.98 -0.06 -71.13 -27.01 -0.6 -65.7Total income 2265.5 1.34 2731.86 1057.13 1621.29 3754.97

EXPENDITURERaw materials 1341.04 0.59 1130.48 699.75 1,130.03 2818.28Powerful cost 311.59 0.15 560.82 18.56 259.61 66.18Employee cost 59.33 0.6 72.46 57.86 40.87 97.66Other manufacturing exp

14.62 0.18 79.63 10.24 17.34 30.84

Selling and admin exp

255.85 0 314.32 30.39 66.24 239.97

Miscellaneous expenses

8.66 3.02 18.35 28.17 17.52 44.86

Total expenses 1991.09 4.54 2176.06 844.97 1531.61 3297.79Operating profit 303.48 -3.29 481.07 180.16 93.18 436.29PBDIT 274.41 -3.2 555.8 212.16 89.68 457.18Interest 162.97 0.78 102.67 15.95 15.43 71.65PBDT 111.44 -3.98 453.13 196.21 74.25 385.53Depreciation 120.15 0.9 184.94 44.71 15.91 52.13Other written off 0 0 1.09 0 0 0Profit before tax -8.71 -4.88 267.1 151.5 58.34 333.4Extra ordinary items

0.27 -0.28 2.78 0 -1.73 -1.2

PBT(post extra-ord items)

-8.44 -5.16 269.88 151.5 56.61 332.2

Tax 13.31 0.01 64.28 51.25 20.65 122.46Reported net profit 22.49 -5.18 203.8 100.27 40.46 209.76Total value addition

650.05 3.95 1045.57 145.22 401.58 479.51

Preference dividend 0 0 0 0 0 0Equity dividend 0 0 74.92 30.87 7.11 48.96

38

Corporate dividend tax

0 0 12.73 5.25 1.21 8.32

Shares in issue 4281.82 4162 882.05 1185.15 1398.97Earnings per share 0.53 -9.81 4.9 11.37 3.41 14.99Equity dividend 0 0 18 35 6 175Book value 20.3 4.58 27.35 79.23 23.64 56.79

ANALYSIS:

1. The lion share in sales turnover is occupied by Coromandel fertilizers (3844.09 crores) and

next to it is Nagarjuna fertilizers with 2193.59 crores, followed by Chambal, Mangalore,

Deepak and Bharth fertilizers respectively.

2. Some slight variations appeared from sales turnover to net sales in the following companies

Bharth fertilizers (-0.12 crores), Deepak fertilizers (-90.57 crores), Mangalore fertilizers (-2.28

crores), coromandel fertilizers (-44.31 crores).

3.The highest other income is shown by Chambal fertilizers(74.73 crores),next to it is Deepak

fertilizers with(32 crores)and Bharth fertilizers is (0.09 crores).where as the other two

companies are showing negative other income.

4.Once again coromandel is having highest share in total income of 3754.97 crores, later it

followed by Chambal fertilizer with 2731.86 crores and nagarjuna fertilizer with 2265.5 crores,

Bharth fertilizer with least amount of 1.34 crores.

5. Nagarjuna fertilizer is making an expense of 1652.63 crores towards its raw materials and

power & fuel with 3rd in its position. Whereas coromandel fertilizer is having a variance of

1100 crores from NFCL and placing it as 1st position in expenses.

6. Coromandel fertilizer is incurring highest employee cost of 97.66 crores when compared to

the other companies.

7. Chambal fertilizer is making higher expenses towards selling and distribution of 314.32

crores but where as coromandel which is having highest sales turnover is making lower than it

i.e, 239.97 crores. And when coming to NFCL it is also making a higher amount of money

39

towards S&D expenses comparing to its sales turn over.

8. Chambal fertilizer is recorded with highest operating profit of 481.07 crores, coromandel

fertilizer with 436.29 crores and nagarjuna fertilizer with 303.48 crores and it is good sign to

the companies.

9. NFCL is a company which is spending huge amount in the terms of interest towards their

borrowing i.e,162.97 crores and it is higher amount when compared to other companies ,it is

not a good sign to the company that more financial risk.

10. PROFIT before tax of NFCL and Bharth fertilizer is showing a negative sign and where as

coromandel fertilizer is showing is showing a good figure of 333.4 crores.

11. Earnings per share available to the investors is higher in the coromandel fertilizers i.e.,

14.99 crores when we make comparisons with others and where Bharth fertilizers is showing a

negative value.

40

3.4 COMPARATIVE BALANCE SHEET FOR 2008-2009

BALANCE SHEET NFCL BHARTH CHAMBAL DEEPAK MFCL COROMANDELAmt amt Amt amt amt Amt

Sources of fundsTotal share capital 465.18 5.29 416.21 88.2 118.55 27.98Equity share capital 427.97 5.29 416.21 88.2 118.55 27.98Share application money 6.53 0 0 0 0 0Preference share capital 37.2 0 0 0 0 0Reserves 441.03 -2.86 722.06 610.6 161.61 766.46Revaluation reserves 760.94 0 0 0 92.65 0Net worth 1673.68 2.43 1138.27 698.8 372.81 794.44Secured loans 1391.31 2.6 1612.98 198.39 355.75 512.27Unsecured loans 62.42 2.03 280.65 150.99 24.25 400.41Total debt 1443.73 4.63 1893.63 349.38 380 912.68Total liabilities 3127.41 7.06 3031.9 1048.18 752.81 1707.12

Application of fundsGross block 3892.78 28.73 3213.86 1039.22 581.24 1125.93Less: Accum. Deprecation

1835.91 21.69 1593.03 487.68 272.21 401.38

Net block 2056.87 7.04 1620.83 551.54 309.03 724.55Capital work in progress 30.23 0 709.58 248.19 15.57 10.84Investments 722.46 0.02 307.41 142.75 0.05 351.34Inventories 189.24 6 302.6 79.24 170.68 864.87Sundry debtors 298.14 0.35 163.1 216.81 17.01 102.59Cash and bank balance 21.66 0.41 58.57 11.76 59.91 52.95Total current assets 509.04 6.76 524.27 307.81 247.6 1020.41Loans and advances 416.87 1.71 472.03 96.31 514.65 606.93Fixed deposits 9.54 0 4.1 18.29 0 13.37Total ca, loans &advances

935.45 8.47 1000.4 422.41 762.25 1640.71

Differed credit 0 0 0 0 0 0Current liabilities 470.62 8.32 468.92 274.68 276.01 916.66Provisions 146.97 0.15 138.78 43.22 58.08 103.66Total Cl &provisions 617.59 8.47 607.7 317.9 334.09 1020.32Net current assets 317.86 0 392.7 104.51 428.16 620.39Miscellaneous expenses 0 0 1.36 1.21 0 0Total assets 3127.42 7.06 3031.88 1048.2 752.81 1707.12Contingent liabilities 231.65 0.51 854.68 184.05 35.67 64.25

41

book value 20.3 4.58 27.35 79.23 23.64 56.79

ANALYSIS

1. The amount raised through share capital in nagarjuna fertilizers is appearing higher

amount when compared to the others i.e, 465.18 crores and in Bharth fertilizers it is

only about 5.29 crores.

2. When coming to reserves, Coromandel, Chambal and Deepak are maintaining huge

amounts as reserves from the part of their profits .NFCL is also showing the reserves

but not in the proportion of coromandel, Chambal and Deepak fertilizers.

3. Net worth of the NFCL is showing a good figure i.e., 1673.68 crores, Where the other

companies showing below 1000 figure. It shows the soundness of the organization and

creates a good image in minds of the people.

4. Investments made by the company also carries a good name in the view of investors

and NFCL is the which made huge investments in the name of company in other

companies i.e,722.46 crores and where as other companies have not invested 50% of

NFCL also.

5. Coming to total current assets NFCL is maintaining a good proportion to other

companies i.e., 509.04 crores where as Chambal is 524.27 crores and coromandel

fertilizer is 1020.41 crores.

6. Current liabilities to be paid to the lenders is more appearing in coromandel and

Chambal fertilizers while others are somewhat less when compared highest possessing

assets company is nagarjuna fertilizers with 3127.42 crores when compared to the

companies like Bharth, coromandel, Deepak, Mangalore, and Chambal fertilizers .it is a

health sign to the company and trustee sign in the minds of investors.

42

FINDINGS

1. More demand for urea and its byproducts. (According to economic survey 2008-2009)

2. The subsidy and govt support towards the agriculture and fertilizers industry is showing

good growth rate. (According to economy survey 2008-2009)

3. Expenditure relating to the raw material is showing fast growth rate for NFCL.

4. As production of fertilizers is showing a growth, packing materials required is also more.

5. Variance in the net sales of NFCL is showing low when compared to other fertilizer

companies for two financial year’s i.e. 2008 and 2009.

6. Amounts scattered in interest and financing charges of budgets 2007-08 and 2008-09 are

somewhat lower than actual of that particular year. This shows that company is going for more

debts from outside than what it expected.

7.In budget 2007-08 the amount allocated towards depreciation is more of 552 lakhs than of

actual and in the later budget 2008-09 it is more of 133.94 lakhs forecasted than of actual of

that particular year.

8. Chambal fertilizer is making higher expenses towards selling and distribution is standing

first with 314.32 and NFCL is standing in third position, it may act as good sign for NFCL as it

is fewer amounts.

9. Coromandel fertilizer is occupying lion share in sales turn over and next to it is nagarjuna

fertilizer with 2193.59 crores.

43

10. Earnings per share available to the investor is higher in coromandel fertilizers

i.e.14.99crores Where NFCL is standing at 4th position with very less amount i.e.53 crores.

11. Net worth of the NFCL is showing a good figure i.e. 1673.68crores where other companies

showing below 1000 crores.

12. Investments made by the NFCL is huge and which played a vital role in carrying good

name and fame in the mind of investor, suppliers etc,

13. Highest possessing of assets is NFCL among all the fertilizer companies compared.

44

SUGGESTIONS:

A budget is treated as an important tool by organization in the management of its financial

resources. With the help of proper maintenance of budget and budgetary control, can allocate

funds for appropriate purpose; keep spending within bounds and better use of its funds. The

following are the things which help in increase effectiveness of budgetary control.

a. Budgetary control avails huge benefits if it properly applied. But it is not possible in the

NFCL because it does not have proper structure and pattern of organization, as

knowledge also lies in the lines of authority and it is possible to get full advantage only

the structure is proper.

b. NFCL needed to divide the organization into sub units. Such that decision centers and

profit centers. Which will be also used as investment, profit, cost centres and improves

responsibility and accountability of employees towards their work.

c. NFCL is required to maintain a systematic way of recording budgets. They must be

flexible enough for making monthly or quarterly budgets and for facing any future

consequences. They can estimate the budgets logically basing not only on the past

estimated/actual figures but also the considerations affecting the future profits of the

concern. Further, employing various budgetary control techniques are Accounting

Techniques like Standard costing (comprising Overhead and Sales variance), Marginal

costing, Business Forecasting, Zero Base Budgeting and.

45

Conclusion:

NFCL is one of the leading manufacturer of fertilizers, it has given many subsidies by the

government in regard to provide the fertilizers at lower price to farmers. NFCL has a

huge capacity to produce UREA and MI in their respected plants when compared to

other fertilizer companies such as Deepak, Bharth, Chambal fertilizers. Expenditure

relating to the raw materials is showing the faster growth in NFCL and along with they

are also going for more borrowings from outside then what they have expected. Apart

from this company is also possessing huge investments and returns on it when compared

to all other companies (as per the study). NFCL is also incurring less amount towards its

distribution channel and it has huge assets in its hand, which shows the soundness of the

company.

46

BIBLIOGRAPHY:

Websites:

http://www.allbusiness.com/government/3568664-1.html

http://www.fao.org/docrep/W4343E/w4343e05.htm

http://findarticles.com/p/articles/mi_hb5951/is_200201/ai_n24060105?tag=rel.res1

http://findarticles.com/p/articles/mi_hb5951/is_200201/ai_n24060105?tag=rel.res1

http://www.laynetworks.com/Accounting%20and%20Finance%20on%20Computers.htm

http://www.centage.com/partners/programs-prn.asp

http://www.centage.com/products/reporting-and-analysis-prn.asp

Books:

P.V.Rathnam., Budgeting, Bombay, Himalaya publishing house, 1994

Cost and management by Maheshwari.

Cost accounting R.S.N. Pillai V. Bagavathi.

COLIN DRURY, Cost and management accounting, sixth edition, Thomson Learning,

2004

47

ANNEXURE

Table

SL.NO PARTICULARSBUDGET 2007-2008

BUDGET 2008-2009

INCOME

1 Capacity 11.946 11.946

2 P1 7.527 7.566

3 P2 5.973 6.733

4 Production (urea) 13.5 14.298

5 Production (mi) 389.44 0

6 Sales(urea) 13.5 14.298

Sales(mi) 375.36 584.86

7 Manufactured ureaPlant 1Specific energy 5.535 5.534Variable cost 3520 3827Fixed cost 3095 3095Group concession 6615 6922

Plant 2Specific energy 5.627 5.621Variable cost 12839 11515Fixed cost 2712 2712Group concession 15551 14227

8 Freight subsidy 700 900

9 Sales 66243.56 71545.4

10 Subsidy

48

Normal productionUrea P1 11375.09 13569.75P2 65111.08 57205.73Additional production

Urea P1 3026.07 3456.34P2 0 6523.47

11 Other income 480 117.5

EXPENDITURE1 Purchases (raw materials) 73815.99 77294.1

2 Power and fuel 26781.82 26769.76

3 Salaries ,wages and benefits 5883.12 6987.38

4 Packing materials consumed 6398.02 6341.44

5 Distribution expenses 765 532.95

6 Other expenses 8267.38 8122.63

7 Interest and financial charges 14992.65 12916.5

8 Depreciation 12567.5 12229.94

49

Table

PARTICULARS NFCL BHARTH CHAMBAL DEEPAK MFCL CORMONANDELamt amt Amt Amt Amt Amt

INCOMESales turn over 2193.59 1.43 2728.78 11,142.71 1627.67 3844.09Excise duty 0 0.12 0.52 90.57 2.28 44.31Net sales 2193.59 1.31 2728.28 1052.14 1625.39 3799.78Other income -29.07 0.09 74.73 32 -3.5 20.89Stock adjustments 100.98 -0.06 -71.13 -27.01 -0.6 -65.7Total income 2265.5 1.34 2731.86 1057.13 1621.29 3754.97

EXPENDITURERaw materials 1341.04 0.59 1130.48 699.75 1,130.03 2818.28Powerful cost 311.59 0.15 560.82 18.56 259.61 66.18Employee cost 59.33 0.6 72.46 57.86 40.87 97.66Other manufacturing exp

14.62 0.18 79.63 10.24 17.34 30.84

Selling and admin exp

255.85 0 314.32 30.39 66.24 239.97

Miscellaneous expenses

8.66 3.02 18.35 28.17 17.52 44.86

Total expenses 1991.09 4.54 2176.06 844.97 1531.61 3297.79Operating profit 303.48 -3.29 481.07 180.16 93.18 436.29PBDIT 274.41 -3.2 555.8 212.16 89.68 457.18Interest 162.97 0.78 102.67 15.95 15.43 71.65PBDT 111.44 -3.98 453.13 196.21 74.25 385.53Depreciation 120.15 0.9 184.94 44.71 15.91 52.13Other written off 0 0 1.09 0 0 0Profit before tax -8.71 -4.88 267.1 151.5 58.34 333.4Extra ordinary items

0.27 -0.28 2.78 0 -1.73 -1.2

PBT(post extra-ord items)

-8.44 -5.16 269.88 151.5 56.61 332.2

Tax 13.31 0.01 64.28 51.25 20.65 122.46Reported net profit 22.49 -5.18 203.8 100.27 40.46 209.76Total value addition

650.05 3.95 1045.57 145.22 401.58 479.51

Preference dividend 0 0 0 0 0 0

50

Equity dividend 0 0 74.92 30.87 7.11 48.96Corporate dividend tax

0 0 12.73 5.25 1.21 8.32

Shares in issue 4281.82 4162 882.05 1185.15 1398.97Earnings per share 0.53 -9.81 4.9 11.37 3.41 14.99Equity dividend 0 0 18 35 6 175Book value 20.3 4.58 27.35 79.23 23.64 56.79

Table

BALANCE SHEET NFCL BHARTH CHAMBAL DEEPAK MFCL COROMANDELAmt amt amt amt Amt Amt

Sources of fundsTotal share capital 465.18 5.29 416.21 88.2 118.55 27.98Equity share capital 427.97 5.29 416.21 88.2 118.55 27.98Share application money 6.53 0 0 0 0 0Preference share capital 37.2 0 0 0 0 0Reserves 441.03 -2.86 722.06 610.6 161.61 766.46Revaluation reserves 760.94 0 0 0 92.65 0Net worth 1673.68 2.43 1138.27 698.8 372.81 794.44Secured loans 1391.31 2.6 1612.98 198.39 355.75 512.27Unsecured loans 62.42 2.03 280.65 150.99 24.25 400.41Total debt 1443.73 4.63 1893.63 349.38 380 912.68Total liabilities 3127.41 7.06 3031.9 1048.18 752.81 1707.12

Application of fundsGross block 3892.78 28.73 3213.86 1039.22 581.24 1125.93Less: Accum. Deprecation

1835.91 21.69 1593.03 487.68 272.21 401.38

Net block 2056.87 7.04 1620.83 551.54 309.03 724.55Capital work in progress 30.23 0 709.58 248.19 15.57 10.84Investments 722.46 0.02 307.41 142.75 0.05 351.34Inventories 189.24 6 302.6 79.24 170.68 864.87Sundry debtors 298.14 0.35 163.1 216.81 17.01 102.59Cash and bank balance 21.66 0.41 58.57 11.76 59.91 52.95Total current assets 509.04 6.76 524.27 307.81 247.6 1020.41Loans and advances 416.87 1.71 472.03 96.31 514.65 606.93Fixed deposits 9.54 0 4.1 18.29 0 13.37Total ca, loans &advances

935.45 8.47 1000.4 422.41 762.25 1640.71

Differed credit 0 0 0 0 0 0Current liabilities 470.62 8.32 468.92 274.68 276.01 916.66Provisions 146.97 0.15 138.78 43.22 58.08 103.66Total Cl &provisions 617.59 8.47 607.7 317.9 334.09 1020.32Net current assets 317.86 0 392.7 104.51 428.16 620.39Miscellaneous expenses 0 0 1.36 1.21 0 0Total assets 3127.42 7.06 3031.88 1048.2 752.81 1707.12

51

Contingent liabilities 231.65 0.51 854.68 184.05 35.67 64.25book value 20.3 4.58 27.35 79.23 23.64 56.79

VARIENCE ANALYSIS

PARTICULARS VARIANCE VARIANCE

  2007-08 2008-09

Net sales 1090.22 167132.O9

Other income 1504.33 1081.5

Total expenditure -1666.98 196211.37Interest and Financing charges 1303.98

4015.5

Depreciation -552.29 133.94

Pbt -2927.68 2776.71

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