1. International Journal of Management (IJM), ISSN
INTERNATIONAL JOURNAL 0976 – MANAGEMENT (IJM)
OF 6502(Print), ISSN 0976 - 6510(Online),
Volume 5, Issue 2, February (2014), pp. 54-60 © IAEME
IJM
ISSN 0976-6502 (Print)
ISSN 0976-6510 (Online)
Volume 5, Issue 2, February (2014), pp. 54-60
© IAEME: www.iaeme.com/ijm.asp
Journal Impact Factor (2014): 3.2150 (Calculated by GISI)
©IAEME
www.jifactor.com
AN EVALUATION OF BUDGETARY CONTROL AT BHIMA
CO-OPERATIVES SUGAR INDUSTRY LTD, IN PUNE
Prof. Megha Mehta
Asst Prof., Sai Sinhgad Business School, Pune
ABSTRACT
Research was conducted with special reference to Budgeting, Budgetary Control and
Performance Evaluation system of BHIMA CO-OPERATIVES SUGAR INDUSTRIES LTD with
the view to ascertain the role that the budget plays in the company and how the key factors of the
budget engage its uses in their daily operational activities. Budget as a profit planning device sets
standard of performance of managers, while budgetary control is a tool implored by management to
keep track of actual performance to ensure budgeted standards are met
This research paper basically focuses on to the budgetary control .Budget is a technique
which quantifies management expectations regarding future income, cash flows, and financial
position. It represents approaches to the achievement of company goals and mission. Capital and
Revenue are the two major factors which is required to be evaluated and from its respective budget,
comparison of actual performance with standard performance has been done. Hence, appropriate
action plan is established for controlling purpose. Transforming business and profit are conventional
and fundamental part of every corporate. Budget is a roadmap to achieve its predefined plan and it is
one of strategy to accomplish it.
Keywords: Budget, Management, Profit, Strategy, Performance Evaluation.
REVIEW OF LITERATURE
According to an Article published in the European Journal of Economics. Ishola Rufus
Akintoye (2008) “Budget and Budgetary Control for Improved Performance: A Consideration for
Selected Food and Beverages Companies in Nigeria”); „Budget And „Budgeting are concepts
traceable to the bible days, precisely the days of Joseph in Egypt. It was reported that „nothing was
given out of the treasure without a written order . History has it that Joseph budgeted and stored
grains which lasted the Egyptians throughout the seven years of famine. 13Budgets were first
‟
‟
‟
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2. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 5, Issue 2, February (2014), pp. 54-60 © IAEME
introduced in the 1920s as a tool to manage costs and cash-flows in large industrial organizations.
Johnson (1996), states that it was the 1960s that Companies began to use budgets to dictate what
people needed to do. In the 1970s Performance improvement was based on meeting financial targets
rather than Effectiveness, companies then faced problems in the 1980s when they were not Willing
to spend money on innovations in order to stay with the rigid budgets, they Were no longer
concerned about how customers were being treated; only meeting Sales targets became essential.
Budgeting in business organization is formally associated with the advent of industrial capitalism for
the industrial revolution of the eighteenth century, which presented a challenge for industrial
management. Glautier and Under (1987) state that „the emergence of scientific management
Philosophy with its emphasis on detailed info as a basis for taking decision provided a tremendous
impetus for the development of management accounting and indeed Budgeting techniques .
However, budgeting at the early stage of its development was concerned with Preparing and
presenting credible information to legitimize accountability and to permit correct performance
evaluation and consequently, rewards. Over the years, the function and focus of budgeting has
shifted considerably and businesOrganization become more complex and their environment becomes
dynamic Coupled with the emergence trend, the term budget and budgeting have been differently
defined and examined by various scholars in several ways. 14 Omolehinwa (1989) defined a budget
as a plan of dominant individuals Organization expressed in monetary terms and subject to the
constraints imposed by The participants and the environments, indicating how the available
resources may be Utilized, to achieve whatever the dominant individuals agreed to be the
organization’s priorities.
‟
‟
OBJECTIVES OF THE STUDY
1)
2)
3)
To study the existing budgetary controls methods & practices at Bhima Co-operatives Sugar
Industries Ltd.
To understand the financial position of company through capital budget and revenue budget.
To compare the budgeted figures with actual figures & comparison of budgets for 2 years.
RESEARCH METHODOLOGY
Primary Source
The information of the budgets were obtained from departmental heads.
Discussion with Cost Accountant regarding preparation of budgets
Secondary source
This type of data were collected from
Office Records
Files & manuals
Annual Reports & Prospectus
INTRODUCTION
Budgeting has come to be accepted as an efficient method of short-term planning and control.
It is Employed, no doubt, in large business houses, but even the small businesses are using it at least
in some informal manner. Through the budgets, a business wants to know clearly as to what it
proposes to do during an accounting period or a part thereof. The technique of budgeting is an
important application of management accounting. Probably, the greatest aid to good management
55

3. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 5, Issue 2, February (2014), pp. 54-60 © IAEME
that has ever been devised is the use of budgets and budgetary control. It is a versatile tool and has
helped managers cope with many Problems including inflation. Objectives of Budgetary Control
Budgetary Control is planned to assist the management for policy formulation, planning, controlling
and co-ordinating the general objectives of budgetary control and can be stated in the following
ways:
Planning: A budget is a plan of action. Budgeting ensures a detailed plan of action for a business
over a period of time.
Control: Control is necessary to ensure that plans and objectives are being achieved. Control follows
planning and co-ordination. No control performance is possible without predetermined standards.
Thus, budgetary control makes control possible by continuous measures against predetermined
targets. If there is any variation between the budgeted performance and the actual performance, the
same is subject to analysis and corrective action.
The use of budgets in controlling operations is known as budgetary control.Such control takes
place by means of budget reports that compare actual results with planned objectives.
Budgetary control consists of:
a. Preparing periodic budget reports that compare actual results with planned objectives.
b. Analyzing the differences to determine their causes.
c. Taking appropriate corrective action.
d. Modifying future plans, if necessary.
A study has been conducted on the “BUDGETARY CONTROL” which is most probably
adopted in Bhima Co-operatives Sugar Industries Ltd.
COMPANYPROFILE:
LOCATION: Bhima Co-operatives Sugar Industries Ltd.
Factory: Madhukarnagar – Patas, Taluka Daund, District – Pune
ESTABLISHED IN: 22-12-1976
REGISTERED NO: P.N.A/PRG/A-2
WEEKLY HOLIDAY: Sunday
CHAIRMAN: Dr. Rahul subash kol
VICE CHAIRMAN: Annat kursnaraj Thorat
AREA OF OPERATION: Maharashtra
MEMBERS: kiran Bhagwat,
Sampatroa Authlee,
Annashaebh Shitole,
Narayan Gawali,
Gopinath Bhundee,
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4. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 5, Issue 2, February (2014), pp. 54-60 © IAEME
VISION: TO provide quality sugar to society and export it in international market.
CAPITAL BUDGET
Receipts
2011-12
2012-13
A) PAID UP CAPITAL
50.00
40.00
B)ISSUED
SHARE
CAPITAL
C)
GOVERNMENT
SHARE
2)
SHORT
TERM
LOAN
A)
MAHARSHTRA
STATE BANK
125.00
100.00
180.18
0.00
2,230.62
0.00
1,338.37
0.00
250.00
0.00
B) PROVISIONS
1)
MAHARSHTRA
STATE BANK
2) PUNE ZILLA COOPERATIVE BANK
Payments
2011-12
1)
TERMS
LOAN
REPAYMENT
A) PUNE ZILLA COOPERATIVE BANK
1) SHARE CAPITAL
B) PUNE ZILLA COOPERATIVE BANK
C) PUNE ZILLA COOPERATIVE BANK
(Rs in lakhs)
B)
PUNE
ZILLA
COOPERATIVE BANK(S.M.P.)
C)
PUNE
ZILLA
COOPERATIVE BANK(LOAN)
D) MAHARSHTRA STATE
BANK(LOAN)
E)
PUNE
ZILLA
COOPERATIVE BANK(LOAN)
F) MAHARSHTRA STATE
BANK(LOAN)
G) MAHARSHTRA STATE
BANK(LOAN)
2)
PROJECT
ESTABLISHMENT
EXPENSES
A)OPERATIONAL
STAFF
EXPENSES
2012-13
334.37
334.37
660.31
0.00
261.73
269.73
162.67
162.67
0.00
267.69
0.00
446.12
283.20
377.60
250.00
0.00
5,000.00
0.00
99.03
0.00
B)INSPECTION & TESTING
159.34
0.00
3)MACHINERY/TOOLS/
FURNITURE/VEHICLES
10.00
25.00
700.00
800.00
4)
BUILDINGS
OTHERS
CONSTRUCTIONS
10.00
15.00
4) Surplus
5)Capital
1,541.48
298.26
782.16
168.02
TOTAL…
6,972.28
1,890.1
6.972.2
1,890.1
3) Deprecation fund
TOTAL…
AND
CIVIL
FINDINGS
From payment side:
Following expenses are not fully paid off which is as follows:
a. Outstanding Rs.660.31 lakhs of pune Zillah co-operative bank (s.m.p).
b. Repayment of Pune Zillah co-operative bank & State Bank of Maharashtra has increased from
previous year.
c. Establishment expenses for the both terms remain unpaid.
d. Expenses for vehicle’s/furniture/machinery/tools/were increased from 10.00 lakhs to
25.00lakhs. Similarly, building and other civil construction expenses were increase from
10.00lakhs to 15.00 lakhs.
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5. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 5, Issue 2, February (2014), pp. 54-60 © IAEME
REVENUE BUDGET
REVENUE RECEIPTS
1) INCOME FROM
SUGAR
2011-12
2,39,384.45
2012-13
23,136.13
REVENUE PAYMENTS
1) TRANSPORT EXPENSES
2) SALES
1,91,451
3,114
A) SUGARCANE SORTING
VEHICLE EXPENSES
5)SUGAR BAGS
7) OTHER INCOME
A) INTEREST
B) DIVIDEND
32.00
26.00
0.40
20.00
0.50
25.00
C) OTHER INCOME
300.00
250.00
B) FARMER PAYMENTS
C) FARMER ROAD REPAIRS
D) SUGARCANE PURCHASE CESS
2)
EXPENSES
FOR
MANUFACTURING
A) ENGINEER DEPARTMENT AND
REPAIRS & MAINTENANCE
B) OTHER EXPENSES
C) WAGES AND SALARY
D) OTHER EXPENSES
2) LABOUR
3) POWER
4) WATER
5) VEHICLES
6) BAGS BELLING
7) TRANSPORTATION
3) INTEREST PAID ON LOAN
A) CAPITAL LOAN
B) WORKING CAPITAL LOAN
C) DEPOSIT FROM MEMBERS
4) BANK COMMISSION
5) GENERAL ACCOUNT
6) PROVIDEND FUND
7) TRAVELLING EXPENSES
8) RENT, RATES & TAXES
9) TELEPHONE,POSTAGE
10) PRINTING & STATIONERY
11) GOVERNMENT CHECKING
FEES
12) MISCELLEOUNS EXPENSES
REPAIRS, DIESEL,PETROL,ETC.
DONATIONS
INSURANCE
MAINTENANCE
LEGAL CHARGES
ADVERTISEMENT EXPENSES
MEETING EXPENSES
SALES PROMOTION
ANNUAL GENERAL MEETING
OTHER EXPENSES
COMPUTER EXPENSES
EMPLOYEE WELFARE & UNIFORM
EXPENSES
13) OTHER
1) BONUS
2) EDUCATION FUND
14) DEPRECIATION EXPENSES
15) LAST YEAR EXPENSES
16) SUGAR EXPECTATION RATE
TOTAL…..
32,207.02
26,551.63
16) EXPECTED PROFIT
TOTAL….
58
2011-12
AND
2012-13
4,385.83
3,440.00
285.25
250.00
545.45
290.30
260.00
0.00
900.00
920.00
700.00
550.00
710.00
560.00
8.00
50.00
25.00
5.00
15.00
4.00
9.00
52.00
27.00
4.50
16.00
4.50
400.00
1,400.00
110.00
3.00
320.00
160.00
4.00
4.00
7.00
15.00
16.00
290.00
1,890.42
110.00
3.00
330.00
170.00
4.50
5.00
7.50
16.00
18.00
13.00
36.00
40.00
30.00
15.00
5.00
2.00
1.00
6.00
250.00
8.00
16.00
13.50
32.00
35.00
32.00
16.00
6.00
2.50
1.00
6.50
260.00
9.50
17.00
250.00
0.75
700.00
1,083.66
19,091.26
280.00
0.75
800.00
0.00
15,200.00
457.82
32,207.02
782.16
26,551.63

6. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 5, Issue 2, February (2014), pp. 54-60 © IAEME
REVENUE BUDGET
a.
b.
c.
d.
Incomes from sugar has been decreased from in current year as compared to previous year.
Sales of sugar are decrease from 1, 91, 451 lakhs to 3114.00 lakhs.
Decline of 50% of profit is observed.
Other income:
Interest received is appreciated from 0.40 lakhs to 0.50 lakhs. Similarly dividend is appreciated
from 20.00 lakhs to 25.00 lakhs.
e. Other income has been decreased from 300.00 lakhs to 250.00 lakhs.
REVENUE PAYMENT
1) Transportation and sugarcane expenses reveals the following changes:
a) Cultivating and vehicles expenses has been decrease from 4,385.53 lakhs to 3,440.00
lakhs.
b) Farmer salaries increases from 285.25 to 290.30 lakhs.
c) Repairs of roads belongs to farmers , increases from 250.00 to 260.lakhs
2) Expenses for manufacturing:
a) 20% sharp increase in expenses for engineering department.
b) Repairs, maintenance & other expenses too increase from 7.90 to 7.90 lakhs.
c) Wages & salaries of workers increase from 550.00 to 560 Lakhs.
d) Other expenses :( increasing trends)
e) Labour, power, water, selling, transportation are also increasing.
3) Interest paid on loan:
a) Capital loan decrease from 400.00 to 290.00 lakhs.
b) Working capital loan increase from 1, 40.00 to 1,890.42 lakhs.
c) No change is observed in deposits from member’s fund. 11.00 lakhs is constant in both
years.
4) Similarly bank commissions are also in stable position.
5) General & other salary expenses are increased from 320.00 to 330.00 lakhs.
6) Provident fund & interest on it increase from 160.00 to 170.00 lakhs. Similarly, travelling
expenses increases from 4.00 to 4.50 lakhs.
7) Rent, rates, & taxes are increased from 4.00 to 5.00 lakhs. Similarly, telephone, postage,
printing & stationery, government checking expenses were increasing respectively.
8) Miscellaneous expenses:
Following are the expenses observed in increasing/decreasing trends
a) 13.00 to 13.50 lakhs for vehicles repairs & diesel petrol expenses
b) 36.00 to 32.00 lakhs for donations & other expenses
c) 40.00 to 35.00 lakhs for insurance expenses.
d) 15.00 to 16.00 lakhs for legal charges.
e) 30.00 to 32.00 lakhs for buildings, repairs & maintenance’s.
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7. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 5, Issue 2, February (2014), pp. 54-60 © IAEME
f)
g)
h)
i)
j)
k)
5.00 to 6.00 lakhs for advertise expenses.
2.00 to 2.50 lakhs for meeting expenses.
6.00 to 6.50 lakhs for annual general meeting expenses.
250.00 to 260. Lakhs for other expenses.
8.00 to 9.50 lakhs for computer expenses.
16.00 to 17.00 lakhs for employee welfare expenses.
9) Others: (increase/decreasing trends)
a) 250.00 to 280. 00 for payment of bonus.
b) No change is observed in education funds expenses.
c) 700.00 to 800.00 lakhs increases from deprecation funds.
d) Last year expenses remain unpaid.
CONCLUSION
From the study it can be concluded that budgetary control is treated as one of the best
technique for minimizing cost & maximizing profits in Bhima Co-operatives Sugar Industries Ltd.
Budgetary control technique helps in profit making or smooth functioning of the business. It
coordinates all the departments like finance, Marketing, Production in the company. It makes the
decentralization of authority in the organization which helps organization goal within stipulated
period of time. Budgetary control acts as a safety for an organization because it helps to identify
business risk & necessary steps can be taken to avoid the risk. Budgetary control techniques help to
know how the available monetary resources can be utilized effectively. After analyzing the budgets
of Bhima Cooperatives Sugar Industries Ltd, We infer that expenses in 2012 were increased as
compared to the year 2011. So the company has to take some remedial measures in order to improve
the firm’s performance & profitability position.
SUGGESTIONS
•
•
•
•
•
Accurate position of the business cannot be estimated.
It arises due to inflationary pressure & change in government policies all these affect the
budgeting performance.
The company should have close watch on the market which helps to make new strategies.
The company should have proper coordination between finance & marketing department in
order to improve their performance.
They can carry out some promotional activities, so as to increase its sales & beat the
competition.
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Management. The Public Manager, 29(2), 52.
[3] Kent, A. (Ed.). (1990). Encyclopedia of library and information science. Boca Raton, FL:
CRC Press.
[4] Kohut, J. D. (1974). Allocating the book budget: A model. College and Research Libraries,
35(3), 192-9.
[5] Koontz, H.; O'Donnell, C.; & Weihrich, H. (1980). Management. New York: M.
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