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INTRODUCTION
OBJECTIVES OF THE STUDY
To offer comments on the annual budgeted estimations on the accounts of a
mother dairy for the users of the financial statements to access the ability of the
mother dairy to generate cash and cash equivalents to serve the needs of the
organization.
To derive the working experience of producing budgetary statements.
To offer limited directions cash management group to steer the organization to a cash
surplus company.
Analyzing the budgetary estimations of the organization.
SCOPE OF THE STUDY
Mother dairy having the continuous growth every year several divisions, the
study of budgetary control in this organization gives a fair idea on the cash
management considering the major transaction of the firm.
The budgetary estimations are taken for the project study form the annual
reports for the information, and are restricted to the last five years. Several aspects of
the firm have been considered.
The discussion is made in ensuring chapter for the budgetary estimations that
have been prepared at the end of the financial year, and the date is compared with the
past five year’s records.
1
METHODOLOGY OF THE STUDY:
A. Sources of the data
There are mainly two important sources through which the whole data is collected.
Primary Data
The primary data of the topic is collected by personal interaction with the
officials of the finance and accounting department and also from annuals of the
company. The financial data relating to organization has been collected for the 5years.
Secondary Data
The data collected from the websites, books and all other relevant information or
literary are taken as secondary source of data. The data thus collected is arranged in a
format.
B. Period of the data
The is the project report (live project) conducted in the month of April,2007 for 45
days. The partial fulfillment of Master of Business Administration (MBA).
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PRESENTATION OF THE STUDY
1) The first chapter is the present scenario of the topic together with objectives
and methodology are presented.
2) The second chapter is about the profile of the MOTHER DAIRY is given in
which the study is done.
3) The third chapter is about industrial profile.
4) The fourth chapter is conceptual frame work relating to budgets and a budget
is reported through tables.
5) The fifth chapter consists of the study of budgetary control of MOTHER
DAIRY.
6) The sixth chapter consists of the suggestion & bibliography.
LIMITATIONS TOF THE STUDY
The 6 weeks period is one of the constraints to make project much more qualitatively
Findings of the study are purely based on information provided by the company other
non financial factors were not considered for analysis.
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INTRODUCTION TO DAIRYING IN INDIA :
Every morning millions of Indians wake up to find their dairy requirement of
milk waiting at their doorstep. Across the country, the dairy products like butter,
cheese, ghee, find their way into millions of homes in the metros, cities, towns and
even teeming need populate.
Milk is the nourishes of health and it was this elixir that brought forth
significant change in the lines of the people of A.P it as changed the way people
looked at life in rural India. But most of all it renewed there hopes and raised their
assumptions.
The main rust was not in just supplying milk but also in giving opportunities to
improve the quality of rural life. And maybe for the first time allowing them to dream.
DIFFERENT KINDS OF SECTORS IN DAIRYING IN INDIA.
In India there are four different kinds of sectors in the field of dairying
They are follows.
1. PRIVATE SECTOR
Individual persons forming his/her dairy shop and collects milk and sale the milk and
its products to customers directly.
2. PUBLIC SECTOR
In this kind of sector, dairying is done by govt. by purchasing milk. From middlemen
and milk producers and processing of milk is done in their own plant and then sold to
the customers.
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3. TRADING SECTOR
Production of milk products is done their primary co-operative society or co-operative
milk union at district level, by which arrangements for collection, processing and
marketing of milk is done and then it is sent to milk takers place.
CO-OPERATIVE SOCIETIES:
Co-operatives mean voluntary association on the basis of equality and for
some common purpose. The basic principle of cooperatives is “each for all and all for
each” in the words of H.CALVERT, cooperatives is a form of organization where in
persons voluntarily associate together as human beings an basis of equality for the
promotion of their economic interest of themselves”.
FEATURES OF CO-OPERATIVE SOCIETY/UNION
It’s membership is voluntary
It’s organization is democratic
It’s functioning is based on decentralized decision making principle
Its aim is economic, social and moral development of its members
In India, evolution of cooperative societies is as old as the co-operatives ACT of
1912, which recognized non-credit forms of cooperative including marketing.
COOPERATIVE MILK UNIONS:
In India, cooperatives milk union’s structure was three tier structures. It
consists of an intermediate organization between primary societies (village level) and
the pace societies.
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REVIEW OF LITERATURE
INTRODUCTION TO BUDGET AND BUDGETARTY CONTROL
BUDGET:
Budget is essential in every walk of our life –national, domestic and business.
A budget is prepared is to have effective utilization of funds and for the realization of
objective as effective utilization of funds and for the realization of objective as
efficiently as possible. Budgeting is a powerful tool to the management for
performing its functions i.e., efficiently. For efficient and effective and budgetary
control provides a set of basic techniques for planning and control are two highly
essential functions. Budget and budgetary control provides a set of basic techniques
for planning and control.
A budget fixes a target in terms of rupees or quantities against which the
actual performance is measured. A budget is closely related to both the management
function as well as the accounting function of an organization.
As the size of the organization increases, the need for budge thing is
correspondingly more because a budget is an effective tool of planning and control.
Budget is helpful in coordinating the various activities (such as production, sales,
purchase etc) of the organization with result that all the activities precede according to
the objective. Budgets are means of communication. Ideas of the top management are
given practical shape. As the activities department heads are coordinated at the much
needed for the very success of an organization. Budget is necessary to future to
motive the staff associate, to coordinate the activities of different department and to
control the performance of various persons operating at different levels.
Budgets maybe divided into two basic classes. Capital and operating Budgets. Capital
Budgets are directed towards proposed expenditure for new projects and often require
special financing.
The operating Budgets are directed towards achieving short-term operational
goals of the organization for instance, production or profit goals in a business firm.
Operating Budgets maybe sub-divided into various departmental of functional
Budgets .
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DEFINITION OF BUDGET
According to institute of charted management accountants, England “ a plan
quantified in monetary term prepared and approved prior to a defined period of time
usually showing planned income to be generated and/ or to be incurred during that
period and the capital to be employed to attain a given objective.”
According to ICMA, England, a Budgets is “financial and/or quantitative
statement, prepared and approved prior to be defined period of time, of the policy to
be pursed during the period for the purpose of attaining a given objective.”
It is also defined as “a blue print of protected plan of a action of a business for
a definite period of time.”
BUDGETARY CONTROL:
No system of planning can be successful without having an effective and efficient
system of control. Budgeting is closely connected with control. The exercise of
control in the organization with the help of Budgets is known as budgetary control.
The process of budgetary control includes.
1. Establishment of Budgets for each function and section of the organization.
2. Executive responsibility in order to perform the specific tasks so that objective
of the enterprise maybe attained.
3. Continuous comparison of the actual performance with that of the budget and
placing the responsibility of executives for failure to achieve the desired
results a given in the Budgets.
4. Taking suitable remedial action to achieve the desired objective if there is a
variation of the actual performance from the Budgeted performance.
5. revision of Budgets in the light of changed circumstances.
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DEFINITION OF BUDGETARY CONTROL:
According to the brown and Howard “ Budgetary control is the system of
controlling costs which includes the preparation of Budgets , co-coordinating the
department and establishing the responsibilities, comparing the actual performance
with the Budgeted and acting up in the results to achieve the maximum profitability.”
According to the j. Betty ”system which uses Budgets as means of planning and
controlling all aspects of producing and/selling commodities and services”
According to the CIMA, London, “Budgetary control is the establishment of Budgets
gets relating to responsibilities of executives to the requirements of a policy, and the
continuous comparison of actual with Budgeted results, either to secure by individual
action the objective of that policy or to provide a basis for revision.
Row land and William in their book entitled Budgeting for management control has
given the difference between Budgets. Budgeting and budgeter control as follow:
“Budgets are the individual objectives of an department etc where as budgeting may
be said to be the act of budgets. Budgetary control embraces all this and in addition
includes the science of planning the Budgets themselves and the utilization of such
Budgets to efforts on overall management too! For the business planning and
control.” Thus , a budget is financial plan and budgetary control results from the
administration of the financial plan.
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ESSENTIAL FEATURES OF A BUDGETARY:
► Budgetary control defines the objective and policies of the undertaking as a whole.
►it is an effective method of controlling the activities of various departments of a
business unit. It fixed targets and the various departments have to efficiently to teach
the targets.
►it is an effective method of controlling the activities of various departments of a
business unit. It fixed targets and the various departments have to efficiently to reach
the targets.
►it secures proper co ordination among the activities of various departments.
►it helps the management to fix up responsibility in case the performance is below
expectation.
► it helps the management to reduce wasteful expenditure. This leads to reduction in
the cost of production.
►it brings in efficiency and economy by promoting cost consciousness among the
employees.
►it facilitates centralized control with decentralized activity.
►it acts as internal audit by a continuous evaluation of departmental results and costs.
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ADVANTAGES OF BUDGET AND BUDGERTARY CONTROL.
There are a number of advantages to budgetary control:
● 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 detailed plans for achieving the targets for each department,
operation and (ideally) each manager, to anticipate and give the organization purpose
and direction.
● Promotes coordination and communication.
● Clearly defines areas of responsibility. Requires of budget centers to he made
responsible for the achievement of budget targets for the operations under their
personal control.
● provides a basis for performance appraisal (variance analysis). A budget is
basically a yardstick against which actual performance is was unread 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.
● Enables remedial action to be taken as variances emerge.
● Motivates employees by participating in the setting of budgets.
● Improves the allocation of scarce resources.
● Economizes management time by using the management by exception principle.
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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.
● Budgets can be seen as pressure devices imposed by management, thus
resulting in:
i) Bad labor relations
ii) In accurate record keeping
●Departmental conflict arises due to:
i)Disputes over resource allocation
ii)Departments blaming each other if targets are not attained.
●It is difficult to reconcile personal/individual and corporate goals.
● 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.
Responsibility versus controlling, i.e. some costs are under the influence of more than one
person, e.g. power costs.
● Managers may overestimate costs so that they will not be blamed in the future
should they overspend.
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LIMITATION OF BUDGETARY CONTROL
►The preparation of a Budget under inflationary conditions and changing government
policies is really difficult. Thus, the accurate position of the business cannot be
estimated.
►Accuracy in budgeting comes through expenditure. Hence it should not be relied on
too much in the initial stages.
►Budget is only a management tool. It is not a sub stature for management. It cannot
be replace management in decision marking.
►Budgeting involves a heavy expenditure, which small concerns cannot afford.
►There will be active and passive resistance to budgetary control as it points out the
efficiency or on efficiency of individuals.
►The success of budgetary control depends upon willing co-operation and team work.
This is often lacking.
►Frequent changes maybe called for in budgets due to fast changing industrial
revision of Budgets is expensive exercise.
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PLANNING
A Budget is a plan of the policy to be pursued during the defined period of
time to attain a given objective. The Budget control will force management at all the
Activities to be done during the future periods Budget as a plan of action achieves the
following purpose:
►Action is guided by well thought out plan because a budget prepared after a careful
study and research.
►The budget serves as mechanism though which management objectives and policies
are affected.
►It is bridge through which communication is establish between the top management
and the operatives who are to implement the policies of the top management.
► The most profitable course of action is selected from the various available
alternatives.
CO-ORDINATION:
The Budgetary control co-ordinates the various activities of the firm and
secure co-ordinates the various activities of the firm and secures co-operation of all
concerned so that the common so that the common objective of the firm maybe
successfully achieved. It forces executive to think and think as a group. It
coordinating the policies, plan and action. An organization without a budgetary
control is like a ship sailing in a chartered sea. A Budget gives direction to the
business and imparts meaning and significance to its achievements by making
comparison of actual performance and badgered performance.
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MOTIVATION
At employees actively participated imbued preparation and if they are
convinced that their personal interest are closely associated with the success of
organizational plan, Budget provide motivation in the form of goals to be achieved.
The Budget will motivate the workers, depends purely on how the workers have been
mentally and physically involved with the process of Budgeting .
CONTROL
Control consists of the action necessary to ensure the performance of the
organization confirms to the plans and objectives. Control of performance is possible
with predetermined standards, which are laid down in the budget.
Thus. Budgetary control makes control possible by continuous comparison of
actual performance with that of the budget so as to report the variations from the
budget to the management of corrective action.
Thus, Budgeting system integrates key managerial functions as it links top
management planning function with the control function performed at all levels in the
managerial hierarchy. But the efficiency of the Budget as a planning.
And control device depends upon the activity in which it is being used. The more
accurate budget can be developed for those activities where direct relationship exists between
inputs and outputs. The relationship between inputs and outputs.
Becomes the basis for developing Budgets and exercising control.
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APPROVED PLAN
A master Budget provides an approved summary of results to be expected from
proposed plan of operations. It concerns all functions of organizations and serves as a guide to
executives and departmental heads responsible for various departmental objectives.
COMMUNICATION
The employees of an organization should know organizational aims, adjectives
of sub units {Budget centers} and the part that thy have to play for their adamant.
Affectively communicate this information to employees. Besides, budgets keep
different sections of organization informed about the contribution of different sub
units in the attainment of over all organizational objectives.
BUDGET PROCEDURE
Having the Budget organization and fix the period, the actual work or
Budgetary control can be taken up to the following pattern.
STEPS IN BUDGETARY CONRTOL
Organization for Budgeting up of definite plans of organization is a first a step
towards installing Budgetary controlling system in any organization a Budgets
manual should be prepared giving detail of the powers, sixties, responsibilities and
areas of operation of each executive in each organization.
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BUDGETARY MANUAL
A budgetary manual lays down the details of an organizational set up, the
routine procedures and programmers to be followed for developing budgets for
various items and the duties and responsibilities of the executives regarding the
operation of the budgetary control system. CIMA England defines a budgetary
manual as “ a document schedule or book let which sets out inter alias, the routine of
and the forms and records required for budgetary control”.
Thus, it is a document, which guides the executives in preparing various
budgets. Budgets are to be drawn keeping in view the objectives of the organization
given the Budget manual, responsibility and functions of each executive in regard to
Budgeting are return sown in the budget manual to avoid any duplication or
overlapping of responsibilities, steps and the methods developing various budgets and
the methods of reporting performance against the budget are return down in the
budget manual. In short it is a written document, which gives everything relating to
the preparation and execution of carious Budgets , it should be clear and there should
be no ambiguity in it.
The following are some of the most important matters covered in budget manual.
1) Introducing and brief explanation of the objects, benefits and principles of
budgets and principles of budgetary control.
2) Organization chart giving the titles to different personals with full explanation
of the duties each to operating system and preparation of departmental and
functional budgets.
3) Length of budget periods and control periods should be clearly stated
4) A method of accounting and control of expenditure.
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5) A statement showing a responsibility given to each manager for approval of
budgets, vouchers and all other forms and documents which authorized them
to spend money. The authority for granting approval must be clearly stated.
6) The entire process of budgeting programmed including the timetable for
periodically reporting. A schedule should be drawn for this.
7) Purpose, specimen form and other number of copies to be used for each report
and statement. Budget centers should also be clearly stated.
8) Outline of main Budgets and their accounting relationships
9) Explanation of key Budgets.
FIXATION OF BUDGET PERIOD:
The Budget period mean the period for which a Budget is prepared and employed. The
Budget period will depend upon the type of business and the control aspect.
Budget period mean the period for which a Budget is prepared and employed. The Budget
period depends upon the nature of the business and the control techniques. For example, in
case of seasonal industries (i.e., food or clothing) the Budget period should be a short one and
should cover one season. But in case of industries with heavy capital expenditure such as
heavy engineering works, the budget period should be ling enough to meet the requirements
of the business. From control point of view , the budget period should be a short one so that
the actual results may be compared with the budget each week end or month end and
discussed with the discussed with Budget committee. Long term Budgets should be
supplemented by short term Budgets to make the Budgetary control successful, as short-terms
Budgets will helping exercising control over day-today operations .in short, the budget period
should not be too ling so that there may be sufficient time before budget implementation. For
most business, annual budget is quite common because it compares with the financial
accounting year.
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There should be a regular time plan for budget preparation. It may be on the following lines.
Long-term budgets for three to five years should be prepared for expansion and
modernization of the undertaking, introduction of new products or new projects and
undertaking advertisement.
Annual budgets coinciding with financial accounting year should be prepared for the
operations activities (i.e., sales, purchases, and production etc., of the business).
For control purposes, shot -term budgets-monthly or even weekly budget-short-term
budgets are prepared to see that actual performance is preceding according to the
budgets and early corrective action may be taken if there is any pitfall.
BUDGETARY CONTROLLER:
Although the chief executive I finally responsible for the budgetary programmer. It is
better if a large part of the supervisory responsibility is deluged to an official
designated as Budget Controller or Budget Director. Such a person should have
knowledge of the technical details of the business and report directly to the president
or the chief executive.
ROLLING (CONTINUES) BUDGET:
This is a budget which is updated continuously by adding a further period(a
month/quarter) and deducting a corresponding earlier period. Budgeting is a
continuous process under these methods of preparation of Budget. Once the first
period elapses, the forecast for that period is dropped and the forecast reliably, this
method is useful. However, it is a costly exercise but matched by considerable
reduction in operational variances.
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ANNUAL VS CONTINUES BUDGETING SYSTEM:
In some organizations budgets are prepared on annual basis. But annual
budgets may not help the management to have control because variances due to
rapidly changing conditions affect the sales in quantity and prices, severe rapidly
changing conditions affect the sales in quantity and prices, severe inflationary
conditions exist resulting fast increase in the prices, severe inflationary sales prices
immediately and wide range of products being produced making it not feasible to
have precise estimate of activity for a year .
The procedure in continuous budgeting will be that a year will be divided into
four quarters. Monthly budgets for the first quarter and three quarterly budgets for the
next year can be prepared . For the first quarter precise estimates can be drawn up
monthly . The; budget estimates for the second quarter may be revised working out
separately monthly estimates on more precise basis for control purposes before the
starting of the second quarter.
Similarly procedure may be followed for third and fourth quarter . This
method a time which need not be in respect of or coincide with the financial year. It
will enable to evolve a precise plan of action and control of variance functions at the
least for the immediate quarter and a broad tentative one the subsequent three quarters
on a continues basis.
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PRINCIPAL BUDGET (LIMTTING) FACTOR:
Principal budget factor is such an important factor that it would affect all the
functional budgets to a large extent. The extent of its influence must be assessed first
in order to ensure that functional budgets are reasonably capable of fulfillment. This is
the factor in the activities of an undertaking which at a particular point in time or over
a period will limit the volume of output. It is the governing factor which is a major
constraint on all the operational activities of the organization, so this factor is taken
into consideration to determine whether the budgets are capable of attainment. It is
essential to locate the limiting factor may be any one of the following:
Is there sufficient demand for the product?(customer demand) Will a required
quality and quantity of materials be available? (Availability of raw material)
Is the plant capacity sufficient to cope up with the expected sales? (Plant capacity)
Is the required type of labor available?( available of labor)
Is cash position sufficient to finance the expected volume of sales?(cash position)
Are there any Government restrictions?( Government restrictions)
For example: A concern has the capacity to produce 50,000 units of particular
item per year. But only 30,000 units can be sold in the market. In this case, low
demand for the product is the limiting factor. Therefore sales budget should be
prepared first and other functional budgets, such as production budget, labor budget,
plant utilization budget, cash budget etc. should be prepared in accordance with this
case plant capacity is limited. Therefore, production budget should be prepared first
and other budgets should follow the production budget.
20
Thus, the budget relating to limiting factor should be prepared first and the
other budgets should be prepared in the light of that factor. All budgets should be co-
coordinated keeping in view the principal budget factor if the budgetary control is to
achieve the desired results.
Principal budget factor is not static. It may very rapidly from time to time due
to internal and external factors. It is of temporary nature and in the light run can be
overcome by suitable management taking sales promotion steps as increasing sales
staff and advertising. Plant capacity can be improved by better planning,
simplification of product or extension of plant.
DIFFERENT TYPES OF BUDGETS;
Different types of budgets have been developed keeping in view the different
purposes they serve. Budgets can be classified according to:
The coverage they encompass;
The capacity to which they are related;
The conditions on which they are based; and
The periods which they cover.
21
FUNCTIONAL BUDGET:
A functional budget is a budget which relates to any of the functions of an
undertaking e.g., sales, production, research and development, cash etc, the following
budgets are generally prepared.
Budget Prepared by
1. Sales Budget including selling Sales Manager
And distribution cost Budget Production Manager
2. Production Budget Purchase Manager
3. Material Budgets Personnel Manager
4. Labor and Personnel Budget Production Manager
5. Manufacturing Overheads Finance Manager
6. Administration Cost Budget Production Manager
7. Plant Utilization Budget Chief Executive
8. Capital Expenditure Budget
9. Research and Development Cost R&D Manager
10. Cash Budgets Finance Manager
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SALES BUDGET:
Sales budget is the most important budget and of primary importance. It forms the
basis in which all the budgets are built up. This budget period. Every quantities and
values of sales to be achieved in a budget in a budget period. Ever effort should be
made to ensure that its figures are as accurate as possible because this is usually the
starting budget (sales being limiting factor on which all the other budgets are built
up). The sales manager should be mode directly responsible for he preparation and
execution of the budget. The sales budget may be prepared according to products,
sales territories, types of customers; salesmen etc., in the preparation of the sales
budget, the sales manager should take into consideration the following factors.
1. Past Sales Figures and Trends.
2. Sale sales men Estimation
3. Plant Capacity
4. Availability of Raw Material and other Supplies
5. General Trade Prospects
6. Orders in Hand
7. Seasonal Fluctuations
8. Financial Aspect
9. Adequate Return on Capital Employed
10. Compeition
11. Miscellanecous Considerations
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PRODUCTION BUDGET:
Production budget is a forecast of the total output of the whole organization
broken down into estimates of output of each type of product with a scheduling of
operations (by weeks and months) to be performed and a recast of the closing finished
stock. This budget may be expressed in quantitative (weight, units et) financial
(rupees) units or both. This budget is prepared after taking into consideration the
estimated sales and the desired closing finished stock of each product. The works
manager is responsible for the total production budget and the departmental managers
are responsible for the departmental production budget. In preparing the production
budget, the following factors are considered.
The time lag between the production in the factor and sales to the customer
should be considered so as to allow fro the time required or the dispatch of goods
from the factory to the place of the customers.
The stock of goods to be maintained both at the factory’s go gown and at he sales
centers.
The level of production needed to meet the sales programme. Monthly production
targets should be fixed and it should be seen that production is kept more or less at a
uniform level throughout the year. The material labor and plant requirements should
be ascertained to have the desired production to meet the sales programme.
The sales and the production are inter-dependant because production budget is
governed by the sales budget and the sales budget is largely determined by the
production capacity and by production costs.
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COST OF PRODUCTION BUDGET;
After determining the volume of output the cost of procuring the output must
be obtained by preparing a cost of production budget. This budget is an estimate of
cost of output planned for a budget period and may be classified into material cost
budget, labor cost budget and overhead budget because cost of production includes
material. Labor and overheads.
MATERIALS BUDGET;
In drawing up the production budget, one of the first requirements to be
considered is material. As we know, materials may be direct or fin direct. The
materials budget deals with the requirements and procurement of direct materials.
Indirect materials are dealt with under the works overhead budget. The budget should
be related to the production budget and the period of the budget should be of short
duration because this budget has an important bearing on the cash budget.
PURCHASE BUDGET:
Purchase Budget is mainly dependent on production budget and material
requirement budget. This budget provides information about the materials to be
acquired from the market during the b period.
Purchase budget should be prepared by the purchase manager by getting relevant
information about capital items, general supplies and direct materials required during
the budget period from other related departments. Like other budgets , the purchase
budget has to be approved by the budget committee. After approval it becomes the
responsibility of the purchases which are not covered by the purchase budget are
made under the following circumstances.
If there is increase in production not anticipated while preparing the purchase budget
and purchase of larger quantities of materials becomes necessary.
If accumulation of stock becomes necessary to avoid shortage of materials.
If overstocking is desired to advantage of lower prices and there is fear that price will
increase in near future. The purchase manager should get additional sanctions from
the higher authorities for making the additional purchases not I covered by the
purchase budget.
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DIRECT LABOR BUDGET:
This budget gives as estimate of the requirements of direct labor essential to
meet the production target. This budget may be classified into labor requirements
budget and requirement budget. The labor requirement budget is developed on the
basis of requirement of the production budget given and detailed information
regarding he different classes of labor e.g., fitters, welders, turner, millers, and
grinders and drillers etc., required for each department, their scales of pay and hours
to be spent. This budget is prepared with a view too enable the personnel department
to carry out programmers of training and training and transfer and to find out sources
of labour needed so that every of effort may be made to remove difficulties arising in
production the available workers in each department, the expected changes in the
labour force during the budget period due to the labour turnovers. This budget gives
information about the personnel specification for the jobs for which workers are to be
recruited, the degree for skill and experience required and the rates of pay. Where
standard costing system is applied, the lacor cost budget is developed on the basis of
standard in the production budget . if standard costing system is not being followed in
the organization, the information of labour cost may be obtained from past records or
estimated cost.
Sometimes another budget known as Manpower budget is prepared. This
budget gives the requirements of direct and indirect labour necessary to meet the
programmer set out in the sales, manufacturing maintenance, research and
development and capital expenditure budget s. the labour terms are expressed of rupee
value, number of labor hours, number and grade of workers etc. this budget makes
provision for shift and overtime work and for the effective training for new workers
on labour cost.
26
MANUFACTURING OVERHEADS BUDGET:
This budget gives an estimate of the works overhead expenses to be in creed in
a budget period to achieve the production target. The budget includes the cost of
indirect material indirect works expenses. The budget may be classified into fixed
cost, charitable cost and semi-variable cost. It can be broken into departmental
overhead budget to facilitate control. In preparing the budget, fixed works overhead
can be estimated on the basis of past information after taking into consideration the
expected changes which may occur during the budget period. Variable expenses are
estimated on the bases of the budgeted output because these expenses are bound to
change with the change in put.
The Cost Account prepares this budget on the basis of figures available in the
manufacturing overhead ledger or the head of the workshop may be asked to give
estimates for the manufacturing expenses. A good method is to combine the estimates
of the Cost Accountant and the shop executive.
ADMINISTRATIVE EXPENSES BUDGET:
This budget covers the expenses incurred in framing policies, directing the
organization and controlling the business operations. In other words, the budget
provides as estimate of the central office and of management salaries. The budget can
be prepared with the help of past experience and anticipated changes. Budget may be
prepared be prepared for each administration department so that responsibility for
increasing such expenses. This budget covers the expenses incurred in framing
policies, directing the organization and controlling the business operations. In other
words, the budget provides an executive. Much difficulty is not experiences in
developing such budget as most of the administration expenses are of a fixed nature.
Although fixed expenses remain constant and are not related to sale volume in the sort
run, they are dependent upon sales in the ling run. With a small change in output, they
did not change. However, if there is persistent fall in output, administration expenses
will have to be reduced by discharging the services of some members of the staff and
taking other economy measures. On the other hand, with persistent increase in output
or business activity, administration expenses will increase but they may lag behind
business activity.
27
BUDGETED INCOME STATEMENT:
A budgeted income statement summarizes all the individual budget i.e., sales
budget, cost of goods sold budget, selling budget, and administrative sales budget.
This budget determines income before taxes. If the tax rate is available net income
after taxes can also be computed.
SELLING AND DISTRIBUTION COST BUDGET:
This budget is the forecast of the cost selling and distribution for budget
period and is clearly related to the sale budget. All expenses related to selling and
distribution of the various products as indicated in the sales budget is included in it.
These expenses are based on the volume of sales set in the sales budget and budget
and budgets are prepared for each item of selling and distribution overhead. Long
term expenses.
As advertisement are spread over more than one period. Selling and
distribution overheads are divided into fixed and variable category with reference to
volume of sales. Separate budgets are prepared for variable and fixed items of selling
and distribution overheads. Certain items of selling and distribution costs as cost of
transport department are included in the departmental production cost budget from
control point of view rather that including in selling and distribution costs budget.
28
PLANT UTILIZATION BUDGET:
This budget lays sown the requirements of plant capacity to carry out the
production as per the production programmer. This budget is terms of convenient
physical units as weight or number of products or working hours.
The main functions of this budget are:
The will show the machine load in each department during the
Budget period
It will indicate the overloading on some departments, machine or group of machine
and alternative courses of actions as working overtime, off loading , procurement or
expansion of plants, sub-contracting etc., can be taken.
Idle capacity in some departments may be utilized by making efforts to increase the
demand for the products by providing after sale service, conducting advertisement
campaign, reducing prices, introducing lucky pries coupons, recruiting efficient sales
staff etc.
CAPITAL EXPENDITURE BUDGET:
The capital expenditure budget gives an estimate of the amount of capital that
may be needed for acquiring the assets required for fulfilling production requirements
a specified in the production budget. The budget is prepared after taking into
consideration in the available productive capacities, building budget etc. The capital
expenditure budget is an important budget providing for acquisition of assets
necessitated by the following factors:
29
RESEARCH AND DEVELOPMENT COST BUDGET
While developing research and development cost budget, it should be clear in
mind that work relating to research and development is different from that relating to
the manufacturing function. Manufacturing function gives quicker results than
Research and development witch may go on for several years. Therefore, these
budgets are established on a long term basis: say for 5 to 10 years which can be
further subdivided into short-term budgets on annual basis. As a rule research
workers are less cost conscious: so they are not susceptible to strict control. A
research and development budget is prepared taking into consideration the research
projects in hand and the new research projects in hand and the new search and
development projects to be taken up. Thus this budget provides an estimate of the
expenditure to be incurred on research and development during the budget period.
After fixation of the research and development cost budget, the research
executive fixes priorities for the various research and development projects and
submits research and development projects authorization forms to the budget
committee. The projects are finally approved by the senior executive. Before giving
the approval, the expenditure on research and development is matched against the
benefits likely to be availed of from the new project; after the approval of the budget,
a close watch is kept on the expenditure so that it may not exceed budget provisions.
It is also seen that extent of progress made is commensurate with the expenditure
incurred.
30
CASH (FINANCIAL) BUDGET:
The cash budget can be prepared by any of the following method:
1. Receipts and payments method
2. The adjusted profit and loss method
3. The balance sheet method
1. Receipts and payments method:
In case of this method the cash receipts from various sources and the cash payments
to various agencies are estimated. In the opening balance of cash, estimated cash
receipts are added and from the total of estimated cash payments re deducted to find
out of the closing balance.
2. The adjusted profit and loss method:
In case of this method the cash budget is prepared in the basis of opening cash and
bank balance of the various assets an liabilities.
3. The balance sheet method:
With the help of budget balances at end except cash and bank balance, a budgeted
balance sheet can be prepared and the balancing figure would be the estimated closing
cash/bank balance.
Thus under this method, closing balances, other than cash/bank will have to be found
out first to be put in the budget balance sheet. This can be done by adjusting the
anticipated.
31
MASTER BUDGET (FINALISED PROFIT PLAN)
The master budget is consolidated summary of the various functional budgets.
It has been defined as “a summary of the budget schedules in capsule form made for
the purpose of presenting, in one report, the highlights of the budget forecast”. The
definition of this budget given by the Chartered Institute of Management Accountant,
England, is as follows :
“Thus summary budget incorporating its components functional budgets and
which are finally approved and employed”.
The master budget is prepared by the budget committee in the basis of co-coordinated
functional budgets and becomes the target summaries functional budget to produce a
budgeted profit and Loss Account and a Budget Balance Sheet as at the end of the
budget period.
FIXED BUDGET:
This budget is drawn for one level of activity and one set of conditions. It has
been defined as a budget which is designed to remain unchanged irrespective of the
volume of output or turnover attained. It is rigid budget and is drawn on the
assumption that there will be no change in the budgeted level of activity. A fixed
budget will, there dour, be useful only when the actual level of activity corresponds to
the budgeted level of activity.
A master budget tailored to single output level of (say) 20,000 units of sales is
a typical example of a fixed budget. But in practice, the level of activity and set
condition will change as a result of internal limitations and external factors like
changes in demand and price shortage of materials and power, acute competition etc.
it is hardly of any use as a mechanism of budgetary control because it does not make
any distinction between fixed, variable and semi-variable costs and provides for no
adjustment in the budget fixed as result of change in cost due to change in level of
activity. It is also not helpful at all in the fixation of price and submission of tenders.
32
FLEXIBLE BUDGET:
The chartered Institute of Management Accountants, defines a flexible budget also
called sliding scale budget as a budget which, by recognizing the difference in
behavior between field and variable costs in relation to fluctuations in output,
turnover, or other variable factors such a number of employees, is designed to change
appropriately with such fluctuations. This, a flexible budget gives different budgeted
costs for different levels of activity. A flexible budget making an intelligent
classification of all expenses between fixed, semi-variable and variable because the
usefulness of such a budget depend upon the accuracy with which the expenses can be
classified. Such a budget is prescribed in the following cases.
Where the level of activity during the year varies from period, either due to the
seasonal nature of the industry or to variation in demand.
Where the business is a new one and it is difficult to foresee the demand.
Where the undertaking is suffering from shortage of a factor o production such
as materials, labors, plant, capacity etc. the level of activity depends upon the
availability of such a factor of production.
Where an industry is influenced by changes in fashion.
Where there are general changes in sales.
Where the business units keep on introducing new products or make changes
in the its products frequently.
Where the industries are engaged in make to order business like ship building.
BASIC BUDGET:
33
A basic budget has been defined as a budget which is prepared for use
unaltered over a ling period of time. This does not take into consideration current
conditions and can be attainable under standard conditions.
CURRENT BUDGET:
A current Budget can define a budget which is related to the current conditions
and is prepared for use over a short period of time. This budget is more useful than a
basic budget, as a target of lays down will be corrected to current conditions.
LONG-TERM BUDGET:
A Long-Term budget can be defined as a budget, which is prepared for period
longer than a year. These budgets help in business forecasting and forward planning.
Capital Expenditure Budget and research and Development Budget are examples of
long-term budgets.
SHORT TERM BUDGET:
This budget is defined as a budget, which is prepared for period less than year
and is very useful to lower levels of management for control purposes. Such budgets
are prepared for those activities the trend in which is difficult to foresee over longer
periods. Cash budget and material budget are examples of short term budget
Performance Budgeting has its origin in U.S.A. after Second World War. It
ties to rectify some of the shortcoming in the traditional b. in the traditional budget
amount are earmarked for the objects of expenditures such as salaries, travel, office
expenses, grant in aid etc. in such system of budgeting the money concept was given
more prominence i.e., estimating or projection rupee value for the various accounting
heads or classification of revenue and cost. Such system of budgeting was more
popularly used in government department and many business enterprises. But is such
system of budgeting control of performance in terms of physical units or the related
costs cannot be achieved.
Performance oriented budgets are established in such a manner that each item
34
of expenditure related to a specific responsibility centre is closely linked with the
performance of that centre. The basic issue involved in the fixation of performance
budgets is that of developing work programmers and performance expectation by
assignees responsibility, necessary for the attaining of goals and objectives of the
enterprise, it involves establishment or well defined centers of responsibilities,
establishment for each responsibility centre-a programmed of target performance in
physical units, forecasting the amount of expenditure required to meet the amount of
expenditure required to meet the physical plan laid down and evaluation of
performance.
ZERO BASED BUDGET:
This budget is the preparation of budget starting from Zero or from a clean
state As a new technique it was proposed by patter peal of Texas Instruments inc..
USA. This technique was introduced in the budgeting in the state of Georgia by Mr.
Jimmy Carter who was then the Government of that state. ZBB was tried in federal
budgeting as a means o controlling state expenditures.
The use of zero based budgeting s a managerial tool has become increasingly
popular since the early 1970’s It is steadily gaining acceptance in the business world
because it is providing it utility as a tool integrating the managerial function of
planning and control. ZBB is not based on the incremental approach and previous
year’s figures are not adopted as a bade. Rather, zero is taken as a base of the name
goes. Taking Zero
As a base, a budget is developed on the basis of likely activities for the future
35
period. In ZBB, by declining the budget from the past, the past mistakes are not
repeated. Funds required for any for the next budget period should be obtained by
presenting a convincing case. Funds will not be available as a matter of course.
The most important advantage of a budgetary control is to enable management
conduct business in the most efficient manner because budgets are prepared to get the
effective utilization and resources and the realization of objectives as efficiently.
It lies down as objective for the business as a whole even though a monetary
reward is not offered the budget becomes a game –a goal to achieve or a target to
shoot at – and hence it is more likely to be achieved or hit that if there was no
predetermined goal or target. The budget is an impersonal policeman that maintains
ordered effort and brings about efficiency in result. It ensures effective utilization of
men, materials, machines and money because production is planned according to the
availability of these items.
Everyone working in the concern knows what exactly to do because budgetary control
laid emphasis on the staff organization. It ensures that individual responsibility are
clearly defined and that the required authority commensurate with the responsibility is
delegated so that buck passingay is prevented when the budgeted results are not
achieved.
Budgetary control takes the help of different levels of management in the
preparations of the budget. Budget finally approved represents the judgment of the
entire organization and not merely that of an individual or a group of individuals.
Thus, it ensures team work.
Management by exception is possible because of actual and budgeted results points
out weak spots so that remedial action is taken against week spots which are not in
conformity with the budgeted performance.
Budgetary control crates conditions for setting up a system standard costing.
It is helpful in reviewing current trends in the business and in determining further
policy of the business because current and future treads are studied in the preparation
of the budget.
36
DISADVANTAGES OF A BUDGET:
While budgets may be essential part of activity they do have number of
disadvantages, particularly in perception terms.
Budget can be seen pressure devices imposed by management, thus resulting in:
1. Bad labor relations
2. Inaccurate record-keeping.
Departmental conflict arises due to:
1. Dispute over resources allocation
2. Departmental blaming each other if targets are not attained. It is difficult to
reconcile personal/individual and corporate goals. 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 department. Responsibility
versus controlling, i.e. some costs are under the influence of more than one person,
e.g. Power costs.
37
COMPANY PROFILE
GENESIS
This is the statewide enterprise of co-operatives for the dairy development. The
Andhra Pradesh dairy development co-operative federation (APDDCF) with million
of farmers as its members for dairy development. Its genesis in 1981 with a three tire
cooperative structure (Andhra Co-operative structure).
ABOUT MOTHER DIARY
The Nalgonda –Rangareddy Co-operative Milk Procedures Union Limited was
registered on 25-02-1986 to cater the needs of milk procedures of two districts
Nalgonda and Rangareddy. The union is having 14 milk chilling centers in Nalgonda
district and 3 in Rangareddy District. A feed mixing plant at Bhongir so as to supply
cattle feed to formers of the two districts .The mother dairy was started in 1987 at
Hayath Nagar with the capacity of 2,00,000 liters per day. In 1989 an extra unit in
mother dairy was inaugurated by the humble chief minister N.T Rama Rao Garu to
supply the homogenized, thick milk with high quality. At first this unit was started as
automatic milk vending i.e., taking the milk from the factory and sending it to the
shops where they give this milk to the consumers by putting coins.
In September 1992, mother dairy was merged with’ Nalgonda, Rangareddy Co-
operation milk producers’ union ltd. And it has been named as “NARMUL”
(MOTHER DAIRY) “nalgonda- rangareddy mutual union ltd”. Presently this union is
renamed as NARMAC’s “Nalgonda-Rrangareddy Milk Mutual Co-operative Union
ltd”. From 15-01-2003 and is paying highest procurement price to its members when
compared to the other union in the state. As automatic milk vending i.e., taking the
milk from the factory and sending it to the shops where they give this milk to the
consumers by putting coins.
38
In September 1992 , mother dairy was merged with’ Nalgonda , Rangareddy
Co-operation milk producers’ union ltd. And it has been named as
“NARMUL”(MOTHER DAIRY) “Nalgonda-Rangareddy Mutual Union
ltd” .presently this union is renamed as NARMAC’s “Nalgonda-Rangareddy Milk
Mutual Aied Co-operative Union ltd from 15-01-2003 and is paying highest
procurement price to its members when compared to the other union in the state.
AT PRESENT THE UNION IS PROCESSING MILK
Milk producers co-operatives societies 358
Milk producers association centers 776
Milk collection routes 61
Total milk producers supplying milk 66,700
The company during the flush section (Sep - March) and “Lean “Sean (April-Aug ) of
every year, maximum and minimum PURITY and QUALITY, which make it , trusted
Name in thousands of households. Mother dairy is the determiner people who have
setup a good marketing network.
The company at present linked up with Mother Dairy India ltd. From 15th January
2005.
39
ACTIVIES OF THE COMPANY
● Milk collection from rural areas
● Processing milk and convert milk into various milk products
● Taking up of fodder development activities.
● Undertaking various technical input activities such as artificial insemination.
● Foot and mouth vaccination etc.,
OBJECTIVES
1. Organize co-operatives if milk producers at village levels.
2. Provides essential inputs to enhance milk production, feed and fodder products
cross
breeding programmers, veterinary aid ,and take up development programs to
provide
effective leadership and managements skills to the milk producers to help them
manage their own co-operatives.
3. Develop infrastructure for processing milk and manufacturing of dairy products.
4. Fulfill the consumer needs of liquid milk and milk products in two districts new
products and packaging lines in tune with the changing scenario of consumer
market and needs.
5. Integrate dairy development with over all rural development efforts and Provide
greater employment to the rural poor.
6. Today there are 7,000 co-operatives with 300 all –women co-operatives and
membership of over 8 lakh people across two districts.
40
BRAND NAME:
Mother Dairy release its products into the markets with the brand name “Mother
Dairy’ written in white colour on blue colour four sided double lined background
which is very good decent in appearance.
LOGO OF THE COMPANY
The logo of the company is a laughing cow with a bell on its neck, on a milk cauldron
followed by the name “NARMAL” and a right human hand.
MARKETING STRATEGY IN PACKAGING FILMS
The films used for packing are white in four colour with their brand name –Mother
Dairy in middle followed by the milk /milk product name both in English and Telugu
and with the net weight. The also has there company logo and
MARKETED BY
Processed and packed by
Ingredients
Quantity
MRP
Best before both in Telugu and in English and a 3d symbol for symbolizing fresh and
pure.
The union is implementing various schemes for its members for improving milk
production, such as first aid, medicine, fertility, camps. Fodder development schemes,
technical assistance and insurance schemes for its members and their cattle.
41
MILK AND MILK PRODUCTS
Mother dairy products are
Milk in two form
Pasteurized toned milk in three volumes
Pasteurized double toned milk in two volumes
Curd in one volume
Buttermilk in one volume
MILK
The milk taken form various milk supplies is sent into the market in 2 different
forms.
PASTEURIZED TONED MILK
►has milk fat 3.0% and milk SNF 8.5
►best before 2days when stored under refrigeration below 8-C
►Homogenized
►available in 200ml,500ml, 1 litre also
PASTEURIZED DOUBLE TONED MILK
►has milk fat 1.5%and milk SNF 8.5 %
►Best before 2 days when stored under refrigeration below 8C
►Homogenized
►made from toned milk
►Available in 200ml, 500ml, sachets
CURD
►has milk fat 3.0% and milk SNF 8.5%
►best before 2 days when stored under refrigeration below 4C
►made from homogenized and pasteurized toned milk
►Available in 200g sachets
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BUTTER MILK
►has milk solids, water, salt, spires and conditions
►Best before 4 days when stored below 8C
►made from pasteurized milk
► Salted
► Available in 200ml sachets
All These Products Are
Processed and Packed by Marketed by
NARMUL LTD. Mother Dairy India ltd.
Mother Dairy Patparganj
Hayatnagar Delhi
DEPARTMENTS IN THE COMPANY
►Production department
43
►Marketing department
►Material or purchase department
►Plant
►Finance or accounts departments
►Processing department
►Personal department
►Pre pack department
►Civil department
►Transport department
►Quality control department
►Butter & Ghee
►Security department
►HRD activities in the company
TRAINING AT MOTHER DAIRY
They are conducting regular training programmers in all units to Cooperative
members for improving milk production and to make aware of first aid, Medicine,
fertility methods, cross breading programmers etc., through audio visual aids, vide
clippings and other appliance. They are conducting regular training programmers for
employees to maintain high quality of all milk production through NDDB.
INDUSTRAIL PROFILE
Milk is India’s NO .1 farm of commodity in terms of its contribution to the
44
national economy. In 1994-95, the value of its output based producer price Rs.500051
millions exceeding that from paddy (rive). Not withstanding its top place and the
many benefits it bestows on the lower rungs of the rural society, dairying has not
received due attention from planners, economist, social scientist and others, For
example. The investment in dairying made under the 5 year plans is not commeasured
rate with its output. Consequently, its potential has not been adequately tapped.
India’s dairy market is multilayered. Its shaped like a pyramid with the base
made up of vast market for low cost milk the bulk of the demand for milk is among
the poor in urban areas whose individuals requirement is small maybe a glass full for
use has white beard for their tea and coffee. Nevertheless, it acts sizable volume
millions of liters per day. In the major cities lies an immense growth potential for
modern sectors. Presently, rarely 778 out of 3700cities and towns as served by its
milk distribution . Network, dispensing hygienically packed wholesome, quality,
pasteurized milk . According to one estimate, the packed milk segment would double
in the next 5 years, giving both estimate, the packed milk segment would in the next
five years, giving both strength and volume to the modern sector, The narrow tip at
the top is a small but an affluent market for western type milk products.
NATIONAL DAIRY DEVELOPMENT BOARD
45
ABOUT NDDB
It was found in 1965 to replace the exploitation with empowerment, tradition
with modernity stagnation with growth transforming dairying into an instrument for
the development of India.
The National Dairy Development Board was created to promote, finance and
support producer-owned and controlled organizations .NDDB’s programmers and
activities seek to strengthen farmer cooperatives and support national policies that are
favorable to the growth of such institutions. Fundamental to NDDB’s efforts are
cooperative principles and cooperative strategies.
GENESIS
NDDB began its operations with the mission of marketing dairying a vehicle
to a better future for millions of pressrooms milk producers. The mission achieved
thrust and direction with the launching of “Operations Flood”, Operation Flood’s third
phase was completed in 1996 and has to credit a number of significant achievements.
ACHIEVEMENTS
46
As on March 2006, India’s 1,17,575 village dairy cooperatives federated into
s and 15 federations procured on average 21.5 million liters of milk every day. 12.4
million farmers are presently members of village dairy cooperatives.
Since its inception, the Dairy Board has planned and spearheaded India’s Dairy
programmers by placing dairy development in the hands of milk producers and the
professionals they employ to manage their cooperatives. In addition, NDDB also
promotes other commodity-based cooperatives, allied industries and veterinary
biological on an intensive and nation-wide basis.
CONSTTUTION
The National Dairy Board – initially registered as a society under the Societies Act
1860 -- was merged with the erstwhile Indian Dairy Corporation, a company formed
and registered under the Companies Act 1956 , by an Act of India’s Parliament –the
NDDB Act 1987 (37 of1987), with effect from 12 October , 1987 The new body
corporate was declared an institution of national importance by the Act.
State 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
47
All India 72128 75424 78286 80607 84406 86159 88082 90715
Andhra Pradesh
4473 4842 5122 5521 5814 6584 6959 7252
Arunachal Pradesh
43 45 46 42 42 46 46 48
Assam 719 725 667 683 682 705 727 739
Bihar 3420 3440 3252 2489 2664 2869 3180 2974
Goa 38 41 44 45 45 46 48 57
Gujarat 4913 5059 5269 5312 5862 6089 6421 6745
Haryana 4373 4527 4679 4850 4978 5124 5221 5222
HimachalPradesh
714 724 742 761 756 773 786 870
J&K 1167 1232 1286 1321 1360 1389 1414 1422
Karntaka 3970 4231 4471 4599 4797 4539 3857 3917
Kerala 2343 2420 2532 2605 2718 2419 2111 2025
Madhya Pradesh
5377 5442 5519 4761 5283 5343 5388 2206
Maharashtra 5193 5609 5707 5849 6094 9238 6379 6567
Manipur 62 65 68 66 68 69 71 75
Meghalaya 59 61 62 64 66 68 69 71
Mizoram 17 20 18 14 14 15 15 16
Nalland 46 48 48 51 57 58 63 69
Orissa 672 733 850 876 929 941 997 1283
Punjab 7165 7394 7706 7777 7932 8173 8391 8554
Rajasthan 6487 6923 7280 7255 7758 7789 8054 8310
Sikkim 35 35 35 35 37 45 48 46
Tamil Nadu 4061 4273 4586 4910 4988 4622 4752 4784
Tripura 57 76 77 77 90 79 84 46
Uttar Pradesh
12934 13418 14152 13857 14648 15288 15943 16512
West Bengal 3415 3441 3456 3471 3515 3600 3686 3790
A&N Islands 22 22 23 22 23 26 25 24
Chandigarth 43 43 42 43 43 43 44 43
D&N Haveli 4 8 8 8 8 8 8 4
Products of Indian Dairy Industry
Production in India
48
Table.1 (000 tones)
Year Production (Million Tones) Per Capita Availability (gms/day)
1996-97 55.7 1781997-98 58.0 1821998-99 60.6 1871999-2000 63.8 1942000-01 66.2 1972001-02 69.1 2022002-03 72.1 2072003-04 75.4 2132004-05 78.3 2172005-06 80.6 2202006-07 84.4 2252007-08 86.2 2302008-09 88.1 2312009-10 90.7 229
ACHIVEMENTS OF DAIRY CO-OPERATIVES.
A commitment to help rural producers help themselves has guided the Dairy Board’s
work for mere than 40 years. This commitment has been rewarded with achievements
made by cooperative dairies in milk production, employment generation, and per
capita availability of milk, foreign exchange savings and increased farmer incomes.
FACTS AT A GLANCE
The Dairy Cooperative Network (As March 2006)
● Includes 170 milk unions
● Operates in over 346 districts
● Covers around 1, 17,575 village level societies
● Is owned by around 12.4 million farmer members of which 3.2 millions were
women
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Milk Production
● India’s. Milk production increased from 21.2 million MT in 1968-69 to 97.1
million MT in 2005-06.
● Per capita availability of milk was 241grams per day in 2005-06, up from
112grams per day in 1968-69.
● India’s 3.9 percent annual growth of milk production between 1995-96 and
2005-06 surpasses the 2 per cent growth in population; the net increase in
availability is around 2 per cent per year.
Marketing
● In 2005-06, average daily cooperative milk marketing stood at 168.06 lakh
liters; annual growth has averaged about 5.8 per cent compounded over the
last five years.
● Dairy Cooperatives now market milk in all metros, major cities and mor than
800 towns/cities.
● during the last decade, the daily milk supply to each 1000 urban consumer has
increased from 17.5 to 58.8 liters.
50
Innovation
● Bulk vending –saving money and the environment.
● Milk travels as far as 2,200 kilometers to deficit areas, carried by innovative
rail and road milk tankers.
● Automatic Milk Collection Unit (AMCU) and Bulk Milk Cooler (BMC) at
grass root level-preserve quality and reduce post-procurement losses.
51
Operation Flood Achievements
Table.2
State/UTNo of DCAOrganized(Cumulative)
FarmerMembers(000)
WomenMembers(000)
MilkProcurement(TKgPD)
MilkMarketing(TLPD)
Andhra Pradesh 4,647 779 144 1,087 1,130
Assam 66 3 0 3 7
Bihar 5,183 265 39 553 303
Delhi NA NA NA NA 2,350
Gujarat 12,025 2,458 633 6,441 2,353
Goa 175 19 3 52 90
Haryana 5,382 261 38 405 278
Himachal Pradesh 391 20 7 25 20
Jammu & Kashmur ** ** ** ** **
Jhakhand 80 2 0 6 191
Karnataka 10,114 1,838 527 2,961 1,711
Kerala 3,282 750 132 764 848
Madhya Pradesh 5,008 246 37 457 315
Maharashtra 19,537 1,637 398 2,802 2,749
Nagaland 78 3 0 4 4
Orissa 2,164 142 60 203 158
Puducherry 104 36 16 57 70
Punjab 6,749 405 50 784 526
Rajasthan 12,714 594 152 1,557 1,014
Sikkinm 209 7 0 8 8
Tamil Nadu 7,832 1,876 639 2,085 1,507
Tripura 84 4 1 3 9
Uttar pradesh 18,776 861 246 828 430
West Bengal 2,449 185 65 336 706
ALL-INDIA 1,17,416 12,416 3,194 21,447 16,808
PERSPECTIVE OF 2010
The Perspective 2010 plan of the Dairy Board maps the future of dairying in
52
India, setting realistic goals for Strengthening Cooperative business, Production
Enhancement Assuring Quality, and creating a Information and Development
Research. The plan was realized with the successful completion of the Operation
Flood Programmer and has been developed by the Stat Milk Marketing Federations
and the Milk Producers’ Cooperative Unions in consultation with the Dairy Board,
The Perspective 2010 goals and strategies to meet them have been drawn by its actual
implementers – Federation and unions and supported by NDDB.
THE WINNING EDGE
The aspects of India’s modern dairy sector are particularly noteworthy vast market for
dairy products are being built as disposable incomes increase. Its focus is increasingly
affluent middleclass, numbering some 300 million all most the population of the
United States which is confined to well define urban pockets and is easily accessible.
Milk occupies pride of place as the most coveted food in the diet, after wheat and rice.
Milk based sweets are culinary delight in all homes through out the years.
The milk production is predominantly rooted in the cooperative system. Its focus is in
the small rural farmer having 1 or 2 cows or buffaloes, yielding 2 or 3 liters of milk
per animal. This system is bases of operating flood, the world’s largest dairy
development programmer.
The preferred dairy animal is the buffalo. Some 65% of the world buffalo milk
produced in India. It has 30% higher total solids compare to cow milk an average of
16% vs. 12% for cow milk. Valued for its high fat content (7% vs. 3.5%), it is high
volume in calcium, phosphorus, lactose and proteins. Buffalo milk is the delight of the
milk processor for its more profitable handling.
EMERGING DAIRY MARKETS
Food service instuitional market
53
It is growing at double the rate of consumer market
Defense market
An important growing marker for quality products at reasonable prices.
Ingredients markets
A boom is forecast in the market of dairy products used as raw material in
pharmaceutical and allied industries.
Parlor market
The increasing away from home consumption trend opens new vistas for ready to
serve dairy products, which ride piggyback on the fast food revolution sweeping the
urban area.
India with her sizable dairy industry growing rapidly and on the path of
modernization would have palace in the sum of prosperity for many decades to come.
The one index to the statement is the fact that the projected total milk output over the
next 15 years (1995-2010) would exceed 1457.6 million tones, which is twice the
total production of the past 15 years.
ANALYSIS AND INTERPRETATION
54
BUDGET ESTIMATIONS OF MOTHER DAIRYDETAILS OF INCOME 2005-06
Table3 (RS. IN LAKHS)S.NO PARTICULARS BUDGETED ACTUALS VARIENCE
INCOMEMILK SOLD 6771 6627 144 ADVSELLING OF MILK ITEMS a)GHEE 363.67 291.1 72.57 ADVb)CHEESE 792 709.74 82.26 ADVc)CURD 47.45 59.8 12.35 FAVd)SKIMMING MILK NIL 0.07 0.07 FAVe)BUTTER MILK 03 02.84 0.16 ADVf)MILK POWDER NIL 0.07 0.07 FAVCATTLE FEED 238 221.5 16.5 ADVMILKSUPPIERS SHARE 12 13.01 1.01 FAVBUILDING RENT 11.59 14.9 3.31 FAVOTHER INCOMES 39 36.23 2.77 ADVBANK LOAN 400 360 40 ADVCLOSING STOCK 101.28 25.25 76.03 ADV
TOTAL 8778.99 8361.51 417.48 ADV
DETAILS OF EXPENSES BUDGETED ACTUALS VARIANCE 2005-06
TABLE4 RS. IN LAKHSMILK PURCHASES 4400 3910.78 489.22 FAV
55
MILK PURCHASED FROM OTHER UNIONS
1002 1046 44 FAV
TRANSPORT CHARGES FOR MILK 235 214 21 FAVMILK PRODUCTS PURCHASEDA)MILK POWDER 400 460.94 60.94 ADVB)CHEESE NIL NIL NILCATTLE FEED MATERIAL 180 165.27 14.73 FAVPURCHASING BAGS FOR CATTLE FEED 8 7.88 0.12 FAVPURCHASING OF STORES MATERIAL 40 35.51 4.49 FAVPURCHASING OF POLYTHIN FILM NIL 252.33 252.33 ADVA)OUR UNION 270 NIL 270 FAVOTHER UNIONS 70 11.52 58.48 FAVPACKING MATERIAL 15 297.91 282.91 ADVELECTRICITY,DIESEL CHARGES 310 48.87 261.13 FAVREPAIRS IN PLANT AND MACHINERY 51.74 99.28 47.54 ADVREPAIRS OF VEHICLES 105.2 14.03 91.17 FAVMANTENANCE AND REPAIRS OF BUILDING 15 NIL 15 FAVOFFICE REPAIRS AND MAINTENANCEA)FURNITURS AND TYPE WRITERS 2.1 2.1 NIL FAVB)COMPUTERS NIL NIL NILMAINTENANCE OF LABORATORY 98.86 98.32 0.54 FAVADMINISTRATION CHARGES 2 1.85 0.15 FAVFRIGHT CHARGES 4.75 4.35 0.4 FAVCATTLE FEED TRANSPORT NIL NIL NILEMPLOYEES SALARIESa)PENSION PROVIDENT FUND 590 581.4 8.6 FAVPRINTING AND STATIONARY 1.9 NIL 1.9 FAVMARKETING EXPENSES 15 1.8 13.2 FAVSALES TAX 30 14.6 15.4 FAVCENTREL TAX 20 28.93 8.93 ADVINCOME TAX NIL NIL NILAUDITOR FEESA)FREE AUDIT FEES NIL NIL NILB)ANNUAL AUDIT FEE NIL NIL NILC)TRANSPORT EXPENSES NIL NIL NILCONVERSION EXPENSESA)PIECE WORKLABOUR CHARGES 140 138.82 1.18 FAVB) TRANSPORT CHARGES 20 15.1 4.9 FAVVRS 20 21.24 1.24 ADVDIVIDEND 15 15.02 0.02 ADVOPENING STOCK NIL NIL NIL
INTEREST ON LONG TERM LOANA)NDDB 106.26 95.7 10.56 FAVB)APCOB,CANARA BANK 400 400 NIL FAVBUILDING AND MACHINERY MATERIALS 130 123 7 FAVTOTAL 8697.81 8106.55 591.26 FAVNET PROFIT 81.18 254.96 173.78 ADV
Table.5
56
DETAILS OF UTILITIES 2005-06 RS. IN LAKHS UTILITIES BUDGETED ACTUALS VARIANCEA)ELECTRICITY CHARGES 164 157.36 6.64 FAVB)GENERATOR DIESEL 164 29 135 FAVC)WATER CHARGES 164 14.59 149.41 FAVD)PERNUS OIL 164 96.96 67.04 FAVTOTAL 656 297.91 358.09PLANT AND MACHINERYREPAIRSA)OIL AND LUBRICANTS 1.8 1.65 0.15 FAVB)REPAIRS 43 39.66 3.34 FAVC)FACTORY LICENSE FEES 0.1 0.1 NIL FAVD)BOILER LICENSE FEES 0.04 0.04 NIL ADVE)AMONIA GAS 0.85 0.81 0.04 FAVF)SALT 0.55 0.52 0.03 FAVG)PURCHASE OF SPARE PARTS 5.4 4.96 0.44 FAVTOTAL 51.74 47.74 4 FAVREPAIRS OF VEHICLESA)DIESEL 85 80.37 4.63 FAVB)OIL ANDLUBRICANTS 2.2 2.1 0.1 FAVC)TAX INSURANCE 3.5 3.42 0.08 FAVD)REPAIRS 14.5 13.39 1.11 FAVTOTAL 105.2 99.28 5.92 FAVADMINISTRATIVE EXPENSES1)BANK CHARGES 8.75 8.07 0.68 FAV2)MANAGERS MEETING CHARGES 0.25 0.24 0.01 FAV3)BOARD MEETING CHARGES 0.7 0.62 0.08 FAV4)GENERAL BODY MEETING EXPENSES
1.2 1.17 0.03 ADV
5)T.A,D.A 1 0.92 0.08 FAV6)HOUSE RENT FOR CHAIRMAN 0.45 0.44 0.01 FAV7)CASH INSURANCE NIL NIL NIL8)INSURANCE 2 2.02 0.02 ADV9)RENT 0.35 0.34 0.01 FAV10)ELECTIONS EXPENSES 8 7.56 0.44 FAV11)CAR RENT 0.4 0.45 0.05 ADV12)MEETING EXPENSES 1.6 0.4 1.2 FAV13)LEGAL FEES 0.09 0.09 NIL FAV14)FESTIVAL EXPENSES 0.22 0.22 NIL FAV15)NEWS PAPER CHARGES 0.4 0.42 0.02 ADV16)POSTAGE 5.2 4.8 0.4 FAV17)TELEPHONE CHARGES 0.3 0.27 0.03 ADV18)DISTRIBUTORS MEETING CHARGES
6.55 6.24 0.31 FAV
19)MUNCIPALTAXES 0.45 0.42 0.03 FAV20)PURCHASE COMMITTEECHARGES
15.5 14.4 1.1 FAV
21)PRIVATE SECURITY SALARY 5.5 5.22 0.28 ADV22)TENDER NOTIFICATION 5.9 5.42 0.48 ADV23)EMPLOYEES TRAVELLING EXPENSES
0.2 NIL 0.2 FAV
24)TRAINING CHARGES 0.3 0.28 0.02 FAV
57
25)AUDITORS TRAVELLING EXPENSESE
NIL NIL NIL
26)STORES INSURANCE 0.7 0.69 0.01 FAV27)STOCK INSURANCE NIL NIL NIL28)TRANSPORT COMMITTEE CHARGES
2.5 2.5 0 FAV
29)GENERAL LICENSE EXPENSES NIL NIL NIL30)STAFF UNIFORM 2 1.96 0.04 FAV31)MAY DAY EXPENSES 28.35 33.16 4.81 ADV32)TYPING CHARGES NIL NIL NILTOTAL 98.86 98.32 0.54 FAVMARKETING EXPENSESA)ADVERTISMENT EXPENSES NIL NIL NILB)AGMARK CHARGES 0.15 0.15 NIL FAVC)A.P.D.D.C.F COMMISSION NIL NIL NILD)FEED TRANSPORT CHARGES NIL NIL NILE)MILK TRANSPORT CHARGES NIL NIL NILF)GHEE TRANSPORT CHARGES NIL NIL NILG)SALES EXECUTIVE SALARIES NIL NIL NILH)VENDING UNION CHARGES NIL NIL NILI)AGENT INCENTIVES 1.75 1.65 0.1 FAVTOTAL 1.9 1.8 0.1 FAV
DETAILS OF CIVIL CAPITAL EXPENSES 2005-06 RS. INLAKHSBUDGETED ACTUALS VARIANCE
58
MILK COOLING SECTION MALLEPALLY
A)3RD PHASE ENTERTAINMENT 1 NIL 1 FAVB)COMPOUND WALL CONSTRUCTION 4.5 NIL 4.5 FAVC)COMPRESSOR BED NIL NIL NILMILK COOLING SECTION KODADAA)REFRIGERATION NIL 8.8 8.8 ADVB)OFFICE RENEVATION 1 NIL 1 FAVMILK COOLING SECTION MOTHKURA)OFFICE CONSTRUCTION NIL 0.78 0.78 ADVMILK COOLING SECTION RAJAPETA)GUEST HOUSE CONSTRUCTION NIL 46.16 46.16 ADVMILK COOLING SECTION SURYAPETA)COMPRESSOR BED NIL NIL NILMILK COOLING SECTION ALERUA)FARMERS GUEST HOUSE 1.5 NIL 1.5 FAVB)BATHROOMS 1.25 NIL 1.25 FAVC)COMPOUND WALL 27 NIL 27 FAVMILK COOLING SECTION TANDURA)COMPOUND WALL CONSTRUCTION 1 0.13 0.87 FAVMILK COOLING SECTION MAALA)CONSTRUCTION FOR FEED 1 NIL 1 FAVMILK COOLING SECTION MIRYALAGUDA
A)REFRIGERATION EXPENSES 3 NIL 2 FAVMILK COOLING SECTION SURYAPETA)GATE CONSTRUCTION 2 NIL 2 FAVMOTHER DAIRY HAYATHNAGARA)COLD STORAGE CONSTRUCTION 2.65 23.2 20.55 ADVB)E.T.PLANT 12 NIL 12 FAVC)FLAVOURED MILK PLANT 3 NIL 3 FAVD)COMPOUND WALL CONSTRUCTION 1 NIL 1 FAVE)BOREWELLS 8.1 NIL 8.1 FAVF)C.C.ROAD CONSTRUCTION NIL NIL NILTOTAL 70 79.07 9.07 ADV
Table.6
Table.7 DETAILS OF PURCHASING 2005-2006 RS. IN LAKHS
BUDGETED ACTUALS VARIANCE
59
OFFICE EQUIPMENTA)OFFICE EQUIPMENT,CALCULATORS
2 NIL 2 FAV
B)PURCHASING OF COMPUTERS 2 NIL 2 FAVC)FURNITURE ALMARAHS 0.2 NIL 0.2 FAV
DAIRY ITEMSMILK CANS 6 4 2 FAVMILK CRAYTES 8 8 NIL FAVTOTAL 18.2 12 6.2 FAV
PURCHASING OF PLANT AND MACHINERYMOTHER DAIRY1)FREE PACK MACHINE 20.9 28.01 7.11 ADV2)FREE PACK SECTION 20.9 10.23 10.67 FAVTOTAL 41.8 38.24 3.56 FAV
INTERPRETATION OF 2005-2006
INCOME:-In this year milk sold is less than budgeted and also less income generated
60
from the selling of milk items. Cattle feed items, milk suppliers share, building rent
are were favorable but other incomes columns showed unfavorable items which
resulted that budgeted are more than actual. So finally ended up with less income
compare to budgeted.
EXPENSES:-But in the expenses net profit gained in actuals is more because of less
in the total expenses. Other expenses such as electricity charges, purchasing bags for
cattle feed, packing material, and repairs of vehicles are also increasing compared to
budgeted. It is good sign
CIVIL CAPITAL EXPENSES:-The civil capital expenses made is more because
concentration given on works such as construction of cattle feed building,
construction of cooling section building in kodada, miryalaguda, hayathnagar etc.,
concentration is on construction.
DETAILS OF PURCHASE:-Details of purchase is less in both under machinery and
office. Dairy items like milk cans and crates are given more importance.
BUDGET ESTIMATIONS OF MOTHER DAIRYDETAILS OF INCOME (2006-07)
61
Table.8 RS. IN LAKHS
SNO PARTICULARS BUDGETED ACTUALS VARIANCE
INCOME1 MILK SOLD 4875 4804 71 ADV2 SELLING OF MILK
ITEMSa)GHEE 660 725 65 FAVb)CHEESE NIL 412 412 FAVc)CURD NIL 40 40 FAVd)SKIMMING MILK NIL NIL NILe)BUTTER MILK NIL 4 4 FAVf)MILK POWDER NIL 9 9 FAV
3 CATTLE FEED 140 223 83 FAV4 MILK SUPPLIERS
SHARE25 20 5 ADV
5 BUILDING RENT 10 18 8 FAV6 OTHER INCOMES 20 20 NIL7 BANK LOAN 300 380 80 FAV8 CLOSING STOCK 780 723 57 ADV
TOTAL 6810 7378 568 FAV
Table.9 DETAILS OF EXPENSES 2006-2007 RS IN LAKHS
BUDGETED ACTUALS VARIANCE
62
1 MILK PURCHASES 3580 3350 230 FAV2 MILK PURCHASED FROM OTHER UNIONS 100 315.8 215 ADV3 TRANSPORT CHARGES FOR MILK 160 185 25 ADV4 MILK PRODECTS PURCHASED
A)MILK POWDER 300 537 237 ADVB)CHEESE NIL NIL NIL
5 CATTLE FEED MATERIAL 135 225 90 ADV6 PURCHASING BAGS FOR CATTLE FEED 5 6 1 ADV7 PURCHASING OF STORES MATERIAL 25 20 5 FAV8 PURCHASING OF POLYTHIN FILM
A)MILK 37.5 10.6 68.5 FAVB)GHEE 37.5 10.7 26.8 FAVC)GHEE 37.5 3 34.5 FAVD)BUTTER MILK 37.5 0.45 37.05 FAV
9 PACKING MATERIAL NIL 15 15 ADV10 ELECTRICITY,DIESEL CHARGES 225 217 8 FAV11 REPAIRS IN PLANT AND MACHINERY 50 53.7 3.7 ADV12 REPAIRS OF VEHICLES 92 85.75 6.25 FAV13 MAINTENANCE AND REPAIRS OF
BUILDING20 20 NIL FAV
14 OFFICE REPAIRS AND MAINTENANCEA)FURNITURES AND TYPEWRITERS 1 0.45 0.55 FAVB)COMPUTERS 0.5 0.8 0.3 ADV
15 MAINTENANCE OF LABORATORY 0.3 0.1 0.2 FAV16 ADMINISTRATION CHARGES 58.45 60.7 2.25 ADV17 EMPLOYEES SALARIES
a)PENSION PROVIDENT FUND 450 380 70 FAVPRINTING AND STATIONARY 8 8 NIL FAVMARKETING EXPENSES 52 37.75 14.25 FAV
SALES TAX 10 50 40 ADVCENTRAL TAX NIL 10 10 ADVINCOME TAX NIL 50 50 ADV
18 AUDITOR FEESA)FREE AUDIT FEES 2.75 2 0.75 FAVB)ANNUAL AUDIT FEES NIL 1 1 ADVC)TRANSPORT EXPENSES NIL NIL NIL
19 CONVERSION EXPENSESA)PIECE WORK LABOUR CHARGES 55 80 25 ADVB)TRANSPORT CHARGES 55 40 15 FAV
20 VRS 85 27.25 57.75 FAV21 DIVIDEND NIL 15 15 ADV22 OPENING STOCK 510 510 NIL ADV
TOTAL 6130 6423.45 293.45 ADVCASH PROFIT(6180-6130) 680 954.55 274.55 ADV
23 INTEREST ON LONG TERM LOANA)NDDB 175 411 230 ADVB)APCOB 350 358.55 855 ADV
24 DEPRECIATION ON BUILDING 130 115 15 FAVTOTAL 6785 7308 523 ADVNET PROFIT 25 70 45 ADV
Table.10
DETAILS OF UTILITIES 2006-07 RS. IN LAKHS
63
UTILITIES BUDGETED ACTUALS VARIANCEA)ELECTRICITY CHARGES 56.25 160 103.75 ADVB)GENERATOR DIESEL 56.25 6 50.25 FAVC)WATER CHARGES 56.25 2.75 53.5 FAVD)PERNUS OIL 56.25 48.25 8 FAVTOTAL 225 217 215.5 FAVPLANT AND MACHINERYREPAIRSA)OIL AND LUBRICANTS 7.14 1.25 5.84 FAVB)REPAIRS 7.14 50 42.86 ADVC)FACTORY LICENSE FEES 7.14 0.35 6.79 FAVD)BOILER LICENSE FEES 7.14 0.15 6.99 FAVE)AMONIA GAS 7.14 1.75 5.39 FAVF)SALT 7.14 0.2 6.94 FAVG)PURCHASE OF SPARE PARTS 7.14 NIL 7.14 FAVTOTAL 50 53.7 3.7 ADVREPAIRS OF VEHICLESA)DIESEL 23 65 42 ADVB)OIL ANDLUBRICANTS 23 1.75 21.25 FAVC)TAX INSURANCE 23 4 19 FAVD)REPAIRS 23 15 8 FAVTOTAL 92 85.75 6.25 FAVADMINISTRATIVE EXPENSES1)BANK CHARGES 7 6 1 FAV2)MANAGERS MEETING CHARGES
0.75 0.3 0.45 ADV
3)BOARD MEETING CHARGES 0.5 0.9 0.4 ADV4)GENERAL BODY MEETING EXPENSES
3 1.35 1.65 FAV
5)T.A,D.A 0.25 0.2 0.5 FAV6)HOUSE RENT FOR CHAIRMAN 0.40 0.48 0.08 ADV7)CASH INSURANCE NIL 0.45 NIL ADV8)INSURANCE NIL 0.3 NIL ADV9)RENT NIL 4 NIL ADV10)ELECTIONS EXPENSES NIL 0.42 NIL ADV11)CAR RENT 12 10 2 FAV12)MEETING EXPENSES NIL 1.13 1.13 ADV13)LEGAL FEES 0.5 0.75 0.25 ADV14)FESTIVAL EXPENSES 0.1 0.11 0.01 ADV15)NEWS PAPER CHARGES 0.2 0.17 0.03 FAV16)POSTAGE 1 0.5 0.5 FAV17)TELEPHONE CHARGES 5 5 NIL18)DISTRIBUTORS MEETING CHARGES
NIL 0.75 0.75 ADV
19)MUNCIPALTAXES 6 6.25 0.25 ADV20)PURCHASE COMMITTEECHARGES
NIL 0.5 0.5 ADV
21)PRIVATE SECURITY SALARY 11 10 1 FAV22)TENDER NOTIFICATION NIL 1.2 1.2 ADV23)EMPLOYEES TRAVELLING EXPENSES
6 4 2 FAV
24)TRAINING CHARGES 0.2 NIL 0.2 FAV25)AUDITORS TRAVELLING NIL 0.25 0.25 ADV
64
EXPENSESE26)STORES INSURANCE NIL 0.2 0.2 ADV27)STOCK INSURANCE NIL 0.5 0.5 ADV28)TRANSPORT COMMITTEE CHARGES
NIL 0.5 0.5 ADV
29)GENERAL LICENSE EXPENSES
NIL 0.24 0.24 ADV
30)STAFF UNIFORM 3 3 NIL31)MAY DAY EXPENSES 0.3 NIL 0.3 FAV32)TYPING CHARGES 1.25 1.25 NIL FAVTOTAL 58.45 60.7 2.25 ADVMARKETING EXPENSESA)ADVERTISMENT EXPENSES 5.7 5 0.7 FAVB)AGMARK CHARGES 5.7 1 4.7 FAVC)A.P.D.D.C.F COMMISSION 5.7 20 14.3 ADVD)FEED TRANSPORT CHARGES 5.7 8 2.3 ADVE)MILK TRANSPORT CHARGES 5.7 0.5 5.2 FAVF)GHEE TRANSPORT CHARGES 5.7 NIL 5.7 FAVG)SALES EXECUTIVE SALARIES 5.7 3 2.7 FAVH)VENDING UNION CHARGES 5.7 0.25 5.45 FAVI)AGENT INCENTIVES 5.7 NIL 5.7 FAVTOTAL 52 37.75 14.25 FAV
Table.11 DETAILS OF CIVIL CAPITAL EXPENSES 2006-2007 RS. IN LAKHS
65
BUDGETED ACTUALS VARIANCE1 MILK COOLING SECTION MALLEPALLY
A)3RD PHASE ENTERTAINMENT 7.6 6.2 1.4B) COMPOUND WALL CONSTRUCTION 1.15 1.13 0.02C)COMPRESSOR BED NIL NIL NIL ADV
2 MILK COOLING SECTION KODADAA)REFRIGERRATION 1.5 1.5 NIL
B)OFFCERENEVATION NIL NIL NIL
3 MILK COOLING SECTION MOTHKURA)OFFCE CONSTRUCTION 1.6 1.6 NIL FAV
4 MILK COOLING SECTION RAJAPET FAVA)GUEST HOUSE CONSTRUCTION 1.8 1.12 0.68 FAV
5 MILK COOLING SECTION SURYAPET FAVA)COMPRESSOR BED 1.2 0.67 0.53 FAV
6 MILK COOLING SECTION ALER ADVA)FARMERS GUEST HOUSE 4 3.65 0.35 ADVB)BATHROOMS 1.4 1.4 NILB)COMPOUND WALL 4 5.86 1.86 FAV
7 MILK COOLING SECTION TANDUR ADVA)COMPOUND WALL CONSTRUCTION 0.15 0.15 NIL ADV
8 MILK COOLING SECTION MAALA)CONSTRUCTION FOR FEED NIL NIL NIL
9 MILK COOLING SECTION MIRYALA GUDAA)REFRIGEATION EXPENSES NIL NIL NIL FAV
10 MILK COOLING SECTION SURYAPETA)GATE CONSTRUCTION NIL NIL NIL
11 MOTHER DAIRY HAYATHNAGARA)COLD STORAGE CONSTRUCTION 10 10 NIL
B)E.T.PLANT NIL NIL NIL
C)FLAVOURED MILK PLANT NIL 2.43 2.43
D)COMPOUND WALL CONSTRUCTION NIL NI L NIL
E)BOREWELLS NIL NIL NIL
F)C.C.ROAD CONSTRUCTION NIL NIL NIL
TOTAL 30.4 35.71 5.31 ADV
Table.12 DETAILS OF PURCHASING 2006-2007 RS IN LAKHS
BUGETED ACTUALS VARIANCEADV
66
1 OFFICE EQUIPMENTA)OFFICE EQUIPMENT,CALCULATORS 0.2 NIIL 0.22 FAV
B)PURCHASING OF COMPUTERS 2 .281 1.19 FAVC)FURNITURE ALMARAHS 1 0.42 0.59 FAVD)ELECTRONIC PUNCHMACHINE 0.5 NIL 0.5 FAVE)CELLPHONES ,TELEPHONES 0.4 NIL 0.4 FAVF)CASH COUNTING MACHINE 0.5 8.71 8.71 FAV
G)TOYOTA,QUALIS VEHICLES NIL 8.71 8.71 FAV2 DAIRY ITEMS
MILK CANS 7.5 NIL 7.5 FAVMILK CRAYTES 7.5 11.3 4.2 FAV
II PURCHASING OF PLANT AND MACHINERY
BUDGETED ACTUALSVARIANCE
1 MOTHER DAIRY1)FREE PACK MACHINE 30 13.85 16.15 FAV2)FREE PACK SECTION NIL NIL NIL3)PURCHASING OF STABILIZER NIL NIL NIL4)( B&G)PURCHASED COMPRESSOR NIL NIL NIL5)(B&G)CONDENSOR COILS NIL NIL NIL6)TWO WATER PUMPS NIL NIL NIL7)11KVT CUBICAL PANEL NIL NIL NIL8)TRANSFORMER SWITCH NIL NIL NIL9)MILK PUMPS NIL NIL NIL10)AMONIA COMPRESSOR MOTAR NIL NIL NIL11)COLD STORAGE MACHINES NIL 11 11 ADV
2 MILK COOLING SECTION SURYAPETA)COMPRESSOR MOTAR 5 NIL 5 FAVB)SOLAR WATER HEAT SYSTEMS 5 1.96 3.04 FAV
3 DIESEL GENERATORS 10 NIL 10 FAV4 PARIGI,BHUVANAGIRI EXPANSION 5 1.35 3.63 FAV5 MIRYALAGUDA EXPANSION 25 13.59 11.41 FAV6 MILK COOLING SECTION PARIGI
A)ARE 232 PRIK COMPRESSOR NIL NIL NIL7 MILK COOLING SECTION NALGONDA
PRE PACK MACHINE NIL NIL NIL8 SOLAR WATER HEATER SYSTEM
A)1000LITERS NIL NIL NILB)500LITERS CHUNDURU NIL NIL NILTOTAL 80 58.03 21.97 FAV
INTERPRETATION 2006-07
INCOMES: Under the income in this year, estimation made on milk sold is 4875
lakhs but actual were 4804 which is less than budgeted. But under the selling of milk
67
items the results were satisfactory cause the actually showed more than estimates.
And also other incomes items are also quite
EXPENSES : in this though the actual expenditure is more than is budgeted the cash
capital and the net profit increased the increase in the actual expenditure is cause
more payments made in the from of the taxes (sales , central sales & income
tax ) . Also because of conversion charges & expenses made on polythin
film .But at the is ended with net profit of 70 which is more than the budgeted (25).
CIVIL CAPITAL EXPENSES: The civil capital expenses showed the variance
of 5.31 lakhs . concentration is given to construction of compound wall ,
refrigeration , compressor bed and renovation . At last it showed favorable
returns .
DETAILS OF PURCHASE : Office equipment showed the increase of actuals
by 2.45 lakhs because purchase of Toyota vehicle which is not mentioned in
budget. In the purchase of plant and machinery the actuals made less than budgeted
because the expenses are not made in expansion activities & purchasing of machinery.
Table.13
BUDGET ESTIMATIONS OF MOTHER DAIRY
DETAILS OF INCOME 2007-08 RS. IN LAKHS
68
PARTICULARS BUDGETED ACTUALS VARIENCE
INCOMEMILK SOLD 5058 4804 254 ADVSELLING OF MILK ITEMSGHEE 605 725 120 FAVCHEESE 318 412 94 FAVCURD 40 40 NIL FAVSKIMMING MILK 50 NIL 50 ADVBUTTER MILK 11 4 7 ADVMILK POWDER NIL 9 9 FAVCATTLE FEED 198 223 25 FAVMILK SUPPLIERS SHARE 20 20 NIL FAVBUILDING RENT 20 18 2 ADVOTHER INCOMES 20 20 NIL FAVBANK LOAN 300 380 80 FAVCLOSING STOCK 968 723 2454 ADV
TOTAL 7608 7378 230 ADV
DETAILS OF EXPENSES RS. IN LAKHS 2007-2008 Table.14
BUDGETED ACTUALS VARIANCE1 MILK PURCHASES 3515 3350 165 FAV2 MILK PURCHASED FROM OTHER
UNIONS315 315.8 0.8 ADV
69
3 TRANSPORT CHARGES FOR MILK 200 185 15 FAV4 MILK PRODUCTS PURCHASED
A)MILK POWDER 315 537 222 ADVB)CHEESE NIL NIL NIL
5 CATTLE FEED MATERIAL 210 225 15 ADV6 PURCHASING BAGS FOR CATTLE
FEED8.5 6 2.5 FAV
7 PURCHASING OF STORES MATERIAL
25 20 5 FAV
8 PURCHASING OF POLYTHIN FILMA)MILK 110 106 4 FAVB)GHEE 10 10.7 0.7 ADVC)GHEE 3 3 NIL FAVD)BUTTER MILK 1 0.45 0.55 FAV
9 PACKING MATERIAL 15 15 NIL FAV10 ELECTRICITY,DIESEL CHARGES 240 217 23 FAV11 REPAIRS IN PLANT AND
MACHINERY55 53.7 1.3 FAV
12 REPAIRS OF VEHICLES 86 85.75 0.25 FAV13 MAINTENANCE AND REPAIRS OF
BUILDING20 20 NIL FAV
14 OFFICE REPAIRS AND MAINTENANCEA)FURNITURES AND TYPEWRITERS 0.5 0.45 0.05 ADVB)COMPUTERS 0.5 0.8 0.3 FAV
15 MAINTENANCE OF LABORATORY 0.1 0.1 NIL FAV16 ADMINISTRATION CHARGES 66.15 60.7 5.45 FAV17 EMPLOYEES SALARIES18 PENSION PROVIDENT FUND 400 380 20 FAV19 PRINTING AND STATIONARY 8 8 NIL FAV20 MARKETING EXPENSES 70 37.75 32.25 FAV21 SALES TAX 50 50 NIL FAV22 CENTRAL TAX 10 10 NIL FAV23 INCOME TAX 50 50 NIL FAV24 AUDITOR FEES
A)FREE AUDIT FEES 2 2 NIL FAVB)ANNUAL AUDIT FEES 1 1 NIL FAVC)TRANSPORT ERXPENSES 0.5 NIL 0.5 FAV
25 CONVERSION EXPENSESA)PIECE WORK LABOUR CHARGES 100 80 20 FAVB)TRANSPORT CHARGES 100 40 60 FAV
26 VRS 100 27.25 72.75 FAV27 DIVIDEND 15 15 NIL FAV28 OPENING STOCK 779 510 269 FAV
TOTAL 6878 6423.4 454.6 FAVCASH PROFIT(6180-6130) 730 954.55 224.55 ADVINTEREST ON LONG TERM LOANA)NDDB 140 411 271 ADVB)APCOB 400 358.55 41.45 FAVDEPRECIATION ON BULDING 115 115 NIL FAVTOTAL 7533 7308 225 FAVNET PROFIT 75 70 5 FAV
DETAILS OF UTILITIES 2007-08 RS. IN LAKHS Table.15
UTILITIES BUDGETED
ACTUALS
VARIANCE
70
A)ELECTRICITY CHARGES 175 160 15 FAVB)GENERATOR DIESEL 10 6 4 FAVC)WATER CHARGES 5 2.75 2.25 FAVD)PERNUS OIL 50 48.25 1.75 FAVTOTAL 240 217 23 FAVPLANT AND MACHINERY REPAIRSA)OIL AND LUBRICANTS 2 1.25 0.75 FAVB)REPAIRS 25 50 25 ADVC)FACTORY LICENSE FEES 0.5 0.35 0.15 ADVD)BOILER LICENSE FEES 0.25 0.15 0.1 FAVE)AMONIA GAS 2 1.75 0.25 FAVF)SALT 0.25 0.2 0.05 FAVG)PURCHASE OF SPARE PARTS
25 NIL 25 FAV
TOTAL 55 53.7 1.3 FAVREPAIRS OF VEHICLESA)DIESEL 65 65 NIL FAVB)OIL AND LUBRICANTS 2 1.75 0.25 FAVC)TAX AND INSURANCE 4 4 NIL FAVREPAIRS 15 15 NIL FAVTOTAL 86 85.75 0.25 FAVADMINISTRATIVE EXPENSES
1)BANK CHARGES 6 6 NIL FAV2)MANAGERS MEETING CHARGES
0.3 0.3 NIL FAV
3)BOARD MEETING CHARGES 1 0.9 0.1 FAV4)GENERAL BODY MEETING EXPENSES
1.5 1.35 0.15 ADV
5)T.A,D.A 0.25 0.2 0.05 ADV6)HOUSE RENT FOR CHAIRMAN
0.48 0.48 NIL FAV
7)CASH INSURANCE 0.45 0.45 NIL FAV8)INSURANCE 0.3 0.3 NIL FAV9)RENT 4 4 NIL FAV10)ELECTIONS EXPENSES 0.45 0.42 0.03 FAV11)CAR RENT 10 10 NIL FAV12)MEETING EXPENSES 1.25 1.13 0.12 FAV13)LEGAL FEES 0.75 0.75 NIL FAV14)FESTIVAL EXPENSES 0.1 0.11 0.04 ADV15)NEWS PAPER CHARGES 0.17 0.17 NIL FAV16)POSTAGE 0.5 0.5 NIL FAV17)TELEPHONE CHARGES 5 5 NIL FAV18)DISTRIBUTORS MEETING CHARGES
1 0.75 0.25 FAV
19)MUNCIPAL TAXES 6.5 6.25 0.25 ADV20)PURCHSE COMMITTEE CHARGES
0.5 0.5 NIL FAV
21)PRIVATE SECURITY SALARY
10 10 NIL FAV
22)TENDER NOTIFICATION 1.25 1.2 0.05 ADV23)EMPLOYEES TRAVELLING EXPENSES
4 4 NIL FAV
24)TRAINING CHARGES 0.25 NIL 0.25 FAV
71
25)AUDITORS TRAVELLING EXPENSES
0.25 0.25 NIL FAV
26)STORES INSURANCE 0.2 0.2 NIL FAV27)STOCK INSURANCE 0.5 0.5 NIL FAV28)TRANSPORT COMMITTEE CHARGES
0.5 0.5 NIL FAV
29)GENERL LICENSE EXPENSES
0.25 0.24 0.01 FAV
30)STAFF UNIFORM 3 3 NIL FAV31)TYPING CHARGES 1.25 1.25 NIL ADV
TOTAL 62.15 60.7 1.45 FAVMARKETING EXPENSESA)ADVERTISEMENT EXPENSES
15 5 10 FAV
B)AGMARK CHARGES 1 1 NIL FAVC)A.P.D.D.C.F COMMISSION 25 20 5 FAVD)FEED TRANSPORT CHARGES
10 8 2 FAV
E)MILK TRANSPORT CHARGES
1 0.5 0.5 FAV
F)GHEE TRANSPORT CHARGES
0.5 NIL 0.5 FAV
G)SALES EXCUTIVE SALARIES
3 3 NIL FAV
H)VENDING UNION CHARGES 0.5 0.25 0.25 ADVI)AGENT INCENTIVES 14 NIL 14 FAVTOTAL 70 37.75 32.25 FAV
Table.16
DETAILS OF CIVIL CAPITAL EXPENSES 2007-08 RS. IN LAKHS
72
BUDGETED ACTUALSVARIAN
CEMILK COOLING SECTION
MALLEPALLYA)3RD PHASE ENTERTAINMENT NIL 6.2 6.2 ADV
B)COMPOUND WALL CONSTRUCTION NIL 1.13 1.13 ADVC)COMPRESSOR BED 1 NIL 1 FAV
MILK COOLING SECTION KODADAA)REFRIGERATION 1.5 1.5 NIL FAV
B)OFFICE RENEVATION 1 NIL 1 FAVMILK COOLING SECTION MOTHKUR
A)OFFICE CONSTRUCTION NIL 1.6 1.6 ADVMILK COOLING SECTION RJAPETA)GUEST HOUSE CONSTRUCTION NIL 1.12 1.12 ADV
MILK COOLING SECTION SURYAPETA)COMPRESSOR BED NIL 0.67 0.67 ADV
MILK COOLING SECTION ALERUA)FARMERS GUEST HOUSE NIL 3.65 3.65 ADV
B)BATH ROOMS NIL 1.4 1.4 ADVC)COMPOUND WALL NIL 5.86 5.86 ADV
MILK COOLING SECTION TANDURA)COMPOUND WALL CONSTRUCTION NIL 0.15 0.15 ADV
MILK COOLING SECTION MAALA)CONSTRUCTION FOR FEED 1 NIL 1 FAV
MILK COOLING SECTION MIRYALAGUDA
A)REFRIGERATION EXPENSES 1.5 NIL 1.5 FAVMILK COOLING SECTION SURYAPET
A)GATE CONSTRUCTION 1 NIL 1 FAVMOTHER DAIRY HAYATHNAGARA)COLD STORAGE CONSTRUCTION NIL 10 10 ADV
B)E.T. PLANT 25 NIL 25 FAVC)FLAVOURED MILK PLANT NIL 2.43 2.43 ADV
D)COMPOUND WALL CONSTRUCTION 5 NIL 5 FAVE)BOREWELLS 3 NIL 3 FAV
F)C.C.ROAD CONSTRUCTION 5 NIL 5 FAVTOTAL 45 35.71 9.29 FAV
Table.17
DETAILS OF PURCHASING 2007-2008 RS IN LAKHSBUGETED ACTUALS VARIANCE
1 OFFICE EQUIPMENTA)OFFICE EQUIPMENT,CALCULATORS NIL NIL NIL
73
B)PURCHASING OF COMPUTERS 6 0.81 5.19 FAVC)FURNITURE ALMARAHS NIL 0.42 0.42 ADVD)ELECTRONIC PUNCH MACHINE NIL NIL NIL ADVE)CELLPHONES ,TELEPHONES NIL NIL NIL ADVF)CASH COUNTING MACHINE NIL 0.81 0.81 ADV
G)TOYOTA,QUALIS VEHICLES NIL 8.71 8.71 ADV2 DAIRY ITEMS
MILK CANS 12 5.65 6.35 FAVMILK CRAYTES NIL 5.65 5.65 ADV
II PURCHASING OF PLANT AND MACHINERY
1 MOTHER DAIRY1)FREE PACK MACHINE 15 13.85 1.15 FAV2)FREE PACK SECTION 2 NIL 2 FAV3)PURCHASING OF STABILIZER 0.5 NIL 0.5 FAV4)( B&G)PURCHASED COMPRESSOR 4 NIL 4 FAV5)(B&G)CONDENSOR COILS 5 NIL 5 FAV6)TWO WATER PUMPS 0.5 NIL 0.5 FAV7)11KVT CUBICAL PANEL 2 NIL 2 FAV8)TRANSFORMER SWITCH 1 NIL 1 FAV9)MILK PUMPS 1 NIL 1 FAV10)AMONIA COMPRESSOR MOTAR 1 NIL 1 FAV11)COLD STORAGE MACHINES NIL 11 11 ADV
2 MILK COOLING SECTION SURYAPETA)COMPRESSOR MOTAR NIL NIL NILB)SOLAR WATER HEAT SYSTEMS NIL 1.96 1.96 ADV
3 DIESEL GENERATORS NIL NIL NIL ADV4 PARIGI,BHUVANAGIRI EXPANSION NIL 1.35 1.35 ADV5 MIRYALAGUDA EXPANSION NIL 13.59 13.59 ADV6 MILK COOLING SECTION PARIGI
A)ARE 232 PRIK COMPRESSOR 6 NIL 6 FAV7 MILK COOLING SECTION
NALGONDAPRE PACK MACHINE 3 NIL 3 FAV
8 SOLAR WATER HEATER SYSTEMA)1000LITERS 6 NIL 6 FAVB)500LITERS CHUNDURU 5 NIL 5 FAVTOTAL 52 58.03 6.03 ADV
INTERPRETATION OF 2007-08
INCOME:- In this year the income gained is less because of less milk sold and
74
income which generated from selling of milk items also less items like cheese, ghee,
buttermilk etc the end results were unsatisfactory.
EXPENSES:- The expenses showed less in actual when compare to Budgeted, thus
net profit at the end gained more. The expenses made on different items is less.
CIVIL CAPITAL EXPENSES:- In this year more importance given civil Capital
works and investment made cold storage construction & compression bed.
DETAILS 0F PURCHASES:- In this year less expenses made in office Purchases
and some expenses made in mother dairy and milk cooling Section.
BUDGET ESTIMATIONS OF MOTHER DAIRY 2008-09Table.18
75
DETAILS OF INCOME 2008-09 RS. IN LAKHSS.NO. PARTICULARS BUDGETED ACTUALS VARIENCE
INCOME1 MILK SOLD 5800 6240 440 FAV2 SELLING OF MILK
ITEMSA)GHEE 580 421 159 ADVB)CHEESE 380 706 326 ADVC)CURD 58 50.45 7.55 FAVD)SKIMMING MILK 3 0.18 2.82 FAVE)BUTTER MILK 10 4.2 5.8 FAV
3 CATTLE FEED 275 237 38 FAV4 MILK SUPPLIERS
SHARE14 12 2 FAV
5 BUILDING RENT 20 18 2 FAV6 OTHER INCOMES 20 25 5 ADV7
BANK LOANS 400 500 100 ADV
TOTAL 7560 8213.83 653.83 FAV
DETAILS OF EXPENSES 2008-09 RS. IN LAKHSTable-19
BUDGETED ACTUALS VARIANCE
1 MILK PURCHASES 4100 3750 350 FAV2 MILK PURCHASED FROM OTHER 230 1090 860 ADV
76
UNIONS3 TRANSPORT CHARGES FOR MILK 200 216 16 ADV4 MILK PRODUCTS PURCHASED
A)MILK POWDER 350 500 150 ADVB)CHEESE NIL
5 CATTLE FEED MATERIAL 225 230 5 ADV6 PURCHASING BAGS FOR CATTLE
FEED9 12 3 ADV
7 PURCHASING OF STORES MATERIAL 35 50 15 ADV8 PURCHASING OF POLYTHIN FILM 210 232 22 ADV9 PACKING MATERIAL 15 21 6 ADV10 ELECTRICITY,DIESEL CHARGES 255 262 7 ADV11 REPAIRS IN PLANT AND MACHINERY 65 60 5 FAV12 REPAIRS OF VEHICLES 98 80 18 FAV13 MAINTENANCE AND REPAIRS OF BUILDING 30 28 2 FAV
A)FURNITURES AND TYPEWRITERS 1 2.2 1.2 ADVB)COMPUTERS 1 1.11 0.11 ADV
14 MAINTENANCE OF LABORATORY 0.1 0.1 NIL FAV15 ADMINISTRATION CHARGES 63.5 60 3.5 FAV16 EMPLOYEES SALARIES17 PENSION PROVIDENT FUND 450 532 82 ADV18 PRINTING AND STATIONARY 8 9 1 ADV19 MARKETING EXPENSES 44.6 14.5 30.1 FAV20 SALES TAX 50 16 34 FAV21 CENTRAL TAX 10 33.66 23.66 ADV22 INCOME TAX 50 21.22 26.78 FAV23 AUDITOR FEES
A)FREE AUDIT FEES 1.75 1.52 0.23 FAVB)ANNUAL AUDIT FEES 1.75 1.3 0.45 FAVC)TRANSPORT ERXPENSES 0.2 0.28 0.08 ADV
24 CONVERSION EXPENSESA)PIECE WORK LABOUR CHARGES 100 106 06 ADVB)TRANSPORT CHARGES 50 15 35 FAV
25 VRS 100 11.2 88.8 ADV26 DIVIDEND 15 9.34 5.66 FAV27 ANIMAL PURCHASE NIL 50 50 ADV28 LONG TERM LOAN
A)SDDB 113.1 111.1 2 FAVB)CANARA BANK 410 520 110 ADV
29 BUILDINGS,MACHINERYPURCHASE 150 135 15 FAVTOTAL 7437 8181.53 744 ADVNET PROFIT 123 32.3 90.7 FAV
Table.20 DETAILS OF UTILITIES 2008-2009 RS. IN LAKHS10 UTILITIES BUDGETED ACTUALS VARIANCE
A)ELECTRICITY CHARGES 175 143 3.2 FAV
77
B)GENERATOR DIESEL 10 16 6 ADVC)WATER CHARGES 5 17 12 ADVD)PERNUS OIL 65 86 21 ADVTOTAL 255 262 42.2
11 PLANT AND MACHINERY REPAIRSA)OIL AND LUBRICANTS 2 1.21 0.79 FAVB)REPAIRS 30 48 2 ADVC)FACTORY LICENSE FEES 0.5 0.5 NILD)BOILER LICENSE FEES NIL NIL NILE)AMONIA GAS 2 1.32 0.68 FAVF)SALT 0.5 1.32 0.82 ADVG)PURCHASE OF SPARE PARTS 30 7.65 22.35 FAVTOTAL 65 60 5 FAV
12 REPAIRS OF VEHICLES
A)DIESEL 65 60 5 FAVB)OIL AND LUBRICANTS 2 1.8 0.2 FAVC)TAX AND INSURANCE 4 3.2 0.8 FAVD)REPAIRS 15 12 3 FAVE)RMT SPARES 7 3 4 FAVTOTAL 93 80 13 FAVADMINISTRATIVE EXPENSES1)BANK CHARGES 8 7.06 0.94 FAV2)MANAGERS MEETING CHARGES
0.25 0.23 0.02 FAV
3)BOARD MEETING CHARGES 1 1.9 0.9 ADV4)GENERAL BODY MEETING EXPENSES
1.5 1.3 0.2 FAV
5)T.A,D.A 0.35 0.18 0.17 FAV6)HOUSE RENT FOR CHAIRMAN 0.48 0.42 0.06 FAV7)CASH INSURANCE 0.5 NIL 0.5 FAV8)INSURANCE 0.3 0.96 0.66 ADV9)RENT 0.1 1.16 1.06 ADV10)ELECTIONS EXPENSES 0.25 NIL 0.25 FAV11)CAR RENT 10 6.43 3.57 FAV12)MEETINGS EXPENSES 0.1 0.11 0.01 ADV13)LEGAL FEES 1 0.7 0.3 FAV14)FESTIVAL EXPENSES 0.1 0.03 0.07 FAV15)NEWS PAPER CHARGES 0.2 0.16 0.04 FAV16)POSTAGE 0.4 0.32 0.08 FAV17)TELEPHONE CHARGES 6 4.28 1.72 FAV18)DISTRIBUTORS MEETING CHARGES
0.2 0.5 0.3 ADV
19)MUNCIPAL TAXES 8 7 1 FAV20)PURCHSE COMMITTEE CHARGES
0.5 0.9 0.4 ADV
21)PRIVATE SECURITY SALARY 11 15 4 ADV22)TENDER NOTIFICATION 1.32 1.5 0.18 ADV
78
23)EMPLOYEES TRAVELLING EXPENSES
4.5 4.79 0.29 ADV
24)TRAINING CHARGES 0.25 0.29 0.04 ADV25)AUDITORS TRAVELLING EXPENSES
0.25 0.27 0.02 ADV
26)STORES INSURANCE 0.2 NIL 0.2 FAV27)TRANSPORT COMMITTEE CHARGES
0.3 NIL 0.3 FAV
28)GENERAL LICENSE EXPENSES
0.1 NIL 0.1 FAV
29)STAFF UNIFORM 2.5 2.5 NIL NIL30)MAY DAY EXPENSES 0.25 NIL 0.25 FAV31)TYPING CHARGES 1.35 0.65 0.75 FAV32)GIFT PURCHASE 1.75 1.39 0.36 FAV33)CM RELIF FUND 1 NIL 1 FAV34)STOCK INSURANCE 1.5 NIL 1.5 FAVTOTAL 63.5 60 3.5 FAVMARKETING EXPENSESA)ADVERTISEMENT EXPENSES 5 3.73 1.27 FAVB)AGMARK CHARGES 1 1.06 0.06 ADVC)A.P.D.D.C.F COMMISSION 25 NIL 25 FAVD)FEED TRANSPORT CHARGES 3.5 5 1.5 ADVE)MILK TRANSPORT CHARGES 1 NIL 1 FAVF)GHEE TRANSPORT CHARGES 0.1 0.3 0.2 ADVG)UNITS EXPENSES 3 NIL 3 FAVH)AGENTS INCENTIVES 6 4.41 1.59 FAVTOTAL 44.6 14.5 30.1 FAV
Table.21
DETAILS OF CIVIL CAPITAL EXPENSES 2008-2009 RS. IN LAKHSBUDGETED ACTUALS VARIANCE
79
1 MILK COOLING SECTION MALLEPALLYA)COMPRESSOR BED NIL NIL NIL NIL
2 MILK COOLING SECTION KODADA
A)OFFICE CUM GUEST HOUSE NIL 4.85 4.85 ADVB)WATER SUPPLY NIL NIL NIL NIL
3 MILK COOLING SECTION MOTHKUR
A)OFFICE EXPANSION NIL NIL NIL NIL
4 MILK COOLING SECTION BUVANAGIRI
A)CONDENSOR CONSTRUCTION NIL NIL NIL NIL
5 CATTLE FEED BUILDING
A)TANKS CONSTRUCTION NIL 9.96 9.96 ADVB)FOUNDATION EXPENSES NIL 3.75 3.75 ADVC)STEPS CONSTRUCTION NIL NIL NIL
6 MILK COOLING SECTION PARIGI
A)SECOND ENTERTAINMENT BUILDING NIL NIL NIL
7 MILK COOLING SECTION MAL
A)STORES ROOM CONSTRUCTION NIL 1.32 1.32 ADV
8 MOTHER DAIRY HAYATHNAGAR
IT PLANTS NIL 9.04 9.04 ADVCOMPOND WALL CONSTRUCTION NIL NIL NILTOILETS CONSTRUCTION NIL NIL NILSTORES CUM LAB CONSTRUCTION NIL NIL NILCIVIL CAPITAL WORKS
9 A)MOTHER DAIRY NIL NIL NIL
B)MILK COOLING SECTION 65 NIL 65TOTAL 65 28 36.12 FAV
Table.22
DETAILS OF PURCHASES 2008-2009 RS. IN LAKHSBUDGETED ACTUALS VARIANCE
1 A)PURCHASE OF COMPUTERS 8 1 7 FAV
B)CELL PHONES AND TELEPHONES NIL 0.2 0.2 ADV2 DAIRY ITEMS
80
MILK CANS NIL 1.7 1.7 ADVMILK TRACKS 12 9.5 2.5 FAVTOTAL 20 12.4 7.6 FAV
PURCHASING OF PLANT AND MACHINERYMOTHER DAIRY
1 S.S GATE WASHER PURCHASE NIL 0.97 0.97 ADV2 MECHANICAL EQUIPMENT NIL 11.7 11.7 ADV3 BALANCE TANKS NIL 0.34 0.34 ADV4 CONTROL WALL NIL 0.24 0.24 ADV5 60KL LEVEL TRANSFORAM NIL 0.53 0.53 ADV6 60KL MILK SILO NIL 13.27 13.27 ADV7 HBM LOAD CELL NIL 5.91 5.91 ADV8 CONTROL PANEL NIL 1.09 1.09 ADV9 BOILAR PURCHASED NIL 0.36 0.36 ADV10 PHE CONDENSOR PURCHASE NIL 19.09 19.09 ADV11 MILK PASTURAIZATION NIL 16.08 16.08 ADV12 PUMP PURCHASE NIL 0.2 0.2 ADV13 5HP PUMP PURCHASED NIL 0.18 0.18 ADV14 1 HP MOTOR PURCHASED NIL 0.5 0.5 ADV15 5 HP SUB PUMPPURCHASE NIL 0.17 0.17 ADV16 NEW MACHINES PURCHASE
A)MOTHER DAIRYB)MILK COOLING SECTION 65TOTAL 65 70.63 5.18 ADV
INTERPRETATION OF 2008-2009
INCOMES:- The income in this year shown the increase of653.83 over the
budgeted .It got more income on selling the cheese where it gained income 326 lakhs
81
over the budgeted and the milk sold in this is 6240 which more than the budgeted
(5800). So finally the income generated is more at the end . If the organization on best
selling products it can attain more gains.
EXPENSES: In this year all the actuals are more than the budgeted . The main effect
can be seen purchase of milk from other unions and more transportation charges ,
milk powder purchase etc . So this caused in decrease in net profit at the . If
organization consider the above and try reduce the expenses it can gain profits.
CIVIL CAPITAL EXPENSES: The expenses made of civil works showed less in
actuals because no investment made on milk cooling section which is reflected in
budget.
DETAILS OF PURCHASE: In this more investment done in the plant& machinery
purchase were less in office purchases .
BUDGET ESTIMATIONS OF MOTHER DAIRY Table.23
DETAILS OF INCOMES (2009-10) RS. IN LAKHS
PARTICULARS BUDGETED ACTUALS VARIENCE
82
1 INCOME
MILK SOLD 6870 6627 243 ADV
2 SELLING OF MILK ITEMS
GHEE 450 291.1 158.9 ADVCHEESE 780 709.74 70.26 ADVCURD 65 59.8 5.2 ADVSKIMMING MILK NIL 0.07 0.07 FADBUTTER MILK 5 2.84 2.16 ADVMILK POWDER NIL 0.07 0.07 FAV
3 CTTLE FEED 242 221.5 20.5 ADV
4 MILK SUTTLIERS SHARE 13 13.01 0.01 ADV
5 BUILDING RENT 18 14.9 3.1 FAV
6 OTHER INCOMES 26 36.23 10.23 ADV
7 BANK LOAN 650 360 290 FAV
8 CLOSING STOCK NIL 25.25 25.25 ADV
TOTAL 9161 8361.51 799.49 ADV
DETAILS OF EXPENSES RS.IN LAKHS (2009-10) Table.24
BUDGETED ACTUALS
VARIANCE
1 MILK PURCHASES 4125 3910.78 214.22 FAVMILK PURCHASED FROM OTHER UNIOBS 1175 1046 429 FAVTRANSPORT CHARGES FOR MILK 240 214 26 FAV
2 MILK PRODECTS PURCHASES
A)MILK POWDER 650 460.94 189.06 FAV
83
B)CHEESE NIL NIL NIL A3 CATTLE FEED MATERIAL 250 165.24 84.79 FAV4 PURCHASING BAGS FOR CATTLE FEED 15 71.88 56.88 FAV5 PURCHISING OF STORES MATERIAL 55 35.51 19.496 PURCHASING OF POLYTHIN FULM
A)MILK 260 252.33 7.67 FAVB)GHEE NIL NIL NIL
D)BUTTER MILK NIL NIL NIL7 PACKING MATERIAL 23 11.52 11.48 FAV8 ELECTRICITY,DIESEL CHARGES 285 297.91 12.92 ADV9 REPAIRS IN PLANT AND MACHINERY 66 48.87 17.13 FAV10 REPAIRS OF VEHICLES 80 99.28 19.28 ADV11 MAINTENANCE AND REPAIRS OF BULDING 31 14.03 16.97 ADV
OFFICE REPAIRS AND MAINTENANCE
A)FURNITURES AND TYPEWRITERS 2 2.1 0.1 FAVB)COMPUTERS 1.5 NIL 1.5 FAV
12 MAITENANCE OF LABORATORY 0.1 NIL 1.5 FAV13 ADMINISTRATION CHARGES 72 104.52 32.52 ADV14 EMPLOTEES SALARIES
PENSION PROVIDENT FUND 587 581.4 5.6 FAVPRINTING EXPENSES 10 NIL 10 FAVSALES TAX 1.4 1.8 0.4 ADVCENTRAL TAX 18 14.6 3.4 FAVINCOME TAX 40 28.93 11.07 FAV
15 AUDITOR FEES
A)FREE AUDIT REES 1.7 NIL 1.7 FAVB)ANNUAL AUDIT FEES 1.4 NIL 1.4 FAVC)TRANSPORT EXPENSES 0.3 NIL 0.3 FAV
16 CONVERSION EXPENSES
A)PIECE WORK LAVOUR CHARGES 117 138.82 21.82 ADVB)TRANSPORT CHARGES 17 15.1 1.9 FAVVRS 20 21.24 1.24 ADVDIVIDEND 15 15.2 0.02 ADV
17 INTEREST ON LONG TERM LOAN
A)NDDB 100 95.7 4.3 FAVB)APCOB 630 400 230 FAVDEPRECIATION ON BUILDING 140 123 17 FAV
9059.9 8160.55 952.85 FAV
DETAILS OF EXPENDED RS.IN LAKHS (2009-10) Table.25 UTILITIES
BUDGETED ACTUALS VARIANCE
A)ELECTRICITY CHARGES 155 157.36 2.36 ADV
B)GENERATOR DIESEL 18 29 11 ADV
C)WATER CHARGES 20 14.59 5.41 FAV
D)PERNUS OIL 92 96.96 4.96 ADV
TOTAL 285 297.91 23.73 ADV
2 PLANT AND MACHINERY
84
REPAIRSA) OIL AND LUBRICANTS 1.3 1.65 0.35 ADV
B)REPAIRS 49 39.66 9.34 FAV
C)FACTORY LICENSE EES 0.5 0.1 0.4 FAV
D)BOILER LICENSE FEES NIL 0.04 0.04 ADV
E)AMONIA GAS 1.5 0.81 0.69 ADV
F)SALT 1.3 0.52 0.78 ADV
G)PURCHASE OF SPARE PARTS 12.4 4.96 7.44 FAV
TOTAL 66 47.74 18.26 FAV
3 REPAIRS OF VEHICLESA)DIESEL 63 80.37 17.37 ADV
B)LIL AND LUBRICANTS 1.5 2.1 0.6 ADV
C)TAX AND INSURANCE 2.5 3.4 0.9 ADV
D)REPAIRS 13 13.39 0.39 ADV
TOTAL 80 99.28 19.287 ADV
4 ADMISNISTRATIVE EXPENESES1)BANK CHARGES 7.5 8.07 0.57 ADV
2)MANAGERS MEETING CHARGES 0.25 0.24 0.01 FAV
3)BOARD MEETING CHARGES 2 0.62 1.38 FAV
4)GENERAL BODY MEETING EXPENSES
1.7 1.17 0.53 ADV
5)T.A. D.A 0.25 0.92 0.67 ADV
6)HOUSE RENT FOR CHAIRMAN 0.5 0.44 0.06 FAV
7)CASH INSURANCE 1 NIL 1 FAV
8)INSURANCE 1.2 2.02 -0.82 ADV
9)RENT 0.21 0.34 -0.13 FAV
10)ELECTIONS EXPENSES 7 7.76 -0.76 ADV
11)CAR RENT 0.1 0.45 -0.35 FAV
12)MEETING EXPENSES 1 0.4 0.6 FAV
13)LEGAL FEES 0.03 0.09 -0.06 ADV
14)FESTIVAL EXPENSES 0.16 0.22 -0.06 ADV
15)NEWS PAPER CHARGES 0.35 0.42 -0.07 ADV
16)POSTAGE 5 4.8 0.2 FAV
17TELEPHONE CHARGES 0.5 0.27 0.23 ADV
18)DISTRIBUTORS MEETING CHARGESS
7 6.24 0.76 FAV
19)MUNICIPAL TAXES 0.9 0.42 0.48 FAV
20)PURCHASE COMMITTEE CHARGES
17 14.4 2.6 FAV
21)PRIVATE SECURITY SALARY 0.5 5.22 -4.72 ADV
22)TENDER NOTIFICATION 5 5.42 -0.42 ADV
23)EMPLOYEES TRAVELLING EXPENSES
0.4 NIL 0.4 FAV
24)TRAINING CHARGES 0.3 0.28 0.02 ADV
25)AUDITORS TRAVELLING EXPENSES
85
26)STORES INSURANCE NIL 0.69 0.69 ADV
27)STOCK INSURANCE NIL NIL NIL
28)TRANSPORT COMMITTEE CHARGES
2.5 2.5 0.25 ADV
29)GENERAL LILCENSE IXPENSES 0.25 1.96 FAV
30)STAFF UNIFORM NIL 1.96 15.82 ADV
31)MAY DAY EXPENSES 1.4 16.58 16.58 ADV
32)TYPING CHARGES NIL 16.58 15.9 ADV
TOTAL 65
5 MARKETING EXPENESES
A)ADVERTISENEBT EXPENSES NIL NIL NIL
B)AGMARK CHARGES 1 0.15 0.85 FAV
C)A.P.D.D.C.F COMMISSION NIL NIL NIL
D)FEED TRANSPORT CHARGES 0.4 NIL 0.4 FAV
E)MILK TRANSPORT CHARGES NIL NIL NIL
F)GHEE TRANSPORT CHARGES NIL NIL NIL
G)SALES EXECUTIVE SALARIES NIL NIL NIL
H)VENDING UNION CHARGES NIL NIL NIL
I)AGENT INCENTIVES NIL 1.65 1.65 ADV
TOTAL 1.4 1.8 0.4 ADV
Table.26
DETAILS OF CIVIL CAPITAL EXPENSES 2009-2010 RS. IN LAKHS
1 MILK COOLING SECTION MALLEPALLY
BUDGETED ACTUALS VARIANCE
A)3 RD PHASE ENTERT AINMENT 1 NIL 1 FAVB)COMPOUND WALL CONSTRCTION NIL NIL NILC)COMPRESSOR BED NIL NIL NIL
2 MILK COLLING SECTION KODADAA)REFRIGERATION 1.5 8.8 7.3 ADV
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B)OFFICE RECEVATION 2 NIL 2 FAV3 MILK COLLING SECTION
MOTHKURA)OFFICE CONSTRUCTION 6 NIL 6 FAV
4 MILK COOLING SECTION RAJAPATA)GUEST HOUSE CONSTRUCTION 1 0.76 0.22 FAV
5 MILK COOLING SECTION SURYAPATA)COMPRESSOR BED 5.64 46.14 39.52 ADV
6 MILK COLLING SECTION ALERUA)FARMERS GUEST HOUSE 13.6 0.13 13.47 FAVB)BATHROOMS NIL NIL NILC)COMPOUN WALL NIL NIL NIL
7 MILK COOLING SECTION TANDURA)COMPOUNWALL CONSTRUCTION NIL NIL NIL
8 MILK COOLING SECTION MAALA0CONSTRUCTION FOR FEED NIL NIL NIL
9 MILK COOLING SECTION MIRYALAGUDAA)REFRIGERATION EXPENSES NIL NIL NIL
10 MILK COLLING SECTION SURYAPETGATE CONS TRUCTION NIL NIL NIL
11 MOTHER DAIRY HAYATHNAGARA)COLD STORAFGE CONSTRUCTION 15.96 23.2 7.24 ADVB)E.T.PLANT 10 NIL 10 FAVC)FLAVOURED MILK PLANT 3 NIL 3 FAVD)COMPOUND WALL CONSTRACTION
1.5 NIL 1.5 FAV
E)BOREWALLS NIL NIL NILF)C.C ROAD CONSTRUCTION NIL NIL NIL
TOTAL 62.2 79.07 16.84 ADV
Table.27
DETAILS OF PURCHASING 2009-2010 RS, IN LASHS
OFFICE EQUIPMENT BUDGETED ACTUALS VERIANCEA)OFFICE EQUIPEMENT,CALCULATORS
5 NIL 5 FAV
B)PURCHASING OF COMPUTERS
0.2 NIL 0.2 FAV
C)FURNITURE ALMARAHS NIL NIL NILD)ELECTRONIC PUNCH MACHINE
NIL NIL NIL
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E)CELLPHONES,TELEPHONES NIL NIL NILF)CASH COUNTING MACHINE NIL NIL NILG)TOYOTA,QALIS VEHICLES NIL NIL NILDAIRY ITEMSMILK CANS 2 4 2 ADVMILK CRAYTES 12 8 4 FAVTOTAL 19.2 12 7.2 FAV
PURCHASE OF PLANT AND MACHINERYPURCHASE OF NEW MACHINERY1)MOTHER DAIRY 58.6 28.01 30.59 FAV2)MILK COOLING SECTION NIL 10.23 10.23 ADVTOTAL 58.6 38.24 20.36 FAV
INTERPRETATION OF 2009-2010
INCOME: In this year the income is less when compare to the budgeted because the
income generated in all items under the heading is less Nothing haired every year
income from selling of milk items especially cheese will gain more but in this year it
is opposite Totally at the end it is not satisfactory.
EXPENSES:- In the expenses the profit generated at the end is more when compare
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to budgeted. Because mainly less milk purchased from the other unions. And the other
expenses incurred also less. The final result is less.
CIVIAL CAPITAL EXPENSES:- In this year more importance is given to civil
expansion organization gave more importance and in crested in compression bed cold
storage construction. It is good to improve the works.
DETAILS OF PURCHASE:- The details of purchase showed less because less
expenses made on office material purchase, and also in mother dairy.
GRAPH OF INCOMES
YEARS BUDGETED ACTUALS2005-06 8778 83612006-07 4810 73782007-07 7608 73782008-09 7608 82132009-10 9161 8361
Figure.1
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Interpretation:
In the year 2005-06 the actual amount is less compared to budgeted amount as the
budget is accurate. In the 2007-08 it shows a slight change between budgeted amount
and actually. In the year 2009-10 budgeted amount is more compared to actually it
shows that the quantity is more compared to market. Selling of milk products, share of
milk suppliers and cattle feed products are less than the estimates.
GRAPH OF EXPENSES
YEARS BUDGETED ACTUALS2005-06 8778 83612006-07 4810 73782007-07 7608 73782008-09 7608 82132009-10 9161 8361
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Figure.2
Interpretation:
In the year 2005-06 actual are less compared to budgeted it shows that they gained in
this year. In the year 2009-10 budget amount is more because as the milk powder,
packing material, central tax are gaining expenses compared to budget amount. In the
last year budgeted amount is more compared to actual the above products did not sold
well. It shows that their budget is aggregate.
GRAPH OF CIVIL EXPENSES
YEARS BUDGETD ACTUALS
2005-06 70 79
2006-07 30.4 35
2007-07 45 35
2008-09 65 25
2009-10 62 79
Figure.3
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Interpretation:
In the year 2005-06 civil expenses are at a very high range. Actuals are high
compared to budgeted because of construction of cold storage sector. Flavored milk
plant and bore weeks. In the year 2007-08 actuals are less compared to budgeted
because as the expenses are less. In the year 2009-10 it incurred high volume of
expenses than the budgeted because it incurred heavy expenses.
SUGGESTIONS
As the internal resources are not sufficient to take up major modifications
revamping of the equipment covering to the requirement of strategic sector,
Government must take steps to provide.
It should put in more efforts to capture a sizable market share.
By taking strategic decision at appropriate time it could be able to transfer some of
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its future expansion and modernization schemes, temporary to another sister
organizations in cooperatives, there by avoiding payment for unused charges duly safe
guarding its requirements to avail the same at times I becomes necessary.
For the past five years it is evident that the incomes including the scrap generated
internally is the excess of estimates. The organization must take steps to utilize the
scrap to bring down costs.
Some welfare steps to be provided to the employees of the mother dairy so that
they can work efficiently and effectively for increase of sales in this regard.
Government should take steps to provide some relief in this regard.
More emphasis should be given to advance technology.
Financial feasibility should be improve a little.
BIBLOGRAPHY
Financial Management S.N MAHESHWARI
Management accounting R.K SHRMA
SHASHIK.GUPTA.
Cost Accounting S.P Jain & K.L Narang
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WEBSITES
www.nddb.org
www.motherdairy.com
www.milkmagic.com
www.fao.org
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