CHAPTER – I

INTRODUCTION

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 BUDGET AND BUDGETARY

CONTROL (Theoretical view)

BUDGET:

 Introduction

 Definition

 Need of budget

 Essentials of budget

 Advantages of budget

 Limitation of budget

 Types of budget

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BUDGETARY CONTROL:

 Nature of budgetary control

 Objectives of budgetary control

 Advantages of budgetary control

 Limitation of budgetary control

 Characteristics of good budgeting

 Requisites for successful budgetary control system

 Organization chart for budgetary control

 Key factor

 Difference between budget and budgetary control

3
 BUDGET

Introduction:

Planning is the basic managerial function. It helps in determining the course

of action to be followed for achieving organizational goals. It is a decision in
advance, what to do, how to do and who will do a particular task? Plans are
framed to achieve better results. Control is the process of checking whether the
plans are being adhered to or not, keeping a record of progress, comparing it
with the plans, and then taking corrective measures for future if there is any
deviation. Every business enterprise needs the use to control techniques for
surveying in the highly competitive and changing economic world. There are
various control devices in use. Budgets are the most important tool of profit
planning and control. They also act as an instrument of co-ordination.

Budget is defined as “ a plan quantified in monetary terms prepared and

approved prior to a defined period of time showing planned income to be
generated and / or expenditure to be incurred during that period and the capital
to be employed to attain a given objective” (CIMA technology). An analysis of
the definition will bring out the following features of a budget:

1. It is a plan expressed in monetary terms. But it also contains physical units.

2. It is prepared prior to the period during which it will operate.
3. It is approved by the management for implementation.
4. It is related to a definite future period.
5. It indicates planned income and expenditure including capital expenditure
during the period.
6. It is prepared for the purpose of implementing the policy formulated by the
management, and the objective to be achieved during the period.
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 A budget may be expressed in relation to time, viz. short-term and long-term
budget in relation to functions, viz. production budget, sales budget, cash budget,
capital budget etc., and in relation to behavior. Viz. fixed budget and flexible
budget.

Definition:

Budget is defined as a kind of future accounting in which problems of future are

met on the paper before transactions actually occur.

According to CIMA, Official Terminology, “A Budget is a financial and/or

quantitative statement prepared prior to a defined period of time, of the policy to be
pursed during that period for the purpose of attaining a give objective”.

According to Crown and Howard, “A budget is a predetermined statement of

management policy during a given period, which provided a standard for
comparison with the results actually achieved.”

Need of budget:

 To forecast and to plan for the future to avoid losses and maximize profits
i.e. to help in planning.
 To bring about coordination’s between different function of an enterprise
i.e., to help in co-ordination.
 To control actual actions by ensuring that actual are in tune with target i.e.,
to help in controlling.

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Advantages of budget:

 It formulates basic policies necessary to achieve organizational objectives.

 It forces all levels of management to participate in the process of setting and
Fulfillment of targets.

 It creates the feeling of co-operation and understanding between different

Departments of the business

 It ensure optimum utilization of resources with a view to maximize returns.

 It highlights upon the in efficiency in the business and thus helps the
Management to take remedial actions.

Types of budget:

The Budgets are usually classified according to their nature. The following are
the types of budgets, which are commonly used.

a) Classification According to Time:

1. Long-term budgets

2. Short-term budgets

3. Current budget

b) Classification on the basis of function:

1. Operation Budgets

2. Financial Budgets

3. Master Budgets
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 c) Classification on the basis of Flexibility:

1. Fixed budget

2. Flexible budget

d) Classification on the basis of nature of business:

1. Capital Expenditure

2. Revenue Expenditure

A) Classification According to Time: -

1) Long Term Budgets — The Budgets are prepared to depict long term
planning of the business. The period of long term budgets various between five
to ten years. The long term planning is done by the top-level management it is
not generally known to lower levels of management's. Long-term time budgets
are prepared for some sectors of the concern such as capital expenditure
research and development. Long term finances etc these budgets are useful for
those industries where gestation period is long i.e. machinery, electricity, and
organization.

2) Short Term Budgets -These budgets are generally for one or five Years and are
in the form of monetary terms. The consumer’s goods industries like sugar, cotton,
textiles, etc. use short-term budget.

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3) Current Budget — The Period of current budget is generally of one to twelve
months. The budgets relate to the current activities of the business. According to
I.C.W.A. London. "Current budget is a budget which is established for use over a
short period of time and is related to current conditions.

B) Classification on the basis of function: -

1. Operating Budgets: These budgets relate to the different activities of

operations of a firm. The number of such budget upon the size and nature of
business. The commonly used operating budgets are;

A. Sales Budget

B. Production Budget

C. Production cost Budget

D. Purchase Budget

E. Raw Material Budget

F. Labour Budget

(2) Financial Budget: - Financial Budget are concerned with cash receipts and
disbursements, working capital. Expenditure, financial position and result of
business operations. The commonly used financial budgets are:

a. Cash Budget
b. Working Capital Budget
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 c. Capital Expenditure Budget
d. Income Statement Budget
e. Statement of Retained Earnings Budget
f. Budget Balance sheet or position statement Budget

(3) Master Budget: - Various functional budgets are integrated into master
budget. This budget is prepared by the ultimate integration of separate function
budgets. According to I.C.W.A. London. "The master budget is the summary
budget in corpora-ting its functional budgets". Master budget is prepared by the
budget officers remained with the top-level management. This budget is used to
co-ordinate the activities of various departments and also to help as a control
device.

(c) Classification on the basis of Flexibility:-

(1) Fixed budget: - The fixed budgets are prepared for a given level of activity,
the budget is prepared before the beginning of the financial year, if the financial
year starts in January then the budget will be prepared a month or two earlier, i.e.
November or December. The charge in expenditure arising out of the anticipated
changes will not be adjusted in the budget. There is a difference of about twelve
months in the budgeted and a actual figures. According to I.C.W.A. London,
"Fixed budget is a which is designed to remain unchanged irrespective of the level
of activity actually attained".

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(2) Flexible Budget: - A flexible budget consists of a series of budgets for
different level of activity. It therefore, various with the level of activity attained. A
flexible budget is prepared after taking into consideration unforeseen changes in
the conditions of the Business. A flexible budget is defined as a budget, which by
recognizing the difference between fixed, semi fixed and variable cost is designed
to change in relation to the level of activity.

(d)Classification of on the basis of nature of business:-

(1)Capital expenditure budget:- Budget which are related to the creation of

manufacturing facilities are knows as capital expenditure budgets

(2)Revenue expenditure budget:- Budget which are prepared for routine

activities or operations are called revenue budget

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 BUDGETARY CONTROL

Introduction:-

Budget is formal plan of future course of action. When the budget is use to
evaluate the actual performance it is known as budgetary control.

“Budgetary control is the planning in advance of various functions of

business so that the business as whole can be controlled.”

Objectives of budgetary of control:

 To control departmental activities.

 To help in systematic planning of protection and formulation of policies.
 To control direct and indirect expenses by limiting the chances of wastages.
 To control income and expenditure of production functions.
 To compare the pre-determined targets with the amount of actual expenses.

Limitations of budgetary control:

 The budgetary control systems are however not free from short coming
which are as follows;
 This system proves useless in that firm where policies, processes,
techniques, etc., are frequently changing since it does not take into account
such changes.
 It is very costly in case of small firm and serves no purpose in the event of
abnormal situations, such as strikes, lockouts etc.
 There are many factors over which the management has no control but the
budgetary control depends on them. In that case, if its is prepared, it may be
inaccurate and fails to serve the purpose for which it is meant.
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Characteristics of good budgeting:

 A good Budgeting system should involve persons at different levels while

preparing the budgets. The subordinates should not feel any imposition of
them.
 There should be a proper fixation of authority and responsibility. The
delegation of authority should be done in a proper way.
 The targets of the budgets should be realistic; if the targets are difficult to be
achieved then they will not ensure the persons concerned.
 A good system of accounting is also essential to move the budgetary
successful.
 The budgeting system should have a whole-hearted support of the top
management.

Requisites for successful budgetary control system:

1. Clarifying Objectives:

The budgets are used to realize objectives of the business. The objectives
must be clearly spelt out so that budgets are properly prepared. In the
absence of clear goals, the budgets will also be unrealistic.

2. Proper Delegation of Authority and Responsibility:

Budget preparation and control is done at every level of management. Even

though budgets are finalized at top level but involvement of persons from
lower, levels of management are essential for their success. This necessities
proper delegation of authority and responsibility.

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3. Proper Communication System :

An effective system of communication is required for a successful budgetary

control. The flow of information regarding budgets should be quick so that
these are implemented. The upward communication will help in knowing the
difficulties in implementation of budgets.

4. Budget Education :

The employees should be properly educated about the benefits at budgetary

system. They should be educated about their role in the success of this system.
The employees may not take budgetary control only as a control device but it
should be used as a tool to improve their efficiency.

5. Participation of all Employees :-

Budgeting is done by every segment of the business. It will also require the
active participation and involvement of all employees. In practice the budgets
are to be executed at lower levels of Management. Those for whom the
budgets are framed should be actively associated with their preparation and
execution. The employees, on the basis of their past experience, may give
more practical and useful suggestions.

6. Flexibility :-
Flexibility in budgets is required to make them suitable under changed
circumstances – Budgets are prepared for the future, which is always
uncertain. Even though budgets are prepared by considering the future
possibilities but still some occurrences late on may necessitate more
appropriate and realistic.
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 Organization chart for budgetary control:

Managing Director

Chief Executive

Budget Committee

Budget Officers

Sales Productio Purchase Personnel Developme Accountan

Manager n Manager Manager Manager nt Manager t

Key factors

The factor that sets a limit to the total activity is known as key
factor which influence budgets. It is also called limiting factor or governing
factor principal budget factor. For example, there may be a high demand for a
particular product but due to non-availability of the supply of raw materials,
production may have to be destructed and this factor is known as key factor.
The following are examples of key factor.

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 1. MATERIALS : I Availability of supply
ii) Restriction imposed by
licenses, quotas etc.,
2. LABOUR : I) General storage
ii)
Shortage of skilled labor
3. SALES : I) Consumer demand
ii)
Inadequate advertising
and warehousing facilities
iii) Dearth of experience
or successful salesman;
4. PLANT : I) Limited capacity due to
lack of capital;
ii) Limited capacity due to
iii) lack of space
In sufficient capacity due
to shortage of supply;
iv)
Bottleneck incretion key
processes;
5. MANAGEMENT : I) Shortage of efficient
executiveness;
ii)
Insufficient capital

The key factor does not create any permanent problem in the business
operations since it is possible to solve any problem with proper management
action in figure.

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Organization for budgetary control

For effective budgetary control a sound and efficient organization is

essential. The following requirements are to be fulfilled for establishing a sound
system.

1. Budget cost center:

A budget cost center is a section of the organization for which

separate budgets can be prepared and control exercised. They can be same as
cost centers with accountability resting with a responsible person who heads
that cost center.

2. Organization chart:
There should be well-defined organization chart, showing the lines of
authority and responsibility of each executive, and his position in relation to
others – both upwards. The design of organization chart will vary depending on
the nature and size of individual business and the extent of control desired.

3. Budget committee:
The responsibility for the preparation of budgets generally rests with
the budget committee, which includes the following executives:

- Chief executive, who will be the chairman of the committee

- Production manager
- Sales manager
- Materials manager
- Standards & quality control manager
- Finance manager
- Other departmental heads

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Difference between budget and budgetary control:

 The budget is an act of planning whereas budgetary control is an act of

controlling.
 The budget concerns itself with the future. Budgetary control, is however,
concerned with the present activities although it is prepared on the basis of data
collected from the past budget. But the activities that the budgetary control
involves are not limited to that budget only. It is also related to the questions as
to how far the budget can effectively Utilized in future
 The budget fixes the target and budgetary control helps to arrive at that
target.
 The actual performance is measured not by the budget by budgetary control.
 But this is not performed by budgets of course they are extremely useful at
the time of preparing a revised budget.

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 CHAPTER – II

OBJECTIVES & METHODOLOGY

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NEED FOR THE STUDY:

The significance and need of choosing “Budget and budgetary control” as a

study is because of its importance i.e., Budgetary control is the process of

determining various budgeted figures for the enterprise for the future period and

then comparing the budgeted figures with the actual performance by calculating

variances, and to ensure planning for future by setting up various budgets. The

requirements and expected performance of the enterprise are anticipated to co-

ordinate the activities at different departments and Fixation of responsibilities

on various individuals in the organization.

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OBJECTIVES OF THE STUDY:

The study is based upon the part of financial performance that has been taken in

to consideration i.e., budgetary concepts.

 To understand the importance of Budget and Budgetary control.

 To apply various theoretical aspects of budget and budgetary control.

 To ascertain how budgetary control helps in planning and coordination of

various operations in an enterprise.

 To ascertain how budgetary control helps in controlling the day-to-day

operations of the business enterprise

 To know whether there is any influence of budgets in profit making or not.

 To know the steps taken by Sangam Dairy in preparation of budgets.

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METHODOLOGY:

The information for the study has been obtained from two sources namely.

1. Primary Data

2. Secondary Data

Primary Data:
The data for study has been collected from the management of the company.

The information about the industry profile and company profile was gathered from

HRD, SANGAM DAIRY and the data about the budget and budgetary control was

gathered from Financial Department.

Secondary Data:

This is taken from the annual reports, websites, company journals,

magazines and other sources of information of SANGAM DAIRY.

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LIMITATIONS:

1. The period of study that is 6 weeks was not enough to go into the detailed

aspects of the study.

2. The study is carried basing on the information and documents provided by

the organization and based on the interaction with the various employees of

the respective departments.

3. Most of the matters related to budgets were confidential and sensitive. So it

is not possible to gather much information.

4. Budgeting process is very dynamic and changes from time to time.

5. Budget that were prepared are only based upon estimation considering the

trend at the time preparation.

6. Flexibility with in the budget is not possible.

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 CHAPTER-II
INDUSTRY PROFILE

23
 CHAPTER-II INDUSTRY PROFILE

Guntur dist was selected for the cooperative development in A.P. For the establishment of this
diary 1.5 lakh rupees was given in donation (In the form of milk). From Guntur at a distance of
16 KM. at Vadlamudi a land of 34.46 acres was purchased again 53 acres of land was purchased
for the technical development corporation has arranged loan. In the scheme of 1,11, III diary
development system and Technical assistance also.

INTRODUCTION

Indian agriculture is gamble in monsoons, when crops failure the farmer is in distress. To protect
himself, he should undertake subsidiary activities like milk, cattle, fisheries etc. 5uffaloes and
cows produce milk which enhances the income of the farmers. Milk consumption is essential in
our country in where in large number of children are nourished. 9ealizing this Government of
India gave a boost to live stock rearing known as Operation flood which ushered in white
revolution In view of growing demand for milk Government established milk producer’s co-
operative unions. One of the milk producer’s union established in Guntur is G.D.M.P.C.U. also
known as Sangam dairy, Sangam dairy involved in production of milk products and provide
services to Consumers. It raises funds to perform manufacturing and other marketing activities.
The three activities of the dairy are finance, production and marketing. In view of importance it
is necessary to analyze financial position of the dairy. One of the significant techniques in
financial analysis is ‘Funds flow’ analysis. It is designed to highlight the changes in financial
condition of a business concern between two points of time. It indicates various means by which
funds were obtained during a particular period and the ways in which these funds were
employed. Funds flow statement is also termed as a ‘Statement of sources and application of
funds’.

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BRIEF HISTORY

Under the operation flood 1 problems, Guntur District was selected to develop dairy activities on
annual patterns keeping in view the three-tier system of village dairy cooperative society at .the
village level, managed by the elected representatives of milk producers, a co-operative union
Ltd., was registered after A.P. Co-operative societies act 1964 with registration no:83DD dated
01-02-1997 with 81 affiliated milk producer’s co-operative society act 1995 with a registration
number; AMC/GNT/DCI/97/28 DT 1/02/1997. It is the first union Registered Under model act in
India.

INDIAN DAIRY INDUSTRY

Dairy is a place was handling of milk, and milk products is done and technology refers to the
application of scientific knowledge for practical purposes. Dairy technology had been defined as
that branch of dairy science which deals with the processing of milk and manufacturing of milk
products on an industrial scale.

Indian with a vast population has great problem to provide every citizen with adequate food, both
India terms of quality and quantity. A large no of people depended on milk 8 its products as are
most important source. nourishment. Thus during promises to be utile significant occupation of
these formers. Besides, organized dairying also creates substantial employment opportunities
diary industry only provides additional employment but reduces the burden of population as
agricultural products keeping this India view, it is necessary to develop diary industry very fast
for over coming the problem of income employment 8 nutrition India the country.

In developed dairying countries such as the 1)SA the year 1850 is seen as the dividing line
between farm and factory scale production various factors contributed to this change in the
countries, Viz. Concentration of population in cities where jobs were plentiful, rapid
industrialization, improvement of transportation facilities, development of machines, etc. where
as the rural l0 areas were identified for milk production, the urban centers were selected for the
location milk processing plants and product manufacturing factories. These plants and factories

25
were expanded and modernized with improved machinery and equipment to ensure the various
advantages of large scale production nearly all the milk in U.S.A. before 1900 was delivered
raw. Once pasteurization was introduced, it developed rapidly mechanical refrigeration helped in
the rapid development of the factory system of market milk distribution.

In India dairying has been practiced as a rural cottage industry since the remote part semi
commercial dairying started with the establishment of military dairy farms and co-operative milk
unions’ through out the country towards the end of nineteenth century.

During the earlier years each household in these countries maintained it “family Cow” or secured
milk from its neighbor who supplied those living by. As the urban population increased, fewer
households would keep a cow for private use the high cost of production, problems of sanitation
etc. Restricted the practice and gradually family cow was culminated and city cattle were all send
back to the rural areas.

Gradually farmers within easy driving distance began delivering milk over regular routes in the
cities. This was the beginning of the fluid milk sheds which surrounded the large cities of today.
Prior to the 1850’s most of the milk was necessarily produced with in a short distance of the
place of lack of suitable means of transportation and refrigeration.

Indian Dairy Industry has made a rapid program since independence. A large number of modern
milk plants and products factories have since been established. These organized dairies have
been successfully engaged in the routine commercial production of pasteurized bottle milk and
various western and Indian dairy products with the modern knowledge, the protection of milk
during transportation. It becomes possible to locate dairies where land was less expensive and
crops could be grown more economically.

In India the Market Milk technology may be considered to have commenced in 1950, with the
functioning of central dairy of Aarey Milk Colony, and milk products technology in 1956 with
the establishment of AMUL Dairy, Anand. The industry is still in its infancy and barely 10% of
our milk production undergoes organized handling.

26
THE CO-OPERATIVE STRUCTURE

The Anand Model of Co-Operative structure builds on a vertically integrated single industry co-
operative that links rural producers with urban instruments by including enhancive milk
production system and improved technology for processing and marketing.

The Anand Model of Co-Operative Structure was three tired. The structure is as Follows

1. The Village Milk producer’s Co-Operative Society.

2. The District Milk Producer’s Co-Operative Union.

3. Various district unions which together form a co-operative milk marketing federation.

ESTABLISHMENT OF ANAND TYPE CO-OPERATIVE IN INDIA

In 1964, the Prime Minister ‘LALBAHADUR SASTRY’ visited Gujarat. During that visit he
was impressed with village milk Co-Operative societies and requested Mr. Varghese Kurein. The
General Manager of Anand Milk Union (AMUL) to extend the Anand Milk Union (AMUL) to
extend the Anand Type Milk.

Co-Operative Dairies to other parts of the country the Prime Minister wrote letter to the Chief
Minister of a States Government advising to take the initiative to setup Anand type milk
producers Co-Operative Societies in their respective states.

The initiative led to the creation of National Dairy development Board (NDDB) in 1965 and
taken its sister organization the Indian Dairy Corporation (IDC) in 1970, with the intention of
implementing operation flood, which is essentially aimed at setting up of Anand type dairy Co-
Operation Flood-I was the extension if the Anand Pattern milk co-operative in the rural hinter
lands.

The National dairy development board and the Indian Dairy Cooperative drew up plans under
operation flood with the aim of establishing the dairy industry in India operation Floods was

27
initiated in 1970 and covered eighteen milk sheds which comprised the rural hinter lands of the
metropolitan cities.

Financial assistance from the World Bank helped NDBB and IDC to establish dairy in1ustry in
the states of Karnataka, Madhya Pradesh and Rajasthari. Having hinter lands of the metropolitan
cities. Financial assistance from the World Bank helped NDB and •IDC to establish dairy
industry in the states of Karnataka, Madhya Pradesh and Rajasthan. Having successfully
achieved the major objectives of operation Flood-I the scheme had been extended to cover 155
milk sheds under operations Flood-Il.

OPERATION FLOOD

Aimed at setting up a model dairy to meet Indians rapidly increasing need for milk and its
products, the project operation Flood was conceived and formulated by the national dairy
development board during the 4th plan period. The project was initiated in 1970. The project
initially scheduled for a period of 5 years, was subsequently extended twice to 11 years. The
project operation Flood was terminated in 1981. Based on the operational validity of the Anand
pattern NDDB had conceived and formulated the project.

The main aim if the project was to create a ‘Flood’ of rurally produced milk assuring the farmers
of remunerative price and ready market and the urban consumer of whole some milk at stable
and reasonable prices by linking the main milk producing areas to main consuming centers in
urban areas.

NATIONAL GRID

National Milk grid has been set up to transport liquid milk from surplus to deficit areas with the
help of 976 roads and rail milk tankers having a capacity of 13.3 million Liters a day National
Milk grid today linked by million rural products in 59 milk shed to 126 urban centers providing
them a national grid, which aims to even out seasonal fluctuations in production and price.

28
DAIRY INDUSTRY IN ANDHRA PRADESH

The programme of dairy industry was initially with commendable help of the United Nations
International Children’s Emergency funds the Freedom from hunger campaign of U.K. These
organizations contributed a lot in the establishment of dairy units in Andhra Pradesh during the
period 1 967-1 967.

Agriculture is the primary occupation of Andhra Pradesh. The total occupation of Andhra
Pradesh is reported to be around 9.5 cores as per 1999. Above 70% to 80% of people in the state
are living in the country side. The milk producers have been faced with a lot of problems in the
process of productions and marketing of milk namely improper transport facilities poor
technology observes of organized system of processing marketing and pricing. At the context
that the government of Andhra Pradesh had viewed to constitute a Dairy development
corporation to safe guard the interest of milk producers and ensuring adequate supply of fresh
milk at a reasonable price of the urban consumers. As a result the APDDC came in existence on
2 April, 1974.

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CO-OPERATIVE FEDERATION

To implement Operation Flood-Il program through active involvement of producers in

organizing milk production, procurement processing and marketing on “Three Tire” Co-
Operative structure as per the national policy of government of India, Andhra Pradesh Dairy
development Co-Operative Federation was constituted in October 1981.

The three tier system includes primary village level dairy Co-Operative Societies, Co-Operative
Unions at district milk shed level and a state level federation.

For dairy development program in Andhra Pradesh the Indian Dairy Co-Operation Offered
financial assistance of 78.51 Cores with 30% of grand and 70% on loan basis. Sixteen districts
out of 23 districts in the state were identified by the National Dairy Development Board for
implementation of operation Flood-li programme. V With the implementation of operation flood-
Il program in Andhra Pradesh, Dairy development has gained momentum providing a trust to
eradicate the poverty and unemployment in rural area and brought greater % awakening and
confidence among producers to manage their own affairs through dairy Co-Operative of Anand
pattern. The dairy development in Andhra Pradesh is presented in the following table.

The promise for India’s Dairy development lies in recognizing the need for a substantial increase
in production of liquid milk. Presently milk products fetch relatively higher price than liquid
milk and this has directly boosted. The output of value added products. Further the indigenous
milk preparation V enjoy higher demand and better prices than the western products such as
tangle, butter cheese, Ice cream, Milk powder. However the importance of liquid milk and it’s
influence on the market can not be underplayed since it meets a basic need of late particularly
since 1985 the liquid milk has witnessed and upswing in price for the development of any
activity a rational pricing polity is vital.

This is more so in case of daring where a positive price policy acts as a catalyst for growth by
motivating he farmers to segment milk production live their four key determining factors are the
price farmers should recessive for

30
MILK The profitability of comparison, non-firm enterprise, the input cost of milk production
and prices consumption response of market.

GROWTH OF THE INDUSTRY

Before the independence of India, India the first half of the 20th century, dairying India the
country was largely unorganized milk & its products were generally not easily marketable
commodities and there was no transport of these products to far distances organized daring, as
was understood India the fist started India a small way when military dairy fame’s & this was
established towards the end of 19th century to met the 5% demand of the forces & their
hospitals. Some dairies have been encouraged to make pasteurized butter, primarily for the use of
British army. As a result he imperial instate of animal has boundary dairy was established India
1923 at Bangalore, there has been another major effort in the early 1940s where milk is
produced. In India rural areas and district, was collected in bulk paste erased & transported by
distributing Bombay by the “Bombay milk scheme” operated by the Bombay municipality when
India become independent In 1947, are of the major milk scheme (GBMS).

PRESENT STAGE OF INDUSTRY

During the last four decades the dairy industry in India has undergone revolutionary changes in
its structure. Now India is the firs largest milk producer in the world. The methods of collection
and marketing and utilization of milk for manufacturing products have been considerably
improved.

Although from the hygiene point of view, the conditions of milk production India rural areas
continue to be un satisfaction, milk product country has more than doubled since the efficient of
planning In 1951. Although it has raised .from 17.4 million tons India to 40.2 million tons India
1984-85 after stagnating at a level of 17.20 tons for 1940 and 1970. India faces shortages to meet
the nutritional requirements of the population. Availability of milk as indicated there by is less
than proportional increase in India milk production in relation in to population growth marketing
schemes were evolved and developed in India in some of the major cities in the initial stage.

31
HISTORY OF INDIAN MILK INDUSTRY

 Beginning in organized milk handling was made in India with establishment of military
dairy farms.

 Handling if milk in Co-Operative milk unions established all over the country on a small
scale in the early stages.

 Long distance refrigerated rail transport of milk from Anand to Bombay since 1945.

 Pasteurization and bottling of milk on a large for organized distribution was started at
Aarey (1950), Calcutta (Haringhata, 1959), Worli (1961), Madras (1963), etc.

 Establishment of milk plants under the Five Year Plans for dairy development allover
India. There were taken up with the dual object of increasing the national level of milk
consumption and ensuring better returns to the primary milk producers. Their main aim
was to produce more, better and cheaper milk.

DAIRY INDUSTRY

Dairy industry is the industry which fiber gates the milk products in to byproducts and served for
different customer located at different places with better quality. And which is to new to man
kind it is as old as him. Although it has been recognized as an industry from 18th century
onwards.

The Dairy Industry in India is going through major changes with the liberalization polices of the
government and the. Restructuring of the economy. This has brought greater participation on the
private sector. This is also consistent with global trends which could hopefully lead greater
integration of Indian dairying with the world market milk products. After stagnating of 20
Millions tones for 20 years between 1950 to 1979 India’s milk productions being to raise,
crossing 30 Million tones in 1980 and 59 Million tones in 1992. Today India ranks as the world
second largest milk producers after the U.S (72 Million Tones).

32
WORLD FOCUS ON INDIAN DAIRY

Indian Dairy is emerging as Sun Raise industry India represents one of the world largest and
fastest growing Market for milk and milk products due to the increasing disposable income
among the 250 Million strong classes. There are two main reasons for the world focus on India
one the low cost economy and two the liberalization process initiated since 1991. Other
important factors including low inflation rates of expensive labor, the presence of the world’s
largest third pool off.

DAIRY DEVELOPMENT UNDER 5 YEARS PLAN

Dairy development in India after the independence under industrialization & public awakening
recess the establishment of organized collection processing and distribution of mile to the reads
of the expanding urban areas.

The planned development of dairying was actually taken up by India as the first national 5 year
plan (1951 -56) and the inadequately of suitable market structure was noticed as factor for milk
production. This expressed itself India a remote rural area, where, a went of quick transport and
marketing facilities, milk was marked India the converted to ghee, which did not provide
sufficient income to the farmer to solve the problem.
The Indian dairy corporation (DC) was established India 1970 as a specialized institution to
promote a finance dairy development in India. The function include financing co-operative dairy
development in India and promoting expansion of milk processing and marketing facilities.

PAST TRENDS

In olden days there were no proper means for transporting the milk from one place to another
place and the milk used to loose its quality while transporting it from milk producers to milk
chilling centers. And there was no critical relation between dairy people and the milk producers
there was only one way communication. In olden days there was no proper equipments for
testing of fat content and SNF testing i.e. solid not fat.

PRESENT TRENDS
33
There has developed a cordial relationship between the milk producers and the dairy people.
Now a day the dairy are providing loans for buying milk producing animal and giving subsidies
for cattle feed and the means of transportation has been increased to a longer extent which has
the better storage capacity of milk for longer period. Streams of new Bye- products have been
introduced in the recent days.

FUTURE TRENDS

It is estimated that the future of the dairy industry would be bright looking the growing pattern
on milk production and increase in the number of milk producers.

And it is expected that the technology will stand at its best position to serve different customers
in many different ways.

PROBLEMS OF THE DAIRY SUB SECTOR

A review of the present state of the sub-sector reveals that during the last two decades a wide
network of cooperatives has been created in the dairy sub-sector of India Economy. This has
brought rapid advances in dairy technology. However the dairy sub-sector of our economy
appears to be in the grip of a few basic problems that have perennially its growth. inFollowing
are some of the basic problems of the sub-sector, which require immediate attention of the
planners and administrators of dairy development. It seems desirable to resolve these problems
so as to develop the dairy sub-sector on a sound fading.

 Low productivity: Majority of the milk’ animals in India have poor yield. Low level of
productivity has resulted in low per capital availability of milk, unprofitable dairy
enterprise, high price of milk products and negligible consumption by the relatively poor
people.

 Problems of cattle feed and fodder: The dairy sub-sector in India faces a strangely
paradoxical situation. On the one hand, it is facing diminishing returns to more intensive
use of animal feeds. Although the scientific feeding rates maximize milk production,
34
 they do not maximize the farmer’s return from milk production. Therefore, they are
unlikely to be used by the. farmer for feeding his milk animals. He feeds his animals at
such rates, which would maximize his financial returns on milk production. Unless
feeding is improved, no lasting improvement can be brought out by selective breeding or
exotic cross breeding.

 Poor breeding : Within the constraints imposed by the supply of cattle feeds and
fodder’s the only way to enhance milk production to meet the growing demand of milk
products is to fully exploit and improve the genetic potential of our milk animals. There
is a need for a suitable breeding policy which would. enhance milk production without
adversely affecting the draught power requirement of the rural economy and total food
supply for human consumption.

 Milk production through wreakers section: The present growth strategy of the dairy
sub-sector envisages ‘that at least one third of the producers in the project areas must be
drawn from the groups of small farmers and at least another .one third from marginal
farmers ‘and agricultural laborers. The quality of their animals is poor. Their fodder
resources are limited; hence their dairy enterprise suffers from a severe setback under the
drought situation. Their animals have a face problem of drinking water and poor shelter
too. These are the major constrains to a steady growth of the dairy sub-sector through
higher involvement of the weaker sections in rural areas. To achieve these objectives the
policies and• problems affecting growth the dairy sub-sector must provide solution to the
problem related with milk production through weaker sections in rural areas.

 Problems of milk marketing:It is a great necessity that production must reach the
consumer at a reasonable price. The traditional system of milk collection and marketing
can be characterized’ by exorbitant rates and ram’ part adulteration. There is a wide gap
between the collection of milk in the flush and lean seasons. It adversely affects the
economic liability of dairy plants as well as the collection and marketing channels.
Adulteration is the other problem of urban milk marketing in India.

35
 Other problems: A balanced and study growth of the dairy sub- sector also depends on
the infrastructure in the country side. The infrastructure also includes research
establishment into supply channels, credit institutions, extension organization and
marketing outlets. An effective growth strategy must work for the establishment of these
ingredients of the infrastructure. There are the basic problems to be considered, while
planning the growth of the dairy sub-sector for their solution is imperative for improving
the incomes of milk producers, nutritional standard of customers and for running the
plants at viability levels. Such solutions are relevant at the national, as well as at the
regional levels. Growth strategy for the development of the dairy sub-sector in a sector in
a particular region would have to evolve proper solutions to these problems.

36
 CHAPTER – IV
COMPANY PROFILE

37
 CHAPTER-IV

COMPANY PROFILE

Milk and Milk products are the most important food items in promotion the health of children are
elders. It is well known as “the wholesome food”. Prior to 1970, the entire population in Guntur
District used to depend on• vendors for milk. Since, the vendors were monopolies. They win an
intention of making profits, adulterated the milk extracted the cream out of it.

Sell the milk at the favorable prices to them. They used to sell the milk of inferior quality are
unreasonable price, which failed to serve the very purpose. So the Government with a view to
protect health and to supply good quality of milk at reasonable price, set up dairies at some
important places and Sangam Dairy is one of them.

Under the Operation Flood-I Programme, Guntur District was selected to develop dairy activities
on Amul pattern. Keeping in view the three tier system of village dairy Co-Operation (V.D.C)
societies, the District Milk producers Co-Operative and Co-Operative federation at state level
which is an apex body.

38
SANGAM DAIRY ORGANIZATIONAL CHART

Board of Directors

Chairmen

Managing Director

Senior Accounting Senior Production

Manager
Manager Manager

Manager

Dairy Manager

Super Visors

Workers

Skilled Workers Unskilled Workers

39
NOMENCCLATURE OF SANGAM DAIRY

The name of the Sangam ‘Dairy is due to the presence of Sangameswara Temple at the village
SangamJagarlamudi near vicinity of the dairy. The dairy is located between Guntur — Tenali
highway about 15 kms from. Guntur and 10 kms from Tenali having a very good architectural
view attracting the visitors.

ANAND PATTERN

The “Ananci Pattern” advocates an integrated approach to the Dairy development. Under co-
operative sector by providing remunerate process and• creating assured market to the farmers
produce and also safeguards th markets of sale produce by jroviding necessary technical inputs
for the rapid progress of Dairy industry. In this pattern, the real investment of producers are seen,
where the village dairy co-operative as well as district union are managed by producers
themselves. The producers have got a say in determining the price of commodity they produce.
This is really a fantastic approach.

OPERATION FLOOD PROGRAMME

Operation Flood-I

Dairy plant handling capacity of 1.5 lakhs liters of Milk per day besides facilities to manufacture
12 M.Ts of Skim milk powder, 8 tons of butter, 2 tons of Ghee and casein from sour milk was
established with a cost of Rs.2.88 Crores.

Providing Technical facilities like, Free veterinary Aid, Cattle Insurance and Aritifical
insemination. Fodder development and cattle feed on no prolit no loss basis was created with an
expenditure of Rs.12Crores.

operation flood-II

Under flood-Il the dairy processing capacity had been increased from 1 .5 Iakhs liters to 2.5
lakhs liters per day with an expenditure of Rs.3.6 crores.

40
Operation Flood-III

Rs.2.5 Crores was collected to this milk shed for expansion improvements in dairy plant chilling
Centers and technical input activities. Our Government gave an amount Of Rs.81 lakhs towards
the construction of• quarters and technical input building.

TECHNICAL INPUTS AND MILK ENHANCEMENT PROGRAMME

Various technical inputs offered to the milk producers are classified as follows.

 Artificial Insemination Services: The dairy has a separate production centre. It is

maintaining 150 Murrah Bulls for semen production purpose producing 60,000 doses of
semen every year, the dairy runs 120 Artificial Insemination centers.

 Animal health:The union gives veterinary aid to milk producers through 6 routes with
head quarter at sangam Dairy. The routes include Repalle, Baptia, Sattenaplli,
Narasaraopeta and Gurazala and one route at Vinukonda. Each veterinary route covers 68
M.P.C. societies. The animals suffering from infertility problems illness are treated.

 Foclder development programme:The union has raised in its campus nearly 15 acers of
perennial crops like para, Hy.Napier, Co-i and Co-2. The union supplies certain varielties
of fodder seeds to the milk producers at 30% subsidy.

 Fodder Seed multiplication Programme: The union has taken up seed multiplication
programme for the past 7 years by supplying good varieties of seed to the producers,
raising in farmer’s field and encouraging seeds multiplication.

 Silvipasture Scheme:Under kissan van this union has taken up growing in farmer’s
fields.

 Distribution of chaff cutters :The union purchased 140 chaff cutters from Ludhiana and
supplied to the milk producers with 50% subsidy for better utilization of grass fodder.
Enrichment of paddy straw with urea The union provides necessary infrastructure and
area required for the programme on free of cost to the producers.
41
  Cattle feed :The cattle feed plant with an installed capacity of 100 Mts per day was
constructed by N.D.D.B. The feed is produced by semi automatic pro weighing with a
provision of mechanical devices to separate and take the uneven and unwanted harmful
particles from the raw materials.

 By-Pass protein food:The union is providing a special feed called by-pass protein feed.
This union is the only union by-pass protein fee in Andhra Pradesh. By pass protein feed
is of superior Quality of conventional type of concentrated feed. Distribution of mineral
mixture Mineral Mixture was distributed to the milk producers on 50% subsidy basis.

 Cattle Insurance:The union is insuring the milk cattle of the producers with a
confessional premium of 3.4% rate. Of the premium, 1/3 is born by the union: 1/3 by the
society; 1/3 by the producer. The union is insuring 5,000 to 6,000 milk animals every
year. The union is contributing to the newly constructed society buildings

 Cross breed heifers subsidy scheme:To encourage cow milk production the union
distributing 900 cross breeds heifers to the milk products on subsidy rate in the year
1992- 1993. One bag feed per a heifer for a month will be supplied by the union.

 Training Programme:Training will be imparted to the society workers for 90 days in

veterinary first aid A.l services; 30 days to paid secretaries and 5 days to testers in clean
milk products, milk testing etc. Training will also be provided to the managing committee
members of V.D,C societies and milk producers regarding for 90 days in procurement
and technical input programme.

 Other Activities: The union supplies testing equipment’s to thO M.P.C Socities and milk
collection centers in no profit on loss basis. A monthly news bulletin “SangamSamacher”
in being circulated to all the societies on free of cost. The union is publishing information
on statutory aspects of Cooperative Act.

Sangam Dairy is no longer controlled by the A.P.D.D.C.F the G.D.M.P.C.U. Limited which
has been named as sangam dairy is the first dairy to be brought under the A.P. Mutually Aided
Co-operative Societies Act to February 2 1997. As a result, Sangam Dairy got the right to market

42
its products which iere carried out by the A.P.D.D.C.F earlier and the commission payable to the
A.P.D.D.C.F for marketing which is about Rs.50 lakhs could be saved.

ASEPTIC PACKAGEING STATION

Aseptic milk or Sterilized milk long shelf milk is a unique way of milk preservation, where the
milk is packed in disposable, laminated paper cartoons with three months shelf life.
The essential feature of this pack is to provide milk paced as a grocery item, with ease and
convenience to the consumer, the consumer can purchase his sleekly requirement and store it for
us aged as and when it is convenient Tetra pack is break through in milk preservation
technology, which offers effective convenience pack to the consumer.

Aseptic make packing station was established initially during the year 1986 and estimated cost of
Rs.2.5 Crores. The station equipped to pack milk in packs with 15 days shelf life earlier has been
replaced with machinery to pack with 3 month’s. shelf life. The existing capacity is 5O000lt
today. After overcome the minimal set back with regards to.

Market identification now the product is making a smooth sailing in the cities of Hyderabad.
Vizag and Calcutta. Besides, the tetra-pack milk has been popularized in the milk deficit coal
belt area of Bhadhrachalam, Khammam and Kotthagudem etc. There are plans for further market
expansion in Calcutta and Bangalore cities.

Aseptic station not only suitable to pack milk but also pack novelty products like sterilized
cream double milk high fat and high solids not fat depending upon the need of the consumers.

Trails are under process for the introduction of these new products. The given table gives brief
details of the milk packed in 500m1 packs from 2000-2007 year wise (in lakhs packets).

EXISTING CAPACITIES

 Milk handling capacity - 2.5 lakhs liter per day

 Milk powder capacity (Two Powder Plants, L&T make and stain co) - 22 M.Ts Per day

43
  Table Butter (4 Packing Machine /CBMM And butter chaplets Machine) -8 M.Ts Per day

 Ghee - 10 M.Ts per day

 Storage of butter in deep Freeze - 700 M.Ts per day

 Boiler Section - 2 oil fires boilers, 2 coal fixed

 Refrigeration - 350 M.Ts

Milk chilling Centers

(a). M.C.C. Narasaraopet - 50,000 LPD (Liters per day)

(b) M.C.C. Gurazala - 30,000 LPD

(c) M.C.C. Vinukonda - 30,000 LPD

(d) M.C.C. BattiprOlu - 30,000 LPD

The union has also started construction works for another two chilling centers each at Vinukonda
and Bhattiprolu

 Cattle Feed - 100 M.Ts per day

 Aseptic Feed - 50,000 M.Ts per day

(a) For Machinery - 2746HP+1 31Kw

(b) For Lighting - 122Kw

SANGAM DAIRY AIMS & OBJECTIVES

 Sangam reaffirms with new millennium.

 To enhance the present procurement to 4.0 lakhs liters / day in the next 5 years.

44
  To enhance the liquid milk market to 1 .5 lakh liters/days in the next
5 years.

 To enhance the business turnover tb 250 crores by 2005.

 To bring all societies in the district under electronic milk testing.

 Increasing milk production enhancement activities inducing cross breading cows and up
gradation of buffaloes.

 Uphold co-principles and be a model co-operative principles and be a model co-op for
others.

SANGAM A SAGA OF SUCCESS

It is true say that milk is the nourishes our life and it was the elixir that brought forth significant
changes India the lives of people of Guntur District. Guntur is the first one selected in the state
under operation flood, program among the 18 districts in the country, which changed the way
people looked at life in rural India.

Sangam — An Instrument of Socio and Economic Change In Group:

The evolution of GDMPCU Ltd. started with the generous donation of milk producer of Krishna,
Guntur and West Godavari District for the purpose of 34.46 acres of lend at a cost of Rs.1.5
lakhs. During 1973-74.

The G.D.M.P.C.U. Ltd., was registered under the A.P. Co-Op societies Act 1964 on 23-2-1 977
and the management of dairy was handed over to the elected representatives of the union on 1-
08-1978 with two milk chilling centers at Narasaraopet and Gurazala, by the A.P.D.D.C. Ltd.

Milk producer’s cooperative societies were established in the village facilitating people to
mobilize themselves and interact productively. This the voyage of Sangam Dairy started with 81

45
co-operative Societies and now it has 21 544 members societies and 432 collecting centers in the
district.

The GDMPCU Ltd. has also entered in a. challenging task of Co-operative

Societies Act 1995 and got registered on 01-02-1997 under the name of
Guntur District Milk producers mutually aided’ co-op union Ltd. In 1997, the union established a
new chilling centre at Bhattiprolu and another at
Vinukonda In 1998.

The union now procuring 2.57 lakh liters per day on an average and a highest of 2.77 lakh liter
during flush and producing milk product like table butter, White Butter, Salted Butter, Cooking
Butter, Skim Milk Power, Whole Milk Power, Toned Milk, whole milk and standardized milk all
the urban areas of the district and other states of the country through its renewed brand Sangam.
The Union expanded its processing capacity from 1 .0 Iakh liters to 2.5 lakh liters during
operation flood II and started Asceptic, packaging station India the dairy premises and cattle feed
plant India the Vadlamudi itself.

The union started its own marketing in the important towns like Hyderabad, Vijayawada,
Tirupathi and Chennai, besides supplying milk to distant places, like Nagpur, Kolhapur, Pune.

Sangamat the Farmers Service:

 Animal vaccines at subsidy rates

 Fodder seeds

 Sitvia pasture scheme

 Distribution of chaff cutters

 Enrichment of paddy straw with urea

 Distribution of cattle feed on subsidy rates

46
  Supply of by pass protein feed

 Distribution of mineral mixture

 Cattle insurance on 2/3 subsidy

 Aid to society building

 Distribution of cross breed cows and heifers

 Training programs to all farmers and paid secretaries

 Formers induction program through CD programs Accident insurance to all member

products.

Sangam — Facts & Figures that Speak

 Sangam is strength of 1.33 lakh member products & procures around 665 lakh liters per
annum.

 Sangam pimps lack around Rs.200 Iakh into the rural economy, every 10 days towards
payment to the milk producers.

 Sangam co-oprativ have been spread over and interwoven with 643 villages of Guntur
Dist.

 Cream rich Sangam milk and toned milk is sold I 8 towns in Guntur District, and Sangam
is the’brand leader. Guntur Dis.t. Sangam milk is also in Hyderabad and Madras.

 Sangam paid one of the highest returns to the member producers amongst the South
Indian dairies during 1998-99, 76% of the turnover was paid as purchase price to farmers.

 Sangam Dairy products sell at premium price on account of its quality. Butter is one of
the leading brands in all metro table butter is in 500 g, 100 g and chiplets (10 C)
manufactured and Sangam Dairy.

47
  Sangam besides giving remunerative price to the farmers has been consistently paying
price difference to all its milk producers during the last four years from its enterprises.

 Sangam Dairy commands a business turnover of approx. 115 crores it is projected to

double in the next five years.

 Sangam hybrid fodders seeds are processed at it own seed processing plant at Guntur and
is sold to all leading co-operatives India the country.

SANGAM IN THE FORE FRONT

History was made in 1995-96 when India surpassed the USA in milk production white sangam
stood in the forefront to come into the new mutually aided co-operative societies act as a model
institution for the entire country.

Sangam is the forerunner in getting ‘A’ certificate from the audit point of view performance its
inception.

AWARDS OF EXCELLENCE

Sangam the recipient of excellence Award and udyogRatna awarded during the year 1997 from
the Institute of Economic studies — New Delhi.
Sangam is the recipient of Gold Star Award from the council of Economic V studies — New
Delhi India 1998.

Sangam is the recipient of Sri MulukunuruViswantha Reddy Awarded for co excellence by the
co-op Development foundation, Hyderabad in 1998.

SANGAM RE- AFFlRMS

 Sangam reaffirms with new target for the new millennium.

48
  To enhance the present procurement to 5.0 lakh liters/day.

 To enhance the business turnover to 250 crores by 2005.

 To make pucca buildings for all the mils societies India villages.

 To bring all the societies India the district to electronic milk testing.

 To achieved total computerization with LAN/wan net work.

FUTURES

 Marketing of Sangam Milk in Hyderabad (June 1997) and Chennai (Sept. 1999)

 Currently around 25,000 per day is being sold in Hyderabad 28,000 Ltrs. And in Chennai
and 9,000 liters per day in Tirupathi.

 Marketing of mango drink (1 liter and 200 ml) and “VijayaSangam” Mineral Water.

 Curd in 200 gms poly pouches and 125 ml cups and Kalakhand in 250 gms’destic books.

 Entire quantity of Skim Milk Powder manufactured (approx 1200 MT) being sold boy in
retail 1 kg packs.

 SangamGhee in poly pouches.

 Future 500 ml and 200 ml launched in November, 2000.

 We are supplying cattle feed to meet the requirement of Producers at Rs. 5.50 perkg.

 Hybrid fooder seeds, vaccines at subsidized, prices to farmers.

Chaff cutters were being given to producers at 25% cost.

The area of operation flood under programmed has been identified into
9 milksheds/unions

49
S.No. District Milk Sheds I Union
1. Srikakulam Visakha
2. Vijayanagaram Visakha
3. Visakhapatnam Visakha
4. East Godavari Godavari
5. West Godavari. Godavari
6. Krishna Krishna
7. Guntur Guntur
8. Prakasam Prakasam
9. Chittor Chotoor
10. Kurnool Kurnool
11. Nalgonda Nalgonda
12. Ranga Reddy Ranga Reddy
13. Medak . Medak
14. Nizamabad Nizamabad

FINANCIAL POSITION

The dairy has earned a turnover of IRs.64.48. cores in 1996-97 and Rs.73 crores in 1997-98. The
turnover for the year 1998-1 999 was Rs.85.10 crores. The turnover for 1999-2000 was
Rs.104.83 crores. The turnover for 2000- 2001 was Rs.109.3 crores. The turnover for 2001-2002
was Rs.119.13 crores. The turnover of 2002-2003 was Rs.115 crores. The turnover for 2003-
2004 is Rs. 119.15 crores. The turnover for 2004-2005 was 1103.25 crores. The turnover for
2005-2006 was Rs.120.13 crores. The turnover for 2006-2007 was Rs.125.51 crores. The dairy is
proposing to increase its share capital of Rs.5 crores on hand to meet the financial exigencies. A
notable feature is that Sangam Dairy has not drawn the Rs.5 crores overdraft facilities by the
G.D. Co-Operative Central Bank for the last year.

As a result the new co-operative societies Act,the commission of Rs.50 lakhs payable to the
APDDCF for marketing of the products could be saved.

50
The interest free loan Rs.1.77 crores from the NDDB has enabled Sangam Dairy to return the
State Government Equity of Rs.81 Lakhs and loan of Rs.96 lakhs.

The dairy gives 3Onp to milk producers for every Kg. of milk they supply, of the 3Ops.l5ps is
given as cash and l5ps.

New Interventions

 Marketing of sangam milk in Hyderabad (in june 1997) and Chennai (September 1999).
Currently around 25000 Lts per day in beingsold in Hyderabad, 28000 lts in chennai and
9000 lts per day in tirupathi.

 Curds in 200gms poly pouches and 125ml cups and kalakhanda 250gms plastic boxes.

 Entire quantity of skin milk powder manufactured (approx 1200 MT) being sold only in
retail 1Kg packs.

 Sangam ghee in poly pouches (1 liter, and 200ml) launched in November 2000.

 We are supplying cattle feed to meet the requirement of producers at Rs.5.50 per kg.

 Hybrid fodder seeds, vaccines at subsidized prices to farmers.

 Insurance coverage (J.P.A.) for 1,00,000 members milk producers for an amount of
Rs.50,000.

 Subsidy for purchase of animals from Haryana is to the tune of Rs.2,500/- per animal.

 Animal insurance 12. building subsidy for societies to an extent of Rs. 20,000/-

 An amount of Rs.5,000 per head for natural death coverage all milk producers as per the
milk procurement guide lines.

51
 CHAPTER – IV
DATA ANALYSIS & INTERPRETATION

52
 I. FUEL CONSUMPTION FOR 2010 - 2011

Coal consumption F.Oil consumption Other Oil

Unit name Statio Cons Cons
Total Rate Cost of Total Cons Rate Cost Total Rate Cost
Generatio n GCV umpti umpti Total
umpti of Oil
Heat Consump on (In per MT Coal (Rs. Consump per KL of Oil Consu on (In per KL
on (In ml.pe (Rs.
Rate Kg per
n (in MU) (kcal / of tion (in Kwh) (in in Crs.) tion (in ml.per (in Rs.) (Rs. in mption r (in Rs.) in Cost (Rs.
kw) Kwh) Kwh) Crs.)
MT) Rs.) KL) Crs.) (in KL)
Coal in Crs.)
1 2 3 4 5 6 7 8 14

Stage-I 3680.00 2360 3189 2723200 0.740 3500 953.12 1177.600 ]0.320 34392 4.05 276.00 0.075 40580 1.12 958.29
Stage-ll 3700.000 2350 3197 2719500 0.735 3500 951.83 1036.000 0.280 34459 3.57 1480.000 0.040 40541 0.60 956.00
Stage-Ill 3700.000 2280 3102 2719500 0.735 3500 951.83 962.000 0.260 34407 3.31 74.000 0.020 40541 0.30 955.44
Stage-IV
Fuel related
Costs/Loss
es

Total 11080.000 2340 3175 8162200 0.737 3500 2856.78 3175.600 0.287 34419 10.93 498.000 0.045 40562 2.02 2919.73

53
 II. Operating & repairs & Maintenance expenditure

RE 2009-10

SI.No. Details 2006-07 2007-08 2008-09 1.4.09 to 1.10.09 to Total BE 2010-11 Remarks
(Actuals) (Actuals) (Actuals) 30.9.09 31.3.10
(Actuals) (Estimations)

A Operating expenses:

1 Lubricants & other Consumables 730.29 615.55 866.57 516.44 568.46 1084.9 1371.7
0 8
2 Water cess payable to PCB 1700.39 1679.87 1752.21 876.05 973.95 1850.0 2000.0
0 0
3 Water rate/ Royalty 144.06 151.60 155.04 75.1 89.84 165.00 180.0
6 0
Total Operating Expenses 2574.74 2447.02 2773.82 1467.65 1632.2 3099.9 3551.7
5 0 8
B Repairs&Maintenance:

1 Plant & Machinery 2246.04 2260.77 1579.02 1464.20 2729.5 4193.7 5134.5
6 7 9
2 Buildings <* 75.40 66.40 40.07 6.53 152.58 159.11 244.05

3 Civil Works ^25.15 119.75 300.01 55.6 194.53 250.15 372.96

2
4 Hydraulic Works 64.64 122.79 162.97 34.0 191.31 225.35 528.48
4
6 Vehicles 22.57 23.87 38.28 12.4 29.00 41.46 50.00
6
7 Office Equipment 6.29 4.22 10.79 4.25 7.25 11.50 15.00

Gross Repairs&Maintenance Exp. 2540.09 2597.80 2131.14 1577.10 3304.2 4881.34 6345.0
3 8
Less:Expr. Capitalised
Net Repairs&Maintenance Exp. 2540.09 2597.80 2131.14 1577.10 3304.2 4881.34 6345.0
3 8

54
 III. Employee Cost
SI. Details 2006-07 2007-08 2008-09 RE 2009-10 BE Remarks
No. (Actuals) (Actuals) (Actuals) 2010-11

1.4.09to 1.10.09 to Total

30.9.09 31.3.10
(Actuals) (Estimations)
1 Salaries

1.1 Salaries (Pay) Emp. Not 3552.89 3305.71 3201.70 1550.19 1762.20 3312.39 3544.89
covered under EPF
1.2 Salaries (Pay) Emp. covered 889.44 899.85 1022.27 534.18 625.55 1159.73 1362.32
under EPF
2 Salaries-Apprentices 0.00

3 Dearness Allowances 0.00

3.1 Dearness Allowances not 97.42 331.42 551.81 397.42 427.29 824.71 1087.27
covered under EPF
3.2 Dearness Allowances 25.44 88.45 167.44 131.92 150.00 281.92 511.67
covered under EPF
4 Other Allowances 1228.98 1419.09 1159.29 579.58 625.00 1204.58 1450.00

5 Bonus/Exgratia 136.71 105.00 276.60 0.00 325.00 325.00 450.00

6 Medical Expenses 12.95 21.57 28.04 10.38 18.00 28.38 35.00

Reimbursement
7 L.T.C 0.87 2.25 3.50 1.71 3.00 4.71 5.50

8 EL Encashment 322.68 353.80 350.29 128.89 250.00 378.89 450.00

9 Payment under Workmen's 0 0 3.51 3.13 3.00 6.13 7.00

Compensation Act
10 VRS Bebefits 0 0 0.00

11 Medical Expenses 0.00 0.00 0.00

12 Medicines Purchased 31.09 32.05 37.26 32.27 34.00 66.27 88.00

55
13 Canteen Expenses 4,48 0:85 1.04 0.80 41.70 1.50 2.50

14 Educational Expenses 3.65 3.79 4.95 4.26 1.00 5.26 7.00

15 Uniform&Livery Exp. 25.56 38.98 89.11 7.46 35.00 42.46 50.00

16 Recreation Expenses 1.44 0.57 0.64 0.45 0.50 0.95 1.00

17 Other Welfare Expenses 1.17 0.44 1.24 0.40 1.00 1.40 2.00

18 Booster Scheme 3.20 2.90 3.10 1.20 2.40 3.60 4.00

19 Other Employee Costs-FBF 0.37 0.31 0.22 0.15 0.20 0.35 0.50

20 Paid holiday amount 49.92 15.86 45.00 60.86 75.00

56
 SI. Details 2006-07 2007-08 2008-09 RE 2009-10 BE 2010-
No. (Actuals) (Actuals) (Actuals) 11
*
1.4.09 to 1.10.09 to 31.3.10
30.9.09 (Estimations) Total
(Actuals)

1 Salaries
21 Terminal Benefits: 0.00
21.1 Pension SGratuity Contribution in 907.47 1273.00 1308.15 674.45 766.32 1440.77 1621.26
respect of employees as on 1.2.99
% of contribution on Pay + DA 35% 35% 35% 35% 35%
21.2 Gratuity Contribution in respect of 12.08 13.18 15.54 8.83 10.24 19.07 24.74
employees recruited after 1.2.99
% of contribution on Pay + DA 1.32% 1.32% 1.32% 1.32% 1.32%
21.3 EPF Contribution in respect of 114.17 157.44 163.71 90.02 105.55 195.57 255.05
employees recruited after 1.2.99
% of contribution on Pay + DA 13.61% 13.61% 13.61% 13.61% 13.61%
Gross Employee cost 7368.75 8050.65 8439.33 4173.55 5190.95 9364.50 11034.69
Less:Expenses capitalised 1367.94 120.93 57.19 30.62 50.00 80.62 100.00
Net Employee cost 6000.81 7929.71 8382.14 4142.93 5140.95 9283.88 10934.69

57
 ADMINISTRATION AND GENERAL CHARGES
SI. No. Details 2006-07 2007-08 2008-09 RE 2009-10 BE
(Actuals) (Actuals) (Actuals) 1.4.09 to 1.10.09 to Total 2010-11
30.9.09 31.3.10
(Actuals) (Estimatio
ns)
Rent,Rates & Taxes
1. 2 49.14 39.57 55.55 26.61 30.00 56.61 65.00

2 Insurance on fixed assets 341.60 244.44 129.81 51.73 125.00 176.73 250.00
3 Telephone charges 9.83 9.98 9.98 5.06 6.00 11.06 13.00
4 Postage&Telegrams 3.15 3.14 3.60 1.69 2.00 3.69 4.50
5 Legal charges 0.59 3.45 0.46 0.40 2.00 2.40 3.00
6 Audit Fee 0.00 0.00 0.00 0.00 0.00 0.00 0.00
7 Consultancy Charges 3.13 11.41 5.54 28.53 15.00 43.53 50.00
8 Technical Fee p.oo 0.00 0.00 0.00 0.00 0.00 0.00
9 Other Prof, charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00
10 Honororium 0.00 0.00 0.00 0.00 0.00 0.00 0.00
11 Conveyance Expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00
12 Travelling expenses 16.83 22.45 15.33 8.94 12.00 20.94 24.00
13 Vehicle running expenses 49.00 42.93 46.41 17.52 28.00 45.52 55.00
14 Vehicle licenses registration 0.00 0.08 0.00 0.00 0.10 0.10 0.20
15 Hired vehicle expenditure 70.08 81.57 67.58 29.16 45.00 74.16 85.00

16 Training & Participation exp. 22.40 27.76 30.82 13.18 49.87 63.05 95.00
17 Fees & Subscriptions 0.61 0.35 0.05 0.00 0.35 0.35 0.50
18 Books & Periodicals 0.84 0.75 0.54 0.23 0.35 0.58 0.75
19 Printing & Stationery 13.66 18.81 22.49 12.85 15.00 27.85 35.00
20 Advertisement Expenses 0.00 0.00 0.07 1.12 1.00 2.12 2.50
21 Police guard charges 12.28 14.14 20.21 10.39 15.00 25.39 30.00

58
 SI. Details 2006-07 2007-08 2008-09 RE 2009-10 BE
No. (Actuals) (Actuals) (Actuals) 1.4.09 to 1.10.09 to Total 2010-11
30.9.09 31.3.10
(Actuals) (Estimatio
ns)

22 Electricity Charges 410. 457. 545.8 349.1 360.00 709.17 750.0

41 25 2 7 0
0.65 0.75 0.85
23 Water Charges ' 0.38 0.45 0.83
"0.74
24 Entertainment expenses 2.04 3.22 5.14 1.27 2.00 3.27 5.00
25 Misc. Expenses 4.90 14.7 11.25 12.68 13.00 25.6 30.00
1 8
26 Incidental Stores Expenses 0 0 0 0.00 0.00 0.00 0.00
27 Demurage&Warfage Expenses 0.24 0.18 0.10 0.07 0.10 0.17 0.25
28 Small&Low value items/Others 10.2 7.18 3.61 5.82 10.00 15.8 25.00
7 2
A
29 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Staff recruitment expenses
30 Research&Dev. Expenses 2.73 2.41 8.20 0.98 6.50 7.48 9.00
31 Preliminary Expenses W/O 0.00 0.00 0.00 0.00 0.00 0.00
Gross Adm.&General Expenses 1024.35 1006.53 983.3 577.7 738.72 1316.50 1533.55
0 8
Less:Expenditure capitalised
Net Adm.&General Expenses 1,024.35 1,006.53 983.3 577.7 738.72 1,316.50 1,533.55
0 8

59
 FUNDS REQUIRED FOR PAYMENTS

RE 2009-10

S.No. Details 1.4.09 to 1.10.09 to BE 2010-11

30.9.09 31.3.10 Total

(Actuals) (Estimation
s)

1 TERMINAL BENEFITS:

a Monthly Pension 664.73 686.0 1350.7 1425.00

0 3
b > 198.68 165.0 363.68 446.50
Commutation of Pension v 0
c Gratuity 92.71 59.60 152.31 185.00

d GIS/FBF 6.53 8.00 14.5 17.00

3
TOTAL (a+b+c+d) 962.65 918.6 1881.2 2073.50
0 5
II G.P.F. 250.47 300.0 550.47 650.00
0
III DebtsS Deposits 48.07 55 00 103.07 150.00

IV Loans&Advances to 1.78 1.90 3.68 4.00

employees(lnterest Free)

60
 i. Fuel consumption for 2011-2012.

Coal consumption F.Oil consumption Other Oil

Unit name Statio Cons Cons
Total Rate Cost of Total Cons Rate Cost Total Rate Cost
Generatio n GCV umpti umpti Total
umpti of Oil
Heat Consump on (In per MT Coal (Rs. Consump per KL of Oil Consu on (In per KL
on (In ml.pe (Rs.
Rate Kg per
n (in MU) (kcal / of tion (in Kwh) (in in Crs.) tion (in ml.per (in Rs.) (Rs. in mption r (in Rs.) in Cost (Rs.
kw) Kwh) Kwh) Crs.)
MT) Rs.) KL) Crs.) (in KL)
Coal in Crs.)
1 2 3 4 5 6 7 8 14

Stage-I 3477.600 2424 3300 2553000 0.734 1900 485.07 1800.000 0.518 37711 6.79 300.000 0.086 39658 1.19 493.05
Stage-ll 3477.600 2424 3300 2553000 0.734 1900 485.07 1200.000 0.345 37711 4.53 200.000 0.058 39658 0.79 490.39
Stage-Ill 3477.600 2424 3300 2553000 0.734 1900 485.07 1000.000 0.288 37711 3.77 200.000 0.058 39658 0.79 489.63
Stage-IV 4140.000 2345 3600 2691000 0.650 2604 700.74 1600.000 0.386 37711 6.03 200.000 0.048 39658 0.79 707.57
Fuel related 50.00
Costs/Loss
es

Total 14572.800 2400 3375 10350000 0.710 2083 2155.95 5600.000 0.384 37711 21.12 900.000 0.062 39658 3.57 2230.64

61
 ii. Operating and repairs and maintenance expenditure

SI.No. Details 2007-08 2008-09 2009-10 RE 2010-11 BE 2011-12

(Actuals) (Actuals) (Actuals)
1.4.10 to 1.10.10 to Total
30.9.10 31.3.11
(Actuals) (Estimation
s)
A Operating expenses:

1 Lubricants & other Consumables 615.55 866.57 1014.41 533.12 1031.5 1564.6 2256.06
6 8
2 Water cess payable to PCB 1679.87 1752.21 1659.22 725.10 1074.9 1800.0 2000.00
0 0
3 Water rate/ Royalty 151.60 155.04 264.90 62.64 212.36 275.0 300.00
0
Total Operating Expenses 2447.02 2773.82 2938.53 1320.86 2318.8 3639.6 4556.06
2 8
B Repairs&Maintenance:

1 Plant & Machinery 2260.77 1579.02 3591.10 1541.93 5982.7 7524.6 9167.11
6 9
*
2 66.40 40.07 75.66 11.18 186.05 197.2 502.35
Buildings
3
3 Civil Works 119.75 300.01 173.75 17.24 262.76 280.0 844.02
0
4 Hydraulic Works 122.79 162.97 150.36 30.59 385.07 415.6 799.80
6
6 Vehicles 23.87 38.28 28.77 16.21 25.00 41.21 50.00

7 Office Equipment 4.22 10.79 18.91 2.84 17.16 20.00 25.00

Gross Repairs&Maintenance Exp. 2597.80 2131.14 4038.55 1619.99 6858.8 8478.7 11388.2
0 9 8
Less:Expr. Capitalised

Net Repairs&Maintenance Exp. 2597.80 2131.14 4038.55 1619.99 6858.8 8478.7 11388.2
0 9 8

62
iii. Employee cost

SI. No. Details 2007-08 2008-09 2009-10 RE 2010-11 BE

(Actuals) (Actuals) (Actuals) 2011-12
1.4.10 to 1.10.10 to Total
30.9.10 31.3.11
(Actuals) (Estimations
)
1 Salaries
1.1 Salaries (Pay) Emp. Not covered under EPF 3305.7 3201.7 3091.03 2709.61 2976. 5686.3 6027.49
1 0 70 1
1.2 Salaries (Pay) Emp. covered under EPF 899.85 1022.2 1115.56 1113.46 1265. 2379.2 2522.02
7 80 6
2 Salaries-Apprentices
3 Dearness Allowances
3.1 Dearness Allowances not covered under EPF 331.42 551.81 879.07 93.06 306.2 399.26 442.18
0
3.2 Dearness Allowances covered under EPF 88.45 167.4* 311.55 38.79 126.8 165.68 183.49
1 9
4 Other Allowances 1419.0 1159.2 1153.64 1002.62 1041. 2043.8 2089.00
9 9 21 3
5 Bonus/Exgratia 105.00 276.60 421.20 0.00 600.0 600.00 750.00
0
6 Medical Expenses Reimbursement 21.57 28.04 19.52 8.43 16.57 25.0 30.00
0
7 L.T.C 2.25 3.50 0.99 0.04 3.46 3.50 3.50

63
 8 EL Encashment 353.80 350.29 524.22 164.1 485.8 650.00 750.00
8 2
9 Payment under Workmen's Compensation Act 0 3.51 3.13 0.00 3.50 3.50 3.50

10 VRS Bebefits 0.00 0.00 0.00 0.00 0.00 0.00 0.00

11 Medical Expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00
12 Medicines Purchased 32.05 37.26 48.11 21.14 41.16 62.3 98.00
0
13 Canteen Expenses 0.85 1.04 1.72 1.43 7.00 8.43 10.00
14 Educational Expenses 3.79 4.95 4.42 3.27 1.73 5.00 5.00
15 Uniform & Livery Exp. 38.98 89.11 28.27 7.83 21.17 29.0 30.00
0
16 Recreation Expenses 0.57 0.64 0.45 0.35 0.30 0.65 0.70
17 Other Welfare Expenses 0.44 1.24 17.34 39.26 25.00 64.2 75.00
6
18 Booster Scheme 2.90 3.10 2.20 1.00 1.60 2.60 3.00
19 Other Employee Costs-FBF 0.31 0.22 0.22 0.13 0.13 0.26 0.30
20 Paid holiday amount 49.92 56.83 14.86 43.14 58.0 60.00
0

64
SI. No. Details 2007-08 2008-09 2009-10 RE 2010-11 BE 2011-
(Actuals) (Actuals) (Actuals) 12

1.4.10 to 1.10.10 to Total

30.9.10 31.3.11
(Actuals) (Estimations)

1 Salaries
21 Terminal Benefits:
21.1 Pension &Gratuity Contribution in respect of 1273.00 1308.15 1,383.00 978.02 1149.0 2127.0 2264.38
employees as on 1.2.99 2 3
% of contribution on Pay + DA 35% 35% 35% 35% 35% 35%
21.2 Gratuity Contribution in respect of 13.18 15.54 18.53 15.01 18.38 33.3 35.71
employees recruited after 1.2.99 9
% of contribution on Pay + DA 1.32% 1.32% 1.32% 1.32% 1.32 1.32%
%
21.3 EPF Contribution in respect of employees 157.4 163.71 189.27 154.11 189.55 343.66 368.22
recruited after 1.2.99 4
% of contribution on Pay + DA 13.61% 13.61% 13.61% 13.61 13.61% 13.61%
%
Gross Employee cost 8050.65 8439.33 9270.25 6366.59 8324.3 14690.91 15751.50
2
Less:Expenses capitalised 120.93 57.19 60.23 „ 15.88 75.00 90.8 100.00
8
Net Employee cost 7929.71 8382.14 9210.02 6350.71 8249.3 14600.03 15651.50
2

65
 SI. Details 2007-08 2008-09 2009-10 RE 2010-11 BE
No. (Actuals) (Actuals) (Actuals) 1.4.10 to 1.10.10 to Total 2011-12
30.9.10 31.3.11
(Actuals) (Estimation
s)

22 Electricity Charges 457. 545.8 626.0 348. 350. 698.48 700.

25 2 7 48 00 00
23 Water Charges 0.75 0.74 0.74 0.38 0.40 0.78 0.85
24 Entertainment expenses 3.22 5.14 4.63 2.11 2.50 4.61 4.75
25 Misc. Expenses 14.7 11.25 19.73 9.10 10.0 19.1 20.0
1 0 0 0
26 Incidental Stores Expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00
27 Demurage & Warfage Expenses 0.18 0.10 0.22 0.03 0.20 0.23 0.25
28 Small & Low value items/Others 7.18 3.61 22.48 9.35 15.0 24.3 25.0
0 5 0
29 Staff recruitment expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00
30 Research & Dev. Expenses 2.41 8.20 3.28 0.93 3.50 4.43 5.00
31 Preliminary Expenses W/O 0.00 0.00 0.00 0.00 0.00 0.00
Gross Adm.&General Expenses 1006.53 983.3 1159. 638. 779. 1418.19 1533.24
0 01 73 46
Less:Expenditure capitalised
Net Adm.&General Expenses 1,006.53 983.3 1,159.01 638. 779. 1,418.1 1,533.24
0 73 46 9

66
 iv. Administration and general charges
(Rs. In Lakhs)

SI. Details 2007-08 2008-09 2009-10 RE 2010-11 BE

No. (Actuals) (Actuals) (Actuals) 1.4.10 to 30.9.10 1.10.10 to 31.3.11 Total 2011-12
(Actuals) (Estimations)

1 Rent, Rates & Taxes 39.57 55.55 54.48 27.72 47.28 75.00 75.00
2 Insurance on fixed assets 244.44 129.81 122.96 112.33 145.00 257.33 300.00
3 Telephone charges 9.98 9.98 17.76 13.68 15.00 28.68 30.00
4 Postage & Telegrams 3.14 3.60 3.45 2.59 1.50 4.09 4.50
5 Legal charges 3.45 0.46 0.96 0.07 0.90 0.97 1.00
6 Audit Fee 0.00 0.00 0.00 0.00 0.00 0.00 0.00
7 Consultancy Charges 11.41 5.54 48.77 2.52 13.00 15.52 25.00
*
8 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Technical Fee
9 Other Prof, charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00
10 Honorarium 0.00 0.00 0.00 0.00 0.00 0.00 0.00
11 Conveyance Expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00
12 Travelling expenses 22.45 15.33 17.60 8.99 12.00 20.99 25.00
13 Vehicle running expenses 42.93 46.41 43.12 24.57 26.00 50.57 55.00
14 Vehicle license& 0.08 0.00 0.00 0.00 0.00 0.00 0.00
registration
15 Hired vehicle expenditure 81.57 67.58 83.37 37.49 48.00 85.49 90.00

16 Training & Participation 27.76 30.82 41.14 9.86 63.58 73.44 108.74
exp.
17 Fees & Subscriptions 0.35 0.05 0.01 0.01 0.10 0.11 0.15
18 Books & Periodicals 0.75 0.54 1.25 2.84 1.50 4.34 5.00
19 Printing & Stationery 18.81 22.49 23.23 15.45 10.00 25.45 30.00
20 Advertisement Expenses 0.00 0.07 1.70 0.00 2.00 2.00 3.00
21 Police guard charges 14.14 20.21 22.06 10.22 12.00 22.22 25.00

67
 v. FUNDS REQUIRED FOR PAYMENTS
S.No. Details RE 2010-11 BE 2011-12

1.4.10 to 1.10.10 to Total

30.9.10 31.3.11
(Actuals) (Estimation
s)

1 TERMINAL BENEFITS:

a Monthly Pension 939.82 1254. 2194.40 2200.00

58
b Commutation of Pension 274.04 175.9 450.00 500.00
6
c Gratuity 148.52 126.4 275.00 300.00
8
d GIS/FBF 6.32 7.27 13.5 15.00
9
TOTAL (a+b+c+d) 1368.70 1564. 2932.99 3015.00
29
II G.P.F. 285.30 320.8 606.11 725.00
1
III Debts&Deposits 129.71 135.0 264.71 350.00
0
IV Loans&Advances to f 2.27 6.73 9.00 10.00
employees(lnterest Free)

68
 Comparative statement of budget from 2006-07 to 2010 – 2011.
.No. PARTICULARS 2006-07 2007-08 2008-09

BE RE ACTUAL BUDGET RE ACTUAL BUDGET RE ACTUAL

SANCTIONE SNCTIONE EXP. ESTIMATE SNCTION EXP. ESTIMATE SNCTIONE EXP.
D D SANCTION ED SANCTION D
ED ED
-p
A FUEL COST
1 COAL 105026.00 95,633.50 100,052.49 97,742.00 104,727.00 104,246.39 108,617.00 124,627.00 150,850.71
2 OIL 716.00 724.00 623.55 731.00 645.00 641.48 685.00 979.00 898.83
TOTAL 105742.00 96,357.50 100,676.04 98,473.00 105,372.00 104,887.87 109,302.00 125,606.00 151,749.54
B O&M EXPENDITURE
1 WATER ROYALTY 108.16 140.40 144.06 141.25 141.28 151.60 150.00 145.46 1,155.11
2 WATER CESS 1030.18 1260.34 1,700.38 1,300.00 1,698.70 1,679.87 1,800.00 1,768.41 1,752.21
3 STATION SUPPLIES & 671.70 ^08.35 730.29 608.35 642.82 528.10 668.54 668.54 795.54
CONSUMABLES
4 REPAIRS & 3014.88 2914.88 2,540.08 2,491.80 2,941.80 2,443.00 2,591.47 2,632.68 2,131.14
MAINTENANCE
5 EMPLOYEE COST 5545.67 7224.53 8,598.72 7,713.92 8,215.15 7,839.09 8,543.76 8,543.76 8,382.17
6 ADM & GEN 1074.36 1001.58 1,042.41 1,010.66 1,083.31 1,025.03 1,051.09 1,051.09 987.74
TOTAL 11,444.95 13,150.08 14755.94 13,265.98 14,723.06 13,666.69 14,804.86 14,809.94 15,203.91

69
 Comparative statement of budget from 2006- 07 to 2010- 11
S.N PARTICULARS 2009-10 2010-11
o.
BUDGET RE ACTUA BE RE ACTUA
ESTIMAT SNCTION L EXP. SNCTION L EXP.
E ED ED
SANCTIO
N ED
A FUEL COST
1 COAL 150,381.0 139,095.0 148362. 167,907.0 198270. 195536.
0 0 25 0 00 63
2 OIL 948.00 i,735.00 1296.92 1,376.00 2417. 1913.84
00
TOTAL 151,329.0 143,830.0 149659. 169,283.0 200,687 197450.
0 0 17 0 .00 47
B O&M EXPENDITURE
1 WATER ROYALTY 142.51 147. 264.90 143.41 275.0 179.98
66 0
2 WATERLESS 1,839.14 1,722. 1659.22 1,951.37 1800. 1562.44
30 00
3 STATION SUPPLIES 642.99 887. 1010.10 1,047.84 1047. 953.56
& * CONSUMABLES 27 84
4 REPAIRS & 3,191.52 3,772. 4042.86 3,722.58 6627. 6794.70
MAINTENANCE 58 68
5 EMPLOYEE COST 8,885.51 8,885. 9210.05 11,376.78 1469 14076.2
51 0.91 7
6 ADM & GEN 957.20 1,227.51 1921.03 1,583.55 1418. 1112.83
19
TOTAL 15,658.87 16,642.83 18,108.1 19,825.53 25,859. 24679.7
7 62 8

Notes:
1) Expenditure on Coal is comparatively more in 2008-09 & 2009-10 due to procurement of imported Coal.
2) Repairs & Maintenance expenditure increased during 2009-10 due to taking up of Capital overhaul works
of Unit IV & VI.

70
 COMPARATIVE STATEMENT OF REVISED ESTIMATION TO
ACTUALS FOR THE FINANCIAL YEAR 2006 – 2007

Particulars 2006-07 Actual Increased & % of

expenditure Decreased (RE – change
R.E incurred Actual)

Fuel cost:-
95633.50 100052.49 4418.99 4.62
 Coal
 Oil 727.00 623.55 (100.45) (13.81)
96360.50 100676.01 4318.54 4.48

O&M
Expenditure:
 Water royalty 140.40 144.06 3.66 2.60
 Water cess 1260.34 1700.38 440.4 3.52
 Station
supplies 608.35 730.29 121.94 20.04
Consumable 2009.09 2574.73 566.00 28.17

Repairs & 2914.38 2540.08 (374.8) (12.86)

Matainance 7224.53 8598.72 1374.19 19.02
Employee Cost
ADM expenses 1001.58 10412.41 40.83 4.07

Total 109510.08 115431.98 5924.76 5.41

71
Interpretation:

In the year 2006 – 07 the actual expenditure increased by 5.41. When

compare to the RE sanctioned 2006-207 due to the following reasons.

Fuel Cost:

Fuel cost increased by 4.48 due to the more consumption of coal &
oil.

Operating expenses:
Operating expenditure increased by 28.17% due to the increasing
expenditure of account books and on account of watercress payable to
AP Pollution control board.

Repairs & Maintenance:

Repairs and maintenance decreased by 12.86 due to the decreasing
Hydraulic works and civil works.

Employee cost:

Employee cost increased by 19.02% due to the increased the amount

of salaries pay expenditure covered under EPF, EL encashment, pension &
Gratuity contribution and EPF contribution and other allowance.

ADM Expenses:

ADM expenses increased by 4.07% due to the increased the amount

Rates & taxes, Travelling Expenditure, Vehicle Running Expenses, Hired
Vehicle Expenses and Trainings & Participation Expenditure.

72
 COMPARATIVE STATEMENT OF REVISED ESTIMATION TO
ACTUALS FOR THE FINANCIAL YEAR 2007 – 2008

Particulars 2007-08 Actual Increased & % of

expenditure Decreased (RE – change
R.E incurred Actual)

Fuel cost:-
 Coal
104727.00 104246.39 (480.61) (0.46)
 Oil
645.00 641.48 (3.52) (0.54)
105372.00 104887.87 (484.13) (0.46)
O&M
Expenditure:
 Water royalty 141.28 151.60 10.32 7.30
 Water cess
1698.70 16790.87 (18.83) (1.11)
 Station
supplies 642.82 528.10 (114.72) (17.85)
Consumable
2482.8 2359.57 (123.23) (4.96)

Repairs & 2941.80 2443.00 (498.80) (16.95)

Matainance
Employee Cost 8215.15 7839.09 (376.06) (4.58)
ADM expenses 1083.31 1025.03 (58.28) (5.38)

Total 120095.06 118554.56 (1540.50) (1.28)

73
Interpretation:

In the year 2007 – 08 the actual expenditure increased by 1.28. When

compare to RE Sanctioned 2007-2008 due to the following reason.

Fuel Cost:

Fuel cost decreased by 0.46 due to less coal consumption and less
amount used for furnace oil and other oil.

Operating expenses:

Operating expenditure decreased by 4.96 due to the amount decrease

in drawn of lubricants & other consummates and water less payable to PCB.

Repairs & Maintenance:

Repairs and maintenance decreased by 16.95 due to decreasing of the

civil works and buildings amount decreased.

Employee cost:

Employee cost decreased 4.58 due to the EPF bonus amount

decreased.

ADM expenses:

ADM expenses decreased by 5.38% due to the decease. The amounts

of Rates & Taxes, Insurance on Fixed Assets Vehicle Running Expenses and
Small & Low Values Items / Others.

74
 COMPARATIVE STATEMENT OF REVISED ESTIMATION TO
ACTUALS FOR THE FINANCIAL YEAR 2008 – 2009

2008-09 Actual Increased & % of

expenditure Decreased (RE – change
Particulars R.E incurred Actual)

Fuel cost:-
 Coal
124627.00 150850.71 (26223.71) 21.04
 Oil
979.00 898.83 (80.17) (8.19)
125606.00 151749.54 26143.52 20.81
O&M
Expenditure:
 Water royalty 145.46 155.04 9.58 6.59
 Water cess
1768.41 1752.21 (16.20) (0.92)
 Station
supplies 668.54 795.54 127.00 19.00
Consumable
2582.41 2702.79 120.38 4.66

Repairs & 2632.68 2131.14 (501.54) (19.05)

Matainance
Employee Cost 8543.76 8382.17 (161.59) (1.89)
ADM expenses 1051.09 987.74 (63.35) (6.02)

Total 140415.09 165953.38 25537.42 8.19

75
Interpretation:

In the year 2008 – 09 the actual expenditure increased by 18.19 when

compare to the budget sanction RE 2008-09 due to the following reason.

Fuel Cost:

Fuel cost increased by 20.81 due to expenditure on coal is more due to

procurement of imported coal.

Operating Expenditure:

OSM expenditure increased by 4.66 due to the increased the

lubricants & other consumables.

Repairs & Maintenance:

Repairs & maintenance decreased by19.03 due to less draw of

payment to labour.

Employee cost:

Employee cost decreased by 1.89% due to decrease in EPF and other

allowances.

ADM expenses:

ADM expenses decreased by 6.02% due to decrease in Rate Tax,

Insurance on Fixed Assets, Consultancy Charges and Travelling Expenses.

76
 COMPARATIVE STATEMENT OF REVISED ESTIMATION TO
ACTUALS FOR THE FINANCIAL YEAR 2009 – 2010

Particulars 2009-10 Actual Increased & % of

expenditure Decreased (RE – change
R.E incurred Actual)

Fuel cost:-
 Coal
139095.00 148362.25 9267.25 6.66
 Oil
1735.00 1296.92 (438.08) (25.25)
140830.00 449659.17 8829.17 6.27
O&M
Expenditure:
 Water royalty 147.66 2647.90 117.24 79.40
 Water cess
1722.30 1659.22 (63.08) (3.66)
 Station
supplies 888.27 1010.10 122.83 13.84
Consumable
2757.23 2934.22 176.99 6.42

Repairs & 3772.58 4042.86 270.28 7.16

Matainance
Employee Cost 8885.51 9210.05 324.54 3.65
ADM expenses 1227.51 1921.03 693.52 56.50

Total 157472.83 167767.33 10294.5 6.53

77
Interpretation:

In the year 2009 – 10 the actual expenditure increased by 6.53 when

compare to the budget sanction RE 2009-10 due to the following reason.

Fuel Cost:

Fuel cost increased by 6.27% due to expenditure on coal is more due

to more procurement of imported coal.

Operating Expenditure:

Operating expenditure increased by 6.42% due to increase in water

expenses on account of commission of stage IV and more drawn of material.

Repairs & Maintenance:

Repairs & maintenance increased by7.16 due to the increased during

2009-10 due to taking up to capital overall works of unit IV & VI &
synchronisation of unit VII in Jan 2010.

Employee cost:

Employee cost increased by 3.65 due to increase EPF dearness

allowances and bones.

ADM expenses:

ADM expenses decreased by 56% due to increased telephone charges,

consultancy expenditure and hired vehicle license & registration.

78
 COMPARATIVE STATEMENT OF REVISED ESTIMATION TO
ACTUALS FOR THE FINANCIAL YEAR 2010 – 2011

Particulars 2010-11 Actual Increased & % of

expenditure Decreased (RE – change
R.E. incurred Actual)

Fuel cost:-
 Coal
198270.00 195536.63 (2733.37) (1.38)
 Oil
2417.00 1913.84 (503.16) (20.82)
200687.00 197450.47 (3236.53) (1.61)
O&M
Expenditure:
 Water royalty 275.00 179.98 (95.02) (34.55)
 Water cess
1800.00 1562.44 (237.56) (13.20)
 Station
supplies 1047.84 953.56 (94.28) (8.99)
Consumable
3122.84 2695.98 (426.86) 13.67)

Repairs & 6627.68 6794.70 167.02 2.52

Matainance
Employee Cost 14690.91 14076.27 (614.64) (4.18)
ADM expenses 1418.19 1112.83 (305.36) (21.53)

Total 226546.52 222130.25 (4416.37) (1.94)

79
Interpretation:

In the year 2010–11 the actual expenditure decreased by 1.94 when

compare to the budget sanction RE 2010-11 due to the following reason.

Fuel Cost:

Fuel cost decreased by 1.38 due to expenditure on coal is more due to

procurement of imported coal.

Operating Expenditure:

Operating expenditure decreased by 13.67 due to the decreased the

water less and station supplies & consumable.

Repairs & Maintenance:

Repairs & maintenance increased by 2.52 due to the increased during

2010-11 due to procurement of generate status and also capital overawes
during the financial year 2010-2011.

Employee cost:

Actual employee cost incurred during the financial year 2010-2011 is

beyond the RE sanctioned due to decrease in bonus and paid holiday
allowances.

ADM expenses:

ADM & General expenses decreased by 21.53 due to decrease in

Consultancy, Training & Participation Expenditure and Electricity Charges.
80
Comparison RE to Actual Total Five Years

Years RE Actual Increased Decreased

2006-07 109507.58 115431.98 59244 -

2007-08 120095.06 118554.56 - 1540.35

2008-09 140415-94 166953.45 26537.51 -

2009-10 157472.83 167767.34 12994.51 -

2010-11 226546.62 222130.25 - 4416.37

59244

26537.51

12994.51

2006-07 2007-08
-1540.4 2008-09 2009-10 2010-11
-4416.4

81
 COMPARATIVE STATEMENT OF ACTUAL

FOR THE FINANCIAL YEAR 2009 – 2010 & 2010 - 2011

Particulars 2009-10 2010-11 Increase/Decrease %

change
Actual Actual

Fuel cost:-
 Coal
148362.25 195536.63 47174.38 31.80
 Oil
1296.92 1913.84 616.92 47.57
149659.17 197450.47 47791.3 31.93
O&M
Expenditure:
 Water royalty 264.90 179.98 (84.92) (32.05)
 Water cess
1659.22 1562.44 (96.78) (5.83)
 Station
supplies 1010.10 953.56 (56.54) (5.60)
Consumable
2934.22 2995.98 (238.24) (8.12)

Repairs & 4042.86 6794.70 2751.84 68.07

Matainance
Employee Cost 9210.05 14076.27 4866.22 52.83
ADM expenses 1921.03 1112.83 (808.2) (42.07)

Total 167767.33 222130.25 54362.92 32.40

82
 60000

50000

40000

30000

20000
Decrease
10000 Increase
0

-10000

Interpretation:-

Fuel Cost:

In the year 2009-10 fuel cost is 149659.17 the it increased in the year

2010 – 2011 to 1,95336.63 due to procurement of imported coal the

percentage of change is 31.93.

Operating Expenditure:

O & M expenditure cost in the year 2009- 2010 is 2934.22 the amount is

2695.98 due to water royalty out in view of demand notice reised by

irrigation dept. the percentage of decrease is 8.12.

83
Repairs & Maintenance:

The prepares & maintance increase 68.07because the RE proposal of

plant & machinery includes the repairs expenditure 31.40 course to

generator & RE and BE proposals of civil work include stage IV.

Employee cost:

The employee cost in the year 2009- 10 is 9210.05 it increased in the

year 2010 -2011 is 14070 the percentage of increased is 52.83 due to EPF

amount will be increase.

ADM expenses:

ADM and general expenditure 2009- 10 are excluding draft ie amount

739.37 lakh towards loss on obsolesce of stores and bad debts written off.

84
 COMPARATIVE STATEMENT OF BUDGET FOR THE

FINANCIAL YEAR 2009 – 2010 & 2010 - 2011

Particulars 2009-10 2010-11 Increase % change

Budget Budget /Decrease

Fuel cost:-
 Coal 150381.00 167907.00 17526.00 11.65
 Oil 948.00 1376.00 428.00 45.14
151329.00 169283.00 17954.00 11.86

O & M Expenditure:

 Water royalty 142.51 143.41 0.9 0.63

 Water cess 1839.14 1951.37 112.23 6.10
 Station supplies 642.99 1047.84 404.85 62.96
Consumable
2624.64 3142.62 517.98 19.73

3191.52 3722.58 531.06 16.64

Repairs & Matainance
8885.51 11376.78 2491.27 28.04
Employee Cost
957.20 1583.55 626.35 65.43
ADM expenses

Total 166987.87 189108.51 22120.66 13.25

85
 20000
18000
16000
14000
12000
10000
8000
6000
4000 Decrease
2000 Increase
0

Interpretation:-
Fuel Cost:

In the year 2009-10 the fuel cost is 151329.00 the amount increased to in

the year 2010 – 2011 is 169283.00 the increased amount is 11.68 due to coal

cost increased.

Operating Expenditure:

O & M expenditure in the year 2009- 2010 2624.64 and the amount 2010

– 2011 is 3142.62 the % of increase is 19.73% due to increase of station

supplies consumable.

86
Repairs & Maintenance:

Prepare & maintenance amount in the year 2009-2010 is 3191.52 and the

2010.2011 is 3722.58 the percentage of increase is 16.64 % due to taking up

to capital overall work of unit IV & VI.

Employee cost:

The employee cost in the year 2009 – 10 is 8885.51 the amount in the

year is 2010 – 2011 the amount is 11376.78 the percentage of increase is

28.04%.

ADM expenses:

The ADM & expenses in the year 2009- 2010 957.20 the amount in

the year 2010 – 2010 the amount is 1583 the percentage of increase is 65.43.

87
 COMPARATIVE STATEMENT OF REVISED ESTIMATION

FOR THE FINANCIAL YEAR 2009 – 2010 & 2010 - 2011

Particulars 2009-10 2010-11 Increase/ %

Revised Revised Decrease change
estimation estimation
Fuel cost:-
 Coal 139095.00 198270.00 59175.00 42.54
 Oil 1735.00 2417.00 682.00 39.31

140830.00 200687.00 59857.00 42.50

O&M
Expenditure:
 Water royalty
147.66 275.00 127.34 86.24
 Water cess
1722.30 1800.00 77.2 4.51
 Station supplies 887.27 1047.84 160.57 18.09
Consumable
2757.23 3122.84 365.11 13.24

Repairs & 3772.58 6627.68 2855.1 75.68

Matainance 8885.57 14690.91 5805.4 65.33
Employee Cost 1227.51 1418.19 190.68 15.53
ADM expenses

Total 157472.83 226546.62 69073.29 43.86

88
 70000
60000
50000
40000
30000
Decrease
20000
10000 Increase

Interpretation:

Fuel Cost:

The fuel cost is in the year 2009- 2010 is 140830.00 the amount in the

year 2010 – 2010 is 200687.00 the increase percentage 42.50.

Operating Expenditure:

The O & M expense in the year 2009- 2010 is 2757.23 the amount in

the year 2010 – 2011 is the amount 3122.84 the increase 13.24 due to RE

proposal and BE for water royalty is worked out in the view of demand

notice raised by irrigation.

89
Repairs & Maintenance:

Repairs and maintain amount increase to 75.68 due to the R E proposal

of plant & machinery includes the repairs expenditure of 21.40 cores for

generator.

Employee cost:

Employee cost the amount 2009-2010 the amount 8855.57 the amount

increase to in the year 2010 – 2011 is 14690.92 the percentage increase

65.33.

ADM expenses:

ADM expenses in the year 2009-2010 is 1227.51 the amount increase

in the year 2010 – 2011 the amount is 1418 the percentage of increased is

15.53.

90
 CHAPTER - V
FINDINGS & SUGGESTIONS

91
 FINDINGS
 Expenditure on coal is comparatively more in 2008-2009 and 2009-

2010 due to procurement of imported coal.

 RE for water royalty is worked out in view of demand notice reised by

irrigation department.

 RE proposals of plant & machinery includes expenditure of Rs.21.40

crore for procurement of generator rotor of unit VI.

 RE and BE proposals of civil works include stage IV.

 Repairs & maintenance expenditure increased during 2009-10, 2010-

11 & 2011-12 due to taking up of capital overhaul works.

 Total expenses for 2009-10 are excluding draft ie amount of

Rs.739.37 lakhs towards lose on obsolesce of stores and bad debts

written off.

 In the year 2011-12 the funds required for payment increase due to the

increase the monthly pension gratuity & GIS / FBF.

92
Suggestions
1. According to traditional method of budget, the Dr.NTPPS should

follow the deferent types of budget but present model types of budget

carring ultimately we can change competitive type of budget.

2. According to the Indian industrial electricity coal miniature so we can

cost of expenditure without any waste we get the more profit (without

considering any type of budget).

3. The CVP analysis not only related to the business it also related to the

manufacturing concern like coal, water extra.

4. Due to the fuel increase the industries cannot tolerate to meet the

expenditure (operating expenditure) in future is difficult for that

whenever we get the profit we keep the amount as CRR it is used

convert the fund or else we came follow the cash flow.

5. For the Repairers Maintenance we can sale scrap on devaluation of

existing equipment when the demand in exim policy.

93
 BIBILIOGRAPHY

Books Referred:

Author Book Published

I.M. Pandey Financial Management  Vikas Publishing’s

house Pvt, ltd.,

G. Prasad Accounting & Finance  Jai bharath

Publishers.

M.Y. Khan – P.K. Jain Financial Management  Tata Mc Graw-Hill

publishers company
Ltd.,

Prasanna Chandra Financial Management  Tata Mc Graw-Hill

publishers company
Ltd.,

Web Sites:

 www.apgenco.gov.com

 www.riskcontrol.com

 www.google.com

Annual reports of “APGENCO (Dr. NTTPS)” 2007-2011

94