PROJECT REPORT

On

“A STUDY ON BUDGETARY CONTROL”

BY

KAVYA.N

1NH19MBA65

Submitted to

DEPARTMENT OF MANAGEMENT STUDIES

NEW HORIZON COLLEGE OF ENGINEERING,

OUTER RING ROAD, MARATHALLI,

BENGALURU

In partial fulfilment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Under the guidance of

Prof. SANTHOSH KUMAR. S

ASSISTANT PROFESSOR

2019 - 2021

CERTIFICATE

This is to certify that KAVYA.N bearing 1NH19MBA65, is a bonafide student of Master of Business

Administration course of the Institute 2019-21, autonomous program, affiliated to Visvesvaraya

Technological University, Belgaum. The project report on “A STUDY ON BUDGETARY CONTROL”

is prepared by her under the guidance of Prof. SANTHOSH KUMAR. S, in partial fulfilment of

requirements for the award of the degree of Master of Business Administration of Visvesvaraya

Technological University, Belgaum Karnataka.

Signature of Internal Guide Signature of HOD Signature of principal

Name of the Examiners with affiliation Signature with date

1. External Examiner

2. Internal Examiner

DECLARATION

I, Kavya. N hereby declare that the project report on “A STUDY ON BUDGETARY CONTROL”

with reference to “HINDUSTAN AERONAUTICS LIMITED (FOUNDRY AND FORGE)

prepared by me under the guidance of Prof. SANTHOSH KUMAR.S, faculty of M.B.A Department,

New Horizon College of Engineering.

I also declare that this project report is towards the partial fulfilment of the university

regulations for the award of the degree of Master of Business Administration by Visvesvaraya

Technological University, Belgaum.

I have undergone an industry project for a period of Twelve weeks. I further declare that this

report is based on the original study undertaken by me and has not been submitted for the award

of a degree/diploma from any other University / Institution.

Signature of Student

Place:

Date:

ACKNOWLEDGEMENT

The successful completion of the project would not have been possible without the

guidance and support of many people. I express my sincere gratitude to Mr. Nilesh

Kumar Thakur, Senior manager (Finance) At HINDUSTAN AERONAUTICS

LIMITED (Foundry and Forge) Division, for allowing to do my project at

HINDUSTAN AERONAUTICS LIMITED.

I thank the staff of HINDUSTAN AERONAUTICS LIMITED, HAL for their

support and guidance and helping me in completion of the report.

I am thankful to my internal guide Prof SANTHOSH KUMAR. S, for his/her

constant support and inspiration throughout the project and invaluable suggestions,

guidance and also for providing valuable information.

Finally, I express my gratitude towards my parents and family for their continuous

support during the study.

KAVYA.N

1NH19MBA65

TABLE OF CONTENTS

SL. NUMBER CONTENTS PAGE NUMBERS

1

Executive summary

1

2

Chapter 1- Theoretical Background of The

Study

2-22

3

Chapter 2- Industry Profile &

Company Profile

23-47

4

Chapter 3- Research Methodology

48-53

5

Chapter 4- Data Analysis and Interpretation

54-67

6

Chapter 5 - Summary of Findings,

Suggestion and Conclusion

68-71

7

Bibliography

72

1

EXECUTIVE SUMMARY

The Report Based on Budgetary control at Hindustan Aeronautics limited (Foundry and

Forge) division this report provides an analytical review of Actuals and estimated budgets at

HAL. This report has five chapters.

Chapter-1 Theoretical Background of The Study

In this chapter, it explains the meaning of budget and budgetary control and the budget

manual at HAL.

And also includes Budgeting process, Basic requirements of budget, Types of budgets,

Capital budget, Sales budget, production budget, Performance budget, Performance

evaluation.

Chapter 2- Industry Profile & Company Profile

Industry - Aerospace and Defense and Types of military aviation, Major five manufactures of

civil transportation aircraft.

Company profile – History, Mission and Vision statement, Award, Quality Policy, Values of

HAL, Aims and Objectives, Strategy, Organization structure, Products and Services profile,

Competition information and SWOT analysis.

Chapter 3- Research Methodology

In this chapter I have mentioned 10 literature survey, Statement of the problem, need of the

budgetary control, Objective of the budgetary control, Hypotheses, Scope of the budgetary

control, for how years data has been collected, Tools for data collection and Limitation of

budgetary control.

Chapter 4- Data Analysis and Interpretation

This chapter is all about the data collection- Actual and two years budgeted balance sheet,

Actual and two years budgeted profit and loss account and also comparing actual and

estimated budgeted value of Total income, Total expenditure, Total profit and finding out the

variance and variance percentage. Then from above information I have done bar graph and

line graph and written interpretation.

Chapter 5 - Summary of Findings, Suggestion and Conclusion

From the data interpretation and going through the company reports came out with few

suggestions and concluded by report.

2

CHAPTER 1

THEORETICAL BACKGROUND OF THE STUDY

3

INTRODUCTION

Budgeting has come to be acknowledged as a proficient technique for present moment and long

haul arranging and control. It is utilized, no uncertainty, in huge organizations, yet even the

private companies are utilizing it in any event in some casual way. Through the spending plans,

a business needs to know unmistakably with regards to what it proposes to do during a

bookkeeping period. The procedure of planning is a significant use of Management

Accounting. One of the best guides to great administration that has at any point been conceived

is the utilization of financial plans and budgetary control to direct an association to proficient

account/operational/action the board. It is a flexible device that have helped CEOs of

associations and their administration (chiefs) adapt to numerous everyday issues going up

against the running of the association which including however not restricted to swelling,

changing government arrangements as far as guidelines and at times vulnerabilities of

time/business climate.

Since numerous years, spending plans are utilized all through private and public associations

to set destinations and to control and adjust supervisors' conduct. Contingent upon whether the

association is working in the private or public area, the financial plan is set up to satisfy certain

prerequisites. Considering the exhibition prerequisite for the spending plan, the private area is

benefit orientated, though the public areas spending accomplishments are assessed dependent

on administrations given by the association. Nonetheless, as the proposition has its fundamental

spotlight on the public area, one can accentuation that public associations perceived significant

difficulties in the manner their spending plans were influenced over the new year’s.

The Financial Crisis of 2008, just as the current Euro-emergency intensely affected the

monetary and financial circumstance of most European nations and constrained them to quickly

adjust their monetary and budgetary arrangements as per severity plans and rising shortages.

As the new strategies required significant cuts openly spending plans, to diminish shortages

and administrative obligation levels, there has been significant requirements for powerful

administration and budgetary control to guarantee sound legislative monetary administration

and integrity.

Notwithstanding, these administrative grimness approaches not just influence the overall

population with the weight of diminished public administrations gave to the populace,

expanded joblessness rates, and more neediness, yet additionally affect budgetary control

measures and how unreservedly troughs of public association can spend government financial

4

plans. Moreover, this implies that administrators of public, just as private associations, are

presumably nearer checked how to spend the financial plan in the midst of starkness or

monetarily tough spots. As the specialized term of setting a financial plan is considered as the

budgetary interaction, bookkeepers see the way toward observing how the financial plan is

spend as budgetary control.

MEANING OF BUDGET

The Chartered Institute of Management Accountants, England, characterizes a 'spending plan'

as under:

"A monetary as well as quantitative assertion, arranged and supported preceding characterize

timeframe, the approach to be sought after during that period to achieve a given target."

1) Budgets are assessment procedures. Since they attempt to make objectives against

which to quantify workers' exhibition, they normally are grumbled about.

2) Budget’s address one of only a handful few assessment strategies, which are

consistently recorded as a hard copy and subsequently concrete. Consequently, bosses

could utilize them sometimes as "whipping posts", which implies that they use them in

a manner to grumble about certain absolutely inconsequential issues.

3) Budgets can be viewed as pressing factor devises. Consequently, they can make similar

negative responses as some other pressing factor mean could create

5

BUDGETARY CONTROL

Earthy coloured and Howard characterize budgetary control is " an arrangement of controlling

costs which incorporates the readiness of spending plans, co-ordinating the division and

building up duties, contrasting genuine execution and the planned and following up on

outcomes to accomplish greatest productivity." at the end of the day, Budgetary Control is the

way toward setting up of departmental spending plans relating the obligations of chiefs to the

prerequisites of an approach, and the consistent examination of real with planned outcomes,

either to get by singular activity the destinations of that strategy, or to give a firm premise to

its modification. The essential goal of budgetary control is to help the administration in orderly

arranging and in controlling the activities of the venture. The essential goal can be met just if

there is appropriate correspondence and coordination among various portion of chain of

command inside the association.

An Enterprise should be managed efficiently and effectively which implies coordination and

control of total entities to achieve the organisation objectives. One systematic approach for

attaining effective management performance is systematic planning of financial parameters

through budgeting which is an integral part of management.

The word budget is derived from a French word Bougette representing a leather pouch into

which fund appropriates to meet anticipated expenses. According to the ICWA London, a

budget is a financial and quantitative statement prepared and approved Prior to a defined period

of time of the policy to be pursued during that period for the purpose of attaining a given

objective. It includes income, feature and Employment of capital.

BUDGETING PROCESS

There are a set of guidelines which are used in the budgeting process by a large number of

organisations. These common steps are listed follows.

Obtaining estimates of sale, production level, expected cost and availability of

resources from each sub unit/ division/department.

Coordination estimates

Communicating the budget to responsible managers and the concerned departments

implementing the budget plan.

Reporting interim progress towards budgeted objectives.

6

BASIC REQUIRMENTS FOR PREPARING BUDGET

Budget committee

It comprises of all executives in charge of major function and entrusted with the preparation

and finalization of budget for various centres and also for the whole company called master

budget.

Budget centre

It is a section of an organisation of an undertaking defined for the purpose of the budgetary

control

Budget manual

It is a document which is set out the responsibility of the person engaged in the routine of and

form records required for budgeting control.

Budget period

The length of the period for the period for which the budget is to prepare. The period may be

of more than one year, for the 1 year (annual budget) or less than one year.

Principal budget factor

The factor which dominates the business operation and which acts as an obstacle or

impediments in accomplishing the desired result specified in the company’s budget

BUDGETING AT HAL

The need for the preparation of budget is to steer the company towards its long-term objectives

by firming up the short-term goals in line with the long-term objectives. The Short-term targets

are reflected in the operating plan of the company.

In order to achieve the short-term target and also to give per trust to the growth of the company,

there is a need to make investment in plant and machinery, test instrument, civil works and

infrastructure. For which Investment plans to be drawn up.

The investment plan is laid down in the capital budget and while the operating plan is laid down

in the revenue budget However in order to achieve the target set in the operating plan, several

supporting plants like

Inventory budget

7

sales budget

cash budget

manpower budget extra is also prepared to identify Areas where control is required.

The preparation of budget is only half the job done. The efficiency of the budgeting process

can best be judged by a system of periodic monitoring. This helps the budgeting process in two

ways

To take necessary action in achieving the targets.

To analyse the reason for variation and take corrective action either through appropriate

measure in achieving the target for revising the basis of budgeting in the future.

This whole excise of budgeting and budgetary control should ideally be a continuous process

to enable by any organisation to focus on area which needs attention.

BUDGETING PROCESS

A Budget it is an overall blueprint of comprehensive plan of action expressed in physical and

financial terms, includes plan for each of the activity/ responsibility centres of the business and

provide a link between the physical and financial plans of various department of a company. It

is also a document to serve as a control for monitoring and review. A budgeting system is a

comprehensive system of planning and control covering all segment of an undertaking and

giving a sense of direction. The budget system should be such that it makes it imperative for

management to establish goals and objectives, define policies, develop programmes, both long

term and short term, and allocate resources, measure performance against the target and in the

process, revise the objectives and policies, if found necessary.

The budget period is the financial year commencing from April to March and the budgetary

exercise will commence in mid-June. The budget is Projected in a 3 year time frame covering

estimates for

Current year

But your (i.e., next year)

Forecast your (i.e., your following budget year)

8

Projection under current year represents a revised estimate (R.E.) for the current year. For

comparison purposes, actual of the year previous to current year, the budgeted projections

approved earlier for the current year as well as actual for the first four or five months of the

current year are also given. The budget is being presented for a three-year time frame

considering the lead time for the supply from the date of order and reasonable span of control

for expenditure, keeping in view fluctuations in prices.

TIME FRAME FOR PREPARATION OF BUDGET

The budget proposal from the unit should reach corporate office by End of September. The

consolidated budget is put to the board in October/ November, so that units/ division, have

sufficient time to initiate midterm course correction, if necessary, for the current year and also

take advance action for achieving target in success during the year.

QUARTERLY REPORTS

Budgetary control system will be complete only if there is a mechanism of regular reporting

by which feedback is obtained and reported to the management. The purpose of the quarterly

capital expenditure statement is to monitor and strive for an even flow of Expenditure so as to

avoid cash crunch situation. Revenue side of the quarterly operating estimates is expected to

aid in monitor and strive for an even flow of Expenditure so as to avoid cash crunch situations.

The Revenue side of the quarterly operating estimates is expected to aid in monitoring the

progress of dispatched during the year and expenditure side will help in identifying the areas,

which mid future control.

RESPONSIBILITY AND PROCEDURE FOLLOWED IN PREPARTION OF BUDGET

Unit/ divisional heads are responsible for the preparation of budget in every unit/

division. The industrial engineering departments (IED) shall be responsible for

preparation and submission of budgets to unit/ division finance. which in case of

multidivisional units the Management Service Department (MSD) shall be responsible

for the job.

Finance department in the unit/ shall be responsible for providing information on

expenditure and possible significant variance to the IED/MSD. This information is to

enable the proposing division to take into account all key factors at the time of

preparation of budget.

9

Unit financial shall also be responsible for financing the budget after obtaining from

the IED/MSD and forwarding it to corporate office.

Corporate finance shall be responsible for consolidating the budget and obtaining the

approval of board. Once the board approved it obtained, corporate financial

communicate the approved budget to the units.

CAPITAL BUDGET:

Effective utilisation of available funds which is a scarce resource if the important function of

financial management. This function involves decision to commit funds in a long-term asset

and other profitability activities.

Capital budgeting may be defined as the company's decision to invest its current funds into

long-term activities, in anticipation of an expectation flow of funds benefits. The long-term

activities are those which affect the company's operation beyond one year. Generally, the

company's capital budgeting decision will involve additional. Disposals modification and

replacement of long term fixed asset

The following key features should always be kept in mind while making a capital investment

decision

In most of the cases the outlay of funds will be heavy.

The decision to committee funds, once Made is Irreversible.

The benefit from deployment of funds is expected in future years.

The reason for capital investment proposals are

Replacement of plant, machinery and installation to keep the present operation going

Additional/ extension for raising output

Taking up a new product line

Vertical integration viz. Making in house and item sofa bought from outside

Fixed asset for R&D activities

Desirable investment on utilities/ infrastructure including staff welfare

10

The capital investment falls under three broad categories:

1. PROJECTS: They are those capital investments where there is identifiable and

computable revenue from the investment proposed and the revenue expenditure in

envisaged. The viability of project is usually assessed by calculating internal rate of

return.

2. AUGMENTATION NEEDS: There is a need for investing in items “other than

project” which will be mainly for augmenting the existing facilities. The argumentation

needs will be categorised as:

i. Modernization and balancing needs

ii. Infrastructure needs like furniture, computers etc.

iii. Items required for R and D.

3. CIVIL WORKS: It lists out all civil work requirements of new building/floors either

in the factory or in the township

11

FLOW CHART OF CAPITAL BUDGET

CAPITAL BUDGET

PROPOSAL ON

PROJECTS

PROPOSAL ON

AUGMENTATION

NEEDS

PROPOSALON

CIVIL WORKS

EXPENDITURE

AUGMENTATIO

N NEEDS

APPROVED

AGUMENTATI

ON NEEDS TO

BE

CIVIL

WORKS

APPROVED

CIVIL

WORKS TO

BE

APPROVED

PLANT & MACHINERY

APPROVED

TEST INSTRUMENTS

APPROVED

INFRASTRUCTURE

NEEDS APPROVED

PLANT &MACHINERY

TO BE APPROVED

TEST INSTRUCTION TO

BE APPROVED

INFRASTRUCTURE

NEEDS TO BE

APPROVED

12

VETTING OF CAPITAL BUDGETING PROPOSAL:

Ideally, a two-tier review committee should be formed in each:

Department level to carry out initial screening of proposals.

Unit level for the prioritization and consultation of requirement of various divisions of

finalize the capital budget projections.

REVENUE

Revenue budget lays down the operating plans of the company. Ideally such plans should

reflect the operational goals of the company. Which again has to be line with the long-term

strategic goals/. Vision of top management companies striving for steady growth should

increase sales and operational activity. Without such increase it would be difficult to maintain

profitability in present competitive environment.

Revenue budgeting excise help the company to focus on areas which need constant monitoring

and follow up the action in budget year.

Important issue taken into consideration relating to revenue budget are:

PROFITABILITY: The need is for maintaining the current trend and stabilizes the

company by allocating the expenses accurately and avoids flaw. Thus, leading to

increased profitability of the company.

INVENTORY: There has been the presence of high inventory in most of the

departments, which needs serious consideration. Measures have to be taken to reduce

the inventory to the required level by applying scientific method of inventory control,

thus bringing down the cost incurred on holding inventory.

DEBTORS/CASH FLOW: The cash flow has to be a satisfying rate of catering the

day today activities without any hassles. It is important to concentrate on the debtors

outstanding and decrease the collection period. This would result in increased cash

flow in easing the activities.

EXPORTS: Are section that need additional concretion. The potential of the company

related to export has not been tapped to be optimum. Require measured have been

incited to accomplish the same.

13

The logical Starting point of any revenue budget excises would it sales plan of the unit. Sales

plan is followed by the budget operating estimates and balance sheet.

The balance sheet is supported by following

Cash budget

Inventory budget

Further, there are independent formats like manpower budget, R&D budget, foreign exchange

budget and welfare and social overheads budget.

SALES BUDGET: Sales budget is the starting point of the revenue budget exercise. It

is prepared according to the orders placed by the customers. Sales budget is necessary

in order to know the extent to which a divisions projection is based on the firm orders

as it indicates the order status of the products. It also brings out the area in which efforts

must be made to secure orders. At most care should be exercised in projecting the sales

of a division or unit. It should be taken into account the figures projected in the 'roll on

plan' and any directives issued from top management from time to time.

OPERATING ESTIMATES: It list out the revenues as well as the cost parameters. It

highlights areas where cost saving should be aimed at. The major cost element is

material cost, employee remuneration and benefits and other revenue expenses. Most

of the cost listed under other revenue expenses are subjected to budgetary control that

budget allocation is must for encouraging the expenditure.

CASH BUDGET: It is important to arrive at the net cash requirement of the units or the

net cash generated by the unit. A Consolidation of the unit’s cash requirement helps in

assessing the total cash requirement of the company. Which in turn enables corporate

office to assess the likely interest burden for the year?

INVENTORY BUDGET: It furnishes the details regarding commitment and

anticipated payment for RMC. Stores and spares and resale items. It requires inventory

levels to be furnished with a breakup of important and indigenous materials. Ratio of

materials to VOP should be furnished specific justification for increase in comparison

to the previous year as also to be furnished.

14

MANPOWER BUDGET: IT project the requirement of Executive and non-executive

which should be done keeping in a view future requirement. Retirement impact of the

voluntary retirement etc.

RESERCH AND DEVELOPMENT BUDGET: It throws light on the extent of R&D

activates planned during the year and the new product expected to come out of R&D

efforts.

BALANCE SHEET: It gives a figurative presentation of the estimated assets and

liabilities of the unit as on 31st March of each year.

BUDGETARY CONTROL

Budgetary control is an important financial technique by which the business concerned can be

efficiently managed enabling forward thinking and thereby carrying out the operations

according to plans.

Fuller participation of the persons being made responsible in the process of setting the

budgets motivates in achieving the budget targets.

Proper training and education for such persons to enable them to appreciate their own

budget and in achieving the corporate objective.

Fixation of individual responsibility for the costs they could control.

Variance analysis as a means to achieve the objective but not for which hunting.

Budgetary control involves comparison of actual with the budget and ascertainment of

variances therefore with a view to find out the reason for such variances and takes a suitable

remedial measure. The budgetary control is a very important activity to ensure that the actual

conform to the plans set up through the budget. The meaning and purpose of setting up the

budgets will not be achieved without an effective budgetary control system. Hence it is

necessary to have an effective system of budgetary control through which actuals are monitored

periodically.

15

All the important budgets viz. Production, sales, profit and loss, working capital, ways and

means, after approval by the board, are broken into monthly budget to facilitate comparison of

monthly actual with the monthly budgets. In the process, care is taken to ensure uniform

production from month to month instead of bunching the major part of production to the last

two quarters of the Years.

In respect of the following budgets comparison of actuals with the corresponding budgete

amounts has to be done in the proforma shown

Production budget

Sales budget

Overhead’s budget

Ways and means budget

TYPES OF BUDGETS

i. CAPITAL BUDGET: This is meant for planning of the commitments for the various

capital facilities, i.e., plant and machinery, civil work and other infrastructure services

needed to achieve the performance objectives. The expenditure to be incurred for the

commitments that are likely to materialise during the budget period is also indicated.

The requirements under new projects, continuing projects, replacements, welfare and

design and development are to be shown separately.

ii. NEW PROJECTS: This covers the facilities necessary to implement new projects

sanctioned duly supported by preliminary project report. New projects are sanctioned

by government or HAL Board of direction depending on capital outlay involved.

iii. CONTINUING PROJECTS: This covers facilities to improve productivity, reduce

cost and remove bottlenecks on account in inadequate balancing, through

improvements and rationalization.

iv. REPLACEMENT: This covers replacement of facilities which have complete it their

life or are beyond economical repairs. Items planned for a replacement should be

scrutinised by an expert committee comprising technical, commercial and Finance

member and cleared for replacement.

16

v. WELFARE: The capital facilities needed for the Welfare of employees such as

Township building, guest houses, Hospitals, canteen, etc, figure under this head. where

certain welfare facilities are contemplated in the PPR/DPR of "New project", those are

reflected under the head "New project" itself.

vi. DRE BUDGET: Large sums are sanctioned by board/government under the head

'Deferred revenue expenditure' when approved a project. This comprises expenditure

on nonstandard equipment, project tooling, training, foreign technician’s expenses,

project cell expenditure, Etalons, long/static/ life test, drawings, etc. A separate budget

to cover the above specific items is prepared.

vii. PERFORMANCE BUDGET: performance budget interrelates the functional outlay

with the physical target and accomplishment reinforcing the principle of accountability

with the ultimate aim of effective overall utilisation of scarce resources. This gets

reflected in the profit and loss budget and projected balance sheet which are supported

by various functional budget enumerated below.

viii. ORDER STATUS: This is essentially a quantitative budget indicating the total order

book position in respect of major product/service and yearwise deliveries during the

budget periods product wise details and furnished. Anticipated order are also shown

distinctly.

ix. PRODUCTION BUDGET: This covers a Production plan for the various activities

both in physical units and by Value where such qualification is not possible or in

voluminous. In formulating the budget. Due care has to be taken to consider the

promised delivery schedules to the customer, planned levels of finished goods to be

man maintained at the year end. and the requirement of the work in progress to make

the following years production programme.

x. SALES BUDGET: This covers the sales to be achieved during the budget period. The

details of a sales for the different product lines and other activities are shown with

physical units, unit rates and values.

xi. PURCHASE BUDGET: This covers the purchase of material necessary to be made to

meet the production programme and to maintain the inventory as per the norms. To be

effective, the Purchase budget specifies the physical units together with the value to be

17

purchased for the various 'A' class materials. The bill of material for the respective

product forms the basis to determine the purchases.

xii. FOREIGN EXCHANGE: This covers the foreign exchange required to purchase the

capital and revenue items including expenditure on payments of licence

fee/royalty/foreign technicians fees, during the budget periods. Details of a foreign

exchange and the non-convertible rupee amount are given. In order to serve as a control

device, it is essential that the item wise details for the provision made from part of this

budget.

xiii. MANPOWER BUDGET: Manpower prepared to maintained during the budget period

taking into account the induction planned and wastage is indicated in the budget.

Breakup of the manpower under officers, direct workers and indirect workers is as

shown separately. The manpower determination is done with reference to the standard

manhours output needed to meet the planned production considering the total task

rather than incremental tasks.

xiv. TRAINING BUDGET: This covers the expenditure proposed to be incurred on

training the personnel both abroad and in India which is indicated separately. The

corporate policy on training and those provided in concerned DPRs are kept in view

while formulating this budget.

xv. SALARIES AND WAGES BUDGET: expenditure on salaries and wages to be

incurred for the proposed manpower as per the manpower budget is shown in the

budget. This includes expenditure on prerequisites, terminal and welfare benefit etc.

xvi. OVERTIME BUDGET: A separate budget is prepared to indicate expenditure to be

incurred during the budget period for payment of overtime to direct and indirect

workers. The object of budgeting overtime expenditure is to ensure optimum utilisation

of available human resources and Resort to overtime only on unavoidable occasions.

18

PERFORMANCE BUDGETING

An effective mechanism of financial management and control can be built up only on a sound

budgetary system. The budget of public enterprise serves the acquirement of internal

accountability and also to external agencies besides providing a plan of action against which

performance is reviewed.

Performance budgeting is an essence, a process or technique for presenting estimate and

expenditure in terms of functions, programmes, activities, and projects. It brings out the total

business operations through a classification by functions, programmes and activities. Through

suitable narrative statement and work load data that form an integral part of the presentation, it

indicates the work done, proposed to be done and the cost of carrying them out. This creates

an inbuilt mechanism for watching the progress in attaining the programmed targets and taking

timely corrective actions. In brief, performance budgeting is a comprehensive operational

document conceived, presented and implemented in terms of programmes, projects, and

activities with their financial and physical aspects closely interwoven.

Following is some of the main steps in formulating the performance budget:

a) Establish a meaningful functional programme and activity classification which

represents the range work of the unit.

b) Bring the system of accounting and financial management into accord with this

classification.

c) Evolve suitable norms, yardsticks, work unit of performance and unit cost, wherever

possible under each activity or programme to facilitate better estimate of financial

requirements and later appraisals and evaluation.

d) Stipulates time bound plan for execution of work and incurrence of expenditure.

e) Ensure the initiation of action for implementing schemes provided in the budget.

f) Oversee the regular flow of expenditure and prevent cost overrun.

19

H.A.L has introduced the system of performance budgeting. The conversational revenue

budget has been restructured as performance budget with the following control centres:

i. Order status

ii. Production budget

iii. Sales budget

iv. profit and loss account

v. Ways and means budget

vi. manpower and training budget

vii. Overtime budget

viii. Welfare budget covering township transport, canteen and medical

ix. Foreign exchange budget

x. Purchase budget

xi. Research and development budget

xii. Projected balance sheet.

PRODUCTION BUDGET

Production budget is compiled product wise/service wise in respect of major products and

service. All other are listed under different groups like manufacture of spares, miscellaneous

overhaul jobs, rotable overhauls etc. This indicates quantitative targets and value where

quantification is not possible, or voluminous, such as spares manufacture and miscellaneous

overhaul jobs. This budget is linked to order status and sales budget the following are steps to

finalising the budget.

Production planning management Services Department assess the availability of resources viz,

men, material and machinery, and estimate the quantities to be produced, product wise and

phase wise in respect of manufacturer of spare rotables and miscellaneous overhaul Jobs, the

quantification is made in monetary terms.

20

The production budget so finalized together with manpower bedsheet for achieving the planned

production are submitted by the Divisions to the corporate office after getting Clearance from

the respective managing directors for approval. The corporate office examines the projections

made by the divisions and after making such changes as deemed necessary for integrating

various divisional budgets, approval is conveyed to the division's these approved budget form

the basis for other operating budgets.

To evaluate the performance against these targets it is necessary to correlate this with

monastery values. To do so, the resources required for production in terms of material, labour

and amortization besides standard manhour content in the production should be given in the

format given at Annexure. This format should precede the manpower projection. Man, hour

rate calculation depends on the format.

It is also necessary to spell out the details of amortization such as total sanction Product Wise,

the rate of amortisation, total amount amortised so far etc.in the format at Annexure. This will

include amortisation of special tooling and test equipment as well as other DRE.

addition, for items costing rupees 10 lacs and above cost benefit analysis is carried out and

appended to the justification sheet. A sample cost benefit analysis is appended at Annexure.

Price for plant and machinery is based on budgetary prices and where budgetary prices are not

available, price escalation is included in the estimated cost of respective item. wherever

important items are involved element is indicated separately.

It is a necessary to keep the free foreign exchange requirement for plant and machinery at the

minimum. where Import of machinery is in inescapable, efforts are made to procure to the

maximum extent from rupee payment area. where projection are being made for imports from

other than our RPA, the reasons for which the RPA has been ruled out, are indicated as per

government directive video letter No. 17(3)/86/D(B&C) dated 28th April 1986 at Annexure.

SALES BUDGET

This budget indicates the quantitative to be delivered, product/activity wise with values, during

the budget period. In the case of direct delivery is by the division to customers, the quantities

indicate in the budget must match with deliveries indicates in the order status. where, however

supplies are made as part of finished product of other division the supplies divisions, the

21

supplies division ensure conformity of the unit considered in the budget with that of user

divisions. For this purpose, use a division advise the supplier division of the quantities of final

products being considered in their sales budget.

As per HAL according policy, sales are set up on the basis of signalling out and

delivery, duly signed forms Q 429/530 or forms evidencing signalling out of aircraft by

the C.R.I constitutes delivery for this purpose. It is therefore imperative that the sales

budget reflect items targeted to delivery during the budget period.

The sales budget is presented in two parts part 1 for form order and part 2 for anticipated

orders. Further the budget under each part lists service and products phase wise

customer wise and also exports. The format is at an Annexure.

Separate worksheet showing the quantity unit cost, unit profit and total sales for each

of the three years are given for firm orders and anticipated order as per format.

Manpower rate adopted for each of the three budget years for computing the labor cost

in indicated in the given format.

For jobs other than Cost Plus FCQs submitted or approved wherever is lower, form the

basis for sales computation for the current year, and likely price for deliveries in the

relevant years form the basis for sales computation for Budget year and forecast year.

For Cost Plus the job sales computation is estimated based on technical evaluation and

past actuals for similar jobs. It is necessary that the items targeted for sales during the

budget period are valued to convert the anticipated accomplishment into monetary

figures.

PERFORMANCE EVALUATION

After the budgets are prepared and the profit and loss budget and projected balance sheet are

made, it is necessary to ascertain the net result of the planned activities in terms of certain

performance criteria. It is essential to see that the necessary activities and the desired input

therefore are so planned that divisions yield the desired result in terms of these performance

parameters. For this purpose, it is necessary to fix standard for various performance criteria

with reference to which the performance is to be judged.

22

The performance criteria should be related to the following groups.

growth

productivity

profitability

resource utilisation.

i. Growth: - under this head of the following are worked out:

The increase of sales over the previous year

percentage increase of production over the previous year

percentage increase of gross block over the previous year.

ii. productivity: - under this head the following are worked out: value of production per

employee

value added for per employee average sales per employee

iii. profitability: - under this head the following are worked out:

Gross profit (before depreciation interest and tax) to capital employed.

Profit before interest and tax to net sales.

Profit after interest and tax to sales.

Net profit to net worth

iv. Resource utilisation: - in order to assess the efficiency in utilisation of resources the

following a worked out:

Net sales to Capital employee Inventory sales.

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CHAPTER 2

INDUSTRY PROFILE AND COMPANY PROFILE

24

INDUSTRY PROFILE

Sector: Electronic Technology

Industry: Aerospace & Defense

Hindustan Flight Ltd. takes part in assembling of aviation items. Its items incorporate airplane,

helicopters, future items, power plant, aeronautics, framework and embellishments, aviation,

and materials. It offers airplane MRO, helicopters MRO, power plant administrations, and

frameworks, embellishments and flying. The organization was established on October 1, 1964

and is settled in Bangalore, India.

Air transportation is one of the principle imaginative effects of our events and draws in the

nation with strength. It is a huge device for financial new development and has basic capacity

in Open security relations.

The word Flying is gotten from the Latin word "avis" is the down to earth a piece of flying,

being the arrangement, progression, creation, movement and usage of plane. "Flight" was

created by the French writer and past oceanic authority Gabriel La Landelle in 1873.

December 17, 1903 by the Wright kin. The Wright kin were the first to fly in a fuelled and

controlled plane. Past flights were lightweight flyers (control anyway no power) or free flight

(power yet no control), yet the Wright kin solidified both, setting the new standard in flying

records. Following this, the all over gathering of ailerons as opposed to wing contorting made

plane much easier to control, and only 10 years sometime later, at the start of World War I,

heavier-than-air fuelled plane had gotten helpful for perception, mounted weapons spotting,

and even attacks against ground positions.

Plane began to move people and payload as plans expanded and more strong. The Wright kin

took up high the principle explorer, Charles Furnas, one of their mechanics, on May 14, 1908.

25

During the 1920s and 1930s inconceivable progression was made in the field of aeronautics,

including the chief abroad outing of Alcock and Gritty shaded in 1919, Charles Lindbergh's

autonomous overseas outing in 1927, and Charles Kingsford Smith's overseas flight the

following year. Probably the best arrangement of this period was the Douglas DC-3, which

transformed into the essential airplane to be helpful passing on explorers just, starting the

forefront season of voyager transporter organization.

AVIATION INDUSTRY CLASSIFICATION

MILITARY

Military avionics is the utilization of military airplane and other flying machines for the

motivations behind directing or empowering airborne fighting, including public airdrop (air

load) ability to give strategic inventory to powers positioned in a theatre or along a front.

Airpower incorporates the public methods for leading such fighting, including the crossing

point of transport and war create. Military airplane incorporates planes, contenders, transports,

mentor airplane, and observation airplane.

The Indian Air Force, Indian Naval Air Arm and Army Aviation Corps are the air arms of the

Indian military. The Indian Air Force is the world's fourth biggest flying corps with essential

duty regarding getting Indian airspace and to direct airborne fighting during a contention. It

was formally settled on 8 October 1932 as an assistant aviation based armed forces of the

British Empire, and the prefix Royal was included 1945 in acknowledgment of its

administrations during World War II. Following the Indian Independence Act 1947, the new

territories of India and Pakistan got free from the United Kingdom, the Royal Indian Air Force

served the Dominion of India, with the prefix being dropped when India turned into a republic

in 1950. Since freedom, the IAF has been engaged with four conflicts with adjoining Pakistan

and one with the People's Republic of China. Other significant tasks embraced by the IAF

incorporate Operation Vijay, Operation Meghdoot, Operation Cactus and Operation Poomalai.

26

Aside from clashes in the subcontinent, the IAF has been a functioning member in United

Nations peacekeeping missions.

TYPES OF MILITARY AVIATION

Fighter aircraft’s

Ground attack aircraft

Bombers

Transport aircraft

Surveillance and reconnaissance

Unmanned aerial vehicles

Missiles

CIVIL

Common flight is one of two significant classes of flying, addressing all non-military flying,

both private and business. The greater part of the nations on the planet are individuals from the

International Civil Aviation Organization (ICAO) and work together to set up normal

principles and suggested rehearses for common avionics through that office.

Common flying incorporates two significant classes:

Scheduled air transport, including all traveler and payload flights working on routinely

planned courses.

General flying (GA), including any remaining common flights, private or business.

27

Major five manufacturers of civil transport aircraft

Airbus

Boeing

Bombardier

Embraer

Tupoloev

Airbus: - Airbus is one of the world's driving airplane producers satisfying about half or a

greater amount of the orders for carriers with in excess of 100 seats. Airbus is situated in Europe

with its base camp in Toulouse, France and has 12 locales in Europe situated in France,

Germany, Spain and UK. Airbus additionally has three auxiliaries in the USA, Japan and

China. They utilize around 52,000 individuals from 85 ethnicities who talk among them more

than 20 unique dialects. Airbus at present has a product offering up of 14 fly airplane types

which range from 100 to 525 seats. There have been in excess of 9,200 airplane requested all

through the world as the Airbus airplane family is perceived for its solace, financial matters

and flexibility.

Boeing: -Boeing is one of the other fundamental aviation organizations and are the biggest

maker of business jetliners and military airplane joined. Boeing likewise plan and fabricates

rotorcraft, electronic and protection frameworks, rockets, satellites, dispatch vehicles and

progressed data and correspondence frameworks. Boeing is situated in USA with its central

command situated in Chicago. They utilize in excess of 158,000 individuals across the United

States and in 70 nations, making them perhaps the most different, gifted and creative labor

forces anyplace on the planet. The fundamental business item that Boeing producers are the

737, 747, 767 and 777 groups of planes and the Boeing Business Jet, with almost 12,000

business jetliners in assistance around the world (around 75% of the world armada).

28

Bombardier: - Bombardier is a worldwide transportation organization that is available in more

than 60 nations on 5 mainlands. They work two organizations: Aerospace and Rail

Transportation. Bombardier Aerospace is the world's third biggest common airplane producer

and are pioneers in the plan and assembling of creative avionics items and administrations for

the business, territorial and land and/or water capable airplane markets. Their central command

are in Montréal, Canada and they utilize more than 32,500 individuals around the world. It's

superior airplane and administrations are found in various business sectors including : Business

airplane - Lear stream, Challenger and Global airplane families; Commercial airplane - new

CSeries program, CRJ Series and Q-Series airplane families; Amphibious airplane -

Bombardier 415 and Bombardier 415 MP airplane; Jet travel arrangements - Flex fly;

Specialized airplane arrangements - Bombardier airplane altered for exceptional missions;

Aircraft administrations and preparing - airplane parts, upkeep, extensive preparing,

specialized help and distributions, and online administrations.

Embraer: - Embraer has become one of the main aircraft manufacturers in the world by

focusing on specific market segments with high growth potential in commercial, defense, and

executive aviation. Embraer is based in São José dos Campos, Brazil and currently employ

29

more than 17,237 people of which 87.7% are based in Brazil. Embraer continues to lead the

industry with its innovative regional and commercial jet product lines. Since 1996, Embraer

has produced and delivered more than 1000 ERJs to more than 37 airlines in 24 countries. The

three markets that Embraer manufacture aircraft for include: 1 Commercial Aviation - EMB

120; ERJ 135; ERJ 140; ERJ 145; ERJ 145 XR; EMBRAER 170; EMBRAER 175;

EMBRAER 190 and EMBRAER 195. 2 Defense Systems - Super Tucano; EMB 145 AEW&C;

EMB MULTI INTEL; EMB 145 MP and Legacy 600. 3 Executive Aviation - Lineage 1000;

Legacy 600; Legacy 500; Legacy 450; Phenom 300 and Phenom 100

Tupolev: - Tupolev is a Russian aerospace and defence company, headquartered in Moscow,

Russia and is officially known as Public Stock Company (PSC) Tupolev. PSC Tupolev

develop, manufacture and overhaul both civil and military aerospace products such as aircraft

and weapons systems. They are also actively developing missile and naval aviation

technologies, with more than 18,000 Tupolev aircraft produced for the USSR and the Eastern

Bloc. Many of the designs that PSC Tupoley have come up with over the years have been dead-

ends or experimental aircraft although they also developed a number of production series

aircraft which may have runs up to 4,500 as in the Tu-2 . The designs go back to the early

piston-powered aircraft; experimental airplanes; Bombers and other military types;

Interceptors; airliners/transport; unmanned aircraft and planned aircraft (PAK DA and Tu-

2000).

30

Major five manufacturers of General aviation aircraft

Cessna

Cirrus Design

Diamond

Mooney

Piper

Cessna: - Cessna Aircraft Company are the main originator and producer of light and medium

size business jets, utility turboprops and single motor airplane as they have sold and conveyed

more airplane than any other person (190,000 and then some) . They began over eighty years

prior as a little airplane organization in Wichita, Kansas (USA) with a plan to fabricate a

monoplane that utilized a wing without swaggers or supports, and now they utilize more than

15,000 individuals around the world. The organization is an auxiliary of the U.S. combination

Textro.

Cirrus Design-Cirrus Design Corporation is an airplane maker and the world's driving trend-

setter of single-motor cylinder fueled airplane, with their SR22 being the world's top-rated

plane in its group. They started in 1984 as a unit plane and configuration fabricating

organization in Wisconsin, US with their VK-30 airplane, prior to moving their base camp in

1994 to Minnesota, US to start innovative work of the SR20 (four traveler, single-motor

composite airplane) with the assistance of more than 950 representatives. Since they began,

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they have likewise produced the fuselage, wings and tail part of a Tactical Unmanned Aerial

Vehicle (TUAV) for the US Department of Defense utilizing composite innovation in every

one of the three segments. Cirrus have likewise fostered the SRV, SR20 and SR22 to join level

board, multi-work shows innovation and cutting-edge security advancements, including a last

degree of assurance known as the Cirrus Airframe Parachute System (CAPS) – a ballistic

parachute sent from the rear of the airplane, much of the time, that permits the whole airplane

to plunge securely from a crisis.

Diamond-: - Diamond Aircraft Industries is an Austrian-based manufacturer of general

aviation aircraft, motor gliders and simulators. They are a global manufacturer with offices in

North America, Europe, Asia and Australia employing 1,200 people and producing over 3,500

aircraft. There are two production facilities, one located in Austria (head office, research and

development operations conducted) and one in Canada. At both of these facilities they produce

aircraft for flight schools and private operators.

Mooney: - The Mooney Airplane Company (MAC) is a US maker of single motor general

aeronautics airplane which was established in 1929, and who have since conveyed in excess of

11,000 airplane around the world. Their central command are situated in Kerrville, Texas

(USA). Mooney serves 7,000 clients in the US and 1,000 globally with an armada of airplane

that has flown in excess of 40 million hours. During their association in the avionics business

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up until this point, Mooney has collected various critical accomplishments including delivering

the first compressed single-motor cylinder controlled airplane (M22 Mustang); creation of the

quickest single-motor airplane (Mooney Acclaim); first creation airplane to accomplish 200

mph on 200 hp (M20J 201); and the quickest cross-country trip in a solitary motor cylinder

fueled airplane (M20K 231) All Mooney airplane have the mark vertical stabilizer with its

upward driving edge and cleared following edge that gives the deception of being forward-

cleared.

Piper: - Piper Aircraft, Inc., is a producer of general aeronautics airplane, situated at the Vero

Beach Municipal Airport in Vero Beach, Florida. Mr Piper presented the Piper Cub in 1937,

and from that point forward Piper Aircraft have become the lone general flight maker to offer

a total line of airplane from rough mentors to elite super props, and the new PiperJet delivering

in excess of 144,000 airplane - 85,000 of which are as yet flying. They at present production

Meridian (business and individual transportation); Mirage; Matrix; Seneca V; Seminole;

Arrow; Warrior III; PiperJet.

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COMPANY PROFILE

Hindustan Aeronautic limited [HAL] a chief Aviation Organization in Asia is occupied with

plan, advancement and assembling of military and common airplane for more than fifty years.

The item range covers essential cylinder motor mentor airplane to helicopters to modern

cutting-edge profound entrance strike airplane. Hindustan Aerodynamic Restricted is an

association where incorporated air borne weapons stages are imagined, created, fabricated and

overhauled. It is one of only a handful few corporate monsters in Asia whose abilities length

the whole scope of exercises from item origination to after deal uphold. HAL is additionally

engaged with the production and gathering of structures needed for India's space programs.

The Motor Division was set up in 1957 to fabricate Orpheus Super Fly Motors under permit

from Moves Royce. In 1959, another permit arrangement was endorsed with Moves Royce to

make Dart Motors to control HS-748 traveler airplane upgrade of Avon Motors fitted at

Canberra and Tracker airplane. From that point forward the division has extended in its

solidarity. Motor division is as of now occupied with the assembling of Artouste motors for

Chetek and Cheetah Helicopters, Adour motors for Puma airplane and Garrett motors for

Dornier airplane.

As indicated by Keith Davis, "Association might be characterized as a gathering of people,

enormous or little, that is collaborating under the heading of chief initiative in achievement of

certain regular target". The association study is the efficient learning measure about an

association to comprehend the various functions of every part in an association. In association

study, the various jobs, to be specific, relational jobs, decisional jobs and enlightening parts of

different individuals are assessed and how it influences the working of the association is

examined.

TYPE: State claimed venture

INDUSTRY: Aviation and guard

FOUNDED: 1940

KEY Individuals:

T Suvarna Raju (Director)

Shri V M Chamola, Chief (HR)

C V Ramana Rao, Chief (Account)

Shri S. Subrahmanyam, Chief (Tasks)

34

Shri D. K. Venkatesh, Chief (Designing and Research and development)

LAYOUT: 99 sections of land (Various divisions)

AIMS AND OBJECTIVES

Ensure accessibility of All Out-Quality Individuals to meet the Hierarchical Objectives

and Goals.

Facilitate ceaseless improvement in Information, Abilities and Capability

(Administrative, Conduct and Specialized).

Promote a Culture of Learning, Development and Accomplishment with accentuation

on Honesty, Validity and Quality.

Motivate labor force through strengthening of People and Group building.

Play an essential job straightforwardly and fundamentally to upgrade

Efficiency,Productivity and the Nature of Work Life.

FOUNDRY AND FORGE DIVISION

HISTORY

The Foundry and Forge Division was set up in 1974. The Division's office, set up on a lavish

territory of 32 sections of land, fabricates Castings, Forgings, Rolled Rings, Shape Memory

Alloy Products rather than Shape Memory Alloy Ferrules, Brake cushions and Rubber Products

for basic applications for the Aeronautics, Space, Defense, Locomotive, Earth mover and

different enterprises. Cutting edge innovation, Quality and Reliability and a profoundly gifted

labor force have empowered the Division to turn out safeguard parts for fundamental

applications in gathering the demanding necessities of each client.

Foundry and Forge Division, other than obliging it's sister Divisions, supplies items to different

homegrown clients just as worldwide Aircraft/Aero-motor primes and Aircraft System

producers.

The Foundry and Produce Division is happy for the association it keeps. Closer home, we

smoothly our things to divisions of HAL manufacturing Airplane, Air engines and Adornments

other than the Space, Safeguard, Railroads, Earth-Moving and Substantial Designing

35

Businesses. Over the globe, among our regarded customers are acclaimed Airplane Air engine

and Airplane Framework producers.

MISSION

The mission of Foundry and Fashion Division is to convey serious items and administrations

that meet or surpass our clients' desires. We will accomplish our central goal by:

Understanding clients' need

Building up our HR

Using deliberate determination, create specialized help and observation of our

providers and sub-contractual workers

Improving consistently the offices

Constantly improving assembling strategies

Presenting item improvement dependent on client input

AWARDS

AS9100C Confirmation

NADCAP Accreditation for Warmth Treatment, NDT and Substance Preparing

ISO 14001 EMS

ISO17025 for the Focal Research center

Director General of Aeronautical Quality Affirmation

Ministry of Science and Innovation, Administration of India

Customer endorsements of Moves ROYCE, UTAS, BAE

COMPANY PROMOTERS:

The government to have set up, its role in promoting the company.

VISION AND MISSION STATEMENT

VISION: To become a significant global player in the aerospace industry.

MISSION: To achieve self-reliance in design, development, manufacture, upgrade and

maintenance of aerospace equipment diversifying into related areas and managing the business

in a climate of growing professional competence to achieve world class performance standards

for global competitiveness and growth in exports.

36

QULITY POLICY:

“To manufacture and supply products to meet the customer requirement and to continuously

improve quality in all products process and service to ensure customer satisfaction”

Quality objective of company are:

Understanding and satisfying customer needs.

To design and approve standard in all direct and support activities.

Implementation of process control in all spheres of activities.

Operation of companywide continuous programs.

Develop human resource through training and involvement and motivation.

VALUES OF HAL

Consumer loyalty: We are devoted to building a relationship with our clients where

we become accomplices in satisfying their main goal. We endeavor to comprehend our

clients' necessities and to convey items and administrations that satisfy and surpass

every one of their prerequisites.

Obligation to add up to quality: We are focused on consistent improvement of every

one of our exercises. We will supply items and administrations that adjust to best

expectations of configuration, produce, unwavering quality, practicality and readiness

for use as wanted by our clients.

Cost and time awareness: We accept that our prosperity relies upon our capacity to

persistently lessen the cost and abbreviate the conveyance time of our items and

administrations. We will accomplish this by disposing of waste in all exercises and

ceaselessly improving all cycles in each space of our work.

Development and inventiveness: We put stock in taking a stab at progress in each

action engaged with our business by seeking after and empowering hazard taking,

experimentation and learning at all levels inside the organization with the end goal of

accomplishing greatness and seriousness.

Trust and camaraderie: We have confidence in accomplishing amicability in work

life through shared trust, straightforwardness, co-activity and a feeling of having a

place. We will take a stab at building enabled groups to pursue accomplishing

authoritative objectives.

37

Regard for the individual: We esteem our kin. We will treat each other with nobility

and regard and take a stab at singular development and acknowledgment of everybody's

maximum capacity.

Uprightness: We have faith in a pledge frankly, reliable and reasonable in the entirety

of our dealings. We resolve to be steadfast and given to our association. We will

rehearse self-restraint and own duty regarding our activities. We will conform to all

prerequisites in order to guarantee that our association is consistently deserving of trust.

AIMS AND OBJECTIVES

Ensure accessibility of Total Quality People to meet the Organizational Goals and

Objectives.

Facilitate ceaseless improvement in Knowledge, Skills and Competence (Managerial,

Behavioural and Technical).

Promote a Culture of Learning, Innovation and Achievement with accentuation on

Integrity, Credibility and Quality.

Motivate labour force through strengthening of Individuals and Team-building.

Play a vital job straightforwardly and fundamentally to upgrade Productivity,

Profitability and the Quality of Work Life.

STRATEGY

Total arrangement with Corporate Strategy.

Tone up Human Resources at ideal level to meet the targets and objectives of the

Company.

Identify, Build, Analyse and Upgrade the Knowledge and Skills through Training, Re-

preparing, Multi-skilling and so forth

Cultivate Leadership with Shared Vision at different levels in the Organization.

Focus on Development of Core Competence in High-Tech regions.

Build Cross-useful Teams.

Promote Vision, Mission and Values all through the Company.

Encourage execution culture that Rewards, Recognizes and Motivates.

38

STANDARDS AT HAL

Strictly cling to the norms, details specified in ISO-9001.

Ensure that our items mirror the best in class innovation and serious costs.

Deliver our items according to the concurred conveyance Schedules.

Clear the monetary duty of its clients inside thirty working days from receipt of

authentic and bonafide claims.

Strive to accomplish worldwide norms to turn out to be internationally cutthroat

39

ORGANISATION STRUCTURE

40

PRODUCTS PROFILE:

AIRCRAFT HELICOPTER

FUTURE PRODUCT POWER PLANT

AVIONICS MATERIAL

41

AEROSPACE SYSTEM AND ACCESSORIES

SERVICES

HAWAK AIRCRAFT SERVICE DHRU ADVANCED LIGHT HELICOPTER

POWER PLANT SERVICE SYSTEM, ACCESSORIES AND

AVIONICS

42

AREA OF OPERATION:

Domestic area

Indian air force

Indian Navy

Indian coast guard

Defence research and development organization

Indian space research organization

Bharat electronic limited

National aerospace labora tories

International area

Air bus, France

Boeing,USA

Bee system, UK

Danautt Aviation, France

Israel Aircraft industries, Israel

Royal Aircraft of OMAN

Air Mavritivs

Aircraft operations in south Asia

HAL’s major exports during the year included A-320 passenger doors to airbus, HAL Aircraft

division 777up lock equipment to Russia, spares and services to Nepal Malaysia, Thailand,

Zimbabwe, Mavritivs and onam. HAL has also initiated measures to identify and establish

strategic alliances and joint ventures with global aerospace companies who provide

MARKETS:

HAL is a monopoly company and its major market is Indian defence force, And in

international market.

43

INFRASTRUCTURE FACILITIES:

Security division:

Security division give the wellbeing measures to worker. New standards and guidelines are

made to shield the representative from meeting with a mishap. Terms and conditions playing

out the work. Security of representative is dealt with by their specialty.

Preparing Halls:

HAL has 5 cool getting ready anterooms with seating limit fluctuating from 15-50, with

versatile visitor designs each homeroom is outfitted with an overhead projector, making board,

public area structure, automated light taking care of projector (DLP) PC, with the crucial

bleeding edge programming to make presentation.

Library:

A decent library with more than 12000 books primarily on administration points, various expert

diaries and a noteworthy assortment of general media helps supplement study hall learning and

task.

Auditorium:

A cooled auditorium planned with 180 seats is additionally accessible for review

films/recordings and directing courses. A very much encouraged Dias is additionally accessible

for social projects of members.

Accommodation:

Completely outfitted 40 twin occupancy rooms and 5dormitories gives convenience to 100

members. A slick and clean cafeteria inside the grounds. An extremely wonderful and quiet

spot to live and closeness to the unstoppable force of life stops, an outright solid air to live in.

Recreation centre:

Diversion focus is outfitted with a home-rec centre, offices for indoor and outside games and

furthermore a TV, which gives the members much required unwinding and amusement during

the available time and occasion. Numerous magazines and papers are additionally accessible.

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Canteen facilities:

Flask has been set up at each division as a need and government assistance measures and in

holding the legal prerequisite under the manufacturing plants represent the accommodation of

representative. This container serves espresso, tea, snacks, supper and so on

Transportation offices:

Representatives living external the organization municipality are furnished with transport

offices (organization possessed) at financed rates to the degree feasible for driving between the

home and work environment.

Schooling offices:

Organization has set up schools at Bangalore, Hyderabad, Koraput, Nasik and Lucknow,

Kanpur for the advantages of worker's kids. The organizations of these schools are vested with

the instructive board comprised with the end goal of the training in individual division.

Rescue vehicle room:

This division is one of the security measures. The office is to support the representatives. Drugs

are given and accessible 24 hours.

COMPITITORS INFORMATION:

The aviation market is exceptionally serious with state claimed, HAL being the biggest Indian

airplane produce. Rivalry is probably going to strengthen with more prominent private area

and unfamiliar investment. The public authority also has set up its function in advancing the

business.

The company does not have any competitors in domestic market, for its aircraft because it

requires huge sum of money and vast area of land for establishing a company and it also

involves huge risk which the private parties would not like to take and the engine division

manufactures aircraft purely for countries defence purpose. So it main customer is MF (Indian

airforce). The company is having few competitors of its exports like being and airbus does

from countries like china and Pakistan.

SWOT ANALYSIS:

45

STRENGTHS

One of the leading Aerospace in south Asia with more than 2BUSD.

Vast experience of over 6 DecadesCover the entire product spectrum in aerospace

domain-vertically integrated company.

Exposure to leading international companies.

Talent pool.

It has flexible manufacturing facilities and effective marketing network.

High quality products and thus reliability and satisfaction.

Order processing, production monitoring and process flow are seamlessly integrated

through a company a country -wide network system.

Strong financial backing.

Proper research and development.

WEAKNESS

The company not keeping pace with the technological changes and thus is still engaged

in 3rd generation products.

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Dependence on western/European original equipment manufacturing (OEMs).

Low share in global market.

Marketing is not much aggressive as required in the current scenario.

Marketing information system/market intelligence to be more effective.

Products basically license oriented.

OPPORTUNITIES

Government spending on defence and civil aviation.

Spurts in civil airlines growth in India.

Stable company economy with impressive growth rate of 8%

Offset made mandatory in all the deals.

Outsourcing by foreign firms to Indian companies.

Foreign companies eyeing for joint venture mode with HAL.

THREATS

Foreign aerospace companies setting up base in India either alone or through joint

venture.

Competition from china with low labour cost.

Increasing oil prices in the Global Aviation market.

HAL has fear to terrorist as it is a defence organization producing fighter aircraft.

GROWTH

The public authority of India (GOI) got one of the investors of Hindustan airplane restricted in

March 1914 and assumed control over the administration in 1942. HAL in its current structure

as a PSU (Public area undertaking) under the service of safeguard and completely possessed

by legislature of India, appeared on October 1, 1964, when Aeronautics India Limited (AIL)

and Aircraft Manufacturing Depot (AMD) were converged with Hindustan Aeronautics

Limited.

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In sixty years, HAL has spread its wings to cover different exercises in the zones of Design,

Manufacturing, Development and Maintenance of:

Light airplane

Piston and fly motor mentors.

Advanced contenders/battle airplane

Helicopters, business airplane

Jet motors

Aircraft frameworks

Equipment and flight

Riveted and welded structures for dispatch vehicles and satellites.

The assembling divisions are completely sponsored by the plan places RESEARCH and

DEVELOPMENT uphold. New activities in R and D, for example, the Advanced Light

Helicopter (ALH). Light Combat Aircraft (LCA), Intermediate Jet Trainer (IJT), Mig and

Jaguar.

48

CHAPTER -3

RESEARCH METHODOLOGY

49

LITERATURE SURVEY

1. Christian Daumoser, Bernhard Hirsch, Matthias Sohn (2018):

Honest in budgeting: A review of morality and control aspects in the budgetary slack

literature.

According to them the review of budgetary slack is heavily researched topic in the field of

management accounting, but the heterogeneous nature of prior research blurs our

understanding of this important topic. In this paper, we provide a structured overview of

research on budgetary slack published in top-tier accounting and business ethics journals and

reach the following conclusion: participative budgeting can create or reduce budgetary slack.

Less slack is affected by budget user’s risk attitudes and information asymmetry. Information

asymmetry increases budgetary slack, but that effect is influenced by multiple factors,

including budgetary participation and information systems. Fairness and reputation concerns

decrease budgetary slack, but ethics concerns do not. Finally, the analysis revealed that social

norms decrease slack and peer influence moderates the effect. We show that research in this

field focuses mainly on psychological perspectives to analyse individuals’ budget-related

behaviour. Experimental research was determined to be the most frequently used research

method. An analysis of current experiments show growing numbers of investigations of

budgetary as a proxy of honesty in managerial reporting.

2. Thorat, M. (2008) focused attention on gender budgeting in disaster management. It

further focused sharply on the need to make a gender responsive activity during an

emergency.

3. Mishra, Yamini and Jhamb, B. (2009): The study found that gender budgeting

statement suffers from flaws in methodology and woman are accorded low priority in

government spending.

4. Jhamb, B. and Sinha, N. (2009): The study also made an assessment of the budgetary

expenditure of union government towards achievement of the MDGs from the

perspective of gender.

5. Tripthi, P. s. and Nigam, R, (2010): The study also found that most of the central

ministries/departments have not been collecting and reporting the gender-disaggregated

50

information on their programmes/ schemes which are essential for undertaking gender

budget analysis.

6. Brown and Howard of Management Accountant "a financial plan is a foreordained

assertion of administrative arrangement during the given time frame which gives a

norm to correlation with the outcomes really accomplished."

7. K. Amjaroen in his book "5 Essentials of fruitful Budgeting": expressed that,

"Planning is direct, simple to do with an accounting page, and more an activity of

diligence than all else". "Basically, planning implies that financial backers don't spend

more than they make. It is otherwise called "living beneath one's signifies" and is by all

accounts an idea lost on heaps of people in social orders their framework urge to live

generally on obligation through Visa". Additionally, it is reason while numerous third

world organizations are worried or properly fizzled in light of the fact that the Chief

Executive runs the association without compelling spending projection which brought

about them living over their methods.

8. According to Argyris (1953): financial plans address bookkeeping strategies, which

are made to control costs through individuals. These bookkeeping procedures generally

affect the conduct of the vast majority inside an association because of the way that not

accomplishing certain spending objective regularly include discipline, where in go,

meeting these spending targets reflect incredible compensations for workers.

Contrasting the view on financial plans from Argyris (1953) with later writing by Drake

and Fabozzi (2010), who likewise underscore the significance of financial plans as "best

administration strategies" to control supervisors and to adjust them to authoritative

targets, which can have a very compensating sway if the planning cycle is surely

known, shows that the translation has remained a remarkable same in the course of the

most recent years. Be that as it may, as spending plans are available inside every

definition interaction, creation cycle, or carry out cycle of an authoritative arrangement,

they can have a tremendous direct impact on the conduct of representatives; along these

lines it is profoundly intriguing to additionally examine them. Moreover, Argyris

(1953) referenced in his exploration that a negative relationship of human conduct

towards the execution of spending plans could be clarified by remembering the

accompanying focuses.

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9. According to Tyales (1998) spending plans can motivationally affect administrators

yet just if directors imagine that they are likewise well on the way to accomplish the

spending destinations.

10. Raghunandan et al. (2012) concur with the way that social and conduct viewpoints

are a basic piece of the planning interaction and that associations need to painstakingly

consider those impacts as spending accomplishment intensely rely upon the

responsibility of directors and representatives

STATEMENT OF THE PROBLEM:

Foundry and forge division at HAL prepares a budget by estimating the various expenses and

income for each financial year. The budget is prepared by the accounts department in

consultation with the various other departments.

Always the estimated budgeted figure does not match the actual figure. The budgeted period

will always commence in mid of Jane every year so, it is difficult to get the current year budget

analysis accurately

NEED OF THE STUDY

It facilitates a centralized control on various decentralized activities.

It encourages more co-ordination among the different departments.

It helps in eliminating wasteful expenses to improve profitability

OBJECTIVES OF THE STUDY:

To study the budgetary control practices and methods at HAL

To compare the performance budgeted figures with actual figure of the financial

statement for different financial years.

Helps if we become an entrepreneur.

Can know how big organization budget.

HYPOTHISES

52

By doing budgetary control they can have a control on their expenditure or control on the

outflow of capital in the organization, so by comparing the actuals and budgeted value company

can predict the out flow in specific area.

SCOPE OF THE STUDY

Budgets are ready for various elements of business-like creation, deals and so on Real

outcomes are contrasted and the spending plans and control is worked out. Guidelines

then again are incorporated by ordering, recording and portion of the costs to cost units.

Real expenses are contrasted and standard expenses.

Budgets have a wide scope of inclusion of the whole association. Every activity or cycle

is separated into number of components and principles are set for each such component.

Budgetary control is worried about beginning of use at useful levels. Standard costing

is worried about the prerequisites of every component of cost.

Budget is a projection of monetary records though standard costing projects the expense

accounts.

To characterize the business destinations absolutely and build up the exhibition targets.

To portray the duties of every office just as every faculty.

To make a standard benchmark for estimating execution.

To distinguish the purposes behind variety, assuming any, and make vital restorative

moves.

To guarantee ideal usage of accessible assets to improve usefulness just as benefit.

To screen and amend the budgetary plans in the event that there is any such necessity

because of evolving climate.

To articulate long haul arrangements with greatest precision.

53

SAMPLE SIZE

Sample size: period of last THREE financial years.

Sample method: Quantitative methodology, By secondary data

STATISTIC TOOLS

comparing of 3 years actual figure and budgeted figure data and finding the variance, Including

graphs, tables, variance percentage of the budgeted statements with respect to the company.

Variance, variance percentage, current ratio

DATA COLLECTION TOOLS

Primary sources:

The information of the budgetary control is obtained from Departmental Heads i.e., discussion

with finance manager and information about budgetary control statement.

Secondary sources:

In the secondary source the data is collected from the past records from office financial

statement or office records, annual reports of the company, magazines and journals.

LIMITATIONS OF THE STUDY

It is very difficult to accurately prepare the budgets for the future, especially during

times of high uncertainties.

Small firms can’t afford budgetary control as it involves heavy additional expenditure.

54

CHAPTER -4

DATA ANALYSIS AND INTERPRETATION

55

BALANCE SHEET OF HAL (FOUNDRY AND FORGEN DIVISION) FOR THE YEAR

2019-2020 AND ESTIMATED BUDGET FOR THE YEAR 2020-2021 AND 2021-2022

Hindustan Aeronautics Limited

Balance Sheet

Division Name: Foundry & Forge In lakhs

Particulars

Actuals

2019-20 BE 2020-21 BE 2021-22

ASSETS

Noncurrent asset

(a)property, plant and equipment

Gross Block 16508 27590 20520

Less: Accumulated Depreciation 7300 10188 12805

Less: Impairment 0 0 0

Net Block 9208 17402 16715

Property, Plant and equipment-customer funded

Gross Block 0 0 0

Less: Accumulated Depreciation 0 0 0

Less: Impairment 0 0 0

Net block 0 0 0

(b) Capital work in progress 12590 550 1025

(c) Investment property

Gross Block 0 0 0

Less: Accumulated Depreciation 0 0 0

Net block 0 0 0

(d) Goodwill 0 0 0

(e) Other intangible assets

Gross Block 94 94 94

Less: Accumulated amortization 45 72 94

Less: Impairment 0 0 0

56

Net Block 49 22 0

(f) Intangible assets under development

Gross Block 0 0 0

Less: Accumulated amortization 0 0 0

Net block 0 0 0

(g) Investments in subsidiaries and joint ventures 0 0 0

(h) Financial assets

Investments

trade receivables

Contract assets

Loans 28 46 23

Other financial assts 0 0 0

(i) Deferred tax assets (Net)

(j) Other non-current assets 0 20 0

Total non-current assets 21875 18040 17763

Current assets

(a) Inventories 0 0 0

(b) Financial assets 17808 15924 17241

Investments 0 0 0

Trade receivables 4044 5530 4280

Contract assets 490 0 286

Cash and cash equivalents 31 1 21

Bank balance other than cash and cash

equivalents 0 0 0

Loans 15 30 20

Other financial assets 229 240 220

(c) current tax assets 0 0 0

(d) Other current assets 875 593 598

Total current asset 23492 22318 22666

Total assets 45367 40358 40429

57

EQUITY AND LIABILITIES

Equity

(a) Equity Share Capital 22789 29389 21943

(b) Other Equity 3190 3034 3024

Total Equity 25979 32423 24967

LIABILITIES

Non-current liabilities

(a) Financial liabilities

Borrowings 0 0 0

Trade payables 0 0 0

(b)Provisions 1029 760 1175

(c) Deferred tax liabilities(net) 0 0 0

(d) Other non-current liabilities 4509 1075 3350

Total noncurrent liabilities 5538 1835 4525

Current liabilities

(a) Financial liabilities

Borrowings 0 0 0

Trade payables

Total outstanding dues of micro & small

enterprises 607 150 800

Total outstanding dues of creditors other than

micro & small enterprises 7357 2230 5580

Sub Total-Trade payable 7964 2380 6380

Other financial liabilities 3193 1380 1980

(b) Other current liabilities 595 340 690

(c) Provisions 2098 2000 1885

(d) Current tax liabilities 0 0 0

Total current liabilities 13850 6100 10935

Total Equity and Liabilities 45367 40358 40427

58

PROFIT AND LOSS STATEMENT FOR THE YEAR ENDING 2019-2020 AND

ESTIMATED BUDGET FOR THE YEAR 2020-2021 AND 2021-2022

Hindustan Aeronautics Limited

Statement of Profit and Loss for the

Period ended

Division Name: Foundry & Forge In lakhs

S. No Particulars

Actuals

2019-20

BE 2020-

21

BE 2021-

22

REVENUE

1 Revenue from operations 8890 12340 10585

IFD sales 20052 18000 21500

2 Other Income 136 129 139

Charges Received 2005 1800 2150

3 Total Income(1+2) 31083 32269 34374

4 EXPENSES

Cost of material consumed 10465 10421 11695

Purchase of stock in trade 0 0 0

Changes in inventory of finished goods,

stock in trade 476 952 243

Employee benefits expenses 8322 8142 9052

Finance costs 2 0 0

Depreciation and Amortisation expenses 1290 2478 2639

Impairment loss 0 0 0

Other Expenses 5720 5517 6384

Changes paid on inter Division Transfer 119 75 80

Direct input to WIP 0 0 0

Provision 1063 500 430

Inter services and common services 436 1150 825

Total Gross Expenses 27893 29235 31348

59

Less: Expenses related to capital and other

accounts 0 0 0

Total Expenses (4) 27893 29235 31348

5

Profit/(Loss) Before Exceptional items

and tax (3-4) 3190 3034 3026

6 Exception items 0 0 0

7 Profit/(Loss) Before tax (5+6) 3190 3034 3026

8 Tax Expenses 0 0 0

9

Profit(loss) for the period from continuing

operation (7-8) 3190 3034 3026

10 Profit(loss) from Discontinued operations 0 0 0

11 Tax Expenses of Discontinued operations 0 0 0

12

Profit(loss) from Discontinued operations

(after tax) (10-11) 0 0 0

13 Profit/loss for the period (9+12) 3190 3034 3026

14 Other comprehensive income (OCI) 0 0 0

Total other comprehensive income 0 0 0

15

Total comprehensive income from the

period (13+14) 3190 3034 3026

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Table showing the calculation of budgeted and actual value of total income and

variance%

Amount in lakhs

Particular 2017-2018

2018-2019

2019-2020

Budgeted

amount 25406.33 24507.92 29318

Actual amount 27426 25942 31083

Variance 2019.67 1434.08 1765

variance

percentage 7.95% 5.85% 6.02%

Graphical representation of budgeted and actual of total income.

0

5000

10000

15000

20000

25000

30000

35000

2017-2018 2018-2019 2019-2020

Budgeted amount Actual amount

61

Graphical representation showing the variance percentage between actual and budgeted

value of total income

Interpretation

From the above budgeted and actual value of total income has increased from 2017-2018

to 2019 to 2021

Due to customer order and also increase in productivity and sales.

Table showing the calculation of budgeted and actual value of total expenditure and

variance.

Amount in lakhs

Particular 2017-2018

2018-

2019

2019-

2020

Budgeted 23550.76 23478.24 26110

Actuals 24624 22452 27893

Variance 1073.24 -1026.24 1783

Variance

percentage 4.5571 4.371 6.8288

0

2019.67

1434.08

1765

0 0.079494 0.058514 0.0602012017-2018 2018-2019 2019-2020

Series1 Series2

62

Graphical representation of budgeted and actual value of total expenditure.

Graphical representation of showing variance percentage of budgeted and actual value

of total expenditure

Interpretation

From above graph it interpreted that the expenditure has decreased in 2018-2019 and

increased in 2019-2020 due to discount from vendor in 2018-2019 and increased in 2019-2020

due to cost of material consumed have increased and employee benefits expenses

0

5000

10000

15000

20000

25000

30000

2017-2018 2018-2019 2019-2020

Budgeted Actuals

1073.24

-1026.24

1783

4.5571 4.371 6.8288

2017-2018 2018-2019 2019-2020

Variance Variance percentage

63

Table showing the calculation of budgeted and actual value of total profit and variance

percentage

Amount in lakhs

Particular 2017-2018 2018-2019 2019-2020

Budgeted 1855.57 1029.68 3208

Actual 2802 3490 3190

Variance 946.43 2460.32 -18

variance

parentage 51.0048 238.9402 -0.561

Graphical representation of budgeted and actual value to total profit.

0

500

1000

1500

2000

2500

3000

3500

2017-2018 2018-2019 2019-2020

Budgeted Actual

64

Graphical representation showing the variance percentage of budgeted and actual value

of profit.

Interpretation

From the above graph interpret that the total profit is increased in 2018-2019 due to increase

in cost of production and decreased in 1029-2020 due to decrease in cost of production.

946.43

2460.32

-1851.0048238.9402

-0.5612017-2018 2018-2019 2019-2020

variance variance percentage

65

Table showing the calculation of current ratio of budgeted and actual value of balance

sheet

Amount in lakhs

Particular 2017-2018 2018-2019 2019-2020

Budgeted 3.97 3.84 3.5075

Actual 3.73 2.86 1.69

Graphical representation showing budgeted and actual current ratio

0

0.5

1

1.5

2

2.5

3

3.5

4

2017-2018 2018-2019 2019-2020

Budgeted Actual

66

Table showing actual and budgeted sales in lakhs

Particular 2016-2017

2017-

2018 2018-2019

2019-

2020

Budgeted 13305 14663 8404 9459

Actual 11978 10116 7096 8533

Variance -1327 -4547 -1308 -926

Percentage -9.97 -31.01 -15.56 -9.79

Graphical Representation showing budgeted and actual value of sales

0

2000

4000

6000

8000

10000

12000

14000

16000

2016-2017 2017-2018 2018-2019 2019-2020

Budgeted Actual

67

Graphical representation showing the variance percentage between actual and budgeted

value of sales

Interpretation

Reason for not matching or actual value is always less than budgeted value is

Orders which were anticipated were not finished

Exports customer would have shifted the delivery period for next year.

-1327

-4547

-1308

-926

-9.97 -31.01 -15.56 -9.792016-2017 2017-2018 2018-2019 2019-2020

Variance Percentage

68

CHAPTER 5

SUMMARY OF FINDINGS, SUGGESTION AND

CONCLUSION

69

FINDINGS

Budget is prepared in the end of the financial year after preparing the actual statements

i.e., profit and loss account and balance sheet.

Always budgets are estimated and prepared for upcoming two financial year.

After budget is estimated it will be revised after six months that is called revised budget,

it is done in the mid of the financial year.

They were not able to allocate the expenses properly in budget.

Allocation of work is not estimated before preparing the budget.

If uncertain expenses occur suddenly, company will postpone the work for the next year

so that it can match with the estimated budget.

Corporate office of HAL rules tells not to exceed their expenses beyond current year

expenses.

It expenses are more in employee befits like Accommodation, employer and their

family hospital facilities and etc...

They will conduct meeting with all the departments who are included in the preparation

of budget and consider how much production is taking place in current year, how much

sales to be done, how much raw material manufacturing department is purchasing in

the current year.

On an average 5% will be increased for the budget from previous year values.

Sales – when we compare actual and budgeted sales the variance will always be in

negative, due to Orders which were anticipated were not finished and Export’s customer

would have shifted the delivery period for next year.

There will be always a difference between actual data and completion of work.

70

SUGGESTION

HAL can look at the activities to be performed in the year and then they can proceed

with the budgeting.

Tracking on monthly spending It will show you how spending even small amounts of

money adds up over time. It will also reveal areas of spending that otherwise go

unnoticed.

Determining the key factors like limiting factor or governing factor or principal budget

factor.

Not to postpone the work for next year, because it might increase the expense of next

year.

The budget should be realistic. It should represent the goals that are reasonably

attainable.

Sales could have estimated accordingly and completed within the year and try to match

the sales budget.

Budgeting should not be partial—it should cover all phases of operations in an

organisation. Further, budgeting should be a continuous exercise.

All the supervisory personnel on the floor should be trained in operating the system.

For this purpose, it is necessary for the budget director to come into close contact with

the supervisory personnel and discuss with them the problems pertaining to the budgets.

There should be scope for carrying out modifications to the system.

An effective system of budgeting requires that periodic reports comparing budget and

the actual results should be prepared promptly. This will help the management to take

corrective action in the areas which are not performing well.

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CONCLUSION

Budgetary control is an important financial technique by which the business concerned can be

efficiently managed enabling forward thinking and thereby carrying out the operations

according to plans.

In this report I have comparison of actual with the budget and ascertainment of variances

therefore with a view to find out the reason for such variances. The budgetary control is a very

important activity to ensure that the actual conform to the plans set up through the budget. The

meaning and purpose of setting up the budgets will not be achieved without an effective

budgetary control system. Hence it is necessary to have an effective system of budgetary

control through which actuals are monitored periodically.

All the important budgets viz. Production, sales, profit and loss, working capital, ways and

means, after approval by the board, are broken into monthly budget to facilitate comparison of

monthly actual with the monthly budgets. In the process, care is taken to ensure uniform

production from month to month instead of bunching the major part of production to the last

two quarters of the Years.

So, it can be seen that budgetary control is an important management tool that is used to monitor

day-to-day activities as well as long-term prospects. If it is utilized properly, then it can help

in controlling cost while ensuring improved efficiency.

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BIBILOGRAPHY

Welcome to Hindustan Aeronautics Limited | India (hal-india.co.in)

Foundry & Forge Division Bangalore (hal-india.co.in)

Budgetary Control: Meaning, Objectives, Techniques, Steps (iedunote.com)

Budgetary Control | Scope and Importance of Budgetary Control (educba.com)

Literature Review On Budgetary Control | ipl.org

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