Budgetary Control at Omaxe Limited

SUMMER TRAINING REPORT

ON

“Budgetary Control”

Training undertaken at OMAXE LTD, corporate office, kalkaji,

New Delhi

SUBMITTED TO AMITY UNIVERSITY OF DISTANCE LEARNING

IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD

DEGREE OF

Master of Business Administration (MBA)

SESSION: 2013-2015

Submitted by:

Anshul Singla

MBA 4TH SEMESTER

ENROLL NO. A19201130931

UNDER THE SUPERVISION OF:-

1. VINIT GOEL

(CHIEF MANAGER FINANCE)

AMITY UNIVERSITY OF DISTANCE LEARING

UTTAR PARDESH 1

DECLARATION

I hereby declare that this summer training project report based on Finance, submitting for partial

fulfillment of the requirement for the degree of MBA (FINANCE) from AMITY UNIVERSITY OF

DISTANCE LEARING is of my original work. This report is for only educational purpose and not for

any other purpose.

(Anshul Singla)

2

ACKNOWLEDGEMENTS

Getting the practical training in the prestigious organization of “OMAXE LTD.” Is very much

informative and fruitful experience for me. I wish to express my deep sense of gratitude towards all

those who have helped me in the best possible way.

I am grateful to my training in charges Mr. VINIT GOYAL (Finance Chief Manager) and Mr. ASHISH

KUMAR JAIN (GENERAL MANAGER) Finance without his kind help and guidance it would not have

been possible for me to complete this project “Budgetary Control System At Omaxe

Limited” in such a short period successfully.

I would also like to thank MR. VINIT GOYAL (Finance Chief Manager) & entire team of OMAXE

LIMITED for the constant support and help in the successful completion of my project.

(Anshul Singla)

3

TABLE OF CONTENTS

Contents Page No.

Chapter 1 Introduction 6-14

Chapter 2 Objectives and Scope of Study 15-16

Chapter 3 Methodology 17-21

Chapter 4 Company Profile 22-36

Budgeting and Budgetary System 37-49

Chapter 5 Data Analysis & Interpretations 50-62

Chapter 6 Charts 63-69

Chapter 7 Findings 70-71

Chapter 8 Suggestions & Conclusions 72-74

Suggestions

Conclusions

Chapter 9 Annexure 75-79

Chapter 10 Bibliography 80-82

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EXECUTIVE SUMMARY

OMAXE LIMITED is the co-operative company. The project has been undertaken on the topic

“A STUDY ON BUDGETARY CONTROL at OMAXE LIMITED” As budgetary control helps to

understand goal of the concern whether it may be short or long term goal.

As the budget is playing an important role in any organization which helps to compare the

actual performance with the budgeted performance .The concept of the Budget and way of

adaptability, which creates new challenges to industrial sector for surviving in this current competitive

edge. It indicates the progress of the concern by way of its sales or profit, market shares, process of the

concern etc.

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CHAPTER-I

INTRODUCTION

6

INTRODUCTION:

It is well recognized that budget are among the essential tools of management of any organization

unlike other management aids, budgets are made use of practically by all functionaries in the

organization. Budgets not only reflect the plan of action for different levels of management but are also

useful to monitor various activates and initiate mid course corrective actions. Budgets just do not

reduce the managerial function to a mere formula but aids as a managerial tool.

Hence”effective use” of this art as well science. Thus it needs continuous budget education and creation

of evaluation and performance through budgets. Budgets provide management summarized picture of

the results to be expected, also forms the proposed plan of operations. They enable the management to

determine whether the plan is satisfactory. Budgets serve as a guide to executives and departmental

heads. They measure performance since” Budget Deviations” reflect either the organization failure to

achieve the planned standards of performance or its ability to better them.

Thus budgeting is a means of obtaining the most productive and profitable use of the companies’

resources through planning and control. Budgets are helpful in coordination the various activities (Such

as production, sales, purchase etc) of the organization with the result that the activities precede

according to the objective.

Budgets are means of communication. Ideas of the top management are given the shape of the

budget and are passed on the subordinates who are to give them the practical shape. As the activities of

various departmental heads are coordinated at the preparation of budget, it is helpful in developing a

team work which is very much needed for the very success of an organization. Thus, a budget is

necessary to plan for the future, to motivate the staff associated, to coordi9nate the activities of different

levels. A budget is an overall blue print of a comprehensive plan of action expressed in physical and

financial terms; it includes plan for each of the activity responsibility centers of the business and

provides a link between the physical and financial plans of various departments of a company. It is also

a document to serve as control for monitoring and review. The budget system should be such that it

makes it imperative for management to establish goals and objectives, define policies, develop

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programmers’ both long term and short term, measure performance against the targets and in the

process, revises the part of management. In a way of budgetary control system has been increasing an

enterprise’s profits, and a goals-achieving machine for facilitating organizational coordination and

planning while achieving the budgeted targets.

NEED FOR BUDGETS

The rationales for budgets have five aspects:

1. Authorization: The budget is used to authorize the expenditure and activities contained in it.

2. Evaluation of performance: The planned activities and expenditures contained in the budget

provide a standard against which the actual achievement of the firm can be measured and

evaluated.

3. Coordination of activities: The piecemeal budgets of the subunits of the firm are so framed that

each sun-unit is made to contribute to the achievement of the overall budget.

4. Control: The setting up of organizational machinery to direct efforts towards the planned aims.

The budgets sets out the planned activity, subsequent deviations between achievement and plan

will indicate the need for investigation and corrective action.

5. Motivation: The budget is so constructed as to move employees form one target goal to

another; indeed it is bound up with the reward punishment type of organization environment and

bureaucratic decision processes, where employees are given incentives to work towards the

achievement of the firm’s targets.

WHY COMPARE ACTUAL AND BUDGET?

One of the objectives of budgeting is to provide a base against which actual performance can be

measured. This is only worth doing if action will be taken as a result.

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In too many organizations the production of results compared to budget is seen as the end of the process.

If no action is taken on the basis of management accounts then there is little point in producing them and

even less point is wasting management time discussing them.

By identifying progress we are better informed regarding the effects of our actions and have a clear

understanding of the effect of any future action we take. Knowing how much is being spent each month

enables a manager to consider whether action needs to be taken to spend more or less in the future. This

process is only worthwhile if the budget is realistic. Analyzing variances against an unrealistic budget is

pointless.

However in a well runs organization the comparison between actual and budget is used as the basis for

deciding the appropriate action. This paper sets out how the analysis is used to maximum effect. The

process is really part of the normal control process.

WHAT CAUSES BUDGET VARIANCES

There are four key reasons and it is important that good managers recognize the differences, because the

action required is may be completely different in each case.

The four reasons are:

1. Faulty Arithmetic in the Budget figures.

2. Errors in the Arithmetic of the Actual Results

3. Reality is wrong

4. Differences between Budget Assumptions and Actual Outcome

Each of these will be examined in turn.

1) Faulty Arithmetic in the Budget Figures

It is perfectly to have an error in the budget. This includes errors of commission or duplication as well

as pure arithmetic. One action is to make a note to ensure it does not happen again when the next budget

is being done. Other action depends on the error.

9

Assume the budget stated no overdraft would necessary and it now appears one is required because the

sales forecast was used to predict cash inflows rather than the debtor payments. There are two options:

Go to the bank and ask for an overdraft, or take some other action to improve cash flow to stay within

the budget cash figure. The original budget numbers will need to be changed to reflect the new

circumstances and future reporting should be against the revised budget (often called a reforecast or

latest estimate.) Action is required but it may not be within the area where the error was made.

AVOID: “The Accounts figures are always different from ours so we ignore them and keep our

records”.

2) Errors in the arithmetic or the actual results

It is perfectly possible for the actual results to be reported wrongly. This includes the use of the wrong

category omission of costs; double counting of income etc. one well known way of staying within

budget is to throw away any invoices received from Suppliers, or charge them someone else’s account

code. This sort of deliberate action makes nonsense of budgetary control and must be avoids. The

corrective action once this is discovered is to prevent it happening again. Improvements in management

education and control procedures are recommended.

One extra consideration is that in order to correct the error the cumulative results will need to be

corrected. This means either putting through a correction in the next period, which will then also be

wrong, or adjusting the past results to correct the error.

Failing to note that the correction can cause misleading results can lead to wrong decisions being made.

AVOID: “The accounts figures are always different from ours so we ignore them and keep our own

records.”

3) Reality is wrong.

Sometimes the actual results are useless as an indicator. A strike or natural disaster will have an impact

on results. This does not mean that the budget process in future should include an allowance for this

10

happening again. (However in large organizations it is normal to allow for the impact of a disaster

centrally as a contingency even if it is not budgeted at operating unit level.) If necessary, insurance

should be taken out. If business is disrupted for two weeks, then it is pointless to compare the remaining

two weeks of the month against a full month’s budget. Produce a realistic budget for only two weeks

and compare against that to establish true performance under normal circumstances.

AVOID: “The variances are distorted because of …..So it’s not my fault”.

4) Differences between budget assumptions and actual outcome

This is the key issue and the one which involves the use of variance analysis techniques. Remember that

all budgets contain errors in the assumption No one knows the future outcome for certain. The

important thing is not to apportion blame by looking backwards, but to look forwards and take action to

improve the future in the light of experience. The action to be take action to be taken depend s on

circumstances. However, punishing deviation from the budget is the best way of destroying the budget

process.

Manages will spend up to budget, conceal data, make the actual fit the budget in order to avoid blame.

This is particularly true in large multi-national organizations. The emphasis must be on what can we do

about it, rather than why the results are different.

AVOID: “We are under budget, who can we blame?”

HOW ARE VARIANCES CALCULATED

There are two important rules:

1) The level of variance analysis should be decided by the needs of the decision maker, not the

convenience of the reporter.

2) The budget must always be flexed for volume changes to produce realistic Variances.

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EXAMPLE:

PARTCULARS BUDGET TOTAL

SALES VOLUME 100 90

SALES VALUE 1000 990

VARIABLE COSTS 500 495

FIXED COSTS 200 210

PROFIT 300 285

The budget committee wishes to blame someone for the fact that profit is down by 15.

“It is obvious who is to blame sales are below target and fixed costs have not been controlled”.

PROPER VARIANCE ANALYSIS

The require some through and some simple calculations. It has 4 Stages:

1) Flexing the budget.

2) Analyzing the variances.

3) Identifying the causes.

4) Taking appropriate action.

Since only the last of these is a value adding activity, the first three are only worth doing if step 4 is

taken in time to help future results. This may mean the first three steps have to be done fast even if that

reduces their accuracy.

FLEXING THE BUDGET

In the example it is futile to compare the actual variable costs with the budget. To do so suggests that

the manager is doing better than budget, but actual volume is below budget so costs should be lower. It

is vital to produce a revised budget to use for comparison. This does not mean that the original budget is

useless. It merely means that in order to analyze the 15 difference it is important to start by removing

the impact of volume changes on the various headings which are by it.

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PARTICULARS ORIGINAL BUDGET REVISED BUDGET ACTUAL

SALES VOLUME 100 90 90

SALES VALUE 1000 900 990

VARIABLE COSTS 500 450 495

FIXED COSTS (LESS) 200 200 210

PROFIT 300 250 285

This recalculates the budget using actual volume but budget prices and shows that the expected profit for

90 units is 2502. Thus the impact on profit is a reduction of 50 and this can be identified as SALES

VOLUME VARIANCE Rs. (50). A common convention is to put unfavorable variances in brackets.

Now the other variance can be calculated.

ANALYSING THE VARIANCES:

PARTICULARSORIGINAL

BUDGETREVISED BUDGET ACTUAL VARIANCES

SALES VOLUME 100 90 90 -

SALES VALUE 1000 900 990 90

VARIABLE COSTS 500 450 495 (45)

FIXED COSTS (LESS) 200 200 210 (10)

PROFIT 300 250 285 35

The valid set of budget data is to compare against actual. The variance on sales can be due to price.

This is the SALES PRICE VARIANCE of Rs. 90.

The variable costs require further investigation.

Assume that the original budget was to use 2.50 meters of material for each sales unit and that each

meter was expected to cost Rs. 2.00. This gave a budget figure 100 X 2.50 X Rs.2.00=Rs.500.

The Actual result included a price of Rs. 2.75 per meter but only 2.00 meters were used per sales unit.

This gave an actual figure of 90 x 2.50 x Rs.2.00 = Rs. 450.

To identify the cause of the variance of Rs. 45, we need to separate the price impact from the

usage impact.

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Price

We expected to pay Rs. 2.00 per meter; we did pay Rs. 2.75 per meter.

Each of the 180 meters we bought cost 0.75 extra ….180 x (2.00-2.75) = Rs. (135) this is the

MATERIALS USAGE VARIANCE Rs. (135).

Usage

We expected to use 225 meters in total to make 90 units; we did use 180.

At the budget price of Rs. 2.00 we saved …..Rs.2.00 x (180-225) = Rs.90

This is the MATERIAL USAGE VARIANCE Rs.90.

On fixed costs we expected to spend Rs. 200 but we did spend Rs. 210.

The FIXED COST VARIANCE IS Rs. (10).

SUMMARISING THE VARIANCES

SALES VOLUME (50)

SALES PRICE 90

MATERIALS PRICE (135)

MATERIALS USAGE 90

FIXED COSTS (10)

-----------

(15)

======

IDENTIFING THE CAUSES

This is where politics and blame apportionment must be avoided. Consider these possible Comments on

the above figures.

“The price of the raw materials went up so we asked the factory to be careful about waste and told the

manufacturing force to put prices up”.

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CHAPTER-2

OBJECTIVES AND SCOPE OF STUDY

15

OBJECTIVES OF STUDY

To provide a theoretical framework of budget, and budgetary control.

To describe the profile of the organization as a backdrop for undertaking a study of budgetary

control system.

To analyze the budgetary system in practice in Omaxe Limited with particular reference to their

objectives and phases of organizational and re-appropriation.

In addition to the analysis of the conventional budgetary system in practice in Omaxe Limited.

The study aims at evaluation and modification to the budgetary system with reference to the

various types of budgets. The scope in the formulation of performance budget is also studied

SCOPE OF THE STUDY

The budgetary control system in Omaxe Limited considers generation and transmission line

projects as independent cost centers. This system prepares the operation and management

budget for each of the cost centers as per the requirements of the cost system. The budget for

the investment center is the sum of the budgets of the cost centers. Separate budgets are

prepared for revenue activities other than Operations and Research Development, Consultancy

Contracts. To facilitate management, budgets are phased into monthly or quarterly targets .The

actual performance is analyzed against this budgeted performance in order to take corrective

remedial actions if variances any exist. The projection of internal resources over a period of 5 to

15 years and updating 5 years plans of the company is also done.

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CHAPTER-3

METHODOLOGY

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RESEARCH METHODOLOGY

Meaning

“Research is a systematized effort to gain new knowledge.” It is a systematic study

consisting of a problem formulating a hypothesis collecting the facts and data, analyzing the facts

and reaching for certain conclusions, which can be in the form of either solution towards a problem.

Research design

A research design is the arrangement of conditions for collection and analysis of data in

a manner that aims to combine relevance to the research purpose with economy in procedure. The

research design used in my study is basically descriptive in nature.

Types of research

Exploratory research

Descriptive research

Causal research

Applied research

Basic research

Exploratory research

Exploratory studies are conducted to clarify the ambiguous problems.

Ambiguity means that the nature of problem to be solved is unclear.

Descriptive research

The research design in my study is descriptive. Its studies are concern with describing

the characteristics of a particular group or individual. Studies concerned with specific prediction

with narration of facts and characteristics concerning individual, group or situations are examples of

descriptive research .it is also known as social research.

Causal research

The mean purpose of causal research is to identify the cause and effect relationship

between variables.

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Applied research

Applied research is conducted when a decision is to be made about a specific real-

like problem.

Basic research

Basic or pure research (fundamental research) attempts to expand the limits of

knowledge.

Sample Design

A sample design is a definite plan for obtaining a sample from a given population. It refers to

the technique or the procedure the researcher would adopt in selecting items for the sample i.e. the

size of the sample. Stratified sample method is adopted to select the sample.

Sample Size

It includes the number of sampling unit selected from the population for

investigation. The sample size must be optimum or adequate. If the sample size is small it may not

appropriately represent the population.

Too large sample would be costly in terms of money &time. The optimum sampling size would

fulfill the requirements of efficiency, representativeness, reliability, and flexibility.

The sample size is taken of 100 customers. It is because of the shortage of time & their busy

schedule.

.

METHODS OF DATA COLLECTION

Data collection is an art. Sometime it is very time consuming affair. The source information

falls under two categories:

Primary Data

Secondary Data

Primary data

We collect primary data either through observation or through direct communication with

respondents in one form or other personal interviews.

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Observation method

Interview method

Schedules & Questionnaire method

Internet

Advantages

Simplicity

Direct and realistic study

Useful for formulating

Greater accuracy

Results are more dependable

Disadvantages

Not possible to remain present

Not possible because a schedule events may not take place

Not possible on account of the long duration

Secondary Data

The secondary data means data that are already available in various reports, diaries,

letters, books, etc.

Life history, diaries, autobiographies, letters and testaments.

Reports published by various Research Organizations.

Advantages

More flexible

It is perfect sample of the general population

Controlled which person will answer the question

Disadvantages

Uneconomical

Emotionalism

Personal bias

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A questionnaire is simply a formalized set of questions for eliciting information. The method used

in this project is closed ended questionnaire in which respondent is not free to choose the response

demand appropriate.

Sampling Method

Stratified method of sampling was used for face-to-face survey while snowball

sampling method was used while conducting telephonic survey.

LIMITATIONS OF THE STUDY

Estimates are used as basis for budget plan and estimates are based on available facts and best

managerial judgment

Budgetary control cannot reduce the managerial function to a formula. It is only a managerial

Tool which increase effectiveness of managerial control

The use of budget may lead to restricted use of resources.

Efforts may therefore not be made to exceed the performance beyond the budgeted targets.

Frequent changes may be called for in budgets due to fast changing industrial climate.

In order that a system may be successful, adequate budget education should be imparted at

least through the formative period. Sufficient training programs should be arranged to make

employees gibe positive response to budgetary activities.

The study is the limited up to the date and information provided by Omaxe Limited Limited

and its annual reports

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CHAPTER 4

COMPANY PROFILE

“Has Glorious Past and

Great future”

22

INTRODUCTION OF OMAXE

The company was originally set up as OMAXE Builders Private limited in 1989, promoted by

SHRI. ROHTASH GOEL, the founder, to undertake construction & contracting business. The

company further changed its constitution to a limited company known as OMAXE Construction

Ltd., in 1999. The name of the company has now changed to OMAXE LTD from 2006. The

company began life as a civil construction and contracting company, has successfully executed

more than 120 prestigious Industrial, Institutional, Commercial, Residential and Hospital

construction projects.

The company entered the Real Estate Development business in 2001 and in now amongst the

large Real Estate Development companies in India. The company has executed construction

contracts for a number of prestigious Indian private, public sector and Multinational's clients.

OMAXE was founded by SHRI. ROHTASH GOEL , a first generation entrepreneur, a civil

engineer by qualification and a visionary having more than two decades of experience in

Construction and Real Estate Development. Mr. GOEL, as the Chairman & Managing Director of

OMAXE has been at the forefront, a man with a mission of building globally comparable quality

Residential & Commercial projects, his motto “Turning Dreams Into Reality “

OMAXE MANAGEMENT

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CMD : Mr. Rohtash Goel

JMD : Mr. Sunil Goel

Director : Mr. J. B. Goel

CEO : Mr. Mohit Goel

Director – Coordination & Audit : Mr. Bhupendra

Chief Advisor – Legal : Mr. Madan Mohan

Director – Construction : Mr. Rajeev Goel

Director - Planning & Finishing : Mr. Praveen Goel

Director - Business Development : Mr. Dalip Moudgil

& Liaisoning

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THE OMAXE LOGO

The OMAXE is a strong,

contemporary and confident symbol for a brand that is always ahead of the rest. It is

specially drawn word mark.

Surety of quality by “INTERNATIONAL ORGANIZATION for STANDARDS.”

LOGO OF REGISTRATION

THE OMAXE IMAGE STYLE

It incorporates one solid, sky- blue rectangular with a square close door

form assures to turn the dreams into reality.

MEANING OF THE TITLE

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The title can be broken into two parts- OM+ AXE = OMAXE.

OM: It is the name of God, according to our ‘Grunth’ all the 36 core live in OM.

AXE: It is the weapon of the construction and the past time the company was in

construction.

The beginnings

Incorporated as Omaxe Builders Private Limited in 1989, to undertake construction & contracting

business, the company changed its constitution to a limited company known as Omaxe

Construction Ltd., in 1999. The name of the company has now changed to Omaxe Ltd in 2006.

26

Omaxe was founded by Shri Rohtash Goel, a first generation entrepreneur, a civil engineer by

qualification and a visionary. With over two decades of experience in construction and real estate

development, Rohtash Goel, as Chairman & Managing Director of Omaxe Ltd., has been at the

forefront of the real estate industry, following its motto “Turning Dreams into Reality” through

building world class residential and commercial projects.

As a civil construction and contracting company, Omaxe successfully executed more than one

hundred and twenty industrial, institutional, commercial and residential projects for a number of

prestigious Indian private, public sector and Multinational's clients such as Amity University, LG,

Pepsi, Samsung, Wave Cinemas, National Brain Research Centre, P.G.I. M.E.R, Apollo Hospitals

and Delhi High Court.

To capture the opportunities offered by the growing real estate market in India, Omaxe entered

the real estate development business in 2001.

Today and Tomorrow

In the span of a few years, Omaxe Ltd. has experienced exponential growth and success, crowned

by its landmark IPO oversubscribed by 68 times in 2007, and is now amongst the largest public-

listed real estate development companies in India.

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By the end of 2007, the company has completed and delivered eleven projects consisting of eight

residential, one integrated township and two commercial, covering 5.6 million sq. ft of area. The

Forest, The Nile, NRI HEIGHTS, Omaxe Connaught Place, Wedding Mall, House 2 Home,

Omaxe Plaza, Omaxe Arcade, Park Plaza, Pearls Omaxe, Omaxe Jasola, Omaxe Novelty Mall,

Omaxe Terminal Mall and Omaxe Mall - Ludhiana are some of the milestone projects of the

company.

The company currently has fifty four projects under development, including hotels: twenty three

group housing projects, sixteen integrated townships, fourteen shopping malls and commercial

complexes. These fifty four projects cover a total of over 156 million sq ft of area and are located

in 31 towns in 10 states in northern, central and southern India. In addition to these, Omaxe is

developing a Special Economic Zone on 12, 500 acres in Alwar Rajasthan.

Omaxe is also spreading its wings off shores and has acquired land in Dubai through a wholly

owned subsidiary. To undertake such expansion, Omaxe Ltd. today, is backed by a professional

and competent Team Omaxe: a constantly growing workforce of currently over twelve hundred

professionals, including four hundred highly-qualified engineers, architects, Chartered

Accountants, MBA’s, etc. With high standards in line with Mr. Goel’s vision and ambitions,

Team Omaxe makes Omaxe Ltd. a strong, structured and high-growth ISO-certified company

with a bright future. Taking forward our vision to provide an environment of professionalism,

competence, teamwork and service excellence, Omaxe is working towards benchmarking our HR

policies with the best employers and international standards. Thanks to its strong experience in

construction, Omaxe’s uniqueness also lies in the fact that the company doesn't give its projects

on sub contract: while assuring timely completion, this also allows keeping pace with the progress

in construction technology, helping to give clients “value for money”.

Today, OMAXE enjoys a reputation of being one of India's leading real estate developers with an

indelible focus on customer satisfaction. Omaxe has adopted quality system standards that

integrate technological and design innovations with a strong technical base to provide state-of-

the-art real estate options.

Omaxe has also been the first to

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offer Penalty Clause,

introduce Sample Flats concept,

offer Theme Malls, like the Wedding Mall, House 2 Home Mall, etc.,

offer ready-to-move-in homes.

Besides this, Omaxe is the first to have created and implemented the concept of Eco Friendly

HEIGHTS, integrating Environment Protection Measures in all projects, with a defined

implementation process.

For Omaxe, environment protection and innovative architecture and practices are the standards of

today and tomorrow’s in real estate development

Presence

Today OMAXE one of India’s fastest growing Real Estate Developer, has registered its

presence across the country with a healthy mix of projects that range from well- planned office

space, international- standard integrated Township, Group Housing, State- of – the art

Commercial – Shopping Malls, Multiplexes, Theme Malls, Resorts, Hotels Serviced Apartments,

Bio-Tech Parks, SEZ’s, etc.

Footprints in New Delhi, Noida. Greater noida, Gurgaon, Faridabad, Ghazi bad, Ludhiana,

Amritsar, Patiala, Derabassi, Baddi, Sonepat, Rothak, Bahadurgarh, Palwal, Faridabad,

Vrindavan, Jaipur, Alwar, Bhiwadi, Indoor, Raipur, Rudrapur, Lucknow, Agra, Rajpur,

Kishangarh, Mohali, Yamuna Nagar, Vrindavan, Vizag, Hyderabad, Jabalpur.

Perception

OMAXE enjoys a reputation of being one of India’s premier Real Estate Developers

with an indelible focus on customer satisfaction. This feet has been achieved through the adoption

of quality system standards that integrate technological and design innovation with a strong

technical base to provide state –of –the –art real estate options.

1st to offer penalty clause.

1st to introduce sample flats

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1st to offer Theme Malls like The Wedding Mall

Presence of environment protection measures with a defined implementation process.

ERP in advanced stage of implementation

1st to come up and implement the concept of ECO friendly city.

1st to offer Ready-to-move-in homes

People

At OMAXE, the human mind and spirit continue to be our most precious resource and a

critical ingredient in the spectacular success of our endeavors. Today, OMAXE boasts of over

1100 qualified men and women who are successfully turning their dreams, and the dreams of

millions, into reality.

Performance

Having registered a phenomenal start based on the successful acquisition and

implementation of a large number of highly challenging and hugely varied projects, all in a short

span of under two decades, OMAXE today enjoys the reputation of being one of India’s fastest

growing Real Estate Developer. A reputation that fuels it to realize more ambitious dreams in its

relentless quest to become the single most trusted brand in the Real Estate Industry.

Vision

Create a progressive organization matching international standard maintaining integrity, high

ethical standard and transparency.

Create an environment of professional, competence, teamwork, and service excellence

Deliver projects conforming to international Environment Impact Assessment (EIA) norms

Use modern cost effective techniques for quality construction resulting in wealth creation.

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Mission

Commitments towards quality, integrity and the creation of value for all stakeholder/customers.

Implement best business practices which exceed customer expectations.

Establish industry standards and benchmarks.

Deliver quality residential &commercial projects comparable with Global Developers

Lead the industry using high caliber and efficient team of people with advanced technology.

OMAXE FINANCIALS

NET WORTH OVER THE YEARS

31

Particulars 2010-11 2009-10 2008-09 2007-08 2006-07

Revenue23,077.5

6

14,399.2

4

8,304.0

8

4.490.5

3

2,439.3

5

Profit

Before Tax 6,161.93 3,229.08

1,606.8

7217.85 101.24

Profit

After Tax 4,948.76 2,439.61

1,281.9

4129.45 63.58

Net Worth 14,132.6

14,333.17

2,149.7

5516.05 419.12

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PROJECTS

RESIDENTIAL

COMMERCIAL

RESIDENTIAL

Projects in INDIA are in the following states:

ANDHRA PRADESH

CHHATTISGARH

DELHI-NCR

HARYANA

HIMACHAL PRADESH

MADHYA PRADESH

PUNJAB

RAJASTHAN

UTTAR PRADESH

34

UTTARANCHAL

COMMERCIAL

Location for commercial projects:

DELHI

HARYANA

MADHYA PRADESH

PUNJAB

UTTAR PRADESH

Vision

To be the most progressive name in the REAL ESTATE INDUSTRY, providing quality,

professionalism and value to customer at par with international standards, based on professional,

ethical and moral values.

Mission

Our mission is to bring homes of international standard within the reach of every individual. We are

committed to achieve and sustain excellence in the field of real estate, for the benefit of the nation

and our beloved country men.

Project Location

35

Omaxe New Heights Faridabad Sector 78 Apartment, Omaxe New Heights Sector 78 Apartment,

Omaxe New Heights, Omaxe New Heights Faridabad DELHI-AGRA highway, makes it an ideal

location to make such a dream into a concrete reality.

Provision for

Commercial complex

Dispensary/nursing home

High school

Nursery schools

A ROYAL RETREAT

Children’s play facilities

Integrated landscape including theme parks.

Wide roads with planted pathways & jogging track.

Features of this project

Essential services within the township: banks, postal service, taxi stand, grocery store, etc.

Underground cables for telephone, electric HEIGHTS distribution, storm water drains & sewer

system.

Efficient power distribution network.

Regulated underground/ overhead water supply

Professionally managed housekeeping

Children's play area.

Integrated landscaping including theme parks, water bodies & water features.

Wide roads with planted pathways & jogging track.

36

Environment-friendly waste disposal.

Restaurant and banquet hall

Located within greenbelt

Rainwater harvesting for replenishing ground water.

BUDGETING AND BUDGETARY SYSTEM

IN

OMAXE LIMITED

37

ZERO BASED BUDGETING:

Zero budgeting is the latest technique of budgeting and it has increased use as a material tool. This

technique was first used in America in 1962, by the former president America, Jimmy Carter.

As the name suggests, it is starting from a "scratch”, the normal technique of

Budgeting is to use previous levels as a base for preparing this year's budget. This method carries

previous years inefficiencies to the present year because we taken last year as a guide, and decide "what

is to be done this year when this much was the performance of the last year.

In the zero based budgeting every year is taken as new year and previous year is not as a base, the

budget for this year will have to be justified according to present situation, zero is taken as base and

likely future activities are decided according to present situations. In zero based budgeting a manager is

to justify why he wants to spend. The performance of spending on various activities will depend upon

their justification and priority for spending will have to be that an activity is essential and the amounts

asked for are really reasonable taking into account the volume of activity.

BUDGET AND BUDGETARY SYSTEM IN OMAXE LIMITED

The budgeting process is used in the performance budgeting for the construction of phase which

includes pre commissioning activities. Besides meeting the essential requirements of managerial control

38

the budgeting exercise also covers the long term capital budgeting, which is presented in the form of

annual plan.

OBJECTIVES OF THE BUDGETARY SYSTEM:

To prepare annual budgets in such a manner those managers at various levels in organization carry

out periodical exercise in respect of each contact or responsible centre for physical planning and

matching resources broke up into monthly targets or cash flows.

To introduce and operate responsible for achievement of specified targets with the recourses

allocated for the purpose.

To bring about effective co-ordinate of all activities of the organization and

To gear up service divisions to meet effectively the requirements of project.

BUDGET PERIOD AND PHASING:

The budget period or annual begets should with the financial year. In October every year the budget

should drawn up for the ensuring the financial year in the form of Budget estimates financial year in the

form of Revised Estimates [R.E]...In addition the budgets are to be reviewed on monthly basis by project

review teams, in the light of actual expenditure and projections in the budget period. Budget should

indicate monthly phasing of expenditure and targets for the first and quarterly phasing for the second

half of the year. At the time of review of the budget estimates to frame revised estimates the quarterly

phasing should be broken up into monthly phasing.

While drawing up the actual budget in October every year, the long term capital budget for ongoing

and new schemes should be formulated as apart of exercise as preparation of annual plan. The long term

capital budget should indicate for a period of six years following the budget period of six years

following the budget period of six years following the budget period wise annual phasing of the capital

expenditure and physical schedules recourse based network.

39

BUDGET HEADS:

For uniform accounting, it is essential that costs are collected for each of the factory though this

may involve splitting up of payments against contracts which embrace more than one system. Allocation

of the cost as system wise affords a sound basis for cost accounting, inter-firm comparisons and

provides valuable inputs to the data bank. Budget provisions are related to project estimates and

monitoring of actual expenditure where as control variables for part control and instrumentation system.

Factory piping which includes pipelines, for ash water mains, compressed air system and civil works

piping.

Auxiliary pumps for water treatment plant and civil works system. If there are, any contracts not

covered in the budget heads provision for such contracts should be shown against the appropriate system

by head by adding code number.

TYPES OF BUDGETS IN OMAXE LIMITED:

According to the nature expenditure budget are classified under:

Direct capital outlay on works

Technical consultancy

incidental construction during construction

Employee cost

Other establishment expenses:

Training and recruitment

Preliminary expenses

misc.brought-out assets

cash budget

Township budget

40

BRIEF EXPLANATION TO THE NATURE OF EXPENDITURE INCLUDED IN EACH

BUDGET IS INDICATED BELOW:

Incidental expenditure during construction personal payment:

These comprises of salary,wages,allowance,contribution of PF and other funds and other

expenses such as LIC,medical reimbursement, canteen subsidy etc. any provision of areas of salary

D.A.

Office and other expenses:

Expenses incidental to construction and capital works not traceable directly to incidental

expenditure, during contribution equipments, vehicle running expense, office rent.LC and cost of

drawings, travelling expenses, printing and stationary, communication expenses, advertisement for

tenders etc. are major items in the category.

Training recruitment & other deferred revenue expenditure:

The first part of the budget consists of expenses for training executives, and non executive trainees,

rent for training halls and expenses for management development courses. The second part consists of

expenses for recruitment such as advertisement for recruitment, interview expenses, T.A. candidate etc.

the third part combines preliminary expenses including registration fees and research ad development

expenses.

Miscellaneous bought out passes:

Vehicles, furniture and fixtures equipments, hospital and medical equipment. Miscellaneous

assesses township figure in the budget.

REVIEW OF PROJECT BUDGET:

41

Monthly review:

At monthly intervals the budget should be reviewed by project review committee [PRC]. Project

budget should report actual expenditure against budget heads. Work heads and corporate budget by the

7th of month following the report month. The monthly review should be examined by project review

team[PRC],who should record variations for any variations and proposed for expending works in the

minutes of the meetings reasons for any variations in the case of budget heads exceeding 10% of the

budget estimates revised estimates or which ever is Rs.5 lakhs should be analyzed and report upon.

Quarterly review:

PRT should conduct a quarterly budgets review with a view to projecting anticipated expenditure during

the year against approved budget estimates/revised estimates. As time is essence of such review, only a

quick review of anticipated expenditure for individual budget heads involving provisions exceeding

Rs.50 lakhs in each case should be made and reported in minutes to PRT. For this purpose, project

budget should furnish all the relevant data to project manager [project] and planning and system by the

10th, of the month following the quarter project budget committee should review the actual expenditure

and assess anticipated expenditure contract co-ordination/engineers in charge. The assessments of

anticipated expenditure should be furnished by the project budget committee to General Manager

[project] by the 30th of the month following the quarter under review.

BUDGET OF SERVICE DIVISION CORPORATE BUDGETS:

A review of budgets of service and corporate divisions should be conducted at quarterly intervals

by corporate budget committee[CS'C].For this purpose corporate accounts should report actual

expenditure up to the need of the quarter by the 10th of the month following quarter to corporate budget

and budget-coordination of the remaining period of the year should be sent to the corporate budget

should put up a consolidated report division wise and project wise to corporate budget committee[CBC]

by the 15th of the may, August, November and February every year.

42

OBJECTIVES OF THE CURRENT BUDGETARY CONTROL SYSTEM IN

OMAXE LIMITED:

The current budgetary control system-operating phase has been compiled to achieve the following

objectives.

To control actual performance with reference to standards/norms adapted in the budget

ascertain the deviations analyze and establish the reasons.

To identify constraints in generation and timely action for estimation constraints.

To monitor the generation of internal recourses so as to ensure the availability of

adequate funds.

To prepare the revenue budget so as to forecasting the periodical profitability of the

organization.

To develop standards/norms of performance in the various areas of operation and

maintenance based on the experience.

To ensure effective coordinate planning of all activities so that all the inputs and services

necessary for achieving the physical targets are available at appropriate time.

To create cost consciousness among the managers responsible for decision making

To provide data regarding operational norms and cost for the purpose of formulating

tariff.

To provide data basis for assessment of working capital requirements

To control the working capital particularly book debts spares and other items inventory.

43

To improve profitability and internal resources generation.

SCOPE OF THE PERFORMANCE BUDGET:

The budget for operation and maintenance activities will be called performance budget operation.

This in effect means that all financial targets in the budget will be based on performance targets in

physical terms.

The current budgetary control system operation pays envisages generation and transmission line

projects as independents investment centres. It becomes applicable to a project in the year in which it

plans to commercialize its first generation unit. How ever, the budget infer expenses from the date of

synchronization to the date of commercial generation is to be taken case of in the capital budget of the

respective project similarly in the case of transmission line projects the system becomes applicable from

the year in which it plans to commissions its first line along with substation or the date commercial

generation of the first unit of generative project with which this line is associated, which ever is later.

For subsequent lines, the O&M will be prepared from the case generation of energisation.

The system investigates the preparation of operation and maintenance budget for each of the cost

centers as per the requirements of coasting systems.

The performance budget operation will consists of following budgets along with the supporting

schedules:

1. Budget balance sheet.

2. Budget profit and loss account.

3. Revenue budget.

In addition, separate budgets for revenue activities other than operation for research and

development consultancy contracts etc.

44

The expenses respect of developmental expenditure for improvements additions replacement,

renewals, balancing facilities etc. arc of capital nature and will be budgeted for in the construction

budget of budgetary control system-construction pairs.

To facilitate management control the system also investigates, phasing of these budgets into

monthly targets. The actual performance then will be reasons for variation s will be analyzed and

established for taking corrective remedial actions.

STAGES IN THE FORMULATION OF PERFORMANCE BUDGET:

The system provides for a two stages formulation for performance budget operation the stages are

given below:

Initial proposal:

In the initial proposal the project is required to indicate yearly targets. In the addition to

furnishing basic information like synchronization and commercial generation dates.

Constraints and coal operation at less than the designed specification calorific value of raw material

and limestone, material consumptions. In physical terms for items whose consumption value in Rs.5

lakhs or more planned shutdown for a maintenance and overhauling and norms for serious operating

parameters provided for designs specifications and in the tariff agreements to the corporate budget

committee.

In the initial proposals is planned to be submitted after considering else factors and keeping in view

the perspective plan of the organization, as well as norms for various operating parameters. These

targets and terms are then communicated to all stations and transmissions line offices of the last week of

July to be used for formulating detailed budget in the final proposal.

45

Final proposal:

Budgeted balance sheet. Budgeted profit and loss account and budgets in the form of cash

budget along with the final proposal will consist of detailed supporting schedules for each of the

investment centre/cost centre. This final proposal needs to be submitted to corporate centre with in three

weeks of receiving approval for initial proposal.

The final proposal, after approval by board, will become the basis of monitoring performance

for cost centers and investment centers.

The frequency and extent review and monitoring will be done is under:

1. The monitoring of actual performance against budgeted target for investment center/profit

center on monthly basis and for cost centers on quarterly for remedial/corrective action.

2. The review of performance budget on quarterly basis to assess the anticipated profitability.

The first step in the preparation of performance budget, O&M is formulation of maintenance

and overhauling schedules for boiler and TO with generation, then considering the grid demand, the

availability or inputs and factory problems, if any the utilization of capacity will be worked out on

month-month basis for the budget period the gross generation targets can be worked and accordingly.

NET GENERATION:

The sales value will be determined from quantum of net generation [i.e., grass generation

aux. consumption].

AUXILLARY CONSUMPTION/CONSUMPTION BY UTILITIES:

The cement consumption by each of the cost centers for individual unit auxiliaries, station

auxiliaries as well as transformer losses are to be estimated separately based on designed specification

and added in order to work out total auxiliary consumption rather than fixing overall percentage

similarly consumption by utilities will also need to be indicated by concerned cost centers like township

46

and construction department this will be valued at cost net generation to arrive at the sales values for

owns consumption.

CHEMICAL CONSUMPTION:

The chemicals are used by many cost centers by many cost centers for treatment of water. The

consumption of chemicals will be co-related with volume of water certain norms will have to be

developed for different type of chemicals and different type of treatments.

Based on these norms each of the cost centers will indicate consumptions of chemicals in

quantitative as well as financial terms the most centre wise requirement will be consolidated to arrive at

total chemicals consumption to be charged to profit and loss account.

EMPLOYEE COST:

The basis of employee cost will be the approved manpower budget effective of respective years of

budget period. The estimation of employee cost is to be done for each grade considering mid-point as

the scale as basis pay and after reading various allowances like "D.A., H.R.A., C.C.A" project allowance

etc. admissible in respective grades. This is to be worked 49 out or each of the budget periods based on

existing strength (at the time of estimation) in each grade and additions during each quarter (taking 70%

satisfaction for additions).

The provisions of LTC medical reimbursement, PF and other welfare expenses in previous years

are taken into account policies changes, if any the details of welfare expenses like liveries and uniforms,

safety expenses, accident compensation, games & sports, canteen subsidy etc. are to list out as per chart

of account the provisions for incentive, bonus and payments of one time nature are to be shown

separately based on total employee cost for executives, supervisors and non-supervisors and total man

power in these categories ,separates of cost per employee will be worked out for each of theses

categories as under.

1. Salaries and allowance

2. Contribution of PF and other funds

47

3. Welfare expenses

The cost centre of employee cost will be worked out based on these rates separately for theses

executives, supervisors and non-supervisors. This will again be consolidated separately for operations,

maintenance and common [service] function. The employee cost of common functions will be

appropriated between construction and O&M budgets in ratio of capital expenditure and sales during

respective years.

REPAIRS & MAINTAINENCE:

In line, with costing system following three activities can represent major classification of

repairs and maintenance.

1. Major overhaul

2. Preventive maintenance

3. Breakdown maintenance

Normally, budgeting will be done for the former two; under each activity separate estimates will

be prepared for consumption of materials and maintenance jobs. This estimation will be done at ach of

sub cost centre wise details are required to be mentioned.

The consumption material for repairs and maintenance will be classified into spares, lubricant

loose tools and plants, consumables and others. The cost centre totals separately for three activities will

be added to arrive at summary of material consumption and maintenance jobs, which will be reflected in

the profile & loss account.

The material consumption, especially of spares, can be estimated based on the expected life of

various components/spares in the installed equipment the frequency of breakdowns in the past and the

requirement for preventive maintenance and major overhauls. The actual life of components may be

different from that indicated in the manufacturer's specification. Therefore, it is very difficult to estimate

48

requirements of spares. But this estimation will become gradually accurate as more experience is gained.

For new stations it will be advisable to collect such information from old stations that have gained

experience in this field.

Normally, maintenance of equipment through contractors should be avoided. But in certain

areas, if the expertise and in house capability or sufficient man power is not available, maintenance

jobs can be got done through contractors. Such contracts will need to be listed out separately .If owner

supply items are covered in such contracts the cost of theses items will be included in the material cost.

FACTORY & GENERAL OVERHEADS:

All the items of an expenditures under this head will be estimated based on past trend with due

adjustment for policy changes. The estimates will be given by cost centre needs for items identified with

respective cost centers. The total administrative cost of service cost centers will be allocated between

construction and O&M in the ratio of capital expenditure and sales during respective years.

Depreciation:

This is to be charged as per ES act from the year following the year in which assets have been

capitalized value and, rates of depreciation furnished by the site finance and account for different

categories of assets. Cost centre-wise depreciation will be added to arrive at total deprecation for the

investment centre.

Interest on fixed capital:

As per existing accounting policy, the interest is to be charged to profit & loss account based on

the loan content in the capitalized assets restricted to total accrued interests on actual loans.

49

For budgeting purposes, interest will be worked on equated loan content or equated loan

which ever is less.

CHAPTER-5

50

DATA ANALYSIS AND

INTERPRETATION

OMAXE Limited Revenue Budget (2008-09)

Table-I

S.no Particulars Budget

Estimated

Amount(Rs.

Crores)

Actual

Amount(Rs.

Crores)

Variance

Sales

1 Fixed and recovery 689 599 90

2 Variable cost recovery 745 652 93

3 Fuel price adjustment recovery 784 823 -39

4 Own consumption 116 128 -12

5 Total of (1…4) 2334 2202 132

6 Average intensives 98 91 7

7 Other income 51 43 8

Grand total(5+6+7) 2483 2336 147

51

Interpretation:

The data pertaining to the generation and consumption of cement at OMAXE Limited have been

obtained from the year 2008-09 and presented in Table-1.The aspect included are total generation of

cement in (cores Rs) and utilization for auxiliary consumption, raw material consumption and line store

respectively.

During the year 2008-09 the sales, fixed cost, variable cost, fuel price, consumption was

decreased. Sales decreased by 132 crores to the estimated budget.

During the year 2008-09 the average intensives are decreased by 7 crores., there income also

decreased by 8 crores respectively.

Finally, with regard to the result in revenue budget of Omaxe Limited, totally decreased by 147

crores in the year 2008-09 respectively.

OMAXE Limited Operational expenditure budget for the year 2008-09

Table-II


Estimated

Amount(Rs.

Crores)

Actual

Amount(Rs.

Crores)

Variance

Variable cost

1 Raw material 400 423 23

2 Lime stone 430 450 20

3 Total of (1,2) 830 873 43

Operative

maintained

cost

4 Chemicals and

water

120 140 20

5 Repairs & 240 275 35

52

maintenance

6 Employee cost 290 335 45

7 Stationary &

general

expenses

55 70 15

8 Rebate 10 12 2

9 Share of

operating

expenses

8 10 2

10 Total of(4..9) 723 842 119

Finance

charges

11 Deprecation 38 11 -27

12 Interest on

fixed capital

18 20 2

13 Totalof-3 56 31 -25

Gland total

(3+10+13)

1609 1746 137

Interpretation:

Observed from the above table that the "Operational Expenditure Budget" of Omaxe Limited

in the year 2008-09.

In the year 2008-09 variable cost components, Raw material consumption 23 crores

increased and the lime stone consumption 20 crores also increased.

In operating & maintain aces cost components, chemicals & water, repair & maintenance,

employee cost, stationary & general expenses rebate and share of other expenses in all are fluctuating

53

expenses of the year 2008-09.how ever the total operating maintenance costs are 119 crores increasing

respectively.

In finance charges depreciation and interest on fixed capital, has been included, the total

finance

Charges recording decreasing 25 crores in the year 2008-09 respectively.


Table-I


Estimated

Amount(Rs.

Crores)

Actual Amount(Rs.

Crores)

variance

Sales

1 Fixed and

recovery

689 617 72

2 Variable cost

recovery

829 735 94

3 Fuel price

adjustment

recovery

815 856 -41

4 Own

consumption

110 132 -22

5 Total of 2443 2340 103

54

(1…4)

6 Average

intensives

93 86 7


8 Grand

total(5+6+7)

2585 2464 121

Interpretation:




respectively.


decreased. Sales consumption is deceased by 103 crores respectively.

During the year 2009-10 the average intensives are decreased by 7 crores and there income also

decreased 11 crores respectively.



OMAXE Limited Operational expenditure budget for the year 2009-10

Table-II


Estimated

Amount(Rs.

Crores)

Actual

Amount(Rs.

Crores)

variance

Variable cost


2 Lime stone 420 465 45

55

3 Total of(1,2) 839 914 75

Operative maintained

cost

4 Chemicals and water 121 148 27

5 Repairs & maintenance 232 289 57


7 Stationary & general

expenses

59 77 18

8 Rebate 11 13 2

9 Share of operating

expenses

8 10 2

10 Total of(4..9) 745 885 140

Finance charges


12 Interest on fixed capital 18 20 2

13 Total of(11,12) 56 34 -22

Grand total

(3+10+13)

1640 1833 193

Interpretation:





56

In operating & maintain aces cost components, chemicals & water, repair &

maintainance,employee cost, stationary & general expenses rebate and share of other expenses in all

are fluctuating expenses of the year 2009-10.how ever the total operating maintenance costs are

140crores increasing respectively.


finance charges decreasing by 22 crores in the year 2009-10 respectively.


Table-I

s.no Particulars Budget

Estimated

Amount(Rs.

Crores)

Actual

Amount(Rs.

Crores)

Variance

Sales

1 Fixed and

recovery

721 611 110

2 Variable cost

recovery

815 729 86

3 Fuel price

adjustment

recovery

810 823 -13

4 Own

consumption

121 131 -10

5 Total of (1…4) 2467 2294 173

57

6 Average

intensive

97 92 5


8 Grand

total(5+6+7)

2617 2434 183

Interpretation:




respectively.


decreased. Sales consumption is decreased by 173 crores respectively.

During the year 2010-11 the average intensives are decreased by 5 crores and there income also




OMAXE Limited operational expenditure budget for the year 2010-11

Table-II


Estimated

Amount(Rs.

Crores)

Actual

Amount(Rs.

Crores)

Variance

Variable cost


2 Lime stone 442 465 23

58

3 Total o(1,2) 860 910 50

Operative

maintained cost

4 Chemicals and

water

128 150 22

5 Repairs &

maintenance

265 296 31


7 Stationary &

general expenses

63 80 17

8 Rebate 11 13 2

9 Share of

operating

expenses

7 10 3

10 Total of(4…9) 790 897 107

Finance charges


12 Interest on fixed

capital

17 19 2

13 Total of(11,12) 58 34 -24

Grand total

(3+10+13)

1708 1841 133

Interpretation:





59

In operating & maintain aces cost components, chemicals & water, repair & maintenance,

employee cost, stationary & general expenses rebate and share of other expenses in all are

fluctuating expenses of the year 2010-11.how ever the total operating maintenance costs are

increasing by 107 crores respectively.


finance charges recording decreasing by 24 crores in the year 2010-11 respectively.

Finally with regard to the operational expenditure budget of Omaxe Limited the total profit

has increased by 133 crores during the year 2010-11.

The overall budget results of Omaxe Limited is industries limited is earning more profits.

Omaxe Limited Revenue Budget (2011-12)

Table-I


Estimated

Amount(Rs.

Crores)

Actual

Amount(Rs.

Crores)

Variance

Sales

1 Fixed and

recovery

724 618 106

2 Variable cost

recovery

840 740 100

3 Fuel price

adjustment

recovery

820 863 -43

4 Own consumption 132 148 -16

5 Total of (1…4) 2516 2369 147

6 Average 102 98 4

60

intensives


8 Grand

total(5+6+7)

2674 2516 158

Interpretation:




respectively.


decreased. Sales consumption is decreased by 147 crores respectively.

During the year 2011-12 the average intensives are decreased by 4 crores and, their income also



crores in the year 2011-12 respectively

Table showing operating expenditure of for the year 2011-2012

Table-II

S.no

Particulars Budget

Estimated amount

(Rs. Crores)

Actual amount

(RS. Crores)

Variance

Variable cost


2 Lime stone 450 470 20

3 Total of (1,2) 870 920 50

Operative maintained cost

61

4 Chemicals and water 130 150 20

5 Repairs & maintenance 280 300 20


7 Stationary & general expenses 65 80 15

8 Rebate 11 13 2

9 Share of operating expenses 8 10 2

10 Total of(4...9) 814 903 89

Finance charges


12 Interest on fixed capital 18 20 2

13 Total of(11,12) 60 35 -25

Grand total (3+10+13) 1744 1858 114

Interpretation:





In operating & maintainaces cost components, chemicals & water, repair &

maintainance,employee cost, stationary & general expenses rebate and share of other expenses in all

are fluctuating expenses of the year 2011-12.how ever the total operating maintenance costs are 89

crores increasing respectively.


finance charges recording decreasing by 25 crores in the year 2011-12 respectively

finally with regard to the operational expenditure budget of Omaxe Limited the total profit has

increased by 114 crores during the year 2011-12.

The overall budget results of Omaxe Limited is industries limited is earning more profits.

62

CHAPTER-6

CHARTS

64

SALES

Table showing total sales of Omaxe Limited

2008-09 2009-10 2010-11 2011-12

BE 2334 2443 2467 2516

ACT 2202 2340 2294 2369

Figure showing on sale of Omaxe Limited

Interpretation

In the year 2008-09 the actual amount is less compared to budgeted amount as the budget is

accurate. In the 2008-09 it shows a slight change between budgeted amount and actual. In the year 2011-

12 budgeted amount is more compared to actual. It shows that the quantity is more comparing to market.

Selling of cement product less than the estimates.

65

AVERAGE INTENSIVES

Table shown on average intensives of Omaxe Limited

2008-09 2009-10 2010-11 2011-12

BE 98 93 97 102

ACT 91 86 92 98

Figure showing on Average Intensicves of OMAXE LIMITED

Interpretation

In the year 2008-09 the actual amount is less compared to budgeted amount as the budget is accurate. In

the 2008-09 it shows a slight change between budgeted amount and actual. In the year 2011-12 budgeted

amount is more compared to actual. It shows that the quantity is more comparing to market. Selling of

cement product less than the estimates.

66

OTHER INCOME

Table shown on other income of Omaxe Limited

2008-09 2009-10 2010-11 2011-12

BE 51 49 53 56

ACT 43 38 48 49

Figure showing on other income of Omaxe Limited

Interpretation

In the year 2008-09 the actual amount is less compared to budgeted amount as the budget is accurate. In

the 2008-09 it shows a slight change between budgeted amount and actual. In the year 2011-12 budgeted

amount is more compared to actual. It shows that the quantity is more comparing to market. Selling of

cement product less than the estimates.

67

VARIABLE COST

Table showing on variable cost of Omaxe Limited

2008-09 2009-10 2010-11 2011-12

BE 830 839 860 870

ACT 873 914 910 920

Figure showing on variable cost of Omaxe Limited

Interpretation

FORM above table it can be under that the estimated amount and actual amount of OMAXE was

recorded at raw materiel 830 during the year 2008-2009 it is increased to actual raw material 873 in the

year 2008-2009. It shows that there is an increased in budget to the actual. The highest amount in budget

was recorded in year 2011-2012..

68

OPERATIVE MAINTAINED COST

Table showing on operative maintained cost of Omaxe Limited

2008-09 2009-10 2010-11 2011-12

BE 723 745 790 814

ACT 842 885 897 903

Figure showing on operative maintained cost of Omaxe Limited

Interpretation:

1. Form the above table it can be understood that the budget of Omaxe Limited cement was

recorded the estimated value 723 during the year 2008-2009 and it is decreased to 842 during the

year 2008-2009.

2. It shows that there is on decreased in the budgetary to the actual 2011-12.

3. The lowest investment in budgetary was recorded in year 2011-12.

69

FINANCE CHARGES

Table showing on finance charges of Omaxe Limited

2008-09 2009-10 2010-11 2011-12

BE 56 56 58 60

ACT 31 34 34 35

Figure showing on finance charges of Omaxe Limited

Interpretation:

1. Form the above table it can be understood that the budgetary of Omaxe Limited cement was recorded

at 56 value of estimation during the year 2008-2009.and it decreased to 31 of actual value in during

year 2008-2009.

2. It shows that there is increase in the budgetary the lower value in the 2008-2009.

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3. The lowest investment in budgetary was recorded in year 2011-2012.

CHAPTER – 7

FINDINGS

71

FINDINGS

There is a huge increase in INCOME of the company in 2011-2012, compared to 2010-2011.

Huge increase in earnings per share in 2011-2012, when compared to 2010-2011.

In the year 2007-08, 2010-11 and 2011-12 represents actual are less than budgeted so less

purchases made in every department. In the year 2008-09and 2009-10 actual is more than

budgeted it shows that greater importance given to purchases.

In the year 2006-07 civil expenses are at a very high range. Accruals are high compared to

budget because of construction of cold storage sector, cement plant and bore wells. In the year

2007-08 actual are less compared to budgeted because as the expenses are less. In the year 2011-

12 it incurred high volume of expenses than the budgeted because it incurred heavy expenses.

In the year 2011-12 budgeted amount is more compared to actual. It shows that the quantity is

more compared to market. Selling of cement products, less than the estimates.

In the year 2011-2012 sales and income increased EXPENDITURE of finished goods,

manufacturing selling, and administration expenses are also increased, deprecation, less transfer

from capital, rescue of assets is decreased.

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CHAPTER-8

SUGGESTIONS & CONCLUSIONS

73

SUGGESTIONS

Planning has become the primary function of management most of the planning relates to

individual situations and individual proposals. Budgets are nothing but expressions largely in

financial terms, budgetary control has, therefore become and essential tool of management for

controlling and maximizing profits.

a. Continuous comparison of actual performance with budgeted performance.

b. The company has to maintain super quick assets in order to maintain sound liquidity.

c. A company has to recollect their own standing amount from the debtors regularly.

d. The company has to maintain funds for long-term investment.

e. The company has to monitory from liability position in regular intervals.

f. The company must be conscious about their working capital position.

g. Company is maintaining the inventories a part from current assets for the entire study period.

To show that excessive inventory level are not good for any organization and any company.

Since the company has it concentrate much more on inventory maintain.

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h. During study period there is negative working capital levels for the company so the

company must maintained enough current assets to keep working capital, figure positively.

CONCLUSIONS

a. Every organization has predetermined set of objectives and goals, but reaching their objectives

and goals by proper planning and executing of these plans economically.

b. The Omaxe Limited objectives of planning and organizing promoting an integrated development

of Cement Company.

c. The corporation machine of Omaxe Limited cement industries is to make available and quickly

cement in increasingly small quantities, the company will spear head the process of accelerated

development of cement sector by expeditiously.

d. The organization needs the capable personalities as management makes the plans and implement

of these plans are expressed in terms of budget and budgetary control.

e. The Omaxe Limited has budget process in two stages. one is the capital expenditure budget and

another is operating maintenance budget, the capital expenditure budget shows the list of capital

projects selected for investment along with their estimated costs, operating maintenance budgets,

the medical budgets are rarely used in the organization like long term budgets, search &

development budget for consultancy.

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f. The Omaxe Limited cement industries is to make efficient utilization of its resources and

implementation of sophisticated technology to produce available and quality cement and also

creating ambience of collective working of its employees.

\

CHAPTER - 9

ANNEXURES

76

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2012:

Cash flow from operating

activities

PARTICULARS RS: RS:

Net profit before tax 3,41,78,32,892 80, 92, 92132

Adjustments for:

Depreciation 58, 30, 64,022 51, 57, 16,762

Loss/profit on food

assets sold/disable

5, 45, 85,229 5, 76, 15,772

Loss on sale of long

term investments

3, 58,952 -----

Income from

long term

investment(other

trader)

4,91,46,881 2,61,37,771

Interest paid/payable

on loans etc

33, 50, 30,376 32, 75, 37,771

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Interest receivable

on loans

2, 50, 55,563 9, 05, 21,426

Provision for doubtful

Debts/deposits in

add

3,82,15,119 --------

Provision for doubtful

Debts/deposits (net) ------------------ 93, 92,067

Debt/advance/

deposits written off

5, 34, 50,070 55, 44,394

Long-term

investment written

off

----------- 7,700

Unrealized loss/gain on

Foreign currency

fluctuation

2, 95, 96,073 19, 16,075

Provision for diminution

in

Value of investment --------------- 1, 10, 09232

Operating profit before

working capital changes:

Adjustment for:

Inventories (1,21,69,75,334) (24,94,24,615)

Trade and other

receivable

(50, 17, 40, 397) 2, 92, 62,288

Trade payables 65, 61, 02,594 (20,01,35,318)

Cash generated from

operations

Direct taxes/ refund (93, 49, 80,671) (20,01,35,318)

Net cash from

operating activities

1,98,37,48,569 1,10,42,01,672

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Interpretation:

Observed from the above table that “cash flow statement “of Omaxe Limited in the year 2011-2012. In

the year 2011-2012 variable net profit before tax, depreciation, loss/profit on food asset sold/disable,

loss on sale of long term investments, interest paid/payable on loans etc have been increased.

In operating profit before working capital changes of inventory, trade receivable and trade payables

of the year 2011-2012. However the total operating profits is increasing respectively.

In cash generated from operations the direct taxes/refund has been included, the total cash generated

from operations increase in the year 2011-2012 respectively.

Finally with regard to the cash flow statement of Omaxe Limited the total cash flow has been

increased during the year 2011-2012. The overall budget results of Omaxe Limited cement is industries

limited is earning more cash flows.

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING 31stMARCH 2012

PARTICULARS RS Rs

Schedule Income 2010-2011 2011-2012

Sales 18,17,81,55,294 25,16,45,89,369

Less excise duty 2,04,63,80,752 3,07,41,00,000

Net sales 16,13,17,74,542 22,06,9660,339

Other income 53, 74, 29,621 49, 04, 06,410

16,66,92,64,153 22,58,00,66,749

Expenditure

Finished goods 7,61,14,89,922 9,20,98,35,678

Manufacturing selling 7,40,51,67,576 9,03,43,03,781

Deprecation 59, 52, 33,509 53, 05, 56,255

Rescue of assets 1, 48,449,493 1, 21, 74,437

Schedule 51, 57, 16,762 53, 30, 64,022

Interest 32, 75, 37,771 33,50,30,375

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Profit before taxation

Provision for

Current taxation 75, 00, 00,000 34, 00, 00,000

Provision benefit tax 1, 22, 00,000 1,10,00,00

Profit after taxation 45, 70,92,132 2,65,68,32,892

Profit available for

appropriation

45,70,92,132 2,65,68,32,892

Appropriation

Proposed dividend 13, 72, 29,954 ------------------

Tax on proposed Dividend 1, 92, 46,501 -------------------

In tend Dividend -------------- 18, 29, 73,272

Tax on in tend

Dividend --------------- 2, 56, 62,001

General resend 5, 00, 00,000 30, 00, 00,000

Balance carried to schedule2 20, 64, 70,455 50, 86, 35,273

25, 06, 15,677 2,14,81,97,619

Earnings per share 9.99% 58.08%

Interpretation:

Observed from the above table that the” profit and loss account “of Omaxe Limited in the year 2011-

2012 In the year 2011-2012.sales and income increased EXPENDITURE of finished goods,

manufacturing selling, and administration expenses are also increased, deprecation, less transfer from

capital, rescue of assets is decreased.

Profit before taxation increased from Rs.34, 00, 00,000 to 75, 00, 00,000 and profit after taxation also

increased from Rs.45, 70, 92,132 to 2,65,68,32,892 in the year 2010-2011 respectively.

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Finally with regard to the profit and loss account of Omaxe Limited the total profit have been increased

the year 2011-2012. The overall budget result of Omaxe Limited cement is industries limited is earning

profits.

CHAPTER – 9

BIBLIOGRAPHY

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BIBLIOGRAPHY

1. Prasanna Chandra, Financial Management: Theory and Practice, 7/e, 2008, Tata McGraw-Hill

Education.

2. I.M.Pandey, financial management: Principles and Practice 9/e, 2005, Vikas publishing.

3. R.K Sharma Shashi K Gupta, financial management: Principal and Management, 7/e, 2002, Kalyani

Publishers.

4. Dr.S N Maheshwari: management Accounting and financial control, 6/e, 1996, sultan chand and

sons.

5. M.Y.Khan, and P.K Jain: Basic financial management, 3/e, 1982, Tata McGraw-Hill.

6. A. W. Willsmore: business budget and budgetary control, 2/e1949, pitman&sons.

7. Edward J Mock: Financial decision making, 2/e, 1969, International Textbook.

8. Eugene F. Brigham: Financial mangament, 12/e, 2008, cengage learning.

9. 88th annual report of Omaxe Limited.

10. detailed project report of Omaxe Limited

WEBSITES:

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