kashish a project on

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A REPORT ON

BUDGETARY CONTROL and PRACTICES AT

IOCL

Name of the organization:

Indian oil Corporation

Sec 19 A, Madhya Marg,

ChandigarhSubmitted To: Submitted By:

Gurjeetpal Singh Kashish Khanna

Faculty, Finance (2111!"#

M$A, Glo%al

Institues

A REPORT ON


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BUDGETARY CONTROL and PRACTICES AT

IOCL

UNDER THE GUDAN!E O"

#R$ SANDEEP DHNGRA

AO% "NAN!E DEPTT$ &O!'(

)

Prof$ Gur*eet+a, Singh

"A!U'T-% "NAN!E

SUB#TTED B-:

.a/hi/h .hanna

&0112134(

#BA% G#ET ASR

ORGAN5ATON

NDAN O' !ORPORATON '#TED% !HANDGARH

G'OBA' NSTTUTE O" #ANAGE#ENT AND TE!HNO'OG-%

A#RTSAR

TABLE OF CONTENTS


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1$ A67no8,edgement

0$ Pur+o/e of the Pro*e6t

3$ O9er9ie8 of Oi, indu/try

$ !om+any Profi,e

$1 Origin

$0 ntrodu6tion

$3 ;oint


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ACKNOWLEDGEMENT

As a part o& curriculu' at G'OBA' NSTTUTE O" #ANAGE#ENT

AND TE!HNO'OG- , the Su''er Internship )rogra'* ai's at o+erall

de+elop'ent o& the students %y pro+iding the' an opportunity to gain corporate

eposure and space to apply their theoretical -no.ledge practically in a

'utually %ene&icial 'anner/ 0o su''er internship can %e success&ul .ithout

the support o& the people .ho -eep the'sel+es closely in+ol+ed .ith the student

undergoing the progra'/ he .ealth o& -no.ledge and guidance shared and

pro+ided %y these pro&essionals is in+alua%le/

First o& all, I .ould li-e to than- 'y co'pany guide at Indian il Corporation

3i'ited , Chandigarh, #r$ Sandee+ Dhingra% A66ount/ Offi6er% O!' &or

his sel&less support and encourage'ent during 'y entire training progra'/

My sincere regard to #r$ B$. .u,/hre/htha% !hief "inan6e #anager% ndian

Oi, !or+$ 'imited% !handigarh&or allo.ing 'e to undergo this training/


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o -no. the +arious heads o& ependiture/

o -no. the .or-ing o& the co'pany/

o get &a'iliar .ith SA)/

Overview of Oil indu!r"

Oil Industry in India


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he il that is produced %y the il Industry in India pro+ides 'ore than !5

percent o& the energy that is pri'arily consu'ed %y the people o& India/ his

a'ount is epected to gro. &urther .ith %oth econo'ic and o+erall gro.th in

ter's o& production as .ell as percentage/ he de'and &or oil is predicted to go

higher and higher .ith e+ery passing decade and is epected to reach an a'ount

o& nearly 25 'illion 'etric ton %y the year 228/

So'e o& the 'ajor co'panies in the il Industry in India areC SA, France and$al'er 3a.rie H Co/3td/

o %lend, 'anu&acture and sellsynthetic, se'i synthetic and'ineral %ased lu%ricating oils,greases and hydraulic &luids,related products and specialties&or @e&ence and Ci+il A+iationuses/

IIn&rastructureH ;nergySer+ices 3td/

2?/?/199" iltan-ingG'%=, Ger'any/

o %uild and operateter'inalling ser+ices &or

petroleu' products/

)etronetIndia 3i'ited

2"/5/199 $harat )etroleu'Corporation 3td/,=industan )etroleu'Corporation 3td/,7eliance Industries

3i'ited, In&rastructure3easing H FinancialSer+ices 3td/ rustCo'pany 3i'ited,ICICI $an- 3td/, State$an- o& India/, ;ssaril 3i'ited/

o i'ple'ent petroleu'products, pipeline projectsthrough Special )urposeEehicles/

)etronet30G 3i'ited

2/8/199? $harat )etroleu'Corporation 3td/, il H

0atural gasCorporation 3td/,GAI3 (India# 3td, Ga4de France, A@$

@e+elop'ent o& &acilities &ori'port and regasi&ication o&

30G at @ahej and Kochi/

)etronet EK3i'ited

21/5/199? )etronet India3i'ited ,7eliance Industries3i'itedH ;ssar il 3i'ited/,

State $an- o& India,

o construct and operate apipeline &or transportation o&petroleu' products &ro'Eadinar to Kandla/


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Gujarat IndustryIn+est'entCorporation, FinancialSer+ices 3i'ited/

Indianil)etronas)ri+ate 3td/

!/12/199? )etronas, Malaysia o construct and i'port&acilities &or 3)G i'port at=aldia and to engage in parallel'ar-eting o& 3)G/

3u%ri4olIndia )ri+ate3i'ited

1/8/2 3u%ri4ol Inc/, BSA o 'anu&acture and 'ar-etche'icals &or use as additi+esin &uels, lu%ricants and greases/

Green Gas3td/

/1/25 GAI3 (India# 3td/ City Gas @istri%ution in3uc-no. and Agra/

Suntera0igeria 253i'ited

9/5/2" Indianil Corporation3td/ H il India/,Suntera 7esources 3td/

In+est'ents in oil and gasindustry especially in theupstrea' sector

Indo Cat )+t/

3i'ited

1/"/2" Intercat, BSA Manu&acturing H 'ar-eting o&

FCC catalysts and additi+es/

IndianilS-ytan-ing3i'ited

21/?/2" Indianil, IIn&rastructureH ;nergy Ser+ices 3td/(For'erly I3:Indianil Corporation3td/ an-ing 3td

@esign, &inance,construct, operate H'aintain a+iation &uel&acility projects/

SU+S(D(AR(ES OF (OCL

Indo Mo%il 3td/ (5#

A+i:il 3td/ (25#

Indian il tan-ing 3td/ (25#


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)etronet India 3td/ (1"#

)etronet EK 3td/ (2"#

)etronet CM 3td/ (2"#

)etronet CI)3 3td/ (12/5#

Indianil )etronas 3td/ (5#

Indian il )anipat )o.er Consortiu' 3td/ (2"#

Indian il CG )etroche' 3td/ (5#

3i%ri4ol India )+t/ 3td/ (5#/

OPERAT(ONS, AREAS OF (OCL

Indianil is India*s &lagship national oil co'pany .ith %usiness interests

straddling the entire hydrocar%on +alue chain L &ro' re&ining, pipeline

transportation and 'ar-eting o& petroleu' products to eploration H production

o& crude oil H gas, 'ar-eting o& natural gas, and petroche'icals/ It is the

leading Indian corporate in the Fortune 6Glo%al 56 listing, ran-ed at the 125th

position in the year 21/ At Indianil, the operations are strategically

structured along %usiness +erticals : 7e&ineries, )ipelines, Mar-eting, 7H@

Centre and $usiness @e+elop'ent L ;H), )etroche'icals and 0atural Gas/

S-e%i&l!ie 7e&ineries

)ipelines

Mar-eting

7H@ Centre and $usiness @e+elop'ent L ;H)


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)etroche'icals

0atural Gas

REF(N(NG

$orn &ro' the +ision o& achie+ing sel&:reliance in oil re&ining and

'ar-eting &or the nation, Indianil has gathered a lu'inous legacy o&

'ore than 1 years o& accu'ulated eperiences in all areas o& petroleu'


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he Corporation has co''issioned se+eral grassroot re&ineries and'odern process units/ )rocedures &or co''issioning and start:up o&

indi+idual units and the re&inery ha+e %een .ell laid out and enshrined in

+arious custo'i4ed operating 'anuals, .hich are continually updated/

Indianil re&ineries ha+e an a'%itious gro.th plan .ith an outlay o&

a%out 7s/ 55, crore &or capacity aug'entation, de:%ottlenec-ing,

%otto' upgradation and uality upgradation/ Major projects under

i'ple'entation include a 15 MM)A grassroots re&inery at )aradip,

rissa, 0aphtha Crac-er and )oly'er Co'ple at )anipat, )anipat

7e&inery epansion &ro' 12 MM)A to 15 MM)A, a'ong others/

In addition, petrol uality upgradation projects are under i'ple'entation

at )anipat, Mathura, $arauni, Gu.ahati and @ig%oi re&ineries proposed to

%e co'pleted %y the end o& 29/


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n the en+iron'ent &ront, all Indianil re&ineries &ully co'ply .ith the

statutory reuire'ents/ Se+eral Clean @e+elop'ent Mechanis' projects

ha+e also %een initiated/ o address concerns on sa&ety at the .or- place,

a nu'%er o& steps .ere ta-en during the year, resulting in reduction o& the

&reuency o& accidents/

Inno+ati+e strategies and -no.ledge:sharing are the tools a+aila%le &or

con+erting challenges into opportunities &or sustained organisational

gro.th/ Dith strategies and plans &or se+eral +alue:added projects in

place, Indianil re&ineries .ill continue to play a leading role in the

do.nstrea' hydrocar%on sector &or 'eeting the rising energy needs o&

our country/

PPE'NES

Indian il Corporation 3td/ operates a net.or- o& 1,?99 -' long crude

oil, petroleu' product and gas pipelines .ith a capacity o& 5/2" 'illion

'etric tonnes per annu' o& oil and 1 'illion 'etric standard cu%ic

'eter per day o& gas/ Cross:country pipelines are glo%ally recognised as

the sa&est, cost:e&&ecti+e, energy:e&&icient and en+iron'ent:&riendly 'ode&or transportation o& crude oil and petroleu' products/


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he operational throughput o& pipelines .as recorded at "5/1 'illion

'etric tonnes during 29:1/ he o&&shore ter'inals o& Indianil at

Eadinar, Mundra and )aradip ha+e handled 21? tan-ers including 12?

E3CCs during the year/

he 'ulti:product pipelines success&ully prepared to transport ;uro IE

grade &uels &ro' re&ineries to 'ar-eting centres 'aintaining the high

uality standards o& products during transportation/ $eginning .ith the

&irst %atch o& ;uro:IE MS grade uality &uel to 0ational Capital 7egion

in January, 21, ;uro IE grade uality &uels ha+e %een transported

through the pipelines &ro' re&inery locations to the 'ajor 'etros &or

supply o& these en+iron'ent &riendly products to the consu'ers as per the

ne. e'ission nor's/

Indianil co'pleted and co''issioned the 29:-' long Chennai:

$angalore )ipeline to position the petroleu' products &ro' Chennai

)etroleu' Corporation*s Manali re&inery to $angalore and surrounding

areas in a cost:e&&ecti+e 'anner/ Crude oil &eed &or the epansion o&

)anipat re&inery to 15 'illion tonnes .as arranged through the

aug'ented Mundra:)anipat )ipeline/ he aug'entation project .as


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co''issioned during the year at a cost o& 7s/ 1"5 crore against appro+ed

cost o& 7s/ 25 crore/

Integrated crude oil handling &acilities %eing pro+ided at )aradip in+ol+es

setting up o& a second and third Single )oint Mooring (S)M# and

conco'itant su%:sea pipelines/ Crude oil %lending application installed at

Mundra has %een an attracti+e solution &or re&ineries .ith the a%ility to

%lend di&&erent crude types to pro+ide a consistent and opti'al &eedstoc-

to re&inery operations/ he online integrated crude oil %lender &acility is

no. %eing i'ple'ented at Eadinar crude oil ter'inal to ena%le the

'ai'i4ation o& yields o& higher +alue products/

I'ple'entation o& )aradip:Sa'%alpur:7aipur:7anchi )ipeline, %ranch

pipeline &ro' Koyali:Sanganer )ipeline at Eira'ga' to Kandla .ill

&urther strengthen the petroleu' product deli+ery in central and .estern

India in the co'ing years/

0e. pipeline projects o& 2 -' .orth approi'ately 7s/ 2 crore

are planned &or epanding the in&rastructure &or transportation o& crude oil

and petroleu' products/ hese include the -' )aradip:=aldia:$udge


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enduring sy'%ol &or high uality petroleu' products and ser+ices/ he

heritage and iconic association that the %rand in+o-es has %een %uilt o+er

&our decades o& co''it'ent to uninterrupted supply line o& petroleu'

products to e+ery part o& the country, and uniue products that cater not

only to the &unctional reuire'ents %ut also the inspirational needs o&

'illions o& custo'ers/

Indianil has %een adjudged India6s 0o/ 1 %rand %y BK:%ased $rand

Finance, an independent consultancy that deals .ith +aluation o& %rands/

It .as also listed as India6s 6Most rusted $rand6 in the 6Gasoline6

category in a 7eaders6 @igest : AC 0ielsen sur+ey/ In addition, Indianil

topped he =indu $usinessline6s India6s Most Ealua%le $rands list/

=o.e+er, the +alue o& the Indianil %rand is not just li'ited to its

co''ercial role as an energy pro+ider %ut straddles the entire +alue chain

o& ga'ut o& eploration H production, re&ining, transportation H

'ar-eting, petroche'icals H natural gas and do.nstrea' 'ar-etingoperations a%road/ Indianil is a national %rand o.ned %y o+er a %illion

Indians and that is a priceless +alue/

RESE RCH . DE*ELOPMENTIn today6s dyna'ic %usiness en+iron'ent, inno+ation through a sustained

process o& 7esearch H @e+elop'ent (7H@# is the only cutting edge tool

&or organisations to thri+e/ Dith e'phasis on de+elop'ent and speedy

co''ercialisation o& glo%ally co'petiti+e products, processes and

technologies, the &ocus has no. shi&ted &ro' 7H@ to 7@H@ (7esearch,

@e+elop'ent H @eploy'ent#/


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I0@MA, a hall'ar- technology

de+eloped %y the Centre &or 'ai'isation o& 3)G and light distillates

&ro' re&inery residue, has %een selected %y Indianil &or setting up a 8

'illion 'etric tonnes per annu' (MM)A# I0@MA unit as a part o&

the 15 MM)A integrated re&inery:cu':petroche'icals co'ple at

)aradip, as .ell as at $ongaigaon 7e&inery H )etroche'icals 3td/

($7)3#/ he Centre has also licensed its @iesel =ydrotreating

technology to these t.o re&ineries/ hese successes ha+e catapulted

Indianil 7H@ into the elite league o& 'ultinational technology

licensors/

Standing in the co'pany o& si .orld.ide technology holders &or Marine

ils, .ith the second glo%al ;M (original euip'ent 'anu&acturer#

appro+al %y Dartsila, S.it4erland, Indianil6s SERVOMarine ils are

no. technically uali&ied to cater to the lu%rication reuire'ents o& 'ore

than 9 o& the .orld6s 'arine engine population/ In the po.er:

generation seg'ent, the ne.ly de+eloped SERVOMarine K:Series .as

appro+ed %y >an'ar Co/ 3td/ o& Japan &or use in their engines operating

on distillate &uels/

he 7H@ Centre continues to pro+ide signi&icant support to the Indianil

Group re&ineries in product uality i'pro+e'ent, e+aluation o& catalysts

and additi+es, health assess'ent o& catalysts, 'aterial &ailure analysis,


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trou%leshooting and in i'pro+ing o+erall e&&iciency o& operations/ In:

house de+eloped FCC 'odels are not only %eing used in Indianil

re&ineries &or process opti'isation %ut a si'ilar 'odel has also %een sold

to a 'ultinational co'pany/ Indianil has &or'ed a joint +enture

co'pany, Indo Cat )+t/ 3td/, .ith Intercat, BSA, &or 'anu&acturing

15, tonnes per annu' o& FCC (&luidised catalytic crac-ing# catalysts

H additi+es in India, &or catering to rising glo%al de'and/

As a step to.ards ensuring energy

security &or the nation, Indianil has launched se+eral initiati+es to

eploit alternati+e sources o& energy such as =ydrogen and $io:&uels/

Su%seuent to co''issioning India6s &irst eperi'ental =:C0G

(=ydrogen:Co'pressed 0atural Gas# dispensing unit at the 7H@ Centre

ca'pus at Farida%ad, de'onstration projects are under.ay on use o& =:

C0G %lends in hea+y and light +ehicles/ Indianil is also setting up

India6s &irst co''ercial =:C0G dispensing station at one o& its retail

outlets in @elhi in the year 2? &or &uelling eperi'ental +ehicles

running on =:C0G %lends as .ell as on pure =ydrogen/ Indianil 7H@

is also .or-ing on production, storage, transportation, distri%ution and

co''ercialisation o& =ydrogen as an alternati+e &uel/


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In $io:&uels, %esides spearheading co''ercialisation o& ;thanol:$lended

)etrol in the country, Indianil has %een in the &ore&ront o& technology

de+elop'ent &or $io:diesel production &ro' +arious edi%le and non:

edi%le oils and its application in +ehicles/ )ioneering studies %y Indiail6s

7H@ Centre esta%lished that $io:diesel produced &ro' Jatropha seeds

.ere at par .ith that produced &ro' +egeta%le oils/ In the past &e. years,

the 7H@ Centre has studied the entire +alue chain o& $io:diesel, starting

&ro' Jatropha plantation to &ield trials on passenger cars, light

co''ercial +ehicles and rail.ay locos in colla%oration .ith se+eral

+ehicle 'anu&acturers, rail.ays and state transport underta-ings.

N TUR L G S+er the years, 0atural Gas has e'erged as the 6&uel o& choice6 across the

Dorld/0atural gas %usiness presents i''ense opportunities &or Indian il and

has already started generating signi&icant re+enues &or the Corporation/ he

Corporation is in the process o& sourcing 'ore 30G and epanding its custo'er

%ase/ Dithin the gas %usiness, city gas distri%ution is seen as a &ocus area &or

rapid gro.th/ Green Gas 3td/, Indian il6s joint +enture .ith GAI3 (India# 3td/,

is operational in Agra and 3uc-no. and plans to epand &or city gas

distri%ution in other parts o& the country/


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Miion 1


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o achie+e international standards o& ecellence in all aspects o& energy and

di+ersi&ied %usiness .ith

&ocus on custo'er delight through +alue o& products and ser+ices, and cost

reduction/

o 'ai'i4e creation o& .ealth, +alue and satis&action &or the sta-eholders/

o attain leadership in de+eloping, adopting and assi'ilating state:o&:the:art

technology

&or co'petiti+e ad+antage/

o pro+ide technology and ser+ices through sustained 7esearch and

@e+elop'ent/

o &oster a culture o& participation and inno+ation &or e'ployee gro.th and

contri%ution/

o culti+ate high standards o& %usiness ethics and otal Nuality

Manage'ent &or a

strong corporate identity and %rand euity/

o help enrich the uality o& li&e o& the co''unity and preser+e ecological

%alance and heritage through a strong en+iron'ent conscience.

O+JECT(*ES . O+L(G T(ONS OF(OCL


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O23e%!ive' O o ser+e the national interests in oil and related sectors in accordance and

consistent .ith Go+ern'ent policies/ O o ensure 'aintenance o& continuous and s'ooth supplies o& petroleu'

products %y .ay o& crude oil re&ining, transportation 'ar-eting acti+ities and to

pro+ide appropriate assistance to consu'ers to conser+e and use petroleu'

products e&&iciently/

O o enhance the country6s sel&:su&&iciency in crude oil re&ining and %uild

epertise in laying o& crude oil and petroleu' product pipelines/

O o &urther enhance 'ar-eting in&rastructure and reseller net.or- &or pro+iding

assured ser+ice to custo'ers throughout the country/ O o create a strong

researchHde+elop'ent %ase in re&inery processes, product &or'ulations,

pipeline transportation and alternati+e &uels .ith a +ie. to

'ini'i4ingeli'inating i'ports and to ha+e net generation products/

O o opti'i4e utili4ation o& re&ining capacity and 'ai'i4e distillate yield and

gross re&ining 'argin/

O o 'ai'i4e utili4ation o& the eisting &acilities &or i'pro+ing e&&iciency and

increasing producti+ity/

O o 'ini'i4e &uel consu'ption and hydrocar%on loss in re&ineries and stoc-

loss in 'ar-eting operations to e&&ect energy conser+ation/

O o earn a reasona%le rate o& return on in+est'ent

/ O o a+ail o& all +ia%le opportunities, %oth national and glo%al, arising out o&

the Go+ern'ent o& India*s policy o& li%erali4ation and re&or's/

O o achie+e higher gro.th through 'ergers, acuisitions, integration and

di+ersi&ication %y harnessing ne. %usiness opportunities in oil eploration

production, petroche'icals, natural gas and do.nstrea' opportunities o+erseas

$ O o inculcate strong core +alues* a'ong the e'ployees and continuously

update s-ill sets &or &ull eploitation o& the ne. %usiness opportunities/


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O o de+elop operational synergies .ith su%sidiaries and joint +entures and

continuously engaged across the hydrocar%on +alue chain &or the %ene&it o&

society at large/

Financial %jecti+es

STATE

O""!E

&UPSO (

NODA

STATE

O""!E

&UPSO (


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MEAN(NG OF +UDGET


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A Budget i/ an esti'ation o& the re+enue and epenses o+er a speci&ied &uture

period o& ti'e/ A %udget can %e 'ade &or a person, &a'ily, group o&

people, %usiness, go+ern'ent, country, 'ultinational organi4ation or just a%out

anything else that 'a-es and spends 'oney/

A Budgetis a plan that outlines an organi4ation6s &inancial and operationalgoals/ So a %udget 'ay %e thought o& as an action plan planning a %udget helpsa %usiness allocate resources, e+aluate per&or'ance, and &or'ulate plans/

Dhile planning a %udget can occur at any ti'e, &or 'any %usinesses, planning a%udget is an annual tas-, .here the past year6s %udget is re+ie.ed and %udgetprojections are 'ade &or the net three or e+en &i+e years/

A budgetis a &inancial docu'ent used to project &uture inco'e and epenses/he %udgeting process 'ay %e carried out %y indi+iduals or %y co'panies toesti'ate .hether the personco'pany can continue to operate .ith its projected

inco'e and epenses/

FE TURES OF +UDGET It is prepared &or a de&inite &uture period/

It is a special &or' o& state'ent epressed in uantitati+e ter's .hich

'ay %e in the &or' o& 'onetary +alue or physical units/

It is prepared .ith a +ie. to attain a de&inite o%jecti+e or target/

It epresses the plans and policies o& the 'anage'ent to %e pursued in

&uture/

It pro+ides a %ase &or 'easuring the success o& actual results/

It is appro+ed %y 'anage'ent &or i'ple'entation/


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It usually sho.s the planned inco'e to %e generated and ependiture to %e

incurred/

O+JECT(*ES OF +UDGETS o pro+ide a realistic esti'ate o& inco'e and epenses &or a period and o&

the &inancial position at the close o& the period/

o pro+ide a coordinated plan o& action .hich is design to achie+e the

esti'ates re&lected in the %udget/

o pro+ide a co'parison o& actual results .ith those %udgeted and ananalysis and interpretation o& de+iations %y areas o& responsi%ility to

indicate courses o& correcti+e actions and to lead to i'pro+e'ent in

&uture plans/

o pro+ide a guide &or 'anage'ent decisions in adjusting plans and

o%jecti+es i& there is an uncontrolla%le change in conditions/

o pro+ide a ready %asis &or 'a-ing &orecasts during the %udget period

to guide 'anage'ent in 'a-ing day to day decisions/

AD*ANTAGES OF +UDGETS

A %udget helps us in the &ollo.ing .ays

kashish a project on

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