'summer Project On Budgeting Control Of Ashok Leyland.docx

SUMMER INTERNSHIP PROJECT REPORT

ON BUDGETARY CONTROL AND FUTURE FORECAST For

ASHOK LEYLAND LTD.

By POOJA SAHNI ROLL NO. 85 In partial fulfilment for the award of the degree

Post Graduate Diploma In Management Batch- 2017-19

Specialization: Finance and Marketing

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CERTIFICATE FROM THE COMPANY

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ACKNOWLEDGEMENT I would like to express my gratitude to everyone who supported me throughout my summer internship project. I am thankful for their aspiring guidance, invaluably constructive criticism and friendly advice during the project work. I am sincerely grateful to them for sharing their truthful and illuminating views on number of issues related to the project. I would like to express my very great thanks to my industry guide (Mr. Raman) for his valuable and constructive suggestions during the planning and development of this research work. His willingness to give his time so generously has been very much appreciated. I would like to thank to my mentor (Mr Gaurav) who have always supported me, ready to review my work and planning for my learning, made the data and other resources available to complete my project. My special thanks to the HR of the organization (Mr. Rohit Arora) whose guidance made me confident about the ability and opportunity which one can get and grab. Lastly, I would like to thank my institution for giving me opportunity to know about the corporate before I actually starts working. Thanks to my parents for always supporting me.

Thank you.

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DECLARATION

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INDEX            

Executive Summary……………….………………………………………….6 About the Company………………………………………………………….7 Objective & Significance of Study…………………………………………..22 Literature Review………………………………….…………………………23 Limitation & constraints……………………………………………………..35 Research Methodology………………………………………………………35 Data collection & Analysis…………………………………………………..36 Templates of budgeting process……………………………………………..45 Finding & Analysis…………………………………………………………..53 Future of Ashok Leyland…………………………………………………….55 Conclusion……………………………………………………………………57 Bibliography………………………………………………………………….58

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EXECUTIVE SUMMARY This report focuses on the financial analysis of Ashok Leyland ltd north zone. This report is on the sales of the north zone as this zone mainly focus on the sales and related expenses. The topic which is assigned to me is the Budgetary control and future forecast of the North Zone of Ashok Leyland. In this I come to know about the various facts and figure which company implements to achieve the target. The different strategy which helps the company to be ahead from the other competitors from the market. The analysis of financial statement and various expanded administrative expenses build the clear understanding about the practical way of working. Budget of any organisation helps to plan and forecast the finance required which helps them to meet the target. It’s a systematic plan for the utilization of manpower and material resources. A budget identifies the planned expenditure for a project, program or portfolio. It is used as a baseline against which the actual expenditure and predicted eventual cost of the work can be reported. At north zone office of ASHOK LEYLAND LTD the focus on the sales of commercial vehicles. Here they plan to promote the product and plans the next contribution that the company is going to contribute in the economy. Control of expenses is the most essential element which a company needs to control to achieve its best output and profit. The report will focus on the trend of sales and the trends of expenses which helps to make the strategy for the next plan. Page 6 of 58

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ABOUT THE COMPANY

ASHOK LEYLAND is the 2nd largest manufacturer of commercial vehicles in India, the 4th largest manufacturer of buses in the world and the 12th largest manufacturer of trucks globally. With a turnover, more than US $ 3.3 billion (2016-17) and a footprint that extends across 50 countries, we are one of the most fully-integrated manufacturing companies this side of the globe. Millions of passengers use buses to get to their destinations every day while over 700,000 trucks keep the wheels of economies moving. With the largest fleet of logistics vehicles deployed in the Indian Army and significant partnerships with armed forces across the globe, we help keep borders secure. Headquartered in Chennai, India, manufacturing footprint spreads across the globe with 9 plants; including one each at Great Britain and Ras Al Khaimah (UAE). Our Joint Venture partners include John Deere (USA) for Construction Equipment, Continental AG (Germany) for Automotive Infotronics and the AL teams Group for the manufacture of high-press die-casting extruded aluminium components for the automotive and telecommunications sectors. Hinduja Group was founded Late Mr. Parmanand Deep Chand Hinduja & currently this group is operating in 35 countries, it’s product & services are wide-spreaded in more than 100 countries. This group has employed more than 72,000 personnel. Guiding Principle

:

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ASHOK LEYLAND LIMITED A SUBSIDARY OF HINDUJA GROUP

Hinduja Group is a multi-billion dollars, transnational conglomerate. The Group was founded by Shri P.D. Hinduja in 1914 whose credo was "My duty is to work so that I can give." The Group's activities span across three core areas: Investment Banking, International Trading and Global Investments. It also supports charitable and philanthropic activities across the world through the Hinduja Foundation. As part of its Global investments, the Group owns businesses in Automotive, Information Technology, Media, Entertainment & Communications, Banking & Finance Services, Infrastructure Project Development, Oil and Gas, Power, Real Estate, Trading and Healthcare. With operations across 37 countries, the Group employs over 70,000 people worldwide. Vision & Mission of Ashok Leyland :

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Evolution of Ashok Leyland :

The history of Ashok Leyland can best be illustrated with the use of a timeline for better comprehension. Following is the history timeline of Ashok Leyland Ltd.:  1948: The history of Ashok Leyland goes all the way back to 1948 when it was founded by Mr. Raghunandan Saran in collaboration with the Austin Motor Company on September 7th as Ashok Motors for the assembly of Austin cars.  1949: Production starts in the month of September and the first Austin A40 is successfully assembled at a factory in Ennore, which is situated North of Madras.  1950 can be considered one of the most significant years on the timeline as during this year Ashok Motors collaborates with Leyland, UK getting sole rights to import, assemble and progressively manufacture Leyland trucks for 7 years.

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 1954: This was another big year for the company as during this year, the firm got government approval to progressively manufacture Leyland commercial vehicles and acquired the license to manufacture 1,000 units per year.  1955: In this year, Ashok Motors officially becomes Ashok Leyland with equity participation from Leyland Motors Ltd.  1969: Ashok Leyland is the first to introduce power steering in commercial vehicles across India.  1970: The company specially designs 1000 vehicles for the Indian Army named the “Hippo Tipper” based on specific requirements.  1972: The company is granted license to manufacture 10,000 units per year. This grant can be said to be anticipated given the positive relationship the company held with the government.  1974: 1974 is a record year as the company exceeded the annual turnover of Rs.1000 million for the first time.  1976: This year facilitated a technological breakthrough as the company releases the ‘Viking’ which is the first bus ever to have an alternator and had a front entry. An Alternator is an electric generator that converts mechanical energy into electrical energy and is used in automobiles to recharge the battery while the engine is running and run all its electrical systems.  1978: Another technological breakthrough as the company unleashes the ‘Cheetah’, the first bus with a rear engine. This helped with the heat dissipation process thereby, making the bus more efficient in its operation.  1980: the company expands and inaugurates the new Hosur Plant. The plant was inaugurated by the then Chief Minister of Tamil Nadu, Mr. M.G Ramachandran. Also, 1980 is an important year in the company’s timeline as they introduced two new trucks: The ‘Tusker’ which was India’s first 13-ton truck which was powered by a 125hp engine and the ‘Taurus’ which was India’s first multi-axle truck.

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 1982: This year saw the expansion of the company into the North by inaugurating two new manufacturing facilities at Bhandara (Maharashtra) and Alwar (Rajasthan) in March and August respectively.  1990: The company’s first Technical Centre is established on the outskirts of Madras for essential testing of trucks before they are sold for commercial purposes.  1993: Ashok Leyland is the first automobile company to receive an ISO 9002 certification in 1993. This certification is an industry standard provided to organizations by the ‘International Organization for Standardization.  1995: The first driver training facility is launched at Nammakal, Tamil Nadu.  1996: the second plant at Hosur is inaugurated by Prime Minister Deve Gowda in December.  1997: The ‘Stallion’, an all-terrain logistics vehicle was inducted into the Indian Army.  2002: The company develops its first Electric-Hybrid vehicle which is showcased at Auto Expo 2002.  2006: The company acquires the Czech Republic based truck manufacturer ‘AVIA’. Also, the company comes into an agreement with the Ras Al Khaimah Investment Authority to set up its manufacturing plant in UAE.  2007: The company goes into a Joint Venture with AG Continental, a German based engineering company for the development of automotive infotronics. Also, the company decides to go into a joint venture with a Finnish based company for the production of High pressure die casting extruded aluminium components.  2008: The company goes into a joint venture with John Deere, USA for the manufacture of construction equipment products.  2010: The company inaugurated its Pantnagar plant which was supposedly its largest plant with the capacity to touch 75,000 vehicles. Also, the company bought a 26% stake in Opt are Plc, a well-known bus maker in the UK. Page 12 of 58

 2011: the company makes its mark in the Light Commercial Vehicle segment by introducing the DOST. Also, October 2011 saw the introduction of a new brand- ‘LEYLAND DEERE’ which brought the company into the construction equipment space with the introduction of the ‘435 Backhoe Loader’  2012: The company introduces the “Jan Bus” the world’s first single-step, front engine, fully flat door bus unveiled by union Minister Shri Kamal Nath.  2013: This year saw the launch of the Neptune engine which is essentially a future ready electronic fuel efficient engine with CRS which is protected up to BS-VI. This year also saw the launch of the BOSS truck which is the next generation intermediate commercial vehicle. Lastly, this year also the launch of the STILE which is a stylish multi-purpose vehicle and the most fuel efficient in its category.  2014: This year essentially saw the launch of multiple vehicles used for various commercial purposes. (Ashok Leyland Ltd., 2018) Leadership Team :

Mr. Dheeraj G. Hinduja

Dr. Andrew C Palmer

Dr. Andreas H Biagosch

Mr. D. J. Balaji Rao

Mr. Jean Brunol

Mr. Jose Maria Alapont

Mrs. Manisha Girotra

Mr. Sanjay K. Asher

Mr. Sudhindar K. Khanna

Mr. Vinod K. Dasari

AUDIT COMMITTEE Mr. Sanjay K. Asher (Chairman) Mr. D.J. Balaji Rao Mr. Jean Brunol Mr. Sudhindar K. Khanna

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STAKEHOLDERS RELATIONSHIP COMMITTEE Mr. Sanjay K. Asher (Chairman) Mr. D. J. Balaji Rao Ms. Manisha Girotra NOMINATION AND REMUNERATION COMMITTEE Mr. D. J. Balaji Rao (Chairman) Mr. Dheeraj G. Hinduja Mr. Jose Maria Alapont Ms. Manisha Girotra CORPORATE SOCIAL RESPONSIBILITY COMMITTEE Mr. Dheeraj G. Hinduja (Chairman) Ms. Manisha Girotra Mr. Vinod K. Dasari TECHNOLOGY COMMITTEE Dr. Andrew C Palmer (Chairman) Dr. Andreas H Biagosch Mr. Jean Brunol Mr. Jose Maria Alapont INVESTMENT COMMITTEE Mr. Dheeraj G Hinduja (Chairman) Dr. Andreas H Biagosch Mr. Jean Brunol Mr. Jose Maria Alapont RISK MANAGEMENT COMMITTEE Dr. Andreas H. Biagosch (Chairman) Mr. D J Balaji Rao Mr. Sanjay K Asher Mr. Gopal Mahadevan Mr. N Ramanathan is the Secretary for all the Committees.

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M r. Dheeraj G. HindujaChairman

Nitin Seth President, LCV

Gopal M ahadevan M r. Vinod K. President, Dasari- CEO Finance & & MD Chief Financial Office

Rajive Saharia President, Global Sales and Distribution

Dr. Seshu Bhagavathula Chief Technology Officer

NV Venkatesh Vikram Batra Balachandar Anuj Kathuria Natarajan Vice President, President-HR, President, Senior Vice Corporate Communicatio Global Trucks President, IT / Strategy and n and CSR CIO Planning

Dr. N Harihar P R Sivanesan Saravanan Senior Vice Senior Vice Senior Vice President, President, President, M anufacturing Quality, Product and Project Sourcing and Development Planning Supply Chain

T Venkataraman Senior Vice President, Global Buses

Organization Structure :

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TV Venkataraman Head, Internal Audit and Risk M anagement

Balasubramoni am E Amandeep N Ramanathan Senior Vice Singh Company President, Head, Defence Secretary Special Projects

Rajesh R Head, Power Solutions Business

Products & Services : Contemporary Trucks

Buses (16-80 Seaters):

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Engineering Support :

Defense Business :

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Sales & Service Outlets :

Products Portfolio :

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Financial Performance of Ashok Leyland: BalanceSheet - Ashok Leyland Ltd. Rs (in Crores) Particulars

Mar'18

Mar'17

Mar'16

Mar'15

Mar'14

12 Months

12 Months

12 Months

12 Months

12 Months

292.71

284.59

284.59

284.59

266.07

Reserves & Surplus

6872.09

5841.48

5122.56

3812.30

3007.89

Net Worth

7164.80

6126.07

5407.15

5118.69

4447.88

Secured Loan

100.00

603.77

674.13

910.00

1937.30

Unsecured Loan

415.69

741.19

1171.91

1681.34

1946.61

7680.48

7471.03

7253.19

7710.03

8331.80

Gross Block

6102.56

5715.78

5207.33

8135.65

8327.87

(-) Acc. Depreciation

1128.34

744.97

415.35

2880.10

2668.00

Net Block

4974.22

4970.81

4791.99

4233.74

4485.94

401.24

205.86

75.86

120.14

181.53

Investments

5802.63

2878.86

1980.44

2648.83

2789.69

Inventories

1709.88

2631.03

1625.01

1398.53

1188.70

Sundry Debtors

980.48

1064.39

1250.95

1257.69

1299.01

Cash and Bank

1004.40

911.97

1593.13

751.29

11.69

Loans and Advances

1713.23

1377.16

1456.38

1879.45

1677.51

Total Current Assets

5407.99

5984.55

5925.47

5286.96

4176.92

Current Liabilities

8034.32

5918.18

5208.70

5266.80

4320.21

871.28

650.86

311.86

334.66

155.99

Total Current Liabilities

8905.60

6569.04

5520.56

5601.46

4476.20

NET CURRENT ASSETS

-3497.60

-584.50

404.91

-314.50

-299.28

.00

.00

.00

.00

.00

7680.48

7471.03

7253.19

7710.03

8331.80

Liabilities Share Capital

TOTAL LIABILITIES Assets

Capital Work in Progress

Provisions

Misc. Expenses TOTAL ASSETS(A+B+C+D+E) Rs (in Crores)

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Profit & Loss - Ashok Leyland Ltd.Rs (in Crores) Mar'18

Mar'17

Mar'16

Mar'15

Mar'14

12Months

12Months

12Months

12Months

12Months

26524.51

21453.14

19992.97

14485.93

9943.43

276.60

1313.01

1055.67

923.75

.00

26247.91

20140.13

18937.30

13562.18

9943.43

0

0

0

0

0

26437.67

20276.40

19054.92

13686.65

10009.95

228.74

168.73

115.96

82.49

61.04

Material Consumed

18729.57

14065.06

13271.11

10026.35

7652.84

Personal Expenses

1811.92

1480.05

1385.06

1184.00

999.67

.00

.00

.00

.00

.00

2738.70

2223.76

1910.53

1242.70

1063.31

Expenses Capitalised

.00

.00

.00

.00

.00

Provisions Made

.00

.00

.00

.00

.00

23508.93

17937.59

16682.67

12535.55

9776.86

Operating Profit

2738.98

2202.54

2254.63

1026.63

166.56

EBITDA

2928.75

2338.81

2372.25

1151.11

233.08

554.61

517.89

487.90

416.34

377.04

.00

.00

.00

.00

.00

INCOME:

Sales Turnover

Excise Duty

NET SALES

Other Income

TOTAL INCOME

EXPENDITURE:

Manufacturing Expenses

Selling Expenses

Administrative Expenses

TOTAL EXPENDITURE

Depreciation

Other Write-offs

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EBIT

2374.14

1820.91

1884.35

734.77

-143.95

131.25

155.38

247.64

393.51

452.92

2242.89

1665.53

1636.71

341.26

-596.88

668.13

107.01

436.94

107.39

-120.60

1574.76

1558.53

1199.77

233.87

-476.28

-34.70

-336.66

-819.12

100.94

505.66

.00

.00

.00

.00

.00

22.52

1.21

8.95

.00

.00

1562.59

1223.08

389.60

334.81

29.38

.00

.00

.00

.00

.00

Equity Dividend

549.48

325.40

154.14

101.99

.00

Equity Dividend (%)

187.72

114.33

54.16

35.83

.00

Shares in Issue (Lakhs)

29271.04

28458.77

28458.77

28458.77

26606.77

EPS - Annualised (Rs)

5.34

4.30

1.37

1.18

.11

Interest

EBT

Taxes

Profit and Loss for the Year

Non Recurring Items

Other Non Cash Adjustments

Other Adjustments

REPORTED PAT

KEY ITEMS

Preference Dividend

Rs (in Crores)

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Joint Ventures:

With our JV with John Deere, USA, we aim to seize the opportunities of the robustly growing construction equipment sector with products like Backhoe Loaders, Four-wheel-drive Loaders, Skid Steers and Excavators under both the Ashok Leyland and John Deere brands.

Ashley Alteams is a JV with the Alteams Group, Finland, and is in the business of producing High Pressure Die Casting (HPDC) aluminium components pre-dominantly for telecom and automotive sectors.

CSR Activities:

Fun Bus

Driver Care

Green Mission

CSR Community Services

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AIDS Awareness

OBJECTIVE OF STUDY In carrying out this research work, the research intends to achieve the following objectives.  Whether attainment of organizational goal (Providing Effective Services) is a direct result of appropriate budgeting planning & controlling process  The importance of budgeting & budgetary control in the activity of Ashok Leyland as is it important in decision-making  The implication of Annual Budgets in Ashok Leyland  Examine the relationship between budgeting & budgetary control  Study the benefits of budgetary control in government owned companies  Examine the budgetary system and the realization of their policy objectives It is believed that an adherence to the recommendation as may be seen later in the study based on the findings of this research will act as a guide or tool and suggest polices aimed at rectifying the negative effects of the existing budgetary system on the development of Ashok Leyland Ltd.

SIGNIFICANCE OF STUDY In general the study will be of great significance to managers and financial analysts and particularly to the organization itself. The organization can basically, with the outcome of the study restructure and encourage effectiveness and efficiency of budgeting and budgetary control as a tool for managerial appraisal in its circumference. This would facilitate the organization to look at a bigger picture to make the further strategies & to achieve it short-term & longterm goals. The public individuals and institutions will on its part be relieved of the problems inefficient or ineffective budgeting since it is true that they constitute the major sources of these funds, if nothing it places the shareholders of commercial venture that seeing their investments being well utilized, budgeted and accounted for by management. The citizens and institution will regard their investment in the form of the equity they have traded.

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SCOPE OF STUDY Budgeting and budgetary control is a vital issue in every organization whether profits oriented or otherwise. However, being a researcher my intends to study Budgeting and Budgetary Control of Ashok Leyland Ltd has been to understand the scope of this tool to help in efficient decision-making.

LITERATURE REVIEW Budgeting is an instrument which helps organizations in planning & controlling both in short-term & long-term. There may be chances of varying degree of extensiveness for both small organizations & big corporate houses. With the help of budget organizations enables themselves to propose the future prospects of its operation & expansion strategies. Budgeting process is an extension of Management Accounting. Budgetary control helps organizations to efficient Finance/Operational/Activity management. It support organization in sustainable business by coping with the inflation, changing Government policies in terms of regulations & make them prepare for uncertainty avoidance. Definition of Budget : As per The Chartered Institute of Management Accountants, England, defines budget as : “A financial and/or quantitative statement, prepared and approved prior to define period of time, the policy to be pursued during that period for the purpose of attaining a given objective." According to Brown & Howard of Management Accountants: "A budget is a predetermined statement of managerial policy during the given period which provides a standard for comparison with the results actually achieved." K. Amjaroen in his book “5 Essential of successful budgeting” stated that : “Budgeting is straightforward, easy to do with a spreadsheet, and more an exercise of persistence than anything else”. Page 24 of 58

“In a nutshell, budgeting means that investors don't spend more than they make. It is also known as "living below one's means" and seems to be a concept lost on lots of individuals in societies their system encourage to live largely on indebtedness through credit card” In General Budget is a systematic plan for the utilization of manpower and material resources. A budget identifies the planned expenditure for a project, program or portfolio. It is used as a baseline against which the actual expenditure and predicted eventual cost of the work can be reported. A budget is a quantified expectation for what a business wants to achieve. Its characteristics are: 

 

 

The budget is a detailed representation of the future results, financial position, and cash flows that management wants the business to achieve during a certain period. The budget may only be updated once a year, depending on how frequently senior management wants to revise information. The budget is compared to actual results to determine variances from expected performance. Management takes remedial steps to bring actual results back into line with the budget. The budget to actual comparison can trigger changes in performance-based compensation paid to employees. Businesses need to plan. In large businesses, such planning is very formal while, for smaller businesses, it will be less formal. Planning for the future falls into three time scales: Classification on the basis of Time :





Long-Term Budgets : Long-term budgets are prepared for a longer period varies between five to ten years. It is usually developed by the top level management. These budgets summarise the general plan of operations and its expected consequences. Long-Term Budgets are prepared for important activities like composition of its capital expenditure, new product development and research, long-term finance etc. Short-Term Budgets : These budgets are usually prepared for a period of one year. Sometimes they may be prepared for shorter period as for quarterly or half Page 25 of 58



yearly. The scope of budgeting activity may vary considerably among different organization. Current Budgets : Current budgets are prepared for the current operations of the business. The planning period of a budget generally in months or weeks. As per ICMA London, "Current budget is a budget which is established for use over a short period of time and related to current conditions." Classification on the basis of Function:



Functional Budgets : The functional budget is one which relates to any of the functions of an organization. The number of functional budgets depend upon the size and nature of business. The following are the commonly used:         

Purchase Budget Sales(Revenue) Production Labour Cost Budget Trade Receivable Budget Trade Payable Budget Cash Budget Selling & Distribution Cost Budget Capital Expenditure Budget

Sales budget: The sales budget as setting forth the sales departments objectives for the budgetary period. The sales budget is the key to the overall industry budget, because the anticipated sales volume is used as a basis to 18 determine amount of goods to be produced, the labour equipment and capital required and the natural and amount of various selling administrative and financial expenses needed. Sales estimates are based on past performances and on the forecast of business conditions for the coming period. Production budget : After the sale budget has been determined, a production budget can be made to meet requirements of sale budget. The actual number of units to be completed is computed from the following data units to be sold, desired size of ending inventory and units in the beginning inventory.

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Direct materials: The material budget is developed to indicate the material to be purchased and materials usage for the period. It shows the estimated raw materials volume that would be used to meet the requirements of the production budget for the budget period. It is usually prepared to show the quantity and value of materials required for the production programmed. The material budget is extremely important in determining future cash requirements. Direct labour budget: The direct labour budget is an estimate of the total direct labour hours and direct labour costs required to complete the expected production during the budgeted period. Manufacturing overhead budget: The manufacturing overhead budget shows the amount expected to be spent as cost running the factory. Manufacturing overhead cost is less consistent. Some of these costs such as indirect material is variable Operating expenses budget : Detailed budgets are normally prepared covering the selling and administrative expenses anticipated as a result of the estimated sales and production operations. Cash budget : A cash budget is one of the most important budgets prepared in the organization. It shows in summary form, the expected cash receipts and cash payments during the budget period The cash budget shows the effect of budgeted activities selling, buying, paying wages, and investing in capital equipment and so on. Cash budgets are prepared in order to ensure that there will be just sufficient cash in hand to cope adequately with budgeted activities.



Master Budgets : Master Budget is summary of all functional activities into a uniform structure which is most efficient form to adapt & employed. Classification on the basis of Capacity:



Fixed Budgets : A fixed budget remains unchanged irrespective of level of activities attained or any other factor affecting the status quo

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

Flexible Budgets : A Flexible budget tends to change related to activities attained, Flexible budget is also known as Variable Budget or Sliding Scale Budget. Takes both fixed, Variable & Semi-fixed manufacturing cost into account. BENEFITS OF BUDGETS AND BUDGETARY CONTROL Budgets provide benefits both for the business, and also for its managers and other staff The budget assists planning By formalising objectives through a budget, a business can ensure that its plans are achievable. It will be able to decide what is needed to produce the output of goods and services, and to make sure that everything will be available at the right time. The budget communicates and co-ordinates Because a budget is agreed by the business, all the relevant managers and staff will be working towards the same end. When the budget is being set, any anticipated problems should be resolved and any areas of potential confusion clarified. All departments should be in a position to play their part in achieving the overall goals. The budget helps with decision-making By planning ahead through budgets, a business can make decisions on how much output – in the form of goods or services – can be achieved. At the same time, the cost of the output can be planned and changes can be made where appropriate. The budget can be used to monitor and control An important reason for producing a budget is that management is able to use budgetary control to monitor and compare the actual results (see diagram below). This is so that action can be taken to modify the operation of the business as time passes, or possibly to change the budget if it becomes unachievable. The budget can be used to motivate A budget can be part of the techniques for motivating managers and other staff to achieve the Page 28 of 58

objectives of the business. The extent to which this happens will depend on how the budget is agreed and set, and whether it is thought to be fair and achievable. The budget may also be linked to rewards (for example, bonuses) where targets are met or exceeded.

The Approved Plan Master Budget provides an approved summary of results to be expected from proposed plan of operations. It cater all the concerns of organization & serves as torch to executive to act as a path finder to achieve the functional objective & therefore organization’s objectives too.

SCOPE & TECHNIQUES OF STANDARD COSTING FOR BUDGETARY CONTROL

Scope : A- Budgets are prepared keeping all the functional context into consideration i.e. Production & Sales. Actual situation is compared & efforts are exercised to control the same. Standards are adhered by classifying, recording & allocation of the expenses to cost units. Actual costs are compared with standard cost. B- Budgets have wider coverage to the organization as a whole. Every operation is segregated into number of elements & standards are set for each elements respectively C- Budgetary control comes into picture at the level of expenditure at functional level. Standard costing is concerned with the requirement of each element of cost D- Budget is a projection of financial accounts whereas Standard Costing projects the Cost Accounting. Techniques :

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A- Budgetary control is exercised by putting budgets & actual parallel, Variance is not generally revealed in the accounts. Standard Costing Variance are revealed through accounts. B- Budgetary control system can be operated in smaller parts. E.g. Advertisement Budget, Research & Development Budget etc. Standard Costing is not put into operation in parts. C- Budgetary control of expenses is broad in nature whereas Standard Costing system is a far more technically improved system by means of which the Variance are analysed in details. PARAMETERS FOR EFFECTIVE BUDGETARY CONTROL

The following parameters are supposed to be the consideration for effective Budgetary Control Process : 1- Clear cut objectives & goal should be well defined 2- The ultimate objective of realizing maximum benefits should always be kept on supreme 3- A Budget Manual is required, Which contains all details regarding plan & procedure for its execution. A proper time-table should be assigned to Budget Preparation for approval, details about responsibilities & Cost Centres etc. 4- Budget committee should be set-up for Budget preparation & efficient execution of the plan. 5- A Budget should always be related to specified time-period 6- Support of top management is necessary in order to get the full support and co-operation of the system of budgetary control 7- To make budgetary control successful, there should be a proper delegation of authority and responsibility. 8- Adequate accounting system is essential to make the budgeting successful. 9- The employees should be properly educated about the benefits of budgeting system. 10The Budgeting System should not cost more to operate than it is worth 11Key factors are limiting factors, if any, should consider before preparation of budget

Page 30 of 58

12For Budgetary control to be effective, proper periodic reporting system should be introduced. ORGANIZATION OF BUDGETARY CONTROL

In order to introduce budgetary control system, the following are essential to be considered for a sound and efficient organization. The important aspects to be considered are: 1. Organisation Chart: For the purpose of effective budgetary control, it is imperative on the part of each entity to have definite "plan of organization." This plan of organization is embodied in the organization chart. The organization chart explaining clearly the position of each executive's authority and responsibility of the firm. All the functional heads are entrusted with the responsibility of ensuring proper implementation of their respective departmental budgets. 2. Budget Centre: A Budget Centre is defined by the terminology as "a section of the organization of an undertaking defined for the purpose of budgetary control." For effective budgetary control budget centre or departments should be established for each of which budget will be set with the help of the head of the department concerned. 3. Budget Officer: Budget Officer is usually some senior member of the accounting staff who controls the budgetary process. He does not prepare the budget himself, but facilitates and co-ordinates the budgeting activity. He assists the individual departmental heads and the budget committee, and ensures that their decisions are communicated to the appropriate people. 4. Budget Committee: Budget Committee comprising of the Managing Director, the Production Manager, Sales Manager and Accountant. The main objectives of this committee is to agree on all departmental budgets, normal standard hours and allocations. In small concerns, the Budget Officer may co-ordinate the work for preparation and implementation of budgets. In large-scale concern a budget committee is setup for preparation of budgets and execution of budgetary control. 5. Budget Manual: A Budget Manual has been defined as "a document which set out the responsibilities of persons engaged in the routine of and the forms and records required for budgetary control." It contains all details regarding the plan and procedures for its execution. It also Page 31 of 58

specifies the time table for budget preparation to approval, details about responsibility, cost centres, constitution and organization of budget committee, duties and responsibilities of budget officer. 6. Budget Period: A budget is always related to specified time period. The budget period is the length of time for which a budget is prepared and employed. The period may depend upon the type of budget. There is no specific period as such. However, for the sake of convenience, the budget period may be fixed depending upon the following factors Types of Business  Types of Budget  Nature of the demand of the product  Length of trade cycle  Economic factors  Availability of accounting period  Availability of finance  Control operation 7. Key Factor is also called as "Limiting Factor" or Governing Factor. While preparing the budget, it is necessary to consider key factor for successful budgetary control. The influence of the Key Factor which dominates the business operations in order to ensure that the functional budgets are reasonably capable of fulfilment. ADVANTAGE OF BUDGETARY CONTROL

The advantages of budgetary control may be summarized as follows: 1. It facilitates reduction of cost. 2. Budgetary control guides the management in planning and formulation of policies. 3. Budgetary control facilitates effective co-ordination of activities of the various departments and functions by setting their limits and goals. 4. It ensures maximization of profits through cost control and optimum utilization of resources. 5. It evaluates for the continuous review of performance of different budget centres. 6. It helps to the management efficient and economic production control.

Page 32 of 58

7. It facilitates corrective actions, whenever there is inefficiencies and weaknesses comparing actual performance with budget. 8. It guides management in research and development. 9. It ensures economy in working 10.It helps to adopt the Principles of Standard Costing

LIMITATIONS OF BUDGETS AND BUDGETARY CONTROL

Whilst most businesses will benefit from the use of budgets, there are a number of limitations of budgets to be aware of: The benefit of the budget must exceed the cost Budgeting is a fairly complex process and some businesses – particularly small ones – may find that the task is too much of a burden in terms of time and other resources, with only limited benefits. Nevertheless, many lenders – such as banks – often require the production of budgets as part of the business plan. As a general rule, the benefit of producing the budget must exceed its cost. Budget information may not be accurate It is essential that the information going into budgets should be as accurate as possible. Anybody can produce a budget, but the more inaccurate it is, the less use it is to the business as a planning and control mechanism. Great care needs to be taken with estimates of sales – often the starting point of the budgeting process – and costs. Budgetary control is used to compare the budget against what actually happened – the budget may need to be changed if it becomes unachievable. The budget may demotivate Employees who have had no part in agreeing and setting a budget which is imposed upon them, will feel that they do not own it. As a consequence, the staff may be demotivated. Another limitation is that employees may see budgets as either a ‘carrot’ or a ‘stick’, i.e. as a form of encouragement to achieve the targets set, or as a form of punishment if targets are missed. Budgets may lead to dis functional management A limitation that can occur is that employees in one department of the business may over-achieve against their budget and create problems elsewhere. For example, a production department might achieve extra output that the sales department finds difficult to sell. To avoid such, dis functional management, Page 33 of 58

budgets need to be set at realistic levels and linked and co-ordinated across all departments within the business. Budgets may be set at too low a level Where the budget is too easy to achieve, it will be of no benefit to the business and may, in fact, lead to lower levels of output and higher costs than before the budget was established. Budgets should be set at realistic levels, which make the best use of the resources available. FORECASTING

 A forecast is an estimate of what will actually be achieved. A forecast that tracks the expected performance of the business, so that timely decisions can be taken to address shortfalls against target, or maximise merging opportunity Its characteristics are:  The forecast is typically limited to major revenue and expense line items. There is usually no forecast for financial position, though cash flows may be forecasted.  The forecast is updated at regular intervals, perhaps monthly or quarterly.  The forecast may be used for short-term operational considerations, such as adjustments to staffing, inventory levels, and the production plan.  There is no variance analysis that compares the forecast to actual results.  Changes in the forecast do not impact performance-based compensation paid to employees.

TYPES OF FORECASTING

Qualitative Technique

Time Series Analysis & Projection

Causal Models

Forecasting Page 34 of 58

QUALITATIVE TECHNIQUES:

The first uses qualitative data (expert opinion, for example) and information about special events of the kind already mentioned, and may or may not take the past into consideration. Primarily, these are used when data are scarce—for example, when a product is first introduced into a market. They use human judgment and rating schemes to turn qualitative information into quantitative estimates. TIME SERIES ANALYSIS AND PROJECTION

The second, on the other hand, focuses entirely on patterns and pattern changes, and thus relies entirely on historical data. These are statistical techniques used when several years’ data for a product or product line are available and when relationships and trends are both clear and relatively stable. One of the basic principles of statistical forecasting—indeed, of all forecasting when historical data are available—is that the forecaster should use the data on past performance to get a “speedometer reading” of the current rate (of sales, say) and of how fast this rate is increasing or decreasing. The current rate and changes in the rate—“acceleration” and “deceleration”—constitute the basis of forecasting. Once they are known, various mathematical techniques can develop projections from them. Time series analysis helps to identify and explain: 

  

Any regularity or systematic variation in the series of data which is due to seasonality—the “seasonal ” Cyclical patterns that repeat any two or three years or more. Trends in the data. Growth rates of these trends. CAUSAL MODELS

The third uses highly refined and specific information about relationships between system elements, and is powerful enough to take special events formally into account. As with time series analysis and projection techniques, the past is important to causal models. When historical data are available and enough analysis has been performed to spell out explicitly the relationships between the factor to be forecast and other factors (such as related businesses, economic Page 35 of 58

forces, and socioeconomic factors), the forecaster often constructs a causal model. A causal model is the most sophisticated kind of forecasting tool. It expresses mathematically the relevant causal relationships, and may include pipeline considerations (i.e., inventories) and market survey information. LIMITATIONS & CONSTRAINTS As my study has been focused on the financial performance of Ashok Leyland Ltd which need critical data to be explored, in continuance of this study the challenges faced is summarized bellow:  As the confidentiality of data allowed me to have a very limited access to it  Limited resources has created much difficulty to create an information pool for further study  The sessions has been conducted on related situations rather than actual populated data of organization  In addition to progress of project, there has been a high probability of exploring multiple sources to retrieve the relevant data of organizational financial performance  Study has been conducted based on secondary data which leave little scope of innovation in recommendation process to current designed system of Budgeting Planning & Controlling RESEARCH METHDOLOGY RESEARCH HYPOTHESIS

The following hypothesis will be tested for this study. Null Hypothesis (H0): That budgets are effective means of planning organizational activities. Alternative Hypothesis (H1): Budgets are not effective means of planning organizational activitics. Null Hypothesis (H0): Budget controls and aids management in decision making. Alternative Hypothesis (H1): Budget does not controls and aids management in decision making. Page 36 of 58

Null Hypothesis (H0): Department heads are not properly educated on the budgeting and budgetary control system. Alternative Hypothesis (H1) That Departmental heads are properly educated on the budgeting and budgetary control system. Data Collection & Data Analysis : As data collection is a big time challenge when it comes to financials of any organization, so is the case with Ashok Leyland too. The critical information is quite limited & which was not supposed to be publically shared with trainee. There is a method of “Descriptive Exploratory” character involved in this study. For data treatment , A quantitative & qualitative approach is considered, since the data were tabulated & treated through a descriptive statistics & data analysis. The data were collected & treated in excel spreadsheets. Since there is a concern of describing the data collection method, in order to allow their replicability & temporal analysis, which is one of the concerns regarding qualitative & quantitative research. Though in pursuance of this project following methods of data collection has been adapted enormously:  Survey: The survey was developed with the help of my mentor in a structured format. The survey has been highlighted with the features aligned to the review of literature. The survey was submitted to a pilot test in which items were found that were inserted & adjusted to a better understanding & do not generate doubts about the questions. The issues were elaborated from the practices identified in the literature search. The application of the survey is divided into two phases; the first includes characterization of company including 3 issues, the second phase involved 10 questions about the Planning of Budget, 5 topics regarding implementation of Budget, With the use of Likert Scale, & 7 objective questions about the evaluation & performance control. The survey has been circulated through Google Doc Platform. Survey was well explained to participants. The collection period has been for 20 days.  Interview: In order to establish a methodological triangulation, after the application of survey, a semi-structured interview was carried out with the coordination of the process of Budget. The methodological triangulation allows the establishment of measures of reliability & validity. The interview approached aspects of the practices different than those usually Page 37 of 58

highlighted in literature, such as the period of preparation of budget, & the purpose of control, among others. The interview aimed at deepening the knowledge on the use of budgeting in ports, with the identification of the reason, or reasons, as well as key explanatory factors of the use of practices other than those mentioned in the literature on the topic.  Presentation : Presentation on Budgeting process has been conducted from the mentor which encompasses budgeting principles & practices in organization. The presentation session has been accompanied with one-oone session which enable us to cross check the validity of literature on which we have established this research. Data reprsentations & it’s analysis Overview : Financial Performance UNDERESTING OF SALES OF ASHOK LEYLAND LTD. (NORTH ZONE)

According to the data provided by the company, the tabular and graphical representation of the sales trend is highlighted. YEAR

BUS

TRUCK

TOTAL

% Inc.% Dec

2013-2014

1345

3740

5085

5.86

2014-2015

770

4901

5671

51.84

2015-2016

1142

9713

10855

6.6

2016-2017

1558

9957

11515

-10.8

2017-2018

1100

9335

10435

-104.35

Table-I

Page 38 of 58

SALES TRENDS 14000 12000 10000 8000

6000 4000 2000 0 2013-2014

2014-2015 BUS

2015-2016 TRUCK

2016-2017

2017-2018

TOTAL

Fig: I

SALES INCREASE DECREASE TRENDS

15000 10000 5000 0 BUS

TRUCK

TOTAL

2013-2014

2014-2015

2015-2016

% Inc.%Dec

-5000 2016-2017

2017-2018

Fig: II

The above table is the description of sales in which it is shown that the sales of vehicles increase during a period of next year and a massive increase and decrease in commercial vehicle market .Lets have a look of market condition which influenced it.

Page 39 of 58

Ratio Analysis: Balance Sheet

Page 40 of 58

Profit & Loss Account:

Profitability Ratios Gross Profit Ratio Gross Profit Ratio= [Gross Profit/Net Sales]x100 = [Rs.827296.71 Lakhs/Rs.2133166.91 Lakhs]x100 = 38.78% Operating Profit Ratio Operating Profit Ratio= [Operating Profit/Net sales]x100 = [Rs.148546.49 Lakhs/Rs.2133166.91 Lakhs]x100 = 6.96% Page 41 of 58

Interpretation: Profitability Ratio

When investors look to analyze the financial standing on an organization, they mainly look at the profitability ratios to get a clear-cut understanding on whether their money will be in safe hands. This is because these ratios indicate the operational efficiency of the organization.

The Gross Profit ratio and the Operating Profit ratio of Ashok Leyland Ltd. is 38.78% and 6.96% respectively. This tell us that the company makes a 39% profit on sales before considering the operating expenses or indirect expenses of the firm. This figure is outstanding as the margin is ascertained by only considering the direct expenses of manufacturing. But, when we look at the operating profit ratio, we find the figure to slide down quite drastically to a mere 7%. This indicates that the organization has huge amounts of operating expenses or indirect expenses thereby reducing the profit margin. But, this margin is acceptable as the industry standard of operating profit ratio stands at 6.5-7% (ICRA, 2017). Going be these standards, Ashok Leyland Ltd. seems to be doing quite well.

The Return on Investment ratio mainly focuses on the level of return a shareholder can expect by investing their funds in an organization. This is one of the most widely used ratio to ascertain whether an investment is feasible. For Ashok Leyland Ltd., this figure stands at 19.96%. With Tata Motors indicating a return on investment ratio of negative 11.91% (Dion Global Solutions Limited, 2017), Eicher Motors having a ratio of 39.77% (Dion Global Solutions Limited, 2017), SML Isuzu establishing a ratio of 15.60% (Dion Global Solutions Limited, 2017) and Force Motors having a ratio of 10.8% (Dion Global Solutions Limited, 2017), we find that the industry average for this ratio of these companies comes to roughly about 14.85%. In comparison to this, Ashok Page 42 of 58

Leyland stands above the industry average and that may very well be a good sign for investors. Next, we have the Return on Capital Employed ratio which as the name suggests, indicates what percentage of the total capital employed in the firm is gotten back through earnings in a financial year. Ashok Leyland has a ratio of 16.05%. Tata Motors maintains a ratio on negative 1.86% (Dion Global Solutions Limited, 2017), Eicher Motors a ratio of 58.11% (Dion Global Solutions Limited, 2017), Force Motors a ratio of 12.85% (Dion Global Solutions Limited, 2017) and SML Isuzu a ratio of 20.08% (Dion Global Solutions Limited, 2017). This brings us an industry average of roughly about 21%. This shows that the company should look into how efficiently it is employing its capital to run the business and it falls significantly behind the industry average.

Comparative Profit and Loss Statement (2016-17) Following is the comparative statement of Profit and Loss for the year ended 31st March 2017. Income Revenue from Operations 2231957.88 2406834.78 174876.9 Other income 16362.07 13069.22 3292.85 Total Income 2248319.95 2419904 171584.05 Expenses Cost of materials and 1282193.74 1397946.87 115753.13 services consumed Purchases of stock-in-trade 161603.34 142786.74 18816.6 Changes in inventories of finished goods, stock-in-trade -46417.79 -68974.42 22556.63 and work-in-progress Excise duty on sale of goods 105967.66 131885.56 25917.9 Employee benefits expense 171066.68 190088.07 19021.39 Finance costs 92504.99 104879.96 12374.97 Page 43 of 58

8% 20% 8% 9% 12% -49% 24% 11% 13%

Depreciation and amortization expense Other expenses Total Expenses Profit before exchange gain on swap contracts / Share of loss of joint ventures and associates Exchange gain on swap contracts Share of loss of joint ventures and associates (net) Profit before exceptional items and tax Exceptional items Profit before tax Tax expense: Current tax Deferred tax Profit for the year from continuing operations Loss from discontinued operations Profit for the year

52393.78

57278.88

4885.1

259651.45 283708.56 24057.11 2078963.85 2239600.22 160636.37

9% 9% 8%

169356.1

180303.78

10947.68

6%

504.8

1539.74

1034.94

205%

-7849.12

-986.5

6862.62

87%

162011.78

180857.02

18845.24

12%

-41137.34 120874.44

2469.23 183326.25

43606.57 62451.81

106% 52%

51363.24 -1706.1

44002.58 -24390.67

7360.66 22684.57

14% 1330%

71217.3

163714.34

92497.04

130%

0

-423.31

423.31

71217.3

163291.03

92073.73

129%

The first thing we notice in the above statement is the 129% increase in the Profit for the year in 2017. We will try to break down how this result has been achieved. Firstly, we see that the company has a total increase in tis expenses and revenues by 8% which is quite normal. The major change is brought in by the exchange gain on swap contracts which results in a 205% increase in comparison. Also, there has been a 106% increase in the income generated from exceptional items which has played a major role in the overall increase in the profit since 2016. Therefore, we can say that there has not been a significant change I the working of the organization to increase its revenue through sales or any effort from the Page 44 of 58

organizations side to decrease the expenses of the firm. Rather, it has been majorly due to the involvement of the company in activities other than its core competencies that has resulted in the major increase in the profits from 2016. UNDERESTING OF EXPENSES OFASHOK LEYLAND LTD (NORTH ZONE) The tabular presentation and graphical representation of expenses which helps to estimate the profitability as well as the control of the expenses.

SUMMERISED EXPENSES Sum of Value in reporting currency Cost element group name Advertisement & Publicity Bank Charges IMS Bandwidth charges, Software charges Legal Expenses Management Development & Suggestions Meetings General Postage & Telegraph Power Office Printing & Stationary Rates & Taxes Rent Repairs-Fixed Security Contracts Transport Dept. Expenses Traveling Cost Grand Total

Page 45 of 58

Grand Total 73,681,200 1,133,029 11,243 783,383 1,255,048 2,894,492 3,908,696 9,349,807 1,138,359 8,664,675 6,489,040 34,814,668 5,385,357 6,074,240 76,922,620 232,505,856

90,000,000 80,000,000 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 -

Grand Total

For a company like Ashok Leyland Ltd. The second manufacturer it become important to have their reach and presence in each and every corner of the market. the expenses table and graph clearly states the type of expenses made to meet the target. The maximum amount of expenses budget goes to the advertisement expenses and repair and fix. The quality which a customer needs to satisfy from a product or a brand is service and reach .The Company making its full efforts and plan to achieve the target. Templates: Op Cost Templates Manpower Cost Wages Less direct labour Net Indirecr wages Salaries- Confidential Salaries- Others Salaries- MR Total Salaries Contributions (Exc. Gratuity) Welfare Expenses Contingency Gratuity Other Manpower Cost(As per Schedule VI) Page 46 of 58

Grand Total

Total Manpower Cost Production Related Cost Factory Power MES Self Generated Total Factory Power Inward Freight(Hire Charges/Logistic) Consumable Tools Consumable Stores Repairs(Variable) T & GSE Total Production Related Cost Sales Related Cost Warantee Campaign Related Warantee Free Services AMC Expenses(Incl DTC) Chassis Rect. Expenses Mobile Service Van Expenses Service Training Expenses Packing & Forwarding Royalty Total Sales Related Cost Administration Cost Power Office Repairs(Fixed) Advertisement & Publicity Rates & Taxes Insurance Travel Postage & telephone Printing & Stationary Transport Dept Expenses Bank Charges Research & Development Director's Fee & Travel Audit Fee & Expenses Recruitment Expenses Rent Legal Expenses Computer Hire Charges Consultancy Charges News Paper & Periodicals Page 47 of 58

Management Development & Suggestions Donations Security Contracts Transit Expenses Shareholder's Meeting Meetings General Membership Subscriptions Exchange Loss/Gain Misc.Expenses Provision for doubtful debts IMS Other Expenses (As per Schedule VI) Total Administration Cost Grand Total

Page 48 of 58

Region CO object name

(All) (Multiple Items)

Sum of Val.in rep.cur. Cost element group name Cost Element Advertisement & 46505005 Publicity 46505025 46505035 46505040 46505045 46505050 46505055 46505065 46505080 Bank Charges 47130005 IMS Bandwidth 47115050 charges,Software charges Legal Expenses 47145095 Management 47145155 Development & Suggestions 47145160 Meetings General 47145175 Postage & Telegraph 47115005 47115025 47115035 Power Office 45905015 Printing & Stationary 47120005 47120015 47120025 47120030 47120035 47120050 47120065 Rates & Taxes 47105020 47105055 47105075 47105085 Rent 47145090 Repairs-Fixed 45920010 45920025 45920050 45920055 45920075 45920090 45920100 45920110 45920115 45920120 45920135 45920165 Security Contracts 47145140 Transport Dept 47125005 47125010 47125015 47125025 47125050 47125070 Traveling Cost 47110005 47110010 47110015 47110025 47110050 47110060 47110070 47110080 Grand Total

Cost element name ADVERTISEMENT - PROD ADVERTISEMENT HOARDS AUDIOVISUAL AND PHOT VEHICLE DEMONSTRATIO SALES PROMOTION DEALERS & OPERATORS TRADE FAIR PARTICIPA GIVEAWAYS(SALES PROM SERVICE PROMOTION EX BANK CHARGES BANDWIDTH CHARGES DA

LEGAL EXPENSES TRAINING - EXTERNAL

SPONSERSHP FEES - EX MEETINGS GENERAL TELEPHONE CHARGES POSTAGE CHARGES COURIER CHARGES POWER-OFFICE PREMISE PHOTOCOPYING OFFICE FORMS BINDING CHARGES COMPUTER STATIONERY COMPUTER DISCS, TAP STATIONERY OTHERS PRINTING STATIONERY CORPORATION AND MUNI REGISTRATION/FILING/ WATER CHARGES RATES-OTHERS RENT OFFICE PREMISES SERVICE CONTRACTS-CI SERVICE CONT-ELECTRI ELECTRICAL SPARES OTHER ELECTRICAL MAI TOOLING & GENERAL SH SERVICE CONTRACTS P OTHER MAINTENANCE FURNITURE PURCHASE < OFFICE EQUIPMENT PUR SERVICE CONTRACTS OT REPAIRS AND MAINTENA OFFICE PREMISES SECURITY CONTRACTS FUEL LUBRICATION BUS FUEL LUBRICATION OWN FUEL FOR JEEPS MAINTENANCE OWN CARS MOTOR VEHICLE INSURA MAINTENANCE JEEPS OUTSTATION TRAVEL CAR HIRE CONVEYANCE FOREIGN TRAVEL FARE TRAVEL OTHERTHAN FAR JOINING EXPENSES ON TRAVEL EXPENSES FORE TRAVEL & OTHER EXPEN

Business Area 1000 448,880

12,800 5,826,316 11,772 7,746,777 866,707 159,095 24,602 11,243

647,857 -

1,901,178 870,514 1,856 571,387 8,144,092 132,011 24,502 105,235 4,814 (735) 337,572 56,682 982,455 5,139,335 9,956 117,150 5,374,125 11,725 68,072

1100 800,244 49,405 38,332 3,747,960 23,921,232 8,139,883 7,941,239 1,006,790 123,708 285

806,836 644,274 (253,551) 1,749 28,133 9,417 2,189 2,536 940

442,500 44,403 261,475 432 6,905

98,935

48,184 -

2000 13,500

4000 59,000

Grand Total 1,321,624

364,562 1,500

30,901 3,577 1,455 36,795 60,163

444,868 58,209 4,194,076 36,518,034 8,873,859 15,836,445 3,267,485 3,166,600 1,133,029 11,243

1,479,763 1,228 148,429 5,800 3,960 1,108,142

204,727 468,976 32,974 994,034 1,402 63,160 3,240

28,680 89,430

522,142 3,250 181,800 25,000 84,350

26,612

26,840 (508,636) 280 111,909 (132,633)

73,242 600 790 6,493,543

6,000 15,035

919,474 1,278,995

1,134 830,582 600 75,993 414,318 1,769,144 340,806 6,658,587 9,141,891 438,975 19,000 3,200 69,247,918

1,308,988 2,870,154

39,800 -

600

933,115

228,481

88,251,564

5,216 122,500

520 1,752,045 3,253

1,607,236 475,371

12,953,130 988,927 11,398

79,200 9,683

6,000

900

186,279 3,501,105 1,928,284 2,829,702

2,000 444,661 5,253,929 660,813

22,500 5,712

18,832

16,185,155 1,004 3,353,392 4,238,994 4,832 49,812 305,285 4,852

1200

556,199 3,600

837,049 507,672 1,570,202

272,697 1,128,348 259,772 1,319,725

2,709,129 101,464 6,894

4,802,784 411,541 571

13,691,835

22,869,587

67,226

783,383 5,712

1,249,336 2,894,492 3,245,679 6,082 656,934 9,349,807 159,431 269,670 111,011 597 6,951 (250) (985) 22,229 535,600 56,682 10,789 1,083,194 7,413,522 13,209 34,350 154,750 6,489,040 11,725 93,072 84,350 1,006 20,738 119,067 119,067 73,242 125,671 1,988,600 65,000 541,161 26,840 5,266,737 27,436,799 5,500 12,784 6,480 4,406,290 5,385,357 4,832 50,946 2,310,017 4,002,084 9,052 75,993 1,058,039 1,931,333 3,341,763 10,577,408 626,524 3,663,058 4,437,533 16,815,749 195,804 195,804 13,686,555 43,293,489 442,735 2,383,642 (62,693) (24,830) 15,100 18,300 38,444,951 232,505,855 99,910 1,898,264 2,045 17,536 211,681 11,385 57,319

OPS BUDGET: Comparative Analysis

Heads

201819

2017-18 Extrapolated

Increas e

% change

ADVERTISEMENT & PUBLICITY TRAVEL

14.09

8.84

5.24

59% 13%

Page 49 of 58

Wt 38 % 28

Typ e A A

10.45

9.23

1.22 23%

% 14 %

REPAIRS(FIXED)

5.15

4.18

0.97

A

RENT

2.22

0.78

1.44

185%

6%

B

SECURITY CONTRACTS

1.19

0.65

0.55

84%

3%

B

POWER OFFICE

1.13

1.12

0.00

0%

3%

B

TRANSPORT DEPT. EXP. POSTAGE & TELEPHONES

0.81

0.73

0.08

11%

2%

B

0.65

0.47

0.18

39%

2%

B

RATES & TAXES MAGMT DEV. & SUGGESTIONS

0.56

1.04

(0.48)

-46%

2%

C

0.17

0.15

0.02

14%

0%

C

LEGAL EXPENSES

0.16

0.09

0.07

71%

0%

C

MEETINGS GENERAL

0.16

0.35

(0.19)

-55%

0%

C

BANK CHARGES PRINTING & STATIONERY

0.15

0.14

0.01

11%

0%

C

0.14

0.14

(0.00)

-1%

0%

C

Grand Total

37.01

27.90

Assumption Area Office Volume Annual Revenue (in crs) @ 18L/Veh Employees

16 3600 0 6480 300

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9.11

Capital requirement plan sheet : RO JAIPUR (WITH AOs) F CAPITAL REQUIREMEN T Jeep 06 Nos (New Requirement) Refrigerator Jaipur,Udaipur,Jo dhpur,Bikaner Projector and screen for Jaipur,Jodhpur,Ud aipur,Bikaner Air Conditioner for Jodhpur,Jaipur,Ud aipur,Bikaner Water Cooler Coffee Vending Machine ( 05 Nos.) Micro Owen TT Table TOTAL

(Amount in Lakhs)

Apr'1 May'1 Jun'1 Jul'1 Aug'1 Sep'1 Oct'1 Dec'1 Jan'1 Feb'1 Mar'1 Nov'18 8 8 8 8 8 8 8 8 9 9 9 20.00 30.00 0.00 0.00 0.00 0.00 0.00

0.00

0.00 0.00 0.00

1.00

New Color printer RO JAIPUR

50.00

2019-20 2020-21 2021-22 2022-23 Total

20.00

1.00

1.00

0.50 0.50

2.00

0.00

1.50

0.00

1.50

0.00

1.00

0.00

0.00

0.25 0.25 0.25 0.25 0.25 0.60

0.00

0.20 0.00 0.00 25.35 30.45 0.75 0.75 0.25 0.00 0.00

0.00

0.00

0.60

0.00 0.00 0.00 0.00

0.20 57.55

2.00

0.35

1.00

20.00

50.00

60.00 200.00

0.00

0.00

1.00

0.00

2.00

0.00

0.00

0.00

1.50

0.00

0.00

0.00

1.00

1.25

ALIMS CAPITAL Apr'1 May'1 Jun'1 Jul'1 Aug'1 Sep'1 Oct'1 Dec'1 Jan'1 Feb'1 Mar'1 REQUIREMEN Nov'18 8 8 8 8 8 8 8 8 9 9 9 T 4 No. Printers (Mult function) 2.50 with xerox, scanner A3 Size

UPS

Sub Total

0.00

1.25 0.00

20.00

0.00 20.00

50.00

0.00

0.60

0.00 60.00

0.20 207.55

(Amount in Lakhs) Sub Total

2.50

2019-20 2020-21 2021-22 2022-23 Total

0.00

0.00

0.00

2.00

2.00

0.35

0.35 Total

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2.50

4.85

Impact of Budget Practices on Profitability:

Ashok Leyland has created an opportunity to grow by restructuring its cost in its budget in year 2013 to 2014 & achieved a greater profitability through this exercise.

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Finding & Analysis As this study based on input provided says that this organization has focused more on profitability thus taken care the budgeting process via Bottom-up approach, the concept of Bottom-up & its applicability is mentioned bellow: The bottom-up approach of budgeting process is more inclusive in characteristics, In the process of bottom-up upper management circulate the general guidelines for budget however lower management cascade & formulate the budget. Each division of organization forms its budget in accordance to the general guidelines. In the end, budget of entire organization is compiled & form the composite budget structure. The bottom-up approach of budgeting is highly inclusive in nature. The employees overall tend to be more committed & inclusive in such kind of budget process. This is why because employees itself participated in budgeting process & feel more related to it.

Hypothesis verification : Null Hypothesis (H0): That budgets are effective means of planning organizational activities. Alternative Hypothesis (H1): Budgets are not effective means of planning organizational activities Explanation : This study supports the null hypothesis as organization has tasted the success of profitability with the help of effective budgeting process. Page 53 of 58

Null Hypothesis (H0): Budget controls and aids management in decision making. Alternative Hypothesis (H1): Budget does not controls and aids management in decision making. Explanation : This study supports the null hypothesis as budgeting process definitely control the performance of the organization & help management in decision making Null Hypothesis (H0): Department heads are not properly educated on the budgeting and budgetary control system. Alternative Hypothesis (H1) That Departmental heads are properly educated on the budgeting and budgetary control system. Explanation : This study supports the alternative hypothesis as organization has adapted bottom-up approach which given right spirit of freedom to departments to prepare their budget & that makes more inclusive & aligned. Thus every department is well educated on this point.

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Future of Ashok Leyland Ashok Leyland Ltd. has been at the top position in the industry for quite some time showing consistent growth and beating their competitors at every step. But, it is also important to consider the what the company holds for the future and they might wish to implement to stay at the top and gain an increasing market share in the industry. The company is currently considering expanding its presence internationally and moving beyond just the Indian market. Also, the company has a clear-cut objective of becoming one the top 10 manufacturers and one of the top 5 bus makers globally. Although the company has been successful in achieving the latter, it still implements various strategies to really become a global presence. That being said, the company wishes to avoid expansion into countries in the Western Hemisphere such as the Unites States of America, Europe and Japan as there exists high competition in these areas. Rather, the company’s main expansion plan includes those countries where there is good potential growth such as Africa, ASEAN and the Middle East. One of the key strategies the company wishes to implement to achieve its expansion plan is to ensure that their competitiveness comes from quality, cost management and customer proximity. The biggest challenge in achieving this goal is believed to be the implementation of technologically improved products in the target markets. This comes as a result of the high cost that is associated with the hybrid solutions and electric vehicles that the company provides. In the Indian context, the company has to find a way to bring these technological solutions to the customers at a feasible price point. (Gopalan, 2016) Also, to realize this goal, the company plans to invest Rs.600 Cr. as capital expenditure to enhance engine and cabin capacity. Also, this investment includes Page 55 of 58

setting up new assembly units in Kenya and the Ivory Coast. These African plants would be rather small with a capacity to produce 200 units a month which would be scalable to 400. The plant in Kenya would be used to cater to the demand for vehicles in East Arica while the plant in Ivory Coast will do the same in West Africa. Also, the company expects the industry to grow by 1015%. (The Economic Times, 2017)

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Conclusion As the research study says that Ashok Leyland has anchored its budgetary part on inclusive way & thus bringing everyone at a common platform to work for the profitability of organization. Though the departments are aligned with the guidelines received from top management. This study also depicts a picture about the provision for future proposition which shows a glimpse of how budgeting itself is working in the direction of business expansions & acquiring new dimensions of growth. As the cut-throat competitions has forced organizations to look forward for more sharpen strategies to sustain in the market, the excellence on departmental level enables them to cope well up with the uncertainty. Thus Budgetary planning & control has certainly given an edge to Ashok Leyland to make strategies on broader proliferation of its business acumen.

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