Introduction to Budget and Budgetary Control

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BUDGETARY CONTROL ON CADBURY INDIA LTD CHAPTER - 1 INTRODUCTION ON CADBURYINDIA LIMITED COMPANY PROFILE 1.1 HISTORY The Cadbury family It was John Cadbury, a young Quaker, who first set things in motion when he opened a shop in Birmingham, UK in 1824. His original focus was the trade of tea and coffee, but he soon spotted a new opportunity in cocoa beverages and laid the foundations for Cadbury's move into chocolate and then confectionery. Cadbury's was a business founded on values and a sense of social responsibility. As a Quakers the Cadbury family believed tea, coffee, cocoa beverages could serve as an alternative to alcohol, seen to be a cause of poverty and deprivation amongst the working classes. More broadly, they were active across other Quaker campaigns for 'justice, equality and social reform, putting an end to poverty and deprivation.' For example, Cadbury were involved in the early anti-slavery movement, calls for better housing and sanitation, and inner city smoke abatement. VIVEK COLLEGE OF COMMERCE Page 1

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Transcript of Introduction to Budget and Budgetary Control

Page 1: Introduction to Budget and Budgetary Control

BUDGETARY CONTROL ON CADBURY INDIA LTD

CHAPTER - 1

INTRODUCTION ON

CADBURYINDIA LIMITED

COMPANY PROFILE

1.1 HISTORY

The Cadbury family It was John Cadbury, a young Quaker, who first set things in motion

when he opened a shop in Birmingham, UK in 1824. His original focus was the trade of tea

and coffee, but he soon spotted a new opportunity in cocoa beverages and laid the

foundations for Cadbury's move into chocolate and then confectionery.

Cadbury's was a business founded on values and a sense of social responsibility. As a

Quakers the Cadbury family believed tea, coffee, cocoa beverages could serve as an

alternative to alcohol, seen to be a cause of poverty and deprivation amongst the working

classes.

More broadly, they were active across other Quaker campaigns for 'justice, equality and

social reform, putting an end to poverty and deprivation.' For example, Cadbury

were involved in the early anti-slavery movement, calls for better housing and sanitation, and

inner city smoke abatement.

Across UK society Quakers were excluded from universities (which were closely tied to the

established church) and therefore entry into the professions.  They were also unwilling to

enter the military due to their pacifist principles, so turned their energies and talents towards

business and social reform.  You could say the legal profession's loss was confectionery's

gain...

 

So starting with cocoa hand-ground with a mortar and pestle in the back room of his shop,

then renting an former malthouse, John Cadbury became a manufacturer of drinking

chocolate and cocoa, laying the foundation of Cadbury's business of creating brands people

love. 

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1.2 INTRODUCTION

Cadbury began its operations in 1948 by importing chocolates and then re-packing them

before distribution in the Indian market. After 59 years of existence, it today has five

company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior),

Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkota

and Chennai). The corporate office is in Mumbai.

We are currently the world’s biggest confectionery company with a number one or number

two position in 20 of the 50 largest confectionery markets across the globe. 

We make, market and sell unique brands which give pleasure to millions of people around the

world every day.  We are recognised as a highly respected company and an employer of

choice with over 50,000 staff worldwide.Currently With origins stretching back over 200

years, today our products - which include brands such as Cadbury, Halls, Trident, Dentyne

and Bubbaloo - are enjoyed in almost every country around the world.  Since then we have

expanded our business throughout the world by a programme of organic and acquisition led

growth..With origins stretching back over 200 years, today our products - which include

brands such as Cadbury, Schweppes, Halls, Trident, Dr Pepper, Snapple, Trebor, Dentyne,

Bubblicious and Bassett - are enjoyed in almost every country around the world. We employ

around60,000people.

Our heritage starts back in 1783 when Jacob Schweppe perfected his process for

manufacturing carbonated mineral water in Geneva, Switzerland. And in 1824 John Cadbury

opened in Birmingham selling cocoa and chocolate.

These two great household names merged in 1969 to form Cadbury Schweppes plc. Since

then we have expanded our business throughout the world by a programme of organic and

acquisition led growth. Concentrating on our core brands in beverages and confectionery

since the 1980s, we have strengthened our portfolio through almost fifty acquisitions,

including brand icons such as Mott's, Canada Dry, Halls, Trident, Dentyne, Bubblicious,

Trebor, Bassett, Dr Pepper, 7 Up and Snapple.

Registered Office

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Cadbury India Ltd, Cadbury House

19, B Desai Road

Mumbai 400 026

Maharashtra-400026

India

SOME KEY POINTS

We make and sell three kinds of confectionery: chocolate, gum and candy

We operate in over 60 countries

John Cadbury opened for business in 1824 - making us nearly 200 years young

We work with around 35,000 direct and indirect suppliers

Every day millions of people around he world enjoy our brands.

PURPOSE

Cadbury core purpose is "Working together to create brands people love". The core purpose

captures the spirit of what we are trying to achieve as a business.We collaborate and work as

teams to convert product, our purpose continues to be to work together to create brands

people love. You are sure to be fans of at least some of our famous brands products into

brands.

VISSION

To align with our core purpose, Cadbury India has defined its Vision as "Life Full Of

Cadbury and Cadbury Full of Life".

Cadbury India will participate in many spaces of consumer life through a cache of product

offerings - be it chocolates or snacks or gum.

We believe that work and fun can co-exist beautifully. Therefore at Cadbury India, it's all

about work hard, play harder!. We bring moments of delight to our consumers everyday and

every time. Therefore, we strongly believe that the people who create these products should

also have fun while doing so.

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VALUES

Performance

Cadbury is passionate about winning. They compete in a tough but fair way. They are

ambitious, hardworking and make the most of our abilities. They are prepared to take risks

and act with speed.

Quality

Cadbury put quality and safety at the heart of all of their activities - their products, their

people, their partnerships and their performance.

Respect

Cadbury genuinely care for their business and their colleagues. Cadbury listen, understand

and respond. they are open, friendly and welcoming. They embrace new ideas and diverse

customs and cultures.

Integrity

Cadbury always strive to do the right thing. Honesty, openness and being straightforward

characterise the way we do business. They have clear principles and do what they say they

will do.

Responsibility

Cadbury take accountability for our social, economic and environmental impact. In this way

Cadbury aim to make their business, their partners and their communities better for the

future.

Cadburys Business Principles are there code of conduct and also take account of global and

local cultural and legal standards. They confirm our commitment to the highest standards of

ethics and business conduct. Core purpose and vision section: Core purpose: Our core

purpose is creating brands people love. The core purpose captures the spirit of what we are

trying to achieve as a business.

Cadbury collaborate and work as teams to convert products into brands.

Non-formal school set up by Cadbury for children of migrant workers in Baddi

Thanks to the efforts of the Baddi factory team over 50 children of migrant workers living in

and around our Baddi factory will now have daily access to non-formal education. Cadbury

has set up a non-formal school as part of our commitment to create prosperous, inclusive and

healthy communities.

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This is the first phase of Project SAHYOG an 18 month project which commenced in January

this year in partnership with an NGO RUCHI. The project reaches out to over 400 poor &

marginalized families in Sandholi village near our Baddi factory and apart from education,

the other key interventions will be on village health, sanitation, education & water harvesting.

The project was recently inaugurated by Mr B R Verma, Labour Commissioner cum Chief

Inspectorate of Factories & Directorate of Employment; Himachal Pradesh in the presence of

Mr Sudhir Sharma, Dy Director Industries and senior officials of BBN Industries

Association. The Chief Guest appreciated Cadbury's effort to make a difference in the

community and encouraged the villagers to come forward and support the initiative.

In the coming months the project through a group of 12 SAHYOG CHAMPIONS (colleagues

from the Baddi factory) will undergo an orientation program with the NGO RUCHI and will

subsequently mobilize Baddi colleagues to volunteer their time in the community on aspects

of village health, sanitation and education.

PRIORITIES

We have a clear business plan called our Vision Into Action (VIA).  This aligns the energies

and efforts of our teams behind the brands, markets and projects that will make the most

impact on our revenue, our margin, and our market performance. We organize across three

priorities:

Growth:  Fewer, faster, bigger, better Using our size, focus and sustainable approach

to create brands which are consumer favourites. Building strong partnerships with

retailers, so we grow profitably across chocolate, gum and candy.

Efficiency: Relentless focus on price, cost and efficiency Simplifying our

organization to reduce costs and increase speed and our ability to compete.

Managing our use of financial and natural resources to increase profit margins and

improve our environmental impact

.

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Capability:  Ensure world-class quality Developing world-class skills, processes and

ways of working. Motivating our people and reward winning performance.

They are underpined by our Sustainability Commitments which have been carefully selected

to both improve our business and our impact on the wider.

1.3 SUSTAINABILITY COMMITMENTS

We see corporate social responsibility and sustainability as key to our future success - helping

us create a world in which we can grow and thrive.

We have identified six commitments to ensure we grow in a responsible and sustainable way

for the long-term.

Commitments:

Promoting responsible consumption through thoughtful marketing, product

innovation and better nutritional labeling.

Ensuring ethical and sustainable sourcing including the Cadbury Cocoa Partnership

to support farmers and their communities.

Prioritizing quality and safety

Cutting carbon, packaging and water use as part of our Purple Goes Green campaign.

Nurturing and rewarding colleagues, and embracing diversity.

Investing in communities - our money, our time, our capability.

As well as being the right thing to do, they also create value and competitive advantage,

helping to strengthen our business, build our reputation, and motivate our people.

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1.4 COST & EFFICIENCY

Relentless Focus on Cost and Efficiency

Cadbury recognize that we can be much more profitable by simplifying the way we do things

across all aspects of our business. Because of the way we have organised ourselves in the past

and the number of acquisitions we have made, we are a complex business.  Our total cost

base is higher and our margins are currently below our peer group average.  Our goal of

increasing our underlying operating margins from around 10% in 2007 to mid-teens by end of

2011, has three core elements: A major group-wide cost and efficiency programme across all

aspects of our business - in sales and administration, in the supply chain, in the regions and at

the group centre. We are aiming to reduce the complexity in our business and minimize

duplicated activities; Improving the performance in three key underperforming emerging

markets – Russia, China and Nigeria; and Focusing relentlessly on profitable growth and

where necessary, rationalizing our portfolio. Examples of the ways in which we are

simplifying our business to reduce costs include: Managing our chocolate, candy and gum

categories and biggest brands on a global basis rather than on an individual market or region

basis.

Combining local market and regional head offices, including in the UK where we are co-

locating our central head office team with the BIMA management team in a single office;

Combining or clustering a number of markets into a single commercial organization with

greater scale and lower overall costs such as Canada and the USA; Outsourcing certain

financing, accounting, IT and human resource processes to specialist third party operators;

This will allow us to reduce costs and invest in new state of the art factories to support our

growth agendas.

1.5 BRANDS

Our brands include many global, regional and local favourites. Our three largest brands are

Cadbury in chocolate, Trident in gum and Halls in candy. Other important brands include: in

chocolate, Crème Egg, Flake and Green & Black’s; in gum, Hollywood, Stimorol, Dentyne,

Clorets and Bubbaloo; and in candy, Éclairs and the Natural Confectionery Company.

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Cadbury Dairy Milk:

When Cadbury Dairy Milk chocolate with its deliciously smooth texture and unique creamy

taste, was first introduced in the early 1900s, it made an immediate impact quickly becoming

the market leader. The success story has continued until today when it is still the top selling

chocolate brand in the country. The Cadbury Mega Brand's broad family of products has

an international retail value approaching US $1billion. As an international brand, Cadbury

Dairy Milk carries the same distinctive image all over the world.Cadbury Dairy Milk

emerged as the No. 1 most trusted brand in Mumbai for the 2005 edition of Brand Equity's

Most Trusted Brands survey. During the 1st World War, Cadbury Dairy Milk supported the

war effort. Over 2,000 male employees joined the armed forces and Cadbury sent books,

warm clothes and chocolates to the front.

Cadbury 5star

Chocolate lovers for a quarter of a century have indulged their taste buds with a Cadbury 5

Star. A leading knight in the Cadbury portfolio and the second largest after Cadbury Dairy

Milk with a market share of 14%, Cadbury 5 Star moves from strength to strength every year

by increasing its user base.

Cadbury 5 Star & Cadbury 5 Star Crunchy now aim to continue the upward trend.

This different and delightfully tasty chocolate is well poised to rule the market as an

extremely successful brand. Cadbury 5 Star played an adept cupid for young couples in love

in the 70's. In fact, Cadbury 5 Star was a way of professing undying love for the significant

other.

Cadbury Perk:

A pretty teenager; a long line, and hunger! Rings a bell? That was how Cadbury launched its

new offering; Cadbury Perk in 1996. With its light chocolate and wafer construct, Cadbury

Perk targeted the casual snacking space that was dominated primarily by chips & wafers.

With a catchy jingle and tongue in cheek advertising, this 'anytime, anywhere' snack zoomed

right into the hearts of teenagers.In 2004, with an added dose of 'Real Cadbury Dairy Milk'

and an 'improved wafer', Perk became even more irresistible.

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The product was supported in the market with a new look and a new campaign. The

advertisement spoke of the irresistible aspect of the brand, with 'Baaki sab Bhoola de'

becoming the new mantra for Cadbury Perk. Cadbury Perk advertising has been a launch pad

for Bollywood stars - Preity Zinta, Raageshwari, Gayatri Joshi and Amrita Rao, were all Perk

models before they made it big on cinema screens.

Cadbury Celebrations:

Cadbury Celebrations was aimed at replacing traditional gifting options like Mithai and dry-

fruits during festive seasons. Cadbury Celebrations is available in several assortments: An

assortment of chocolates like 5 Star, Perk, Gems, Dairy Milk and Nutties and rich dry fruits

enrobed in Cadbury dairy milk chocolate in 5 variants, Almond magic, raisin magic, cashew

magic, nut butterscotch and caramels.The super premium Celebrations Rich Dry Fruit

Collection which is a festive offering is an exotic range of chocolate covered dry fruits and

nuts in various flavours and the premium dark chocolate range which is exotic dark chocolate

in luscious flavours.

Cadbury Celebrations has become a popular brand on occasions such as Diwali, Rakhi,

Dussera puja. It is also a major success as a corporate gifting brand. The communication is

based on the emotional route and the tag line says "rishte pakne do" which fits with the brand

purpose of strengthening your relationships with something sweet

The "Rishte Pakne do" jingle was penned by noted writer Gulzar.

Cadbury Temptations

Ever see people hide away their chocolate since they don’t want to share it! If you have, then

its likely to be a bar of Cadbury Temptations! Cadbury Temptations is a range of delicious

premium chocolate in five flavours.Research revealed a niche segment of “ chocoholics”-

those exposed to international chocolates and those who love a variety of chocolates but

possibly find the price of international chocolates too high. Cadbury Temptations is a range

targeted at this segment of discerning chocolate lovers.

The Cadbury Temptations range is available in 5 delicious flavour variants - Roast

Almond Coffee, Honey Apricot, Mint Crunch, Black Forest and Old Jamaica. With its

international quality chocolate Temptations soon became a popular brand for "chocoholics".

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Cadbury Dairy Milk Éclairs

Eclairs was first discovered by a local confectionery firm in London, England in the 1960s.

The firm then became part of Cadbury in 1971 making Cadbury Eclairs the second largest

brand in the company. T

he experience of eating a Cadbury Dairy Milk Eclair is truly unique because of its creamy

caramel exterior and rich Cadbury Dairy Milk chocolate at the center. In 2006 Cadbury Dairy

Milk Eclairs launched a crunchy Eclair with a hard caramel outside and delicious Cadbury

Dairy Milk chocolate inside called Cadbury Dairy Milk Eclairs Crunch.

Gems

The saying "Good things come in small packets" has been proven right many a times and it

couldn't have been truer for the pretty chocolate buttons called Gems. Who can forget the

unique, brightly colored chocolate buttons with crispy shells, encased in a pack that's as

colorful as the product itself? Unrivalled in all these years, Cadbury Gems has captured every

consumer's fantasy for almost 4 decades. Little wonder that Cadbury Gems, the brand that

came into India in 1968 is still going strong. Today, Cadbury Gems has established itself as

one of the leading brands in its segment. With the single-minded purpose to delight every

consumer and help them discover the fun, exciting and adventurous side of life, Cadbury

Gems will continue to be the leading brand in Cadbury India's portfolio. The colourful world

of Cadbury Gems does not include the colour black.

Cadbury Bourn vita

The brand has been an enduring symbol of mental and physical health ever since it was

launched in 1948. It is hardly surprising then, that Bournvita enjoys a major presence in the

Malt Food market. Given its market share of 17%, Cadbury Bournvita reaches across

hundreds of cities, towns and villages through 3,50,000 outlets in India.

In the new millennium, keeping pace with the evolving mindsets of the new age consumers,

Cadbury Bournvita is about arming consumers with Confidence to take on physical and

mental challenges that nobody else can, resulting in one of the most successful advertising

campaigns which is based on 'Real Achievers who have grown up on Bournvita'. The

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Cadbury Bournvita Quiz Contest, which started airing on April 12th 1972, is India's longest

running national school quiz contest. Starting out as a contest held in cities, and then on

radio, the contest currently has been running for over 10 years on satellite television. It has

over 500 episodes to its credit, and today the contest directly reaches more than 11,25,000

students, in 4000 schools across 66 cities and 7 countries - UAE, Kuwait, Qatar, Oman,

Bahrain, Nepal and India.

Halls

Halls accounts for more than 50% of international cough drop sales, andis the leading

sugarconfectionery brand in the world with 2% of the market.Halls is also the clear leader of

the medicated confectionery market with 22%.Halls is sold as a cold relief product and has

licensed medicated status in markets such asthe US, the UK and Canada. In hotter and drier

countries however, Halls is bought

for mouth refreshment.

Halls is marketed in 24 different countries around the world & is offered in over 26 flavours.

Halls produced the largest sweet in the world in 1964. Weighing 76kilos, the sweet was put

on exhibition in New York. Halls accounts for more than 50% of international cough drop

sales.

Eclairs

Eclairs are now one of Cadbury’s top brands and is sold across five continents and in more

than 23 countries.Cadbury Eclairs take you on a delicious journey through a layer of pure

caramel to a heart of rich Cadbury’s chocolate.  The two classic ingredients of toffee and

chocolate combine together to create a truly unique experience that has made Cadbury’s

Eclairs the number one Éclair in the world.

Dentyne

Dentyne was first introduced in 1899 by Frankling V Canning (the manager of a drug store in

New York) and was the the first pinkish-colored gum available in a slab format.  Dentyne’s

name is a combination of “dental” and “hygiene” as it was the first gum promoted as an aid to

oral hygiene.

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Dentyne was first advertised in 1956 and for over 40 years was positioned as the gum that

“brushes your breath” clean with a refreshingly tingle of cinnamon.  During those 40 years,

over 25 successful TV advertising campaigns took place, cementing Dentyne as a market

leader in the USA

1.6 AWARDS

Asian Marketing Effectiveness Awards 08

Asian Marketing Effectiveness Awards 2008 for Bournvita Folk/Fusion campaign - GOLD

award for the "Best Insights and Strategic Thinking" and SILVER award for the 'Most

Effective Use of Advertising'.

The Asian Marketing Effectiveness Awards are the region's most prestigious awards that

celebrate resourceful Asian marketing. They are designed to set the standard for effective

marketing within the region, and aim to uncover the campaigns that show results through

innovative spirit and combining creativity with effectiveness to build world class brands.

Cadbury India ranked 7th Great Place to Work in India No. 1 FMCG Company

Cadbury India has been ranked as the 7th Great Place to Work and the No. 1 FMCG company

in India in 2008, by the Great Place to Work Institute.

This study, in its fifth year in India , has a presence in 30 countries and is the oldest, most

comprehensive and respected workplace study worldwide. Over two hundred companies

throughout India participated in the survey, which measured the degree of satisfaction of

employees with their place of work and picked out the best working environments. This is the

fourth time we have featured amongst the Great Places to Work in India . We were ranked

10th in 2003, and were among the top 25 in 2004 and 2005.

Great Place to Work 2007

'Cadbury India' has been awarded the "Bronze Award for Excellence in People Management"

in the 'Great Place to Work 2007' survey conducted by Grow Talent Company Limited and

Businessworld. The award recognizes Cadbury India as a national leader in the area of

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Human Resource Management.

Business World along with Grow Talent has been carrying out the 'Great Place to Work'

survey for the past 4 years. This award is based on the ranks received in top 25 list of the

Great Place to Work India studies conducted in the last four years.

ABBY Award wins for India.

The prestigious ABBY awards, held in March, recognise creative excellence in the Indian

Advertising Industry. The Ulta Perk campaign won four Silver Awards in total and the

Cadbury Dairy Milk Campaign, Miss Palampur, also won a Silver Award. This year Cadbury

also sponsored the new 'Young ABBY' Award.

Bournvita won the Emmvie Gold for the Best Media Innovation - TV.

Cadbury won the Emmvie Gold for the Best Media Innovation - TV, for brand Bournvita, for

the entry Physical symbol of Confidence.

Cadbury Dairy Milk & Bournvita crowned as Consumer Superbrands

Cadbury Dairy Milk & Bournvita have done it again. For the

second time running, Cadbury Dairy Milk & Bournvita have been declared a `Consumer

Superbrand' for 2006-7 by Superbrands India.

Cadbury- Ranked among India's most respected companies

Cadbury India has been ranked 5th in the FMCG sector, in a survey on India's most respected

companies by sector conducted by Business World magazine in 2007.

Cadbury wins the Effies 2006

Pappu does it again!

At the recent Effie 2006 awards organized by The Advertising Club of Mumbai, our 'Pappu

Pass Ho Gaya' advertising campaign bagged two more awards - Gold in the Consumer

Products category and Silver in the Integrated advertising campaign category.

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Cadbury India roars at Cannes

Cadbury India received a bronze award at the Cannes Lions International Advertising

Festival for partnering with a mobile phone operator in 2005 to provide exam results via SMS

to school children.

Cadbury India is a Great Place to Work

The 'Great Place to Work' Institute study listed Cadbury India as a Great Place to work in

2005 for the third time in a row. Incidentally, Cadbury was in the Top 25 in 2003, 2004 and

2005 too.

Reader's Digest Award recognizes Bournvita

Bournvita won the 'Reader's Digest Trusted Brands' Gold Award for the vitamin health

supplement category in Indian in 2006. The merit was based on 7000 responses from

questionnaires and telephone interviews across Asia.

Suraksha Puraskar Award – 2005

Cadbury India's Bangalore factory has received the "Suraksha Puraskar" safety award from

the National Safety Council - Karnataka chapter.

National Safety Council (NSC) was set up by the Ministry of Labour, Government of India in

1966, as an autonomous body to generate, develop and sustain a voluntary movement on

Environment, Health and Safety.

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CHAPTER 2

INDUSTRY SCENARIO

Today, we are poised in our leap towards quantum growth. We are a part of the Cadbury

Schweppes Group, world's No.1 Confectionery Company. Yes, like we said we will continue

to spread happiness

2.1 GROWTH OPPORTUNITY

We have a strong presence in faster growing categories and markets. Gum, 29% of our

revenue, is a prime example. We also have the largest (by value) and most broadly spread

emerging markets business of any confectionery group, which in 2007 accounted for

approximately one-third of our confectionery revenue. From 2004 to 2007, the revenue of our

emerging markets confectionery businesses grew on average by 12% p.a. on a like-for-like

basis.

As a total confectionery business we have a natural growth path.  In many

markets we are already leaders in one or two categories and can expand into a second or third

by making the most of our global capabilities.

Between 2004 and 2007, our organic revenue growth averaged 6% a year, a significant

increase on the previous four years, when Cadbury’s confectionery growth averaged less than

3%, and the Adams business, which we brought in 2003, barely grew. We have significantly

accelerated our growth since 2004 by unlocking the potential of the Adams business and by

substantially increasing our investment in innovation, marketing and sales.

Our revenue ambition of between 4% and 6% annual organic growth for the 2008-2011 is

underpinned by:

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The strength of our brands and market positions;

The increased investment we have made in innovation, marketing and sales;

Our greater exposure to faster growing categories (such as gum) and markets (such as

emerging markets); and

Healthy demand for confectionery: the market has grown consistently at around 5% every

year for the last four years.

Our revenue ambition allows for some rationalisation of our portfolio as we redouble our

efforts to grow more profitably.

2.2 COMPETITION

By participant, the market is relatively fragmented, with the five largest confectionery

companies accounting for less than 40% of the market. There are a large number of

companies which participate in the markets on only a regional or local basis. We compete

against multinational, regional and national companies.

Our chocolate share is built on regional strengths as is the case for the other top five

chocolate groups. We command strong positions in the UK, Ireland, Australia, New Zealand,

South Africa and India.

Our number two position in gum is built on strong market shares throughout the Americas, in

parts of Europe (including France, Spain and Turkey), and in Japan, Thailand and South

Africa.

In candy, we have a number one position. Halls is our largest brand in candy and our position

is supported by other significant regional and local brands.

We have number one and number two confectionery market positions in 20 of the world’s 50

largest confectionery markets by retail sales value. These markets accounted for around three

quarters of our revenue in 2007

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MAJOR KEY PLAYERS

Hindustan Unilever Ltd

ITC (Indian Tabacco Company)

Nestle India

GCMMF (Amul)

Dabur India

Asian Paints India

Britannia Industries

Procter & Gamble Hygenic and health Care

Marico Industries

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CHAPTER 3

SWOT ANALYSIS OF CADBURY

Strength:

Cadbury Schweppes plc is a very profitable organization, generated revenue of more

than £6,508 billion (2005).

It is a global chocolate brand built upon a reputation for fine products and services.

Cadbury Schweppes plc was one of the Fortune Top 100 Companies to Work For in

2005. The company is a respected employer that values its workforce.

The organization has strong ethical values and an ethical mission statement

Weakness:

Cadbury has a reputation for new product development and creativity. However, they

remain vulnerable to the possibility that their innovation may falter over time.

The organization has a strong presence in the United States of America, UK and

India. It is often argued that they need to look for a portfolio of countries, in order to

spread business risk.

Cadbury's recall over 1 million chocolate bars over salmonella fears

The organization is dependant on a main competitive advantage, the retail of coffee.

This could make them slow to diversify into other sectors should the need arise.

The company has no apprehensions of cannibalization of its chocolate brands.

Opportunity:

Cadbury Company is very good at taking advantage of opportunities.

The company has the opportunity to expand its global operations. New markets with

new products which are limited in particular region.

Cadbury has decided to focus on a few of its key brands such as Cadbury Dairy Milk,

Bournvita, Eclairs and Halls to drive growth for the company.

Cadbury India is attempting to increase the declining market for chocolate with

innovation, one of which is its sweet snack, Bytes.

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Brand ambassador Amitabh Bachchan for advertising there new products.

Threats:

Who knows if the market for Cadbury will grow and stay in favour with customers, or

whether another type of beverage or leisure activity will replace coffee in the future?

Health organization have so many barriers for new development

Cadbury’s are exposed to rises in the cost of chocolate and dairy products.

Entry into salted snacks was ruled out so it is important to do new innovation and

marketing research.

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CHAPTER 4

INTRODUCTION BUDGET AND BUDGETORY CONTROL

1.1 INTRODUCTION TO BUDGET AND BUDGETARY CONTROL:

BUDGET:

A budget is a financial and /or quantities a statement prepared prior to a definite period of time,

of the policy to be pursed during that period that for the purpose of attaining a given objective.

A budget is a pre determined statement of management policy during a given period which

provides a standard for comparison with the results actuality achieved.

Advantages of budgets:

A budget helps us in the following ways:

1. It brings about efficiency and improvement in the working of the organization.

2. It is a way of communicating the plans to various units of the organization. By establishing

the divisional, departmental, sectional budgets, exact responsibilities are assigned. It thus

minimizes the possibilities of buck passing if the budget figures are not met.

3. It is a way or motivating managers to achieve the goals set for the units.

4. It serves as a benchmark for controlling on-going operations.

5. It helps in developing a team spirit where participation in budgeting is encouraged.

6. It helps in reducing wastage and losses by revealing them in time for corrective action.

7. It serves as a basis for evaluating the performance of managers.

8. It serves as a means of educating the managers

BUDGETING:

Budgeting is the technique for formulation begets.

Budgets are the individual objectives of a department, whereas budgeting is the act of building

budgets

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BUDGETARY CONTROL:

Budgetary control involves the use of budget and budgetary reports, throughout the period to

co-ordinate, evaluate and control day to day operations in accordance with the goals specified

by the budget.

Budgetary control techniques:

I. Accounting techniques

a. Standard costing

b. Overhead and Sales variance,

c. Marginal costing,

d. Business Forecasting,

e. Zero Base Budgeting

Advantages of budgeting and budgetary control :

There are a number of advantages to budgeting and budgetary control:

1. Compels management to think about the future, which is probably the most important feature

of a budgetary planning and control system. Forces management to look ahead, to set out

d`etailed plans for achieving the targets for each department, operation and (ideally) each

manager, to anticipate and give the organization purpose and direction.

2. Promotes coordination and communication.

3. Clearly defines areas of responsibility. Requires managers of budget centers to be made

responsible for the achievement of budget targets for the operations under their personal control.

4. Provides a basis for performance appraisal (variance analysis). A budget is basically a

yardstick against which actual performance is measured and assessed. Control is provided by

comparisons of actual results against budget plan. Departures from budget can then be

investigated and the reasons for the differences can be divided into controllable and non-

controllable factors.

5. Enables remedial action to be taken as variances emerge.

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6. Motivates employees by participating in the setting of budgets.

7. Improves the allocation of scarce resources.

8. Economizes management time by using the management by exception principle.

Problems in budgeting:

Whilst budgets may be an essential part of any marketing activity they do have a number of

disadvantages, particularly in perception terms.

1. Budgets can be seen as pressure devices imposed by management, thus resulting in:

a. Bad labor relations

b. Inaccurate record-keeping.

2. Departmental conflict arises due to:

a. Disputes over resource allocation

b. Departments blaming each other if targets are not attained.

3. It is difficult to reconcile personal/individual and corporate goals.

a. Waste may arise as managers adopt the view, "we had better spend it or we will lose it". This

is often coupled with "empire building" in order to enhance the prestige of a department

b. Responsibility versus controlling, i.e. some costs are under the influence of more than one

person, e.g. power costs.

c. Managers may overestimate costs so that they will not be blamed in the future should they

overspend.

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Chief executive

Accounts

manager

Budget committee

Production

manager

Sales

manager

Finance

manager

Budget officer

Personnel

manager

R&D

manager

•Production budget •Plant utilization Budget

• Sales budget•Advertisement budget

• Receipts budget

• Payment Budget

Cost budget

Labor budget R & D

Budget

BUDGETARY CONTROL ON CADBURY INDIA LTD

CHAPTER 5

ESSENTAIL OF EFFECTIVE SYSTEM OF BUDGETARY

CONTOL

5.1 There are certain steps which are necessary for the successful implementation of a

budgetary control system. They are as follows:

1. Organization for budgetary control

2. Budget centers

3. Budget officer

4. Budget manual

5. Budget committee

6. Budget period

7. Determination of key factor.

2.Budget centers:

A budget center is that part of the organization for which the budget is prepared. A budget

center may be a department, section of department or any other part of the department

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3.Budget manual:

A budget manual is a document which spells out the duties and also the responsibilities of the

various executives concerned with the budgets. It specifies the relations among various

functionaries.

4.Budget officer:

The chief executive, who is at the top of the organization, appoints some persons as budget

officer. The budget officer empowered to scrutinize the budgets prepared by the various

departmental heads and too many changes in them, if the situation so demands. The actual

performance of different departments is communicated to the budget officer. He determines the

deviations in the budget and takes necessary steps to rectify the deficiencies, if any.

5.Budget committee :

In a small scale concerns, the accountant is made responsible for preparation and

implementation of budget. In large scale concerns a committee is known as a budget

committee is formed. The heads of all important departments are made members of this

committee. The committee is responsible for preparation and execution of budgets. The budget

officer acts as so coordinator of this committee.

6.Budget period:

A budget period is the length of time for which a budget is prepared. The budget period

depends upon a number of factors. It may be different for different industries or even it may be

different in the same industries or business.

7.Determination of key factor:

A factor which influences all other budget is known as key factor or principle factor. There

may be limitations on the quantity of goods concern may sell. In this case sales will be a key

factor and all other budgets will be prepares by keeping in view the amount of the goods the

concerns will be able to sell.

The raw material supply may be limited, so production, sales and cash budgets will be

decided according to raw materials budget. Similarly, plant capacity may be a key factor if the

supply of other factors is easily available.

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5.2 ADVANTAGES OF BUDGETARY CONTROL:

The budgeting control system helps in fixing the goals for the organization as a whole and

concerted efforts are made for its achievements. It enables economies in the enterprise. Some

of the advantages of budgetary control are:

Maximization of profits:

The budgetary control aims at the maximization of profits of the enterprise. To achieve this

aim, a proper planning and coordination of different functions is undertaken.

Co-ordination:

The working of different departments and sectors is properly coordinated. The coordination of

various executives and sub ordinates is necessary to for achieving budgeted targets.

Specific aims:

The plans, policies, and goals are decided by the top management. All efforts are together to

reach the common goal of the organization. Every department is given a target to be achieved.

The efforts are directed towards achieving some specific aims

.

Tool for measuring of performance:

By providing targets to various budgetary control provides a tool for measuring performance.

The budgeted targets are compared to actual reasons and deviations are determined. The

performance of the each department is reported to the top management

.

Economy:

The planning of expenditure will be systematic and there will be economy in spending. The

finance will be put to optimum use.

Determining weakness:

The deviations in budgeted and actual performance will enable the determination of weak

ports. Efforts are concentrated on those aspects where performance is less than the stipulated.

Corrective action:

The management will be able to take corrective measures whenever there is discrepancy in

performance.

Reduce costs:

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In the present day competitive world budgetary control has a significant role to play. Every

business man tries to reduce the cost of production for increasing sales.

Introduction of incentive schemes :

Budgetary control system also enables the introduction of incentive schemes of remuneration.

The comparison of budgeted and actual performance will enable the use of such schemes.

5.3 LIMITATIONS OF BUDGETORY CONTROL:

Uncertain futures:

The budgets are prepared for the future period. Despite best estimates made for the future, the

prediction may not always come true. The future is always uncertain and the situation which is

presumed to prevail in future may change.

Budgetary revisions required:

Budgets are prepared on the assumptions that certain conditions will prevail. Because of future

uncertainties, assumed conditions may not prevail necessitating the re vision of budgetary

targets. The frequent revision of targets will reduce the value of budgets and revisions involve

huge expenditure too.

Problem of co ordination:

The success of budgetary control depends upon the co-ordination among different departments.

The performance of one department affects the results of other departments.

Conflict among different departments:

Budgetary control may lead to conflicts among functional departments. Every departmental

head worries his department goals without thinking of business goal. Every department tries to

get maximum allocation of funds and this raises a conflict among different departments.

5.4 TYPES OF BUDGETS:

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BASED ON TIME :

Long term budgets:

The budgets are prepared to depict long term planning of the business. The period of long term

budgets varies between 5 to 10 years. Long term budgets are prepared for some sector of the

forms concern such as capital expenditure, research and development, long term finance, etc.

Short term budgets:

These budgets are generally one or two years are in the form of monitory terms. The

consumers’ goods industries like sugar, cotton, textile, etc. use short term budgets.

Current budgets:

The periods of current budget is generally of months and weeks. These budgets related to the

current activities of the business.

BASED ON FUNCTION:

Operating budgets:

These budgets are related to the different activities or operations of a firm. The no. of such

budgets depends upon the size and nature of business. The commonly used operating budgets

are:

1. Sales budget

2. Production budget

3. Production cost budget

4. Purchase budget

5. Raw material budget

6. Labor budget

7 plant utilization budget

8. Manufacturing expenses or workers over head budget

9. Administrative and selling expenses budget

Financial budget:

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Financial budgets are concerned with cash receipts and disbursements, working capital, capital

expenditure, financial position and results of business operations. The commonly used

financial budgets are:

1. Cash budgets

2. Working capital budget

3. Capital expenditure budget

4. Income statement budget

5. Statement of retained earnings

6. Budgeted balance sheet or position statement budget

BUDGET TYPES

1. Sales budget: The sales budget is an estimate of future sales, often broken down into

both units and dollars. It is used to create company sales goals.

2. Production budget: Product oriented companies create a production budget which

estimates the number of units that must be manufactured to meet the sales goals. The

production budget also estimates the various costs involved with manufacturing those

units, including labor and material.

3. Cash Flow/Cash budget: The cash flow budget is a prediction of future cash receipts

and expenditures for a particular time period. It usually covers a period in the short

term future. The cash flow budget helps the business determine when income will be

sufficient to cover expenses and when the company will need to seek outside

financing.

4. Marketing budget: The marketing budget is an estimate of the funds needed for

promotion, advertising, and public relations in order to market the product or service.

5. Project budget: The project budget is a prediction of the costs associated with a

particular company project. These costs include labor, materials, and other related

expenses. The project budget is often broken down into specific tasks, with task

budgets assigned to each.

6. Revenue budget: The Revenue Budget consists of revenue receipts of government

and the expenditure met from these revenues. Tax revenues are made up of taxes and

other duties that the government levies.

7. Expenditure budget: A budget type which include of spending data items.

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BASED ON THE FLEXBILITY:

1. Fixed Budget:

Fixed budgets are prepared for a given level of activity,; the budget is prepared before the

beginning of financial year. The changes in expenditure arising out of the anticipated changes

will not be adjusted in the budget.

2.Flexible budget:

A flexible budget consists of a series of budgets for different level of activities. Therefore,

varies with the level of activity attained. A flexible budget is prepared after taking into

consideration unforeseen changes in the conditions of the business. A flexible budget is

defined as a budget which by recognizing the difference between fixed, semi fixed and variable

cost is designed to change in relation to the level of activity.

3.Master budget:

Various functional budgets are integrated info master budgets. The budget is prepared by the

ultimate integration of separate functional budgets.

Definition:

The master budget is the summary budget incorporating its functional budgets-----------ICMA.

Master budget is prepared by the budget officer and it remains with the top level management.

This budget is used to co ordinate the activities of various functional departments and also to

help as control device.

The various steps involved in the preparation of this budget is the preparation of the budget

include the construction of sales budget, production budget, cost of production budget, cash

budget and the projected income statement and the balance sheet.

4.Zero based budgets:

Before preparing a budget, a base is determined from which the budget process begin. Quite

often current year’s budget is taken as the base or the starting point for preparing the next

year’s budget. The figures in the base are changed as per the plan for the next year. This

approach of preparing a budget is called incremental budgeting since the budget process is

concerned mainly with the increase or changes in operations that are likely to occur during the

budget period. For example, sales of the current year’s budget may be taken as the base and

next year’s budget for sales will be current year’s budget may be taken as the base and next

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year’s budget for sales will be current year’s sales plus allowance for price increases and

expected changes in sales volumes. The main drawback of this conventional approach is that it

perpetuates the past inefficiencies.

Zero bases budgeting (ZBB) is an alternative to conventional or incremental budgeting.

ZBB was introduced at Texas Instruments in USA in 1960 by Peter Phyrr, who is known as the

father of ZBB. It is a managerial tool and is steadily gaining acceptance in the business

community. ZBB not based on incremental approach and previous year’s figures are not taken

as the base, for preparing next year’s budget. Instead, the budget figures are developed with

zero as the base, which means that a budget will be prepared as if it is being prepared for a new

company for the first time.

Advantages of zero based budgets:

In ZBB all activities included in the budget are justified on cost benefit consideration

which promotes more effective allocation of resources.

ZBB discards the attitude of accepting the current position in favour of an attitude of

questioning and challenging each item of budget.

It is an educational process and can promote a management team of talented and skilful

people who tend to promptly respond to changes in the business environments.

It facilitates identification of inefficient and unnecessary activities and avoid wasteful

expenditure.

Cost behavior patterns are more closely examined.

Disadvantages of zero based budgets:

ZBB involves high cost of preparing budgets every year.

It also requires high volume of paper work.

In ZBB there is danger of emphasising short-term gains at the expense of long-term

ones.

It has a tendency to regard any activity not foreseen and sanctioned in the most recent

ZBB as illegitimate.

CHAPTER 6

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BUDGET PREPARATION

BUDGET PREPARATION:

The company prepares its master budget along with budgets for major important

functions like sales, production, cash, labor, etc. the budget is prepared by Budget Control and

Cost Accounts (BCCA) department in consultation with the chief executive, departmental

heads. After the initial budget preparation, it is approved by budget committee and finally, it is

sent for the approval of Board of Directors at its head office at Mumbai. Normally the

standards of last year are used as the basis for budget preparation with suitable adjustment.

For example, rates of materials are adjusted according to the prevailing rates in the

market. Similarly adjustment is made in labor cost depending on the budget period. Dearness is

paid on the basis of All India cost of Living Index. Overheads are changed on percentage basis.

When budgets are prepared and approved, these are communicated to respective heads of

departments/ sections for implementation

COMPARISON WITH ACTUAL PERFORMANCE OF PREVIOUS YEAR:

It will be more meaningful, if the comparison of the current year actual is made with the

previous year actual, in addition to the comparison of actual performance of the current year

with the budgets. For this purpose, the profit and loss account and balance sheet as per the

companies act, 1956 can be made use of. On the similar lines, reasons for variance are submitted

to the management for taking appropriate actions.

PREPARTION OF CASH BUDGET:

A cash budget is an estimate of cash receipts and disbursements during a future period of time. It

precedes various other budgets like material budgets research and development budget.

Definition:

“The cash budget is an analysis of flow of cash in a business over a future, shot or long period of

time. It is a forecast of expected cash intake and outlay”

The cash receipts from various sources are anticipated. The estimated cash collections for sales,

debts, bills receivables, interest, dividends and other incomes and sale of investments and other

assets will be taking into account. The amount to be spent on purchase of materials, payment to

creditors and meeting various other revenue and capital expenditure needs should be considered.

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Cash forecasts will include all possible sources from which cash will be received and the

channels in which payments are to be made so that a consolidated cash position is determined.

The cash budget should be coordinated with other activities of the business. The functional

budget may be adjusted according to the cash budget. The available funds should be fruitfully

used and the concern should not suffer for want of funds.

Objectives of setting budgets :

a. It is a plan of action and serves as a declaration of policies.

b. It defines the objectives for all the executives.

c. It provides a means of co-ordination and communication.

d. Budgets facilitate centralized control with delegated authority and responsibility.

e. It provides comparison of actual performance with budgets

f. Only the exceptions are reported to the management so that corrective action can be taken in

order to achieve the objectives laid down by the management

CHAPTER 7

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FINANCIAL ANALYSIS OF CADBURY INDIA LTD

1.1 BALANCE SHEET OF CADBURY INDIA LTD

Particulars Dec-11

Share Capital 31.07

Reserves Total 991.12

Total Shareholders Funds 1,022.19

Secured Loans 0.00

Unsecured Loans 7.23

Total Debt 7.23

Total Liabilities 1,029.42

SOURCES OF FUNDS:

 

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APPLICATION OF FUNDS :

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Gross Block 964.44

Less : Accumulated Depreciation 455.13

Less:Impairment of Assets 3.41

Net Block 505.90

Lease Adjustment 0.00

Capital Work in Progress 245.64

Investments 39.03

Current Assets, Loans & Advances  

Inventories 427.04

Sundry Debtors 58.61

Cash and Bank 489.37

Loans and Advances 79.22

Total Current Assets 1,054.24

Less : Current Liabilities and Provisions  

Current Liabilities 769.09

Provisions 65.21

Total Current Liabilities 834.30

Net Current Assets 219.94

Miscellaneous Expenses not written off 0.00

Deferred Tax Assets 40.35

Deferred Tax Liability 21.44

Net Deferred Tax 18.91

Total Assets 1,029.42

Contingent Liabilities 176.04

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1.2 CASH FLOW:

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Particulars Dec-11

Cash and Cash Equivalents at Begining

of the year410.56

Net Cash from Operating Activities 271.06

Net Cash Used In Investing Activities -179.53

Net Cash Used In Financing Activities -12.72

Net Inc/(Dec) In Cash And Cash 78.81

Cash And Cash Equivalents At End Of

The Year489.37

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CHAPTER 8

CONCLUSION

To maintain organizational integrity, senior-level managers need to be careful to provide

realistic budget directives.  Lower-level managers need to be truthful in reporting "bad news"

relative to performance against a budget, even if they find fault with the budget guidelines. 

The formal budgeting system has the following major benefits.

 1. Budgeting due to its formal time table or schedule compels managers to think ahead apart

from taking care of their current activities.

 2. Budgeting, due to its approval and authorization  by the superiors, provides definite

expectations that are the best framework for judging subsequent performance.

 3. Budgeting helps in coordinating the various departments of the organization. The budget

harmonizes the goals (objectives) of the individual departments into the organization wide

goals (objectives).

 

Cadbury Ltd. is one of the leading comapny,. Cadbury Ltd has a huge capacity to produce

chocolates when compared to other ompanies such as Dabur Expenditure relating to the raw

materials is showing the faster growth in a company and along with they are also going for

more borrowings from outside then what they have expected.

Apart from this company is also possessing huge investments and returns on it when compared

to all other companies (as per the study).

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CHAPTER 9

BIBILOGRAPHY

Financial Management-Arvind.A.Dhond

www.cadburyindia.com

www.indianfoline.com

http://www.allbusiness.com/government/3568664-1.html

http://www.fao.org/docrep/w4343e/w4343e05.htm

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