SUMMER TRAINING PROJECT REPORT

ON

ANALYSIS OF BUDGETARY CONTROL

RELIANCE INDUSTRIES LIMITED

(MULTINATIONAL CONGLOMERATE COMPANY)
OF

BACHELOR OF BUSINESS ADMINISTRATION

CHANDIGARH UNIVERSITY, MOHALI

SUPERVISION BY SUBMITTED
BY
 VINEET
KUMAR ASST. PROFESSOR
18BBA1262 PRAVEEN SIR
BBA 5 th SEMESTER

DECLARATION

I the undersigned solemnly declare that the report of the project work entitled

Summer Training Project Report, is based my own work carried out during the

course of my study under the supervision of Asst. Professor Praveen Sir

I assert that the statements made and conclusions drawn are an outcome of the

project work. I further declare that to the best of my knowledge and belief that the

project report does not contain any part of any work which has been submitted for

the award of any other degree/diploma/certificate in this University or any other

University.

_________VINEET KUMAR__________

(Signature of the Candidate)

Vineet Kumar

18BBA1262
 CERTIFICATE

This to certify that the report of the project submitted is the outcome of the project

work entitled Analysis of Budgetary Control carried out by Vineet Kumar bearing

18BBA1262 & Carried by under my guidance and supervision for the award of

Degree in Bachelor of Business Administration of Chandigarh University

To the best of my knowledge the report

I) Embodies the work of the candidate him/herself,

ii) Has duly been completed,

iii) Fulfils the requirement of the ordinance relating to the BBA degree of the

University and

iv) Is up to the desired standard for the purpose of which is submitted.

_______________________
 (Signature of the Supervisor)

Praveen Sir

Asst. Professor

University School of Business (BBA)

Chandigarh University

ABSTRACT

The study is based on the references, Data and Knowledge in this study we are

going to see the problem regarding the budget system in the organization. We are

primarily focus on budget system of organization then our main focus will be the

BUDGETARY CONTROL. According to “Brown and Howard” Budgetary

control is a system of controlling costs which includes the preparation of budgets,

coordinating the departments and establishing responsibilities, comparing actual

performance with the budgeted and acting upon results to achieve maximum

profitability. So basically, we are going to see how an organization prepare their

budget and we are going to see how company spend their income and expenditure

and then we are going to compare that with our actual report of the company
because every company has a budget and in every time someone has to check their

budget if any discrepancy found so that has to be resolved after that we are going

to compare the actual performance of the organization with standard performance

that is previous so this will help us to find out the how much growth can company

achieve in next 5 year.

INTRODUCTION

“Budgetary Control” is a procedure or a systematic control of organization

operation which follow some standard and target regarding income and

expenditure in which manager of budget continuous monitor the performance

against them.

“Brown and Howard” is a system of controlling costs which includes the

preparation of budgets, coordinating the departments and establishing

responsibilities, comparing actual performance with the budgeted and acting upon

results to achieve maximum profitability

Budget is a microeconomic concept which shows us the purchased of goods or

exchanged with one another or we can say that budget is a estimation of revenue

and expenses over a specified future period of time or re valued on a periodic basis

and budgetary control is a process by which budget are made for a specified period

of time and compared with actual performance of the organization for finding out

any variances and also we can say that budgetary control is a process through

which managers set financial goal of the organization and adjust the performance

by comparing the actual performance with the budget and adjust the performance

according to the need of the organization.

OBJECTIVE OF THE RESEARCH

The main objective for this research was to find out how budgetary system works

and performs in all sectors mainly focusing on Reliance Industries.

Budget is one of the most powerful tools that organization have to estimate about

the revenue and expenses budgetary control involve study the different financial

statements and evaluate them and control day to day expenses in the organization.

So, the reason is that why we are studying budgetary control.

Objective of the study

1. To study the existing budgetary controls method & practices at Reliance

Industries Ltd.

2. To compare the budgeted figures with actual figures and compare financial

statements for different financial years.

3. To forecast the future plan to avoid losses but more positively to maximize

the profit of Reliance Industries.

4. To study how to analyze different budgets statements of worlds biggest

industries and multinational companies

5. To study types of Budget that companies used

SIGNIFICANCE OF THE STUDY

Budgetary control is the best techniques for the management, controlling, and for

finance also in every department budget are made with estimated data. Or we can

say that to make budget and control the business budgetary control is the key to

make budget and controlling

So, after knowing this that we make budget with the help of budgetary control so it

says that budgetary control is important tool of management.

Budgetary control also help organization in forecasting so this is one the technique

that is used in budgetary control. We do forecast of financial performance and we

calculate the best estimation for future

Budgeting also help management is reducing any wastage so it improves the

efficiency of the organization.

Budgetary control also help organization in maximization profit of the

management

After knowing that budgetary control is the most important tool of management

and every department need budgetary control tool so that they can work effectively

and efficiency so in future budgetary control is going to be the important tool and

every new organization is going to use this tool to enhance their profit and

performance by comparing their actual performance with the standard one.

COMPANY PROFILE

Reliance Industries Limited (RIL) is an Indian multinational conglomerate

company headquartered in Mumbai, Maharashtra, India. Reliance owns businesses

across India engaged in energy, petrochemicals, textiles, natural resources, retail,

and telecommunications. Reliance is one of the most profitable companies in India,

the largest publicly traded company in India by market capitalization, and the

largest company in India as measured by revenue after recently surpassing the

government-controlled Corporation. On 22 June 2020, Reliance Industries became

the first Indian company to exceed US$150 billion in market capitalization after its

market capitalization hit ₹11,43,667 crore on the BSE. The company is ranked 96th

on the Fortune Global 500 list of the world's biggest corporations as of 2020.It is

ranked 8th among the Top 250 Global Energy Companies by Platts as of 2016.

Reliance continues to be India's largest exporter, accounting for 8% of India's total

merchandise exports with a value of ₹1,47,755 crore and access to markets in 108

countries. Reliance is responsible for almost 5% of the government of India's total

revenues from customs and excise duty. It is also the highest income tax payer in

the private sector in India. n 2001, Reliance Industries Ltd. and Reliance Petroleum

Ltd. became India's two largest companies in terms of all major financial

parameters. The number of shares of RIL are approx. 310 crores (3.1 billion). The

promoter group, the Ambani family, holds approx. 46.32% of the total shares

whereas the remaining 53.68% shares are held by public shareholders, including
FII and corporate bodies. Life is the largest non-promoter investor in the company,

with 7.98% shareholding

The company was co-founded by Dhirubhai Ambani and Champaklal Damani in

1960's as Reliance Commercial Corporation. In 1965, the partnership ended and

Dhirubhai continued the polyester business of the firm in 1966, Reliance Textiles

Engineers Pvt. Ltd. was incorporated in Maharashtra. It established a synthetic

fabric mill in the same year at Naroda in Gujarat. On 8 May 1973, it became

Reliance Industries Limited. In 1975, the company expanded its business into

textiles, with "Vimal" becoming its major brand in later years. The company held

its Initial public offering (IPO) in 1977.The issue was over-subscribed by seven

times. In 1979, a textiles company Sidhpur Mills was amalgamated with the

company. In 1980, the company expanded its polyester yarn business by setting up

a Polyester Filament Yarn Plant in Patalganga, Raigad, Maharashtra with financial

and technical collaboration with E. I. du Pont de Nemours & Co.U.S.

INDUSTRY PROFILE
Reliance Industry Ltd. Founded in 1965 by industrialist Dhirubhai Ambani it is

conglomerate and it is a multi-industry company and Reliance is a combination of

the multi business entities operating in entirely different under one corporate group

we can say that Reliance is a parent company and all other are subsidiaries of

reliance industry

Reliance Retail

Reliance Jio

Reliance Trends

Reliance Digital

Reliance Fresh

Reliance Jio Mart

Reliance Telecomm

Reliance Retail Ventures Ltd (RRVL), subsidiary of Reliance Industries Ltd will

acquire the retail and wholesale business and the logistics and warehousing

business from the Future Group as going concerns on a slump sale basis for

lumpsum aggregate consideration of INR 24,713 crore," the company said in a

statement
Reliance Retail will now have access to close to 1,800 stores across Future Group's

Big Bazaar, FBB, Easy day, Central, Food hall formats, which are spread in over

420 cities in India

Reliance Industrial Infrastructure Limited, a Reliance Group Company, is mainly

engaged in the business of setting up operating industrial infrastructure. Its main

activities are providing

● services of transportation of petroleum products and raw water through its

pipelines,

● construction machinery on hire and

● other infrastructure support services. The Company has its operations mainly

in the Mumbai and the Rasayani regions of Maharashtra, Surat, and

Jamnagar belts of Gujarat.

OBJECTIVE OF BUDGETARY CONTROL

An effective budgeting system plays a crucial role in the success of a business

organization.

The budgeting system has the following objectives, which are of paramount

importance in the overall efficiency and effectiveness of the business organization.

These objectives are discussed below

● Planning

Planning is necessary for regularly doing any work. A well- prepared plan helps

the organization to use the scarce resources efficiently and thus achieving the

predetermined targets becomes easy.

A budget is always prepared for the future period and it lays down targets

regarding various aspects like purchase, production, sales, manpower planning, etc.

This automatically facilitates planning.

 ● Coordination - For achieving the predetermined objectives, apart from

planning, coordinated efforts are required. Budgeting facilitates coordination

in the sense that budgets cannot be developed in isolation.

For example, while developing the production budget, the production manager will

have to consult the sales manager for a sales forecast and purchase manager for the

availability of the raw material.

● Control

Planning is looking ahead while controlling is looking back.

The preparation of budgets involves detailed planning about various activities like

purchase, sales, production, and other functions like marketing, sales promotion,

manpower planning. But planning alone is not sufficient.

There should be a proper system of control which will ensure that the work is

progressing as per the plan.

Budgets provide the basis for such controlling in the sense that the actual

performance can be compared with the budgeted performance.

TYPES OF BUDGETARY CONTROL TECHNIQUES

● Financial Budgets. - Such budgets detail where the organization expects to

get its cash for the coming period and how it plans to spend it. Usual sources

of cash include sales revenue, the sales of assets, the issuance of stock, and

loans.

● Operating Budget - This type of budget is an expression of the organization’s

planned operations for a particular period.

● Non – Monetary Budgets - Budgets of this type are expressed in

non-financial sales or revenues and expenses, i.e., profit. If the anticipated

profit figure is too small steps may be needed to increase the sales budget or

cut the expense budget.

STEPS FOR BUDGETARY CONTROL

Budgetary control has the following stages.

 ● Developing Budgets - The first stage in budgetary control is developing

various budgets. It will be necessary to identify the budget centres in the

organization and budgets will have to develop for each one of them.

Thus, budgets are developed for functions like purchase, sale, production,

manpower planning as well as for cash, capital expenditure, machine hours, labour

hours and so on.

● Recording Actual Performance - There should be a proper system of

recording the actual performance achieved. This will facilitate the

comparison between the budget and the actual. An efficient accounting and

cost accounting system will help to record the actual performance

effectively.

● Comparison of Budgeted and actual performance - One of the most

important aspects of budgetary control is the comparison between the

budgeted and the actual performance. The objective of such a comparison is

to find out the deviation between the two and provide the base for taking

corrective action.
 ● Corrective Action - Taking appropriate corrective action based on the

comparison between the budgeted and actual results is the essence of

budgeting. A budget is always prepared for the future and hence there may

be a variation between the budgeted results and actual results. There is a

need for investigation of the same and take appropriate action so that the

deviations will not repeat in the future. Responsibilities can be fixed on

proper persons so that they can be held responsible for any such deviations.

INTRODUCTION

A literature review is a comprehensive summary of previous research on a

topic. The literature review surveys scholarly articles, books, and other

sources relevant to a particular area of research.

PURPOSE OF THE STUDY

In spite of the widespread use of the budget for control the organization (Reliance)

activities relatively little know about how budget influence behavior furthermore

the interaction of budgets with other means of influencing behavior human

behavior has remained largely unexplored. This research is based or we gone a

explore more about budget and budgetary control the relation between them we are

going to analyzed the data of the organization to know that how manager is

working for organization and how the control their budget and also we are going

analyze the data for the organization to improve and enhance their performance by

use of budgetary control or the use of budget the information and data the we have

collected from the organization or from the internet so the whole study on

budgetary control is going to base on the secondary data and also the effects of

budget on organization we going to see

● REVIEW OF LITERATURE OF BUDGETARY CONTROL

Budgetary control is the one of best technique of controlling, management

and finance  in which every department's budget is made with estimated data. After

this, manager compares the estimated data with original data and fix the

responsibility of employee if variance will not be favorable. And in every year

government give new policy in the market the start new budget for every one new

policy’s new prices everything starts changing after in each financial year the new
budget will show so that why it is important to study about budgetary control and

budget also

So basically, the previous study on budgetary control many people did the study on

budgetary control and their reviews as follows –

● Budgetary control on organization structure (WLLIAM J. BRUNS, JR AND

JOHN H.) the did the research on several organization also the collect the

data from the 25 organization to know the interaction and relationship of one

source they find out that there are important interorganizational differences

in budget related behavior by managers

● Reliance on Accounting Information and Budgetary participation (PETER

BROWNELL AND MARK HIRST) they also did study on the accounting

information and budgetary participation of reliance industries the main focus

of the study is on journal has addressed the question on the whether evaluate

styles of managers which is vary on based on accounting-based performance

assessments the conclusion of the study support the hypothesis that

compatible combination of participation and budget emphasis

Also, some student of Dinabandhu Andrews institute of technology of management

they also did the study on the topic budgetary control and on the reliance industries

ltd so the conclusion of their study is state that budgetary and budgeting plays

important role in the organization for minimizing the cost and maximizing the cost

for the profit

So, based on the previous study on budget and budgetary control we are going to

study the budgetary control to improve their performance and how managers can

effectively use this technique to maximization of profit

● RESEARCH METHODOLOGY

All the information that we have collected on the topic is going to be the secondary

data all the data that we have collected from some articles or some from the annual

report of the organization or some from the internet based on the previous study so

the study is aim to be the budgetary control to improve the performance of the

organization
The study is totally based on quantitative and qualitative data in which we need to

prepare data like budget data’s like any financial data of company and we are going

to analyzing some images we use some graphs also images of budget

The data that we are using it is available on internet that is existing data are

available so that’s what we are going to use for our research paper it is for both

qualitative data and for quantitative data for both technique we use existing data

The tool we are using another that is google scholar in which we found various

data research paper on our topic so that could help in our research to do more and

more clarity in the research paper

FINDING AND ANALYSIS

SALES AND BUDGET FORECAST

FINDINGS

This is the Budget analysis of the Reliance industries from 2015 to 2020 in budget

we know that we have to think about future that how much money we needed to

complete our objective without any loss what budget say about financial statements

of the company we generally analyses each financial report to find out the profit at

last. Budget means we estimate some amount and we know that we need to achieve

our goal in future in this estimated budget

As you can seeing the image above, I used to excel to forecast budget of the

reliance ad the profit at the end

This is the income statement of the reliance industries what I have done in that

income statement I done the forecasting of the budget and net income in future

from 2021 to 2025 how much profit that reliance can make in each financial year.

After that budget forecasting and after that I just take some assumptions to make

this forecaster and more valuable

I take revenue of reliance constant in each year that is only (10%) in each year the

estimated profit or revenue reliance company gain in each financial year that is

10% only.

In budgetary control we know that we have to compare actual performance with

the standard performance that is today performance

We can also compare our budget with the help of this income statement with others

company also

For example – ABC ltd gaining -7.12 percent of sale growth this is not growth this

is decline in sale but we can compare our sale report with the ABC ltd. As we can
see the reliance industries sales decline by -8.98 percent sales decline that means

ABC analyses as the better sales growth then the reliance industries

Control Ratios for budgetary control

Capacity Ratio – Actual Hours Worked / Budgeted Hours

Activity Ratio – Standard hours for actual production / Budgeted Hours * 100

Efficiency Ratio – Standard hour for actual production / Actual Hours worked *

100

Calendar Ratio – Number of actual working days in period / Numbers of working

days in the budgeted period * 100

Efficiency ratio measures the how well company utilizes its resources to make a

profit efficiency ratio measures by the managers of the reliance industries to see

that how well they are operating the business and they meet their business goals or

not.

Also, with the help of this ratio they can measures their performance with the other

company in the market and how well they are in the competition so this will help

us to compare the performance of the company with others.

Investor also use efficiency ratio as same managers do but they use efficiency ratio

to determine that business is good or bad for the investment perspective or they

find out the value of the stocks with the help of efficiency ratio.

BALANCE SHEET ANAYSIS

IMPACT

● He company's current liabilities during FY20 stood at Rs 4,129 billion as

compared to Rs 3,140 billion in FY19, thereby witnessing an increase of

31.5%.

● Long-term debt down at Rs 1,976 billion as compared to Rs 2,075 billion

during FY19, a fall of 4.8%.

● Current assets rose 14% and stood at Rs 2,583 billion, while fixed assets

rose 11% and stood at Rs 6,418 billion in FY20.

● Overall, the total assets and liabilities for FY20 stood at Rs 11,659 billion

as against Rs 10,024 billion during FY19, thereby witnessing a growth of

16%.
 CASH FLOW STATEMENT ANALYSIS

IMPACT

1. RELIANCE IND.'s cash flow from operating activities (CFO) during

FY20 stood at Rs 981 billion, an improvement of 131.6% on a YoY basis.

2. Cash flow from investing activities (CFI) during FY20 stood at Rs -757

billion on a YoY basis.

3. Cash flow from financial activities (CFF) during FY20 stood at Rs -25

billion on a YoY basis.

4. Overall, net cash flows for the company during FY20 stood at Rs 198

billion from the Rs 37 billion net cash flows seen during FY19.
 RATIO ANALYSIS OF RELIANCE

1. Solvency Ratio

● Current Ratio - The company's current ratio deteriorated and

stood at 0.6 during FY20, from 0.7 during FY19. The current

ratio measures the company's ability to pay short-term and

long-term obligations.

● Interest Coverage Ratio - The company's interest coverage ratio

deteriorated and stood at 3.6x during FY20, from 4.3x during

FY19. The interest coverage ratio of a company states how

easily a company can pay its interest expense on outstanding

debt. A higher ratio is preferable.

2. PROFITABLITY RATIO

● Return on Equity - The ROE for the company declined and

down at 8.8% during FY20, from 10.3% during FY20. The

 ROE measures the ability of a firm to generate profits from its

shareholders capital in the company.

● Return On capital Employed - The ROCE for the company

declined and down at 11.6% during FY20, from 12.1% during

FY19. The ROCE measures the ability of a firm to generate

profits from its total capital (shareholder capital plus debt

capital) employed in the company.

● Return on Assets - The ROA of the company declined and

down at 5.3% during FY20, from 5.6% during FY19. The ROA

measures how efficiently the company uses its assets to

generate earnings.
IMPACT

● The trailing twelve-month earnings per share (EPS) of the company

stands at Rs 62.9, a decline from the EPS of Rs 67.2 recorded last year.

● The price to earnings (P/E) ratio, at the current price of Rs 2,175.9, stands

at 33.2 times its trailing twelve months earnings.

● The price to book value ratio at current price levels stands at 1.7 times,

while the price to sales ratio stands at 1.4 times.

● The company's price to cash flow ratio stood at 21.3 times its end-of-year

operating cash flow earnings.

SUGGESTION

● Reliance industry ltd. Has to look at his financing activities as we seen in

cash flow statement of reliance financing activities shows the negative

balance that means cash is not coming into the company and they are paying

debts or dividends to the shareholders.

● Reliance industries ltd also they need to generate more profit from the

capital as we seen ROE decline in FY 20 so keep that ratio high from the

previous one so that they can earn more profit from the shareholder capital.

● Earning per share of Reliance Industries decline if we compare that with last

year and that is a negative sign for the reliance industries and it is a signal to

the Investor that company is in trouble or their share prices also going to be

down.

● ROA of reliance industries is decline in FY20 as compare to FY19 so that

means that they re not using their resources or assets in generating profits for

the company so this is another negative point so they need to use their assets

when it is needed so that they can generate profit

LIMITATIONS

1. CONFIDENTIAL – While making this report we face issue of data

confidential the most of the reports on google scholar about budgetary

 control they are confidential if we need to access that report they ask

for money or some report even not accessible

2. Most of the data or mine report is based on secondary data’s so while

searching for the data some data of reliance industries are not

available on the internet

3. Some information in not relevant while searching for the various data

on financial data in every websites information id different if we

compare with other websites so it’s a problem for us to use that

information is, they relevant or not.

CONCLUSIONS
From the study it can be concluded that to know that budgeting is treated as one of

the better techniques for minimizing cost and maximizing profit. Budgeting plays

an important role in the profit making or smooth running of the company. It

coordinates all the departments like Finance, Marketing, Production in the

company. It makes the decentralization of authority in the organization which helps

organization goal with in stipulated period of time. Budgeting acts as safety for an

organization because it helps to identify business risk and necessary steps can be

taken to avoid the risk.