1. ACKNOWLEDGE
The present practical training report is submitted to PUNJAB
TECHNICAL UNIVERSUTY, JALANDHAR for partial
fulfillment of degree, Bachelor of Business Administrative. First and
foremost we would like to thank our Teachers for their kind guidance in
completing this project successfully. We also thank them for their
unitary attention which they bestowed right from the beginning of this
project.
We would like to thank our Director Mr. Bahauddin Ahmed
who allowed us for the project training though our college to some
well Organization.
We being the student of M.I.M.T convey our sincere thanks to
Mr. B.K. Mishra - General Manager, SECL Kusmunda Area
for providing all the facilities required for making the training
successful.
Next, we would like to thank Mr. Kanti Kumar, Area Finance
Manager, SECL Kusmunda Area for his gratitude of permitting us
to carry on this training which was very helpful in making this project
“COST BUDGETING” a success.
For this Project, we were able to spend one month at SECL .We were
sure that the knowledge and experience gained will go a long way in
ensuring our success as a professional and as an individual.
1

2. VIKAS SONI
2

3. DECLARATION
I Vikas Soni a student of BBA in Modern Institute of
Management and Technology, Korba hereby declare that the
project work titled “COST BUDGETING” with particular reference to
Kusmunda Area is a genuine work done by me under the guidance of
Mr. Kanti Kumar Area Finance Manager, Kusmunda Area,
SECL Bilaspur (C.G.)
This project is record of the original work done by me and the
matter enclosed has not been submitted for the award of any other
degree or diploma in university. All information collected is authentic
to the best of my knowledge, the work done by other if referred has been
properly acknowledged.
Date:-
Place: - Korba VIKAS
SONI
3

4. CERTIFICATE
This is to certify that the project Report entitled “COST
BUDGETING” which is been submitted for the partial fulfillment
Bachelor of Business Administrative (B.B.A.) by Vikas Soni
to M.I.M.T ,Korba (C.G) Affiliated by Punjab Technical
University, Jalandhar is an original work carried out by the
candidate themselves under our supervision and guidance. This work has
not been submitted to any other university/ institute for the award of any
Degree or Diploma to the best of our knowledge.
Date:
Place: Korba
Internal Examiner DIRECTOR
Management dept. M.I.M.T
Korba (C.G)
(M.I.M.T) Korba (C.G)
4

5. CHAPTER - 1
OVERVIEW OF
SECL
5

6. INTRODUCTION
South Eastern Coalfields Limited is the largest coal producing company in the
country. It is one of the eight subsidiaries of Coal India Limited (A Govt. of India
Undertaking) under the Ministry of Coal. The company was adjudged the best PSU in the
country for 97-98 and was awarded Jawaharlal Nehru Memorial National Award for
pollution control and energy conservation in the year 2003, Excellence award in 2004,
2006 and 2008, National safety award from Hon'ble President of India in 2004, 2005 and
2006. SECL has been awarded “Mini Ratna" Status by Govt of India in 2007. In year
2009-10, total coal production by SECL was 108.01 million tonnes from open cast and
underground mines which is highest among all subsidiaries of Coal India Ltd and among
all coal producing companies in India. In the year 2009-10 out of total coal production of
431.27 million tonnes produced by Coal India Ltd, total coal production by SECL was
108.01 million tonnes SECL has been making profits since its inception.
The important Workshop, SECL Korba has been recognized with ISO 9002:1994
License from Quality structure Certification in the area of repair of old machines and
manufacturing of spares. The license is useful from 21/12/2000. The coal deposits of
SECL happen in 5 districts i.e. Bilaspur, Korba, Raigarh, Surguja & Korea in
Chhattisgarh and 3 districts Shahdol, Umaria, Anuppur district in MP.
SECL Korba coalfield is settled in Korba district of Chhattisgarh state and covers
a field of around 530 Square kilometer. As per GSI a total of 10115.21 Metric tan. Coal
reserves availableness in SECL Korba.
The coal deposits of SECL occur in five districts i.e. Bilaspur, Korba, Raigarh ,
Surguja & Korea in Chhattisgarh and three districts Shahdol,Umaria, Anuppur district in
Madhya Pradesh. This occurs in the great Son Mahanadi master basin.
6

7. SECL has 92 Mines. Total UG Mines are 70 and Total OC mines are 21.There is 1
mixed mine. There are 42 UG Mines, 13 OC Mines, 1 Mixed Mines in Chhattisgarh
and 28 UG Mines, 8 OC Mines in Madhya Pradesh.
These mines are divided into 13 Administrative areas -
(1) Johilla area
(2) Sohagpur area
(3) Jamuna & kotma area
(4) Hasdeo area
(5) Chirimiri area
(6) Baikunthpur area
(7) Bisrampur area
(8) Bhatgaon Area
(9) Korba area
(10) Gevra area
(11) Kusmunda area
(12) Raigarh area
(13) Dipka area.
The corporate office is at Bilaspur (C.G.).
As on 31/03/2007 SECL has geological coal reserve of 44.838 billion tonnes.
As on 31/03/2007 SECL has mining right over 956.41 sq.km and all rights over
259.85 sq km.
7

8. SECL has four major coalfields with following geological reserves.
Reserve potential of SECL as per GSI as on 31/03/2007.
Coal Mining Area
(Sq.KM)
Geological Reserves
(Mil Tonnes)
Depth
(meters)
Korba
Central India
Mand-Raigarh
Ramkola-Tatapani
530.0
5345.0
520.0
260.0
10115.21
15613.98
19106.04
1616.79
0-600
0-1200
0-1200
0-600
SECL 6655.0 46452.02 0-1200
8

9. CORPORATE MANAGEMENT TEAM
 At Corporate level
N.C JHA
Chairman-Cum-Managing
Director
R.S.SINGH
Director(Personnel)
A.R.KOMAWAR
Director (Finance)
P K ROY
CHOWDHURY
Director
(Technical)(Operation)
9

10. GOPAL SINGH
Director(Technical)(P&P)
K.S.KROPHA
Joint Secretary ,Govt. of India,
Ministry of Coal , New Delhi
SHRI ARUN
KUMAR
PROF.B.B.BHATTACHARYA
10

11. CHAPTER – 2
PERFORMANCE
OF “SECL MINES”
11

12. COAL MINING - Our Business
The 4 Main Departments of a S.E.C.L.
The 4 main departments are:
(A) Sales:- Every company is in business to make money. It will either be selling a
product or a service. The Sales department deals with marketing and advertising
the product/service and taking orders.
♦ The advertising may be done by means of:
 newspapers or magazines
 radio or TV
 catalogues
 flyers
 CDs
 Internet etc.
♦ The sales may be made by
 Phone
 on-line
 emails
 printed order forms
 sales reps who work for the company and offer the customer a friendly face and
ready answers to any questions.
(B) Purchasing:- If a product is being manufactured, then the components that go
to make up this product will have to be purchased from various suppliers. These
components are crucial to the product and it is essential that there are always
enough of them on site for the product to be manufactured every working day.
The purchasing department must know when to re-order components and
how many at a time. Too many would lead to a cash flow problem with the
company having to pay out for the supplies before it can recoup the cash by
selling the product. Too few would lead to the company standing idle (and
therefore losing money) while it is waiting for these precious components.
Even if there are no actual components to buy (i.e. a service is being sold),
there are still materials to purchase (buy or rent)- computer paper, printer ink or
toner, other office supplies, cleaning supplies, company cars etc. In addition every
company needs electricity, phones, computers, water, building rents, council tax
rates etc.
♦ The purchasing department will have to:
 find a supplier
 negotiate a deal (discounts for bulk etc)
 place an order
 track the order
 check that the goods received are as requested
 pay the invoice
(C) Finance (Accounts):- The Finance Department is responsible for all the
money that comes into and goes out of the company. Records of all receipts and
payments will probably be done on computer via spreadsheets. It will obviously
12

13. liaise very closely with the Purchasing and Sales departments. It will set annual
budgets for the company and keep a check on the performance of the company
throughout the year, producing graphs and charts where necessary.
It is also responsible for calculating and paying the wages of the
employees. This means it must also make deductions for Income Tax, National
Insurance, and Pension fund contributions.
(D) Operations:- This is the department where the actual production of the goods
or services takes place. If it is a manufacturing company, then they may well be
using computer aided design (CAD) and/or computer aided manufacturing
(CAM) to produce the product.
If there is no actual product as such (i.e. a service) then the employees will
probably be working at computers to perform their jobs. Such companies are in
the majority today, as the manufacturing industry declines and are being replaced
by service industries. A few obvious examples are:
i. Banks/building societies
ii. Insurance companies
iii. Software companies
iv. Travel agents
While these are the 4 main departments in any large organization, even these are often
subdivided into smaller departments, such as Personnel (Human Resources), Salaries,
Project teams etc.
13

14. ♦ PRODUCTION AND PRODUCTIVITY:-
A Mini Ratna Company - South Eastern
Coalfields Limited has made a record in
the year 2009-10 in Production and set
an all time highest record in Overall
Performance in respect of off-
take/despatches, production, wagon
loading, quality improvements and
optimization of overall consumers’
satisfaction in terms of meeting their coal
requirement.Total Production in the year
2009-10 was 108.01 Million Tonnes
against the target of 106 Million Tonnes
which is 6.78 % more than in the year
2008-09.
SECL has also set a historical all time
high record of despatch by despatching
105.87 Million Tonnes to its various
Consumers during the year 2009-10.
This is an all time high record by any
subsidiary of Coal India Limited.
PRODUCTION AND PRODUCTIVITY FROM 1998 – 2010
Production
(mill. Tonnes)
Productivity
(Output/manshift)
year OC UG Total OC UG Overall
98-99 41.5616.00 57.56 9.24 0.92 2.64
99-00 42.7516.01 58.70 9.36 0.93 2.70
00-01 44.5715.76 60.33 9.96 0.93 2.83
01-02 48.2115.91 64.12 10.03 0.97 3.0
02-03 50.4416.16 66.60 10.70 1.01 3.21
03-04 54.6516.36 71.01 11.25 1.05 3.49
04-05 61.9716.58 78.55 12.27 1.11 3.95
05-06 66.5016.52 83.02 12.76 1.12 4.17
06-07 72.3016.20 88.50 13.27 1.14 4.51
07-08 77.0516.74 93.79 14.30 1.19 4.83
08-09 83.5817.57101.1515.76 1.26 5.26
09-10 90.1817.83108.0118.89 1.33 5.96
14

15. ♦ PERFORMANCE [2009-10]
ITEM ACTUAL % Growth
TOTAL PRODN M.T. 108.01 6.78
O/C PRODN M.T. 90.18 7.90
U/G PRODN M.T. 17.83 1.48
OBR MM3 129.80 21.30
OVERALL OMS Te 5.96 13.31
OC OMS Te 18.89 19.86
U/G OMS Te 1.33 5.56
COAL
OFFTAKE
MT 105.89 2.79
WAGON
LOADING
FWW/DAY 4472 -4.79
SUPPLY TO
STEEL PLANT
M T 1.50 -0.66
♦ SECTOR WISE DESPATCH (MT) (TOTAL DESPATCHES -
105.87 MT) [2009-10]
Power
House
CPP
UNIT
Cement
Steel
(Blendable)
Sponge FertilizerOther
74.26 11.25 4.73 0.15 4.39 0.64 10.45
♦ MODE WISE DESPATCH (MT) (TOTAL DESPATCHES - 105.87
MT) [2009-10]
RAIL ROAD MGR BELT
OTHER /(OWN
WAGONS)
40.54 40.43 16.39 5.37 3.14
♦ GRADEWISE PRODUCTION [2008-09]
GRADE %
A 2.58
B 9.75
C 9.47
D 4.39
15

16. E + F 73.67
SC-II 0.14
♦ STATE WISE PRODUCTION (MT) [ 2008 - 09 ]
Chhattisgarh Madhya Pradesh
88.72 (87.71 %) 12.43 (12.29 %)
16

17. MAN POWER - Our Strength
♦ Total Manpower As
on 1/4/2010 = 79781
♦ As on 1/4/2010
Executives
Supervisory
staff
Highly skilled
& skilled
Semi skilled &
Unskilled
Ministerial
Staff
Trainees TOTAL
2663 8987 35976 28236 3501 418 79781
♦ As on 1/4/2010
SCHEDULE CASTE SCHEDULE TRIBE
OTHER BACKWARD
CLASS
OTHERS
16414 (20.57%) 18015 (22.58%) 14679 (18.40 %) 30673( 38.45%)
♦ Total Manpower As on 1/4/2009 = 81434
♦ As on 1/4/2009
Executives Monthly rated Daily rated
Piece rated CO' Trg TOTAL
2735 14752 60734 2770 443 81434
♦ As on 1/4/2009
SCHEDULE CASTE SCHEDULE TRIBE OTHER BACKWARD OTHERS
17

18. CLASS
16761(20.58 %) 18406(22.60 % ) 14962(18.38 %) 31305(37.55 %)
♦ Total Manpower As on 1/4/2008 = 82,782
♦ As on 1/4/2008
Executives Monthly rated Daily rated
Piece rated CO' Trg TOTAL
2781 14,500 61,713 3473 315 82782
♦ As on 1/4/2008
SCHEDULE CASTE SCHEDULE TRIBE
OTHER BACKWARD
CLASS
OTHERS
17301(20.91 %) 19048(23.01 % ) 15348(18.54 %) 31085(37.55 %)
♦ Total Manpower As on 1/4/2007 = 84,368
♦ As on 1/4/2007
Executives Monthly rated Daily rated
Piece rated CO' Trg TOTAL
2718 14,729 62,854 3645 422 84368
♦ As on 1/4/2007
SCHEDULE CASTE SCHEDULE TRIBE
OTHER BACKWARD
CLASS
OTHERS
17717(21 %) 19405(23.0 % ) 15692(18.6 %) 31554(37.4 %)
♦ Total Manpower As on 1/4/2006 = 85,871
♦ As on 1/4/2006
Executives Monthly rated Daily rated
Piece rated CO' Trg TOTAL
2745 14,762 63,583 4360 421 85871
18

19. ♦ As on 1/4/2006
SCHEDULE CASTE SCHEDULE TRIBE
OTHER BACKWARD
CLASS
OTHERS
18033(21 %) 19750(23.0 % ) 15972(18.6 %) 32116(37.4 %)
19

20. SAFETY
A. Mission of the Company on Safety: The Company is fully committed to total
safety in all aspects of its operations.
The Company’s motto is that Safety
overrides all production targets. The
Company attaches prime importance
to safety of the employees which will
not be compromised for any other
considerations.
B. Safety Policy: - Mining is a
hazardous profession with many of
its activities forcing against the
nature. But in course of time we have
learnt to excel in our profession to
such an extent that SECL has made
multi-dimensional strides in the field
of coal mining. We have formulated
Safety Policy comprises of 27 points,
a few of these points attracts special importance are as summarized below;
1. To plan and design all operations in such a way as to eliminate or materially
reduced the mining hazards.
2. To co-operate with the Directorate of Mines Safety and the mine equipment
manufacturers in developing safer mining systems and equipment as to
provide safe working conditions by suitable changes in technology.
3. To regard safe working as regular precedence for improvisation over unsafe
practices.
4. To bring about improvement in working conditions by suitable changes in
technology.
5. To organize appropriate forum, with employees’ representatives, for joint
consultation on safety matters and to secure their motivation and commitment
in safety management.
6. To prepare Annual Safety Plans and Long-term Safety Plans at the beginning
of every calendar year, both for the company and for the individual units, to
effect improved safety in the various operations, as per respective geo-mining
conditions.
7. To improve safety standards through counseling and training the accident-
prone persons.
8. To arrange for multi-level monitoring of implementation of the Safety Plans
through Internal Safety Organization at the Head Quarters and at Area levels.
9. To ensure that all levels of employees continue to reflect safety consciousness
in their working as well as to inculcate accountability towards safety measures
amongst them.
10. To institute continuous education, training and re-training of all employees,
with emphasis placed on the development of safety-oriented skill.
11. To make continuous efforts to provide all the employees a good Health -
physical, mental & social.
20

21. 12. To investigate the cause of any incidence of accident and suggest preventive
measures by Safety Committee and follow up action for remedial measures.
13. To ensure adequate ventilation, illumination and sanitation at all working
places.
C. Safety performance:- The accidents statistics for the year under review as
compared to last years are tabulated as under;
2006-07 2005-06 2004-05 2003-04
Fatal Accidents 6 14 9 9
Fatalities 6 15 10 9
Serious Accidents 69 76 116 87
Serious Injuries 71 82 118 90
Fatality rate per MT output 0.068 0.181 0.127 0.127
Fatality rate per 3 lakh Man shift 0.121 0.228 0.148 0.131
Note: Figs. for the calendar year 2006-07 are subject to reconciliation with DGMS.
21

22.  YEAR WISE FINANCIAL PERFORMANCE:-
(Rs. In crores)
2009-10 2008-09 2007-
08
2006-07 2005-06 2004-05 2003-04 2002-03
Gross Profit before
interest
depreciation
3320.19 2178.95 2449.9 2024.91 1529.66 1820.17 1560.63 1146.74
Less : Interest 14.20 13.82 14.56 20.91 15.28 13.78 19.71 36.67
Less :
Depreciation
242.42 347.20 367.81 226.17 228.26 225.46 226.70 227.94
Profit before tax 3063.57 1817.93 2067.3 1777.8 1286.1 1580.9 1314.2 882.13
Less: Provisions
for taxation
946.35 786.81 708.23 540.94 334.09 522.86 390.88 324.58
Profit after tax 2117.22 1031.12 1359.1 1236.8 952.03 1058.0 923.34 557.55
Add: Balance in
Profit & Loss A/c
3200.05 2995.97 2753.8 2238.4 1839.0 1412.7 1003.7 815.88
Investment
utilization Reserve
written back
0.00 0.00 00.00 0.00 0.00 0.00 16.35 31.22
Adjustment of
excess provision
for tax
0.00 0.00 0.38 29.86 23.02 -0.70 2.77 1.36
Impairment of
Assets/Adjustment
of Employee
0.00 - 15.82 - - 43.30 - -
22

23. benefit
Surplus available
for appropriation
5317.27 4027.08 4096.7 3445.5 2768.0 2428.2 1940.6 1406.0
Appropriations:
Capital
Redemption
Reserve
- - - - - - - 75.00
General Reserve 211.80 103.20 137.10 123.70 95.20 105.85 92.50 56.00
Dividend on
Preference Shares
0.00 - - - - - 26.31 30.00
CSR Reserve 43.14
Dividend on
Equity Shares
1270.46 618.68 823.71 495.31 380.92 424.45 359.70 210.43
Dividend Tax 215.92 105.15 139.99 72.67 53.43 58.89 49.45 30.80
Balance carried to
Balance Sheet 3575.95 3200.06 2995.9 2753.8 2238.4 1839.0 1412.7 1003.7
 PROFIT BEFORE TAX:-
YEAR RS. IN CRORES
2002-03 882.13
2003-04 1314.22
2004-05 1580.93
2005-06 1286.12
2006-07 1777.83
2007-08 2067.37
2008-09 1817.93
2009-10 3063.57
 Financial Performances Indices:-
Sl.No. Particulars Year ending
2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03
1. Capital
Employed(crores)
4360.76 4380.28 3814.60 3489.76 2780.98 2301.83 1887.66 2939.71
2. Sales(crores) 11219.02 10166.61 8728.04 7646.26 7127.19 6544.52 5365.66 5062.99
3. Current Ratio 1.20 1.27 1.29 1.40 1.25 1.20 1.03 1.53
23

24. 4. Debt/Equity Ratio 0.06 0.08 0.08 0.09 0.12 0.16 0.21 0.25
5. Profit before tax to (%)
I. Capital
Employed
70.25 41.50 54.20 50.94 46.25 68.68 69.62 30.01
II. Networth 69.66 38.14 46.36 43.57 37.37 53.65 54.43 45.72
III. Sales 27.31 17.89 23.69 23.25 18.05 24.16 24.49 17.42
6. Profit after
tax/Equity
588.61 286.66 377.85 343.87 264.67 294.15 256.70 146.66
7. Earning per share
of
Rs.1000/- (in RS)
5886.06 2866.60 3778.53 3438.68 2646.74 2941.53 2493.82 1466.62
24

25. CHAPTER – 3
CONCEPT OF
COST
25

26. INTRODUCTION:
In business, the cost may be one of acquisition, in which case the amount of
money expended to acquire it is counted as cost. In this case, money is the input that is
gone in order to acquire the thing. This acquisition cost may be the sum of the cost of
production as incurred by the original producer, and further costs of transaction as
incurred by the acquirer over and above the price paid to the producer. Usually, the price
also includes a mark-up for profit over the cost of production.
cost reflects the true cost of purchasing a financial asset held over an extended
period of time. The longer a stock or other assets is held, the higher the probability that
the original purchase price will need to be revised in order to reflect adjustments such as
future purchases, stock splits, and dividend payments.
Cost basis can also increase if a dividend is reinvested. In this case, the cost basis
goes up to reflect the increased investment. Using an incorrect cost basis can have
significant tax implications as it affects the calculation of taxable profits.
Different Types of Costs:
In the effort to properly classify the types of costs, here are some of them:
1. Manufacturing Costs:- These costs involve the conversion from raw
materials to finished goods employing labor and manufacturing facilities. These
include direct materials, direct labor and manufacturing overhead. Direct
materials are the main components of the finished product and direct labor is the
manpower costs that are attributable to the manufacture of the merchandise.
Manufacturing overhead are costs that is not properly identified as direct labor or
direct materials.
2. Non-Manufacturing Costs:- Period and product costs are the two types of costs
under this classification. Period costs are those that are measurable through time
intervals like rent on a monthly basis. Product costs are those expenses related to
the sale of the products.
3. Costs Related to Function and Control:-These are costs that are
variable, fixed, direct, indirect, controllable, non-controllable, avoidable,
unavoidable, relevant and irrelevant. Variable costs are those that will change in
line with the level of business activity. Examples are direct materials, direct labor,
cost of goods sold, etc. since they tend to fluctuate in relation to the output of the
goods, both in the manufacture and sales.
4. Direct Costs:-These are costs that are directly related to your product. Ex: If
you have a automobile that is being produced the staring wheal, the tires and the
radio.
5. Indirect Costs:-Indirect cost are those that deal directly with the product but
not any product in particular. Such as, if you have employees who build the cars
they are directly responsible but not responsible completely with any one product
or in this case car.
6. Fixed Costs:-These are the costs that are always the same or close to the same
amount taken out every month. These are normal monthly expenses that come to
your business whether you make a sale or not.
26

27. 7. Variable Costs:- These are costs that increase or decrease with the volume of
sales that you have.
8. Relevant Costs:- These are costs that are needed when you take a different
strategic move. If you decide you want to produce more cars and the tires go up in
price then that cost is relevant to your production.
9. Irrelevant Costs:-These can be costs that decide on a future course of action
and are disregarded until that time comes as they may make you make mistakes in
the here and now. Or they may be some cost that happened in the past and now
are irrelevant cause that money is now gone.
10. Other Costs:-These types of costs are used by management accountants in
their planning and budgeting. They are the following; differential, opportunity,
imputed, out-of pocket and sunk costs.
27

28. CHAPTER - 4
CATEGORIES OF
COST
28

29. ESTIMATION
COCT
OPERATIONAL
COST
ORGANIZA-
TIONAL
COST
STAFFING
COST
CAPITAL
COST
ESTIMATING COSTS - CATEGORIES
The cost estimate is what helps you determine realistically what it will cost to implement
your operational plan.
When you carry out your plans you will probably need to make use of a wide
range of inputs. Inputs include people, information, equipment, skills. Most of these
inputs will have a cost attached to them. These are the costs you need to estimate in order
to develop a budget. Careful cost estimation helps in the following ways:
• It helps you develop an accurate budget; and
• It helps you to monitor and control the actual costs of carrying out activities.
The costs you need to estimate fall into the following categories:
(1) Operational cost:-The direct costs of doing the work e.g. the cost of hiring a
venue, or of printing a publication, or of travelling to the sites where fieldwork
needs to take place. Here you would include materials, equipment, transport and
services.
(2) Organizational costs: - The costs of your organizational base, including
management, administration, governance. Once you have decided on the best
organizational set-up to support your operational plans, you will incur the
organizational expenses on a regular basis – even if you do not carry out your
plans or have activity levels as high as you had hoped. So, for example, if you
hire premises for four projects but only manage to carry out two, you will still
have to pay rent for the extra space. If you have hired a full-time receptionist on
the same belief, you will still have to pay her salary, even if she is under-utilized.
(3) Staffing costs: - These are the costs for your core staff – the people involved in
management, the people doing work that cuts across projects. (These costs can be
included as a category under “organizational costs”.) These costs include their
salaries and any benefits such as medical aid or pension fund payments for which
the organization is responsible. You can “charge staff costs out” to the various
projects on which the staff members work. So, for example, if your Publications
Officer is going to spend half her time working on publications for a particular
29

30. Standard
Costing
Marginal
Costing
Absorp-
tion
Costing
Full
Costing
Cost
center
Types
project, then you can include half her salary and benefits in your costing for the
project. If your Director is going to spend 15% of her time providing management
support to the head of the same project, then 15% of her time and benefits can
also be charged to the project.
(4) Capital costs: - These are costs for large “investments” which, while they may
be necessary because of a project or projects, will remain organizational assets
even after the projects are over. Vehicles and equipment such as computers and
photocopiers fit here. They may be used by all projects, or they might only be
required for a specific project. Depending on how you intend to use the
equipment, you might budget for it under operational costs or under
organizational costs.
COST CENTER
There are various types of cost centers are:
30

31. 1. Full Costing: - A method of allocating indirect costs to a range of products
produced by the firm. e.g. if a firm produces three products - a, b, and c - and has
indirect costs of £1 million, assume proportion of direct costs of 20% for a, 55%
for b and 25% for c Indirect costs allocated as 20% of 1 million to a, 55% of £1
million to b and 25% of £1 million to c.
2. Absorption Costing: - All costs incurred are allocated to particular cost
centres – direct costs, indirect costs, semi variable costs and selling costs
Allocates indirect costs more accurately to the point where the cost occurred.
3. Marginal Costing: - The cost of producing one extra unit of output (the
variable costs).
Selling price – MC = Contribution
Contribution is the amount which can contribute to the overheads (fixed costs)
4. Standard Costing: - The expected level of costs associated with the
production of a good/service.
Actual costs – Standard costs = Variance
Monitoring variances can help the business to identify where inefficiencies or
efficiencies might lie
31

32. Frameworks for Estimating Costs:
• Estimating operational costs:-
Activity Unit cost Quantity Total cost of
item
 Materials
 Equipment
 Services
 Transport
The unit cost is the
cost of a single
item,
Or one unit. E.g.
Cost per day, per
kilometer, per
person.
This is the number
of units (how many)
you
Will need for the
activity. e.g. 200
training packs, 130
days of trainers’
time.
Multiply the total
number of units by
the unit cost.
Total cost for
Activity
The sum of all the
individual costs
• Estimating organizational cost:-
Once you have done your estimates here, you may decide to assign a percentage
of the various items to specific departments or projects. This is acceptable
practice.
2007 2008 2009
Management:
Salaries/benefits:
Donor liaison:
Governance liaison:
Public relations:
Fundraising:
Human resourcing:
Administration:
Salaries/benefits:
Equipment:
Software:
Stationery:
Governance and
organizational
development:
Board meetings:
Organizational
processes:
Resource centre:
Overheads:
Office rental:
Electricity and water:
Insurance:
Maintenance:
Legal fees and audit
fees:
Annual totals:
Total:
32

33. CHAPTER - 5
INTRODUCTION
OF BUDGETS
33

34. Introduction:-
A Budget is a plan that outlines an organization's financial and operational goals.
So a budget may be thought of as an action plan; planning a budget helps a business
allocate resources, evaluate performance, and formulate plans.
While planning a budget can occur at any time, for many businesses, planning a
budget is an annual task, where the past year's budget is reviewed and budget projections
are made for the next three or even five years.
The basic process of planning a budget involves listing the business's fixed and
variable costs on a monthly basis and then deciding on an allocation of funds to reflect
the business's goals. (For more on fixed and variable costs, see Breakeven Analysis.)
Functions of a Budget:-
Budgets can fulfill one or more of the following functions:
1. Mapping: A budget can be used to detail the road to be traveled in fulfillment of an
organizational objective. It details all the steps to be taken, and therefore can act as a
check on the overall viability of the organization’s objectives.
2. Controlling: The budget can ensure the achievement of objectives by placing a
planning control framework over the steps to be taken.
3. Coordinating: By spelling out the linkages between parts of the organization’s
plan, the budget can help to co-ordinate activities.
4. Communicating: The budget is a means for management to explicitly inform staff
and the wider public what the organization will be doing.
5. Instructing: A budget is often just as much a form of executive order as an
organizational plan since it lays out the requirements of the organization – it may
therefore be regarded as a managerial instruction.
6. Authorizing: As well as an instruction, the budget is an authorization to take
action within the specified limits. In that respect, the budget performs a delegating
function.
7. Motivating: Budgets can act as a motivational tool to encourage managers to
perform within targeted limits.
8. Performance Measurement: A budget may provide a benchmark against which
actual performance can be measured.
9. Decision-Making: A well-designed budget can be a useful tool in evaluating the
consequences of proposed changes in actions, since it should be possible to track the
effect of any change throughout the organization.
34

35. Sales Budget
Forecasts how
much will be sold
Sales Budget
Forecasts how
much will be sold
Production
Budget
Forecasts how
many units need to
be made
Production
Budget
Forecasts how
many units need to
be made
Labor Budget
Outlines the
labour required of
production budget
Labor Budget
Outlines the
labour required of
production budget
Cash Budget
(Cash flow)
Forecasts the
money flows in &
out of the business
Cash Budget
(Cash flow)
Forecasts the
money flows in &
out of the business
Marketing
Budget
Estimating funds
for promotion
Marketing
Budget
Estimating funds
for promotion
Project Budget
Prediction of cash
to achieve objects
Project Budget
Prediction of cash
to achieve objects
TYPES OF
BUDGET
TYPES OF
BUDGET
TYPES OF BUDGET:-
A firm will create a number of different budgets:-
A. Sales budget: - The sales budget shows the projected sales of various products,
their average sales price, and the total sales realisation. The sales budget is subjected
to the greatest uncertainty considering that the preparation of sales budget starts with
sales forecast. Sales forecast is essentially an estimate, a prediction of customers
demand, and a reflection of market demand. Management reacts to sales forecast by
making decision relating to where it wants to position the company in the
marketplace in relation to its competitors. This decision is reflected in the sales
budget.
B. 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.
C. Cash Flow/Cash budget: - Cash budget is essentially the cash plan for a defined
period of time. The objective of the cash budget is to ensure that sufficient cash is
available at all times to meet the level of operations that are outlined in the various
budgets. Cash budget enable a firm to take precautionary measures and arrange in
advance for investment and loan facilities whenever cash surpluses or deficits arises.
The overall aim is to manage the cash of the firm to attain maximum cash availability
35

36. and maximum interest income on any idle funds. Cash budget also show the
feasibility of management's plans in cash terms and illustrate the financial impact of
changes in management policy.
D. 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.
E. 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.
F. Labor budget: - The direct labor budget is a budget of planned expenditures for
direct labor. The direct labor budget indicates the rate per hour and the number of
hours necessary to meet production requirements. The manpower budget contains
detailed information about all employees in the organization. This budget is a tool
which can be used as a human resource planning over a short time horizon. In the
preparation of this budget, it involves the process of analysis and estimation of the
need for the availability of employees by considering present skills level, changes in
the technology, vacancies expected to arise from transfer, retirement and promotion,
expansions planned and contraction of operations.
Features of budgets:-
(1) Estimates of the income and expenditure of a business or a part of a business over
a time period.
(2) Used extensively in planning.
(3) Helps establish efficient use of resources.
(4) Help monitor cash flow and identify departures from plans Maintains a focus and
discipline for those involved.
(5) An important instrument of the financial management used as aid in planning,
programming and control.
(6) A budget may be defined as a financial and quantitative statement, prepared and
approved prior to defined period of time, of the policy to be pursued during that
period for the purpose of achieving the given objective.
Advantages of budgeting:-
a) Easily understood (as it is retrospective), makes marginal changes and secures
agreement through negotiation.
b) Administratively straightforward (and therefore cheap).
c) Allows policy makers to concentrate of the key areas of change. Ministers, elected
representatives and senior officials are not required to study long and detailed
budgetary documents.
d) Particularly useful where outputs are difficult to define/quantify; and, stable and,
therefore, changes are gradual.
Disadvantages of budgeting:-
a) backward looking – focus more on previous budget than future operational
requirements and objectives;
b) does not allow for overall performance overview;
c) does not help managers identify budgetary ‘slack’;
36

37. d) often underpinned by data or service provision which is no longer relevant or is
inconsistent with new priorities;
37

38. CHAPTER - 6
PRINCIPLES OF
BUDGETING
38

39. Basic Principle of Budgeting:-
A budget is a document that translates plans into money - money that will need to be
spent to get your planned activities done
(expenditure) and money that will need to
be generated to cover the costs of getting the
work done (income). It is an estimate, or
informed guess, about what you will need in
monetary terms to do your work.
A budget is not:
a) Written in stone – where necessary,
a budget can be changed, so long as
you take steps to deal with the
implications of the changes. So, for
example, if you have budgeted for
ten new computers but discover that
you really need a generator, you
could buy fewer computers and
purchase the generator.
b) Simply a record of last year’s expenditure, with an extra 15% added on to cover
inflation. Every year is different. (See also the section on different budgeting
techniques.) Organizations need to use the budgeting process to explore what is
really needed to implement their plans.
c) Just an administrative and financial requirement of donors. The budget should not
be prepared as part of a funding proposal and then taken out and dusted when it is
time to do a financial report for the donor. It is a living tool that must be consulted
in day to day work, checked monthly, monitored constantly and used creatively.
d) An optimistic and unrealistic picture of what things actually cost – don’t
underestimate what things really cost in the hopes that this will help you raise the
money you need. It is better to return unspent money to donors than to beg for a
“bit more” so you can complete the work.
Important of Budget for an Organization, Project or Department
The budget is an essential management tool. Without a budget, you are like a pilot
navigating in the dark without instruments.
I. The budget tells you how much money you need to carry out your
activities.
II. The budget forces you to be rigorous in thinking through the implications
of your activity planning. There are times when the realities of the
budgeting process force you to rethink your action plans.
III. Used properly, the budget tells you when you will need certain amounts of
money to carry out your activities.
IV. The budget enables you to monitor your income and expenditure and
identify any problems.
V. The budget is a basis for financial accountability and transparency. When
everyone can see how much should have been spent and received, they
can ask informed questions about discrepancies.
39

40. VI. You cannot raise money from donors unless you have a budget. Donors
use the budget as a basis for deciding whether what you are asking for is
reasonable and well-planned.
Involvement in Budgeting:-
Budgeting is a difficult and responsible job. Your organization’s ability to do
what it has planned to do and to survive financially depends on the budgeting process.
Whoever does the budgeting must?
i. Understand the values, strategy and plans of the organization or project;
ii. Understand what it means to be cost effective and cost efficient (see
Glossary of Terms);
iii. Understand what is involved in generating and raising funds.
Where staff is competent to take full responsibility for the financial side of the
organization or project, the following would normally be involved in the budgeting
process:
i. The Finance Manager and/or Bookkeeper;
ii. The Project Manager and/or Director of the organization or department.
Where staff lacks confidence to do the budgeting, then Board members can be brought in.
Some Boards have a Finance Committee or a Budget Sub-Committee. It is a good idea to
have someone on your Board with financial skills. S/he can then help the staff with
budgeting.
BUDGETING GUIDELINES:
While budgeting depends to a certain extent on the particulars of your organization or
project, there are certain guidelines which apply across projects and organizations.
BUDGETING RULES
These are not rules that are fixed for all time. They offer some guidelines that will help
you deal with common situations.
(i) It is usual for long-term projects and organizations to prepare a budget which
makes projections for several years at a time. While it is usually only the budget
for the forthcoming year that is really quite accurate, the projections for the
following years gives some indication of the levels of funding that are likely to be
needed. Some allowance is usually made for inflation for subsequent years, as
well as for the anticipated activities which may differ from the first year. A three-
year budget should be based on a three-year plan.
(ii) Contributions in kind (not money, but goods) should be included as a note to the
budget (for more on notes see the consolidated budget in the examples). Although
they are not part of the budget, they reduce budget costs and so should be
indicated. This includes the contribution made by volunteers in the form of sweat
equity (see Glossary of Terms).
(iii) Some costs that need to be estimated but that often get forgotten:
o Start-up costs – for a new organization or project, such as large-scale
recruitment, moving in, building alterations, launching the project or
organization.
o Research and development – consultation, needs assessment, planning
processes.
40

41. o Democracy and governance – establishing the structures, recruiting for
them,
o Getting a constitution developed and accepted, training members of
voluntary structures.
o Marketing or public relations – building a professional image.
o Replacement of capital goods.
o Monitoring and evaluation costs for projects.
(iv)Estimates are informed guesses, not just guesses. Does your homework, get
quotes, phone around to arrive at a likely cost? Check any figures you have from
previous years that may provide helpful information. Note down any price
increases you already know about (e.g. a salary increase of 10% may have already
been agreed.) Make notes of any unusual expenses that are likely to occur (e.g.
moving your offices). A few dollars may not seem a big amount, but multiplied
many times over this kind of discrepancy can make a big difference in your
budget.
(v) Keep your notes! As you plan your budget and make decisions about how you
will estimate costs, keep your notes handy so that you can go back and check
where the amounts came from. You may, for example, work out your workshop
costs on the basis of a certain amount for photocopying, based on an estimated per
page cost. When, a year later, the costs are higher than anticipated, you should go
back to your notes and see where the discrepancy comes in. Or, in another
scenario, a donor makes ask you to explain how you arrived at the cost per
participant for workshops.
(vi)For your own management purposes, break the budget for the forthcoming year
into a monthly budget. This will help you when you are watching your cash flow
(see section on watching your cash flow). It will also help you to pick up
variances (see Glossary of Terms) quickly.
41

42. CHAPTER - 7
KINDS OF
BUDGETS
42

43. KINDS OF
BUDGETS
SURVIVAL
BUDGET
GUARAN-
TEED
BUDGET
OPTIMAL
BUDGET
DIFFERENT KINDS OF BUDGETS
In addition to your main working budget – what you realistically expect to generate or
raise, and how this will be spent – you can also have some “what if” options budget.
“What if” budgets allow you to prepare for the unexpected – whether it is good or bad?
You’re “what if” budgets could include:
A. Survival
budget: - This is the minimum required in order for the organization or project
to survive and do useful work.
B. Guaranteed budget: - This is based on the income guaranteed at the time the
budget is planned. Usually the “guarantees” are in the form of promises from
donors. However, unexpected situations, such as a donor grant coming through
very late, may make it necessary to switch to your survival budget.
C. Optimal budget: - This covers what you would like to do if you can raise
additional money. Once extra money comes in or is promised, it becomes part of
your working budget.
DIFFERENT BUDGETING TECHNIQUES:
The two main techniques for budgeting are incremental budgeting and zero based
budgeting.
43

44. BUGETING
TECHNIQUES
BUGETING
TECHNIQUES
INCREMENTAL
BUDGETING
INCREMENTAL
BUDGETING
ZERO BASED
BUDGETING
ZERO BASED
BUDGETING
(A)
Incremental budgets are budgets in which the figures are based on those of the
actual expenditure for the previous year, with a percentage added for an
inflationary increase for the new year. This is an easy method that saves
time but it is the “lazy” way and is often inaccurate. This budgeting
technique is only suitable for organizations where each year is very similar
to the previous one in terms of activities. Very few dynamic organizations
or projects are so stable that this budgeting technique really works for
them.
(B) In zero based budgets, past figures are not used as the starting point. The
budgeting process starts from “scratch” with the proposed activities for the
year. The result is a more detailed and accurate budget, but it takes more
time and energy to prepare a budget in this way. This technique is
essential for new organizations and projects, but it is also probably the
best route to go in a dynamic organization that is proactive in taking on
new challenges.
44

45. QUESTIONARIES
45

46. 1. What are the guidelines prefer for additional budget/
special budget?
GUIDELINES FOR ADDITIONAL BUDGET/ SPECIAL
PURPOSE BUDGET
The Revenue Budget BE 10-11 has been prepared for normal activities and on
special purpose/ additional budget has been included except coal removal
expenses at Chirimiri Area by CM& LCCM operation in line with ESM payment
for coal removal from face to surface in opencast mines.
The additional budget/ special purpose budget will be provided to areas on
following guidelines:
(i) The individual case file to be initiated by Area duly examined by AFM and
recommended by Area CGM to be forwarded to GM(F) C&B through
concerned HOD at HQ with his due examination and recommendation.
(ii) The Head of Expenditure and amount thereof will be limited to their original
demand submitted at the time of preparation the CIL BE 23010-11 i.e. prior
to 8th
march 2010.
(iii) AFM should specially indicated the reasons for demanding
additional/special purpose budget like in earlier year same has been incurred
out of additional/special purpose budget or in past same has not be incurred &
this is not for additional production or this is not routine expenditure and it is
one time job etc.
(iv)Thereafter file will be examined at HQ A/c and if in order then same will
recommended for approved D(T)/ D(F) /CMD for provision of additional/
special purpose budget.
(v) After communication of additional budget the respective area shall
incorporated the same in their revenue budget.
46

47. 2. What are the norms are preferred by “SECL” Company?
Norms for preparation Budget:-
There are following norms for preparation of cost:-
i. Production: Coal production, OBR, OBRH to be
obtained from CGM (prdn). The coal,
OBR, OBRH to be indicated separately by
departmental and outsourced.
ii. Man shift: The manshifts deployed in 09-10 to be
reduced/increased by:
a) Average reduction in manpower of
09-10 & proposed reduction in
manpower in 10-11. @ 265manshift
per employee/year for UG mines @
300 manshift per employee/year for
OC mine.
b) Actual physical levels of Normal
OT hours in 2010-11 should not be
allowed to increase over the actual
physical level of normal OT hours
of 09-10, No Sunday working in
loss making underground mines and
opencast mines. Incentive payment
should be shown separately.
c) If there is an increase in manpower
in 10-11, then 50% manpower to be
taken and manshift to be calculated
as per above rate.
iii. EMS, Salary & Wages It is to be taken 10.00% above up to
January 10 and EMS excluding the
expenditure of production incentive and
Gratuity payment in cash. Gratuity
payment in cash to be nil and separate
figures for production incentive to be
calculated and accordingly amount of
salary wages to be carried as under:
EMS up to Jan 10 excluding cash gratuity
& production incentives x 1.10 x manshift
to be deployed in 10-11 Add impact of
production incentives.
iv. Area OH The unit forming parts of area OH with unit
wise breakup in different heads of
47

48. expenditure in 09-10 upto Jan 10 and
proposed for 10-11 to be provided. The
salary & wages to be escalated by 10.00%
and other heads to be recalculated by 3%,
any extra ordinary expenditure to be
explained in detail.
v. Explosives This is to be calculated mine-wise based on
PF of 09-10 for coal, OB blasted
(excluding loose OB) and multiplied by
current rate of RC. Working sheet to be
enclosed for all mines.
vi. Timber It is to be calculated as prefixed/variable
norms with 3% escalation.
vii. POL It is to be calculated mine wise for HSD &
Lubricants based on fixed/variable norms at
current rate. Calculation sheet to be
enclosed for all mines with2% economy.
viii. Power It is to be calculated as per fixed/variable
norms at current rate with 2% economy.
ix. Coal transportation Mine-wise coal transportation programmed
duly matching with production to be
prepared giving loading, transporting lead-
wise and wagon loading, rates to be taken
current working rates.
x. O.B.R. It is to be prepared mine-wise job-wise at
current rate. The rates should be including
service tax.
xi. Purchase repair Same as other contract without any sub
heads.
xii. Welfare It is to be prepared on the same line with
other contract with item wise/head-wise
details as per welfare preformed exp.
Statement.
xiii. Misc. It is to be prepared on same line other
contract with major head-wise details in
separate encloses.
xiv. Workshop debit On the same line of 09-10 with 4%
escalation.
xv. Depreciation interest It is as normal calculation.
xvi. Sale value It is to be calculated grade wise, mine-wise
taking into accounts dispatch plan by FSA,
Power houses at current rates.
48

49. 3. What are the variability factors for revenue budget of the
company?
SECL: BILASPUR
VARIABILITY FACTORES FOR REVENUE BUGET2010-11
HEADS OPENCAST BASIS OF
CALCULATION
UNDERGROUND
Explosives 100% variable Total composite
prod.
100% variable
Timber 90% variable &
10% fixed
POL 80% variable &
20% fixed
Deppt. Composite
prod.
20% variable &
80% fixed
Hemm spares 30% variable &
70%fixed
Deppt. Composite
prod.
Stores 30% variable &
70% fixed
Deppt. Composite
prod.
30% variable &
70% fixed
Power 60%variable & 40%
fixed
Total composite
prod
30% variable &
70% fixed
Coal transport 100% variable Coal production 1005 variable
Surface miner 100% variable As per target 100% variable
Other contract 50% variable &
50% fixed
Deppt. Composite
prod.
50% variable &
50% fixed
Purchase repair 50% variable &
50% fixed
Deppt. Composite
prod.
50% variable &
50% fixed
49

50. COST SHEET MARCH 2010
SOUTH EASTERN COALFIELDS LIMITED
Confirms working
result
Budget Actual
PARTICULARS (March 2010)
Total
production(LT)
150.00 142.04
Revenue
production (LT)
150.00 142.04
Net saleable coal
(LT)
150.00 142.04
Dept. OBR
(LCUM)
123.00 92.21
Total rev. OBR 220.00 172.86
Total manshifts
Actual 7.19 6.88
Adjusted 8.83 10.74
OMS 15.99 13.22
EMS 1380.76 1456.48
EXPENDITURE Amount Cpt Amount Cpt
Salaries and wages 4347.46 28.98 5682.93 40.01
Normal O.T. 425.55 2.84 588.46 4.14
Sunday O.T. 633.61 4.22 812.18 5.72
Lead and lift 0.00 0.00 0.00 0.00
Fall back 0.00 0.00 0.00 0.00
Production
Incentives
115.75 0.77 31.87 0.22
LTC/LLTC/RRF 98.71 0.66 77.71 0.55
GRATUITY 22.00 0.15 12.50 0.09
LEAVE
ENCASHMENT
(CASH)
0.00 0.00 0.00 0.00
OTHER PERKS 2221.02 14.81 2811.57 19.79
INTERIM RELIEF 0.00 0.00 0.00 0.00
Prove for NCWA-
VII (C.Y)
2064.00 13.76 0.00 0.00
Total salary and
wages
9928.11 66.19 10017.22 70.52
Administrative exp
area OH
2116.68 14.11 2270.08 15.98
Company OH 1777.44 11.85 1777.73 12.52
Total 3894.12 25.96 4047.81 28.50
50

51. administrative exp.
Stores :-
Explosive
3423.89 22.83 2840.05 19.99
Timber 0.00 0.00 0.00 0.00
POL 5953.73 39.89 5102.29 35.92
HEMM stores 2200.71 14.67 1902.05 13.39
Other stores 1299.81 8.67 1427.62 10.05
Total stores 12878.14 85.85 11272.01 79.36
Power 2491.99 16.61 2113.67 14.88
Coal transportation 6977.91 46.52 7386.19 53.41
Less:- STC 6001.66 40.01 4527.70 31.88
Net transport coal 976.25 6.51 3058.49 2153
OBR. Contractual 6684.00 44.56 5721.00 40.28
Other contractors 821.64 5.48 558.49 3.93
Purchase repair 489.60 3.26 267.60 1.88
Workshop debit 1409.88 9.40 1237.80 8.71
Welfare exp 1256.88 8.38 1217.95 8.57
Other misc exp. 1423.02 9.49 802.72 5.65
OVR/UDR
loading/demmu
0.00 0.00 154.67 1.09
TOTAL CASH
COST
42343.63 282.29 40469.43 284.92
VRS 0.00 0.00 0.00 0.00
Rehab of
ECL/BCCL
900.00 6.00 852.75 6.00
Service charges
CIL
827.28 5.52 659.15 4.64
Prov. Stock
deterioration
0.00 0.00 0.00 0.00
Land reclamation 150.00 1.00 15.00 0.11
OBR adjustment -6467.01 -43.11 2378.92 16.75
Interest 279.96 1.87 173.49 1.22
Depreciation 3812.88 25.42 2355.00 16.58
Provision for
gratuity (deferred)
649.92 4.33 649.92 4.58
Provision for leave
etch (deferred)
90.00 0.00 90.00 0.00
Total no-cash cost 243.03 1.62 7174.89 50.51
Total cost 42586.65 283.91 47644.32 335.43
Gross sale value of
raw coal
86763.51 578.42 88058.28 619.95
Less: quality
deduction
-397.72 -2.65 -483.95 -3.41
51

52. Bonus bill 1471.83 9.81 677.09 4.77
Net sale value of
coal
87837.62 585.58 88251.42 621.31
Profit or loss on
coal
45250.97 301.67 40607.10 285.88
52

53. LIMITATION OF STUDY
1) The present study is based on last two years data.
2) There is slow process of work as there are many formalities.
3) When there is tender all the parties are given money but if they are not contracted
then they should return money within 15days but they are unable to get it in time.
4) The under loading and over loading could not be fully minimized.
5) The study is based on Kusmunda Area as a whole, thus data have been collected
from the quality control report and cost quality improvement fortnight year 2005-
06 of Kusmunda Area.
6) Project wise production is not considered.
53

54. CONCLUSION
1) In coalmines industry maximum cost is of fixed in nature.
2) Every controllable heads is measured by cost per ton, to minimize it, the only
solution is to increase production.
3) In petroleum, oil, lubricant specific consumption must be observed, so that
individual control is made separately.
4) Store cost is very much high because of maintenance of equipment given by
World Bank as well as management fail here to control these heads.
5) Almost all the controllable head have 80% direct relation with production so
20% is that part where management practices control.
6) To some extent there is unnecessary wastage of diesel.
7) All the heads is more or less under controllable because all are under budget.
54

55. BIBLIOGRAPH
1. www.google.Com
2. www.coalindia.nic.in
3. www.secl.nic.in
4. Yearly report of Kusmunda area.
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