Introduction to financial forecasting and planning:

Some future point. A forecasting exercises is usually carried out in order to provide an aid to
decision-making and planning in the future. Business forecasting is an estimate or predection of
future developments in business such as sales, expenditure and profits. Given the wide swings in
economic activity and the drastic effects these fluctuations can have on profit margins, business
forecasting has emerged as one of the most important aspect of corporate planning.

In general usage financial plan can be a budget, a plane for spending and saving future income.
This plane allocates future income to various types of expences, such as rent or utilities, and also
reserves some income for short-term and long-term savings. A financial plan can be an
investment plan, which allocates savings to various assets or projects expected to produce future
income , such as a new business or product line, shares in an existing business, or real estate.

Financial forecast or financial plan can also refer to an annual projection of income and expences
for a company, division or deparment. A financial plan can also be an estimation of cash neesd
and a decision on how to raise the cash, such as through borrowing or issuing additional shares in
a company. w hile a financial plan refers to estimating future income , expenceses and assets, a
financing plan or finance plan usually refers to the means by which cash will be acquired to
cover future expenceses, for instance through earning, borrowing or using saved cash.
SCOPE OF THE STUDY:

The efficient allocation of capital is the most important financial function in the modern times. It
involves decision to commit the firm’s, since they stand the long-term and short-term assets such
decisions are of considerable importence to the firm since they send to detemine its value and
size by influcing its growth, probablity and growth.

The scope of the study is limited to collecting the financial data of BHARATHI CEMENTS for
four years and budgeted figures of each year.
NEED AND IMPORTANCE:

 The need financial manager prepares proforma or projected financial statements

to assess the firm’s forescasted performance is in line with targets and
expectations of investors.
 Examine the effect of proposed operating changes.
 Anticipate the financing need, of the firm.
 Estimate the future free cashflows.
OBJECTIVES OF THE STUDY:

The main objective of the study is to understand the financial position of the company, refers to
th development of long term strategic financial plans that guide the preparation of short-term
operating plans and budgets, which focus on analyzing the pro forma statements and preparing
the cash budget.

 Determinig capital requirements- this will depend upon factors like cost of current and
fixed assets, promotional expenceses and long-range planning. Capital requirements
have to be looked with both aspects; short-term and long- term requirements.
 Determining capital structure- the capital structure is the composition of capital, i.e, the
relative kind and promotion of capital required in the business. This includes decisions
of debet-equity ratio both long-term and short-term.
 Framing financial policies with regards to cash control, lending, borrowings,etc.
 A finance manager ensures that the scarce financial resources are maximally utilized in
the best possible manner at least cost in order to get maximum returns on investment.
 Changes in economic conditions and govt. policies changes in economic conditions and
government policies exert adverse influence on the effectiveness of financial plan.
 Regid view- if the financial managers follow a regid view regarding the financial plan of
corporation, and hestitate in making necessary adjustment according to the changing
economics and business conditions.
RESEARCH METHODOLOGY:

Aberdeen examined the use, the experinces, and the intention of more than 140
companies performing financial planning, budgeting, and forecsating in adiverse set of
indurtries. The online survey was supplemented with interview with select survey
respondents , gathering additional information on financial planning , budgeting and
forecasting strategies, experiences, and results.

LIMITATIONS:

Financial forecasts, no financial plan can exactly predict the future economic and the
business environment. If the forecasting is wrong, the financial plan would be herefore,
a financial plan should be periodically reviewed and necessary changes must be made in
accodance with the changinging economic and business environment.

Lack of co-ordination if there is not effective co-operation and co-ordination among

various officials of the coperation, it is difficult to implement even the ideal financial
plan successfully and the financial plan proves unsucessfully and ineffective.
CHAPTER - II
REVIEW OF LITERATURE
METHODS OF FANCIAL FORESCASTING AND PLANNING:

1. PERCENT OF SALES METHOD

2. BUDGETED EXPENSE METHOD
3. VARIATION METHOD
4. COMBINATION METHOD.

DATA COLLECTION:

 Primary data: the primary data is the data which is collected, by interviewing directly
with the organization concerned executives. This is the direct information gathered from
organization.
 Secondary data: the secondary data is the data which is gathered from publications and
websites.

Financial forecasting and planning:

INDUSTRY PROFILE:

In the most general sense of the word, a cement is a binder, a substance which
sets and hardens independently, and can bind other materials together. The word “cement” traces
to the Romans, who used the term “opus caementicium” to describe mansonry which resembled
concrete and was made from crushed rocks with burnt lime as binder. The volcanic binder ash
and pulverized brick additive which were later referred as to cementum, cimentum, cement and
cement. Cement s used in construction are characterized as hydraulic or non-hydraulic.

The most important use of cement is the production of mortar and concrete the bonding of
natural or artificial aggregates to form a strong building material which is durable in the face of
normal environmental effects.

Concrete should not be confused with cement because the term cement refers only to the dry
powder substance used to bind the aggregate materials of concrete. Upon the addition of water
and or additives the cement mixture is referred to as concrete, especially if aggregates have been
added.

If is uncertain where it was first discovered that a combination of hydrated non-hydraulic lime
and a pozzolan produces a hydraulic mixture (see also: Pozzolanic reaction), but concrete made
from such mixtures was first used on a large scale by Romanengineers. They used both natural
pozzolans (trass or pumice) and the artificial pozzolans (ground brick or pottery) in these
concretes. Many excellent examples of structures made from these concretes are still standing,
notably the huge monolithic dome of the pantheon in rome and the massive baths of Caracalla.
The vast system of roman aqueducts also made extensive use of hydraulic cement. The use of
structural concrete disappeared in the medieval Europe, although weak pozzolanic concrete
continued to used as a core fill in stone walls and columns.

Modern cement

Modern hydraulic began to be developed from the star of the industrial revolution (around 1800),
driven by the three main needs:

Hydraulic renders for finishing brick building in wet climates

Hydraulic mortars for masonry constructions of harbor work, etc, in contact with sea water.

Development of strong concretes.

In Britain particularly, good quality building stone become more expensive during a period of
rapid growth, and it become a common practice to construct prestige buildings from the new
industrial bricks, and to finish them with a stucco to limitate stone. Hydraulic limes were favored

For this, but the need for a fast time encouraged the development of new cements. Most famous
was parker’s “roman cement.” This was developed by james parkers in the 1780, and finally
patented in 1796. It was in fact, nothing like any material used by roman, but was a natural
cement made by burning septaria nodules that are found in certain clay deposits and that
contains both clay material and calcium corbonate. The burnt nodules were ground to a fine
powder. This product, made into a mortar with sand, set in 5-15minutes.the success of roman
cement led other manufactures to develop rival products by burning artificial mixtures of clay
and chalk.

John smeaton made an important contribution to the development of cement when he was
planning the construction of third eddystone light house(1755-9) in the English channel. He
needed a hydraulic mortar that would set and develop some strength in the twelve hours period
between successive high tides. He performed an exahaustive market research on the available
hydraulic limes, visiting their production sites and noted that the hydraulicity of the lime was
directly related to clay of the limestone from which it was made. Smeaton was a civil engineer
by profession and look the idea no further. Apparently unaware of smeatons work, the same
principle was identified by Louis vicat in the first decade of the nintheen century. Vicat went on
to devise a method of combining chalk and clay into an intimate mixture, and burning this ,
produced an artificial cement in a similar mannar around the same time, but did not obtain a
parent until 1822. In 1824, joseph aspdin patended a similar material, which he called Portland
cement, because the render made from it was in color to the prestigious Portland stone.

All the above products could not complete with lime/pozzolan concrete because of fastsetting
and low earil strength . hydraulic limes, natural cement and artificial cements all rely upon their
belt content for strength development. Belite developes strength slowly. Becaused they was
burned at a temperature below 1250C of many weeks before formwork, they contained no alite,
which is responsible for early strength in modern cement. The first cement to consistency contain
alite was made by joseph aspdin’s son William in the early 1840s. this was what we call today
modern Portland cement.