Costing Project

CHAPTER I

1 INTRODUCTION

1.1 COMPANY PROFILE

Gupta Paints And Chemical is one of the largest automotive paint company in West Bengal and it operates in three states namely West Bengal,Orrisa and Jharkhand and has one paint manufacturing facilities in Kolkata and is setting up a new larger modern plant in Kolkata

The company has come a long way since its small beginnings in 1982. Two brothers who were willing to mark their foot in the world of paint industry and thus ended up setting up a partnership firm. Over the course of 27 years, Gupta Paints and Chemical became a leading market player in the unorganized paints industry in Kolkata and periphery. Driven by its strong consumer-focus and innovative spirit, the company has been the market leader in paints since 1982. Today it is double the size of any other unorganized paint company in Kolkata. Gupta Paints And Chemical manufactures a wide range of paints for Decorative and Industrial use.

Vertical integration has seen it diversify into products such as Automotive Paints, synthetic paints, automotive and synthetic primers, stoving paints and thinners.

Satish Gupta and Ashish Gupta are the two brothers who started the company.Satish Gupta who after finishing his studies joined his family business and Ashish Gupta who was pursuing charted accountant course, in the mean time they met vikram sarkar who was earlier working with Shalimar paints who motivated them to venture out into paint industry. This was how the company was started and now the company plans to expand its horizon by becoming a national level player in the paint industry.

VISION: -

► To be a vibrant and growth oriented Automotive paint Company.

► To be of national player in the paint industry.

► To be committed to attain sustained excellence in performance, safety, standards,

Customer care and environment management.

► To be provide a fillip to the development of the region.

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132( EAST SIKKIM)

1

MISSION: -

● To develop core competencies in manufacturing automotive paints products with

A focus on achieving international standards on safety, quality and cost.

● To penetrate the paint market throughout the nation.

● To create a pool of knowledgeable and inspired employees and ensure their Professional and

personal growth.

● To contribute towards the development of the region.

NEXT YEAR PROJECTIONS

Introducing Water – based Paints.

Repositioning of existing Brands in Rural Market.

Broadening of Distribution Network.

Adding more choices for shades and effects.

Enhancing Better Quality

Demand will be generated through the new constructions coming in housing

and industries.


2

Paint is used to protect, preserve, decorate, or add functionality to an object or surface by covering it with a pigmented coating. Examples of protection are the covering of metal to retard corrosion, and the painting of a house to help protect it from the elements. An example of decoration is to add festive trim to a room's interior. Paint may be used to add functionality by modifying light reflection or heat radiation of a surface. Another example of functionality is the use of color to identify hazards or to identify the function of equipment, such as pipelines or military ammunition.

As There are many types of artists' paints: for example, oils, watercolor, acrylic, gouache etc.Paint can be applied to almost any kind of object. It is used, among many other uses, in the production of art, in industrial coating, as a driving aid (road surface marking), or as a barrier to prevent corrosion or water damage. Paint is a semi finished product, or intermediate good as the final product is the painted article itself.

Paint can also be mixed with glaze to create various textures and patterns. This process is referred to as faux finish and is quite popular with discerning homeowners, architects, interior designers, and scenic designers.

Cave paintings drawn with red and yellow ochre, hematite, manganese oxide and charcoal may have been made by early Homo sapiens as long as 40,000 years ago.

Ancient painted walls at Denerdera, Egypt, which were exposed for many ages to the open air, still possess a perfect brilliancy of color, as vivid as when they were painted about 2,000 years ago. The Egyptians mixed their colors with some gummy substance, and applied them separated from each other without any blending or mixture. They appeared to have used six colors: white, black, blue, red, yellow, and green. They first covered the field entirely with white, upon which they traced the design in black, leaving out the lights of the ground color. They used minimum for red, and generally of a dark tinge.

Pliny mentions some painted ceilings in his day in the town of Ardea, which had been executed at a date prior to the foundation of Rome. He expresses great surprise and admiration at their freshness, after the lapse of so many centuries.

Paint was made with the yolk of eggs and therefore, the substance would harden and stick onto the surface applied. Some red paint was made of blood of animal. Pigments were made from plants and sands.


3

http://en.wikipedia.org/wiki/Blood

http://en.wikipedia.org/wiki/Egg_(food)

http://en.wikipedia.org/wiki/Rome

http://en.wikipedia.org/wiki/Ardea

http://en.wikipedia.org/wiki/Pliny_the_Elder

http://en.wikipedia.org/wiki/Minium

http://en.wikipedia.org/wiki/Egypt

http://en.wikipedia.org/w/index.php?title=Denerdera&action=edit&redlink=1

http://en.wikipedia.org/wiki/Homo_sapiens

http://en.wikipedia.org/wiki/Charcoal

http://en.wikipedia.org/wiki/Manganese_oxide

http://en.wikipedia.org/wiki/Hematite

http://en.wikipedia.org/wiki/Ochre

http://en.wikipedia.org/wiki/Cave_paintings

http://en.wikipedia.org/wiki/Faux_finish

http://en.wikipedia.org/wiki/Glaze_(painting_technique)

http://en.wikipedia.org/wiki/Intermediate_good

http://en.wikipedia.org/wiki/Corrosion

http://en.wikipedia.org/wiki/Road_surface_marking

http://en.wikipedia.org/wiki/Industrial_coating

http://en.wikipedia.org/wiki/Art

http://en.wikipedia.org/wiki/Gouache

http://en.wikipedia.org/wiki/Acrylic_paint

http://en.wikipedia.org/wiki/Watercolour

http://en.wikipedia.org/wiki/Oil_paint

http://en.wikipedia.org/wiki/Ammunition

http://en.wikipedia.org/wiki/Pipeline_transport

http://en.wikipedia.org/wiki/Heat_radiation

http://en.wikipedia.org/wiki/Light_reflection

http://en.wikipedia.org/wiki/Corrosion

http://en.wikipedia.org/wiki/Metal

INDIAN PAINT INDUSTRY SENARIO


4

1.2ABOUT THE PROJECT WORK

The project work has been undertaken for fulfillment of course requirement for

completion of two year Masters of Business Administration program from Sikkim Manipal

Institute of Technology.

I selected Punjab national bank, Bihar sharif Nalanda Bihar to carry out the project work.

I was assigned to do my project on the topic “Working capital assistance by P.N.B at Punjab

National Bank” .The reason behind the selection of this topic is the role of working capital has

gained tremendous importance and is of utmost importance for the development and marketing

of the business. The P.N.B is one of the leading bank of banking industry of India . With the

opening of market and in the era of competitiveness of lot of national and multinational banks

are coming in the field of baknking sector and as such the banks have to ensure the satisfaction

of the customers and also the companies have to make sure of a safe and healthy environment of

their staff along with making a profit. Organizations need to establish their own standards for

safe practice tailored to their business demands and requirements. It should be made sure that the

workforce has the correct level of knowledge and skill to operate safely and that a safe and

healthy working environment is maintained. It is so due to the fact that it is the manpower which

gives an edge to the organization over its counterpart.

Since banks main activity is to collect the money from the customer and lend it to the place

where it is more secured and provides the optimum return. To select such place it is very

necessary for the banks, that before lending the money or proving the loan to the customer, bank

must go for the full information about the firm or to the person whom it is lending the money.

Then only it will succeed in lending the money to the place where they will get the maximum

return.


5

A. OBJECTIVE OF THE STUDY :

►The primary objective of the study is to estimate the security of the investment or loan provided by Punjab National Bank.

► the other primary objective of the study is to estimate the profit made by the company by

Selling its product under the prevailing manufacturing condition.

►Based on the above objective the other objective is to work out the way to Reduce the cost of the products which are manufactured at Gupta Paints and Chemicals. Provide required data for fixing sales price for submitting tenders, quotations etc

B. SCOPE OF THE STUDY :

The study is only confined to Gupta Paints and Chemicals .In the present competitive business scenario each and every organization are looking for ways to gain an competitive advantage over their competitors so as to maximize their penetration in the market. The best possible ways to gain a competitive advantage is by achieving an optimal and the minimal cost of production which would give the company an edge over their competitors. The company could sell its products at a cheaper rate compared to its competitors which would help the company to penetrate the market. Hence this project tries to work out the cost of production of paints at Gupta Paints and Chemicals and compare it with its competitors and try to find out the ways to minimize the cost of production and how the company could penetrate the market.


6

CHAPTER II

METHODOLOGY

2.1 Research Design

For an effectiveness of systematic research a sound plan is needed. The plan is called a research design. It is planning a strategy of conducting research. It plans to what is to be observed, how to record observations. Research design is thus a detailed plan of how the goal of the research will be achieved. So for getting valid results out of the research, the research has been systematically and technically arranged and implemented. In my first stage I thought and decided to study in brief the Theoretical Overview as what is Working Capital and Working Capital management.

After knowing in brief about the Working Capital and Working Capital management in general, I decided to know as how working capital is calculated and how Punjab National Bank helps the small scale industries in maintain those working capital and what are the steps taken by bank for the security of the loan.

2.2 METHODOLOGY OF THE STUDY :

(1) The present study is based on secondary data collected from the Books of accounts and bills and vouchers of Punjab National Bank Review of last year’s annual Reports. (2) To a small extent, this study is based on primary data collected Through personal interview of the employees, dealers and management personnel.


7

2.3 Selection of the Sample

This study being analytical in nature was developed with the help of

secondary data collected from the statistics obtained from the Punjab

National Bank. Many reference books and annual reports were also

resources of data. Primary data was used to confirm the findings of

secondary data. Informal discussions with concerned executives, dealers and

the faculty members were the major sources of the primary data.

2.4 SAMPLING FRAME

A sampling frame may be defined as the listing of the general components of the individual units

that compromise the defined population.

a) People: The people include all the empoyees, manager and people from top

management of P.N.B.

b) Activities : Activities included observation of work in different departments and

having hands on experience at work.

2.5 SAMPLING TECHNIQUE

The Probability Sampling Method.

Tabulation Method for analysis.

Graphical representation of Data


8

2.6 Sources of Data

2.6.1 PRIMARY DATA

The project doesn’t involve any Primary data and the objective also didn’t

require any Primary data. Thus the research is based on the secondary data

attached with the report. The only Primary data used was to confirm the

findings of secondary data. Informal discussions with concerned executives,

dealers and the faculty members were the major sources of the primary data.

2.6.2 SECONDEARY DATA

The project involves the working capital assistance provided by Punjab National Bank to the

small scale industries of the local market of Bihar Sharif, so the entire project is based on

Secondary Data collected from the Financial Department of the company. The data collected

are:-

Financial Statements

Bill and vouchers.

Informal discussion with the concerned executives and dealers.

The main advantages of Secondary Data are that the information obtained

relates to Original figures of the Company. It is not influential by anyone

and it is not biased

2.7 Tools of Data Analysis

The tools of data analysis are Graphs and Tables, which are prepared by using simple

mathematical and statistical tools.


9

2.8 Findings

The cost of production is fairly good, but the sales are being hampered by the production

constraint faced by the company.

The products offered by Gupta Paints are fairly cheaper compared to the the

price offered by its competitors.

The company is making a profit of 5%, along with this the dealers are also

being allowed a 10% discounts on all products.

The efficiency of the workers is affected by the informal ambience prevailing in the

factory.

The other factor found out was that the company has an undeveloped distribution channel

which concentrates only in Kolkata and surroundings, because of which the people are

not aware of the brand, which hinders the sale.

The company is unable to match the demand with the supply because of production

constrain.

The company follows the manual method to pack the paints.


10

2.9 LIMITATION OF THE STUDY:

Every study conducted may have certain shortcomings and unfortunately ours is also a similar case. A few errors have crept in despite our best efforts to avoid them but it is expected that still our study and findings are very much relevant.

The greatest limitation is the time factor. To study the working capital assistance byPunjab National Bank, requires a lot of times, it is not possible to cover all the working capital assistance provided by P.N.B in such a short span of time i.e. 10 weeks (2.5) months.

Some of the Information about the company has not been disclosed by the company due to their policies; hence some of the data are based on assumption.

Huge Mathematical Calculations is involved in working capital analyasis analysis which could lead into some calculation errors.

.

The other limiting factor was the lack of cooperation from the management of the organization.

There was not sufficient time to measure the effectiveness of the recommendation.


11

CHAPTER III

FINDINGS AND ANALYSIS

CONCEPTUAL DEFINATION

Working Capital: The term working capital refers to the capital required to carry on the daily activities of the business. It is very vital for any sort of business.There are two concept of working capital:

1. Gross working capital.2. Net working capital.

Gross Working Capital: It refers to the firms total investment in current or circulating assets.

Net Working Capital: The term net working capital has been defined in two different ways:

1. It is the the excess of current assets over current liabilities. Or we may define it as the difference between current assets and current liabilities.

2. It is that portion of firm’s current assets which is financed by the long term fundd of the company.

Thus figouuraticaly we can express net working capital in the following ways:

Net working capital = Current assets – Current liabilities..

Need for working capital : since we know that basic objective of every business is to maximize the wealth of shareholders’. This can be possible only when the revenue of sales is maximized. However, sales do not convert into cash instantaneously. There is always a time gap between the sale of goods and receipt of cash. Working capital is required for this period in order to sustain the sales activity. In case adequate working capital is not available for this period, the company will not be in a position to sustain the sales since it may not in a position to purchase raw materials, pay wages and other expenses required for manufacturing the product to be sold.

The time gap between the sales and their actual realization in cash is technically termed as ‘operating cycle’ of the business.


12

--------------------------------------------------------------Operating cycle of a business can be represented in the chart form as follows:

Types of working capital : Working capital can be divided into two category on the basis of time:

1. Permanent Working Capital.2. Temporary Working Capital.

Permanent working capital: This refers to that minimum amount oof investment in all current assets which is required at all times to carry out minimum level of business activities.

Temporary working capital: The amount of such working capital keeps on fluctuating from time to time on the basis of business activities. In other words, it represents additionalcurrent assets required at different times during the operating year.


13

Cash Finished Goods

Account Receivable

Raw Material

Work In Progress

estima

Estimation of working capital: In order to determine the amount of working capital needed by a firm, a number of factors viz. production policies, nature of business, length of manufacturing process, credit policies, rapidity of turnover, seasonal fluctuation are to be considered by the finance manager. Besides this a finance manager can adopt the following techniques for assessing the working capital requirements of a firm.

1.Components of working capital approach: In this approach every component of current assets and current liabilities is being estimated. Since we know that working capital is the excess of current assets over its current liabilities. If we estimate the every components of current assets and current liabilities, we can estimate net working capital.

2.Percent of sales approach: This is the most simple and traditional approach of estimating the working capital requirements. On the basis of past experience between sales and working capital requirements, a ratio can be determined for estimating the working capital requirements in the future.

3.Operating cycle approach: According to this approach, the requirement of working capital depends upon the operating cycle of the business. The operating cycle begins with acquisition of raw materials and end with collection of receivables. It may broadly classified into four stages.

(1) Raw material s and stores storage stage. (2) Work in process stage. (3) Finished goods inventory stage. (4) Receivables stage.


14

Symbolically, the duration of working capital cycle can put as follows:

O = R+W+F+D-C.

Assessment of working capital requirement by Shiva Sagar Rice Mill Private LTD

Operating Statement as per the p/l account for the year ending.


15

Assessment of working capital requirement by Shiva Sagar Rice Mill Private LTD

Operating Statement as per the p/l account for the year ending.

Operating statement

1. Gross sales

Domestic sales

Export sales

Total

Less: excise duty

Net sales

2.Cost of sales

i.Raw materials( incl. stores and other items used in process of manufacture)

Indigenous

Imported

ii. others spares

Imported

Indigenous

2010Proj

318.23

00000

318.23

00000

318.23

277.63

000.00

000.00

000.00

2011Proj

371.26

00000

371.26

00000

371.26

323.90

000.00

000.00

000.00

2012Proj

424.30

00000

424.30

00000

424.30

370.18

000.00

000.00

000.00

2013Proj

424.30

00000

424.30

00000

424.30

370.18

000.00

000.00

000.00

2014Proj

424.30

00000

424.30

00000

424.30

370.18

000.00

000.00

000.00

2015proj

424.30

00000

424.30

00000

424.30

370.18

000.00

000.00

000.00


16

iii. power & fuel

iv. direct labour(factory wages & salary)

v. other manufacturing expences

vi depreciation

subtotal (item i to iv )

vii. add : opening stock in process

sub-total

viii. deduct closing stock in process

Cost of production

ix. add: opening stock of finished goods

x. deduct: closing stock of finished goods

3.selling general & admin exps.

4.sub-total

5. Operating profit before interest.

6. Interest(T.L+W.C)

8. Operating profit after interest

9. (i). Add other non

6.05

4.20

2.62

7.92

298.62

000.00

298.62

000.00

298.62

000.00

5.97

0.80

293.45

24.78

11.03

13.75

7.06

4.41

2.93

7.92

346.22

000.00

346.22

000.00

346.22

5.97

6.97

0.93

346.15

25.11

10.56

14.55

8.06

4.63

3.05

7.92

393.84

000.00

393.84

000.00

393.84

6.97

7.96

1.06

393.91

30.39

9.89

20.50

8.06

4.86

3.08

7.92

394.10

000.00

394.10

000.00

394.10

7.96

7.96

1.06

395.16

29.14

9.22

19.92

8.06

4.86

3.08

7.92

394.10

000.00

394.10

000.00

394.10

7.96

7.96

1.06

395.16

29.14

8.54

20.60

8.06

4.86

3.08

7.92

394.10

000.00

394.10

000.00

394.10

7.96

7.96

1.06

395.16

29.14

7.87

21.27


17

operating income

a. Other income

b. Interest income

Sub-total income

(ii). Deduct other non –operating expenses

a. Prov. For doubtful debts

b. Write-off

c. Prov. For wealth tax

d. Prior period adjustments

Sub-total (expenses)

(iii). Net other non-operating income/expenses

10. Profit before tax/loss

11. Provision for taxes.

Current year

Defferred Tax provision for the year

12. Income tax of earlier year

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

13.75

0.72

00.00

000.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

14.55

2.53

00.00

000.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

20.50

5.70

00.00

000.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

19.92

6.39

00.00

000.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

20.60

7.28

00.00

000.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

21.27

8.03

00.00

000.00


18

13. Net profit/Loss

14. a. Equity dividend paid amoun

b. Dividend ratec. Dividend tax

15. Retained profit

16. Retained profit/net profit (%age)

PBDIT

PBT/SALES

Cash Accrual

RM to sales(%)

Overhead to sales

Operating cost to sales

13.03

00--

13.03

100

32.70

4.32

20.95

85.37

0.25

91.96

12.02

1--

11.02

100

33.03

3.92

19.94

86.97

0.25

92.99

14.80

2--

12.80

100

38.31

4.83

22.72

87.01

0.25

92.59

13.53

2--

11.53

100

37.06

4.69

21.45

87.24

0.25

92.88

13.32

2--

11.32

100

37.06

4.86

21.24

87.24

0.25

92.88

13.24

2--

11.34

100

37.06

5.01

21.16

87.24

0.25

92.88


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Shiv Sagar Rice Mill Private Ltd.

As per balance sheet Dated

2010proj

2011proj

2012proj

2013proj

2014proj

2015proj

LIABLITIES

CURRENT LIABLITIES

1. Short term borrowings from banks (including bills purchased and discount and the excess borrowing placed on repayment basis)

(i) From applicant bank

(ii) From other banks

Sub-total A:

2. Short term borrowing from others

3. Sundry creditors(trade)

4. Sundry creditors(capital goods)

5. Advances payments from customers

6. Provision for taxation7. Dividend

payable(including tax thereon)

8. Other statutory liabilities(due within one year)

9. Deposits/instt. On term loans/DPGS/debenture

15.750.00

15.75

00.00

00.00

2.78

0.32

0.00

0.00

0.00

0.00

15.750.00

15.75

0.00

0.00

3.24

0.36

0.00

0.00

0.00

0.00

15.750.00

15.75

0.00

0.00

3.70

0.42

0.00

0.00

0.00

0.00

15.750.00

15.75

0.00

0.00

3.70

0.42

0.00

0.00

0.00

0.00

15.750.00

15.75

0.00

0.00

3.70

0.42

0.00

0.00

0.00

0.00

15.750.00

15.75

0.00

0.00

3.70

0.42

0.00

0.00

0.00

0.00


20

s etc.

10. Other current liabilities and prov.

Sub-total B:

11. Total Current Assets

TERM LIABLITIES

12. Debentures (not maturing within one year)

13. Preference shares(redeemable after one year)

14. Term loan from(excl. installments, payable within one year)

15. Term deposits(repayable after year)

16. Other term liabilities(unsecured loan)

17. Total term liabilities18. Total outside

liabilities (items 11+17)

NET WORTH

19. Ordinary share capital20. General reserve21. Revaluation reserve22. Other reserves23. Surplus 24. Net worth25. Total liabilities

0.00

3.10

18.85

0.00

0.00

61.95

0.00

3.41

65.36

84.21

30.0013.020.000.000.0043.02127.23

0.00

3.60

19.35

0.00

0.00

56.95

0.00

2.73

59.68

79.03

30.0023.920.000.000.0053.95132.98

0.00

4.12

19.87

0.00

0.00

51.95

0.00

2.05

54.00

73.87

30.0036.660.000.000.0066.66140.53

0.00

4.12

19.87

0.00

0.00

46.95

0.00

1.37

48.32

68.19

30.0048.100.000.000.0078.10146.29

0.00

4.12

19.87

0.00

0.00

41.95

0.00

0.68

42.63

62.50

30.0059.320.000.000.0089.32151.82

0.00

4.12

19.87

0.00

0.00

36.95

0.00

0.00

36.95

56.82

30.0070.460.000.000.00100.46157.28


21

Thus from the above calculation we can see that the total liabilities of the business is 127.23 lacs rupees. The liabilities consists of current liabilities, Term liabilities, and the net worth of the business that is the owner’s capital. Thus

Total Liabilities = C.L + T.L + N.W. = 18.65 + 65.36 + 43.02 = 127.23.

This can be shown with the help of following chart grph.


22

2010proj

2011proj

2012proj

2013proj

2014proj

2015proj

CURRENT ASSETS

26. Cash & bank balances27. Investment other than

long term

i. Govt. and other trustee securities.

ii. Fixed deposit with bank

iii. Others

28. i. Receivables other than defferd and export receivables including bills purchased and discount by banks.)

ii. Export receivables(including bills purchased and discounted by banks)

29. Installment of deffered receivables (due within one year)

30. Inventory

i. Raw material (including store and other items used in the process of manufacture)

ii. Stock in processiii. Finished goodsiv. Other consumables

spares 31.Advances to suppliers of raw material and

6.48

---

4.24

0.00

0.00

19.86

13.88

1.004.98-

11.00

6.23

---

4.95

0.00

0.00

23.17

16.2

1.165.81-

21.00

6.77

---

5.66

0.00

0.00

26.48

18.51

1.336.64-

32.00

6.54

---

5.66

0.00

0.00

26.84

18.51

1.336.64-

46.00

5.66

0.00

0.00

26.48

18.51

1.336.64-

58.00

---

5.66

0.00

0.00

26.48

18.51

1.336.64-

72.00


23

stores/spares

32. Advance payment of taxes.

33. Other current assets

i. Advances to staff ii. Claims

recoverableiii. Others due within

one year.

34. Total current assets(total of items 26 to 33)

0.00

---

41.58

0.00

---

55.35

0.00

---

70.91

0.00

---

84.68

0.00

---

98.23

0.00

---

111.70

We have calculated current liabilities and current assets individually. This two figure can be shown with the help of following bar graph.


24

We can see from the figure that projected current assets of shiv sagar rice mill ltd is in increasing trend from year to year , where as its current liabilities remains almost constant. Since we know that working capital is the firm’s investment in its total current assets and its net working capital is the excess of current assets over its current liabilities. Or it is the proportion of firms current assets which is to be financed by the firm long term funds. Thus we can conclude from the figure that most portion of the shiv sagar rice mills private ltd is supposed to be financed by the long term fund of the organization.


25

2010proj

2011proj

2012proj

2013proj

2014proj

2015Proj


26

Fixed Assets

35.Gross Block(land and building, machinery, work in progress etc.)

36.Depreciation to date

37. Net block item

Other Noncurrent assets

TOTAL ASSETS

93.10

7.92

85.18

0.47

127.23

85.18

7.92

77.26

0.37

132.98

77.26

7.92

69.34

0.28

140.53

69.34

7.92

61.42

0.19

146.29

61.42

7.92

53.50

0.09

151.82

53.50

7.92

45.58

0.00

157.28

2010proj

2011proj

2012proj

2013proj

2014proj

2015Proj


27

TANGIBLE NET WORTH

NET WORKING CAPITAL

CURRENT RATIO

TOL/TNW

TOTAL TERM LIABLITIES/TNW

NET SALES/TOTAL TANGIBLE ASSETS

CURRENT RATIO(WITHOUT T/L INST.)

PBDIT/INTEREST

PAT/NETSALES

ROCE

(INVT+RECEIVABLE)/ SALES DAYS

43.02

22.73

2.21

1.96

1.52

2.50

2.21

1.88

0.57%

16.32%

27

53.95

36.00

2.86

1.46

1.11

2.79

2.86

3.13

3.68%

24.84%

27

66.66

51.04

3.57

1.11

0.81

3.02

3.57

3.87

3.57%

27.26%

27

78.10

64.81

4.26

0.87

0.62

2.90

4.26

4.02

3.19%

25.33%

27

89.32

78.36

4.94

0.70

0.46

2.79

4.94

4.34

3.14%

24.41%

28

100.46

91.83

5.62

0.57

0.37

2.70

5.62

4.71

3.12%

23.56%

28


28

The elements of cost exhibited in a cost sheet are basically to facilitate the process of cost analysis for managerial decision making and cost control. The important elements of cost are discussed below.

Direct material cost

Direct material cost refers to the cost of the material which becomes a major part of the finished product. This material of the product can be identified, measured and is directly chargeable to the product.In our cost sheet the raw material, unloading charge and the input tax has been considered as the direct material and the detail of which are given below.

The cost of raw material required to manufacture 100kgs of automotive paints.

OPENING STOCK OF AUTOMOTIVE PAINT

The amount of raw material available with the company at the beginning of the month (June) equals to the amount of raw material required to manufacture 2400 kgs of paintsTherefore the cost of the opening stock =Rs95.76*2400 =Rs229824

The amount of tax applicable on the opening stock =Rs229824*4%

=Rs229824*(4/100)

=Rs9193

Therefore the total value of the opening stock =Rs (229824+9193)

=Rs239017.

PURCHASE

The total purchase made during the month of June was 22000 kgs of raw material

The total cost of 22000kgs raw material=Rs22000*95.76SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

( EAST SIKKIM)

29

=Rs2106720


=Rs2106720*(4/100)

=Rs 84269CLOSING STOCK

The amount of raw material available with the company at the end of the month (June) equals to the amount of raw material required to manufacture 1400 kgs of paints

Therefore the cost of the closing stock =Rs95.76*1400 =Rs134064The amount of tax applicable on the closing stock= Rs134064*(4/100)

=Rs5363

Therefore the total value of the closing stock =Rs (134064+5363) =Rs139427

TRANSPORTATION EXPENSES

This expense includes the cost involved in carriage inward of raw material .The transportation cost involved in procuring the raw material is nil because the rate of raw material are delivered FOR destination, the only charge involved in procuring raw material is the unloading charge which is paid to the labours who unload the raw material from the truck and this cost comes up to Rs 460

Direct labour

The workers who work directly with the raw material in converting them to finish goods represent the direct labour. It is the cost which can be identified with, and allocated to the cost centers or cost units.The details of the workers are given below

The table below gives the detail of the employees along with the monthly Cost involved in maintaining them.

DISCRIPTION OF WORKER

NO.S OF WORKERS

WAGE(Rs) AMOUNT(Rs)

Production SupervisorShop Floor Workers

117

180004600

1800078200


30

Direct labour

Factory Security Guard Store keeper Cleaner

Indirect wageFinance Manager/AccountantOffice mangerOffice ClerkOffice staff expense

Salesmen

111

111

5

300055001000

1500080004200

4400

…………………………96200

300055001000…………………..95001500080004200…………………..2720022000

TOTAL 29 154900

Direct expenses

Any expenditure other than the direct material and the labour, directly incurred on a specific product is called direct expenses. It can be identified with and allocated to the cost centre or cost unit. The detail of the direct expense associated with our product is given below. The table below gives the detail of the packaging container required for packing the automotive paints and the associated cost.

PARTICULARS QUANTITY (Pcs) RATE (Rs) AMOUNT (Rs)1 LITRE500 ML200ML100ML 50 ML

145008000800090007800

21750080000600005400025350

21000095000580005750026000

TOTAL 436850

Factory overhead


31

All cost incurred in the factory that cannot be considered direct material or direct labour or as direct expense are classified as factory overhead. It includes indirect labour, material and expense. The details of which are given below

WORKER WELFARE EXPENSE

INSENTIVE 12% of salary in case of maximum production (i.e. 23000kgs) = 96200*(12/100) = Rs11544

Insurance of workers =Rs 500*No’s of workers (annually 6000) =Rs 500*29 =Rs 14500

WASTAGE DURING PRODUCTION

The amount of wastage that occurs while manufacturing of paint is assumed to be 2%.Therefore the cost involved in wastage is = (cost of direct material +cost of direct labour)*2% =Rs (2291039+96200)*(2/100)=Rs47745.

Factory Electricity

The table below gives the detail of the electricity consumed at factory along with the monthly Cost involved in the consumption

ELECTRICITY CONSUMED RATE AMOUNT3200KWH 3.65 15247TOTAL 15247

Note:-the total cost of electricity includes the meter rent and the taxes. Along with this the rate mentioned above is the rate charged at the lower slab of consumption. In practical the amount of


32

electricity consumed falls in two slabs. Here for simplicity the net amount of bill has been mentioned.

Factory stationary

The total cost involved in factory stationary is given below in the table

PARTICULARS AMOUNTPurchase requisition padPurchase order slipBin card Store ledgers

250

TOTAL 250

Note: - all the stationary and printing requirement are ordered at the beginning of the financial year, hence out here the yearly expense has been averaged to monthly expense

Maintenance expense

The amount allocated for the maintenance of the machinery, electrical fittings and general works is Rs2500.Note:-the maintenance cost dose not remains constant, it may vary according to the need of the work.the amount mentioned above has been averaged from the yearly fund allocated to the maintanance work in the previous financial year.

Depreciation

The amount charged against depreciation is at the rate of 1% of the total fixed assets of Rs 900000 in the form of building and machinery which amounts to Rs 9000.

Note:-this amount has been taken from the previous year financial report.

SAFTEY EXPENSE

The amount allocated for the safety of the factory and the employees for in the form of fire extinguisher and medical first aid is Rs2000.

MACHINARY SPARES AND OILS

The amount allocated for the spare parts like the belts, rotating blades, bush carbon etc is Rs1000. And the amount allocated for the machine oil and grease required for smooth running of machine is Rs 300.


33

Along with this the expense incurred on cleaning materials which consist of broom sticks, cleaner rod, cleaning pad and cleaner liquid comes to Rs 250Note:-the cost of machinery spares and oil dose not remains constant; it may vary according to the need of the work. The amount mentioned above has been averaged from the yearly fund allocated to the machinery spares and oil in the previous financial year

Administration overheadOFFICE STATIONARY

It includes cost of planning and controlling the policies and operation of a business enterprise.

The details of the administrative overhead are given below

Note: - all the stationary and printing requirement are ordered at the beginning of the financial year, hence out here the yearly expense has been averaged to monthly expense

TELECOMMUNICATION EXPENSES

The

telecommunication expenses comprise of the under mentioned services rendered by the telecom department

Broadband service Fax


34

PARTICULARS AMOUNTEnvelopsA4 size papersCartiage refillingVisiting cardsLetter padsPen, stapler pin,glues,tapes etc

10036020010010040

TOTAL 900


10036020010010040

TOTAL 900


10036020010010040

TOTAL 900

Telephone connectionThe total cost incurred for the above mention services is Rs2865.

Note:-the total cost of electricity includes the meter rent and the taxes. Along with this the rate mentioned above is the rate charged at the lower slab of consumption. In practical the amount of electricity consumed falls in two slabs. Here for simplicity the net amount of bill has been mentioned

POSTAL EXPENSESThe postal expense consists of cost involved in posting the transport consignee copy to the dealers who have made the purchase. This expense comes up to Rs 500.

OTHER EXPENSESIt includes the expense involved in the office like the expense made in drinking water, tea, snacks and newspaper. This comes up to Rs 3000.

BANK EXPENSESIt includes the amount charged by the bank for issuing demand drafts and DACR and it amounts to Rs 500.

The table below gives the detail of the electricity consumed at office along with the monthly Cost involved in the consumption.

ELECTRICITY CONSUMED RATE AMOUNT600kwh 2.65 1750


35

Note:-the total cost of electricity includes the meter rent and the taxes. Along with this the rate mentioned above is the rate charged at the lower slab of consumption.

TAXES

The total output tax (VAT) charged on the finished product is 12.5%

Therefore the total tax charged on the automotive paint is = (factory cost+office &adm overhead+ selling and distribution overhead +profit)*12.5%

=Rs (2946525+36715+84500+209622)*(12.5/100)

=Rs415920

Selling and distribution overhead

It covers the cost of making sales .it includes expense of creating new demand and retaining existing demand. The details of selling overhead are as follows

TRANSPORTATION EXPENSES

This expense includes the cost involved in carriage outward involved in transporting the finished goods.

The cost involved in transporting the finished goods is shown in the table below


36

PARTICULAR QUANTITY RATE (Rs) AMOUNT(Rs)Paints carriage chargeLoading charge

21400 LITS3200 cartoons

1/LITRE0.5/cartoon

214001600

TOTAL 23000

ADVERTISING EXPENSES

The total cost involved in advertisement is shown below in the table

PARTICULARS AMOUNT (Rs)Festoon Cable TV advertisement

800700

TOTAL 1500

TRAVELLING EXPENSE

The total cost involved in travelling is given below in the table

PARTICULARS Detail AMOUNTMetro passmonthly allowance to salesmentwo wheeler expense

8*1505*1200

12006000800

TOTAL 8000

TOTAL SALES

The selling price of 1 litre of automotive paint is Rs196Therefore the amount of total sales is =Rs196*21390 =Rs4192440.

Packaging expense

PARTICULAR QUANTITY RATE(Rs) AMOUNT (Rs)CARDBOARD CARTOON

4000 7.5 30000

TOTAL 30000


37

SALES PROMOTION

Sales promotion is given to the customers in the form of cash back offer. Under this scheme there is a sticker in the cap of the synthetic paint in which the prize money amount is wrriten, when a customer returns the cap he gets the amount written on the cap. The amount written on the cap varies from Rs zero to Rs 50.in this form an amount of Rs 29914 is distributed.

DEALER MARGIN

Therefore the total discount allowed to the dealers is = (total sales *10%)

=Rs 4192440(10/100) =Rs 4192440

GUPTA PAINTS AND CHEMICALSCOST SHEET OF AUTOMOTIVE PAINT

For the month June (2009-10)Production 21390Lits

ELEMENTS AMOUNT(RS) TOTAL COST (RS)

COST PERUNIT(RS)

COST OF DIRECT MATERIAL CONSUMEDADD:OPENING STOCKPURCHASESINWARD CARRIAGE(UNLOADING)

2390172106720460


38

INPUT TAX (VAT 4%)LESS:CLOSING STOCK

DIRECT WAGESSHOP FLOOR WORKERSPRODUCTION SUPREVISOR

DIRECT EXPENSESCONTAINERS

PRIME COST…………………………………………

FACTORY OVERHEADINDIRECT MATERIALOIL AND GREASE MACHNINARY SPARES

INDIRECT WAGESSTORE KEEPERSECURITY EXPENSES

WORKERS WELFARE EXPENSEINSURANCEINSENTIVE

84269

139427

7820018000

436850

3001000

5500 3000

1450011544

2291039

96200

436850………………

2824089

ELEMENT AMOUNT(RS) TOTAL COST(RS)

COST PERUNIT(RS)

FACTORY EXPENSESWASTESTATIONARYELECTRICITYINSURANCECLEANING STAFFCLEANING MATERIALMAINTENANCE OF FACTORYSAFTEY EXPENSEDEPRECIATION OF PLANT & FACTORY

477452001524710001000250250020009000………………

114786……………


39

FACTORY COST……………………………………………OFFICE AND ADMINISTRATIVE OVERHEAD :

SALARY:OFFICE CLERKMANAGERSFINANCE MANAGER/ACCOUNTANTPARTNERS FEES

OFFICE:

OUTPUT TAX (VAT 12.5%)

STATIONARYLIGHTINGTELECOMMUNICATIONPOSTAL SERVICESOTHER EXPENSESBANK EXPENSES

COST OF PRODUCTION……………………………………………SELLING AND DISTRIBUTION OVERHEAD

SALESMEN SALARYTRAVELLING EXPENSE OF SALESMEN

ADVERTISINGPACKAGING EXPENSESCARRIAGE OUTWARDSALES PROMOTIONDIACOUNT ON SALE

COST OF GOOD SOLD

PROFIT

SALES

420080001500050000

414964

900175028655003000500

220008000

1500300002300038530419244

2938875

501679………………3440554

542274……………3982818

209622

4192440.


40

The cost of production of 21390 litres (23000kgs) of automobile paint is Rs3982818

Therefore the cost of production of 1 litre of automobile paint is = Rs3982818 /21390 =Rs 186.2

And the total sale of 21390 litres (23000kgs) of automobile paint comes up to Rs 4192440.

Therefore the selling price of 1litre of automobile paint is = Rs 4192440/21390 = Rs 196.

Therefore the profit made by the company on the sale of 21390 litres (23000kgs) of automobile paint is given by = total sales –cost of production.

= Rs 4192440- 3982818

= Rs 209622

And the profit per litre is = total profit/total production

= Rs209622/21390

=Rs9.8

SYNTHETIC ENAMEL

It is an oil-based paints and can have various combinations of solvents as the diluents, including aliphatics, aromatics, alcohols, and ketones. It is essentially used for the preservation of all types of architectural structures, including factories, from ordinary attacks of weather. Uncoated wood and metal are particularly susceptible to deterioration, especially in cities where soot and sulfur dioxide accelerate such action. Aside from their purely protective action, paints, varnishes, and lacquers increase the attractiveness of manufactured goods, as well as the aesthetic appeal ofa community of homes and their interiors.It is a fast-drying paint containing pigment suspended in an oil base. Theses paints can be diluted with thinner, and become water-resistant when dry. Depending on how much the paint is diluted or modified with acrylic gels, mediums, or pastes, the finished automotive painting can resemble a watercolor or an oil painting, or have its own unique characteristics not attainable with other media.


41

http://en.wikipedia.org/wiki/Oil_painting

http://en.wikipedia.org/wiki/Watercolor_painting

http://en.wikipedia.org/wiki/Paint

http://en.wikipedia.org/wiki/Ketone

http://en.wikipedia.org/wiki/Alcohol

PRODUCTION PROCESS FOR SYNTHETIC ENAMEL PAINTS

The synthetic enamel paints are manufactured in the multiple of 100 kgs and the whole process can be divided into five steps that are Charging, Dispersing, Stabilization Discharging and washing, Make up The amount of raw material required in each step of the manufacturing process is given below.

Charging and dispersing

In this step the following raw material are mixed in an attritor for 3 hours and are then dispersed upto 7+ level on the henchman gauge.05 kgs of Phillip Carbon10 kgs of RDCO08kgs of MTO 0.5 kg of zinc octate

Stabilization

In this step the raw material mixed in the above step is stabilized with the help of 10kgs of RDCO05 kgs of MTO, and then it is run for 30 mins in attritor.

Discharging and washingIn this step 03 kgs of MTO is added to the stabilized mixture in order to disperse the paint so formed.

Make up

In this step the above mixture is mixed and stirred in a stirrer followed by the addition of the under mentioned chemicals45 kgs of RDCO5 kgs of Long Oil Alkyd5 kgs of Malic1 kgs of Calcium Octate0.5 kgs of Cobalt Octate0.5 kgs of Lead Octate0.1 kgs of MEK Oxide1.2 kgs of MTO100kgs

The total quantity of raw material used is 100kgs and the weight per liter of the paint obtained by the above process is 1.01 which gives a yield of 99 liters per 100kgs of raw materials used. The direct material consists of the Raw materials required, inward carriage and the input tax to manufacture 100 kgs of synthetic enamel.

.


42

The details of the raw material along with it cost is given below in the table

PARTICULARS QUANTITY(Kgs) RATE(per Kgs) AMOUNT(Rs)

RDCOMTOZinc OctateSoya LecithinLong Oil AlkydMalicCalcium OctateCobalt OctateLead OctateMEK OxidePhillips Carbon

6517.20.50.25510.50.50.15

7256120408078120330120220220

468096360840039012016560221100

TOTAL 100 7968

TRANSPORTATION EXPENSE

The transportation expense is same as that of automotive paint

OPENING STOCK OF SYNTHETIC PAINT

The amount of raw material available with the company at the beginning of the month (June) Equals to the amount of raw material required to manufacture 1200 kgs of paints

Therefore the cost of the opening stock =Rs79.68*1200

=Rs95616


=Rs95616*(4/100)

=Rs3825

Therefore the total value of the opening stock =Rs (95616+3825)SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

( EAST SIKKIM)

43

=Rs99441

PURCHASE


The total cost of 22000kgs raw material=Rs23500*79.68

=Rs1872480


=Rs1872480*(4/100)

=Rs 74899CLOSING STOCKThe amount of raw material available with the company at the end of the month (June) equals to the amount of raw material required to manufacture 1700 kgs of paintsTherefore the cost of the closing stock =Rs79.68*1700

=Rs135456

The amount of tax applicable on the closing stock= Rs135456*(4/100) =Rs5418

Therefore the total value of the closing stock =Rs (135456+5418) =Rs140874

Direct labour –the cost of direct labour is same as that in case of automotive paint

Direct expense

The details of the containers required to pack synthetic enamels are given below in table

PARTICULARS QUANTITY(Kgs) RATE(per Kgs) AMOUNT(Rs)500 ML1 litre4 litre20 litre

394080001450350

101527.5125.5

380001260003640042840

TOTAL 243200

FACTORY OVERHEADSIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

( EAST SIKKIM)

44


The amount of wastage that occurs while manufacturing of paint is 2%.Therefore the cost involved in wastage is = (cost of direct material +cost of direct labour)*2% =Rs (1906406+96200)*(2/100)

=Rs40052

The other cost associated with the factory overhead remains the same as that of automotive paint

Office and Administrative overhead-

The cost associated with this overhead remains the same as in case of automotive paint.The only cost that vary is that in case of output tax (VAT12.5%)



=Rs (2350939 +86715+84500+170775)*(12.5/100)

=Rs 336616SALES PROMOTION

Sales promotion is given to the customers in the form of cash back offer. Under this scheme there is a sticker in the cap of the synthetic paint in which the prize money amount is wrriten, when a customer returns the cap he gets the amount written on the cap. The amount written on the cap varies from Rs zero to Rs 50.in this form an amount of Rs 42200 is distributed.

DEALER MARGINTherefore the total discount allowed to the dealers is = (total sales *10%)=Rs 3415500*10%=Rs 3415500*(10/100)=Rs385955


45

GUPTA PAINTS AND CHEMICALSCOST SHEET OF SYNTHETIC PAINT

For the month June (2009-10)Production 22770 Lits


COST PERUNIT(RS)

COST OF DIRECT MATERIAL CONSUMEDADD:OPENING STOCKPURCHASESINWARD CARRIAGE(UNLOADING)

994411872480460


46

INPUT TAX (VAT 4%)LESS:CLOSING STOCK


DIRECT EXPENSESCONTAINERS PRIME COST……………………………………………FACTORY OVERHEAD

INDIRECT MATERIAL

OIL AND GREASE MACHNINARY SPARES

INDIRECT WAGESSTORE KEEPERSECURITY EXPENSES

WORKERS WELFARE EXPENSE

INSURANCEINSENTIVE

74899

140874

7820018000

243200

3001000

5500 3000

1450011544

1906406

96200

243200………………2245806


COST PERUNIT(RS)

FACTORY EXPENSESWASTESTATIONARYELECTRICITYINSURANCECLEANING STAFFCLEANING MATERIALMAINTENANCE OF FACTORYSAFTEY EXPENSEDEPRECIATION OF PLANT &

400522001524710001000250250020009000 107093


47

FACTORY

FACTORY COST……………………………………………

OFFICE AND ADMINISTRATIVE OVERHEAD:SALARY:OFFICE CLERKMANAGERSFINANCE MANAGER/ACCOUNTANTPARTNERS FEES

OFFICE:



COST OF PRODUCTION…………………………………………SELLING AND DISTRIBUTION OVERHEAD



COST OF GOOD SOLD

PROFIT

SALES

………………

420080001500050000

336861

900175028655003000500

220008000

1500300002300042200341550

………………

2352899

423576………………2776475

468250……………3244725

170775

3415500


48

T he cost of production of 22770 litres (23000kgs) of synthetic paint is Rs 3244725

Therefore T he cost of production of 1 litre of automobile paint is = Rs 3244725/22770 = Rs142.5 And the total sale of 22770 litres (23000kgs) of automobile paint comes up to Rs. 3415500

Therefore the selling price of 1litre of automobile paint is = Rs 3415500/22770 = Rs 150


= Rs3415500-3244725

= Rs 170775


= Rs170775/22770

=Rs 7.5

STOVING PAINT

It is a nitrocellulose based paint which is mainly used to protect the metals from deterioration and rusting along with the protective function it also add to the aesthetic appeal of the product.It is a fast-drying paint containing pigment suspended in an NC base. Stoving paints can be diluted with thinner, and become water-resistant when dry. Depending on how much the paint is diluted or modified with acrylic gels, mediums, or pastes, the finished automotive painting can resemble a watercolor or an oil painting, or have its own unique characteristics not attainable with other media. These paints are basically industrial paint and are used in fan, tube Patti and other industries.

PRODUCTION PROCESS FOR STOVING PAINTS


49




The stoving paints are manufactured in the multiple of 100 kgs and the whole process can be divided into five steps that are Charging, Dispersing, Stabilization, and Discharging and washing, Make up The amount of raw material required in each step of the manufacturing process is given below.


In this step the following raw material are mixed in a ball mill for 48hours and are then dispersed upto 7+ level on the henchman gauge.15kgs of rutyl titanium08 kgs of coconut oil alkyd06kgs of Xylene

Stabilization

In this step the raw material mixed in the above step is stabilized with the help of 04kgs of coconut oil alkyd02kgs of xylene.02kgs of N-Butanol and the above mixture is mixed in the ball mill for 30 minutes.

Discharging and washing

In this step the under mentioned raw materials are added to the stabilized mixture04 kgs of Xylene

Make up

In this step the above mixture is mixed and stirred in a stirrer followed by the addition of the under mentioned chemicals44 kgs of coconut alkyd13.5 kgs of MF resin1 kgs of Di-Acetone Alcohol0.5 kgs of N-Butanol100kgs

The total quantity of raw material used is 100kgs and the weight per liter of the paint obtained by the above process is 1.1 which gives a yield of 91 liters per 100kgs of raw materials used. The direct material consists of the Raw materials required, inward carriage and the input tax to manufacture 100 kgs of synthetic enamel.

The details of the raw material along with it cost is given below in the table



50

Rutyl titaniumCoconut oil alkyd N -ButanolDi- acetone alcoholXylene.MF resin

15660.511213.5

150888010565130

22505808401057801755

TOTAL 100 10738

OPENING STOCK OF STOVING PAINT The amount of raw material available with the company at the beginning of the month (June) Equals to the amount of raw material required to manufacture 600 kgs of paints


=Rs64428


=Rs64428*(4/100)

=Rs2577


=Rs67005

PURCHASE



=Rs2577120


=Rs2577120*(4/100)

=Rs 103085

CLOSING STOCK


51

The amount of raw material available with the company at the end of the month (June) equals to The amount of raw material required to manufacture 1600 kgs of paints

Therefore the cost of the closing stock =Rs107.38*1600

=Rs171808

The amount of tax applicable on the closing stock= Rs171808*(4/100)

=Rs6872

Therefore the total value of the closing stock =Rs (171808+6872)

=Rs178680



Direct labour –

The cost of direct labour is same as that in case of automotive paint.

Direct expenses - the cost of direct expense includes the cost of container, the details of which is given below

PARTICULAR QUANTITY RATE AMOUNT1 Lits500ml200ml100ml50ml

1330090009500100005800

15107.55.753.25

19950090000712505750018850

TOTAL 437100

FACTORY OVERHEAD



52

The amount of wastage that occurs while manufacturing of paint is 2%.Therefore the cost involved in wastage is = (cost of direct material +cost of direct labour)*2% =Rs (2568990+96200)*(2/100)

=Rs53304



The cost associated with this overhead remains the same as in case of automotive paint.The only cost that vary is that in case of output tax (VAT12.5%)



=Rs (3230035+86715+84500+170775)*(12.5/100) =Rs453935

SALES PROMOTION

Sales promotion is given to the customers in the form of cash back offer. Under this scheme there is a sticker in the cap of the stoving paint in which the prize money amount is wrriten, when a customer returns the cap he gets the amount written on the cap. The amount written on the cap varies from Rs zero to Rs 50.in this form an amount of Rs 67050 is distributed.

DEALER MARGIN

Therefore the total discount allowed to the dealers is = = (total sales *10%

=Rs 4604600*10%

=Rs 4604600*(10/100)

=Rs 460460


53

GUPTA PAINTS AND CHEMICALSCOST SHEET of STOVING PAINT



COST PERUNIT(RS)

COST OF DIRECT MATERIAL CONSUMEDADD:OPENING STOCK 67005


54

PURCHASESINWARD CARRIAGE(UNLOADING)INPUT TAX (VAT 4%)LESS:CLOSING STOCK


DIRECT EXPENSESCONTAINERS PRIME COST…………………………………………FACTORY OVERHEADINDIRECT MATERIAL


INDIRECT WAGES

STORE KEEPERSECURITY EXPENSES


2577120460103085

178680

7820018000

437100

3001000

5500 3000

1450011544

2568990

96200

446500………………3102290


COST PERUNIT(RS)

FACTORY EXPENSESWASTESTATIONARYELECTRICITYINSURANCECLEANING STAFFCLEANING MATERIALMAINTENANCE OF FACTORYSAFTEY EXPENSE

53304200152471000100025025002000


55

DEPRECIATION OF PLANT & FACTORY

FACTORY COST…………………………………….

OFFICE AND ADMINISTRATIVE OVERHEAD : SALARY:OFFICE CLERKMANAGERSFINANCE MANAGER/ACCOUNTANTPARTNERS FEES

OFFICE:



COST OF PRODUCTION……………………………………………

SELLING AND DISTRIBUTION OVERHEADSALESMEN SALARYTRAVELLING EXPENSE OF SALESMEN


COST OF GOOD SOLD

PROFIT

SALES

9000……………

420080001500050000

453010

900175028655003000500

220008000

1500300002300067050460460

120345……………

3222635

539725………………3762360

612010……………..4374370

230230

4604600.


56

T he cost of production of 20930 litres (23000kgs) of automobile paint is Rs 4374370

Therefore T he cost of production of 1 litre of automobile paint is = Rs4374370 /20930

=Rs 209

The total sale of 21390 litres (23000kgs) of automobile paint comes up to Rs 4604600.Therefore the selling price of 1litre of automobile paint is = Rs 4604600/20930 = Rs 220.

Therefore the profit made by the company on the sale of 21390 litres (23000kgs) of automobile paint is given by = total sales –cost of production. = Rs 4604600-4374370

= Rs230230


= Rs230230/20930

=Rs 11

AUTOMOTIVE PRIMER

It is a nitrocellulose based primer which is mainly used to protect the metals from deterioration and rusting along with the protective function it also add to the aesthetic appeal of the product.It is a fast-drying paint containing pigment suspended in an NC base. Automotive primer is used before the application of automotive paint, its main function is to help the paints to run smoothly and evenly on the metal surface and also help to enhance the gloss of the paint. It can be diluted with thinner, and become water-resistant when dry.

PRODUCTION PROCESS FOR AUTOMOTIVE PRIMER


57


The automotive primers are manufactured in the multiple of 100 kgs and the whole process can be divided into five steps that are Charging, Dispersing, Stabilization, and Discharging and washing, Make up The amount of raw material required in each step of the manufacturing process is given below.


In this step the following raw material are mixed in a pot mill for 72 hours and are then dispersed upto 4.5+ level on the henchman gauge.20 kgs of Red Oxide Powder.08 kgs of Clay Powder.08 kgs of Soap Stone08 kgs of whiting0.5 kgs of Aluminum Sterter12 kgs of RLO15 kgs of MTO

Stabilization

In this step the raw material mixed in the above step is stabilized with the help of 02 kgs of coconut oil alkyd04kgs of xylene.


In this step the under mentioned raw materials are added to the stabilized mixture02 kgs of benzene03 kgs of ½ sec cotton02 kgs of 5/6 sec cotton07 kgs of ethyl acetate03 kgs of butyl acetate01 kgs of diacetone alcohol01 kgs of n- butanol0.5 kgs of Zinc Octate

Make up

In this step the above mixture is mixed and stirred in a stirrer followed by the addition of the under mentioned chemicals02 kgs of coconut alkyd01 kgs of benzene100kgs

The total quantity of raw material used is 100kgs and the weight per liter of the paint obtained by the above process is 1.24 which gives a yield of 81 liters per 100kgs of raw materials used.


58

In our cost sheet the raw material, unloading charge and the input tax has been considered as the direct material and the detail of which are given below.

The direct material consists of the Raw materials required, inward carriage and the input tax to manufacture 100 kgs of synthetic enamel.

The details of the Raw material required to manufacture 100 kgs of Automotive Primer is given below


Red Oxide PowderClay powderSoap StoneWhitingAluminum SterterRLOMTOcoconut oil alkyd benzenezinc octatecottonethyl acetatebutyl acetate diacetone alcoholn- butanolXylene.

208880.51215430.5573114

76107707656885012016065981058065

140488056359128403522608004552941058015060

TOTAL 100 4667

OPENING STOCK OF AUTOMOTIVE PRIMER



=Rs84006



59

=Rs84006*(4/100)

=Rs3360


=Rs87366.

PURCHASE



=Rs1017406


=Rs1017406*(4/100)

=Rs 40696

CLOSING STOCK



=Rs28002


=Rs1120


=Rs29122




60

DIRECT LABOUR-

The cost involved in direct labour is same as in case of automotive paint

DIRECT EXPENSE

The cost associated with direct expense includes the cost of container, the detail of which is given below

PARTICULAR QUANTITY RATE AMOUNT1 Lits500ml200ml100ml50ml

10000104009500110008600

15107.55.753.25

150000104000712506600027950

TOTAL 419200

Factory overhead


The amount of wastage that occurs while manufacturing of paint is 2%.Therefore the cost involved in wastage is = (cost of direct material +cost of direct labour)*2% =Rs (1116806+96200)*(2/100) =Rs24260



The cost associated with this overhead remains the same as in case of automotive paint.

The only cost that vary is that in case of output tax (VAT12.5%)

The total output tax (VAT) charged on the finished product is 12.5%SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

( EAST SIKKIM)

61


=Rs (1748807+86715+84500+170775)*(12.5/100)

=Rs256304

SALES PROMOTION

Sales promotion is given to the customers in the form of cash back offer. Under this scheme there is a sticker in the cap of the primer in which the prize money amount is wrriten, when a customer returns the cap he gets the amount written on the cap. The amount written on the cap varies from Rs zero to Rs 50.in this form an amount of Rs 69106 is distributed.

DEALER MARGIN

The total discount allowed to the dealers is 10% of the total sales = (total sales *10%)

=Rs 2608200*(10/100)

=Rs 260820

GUPTA PAINTS AND CHEMICALSCOST SHEET AUTOMOTIVE PRIMER

For the June (2009-10)Production 18630 Lits


COST PERUNIT(RS)

COST OF DIRECT MATERIAL CONSUMEDADD:


62

OPENING STOCKPURCHASESINWARD CARRIAGE(UNLOADING)INPUT TAX (VAT 4%)LESS:CLOSING STOCK



PRIME COST………………………………………

FACTORY OVERHEAD

INDIRECT MATERIAL


INDIRECT WAGES



87366101740646040696

29122

7820018000

419200

3001000

5500 3000

1450011544

1116806

96200

419200………………..1632206


COST PERUNIT(RS)

FACTORY EXPENSES

WASTESTATIONARYELECTRICITYINSURANCECLEANING STAFFCLEANING MATERIAL

242602001524710001000250


63

MAINTENANCE OF FACTORYSAFTEY EXPENSEDEPRECIATION OF PLANT & FACTORY

FACTORY COST…………………………………………OFFICE AND ADMINISTRATIVE OVERHEAD : SALARY:

OFFICE CLERKMANAGERSFINANCE MANAGER/ACCOUNTANTPARTNERS FEES

OFFICE:



COST OF PRODUCTION……………………………SELLING AND DISTRIBUTION OVERHEADSALESMEN SALARYTRAVELLING EXPENSE OF SALESMEN


COST OF GOOD SOLD

PROFIT

250020009000………………

420080001500050000

253142

900175028655003000500

220008000

1500300002300069106260820

91301………………

1723507

339857………………2063364

414426…………2477790

130410


64

SALES 2608200.

T he cost of production of 18630 litres (23000kgs) of automobile primer is Rs2477790

Therefore T he cost of production of 1 litre of automobile paint is = Rs2477790/18630 =Rs 133

And the total sale of 18630 litres (23000kgs) of automobile primer comes up to Rs 2608200

Therefore the selling price of 1litre of automobile paint is = Rs2608200/18630

= Rs 140


= Rs 2608200-2477790

= Rs 130410


= Rs 130410/18630

=Rs 7

SYNTHETIC PRIMER

It is an oil-based paints and can have various combinations of solvents as the diluents, including aliphatics, aromatics, alcohols, and ketones. It is essentially used for the preservation of all types of architectural structures, including factories, from ordinary attacks of weather. Uncoated wood and metal are particularly susceptible to deterioration, especially in cities where soot and sulfur dioxide accelerate such action. Aside from their purely protective action, paints, varnishes, and lacquers increase the attractiveness of manufactured goods, as well as the aesthetic appeal ofA community of homes and their interiors.It is a fast-drying paint containing pigment suspended in an oil base. Theses paints can be diluted with thinner, and become water-resistant when dry. Depending on how much the paint is diluted or modified with acrylic gels, mediums, or pastes,


65


http://en.wikipedia.org/wiki/Ketone

http://en.wikipedia.org/wiki/Alcohol

the finished automotive painting can resemble a watercolor or an oil painting, or have its own unique characteristics not attainable with other media.It is basically applied before the application of synthetic enamel, its main function is to help the synthetic enamel to run smoothly and evenly and also enhance the gloss of the paint.

PRODUCTION PROCESS FOR SYNTHETIC PRIMER

The synthetic enamel paints are manufactured in the multiple of 100 kgs and the whole process can be divided into five steps that are Charging ,Dispersing, Stabilization, Discharging and washing, Make up The amount of raw material required in each step of the manufacturing process is given below.


In this step the following raw material are mixed in an attritor for 72 hours and are then dispersed upto 4.5+ level on the henchman gauge.20 kgs of Red Oxide Powder.08 kgs of Clay Powder.08 kgs of Soap Stone08 kgs of whiting0.5 kgs of Aluminum Sterter12 kgs of RLO15 kgs of MTO

Stabilization

In this step the raw material mixed in the above step is stabilized with the help of 16 kgs of RLO0.7 kgs of Cobalt octate01 kgs of Lead Octate01 kgs of Lead Octate0.5 kgs of Manganese Octate0.8 kgs of Zinc Octate and then it is run for 30 mins in attritor.


In this step 4.8 kgs of MTO is added to the stabilized mixture in order to disperse the paint so formed.

Make up

In this step the above mixture is mixed and stirred in a stirrer followed by the addition of the under mentioned chemicals


66



04 kgs of MTO

100kgs

The total quantity of raw material used is 100kgs and the weight per liter of the paint obtained by the above process is 1.35 which gives a yield of 74 Liters per 100kgs of raw materials used.

Raw material required to manufacture 100 kgs of Synthetic Primer


Red Oxide PowderClay powderSoap StoneWhitingAluminum SterterRLOMTOCobalt octateLead octateCalcium octateManganese octateZinc octate

208880.52823.80.7110.50.8

76107707656330120120140120

14048805635212813332311201207096

TOTAL 100 4457

OPENING STOCK OF SYNTHETIC PRIMER The amount of raw material available with the company at the beginning of the month (June) Equals to the amount of raw material required to manufacture 700 kgs of paints


=Rs31199


=Rs31199*(4/100)

=Rs1248


67


=Rs32447

PURCHASE



=Rs1114250


=Rs11142501*(4/100)

=Rs 44570

CLOSING STOCK



=Rs120339


=Rs4814


=Rs125153




68

DIRECT LABOUR-

The cost associated with direct labour is same as that in case of automotive paint

DIRECT EXPENSE

The details of the containers required to pack synthetic enamels are given below in table

PARTICULAR QUNATITY RATE AMOUNT500 ML1 Lits4Lits20Lits

800026001655600

101527.5125.5

8000390004551375300

TOTAL 167813

Factory overhead


The amount of wastage that occurs while manufacturing of paint is 2%.Therefore the cost involved in wastage is = (cost of direct material +cost of direct labour)*2% =Rs (1066574+96200)*(2/100)=Rs23255







69


=Rs (1494310+86715+84500+170775)*(12.5/100)

=Rs105938

SALES PROMOTION

Sales promotion is given to the customers in the form of cash back offer. Under this scheme there is a sticker in the cap of the thinner bottle in which the prize money amount is wrriten, when a customer returns the cap he gets the amount written on the cap. The amount written on the cap varies from Rs 1to Rs 50.in this form an amount of Rs 7843 is distributed.

DEALER MARGIN

Therefore the total discount allowed to the dealers is = (total sales –profit-cost of production-selling &administrative overhead)

=Rs (2118760. - 105938 -1802458-84500)=Rs 125864

GUPTA PAINTS AND CHEMICALSCOST SHEET OF SYNTHETIC PRIMER



COST PERUNIT(RS)

COST OF DIRECT MATERIAL CONSUMED


70

ADD:OPENING STOCKPURCHASESINWARD CARRIAGE(UNLOADING)INPUT TAX (VAT 4%)LESS:CLOSING STOCK



PRIME COST…………………………………………FACTORY OVERHEADINDIRECT MATERIALOIL AND GREASE MACHNINARY SPARES

INDIRECT WAGES



32447111425046044570

125153

7820018000

167813

3001000

5500 3000

1450011544

1066574

96200

167813………………

1330587


COST PERUNIT(RS)

FACTORY EXPENSESWASTESTATIONARYELECTRICITYINSURANCECLEANING STAFFCLEANING MATERIALMAINTENANCE OF FACTORY

2325520015247100010002502500


71

SAFTEY EXPENSEDEPRECIATION OF PLANT & FACTORY

FACTORY COST……………………………………………

OFFICE AND ADMINISTRATIVE OVERHEAD : SALARY:


OFFICE:



COST OF PRODUCTION……………………………………………SELLING AND DISTRIBUTION OVERHEADSALESMEN SALARYTRAVELLING EXPENSE OF SALESMEN


COST OF GOOD SOLD

PROFIT

20009000……………

420080001500050000

211005

900175028655003000500

220008000

150020000230007843211876

90296………………

1420883

297720………………1718603

294219………………2012822

105938


72

SALES 2118760

T he cost of production of 21620 litres (23000kgs) of synthetic paint is Rs 2012822

Therefore T he cost of production of 1 litre of automobile paint is = Rs 2012822/21620 = Rs93.1 And the total sale of 21620 litres (23000kgs) of automobile paint comes up to Rs. 2118760

Therefore the selling price of 1litre of automobile paint is = Rs2118760/21620

= Rs 98.


= Rs2118760-2012822

= Rs 105938


= Rs105938/21620

=Rs 4.9

NC THINNER

They are mainly used to dilute the paints according to the need. They help the paint to run smoothly and evenly and also enhance the glow of the paint

PRODUCTION PROCESS FOR NC THINNER


73

All the raw materials namely Benzene, Diacetone Acetate, Butyl Acetate, N-butanol and Ethyl Acetate are added in the small ball mill and are mixed for 4 hours in the same after they have been thoroughly mixed them are discharged in the stirrer and are then packaged.

Raw material required to manufacture 100 kgs of NC Thinner


BenzeneDiacetone AcetateButyl AcetateN-butanolEthyl Acetate

75107.52.55

50105988065

37501050735200325

TOTAL 100 6060

OPENING STOCK OF NC THINNER



=Rs78780


=Rs78780*(4/100)

=Rs3151


=Rs81931

PURCHASE



=Rs1515000


74


=Rs1515000*(4/100)

=Rs 60600

CLOSING STOCK



=Rs199980


=Rs7999


=Rs207979



Direct labour –

The cost of direct labour is same as that in case of automotive paint

DIRECT EXPENSE

THE DETAILS OF THE CONTAINER REQUIRED TO PACK THINNER

PARTICULARS QUANTITY(Kgs) RATE(per Kgs) AMOUNT(Rs)1 litre pvc bottle0.5 litre pvc bottle

1500016000

32

4500032000

TOTAL 77000


75

Factory overhead


The amount of wastage that occurs while manufacturing of paint is 2%.

Therefore the cost involved in wastage is = (cost of direct material +cost of direct labour)*2%

=Rs (1450012+96200)*(2/100)

=Rs30924

The other cost associated with the factory overhead remains the same as that of automotive Paint





Therefore the total tax charged on the automotive paint is = (factory cost+office &adm SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

( EAST SIKKIM)

76

overhead+ selling and distribution overhead +profit)*12.5% =Rs (1719177+86715+84500+126500)*(12.5/100)

=Rs252112

SALES PROMOTION

Sales promotion is given to the customers in the form of cash back offer. Under this scheme there is a sticker in the cap of the thinner bottle in which the prize money amount is wrriten, when a customer returns the cap he gets the amount written on the cap. The amount written on the cap varies from Rs 1to Rs 50.in this form an amount of Rs 16996 is distributed.

DEALER MARGIN

Therefore the total discount allowed to the dealers is 10 % of the sales price = (total sales *10%)

=Rs 2530000*(10/100)

=Rs 253000

GUPTA PAINTS AND CHEMICALSCOST SHEET OF NC THINEER

For the June (2009-10)Production 23000Lits


COST PERUNIT(RS)


77

COST OF DIRECT MATERIAL CONSUMED

ADD:OPENING STOCKPURCHASESINWARD CARRIAGE(UNLOADING)INPUT TAX (VAT 4%)LESS:CLOSING STOCK


DIRECT EXPENSESCONTAINERS PRIME COST…………………………………………FACTORY OVERHEAD

INDIRECT MATERIALOIL AND GREASE MACHNINARY SPARES

INDIRECT WAGES



100838157560046063024

289910

7820018000

77000

3001000

5500 3000

1450011544

1450012

96200

77000………………1623212


COST PERUNIT(RS)

FACTORY EXPENSES

WASTESTATIONARYELECTRICITY

3092420015247


78

INSURANCECLEANING STAFFCLEANING MATERIALMAINTENANCE OF FACTORYSAFTEY EXPENSEDEPRECIATION OF PLANT & FACTORY

FACTORY COST……………………………………OFFICE AND ADMINISTRATIVE OVERHEAD : SALARY:


OFFICE:



COST OF PRODUCTION……………………………………………SELLING AND DISTRIBUTION OVERHEAD



10001000250250020009000………………

420080001500050000

251112

900175028655003000500

220008000

1500200002300016996253000

97965………………

1721177

337827……………2059004

345496………………


79

COST OF GOOD SOLD

PROFIT

SALES

2403500

126500

2530000

T he cost of production of 23000 litres (23000kgs) of synthetic paint is Rs2403500

Therefore T he cost of production of 1 litre of automobile paint is = Rs2403500/23000

= Rs104.5 And the total sale of 23000 litres (23000kgs) of primer comes up to Rs. 2530000

Therefore the selling price of 1litre of automobile paint is = Rs 2530000/23000

= Rs 110Therefore the profit made by the company on the sale of 23000 litres (23000kgs) of automobile paint is given by = total sales –cost of production.

= Rs2530000-2403500

= Rs 126500.


= Rs 126500/23000

=Rs 5.5FINDINGS

This project work mainly concentrates to ascertain the cost and profitability of each individual product manufactured by the company the details of the cost and the profit is given below in the table.

ATTRIBUTES SALES PRICE COST PRICE PROFIT

AUTOMOTIVE PAINT 196 186.2 9.8

AUTOMOTIVE PRIMER 140 133 7


80

SYNTHETIC ENAMEL 150 142.5 7.5

SYNTHETIC PRIMER 98 93.1 4.9

STOVING PAINT 220 209 11

THINNER 110 104.5 5.5

Comparative study of sales price of automotive paint

COMPETITORS

The company mainly concentrates on the automotive paint and primer business, hence has to compete with other players in the same field. The main competitors of the company are kamdehnu paints, Asian paints, provolac paints, Berger paints, gautam paints and some others.


81

Market share in automotive paint in and around Kolkata

SALE OF PRODUCTS

ATTRIBUTES QUANTITY(Lits)

AUTOMOTIVE PAINT 11000


82

AUTOMOTIVE PRIMER 3000

SYNTHETIC ENAMEL 3000

SYNTHETIC PRIMER 1500

STOVING PAINT 2000

THINNER 2500

CHAPTER-IV

Conclusion & Recommendation

CONCLUSION


83

Man is an emotional being, whose ‘thirst’ for satisfaction can never be fully quenched. The

Company Gupta paints are renowned company which has been trying to establish itself as No.1

in the automotive paint market in and around Kolkata for their Quality and Services.

However, despite the fact that after providing the best Quality and Service, the company has not

been able to increase or even maintain it’s Market Share in Automotive paint industry in the

Eastern Region? There are various factors that are affecting the sales of the company in this zone

and they are as follows:

1) The cost of production is fairly good, but the sales are being hampered by the production

constraint faced by the company.

2) The company is unable to match the demand with the supply because of production

constrain.

3) The products offered by Gupta Paints are fairly cheaper compared to the price offered by

its competitors.

4) The company is making a profit of 5%; along with this the dealers are also being allowed

a 10%+ discounts on all products.

5) The efficiency of the workers is affected by the informal ambience prevailing in the

factory.

6) The other factor found out was that the company has an undeveloped distribution channel

which concentrates only in Kolkata and surroundings, because of which the people are

not aware of the brand, which hinders the sale.

Recommendation:-SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

( EAST SIKKIM)

84

Gupta Paints and Chemical has a market share of over 16% in the auto motive paint sector and the

same is true in case of other category of paints in the market of Kolkata

But as they say, there is always some room for improvement. Following

are some of the recommendations based on the observations under study for Gupta

Paints And Chemical which will enable them in better Utilization of their Resources-

Assets and Manpower , thus reducing different Costs at different categories . This

will indirectly increase the Profits of the Company, and thus better Services can

be provided by the Company for higher Sales and Market Share.

a. The company should try to increase the production ,by replacing the old ball mills, with new age technologically advanced pot mills and arritors which would lead in reduction in the time required for the production of paint from 48 hours to 12 hours.

b. The company should install a belt conveyor for packaging instead of following a manual process of pacakaging.This change would lead in reduction in the labour cost and time but along with this will give uniformity to the product in the form of weight and tidiness.

c. The company should switch to PVC containers for packing the paints instead of

using tin container; this would lead to slight reduction in the cost of containers.

d. The company should adopt a policy of division of labour which would add to the efficiency of the labour as well the company.


85

e. The company should install colorant machine at all its dealer counter as soon as possible. By doing this the company now has to produce only the bases while the choice of the color can be made at the dealer counter. This change would lead to reduction in the cost of holding inventory.

f. The company should focus on its corporate customers like railways along with this it should try to build more corporate customer base.

g. The company should try to build a direct relationship with the manufacturers of raw material, instead of depending on dealers.

h. The company should also focus on the decorative paint market which is under tapped till now by the company.

i. Better utilization of different resources will lead to the marginal

Reduction in various cost .Reduced cost will lead to greater Profit

Margin for the company, with the extra margin the company can provide

better service to its customers than the competitors. By doing this the

company will not only be able to retain its existing customers but will

also be able to attract new customers.


86

Costing Project

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