COSTING TECHNIQUES AND OPERATING PART OF

ANANT SPINNING MILL- MANDIDEEP

Submitted by:Gagan Singh

Shubham MohabeRohan Shrivastava

Shrikant SomaniMamta Bhojwani

Nidhi SinghShishir Jain

Varsha Nathnani

ANANT SPINNING MILL

• Anant spinning mill is a group owned by Vardhman Textiles Ltd., formerly Mahavir Spinning Mills Limited,

• The Company operates in five segments: yarn, sewing thread, steel, fibre and fabric

• Subsidiaries include VMT Spinning Company Limited, VTL Investments Limited, Vardhman Acrylics Limited and Vardhman Yarn and Threads Limited

• The group is one of the largest spinning group of the country with a spindlier of over 5, 50,000.

• The group has 12 production plants located in the states of Punjab, Himachal Pradesh and Madhya Pradesh.

• In many of the yarn market segments, Vardhman holds the position of market leader besides being a large and reliable supplier in the country.

• Vardhman is also the largest exporter of yarn from India. The group yarn exports amount to over US$ 100 million covering the most quality conscious markets in theworld.

• The total export of Cotton yarn of the group is about 6% of total export of cotton yarn from the country.

METHOD OF COSTING

PROCESS COSTING-• It refers to the costing or process involved

in converting materials into finished goods. • Under this method the cost of operation of

each process or operation and the cost of transfer are ascertained .

• It is also known as continuous operating costing.

• OPERATION COSTING this method of costing is also used .it basically

comes in the process costing method. Under this method ,each operation in each

stage of production or process is separately costed. Therefore,the cost of finished goods is determined.

TECHNIQUES OF COSTING AT ANANT

• Marginal costing: In this technique, cost is divided into fixed and variable and the variable is of special interest and importance. This is because, marginal costing regards only variable costs as the costs of products.

• Fixed cost is treated as period cost and no attempt is made to allocate or apportion this cost to individual cost centers or cost units. The Company uses this type of Costing technique.

PROCEDURE

• The average count of the plant• Capacity of the plant - No of spindles to be installed and the

number of back process and winding machines required• Investment on machineries• Investment on land• Investment on building• working capital required• product lay out, the count pattern• Selling price of individual counts• raw material cost(including freight, duty etc)• packing cost per kg of yarn

• freight per kg of yarn• direct labour cost• indirect labour cost• fixed power cost• variable power cost• spares consumption• administration costs• selling overheads

STEPS

• STEP NO.1: Contribution to be calculated. In general for a spinning mill, contribution per kg oaf particular count is calculated to work out the economics for a new project as well as for a running mill.

• STEP NO. 2: To work out the Total Investment cost (machineries, accessories, land and building, humidification and electrical instruments)

• STEP NO.3: To calculate the expenses ( labour, power, stores,working capital, insurance etc)

• STEP NO.4: PAY BACK CALCULATION

COSTING SOFWARES

• The SAP CO (Controlling) Module provides supporting information to Management for the purpose of planning, reporting, as well as monitoring the operations of their business. Management decision-making can be achieved with the level of information provided by this module.

• INVENTORY TRIGGER The company is also having a facility of sap

software in which there is a function which gives an indication to the company about the raw material availability as soon as it reaches to the 20 percent mark and also by the help of this inventory trigger system the information is reached directly to the vendors who are integrated with the system and to the company also.

ERP SOFTWARE

• Enterprise Resource Planning (ERP) is the latest high end software solution, Information Technology has lent to the world of business application.

• An ERP software solution seeks to streamline and integrate operations, processes and information flows in an enterprise, to synergize the resources of an organization namely men, material, money and machine.

• In other words, ERP systems integrate all data and processes of an organization into a unified system.

• A typical ERP will use multiple components of computer software and hardware to achieve the integration.

• A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules.

COST CONTROL METHODS

• Inventory control method-• budgetary technique- for the purchase of raw material and stock

what the company require is to a purchase budget in terms of quantities and value involved. the sales is stipulated of the corresponding period generally works out to be a key factor.

• Control ratios • Inventory turnover ratios

• Material turn over =value of material used in the period / value of average material held during the period

• Finished stock turnover=value of finished stock sold in the period/value of average stock held during the period

• Labors cost control• Time recording is done• Daily time sheets and weekly time sheets• Ratios is calculated like • Cost ratios =direct labour cost /cost of

production

INVENTORY CONTROL

ANANT uses Just in time is a ‘pull’ system of production, so actual orders provide a signal for when a product should be manufactured. Demand-pull enables a firm to produce only what is required, in the correct quantity and at the correct time.