mba_project report finance

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1. INTRODUCTION:

Natural fibers cotton, flax, silk, and wool represent the major fibers available

to ancient civilizations. The earliest known samples of yarn and fabric of any kind

were found near Switzerland, where bundles of flax fibers and yarns and fragments

of plain-weave linen fabric, were estimated to be about 7,000 years old.

Cotton has also been cultivated and used to make fabrics for at least

7,000 years. It may have existed in Egypt as early as 12,000 B.C. Fragments of

cotton fabrics have been found by archeologists in Mexico (from 3500 B.C. )., in

India (3000 B.C. ), in Peru (2500 B.C. ), and in the southwestern United States(500 B.C. ). Cotton did not achieve commercial importance in Europe until after

the colonization of the New World. Silk culture remained a specialty of the

Chinese from its beginnings (2600 B.C.) until the sixth century, when silkworms

were first raised in the Byzantine Empire.

Synthetic fibers did not appear until much later. The first synthetic,

rayon, made from cotton or wood fibers, was developed in 1891, but not

commercially produced until 1911. Almost a half a century later, nylon was

invented, followed by the various forms of polyester. Synthetic fibers reduced the

world demand for natural fibers and expanded applications. Until about 1300, yarn

was spun on the spindle and whorl. A spindle is a rounded stick with tapered ends

to which the fibers are attached and twisted; a whorl is a weight attached to the

spindle that acts as a flywheel to keep the spindle rotating. The fibers were pulledby hand from a bundle of carded fibers tied to a stick called a distaff. In hand

carding, fibers are placed between two boards covered with leather, through which

protrude fine wire hooks that catch the fibers as one board is pulled gently across

the other.

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The spindle, which hangs from the fibers, twists the fibers as it rotates

downward, and spins a length of yarn as it pulls away from the fiber bundle. When

the spindle reaches the floor, the spinner winds the yarn around the spindle to

secure it and then starts the process again. This is continued until all of the fiber is

spun or until the spindle is full.

A major improvement was the spinning wheel, invented in India

between 500 and 1000 A.D. and first used in Europe during the middle Ages. A

horizontally mounted spindle is connected to a large, hand-driven wheel by a

circular band. The distaff is mounted at one end of the spinning wheel and the fiber

is fed by hand to the spindle, which turns as the wheel turns. A component called

the flyer twists the thread just before it is wound on a bobbin. The spindle and

bobbin are attached to the wheel by separate parts, so that the bobbin turns more

slowly than does the spindle. Thus, thread can be twisted and wound at the same

time. About 150 years later, the Saxon wheel was introduced. Operated by a foot

pedal, the Saxon wheel allowed both hands the freedom to work the fibers.

1.2Yarn

Yarn consists of several strands of material twisted together. Each strand

is in turn, made of fibers, all shorter than the piece of yarn that they form. These

short fibers are spun into longer filaments to make the yarn. Long continuous

strands may only require additional twisting to make them into yarns. Sometimes

they are put through an additional process called texturing.

The characteristics of spun yarn depend, in part, on the amount of twist given to

the fibers during spinning. A fairly high degree of twist produces strong yarn; a

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low twist produces softer, more lustrous yarn; and a very tight twist produces crepe

yarn. Yarns are also classified by their number of parts. A single yarn is made

from a group of filament or staple fibers twisted together. Ply yarns are made by

twisting two or more single yarns. Cord yarns are made by twisting together two or

more ply yarns.

1.3 Raw Materials

About 15 different types of fibers are used to make yarn. These fibers fall

into two categories, natural and synthetic. Natural fibers are those that are obtained

from a plant or an animal and are mainly used in weaving textiles. The most

abundant and commonly used plant fiber is cotton, gathered from the cotton boil or

seed pod when it is mature.

Fibers taken from the plant leaf or stern are generally used for rope. Other

plant fibers include acetate (made from wood pulp or cotton linters) and linen,

made from flax, a vegetable fiber. Animal fibers include wool, made from sheep

hair, and mohair, made from angora goats and rabbits. Silk is a protein extruded in

long, continuous strands by the silkworm as it weaves its cocoon.

Synthetic fibers are made by forcing a thick solution of polymerized

chemicals through spinneret nozzles and hardening the resulting filament in a

chemical bath. These include acrylic, nylon, polyester, polyolefin, rayon, spandex,

and triacetate. Some of these fibers have similar characteristics to the natural fibers

without the shrinkage problems. Other fibers have special properties for specific

applications. For instance, spandex can be stretched over 500% without breaking

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Fibers are shipped in bales, which are opened by hand or machine. The

picker loosens and separates the lumps of fiber and also cleans the fiber if

necessary. The carding machine separates the fibers and pulls them into somewhat

parallel form. The thin web of fibers formed then passes through a funnel-shaped

device that produces a ropelike strand of parallel fibers. Rollers elongate the

strand, called a sliver, into a single more uniform strand that is given a small

amount of twist and fed into large cans.

1.4 The Manufacturing Process

There are three major spinning processes: cotton, worsted or long-staple,

or wool. Synthetic staple fibers can be made with any of these processes. Since

more yarn is produced with the cotton process than the other two, its manufacture

is described below.

Preparing the fibers

Fibers are shipped in bales, which are opened by hand or machine. Natural

fibers may require cleaning, whereas synthetic fibers only require separating.

The picker loosens and separates the lumps of fiber and also cleans the fiber

if necessary. Blending of different staple fibers may be required for certain

applications. Blending may be done during formation of the lap, during

carding, or during drawing out. Quantities of each fiber are measured

carefully and their proportions are consistently maintained.

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Carding

The carding machine is set with hundreds of fine wires that separate the

fibers and pull them into somewhat parallel form. A thin web of fiber is

formed, and as it moves along, it passes through a funnel-shaped device that

produces a ropelike strand of parallel fibers. Blending can take place by

joining laps of different fibers.

Combing

When a smoother, finer yarn is required, fibers are subjected to a further

paralleling method. A comb like device arranges fibers into parallel form,

with short fibers falling out of the strand.

Drawing out

After carding or combing, the fiber mass is referred to as the sliver. Several

slivers are combined before this process. A series of rollers rotating at

different rates of speed elongate the sliver into a single more uniform strand

that is given a small amount of twist and fed into large cans. Carded slivers

are drawn twice after carding. Combed slivers are drawn once before

combing and twice more after combing.

Twisting

The sliver is fed through a machine called the roving frame, where the

strands of fiber are further elongated and given additional twist. These

strands are called the roving.

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Spinning

The predominant commercial systems of yarn formation are ring spinning

and open-end spinning. In ring spinning, the roving is fed from the spool

through rollers. These rollers elongate the roving, which passes through the

eyelet, moving down The sliver is fed through a machine called the roving

frame, where the strands of fiber are further elongated and given additional

twist. The predominant commercial systems of yarn formation are ring

spinning and open-end spinning. Open-end spinning omits the roving step.

and through the traveler. The traveler moves freely around the stationary

ring at 4,000 to 12,000 revolutions per minute. The spindle turns the bobbin

at a constant speed. This turning of the bobbin and the movement of the

traveler twists and winds the yarn in one operation.

Open-end spinning omits the roving step. Instead, a sliver of fibers is fed

into the spinner by a stream of air. The sliver is delivered to a rotary beater

that separates the fibers into a thin stream that is carried into the rotor by a

current of air through a tube or duct and is deposited in a V-shaped groove

along the sides of the rotor. As the rotor turns, twist is produced. A constant

stream of new fibers enters the rotor, is distributed in the groove, and is

removed at the end of the formed yarn.

1.5 TEXTILE INDUSTRY

Back in the 18th century the textile was generally based on processing

wool. The wool, as it has already been mentioned, was processed industry

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wool, which was processed individually by individual artisans. Their

work was home-based and they had their own individual premises at home

to do the spinning and the weaving of the wool in order to process it.

Ordinarily, house like this were called weavers cottages. Great Britain was

the first to start the revolution in the sphere of textile industry due to the fact

that it had lost of raw materials obtained from its countless colonies. The

wool processing took much time and a lot of wool became very hard tohandle. Basically, the textile industry was the main industry for many

countries in the 18th century.

1.6 Origin of textile industry:

The individual artisans used handlooms and spinning wheels as the

primary tools for processing textiles. The handloom was originally a Roman

invention that was used to cope produce yarn with interlaced threads this

was the way artisan-workers obtained cloth some of which afterwards was

converted into clothes and some remained cloth and was stored. The process

of obtaining yard was very difficult as the worker had to size the yarn, dry it,

and beam it in the handloom. Usually the cloths needed to be bleached, so

the artisans soaked it in lactic acid and then dried in the open sun. So

generally it took almost eight month before the cloth was completely ready.

The processes of weaving, spinning and carding took a lot of precious time

and were not that profitable for the workers, but their only way for their

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families to survive. Artisans had difficulties in making the cloth different

from what they usually did, especially when they were asked for a wider

cloth, because it meant that more than two people had to be at the handloom

for a long time in order to achieve this result. Some textiles were dirty at the

moment when they were to be processed so therefore they were cleaned. The

technology of cleaning the textiles from dirt before the industrialization

period was called willowing. So the members of the artisans family had to

clean the textiles by hand which was very exhausting and took quite a long

time.

The spinning of the textile was made with the help of a stick that was

nearly 3 feet long. The person doing it had to be really skillful as he was

supposed to hold the stick under his left arm and the forefinger and the

thumb of his right hand neatly twisted the wool fibers obtained from the

stick. Then the thread got on a spindle.

Basically, the whole process of getting cloth can be presented as a scheme:

Carding: Children did the carding. They were supposed to remove the

short fibers with the help of a hand-card. A hand-card was a wooden block

with small handles and had spikes made from metal its surface.

Spinning: Was usually made by a woman and it was a process of

converting cardings to yarn with the help of a spinning wheel.

Weaving: With the help of a handloom the yarn was made into cloth.

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This work was conducted by a man and concluded the whole procedure of

processing the textiles.

It is common knowledge now that he 18th century domestic system did not

provide any solutions in dealing with wool, cotton, silk and flax, as these

were the most used materials back then . Weaving, spinning and carding

were the only options of conversion of the textiles into different goods.

Being the heart of the textile industry, Great Britain was very much

interested in the export of woolen goods and as the result needed a fast and

high-quality production of these goods, which individual production could

not give by any means.

1.7 Changes in management and textile industry:

The changes that took place within the textile industry

are enormous. The Industrial Revolution produced the result

the industry was so much expecting a greater amount of

fabric was produced in less time at a lower cost. Of course it

meant more money for the countries but at the same time

factories required millions of workers in order to constantly

increase the productivity and therefore the profit. The major

minus and may be the most visible sign of lack of

professionalism of the factory management was that they

strived for having the more the workers the better not taking

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into account various factors, such as the conditions of work,

the age requirements and contraindications and the

sometimes even the decline of quality due to a non-rational

exploitation of the machinery. Though the profits from the

factories were huge people got tiny wages and sometimes

were almost starving. This is what concerns the

management of the textile factories.

Nevertheless, the new machinery used showed outstanding

results. It completely changed the technology of textile

manufacturing making it more qualified and professional.

The industry was changed inside out. The new level of

productivity brought its fruits. New quality textiles were

improved and something new was added in the process of

work. Of course they did have disadvantages such as the

danger of the industry, nevertheless clothes became more

available and yarn became very cheap and affordable. The

new technology saved time and money making a huge step

in the technical progress of the worldshistory.

The Industrial revolution converted the domestic textile

system into the factory system, which factions faster and

better. The textile processing was not made by hand

anymore. This separated humanity from the primitive

existence. Before the Industrial Revolution people had to

work at home, dedicating all their time to the textile

manufacturing through weaving, spinning and carding. The

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Industrial Revolution brought new inventions that absolutely

changed the situation. Workers had a working place, did not

have no work at home anymore and the manufacturing

became faster. The textile industry provided a strong base

for the economy.

1.8 Textile Industry in India:

The textile industry occupies a unique place in our

country. One of the earliest to come into existence in India, it

accounts for 14% of the total Industrial production,contributes to nearly 30% of the total exports and is the

second largest employment generator after agriculture.

Textile Industry is providing one of the most basic

needs of people and the holds importance; maintaining

sustained growth for improving quality of life. It has a unique

position as a self-reliant industry, from the production of raw

materials to the delivery of finished products, with

substantial value-addition at each stage of processing; it is a

major contribution to the countrys economy.

Indian textile industry has the highest loom age including

handlooms in the world. It contributes about 61% to the world

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loom age. It also contributes about 12% to the world production of

textile fibers and yarns including jute. It is the largest producer of

jute, second largest producer of silk, third largest producer of

cotton and cellulosic fiber/yarn and fifth largest producer of

synthetic fibers/yarns.

Financial Year-wise, Variety-wise Production of Yarn

(Qty. in Million Kgs.)

Financial

Year

Cotton

Yarn

Blended

Yarn

100% NonCotton

Yarn

Total

Qty.

Growth

rate

. Qty. Growthrate

%Share

Qty. Growthrate

%Share

Qty. Growth rate %Share

. .

1995-1996 1788 13% 75% 395 14% 17% 195 23% 8% 2378 14%

1996-1997 2148 20% 77% 484 22% 17% 162 -17% 6% 2794 17%

1997-1998 2213 3% 74% 583 20% 20% 178 10% 6% 2973 6%

1998-1999 2022 -9% 72% 595 2% 21% 191 7% 7% 2808 -6%

1999-2000 2204 9% 72% 621 4% 20% 221 16% 7% 3046 8%

2000-2001 2268 3% 72% 644 4% 20% 246 11% 8% 3158 4%

2001-2002 2212 -2% 71% 609 -5% 20% 280 14% 9% 3101 -2%

2002-2003 2177 -2% 71% 584 -4% 19% 319 14% 10% 3080 -1%

2003-2004 2121 -3% 69% 589 1% 19% 342 7% 11% 3052 -1%

2004-2005 2272 7% 70% 585 -1% 18% 366 7% 11% 3223 6%

2005-2006 2521 11% 73% 588 1% 17% 349 -5% 10% 3458 7%

2006-2007 2824 12% 74% 635 8% 17% 355 2% 9% 3813 10%

2007-2008 2948 4% 74% 677 7% 17% 378 6% 9% 4003 5%

2008-2009 2899 -2% 74% 655 -3% 17% 361 -5% 9% 3914 -2%

2008-2009 754 4% 74% 170 6% 17% 90 -3% 9% 1014 3%

2009-2010

(Apr-Jan)743 -1% 74% 161 -5% 16% 96 7% 10% 1001 -1%

Source: Ministry of Textiles, Government of India.

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1.9 BACKGROUND INFORMATION

The textile industry plays a pivotal role in the Indian

economy. The country has produced legends such as Dhaka

muslin, which was woven so fine and light that it could pass

through a finger ring. But what is significant today is that

this sector contributes substantially in providing employment

and earning foreign exchange. The country is rich in natural

resources such as cotton, jute and silk. The textile industry isthe second largest employer, after agriculture, with a total

workforce of around 35 million. India is next only to China

among the world's largest producers of textiles and

garments. The industry is the largest foreign exchange

earner, as the import content is insignificant compared with

those of other major export products. Its contribution in

exports is nearly 20 per cent. How many of us know that 85

per cent of the handlooms in the world are produced in

India? The number of handlooms in the country is four

million. The activities in textiles range from the production of

natural raw materials such as cotton, jute, silk and wool to

the manufacture of quality products such as cellulose fibre,

synthetic filament and spun yarn. This is, perhaps, the only

industry that is self-reliant and complete in value addition

from raw materials to the highest value-added products.

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The textile industry occupies a unique place in our

country. One of the earliest to come into existence in India, it

accounts for 14% of the total Industrial production,

contributes to nearly 30% of the total exports and is the

second largest employment generator after agriculture.

Textile Industry is providing one of the most basic needs of

people and the holds importance; maintaining sustained

growth for improving quality of life. It has a unique position

as a self-reliant industry, from the production of raw

materials to the delivery of finished products, withsubstantial value-addition at each stage of processing; it is a

major contribution to the country's economy. Its vast

potential for creation of employment opportunities in the

agricultural, industrial, organized and decentralized sectors

& rural and urban areas, particularly for women and the

disadvantaged is noteworthy

Against all these merits, an experts lament goes: "It is

difficult to find such a large-scale industry in the country that

is so disorganized as the Indian textile industry". The

industry is often plagued by obsolescence, unhealthy

regulations and problems of lab our. This emphasizes the

need for strengthening the management mechanism in the

industry, to face the emerging international challenges.

Common sense administration has its in-built constraints in a

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world where scientific management decides the destiny of

industries in the modern global scenario.

The textile industry in India will face intensified competition

in both their export and domestic markets. However, the

migration of textile capacity will be influenced by objective

competitive factors and will be hampered by the presence of

distorting domestic measures and weak domestic

infrastructure in several developing and least developed

countries

The challenges from global competition demand a scientific

approach from properly trained management professionals

who have specialised in this sector. Sickness and inter-sector

contradictions that are a bane of the industry have to be

solved through a wise approach and well-calibrated steps, to

ensure healthy growth. Managers who are trained in

traditional management disciplines will take a long time to

get themselves familiarized with the special problems of the

textile scene. A strong and competent cadre of trained

mangers will help the continuous upgrading of knowledge

and skills, fulfilling the need for maintaining a cutting edge in

the world of intense competition.

The Future:

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Spinning systems and yarn manufacturing machinery will continue to

become more automated and will be integrated as part of a manufacturing

unit rather than as a separate process. Spinning machines have already been

developed that combine carding and drawing functions. Production rates will

increase by orders of magnitude as machines become available with even

more spindles. Robot-controlled equipment will become standard.

Domestic yarn producers will continue to be threatened by competition from

other countries, as these continue to buy the latest textile machinery

technology. Higher domestic material prices will not help, since the cost of

the raw material can represent up to 63% of the total cost of producing the

yarn. Indian yarn producers will continue to form alliances with their

customers and customers' customers to remain competitive. The textile

industry is also forming unique partnerships. The Indian Textile Partnership

is a collaborative research and development program among industry,

Government, and academia aimed at strengthening the competitiveness of

the industry.

Yarn producers will have to incorporate pollution prevention measures to

meet the air and water quality restrictions. Equipment manufacturers will

continue to play an important role in this endeavor.

1.10 Chapter scheme:

I. Deals with the introduction.

II. Profile of Janaki Cotton Mills limited and objectives.

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III. Research Methodology , Scope of the study & Theoretical view of

Budgetary Control and Linear trend.

IV. Analysis and Interpretations.

V. Deals with Findings and Conclusion

2. (A) COMPANY PROFILE

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Janaki cotton mills limitedhas been started at the year of 1991. It is

located at Tirunelveli district on the way to Kannyakumari just 5 Km from

Vallioor. The total area of this mills premise is 10 Acres. 70% of the area

is utilized for the machinery building. Remaining areas are utilized for

plantation of trees. Trees like teak, mango, neem, coconut etc are well

maintained. The organization is giving more importance for environment

protection. The company commenced commercial production of yarn in

1994.

2. 1. Management:

The company is manged by professional and skilled workers under the

leadership of Mr.Sudalaimuthu - Managing Director, other directors are

Mr.S.S.Muthu(whole time Director), Mr.A. Swaminathan, Mr.A.Navaneetha

Krishnan, Mr.Adam, Mr.S.Sakkaraiappan, Mr.C.Jeyaraj, Mr.S.Nambirajan

and Mrs.S.Muthulakshmi.

In 2008 the mill was certified by ISO 9001:2008 for the quality

Management system in supply and Manufacturing of Yarn producing. The

management improved its turnover and profitability over the year

remarkably and all its borrowing accounts have been regular.

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JANAKI COTTON MILLS LIMITED

ORGANISATION CHART

MANAGING DIRECTOR

CEO

_____________________________________________________

PURCHASE PRODUCTION ADMINISTRATIVE ACCOUNT

MANAGER MANAGER MANAGER MANAGER

EXECUTIVE QUALITY&LAB TEST OFFICE EXECUTIVE ACCOUNTS

(Purchase and sales) EXECUTIVE

_______________________________

OPERATORS SUPERVISIONS(Manufacturing, packaging, dispatching) (Maintenance, electrical & Mechanical)

In 1993 the mill has started with 2600 spindles. In the early stage the yarn

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produced was used for bet sheet and towels. The count of yarn spun were

20s,30s,2/20s, NE. The number of labours employed was 50.

In 1997 the mill was expanded the spindles with 2900 and the total

spindles was 5500. The count of yarn spun were 20s, 30s, 40s,2/20s,NE..

The quality of yarn was improved from weft to warp. The number of

labours employed was 110.

In 2000 the mill was expanded the spindles with 6500 and the total

spindle was 12,000. The counts of yarn spun were 20s,30s,40s,NE. The

quality of yarn was improved from weft to warp to hosiery. The

management gave most importance for quality .

In 2003 the mill has expanded the spindles up to 12,000 with latest

machineries imported from foreign countries. The counts of yarn spun were

20s,30s,40s,52s,NE. The turnover of the company was around

Rs.12,00,00,000 per Annum. The quality of yarn was improved from warp

to hosiery.

In 2006 the mill has expanded the spindles up to 15,000 with latest

machineries from leading machineries manufacturers.

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1. Rieter Draw Frame model D35 from M/s Rieter Machine Works,

Germany.

2. Lakshmi Ring Frame Model LR6/S from M/s Lakshmi Machine Works

Ltd., Coimbatore.

3. Muratec Automatic winding machine from Murata Machinery Limited.

4. Sehalforst - Autoconer 338 Machine imported from Germany.

Recently the mill has installed another one fully automatic winding

No.21C process coner manufactured by Murata Machinery, Japan. The cost

of this machine is around Rs.1, 10, 00,000/-. Now 50% the production of

yarn to exported in foreign countries. The turnover of the company was

around Rs.15crores. The number of labours employed was 180.

2.2. Source of Material:

The raw material required for this industry is quality cotton with a

staple length of about 29mm and above and fiber fineness of 3 to 5 micro

grams per inch, with 2 to 4 percent of trash. The company uses RG-34,

MCU-5, MECH-1, DCE-32, SANKAR-4 varieties of cotton. Cotton is

available in abundance in Punjab, Maharashtra, Andhra Pradesh, Gujarat,

Karnataka and Tamil Nadu. From inter stages only 10% of cotton are

consumed and 75% of cotton from the up countries and balance from abroad

particularly in West Africa.

World's No: 1 Cotton producer is China and India ranked 2nd place

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and next comes America and Africa. Egypt is producing super fine quality

cotton. The company adopts a prudent policy of cotton procurement and

resorts to purchase from several states. The managing Director is well

trained and experienced in selection of good quality cotton and entering into

foreign contracts. He is well connected with reputed suppliers of local and

up country cotton. Hence no problem is envisaged in purchasing quality

cotton at optimum prices.

As the raw material is easily available, entering into long term

arrangements for supply of cotton isn't warranted.

2. 3 Quality Control Software:

Here the software used is for estimating the linear density is (Number)

strength of yarn samples (Thread). The length of sample yarn is 120 yards.

The sample is wound in Wrap Reel removed and placed on the Electronic

scale. The software automatically accounts the weight. The sample is placed

on the strength tester. Here the treads are broken and the strength at the time

of break is accounted by the software with this weight and strength count

and CSP(count, strength product) of yarn is estimated.

2.4. Other Sources:

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Power:

The mill is presently with a high 1100 v tension power connection.

The total sanctioned load is 1200 KVA. The prudent availed load is

1000 KVA. The mill has total capacity of 800 KVA. Two Generators

of capacities 125 KVA and 350 KVA are existing.

Water:

Water requirement for this unit is very limited. There exist 3" Bore

wells and 4.5" Bore wells with copious supply of water, inside themill premises. No water problem is envisaged.

Transport:

The mill is situated on the Tirunelveli District. On the way of

Kannyakumari National highway (NH7). The transportation facilities

are very favorable to the mill.

Labour Profile:

The mill is situated at parkland village, which is surrounded by many

villages via, Kalandhapanai, Paaraydi village, South valliyoor,

viswasapuram,Rosmiyapuram, Pampankulam, kumarapuram,

Kallikulam.where from the unit can get labours. Periodical training

programmers are being conducted to train the work men. Quality

circles are functioning to achieve involvement and work culture

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among the workmen.

Labours employed in mills are skilled and semi - skilled.

Qualifications needed for semi -skilled worker area 8th STD. For

skilled worker they have to gone through ITI or Diploma course.

Payroll:

Payroll is a software consists of Bio-data of labours, wages earned,

PF deducted etc. Payroll is used for maintenance of details of labours,working in the mills.

Attendance:

All labours given one token with code number. Every labour entering

the gate is putting their token in a particular box. After it should

record the attendance register, The token is returned to the labours

when they are going out at the end of shift.

Working hours:

The weekly working hours of the industry are fixed on shift basis.

There are 3 shifts per day. Each shift consists of 8 hour as

1st shift - 08.00 am to 04.30 pm

2nd shift - 04.30 pm to 12.30 pm

3rd shift - 12.30 pm to 08.00 am

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It is applicable for laborers. The officer and executive have working

time from 9 am to 1 pm and 2 pm to 5.30 pm. They have lunch break

between 1 pm to 2 pm. Every year in addition to three national

holidays, the employees are having sixteen festival holidays.

Leave Facilities:

The following leave facilities are available to the employees of

Janaki Cotton Mills.

Casual Leave:

The staffs are allowed 7 days casual leave.

Earn Leave:

The staffs are allowed 20 days earn leave. The laborers are allowed

one earn leave for every 15 days.

Medical Leave:

The staffs are allowed 8 days medical leave. The industry is covered

under ESI.

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Housing Facilities:

Housing is the primary need of human beings in a civilized life. It

constitutes the most important part if the physical environment which

continuously influences man's health and well being. The health,

happiness, general manners and morale of the people in urban areas to a

large extend are influenced by the conditions of housing.

There are no of staff quarters provided by the industry. But the high

official persons are provided houses. They constructing Women Hostel in

their campus, however there are rooms available inside the industry tostay with all essential features.

Transport Facilities:

The employees are provided transport facilities on free of cost going

to the industry and come back to the home. The industry has 2 mini buses

for providing transport facilities by its own.

2.5. Other Facilities:

Safety from Machines & Training to workers:

The employees are provided helmet, shoes, mark, gloves, uniform etc

to prevent heat and from the machines. Special care is taken to provide

training to workers. Each department head identifies the training needs.

They intimate these to the administrative officer. Training is done as

monitoring is done by the department heads and the administrative officer.

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The training evaluation is done. Usually programmed is undue by the

authorized trainers. Training schedule is prepared once in a yearly. Induction

Training is also provided.

2.6. Machine Requirements:

The promoters have installed premium equipment in their mill. Details of the

machinery installed by various departments.

S.No. DEPARTMENT QUANTITY

1 Blow Room 2 lines

2 Carding Machine 8 Numbers

3 Draw Frame 4Numbers

4 Simplex 4Numbers

5 Ring Frames 30Numbers

6 Reeling 6 Numbers

7 Cone Winding 3 Numbers8 Bundling & Pressing 1 Numbers

9 Compressor 3 Numbers

10 Generator 2 Numbers

FLOW CHART OF PRODUCTION PROCESS

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Mixing

Blow Room

Carding

Drawing

Simplex

Spinning

_____________________________

Autoconer Cone winding

Packing Packing

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2.7. Details of Production Process:

Blow Room:

Cotton generally comes in the form of highly compressed bales,

which is well opened in the Blow room. Though this opening process,

foreign materials such as leaf, seed particles, dusty and other

impurities are removed with minimum loss of lint, which comes in

the form of lap. The degree of opening imparted to cotton in the blow

room has a good bearing on the yarn quality.

Carding:

This process further helps to individualize the fibres and to remove

foreign substances such as sand, dust, seed coat, leafy matter and

other impurities. It also removes the naps present in the lap and forms

a continuous uniform sliver of required hank.

Drawing:

Drawing helps equalize the crises crossed fibres of the card sliver with

one another and align them to the axes of the sliver through the

process of drafting. It removes the hooks if carded fiber and

straightens the Fibres by sliding them over one another. It helps to

homogeneously blend number of slivers from different cards, so as to

improve, the regularity in weight per unit length of the sliver.

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Simplex:

The diameter of the drawing sliver is reduced sufficiently before final

spinning of yarn. The delivered material roving is a continuous strand

of fibres twisted slightly before it is wound on bobbins for the next

process.

Spinning:

Spinning is the final process of converting cotton fibres into yarn,which involves the process of spinning together fibres, by drawing

them from fibrous mass and the drafted strand to form yarn of

required count. It is wound on ring bobbins.

Reeling / Winding:

Reeling / winding is the process where in the objectionable yarn

wasters are removed and the yarn on cops is transformed into

marketable Hank / Cone form.

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2. (B). Objectives of the study:

1. To know the Organization and Yarn Manufacturing process of Janaki

Cotton Mills Limited, Valliyoor, Tirunelveli district.

2. To analysis and forecast the production and sales level of Janaki Cotton

Mills limited.

Need for the study:

The study which will help to know the level of production capacity

and improve the financial performance of Janaki cotton Mills Ltd

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3. RESEARCH METHODOLOGY

3.1 Research Design:

The study is an analytical research. The researcher has used the

historical data for the analysis and made a critical evaluation of the materials.

3.2 Nature of study:

The nature of data that the researcher is used secondary data. Moreover the

researcher has collected relevant primary information regarding inventory

management practice of company through discussion with company officials and

observations.

3.3 Data collection:

The data for the study has been collected from the published statements, viz.,

Trading & Profit and Loss account and the Balance sheet contained in the annual

reports of the company.

3.4 Period of the study:

The financial and production related statement are helpful for the analysis of

firms performance and take decisions on the basis of analysis. For this purpose the

financial statement taken for a period of 2008-09.

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3.5 Scope of the study:

The present day is confined only in Janaki Cotton Mills Limited,

Tirunelveli district. The main focus of the study is to analysis the flexible

budget in Yarn manufacturing process and to find out the problem.

3.6. Tools of data analysis:

Budgeting Tools used for the analysis, they are

1. Flexible budget analysis.

2. Production budget and3. Linear trend.

3.6 Theoretical view of Budgeting:

Concept of budgeting:

One of the primary objectives of cost accounting is to provide

information to business management for planning and controlling.

Budgeting act as tool of both planning and control. Budgeting is a formal

process of financial planning using financial accounting data. The Institute

of Cost and Management, Accountants (UK) defines a budget as a

Financial and /or quantitative statement, prepared and approved prior of

time, of the policy to be pursued during that period for the purpose of

attaining a given objective. It may include income, expenditure and the

employment of capital.

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3.6.1. Budgeting and forecasting:

Sometimes the terms Budgeting and forecasting are used

interchangeably. Both terms have some similarities, for example, both relate

to future events and involve prediction of something. The basic difference

between budgeting and forecasting lies in degree of sophistication involved

in the predictions used by them. According to the National Association of

Accountants (USA), Forecasting is a process predicting or estimating a

future happening. Forecasting is an essential part of budgeting process.

Forecasting is estimating future events and their effects on the budget.

Forecasting come to an end after mere estimating. Budgeting is a process of

preparing budgets and further aspect are involved in procedure. Besides,

forecasting can be made by a firm for purpose other than budgeting, such as

a forecast of general business conditions.

3.6.2. Concept of Budgetary Control:

Budgetary control is a means of control in which the actual state of

affairs is compared with the budget so that appropriate action may be taken with

regard to any deviations before it is too late. Briefly, the use of a budget to

control a firms activities is known as budgeting control. Budgetary has the

1. To provide an organized procedure for planning. It provides a detailed plan

of actions for a business over a definite period of time.

2. To coordinate all the activities of various department of a business firm in

such a manner that the maximum profit will be achieved for the minimum

use of resources.

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3. To provide a means of determining the responsibility for all deviations from

the plan (budget), and to supply information on the basis of which necessary

corrective action may be taken. Thus, budgetary control has the objective of

controlling cost.

3.6.3. Objective And Function of budgeting:

An effective budgeting system is vital to the success o a business firm.

Budgeting firm. Budgeting is needed in organizations to perform the following

functions:

1. Planning,

2. Coordination,

3. Communication, and

4. Performance evaluation.

Planning:

Almost all business activities require some planning to ensure

efficient and maximum use of scarce resources. The budget is a formal

planning framework that all provides specific deadlines to achieve

departmental objective to contributes towards the overall objectives of an

organizations. A budget incorporates expected performance and present

managerial targets. Thes3e targets guide the business operations and help in

overcoming problems and analyzing the future. Budgeting influences the

formulation of all business strategies and subsequently assists business

managers in executing such strategies.

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Coordination:

Coordination is a managerial function under which all factors of production

and all departmental activities are balanced and integrated to achieve the objectives

of the organizations. The budgeting process provides the basis for individual in all

parts of the organization to exchange ideas on how best to achieve these objectives

in the following ways:

The existence of a well laid plan is the step towards achieving coordination.

Executives are forced to think of the relationships among individualoperations, and the company as a whole.

Budgets help to restrain the empire-building efforts of executives. Budgets

broaden individual thinking by helping to remove unconscious biases on the

part of engineers, sales and production officers.

Budgets help to search out weakness in the organizational structure. The

formulation and administration of budgets isolate problems of

communication, of fixed responsibility, and of working relationships.

Communication:

It is necessary is an efficient organization that all people be informed

about the objectives, policies, programmes and performances. This is made

possible through their participation in the budgeting process. Budgets

inform each manager of what other have agreed to do. They also inform

managers of the resources available to achieve objective and targets.

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Control and performance evaluation:

Budgeting enters into control three points:

a. When a budget is being formulated, departments analyze their plans

for the future and submit estimates as per their requirements,

justifying each of their demand by demonstrating a need.

b. After budgets of different departments have been reviewed and

approved they become targets that set desirable limits on spending.

c. At the end of the budget period, a comparison of actual expenditures

with budget expenditure is made as a mean of judging performance

and fixing responsibility for a deviation. Budgets are the basis of

performance evaluation in an organization as they reflect realistic

estimates of acceptable and expected performance. It is more

accurate, reliable and reasonable to measure current performance

against a budget rather than against a vague expectation or against

result of previous year when conditions might have changed.

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3.6.4 Advantages of Budgeting:

Budgeting plays an important role in the effective use of resource and

achieving overall organization goals. It has the following advantages:

1. Budgeting compels and motivates management to make an early and

timely study of its problems. It generates a sense of caution and care, and

adequate study among manager before decisions are made by them.

2. Budgeting provides a valuable means of controlling income and

expenditure of a business as it is a Plan for spending.

3. Budgeting provides a tool through which managerial policies and goals

are periodically evaluated, tested and tested and established as guidelines

for the entire organization.

4. Budgeting helps in directing capital and other resources into the most

profitable channels.

5. The use of budgeting in an organization develops an attitude of Cost

consciousness. Stimulates the effective use of resources, and creates an

environment of profit-mindedness throughout the organization.

6. It provides a norm, basis or yardstick for measuring performance of

departments in organizations.

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Limitations:

1. Planning, budgeting or forecasting is not exact science; it uses

approximations and judgment which may not be cent percent accurate.

At best, a budget is an estimate; no one knows precisely what will happen

in the future.

2. The Success and utility of budgeting depends upon on cooperation and

participation off all members of management. Many a time budgeting

has failed because executive management has paid only lip service to its

execution.

3. The establishment of a budgeting process takes time. Also, sometimes

too much is expected from a budget and in case expectations are not

fulfilled, the blame is put on the budget.

3.6.5. FLEXIBLE BUDGETING:

A flexible budget that is prepared for a range, i.e. for more than one

level of activity. It is set of alternative budget to different expected levels

of activity. The flexible budget is also known by other names, such as

variable budget, dynamic budget, sliding scale budget, step budget, expense

formula budget and expense control budget. The underlying principle of a

flexible budget might be developed that would apply to a relevant Range

of production; The flexible budget provides a reliable basis for comparison

because it is automatically geared to changes in production activity. A

flexible budget has the following important features:

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1. It covers range of activity (output).

2. It is flexible, i.e. easy to change with variation in production levels.

3. It facilitates performance measurement and evaluation.

Planning or budgeting for a range of activity rather than for a single level of

activity always preferable due to the uncertainty about the changes in

activity levels. In flexible budgeting, that ranges of activity is selected, With

one or more in between. Among different activity levels the most likely

activity level is made the basis for planning business operations. Flexible

budgeting makes it easy to adjust plans to changing production levels

without any delay. The flexibility involved in this budget makes a very

useful decision making tool for management.

3.6.5. (A) Steps in Flexible Budgeting:

The following steps involved in developing a Flexible budget:

1. Deciding the range of activity to which the budget is to be prepared.

2. Determining the cost behaviour patterns(Fixed, Variable)

3. Selecting the activity levels (generally in terms of production) in prepare

budgets at those levels.

4. Preparing the budget at each activity level selected by associating the

activity level with corresponding costs. The corresponding costs to be

attached with activity level are determined in terms of their behavior.

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(B) Advantages of Flexible Budget:

1. Accurate budgeting: The use of flexible budget may result in the

preparation of more accurate budgets. Flexible budgeting techniques

require that consideration is to be given to the output factor in the budget

preparation. Since all costs do not behave in the same manner (as some

costs rise faster than others when production increases) a budget giving

consideration to the volume (output) factor is bound to be more accurate

than one where volume is not considered.

2. Accurate performance measurement: The flexible budgeting technique

incorporates changes in activity level and compares actual result with the

budget in terms of output achieved. This facilitates more meaningful

more comparison and evaluation between actual and budgeted data as

comparable data are compared.

3. Coordination: flexible budgeting results in coordination between all

activities/departments of a business. Production is planned in relation to

expected sales; materials and labour are acquired to meet expected

production requirements. Facilities are provided to achieve budgetary

goals, and funds are made available for the investments necessary to have

higher outputs.

4. Control tool: Flexible budgeting is an effective management control tool.

Comparison between the budgeted costs (at the actual production level)

and actual costs form the basis for analyzing cost variances and fixing

responsibility for the same. In fact managers themselves feel motivated

in controlling costs for which they are responsible they are responsible.

This contributes to cost control throughout the organization.

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3.6.6 Production Budget:

A production budget is stated in physical units. It specifies the number of

units of each product that must be produced to satisfy the sales forecast and to

achieve the desired level of closing finished goods inventory. Essentially, the

production budget is the sales budget adjusted for inventory changes as follows:

Unit to produce =Budgeted sales+Desired closing inventory of finished goods(-)

Beginning inventory of finished goods.

3.7Lineat trend:

The method of least square may be used either to fit a straight line trend or a

nonlinear trend. The straight line may represented by the equation.

S = a+b.T when and are constant representing the intercept and slope respectively

of the estimated straight line. In order to determine the values of a and b the

following two normal equation need to be solved:

S=Na + bT

ST=aT+bT2

These method is based upon the analysis of Past data. The basic assumption of

these methods is that future events area continuation of the past. Fitting of trend to

the given data and use this to make forecasts. The result of these method are fairly

accurate so long as the trend has a persistent tendency to more in the same

direction. The analysis is more reliable for the short term forecast.

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4. ANALYSIS AND INTERPRETATIONS

Table No.4.1 Shows the various cost involved in the actual production process

of Mixing during the year 2009.

Following working notes is clearly stated the above table to represents various cost

involved each process and calculations, after its convert in to 90% and 100%

Working notes:

o Average of raw material in this process (per day) = 5670kgs.

o Total working days = 287 days,

i.e 365days 9 Govt. holidays 12 days maintenance=344days.

Here, 4 hours shut down for each working days, (4 x

344days=1376hours)

1376/24 hours=57days.

43

S.No Particulars 80%

A

1.

2.

B.

3.

4.5.

C

6.

7.

8.

9.

Variable Cost:

Material Cost

Labour Cost

Semi-Variable

Power

Fuel & oilRepair & Maintenance

Fixed Cost:

Cotton testing fee & supervisions.

Depreciation:

Direct

Indirect

Insurance

Administrative &

Selling overhead.

126928620

602364

-

--

32277

5923713.5

3340730.1

35215.3

1037806.5


44/78

Therefore, 344days-57 days =287 days.

Working Notes contd.

o Percentage production capacity = 287/365days x 100

=78.630%

Assume as a roundly 80% is current production capacity.

o Per Kilogram of Raw Material: Rs.78/-

o Labour Cost:

Total labours production process = 129

Labour cost involved in Mixing process =602364

i.e. Total Labour cost/14 labours in mixing process.

6. Insurance for the mixing process = 35215.3

7. Depreciation:Total depreciation = 74115549

Directly depreciation involved in production process= 47389

Other depreciations = 26725841

(it should divided into each process)

Therefore, Mixing process = 5923713.5 &3340730.1

8. Total Administrative & Selling overheads 7000829

(+)other Administrative expenses 265743

(-) other heads (windmills) 9340259

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Therefore each process = 1037806.5

On the basis of calculations are converted into 90% and 100%. It

helps to compare the current level production to maximum level

productions.

Table No.4.1(a) Shows the various cost involved in the process of mixing

during the year 2009.

S.No Particulars 80% 90% 100%

A

1.

2.

B

3.

4.

5.

C

6.

7.

8.

9.

Variable Cost:

Material Cost

Labour Cost

Semi-Variable

Power

Fuel & oil

Repair &

Maintenance

Fixed Cost:

Cotton testing fee &

supervisions.

Depreciation:

Direct

Indirect

Insurance

Administrative &

Selling overhead.

126928620

602364

-

-

-

32277

5923713.5

3340730.1

35215.3

1037806.5

142794698

677659

-

-

-

36311.6

6664177.6

3758321.3

39617.2

1167532.2

158660775

752955

-

-

-

40346.25

7404641.7

4175912.6

44019.1

1297258

Total 137900726.4 1555138316.9 172375907.7

Inference:

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Table No.4.1(a) shows that various cost involved in the process of Mixing,

Here the capacity of 80% consists the cost of 137900726.4, 90% consists the cost

of 1555138316.9 and total cost of maximum level is 172375907.7


of Blow room during the year 2009.



Working notes:

1.Average of raw material in this process (per day) = 5414kgs.

46


A

1.

2.

B.

3.

4.

5.

C

6.

7.

8.

9.

Variable Cost:

Material Cost

Labour Cost

Semi-Variable

Power

Fuel & oil

Repair & Maintenance

Fixed Cost:

Cotton testing fee & supervisions.Depreciation:

Direct

Indirect

Insurance

Administrative &

Selling overhead.

125859258

129078

1707650

219991

122033

32277

5923713.5

3340730.1

35215

1037806.5


47/78

2.Labour Cost:


Labour cost involved in this process = 129078.

i.e. Total Labour cost/3 labours in Blowroom process.


3.Power: 1700units x Rs.3.50 =5950

5950 x 287days = 1707650

4.Per Kilogram of Raw Material: Rs.81/-

5.Fuel and oil: 10% on total amount of Fuel and oil Rs.21999126.Repair maintenance: 5.3% on Rs.2302504

7. Insurance for the each process = 35215.3

8. Depreciation:

Total depreciation = 74115549




Therefore, each process = 5923713.5 &3340730.1

9.Cotton testing fees 7 supervisions: (49216+209000=258216)

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Divided by 8 process(except packaging), = 32277.







productions.

Table No.4. 2(a) Shows the various cost involved in the process of Blowroom



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A

1.

2.

B

3.

4.

5.

C

6.

7.

8.

9.

Variable Cost:

Material Cost

Labour Cost

Semi-Variable

Power

Fuel & oil


Fixed Cost:


supervisions.

Depreciation:

DirectIndirect

Insurance

Administrative &

Selling overhead.

125859258

129078

1707650

219991

122033

32277

5923713.5

3340730.1

35215

1037806.5

141591656

145212.7

1921106.2

247489.8

137287.1

36311.6

6664177.6

3758321.3

39617.2

1167532.2

157324073

161647.5

2134562.5

274988.7

152541.2

40346.25

7404641.7

4175912.6

44019.1

1297258

Total 138407752.1 155708711.7 173009990.6

Inference:

Table No.4.2(a) shows that various cost involved in the process of

Blowroom, Here the capacity of 80% consists the cost of 138407752.1, 90%

consists the cost of 155708711.7 and total cost of maximum level is 173009990.6


of carding during the year 2009.

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Working notes:


2.Labour Cost:


Labour cost involved in Carding process =86052

i.e. Total Labour cost/2 labours in Blowroom process.

50


A

1.2.

B.

3.

4.

5.

C

6.

7.

8.

9.

Variable Cost:

Material CostLabour Cost

Semi-Variable

Power

Fuel & oil


Fixed Cost:


Depreciation:

Direct

IndirectInsurance

Administrative &

Selling overhead.

12480482086052

1506750

204592

545693

32277

5923713.5

3340730.135215

1037806.5


51/78


3.Power: 1500units x Rs.3.50 =5250

5250 x 287days = 1506750


5.Fuel and oil: 9.3% on total amount of Fuel and oil Rs.2199912

6.Repair maintenance: 23.7% on Rs.2302504

7. Insurance for each process = 35215.3

8. Depreciation:




(it should divided into each process)Therefore, each process = 5923713.5 &3340730.1







51


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productions.

Table No.4. 3(a) Shows the various cost involved in the process of Carding



A

1.

2.

B

3.

4.

5.

C

6.

7.

8.

9.

Variable Cost:

Material Cost

Labour Cost

Semi-Variable

Power

Fuel & oil


Fixed Cost:


supervisions.

Depreciation:

Direct

Indirect

Insurance

Administrative &

Selling overhead.

124804820

86052

1506750

204592

545693

32277

5923713.5

3340730.1

35215

1037806.5

140405423

96808

1695093

230166

613905

36311.6

6664177.6

3758321.3

39617.2

1167532.2

156006025

107565

1883437

255740

682116

40346.25

7404641.7

4175912.6

44019.1

1297258

Total 137517649.1 154707354.9 171897060.7

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Inference:

Table No.4.3(a) shows that various cost involved in the process of Carding,




of Drawing during the year 2009.



Working notes:


53


A

1.

2.

B.

3.

4.

5.

C6.

7.

8.

9.

Variable Cost:

Material Cost

Labour Cost

Semi-Variable

Power

Fuel & oil


Fixed Cost:Cotton testing fee & supervisions.

Depreciation:

Direct

Indirect

Insurance

Administrative &

Selling overhead.

126199066

129078

301350

46198

437475

32277

5923713.5

3340730.1

35215

1037806.5


54/78

2.Labour Cost:


Labour cost involved in drawing process =129078.

i.e. Total Labour cost/3 labours.


3.Power: 300units x Rs.3.50 =1050

1050 x 287days = 301350


5.Fuel and oil: 2.8% on total amount of Fuel and oil Rs.21999126.Repair maintenance: 19% on Rs.2302504

7. Insurance for the drawing process = 35215.3

8. Depreciation:





Therefore, Each process = 5923713.5 &3340730.1


54


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productions.

Table No.4. 4 (a) Shows the various cost involved in the process of Drawing



55


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A

1.

2.

B

3.

4.

5.

C

6.

7.

8.

9.

Variable Cost:

Material Cost

Labour Cost

Semi-Variable

Power

Fuel & oil


Fixed Cost:


supervisions.

Depreciation:

DirectIndirect

Insurance

Administrative &

Selling overhead.

126199066

129078

301350

46198

437475

32277

5923713.5

3340730.1

35215

1037806.5

141973950

145213

339019

51973

492159

36311.6

6664177.6

3758321.3

39617.2

1167532.2

157748833

161348

376688

57748

546844

40346.25

7404641.7

4175912.6

44019.1

1297258

Total 137482909.1 154668273.9 154668273.9

Inference:

Table No.4.4(a) shows that various cost involved in the process of drawing,

Here the capacity of 80% consists the cost137482909.1, 90% consists the cost of

154668273.9 and total cost of maximum level is 154668273.9


of Simplex during the year 2009.

56


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Working notes:


2.Labour Cost:


Labour cost involved in these process =430260

i.e. Total Labour cost/10 labours in process.

57


A

1.2.

B.

3.

4.

5.

C

6.

7.

8.

9.

Variable Cost:


Semi-Variable

Power

Fuel & oil


Fixed Cost:


Depreciation:

Direct

IndirectInsurance

Administrative &

Selling overhead.

127591590430260

904050

120995

391425

32277

5923713.5

3340730.135215

1037806.5


58/78


3.Power: 900units x Rs.3.50 =3150

3150 x 287days = 904050



6.Repair maintenance: 17% on Rs.2302504


8. Depreciation:




(it should divided into each process)Therefore, Each process = 5923713.5 &3340730.1







58


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productions.

Table No.4. 5(a) Shows the various cost involved in the process of Simplex



A

1.

2.

B

3.

4.

5.

C6.

7.

8.

9.

Variable Cost:

Material Cost

Labour Cost

Semi-Variable

Power

Fuel & oil


Fixed Cost:Cotton testing fee &

supervisions.

Depreciation:

Direct

Indirect

Insurance

Administrative &

Selling overhead.

127591590

430260

904050

120995

391425

32277

5923713.5

3340730.1

35215

1037806.5

143540539

484043

1017056

136119

440353

36311.6

6664177.6

3758321.3

39617.2

1167532.2

159489488

537825

1130063

151244

489281

40346.25

7404641.7

4175912.6

44019.1

1297258

Total 139808062.1 157284069.9 174760078.7

Inference:

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Table No.4.5(a) shows that various cost involved in the process of Simplex,

Here the capacity of 80% consists the cost of139808062.1, 90% consists the cost of


Table No.4.6Shows the various cost involved in the actual production process

of Spinning during the year 2009.



Working notes:

60


A

1.

2.

B.

3.

4.

5.C

6.

7.

8.

9.

Variable Cost:

Material Cost

Labour Cost

Semi-Variable

Power

Fuel & oil

Repair & MaintenanceFixed Cost:


Depreciation:

Direct

Indirect

Insurance

Administrative &

Selling overhead.

127998413

2409456

703150

1473941

630887

32277

5923713.5

3340730.1

35215

1037806.5


61/78


2.Labour Cost:


Labour cost involved in spinning process =2409456

i.e. Total Labour cost/56 labours in this process.


3.Power: 700units x Rs.3.50 =2450

2450 x 287days = 703150

4.Per Kilogram of Raw Material: Rs.87.5/-5.Fuel and oil: 67% on total amount of Fuel and oil Rs.2199912



8. Depreciation:






61


62/78








helps to compare the current level production to maximum levelproductions.

Table No.4. 6(a) Shows the various cost involved in the process of Spinning



62


63/78

A

1.

2.

B

3.

4.

5.

C

6.

7.

8.

9.

Variable Cost:

Material Cost

Labour Cost

Semi-Variable

Power

Fuel & oil

Repair &

Maintenance

Fixed Cost:


supervisions.

Depreciation:Direct

Indirect

Insurance

Administrative &

Selling overhead.

127998413

2409456

703150

1473941

630887

32277

5923713.5

3340730.1

35215

1037806.5

143998214

2710638

791044

1658184

709748

36311.6

6664177.6

3758321.3

39617.2

1167532.2

159998016

301180

878938

1842426

788609

40346.25

7404641.7

4175912.6

44019.1

1297258

Total 143585589.1 161533787.9 176771346.7

Inference:

Table No.4.6(a) shows that various cost involved in the process of Spinning,

Here the capacity of 80% consists the cost of 143585589.1,

90% consists the cost of 161533787.9 and total cost of maximum level is

176771346.7

Table No.4.7.1 Shows the various cost involved in the actual production

process of winding during the year 2009.

63


64/78



Working notes:


2.Labour Cost:


Labour cost involved in Winding process = 903546


64


A

1.2.

B.

3.

4.

5.

C

6.

7.

8.9.

Variable Cost:


Semi-Variable

Power

Fuel & oil


Fixed Cost:


Depreciation:

Direct

IndirectInsurance

Administrative &

Selling overhead.

39850524903546

326462

39598

112823

32277

5923713.5

3340730.1

35215

1037806.5


65/78


3.Power: 325units x Rs.3.50 =1137.5

1137.5 x 287days = 326462





8. Depreciation:




(it should divided into each process)Therefore, Each process = 5923713.5 &3340730.1







65


66/78



productions.

Table No.4.7.1(a) Shows the various cost involved in the proce ss of winding



A1.

2.

B

3.

4.

5.

C

6.

7.

8.

9.

Variable Cost:Material Cost

Labour Cost

Semi-Variable

Power

Fuel & oil


Fixed Cost:


supervisions.

Depreciation:

Direct

Indirect

Insurance

Administrative &

Selling overhead.

39850524

903546

326462

39598

112823

32277

5923713.5

3340730.1

35215

1037806.5

44831839

1016489

367270

44548

126926

36311.6

6664177.6

3758321.3

39617.2

1167532.2

49813155

1129433

408078

49498

141029

40346.25

7404641.7

4175912.6

44019.1

1297258

Total 51602695.1 58053031.9 64503370.65

Inference:

Table No.4.7.1 shows that various cost involved in the process of Winding,

66


67/78

Here the capacity of 80% consists the cost of 51602695.1, 90% consists the cost of


Table No.4.7.2. Shows the various cost involved in the actual production

process in Autoconer during the year 2009.



Working notes:


67


A

1.

2.

B.

3.

4.

5.

6.

C

7.

8.

9.

10.

Variable Cost:

Material Cost

Labour Cost

Semi-Variable

Power

Generator (35%)

(65%)

Fuel & oil


Fixed Cost:

Cotton testing fee & supervisions.Depreciation:

Direct

Indirect

Insurance

Administrative &

Selling overhead.

81973227

774468

627812

1293394

2402017

94596

62168

32277

5923713.5

3340730.1

35215

1037806.5


68/78

2.Labour Cost:


Labour cost involved in Autoconer process =774468



3.Power: 675units x Rs.3.50 =2187.5

2187.5 x 287days = 627812 (including Generator power:36954112)


5.Fuel and oil: 4.3% on total amount of Fuel and oil Rs.21999126.Repair maintenance: 2.7% on Rs.2302504


8. Depreciation:







68


69/78








productions.

Table No.4. 7.2 (a) Shows the various cost involved in the process of

Autoconer during the year 2009.


69


70/78

A

1.

2.

B

3.

4.

5.

6.

C

7.

8.

9.

10.

Variable Cost:

Material Cost

Labour Cost

Semi-Variable

Power &

Generator: (35%)

(65%)

Fuel & oil


Fixed Cost:


supervisions.Depreciation:

Direct

Indirect

Insurance

Administrative &

Selling overhead.

81973227

774468

627812

1293394

2402017

94596

62168

32277

5923713.5

3340730.1

35215

1037806.5

92219880

871277

706289

1455068

2702269

106421

69939

36311.6

6664177.6

3758321.3

39617.2

1167532.2

102466534

968085

784765

1616743

3002521

118245

77710

40346.25

7404641.7

4175912.6

44019.1

1297258

Total 97597424.1 109797102.9 121996780.7

Inference:

Table No.4.7.2(a) shows that various cost involved in the process of

Autoconer, Here the capacity of 80% consists the cost of 97597424.1, 90%

consists the cost of 109797102.9and total cost of maximum level is 121996780.7

Table No.4. 8 Shows the various cost involved in the process of packaging


70


71/78


A

1.2.

B

3.

4.

5.

C

6.

7.

Variable Cost:


Semi-Variable

Power

Fuel & oil


Fixed Cost:

Insurance

Administrative &

Selling overhead.

12182375186052

-

-

-

35215

1037806.5

142794698677659

-

-

-

39617.2

1167532.2

158660775752955

-

-

-

44019.1

1297258

Total 122982824.5 144679506.4 160755007.1

Inference:

Table No.4.8 shows that various cost involved in the process of Packaging,



TABLE No.4.9. PRODUCTION BUDGET FOR SIX MONTH ENDING,

31ST December 2009

71


72/78

Particulars July09 Aug.09 Sep.09 Oct.09 Nov.09 Dec.09

Sales

Add: ClosingStock

Less:

Opening-

Stock

Add: Loss in

production

TOTAL

(No. of Unit

Produced)

156828

38484.9

126012

47355.4

145588

36456.1

146912

26813.6

126032

39304.3

156554

27073.9

195312

47298.4

173367.4

38484.9

182044.1

47355.4

173725.6

36456.1

165336.3

26813.6

183627.9

39304.3

148014.5

1677.2

134882.5

1528.4

134688.7

1526.2

137269.5

1555.4

138522.7

1569.6

144323.6

1635.3

149691.7 136410.9 136214.9 138824.9 140092.3 145958.9

Inference:

S.No Details of 2009 80% 90% 100%

1. Total Production 16,94,387 19,06,185.38 21,17,984

2. Monthly wise 1,41,199 1,58,849 1,76,497

3. Day to day 5,904 6,642 7,380

Working notes for the previous table 4.9. And Inference:

6Months Production (80%Capacity) = 847193.6,

72


73/78

o Therefore 1 year = 1694387, If 90%basis = 1906185.38,

Maximum level = 2117983.75

o Divided by 12 months = 141199, If90%basis = 158849, If 100% =

176497.

o Total working Days = 287 days (by Calculations)

Therefore, 80% = 1694387 287 = 5904

90% = 1906185.38 287 = 6642

100% = 2117983.75 287 = 7380

Inference:

S.No Details of 2009 80% 90% 100%

1. Total Production

(kgs)

16,94,387 19,06,185.38 21,17,984

2. Monthly wise 1,41,199 1,58,849 1,76,4973. Day to day 5,904 6,642 7,380

Above table shows the actual production of 2009 is 1694387kgs, and also its

predicts level of capacities as 90% and 100% is 1906185.38 and 2117984

respectively.

73


74/78

TABLE No.4.9 (a). PRODUCTION BUDGET FOR January t o May 2010,

(by using forecasted Value)

Inference:

From the above Table shows that the forecasted value of Sales, Closing stock,

opening stock, loss in production, Total production value of 2010January to May.

The forecasted value of January2010 is approximately equal to the Production

Ledgers of the company.

74

Particulars Jan Feb Mar Apr. May

Sales

Add: Closing

Stock

Less:

Opening-

Stock

Add: Loss in

production

TOTAL(Kgs)

(No. of Unit

Produced)

159392

26897

185958

31380

212523

35863

239089

40346

265654

44829

186289

25444.7

217338

29684.9

248386

33925

279435

38166

310483

42407

160844.3

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