Project Report Prerna
Project Report Prerna
Project Report Prerna
OF
BUT LET HIM SET HIS OWN TARGETS, GIVE HIM FREEDOM AND
THE AUTHORITY, AND HIS TASK BECOMES A PERSONAL MISSION:
I CAN
INTRODUCTION-
Summer training included a period of one month which had an indispensable effect
in the enlightening of knowledge and sagacity to build faith and confidence in
oneself to get the knowledge sharpened up and be optimistic for a bright career
ahead.
The purpose of pursuing this training was to get a thorough knowledge about the
finance system in firm and know more about the working of one of the most
robustly growing companies i.e. Ambuja Cements Ltd.
CEMENT INDUSTRY-
INTRODUCTION-
The Indian cement industry is the second largest in the world after China,
employing in excess of a million people throughout the country. The cement
industry contributes a big deal to the Indian economy, more so because the
construction industry in India relies heavily on the cement industry for natural
reasons. Indian as well as foreign companies have invested billions in the Indian
cement industry after regulations were lifted off in 1982. The cement industry in
India is currently undergoing a turnaround phase striving hard to come at par with
its global competitors in terms of health, safety, environment , production and
energyefficiency.
India has a lot of potential for development in the infrastructure and construction
sector and the cement sector is expected to largely benefit from it. Some of the
recent major government initiatives such as development of 100 smart cities are
expected to provide a major boost to the sector.
During the next four to five years, the Indian cement market is projected to witness
a Compound Annual Growth Rate (CAGR) of around 8.96 percent. Approximately
67 percent of the cement consumption can be attributed to the housing sector in
India, 13 percent to the infrastructure sector, 11 percent to the commercial
construction and the rest to the industrial construction segment. The next two years
might see the cement industry add on 5.6 croretonnes to its capacity due to a steep
rise in the demand. The overall cement capacity in India is expected to reach 39.5
croretons by the next year and 42.1 croretonnes by the end of 2017 from the
present 36.6 croretonnes.
A staggering 97 percent of the total cement production in India comes from the
188 large plants set up across the country, while 365 small cement plants are
responsible for the remaining three percent. Just the three states of Tamil Nadu,
Andhra Pradesh and Rajasthan are home to 77 of the 188 large plants. Some of the
world's top cement companies are based in India. Seventy percent of all the cement
produced in India belongs to the top 20 companies operating in the industry.
ABOUT AMBUJA
CS-Mr.Rajiv Gandhi
Achievements
Recognition
Vision of ACL
To be the most sustainable and competitive company in the cement industry.
Mission of ACL
1. COST
An amount that has to be paid or given up in order to get something.In
business, cost is usually a monetary valuation of effort, material, resources,
time and utilities consumed, risks incurred, and opportunity forgone in
production and delivery of a good or service. All expenses are costs, but not
all costs (such as those incurred in acquisition of an income-generating
asset) are expenses.
2. EXPENSES
Money spent or cost incurred in an organization's efforts to generate
revenue, representing the cost of doing business. Expenses may be in the
form of actual cash payments (such as wages and salaries), a computed
expired portion (depreciation) of an asset, or an amount taken out of
earnings (such as bad debts). Expenses are summarized and charged in the
income statement as deductions from the income before assessing income
tax.
3. LOSS
Loss is a cost that produces no benefit. It may be in the form of decrease in
value, excess of expenditure over income, excess of cost over the net
proceeds from a transaction. Expenses are incurred to obtain something and
losses are incurred without any compensation. They add to the cost of
product or services without any value addition to it.
4. COST CENTER
A cost center refers to a defined area, machine, or person to whom direct and
indirect costs are allocated. It is a distinctly identifiable department,
division, or unit of an organization whose managers are responsible for all
its associated costs and for ensuring adherence to its budgets. It is also called
cost pool or expense center.
5. PROFIT CENTER
It is a distinctly identifiable department or unit that contributes to the overall
financial results of a firm. Where adequate cost accounting systems are in
place, profit centers are given responsibility to target certain percentages of
the total revenue and are given adequate authority to control their costs to
achieve those targets. See also cost center and revenue center.
6. COST DRIVERS
A factor that can cause a change in the cost of an activity.
An activity can have more than one cost driver attached to it. For example, a
production activity may have the following associated cost-drivers: a
machine, machine operator(s), floor space occupied, power consumed, and
the quantity of waste and/or rejected output.
METHODS OF COSTING
Different industries follow different methods to establish the cost of their product.
This varies by the nature and specifics of each business. There are different
principles and procedures for performing the costing. However, the basic
principles and procedures of costing remain the same. Some of the methods are
mentioned below:
Job costing: Under this method, costs are ascertained for each work order
separately as each job has its own specifications and scope. Job costing is
used, for example, in painting, car repair, decoration, and building repair.
2. CRUSHING
The quarried material is then reduced in size by compression and/or impact
in various mechanical crushers
The uncrushed limestone is converted into crushed lime stone.
Iron ore
Phospho gypsum
Coarse ash 1-2%
Red mud- 1-2%
4.CLINKER PRODUCTION
Heatingof raw meal at a very high temperature in the rotating kiln,
Fuels required for the same are - coal, pet coke, alternative fuel, diesel.
Due to heating 1.5 unit of material shrinks to 1unit.
The kiln is designed to maximize the efficiency of heat transfer from fuel
burning to the raw material
At this high temperature, minerals fuse together to form predominantly
calcium silicate crystals - cement clinker.
The molten cement clinker is then cooled as rapidly as possible
Clinker may be either stored on site in preparation for grinding to form
cement or transported to other sites
5. CEMENT PRODUCTION
The grinding together of cement clinker, with around 5% of natural or
synthetic gypsum in cement or ball mill containing steel balls to grind the
mixture into cement
Other cementations materials such as slag, phosphor gypsum, imported
gypsum, fly ash are added to the cement.
Thecement or ball mill contains steel balls to grind the mixture into cement.
The types of cement produced at ACL are PPC, PPC+, OPC43, OPC53 and
composite cement.
Report 15 A of ACL is a report generated by using SAP that helps to ascertain the
total cost of goods produced at mines,crushers,rawmill,kiln and cement mill.
The entire cost information regarding line 1 and line 2 can be obtained in an
organized manner and format from report 15 A.
Line 1-file NE06
Line 2-file NE08
Combined- file NE06+NE08
SAP
PROVISIONS INCLUDE-
Bad debts written off.
Provision for wear parts
Other provisions.
DEPRECIATION INCLUDES-
Depreciation/amortization of PPEs
Depreciation/amortization of Long term assets
Depreciation/amortization of operating assets
ANALYSIS-
A cost sheet is used to compile the margin earned on a product or job, and
can form the basis for the setting of prices on similar products in the future.
From the cost sheet of clinker of ACL for the year ended 2016, following
observations can be made –
1. In the year 2016 ACL has produced 772812 units of clinker ,the
captive consumption of clinker is 1622446 while the quantity sold is
367256
2. The total operating expenses of clinker for the year 2016 is
1770395364.59 rupees while the per unit operating cost is 2,290.85
rupees which is less as compared to previous year .
3. In the year 2016 there has been a decrease in the cost of production
of clinker i.e. 1770395364.59 rupees while an increase in the per unit
cost of production of clinker i.e. 2290.85 rupees as compared to
previous year.
4. The cost of production of goods sold of clinker has increased to
647918035 rupees while the per unit cost goods sold has reduced to
176421 rupees.
5. There are no administration ,selling and distribution over heads,
packing and interest and financing cost associated with clinker thus
the cost of sales of clinker has increased to 647918035 rupees while
the per unit cost of sales reduced to 176421 rupees.
6. The net sale realization from clinker has increased to 83881955270
rupees
7. The profit margin of clinker for the year 2016 can be obtained from
the difference between the cost of sale and net sales of clinker which
comes to be 190901517.19 rupees.
Rs. Rs.
Rs.
Rs.
1,538
3,208,267,282 1, 3,330,328,469.28 .66
Materials Consumed * .67 364.16
Process -
Materials/Chemicals -
507,789,407. 234
506,190,96 61 .61
Utilities * 0.61 215.23
7,641,866.
4,097,67 78 3.53
Direct Employees Cost 1.00 1.74
57,900
.00 0.03
Direct Expenses -
88,614,592. 40
Consumable Stores & 108,942,24 27 .94
Spares 5.20 46.32
5,369,341.
10,087,71 81 2.48
Repairs & Maintenance 0.17 4.29
5,559,670.
5,415,73 90 2.57
Quality Control Expenses 6.98 2.30
Increase/Decrease in
Work-in-Progress
-
Other Adjustments -
4,749,068,775. 2,205
Cost of Production of 4,702,648,387 2, 76 .77
Goods Sold .22 009.30
353,535,958. 164
355,188,15 32 .20
Administrative Overheads 7.04 151.76
-
Secondary Packing Cost -
2,755,896,271. 1,280
Selling & Distribution 3,082,761,358 1, 52 .01
Overheads .61 317.17
708,075
Interest & Financing 1,468,43 .27 0.33
Charges 8.66 0.63
7,859,209,080. 3,650
8,142,066,341 3, 87 .32
Cost of Sales .52 478.86
8,578,473,539. 3,984
8,816,797,252 3, 83 .39
Net Sales Realization .97 767.15
719,264,458. 334
674,730,91 96 .07
Margin [Profit/(Loss)] 1.45 288.29
ANALYSIS-
From the cost sheet of cement of ACL for the year ended 2016, following
observations can be made –
In the year 2016 ACL has produced 2351830 units of cement ,the captive
consumption of cement is 87771 while the quantity sold is 2340440.66.
The total operating expenses of cement for the year 2016 is 409593196.48
rupees while the per unit operating cost is 174159 rupees which is less as
compared to previous year .
In the year 2016 there has been a decrease in the cost of production and the per
unit cost of production of cement i.e. 4710211767.25 rupees and 2002.79 rupees
respectively.
The cost of production of goods sold and the per unit cost goods sold of cement
has decreased to 4702648387.22 rupees and 2009.30 rupees respectively.
There has been an increase in the administration ,selling and distribution over
heads, and a decrease in interest and financing cost associated with cement thus
the cost of sales of cement has increased to 8142066341.52 rupees while the per
unit cost of sales reduced to 3478.86 rupees.
The net sale realization from cement has increased to 8816797252.97 rupees.
The profit margin of cement for the year 2016 can be obtained from the
difference between the cost of sale and net sales of cement which comes to be
674730911.45 rupees.
FINANCIAL ANALYSIS
Amount in ₹ crores
2016 2015 2014 2013 2012
INCOME STATEMENT
NET SALES 9,160 9,368 9,911 9,079 9,675
OPERATING EBITDA 1,683 1,531 1,928 1,667 2,473
PROFIT BEFORE TAX 1,337 1,172 1,783 1,514 1,902
PROFIT AFTER TAX 970 808 1,496 1,295 1,297
BALANCE SHEET
NET WORTH 19,074 10,307 10,103 9,486 8,805
BORROWINGS 37 33 29 29 35
CAPITAL EMPLOYED 19,656 10,946 10,763 10,121 9,414
FIXED ASSETS - GROSS BLOCK 15,289 12,013 11,429 10,826 10,184
FIXED ASSETS - NET BLOCK 5,979 6,092 6,227 6,063 5,862
CURRENT ASSETS 4,109 6,549 6,995 5,537 5,276
CURRENT LIABILITIES 3,611 3,226 3,138 2,843 2,899
Amount in ₹ crores
Non-
current
liabilities
Long- 23.58 22.68 0.9 3.968253
term 968
borrowin
gs
Deferred 492.89 564.9 -72.01 -
tax 12.74738
liabilities 892
(net)
Other 7.95 5.99 1.96 32.72120
long-term 2
liabilities
Long- 45.28 35.4 9.88 27.90960
term 452
provision
s
569.7 628.97 -59.27 -
9.423342
926
Current
liabilities
Trade 0.78 0.52 0.26 50
payables
Micro 896.2 679.3 216.9 31.92992
enterprise 787
s and
small
enterprise
s
Other 1464.2 1461.9 2.33 0.159378
current 6 3 356
liabilities
Short- 1249.7 1084.3 165.39 15.25259
term 3 4 605
provision
s
3610.9 3226.0 384.88 11.93023
7 9 133
ASSETS
Non-
current
assets
Fixed 5978.3 6091.7 -113.36 -
assets 6 2 1.860886
58
Tangible 0.29 0.31 -0.02 -
assets 6.451612
903
Intangible 320.02 414.12 -94.1 -
assets 22.72288
226
Capital 6298.6 6506.1 -207.48 -
work-in- 7 5 3.188982
progress 732
CURRE
NT
ASSETS
current 1065.0 2119.2 -1054.21 -49.74
investmen 2 3
ts
inventorie 937.54 895.45 42.09 4.70
s
trade 300.08 286.36 13.72 4.79
receivable
s
cash and 1412.8 2848.3 -1435.52 -50.39
bank 7 9
balance
short term 358.92 336.26 22.66 6.738833
loans 046
other 34.52 62.91 -28.39 -
current 45.12796
assets 058
4108.9 6548.6 -2439.65 -
5 37.25452
769
ANALYSIS –
From the balance sheet of Ambuja Cements Limited the following observations can be
made:-
1. The share capital and reserves have increased in the year 2016 which has led to
85.05% increase in the shareholders fund i.e. 19,073.56 crore rupees.
2. There has been an increase in the long term borrowings ,liabilities and provisions and
a decrease in the differed tax liability which has led to 9.42 % decrease in
noncurrent liabilities of ACL in the year 2016 i.e. 569.70 crore rupees.
3. The trade payables, micro and small enterprises, current liabilities and short term
provisions have increased in the year 2016 which has led to 11.93 % increase in the
current liabilities i.e.3610.97 crore rupees.
4. This increase in shareholders fund and current liabilities and a decrease in non-
current liabilities has led to an overall increase of 64.20 % in the total equity and
liabilities of ACL i.e. 23,254 crore rupees.
5. It is also observed that in the year 2016 there has been a fall of 3.18 % in capital
work in progress which includes tangible, intangible and fixed assets of ACL
i.e.6298.67 crore rupees.
6. However there has been an increase in the non-current investment and other
noncurrent assets and a decrease in the long term loans and advances which has led to
a rise of 1060.30 % in the total non-current assets of ACL i.e. 12,846.61 crore
rupees.
7. There has been an increase in the inventories, trade receivables ,short term loans and
a decrease in the current investments ,cash and bank balances and other current assets
which has led to a fall of 37.25 % in the total current assets of ACL i.e. 4108.95
crore rupees.
8. The proportionate increase in the non-current assets of ACL is more as
compared to the proportionate decrease in the total current assets which has led
to an overall increase of 64.20% in the total assets of ACL i.e23254 crore rupees.
POWER PLANT
Maximum Demand-
MD is measured in Kilowatt (kW). It is the highest level
of electrical demand monitored in a particular period usually
for a month period.
Billing demand-
Maximum flow of power at a given point of time.
Normal -
On peak- time period between 6 pm to 11 pm. Value to
be calculated at 135% of normal time.
Off peak- time period between 11 pm to 5 am. Value to
be calculated at 85% of normal time.
ACL borrows 18,000 units from CSEB every month.
75% of the above amount is to be paid every month as a
mandatory amount. Additional amount is to be charged if
the consumption exceeds.
Units generated are to be converted to KVAH.
15% OF THE RATE OF NORMAL ENERGY
CHARGE WILL BE PAID AS ELECTRICITY DUTY
TO GOVERNMENT.
Generation of energy is done in ratio of 9:1 i.e. 90% from
TPP and 10% from CSEB.
If sale or transfer of goods and services is done within the state, the calculation of
GST is done on the basis of summation of central and state GST.
For example- if rate of tax on a good is 28% and sale is done within the state, the
amount to be charged is to be divided in two equal parts i.e. 14% + 14%.
WORKING OF GST
STAGE PURCHAS VALUE VALUE RAT GST ON INPUT NET
E VALUE ADDITION/PROFI OF E OF OUTPU TAX GST ON
OF GST T GOODS GST T CREDI OUTPU
AND T T
SERVICE
S AT
NEXT
STAGE
MANUFACTURE 50 80 130 20% 26 10 26-
R 10=16
DEALER 130 20 150 20% 30 26 30-26=4
RETAILER 150 20 170 20% 34 30 34-30=4
Input tax rebate plays a very indispensable role in GST. The tax
already paid on input is thereafter reduced when tax on output is paid.
Input tax rebate can be claimed only when the assurance of both the
parties i.e. buyer and the seller is received.
BENEFITS OF GST-
i. Elimination of multiple taxes.
ii. Cascading effect reduction
iii. Ease of business
iv. Help to build a corruption free tax administration.
GST REGISTERATION
Registration of GST is compulsory for companies with minimum capital of:-
CONCLUSION-
One month of summer training under the guidance of Mr. Vishwas Soni sir
made us to discover a lot of things related to finance and costing of any
industry. Ambuja Cement follows the strategy of utmost care of its employees.
The company follows ‘SAFETY FIRST PRODUCTION NEXT’ approach.
The financial position of the company is stable and adding stars in the sky.
The company follows a procedure of process costing. Some details about
POWER PLANT were also provided.
Additionally, we got to know about the most burning topic among all
companies i.e. ‘GST’.
Thanking Mr. Gulzar Aneja sir and Mr. Arun Sen sir for their utmost
support and permitting for one month summer training course. Special
thanks to Mr. Vishwas Soni sir for being a great guardian at every step during
the internship.