Professional Documents
Culture Documents
With immense pleasure I would like to offer my humble gratitude to Mr. Shiva
Kumar, Vice President – LIPL-ACP a for providing me an opportunity to
undergo training in their esteemed organization.
1
CONTENT
CHAPTER-1 Introduction
Introduction to Cement Industries in India
Introduction to Lafarge
Objectives & Integrated policies of Lafarge
Lafarge in India
Award Winning Performance
Introduction to Arasmeta Cement Plant
Definition
Objectives
Importance
Reports Provided By Cost Accounting
Factors In Installing A Cost Accounting System
Essential Of A Good Cost Accounting System
Advantages Of A Cost Accounting System
2
Elements Of Cost
CHAPTER-7 Suggestion
Conclusion
3
CHAPTER – 1
INTRODUCTION OF
LAFARGE
INTRODUCTION TO CEMENT INDUSTRIES
IN INDIA
The cement industries in India are well settled industries. LAFARGE, AMBUJA,
CENTURY, GRASIM, ULTRATECH, TATA etc are the big names in the world
of Cement Industries. Cement Industries ranks next to steel industries from the
point of view of economic development of the country. Cement Industries has
been working for a quite long time.
The word cement is used to define any adhesive substance. It is derived
from Latin word “caementum” which means stone chippings. Cement is a
complex mixture of Tri-Calcium Silicate-55%-60%
Di-Calcium Silicate-15%-20%
Tri-Calcium Silicate aalumino ferrite-12%
Gypsum-4% and some impurities such as magnesium oxide, free lime etc
Cement is finally ground powder that when mixed to water sets to hard
mass. The history of cement goes back to classical GREECE and ROME. The
material then used was lime and volcanic ashes that slowly reacted with lime in
4
presence of water to form a hard mass. The invention of Portland cement was
attributed to Joseph Aspidine who in 1824 took out a patent for synthetic mixture
of limestone and clay. The two other important developments in the history of
Cement were the invention of Portland Slag cement and Portland Pozzolona
Cement, commonly called as PSC and PPC respectively.
The history of Portland Cement in India is dated back to 1914, when first
cement plant was established at Porbandar to produce the Ordinary Cement
(OPC)
The important landmarks in the history of Cement
Manufacturing in India are: -
YEAR EVENTS
Indian Cement Industry founded with the establishment of Indian
1914
cement at Porbandar with 1000 ton capacity
1924 Ten Companies with total capacity of 5.6 lakh tones cement started.
5
1956 Indian policy comes into force
DOMESTIC PLAYERS
6
FOREIGN PLAYERS
• Lafarge India
• Holcim
• Italecementi Group
INTRODUCTION TO LAFARGE
The Lafarge group is a world leader in construction material and holds leading
positioning in each of its four-core business area viz. Cement, Aggregates and
Concretes, Gypsum and Roofing. It operates in 75 countries and globally employs
over 80000 people and generated annual sale of Rs 9372 million in the year
2005.It expertise and best practices in efficient industrial production and
conservation of natural resources have been implemented around the world.
The Lafarge group was set up in 1883, in southern France, between the cities of
Lyon and Marseille. In 1864, the groups internationals operation received a fillip
with the receipt of an order for supplying 110000 tones of Cement for the
construction of Suez Canal. Between 1900 and 1914 the group expanded in
France North & South America. and then in all continents.
7
TATA steel’s cement division. The company acquired a total capacity of 4 million
tones of cement & after de-bottlenecking, currently, has a manufacturing capacity
of 5million tones of cement & 3 million tones of clinker.
History of Lafarge
The Lafarge story began in 1833…
8
1 9 1 4 - 1 9 5 5 G ro w t h o n a l l f ro n t s
International development began with the opening up of North American markets.
Lafarge, which had operated in Algeria over since 1866, now became the leading
Portland cement producer in Algeria, and set up operation in Morocco and
Tunisia. Lafarge Continued to acquire companies in mainland France. With a
quarter of the domestic market, the company became established as France’s
number one cement producer. In 1926, Lafarge opened its first alumnus cement
plant in the United Kingdom .It diversified into Gypsum in 1931 and developed
Super Blanc, new cement, in1932. By 1939, Lafarge was the leading cement
producer in the France. After 1945, Lafarge gained a new lease of life with the
arrival of Alfred Francois at the helm, the Marshall Plan and the post- war
rebuilding boom, production doubled over the next ten years.
1 9 5 5 - 1 9 8 1 M e r g e r s , A c q u i s i t i o n s , D e v e l o p me n t s
In 1956, Lafarge constructed its North American cement plant, creating Lafarge
cement of North America with startup of the Richmond Plant in Canada. In 1959
Lafarge began operation in Brazil. By the end of the 1960 Lafarge Canada has
become the third largest cement producer in the country, with the annual
production capacity of 90,000 tonnes. In 1980, a merger agreement was signed
between Lafarge and coppee as the number one cement producer in North
America. The size of the group rose from 12000 to 17000 employees.
9
acquired interests in Ashland (Spain), Aslan(Turkey) and Perlmooser (Austria).
The followed investment in Eastern Europe, East Germany, the Czech Republic
(1991), then Poland ,Romania, Russia and Ukraine. The agreement with the East
Germany cement producer, Karsdorf, came even before German reunification had
been mooted.
10
OBJECTIVES AND INTEGRATED POLICIES
OF LAFARGE
To bring the profitability of our recently acquired operations to the highest level
by using
# Our continuing efforts in reducing the cost base and improving efficiencies.
#To strengthen further our concrete tiles leadership and increase our presence in
clay tile.
Integrated policy
• Quality
• Environment
• Occupational health and safety
Lafarge India Pvt. Ltd. affirms its commitment towards customer satisfaction,
environmental protection, healthy and safe work environment for all concern and
shall endeavor to –
11
• Produce clinker and cement exceeding the applicable standard to satisfy
the customer needs
• Comply with all applicable legal and other requirement
• Provide the necessary resource and training to all employees in conducting
their work and enhancing their skill
• Regularly set and review objectives and targets for continual improvement
in quality, productivity, work environment & health and safety
performance
• Prevention or control of pollution and occupational health and safety
hazards
• Institute Management Systems of international repute and continual
improve their effectiveness
• Communicate the necessary information to the stakeholders.
Responsibilities
12
To make the employees the heart of the company-
Environmental Policy
13
• Innovative products
• Training and evolution
LAFARGE IN INDIA
PLANTS IN INDIA
A brief description of Lafarge India’s existence facilities is as below-
14
GROUP DIVISION
Different divisions in the group are as under –
CEMENT-
Lafarge manufactures and supplies wide variety of Cement and Hydraulic binder
to all those involved in the construction industries viz. building and public works
contractor, builders, whole sellers, prefabricated concrete manufacturers, ready
mix concrete producers, specifies etc.
ROOFING
15
new product such as our star surface, concrete tiles with a smoother surface.
Concrete, clay and metal roof tiles product ranges, roof system components and
chimney systems.
GYPSUM
Lafarge also manufactures a wide variety of gypsum product like Blocks, Plaster
boards, Sprayable plasters, wall boards and plaster coating for variety of
customers requirements. It is 3rd largest manufacturer of gypsum products in the
world.
Plaster board systems, Gypsum blocks and sprayable plaster intended for
construction, finishing in new building and renovation.
SALES BY DIVISION
As stated earlier that the Lafarge has been divided into 4 different groups. The
coverage of their market in the world is shown below-
16
Gypsum
9%
Roofing
11%
Cement
47%
Aggregates &
Concrete
33%
The above graphics clearly shows the sales of each group in % of the sales of their
products in the world. As shown that it nearly sales 47% of cement, 33% of
aggregate and concrete,11% of roofing,9% of gypsum.
17
Lafarge India offers four exclusive products-
MARKET OF LAFARGE
The Lafarge India covers a large area in the world. The cement and the products
are very popular in the world. These products are demanded in the different
18
region of the world. The graph below shows the overall detail of the region of the
world where there are sold.
Market in India
The world of the Lafarge in India begins with the acquisition of some of the
cement plant such as TISCO and RAYMOND in the years 1999 and 2001.Lafarge
India has covered a wide region of the Indian market within a small period. The
eastern region and some parts of Maharashtra etc.were quickly within the range of
the Lafarge.
The market region of Lafarge India is shown below.
PRESENCE IN INDIA
La
Lafarg
fa ee
rg ,,Ara
Arasmee
smta
ta
Clinker- 1.6 MT
Clinker- 1.6MT
Ce
Cemee
mnt
nt--1.6
1.6MT
MT
J
A
S
La
Lafarg
fargee,,So
Sonn
aa
dd
ih
ih Lafa
La rg
fa ee
rgJo
,Jo
, jobb
joeera(GU)
ra(GU)
Clinke r- 1.2
Clinker- 1.2MTMT Cem ent - 3.0 MT
Cement - 3.0MT
Cem
Cemee
nt
nt--0.4
0.4MT
MT
The company has a strong focus on the eastern India market and has emerged as a
major player in the region with a 20% market share. It sells its product in the
19
states of Jharkhand, Bihar, North East, West Bengal, Orissa, and Chhattisgarh.
Lafarge has established good brand equity and has thus been able to command a
premium in price over its competitors.
LAFARGE GROUP
LAFARGE GROUP
No. of Employees-77000
20
MARKET SIZE & SHARE
Assam &
Biha North Eastern
r 4.4 1.9 states
MT
MT 22.4%
Market Share - Eastern India 17.7%
Jharkhan West
d 2.7 Bengal
MT
29.9% J 6.8 MT
Chhattisgar 17.3%
h
3.5 MT
A Orissa
18.3%
S 4.4 MT
11.2%
21
1989.90 2nd Best productivity performance in cement industry
22
ARASMETA CEMENT PLANT
23
Plant Location Vill. Arasmeta, District - Janjgir
Chhattisgarh, India
Total Land Area 860.5 Hect.(2125 Acres)
Land Area (Factory) 82.5 Hect. (203.8 Acres)
Land Area (Colony) 43 Hect. (106 Acres)
Land Area( Mines ) 735 Hect. (1816 Acres)
No of Employees 650
Specific Power Consumption 77 KWH / MT Packed Cement(PPC)
Maximum Temperature 48 o C
Minimum Temperature 8 oC
Relative Humidity 80 % Max.
Rain Fall 1000mm Avg.
Northern Latitude 21o55' to 22o00'
Estern Longitude 82o15' to 82o25'
HISTORY
The taking over of the Raymond cement plant by the Lafarge group formed the
Arasmeta cement plant.The arasmeta cement plant came into existence in the year
22nd january 2001.Arasmeta Cement plant is one of the profit earning units of the
Lafarge group.All the formalities in respect of the transfer of the cement division
Raymond India ltd.to Lafarge India ltd.were completed with the signing of
24
agreement between Mr. K.V Ganeshan, COO Lafarge India Pvt. Ltd.and Mr.A.D
Causes of Establishment.
FACILITIES
The Arasmeta Cement Plant is both the Clinkerisation unit and Cement Grinding
unit. It produces 1.6 MTPA of clinker per year and 1.6 MTPA of Portland
Pozzolana Cement and now they have started the new product named as Lafarge
Concreto Cement in the market.
Position of land
LAND In ACRES
GOVERNMENT LAND 620.52
DIRECT PURCHASE 798.00
BY COMPANY ACQUISITION 235.48
Quality
25
Arasmeta cement plant has received following certificates
⇒ ISO 9001-2001
⇒ EMS 14000
⇒ OHSAS 18000
CHAPTER – 2
INTRODUCTION TO
FINANCE
DEPARMENT OF
ACP
26
INTODUCTION TO FINANCIAL DEPARTMENT OF
LAFARGE (ACP)
ACCOUNTS AND CONTROL DEPARTMENT -An Overview
As the nomenclature of the Department denotes, the objectives are two fold –
“Accounts” related and “Control” related.
No management decision can be taken unless there is proper Accounting & Book
Keeping. It also helps to discharge tax obligations and other statutory obligations
properly and timely.
c) Payment Control: All payments are released after the transaction passes
successfully through related controls.
27
SIGNIFICANT ACCOUNTING POLICIES
1. Accounting methodology
The Lafarge India Pvt. Ltd. Follows the mercantile system of accounting and
recognizes income and expenditure on accrual basis. The accounts are prepared
on historical cost basis as a going concern. Accounting policies not referred to
otherwise are consistent with generally accepted as accounting principles.
2. Use of estimates.
3. Revenue recognition.
5. Fixed assets.
Fixed assets are valued at cost of acquisition or construction. They are stated at
historical costs.
6. Valuation of inventories
28
i) Stores, spares parts and other supplies are valued at weighted average
cost or net realizable value, which ever is low.
ii) Raw materials are valued at monthly weighted average cost or net
realizable value, which ever is low. The cost includes purchased price
as well as incidental expenses.
iii) Work in progress is valued at absorption cost or net realizable value
which ever is low.
iv) Finished goods are valued at cost or net realizable value which ever is
low. Cost includes freight and excise duty paid/provided for on
finished goods.
7. Investments.
i) Current investments are valued at cost or fair/ market value which ever
is low.
ii) Long-term investments are shown at cost. However, when there is
decline, other than temporary, in the value of a long term investment
the carrying amount of such investment is reduced to recognize the
decline.
8. Taxes on income
Current tax is measured at the amount expected to be paid to / recovered from the
revenue authorities using applicable tax rates and laws.
The deferred tax for timing difference between the book and tax profits for the
year is accounted for in accordance with the accounting standard (AS22)
Accounting for taxes on income issued by the Institute of Chartered Accountants
of India using the tax rates and the laws that have been enacted or substantively
enacted as of the balance sheet date.
29
Provisions involving substantial degree of estimation in measurements are
recognized when there is present obligation as results of past events and it is
probable that there will be an outflow of resources. Contingent Liabilities are not
recognized but are disclosed in the notes. Contingent assets are neither recognized
nor disclosed in the financial statements.
Source –Lafarge
Annual Financial statement
ACCOUNTS DEPARTMENT
The Accounts and Control Department at the Plant Level is headed by Senior
Manager – Plant Accounts & Control and he reports Administratively to Plant
Manager and Functionally to Vice President - Accounts & Control.
a) Financial Accounting:
General Accounting
● Raw Material Accounting
● Stores Accounting
● Contractor Accounting
● Accounting entries
● Trial Balance
30
Control
● Inter Unit Account reconciliation
● Record keeping-documentary evidence for each transactions
● Preparation of Account Reviews
● Reconciliation between GL and P&I module
● Reconciliation of Cenvat (Excise & Service Tax)
● Compliance to Statutory Audit/ Tax Audit/ FOCUS
Accounts Payable
● Raw Material Bills processing & Payment
● Stores Bills processing & Payment
● Contractor Bills processing & Payment
● Import Material & Services Bills processing
● Issue of Sales Tax declaration forms
● Maintenance of JDE vendor address book for LIPL
● Preparation of Landed Cost Rule (LCR) for LIPL
● Statutory Payments
● Other Direct Bills processing & Payments
● Maintenance of Vendor invoices
● TA Bills Processing & payment
● Inward & Outwards Freight Bills processing & Payment
● Raising of Debit notes / Recoveries
• TDS deduction from vendor & Payment to Govt A/c
Control
● Receiving confirmations from venders
● Reconciliation of balance between parties & our books
● Integrity Report Generation from System
31
● Compliance to Statutory Audit/ Tax Audit/ FOCUS
Reporting
● Filing of E-TDS Quarterly returns
Pay Roll
● Processing of payroll
● Processing of Full & Final settlement
● Incorporation of Income Tax changes
● Preparation of Salary Budget
● Calculation of Income Tax
● Calculation of Superannuation & Gratuity & reporting
Payment
● TDS payment
● Professional Tax payment
● Payment of Salary & Wages and other allowances
Control
● Analysis between Budget & Actual
● Compliance to Statutory Audit/ Tax Audit/ FOCUS
Reporting
● Filing of E-TDS Quarterly returns
● Professional Tax returns
32
Treasury
b) Management Accounting:
Reporting & MIS
● Capex Reporting
● Monthly Plant Cost
● Stock Valuation Report
● MIS Recordings
● Quantitative Details
● Fortnightly Cost Forecast
● Clinker Cost to JCP
● Capex Status to Plant
● Compliance to Statutory Audit/ Tax Audit/ FOCUS
33
(2) Fixed Assets
● Maintenance of Fixed Assets module in JDE
● Capitalization of Fixed Assets
● Running of Depreciation calculation module
● Depreciation checking & booking
● Asset Physical Verification
● Write Off of obsolete items
● Integrity Report Generation from System
● Compliance to Statutory Audit/ Tax Audit/ FOCUS
● New Asset Codification Form
● Asset Divestment Form
(3) Capex Project
● Obtaining new Job Cost Number
● Capitalization of expenses incurred on projects
● EVA Analysis
● Capex Audit
● Compliance to Statutory Audit/ Tax Audit/ FOCUS
● Monthly Capex status reporting
c) Taxation:
● Maintenance of Excise Records
● Statutory Audits
● Departmental Audit
● Cenvat Credit availment
● Responding to Show cause Notices
● Filing & Attending Appeals
● Keeping track of modifications in Acts & Rules
● Submission of Returns
34
● Payment of Excise & Service Tax
● Compliance to Statutory Audit/ Tax Audit/ FOCUS
● Payment of Entry Tax & VAT & Central Taxes
● Compliance to Statutory Audit/ Tax Audit/ FOCUS
Lafarge India Pvt. Ltd. incurs fund from various sources includes,
shareholder funds and loan funds. Shareholder fund involves capital share
received from investors, and reserves and surplus. Contrary to this loan funds
involves secured loans as well as unsecured loans. Similarly the received capitals
from various sources are used in acquiring fixed assets, investments in long term
or short term sources, payment of loan and advances. Current liabilities and
35
provision are paid through these acquired sources. The data below shows the
acquisition of fund and their applications of the fund.
Shareholders funds
1. Capital 4156963.00
2. Reserves and surplus 2837500.00 6994463
Loan funds
1.Secured loans 4323369.00
2. Unsecured Loans 39602.00 4362971
36
Less-Excise Duty m INR 1391 1420 1733 1862 1954
5000
4000
3000
Sales
2000
1000
0
1 2 3 4 5
Year Unit 2002 2003 2004 2005 2006
Sales volume KT 4121 3692 4316 4555 4760
37
BALANCE SHEET
Item Unit 2002 2003 2004 2005 2006
Net fixed Assets m 1203 11693 11157 1072 10800
INR 7 1
Net Current Assets m 927 105 74 873 495
INR
Share Capital m 4157 4157 4157 4157 4157
INR
Reserve & Surplus m 2600 2600 2992 2038 3627
INR
Loan Fund m 6668 5531 4201 4303 2769
INR
Net Worth m 6366 6307 6905 6305 8534
INR
Source- Lafarge Financial Statement
38
Net Profit In last 5 Years
2500
2000
1500
Profit
1000
500
0
1 2 3 4 5
Year Unit 2002 2003 2004 2005 2006
Net Profit m INR 129 221 392 816 1840
FINANCIAL RATIOS
39
Debt Equity Ratio Of Last 5 Years
4
Val
ue
3
year
JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC TOTAL
PP 12523 10488 10198 14615
C 103867 112962 5 5 112255 128221 86410 76241 4 3 127803 115571 1341587
Duraguard 4798 2061 0 0 0 0 0 0 0 0 0 0 6859
Concreto 0 9364 4509 8962 17814 8819 0 6267 11267 9157 6286 9768 92213
12438 12974 15531 12533
TOTAL 108665 7 4 113847 130069 137040 86410 82508 113251 0 134089 9 1440659
40
160000.000
140000.000
120000.000
100000.000
PPC
80000.000
Duraguard
60000.000 Concreto
40000.000
20000.000
0.000
JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC
CHAPTER – 3
COST ACCOUNTING
41
COST ACCOUNTING
Costing is a very significant area of accounting in any production unit. In a
production unit there are elements like material, labour and overheads, which are
important parts of cost accounting system. There is various way of defining the
cost accounting. It can be defined in following terms: -
Cost Accounting is “the process of accounting for cost which begins with the
recording of income and expenditure or the bases on which they are calculated
and ends with the preparation of periodical statements and reports for ascertaining
and controlling costs”.
42
Cost Accountancy is “the application of costing and cost accounting principles,
methods and techniques to the science, art and practice of cost control and the
ascertainment of profitability. It includes presentation of information derived there
from for the purpose of managerial decision-making.
1. Ascertainment Of Cost
2. Determination Of Selling Price
3. Cost Control And Cost Reduction
4. Ascertaining The Profit Of Each Activity
5. Assisting Management In Decision-Making
43
controlling and decision-making. It helps the business firm in following functions:
-
44
Cost sheets showing total cost, comparative figures for previous and
current period, analysis of various elements etc.
Statements related to the consumption of materials, used in production
and wastage.
Report on labour utilization regarding the production and idle time etc.
Comparisons of overheads taking the actual and budgeted figures.
Reconciliation of actual profit earned with estimated or budgeted
profit.
Report on the cost of abnormal losses during production.
Expenses on research and development
45
The benefits of installing the system must be explained to the concerned
persons in the organisation.
46
ADVANTAGES OF A COST ACCOUNTING SYSTEM
47
Cost accounting provides methods, which are helpful in
comparison of actual and estimated values and get the deviations.
Cost of idle capacity can be easily worked out through the cost
system.
Cost comparison helps in cost control.
ELEMENTS OF COST
ELEMENTS OF COST
48
OVERHEADS
CHAPTER – 4
COST ACCOUNTING
SYSTEM AT ACP
49
COST ACCOUNTING SYSTEM AT LAFARGE INDIA
Pvt. Ltd.,ARASMETA CEMENT PLANT
Total cost
In order to ascertain the cost correctly, the entire manufacturing activities both
direct and indirect have been broken into cost centers based on identical processes
/machinery /activity. The expenses are identified and collected at each cost center
50
level. The cost centers have been broadly identified with the following major
manufacturing processes: -
Major
Manufacturing
Process
Limestone Cement
Clinkerisation
Quarrying manufacturing
Crushing
Raw Mill
Kiln
Technical
Cement Mill
Services
Material
CCR
Packing Handling
Civil Mech.
Department Workshop
Elec.
51
Workshop
c. INDIRECT – Administration Overheads (Factory)
52
Informat
ion &
Stores Technol Personn
el
Rural Account
develop s
ment
Sports VP’s
& office
Welfare
purchas
Safety
Indirect- e
Adminis
tration
General
Training Adminis
tration
Environ Guest /
ment Transit
houses
Security Town
Services mainten
ance
Medical Canteen
Services Services
53
e. Selling and Distribution Overheads (S G & A)
2. LABORATORY
• Raw Mill 35%
• Clinker 15%
• Cement 50%
PROCESS OF MANUFACTURE
54
A brief note regarding the process of manufacture along with flow chart covering
production, utility and service department of the product.
Cement grade limestone is available in the captive mines situated adjacent to the
plant site.Limestone is mined and transported in Dumpers to primary Crusher.The
Primary Crusher reduces its size to approximately 300 mm. The size of the stone
is further reduces when it passes through secondary crusher to 25 mm. The
crushed stone is stacked by a stacker in stock piles of approximately 15000 ton
capacity.
Limestone form stackes is reclaimed by reclaimer. The process of stacking
and reclamining ensures pre-homogenizing of limestone alongwith other
corrective materials e.g. Gypsum and Iron Ore are ground in ball mill or Vertical
roller mill to the required fineness.The ground material is pumped to blending
silo. Blending silos help in proper homogenizing of raw mix when material from
blending silo is transferred to storage silo.
Raw mix from storage silo is fed to Pre Heater through weight feeder.The raw
mix gets heated while passing down the Pre- Heater and then into the kiln. The
ground coal is fired from the outlet end of the kiln.
The hot clinker obtained from the kiln passes through the cooler where it gets
cooled.
The clinker is again ground with Pozzolanic material ( Fly ash ) for PPC in
ball mills to obtain Cement.The Cement is then transported through RBC to
cement silos from where it is taken to automatic packers to pack into 50 Kgs bags
whenever needed in the packing plant.The packed Cement is then dispatched
either by Railway or Truck to various destinations as per the Logistics plan.
55
Limestone Mines
Quarry Workshop
Limestone
Transport
Crusher
Raw Mill
Coal Workshop ( VM )
Kiln
Clinker
Despatch
Packing
Cement & Cement
Grinding Despatch Grinding
PRODUCTION RECORDS
56
Company maintains adequate production records, showing actual hours
worked and hours lost with adequate reasons for kiln, raw mill and cement.
LIMESTONE
Daily reports showing quantity raised, quantity transported, quantities
crushed are prepared. In the costing department, separate register is maintained
for quantitative records. For the purpose of management control periodic cost
statement are prepared with budgeted and actual values. The cost sheet is prepared
on the monthly basis, with figures up to that month and up to that period of the
year. Since the company has their own mines, limestone is not use in financial
records. It is treated as production.
Purchase items like Gypsum, Fly ash etc separate ledger of
receipts, issue and stock are kept. The cost of receipt includes the freight, taxes
etc. The total cost is known as landed cost. Consumption record is kept every
month. The closing stock is valued at cost including freight, taxes and duties.
LABOUR COST
It is charged to cost centers on actual department wise allocation.
The record of receipt, issue and stock of stores and spares are kept
in computers in online form. The issues are valued in weighted average method
on the basis of authorized slip issued from cost centers. Consumption report is
prepared item wise and cost center wise. At the year end physical stock is taken
and is valued at cost same as limestone. The receipts are also recorded it as in
limestone. All the items of store and spare are physically verified at the end of the
year.
57
REPAIR AND MAINTENANCE
These are identified with various cost centers as per actuals by
analysis of bills of jobs.
DEPRECIATION
Total depreciation of cement unit is computed for each asset cost
center wise on the basis of Company’s Act 1956. The company follows Straight
Line Method (SLM).
58
59
CHAPTER – 5
DATA COLLECTION
DATA COLLECTION
DATA COLLECTION:
60
The data for any project for analysis and interpretation can be collected through
two methods, which are: -
In my project I had used both type of methods. The information collected about
the company is basically collected through the secondary data that is collected
through Internet and magazines.
The data about the working cost accounting system is
collected from the employees of the finance department, which is a method of
primary data. On the basis of this information I had done my analysis and
interpretations. It helps in drawing conclusions and providing necessary
suggestions.
This kind of statement helps in many ways. The above statement can be used for:
To know the allocation of things to different departments
To compare the actual working with the planned figures
61
To know the current position in compare to planned targets
Help to take corrective steps if the company is lacking in any area
Help in increasing efficiency
In the ACP plant cost sheets are prepared for every overhead and process. In case
of my project my focus is on production area, so I basically taken the following
cost sheets for my analysis of the cost system and its application at ACP: -
LIMESTONE QUARRY
CRUSHER
RAW MILL
KILN
CEMENT
PACKING PROCESS
CENTRAL CONTROL ROOM
LABORATORY
ADMINISTRATION OVERHEAD (FACTORY)
PRODUCTION OVERHEAD (FACTORY)
I have shown one example of the cost sheet of the one process. The cost sheet is
same for all the other processes that are stated above.
62
DESCRIPTION OBJECT RESPONSE MONTH UPTO THAT FOR THE YEAR
ACCOUNT CENTER MONTH
BUDGET ACTUAL BUDGET ACTUAL BUDGET ACTUAL
Opening Stock (M.T)
Production (M.T)
TOTAL (M.T)
Consumption/Dispatch
(M.T)
Closing Stock (M.T)
OPERATIONS:
Stores & Spares
Oil/ Fuel
Explosives
Other Spares
Contractors
Power
Sub - Total (1)
MAINTENANCE &
REPAIRS:
Stores & Spares
Mechanical
Electrical
Instrumentation
Others
Lubricants
Contractors
Mechanical
Electrical
Instrumentation
Others
Sub - Total (2)
Salaries & Wages
Other Expenses
TOTAL RAISING COST
Opening Stock (M.T)
Closing Stock (M.T)
Cost Of Limestone
Transferred
Cost Of Mines Workshop
Cost Of Lime Stone
Transportation
Cost Of Limestone
Transferred KCB
Total Cost Of Limestone At
Crusher
DEPRECIATION
OTHER EXPENSES
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CHAPTER – 6
ANALYSIS AND
INTERPRETATION
• OPERATIONS
• MAINTENANCE AND REPAIRS
• SALARY AND WAGES
The cost is distributed through different cost centers according to the requirement
of departments in different process. The cost centers are given different codes,
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which not only help in the allocation of the cost, but it makes it convenient in
entering the value in financial software. It further helps in audit and rechecking
works. The cost flow chart with the cost codes at ARASMETA CEMENT PLANT
is shown in the following page. It not only helps us to study the flow of cost, but
also the different heads of expenditure.
ANALYSIS
As I mentioned earlier that I had analyzed ten cost sheets of those processes
which are the main part of the production. The cost sheets are: -
LIMESTONE QUARRY
CRUSHER
RAW MILL
KILN
CEMENT
PACKING PROCESS
CENTRAL CONTROL ROOM
LABORATORY
ADMINISTRATION OVERHEAD (FACTORY)
PRODUCTION OVERHEAD (FACTORY)
On the basis of my analysis I found three major division of cost, which I
mentioned above. The analysis of the cost is done with the respect of total cost of
that particular process. The analysis of cost as follows: -
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OPERATIONS
BUDGETED ACTUAL
TOTAL OPERATION % TO TOTAL OPERATION % TO
NAME OF PROCESS COST TOTAL PROCESS COST TOTAL
PROCESS COST COST COST COST
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PROD. OHS. 36871 1076 2.92 35979 741 2.06
67
OPERATION COST % TO TOTAL COST
100
90
80
% TO TOTAL COST
70
60
50
40
30
20
10
0
RAWMILL
GRINDING
PACKAGING
CRUSHER
LIMESTONE
KILN
PROD. OHS.
CEMENT
QUARRY
PROCES S
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BUDGETED ACTUAL
NAME OF TOTAL MAINT. % TO TOTAL MAINT. % TO
PROCESS PROCESS & REP. TOTAL PROCESS & REP. TOTAL
COST COST COST COST COST COST
LIMESTONE 55334 5842 10.52 43687 6042 13.83
QUARRY
CRUSHER 75085 5489 7.31 74596 3782 5.07
RAWMILL 101600 12507 12.31 110532 10677 9.66
KILN 97277 16071 16.52 112678 1973 17.51
CEMENT 198114 10202 5.15 172353 10427 6.05
GRINDING
PACKAGING 136345 2850 2.09 152743 3681 2.41
PROD. OHS. 36871 9679 26.25 35979 14694 40.87
CCR 360 360 100 217 217 100
LAB 3885 2025 52.13 3622 1321 36.46
1. Here we can see that the maximum percentage to total cost is required in
central control room (CCR), where the whole cost is required for
maintenance and repairs.
2. We can also observe that the process, which required high operation cost,
had less maintenance and repairs cost.
3. In this cost we can see that except limestone quarry, kiln, cement grinding
and production overheads the actual cost is less than the budgeted value.
4. From the figures we can interpret that the cost of maintenance and repair
is low. It shows that the working at the plant is very smooth and controlled
one.
5. Here also the company is able to check its cost according to its estimated
values.
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MAINT. & REPAIR % TO TOTAL COST
100
90
80
70
% TO TOTAL COST
60
50
40
30
20
10
0
LIMESTONE
KILN
GRINDING
PACKAGING
RAWMILL
LAB
CRUSHER
CCR
PROD. OHS.
CEMENT
QUARRY
PRO CESS
SALARY
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NAME OF TOTAL SALARY % TO TOTAL SALARY % TO
PROCESS PROCESS TOTAL PROCESS TOTAL
COST COST COST COST
LIMESTONE 55334 7747 14 43687 7689 17.6
QUARRY
CRUSHER 75085 2771 3.69 74596 2715 3.64
RAWMILL 101600 3942 3.88 110532 3791 3.43
KILN 97277 11031 11.34 112678 11268 10
CEMENT 198114 4675 2.36 172353 4550 2.64
GRINDING
PACKAGING 136345 8522 6.25 152743 9760 6.39
PROD. OHS. 36871 18878 51.2 35979 17511 48.67
ADMIN. OHS 70067 15947 22.76 68570 17622 25.7
LAB 3885 1860 47.87 3622 2014 55.61
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% TO TOTAL COST
100
0
10
20
30
40
50
60
70
80
90
LIMESTONE
QUARRY
CRUSHER
72
RAWMILL
KILN
BUDGETED VALUE
CEMENT
GRINDING
PROCESS
PACKAGING
PROD. OHS.
ACTUAL VALUE
SALARY COST % TO TOTAL COST
ADMIN
LAB
CHAPTER – 7
SUGGESTIONS
SUGGESTIONS
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The cost accounting system in the Lafarge India Pvt. Ltd., Arasmeta Cement Plant
is a very efficient one. We cannot suggest much to the organisation. But the
system reveals some values, which need suggestion for better working at the
plant.
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CHAPTER – 8
OVERVIEW OF
OTHER
DEPARTMENTS
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in nature. The flow of the material is continuous. The Shape for the material flow
is
I + U shaped.
Production Process.
The Limestone, which is one of the major raw material for the production of the
cement. The limestone is extracted from the mine. The mine is first drill and then
with the help of the explosive it is blasted and the ores of the limestone is taken to
the crusher. The ore containing the high percentage of the lime is taken to the
primary crusher where it is broken into pieces. The broken pieces of the limestone
are then sent to the secondary crusher where it is broken into smaller pieces. From
the crusher it sent to raw mill where the limestone is mixed with gypsum and iron
ore. Gypsum is added to slow down the settling of the cement and iron ore is
added to provide the strength. Then the mixture is sent to the kiln where the
temperature of nearly 1400 degree C is maintained and the mixture thus converted
into clinker. The clinker is then sent to grinding unit where it is grind and mix
with gypsum. The fine mixture of the cement is sent for packaging where it is
packed and sent for the dispatch through road and railway.
B. Stores Management.
Receipt Section.
The receipt section as the name suggests that it keeps the data regarding the
inventory that are supplied to the Lafarge for the purpose of the production. The
order is sent to the operation office of the Lafarge and then the order is issued to
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the supplier. The supplier supplies the material to the company that is recorded at
the receipt section.
Issue Section.
The issue section issues the material that is requested by the other department for
the purpose of the production. First the requisition is issued by the department
according to theirs needs, this requisition is sent to the receipt section and it is
approved by the high authority and then the materials is issued to the requisite
department. Finally the records are maintained.
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In this department of Lafarge the daily Dispatch or the sales of goods is
maintained. Here the quantitative measurement of dispatch of goods is done and
report is sent to the Finance Department. The functions performed by the
Logistics Department are: -
1. The work order is issued in the name of the transporter by the Logistic
department.
2. Transporters are then issued a particular code called RO.
3. According to that RO transporters deposits the paper of Truck.
4. By taking information from the papers of Truck deposits by the
transporters “Delivery instruction” is prepared commonly called as DI.
5. DI includes all the relative information about the quantity of cement,
Truck and the Truck Driver
6. DI is prepared and sent to the transporters.
7. The truck is kept in a queue in the Truck yard till the announcement.
8. After announcement the empty truck enters the premises of LAFARGE.
9. The empty truck is then weighted in a weighbridge.
10. After crossing the weighbridge the truck moves towards the packing plant
for loading.
11. In a packing plant according to DI mentioned quantity of materials are
issued and loaded in a truck / Wagon
12. Then again Loaded Truck has to pass through weighbridge where loaded
quantity is checked.
13. Then in Dispatch DI is kept and Gate pass is issued.
14. Three copies of gate pass is issued one to driver, to dispatch Department
&one is sent to accounts.
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15. The whole Dispatch is summarized at 12 o’clock at night every day. Three
copies of summary is prepared one is sent to Bilaspur office, one in the
Accounts Department and one is kept by the Dispatch Department.
INFORMATIONTECHNOLOGY
DEPARTMENT OF LAFARGE, ACP: -
Lafarge has wide area network (WAN), which connect all computers in the plant.
It has two main server namely JDE, MAXIMO located in Malaysia. With the help
of CITRIX tool it provide remote login. Finance department uses ERP and PEPS.
Generally Visual basic acts as front-end and Oracle acts as backend. Network
services provided by IT department are in three parts: T Drive- common to all
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employees, anybody can access it. W Drive- specific for a given department. No
other department can work upon any other department’s drive. Y Drive - specific
for given employee.
SAFETY DEPARTMENT
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Safety function
Audit: monthly audit is done for checking equipments, machines etc. It can be
done internally and externally both.
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• Discussion related to First aid injuries and accidents occurred in
the month
Safety Person of the month: Every month two persons are selected to be the
safety person of the month. One person is from the contractors and one is from the
workmen’s working in the Lafarge.
First Aid Box: First box is placed in each and every department of Lafarge.
Doctor: Every Tuesday and Friday a lady doctor visit the plant for the general
checkup of the lady employees.
Medical claim: For the workmen the compensation for medical injury is up to
750000 and for the officers it is up to 1lakh-2lakh approx.
Allowances: In packinghouse where the cement is loaded all the employees are
provided with dust allowance to prevent them from any hazardous effect of
cement powder. This includes one and half Kg of jaggery and 600 Grams of
mustard oil per month. And for working in kiln area Heat allowance in form of
money is given.
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Permit to work: Only those employees or contractors are permitted to work ,by
the safety department having one or all the permits given below:
• Work permit
• Height Permit
• Confined space
• Hard Permit
Safety instruments:
For working in any part of the plant various safety instruments are provided to the
workmen keeping in view the safety of the workers health. some of the safety
instruments are :
• Helmet
• Safety shoes
• Nose mask
• Ear plug
• Goggles
• PP bags
• Hand gloves
• Safety belts
• Nets
• Apron for welding purposes
• Full screen Helmet
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Human resource policies of Lafarge India Pvt. Ltd.
Recruitment Policy. The applicants are required to apply for the post to main
office in the Mumbai and Kolkata.
Integrated policy
• Quality
• Environment
• Occupational health and safety
Lafarge India Pvt. Ltd. affirms its commitment towards customer satisfaction,
environmental protection, healthy and safe work environment for all concern and
shall endeavour to –
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• Institute Management Systems of international repute and continual im-
prove their effectiveness
• Communicate the necessary information to the stakeholders.
Performance Appraisal.
85
Following two methods basically does the assessment of the performance of an
employee in Lafarge-
• Job Description. It includes the nature of the basic job done by a
particular employee. It describes the basic responsibility and
accountability towards the job assigned to him.
• Key Performance Indicator (KPI). It specifies area of work,
weighted or importance of your work, action plan prepared,
evaluation of job. In Lafarge there are some parameter on which
the performance of the employee is measured. Every parameter is
provided a scale from 0-10
The weightage is calculated on the following parameter-
Performance Factors- It includes Planning, controlling, organising,
innovating, and decision making etc. Besides this appraisal is done on the
basis of project Undertaken and some unplanned achievements. Lafarge
believe in 360 degree evaluation.
Internal mobility.
From the above performance evaluation the score obtain is compared with the
following ranks 1. Outstanding. 2. Fully Achieved. 3. Mostly Achieved. 4. Not
Achieved. 5. New Assignment. As per the rank provided the internal mobility
such as promotion transfer and demotion is decided.
Compensation Plan.
Lafarge provides their employee a compensation with the Fixed Salary +
Bonus+ PF+ Others Facilities.
Welfare Activity. Lafarge has provided many facilities to their employees
under their social responsibilities-
• Providing housing facilities.
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• Transport Facilities for their employee by providing bus services
for the employees and their family.
• Providing Medical Facilities.
• Providing Drinking Facilities.
• Women and health development program.
• Assistance to repair and construction.
• Providing School facilities.
• Safety Policy.
• Security Policy.
Environmental Policy.
• Sparing use of natural resources.
• Environmental know-how and expertise
• Following pre determined environmental standards
• Innovative products
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CONCLUSION
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