LOVELY PROFESSIONAL UNIVERSITY

School of _Mittal___ Faculty of__Business and Applied Arts______

Name of the faculty member ___Rohit Bansal________

Course Title: Advanced Cost And Management

Course Code: ACC 354 Accounting
Academic Task No: CA 1 Academic Task Title: Online Assignment 1
Date of Allotment: 18-08-2020 Date of Submission: 13-09-2020
Student Roll No: B018 Student Reg. No: 11814290
Term: 1 Section: Q3E51
Max. Marks Marks. Obtained:
Evaluation Parameters

Learning Outcomes: The outcomes of this assignment are to clear understand about the management
terms and able to make the decision on different situation of Advanced cost and management accounting
and use the theoretical concept into practical life and make a decision for the company which is helpful to
them.

Declaration:

I declare that this Assignment is my individual work. I have not copied it from any other students’ work
or from any other source except where due acknowledgement is made explicitly in the text, nor has any
part been written for me by any other person.

Student’ Signature: Mayank Jain

Evaluator’s Comments (For Instructor’s use only)

General Observations Suggestions for Improvement Best part of assignment

     

Evaluator’s Signature and Date:

Marks obtained: Max Marks:

 CROMPTON GREAVES CONSUMER ELECTRICALS LTD

INTRODUCTION OF COMPANY:
Crompton Greaves Consumer Electricals Limited manufactures and markets a range of consumer
products. The Company's main products/services include lighting products (luminaries and light
sources) and electrical consumer durables (fan and appliances and pumps). It operates through
two segments: Lighting Products and Electrical Consumer Durables. Its Lighting Products
segment comprises luminaires and light sources. Its Electrical Consumer Durables segment
comprises fans, appliances and pumps. It offers ceiling fans, table fans, pedestal fans, wall
mounted fans, domestic exhaust fans, special fans and personal fans. It offers lighting products,
including lamps, consumer luminaires, solar and lighting automation. Its household appliances
include geysers, mixer grinders, toasters and irons. Its pumps are classified into industrial,
agricultural and domestic pumps, and offers surface pumps, submersible pumps, accessories and
pumping systems.
This company is one of the leading consumer companies in India with a 75+ years old
brand legacy. As of February 2016, they are an independent company under professional
management and have 2 business segments – Lighting and Electrical Consumer Durables.
They make a market of their products under the “Crompton” brand name in India and
select export markets also.

MISSION:
The mission of Crompton Greaves Ltd is to focuses on addressing issues of customer
satisfaction. The mission of Crompton Greaves of India has identified its target customer groups
and also identified their needs and demands. They also reflect on how its products and services
work towards increasing customer satisfaction for its target customers. And the most important
mission of this company is to provide the best styles and the highest industry quality in
Consumer Products and accessories.

VISSION:
Company has decided to achieve these five visions and these are the most important the pillars of
this company to stand and stay in the market.
  Brand excellence
 Portfolio excellence
 Go to market excellence
 Operational excellence
 Organization excellence

MANAGEMENT OF COMPANY:

Board of Directors
Name Designation
Mr. Hemant Nerurkar Chairman & Independent Director
Ms. Smita Anand Independent Director
Mr. D Sundaram Independent Director
Mr. P M Murty Independent Director
Mr. Shantanu Khosla Managing Director
Mr. Promeet Ghosh Non-Executive Director
Mr. Sahil Dalal Non-Executive Director
Ms. Shweta Jalan Non-Executive Director

Key Executives
Name Designation
Mr. Mathew Job Chief Executive Officer
Mr. Sandeep Batra Chief Financial Officer
Ms. Pragya Kaul Co. Secretary & Compliance Officer

PRODUCTS:

Fans Lighting Appliances Pumps

 ceiling fans professional geysers surface
lightening - LED

table fans Lamps room heaters submersible

pedestal fans consumer garment care accessories

luminaries

wall mounted professional food preparation pumping

fans lighting categories
conventional

domestic Solar cooking

exhaust fans

special fans lighting beverages/breakfast

automation

personal fans air coolers

power solutions

COMPETITORS:
 Whirlpool
 Usha
 Symphony
 Bajaj Electric
 Orient
 Philips
 Khaitan Elec
  Havells Ind ltd
 V-Guard

ANALYSE PRICING DECISION FOLLOWED BY ORGANIZATION:

Crompton Greaves believes in competitive pricing strategy. It always analyses the prices of
rivals and sets its price accordingly. The price is set in such a way that it doesn’t seem to
discourage the customers or make them feel it is out of reach, instead it maintains its value and
quality and helps the customers in making the right choice. Crompton Greaves has always
offered quality products to its customers as a results of which customer loyalty towards this
brand is very high. This gives an overview in the marketing mix pricing strategy of Crompton
Greaves.
Crompton Company has invested prudently in augmenting its R&D capabilities, data
infrastructure and continues to work on its brand architecture to cater to consumers in each
segment. These efforts have yielded positive results as seen in the innovative product launches
across all categories Like,
1. SilentPro and Duratech in the fans’ category
2. Pressure booster in Pumps
3. Solarium Neo, Vogue, Rapid Jet in Water Heaters
4. Human centric lighting in Lighting
5. Optimus in Air Cooler
6. Back-up range in LED etc
After seeing all the industrial report, I saw that Crompton Greaves consumer electricals ltd are
following perfect competition market structure. They are selling a homogeneous product and
using identical products process and all of them have perfect information about the market and
price. In this market there is free entry and exit of firms into and out of the country. That why
they are facing big competition in market but here goodwill of company and product quality of
product playing big role and with these things the demand of the company is increasing and sales
is also increasing day by day. There are large numbers of sellers selling same product at same
price so there is huge competition among them.
Crompton has no control over market price which will equate the quantities available with the
quantities which the buyer is willing to buy. Crompton Greaves has to take a decision in favour
of the quantity to sell.
Our strategy is focussed on creating an agile Go-to-Market (GTM) organisation that will deliver
the right product at the right place according to the channel and customer segmentation. We are
also building a huge digital sales data bank at the distributor and retail levels, and this data
analytics is helping us drive sales and increase the productivity of the people. We are also
focussing on strengthening our footprint in rural, e-commerce and alternative channels to reach
the end consumers.
PROFIT AND LOSS ACCOUNT OF CROMPTON GREAVES CONSUMER ELECTICALS
LTD: Rs(in crore)

2020 2019 2018 2017 2016

Sales Turnover 4511.97 4478.91 4105.12 4016.67 1868.27

Excise Duty .00 .00 25.46 115.78 56.59

NET SALES 4511.97 4478.91 4079.66 3900.89 1811.68

Other Income 58.8700 48.2600 30.7500 19.4900 3.8500

TOTAL INCOME 4570.84 4527.17 4110.41 3920.38 1815.53

Here the sales turnover is increasing from year to year it means the market capturing is more as
compare with the competitors and demand of Crompton Greaves products are more due to
goodwill and quality of product. One more things is customers are loyal to this company.
In 2020 the sales is 4511.97 crores and in last year 4478.91 it means 33.06 crores in sales from
last year.
The CAGR of Crompton Greaves from 2015 to 2019 and the data is telling us that how the
company is boost the EBIT of company and margin share of profit after selling the products.
EBIT (INR CRORES)

CAGR (FY15-19)
571
518
474
360
310

FY15 FY16 FY17 FY18 FY19

EBIT MARGIN(%) 10% 10% 12.1% 12.7% 12.8%

Here in the above diagram/graph it shoes that the CAGR of Crompton from 2015 to 2019. The
earning before interest and taxes are increasing from year to year and the company profit is also
increased with this. In 2020 it is more than 571 and the margin is also more than 12.8%. As per
the company report nowadays sell is more increased as the record of previous years.

ANALYSE WHICH PRICING POLICY ARE IN LINE WITH ORGANIZATION GOALS

AND OBJECTIVES:
The price is set in such a way that it doesn’t seem to discourage the customers or make them feel
it is out of reach, instead it maintains its value and quality and helps the customers in making the
right choice. The main goals or objectives of Crompton Greaves is to make their customers
satisfaction and provide them a quality product. The tag line which they used is “Let’s Hangout
Ghar Pe!”
Organizational goals are those business and strategic objectives that define the purpose of
Crompton Greaves Ltd. Organizational goals are strategic targets that Crompton Greaves Ltd
wants to achieve over a period of time. This time period is generally long term. The goals of
Crompton Greaves Ltd help direct its employee behaviour, as well as help in directing the
operations of the business in the short term.
Organizational objectives for Crompton Greaves Ltd are the short to medium term targets and
goals that the organization sets to achieve the bigger strategic goals set for the long term. The
organizational objectives are important in shaping resource allocation within Crompton Greaves
Ltd as well as in determining the policies, schedules and processes that are implemented in
Crompton Greaves Ltd.
In this way Crompton Greaves optimized cost structure and maximize the material margin
improvement.
 Ongoing cost-reduction program resulting in higher efficiency and scale
 Fans: Design optimization in Plastic & Metal Exhaust and Alternate sourcing,
Negotiation with suppliers; Backward integration in ceiling fans & TPW
 LED’s: Operational improvements including kit costs reduction, spec optimization,
packaging and moving manufacturing inhouse
 Pumps: Renegotiation of vendor contracts on higher throughput
 Appliances: Value engineering & Alternate sourcing

By this process of cost reduction Crompton Greaves reduced the cost of re-invested and the
prices of LED is reducing by 2.3%.
420 bps of overall Improvement in material margin = 190bps through cost savings + 230 bps of
cost savings re-invested to reduce 2.3% LED prices.
For reducing cost Crompton Greaves used this method and more focus on these points so that
they can fully optimized the resources as well as optimized the cost and sell the different product
in very less price and more profit as compare with competitors.
 Bundling of Demand across products
 Design improvements
 Moving manufacturing in-house
 Process Improvement
 Alternate suppliers
They are entering in new segments with strategies such as Solar Pumps, Kitchen Appliances led
by Mixer Grinders. They make this product and acquire a new market for the growth of company
and earn more profit.
They are doing one innovation on focused towards energy efficiency and connected technologies
like IoT and Solar energy so that the product is unique in market and they acquire the hole
market of India after doing this innovation. Till now no one company is make this kind of
product that why Crompton are trying to do such innovation and set the market level to the
competitors.
They are still used GTM marketing strategy to stable in market and distribute their product to
retailer and retailer sell their product to customer. In this way GTM is used.
DETERMINE THE PRICING STRATEGIES:
The new products of Crompton Greaves consumer electricals ltd in 2019 and the Pricing strategy
of Crompton Greaves of the three new products are listed below:
1. Silent Pro Mist White
2. Pressure Booster
3. Human-Centric Lighting
4. Backup LED

The most and big competitor of Crompton Greaves consumer electricals ltd is
Major competitors in fans are Havells, in pumps the major competitors are V-Guard and in
lighting the major one competitor are Philips.
So now the price discrimination of different products if Crompton and comparison with the
competitors of the same product.
1. Silent Pro Mist White:
Product: Fans Crompton Greaves Havells
Silent Pro Mist White 1200 Rs.6980 Rs.7280
mm active blade anti-dust
celling fan with remote
control

Here the competitors havells is selling the same kind of product in higher price as compare with
Crompton. In this product of fans silent pro mist white in colour is 1200 mm active blade and
anti dust celling fans is general are produced by all the company but Crompton is one company
who is sell this product in less price in market as compared with other competitions like Philips,
havells, orient etc.

2. Pressure Booster:
 Product: Pumps Crompton Greaves V-Guard
1HP pressure booster Rs.13800 Rs.14800
pump

Here one more price comparing with the similar competitors V-Guard. The product is pressure
booster pump and the horsepower of this product is 1 and I saw same kind of product in V-Guard
company as well and they are selling this product in 14800 and Crompton sell this product in
13800. Total 1000 difference is there but in pumps V-Guard is having more customers from
Crompton. That’s why Crompton sell this product in less price so that customers are come more
here.
3. Human-Centric Lighting
Product: Lighting Crompton Greaves Philips
Star Magic 3 in 1 colour Rs.1500 Rs.1780
changing panel 12w
Now for the lighting product Crompton has two big competitors are one is Philips and another is
orient. Here product name star magic 3 in 1 colour changing panel 12w is price in Crompton is
1500 and same product in Philips company price is 1780. So, more price in Philips as compare
with Crompton.
4. Backup LED
Product: Bulbs Crompton Greaves Philips
Backup LED Bulb Rs.180 Rs.265

Now here the product is bulb and the name of product in Crompton is backup LED bulb and the
price is 180 but the competitor price is 265 that’s why Crompton is biggest company in India
selling bulbs. Here the competitors Philips is selling the same kind of bulb in higher price to earn
more profit but Crompton is selling the product in reasonable price.

CONCLUSION:
Business along with certain brand usage rights were transferred to Crompton Greaves Consumer
Electricals Limited (CGCEL). The excess of liabilities over net assets based on fair value and the
share capital amounting to 779.41 crore, was recorded as Goodwill in the books of CGCEL. The
Company has adopted the policy of amortising the goodwill in the books of account, on the
outcome of impairment test if there is an indication of impairment as at the reporting date. Based
on the valuation done by the management’s consultant, the value of the goodwill is more than
book value of goodwill as at 31st March, 2020, and hence, there is no indication of impairment.
Due to the inherent uncertainty involved in forecasting and discounting future cash flows,
determination of discount and terminal growth rates, which are the basis for computing the value
of goodwill and the assessment of recoverability, these are the key judgement areas. In view of
the above, the Company has carried out an impairment assessment of goodwill using the value
in-use model which is based on the net present value of the forecast earnings of the cash
generating units. The computation involved using certain assumptions around discount rates,
growth rates and cash flow forecasts. Accordingly, this is considered as the key audit matter.
Crompton Greaves ltd use perfect competition in pricing market structure so that they are always
worried from the new entrance and the competitors too. That’s why they are making a new
product and doing a lot of innovation in their product so they can remain in market and make
profit out of it.