Course Code: ACCM507 Course title: Financial Reporting, St.

& analysis-II
Course Instructor: Gagandeep Singh Section: Q2141
Academic Task no: 1 Academic Task Title: Accounting
Concepts
Date of allotment: 13/12/2021 Date of Submission: 23/12/2021

Student’s Roll no: RQ2141A01 Students Reg No.: 12102966

Declaration:

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

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ITD Cementation company began operations in India in 1931 as a branch of
The Cementation Company Ltd, UK, a member of the Trafalgar House Group
of London, with the purpose of performing significant grouting and drilling
work on the rapidly increasing hydraulic structures. Since then, the Company
has worked tirelessly to strengthen India and has amassed extensive expertise in
the field of infrastructure development.
Cemindia Company Limited (1931-1978):
i. Since 1931, The Cementation Company Limited of the United Kingdom
('CCL, U.K.'), a subsidiary of the Trafalgar House Group of the United
Kingdom, has operated as a branch in India and has been involved in
construction activities there. CCL, U.K. was granted permission to
continue operating in India by the Reserve Bank of India in 1978, subject
to the conversion of CCL, U.K.'s India branch into an Indian firm.
ii. Cemindia Company Limited was formed in 1978 and received its
Certificate of Commencement of Business on November 6, 1978.
Trafalgar House Construction India Limited (1994):
i. In order to reflect its direct relationship with its then controlling
company, the firm changed its name to Trafalgar House Construction
India Limited in 1994 and got a new certificate of incorporation on
September 7, 1994.
Kvaerner Cementation India Limited (1998):
i. Trafalgar House Plc was purchased by Kvaerner ASA in 1996. Following
the acquisition, the company renamed itself Kvaerner Cementation India
Limited and received a new certificate of incorporation on September 1,
1998.
Skanska Cementation India Limited (2001):
i. Skanska AB agreed to purchase the full issued share capital of Kvaerner
Construction Group Limited from Kvaerner Plc in the year 2000. The
control of this company was transferred from Kvaerner ASA to Skanska
AB as a result of the transaction.
 ii. Skanska AB made an offer to the public shareholders of this Company to
purchase fully paid-up equity shares of this Company in accordance with
the criteria of the SEBI Takeover Code. On July 11, 2001, the company
changed its name to Skanska Cementation India Limited and received a
new certificate of incorporation.
ITD Cementation India Limited (2005):
i. The Cementation Company Limited and Skanska AB agreed into a Share
Purchase and Sale Agreement with Italian-Thai Development Public
Company Limited in Thailand in 2004. On the 26th of May, 2005, the
company changed its name to ITD Cementation India Limited and got a
new certificate of incorporation. The Strong Parentage has accelerated the
Company's momentum in acquiring big infrastructure construction
contracts across India as one of the largest civil engineering contractors in
Southeast Asia.

1. Fixed cost of ITD Cementation Limited:

In Cost Management study cost analysis is plays major role. The fixed cost is vital
element of Cost Management. So, following collected fixed cost data taken from
Annual report 2020-21 and 2019-20 to compare different year data.

Fixed Cost of ITC Cementations (in Rs. Lakh)

Sr.
Particulars 2021 2020 2019
No.
         
1 Rent 3,479.99 1,937.41 3,043.41
2 Salaries, wages 31098.27 31335 35786.7
3 Insurance 3,057.47 1,192.97 1273.87
4 Rates and Taxes 3,887.17 2,461.54 388.64
5 Depreciation 2,904.22 1,437.23 3,344.36
6 Audit fees 76.52 76.52 76.21
7 Plant and Machinery 940.17 601.21 934.64
Corporate Social Responsibility (CSR)
8 215.18 208.29 108.16
expenses
39250.1 44955.9
  Total Cost 45658.99
6 9

(Sources: Annual report 2020-21, 2019-20.)

 2. Variable Cost of ITC Cementations Limited:

In costing of any Product or Service Variable cost effect on total cost when it varies. It
varies in proportion of total cost. Variable costs increase or decrease depending on a
company’s production or sales volume.

Variable cost of ITD Cementations (in Rs. Lakh)

Sr.
No. Particulars 2021 2020 2019
         
1 Power and fuel 7,743.20 7,670.11 10,018.97
2 Travelling expenses 704 776.85 1,109.82
3 Site transport and conveyance 3,925.75 3,380.97 3,564.23
4 Royalty expense 1,076.54 1,043.66 1119.58
5 Infotech expenses 944.01 769.57 485.9
6 Water charges 653.96 293.45 404.37
7 Postage, telephone and telegram 124.47 130.44 182.43
8 Temporary site installations 419.12 394.84 623.28
9 Consumption of spares 1,708.59 1,603.43 2088.77
10 Printing and stationery 128.82 159.36 182.76
17,428.4 19,780.1
  Total Cost 6 16,222.68 1

(Source: Annual report 2020-21, 2019-20.)

3. Cost Sheet of ITD Cementations Limited:
I. Prime cost is calculated raw material consumed with addition to direct labor
and found values in 2019, 2020 and 2021
II. Work cost is calculated Prime cost + Sum of all factory overheads.
III. Cost of Production for all the years is calculated as:
Cost of Production = Factory Cost + Office and Administration Overheads.
IV. Cost of Sales or Total Cost for all the years of ITD cementations is calculated
as: Total cost =Cost of Production + Selling and Distribution Overheads.
V. Total Sales = Total Cost + Net Profit for ITD cementations.

The cost sheet of ITD cementations Limited is as follows, which is sourced from
annual report of 2020-21 and 2019-20 years.
 ITD Cementations - Cost Sheet ( in Rs. Lakh)
Particulars 2021 2020 2019
       
Opening Stock Raw Material 26,736.05 22,924.87 14,105.64
1,10,371.7 1,28,375.2
Purchase of Raw Material 90,698.93 3 0
Closing Stock of Raw Material -31,045.02 -26,736.05 22,924.87
1,06,560.5 1,65,405.7
Raw Material Consumed 86,389.96 5 1
Direct Wages (Labour) 31,098.27 31,334.99 35,786.70
1,17,488.2 1,37,895.5 2,01,192.4
Prime Cost 3 4 1
Factory Overheads      
Rent 3,479.99 1,937.41 3,043.41
Power and Fuel 7,743.20 7,670.11 10,018.97
Rates and Taxes 3,887.17 2,461.54 388.64
Depreciation Expenses 2,904.22 1,437.23 3,344.36
Insurance 3,057.47 1,192.97 1273.87
Opening Stock in WIP 3,989.03 ` 2,880.31
31,912.48
Closing Stock in WIP 5,132.28 51,357.01 0
Work Cost 137417.03 133150.27 219261.66
Office and Expenses      
Overheads      
Asset Depreciation 10,015.09 9,648.45 3,347.38
Audit Fee 76.52 76.52 76.21
Bank and Others 10,582.15 2,974.90 2,788.51
Production Cost 158090.79 145850.14 225473.76
Opening Stock in Finished
Goods 26,736.05 22,924.87 10,370.42
closing Stock in Finished Goods -31,045.02 -26,736.05 -13,894.02
Cost of Goods Sold 215871.86 195511.06 249738.2
Selling and Distribution
Overheads      
Commission 4,113.59 13,049.61 3,006.97
Bad Debt -5,684.31 -5,684.31 -5,684.31
Cost of Sales / total Cost 27.2773 28.6071 25.6848
76510.202 68356.502
Profit 7 9 72798.085
Sales 76,537.48 68,385.11 72,823.77
4. P/V Ratio of ITD Cementations Limited:

PV Ratio of ITC Cementations. (in Rs. Lakh)

Particulars 2021 2020
Total Variable Cost 17,428.46 16,222.68
Total Sales 76,537.48 68,385.11
Contribution 59109.02 52162.43
PV Ratio 77.22885572 76.27746742

The Profit Volume (P/V) Ratio is the measurement of the rate of change of profit due
to change in volume of sales. The PV ratio of ITD cementations for 2020 is 76.27%
and 2021 is 77.22% P/V Ratio = Contribution / sales *100. Contribution means the
difference between sale price and variable cost of the company. When P/V ratio is
high it indicates the high profit margin. A low P/V ratio indicates low profit margin.
In case of ITC Cementation, it seems that it is profitable.
5. Margin of Safety of ITD Cementation Limited:

It refers to the difference between actual sales and Break-even point. Manager can
utilize the margin safety to know how much sales can decrease before the company
or a project becomes unprofitable. The below margin of safety is calculated for
2020-21 for the company. The margin of safety was found in 2020 as 896.1559057
and in 2021 is 990.6945013.

Margin of Safety of ITC Cementations. (in Rs. Lakh)

Particulars 2021 2020
Profit 76510.2027 68,356.50
PV Ratio 77.22885572 76.27746742
Margin of Safety 990.6945013 896.1559057

6. Break Even Point of ITC Cementations Limited:

It is a financial calculation that weighs the costs of a new business, service or
product against the unit sell price to determine the point at which you will break
even. If a company has reached its break even point, this means the company is
operating at neither a net loss nor a net gain (i.e., “broken even”). It shows no profit
no loss amount in unit and in monetary terms also.
BREAK EVEN POINT = TOTAL FIXED COST DVIDED BY
PROFIT/VOLUME RATIO
 Break Even Point of ITC Cementations. (in Rs. Lakh)
Particulars 2021 2020
Fixed Cost 45658.99 39250.16
PV Ratio 77.22885572 76.27746742
Break Even Point 591.2167101 514.5708337

Conclusion:
ITD Cementations Limited is doing well in cost management. According to analysis
it shows that this business is feasible to expand. Cost is well managed, and they are
gaining great profit from it.

References:

https://www.itdcem.co.in/
Annual report 2020-21
Annual report 2019-20
Annual report 2020:
Annual report: 2019