CVP Analysis Project

INTRODUCTION
This research is mainly done to find out the cost-volume-profit and its impact on the overall
performance of KSE ltd at irinjalakuda, Thrissur. The study determine the breakeven point
and output level required achieving a target operating income by using equation, contribution
margin and graph method. The study helps to know how cost and sales volumes have affected
the profitability of the company.
Cost volume profit analysis is the method for understanding the relationship between
revenue, cost and sales volume. In alternative words, CVP analysis the techniques wont to
determine the extent of operational activity required to avoid losses, reach targeted profit, set
up future operations, pick enlargement or contraction plans, monitor organizational
performance and analyse operational risk as they choose appropriate cost structure to help in
the decision-making process to sustain the firm
The study on cost-volume-profit analysis will surely help the management for taking various
decision regarding making or buy product, introduce a new product or not, accept an order or
not, change the method of production or not etc. in the future. Through this study, we can
analyse and maintain a good relationship between cost-volume-profit. The financial tool
which is used for analysing the data is break-even analysis and contribution margin analysis.
KSE ltd at Thrissur is a manufacturing factory producing KS cattle feed, jersey copra cake,
KS mineral mixture and milk products and core of amount the company is dealing for the
production and sale of these products. So breakeven and cost-volume-profit analysis is vital
for this company in order to analyse the role of production cost and volume to the company’s
net income and operating income. Break-even analysis helps the company to determine a
target sale in order to avoid loss. Thereby the investors wouldn’t have to suffer loss of their
investment. And after achieving this break-even, cost-volume-profit analysis helps the
company to determine whether the cost-volume-profit relationship are at an appropriate level
or not. If not, it helps the company to decide any changes that have to be made in cost or in
volume in order to maximize the profit. So it also helps in the decision making of the
company for increasing its profit. So both these breakeven and cost-volume-profit analysis
have a vital role in a company’s financial growth
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INDUSTRY SCENARIO; FOOD INDUSTRY
Food process sector is indispensable for the general development of associate economy
because it provides an important linkage and natural process between agriculture and trade. It
helps to diversify and modify farming; enhance the financial gain of farmers; produce
markets for export of agro foods also as generate larger employment opportunities. Through
the presence of such industries, a wider range of food products could be sold and distributed
to distant locations. The term 'food method' is principally outlined as a process of import
addition to the agricultural or husbandry turn out by varied strategies like grading, sorting and
packaging. In different words, it's a method of producing and protective food substances in a
good manner with a read to boost their shelf life; improve quality additionally as make them
functionally more useful. It covers the spectrum of products from sub-sectors comprising
agriculture, horticulture, plantation, animal husbandry and fisheries.
Food process trade is one in all the biggest trade in the Asian nation and is graded fifth in
terms of production, consumption and export. Earlier, the food method was principally
confined to food preservation, packaging and transportation, which mainly involved salting,
curdling, drying, pickling, etc. However, over the years, with rising new markets and
technologies, the arena has widened its scope. It has started manufacturing several new things
like ready-to-eat food, beverages, processed and frozen fruit and vegetable products, marine
and meat products, etc. It else includes the institution of post-harvest infrastructure for
methodology of varied food things like cold storage facilities, food parks, packaging centres,
added centres, irradiation facilities and modernised shambles.
The food process sector contains 2 segments- Primary processed foods and added food.
Primary phase contains packaged fruit and vegetables, milk, flour, rice, spices etc. and
constitutes around sixty-two in price terms of the processed foods. Value-added phase
includes processed fruits and vegetables, juices, jam & jelly etc. and holds around thirty-eight
the share within the total processed food. In an emerging country like India, where growth
with equity is a primary policy thrust, the optimum development of the food processing sector
will contribute significantly in tackling several developmental considerations like disguised
state in agriculture, rural economic condition, food security, food inflation, improved
nutrition, prevention of wastage of food etc. By serving as a bridge between agriculture and
producing and by coping with a basic would like of all Indian voters – the assured offer of
healthy and cheap food at all locations in the country, this sector has the potential to be a
major driver in
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India ‘s growth in the coming years. In fact, the food process sector has been growing quicker
than the agriculture sector. The food process trade includes various cluster of firms concerned
within the process of merchandise like fish, meat, milk, crops and water. It includes
numerous tiny & Medium Enterprises (SMEs) worldwide and additionally a number of the
biggest firms within the world. Many of those firms deliver merchandise on to customers,
while others specialize in Business-to-Business activities (ingredients, commodity markets).
Some firms directly participate in all told areas of food production, from farming activities
through to final production and retail. Others square measure focused additional at the highest
finish of the assembly chain or get through goods markets. In fact, Food processing is one of
the world ‘s largest industries from the perspective of the number of companies involved in
the sector, as well as in terms of its total economic value
GLOBAL FOOD PROCESSING INDUSTRY
The Global Processed Food Industry is valued at US $ 3.2 trillion and accounts for over
3/4th of global food sales. Despite the large size of the industry, only 6% of the processed
food is traded the world over as compared to bulk agricultural commodities where 16% of
produce is traded. Growth of the sector has been the highest in developed economies,
especially across Western Europe, North America, Japan and Australia. USA is the single
largest consumer of processed food and accounts for 31% of global sales.
The food processing sector has seen substantial growth in developing economies with
increase in GDP, per capita income and the resultant changes in lifestyle. Organized retailing
and availability of better processing technologies too have contributed to the accelerated
growth of the sector. The food processing industry is characterized by intense competition,
with the most reliable firms performing well by focusing on efficiency in terms of fast
processing and distribution. The global economic recession had less effect on the food
processing industry than other industries due to rising demand for pre-packaged food. The
industry is becoming increasingly automated, and is therefore seeing labour costs decline.
The advantages of food processing include greater food consistency, longer shelf life,
removal of toxins, reduction of food borne diseases and cheaper food. The global fresh meat
market is expected to produce 300 million tons by 2015. A rising global population and
extensive urbanization are driving forces for the market. Asia-Pacific demand is growing in
tandem with disposable incomes and meat consumption. Asia-Pacific leads the food
processing industry in terms of market share.
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Market growth in countries in Eastern Europe and Asia-Pacific continues as developing
countries enjoy a more favourable economic climate, with larger disposable incomes and
improved living standards. Demand for food that is light on preparation time continues to
grow in developed countries. Germany, The US, France and Austria are among the major
exporters of food processing machinery while the US, the UK, Germany and France lead in
importing. China ‘s processed food industry is expected to continue showing close to 35%
yearly growth from 2010 through 2013, mainly due to higher standards of living and
improved economic conditions. China ‘s processed food market was left relatively unscathed
by the economic downturn. Growth will continue to be lead by meat processing, with a
forecast yearly growth of more than 15% for the next few years.
Other leading food market segments in China are dairy products and ready meals. Growth
will likely continue as China ‘s 25% rate of processed food production catches up with the
average 80% rate in developed nations such as the US. The main driving force behind the
global food industry is technological innovation, which concentrates on satisfying consumer
demand for more tastes and easy-to prepare foods. Companies are focusing on innovation to
boost profits, with 60% of large companies and over 40% of medium sized enterprises
investing in process and product innovation. Over 99% of the EU food and beverage industry
is comprised of small- and-medium-sized enterprises.
Danish, French and Greek food processing companies dedicate a sizeable part of their profit
to research and development, while other countries such as Austria, Hungary and the Czech
Republic lag further behind. The main aims of research and development within the food
processing industry are better quality food, enhanced taste, cheaper prices and greater
convenience. Other industries recruited in the process include nanotechnology, biotechnology
and other advanced information technology fields. Companies cut production costs by:
reducing waste; employing effective manufacturing techniques used in other industries;
optimizing automation to cut back on labor costs; and finding ways to cut down on input
materials such as energy
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FOOD PROCESSING INDUSTRY IN INDIA
The Indian food process business stands at $135 billion and is calculable to grow with a
CAGR of ten per cent to achieve $200 billion by 2015. The food processing industry
contributed 7% to India ‘s GDP. The business employs around thirteen million employees
directly and concerning thirty-five million indirectly.
The industry is divided into different sectors specifically, milk and allied product, meat and
poultry, seafood, work and confectionery, vegetables and fruits grain, pulses and oilseeds
merchandise, alcoholic and non-alcoholic products, and packaged foods. The classification
isn't distinct as several processed product overlap completely different segments. India ranks
No. 1 in the world in production of Milk (Fresh, whole, buffalo), Pulses, Ginger, Chick Peas,
Bananas Guavas, Papayas and Mangoes. Further, India ranks No. 2 within the world in
production of Rice, Wheat, Potatoes, Garlic, Cashew fruity, Groundnuts, Dry Onion, Green
Peas, Pumpkins, Gourds, and cauliflowers. With the massive production base, Republic of
India will simply become the leading food provider to the globe and at an equivalent time
serving its Brobdingnag an growing domestic market with over a billion people. 15
Investments in the registered food processing units have been growing in recent years. In
2007-08 the fixed capital of registered food processing units has increased by 18.93% over
the previous year.
Food process business in Republic of India is more and more seen as a possible supply for
driving the agricultural economy because it brings action between business and agriculture. A
developed food process business is anticipated to guide increase in farm gate costs translating
into inflated rural incomes, scale back wastages, ensure value addition, promote crop
diversification, generate employment opportunities as well as export earnings. With such an
oversized and varied production base let alone low personnel value and trendy technology,
the Indian food processing sector is poised for growth, if the advantages are leveraged
optimally. The growth is driven by the actual fact that the central government has given a
priority standing to any or all agro-processing businesses.
Government incentives in the field of mega food parks, cold chain and exports benefits are
also playing an important role in promoting food processing. The major challenges are
investments at completely different points of the availability and worth chain, proper
research, farm and lab connectivity, up-gradation of technology, increase in farm holding,
skill and manpower coaching, backend and front-end integration and cold chain integration.
The opportunities within the food process business are Brobdingnag again. However, there's
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a necessity to boost
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technology and productivity to be competitive globally. As the economy grows, the food
process business can provide larger opportunities to the new still because the existing players.
India has the second-largest cultivable land of 161 million hectares and has the very best area
beneath irrigation. Next to China, India ranks second largest food producer in the world and
has the potential to immerse the biggest with its food and agricultural sector. India accounts
for fewer than one.5% of international food trade despite being one sixteen of the globe ‘s
major food producers, that indicates vast potential for each investors and exporters.
Food industry has an important role in linking farmers and consumers within the domestic
and international market The Ministry of Food Process Industries is creating all efforts to
encourage investments across the worth chain. The business engages roughly 1.85 mn
individuals in around 39,748 registered units with mounted capital of $ 32.75 bn and
combination output of around $ 158.69 bn. Major industries constituting the food process
business are grains, sugar, edible oils, beverages and farm product.
The key sub-segments of the Food Processing industry in India are Dairy, Fruits &
Vegetables, Poultry & Meat processing, Fisheries, Food retail etc.
Key facts:
311.71 mn tones of horticulture crop production in 2017-18
Milk production of 176.3 mn tones during 2017-18 with per capita availability of milk at a
level of 375 grams per day in 2017-18
Egg production of around 95.2 bn during 2017-18
Total fish production was 12.6 mn tones during 2017-18
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THEORYTICAL CONCEPTS
COST-VOLUME-PROFIT ANALYSIS; MEANING AND DEFINITION
The cost volume profit analysis, normally stated as CVP, maybe a planning process that
management uses to predict the long run volume of activity, costs incurred, sales made, and
profits received. In different words, it’s a mathematical equation that computes however
changes in costs and sales can have an effect on financial gain in future periods.
The CVP analysis determines all cost as either variable or fixed. Fixed cost are expenses that
don’t fluctuate directly with the volume of units produced. These cost-effectively remain
constant. An example of a fixed cost is rent. It doesn’t matter what percentage of units the
production line produces. The rent expense will always be the same.
Variable cost, on the other hand, change with the levels of production. These costs include
materials and labour that go into each unit produced. For example, a car factory would
classify tire costs as a variable cost. Every car that's created should have 4 tires. The more
units produced, the more tire costs increase.
The CVP analysis uses these two costs to plot out production levels and therefore the
financial gain related to every level. As production levels increase, the fixed costs become a
smaller percentage of total income while variable costs remain a constant percentage. Cost
accountants and management analyse these trends in an effort to predict what costs, sales, and
profits the company will have in the future. They also use cost volume profit analysis to
calculate the break-even point in production processes and sales. The break-even point is
drawn on the CVP graph where the sales, fixed costs, and variable costs’ lines all intersect.
This is a key construct as a result of it shows management that the revenue from a project are
ready to cover all the prices related to it. Using a variation of the CVP, management can
calculate the break-even point in profits, units, and even dollars.
Cost Volume Profit Analysis explains the behaviour of profits in response to a change in cost
and volume. In other words, it is an analysis presenting the impact of cost and volume on
profits. Hesier wrote “The most significant single factor profit planning with of the common
business is that the link between the amount of business, value and profit”. The CVP
relationship is a very important tool used for the profit designing of a business.
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Elements of CVP analysis
The three elements included in CVP analysis are:
1) Cost, which implies the expenses concerned in manufacturing or selling a product or

service.
2) Volume, which implies the number of units produced in the case of a physical
product, or the amount of service sold.
3) Profit, which implies the difference between the sales price of a product or service
minus the cost to manufacture or provide it.
ASSUMPTION OF CVP ANALYSIS
 All costs, including production, administrative, and overhead costs, can be identified
as either fixed or variable.
 The selling price per unit is constant.
 Changes in activity are the factors that affect costs.
 All units produced are sold
OBJECTIVES OF CVP ANALYSIS
 To forecast the profit accurately.

 To determine margin of safety
 To determine breakeven point
 To help management in determining the pricing policies.
 To evaluate the performance of the business
 To facilitate the preparation of flexible budgets.
 To achieve the cost control and cost reduction
 To help management in making decision such as make or buy, shutdown or not,
introduce a new product or not, accept an order or not, change the method of
production or not, etc.
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ADVANTAGES OF CVP ANALYSIS
 Cost-volume-profit analysis is useful in profit planning, cost control and decision-

making.
 It helps to making flexible budgets which indicate cost and profit at various levels of
activities.
 It helps to determine the maximum sales volume required to avoid losses.
 It helps to determine the sales volume at which the profit goal of the firm will be
achieved.
 It helps management to find the most profitable combination of costs and volume.
 It helps in evaluating the effect of change in selling price on profitability.
 It provides a means for assessing the profitability of each product so that the optimum
product mix may be determined.
 The study of cost-volume relationship is necessary in order to know the amount of
overhead costs which could be charged to product costs at various levels of operation.
 It helps in evaluating the performance of an organisation for the purpose of control.
IMPORTANCE OF CVP ANALYSIS
The CVP analysis is useful to management as it provides an insight into the effects and inter-
relationship of factors, which influence the profits of the organization. The relationship
between cost, volume and profit makes up the profit structure of a firm. Hence, the CVP
relationship becomes important for budgeting and profit planning.
As a starting point in profit planning, it helps to find the maximum sales volume to avoid
losses and the sales volume at which the profit goal of the firm will be achieved. As an
ultimate goal, it helps management to find the most profitable combination of costs and
volume.
A dynamic management, therefore, need of CVP analysis is to forecast and monitor the
implication of its short-run decisions about fixed costs, sales volume and sales price for its
profit plans on a continuous basis.
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LIMITATION OF C-V-P ANALYSIS
 It is very difficult or impossible to separate costs into fixed and variable.

 It assumes that fixed cost remain fixed for any level of production. But actually it will
remain fixed only up to a certain level of activity.
 It assumes that variable costs vary in different proportion to volume of production.
But the variable cost need not necessarily vary in direct proportion of output.
 The assumption that only one product is produced or that sales mix remains constant
is difficult to find in actual life.
 When a number of the products are manufactured, separate break-even charts may be
prepared for individual products. This necessitates the apportionment of fixed costs on
an arbitrary basis.
 The assumption that selling price remains constant is not valid.
 Break-even analysis completely ignores the capital employed in business.
 It has limited application in long-range planning.
 It ignores marketing aspects and effect of government policies etc. which are
necessary for decision making.
COMPONENTS OF CVP ANALYSIS
 MARGINAL COSTING
 CONTRIBUTION
 PROFIT VOLUME RATIO
 BREAKEVEN ANALYSIS
 MARGIN OF SAFETY
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MARGINAL COSTING
Marginal cost is the extra cost of manufacturing a further unit. IMA London defines monetary
value as “the quantity at any given volume of output by that mixture prices square measure
modified if the quantity of output is enhanced or bated by one unit”. Thus, the marginal cost
is the amount by which total cost changes when there is a change in output by one unit.
Marginal Costing is a technique whereby marginal costs are ascertained. In this technique of
costing only variable costs charged to cost units, while fixed costs are written off against a
fund called contribution. IMA, London wrote Marginal Costing is “the ascertainment, by
differentiating between fixed costs and variable costs, of marginal cost and the effect on
profit of changes in volume or type of output”. In the words of J. Batty, “marginal costing is a
technique of cost accounting, which pays attention to the behaviour of costs with changes in
the volume of output”.
Sales = Variable costs + fixed cost ± Profit/Loss
OR Sales – Variable costs = fixed cost ± Profit/Loss
CONTRIBUTION (C)
Contribution is a very important concept in marginal costing. It is the basis of decision-

making and control. It is the profit in marginal costing. it refers to excess of sales over
variable cost. It is not the final profit. It is the marginal profit. Contribution also known as
‘contribution margin’ or ‘gross margin’. It covers fixed cost and profit. If contribution is
more than the fixed cost, there is a profit. If contribution is less than the fixed cost, there is a
loss.
Contribution(C) = Sales(S) – Variable Cost (VC)
PROFIT VOLUME RATIO
The Profit-volume ratio, which is also called the ‘contribution ratio’ or ‘marginal ratio profit-
volume ratio indicates the relationship between contribution and sales and is usually
expressed in percentage. The magnitude relation shows the quantity of contribution per rupee
of sales. Since, within the short, fixed cost does not change, the profit-volume ratio also
measures the rate of change of profit due to change in the volume of sales.
It is influenced by sales and variable or monetary value. If the sale value will increase while
not a corresponding increase in monetary value, the contribution increases and the profit-
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volume ratio improves. Similarly, if the marginal cost is reduced with sale price remaining
the same profit-volume ratio improves.
The advantages of profit-volume ratio are that it can be used to measure the profitability of
each product, or group of them, separately so that the necessity for continuance of such
products can be examined. It may also be used to measure the profitability of each production
centre, process or operation. A high profit-volume ratio indicates high profitability and low
profit-volume ratio indicates low profitability
pv ratio= contribution / sales *100
BREAKEVEN ANALYSIS
Break-even analysis is that the most generally used technique of price volume profit analysis.
It establishes the relationship between cost and profit with sales volume. It is a method of
presenting and studying the interrelationship among cost, volume of sales and profit at
various levels of activity. The term break-even analysis is taken in slender additionally as
broad sense. In a narrow sense, it is the process of finding the breakeven point (BEP). BEP is
the point at which total sales revenue is equal to total cost. It is the point of no profits no loss.
In its broad sense, it means a system of analysis, which used to determine the probable profit
at different levels of activity. It shows the behaviour of cost and profit at varying levels of
activity.
Car Heyel defines breakeven analysis as “a method for studying the relationship among sales
revenue, fixed cost and variable expenses as to determine the minimum volume at which
production so can be profitable”
MARGIN OF SAFETY
The management may be interested in knowing the extent to which the sales is above the
BEP. This is called ‘margin of safety’. It is the excess of actual or present sales over the BEP
sales. It refers to the amount by which sales revenue can fall before a loss incurred. It
indicates the strength or weakness of an enterprise. A high margin of safety indicates the
soundness of the business. It may be expressed in unit, sales revenue or as a percentage of
sales.
Margin of safety = present Sales value – BEP Sales value
If it is to be expressed as a percentage of sales, the following formula is used:
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Margin of Safety = Actual sales - BEP Sales X 100 /Actual sales
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INTRODUCTION ABOUT THE COMPANY
Kerala Solvent Extractions Limited now known as KSE Limited is one of the largest
manufacturers of compound cattle feed in the country. KSE Limited was registered in 1963
and started production in its Solvent Extraction Plant in 1972 in Kakkathuruthy road,
Irinjalakuda with a capacity of 40 MTs per day. It was the first solvent extraction plant in
Kerala spread over 15 acres.
KSE Limited is a public limited company with around 4500 shareholders. The shares are
listed in Bombay Stock Exchange (BSE). kse ltd is the largest manufacturer of compound
cattle feed in private sector in the India. The last 3 decades have seen KSE emerging as a
leader in solvent extraction and ready mixed cattle feed in the country. Today the company
commands the expertise, resources and infrastructure to manufacture a variety of farm animal
introduce high volumes, copra oil from copra oil cake and refined edible oil.
The company operates through 3 segments, which include animal feed division, oil cake
processing division and dairy division. It is dairy division consists of milk and milk products,
including ice cream. It offers ice cream under the brand, VESTA. The company is also
engaged in the field of milk procurement, processing and marketing of liquid milk and milk
products. Its milk products include KS Milk, KS Ghee and KS curd. VESTA Ice Cream has
become popular in many districts in Kerala. Its cattle feed products include KS supreme
pellet, KS Delux plus pellet and KS super.
Driven by a commitment to high standards of quality, KSE has not only won client
confidence however additionally national recognition through many awards and accolades.
With modern manufacturing facilities spread over three states, KSE caters to the vast belt
stretching across Southern India. Since present days, KSE has endeavoured to produce its
product to customers through an in-depth network of dealers and retailers, that kind a
dedicated force behind the success of KSE. It could be a matter of pride that KSE is a unit
name these days. With a powerful commitment to Customers and products quality and being
cost-competitive, KSE stands poised to fulfil new challenges.
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VITAL STATISTICS
Company name KSE Limited
Type Public company
industry Food
Founded 25 September
Headquarters Irinjalakuda
Thrissur district
Kerala
Traded as BSE: 519421

NSE: KSE
Products Cattle feed, edible oil and dairy products
Key people A.P George (managing director)
Revenue Rs. 1,049.23crore
Net income Rs. 15.61core
Number of employees 810
website www.kselimited.com
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VISION
The company endeavour to require care of leadership through quality product, explore new
avenues in development and commercialism create a stronger bond between the management,
workforce, dealers and customers, contribute to social development and rural upliftment, and
constantly strive for excellence in all spheres of our activities.
MISSION
To maintain market leadership.
To minimize the cost incurring in the production process.
To maintain the product quality
To be competitive in all markets.
To be compliment to all global quality standards
To maintain the top position in the industry.
To utilize the new technological changes for the advantage of the corporate.
OBJECTIVES OF THE COMPANY
The memorandum of association of the company list out all objectives for which the
company is registered the most important three objectives are
To produce, manufacture, extract, purchase, refine, prepare import-export, sell and usually to
deal in oil from seeds and different oil-bearing materials to hold on business of the refine the
hydrogenation therefrom and of trades connected there within
To acquire correct established, operate and maintain oil mills, extraction plants, ghee plants
and workshops.
To purchase, manufacture, sell or otherwise deal in oil cakes, washing soaps, toilet Soaps and
other products
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HISTORY OF THE COMPANY
It was in 1963 Kerala Solvent Extraction Limited now known as KSE Limited entered the
solvent extraction industry, setting up the very first solvent extraction plant in Kerala.
Although Kerala produces eightieth of total coconut created in country, massive a part of it
had been sold to different states as coconut itself and that they were earning sensible profit
once mills in Kerala wasn't able to get enough copra for their daily needs. When refining
industry in different components of the country was thriving, in Kerala it had been troubled.
So the understood the need for modernization of their mills. At that time Dr. P.S. Loknath
committee setup to review the practicability of beginning new industries in Kerala, suggested
the institution of 3 solvent extraction plants and one amongst them in Thrissur district. The
oil mill homeowners in and around Irinjalakuda, who were thinking in similar lines saw the
chance and took the initiative to determine a solvent extraction unit, thus was KSE Limited
born.
On the road to success, there have been several hurdles. Initially, the mobilization of capital
displays the best challenge. The future looked grim. But determination and optimism paid off.
Thus on twenty-five September 1963 the Kerala Solvent Extraction restricted was registered
as a public Ltd. The solvent extraction plant went on stream in 1972 and in 1976 a brand new
plant was originated to manufacture prepared mixed animal feed, that was pioneering step.
Since then there was no looking back.
The last 3 decades are seen KSE rising because the leader in solvent extraction and prepared
mixed animal feed put in the country. And through these years of consolidation and
diversification, KSE has created a distinct segment for itself. Today KSE commands the
resources, experience and infrastructure to manufacture a selection of farm animal feed, in
high volumes, oil from feed, and refined edible oil.
KSE had computerized its operations way back. In the year 1999, KSE went on to upgrade its
electronic data processing setup more. A custom created ERP code was developed for its
units and head workplace through M/S. RR Software Private Ltd, Cochin and online
computerization was fully implemented at all its plants. Being custom created for KSE code,
with SQL RDBMS, face on visual basic and Windows NT OS, seamlessly had integrated all
functions of the organization like fa, Inventory Billing, Payroll, PPC, MIS, and Share
Accounting etc.
The Head workplace at Irinjalakuda has two servers and forty nodes running the appliance
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different units, in all, have about 8 severs and about 50 nodes.
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Their latest plant at Vedagiri, Kottayam features a processed management blend, size
reduction, batching, and pellet cooling and aspiring systems. from a single unit, solvent
extraction plant, KSE has grown in to a multi-unit, multi-product organization. Infrastructure
for growth has perpetually been viewed as a priority at KSE. With modem manufacturing
facilities spread over three states, KSE caters to a vast bet stretching across south India. With
a strong commitment to customers and product quality and being cost competitive KSE, stand
poised to meet new challenges. The company came into existence with a awfully modest
objective to assist the solvent extraction millers through solvent extraction method achieving
an equivalent with exceptional success. KSE over the year expanded considerable having
ventured into other growth areas.
The very new area in which KSE Limited has entered into diary sector the field includes the
procurement, processing, marketing of liquid milk and milk products, KS milk, KS curd, KS
buttermilk etc. have already popular in Thrissur, Emakulum, Malapuram, Alappuzha districts.
KSE Limited has already launched Vesta brand ice cream on August 2002, which has been
well accepted in the market matching one in the cattle field industry. KSE having two
production plant with processing capacity of 100 tons per year the company has also a
chemical oil refining plant of 20 tons per day. In 1996 KSE Limited has listed in stock
exchange of Bombay, madras and Kochi. Currently the company is having an annual turnover
of around 900crores.
GROWTH CHRONICLE OF KSE
1963
Registered as a company named Kerala Solvent Extraction Limited
1972
The company started production in Irinjalakuda with a Solvent Extraction Plant with a
capability of forty MTs per day
1976
A new plant was originated in Irinjalakuda to supply 50MTs of prepared -mixed cattle feed.
1979
production capability of cattle feed plant in Irinjalakuda redoubled to sixty MTs per day.
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1980
Solvent Extraction Plant capability in Irinjalakuda redoubled to sixty MTs per day.
1983
A production capacity of 120 MTS per day fully automatic new cattle feed plant started in
Irinjalakuda
1984
The Solvent Extraction Plant capability of Irinjalakuda enlarged to eighty MTs per day.
1987
Production capability of cattle Feed Plant in Irinjalakuda enlarged to one hundred eighty MTs
per day.
1988
New Cattle feed plant with a production capacity of 100 MTs per day started in
Swaminathapuram, Tamilnadu.
1989
Production capacity of Cattle Feed Plant in Swaminathapuram unit increased to120 MTs per
day. A new Solvent Extraction Plant commissioned at Swaminathapuram, Tamilnadu.
1990
day. Introduction of KS Supreme pellets, by-pass protein cattle feed in the market.
1992
Cattle feed manufacturing begins in 3 party
unit 1994
day. A new feed supplement for cattle named as Keyes Fotintroduced. Company listed its
shares in stock exchanges of Cochin. Chennai and Mumbai
21
1995
Vegetable oil refining plant commissioned. KS SUPREME-sunflower oil launched. A new

Godown in Calicut opened.
1996
New cattle feed plant with a production capacity of 240 MTS per day started in Vedagiri,
Kottayam district. Company's name of Kerala Solvent Extraction Limited changed to "KSE
Limited"
1998
New cattle feed plant with a production capacity of 240 MTS per day started in Palakkad
district. As a Silver Jubilee gift company offered to the public, a children's park and
information centre.
1999
Company introduces new product KS deluxe plus the new pellet in HDPE bags of Kerala
market.
2000
Company started production and marketing of pasteurized Milk and Milk Products from
Konikkara and Thalayuthu dairy units. As per the offer to the public, company opened the KS
Park and Information Centre.
2002
Production capacity of Cattle Feed Plant in Irinjalakuda unit increased to 195 MTS per day.
Company's dairy product of ice cream named VESTA' launched.
2003
Production capacity of Cattle Feed Plant in Swaminathapuram unit increased to 195 MTS per
day. They started production in a leased plant at Edayar, Kalamassery
2004
Acquired land at Kinfra Park, Koratty for a new solvent extraction plant and aphysical oil
refining plant. ISO 9001:2008 Certification received.
22
2005
Production capacity of Cattle feed plant in Irinjalakuda increased to 210 MTS per day. They
purchased land at Mysore for a new plant.
2006
A new solvent extraction plant with a capacity of 200 TPD and a new physical oil refining
plant with a capacity of 100 TPD commissioned at Kinfra Park, Koratty. Solvent plant at
Irinjalakuda dismantled.
2008
Ice cream production unit commissioned at Thalayuthu,
Tamilnadu 2009
Production capacity of cattle feed plant in Swaminathapuram unit increased to 200 MTS per
day Commissioned 500 TDP fully state of the Art German Technology Animal Feed Plant at
Irinjalakuda.
2010
lce-cream production units commissioned at Vedagiri, Kottayam.
2012
They Started production in a leased plant at Kochuveli, Trivandrum
2013
Feed Supplement named GORASAM introduced.
2014
Company disposes the property at Mysore. Cattle feed production capacity of old plant at
Irinjalakuda unit increased to 225 MTs per day.
2015
Cattle feed production capacity in Swaminathapuram unit increased to 225 MTs per day
2017
Windmill project inaugurated in Tamilnadu and production started on 25/03/2017
23
ORGANIZATION CHART
BOARD OF DIRECTOR
CHAIRMAN
MANAGING DIRECTOR
EXECUTIVE DIRECTOR
CHIEF GENERL CHIEF FINANCE OFFICER &
MANAGER COMPANY SECRETARY
Personal Marketing Production Quality Purchase

Finance
department control department
department department
department department
EDP General store

DEPARTMENT
Boiler department
Electrical department
Maintenance department
Godown department
24
BOARD OF DIRECTORS
SL.NO NAME OF BOARD OF DIRECTOR POSITION
1 DR. JOSE PAUL THALIYATH CHAIRMAN
2 SRI. A P GEORGE MANAGING DIRECTOR
3 SRI. M P JACKSON EXECUTIVE DIRECTOR
4 SRI. P D ANTO DIRECTOR
5 DR. K.C VIJAYARAGHAVAN DIRECTOR
6 SRI. K PAUL FRANCIS DIRECTOR
7 SRI. T R REGHULAL DIRECTOR
8 SRI. JOESPH XAVIOUR INDEPENDENT DIRECTOR
9 MRS. SATHI A MENON INDEPENDENT DIRECTOR
10 SRI. PAUL JOHN INDEPENDENT DIRECTOR
11 SMT. MARYKUTTY VARGHESE INDEPENDENT DIRECTOR
ADMINISTRATIVE MANAGERS
1 SRI. M ANIL GENERAL MANAGER
2 SRI. R SANKARANARAYANAN CHIEF FINANCIAL OFFICER &

COMPANY SECRETARY
25
SHARE CAPITAL PATTERN
% Of Share
Category No. Of Share Hold
Holding
Promoter’s Holding
Indian promoters 11,08,338 34.64
Sub total 11,08,338 34.64
Non-Promoter’s Holding
Banks _ _
Private corporate bodies 5,24,533 16.39
Indian public 15,37,179 48.03
NRIs/OCBs 29,950 0.94
Sub total 20,91,662 65.36
Grand total 32,00,000 100
AWARDS AND RECOGNITION
1) Kerala’s first solvent extraction plant.
2) No: 1 in processing coconut oil cake through solvent extraction in India.
3) Winner of S.E.A National Awards and State Productivity and Safety Awards
continuously for 14 Years.
4) First ranker in mixed cattle feed production in India.
5) Recognition from Animal Nutrition Society for contributions in cattle feed

manufacturing.
6) Kerala’s first export mixed cattle feed.
7) Tamilnadu productivity council safety award.
8) Kerala state Productivity Council Award 1996-97 to 2005-06.
9) Entrepreneur award from the college of veterinary and animal science
10) FACT MKK Nayar memorial productivity award
26
PRODUCT PROFILE
The main products marketed by KSE Ltd. is as follows
K.S Cattle Feed products
It includes six types. They are;
A. JERSEY COPRA CAKE: - Protein rich, tasty, de-oiled coconut cake.
B. KS DELUX PELLET: - The choice of caring farmers for better results.
C. KS DELUX PLUS PELLET: - It is for medium yielding cows has a crude protein
D. KS SUPREME PELLET: - A bypass protein feed with ISI mark specially made
for cattle superior germ plasam and high production potential.
E. KS PREMIUM PELLET: - It is an economical pellet for low yielders.
F. KS FORTE: -An invigorating feed supplement for cattle contains vitamin A, D &E
G. GORASAM
Dairy products
A. KS MILK
B. KS GHEE
C. KS CURD
D. KS BUTTER MILK
E. ICE CREAMS (VESTA)
RAW MATERIALS USING FOR CATTLE FEED PRODUCTION

1 Oiled Rice Bran
2 Deoiled Rice
Bran 3 Cholam
4 Cotton Seed Cake
5 Rape Seed Cake
6 Ground Nut Cake
7 Maize
8 C N Cake Powder
9 Tamarind Powder
27
10 Coffee Husk
11 Molasses
12 Salt
13 Vitamins & Minerals
CORPORATE SOCIAL RESPONSIBILITY
The CSR policy of KSE Limited incorporates the company's philosophy for giving back to
the society as a corporate citizen and lays down the guidelines and mechanism for
undertaking socially useful programs for the welfare and sustainable development of the
community at large. The main objective of the policy is to establish the basic principles
and the general framework of action for the management to undertake and fulfill its
corporate social responsibility. Under the policy, the company is committed to spend in
every financial at least 2% of its average net profits for the three immediately preceding
financial years in some of the identified activities.
1) Construction of footpath cum handrail for public at a cost of 10 Lakhs
2) Contribution to Kargil Fund (5 Lakhs)
3) Contribution to Gujarat Earthquake Relief Fund (10 Lakhs)
4) Contribution to Bharatia Vidhya Bhavan School, Irinjalakuda (1 Lakhs)
5) Contribution to St. James Hospital, Chalakudy (3 Lakhs)
6) Contribution to Amala Cancer Centre Hospital and Research Centre, Thrissur (3 Lakhs)
7) Contribution to Chief Minister's Relief Fund (3 Lakhs)
8) Contribution to Unnai Warier Smarakakalanilayam, Irinjalakuda for construction
of class rooms (20,000)
9) Two dialysis machines& one medical RO plant for dialysis to Sacred Heart
10) 26 Nos. Hospital beds to the department of Pediatrics, Government Medical
11) Providing one dialysis machine to Santhosham Hospital, Udumalpet (6.10 Lakhs)
12) Mission Hospital, Pullur, Irinjalakuda (14.80 Lakhs) College Thrissur (0.55 Lakhs)
13) Providing bus to Pratheeksha Training Centre, irinjalakuda (14.53 Lakhs)
14) Utilities for inmates of Jeevajyothi old age home, Parappukkara (3.72 Lakhs)
28
15) Physiotherapy equipment’s to Alpha Palliative Care link Centre, Irinjalakuda
help cancer patients (1.50 Lakhs)
16) Construction and maintaince of modern children’s information Centre “KS park”
in irinjalakuda (80 Lakh)
17) Renovation work of public pond behind koodalmanikyam temple, irinjalakuda
(24.79 Lakh)
18) Reference book for the library of sahrdaya college of advanced studies, kodakara
(1.04lakh)
19) Distribute medicine through oncology department of govt. hospital, Thrissur to
help cancer patients (1.50 Lakh)
MAIN COMPETITIORS
 KERALA FEEDS LIMITED
 GODREJ ANIMAL FEEDS
 PRIMA FEED
 AGRO TECH FOODS
 SUNANDHINI
 AMUL
 UNCLE JOHN
 MILMA
29
SWOT ANALYSIS
STRENGTHS
 Excellent infrastructure for manufacturing products
 Fully computerized plant
 Good network of leadership
 Financial strength of the company
 Leadership in the market
 Reputation and brand image in the company
 Efficient employee-employer relationship
 Abundant availability of raw material
 Consistent quality of the product
 Over 38 years’ experience in the field
WEAKNESS
 Higher requirement of working capital

 Inadequately developed linkages between research organization and industry.
 Inadequate promotional activities for dairy products
 Seasonality of raw material
 Lack of adequate quality control and testing methods as per international level.
 Inefficient supply chain due to a large number of intermediaries
 Stagnant number of
 cattle population affect marketing growth
OPPORTUNITIES
 Expanding its distribution area

 Growing demand of its product
 Opening of global market
 Large crop and material base offering a vast potential for agro
processing Activities
 Favorable demographic profile and changing lifestyle
 Expand manufacturing units
30
 Integration of development in contemporary technologies such as
electronics, material science, bio-technology etc. offer vast scope for rapid
improvement and progress
 Financial strength of 80% of the company leads to better purchasing power
THREATS
 Affordability and cultural preference of fresh food

 High inventory carrying cost
 High taxation
 High packaging cost
31
REVIEW OF LITERATURE
Ilhan Dalci (2005) has conducted "a study on Cost volume profit analysis" with the
objectives to know how traditional cost volume profit analysis create managers to make false
decision and also to create a comparison between activity based cost volume profit analysis
and the traditional cost volume profit analysis. The secondary data have been collected from
various sources like annual reports of the companies, journals, articles, publications and
websites. The study has found that under traditional cost volume profit analysis, costs are
categorized strictly as fixed or variable with respect to number of products produced and sold,
but some costs that are fixed with respect to the volume are not fixed with respect to other
factors and due to this traditional cost volume profit analysis may not generate accurate
information. It has also been identified that predicting total costs requires multiple cost
factors such as number of output produced, number of units sold at which will be covered by
activity based cost volume profit analysis. The study has concluded that traditional cost
volume profit analysis includes only volume based cost drivers whereas activity based cost
volume profit analysis includes multiple cost drivers which proves more accurate.
Rijal Madhav (2005), had conducted a research on "cost volume profit analysis tools to
measure the effectiveness of profit planning and control; A case study of NEBICO Private
Limited." He has entered his study to examine CVP analysis as a tool in the manufacturing
industry and to analyse the CVP and its impact in profit planning. It covers five years’
financial statement. The major finding is The company's variable cost is in proportion than
the fixed cost in total cost amount, which contribute to a lower contribution margin. The
company has a high fixed cost Company has no plan to reduce cost. There is a lack of
effective cost control programs or techniques. The company has no effective inventory
policy. The inventory management, raw material handling and controlling system are not
efficient and effective. The board of directors is the main authority in price-fixing and it
directly interferes to price of biscuit and confectionery products. Nebico Pvt. Ltd. has not
proper practice of segregating the costs into fixed and variable or controllable and non-
controllable. There is no proper coordination among production, administration, distribution,
inventory and sales department.
Shrestha Dharma (2006), had conducted a research entitled “Cost, Volume and Profit
Analysis of Commercial Bank: A Case Study of Himalayan Bank Limited”. This study
concerned to examine the practice of CVP analysis & its effectiveness in Commercial Bank,
in this study the secondary data had been used mostly and related other information had
32
collected by informal interview for segregating cost, Cost analysis, contribution margin
analysis, P/V
33
ratio analysis & Break-Even analysis. The time period covered by this Research was six years
The major findings are CVP analysis has not practised yet. There is no Practice of
segregating cost into fixed and variable. The costs are roughly classified and that
classification is not scientific and appropriate. All the level of management is not involved in
profit planning and decision making of the Bank. There is no complete and comprehensive
budgeting system. Lack of the system of SWOT analysis. Liberalized policy of Government,
skill manpower, good management team, use of computer technology etc. are the strength of
Bank were as unable to provide service in rural area, market competition, conflict in Nation,
Industries and Business closed done are weakness and threat.
Ronald (2008) suggested CVP analysis is the technique which summarizes the effects of
changes in an organization’s volume of activity on its costs, revenue and profit. CVP analysis
can be extended to cover the effects on profit of changes in selling prices, service fees, costs,
income tax rates, and the organizations mix of products or services. In short CVP analysis
provides management with a comprehensive overview of the effects on revenue and costs of
all kinds of short-run financial changes. Although the word profit appears in the term, CVP
analysis is not confined to profit seeking enterprises. Managers in non-profit organizations
also routinely use CVP analysis to examine the effects of activity and other short-run changes
on revenue and costs.
Edna Gunderson (2009) conducted "a study on Cost Volume Profit Analysis” with the
objectives to identify the important elements of cost volume profit analysis and to show that
the cost volume profit analysis helps in decision making. Break-even point and contribution
are used to analyse the collected data. The findings are break-even point can be calculated as
either the minimum sales quantity or the minimum revenue required to avoid a loss or profit.
The cost volume profit model can also be used to calculate target operating income.
Managers also use cost volume profit analysis to take other decisions, mainly strategic.
Different choices can affect selling prices, variable costs and fixed costs. Therefore, the
author has concluded by suggesting that the cost volume profit model proves better in making
managerial decisions
Georgiev (2014) studied the applying of Cost-Volume-Profit‟ Analysis within the hotel
business based on survey knowledge of upper-level hotels within the north-east region of
Balkan nation, research results indicate that analysts apply the CVP analysis to any or all
aspects of management accounting, that clearly speaks of its significance for generation of
information on hotel management. Taking into consideration the specifics of the hotel
34
product
35
we tend to cannot however settle for as logical the results on the extent and frequency of
application of CVP analysis.
Jain (2010) a break-even analysis indicate the relationship between the costs and profits with
the sales volume. The sales volume that equates total revenue with connected costs and
resulted in neither profit nor loss is termed the breakeven volume. If all costs are assumed to
be variable with the sales volume, the BEP would be at zero sales. If all costs were fixed,
profits would be varying disproportionately with sales and the BEP would be at a point where
sales revenue total equalled fixed costs. BEP analysis is the most widely used technique of
CVP analysis. Breakeven analysis establishes the connection between revenues and costs
with regard to volume. It indicates the extent of sales at that total costs area unit up to total
revenues. The term breakeven analysis is interpreted in narrow as well as in broad sense. In
its narrow sense, it is concerned with finding out the break-even point. In its broad sense, it
means a system of analysis which is used to determine the probable profit at different levels
of activity.
Rhan (2010) says that CVP analysis shows the link among the varied ingredients of profit
planning, namely, unit sales price, variable cost, sales volume, sales mix and fixed cost. Profit
designing maybe a perform of the terms of a unit of product, the variable cost of making and
selling the product, the volume of product units sold, and, within the case of multi-product
firms, sales mix and, finally the total fixed costs. The CVP analysis is a management
accounting tool to show the relationship between these ingredients of profit planning. The
entire gamut of profit planning is associated with CVP inter-relationships. A widely used
technique to review the CVP relationship is break-even analysis.
Prihadyanti (2011) This study states that “the Cost-volume-profit (CVP) analysis is a widely
used tool for managerial planning. The failure of CVP analysis to include value of capital into
a product's cost operate will result in underestimating a product's cost while overstating its
profitability. This paper proposes another variation of the CVP analytical model to
incorporate the value of capital on R&D investment and its risk level on strategic selections.
The changed CVP model provides a lot of helpful data to management as a result of it focuses
on a lot of specific kind of investment that has specific characteristics. The CVP model
developed is a lot of complicated, because it includes risk and uncertainty for the expected
revenue, and specifies the R&D expenditure as a percentage of total sales. However, the
model still needs further development.”
36
Trifan Anton (2011) Study Founded “on the distinction between variable costs and fixed
costs, the analysis of the relationship between the volume of activity, costs and profits is
directed to decision-making in order to guide an entity's management to obtain optimal
results. It is known that the models that individualize the development of the expenses at an
entity's level represent the basis of cost analysis. Then, given the fact that foresight imposes
taken into account fluctuations in an activity, the grouping of expenses into variable and fixed
will be used for forecasting management, for evaluating an entity's performance and for
analyzing decisional alternatives.”
Teodora Roupska (2012) This study explained that “The Cost-Volume-Profit (CVP) analysis
is a well-known Management Accounting tool applicable in industrial companies. It can be
applied successfully in agrarian companies, but it is necessary to identify fixed and variable
costs (in Bulgaria it isn’t done), made for raising animals or growing plants, because the
agrarian production is made from biological assets. The costs made for plants or animals are
different. Besides the same cost in the individual companies are able to be classified
differently depending on its particular manifestation. The “Cost-Volume-Profit” analysis can
easily be used to base agrarian companies’ management decisions as in the other companies –
by computing break-even point, by computing, margin of safety and etc. In our empirical
study it is possible to compute the break-even point in units in two versions. In the first the
unit is an animal and in the second – a kilogram of meat. The received results proved that to
organizing a profitable pig farm in Bulgaria it is necessary to have more than 898 animals”.
John Donald (2013), Suggested that the ability to categorize costs as either fixed or variable
and to estimate the fixed and variable components of mixed costs is important because it
enables the utilization of decision-making techniques like cost volume profit analysis (CVP
analysis). This is basically a short (or tactical) decision tool that shows the impact on profit of
changes in prices, prices and sales volume in units. We cannot estimate accurately the impact
of those changes unless we all know that prices area unit fastened and that area unit variable.
CVP analysis is sometimes called break-even anal sis because it allows the user to calculate a
break-even point. This is the extent of production and sales at that a product or service stops
losing cash and becomes profitable. At the break-even, point profit equals zero. Once we
know the break-even point we can assess the financial viability of a new product or analyse
our current operating performance.
37
Henry Osahon (2014) This study shows “the ability of a corporation to check the
interactions of economic variables during a kind of setting is very important in effective
decision-making and ultimately profitability and survival. This paper posits the use of Cost-
Profit Volume (CPV) analysis in this regard and applied it to the non-profit organization.
Using a case study approach, the study demonstrates practically the application of CVP
framework to decision problems. Thereafter, primary data were collected by means of
questionnaire and analysed using frequency percentage to investigate why cost/management
accounting decision frameworks in general are not popular among non-profit organizations in
Nigeria. The traditional technique of CVP analysis together with its assumptions and
limitations were addressed.
Gabriel Soares (2016) concluded the problem of reallocating productive resources to

maximize profit. Mostly the topic focuses on developing or improving the Cost-Volume-
Profit model to obtain solutions that provide an ideal mix of products before the data is given.
In particular, some algorithms are available for the problem. However, these proposals do not
consider the minimum number of units to be produced, and the reallocation of productive
resources for each product is a problem found in these studies. Bearing this in mind, a new
algorithmic program based on individual monetary revenue is planned. Computational results
indicate that the proposed method can be utilized as a decision support system.
Kavitha (2018) Based on the results, the researcher concludes management may use cost
volume, profitability analysis to calculate the profit yield by a given amount of selling goods.
The management may set the necessary sales level to earn the desired profit through the cost
volume profit analysis. After analyses of the various data related to Salem steel plant, the
study concluded that the cost volume, profitability analysis more or less depends upon the
better utilization of resources, cut-off expenses and goodwill and market share. Moreover,
CVP analysis was used to increase production capacity and use advanced technology to cut
down the cost of production and wage cost in order to increase the profitability, volume, not
only against the investment but also from the investor’s return point of view. Cost volume
profitability analysis is helpful to analyse the profitability position according to the cost and
sales volume not only Salem steel plant but also useful in every organization to prevent the
future risks of the business.
38
PROBLEM STATEMENT
The most significant single factor in the planning of the average business is the relationship
between the volume of business, its costs and profit. Through this study the analysis of Cost,
Volume and Profit has been done by using the technique of Contribution Margin Analysis,
P/V ratio, Breakeven Analysis and margin of safety. Techniques of ratio analysis and trend
analysis are used to know the current profitability and to predict the future trend on cost,
revenue and profit at KSE Ltd, Thrissur. The problem identified in the company is that the
unawareness and less priority given for the cost volume profit relationship. If cost, volume
and profit are properly managed, it helps the company to take managerial decisions
effectively. Most manufacturing industries are unaware of the extent to which cost-volume-
profit analysis affect their various decisions. Manufacturing industries are facing the problem
of how to make use of the available scarce resources in order to achieve the objective of
profit maximization
OBJECTIVES OF THE STUDY
 To analyze the relationship between cost, volume and profit of KSE Ltd.
 To ascertain contribution and profit-volume ratio of KSE Ltd.
 To ascertain margin of safety of the company
 To give suggestion about the future trend on cost, profit and sales.
SCOPE OF THE STUDY
This study is performed by using the cost sheet and annual records of the KSE Ltd
Irinjalakuda. The analysis done in the cost sheet are Breakeven analysis, profit volume, etc.,
these calculations cover the major areas like contribution margin, profit. This would be useful
for company to make new strategy to compete in the market by adopting various controlling
techniques in the process of manufacturing. This study was conducted only on overall cost
volume profit analysis and not on each and every variable. This study helps to forecast profit
fairly and accurately as it is essential to know the relationship between profit and costs, this
study assists in evaluation of performance for the purpose of control and also assists in
formulating policies by showing the effect of different price structure on costs and profit. The
study is also helpful for the managers to understand about the current profitability trend and
to predict the future trend in cost, volume and sales.
39
RESSEARCH METHODOLOGY
The science of method is termed as research methodology. It refers to process of conducting
the research. Research methodology not only described the steps involved in conducting the
research, but also justifies the choices of various methods, states the limitations of the
research and also bring out the presupposition and consequence and conducting the research.
Research methodology answers question like the why, what, how, when of conducting the
research.
RESEARCH DESIGN
Research design is the strategy for the study and plan by which the strategy is to be carried
out. The study is analytical research because this study is primarily based on the internal
records and the annual records of the company. in analytical research, the researcher had to
use facts or information already available, and analyses these to make a critical evaluation on
the material
SOURCES OF DATA
only secondary data are used were used for data collection
Secondary data
The data which are originally collected but rather obtained from the published or unpublished
sources are known as secondary data. For this study secondary data are collected from
 Company websites
 Annual reports
 Journals and magazines
TOOL OF DATA ANALYSIS
 Breakeven analysis
 PV ratio
 Margin of safety
 Contribution
 Trend analysis
40
TOOL OF DATA PRESENTATION
 Chart
 Table
DURATION OF THE STUDY
Duration of the study is 28 days
PERIOD OF THE STUDY
Periods that covered by the study extended to five years 2014-2015 to 2018-2019
LIMITATIONS OF THE STUDY
 The study restricted to financial year from 2014-2015 to 2018-2019

 The analysis of the study based on past record of the organization
 The limitation of CVP analysis, breakeven analysis, are applicable here
 The study mainly depending on the secondary data so limitation of secondary data
is applicable here.
CHAPTER SCHEME
Chapter 1 – Introduction
Chapter 2 – Profile of the industry
Chapter 3 – Research design
Chapter 4 – Data analysis and interpretation
Chapter 5 – Summery of findings, conclusion and suggestion
41
Table 4.1: Fixed costs of the previous five years.
AMOUNT
YEAR (In lakhs)
2014-2015 6629.63
2015-2016 5130.91
2016-2017 6101.07
2017-2018 9582.57
2018-2019 6372.49
Chart 4.1: Fixed costs of the previous five years.
FIXED COST
12000
9582.57
10000
8000
6629.63 6372.49
6101.07
6000
5130.91
4000
2000
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
INTERPRETATION
From the given table and chart, it can be interpreted that in the year 2015-2016, the fixed
cost is comparatively lower than other years. And the fixed cost is higher in the year
2017- 2018. There is a slight increase almost in every year compared to previous year
and also there is a decrease of fixed cost in the year 2018-2019 compared to 2017-2018.
42
Table 4.2: Variable cost of the previous five years.
AMOUNT
YEARS (lakhs)
2014-2015 80185.83
2015-2016 86834.47
2016-2017 97261.08
2017-2018 114391.12
2018-2019 114221.36
Chart 4.2: Variable cost of the previous five years.
VARIABLE COST
140000
114221.36
120000 114391.12
97261.08
100000
86834.47
80185.83
80000
60000
40000
20000
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
INTERPRETATION
From the bar diagram, it can be interpreted that variable cost is higher in the year 2017-
2018. And a linear relation can be seen in variable cost, that it is increasing slightly from
the year 2014-2015 to 2018-2019. Since it is a manufacturing firm, manufacturing
process requires more money.
43
Table 4.3: Total costs of the previous five years.
AMOUNT
YEARS
(lakhs)
2014-2015 85984.91
2015-2016 91965.38
2016-2017 103362.15
2017-2018 123973.69
2018-2019 120593.85
Chart 4.3: Total costs of the previous five years.
TOTAL COST
140000
123973.69
120593.85
120000
103362.15
100000 91965.38
85984.91
80000
60000
40000
20000
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
INTERPRETATION
The above chart represents the total costs. It consists of total fixed and variable cost for
the past five years. From the bar diagram, it can be interpreted that there is an increasing
trend in the total cost from the year 2014-2015 to 2017-2018. The company had spent
high cost in the year 2017-2018 and less cost had spent in the year 2014-2015
44
BREAKEVEN ANALYSIS
Table 4.4: Marginal cost statement during the year 2014-2015
Particulars Amount(lakhs)
Sales 89970.05
Less: variable cost 80185.83
Contribution 9784.22
Less: Fixed cost 6629.63
Add: other income 1208.82
Profit 4363.41
Calculation of profit volume (P/V) ratio.
P/V Ratio = contribution/sales*100
= 9784.22/89970.05*100
= 10.87%
Calculation of Breakeven point
BEP in Sales = Fixed cost*sales/contribution
= 6629.63*89970/9784.22
= 60962 lakhs
45
Sales 92493.46
Profit 758.07
= 5658.99/92493.46*100
= 6.11%
= 5130.91*92493.46/5658.99
= 83862 lakh
46
Sales 104724.53
Profit 1561.63
= 7463.45/104724.53*100
= 7.10%
= 6101.07*104724.53/7463.45
= 85608 lakhs
47
Sales 130417.33
Profit 6962.71
=16026.21/130417.33*100
= 12.28%
= 9582.57*130417.33/16026.21
= 77980 lakhs
48
Sales 120940.70
Profit 942.61
= 6719.34/120940.70*100
= 5.55%3
= 6372.49*120940.70/6719.34
= 114698 lakhs
49
Table 4.9: Contribution margin of the company
YEAR CONTRIBUTION (IN LAKHS)

2014-2015 9784.22
2015-2016 5658.99
2016-2017 7463.45
2017-2018 16026.21
2018-2019 6719.34
Chart 4.9: Contribution margin of the company
CONTRIBUTION
18000
16026.21
16000
14000
12000
9784.22
10000
7463.45
8000
6719.34
5658.99
6000
4000
2000
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
INTERPRETATION
From the above table and chart, it can be interpreting that the contribution margin of the
KSE ltd was increasing from 2016-2017 to 2017-2018 and it has decreased to (6719.34
lakhs) in the year 2018-2019.Higher contribution rate shows high rate of profit and the lower
rate of contribution shows lower rate of profit. The profit earned by the company was low in
the year 2015-2016 when compared to other years and the higher profit was earned in 2017-
2018.In order to improve a company’s contribution margin they either need to reduce
variable costs, such as raw material and shipping expenses, or increase the price of their
products and services.
50
Table 4.10: Profit of the company.
YEAR PROFIT (IN

LAKHS)
2014-2015 4363.41
2015-2016 758.07
2016-2017 1561.63
2017-2018 6962.71
2018-2019 942.61
Chart 4.10: Profit of the company.
PROFIT
8000
6962.71
7000
6000
5000
4363.41
4000
3000
2000 1561.63
758.07 942.61
1000
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
INTERPRETATION
The above table and chart shows the profit earned by the company. The highest profit earned
by the company was in 2017-2018, And the lowest profit earned by the company was in
2015- 2016. The company had higher revenue in the year 2017-2018 and the p/v ratio was
also higher.
51
Table 4.11: Comparison of P/V ratios of the previous five years.
YEAR P/V RATIO
2014-2015 10.8%
2015-2016 6.11%
2016-2017 7.10%
2017-2018 12.28%
2018-2019 5.55%
Chart 4.11: Comparison of P/V ratios of the previous five years.
PROFIT-VOLUME RATIO
14.00%
12.28%
12.00%
10.80%
10.00%
8.00%
7.10%
6.11% 5.55%
6.00%
4.00%
2.00%
0.00%
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
INTERPRETATION
From this graph, we can see that the lower p/v ratio is in the year 2015-2016 and the highest
p/v ratio is in the year 2017-2018. the reason for increasing the p/v ratio was increasing of
contribution margin. Contribution margin was higher in the year 2017-2018 when compared
to other years. And the contribution margin was lower in the year 2015-2016 as compared to
other years. So, we can interpret that the P/V ratio will be increased when the contribution
margin is higher and the P/V ratio will be decreased when the contribution margin is lower.
52
Table 4.12: Comparison of BEP IN SALES of the previous five years.
YEAR BEP IN SALES

(IN LAKHS)
2014-2015 60962
2015-2016 83862
2016-2017 85608
2017-2018 77980
2018-2019 114698
Chart 4.12: Comparison of BEP IN SALES of the previous five years.
BREAKEVEN POINT IN SALES

140000
120000 114698
100000
83862 85608
77980
80000
60962
60000
40000
20000
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
INTERPRETATION
The above graph shows the (BEP IN SALES) of the previous five years. From this graph we
can see that the highest (BEP in sales) was in the year 2018-2019. The lowest (BEP in sales)
was in the year 2014-2015. Increase in sales and contribution is essential for stability of
breakeven point.
53
CALCULATION OF MARGIN OF SAFETY OF KSE LTD, IRINJALAKUDA,
 Margin of safety in the year 2014-2015
Margin of safety = Actual sales –BEP sales
= 89970.05-60962
= 29008.05

=92493.46-83862
= 8631.46

= 104724.53-85608
= 19116.53

= 130417.33-77980
= 5283.38

= 120940.70-114698
= 6242
54
Table 4.13: Margin of safety in lakhs from the year 2014-2015 to 2018-2019.
MARGIN OF SAFETY
YEAR
(In lakhs)
2014-2015 29008.05
2015-2016 8631.46
2016-2017 19116.53
2017-2018 5283.38
2018-2019 6242
Chart 4.13: Margin of safety in lakhs from the year 2014-2015 to 2018-2019.
MARGIN OF SAFETY
35000
29008.05
30000
25000
20000 19116.53
15000
10000 8631.46
6242
5283.38
5000
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
INTERPRETATION
In this graph, it has been interpreting that, in 2018-2019 the KSE Ltd had low margin of
safety comparing with previous year. Because of that, in this year company get low profit
and in 2014-2015 and 2016-2017 the company had high margin of safety. Because of that in
these year company get high profit.
55
Table 4.14: comparative representation of breakeven sales, actual sales, total cost and
profit of KSE Ltd during the year 2014-2019. (In lakhs).
Year Sales BEP Total cost Profit
2014-2015 89970.05 60990.15 85984.91 4363.41
2015-2016 92493.46 83975.61 91965.38 758.07
2016-2017 104724.53 85930.56 103362.15 1561.63
2017-2018 130417.33 78033.95 123973.69 6962.71
2018-2019 120940.70 1148.19 120593.85 942.61
Chart 4.14: Comparative representation of BEP in sales, actual sales, sales, total cost
and profit of KSE Ltd.
COMPARATIVE REPRESENTATION OF SALES, BEP, TOTAL COST

AND PROFIT
942.61
120593.85
2018-2019
1148.19
120940.7
6962.71
123973.69
2017-2018
78033.95
130417.33
1561.63
103362.15
2016-2017
85930.56
104724.53
758.07
91965.38
2015-2016
83975.61
92493.46
4363.41
85984.91
2014-2015
60990.15
89970.05
0 20000 40000 60000 80000 100000 120000 140000
Profit Total cost BEP Sales
56
INTERPRETATION
From the above table and chart it has been identified that, in the year 2017-2018 the
company has high sales and high profit. From the year 2013-2014 to 2014-2015 there was a
tendency of increasing the profit. But in 2015-2016 profit was decreased because of the
increase in the total cost. In the year 2018-2019 the BEP sales was lower than compared to
other years
TREND ANALYSIS
Trend analysis is a technique used in technical analysis that attempts to predict the future
stock price movements based on recently observed trend data. Trend analysis is based on the
idea that what has happened in the past gives traders an idea of what will happen in the
future. There are three main types of trends: short-, intermediate- and long-term.
TREND LINE EQUATION
Y=a+bX
a= ∑y b= ∑xy
n ∑x2
57
TREND ANALYSIS ON TOTAL COST
Table 4.15: Trend analysis on total cost
YEAR Y X= x-2017 X2 XY
2015 85984.91 -2 4 -171969.82
2016 91965.38 -1 1 -91965.38
2017 103362.15 0 0 0
2018 123973.69 1 1 123973.69
2019 120593.85 2 4 241187.7
∑Y= 525879.98 ∑X2= 10 ∑XY=101226.19
y = a + bx
a= ∑y b= ∑xy
n ∑x2
= 525879.98 = 101226.19
5 10
a= 105175.996 b= 10122.619
58
Trend equation: - y =105175.996 + 10122.619 X
2020 = 105175.996 + 10122.619 (3) = 135543.85
2021 = 05175.996 + 10122.619 (4) = 145666.47
2022 = 105175.996 + 10122.619 (5) = 155789.09
2023 = 105175.996 + 10122.619 (6) = 165911.71
2024 = 105175.996 + 10122.619 (7) = 176034.32
Chart 4.15: Trend analysis on total cost
PROJECTED TOTAL COST

200000
176034.32
180000
160000 165911.71
155789.09
140000 145666.47
123973.69
120000
135543.85 120593.85
100000 103362.15
91965.38
80000
85984.91
60000
40000
20000
0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
INTERPRETATION
It can be understandable that there is an increasing trend in the total costs of the company in
all years. The reason for the increasing trend of the total is that the company had increased
their production volume from year to year.
59
TREND ANALYSIS ON SALES
Table 4.16: Trend analysis on sales
2015 89970.05 -2 4 -179940.1
2016 92493.46 -1 1 -92493.46
2017 104724.53 0 0 0
2018 130417.33 1 1 130417.33
2019 120940.70 2 4 241881.4
∑Y= 538546.07 ∑X2= 10 ∑XY=99865.17
y = a + bx
a= ∑y b= ∑xy
n ∑x2
= 538546.07 = 99865.17
5 10
a= 107709.214 b= 9986.517
60
Trend equation: - y =107709.214 + 9986.517 X
2020 = 107709.214 + 9986.517 (3) = 137668.76
2021 = 107709.214 + 9986.517 (4) = 147655.28
2022 = 107709.214 + 9986.517 (5) = 157641.79
2023 = 107709.214 + 9986.517 (6) = 167628.31
2024 = 107709.214 + 9986.517 (7) = 177614.83
Chart 4.16: Trend analysis on sales
PROJECTED SALES
200000
180000 177614.83
167628.31
160000
157641.79
147655.28
140000 130417.33 137668.76
120000 120940.7
100000 104724.53
92493.46
80000 89970.05
60000
40000
20000
0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
INTERPRETATION
We can predict that there will be an increasing trend in the sales or revenue of the company
in coming years. Sales promotions activities generally create an immediate positive impact
on sales. The company had increased the production volume due to the high demand for the
products. It helps the company to improve the sales volume.
61
TREND ANALYSIS ON PROFIT
Table 4.17: Trend analysis on profit
2015 4363.41 -2 4 -8726.82
2016 758.07 -1 1 -758.07
2017 1561.63 0 0 0
2018 6962.71 1 1 6962.71
2019 942.61 2 4 1885.22
∑Y= 14588.43 ∑X2= 10 ∑XY= -636.96
y = a + bx
a= ∑y b= ∑xy
n ∑x2
= 14588.43 = -636.96
5 10
a = 2917.686 b= -63.969
62
Trend equation: - y =2917.686 + -63.969 X
2020 = 2917.686 + -63.969 (3) =2726.59
2021 = 2917.686 + -63.969 (4) =2662.90
2022 = 2917.686 + -63.969 (5) =2599.20
2023 = 2917.686 + -63.969 (6) =2535.51
2024 = 2917.686 + -63.969 (7) =2471.81
Chart 4.17: Trend analysis on profit
PROJECTED PROFIT
8000
7000 6962.71
6000
5000
4363.41
4000
3000 2726.59 2599.2

2535.51
2662.9
2000 2471.81
1561.63
1000 942.61
758.07
0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
INTERPRETATION
We can predict that the profit of the company will have an increasing trend in the future
even though the actual profit of the year 2015-2016 was decreased. But, the profit shows an
increasing trend from the very next year onwards. The exact reason is that the sales volume
of the company was increasing from year to year.
63
FINDINGS
 Fixed cost
From this study it is identified that there was a sudden increase of fixed cost in
the year 2017-2018. The expenses like salaries, rent, insurance etc. were
increasing year by year, that leads to increase the fixed cost of the company.
however, in the year 2015-2016 fixed cost is lower compared to other years.
 Variable cost
The variable cost of the company was increasing in every year due to the
production volume increased by the firm. A linear relation can be seen in
variable cost that it was increasing slightly from the year 2014-2015 to 2018-
2019. it found that, the variable cost is one of the main factor to determine the
profit of the company. Because, variable cost of the company was increasing in
every year but the profit of the company was fluctuating. The profit margin of
the company will be increased when the sales volume exceeds variable cost.
But, the profit margin will be deceased when the sales are close to variable cost.
 Total cost
The total cost of the company has the increasing tendency, which means the
company was increasing its production volume year by year.
 Contribution
There is a strong relationship between contribution and profit. Higher

contribution rate shows high rate of profit and the lower rate of contribution
shows lower rate of profit. on this study profit of the company was increasing
according to the increase in contribution margin. So the financial position of the
company is showing a positive sign. If the company wants to improve the
position of contribution margin ratio, it should try to reduce variable cost by
increasing sales volume.
64
 P/V ratio
P/V ratio and the profit have a strong relationship. When the P/V ratio is
high it indicates high profit margin. A low P/V ratio indicate low profit margin.
Here, P/V ratio was higher in the year 2017-2018 and the profit margin was also
higher when compared to other years. P/V ratio was lower in the year 2015-
2016 and the profit of the company was also lower compared to other years
 Break-even sales
From this study we can see that the highest BEP in sales was in the year 2018-
2019. The lowest BEP in sales was in the year 2014-2015. Increase in sales and
contribution is essential for stability of break-even point.
 Margin of safety
A high margin of safety is the sign of prosperity of the business and a low
margin would indicate high fixed cost. High margin of safety indicates high
profit and the low margin of safety indicates low profit .in the year 2018-2019
the KSE Ltd had low margin of safety comparing with previous year. Because of
that, in this year company get low profit and in 2014-2015 and 2016-2017 the
company had high margin of safety. Because of that in these year company get
high profit
 Trend analysis
 Trend analysis on total cost shows the increasing trend in future. In the last
five years also, there was an increasing trend in the total cost. This was
because of the increase in the production volume. In future also company
will increase its production volume due to high demand in the market.
 Trend analysis on total sales also showing the increasing trend in future.
Which means the demand for the products of KSE ltd is very high. Sales
promotion activities of the company made a positive impact among their
customers.
 Trend analysis on profit has the increasing trend due to the increasing trend
on the sales volume of the company than its total cost.
65
CONCLUSION
Cost volume Profit Analysis is very important for a manufacturing company for
improving the cost control efficiently. The study analyzed the cost volume profit and
its impacts on overall performance of KSE Ltd. In addition to this, studied the break-
even sales, margin of safety, current profitability of the company. The study also tries
to give suggestions about the future trend on cost, profit and sales.
From the study, it has been find out that cost reduction by increasing sales is the
only solution to increase the profit of the firm. The company had high growth in the
year 2014-2015 and 2017-2018. If they follow all the strategies, techniques and
policies used in those years for future, they can grow high. I hope that the company
will pay serious attention to my findings and suggestions. Company or management
enables to predict the profit as a wide range of volume and to determine the price of the
products very carefully. Through the analysis, the manager can easily take decision
showing in this report how utilization of available capacity will lead to increase in
profit.
66
SUGGESTIONS
 In this study, the level of profit volume ratio is in a variable manner. There is an
increase and decrease in profit volume ratio year by year. So the company has to
adopt some measures to control. It like increase the sales, reducing the total cost
especially variable cost, improve inventory control system etc.
 If the company calculate CVP analysis, it will help them to take various decisions
regarding make or buy product, pricing policy, change the method of production
or not etc.
 Separate cost control department should be established for the effective

management of cost.
 The company has good profitability in the year 2014-2015 and 2017-2018. If the
company applies all the strategies and policies followed in these years for future,
they can maintain and improve high level of profit and return.
 The company has to give an attention to reduce the unwanted variable cost. If the
company could able to control the variable cost, breakeven sales can be
reduced. By lowering your break-even volume, the company can increase their
return on investment and potentially pursue new, more profitable business models.
 The company has good margin of safety in 2014-2015 and 2017-2018. High
margin of safety is the sign of prosperity of the business. The company must
follow the policies and strategies of these year to achieve a good margin of safety
in future. One of the most important ways to improve the margin of
safety is to improve marginal contribution per unit, which is possible by
increasing the selling price (if market conditions are favorable) and lowering the
variable cost per unit of the product. and another way to improve margin of safety
is to increase sales volume and lowering break even output
 Profits, sales and costs should be analyzed by preparing budgeting or planning

with actual performance within a periodic term such as monthly, quarterly, semi
quarterly, yearly etc. which will help to improve the profit planning and
controlling of the company
67
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INTRODUCTION

GLOBAL FOOD PROCESSING INDUSTRY

311.71 mn tones of horticulture crop production in 2017-18

Egg production of around 95.2 bn during 2017-18

Total fish production was 12.6 mn tones during 2017-18

COST-VOLUME-PROFIT ANALYSIS; MEANING AND DEFINITION

The three elements included in CVP analysis are:

1) Cost, which implies the expenses concerned in manufacturing or selling a product or

ASSUMPTION OF CVP ANALYSIS

OBJECTIVES OF CVP ANALYSIS

 To forecast the profit accurately.

 Cost-volume-profit analysis is useful in profit planning, cost control and decision-

IMPORTANCE OF CVP ANALYSIS

 It is very difficult or impossible to separate costs into fixed and variable.

COMPONENTS OF CVP ANALYSIS

Sales = Variable costs + fixed cost ± Profit/Loss

OR Sales – Variable costs = fixed cost ± Profit/Loss

Contribution is a very important concept in marginal costing. It is the basis of decision-

Contribution(C) = Sales(S) – Variable Cost (VC)

PROFIT VOLUME RATIO

pv ratio= contribution / sales *100

Margin of safety = present Sales value – BEP Sales value

If it is to be expressed as a percentage of sales, the following formula is used:

Company name KSE Limited

Type Public company

Traded as BSE: 519421

Products Cattle feed, edible oil and dairy products

Key people A.P George (managing director)

Revenue Rs. 1,049.23crore

Net income Rs. 15.61core

Number of employees 810

To maintain market leadership.

To minimize the cost incurring in the production process.

To maintain the product quality

To be competitive in all markets.

To be compliment to all global quality standards

To maintain the top position in the industry.

OBJECTIVES OF THE COMPANY

GROWTH CHRONICLE OF KSE

Registered as a company named Kerala Solvent Extraction Limited

Cattle feed manufacturing begins in 3 party

Vegetable oil refining plant commissioned. KS SUPREME-sunflower oil launched. A new

Ice cream production unit commissioned at Thalayuthu,

lce-cream production units commissioned at Vedagiri, Kottayam.

They Started production in a leased plant at Kochuveli, Trivandrum

Feed Supplement named GORASAM introduced.

Windmill project inaugurated in Tamilnadu and production started on 25/03/2017

CHIEF GENERL CHIEF FINANCE OFFICER &

MANAGER COMPANY SECRETARY

Personal Marketing Production Quality Purchase

EDP General store

SL.NO NAME OF BOARD OF DIRECTOR POSITION

1 DR. JOSE PAUL THALIYATH CHAIRMAN

2 SRI. A P GEORGE MANAGING DIRECTOR

3 SRI. M P JACKSON EXECUTIVE DIRECTOR

4 SRI. P D ANTO DIRECTOR

5 DR. K.C VIJAYARAGHAVAN DIRECTOR

6 SRI. K PAUL FRANCIS DIRECTOR

7 SRI. T R REGHULAL DIRECTOR

8 SRI. JOESPH XAVIOUR INDEPENDENT DIRECTOR

9 MRS. SATHI A MENON INDEPENDENT DIRECTOR

10 SRI. PAUL JOHN INDEPENDENT DIRECTOR

11 SMT. MARYKUTTY VARGHESE INDEPENDENT DIRECTOR