A Study On Cost Volume Profit Analysis A

A STUDY ON
COST VOLUME PROFIT ANALYSIS AT
GASHA STEELS PVT LTD., KANJIKODE
PROJECT REPORT
Submitted by
GOPIKA G S
MZC17MBA19
Under the guidance of
Ms. JAINY RAJAN
(Asst. Prof., Mount Zion School of Business Management)
In partial fulfilment of the requirements
for awarding the degree of
MASTER OF BUSINESS ADMINISTRATION
of
A P J Abdul Kalam Technological University, Trivandrum
SCHOOL OF BUSINESS MANAGEMENT

MOUNT ZION COLLEGE OF ENGINEERING
KADAMMANITTA
APRIL 2019
A STUDY ON
COST VOLUME PROFIT ANALYSIS AT
GASHA STEELS PVT LTD., KANJIKODE
PROJECT REPORT
Submitted by
GOPIKA G S
MZC17MBA19
Under the guidance of
Ms. JAINY RAJAN
(Asst. Prof., Mount Zion School of Business Management)
In partial fulfilment of the requirements
for awarding the degree of
MASTER OF BUSINESS ADMINISTRATION
of
A P J Abdul Kalam Technological University, Trivandrum
SCHOOL OF BUSINESS MANAGEMENT

MOUNT ZION COLLEGE OF ENGINEERING
KADAMMANITTA
APRIL 2019
DECLARATION
I undersigned, hereby declare that project titled “A STUDY ON COST VOLUME

PROFIT ANALYSIS” submitted in partial fulfilment for the award of degree of Master of
Business Administration of A P J Abdul Kalam Technological University, Trivandrum is a
bonafide record of work done by me under the guidance of Ms. JAINY RAJAN, Asst. Prof.,
School of Business Management, Mount Zion College of Engineering, Kadammanitta. This
report has not previously formed the basis for the award of any degree, diploma, or similar title
of any University.
KADAMMANITTA GOPIKA G S
ACKNOWLEDGEMENT
Through this acknowledgement I express my sincere gratitude towards all those people
who helped me in this project, which has been a learning experience.
This space wouldn’t be enough to extend my warm gratitude towards my project guide
Ms. Jainy Rajan, Asst. Prof., for her efforts in coordinating with my work and guiding in right
direction.
I escalate a heartfelt regards to our Institution Director Prof. Dr. T.C Varghese for
giving me the essential hand in concluding this work.
It would be injustice to proceed without acknowledging those vital supports I received

from my beloved classmates and friends, without whom I would have been half done.
I also use this space to offer my sincere love to my parents and all others who had been
there, helping me walk through this work.
GOPIKA G S
INDEX
SL. No TOPICS PAGE No

1 INTRODUCTION 1-4
1.1 Background of the study 1
1.2 Need and Significance of
the study 2
1.3 Statement of problem 2
1.4 Objectives of the study 3
1.5 Scope of the study 3
1.6 Limitations of the study 3
1.7 Organization of the report 4
2 PROFILES 5-14
2.1 Industry Profile 5
2.2 Company Profile 13
2.3 Product Profile 14
3 LITERATURE 15-18
REVIEW
4 THEORETICAL
FRAMEWORK 19-25
5 RESEARCH
METHODOLOGY 26-30
5.1 Objective of Research 26
5.2 Research design 26
5.3 Data Collection 26
5.4 Data Analysis Techniques 27
5.5 Data Interpretation 30
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6 DATA ANALYSIS 31-45
6.1 Contribution 31
6.2 P/V Ratio 33
6.3 Break-even Point 35
6.4 Margin of Safety 37
6.5 Margin of safety ratio 39
6.6 Degree of operating 41
leverage
6.7 Regression 43
6.8 Correlation 45
7 FINDINGS 52-53
8 RECOMMENDATIONS 54
9 CONCLUSION 55
REFERENCES 56
APPENDIX 58-69
ii
LIST OF TABLES
TABLE No TITLE PAGE No.
6.1 Contribution 31
6.2 P/V Ratio 33
6.4 Margin of Safety 37

leverage
6.7 Regression 43
6.8.1 Correlation between 45

fixed assets and total
cost
fixed assets and sales
volume
fixed assets and profit
current assets and total
cost
current assets and sales
volume
iii
current assets and profit
iv
LIST OF CHARTS
FIGURE No TITLE PAGE No.
4.1 Break-even chart 22
6.1 Contribution 31
6.2 P/V Ratio 33
6.4 Margin of safety 37

leverage
v
Chapter 1
INTRODUCTION
A Study on Cost Volume Profit Analysis at Gasha Steels Pvt. Ltd.,Kanjikode
1.1 BACKGROUND OF THE STUDY

Some industries today are encountering problems raised by expansion through increased
sales and the introduction of new products. Many on the other hand are facing problem of
contraction due to the introduction of substitute materials, products. Whenever is the case, it is
vitally important that management should be in a clear position to plan for these changing
levels of activity. In order to solve the problem created by the above situation profit planning,
cost and decision making require an understanding of the characteristics of costs and their
behaviour at different operating levels. One of the most important tools develop by accountants
to assist management in meeting the challenges is the cost volume-profit-analysis (C.V.P)
otherwise known as the behaviour analysis.
The analytical technique used to study the behaviour of profit in response to changes in
volume, costs and price is called the cost-volume-profit analysis. It is the device used to
determine the usefulness of the profit planning process of a firm. Cost-volume-profit analysis
is a specific way of presenting and studying the inter-relationship between costs, volumes and
profits. It provides information to management in a most lucid and precise manner. It
establishes a relationship between revenues and costs with respect to volumes. It indicates the
level of sales at which costs and revenue are in equilibrium. This equilibrium point is
commonly known as Break-even point. The break-even point is the point of sales volume at
which total revenues is equal to total costs. It is a point of zero profit. It helps to find out the
profitability of a product, department of division to have better product mix, for profit planning
and to maximize the profit of a concern. Thus cost volume profit analysis furnishes the
complete picture of the profit structure.
The study is mainly conducted to analyse the relationship between cost, volume and profit
of the firm. The project aims to investigate the cost to be reduced to achieve a desired profit.
The present study is conducted to analyse the profit structure of GASHA STEELS PVT LTD.
The study has been done with the help of contribution, p/v ratio, break-even point, margin of
safety, margin of safety ratio, operating leverage, regression and correlation.
Mount Zion School of Business Management, Kadammanitta

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1.2NEED AND SIGNIFICANCE
The CVP analysis is very much useful to management as it provides an insight into the
effects and inter-relationship of factors, which influence the profits of the firm. The relationship
between cost, volume and profit makes up the profit structure of an enterprise. Hence, the CVP
relationship becomes essential for budgeting and profit planning. As a starting point in profit
planning, it helps to determine 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 objective it helps
management to find the most profitable combination of costs and volume.
A dynamic management, therefore, uses CVP analysis to predict and evaluate the
implications of its short run decisions about fixed costs, marginal costs, sales volume and
selling price for its profit plans on a continuous basis. CVP analyses are also useful for planning
and monitoring operations. Also, management needs an understanding of how revenues, costs
and volume interact in providing profits. All these analyses and information are provided by
cost-volume-profit analysis.
1.3STATEMENT OF THE PROBLEM
Profit is necessary for the survival and growth of every business enterprise. If the business
doesn't make profit it will not survive in the growing competitive world. So, in every business
in case of realisation of profit, cost of every product plays an important role, this can be
determined with the help of cost volume profit analysis. Every business should cross the no
profit no loss point to realise the profit. For this reason they should calculate the break-even
point. There exists close relationship between the cost, volume and profit. If volume is
increased, the cost per unit will decrease and profit per unit will increase. Thus, there is direct
relation between volume and profit but inverse relation between volume and cost. Analysis of
this relationship has become interesting and useful for the cost and management accountant.
This analysis may be applied for profit-planning, cost control, evaluation of performance and
decision making. It also helps in evaluating the effect of change in selling price on profitability
and helps management to find the most profitable combination of costs and volume. The
analysis helps to determine the sales volume at which the profit goal of the firm will be
achieved and also the sales volume required to avoid losses. It also helps in evaluating
performance of an organisation for the purpose of control.

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1.4OBJECTIVES OF THE STUDY

 To study the cost volume profit analysis and its impact on Gasha Steels Pvt Ltd.
 To find out the break-even point.
 To identify the margin of safety and margin of safety ratio of Gasha Steels Pvt Ltd.
 To understand the level of cost to be reduced to achieve a desired profit.
 To analyse the degree of operating leverage of Gasha Steels Pvt Ltd.
 To investigate the impact of fixed assets and current assets on cost, volume and profit.
1.5SCOPE OF THE STUDY
Cost-Volume-Profit (CVP) Analysis is a tool for planning and decision-making that

emphasises the interrelationships of cost, quantity sold, and price. It studies the effects of
changes in cost and volume on a company's profits. It can be used for analysing management
decisions such as setting selling prices, determining product-mix, and maximising the use of
production facilities. This analysis helps to forecast profit fairly and accurately as it is essential
to know the relationship between profits and costs on the one hand and volume on the other. It
is also useful in setting up flexible budget which indicates costs at various levels of activity.
We know that sales and variable costs tend to vary with the volume of output. It is necessary
to budget the volume first for establishing budgets for sales and variable costs. This analysis
assists in evaluation of performance for the purpose of control. In order to review profits
achieved and costs incurred, it is necessary to evaluate the effect on costs of changes in volume.
It also assists in formulating price policies by showing the effect of different price structures
on costs and profits. This analysis makes possible to attain target profit by locating the volume
of sales required for such profit and finally achieving such sales volume.
1.6 LIMITATIONS OF THE STUDY
1. The study has based on annual report furnished by the company and the accuracy of
the analysis depends on the accuracy of the available data.
2. The data are approximated whenever necessary.
3. Confidential data are not revealed.
4. The study is conducted by considering only last five year’s report so it is not possible
to find out the lifetime performance of the company.
5. Time limit is the major limitation of the study.

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1.7 ORGANISATION OF THE REPORT
This project is presented in eight chapters. The first chapter includes background of
the study, need and significance of the study, statement of the problem, objectives, scope and
limitations of the study.
The chapter 2 is profile. It includes industry profile, company profile and product
profile. It gives much more knowledge about the company.
In chapter 3 conceptualizes the literature review. Literature review is secondary

sources, and does not report new or original experiment work. This will give a brief description
about the topic.
The fourth chapter is theoretical framework. The theoretical framework is a collection

of interrelated concepts, like a theory and all concepts related to the topic. The information’s
were collected from various texts, books and from the internet.
The fifth chapter research methodology includes objectives, hypothesis, research

design, source of data, data analysis techniques.
In sixth chapter the analysis of the collected data were made by using tools such as
contribution, p/v ratio, break-even point, margin of safety, margin of safety ratio, operating
leverage, regression and correlation.
Chapter 7 conceptualizes the findings that arise from the data analysis. Here get findings
from contribution, p/v ratio, break-even point, margin of safety, margin of safety ratio,
operating leverage, regression and correlation.
Chapter 8 includes the suggestion from the side of the researcher the organization
should consider.
Finally, Chapter 9 presents the conclusion, scope for future research and implication
of the research to management theory and practice.

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Chapter 2
PROFILES
2.1 INDUSTRY PROFILE
Steel is one of the world’s most essential materials. It is fundamental to every aspect of
our lives, from infrastructure and transport to the tinplated steel can that preserves food. It is
one of the most important products of the modern world and is of strategic importance to any
industrial nation. From construction, industrial machinery and transportation to consumer
products, steel finds a wide variety of applications. It is also an industry with diverse
technologies based on the nature and extent of use of raw materials. Since the introduction of
Bessemer converter in 1856, an invention that ushered in the large scale production of steel,
the steel industry has come a long way in terms of technology, input material, quality of end
product, diversity in application of end product, and level of automation.
Steel is crucial to the development of any modern economy and is considered to be the
backbone of human civilization. The level of per capital consumption of steel is treated as an
important index of the level of socio economic development and living standards of the people
in any country. It is a product of large and technologically complex industry having strong
forward and backward linkages in terms of material flows and income generation. All major
industry economies are characterized by the existence of a strong steel industry and growth of
many of these has been largely shaped by the strength of their steel industries in their initial
stage of development. Steel industry was in the vanguard in the liberalization of the industrial
sector and has made rapid strides since then. The new Greenfield plant represents the latest in
technology. Output has increased, the industry has moved up in the value chain in the exports
have raised consequent to a greater integration with the economy. The new plants have also
bought about a greater regional dispersion easing the domestic supply position notably in the
western region. At the same time, the domestic steel industry faces new challenges. Some of
these relate to the trade barriers in the developed markets and certain structural problems of the
domestic industry notably due to the high cost of commissioning of new projects the domestic
demand too has not improved to significant level. The litmus test of steel industry will be to
surmount these difficulties and remain globally competitive.
History of Steel and Steel Industry
Steel was known in antiquity and was produced in bloomeries and crucibles. The
earliest known production of steel is seen in pieces of ironware excavated from an
archaeological site in Anatolia (Kaman-Kalehoyuk) and are nearly 4,000 years old, dating from
1800 BC. Horace identifies steel weapons such as the falcata in the Iberian Peninsula, while

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Noric steel was used by the Roman military. The reputation of Seric iron of South India (wootz
steel) grew considerably in the rest of the world. Metal production sites in Sri Lanka employed
wind furnaces driven by the monsoon winds, capable of producing high-carbon steel. Large-
scale Wootz steel production in Tamilakam using crucibles and carbon sources such as the
plant Avaram occurred by the sixth century BC, the pioneering precursor to modern steel
production and metallurgy. The Chinese of the Warring States period (403–221 BC) had
quench-hardened steel, while Chinese of the Han dynasty (202 BC – 220 AD) created steel by
melting together wrought iron with cast iron, gaining an ultimate product of a carbon-
intermediate steel by the 1st century AD.
Steel is an alloy composed of between 0.2% and 2.0% carbon, and the balance of iron.
From prehistory through the creation of the blast furnace, iron was produced from iron ore as
wrought iron, 99.82% - 100% Fe, and the process of making steel involved adding carbon to
the iron, usually via serendipity in the forge or via the cementation process. The introduction
of the blast furnace reversed the problem. A blast furnace produces pig iron, which is an alloy
of approximately 90% iron and 10% carbon. If the process of steelmaking begins with pig iron
instead of wrought iron, the challenge is to remove a sufficient amount of carbon to get it to
the 0.2 to 2 percent for steel.
Before about 1860 steel was an expensive product, made in small quantities and used
mostly for swords, tools and cutlery; all large metal structures were made of wrought or cast
iron. Steelmaking was centered in Sheffield, Britain, which supplied the European and the
American markets. The introduction of cheap steel was due to the Bessemer and the open hearth
processes, two technological advances made in England. In the Bessemer process, molten pig
iron is converted to steel by blowing air through it after it was removed from the furnace. The
air blast burned the carbon and silicon out of the pig iron, releasing heat and causing the
temperature of the molten metal to rise. Henry Bessemer demonstrated the process in 1856 and
had a successful operation going by 1864. By 1870 Bessemer steel was widely used for ship
plate. By the 1850s, the speed, weight, and quantity of railway traffic were limited by the
strength of the wrought iron rails in use. The solution was to turn to steel rails, which the
Bessemer process made competitive in price. Experience quickly proved steel had much greater
strength and durability and could handle the increasingly heavy and faster engines and cars.
After 1890 the Bessemer process was gradually supplanted by open-hearth steelmaking
and by the middle of the 20th century was no longer in use. The open-hearth process originated

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in the 1860s in Germany and France. The usual open-hearth process used pig iron, ore, and
scrap, and became known as the Siemens-Martin process. Its process allowed closer control
over the composition of the steel; also, a substantial quantity of scrap could be included in the
charge. The crucible process remained important for making high quality alloy steel into the
20th century. By 1900 the electric arc furnace was adapted to steelmaking and by the 1920s,
the falling cost of electricity allowed it to largely supplant the crucible process for specialty
steels.
GLOBAL SCENARIO
Steel, the recycled material is one of the top products in the manufacturing sector of the
world. The Asian countries have their respective dominance in the production of the steel all
over the world. India being one among the fastest growing economies of the world has been
considered as one of the potential global steel hub internationally. Over the years, particularly
after the adoption of the liberalization policies all over the world, the World steel industry is
growing very fast.
Steel Industry is a booming industry in the whole world. The increasing demand for it
was mainly generated by the development projects that has been going on along the world,
especially the infrastructural works and real estate projects that has been on the boom around
the developing countries. Steel Industry was till recently dominated by the United States of
America but this scenario is changing with a rapid pace with the Indian steel companies on an
acquisition spree. In the last one year, the world has seen two big M&A deals to take place:-
 The Mittal Steel, listed in Holland, has acquired the world's largest steel company called
Arcelor Steel to become the world's largest producer of Steel named Arcelor-Mittal.
 Tata Steel of India or TISCO (as listed in BSE) has acquired the world's fifth largest
steel company, Corus, with the highest ever stock price.
It has been observed that Steel Industry has grown tremendously in the last one and a
half decade with a strong financial condition. The increasing needs of steel by the developing
countries for its infrastructural projects has pushed the companies in this industry near their
operative capacity.
The most significant growth that can be seen in the Steel Industry has been observed
during the period 1960 to 1974 when the consumption of steel around the whole world doubled.
Between these years, the rate at which the Steel Industry grew has been recorded to be 5.5 %.
This roaring market saw a phase of deceleration from the year 1975 which continued till 1982.

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After this period, the continuous fall slowed down and again started its upward movement from
the early 1990s.
Steel Industry is becoming more and more competitive with every passing day. During
the period 1960s to late 1980s, the steel market used to be dominated by OECD (Organization
for Economic Cooperation and Development) countries. But with the fast emergence of
developing countries like China, India and South Korea in this sector has led to slipping market
share of OECD countries. The balance of trade line is also tilting towards these countries.
The main demand creators for Steel Industry are Automobile industry, Construction Industry,
Infrastructure Industry, Oil and Gas Industry, and Container Industry.
New innovations are also taking place in Steel Industry for cost minimization and at the same
time production maximization. Some of the cutting edge technologies that are being
implemented in this industry are thin-slab casting, making of steel through the use of electric
furnace, vacuum degassing, etc.
The Steel Industry has enough potential to grow at a much accelerated pace in the coming
future due to the continuity of the developmental projects around the world. This industry is at
present working near its productive capacity which needs to be increased with increasing
demand.
INDIAN SCENARIO
Indians were familiar with Steel from Vedic Age, more than 4000 years ago, Modern
steel making in India began with the setting of first blast furnace of India at Kulti in 1870 and
production began in 1874, which was set up by Bengal Iron Works. The initialization of Indian
Steel Industry was begun by Sir Jamshedji Tata in 1907. TISCO was established by Dorabji
Tata in 1907, later Mysore Iron and Steel Works (later renamed as Visvesvaraya Steel Works)
was established in year 1936, and in year 1939, the production of Steel was started in another
private company the Iron and Steel Company. TISCO launched a major modernisation and
expansion program in 1951. Prime Minister Jawaharlal Nehru, a believer in socialism, decided
that the technological revolution in India needed maximisation of steel production. He,
therefore, formed a government owned company, Hindustan Steel Limited (HSL) and set up
three steel plants in the 1950s. Thus, we can conclude that, at the time of independence, India
possessed a small but viable steel industry with an annual capacity of 1.3 million tonnes. In
1951, the finished steel production in India was 1.1 million tonnes.
At the time of independence, India had a small iron and steel industry with production
of about a million tons (MT). In due course, the government was mainly focusing on

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developing basic steel industry, where crude steel constituted a major part of the total steel
production. After Independence, Steel Industry became one of the major focuses in planned
economic development; it became one of the key sectors for public investment in first five year
plan itself. The phenomena started with the signing of agreements with Germany in 1953 to set
up a plant in Rourkela, Orissa. Later, in 1956, two more agreements with USSR (for Bhilai
Steel Plant) and UK (for Durgapur Steel Plant) had been signed. The successive capacity
augmentations at Bhilai, Durgapur and Rourkela helped the capacity to further rises to 2.5, 1.6
and 1.8 million tonnes per annum respectively by the end of 60s. Bokaro Steel Plant was set
up in 1973-74 with capacity of 2.5 million tonnes per annum. The major restructuring took
place in 1978, when Steel Authority of India Limited (SAIL), a Public Sector Enterprise came
into picture with an aggregated capacity of over 10 million tonnes per annum. The first on
shore public sector integrated steel plant was set up in 1992, the Rashtriya Ispat Nigam Limited
with a capacity of 3 million tonnes per annum. During the first two decades 1950-1960 and
1960-1970, the average annual growth of Steel Production exceeded 8 percent, from 1970-
1980 the growth came down to 5.7 percent and boosted up marginally for next decade to 6.4
percent per annum.
Before 1990s, the steel industry was by and large the exclusive safeguarded and
controlled by Public Sector, the TISCO being the only exception. The new economic policy
announced in 1191, better known as liberalisation phase, was no doubt a milestone in the
evolution of Indian Economy. But also, the liberalisation phase of Indian Economy, makes the
Iron and Steel Industry undergone a sea change. The process of economic reforms accompanied
in substantial liberalisation of policies and institutions governing trade, industry and finance.
Steel Industry has become one of the foremost sectors to be opened under the New Economic
policy. Substantial Private Investments flowed in with the consequent change indicating a new
beginning for the interplay of free market enterprises in the vital sector
Many public sector units were established and thus public sector had a dominant share
in the steel production till early 1990’s. Mostly private players were in downstream production
which was mainly producing finished steel using crude steel products. Capacity ceiling
measures were introduced. Till early 1990’s, when economic liberalization reforms were
introduced, tons; for additional capacity creation producers had to take license from the
government; foreign investment was restricted; and there were restrictions on imports as well
as exports.

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STATE SCENARIO
Kerala was one of the most industrially rich states in India during the fifties. The
presence of more than 50 small and medium steel manufacturing units in the state have been
contributing extensively for the development of the state. The industrial scenario in Kerala is
fast undergoing a renaissance and it is left for the steel manufacturers who are operational here
to seize the emerging opportunities of growth without detrimentally affecting the environment.
The private sector steel industry in Kerala is only a decade old. And this relatively young
industrial sector is serving the booming housing sector and is thereby contributing substantially
to the state's exchequer. With the state's housing sector all set to grow manifold this share is
bound to move upwards in the days to come.
Steel Manufactures Association of Kerala
Brought together all manufacturers of Kerala’s Secondary Steel Sector and formed the
Steel Manufacturers Association of Kerala which is the only association representing steel
industry in Kerala.
CURRENT SCENARIO
India was the world’s third-largest steel producer@ and third-largest steel consumer in
2017. The growth in the Indian steel sector has been driven by domestic availability of raw
materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a
major contributor to India’s manufacturing output. The Indian steel industry is very modern
with state-of-the-art steel mills. It has always strived for continuous modernisation and up-
gradation of older plants and higher energy efficiency levels. Indian steel industries are
classified into three categories such as major producers, main producers and secondary
producers.
Market Size
India’s finished steel consumption grew at a CAGR of 5.69 per cent during FY08-FY18
to reach 90.68 MT.
India’s crude steel and finished steel production increased to 102.34 MT and 104.98
MT in 2017-18, respectively.
In 2017-18, the country’s finished steel exports increased 17 per cent year-on-year to
9.62 million tonnes (MT), as compared to 8.24 MT in 2016-17. Exports and imports of finished
steel stood at 4.33 MT and 5.41 MT, during Apr-Nov 2018 (P).

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Investments
Steel industry and its associated mining and metallurgy sectors have seen a number of
major investments and developments in the recent past.
According to the data released by Department of Industrial Policy and Promotion
(DIPP), the Indian metallurgical industries attracted Foreign Direct Investments (FDI) to the
tune of US$ 10.84 billion in the period April 2000–June 2018.
Some of the major investments in the Indian steel industry are as follows:
 As of December 2018, Vedanta Group is going to set up a one million tonne capacity
steel plant in Jharkhand with an investment of Rs 22,000 crore (US$ 3.13 billion).
 JSW Steel will be looking to further enhance the capacity of its Vijayanagar plant from
13 MTPA to 18 MTPA. In June 2018, the company had announced plans to expand the
plant’s production capacity to 13 MTPA by 2020 with an investment of Rs 7,500 crore
(US$ 1.12 billion).
 Vedanta Star Ltd has outbid other companies to acquire Electrosteel Steels for US$
825.45 million.
 Tata Steel won the bid to acquire Bhushan Steel by offering a consideration of US$
5,461.60 million.
 JSW Steel has planned a US$ 4.14 billion capital expenditure programme to increase
its overall steel output capacity from 18 million tonnes to 23 million tonnes by 2020.
 Tata Steel has decided to increase the capacity of its Kalinganagar integrated steel plant
from 3 million tonnes to 8 million tonnes at an investment of US$ 3.64 billion.
Government Initiatives
Some of the other recent government initiatives in this sector are as follows:
 An export duty of 30 per cent has been levied on iron ore^ (lumps and fines) to ensure
supply to domestic steel industry.
 Government of India’s focus on infrastructure and restarting road projects is aiding the
boost in demand for steel. Also, further likely acceleration in rural economy and
infrastructure is expected to lead to growth in demand for steel.
 The Union Cabinet, Government of India has approved the National Steel Policy (NSP)
2017, as it seeks to create a globally competitive steel industry in India. NSP 2017
envisages 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steel
consumption by 2030-31.
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 The Ministry of Steel is facilitating setting up of an industry driven Steel Research and
Technology Mission of India (SRTMI) in association with the public and private sector
steel companies to spearhead research and development activities in the iron and steel
industry at an initial corpus of Rs 200 crore (US$ 30 million).
Road ahead
India is expected to overtake Japan to become the world's second largest steel producer
soon. The National Steel Policy, 2017, has envisaged 300 million tonnes of production capacity
by 2030-31.
In 2018, steel consumption of the country is expected to grow 5.7 per cent year-on-year
to 92.1 MT. Further, India is expected to surpass USA to become the world’s second largest
steel consumer in 2019.
Huge scope for growth is offered by India’s comparatively low per capita steel
consumption and the expected rise in consumption due to increased infrastructure construction
and the thriving automobile and railways sectors.

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2.2 COMPANY PROFILE
Gasha Steels Private Limited is a Private incorporated on 30 June 1995. It is classified

as Non-govt Company and is registered at Registrar of Companies, Ernakulam. It's a private
unlisted company and is classified as 'company limited by shares'. It is involved in Manufacture
of Basic Iron & Steel. This division with state of the art facilities produces high quality TMT
BARS, ANGLES, SQARES and all section of TOR steels. By adopting highest manufacturing
standards and using cutting edge technology, this manufacturing facility at Kanjicode, Kerala
produces TMT bars of top quality.
The company is engaged in the business of manufacturing TMT bars and wire rods of
various sizes and specifications according to the BIS standards (ISI) and needs of the customers
up to a capacity of 3000 tons per month on double shift basis. The rolled products are steel rods
(CTD/TMT) from 5mm to 16mm. these rolled products, namely 5, 6, 8,10,12,16 bars are
extensively used in buildings and other civil construction work in Kerala. Our rolling mill unit
is spread over 4.5 acres of land with adequate infrastructure facilities like power, transport and
communication facilities. GASHASTEELS steadily gross on its core ideals of quality
management, innovation and understanding customer’s needs, through continuous quality
improvements in steel products. GASHA STEELS were able to strength its position as a market
leader. The company’s products command a good premium over the market prices. Now
GASHA emerging as top one among the reputed rolling mills Kerala.
High quality thermo mechanically treated (TMT) bars are manufactured using the most
contemporary technology available worldwide and supervised by qualified metallurgist and
structural engineers. The products are BIS approved and meet all the standards of ISI and
marked ISI label. The salient features of the rolling mill include an extensive billet /ingots yard
forecast-wise (CHEMICAL) stacking of billets; this will help to get better consistency in TMT
bars. TMT steels bars are made using rapid quenching and tempering technology. It allows the
production of bars to be par with BIS and international standards. Hot rolled bars from steel
billets are subjected to PLC-controlled online thermo- mechanical treatment; the bars are made
pass through heat treatment over three successive stages.
 Quenching
 Self-tempering
 Normalizing (atmospheric cooling)

13
After quenching process, the bars are cut to desire sizes with the auto sharing machines and
transferred to the cooling bed wherein they are naturally cooled to get the defined structure.
Unlike conventional bars that are subjected to force cooling cold twisting. TMT bars have high
strength, greater yield and elongation, uniform micro structure, toughness, ductility and greater
weld ability. Hence they are equipped with the requisite properties like outer rib arrangements
as per the standard of BIS with CNC machines to PULLOUT test of BIS, also to provide
strengthen to concrete structures for enduring natural hazards. Further, our quality controllers
also test each product at both, procurement and delivering stages. This helps in avoiding any
consistency at the client ends.
OBJECTIVES OF THE COMPANY
 Improving customer satisfaction.
 Ensure sale and environment friendly process through active involvement.
 Create awareness amongst the employees.
 Encouraging our suppliers and contractors to adopt quality.
MISSION
 Identifying the needs of customers for product services and meeting customers’ needs
and supply.
 Ensuring that the quality product to build at every stage of operations.
 Retaining customer confidence and loyalty by providing quanlity product and services.
 Committed work force through continual enrichment of skill and knowledge.
2.3 PRODUCT PROFILE

1. Steel Rolling Mill
2. Steel Pipes
3. Stainless Steel Sheets
4. TMT Bars
5. TMT Bars 10mm
6. Steel Sheet Plates
7. Steel Ingots
8. Stainless Steel Pipes

14
Chapter 3
LITERATURE REVIEW
3. REVIEW OF LITERATURE
A literature review or narrative review is a type of review article. A literature review is
a scholarly paper, which includes the current knowledge including substantive findings, as well
as theoretical and methodological contributions to a particular topic. Literature reviews
are secondary sources, and do not report new or original experimental work. Most often
associated with academic-oriented literature, such reviews are found in academic journals, and
are not to be confused with book reviews that may also appear in the same publication.
Literature reviews are a basis for research in nearly every academic field. A narrow-scope
literature review may be included as part of a peer-reviewed journal article presenting new
research, serving to situate the current study within the body of the relevant literature and to
provide context for the reader. In such a case, the review usually precedes the methodology
and results sections of the work.
Dr. Ilhan Dalci (2005)1 conducted a study entitled on ‘Cost Volume Profit Analysis’
He has conducted ‘a study on Cost volume profit analysis’ with the objectives to
understand how traditional cost volume profit analysis leads managers to make wrong decision
and also to make 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.
Edna Gunderson (2009)2 conducted a study entitled on ‘Cost Volume Profit Analysis’
He has conducted "a study on Cost Volume Profit Analysis” with the objectives to
identify the essential elements of cost volume profit analysis and to show that the cost volume
profit analysis helps in decision making. Break-even point and contribution have been used to

15
analyze 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.
Dr. R. Kavitha (2018)3 conducted a study entitled on ‘Cost Volume Profit Analysis’
She has taken Salem Steel Authority of India Limited, Tamilnadu which is one among
the steel industries in India to measure the profitability position through BEP analysis. In order
to fulfil the objectives, the researcher has taken ten years financial data from the period of
2005-2006 to 2014- 2015 in the form of secondary data. From the results, a PV ratio from
2005-06 to 2014-15 are gradually increased and also breakeven point shows a satisfactory level
with respect to all the level of sales volume in all ten years. Therefore, it is concluded that CVP
analysis is used to escalate production capacity and utilize advanced technology to reduce cost
of production and wage cost for the purpose hiking the profitability, volume, not only against
the investment, but also from the investor’s return point of view. KEY WORDS - Break Even
Point, Cost, Margin of Safety Profit, Sales.
Sadiq Rabiu Abdullahi, Bello Abiodun Sulaimon, Ibrahim Salihu Mukhtar, Muhammed
Hardy Musa (2017)4 conducted a study entitled on ‘Cost-Volume-Profit Analysis as a
Management Tool for Decision Making In Small Business Enterprise’
This study aimed to figure out if small business enterprises utilize cost volume profit
(CVP) analysis as a management tool for decision-making process in Bayero University Kano,
with a view to shed light on the reality of the use of CVP analysis as a decision-making tool in
small business enterprises. The study population is made up of the entire small business
enterprises within Bayero University, Kano. Primary source of data were utilized using
structured questionnaires. The hypotheses were tested using Mann-Whitney U test and Pearson
correlation coefficient. A very weak relationship (0.02) was recorded, it was discovered that
there is no statistical significant difference between having the knowledge of a management
accounting tools and its application. The study concludes that small business enterprises utilize
CVP ignorantly and it is recommended that CVP analysis and other management accounting
tools be introduced to small business enterprises so that productivity can be improved.

16
B Navaneetha, K Punitha, Raichu Mercy Joseph, S Rashmi, T Sai Aishwariyaa (2017)5

conducted a study entitled on ‘An analysis of cost volume profit of Nestlé limited’
Cost volume profit analysis scrutinizes the relationship between changes in activity and
changes in total sales revenue, cost and profit. It may provide very useful information
particularly for a business that is commencing operations or facing difficult economic
conditions. Cost volume profit analysis determines how many units of a product must be sold
so that the business reaches its breakeven point. It allows the business to consider the effect on
profits of various changes in operating costs and revenues such as a reduction in selling price
or an increase in fixed cost to determine the sales volume required to achieve a specific profit
level and to establish the amount by which the current sales level can decrease before losses
are incurred. Cost volume profit analysis examines the behaviour of changes in the output level,
selling price, variable cost per unit and fixed cost of a product or service. The cost-volume
profit analysis may be deter. The purpose of this article is to illustrate how the cost of capital
may be incorporated into CVP analysis. It develops the mathematical relationship between a
product's discounted operating income after taxes less the cost of capital and the product's price,
costs, invested funds, and sales quantity. From this relationship, the sales quantity needed to
earn a rate of return equal to the firm's cost of capital may be estimated. The main uses of cost-
volume-profit analysis are in performance measurement, control, stock valuation and in the
establishment of selling prices. Cost-volume-profit analysis is a target cost which should be
attained. It states that cost-volume profit analysis are predetermined costs, target costs or
carefully pre planned costs which management endeavours to achieve with a view to
establishing or attaining maximum efficiency in the production process.
Seung Hwan Kim (2015)6 conducted a study entitled on ‘Cost-Volume-Profit Analysis for
a Multi-Product Company’
Cost-volume-profit (CVP) analysis is one of the most common-and-important chapters

in an introductory managerial accounting course. While a CVP analysis for a single-product
company is relatively easier to be illustrated, the CVP analysis for a multi-product company
necessarily takes extra steps to illustrate. For the case of a multi-product company having a
sales mix ratio among their products, this study developed a micro approach to the handling of
decimals, if appearing, when the company finds their break-even point and target profit point.
This study exemplifies how the developed approach gets to closer answers to a break-even

17
point and a target profit point than an existing approach. Cost-volume profit analysis to be a
commonly used tool providing management with useful information for decision making. Cost
volume-profit analysis will also be employed on making vital and reasonable decision when a
firm is faced with managerial problems which have cost volume and profit implications.
Robert Kee (2007)7 conducted a study entitled on ‘Cost-Volume Profit Analysis

Incorporating the Cost of capital’
The purpose of this article is to illustrate how the cost of capital may be incorporated
into CVP analysis. It develops the mathematical relationship between a product's discounted
operating income after taxes less the cost of capital and the product's price, costs, invested
funds, and sales quantity. From this relationship, the sales quantity needed to earn a rate of
return equal to the firm's cost of capital may be estimated.
Cost-volume-profit (CVP) analysis is a mathematical representation of the economics

of producing a product. The relationships between a product's revenue and cost functions
expressed within the CVP model are used to evaluate the financial implications of a wide range
of strategic and operational decisions. For example, CVP analysis is employed to assess the
financial implications of product mix, pricing, and product and process improvement decisions.
Perhaps equally important, CVP analysis facilitates measuring the sensitivity of a product's
profitability to variations in one or more of its underlying parameters. Finally, CVP analysis
may be used to determine the trade-offs in profitability and risk from alternative product design
and production possibilities. In effect, CVP is a quantitative model for developing much of the
financial information relevant for evaluating resource allocation decisions.

18
Chapter 4
THEORETICAL FRAMEWORK
4. THEORETICAL FRAMEWORK OF THE STUDY
Cost volume profit analysis scrutinizes the relationship between changes in activity and
changes in total sales revenue, cost and profit. It may provide very useful information
particularly for a business that is commencing operations or facing difficult economic
conditions. Cost volume profit analysis determines how many units of a product must be sold
so that the business reaches its break-even point. It allows the business to consider the effect
on profits of various changes in operating costs and revenues such as a reduction in selling
price or an increase in fixed cost to determine the sales volume required to achieve a specific
profit level and to establish the amount by which the current sales level can decrease before
losses are incurred. The three elements involved in cost volume profit analysis are,
 Cost - the expenses involved in producing or selling a product of service.
 Volume - the number of units produced or the amount of service sold.
 Profit - the difference between the selling price of a product or service and the cost to produce
or provide it
Cost volume profit (CVP) analysis generally defined as a planning tool by which
managers can evaluate the effect of a change(s) in price, volume, variable cost or fixed coat on
profit. Additionally, CVP analysis is the basis for understanding contribution margin pricing,
related short-run decisions, target costing and transfer pricing. In the marginal costing varies
directly with the volume of production or output. On the other hand, fixed cost remains
unaltered regardless of the volume of output. In net effects, if the volume is changed, variable
cost varies as per the changes in volume. In this case, selling price remains fixed, fixed price
remains fixed and then there is a change in profit. Cost Volume Profit Analysis is a logical
extension of marginal costing. It is based on the same principles of classifying the operating
expenses into fixed and variable. Now-a-days it has become a powerful instrument in the hands
of policy makers to maximise profit. Apart from profit projection, the concept of cost volume
profit is relevant the short run. The relationship among cost, revenue and profit at different
levels may be expressed in graphs such as breakeven charts, profit volume graphs or in various
statement forms. Earnings of maximum profit is the ultimate goal of almost all business
undertakings. The most important factors influencing the earning of profit is the level of
production, i.e. volume of production.

19
Profit depends on a large number of factors, most important of which are the cost of
manufacturing and the volume of sales, volume of sales depends upon the volume of production
and market forces which turns in related to costs. Management has no control over market. In
order to achieve certain level of profitability, it has to exercise control and management of
costs, mainly variable cost. This is because fixed cost is a non-controllable cost. It helps to find
out the profitability of a product, department of division to have better product mix, for profit
planning and to maximize the profit of a concern. These decisions can include such crucial
areas as pricing policies, product mixes, market expansion or contractions, outsourcing
contracts, idle plant usage, discretionary expenses planning and a variety of other important
considerations in the planning process. Given the broad range of context in which cost volume
profit can be used. In other words, it helps in locating the level of output which evenly breaks
the cost and revenues used in its broader sense, it means that system of analysis which
determine profit, cost and sales at different levels of output. The cost volume profit analysis
establishes the relationship of cost, volume and profit. Thus cost volume profit furnishes the
complete picture of the profit structure. In other word, cost volume profit is a management
accounting tool that expresses relationship among sales, volume, cost and profit. The cost
volume analysis uses the techniques of breakeven analysis, operating leverage, margin of safety
and effect of changes on sales and contribution on margin and net operating income. The level
of sales needed to achieve desired target profit, in order to predict changes in net operating
income.
CVP analysis
Cost Volume Profit (CVP analysis), also commonly referred to as Break Even Analysis,
is a way for companies to determine how changes in costs and sales volume affect a
company’s profit. With this information, companies can better understand overall performance
by looking at how many units must be sold to break even or to reach a certain profit threshold
or the margin of safety. The CVP analysis classifies all costs as either fixed or variable. Fixed
costs are expenses that don’t fluctuate directly with the volume of units produced.
These costs effectively remain constant. Variable costs, on the other hand, change with the
levels of production. These costs include materials and labour that go into each unit produced.

20
The objectives of cost-volume profit analysis are:
i) To forecast profits accurately.

ii) To help to set up flexible budgets.
iii) To help in performance evaluation for purposes of control.
iv) To formulate proper pricing policy.
v) To know the overheads to be charged to production at various levels.
The factors which are usually involved in this analysis are:
a) Selling price
b) Sales volume
c) Sales mix
d) Variable cost per unit
e) Total fixed cost
Benefits of Cost-Volume Analysis (CVP)
1. CVP analysis provides a clear and simple understanding of the level of sales which are
required for a business to break even (No profit No loss), level of sales required to achieve
targeted Profit.
2. CVP analysis helps management to understand the different cost at different levels of
production/sales volume. CVP analysis helps decision makers in forecasting cost and
profit on account of change in volume.
3. Effects of changes in fixed and variable cost help management decide the optimum level
of production
Break Even Chart
The chart depicts the interplay of three elements viz., cost, volume, and profits. The chart is a
graph which at a glance provide information of fixed costs, variable costs, production / sales
achieved profits etc., and also the trends in each one of them. The conventional graph is as
follows:
This is a simple break even chart. The procedure for drawing the chart is as follows:

21
Fig 4.1: break-even chart
1) Take X - axis as the volume of sales or capacity or production.

2) Take Y – axis as the costs or revenue.
3) Having known at ‘0’ level of activity the same fixed cost is incurred, the fixed cost line
drawn parallel to the X – axis.
4) At ‘0’ level of activity, the total cost is equal to fixed cost. Therefore the total cost line
starts from the point where the fixed cost line meets the Y – axis.
5) Next plot the sales line starting from ‘0 ’.
6) The meeting point of the sales and the total cost line is the Break Even Point. It is also
called Break Even Point because at this point there is no profit and loss either.
Angle of Incidence
This is the angle of intersection between the sales line and the total cost line. The larger
the angle the greater is the profit or loss, as the case may be.

22
Margin of Safety
This is the difference between the actual sales level and the break even sales. It
represents the “cushion” for the company. The larger the distance between the break even sales
volume and the actual sales volume, more comfortably the company can afford to allow the
fall in sales without the danger of incurring losses. If the margin of safety is low i.e., if the
distance between the actual sales line and the break even sales line is too short, even a small
fall in the sales volume will drive the company into the loss area.
Elements of CVP analysis
a. Contribution
b. P/V ratio
c. Break-even point
d. Margin of safety
e. Margin of safety ratio
a. Contribution
The contribution margin ratio is the difference between a company's sales and
variable expenses, expressed as a percentage. The total margin generated by an entity
represents the total earnings available to pay for fixed expenses and generate a profit.
Contribution = Sales −Variable costs
b. P/V ratio
P/V Ratio (Profit Volume Ratio) is the measurement of the rate of change of profit due
to change in volume of sales. It is one of the most important ratio for computing profitability
as it indicates contribution with respect of sales.
Contribution
P/V ratio = ×100
Sales

23
c. Break-even point
The break-even point can be defined as a point where total costs (expenses) and total
sales (revenue) are equal. Break-even point can be described as a point where there is no net
profit or loss.
Fixed cost ×Sales

Break-even point =
Contribution
d. Margin of safety
The margin of safety is a financial ratio that measures the amount of sales that exceed
the break-even point. In other words, this is the revenue earned after the company or department
pays all of its fixed and variable costs associated with producing the goods or services.
Margin of safety = Sales –Break even sales
Margin of safety is the extent over which the budgeted or actual sales exceed the break-
even sales. It denotes the extent to which the sales can drop before a company starts incurring
losses. Also, the higher the margin of safety is, the lower is the risk of sales breaking even and
higher is the profit. This version of the margin of safety equation expresses the buffer zone in
terms of a percentage of sales.
Margin of safety
Margin of safety ratio = ×100
Sales
In general, cost volume profit analysis is designed to show how changes in product
margins, prices, and unit volumes impact the profitability of a business. Cost volume profit
analysis is one of the fundamental financial analysis tools for ascertaining the underlying
profitability of a business. The components of the analysis are as follows:
Activity level: This is the total number of units sold in the measurement period.
Price per unit: This is the average price per unit sold including any sales, discounts and
allowances that may reduce the gross price. The price per unit can vary substantially from

24
period to period based on changes in the mix of products and services, these changes may
be caused by old product terminations, new product introductions, product promotions and
the seasonality of sales for certain items.
Variable cost per unit: This is the totally variable cost per unit sold, which is usually just
the amount of direct materials and the sales commission associated with a unit sale. Nearly
all other expenses do not vary with sales volume, and so are considered fixed costs.
Total fixed cost: This is the total fixed cost of the business within the measurement period.
This figure tends to be relatively steady from period to period, unless there is a step
cost transition where management has elected to incur an entirely new cost in response to
a change in activity level.

25
Chapter 5
RESEARCH METHODOLOGY
5. RESEARCH METHODOLOGY
Research methodology is a way to solve the problem systematically. This study is

analytical type of research. The nature of data collected is secondary. The main sources of data
are from Balance sheet and Annual Report. The period of study covered five years from 2013-
2014to 2017-2018.Techniques used for analysis are contribution, p/v ratio, break-even point,
margin of safety, operating leverage, regression and correlation.
5.1 OBJECTIVE OF THE RESEARCH
Cost volume profit analysis is developed to understand the relationship between cost,
volume and profit. The selling price affects the volume of sales, the volume of sales directly
affects the volume of production and the volume of production in turn influences cost. This
analysis is used to determine how changes in costs and volume affect a company's operating
income and net income. The present study focuses on the cost volume profit analysis of Gasha
Steels Pvt Ltd.
5.2 RESEARCH DESIGN
A research design is purely and simply the framework for the study that guides the
collection and analysis of data. It is a blue print that is followed in completing a study. There
are 3 types of research design.
 Analytical research design

 Descriptive research design
In this research work the researcher selected the Descriptive research design.
5.3 DATA COLLECTION
5.3.1 Primary data
Primary data are those, which are collected for the first time and are original in nature
and character. So the primary data collection is not applicable to this study.

26
5.3.2 Secondary data
Secondary data are those which have already been collected by someone and which are
passed through the statistical machine at least once. Mainly the secondary data are used for the
study i.e. annual report, company manuals and other relevant documents. The study also used
the literature provided by the organization. In addition, another source of data was through
reference to the library and review of different articles and relevant previous studies and from
company website also, this study is a descriptive financial analysis measure.
The major source of secondary data are
 Balance sheet of the company for the last 5 years.

 Profit and Loss account of the company for the last 5 years.
 Website of the company and other relevant websites.
 Annual report of the company for the last 5 years.
5.4 DATA ANALYSIS TECHNIQUES
a. Contribution
b. P/V ratio
c. Break-even point
d. Margin of safety
f. Operating leverage
g. Regression
h. Correlation
a. Contribution

27
b. P/V ratio
Contribution
P/V ratio = ×100
Sales
c. Break-even point
profit or loss.
Fixed cost ×Sales

Break-even point =
Contribution
d. Margin of safety
pays all of its fixed and variable costs associated with producing the goods or services.
Margin of safety
Sales

28
f. Degree of operating leverage
The degree of operating leverage (DOL) is a financial ratio that measures the sensitivity
of a company’s operating income to its sales. This financial metric shows how a change in the
company’s sales will affect its operating income.
Contribution
Operating leverage =
Operating profit
g. Regression
Regression is a statistical measurement used in finance, investing and other disciplines

that attempts to determine the strength of the relationship between one dependent variable
(usually denoted by ‘y’) and a series of other changing variables (known as independent
variables).
x = c + dy
∑x ∑y
c= -d
n n
nΣxy – (ΣxΣy)
d=
n∑y2 −(Σy)2
h. Correlation
Karl Pearson’s coefficient of correlation
Karl Pearson, the great biologist and statistician has given a formula for calculation of
coefficient of correlation. Correlation coefficients are used in statistics to measure how strong
a relationship is between two variables. There are several types of correlation coefficient:
pearsons correlation is a correlation coefficient commonly used in linear regression. If you are
starting out in statistics, you will probably learn about pearsons r first. In fact, when anyone
refers to the correlation coefficient, they are usually talking about pearsons

29
nΣxy − (ΣxΣy)
r=
√[nΣ𝑥 2 − (Σx)2 ][nΣ𝑦 2 − (Σy)2 ]
5.5 DATA INTERPRETATIONS
Data interpretation can be defined as applying statistical procedure to analyze specific

facts from a study or body of research. Data interpretation question are a part of many
standardized tests. The ability to interpret data presented to labels, graphs and charts is a
common requirement to many management and professional jobs. Here data is presented either
in the form of a table or a bar chart or a pie chart or a line graph or as a combination of one of
their formats. Data analysis involves working to uncover pattern and trends in data sets and
data interpretation involves explaining those patterns and trend, data interpretation is the
process of making sense of numerical data that has been collateral analyzed and presented.

30
Chapter 6
DATA ANALYSIS
6.1 CONTRIBUTION
Table 6.1 Contribution of Gasha Steels Pvt Ltd for the period from 2013-14 to
2017-2018 (in Rs.)
Year Sales Variable cost Contribution
2013-14 1299968443 1262957022 37011421
2014-15 1733517934 1608218487 125299447
2015-16 1429425418 1312444221 116981197
2016-17 1588919388 1464691589 124227799
2017-18 2231599239 2120495122 111104117
(Source: Annual accounts of the company)

Fig 6.1 Contribution of Gasha Steels Pvt Ltd for the period from 2013-14 to
2017-2018
140000000
120000000
100000000
Contribution
80000000
60000000
40000000
20000000
0
2013-14 2014-15 2015-16 2016-17 2017-18
Year

31
INTERPRETATIONS
The above graph shows contribution for various years. Generally, the amount of
contribution margin should be sufficient to cover all fixed costs as well as to contribute towards
profit. Here the contribution has been fluctuating over the years. During the period 2013-14 the
contribution was Rs. 37011421 and it goes up to Rs. 125299447 in the year 2014-15. After it
declined to Rs. 116981197 during the period 2015-16 from there it increased to Rs. 124227799
during the year 2016-17 and again it declined in the year 2017-18 to Rs. 111104117.

32
6.2 P/V RATIO
Contribution
P/V ratio = ×100
Sales
Table 6.2 P/V ratio of Gasha Steels Pvt Ltd for the period from 2013-14 to
2017-2018 (in Rs.)
Year Contribution Sales P/V ratio
2013-14 37011421 1299968443 2.84
2014-15 125299447 1733517934 7.22
2015-16 116981197 1429425418 8.18
2016-17 124227799 1588919388 7.81
2017-18 111104117 2231599239 4.97

Fig 6.2 P/V ratio of Gasha Steels Pvt Ltd for the period from 2013-14 to
2017-2018
9
8
7
6
P/V ratio
5
4
3
2
1
0
2013-14 2014-15 2015-16 2016-17 2017-18
Year

33
INTERPRETATIONS
The above graph shows the P/V ratio for the last five years. From the above graph it is
clear that the company is having a low P/V ratio in all the five years. From the table we can see
that among the five years the company is having a very low P/V ratio in the year 2013-14 of
about 2.84% and it increased to 7.22% during the period 2014-15 and further increased to
8.18% in 2015-16. And it declined in the year 2016-17 to 7.81% and further declined to 4.97%
during 2017-18.

34
6.3 BREAK-EVEN POINT
profit or loss.
Fixed cost ×Sales

Break-even point =
Contribution
Table 6.3 Break-even point of Gasha Steels Pvt Ltd for the period from 2013-14 to
2017-2018 (in Rs.)
Year Fixed cost Sales Contribution Break-even

point
2013-14 33973277 1299968443 37011421 1193258373
2014-15 71932520 1733517934 125299447 995186463
2015-16 88721499 1429425418 116981197 1084112396
2016-17 102405716 1588919388 124227799 1309806894
2017-18 81230261 2231599239 111104117 1631563200

Fig 6.3 Break-even point of Gasha Steels Pvt Ltd for the period from 2013-14 to
2017-2018
1.8E+09
1.6E+09
1.4E+09
1.2E+09
Break-even point
1E+09
800000000
600000000
400000000
200000000
0
2013-14 2014-15 2015-16 2016-17 2017-18
Year

35
INTERPRETATIONS
Break-even point for the period 2013-14 to 2017-18 is depicted in the above graph.
Increase in the break-even point will lead to the decrease in the contribution and hence
adversely affect the profitability of the company. Here we can see that the break-even point
during the period 2013-14 was about Rs. 1193258373 and it declined to Rs. 995186463 in the
year 2014-15. After it shows a drastic increase in the break-even point in the coming years. It
shows a break-even point of about Rs. 1084112396 in the year 2015-16, Rs. 1309806894 in
the year 2016-17 and Rs. 1631563200 in the year 2017-18.

36
6.4 MARGIN OF SAFETY
pays all of its fixed and variable costs associated with producing the goods or services. .
Table 6.4 Margin of safety of Gasha Steels Pvt Ltd for the period from 2013-14 to
2017-2018 (in Rs.)
Year Sales Break-even sales Margin of safety
2013-14 1299968443 1193258373 106710070
2014-15 1733517934 995186463 738331471
2015-16 1429425418 1084112396 345313022
2016-17 1588919388 1309806894 279112494
2017-18 2231599239 1631563200 600036039

Fig 6.4 Margin of safety of Gasha Steels Pvt Ltd for the period from 2013-14 to
2017-2018
Margin of safety
800000000
700000000
600000000
Margin of safety
500000000
400000000
300000000
200000000
100000000
0
2013-14 2014-15 2015-16 2016-17 2017-18
Year

37
INTERPRETATIONS
The above graph shows the margin of safety for last five years. An increase in the break-
even sales leads to a decrease in the margin of safety and which will affect the profit margin.
The company is having a low margin of safety in all the five years. Among the five years the
least margin of safety is in the year 2013-14 of about Rs. 106710070. And over the coming
years it shows a fluctuating margin of safety. In 2014-15 it increased to Rs. 738331471 and it
declined in 2015-16 to Rs. 345313022 and further declined to Rs. 279112494 in 2016-17. In
2017-18 it goes up to Rs. 600036039.

38
6.5 MARGIN OF SAFETY RATIO

Margin of safety
Sales
Table 6.5 Margin of safety ratio of Gasha Steels Pvt Ltd for the period from 2013-
14 to 2017-2018 (in Rs.)
Year Margin of safety Sales Margin of safety

ratio
2013-14 106710070 1299968443 8.20%
2014-15 738331471 1733517934 42.59%
2015-16 345313022 1429425418 24.15%
2016-17 279112494 1588919388 17.56%
2017-18 600036039 2231599239 26.88%

Fig 6.5 Margin of safety ratio of Gasha Steels Pvt Ltd for the period from 2013-14
to 2017-2018
45.00%
40.00%
35.00%
Margin of safety ratio
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
2013-14 2014-15 2015-16 2016-17 2017-18
Year

39
INTERPRETATIONS
The above graph shows the margin of safety ratio for last five years. The margin of
safety ratio shows the extent to which the sales can drop before a company starts incurring
losses in percentage. In 2013-14 the company is having a margin of safety ratio of about 8.20%
only. It shows an increase up to 42.59% in the year 2014-15 and it declined in the coming two
years. During the period 2015-16 the ratio was about 24.15% and during 2016-17 it was about
17.56%. And in 2017-18 it increases to 26.88%.

40
6.6 DEGREE OF OPERATING LEVERAGE
The degree of operating leverage (DOL) is a financial ratio that measures the sensitivity
of a company’s operating income to its sales. This financial metric shows how a change in the
company’s sales will affect its operating income.
Contribution
Operating leverage =
Operating profit
Table 6.6 Operating leverage of Gasha Steels Pvt Ltd for the period from 2013-14
to 2017-2018 (in Rs.)
2013-14 2014-15 2015-16 2016-17 2017-18
Sales 1299968443 1733517934 1429425418 1588919388 2231599239
Variable 1262957022 1608218487 1312444221 1464691589 2120495122

cost
Fixed cost 33973277 71932520 88721499 102405716 81230261
Sales – 37011421 125299447 116981197 124227799 111104117

variable
cost
Sales – 3038144 53366927 28259698 21822083 29873856
variable
cost – fixed
cost
Operating 12.18 2.34 4.13 5.69 3.71
leverage

41
Fig 6.6 Operating leverage of Gasha Steels Pvt Ltd for the period from 2013-14
to 2017-2018
14
12
10
Operating leverage
0
2013-14 2014-15 2015-16 2016-17 2017-18
Year
INTERPRETATIONS
The above graph shows the degree of operating leverage for various years. Here the
company is having a low DOL which indicates that the company’s variable costs are larger
than its fixed costs. During the period 2013-14 the company is having the degree of operating
leverage of about 12.18%, it declined to 2.34% in the year 2014-15. During the period 2015-
16 and 2016-17 the DOL slightly increased to 4.13% and 5.69% respectively. Again it declined
in the year 2017-18 to 3.71%.

42
6.7 REGRESSION
Regression is a statistical measurement used in finance, investing and other disciplines

that attempts to determine the strength of the relationship between one dependent variable
(usually denoted by ‘y’) and a series of other changing variables (known as independent
variables).
x = c + dy
∑x ∑y
c= -d
n n
nΣxy – (ΣxΣy)
d=
n∑y2 −(Σy)2
6.7 Regression between total cost and profit (in Rs.)
Total Cost (x) Profit (y) y2 xy

1296930299 3038144 9.23×1012 3.94×1015
1680151007 53366927 2.84×1015 8.96×1016
1401165720 28259698 7.98×1014 3.95×1016
1567097305 21822083 4.76×1014 3.41×1016
2201725383 29873856 8.92×1014 6.57×1016
 ∑x = 8147069714
 ∑y = 136360708
 ∑y2 = 5.01×1015
 ∑xy = 2.32×1017
nΣxy – (ΣxΣy)
d=
n∑y2 −(Σy)2
5×2.32×1017 – (8147069714×136360708)
d=
5×5.01×1015 −(136360708)2
= 7.63

43
∑x ∑y
c= -d
n n
8147069714 136360708
c= – 7.63
5 5
= 1421327503
In 2020, if they want to achieve operating profit
y = 40000000
x = c + dy
= 1421327503 + 7.63×40000000
= 1726527503
INTERPRETATIONS
From the above, we can see that if the company want to achieve an operating profit of
Rs. 40000000 in 2020, they want to reduce the cost of sales by Rs. 1726527503.

44
6.8 CORRELATION
Karl Pearson’s coefficient of correlation
Karl Pearson, the great biologist and statistician has given a formula for calculation of
coefficient of correlation. Correlation coefficients are used in statistics to measure how strong
a relationship is between two variables. There are several types of correlation coefficient:
pearsons correlation is a correlation coefficient commonly used in linear regression. If you are
starting out in statistics, you will probably learn about pearsons R first. In fact, when anyone
refers to the correlation coefficient, they are usually talking about pearsons
nΣxy − (ΣxΣy)
r=
√[nΣ𝑥 2 − (Σx)2 ][nΣ𝑦 2 − (Σy)2 ]
6.8.1 Correlation between fixed asset and cost
Fixed asset (x) Total Cost (y) x2 y2 xy

112312211 1296930299 1.26×1016 1.68×1018 1.45×1017
117076471 1680151007 1.37×1016 2.82×1018 1.96×1017
121722288 1401165720 1.48×1016 1.96×1018 1.70×1017
119930731 1567097305 1.43×1016 2.45×1018 1.87×1017
122398015 2201725383 1.49×1016 4.84×1018 2.69×1017
 ∑x = 593439716
 ∑y = 8147069714
 ∑x2 = 7.03×1016
 ∑y2 = 1.37×1019
 ∑xy = 9.67×1017
nΣxy − (ΣxΣy)
r=
√[nΣ𝑥 2 − (Σx)2 ][nΣ𝑦 2 − (Σy)2 ]
5×9.67×1017 − (593439716×8147069714)
r=
√[5×7.03×1016 − (593439716)2 ][5×1.37×1019 − (8147069714)2 ]
= 0.584595

45
INTERPRETATIONS
From the above, we can see that there exist a positive correlation between fixed assets
and cost of sales.

46
6.8.2 Correlation between fixed asset and volume
Fixed asset (x) Sales Volume (y) x2 y2 xy

112312211 1299968443 1.26×1016 1.68×1018 1.46×1017
117076471 1733517934 1.37×1016 3.00×1018 2.02×1017
121722288 1429425418 1.48×1016 2.04×1018 1.73×1017
119930731 1588919388 1.43×1016 2.52×1018 1.90×1017
122398015 2231599239 1.49×1016 4.98×1018 2.73×1017
 ∑x = 593439716
 ∑y = 8283430422
 ∑x2 = 7.03×1016
 ∑y2 = 1.42×1019
 ∑xy = 9.84×1017
nΣxy − (ΣxΣy)
r=
√[nΣ𝑥 2 − (Σx)2 ][nΣ𝑦 2 − (Σy)2 ]
5×9.84×1017 − (593439716×8283430422)
r=
√[5×7.03×1016 − (593439716)2 ][5×1.42×1019 − (8283430422)2 ]
= 0.591296
INTERPRETATIONS
and sales volume.

47
6.8.3 Correlation between fixed asset and profit
Fixed asset (x) Profit (y) x2 y2 xy

112312211 3038144 1.26×1016 9.23×1012 3.41×1014
117076471 53366927 1.37×1016 2.84×1015 6.24×1015
121722288 28259698 1.48×1016 7.98×1014 3.43×1015
119930731 21822083 1.43×1016 4.76×1014 2.61×1015
122398015 29873856 1.49×1016 8.92×1014 3.65×1015
 ∑x = 593439716
 ∑y = 136360708
 ∑x2 = 7.03×1016
 ∑y2 = 5.01×1015
 ∑xy = 1.62×1016
nΣxy − (ΣxΣy)
r=
√[nΣ𝑥 2 − (Σx)2 ][nΣ𝑦 2 − (Σy)2 ]
5×1.62×1016 − (593439716×136360708)
r=
√[5×7.03×1016 − (593439716)2 ][5× 5.01×1015 − (136360708)2 ]
= 0.397829
INTERPRETATIONS
and profit.

48
6.8.4 Correlation between current asset and cost
Current asset Total Cost (y) x2 y2 xy

(x)
311224995 1296930299 9.68×1016 1.68×1018 4.03×1017
285395656 1680151007 8.14×1016 2.82×1018 4.79×1017
214728146 1401165720 4.16×1016 1.96×1018 3.00×1017
171580578 1567097305 2.94×1016 2.45×1018 2.68×1017
413467980 2201725383 1.70×1017 4.84×1018 9.10×1017
 ∑x = 1396397355
 ∑y = 8147069714
 ∑x2 = 4.19×1017
 ∑y2 = 1.37×1019
 ∑xy = 2.36×1018
nΣxy − (ΣxΣy)
r=
√[nΣ𝑥 2 − (Σx)2 ][nΣ𝑦 2 − (Σy)2 ]
5×2.36×1018 − (1396397355×8147069714)
r=
√[5×4.19×1017 − (1396397355)2 ][5×1.37×1019 − (8147069714)2 ]
= 0.668567
INTERPRETATIONS
From the above, we can see that there exist a positive correlation between current assets
and total cost.

49
6.8.5 Correlation between current asset and volume
Current asset Sales Volume (y) x2 y2 xy

(x)
311224995 1299968443 9.68×1016 1.68×1018 4.04×1017
285395656 1733517934 8.14×1016 3.00×1018 4.94×1017
214728146 1429425418 4.16×1016 2.04×1018 3.06×1017
171580578 1588919388 2.94×1016 2.52×1018 2.72×1017
413467980 2231599239 1.70×1017 4.98×1018 9.22×1017
 ∑x = 1396397355
 ∑y = 8283430422
 ∑x2 = 4.19×1017
 ∑y2 = 1.42×1019
 ∑xy = 2.39×1018
nΣxy − (ΣxΣy)
r=
√[nΣ𝑥 2 − (Σx)2 ][nΣ𝑦 2 − (Σy)2 ]
5×2.39×1018 − (1396397355×8283430422)
r=
√[5×4.19×1017 − (1396397355)2 ][5×1.42×1019 − (8283430422)2 ]
= 0.655347
INTERPRETATIONS
and sales volume.

50
6.8.6 Correlation between current asset and profit
Current asset Profit (y) x2 y2 xy

(x)
311224995 3038144 9.68×1016 9.23×1012 9.45×1014
285395656 53366927 8.14×1016 2.84×1015 1.52×1016
214728146 28259698 4.16×1016 7.98×1014 6.03×1015
171580578 21822083 2.94×1016 4.76×1014 3.74×1015
413467980 29873856 1.70×1017 8.92×1014 1.23×1016
 ∑x = 1396397355
 ∑y = 136360708
 ∑x2 = 4.19×1017
 ∑y2 = 5.01×1015
 ∑xy = 3.82×1016
nΣxy − (ΣxΣy)
r=
√[nΣ𝑥 2 − (Σx)2 ][nΣ𝑦 2 − (Σy)2 ]
5×3.82×1016 − (1396397355×136360708)
r=
√[5×4.19×1017 − (1396397355)2 ][5×5.01×1015 − (136360708)2 ]
= 0.038224
INTERPRETATIONS
and profit.

51
Chapter 7
FINDINGS
7. FINDINGS
 The company’s contribution is low for the last five years. It is because of the high
variable cost and so here the amount of contribution margin is not enough to cover all
fixed costs.
 The P/V ratio of the company is very low i.e. the company is having a low profit margin.
It represents that the company is not earning a satisfactory profit from its sales. There
is a huge difference between the revenue and profit earned.
 The break-even point of the company is not satisfactory. While analysing break-even
sales we can see that it is near to the value of sales. An increase in the break-even sales
is due to the high variable cost.
 By analysing the margin of safety we can see that the company is having a low margin
of safety. Decrease in the margin of safety is due to the abundance of break-even sales.
 The margin of safety ratio shows the percentage of sales through which the company
gets profit. Here the company is having a low margin of safety ratio all below 50%. It
is because of the high break-even point.
 While analysing the degree of operating leverage we can see that the company is having
a low DOL, it is because of that the variable cost is larger than the fixed cost. It implies
that a significant increase in the company’s sales will not lead to a substantial increase
in its operating income.
Regression
 In 2020, if the company want to achieve an operating profit of Rs. 40000000 they need
to reduce the cost of sales by Rs. 1726527503.
Correlation
 From the correlation analysis between fixed asset and cost of sales for the year 2014 to
2018, here the fixed asset and cost of sales having a positive correlation, which are
interrelated.
 From the correlation analysis between fixed asset and sales volume for the year 2014
to 2018, here the fixed asset and sales volume having a positive correlation, which are
interrelated.
 From the correlation analysis between fixed asset and profit for the year 2014 to 2018,
here the fixed asset and profit having a positive correlation, which are interrelated.

52
 From the correlation analysis between current asset and cost of sales for the year 2014
to 2018, here the current asset and cost of sales having a positive correlation, which are
interrelated.
 From the correlation analysis between current asset and sales volume for the year 2014
to 2018, here the current asset and sales volume having a positive correlation, which
are interrelated.
 From the correlation analysis between current asset and profit for the year 2014 to 2018,
here the current asset and profit having a positive correlation, which are interrelated.

53
Chapter 8
RECOMMENDATIONS
8. RECOMMENDATIONS
 The company has to either increase the selling price per unit or increase the sales
turnover to earn a satisfactory profit in the business.
 The margin of safety can be improved by improving the contribution margin through
reducing the variable cost.
 The company should give more importance to fixed cost, they must use more fixed cost
rather than variable cost in operational activities.
 The company can increase production by reducing the wastage of raw materials, thus
they can increase the sales.

54
Chapter 9
CONCLUSION
CONCLUSION
The study aims at the Cost Volume Profit Analysis of Gasha Steels Pvt.Ltd. with the
objective to find out the relationship between cost, volume and profit of the company. Gasha
Steels Pvt.Ltd. is an enterprise in India, with the main office in Kochi. It's a private unlisted
company and is classified as 'company limited by shares'. It is involved in Manufacture of Basic
Iron & Steel by adopting highest manufacturing standards and using cutting edge technology.
This study helps to find whether the company is achieving a satisfactory profit margin
with its sales. Various tools such as contribution, P/V ratio, break-even point, margin of safety,
operating leverage, regression and correlation were used in this study. The cost of sales is very
high, which is very near to the sales value i.e. here the cost and revenue are almost equal. So
the company is not achieving a high profit from their sales. The high cost is mainly due to the
increase in variable cost. So here the company need to put more focus on their fixed cost, they
must utilize more fixed cost for their operational activities.
The study makes evident that the overall performance of the company regard to
profitability is average but still, the performance of the company can be maximised through
careful measures of cost control which enhance the operating efficiency of the company. The
company can reduce their cost by reducing the variable cost, thereby the sales get increase due
to their quality and also the performance will be improved in the future.

55
REFERENCES
REFERENCE
 BOOKS
1. M N Arora, Cost Accounting Principles and Practise, 7th revised edition, Vikas
Publishing House Pvt Ltd, New Delhi (2000)
2. Kothari C R, Research Methodology, 5th revised edition, New Age International
Publishers ltd, New Delhi (2012)
3. B M Lall Nigam and I C Jain, Cost Accounting Principles and Practise, Prentice Hall
of India, New Delhi (2009)
4. A K Sharma, Text Book of Correlation and Regression, Discovery Publishing House,
New Delhi (2005)
 JOURNALS
1. DALCI, İlhan. "Activity based Cost volume profit Analysis: Another Approach To
Break even Analysis." Çukurova Üniversitesi Sosyal Bilimler Enstitüsü Dergisi 14.2
(2005).
2. Edna Gunderson (2009) "Cost Volume Profit Analysis", International Journal of
Accounting, 57-90
3. International Journal of Business and Management Invention (IJBMI) ISSN (Online):
2319 – 8028, ISSN (Print): 2319 – 801X www.ijbmi.org || Volume 7 Issue 5 Ver. II ||
May. 2018 || PP—46-51
4. Cost-Volume-Profit Analysis as a Management Tool for Decision Making In Small
Business Enterprise; IOSR Journal of Business and Management (IOSR-JBM);
Volume 19, Issue 2. Ver. I (Feb. 2017), PP 40-45
5. B Navaneetha, K Punitha, Raichu Mercy Joseph, S Rashmi, T Sai Aishwariyaa ;An
analysis of cost volume profit of Nestlé limited; International Journal of Commerce and
Management Research ISSN: 2455-1627; Volume 3; Issue 3; March 2017; Page No.
66-68
6. Cost-Volume-Profit Analysis for a Multi-Product Company: Micro Approach(2015)
Seung Hwan Kim; International Journal for Accounting and Financial reporting; Vol
5;
7. Robert Kee (2007); Cost-Volume Profit Analysis Incorporating the Cost of capital;
Journal of managerial issues; vol(19), No (4)

56
 REPORTS
1. Annual reports of Gasha Steela Pvt Ltd during the year 2013-14 to 2017-2018
 WEBSITES
1. https://www.emis.com/php/companyprofile/IN/Gasha_Steels_PvtLtd_en_3929002.ht
ml (retrieved on 14/03/2019)
2. https://www.scribd.com/document/241295808/An-Organisation-Study-of-Gasha-
Steels-Industry-Pvt ( retrieved on 15/03/2019)
3. https://www.investopedia.com/terms/c/cost-volume-profit-analysis.asp (retrieved on
22/03/2019)
4. https://www.bankingschool.co.in/financial-analysis/what-is-profit-volume-ratio-pv-
ratio/ (retrieved on 24/03/2019)

57
APPENDIX
Cost sheet for the year ended 31st march 2014 (in Rs.)
Particulars Total
Raw materials consumed 1248115489
Freight & coolie 4503095
Production expenses 3370194
Prime cost 1255988778
Add: factory overheads
Electricity charges 30568202
Repairs & maintenance:
Materials 852176
Electricity 112961
Buildings 666926 32200265
Work cost 1288189043
Add: office overheads
Audit fee 200000
Bank charges 4247918
Donation 15000
General expenses 581726
Medical expenses 11717
Postage & telephone 204263
Printing & stationary 76297
Professional charges 218313
Rates & taxes 331349
Security charges 644557
Surveiling fee 384479
Insurance 65000 6980619
Cost of production 1295169662
Add: selling & distribution overheads
Discount allowed 47849
Travelling expenses 335491
Vehicle expenses 1377297 1760637
Cost of sales 1296930299

58
Profit 3038144
Sales 1299968443

59
Particulars Total
Machinery 4137222
Vehicle 1219782
Others 56772
Electricity 133507
Buildings 2794961 44220569
Audit fee 257500
Donation 15000
Medical expenses 11348
ESI penalty 78037
Insurance 77684 9976363
Advertisement charges 12874807
Demurrage 473237
Discount allowed 918429

60
Lorry hire charges 13698631

Marketing & business promotion expenses 2401800
Profit 53366927
Sales 1733517934

61
Particulars Total
Electricity charges arrears 6636768
Machinery 3828506
Vehicle 1893538
Others 232085
Electricity 878612
Buildings 2037001 52184688
Audit fee 430000
Donation 54651
ROC filling charge 521701
Insurance 167000 20088967

62

Profit 28259698
Sales 1429425418

63
Particulars Total
Diesel for mill 1230323
Supervision charges 1980000
Machinery 1479792
Others 163456
Buildings 373016 48824015
Audit fee 270000
Donation 64250
ESI arrears paid 1595
Rent 392400
Insurance 186213
Round off 140
Subscription 65696 24625289

64
Bad debts 15032730

Clearing & forwarding charges 18450
Profit 21822083
Sales 1588919388

65
Particulars Total
Freight inwards 30900780
Power & fuel 55039468
Plant & machinery 2196220
Others 558736
Buildings 611566 58405990
Rent 338889
Insurance 232907
Miscellaneous expenses 32084672 34505469
Profit 29873856
Sales 2231599239

66
Balance sheet for the period 2013-14 to 2017-18 (in Rs.)
Particulars 2014 2015 2016 2017 2018

I. EQUITY AND
LIABILITIES
1. Shareholder’s
fund
a) Share capital 32500000 95000000 95000000 95000000 95000000
b) Reserve & 81407487 85423689 93142505 76416257 69268688
surplus
c) Money received
against share
warrant
2. Share 40000000
application
money pending
allotment
3. Non Current
liabilities
a) Long-term 19450000 5396571 5153778 2944905 885778
borrowing
b) Deferred tax 223489 684269 Nil Nil 11435967
liabilities
(Net)
c) Other long- Nil Nil Nil Nil
term
liabilities
d) Long-term Nil Nil Nil Nil
provision

67
4. Current
liabilities
a) Short-term 168049670 134585999 99102776 158981284 182583004
borrowing
b) Trade 97018519 93752339 48783486 52070664 190056832
payable
c) Other Nil Nil Nil Nil 780971
current
liabilities
d) Short-term 5764733 7623148 10154678 8752225
provision
Total 444413898 422466014 351337223 394165335 550011240
II. ASSETS
1. Non current
assets
a) Fixed assets
i) Tangible 112312211 117076471 121722288 119930731 122398015

assets
ii) Intangible Nil Nil Nil Nil
assets
iii) Capital Nil Nil Nil Nil
work-in-
progress
iv) Intangible Nil Nil Nil Nil
assets under
development
b) Non current Nil Nil Nil Nil
investments
c) Deferred tax 1242172 304418 304418
assets (Net)
d) Long-term loans 19634520 19993887 14582372 12189608 14145245
& advances

68
e) Other non Nil Nil Nil Nil

current assets
2. Current assets
a) Current Nil Nil Nil Nil
investment
b) Inventories 71960169 102456412 110408007 100177599 234329574
c) Trade 23572022 53282386 121099386 118372406
receivables
d) Cash & bank 7651140 19777642 33963363 18259761 13967717
balances
e) Short-term 231613686 139589580 17074390 22103841 46500103
loans &
advances
f) Other current Nil Nil Nil 99991 298180
assets
Total 444413898 422466014 351337223 394165335 550011240

69

A Study On Cost Volume Profit Analysis A

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A STUDY ON

COST VOLUME PROFIT ANALYSIS AT

GASHA STEELS PVT LTD., KANJIKODE

Under the guidance of

Ms. JAINY RAJAN

(Asst. Prof., Mount Zion School of Business Management)

In partial fulfilment of the requirements

for awarding the degree of

MASTER OF BUSINESS ADMINISTRATION

SCHOOL OF BUSINESS MANAGEMENT

COST VOLUME PROFIT ANALYSIS AT

GASHA STEELS PVT LTD., KANJIKODE

Under the guidance of

Ms. JAINY RAJAN

(Asst. Prof., Mount Zion School of Business Management)

In partial fulfilment of the requirements

for awarding the degree of

MASTER OF BUSINESS ADMINISTRATION

SCHOOL OF BUSINESS MANAGEMENT

I undersigned, hereby declare that project titled “A STUDY ON COST VOLUME

It would be injustice to proceed without acknowledging those vital supports I received

SL. No TOPICS PAGE No

TABLE No TITLE PAGE No.

6.2 P/V Ratio 33

6.3 Break-even Point 35

6.4 Margin of Safety 37

6.5 Margin of safety ratio 39

6.6 Degree of operating 41

6.8.1 Correlation between 45

FIGURE No TITLE PAGE No.

4.1 Break-even chart 22

6.2 P/V Ratio 33

6.3 Break-even Point 35

6.4 Margin of safety 37

6.5 Margin of safety ratio 39

6.6 Degree of operating 42

1.1 BACKGROUND OF THE STUDY

Mount Zion School of Business Management, Kadammanitta

1.2NEED AND SIGNIFICANCE

1.3STATEMENT OF THE PROBLEM

Mount Zion School of Business Management, Kadammanitta

1.4OBJECTIVES OF THE STUDY

Cost-Volume-Profit (CVP) Analysis is a tool for planning and decision-making that

1.6 LIMITATIONS OF THE STUDY

Mount Zion School of Business Management, Kadammanitta

1.7 ORGANISATION OF THE REPORT

In chapter 3 conceptualizes the literature review. Literature review is secondary

The fourth chapter is theoretical framework. The theoretical framework is a collection

The fifth chapter research methodology includes objectives, hypothesis, research

Mount Zion School of Business Management, Kadammanitta

2.1 INDUSTRY PROFILE

History of Steel and Steel Industry

Mount Zion School of Business Management, Kadammanitta

Mount Zion School of Business Management, Kadammanitta

Mount Zion School of Business Management, Kadammanitta

Mount Zion School of Business Management, Kadammanitta

Mount Zion School of Business Management, Kadammanitta

Steel Manufactures Association of Kerala

Mount Zion School of Business Management, Kadammanitta

Mount Zion School of Business Management, Kadammanitta

2.2 COMPANY PROFILE

Gasha Steels Private Limited is a Private incorporated on 30 June 1995. It is classified

Mount Zion School of Business Management, Kadammanitta