Kaizen Eduplus Society

Institute of Excellence
in
Management Science
Name:-SARTHAK S PADWALKAR

Reg .No:-18MBA374

Topic:- “A STUDY OF COST VOLUME AND PROFIT ANALYSIS OF THE COMPANY”

External Guide INTERNAL Guide

MR.ANKIT KUMAR JAIN PROF. KIRAN KUMAR BALIGAR
Dy MANAGER FINANCE & ACCOUNTS INSTITUTE OF EXCELLENCE IN
GRASIM INDUSTRIES LTD MANAGEMENT SCIENCE
CHEMICAL DIVISION, TARIHAL INDUSTRIAL AREA ,AIRPORT
KARWAR-581307 ROAD, HUBLI =580026
 Introduction

Cost is the sum that is required to be paid in

order to get the materials that is essential for
the working of the company.
With the help of analysis of CVP it is also
possible to find the profit that is being earned
at various levels of the enterprise.
 Need for study

• In order to know the cost controlling practise and

procedures that is adapted in Grasim Industries
Limited.
• To determine the profit maximization and cost
efficiency.
• To know the net income and operating revenue
with regards to variations in cost volume and profit
in the company.
 Industry profile

• The chemical industry comprises that companies produce

industrial profile .
• Utilization of chemicals was made from the past but the concept of
heavy chemical industry came into existence in the pre- industrial
revolution period.
• The fastest- growing areas have involved the manufacture of
synthetic organic polymers used as plastic ,fibers and elastomers.
• Presently the chemical industry has been concentrated in three
areas of the world ,Western Europe , North America and Japan
 Company Profile

• Grasim Industries Limited is the flagship company of the Aditya Birla

Group. It started as a textiles manufacturer in India in 1947.
• Grasim Industries Ltd which is a unit of Aditya Birla Group has
also acquired Chlor-alkali and Phosphoric acid division of Solaris
Chemtech Industries Limited, based in Karwar.
• It is based on the medium scale industry so the success of the
company is the quality and service followed by an updated
technology.
• The company ‘s research and development and well equipped
quality assurance department leads to increasing the
efficiency of the industry.
 Company Profile

• The fastest – growing areas have involved the manufacture

of synthetic organic polymers used as plastics ,fibers and
elastomers.
• Grasim is an Indian chemical manufacturing company
headquartered in Mumbai, Maharashtra. It was ranked
154th in the world’s best regarded firms compiled with
Forbes.
• Presently the chemical industry has been concentrated the three
areas of the world ,Western Europe, North America and Japan
(the Traid).
 Research Methodology

• Objectives
1. The relation between costs and profit can be found out with the help of the
analysis of CVP .It also helps in precise estimation of the profits.
2. It becomes easy to prepare the flexible budget with the help of the analysis
,which shows the costs that are incurred at the various levels of the
managements.
3. Purpose of control can be estimated with the help of the analysis. In order to
estimate the change in volume of costs ,It becomes obligatory to evaluate the
profit that is earned and the costs that are incurred .
4. This also helps in preparing the pricing policies by showing the impact on
various structures on the profits and the costs.
 Sources of Data Collection

• Primary data
is collected through talks with the organization
guide and through observation.
• Secondary data
is referred to the data that already exists or
collected by someone else and it is preferred
through annual reports or websites .
 Proposed tools for the analysis

• Contribution Margin Ratio:

The PV ratio would be calculated in order to
establish the relationship between contribution
and sales in order to study the profitability
of the business.
• Break Even Analysis:
The break-even analysis would be calculated to
know the point where revenue will be equal to
its expenses.
 Limitations of study

• This study confined to a particular unit of the

company.
• This study is dependent on a availability of
documents and data that is provided by the
Grasim Industries Limited at the time research.
• As the internship was for limited to chemical
industry so all information was available.
 Proposed Findings

• Caustic soda:
1. It was found that the sale of caustic soda has been rising annually.
When it is being compared to the previous years .It was highest in
the year 2018-2019 which is a good sign for the company’s growth.
2. The variable cost of producing caustic soda was more in the year
2015-2016 i.e It was Rs.9121.72 lakhs when compared to the other
2 years . At the last year 2018-2019 the variable cost was
Rs. 20121.7 lakhs.
3. PV ratio of the soda has been increased when checked with the
previous year It is rising annually for past 3 years .
 Proposed Suggestions

• It is being found that the sales of the phosphoric have come down .
So it becomes necessary for the company to take the required steps
in order to expand the sales for phosphoric acid.
• It is founded that the sales of caustic soda is been continuously
increasing so the company must follow the same for the upcoming
period.
• The company is required to adopt new technology will help the
company in reducing its fixed expenses .
• The company has to take the necessary steps in order to reduce its
cost of production.
 Conclusion

• The study makes evident that the overall performance of the

company with regard to profitability is average but still, the
performance of the company can be maximized through careful
measures of cost control which will enhance the operating
efficiency of the company.
• The company can reduce their costs , thereby the sales get increase
due to their quality and also the performance will be improved in
future.
• But if the company applies recommendations of this study towards
its management , the company will be back on to a higher
profitable position with short period .