Karnatak University

A STUDY ON COST ANALYSIS AT PATIL ELECTRICAL WORKS PRIVATE LTD
KARNATAK UNIVERSITY, DHARWAD

INSTITUTE OF BUSINESS MANAGEMENT AND RESEARCH, HUBLI.
Summer In-Plant Project

A report on
“PROJECT
“A STUDY ON COST ANALYSIS”

AT
PATIL ELECTRICAL WORKS PRIVATE LIMITED,
HUBBALLI.
This Report
Submitted to
KARNATAK UNIVERSTIY, DHARWAD
In partial fulfilment of the requirement for the award of degree in
MASTER OF BUSINESS ADMINISTRATION
Carried during the academic year 2017-2018
Submitted by:
AISHWARYAPRASAD K.S.
Registration No: 17MBA639
EXTERNAL GUIDE:
INTERNAL GUIDE:
MR VIKAS PUROHIT
Prof. GULNAZ GAIMA
PATEL ELECTRICAL WORKS PVT
Asst professor LTD, HUBBALLI
1
INSTITUTE OF BUSINESS MANAGEMENT AND RESERCH
CERTIFICATE
This is to certify that Ms AISHWARYAPRASAD K.S, Reg. No.
17MBA639 student of 2ndsemester of our Institution has completed Summer In-
plant Project (SIP) during the academic year 2017-2018 at PATIL
ELECTRICAL WORKS PRIVATE LIMITED, HUBBALLI. Entitled “A
STUDY ON COST ANALYSIS” in partial fulfilment of Master of Business
Administration degree as prescribed by Karnataka University, Dharwad.
Dr. Sadanand Havanagi

Director
External Examiner:-
2
CERTIFICATE
This is to certify that AISHWARYAPRASAD is a bonafide student of
this Institute has completed Summer In-Plant Project (SIP) during the academic
year 2017-2018 at “PATIL ELECTRICAL WORKS PRIVATE LIMITED”.
She has prepared and submitted the project assigned to her, namely “A STUDY
ON COST ANALYSIS” under my guidance.
Prof. GULNAZ GAIMA

Assistant Professor
IBMR, HUBLI
3
CERTIFICATE
This is to certify that MS. AISHWARYAPRASAD K.S. with Roll No:
17MBA639 student of Institute of Business management & Research, Hubballi
studying in MBA has successfully completed his/her Summer In-Plant Project on
“A STUDY ON COST ANALYSIS” in our organization from 28th June to 28th
August 2018 (60 days).
During the period of project, his/her conduct and behaviour was found
good. We wish the good luck in his/her future endeavors.
Place: HUBBALLI
Date: 28/08/2018 External Guide Name
VIKAS PUROHIT
4
DECLARATION
I, AISHWARYAPRASAD K.S, student of MBA 2ndsem, Institute of

Business Management and Research, Hubballi, hereby declare that the project
work entitled “A STUDY ON COST ANALYSIS” carried out at “PATIL
ELECTRICAL WORKS PRIVATE LIMITED” is submitted to Karnataka
University Dharwad through the Institute of Business Management and Research,
Hubballi, in partial fulfilment of the requirements for the award of the Master of
Business Administration degree. This project report is a bonafide work prepared
by me under the guidance of Prof. GULNAZ GAIMA, Asst. Professor in MBA
department of Institute of Business Management and Research, Hubballi. The
findings and suggestions of this project report are based on the information
collected by me during the period of my study.
To the best of my knowledge and belief, the matter presented in this report has
not been submitted previously in part or full to any university for the award of
any degrees.
Date: 28/08/2018 AISHWARYAPRASAD K.S

Place: Hubballi 17MBA639
5
ACKNOWLEDGEMENT
I wish to express my heartfelt thanks to all those who were involved in completion
of my project entitled “A STUDY ON COST ANALYSIS”.
First of all I wish to express my sincere thanks to our Director, MBA department
Dr. Sadanand Havanagi who has fully supported and encouraged me in this
venture.
It is my privilege to have accomplished this study under the guidance of my guide,

Prof. GULNAZ GAIMA, Asst. Professor of MBA Department IBMR, Hubballi
for taking keen interest and full involvement, dynamic motivation and valuable
guidance extended to me throughout the project.
I wish to thank Mr VIKAS PUROHIT, as my external guide and all the

employees of the organization for guiding and helping me in completing this
project successfully.
My sincere and affectionate regards to my parents for the immense support which
encouraged me to conclude this project on time. I wouldn’t forget to thank all my
faculty members of the Institute, friends and everybody for their kind co-
operation and help in this matter.
AISHWARYAPRASAD K.S
17MBA639
6
CONTENTS
CHAPTER CHAPTER PAGE

NUMBER NAME NUMBER
1 Executive Summary 10
2 Industry Profile 11-13
3 Company Profile 14-36
4 About the study 37-39
5 Research methodology 40-41
6 Conceptual framework 42-55
7 Analysis, Findings &Suggestions 56-71
8 Conclusion 72-73
9 Bibliography 74-75
10 Annexure 76-85
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CHAPTER 1
EXECUTIVE SUMMERY
8
EXECUTIVE SUMMERY
TITLE: A STUDY ON “COST ANALYSIS” AT PATIL ELECTRICAL

WORKS PRIVATE LIMITED, HUBBALLI.
The project was undertaken in “Patil electrical works private ltd”, Hubballi. MR. RAMESH
PATIL is the Founder and managing director of the organisation. The study was made to
understand the cost analysis in the organisation.
Patil electric works PVT LTD is committed to providing and maintaining a safe and healthy
workplace for all staff and labours and to providing the information, training supervision
needed to achieve this.
They always give importance to eco-friendly working environment. They can proudly say
that they work in and for eco-friendly environment. The young and dynamic professional
team maintains highest level of corporate compliances and ethics while dealing with various
business associates.
The study was made to understand the organisation as a whole. The study contains the
company profile, company vision and mission, company objectives &organisation chart etc.
the information was collected through company guide &other related materials like company
prospects, company website etc.
Method of collecting primary data was through observation and discursion with external
guide, and the secondary data has been collected through internet, company profile, company
website etc.
In today’s rapidly changing business environment, organisations have to respond quickly to

requirements for people. The financial market has been witnessing growth which is manifold
for few years. Many private players have enterd the economy there by increasing the level of
competition. In the competitive scenario it has become a challenging for each company to
adopt practices that would help the organisation stand out in the market. Therefore a cost
analysis practice in an organisation must be effective in cost planning.
This study is to know the cost analysis of patil electrical works private ltd. Main objective
are to study related to concept of overall cost at patil company, analise and classify all
expenditure with reference to the cost of products and operations, to provide actual figures of
cost for comparison with estimates and to serve as a guide for future estimates or quotations
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and to assist the management in their price fixing policy, to arrive at the cost of production of
every unit, job, operation, process, department or service and to develop cost standards.
It was an opportunity to learn about cost analysis at PATIL ELECTRICAL WORKS PVT
LTD, HUBBALLI. Which I believe one of the growing companies now a days.
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CHAPTER 2
INDUSTRIAL PROFILE
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INDUSTRY PROFILE
Introduction to the Industry:
 History of the Industry:
The Electric Industry consists of companies that make a range of products for a diverse
customer base. Products include electric materials, electric motors, commercial and industrial
lighting fixtures, heating, ventilation air conditioning systems and components, and, among
other, electrical power equipment. Operating structures involve high fixed costs. Aluminium
and Steel are essential raw materials used in the manufacture of products. Fluctuation in
commodities prices can have an impact on the earning performance. The industry spans all
corners of the world, and it is subject to the influence of the macroeconomic cycle.
 ELECTRIC INDUSTRY :
The Electric Equipment manufacturing industry is part of the electric manufacturing, science
and mathematics sector. The engineering industry in India manufactures a wide range of
products, with heavy electrical goods accounting for bulk of the production. Most of the
leading players are engaged in the production of heavy electric goods and mainly produces
high-value products like AC motors, Alternators using high-end technology. Requirements of
high level of capital investment poses as a major entry barrier. Consequently, the small and
unorganized firms have a small market presence.
The light electric goods segment like wires harness, on the other hand, uses medium to low-
end technology. Entry barrier is low on account of the comparatively lower requirement of
capital and technology. This segment is characterized by the dominance of small and
unorganized players which manufacture low-value added products. However, there are few
medium and large scale firm which manufacture high-value added products. This segment is
also characterized by small capacities and high level of competition among the players.
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STATUS OF THE INDUSTRY AT PRESENT

Electric sector is the largest in the overall industrial sectors in India. The domestic EE
industry contributed 1.8% to the nation’s GDP in 2015-2016 and 10.5% to the manufacturing
GDP. The industry provides direct employment to about 0.5 million person and indirectly to
about 1 million persons. The entire value chain would account for a total of over 5 million
persons. The domestic industry now by and large geared up to meet the current and future
demand of the power and other sector of the economy. The industry’s share of export is about
1.5% of the country’s total exports, whereas its share of import is about 3.2% of the total. The
country’s trade deficit in EE is widening every year, which is matter of serious concern. The
capacity utilization of the T&D equipment industry is broadly only 70%, which is a matter of
concern for the industry. As a result, even the generation equipment sector will soon be
sitting on huge surplus capacity. Imports have captured about 43% of the market for electrical
equipment in India, whereas there is significant domestic overcapacity. Considering the
domestic EE industry’s importance for the power sector, GDP growth and also employment,
it is extremely important to ensure that the targeted growth of the entire electrical equipment
industry is aligned with the 12 and 13
13
CHAPTER 3
COMPANY PROFILE
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PATEL ELECTRIC WORKS PVT LTD
HUBBALLI
COMPANY PROFILE
INTRODUCTION
Patil electric PVT ltd , has positioned itself as a well-known brand in electrical rotating
machine segment as a supplier and manufacturer of varied range of products in india having
ISO/TS 16949:2009 certification. We cater to the needs of electrical motors, Alternators,
Armatures, wiring Harness and other wide range of applications.
Patil electric works (p) ltd, is a lending name in the field of manufacturing of a varied range
of a product viz,
 Armatures for automobile starters

 WIRE HARNESS for auto, Eng., defence etc.,
 A C motors and alternators.
 Magnetic coils and field coils etc.
 Servicing of AC motors and alternators.
Based hubli-karnataka, our company has grown by LEAPS and BOUNDS from the time of
its modest inception to become the most preferred choice of customer, cutting across a range
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of customer, cutting across a range of industry. Meticulously monitor the quality of each
component there by achieving reliable and defect free final product with high rate of first
pass yield which is mainly because of state of the art equipment’s and process.
Fully automated cutting, stripping, seal insertion and crimping with crimp force analyser and
ultrasonic welding machine for wire harness.
The vacuum pressure impregnation process ensures all our motor products are perfectly
impregnated with varnish/resin.
Fully automated state of the art manufacturing facility installed for the manufacture of
armatures for starter motors.
A decided team of talented managers. Technocrats are continuously engaged in phenomenal

growth of company to achieve collective goal towards ensuring customer delight. With this
we are confidently marching ahead in our journey, towards attaining undisputed leadership in
this highly specialized and competitive field
COMPANY OVERVIEW
A BRIEF OVERVIEW OF THE COMPANY
The journey so far…
Patel electric works laid its foundation in 1991 as a motor manufacturer at hubballi in India
.During the first few years of its operations, the company invested its time and resources to be
future-ready by researching the needs of various industry verticals, developing and
establishing proper manufacturing methods, inducting and training a team of like-minded
engineers and technicians, and by developing a committed vendor base.
Once equipped, the company expanded its product range to cater to various customised motor
segment. PEW focused on reaching out and winning confidence of several companies in
India from various industry segments. The ever-growing client list included major corporates,
PSUs and OEMs.
After gaining a firm footing in the market, the second decade of the 21st century was the time
to consolidate position and be ready for a quantum leap. The company established a new wire
harness division to supply quality wiring harness to different automotive companies.
Now PEW has recently established new line to manufacture starter motors Armatures for
leading four wheeler companies to cater Indian market and to export.
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PROMISING FUTURE
With these credentials and commitment, PEW is poised to cross new frontiers. Our products
are reaching every corner of the country and several parts of the world and are preferred
because of the assurance of quality, reliability, safety, quicker delivers and efficient service.
Considering the ever growing demand from across the globe, we are investing in technology,
expanding our manufacturing capacity, widening product offerings and strengthening reach.
While adhering to international standards and marketing our products globally, we are aiming
to achieve business excellence for a single reason-customer satisfaction.
ORGANISATION PROFILE
Name of the organisation Patil electric works PVT.LTD
Type of the firm Private ltd
Office and manufacturing plant 1st Gate, special plot no.7,3rd cross
Industrial estate, gokul road
Hubballi-580030
Karnataka, india
Tel:+918362331735,2333249
Email: [email protected]
LinkedIn: pewpl
Year of establishment 1991

DIRECTORS AND EXECUTIVES
Name Designation
Ramesh patil Managing director
Prasad patil Director
Vikas purohit Plant head
Admin A.V Bolappa
HR SUDHIR
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FACT SHEET
Nature of business Manufacturer

Total number of employees 51 to 100 peoples
Year of establishment 1991
Legal status of firm Private limited company
Annual turnover Rs. 10-25 crore
Tan no BLRP0*****
INFRASTRUCTURE
Land 25000 sq.ft
Building 12000sq.ft
Backup power 82.5KVA
NATURE OF BUSINESS
 By taking complete project ownership.

 Focus on quality-cost optimization.
 Global vision.
 Process driven services.
 Responsive to client needs.
 Build a state- of- the- Art manufacturing technology.
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QUALITY STATEMENT
At patil electric works pvt. Ltd, are committed to,
 Meet customer requirements and excel in all spheres of management, through

continual improvements of products, processes and system in order to satisfy
customers, stake holders, and employees.
 Involve people at all levels of the organisation to achieve organisational goals.
 Prevent pollution, injury and ill health.
 Communicate this QHSE policy to all our employees and contractors and make this
policy available for public.
 Improve quality of products , environment and occupational health and safety.
QUALITY OBJECTIVES
 Enhance customer satisfaction

 Effective planning, provision and utilization of resources.
 Provide training and upgrade employee skills.
 Reduce customer complaints.
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 Reduce in-house rework.

 Reduce cost of poor quality.
 Improve supplier’s performance rating.
 Ensure safe work environment.
 Reduce maintenance break down percentage.
VISION AND MISSION
Vision
“Our vision is to be among the top manufacturers and services providers for rotating machine
and wires harness in India and beyond to cater to high end market using latest technology and
by continuously learn”
Mission
To seamlessly integrate in to customers processes and act as an extension facility of customer
by following the six point rule:
 Quality-cost optimization
 Global vision
 Process driven services
 State-of-the-Art-technology
 Project ownership
 Responsive to client needs
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PRODUCT PROFILE
PEWPL have three distinctive product in a common administration they
are:
 Armatures
 Wire harness
 Electric motors
 Alternators
ARMATURES
An armature is one of the key parts in rotating machinery, generally it is a rotating mass with
systematic arrangement of conductors culminated at the commutator &electrically joined to
produce motoring or generating action.
Manufacturing facility
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State of the art fully automated manufacturing facility for armatures(used mainly for starter
motors &power tools).
CNC controlled induction welding machine.
Automated varnishing station.
CNC controlled balancing machine.
Some of the assembly line stations
 Paper Faring
 Hair pin forming
 Shaft &stack pressing
 Varnishing
 Twisting
 Commutator r/o measurement
 Welding station
 Tinning
 Ring pressing
 Slot insulation
 Cummutator pressing
 Electrical testing
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Armature division
MOTORS
Patil electric is a reputed manufacturer of a wide range of high quality motors up to 160 L
Frame(15kw).the range includes various types of motors such as standard induction , crane
&Hoist duty motors, Energy Efficient motors, Textile motors to name a few. He range has
been proving its worth for different applications in various industries for nearly two decades .
Patel electric motor is the preferred choice of major corporates, MNCs &OEMs due to the
product quality, performance, timely deliveries and competitive prices.
Product range
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Motors
Standard motors
 Single phase
 Three phase
Crane & Hoist duty motors
Energy efficient motors
Textile motors
Special motors
Duel speed motor
Dual voltage motor
50 to 60 Hz. frequency motor
High torque motor
Special performance requirements
Inverter duty motors
Cooling tower motors
WIRE HARNESS
Wire harness is a string of wires which transmits information signals or operating currents in
a machine just as a nervous system in a body. By binding many wires in to bunch
systematically, the wire can be better secured against the adverse effects of vibrations,
abrasions, temperature &moisture.
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Dash board harness-LCV Harness electrical vehicl
Battery cabel dash board harness-MCV
Manufacturing facilities
State of the art CNC wires cutting, stripping, seal insertion, crimping with crimp quality
monitor.
Digital push pull load tester for crimping.
Ultra sound welding for splice.
Assembly &amo; testing jigs.
Harness tester with integrated lable printer.

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Engineering capabilities for wiring harness
Design, Develop & validate wiring harness.
Design & Fabricate jigs, fixtures.
Assembly & circuit checking boards.
Wire harness for various applications like:
 Automobile sector: buses, trucks, LCVs, cars, construction equipment’s & two/three
wheelers
 Elevator Lifts & Excavator.
 Control panel for machines.
 Home appliances: Refrigerator, Mixer, washing machine, etc
 Electronic industries.
 Aviation industries.
Alternators
Features
 Compact and aesthetically built

 Conforms to all leading industrial and marine standard
 Simple design, fewer parts to coupling bolts, arts easy access to coupling bolts, output
terminals, and rotating diodes
 Simples to install and maintain
 Wound with 2/3 pitches in stator to eliminate harmonics
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 Self-lubricating, sealed type for ball bearing
Specification
Phase three/single
Frequency 50HZ
Voltage 415/24 V
Power factor 0.8 lag
Speed 1500rpm
Voltage regulation +/-1% with 4% prime mover speed variation
Class of insulation H
No. of bearings s Single/Double
Contract manufacturing / reverse engineering
Manufacture of complete or patel electric motors & generators as per drawings &
specifications of the client OEM with all the raw materials & testing as per theit protocols/ IE
standards.
LT Coils supply service for up to 500 frames
 Stator coils
 Diamond coils
 Rotor coils / rotor bars
 Armature coils
 Robebel bars
 Field coils
 Inter pole coils
 Strip on edge wound coils
 Speciality coils
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Designing & reverse engineering

 We undertake reverse engineering project to develop motor / alternator & wire
harness by studying the sample or the specification.
 Based on the study, drawings are created to match the requirement.
 Once the drawings are freezed, the prototypes are manufactured & after trail testing &
approval or customer, regular production starts
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ORGANISATION CHART
Managing director
Director
Plant head
Armature division Motor division Harness division
Production QAE HR ACTIVITY Production QAE Production QAE
Engineer Engineer Store Engineer Engineer Inspect

officer or
Operation Inspector Operation Operation
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SWOT ANALYSIS
STRENGTHS
 Strong product development.
 Goodwill of the company.
 Attention to customer urgency.
 Good product line.
 Dedication team to take up challenging work.
 Good infrastructure of the company.
 Quality maintained in the process of manufacturing.
 Huge demand for this product.
WEAKNESS
 No such entity has been identified so far.
OPPURTUNITIES
 Potential market for products is growing high.
 Order is received is greater than what they are able to produce, so opportunity to
increase production capacity for which ready market is available
 They have excellent infrastructure facility to workers.
THREATS
 Main threats are the government policy rules regulation, competitors and technology.
 Fall in prices can affect profitability.
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AN OVERVIEW OF THE DEPARTMENT
DEPARTMENTS
Following are the departments maintained by patil electric works private

ltd was as follows:
1 Administration departments
2 purchase departments
3 production department
4 store department
5 quality assurance department
6 Account department
7 marketing department
8 human resource management
ADMINISTRATIVE DEPARTMENT
Responsibilities of the administration department
1. They have to maintain all the fully computerized information properly.
2. They have to take care about staffs should running of the company.
3. All the administration staffs should handle effective and minimum paper work.
4. Appointment/requirement of employee.
5. Discipline action against miss conducted employee.
6. 6 conducting meeting.
7. Maintain of personal records of employees.
PURCHASE DEPARTMENT
The purchase department plays a very important role in an organisation. Because purchasing
has its effect on every vital factor concerning the manufacture, quality, cost , efficiency. Its
function is to procure materials, suppliers, services, machines and tools at the most
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favourable terms consistent with maintaining the desired standard of quality. A substantial
part of the company’s finance is committed which affects cash flow position of the company.
Thus, if the size of the business concern permits, there should be separate purchase
department and the responsibility for purchasing all types of materials should be entrusted to
this department.
PRODUCTION DEPARTMENT
Production department refers to the application of management principles to the production

function in a factory. In other words production management involves application of
planning, organisation, directing, and controlling the production process.
A well organised production functions can offer competitive advantage to a firm in the
following area.
 Higher quality
 More inventory turns
 Shorter new productions lead time.
 Greater flexibility
 Better customer satisfaction
 Reduced wastage
STORE DEPARTMENT
A separate room is provided for storing all the materials systematically, the main in-charge of
store department is the operating manager and store officer. The store officer maintains all
required records & issues the materials to the different department following the proper
procedure. Store officer reports operating manager who in-turn reports to the company
manager.
Functions
 Recipt of materials.
 Inspect of order quality and any specifications
 Maintain minimum levels of materials.
QUALITY ASSURANCE DEPARTMENT

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The quality assurance department is main function of the QA department is to check whether
the raw materials purchased and goods manufactured are better quality or not.
Here quality means the totality of the features and charecterstics of a products or services.
The quality policy of this department is to be world class leader in designing and
manufacturing quality value of products for the process industry worldwide.
ACCOUNT DEPARTMENT
All the transaction related to receipts &payments of the whole organisation is done only in
the accounts department. It deals with preparation of balance sheet. Profit and loss account
&other necessary accounts, maintaining cash and bank transactions, pay slips, preparation of
payment, receipt& journal vouchers file, Dealing with loans and other financial matters,
Dealing with T.D.S, Monthly Trial balance, Framing annual report etc.
Objectives of account department
A. Maintenance of book of accounts and finalization of A/C’s management level.

B. Preparation of annual budgets for every month & submitting the various analysis
reports.
C. Preparation of cash flow and fund flow statement.
MARKETING DEPARTMENT
In this company marketing process begins when the marketing representation or the agents
are sent to the customers to gather the information about the requirement of the customer.
Then a design is prepared according to the requirement of the customer& quotation or
estimation report is prepared. This quotation contains detailed information about the price,
quality, technical specifications, transportation and other costs, tax excise duty payable,
payment terms, &delivery date & other conditions. Quotation is issued to the customer and if
the customer is satisfied with the quotation then he will place an order the company starts its
production.
HUMAN RESOURCE DEPARTMENTS
The total knowledge, skills, creative abilities & aptitude of an organisation work force, as
well as value, attitudes &beliefs of the individual involved.
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OBJECTIVES OF HRM
 To create and utilize an able & motivated workforce, to accomplish the basic
organisation goals.
 To establish and maintain sound organisational structure and desirable working
relationship among all the members of an organisation.
 To secure the integration of individual & groups within the organisation by co-
ordination of individual & group goals with those of organisation.
 To create facilities & opportunities for individual or group development so as to
match with the growth of the organisation.
Searching for human Building of good relationship Psteady of human

between management and efficiency &suitable
resource activity
employee relation
Selection of suitable Arrangement of necessary

candidate training to staff and employees to
increase the man power efficiency
Good working Providing necessary

environment creation benefit to the
employees
RECRUIPTMENT PROCES
1. Advertisement 5 send call letter

2. Campus interview 6. Preparation of interview
3. Appropriate bio data 7. Record performance
4. Interview panel 8. Selection of the candidate
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AWARDS AND RECOGNITIONS
Manufacture excellence award by government runner up by PV competition held by

Of Karnataka 2017 m/s Bosch-2017
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Appreciation award by customer excellence award by govt of Karnataka-2015

-tata motors-2013
LIST OF TOP CUSTOMER
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CHAPTER 4
ABOUT THE TOPIC
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PROBLEM STATEMENT
Analysing cost is an important process and taking quick decision, in any electronics
manufacturing unit. Costing is start from the point of ordering the material and up to the point
where shipment is received.
 How the cost to be estimated?

 To know the risk of each of its source.
 To select a least interest rate, source of fund.
 Complete all documents &procedures, required to receive the orders.
TITLE OF THE STUDY
“A STUDY ON COST ANALYSIS AT PATIL ELECTRICAL WORKS

PRIVATE LTD”
OBJECTIVE OF STUDY
 To study and understand the concept of cost analysis
 To examine the different cost
 To determine and analyse different ratios related to inventory
 To analyse net profit ratio
 To give suggestion on the basis of findings
SCOPE OF THE STUDY
 It covers financial statement of 5 years of data

 marginal costing
 Ascertainment of Average cost
 Net profit ratio
 Inventory Turnover Ratio and Inventory Holding Period
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LIMITATION
 The primary data received is subjected to particular division or organisation, which

may differ from one department to the other.
 Financing decision may vary from one management to another.
 The data may be realistic but may not be accurate.
 Practice is most of the times different from theory.
 Policies and practice may change from time to time.
 Change in government policies is a limitation to the study.
 Limitation of time.
 Not exact tool for forecasting.
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CHAPTER 5
RESEARCH METHODOLOGY
40
RESEARCH METHODOLOGY
Research design is the based framework, which provides guidelines for the
research process. It is a map or blue print according to which the research is to
be conducts. The research design specifies the method for data collection &data
analysis determine the source of data. Most specifically it was a kind of
“descriptive research” who takes care of who, when, where, what, how and why
aspects of the investigation further the researcher used the statistical method to
serve the purpose of project, it permitted the research to derive more accurate
generalization whose reliability could be measured
Collected data/information about Patel electric works private ltd through:
 Primary data collection

Primary data are the data gathered at first hand, it is collected from the
financial executives and other employees through personal discussion and
interactions. the heads of other departments in the firms were also
consulted for the information.
 Secondary data
 Annual report of the company.
 Through company’s website.
 Text books.
 Manuals of the company.
 Internet
 Statement of cost sheet
Analysing tool: Ratio analysis, marginal costing, Microsoft excel with the
help of charts
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CHAPTER 6
CONCEPTUAL FRAMEWORK
42
CONCEPTUAL FRAMEWORK
LITERATURE REVIEW
By; journal Asian research consortium
In this paper empirical research will be organised under eight sections: a)cost analysis for
product costing and pricing decisions, b)cost analysis for cost management, c) cost analysing
profit planning, d) cost analysis in capital investment decisions, e)cost analysis for marketing
decisions, f)cost analysis for setting cost standards, g) cost analysis for life cycle cost
determination and h)cost analysis to determine for product/customer profitability. This study
concentrates on the main decision making by managers through the use of cost analysis
prepared and submitted by managerial accountants.
COST ANALYSIS FOR PRODUCT COSTING AND PRICING DECISIONS
One area where cost analysis is used in managerial decision making is in setting product or
services prices. Different pricing approaches are used by business organisations, which
include cost based pricing, market based pricing, target pricing, and others. Also, business
organisation are likely to adopt diverse pricing strategies. Noble and gruca (1999) define
pricing strategy as the means by which a pricing objective is to be achieved. Most pricing
strategies imply a relative price level related to costs, competition, or customers.
Determinants are the internal and external conditions that determine manager’s choice of
pricing strategies. Diamantopoulos (1991, 1994) refers to the price sensitivity, product
differentiation, and potential for economics of scale collectively as the “pricing environment”
describing them as the elements that constitutes the setting within which price decision
making takes place. Nagle and Holden (1995) states that when customer are insensitive to
price and and the products are highly differentiated; a firm can use a price skimming strategy
to achieve its profit maximization objective. Nagle and Holden (1995), on the other hand,
state that when a firm is faced with highly price sensitive customer can reduce its unit cost by
spreading its fixed costs over a high volume of output to allow it to use penetration pricing
strategy to achieve its profit maximization on objective. Noble and Gruca (1999) mentioned
four pricing situation for industrial goods pricing, namely: new product, competitive, product
line, and cost based. They further identify pricing strategies adopt under each pricing
43
situations. Consequently, they identified three pricing strategies most closely associated with
new products, namely: skim pricing, penetration pricing, and experience curve pricing. Every
one of these strategies shares the distinction of being appropriate in the early life of a product.
Therefore, the age of the product being priced will determine whether a manager chooses one
of the new product pricing strategies competitive pricing situation focuses on the price of the
product relative to the price of one or more competitors.
The stage of the product life cycle and ease of estimating demand will influence whether the
manager will choose one of these competitive pricing strategies. Product line pricing situation
focuses on the price of the focal product influenced by other related products or services from
the same company.
Managers in the firm which sell goods and services related to the focal product will choose
one of the product line pricing strategies. Product costs are widely used as major inputs in the
product pricing decisions. Hall and Hitch (1939) state the general pattern of price setting to
be cost based. Bonoma et al. (1988) found that managers continues to use cost data and
information as primary pricing concern Diamantopoulos (1991), claims that cost-plus pricing
is by far and away the most widely used pricing approaches. Cost-plus pricing is an inward
oriented strategy , involving company and product considerations, Cost-based pricing
situation focuses on the inward oriented strategy, involving company and product
considerations, cost based pricing situation focuses on the interal cost of the firm including
fixed and variable costs, contribution margins, and so on. Several pricing strategies, such as
target-return pricing, mark-up pricing, rate of return pricing, contribution pricing,
contingency pricing are included as the part of cost-based pricing strategies. Ere (1986)
presents three common product costs, namely variable costing. Full absorption costing, and
normal –overhead absorption costing. He mentioned that variable costing leads to the
complete- analysis price for firms with linear cost curves where demand and cost curves are
deterministic and the decision maker is risk-neutral. Thus, it can be seen from the available
literature that reliable cost data and cost analysis has become a basic input in pricing
decisions in both product manufacturing and service organizations.
44
THEORETICAL SUMMERY
Meaning of cost
Cost in simple words, means the total of all expenses, cost is defined as the amount of
expenditure incurred on given thing. Thus it is that which is given or sacrificed to obtain
something.
COSTING
Costing is the techniques and process of ascertaining costs. These techniques consist of
principles and rules which govern the procedure of ascertaining cost of products or services.
The techniques to be followed for the analyst of expenses and the process of different
products or services differ from industry to industry. The main object of costing is the
analysis of financial records, so as to subdivide expenditure and allocate it carefully to
selected cost centres, and hence to build up a total cost for the departments, process or jobs or
contracts of the undertaking.
Cost accounting
Cost accounting is the process of controlling the cost through various methods like analysing,
recording, categorising, summarising, assessing different course of action, and funds
distribution.
Objective of cost accounting:

 Ascertainment of cost.
 Determination of selling price
 Cost control and cost reduction
 Ascertaining the profit of each activity
 Assisting management in decision making
Advantages of cost accounting

 Discloses profitability of activities.
 It helps in cost control.
 It helps in formulating policies.
 It helps in decision making and it guide in fixed selecting prices.
45
 It helps in fixing the standard of efficiency of workers.

 It helps to judge the financial position and credit worthiness of the business.
Disadvantages of cost accounting

 Absence of readymade system.
 Cost differences.
 Cost data have no usefulness in themselves.
 It is not true or exact cost.
Classification of costing:
Classification by nature:
i) Direct cost: direct cost is the cost which can be identified with a cost center or a
cost unit for. E.g. cost of direct materials, cost of direct labour.
ii) Indirect cost: cost which cannot be identified with a particular cost centre or cost
unit is called indirect costs. For e.g. wages paid to indirect labour.
Classification by behaviour:
i) Fixed cost: fixed cost is that cost which remains constant at all levels of
production. For e.g. rent, insurance.
ii) Variable cost: the cost which various with the levels of productions called
variable cost i.e. it increases on increase in production volume and vice-versa. For
e.g. cost of materials, cost of labour.
iii) Semi variable cost: this cost is partly fixed and partly variable in relation to the
for e.g. telephone bill, electricity bill.
Classification by function:
i) Production cost: it is the cost of the entire process of production. In other

swords it is nothing but the cost of manufacture which is incurred up to the stage
of primary packing of the product.
ii) Administrative cost: it is the indirect cost pertaining to the administrative

function which involves formulation of policies, directing the organisation and
46
controlling the operation of an undertaking. This cost is not related to any other
function like selling and distribution, research and development etc.
iii) Selling cost: selling cost represents the indirect cost which is incurred fo
A) Seeking to create and stimulate demand and
B) Securing orders.
iv) Distribution cost : it is the cost of the sequence of operations which begins
with making the packed product available for dispatch and ends with making the
reconditioned returned empty package, if any available, for re-use. V.R&D cost-
“research cost” and “development cost” are two different types of costs. Research
cost is the cost of researching of new products, methods and applications.
Development cost is the cost of the process which begins with the implementation
of the decision to produce the new product.
v) Pre-production cost: it is that part of the development costs which is incurred
for the purpose of a train run, before the commencement of formal production.
vi) Conversion cost: it is the cost incurred for converting the raw material in to
Finished product. it comprises of direct labour cost, direct expenses and factory
overhead.
vii) Prime cost: prime cost is the aggregate of direct material cost, direct labour
cost, and direct expenses. The term ‘direct’ indicates that the elements of cost are
traceable to a particular unit of output.
Classification by controllability:
i) Controllable cost- the cost, which can be influenced by the action of specified
person in an organisation, is known as controllable cost. In a business
organisation, heads of each responsibility centre are responsible to control costs.
Costs that they are able to control are called controllable costs and include
material, labour and direct expenses.
ii) Uncontrollable cost- the cost which cannot be influenced by the action of
person heading the responsibility centre is called uncontrollable cost. For e.g. all
the allocated costs and the fixed costs.
Note: it may be noted that controllable and uncontrollable cost concepts are related to the
authority of a person in the organisation, an expenditure which may be controllable by one
47
person may not be controllable by another. Moreover, in the long run, all cost may be
controllable.
Classification by normality:
i) Normal cost- it is the cost which is normally incurred at a given level of output,
under the condition in which that level of output is normally attained. Normal cost
is charged to the respective product/ process.
ii) Abnormal cost- it is the cost which is not normally incurred at a given level of
output in conditions in which that level of output is normally attained. This cost is
charged to the costing profit and loss account i.e. the product / process does not
bear the abnormal cost.
Classification by time compute:
i) Sunk cost
ii) Estimated cost
Elements of cost
Elements of cost mean the essential part or services or jobs. In other words elements of the
total cost and include the main item of expenditure incurred for production of goods, services
and jobs.
Analysis and classification of cost:
Cost is the amount of expenditure incurred for production of goods and services. Thus cost is
composed of three elements, viz, material, labour, expenses.
Classification of cost:
Cost classification is the process of grouping costs according to their common feature or
characteristics. Classification is essential to find out the cost of production.
Objective of classification:
 It helps the management for implementing cost control and decision making.
 It helps for calculation of cost of production.
 It helps for valuation of work-in-progress.
48
Elements wise classification
Cost classified on the basis of element wise is as fallows
1 material cost.
2 labour cost.
3 other expenses.
Elements of cost
The various elements of cost can be illustrated by the following chart:
Elements of cost
Material Labour Other expenses
Direct Indirect Direct Indirect Direct Indirect
Overhead
Administration Sales Distribution

Factory
49
A. MARGINAL COST
“Marginal cost is the cost of one additional unit of output”
This is “the cost of commodities supplied to an undertaking” materials are further divided in
to two parts.
1. Direct materials
2. Indirect materials
1) Direct material: direct material are those material which can enter in to any form
of the finished product. Direct materials cost is which can be conveniently identified
and allocated.
2) Indirect material: indirect material are those materials which cannot be

conveniently identified with cost unit
Characteristics of marginal cost
Classification
in to fixed and
variable cost
Characteristics of marginal Valuation of

Determination
costing
of price Stock
P-
Profitability
50
Application of marginal costing

1. Cost control and reporting
2. Pricing
3. Profit planning
4. Decision making.
5. Make or buy decision.
6. Closing down or suspending activities.
FORMAT OF MARGINAL PROFIT

Particular Amount
Sales ***
Less variable cost **
Contribution ***
Less Fixed Cost **
Marginal profit ***
Formulas of marginal costing

CONTRIBUTION: it is the difference between sales and variable cost. It is also known as
contribution margin.
Contribution = sales-variable cost
Contribution = fixed cost +profit
Contribution = sales* p/v ratio
VARIABLE COST = (variable cost/sales)*100
TOTAL COST = variable cost + fixed cost
51
P/V RATIO OR PROFIT VOLUME RATIO: the p/v ratio, which establishes the
relationship between contribution and sales, is of vital importance for studying the
profitability of operations of business. It reveals the effect on profit of changes in volume.
P/V Ratio = contribution / sales *100
P/V Ratio = sales- variable cost / sales *100
P/V Ratio = fixed cost + profit / contribution
P/V Ratio = change in profit or contribution / change in sales
C. Materials cost control
Materials cost is one of the important elements of cost of product or unit. It constitutes a
substantial proportion of the total cost of production. For material cost control purposes, it is
very essential to know the important aspects of material, material control and material
purchase control.
Materials: the term materials refers to all commodities or components which are consumed
in the process of manufacture. The materials may be classified in to direct materials and
indirect materials.
Direct materials:
Direct materials form part of the finished products. They can be easily identified with a
particular cost unit. For example, cotton used in textile mills, timber used in furniture
industry.
Indirect materials: indirect materials indirectly used for conversation from raw materials in
to finished products. They cannot be easily identified with a particular cost unit. For example,
spare parts, tools, nails, lubrications etc.
Calculation by inventory turnover ratio:
1. Inventory turnover ratio = cost of materials consumed

Cost of average stock held
During the period
52
2. Inventory turnover period = 365

Inventory turnover ratio
D. LABOUR COST
These are cost of remuneration, such as wages, salaries, commission, bonus, and etc. of the
employee of an undertaking.
1. Direct wage: wages paid to the labourers who are directly engaged in converting
raw materials in to finished product it is also called direct labour, productive
labour, and prime cost.
2. Indirect labour: indirect labour is not directly engaged in the production of goods
but only to assist or help in production of services.
E. OTHER EXPENSES
The expenses means the cost of services provide to an undertaking and the notional cost of
the use of owned assets. In other words costs other than the material and labour are called
expenses.
1. Direct expenses: direct expenses are those expenses which can be specifically
incurred in connection with a cost unit. E.g. hire of special plant for a particular
job.
2. Indirect expenses: indirect expenses are those expenses which cannot be directly
identified with a particular job.
Overheads
An overhead includes indirect materials, indirect labours, and indirect expenses in general
terms, overhead comprise all expenses incurred for in connection with the general
organisation of the whole or part of the undertaking that is the cost of the operation supplies
and services used by the undertaking and the including the maintainance of capital assets.
The main group in to overheads may sub divided are as fallows.
1. Production / manufacturing overhead

2. Administration overheads.
3. Selling overheads.
4. Research and development overheads.
53
5. Distribution overheads.
BEP ANALYSIS
Meaning
Break even analysis is a widely used techniques to study the CVP (Cost value profit)
relationship. It is interrupted in narrow as well as broad sense.
In its narrow sense, break even analysis is connected with determining break even points i.e.
that level of production and sales where there is no profit & no loss at this point. Total cost is
equal to the total sales revenue.
Whwn used in broad sense, break even analysis is used to determine probable profit or loss at
any given production of sales. It is also used to determine the amount of sales to earn a
desired amount of profit.
METHOD OF BREAK EVEN ANALYSIS
Break-even point is the volume of output or sales at which total cost is exactly equal to sales.
It is a point of no profit and no loss. This is the minimum risk of promotion at which total
cost is recovered & after this point profit begins.
The fundamental formula to calculate break-even point (in rupees):
BEP = Total fixed cost * sales
Contribution
BEP IN SALES = Actual sales – margin of profit
MARGIN OF SAFETY
Margin of safety may be defined as the difference between the actual sales and sales at break-
even point.
In other words when actual sales exceeds the BEP sales it is known as margin of safety. If the
margin of safety is large it indicates soundness of business. And the profitability of huge
profit.
54
This margin of safety has to improve from the fallowing steps
1) Increase the volume of sales

2) Increase the selling price
3) Reduced the fixed cost
4) Reduced the variable cost
The formula for calculation of margin of safety:
Margin of safety = profit
P/v ratio
Margin of safety in valve = Actual sales – BEP Sales
55
CHAPTER 7
DATA ANALYSIS AND

INTERPRETATION
56
DATA ANALYSIS AND INTERPRETATION

COST ANALYSIS
Values that are used for calculation
YEAR 2013-14 2014-15 2015-16 2016-17 2017-18
Sales 9272314 9764959 10556899 9241989 9565781
Variable cost 2045168 2645389 2898546 2976876 2998987
Fixed cost 3567897 3578986 357676896 2897654 2987623
Calculation of EBIT
Year 2013-14 2014-15 2015-16 2016-17 2017-18
Sales 9272314 9764959 10556899 9241989 9565781
Less Variable cost 2045168 2645389 2898546 2976876 2998987
Contribution 7227146 7119570 7658353 6265113 6566794
Less fixed cost 3567897 3578986 3576896 2897654 2987623
EBIT 3659267 3540584 4081456 3367459 3579171
57
EBIT
4500000
4081456
4000000
3659267 3579171
3540584
3500000 3367459
3000000
2500000
2000000
1500000
1000000
500000
0
2013-14 2014-15 2015-16 2016-17 2017-18
Interpretation: The EBIT for the period 2105-16 is the highest one i.e. 4081456, from
2016-17 to 2017-18 it continuous increasing i.e. 3367459, 3579171; it shows the increasing
EBIT year to year.
2 Table showing direct and indirect expenses.

Year 2013-14 2104-15 2015-16 2016-17 2017-18
Direct expenses 18003778 27391668 25064357 27212488 16336432
Indirect expenses 8865432 13567548 20123457 29765438 9345678
Contribution of direct and indirect cost
58
DIRECT AND INDIRECT EXPENSES

30000000 29765438
27391668 27212488
25064357
25000000
20123457
20000000
18003778
16336432
15000000 13567548
8865432 9345678
10000000
5000000
0
2013-14 2104-15 2015-16 2016-17 2017-18
Direct expenses Indirect expenses
Interpretation: from the above graph it reveals that direct expenses and indirect expenses
are fluctuating and direct expenses are more than indirect expenses, in the year 2014-15 have
increased if compared to rest three years. Compared to 2015-16 and 2016-17 again it has
increased by 27212488, in the year 2016-17 indirect expenses are more than the direct
expenses. it shows company has to reduce direct cost.
3. According to nature from 2013-14 to 2017-18

Year 2013-14 2014-15 2015-16 2016-17 2017-18
Fixed cost 3567897 3578986 3576896 2897654 2987623
Variable cost 2045168 2645389 2898546 2976876 2998987
STATEMENT SHOWING FIXED AND VARIABLE COST
59
FIXED COST AND VARIABLE COST
4000000
3567897 3578986 3576896
2976876 2998987
3500000
2898546 2987623
2897654
3000000 2645389
2500000
2045168
2000000
1500000
1000000
500000
0
2013-14 2014-15 2015-16 2016-17 2017-18
FIXED COST VARIABLE COST
INTERPRETATION: The above graph shows total costs are decreasing from year
2013-14 to 2015-16 decreasing trend after that it shows fluctuating from 2016-17 to 2017-18,
it shows that the company has to control both the cost. Its good sign the companies fixed
costs are decreasing compare to variable cost apart from 2016-17.
MARGINAL COSTING
4. Calculation of P/V Ratio.
p/v ratio= (sales-variable cost)/ sales. Or p/v ratio= contribution/ sales
Year 2013-14 2014-15 2015-16 2016-17 2017-18
Ratio 78% 73% 72.5% 68% 69%
2013-14 = 7227146 = 78%
9272314
60
2014-15 = 7119570 = 73%
9764959
2015-16 = 7658353 = 72.5%
10556899
2016-17 = 6265113 = 68%
9241989
2017-18 = 6566794 = 69%
9565781
STATEMENT SHOWING PROFIT VOLUME RATIO
P/V RATIO
78%
78%
76%
74% 73%
72.50%
72%
70% 69%
68%
68%
66%
64%
62%
2013-14 2014-15 2015-16 2016-17 2017-18
Interpretation: the company can able to maintain the ratio because of the better
demand in the market for the brand. Whenever there is a rise in the price of the
input (raw material) the company can able to increase correspondingly their
selling price as to match increase in their input cost. It shows company’s PV
ratio are fluctuating but an average its above 55%.
BREAKEVEN ANALYSIS
61
Format for calculation of BEP (Break even analysis)

Total fixed cost
BEP = * Sales
Contribution
1. Calculation of BEP sales
BEP Analysis (in rupees)
Year 2013-14 2014-15 2015-16 2016-17 2017-18
BEP (RS) 4577555 4908814 4930685 4274477 4352040
Sales 9272314 9764959 10556899 9241989 9565781
3567897 * 9272314 = 4577555

7227146
3578986 * 9764959 = 4908814
7119570
3576896 * 10556899 = 4930685
7658353
2897654 * 9241989 = 4274477
6265113
2987623 * 9565781 = 4352040
6566794
Statement showing margin of safety

Calculation of margin of safety:
Margin of safety = Actual sales – BEP Sales
Year Actual sales BEP Sales Margin of safety

2013-14 9272314 4577555 4694759
2014-15 9764959 4908814 4856145
62
2015-16 10556899 4930685 5626214
2016-17 9241989 4274477 4967512
2017-18 9565781 4352040 5213741
MARGIN OF SAFETY
5626214
6000000 5213741
4856145 4967512
5500000 4694759
5000000
Margin of safety
4500000
4000000
2013-14 2014-15 2015-16 2016-17 2017-18
Margin of safety
INTERPRETATION: The company is maintaining margin of safety 4694759 in the

year 2013-14 overall, all the years from the 2014-15 to 2017-18 which imply the company is
safer. As the margin of safety is good the company as immense opportunity are available to
the company to take up the expansion programme to in the face of profitable area.
2. TABLE SHOWING NET PROFIT RATIO OF THE FIRM (IN

%GE)
Calculation of Net profit ratio
Net profit ratio = Net profit * 100
Sales
Table showing net profit ratio
63
Year 2013-14 2014-15 2015-16 2016-17 2017-18
Net profit ratio 2.3% 3.9% 4.3% 4.8% 5.6%
Statement of Net profit ratio:
NET PROFIT RATIO

2013-14 2014-15 2015-16 2016-17 2017-18
5.60%
4.80%
4.30%
3.90%
2.30%
Net profit ratio
Interpretation : The above graph reveals that the high ratio indicates the efficient
management of the affairs of the firm i.e. 2016-17, 4.80 and 2017-18, 5.60. it
shows profit are fluctuating and it is above 5% it is good for the company.
AVERAGE COSTING
3. Calculation of cost of average stock.
Cost of average stock = opening stock + closing stock / 2

Year 2013-14 2014-15 2015-16 2016-17 2017-18
Amount 1844163 3245578 3024402 2836512 2445789
STATEMENT SHOWING COST OF AVERAGE STOCK

64
COST OF AVERAGE STOCK

3500000
3245578
3000000 3024402
2836512
2500000 2445789
2000000
1844163
1500000
1000000
500000
0
2013-14 2014-15 2015-16 2016-17 2017-18
INTERPRETATION: The above average stock of the company in the year 2013-14 i.e.
1844163 is the lowest stock and from the year 2014-15 to 2017-18 the average stock is
decreased from 3245578 to 2445789.
4. CALCULATION OF INVENTORY TURN OVER RATIO
Inventory turnover ratio = cost of goods sold / cost of average stock held
during the period
Year 2013-14 2014-15 2015-16 2016-17 2017-18
Ratio 5.68 5.03 5.16 3.74 3.04
65
INVENTORY TURNOVER RATIO

6
5.68
5.16
5.03
5
4 3.74
3.04
3
0
2013-14 2014-15 2015-16 2016-17 2017-18
INTERPRETATION: The above inventory holding period ratio is decreasing year by

year It was 5.68 months in a year 2013-14 and 5.03 months in the year 2014-15. In the year
2015-16 it increased to 5.16 months the company is minimizing the inventories holding
months to increase the sales 75 it shows that inventory taking long time to convert in to sales.
5. INVENTORY HOLDING PERIOD

This period measures the average time taken for clearing the stock. It indicates that how many
day’s inventories take to convert from raw material to finishes goods.
Inventory turnover period = 365
Inventory turnover ratio
66
Inventory holding period = 365 / inventory turnover ratio
Year 2013-14 2014-15 2015-16 2016-17 2017-18

Period 64 73 71 98 120
INVENTORY HOLDING PERIOD
120
120
98
100 73
71
64
80
60
40
20
Period
0
2013-14 2014-15 2015-16 2016-17 2017-18
INTERPRETATION: The inventory turnover ratios are by the year from 2013-14 to
2017-18 are 64 to 120 except 2015-16 i.e. 71 are increasing year by year. It shows that
inventory ratio are fluctuating and it 2013-14 is decreasing from 5.68-0.65 it shows that
inventory taking long time to convert in to sales.
67
CHAPTER 8
FINDING AND SUGGESTIONS
68
FINDINGS
 The EBIT for the year 2015-16 is the highest one i.e. 4081456, from 2016-17 to 2017-
18 it continuously increasing i.e. 3367459, 3579171; it shows the increasing EBIT
year to year.
 Direct expenses and indirect expenses are fluctuating and direct expenses are more
than indirect expenses, in the year 2014-15 have increased if compared to rest three
years. Compared to 2015-16 and 2016-17 again it has increased by 27212488, in the
year 2016-17 indirect expenses are more than the direct expenses. it shows company
has to reduce direct cost.
 Total costs are decreasing from year 2013-14 to 2015-16 decreasing trend after that it
shows fluctuating from 2016-17 to 2017-18, it shows that the company has to control
both the cost. Its good sign the companies fixed costs are decreasing compare to
variable cost apart from 2016-17
 The company can able to maintain the ratio because of the better demand in the
market for the brand. Whenever there is a rise in the price of the input (raw material)
the company can able to increase correspondingly their selling price as to match
increase in their input cost. It shows company’s PV ratio are fluctuating but an
average it’s above 55%.
 The company is maintaining margin of safety 4694759 in the year 2013-14 overall, all
the years from the 2014-15 to 2017-18 which imply the company is safer. As the
margin of safety is good the company as immense opportunity are available to the
company to take up the expansion programme to in the face of profitable area.
 The above graph reveals that the high ratio indicates the efficient management of the
affairs of the firm i.e. 2016-17, 4.80 and 2017-18, 5.60. it shows profit are fluctuating
and it is above 5% it is good for the company.
 The average stock of the company in the year 2013-14 i.e. 1844163 is the lowest
stock and from the year 2014-15 to 2017-18 the average stock is decreased from
3245578 to 2445789.
69
 The inventory turnover ratios are by the year from 2013-14 to 2017-18 are 64 to 120
except 2015-16 i.e. 71 are increasing year by year. It shows that inventory ratio are
fluctuating and it 2013-14 is decreasing from 5.68-0.65 it shows that inventory taking
long time to convert in to sales.
 The above inventory holding period ratio is decreasing year by year It was 5.68
months in a year 2013-14 and 5.03 months in the year 2014-15. In the year 2015-16 it
increased to 5.16 months the company is minimizing the inventories holding months
to increase the sales 75 it shows that inventory taking long time to convert in to sales.
SUGGESTIONS
 Company can able to maintain the ratio because of the better demand in the market
for the Brand. Whenever there is a rise in price of the input (Raw material) the
company can able to increase correspondingly their selling price as to match increase
in their input cost.
 The company have to concentrate on stock. By analysing we can suggest the company
to follow material technique EOQ, ABC analysis and level of stock. It leads to help
the management to control on stock properly.
 Company has to reduce and control variable cost by proper adopting techniques of
cost control concentrate on (variable cost).
 Direct expenses can be reduced or controlled by proper budgeting or budgetary
control system.
 Company has to reframe inventory policy for the reducing inventory holding period.
 Company has to reframe credit policy to increase their business, and unnecessary
blockage of stock.
GENERAL SUGGESTION
 Company has to prepare cost sheet in proper format.

 Company has to minimize the wastage
 Company has to improve the sales
70
71
CHAPTER 9
CONCLUSION
CONCLUSION
The study made to analyse the cost analysis of direct and indirect expenses, fixed and
variable expenses and overall expenses of an organisation in order to meet the expectation
since the patil electric works private ltd is facing heavy competition in and around area of the
region essential to focus on aspect of cost, profitability and etc.
72
Cost accounting is a recent development. It is the branch of financial account. It maintains the
records of unit wise, process wise, job wise, department wise and control in reduction of costs
by preparation of cost, probably etc.
It has been an excellent opportunity for me to carry out the project at PATIL
ELECTRICAL WORKS PRIVATE LTD. It has helped me to a great extent to understand
the work culture and work environment prevailing within an organisation.
The administration department of all the sectors department employees are maintained the
good relationship between each other and in the manufacturing process all workers are
moving with each other and in the company overall coordination is good.
According to me patil electric works Pvt Ltd, Hubballi. The finance department is carrying
out of its responsibilities efficiently. All the major departments are cooperating and
synchronizing their efforts for the progress of company.
At the end I think each and every one who has directly or indirectly contributed their time
and efforts in completion of project at “PATIL ELECTRICAL WORKS PRIVATE
LTD”
73
CHAPTER 10
BIBLIOGRAPHY
BIBLOGRAPHY
Reference book:
 Cost and management accounting by M.N ARORA
74
 Cost and management accounting by institute of company secretaries of India (ICSE)

 Theory and problems of management and cost accounting by M.Y KHAN and P.K
JAIN.
WEBSITES:
 [email protected]
 www.wikipedia.com
 www.slideshare.net
75
ANNEXURE
PATIL ELECTRICAL WORKS PRIVATE LTD

PROFIT AND LOSS STATEMENT FOR THE PERIOD YENDED 31st MARCH, 2014.
SL PARTICULAR NOTE NO. AS ON 31ST AS ON 31ST

NO MARCH 2014 MARCH 2013
76
1 Revenue from operations 16 24664535 44503434

2 Other income 17 7184328 4066539
3 Total revenue (1+2) 31848863 48569973

4 EXPENSES:
Cost of material consumed and direct expenses 18 18003778 35298348
Purchase of stock in trade
Changes in inventories of finished goods, work in
progress and stock in trade 19 (2530419) (123535)
Employee benefit expenses 20 4957826 5031788
Financial costs 21 2492203 2841991
Depreciation and amortization expenses 22 2547824 2548454
Other administrative expenses 23 2454491 1757080
Total expenses (4) 27925703 47354127

5 Profit before exceptional and extraordinary items
and tax (3-4) 3923160 1215846
6 Exceptional items
7 Profit before extraordinary items and tax (5-6)

3923160 1215846
8 Extraordinary items/ prior period item
180000
9 Profit before tax (7-8)
10 Tax expenses 3923160 1035846

Current tax
1014940 197381
Deferred tax
46506 608930
11 Profit (loss) from the period from continuing (9-10)
operations 2861714 229536
12 Profit(loss) from discounting operations - -
13 Tax expenses of discounting operations - -
14 Profit(loss) from discounting operations(12-13)
- -
2861714 229536
15 Profit (loss) for the period (11+14)
16 Earning per equity share
Basic + Diluted (50.54+50.54) (4.05+4.05)
BALANCESHEET AS ON 31ST MARCH 2014

PARTICULARS Note no As on 31st march As on 31st
2014 march 2013
1. EQUITY AND LIABILITIES
(1) Shareholders funds
A. Share capital 1 5662100
B. Reserves and surplus 2 16011774 5662100
0
77
C. Money received against 0

12985170
(2) Share application money pending allotment
3 5031890 0
(3).Non-current liabilities
0
a) Long term borrowings
0 0
b) Deferred tax liabilities (Net)
0
c) Other long term liabilities
d) Long term provision
4 17557502 9436550
(4). Current liabilities
5 6247340
a) Short term borrowings
6 219206 0
b) Trade payables
7 281281
c) Other current liabilities
0
d) Short-term provisions
0
Total equity and
liabilities
8
II.ASSETS
(1) Non-current assets
18630956
a) Fixed assets
I. Gross block
9 11833266
II. Depreciation
III. Net block
359164
b) Non-current investments
10
c) Deferred tax assets (net)
271138
d) Long term loans and advances
51011093
e) Other non-current assets
11 59178344
12
(2) CURRENT ASSESTS
13 35622549 36011321
a) Current investments
14 15657975 13110152
b) Inventories
15
c) Trade receivables
d) Cash and cash equalents 19964573 22901170
e) Short term loans and advances 1538587 1788587
f) Other current assets 713912 760418
-
Total assets 51011093 59178344
Total assets
51011093 59178344
78
BALANCESHEET AS ON 31st MARCH 2015

2015 march 2014
2. EQUITY AND LIABILITIES
A. Share capital 1 5662100
C. Money received against
16011774
0
(3).Non-current liabilities 3 21789668
a) Long term borrowings 0
b) Deferred tax liabilities (Net)
c) Other long term liabilities
d) Long term provision
5031890
(4). Current liabilities 4 31217821
a)Short term borrowings 5 15251403 0
b) Trade payables 6 333758
c) Other current liabilities 7 424641 0
d) Short-term provisions
0
Total equity and liabilities
II.ASSETS
(3) Non-current assets 8
A) Fixed assets 17557502
i. Gross block
ii. Depreciation 6247340
IV. Net block 9
f) Non-current investments 219206
g) Deferred tax assets (net)
h) Long term loans and advances 10 281281
i) Other non-current assets 89564799
51011093
ii. CURRENT ASSESTS 11 75455481 35622549
g) Current investments 12 16441038 15657975
h) Inventories 13 59014444 15657975
i) Trade receivables 14 1538587 19964573
j) Cash and cash equalents 15 790257 1538587
k) Short term loans and advances 21849 713912
l) Other current assets 1595000 1355000
Total assets 89564798 51011093
79

PROFIT AND LOSS STATEMENT FOR THE PERIOD YENDED 31st MARCH, 2015


2 Other income 17 2629483 7184328
3 Total revenue (1+2) 36104532 31848863

4 EXPENSES:
progress and stock in trade 19 180210 (2530419)
Total expenses (4) 37051002 27925703

946471 3923160
and tax (3-4)
6 Exceptional items
7 Profit before extraordinary items and tax (5-6) 946471 3923160

946471 3923160
10 Tax expenses 1014940
Current tax 76345.42 46506
Deferred tax
(870125) 2861714
operations
14 Profit(loss) from discounting operations(12-13) - -
15 Profit (loss) for the period (11+14) (870125) 2861714

Basic + Diluted
(50.54+50.54)
80



2 Other income 17 2495845 2629483
3 Total revenue (1+2) 40174579 36104532

4 EXPENSES:
progress and stock in trade 19 3015767 180210
Total expenses (4) 44749195 37051002

and tax (3-4) 4576616 946471
6 Exceptional items
7 Profit before extraordinary items and tax (5-6)

4576616 946471

4576616 946471
10 Tax expenses
Current tax
Deferred tax 834684 76345.42
operations 5409300 870125
14 Profit(loss) from discounting operations(12-13) - -
15 Profit (loss) for the period (11+14) 5409300 870125

Basic + Diluted
81

2016 march 2015
(1) EQUITY AND LIABILITIES
A. Share capital 1 14063000 5662100
(3).Non-current liabilities 3 25120048 21789668

i. Long term borrowings 44426
ii. Deferred tax liabilities (Net)
iii. Other long term liabilities
iv. Long term provision
(4). Current liabilities 4 25503408 31217821

A. Short term borrowings 5 13946107 15251403
B. Trade payables 6 194548 333758
C. Other current liabilities 7 210048 424641
D. Short-term provisions
87282411 89564799
Total equity and
liabilities
II.ASSETS 8 77000154 75455481
I. Non-current assets 23384118 16441038
a. Fixed assets
b. Gross block
c. Depreciation 9 53616036 59014444
d. Net block 521850 1538587
e. Non-current investments 790257
f. Deferred tax assets (net) 10 19849
g. Long term loans and advances 21849
h. Other non-current assets
11 3239183
II. CURRENT ASSESTS 12 6009698 1595000
a. Current investments 13 16236875 9025465
b. Inventories 14 163295 15067345
c. Trade receivables 15 7475626 287051
d. Cash and cash equalents - 2224799
e. Short term loans and advances -
f. Other current assets
87282411 89564798
Total assets
82



2 Other income 17 1338251 2495845
3 Total revenue (1+2) 91128491 40174579

4 EXPENSES:
progress and stock in trade 19 408411 3015767
90852647 44749195
Total expenses (4)
5 Profit before exceptional and extraordinary items 275884 4574616
and tax (3-4)
6 Exceptional items
7 Profit before extraordinary items and tax (5-6) 275884 4576616

275884 4576616
10 Tax expenses
Current tax 646726 834684
Deferred tax
11 Profit (loss) from the period from continuing (9-10) 370881 5409300
operations - -
14 Profit(loss) from discounting operations(12-13)
370881 5409300
15 Profit (loss) for the period (11+14)
16 Earning per equity share 3 3
Basic + Diluted
83

2017 march 2016
(1) EQUITY AND LIABILITIES
(1) Shareholders’ funds
A. Share capital 1 1406300 14063000
(3).Non-current liabilities 3 23445182 25120048

a. Long term borrowings 691152 44426
b. Deferred tax liabilities (Net)
c. Other long term liabilities
d. Long term provision
(4). Current liabilities 4 18453814 25503408

a. Short term borrowings 5 15596271 13946107
b. Trade payables 6 2211650 194548
c. Other current liabilities 7 858597 210048
d. Short-term provisions
83149614 87282411
Total equity and
liabilities
II.ASSETS 8 79432658 77000154
1. Non-current assets 29543031 23384118
I. Fixed assets
a. Gross block
49889627 53616036
b. Depreciation 9 521850 521850
c. Net block
A. Non-current investments
19849 19849
B. Deferred tax assets (net) 10
C. Long term loans and advances
D. Other non-current assets
11 4616804 3239183
II. CURRENT ASSESTS 12 5601287 6009698
a. Current investments 13 21052400 16236875
b. Inventories 14 81063 163295
c. Trade receivables 15 1366734 7475626
d. Cash and cash equalents
-
e. Short term loans and advances
f. Other current assets
83149614 87282411
Total assets
84
85

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A STUDY ON COST ANALYSIS AT PATIL ELECTRICAL WORKS PRIVATE LTD

KARNATAK UNIVERSITY, DHARWAD

Summer In-Plant Project

“A STUDY ON COST ANALYSIS”

This is to certify that Ms AISHWARYAPRASAD K.S, Reg. No.

17MBA639 student of 2ndsemester of our Institution has completed Summer In-

plant Project (SIP) during the academic year 2017-2018 at PATIL

ELECTRICAL WORKS PRIVATE LIMITED, HUBBALLI. Entitled “A

STUDY ON COST ANALYSIS” in partial fulfilment of Master of Business

Administration degree as prescribed by Karnataka University, Dharwad.

Dr. Sadanand Havanagi

This is to certify that AISHWARYAPRASAD is a bonafide student of

year 2017-2018 at “PATIL ELECTRICAL WORKS PRIVATE LIMITED”.

ON COST ANALYSIS” under my guidance.

Prof. GULNAZ GAIMA

This is to certify that MS. AISHWARYAPRASAD K.S. with Roll No:

17MBA639 student of Institute of Business management & Research, Hubballi

studying in MBA has successfully completed his/her Summer In-Plant Project on

“A STUDY ON COST ANALYSIS” in our organization from 28th June to 28th

August 2018 (60 days).

good. We wish the good luck in his/her future endeavors.

I, AISHWARYAPRASAD K.S, student of MBA 2ndsem, Institute of

Date: 28/08/2018 AISHWARYAPRASAD K.S

It is my privilege to have accomplished this study under the guidance of my guide,

I wish to thank Mr VIKAS PUROHIT, as my external guide and all the

CHAPTER CHAPTER PAGE

2 Industry Profile 11-13

3 Company Profile 14-36

4 About the study 37-39

5 Research methodology 40-41

6 Conceptual framework 42-55

7 Analysis, Findings &Suggestions 56-71

TITLE: A STUDY ON “COST ANALYSIS” AT PATIL ELECTRICAL

In today’s rapidly changing business environment, organisations have to respond quickly to

Introduction to the Industry:

 History of the Industry:

STATUS OF THE INDUSTRY AT PRESENT

PATEL ELECTRIC WORKS PVT LTD

 Armatures for automobile starters

A decided team of talented managers. Technocrats are continuously engaged in phenomenal

Name of the organisation Patil electric works PVT.LTD

Type of the firm Private ltd

Year of establishment 1991

Nature of business Manufacturer

Land 25000 sq.ft

Backup power 82.5KVA

 By taking complete project ownership.

At patil electric works pvt. Ltd, are committed to,

 Meet customer requirements and excel in all spheres of management, through

 Enhance customer satisfaction

 Reduce in-house rework.

VISION AND MISSION

CNC controlled induction welding machine.

Automated varnishing station.

CNC controlled balancing machine.

Some of the assembly line stations

Crane & Hoist duty motors

Energy efficient motors