ACKNOWLEDGEMENT

I express my gratitude to all those who have directly or indirectly helped me in

the completion of my pursuit .I am deeply indebted to management of
LAFARGE INDIA Pvt. Ltd, ARASMETA CEMENT PLANT who found in
me confidence to undertake this project.

With immense pleasure I would like to offer my humble gratitude to Mr. Shiva
Kumar, Vice President – LIPL-ACP a for providing me an opportunity to
undergo training in their esteemed organization.

I am immensely thankful to Mr.Rajnish Sinha, training coordinator, for sparing

his invaluable time for my project and clarifying all my doubts personally in spite
of such busy schedule and putting confidence in me and providing every kind of
help which was really needed for this project.

I am deeply thankful to Mr. Amardeep Singh, Sr. Finance Officer, being a

source of guidance and support to me throughout this project. I am also thankful
to him for sharing his knowledge and experience with me and clarifying each of
the doubt I have came across while doing this project.

I am also thankful to Mr.Sanjay Gupta for providing all the necessary

information for getting an actual view of the organization.

Pankaj Kumar Singh

MBA (IVth SEM)

1
 CONTENT
CHAPTER-1 Introduction
 Introduction to Cement Industries in India

 Introduction to Lafarge
 Objectives & Integrated policies of Lafarge
 Lafarge in India
 Award Winning Performance
 Introduction to Arasmeta Cement Plant

CHAPTER-2 Introduction to Financial Department

 Accounts And Control Department

 Significant Accounting Policies
 Accounts Department
 PF, Superannuation, EDLI, GSIL
 Financial Fundamentals Of ACP
 Financial Information Of Lafarge

CHAPTER-3 Cost Accounting

 Definition
 Objectives
 Importance
 Reports Provided By Cost Accounting
 Factors In Installing A Cost Accounting System
 Essential Of A Good Cost Accounting System
 Advantages Of A Cost Accounting System

2
  Elements Of Cost

CHAPTER-4 Cost Accounting System at ACP

CHAPTER-5 Data Collection

CHAPTER-6 Analysis and Interpretation

CHAPTER-7 Suggestion

CHAPTER-8 Overview of Other Departments

Plant and Operation Management

Dispatch or Logistic Department
Information Technology

Conclusion

3
 CHAPTER – 1
INTRODUCTION OF
LAFARGE
INTRODUCTION TO CEMENT INDUSTRIES
IN INDIA

The cement industries in India are well settled industries. LAFARGE, AMBUJA,
CENTURY, GRASIM, ULTRATECH, TATA etc are the big names in the world
of Cement Industries. Cement Industries ranks next to steel industries from the
point of view of economic development of the country. Cement Industries has
been working for a quite long time.
The word cement is used to define any adhesive substance. It is derived
from Latin word “caementum” which means stone chippings. Cement is a
complex mixture of Tri-Calcium Silicate-55%-60%

Di-Calcium Silicate-15%-20%
Tri-Calcium Silicate aalumino ferrite-12%
Gypsum-4% and some impurities such as magnesium oxide, free lime etc
Cement is finally ground powder that when mixed to water sets to hard
mass. The history of cement goes back to classical GREECE and ROME. The
material then used was lime and volcanic ashes that slowly reacted with lime in

4
presence of water to form a hard mass. The invention of Portland cement was
attributed to Joseph Aspidine who in 1824 took out a patent for synthetic mixture
of limestone and clay. The two other important developments in the history of
Cement were the invention of Portland Slag cement and Portland Pozzolona
Cement, commonly called as PSC and PPC respectively.

The history of Portland Cement in India is dated back to 1914, when first
cement plant was established at Porbandar to produce the Ordinary Cement
(OPC)
The important landmarks in the history of Cement
Manufacturing in India are: -

YEAR EVENTS
Indian Cement Industry founded with the establishment of Indian
1914
cement at Porbandar with 1000 ton capacity

1924 Ten Companies with total capacity of 5.6 lakh tones cement started.

1925 Indian Cement Manufacturing Association C.M.A. was started.

Concrete Association of India was formed to educate public in the issue

1927
of cement through free technical advice.
Cement marketing company of India was formed to promote the sales
1930
and distribution of Cement at regulated price

1936 Cement companies merge to form associated Cement Company.

Indian started Institute and Directorate General of suppliers and

1951
disposals established

5
1956 Indian policy comes into force

1965 Cement Research Institute was set up.

Cement Industry was one of the first Industries to be liberalized.

1982 RAYMOND LTD cement division went into production at Gopalnagar,
Bilaspur

VIJAYPATH SINGHANIA owner of RAYMOND LTD has sold his

2001
company to LAFARGE GROUP

CEMENT INDUSTRIES IN INDIA

DOMESTIC PLAYERS

• Associated Cement Company Ltd. (ACCL)

• Century Textile and Industries Ltd. (CTIL)
• Grasim – UltraTech Cemco.
• Gujrat Ambuja Cement Ltd. (GACL)
• India Cements
• Jaiprakash Associates Ltd
• Madras Cements
• J K Synthetics

6
FOREIGN PLAYERS

• Lafarge India
• Holcim
• Italecementi Group

INTRODUCTION TO LAFARGE

The Lafarge group is a world leader in construction material and holds leading
positioning in each of its four-core business area viz. Cement, Aggregates and
Concretes, Gypsum and Roofing. It operates in 75 countries and globally employs
over 80000 people and generated annual sale of Rs 9372 million in the year
2005.It expertise and best practices in efficient industrial production and
conservation of natural resources have been implemented around the world.
The Lafarge group was set up in 1883, in southern France, between the cities of
Lyon and Marseille. In 1864, the groups internationals operation received a fillip
with the receipt of an order for supplying 110000 tones of Cement for the
construction of Suez Canal. Between 1900 and 1914 the group expanded in
France North & South America. and then in all continents.

Lafarge Group, a fortune 500 French giant, is a leader in construction materials

with global revenues of US$ 19 billion in 2003. The group’s Indian operations,
Lafarge India Pvt. Ltd. started in November 1999,subsequent to the takeover of

7
TATA steel’s cement division. The company acquired a total capacity of 4 million
tones of cement & after de-bottlenecking, currently, has a manufacturing capacity
of 5million tones of cement & 3 million tones of clinker.

History of Lafarge
The Lafarge story began in 1833…

1833-1914 Solid Foundation

In 1833 Leon Pavin, launched an industrial lime production operation, having

taken over a business acquired by his family in 1749 with the purchase of the
Lafarge domain in south eastern France, an area known for generation for the
quality of its limestone deposits. The company signed its first major international
contract in 1864, delivering 110000 tonnes of lime for the construction of the
Suez Canal. Lafarge opened its first central research laboratory in 1887, the Le
Teil Laboratory, with which highly reputed scientists collaborated. In 1908, the
central laboratory filed a patent for the Cement Founder calcium aluminates,
obtained by fusing a mixture of bauxite and limestone. This new high alumina
binder gradually established a reputation as rapid hardening cement resistant to
both high temperature and corrosion. In the year until 1914, favouring a strategy
of horizontal integration, the company – now the “Societe des Chaux et des
ciments de Lafarge du Teil”- set about acquiring time and cement companies in all
parts of France.

8
1 9 1 4 - 1 9 5 5 G ro w t h o n a l l f ro n t s
International development began with the opening up of North American markets.
Lafarge, which had operated in Algeria over since 1866, now became the leading
Portland cement producer in Algeria, and set up operation in Morocco and
Tunisia. Lafarge Continued to acquire companies in mainland France. With a
quarter of the domestic market, the company became established as France’s
number one cement producer. In 1926, Lafarge opened its first alumnus cement
plant in the United Kingdom .It diversified into Gypsum in 1931 and developed
Super Blanc, new cement, in1932. By 1939, Lafarge was the leading cement
producer in the France. After 1945, Lafarge gained a new lease of life with the
arrival of Alfred Francois at the helm, the Marshall Plan and the post- war
rebuilding boom, production doubled over the next ten years.

1 9 5 5 - 1 9 8 1 M e r g e r s , A c q u i s i t i o n s , D e v e l o p me n t s
In 1956, Lafarge constructed its North American cement plant, creating Lafarge
cement of North America with startup of the Richmond Plant in Canada. In 1959
Lafarge began operation in Brazil. By the end of the 1960 Lafarge Canada has
become the third largest cement producer in the country, with the annual
production capacity of 90,000 tonnes. In 1980, a merger agreement was signed
between Lafarge and coppee as the number one cement producer in North
America. The size of the group rose from 12000 to 17000 employees.

1982-1990 The conquest of Europe

During the 1980s, with the construction of a single market representing more than
300 million inhabitants the group chose to expand its business in Europe. Lafarge
turned to Germany, raising its stake in Portland Zementwerk at Wossingen to
83%. Through the purchase of Swiss company, cementia in 1989, the group

9
acquired interests in Ashland (Spain), Aslan(Turkey) and Perlmooser (Austria).
The followed investment in Eastern Europe, East Germany, the Czech Republic
(1991), then Poland ,Romania, Russia and Ukraine. The agreement with the East
Germany cement producer, Karsdorf, came even before German reunification had
been mooted.

1992-2003 Lafarge becomes world leader in building materials

1994 saw Lafarge take a foothold in China. Today, all four of the groups division
operates there have been developments throughout Asia (1998: Indonesia and the
Philippines; 1999 India and South Korea). The group’s expansion in Poland began
in 1995 with the acquisition of a 75% stake in Kujaway. Within six years, 4
entities representing all four divisions were active in the country.
Lafarge acquired Redland in 1997, positioning itself more strongly in Aggregates
and Concrete and gaining entry into Roofing market.
Thanks to acquisition of Warren in Canada in 2000, Lafarge became one of the
leading Aggregates producers in North America. Lafarge focused on its main four
divisions, and divested its specialty product business, which became Masteries.
Lafarge was the first industrial group to conclude a partnership agreement with
WWF (World Wildlife Fund for nature).
In 2001, following the acquisition of Blue Circle, Lafarge became the world’s
leading cement producer. Numerous acquisition and joint venture in all four
divisions and one every continent,
Particularly Asia has continued to consolidate its world leadership position. In
July 2001, Lafarge was introduced onto the New York Stock Exchange (NYSE).

10
 OBJECTIVES AND INTEGRATED POLICIES
OF LAFARGE

Objectives of Lafarge India Pvt. Ltd.

To bring the profitability of our recently acquired operations to the highest level
by using

# Our global know-how

# Our benchmarking capability

# Our continuing efforts in reducing the cost base and improving efficiencies.

# Our experienced management Team

# Introduce new ready mix products with higher value added

# To continue exploring acquisition in Cement and Aggregates.

#To strengthen further our concrete tiles leadership and increase our presence in
clay tile.

Integrated policy
• Quality
• Environment
• Occupational health and safety

Lafarge India Pvt. Ltd. affirms its commitment towards customer satisfaction,
environmental protection, healthy and safe work environment for all concern and
shall endeavor to –

11
 • Produce clinker and cement exceeding the applicable standard to satisfy
the customer needs
• Comply with all applicable legal and other requirement
• Provide the necessary resource and training to all employees in conducting
their work and enhancing their skill
• Regularly set and review objectives and targets for continual improvement
in quality, productivity, work environment & health and safety
performance
• Prevention or control of pollution and occupational health and safety
hazards
• Institute Management Systems of international repute and continual
improve their effectiveness
• Communicate the necessary information to the stakeholders.

Responsibilities

To anticipate and meet customer needs –

• Create a perceived difference and be the supplier of choice.

• Serve our customer better by knowing them better.
• Contribute to the development and progress of the construction industries

To enhance the value of shareholders investment and gain their trust.

• To provide shareholders with the competitive return on their investment.

• To provide them with the clear information.
• To respect the interest of companies partner and minority shareholders

12
To make the employees the heart of the company-

• To base legitimate authority on the ability to contribute to the company s

success.
• To develop mutual respect and trust.
• To provide employees with equitable compensation and fulfilling
professional environment.

To gain from increasing diversity-

• To make company’s cultural diversity an asset.

• To delegate responsibility with accountability and control
• To develop an effective cross operational management approach
• To make the use of synergies and share know-how.

To respect common interest

• To participate the life of communities where company operates

• To operate responsibility towards the environment.
• To be guided by principles of integrity, openness and respect in company
commitments.

Environmental Policy

• Sparing use of natural resources

• Environmental know-how and expertise
• Following pre determined environmental standards

13
 • Innovative products
• Training and evolution

LAFARGE IN INDIA

Lafarge India Pvt Ltd commenced operation in India by acquisition of TISCO’s

cement plants in 1999, and later in January 2001 further acquired cement business
of Raymond Limited. Now the Lafarge India CEO, Uday Khanna .The eastern
India operation center is in Kolkata while head office in Mumbai.

PLANTS IN INDIA
A brief description of Lafarge India’s existence facilities is as below-

Location Facilities Rated capacities

Sonadih Clinkerisation 1.4 MTPA of
unit clinker
Cement grinding 0.4 MTPA of OPC
unit 43 Grade
Jojobera Cement grinding 3.0 MTPA of PSC
unit & PPC
Arasmeta Clinkerisation 1.6 MTPA of
unit clinker
Cement grinding 1.6 MTPA of PPC
unit

14
 GROUP DIVISION
Different divisions in the group are as under –

CEMENT-

Lafarge manufactures and supplies wide variety of Cement and Hydraulic binder
to all those involved in the construction industries viz. building and public works
contractor, builders, whole sellers, prefabricated concrete manufacturers, ready
mix concrete producers, specifies etc.

In addition to qualities of stability, strength and durability Lafarge cement is

highly adaptable to a wide range of applications, such as aggressive environment,
rapid applications architectural consideration and technical constraints.

AGGREGATES & CONCRETES

Lafarge also manufactures a wide variety of concrete, including standard

Concretes and specially concretes, which offer specific advantage in terms of ease
of application, economic utilization, strength or appearance. Aggregates are used
alone or in conjunction with a binder in building, civil engineering and public
works. Lafarge is the second largest manufacturer of Aggregates and concrete in
the world.

ROOFING

The group manufactures wide variety of roofing material, including concrete,

metal and clay roof tiles to meet a wide range of consumer requirements. It is the
world’s largest manufacturer of roofing materials. In Germany, Lafarge introduce

15
new product such as our star surface, concrete tiles with a smoother surface.
Concrete, clay and metal roof tiles product ranges, roof system components and
chimney systems.

GYPSUM

Lafarge also manufactures a wide variety of gypsum product like Blocks, Plaster
boards, Sprayable plasters, wall boards and plaster coating for variety of
customers requirements. It is 3rd largest manufacturer of gypsum products in the
world.
Plaster board systems, Gypsum blocks and sprayable plaster intended for
construction, finishing in new building and renovation.

SALES BY DIVISION

As stated earlier that the Lafarge has been divided into 4 different groups. The
coverage of their market in the world is shown below-

16
 Gypsum
9%
Roofing
11%

Cement
47%

Aggregates &
Concrete
33%

The above graphics clearly shows the sales of each group in % of the sales of their
products in the world. As shown that it nearly sales 47% of cement, 33% of
aggregate and concrete,11% of roofing,9% of gypsum.

PRODUCT –LAFARGE CEMENT

17
Lafarge India offers four exclusive products-

Portland Slag Cement (PSC) available in the markets of West Bengal,

Bihar, Orissa and the Northeastern states.
Portland Pozzolana Cement (PPC) available in the markets of West
Bengal, Bihar, Orissa and the Northeastern states.
Ordinary Portland Cement (OPC), 43 grade available in the market of
Madhya Pradesh, Chattisgarh, and Vidharba (Maharashtra)
Clinker, available in the Indian states of West Bengal, Bihar and Andhra Pradesh
is exported to Bangladesh and Nepal.

MARKET OF LAFARGE

The Lafarge India covers a large area in the world. The cement and the products
are very popular in the world. These products are demanded in the different

18
region of the world. The graph below shows the overall detail of the region of the
world where there are sold.

Market in India
The world of the Lafarge in India begins with the acquisition of some of the
cement plant such as TISCO and RAYMOND in the years 1999 and 2001.Lafarge
India has covered a wide region of the Indian market within a small period. The
eastern region and some parts of Maharashtra etc.were quickly within the range of
the Lafarge.
The market region of Lafarge India is shown below.

PRESENCE IN INDIA

La
Lafarg
fa ee
rg ,,Ara
Arasmee
smta
ta
Clinker- 1.6 MT
Clinker- 1.6MT
Ce
Cemee
mnt
nt--1.6
1.6MT
MT
J
A
S

La
Lafarg
fargee,,So
Sonn
aa
dd
ih
ih Lafa
La rg
fa ee
rgJo
,Jo
, jobb
joeera(GU)
ra(GU)
Clinke r- 1.2
Clinker- 1.2MTMT Cem ent - 3.0 MT
Cement - 3.0MT
Cem
Cemee
nt
nt--0.4
0.4MT
MT

LEADER IN EASTERN INDIA MARKET

The company has a strong focus on the eastern India market and has emerged as a
major player in the region with a 20% market share. It sells its product in the

19
states of Jharkhand, Bihar, North East, West Bengal, Orissa, and Chhattisgarh.
Lafarge has established good brand equity and has thus been able to command a
premium in price over its competitors.

LAFARGE GROUP

Cement Aggregate Roofing Gypsum

s&
Concrete

World wide No. 1 No. 2 No.1 No.3

position

Sales in Rs. 27,953 20,503 16,665 14,079

(Crores)

No. of plants / 106 plants 1700 200 68

Manufacturing and 20
Sites Grinding
plants

LAFARGE GROUP

No. of countries where operating-75

No. of Employees-77000

20
 MARKET SIZE & SHARE

Assam &
Biha North Eastern
r 4.4 1.9 states
MT
MT 22.4%
Market Share - Eastern India 17.7%

Jharkhan West
d 2.7 Bengal
MT
29.9% J 6.8 MT
Chhattisgar 17.3%
h
3.5 MT
A Orissa
18.3%
S 4.4 MT
11.2%

AWARD WINNING PERFORMANCE

YEAR AFTER YEAR
YEAR AWARD
1987.88 Best energy efficiency in Indian cement industry
Best productivity performance in cement industry

1988.89 Best energy efficiency in Indian cement industry

productivity performance in cement industry

21
1989.90 2nd Best productivity performance in cement industry

1990.91 Best productivity performance in cement industry

3rd Best energy efficiency in Indian cement industry

1992.93 Best energy efficiency in Indian cement industry

1995 British Safety Council Award

1997 National Energy Conservation Award

1997-98 Mine Environment & Minerals Conservation Award

National Productivity Award

2001 National Energy Conservation Award

22
ARASMETA CEMENT PLANT

23
 Plant Location Vill. Arasmeta, District - Janjgir
Chhattisgarh, India
Total Land Area 860.5 Hect.(2125 Acres)
Land Area (Factory) 82.5 Hect. (203.8 Acres)
Land Area (Colony) 43 Hect. (106 Acres)
Land Area( Mines ) 735 Hect. (1816 Acres)
No of Employees 650
Specific Power Consumption 77 KWH / MT Packed Cement(PPC)
Maximum Temperature 48 o C
Minimum Temperature 8 oC
Relative Humidity 80 % Max.
Rain Fall 1000mm Avg.
Northern Latitude 21o55' to 22o00'
Estern Longitude 82o15' to 82o25'

Arasmeta cement plant is one of the units established by Lafarge group in

India.The Arasmeta cement unit is both clinkerisation and grinding unit.

HISTORY

The taking over of the Raymond cement plant by the Lafarge group formed the
Arasmeta cement plant.The arasmeta cement plant came into existence in the year
22nd january 2001.Arasmeta Cement plant is one of the profit earning units of the
Lafarge group.All the formalities in respect of the transfer of the cement division
Raymond India ltd.to Lafarge India ltd.were completed with the signing of

24
agreement between Mr. K.V Ganeshan, COO Lafarge India Pvt. Ltd.and Mr.A.D

Khatri, V.P. Raymonds. Arasmeta cement mainly produces PPC cement.

Causes of Establishment.

ACP was established here because of the following reasons.

• Availability of raw materials.

• Facility of transport.
• Fulfillment of water.
• Nearness to Market.
• Sufficient Supply of Labour.
• Nearness of sources of fuel and power.

FACILITIES

The Arasmeta Cement Plant is both the Clinkerisation unit and Cement Grinding
unit. It produces 1.6 MTPA of clinker per year and 1.6 MTPA of Portland
Pozzolana Cement and now they have started the new product named as Lafarge
Concreto Cement in the market.

Position of land

LAND In ACRES
GOVERNMENT LAND 620.52
DIRECT PURCHASE 798.00
BY COMPANY ACQUISITION 235.48

Quality

25
Arasmeta cement plant has received following certificates
⇒ ISO 9001-2001
⇒ EMS 14000
⇒ OHSAS 18000

CHAPTER – 2
INTRODUCTION TO
FINANCE
DEPARMENT OF
ACP

26
 INTODUCTION TO FINANCIAL DEPARTMENT OF
LAFARGE (ACP)
ACCOUNTS AND CONTROL DEPARTMENT -An Overview
As the nomenclature of the Department denotes, the objectives are two fold –
“Accounts” related and “Control” related.

a) Accounts: Every Company & Business Organization needs to assess its

financial transaction and performance. For that it is essential that financial
transactions are identified and recorded properly in a systematic way as per
Generally Accepted Accounting Principles. It provides various reports and up to
date information like
• Total Income & Expenditures, nature wise, period wise, etc.
• Customer & Creditor Balances.
• Capital & Fixed Assets, Investments.

No management decision can be taken unless there is proper Accounting & Book
Keeping. It also helps to discharge tax obligations and other statutory obligations
properly and timely.

b) Budgetary Control: After capturing data and records, it is essential that

Various Cost and Production parameters are analyzed. Reasoning for variance
with respect to Budgets & Forecasts are documented. Adverse variances are
reported to Plant & EOO.

c) Payment Control: All payments are released after the transaction passes
successfully through related controls.

27
SIGNIFICANT ACCOUNTING POLICIES

1. Accounting methodology

The Lafarge India Pvt. Ltd. Follows the mercantile system of accounting and
recognizes income and expenditure on accrual basis. The accounts are prepared
on historical cost basis as a going concern. Accounting policies not referred to
otherwise are consistent with generally accepted as accounting principles.

2. Use of estimates.

The preparation of financial statements in conformity with the generally accepted

accounting principles requires estimates and assumptions to be made that affect
the reported amount of the assets and liabilities on the date of the financial
statements and the reported amount of revenues and expenses during the reported
period.

3. Revenue recognition.

i) Sales are recognized when goods are supplied and invoiced.

ii) Revenue is recognized only when it is reasonably certain that the
ultimate collection will be made.
4. Preliminary expenses.

Preliminaries expenses are amortized in five equal annual installments.

5. Fixed assets.

Fixed assets are valued at cost of acquisition or construction. They are stated at
historical costs.

6. Valuation of inventories

28
 i) Stores, spares parts and other supplies are valued at weighted average
cost or net realizable value, which ever is low.
ii) Raw materials are valued at monthly weighted average cost or net
realizable value, which ever is low. The cost includes purchased price
as well as incidental expenses.
iii) Work in progress is valued at absorption cost or net realizable value
which ever is low.
iv) Finished goods are valued at cost or net realizable value which ever is
low. Cost includes freight and excise duty paid/provided for on
finished goods.
7. Investments.

i) Current investments are valued at cost or fair/ market value which ever
is low.
ii) Long-term investments are shown at cost. However, when there is
decline, other than temporary, in the value of a long term investment
the carrying amount of such investment is reduced to recognize the
decline.
8. Taxes on income

Current tax is measured at the amount expected to be paid to / recovered from the
revenue authorities using applicable tax rates and laws.

The deferred tax for timing difference between the book and tax profits for the
year is accounted for in accordance with the accounting standard (AS22)
Accounting for taxes on income issued by the Institute of Chartered Accountants
of India using the tax rates and the laws that have been enacted or substantively
enacted as of the balance sheet date.

9. Provisions Contingent Liabilities and Contingent Assets

29
Provisions involving substantial degree of estimation in measurements are
recognized when there is present obligation as results of past events and it is
probable that there will be an outflow of resources. Contingent Liabilities are not
recognized but are disclosed in the notes. Contingent assets are neither recognized
nor disclosed in the financial statements.

Source –Lafarge
Annual Financial statement

ACCOUNTS DEPARTMENT

The Accounts and Control Department at the Plant Level is headed by Senior
Manager – Plant Accounts & Control and he reports Administratively to Plant
Manager and Functionally to Vice President - Accounts & Control.

a) Financial Accounting:
General Accounting
● Raw Material Accounting

● Stores Accounting

● Contractor Accounting

● Accounting entries

● Trial Balance

30
Control
● Inter Unit Account reconciliation
● Record keeping-documentary evidence for each transactions
● Preparation of Account Reviews
● Reconciliation between GL and P&I module
● Reconciliation of Cenvat (Excise & Service Tax)
● Compliance to Statutory Audit/ Tax Audit/ FOCUS

Accounts Payable
● Raw Material Bills processing & Payment
● Stores Bills processing & Payment
● Contractor Bills processing & Payment
● Import Material & Services Bills processing
● Issue of Sales Tax declaration forms
● Maintenance of JDE vendor address book for LIPL
● Preparation of Landed Cost Rule (LCR) for LIPL
● Statutory Payments
● Other Direct Bills processing & Payments
● Maintenance of Vendor invoices
● TA Bills Processing & payment
● Inward & Outwards Freight Bills processing & Payment
● Raising of Debit notes / Recoveries
• TDS deduction from vendor & Payment to Govt A/c
Control
● Receiving confirmations from venders
● Reconciliation of balance between parties & our books
● Integrity Report Generation from System

31
 ● Compliance to Statutory Audit/ Tax Audit/ FOCUS

Reporting
● Filing of E-TDS Quarterly returns

Pay Roll
● Processing of payroll
● Processing of Full & Final settlement
● Incorporation of Income Tax changes
● Preparation of Salary Budget
● Calculation of Income Tax
● Calculation of Superannuation & Gratuity & reporting

Payment
● TDS payment
● Professional Tax payment
● Payment of Salary & Wages and other allowances

Control
● Analysis between Budget & Actual
● Compliance to Statutory Audit/ Tax Audit/ FOCUS

Reporting
● Filing of E-TDS Quarterly returns
● Professional Tax returns

32
Treasury

● Maintenance of Manual Cash & Bank Books

● Maintenance of CNCC Account (for ACP & SCP)
● Cash Receipt & Payment
● Payment Group Generation & Payment
● Bank Draft Purchase statement
● Record keeping for Bank Guarantees & FDR
● Daily Physical Verification of Cash & Reconciliation
● Bank reconciliation statement
● Compliance to Statutory Audit/ Tax Audit/ FOCUS
● Monthly Cash Forecast

b) Management Accounting:
Reporting & MIS
● Capex Reporting
● Monthly Plant Cost
● Stock Valuation Report
● MIS Recordings
● Quantitative Details
● Fortnightly Cost Forecast
● Clinker Cost to JCP
● Capex Status to Plant
● Compliance to Statutory Audit/ Tax Audit/ FOCUS

33
(2) Fixed Assets
● Maintenance of Fixed Assets module in JDE
● Capitalization of Fixed Assets
● Running of Depreciation calculation module
● Depreciation checking & booking
● Asset Physical Verification
● Write Off of obsolete items
● Integrity Report Generation from System
● Compliance to Statutory Audit/ Tax Audit/ FOCUS
● New Asset Codification Form
● Asset Divestment Form
(3) Capex Project
● Obtaining new Job Cost Number
● Capitalization of expenses incurred on projects
● EVA Analysis
● Capex Audit
● Compliance to Statutory Audit/ Tax Audit/ FOCUS
● Monthly Capex status reporting
c) Taxation:
● Maintenance of Excise Records
● Statutory Audits
● Departmental Audit
● Cenvat Credit availment
● Responding to Show cause Notices
● Filing & Attending Appeals
● Keeping track of modifications in Acts & Rules
● Submission of Returns

34
 ● Payment of Excise & Service Tax
● Compliance to Statutory Audit/ Tax Audit/ FOCUS
● Payment of Entry Tax & VAT & Central Taxes
● Compliance to Statutory Audit/ Tax Audit/ FOCUS

PF, SUPERANUATION, EDLI, GSIL

● Maintain PF Members Eligibility Register.
● Monthly Deduction statement to Kolkata/Mumbai for challan preparation.
● Challan submission to Bank.
● Submission of Monthly / Yearly Returns to Regional PF Commissioners`
Office, Raipur
● Submission Employees PF Transfer cases to Regional PF Offices
● Submission PF Advance/ Final settlement cases
● Statutory Provident Fund Audit both Internal/ External.
FINANCIAL FUNDAMENTALS OF ARASMETA CEMENT
PLANT
Sources of funds.
An organization requires fund to operate its business. As some of the fund is
engaged for the production activity, some fund is engaged in investment activity
and others are used for the payments and some fund are locked up in providing
credit facilities. So the organization looks for the fund from the outside they may
be long term and short terms loan.

Lafarge India Pvt. Ltd. incurs fund from various sources includes,
shareholder funds and loan funds. Shareholder fund involves capital share
received from investors, and reserves and surplus. Contrary to this loan funds
involves secured loans as well as unsecured loans. Similarly the received capitals
from various sources are used in acquiring fixed assets, investments in long term
or short term sources, payment of loan and advances. Current liabilities and

35
provision are paid through these acquired sources. The data below shows the
acquisition of fund and their applications of the fund.

Sources of funds In Rs. 000's Total

Shareholders funds
1. Capital 4156963.00
2. Reserves and surplus 2837500.00 6994463

Loan funds
1.Secured loans 4323369.00
2. Unsecured Loans 39602.00 4362971

Tax deferred 1355000.00

Grand Total 12712434

Collection of above fund is done through following sub source

FINANCIAL INFORMATION OF LAFARGE

The principal financial parameters of the Lafarge group for past 4
years are as under:-
5 years performance
Year Unit 2 2 2004 2005 2006
002 003
Sales volume KT 4121 3692 4316 4555 4760
PROFIT & LOSS m INR
ACCOUNTS
Gross sales M INR 9008 8553 1060 11234 13596
5

36
Less-Excise Duty m INR 1391 1420 1733 1862 1954

Net Sales m INR 7617 7133 8872 9372 11642

Operating profit m INR 1367 1384 1740 1517 2414

(PBDIT)
Depreciation m INR 667 681 668 705 682
Interest m INR 728 654 510 361 300
Profit Before Tax m INR 27 49 562 451 1412
Current Tax m INR 1 3 45 51 167
Deferred Tax m INR 240 125 (416) (523)
Exceptional Items m INR 101 27
Net Profit m INR 129 221 392 816 1840

Sales Volume Of last 5 Years

5000

4000

3000
Sales
2000

1000

0
1 2 3 4 5
Year Unit 2002 2003 2004 2005 2006
Sales volume KT 4121 3692 4316 4555 4760

37
 BALANCE SHEET
Item Unit 2002 2003 2004 2005 2006
Net fixed Assets m 1203 11693 11157 1072 10800
INR 7 1
Net Current Assets m 927 105 74 873 495
INR
Share Capital m 4157 4157 4157 4157 4157
INR
Reserve & Surplus m 2600 2600 2992 2038 3627
INR
Loan Fund m 6668 5531 4201 4303 2769
INR
Net Worth m 6366 6307 6905 6305 8534
INR
Source- Lafarge Financial Statement

38
 Net Profit In last 5 Years

2500

2000

1500
Profit
1000

500

0
1 2 3 4 5
Year Unit 2002 2003 2004 2005 2006
Net Profit m INR 129 221 392 816 1840

FINANCIAL RATIOS

Years Unit 2002 2003 2004 2005 2006

Operating Profit Margin % 15.6 16.5 17.5 14.7 19.5
Return on Capital Employed % 5.2 5.7 9.4 7.2 17.3
Interest cover X 0.9 1.1 2.1 2.3 5.6
Debt Equity Ratio X 0.99 0.82 0.6 0.6 0.34
Earning Per Share INR / Share 0.31 0.53 0.95 1.96 4.26
Cash earning per share INR / Share 1.3 1.7 2.9 2.7 4.5
Book value per share INR / Share 15.4 15.4 16.7 17.6 20.6

39
 Debt Equity Ratio Of Last 5 Years

4
Val
ue
3

1998 2000 2002 2004 2006 2008

year

Source- Lafarge Annual Financial Statement

PRODUCTION DATA FOR THE YEAR 2007 (MONTHLY

BASIS)

JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC TOTAL
PP 12523 10488 10198 14615
C 103867 112962 5 5 112255 128221 86410 76241 4 3 127803 115571 1341587
Duraguard 4798 2061 0 0 0 0 0 0 0 0 0 0 6859
Concreto 0 9364 4509 8962 17814 8819 0 6267 11267 9157 6286 9768 92213
12438 12974 15531 12533
TOTAL 108665 7 4 113847 130069 137040 86410 82508 113251 0 134089 9 1440659

40
160000.000

140000.000

120000.000

100000.000
PPC
80000.000
Duraguard
60000.000 Concreto

40000.000

20000.000

0.000
JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC

CHAPTER – 3
COST ACCOUNTING

41
 COST ACCOUNTING
Costing is a very significant area of accounting in any production unit. In a
production unit there are elements like material, labour and overheads, which are
important parts of cost accounting system. There is various way of defining the
cost accounting. It can be defined in following terms: -

Costing is “the technique and process of ascertaining costs”.

Cost Accounting is “the process of accounting for cost which begins with the
recording of income and expenditure or the bases on which they are calculated
and ends with the preparation of periodical statements and reports for ascertaining
and controlling costs”.

42
Cost Accountancy is “the application of costing and cost accounting principles,
methods and techniques to the science, art and practice of cost control and the
ascertainment of profitability. It includes presentation of information derived there
from for the purpose of managerial decision-making.

OBJECTIVES OF COST ACCOUNTING

The main objectives of Cost Accounting are as follows: -

1. Ascertainment Of Cost
2. Determination Of Selling Price
3. Cost Control And Cost Reduction
4. Ascertaining The Profit Of Each Activity
5. Assisting Management In Decision-Making

IMPORTANCE OF COST ACCOUNTING

Management of business concern expects from Cost

Accounting detailed cost information in respect of its operations to equip their
executives with relevant information required for planning, scheduling,

43
controlling and decision-making. It helps the business firm in following functions:
-

 Control of Material cost through proper utilization and supply

management.
 Control of Labour cost through reduction in labour turnover and idle
time.
 Control of Overheads by keeping a strict check over them.
 Measuring Efficiency by comparing the standard and actual outputs and
costs.
 Preparing Budget which help in planning in getting results.
 Price Determination by help of cost of all the elements and taking profit
in consideration.
 Help in curtailment of loss during off-season by reducing overheads and
using ideal capacity.
 Helpful in Expansion by providing information of production at different
levels.
 Helpful in Decision-Making by providing them accurate information
about production functions.

REPORTS PROVIDED BY COST ACCOUNTING

There are many types of reports, which are prepared with

the help of cost accounting to help the firm in taking different kinds of decisions.
Some of those reports are as follows: -

44
  Cost sheets showing total cost, comparative figures for previous and
current period, analysis of various elements etc.
 Statements related to the consumption of materials, used in production
and wastage.
 Report on labour utilization regarding the production and idle time etc.
 Comparisons of overheads taking the actual and budgeted figures.
 Reconciliation of actual profit earned with estimated or budgeted
profit.
 Report on the cost of abnormal losses during production.
 Expenses on research and development

FACTORS IN INSTALLING A COST ACCOUNTING SYSTEM

The management, which has a habit of studying information thoroughly before
making decisions, would require a cost accounting system. Before setting up a
cost accounting system the under mentioned factors should be studied: -

 The objective of installing the system must be clear.

 The system must be install in the area of business where it is most
beneficial.
 The installation of cost system should not need alteration or extension of
firm.
 The affect on different variable expenses should be considered.
 The maximum amount of information should be gathered without much
labour and by faithful ways.
 The data collected should be able to get verified.

45
  The benefits of installing the system must be explained to the concerned
persons in the organisation.

ESSENTIAL OF A GOOD COST ACCOUNTING SYSTEM

 It should be tailor-made and simple.

 Able to fulfill the requirement of business concern.
 Data used for Cost Accounting System must be accurate.
 Cooperation and coordination between different departments is
essential.
 The Cost of installing and operating of the system must be
justified.
 It should not provide any kind of unnecessary and meticulous
details.
 Management should have a faith in the Costing System and should
provide a helping hand for its development and success.

46
ADVANTAGES OF A COST ACCOUNTING SYSTEM

 Helps in identifying unprofitable activities, losses or inefficiencies

in any area of working in the organisation.
 By the use of techniques like cost reduction, operational research
and value analysis it helps in achieving the economy in firm’s
operations.
 Helps in knowing the reasons for increase and decrease of
profit/loss.
 It provides information and data to management to serve as guides
in making decisions involving financial considerations.
 It provides a great help in deciding the selling price.

47
  Cost accounting provides methods, which are helpful in
comparison of actual and estimated values and get the deviations.
 Cost of idle capacity can be easily worked out through the cost
system.
 Cost comparison helps in cost control.

ELEMENTS OF COST

ELEMENTS OF COST

MATERIAL COST LABOUR COST

OTHER EXPENSES

DIRECT INDIRECT DIRECT LABOUR INDIRECT LABOUR DIRECT

INDIRECT
MATERIAL MATERIAL COST COST EXPENSES
EXPENSES
COST COST

48
 OVERHEADS

PRODUCTION ADMINISTRATION SELLING

DISTRIBUTION
OVERHEADS OVERHEADS OVERHEADS
OVERHEADS

CHAPTER – 4
COST ACCOUNTING
SYSTEM AT ACP

49
 COST ACCOUNTING SYSTEM AT LAFARGE INDIA
Pvt. Ltd.,ARASMETA CEMENT PLANT

As a production unit a good costing system is very essential for ARASMETA

CEMENT PLANT. Company has adopted process-costing system for determining
the cost of the product under reference through integrated accounting system – JD
EDWARDS FINANCIALS. The company determines the cost under the
following elements: -

Total cost

Raw material Labour Overheads

In order to ascertain the cost correctly, the entire manufacturing activities both
direct and indirect have been broken into cost centers based on identical processes
/machinery /activity. The expenses are identified and collected at each cost center

50
 level. The cost centers have been broadly identified with the following major
manufacturing processes: -

Major
Manufacturing
Process

Limestone Cement
Clinkerisation
Quarrying manufacturing

a. DIRECT- Process Cost Centers

Direct-Process Cost Centers

Crushing

Raw Mill

Kiln

Technical
Cement Mill
Services
Material
CCR
Packing Handling

b. DIRECT- Production Overheads

Power
Laboratory
generation
Direct-
Production
overheads
General
Water
Industrial
supply
Services

Civil Mech.
Department Workshop
Elec.
51
Workshop
c. INDIRECT – Administration Overheads (Factory)

52
 Informat
ion &
Stores Technol Personn
el
Rural Account
develop s
ment

Sports VP’s
& office
Welfare

purchas
Safety
Indirect- e
Adminis
tration

General
Training Adminis
tration

Environ Guest /
ment Transit
houses

Security Town
Services mainten
ance
Medical Canteen
Services Services

d. Administration Overheads (Corporate)

53
e. Selling and Distribution Overheads (S G & A)

The different overheads are allocated in different process in the following

proportions: -

1. PRODUCTION OVERHEADS (except laboratory & CCR)

• Clinker 61%
• Cement 26%
• Packing 13%

2. LABORATORY
• Raw Mill 35%
• Clinker 15%
• Cement 50%

3. CCR (Central Control Room)

• Raw Mill 20%
• Clinker 50%
• Cement 30%

4. ADMINISTRATION OVERHEADS (FACTORY)

• Clinker 61%
• Cement 26%
• Packing 13%

PROCESS OF MANUFACTURE

54
A brief note regarding the process of manufacture along with flow chart covering
production, utility and service department of the product.

Cement grade limestone is available in the captive mines situated adjacent to the
plant site.Limestone is mined and transported in Dumpers to primary Crusher.The
Primary Crusher reduces its size to approximately 300 mm. The size of the stone
is further reduces when it passes through secondary crusher to 25 mm. The
crushed stone is stacked by a stacker in stock piles of approximately 15000 ton
capacity.
Limestone form stackes is reclaimed by reclaimer. The process of stacking
and reclamining ensures pre-homogenizing of limestone alongwith other
corrective materials e.g. Gypsum and Iron Ore are ground in ball mill or Vertical
roller mill to the required fineness.The ground material is pumped to blending
silo. Blending silos help in proper homogenizing of raw mix when material from
blending silo is transferred to storage silo.
Raw mix from storage silo is fed to Pre Heater through weight feeder.The raw
mix gets heated while passing down the Pre- Heater and then into the kiln. The
ground coal is fired from the outlet end of the kiln.
The hot clinker obtained from the kiln passes through the cooler where it gets
cooled.
The clinker is again ground with Pozzolanic material ( Fly ash ) for PPC in
ball mills to obtain Cement.The Cement is then transported through RBC to
cement silos from where it is taken to automatic packers to pack into 50 Kgs bags
whenever needed in the packing plant.The packed Cement is then dispatched
either by Railway or Truck to various destinations as per the Logistics plan.

55
 Limestone Mines
Quarry Workshop

Limestone
Transport

Crusher

Raw Mill
Coal Workshop ( VM )

Kiln

Coal Workshop Raw Mill

( BM )

Clinker
Despatch

Packing
Cement & Cement
Grinding Despatch Grinding

PRODUCTION RECORDS

56
 Company maintains adequate production records, showing actual hours
worked and hours lost with adequate reasons for kiln, raw mill and cement.

LIMESTONE
Daily reports showing quantity raised, quantity transported, quantities
crushed are prepared. In the costing department, separate register is maintained
for quantitative records. For the purpose of management control periodic cost
statement are prepared with budgeted and actual values. The cost sheet is prepared
on the monthly basis, with figures up to that month and up to that period of the
year. Since the company has their own mines, limestone is not use in financial
records. It is treated as production.
Purchase items like Gypsum, Fly ash etc separate ledger of
receipts, issue and stock are kept. The cost of receipt includes the freight, taxes
etc. The total cost is known as landed cost. Consumption record is kept every
month. The closing stock is valued at cost including freight, taxes and duties.

LABOUR COST
It is charged to cost centers on actual department wise allocation.

STORES AND SPARES

The record of receipt, issue and stock of stores and spares are kept
in computers in online form. The issues are valued in weighted average method
on the basis of authorized slip issued from cost centers. Consumption report is
prepared item wise and cost center wise. At the year end physical stock is taken
and is valued at cost same as limestone. The receipts are also recorded it as in
limestone. All the items of store and spare are physically verified at the end of the
year.

57
REPAIR AND MAINTENANCE
These are identified with various cost centers as per actuals by
analysis of bills of jobs.

DEPRECIATION
Total depreciation of cement unit is computed for each asset cost
center wise on the basis of Company’s Act 1956. The company follows Straight
Line Method (SLM).

HEAD OFFICE AND OTHER EXPENSES

Head offices expenses are charged to their respective accounts through inter unit
account for the expenses incurred. All other expenses are charged to different
departments on the basis of nature of expenditure.

58
59
 CHAPTER – 5
DATA COLLECTION

DATA COLLECTION
DATA COLLECTION:

60
 The data for any project for analysis and interpretation can be collected through
two methods, which are: -

1. PRIMARY DATA→ Primary data is that data which is collected by the

researcher himself by going to the place of happening.

2. SECONDARY DATA → Secondary data is a form of data that is collected

through various indirect ways like newspapers, books, journals,
periodicals, reports published by the companies, Internet etc.

In my project I had used both type of methods. The information collected about
the company is basically collected through the secondary data that is collected
through Internet and magazines.
The data about the working cost accounting system is
collected from the employees of the finance department, which is a method of
primary data. On the basis of this information I had done my analysis and
interpretations. It helps in drawing conclusions and providing necessary
suggestions.

THE COST STATEMENTS OF THE ACP ARE PREPARED AS

FOLLOWING: -
DESCRIPTION OBJECT RESPONSE MONTH UPTO THAT FOR THE YEAR
ACCOUNT CENTER MONTH
BUDGET ACTUAL BUDGET ACTUAL BUDGET ACTUAL

This kind of statement helps in many ways. The above statement can be used for:
 To know the allocation of things to different departments
 To compare the actual working with the planned figures

61
  To know the current position in compare to planned targets
 Help to take corrective steps if the company is lacking in any area
 Help in increasing efficiency
In the ACP plant cost sheets are prepared for every overhead and process. In case
of my project my focus is on production area, so I basically taken the following
cost sheets for my analysis of the cost system and its application at ACP: -
 LIMESTONE QUARRY
 CRUSHER
 RAW MILL
 KILN
 CEMENT
 PACKING PROCESS
 CENTRAL CONTROL ROOM
 LABORATORY
 ADMINISTRATION OVERHEAD (FACTORY)
 PRODUCTION OVERHEAD (FACTORY)
I have shown one example of the cost sheet of the one process. The cost sheet is
same for all the other processes that are stated above.

COST SHEET FOR LIMESTONE QUARRY

62
DESCRIPTION OBJECT RESPONSE MONTH UPTO THAT FOR THE YEAR
ACCOUNT CENTER MONTH
BUDGET ACTUAL BUDGET ACTUAL BUDGET ACTUAL
Opening Stock (M.T)
Production (M.T)
TOTAL (M.T)
Consumption/Dispatch
(M.T)
Closing Stock (M.T)
OPERATIONS:
Stores & Spares
Oil/ Fuel
Explosives
Other Spares
Contractors
Power
Sub - Total (1)
MAINTENANCE &
REPAIRS:
Stores & Spares
Mechanical
Electrical
Instrumentation
Others
Lubricants
Contractors
Mechanical
Electrical
Instrumentation
Others
Sub - Total (2)
Salaries & Wages
Other Expenses
TOTAL RAISING COST
Opening Stock (M.T)
Closing Stock (M.T)
Cost Of Limestone
Transferred
Cost Of Mines Workshop
Cost Of Lime Stone
Transportation
Cost Of Limestone
Transferred KCB
Total Cost Of Limestone At
Crusher
DEPRECIATION
OTHER EXPENSES

63
 CHAPTER – 6
ANALYSIS AND
INTERPRETATION

ANALYSIS AND INTERPRETATION

My observation is basically focused on the different cost of the process of cement
production. The cost sheets which I use for this project had many type of costs.
But they can be analyzed under three heads, which are as follows: -

• OPERATIONS
• MAINTENANCE AND REPAIRS
• SALARY AND WAGES

The cost is distributed through different cost centers according to the requirement
of departments in different process. The cost centers are given different codes,

64
which not only help in the allocation of the cost, but it makes it convenient in
entering the value in financial software. It further helps in audit and rechecking
works. The cost flow chart with the cost codes at ARASMETA CEMENT PLANT
is shown in the following page. It not only helps us to study the flow of cost, but
also the different heads of expenditure.

ANALYSIS
As I mentioned earlier that I had analyzed ten cost sheets of those processes
which are the main part of the production. The cost sheets are: -

 LIMESTONE QUARRY
 CRUSHER
 RAW MILL
 KILN
 CEMENT
 PACKING PROCESS
 CENTRAL CONTROL ROOM
 LABORATORY
 ADMINISTRATION OVERHEAD (FACTORY)
 PRODUCTION OVERHEAD (FACTORY)
On the basis of my analysis I found three major division of cost, which I
mentioned above. The analysis of the cost is done with the respect of total cost of
that particular process. The analysis of cost as follows: -

65
OPERATIONS
BUDGETED ACTUAL
TOTAL OPERATION % TO TOTAL OPERATION % TO
NAME OF PROCESS COST TOTAL PROCESS COST TOTAL
PROCESS COST COST COST COST

LIMESTONE 55334 41500 75 43687 29951 68.5

QUARRY

CRUSHER 75085 6063 8.08 74596 7460 10

RAWMILL 101600 69220 68.13 110532 75935 68.7

KILN 97277 70195 72.16 112678 80328 71.29

CEMENT 198114 90795 45.83 172353 87279 50.64

GRINDING

PACKAGING 136345 20206 14.82 152743 19390 15.42

66
PROD. OHS. 36871 1076 2.92 35979 741 2.06

ANALYSIS & INTERPRETATION

1. The figures above shows that at limestone quarry process the main
component of cost is operation cost, which has 75% of total cost. The
minimum being needed in production overheads.
2. It is also significant to note that in some process the actual cost is lower
than the budgeted cost. In some cases it is slightly higher.
3. In case of cement grinding process the difference is high as the factors of
operation like oil, fuel and power are variable in requirements.
4. Finally we can say that the operation cost is an important part in the
production process as it carries maximum cost in process like limestone
quarry, kiln, raw mill and cement grinding.
5. Also the organisation is able to perform its work under its estimated costs,
which shows the efficiency in the working of the organisation.

67
 OPERATION COST % TO TOTAL COST

100
90
80
% TO TOTAL COST

70
60
50
40
30
20
10
0
RAWMILL

GRINDING

PACKAGING
CRUSHER
LIMESTONE

KILN

PROD. OHS.
CEMENT
QUARRY

PROCES S

BUDGETED VALUE ACTUAL VALUE

MAINTENANCE AND REPAIRS

68
 BUDGETED ACTUAL
NAME OF TOTAL MAINT. % TO TOTAL MAINT. % TO
PROCESS PROCESS & REP. TOTAL PROCESS & REP. TOTAL
COST COST COST COST COST COST
LIMESTONE 55334 5842 10.52 43687 6042 13.83
QUARRY
CRUSHER 75085 5489 7.31 74596 3782 5.07
RAWMILL 101600 12507 12.31 110532 10677 9.66
KILN 97277 16071 16.52 112678 1973 17.51
CEMENT 198114 10202 5.15 172353 10427 6.05
GRINDING
PACKAGING 136345 2850 2.09 152743 3681 2.41
PROD. OHS. 36871 9679 26.25 35979 14694 40.87
CCR 360 360 100 217 217 100
LAB 3885 2025 52.13 3622 1321 36.46

ANALYSIS & INTERPRETATION

1. Here we can see that the maximum percentage to total cost is required in
central control room (CCR), where the whole cost is required for
maintenance and repairs.
2. We can also observe that the process, which required high operation cost,
had less maintenance and repairs cost.
3. In this cost we can see that except limestone quarry, kiln, cement grinding
and production overheads the actual cost is less than the budgeted value.
4. From the figures we can interpret that the cost of maintenance and repair
is low. It shows that the working at the plant is very smooth and controlled
one.
5. Here also the company is able to check its cost according to its estimated
values.

69
 MAINT. & REPAIR % TO TOTAL COST

100
90
80
70
% TO TOTAL COST

60
50
40
30
20
10
0
LIMESTONE

KILN

GRINDING

PACKAGING
RAWMILL

LAB
CRUSHER

CCR
PROD. OHS.
CEMENT
QUARRY

PRO CESS

BUDGETED VALUE ACTUAL VALUE

SALARY

70
 NAME OF TOTAL SALARY % TO TOTAL SALARY % TO
PROCESS PROCESS TOTAL PROCESS TOTAL
COST COST COST COST
LIMESTONE 55334 7747 14 43687 7689 17.6
QUARRY
CRUSHER 75085 2771 3.69 74596 2715 3.64
RAWMILL 101600 3942 3.88 110532 3791 3.43
KILN 97277 11031 11.34 112678 11268 10
CEMENT 198114 4675 2.36 172353 4550 2.64
GRINDING
PACKAGING 136345 8522 6.25 152743 9760 6.39
PROD. OHS. 36871 18878 51.2 35979 17511 48.67
ADMIN. OHS 70067 15947 22.76 68570 17622 25.7
LAB 3885 1860 47.87 3622 2014 55.61

ANALYSIS & INTERPRETATION

1. We can observe that salary is a main component of total cost in laboratory,

administration overheads and production overheads.
2. The reason for that is at the process like limestone quarry, kiln, cement
grinding and crusher we need more of labours than officers, whose wages
are lower than the officers working in laboratory, administration and
production departments.
3. Here we can see that the actual cost is higher than estimated one. But this
usually happen because there are contract labours, whose numbers are
variable at times. Also company some times provides incentives to the
employees for getting better results.
4. We can interpreted that there is a difference in the actual and budgeted
and actual values of wages and salary is due to change in number of
employees and the extra bonuses provided by the organisation.

71
 % TO TOTAL COST

100

0
10
20
30
40
50
60
70
80
90
LIMESTONE
QUARRY

CRUSHER

72
RAWMILL

KILN

BUDGETED VALUE
CEMENT
GRINDING

PROCESS
PACKAGING

PROD. OHS.

ACTUAL VALUE
SALARY COST % TO TOTAL COST

ADMIN

LAB
 CHAPTER – 7
SUGGESTIONS

SUGGESTIONS

73
The cost accounting system in the Lafarge India Pvt. Ltd., Arasmeta Cement Plant
is a very efficient one. We cannot suggest much to the organisation. But the
system reveals some values, which need suggestion for better working at the
plant.

1. The whole working is online. In case of mistake it took time for

rectification. The plant should provide help to the officers to rectify the
mistakes themselves.
2. On finding difference in actual and budgeted figures, the cost accounting
system should generate alert to the concern departments.
3. The costs accounting systems also checks the employees’ number in the
organisation and relate it to the deviations in the salary and wages. It
should provide report for it.
4. The costs accounting system can be further improved, so that it can be
more helpful in the process of analysis of data.
5. The costs accounting system can take some innovative steps like better
wage payment system etc in improving the profits and performance of the
organisation.

74
 CHAPTER – 8
OVERVIEW OF
OTHER
DEPARTMENTS

Plant and operation Management.

A. Production Management.
Structure of Plant.
The structure of the Lafarge India Pvt. Ltd. is continuous process layout. Here the
process of the cement production is continuous. So the layout here is continuous

75
in nature. The flow of the material is continuous. The Shape for the material flow
is
I + U shaped.
Production Process.
The Limestone, which is one of the major raw material for the production of the
cement. The limestone is extracted from the mine. The mine is first drill and then
with the help of the explosive it is blasted and the ores of the limestone is taken to
the crusher. The ore containing the high percentage of the lime is taken to the
primary crusher where it is broken into pieces. The broken pieces of the limestone
are then sent to the secondary crusher where it is broken into smaller pieces. From
the crusher it sent to raw mill where the limestone is mixed with gypsum and iron
ore. Gypsum is added to slow down the settling of the cement and iron ore is
added to provide the strength. Then the mixture is sent to the kiln where the
temperature of nearly 1400 degree C is maintained and the mixture thus converted
into clinker. The clinker is then sent to grinding unit where it is grind and mix
with gypsum. The fine mixture of the cement is sent for packaging where it is
packed and sent for the dispatch through road and railway.

B. Stores Management.

Receipt Section.
The receipt section as the name suggests that it keeps the data regarding the
inventory that are supplied to the Lafarge for the purpose of the production. The
order is sent to the operation office of the Lafarge and then the order is issued to

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the supplier. The supplier supplies the material to the company that is recorded at
the receipt section.
Issue Section.

The issue section issues the material that is requested by the other department for
the purpose of the production. First the requisition is issued by the department
according to theirs needs, this requisition is sent to the receipt section and it is
approved by the high authority and then the materials is issued to the requisite
department. Finally the records are maintained.

DISPATCH OR LOGISTIC DEPARTMENT

INTRODUCTION TO LOGISTIC DEPARTMENT

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In this department of Lafarge the daily Dispatch or the sales of goods is
maintained. Here the quantitative measurement of dispatch of goods is done and
report is sent to the Finance Department. The functions performed by the
Logistics Department are: -

FUNCTION OF LOGISTICS DEPARTMENT

1. The work order is issued in the name of the transporter by the Logistic
department.
2. Transporters are then issued a particular code called RO.
3. According to that RO transporters deposits the paper of Truck.
4. By taking information from the papers of Truck deposits by the
transporters “Delivery instruction” is prepared commonly called as DI.
5. DI includes all the relative information about the quantity of cement,
Truck and the Truck Driver
6. DI is prepared and sent to the transporters.
7. The truck is kept in a queue in the Truck yard till the announcement.
8. After announcement the empty truck enters the premises of LAFARGE.
9. The empty truck is then weighted in a weighbridge.
10. After crossing the weighbridge the truck moves towards the packing plant
for loading.
11. In a packing plant according to DI mentioned quantity of materials are
issued and loaded in a truck / Wagon
12. Then again Loaded Truck has to pass through weighbridge where loaded
quantity is checked.
13. Then in Dispatch DI is kept and Gate pass is issued.
14. Three copies of gate pass is issued one to driver, to dispatch Department
&one is sent to accounts.

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 15. The whole Dispatch is summarized at 12 o’clock at night every day. Three
copies of summary is prepared one is sent to Bilaspur office, one in the
Accounts Department and one is kept by the Dispatch Department.

INFORMATIONTECHNOLOGY
DEPARTMENT OF LAFARGE, ACP: -

Lafarge has wide area network (WAN), which connect all computers in the plant.
It has two main server namely JDE, MAXIMO located in Malaysia. With the help
of CITRIX tool it provide remote login. Finance department uses ERP and PEPS.
Generally Visual basic acts as front-end and Oracle acts as backend. Network
services provided by IT department are in three parts: T Drive- common to all

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employees, anybody can access it. W Drive- specific for a given department. No
other department can work upon any other department’s drive. Y Drive - specific
for given employee.

IT Department plays three major roles: -

• To co-ordinate functioning of ERP

• To raise call to help desk- Regional sales services, when problem

cannot be handled locally.

• To check the functioning of each computer of all department.

SAFETY DEPARTMENT

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 Safety function

Safety Talk: One of the major activity in safety department is conduction of

safety talk .It is held daily in which all the HOD’s and plant manager participate
and discuss for all the accidents.

Audit: monthly audit is done for checking equipments, machines etc. It can be
done internally and externally both.

Safety program: It consist of following processes conducted at every first date of

each month for the duration of two hours. It includes:
• Reading of Monthly prayer
• Reading of Integrated Policy
• Health and safety measures

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 • Discussion related to First aid injuries and accidents occurred in
the month

Safety Person of the month: Every month two persons are selected to be the
safety person of the month. One person is from the contractors and one is from the
workmen’s working in the Lafarge.

First Aid Box: First box is placed in each and every department of Lafarge.

Doctor: Every Tuesday and Friday a lady doctor visit the plant for the general
checkup of the lady employees.

Medical claim: For the workmen the compensation for medical injury is up to
750000 and for the officers it is up to 1lakh-2lakh approx.

Safety Seminars: Safety Seminars are conducted in regular intervals to enhance

the awareness of the employees.

Fatal Compensation: If a person because of any major accident becomes fatal

then according to company’s rule every employee will help him by donating their
one day’s half salary within three days.

Allowances: In packinghouse where the cement is loaded all the employees are
provided with dust allowance to prevent them from any hazardous effect of
cement powder. This includes one and half Kg of jaggery and 600 Grams of
mustard oil per month. And for working in kiln area Heat allowance in form of
money is given.

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Permit to work: Only those employees or contractors are permitted to work ,by
the safety department having one or all the permits given below:
• Work permit
• Height Permit
• Confined space
• Hard Permit

Safety instruments:

For working in any part of the plant various safety instruments are provided to the
workmen keeping in view the safety of the workers health. some of the safety
instruments are :
• Helmet
• Safety shoes
• Nose mask
• Ear plug
• Goggles
• PP bags
• Hand gloves
• Safety belts
• Nets
• Apron for welding purposes
• Full screen Helmet

HUMAN RESOURCE DEPARTMENT OF LAFARGE ACP

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 Human resource policies of Lafarge India Pvt. Ltd.

Recruitment Policy. The applicants are required to apply for the post to main
office in the Mumbai and Kolkata.

Selection Policy. The applicant is interviewed by a panel and with telephonic

way. The selected candidate is then sent for the placement.

Integrated policy

• Quality
• Environment
• Occupational health and safety
Lafarge India Pvt. Ltd. affirms its commitment towards customer satisfaction,
environmental protection, healthy and safe work environment for all concern and
shall endeavour to –

• Produce clinker and cement exceeding the applicable standard to satisfy

the customer needs
• Comply with all applicable legal and other requirement
• Provide the necessary resource and training to all employees in conducting
their work and enhancing their skill
• Regularly set and review objectives and targets for continual improvement
in quality, productivity, work environment & health and safety perform-
ance
• Prevention or control of pollution and occupational health and safety haz-
ards

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 • Institute Management Systems of international repute and continual im-
prove their effectiveness
• Communicate the necessary information to the stakeholders.

Induction And Training.

The person who is appointed in the Lafarge is trained under a schedule.
For e.g. a person is from the marketing then he will be trained under the following
schedule. The schedule is as under-
1. Plant Overview.
2. Orientation to Operation Area.
3. Overview of Logistic.
4. Overview of Quality Assurance
5. Visit to the Marketing areas.
The training for the person is first categories as under which category the person
is to be trained. The category for the training is as follows-
• Functional.
• General.
• Technical.
• Safety.
• BATS – Behavioral Approach Towards Safety.
• Quality.
• Behaviour.
• New Technology.
• External.

Performance Appraisal.

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 Following two methods basically does the assessment of the performance of an
employee in Lafarge-
• Job Description. It includes the nature of the basic job done by a
particular employee. It describes the basic responsibility and
accountability towards the job assigned to him.
• Key Performance Indicator (KPI). It specifies area of work,
weighted or importance of your work, action plan prepared,
evaluation of job. In Lafarge there are some parameter on which
the performance of the employee is measured. Every parameter is
provided a scale from 0-10
The weightage is calculated on the following parameter-
Performance Factors- It includes Planning, controlling, organising,
innovating, and decision making etc. Besides this appraisal is done on the
basis of project Undertaken and some unplanned achievements. Lafarge
believe in 360 degree evaluation.

Internal mobility.
From the above performance evaluation the score obtain is compared with the
following ranks 1. Outstanding. 2. Fully Achieved. 3. Mostly Achieved. 4. Not
Achieved. 5. New Assignment. As per the rank provided the internal mobility
such as promotion transfer and demotion is decided.
Compensation Plan.
Lafarge provides their employee a compensation with the Fixed Salary +
Bonus+ PF+ Others Facilities.
Welfare Activity. Lafarge has provided many facilities to their employees
under their social responsibilities-
• Providing housing facilities.

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 • Transport Facilities for their employee by providing bus services
for the employees and their family.
• Providing Medical Facilities.
• Providing Drinking Facilities.
• Women and health development program.
• Assistance to repair and construction.
• Providing School facilities.
• Safety Policy.
• Security Policy.

Environmental Policy.
• Sparing use of natural resources.
• Environmental know-how and expertise
• Following pre determined environmental standards
• Innovative products

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CONCLUSION

Cost Accounting is a very important branch of financial

working of any production organisation. It not only helps in comparison of actual
cost and estimated cost, but also helps the firm to know his exact position of its
working. The main focus of my project was to study the cost accounting system
of Lafarge India Pvt. Ltd., Arasmeta Cement Plant.

My overall objective is to know the working and

functions of cost accounting system of the plant. During my training period with
data collection and interaction with the employees of the Arasmeta Cement Plant
(LIPL) I am able to know about the working of the cost accounting system.

My study shows that the cost accounting system at the

Arasmeta Cement Plant (LIPL) is a very efficient system. It keeps records of each
and every department. It helps to analyze the data of all departments at one place.
Since the system is an online one it helps in working fast. The cost accounting
system at the Arasmeta Cement Plant (LIPL) not only provide the true position to
the management, but also provide budgetary solutions to the organisation. All in
all we can say that the cost accounting system at the Arasmeta Cement Plant
(LIPL) is a system which every production unit should have for better
performance.

My objective of the project is fulfilled with the help of

data provided and help from the employees of the Arasmeta Cement Plant
(LIPL).

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