A PROJECT REPORT ON COST ANALYSIS OF ORACLE PLASTIC PRIVATE LIMITED SUBMITED BY Akash Bang(05) Bhupendra Chintamwar(10) Ashlesha Hate(22)

Vaibhav Puslekar(46) MMS-I (SEM-II) SUBMITTED TO PROF. DEEPA CHAVAN

THROUGH Smt.K.G.MITTAL INSTITUTE OF MANAGEMENT INFORMATION TECHNOLOGY AND RESEARCH YEAR 2012-2013

Cost and Management Accounting

INDEX
1. EXECUTIVESUMMARY 2. Introduction to Company 3. Workers Management Hierarchy 4. Wages and Salary Information 5. Distribution Channel 6. About the Products 7. About the Process 8. Labour Cost 9. Conclusion & Suggestions 1 4 6 7 8 9 10 12 14

Cost and Management Accounting

Executive Summary
This project is based on to understand costing done in the plastic industry. Indian plastic industry has made significant achievements in the country ever since it made a promising beginning with the start of production of polystyrene in 1957. The industry is growing at a rapid pace and the per capita consumption of plastics in the country has increased several times as compared to the earlier decade. The chronology of production of polymers is summarized as under 1957 - Polystyrene 1959 - LDPE 1961 - PVC 1968 - HDPE 1978 Polypropylene On the basis of value added, share of India's plastic products industry is about 0.5% of India's GDP. The export of plastic products also yield about 1% of the country's exports. The sector has a large presence of small scale companies in the industry, which account for more than 50% turnover of the industry and provides employment to an estimate of about 0.4 million people in the country. Approximately Rs 100 billion are invested in the form of fixed assets in the plastic processing industry. Currently, the Indian plastic industry is highly fragmented with an estimate of around 25,000 firms and over 400,000 employees. The top 100 players of Indian plastic industry account for just 20% of the industry turnover. Barring 10 to 15% of the firms that can be categorized as medium scale enterprises, most of the units operate on a small scale basis. This project is based on to understand costing done in the plastic disposable industry. A plastic(Disposable) is a product designed for cheapness and short-term convenience rather than medium to long-term durability, with most products only intended for single use. The term is also sometimes used for products that may last several months to distinguish from similar products that last indefinitely. The disposable products include medical & hygiene products such as toilet paper, Plastic
3

Cost and Management Accounting

Syringes, Blood Bags,Paper Napkins, Facial Paper & Toilet Rolls ,Baby and adult diapers etc. kitchen & dining products like disposable dishware, plastic cutlery, cans ,bottles, cups, plates, glasses et .Plastic Disposable packaging material is widely used in hotels and catering

Industries.Consumer products like paper shopping bags and recycled plastic shopping bags, etc. The disposable paper industry has a huge potential, given the largest infant population in the world and a large, growing middle class with expanding disposable incomes. Paper manufacturers and petrochemical companies seem to have realized the enormity of this emerging market.

The increasing awareness for health and hygiene among the expanding middle class and significant proportion of fe to the total population, its right time for Indian players to invest in this segment as this industry has only 1% market penetration as against 98% in developed countries. The plastics industry shapes the world we live in today whether it is industrial, technological or commodities used on a regular basis. Research covers a wide spectrum of plastics including materials, additives, processes, applications, and intermaterials. Polymers, resins, coatings, films and composites are major areas of the plastics market covered. Quality market analysis, forecasts and trends determined from key market drivers help shape the future of the plastics industry. In-depth company profiles and patent analysis will help understand the emerging technologies and applications by key market players and stakeholders. This study analyzes the $15.3 billion Indian plastic service industry. It presents historical demand data for the years 2000, 2005 and 2010, with forecasts for 2015 and 2020 by product (e.g., containers, lids and dones, wraps, bags, cups, dinnerware, napkins, moist towelettes) and market (e.g., eating and drinking places, retail and vending machines, institutional, lodging and hospitality, sports and recreation). The Indian plastic industry clearly has the potential to continue its fast growth. However, over the next few years, competition in the industry is expected to increase considerably, as a result of global trends, which will become applicable to the liberalizing economy of country. To survive the competition, both polymer manufacturers and processors will need to adopt radically new methods and approaches to reduce costs, improve market and customer service and management of performance.

Cost and Management Accounting

The per capita consumption of plastics in India is well below the world average. However it also reflects the many years of growth ahead, as the country's economy continues to grow and upgrade the usage of products.

Translating the expected growth rate into incremental demand, it is obvious that the country will remain one of the largest sources of additional demand for almost all kinds of plastics.

Hence, it is clear that plastics will continue to be a growth industry, with boosting prospects for fresh investments in polymerization and downstream processing capacity. This is in contrast to the situation in various other countries, where growth prospects are limited, either because of stagnant demand or due to the historical over building. In such countries, the overall outlook would be far less promising, with the key imperatives being cost cutting and capacity rationalization.

In the calendar year 2012, the value of world plastic export was US$ 375 billion. However the share of India was less than 1 % with exports of worth US$ 3.187 billion. The percentage of growth in export was 21 %. During this trend of growth in exports, the export of plastics raw material increased from 55 % to 60 % of the total export of plastic goods, while the export of processed plastic goods has registered a negative growth from 45 % to 9 %. According to recent reports, the industry is said to be losing an opportunity of USD 300 million through value addition on the raw materials that are exported.

Cost and Management Accounting

Introduction About the Company

Oracle plastic pvt ltd are Manufacturer, Exporters, Wholesale Suppliers Of plastics disposable plastic cups, plastic glass, plastic containers, plastic spoons, plastic donas, plastic plates etc which can be disposable. Mr. Rajesh Gandhi is the Owner and the founder of the oracle plastic private ltd. The year of establishment of oracle plastic pvt. Ltd. is in 1999. Today Oracle plastic is a leading manufacturer, trader and supplier ,Exporter of Plastic ,

Disposable Plastic, Paper Cups, plastic cups , ,Plates, Glasses and Containers, Paper Napkins, Tooth Picks, Drinking Straws, , Fancy Containers for Sweets, Food packing material Baking etc. Oracle plastic is situated in Thane district in Maharashtra. They have their factory is in Wada industrial Estate & Administrative office is in Thane city. Oracle plastic having their customers in all over the India, but in the most sale of the company is come from the north region of the India. Oracle plastic is known for their quality product with wide range of variety. Today their brand is the preferred agency with over 2000 satisfied customers. Clients include Wholesaler, Supplier, stockiest, other big buyers. .The company is having 80-100 employees working in factory and office.

Vision:
Knowledge and expertise in the industry have enabled us to emerge as one of the most eminent names in the industry. We follow ethical business procedures to cater to our valuable clients, which helps us in maintaining long and healthy business relations with our customers.

Quality Assurance
Oracle plastic due care of product quality. Therefore, we have a separate quality control department which is entirely engaged in checking the quality of our products. Our quality control experts take up several vigilant measures to ensure that our clients get only the best products. Stringent tests are carried out under Standard Operating Procedures (SOP) for checking the raw materials and finished products. Oracle plastic range of Paper and Plastic Bags, Disposable Plastic, Paper Cups, Foil Cups, Thermocol Cups, Plates, Glasses and Containers, Paper Napkins, Tooth Picks, Drinking Straws, Foil Rolls, Fancy Boxes for Sweets, Chocolate Moulds, etc. are tested on the following:6

Cost and Management Accounting

Chemical resistivity High thermal capacity Ecological compatibility Resistivity to gas & moisture High stability and sanitation standards.

Infrastructure
Robust & most modern production machinery and equipment Skilled and experienced team of trained, dedicated and dynamic staff R&D team engaged in extensive research to keep us abreast of the latest happenings in the respective arena Spacious warehousing facility.

Exports
Oracle plastic also do their business in international market .They first started their export business in 2006 with united states. They get great response in export business and they are started to expand their export business. Today Oracle plastic exports their goods six countries like UK, US, Fiji, Mauritius, Newziland, Austrialia

Oracle plastic is planning to expand their export business in Europe. They also provide speciality goods to foreign countries. They export the goods as per the requirement of the customers.

Strength of a company
Goodwill in the markets Cost effective A supply Chain Safe packing
7

Cost and Management Accounting

Customized solutions for Export business Quality products

Workers and Management Hierarchy

Director

GM

Office Head (1)

Factory Head(1)

Import Export Manager (2)

Production Manager (2)

Clerk (1)

Supervisor (4)

Cashier(1)

Worker (80)

Marketing Manager (1)

Bank Person (1)

Cost and Management Accounting

Wages and salaries Information:

Designation
Factory
Factory Head Production Manager Supervisor Worker Export Import Manager

Salary
12000 10000 8000 4000 15000

Office
Clerk Cashier Bank person Marketing 8000 10000 7000 12000

Wages and salaries in kind consist of remuneration in the form of goods and/or services that are not necessary for work and can be used by employees in their own time, and at their own discretion, for the satisfaction of their own needs or wants or those of other members of their households.

The wages and salaries given to the workers in monthly basis. The salary and wages given to the workers as per their posts. The salary paid to the office employees to the time period of 10am to 7pm, and factory workers are 10am to 6pm.

Cost and Management Accounting

DISTRIBUTION CHANNEL
The criteria of distribution are as follows:Oracle plastic follows the traditional way of distribution. The company forms their own distribution channel. A chain distribution method is followed by the oracle plastic.

Company

Distributor

Treder

Retailer

Consumer

Our distribution channel is divided into two parts. AREA WISE DISTRIBUTION CHANNEL. DISTRIBUTION ACCORDING TO DISTRICT.

Area wise distribution channel includes areas:-

Areas of distribution Gujarat Rajasthan Madhya Pradesh Delhi Kolkata Chhattisgarh Bhubaneswar Assam

Number of distribution channels 5 5 5 1 1 1 1 1

Oracle plastic is having different distributor strategy for Maharashtra, In Maharashtra they are having district wise distributors. For one district one distributor. Oracle plastic Distribute their product in international market with the help of other companies in the market.

10

Cost and Management Accounting

About the Products:

Product Range
Oracle plastics manufacturing and supplying the following goods :

Plastic Bags Disposable Plastic Products Plastic cups Plastic disposable glasses Plastic disposable Plates Plastic disposable Donnas Containers Plastic meal stray Plastic spoons Etc.

Oracle plastic is providing a wide range of plastic disposable products to their customers . the product are available in different sizes and in different designs. Oracle plastics products are well designed and well shaped products. Oracle plastic is having 370 products for their customers. The product is designed by considering different requirement of different ares in India. For example : A plastic Dona is having different size, shape. But in south India the big dona is preferred by the customers. The plastic glass is the the highest selling product of the oracle plastic. Oracle plastic have a good range of plastic glasses . Total 93 types of plastic glasses is produced by the oracle plastic. These plastc glasses are classified into different sizes and different weight of the glasses. The company produce the different product for the international market. A special quality product as per the requirement of the customer is produced by the the company for international market.

11

Cost and Management Accounting

About the Process Analysis of Making of Disposable glass

Plant Capacity:
The production basis for a typical tiny unit would be as under: Working hours/day : 8 (1 shift) Working days in a year : 300 Annual Production capacity : 60,00,000 Nos. plastic disposable cups. The unit has been assumed to operate at 70%, 80% and 90% of its installed capacity in the first, Second and third year and onwards of its operation.

Raw Material:
The main raw material required for manufacturing plastic disposable cups is High Impact Polystyrene (HPIS) sheet (15 MT per annum). Process: Polypropylene/Polystyrene sheet feeding reels of preset length is dragged from bobbin reel in the thermoforming plant. The conveyor chains carry the sheet through the heater assembly to the forming table. The heated sheet is punched to form the shape of the mould. The cups thus formed are stocked and the punched waster sheet is wound on scrap sheet winder. To get printed cups, the sheets are printed before forming into cup. Taking 200ml. cup as yard stick as it
12

Cost and Management Accounting

is mostly used for serving coffee/tea the installed capacity of the machine with 5 cavities mould is approximately 52500 cups per shift. In terms of weight, a 200ml cup made of 0.7mm thick High Impact Polystyrene sheet is approximately 2.58 gms. Therefore, the total weight of output per shift is 135 Kg. The average weight of sheet required per cup is 3.2gms. (which implies wastage of approximately 0.62gms per cup). As the raw material wastage is very high the scrap needs to be recycled. The scrap can be ground and extruded in sheet extruder.

Machinery:
The major equipment required by the unit for manufacturing plastic disposable cups are as follows: Automatic thermoforming machine Die Punch for cups Other accessories (Air compressor) Sheet extruder and scrap grinder Testing equipment

Cost paid by the company:1. Raw material Transportation Cost 2. Packeging cost 3. Bank interest on cc 4. Labour 5. Water supply 6. Electricity bills 7. Import clearing or forwarding cost Etc.

Taxes added by the company on Basic cost

13

Cost and Management Accounting

Production cost + Central Excise Tax (12.36%) + VAT(5%) + C.S.T.(2%, Only for out of Maharashtra)

Labour cost
Importance Proper study, analysis and control of labour costs are important to all manufacturing concern because of the following reasons. Labour cost is main element of cost which covers one of the major portions of the total cost of a product or job. It is more difficult to control as compared to material cost due to the involvement of human element. It is affected due to a change in government policy and requirement of trade union. It is adversely affected due to dissatisfaction, irregularity, inefficiency, idle time, and highlabour turnover, lack of interest and negative attitude of the workers. It is important from the fact that the direct labor cost is taken as the basis of estimating the amount of factory overheads while determining the product cost.

Designation
Factory Head Production Manager Supervisor Workers

No. of workers
1 2 4 80

Salary
12000 10,000 8000 4000

Calculation for labor cost

14

Cost and Management Accounting

Workers are working 8 hours per day &26 days in a month. The salaries given to all workers as per monthly basis.

1. Harsley Premium Plan

(Hr. Rate X Time Taken) + (50% X Time Taken X Hr.Rate)

2. Rowan Premium Plan

(Hr. Rate X Time Taken) + (Time Saved /Time Allowed X Time Taken) X (Hr. Rate)

Labour cost as per daily basis

Factory Head 1 X 12000 = 24,000/26 = 24,000/8 = 115.38 per hr.

Production Manager

2 X 10000 = 20,000/26

= 769.23/8

= 96.15 per hr.

Supervisor

4 X 8000 = 32,000/26

= 888.88/8

= 111.11 per hr.

Worker

80 X 4000 = 3,20,000/26

= 12307.69/8 = 1538per hr.

Formula:

Harsley Premium plan

= (Hr RATE X TIME TAKEN) + (50% X TIME TAKEN X HR RATE) = (1860.64 X 8) + (50% X 8 X 1860.64) = 14885.12 + 7442.56

= 22327.68 per day

15

Cost and Management Accounting

Rowan premium plan
= (Hr RATE X TIME TAKEN) + (TIME SAVED X TIME TAKEN/TIME ALLOWED)
= (1860.64 X 8) + ( 0 X 8/8 ) = 14885.12 per day By, the Harsley Premium Plan we get 22327.68 rs. (per day) and Rowan Premium Plan we get 14885.12 rs. (per day)

Harsley Premium Plan 22327.68 X 26 days =

5,80,519.68 X 12 months = 69,69,66236.16.52 rs (yr.)

Rowan Premium Plan

14885.12 X 26 days =

3,87,013 X 12 months =

46,44,157.44rs (yr.)

Conclusion
We conclude that the factory owner should go with the Rowan Premium Plan to distribute the wages to its labours. Because, Rowan Premium Plan is good too factory owner as far as the Harsley Premium Plan.

Suggestion
Company has to use the new technology into the machinery so that their productivity can increase and they can give the more output, and also saves their labour cost. The company is giving payment to labours is same they have to charge according to their ability so that they can control the cost. Company shoud have to charge Wages at competitive price. High and low rate of wages will disturb workers and increase cost of laborers. It also is on the basis of time or unit produced.

16