A

CONTINUOUS EVALUATION
COMPONENT (CEC) REPORT
AT
“GOYAL SPARES”

SUBMITTED TO
MARWADI EDUCATION FOUNDATION GROUP OF INSTITUTIONS

IN PARTIAL FULFILLMENT OF THE

REQUIREMENT OF
THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS
ADMINISTRATION - Semester - 2

UNDER
GUJARAT TECHNOLOGICAL UNIVERSITY,
AHMEDABAD

SUBMITTED BY
PRIYANSHU CHOKHANI
Enrolment No.: 167340592124
M.B.A. SEMESTER 2
MEFGI
M.B.A. PROGRAMME
Affiliated to Gujarat Technological University
Ahmedabad
May 2017
 ACKNOWLEDGEMENT

I wish to express my sincere thanks to Dr. Amar Gandhi Sir, HOD –MBA, Marwadi Education
Foundation Group of Institutions, Rajkot for providing me an opportunity to carry out CEC project.
I am also thankful to Mr. Ramnikbhai bhalala(Introducer) and “GOYAL SPARES” for providing
me training of seven days.

I take this opportunity to record my sincere thanks to all the faculty members of Department of
Management, Marwadi Education Foundation Group of Institutions, Rajkot for their guidance and
encouragement.

I place on record, my sense of gratitude to one and all who, directly or indirectly, have lent their
helping hand in this project report.

PRIYANSHU CHOKHANI

Name of Student

2
 DECLARATION
I have undersigned PRIYANSHU CHOKHANI, student of MBA – 2 of
MARWADI EDUCATION FOUNDATION GROUP OF INSTITUTION.
Here by declared that project work presented in this report is my own
work.

This report has not been previously submitted to any other university for
any examination.

Date:

Place: Rajkot

Signature:

3
 TABLE OF CONTENTS

Sr. No. Particulars Page No.

1 Company Profile 4
2 Particulars

3 PART - A 7
4 Quantitative analysis-2 15
5 Management information system 20
6 Marketing management 25
7 Human resource management

8 PART - B 31
9 Cost & management accounting 37
10 Production & operations management 43
11 Financial management 48

4
 COMPANY PROFILE

With 25 years’ experience, GOYAL Foot valves has been associated in manufacturing of best &
premium quality plastic foot valve, foot valves for water pumps in agriculture area, cocks and wide
range of other accessories with premium brand label of GOYAL Tech. now a day we have 5+ years’
experience in whole sell foot valves exporter in India.

We are one of the best manufacturer, exporter and whole sell supplier of all wide range of foot
valves, premium quality of agriculture valves with IS standard.

Our first goal is achievement of perfection and excellence with guarantee. Our area unit equipped
with all requisite technology appliances and tool as well as producing machines and quality testing
equipment. Our ability to grasp the customers’ desires including a targeted analysis development
team ensures prompt delivery of product satisfy the industries dynamical desires. The business of
our industries already spared in domestic as well as international market.

GOYAL Foot valve is Rajkot, Gujarat (India) based industries and we manufacture plastic foot
valves for last 25 years. From the first we have got been committed to produce our customer with
the very best quality of services and attainment second to none within the business.

 Partnership Organization
 Small Scale Industries Unit
 National Small Industries Corporation Limited
STATUS
 (NSIC) Registered
 Accredited ISO 9001:2008 Certificate
 BIS Licence holder

NATURE OF BUSINESS Manufacturer, Exporter, Contractor.

5
Year of Establishment 1974

Recently performed direct export of

valves to South Africa, Nigeria, Ghana, Uganda,
EXPORT NETWORK
Egypt, UAE, Saudi Arabia, Bangladesh, Nepal &
Bhutan.

We have Three Manufacturing units situated in

INFRASTRUCTURE FACILITY
Rajkot, Gujarat. India.

All mechanical and chemical tests of raw

LABORATORY WORKS
materials are performed within the workshop.

We have the arrangement to do various

TESTING FACILITY material Test in on our workshop as per Indian/
International Standard.

Our products are manufactured under the

guidance of qualified engineers maintaining
Q.A.M. stringent inspection right from the procurement
of all components and at the stages of
manufacture till packing and dispatch.

 Highly durable and technically advanced.

ADVANTAGES  Well-equipped manufacturing unit.
 Products offered at competitive rates

Export Percentage 40%

Sales Volume Rs. 4.25 Crores

No of Staff 93

No of Production Lines 1

Export Markets Worldwide

No of Designers 2

Monthly Production Capacity As per requirement

6
GROUP A

7
Quantitative
Analysis - 2

8
 INTRODUCTION

Quantitative analysis is the scientific approach to managerial

decision making. Whim, emotions and guesswork are not part of the
quantitative analysis approach. The approach starts with data. Like
raw material for a factory, these data are manipulated or processed
into information that is valuable to people making decisions. This
processing and manipulating of raw data into meaningful information
is the heart of quantitative analysis. Computers have been
instrumental in the increasing use of quantitative analysis.

Different Quantitative Techniques are as follows:

1. Statistical techniques like measures of central values & variation,

sampling, probability theory, regression analysis and statistical
quality control

2. Programming techniques: These OR techniques involve problem

formulation, mathematical models and correct use of data to get
the solution, testing the model and arriving at decision.

9
 Nature And Characteristic /Features Of OR :

1. Decision Making : A major premise of OR is that decision making, irrespective of the situation
involved can be consider a general systematic process that consist of the following steps :
1) Define the problem and established the criterion.
2) Select the alternative courses of action for consideration.
3) Determine the model to be used.
4) Evaluate the alternatives and choose the one that is optimal.

2. Scientific Approach: OR employs scientific methods for the purpose of solving the problems, and
there is no pace of whims and guesswork in it.

3. Objective: OR attempts to locate the best or optimal solution to the problem under consideration. For
this purpose, it necessary that a measure of effectiveness is defined, this is based on the goals of the
organization.

4. Inter-Disciplinary Team Approach: OR is inter-disciplinary in nature and requires a team approach

to a solution to the problem. No single individual can have a thorough knowledge of the myriad aspect
of operations research and how the problems may be addressed.

5. Digital computer: Use of a digital computer has become an integral part of the operations research
approach to decision-making. The company may be required due to the complexity of the model,
volume of data required or the computations to be made.

 Methodogy (Process) Of Operations Research :

The approach to the problem solving consists of the following steps:

1. Formulate the problem: The first step in quantitative analysis is to develop a clear and concise
statement of the problem. In many cases, defining the problem proves the most important and difficult
step. It is essential, therefore, that the root problem should be identified and understood in the first
place.

Once the problem has been identified, it is categorise as being standard or special. The
standard problems are also known as PROGRAMMED PROBLEMS. The special problems
are also known as NON-PROGRAMMED PROBLEMS.
2. Model Building: A model is a theoretical abstraction of a real-life problem. In fact, many real-life
situations tend to be very complex because there are literally innumerable inherent factors in any
given situation. Thus, the decision makes has to abstract from the empirical situation those factors
which are most relevant to the problem. Having selected the critical factors he combines them in some
logical manner so that they from a counterpart of a model of the actual problems.

10
 Types of
model

Physical Symbolic
Model Model

Iconic Analogue
Model Model

3. Obtaining Input Data : Once an appropriate model has been formulated, the next step is to obtain
the data to be used in the model as input. Since the quality of data determines the quality of output,
the importance of obtaining accurate and complete data cannot be over-emphasised.this situation may
be described as GIGO: gold in, gold out or garbage in, garbage out.

4. Solution of Model: Having formulated an appropriate model and collected the input data, the next
stage in the analysis calls for the solution to the model and the interpretation of the solution in context
of the given problem. A solution to a model implies determination of a specific set of decision
variables that would yield a desired level of output. It may be noted that the solutions can be classified
as being feasible or infeasible, optimal or non-optimal and unique or multiple.

a) Feasible and infeasible solutions: A solution which satisfies all the

constraints of the problem is called a feasible solution. A solution which does
not satisfy all constraints of the problem is called as infeasible solution.

b) Optimal and non-optimal solution: An optimal solution is one of the feasible

solutions to a problem that optimizes and is, therefore, the best among them.
other than the optimal solutions are called as non-optimal solutions.

c) Unique and multiple solutions : If only one optimal solution to a given

problem exists, it is called as unique solution. On the other hand if two or more
solutions to a problem exist, which are equally efficient, then multiple optimal
solutions are said to exist.

5. Model validation: The validation of model requires determining whether the model can adequately
and reliably predict the behavior of the real system that it seeks to represent. Also it involve testing
the structural assumptions of the ascertain their validity.

6. Implementation: The final step is the implementation of the results. It is the process of incorporating
the solution in the organization. Implementation of solution is often more difficult than it may
apparently see. No standards prescription can be given, which would insure that the solution would
automatically be adopted and implemented.

Values and again steps are repeated until the optimum solution is found.

11
  ASSIGNMENT PROBLEM:
There are many situations where the assignment of people, machines and so on may be
called for. Assignment of workers to machines, clerk to various checkout counters, salesmen to different sales
area, service crews to different districts etc. Assignment is a process because people possess varying abilities
for performing different jobs and therefore, the costs of performing those jobs by different people are
different. Obviously, if all persons could do a job in the same time or at the same cost then it would not matter
who among them is assigned the job. Thus, in an assignment problem, the question is how the assignments
should be made in order that the total cost involved is minimized (or the total value is maximized when pay-
offs are given in terms of profit).

 STEPS TO SOLVE ASSIGNMENT METHOD WITH HUNGARIAN

METHOD:

 Step 1: Row subtraction: Selecting the minimum values from each row and subtracting the other
values with selected smallest value.

 Step 2: Column subtraction: Selecting the minimum values from each column and subtracting the
other values with selected smallest value.

 Step 3: drawing minimum lines: Drawing minimum lines which cover maximum zeros.

 Step 4: finding optimum solution: If no. of rows, no. of columns and no of lines are equal, then
optimum solution can be found by selecting the original values of the place where zeros are cut
without intersection point.
 Step 5: 5 Revise construction of matrix: If no. of rows, no. of columns and no of lines are not equal,
then revised cost matrix is constructed by selecting the minimum uncut value from matrix and
deducting it from other uncut values and adding to the intersected values and again steps are repeated
till the optimum solution is found.

 ASSIGNMENT PROBLEM AT GOYAL SPARES:

 Assignment problem for accounts department is between the jobs done in accounts
department and employees in man-hours. Jobs are described horizontally and shifts are
described vertically:

12
Question:

JOBS

Recording Preparing Auditing

transaction reports
EMPLOYEES
1st 5 3 2

2nd 4 9 2

3rd 6 4 5

Solution:
 Step 1 Row Reduction: selecting the minimum values from each row and subtracting the other values
with selected smallest value.

3 1 0

2 7 0

2 0 1

 Step 2 Column Subtracting: selecting the minimum value from each column and subtracting the
other values with selected smallest value.

1 1 0

0 7 0

0 0 1

13
 Step 3 Drawing Minimum Lines: drawing minimum lines covers maximum zeros.

1 1 0

0 7 0

0 0 1

 Step 4 Finding Optimum Solution:

Here, m=n=lines. So, optimum solution can be found out.

CIR2=4
C2R3=4
C3R1=2
10 MAN-HOURS.

LINEAR PROGRAMMING

X1 = number of benches produced

X2 = number of tables produced
Maximize profit $9X1 + $20X2
subject to 4X1 + 6X2  1,200 hours
10X1 + 35X2  3,500 feet
X 1, X 2  0
Profit at point a (X1 = 0, X2 = 100) = 2,000
Profit at point b (X1 = 262.5, X2 = 25) = 2,862.50
Profit at point c (X1 = 300, X2 = 0) = 2,700

14
Application of Quantitative Analysis approach needs a huge investment
in software and preparation of models. Even the data of each product
and its cost shall be needed to derive the solution and get to a decision.

15
 Management
Information System

16
 INTRODUCTION

 The Management Information System is the concept of a decade or two; it has been
understood and described in number of ways.
 It is also popularly known as the information system, the information and decision system,
the computer based information system.
 The MIS has more than one definition, some of which are given below,
 The MIS is defined as a system which provides information support for decision making in
the organization.
 The MIS is defined as an integrated system of man and machine for providing the
information to operations, the management and the decision making function in the
organization.
 The MIS is defined as a system based on the database of the organization evolved for the
purpose of the providing information to the people in the organization.

17
 INTRODUCTION TO COMPANY

A store is one charitable trust that provides the medicine 20% of price to the society.
The main head quarter of this trust is at surat and the founder of that medical is divyangbhai. They
provide 20% discount on all the medicines. They have wide range of medicines and the equipments for
the patient available at every time.

18
(1)Technology and infrastructure required to implement an information system:

(A) Computer hardware: is the physical equipment used for input, processing, and output activities in an
information system. It consists of the following: computers of various size and shapes (including mobile
handheld devices); various inputs, output, and storage devices.
(B) Telecommunication: that links computer together.
(C) Data management technology: consist of the detailed, pre-programmed instructions that control and
coordinate the computer hardware components in an information system.
(D) Networking and telecommunication technology: consisting of both physical storage media.
(E) Computers and communication equipment: can be connected in networks for sharing voice, date,
images, sound, and video.

In GOYAL SPARES from above required infrastructure we are having computer hardware,
telecommunication, and networking.

-> (3) Networking and internet, wireless network:

(a)Bluetooth: Bluetooth is the popular name for the 802.15 wireless networking standard .which is useful
for creating small personal area networks (PANs).it links up to eight devices within a 10 meter area using
19
low-power, radio-based communication and can transmit up to 722 Kbps in the 2.4-GHz band. Wireless
phones, pagers, computers, printers, and computing devices using Bluetooth communicate with each other
without direct user intervention.

(b)Wi-Fi and wireless internet Access:

the 802.11 set of standards for wireless LANs and wireless internet access is also known as Wi-Fi. The
first of these standards to be widely adopted was 802.11 g , which was transmit up to 11 Mbps in the
unlicensed 2.4-GHz band and has an effective distance of 30 to 50 meters. The 802.11g standard can
transmit up to 54 Mbps in the 2.4-Ghz range.

(c)WiMAX:
A surprisingly large number of areas in the United States and throughout the world do not have access to
Wi-Fi or fixed broadband connectivity. The range of Wi-Fi systems is no more than 300 feet the base
station, making it difficult for rural groups that don’t have cable or DSL services to find wireless access to
the Internet.

(d)RFID AND WIRELESS SENSOR NETWORKS:

Mobile technologies are creating new efficiencies and ways of working throughout the enterprise. In
addition to the wireless system we have just described, radio frequency identification system and wireless
sensor networks are having a major impact. Radio Frequency Identification (RFID) Radio frequency
identification (RFID) systems provide a powerful technology for tracking the movement of goods
throughout the supply chain.

20
Marketing Management

21
 ORGANISATION

Organization of marketing means the structure of marketing and sales. Its

field of work including authorities and responsibilities. The organization of
marketing department of this firm is line type organization. Responsibilities
flow from lower level to upper level and orders flow from top level to bottom
level management.

The organization chart of GOYAL Industry is given as under.

BOARD OF DIRECTORS

CHAIRMAN

MANAGING DIRECTOR

MARKETING DIRECTOR

AREA SALES MANAGER

SALES EXECUTIVES

22
 PRESENT MARKET

Present market means the current situation of market of the

company. It includes the demand, customers, competitors, dealers, etc.
Market condition includes current marketing policy of the company i.e.
pricing policy, sales promotion, adverting policy, marketing research,
product development programmes, sales force, etc. It also includes the
present market share of the company.

The present market share of GOYAL SPARES is about 44% of

total market. It has very less competitors. So its market share is large
and also its customers are more than other company’s. This company
is in the situation of full demand because it produces on the order base.
As per information, it has already been received orders of 3 years from
different customers like Tata Motors, Mahindra & Mahindra, etc.

23
 MARKET SEGMENTATION

In simple words market segmentation means specific group of

customers which have certain needs & wants for specific product.

“Market segmentation consists of a group of customers who share a

similar set of needs and wants.”

Each & every company has their own market segmentation. Company
has to divide the market on the basis of different factors i.e.
geographical factors, demographical factors, etc.

In case of GOYAL Industry, they divide their market on the basis of

geographical area. Their market segment is expanded to the domestic
areas, means different states as well as abroad countries.

First we discuss its market segment at district level. The names of

districts are given as under.

 Ahmadabad
 Rajkot
 Baroda
 Bhuj
 Surat
 Jamnagar etc.

24
 Now, we discuss its market segment at state level, which is as under.

 Madhya Pradesh
 Rajasthan - Jaipur
 Aandhra pradesh – Hyderabad
 Uttar Pradesh
 Maharashtra – Poona etc.

Means they sell their goods in different states as well as its district such
as in Hyderabad, Jaipur, Poona, etc

Now, we discuss its market segment at national level. Its market

segment is expanded to many foreign countries which are as under.

 U.S.A.
 U.K.
 South Africa
 Nigeria
 Germany
 Italy
 Bangladesh
 Colombia
 Iran
 Egypt etc.

25
7 P’S OF MARKETING

26
 PRODUCT DECISION

Product decision means taking a decision about product i.e.

decision related with price of the product, quality of the product,
packaging of the product, branding of the product, etc. Marketing
manager has to take such a various decision related with product. He
has to also taking decision about product line, product length, product
width, product variety, product mix, etc.

Sometimes in product decision, he has two alternative decisions

i.e. either produce a new product or improve the existing product.

In GOYAL Industry, marketing director takes all types of product

decision whether it is related with price, quantity, etc. It always
improving the product quality continuously. Sometimes if required, then
it may also produce new product.

Whenever they take product decision, they have to research the market
and also they have to consider the consumers’ interest.

27
 BRANDING

Branding is one of the important decisions in product mix.

Manufacturer has to decide the name of the product which is prior to
introduce in the market. The name is known as brand name and
process of naming the product is known as branding. So customers can
easily identify & remember particular product of particular company.
Similarly sellers can distinguish their product from other competitors
due to brand name if brand name is selected. It can create brand
loyalty, brand image etc.

“The name, symbol, word, or picture given to the product to

distinguish from other producer and help customers to identifying the
product can be considered as Brand name.”

In case of GOYAL Industry, the brand name of its product is also

known as GOYAL. It keeps the brand name GOYAL of their product
because GOYAL is universal name and we can speak easily.
Constitution of this word was made in 1965. This name is constituted
from the one dairy at RAJKOTi.e. we all know, GOYAL.

GOYAL is the short form of Ltd. So it is the history of brand

name i.e. GOYAL.

28
 CHANNEL OF DISTRIBUTION

The term distribution means to distribute, to spread or to

disseminate. In the field of marketing1 distribution means distribute or
spread the products or services to their final customer for satisfying
their need & wants.

The term channel of distribution indicates the route or path or

way through which goods or services flow or move from producer to the
consumer.

In the case of GOYAL Industry, the channel of distribution is of

one level means they sell their product direct to customers i.e. direct
selling or sometimes through dealers of the company.

Further the company is selling direct of its consumers. Some

times company has to perform function of wholesaler and has to give
some facilities to customers like transportation, discount, etc.

PRODUCER PRODUCER

DEALERS

CUSTOMERS CUSTOMERS

29
 COMPETITORS AND MARKETSHARE

In this modern era, we can see the competition in each and

every field of business. Producer can produce better quality product
only when there is competition because every producers want to
produce product or services which is better than competitors. Means
they compete with each other and finally they produce quality goods,
low price goods, better in every aspect.

GOYAL Industry has to compete with their customers.

According to my observation during industrial training this company
facing competition and gives better fight to their customers. That is why
this company can sustain their place in the market.

Some names of their competitors are given as under.

 Bhavany Industries Ltd.

 Kishan Group Ltd.
 M – Tech Ltd.
 Rolex Com. Ltd.

GOYAL Industry enjoying 44% of total market share, in Indian market

60% of market share because it exports their goods in foreign market.
So their total market share is increased.

30
Human Resource
Management

31
INTRODUCTION

There is one popular theme in the mgt. ―Man is Master ― and

GOYAL ind. Follow this theme. Generally organization is run with the help
of five Ms. Viz. Man, Money, Material, Machine & Market. However it is
impossible to seem the organization without human resources. Thus
human resources comprise the value of the organization by effective and
efficient work.
Hence, the human resource mgt is the prime aspect for any organization be
it a profit or non profit, private and public.

GOYAL Ind. has different department for working. Human resources

department is one of the important department of this co. there is very
vertical kind of ― Human Resources Department. At the top there is a
managing director. Under the managing director, administrator manager is
working.
The superior-subordinate relationships are defined by
organization charts, which are formal documents that indicate the chain of
command and the titles that have been assigned to the managers and
other personnel.

Organization charts indicate people’s locations or

positions in the hierarchy and their relationship within a formal
organization.

32
 OPERATIONAL
DEPARTMENT

DEPUTY
MANAGER

ASSISTANCE
MANAGERS

RECRUITUSNT AND SELECTION

In personnel department it is the most important process of searching

for prospective employees. Recruitment is a process to discover the
sources of manpower to set
the requirement of the staffing schedule and to employ effective measures
for attracting that manpower in adequate numbers to facilitate effective
selection of an efficient work force.
There are main two sources of recruitment
1) Internal sources
2) External sources
In case of unit, they use both the sources:

1) Internal sources:-
GOYAL IND. Include following two aspects…
a) By promoting employees of organization:-
33
GOYAL Ind. includes more of technical types of jobs. So that, it required
Familiar and experienced personnel. So, whenever new vacancies arise in
the organization somebody within the unit is up grated transferred of
promoted to will that post

b) Friends & relatives of present employees:-

GOYAL Ind. include sometimes existing employees recommended the unit
to recruit the particular person for particular job because either the person
is his relatives or friend, the potential person is evaluated in term of job
recruitment by the board.

2) External sources:-
In external sources GOYAL Ind. use
a) Advertisement
b) Employment agencies

a) Advertisement:-
Advertisement is an externally popular method of recruitment nowadays.
GOYAL IND. gives advertisement in newspaper to recruit worker, clerical
employee and lower level administrative staff.

b) Employment agencies:-
Whenever ind. need employees it also conflicts private employment
agencies. Agencies send data of the candidate to the unit. The new
employee is placed according to his qualification and experience and is
introduce the management staff and other workers.

34
 TRAINING & DEVELOPMENT

Training is the theoretical and practical education being given to

employees for getting proficiency in a particular field. While, development
is the method of developing all round personality, so that mental abilities
and inherent qualities are developed. Training is the corner stone of sound
personnel administration. A trained employee feels that he is the master of
his job and such employees has a higher morale. Training is important for
development of skill and technical knowledge.

There are various type of training:-

1) On - the job training
2) Apprentice training
3) Vestibule training
4) Off - the job training

In GOYAL IND. they use on the job training as per workers

requirement. On the job and off the job both are given by unit as workers
requirement.

35
 PROMOTION AND TRANSFER

Transfer and promotion are activities through which an adjustment in

size of work force of an enterprise can be made with changing. A promotion
is the upward advancement of an employee in a unit to some another job
that demands better salary and wages, better status, more hour of work and
better working condition, more responsibility etc.
In unit, promotion is given on the basic of skill & seniority.

The employees of GOYAL IND. are transferred within the unit like
GOYAL IND PVT. LTD. UNIT -1 and UNIT - 2 etc…When the production
changes in any unit. When there is a shortage of workers in some section
etc. then those are the main sources for taking a decision regarding the
transfer & promotion of the employees.

36
 COMPENSATION MANAGEMENT

Compensation can be defined as money received in the performance

of work, plus the many kinds of benefits and services that organization
provides to their employees. Money is included under direct compensation
i.e. wages and salary while benefits like life, accident, health insurance
come under indirect compensation.
Employees work in the organization with the purpose of receiving
some return from the organization. This helps them to satisfy their basic
needs. Thus, the company compensate the employees for the work that
they done it for the company. The return given to them should be fair and
reasonable to the work that they have performed.
In GOYAL Ind. they adopt piece wage system. The wages of the labor
depends upon the no. of unit produces by workers. Wage range is 45 to
50.

37
 GRIEVANCE HANDLING

The nature and pattern of grievance, the way of their expression differs but
a need for creating a formal grievance handling process is must. In the
formulation and implementation of the police, programmers and procedure
which would enable them to handle employee grievance this polices,
programmer and procedure are known as grievance procedure.

In, GOYAL Ind. The grievance handling procedure as under:

 First, the employee explain has grievances to his supervisor. The
supervisor tries to solve the problem.

 If the supervisor cannot solve, personnel manager is consulted and

he investigates the matters and tries to solve it.

 If the problem is not solved by the personnel manager, then the

managing director is approached and tries to draw some conduction
of matters.

 Finally, the grievances are placed before the board of director and
solutions acceptation to the employees and management is found.

38
GROUP B

39
Cost & Management
Accounting

40
 INTRODUCTION

‘Cost accounting is the process of accounting for costs from the

point at which expenditure is incurred or committed to the establishment
of its ultimate relationship with cost centres and cost units. In its widest
usage, it embraces the preparation of statistical data, the application of
cost control methods and ascertainment of profitability of activities
carried out or planned.’

Cost is ‘the amount of expenditure (actual or notional), incurred or

attributable to a given thing.’ (CIMA, London)
A cost is the value of economic resources used as a result of producing
or doing the things costed.’ (W M Harper)
‘Cost is a measurement, in monetary terms, of the amount of resources
used for the purpose of production of goods or rendering of services.’
(ICWA of India)

41
 METHODS OF COSTING

• Job order costing: Cost unit in job order costing is taken to be a

job or work order for which costs are separately collected and
computed.

• Process costing: This method is used in mass production

industries manufacturing standardized products. Costs are
accumulated for each process or department

TECHNIQUES OF COSTING

• Standard costing
• Budgetary control
• Marginal costing
• Total absorption Marginal costing
• Uniform costing

42
ELEMENTS OF COSTING

43
 DECISION MAKING AND MARGINAL COSTING

Sales mix
decisions

Selection of a
Make or buy suitable of
decisions method
production

Special
Plant shut
Selling price Decision-
down
decisions making
decision
Areas

44
 Practical implementation
The following figures have been obtained from the records of a goyal
foundry for the year ended 31st march 2017.

Particulars Amount

Cost of material 1200000

Cost of labour 1000000
Factory cost 600000
Administration overheads 672000
Selling overheads 448000
Distribution overheads 280000
Profit 1050000

A work order has been executed in year 2017-18 and the estimation of
expenses are given below:

Cost of material 200000

Cost of labour 100000

45
 Assuming that in 2017-18, the rate of works overheads has gone up by 20%.
Administration and selling overheads have gone up 12.5%, while distribution
overheads have gone up by 10%.
At what price should the producx t be sold so as to earn the same rate of
profit on the selling price?
Cost sheet-2016-17
Particulars Amount

Material consumed:
Cost of material 1200000
Cost of labour 1000000
Prime cost: 2200000

Add : Work overheads 600000

Factory cost: 2800000

Add : Administration overheads 672000

Cost of production:
3472000

Add: selling overheads 448000

Distribution overheads 280000

Total cost: 4200000

1050000
Profit
5250000
Sales

46
 Estimated cost sheet for 2017-18
Particulars Amount

Material consumed:
Cost of material 2000000
Cost of labour 1000000
Prime cost: 3000000

Add : Work overheads 720000

Factory cost: 3720000

Add : Administration overheads 1004400

Cost of production:
4724400

Add: selling overheads 669600

Distribution overheads 409200

Total cost: 5803200

1450800
Profit
7254000
Sales

47
Production &
Operations
Management

48
 PRODUCTS OF THE FIRM

There are 08 to 10 products produced by the unit. Some of the products

manufactured by the GOYAL IND.
 Crank shafts

 Connecting road

 Rocker Arm

 Cam shaft

 Bridge Noelle

 Shifter shaft

 Hydraulic road

 Arm Knuckle

Crankshaft
It is the main part of the engine. It should be
hard because more weight is carried by it as it
rotates independently in the crankcase with
main bearing.

Camshaft
It is just as bid as crankshaft but its diameter is too small. The rotation
force is almost half than crankshaft. It has gear on the hand, which is joined

49
with the fear of crankshaft. Crank gear is small and cam gear is double of
crank gear.

Connecting Rod
Generally, it is described as the one, which
connects the two parts of engine

Cylinder Block
A cylinder block is an integrated structure
comprising the cylinder of a reciprocating engine
and often some or all of their associated
surrounding structures. The term engine block is
often used synonymously with "cylinder block"

Cylinder Head

In an internal combustion engine, the

cylinder head (often informally
abbreviated to just head) sits above the cylinders on top of the cylinder
block. It closes in the top of the cylinder, forming the combustion chamber.
This joint is sealed by a head gasket.

50
PRODUCTION PROCESS

Raw Material

Cutting

Heat Treatment

Hardness
Checking

Shot Blasting

Machining

Chemical
Dimensional
Oiling &
Packaging

51
 RAW MATERIAL:-

Raw materials are the foundation of any product. Without materials

we cannot able to produce finished goods. Raw material is basic
requirement of any product.

In case of GOYAL INDUSTRIES they used 20 items as a raw material.

Mostly party provide them raw materials according to their demanded
product. In other case the raw material are available in India and credit
period is 30 days after checking the laboratory supervisor passes them
through production process.
The raw material received at the factory is tasted and checked for size,
chemical composition, physical properties, cracks, blowholes, surface
finish etc. As for e.g. the chemical composition for en 8d carbon must be in
the following range of percentage;
Carbon (c) = 0.50% + 00.55%
Silicon (si) = 0.10% + 00.92%
Manganese (nm) = 0.70% + 00.92%
Sulphur (s) = 0.06% + maximum
Phosphorous (p) = 0.06% + maximum

If the raw material is up to make then it is approved otherwise it is rejected

and sent back to the supplier. For manufacturing of products the basic raw
material used are
a) Carbon

52
b) PI & IRON
c) ALLOY STEEL
d) CAS

MACHINARY USED

In GOYAL Industries they use much big machinery. They use

machines are flat machine, cutting machine, rolling machine, finishing
machine, drilling machine, micro analysis machine, drive machine,
induction Harding, crank pin grinding, connection road boarding, surface
gridding.

INDUCTION HARDENING
MACHINE

53
SURFACE GRINDING MACHINE

QUALITY CONTROL

Quality is a heart of product. In those competitive areas. Quality is

essential because consumer prefer only qualitative product. Qualitative
product makes competitive in the market and able to stand in the market.
In unit, they use sample test machine, with the help of machinery wastage
& scrap are reduced and quality improved.

GOYAL has fully equipped testing facilities which include all

mechanical properties like Hardness, UTS, % Elongation, YS and Fatigue.
The Metallurgical Testing lab includes a spark emission spectrometer for
chemical composition (can detect 29 elements even in traces up to 0.001%)
and ability to do microstructure study.
All manufacturing plants have their independent receiving inspection and
basic testing and gauge calibration facilities.

54
 RESEARCH & DEVELOPMENT AND DESIGN
GOYAL has the ability to design a connecting rod from engine data.
Several qualified and experienced engineers work in the Design Cell.
Latest and relavent application software is used by our designers.
GOYAL also has the ability to design and manufacture various fixtures and
gauges required in the manufacturing process.

CERIFICATE AND AWARDS

55
 Financial
Management

56
 INTRODUCTION

Finance is the life blood of business. It is rightly termed as the

science of money. Money is required from the beginning till the end of
business. The basic purpose of financial planning is to make sure that
adequate funds are raised at the minimum cost and that they are used
wisely.

It is rightly said that a businessman needs money to make money. It

can be modified as if you have money and you manage it properly, you
will surely make money. Thus, in any unit financial management is the
most required tool.

Finance management refers to acquisition, utilization and

maintenance of amount received from different sources and to use it for
various productive activities for achieving some objective.

“Finance management is concerned with the effective use of an

important economic resources namely capital fund.”

57
FINANCE DEPARTMENT STRUCTURE

Financial Department

Finance Manager

Chief Accountant
Administrative officer

Clerical Staff

58
 FINANCIAL PLANNING

The work of financial planning starts with a idea of establishing a

business. It is necessary to plan the financial needs of a business. Finance
planning aim at estimating the capital requirement and determining its
structure. The term ―financial planning means different things to different
managers depending on the nature of business. The firms size and so on.
In a narrow since finance planning is determining the financial goals, policies
and procedure to achieve the objectives of the enterprise.

In GOYAL IND. PVT. The finance manager and commercial manager

planning with the departmental heads undertakes a weekly financial
planning programmed and every month the time is reviewer so if it is requires
any adjustment it can be made in time.

59
 SOURCES OF FUNDS
Finance is inevitable for any organization. But to acquire this finance
suitable sources are to be found. Sources of finance are that through which
organization gets the finance. There are many sources through which
company can get the finance. The main two sources are:-
 Internal sources
 External sources
Internal source means the finance come from within the organization.
This means that either owners of the company bring the finance or they
plough back the profit in the working of the organization. External sources
of finance mean that the company borrows the finance from different place
which may be bank or any financial institution.
If the company borrows finance from external parties then they have to
pay interest on the money borrowed. The finance manager must be
efficient enough who is able to borrow high amount of finance at low
cost. He should have proper knowledge of various sources of finance.

GOYAL Industries has got certain portion of their funds from banks
to fulfill their requirement and grow in the market. They have connection
with State Bank Of India(SBI)

60
 CAPITAL SRUCTURE
Capital structure refers to composition of various term sources of
funds such debenture, ordinary shares, preference shares, reserves and
surplus, etc. a balanced capital structure means an ideal combination of
borrowed and owned capital so as to attain the goal of maximization of
cost of capital.

The financing manager should try for optimize of capital structure for
the company and it is achieved when the market value of share is highest
and cost of capital is minimum so that board of director and finance
manager both should create a suitable capital structure.

In GOYAL Industries they have a very proper capital structure. They

have a balance between owners and borrowed capital which help them to
use the finance smoothly and properly.

61
 ACCOUNTING SYSTEM , YEAR AND POLICY

 ACCOUNTING SYSTEM:
There are two types of accounting systems (1) Mercantile System of
Book Keeping (2 )Cash System of Book Keeping

GOYAL INDUSTRIES is a Private Limited Company registered under

the Companies Act, 1956. As per the provisions of Companies Act, 1956,
every company is mandatorily required to follow Mercantile System of
Accounting.
Hence, GOYAL INDUSTRIES follows Mercantile System of
Accounting.

 ACCOUNTING YEAR:

A Company may follow following types of accounting year:

Financial Year (April to March)
Calendar Year (January to December)
As per Income Tax Act, every assessee is required to follow Financial
Year as the Accounting Year.
- Thus, GOYAL INDUSTRIES follows Financial Year as the
Accounting Year
ACCOUNTING POLICY:
- As per the provisions of the Companies Act, 1956, every company is
required to mandatorily follow Accounting Standards issued by the
Institute of Chartered Accountants of India.
62
Hence, GOYAL INDUSTRIES follows all the accounting policies as
per Accounting Standards.

63
 CONCLUSION

Future is always uncertain. But we make it possible to do our desire be making various creative
efforts.

“Goyal Spares”, has achieved great success in establishing good brand plastic items, image,
prestige and reputation over the consumers and also in market.

In order to meet the increasing demand of the products, the Goyal Spares has planned to install a
sophisticated and ultramodern plant with the production capacity of more than 2.5 ton per hour in
the neighbourhood of Ahmedabad. Thus, the company is planning to sale in upper parts of country.

“Goyal Spares”, is able to make best us available resources and going to look forward for exporting
their plastic items beyond the boundary. I wish it a very bright and successful future.

SUGGESTION

As a student I would like to give some suggestion for better future of the company which I come to
know during preparing my project report.

For such giant organization, I don’t have any suggestions to give there is some eye catching loops.
Then also I have some point in my mind to suggest for their betterment. They are as follows:

- Company may increase its sales promotion activities to attract new customers and more satisfied
to its old and loyal customers.

- The company may invest in research and development program.

64
- Give more responsibility to lower level management.

- The company may research to more diversified to cater to the needs of both rich and poor. This
will ultimate and hence the overall profitability.

- They may make more advertising through television, newspaper and holdings etc. for increasing
their sales rather profit.

- They may keep a perfect eye on the quality of the products.

65