A STUDY ON COST-BENEFIT ANALYSIS AT ALLOYSYS

EXTRUSION PVT LTD

Submitted in partial fulfillment of the requirements for the award of

MASTER OF BUSINESS ADMINISTRATION

by

CHINTA SHRIYA
Register No.41410060

SCHOOL OF MANAGEMENT STUDIES

SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY
(DEEMED TO BE UNIVERSITY)
Accredited with Grade “A” by NAAC I 12B Status by UGC I Approved by AICTE
JEPPIAAR NAGAR, RAJIV GANDHI SALAI, CHENNAI - 600 119

April 2023
 SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY
(DEEMED TO BE UNIVERSITY)
Accredited with “A” grade by NAAC I 12B Status by UGC I Approved by AICTE
Jeppiaar Nagar, Rajiv Gandhi Salai, Chennai – 600
119
www.sathyabama.ac.in

SCHOOL OF MANAGEMENT STUDIES

BONAFIDE CERTIFICATE

This is to certify that this Project Report is the bonafide work of CHINTA SHRIYA
41410060 who carried out the project entitled “A Study On Cost-Benefit
Analysis At Alloysys Extrusion Pvt Ltd” under my supervision from January
2023 to March 2023.

Dr. John Paul. M (Associate Professor)

(MBA, MHRM, M. PHIL, TN-SET, PH.D)
Internal guide External Guide

Dr. BHUVANESWARI .G
Dean – School of Management Studies

Submitted for Viva voce Examination held on_____________________

Internal Examiner External Examiner

 DECLARATION

I CHINTA SHRIYA (41410060) hereby declare that the Project Report entitled “A
Study On Cost-Benefit Analysis At Alloysys Extrusion Pvt Ltd” done by me
under the guidance of Dr. John Paul .M is submitted in partial fulfillment of the
requirements for the award of Master of Business Administration degree.

DATE:

PLACE: CHINTA SHRIYA

 ACKNOWLEDGEMENT

I am pleased to acknowledge my sincere thanks to Board of Management of

SATHYABAMA for their kind encouragement in doing this project and for completing it
successfully. I am grateful to them.

I convey my sincere thanks to Dr. G. Bhuvaneswari, Dean - School of Management

Studies and Dr. A. Palani, Head - School of Management Studies for providing me
necessary support and details at the right time during the progressive reviews.

I would like to express my sincere and deep sense of gratitude to my Project Guide Dr.
John Paul .M for her valuable guidance, suggestions and constant encouragement
paved way for the successful completion of my project work.

I wish to express my thanks to all Teaching and Non-teaching staff members of the
School of Management Studies who were helpful in many ways for the completion of
the project.

CHINTA SHRIYA
 ABSTRACT

Cost-benefit Analysis is a statement of cost showing cost per unit of any product at
every level of production. It is important to know at what stage of production we are
and what price at the particular production stage. Cost of production includes
various factors from manufacturing to administration expenses. These variables
need to be given special care and attention by the company to bring about efficiency
in cash management. Hence the major objectives of the study undertaken were, to
analyse the cost at different stages of production, to assist in fixing of selling price,
to make a comparison of cost sheet with previous years and provide suitable
suggestions. .
The secondary data is chosen for the study on Cost-benefit Analysis. The data
were collected from various journals, websites and the annual report of Alloysys
Extrusion Pvt Ltd. The analytical research technique was adopted in this project.
The researcher used analytical type of research to analyze the past data based on
which certain future decision can be made. Data extracted from the annual report of
the company was analysed for cost with the help of cost overheads, administration
overheads, selling & distribution overheads in prime cost, direct material, labour and
expenses and inventory turnover ratio.
The factory overhead cost analyzed for the past five years shows an increasing
with normal trend. The prime cost of administration overhead indicates an increase
during the mid-period. The direct labor and expenses constantly stands at same
level of percentage with some differences. The study of the overall components of
cost has revealed that sales cost and profit ratio, the cost of production and cost of
sales is affecting the profit of the Alloysys Extrusion Pvt Ltd. Cost efficiency of the
company could be enhanced by reducing the cost of the production and cost of
sales.
 CHAPTER – 1

INTRODUCTION

1.1 INTRODUCTION:

Cost-benefit Analysis is a statement prepared to show the various elements of costs.

It is prepared at regular intervals, for example weekly, monthly, quarterly, yearly etc.
In some cases comparative figures of various periods are also shown in the cost
sheet so that assessment can be made about the progress of a business.
Cost-benefit Analysis is a statement of cost showing cost per unit of any product At
Every level of production. It is important to know at what stage of production we are
and what price of the particular production stage.
In other words, when costing information is set out in the form of a statement it is
called a Cost-benefit Analysis. It is usually adopted when only one product is
produced and all costs are incurred for that product only. Cost-benefit Analysis may
be prepared for a week, for a month, quarterly or yearly indicating various
components of cost such as Factory Overhead Cost, Administration Overhead Cost,
Selling &Distribution Overhead Cost in Prime Cost, Indirect material in Direct
material, Indirect Labour in Direct Labour, Indirect Expenses in Direct Expenses,
Inventory turnover ratio, Inventory turnover ratio in average stock, Inventory turnover
ratio in inventory turnover in days.
Elements of cost are necessary to have a proper classification and analysis of total
cost. Thus, elements of total cost provide the management with necessary
information for proper control and management decisions. For this purpose, the total
cost is analyzed by the elements or nature of cost, i.e., material, labor, and
overheads.
1.1 What is Cost Sheet?
Cost sheet means a statement that is gathered all the expenses and costs
related with a manufacturing process. This is mainly used for collect the margin of
profit earned on a product and can form the supporting to set price on identical
products in future. Cost sheet also can be used for the support for different cost
control techniques and measures. A cost sheet can be created on paper as well as
through computer.
Definition of Cost Sheet
CIMA London defined cost sheet as ‘a statement which provides for the assembly
of the detailed cost of a Centre or a cost unit’

The costs are usually listed in cost sheet by following categories

 Direct labor
 Direct materials
 Administrative overhead
 Factory overhead
 Direct expenses
 Selling and distribution

Sometimes following costs also included in cost sheet

 Shipping & Handling

 Supplies
 Outsource cost

The costs that are listed on cost sheet include labor cost and actual material cost
incurred. Anyway it is also possible that those costs are only listed in their standard
cost. The development of cost sheet is very important, typically if it is prepared by
hand.

The format of the cost sheet is typically a standard one that should be either setup
within the computer accounting system or manually rolled from past reports when
the report is printed. Another purpose of the cost sheet is that it can be used as the
support for the quote to a customer, basically to produce a custom product. In this
situation cost sheet includes the best prediction of the company’s prediction for the
requested product, with the details for each of the past indicated expense line items.
Advantage of Cost Sheet
 Cost sheet indicates the breakup of the total cost by each elements like labor,
material, overhead etc.
 Cost sheet facilitates the comparison of each costs in different years.
 Cost sheet helps the management to fix the selling price.
 Cost sheet can act as a guide to the management to formulate the production
policy.
 It helps the management to have control over the cost of production

Direct Materials
In simple word, it is the material that is used during the production of a product and
it can be directly identified with the product. Other names for the direct material are
productive material, raw stock, store and raw materials. The cost of direct material
can be easily fount with the unit of production.
Step to estimate the Direct material cost
 Identify the total amount goods to be produced. This is called as order size.
 Estimate the total amount of raw material needed to produce the order size
 Multiple that estimated amount by the cost related with the raw material.
 If there is scrap or waste its cost should be included in the step three.
 If the scrap or waste can be sold at scrap value, then this amount should be
deducted from the cost in the step four.

Direct Labour
Direct labour is the employees or workers who are directly involved in the production
process of goods. The cost which is assigned to a specific cost center or product is
known as direct labor cost. This includes

 The cost of the fringes and wages given to the direct worker or employee.
 The cost of the temporary helper who work directly on the production or
manufacturing process.
Factory Overhead

Other names for the factory overhead are work overhead and manufacturing
overhead. Factory overhead is the total cost involved in an operation of all
manufacturing facility in a production business that can’t be discovered directly to a
product. Factory overhead is usually applies to direct labour cost and indirect cost.
It include all the cost included in production excluding the cost of raw material.
Example: production supervisor salary, factory rent, depreciation, equipment setup
cost, factory utilities, fringe benefit etc.

Administration Overhead

It is the costs that are not involved in the production or development of goods or
services. Administration overhead is considered as a period cost. It means the
benefit of this kind of cost don’t carry forward into future periods. It is also known as
general overhead.
Example: office supplies, sales travel and entertainment, administration travel
expenses, salary and commission, wages etc.

Selling and Distribution Overhead

These are the expenses that are normally incurred to enhance the service and sales
to the customer. So normally the expenses like salesman salary, travel expenses,
advertisement cost, commission, banner and billboard, brochure and catalogue, bad
debt, showroom expenses, free gift etc. are included under this.
Distribution expense is the expenses which are sustained for storage and
warehousing, making goods available to delivering to customer and packing of
goods that are going to send.
So in general sense, distributing expense includes warehousing cost, cost of
preparation of challan, storage cost, packing cost, delivery cost etc.
Prime Cost

Prime cost is the cost which is directly assigned to the production of each goods. It
is direct cost which includes the cost of direct material and direct labour in production
of goods. The companies use the prime cost to price their products.

Prime cost is calculated by adding the cost of labour to the cost of raw material that
are directly related to the manufacturing process. The formula for prime cost only
takes into account those variable expenses are directly associated to the production
of each good. The formula for prime cost is as follows

Prime cost = Raw material + Direct labour

Work Cost

Work cost is the aggregate cost of the direct resource involved in performing the
work. It can be also said that sum of all expenses incurred by a contractor during
the performance of a contract or work

Main cost control techniques

 Inventory control
 Labour control
 Overhead control
 Budgetary control
1.2 INDUSTRY PROFILE

Aluminum Industry in India is a highly concentrated industry with the top 5

companies constituting most of the the country's production. With the growing
demand of aluminum in India, the Indian aluminum industry is also growing at an
enviable pace. In fact, the production of aluminum in India is currently outpacing the
demand.

Though India's per capita consumption of aluminum stands too low (under 1
kg) comparing to the per capita consumptions of other countries like US &
Europe (range from 25 to 30 kgs), Japan (15 kgs), Taiwan (10 kgs) and China
(3 kgs), the demand is growing gradually. In India, the industries that require
aluminum most include power (44%), consumer durables, transportation (10-
12%), construction (17%) and packaging etc.

The Background

Though the existence of Aluminum was first established in the year 1808, it
took almost 46 years to make its production commercially viable. The
research work of several years resulted in extracting the aluminum from the
ore. Aluminum is third most available element in the earth constituting almost
7.3% by mass. Currently it is also the second most used metal in the world
after steel. Due to the consistent growth of Indian economy at a rate of 8%,
the demand for metals, used for various sectors, is also on the higher side.
As a result, the Indian aluminum industry is also growing consistently. In
FY09, the aluminum industry in India saw a growth of about 9%.

The production of aluminium started in India in 1938 when the Aluminum

Corporation of India's plant was commissioned. The plant which was set up
with a financial and technical collaboration with Alcan, Canada had a capacity
of producing 2,500 ton per annum. Hindustan Aluminum Corporation
(Hindalco) was set up in UP in the year 1959; it had a capacity of producing
20,000 ton per annum. In 1965, a public sector enterprise Malco which had
a capacity of 10,000 ton per annum was commissioned; by 1987, National
Aluminum Company (NALCO) was commissioned to produce aluminum. It
had a capacity of producing 0.218 million ton.

During the 1970s, the government started regulating and controlling the
Indian aluminum industry. Restrictions in entry and price distribution controls
were quite common in the Indian aluminum sector. Aluminum Control Order
was implemented where the aluminum producers had to sell 50% of their
products for electrical usages. However, in 1989, the order was removed as
the government decontrolling was revoked. With de-licensing of industry in
1991, the liberal import of technologies and capital goods was started. The
liberalization resulted in a growth rate of 12% of the industry, comparing to
the growth rate of 6% during the 1980.

Aluminum Production in India

India is world's fifth largest aluminum producer with an aluminum production

competence of around 2.7 million tones, accounting almost 5% of the total
aluminum production in the world. India is also a huge reservoir of Bauxite
with a Bauxite reserve of 3 billion tones.

The Production

India lies at the eighth position in the list of leading primary aluminum
producers in the world. India saw a significant growth in aluminum production
in the past five years. In 2006-07, the production target of aluminum in India
laid by the Ministry of Mines, Government of India was 1,153 KT, which was
augmented to 1,237 KT in the next year (2007-08). Due to the growing
demand from the construction, electrical, automobiles and packaging
industry, the production of aluminum also hiked up. In FY 09, the total
aluminium production in India was around 1.35 tonnes.

The Consumption

After a stagnant consumption of primary aluminum in India from the end of

 1990s to 2002 (when the consumptions were between 500 – 600 KT), it
started rising sharply since 2002. The consumption reached at 1,080 KT in
2006. The consumption of aluminum in India is dominated by the industries.

The Indian aluminum industry is dominated by four or five companies that

constitute the majority of India's aluminum production. Following are the
major players in the Indian aluminium industry:
 Hindustan Aluminum Company (HINDALCO)
 National Aluminum Company (NALCO)
 Bharat Aluminum Company (BALCO)
 MALCO
 INDAL
HINDALCO: Hindalco is the biggest player in the aluminum industry in India with
around 39% of market share. An Aditya Birla Group flagship company, Hindalco
has its aluminum plant at Reknot in Uttar Pradesh. It has various aluminum
products with a market share of 42% in primary aluminum, 20% in extrusions
63% in rolled products, 31% in wheels and 44% in foils.

Sterlite Industries: The aluminum business of Sterlite Industries Limited

comprises of two Indian aluminum giants – BALCO and MALCO. While BALCO
is a partially integrated, MALCO is a fully integrated producer of aluminum.
Sterlite has got a market share of around 32%.

NALCO: It is also one of the leading aluminum producers in India. Government

of India has a stake of 87.15% in this company. Its aluminum refinery is located
at Damanjodi. It also has a smelter located at Angul, Orissa. Currently, NALCO
is concentrating on a capex program to increase its production from 345,000 tons
to 460,000 tons.

The most commercially mined aluminum ore is bauxite, as it has the highest
content of the base metal. The primary aluminum production process consists of
three stages. First is mining of bauxite, followed by refining of bauxite to alumina
and finally smelting of alumina to aluminum. India has the fifth largest bauxite
reserves with deposits of about 3 bn tons or 5% of world deposits. India's share
in world aluminum capacity rests at about 3%. Production of 1 ton of aluminum
requires 2 tons of alumina while production of 1 ton of alumina requires 2 to 3
tons of bauxite.

 The aluminum production process can be categorized into upstream and

downstream activities. The upstream process involves mining and refining
while the downstream process involves smelting and casting & fabricating.
Downstream-fabricated products consist of rods, sheets, extrusions and foils.
 Power is amongst the largest cost component in manufacturing of aluminum,
as the production involves electrolysis. Consequently, manufacturers are
located near cheap and abundant sources of electricity such as hydroelectric
power plants. Alternatively, they could set up captive power plants, which is
the pattern in India. Indian manufacturers are the lowest cost producers of the
base metal due to access to captive power, cheap labor and proximity to
abundant supply of raw material, i.e., bauxite.
 The Indian aluminum sector is characterized by large integrated players
like Hindalco and National Aluminum Company (Nalco). The other producers of
primary aluminum include Bharat Aluminum (Balco), a subsidiary of Vedanta
Resources.
 Aluminum offers a rare combination of valuable properties. It is three times
lighter than Iron but is almost as strong as steel, extremely flexible and
corrosion resistant due to thin surface layer of aluminum oxide. Aluminum has
been continuously finding new applications due to rising price competence,
superior weight to strength ratio, corrosion resistance, formability, dampness
etc.
 On the industrial side, aluminum is heavily used in electrical power
transmission, machinery and equipment, and construction. Housing, in
particular, makes heavy use of the lightweight material as a substitute for steel
and wood in doors, windows and siding. On the consumer side, aluminum is
used in a variety of retail products, including cans, packaging, air
conditioners, furniture and vehicles.
 HOW TO RESEARCH THE ALUMINIUM SECTOR (KEY POINTS)

 Supply
 Supply of aluminum is in excess and any deficit can be imported at low rates of
duty. Currently, the demand is stable while supply is in excess.
 Demand
 Demand for aluminum is estimated to grow at 6%-8% per annum in view of the
low per capita consumption in India. Also, demand for the metal is expected to
pick up as the scenario improves for user industries, like power, infrastructure
and transportation.
 Barriers to entry
 Large economies of scale. Consequently, high capital costs.
 Bargaining power of suppliers
 Most domestic players operate integrated plants. Bargaining power is limited in
case of power purchase, as Government is the only supplier. However,
increasing usage of captive power plants (CPP) will help to rationalize power
costs to a certain extent in the long-term.
 Bargaining power of customers
 Being a commodity, customers enjoy relatively high bargaining power, as prices
are determined on demand and supply.
 Competition
 Competition is primarily on quality and price, as being a commodity,
differentiation is difficult. However, the recent spate of consolidation has reduced
the competitive pressure in the industry. Further, increasing value addition to
aluminum products has helped some companies protect themselves from the
high volatilities witnessed in this industry.

FINANCIAL YEAR '15

 The commodity markets, and in particular the aluminum industry, are going
through a challenging phase at present because of the sharp slide in
realizations.
 During the last quarter of FY15, heightened risk averseness led to dumping
of commodities across the board. The resultant rise in US$, coupled with
surging Chinese exports following slowing demand growth in China resulted
in a sharp decline in LME, which dropped sharply by almost 10%. This was
also accompanied with significant decline in regional premium, resulting in a
large decline in all-inclusive aluminum realizations putting pressure on
margins.
 Aluminum prices on LME have declined quite sharply over the last few months
due to confluence of many factors such as heightened risk averseness,
European region uncertainty related to Greece, slowing demand growth from
China and rising exports from it.
 The premiums across the regions have declined over 70%. This was primarily
on account of large inventory de-stocking, which was the result of carry trade
becoming less attractive, which in turn can be attributed to various factors
such as change in LME warehousing rules, flattening of forward curve
resulting into decline in contango, tightened regulatory environment that
discouraged warehousing and impending specter of Fed increasing interest
rates resulting in higher financing costs.
 Due to above reasons, Realizations have declined sharply in recent months
due to excess supplies. This scenario may continue for a while and hence
over short term, realizations may remain under pressure.
 Global demand for aluminum has historically tended to outperform that for
other metals. The weak price performance in some of the recent years has
been more due to supply side developments than any issues with demand. In
2014, global aluminum consumption rose 5.5% YoY, the fastest pace in three
years, despite the slowdown in Chinese consumption growth to around 8%.
 China accounted for 44% of global primary aluminum consumption in 2014,
up from 23% in 2005. As the country continues to develop towards a more
consumer-focused economy, aluminum consumption is expected to become
more consumer-driven. Aluminum consumption in the USA has recovered
well since the financial crisis, rising by over a third in the five years to 2014.
However, consumption still remains 20% below pre-crisis peak levels.
European demand has struggled to grow in recent years, as it has been
affected by the ongoing economic slowdown.
 Indian aluminum demand rose by 38% in the five years to 2014. India is
currently the world's fifth-largest consumer of aluminum, behind China, the
USA, Japan and Germany, and it is expected that the strong demand
fundamentals have potential to elevate the country to the No. 3 position by
2024.

PROSPECTS

 The Indian recovery is on the mend and the economy is expected to grow at
over 7.5% in FY18 and FY19. This would result in aluminum demand growth
on account of stronger consumption and investment. The government's thrust
on power sector that went through a challenging phase bodes well for
aluminum industry as power sector is a strong demand driver for aluminum
consumption in India.
 The US demand is expected to remain strong growing at a CAGR of 4-5%
over next few years, as the housing recovery gains traction, car sales
continue to improve and aluminum demand benefits from new applications,
particularly in the automotive sector. Western Europe is expected to grow
moderately amidst economic uncertainty. The aluminum demand is expected
to grow at around 2.5%
 In 2022, Chinese aluminum demand is expected to grow at around 6-7%, a
substantial slowdown from the double-digit increase of the past decade.
Demand growth will be strongest in consumer-related sectors.
 In short term, Chinese supply is expected to continue to impact Rest of the
World demand-supply dynamics adversely. However in long term, overall the
demand supply scenario for primary aluminum globally looks encouraging as
demand continues to be robust with expectations of around 6% growth.
 On the positive side, the reduction in prices of crude derivatives in the recent
months is expected to help on the cost front. In the recent quarters, coal
availability in India is showing signs of improvement. With the expected
growth in output of public sector coal mining companies and the likely
operationalization of captive coal blocks, coal availability in the country may
improve further, which will ease the cost-side pressures
 1.3 COMPANY PROFILE

Alloysys Extrusion [P] Ltd came into existence in 2005. The journey from
manufacturing aluminum extrusion to becoming one of the best makers of Quality
Aluminum Extrusions have been filled with accomplishments and accolades.
Alloysys Extrusion aims to have a global presence as a leading global manufacturer
of high-quality Aluminum extruded products. The endeavors of the organization are
focused towards achieving all-round excellence. The organization seeks to
accomplish a fusion of traditional methods and innovative concepts to supply the
best quality extruded product. Alloysys Extrusion manufactures wide variety
Aluminum extrusions like extruded channel, extruded section or extruded profile that
meet diversified usage.

Alloysys Extrusion has been maintaining its utmost standards of precision and
quality and founded on the philosophy of ensuring uncompromising satisfaction to
our customers. We have excellent time delivery of all the versatile extrusion
products and these products are adding a new dimension to the modern building
construction technology and to our business. Alloysys Extrusion [P] Ltd as the
acknowledged market leaders have set up benchmarks for quality, timely delivery
and client satisfaction. We have a unique combination of being flexible and an ability
to react very quickly to changes in designs and specifications. This has ensured that
our products and services to all our customers have been acclaimed internationally.
From the beginning, we have always had a strong foundation of adaptability and
experience. Always working very closely with customers, we have developed our
products and services in tune with the market developments and requirements.
Meeting with customer's need and satisfaction is the true achievement

Alloysys Extrusion believes and follows this only statement at the time of
manufacturing the products. This idea has helped Alloysys Extrusion to set a clear
picture towards company's goal. Alloysys Extrusion is all set to have a wide range
of all kind extrusions in near future. Alloysys Extrusion have well known in eastern
part of the country.
 WHAT WE CAN OFFER YOU

ALLOYSYS EXTRUSION currently has automatic hydraulic presses with a

production capacity of 3,000 MT per annum. The company offers the standard
aluminum extrusions profiling and also is able to take care of specific designs and
requirements.

OUR CAPABILITIES
 Automated Hydraulic Extrusion Presses
 Capacity: 3000 MT per annum
 Die Library: 1000
 profiles ranging from 10mm - 150 mm CCD
 Section weight up to 17 kg per piece
 Wall thicknesses minimum 0 .5mm - 20 mm
 Cut lengths up to 6-7m
 Standard alloy ranges
 MISSION:
To become the most preferred aluminium extrusion company, focusing on
manufacturing the high quality extruded products with excellent service consistently.

VISION:

We shall be producing high quality aluminium extrusions with our organizational

expansion so that we shall always be able to meet the expectations of our all
business associated people and specially our consumers.

PRODUCTS
1. Architectural
A) ALUMINIUM EXTRUDED DOOR PARTITION SERIES
 All
 Partitions
 Middle Section
 Top Bottom


Single Partition
 Double Partition


Door Top


Door Middle Single


Door Middle Double


Door Bottom
 Door Vertical


Glazing Clip

B) ALUMINIUM EXTRUDED CURTAIN WALL SERIES


Curtain Wall Section 1423


Curtain Wall Section 1426


 Curtain Wall Section 1431

C) ALUMINIUM EXTRUDED HOLLOW SECTION SERIES


Rectangular Tube


Square Tube

D) ALUMINIUM EXTRUDED OPENABLE WINDOW SERIES

 All
 34 Series
 40 Series
 Cleat Angle


34 Series Outer Frame


 34 Series Shutter Frame


34 Series Mullian


34 Series Clip


40 Series Outer Frame


40 Series Shutter Frame


 40 Series Mullian


40 Series Clip


Cleat Angle

E) ALUMINIUM EXTRUDED TEE SERIES


Bulb Tee

2. Industrial
A) ALUMINUM EXTRUDED ANGLE SECTION SERIES


 Equal Angle


Unequal Angle

B) ALUMINUM EXTRUDED LADDER SECTION SERIES


Fluted Tube


C Section


Stapazing


 Hinge

C) ALUMINUM EXTRUDED WATER CHANNEL SECTIONS


Water Channel Section 7506


Water Channel Section 7511

D) ALUMINUM EXTRUDED ROUND TUBE


Round Tube

E) ALUMINUM EXTRUDED L SECTIONS


 L Section

F) ALUMINUM EXTRUDED DOUBLE ROLLER SECTIONS


Double Roller Section

CUSTOM EXTRUSION

1. INDUSTRY SPECIALIZATION

Aluminium extrusion technology in modern industries continues to be a subject of

discussion and evaluation concerning its application to the working environment.
The demand for and application of aluminium extrusion in architecture and in the
manufacture of auto mobiles, small machine components, structural component and
especially aircraft, have increased tremendously, and competition in this industry is
intense. The extrusion industry is now more than 100 old.

Industrial Uses: Aluminium is used extensively in almost countless application

because of its high strength combined with low density. Also it is corrosion resistant
to the atmosphere as a thin film of aluminium oxide forms over aluminium surfaces
which protect it from further corrosion. Also, aluminium is non-toxic making it suitable
for application involving contact with food products.

The most extensive and biggest use of aluminium is in packing. It used for packing
in various forms such as cans, foils, tubes, and bottle tops. Second biggest use of
extruded aluminium is in transportation. Aluminium extruded sections are widely
used in most transport vehicles. It is particularly suited for aeroplanes. A modern
aeroplane contains about 80% aluminium by weight; A Boeing 747 contains about
75 tons of aluminium.
 Electrical transmission is another very big application area for aluminium. It has
about 63% of electrical conductivity of copper but only half the density. That makes
it a very attractive substitute for copper in electric cables and transmission lines.
Particular for bare conductors of transmission lines, aluminium is the only choice.

Aluminium finds very big application in construction industry as forming Architectural

channels or sections of window and door frames, cladding, and roofing. Aluminium
is also used for painting other surfaces. Aluminium is also used extensively for
making stylish and light weight furniture. It is particularly popular for folding and other
type of furniture which is intended to be shifted and stored away frequently.

2. THE EXTRUSION PROCESS

Extrusion is a plastic deformation process in which a block of metal (billet) is forced

to flow by comparison through the die opening of a smaller cross - sectional area
than that of the original billet. Extrusion is an indirect - compression process. Indirect
- compressive forces are developed by the reaction of the work piece (billet) with
the container and die results in high values. The reaction of the billet with the
container and die results in high compressive stresses that many breakdowns from
the billet. Extrusion is the best method because the billet is subjected to
compressive forces only. Extrusion can be cold or hot, depending on the alloy and
the method used. In hot extrusion, the billet is preheated to facilitate plastic
deformation. Conventional Direct Extrusion: The most important and common
method used on aluminium extrusion is the direct process. In this process, the
principle of direct extrusion, the billet is placed in the container and pushed through
the die by the ram pressure. Direct extrusion finds application in the manufacture of
aluminium solid rods,aluminium bars, hollow tubes, and hollow and solid sections
according to the design and shape of the die. In the same direction as ram travel.
During this process, the billet slides relative to the walls of the container. The
resulting frictional force increases the ram pressure considerably. During the direct
extrusion, the load or pressure - displacement curve most commonly. Traditionally,
the process has been described as having three distinct regions:
 The billet is upset, and pressure rises rapidly to its peak value.
 The pressure decreases, and what is termed "steady state" extrusion proceeds.
3. EXTRUSION IDEA TO OBJECT

"Meeting with customer's need and satisfaction is the true achievement", we also
believe and follow this only statement at the time of manufacturing our extruded
products

The process initiates with the necessity or demand of an Extruded profile. Once the
necessity arrives, it demands specific die for that extrusion product which results in
the making of specific die for the product After getting the die, finally the production
phase of that particular extruded product takes place in plant under the process.

QUALITY MANAGEMENT

1. QUALITY CONTROL AND COMPLIANCES

At Alloysys Extrusion, we do not compromise on quality, we walk an extra mile to

sustain the quality. What we have done is that we have standardized the process of
quality compliance checks. The quality compliance tests are not carried out
randomly but it is a well defined process carried out continuously at every stage of
production. An error does not become a mistake until you refuse to correct it. With
this principle the Alloysys Extrusion has in place a complete traceability system to
trace down the root cause of deviation, should they happen to occur. We are fully
geared with the requisite technical expertise and quality control mechanism, which
leads us to successfully meet even the bulk orders of the clients. Additionally, our
streamlined administration, regular follow-ups with the clients and quick order
dispatch has enabled us to win the faith and trust of the customers.
Alloysys extrusions is awarded ISO 9001:2008 Certification by international
agency narks accrediting of Norway for its quality management standards.

2. TECHNICAL SPECIFICATION

Aluminium is a soft, durable, lightweight, ductile and malleable metal with

appearance ranging from silvery to dull gray, depending on the surface roughness.
Aluminium is nonmagnetic and does not easily ignite. A fresh film of aluminium film
serves as a good reflector (approximately 92%) of visible light and an excellent
reflector (as much as 98%) of medium and far infrared radiation. The yield strength
of pure aluminium is 7-11 MPa, while aluminium alloys have yield strengths ranging
 from 200 MPa to 600 MPa. Aluminium has about one-third the density and stiffness
of steel. It is easily machined, cast, drawn and extruded. Corrosion resistance can
be excellent due to a thin surface layer of aluminium oxide that forms when the metal
is exposed to air, effectively preventing further oxidation. The strongest aluminium
alloys are less corrosion resistant due to galvanic reactions with alloyed copper. This
corrosion resistance is also often greatly reduced when many aqueous salts are
present, particularly in the presence of dissimilar metals. Aluminium is one of the
few metals that retain full silvery reflectance in finely powdered form, making it an
important component of silver-coloured paints.
WHAT OUR PRODUCTS OFFER WITH RESPECT TO THE TECHNICAL
SPECIFICATION

 Corrosion-Resistant

 High Strength-to-Weight Ratio

 Ease of Fabrication

 Ease of Fastening and Assembly

 Versatility in Joining

 Durable, Resilient and Strong etc.

3. USES

Aluminium is almost always alloyed, which markedly improves its mechanical

properties, especially when tempered. For example, the common aluminium foils
and beverage cans are alloys of 92% to 99% aluminium. The main alloying agents
are copper, zinc, magnesium, manganese, and silicon (e.g., duralumin) and the
levels of these other metals are in the range of a few percent by weight. With
completely new metal products, the design choices are often governed by the choice
of manufacturing technology. Extrusions are particularly important in this regard,
owing to the ease with which aluminium alloys, particularly the Al-Mg-Si series, can
be extruded to form complex extruded profiles.
1.4 NEED OF THE STUDY:

 The knowledge of the total cost cannot fulfill the entire information needs of
management.
 For a complete control and analysis, classification of total cost is necessary.
 The cost sheet will give the components/ classification of total cost.

1.5 OBJECTIVES OF THE STUDY

Primary Objective:

A study on Cost-benefit analysis for the Alloysys Extrusion Pvt Ltd at Chennai.

Secondary Objective:

 To understand the cost structure of the company.

 To understand how the cost will affect performance and profit of the
company.
 To evaluate each cost of the company and suggest them what are the
changes they have to implement.

1.6 SCOPE OF THE STUDY

 The cost of output can be ascertained from the statement known as Cost-
benefit Analysis.
 The study of total cost under different classification of cost.
 The classification of cost is done on the basis of elements of total cost,
function and behavior of cost.
 The cost of a cost center or cost unit is shown in the cost sheet.
1.7 LIMITATIONS OF THE STUDY

 Limited Data:
 This project has completed with annual reports and it’s just constitutes one
part of data collection i.e. secondary. There were limitations for primary data
collection because of confidentiality.
 Limited Period:
 This project is based on five year annual conclusions are based on such
limited data. The trend of last five year may not reflect the real working capital
position of the company.
 Limited Area:
 Also, it was difficult to collect the data regarding the competitors and their
financial Information industry figures difficult to get.
 CHAPTER-2
REVIEW OF LITERATURE

REVIEW OF LITERATURE:

Mukesh Chouhan & Mrupee Shivani in May 2013, the management accounting,
Mukesh Chouhan & Mrupee Shivani conducted study on the costing techniques –
life cycle costing need for better asset management. Both the capital and the
ongoing operating maintenance cost must be considered wherever asset
management decision involving cost is made. This is the life cycle cost approach. It
is a process to determine the sum of all cost associated with an asset or part thereof,
including acquisition, installation, operating, maintenance, refurbishment and
disposal cost.

Carrar and Gibson 2008,

In its history says that some expenses are driven by factors beyond the control of
the department. Such as those related to inflation or goods or services most
expenses budgets segregates salaries and benefits from other item in the expenses
budget. Budgeting personals cost relating to a variety of factors, including addition
of position, loss of the positions, the need for temporary or seasonal workers,
changes in benefits and outsourcing of certain personal functions that were formally
handled within the institution. It should be noted that the personnel items expenses
in the budget are segregated from other expenses and special permission usually
must be received transfer money from the personnel budget to cover other
expenses within the department or vice versa.

Dijkman in June 2007, the management accounting,

Dijkman in his paper tries to address as many issues possible with adequate
variations, to capture the dynamics of industry and evolve a costing process using
activity based costing. In the final, much depends on the level of detail and the costs
and the benefits in the exercise.
Shim and Siegel 2013,
In his study says a budget is a plan expressed in quantitative, usually monetary
turns covering a specified period of time, usually a year. Budgeting, a term for
several terms cannot be changed easily and only under specified circumstances to
attain the budget targets. The budget is also reviewed and approved by someone
who is higher in authority than the person who accepts the responsibility.

Yosef S Sherif, William J Kolarik, Omega in March 1891, The Management

Accountant
Yosef S Sherif, William J Kolarik conducted a study on life cycle costing concept
and practice. This paper traces the development of life cycle costing (LCC)
technique in the United States and classifies documented LCC literature by both
model type and application. His paper outlines the optimal maintenance model for
life cycle costing analysis. His paper also outlines the optimal maintenance schedule
that minimizes the system future total expected maintenance cost.

Per Dahlen Gunnar S Bolmsjo in December 1996 International journal of

production Economics ,
Per Dahlen Gunnar S Bolmsjo conducted a study on life cycle analysis of the labor
factors. In their study they highlighted the purpose of this paper is to widen the field
of application of life cycle costing and carry through an analysis of investment done.
David G. Woodward on 10th June 1998, Division of accounting, Stafford
university business school,

David G. Woodward undertook study on life cycle costing. It is not limited to

forecasting of future costs in the beginning of a life cycle. The focus of LCC changed
during the product life cycle.

Ryall, in his Dictionary of costing

“From a technical point of view, the term cost may be used when referring to the
cost of manufacturing only or the cost of selling and distribution of goods or to
indicate the total cost of manufacturing, selling and distribution”.
Walter & Bigg the Cost Accounting
The expenses of a product are analyzed under different heads in form of statement.
“The expenditure which has been incurred upon production for a period is extracted
from the financial books and the stores records, and it set out in a memorandum or
a statement. If this statement is confined to the disclosure of the cost of the units
produced during the period, it is termed as a Cost-benefit Analysis”. In other word
Cost-benefit Analysis is a statement showing the total cost under proper
classifications in a logical order.
From the above, it is clear that the term ‘Cost’ is perceived by different people
differently. In simple terms cost may be described as the total of all expenses
incurred, whether paid or due in production and sale of a product or expended in
rendering services.

Phill Carroll (How to Control Production Cost, 1953) in his book describing the
importance of reduction and control of cost for generating adequate profit by the
companies. The book points out various wrong techniques of cost accounting that
are used by different companies. He clearly mentioning that managers have to be
aware of different cost and how those cost will affect the company’s performance.

Boardman (Boardman, Greenberg, Vining, & Weimer, 1996) identified 9 important

steps of cost benefit analysis. He also explain the various demerits and problems of
these steps. He has done this through expanding each steps. In this article he
mentioned the report of a workshop. The workshop was conducted by Bank of
England and it is about the topic cost benefit analysis. Members from central bank
and other financial institutes were participated the workshop. According to this
analysis, the top strategy is that achieve the goals and mission at a minimum cost.
That means the company has to minimize their expenditure after that only they are
supposed to make strategy for achieving the goal.

John Christian, Gillin, Amar Pandeya (Christian, Gillin, & Pandeya, 1997) discuss
the difficulties faced by facility managers in any company. He mentioned various
problem and one of the important problem is that estimation of operating cost and
maintenance cost in the upcoming years. It is very difficult to predict those cost even
if they are nearest to the actual reality. The accuracy of those cost can be somehow
managed by collecting previous year’s records and analyzing the different factors
that decide the cost effect. He analyzed eight government offices and 14 university
facility and its operating cost and maintenance cost. And he developed cost
prediction model by 24 using regression analysis and neutral networks. And this can
be used to help the system manager to predict the maintenance cost and operation
cost

Roland T. Rust, Christine Moorman and Peter R. (Roland T. Rust, Oct 2002),
states that cost reduction and revenue expansion can be used to increase the profit
and cash flow of a company. In this literature state that operation and quality will
give good foundation to reduce the cost. And at the same time the satisfaction of
customer and market orientation will give foundation to increase the revenue of the
company.

Compton and Brinker (Compton, J & Brinker, & Thomas M, 2005) stated that all
cost are not of same nature and all can’t be used for evaluation for the purpose of
decision making. Only some cost should be used for this purpose. Compton, Brinker
and Thomson distinguished cost in a different way from others. They distinguished
both marginal cost and sunk cost. Martin in 1992 distinguished direct cost, indirect
cost and distributable cost.

Mikhail Chester and Chris Hendrickson (Chester & Hendrickson, 2005), made a
finding that “construction cost goes up in a project with the seven different
mismanagement scenarios. Those seven scenarios are (i) delay (ii) acceleration (iii)
re sequencing of work (iv) cost cutting (v) change of scope (rework) (vi) defective
work (vii) strike”. So the management should consider these things and they should
try to avoid these scenarios to reduce the construction cost.

Rajiv Bhatt (2006) mentioned that “the cost overrun take place due to (i) late
payment from client or contractor, (ii) late supply of materials and decisions, (iii)
delayed possession of site, (iv) inflationary increase in material rates, (v) Revised
estimate”. 25 These things will create the chance for cost overrun. So we should
ensure that these things are not happening and it will prevent the cost overrun.

R K Uppal and Rimpi Kaur (Uppal & Kaur, 2009) analyzed different aspect of
reducing the cost in banking sector. The challenge faced by banks is that gaining
good profit and reducing the cost. It is also compulsory for them to survive and
compete successfully in the competitive business world. Banks get deposit from the
public and that money will be used for the purpose of investing in different
instruments and gives to the public as loan. From the investment they will get returns
as dividend and interest and interest from the loan. The study states that the cost of
deposit is just double of the cost of borrowing. And the study states that investing
on different instrument is better than lending money to the public in the form of loan.
This is because the interested charged from the public for the loan is lesser than the
interest and dividend received from the investment in different instruments. This
works only for public sector bank. For private sector banks and foreign banks it is
better to lend money to the public. And the study also give suggestion to the bank
to reduce the cost to increase the profit.

Stefania-Eliza and Florin (Stefania, Bana, & Sgardea, 2009) examined that
production cost can be used as a good cost for evaluation of the profit of a company.
He says that cost of production is the best cost to evaluate the performance and
profit. He also mentioned that cost of introducing a new product in to the industry
also an important cost. The entry cost includes research cost, product development
cost, product testing cost and cost that incurred for product marketing, advertising
and distribution. These cost will play an important role to the performance of the
company. 26

Keng, Tan Chin, Mansor Norizzati (An Exploration of Cost Overrun in Building
Construction Projects, 2018) stated that cost overrun in construction projects
happen because of changes in design and delay of project. In order to avoid the
cost overrun they should ensure the design of the project. It should not be changing
often. And they should acquire in depth knowledge about the key project parts. And
there should also a scheduled planning. The planning should be done according to
the important and scope of each work. And it will avoid the chance for pre mature
delivery of material to the project location. By taking care of these thing we can
control the cost overrun in the building construction projects.

Dr. Atul Bansal (Bansal, 2014) studied about determination of efficiency of the
banks. He used cost benefit analysis for this study purpose. He says that banks can
perform well with a good competition strategy. But one of the main problem is that
it is not easy to predict the cost because of uncertainty. He also mentioned that
banks should reduce the cost and increase the income to survive in the market and
to successfully compete against the competitors.

Paul R. Garvey (Probability methods for cost uncertainty analysis: A system

engineering perspective, 2000) explain, to what extend the cost can over run. And
he also states about different uncertainty and how the uncertainty will drive the cost.
He also done cost uncertainty analysis. This will give an idea about costs that can
be a danger or threat for the organization.

Hathaway Bruce R (Controlling New Facility Cost, 1975) explains about

management control of construction projects from the beginning of planning through
job completion is the most important to cost control. In order to help in controlling
construction cost, 27 important actions has to be taken include master planning all
construction phases, using proven cost estimating techniques, matching to the
concept of creative cost control in the design phase, using established contractor
selection procedures.

Abdul Rahman, Hamza (Cost of Quality Failures in Civil Engineering, 1993)

provides an idea about the importance of cost reduction in civil engineering sector.
He also mentioned the importance of the quality cost. Quality cost is the cost that
are incurred by the company while maintaining the quality of their products.

Watson RB (Construction Cost Control Technique in UK, 1998) in his book

mentioning that in the case of industrial engineering, reference has to be made to
sort of independent indices relating differently to material and labor, and it is not
easy to establish a reliable combined index for labor and material as in the case of
the other two categories. The cost indices for large industrial projects provided by
Association of Cost Engineering (ACE) reflect the important changes in tender
levels.

Ali Mohammed Alashwal (Simulation Techniques for Cost Management, 2017)

studied about the Malaysian construction sector. And he found that they are
applying very low cost simulation techniques. And their knowledge of responding
also low. And he also finds the problem of adopting this technique. Performance of
cost, in Malaysian construction sector is adequate even though there is no matching
between the technique and performance.

Christine Brian (Medical Cost Control Techniques 1993) stated several

suggestions from the survey results. Few management cost control techniques
appear to be very famous among the operators of self-insured medical expense
plans. These involves 28 continued stay reviews, pre-admission authorizations,
HMOs as provider organizations, outpatient testing and EAPs.

Kim Yong Woo (Implication of New Production Paradigm for Project Cost Control,
2002) in his book state that in the area of overhead cost control, current control uses
resource-based costing and volume-based allocation, techniques based on the
transformation view and manage-by-results (MBR) thinking. The research
introduced a new overhead control method, profit point analysis (PPA), which take
on activity-based costing from manufacturing. The case study is conducted to test
the new method recommended that it belongs to the new production paradigm in
that it conceptualizes production as a flow and adopts manage-by-means (MBM)
thinking.

R Jayaraman (Project Cost Control) has found that cost control which is
restructured achieved a good result. And it worked better than actual expectation.
And the result was , cold rolling mill did rolling of steel sheet completed fast and
effectively.

Sudhakar, Samuel (Potential of IT to Improve Cost Control in Community College)

saying that, investment in IT has assisted institutions grow online enrollments
(87.6%), improved efficiency (97.3%), and improved productivity (97.3%). 91% of
the survey responders told that IT has enhanced their internal and external
communications and 99.1 % said that IT provides a good return on investment (ROI)
at their institution. The effect of the above results is that investments in IT have
assisted institutions to increase their revenue streams and reduce operating
expenses. It is suggested that CC’s consider strategic investments in IT to make
better efficiency and productivity, and to make better internal and external
communications with their stakeholders. Further it is suggested that return on
investment on IT investments be defined, analyzed, measured, improved and
controlled.
 CHAPTER – 3
RESEARCH METHODOLOGY

RESEARCH:
Research is an organized, systematic, database, critical, objective, scientific,
inquiry or investigation into a specific problem, undertaken with the purpose of
finding answer or solutions to it. Emory defines research as, “any organized inquiry
designed and carried out to provide information for solving a problem”.

3.1 RESEARCH DESIGN:

Research design is of condition for collection specification of methods and
procedures for acquiring the information needed to structure or to solve problem.
Research design is defined as, “the arrangement for collection and analysis of
the data in a manner that aims to combined relevant to the research purpose with
economy in procedure”.
Analytical research technique was adopted in this project. The researcher used
analytical type of research to analyze the past data based on which certain future
decision can be made.

3.2 SOURCE OF DATA

PRIMARY DATA:
The primary data is that the data which is collected fresh or first hand and for
first time, which is original in nature. Primary data can be collected through personal
interview, Questionnaire and so on to support the secondary data.

SECONDARY DATA:
This data, which have already been collected and presented by any agency, may
be used for the purpose of investigation. Such data may be called secondary data.
Secondary data may earlier be published data or unpublished data. Usually
published data are available in annual report.
3.3 TOOLS USED FOR THE STUDY:

I. PERCENTAGE OF OVERHEADS
 Factory Overhead
 Administration Overhead
 Selling & distribution Overhead

II. DIRECT MATERIAL, LABOUR & EXPENSES

 Percentage of Indirect Material in Direct Material
 Percentage of Indirect Labor in direct Labor
 Percentage of Indirect Expenses in direct Expenses

III. RATIO ANALYSIS

 Current Ratio
 CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

Table No. 4.1

COST SHEET FOR THE YEAR 2018-19 & 2019-20

2018-19 2019-20
 Chart showing Cost Sheet for the year 2018-19 & 2019-20

2018-19 2019-20

Interpretation:

In the year 2018-19 the total cost was 73,396,177 but in the year 2019-20 it was
increased to 76,531,782 because company increased production capacity. Even
though the company need to take certain measures to increase its profit level by
decreasing its production cost. But the company reach its desired goal as there is
a more sales.
Table No. 4.2

COST SHEET FOR THE YEAR 2020-21 & 2021-22

2020-21 2021-22
 Chart showing Cost Sheet for the year 2020-21 & 2021-2022

2020-21 2021-22

Interpretation:

In the year 2020-21 & 2021-22 there is a small change in the total cost. But profits
reduced drastically because of the less net sale in 2016-17 that is 78,910,159
compared to 85,677,188 in 2015-16. Because lesser turnover compared to the
previous year. And in this year real estate fall down it affect the house construction
it indirectly affects this industry also.
Table No. 4.3

COST SHEET FOR THE YEAR 2020-21 & 2021-22

2020-21 2021-22
 Chart showing Cost Sheet for the year 2020-21 & 2021-22

2020-21 2021-22

Interpretation:

In the year 2020-21 & 2021-22 there is a change in the total cost. But profits
increased in 2021- 20 compared to 2020-21 even though the net sale decreased
in 2021-22. The main reason for increasing profit is that company could reduce the
total cost in 2021-22 that is 63,56,1834 compared to 76,398877 in 2020-21. That
was a great positive sign for the company.
Table No. 4.4

Table showing % of increase/decrease of Direct Material

2018-19

2019-20

2020-21

2021-22

Analysis:

In the year 2018-19 direct material shows 100 %(as basic year) but in the year
2019-20 it is increase to 114.37%. And in the year 2020-21 direct material
increase to 108.83% and in the year 2021-22 it was decrease to 86.51%.
 2018-19 2019-20 2020-21 2021-22

Interpretation:

From the above graph we can observe that the percentage of direct material in the
year 2018-19 is considered as 100% (as base year) then it has been increased to
114.37% in the year 2019-20. But in 2020-21 and 2021-22 it has been decreased
to 108.83% and 86.51%.

So, we can observe that there is increased in direct material when compared to
the base year 2018-19 in the 2019-20. After that direct material cost decreased
gradually. It’s a good sign to the company.
Table No. 4.5

Table showing % of increase/decrease of Direct Labor cost

2018-19

2019-20

2020-21

2021-22

Analysis:

From the above table direct labor cost in the base year 2018-19 is 100%. Then it
has been increased to 102.56% in the year 2019-20 and again in the year 2020-21
and 2021-22 it has been increased to 103.84% and 109.15% respectively.
 2018-19 2019-20 2020-21 2021-22

Interpretation:
From the above graph we can observe that the percentage of Direct Labour in the
base year 2018-19 is 100%. Then it has been increased to 102.56% in the year
2019-20 and again in the year 2020-21 and 2021-22 it has been increased to
103.84% and 109.15% respectively.

So, we can say that there is a gradual increase in Direct Labour when compare to
the base year 2018-19 because in the company fell that workers are the assets of
the company so year by year they added the workers. And a negative impact by
adding workers is that it will increase cost of labour that will not good for company
if they do not extract the work.
Table No. 4.6

Table showing % of increase/decrease of Manufacturing Overhead

2018-19

2019-20

2020-21

2021-22

Analysis:

In the above table in the base year 2018-19 is 100%, that has been decreased in
the year 2019-20 is 71.91%. In the year 2020-21 is 54.85% that has been
decreased, but in the year 2021-22 it has been increased in 59.97% respectively.
 2018-19 2019-20 2020-21 2021-22

Interpretation:

The above Graph shows that manufacturing overhead for 3 years from 2018-19 to
2019-20, there is a continuous decrease in the manufacturing cost as the
company is having good control over its but in the year 2021-22 slightly increased
it is not a good sign to the company. Company need to use more machine power
than the man power as the result the process will be faster and there is a decrease
in the training cost to the workers. This helps the company to invest the saved
amount in implementing some advertisement programmers to increase sales.
Table No. 4.7

Table showing % of increase/decrease of Administration overhead

2018-19

2019-20

2020-21

2021-22

Analysis:

In the above table the year 2018-19 is considered as 100% then administration
expense has been increased to 104.19% and 108.24% in the year 2019-20 and
2020-21 respectively. And in 2021- 22 it has been decreased to 84.34%.
 2018-19 2019-20 2020-21 2021-22

Interpretation:

In the above graph Administration overhead in the year 2018-19 is considered as

100%. Then it has been increased to 104.19% and 108.24% in the year 2019-20
and 2020-21 respectively and 2021-22 it has been decreased to 84.34%.

So, we can say that there are more fluctuations when compared to the base year
2018-19 but in the year 2021-22 it decreased its cost. It is a good sign; the
company should maintain same thing.
Table No. 4.8

Table showing % of increase/decrease of Selling & Distribution Overhead

2018-19

2019-20

2020-21

2021-22

Analysis:

In the above table in the year 2018-19 is 100%, then it has been increasing to 10,
620,473 i.e., 103.23% in the year 2019-20 and in the year 2020-21 the Selling &
Distribution amount increased to 13,424,753 i.e., 126.40% then in the year 2021-
22 the Selling & Distribution decreased to 8,321,817 i.e., 78.36% respectively.
 2018-19 2019-20 2020-21 2021-22

Interpretation:

From the above graph we can observe that the percentage of Selling &
Distribution Over head in the year 2018-19 is 100%, than it has been increase
to10, 620,473 i.e., 103.23% in the year 2019-20 and in the year 2020-21 the
Selling & Distribution amount increased to 13,424,753 i.e., 126.40% then in the
year 2021-22 the Selling & Distribution decreased to 8,321,817 i.e., 78.36%
respectively.

So, we can say that there are some fluctuations when compared to the base year
2018-19 but last year well controlled expenses and achieved good sales also it is
good achievement to the company.
Table No. 4.9

Table showing % of increase/decrease of Total Cost

2018-2019

2019-2020

2020-2021

2021-2022

Analysis:

In the above table in the year 2014-15 is 100% then it has been increased to
104.27 % in the year 2015-16. In the year 2016-17it has been decreased to
104.09% but again it decreased to 86.60% in the year 2017-18.
 2018-19 2019-20 2020-21 2021-22

Interpretation:

Form the above graph we can observe that the % of Total Cost from in the year
2018-19 is 100% then it has been increased to 104.27 % in the year 2019-20. But
in the year 2020-21 it has been decreased to 104.09% but again it decreased to
86.60% in the year 2021-22.

So, there is a fluctuation in total cost when compare to the base year 2014-15. But
last two years Total Cost decreasing it is good sign to the company it helps to
increase the company profit in 2021-22.
Table No. 4.10

Table showing % of increase/decrease of Prime Cost

2018-19

2019-20

2020-21

2021-22

Analysis:

In the above table in the year 2018-19 is 100%. In the year 2019-20 it has been
increased to 110.52% and in the year 2020-21 and 2021-22 it has been decreased
to 107.20% and 93.89% respectively.
 2018-19 2019-20 2020-21 2021-22

Interpretation:

From the above graph, we can see that the Prime Cost in the year 2018-19 is
100% as base year. But during 2019-20 it has been increased to 110.52% and in
the year 2020-21 and 2021-22 it has been decreased to 107.20% and 93.89%
respectively.

So, we can say that decreasing prime cost is good but company should not reduce
this cost by reducing output. Company must increase the production and reduce
the prime cost through optimum utilization of recourses.
Table No. 4.11

Table showing % of increase/decrease of Work Cost

2018-19

2019-20

2020-21

2021-22

Analysis:

In the above table during the year 2018-19 the Work Cost is 100%. The chart
shows the continues decline in the Work Cost from year 2019-20 to 2021-22 that
is 104.49%, 99.03% and 88.59% respectively.
 2018-19 2019-20 2020-21 2021-22

Interpretation:

The above graph revels that information about the Work Cost calculated from the
last preceding 4 years. During the year 2018-19 the Work Cost is 100%. The chart
shows the continues decline in the Work Cost from year 2019-20 to 2021-22 that
is 104.49%, 99.03% and 88.59% respectively.

So, we see that there is decreasing trend of work cost after the year 2019-20 it is
good sign for company, maintain this trend for better prosperity
Table No. 4.12

Table showing % of increase/decrease of Cost of Production

2018-19

2019-20

2020-21

2021-22

Analysis:

In the above table 2018-19 the company incurred Rs 62,775,704 cost of

production but in the year 2019-20 it has been increased to Rs 65,568,256 but in
the year 2020-21 and 2021-22 it has been decreased to Rs 62,974,124 and Rs
55,240,017 respectively.
 2018-19 2019-20 2020-21 2021-22

Interpretation:

The above graph helps us to determine the impact of Cost of Production on Net
Profit of the company. In 2018-19 the company incurred Rs 62,775,704 cost of
production but in the year 2019-20 it has been increased to Rs 65,568,256 but in
the year 2020-21 and 2021-22 it has been decreased to Rs 62,974,124 and Rs
55,240,017 respectively.

So, we can observe that in the year 2020-21 and 2021-22 Company having well
control over the cost of production.
Table No. 4.13

Table showing % of increase/decrease of Net Sales

2018-19

2019-20

2020-21

2021-22

Analysis:

In the above table in the year 2018-19 is considered as 100% then it has been
increased to 106.88% in the year 2019-20. In 2020-21 and 2021-22 it has been
decreased to 98.44% and 88.72%.
 2018-19 2019-20 2020-21 2021-22

Interpretation:

From the above graph we can observe that the percentage of sale in the year
2018-19 is considered as 100% then it has been increased to 106.88% in the year
2019-20. In 2020-21 and 2021-22 it has been decreased to 98.44% and 88.72%.

So, we can observe that there is a increased in sales when compared to the base
year 2018-19 in the 2019-20 after that sales decreased gradually because more
competitors entered in the market their fore company need to focus more on their
business to impure the sales.
Table No. 4.14

Table showing % of increase/decrease of Profit/Loss

2018-19

2019-20

2020-21

2021-22

Analysis:

In the above table shows in net profit 134.20% in the year 2019-20 compared to
the base year 2018-19 i.e. 100% and 2020-21 suddenly profit decreased to
2,511,282 because the input cost is very high and sales is less and also slowdown
of electrical industry but in the year 2021-22 it has been recovered to the large
extent i.e. 7,574,218
 2018-19 2019-20 2020-21 2021-22

Interpretation:

In the above graph we can see that there is a quantum jump in net profit 134.20% in the
year 2019-20 compared to the base year 2018-19 i.e., 100% and 2020-21 suddenly profit
decreased to 2,511,282 because the input cost is very high and sales is less and also
slowdown of electrical industry but in the year 2021-22 it has been recovered to the large
extent i.e., 7,574,218
Ratio Analysis

1. Current Ratio

Current ratio= Current asset/ Current liability

Table No. 4.15

Table showing Current Ratio

2019

2020

2021
2022

Analysis:

The table above shows the position of current asset and current liabilities has
been shown from the year 2019 – 2022. Table indicates that the values of current
asset and current liabilities changes every year. As in the current assets the value
is increased from 2019 to 2021 but at the year 2022 the value decreased as
shown in above table. And also the value of current liabilities also increase for the
year 2019 – 2022, but there is a slightly change in last year. At the end of the 2022
there is a decrease in current assets and increase in current liabilities.
 2019 2020 2021 2022

Interpretation:

The standard current ratio of the firm should be 2:1. From the above table it is
observed that Current Ratio is instable and fluctuating. In the year 2019 the ratio is
1.165 times. In the year 2020 the ratio is 1.18 times. In the year 2021 the ratio is
1.16 times; 2022 the ratio is 1.078 times. But still, it is not satisfactory.
 CHAPTER 5
FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 FINDINGS
In my study of Cost Analysis at Alloysys Extrusion Pvt Ltd, I came to find the
following information.
 Profit of Alloysys Extrusion Pvt Ltd was increasing continuously but in 2020-
21 the profit reduced. But in 2021-22 company again increased their profit.
 The labour cost of the company is increasing every year because they are
recruiting more and more employees.
 The net sale of the company decreased during the periods 2020-21 and
2021-22.
 The direct materials has increased in the year 2019-20 compared to 2018-
19. But in 2020-21 and in 2021-22 it decreased due to the fluctuations in
the cost of raw materials.
 The cost of manufacturing overhead is decreased continuously till 2020-21.
But in the year 2021-22 it has been increased slightly.
 In Selling and distribution overhead there are some fluctuations over years
when compared to the base year 2018-19. But in last year company
controlled expense and it is a good achievement by the company.
 There is fluctuation in total cost when compare to the base year 2018-19.
But in last two years we can see that total cost is decreasing and it is good
sign to the company. And it helped the company to increase the profit in
2021-22
 Prime cost is decreasing from the year 2020-21. But it is worth to mention
that company should not reduce the prime cost by reducing the output.
 Cost of production has increased in the year 2019-20 but the company
could reduce it during last two years.
 Net sales of the company increased in 2019-20 when compared to the base
year 2018-19, but after those sales decreased gradually because of good
performance of competitors. Even though in 2021-22 they could increase
the profit because they could reduce the total cost.
5.2 SUGGESTIONS
From Research and Study I submit the following Suggestions.

 Alloysys should try to obtain more orders which will help the company to
manufacture bulk products and thereby reduce the cost of production.
 Alloysys should always purchase the high-quality raw materials because it
helps to attract more customers and expand its market.
 The company should purchase raw materials at reasonable price so that
they can reduce cost.
 The company should adopt advance technology to improve their product
quality and efficiency.
 It is recommended to Alloysys take steps to reduce the overall costs that
will enable the company to reduce the cost of product and its price.
 The Company should utilize all the available resources with it effectively to
achieve its targets.
 Since the company’s manufacturing expenses are not under control and not
satisfactory during 2021 & 22, they should work on reduce manufacturing
cost.
 Now it very badly needs different Cost reduction methods and Techniques.
 The Company also should try to reduce its selling and distribution cost while
considering the current market demand, competitors strategies and
changes in customers.
 Company should use more machine power than the man power in order to
make the process faster and there should be a decrease in the training cost
to the workers. This will help the company to invest the saved amount in
doing some promotional and advertisement programmers to increase sales.
 Prime cost is decreasing from the year 2020-21. But it is worth to mention
that the company should not reduce the prime cost by reducing the output.
5.3 CONCLUSION

Alloysys is a company of producing different power equipment, and it supplying its

products mainly in Chennai and other states. Its adopted good quality checking
instruments for inspection of each individual products in the organizations. It sells
the products at reasonable price to the customers. In the current market situation,
all the industry competes the competitive market, Alloysys manufactures and sells
the products more economically.
From the above findings we can say that company should take effective remedies
to control and reduce the cost. They should clearly observe and review the cost
every time. Company can’t simply ignore cost and cost analysis since it is
important to achieve good sale and profit. To earn more profit company should
reduce the cost maximum as much as they can. To reduce the cost there should
be effective utilization of resource. So the management should take steps to
increase the utilization of capacity, at least to recover all the cash expenses.
Otherwise, company’s cost of production will increase.
Company needs to use more machine power than the man power as the result the
process will be faster and there should be a decrease in the training cost to the
workers. This will help the company to invest the saved amount in implementing
some advertisement programmers to increase sales.
Sufficient fund has to be allocated every year for repairs and maintenance. There
should be fuller utilization of installed capacity and improved inventory polices
which reduces the inventory carrying cost.
Finally concluded the company should be make efforts for increasing productivity
and reducing cost.