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CHAPTER 1 INTRODUCTION
We have entered into an area of liberalization the development process has opened the doors of
economy and in globalised economic environment it is necessary to protect the interest of
consumers, investor, company and the country as a hole. In a liberalized economy, there is no
role of traditional management in corporate world now only the professional management is
required to control of the costs of the present day origination
Modern area is called the industrial area. Every where there is vast developing in the field of
industry. On account of the development of the industries, the modern industries require
minimum cost of production and such as maximization of profits. For this purpose, they depend
on the financial statements such as trading profits and loss account and balance sheet but these
financial statements give information as whole. It means the entire industry is treated as one unit.
It is difficult task to locate the errors.
Cost account is recent development. It is the branch of financial accounting. It maintains the
records unit wise, process wise, job wise, department wise. At the end, we can easily control are
help in reduction of costs by preparation of the statements unit wise or job wise. So cost
accounting is developed basically to remove the limitation of financial accounting

METHOD OF COSTING
Depending on the nature of the business i.e the type of the product made and the procedure
adopted to make it all the different costing methods are classified as follows
1.Specific Order Costing
This is a costing method applicable to those industries where the activity beingaccomplished
consist of task which is specifically identifiable at each stage of production
This includes
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1.Job Costing
2.Batch Costing
3.Contract costing
2.Operation Costing
This is a costing method applicable to those industries where the activity consists of continuous
or repitive operations or processes and the products are identical and cannot be segregated
This includes
1.unit costing
2.process costing
3.Operating Costinging
This is also called service cost and is applicable to organizations which produces services but
not tangible goods

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CHAPTER 2 PROCESS COSTING

Process costing is usually a significant chapter. it is a method of assigning costs to units of
production in companies producing large quantities of homogeneous products. Process
costing is a type of operation costing which is used to ascertain the cost of a product at
each process or stage of manufacture.

Process costing is an accounting methodology that traces and accumulates direct costs, and
allocates indirect costs of a manufacturing process. Costs are assigned to products, usually in a
large batch, which might include an entire month's production. Eventually, costs have to be
allocated to individual units of product. It assigns average costs to each unit, and is the opposite
extreme of Job costing which attempts to measure individual costs of production of each unit.
Process costing is usually a significant chapter. it is a method of assigning costs to units of
production in companies producing large quantities of homogeneous products.
Process costing is a type of operation costing which is used to ascertain the cost of a product at
each process or stage of manufacture. CIMA defines process costing as "The costing method
applicable where goods or services result from a sequence of continuous or repetitive operations
or processes. Costs are averaged over the units produced during the period". Process costing is
suitable for industries producing homogeneous products and where production is a continuous
flow. A process can be referred to as the sub-unit of an organization specifically defined for cost
collection purpose.

IMPORTANCE OF PROCESS COSTING

Costing is an important process that many companies engage in to keep track of where their
money is being spent in the production and distribution processes. Understanding these costs is
the first step in being able to control them. It is very important that a company chooses the
appropriate type of costing system for their product type and industry. One type of costing
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system that is used in certain industries is process costing that varies from other types of costing
(such as job costing) in some ways. In process costing unit costs are more like averages, the
process-costing system requires less bookkeeping than does a job-order costing system. Thus,
some companies often prefer to use the process-costing system.

WHEN PROCESS COSTING IS APPLIED

Process costing is appropriate for companies that produce a continuous mass of like units
through series of operations or process. Also, when one order does not affect the production
process and a standardization of the process and product exists. However, if there are significant
differences among the costs of various products, a process costing system would not provide
adequate product-cost information. Costing is generally used in such industries such as
petroleum, coal mining, chemicals, textiles, paper, plastic, glass, and food.

REASONS FOR USE

Companies need to allocate total product costs to units of product for the following reasons:
A company may manufacture thousands or millions of units of product in a given period of time.
Products are manufactured in large quantities, but products may be sold in small quantities,
sometimes one at a time (automobiles, loaves of bread), a dozen or two at a time (eggs, cookies),
etc.
Product costs must be transferred from Finished Goods to Cost of Goods Sold as sales are made.
This requires a correct and accurate accounting of product costs per unit, to have a proper
matching of product costs against related sales revenue.
Managers need to maintain cost control over the manufacturing process. Process costing
provides managers with feedback that can be used to compare similar product costs from one
month to the next, keeping costs in line with projected manufacturing budgets.
A fraction-of-a-cent cost change can represent a large dollar change in overall profitability, when
selling millions of units of product a month. Managers must carefully watch per unit costs on a
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daily basis through the production process, while at the same time dealing with materials and
output in huge quantities.
Materials part way through a process (e.g. chemicals) might need to be given a value, process
costing allows for this. By determining what cost the part processed material has incurred such as
labor or overhead an "equivalent unit" relative to the value of a finished process can be
calculated.

PROCESS COSTING PROCEDURES

There are four basic steps in accounting for Process cost:
Summarize the flow of physical units of output.
Compute output in terms of equivalent units.
Summarize total costs to account for and Compute equivalent unit costs.
Assign total costs to units completed and to units in ending work in process inventory.
Examples of the industries where this type of production occurs include oil refining, food
production, and chemical processing. For example, how would you determine the precise cost
required to create one gallon of aviation fuel, when thousands of gallons of the same fuel are
gushing out of a refinery every hour? The cost accounting methodology used for this scenario is
process costing.

Types of Process Costing

There are three types of process costing, which are:

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Weighted average costs. This version assumes that all costs, whether from a preceding period or
the current one, are lumped together and assigned to produced units. It is the simplest version to
calculate.
Standard costs. This version is based on standard costs. Its calculation is similar to weighted
average costing, but standard costs are assigned to production units, rather than actual costs; after
total costs are accumulated based on standard costs, these totals are compared to actual
accumulated costs, and the difference is charged to a variance account.
First-in first-out costing (FIFO). FIFO is a more complex calculation that creates layers of
costs, one for any units of production that were started in the previous production period but not
completed, and another layer for any production that is started in the current period.
There is no last in, first out (LIFO) costing method used in process costing, since the underlying
assumption of process costing is that the first unit produced is, in fact, the first unit used, which
is the FIFO concept.
Why have three different cost calculation methods for process costing, and why use one version
instead of another? The different calculations are required for different cost accounting needs.
The weighted average method is used in situations where there is no standard costing system, or
where the fluctuations in costs from period to period are so slight that the management team has
no need for the slight improvement in costing accuracy that can be obtained with the FIFO
costing method. Alternatively, process costing that is based on standard costs is required for
costing systems that use standard costs. It is also useful in situations where companies
manufacture such a broad mix of products that they have difficulty accurately assigning actual
costs to each type of product; under the other process costing methodologies, which both use
actual costs, there is a strong chance that costs for different products will become mixed
together. Finally, FIFO costing is used when there are ongoing and significant changes in
product costs from period to period to such an extent that the management team needs to know
the new costing levels so that it can re-price products appropriately, determine if there are
internal costing problems requiring resolution, or perhaps to change manager performance-based
compensation. In general, the simplest costing approach is the weighted average method, with
FIFO costing being the most difficult.

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Cost Flow in Process Costing

The typical manner in which costs flow in process costing is that direct material costs are added
at the beginning of the process, while all other costs (both direct labor and overhead) are
gradually added over the course of the production process. For example, in a food processing
operation, the direct material (such as a cow) is added at the beginning of the operation, and then
various rendering operations gradually convert the direct material into finished products (such as
steaks).
Process method and techniques
Process costing is a technique of costing and it may be adopted using any of the techniques of
costing
The technique adopted will decide the procedure adopted in relation to various accounting
purpose of valuation of stocks
Fixed cost will be considered along with variable cost if absorption costing is adopted
Only variable cost will be considered if marginal costing is adopted
EXAMPLE

OF AN AREA WHERE

PROCESS

MANUFACTURING INDUSTRY

COSTING

IS APPLIED-SUGAR

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There are a number of steps in producing raw sugar from cane:

Cane receiving and unloading (receive the cane at the factory and unload it from the transport
vehicles)
Cane preparation (cutting and shredding cane to prepare it for juice extraction)
Juice extaction (two technologies are in common use; milling or diffusion)
Juice clarification (remove suspended solids from the juice, typically mud, waxes, fibres)
Juice evaporation (to concentrate the juice to a thick syrup of about 65brix)
Crystallisation
Separation of the sugar crystals from the mother liquor, most done by centrifugal machines
Sugar drying
Packaging and delivery
These processing steps will produce a brown or raw sugar. Mill white sugar also known as
plantation white sugar can be produced by introducing some form of colour removal process
(often sulphitation) between the juice clarification and the juice evaporation stages mentioned
above.[1] The raw sugar produced is often refined to produce white sugar. This sugar refining can
be done either at a completely separate factory or at a back-end refinery which is attached to the
raw sugar factory.
Juice extraction
Juice extraction by milling is the process of squeezing the juice from the cane under high
pressure between heavy iron rollers. Cane diffusion is the process of leeching the juice from the
cane by repeatedly wasing the cane with water and low concentration cane juice.[2][3]
Juice clarification

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Sugar cane juice has a pH of about 4.0 to 4.5 which is quite acidic. Milk of lime is added to the
cane juice to adjust its pH to 7. The lime helps to prevent sucrose's decay into glucose and
fructose. The limed juice is then heated to a temperature above its boiling point. The superheated
limed juice is then allowed to flash to its saturation temperature: this process precipitates
impurities which get held up in the calcium carbonate crystals.[4] The flashed juice is then
transferred to a calrification tank which allows the suspended solids to settle. The supernatant,
known as clear juice is drawn off of the clarifier and sent to the evaporators.
Juice evaporation
The clarified juice is concentrated in a multiple-effect evaporator to make a syrup of about 60
percent sucrose by weight.
Crystallisation and centrifuging
This syrup is further concentrated under vacuum in a vacuum boiling pan [a] until it
becomes supersaturated, finely ground sugar crystals suspended in alcohol are introduced into
the vacuum pan as seed crystals around which sucrose is deposited and these crystals then grow
in size until they are ready to be discarged (typically about 1 millimetre (0.039 in))
A number of boiling schemes are possible, the most commonly used boiling scheme is the threeboiling scheme. This method boils the sugar liquors in three stages, called A-, B- and C-.
A batch type sugar centrifuge separates the sugar crystals from the mother liquor. These
centrifugals have a capacity of up to 2,200 kilograms (4,900 lb) per cycle. The sugar from the
centrifuges is dried and cooled and then stored in a silo or directly packed into bags for shipment.
The mother liquor from the first crystallization step (A-product) is again crystallized in vacuum
pans and then passed through continuous sugar centrifugals. The mother-liquor is again
crystallized in vacuum pans. Due to the low purity the evapo-crystallization alone is not
sufficient to exhaust molasses, and so the so-called massecuite (French for boiled mass) is
passed through cooling crystallizers until a temperature of approx. 45 C (113 F) is reached.
Then the massecuite is re-heated in order to reduce its viscosity and then purged in the Cproduced centrifugals. The run-off from the C-centrifugals is called molasses.
The spun-off sugar from the B-product and C-product centrifugals is re-melted, filtered and
added to the syrup coming from the evaporator station.
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Back-end refineries
Some cane sugar mills have so-called back-end refineries. In this case, a portion of the raw sugar
produced in the mill is directly converted to refined sugar with a higher purity for local
consumption, exportation, or bottling companies. Wastage is used for heat generation in the sugar
mills.
Energy in the sugar mill
The remaining fibrous solids, called bagasse, are burned for fuel in the mill's steam boilers.
These boilers produce high-pressure steam, which is passed through a turbine to generate
electrical energy (cogeneration).
The exhaust steam from the turbine is passed through the multiple effect evaporator station and
used to heat vacuum pans in the crystallization stage as well as for other heating purposes in the
sugar mill.
Bagasse makes a sugar mill more than energy self-sufficient; surplus bagasse goes in animal
feed, in paper manufacture, or to generate electricity for sale.

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CHAPTER 3 REVIEW OF LITERATURE

JAMES RUTH Costs can be classified in a number of waysdepending on the purpose of the
classification. For example, classification of costs for purposes of determining inventory
valuations and cost of goods sold for external reports differs from the classification of costs that
would be carried out to aid decision-making. It is important to note that the classifications of
costs are not mutually exclusive. That is, a particular cost may be classified in many different
waysdepending on the purpose of the classification.
JAMES RUTH explained Manufacturing costs. These costs are incurred to make a product.
Manufacturing costs are usually grouped into three main categories: direct materials, direct labor,
and manufacturing overhead.
Mr. Stewart Direct materials consist of those raw material inputs that become an integral part of a
finished product and can be easily traced into it. Examples include the aircraft engines on a
Boeing 777, the Intel processing chip in a personal computer, and the blank video cassette in a
pre-recorded video. . Direct labor consists of that portion of labor cost that can be easily traced to
a product. Direct labor is sometimes referred to as touch labor since it consists of the costs of
workers who touch the product as it is being made. Manufacturing overhead consists of all
manufacturing costs other than direct materials and direct labor. These costs cannot be easily and
conveniently traced to products. Examples include miscellaneous supplies such as rivets in a
Boeing 777, supervisors, janitors, factory facility charges, etc. Prime cost consists of direct
materials plus direct labor. Conversion cost consists of direct labor plus manufacturing
overhead.A manufacturing company incurs many other costs in addition to manufacturing costs.
For financial reporting purposes most of these other costs are typically classified as selling
(marketing) costs and administrative costs. Marketing and administrative costs are incurred in
both manufacturing and merchandising firms.These costs include the costs of making sales,
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taking customer orders, and delivering the product to customers. These costs are also referred to
as order-getting and order-filling costs.These costs include all executive, organizational, and
clerical costs that are not classified as production or marketing costs. Costs can also be classified
as period or product costs.
WILLEY explains Period costs are expensed in the time period in which they are incurred. All
selling and administrative costs are typically considered to be period costs. You should be careful
to point out that the usual rules of accrual accounting apply. For example, administrative salary
costs are incurred when they are earned and not necessarily when they are paid to employees.

Mr.Walsh's Product costs are added to units of product (i.e., inventoried) as they are incurred
and are not treated as expenses until the units are sold. This can result in a delay of one or more
periods between the time in which the cost is incurred and when it appears as an expense on the
income statement. Product costs are also known as inventoriable costs. The discussion in the
chapter follows the usual interpretation of GAAP in which all manufacturing costs are treated as
product costs. Managers often need to be able to predict how costs will change in response to
changes in activity. The activity might be the output of goods or services or it might be some
measure of activity internal to the company such as the number of purchase orders processed
during a period. In this chapter, nearly all of the illustrations assume that the activity is the output
of goods or services. In later chapters, other measures of activity will be introduced.While there
are other ways to classify costs according to how they react to changes in activity, in this chapter
we introduce the simple variable and fixed classifications. A variable cost is constant per unit of
activity but changes in total as the activity level rises and falls. A fixed cost is constant in total
for changes in activity within the relevant range. (Just about any cost will change if there is a big
enough change in activity. Fixed costs do not change for changes in activity that fall within the
relevant range.) When expressed on a per unit basis, a fixed cost is inversely related to activity
the per unit cost decreases when activity rises and increases when activity falls.
There is some controversy concerning the proper definition of the relevant range. Some refer
to the relevant range as the range of activity within which the company usually operates. We
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refer to the relevant range as the range of activity within which the assumptions about variable
and fixed costs are valid. Either definition could be usedour choice was dictated by our desire
to highlight the notion that fixed costs can change if the level of activity changes enough.
On the other hand, other costs are treated as indirect costs because it would not be practical to
treat them otherwise. For example, it would be possible to measure the precise amount of solder
used on each circuit board produced at a HP plant, but it wouldnt be worth the effort. Instead,
solder would typically be considered an indirect material and would be included in overhead.
Every decision involves choosing from among at least two alternatives. Only those costs and
benefits that differ between alternatives are relevant in making the selection. This concept is
explored in greater detail in the chapter on relevant costs. However, decision-making contexts
crop up from time to time in the text before that chapter, so it is a good idea to familiarize
students with relevant cost concepts.
ICWA explains A differential cost is a cost that differs between alternatives. The cost may exist
in only one of the alternatives or the total amount of the cost may differ between the alternatives.
In the latter case, the differential cost would be the difference between the cost under one
alternative and the cost under the other. Differential costs are also called incremental costs.
Differential costs and opportunity costs should be the focus of decision-making. They are the
only relevant costs and all others should be ignored.
ICWA further exclaims An opportunity cost is the potential benefit that is given up by selecting
one alternative over another. The concept of an opportunity cost is rather difficult for students to
understand because it is not an actual expenditure and it is rarely (if ever) shown on the
accounting books of an organization. It is, however, a cost that must be considered in decisions.
A sunk cost is a cost that has already been incurred and that cannot be changed by any decision
made now or in the future. Since sunk costs cannot be changed and therefore cannot be
differential costs, they should be ignored in decision making. While students usually accept the
idea that sunk costs should be ignored on an abstract level, like most people they often have
difficulty putting this idea into practice

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CHAPTER 4 NIRANI SUGAR INDUSTRIES

The growth of a country is dependent on a multitude of factors, of which the industries sector
plays a vital and large role. They cater to the overall economic development of a nation while
contributing to the individual economic growth of those employed by them, through their large
employment opportunities.
MRN Group of Industries is one of the best examples to showcase the impact of the industries on
economic development. MRN Group of Industries is situated in the Mudhol taluk of Bagalkot
District in North Karnataka having Corporate Office at World Trade Center Bangalore. The
people of this region have been witnessing steady economic growth for the last 10 years, thanks
to MRN Group of Industries.
Today, the MRN Group of Industries is at the Cusp of Times and it presents tremendous
progress and prosperity to create value and wealth for the rural families of this part of Karnataka.
MRN Sugar & Cements units have created a corridor of sustainable employment opportunities
for the rural youth in this area.
Brief History
As a nations first Mini Sugar plant nirani sugars ltd was established by an young Engineer with
Management degree in hand, started venturing to establish mini sugar plant for enabling him to
crush his own cane. After developing technically and financially and with support of cane
growers and bankers, MRN Sugar started taking big turns every year and over the period of one
and half decades had transformed from mini unit to an Asias biggest sugar complex, at single
site, Today the MRN group is at the top of time and had developed in various fields namely
Agro-based industries, Cement industries, Credit & banking, Educational and automobile fields
etc. The annual turnover of all these units, have reached high turnover.

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Main Objectives
Main objectives of all these Units, is to assist forming community and general public creating a
sustainable employment opportunities for rural populace. Under Corporate Social Responsibility,
each unit is having great motto to help for community development. We create infrastructural
facilities namely rural roads, drinking water, educational institutions which are main needs of the
rural people. We conduct health camps, rural sports and rural religious functions in their vicinity.
We under take promotional activity namely farmers trainings and imbibing them latest
technology in the field of agriculture, besides conducting foreign trips to farmers, every year.

Achievements
We have kept up a fair track record of receiving many Awards and Rewards every year from
reputed national institutions recognizing our achievements in the field of production of Sugar,
Power and Ethanol. We have bagged gold and silver prizes for our highest achievement in
respective fields.

Futuristic Plans/Expansion
Under futuristic plans & programs, all our prospering units, are expanding their capacities with a
main motto of helping Cane growers, rural youth, venders and general public of this area.

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COMPANY PROFILE
Name of the Company

M/S Nirani Sugars Ltd

Kulali Road
Mudhol

Registered office

Dist:Bagalkot
M/S Nirani Sugars Ltd

Branch Office
Managing Director
Status of the Company
Constitution of the Firm
Financial institution of the company

Lokapur Mudhol
Bijapur
Murugesh R. Nirani
Sole trading concern
Registered under companies act 1956
K.S.I.I.D.C

Banker of the Company

K.S.F.C
Sangli Bank Jamakhandi
S.B.I Mudhol Branch
Indian Bank Lokapur
Gramen Bank of Mudhol

ORGANIZATION STRUCTURE OF NSL

Chairman & MD

Murugesh. R. Nirani. (B.E.Civil. MBA)

Board of Directors

H .R. Nirani. Advocate

Kamala .M. Nirani
L .R.Nirani

Administration

S .R.Nirani
Sangamesh .R. Nirani (Executive Director)
R .V .Vatnal (Technical Director)
S .V. Karriyannavar (CEO)
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S .C .Iitnal (GM of Plant)

M .R. Dabade (Dy GM, Production)
M .S. Heggalagi (Manager, PMP)
B .S. Khandekar (GM, Cane)
M .M. Hiremath (Finance)
S .C. Salagare (Chief Engineer)
S .G. Yaragatti (Stores purchase officer)
M .R. Agnihotri (Personnel officer)

HISTORY OF NIRANI SUGARS LTD

M/s Nirani Sugars Ltd,, set up in 1996 was promoted by Mr.Murugesh R Nirani. B.E, D.B.M., a
technical Graduate and local MLA of Bilagi and Minister of large and Medium Scale Industry,
Govt of Karnataka. He comes from an agricultural family from Bilagi Taluk of Bagalkot Dt. He
started as an industrialist with setting up of a modern Khandasari Unit at Mudhol. He is also very
actively involved as a Managing Director of Badgandi Sugars Ltd, a new 2500 TCD sugar and
Co-gen plant at his constituency Bilagi. The new unit has commenced commercial production in
December 2005. He has also been recognized and awarded Bharat Udyog Ratna award from
Govt of India. He has also taken over a sick mini cement plant of 100 TPD capacities at Mudhol
area, which has now been put into commercial operation with a capacity of 200 TDP within a
short span of time. He has also contributed his service in setting up residential school and D, Ed
College at Mudhol.
Nirani sugars Ltd. Is presently operating a sugar mill of 5000 tones cane day (5000 TCD). This
sugar mill was originally established as a khandasari sugar factory of 500 TCD in the year 199798. In fact this was the most modern khandasari sugar factory & was first in the country to have
started with high pressure boiler, turbo generator set with captive power generation, multiple
effect pressure evaporator system with falling film evaporators etc. it successfully produced
goods quality white crystal sugar. But as khandasari unit, it had its own constraints due to
technical limitations and govt policies.
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Subsequently, making use of the govt. of Indias liberalized policy, vide govt of India
notification DCS /S/14/97 dated 2-6-98, which permitted conversion of khandsari sugar
Readopting vacuum evaporation & vacuum pan boiling systems along with related changes.
NSL did not lose time to expand the capacity to 5000 TCD, side by side taking development
measures to increase cane area & cane availability. Today NSL is a regular sugar factory with
5000 TCD capacity with improved efficiencies.
Having regard to the above, the new sugar projects in the country, are coming up with a capacity
of 5000 TCD & more with the facility of cogeneration of power. A number of existing mills in
the country are expanding to even bigger capacities like 7500 TCD, 10000 TCD & so on.
The cogeneration of power permits generation of surplus power, which is encashable and thus
helps augmentation of income to the industry substantially on a sustained basis. The profitability
of the cogeneration plant increases with increase in the size of the plant. Bigger cogeneration
plants are feasible only with bigger sugar mills, either as forward integration or with back up
support for fuel.
The market and the price for the power produced is assured as the surplus power so generated is
under written by KPTCL through power purchase Agreement. The govt of Karnataka also
shares the aforesaid viewpoint & encourages cogeneration of power by sugar factories using
bagasse as a fuel. In support of this, the govt has announced a capital subsidy of Rs. 25 lakhs per
MW of surplus power, for such cogen projects.
In fact NSL has already entered into an agreement with TATA power trading company Ltd. For
sale of power at a price of Rs3.61 per unit.
To match the sugar mill expansion from 5000 TCD to 10000 TCD, NSL proposes to double its
cogeneration capacity also from 16MW to 48MW.

OBJECTIVES OF NIRANI SUGARS LTD

Maximum utilization of man power production capacity and raw material
for food recovery.
Proper co-ordination and co-operating among its members.
To manufacture good quality sugars and its by products with the help
of the members who supply sugarcane raw material.
To provide comparative market rate to the farmers.
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To inculcate modern techniques and methods of cultivation and

To Supply seeds machines for the farmers.
To maintain proper of transport for the formers during season.
Utilization of raw material to the maximum level to get by
Products like Molasses and to market them at proper rates.
To undertake such other activities are incidental and conductive
to the development of the society.
Maintain continuous improvement programs in Technology.
Help farmers to increase there yield through research & development.
To produce good quality sugar at acceptable prices to meet the increasing demand

Nature of Business Carried

Nature of Business carried NSL is involved in the activity of manufacturing white crystal sugar
products which is the main product. The process of production involve conversion of
Raw sugarcane to sugar,
Raw sugar into refined sugar
Molasses, Bagasses are its by products.

Vision Mission & Goals

Vision
The main vision of the company is to develop the rural area & provide the better infrastructure
facilities to the localities & to farmers.
Mission
The mission of the company is to pay the better returns for its shareholder in terms of higher
cane rate & to the stakeholders in terms reasonable salary & wages.

Goals of Nirani Sugars Ltd

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To expand its installed capacity, achieve end-to-end integration for all its plants to improve
margins and reduce business cycle.
Achieve greater raw material security.
Increase its focus of corporate and high value consumers.
To become the most efficient and market driven integrated processor of sugarcane in the world.
While enabling the team to grow in a learning and motivating atmosphere, participating in the all
round development of community.
Delivering consistently on returns to all its shareholders.
Bringing over all productivity and efficiency through out the organization, especially by value
addition of its by products in sugar effluent waste etc.
Producing the best quality sugar to satisfy the domestic and internal norms
PRODUCT PROFILE
The factory produces about 184400 Tones of plantation crystal white sugar. As per statute from
Govt of India the sugar can be packed in 100 Kg net Gunny bags and 50 Kg net Polythene bags.
As per the Indian sugar standards the sugar can be graded in 3 grades by size and color namely
L, M, S (size) and 29, 30 (color). The factory envisages producing M30 and s30 grades. The
storage of sugar will be done in a warehouse built in masonry and roofed with AC sheets. The
size of the warehouse will be suitable to store about 50% of a seasons production.
The molasses which is a by product, is a highly viscous liquid. The total production of molasses
in a season will be about 40,480 Tone. Two steel storage tanks of capacity 4000 tone each will be
added. This can accommodate about 2 months production. As the demand for molasses is high,
it is proposed to sell the molasses to distilleries as raw material to produce alcohol.
Beside the finished goods and molasses storage space is required for Bagasse, ash and filter mud.
Adequate open will be provided for these in the factory for easy and smooth working of the
factory.
Main Product- White Crystal Sugar:
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The main product of the sugar manufacturing process is white crystal sugar.
This white crystal sugar is manufactured in the following 3 grades:
L-30 [Large size sugar]
M-30 [Medium size sugar]
S1-30 [small size sugar]
By-Products of Sugar Cane:
The sugar mill produces many by-products along with sugar. A typical sugarcane comprising of
3000 ton capacity can produce 345 on of sugar, 6000 liters alcohol, 3 tons of yeast, 15 tons of
potash fertilizer, 25 ton of press mud fertilizer and 750 KW of power from bagasse.
FUNCTONAL ANALYSIS

The

functional

of

the

organization

Department and one divided in to sections.

Production

Laboratory Section

Manufacturing Section

Engineering Section

Go down Section

Human Resource Development

Administrative Section

Shares Section

Security Section

Vehicle Section

Time office section

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Finance Accounting Section

General Account Section

Cane Account Section

Marketing Section

Cane Development Section

Purchase section

Production Department
Production department is a most important part of the factory and it is divided into two
departments.
Engineering department
Manufacturing department
Engineering department
The engineering department maintains all the work connected with plant and machinery.
Engineering department aims at enhancement of the feeding capacity of factory. The department
is assisted by workshop.
Workshop
Spares are fabricated using the lathe machine in the workshop and shaping like

square, cutting

fabcrising etc, are done in the workshop 75% of work of machinery are done in workshop. This
department having following machines.
Lathe machines for round job.
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Shaping machine of 32 inch for right angle planning

hacksaw machine for cutting
Redial drilling machine for drilling hole
Grainding machine for tool grainding
Manufacturing department
Manufacturing department is divided in to 3 sections
Laboratory department
Manufacturing Department
Go down
Laboratory department
Laboratory plays a significant role in sugar production. The key activity of laboratory is checking
the content of sugar in the Sugarcane and fixing the correct shape and size of sugar. The
Laboratory prepares hourly reports which advice in the addition of other chemicals in the
production.
Activities of the laboratory

Determining and maintenance of temperature of boiling juice.

Determining the percentage of water content in the dilution of
Juice.
Determining the percentage and content of chemicals to be added doming production.
Finding the PH of water through universal indicator.
Choice of colour and size for sugar.
To manage the time and quality.
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PROCUREMENT OF SUGAR

Crushing of sugarcane
Sugarcane is harvested in the fields. Dressed and bundled in small bundles stocked in Lories,
tractor or bullock carts supplied to factories, weighed and crushed in set of mills.
Crushing takes place mainly in two stages. First, preparation and then milling. The milling takes
place after preparing the cane in leveler and cutter. Milling is done by passing the prepared cane
blanked through sets of mills. Weighted water also is added in the course of crushing for better
extraction of juices. After crushing the bagasses is sent to boiler as fuel and juice sent for
processing after weighment.
Juice clarification (Double clarification)
The weighed juice is primarily heated in juice heated at65-70 0C. It undergoes a process of
clarification i.e. addition of lime and sulpher dioxide simultaneously. The juice thus sulphited
heated again in another set of juice heaters at 100-1050 C and the hot juice is sent to a clarifier.
Where it settles and clear juice is decanted out from the Clarifier and sent for evaporation in a set
of multiple effect evaporator Bodies designed for steam economy (quadruple effects of
evaporation) The juice thus evaporated gets concentrated to form thick syrup of about 58-60 0 C
brix).
Crystallization
The syrup thus sulphited in syrup. Salphitor is sent to pan floor for further crystallization in
vacuum pans. The syrup collected gets in supply tanks is taken to pans for pan boiling, where the
syrup is further boiled attains super satiation stage. In such a condition sugar grains are formal

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and hardened, developed to form a mass called massecuite. The massecite is dropped in
crystallizers and cooled to complete the process of crystallization.
Curing
In centrifugals the massecuite is cured i.e. sugar crystals are separated from mother ligouor in
high speed centrifugal machines.The sugar crystals thus separated are properly dried by blowing
hot air and cold air. The molasses is collected in separate tanks and Used for further boiling to
recover more sugar.
Grading and Bagging
The dried sugar after passing through elevator goes to the grade for graduation. The sugar falls
into the bins with this fall sugar is packed in bags.
The graded sugar is bagged weighted for 100kg & they are stitched numbered and stocked in the
sugar go down in different lots as per grade and color.
Godown Section:
In the production department the godown are maintained for store the sugar.

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CHAPTER 5 ANALYSIS AND INTERPRETATION

5.1Competitors Information:
The main competitors are as follows:
Godavari sugar Ltd.
Crushing capacity-3500 TCD
Recovery-10.5%
Sugar production-4000 Qtls (per day)
Shree Prabulingeshwar sugar works Ltd.
Crushing capacity-4500 TCD
Recovery-11.2%
Sugar production-9000 Qtls (per day)
Nandi sugars Ltd
Crushing capacity -5000 TCD
Recovery -12%
Sugar production 10000Qtls (per day)

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5.2 S.W.O.T.ANALYSIS FOR NIRANI SUGARS PVT LTD

(STRENGTH, WEAKNESS, OPPORTUNITIES, THREATS)
STRENGTHS:
It has own co - generation unit (62MW).
Sufficient water resources.
Good communication media.
Sufficient infrastructure.
Attendance maintained on Software bases.
WEAKNESS
Poor marketing strategies.
Poor promotional activity.
Imbalance between sugar cane available and factory crushing capacity per day.
OPPORTUNITIES
They can establish a liquor industry by using its by products
Providing the electricity power to the KPTCL
If importing of Sugar is restricted the company cabs grab the market as possible as.
The company is located in the rural area so labours availability is sufficient and cheaper.
THREATS:
Free imports.
Unstable Government.
Poor agricultural policy.
Low availability of working capital.
Decreased in the average production rate of sugarcan

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5.3 STATEMENT OF COST SHEET OF NIRANI SUGARS LTD

Particulars

2012-13

2013-14

2014-15

Purchase of raw material

130,0585,00

172,548,000

215,068,000

Closing raw material

Raw material consumed

130,058,500

172,548,000

215,068,000

Freight inwards

13,005,850

18,395,725

24,032,400

Prime cost

143,064,350

190,943,725

239,100,400

Factory over heads

9,180,600

15,972,950

23,730,000

Depreciation on building

1,000,000

1,5000,00

2,000,00

Depreciation on machinery

1,200,000

1,7000,00

2,200,000

Depreciation on electricals

250,000

300,000

350,000

Work cost

154,694,950

210,416,675

267,380,400

Office over heads

1,530,100

2,381,850

3,744,000

Depreciation on computer

50,000

60,000

70,000

Depreciation on office equipments

150,000

2000,00

300,000

Cost of production

156,485,050

213,058,525

271,494,400

Opening stock of finished goods

1,534,065

3,928,720

4,149,800

Less :closing stock of finished goods

4,090,840

8,839,620

17,337,000

Cost of goods sold

153,928,275

208,147,625

258,307,200

Selling over heads

3,763,937

4,140,990

13,868,850

Cost of sales

157,692,212

212,288,615

272,176,050

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5.3.1Analysis of cost sheet:

Prime cost: The prime cost in 2012-13 143,064,350 and in 2013-14 it was increased to
190,943,725 and 2014-15 it was increased to 239,100,400 .This cost is increase to year by year .
Work cost: The work cost in 2012-13 154,694,950 and in 2013-14 it was increased to
210,416,675 and 2014-15 it was increased to 267,380,400.
Cost of production: The cost of production in 2012-13 156,485,050 and in

2013-14 it was

increased to 213,058,525 and 2014-15 it was increased to 213,058,525.

Cost of goods sold: The cost of goods sold in 2012-13 153,928,275 and in

2013-14 it was

increased to 208,147,625 and 2014-15 it was increased to 258,307,200.

Cost of sales: The cost of sales in 2012-13 157,692,212 and in 2013-14 it was increased to and
in 212,288,615 2014-15 it was increased to 272,176,050.
5.3.2 Marginal income statement
Particulars
Sales
Less: variable cost
Contribution
Less: fixed cost
E.B.I.T.
Total cost

2012-13
58063755
45818596
12245159
1988986
10256173
47807582

2013-14
159273632
130849400
28424232
3128956
25295276
133978356

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2014-15
260120510
183355675
76764835
4355859
72408976
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The EBIT for the year 2012-13 was 10256173, in the year was 2013-14 was 25295276, and in
the year 2014-15 was 72408976. It shows the increasing in EBIT year to year

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CHAPTER6
FINDINGS, SUGGESTION AND CONCLUSION
6.1 Findings of the study
Raw material consumption is increasing. The increase in sugar cane consumption from the year
2012-13 to 2013-14 was 75.37% and that from the year 2013-14 to2014-15 was 80.22%
Over head of the firm was increasing from the year 2012-13 to 2013-14 was 57.47% and from
the year 2013-14 to 2014-15 was 65.20%
Prime cost of the firm was increasing from the year 2012-13 to 2013-14 was 74.92% and from
the year 2013-14 to 2014-15 was 79.85%
Work cost of the firm was increasing from the year 2012-13 to 2013-14 was 73.51% and from
the year 2013-14 to 2014-15 was 78.69%
Cost of production of the firm was increasing from the year 2012-13 to 2013-14 was 73.44% and
from the year 2013-14 to 2014-15 was 78.47%
Cost of goods sold of the firm was increasing from the year 2012-13to2013-14 was 73.95%
and from the year 2013-14 to 2014-15 was 80.58%
Cost of sales of the firm was increasing from the year 2012-13 to 2013-14 was 74.28% and from
the year 2013-14 to 2014-15 was 78%
6.2 Suggestion:
As prime cost, cost of production are increasing in the firm exercise cost reduction and cost
control techniques like material control, labor control, over head control, capital expenditure
control.
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As the raw material cost is increasing the firm should using new techniques to reduce it. 1) Like
the firm allowed near to the sources of raw material. 2) Reducing raw material usage in
production down time.
6.3 Conclusion
In this study is attempt to made analyze the cost analysis of the sample unit .Since the Nirani
Sugars Ltd is facing heavy competition in an around area of the region, It is essential to focus on
the aspect of cost, profitability etc
Cost accounting is a recent development. It is the branch of financial accounting. It maintains the
records unit wise, process wise, job wise department wise, we can easily control in reduction of
costs by preparation of the statement unit wise or job wise.

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BIBLIOGRAPHY
http://www.niranigroups.com/about.html
https://en.wikipedia.org/wiki/Cost_accounting
www.accountingcoach.com/blog/what-is-cost-accounting
www.investopedia.com/terms/c/cost-accounting.asp
www.slideshare.net/.../cost-analysis-nirani-sugars-ltd-project-report

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