Cost Analysis For Cement Production

A Project Report
On
“COST ANALYSIS FOR CEMENT PRODUCTION”
for
“ACC Ltd, Chaibasa Cement Works”
By
“AKHILESHWAR KUMAR”
Under the guidance of
“Dr. Yashwant Vaishampayan”
Submitted to
“University of Pune”
In partial fulfillment of the requirement for the award of the degree of
Master of Business Administration (MBA)
Through
Vishwakarma Institute of Management
Pune-48.
BRACT’s
Vishwakarma Institute of Management
(Approved by AICTE, New Delhi and Affiliated to University of Pune) S.No.
3&4,Kondhawa Bk.,Pune-411048.Ph.:26932800/26932900,Fax: 26932700,Mail :
info@vim.ac.in, www.vim.ac.in
Certificate
This is to certify that Mr. AKHILESHWAR KUMAR has completed the Summer
Project Titled “COST ANALYSIS FOR CEMENT PRODUCTION” to my
satisfaction and as per the requirements of the two year full-time MBA programme.
Project Guide Director
Date:
ACC Limited
Chaibasa Cement Works
P.O. Jhinkpani
July 17, 2008 Singhbhum (W) - 833215
Jharkhand, India
Phone: +91-6589-235224
Fax : +91-6589-235250
www.acclimited.com
CERTIFICATE
This is to certified that Mr. Akhileshwar kumar, a student of III

Semester M.B.A. in Finance Stream pursuing in Vishwakarma
Institute of Management (VIM), Pune University, Maharashtra
(session- 2007-09), has undergone Summer Project on “Cost Analysis
for Cement Production” in ACC Limited, Chaibasa Cement Works, PO:
Jhinkpani, District- Singhbhum (West), Jharkhand, for a period of eight
weeks commencing from 21st May, 2008 under my guidance and
supervision in partial fulfilment of the degree of Master of Business
Administration. During the aforesaid period he has done a project work
on “Cost Analysis for Cement Production”.
During the training period, his performance, conduct etc were found very
good. We wish him ever success in his career.
For ACC Limited
Mr. P. K. MOHANTY
Manager-Finance
Chaibasa Cement Works
Registered Office: Cement House, 121, Maharshi Karve Road, Mumbai 400020,India.
ACKNOWLEDGEMENT
At first I am indebted to Director of VISHWAKARMA INSTITUTE OF
MANAGEMENT (VIM), PUNE for giving me permission to undergo this Training
programme.
I would like to express my heartfelt gratitude and
thanks to my project guide Dr. Yashwant Vaishampayan, Finance faculty of VIM
and Dr. Smita Sovani, Finance faculty of VIM for their guidance and Support
throughout this project. I am thankful to my institute for providing me with proper
resources and fostering this project work.
I convey my sincere thanks to Mr. P. K. Mohanty, Manager Finance of ACC
Limited Chaibasa cement works for granting me opportunity to work with an
esteemed organization. He has been benevolent enough to lend help and spare his
valuable time throughout this project. He has been immensely contributive with his
ideas, constructive criticism and motivation which were the guiding light during the
entire tenure of this work.
Finally I also extend my heartiest thanks to Mr. B.PAN (Costing) and other
employees of ACC Ltd for their support and guidance.
I would like to take this opportunity as a platform to thank various individuals,
without the support of whom, this project would not have been successful.
AKHILESHWAR KUMAR
LIST OF TABLES
Sr.No. Name of Tables Page No.

1. Clinker Production 52
2. Cement Production 53
3. Cement Despatches 54
4. Raw Materials 55
5. Fuels/Thermal Energy(Kiln) 56
6. Electrical Energy Variable 57
7. Wear Parts 58
8. Production and Distribution Materials 59
9. Mining Concessions and Royalties 60
10. Total Variable Cash Cost 61
11. Total Fixed Cash Cost 63
12. Total Fixed Cash Cost Per Tonne of Cement 65
13. Cash Cost 66
14. Actual Cost 67
15. Cost of Goods Produced 68
16. Prices and Usage Data 70
17. Plant – Chaibasa Cement Works , 15A Cost Per Tonne 75
18. 31-Dec-2006, ACC Consolidated Group Company, India, Plant 77-A
– Chaibasa, Clinker and Cement – Cost Per Ton(15A)

19. Actual Jan/Dec 2007, ACC Consolidated Group Company, 77-B
India, Plant –Chaibasa, Clinker and Cement Cost Per Ton(15A)

20. Reason for Variance, Cumulative Actual Vs Budget 78
INDEX
NO. OF THE NAME OF THE CHAPTER PAGE NO.
CHAPTER
1. EXECUTIVE SUMMARY 1-2
2. COMPANY PROFILE 3-30
ABOUT CEMENT INDUSTRY

 INTRODUCTION
 MAJOR CEMENT COMPANIES IN
INDIA
ABOUT ACC LTD
 INTRODUCTION
 ACC VISION
 HISTORY
 CORPORATE GOVERNANCE
 IT INFRASTRUCTURE
 SUBSIDIARIES AND ASSOCIATES
 ACC’S PLANT WISE CAPACITY
 PRODUCT : CEMENT
 PRODUCT QUALITY
 PIONEERING EFFORTS
 INTERNATIONAL
RECOGNITION
 RESEARCH AND
DEVELOPMENT
 PRIORITY TO POLLUTION
CONTROL
 STRATEGIC PERPECTIVE
ABOUT ACC-CHAIBASA CEMENT
WORKS
 HISTORY
 CONTRIBUTION TO SOCIO-
ECONOMICAL ASPECTS
 IT-INFRASTRUCTURAL
 INFRASTRUCTURAL FACILITY
3. OBJECTIVES OF STUDY 31-32
4. RESEARCH METHODOLOGY 33
5. DATA ANALYSIS 34-80
BASIC CONCEPT OF COSTS
 ACC CONCEPT OF COST CENTER
ANALYSIS OF COST
6. FINDINGS 81
7. SUGGESTIONS AND CONCLUSIONS 82-83
8. LIMITATIONS 84
9. BIBLIOGRAPHY 85
CHAPTER-I
EXECUTIVE SUMMARY
This project includes cost analysis of cement production in ACC Limited, Chaibasa
Cement Works, Jharkhand. ACC Limited is India's foremost manufacturer of cement
and concrete. ACC's operations are spread throughout the country with 14 modern
cement factories, more than 30 Ready mix concrete plants, 20 sales offices, and
several zonal offices. Duration of project was 21 st May to 17th July. Procedure of
carrying out the project: - In first week I was observing various works carried out in
the factory and become familiar with all the functions carried out in the plant.
ACC manufacturing following types of cement:

1. Ordinary Portland Cement ( 43 Grades & 53 Grades )
2. Fly-ash based Portland Pozzolana Cement
3. Portland Slag Cement
In current economic scenario and cutthroat competition, it is very important for any
business to manage and utilize its resources to the best. Resources can be man,
Material, machinery, money and market. Finance is one of the most important areas of
any business; it is an indispensable part of any company. Cost management, in many
ways is an integral part of the job of managers who are involved in planning,
allocation and control of resources. This project provides fundamental conceptual
blocks for theory of Cost Management implementation in manufacturing industry. To
begin the report, the introduction and detailed discussions about the Cement
Manufacturing Industry, basic concept of costing through three cost centre such as
main cost centre, auxiliary cost centre and pre-process cost centre, the main study
issue:-
“Cost Analysis for Cement Production” of ACC Limited Chaibasa Cement Works”
developed.
The project explores the different constituent element of variable cash cost and its
effect on cost per tonne of cement and clinker production.
SCOPE OF THE PROJECT:
1. Cost sheet will be useful for price restructuring. Head office has been decided
profit margin and thereby decides the selling price. It is observed that
maintenance cost of plant is increasing. This analysis will help the finance
manager to control the cost of cement production.

2. This cost analysis will help the plant manager to understand expenditure in
different element of variable and fixed cost.
CHAPTER-II
COMPANY PROFILE
ABOUT CEMENT INDUSTRY
 INTRODUCTION
Cement is a fundamental material indispensable to constructions and development of
modern world because of its intrinsic performance characteristics, its versatile uses in
constructions and its ability to create pleasing aesthetic structures. Cement industries
occupy an important position in the arena of predominance as the basic infrastructure
industry for development.
Cement is one of the key infrastructures for industries. India is the second largest
cement producer in the world, with an installed capacity of 160 million tonnes.
Cement industry has undergone rapid technological up- gradation and vibrant growth
during the last two decades, and some of the plants can be compared in every aspect
with the best operating plants in the world.
Indian cement industry is a mixture of mini and large capacity cement plants, and
majority of the production of cement in the country (94%) is by large plants, which
are defined as plants having capacity of more than 600 TPD(tonne per day). The
installed capacity is distributed over across approximately 129 large cement plants
owned by around 54 companies.
Indian cement industry is one of the key industries amongst various old economy
industries, which have witnessed up and down cycles along with the general
economic trend in the past. However, the Indian economy has gathered its momentum
in the last couple of the years the fortunes of this industry have also swung from being
unfavourable demand – supply scenario burgeoning demand prospects.
As an emerging market India has substantial potential. The growth outlook for the
Indian economy over the coming year is positive. The country’s dynamic expansion
of India’s infrastructure at 125 kilograms per capita per year, cement consumption is
currently among the lowest in Asia. Cement consumption of 139 million tonnes in
2006 is expected to grow by an average 9 to 10 percent in the coming years.
Indian cement industry has turned the corner. Currently, the demand supply situation
is in a state of equilibrium. Demand is set to rise as consumption from housing and
infrastructure sectors is increasing:
 Housing sector, which accounts for 50% of the demand, is see to grow at 15%
over the next four years.
 Government’s infrastructure projects and road development programs will
generate an additional demand of 10 million tonnes annually in the next four
years.
Cement being one of the key construction material has witnessed a robust growth of
more than 8.5 percent in volume terms during the third quarter of current financial
year and about 10 percent rise in dispatches in the first nine months of the year mainly
of the back of growing investment in infrastructure projects.
The structure of the industry is fragmented, although, the concentration at the top is
increasing. The fragmented structure is a result of the low entry barriers in the post
decontrol period and the ready availability of technology. However, cement plants are
capital intensive and require a capital investment of over Rs.3500 per ton of cement,
which translates into an investment of Rs.3500 million for a 1 mtpa green field plant.
 MAJOR CEMENT COMPANIES IN INDIA
TABLE A
COMPANY INSTALLED CAPACITY %
(MILLION TONES)
ACC Ltd 19.4 12
Ultra Tech Cement Ltd 17.0 11
Gujarat Ambuja Group 14.9 9
Grasim Industries 14.1 9
India Cements 8.8 5
J. K. Group 6.7 4
Century Textiles 6.3 4
Jaypee Cement Ltd 6.1 4
Others 67.0 42
Total 160.3 100
ABOUT ACC LIMITED
 INTRODUCTION
ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's
operations are spread throughout the country with 14 modern cement factories, more
than 30 Ready mix concrete plants, 20 sales offices, and several zonal offices. It has a
workforce of about 10,000 persons and a countrywide distribution network of over
9,000 dealers. ACC's research and development facility has a unique track record of
innovative research, product development and specialized consultancy services. Since
its inception in 1936, the company has been a trendsetter and important benchmark
for the cement industry in respect of its production, marketing and personnel
management processes. Its commitment to environment-friendliness, its high ethical
standards in business dealings and its on-going efforts in community welfare
programmes have won it acclaim as a responsible corporate citizen. ACC has made
significant contributions to the nation building process by way of quality products,
services and sharing its expertise.
In the 70 years of its existence, ACC has been a pioneer in the manufacture of cement
and concrete and a trendsetter in many areas of cement and concrete technology
including improvements in raw material utilisation, process improvement, energy
conservation and development of high performance concretes.
ACC’s brand name is synonymous with cement and enjoys a high level of equity in
the Indian market. It is the only cement company that figures in the list of Consumer
Super Brands of India.
The company's various businesses are supported by a powerful, in-house research and
technology backup facility - the only one of its kind in the Indian cement industry.
This ensures not just consistency in product quality but also continuous improvements
in products, processes, and application areas.
ACC has rich experience in mining, being the largest user of limestone, and it is also
one of the principal users of coal. As the largest cement producer in India, it is one of
the biggest customers of the Indian Railways, and the foremost user of the road
transport network services for inward and outward movement of materials and
products.
ACC has also extended its services overseas to the Middle East, Africa, and South
America, where it has provided technical and managerial consultancy to a variety of
consumers, and also helps in the operation and maintenance of cement plants abroad.
ACC is among the first companies in India to include commitment to environmental
protection as one of its corporate objectives, long before pollution control laws came
into existence. The company installed pollution control equipment and high efficiency
sophisticated electrostatic precipitators for cement kilns, raw mills, coal mills, power
plants and coolers as far back as 1966. Every factory has state-of-the art pollution
control equipment and devices.
ACC demonstrates the practices of being a good corporate citizen undertaking a wide
range of activities to improve the living conditions of the under-privileged classes
living near its factories.
 ACC VISION
Partner with local community to:-
 Understand their needs.
 Involve them and initiate programmes,
 For their upliftment
 Support them in their development
 Create opportunities for self employment.
 Safety of employee.
“To create an environment for sustainable development of local community”
 HISTORY
ACC was formed in 1936 when ten existing cement companies came together under
one umbrella in a historic merger – the country’s first notable merger at a time when
the term mergers and acquisitions was not even coined. The history of ACC spans a
wide canvas beginning with the lonely struggle of its pioneer F E Dinshaw and other
Indian entrepreneurs like him who founded the Indian cement industry. Their efforts
to face competition for survival in a small but aggressive market mingled with the
stirring of a country’s nationalist pride that touched all walks of life – including trade,
commerce and business.
The first success came in a move towards cooperation in the country’s young cement
industry and culminated in the historic merger of ten companies to form a cement
giant. These companies belonged to four prominent business groups – Tatas, Khataus,
Killick Nixon and F E Dinshaw groups. ACC was formally established on August 1,
1936. Sadly, F E Dinshaw, the man recognized as the founder of ACC, died in
January 1936. Just months before his dream could be realized.
ACC stands out as the most unique and successful merger in Indian business history,
in which the distinct identities of the constituent companies were melded into a new
cohesive organization – one that has survived and retained its position of leadership in
industry. In a sense, the formation of ACC represents a quest for the synergy of good
business practices, values and shared objectives. The use of the plural in ACC’s full
name, The Associated Cement Companies Limited, itself indicates the company’s
origins from a merger. Many years later, some stockbrokers in the country’s leading
stock exchanges still refer to this company simply as ‘The Merger’.
A strategic alliance
The house of Tata was intimately associated with the heritage and history of ACC,
right from its formation in 1936 upto 2000. Between the years 1999 and 2000, the
Tata group sold all 14.45 per cent of its shareholding in ACC in three stages to
subsidiary companies of Gujarat Ambuja Cements Ltd (GACL), who are now the
largest single shareholder in ACC. This has enabled ACC to enter into a strategic
alliance with GACL; a company reputed for its brand image and cost leadership in the
cement industry.
Holcim - a new partnership
A new association was forged between ACC and the Holcim group of Switzerland in
2005. In January 2005, Holcim announced its plans to enter into a long-term strategic
alliance with the Ambuja Group by acquiring a majority stake in Ambuja Cements
India Ltd. (ACIL), which at the time held 13.8 per cent of the total equity shares in
ACC. Holcim simultaneously announced its bid to make an open offer to ACC
shareholders, through Holcim Cement Pvt Limited and ACIL, to acquire a majority
shareholding in ACC. An open offer was made by Holcim Cement Pvt. Limited along
with Ambuja Cements India Ltd. (ACIL), following which the shareholding of ACIL
increased to 34.69 per cent of the Equity share capital of ACC. Consequently, ACIL
has filed declarations indicating their shareholding and declaring itself as a Promoter
of ACC.
Holcim is the world leader in cement as well as being large suppliers of concrete,
aggregates and certain construction-related services. Holcim is also a respected name
in information technology and research and development. The group has its
headquarters in Switzerland with worldwide operations spread across more than 70

countries. Considering the formidable global presence of Holcim and its excellent
reputation, the Board of ACC has welcomed this new association.
 CORPORATE GOVERNANCE
The importance of Corporate Governance has always been recognised in ACC. Much
before Corporate Governance guidelines became applicable and mandatory for listed
companies; ACC had systems in place for effective strategic planning and processes,
risk management, human resources development and succession planning. The Audit
Committee in ACC was constituted as far back as in 1986. The Shareholders-
Investors Grievance Committee was formed way back in 1962 and the Compensation
Committee was convened since 1993. The Company’s core values are based on
integrity, respect for the law and strict compliance thereof, emphasis on product
quality and a caring spirit. Corporate Governance therefore in ACC is a way of life.
 IT INFRASTRUCTURE
ACC was among the first Indian companies to adopt automation of information
technology. It started computerizing our systems as early as 1968 - a commitment to
progress through the harnessing of relevant available technologies, a practice that
continues even today.
It has traveled a long way from its early days when it was using simple keypunching
machines. Significant improvements have been made in application systems and
infrastructure since then - from Batch processing to on-line systems, from IBM 1401
and Data General system to the latest Linux/UNIX and Windows 2003 based
machines. It has made timely transitions determined by available technologies and
business requirements.
In February 2007 the company made a quantum jump from in-house developed
systems using Oracle 9i and Developer 6i to an ERP (SAP) based solution. This
decision was based solely on our strategic objectives and the business benefits that it
expects to derive from implementing such a solution. With this move it also aligned
people, business processes and technologies across the country.
The Company has an Intranet Portal called ‘Accelerate’ which is dedicated to
employees. The portal’s content is based on Personal information relating to Human
Resource matters, Performance Management, as well as other information of use to
employees such as the latest news on company affairs, developments on sustainable
development, house magazines and newsletters.
Being a large organization with a countrywide network of manufacturing, marketing
and R&D centers, it has invested in the creation of a comprehensive infrastructure that
allows free flow of information across the organization. This enables almost instant
communication between all levels in the organization. A hybrid WAN network
connects each of our 275 plus locations. A judicious mix of VSAT and VPN links
ensure adequate connectivity between these locations. Each manufacturing location
has a well designed LAN to meet its needs.
IT in ACC is well placed to master future expansions of its core businesses.
Patni Computer Systems installed India’s first Data General computer in ACC in 1978
and deployed a team of their best employees to manage it. The team comprised the
legendary Narayanamurthy, then among the earliest employees of PCS. They were
given an office in Cement House. Later when he and others from PCS established
Infosys Technologies in Bangalore 1981, ACC was among their first customers.
 SUBSIDIARIES AND ASSOCIATES
1. Bulk Cement Corporation (India) Limited (BCCI)
2. ACC Concrete Limited
3. Lucky Minmat
 ACC’S PLANT WISE CAPACITY
State Capacity (MTPA)

Units
Bargarh Bargarh Cement Works 0.96
Cement Nagar, PO Bardol
District Bargarh
Orissa -768038
Phone: 91- 6646-46191 to 94
Fax: 91-6646-46430
Chaibasa Chaibasa Cement Works 0.87
P.O. Jhinkpani - 833 215
District Singhbhum
Jharkhand
Phone: 91-6589-35224
Fax: 91-6589-35250
Chanda Chanda Cement Works 1.00
P.O. Cementnagar
Pin - 442 502
Dist Chandrapur
Maharashtra
Phone: 91-7172-275026
Fax: 91-7172-275165
Damodhar Damodar Cement Works 0.53
P.O. Sunuri 723 121
Madhukunda
District Purulia
West Bengal
Phone: 91-341-230671/672
Fax: 91-341-230671
Gagal Gagal Cement Works 4.40
P.O. Barmana - 174 013 (Gagal I and II)
District Bilaspur
Himachal Pradesh
Phone: 91-1978-244041/31
Fax: 91-1978-244067
Jamul Jamul Cement Works 1.58
P.O. Jamul Cement Works
Pin- 490 024
District Durg
Chhattisgarh
Tel:00-91-788-383 082/84
Fax:00-91-788-382 585/643
Kymore Kymore Cement Works 2.20
P.O. Kymore
Pin- 483 880
Dist. Katni
Madhya Pradesh
Phone: 91-7626-272301
Fax: 91-7626-272303
Lakheri Lakheri Cement Works 1.50
P.O. Lakheri
Pin- 323 603
Dist Bundi
Rajasthan
Phone: 91-7438-261642/54
Fax: 91- 07438-261504

Madukkarai Madukkarai Cement Works 0.96
P.O. Madukkarai
District Coimbatore
Tamil Nadu
Phone: 91-422-822282/449
Fax: 91-422-822286
Sindri Sindri Cement Works 0.91
P.O. ACC Colony
Pin- 828 124
District Dhanbad
Jharkhand
Phone: 91-326-2251 054
Fax: 91-326-2251 236

Wadi Wadi Cement Works 2.59
P.O. Wadi
Pin- 585 225
District Gulbarga (C. Rly)
Karnataka
Phone: 91-08476-302406/302239
Fax: 91-08476-302190
New Wadi Wadi Cement Works 2.60
Plant P.O. Wadi
Pin- 585 225
District Gulbarga (C. Rly)
Karnataka
Phone: 91-8476-302 406
Fax: 91-8476-302 190

Tikaria Tikaria Cement Grinding and Packing 2.31
Plant
ACC Limited
Tikaria Industrial Area
P.O. Tehsil Gauriganj
District Sultanpur 227 409
Uttar Pradesh
Phone: 91-5368-44279
Fax: 91-5368-44479
 PRODUCT: CEMENT
ACC manufactures the following types of cement.
ORDINARY PORTLAND CEMENTS
43 Grade Cement (OPC 43 Grades)
ACC Cement is the most commonly used cement in all constructions including plain
and reinforced cement concrete, brick and stone masonry, floors and plastering. It is
also used in the finishing of all types of buildings, bridges, culverts, roads, water
retaining structures, etc.
What is more, it surpasses BIS Specifications (IS 8112-1989 for 43 grade OPC) on
compressive strength levels.
ACC Cement is marketed in specially designed 50 kg bags.
53 Grade Cement (OPC 53 Grades)
This is an Ordinary Portland Cement which surpasses the requirements of IS: 12269-
53 Grade. It is produced from high quality clinker ground with high purity gypsum.
ACC 53 Grade OPC provides high strength and durability to structures because of its
optimum particle size distribution, superior crystalline structure and balanced phase
composition.
It is available in specially designed 50-kg bags.
BLENDED CEMENTS
Fly-ash based Portland Pozzolana Cement:-
This is special blended cement, produced by inter-grinding higher strength Ordinary
Portland Cement clinker with high quality processed fly ash - based on norms set by
the company's R&D division. This unique, value-added product has hydraulic binding
properties not found in ordinary cements.
Special about ACC’s Fly-ash based PPC:-
ACC Fly-ash based PPC is made by intergrinding high strength clinker with specially
processed fly ash. This imparts a greater degree of fineness to ACC Fly-ash based
PPC cement, improved workability properties while mixing, and makes concrete more
corrosion resistant and impermeable. All of this makes for better long-term strength
and improved corrosion resistance and therefore, greater life for your constructions.
ACC Fly-ash based PPC is an eco-friendly cement.

Advantages of using ACC’s Fly-ash based PPC:-
In concrete made from ordinary cements, moisture reacts with calcium hydroxide in
concrete to form calcium bicarbonate, which leaches out of the concrete, leaving
pores that reduce its strength. ACC Fly-ash based PPC has ingredients which react
with calcium hydroxide to form CSH gel, to provide additional strength, which
actually makes the concrete grow in strength over the years. It also produces less heat
of hydration and offers greater resistance to the attack of aggressive waters than
normal Portland cement.
ACC Fly-ash based PPC can be used for all jobs in construction:-
ACC Fly-ash based PPC easily replaces OPC and provides additional advantages for
practically all types of construction applications - commercial, residential, bungalows,
complexes, foundation, columns, beams, slabs and RCC jobs. It is especially
recommended for mass concreting work, and where soil conditions and the prevailing
environment take heavy toll of constructions made with ordinary cements.
ACC Fly-ash based PPC stand up to corrosive environments:-
Due to its inherent characteristics, ACC Fly-ash based PPC makes very corrosion
resistant concrete that is superior to concrete made with OPC. It is more impermeable
to oxygen, CO2, chlorides, etc. Leaching of alkalis is reduced and the alkaline
environment around steel is maintained.
Portland Slag Cement
This is a slag-based blended cement that imparts strength and durability to all
structures. It is manufactured by blending and inter-grinding OPC clinker and

granulated slag in suitable proportions as per our norms of consistent quality. PSC has
many superior performance characteristics which give it certain extra advantages
when compared to Ordinary Portland Cement
Special about ACC’s PSC
Compared to OPC, ACC PSC imparts some important additional advantages
 Reduction in free lime leaching.
 Ultimate higher strength.
 Improved workability reduced bleeding as well as segregation and corrosion.
 Denser, less permeable concrete and mortar.
 Better resistance to sulphates, chlorides, and CO2 and alkali-aggregates
reaction.
 Less heat, reduced plasticity and drying shrinkage.
 Increased static modulus of elasticity.
 Increased serviceability with less deflection of members and micro cracks and
reduced cost of construction and maintenance.
All these factors make for a strong, durable, and longer lasting construction. ACC
PSC benefits the structure, protects the environment by reducing CO2 emissions and
helps conserve energy. This is why it is often referred to as eco-friendly cement.
The Federation International de la Precontrainte (FIP) Guide to Good Practice for
"concrete constructions in hot weather," states that if concrete is likely to be exposed

to an environment of sulphate-bearing water or soil, it is preferable to use a proven
type of blended cement containing ground granulated blast furnace slag. Concrete
made with ACC PSC has a higher density than concrete made with OPC, and hence it
improves the durability of concrete structures.
It can, therefore, be used for all purposes where OPC or PPC is used.
 PRODUCT QUALITY
Product Development has always been an important activity at ACC, arising out of a
focus on quality and process improvement. It has been a constant partner, driving
research, innovation and evaluation. In 1964, a centralized research facility - the
Central Research Station (CRS) was established in Thane. The research complex now
renamed as ACC Thane Complex, spread over an area of 8000 sq m has modern labs
with the latest equipment and manned by highly qualified scientists and technologists
who carry out product development work in cement and allied fields.
ACC has effectively pledged its reputation as the market leader in the quality of
cement. Maintaining this lead calls for harnessing the resources and expertise of the
company - from applied research and production to marketing. Accordingly, all ACC
factories are equipped with state-of-the-art process control instrumentation and
associated quality control and testing laboratories. Trained engineers, chemists and
technicians man these. The Central Laboratory at ACC Thane Complex is used as a
reference laboratory for diagnosis and resolving specific trouble-shooting cases.
As a result of this focus on quality, ACC cement specifications exceed those set by
BIS by a wide margin. Today, all ACC cement plants have the ISO 9001 Quality
Systems certification. This demonstrates our tradition of providing reliable and

consistent quality through the application of modern technology, and justifies the
preferences of a nationwide customer base.
 PIONEERING EFFORTS
ACC Ltd has pioneered the manufacturing of Portland cement in India. Portland Slag
cement, Portland Pozzolana cement, Oil well cement, Sulfate resistant cement etc. has
been by ACC. It has introduced the use of industrial wastes as raw material and fuel.
It is the only company to exploit low grade limestone for cement manufacture by
beneficiating it using the forth flotation process. By utilizing low grade limestone it
has contributed to the conservation of the mineral wealth of the country. A distinction
no other cement company has achieved. This can also be said, as it has its own large
and well equipped R&D laboratories.
ACC was the first company in India to put up one million tones
per annum capacity cement plants using indigenous technology. It was first time in
India that one of the Wet process cement plants of ACC was converted to semi wet
process using modern technology. It led others in introducing pre – calciner
technology in existing cement plants.
 INTERNATIONAL RECOGNITION
The company in the operation of cement plant has gained international recognition
when it was called upon to operate a cement plant in Saudi Arabia and two plants in
Iraq under operation and management contracts. Due to the gulf war the contract with
Iraqi companies ceased to operate. The contract for the operation of the plant in Saudi
Arabia which has added one more modern high capacity production line recently has
been in force for nearly 25 years. Currently it is partnering one of the major
international consultants, the Blue Circle industries of UK in the total project
consultancy assignment for the construction of a new production line of a cement
company in U.A.E. It is also closely associated with a major cement project in
Malaysia. The company’s experts have helped in the implementation of a major
cement project of 2.5 million tones per annum capacity in Saudi Arabia. The geologist
of the company had undertaken geological survey and investigation assignments for
cement companies abroad. ACC has a joint venture with M/S. FKCC.(Fars and
Khujistan Cement Company), the largest cement manufacturing company in Iran to
provide consultancy services to the Iranian Cement industry.
The joint venture, IICEC, has earned an enviable reputation and
recognition from the cement industry in Iran in short span of time.
 RESARCH AND DEVELOPMENT
The services are availed by many clients in India and abroad by a laboratory set up in
Thane near Bombay in the early 60’s which has grown into a premier industrial R&D
Institution. The total support is given by this institution to the operating units of the
company in the areas of processes, products and quality control. It has highly and
equipped and expertly manned laboratories and pilot plant facilities. The R&D
Division has also been active in product and process development in non cement areas
such as refractory, chemicals and advanced electronic materials. It has played a big
role in the company’s business diversification activities.
 PRIORITY TO POLLUTION CONTROL
The company has played a significant part in making Indian Cement industry a
substantially pollution free industry. It has spent a large amount of money in installing
pollution control systems even in its not so economic production units such as its wet
process cement plants. The companies’ activities have always taken into consideration
the societal concerns in regard to protection of the environment. Its modern cement
plants incorporate state of the art pollution control equipment. The company’s
technical collaboration with Hamon Research Cottrell of United states for the
manufacture of pollution control technology and system design.
The company’s project formulation and operating philosophy
stress as much on pollution control as on reducing costs and maximizing outputs. The
norms set are better than statutory requirements and are comparable to the norms in
western countries. A special cell in the operations division focuses on all pollution
control issues and monitors control in all manufacturing units.
Company consumes in cement manufacture large quantities of
blast furnace slag and fly ash, the waste by – product of then steel and power
industries. These by – production are potentially a threat to environment if not
recycled in production processes. The project under study in this report also envisages
use of fly ash, a waste product from Thermal Power Stations, in the manufacture of
cement. In this way the company is contributing to the implementation of the
pollution control strategy. The company is innovating less polluting method of
transporting cement over long distances. ACC has pioneered the carrying of bulk
cement in specially designed rail bulkers in India and is the only company to utilize
this mode of transport from its plant at Wadi to Kalamboloi near Mumbai in India.
ACC has tied up with M/S. Unozowa of Japan for the design and Technology transfer
of bulker tanks in order to supply environmentally friendly bulkers for road transport.
 STRATEGIC PERSPECTIVE
ACC has decided to utilize the available funds to consolidate its present operation
with new energy efficient technologies in order to reduce costs and to enhance the
productive capacity of existing assets. Keeping in mind the state of the cement
industry ACC has came up with this strategy. The project and engineering division of
ACC handles cement projects of various magnitudes. It has successfully engineered
and commissioned a large number of plants for ACC and other clients in India and
abroad.
ACC- CHAIBASA CEMENT WORKS
 HISTORY
The Chaibasa Cement Factory was established in 1947. It is situated at Jhinkpani
about 20 kms away from Chaibasa town. It was formally inaugurated on Nov.5, 1946,
by Sir Huge Dow, the then Governor of Bihar. Chaibasa Cement Works, an ISO-9001
and ISO-14001 certified unit of The Associated Cement Companies Ltd. The factory
nestles in the picturesque Chhotanagpur plateau of Jharkhand, in West Singhbhum
District. At Jhinkpani the silence lies unbroken by the raucous cries of humanity, only
the rolling hills and verdant glades dotted with tiny huts listen to the hustle and bustle
of A.C.C. factory. It seems as through the primeval and modern were trying to
commune. The works has its own colony, hospital, sports club, small shopping
complex, schools, banks, post office. It is well connected with the world through
telephone and Internet. To cater to the need of nearby villagers such as health
services, skill development i.e. carpentry, stitching/embroidery for women for self-
employment, Rural Development Center has been established.

The cement factory built during World War-II is the first entirely indigenous plant
manufactured by ACC at its own workshop and it was in January 1947 that the first
ton of cement was put out for sale. This is the first plant of its kind indigenously
designed by ACC, for manufacturing of Portland Slag Cement using the waste
product i.e. granulated slag of TISCO, Jamshedpur. Right from the inception of the
plant we received Slag from TISCO.
Subsequently, at the request of TISCO, ACC put up a Slag Granulation Plant
at its own cost located at Jamshedpur in the year 1969.
• At present this is the only Clinkering plant in the state of Jharkhand.
• This is the only big industry within the radius of 60 Kms.
• Right from the inception of the factory this plant is producing Slag based Cement
and this is the first slag based cement plant in India.
The main causes for the establishment of the industry in this particular location were:-
1. Availability of Raw Material such as – Limestone from own mines, Slag from
TISCO, Bauxite from Lohardaga, Iron ore fines from Noamundi.
2. There were only few industries in this region at that time. They were –
 Tata Group – TISCO (Now Tata Steel) & TELCO (Now Tata Motors).
 HEC (Heavy Engineering Corporation).
 Bokaro Steel Plant.
3. Cheap Land and Labour from the local market.
4. Good support from the State Government.
 CONTRIBUTION TO SOCIO-ECONOMIC ASPECTS

 Supports 1500 families directly & 3500 families indirectly workforce
predominantly Tribal.
 Supports population in the surrounding areas – dependent on Chaibasa Cement
Works for maintaining the Socio economic balance.
 Establishment of Rural Development Centre in 1953 – more than one lakh
villages are being benefited from this centre.
 Installation of water pumps, laying of water pipe lines, providing water
tankers for drinking and irrigation water.
 Thrust on education by constructing and maintaining middle/high schools in –
addition to vocational training through tailoring & carpentry school.
 Roads, Culverts and Bridges constructed and maintained in the surrounding
villages.
 Agricultural and Technical Guidance through a well manned demonstration
farm.
 Agricultural implements like sprayers, dusters & paddy thresher are provided
to the Farmers free of cost.
 A forestation of mining, plant and other surrounding areas on a large scale.
 Mobile medical services and free medical checks/medicines for people of
surrounding villages.
 These are the benefits provided by the Chaibasa cement plant to the society
and economy.
 IT- INFRASTRUCTURE
ACC Limited Chaibasa Cement Works is working on SAP platform, means System
Application and Product in data processing.

There are SEVEN modules in SAP, which is implemented in ACC Chaibasa Plant.
a. FICO
b. MM (Material Management)
c. SD (Sales and Distribution)
d. PP (Production Planning)
e. PM (Planned Maintenance)
f. PS (Project System)
g. HR (Human Resource):- Which has implemented on 21May, 2008.
 INFRASTRUCTURAL FACILITIES
LOCATION
The plant is located about 150 km from Ranchi airport and 2.2 km from Jhinkpani
railway station. The Paradeep seaport is 332 km from plant. Plant gets coal from
MCL, ECL, SECL (washery coal) and coal fines from steel industry. The national
highway NH-75E an inter state road is within 1 km from the plant. The general terrain
of the area is gently hilly. Chaibasa has a population of 1.5 lakh. The school up to 12 th
standard and dispensary is within the premises of the plant. There is college facility
available 16-18 km away from plant. The altitude is 270.345 meters above mean sea
level.
CLIMATE
The temperature is extreme in both summer and winter. In summer, it goes up to 45 c
and in winter, it goes as low as 4-5 c. The summer period is April & May and rainy
season is from June to September (traces in January, February, April, and November).
The annual rainfall is 1500-1700 mm. The maximum relative humidity is 70% and
minimum is 60%. There is no history of earthquake and flood. The soil consists of
rock and murram.
WATER
The source of water is river, reservoir created in Gunmala and abandoned quarry. The
water is pumped from these sources to the plant. The water required clinker plant
excluding colony will be 925 m3 / day. Water is required for filter wash, crusher
dryer/ball mill bearing cooling and there will be loss of 15% moisture in cake with
flue gases. In present semi – wet process plant, 36% slurry is fed to kiln and water lost
with flue gas is 805 m3 / day. Water requirement for 20 mw power plant is
approximately 2800 m3 / day. There are 635 quarters in colony. Taking average 4
persons per house and 200 liters/day/person, water required is 510 m3 / day.
Treatment of water for domestic use is being done.
POWER
Present power consumption is 15-16 Mw. The source of power is sub station 30 km
away from plant at Kendposhi which receives 132 KV away from JSEB and steps it
down to 33 kV. Power is drawn from existing 15 Mw captive power plants and 6 Mw
captive power plant act as stand by. Presently cost of power is Rs. 2.49 /kWh
including both grid and captive power.
TRANSPORT
Limestone is transported from quarry through 2.5 KM long pipe conveyer. Here 1000
mm width conveyer belt is folded in shape of pipe with the help of idlers; it is then
pulled by heavy motors. The cement transport is by rail. The coal transport is by rail
only. Plant owns one rail loco. There is broad gage railway track (2.2 km) from rail
station to the existing plan. The track from station to factory yard is 2.2 km. The
railway track inside the plant is 800m long. There is no. of tracks in the plant area.
The roads within the plant are in good condition. Public transport is well established.
FUEL
Plant uses coal from Mahanadi Coalfields Limited (MCL), Brijrajnagar /Eastern
Coalfield Limited (CECL), Khaskajora / South Eastern Coalfield Limited (SECL),
Washery Present coal consumption is 23.5% semi wet, and 76.5% dry combined
process with heat consumption of 750 kcal/kg cl, coal consumption will be 18.5%
with existing coal.

CHAPTER-III
OBJECTIVE OF PROJECT
NEED OF STUDY:
During my first week of visit in different department of plant I have collected many
information about different problems which are plant was facing and other one
increasing cost of production per ton of cement. Finally I have decided to select “Cost
Analysis for Cement Production” for my project topic.
PRIMARY OBJECTIVES:
1. To understand, how costing has done by cost accountant.
2. To know about the cost reduction process.
3. To know how cost of finished goods decided by company.
4. To study the existing procedures of costing in ACC Limited.
5. To know about process of consolidation of different cost centers.
SECONDARY OBJECTIVE:
1. To analyse data of different element of variable cost of plant with the help of
graphical representation for same.
2. To find the reason of difference of cost involve in variable cost.
3. To find the reason of variance for cumulative Actual Vs Budgeted.

SIGNIFICANCE:
This project has helped the finance manager and cost accountant of plant to know the
cost involvement in different element of variable cost, which can be controlled at
plant level.
CHAPTER-IV
RESEARCH METHODOLOGY
SCOPE OF THE STUDY:
1. Cost sheet will be useful for price restructuring. Head office has been
decided profit margin and thereby decides the selling price. It is observed
that maintenance cost of plant is increasing. This analysis will help the
finance manager to control the cost of cement production.
2. This cost analysis will help the plant manager to understand expenditure in
different element of variable and fixed cost.
PRIMARY SOURCES OF DATA:
1. Introduction to Holcim Accounting and Reporting Principal(HARP), Manual
2. SAP System’s generated 15A Format
3. Some data provided by the Finance Manager form his data base.
SECONDARY SOURCES OF DATA:
1. Journals published at head office level
2. Data available on ACC website has helped to know about background of
company.
CHAPTER-V
DATA ANALYSIS
BASIC CONCEPT OF COST
 ACC CONCEPT OF COST CENTER:
Introduction to Holcim Accounting and Reporting Principles (HARP)
Objectives of HARP
 HARP Principals
 Accrual Basis and Going Concern
 Understandability
 Relevance and Materiality
 Reliability
 Comparability
 Constraints on Relevant and Reliable Information
 True and Fair View / Fair Presentation.
COST CENTER:
The Holcim management accounting model is based on the identification and
definition of the three different types of cost centers.
Different types of cost centers:
 Main cost centers
 Auxiliary cost centers

 Pre-process cost centers
The activities and costs incurred in the process of making cement are collected in
these cost centers.
This lesson has been explained to me the cost centers are specified for clinker and
cement production so that one will be able to identify to which center the cost of
certain specific activities will be charged.
The three different types of cost centers
1. Main cost centers: -
Represent the main cost flows of the clinker and cement
production process (e.g. cement grinding, raw material extraction, etc.)
2. Auxiliary cost centers: -
Represent the infrastructure and organizational body of the
plant. These are generally not directly involved in the production process (e.g.
plant management, quality control, water treatment, etc.)
3. Pre-process cost centers: -
Capture the costs of preparing and handling material that
is consumed by the main production processes. (e.g. alternative fuels, etc.)

Auxiliary Cost Centers Pre-process Cost Centers
Plant Management Preparation and handling of

additives
Labour expenses own
Other personnel expenses Labour expenses own
Third party services Third party services
etc etc
Main Cost Centers

- Labour expenses 1)
Third party services 1)
Fuels / thermal energy (kiln)
etc
Allocation of auxiliary cost centers
2)
1) Primary cost
2) Secondary costs
Cost Center Structure
Auxiliary Cost Centers Pre-process Cost Centers
Plant Management Gypsum and additives

Preparation and handling
Diesel / gasoline
Labour expenses own Diesel / gasoline
etc Labour expenses
etc
Main Cost Centers
Cement Grinding
Fuel / thermal energy(kiln) 1)

Diesel / gasoline 1)
Raw material 3)
Labour expenses own 1)
-----
Allocation of auxiliary cost centers
2)
1) Primary costs
2) Secondary costs
3) Direct consumption from raw material inventory
(including materials handled and prepared within a pre-
process)
Main cost center:
 Main cost centers reflect the main production, distribution and cost flows of a
plant following the main component of a product from the beginning to the
finished product.
 Primary costs: Cost charged directly to main cost centers.
 Secondary costs: allocation from other (e.g. auxiliary) cost centers
 Consumption of inventory (e.g. from previous cost center)
Auxiliary cost center:
 Auxiliary cost centers are the organisational body of a plant. Equipment
included in auxiliary cost centers forms the infrastructure of a plant and is not
directly involved in the production or distribution process.
 The individual types of cost are included in the respective auxiliary cost
centers. The sum of these individual costs is thereafter allocated as a total into
one type of cost of the respective main cost centers.
Allocation of auxiliary cost centers:
 The costs incurred in an auxiliary cost center are accumulated and
thereafter allocated as a total into two types of costs in the respective main
cost centers:
1. Allocation of auxiliary cost centers before depreciation and amortization
of long term operating assets.
2. Depreciation and amortization of long term operating assets from
allocation of auxiliary cost centers.

 This enables the split of costs before and after depreciation and
amortization of long term operating assets to be carried through to the
main cost centers even after allocation of auxiliary cost centers and the
calculation of Operating EBITDA.
 It is notable that in certain cases (e.g. within the product sub-segment
clinker and cement) the key (allocation percentage) is defined.
Pre-Process cost center:
 Pre-process cost centers are those cost centers involved in the
preparation and handling of products (e.g. traditional and alternative
fuels, correctives, etc.) and electrical energy to be consumed in the
production process.
 Within pre-process cost centers, only the cost related to preparation
and handlings of the respective products are to be included.
 The charge from the inventory of the respective product subject to
preparation and handling is chargeable (as inventory consumption)
directly to the main cost centers.
Pre-process cost centers flow into the respective main cost centers as follows:
Pre-process cost centers

Alternat- Corre- Power Traditional Alternative Gypsum Mineral
ive raw ctive generati- fuels fuels and component-
materials prepa- on preparation preparation additives s
preparat- ration and and preparation preparation
ion and and handling handling and and
handling handl- handling handling
ing
Allocation
to all
receiving
cost centers
Main cost centers
Raw Raw Raw meal Clinker Cement

material material preparation production grinding
extraction preparation
Allocation of pre-process cost centers:
 Pre-process cost centers are with the exception of power generation- directly
linked to one main cost center mainly consuming the respective products.
 No intermediate inventory exists between a pre-process cost center and the
corresponding main cost center.
 The costs from pre-process cost center are not allocated, aggregated on a
single line to the respective main cost center; they are allocated to each
individual type of cost.
 The exception: the cost of the power generation pre-process cost center ( for
own power generation plants only) are allocated directly through the type of
costs ‘Electrical Energy Variable’ and ‘Electrical Energy Fixed’ to all
consuming cost centers.
Cement production – Flow chart

Auxiliary cost centers
Infra Plant Gener- Electri- Parts Plant Quality Mobile Water

struc man- al plant cal and mainte- control equipm supply/
ture agem servi power suppl- nance and ent treatment
ent ces and ies and labora- mainte /distribu-
control manag work tory nance/ tion
ement shops garage
Sewage Solid waste Railway 70 % to clinker

treatment disposal traffic production
plant infrastruc ture 30 % to cement
(at plant) grinding
Pre-process cost centers
Alterna Correc- Power Traditional Alterna Gypsum Mineral

tive raw tive genera- fuels tive fuels and compo
materials prepa tion preparation prepara additives nents
prepara- ration and tion and preparati preparation
tion and and handling handling on and and
handling hand handling handling
ling
Allocation
to all
receiving
cost centers
Main cost canters
Raw material Raw material Raw meal Clinker Cement

extraction preparation preparation production grinding
Cement
types
 If it is impossible to split the activities of a pre-process cost center and a main
cost center by equipment and by employees, the costs can be allocated to the
cost center where the activity mainly takes place e.g. grinding coal and raw
material grinding by the same equipment.
The rule for allocating auxiliary cost centers is:
 Allocation of the auxiliary cost centers 70 % to clinker production and 30 % to
cement grinding.
 If there is no cement grinding installations, the auxiliary cost centers are
allocated 100 % to ‘clinker production’ main cost center.
 Grinding plant allocate the auxiliary cost centers 100 % to ‘cement grinding’
main cost center.
Note: If an auxiliary activity is assigned only to one main cost center than these costs
are disclosed directly in this cost center.
Exception: Auxiliary cost center ‘Plant Management’ always is to be used to collect
the cost of supervisors (for confidentiality reasons) which have to be charged first to
auxiliary cost center and are thereafter allocated using the 70 % / 30 % rule.
All equipment for transport and feed of material into storage, as well as the storage
itself, is part of the preceding cost center;
While on the other hand:
All equipment for reclaiming and extraction from the storage belong to the next cost
center.
At a plant, the costs related to the storage of inventories belong to the cost center that
produces the inventory as output. The physical location of the stockpile is irrelevant.
Raw Material Extraction' versus 'Raw Material Preparation
All the activities related to extracting and moving the raw material (e.g. limestone)
from the quarry until the bin of the crusher belong to the main cost center 'Raw
Material Extraction'. Subsequent activities belong to the main cost center 'Raw
Material Preparation'.
'Raw Material Preparation' versus 'Raw Meal Preparation'
All the activities related to moving the prepared raw material (e.g. limestone after
crushing) to the related storage in the crushing area, including all the expenditures
related to the storage thereof, belong to the 'Raw Material Preparation' main cost
center.
All the activities related to moving the prepared raw material from the stockpile or
intermediate storage to the mill area and the mill feed system belong to the 'Raw Meal
Preparation' main cost center.
'Raw Meal Preparation' versus 'Clinker Production'
All the activities related to moving the raw meal to the related storage in the
homogenizing silos/slurry tanks, including all the expenditures related to the
homogenization and storage thereof, belong to the 'Raw Meal Preparation' main cost
center.
All the activities related to extracting the raw meal from the homogenizing silo or
slurry tanks and moving it to the kiln feed system belong to the 'Clinker Production'
main cost center.

'Clinker Production' versus 'Cement Grinding'
All the activities related to moving the clinker to the clinker storage including all the
costs related to the storage belong to the 'Clinker Production' main cost center.
All the activities related to extracting the clinker from the clinker storage and moving
it to the cement mill feed system belong to the 'Cement Grinding' main cost center.
RAW MATERIAL EXTRACTION VOLUME (t):
The quantity of raw material mined/extracted and transported from the quarry to raw
material preparation or other process steps.
Calculation:
The volumes are measured with:
 Weigh feeders or similar devices.
 Truck load count.
 Front end loader shovel loads multiplied by typical loading-weight.
 The water content of the raw material is included.
 Volumes consumed after raw material preparation are included.
RAW MATERIAL PREPARATION VOLUME (t):
Raw material produced in the raw material preparation process, for example crushing
and homogenizing.
Calculation:
 The water content of the raw material is included.
 Measured with: Weigh feeders or similar devices, truck load count or front
end loader shovel loads multiplied by typical loading-weight.
 Volumes consumed after Raw Material Preparation are included.
RAW MEAL PREPARATION VOLUME (t):
Raw meal produced in the raw meal preparation process, for example grinding mills
of all production units in operation. The quantity calculated contains all raw meal
types.
Calculation:
 For all processes (e.g. dry, semi dry, semi wet, wet) the water content of the
raw-meal / slurry is not included.
 The raw meal produced is determined by raw material fed to the system
minus the loss of moisture.
CLINKER PRODUCTION VOLUME (t):
Actual quantity of clinker production process, for instance kilns of all operating
production units. The quantity accounted comprises all clinker types and the quantity
of off specification clinker.
Calculation: Clinker production volume (t) = (raw meal consumed)/
(Raw meal clinker factor)

Note: If the volume of clinker manufactured is calculated by using the raw meal /
clinker ratio, then this factor has to be verified periodically by comparing the
inventories of the raw meal and the clinker volume feed to the clinker storage.
CEMENT PRODUCTION VOLUME (t):
This indicator corresponds to the quantity of cement produced with grinding mills and
/ or mixers (blenders) of all production units in operation. The quantity accounted
contains all cement types.
Calculation: Cement production volume (t) =
Mixer / Blender Vol. added (if applicable) + Cement Grinding Volume (for mill 1) (t)
Cement Grinding Volume (for mill 1) (t) = Clinker input dry (t) + Set regulator (e.g.
gypsum) (dry) (t) + Minor additional constituents (e.g., cement kiln dust) (t) +
Mineral components (e.g. slag, limestone) (dry) (t)
Auxiliary Cost Centers:
The auxiliary cost centers provide the organizational body and infrastructure
equipment for the clinker and cement production process. They are not directly
involved in the production or the distribution process.
Note that the respective auxiliary personnel should be charged to the appropriate
auxiliary cost center.
The types of auxiliary cost centers may differ from one company to another; however,
at least one auxiliary cost center must be identified for each Group company.
Pre-Process Cost Centers:
Pre-process cost centers are those cost centers for:
 the preparation and handling of product to be consumed in the production
process; and
 Their own power plant.
All Group company cement plants are required to have the following minimum set of
pre-process cost centers.
a. Power Generation
Costs incurred in generating electrical power, for companies with own power
plant only.
Note that where a Group company has constructed a power plant but it is owned by
the state authorities / third parties, and the Group Company has to pay for power
usage, this cost of usage does not belong to this pre-process cost center, but has to be
charged directly to the appropriate main cost center.
Revenue from selling electrical energy to third parties is included in this pre-process
cost center as a cost reduction.
b. Alternative Raw Materials Preparation and Handling
Costs incurred in preparation and handling of raw materials used to replace:

- the main siliceous and arcillaceous materials (limestone, marl, shale and clay) used
for consumption in the raw mill as part of raw material preparation and usually are in
the form of an industry by-product (e.g. contaminated soil, dry sludge, etc.)
At cement plant this includes the activities of unloading, internal transporting, sorting,
crushing, grinding and feeding of alternative raw materials.
c. Correctives Preparation and Handling
Costs incurred in the preparation and handling (unloading, internal transporting,
sorting, crushing, grinding, and feeding) of:
 Materials that correct the chemical composition of raw materials to make the
required raw meal composition to produce standard quality cement.
 Correctives include iron oxide, iron ore, sand, silica, high-grade limestone
(when used as a corrective), kaolin, bauxite, magnetite and pyrite ash, etc.
Correctives do NOT include the main siliceous and arcillaceous materials (limestone,
marl, shale and clay) or the alternative raw materials.
d. Traditional Fuels Preparation and Handling
sorting, feeding to the burner pipe) of traditional fuels for consumption in the
production of clinker.
 Examples of traditional fuels are coal, pet coke, liquid fuels (heavy oils, light
oils, petroleum), natural gas, gases (acetylene, nitrogen, oxygen, propane).
All other fuels are considered alternative fuels.

e. Alternative Fuels Preparation and Handling
Costs incurred in the preparation and handling of fuels used to replace the
traditional fuels for consumption in the production of clinker. Alternative fuels are
normally:
 industrial or municipal waste or industrial by-products; and
 Acquired either substantially cheaper, free of charge or together with a
payment from a third party for the disposal.
Examples of alternative fuels include tire-derived fuel, plastics, graphite, rubber,
wood, ultra heavy and waste oil, etc.
At cement plant this cost center includes the activities of unloading, internal
transporting, sorting, shredding and feeding to the burner pipe. At AFR unit, this
includes the activities of unloading, internal transporting, sorting, shredding, pre-
treatment, and shipping and transportation to cement plant(s).
f. Gypsum and Additives Preparation and Handling
sorting, crushing, feeding to the burner pipe) of gypsum and additives.
 Gypsum and additives are materials fed into the cement grinding and pre-
grinding process to enhance the qualities of the finished cement.
 Additives include anhydrite, lime, limestone when used as an additive, kiln
filter dust, etc.
 Grinding aids are not considered as additives.

Note that the costs relating to the material itself (including the costs to transport it to
the plant) are charged through inventory consumption directly to the finished
product. This procedure is necessary because the costs of the 'Cement Grinding' main
cost center are allocated to the different cement types by kWh and this key would not
apply to the material consumption. Redding, pre-treatment, shipping and
transportation to cement plant(s).
g. Mineral Components (MIC) Preparation and Handling
sorting, crushing) of materials used to enhance performance and to substitute
clinker.
 These include fly ash, pozzolane, ground granulated blast furnace slag
(GGBFS), granulated blast furnace slag (GBFS), air cooled blast furnace slag
(ACBFS), steel slag, bottom ash, silica fume.
Note that the components of the cost relating to the material itself (including the costs
to transport it to the plant) are charged directly through inventory consumption to the
finished product. This procedure is necessary because the costs of the 'Cement
Grinding' main cost center is allocated to the different cement types by kWh and this
key would not apply to the material consumption.
Cost Accounting Principles – Types of Costs
 Cash versus non-cash cost:
Cash costs mainly disclose the actual flows (cash) in and flows (cash) out of a
cost center. Cash cost is the sum of fixed and variable costs at cost center
level.
 Fixed versus variable costs:
Variable costs: It depends directly on the volumes of a plant. Within narrow
bounds and in short term view directly related to volume produced.
Fixed costs: In all other cases, costs are considered as fixed.
 Production versus maintenance:
Maintenance expenses include all the expenditures incurred in the activities of:
 Maintaining and restoring the desired status and
 Assessing the actual status of assets used for production and
distribution processes
 Above versus below operating profit

ANALYSIS
A. CLINKER PRODUCTION
Total Quantity of
Year Production Difference (Y) % Increase (Z)
(in tonnes)(X)
2006 1052447 - -
2007 1100026 47579 4.52
RATE OF CHANGE OF CLINKER PRODUCTION
1200000 1100026 5
1052447
4.52 4.5
1000000
Percentage Increases
4
800000 3.5
3 X
Tonnes
600000 2.5 Y
2 Z
400000 1.5
200000 1
47579 0.5
0 0
2006 2007
Year
FINDINGS:
1. Total quantity of clinker production is growing in year 2007 w.r.t. year 2006.
2. Percentage growth of clinker production is increasing in year 2007 w.r.t. year
2006.
B. CEMENT PRODUCTION
Total Quantity of % Increase
Year Difference (Y)
Production(Tonnes) (X) (Z)
2006 673357 - -
2007 719457 46100 6.85
Rate of change of cement production
800000 719457 8
673357
700000 6.85 7
600000 6
500000 5 X
Tonnes
400000 4 Y
300000 3 Z
200000 2
100000 46100 1
0 0
2006 2007
Year
FINDINGS:
1. Total quantity of cement production is growing in year 2007 w.r.t. year 2006.
It means plant capacity is increases successive year.
2. Percentage increase in year 2007 is 6.85 w.r.t. year 2006.
C. CEMENT DESPATCHES
Total Quantity of Cement % Increase
Year Difference (Y)
Despatches (Tonnes) (X) (Z)
2006 666473 - -
2007 716349 49876 7.48
Rate of change of cement despatches
800000 716349 8
666473 7.48
700000 7
600000 6
500000 5 X
Tonnes
400000 4 Y
300000 3 Z
200000 2
100000 49876 1
0 0
2006 2007
Year
FINDINGS:
1. Cement despatches increases in year 2007 w.r.t. year 2006.
2. Percentage increase of cement despatches is 7.48 in year 2007 w.r.t. year
2006.
VARIABLE CASH COST
1. RAW MATERIALS
Year Cost Per Tonne- Difference (Y) % Increase (Z)

Cement(in Rs)
(X)
2006 299.97 - -
2007 315.34 15.37 5.12
Rate of Change of Raw Material Cost Per Tonne
350 315.34 6
299.97
300 5.12 5
250
4
X
200
Rs
3 Y
150
Z
2
100
50 1
15.37
0 0
2006 2007
Year
FINDINGS:
a. Cost per tonne of cement in year 2007 increases w.r.t. year 2006.
b. Percentage increase in cost per tonne of cement is 5.12 in year 2007 w.r.t. year
2006.
REASON:
Rate per tonne of Bauxite, Iron Ore, and Imported Gypsum in year 2007 is higher
than that of year 2006.
2. FUELS/THERMAL ENERGY (kiln)

Cost per tonne –
Year cement (in Rs) Difference (Y) % Increase (Z)
(X)
2006 258.25 - -
2007 264.63 6.38 2.47
Rate of change of fuels/thermal energy cost per tonne of

cment
300 3
258.25 264.63
250 2.47 2.5
200 2
X
Rs
150 1.5 Y
Z
100 1
50 0.5
6.38
0 0
2006 2007
Year
FINDINGS:
1. Cost per tonne of cement increases in year 2007 w.r.t. year 2006.
2. Percentage increase of cost per tonne in year 2007 is 2.47 w.r.t. year 2006.
REASON:
Rate per tonne of Indian Coal and Imported Coal in year 2007 is higher than
year 2006.
3. ELECTRICAL ENERGY VARIABLE

Cost per tonne -
Year Difference (Y) % Decrease (Z)
Cement (X)
2006 185.03 - -
2007 181.79 - 3.24 1.75
Rate of change of Powe cost per tonne of cement
200 185.03 181.79 2
1.75 1.8
150 1.6
Percentage Decreases
1.4
100 1.2 X
Rs
1 Y
50 0.8 Z
0.6
0 0.4
2006 2007-3.24 0.2
-50 0
Year
FINDINGS:
1. Power cost per tonne of cement is decreasing in year 2007 w.r.t. year 2006.
2. Percentage decrease of Power cost per tonne of cement is 1.75 in year 2007
w.r.t. year 2006.
REASON:
Power cost per tonne of cement is decreasing due to change in usage of power
by 1.19 % in Clinker and 4.74 % in Grinding and also reduction in average power
cost.
4. WEAR PARTS
Cost per tonne –
Year Cement (in Rs) Difference (Y) % Increase (Z)
(X)
2006 15.69 - -
2007 45.29 29.6 188.66
Rate of change of wear parts cost per tonne of cement
50 200
45.29 188.66
45 180
40 160
35 140
29.6
30 120 X
Rs
25 100 Y
20 15.69 80 Z
15 60
10 40
5 20
0 0
2006 2007
Year
FINDINGS:
1. Bar chart of wear parts cost per tonne of cement is increasing in year 2007
w.r.t. year 2006.
2. Percentage increase of wear parts cost per tonne of cement is 188.66 in year
2007 w.r.t. year 2006.
5. PRODUCTION AND DISTRIBUTION MATERIAL

Cost per tonne
Year Difference (Y) % Increase (Z)
-Cement (X)
2006 25.98 - -
2007 29.26 3.28 12.63
Rate of change of cost per tonne of cement
35 14
29.26 12.63
30 12
25.98
25 10
20 8 X
Rs
Y
15 6 Z
10 4
5 3.28 2
0 0
2006 2007
Year
FINDINGS:
1. Cost per tonne of cement is increasing in year 2007 w.r.t. year 2006.
2. Percentage increase of cost per tonne of cement is 12.63 in year 2007 w.r.t.
year 2006.
6. MINING CONCESSIONS AND ROYALTIES
Year Cost per tonne Difference (Y) % Decrease (Z)

-Cement (X)
2006 43.21 - -
2007 39.89 - 3.32 7.68
50 9
43.21
39.89 8
40 7.68
7
30 6
5 X
Rs
20 Y
4
Z
10 3
2
0
2006 2007 1
-3.32
-10 0
Year
FINDINGS:
1. Cost per tonne of cement is decreasing in year 2007 w.r.t. year 2006.
2. Percentage decrease of cost per tonne of cement is 7.68 in year 2007 w.r.t.
year 2006.
 TOTAL VARIABLE CASH COST
Cost per tonne

Year Difference (Y) % Increase (Z)
-Cement (X)
2006 835.97 - -
2007 927.20 91.23 10.91
1000 927.2 12
900 835.97 10.91
10
800
700
8
600 X
Rs
500 6 Y
400 Z
4
300
200
91.23 2
100
0 0
2006 2007
Year
FINDINGS:
1. Cost per tonne of cement is increasing in year 2007 w.r.t. year 2006.
2. Percentage increase of cost per tonne of cement is 10.91 in year 2007 w.r.t.
year 2006.
CONSOLIDATED VARIABLE CASH COST

340 1000
320 950
900
300 850
280 800
260 750
240 700
Percentage change
650
220 600
200 550
180 500
Rs
450
160 400
140 350
120 300
250
100 200
80 150
60 100
40 50
0
20 -50
0 -100
A B C D E F
All element of Variable cash cost
Year 2006 Year 2007 Percentage change
A – Raw Materials
B – Fuels/Thermal Energy (kiln)
C – Electrical Energy Variable
D – Wear Parts
E – Production and Distribution Material
F – Mining Concessions and Royalties
FINDINGS:
Total variable cash cost per tonne of cement increases in year 2007 w.r.t. year
2006 due to increase in cost per tonne of cement of Raw Materials, Fuels/Thermal
Energy (kiln), Wear Parts and Production and Distribution Material.
 TOTAL FIXED CASH COST

Cost (in Lakhs)
(X)
2006 4327.84 - -
2007 4150.56 - 177.28 4.1
Rate of change of cost
5000 4.5
4327.84
4500 4150.56 4.1 4
4000
3.5
3500
3
3000
2500 2.5 X
Lakhs
Y
2000 2 Z
1500
1.5
1000
1
500
0 0.5
2006 2007
-177.28
-500 0
Year
FINDINGS:
1. Fixed Cost in year 2007 decreases w.r.t. year 2006.
2. Percentage decrease of fixed cost in year 2007 is 4.1 w.r.t. year 2006.
CONSOLIDATED FIXED CASH COST

Rate of change of cost of element of Fixed cost
2100 1000
1950 950
1800 900
1650 850
1500 800
750
1350
700
1200 650
1050
Percentage change
600
900 550
Rs Lakhs
750 500
600 450
450 400
300 350
150 300
0 250
200
-150 A B C D E F G H I J K 150
-300 100
-450 50
-600 0
-750 -50
-900 -100
All element of Fixed cost
Year 2006 Year 2007 Percentage change
A - Electrical Energy Fixed
B - Labour Expenses Own
C - Labour Expenses Subcontracted Fixed
D - Labour Expenses Maintenance Own - M
E - Labour Expenses Maintenance Subcontracted Fixed -M
F - Other Personnel Expenses
G - Third Party Services
H - Third Party Services Maintenance -M
I - Maintenance Material –M
J - Other Cost Center Expenses
K - By-Products and Other Revenues

FINDINGS:
Total Fixed cash cost decreases in year 2007 w.r.t year 2006 due to decrease of cost in
Labour Expenses Subcontracted Fixed, Labour Expenses Maintenance Own, Labour
Expenses Maintenance Subcontracted Fixed and Other Cost Center Expenses.
 TOTAL FIXED CASH COST PER TONNE OF CEMENT
Cost per tonne –

cement (X)
2006 320.82 - -
2007 280.42 - 40.4 12.59
350 320.82 14
300 280.42 12.59

12
250
10 Percentage Decreases
200
150 8 X
Rs
Y
100 6 Z
50
4
0
2006 2007 2
-50
-40.4
-100 0
Year
FINDINGS:
1. Cost per tonne of cement decreases in year 2007 w.r.t. year 2006.
2. Percentage decrease of cost per tonne of cement in year 2007 is 12.59 w.r.t.
year 2006.
CASH COST = VARIABLE CASH COST + FIXED CASH COST
 CASH COST
Cost Per Tonne-
Year Cement(in Rs) Difference (Y) % Increase (Z)
(X)
2006 1156.80 - -
2007 1207.62 50.82 4.39
Rate of Change of Cost Per Tonne
1400 5
1207.62 4.5
1156.8 4.39
1200
4
1000 3.5
3 X
800
Rs
2.5 Y
600 Z
2
400 1.5
1
200
50.82 0.5
0 0
2006 2007
Year
FINDINGS:
2. Percentage increase of cost per tonne is 4.39 w.r.t. year 2006.
ACTUAL COST = CASH COST
+ PROVISION/DEFERRAL FOR WEAR PARTS
+ OTHER PROVISION AND WRITE-OFFS
 ACTUAL COST
Cost Per Tonne-
Year Cement (in Rs.) Difference (Y) % Increase (Z)
(X)
2006 1157.36 - -
2007 1199.44 42.08 3.64
1400 4
1157.36 1199.44 3.64
1200 3.5
3
1000
2.5
800 X
Rs
2 Y
600
1.5 Z
400
1
200 0.5
42.08
0 0
2006 2007
Year
FINDINGS:
2. Percentage increase of cost per tonne is 3.64 in year 2007 w.r.t. year 2006.
COST OF GOODS PRODUCED =
ACTUAL COST + DEPRECIATION AND
AMORTIZATION OF LONG-TERM OPERATING ASSETS
 COST OF GOODS PRODUCED
Year Cost Per Tonne- Difference (Y) % Increase (Z)

Cement(in Rs)
(X)
2006 1283.47 - -
2007 1445.23 161.76 12.60
1600 14
1445.23
12.6
1400 1283.47 12
1200
10
1000
8 X
Rs
800 Y
6 Z
600
4
400
161.76 2
200
0 0
2006 2007
Year
FINDINGS:
2. Percentage increase of cost per tonne is 12.6 in year 2007 w.r.t. year 2006.
PRICE & USAGE DATA
Cumulative Data for Year Year 2006
2007
Actual Budget Cumulative
Raw Material
Factors Extraction 1.58 1.67 1.68

Raw Material
Preparation 1.76 1.67 1.68

Raw Meal
Preparation 1.50 1.50 1.74

Clinker 55.04 55.53
Corrective Mill scale (Price
Materials Rs/Tonne) 743.68 0.00 0.00

Bauxite(Price
Rs/Tonne) 1251.00 1043.65 1017.14

Iron Ore(Price
Rs/Tonne) 911.86 885.00 773.59

Purchased
Limestone 0.00
Purchased
Limestone
consumption as
a %age of
clinker
production
Fuel & Indian Coal - 3379.64 2645.00 1815.38
Alternative Fuel Kiln(Price

Rs/Tonne)
Imported
Coal(Price
Rs/Tonne) 4335.50 4093.00 3472.79

Pet Coke(Price
Rs/Tonne)
Alternate Fuel
( Price
Rs./Tonne)
Weighted average
Fuel(Price
Rs/Tonne) 3592.48 3317.45 2793.70

Usage % to
Clinker 14.82 15.36 16.57

Clinker to
Cement factor 55.04 55.19 56.11

Rs./Tonne of
Cement 264.50 281.28 259.74

Mj/T of Clinker 476.25 509.67 462.92
CV(NOW) -
Indian Coal 4680

CV(NOW) -
Imported Coal 5970

CV(NOW) - Pet
Coke ( F Grade) 3148

CV(NOW) -
Alternate Fuel
CV(NOW) - Wt.
Average 5156 4860 4629

Paise/ 1000
K.Cal. 750 745 758

Coal 1.254 1.400
consumption in
TGs ( Kg per
kwh generated)
Sister Works
Clinker Rate - Rs./Tonne

Usage %
Indigenous(Price
Gypsum Rs/Tonne)
Imported(Price
Rs/Tonne) 2287.32 2051.60

Wt. Avg. ( Price
Rs./Tonne) 1857.09
Usage % 4.77% 4.50% 4.65
Slag (Avg) Price Rs/Tonne 501.05 593.71 578.13
Usage % 33.12% 34.87% 34.55
Fly Ash.
(including Fly
Ash – Own) Price Rs/Tonne 41.90 70.00 91.85

Usage % 7.07% 5.44% 5.48
Power
( including
auxiliary power Usage-Kwh/T of
consumption) Clinker 66.70 68.30 67.51

Usage-Kwh/T of
Grinding 46.96 46.80 49.30

Usage-Kwh/T
Direct 85.60 84.73 87.18

Gross Power
Generation TG1(Lakh/ Kwh) 337.64 353.29 298.63

TG2(Lakh/ Kwh) 988.54 1174.49 894.00
TG3(Lakh/ Kwh)
Sub total 1326.18 1527.78 1192.63
DG(Lakh/ Kwh)
Total 1326.18 1527.78 1192.63
Gross Power Grid(Lakh/ Kwh) 34.80 15.12 19.37
Purchased
Grand Total 1360.98 1542.90 1212.00
Net Power
Distributed –
Own TG1(Lakh/ Kwh) 290.17 305.60 253.25

TG2(Lakh/ Kwh) 846.87 1015.93 766.87
TG3(Lakh/ Kwh)
Sub total 1137.04 1321.53 1020.12
DG(Lakh/ Kwh)
Total 1137.04 1321.53 1020.12
Net Power
Purchased Grid(Lakh/ Kwh) 33.93 14.74 18.88

Grand Total 1170.97 1336.27 1039.00
Self consumption
as a %age of
power generated %age of self
from TGs consumption 12.51% 11.00%

Variable Cost of
Power generated
(based on net
distributed) TG1(Paise/ Kwh) 304.23 235.33 314.47

TG2(Paise/ Kwh) 135.41 175.15 169.32
TG3(Paise/ Kwh)
Average 178.01 187.99 205.36
DG(Paise/ Kwh)
Grid(Paise/ Kwh) 338.95 432.82 647.61
Wtg. Average 182.67 190.69 213.39
PLANT – CHAIBASA CEMENT WORKS
15 A COST PER TONNE
Year 2007
Description Unit Actual Budget
Clinker Production Tons 1100026 1204500
Cement Production " 719457 856000
Cement Despatches " 716349 856000
Cost Per
Tonne-
Variable Cash Cost Cement

Raw Materials " 315.34 336.22
Fuels/Thermal Energy (Kiln) " 264.63 281.23
Diesel/Gasoline " 36.49 26.17
Electrical Energy Variable " 181.79 155.95
Wear Parts " 45.29 47.58
Production and Distribution Material " 29.26 48.44
Labour Expenses Subcontracted Variable " 9.44 0.13
Labour Expenses Maintenance Subcontracted
" 2.21 0.05
Variable
Outsourced Quarry Activities " 2.86 7.27
Mining Concessions and Royalties " 39.89 42.31
Variable Cash Cost " 927.20 945.35

Rs.Lacs
Fixed Cash Cost
Electrical Energy Fixed " 384.44 363.53
Labour Expenses Own " 1109.49 790.99
Labour Expenses Subcontracted Fixed " 220.82 162.35
Labour Expenses Maintenance Own " 65.10 185.99
Labour Expenses Maintenance Subcontracted Fixed " 149.45 180.12
Other Personnel Expenses " 145.15 43.08
Third Party Services " 261.14 71.83
Third Party Services Maintenance " 137.59 130.90
Maintenance Material " 1877.75 1174.54
Other Cost Center Expenses " 535.86 870.37
By-Products and other Revenues " -736.23 -100.56
Fixed Cash Cost " 4150.56 3873.14
Cost Per
Tonne - 1207.62 1178.85
Cash Cost Cement

Provision/Deferral for Wear Parts " 1.65 2.27
Provision/Deferral for Absorption of Fixed Costs "
Other Provision and Write-Offs " -9.83 0.11
Sub Total: " -8.18 2.38
Actual Cost " 1199.44 1181.23
Depreciation and Amortization of Long-Term Rs Lacs 245.79 0.00
Operating Assets
Cost Per
Tonne - 1445.23 1181.23
Cost of Goods Produced Cement
(Note: - Cost of packing, storage, handling, transportation, taxes and levies, profits
etc. are to be added to fix MRP which is done by the head office.)
CHAIBASA
31-Dec-06 ACC R
E
V
I
Consolidat S
ed Group E
Company D
In
dia
JANUA
Clinker and RY /
Cement - DECEM
Cost per Ton BER
(15 A) 2006
Sub-Segment:
Clink
er
and
Cem
Support Process: ent
n
/
a
T T C
ot ot e
T
al al m
ot
Cl Cl e
al
in in n
Raw Clink Pr
Raw Raw k k t
Materi er od
Material Meal er er G
al Prod uc
Extractio Preparati P P ri
Prepar uctio tio
n on ro ro n
ation n n
d d i
C
u u d
os
ct ct i
t
io io n
n n g
C
o
s
t
C
C P C T o T
o e C o T ot s ot
s r o s ot al t al
t st t al C P C Tot
C P C T C P P C o e os al
o e o o o e e o st r t Am
s r s n s r r st P T P oun
t T t t T T P er o er t of
P o P - P o o er T n T Cos
e n C e e n n T o on t
C r - o r C C r - C - o n- C - - Rs/
o T C s T l o T C o C n- C o C C Tho
s o li t o i s o li s li Cl e s e e usa
t n n n n t n n t n in m t m m nds
Variable Cash Cost
Raw Materials 0 0 0 0 0 0 6 3 6 0 0 6 3 1 2 29 242
3 4 0. 0. 3. 7 6 9. 853
7 . 7 7 9 9 6 97
1 8 4 1 .
3 0
7 7 6 3
4 4
8 6 4 2
4 0 6 5 0
9 . 0. 7. 3 . 25
Fuels/Thermal 5 7 7 6 9 5 8. 485
Energy (Kiln) 0 0 0 0 0 0 0 0 0 3 9 9 7 0 8 25 343
1 1
4 8 3 1 0
3 . . 3. 7. 07
3 1 7 7 6 .6 143
Diesel/Gasoline 0 7 3 0 0 0 0 0 0 0 0 3 8 0 0 8 30
1 1 1
1 1 3 2 1 7 0
1 0 1 0 5 0 3 2 6 9 4 8 0 4
4 . . 3 . . 6 . 3. 5 . 4. 0. 1 . 18
Electrical Energy 5 8 3 1 9 0 8 0 5 3 7 6 9 1 1 5. 222
Variable 3 3 9 0 8 4 5 2 1 5 3 7 0 4 3 03 097
1
2 1 7 6 0 7 0
7 . 2. 0 . 5. 0 . 15
2 4 5 6 7 9. 2 6 4 .6 168
Wear Parts M0 0 0 0 0 0 2 9 9 5 1 3 0 3 9 9 50
1 1 1 1
3 7 2 1 0 2 8
1 . . 2. 7. 7 . 25
Production and 8 5 6 6 0 4 9 .9 259
Distribution Material 5 2 3 0 0 0 0 0 0 0 0 3 6 1 2 8 26
0
0. 00
0 .0
Packing Material 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0
Labour Expenses 1 . 0. 0. . 00
Subcontracted 1 1 1 0 4 0 .1
Variable 0 0 0 0 0 0 0 0 0 4 1 1 6 9 7 3 163
Labour Expenses 0 0
Maintenance . 0. 0. 00
Subcontracted 6 0 0 0 .0
Variable M0 0 0 0 0 0 0 0 0 2 6 6 3 0 0 3 62
0
0. 00
Third Party 0 .0
Transportation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0
0. 00
Outsourced Quarry 0 .0
Activities 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
8 7
0 7 7 4
6 . 7. 3. 43
Mining Concessions 5 4 2 2 2 .2 806
and Royalties 7 6 7 0 0 0 0 0 0 0 0 7 1 0 0 1 57
1 1 6 2 4
0 6 0 1 1 7 3 2 5 7 4 6 0
9 2 5 0 5 0 0 8 8 9 7 3 9 0
6 . . 3 . . 1 . 6 7 7 9. 5. 4 . 83 108
2 5 0 1 9 0 2 3 6. 2 . 2 7 9 2 5. 828
Variable Cash Cost 5 2 2 0 8 4 4 8 8 9 4 6 6 3 2 98 1

Fixed Cash Cost
1 1
0 0 0 0 0 1 0 1 0 5 8
1 . . 8 . . 2 . 0. 0 . 1. 6. 6 . 14
Electrical Energy 1 0 1 3 4 8 9 1 2 5 5 7 5 7 4 .9 179
Fixed 8 7 1 5 8 1 9 6 8 9 1 1 5 9 3 8 90
1 1 5 5 2 3
0 6 0 2 1 2 1 0 4 2 6 3 6 9
9 . . 0 . . 0 . 7 . 5. 6. 4 . 75
Labour Expenses 4 2 4 8 2 0 4 5 3 0 5 6 8 3 .9 953
Own 7 4 9 3 1 3 7 7 1 7 1 3 4 7 4 8 01
1 1
5 2 4 0 0 0 5 4 2 1 4
Labour Expenses 0 . . 1 . . 7 . 0. 2 . 0. 1. 7 18
Subcontracted 1 8 8 4 0 1 4 4 7 0 4 1 2 1 .2 258
Fixed 9 6 1 4 8 4 0 1 1 4 5 1 5 4 7 5 21
1 0 1 0 0 6 6 0 3 5
2 . . 6 0 . 4 . 0. 4 . 8. 4. 3 . 09
Labour Expenses 1 6 1 8 . 6 7 2 4 9 1 4 7 8 0 .7 122
Maintenance Own M2 9 6 8 4 7 1 6 5 5 7 5 3 3 2 5 49
1
Labour Expenses 1 0 1 0 0 0 5 1 0 5 8
Maintenance 1 . . 4 . . 7 . 0. 7 7. 9. 4 . 17
Subcontracted 5 6 1 7 2 4 0 3 6 8 1 2 6 7 1 .7 235
Fixed M9 6 1 9 8 7 1 8 7 6 5 5 5 4 3 8 99
0 3 5
0. 7 . 05
Other Personnel 0 1 5 .5 371
Expenses 0 0 0 0 0 0 0 0 0 0 0 0 0 2 1 1 2
0
0. 00
Third Party 0 .0
Services 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2 1 2 0 0 0 2 2 0 1 2
Third Party 3 . . 4 . . . 0. 9 . 5. 3. 4 . 05
Services 8 3 2 8 2 4 5 0 0 6 8 6 1 0 0 .2 728
Maintenance M1 6 8 0 8 7 2 3 5 7 2 2 4 8 9 3 8
8 4 7 1 1 5 5 1 2 3
3 7 9 6 5 8 4 5 2 5 8 3 4
0 . . 3 9 . 7 . 8. 2 . 6. 7. 2 . 12
Maintenance 5 3 5 8 . 9 4 7 3 3 4 3 4 4 5 1. 186
Material M8 7 7 6 5 6 0 8 3 3 8 4 3 7 2 95 664
0 0 0 0 1 1 1 1 0 5 7
3 . . 1 . . 9 . 1. 6 . 3. 2. 1 . 09
6 2 3 8 1 1 2 0 8 5 5 9 2 1 5 .7 924
Assets Charged Off 4 1 5 4 1 8 3 5 3 6 7 3 0 3 9 9 0
4 3 1 2
0 8 3 2 7 5
6 . 8. 1. 4 . 47
Other Cost Center 4 6 6 6 2 8 .4 580
Expenses 0 0 0 0 0 0 0 0 0 9 2 2 0 1 7 7 70
- - - - -
5 4 - 0 2 3 -
0 . 4. 2. 1 . 05 -
By-Products and 0 7 7 6 4 1 .8 715
other Revenues 0 0 0 0 0 0 0 0 0 5 6 6 6 5 9 5 0
Fixed Cash Cost 1 5 9 2 1 2 1 7 1 1 1 3 1 9 1 32 432
0 9 9 1 2 0 3 . 3. 9 8 2 8 4 4 0. 784
4 8 8 0
2 . . 2 . . 9 7 . 0. 4 .
5 4 8 7 3 7 7 6 3 8 8 2. 5 9 3
8 6 8 9 4 3 3 4 2 1 7 8 1 3 1 82
2 1 8 7 1 3 5
1 2 2 3 1 3 8 4 2 8 1 6 6 4
3 1 0 1 8 0 4 6 8 7 6 0 1 3 0 11
8 . 4 5 . . 0 . 0. 5 . 2. 6. 9 . 56 152
8 9 . 8 3 7 9 0 1 1 2 0 2 8 5 .8 106
Cash Cost 3 8 9 9 2 7 7 2 2 0 7 6 7 6 3 0 5

0
0. 00
Clinker Recd. From 0 .0
S.W. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0
0. 00
Provision/Deferral 0 .0
for Wear Parts M0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0
Provision/Deferral 0. 00
for Absorption of 0 .0
Fixed Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
1 0
0 0 0. 00
Other Provision and 4 . 5 .5 104
Write-Offs 9 6 1 0 0 0 0 0 0 0 0 1 6 0 0 6 9
1 0
0 0 0. 00
4 . 5 .5 104
Sub Total: 9 6 1 0 0 0 0 0 0 0 0 1 6 0 0 6 9
2 1 8 7 1 3 5
1 2 2 3 1 3 8 4 2 8 1 6 6 4
4 2 0 1 8 0 4 6 8 7 6 0 1 3 0 11
9 . 5 5 . . 0 . 0. 5 . 3. 6. 9 . 57 152
3 5 . 8 3 7 9 0 1 1 2 0 8 8 5 .3 211
Actual Cost 2 8 9 9 2 7 7 2 2 0 7 6 3 6 3 6 4

1 1 1 1 4 2 9 1 2 3
Depreciation and 5 9 5 5 8 5 0 1 3 4 8 5 8 5 7
Amortization of 9 . . 4 . . 1 . 8. 1 9 8. 8. 4 . 12
Long-Term 0 0 2 7 9 0 4 9 2 9 . 0 3 0 7 6. 191
Operating Assets 8 7 4 2 7 7 2 7 4 8 5 5 8 5 3 11 125
2 1 2 1 9 8 1 3 5
3 3 2 4 2 4 2 6 1 2 7 2 7 8 7
0 1 1 7 7 5 4 7 1 1 5 6 0 9 8 12
8 . . 0 . . 2 . 8. 7 . 1. 5. 3 . 83 171
Cost of Goods 4 6 1 6 2 8 3 9 3 0 7 1 2 9 2 .4 323
Produced 0 5 4 1 9 4 9 9 6 8 7 1 1 1 6 7 9
5
1 1 1 1 1 8
7 7 8 0 0 8 6
5 2 2 5 5 5 7 12
3 4 7 2 2 2 3 61
4 3 0 4 4 8. 3 88
1 8 2 4 4 3 5 5.
Production Tons 0 5 0 0 9 0 0 9 0 0 7 7 6 0 7 36 0
Factors: 0 1 0 0 1 0 0 1 0 0 0 0 0 0 0 00 0
. . .
6 6 7
7 7 4 0.
9 9 0 5 .5
7 7 4 6 6

8 5 8 1 1 1 1 8 8 1 1 4 6
7 0 4 8 0 7 2 6 1 7 3 9 1 0 0
8 . . 0 . . 6 . 2. 6 . 7. 0. 5 . 17
Maintenance Cash 1 0 1 3 4 5 8 9 0 0 2 0 1 7 2 0. 246
Cost 0 8 2 3 6 7 6 4 9 8 4 2 7 5 5 42 712
0
0. 00
Provision/Deferral 0 .0
for Wear Parts 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
8 5 8 1 1 1 1 8 8 1 1 4 6
7 0 4 8 0 7 2 6 1 7 3 9 1 0 0
8 . . 0 . . 6 . 2. 6 . 7. 0. 5 . 17
1 0 1 3 4 5 8 9 0 0 2 0 1 7 2 0. 246
Maintenance Cost 0 8 2 3 6 7 6 4 9 8 4 2 7 5 5 42 712

Pag
e
No.:
-
77-
A
ACTUAL JAN / DEC 2007 CHA
ACC Consolidated Group Company
India
Clinker and Cement - Cost per Ton (15 A)
Sub-Segment:
Support Process: Clinker and Cement
n/a
Raw Material Extraction R

Cost Per
Cost Per
Cost Ton - Cost
Ton
Clin
Variable Cash Cost
Raw Materials 0.00 0 0
Fuels/Thermal Energy (Kiln) 0.00 0 0
Diesel/Gasoline 43336.003 25.01 39.40 3
Electrical Energy Variable 1492.344 0.86 1.36 767
Wear Parts M 0.00 0.00 0.00
Production and Distribution Material 2531.387 1.46 2.30
Packing Material 0.00 0.00 0.00
Labour Expenses Subcontracted Variable 822.586 0.47 0.75 3
Labour Expenses Maintenance Subcontracted Variable M 33.13 0.02 0.03 11
Third Party Transportation 0.00 0.00 0.00
Outsourced Quarry Activities 5725.52 3.30 5.20
Mining Concessions and Royalties 79712.61 46.00 72.46
Variable Cash Cost 133653.58 77.13 121.50 785

Fixed Cash Cost
Electrical Energy Fixed 254.38 0.15 0.23 119
Labour Expenses Own 14923.70 8.61 13.57 378
Labour Expenses Subcontracted Fixed 1719.68 0.99 1.56 18
Labour Expenses Maintenance Own M 564.59 0.33 0.51 47
Labour Expenses Maintenance Subcontracted Fixed M 858.18 0.50 0.78 115
Other Personnel Expenses 1639.08 0.95 1.49 9
Third Party Services 1172.34 0.68 1.07 11
Third Party Services Maintenance M 3462.04 2.00 3.15 222
Maintenance Material M 43472.60 25.09 39.52 1779
Other Cost Center Expenses 2346.62 1.35 2.13 61
By-Products and other Revenues -31.54 -0.02 -0.03
Fixed Cash Cost 70381.67 40.62 63.98 2762
Cash Cost 204035.25 117.74 185.48 3548

Provision/Deferral for Wear Parts M 0.00 0.00 0.00 71
Provision/Deferral for Absorption of Fixed Costs 0.00 0.00 0.00
Site Restoration 0.00 0.00 0.00
Other Provision and Write-Offs 1049.50 0.61 0.95 -3
Sub Total: 1049.50 0.61 0.95 67
Actual Cost 205084.75 118.35 186.44 3616

Depreciation and Amortization of Long-Term Operating
Assets 61908.91 35.73 56.28 404
Cost of Goods Produced 266993.66 154.08 242.72 4021
Production Tons 0.00 1732880 1761906
Factors: 0.00 1.5753 -
Maintenance Cash Sheet 48390.53 27.92 43.99 2175

Provision/Deferral for Wear Parts 0.00 0.00 0.00 71
Maintenance Cost 48390.53 27.92 43.99 2246
1.5753

REASON FOR VARAINCE
Cumulative Actual Vs Budget
Variable Cash Cost Reasons for Variance
Raw Materials Price Price variance is less mainly due to cost of
limestone has reduced by Rs.42.28/Tn
than budget. Cost of slag is also less due
to availability of slag from cheaper
sources with less price. Maximum use of
own generated fly ash.
Usages Usage has reduced by 15.00% in Slag,
increase by 1.55% in Fly ash due to more
production of PPC.
Fuels/Thermal Energy (Kiln) Price Avg. Coal price for kiln is higher by
Rs.22.43/Tn of cement only due to use of
dearer Imported coal received from South
Africa, Indonesian & Bhutan during the
year with revised rate.

Usage is less by 10.62% due to use of
Usages
imported coal during the period with more
CV.
Diesel/Gasoline Price
As per market rate.

Usages
As per actual consumption.
Electrical Energy Variable Electrical energy variable is less by
Rs.6.71/Tn of cement due to use of
cheaper coal with proper planning
received from MCL "F" Gr. / CPP Coal.
Wear Parts Wear parts charges more for Degradation
of Cement Mills & also issue of
refractories etc during major repairs of
kiln.
Production and Distribution Less than budget.
Material
Labour Expenses As per actual charges
Subcontracted Variable
Labour Expenses As per actual charges
Maintenance Subcontracted
Variable

Outsourced Quarry Activities Due to less removal of overburden at
quarry (Mines) than budget.
Mining Concessions and Charges are per rate applicable.
Royalties
Fixed Cash Cost
More due to more consumed of state
Electrical Energy Fixed power than contract Demand.
More than budget due to increase /
Labour Expenses Own revision in average salary to staff.
More due to revision in D.A & Basic rate
Labour Expenses of contractor’s labours & also making
Subcontracted Fixed payment of arrears.
Labour Expenses Major junk clubbed in labour expenses
Maintenance Own own.
Labour Expenses
Maintenance Subcontracted Less than budget due to production
Fixed /Despatches.
Other Personnel Expenses As per actual charges.
Third Party Services More due to Kiln Annual shut down.
Third Party Services More maintenance Job uploaded to third
Maintenance party.
Maintenance Material Due to major repairs and also includes

unscheduled maintenance of Raw mill
VRM and Coller grate plate which
includes a additional expenses of Rs 1.20
crores.
Other Cost Center Expenses
By-Products and other
Revenues
CHAPTER-VI
FINDINGS
1. After analysis of variable cost and fixed cost of plant, I got the knowledge
about how costing has done by cost accountant in plant, detail process of cost
reduction, brief idea of finalising cost of finished goods of company, detail
existing procedures of costing and the process of consolidation of different
cost centers.
2. After analysing of variable cost of plant I got the following findings about
different element of variable cost:
i. Raw Material cost per tonne of cement in year 2007 increases w.r.t.
year 2006. Percentage increase of cost per ton of cement is 5.12 in year
2007 w.r.t. year 2006.
ii. Fuels/Thermal energy Cost per tonne of cement increases in year 2007
w.r.t. year 2006. Percentage increase of cost per tonne in year 2007 is
2.47 w.r.t. year 2006.

iii. Electrical energy variable cost per tonne of cement is decreasing in
year 2007 w.r.t. year 2006. Percentage decrease of Power cost per
tonne of cement is 1.75 in year 2007 w.r.t. year 2006.
iv. Percentage increase of wear parts cost per tonne of cement is 188.66 in
year 2007 w.r.t. year 2006.
3. I have collected data for reasons of variance for cumulative Actual Vs
Budgeted for last year along with reasons of difference of cost involve in
variable cost.
CHAPTER-VII
SUGGESATIONS AND CONCLUSIONS
Suggestions:
I have given following suggestions the finance manager:
1. To control gypsum cost by looking different source having optimum
transportation cost. Gypsum cost per ton of cement manufacturing is
increasing in year 2007 w.r.t. year 2006. So source of gypsum should be near
to the plant that will help to reduce cost per ton of cement manufacturing.
2. Gypsum should be purchased as per quality of requirements. Gypsum which
one utilising in plant is very high quality is more than requirement of plant.
3. Maintenance cost of plant should be controlled. The Clinker manufacturing
equipment Kiln has changed in year 2005 to improved dry process Kiln. That
will required more maintenance cost in year 2007 w.r.t year 2006.
Conclusions:
Cost Analysis is a broad topic and most vital activity in any company. During my
understanding of cost concept in this plant, I have visited all departments and got
valuable information regarding cost. In this project I have done comparative analysis
of main element of Variable Cash Cost, overall Fixed Cost, Cost of Goods Produced
per tonne of cement, Total quantity of clinker production, cement production and
cement despatches. Total quantity of clinker production is growing in year 2007 w.r.t.
year 2006. and percentage growth of clinker production is increasing in year 2007
w.r.t. year 2006. Total quantity of cement production is growing in year 2007 w.r.t.
year 2006. It means plant capacity is increases successive year and Percentage
increase in year 2007 is 6.85 w.r.t. year 2006. Total cement despatches increases in
year 2007 w.r.t. year 2006 and percentage increase of cement despatches is 7.48 in
year 2007 w.r.t. year 2006. Total variable cash cost per tonne of cement increases in
year 2007 w.r.t. year 2006 due to increase in cost per tonne of cement of Raw
Materials, Fuels/Thermal Energy (kiln), Wear Parts and Production and Distribution
Material. Total Fixed cash cost decreases in year 2007 w.r.t year 2006 due to decrease
of cost in Labour Expenses Subcontracted Fixed, Labour Expenses Maintenance
Own, Labour Expenses Maintenance Subcontracted Fixed and Other Cost Center
Expenses. Analysis concludes that plant’s production of cement and clinker is
increasing and would be better by effective cost control.

CHAPTER-VIII
LIMITATION OF PROJECTS
1. Time constraint of project duration.
2. Respondent was busy.
3. All the costing concept is implemented by SAP enabled computer system
itself that was the main constraint for getting knowledge about costing.
4. Less practical knowledge about working of SAP-FICO Module, due to non
availability of personal log-in ID.

CHAPTER-IX
BIBLIOGRAPHY
1. M. Y. Khan & P.K. Jain (2001);Management Accounting, Tata McGraw-Hill
Publishing Company House, New Delhi:PP-5.3
2. Web Site link of ACC Ltd :
<http://www.acclimited.com/newsite/corprofile.asp> assessed on Friday7th
June 2008, 7:35p.m
3. Introduction to Holcim Accounting and Reporting Principal (HARP) :
Mannual
4. 15A Format (Generated by SAP-FICO Module) : Year 2007
5. 15A Format (Generated by SAP-FICO Module) : Year 2006

Cost Analysis For Cement Production

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A Project Report

“COST ANALYSIS FOR CEMENT PRODUCTION”

“ACC Ltd, Chaibasa Cement Works”

Under the guidance of

“Dr. Yashwant Vaishampayan”

In partial fulfillment of the requirement for the award of the degree of

Master of Business Administration (MBA)

Vishwakarma Institute of Management

Vishwakarma Institute of Management

(Approved by AICTE, New Delhi and Affiliated to University of Pune) S.No.

3&4,Kondhawa Bk.,Pune-411048.Ph.:26932800/26932900,Fax: 26932700,Mail :

Project Guide Director

This is to certified that Mr. Akhileshwar kumar, a student of III

For ACC Limited

At first I am indebted to Director of VISHWAKARMA INSTITUTE OF

MANAGEMENT (VIM), PUNE for giving me permission to undergo this Training

I would like to express my heartfelt gratitude and

thanks to my project guide Dr. Yashwant Vaishampayan, Finance faculty of VIM

throughout this project. I am thankful to my institute for providing me with proper

resources and fostering this project work.

I convey my sincere thanks to Mr. P. K. Mohanty, Manager Finance of ACC

Limited Chaibasa cement works for granting me opportunity to work with an

entire tenure of this work.

employees of ACC Ltd for their support and guidance.

I would like to take this opportunity as a platform to thank various individuals,

Sr.No. Name of Tables Page No.

– Chaibasa, Clinker and Cement – Cost Per Ton(15A)

India, Plant –Chaibasa, Clinker and Cement Cost Per Ton(15A)

NO. OF THE NAME OF THE CHAPTER PAGE NO.

2. COMPANY PROFILE 3-30

ABOUT CEMENT INDUSTRY

 MAJOR CEMENT COMPANIES IN

ABOUT ACC LTD

 SUBSIDIARIES AND ASSOCIATES

 ACC’S PLANT WISE CAPACITY

ABOUT ACC-CHAIBASA CEMENT

BASIC CONCEPT OF COSTS

 ACC CONCEPT OF COST CENTER

Cement Works, Jharkhand. ACC Limited is India's foremost manufacturer of cement

ACC manufacturing following types of cement:

2. Fly-ash based Portland Pozzolana Cement

3. Portland Slag Cement

any business; it is an indispensable part of any company. Cost management, in many

allocation and control of resources. This project provides fundamental conceptual

blocks for theory of Cost Management implementation in manufacturing industry. To

effect on cost per tonne of cement and clinker production.

SCOPE OF THE PROJECT:

manager to control the cost of cement production.

different element of variable and fixed cost.

ABOUT CEMENT INDUSTRY

Cement is a fundamental material indispensable to constructions and development of

occupy an important position in the arena of predominance as the basic infrastructure

industry for development.

with the best operating plants in the world.

owned by around 54 companies.

unfavourable demand – supply scenario burgeoning demand prospects.

2006 is expected to grow by an average 9 to 10 percent in the coming years.

is in a state of equilibrium. Demand is set to rise as consumption from housing and

infrastructure sectors is increasing:

over the next four years.

 Government’s infrastructure projects and road development programs will

generate an additional demand of 10 million tonnes annually in the next four