SUBMITTED BY:- MANISHA SHARMA

A REPORT ON“FINANCIAL PERFORMANCE AND COSTING”

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INTERNSHIP REPORT

IN HINDUSTAN COPPER LIMITED (A Govt. Of India Enterprise)

A Report submitted in partial fulfillment of the requirement for the award of the

Master of Business Administration (2011-13 SESSION)

Content

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S.NO TITLE PAGE NO.

1.

2.

3.

4.

5.

6.

7.

8.

CERTIFICATE OF THE COMPANY

ACKNOWLEDGEMENT

PREFACE

EXECUTIVE SUMMARY

PROFILE OF THE COMPANY

WORK DESCRIPTION

FINDING & ANALYSIS

CONCLUSION

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ACKNOWLEDGEMENT

“EVERY GOOD WORK REQUIRES THE GUIDANCE OF EXPERTS”

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The beatitude, felicity and bliss for a successful completion of any work or task would not complete without the expression of appreciation of simple virtues to the people who made it possible.

This summer internship was my first step to the corporate world & towards the completion of this training successfully; I would like to express my deepest gratitude to Meena Maheshavri, Naveen Dhadchi & Vivek Sharma who has helped me.

I deem it my pleasure to convey thanks to the management of Hindustan copper limited (Khetri branch) which has given me permission to make a project on FINANCIAL PERFORMANCE & COSTING. I am highly obliged to Suman Verma for guiding me in doing the research of the project work.It is indeed my privilege to thank all the officers & workers of HCL Khetri copper complex who helped me directly or indirectly in revealing the figures & facts.

As I sum up, I appreciatively reminisce the contribution to everyone without there help & support, this study would have never taken its present form.

MANISHA SHARMA

PREFACE

Summer internship is an essential part of management study. Programmed classroom study provides only theoretical

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knowledge of management but practical experience is vital to implement the theoretical study in reality.

As a management student, I MANISHA SHARMA hereby undergone a six weeks summer training program as a part of college curriculum. For this purpose I joined Hindustan copper limited (Khetri copper complex).When I had a discussion with the officers, I found that the study on FINANCIAL PERFORMANCE & COST controlling have a great potential to prepare project report.

To start with an Introduction about the company, this report is mainly based on FINANCIAL PERFORMANCE & COST

So this project report represents a systematic and analytical explanation of COSTING. This training taught us the difficulties involved in the practicality of the issue and offered us great learning as well. This helped me in understanding the basic model of finance department in a production unit. Not only had that, training also widen our horizon of understanding.

DECLARATION

I declare that I have completed our project on this topic:

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“FINANCIAL PERFORMANCE & COSTING”

The purpose of my visit to Hindustan copper limited was to do my

internship from there itself & I chose above mentioned topic because when I

discussed with officials, I found that the study of financial performance and

costing system has a great potential to prepare a project report and our

interest also lies in that.

So it was a real learning for me which can’t be learned through books, which

can only be understood through practical ways. This is how it prompted me

to take up project report on FINANCIAL PERFORMANCE & COST.

Date: 19-07-2012

MANISHA SHARMA

EXECUTIVE SUMMARY

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As a part of curriculum I have done my internship training at Hindustan Copper Limited (Khetri copper complex). In this report I am going to share our experience in that company for a period of six weeks from 06/06/2012 to 19/07/2012.

I deeply indebted to the management of HCL, KCC for kindly Allowing me to conduct the study in this esteemed organization.

I am grateful to my supervisor Miss Suman Verma, Dy.Mgr. Finance {Cost accounting} for her valuable guidance and

Necessary encouragement in this project. I would like to thank to all finance department member who given Direction to my work on project. I am in extreme dilemma as to How I can appropriately acknowledge my deep gratitude and Thanks to all finance department for their valuable time and

Suggestions for this project.

Name Designation

Mr. Lokesh Purohit Sr.Manager.[Fin.] Mr. H.S. Daiya Dy.Manager [Fin.] Mr. A.S. Verma Ch.Manager [Training] Mr. S.S. Daiya Astt. Manager [Fin.] Miss Meena Maheshvari Astt. Manager [Fin.] Mr. Naveen Mgmt. Trainee Mr. Ashish Jain Astt. Acountant PROFILE OF THE COMPANY

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Hindustan Copper Limited (HCL), a public sector undertaking under the administrative control of the Ministry of Mines, was incorporated on 9th November 1967. It has the distinction of being the nation’s only vertically integrated copper producing company as it manufactures copper right from the stage of mining to beneficiation, smelting, refining and casting of refined copper metal into downstream saleable products.

The Company markets copper cathodes, copper wire bar, continuous cast copper rod and by-products, such as anode slime (containing gold, silver, etc.), copper sulphate and sulphuric acid. More than 90% of the sales revenue is from cathode and continuous cast copper rods. In concluded financial year 2006-07, as per provisional estimates, the Company has earned an all time highest net profit pf Rs 331 crore (~USD 75 million) against a sales turnover of Rs 1800 crore (~ USD 420 million). HCL’s mines and plants are spread across four operating Units, one each in the States of Rajasthan, Madhya Pradesh, Jharkhand and Maharashtra as named below:

» Khetri Copper Complex (KCC) at Khetrinagar, Rajasthan » Indian Copper Complex (ICC) at Ghatshila, Jharkhand » Malanjkhand Copper Project (MCP) at Malanjkhand, Madhya Pradesh » Taloja Copper Project (TCP) at Taloja, Maharashtra

INTRODUCTION TO KHETRI COPPER COMPLEX:-

Historical Background-

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The Aravali hill is the host of copper minerals, with a 76km. long belt from Singhana to Raghunathgarh, popularly known as Khetri Copper belt.

The slag heaps at Singhana, Khetri, Papurana, Babai and many more places and the innumerable ancient working in the form of pits, inclines, shafts etc, bear testimony to the fact that mining and smelting activities were undertaken since ancient times.

Though the archeological extrapolations arrived on the basis of excavations at Ganeshwar near Neem-ka-thana logically ascribe the mining activity in the area to Harappa and Mohanjodaro civilization, the first recorded mention of copper mining in this belt is found in ‘Ain-i-Akbari’ of sheikh Abul Fazal in the year 1590.

It is also reported that two mines were functioning at singhana and Khetri towns up to 1869 when the government of India closed them.

Though regular mining ceased in this area by 1872, sporadic mining activity continued till 1910. With the advent of 20th

century, the geologists of GSI carried out preliminary geological work without much success, Indian bureau of mines undertook further exploration and Khetri mine was started by NDMC and the project was handed over to HCL in 1967 when HCL was formed.

Location: -

KCC is located at Khetri Nagar near the old princely town of Khetri in Jhunjhunu district of Rajasthan, which is 190 km. away from New Delhi and 175 km. away from Jaipur, capital of Rajasthan.

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INTRODUCTION:-

Khetri Copper Complex (KCC), a public sector undertaking under the administrative control of the Ministry of Mines, was incorporated on 1975. It has the distinction of being the nation’s only vertically integrated copper producing company as it manufactures copper right from the stage of mining to beneficiation, smelting, refining and casting of refined copper metal into downstream saleable products. Its headquarter is at Kolkata.

COMPANY WEBSITE:- http://www.hindustancopper.com

VISION STATEMENT:-

To offer the best possible benefits to our customers with the products and services. To built and maintain a team of motivated and committed workforce with high work ethos.

MISSION STATEMENT:-

Our mission is to produce the best quality product to customer’s satisfaction and to introduce improvement in the after sales service. We believe that quality is not just conformance to specifications but also satisfaction of the customer in all respects of production and service. To make this the basis of quality assurance, meticulous care is taken at every stage from manufacture to dispatch of orders.

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SOCIAL COMMITMENT:-

Hindustan Copper Ltd., since its inception, has made significant contribution for the upliftment of living conditions of the people of the areas where it had established its production units and mines. These areas were in Rajasthan, Bihar, Madhya Pradesh and Maharashtra. Hindustan Copper Limited is fully committed to the concept of operating in an Environment friendly atmosphere.

HCL » Philosophy:-

As a responsible corporate citizen, the Company is committed to sound corporate practices based on conscience, openness, fairness, professionalism and accountability in building confidence of its stakeholders in paving the way for its long term success.

The philosophy of the Company in relation to corporate governance is to ensure transparency, disclosures and reporting that conforms fully with the laws and regulations of the country in order to promote ethical conduct and practices throughout the organization for enhancing stakeholders’ values.

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OBJECTIVE The Company’s reputation depends on the conduct of its Directors, Senior Executives and its employees. Every employee who is associated with the Company must play a part in maintaining HCL’s reputation for the highest ethical standards. The purpose of this Code of Conduct is apart from meeting the requirements of Listing Agreement with the Stock Exchanges are to:  (a) Articulate the high standards of honesty, integrity, ethical and law abiding behavior expected of Directors and Senior Executives;  (b) Encourage the observance of those standards to protect and promote the interests of shareholders and other stakeholders (including employees, customers, suppliers, creditors and society at large); (c) Guide Directors and Senior Executives as to the practices thought necessary to maintain confidence in the Company’s integrity; and (d) Set out the responsibility and accountability of Directors and Senior Executives to report and investigate any reported violations of this code or unethical or unlawful behavior. It is impossible to spell out every possible ethical scenario. The Directors and Senior Executives should rely on their discretion, judgment and skill expected from a reasonably prudent person under comparable circumstances.This Code of Conduct will provide Directors and Senior Management of HCL only general guidance on the standards of conduct expected of them including guidelines on conflict of interests.

QUALITY ASSURANCE

High quality of product and associated customer satisfaction is of supreme importance in HCL operations. All actions are directed to produce a quality which not only satisfies the customers but prove to be a “CUSTOMERS’ DELIGHT”. In order to achieve this the Company has accredited itself with ISO 9002 certification for all its products viz.: Copper Cathode and Copper CC Wire rods. HCL is the FIRST ISO accredited Company in India in copper production field.

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History of hcl

1967 Nov 9, 1967 - Hindustan Copper Ltd. (HCL) was incorporated on 9th November 1967. It is a Public Sector Enterprise under the Ministry of Mines, Government of India. In the History of Indian Copper, Hindustan Copper Limited (HCL) holds pride of place. With the spirit of an undaunted pioneer HCL has contributed immensely to the industrial growth of the Country and its march towards self-reliance

1972M/S Indian Copper Corporation Limited, Private Sector Company, located at Ghatshila, Jharkhand with Smelter and Refinery was Nationalized and made part of HCL.

1975Fully integrated Copper complex  from mining to  refining  came on stream at Khetri ( capacity 31,000 tones of refined copper)

2001 Dec 19, 2001 - After failing to attract any bidders for Hindustan Copper Ltd (HCL), the ministry of disinvestment is now proposing to rework the deal and offer 74 per cent or more of equity stake in the company to a strategic partner. The government holds 98.76 per cent stake in HCL.

2008 Introduce ERP system first time in Hindustan copper limited.

2009 Mar 2009 - Mumbai: Hindustan Copper Ltd is expecting a 10% fall in

production in the fiscal year to end-March 2009, a senior company

official said on Thursday. Images: Maruti's new 'Star' "It (production)

may be less because one of our smelters has been shut down ... It is

likely to be recommissioned soon," the official, who did not wish to be

named, told Reuters on the sidelines of a conference.

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Product OFFERED

Organizational STRUCTURE

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At head office level:-

Units of HCL

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Hindustan copper limited (HCL) mines and plants are spread across four operating units.

Khetri Copper Complex (KCC) at Khetrinagar,

Rajasthan

• Indian Copper Complex (ICC) at Ghatshila, Jharkhand

• Malanjkhand Copper Project (MCP) at Malanjkhand, Madhya Pradesh

• Taloja Copper Project (TCP) at Taloja, Maharashtra

KHETRI COPPER COMPLEX

Khetri copper complex (KCC) is in Rajasthan. This is the largest production unit of HCL. It comprises two underground mines, one Is KCC and other is Kolihan copper mines (KCM).The KCC mines Have 0ML, 60ML, 120ML, 180ML, 240ML, 300ML and 360ML, 0ML. It has concentrator plant, a smelter, a refinery along with acid and fertilizer plant but fertilizer plant is not running due to high cost. Capacity of this plant is 33000 tones. The final product of these mines is copper cathode and copper wire bar and by-product is sulphuric acid.

Mines:-

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1. Khetri Mines:- The ore bodies of the Khetri Mines in the form of lenses are having a dipping at about 50 deg to 60 deg. Strike extension of lenses is 100 mtrs to 300 mtrs and vertical extension is 50 mtrs to 250 mtrs. Around 50 lenses have been identified. Total strike length of mine is around 3 kms. Width of the ore body varies from 5 mtrs to 50 mtrs. In addition, the development work has been done in adjacent to Khetri Mines namely Banwas. The reserves (proved and possible) are 63.44 million tone with an average grade of 1.34%.

2. Kolihan Mines:- 3 lodes of ore body have been identified but at each level only 2 lodes are available. Width of ore body is 20 mtrs to 100 mtrs. Lenses are having dipping of 60 deg to 80 deg. Total strike length of mine is around 0.60 km. The reserves (proved and possible) are 23.26 million tone with an average grade of 1.23%.

Plants :- - Concentrator

- Smelter - Refinery- Wire bar- Sulphuric Acid

. Indian Copper Complex (ICC) :-

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Indian Copper Complex at Jharkhand is having one running mine i.e. Surda and having two concentrator plants, one smelter, refinery, two Sulphuric Acid Plants, PMR Plant etc.

The Surda Mine is having 16.97 million tones with oregrade of 1.21% cu. There are few small deposit mines around Mosaboni with certain amount of proven reserves and HCL is having lease of these mines. There is a possibility of open cast mining in this area subject to its economic viability in individual cases. The final product of these mines is copper cathode and by product is sulphuric acid, nickel sulphate, selenium, tellurium, copper sulphate, gold, silver, anode slime etc.

Malanjkhand Copper Project (MCP):- HCL is having an excellent Open Cast Mine at Madhya Pradesh. The annual production is around 22,000 tone of concentrate. The cost of concentrate is less than the imported concentrate and HCL has been giving attention for the expansion of this project and as against 2 laky tone of ore milling at the Concentrator Plant, MCP is achieving more than 100% capacity. HCL has also taken prospecting lease in the adjoining area and drilling operations by MECL (A PSU) are being done to find out the exact grade and deposit in the adjoining areas of Malanjkhand. The proven ore reserves is around 35.30 million tones with average grade of

1.11% cum. There is a possibility of expansion of Malanjkhand Concentrator Plant with some investment.

Taloja Copper Project (TCP): -

Taloja Copper Project at Taloja, Maharashtra, is having wire rod casting facilities with installed capacity of 60,000 tone per annum.

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Taloja Plant is very modern having Southware Technology and produces best quality of Wire Rod for Indian Market and abroad. The capacity of Taloja Plant cannot be fully utilized for not having matching production facilities at Khetri and Ghatshila. Taloja Plant is having No. of manpower and even with 50-60% capacity production, the plant can be made viable. The final product of these mines is continuous cast copper rod.

SALES FIGURE (Rs in crore)For the year

2011-12 2010-11 2009-10 2008-09

Sales 30,752 35,714 45,384 42,303

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FINANCIAL PERFORMANCE:-

The comparative result for the years 2010-11 & 2011-12 are as under:-

(Rs in crore)

PARTICULARS 2011-12 2010-11 Sales(tones) 30,752 35,714 Turnover 1471.91 1146.52Profit before tax 472.92 335.21Net Profit 323.44 224.10

HIGHTLIGHTS:-

The turnover has registered 2.23% growth rate over 2010-11 Net profit after tax during the year was adversely affected

due to reduction in net realization on account of rupee appreciation as US dollar exchange rate during 2011-12 being Rs 40.54 compared to Rs 45.50 in 2011-12.

PRODUCTION OF COPPER IN INDIA-

India is not a major producer of copper ore but it produces the refined form of copper. It contributes to about 3.5 to 4% of the world total production of copper. India is indulged in importing copper ores from the ore exporting countries of the world like Chile, Canada, Indonesia and Australia & extract copper out of them as there is a shortage of copper mines in our country. Thee production of copper in India dependents on these imports only.

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Three companies in India largely handle production of copper from its ore. They are:-

Hindalco Sterlite Industries Hindustan Copper Ltd.

Among these three companies, Hindustan Copper Ltd forms part of the Indian public sector & the other two belongs to the private sector.However, small quantities of copper that is produced in India are extracted from the copper mines situated at Khetri & Malanjkhand areas of the country.

MARKET SHARE OF HCL

Earlier HCL is the only vertically integrated copper producer in India engaged in all the activities ranging from mining to refining.With the economic liberalization in the last decade, the industry Was opened to private companies as well.

Currently copper industry has just three major players (Sterlite, Birla copper & Hindustan Copper Ltd). Among them HindustanCopper ltd is the only primary producer of copper with mines &

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Refines copper while Sterlite & Birla copper are secondary producers who imports copper concentrate to produce end products like copper bars, rods and wires.To reduce dependence on external sources and to ensure consistent supplies of good quality copper concentrate, both the secondary producers have acquired copper mines. Sterlite and Birla copper both have acquired two copper mines in Australia.

The market share of Hindustan Copper Ltd is as follows:-

FINANCE DEPARTMENT The finance department of HCL has following section:-

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FINANCE DEPARTMENT OVERVIEW (DEPARTMENTS) DGM FINANCE

AGM FINANCE

SUPPLY ORDER (SECTION HEAD)

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FOREIGN EXCHANGE (SECTION HEAD)

COMPILATION (SECTION HEAD)

SALES ACCOUNTING (SECTION HEAD)

INTERNAL AUDIT (SECTION HEAD)

STORE ACCONTING (SECTION HEAD)

PAY BILL (SECTION HEAD)

MISCELLANEOUS (SECTION HEAD)

WORKS ACCOUNTING (SECTION HEAD)

TA / LTC (SECTION HEAD)

BANK SECTION

CASH SECTION

GENERAL FUNCTION OF FINANCE

1.)Supply order section

2.)Work section

3.) Internal audit section

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4.)Stores accounting

5.)Costing and material receipt section

6.)Misc and bank section

7.)Pay bill section

8.)Provident fund and family pension section.

SUPPLY ORDER SECTION

1> Based on the requirement of user department in the company. An

indent raised by then for procurement of material to the purchase

department.

2> Purchase department will foal enquires to the sources known by the

i.e. Limited Tender Enquiry (LTE) Single Tender Enquiry (STE) if it is a

single source supply/Open tender enquiry.

3> Based on the offers received against enquires, 2) above a comparative

Statement is prepared by purchase department and after getting

Technical recommendation from the user department the same is

Forward to finance for approval and concurrence.

WORK SECTION

It is second section in the finance department in KCC. It is concerned with the

works accounts of the civil town ship of the company. Every work which is the

down by contract bases in the company or outside the company i.e. in civil.

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All the work down by contract basis, their payment is made by works section. In

the contract every worker and concerned workers and paid by works section

under the company.

And every payment which is made by the company is paid under cheque by

band. At the time of payment contractor may be give money by the company time

to time is called running account bill.

Contractor may get his money at the end of work completed or he can get money

time to time by preparing running account by the works section.

Contractor has done all the works in the period of his schedule; it recorded in the

measurement book , how many workers are working in this contract, whatever

work done in the mean workers are working in this contract whatever work done

in the mean time or whole gone time. Date of staining. Date of closing, how many

work has been done in the contract so far and money paid for that work.

INTERNAL AUDIT

Internal audit a valuation of internal transaction of the company. It is part finance

in every company.

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In this company called Hindustan Copper Limited and in Khetri Copper Complex

is third section in the finance.

In the internal audit section they have to maintain all the inventory of products

like work in progress raw material in the organization.

They are verifying all the transaction of cash counters in the KCC hospital

including all the words in the hospital. Auditing of material gate passes to check

in the inventory passes. Auditing of canteen, cash counters and stores. Auditing

of library, sports councils, guest house, sudden verification of copper dispatch

etc.

STORES ACCOUNTING

This section belongs to the finance department and it is the forth section of the

department. As soon as the receipt voucher prepared by material receipts

section/ stores department copies of which are being sent to finance department

for pricing and accounting.

Material receipts section for only receipts and issue composition of the materials

and goods.

Stores accounting section also deals with the issue price and maintain a set of

stores ledgers pricing of issue vouchers are based of weighted average method.

COSTING SECTION

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Costing section is the main section in the finance department. It is

the over all calculation of the cost.

1) Every month cost is determined by preparing cost sheet for

each activity i.e. mines and plants separately.

2) At the end of the year a comprehensive cost sheet 3 cost sheet

based on actual financial date.

3) All the input data’s are collected form various production, unities

such Khetri copper complex and Kolihan copper mines.

Concentrator plant, smelter plant, Refinery or Tent House and

wire bar plant and lastly from Acid and Fertilizer plant.

4) There is a central agency which control with production named

as Product Planning Control (PPC) or other cost wiz Salary and

material data’s are taken from computer directly based on salary

bill or relevant one and consumption of stores and spears.

5) A separate monthly cost sheet is also prepared for power cost.

Power used by each cost center and cost their against.

6) Every month the cost section in the finance department in KCC

also prepares a report for norms and variance.

7) Certain norms have been fixed for major operating item based

on the same variances are dawn.

8) While preparing materials cost sheet cost is drawn as fixed and

variable where as variable cost is processed cost like operating

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materials stores power and full and direct cost is known as fixed

cost like salary and wages and other related services

9) There is some other fixed cost which is treated as indirect cost

which depreciated general/ social overheads. Besides these

overheads shares of head office expenses ad interest on cash

credit is also considered besides selling and distribution

process.

BANK SECTION

The Bank section is related only bank transaction that is accrued in KCC. There

are mainly two banks related to the company such as SBBJ (State Bank of

Bikaner and Jaipur) and Indian Overseas Bank (Kolihan nagar and Khetri nagar)

1) All the payment of other section of finance (other then cash)

is paid by bank section in the form of vouchers, which is

above pass on to the bank.

2) In the processing there may be some, corrections that is

related to the bank account. For correction of difference of

each bank give the statements to the company and bank

section.It is made a reconciliation statement for the

difference of the transaction per month.

3) If the party sales some good to the company by bank, then

the company give the money to bank and take goods

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receipts by the Bank and collect the goods from the godown

of that party belongs.

4) Voucher by the bank section through bank pay all the

payment of any section of finance department.

5) This section through bank pays all the payment of

contractor.

6) This section prepares a daily bank book of SBBJ & IOB

Kolihan nagar and Khetri nagar.

7) This section pays the payment of employees.

MISCELLANEOUS SECTION

This section relates to the misc. Transaction in the finance department like

advance to employees and officers. This section keeps the full record of

advances and payment like private water supply, electricity, house from out side

parties like ship etc.All the services given by the company to these parties and

payments received by the misc. Section in the form of demand draft and

cheques.

PAY BILL SECTION

This sections related to the employees regarding to their salary, advances etc.

They maintain their records of polices, investments, gratuities.

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Those employees who have completed their five year service in his company,

he will entitle for gratuity. If an employee had been died before five years there

are some conditions:-

1) Through 1 to 5 years, 6 month salary is given through basic pay T-

dearness allowance.

2) If an employee completed only one year service in the company he will

entitled for two months salary. After compilation of thirty years of service

he will entitled tor ten months salary. He can take voluntary retirement

after 50 yr of age and 10 yr of service in a company.

PROVIDENT FUND & FAMILY PENSION SCHEME

This section is derectly related to the employees. This section deposits some

amount from the salary of the employees for his emergency, which is called the

provident fund of every employee. There are some functions of this section:

1) Final settlement of provident fund dues of every employee.

2) Transfer of provident fund to other company, if employee transferred.

3) This section provide employee provident fund loan in the company

annual report.

4) Monthly provident fund return to regional provident fund commissioner

(RPFC) Jaipur.

COMPILATION

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Compilations means the revaluation of all the vouchers, receipts etc. And all the

payment of cash and bank valuated by the compiler. He must check all the entry

of every voucher and receipts. By the help of computer in the company. This

section are functioned to analyses sale of product including which product,

quantity, value, excise, sales tax of octroy than they make entry in sale registers.

Even money received from purchaser on account of sales tax, he should pay the

sales tax to govt. Till the 7th of the next month. Showing all sales and sales tax

with receipt of money deposited into govt. account. In compilation of financial

year annual return will be filled to the state govt. The Tate of raw is 8% and

finished goods 16% in the form of excise duty, this section than give the report to

the excise paid, opening balance, closing balance in the form of RT -12 . Every

transaction related excise duty should be coquet between 9 am to 5 pm, which is

called the transaction hour by the excise department. In the compilation process

preparing cash voucher, then bank voucher. If there is a wrong code it will be

deleted and prepare journal voucher. There are two main function of compilation

in the company. It is related to the assets of the company and sale records.

ASSETS

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Regarding purchase of assets allotted and account code including name of

particulars material and original cost cumulative depreciation and return down

value.

Unused material sells after a committee of approval than after the above assets

sells. After opening the tender the party will be deposited advance amount 60%

or 70% the total cost of sell stores will prepare a bill against lot number and

inquiry number a list sent to concern financial department for prepared the

voucher of adjustment amount.

1) When the receipt the material from inter bead unit than we will take

a new assets from number 51 to transfer in assets book.

2) When material transfer from inter unit to another inter unit, we will

send invoice and original volume of the material cumulative and

written sown value sent through transfer certificate. Then the above

unit informs that we will take the material and acceptance of

transfer certificate.

3) When the material transferred to inter project we will sent a issue

voucher with material to project and also mention the above

practice of original cost cumulative cost and written down value of

the material also sent through transfer certificate.

Project profile

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TITLE:-

A study of “FINANCIAL PERFORMANCE AND COSTING” at Khetri copper complex, a unit of M/s Hindustan Copper ltd, a government of India Enterprise.

OBJECTIVE OF PROJECT:-

To have a knowledge about the CA/IC & its management To study the problems faced by HCL unit i.e. KCC To gain practical knowledge as well

RESEARCH METHODOLOGY:-

I used all primary & secondary data for analysis. To know the various aspects of cost accounting being done at KCC, the data has been collected from the internal as well as external sources.

The focus of the study is on Cost analysis. The secondary data are the published data. The data has been collected for previous five years.

SCOPE OF STUDY:-

The scope of study is limited to Khetri copper limited, a unit of HCL.

Data collection has been done on cost a/c basis & for stock control items and operating supplies.

FINANCIAL REPORT OF 5 YEARS AT A GLANCE

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For the year 2012-11 2011-10 2010-09 2009-08 2008-07

Turnover 1429.85 1349.10 1839.79 1799.64 1053.76

Profit/(loss) 36668 16425 11173 289 (8999)

Depri & amortisation

8945 5837 5575 5905 5771

Net profit/(loss)

31394 10588 5598 (5616) (14770)

Value of production

190918 104837 63124 53443 50153

Share capital

97745 94895 94895 90895 79511

Internal resources

19560 (11057) (29884) (35030) (31039)

Long-term loans

21250 18750 22275 27562 29182

Cash credit from banks

481 11823 7611 13949

Capital expenditure gross

99399 97789 96771 99431 100559

Working capital

32464 6278 3394 (102) (2595)

Capital employed

50064 24747 23455 21528 20389

Total variable cost/fixed cost for last five year.

COSTING THEORITICAL ASPECT:-

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Cost:-Cost means the amount of expenditure incurred on or attributable to a specified thing or activity. It is a measurement in monetary terms of the amount of resources used for the purpose.

Costing:-Costing is a process of ascertaining cost while cost is the final result of costing.

Cost Accounting:-Cost accounting is the applying of costing principles. It includes classification, analysis, recording, summarization, interpretation and control of current & perspective costs.

Need of costing:-The objective of costing is to analyze the expenses with a view to know the cost of a unit of output of an operation.

Control over cost:-The idle time of machine and labor & material are controlled so that wastage is minimized and expenses are also controlled so that they cannot unreasonably inflate cost.

Help formulating policies:-Costing help management by supplying necessary information so that management can adopt a policy or formulate a policy.

Hcl process costing system

The production process is must for every manufacturing company. Hindustan copper limited follows Process Costing System.

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Process costing system is a system where a manufacturing of a product is carried out on a continuous process. So cost during a period is determined on a process basis. This cost being divided by the number of units of output during the same period gives the per unit cost.Industries like refineries, chemical, cement, sugar, pharmaceutical, gas and electricity generating concerns, steel industries, soap industries, leather industries etc. use process costing.

Features of HCL process costing:-

The following characteristic of process costing of HCL:-

Each process undertakes a particular operation and each process

Is treated as a cost centre and separate cost records are Maintained for each cost centre. Material cost, wages and overheads are collected process

wise And charged accordingly. Production data are collected separately for each process. Cost of the production units normally lost or spoiled are Ascertained and included in the cost of units produced. Next process. Work-in-progress or each process cost is valued and

considered For arriving at end of a cost period. Averaging the total cost of the period.

ELEMENTS OF COST IN HCL PROCESS COSTING SYSTEM:-

I. VARIABLE COST:-

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1) Material a. Feed Material b. Raw Material c. Operating Materiald. Others Storese. Liquid Exigenf. Fuel

2) Power 3) Spares 4) Incentive bonus5) Royalty & cess6) Amortization (mine development expenditure)7) Utilities:-

a. Steamb. Compressed Airc. water

II. FIXED COST:-1) Salaries & wages2) Repair & maintenance3) Mine services4) Central services5) Depreciation6) Interest7) General overheads8) Social overheads9) Head office expenses10)Selling & Distribution

(A) Sub-Cost Centers of CONCENTRATOR:- Crushing Grinding Floatation

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Filtration Tailing disposal ad water reclamation Transportation of concentrator

PRACTICAL ASPECT:-

HCL is one of the companies which use process costing method.

For study of cost analysis, I went through the cost sheets of last

three years and found out the trend of production cost of the

company.

There are 8 cost centers of the company. Every centre has its own

production cost and I have done analysis of every cost centre.

Name of all these cost centers are:-

1. Khetri mines,

2. Kolihan mines,

3. Concentrator,

4. Slag treatment plant,

5. New anode,

6. Cathode,

7. Wire bar,

8. Sulphuric acid plant.

I analyzed the cost of production of cost centre wise for last three

years starting from 2009-10 to 2011-12.

Cost centre- Total Mines (Khetri & Kolihan Mines)

Particulars F.Y. 2009-10 F.Y.2010-11

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F.Y.2011-12 Total ore production MT 907388 971511 1000485

Total metal in ore MT 8621 9373 8769Total variable cost (lacs) 3335.12 3855.38 4072.91Variable cost / MT (Rs.) 378.84 417.04 434.06Total fixed cost (lacs) 7646.21 9913.42 9965.50Fixed cost/ MT (Rs.) 868.36 1072.34 1062.02Total cost of production (lacs) 10981.93 13768.80 14038.41Cost of production / MT (Rs.) 1247.20 1489.38 1496.08Total process cost/ MT of metal (Rs.)

130056.01 152040.63 167123.92

Analysis :- Total ore production and metal in ore is increased in all the three years. Variable cost per MT was Rs.378.84 in F.Y. 2009-10 and it became Rs. 417.04 in 2010-11. There was higher change in variable cost. The main reason of this change was that company’s Royalty and Amortization cost doubled during this period. In F.Y. 2011-12 there was no major change in variable cost/MT. In this year Rs.434.06 there was a slight change and reason for this change was the increase in power cost of the company.Total fixed cost of the company was increased in all the three years. Total Fixed Cost was Rs.7646.21lakhs in F.Y. 2009-10 and it become Rs.9913.42lakhs in F.Y. 2010-11 because of higher wages & salaries for mine services and increase in general overheads. In 2011-12 it reached to Rs. 9965.50lakhs. This was also because of increase in salaries & wages of workers, stores & spares and in general overheads.As a result of increase in TVC & TFC, overall cost of ore production in mines is increased.

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Cost centre- Concentrator

Particulars F.Y. 2009-10 F.Y. 2010-11 F.Y. 2011-12Total concentrate MT 46582 45174 41450Metal in concentrate MT 7992 8059 7463Total input material cost(lakhs)

11608.19 13900.12 15022.18

Total variable cost (lakhs)

1201.45 2018.73 2384.31

Variable cost/ MT (Rs.) 2579.17 4468.74 5752.22Total fixed cost (lakhs) 2866.57 3141.82 3606.63Fixed cost/ MT (Rs.) 6153.72 6954.84 8701.07Total cost of production (lakhs)

15676.21 19060.67 21013.12

Cost of production/MT (Rs.)

33652.79 42193.75 50694.97

Total process cost/MT of quantity (Rs.)

196148.77 236514.08 281563.98

Analysis:-

In the year 2009-10 quantity of concentrate was increased but in the year 2010-11 it was decreased and reached to 45174MT. Total input material cost was also increased to Rs 13900.12lakhs in year 2010-11 as compare to previous year when it was Rs. 11608.19lakhs. This increase was due to increase in rate & quantity of ore. In the year 2011-12 the input cost reached to Rs. 15022.18lakhs. This increase was also because of increase in rate of ore and increase in interring unit transfer (I.U.T.) cost.

Variable cost / MT were increased in year 2010-11 as compare to previous year. This was because of increase in cost of operating

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materials, especially, increase in rate of grinding media rods. In year 2011-12, variable cost/MT was increased and reached to Rs.5752.22. The reason for this increase was increase in rate of operating material especially in grinding media rods and increase in cost of stores.

Total fixed cost was also increased in 2010-11 as compared to previous year; it was due to increase in cost of salaries & wages and social overheads. In the year 2011-12 it was also increased than compared to previous year and this was also because of increase in cost of salaries & wages of workers increase in cost of spares and other contractual jobs.

Total cost of production was also increased due to consistent increase in TVC & TFC.

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SWOT ANALYSIS STRENGTH WEAKNESS

1) The only vertically integrated copper producer in India.

2) Fully developed infrastructural facilities.

3) Rich experience in copper mining, smelting, refinery etc

4) Holding mining lease of 60% of India’s copper reserves.

5) Skilled and well-trained work force/manpower.

6) Established brand value as it is the oldest one.

7) Wide distribution network and established customer base.

8) Wide distribution network9) Experience and skilled HR.10) Only vertically integrated

copper producer in India.11) Producing refined copper

From mining stage. 12)Capability to assimilate new Technology.13)Production facilities are Spread across the country.

1) Low process efficiency/old technology.

2) High cost due to low scale of operation.

3) Limited value added products.4) Limited IT intervention.5) High cost of logistics due to

multi-location units.6) Accumulated losses7) Low scale of operation8) Under ground mines and KCC

with low grade and precious metal content.

9) Low sustaining rate of growth10) Lack of advertising11) Large work force but relatively

low labor productivity as compare to competitors.

12) High capital overheads that decreases the profitability of the company

OPPORTUNITY THREAT

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1) Copper demand growth is7-8% in India.

2)Potential to develop /construction new mines as Well as to re-open the closed Mines.

3)Opportunities to explore new Deposits (40000 sq. km Conducive area for copper Mineralization awaiting Exploration)

4) Increasing infrastructure and consumer demand will drive growth of copper in India by about 7-8% government power for all by 2012 scheme, rural electrification , railway electrification etc

5) Scope of starting new project Through joint venture to attain Rapid growth.

6) Opportunities for FDI, technologies collaboration etc can become a global player.

1) Rising cost of inputs especially power & fuel.

2) Continuous attrition of skilled manpower.

3) Cyclic nature of world copper prices.

4) Production substitution i.e. aluminum optical fiber.

5) Due to heavy production Cost company may go for Shut down.

CONCLUSIONAfter completing my project on cost analysis of KCC, I found some facts about the company’s cost accounting system. I took

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data from company’s accounts and analyzed them. After analyzing them I found that cost of production of every cost centre is increasing regularly. There were some stages in these three years of time when cost of production decreased as compare to previous year. Variable cost per MT was not constant to all the years, it was fluctuating very much. Total fixed cost was also not constant, it was increasing regularly.The capacity of the plant such as refinery and smelter is very much and available concentrate is very less as compare to their capacity so the cost of production is going to be very high. A mine of the company has also reached at very deep level. At present, the mining activities are being carried out in 120 meter &180 meter levels so the cost of mining is also increasing day by day.

The metal grade in ore is also a factor for higher production cost of the company. The metal grade in the ore in not very much so a little amount of metal is obtained from a large quantity of ore. This also increases the cost of production. Some times before, the company was importing the concentrate from other units of the HCL and from outside of India also to meet the capacity of its smelter and refinery plant. At that time the cost of imported concentrate was low and that’s why the cost of production of company was also less but now the cost of imported concentrate is high and company stopped to import concentrate from outside, because of this reason the cost of production on company’s own concentrate is going high.Other fixed costs such as salaries & wages of workers and officers, maintenance of plant & machinery etc. are also high and this leads to continuous increase in total fixed cost. As a result of this the cost of production is also increasing regularly.

SUGGESTION TO REDUCE COST

1) Proper implementation planning:-

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a. Develop a comprehensive time plan for various activities like-land acquisition, tender evaluation ,requirement of personnel ,construction of building ,arrangement for utilities ,trial production run etc.

b. Estimate meticulously the resource requirement (manpower, material, money etc) for each period to realize the time plan.

c. Specify cost standards

2) Sound organization:-A sound organization for implementing the project is critical to its success. The characteristic of an org are:-

a. It is led by all competent leaders who are accountable for the project performance.

b. The authority of the project leader & his team is commensurate with their responsibility.

c. Adequate attention is paid to the human side of the project.

d. Systems and methods are clearly definede. Reward & penalties to individuals are related to

performance.

3) Timely availability of fund:-It is a common observation that firms which have a comfortable liquidity position are in general able to implement projects expeditiously and economically.

4) Better contract management:-

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a. The competence & capability of all the contractors must be ensured & weak link can jeopardize the timely performance of the contract.

b. Help should be extended to contractors & suppliers when they have genuine problems they should be regarded as part in a common pursuit.

5) Others:-a. Control on wastage and recycle perfectlyb. Improve securities system of product (many cases

found of theft)c. Improve concentrate other country those metal

availability is high as compare to our.d. Fill the gap high authority to lower e. Stop the political interfere & corruptions.

There are some suggestions for the company:-

# HCL production copper since 1967 so old should be replaced the plants of a new technology which will increase the productivity and efficiency of the plants.

# Company should expand its production capacity so that they can remain in completion.

# Fertilizer plant should be restarted with new technology and new planning.

# The Company should upgrade its R&D section with latest technology known so that they can develop and research new project like security for mines.

# Company should dispose off the obsolete items and old assets.

# Company should diversify its plants.

Personal Reflections:-

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This was a great opportunity for me to work in an esteemed organization such as HCL. This was my first practical experience to work in a real corporate world. I learnt a lot from this summer internship.Before summer training, I have read a great deal about the organization (HCL) and about maintaining financial system in books only but in KCC, I got the real knowledge of a finance department of an organization. I got the knowledge of various sections of the finance department and their major activities. I also learnt the interrelation of various departments of an organization.

After getting formal knowledge of all the sections and departments, I will emphasis on my main project work. My project was on cost analysis, so I got much knowledge of cost accounting and costing systems. I studied the cost sheets and other accounts of the company and also helped in preparing monthly cost sheet of the company. This was a great opportunity for me. I also got knowledge about company’s production process and visited the production plant and mining area.

Best thing which I learnt here was to work on ERP system. In today’s technological era every organization is using ERP system in its organization and this was a good opportunity for me to learn how to work on ERP system. I used ERP system and prepared a lot of contracts bills using this system and also made payments to same using this system. This was a good learning for me.

Instead of all these I also worked on excel and prepared various documents such as service tax bill, PVC (price variation clause) etc. While preparing all these statements on excel I learnt about the various taxes and their rates.

All these learning are very important for me and will help me in future. During this period of learning of two months, I also faced some problems such as non availability of relevant information at different times, lack of time given by staff due to lack of staff in the finance department, etc. but above all this was a good and great experience for me.

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LEARNINGS FROM THE INTERNSHIP

My 8 weeks Summer Internship Program in Hindustan Copper limited, Khetri Nagar is a nice experience. In the beginning I felt little awkward as the environment and people were new to me, but very soon I found myself among a dedicated team of officer and workers. I am inspired by the sense of dedication, timing, office decorum, behavior and responsibility of all mostly in materials and finance departments. My movement was limited in these two departments only.I enjoyed to work and collected the data necessary for my project report. Huge amount of data’s were available and every body extended their co-operation in collecting it. Though it is a Public Sector undertaking but the work culture is worth noticing. Just after my training has been upgraded to the “Mini Nav Ratna “ status which is another feather in the cap of HCL.I am mostly associated with finance and materials departments and I found the cohesiveness of these two departments because my subject of internship revolves in and around these two departments and also I visited the plant and the copper mines to know the production process of copper in a more detailed way. This gives me a brief idea that what sorts of materials are being used by every department in the production process. Although it’s a complex thing but more quite interesting. The main objective of Hindustan Copper Limited is to provide LME prescribed quality of Copper at minimum cost of production. As this company is engaged in right from copper mining of copper ore to production of saleable copper. The two private players Sterlite and Hindalco are always giving though competition. In spite of all that Hindustan Copper Limited is flourishing day by day. It Only confirms the determination and never dies spirit of a company engaged in very complex nature of operation.

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SOURCES/ Bibliography

1. Collection of data from company2. Yearly manuals of HCL3. Personal interaction with Officers of HCL4. Learning under training in HCL5. I M Pandey, Financial Management (Ninth Edition)

WEBSITES:- www.hindustancopperlimited.com www.google.com

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