PRESENTED BYGAURAV KAPOOR 27 ANEESHA NAGAVEKAR 37 JAYNESH PAREKH 40 HANIF PARMAR 41 PRANAY PASAD 42

ACKNOWLEDGEMENT

THANK MRS. NEHA MARU FOR GIVING US THIS PROJECT. HAS SURELY ENHANCED OUR KNOWLEDGE ON THIS SUBJECT.

ALSO THANK PIDILITE IND. LTD. FOR SHARING KNOWLEDGE WITH US.

AS KIND OF MR. B.O.MEHTA (SENIOR PRESIDENT) AND MR. SUBHARTHI UMDAR (COST DEPARTMENT HEAD) FOR GUIDING US. THANK YOU

INTRODUCTION

I am pleased to introduce you to Pidilite Industries and its products.

Since its inception in 1959, Pidilite Industries Limited has been a pioneer in consumer and specialities chemicals in India. Over two-third of the companys sales come from products and segments it has pioneered in India.

Our product range includes Adhesives and Sealants, Construction and Paint Chemicals, Automotive Chemicals, Art Materials, Industrial Adhesives, Industrial and Textile Resins and Organic Pigments and Preparations. Most of the products have been developed through strong in-house R&D.

The Group's turnover is about US $ 350 Million for the year 2006-07.

In a recent report by Economic Times, Pidilite ranked 131 st amongst the top 500 listed companies in India.

Pidilite Industries is the market leader in adhesives and sealants, construction chemicals, hobby colours and polymer emulsions in India. Our brand name Fevicol has become synonymous with adhesives to millions in India and is ranked amongst the most trusted brands in India.

Pidilite is also growing it's International presence through acquisitions and setting up manufacturing facilities and sales offices in important regions around the world. Fevicol is now the largest selling adhesives brand in Asia.

We have reached where we are today mainly due to the close team-work of our employees and due to our shared value system which emphasizes commitment to excellence, closeness to customers, and the spirit of innovation.

We hope you find your association with the Pidilite Group fruitful and satisfying.

B. K. Parekh,Chairman.

FEVICOL MR
Used for Art & Craft activities. Used in activities like collage making, bread crafting, papier-mch & other craft techniques. Bonding/sticking paper, cardboard, thermocole, fabrics, wood, plywood, etc. Features & Benefits

Synthetic white adhesive. Ready to use. Strong bonding. Simple and convenient to use. Convenient pack sizes to meet different quantity requirements.

Packing 10g Cone Pack. 10g Aangular Tip. 100g Squezee Bottle. 500g Flip Top. 1Kg Flip Top. 15g Tub Pack. 25g Tub Pack. 10g Angular Tip Tube. 30g Angular Tip Tube. 30g glue Pen. 25g Tub Pack. 50g Plastic Container. 100g Plastic Container. 200g Plastic Container. 500g Plastic Container. 1 Kg Plastic Container.

FEVI STIK

Used for bonding most plastics, rubber, ceramic, metal and porous materials like wood, leather. Used for repairing broken plastic parts, joining footwear, leather articles, making O` rings. Bonding/sticking paper, cardboard, thermocole, fabrics, wood, plywood, etc. Features & Benefits

Bonds in an instant. Withstands temperature from -40c to 90c. Clog resistant nozzle, preventing wastage. Packing

500mg, 1g, 2g, 3g, 5g, 20g.

Dr. Fixit Silicone Sealant

Multi Purpose Silicone Sealant. Dr. Fixit Silicon Sealant comes in 2 variants: 1. General Purpose - Acetic Cure Silicon Sealant for windows. 2. Metal and Glazing purpose - Neutral Cure Silicon Sealant. Applications:

Glass and Ceramics. Metal and painted surfaces. Non oil wood. Sealing aluminum/ glass window frame joints, fixing glass into aluminum frames. Bathroom fittings, Plastic and Tiles. Features & Benefits

Fast curing silicone sealant. very strong adhesion. High elasticity.

Fevicol SH

Synthetic Resin Adhesive used for bonding wood, plywood, laminates, veneers, particle boards, block board/hard board & MDF to each other. Ideal for woodworking. Features & Benefits

Synonymous with strong bond in wood and furniture industry. Unsurpassed bonding strength. Resistant to water and heat. Gives high coverage. Packing

50 gm, 125 gm, 250 gm, 500 gm. 1 Kg, 2 Kg, 5 Kg,10 Kg,15 Kg, 20 Kg, 30 Kg, 50 Kg.

Fevicol Marine

Synthetic Resin Adhesive with a superior resistance to water, Fevicol Marine could be used for bonding wood, plywood, laminates, veneers, particle boards, block board/hard board & MDF to each other. Features & Benefits

Fevicol Marine is a specialised water resistant adhesive that protects furniture from water. Its special chemical properties give superior bonding with marine (BWP) ply to laminate. 48-hour continuous cold water resistance. 1-hour boiling water resistance. Packing

1 kg, 2 kg, 5 kg, 10 kg, 20 kg, 50 kg.

Fevicol Speedx

Synthetic Resin Adhesive with faster drying time, Fevicol Speedx could be used for bonding wood, plywood, laminates, veneers, particle boards, block board/hard board & MDF to each other. Features & Benefits

Fast setting adhesive. Ideal for time bound projects. Saves time, saves money. Packing

1 kg, 2 kg, 5 kg, 10 kg, 20 kg, 50 kg.

Fevicol WRA

Fevicol WRA is India`s 1st Wood Reiforced adhesive. It could be used for bonding wood, plywood, laminates, veneers, particle boards, block board/hard board & MDF to each other. Features & Benefits

Contain wooden particles for extra strengths. Higher coverage Wood coloured for better finish Packing

1 kg, 2 kg, 5 kg, 10 kg, 20 kg, 50 kg.

COMPANY VISIT

We visited the company on 6th of August and met Mr. B.O.Mehta, Sr.President of Pidilite Ind. Ltd. His subordinate Mr. Subharthi Majumdar guided and explained us the costing methods of the company. Their manufacturing unit is situated in Himachal Pradesh. Company manufactures various types of adhesives for eg; fevicol, fevi kwik, fevi stik, Dr. Fixit etc. Company has different departments on the basis of products. We have mainly focused on fevicol department. Fevicol department includes different types of fevicol such as fevicol MR, fevicol SH, fevicol Marine, Fevicol SpeedX, fevicol WRA.

The main processes involved in manufacturing these products are mixing of various chemicals in the appropriate proportions. After mixing, packing is the next major process. Main costs incurred by the company are raw material cost(RM) and packing material cost(PM). Other costs such as manufacturing cost, factory cost, marketing cost, selling and distribution cost etc have a very negligible effect on the cost of the product. As no heavy machinery is involved in production, factory expenses such as power, labour, maintenance and repairs are automatically cut down. For eg, let us assume the cost of the product is Rs. 60, then approximately RM cost and PM cost contributes to Rs. 52-55.

MCNR Trend Analysis

It refers to material cost net realization. It is a ratio of material cost to net realization. Net realization is the amount that is obtained after deducting all the expenses i.e. discounts, freight, excise etc. This ratio forms a very important part for the company. As raw materials form a major part of the cost, calculation and analysis of MCNR is very important. Fluctuations in this ratio makes company alert about their cost. Company then takes necessary steps to maintain or reduce the material cost. EXCISE DUTY Excise forms a negligible part for the cost of the product. Since manufacturing plant is situated in Himachal Pradesh which is excise free state, excise on sales is exempted. Excise is levied on purchases that the company pay according to the states respective rates. FREIGHT The company includes inward freight in the cost of the product whereas outward freight is merged in financial accounts. Freight is allocated on the basis of weight or volume of the product.

EQUALIZATION DISCOUNT Every state has different tax rates, due to this the cost incurred by retailers of different states also differs. Hence to maintain standard profit margin , the company offers equalization discount.

NON EQUALISATION DISCOUNT The company offers discount on invoices in case of bulk purchases. These come under non equalization discount.

CREDIT NOTE The company issues credit notes to its suppliers incase of return of goods.

SCHEME DISCOUNTS Pidilite sets targets for scheme discounts on the basis of previous years records and future budgets. Company takes precautions to avoid crossing the targets set.

WE ACQUIRED THE FOLLOWING INFORMATION ABOUT THE COMPANYS COSTING METHODS FROM MR. SUBHARTHI MAJUMDAR (COST DEPARTMENT HEAD)

Q1. What type of production does the company have? Ans: The company follows manufacturing production of adhesives, which includes Fevicol, Fevikwik, Fevistik and many more. The company does not carry job/batch/uniform costing method. It has its own method of costing based on adhesives.

Q2. How does the company maintain their cost records? Ans: Earlier the company maintained its records through mere paper work. But now according to cost record rules, records are maintained through computerized system. The company does follows a specific costing method called the Weighted Average Costing method.

Q3.Does the company have a separate cost department? Or are all the cost records are merged on the financial records? Ans: The Pidilite company has a separate cost department where it maintains its costing records. At the end of the year the cost records are merged with the financial records.

Q4. How does the company get orders? Ans: The company gets its orders according to SKUs i.e stock keeping units. Every product of Pidilite like Fevicol has different quantity packs Example:- 50gms, 125gms, 500gms, 1kg, 5 kg, 50kg.These are knows as SKUs.

Q5.How does the company find out the cost per unit(CPU) ? Ans: The company maintains cost records on monthly basis. It calculates its cost per unit by Weighted Average Costing method.

Q6.What is the base of overhead allocation? Ans: The main cost incurred is raw material cost and packing material cost. Other expenses such as manufacturing cost, marketing cost, selling and distribution cost are very less as compared to RM cost and PM cost. Because manufacturing of these products requires only mixing of various components and no other processes are involved. Hence RM cost forms the major part of product cost. As very less expenses are incurred, there is no question of overhead allocation.But if any expenses incurred are apportioned on the basis of sales.

Q7.Do they have any proceeses or stages in production? If less how do they calculate cost of product i.e. do they calculate total cost directly or do they find out cost of each stage or process? Ans: There are not much processes involved in the production. Mixing forms major part in production, sometimes followed by pre heating of mixtures. Hence calculating cost at various stages is not possible.

Q8.Do they prepare budgets for next year? Ans: Yes they prepare budgets for next year.