A

CASE STUDY
ON
OPERATING COST OF COAL MINES
SINGARENI COLLORIES COMPANY LTD, YELLANDU
(Project report submitted to Kakatiya University, Warangal
In partial fulfillment of the requirement for the award)

MASTER OF BUSINESS ADMINISTRATION

Submitted By

CH.RAVI
HT. No.10098C1082
UnderThe Guidanec of:
Mr.SRINIVASARAO
M.B.A
K
AVITHA MEORIAL P.G.COLLEGE
KAKATIYA UNIVERSITY,
WARANGAL
(2009-2011)

KAVITHA MEMORIAL POST-GRADUATE COLLEGE

1
 (Approved by A.I.C.T.E. Recognized by Govt. of A.P., Affiliated to K.U.)

CERTIFICATE

This is to certify that Mr.CH.RAVI S/0.KRISHNAMURTHY, bearing

Hall Ticket No.10098-C-1082, a student of our college, studying M.B.A.

IVth Semester has successfully completed his project work entitled.

“SINGARENI COLLORIES COMPANY LTD”, YELLANDU .

This project is submitted in partial fulfillment of the requirement for

the
award of MASTERS DEGREE IN BUSINESS ADMINISTRATION.

Place : Khammam PRINCIPAL

Date : Dr. K.V.RAMANA RAO

CERTIFICATE

2
 This is to certify that Mr.CH.RAVI has been undertaken the

Project Work entitled “OPERATING COST OF COAL MINES” in

singareni collories, YELLANDU in partial fulfillment of the requirement

of the award of Master of Business Administration by KAKATIYA

UNIVERSITY, WARANGAL. This practical exposure had been

endeavored and submitted by him under my able supervision and

guidance.

Also to my belief this book is the result of his experience

and bears no resemblance with reports submitted earlier.

Place: Khammam Mr.S.SRINIVASARAO

Date : Project Guide

DECLARATION

I hereby declare that the project report entitled “SINGARENI

3
COLLORIES COMPANY LTD”, YELLANDU is an original and

genuine work done by me.

I also that it is not submitted elsewhere for the award of any

degree or diploma either by myself or someone else and submitting
it from the context of an academic endeavor and partial fulfillment
for the award of Master of Business Administration degree by
KAKATIYA UNIVERSITY as part of the academic curriculum.

Place: Khammam (CH.RAVI)

Date

4
 ACKNOWLEDGEMENT

At i really enjoyed doing summer internship program. It has been a great

experience for me to work in such a reputed organization I consider myself lucky to get a
chance to work with “SINGARENI COLLORIES COMPANY LIMITED”.
I wish to pay may regards to the chief H.R.D sir K.J.Amarnath, C.G.M, HRD Department

at kothagudem for giving permission to do my project work at SCCL.

I express my deep sense of gratitude to Chief G.M. K.V.R. MURTHY , General Manager
of SIGARENI COLLORIES COMPANY LTD , YELLANDU
I express my sincere thanks to Dr.K.V.RAMANA RAO, Principal, &
MANAGEMENT OF KAVITHA MEMORIAL PG COLLEGE for provided me with
opportunity to carry out the project work.
I am grateful to my guide Mr.S.SRINIVASARAO and also Other Faculty,
Librarian. Support, co-operation, guidance and encouragement.
Lastly, I express my deepest gratitude towards my family members, my well
wishers and my friends who helped me for pursuing the Masters Degree.

(CH.RAVI)

5
 CONTENTS

CHAPTE
CHAPTER NAMES
R NOS.
 INTRODUCTION (8-14)
 Need of the study
 Objectives of the study
1
 Scope of the study
 Research Methodology
 Limitations of the study

2  COMPANY PROFILE (16-53)

 CONCEPTUAL FRAME WORK

3
(55-69)

 DATA ANALYSIS &

4
INTERPRETATION (71-84)

 FINDINGS & CONCLUSIONS

5
(85-87)

APPENDIX  BIBLIOGRAPHY (85-87)

6
 CHAPTER – I

INTRODUCTION

7
INTRODUCTION:

The information concerning the business enterprise is very helpful to the

Management to control it in an efficient way. As the other branches like financial

accountancy and management accountancy, the cost accountancy also serves the

Important information to the regarding the operating efficiency if the business, it

becomes very easy for management to lay down management policies, to guide

management decisions or evaluate operating management performance with the

information provided by cost accounting.

The management The term operation in business terminology refers to an activity of

the business. It is very important to study the of the business in detail because the

entire business Depends on the operation, which it performs. Should always

concentrate on the efficiency of the operation and also the costs associated

To the operations. It is very important to control the costs associated to the

Operations for the enterprises like manufacturing companies, companies engaged in

The process of extraction of materials form earth like, coal mines etc.

Generally, the above-mentioned business enterprises depend on the operation

that it has to be performed in to produce the final output. The cost associated wroth such

operations are generally higher. The costs are called as The costs “Operating costs”

which are incurred t o perform the operation of the enterprise, are called as operating

costs.

8
The costs are to be accounted for in order to arrive at the total costs of operation

Or process, which helps in determining the price of the final product. “Cost

Accounting is the classifying recording and appropriate allocation of expenditure of

the determination of products or service, and to the presentation of suitably;

arranged data for the purpose of control and guidance of management.”

It includes the ascertainment of the costs of every process, operation, service or

contract as may be appropriate. It deals with the cost of production, selling and

distribution It is thus, the provision of such analysis and classification of

expenditure as will enable the total cost of any particular unit of production to be

ascertained with reasonable degree of accuracy and at the same time to disclose exactly

how such total cost is constituted (I.e. the value of material used, the amount of labors

and other expenses incurred) so as to control and reduce the cost. The term Operation

herein general refers to any activity, which I engaged in converting the raw materials

into finished goods or the process of producing or extracting the final product.

This project is concerned with the operation of extracting the local form the

underground and the cost associated with that operation. The company produce the coal

from two types mines namely Open cast mines and underground mines. More

specifically this project focuses on the costs of operations in underground mines.

In underground mines the company follows various technologies to produce the coal are

as follows.

Hand section

Long walls

9
 BG panels

Continuous miner

Side Discharge loaders

Load Haul Dumpers

In hand section the coal is extracted entirely with manpower. In machine mining the coal

Is produced with the help of machines. In machine mining the production process

depends largely on machines but it requires some skilled manpower also. The study

focuses on the machines called side discharge loaders. For the purpose of the detailed

study of the production process of coal in Singareni collieries the coal mine Kotta gudem

area it was observed. In this mine the coal produced with the help of machines

called SDLs (side discharge loaders0besides hand section.

Extraction of coal in hand section entirely depends on the manpower. The process of

extraction of coal from an underground mine witch is using the technology of hand

section is as follows.

Blasting the faces with the help of explosives: the face is the place where

the coal is located. The coal will be separated from the earth using these explosives.

The process of blasting makes it easy to remove the coal from the earth, this process is

Known as Coal Cutting. The men who this process are known as coal cutters.

After cutting into pieces the coal will be filled in to tub trains. The men perform this

process are known as coal fillers. The tub trains bring the coal from underground to

the surface using attack.

10
 From the surface the coal is transported it the coal screening plant(csp) for

cleaning and other process after which the coal can be used. After this process the

coal can be transported to the customers of Singareni.

Another technology of extracting coal is using SDLs is to improve

safety, avoid the human drudgery of carrying baskets at work apace and also better

conservationof coal. in the mines where the technology of SDLs is using the coal

can be extracted as follows.

Blasting of coal with the help of explosives o separate it from the

machine instead of men can fill the coal. These machines are called as side discharge

loaders(SDLs). After the blasting the coal SDLs move towards the face, takes the

coal into its basket and comes back(in the same direction without turning back)and

discharge the coal onto a belt. The belt takes the coal and dumps into the tubs of the

tub train and these tubs will bring the coal to the surface.

The capacity of the bucket of the machine is one tone. The time taken

by the machines it move from the coverage belt to the face where the coal is

blasted to lift the coal into the bucket and to discharge the coal onto the coverage belt is

called Lead Time. The lead time takes the major part in computing the cost of the

production. Shorter the lead time larger the production and vice a versa.

The process will generally includes the following costs:

1. Wages(filling and time rated)

2. Wages of other executives

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 3. Explosives

4. Power

5. Coal transportation

6. Other stores

7. Sand stowing

8. Mine overheads

9. Workshop overheads

10. CSP overheads

11. Depreciation of mines

12. Depreciation of common assets

13. Inters

NEED OF THE STUDY

A. Analyze the same worth the turn over the years.

B. To determine the cost of each operation involved in a process.

C. It helps management in making more accurate estimated about the cost

D. of similar jobs to be executed in future on the basis of past records.

E. Special order concerns manufacture products in clearly distinguishable

F. loss in accordance with special order and individual specification.

G . Each process is designated as separate cost centre and the cost er unit is

calculated by dividing the total costs of the process with the total number

of units produced by the process.

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Objectives of the study

1. The find out the cost of product at each stage in manufacturing. by undertake an

item and study the operating cost of the company. to highlight the efficiency of operating

cost of the company through various parameters.

2. To make suggestion if any for improving the practical positions of the firm

regarding operating

Scope of the study

The area of the study was restricted to the singareni collieries company limited and its

operations.

Methodology of the study

1. Determination of the input required to be Introduced in

the operation.

2. Calculation of the cost of raw materials required

To produce one piece of finished product.

3. To find out the operating profit ratio.

4. Calculating the operating ratio.

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Data collection method

The study is based on secondary data and examines the total costs vs. operating

costs. The results are drawn mainly from the sources

Secondary data has been collected from the various sources such as

 Publications of the company.

 Business magazines.

 Journal, text books.

 Company websites.

 Annual reports.

In order to gain information on current processes and

operations the area chosen for study is the Kottagudam area in khammam district.

Limitation of the study

1. Coverage area was only limited to one coal mine in the

Company

2. The financial data of the mines is limited to one yeas.

3 .The analysis is based on only monitory information and

Monitory factors/ information are ignored.

4.While computing number, percentage, the figure was

Approximated

5. The period of study limited only for five year the is from

2005- 06 to 2009-10

6. The operating cost of the Singareni collieries is confined to Yellndu area

14
INTRODUCTION:

Man is blessed with abundance of natural resources, Including Mineral wealth

15
that play vital role in the Development of a country and promote the economic growth

when explored and made best use of them.

Coal, which is one of the important minerals, is known to man since

Ages and this natural wealth has put to diverse use in the modern world. Coal regarded

as the fuel for growth, the coals an important input for power generation and many

other industries like iron and steel, railway, shipping and construction industries etc,

a vital infrastructure for economic development. Despite the development for alternative

fuel sources like electricity, petrol and solar energy, coal continues to be major fuel

material in many industries. Thus coal industry plays an important role in the industrial

development of any country, like India.

The world coal consumption is projected to go up from 4.7 billion tones in

1999 to 6.4 billion tones by 202, primarily in china and India which are expected to

account for 75% of the increased consumption.

In India, coal mining was started in 1774 and is still significantly under the

government control and ownership with coal India (CIL),worth its following subsidiaries

subsidiaries are become number one coal producer in India.

1. Eastern coal fields India limited (BCCL)- sanitaria, west

Bengal.

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2. Barth cooking coal limited (BCCL)-dhanbad, Bihar.

3. Central coal fields limited (ccl) - Ranchi, Bihar.

4. northern coal fields limited(NCFL)-singular, mayday Pradesh

5. Western coal fields limited (WCFL)- Nagpur, Maharashtra.

6. Mahanadi coal fields limited (MCL)- sambalpur. Orissa.

7. Central mining planning &design institute limited (CMPDIL)

Ranchi, Bihar.

SCCL-ORIGIN:

A remarkable little adventure gave birth to this giant corporate

17
 entity that us today the Singareni collieries company limited.Way back on a dark

night in 187, a group of pilgrims who on their way to have a dasrhan of lord rama

at bhadrachalm temple(near Singareni village) has lit a fire to prepare their meal. one

of the supporting stones on their makeshift stove caught fire. The incident was

immediately reported to the local government.

This led to an extensive survey Dr.William king, an eminent geologist,

which confirmed the revolutionary discovery of mammoth deposits of coal Godavari

valley.

The rest, as they say, is

HISTORY:

The year 1886 witnessed the formation of the Hyderabad Deccan company

private limited and it acquires the mining rights for exploiting the coal reserves. The first

commercial operation commenced at Yellandu (khammam district) in Andhra Pradesh in

1889. in 1921 the company. Re- christened the “Singareni collieries company limited”

and its scrip listed on the London stock Exchange.

The mining rights or exploiting the coal reserves were acquired by the

Hyderabad Deccan company, which was incorporated at London stock exchange. Hence

Th e first extracting of coal was started at Yellandu in 1886 by Hyderabad company

The company became government company after nizam purchased

its shares from London stock exchange in 4945. With this, sccl became the first-ever

government managed coal company in India. Later in the year 1949, sccl came under

the control of governments of India and Andhra Pradesh as a joint venture with

equity ration of 49% and 51%respectively.

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 The sccl Is engaged in coal mining in four districts of Andhra Pradesh

namely. Khammam, karimnagar, adlibbed and wrangle. In overall India it spreads to 6%

geographical area producing 1 of total coal.

The operation areas of sccl are as follows:

KHAMMAM DISTRICT –Kothagudem, Yellaandu and manuguru.

ADILABAD DISSTRICT-Bellampalli, mandamari and srirampur

KARIMNAGAR DISTRICT-Ramagundam-I,II&III

WARANAGAL DISTRICT- Bhoopalapally.

The coal reserves stretch over 350 square kms. Of pranahita Godavari valley of above

districts of Andhra Pradesh with proven deposits of 8,575 million tones of coal. Sccl

now operates forty two (42) under ground mines and thirteen(13) open cast mines in

these four(4)districts.

Miles stones of technology introduction:

1948: introduction of machine mining(Shuttle car).

1951: electric coal drills

1953: electric cap lamps.

1954: frame proof mining machinery.

1975: open cast mining

1979: side dump loaders(sdls).

1981; load haul dumpers.

1983. Mechanized long wall.

1986: introduction of computers abd walking dragline in

opencast mines.

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 1989: French blasting gallery technology.

1994: Input crushing conveying technology in open

cast mining.

2002: surface miner technology.

Technologies & their output in sccl:

NAME OF THE TECHNOLOGY PERCENTAGE TO TOTAL OUTPUT in

2006-07
Traditional underground mining 15%
Opencast mining 69%
Long wall technology
16%
Blasting gallery technology

MANPOWER OF SCCL

SLNO CATEGORY 31-05-2008

1 Top Executives 6
2 executives 2512
3 supervisory 3936
4 Secretarial staff 2352
5 Technical staff 9668
6 Skilled(daily rated) 18781
7 Semiskilled(daily rated) 5298
8 Unskilled(daily rated) 19335
9 Unskilled(piece rated) 16733
10 apprentices 7
total 78628

SCCL-MISSION:

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  To retain strategic role of a premier coal producing company in the country

and excel in a competitive business environments.

 To strive for self-reliance by optimum utilization of existing resources and earn

adequate returns on capital employed.

 To exploit the available mining blocks with maxim Conservation and utmost

safety by adopting suitable technologies and practices and constantly

upgrading them against international bench marks.

 To supply reliably and qualitative coal in adequate quantities and strive

to satisfy customers needs by constantly harmonious industrial relations

with the legal and social frame work of the state.

 To emerge as a responsible company through good corporate governance,

by laying emphasis on protection of environment & ecology and with due

regard for corporate social obligations.

GLOOM TO GLORY:

The SCCL was receiving budgetary support from both government of India and

21
government of Andhra Pradesh till some time age, but they later abandoned. Also the

pricing of coal was decided by government of India keeping its impact on other major

sectors like, power, railways, cement etc. the prices were not revised regularly, also hike

in input cost due.

To periodical revisions of national coal wage agreements(NCWA) stores

and interest were also not fully compensated by government. The frequent strikes by the

workers, law and order problem , low productivity, apart from un-Remunerative coal

price vis-à-vis cost of production during the period 1989-90 to 1991-92 affected the

financial health of the company and refer referred to BIFR in may 1992, but due to

liberal financial package extended by the govt. of India in consultation with govt. of AP,

and sustained effort made by the management SCCL and Trade unions, a modest

financial turnaround was achieved. The company earned profit of Rs.17.76 core and

26.64 core in 1993-94 and 1994-95respectively. My march 1994,SCCL came out the

BIFR purview.

Following remedial measures/reforms were taken by the company for success:

 Unifying trade unions through path breaking elections.

 High pitch communication drive harnessing media, launching

 literacy programmers.

 Focused multi-faceted worker’s welfare programme.

 Establishing outsourcing of non-core and ancillary activities.

 Innovative programmers launched(Dial-your-GM, field visits,

intersections, follow –ups)

 Fuel supply agreements-technology infusion for quality testing,

workforce visits to client sites.

22
  Focus on safety,emvironment protection and lab our welfare.

The process of turning around a sick company, which commenced in

1997-98, reached its logical conclusion when SCCL totally, wiped out its accumulated

losses and entered the financial year 203-04 with ant profit of Rs80.45 core after issuing

a dividend of Rs 86.70 core

.

S,no particulars Units Pre-1998 Post-1997 Gain/reduction(

(1996-97) (2002-03) %)
1 Coal M.tonnes 28.73 33.24 (+)16%
production
2 Coal M.tonnes 28.83 33.37 (+)16%
dispatches
3 Overall Tones 0.98 1.51 (+)54%
output per
man
shift(OMS)
4 Manpower Nos. 1,14,486 97,053 (-)15%
5 No.of Nos. 310 35 (-)83%
strikes
6 Turn over Rs.incror 2114 3689 (+)75%
s
7 Gross Rs. 3339 4115 (+)23%
investment
8 Earnings Rs 345.660 697.86 (+)97%
per manshift
9 Welfare Rs 14,402 30,195 (+)110%
exp.pee

MINING SUCCESS &HONORS:

SCCL’s multi faceted achievements are land marks that stand testimony to efficacy.

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The company has deservedly won many awards-prominent among them are:

2001-02:
-Best Management Award in the state

-national safety Award.

-Best payroll saving award in the state.

2003-04
-Best Workers’ Welfare Activity Award from FAPCCL.

2005-06
-Golden peacock Environment Management Award from world

Environment management foundation.

COMPUTERIZATION IN SCCL:

 SCCL has initiated computerization activity in the early eighties utilizing

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 Outside faculties and installation of in-house computer in the corporate office in

1986 since then number of systems is developed such as pay roll, stores.

Accounting management information system, personnel, personnel data (EPR),

in inventory management.

 Computerization has been introduced in the supply and allotment of coal to the

industries in the non-core sector by the marketing department. All documentation

of data pertaining to over 2000 industrial consumers has been total computerized.

 The marketing department has been issuing computerized sale notes to all the

industrial consumers with in 24 hours of receipt of requests from the consumers

.Daily a computerized statement indicate the sale notes issued to consumers and the

requests pending at the each day is displayed on the notice board of the marketing

deklpartment.

 Computerized recruitment system by which selection of candidates was

Completed within 24 hours of written test evolved to remove the subjectivity in the

Selection process and this was appreciated by the candidates as well as the general

public.

INDUSTRIAL RELATIONS:

Industrial relations are one of the most delicate and complex elements of a modern

25
industrial society. Industrial relations have now become a part and parcels of the

science of management because they deal with the manpower enterprise.

The term industrial relations refer to industry and relations. Industry means

any productive activity in which an individual is engaged and trade unions on wages and

other terms of employment. The day-to-day relations with a plant also constitute one of

the important elements and impinge on the broader aspect of industrial relation. The

primary objective of industrial relations is to bring about good and healthy relations

between the two parries in industry-labor and management.

INDUSTRIAL RELATIONS IN SCCL

1. To safeguard the interest of labor as well as of management by Securing

he

highest level of mutual understanding and good will Between all sections in industry

which take part in the process of Production.

2. To avoid industrial conflicts and develop harmonious relations, which are

essential for the productive efficiency of workers and the industrial progress of the

country.

3. To raise productivity to a higher level in an era of full employment By reducing the

tendency to higher and frequent absenteeism

4. To establish and maintain industrial democracy based on labor partnership, not

only for the purpose of sharing the gains of but also participating and managerial

discussions so that the individual personality may be fully developed anther may

grow into a civilized citizen of the county.

5. To bring down strikes, lockouts’ and gelatos by providing better And reasonable

wages and fringe benefits to the works’ and improved living conditions.

26
6. To bring about government control over such units and plants as re-running atlases

where production has to be regulated in the public interest.

7. To ensure that the state endeavors to bridge the gap between the unbalance,

disordered and maladjusted social order and the need for reshaping the complex social

relationships emerging out of technological advance interest- protecting some and

retraining others and evolving a healthy social order.

The industrial relations in the organization (SCCL)is cordial and

Harmonious once the industry has gone into the clutches of BIFR known for its strikes

and called as ‘strikes singareni’ (sammela singareni). There are multi dimensional trade

unions and craft unions resulted intra trade union activates lead to the conflict between

the management and the unions resulting continuous losses to the industry and

referred to the BIGR.

In order to save the industry from the clutches of BIFR, reforms ware

Introduced in the industry. They gave good results and become turn around. The worker

were well educated through communication system of writing individual letters,

electronic media bringing about the facts and prevailing conditions of the industry,

which has resulted some ‘no strike months’ Introduction of reforms has better results

and become turn around and started getting profits for the last four consecutive years.

WELFARE MEASURES IN SCCL:

A) MEDICAL FACILITES:

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 Management of SCCL is evincing keen interest in delivery of health care

hest standards.

Hospitals: 8 hospital with 1058 beds are made available. Thaïs comes to

a bed- employee ratio of 1:78. this is higher compared to the B.P.E norms of

1:100.

Dispensaries: dispensaries’ from the frits contact centers for providing

primary medical care service. There are 40 dispensaries

Located at different areas of mining operations. These are situated amidst

employee colonies for easy accessibility.

Medical & paramedical personas: medical &Health departments has 2188

employees working at different hospitals and dispensaries’.

CATTEGORY NUMBER
Specialist 75
Doctors Services: All hospitals
GDMOs 155 are prearranged with
Nursing staff 393 the emergency care
Others 1578 services to handle
any type of critical care viz, trauma care, intensive coronary care, medical care,

pediatric intensive care and surgical emergencies.

Specialist: Most common specialist services made available at hospitals are general

medicine, chest medicine, ophthalmology, ENT, Psychiatry, Dermatology, Radiology,

dental and

Referral services: Hospital and the dispensaries provoke the first contact care and

the curative service . However there is a need to provide super specialty services certain

diseases namely; cardiac cases, certain kidney disorders etc. ten super specialty hospitals

are empanelled basing on the facilities available, quality of service render patient

28
satisfaction.

Sl no Name of the hospital

01 Apollo hospital
02 Bibi cacerhospital
03 Care hospital
04 Image hospital
05 Indo American cancer institute
06 Kamineni hospital
07 Medwin hospital
08 Rainbow children hospital
09 Sushrutaha cancer hospital
10 Usha mullapudi cardiac centre

Cardiologists visit: cardiologist’s consultation and advice is needed for many of the

patients especially in the present day context of increased awareness on health matters.

To meet the need such of employees and their family members, cardiologists visits are

arranged at main hospital, kothagudem and area hospital ramagundam at regular interval

Expenditure of referral services: there is no restriction or limitation of expenditure in

providing the necessary treatment by referral hospital. Relevant particulars about referral

services from the year 2000-06 are as follows.

Year No of cases Expenditure

2000-01 4266 Rs.15,29,3120
2001-02 3904 Rs 16,62,4609
2002-03 3465 Rs. 18,35,4223
2003-04 3363 Rs. 28,03,3117
2004-05 3216 Rs. 25.89,9245
2005-06 3367 Rs. 30,20,0000

Ambulance services: 36 ambulances are provided meeting the requirement at

the medical centers. They will be equipped with external defibrillators, portable

ventilators and automatic CPR system induce course of time.

29
Family welfare operations: are undertaken at all our hospitals and incentive is also

being paid.

Immunization: immunization activities are being followed at out hospitals against

the 06 vaccine preventable diseases.

Screening camps: the concept of health screening camp is a new approach towards

health protection. SCCL is a pioneer in organizing health-screening camps of significant

magnitude in our country health screening caps organized at SCCL are enclosed.

Outreach service camps: as a part of our contribution towards the poor and people who

can not afford medical specialist’s advice and opinion, SCCL has mega health

camps. List of such camps organized are enclosed.

B) SOCIAL SECURITY SCHEMES

The SCCL is taking all possible measures to provide welfare amenities to

its employees, particularly in the fields of health, sanitation, residential accommodation

education to workers’ children, supply of water, laying of roads, improving health

awareness among employees an their families through communication cell, sports and

games to provide recreation in addition to various social security schemes.

C) HOUSING: As on 31.03.2009 there are 47,604 quarters existing in all the areas of

the company, 4100 quarters are under construction. The housing satisfaction is 59,82%.

D) SOCIAL SECURITY SCHEMES:

a)Insurance schemes;

Name of the scheme Premium payable Amount payable

30
1.JPAIS @Rs.278/-for 2years Rs . 1,00,000
2.FBIS @Rs.10/- p.m per employee Rs .10,000
3.Group insurance Rs .40,000/-
4.group service linked @Rs. 200/- per month Rs .2,00,000/-
insurance scheme (GSLIS)
@Rs. 100/-per month Rs .1,00,000/-
@Rs. 65/- per month Rs . 65,000/-
@Rs. 60/- per month Rs . 60,000/-

b)coal mines provident fund scheme:

Employees contribution :12% of wages

Employees contribution : 12%(equal contribution)

c)coal mines pension scheme-1998:

Employee contribution: 2% of the salary from 01-04-1989 to 31-03-1996+ an amount

Equivalent to one increment calculated on the basis of salary as on 1st day of July, 1995

of employees appointed after 01-07-1995 or the date of joining whichever is later.

Employee and Employers: An amount equivalent to two and one third contribution

percent of salary of the employee.

Central Govt. contribution: an amount equivalent to one and two third percent of the

salary of the employee.

E) CONSTITUTION OF AREA TERMINAL BENEFITS CELLS:

The management of SCCL has constituted area terminal benefits the form the of a single

window for speedy settlements of claims on receiving intimation about superannuating

/leaving company’s service due to various reasons in respect of an employee.

1. coal mines provident fund

2. coal mines pension scheme

31
 3. gratuity

4. FBIS(death) claim

5. refund of FBIS accumulation

6. group insurance scheme

7. janatha personal accident insurance scheme

F) SETTLEMENT OF TERMINAL BENEFITS IN RESPECT OF MINE

ACCIDENT CASES:

Dependant employment is being provided to the eligible dependants of ex-employees

died in fatal mine accident cases at area level immediately on receiving the claim for

the same complying with the dependant employment guidelines. If the claimant opts

for lump sum amount of Rs 3 lakes or payment of monthly monetary compensation

@Rs 4000/- per month the same is being considered and settled of priority in lieu of

dependant employment.

G) GROUP GRATUITY SCHEME WITH LIC OF INDIA:

A. This scheme is effective from 11.12.2003 and covers both executives and non-

executives and covers trains in regular grade and other employees who are covered

under the gratuity rules of the company.

b. Gratuity will be paid by LIC of India to employee/ nominee for the period of

service rendered by the employees as per the existing rules and limits.

c. In addition, in case of unfortunate death of the employee, LIC would also pay

gratuity for the service the employee would have rendered until retirement had he

been alive.

d. The total of b, c, shall be restricted to Rs 3,50,5000/- or the ceiling as prescribed in

32
 the payment of gratuity act from time to time.

H) EX-GRATIA:

An amount of Rs. 30.000/- as ex- gratia w.e.f. 01.01.2005 is being paid to the

Bereaved family of the workmen died in mine accidents in accordance with the

provisions of national coal wage agreement.

I) MATCHING GRANT: Management is giving matching grant subject to a

maximum of Rs. 1.00.000/- (w.e.f 01.07.2004) in ease of death of a workman due to

mine accident while in service ,Rs 75,000/- in case of death due to natural cause while

on duty subject to various conditions and Rs.5,000/- in case of death due to other than

above two causes provided his co-workers do not resort to sympathetic strike and

contribute their donation for the welfare of the bereaved family.

J) DEPENDANT EMPLOYMENT: Dependant employment is being

Provided the dependants of ex-employees died in harness/declared medical unfit as per

NCWA provision subject to availability of vacancies. As per various Settlement, 344

nos, of dependants provided employment during the Year 200506(31st march,2006)

and April 2006 to march ,2007 is 274.

In the financial year 2002-03 a settlement was arrived at on 08-03-2002 with

the Recognized union on payment of monetary compensation in, lieu of dependant

employment under company voluntary retirement scheme(VRS on grounds). There are

about 3075 dependants waiting gore employment under company VRS. It if wguch, 2876

cases have been settled as on 31.03.2007 for payments of monetary compensation/ lump

sum payment of 24 months’ wages last’ drawn in lieu of dependant employment

33
K) MONTHKY MONETARY COMPENSATION (MMC)/LUMPSUM
PAYMENT:

The scheme of MMC has been implemented in lieu of female dependent employment in

respect of the cases of death / board medical unfit arose form 02-10-1997.in accordance

with the memo of settlement dated 31.07.1997. As per the guidelines of JBCCL

implementation. The claims are being received gram areas for settlement of MMC so on

31.03.2007 1848 claims have been settled and sanction pf [au,enmt priers released to pay

the nenefocoaroeds @Rs 3000,/- per month in case of death in harness and Rs 4000/- per

month in case of fatal/mine accident.

L) EDUCATION FACILAITIES;

A No of high schools and upper primary schools run by S.C educational society.

B. No of degree colleges (women)

C. No of junior college (women)

The above educational institutions are running by S.C educational

society

M) GRANT OF SCHOLARSHIPS TOMERIT STUDENTS, ARE CHILDREDN

OF EMPLOYEES:

In order to encourage the sons and daughters of employees(NCWA/Executives0

to excel in their studies and to seek admission in engineering and medical courses, a

scholarships of Rs 6000/- every year for the son/daughter of SCCL employees (NCWA

employee /exertive caer0 is been sanctioned form the year 1998 in the event of he or

she securing admission in the engineering and medical courses by getting a rank below

34
2000 in the EAMCET/IIT for a period of 4/5 years.

Approval was accorded for awarding of 2 merit scholarships @Rs.6000/- per

year to the children of employee to those who got admission into BITS Plain through

BITSAT form 2005-06 onwards. Financial assistance to the children of SCCl employees

who qualify for UPSC main exams;

In order to encourage the employees children for excelling in civil services

examination, a scheme was formulated off extending the financial assistance as a welfare

measure form the year 2004. The candidate who qualifies in main examination will be

considered for awarding financial sibilance @Rs.12.000/- ,8000/- and Rs.4000/- as the

case nay be, for the children of workmen (06nos)/ supervisory staff (03nos) / executives

(01no)respectively as per order of merit.

N) SPECIAL WELFARE AMINITIES PROGRAMME:

The company is providing several facilities in the workers colonies like water supply,

power, roads, sanitation, drainage, street lighting etc, the special welfare amenities

include drains, sanitary lines, removal of garbage, replacement of doors and windows,

roads slab toilets buildings repairs etc. under the special welfare measures. The details of

area wise funds allocated and utilized under SWAP-V programme as on 31.03.2007 are

furnished hereunder;

35
O) SINARENI COLLEERIES COOPERATIVE CENTRAL STORES
LIMITED:

The singareni collieries company ltd has established S.C. Cooperative central stores

limited(popularly known as Singareni super bazaar)in which, the workmen of SCCl are

inners. The infrastructure facilities like buildings’ and furniture being provided by

SCCL to the super bazer. A total 44 sales depots of super bazaar (including gas go downs

and distribution points) are functioning in the coal field areas.

P) FREE SUPPLUY OF LPG TO THE EMPLOYEES;

It has beep made mandatory that all employees’ of SCCL including workers should go

For LPG connection for their use for which SCCL will reimburse the use of coal for

Cooking purposes in householders is banned by not supplying coal to the SCCL

employees. The SCCL arranged 19 nos. LPG distribution points in all over the colliery

areas for the benefit of the employees through singareni super bazaar.

Q) EMPLOYEES CO-OPERATIVE CREDIT SOCIETIES:

The workmen of SCCL working in the mines and department are encouraged ton become

members of “Employee cooperative credit society” with a view to inculcate the culture of

thrift and avoid our employees going to money lenders for obtaining loans. There are 49

cooperative credit societies functioning in the mines and department of SCCL grant loans

to the members employees for the purpose of meeting expenditure on the education of

their children, purchase of two wheelers etc. depending upon the financial sates of each

36
coop credit society to the member employee. The cooperative credit societies would also

accept the deposits from the members employees, further, the maximum amount varies

from one cooperative society to another cooperative society as per their discretion.

R) CANTEEN;

60 canteens are maintained by the management at the mines and depts.

S) COMMUNITY BUILDINGS/FACILITES:

In order to provide recreation facilities the company has constructed recreation clubs and

community halls in the coal field areas.

No of community 10

No of recreations clubs 32

T) SPORTS &RECREATIONAL FACILITIES:

The SCCL has a long history in encouraging its employees in the field of sports and

games. Work people sports& games associations’ (WPS&GGA) are formed in all the

areas. Even though SCCL is not a subsidiary of CIL, it is one all India basis under the

banner of “CIL inter company tournaments tournaments”

The company has also been encouraging the employees to participate in the inter

district, state level tournaments conducted by sports authority of A.P(SAAP).the players

from the company have also participated in the national/ international level meets and

won the medals

SCCL is encouraging the workmen and their children to participate in the Sports

and games events to keep up better health, leading to personality Development. SCCL
teams are being sent to participate in al India coal fields Tournaments.

No of play grounds ;10

37
 No of stadium :08

No of swimming pools :10

U) SCOUTS & GUIDES:

The SCCL has started Barth scouts &guides singareni collieries district association

in the year 1977. SCCLK is giving financial assistance to the S.C district association

for enrolling the scouts, guides, Rovers and rangers from among the employees and the

school children in the coal field areas.

The Barth scouts & guides S.C district association is undertaking voluntary

camp, pulse polio programmed etc, besides rendering service to control the mobs at the

time of brahmothsavams at tirumala tirupthi devasthanams and on srirama navamiand

mukkotiekadasi at bhadrachalam.

The singereni district association organized a 3 days rally (shanthi yatra)

Programmed at boopala palli in the month of February,2007with participation of school

children’s of all school children of all school of surrounding areas and scout & guides of

all areas.

V) VOCATIONAL TRAINING FOR EMPLOYEE’S CHILDREN:

Singareni siva samithi (sss) being registered under Andhra Pradesh public

societies act shall take up all educational training programmer. Self-employment

schemes, help for army recruitment etc. and other educational training programmers for

the children of employees who have died in “ harness and unemployed youth which

includes daughters and sons of employee & ex-employees and also to spouses of ex
employees only.

In order to make the educated unemployed children of our employees as self

38
employed , SCCL is organizing training programmed free of cost to the eligible

unemployed children in photo lamination, screen printing, dress making and electrical

courses etc. in the coal field area SCCl impairing training in 14Categories through khadi

gramodyog maha vidyalaya, rajendranagar, Hyderabad under the aegis of singareni

sevasamithi.

Family day programmes were also organized in all the areas for NCWA employees

With a view to“one family, one vision and one mission”of SCCL slogan. Various cultural

Programme display and mementos were presented to participants. A free yoga camp was

organized in all the areas for the benefit of “singarenians”.

W) COACHING CAMPS FOR CHLDREN OF EMPLOYEES/EX-

EMPLOYEES FOR POLICE/ARMY RECRUITMENTS:

In order to help the unemployed children of our employees/ex-employees

And also the unemployed youth in the vicinity of coal field area, the SCCL is organizing

free coaching camps to the willing persons to enable them to participate in the army and

recruitments. The unemployed children who are given training in the camps are being

paid to fro train fares from local field area t the place of selection at the place of

selection.

The statement showing the no. of candidates imparted training and selected In
Army/ police/para-military recruitments.

39
Area No of candidates No of candidates No of candidates
imparted training selected under process for
selection
Corporate 152 27 0
Kothagudem 261 18 1
Yellandu 146 40 0
Manu guru 655 63 2
RG-I,II,III,IV, areas 625 84 4
Bhoopalapalli 385 30 0
Bellampalli 537 15 3
Madamarri 448 13 7
Srirampur 419 26 2
Total 2628 316 19

Y) LITERACY PROGRAMME IN SCCL:

In SCCL there are thousands of unskilled workers, working in underground mines,

in the survey conducted in the year 2001, it was found that about 33.860 workmen and

41,310 Spouse of workmen were illiterate, who cannot read or write in telugu out of

30318 workmen and 11,753 spouses of workmen workmen were under literate as

31.03.2009.

Z)USING TV MEDIA FOR SAFETY PUBLICITY:

Communication cell: communication cells have also been established to bring about

awareness among the workmen and their living conditions including safety awareness in

the mines and departments. Communication through letters, pamphlets, posters and

through electronic media i,e ,.Telecasting through SITI cable. Programmed on various

subjects including safety awareness of interest dispelling doubts and darkness from

theminds of the workmen are telecast every week through “singareni tarangalu”in local

cable T.V.

40
NEW COMMUNICATION POLICY IN SCCL:

With a view to bring more awareness in the workmen and their family members

and t inculcate the culture of “SINGARENISM” and to feel a “SINGARENEAN” the

new communication policy is designed vide circular no CRP/PER/IR/G/234/1025,and

dated 13.02.2003. as such the following works are implementing.

1)PADAYATRA’S:-
A team of about 30 members consisting of executives’, best workmen, member of SSS

&SEWA etc. on 1st of every month from 9.00 AM to 12.00 noon in different colonies’ by

rotation with appropriate banners/ play cards etc.

2.MINE :

sac/asst/on 15th and last day of the month from 4.00PM to 5.30 PM to be by the manager

and all the executives with workmen and family members.

3) SADASSU IN DEPARTMENTS:

On 15th and last day of the month form 4.00PM to 5.30 to be conducted by the HOD’s

and the executives as into the case of mines.

4) CULTURAL PROGRAMMES:
The area communication cell to organize cultural programmed in the colonies on 20th of

every month for about 1 to 1 ½ hour starting form 6.30 pm.

5) Weekly press meat.

6) Singareni triangle through SITI channel (quality programmes to be produced)

7) Singareni house magazine (Singareni varthalu)

8) Monthly news letter types poster(Singareni samachara prabha)

9)”Singareni sravanthi” through AIR (FM) kothagudam.

41
EMM NUMBERS ON ROLL % AVAILABILITY % UTILISATION WITH
REFERENCE

2009-10 2008-09

2009-10 2008-09 2009- 2008- 2009- 2008-

10 09 10 09

Draglines 2 2 94 88 36 49 39 56

Shovels 57 59 77 80 48 48 63 60

Dumpers 346 363 73 73 35 35 48 48

Dozers 85 76 68 69 31 34 45 50

Drills 47 49 79 80 21 30 26 31

42
EXPENDITURE INCURRED ON WELFARE

Year Expenditure (Rs in Expenditure per

lkhs) employee(in Rs)
2005-06 27681 27837
2006-07 29305 30195
2007-08 31724 3349
2008-09 37693 40925
2009-10 46800 54403

43
ORGANIZATION HIERARCHY:

Chairman cum managing director who is drawn from senior I.A.S. officer of state

government heads the Singareni collieries company limited at corporate level. Director

and CGMs / General managers assist him .SCCL has organizational hierarchy at

area level too headed by area general manager.

The organization chart is given in the following page. It has been given both at area level

and corporatehouses located with in the state of ANDHRA PRADESH get their coal

suppliers from Singareni collieries.

In addition the requirement of coal of some of the power houses

Located in Maharashtra and Karnataka is also met from Singareni Company limited in

the small scale sector, about 2700 industrial units situated over the southern states get

their requirements of coal from SCCL

44
 TARGET AND OFF-TAKE OF COAL

During the year 2009-2010 off take of coal was 41.95 million tones

Against the AAP target of 38.04 million tones’ per the new coal distribution polic

announced by the ministry coal, goal, the customers who are drawing more than 4000

tonesper annum have to enter in to FSA and so far 140 such customers haveentered in to

FSAS with the SCCL.A part from that, three power utilities, 44 cement units 38 sponge

iron units and 18 CPP customers have FSAS with SCCL. 89% of dispatches have been

covered by FSAS and joint sampling protocols agains87% covered in the previous year.

The no of customers registered with SCCL have gone up from 5502 in 2006-07 to 6375

in 2008-09 the details of sector wise AAP target and off take and colliery consumption

during 2008-09 has compared to the previous year are as under

2009-10 2008-09
SECTOR
OFF- %ACHI TARG OFF-
TARGET %ACHIEVED
TAKE EVED ET TAKE
31.93 108 28.98 28.39 98
Power 29.70

5.00 5.58 112 4.90 5.15

Cement 105

0.50 0.49 98 0.50 0.50 100

Heavy Water Plant

Other Industries 2.72 3.79 139 3.00 3.45 115

Colliery 0.12 0.16 133 0.12 0.14 117

consumption

45
 38.04 41.95 110 37.50 37.63 100
Total

MODE OF DISPATCHES:

Dispatches through different modes (excluding celery

consumptions during 2009-10 as against previous year are as indicated below

YEAR RAIL ROAD MERRY- ROPE- TOTAL

GO.ROUND WAY

2009-10 21.69 10.98 8.63 0.49 41.79

2008-09 18.57 9.31 9.11 0.50 37.49

Absolute 3.12 1.67 -0.48 -0.01 4.30

increase

46
WAGON LOADING PERFORMANCE:

During the year 2009-10 daily average loading of 2719/1088 four wheeler

wagons/box wagons. Was done as against 2355/942 FWW/BOX wagons in 2008-09

registering a growth rate of 15.45%

MEASURES FOR IMPR1OVING QUALITH AND CUSTOMER SATISFACTION:

Modernizations of CHPS by establishing auto sampling system is inprogress

and labs are provided with latest equipment.washery is being established atManu guru on

BOO basis. With a view to facilitate the customers who are unableto get coal as

per the exisisting system e-auction of coal is introduced which coalcan be purchased

on line through simple, transparent and customer friendly systemcomplaints received

from customers on sampling, quality and weighmenthave slightly increased from

15in the previous year to 20 during year under report and necessary measures were

Taken to address the complaints which lead to prompt elimination of grievances of

customers.

INDUSTRIAL RELATIONS:

The year 2009-10 has set a new record in the IR scenario of the company with zero

strikes, company in establishing congenial atmosphere and maintaining industrial

harmony and peace. It was possible through multi-dimensional approach whichInter-alia

consists efforts in creating increased awareness among workmen, enhancing welfare

measures, transparency and holding meetings eighth unions at regularinternals, elections

for according recognition to the trade unions at company andareas levels wereconducted

for the 4th time successfully, while the year 2008-09 isstrike free- the number of strikes,
man days & production lost in previous year are as Under

47
 PARTICULARS UNIT 2009-10 2008-09

Strikes No Nil 3

Man days lost No Nil 5587

Production lost Tonne Nil 9872

WELFARE OF EMPLOYEES AND SOCIAL SECURITY SCHEMES:

Various welfare activities that are in vogue viz, housing &sanitation,educational,

recreational, medical facilities with super specialty services and socialsecurity schemes

are being continued with more vigor awareness campaigns on thesubjects of health,

hygiene, prevention and spreading of diseases were organizedextensively for the benefit

of employees and the people living in thevicinity of miningareas. T he overall housing

satisfaction as on 31-03-08 was 68% as against 60% at the end of previous year.

In order to improve employment opportunities to the dependents of the

employees/ex-employees, thecompany hasestablished a polytechnic college at srirampur

with computers, civil, electrical& mechanical branches from theacademic year 2009-10.

AWARDS & ACCOLADES:

48
 The SCCL has received APPCB award for excellence in bio-medical waste

management for the year 2008-09 for main productivity in underground mines.

 Singareni Collieries Company has been awarded infraline energy excellence

award 2008, under corporative excellence.

 The SCCL received the INDIRA GANDHI VRIKSHA MITRA AWARD-

Contributes made in the field of a forestation and waste land development 05th June

2007, at NEW DELHI

 Environment excellence award for 2005-06 from society for research and

initiatives for sustainable technology(SRISIT), NEW DELHI.

 Environmental excellence award from green tech foundation in 2005-06

.
 “GOLDEN PEACOCK Environment management award – 2005” from the

institute of directors, NEW DELHI.

 “GOLDEN PEACOCK ENVIRONMENT MANAGEMENT AWARD-2005”,

from world environment foundation, NEW DELHI.

 The second best corporate film award 2005 by public relations society of India.

 “national Fly Ash Utilization Award 2005”jointly instituted by the Ministry of

49
 Environment &Forests, Government of India.

 “Best management award” for 2001-02 by the government of A.P.

 “Best worker’s welfare Activity Award” for 2003-04 by the Federation of

 F.A.P.C.C.I.

INFORMATION TECHNOLOGY:

Enterprise resource planning (Erp) software is being implemented in association

with SAP India initially in finance, payroll, materials management and marketing and

movementmodules,networking through infant is established between various departments

/mines. Laser profiler is introduced for survey departments. Project monitoring

is integrated with estates and purchase departments for reviewing implementation of

various projects. Hospital management system is implemented at main hospital

Kothagudem and steps are being taken to replicate the same in other 3area hospital.

SAFETY IN MINES:

The company strives constantly continuously and consistently for complete

safe and accident free mining operations, during the year under report several measures

were taken towards improving safety which includes mechanization of mines and other

work places , creation of awareness among the work men and their family members,

organizing training programmes and work shops, conducting safety audit The details of

accidents during the year under report are indicated below:

50
YEAR FATAL SERIOUS INJURY RATE
PER MILLION
TONNE OF
PRODUCTION
No.of No. of No. of No. of Fatal Serious
accidents persons accidents persons
involved injured

2009-10 11 11 535 538 0.27 13.25

2008-09 16 19 587 592 0.50 15.70

MINES RESCUE SERVICES:

The mines rescue services of the company were developed on par withinternational

standards and best of its kind in India This is achieved by continuous strengthening of

rescue services with the best training. Latest resourceue equipment and by adopted

international best practices. During the year under report 29Nos. of specialstretches (13

spine board and 16 scoop) were imported from Australia /Singapore toimprove

conveyance facilities of injured persons from place of work and the same arebeing used

on trial basis at rescue service points. During the year under report, 32 persons were

imparted initial training in rescue and recovery works and 593 activerescue trained

persons working at different mines of the company were imparted 4947 refresher Man

shift practices.

51
 Two mines rescue teams of the SCCL have participated in All India

Rescue competitions held in February, 2009 conducted by SCCL at manendergarh and

bagged 1st and 3rd overall best performance prices respectively, “ The SCCL team got

prize for the 3rd consecutive year.”

RESEARCH AND DEVELOPMENT:

During the year under report, R&D activities were taken up in UG mines

on strata control studies in long wall BG panels, semi - Mechanized, wide stall method

of working, simultaneous extraction of seams, and estimation of long Wall support

capacity, water dams design, determination of in-situ strength of coal, degree of

Gassiness and reclassification. In opencast projects, studies were carried out in High

wall and dump slope stability, determination of optimum slope of benches, impact of

deep hole blast vibrations and controlled blasting. The activities benefited in expediting

the new projects, improving safety, mine ventilation, production and productivity,

health of workmen.

S&T PROJECTS:

6 S&T projects were completed during the year under review and 6 projects are in

progress at the end of the year.

FUTURE PLAN OF ACTION:

Ventilation studies, strata monitoring and ground control studies,

Introduction of resin capsules in heavy water seepage mines in conjunction with roof

Bolters are some of the studies proposed to be conducted future. During 2009-10

expenditure incurred on R&D was Rs 0.53 crores ( previous year Rs 1.27 crores) which

amounted to 0.12% of the total turnover.

52
ENVIRONMENT AND ECOLOGY:

SCCL carries out eco-friendly coal mining and gives due concern for protection

Of environment, air, water, bio-diversity and nature, the activities taken by the

Company have won laurels for the company have won laurels for the company and

several environmental organizations have conferred awards. SCCL takes measures on a

continuous basis for keeping quality levels of air , water, and environment with in the

limits and unaffected by mining and allied operations. 4sewage treatment plants were

constructed during 2009-10.

ORGANIZATION STRUCTURE:

The successful performance of any institute depends to a large extent upon

its organization may be defined as “ the process of identifying and group of work to

be performed defining and delegation responsibility and authority and establishing of

relationship for the purpose of enabling people to work most effectively together

accomplishing objectives”.

A sound organization structure is a pre-requisite for efficient management it

provides the frame for carrying the activates of the ill designed the functioning

of the organization Set-up which can be followed by other organization also.

53
 CHAPTER –III

CONCEPTUAL FRAME WORK OF

OPERATING COSTS

54
INTRODUCTION:
The term operation in business terminology refers to an activity of the business. It isvery

Important to study the operations of the business in detail because the entire business

Depends of the operation, Which its performs. The also the costs associated to the

operation. It is very important to control the costs associated to the operation for the

enterprises like manufacturing companies,companies engaged in the process of extraction

of materials from earth like, coal mines etc.

Generally the above mentioned business enterprise depend on the operation

That it has to be performed in order to produce the final output. The cost associated with

such operations are generally higher. These costs are called as ”OPERATING COSTS”

The costs, which are incurred to perform the operation of the enterprise, are called as

Operating costs.

The costs are to be accounted for in order to arrive at the total costs of

Operation or process, which helps in determining the price of the final product.” cost

accounting is the classifying , recording and appropriate allocation of expenditure for the

determination of the costs of products or service and to the presentation of suitably,

arranged for the purpose of control and guidance of management”

It includes the ascertainment of the costs of very process. operation service

or contract as may be appropriate. It deal with the cost of production. Selling and

distribution. It is thus the provision of such analysis and classification of expenditure as

will enable the total cost of any particular unit of production to ascertained with

reasonable degree of accuracy and at the same time to disclose exactly how such total

cost is constitutes (i.e., the value of material used, the amount of labor and other

expenses incurred) so as to control and reduce the cost.

55
THE FEATURES OF COST ACCOUNTING

1. It is process of accounting.

2. It records income and expenditure relating to production of goods and service.

3. It provides statistical data on the basis of which future estimates are prepared and

quotations are submitted.

4. The exact cause of decrease or increase may suffer not because of the cost of

production is high or price are low also because the output is much below the capacity of

the concern.

5.Efficiency of public enterprises. Costing has a more important role to play in public

enterprises than in private enterprises. The primary objective of the public enterprise is

not to raise profits but it is to serve the society by providing quality goods at cheaper

rates.

The efficiency of a public sector can be best judged by comparing its cost of

production with the cost of production of its counterparts.

56
ELEMENTS OF COST

Elements of costs

Material Labour Other expenses

Direct Indirect Direct Indirect Direct Indirect

Prediction of Administrati Selling OH Distributio

works OH on OH n OH

57
By grouping the above elements the following divisions of costs are obtained.

1. Prime cost = direct material + direct labour +direct expenses.

2. Workers or factory cost = prime cost + works or factory overheads.

3. Cost of production= works cost + administration overheads.

4. Total cost or cost of sales = cost of production + selling and distribution overheads.

The difference between cost of sale and selling price presents the profits or loss.

DIRECT MATERIALS:

Direct materials are those materials which can be identified in the product and can be

conveniently measured and directly enter the production and form a part of the finished

product. For example timber in furniture making clothe in dress making and bricks in

building a house.

The following are normally classified as direct materials

i) All raw materials like jute in the manufacturing of gunny bags, pig iron in

foundry and fruits in caning industry.

ii) Materials specifically purchased for a specific job, process or order

like glue for book building starch powder for dressing yarn etc.

iii) Parts or components or produced like batteries for transistor radios and tires
for

iv) Primary packing materials like cartons, wrapping ,cardboard boxes, etc.

used to protect finished product from climatic conditions or far easy handling

inside the factory.

58
 Indirect materials are those materials which cannot be classified as direct

material. For examples , consumables like cotton waste, lubricants, brooms, rags,

cleaning materials, materials for repairs and maintenance of fixed assets. High diesel used

in power generations etc.

DIRECT LABOUR:

Direct labor is all labor expended in altering, construction, composition, confirmation

or condition of the product. In simple words it is that labor which can be conveniently

identified or attributed wholly to a particular job, product or process or extended in

converting raw materials in to finished goods. Indirect wages are the wages paid to

supervisors, inspectors etc, through not direct labor.

DIRECT EXPENSES:

All expenses, which can be identified to a particular cost center and hence directly

charged to the center, are known as direct expenses. In other words all expenses (other

hand direct materials and direct labour) incurred specifically for a particular product, job,

department etc,. are called direct expenses. These are directly charged to the product,

job, department etc.

Examples of such expenses are royalty, excise duty, hire ,charges of a specific plant and

equipment.

OVER HEADS:

Overheads may be defined as the aggregate of the cost of indirect materials, indirect

Labor and such other expenses including services as cannot conveniently be Charges

direct to specific cost units. Thus, overhead are all expenses that direct expenses.

59
Over head are sub divided as

i. Manufacturing expenses

ii. Administration over heads.

iii. Selling over heads.

iv. Distribution over heads.

v. Research and development over heads.

EXPENESE EXCLUDED FROM COSTS:

The total cost of a product should include only those items or expenses which are a

charge against profit. items of expenses which are relation to capital assets.Capital losses,

payments by way of distribution of profits and matters of pure finance should notfrom a

part of the costs.

Examples of such expenses are income tax, dividends. Abnormal wastage Of

materials, wages paid abnormal idle time, interesting capital given or received expenses

of raising capital, discount on shares and debentures profit or loss from the sale of asset

investment excessive depreciation. Appropriation of profit, writing off good wall,

preliminary expenses, and underwriting expenses etc.

STATEMENT OF COST OR COST SHEET:

Cost sheet is a statement designed to show the output of a particular accounting period

along with break-up of costs. The data incorporated in cost sheet are collected form

various statements of accounts, which have been written in cost accounts, either day-to-

day or regular records.

There is no fixed form for preparation of a cost sheet in order to make the cost sheet more

60
useful it is generally presented in columnar form The columns are for total cost of the

current period per unit cost for the current period and total and per unit cost for the

preceding period and total and per units for the budget period and so on.

ADVANTAGE OF COST SHEET:

1. It discloses the total cost and the cost per unit of the units produced during the

given period.

2. It enables a manufacture to keep a close watch and control over the cost of

production.

3. By providing a comparative study of the various elements of current cost with the

past results and standard cost. It is possible to find out the causes of variations in

costs and to eliminate the adverse factors and conditions which to go increase the

total cost.

4. It acts as a guide to the manufacture and helps him in formulating a define useful

production policy.

5. It helps in fixing up the selling price more accurately.

OBJECTIVE OF OPERATING COST:

1. To find out the cost of the product at each stage on manufacturing.

2.It helps in finding out the cost of production of every order and thus helps

in ascertaining profit on its execution. The management can judge the profitability of

each job and decide its future course of action.

3. Management in making move accurate estimates about the cost of similar job to

be executed by the helps of past records the management conveniently and accurately

determine and quote the price for order.

61
4. It enables management to control operational in efficiently by companies actual

Cost with the climates ones.

5.Each order should be continuously identifiable from the raw material stage to stage of

completion.

The term operation here in general refers to any activity, which I engaged in

Converting the raw materials into finished goods are the process of producing or

extracting finalproduct.

This project is concerned with the operations of extracting the local from the under

ground and the cost associated with the operation. The company produce the coal from

two types mines namely opencast mines and underground mines. More specifically this

project focus on the cost of operation in underground mines In underground mines the

company follows various technology to product

the coal are as follows.

Hand section

Long walls

BG panels

Continuous Miner

Side discharge loaders

Load haul dumpers.

62
 In hand section the coal is extracted entirely with man power. In machine mining

the coal is produced with the help of machines. In machine mining the production process

depends largely on machines but it requires some skilled msn power also.

The study focus on the machines called side discharge loaders. For the purpose of the

detailed study of the production process of coal in Singareni collarless the coal mine

Kothagudem area situated at Kothagudem was observed.

In this mine the coal is produced with the help of machines called SDL’s (side

dischargeloaders) beside hand section.

Extraction of coal in hand section entirely depends upon the man power the process

of extraction of local from an under ground mine which is using the

technology of hand section is as follows:

Blasting the faces with the help of explosives. The face is the place where

the coal is located . the coal will be separated from the earth using these explosives.

The process of blasting make it easy to remove the coal from the earth , these process is

known as coal cutting. The men who do this process are known as coal cutters. After

cutting into pieces the coal will be filled into tub trains bring the coal from underground

to the surface using a track.

From the surface the coal is transported to the coal screening planning(CSP) for

cleaning and other process after which the coal can be used. After these process the coal

can be transported to the Singareni customers.

63
 Another technology of extracting of coal is using SDL’s. the main objective of

introducing SDL’s is to improve safety, avoid the human drudgery of carrying baskets at

work space and also better conservation of coal. In the mines where the technology of

SDLs is using the coal can be extracted as follows.

Blasting of coal with the help for explosives to separate it firm the earth the machines

instead of men can fill the coal. These machines are called as side discharge loaders

(SDLs). After the blasting for the coal SDLs move towards the face, takes the coal into

its bucket and comes back (in the same direction without turning back)and discharge the

coal onto a belt. The belt takes the coal and dumps into the tubs of the tub train and these

tubs will bring the coal to the surface.

The capacity of the bucket to the machine is one tone. The time taken by the

machines to move from the coverage belt to the face were the coal is blasted, to lift the

coal into the bucket and to discharge the coal onto the coverage belt is called lead time

The lead time takes the major part in computing the cost of the production. Shorter the

lead time larger the production and vice a versa.

64
The process will generally include the following costs.

1. wages (Filling and time rated)

2. wages of other executives

3. explosives

4. other stores

5. power

6. coal transportation

7. sand stowing

8. Mine overheads.

9. workshop overheads

10. CSP overheads.

11. Depreciation of mines

.
12. Depreciation of common assets.

13. Interest.

14. Area overheads.

The system being followed and the steps involved in preparation of cost sheet under

the present costing system are explained as follows.

a) A preformed cost sheet followed in presentation of cost sheet for hand section and

technologies is furnished. For expenditure is presented through the cost sheet under

various elements of cost.

b) Cost ascertainment is done through cost centers allotted to the various elements of

cost.

65
 The total activities at the mine are divided into 39 parts and each activity is

given a cost called activity cost center with two digit code starting from 01 to 39 to

ascertain the expenditure .The activity wise cost centers are shown below. The

Expenditure. The activity wise centers are shown below. The expenditure booked the

below cost centers is treated as direct incurred at the mine.

Similarly to ascertain the expenditure on various surface activities cost codes

from 40 to 102 are allocated which are used to book the expenditure on the activities

on the service and administrative departments etc. the expenditure incurred at

workshop, CSP and G.M office est. Are the examples of the indirect cost booked

through below cost centers.

The indirect cost is grouped into 2 parts for presentation in the mine cost

sheet. They are mine overheads and area overheads. The mine overhead, which

represents the incidental, costs to the direct wages like LTC/LLTC, leave

encashment, workmen compensation free issue fo gas etc. paid to the employees

have been taken as direct expenditure and the actual provision of gratuity allocated to

the mine is treated as mine overhead and appointed on the basis of men on roll. The

area overhead have been a[[prto9oned on the basis of production as per the

procedure.

66
 Thus the total cost of production is ascertained by way of allocation of direct

expenditure and apportionment of overhead costs booked through various cost centers.

The expenditure thus ascertained is dived with the production to arrive at

th4e cost of production per tone. The profit/ loss is the difference between the average

sales realization plus surface transport charges and total cost of production.

The preformed of existing cost sheet is felt adaptable to other underground

machine mining technologies and as such the same is retained. The cost of production is

to be ascertained for a technology as a profit center and all the costs are ascertained

accordingly.

To introduced the system of cost booking to the cost centers technology wise it

is sought to ascertain the expenditure right from the basic documents of expenditure

Without considering manual information.

According the manpower at the mines on allocation and apportionment to the

respective technology shall be grouped under the technology coal with designed cost

centers and the attendance shall be maintained and furnished accordingly so that wages

cost can be directly obtained for each technology through the wage summaries from

payroll programs.

The indirect cost involving wages, stores and other expenditure booked to the

respective cost centers shall be appointed ion the basisof production and the adopted base

as is dine in the case of apportionment of overhead cost to the mines.

67
 Specimen of cost sheet or statement of cost

Particulars Total cost (Rs.) Cost per unit(Rs.)

DIRECT MATERIALS XXX XXX

DIRECT LABOUR XXX XXX

DIRECTT OR
CHANGEABLE EXP: XXX XXX

PRIME COST
ADD:
WORK OVERHEADS XXX XXX
WORKS COST
ADD:
ADMINISTRATION
OVER HEADS XXX XXX

COST OF PRODUCTION
ADD:
SELLING AND
DISTRIBUTION OVER
HEADS
XXX XXX
TOTAL COST OF COST
OF SALES

68
Cost Centre Cost centre Desc
1201100913 YLD 21 GS DistMisc.Prepn. Works
1201100914 YLD 21 GS Cleaning&Stone Dusting
1201100915| YLD 21 GS Constn Of Ventin, Stpng
1201100916 LD 21 GS Constn.Of Air Crossings
1201100917 LD 21 GS Chipping Of Isoltn Stpng
1201100918 LD 21 GS Constn.Of Isolation Stpng
1201100919 LD 21 GS Other Masonry Works
1201100920 YLD 21 GS Drivage of Tunnels
1201100921 YLD 21 GS Safety Works - Others
1201100922 YLD 21 GS Mntnce of Old Workings
1201100923 YLD21GSRfsupnt-Bolting
1201100924 YLD 21 GS Rf Supptg -Chocks&Props
1201100925 YLD 21 GS Rf suppt-Girders
1201100926 YLD 21 GS Withdrawal Of Supports
1201100927 YLD 21 GS Quality Mgt. Works
1201100928 YLD 21 GS Envrmt.al Mgt. Works
1201100929 YLD 21 GS Loading&Trptn-Materials
1201100930 YLD 21 GS Other Eleci. M&R Works
1201100931 YLD 21 GS Other Mech.M&R Works
1201100932 YLD 21 GS Pipe Line Laying Works
1201100933 YLD 21 GS ManRidingSystem Works
1201100934 YLD 21 GS Man Winding System
1201100935 YLD 21 GS Tub Repairing
1201100936 YLD 21 GS Misc. Surface Works
1201100937 YLD21GSGenriExpndr
1201100938 YLD 21 GS Canteen Exp/Works
1201100940 YLD 21 GSTech Specific BG Works
1201100942 YLD 21 GSTech Specific SDL Works
1201100943 YLD 21 GSTech Specific LHD Works
1201100945 YLD 21 GSTech Specific HS Works
1201100961 YLD 21 GS Main Mech. Ventilator
1201100962 YLD 21 GS Haulage&T ramming
1201100963 YLD 21 GS Lamp Room Mntnce.
1201100964 YLD 21 Inc GS General Mazdoor Works
1201100965 YLD 21 Inc GS Pit Store
1201100966 YLD 21 Inc GS Pumping
1201100967 YLD 21 GS Prospecting-U/G Drilling
1201100970 YLD Agent's Office (21 INC & JK5
1201101200 YLD 21 HS Coal Filling
1201101201 YLD 21 HS Coai Cutting
1201101202 YLD 21 HS Coal Blasting
1201101203 YLD 21 HS Belt Conveyors
1201101204 YLD 21 HS Coal Haulage&T ramming
1201101205 YLD 21 HS Misc.Surface Works
1201101207 YLD 21 HS Mntnce. & Repairs
1201101209 YLD 21 HS PlateLaying&Ballasting
1201101210 YLD 21 HS Pumping

69
70
 Wages to cost of production

YEAR S TOTAL WAGES TOTAL COST PERCENTAGE

2005-06 10,919.31 23,393.50 46.67

2006-07 9,127.47 22,786.71 40.05

2007-08 8,463.42 18,159.05 46.60

2008-09 10,758.20 23,911.00 44.99

2009-10 10,355.01 35,679.07 29.02

71
 Source from annual report of S.C.C.

Interpretation:
The wages to cost of production ratio is fluctuating from year to year. (in year

2005-06 the wages to cost of production ratio is 46.67% and in the year 2009-10, it is

decreased to 29.02%.).so their is a decline is total wages amount is the year 2009-10. It

very low in the year 2009-10 and in is very high in year 2005-06.

72
 Stores to cost of production

YEAR S TOTAL WAGES TOTAL COST PERCENTAGE

73
2005-06 3595.61 23393.50 15.37

2006-07 1409.63 22786.71 6.19

2007-08 1253.2 18159.05 6.90

2008-09 2743.33 23911.00 11.47

2009-10 6654.27 35679.07 18.65

Source from annual report of S.C.C.L

Interpretation:
The stores to cost of production ratio is fluctuating from year to year . (In the year 2005-

06)the stores to cost of production ratio is 15.37%, and in the year 2009-10,it is increased

74
to 18.65%). So there is a decline is total stores amount in the year 2009-10. it very high

in the year 2009-10 and very low in the year 2006-07

75
 Other expanses to cost of production

YEAR S TOTAL OTHER TOTAL COST OF PERCENTAGE%

EXPENCES PRODCTION

2005-06 8878.58 23,393.50 37.97

2006-07 12249.60 22,786.71 53.75

2007-08 8442.43 18,159.05 46.49

2008-09 10409.49 23,911.00 43.53

2009-10 18669.79 35,679.07 52.32

76
Source from annual report of S.C.C.L

77
Interpretation:
The other expanses to cost of production ratio is fluctuating from year to year.( in the

year 2005-06 other expanses to cost of production ratio is 37.95% and in the year 2009-

10 is increased to 52.32% ). So there is a increase is total other expanses amount in the

year 2009-10. it very in the year2008-09, and very low in the year 2005-06.

78
 Total cost of production and trend analysis

YEARS TOTAL COST OF TREND ANALYSIS%

PRODUCTION

2005-06 23,393.50 100.00

2006-07 22,786.71 97.41

2007-08 18,159.05 77.62

2008-09 23,911.00 102.2

2009-10 35,679.07 152.52

Source : annual report of S.C.C.L

79
Interpretation:
The trend analysis to cost of production ratio is fluctuating from year to year.( in the year

2005-06 the trend analysis to cost of production ratio is 100% and in the year 2009-10 ,

it is increased to 152.52%). So there is increase in total trend analysis amount is the year

2008-09. it very high in the year 2009-10. it very low in the year 2007-08.

80
 Total cost of production to total sales

Years Total cost of Total sales Percent (%)

production

2005-06 23,393.50 21424.94 109.19

2006-07 22,786.71 18249.94 124.86

2007-08 18,159.05 24738.83 73.40

2008-09 23,911.00 24520.91 97.5

2009-10 35,679.07 34988.93 101.97

Source from annual report of S.C.C.L

81
Interpretation:
The total sales to cost of production ratio is fluctuating from year to year .( in the year

2005-06 the total sales to cost of production ratio is 109.19% and in the year 2009-10, it

is decreased to 101.97%). So there is a deline in total sales amount in the year 2009-10. it

very high in the year 2006-07, and very low in the year 2007-08.

82
 Profit/loss to total sales

Year Profit/loss Total sales Percentage(%)

2005-06 1968.56 21424.94 9.19

2006-07 4536.77 18249.94 24.86

2007-08 6579.78 24738.83 26.60

2008-09 609.91 24520.91 2.48

2009-10 690.14 34988.93 1.97

Source from annual report of S.C.C.L

83
Interpretation:
The profit/loss to total sales ratio is fluctuation from year to year .(in the year 2005-06

the total profit/loss to total sales ratio is 9.19%, and in the year 2009-10 , it is decreased

to -1.97 % ). So there is decline in total profit/loss amount in the year 2009-10. it very

high in the year 2007-08,and very low in the year 2008-09.

84
 Proportion expenses to total cost

Year Wages Stores Other expenses Total cost

(in %) (in %) (in %) (in %)

2005-06 46.67 15.37 37.97 100

2006-07 40.05 6.19 53.75 100

2007-08 46.60 6.90 46.49 100

2008-09 44.99 11.47 43.53 100

2009-10 29.02 18.65 52.32 100

Source from annual report of S.C.C.L

85
Interpretation:
1.The wages to cost of production ratio is fluctuating from year to year. (in year

2005-06 the wages to cost of production ratio is 46.67% and in the year 2009-10, it is

decreased to 29.02%.).so their is a decline is total wages amount is the year 2009-10. It

very low in the year 2009-10 and in is very high in year 2005-06.

2.The stores to cost of production ratio is fluctuating from year to year . (In the year
2005-

06)the stores to cost of production ratio is 15.37%, and in the year 2009-10,it is increased

to 18.65%). So there is a decline is total stores amount in the year 2009-10. it very high

in the year 2009-10 and very low in the year 2006-07

3.The other expanses to cost of production ratio is fluctuating from year to year.( in the

year 2005-06 other expanses to cost of production ratio is 37.95% and in the year 2009-

10 is increased to 52.32% ). So there is a increase is total other expanses amount in the

year 2009-10. it very in the year2008-09, and very low in the year 2005-06

86
 CHAPTER- V
FINDINGS AND
CONCLUSIONS

87
 FINDINGS

 The wages to cost of production ratio is fluctuating from year to year. (in year
2005-06 the wages to cost of production ratio is 46.67% and in the year.

 The stores to cost of production ratio is fluctuating from year to year . (In the year
2005-06)the stores to cost of production ratio is 15.37%, and in the year.

 The other expanses to cost of production ratio is fluctuating from year to year.( in
the year 2005-06 other expanses to cost of production ratio is 37.95% and in the
year.

 The trend analysis to cost of production ratio is fluctuating from year to year.( in
the year 2005-06 the trend analysis to cost of production ratio is 100% and in the
year.

 The total sales to cost of production ratio is fluctuating from year to year .( in the
year 2005-06 the total sales to cost of production ratio is 109.19% and in the year.

 The profit/loss to total sales ratio is fluctuation from year to year .(in the year
2005-06the total profit/loss to total sales ratio is 9.19%, and in the year.

88
 CONCLUSION

 The performance in maintenance the operating cost of the organization is good.

This shows the healthy of financial strength of organization.

 The under ground expanses are year to year increased so those expenses try to

minimize that.

 Other expanses are increased from year to year. This situation can be avoided

by increasing the sales.

 The management is to minimize the operating cost expenditure to the extent

possible to decrease the net profit ratio, which is very low.

 The management of S.C.C.L. has to examine efforts to increase the net profit

ratio in the same way as achieved better results in case of gross profit.

From the frame conclusion it is recommended to S.C.C.L. are expressed their

comments as follows.

The S.C.C.L is production oriented public ltd company the sales price of

based on the financial viability and as well as the government policies. The

S.C.C.L has no freedom in fixation of purchase prices of the business. The main

objective of the S.C.C.L is to viable the coal selling rate to the extent possible.

With regard to Net profit, it is concluded that it is the internal efficiency gains of

the management against the expected targets fixed by the S.C.C.L

89
 Hence the un favorable factors referred under the conclusion at Sl.No.3, 4,

5 may be negligible.

BIBILIOGRAPH
Y
90
 BIBLIOGRAPHY

1) FINANCIAL MANAGEMENT ----- I.M.PANDEY

2) FINANCIAL MANAGEMENT ----- S.N.MAHESHWARI
3) FINANCIAL MANAGEMENT ----- PRASANNA
CHANDRA
4) MANAGEMENT ACCOUNTING ----- KHAN & JAIN
5) MANAGEMENT ACCOUNTING ----- R.K. SHARMA
&
SHASHI K GUPTA

Websites:
www.singareni.com
www.sccl.com
www.hrm.india.com
www.mines.india.org
www.management.com

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