cost accountancy services....few important

Cost Audit

Management Advisory

Understanding professional activities of

CMA Manish Shukla

Hemant Shah & Associates

Movie

Courtesy: TedTalk, Youtube, and many others

Only for member’s private use at BNI Victory chapter29-10-2014

Cost Audit ~ Cost Analysis….helps business to be an efficient user of

resources…just not raw material but also

– manpower, – utilities (power / electricity, gas, water),– packaging material, stores– transportation, communication

– assets, and many more


Margins

likeROI, Interest Coverage, Working Capital

Why??

• Why business need to be

efficient or more efficient

…………………user of resources

• otherwise those resource will find

alternative user or charge / cost higher


Analysis helps in….• Investment decision making tool - add

investment, add branches / franchisee / marketing team, face challenging time

• Reward stakeholders in business (performance bonus, linked career growth)

• CAS4 certification (Cost-of-Production); Related Party transaction

• Stock Valuation (implication for bank loan, insurance premium, etc.)


Analysis helps in….(contd.)• Stand-well during Anti Dumping Procedure

(either import or export)

• Share of income by government from regulated companies (telecom, coal, etc.)

• CompetitionImprove Selling Price to make it affordable to

customers / buyersImprove Margin / Profitability


Study data

Study data


Competition Commission of India


WTO

Cost of Production, Per Unit Cost, Recovery of all cost, cost treatment…


WTO

Historical cost…


In Excise Audit Manual……

…..reference to Cost Audit Report


Experience and know….Case 1• A metal manufacturing unit, over 41 years in

business• 4 product category, Regular Accounting,

Financial auditing, basic Cost record

• Cost Advisory, product-wise detailingStandard norms wise allocation of RM, Manpower,

Utilities, Spares, Packing MaterialLegitimate apportionment of overheads

• Helped appropriate Cost-of-Production and in Product Pricing


Experience and know….Case 2• A chemical manufacturing unit, 25 years in

business• 4 product category, Regular Accounting (using

BOM in Tally), Financial auditing,

• Cost Audit, product-wise detailingStandard norms wise allocation of expensesDirect allocation expensesLegitimate apportionment of overheads

• Helped appropriate Stock Valuation, and Cost-of-Production for Joint-Products


Experience and know….Case 3• A textile manufacturing unit, 17 years in business• 1 Basic product; 5 sub-product category, Regular

Accounting, Financial auditing, implementing SAP

• Cost Audit, product-wise detailingProcess-wise cost-of-production, many others

• Helped understand that • Under-utilization in Spinning stage• Processing Cost ‘Standard’ used, not appropriate• Pricing needs attention for 3 product category


About Us

Hemant Shah & Associates, Cost Accountants• Formally, since October 2012• CMA Hemant V Shah, 30 years into practice• CMA Manish Shukla, 18 years in service industry• 3 associates; Office at Fort• Office Address

• Sailor Building, 373, Dr. D. N. Road, Fort. Mumbai 400 001

• Contact number• Hemant Shah: 9819182816; Manish Shukla: 9029100665

• Email ID (exclusively, for work related)

• [email protected]


Customers RequiredAppropriate connection: 1. Compliance Head

2. Finance Head / CFO

3. Managing Director / Promoter

Specific Industries / Activities• Mineral Products / Mining• Construction, Road & Infrastructure projects• Healthcare• Railways• Ports• Defense


Customers RequiredCompanies, in particular• MOIL (Mining)• Shirpur Gold (Mining)• Readymade Steel (Steel)• Tulsyan NEC (Steel)

• Aarey Drugs (Pharma)• Aarti group (Chemical + Pharma)• Avon Organics (Chemicals)• Balaji Amines (Chemicals)• Bodal Chemicals (Dyes)• I G Petrochems (Chemicals)• Jayant Agro Org. (Chemical)• Shree Rayal. Alkaly (Chemical)• Strides Arcolab (Pharma)• Shiva Global (Fertilizer)

Companies, in particular• 20 Micron (Mineral / Mining)• Ankit Met.Power (Steel)• Arcotech (Metal)• Ashapura Minetech (Mining / Minerals)• Ashoka Buildcon (Infrastructure)• Balasore Alloys (Ferro Alloys)• Bhushan Steel (Steel)• Bhuwalka Steel (Steel)• G M D C (Mining)• Gallantt group (Steel)• Godawari Power (Steel)• Goodluck Steel (Steel)• Kamdhenu Ispat (Steel)• Kirloskar Ferrous (Steel)• Guj NRE Coke (Mineral)• KIOCL (Mineral Mining)• MAN Inds (Steel)


Customers RequiredCompanies, in particular• IL&FS Engg. (Engg Turnkey)• Indbull Real Estate (Construction)• IVRCL (Construction)• J Kumar Infra (Construction)• Jaypee Infratec. (Construction)• Engineers India (Engg. Turnkey)• Kolte Patil Dev. (Construction)• Madhucon Project (Construction)• Mahindra Life. (Construction)• NCC (Construction)• Oberoi Realty (Construction)• Omaxe (Construction)• Parsvnath Devl. (Construction)• Puravankar.Proj. (Construction)• Ramky Infra (Construction)• Simplex group (Construction)• Sobha Developer (Construction)• Supreme Infra. (Construction)• Unity Infra. (Construction)

Companies, in particular• Ansal Group (Construction / Housing)• Aro Granite (Granite & Marbles)• B.L.Kashyap (Construction)• BGR Energy Sys. (Engg - Turnkey)• Brigade Enterprises (Construction)• C & C Construction group (Construction)• Cera Sanitary (Ceramics)• Delta Corp (Construction)• Era Infra Engg. (Construction)• Everest Inds. (Cement)• DLF (Construction)• Gammon group (Construction)• Gayatri Projects (Construction)• GMR Infra. (Engg Turnkey)• GVK Power Infra. (Engg Turnkey)• GPT Infraproject (Construction)• Guj. Sidhee Cement (Cement)• H D I L (Construction)• Hind. Construction (Construction)


Customers RequiredCompanies, in particular• Ahmednagar Forging (Casting, Forging)• Alicon Casting (Auto Casting)• Amtek Auto (Auto Ancillaries)• Automotive Axles (Auto Ancillary)• Banco Products (Auto Ancillary)

• GTL (Telecom & Power)• EMC (Transmission Line Towers)• EMCO (Transformers)• BS (Transmission Line Towers)

• Alps Inds (Textile)• APM Inds (Textile)• Arvind Inds (Textile)• Banswara Syntex (Textile)

Companies, in particular• Dhampur Sugar (Sugar)• Dharani Sugar (Sugar)• Dwarikesh Sugar (Sugar)• Oudh Sugar Mills (Sugar)• Simbhaoli Sugars (Sugar)• Ugar Sugar Works (Sugar)• Uttam Sugar Mills (Sugar)

• Apollo Hospital (Hospital)• Fortis Health (Hospital)• Opto Circuits (Medical Equipment)

• Accurate Transformers (Electrical transformer)

• Aksh Optifibre (Telephone Cables)• Apar Inds (Electrical Equipment)


Customers RequiredCompanies, in particular• Balmer Lawrie (Diversified)• Binani group (Diversified)

• Butterfly Gan Appl (Appliances)

• Elgi Rubber (Rubber)

• Mahanagar Gas (Gas distribution)

Companies, in particular• CORE Education (Computers

Education)

• Aban Offshore (Oil Drilling)

• ABG Shipping (Ship Breaking)

• Ajanta Soya (Edible Oil)• Gokul Refoils (Solvent Extraction)• Rasoya Proteins (Solvent Extraction)


Thank You

Participate by introducing to

your appropriate connections

Courtesy: TedTalk, Youtube, CCI, WTO, various agencies and companies mentioned therein


for your active listening

Few FAQs / Learning

1. Our Services use – Mandatory: Government filing– Non-mandatory / Internal : Business

development tools

2. When to avail (other than mandatory requirement)

– Business Size enough to substantial advise– Complexity in business– External advise, worth efficiency improvement


Few FAQs / Learning…..(contd.)

3. Referral, our activities– Basic Business Health Checkup; 3 working

days

– Abridged Cost Statements (Product / Service)

– Cost System Design & Development

– Cost Audit

– Management Audit (system adherence in your business)

– Corporate Performance Appraisal

– Certification (CAS-4, etc.)


Few FAQs / Learning…..(contd.)

4. Referral, industry / activitiesa) Companies operating in public interest

• Railways and allied operations, Mineral Products, Cement, Ores, Mineral Fuel & Oil, Base Metal, Chemicals (Org + In-Org), Jute & Jute products, Edible Oil under APM, Construction Industry, Health Services (Hospital, Diagnostic, Clinical centre & Test Labs), Education Services

b) Companies engaged in production / import / supply / trading of medical devices

• cardiac stents, heart valves, spinal implants, drug eluting stents, catheters, intra ocular lenses, bone cement, scalp vein set, deep brain stimulator, etc.


Few FAQs / Learning…..(contd.)4. Referral, activities

c) Companies operating in GOI regulated sector • Port Services, Aeronautical Services, Telecommunication,

Electricity, Steel, Roads & Other Infrastructure projects, Drugs & Pharmaceutical, Fertilizer, Sugar & Industrial Alcohol, Petroleum products, Rubber and allied products

d) Companies engaged in strategic sectors• Defense, Space and Atomic Energy (Arms and

Ammunition, Turbo Jets / Propellers, Explosive & Detonators, Radar apparatus, Tanks & other armoured fighting vehicles, etc.)

(clarification relating to point 4 availing in MCA notification dated 30th June 2014)


Few FAQs / Learning…..(contd.)5. An ‘extract’ of Cost Accounting exercise

Customer pays for a particular product / service– Not for whole company have multiple products / services

• So, access cost of each product / service (category)• cost of direct inputs, for overheads, • cost of administrative, common expenses, marketing,

interest• credit from waste sale, inter-unit transfer, etc.

• methodology for apportionment, stock valuation, pricing for captive consumption


cost accountancy services....few important

Documents

members private use

bni victory chapter29

unit cost

cost analysis

cost treatmentonly

cost audit reportonly

charge cost higheronly

business4 product category