PROJECT REPORT

ON
COSTING SYSTEM
IN
WBD, TATA STEEL, JHARKHAND

Under the Guidance of-

Mr. Vinod Kumar
Mr. Kumar Sunil
Mr .D Kunar
Mr. M. N. Rao
TATA STEEL LTD.

1
 ACKNOWLEDGMENT

We are truly privileged that we got the opportunity to do our project in a

reputed organization like TATA STEEL. We would like to thank Mr. R. K.
Shrivastava (Chief HR/IR) &Mr. M.N.RAO (Sr. Manager Training) for
giving us an opportunity to work at TATA STEEL WEST BOKARO
DIVISION. The association with such a focused & growth oriented
company has given us a clear knowledge of what is an organization and
what are the major factors that helps an organization to achieve the
objectives effectively and efficiently.

We wholeheartedly thank Mr. Vinod Kumar, Mr. Kumar Sunil,

Mr. Ashish, Mr. Malay Sinha, Mr. D Kunar & Mr. Ashish ghosh for
guiding us in our work & providing us with valuable information &
suggestions.

We are grateful to the executives of different departments who have been

a great help and showed their support as & when required. The study
reinforced the theoretical and practical knowledge acquired in terms of
applications

At the end I would like to thank all the respondents, friends and family who
were supportive and encouraging throughout the project.

2
 PREFACE

The project assigned to me was to perform the study of COSTING

SYSTEM IN WBD and the study of environment in which it operates, for
which I underwent ten weeks summer training, this training is a integral part
of PGP/MBA curriculum. The project has been prepared to summarize West
Bokaro activities and highlight the crucial system of costing at WBD.

This project presents a framework for evaluating inventory, costing, &

payroll that have been developed by professional accountants. This project
explains the rationale behind the principles and suggests ways and means to
improve these systems in practice.

I have tried to present it in single way so that it is user friendly and

interesting for users. Illustrations, formats, graphs, diagrams have been used
whenever required to add glory. I shall thanks to all those who have guided
me in completion of the project. I would highly appreciate to receive
suggestion from the readers to further improve the project.

INDEX

3
 SI CONTENTS PAGE NO
NO.
1 INTRODUCTION TO TATA STEEL
• HISTORY 5-7
• COMPANY PROFILE 7-8
• MISSION & VISION 9-10
• OBJECTIVES & GOALS 10-12
• AWARDS & RECOGNITION 12-13

2 INTRODUCTION TO WBD
• INTRODUCTION
• STRATEGIC IMPORTANCE 14-18
• MINES&WASHRIES OF WBD 19
• ORGANIZATION STRUCTURE 19-21
21
3 COSTING SYSTEM
• INTRODUCTION TO PRODUCTION
SYSTEM
• INTRODUCTION TO COSTING 23-24
• FLOW OF COST 24-28
• COST CENTRE 29
• PRODUCTION AND SUPPORT SERVICE 29-30
• TYPES OF PRODUCT AT WBD 31-34
• APPORTIONMENT OF COST 34-36
• PRODUCTION &SALES REPORT 37
• RECOMMENDATION 37-38
39-44

HISTORY OF TATA STEEL

The origins and ascent of Tata Steel, which has culminated into the century
long history of an industrial empire, emerge from the illustrious efforts of

4
India's original iron man and the remarkable people who thereafter, have
kept the fire burning.

The story of Tata Steel is a century old. And so is the story of steel in India.
Etched with the visions and hardships of a single man, the story has flowed
through ages to re-define steel in every way. The Tata, which started in
1907, completed a century of trust in 2007 and carries on. Over the years
this one company has discovered different avenues of effective steel
utilization and its story defines and re-defines conventional wisdom in more
ways than one.

As India was left slightly dazzled and overwhelmed in the wake of the
Industrial Revolution in England the leading Indian intellectuals of the 19th
century believed that if India were to keep pace with the world it would have
to master the modern scientific methods of the West. It was this vision of
constructive change that led Jamshed ji Nusserwanji Tata to embark on a
journey of growth that paved the path for industrialization in India. Within
his lifetime, Jamsetji was to witness the birth of a revolutionary Indian
nationalism that would assist in the emergence of independent India, the
spirit of which could already be felt when he died in 1904. In his lifetime
J.N.Tata was captivated and led by the three guiding stars - building an iron
and steel company, generating hydro-electric power and creating an
institution that offer the best education in science.

Jamsetji Tata had started his quest for steel way back in 1882 but it was
twenty-five years later, in December 1907 that the explorers found their way
to Sakchi - at the confluence of the rivers Subarnarekha and Kharkai. On
27th February 1908 when the first stake was driven into the soil of Sakchi
the dream had come alive.

When Tata’s issued shares on 26th August 1907, for the first time in the
financial history of the country, the Indian people - the masses, the affluent
and the common people -joined hands to put up the first truly Indian
enterprise. The Tata family contributed the remaining 11% shares of the
Tata Iron and Steel Company Limited. The Steel Company obtained its first
colliery in 1910, adding six more in course of time. Several mines were
spread over the states of Bihar, Orissa and Karnataka. The Tata’s soon
became the first to own a fully mechanized iron ore mine in India at
Noamundi. The Coal Beneficiation Plant at West Bokaro undertook
beneficiation of low-grade coal, thus helping in the conservation of the fast
dwindling resources of high quality coal. The collieries, the mines and the
quarries together furnish the bulk of the raw material requirements of the

5
plant. When the entire world was reeling in the Great Depression, the Tata’s
survived and supplied nearly three-fourth of the country’s steel
requirements. By the Second World War, Tata’s production capacities had
expanded enough to make their prices lower than those of steel produced in
England, raising them to an authoritarian position.

Post-Independence the Tata’s decided to set on the Herculean task of nation

building. The much-required steel for the newly devised Five-year Plans
came from the Tata factories. The Company undertook the Howrah Bridge
in Calcutta, the Bhakra-Nangal Project and the Damodar Valley
Corporation, the port at Kandla, the city of Chandigarh and many more
important projects. It did not take long for work to begin thereafter. In 1908
the plant became functional and the next year, in 1909 the blast furnaces,
steel furnaces, coke ovens, powerhouse and machine shops were laid down.
Land for the site, mines and quarries were acquired in 1910. The
Government contributed their bit by connecting railway to Gorumahisani.
The first steel was rolled on 16th February 1912 - a momentous day in the
history of industrial India.

The Tata’s were the first employers to introduce the 8-hour working day
(1912), free medical aid (1915), workers’ provident fund scheme (1920) and
many other welfare schemes even before they were introduced in the West.
The “employee association with management” programme initiated in 1956
gave the workers a stronger voice in the affairs of the Company. The story of
Tata’s achievements is a collective effort of people who sank differences of
caste, creed, race and status to strive for a common goal- excellence. They
offered their best as an expression of a sense of belonging, a sense of
commitment to the family of which they were a part - the Tata’s.

The last decade of the twentieth century happened to be a very hectic period
of self-renewal and growth for Tata Steel. An extensive technological
overhaul, several improvement projects, cost control measures, optimizing
IT support and a strong customer-centric approach were all instrumental in
finding the right direction for changing outlooks. At the turn of the
millennium, Tata Steel had earned the complete trust of the whole wide
world and emerged as a strong entity in the global steel industry.

COMPANY PROFILE

6
Established in 1907, Tata Steel is Asia’s first and India’s largest private
sector steel company. Tata steel is among the lowest cost producer of steel in
the world.

Determined to be a major global steel player, Tata Steel has recently

included in its fold Nat Steel, Asia (2 MTPA) and Millennium Steel (1.7
MTPA) creating a manufacturing network in eight markets in South-East-
Asia and Pacific countries. Soon the Jamshedpur plan will expand its
capacity from 5 MTPA to 7 MTPA by 2008 and 10 MTPA by 2012. The
Company plans to enhance its capacity, manifold through organic
growth and investments. The Company’s wire manufacturing unit in Sri
Lanka is known as Lanka Special Steel, while the joint venture in Thailand
for limestone mining is known as Sila Eastern. Tata Steel products are
targeted at the quality conscious auto sector and the burgeoning construction
industry. With wire manufacturing facilities in India, Sri Lanka and
Thailand, the Company plans to emerge as a major global player in the wire
business.

While the Company is focused in the pursuit of its operational goals, it is

also committed to being a good corporate citizen. Tata Steel extends support
to the economically underprivileged not by Charity but by strengthening and
empowering them with expertise and knowledge.

Given below is an outline of Tata Steel's operations in Europe and

SoutheastAsia.

Corus is Europe’s second largest steel producer. With main steelmaking

operations in the UK and the Netherlands, Corus supplies steel and related
services to the construction, automotive, packaging, mechanical engineering
and other markets worldwide. Corus comprises three operating Divisions,
Strip Products, Long Products and Distribution & Building Systems and has
a global network of sales offices and service centre’s, employing around
37,000 people worldwide.

7
Headquartered in Bangkok, Tata Steel Thailand is a major steel producer in
Thailand and is the largest producer of long steel products with a
manufacturing capacity of 1.7 mtpa.

NatSteel Holdings is headquartered in Singapore and is a leading supplier of

premium steel products for the construction industry. It became a 100%
subsidiary of Tata Steel in February 2004. NSH produces about 2 MT of
steel products annually across its regional operations.

MISSION AND VISION

GROUP VISION:

We aspire to be the global steel industry benchmark for

Value Creation and Corporate Citizenship
We make the difference through:
Our PEOPLE, by fostering team work, nurturing talent, enhancing
leadership capability and acting with pace, pride and passion.
Our OFFER, by becoming the supplier of choice delivering premium
products and services and creating value to our customers

8
Our INNOVATIVE APPROACH, by developing leading edge Solutions in
Technology, processes and products.
Our CONDUCTS, by providing a safe working place, respecting the
environment, caring for our communities and demonstrating high ethical
standards.

MISSION

Consistent with the vision and values of the founder Jamshedji Tata, Tata
Steel strives to strengthen India’s industrial base through the effective
utilization of staff and materials. The means envisaged to achieve this are
high technology and productivity, consistent with modern management
practices.
Tata Steel recognizes that while honesty and integrity are the essential
ingredients of a strong and stable enterprise, profitability provides the main
spark for economic activity.
Overall, the Company seeks to scale the heights of excellence in all that it
does in an atmosphere free from fear, and thereby reaffirms its faith in
democratic values.

OBJECTIVE OF TATA STEEL

The Company sets down it’s objectives in 1964.The statement spelled out
that fundamental objective of the Steel Company is:
• To strengthen India’s Industrial base through increased
productivity. Effective utilization of material and manpower
resources.

• Continued application of modern scientific and managerial

methods, as well as through systematic growth, in keeping with
national aspirations.

The company recognizes that while honesty and integrity are the essential
ingredients of a strong and stable enterprise, profitability provides the main
sparks for economic activity. It affirms its faith in democratic values and in
the importance in the success of the individual, collective and corporate
enterprise for the economic emancipation and prosperity of company guided
in its policies and objectives by philosophy and its founder Jamshedji Tata.

9
The company believes in effective discharge of its duties and obligations
toward.

SHARE HOLDER

• By protecting and safeguarding their investments.

• By ensuring to them a fair return.

EMPLOYEES

• By realistic and generous understanding and acceptance of their needs

and rights and an enlightened awareness of the social responsibilities
of industry.
• By providing adequate wages, good working conditions, job security,
effective machinery for speedy redressal of grievances and suitable
opportunity for promotion and self-development.
• By promoting feelings of trust and loyalty through a human and
purposeful awareness of their needs and aspirations and.
• By creating a sense of belonging and team spirit through their closer
association with the management at various levels.

CUSTOMER

• By providing products of proven quality at a fair price.

• By fulfilling its commitment impartially and Courteous in accordance

with sound and straight forward business principles.

• By earning their continuing confidence in its productive ability and

its technical competence to keep improving the quality of its
products.

10
COMMUNITY

• By respecting the dignity of the individual and his activity according

to the ideals of the community.

• By encouraging talent and promoting a civic sense among members of

a community.

• By availing of opportunities to develop democratic quality involved in

collective work undertaken in the interest of the community.

• By assuming it proper share of social responsibilities in the

communities in which the company operates.

AWARDS AND RECOGNITION

• World Steel Dynamics has ranked Tata Steel as the world’s best steel
maker (for two consecutive years) in its annual listing in February
2006. Tata Steel has been conferred the Prime Minister of India’s
Trophy for the Best Integrated Steel Plant five times.

• It has been awarded Asia’s most admired knowledge enterprise.

• Conferred the prestigious Global Coalition award for Business

excellence in the Community in recognition of its pioneering work in
the field of HIV/AIDS awareness.

• Tata Steel works has been conferred the prestigious Social

Accountability International (SAI), USA. It is the first steel com-any
in the world to receive this certificate.

• Corporate Sustainability Report of Tata Steel hailed by United

Nation’s Environment Programme (UNEP) and standard and poor

11
 as strongest , submitted by any corporate house from emerging
economics.

• Best Governed Company Award 2006 for setting high standards in

governance practices.

• Tata Steel conferred Mother Teresa Award for Corporate Citizen

.
• Tata Steel won “Award for Corporate Social Responsibility in Public
Health by US Indian Business Council (USIBC), Population Services
International (PSI) and the centre for Strategic and International
Studies (CSIS) in 2007.

• Deming application Prize 2008 for excellence in TQM.

• ET award for “company of the year” in Jan. 2008.

• Golden peacock award for CSR on 4th mar. 2009.

TATA STEEL conferred fortunes most admired company on 12th may 2010.

12
WEST BOKARO DIVISION
(A RAW MATERIAL DIVISION)

HISTORY:

Located 180 K.M north of Jamshedpur, the West Bokaro Collieries division
of TAT A STEEL has been making a major contribution towards the Steel
Plant’s total requirements of metallurgical coal. The land belonged to
Kamakhaya Narayan Singh Bahadur, Maharaja of Ramgarh. He leased

13
1300 bighas to Bokaro and Ramgarh Ltd. For hiring activities. The firm later
subs leased property to its managing agents. In 1946 Anderson Wright
&Company, a mining firm conducted the geological survey of the area
and confirm deposit of metallurgical coal in abundance. They invited Tata
Steel to buy all coal that it would raise at West Bokaro this offer came like
an answer to a prayer. For one the prime cooking coal that the Steel
company received from five captive collieries in the Jharia coal field could
not meet immediate Blast furnace needs the offer meant that West Bokaro
could help over- come this deficiency at least partly.
In 1951 the first ever coal Washery i.e. Washery no.-l in the country was set
up by Tata Steel at West Bokaro with a rated through put capacity of 0.6
MPTA. The entire production of medium cooking coal of West Bokaro was
commited to Tata Steel right from the beginning of the mining operation at
West Bokaro.
In 1952 with the advent of land reforms act abolishing zamindari system in
Bihar M/S Anderson Wright & Company which had so far paid royalty to
the Maharaja became lease of the state Govt. From 1952 the managing agent
system was abolished by an amendment to the Company's Act. thus the
colliery passed into the direct supervision of Tata Steel West Bokaro Pvt.
Ltd. A wholly subsidiary of Tata Steel. In 1972 West Bokaro was made a
separate of the company with some specific entity. The West Bokaro
collieries raised its first 100 tonnes of the coal in 1978 with taotal manpower
of 15 employees from the underground and the place is still known as "
South Mine Incline.”
In 1972 open cost main was introduced with small scale mechanization
under the phase -1 expansion phase-11 to achieve self sufficiency in
Metallurgical coal requirement of the Steel plant having a capital outlays of
Rs. 50,00 crores two new mechanized Queries were opened viz a viz Quarry
"A" and "B" each with a capacity of 3000 tonnes per day, totaling 1.8
million tons per anuum . A new Wahery (W-ll) was commissioned in 1982.
All the washed products namely clean coal meddling from West Bokaro is
being transported to Chainpur railways siding from where the same is loaded
into wagon and dispatched to Jamshedpur.

MODERNISATION PHASE-III
With the launching of modernization phase-Ill at Jamshedpur, the
requirement of coal increased and West Bokaro was required to feed 1.4
MTPA (Million tons per annum) of clean coal having an ash content of 17%
as against the present the 1.1 MTPA. This marked the beginning of yet
another new phase modernization phase-III (MP) at West Bokaro.
Modernization phase-Ill was launched in the year 1991-92 and completed by
1994-95, total capital outlay was Rs. 265 crore. With the completion of MP-

14
III the raw coal production was increased from 2.5 MTPA to 3.5 MTPA.
There was increase of overburden production from 3.6 million cubic meters
per annum to 8.34 million cubic meters. The expansion program included
the opening of a new open-cast mine with necessary infrastructure at Pundi,
installation of a third washery (W-III) having a capacity of 2.1 MTPA,
augumentation of product transportation capacity and one more moving
loader facilitities at chainpur for higher dispatches by Rail. In order to meet
the increased requirement of 10 MW fluided power plant was
commissioned.

A brief history and growth series of West Bokaro Division is

given below:-

1 1947 Mines comes into existence as M/S Bokaro&Ramgarh

Ltd. Management of mine given to M/S Anderson Wright.

2 1952 Management taken over by M/S West Bokaro Pvt. Ltd. A

wholly owned subsidiary of Tata Steel.

3 1972 West Bokaro becomes a division of Tata Steel

GROWTH

Year Major facilities Capacity

1948 Underground mine opened 0.30 million tons per

annum

1951 2.1 MW Power House 1.50 tones per hour Clean coal @ 18% Ash
washery No.1
( 1st in India) 90 TPH monocable ropeway

15
1972 Modernisation Phase- 1 500 TPD Enter in Quarry 0.40 MTPA Clean
coal@ 18% Ash

1982 Modernisation Phase-2 6.2MW Power House 500 1.10 MTPA Clean
TPH BC rope way 1 .80 MTPA through washery coal@ 17% Ash
No.-2 Q-AB/EF Rope way/PCP-1

1994 Modernisation Phase-3 1.40 MTPA

2.1 MTPA Through Washery Clean coal@ 17% ash
No.-3 (Modular concept, Desholer In Built)
Q-E/PCP-2/OLC 220 TPH Monocable
Ropeway 10X2 MW Power House

1997 Sustance of Production (Replacement of 1.40 MTPA

Production) Clean coal@ 17% Ash

1999 Deshaling plant 1.46 MTPA

Clean coal (a) 17%
Ash

2000 Sustenance Phase-1 1.567 MTPA

Additional equipment Replacement of Clean coal fd) 17%
Equipment Replacement of old equipment Ash
GPS(Global Positioning System)based
TDS (Trunk dispatch system) (1st in India
2003-04 Sustenance Phase-2 Opening of new South 1.7 MTPA Clean
Eastern Block coal@ 16% Ash
(1st coal mine in India which have world level
equipments and facilities

16
ASPIRATION OF WEST BOKARO DIVISION

“To be the most admired unit in coal industry”.

WEST BOKARO IS TODAY………….
• West Bokaro is a division of Tata Steel providing 43% cooking
coal & thermal coal requirement of the company.
• It also provides 34% thermal coal of the requirement of Jojobera
plant, Tata Power.
• Location-180 Kms. North of Jamshedpur -38Kms, South of
Hazaribagh 26 Kms. North of RamgarhCantt.
• Leasehold-4300 acres.
• Reserves-200 MT.
• West Bokaro Division is the first coal mine in India,which has
been certified under Environment Management System ISO 14001.

WORK ACTIVITIES
West Bokaro is one of the coal mines divisions of Tata Steel, which provides
the various types of coal on demand of the Tata Steel Jamshedpur & other
customers. The products are:-
• ROM (Raw coal)
• Clean coal
• Middling coal
• Rejection coal
• Slurry

STRATEGIC IMPORTANCE OF WEST BOKARO

17
The division is built on the philosophy of excellent services. Cost
competitiveness (Rs.950 per ton over Rs. 3000 per ton imported from
Australia), consistency, product quality and adherence to deadlines give the
division a distinct edge over other collieries. The West Bokaro Collieries
have a distinction of commissioning the county's first coal washery in 1951.
Later, a second washery with automatic controls for online monitoring and
control process parameters was set up. The colliery has reserves of over 196
million tonnes of coal. The colliery showcases sophisticated mining
technology and delivers coal at competitive cost, accounting for about 50%
of Tata Steel's coking coal requirement for its Blast Furnaces and Coke
Ovens. 2.4 million ton per annum clean coal is produced here.

MINES AND WASHERIES OF WEST BOKARO DIVISION

MINES: A mine is the surface land which is rich in coal. Raw coal is
extracted from mine and sends towasheries .there are two types of mine:
• Underground mines
• Open cast

UNDER GROUND MINES: In underground mines mining operations are

performed without removing upper layer of earth .now these mines are not in
use because of safety reason.

OPEN CAST MINES: In open cast mine the upper layer is removed to
perform mining operation.

WASHERIES: It is a plant which cleans the impurities of raw coal and

produces coal with desired characteristics.

COAL: Coal is a non-renewable fossil fuel that was formed by a series of

natural geochemical process .from plants remains which accumulated
together with other sediments the sea floor in shallow gradually subsiding
basins of sedimentation . coal reserve is about 192 million tones.

OVERBURDEN: means the layer between two coal seams, which is made
of rock and soil having no fuel quality.

18
MINING OPERATIONS

• Preparation of surface-First the surface of land is prepared for

mining operations, trees are cut down, surface is labeled

• Drilling-Drilling is done through drilling machines, this machines

drills holes in the surface

• Blasting- In this process the holes done by drilling machine are filled
by explosive such as gun powder after that celling is done then after
blasting took place

• Removal of over burden- After blasting heavy rocks breaks down in

to small pieces ,then with the help of Dosers and shovel machine these
OB are loaded on dumper the loaded dumper dump the OB to the
distance place from the mining areas.

• Extraction of coal-In this process drilling and blasting operations are

repeated and then what we get is raw coal,this raw coal is then send to
hopper for crushing plant.

• Crushing of coal-In hopper huge rocks of raw coal are crushed into
small size acceptable to washries.

• Coal beneficiation-In washery coal beneficiation took place, coal

beneficiation include washing of coal. After washing the coal we get
is clean coal, middling & reject.

• Dispatch to railway siding and storage –Clean coal is then

dispatched to Jamshedpur plant through railways

Chief
Dpt.Managing
Head
Manager
Head
Chief
Head
Managing
Chief
Head
Vice
Chief
Head
General
Medical
President
manager
Director
Director
(Coal
(Quarry
(Account)
(Tech.Gr.)
(Aspire)
(P&S)
officer
(Engg.Serv)
Adminis-
(Sec.
(R&TS)
(Quarry
(P-SEB)
(Planning)
(HR/IR)
(HR)
(ITS)
(West
Ben)
E) Bokaro)
AB)
tration
Prod.)
Raw Material

19
ORGANISATION STRUCTURE

20
21
INTRODUCTION OF PRODUCTION SYSTEM

West Bokaro is an opencast mine of coal. In order to extract the raw coal
Mining operation has to go through several processes gradually.

ACTIVITIES IN QUARRY
Ground Preparation & Removal of Overburden.

• Preparation of surface(clearing ground surface)

22
• Firstly the rocks are drilled

• filled by the gun powder and blasting is done

• SHOVELL MACHINE and DUMPHER dumped over burdens on

dumping yard...

Extraction of raw coal (grade wise) from various quarries.

• Seams of coal are drilled.

• Filled by the gun powder.

• Blasting is done to fragment the coal.

• Heavy Earth Moving Machineries (HEMM) takes out coal from the
mine and sends to crushing plant to further reduce the coal size.

ACTIVITIES IN CRUSHING PLANT

Crushing Plant: Raw coal is dumped into hoppers by 50 T capacity

Bottom Dump Coal Haulers. Crusher is driven by a 180 KW slipring motor.
The raw coal is crushed to a size of –125 mm. Crushed coal is fed to 2
conveyor circuits (600 TPH) known as C1A and C1B.

Inbound Logistics (Transfer to Washery): With the help of

Ropeway and Conveyor belts Crushed Coal transfer from
Crushing plant to Washery for Coal beneficiation.

Coal Beneficiation: Raw coal is beneficiated, at the Washeries, to

produce clean coal, middling, tailings and rejects. The principle of
separation by specific gravity is employed in the DM Cyclone process,
where the medium of washing constitutes of water and finely ground
magnetite powder.

Outbound Logistics: Ropeway is used to transfer the Clean Coal from

washeries to Chainpur Railway siding in order to dispatch the clean Coal to
Jamshedpur.

COSTING

23
 The techniques and processes of ascertaining costs. Costing works are
performed in the different cost centers at west bokaro division and works are
done very effectively and efficiently.

The entire costing related activities are performed in SAP (ERP).As

accounting system, including Account Receivable and Payable are also in
SAP, costing system draws input from these module automatically.

Post costing Run: following reports/statements are generated.

• Total expenditure under different expense heads.

• Amount absorbed in cost and statement of under/over absorption.
• Material wise cost.
• Cost of sales.
• Department/activity wise cost.

Based on above data/reports, variation analysis with ABP is done for

managerial decision.

The process of cost run is fully automated and manual intervention is

minimized.

Production Data Payroll Related Data Sales Related Data

(Material Wise)

Parameters Such as Provision for Expenses

Equivalent Ratio ERP

Reports/Data

24
NEED FOR COSTING
• Exercise the control over cost.

• Cost is to help formulating policies.

• Cost help in management in fixation of the selling price of the product

produced.

• It helps the management in its effort to maximize the output and profit.

• It helps in forecasting

• To allocate proper cost to respective cost center

• To record cost

• Good costing system provide base for future planning

Costing System consider the expenses of every activities in

production process

25
COST

It is the amount of expenditure incurred on or attributable to a given thing. It

is the result of effective combination of factors of production. Cost or
production cost refers to all sorts of monetary expenditures incurred in the
production of the commodity.

Fig.:- Showing Types of Production Cost

Total Fixed Cost (TFC)

It is the payment for fixed factors of production in the short run is
known as total fixed cost. Fixed costs are cost which do not change with the
change in quantity of output. Fixed costs are also known as supplementary
costs or overhead costs.
Some examples of Total Fixed Costs are:-
• Insurance premium
• Salaries of the permanent employees
• Standard depreciation of the plant and machinery
• Maintenance of building and license fee etc.
Total Variable Cost (TVC)
It is the payment of variable factors of production is called as total
variable cost. Variable cost is one which varies as the level of the output
varies. Total variable costs are also known as prime costs, special costs or
direct costs.
Some examples of Total Variable Costs are:-
• Wages of temporary labourers
• Cost of raw materials
• Cost of fuel
• Cost of electricity etc.

26
Total Cost (TC)
Total cost includes both total fixed cost and total variable cost. It may
be also called as total cost of production.

TC = TFC + TVC
Elements of Cost
1. Material (Material is a very important part of business)
A. Direct material
B. Indirect material
2. Labor
A. Direct labor
B. Indirect labor
3. Overhead
A. Indirect material
B. Indirect labor
They are grouped further based on their functions as,
1. Production or works overheads
2. Administration overheads
3. Selling overheads
4. Distribution overheads

Classification of costs
Classification of cost means, the grouping of costs according to their
common characteristics. The important ways of classification of costs are:
• By nature or element: materials, labor, expenses
• By functions: production, selling, distribution, administration, R&D,
development,
• As direct and indirect
• By variability: fixed, variable, semi-variable
• By controllability: controllable, uncontrollable
• By normality: normal, abnormal
Cost centre
In business, a cost centre is a division that adds to the cost of an
organization, but only indirectly adds to its profit. Typical examples include
research and development, marketing and customer service. Companies may
choose to classify business units as cost centres, profit centres, or investment
centres. There are some significant advantages to classifying simple,

27
straightforward divisions as cost centres, since cost is easy to measure.
However, cost centres create incentives for managers to underfund their
units in order to benefit themselves, and this underfunding may result in
adverse consequences for the company as a whole.
In simple words, Cost Centre is the lowest cost object in the
organization structure. Cost Elements are also used in Costing System. Cost
Elements represents nature of expenditure. Cost Centre and Cost Element
both are related to each other taking them individually for decision making
or analyzing does not work. This can be understand with the help of an
example: Suppose in a company XYZ Co. Ltd. there are 4 Cost Centres A,
B, C and D and their cost during a financial year are Rs 500, Rs 800, Rs 900
and Rs 1100 respectively. From the above data we cannot infer anything, we
cannot take decision on these data until and unless we have the proper
information of expenses which are included in this amount i.e. different
expenses which constitute the total expense for the financial year of a cost
centre. Say, out of Cost of Rs 500 of cost centre A Rs 100 is paid for wages,
Rs 50 paid for maintenance, Rs 75 for repairs, Rs 75 for stores, Rs 100 for
transport and Rs 100 other misc. expenses. When we combine both the
elements then it makes easy to understand the data or its origin and it also
makes easy to take decision.

Cost Cost Elements Tota

Centr Wag Repair Maintenanc Stor Transpor Misc l
e e s e e t .
A 100 75 50 75 100 100 500

Costing System at West Bokaro

In TATA Steel Costing is done on the basis of Accrual basis which
expenses incurred is recorded on the same date whether paid in cash or not.
TATA Steel derives a significant cost advantage from its low-cost captive
sources of iron-ore and coal. The company's cost of coking coal, an
important element of production cost, is almost less in comparison to other
companies, despite using a 50:50 blend of captive coal and imported coke.
Blended coal is used to reduce the high ash level of Indian coal, which is not
suitable for metallurgical operations. TATA Steel's cost structure also
benefits from the modernization programmes and process improvements that
it has continuously undertaken.
West Bokaro Division, a captive source of coal, works as one of the
various Cost Centres of TATA Steel Ltd. having its own cost centres along
with various cost elements of these cost centres. These cost centres and their
cost elements are taken together for better understanding of the cost incurred
on each cost elements with respect to their cost centres. Cost savings have

28
primarily accrued from improvements in throughput in different equipment,
and processes and reduction in specific raw material consumption. The
company has also satisfactorily dealt with its high labour costs through
continuous manpower rationalisation.
The company recognizes the need to further reduce costs and improve
efficiencies. TATA Steel plans to achieve additional cost savings in the
areas of strategic sourcing, inbound and outbound logistics, manpower and
administrative costs.
TATA Steel has divided the production process at West Bokaro
Division in the following cost centers for his convenience and better
working:
List of cost centers in use at West Bokaro Division:

S. No. Cost Centres

1. Drilling
2. Shovelling
3. Mining Gnrl – Coal
4. Loading
5. Hauling
6. Pumping
7. Dozzing
8. Crushing Plant
9. Deshlling Plant
10. Outbound Logistics
11. Rake loading system at Chainpur
12. Support Services (Work Shop, Water Supply, Power
etc.
13. Overheads (Medical, HR, Accounts etc.)

System Application & Products (SAP – ERP)

29
 The entire Costing related activities are performed in System
Application & Products (SAP – ERP). In SAP, each and every cost element
of Cost Centres is defined and is uniquely identified by 7 digits numeric
codes. Following is the list of Cost Centre groups and their SAP group
name; these are meant for the convenience of user:
Group SAP Group Name
Quarry AB QAB
Quarry E QE
Quarry SE QSE
Coal Beneficiation CBGRP
Power PWR
Central Organisation CORG
Support Service WBMISC
Total West Bokaro RWBK01
Cost Centre group WBK
Department wise Cost RWBK01
Centre
Maintenance Cost Centre WBMNTPM
Cost Element Group WBALL
As accounting system, including accounts receivables and payables,
costing system draws input from these modules automatically.
Post costing run following reports and statements are generated:
• Total expenditure under different expenses head.
• Amount absorbed in cost and statement of under/over absorbtion.
• Material wise cost.
• Cost of sales
• Department activity wise cost.

Based on the above data and reports, variation analysis with Annual
Business Plan is done for managerial decision. The process of cost run is
fully automated and thus manual intervention is minimized.
Inventory and Stores related Data Payroll related data

Production data Sales related data

Parameters like Eq. ratio System Application & Products (ERP) Provision for expenses

30
 Data, Reports and Statements

Figure showing the structure of SAP (ERP)

Production Process
West Bokaro is an opencast mine of coal. In order to extract the raw
coal, mining operation has to go through several processes gradually.
Process begins with clearing ground surface with the help of drilling
machine and gunpowder (used to blast the surface). After blasting over
burden like rocks, dust etc is removed from the surface with the help of
shovel machine and earth moving equipments. Once the surface is cleared
raw coal is extracted from the mine with the help of dumpers and sends to
the crushing plant. In crushing plant, raw coal is dumped into hoppers by 50
T capacity Bottom Dump Coal Haulers. Crusher is driven by a 180 KW
slipring motor. The raw coal is crushed to a size of –125 mm. Crushed coal
is fed to 2 conveyor circuits (600 TPH) known as C1A and C1.With the help
of Ropeway and Conveyor belts Crushed Coal transfer from Crushing plant
to Washery for Coal beneficiation.
Coal Beneficiation is a process in raw coal is beneficiated, at the
Washeries, to produce clean coal, middlings, tailings and rejects. The
principle of separation by specific gravity is employed in the DM Cyclone
process, where the medium of washing constitutes of water and finely
ground magnetite powder. After beneficiation raw coal is ready to dispatch
for consumption, for this purpose ropeway is used to transfer the Clean Coal
from Washery to Chainpur Railway siding in order to dispatch the clean
Coal to Jamshedpur.
Post beneficiations following products are generated:
Product Range of Ash % End Use Mode of Dispatch
Clean 11 to 13.5 Steel making Rail
Coal
Middlings 35 to 40 Thermal Power Plants Rail
Tailings 50 to 65 Bricks Kilns etc. Rail/Road
Rejects 65 + Power Plants etc. Rail/ Road

31
Costing System consider the expenses of every activities in production
process;

Costing works are performed in the different cost centers at West

Bokaro division and works are done very effectively and efficiently. As
discussed earlier, a cost centre is a division that adds to the cost of an
organization, but only indirectly adds to its profit as well as it has its own
cost elements, which may differ from cost centre to cost center. In SAP each
cost centre is defined and is given a specific code or identification number
which is known as Cost Centre Number.
Cost or production cost refers to all sorts of monetary expenditures
incurred in the production of the commodity.
Fig.:- Showing Types of Production Cost

Purchase of Raw materials Purchase of Services & Labour Purchase of Plant & Equipment

Overheads Processing & Maintenance Depreciation

Work in Progress

Finished Goods

32
 Cost of Goods transfer / Sold

From the above diagram it is clear that for Production or

manufacturing we need some other things except raw materials i.e. transport
service, labour, maintenance etc. these are called Support Services.
Some of these Production Service and Support Services of West
Bokaro Division are listed following;

Production Services
Items Quarries WBC
AB E SE
OB Coal OB Coal OB Coal
Drilling ** *** ** *** ** *** ****
Blasting ** *** ** *** ** *** ****
Dozing ** *** ** *** ** *** ****
RD-Maint ** *** ** *** ** *** ****
Minning GNR ** *** ** *** ** *** ****
Drill-Maint ** *** ** *** ** *** ****
Shovelling ** *** ** *** ** *** ****
Shovel-Maint ** *** ** *** ** *** ****
Dumping ** *** ** *** ** *** ****
RD-Maint ** *** ** *** ** *** ****
Dozer-Maint ** *** ** *** ** *** ****
Elec-Maint ** *** ** *** ** *** ****
Loading ** *** ** *** ** *** ****
Pl & Buil. Maint ** *** ** *** ** *** ****
Hauling ** *** ** *** ** *** ****
Pumping ** *** ** *** ** *** ****
Pump-Maint ** *** ** *** ** *** ****
Suppt. Equip. ** *** ** *** ** *** ****
Suppt. Equip Maint ** *** ** *** ** *** ****
Haul Road Maint ** *** ** *** ** *** ****
Project Exp(SEB) ** *** ** *** ** *** ****
Future Use ** *** ** *** ** *** ****
Total Cost ** *** ** *** ** *** ****

SUPPORT SERVICES
ITEMS WBC
SPH-OPRN *******

33
SPH-MAINT *******
DG SET-OPRN *******
DG SET-MAINT *******
DVC *******
PD-OPRN *******
PD-MAINT *******
Personnel Dept. *******
Canteen Services *******
Training & Quality *******
Rural Development *******
Secondary Production *******
Planning & Development *******
Land Cell *******
Environment Cell *******
ITS *******
Accounts *******
GM-Office *******
Corp. Comm *******
ASPIRE *******
Gen. Service *******
Central Garage *******
Domestic Water *******
AC & Rfgeration *******
Elec. Gen. Maint *******
Telecom Dept *******
Sanitation *******
Town Maintenance *******
Inspection Cell *******
Medical *******
Administration *******
Security *******
Guest house *******
Officer’s Hostel *******
Sports Cell *******
PUR & STORES *******
Project Cell *******

34
Cen. Org. logical *******
Workshop *******
Instrumentation *******
Industrial Water *******
CSEP *******
EOS *******
Quality Monitoring *******
EEI (CB) *******
MGMT Cost *******
Exploration *******
Casual Employees *******
Middling Credit *******
Block KB & P *******
QCD *******
Total Cost of Support Service *******

Cost of Production Dept + Cost of Support Services Dept. = Total

Cost

Cost Run, Process & Control

The cost process begins with knowing the requirement of clean coal
by the TATA Steel, Jamshedpur. This requirement is dependent on various
internal and external factors. Internal factor can be Policy of management,
Production requirement etc and external factors can be Government Policy,
Price of Coal in International Market etc. Once the requirement of clean coal
by TATA Steel, Jamshedpur is received by West Bokaro Division an Annual
Business Plan (ABP) is prepared. ABP is a statement showing the estimate
value of production and cost incurred during the production process by the
various cost centers. These estimated values are calculated on the basis of
last month data and then entered into the system. The ABP is drafted after
deep analysis impact of external factors, need of Jamshedpur plant,
Government policies, inflation rate etc. The ABP drafted is a very useful
tool for monitoring expenses and production target. The ABP figures are
also fed in the system so, that planned and actual figures are displayed
simultaneously and easy to monitor.
Survey report (details of opening balance, production, consumption,
dispatch & sales and closing stock of different material are given in the
report) is received from Chief (Planning). Reconciliation of data as per SAP

35
with that of Survey Report is done. For cost control – Data as per SAP
should be matching with Survey report figures. In case of difference, contact
the authorized production personnel and sr. Manager (Q-AB) from
departments for correction. Cost run should not start before data as per SAP
is exactly matching with survey report.
There are specific activities for each production and maintenance
departments in SAP which enables system to compute standard cost. In the
end of the month ABP figures are compared with Actual figure and Cost
Sheet (Annexure V) is prepared for the month and then on the basis of this
cost sheet a Comparative Statement (Annexure VI) is prepared and sent to
Chief Finance Officer (Jamshedpur) and General Manager (West Bokaro
Division).

At west Bokaro Division two types of products are produced:

1) Joint product
• Clean coal
• Middling

2) By-products
• Tailing
• Washery Rejects

1. Joint- product
Joint product is the main product. It means that all the mining operations are
done for getting the main product i.e. clean coal.

36
Clean coal

Clean coal is obtained from the raw coal after washing the coal at the
washeries of the WBD and raw coal is obtained from the mining operations.
We calculate the net cost of cc.
Clean coal is a low ash% coal which is used in blast furnace for melting
iron.
West Bokaro Division is a captive mine of Tata steel ltd. The primary
objective is to supply of clean coal to Jamshedpur plant as per the annual
budget plan decided by the company at low cost.

Middling

At WBD joint product is the middling. It contains the 35%ash it is obtained

during the process of main product. It is sold by the Del credre agent .We
calculate the net cost of middling.
Middling are sold to the thermal power stations or some middlings are sent
to the Jamshedpur for further process.
Joint products are defined as the two or more products separated in course of
some processing operations, usually requiring further processing, each
product being in such proportion that no single product can be designed as a
major product.
By analyzing, it is clear that two or more products are inevitably produced in
a process from one basic raw material and each has more or less the same
value economic importance or earns approximately the same profit in
relation to the other.

MAIN FEATURES ARE:

1) Joint product by their very nature of production process cannot be

produced separately and have equal economic importance.
2) The joint products can be sold either at the stage of production (split
off point) or itself or they can be processed further.
3) Costs incurred before the split off point are called joint costs and the
costs incurred Beyond that point are known as separable cost.
4) The crucial factor in accounting for joint product is allocation of joint
cost among the joint product from the joint process.

Commonly used methods for allocating joint process costs are:

1) Physical quantities method.

37
2) Relative sales value method.
3) Net realizable value less normal profit method.
4) Weighted average cost method.
5) Any reasonable method. - Equivalent Ratio (ER) method

Use value of coal is equal to the carbon content in it. Carbon content in clean
coal is higher than middling. The ratio for distribution of cost is based on the
ration of carbon in clean coal and middling as per their quantity.

1. BY PRODUCTS
Tailing and rejects are the byproducts at WBD. Tailing contains 50% of ash
% and it is used in brick kilns. We calculate the net cost of Tailing.
Rejects contains 65% of ash% and it is used in FBC power houses, there is
no calculation work is done.
By product is defined as the any saleable or usable value incidentally
produced in addition to main product.
By analyzing the definition it is clear that by products are associated
products which arise or emerge from one basic raw material in the course of
producing the main product and such product having the market value.

MAIN FEATURES ARE:

1) By products are of lesser value as compared to that of main product.

2) If subsequently process enhances their value but the resulting profit will
be less than that of the main product otherwise the by product would
become the main product.

3) The accounting treatment depends upon whether the by product is sold at

the split off point or is further processed.

The two most commonly used methods of accounting for by

products are:-

1. Miscellaneous income method.

2. Net realizable value method.

At WBD NET REALISABLE VALUE METHOD is used.

Cc =clean coal,
Midd. =Middling’s

38
Apportionment of Cost
At West Bokaro Division, Equivalent Ratio Method is used to allocate
cost of Joint Product and Net Realizable Method is used for allocating the
cost of By-Product. In Equivalent Ratio Method, ratio of division of cost is
calculated on the basis of Carbon content in the product. Net Realizable
Value is a method of evaluating an asset's worth when held in inventory, in
the field of accounting. NRV is part of the Generally Accepted Accounting
Principles and International Financial Reporting Standards (IFRS) that apply
to valuing inventory, so as to not overstate or understate the value of
inventory goods. Net realizable value is generally equal to the selling price
of the inventory goods less the selling costs (completion and disposal). In
formula:
Inventory Sales Value - Estimated Cost of Completion and Disposal = Net
Realizable Value
Clean Coal and Middling are considered as joint product. Expenditure
is allocated to both products based on carbon produced (equivalent ratio
method). On production of Tailings, credit is given to CC and Middling cost
at the rate of administered price of tailings. Amount of credit is distributed to
Clean Coal and Middling based on carbon production. Stock of Middling is
valued at moving weighted average price.
Stock of Tailings is maintained at administered price. On actual sale
of Middling, difference between sale price and moving weighted average
price is credited to CC cost. On sale of tailings, difference between sale price
and administered price is credited to CC cost and Middling cost in the ratio
of carbon production .Credit for sale of Rejects is given at the time of actual
sale to Clean Coal and Middling at ratio of carbon production.

Example: Apportion of Cost*

Dispatching Cost Rs. 30,000
Production Clean Coal 200 tones Middlings 350 tonnes

39
Sale of Middling 15 tonnes @ Rs 800 per ton
Govt. notified price of Tailings Rs. 760 per ton
Selling price of Tailings Rs. 1,410 per ton
Total Cost of Raw Coal Rs. 1, 00,000
Production of Tailings 10 tonnes
Rejects 50 tonnes
Selling price of Rejects Rs. 225 per ton
(* figures are hypothetical)
Calculation of Cost per ton of Clean Coal and Middling:
Particulars Clean Coal Middling
Production 200 t 350 t
Ash % 14% 40%
Carbon Content 86% 60%
Equivalent Ratio 200*86% 350*60%
= 172 = 210
=172/(172+210) =210/(172+210)
= 0.45 or 45% = 0.55 or
55%
Cost to be absorbed in ratio = 45% = 55%
Gross Cost = 100000*45% = 100000*55%
= 45000 = 55000
(-) Sale of Tailing (1410*10) = (6345) = (7755)
---------------- ---------------
= 38655 = 47245
(-) Sale of Washery Rejects (225*50) = (5062.5) = (6187.5)
---------------- ---------------
= 33592.5 = 41057.5
(-) Sale of Middling (800*15) = (12000)
---------------- ---------------
Net Cost before dispatching = 21592.5 = 41057.5
(+) Dispatching Cost = 12000 = 18000
---------------- ---------------
Net Cost after Dispatching = 33592.5 = 59057.5
---------------- ---------------
Cost per ton before dispatching = (21592.5/200) = (41057.5/350)
= 107.96 = 117.30
Rs. 107.96/t Rs.
117.3/t
Cost per ton after dispatching = (33592.5/200) = (59057.5/350)
= 167.96 = 168.73
Rs. 167.96/t Rs.
168.73/t

40
ABP
ABP stands for “ANNUAL BUSINESS PLAN” it is like an annual pre-
planned budget for one financial year.
The ABP drafted is a very useful tool for monitoring expenses and
production target.
The ABP figures are also fed in the system so, that planned and actual
figures are displayed simultaneously and easy to monitor.

The ABP is drafted after deep analysis impact of external factors, need of
Jamshedpur plant, government policies, inflation rate, etc.

Production Report
Production report is a key document. It contain following
information:-
• Extraction of Overburden.
• Extraction of raw coal (grade wise) from various quarries
• Opening stock and Closing stock is also given.
• Raw coal fed to washeries.
• Quantitative detail raw material is also given.
• Clean coal dispatch to Jamshedpur plant.
• Middlings and Tailings are sold to the Institutional buyers.

The report is made on daily basis. However at the month end a final
summary of the entire month is captured and verified by surveyor. The data
like raw coal production etc. helps in calculation of royalty and stowing
excise.
.

SALES REPORT

SALES REPORT is a key document. It contains following information:

41
• Name & Address of the party whom the company has sold its product.

• Name of the item sold.

• Quantity of the item sold.

• Rate of the item sold.

The report is made on daily basis. However at the month end a final
summary of the entire month is captured and verified by surveyor.

On the sales VAT and CST are calculated.

RECOMMENDATION

The mining industry is under constant pressure to stay competitive whilst

complying with often conflicting environment and safety objectives.

Here we recommend some ways to reduce cost and increase productivity:

42
1) The company can reduce it’s production cost by using the central
positioning of a primary crusherin the pit of an opencast mine,
accompanied by conveyors that transport the crushed over burden out of
the pit. This shortens the travelling distance for ore trucks as well as the
cycle times betweenthe excavation and crusher operations, requiring
fewer trucks without reducing the beneficiation rate.

The same applies when conveyors, instead of trucks, are used to

remove overburden from under-ground operations. It allows greater
savings in terms of fuel, carbon dioxide emissions and time,”

2) The company can also go for an automatic mine hoisting system

developed by GHD, it carry two standard mine trucks directly up and
down the slope of a mine.
The concept, which has been aptly named ‘truck uplift in pit system’ or
TULIP, eliminates the need for trucks to drive up and down the pit and
offers economic, safety and sustainability benefits.
The system achieves significant cost savings leading to capital
investment recovered within approximately two to three years after
implementation due to:
• Reduced truck fuel consumption, fleet sizes, maintenance and tire
costs.

• Reduced manpower due to fewer trucks.

• Lengthening of the economic life and depth of a mine due to

reduced pit cut backs.

• Increased safety of operations due to reduction of haulage operation.

• Significant reduction in greenhouse gas emissions by elimination of

up-ramp travel under maximum power.

• Decrease emission of greenhouse gases : The company can reduce

its cost by reducing greenhouse gas emission, because when
company reduce greenhouse gas emission , it can earn CORBON
CREDIT, which can be sold to industries situated in other developed
countries .

43
FEW WAYS TO REDUCE OFFICE ENERGY
CONSUMPTION

• Optimize Energy Settings on Your Computer- Every computer has

energy settings that will put the machine into sleep mode if not used
for a certain period of time. Using these settings to shut off the
monitor or put the computer into sleep mode can really help lighten
the electricity load.

• Shut Down Your Computer When You Leave.

• Unplug Devices that are Not in Use.

• Replace Old Monitors with LCD Screens - LCD monitor saves 50

% more electricity than a CRT monitor so use LCD monitor in
office.

• Install an Occupancy Detector -For a relatively small amount of

money an occupancy detector can be installed in a room and linked
to the lighting. The detector will shut off lights when people are not
in the room, helping to reduce office energy consumption

• Use Compact Fluorescent Light Bulbs - Compact fluorescent light

bulbs are a relatively new addition to the market, and they are about
four to five times more efficient than a traditional light bulb.

• Invite in Sunlight - Natural light is free, clean, and also helps

brighten the mood of workers. To reduce office energy
consumption open up all those blinds and invite the natural light
inside. Try to arrange desks around natural light sources if possible
as well.
• Use electronic chock instead of common chocks
• Don’t use zero watt bulb it actually consumes 10 watt
• Do not overcharge phone- Besides wasting power, it will damage
the phone, too.
• Change Default Printing to Black & White It’s estimated that it
costs .08 cents a page to print in color versus .007 cents page to
print in black and white. So, if we assume a person prints 10 pages
a day*260 workdays…printing in color will cost $208 per year

44
 while printing in black and white will cost $18.20 per year for a
difference of $189.80.Take that across a company of 5,000
employees and we’re talking some serious costs savings folks
($949,000).

• Print on Both Side of Paper

• Text Messaging Plans

• Proper inventory management- By reducing dead stock, carrying

cost & proper forecasting.

• Brainstorming

• Benchmarking: Set up internal benchmarks to reduce your cost per

order, cost per call, cost per contact and cost per transaction.
Translate these down to department and individual work standards

• Staffing models - full time/part time/flex: Labour is your single

biggest expense in the cost center. Take a good look at your current
staffing ratio. Full time, if not kept productive, may be costly.
Change the mix of full time, part time and flex time staff.

• Minimize machine breakdown.

• Telecomm audit- Make sure your office telephones are used for
official work not for personal calls.

• Negotiate with your suppliers.

• Keep your employee up to date by proper training Employees must

know from the starting point what is being expected from them, so
confusion can be avoided between managers and subordinates.
Because a small confusion can harm the operation.

45
 ****************************************

CONCLUSION
I enjoyed a lot during my training. I also learned many things about the
organization from which I was unaware which were important for my
personal enrichment.

Payroll system at West Bokaro Division is an outcome of practical thinking

and designed as per specific need of West Bokaro Division. Visits to the
accounts department were a learning experience for me. The process may
not be applicable to all parallel industries. But, indeed it was a learning and
pleasant experience.

46
REFERENCE
• INTERNET
• JRD TRAINING CENTRE, LIBRARY
• FINANCIAL MANAGEMENT-I.M. PANDEY
• STAFFS (ADM.OFFICE,ACCOUNTS DEPT,
STORE DEPT., PURCHASE DEPT)

47