Table of contents:

Serial No

PARTICULARS

PAGE NO

Executive summary

4-5

Industry Profile

6-10

Major players in Tiles Industry

11-12

Company Profile

13-17

Departmental study

18-40

Project Analysis

Objectives of Study

41

Methodology

42

Analysis, Interpretation &

43-58

Calculation

Findings

59-60

Suggestions

61

Conclusion

62

Bibliography

63

Executive summary
Murudeshwar Ceramics Limited, Hubli is a Public Limited Company in the Joint Section
promoted by Shri. R.N. Shetty and Associates and KSIIDC. The company was incorporated
on 29-6-1983 and commenced commercial operation during the year 1988. The company
started manufacturing of Ceramic tiles initially and then diversified to manufacture vitrified
tiles and Granite slabs from the year 1993-94 and 1994-95 respectively.
Cost Volume Profit Analysis is an important tool that provides management with
useful information for managerial planning and decision-making. Profit of a business firm
are the result of interaction of many factors, such factors determine whether the firm has
profit or loss and whether it increases or decreases over a time among these influencing
factors following are considered as key factors.
Selling price
Total fixed costs
Sales Mix
Internal efficiency
To do an effective job in planning and decision-making, management must have
analysis, which allows reasonably correct prediction of how profit will be affected by
change in any one of these factors. Cost volume profit analysis furnishes complete picture
of a profit structure that enables management to distinguish between the effect of sales,
volume, function and the result of price or cost changes upon profit.
Thus cost volume profit analysis is the study of the relationship between expenses,
revenue (Sales) and profit.

The objectives of the study:

1.

To study the relationship between the cost and profit at different levels of
capacity of MCL.

2.

To analyse the trend in break-even position of the company.

3.

To study the Break-even point of MCL

4.

To study the P/v ratio and Margin of safety of the companys all products

Industry profile
Introductions
Tendency of every human being to is to make a beautiful dwelling for himself that suits his
capacity and needs. Since ages beautiful home requires many factors, which should be taken into
account, one of them is the flooring, which plays a vital role. However, a man's expectation and
needs cannot be decided. In the early days, there was a large usage of wood and textile in the earlier
period. Later the use of natural stones available in abundance became prominent.
Adopting some simple technique, the natural stones were made to undergo a simple process
before being actually used. The processed stones were broadly termed as "tiles". This was the dawn
of the tile industry. During the evolutionary days, only the developed countries had the tile industry.
But as gradually, the demand increased, the tile industry began being found also in the developing
countries, basically due to favorable factors like the availability of the raw material in abundance
and the simplicity of the techniques used in the processing of the tiles.
During the due course, the wood and other materials used for flooring lost their value
providing an added advantage to the tile industry. Hence giving a chance to flourish. The smart and
intelligent human being began hunting for a better technique for the processing of tiles and to
provide a variety for one to choose.
As the hunt resulted in the evolution of ceramic tiles, the glazed tiles were the first types of
ceramic tiles that were introduced, which did saw tremendous improvements in the later days.
The origin of the tile industry dates way back to the year 1958 A.D with the introduction of
glazed ceramic tiles by some industries like H & R Johnson India Ltd. and Somany Pilkington Ltd.
As both the industries largely dominated the market till 1985, suddenly when Spartek Ceramic Ltd.,
made a rapid wave in the tiles market with the unique introduction of Matt and semi-Matt finished
tiles. As the tile industry flourished, many new competitors entered the market with the improved
technologies and better products. Now the ceramic tile industry sizes to approximately 30 million
dollars.

Overview of tiles:
What is a ceramic tile?
Ceramic derived from a Greek word "Keramic" meaning "The art of potter". In
India, the pottery manufacturing started as early as 3000 BC. As every bad has a good
hidden within, the 2ND world war came as a boon for the ceramic industry, which resulted in
the gearing up of the production of ceramic products for meeting the demand of war
hospitals as certain metals for metallic utensils were banned.
Ceramic may be defined as products that are neither metals nor organic compound
but are inorganic material that are first mounded into shapes and then hardened by heat.
Ceramic tile is a two-layer tile with the upper portion being the glaze part and the lower
portion being the base part.
Clay is the general name for earth that form a paste when mixed with appropriate
amount of water and that hardness when heated, most clays are composed of silica and
alumina while kaolins are their purest forms.
Wall and floor are founded by pressing higher grades of clay after blending them
with flint, feldspar and talc.

Main Characteristics of Ceramics Tiles:

1.

Ceramic tiles last for a very long time.

2.

They have good resistance to chemical solutions like oil,

Detergents etc.

3.

Colour tiles have scratch resistance

4.

Easy maintenance.

Vitrified Tiles:
Vitrified means non-porous i.e. it does not absorb water. Vitrified takes are stronger
than ceramic. These tiles are single bodied tiles.
The main characteristics of vitrified tiles are
1.

Natural Colour

2.

Durability

3.

Hardness

4.

Easy Maintenance

What is in a tile?
Generally, ceramic tiles are broadly classified as wall and floor tiles. With totally
diverse characteristics, wall and floor tiles cannot generally be used as substitutes for one
another. In tune with the nature of usage, floor tiles are usually thicker than the wall tiles.
The sizes also differ with floor tiles having larger dimensions. Apart from this, the wall tiles
are more porous than floor tiles. The technology that goes into making wall and floor tiles is
also different. Generally, floor tiles are manufactured using the single fire technology, which
is energy efficient and cost effective. However, as it is more suited to produce large sized
tiles, the single fire technology is used in the manufacturing of floor tiles.

The traditional double-fired technology is more suited for wall tiles. As the name
suggests, it requires firing of tiles in 2-stages. This enhances the production time and cost of
manufacturing. Over the recent years, the technology has improved to the extent that
smaller size tiles can be produced using the single firing technology. This technological
break through is known as "Moroporosa". Apart from the production of tiles in various
sizes, the mounting competitive pressure in the industry has prompted the players to
introduce innovative products. Apart from the traditional wall and floor tiles, the
manufacturers now

offer floor tiles, which are in the form of narrow strips, which can be used as borders at the
corners of a room. These have exquisite designs that gel with the tiles at the centers of the
floor.
A more recent development in the ceramic tiles, considered as a substitute for Italian
marble. These tiles are non-porous and are relatively stronger, compared to the traditional
tiles. Thus, the popularity of these tiles is on the rise.
The Granito range of tiles is also more suited to high traffic areas such as shopping malls or
offices. In India, H & R Johnson, Spartek, Bell ceramics & Murudeshwar ceramics are the major
producers of Granito range of tiles.

Evolution of the tiles:

The tile may appear to be costlier surfacing material initially, but if the costs are
spread over the life cycle of a building, it becomes cost competitive.
Various studies show that in case, wall and floor coverings, consumer preferences
are leaning away from textile, wood, stone etc. In the house, the tile has not only been
confined to the kitchens and bathrooms, but it has moved to the halls, corridors and in the
balconies. Floors, once neglected are now getting attention, its utility as industry flooring is
also getting increasingly appreciated.
Like other consumer products preferences and fashions in ceramic tiles also keep
slowly changing consumer preferences have been moved from small sizes to comparatively
large ones, from glassy finishes to Matt surfaces, from smooth to rustic, from deep to light
shades from solid colors to decors interspersed with plain tiles, from single shades to a
chiaroscuro of colors.
In the public building, it is used more readily in walkways, community centers,
schools, hospitals, restaurants, swimming poois and surrounding areas, super-markets and
subways. This has become possible because every manufacturer today is updating the
manufacturing technology.

Aesthetics:
Apart from the aesthetic side also, gone are the days when the white glazed tile was
all one saw. As the market for tiles became more widespread, a number of developments
have been taken place to ensure its continued broader acceptance, not at-least of which has
been the changing accent on quality and the more varied spread of decorative designs that
are now proving popular with the use of multi-colored screen printing a variety of designs
are being created which has helped in blending aesthetics with utility.
Thus aesthetic appeal, abstract designs, a variety of colors coupled with easy maintenance.
Tiles today offer the enterprising homemaker a wealth of option. Floors once neglected are getting
attention. Also it's utility as industrial attention. Also it's utility as industrial flooring is getting
increasingly appreciated.
Thus, vast improvements in overall quality, combined with the introduction of the vitrified
tiles have meant that tiles are no longer confined to the Bathroom. In fact, today the Indian tile
industry forms an integral part of the housing budget of the country's professional, middle class
accounting for over 250 million of it.

MAJOR PLAYERS IN THE CERAMIC TILE INDUSTRY:

India's tile industry is comprised of two major sectors: "organized" and
"unorganized". Of these the former accounts for 27 major producers, whilst companies in
the latter are estimated to number in the region of 100.
Until 1985, two companies namely H&R Johnson India Ltd. and Somany Pilkington
Ltd. had the lions share to themselves in the Glazed Wail Tiles sector. In 1985, Spartek
Ceramics Ltd. stormed the market with its matt and semi-matt finished tiles. The Rs 400
crore ceramic tile market has seven leading players with H&R.Johnson India Ltd. having a
dominant presence with over 25% of the market share.
The market for tiles has never been better. The field, earlier restricted only to
Spartek, has seen a boom: Kajaria, Johnson, Somany Pilkington, Bell Ceramics,
Madhusudan (Cera), Murdeshwar (Naveen), and Peddar, Eurocon, Nitco, Orient, Raju,
Redland Comland, Ultra, Bisazza and many.
A brief note of some of these companies is as below:
KAJARIA CERAMICS LTD.:
This company is located in Alwar district of Rajasthan. It is the largest exporter in
India. The Net profit of 2005-2006 stood at Rs. 28.17 Crore, up 11% from Rs. 25.49 crore
for preceding fiscal.
SPL LTD:
Formerly known as Somany Pilkingtons Ltd., recently this company is recording
increased sales, on one hand and relatively low profitability on the other hands.
The Net profit for 2005-06 stood at Rs. 3.1 crore, as against a net loss of Rs.1.78 crore for
the previous year.
H & R Johnson India Limited:
Till 1995, H&R Johnson enjoyed monopoly along with SPL in the ceramic industry.
Later with the entry of new players it had to lose some of its market share to its competitors.
But till today it is the largest tile manufacturer in India in terms of turnover.

Bell ceramics Ltd:

It has maintained a high profile in the market this year. With the construction of new
facility and the expansion of an existing one.

Spartek ceramics ltd:

Spartek entered this market in 1985 with its matt and semi-matt finished tiles being
manufactured using the single firing process. The company has also taken interests in
Neycer India and Stiles India, whilst a strategic alliance has been entered into with
International Ceramics

10

Company profile
Introduction
Murudeshwar Ceramics Limited is a joint sectors undertaking prompted by Karnataka State
Industrial investments development (KSIIDC) & Mr.R.N.Shetty an industrialist & builder
of repute in Karnataka.
MCL is one of the emerging companies in the field of tiles manufacturing, it is always a
head in the race of competition. The initial project 12500 tones of ceramic tiles at
krishnapur village near Hubli. Having completed the project implementation work within a
record period of 14 months. The has led by R.N.Shetty, first generation entrepreneur having
other business interests in sectors such as hotels, irrigation works, sea foods, exports 4 civil
contracting industry.
The MCL is having good position in production of tiles. Almost all its machinery have been
imported from same Imola, Italy with technical work know how the company has recently
got ISO 9001: 2000 certificate from TOVCERT Germany ltd.
Presently the R.N.Shetty group holds 4% of equity state, finance institution holds 19%
KSIIDC holds around 13% state & public shareholders hold the balance 27%.

Vision:
The main objective of MCL Company as set up in memorandum & article of association of
the company as follows
To manufacture important export & deal in tiles of all kinds particularly glazed tiles flooring
bricks, fire brick, pottery earths ware terracotta & other clay products including toys
chinaware & other ceramic products, artificial tiles, synthetic marbles stone & other by
products.

11

 To carry the business of manufacturing imports exporters & dealers in porcelain or grass
insulator of all types of designs, insulating materials, sanitary waste, stone ware all kinds &
description made out of chemicals or other substances.

Motto:
Ultimate tiles for the beautiful floors

12

R.N.SHETTY GROUP OF COMPANIES

CONSTRUCTION
The construction wing of the R.N.Shetty group has curved a name for
itself in the industry for its architectural designs, quality& time bound completion of the
project, the group operates its construction projects in the name of RNS infrastructure Ltd.
(formally known as R.N.Shetty) & Naveen mechanized construction co, Private Ltd. These
companies have made their mark in the Indian construction design, construction,
landscaping, period architectural styles & urban planning the companies have also
specialized in major works & constructed dams, canals, bridges& tunnels, national
highways of national importance.

MANUFACTURING
The manufacturing is the wing of RNS group, one of the area of
business areas of the group is recognized in the little group of business leaders in India for
the kind of growth it has achieved in this sector. The group operated under the name of
MCL.

HOTEL INDUSTRY
The RNS group is also ventured into hotel industry. The group is
having number of hotels all over Karnataka under the name of Naveen Hotel.

Hotel Naveen Hubli.

RNS Residency Murdeshwar.

Naveen Beach Resort Murdeshwar.

13

Taj Residency Banglore.

AUTOMOBILE INDUSTRY
The RNS group has entered into the automobile sector RNS
motors. The name RNS motors is trusted & reliable in the karanataka region to its superior
quality services. The company has showrooms in Hubli, Bangalore, and Murdeshwar &
Bijapur.
An RNS motor is one of the leading authorized dealers for Maruti
Udyog limited.

POWER SECTOR
Murdeshwar Power Corporation ltd incorporated in 1993,
murdeshwar power corporation ltd, has made key investments in the field of R&D in the
power sector & also specialized in the implementation of various projects. This includes
planning, designing, geographical & geological study analysis, murdeshwar power
corporation has constructed the prestigious power house of 12MW capacity at narayanpur
left bank canal. The bulb turbines have been supplied by BHEL.

ENGENEERING:The RNS group has ventured into the field of engineering works under
the name of naveen structural & engineering pvt co. ltd. The company was incorporated in
1981 & specialized in skilled fabrication works, specific to the construction works, specific
to the construction industry, work shop in Hubli is highly sophisticated &contains state of
the art equipment machinery company has manufactured stuttering silos, crest gates &
many other specialized structures.

14

15

PRODUCTION DEPARTMENT
Product profile:
MCL manufactures three kinds of tiles, they are
1. Ceramic tiles
2. Vitrified tiles
3. Natural tiles
CERAMIC TILES:
Ceramic tiles are broadly classified into wall and floor tiles. The major
raw material used in this manufacture is clay. The floors are formed after pressing higher
grades of clay after bending them with slant, feldspar & talk.
All the tiles are further classified during inscepction into four grades
namely A, B, B-1 & C.

A grade tiles means which tiles are defect free & export quality these tiles are
packed separately.

B (commercial) grade tiles are the tiles which have minimum chipping, minimum
cracks. Even in case of slight variation of pin holes on the surface of the tiles are
segregated as a B grade tiles.

B-1 tiles have more chipping, edge cracks & variation surface, defects, pin holes on
the & major print defects in case of the defect greater than B-1 tiles they are
classified as C-1 tiles rest all tiles falls in the C grade tiles.

16

ADVANTAGES OF CERAMIC TILES:1. Due to other glazed finish they are impermeable & so, stain proof, fire proof with anti
echo properties.
2. They are unaffected by either alkaline or acidic substances.
3. Abrasive resistance is very high
4. In case of multi storied building the beam weight is reduced
5. They can be easily transported.
6. They are slip proof.
VITRIFIED TILES:Vitrified tiles are naveen diamontiles crone both in mall & shine finisher,
when the tile is polished it is a Shine finish, else it is Mallfinish the difference between
ceramic & vitrified tiles is t hat the ceramic tiles consist of base part & glazed part while a
vitrified tiles is a single whole there are only two kinds i.e A & B grades.
ADVANTAGE
1. Frost resistant
2. Non finding
3. Abrasion resistant
4. Hygienic
5. Water resistant
6. Acid, alkali resistant
7. Extreme hardness
8. Shock resistant

17

The recommended application of diamontile is in schools, colleges, & education centers,

airports, floors & other transport station floors, industries, hospitals, restaurants.
NATURAL GRANITE SLABS: These are natural stores which are obtained from mines located at
iikal, Banglore & agumbe etc these stones are cut required sizes & they polishes they come in a
wide variety of the coluor depending on the colour of raw materials, no additional colours is added
at the factory.

PRODUCTION PROCESS
CERAMIC TILES: -

Clay

Wolmilling &
mixing
Filtering

Moisture adjusting
spray drying

Glazing

Firing

Inspection

Packing
18

PROCESS: The production of ceramic tiles comprises of various critical stages that
determine the character of the final product. The amount of raw material used varies
according to the physical characteristics required of the tile much skill lies in forming the
raw material into batches.
The mixture thus made is chopped into tiles (after being dried to right moisture content)
by press die, extrusion die as a combination of the both.

The most critical step in manufacturing, unless, the time, temperature,

atmosphere are properly controlled there will be various in colours &
other physical properties from batch to batch & even from tile to tile,
firing is made easier by the use of latest treatment technology.

In recent years tiles are fired by single firing technique through this
method time taken for one production cycle is one hour because the
flame hints the tiles directly.

Once the tiles have been formed those to be glazed by the single firing
process are coated with a mixture that fuses upon firing to form an
imperious glossy film on the tile surface.

VITRIFIED TILES: The overall production process in the same manner for the vitrified tiles is
well. However these tiles are not glazed, after firing tiles pass into the polishing line. Here
the surface of the tiles is grand so, as to give them a smooth finish. The edges of the tiles are
also calibrated to smoother out rough edges.
As a result tiles emerging out of polishing line have a shine not seen
in other tiles

19

PROCESS OF VITRIFIED TILES: -

Batch weighting

Slip
Grinding

Spray drying

Glazing line

Pre housing

Firing
Kiln
Rapid cooling

Natural cooling

Final cooling

20

Process: 1. Processing used for the manufacture of vitrified proclien tiles the raw material as
indicated above composition generally having 50% non plastic material are stored
in the converted storage are batched with the help of weight batches to achieve the
desired proportionate ratios. This prepared batch is put into the grinding medic to
attain a very low residue in the grand mass.
2. Generally, two types of grinding operations are undertaken in the ball mill. One is
exclusively for the base body composition which is without the colour added to it.
3. The production constitutes aprox 80% of the total requirement, the rest of the 20%
body mix are coloured in different storage hungers.
4. This is the grand mass as per the desired specifications in terms of particular ssize
distribution, viscosity & density spray dried with the help of drier with a high
pressure position pump.
5. The spray dried granules are collected in the huge storage silos each having
compaction of 80 cm, the base pawed & the colored pawed are stored in different
silos.
6. As per the requirement & the designs for the manufacture of granite tiles the
desired ratio of the base gravels are drawn from the respective silos weighted &
batched mixing them thoroughly in a mixer granulator.
7. This mixed powder of composition to take desire design, is drawn through a set of
conveyors to a hydravalic press & imparted a pressure of 350 to 1500. 59m to
ensure near complete compactness.
8. The tiles emerging out of hydraulic press are cleaned, brushed, & then taken into
the drying system where the residue moisture is reduced to less than 1% of
enhance of the mechanical property of the tile.

21

9. Further the tiles are fed into the roller hearth kiln, critical equipments designed to
produce vitrified products at a high temperature namely, 1200 degree centigrade.
10. The roller hearth kiln users a clean fuel namely L.P.G has a technical reasons. The normal
production cycle for firing the tile from the coil to cold in the roller hearth.

11. Kiln is approx 60 min they fire products which have already achieved the required
characteristics are stored in the sorting line for a war page, rectangularity
dimension accuracies & visual inspection.
12. The first qualities tiles are selected in the sorting line are taken to the polishing
line. The polishing line primarily consists of calibrating the machine wise which
control thickness & planarian of the tiles.
13. After the calibration the tile is subjected to the polishing machine, which
comprises of 18 heads with different construction & operations to achieve the
desired quality of polishing on the vitrified tiles.
14. The tiles are polished thus subjected to squaring in the machine, where the
rectangularity of the tiles is achieved through lateral grinding subsequently
chamfered for the edge in the chamfering machine.
15. The tiles coming out from the chamfering machine are thoroughly cleaned before
being dried & brushed.
16. The product is now ready for selection & packing. The water coolant used for
calibrating polishing, squaring & chamfering machine.

22

NAVEEN DIAMONTILE
Naveen diamontile are manufactured at two states of the art
factories located in hubli of Karnataka state & karikal of Pondicherry state.
Naveen dimontiles created from the word renowned white
burning clay imported from Ukraine, unlike all commonly available clays, this white
burning clay is specially suited the verification that renders the very special qualities to
naveen diamontiles hardness, strength & ultra water absorptions

23

FINANCE DEPARTMENT
CHART

Vice President

AGM Excise

AGM
Manager
Officer

Staff

AGM Accounts

Manager
A/Cs
Asst Manager

Officer

Staff

24

 CASH MANAGEMENT
Cash is the important current assets for the operation of business, such
as the basics inputs needed to keep the business running on a continuous basis. It is also the
ultimate output expected to be realized by selling the product manufactured by the firm. The
term cash includes coins, currencies & cheques held by the firm & the balances in its bank
account.
Cash is required to meet the firms transactions & precautionary needs
it keeps additional funds to meet emergency situations, some firms also maintain cash for
taking advantages of speculative price change of input & output.

Cash management is concerned with the management of

Cash flows into & out of the firm
Cash flows within the firm
Financing the deficit or investing the surplus

MCL has a systematic cash planning procedure, once in a year. They plan
total cash flows and total fund flow statements for the preparing cash budget monthly, every
month cash budget is prepared by considering expected cash inflows & out flows during the
period. This enable the company to know the position of the cash whether it is surplus or
deficit. Thus by knowing the position they can take suitable action.
FINANCE POLICY
Every firm must find the source of funds to finance its current assets.
It can adopt different financing policy. MCL is following matching or hedging policy. Thus
it is fixed asset by long term finance & temporary or variable current assets by short term
finance.

25

It obtains find based & non find based credits including open cash
credits obtain from canara bank, state bank of India. Bank of Baroda, lakshmi vilas bank,
sirsi urban co-operative bank ltd interest rate is 14.5%
The amount is required is predicted & submitted to the bank. The
company will have to submit the operating statement analysis or the balance sheet
comparative statement of CA & CL and fund flow statements.
The amount is established & detailed working of their will be
submitted to the workers & other members of the bankers. After scrutinizing the proposal
with members of the banks & the company executive & the final eligibility of working
capital is worked out & decided at the meeting.

Working capital involves

Forecasting needed funds.

Acquiring.

Monitoring the level of the cash receivables & inventories.

Knowing percentage of funds in current accounts

Significant accounting policy.

26

MARKETING DEPARTMENT
CHART
MD

GM

Commercial
Executive

Manager Delhi

Regional
manager hubli

Sales executive

Asst GM
Bangalore
Manager
Mumbai
Regional
manager

Mktg executive

A/Cs
executive

Regional
manager

Sales

Sales
executive

Marketing

27

MARKETING PROCESS AT MCL

Importance of marketing at MCL a wider acceptance by the
efficient marketing from last couple of years. MCL is having strong market in south now
concentrating more towards north through its new marketing strategies.

REDUCING COST
MCL is making efforts towards reducing cost of production by
giving more importance to marketing. By introducing quality products MCL successful in
building good will in the ceramic market this is the result of efficient marketing.

DISTRIBUTION CHANNELS OF MCL

Producer

Direct selling

In direct selling

Dealer

Company
showrooms

Company
website

Others

Companys sales
executive

28

COMPANIES SHOWROOM
Already the company has having 38 showrooms spread all over india
which enables direct contact between the company and the final consumers. It is happy to
note that the company in planning operation of 60 showrooms in a major & minor city or
towns all over India some of the important showrooms & there address is as follows.
New Delhi

Murudeshwar ceramics ltd SDA

Ludhiana

Murudeshwar ceramics ltd SDA

Firoz Gandhi market Ludhiana

Hubli

MCL gokul road Hubli

Bangalore

MCL Elephant rock road Bangalore

Mysore

MCL Fort mohalla Mysore

Chennai

MCL annasalai Chennai

Hyderabad

MCL amarpet

Kolkata

MCL middle son street Kolkata

29

COMPANYS WEBSITE
Marketing can also be done by using company website. Here there
is a special heading called reach us by filling names and addresses transaction can be
done.
www.naveenceramics.com

COMPANYS SALES EXECUTIVE

The marketing team has appointed sales executives all over
the country. They meet architects, engineers, & builders, they give information about the
products, prices, etc if the order is executed then they will fulfill the necessary formalities.

COMPANY DEALERS
The company has its own dealers spread all over the country.
They place the order through the executives of the company or directly contact the head
office.
Some of the dealers are as follows
Dharwad floor art
Niketan engineering center Badami
Sri Vijaya stones and marbles Baglkot.
A.Y.M traders Belgum
Chetan traders Belgum
Kaveri traders Belgum

30

 Vasanta stones Davangere.

STORES DEPARTMENT
Inventory management constitutes a major element of capital inventory are the most
significant part of current assets. Inventors may be in the form of raw- material work in
progress or finished goods.

The main objectives a inventory management is to ensure a

continuous supply of raw-material and also to minimize ordering and carrying time to
reduce working capital burden. Inventors represent investment of a firms fund the firm
should therefore consider;
Costs
Return
Risk
\
FACTORS IN ESTABLISHING ITS INVENTORY POLICY INVOLVES TWO
TYPES OF COSTS
Ordering costs
Carrying cost includes EOQ ( Economic order quantity)
EOQ = Q=2 AO/C Where
A= Annual Requirement
B= Ordering cost
Q= per unit carrying cost
The inventory level of which the firm places its order to replacing inventory is called
as Recorder Point it depends on the following factors.
The dead time
The usage time

31

The raw materials of MCL required manufacture of all three varieties

of ceramic tiles is clay feldspar and guard. The clay is brought from quarries, the company
to be sufficient for its needs for about 100 years estimates govinkoppa, yaragatti and
Thirtahalli the availability at these quarries. Field spar & quart are source from local
suppliers such as Mysore minerals ltd. Special class are produced from Rajasthan

PURCHASE DEPARTMENT
OBJECTIVES:
To evaluate and select sub- contractors on the basis of their liability to meet specific
requirements.

To maintain records of approval sub- contractors & control to ensure equality

requirements are fulfilled consistently.

The procedure is applicable to product and purchased and sub-contracted that are
used in processing supply the product to meet the customers need and requirement

PROCEDURE:
The purchase department functions mainly undergone the following two procedures
Selection of Sub-Contractors or Quotations:
The purchase department has to select vendors on the basis of the ability to meet
their requirements.
The purchase department asks for the quotations from the various supplies and
selects the quotation that is balling lowest cost. But there never the managers inspect
compromise with the quality the durability of the material and the team members then it is
approved.
Release of Purchase order:
For releasing orders the purchase department gets feedback from the planning
department. Usually 3 months stock is mentioned in the stores department.
There will be 4 copies of purchase order. One copy is meant for vendors & other
thrice copies are distributed to the purchase department. Stores department and purchased

32

material will be located in main stores and then handed over for inward inspection.
Inspection will be done referring purchase order.

THE PURCHASE ORDER CONTAINS THE FOLLOWING DETAILS:

The type, class, style, grade or other precise identification

Standard / Specification inspection requirements and other relevant technical data.

Introduction letter from vendors.

33

HR DEPARTMENT
HR DEPARTMENT CHART

AGM HRD

PERSONNEL
OFFICER

STAFF

OBJECTIVE
The main objective of personal department is to select the right person for
right place for right job also train them. It also aims in solving the misunderstanding
between the works & management.
There are two types of workers in the company. They are skilled &
unskilled workers, 826 as on 30/08/08. It included both the skilled & unskilled workers.
There are totally 750 employees in that 520 are workers remaining 230 are staff.

34

RECRUITMENT PROCEDURE
In case of selection of works in production level MCL will prefer
diploma in mechanical & electrical or any graduates who will suitable for the job
requirement. The interview panel consists of 4 members who will responsible for the
selection of workers. The interview panel will be same every time.
For every level management direct recruitment is preferred.
INTERVIEW PANEL CONSIST OF

AGM HR

AM HR

Section in charge or
senior supervision

Shift Assistant

Shift Supervisors
35

They will judge the candidate through the rating scale technique. The scale use to .5 to 5 the min.
salary offered by MCL is 3500/- for the skilled or technical or 3000/- for non technical. The wages
are paid according minimum wages act.

FACILITIES PROVIDED FOR WORKERS

Employees expenses

Salary includes basic, DA

Social security act

They have ESIC (employees state Insurance Corporation) for the security of

the workers the percentage of ESZ of 1.75%

PF

Bonus

Canteen facility

Health care

36

RESEARCH AND DEVELOPMENT DEPARTMENT:

Research and development at MCL is a very important development constantly
engaged in the process of finding new and improved methods of the production the specific
area in which R & D is carried out by the company is

Important substitution

New effect colours and designs for the existing product range

Introducing new raw material to improve the quality of the products

Special grids are designed to produce new design and powder mixing technology.

To improve energy saving measure to introduce large sizes.

To reduce cost of production

Some of the benefits desired as a result of the above R & D efforts is a new and
improved product range and improved realization. In future R &D efforts are to be
concentrated in addition facilities for suitable salt printing on tiles. The company is
constantly making efforts towards technology absorption adoption and innovation through
their efforts the technology imported 1996-97 regarding screen printing on vitrified tiles has
been fully absorbed
Research & Development department:
o It has a strong its house R & D base apart from developing a new and
o Improved product range. It also gas the capability of absorbing imported technology

loyal network of Dealers:

37

o The company has built up a local network of dealers in south India as well as in the western
parts. Investment of long credit period on healthy discounts has created awareness and
brand image for Naveen Tiles.

Satisfaction of Customers Needs:

o Vitrified tiles of the gaining a lot of populaterey in the market. MCL has an installed
capacity of 7500 tpa of which has the flexibility tiles or Vitrified tiles.

Good will:
o The company has got the good will from the manufacturing the Vitrifued tiles as well as
ceramic tiles. It has given more preference for their royal dealers.
High Quality:
o The MCL is marketing high quality of vitrified tiles also and it is maintaining the quality
products.

38

Cost Volume Profit Analysis

Objectives of the study
The main objectives of study are:1. To study the relationship between cost & profit at different levels of capacity of
MCL.
2. To analyze the trend in break even position of the company.
3. To study the break even point of MCL.
4. To study P/V Ratio & margin of safety of the companys products.

The sub objectives of the study are:

1. To forecast profit fairly accurately as it is essential to know the relationship between profits
& costs on one hand & volume on the other.
2. To analyses the data, which is helpful in setting up flexible, budgets, which indicates costs at
various levels of activity.
3. To assist in evaluation of performance for the purpose of control in order to review profits
achieved & costs incurred.
4. To assist in formulating price policies by showing the effect of different costs & profits.

39

Methodology
1.

Primary Sources:
Primary sources include information collected through discussion with the
concerned departmental persons.

2.

Secondary Sources:
The Secondary data is collected for the six years i.e. from 2004 to 2008. This
data is collected from Annual Report and published Data of MCL data provided
by the company. The relevant supporting data is collected from different books,
journals, websites of the company etc.

40

COST VOLUME PROFIT ANALYSIS

Cost volume profit analysis is a logical extension of marginal costing it is based on the
principals of classifying the operating expenses into fixed & variable. Now a day it has
become a powerful instrument in the hands of powerful instrument in the hands of policy
makers to maximize profits.

Earning of the maximum profit is the ultimate goal of almost all

business undertakings. The most important factor influencing the earning of profit is the
level of production. CVP analysis examines the relationship of costs & profit to the volume
of business to maximize profits there may be changes in the level of production due to many
reasons, such as competition, introduction of new products, trades depression or boom,
increased demand for the product, scare resources, change in the selling prices of products
etc. in such cases management must study the effect on profit on a/c of the changing levels
of production a number of techniques can be used as an aid to management in this respect
one such technique is the CVP.

41

MARGINAL INCOME STATEMENT

In this analysis the marginal income statement of ceramic tiles, vitrified tiles and
granite slab are studied. It contains information regarding capacity levels, sales, variable
cost, contribution, fixed costs and profit.
Table 1 shows marginal income statement of ceramics Tiles
Table 1
Marginal income statement

Particulars

20032004

20042005

Capacity utilization

20052006

20062007

20072008

85%

69%

57%

Sales

50

14

179

4424

3074

Less: variable cost

20

355

3451

1798

Contribution

30

-176

973

1276

Less: Fixed cost

24

29

32

38

44

Profit

-20

-208

935

1232

Source: published data of the company

42

Cost structure of Ceramic tiles

4500
4000
3500
3000
2500

Sales

2000

Less:variable cost

1500

Less:Fixed cost

1000

Profit

500
0
-500

Table 1 reveals that: the trend from 2003 to 2008n shows that there is highest capacity
utilization in 2005(85%) & in 2007(69%) but sales is high in the 2007. but the
corresponding profit is high in the year 2008. but in the year 2007 there is high total cost
also, affecting to less sales & profit. So due to less sales & profit in 2006 the ceramic tiles
suffered from loss.

43

Table 2shows marginal income statement of Vitrified Tiles

Table 2
Marginal income statement

Particulars

20032004

20042005

20052006

20062007

20072008

Capacity utilization

70%

63%

82%

81%

42%

Sales

12940

9716

11230

7762

5390

Less :variable cost

8336

8001

8274

6681

3633

Contribution

4604

1715

2956

1081

1757

Less: Fixed cost

249

295

328

383

448

Profit

4355

1420

2628

698

1309

Source: published data of the company

Cost Structure of Vitrified Tiles
14000
12000
10000
Sales

8000

Less:variable cost

6000

Less:Fixed cost

4000

Profit

2000
0

44

Table 2 reveals that: there is an increasing trend in capacity utilization from 2004 to 2007.
& Decrease in 2008. The profit from vitrified tiles has gone down from rs. 4355 lacs in the
year 2004 to rs.1309 lacs in the year 2008.

Table shows marginal income statement of Granite slabs

Table 3
Marginal income statement

Particulars

20032004

20042005

20052006

20062007

20072008

Capacity utilization

17%

35%

27%

66%

68%

Sales

249

535

439

1519

947

Less: variable cost

399

841

390

1109

714

Contribution

-150

-306

49

410

233

Less: Fixed cost

24

29

32

38

44

Profit

-174

-335

17

372

189

Source: published data of the company

Cost Structure of Granite Slabs

1600
1400
1200
1000
800
600
400
200
0
-200
-400

Sales
Less:variable cost
Less:Fixed cost
Profit

45

Table 3reveals that: there is increasing capacity utilization from 2004 to 2008. the granite
slabs has the loss in the year 2004 & 2005. Towards giving high total cost of production
process. But the sales & corresponding profits are more in the year 2006 to 2008.

PROFIT VOLUME RATIO

P/V ratio is one of the important ratios for studying the profitability of
operations of business & establishes the relationship between contribution & sales. It
denotes the percentage of each sales rupee available to cover the fixed costs & to provide
operating income to firm P/V ratio revels the rate of contribution per product as per of
turnover.

Comparison of P/V ratio can be made to find out which product is more
profitable; higher the P/V ratio more will be the profit & lower the P/V ratio lesser will be
the profit.

TABLE 4:

PROFIT VOLUME RATIO OF

CERAMIC TILES
CERAMIC TILES
YEAR

CONTRIBUTION SALES

P.V.RATIO

2003-2004

30

50

60

2004-2005

14

64.285714

2005-2006

-176

179

-98.32402

2006-2007

973

4424

21.993671

2007-2008

1276

3074

41.509434

Table 4 revels that: there is a decreasing profit volume ratio. It is considerably

decreased in the year 2006 means it has minus profit volume ratio (i.e. -98.3) &
considerably decreases in P/V ratio due to high marginal cost

46

PROFIT VOLUME RATIO

VITRIFIED TILES
YEAR

CONTRIBUTION

SALES

P.V.RATIO

2003-2004

4604

12940

35.579598

2004-2005

1715

9716

17.651297

2005-2006

2956

11230

26.322351

2006-2007

1081

7762

13.926823

2007-2008

1757

5390

32.597403

Table 5 revels that: there is a slight variation in the trend of P/V ratio of vitrified tiles the
P/V ratio is high there is more scope of high profits. But it has decreased in the year 2005 &
2007 affecting to only profit.

47

TABLE 6:
PROFIT VOLUME RATIO
GRANITE SLABS
YEAR

CONTRIBUTION

SALES

P.V.RATIO

2003-2004

-133

249

-53.41365

2004-2005

-252

535

-47.1028

2005-2006

49

439

11.161731

2006-2007

409

1519

26.925609

2007-2008

232

947

24.498416

Table 6 revels that: there is a decreasing P/V ratio of granite slabs from 2004-2008.
in the case of granite slabs having the slight increasing trend in the sales but highest
increasing trend is ion the marginal cost. Therefore it is affecting to P/V ratio.

48

BREAK EVEN CHART.

A business is said to break even when its total sales are equal to its total cost.
It is a point of no profit no loss, at this point contribution is equal to fixed cost, a concern
which attends BEP at less number of units will definite be better from another concern
where BEP is achieved at more units of production.

Advantages of break-even charts

The management can understand information provided by the break-even chart more
easily than contained in the cost statements.

The chart is useful for taking marginal decisions; it shows the effect on profits of
changes in FC, VC & selling price.

The chart is very useful in forecasting costs & profits at various volumes of sales.

A break-even chart is a tool for cost control because it shows the relative importance
of the fixed costs & the variable costs.

Profitability of various products can be satisfied with the help of these charts & most
profitable product mix can be adopted.

49

TABLE 7
BREAK EVEN CHART
CERAMIC TILES
YEAR

FIXED COST

P.V.RATIO

BREAK EVEN SALES

2003-2004

24

60

40

2004-2005

29

64.2

45.17133956

2005-2006

32

-98.3

-32.55340793

2006-2007

38

21.9

173.5159817

2007-2008

44

41.5

106.0240964

SOURCE: Published data of the company

BES OF CERAMIC TILES

200
150
100
BREAK EVEN SALES

50
0
-50

Table 7 revels that: the trend in break even sales is fluctuating from 2004-2008. it
indicates the difference point in the case of ceramic tiles. But it is decreased in the year
2006.

TABLE 8:

50

VITRIFIED TILES
YEAR

FIXED COST

P.V.RATIO

BREAK EVEN SALES

2003-2004

249

35.5

701.4084507

2004-2005

295

17.6

1676.136364

2005-2006

328

26.3

1247.148289

2006-2007

383

13.9

2755.395683

2007-2008

448

32.5

1378.461538

BES OF VITRIFIED TILES

3000
2500
2000
1500

BREAK EVEN SALES

1000
500
0

Table 8 revels that: the increasing trend is in BES position of vitrified tiles of the company.
It is because of fixed cost over the years. But also it is not affecting profit & margin of
safety. But there is a slight decrease in fixed cost. The total sales, profit & margin of safety
are proportionately increasing trend in vitrified tiles.

TABLE 9:
GRANITE SLABS

51

YEAR

FIXED COST

P.V.RATIO

BREAK EVEN SALES

2003-2004

24

53.4

44.94382022

2004-2005

29

47.1

61.57112527

2005-2006

32

11.1

288.2882883

2006-2007

38

26.9

141.2639405

2007-2008

44

25.2

174.6031746

BES OF GRANITE SLABS

300
250
200
150

BREAK EVEN SALES

100
50
0

Table 9 revels that: There is considerably decrease in BES of granite slabs in

2004 & 2005. But there is fluctuating trend in BES of granite slabs up to 2008. it is affected
to profit only.

MARGIN OF SAFETY.

52

Margin of safety is the difference between the actual sales & the sales at
break-even point. One of the assumptions of marginal costing is that output will coincide
sales, so margin of safety is also the excess points output. If the margin of safety is large, it
is an indicator of the strength of business because with a substantial reduction in the sales or
production profit shall be made. If the margin is small reduction in the sales or production
will be serious matter & lead to loss.

TABLE 10:
MARGIN OF
SAFETY
CERAMIC TILES
YEAR

TOTAL SALES

MARGIN OF
SAFETY

BES

2003-2004

50

40

10

2004-2005

14

45.17

-31.17

2005-2006

179

32.55

146.45

2006-2007

4424

173.5

4250.5

2007-2008

3074

106.02

2967.98

53

MARGIN OF SAFETY OF CERAMIC TILES

4500
4000
3500
3000
2500

MARGIN OF
SAFETY

2000
1500
1000
500
0
-500

Table 10 revels that: There is increasing trend in margin of safety of ceramic tiles. It is
because of increased sales & increased capacity utilization. It is important that there should
be a reasonable margin of safety usually indicates low fixed overhead so that profits are
made until there is a low level of activity to absorb fixed costs.

54

TABLE 11:
VITRIFIED TILES
YEAR

TOTAL SALES

BES

MARGIN OF SAFETY

2003-2004

12940

701.4

12238.6

2004-2005

9716

1676.1

8039.9

2005-2006

11230

1247.1

9982.9

2006-2007

7762

2755.3

5006.7

2007-2008

5390

1378.4

4011.6

MARGIN OF SAFETY OF VITRIFIED TILES

14000
12000
10000
8000

MARGIN OF
SAFETY

6000
4000
2000
0
1

Table 11 revels that: There is a decreasing trend in margin of safety of vitrified tiles. The
decrease in margin of safety usually indicates high fixed overhead. But also there is an
increase in BES also so it is not affected the profit of vitrified tiles.

55

TABLE 12:
GRANITE SLABS
YEAR

TOTAL SALES

BES

MARGIN OF SAFETY

2003-2004

248.49

44.9

203.59

2004-2005

535

61.5

473.5

2005-2006

382

288.2

93.8

2006-2007

1160

141.2

1018.8

2007-2008

8910

174.6

8735.4

MARGIN OF SAFETY OF GRANITE SLABS

10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0

MARGIN OF
SAFETY

Table 12 revels that: there is an increasing trend in margin of safety of granite slabs. The
margin of safety has increased from 203.5 lakhs to 716.84 lakhs. This is the main reason for
increasing trend in granite slabs. But due to highest marginal cost the profit has not made.

56

FINDINGS

CERAMIC TILES:

1. There is a fluctuation in capacity utilization of ceramic tiles. But increase in sales

from 2004 to 2008, & increase in total cost also. Due to increase in total cost slight
decrease in sales leads to loss in 2005 & 2006. But in the year 2007 & 2008 there is
increase in sales as well as profits here total cost doesnt affect the profit.
2. There is decreasing trend in P/V ratio is due to high marginal cost.
3. The break-even sales are in decreasing trend in the year 2004-2006. But there is a
slight increase in 2007 & 2008.
4. There is an increasing trend in margin of safety of ceramic tiles it is because of
increased sales & increased capacity utilization it shows profitable position of the
product.

VITRIFIED TILES
1. There is increasing trend in capacity utilization from 2004-2007 & decrease in 2008.
Due to high total cost there is decrease in profit.
2. There is a slight variation in the trend of P/V ratio of vitrified tiles due to high
marginal cost.
3. The break-even sales for vitrified tiles are increasing trend. This is also show there is
increase in fixed cost also. But it didnt effect the profit because due to increase in
sales.
4. There is a fluctuating trend in margin of safety of vitrified tiles. The fluctuating is
due to increase in fixed overheads. But also there is increase in BES also.

57

GRANITE SLABS

1. There is increase in capacity utilization from 2004-2008. The granite slabs has the
loss in the year 2004 & 2005 due to high total cost & low sales. But also there is
increase in sales & profits.
2. There is a decrease in P/V ratio of granite slabs as sales also but due to high
marginal coast there is decrease in P/V ratio.
3. There is increasing trend in BES of granite slabs although it has loss in 2004 &
2005. But there is increase in sales during 2006 &2008.
4. There is an increasing trend in margin of safety of granite slabs & there is
fluctuation in BES.

58

Conclusion

Murudeshwar Ceramics Ltd. has achieved cost effectiveness in many of its

segments. The employees are very much interested in improving their performance. The
whole system is fully computerized.

The Company has started new unit for the manufacture of vitrified tiles at Karaikal,
Pondichery. It helps the company to reduce cost of product because company uses natural
gas in process of production. Moreover the company follows a well-documented quality
system. Continues efforts are being made in expanding market network.
By analyzing all the above things it can be said that the sample unit i.e. MCL has a
bright future in coming years.

59

Suggestions
I] Ceramic tiles:
1. It is having high market demand. The company should concentrate on rural and
urban places apart from big cities.
2. The company should maintain stocks to produce the products in time.

II] Vitrified tile:

1. The reason is decrease in sales so the company should increase the advertisement
and sales promotion activities to increase sales. When the demand for the product
comes into picture automatically sales will increase. For increase in sales it should
obliviously utilize the production capacity.
2. The company should increase the sales promotion activities to increase the P/V ratio.

III] Granite slabs:

1. The company should give incentive or commission to the dealers and if possible it
should motivate the class-I contractors or constructors to purchase the tiles and all
from these company by providing them incentives and commission and to increase
the production capacity.
2. The company should maintain the above proper inventory method which suites its
business like Just In Time etc. because excise duty or tax has been levied on the
finished goods.

60

Bibliography
1.

www.naveentile.com

2.

I.M. Pandey
Financial Management

3.

Jain & Narang

Marginal costing

61