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MANAGERIAL ACCOUNTING

STUDY OF COST ACCOUNTING, BUDGETING &

BUDGETARY CONTROL SYSTEMS IN AN

ORGANISATION.

ACADEMIC GROUP 6

ARUNDHATI GOVEKAR

CHIRAG JAIN

JEET KANTI SHAH

KIRTHIGA SHRIDHAR

MUSTI RAVIKANTH SARMA

SHRUTI KUNTHIA

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INDEX

A. BRIEF WRITE UP ON THE INDUSTRY

B. BRIEF WRITE UP ON THE COMPANY

C. THE COST ACCOUNTING SYSTEM

D. BUDGETING AND BUDGETARY CONTROL

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A. BRIEF WRITEUP OF THE INDUSTRY

The industry in which the company I SPAT Industries Limited operates is steel

manufacturing. It is engaged in manufacturing particularly hot/cold rolled and

galvanised steel coils, sponge iron, galvanised and colour coated steel sheets.

The global steel production has touched the levels of 1.3 billion MT per annum.

There are nearly 81 major players in this sector globally. Out of them the share of

top 15 of these players is as follows.

RANKING(2009)

2009 2008 2007 COMPANY COUNTRY

1 77.5 103.3 116.4 ArcelorMittal India

2 31.3 35.4 28.6 Baosteel Group China

3 31.1 34.7 31.1 POSCO South Korea

4 26.5 37.5 35.7 Nippon Steel Japan5 25.8 33 34 JFE Japan

6 20.5 23.3 22.9 Jiangsu Shagang China

7 20.5 24.4 26.5 TataSteel India

8 20.1 16 16.2 Ansteel China

9 16.7 19.2 17.3 Severstal Russia

10 15.3 17.7 16.2 Evraz Russia

11 15.2 23.2 21.5 United States Steel Corporation United States

12 15.1 12.2 12.9 Shougang China

13 14.2 20.4 18.6 Gerdau Brazil

14 14 20.4 20 NucorCorporation United States

15 13.7 27.7 20.2 Wuhan Iron & Steel China

Note : All figures in million MT/annum.

Further the countrywise production is indicated in the following picture.

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e global s eel indus

y has been notoriouslycyclical and although internal de and is likely

to re ain high in India for the foreseeable future overcapacity in the global market place

remains a real threat in the next decade Overcapacity would bring about increased

competition. In addition foreign direct investment is likely to slow down and production

needs be re-evaluated. Greater consolidation in the global industry remains highly likely as

the major players aim for a larger global footprint. In doing so thecompanies are pursuing

two objectives to lower their costs and increasing their market share. Acquisitions in India

currently appear lucrative with large raw material deposits lower wages and favourable

energy prices.

The steel industry in India is poised for major expansion in the future to 80 millionMTs

capacity by2020. Government isexercising efforts on improving steel consumption in rural

areas improving steel cement ratio and reducing timber consumptionin the construction

sector. India is likely to surpassSouth Korea, Japan, EU andthe U.S. in the next fiveyears in

steel production. The only big competitor and also the biggest player globally, China, will still

continue to be the biggest owing to itsexports.

There are two main ways in which steel is being currently manufactured :-

1. Iron ore-based steel manufacturing : It accounts for about 70% of world steel production.

Iron ore is reduced to iron and then converted to steel. The main inputs are iron ore,

coal,limestone and recycled (scrap) steel. The main ore-based production routes are:

ironmaking via the blast furnace (BF) followed bysteelmaking in the basic oxygen furnace

(BOF), and ironmaking via direct reduction (DRI)followed bysteelmaking in theelectric arc

furnace (EAF).

IRON

ORE

COAL

LIMESTONE

SCRAP STEEL

BASIC

OXYGEN

FURNACE

Direct

Reduction

ELECTRIC ARCFURNACE

STEEL

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