Reduction in Sugar Conversion Cost Dilip S. Patil
Finance Manager Padmabhushan Krantiveer Dr. Nagnathanna Nayakawadi Hutatma Kisan Ahir S.S.K. Ltd., Nagnathanna Nagar, Walve, Tq. Walava, Dist. Sangli. Email: dilip.patil4@gmail.com Mobile 9637764111, 8275304763
ABSTRACT “Reduction in sugar conversion cost is need of time in uncertainty of situation. The paper is based on how to reduce the conversion cost in sugar to survive in odd time, the overall financial management of sugar industry and how to earn profit even after making more expenditure. This Paper is focusing on formula method of analyzing income and expenditure by making comparative study.”
Introduction Conversion cost is the cost required to convert Raw material into finished goods. As the conversion cost is less profits can be increased and it will also help to be competitive in the market. Cost management is the key to survival in a competitive global industry. This paper is concern here how to minimize sugar manufacturing cost from factory point of view. Here quality should be maintained but unit or single output cost per unit (marginal cost per unit) should be reduced possible extent using best and latest cost management techniques. Basically sugar industry is not having any control over the sugarcane cost and as well as selling price of sugar. So the sugar industry need to focus on the conversion cost incurred during the time of production of sugar from sugar cane here effective and efficient cost control should be adopted.
Areas of Cost Reduction Fuel oil and Lubricant
By following preventive maintenance consumption can be reduced.
Power
Power must be used whenever necessity arises. Switching off the motors, pumps when not in use. Modernizing the boiler, co-generation of power. Using LED lighting in factory premises.
Packaging materials
Correct use of Gunny /PP bags.
Repairs and maintenance
By preventive maintenance, quality spares and technical modifications.
Steam production
Bagasse consumption, Firewood, Steam economy, Exhaust utilization.
Financial Management
Quick disposal of finished and co products by tapping the market when prices are high
Repairs & Maintenance
By Preventive Maintenance, by procuring Quality Spares, by Technical Modifications
Administrative cost
By reducing overtime cost, by reducing expenses on stationery, guest house, vehicle etc.
Miscellaneous –
Cost reduction in purchase, cost reduction in sugar selling, Inventories.
Cost Management Techniques 1.
Cost Comparison It is not possible to accept an advice given by anyone i.e. to reduce expenditure; instead we can analyze the factory expenditure. To analyze expenditure is the best technique for cost control. If we have not analyzed the expenditure then we will not able to understand whether our expenditure is increasing or decreasing. For analyzing expenditure you have to compare the current year expenditure with the last year expenditure of your own mill and also with the other sugar mills having good financial management. The specimen is given as under: