Cost Management v1.0

Cost ManagementPiramal Helthcare

Group No 3

• Dharmanand Chikhale 04• Sanket Mayekar 10• Ajesh Nair 13• Niraj Bajpayee 03

2

IntroductionCompany ProfileProduct OverviewProduct DetailsCost sheet Question & Answers

TOPICS

Company Background

Piramal Healthcare Ltd (Piramal Healthcare), the flagship company of the Piramal Enterprises, was formed in 1988 following the Piramal group’s acquisition of Nicholas Laboratories from Sara Lee.

In 2002, Piramal Healthcare acquired the pharmaceutical business of ICI

In 2003 merged Global Bulk Drugs & Fine Chemicals Pvt Ltd with itself.

Company Background

In 2004, the company acquired the global inhalation anaesthetics business of Rhodia Organique Fine Ltd (Rhodia), UK. Piramal Healthcare has a presence in custom manufacturing, APIs & intermediates, formulations, vitamins, herbal products, diagnostics and patient care.

Business Profile

Piramal Healthcare’s product offerings in India spans across nine key therapeutic areas, that includes cardio-vascular, neuro-psychiatry, oncology, diabetes management, respiratory, anti-infectives, gastro-intestinals, dermatology and NSAIDS. Company has 10 plants; four located in Maharashtra, two in Gujarat, and one each in AP, MP, HP, TN. It also has a research center in Mumbai.

Business Profile

In FY07, Piramal Healthcare launched 22 new products. Wellspring, the company’s chain of pathology laboratories and diagnostic centres, acquired the balance 40% stake in DDRC Wellspring Pathlabs Pvt Ltd. In FY07, Piramal Healthcare acquired the remaining 51% stake in its JV company, Boots Piramal Healthcare Pvt Ltd and renamed as Piramal Healthcare Consumer Products Pvt Ltd and marketing rights for brands Strepsils, Clearasil and Sweetex in India were transferred to Reckitt Benckisser India Ltd

Cost Sheet Name of cost comp. Overall Fixed VariableRaw Materials 10.68 0.00 10.68Packing Materials 0.43 0.00 0.43Setup 0.02 0.02 0.00Labour 0.27 0.27 0.00Machine 0.16 0.16 0.00Power 0.09 0.09 0.00Steam 0.10 0.10 0.00Conversion Charges 0.00 0.00 0.00Cost of Production - [A] 11.75 0.64 11.11Material Overheads 0.18 0.00 0.18Quality Overheads 0.12 0.12 0.00Production Overheads 0.36 0.36 0.00Admin Overheads 0.00 0.00 0.00Sales Overheads 0.00 0.00 0.00PDS Cost 0.00 0.00 0.00Cost of Sales - [B] 0.66 0.48 0.18Total Cost - [A]+[B] 12.41 1.12 11.29

Cost Of Production

Cost Of sales

Display Material Cost Estimate with Quantity Structure

Costing structureUnit of Measure Quantity Rate Total value

Zilo Tablets, 1X10's Blister ECH 1.000 12.41 12.41

ZILO Tablets Coated Bulk KG 0.009 1,305.56 11.75

ZILO Tablets Core Bulk KG 0.008 1,341.25 10.73

Ornidazole KG 0.005 722.00 3.61

Ofloxacin IP KG 0.002 2,920.00 5.84

MICROCRYSTALLINE CELLULOSE IP KG 0.001 60.00 0.06

Hydroxy Propyl Cellulose (Klucel IP W) KG -   0.25

Sodium Starch Glycolate (Primojel)USP KG -   0.06

MAGNESIUM STEARATE IP KG -   -

TALC IP KG -   -

CROSCARMELLOSE SODIUM BP/IP (AC-DI SOL) KG -   0.25

Instacoat IC-U-5700 KG -   0.50

ISOPROPYL ALCOHOL IP/BP L 0.002 55.00 0.11

Raw Materials      10.68

FILM PVC CLEAR TRANS 160/0.25MM,340GSM KG 0.002 65.00 0.13

Foil BL Zilo Tablet 156/0.02mm,4.5HSL-BD KG -   0.09

SHOWBOX Zilo Tab,10x10's 75x55x78mm-BD T -   0.17

Shipper 5P 455x240x410mm TP:180/RP:140 EA 0.001 40.00 0.04

Label Sh Zilo Tabs,120x10x10s110x70mm-BD T -   -

BOPP TAPE LB 65X48 PHL LOGO PRT EA -   -

Packing Materials       0.43

Cost structurefor 1 X10 Blister of Zilo’s Tablet

1 12.41 2 11.75 3 10.73 4 3.61 5 5.84 6 0.06 7 0.25 8 0.06 9 0.25

10 0.50 11 0.11 12 10.68 13 0.13 14 0.09 15 0.17 16 0.04 17 0.43

Cost System

Costs usually classified by– Type

• Product and period costs– Function

• Manufacturing• Non-manufacturing costs

Nonmanufacturing cost

Traditionally management accountants have looked at nonmanufacturing costs as a large pool of costs that should be managed by periodic budget appropriationsFor example, expenditures on items such as advertising are determined by what the organization can afford rather than by the mission it has to accomplish with advertising

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