SANSKRITI SCHOOL OF BUSINESS

Internship onA STUDY OF FINANCE CONTROLLING/OVERHEAD

CONTROL OF ALSTOM T&D INDIA LTD.

By : ASHA MEENA

PGDM (FINANCE)

ALSTOM

Alstom, a global leader in energy generation, transmission and rail infrastructure, has gained an enviable reputation through the quality of its products and services.

Committed to customer satisfaction by continuously improving products and setting the benchmark for innovative and environmentally conscious technologies.

In India, Alstom offers full range of products and services

for power generation, transport and transmission sector.

• Power sector: Leader in clean technologies for all types of fuel including gas, coal, hydro, nuclear, solar, wind, etc and also offers a comprehensive range of power generation solutions.

• Transport sector: Only multi specialist constructor in the railway sector covering everything from rolling stock and maintenance to signalling and infrastructures.

• Grid sector: Sector offers products, power electronics, automation and turnkey solutions, alongside a full range of services, to its customers across high, extra high and ultra-high voltages (66 kV to 765 kV/1200 kV).

Designs and manufactures equipment and engineered turnkey solutions to manage power grids and transmit electricity from the power plant to the large end-user, be it a distribution utility or an industrial process or production facility.

ALSTOM GROUP

POWER GRID TRANSPORT

TURBINES

GENERATORS

BOILERS

ENVIRONMENTEQUIPMENTS

POWER TRANSFORMERS

AUTOMATION

SWITCHGEAR (AIS/GIS)

SOLUTIONS

RAIL SYSTEMSIGNALLING

Production Process

START

CORE SLITTING & CUTTING

WINDING

CORE BUILDING

NESTING, COIL ASSEMBLY & COIL STACKER

CORE COIL ASSEMBLY

ACTIVE PART VAPOUR PHASE DRYING

TANKING

FINAL ACCEPTANCE

TEST

FINAL TESTINGDISPATCH

Competitors

ABB, 56.1%

CGL, 21.2%

ALSTOM, 10.7%

TBEA, 6.0%ZTR, 6.0%

• Alstom Objective : Sustain Market Share and be in

No.1 position in Transformer business, which demands high Order Input in a market where demand / supply gap is + 30%.

Limitations :

• Strongly dependent on only 1 customer (PGCIL).

• Delay in order decision by PGCIL for bulk tenders leading to lack of clarity of price trends.

• Demand Supply gap widening.

Challenges :

• Improve competitiveness by optimizing Design.

• Reduce material cost by strong Sourcing support.

• Optimize Overheads.

• Resource management.

Overheads Defined as all indirect costs incurred for the

production of goods or services.

Indirect cost or overheads are those expenses which cannot be identified or related to a specific or particular product or service. These overheads are not ‘allocated’ but are appointed (divided) among various products or cost centres like: rent, insurance, telephone charges etc.

Production Overheads

Factory overhead + factory burden + manufacturing cost.

Indirect factory-related costs that are incurred when a product is manufactured.

Eg: Electricity used to operate factory equipment, depreciation on the factory equipment and building, factory supplies and factory personnel (other than direct labour).

Factory overhead is the costs incurred during the manufacturing process, not including the costs of direct labour and materials.

Eg: Production supervisor salaries, factory rent, fringe benefits, factory utilities, depreciation etc.

Non-production Overheads

Costs (sometimes referred to as "administrative overhead") represent a manufacturer's expenses that occur apart from the actual manufacturing function.

Non manufacturing costs include Selling, General and Administrative (SG&A) expenses, and Interest Expense.

Marketing and selling costs

Administrative costs

MANPOWER/CONTRACT LABOURS• Total number of contract labours function wise with HR data.

• Dealing with past data and required information.

• Field work by going to the shop floor & getting the names of each departmental head.

• Knowing their agencies and interviewing with them: wage rate, working hours, nature & process of work etc.

ELECTRICITY• Everyday electricity readings for coming 15-20 days

• Information regarding supply , allocation & consumption.

• Comparing & recording data for further cross verification.

• Due to regularity and hard work, electricity daily readings are also now a part of dash board and being daily updated time wise.

My Observation In LTI Vadodara unit, strong management focus has

been emphasized to control the overheads and since it does not involve much technical support, during the training Overhead Analysis has been performed and focus was done as how we can control , monitor the overheads and educate

Management team so that they contribute to the organization by reducing / sustaining the level of

overheads beside increase due to inflation or other external factors.

RECOMMENDATIONS AND SUGGESTIONS

Manpower / Contractual Labour :

Improve processes so as to minimize loading / unloading of materials.

Engage unskilled workforce to reduce the cost. Skilled resource not to be used in production.

Negotiate with sub - contractor commission charges.

Give work base contract rather man day contract.

Electricity :

Control electricity in Winter season to keep the average within permissible limit.

Identify opportunities to maintain same level of Electricity cost even with inflation in per unit rate.

Work in implementing Solar system in phased manner.

Daily monitoring of Electricity consumption.