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THE MANAGEMENT ACCOUNTANT
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SEPTEMBER 2016
VOL. 51 NO. 9

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www.icmai.in September 2016  The Management Accountant 1
2 The Management Accountant  September 22016 www.icmai.in
The Institute of Cost
Accountants of India
PRESIDENT THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
CMA Manas Kumar Thakur
(erstwhile The Institute of Cost and Works Accountants
president@icmai.in
VICE PRESIDENT
of India) was first established in 1944 as a registered
CMA Sanjay Gupta company under the Companies Act with the objects of
vicepresident@icmai.in promoting, regulating and developing the profession of
COUNCIL MEMBERS Cost Accountancy.
CMA Amit Anand Apte, CMA Ashok Bhagawandas Nawal, On 28 May 1959, the Institute was established by a
CMA Avijit Goswami, CMA Balwinder Singh,
special Act of Parliament, namely, the Cost and Works
CMA Biswarup Basu, CMA H. Padmanabhan,
CMA Dr. I. Ashok, CMA Niranjan Mishra,
Accountants Act 1959 as a statutory professional body for
CMA Papa Rao Sunkara, CMA P. Raju Iyer, the regulation of the profession of cost and management
CMA Dr. P V S Jagan Mohan Rao, accountancy.
CMA P. V. Bhattad, CMA Vijender Sharma It has since been continuously contributing to the
Shri Ajai Das Mehrotra, Shri K.V.R. Murthy,
growth of the industrial and economic climate of the
Shri Praveer Kumar, Shri Surender Kumar,
Shri Sushil Behl
country.
The Institute of Cost Accountants of India is the only
Secretary recognised statutory professional organisation and
CMA Kaushik Banerjee, secy@icmai.in licensing body in India specialising exclusively in Cost
Sr. Director (Finance, Admin. & HR)
and Management Accountancy.
CMA Arnab Chakraborty, finance.arnab@icmai.in
Sr. Director (CAT, Training & Placement)
CMA L Gurumurthy, cat.gurumurthy@icmai.in
Sr. Director (Technical)
CMA J K Budhiraja, technical.budhiraja@icmai.in MISSION STATEMENT
Director (Examinations)
CMA Amitava Das, exam.amitava@icmai.in The
h CMA
Director (PD) Professionals would
CMA S C Gupta, pd.director.@icmai.in
ethically drive enterprises globally
Director (Research & Journal) & Editor
CMA Dr. Debaprosanna Nandy, rnj.dpnandy@icmai.in
by creating value to stakeholders
Director (Membership) in the socio-economic context through
CMA A S Bagchi, membership.bagchi@icmai.in competencies drawn from the integration of
Director (Discipline) & Jt. Director strategy, management and accounting.
CMA Rajendra Bose, discipline.director@icmai.in
Additional Director (IT)
Smt. Anita Singh, it.anita@icmai.in
VISION STATEMENT
Joint Director (Tax Research)
CMA Chiranjib Das, taxresearch@icmai.in
The Institute of Cost Accountants of India
Joint Secretary & In-Charge (CPD)
CMA Nisha Dewan, jsecy.nisha@icmai.in would be the preferred source of
Joint Director (Infrastructure) resources and professionals for the
CMA Kushal Sengupta, finance.kushal@icmai.in financial leadership of
Joint Director (President’s & Vice President’s office)
CMA Tarun Kumar, presidentoffice.tarun@icmai.in
enterprises globally.
Joint Director (Studies & Academics)
CMA Sucharita Chakraborty, studies.sucharita@icmai.in
Deputy Director (Advanced Studies)
CMA M.P.S Arun Kumar, advstudies.arun@icmai.in IDEALS THE INSTITUTE STANDS FOR
Editorial Office • to develop the Cost and Management Accountancy profession
CMA Bhawan, 4th Floor, 84, Harish Mukherjee Road, Kolkata-700 025
Tel: +91 33 2454-0086/0087/0184 , Fax: +91 33 2454-0063 • to develop the body of members and properly equip them for
Headquarters
CMA Bhawan, 12, Sudder Street, Kolkata 700016
functions
Tel: +91 33 2252-1031/34/35 , Fax: +91 33 2252-7993/1026 • to ensure sound professional ethics
Delhi Office
CMA Bhawan, 3, Institutional Area, Lodi Road, New Delhi-110003 • to keep abreast of new developments
Tel: +91 11 24622156, 24618645 ,Fax: +91 11 4358-3642
WEBSITE Behind every successful business decision,
www.icmai.in
there is always a CMA

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EDITORIAL
Greetings!!! speciality. It doesn't have to be expensive; marketing

can range from posters in window and leaflet drops
Cost Competitiveness leads to upgradation of the through advertising campaigns in local media.
productivity of all the resources, resulting in optimal  Looking aer existing customers:
utilization of resources and minimization of wastages. Existing customers are competitors' target
Cost Competitiveness is required for strategic planning market. So beer customer service is required to be
and decision making for sustained growth. It is a provided by being more responsive to their needs and
systematic method to control the excess costs incurred expectations. If feasible, offering low-cost extras such
resulting in cost advantage. The consideration of cost as improved credit terms, discounts or loyalty schemes
competitiveness starts in the market with pricing. A are needed to be considered.
competitive advantage allows a company to produce  Target new markets:
or sell goods more effectively than other organizations. Selling into a greater number of markets can
Several types of strategies are available in the business increase customer base. Further, online marketing
environment. Flexibility is an important feature of nowadays is creating huge impact on customers and
competitive business strategies. Business owners are even narrowing the bridge to reach the overseas
flexible enough to use standard strategies or develop customers. It saves time, paper work and even it is an
their own strategy. inexpensive way of marketing.
 Motivation for employees:
Strategies for Staying Cost Competitive:
Employees are oen more impressed by a good and
 Knowing the competition: healthy working environment and benefits such as
Firstly it is required to find out the competitors, flexible working and structured career development.
what they are offering and their unique selling point  Future Forecasting:
(USP). This will identify the areas required to compete Proper planning and forecasting is a must to stay
in, as well as gives a platform for differentiating from competitive in the market. A business that does not
the rival organizations. use forecasting techniques will likely succumb to their
 Knowing the customers: competition in a short period of time. This would assist
Customer expectations can change dramatically a company to prepare in meeting customer demands.
when economic conditions are unstable. Sales and
marketing strategies are required to be revised on time Market globalization generates a new business
to time based on their expectations. environment where the management faces several
 Differentiation Strategy: strategic confrontations in the open economy.
Business owners use competitive business Moreover, customers are more fastidious, they insist
strategies to differentiate their goods or services from upon low costs/prices, quality, time and innovations.
others in the industry. Differentiation may be actual Thus quest for sustainability has already started to
or perceived. Companies typically use advertising transform the competitive background, which will
messages that describe a product similar to those in compel the companies to change the way they think
the market with a few subtle differences. This strategy about products, technologies, processes and business
encourages consumers to differentiate the product in models. The key to progress, particularly in times of
their minds. economic crisis, is innovation.
 Price Strategy:
Many organizations develop pricing strategies to This issue presents a good number of articles on the
maintain a competitive advantage. These include cover story theme ‘Cost Competitiveness – Complexities
penetration, economy, skimming, bundle and to Confidence’ by distinguished experts and authors.
promotional strategies. Promotional pricing strategies We look forward to constructive feedback from our
may allow businesses to offer additional benefits to readers on the articles and overall development of the
consumers, such as a buy-one-get-one-free business journal. Please send your mails at editor@icmai.in. We
strategy. thank all the contributors to this important issue and
 Step up marketing approach: hope our readers enjoy the articles.
More effort is required to make people aware
about the organization, its product or services and its
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-: PAPERS INVITED :-
Cover stories on the topics given below are invited for ‘The Management
Accountant’ for the four forthcoming months.
e m e
e me e me
em he Th Th
Th Economic Innovations - T The Changing Role of 25 Years of Economic
Indian Banking Sector
in
the game changer Management Reforms in India Transition
Accountants
October November December January
2016 2016 2016 2017
Subtopics Subtopics Subtopics Subtopics
• Innovations in Finance • Traditional role to a more • Issues & Challenges • Impact Analysis of
and its impact on dynamic involvement in • Economic and Fiscal Dynamic Banking
economy businesses policy Reforms and its Scenario
• Accounting Standards as • Experiencing change from impact • Technology trends and
a game changer a strategic apex role • Sector wise Reforms and operating models
• New tools in Strategic • Management Accountants its impact • New licensing agree-
Cost Management as business partner and • India in the Global ments
• Innovations in produc- change agent economy in post-reforms • MSME Finance: Credit
tion process • New tools and techniques period challenges and impetus
• Innovations in IT/ITES • Performance measure- • Economic Reforms and for growth
• Innovative ideas on ments Social developments • Managing Risk, Regula-
Cost Management - role • Corporate Governance • Economic Reforms and tions and Capital
of CMAs and business ethics Nation Building - Role • M&A of Banks in India
• Innovations in different • Achievement towards of CMAs
sectors of economy - sustainability goals • Economic Reforms -
case study • Case Studies Unfinished Agenda
The above subtopics are only suggestive and hence the articles may not be limited to them only.
Articles on the above topics are invited from readers and authors along with scanned copies of their recent passport-size
photograph and scanned copy of declaration stating that the articles are their own original and have not been considered for
publication anywhere else. Please send your articles by e-mail to editor@icmai.in latest by the 1st of the previous month.
Directorate of Research & Journal

The Institute of Cost Accountants of India (Statutory body under an Act of Parliament)
CMA Bhawan, 4th Floor, 84 Harish Mukherjee Road, Kolkata - 700 025, India
Board: +91-33- 2454 0086 / 87 / 0184, Tel-Fax: +91-33- 2454 0063
www.icmai.in
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PRESIDENT’S COMMUNIQUÉ
If you just work on stuff that you like
and you’re passionate about, you don’t
have to have a master plan with how
things will play out.
- Mark Zuckerberg
August, 2016. With the help of our Regional

Councils and Chapters, we look forward to
hold more such technical programs, seminars,
workshops on GST for proper awareness and
knowledge dissemination across the country. Let
us march forward together with the noble initiatives
undertaken by the Government of India towards
implementation of the biggest tax-reform through
Goods and Services Tax(GST), facilitate investors to Make
in India, contribute in making 'One India, One Tax' and be a
tax-compliant economy.
Electronic filing of Return of Income Scheme
You are aware that the Central Board of Direct Taxes (CBDT)
CMA MANAS KUMAR THAKUR has modified the Electronic Furnishing of Return of Income
President Scheme, 2007 to include the name of Cost Accountants and
The Institute of Cost Accountants of India Firms of Cost Accountants to enable them to be the authorized
intermediaries to electronically file Income Tax returns on behalf
of the taxpayers. On behalf of the Council of the Institute and
My Dear Professional Colleagues, also on my personal behalf, I would like to pay sincere gratitude
to CMA P.V. Bhaad, Immediate Past President of the Institute
Namaskaar for his efforts in vigorously following up this maer with CBDT. I
assure you that with the combined efforts of Council, Members
I am happy to note that the Taxation Commiee has organised and Executives of the Institute the Institute will be able to achieve
‘Train the Trainers’ programs for enriching the members’ knowledge all the pending tasks successfully.
in the all-important area of GST. Programs are successfully Meeting with VIPs
completed in Delhi and Mumbai while Kolkata and Chennai are I wish to inform the members that I along with Vice-President
scheduled for September, 2016. Tax Research Department of the met Shri Suresh Prabhu, Hon’ble Union Minister of Railways.
Institute under guidance of Chairman, Taxation Commiee has Hon’ble Minister advised the Institute to come up with suggestions
prepared an e-book, Reading Material on Model GST Law. This to optimise pricing of different services offered by Railways. On
technical literature is draed in lucid language containing flow behalf of the Institute we assured him that Institute is ready
charts, illustrations and explanations for simplicity and ease to wholeheartedly support the Railways Ministry. We met Shri
of understanding for its readers. I appreciate the efforts of the Kalraj Mishra, Hon’ble Union Minister for MSME and discussed
Taxation Commiee in this regard. Members are requested to about the role of Institute and its members in development of
share their relevant experience and opinion for further value MSME sector.We also met Shri AR Meghwal, Hon’ble Minister
addition. of State for Finance and Corporate Affairs and discussed with
Taxation Commiee has prepared and submied clause wise him about the important professional maers. We also met Shri
analysis on provisions of Model GST Law 2016. Suggestions HasmukhAdhia, IRS, Hon’bleRevenue Secretary and discussed the
submied by the Institute on Model GST Law, with an objective role Institute is playing in the dissemination of knowledge with
of ease of compliance and ease of doing business in India, were regard to development of GST law. He appreciated the Institutes
well heard off during stakeholders consultation on 18thAugust, initiatives and also advised to conduct more programs on GST
2016 before the officials of Ministry of Finance and also before Law and its development. We also met newly appointed Advisor
the Empowered Commiee of State Finance Ministers on 30th (Cost), Ms. V. Geetha and discussed with her the issues pending
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with the CAB with regard to Cost Rules. related services and quality control. Section 148(3) of the
Initiatives by various departments of the Institute Companies Act 2013 provides that the cost auditing standards
CAT Department are to be issued by the Institute with the approval of the Central
The journey which we started in 2009 in terms of Skill Government. Members are aware that the Institute aer approval
Development through CAT continues. I am happy to share with of the Central Government has already issued four Cost Auditing
you that on 8th Aug 2016 an MoU with AP State Skill Development Standards on 11th September, 2015. On the recommendation
Corporation was signed for offering CAT Course in the state of of the Board, the Institute also approved additional 15 (fieen)
Andhra Pradesh. We will be joining States like Gujarat, West Standards on Cost Auditing (SCAs) and sent to the Central
Bengal and Karnataka very soon for imparting Skill Development Government for its approval. These Standards aer approval by
Course through CAT. the Government will be issued by the Institute shortly. Further,
Continuing Professional Development Department the Secretariat of CAASB is also developing Glossary of Terms as
The webinars on ‘Business Valuation’, ‘Reporting of Frauds defined in the Standards on Cost Auditing and also the Frequently
w.r.t. Companies Act 2013’, Income Declaration Scheme 2016’ Asked Questions (FAQs) on these Standards.
and ‘Strategic Management’ were well received by the members. The previous Board realizing the need for Capacity Building
Recorded webinars are available on Institute’s website under of the members of the Institute and for the purpose of proper
Featured Links. Institute associated with FICCI as Support Partner advocacy had already decided to conduct Seminars/Programs
in the FIBAC 2016-New Horizons in Indian Banking during 16-17 on the Standards on PAN India basis. Some of the Seminars/
August 2016 at Mumbai.I feel happy to note the increasing Programs/ Webinars have already been conducted by the Institute
number of programmes by our Regional Councils and Chapters. I and next series is being taken up by the Institute shortly.
sincerely appreciate their efforts in organizing various programs, Examination Directorate
seminars and discussions on the topics of professional relevance The Examination Directorate has been able to successfully
and importance for the members.I hope that our members are declare Foundation, Intermediate, Final and 3 Diploma Courses
immensely benefied by these programs and look forward for results for June 2016 term of Examination. The Examinations were
active participation of our members to enhance professional conducted at 121 centres in India and Abroad. I congratulate all
knowledge and skills. the passed out students and wish them a bright future. I also wish
Cost Accounting Standards Board (CASB) best of luck to all those who could not cross the line this time.
The Council of the Institute has recently re-constituted Cost International Affairs Department
Accounting Standards Board (CASB) for the year 2016-17. I am The Institute was represented by CMA Dr. PVS Jagan Mohan
fully confident that reconstituted Board will continue to bring new Rao, CMA P Raju Iyer, and CMA Niranjan Mishra, Council
and limited revisions of the Cost Accounting Standards keeping Members in the meetings of various SAFA Commiees, SAFA
in view latest legal and contemporary developments in India Board, SAFA Assembly and SAFA International Conference
particularly GST and Ind AS. Goods and Service Tax (GST) is likely organised by the Institute of Chartered Accountants of Nepal
to be implemented in India from the next fiscal year and will have during 12thand 13thAugust 2016 at Kathmandu, Nepal. CMA PVS
major implication on Indirect Tax Structure. Further, the Ministry Jagan Mohan Rao also represented the Institute as speaker in
of Corporate Affairs (MCA) has already issued a note outlining the one of the sessions in the SAFA International Conference besides
various phases in which Indian Accounting Standards converged chairing the meeting of SAFA PAIB commiee.
with IFRS (Ind AS), for Companies other than Banking Companies, Membership Department
Insurance Companies and NBFCs. Ind AS may have impact on Members are kindly aware that the membership fee for the
the Cost Accounting Standards issued by the Institute. In view of year 2016-2017 has become due on 1stApril 2016 and as per
above developments, the Secretariat of CASB is working on the Regulations 7(6) & 7(7) of the Cost and Works Accountants
impact of both GST and Ind AS on the existing Cost Accounting Regulations, 1959 (as amended) the dues are to be paid latest by
Standards issued by the Institute. The Board will also bring 30th September 2016. It is observed that some of our esteemed
Guidance Notes for the other Cost Accounting Standards to members are yet to pay their membership dues and I would like to
explain the requirements of Standards and provide the guidance request them to the clear their membership dues immediately and
with practical examples and illustrations on technical issues continue to enjoy the benefits of membership. As mentioned in
relating to Cost Accounting Standards. my earlier communique, members can now pay their fees online,
Cost Auditing and Assurance Standards Board (CAASB) without any additional charges, through the Institute’s Internet
The Council of the Institute reconstituted Cost Auditing and Payment Gateway on the linkhp://www.cmaicmai.in/MMS/
Assurance Standards Board (CAASB) for the year. The Board has Login.aspx?mode=EU
been entrusting with the responsibility to formulate standards Placement Department
and develop guidance notes in the areas of auditing, assurance, I am joining members of this great profession in congratulating
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the June 2016 final qualified students and happy to inform that the Research, Journal and IT Commiee of the Institute were among
Campus placement program for these students are scheduled in the eminent dignitaries present in the inaugural session. Two
the month of October 2016 in Chennai/Mumbai/Delhi and Kolkata. plenary sessions and one technical session on Research Paper
I wish all these students a successful professional career. I also Presentations on the concerned theme were conducted by eminent
extend warm welcome to the Corporate to visit our campuses and speakers present in the seminar. The seminar aimed at tapping the
find their future managers in our CMAs. issues revolving around Finance, Management & Economics in the
Professional Development Department current scenario.
I wish to inform the members that due to initiatives of Career Awareness Activities
Professional Development Department of the Institute, the The Institute in association with Calcua University organized
Department of Fertilisers, Government of India has formed a panel a Career Awareness Seminar on ‘Commerce Education and
of Practising Cost Accounting firms for examination of Cost Data Beyond’ on August 27, 2016 at the University Centenary Hall. Shri
of P&K Fertiliser companies. In association with the PHD Chamber Harshavardhan Neotia, President, FICCI was the Chief Guest of the
of Commerce and Industry, the Institute organised workshop on Seminar. CMA (Dr.) Swagata Sen, Pro-Vice-Chancellor for Academic
Corporate Laws & Regulations, 2016 (Recent Amendments) on Affairs, University of Calcua, Swami Suparnananda, Secretary,
9th&10thAugust 2016 and an Educative & Knowledge Series on The Ramakrishna Mission Institute of Culture, Golpark, CMA Dr
“Dra Model GST Law” on 5th&10thAugust, 2016. As an Institutional Asish K. Bhaacharya, Professor and Head, School of Corporate
Partner with Governance Now, India Banking Reforms Conclave Governance and Public Policy, IICA, New Delhi, Prof. Suman K.
2016 was organised on 24thAugust 2016 at Mumbai wherein Mukherjee, Renowned Economist, Prof Rajib Dasgupta, Head of the
issues such as lower productivity and profitability due to high Department, Department of Commerce, University of Calcua, Mr.
Non-Performing Assets were taken up for discussions.During the VibhorTandon, Assistant Vice President, MCX, CMA Avijit Goswami,
conclave the Vice President of Institute addressed the participants CMA Biswarup Basu, Council Members of the Institute and the
in a session on “Financial Inclusion to promote inclusiveness in Secretary of the Institute were among the eminent dignitaries
growth phenomenon of the country”. present in the seminar and deliberated their views. The Quarterly
On sending of representations and regular follow up by PD publication of Research Bulletin, Volume 42 No II of July 2016 was
Directorate, North Eastern Indira Gandhi Regional Institute of released during the session. The Chairman, EIRC and the Director
Health and Medical Sciences, Krishna Bhagya Jal Nigam Limited, (Membership) of the Institute jointly conducted a CMA Career
Department of Health & Family Welfare, Government of West Bengal Awareness Programme aimed to spread an area of interest among
and Brahama Putra Valley Fertilizer Corporation Limited have the students over there. The Director (Research and Journal) of the
recognised the role of Cost Accountants for various professional Institute anchored the whole seminar. The response of the seminar
services. The department is commied to take up the professional was overwhelming and it was thoroughly aended by more than
development issues with stakeholders and I urge the members to one thousand students and one hundred faculty members from
bring all such issues to the PD Department for taking necessary more than fiy colleges across West Bengal.
action. Initiatives by Chapters and Regions
Research & Journal Department Bangalore Chapter celebrated its 100thBatch of Oral Coaching
I had an opportunity to aend a UGC Sponsored National Level Classes on 6thAugust 2016.Ranchi Chapter of Cost Accountants
Seminar on ‘Start up India and its Prospect’ on August 28, 2016 organised its Annual Seminar on GST on 7thAugust 2016. I aended
organized by the Institute in association with Naba Ballygunge both the events and urged the Chapters, Members and Students to
Mahavidyalaya, Department of Commerce, Kolkata at the College perform with dedication and vigour for the cause of profession and
Auditorium. In the inaugural session, Dr.SukumalDaa, Principal, Institute. Number of other chapters also organised programs and
Naba Ballygunge Mahavidyalaya, CMA Dr Asish K. Bhaacharya, seminars which I could not aend due to certain preoccupations
Professor and Head, School of Corporate Governance and Public and I congratulate them for taking initiatives to build the capacity
Policy, IICA, New Delhi deliberated on the concerned subject. In of members and students.
the two technical sessions and the Research session, renowned I wish prosperity and happiness to members, students and
academicians enriched the seminar with their wonderful and their families on the occasion of Ganesh Chaturthi, Onam and
inspiring presentations. Vishwakarma Pujaand wish them success in all of their endeavours.
Another UGC Sponsored National Level Seminar had been
organised by the Institute in collaboration with Shri Sikshayatan With
W ith
hwwarm regards,
arm re
ar ega
gard
rds,
s,
College based on the theme ‘Contemporary Issues in Finance,
Management and Economics’ on August 26, 2016 at the college
premises. Shri G K Khaitan, President, Shri Sikshayatan College, Dr
(CMA Manas Kumar Thakur)
Aditi Dey, Principal, Shri Sikshayatan College, and the Chairman, 1st September 2016
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(Council Committees for the year 2016-17)
Standing Committees
1. Executive Committee 2. Examination Committee

(Quorum: 4) (Quorum: 4)
Chairman Chairman
1. CMA Manas Kumar Thakur, President 1. CMA Manas Kumar Thakur, President
Members Members
2. CMA Sanjay Gupta, Vice- President 2. CMA Sanjay Gupta, Vice- President
3. Shri Sushil Behl, Government Nominee 3. CMA Biswarup Basu
4. CMA P.V. Bhattad, IPP 4. CMA P. Raju Iyer
5. CMA Amit Anand Apte 5. CMA Papa Rao Sunkara
6. CMA Dr. P.V.S. Jagan Mohan Rao 6. CMA Balwinder Singh
7. CMA H. Padmanabhan 7. CMA A.B. Nawal
Secretary Secretary
CMA Kaushik Banerjee, Secretary CMA Amitava Das, Director (Examination)
3. Finance Committee
(Quorum: 4)
Chairman
1. CMA Manas Kumar Thakur, President
Members
2. CMA Sanjay Gupta, Vice- President
3. Shri Surender Kumar, Government Nominee
4. CMA Niranjan Mishra
5. CMA Dr. I. Ashok
6. CMA Avijit Goswami
7. CMA Vijender Sharma
Secretary
CMA Arnab Chakrabarty, Sr. Director (Finance, Admin & HR)
Other Committees
4. Disciplinary Committee U/s 21B(1) 5. Training & Education Facilities Committee
Presiding Officer Chairman
1. CMA Manas Kumar Thakur, President 1. CMA Papa Rao Sunkara
Members
Members
2. CMA Niranjan Mishra
2. Shri Surender Kumar, Government Nominee
3. CMA P. Raju Iyer
4. Shri Debashish Bandopadhyay – Nominee of Central 3. CMA Niranjan Mishra
Government 4. CMA Balwinder Singh
5. Shri Rakesh Tyagi – Nominee of Central 5. CMA Amit Anand Apte
Government 6. CMA H. Padmanabhan
7. CMA Dr. I. Ashok
Secretary
CMA Rajendra Bose, Director (Discipline) Secretary
CMA Sucharita Chakraborty, Joint Director (Academics &
Studies)
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6. Research, Journal and IT Committee 7. Professional Development, Banking & Insurance

(Quorum: 4) Committee (Quorum: 5)
Chairman Chairman
1. CMA Avijit Goswami 1. CMA Amit Anand Apte
Members Members
2. Shri Surender Kumar, Government Nominee 2. Govt Nominee CAG
3. CMA Vijender Sharma 3. CMA H. Padmanabhan
4. CMA Dr. P.V.S. Jagan Mohan Rao 4. CMA Balwinder Singh
5. CMA Papa Rao Sunkara 5. CMA Niranjan Mishra
6. CMA P. Raju Iyer 6. CMA Avijit Goswami
7. CMA H. Padmanabhan 7. CMA P. Raju Iyer
8. CMA Amit Anand Apte 8. CMA Dr. I. Ashok
9. Advisor (Cost)
Secretary (Research &Journal) 10. CMA B.B. Goyal
CMA Dr. Debaprosanna Nandy, Director (Research &
Journal) & Editor Secretary (Professional Development)
Secretary (IT) CMA S.C. Gupta, Director (PD)
Ms Anita Singh, Additional Director (IT) Secretary (Banking & Insurance)
Shri Pradipta Gangopadhyay, Deputy Director (Research
& Journal)
8. Continuing Professional Development Committee 9. Cost Auditing & Assurance Standards Board
Chairman Chairman
1. CMA Sanjay Gupta, Vice- President 1. CMA P. Raju Iyer
Members Members
2. Shri Surender Kumar, Government Nominee 2. Shri Sushil Behl, Government Nominee
3. Shri Sushil Behl, Government Nominee 3. CMA Balwinder Singh
4. CMA P.V. Bhattad, IPP 4. CMA Niranjan Mishra
5. CMA Biswarup Basu 5. CMA Amit Anand Apte
6. CMA Amit Anand Apte 6. CMA Biswarup Basu
7. CMA H. Padmanabhan 7. CMA B.B. Goyal
8. CMA A.B. Nawal 8. CMA Mrityunjay Acharjee
9. CMA Ajay Deep Wadhwa
Secretary 10. Nominee of MCA
CMA T.R. Abrol, Deputy Director (PD) 11. CMA A.N. Raman
12. CMA Chandra Wadhwa
13. Nominee of - CII/FICCI/ ASSOCHAM/ PHDCCI
14. Nominee of - CII/FICCI/ ASSOCHAM/PHDCCI
15. Nominee of - CII/FICCI/ ASSOCHAM/PHDCCI
16. Nominee of CAG
17. Nominee of Regulator - TRAI/PNGRB/SEBI/CCI
19. Nominee of ICSI
20. Nominee of IIM - Dr. Pankaj Gupta
Secretary
CMA J.K. Budhiraja, Senior Director (Technical)
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10. Regional Council & Chapters Coordination 11. WTO, International Affairs and Sustainability
Committee (Quorum: 4) Committee (Quorum: 4)
Chairman Chairman
1. CMA Niranjan Mishra 1. CMA H. Padmanabhan
Members Members
2. Shri Surender Kumar, Government Nominee 2. Shri K.V.R. Murthy, Government Nominee
3. CMA Balwinder Singh 3. Shri Ajai Das Mehrotra, Government Nominee
4. CMA Dr. I. Ashok 4. CMA Avijit Goswami
5. CMA Amit Anand Apte 5. CMA P. Raju Iyer
6. CMA H. Padmanabhan 6. CMA P.V. Bhattad, IPP
7. CMA Avijit Goswami 7. CMA A.B. Nawal
Secretary Secretary
CMA Arnab Chakrabarty Sr. Director (Finance, Admin CMA Tarun Kumar, Joint Director (President's Office /
& HR) Vice President's Office)
12. Taxation Committee 13. CAT Committee

Chairman Chairman
1. CMA A.B. Nawal 1. CMA Dr. I. Ashok
Members Members
2. Shri Ajai Das Mehrotra, Government Nominee 2. Shri Surender Kumar, Government Nominee
3. Shri Sushil Behl, Government Nominee 3. CMA Biswarup Basu
4. CMA Amit Anand Apte 4. CMA Papa Rao Sunkara
5. CMA Papa Rao Sunkara 5. CMA Amit Anand Apte
6. CMA Balwinder Singh 6. CMA Avijit Goswami
7. CMA Dr. P.V.S. Jagan Mohan Rao 7. CMA H. Padmanabhan
8. CMA S. R. Bhargave
9. CMA N. Swain Secretary
10. Shri Sanjay Goyal CMA L. Gurumurthy, Senior Director (CAT, Training
& Placement)
Secretary
CMA Chiranjib Das, Joint Director (Tax Research)
14. Corporate Laws, Governance & Corporate 15. Members’ Facilities & Services Committee
Sustainability Committee (Quorum: 4) (Quorum: 3)
Chairman Chairman
1. CMA Dr. P.V.S. Jagan Mohan Rao 1. CMA Biswarup Basu
Members Members
2. Shri K.V.R. Murthy, Government Nominee 2. CMA A.B. Nawal
3. Shri Ajai Das Mehrotra, Government Nominee 3. CMA Niranjan Mishra
4. CMA Biswarup Basu 4. CMA Papa Rao Sunkara
5. CMA Vijender Sharma 5. CMA Vijender Sharma
6. CMA Papa Rao Sunkara 6. CMA P. Raju Iyer
7. CMA A.B. Nawal
Secretary
Secretary CMA Arup S. Bagchi, Director (Membership)
CMA Dibbendu Roy, Joint Director (Finance)
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16. Members in Service & Training & Placement 17. Cost & Management Accounting & Election
Committee (Quorum: 4) Reforms Committee (Quorum: 3)
Chairman Chairman
1. CMA P.V. Bhattad, IPP 1. CMA Vijender Sharma
Members Members
2. Shri K.V.R. Murthy, Government Nominee 2. Shri Ajai Das Mehrotra, Government Nominee
3. CMA Dr. P.V.S. Jagan Mohan Rao 3. CMA Dr. P.V.S. Jagan Mohan Rao
4. CMA A.B. Nawal 4. CMA P.V. Bhattad, IPP
5. CMA Avijit Goswami 5. CMA Biswarup Basu
6. CMA Dr. I. Ashok 6. CMA Dr. I. Ashok
7. CMA Vijender Sharma
8. CMA H. Padmanabhan Permanent Invitee to Election Reforms Committee
CMA Kaushik Banerjee, Secretary
Secretary Secretary
CMA L. Gurumurthy, Senior Director (CAT, Training CMA Nisha Dewan, Joint Secretary
& Placement)
18. Infrastructure Committee 19. Cost Accounting Standards Board

Chairman Chairman
1. CMA Manas Kumar Thakur, President 1. CMA Balwinder Singh
Members Members
2. Shri Ajai Das Mehrotra, Government Nominee 2. Shri Sushil Behl, Government Nominee
3. Govt Nominee CAG 3. CMA Niranjan Mishra
4. CMA Vijender Sharma 4. CMA P. Raju Iyer
5. CMA Dr. I. Ashok 5. CMA Dr. P.V.S. Jagan Mohan Rao
6. CMA Dr. P.V.S. Jagan Mohan Rao 6. CMA Avijit Goswami
7. CMA P.V. Bhattad, IPP 7. CMA B.B. Goyal
8. CMA K. Narasimha Murthy
Secretary 9. CMA D. V. Joshi
CMA Kushal Sengupta, Joint Director (Finance) 10. CA Chandrashekhar Chitale
11. PCA/Co-opted
12. CMA M.R. Rath
13. CMA Sushil Kothari
14. Nominee of Corporates/Industry
15. CMA Sham Wagh
16. Dr. Shailesh Gandhi, IIM-Ahmedabad
17. Shri Murli Ganesan, ITC Ltd.
22. Nominee of - CII/FICCI/ASSOCHAM/PHDCCI
23. Nominee of - CII/FICCI/ASSOCHAM/PHDCCI
24. Nominee of -CII/FICCI/ASSOCHAM/PHDCCI
25. Advisor (Cost)
26. Nominee of MCA
27. Nominee of CBEC
28. Nominee of CBDT
29. Nominee of ICAI
30. Nominee of ICSI
Secretary
CMA J.K. Budhiraja, Senior Director (Technical)
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20. Disciplinary Committee U/s 21D 21. Coordination Committee of The Institute of Cost
(Quorum: 2) Accountants of India, The Institute of Company
Secretaries of India and The Institute of Chartered
Accountants of India (Quorum: 2)
Chairman
1. CMA Manas Kumar Thakur, President Chairman
1. CMA Manas Kumar Thakur, President
Members
2. Shri Ajai Das Mehrotra – Nominee of Central Members
Government 2. CMA Sanjay Gupta, Vice- President
3. CMA P.V. Bhattad, Immediate Past President 3. CMA P.V. Bhattad, IPP
4. CMA H. Padmanabhan
Secretary
CMA Kaushik Banerjee, Secretary Secretary
CMA Tarun Kumar, Joint Director (President's Office / Vice
President's Office)
22. Board of Discipline 23. Board of Advanced Studies

Presiding Officer Chairman

1. CMA Jugal Kishore Puri 1. CMA Manas Kumar Thakur, President
Members Members
2. CMA Avijit Goswami 2. CMA P.V. Bhattad, IPP
3. One person designated under clause (c) of sub-sec- 3. CMA Sanjay Gupta, Vice-President
tion (1) of Section 16 – Member. 4. CMA P. Raju Iyer
5. CMA Balwinder Singh
Secretary 6. CMA Neeraj Arora
CMA Rajendra Bose, Director (Discipline) 7. CMA Dr. Asish K. Bhattacharyya
8. CMA T.C.A. Srinivasa Prasad
Secretary
CMA M.P.S. Arun Kumar, Deputy Director (Advanced
Studies)
24. GST Advisory Board 25. Railway Advisory Board

Chairman Chairman
1. CMA Brijmohan Sharma, Past President 1. CMA Manas Kumar Thakur, President
Members Members
2. CMA Upender Gupta, IRS, Commissioner (GST), 2. CMA Sanjay Gupta, Vice-President
CBEC Govt. of India 3. CMA Partha Sarathi Bhatacharjee, Ex CMD, Coal India
3. CMA Mrityunjay Acharjee, Associate VP, Balmer Limited
Lawrie & Co. Ltd. 4. Shri R.K. Jain, IRS
4. CMA CA Rahul Renavikar, Ernst & Young LLP 5. CMA K. Narasimha Murthy
5. CMA Mahammad Rafi 6. CMA D.K. Saraf, Chairman, ONGC
6. CMA P. Ravindar 7. CMA Dr. M.B. Athreya
7. CMA Dr. Pawan Jaiswal
Secretary
Secretary CMA L. Gurumurthy, Senior Director (CAT, Training &
CMA Chiranjib Das, Joint Director (Tax Research) Placement)
President and Vice President are Permanent Invitees to all the Committees except Disciplinary Committees.
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Hon'ble Union Minister for Micro, Small

and Medium Enterprises, Shri Kalraj
Mishra, being felicitated by
CMA Manas Kumar Thakur, President,
CMA Sanjay Gupta, Vice President and
Shri Sushil Behl, Government Nominee of
the Institute.
Hon'ble Union Minister for Railways,

Shri Suresh Prabhu, being felicitated by
CMA Manas Kumar Thakur, President,
CMA Sanjay Gupta,
Vice President,
Shri Sushil Behl and Shri Surender Kumar,
Government Nominees of the Institute
CMA Sanjay Gupta,

Vice President of the Institute felicitating
Shri. Amardeep Singh Bhatia, Joint
Secretary, Ministry of Corporate Affairs
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Shri Gyaneshwar Kumar Singh, Joint

Secretary, Ministry of Corporate Affairs
being felicitated by
CMA Sanjay Gupta,
Vice President of the Institute
CMA Manas Kumar Thakur, President of

the Institute hoisted the National Flag
at Headquarters of the Institute on the
occasion of 70th Independence Day
on August 15, 2016
CMA Sanjay Gupta,

Vice-President of the Institute hoisted
the National Flag at Delhi office of
the Institute on the occasion of 70th
Independence Day on August 15, 2016
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ICAI-CMA SNAPSHOTS
CMA Manas Kumar Thakur,

President of the Institute,
CMA Harijiban Banerjee and
CMA Amal Das, Past Presidents of the
Institute, CMA Kaushik Banerjee,
Secretary of the Institute addressing
about introducing CMA Syllabus 2016 at
the Press Meet organized by the Institute
on August 4, 2016 at Headquarters,
Kolkata
Release of CMA Syllabus 2016 of

the Institute at J N Bose Auditorium,
Headquarters, Kolkata on August 4, 2016.
From Le: CMA Biswarup Basu, Council
Member, Prof. Siddhartha Daa, Former
Pro-Vice Chancellor, Jadavpur University,
Swami Prajnatmananda Ji Maharaj,
in-charge, Youth Programmes & Cultural
Programmes, The Ramakrishna Mission
Institute of Culture, CMA Manas Kumar
Thakur, President of the Institute, CMA
Partha Sarathi Bhaacharyya, Former
CMD, Coal India Ltd, Prof. Sankar Kumar
Sanyal, President, Howrah Chamber of
Commerce & Industry, former Director,
State Bank of India, Bengal circle, and CMA
Kaushik Banerjee, Secretary of the Institute
Dr. Subbarao Ghanta, Special Secretary

and Ex. officio Secretary to
Chief Minister of AP and
the Institute, signed MoU with AP Skill
Development Corporation on August 8,
2016 for introduction of CAT Course in
the State of AP. Others seen are Council
Members and Regional Council Members
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CMA P V Bhaad, immediate past

president of the Institute congratulating
CMA Pradip H. Desai, newly elected
Chairman of WIRC. Others seen are
Council Members and Regional Council
Members

the Institute addressing the gathering on
the occasion of the seminar based on the
theme ‘National Pension Scheme(NPS)’
jointly organized by Bhubaneswar
Chapter & NASDL e-Governance
Infrastructure Ltd. in association with
Business Standard on July 24, 2016.
Seen on the dais from le: CMA Damodar
Mishra, Secretary, CMA B.B. Nayak,
Chairman, PD Commiee, CMA Siba
Prasad Kar, Chairman of the Chapter,
CMA Niranjan Mishra, Council Member,
CMA Siba Prasad Padhi and CMA C.
Venkata Ramana, Regional Council
Members of the Institute, Kolkata
Official launching of CAT ROCC Certificate

by CMA Anas K(Director, ICMS) from
Shri. P. K Kunhalikkuy, (Deputy
opposition leader, Kerala Legislative
Assembly) in the presence of
CMA H Padmanabhan (Chairman, W.T.O,
International affairs and Sustainability
commiee & Council Member) and
Shri. K. K. Nasar (Chairman, Koakkal
Municipality)
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The Institute in association with Department of Volume 42 No. II, July 2016 published by the Research
Commerce, Calcutta University organized a seminar on and Journal Directorate of the Institute was released
‘Commerce Education and Beyond- The Professional Edge’ during the session. Swami Suparnananda, Secretary, The
on August 27, 2016 at the University’s Centenary Hall. Ramakrishna Mission Institute of Culture, Golpark, the
The initiative was deeply extended to create an awareness next speaker with his prfound knowledge stated that
among the students pertaining to Cost and Management one must enjoy life but should lay stress over sacrifice
Accountancy. Uniformity was witnessed during the too. He added that happiness is not about collection of
start –up phase of the event when all the veteran eminent things but of divine nature. Pulling the nature, CMA Dr
invitees assembled to contribute after it was hit by a Asish K. Bhattacharya, Professor and Head, School of
magnificent welcome address by CMA Kaushik Banerjee, Corporate Governance and Public Policy, IICA, New
Secretary of the Institute. CMA (Dr.) Swagata Sen, Pro- Delhi made it crystal clear by saying that to be in the top
Vice-Chancellor for Academic Affairs, University of management level, one needs really to have the essence
Calcutta deliberately said that commerce has to cover of management accountancy. Again CMA Manas Kumar
employability as well as equity. As a matter of fact, he Thakur, President of the Institute literally appreciated the
feels that commerce is practical in nature and hence it is state of being a commerce student. To support him, many
required to cement both academic and professional genres. other eminent speakers like Prof. Suman K. Mukherjee,
When the turn came for the next player, interestingly Shri Economist, in the next interactive session, motivated the
Harshavardhan Neotia , President, FICCI and Chief Guest students like anything to jog their minds and gear up for a
of the seminar shook the ambience at a go when he revealed fantastic career with Cost and Management Accountancy,
that he happens to be a former student of the Institute. He a curriculum that the country needs. CMA Avijit Goswami
also claimed that effort and result are not proportional. and CMA Biswarup Basu, council members of the Institute
Students felt happy when he mustered up his courage and addressed the gathering and enlightened the students
distributed the statement “Enjoy Your Life.......” about the CMA course curriculum. Prof Rajib Dasgupta,
Meanwhile, Quarterly publication of Research Bulletin, Head of the Department, Department of Commerce,

University of Calcutta delivered his vote of thanks.
CMA Bibekananda Mukhopadhyay, Chairman, EIRC
and CMA Arup Sankar Bagchi, Director (Membership)
of the Institute jointly conducted a CMA Career
Awareness Programme aimed to spread an area of
interest among the students over there and strived
to identify questions that lead to discussions rather
than just need to be answered. Mr. Vibhor Tandon,
Assistant Vice President and Mr. Diptendu Moulik ,
Senior Executive , Multi Commodity Exchange of India
Ltd. (MCX) took an interactive session on Commodity
Exchange. To give the entire venture the correct
acknowledgement with his beautiful anchoring, CMA
(Dr.) Debaprosanna Nandy, Director, Research &
Journal of the Institute was eulogised to the fullest.
There was an overwhelming response and the seminar
was thoroughly attended by more than one thousand
students and one hundred faculty members from more
than fifty colleges across West Bengal.

COVER STORY
LOCALISATION
&
COST COMPETITIVENESS IN
AUTOMOTIVE INDUSTRY
: A CASE STUDY OF BOSCH
Industrial location is an increasingly important decision faced
by both national and international firms. There are a number of
examples which shows that how a particular industry has been developed
in a particular location of a country even a country itself becomes location
for a particular type of industry. There are many factors which influence the
localisation of a particular industry and moreover all the factors are not
equally important. Factors dominating depend on the type of industry
and its key resources. The present paper is an effort to look inside
localisation of automobile industry in reference to Bosch.
CMA Dr. Mukesh Chauhan

Assistant Professor
PG Department of Commerce
PG Govt College, Chandigarh

L
ocation, localization and planned location of industries are oen felt to be synonymous. But, the distinction among these
three terms is of immense importance. Entrepreneurs locate their enterprises where the cost of production comes, the
lowest at the time of establishing industries. This is known as ‘location of industries’.
The concentration of a particular industry mainly in one area, as occurred with many industries in India, for example,
textile industry in Mumbai is known as ‘localisation of industries’. ‘Planned location of industries’ is a term whereby the
location of industries is planned to give each industrial area a variety of industries so that large industries are dispersed
and not localised.
It is not always possible to explain industrial location independently with the help of any one factor. In fact, several factors/
considerations influence the entrepreneur’s decision in selecting the location for industry. Selection of industrial location is a strategic
decision. It is a onetime decision and not be retracted again and again without bearing heavy costs.
Nonetheless, regardless of the type of business/enterprise, there are host of factors but not confined to the following only that
influence the selection of the location of an enterprise:
(i) Availability of Raw Materials
(ii) Proximity to Market
(iii) Infrastructural Facilities
(iv) Government Policy
(v) Availability of Manpower
(vi) Local Laws, Regulations and Taxation
(vii) Ecological and Environmental Factors
(viii) Competition
(ix) Incentives, Land costs. Subsidies for Backward Areas
(x) Climatic Conditions
(xi) Political conditions.

COVER STORY
Literature Review locating abroad. Ballance (1987) analyzed the effect of incentives
in location decisions.
Empirical studies of industrial location A review of empirical
studies of industrial location reveals some of the most influential Objectives of The Study
factors in making a decision to locate industrial plants at particular
sites (Lurell, 1962; Smith, 1966; Karaska, 1969; Cameron and 1. To discuss the theory of localisation
Clark, 1966; Carnoy, 1972; Keeble, 1976; Dorward, 1979; Cobb, 2. To explore the localisation of Bosch Limited
1982; Forbes, 1982; Lloyd and Mason, 1984; Walters and Wheeler, 3. To draw conclusion regarding localisation
1984; Brusco, 1985; and Mason and Harrison, 1985; Mazzarol and
Choo, 2003; Wood and Parr, 2005). Most oen cited factors of Research Methodology
industrial location are distance to market, distance to materials,
prevailing wage rates (labor costs), productivity of workers, The main source of data is of secondary type which has been
availability of labor, adequacy of transportation, closeness to collected through various reliable sources and also backed by
producers, industrial climate, taxes, anticipation of market growth, extensive literature survey. The study is of descriptive nature.
transportation costs, availability of land for future site expansions,
cost and availability of utilities, political climate toward business, Hypotheses Creation
population growth, and income levels of consumers. These factors
can be classified into three basic categories: markets, labor, and Localization has several inherent advantages associated
community environment. to it which can be utilized by the OEM (Original Equipment
Manufacturer) manufacturers to have competitive advantage over
International location factors others. Hence we can hypothesize the fact as follows:
Many authors point out that only a limited amount of research
has been reported on factors influence international location H1: For best selling cars in any price segment, the percentage of
decisions for contemporary manufacturing operations (MacCarthy localization is higher compared to other cars
and Ahirawong, 2003; Siebert, 2006; Carod, 2005). The literature H2: Car manufacturers who are rated high in quality of aer
on International literature on industrial locations falls into two sales service have a high degree of localization content in their
categories: empirical studies, and works developing theoretical cars
concepts. Both strongly suggest that the long term investor in
foreign countries realizes that reactions of host governments About Bosch
are likely to be very complex (Vernon, 1968, 1971), McGregor and
Walters (1977) aempted to identify those factors that had guided Started as a brain child of Robert Bosch in the year 1886,
management’s decision to invest abroad. The main determinants German multinational company Bosch has established itself as the
identified in that study are: accessibility, basic services available, one of the largest suppliers of automotive components all over the
environment, site costs, industrialization, labor and staff globe. Robert Bosch GmbH operates through its 4401 subsidiaries
availability, host taxes and incentives, area reputation, the nature and regional companies all over the world. Robert Bosch Stifung
of the host government and its policies. Horst (1972) surveyed GmbH, a charitable foundation, is the primary investor having
1191 manufacturing corporations with foreign subsidiaries. He 92% of the total share capital in Robert Bosch GmbH. The Bosch
aempted to draw some inferences about the direct investment family and the Robert Bosch GmbH hold the remaining of the
process by comparing the characteristics of firms investing share capital in the company. This ownership structure acts as
in Canada with those not doing so, and of multinational firms the biggest proponent for entrepreneurial freedom and strategic
with those which are solely domestic. Another study which investment decisions for the future growth of the company.
investigated firm and industry determinants, is that of Vernon Headquartered in Gerlingen, near Stugart, Germany and with
(1971), who studied 187 U.S. manufacturing corporations with an employee base of 300,000 spread across 60 countries, Bosch
six or more foreign subsidiaries. He identified a set of factors managed to obtain revenue of 49 Billion Euros2 in the financial
important to these firms. Rummel and Heenan (1978) studied year of 2014 from its worldwide trade operations. 78% of this total
the process undertaken by multinationals to analyze political operation came from operations outside Germany.
risk. Their study reveals a host of factors considered important in Spanning over 150 odd countries, Bosch caters to the need
making international industrial location decisions. These factors of the industry by manufacturing core products like automotive
include domestic instability, foreign conflict, political climate, and components, industrial and building equipment. On the basis of
economic climate. Other studies dealt with the disadvantages of these product categories, Bosch has segmented its operation into

four verticals i.e. automotive technology, industrial technology, manufacturing/assembly unit in China and India. The primary
consumer goods, energy and building technology. With a vision reason for the same is the tax benefits they obtain by selling
of development and sustenance, the Bosch group is continuously domestically manufactured/assembled cars. For example in India,
innovating for the holistic welfare of the society. Bosch invests if BMW chooses to import and sell its fully finished car, it has to
around 10% of its total annual revenue towards research and pay a duty of 120% whereas if it imports a CKD the import duty
development. This led to the filing of 4,5003 patents in 2014 for the same is just 40%. Therefore, it is economically wise to set
alone for the future development of high performance, efficient up assembly /manufacturing units in India rather than to import
and eco-friendly products. In total Bosch group accounts for fully finished cars.
around 770004 patents and utility models through its worldwide This was the trend followed by most of the automotive players.
operations. However, due to increase in competition and a pressure to reduce
prices, these companies are now forced to progress towards the
Bosch in India next step of sourcing the components from within India/China.
Therefore, localization or local sourcing has become one of the key
Bosch started its operation in India in the year of 1922 by long term strategies for these manufactures. The key advantages
establishing an import based model. Finding India to be a that can be leveraged through localization are explained below:
strategically important market, it set up its first production unit in (a) Shielding from global economic fluctuations: Localization
1951. Currently Bosch has 10 manufacturing units and 7 research helps a manufacturer in shielding itself from any kind of
and development facilities5 across the country. The company global economic turmoil. This will maintain price stability
has an employee base of over 26,000 in India and it generated in the domestic market irrespective of any global economic
revenue of $2 Billion in the financial year of 2014. It has also turmoil. The manufacturer can continue to thrive by
introduced a state-of-the-art R&D facility to provide its customer leveraging localized supply of raw materials and domestic
with good quality products according to their needs. Bosch is one demand for different components.
of the biggest success stories of a foreign multinational company (b) Beer Revenue Generation: Because of low cost
operating in India. The reason for the success can be aributed to manufacturing and competitive pricing of the products,
the factor mentioned below: demand will be higher in case of the manufacturer. This
in turn will help in achieving beer revenue from both
(a) Customized & Price effective manufacturing: Bosch’s core domestic and international markets.
strength is derived from the price effective manufacturing (c) Low Cost Human Resource: Through localization,
of customized products according to the need of the Indian manufacturers can take the advantage of low cost human
local market. resource of a nation like India. By providing initial training
(b) Investment in R&D: Bosch’s R&D facility in India is the and work specific insights, companies can utilize the vast
largest outside its home market in Germany. It contributes in knowledge pool of the country at a lower price. This will
a significant way for local and global product development. in turn help in bringing down the price for the product. As
(c) Societal work and development initiative: Bosch India it can be seen from the following figure, manufacturers in
has invested heavily for the workforce development. It has countries like China, India, Indonesia, Thailand leverage the
helped Bosch in talent utilization across several verticals low cost human resource for cost effective production.
within the company.
Exhibit-1: Cost of Human Resource
Significance of Localization
Due to the plateaued growth of the automotive industry in

developed markets like North America, Western Europe and Japan,
the automotive companies have shied their focus towards new
growth potentials in developing countries. These companies are
primarily focusing on countries like China and India their future
growth strategies, which have seen a cumulative growth rate6
of 25% and 15% respectively in automotive industry between
2001 to 2007 financial year. These two countries are expected
to contribute more than 20% of the global car market in the FY
2015-16. Almost all major car manufacturers have set up their Source: hp://www.dragonsourcing.com/product-localization

COVER STORY
(d) Reduction in Investment: With localization, a Excise duty has also been slashed to encourage the domestic
manufacturer can continue their business without going production ratio.
for backward integration or foreign import. This helps in
both controlling the capital investment and optimizing Leveraging these factors, several foreign vehicle
the operational investment for the manufacturer. manufacturers like Suzuki, Hyundai, Ford etc. have initiated
(e) Reduction in Lead Time: Localization can help their expansionary plans of their Indian operations to not
in bolstering the supply chain by shortening the only cater to the domestic Indian market but also view India
transportation time of raw materials or sub-system units to be an export hub. Indian car manufacturers like Tata and
from suppliers. This will not only reduce the production Mahindra have also gone global and completed some foreign
lead time but also help in minimizing the cost required acquisitions and have also started their export operations.
for production pre-planning. Apart from the above factors, a huge demand from expanding
(f) Faster Service Response: With a shorter lead time, middle class family with a higher disposable income, thrust on
the manufacturer can respond quickly to the customer infrastructure spending10 and road development in India have
demands and grievances. This will lead to beer become the boosters for the growth of the sector.
customer satisfaction and customer engagement. This break-neck growth of worldwide automotive industry
Faster aer-sale service will bring in more demand from in the twentieth century brought about milestone changes
customers requiring rapid resolution of the requirements in the price and performance of the diesel engines. These
and problems. continuous improvements in the field of diesel engine
(g) Need based Customization: A manufacturer can manufacturing helped the Indian passenger and commercial
implement mass product customization with the vehicle segment to thrive. Diesel engine being the most
support from localized suppliers. Customers can be efficient internal combustion engines has become the
satisfied with quick but low price offerings based on central driver in the nation’s economic activities. Inherent
their requirement. Customization can be done according performance parameters like beer fuel economy, more power
to the emerging market demand at a faster pace. efficiency, and longer durability made diesel engines the most
(h) Cost Benefits: With localization, a manufacturer critical component in transportation, agricultural, industrial
can source raw materials and sub-system units at a and mining activities. Several technological breakthroughs
cost effective price. Again, this helps in keeping the have also been achieved through collaborative research
manufacturer price competitive in the global market as and development projects to bring down the emission
well. levels making it more pro-business. But because of sluggish
demand from global market, Society of Indian Automobile
The Indian Automobile & Automotive Industry Manufacturers (SIAM) has forecasted Indian automotive
industry to acquire a value of $145 Billion by the end of
India currently stands as the 7th largest producer in the financial year 2016. Therefore, an Indian domestic operation
world with an average annual production of 17.5 Million has assumed important role for all car manufacturers and
vehicles7. It is also expected to become the 4th largest hence a primary emphasis is laid on localization in order to
automotive market by volume, by the end of 2015. The Indian leverage the benefits.
car market is expected to have a potential growth of 6+ Million
units annually by 2020. The Indian automotive sector valued The Discussion
at $100 Billion8 at the end of financial year 2015, is one of the
largest automotive industries all over the world. It contributes Analysis of Hypothesis-1
22%9 towards the nation’s GDP from manufacturing sector. In order to analyze the Hypothesis-1, the sales data and the
Riding on the waves of ‘Make in India’, the industry not only percentage of local content of several cars from different car
saw a growth of 3.90% in domestic passenger vehicle segment manufacturers in India have been considered:
but also fortified the net export by 4.42% in the financial year In the Exhibit-2 provided in the following page, there
of 2015. The passenger vehicle segment has an overall share has analyzed three different car segments in terms of price
of 14% towards the total contribution from Indian automotive range. From the analysis, it has been observed that the top
industry. Indian government has also taken several initiatives selling cars in any price range have high degree of localization
to strengthen this contribution from the automotive industry. content. Thus, it can be seen that the advantages leveraged
100% FDI through automatic path has been allowed to improve through localization have a direct influence on the sales
technical and financial conditions of Indian automotive sector. volume of the cars.

Exhibit-2: The sales data and the percentage of local content of several cars from different car manufacturers in India
Source: Compiled from various sources
Analysis of Hypothesis-2 responsive aer sales service at a reasonable price point to its
customer.
Car manufacturers who are rated high in quality of aer sales Thus, it can be observed that localization is extremely
service have a high degree of localization content in their cars. advantageous to boost the sales and achieve customer
In a ranking released by JD11 Power on Customer Service Index, satisfaction. Car manufacturers like Suzuki, Hyundai have
Maruti Suzuki, Honda, Hyundai are ranked 1, 2 and 3 respectively enabled their own Japanese and Korean Tier-1 suppliers to set
with respect to customer service. An interesting aspect to this up bases in India for implementing the Just-in-time systems
observation is that these three car manufacturers produce cars and leveraging other localization advantages. However, with
with average localization content over 90%. The reason for the high increasing market competition, car manufacturers should focus
ranking can be aributed to the ease of availability of spare parts, not only on their level of localization but also the localization
time taken for spares replacement, cost of spare parts and service. of raw material sourced by their tier-1 suppliers. This process of
These factors are direct advantages yielded due to localization. localization can be termed end-to-end localization. For instance,
Hence, it can be seen that localization also helps in ensuring that the tier-1 suppliers like Bosch India are operating at an average
high degree of service quality is maintained which yields to greater localization of 20% to 30% whereas car manufacturers claim
customer satisfaction, customer loyalty and increased sales. an average localization percentage to be around 80% to 90%.
This mismatch in projects a potential for further improvement of
Exhibit-3: Service Index of Various Car Brands in India localization which will benefit pre-sale and aer-sale activities
and contribute to cost benefits. Hence, it is highly important
to analyse the constraints affecting the localization of tier-1
suppliers and solving them will help the car manufacturers to
leverage the complete advantage from the entire value chain.
Factors Affecting Localization of Tier-1 Suppliers
From the secondary analysis of localization process in India,

I came across several factors which affect the process of end-
to-end localisation of Tier-1 suppliers. These factors can be
segregated into three categories which are as follows:
Source: hp://india.jdpower.com/press-release/2014-india-customer- 1. Quality constraints:

service-index-csi-study It is commonly observed that the quality of material
From the above analysis, it is evident that an OEM car supplied by the Tier-2 suppliers in India is not on par with
manufacturer can create a beer brand value by providing their western counterparts. This can be aributed to lack

COVER STORY
of technical expertise, workmanship skills, infrastructure, sourcing hubs. This industry is estimated to aain a CAGR
systems and non-adherence to industry best practices. rate of 14%12 in the financial period from 2013 to 2021.
The level of penetration of 6-sigma and quality control Currently Indian auto component industry is contributing
norms is very low in case of Tier-2 suppliers. Localization around 7% towards the country’s GDP. Apart from that,
faces a major hard stop due to this as these materials the industry registered an increase of 16.7% in terms of
do not match the high level of quality standards fixed exported components as well. With a potential of 400%
by Tier-1 suppliers like Bosch, Delphi etc. Due to this the growth13 ($30 Billion in 2011 to $113 Billion in 2020) in auto
Tier-1 suppliers are forced to import the required raw component segment, Indian auto component industry is
materials to fulfil quality conformity. aracting many global and Indian OEM manufacturers
to invest in capacity and knowledge building activities
2. Technological and Economic constraints: and localization. Hence, many Indian auto component
It is commonly found that the technology used by Indian suppliers have also boarded this localization bandwagon
Tier-2 suppliers in not on par with their western and to grab the long term benefits which can be segregated into
Japanese suppliers. This is because of lack of development two parts i.e.
of indigenous technology in terms of electronics, precision
machining and machine building. With the current Micro Benefits and Macro Benefits
technology base available in India, precision machining in
terms of microns is not possible and investment in terms Exhibit-4: Auto Component Sales Factors
of importing precision tools and machines require a heavy
financial investment which is not affordable for many
Indian Tier-2 suppliers. Furthermore, importing these
machineries and tools adds to a high fixed cost which
further translates into higher price of the component
produced. Again, Electronics manufacturing in India is still
at its nascent stage and therefore, import of electronic
goods contributes to a large chunk of India’s overall
imports.
3. Learning curve & Economies of Scale constraints:
In analysis I also observed that technologies used by Source:hps://www.atkearney,cim documents/10192/3da62f2b-

Indian suppliers were introduced decades earlier in the 99e0-4751-a6e3-91f46f114e76
developed countries. Therefore, the suppliers in the
developed economies have garnered learning curve Micro Impacts:
advantages and have developed efficient methods of
mass production. Due to this, they are able to produce Due to this new growth frontier in Indian auto component
components at a cheaper price which cannot be matched industry, component suppliers are deriving multitude of benefits,
by the Indian suppliers. This acts as a major deterrent to which can be termed as micro benefits. This has facilitated many
localization as it becomes unaractive for companies like suppliers to leverage the process of localization in order to grow
Bosch. As they lose the primary cost benefit advantage, across three dimensions, which are as follows:
they would rather prefer to use the cost effective imported
parts rather than the expensive locally manufactured 1. New product development capabilities and
materials. diversification:
The financial constraint prevents the suppliers from acquiring
4. Economic & monetary impact of localization: advanced product development capabilities. Localization helps
Indian auto component industry is one of the important the component suppliers in leveraging the financial power of
parts of the Indian automobile industry. With the backing global and Indian OEM manufacturers to overcome the capital
of Indian automobile industry which is the sixth largest barrier. This not only boosts the suppliers to come up with new
market in the world, Indian auto component industry is also manufacturing capabilities but also pushes them to diversify
catching up the pace to become one of the strategic global into new product segments. This helps the supplier in acquiring

new customers and in achieving a helps in creation of new technologies
first mover competitive advantage
Entry of many global required for the capacity enhancement
over other new foreign as well as OEM manufacturers and efficient production. This in
domestic entrants. Again, these are encouraging Indian turn helps in creation of more job
capabilities help the suppliers automotive component opportunities within a country.
in capturing future growth suppliers to establish global Government also provides
opportunities in the global supply networks that is provisional training to cater to the
market. huge demand for skilled workforce.
helping the Indian suppliers
Again encouragement for Research
2. Augmentation of
in becoming more competitive and Development (R&D) culture
existing supply and service and agile in providing quality and fortification of Information and
capabilities: product and services to Technology (IT) sector create more
With the entry of many global domestic and foreign OEM job options to augment the industrial
OEM manufacturers, the demand for manufacturers. production. With the development of
the implementation of global norms is skilled workforce, it becomes easier to
also increasing. This is encouraging Indian manufacture quality products capable of
automotive component suppliers to establish competing with foreign made components and
global supply networks. In turn, this is helping the products.
Indian suppliers in becoming more competitive and agile in
providing quality product and services to domestic and foreign Sample Study of Localization
OEM manufacturers. For instance, through the support from
GM’s supplier footprint team, 25% of GM’s Indian supplier base In order to beer understand the difficulties involved in
has been developed to cater to its international operations. In this localization it has been decided to take a material which Bosch
way, an Indian automotive supplier becomes an indispensable has found as a boleneck in terms of localization in India. Upon
and strategic partner of a tier-1 supplier or OEM manufacturer. discussing with Bosch it was identified this material to be High
Speed Steel, a raw material used by Bosch to manufacture
Macro Impacts common rail injectors. This particular grade of HSS is procured
by Bosch from France & China and they are currently facing
Localization has a bigger impact on the country as a whole difficulties in localizing the same. The usage of this HSS is
compared to the impact on a micro level. Due to the ripple approx. 10 tonnages/ month and represents 3% of their total
effects of investments made within the country, the economic steel purchase.
and growth indicator of the country strengthens. These impacts Due to confidentiality issues, the composition of these steel
are described as below: is not mentioned. However, in our market research we identified
a few vendors who are involved in manufacturing and selling
1. Knowledge transfer and technological support: alloy steels. Bosch has already touched base with some of these
Tie-ups with global OEM manufacturers have enabled Indian suppliers and hence we were able to identify the difficulties faced
auto component suppliers in investing in knowledge development by the suppliers as well in our detailed interviews. The major
through R&D. Global tier-1 suppliers and OEM manufacturers difficulties are listed below
facilitate many technological and financial supports in achieving 1. Constraints in the manufacturing process. As the Indian
a steep learning curve to match with the quality and pace of players are relatively new entrants and adopters of
suppliers in developed countries like Germany and Japan. these technologies , they are facing difficulties in the
This in turn helps the Indian automotive component suppliers manufacturing process such as hot forming and rolling
in avoiding the risk of falling behind in the game of advanced areas
technology and support system. This can be backed by the Edel 2. Cost competitiveness. The Indian companies suffer from
investment research report which talks about the ‘accepted a scale disadvantage and hence they are unable to match
quality’ standards of 80%14 of total exported components to the the price of their Chinese counterparts.
USA and Europe. 3. They understand Bosch’s quality expectations but are
unclear on how to achieve the same within the expected
2. Job creation and development of skilled workforce: price range of Bosch.
Localization aracts more foreign direct investment15 which

COVER STORY
Conclusion the Indian suppliers and transfer

knowledge. We believe, Bosch
With the study the following Diesel engine being the most with their volumes and leverage
findings can be withdrawn: efficient internal combustion engine over their suppliers in Europe
Localization has gained has become the central driver in can enable these tie-ups.
significant importance in the nation’s economic activities. Bosch can also open up
the recent years as firms their global market to these
are forced to leverage the
Inherent performance parameters Indian supplier to help
local resources in order like better fuel economy, more them achieve volume scale
to cope-up with rising raw power efficiency, and longer efficiency.
material prices and also durability made diesel engines In conclusion, we would
to improve supply chain the most critical component in like to put forth our view that
efficiency. in order to make initiatives
By implementing localization,
transportation, agricultural, like “Make in India” successful
firms are able to implement industrial and mining activities and sustainable, there should be
the Just in Time systems which significant investments in R&D and
reduces the inventory cost and also also a primary focus on the technology
significantly cut down on the logistics and skill development of the nation
cost. as a whole. MA
For best selling cars in any price segment, the percentage
of localization is higher compared to other cars References
Car manufacturers who are rated high in quality of aer sales 1. hp://www.bosch.com/en/com/bosch_group/business_
service have a high degree of localization content in their cars sectors_divisions/business_sectors_divisions_2.php
2. hp://annual-report.bosch.com/financial-report/financial-
The localization content of OEM car manufactures in India
report/
are in a higher range with many models crossing more than 3. hp://www.boschindia.com/en/in/sustainability_
90%. However, analysing the localization of Tier-1 suppliers innovation_5/patents_5/patents.html
we could see that there is a significant drop. For eg :- Bosch 4. hp://www.bosch-press.com/tbwebdb/bosch-usa/en-US/
PressText.cfm?&nh=00&Search=0&id=341
has an overall localization content of only 30% which is much
5. hp://www.livemint.com/Home-Page/
lesser than the car manufacturers. JF92JSrZa9H3o4pXWb44HI/Boschs-long-tryst-with-India.html
This brings us to the conclusion that OEMs (car manufacturers) 6. hp://www.bcgindia.com/documents/file15171.pdf
should focus on end-to end localization and must also focus on 7. hp://www.makeinindia.com/sector/automobiles/
8. hp://economictimes.indiatimes.com/industry/auto/
localizing the sources of raw materials of their Tier-1 suppliers
news/passenger-vehicle/cars/slow-local-demand-and-
as well. global-slowdown-hindering-indian-automobile-industry/
Localization is highly important for any developing nation articleshow/46801554.cms
on the whole as it helps greater dissemination of knowledge, 9. hp://www.ibef.org/industry/india-automobiles.aspx
10. hp://economictimes.indiatimes.com/industry/auto/news/
technology and creates a skilled labour force.
industry/indian-automobile-industry-gets-loose-change-from-
Considering a specific case of localization of Bosch, they budget-2015/articleshow/46412094.cms
have a major difficulty in localizing a particular composition 11. india.jdpower.com/press-releases/2016-us-customer-service-
of High speed steel used in their common rail injectors. Upon index-csi-stud
12. hp://indiatransportportal.com/auto-components-global-
conducting interviews with existing steel makers in India we
players-focus-on-india-27777
identified that they face issues in catering to Bosch’s high 13. hps://www.atkearney.com/automotive/ideas-insights/
specification. Apart from that they also suffer from cost article/-/asset_publisher/LCcgOeS4t85g/content/india-s-
competitiveness due to the scale advantage possessed by their auto-component-suppliers-new-frontiers-in-growth/10192
14. hp://auto.economictimes.indiatimes.com/news/auto-
European and Chinese counterparts.
components/indias-top-5-auto-component-suppliers-set-to-
The suppliers understand the quality expectation of Bosch enter-the-global-top-100-list/46270043
but require Bosch’s inputs on how to achieve the quality in the 15. hp://www.pakistantoday.com.pk/2014/05/28/business/
expected price range. This is a challenge as Bosch is not an local-manufacturing-benefits-to-industry-economy-and-
recommendations/
expert in manufacturing of their raw materials. A middle level
solution to this problem would be enabling of technological
tie-ups by Bosch via which their European suppliers can visit professordrchauhan@gmail.com

COVER STORY
Cost
competitiveness
for
sustainability
CMA Deepa R. Hinge

Lecturer in Bhonsala College
Nashik

COVER STORY
D
evelopment of any country or community
depends upon the industrial statues of that
country. There are some popular benchmarks
upon which development has been judge.
Development means overall growth, growth
of entire aspects of surroundings. Only one
sided growth or one angle growth gives crisis among the society
and society and development loses its utility. Business, activity
which is doing under the intention of profit, but that activity
should be continuous and having the perpetual succession in
the over competitive world. Development does not means that
to earn maximum profit .Every product and service is available
and affordable to the community as a general according to
their standard of living of life such situation is rarely held in the
economy, as whole world is dynamic and over competitive.
For achieving the development, there are number of key
policies are available but at the same time, every human being
must take care of our surroundings and all ecological balance. For As shown in the diagram the term sustainability has broader
the development one thing must be clear, that there is to remain scope which includes natural economic health social economic
sustain for a long time in the competition so, development, environment.
sustainability competitiveness are the mutually interdependent. The concept of environmental sustainability includes two ideas,
Everybody wants to survive and sustain then it is developed
and if it is developed, then it should be sustain in the 1) Ecology: -
competition between rivals. In today’s dynamic world which The idea of non human world is moral consideration.
is full of competition and, this cannot be avoided. The word
sustainability key development policy space over past decades 2) Environmental: -
and its advancement regarded to environmental sustainability A broad based concerned with protecting the environment and
and inclusive growth. Such concept comprises social, economic, in particular with the effect of environment damages.
environmental component of sustainability. The definition of
sustainability “Development which meets the needs of present Over past decades these ideas are prominent. Environmental
which out compromising the ability of future generations to meet and social sustainability are the simultaneously inputs of the
there own needs “ growth process. They should not be considered in isolation,
as they are integral part of the economic growth and process
also. The concept of sustainability competitiveness places more
emphasis than the concept of sustainable development, which
does works on the importance of the productivity as a driver of
prosperity and long term growth.
Sustainable competitiveness defines, “a set of institution
policies and other factor that make a nation productive over
the longer term while ensuring social and environmental
sustainability.”Although competitiveness can be equated with the
productivity. Sustainable competitiveness can be linked to the
broader concept it focuses on aspect that go beyond not merely
economic outcomes to include other vital elements ,that render
society sustainable and prosperous by ensuring high quality
growth. The word sustainability has some crises also. Following
are some broad categories-
1. Human and social
2. Environmental
3. Economy and business

The solution of these crises of sustainability is yet to the factor Competitiveness and environment sustainability
in the process for elimination of human greed.
“As earth provides enough to the society every man need but As cost competitiveness and sustainability they are inter
not every mans greed. connected. Cost which is very integral part of the any product
Sustainability also interdependent the cost competitiveness. or service which decides popularity in the market, where as
The word cost has very much vital and which has great impact on quality decides how long the product will held in the market
the profitability, popularity of the products or the service in the .Sustainability means “ to be remain in the market”. If any
markets. The cost competitiveness means” a product or service business or company wants there product or service to be
that is cost competitive that is cheap as compared to the similar remain in the market, then the price of that product should be
product or service “. When the question comes to the cost and its design in such a way that, it is cheap as compare to the other
competitiveness then following strategies are available. similar product if service which gives some unique utilities and
quality. If any business or company is successful in managing
 Kaizen costing for research and development innovation these specification, then the product is going to sustain in the
market for long period. But as there are cultural, fashion, changes
 Target costing ,business also changes according to all with the help of research
and adopting different techniques of market survey. If product
 Overall cost management or service maintained the quality which the customer wants then
customer also ready to pay extra for it. While doing all activities
No company cannot avoid cost increase and operating of the business cost is the integral part of that.
cost should not be adjusted every time with the increase cost Last but not the least sustainability and competitiveness go
Management and cost accountant always fight between this hand in hand. It means product or service should be sustain
two term that is cost should be competitive and same time in the market when it is cost competitive, and when it is cost
product should be qualitative one. Cost is to be maintained competitive only it is sustainable, the word sustainability has
when company is able to utilize skills, workforce, inexpensive broader scope, It includes environment social economic areas
raw material controlled cost, creating effective and efficient cost .bur in spite of all these cost should be the most vital element
model by using re- engineering and product design. There are of sustainability. MA
different angles of the sustainability and competitiveness such
as –
Competitiveness and social sustainability.
Competitiveness and economic sustainability hinge.deepa@yahoo.in
Articles invited
We invite quality articles and case studies from members in the industry with
relevance to Cost and Management Accountancy, Finance, Management,
and Taxation for publication in the journal. Articles accompanied by color
photographs of the author can be sent to: editor@icmai.in

COVER STORY
Cost Competitiveness-
An Innovative Strategic Approach
to boost up Market Share
CMA R. Ram Ganesh

Company Secretary cum Finance Manager
KSDC for SC& ST Ltd,
Thrissur
34 Thee Ma
M
Management
anage
gem
ge m ent A
Accountant
c c o u ntantt  Sept
Se p t em
pt m be
September b r2 0 16
2016 www.icmai.in
w w w.
w icmai.in
W
e e professionals always give paramount Cost Competiveness and its long run benefits
importance in aaining a Competitive
approach in all our vision and actions; The thumb rule Higher the Investment, Higher the Return is being
similarly being competitive is the best challenged by the Cost Competiveness factor, which means Cost
methodology and trade secret for an Competitiveness is a strategic approach where the profitability is
entity to aain success sustaining factor improved and increased in momentum with parallel reduction of
and exponential growth. Competitiveness is the ability to provide cost. Cost Competitiveness may appear easy in theoretical scrutiny,
output in an effective and efficient manner by an organization but this is the most intricate technique where organizations face
to its targeted client than its competitors. Being competitive is many unforeseen challenges while puing the same into practice.
not a one time process, but is an end result of continuous brand Cost Competitiveness includes many multiple balancing complexities
building and focus on quality delivery. Competitiveness is not which apparently many organizations go for a second thought on
only limited to its market where their products are dealt, but also executing the plan. A touch on cost involves a cascading effect on
cover the social and global environment where it gets exposed to Quality, Efficiency, Productivity and Turnover. Cost Competitiveness is
many uncertainties and unknown vicinity. Accordingly aaining not a flat cut on cost but is a systematic method to control the excess
a competitive strategy on cost is the first and best strategy an costs incurred and thereby results in cost advantage. In the present
organization should adopt to build a strong share in the global scenario all organization are on e platforms, where the deliverables
market which would pave way to aain Profitability, ROI and very and cost are of prime importance. There should be an end to an end
importantly Customer Satisfaction. analysis such that the dream of being cost competitive will become
realistic. The major long run benefits of Cost Competitiveness are;
Role of Cost Competitiveness in Building Market Share 5 Step model for bridging Cost Competitiveness and Market
Share
Market Share is defined as the ratio of an Entity’s contribution 1. Cost factor must be given the top priority whenever a
to the Industry Contribution. Market share is the indicator in a business decision is taken.
particular segment that how well an organization performs against 2. Rather than investing and innovating, a growing concern
its Competitions. Market Share is also a metric of success which must always analyze the opportunity cost before it increases
clearly specifies whether an Organization is a Market Challenger its product line.
or a Market Leader. Market share is thus a sum product of Brand 3. The focus on investment in acquiring high quantity producing
Penetration, Product Line, Profitability and Customer Loyalty. To machinery must be substituted with quality generating
improve market share, there should be continuous supply of prod- resources, which would eliminate unwanted depreciation
ucts; for maintaining continuous supply, there should be increased cost.
productivity; for increase in productivity, there should be adequate 4. Expanding in local areas with improved marketing strategies
investment; and this investment must have a cost competitive factor must be adopted rather than high value Mergers and
which will result in building Market share. Acquisitions which is focused only on temporary brand value
www.icmai.in
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COVER STORY
and a premium goodwill. in other areas.

5. Lean Accounting must be practiced in place of sophisticated 2. Each step in achieving Cost Competitiveness should be
reporting practices. having at most care and any wrong step would lead multi
faceted irrecoverable consequences.
Challenges faced by Cost Competitiveness 3. Focus on Cost Competitiveness must be done only aer
ascertaining market demand and nature of Industry.
Adopting Cost Competitiveness is a very difficult and complex 4. Cost Competitive strategy should not result in Disinvestment
mechanism as it involves an analytical approach and sensitive and blockage of capital.
consequences. Following are the major challenges faced when 5. Cost Competitiveness must be adopted only as a strategy
adopting Cost Competitiveness strategy; to eliminate revenue leakage and must not be a burden to
1. Excess reliance of cost competitiveness will result in less focus invest into new markets.
Conclusion
Cost Competitiveness is a system which must be introduced in an entity where

there is capital expenditure more than what actually is required and measures
can be adopted to improve profit figures by cuing short the costs. There
are entities where systems are well framed such that no special Cost benefit
strategies are in process however, the stages where the inputs pass through, are
in beer controllers of costs. In these scenarios, effort put in additional Cost
Competitiveness strategy will result in failure and sometimes in uncontrollable
disasters. Country like India has Buyers’ Market and the seller is bound to produce
what Customer actually requires and not that at what cost the seller decides. Too
much focus on Cost will tempt him to reduce the prices to aract the customers
which may give initial margin and he may not be able to survive in a competitive
environment in the long run. An entity must first focus on improving Market Share
with all Innovation and Strategy resources that he is acquaint with and aer
geing well established with a muscular customer base, Cost Competitiveness
shall be implemented. It is always ideal that building Market Share may precede
Cost Competitiveness. The Cost and Management Professionals have a pivotal
role to advice the Management which has far reaching impact on the Business,
especially with regard any decision based on adopting or discontinuing policies/
strategies related to Cost Control or High Value Investments. MA
rg0801@gmail.com
rg0801@gmaill com
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Cost Optimization –
Shared Service Center

SSC is a new organizational
department which is set to take over
all non-core activities from various
BUs to gain efficiencies in routine
processing by taking advantage
of common practices and enabling
technology and remove redundancies
CMA Ramesh Kumar Ganti

Freelance Professional
Secunderbad
www.icmai.in September 2016  The Management Ac

Accountant 37
COVER STORY
I
n current business environment of constantly increasing 1. Cost of performing the activity (total cost of ownership of
cost of all resources and high speed at which technology the process)
is changing, the management need to evolve new 2. Is the process a core or a non-core for the BU
strategy for sustaining the important support functions 3. Risk and control
to work at optimal level and hence Share Service Centre 4. Technology enhancements
(SSC) business model was evolved to keep the cost 5. Improving the efficiency and effectiveness of the process
competitiveness of running the various support functions of the The above are only few important among other parameters.
organization. CMAs play a very pivotal role in arriving a decision to “make”
(i.e. IN-source) or to “buy” (i.e., OUT-source). The project report
Meaning of SSC will involve a detailed cost/benefit analysis, cash flow statement,
IRR calculation of investment for SSC, project plan, project
Sourcing in business world implies acquiring materials and execution team, risk plan, among others.
services aer evaluating various suppliers which is optimum to In this article I will mainly focus on Shared Service Centre (SSC)
the procuring business unit’s (BU) within an organization. A BU setup i.e. IN-sourcing of BU’s non-core activities.
can either be a plant or/and facility which have independent
support functions like Finance & Accounts, HR, Admin, and IT. Org structure Pre- and Post- set up of SSC
These BU’s source the materials and services on their own and
depend on head office mainly for budgeting and consolidation SSC is a new organizational department which is set to take
activities. over all non-core activities from various BU’s to gain efficiencies
There are effectively 2 ways to optimize the sourcing of BU in routine processing by taking advantage of common practices
functions and they are: and enabling technology and remove redundancies.
Either “OUT-source” the sourcing activities to external 3rd
party service providers; OR Pre-SSC: as we can note each BU will have the support functions
to “IN-source” the sourcing activities by creating a shared independently and working in silos, which leads to redundancy
service centre (even called Global Business Services or of tasks, lack of negotiation capabilities with suppliers/vendors,
Global Business Centre) non-standardized processes, additional resources, MIS and
The Company board, before a decision is taken to IN or OUT consolidation will take time, risk & control will be for each of
the sourcing activities, a thorough evaluation is done and will the BU’s
involve below high level parameters:

Post-SSC: the BU’s can more concentrate on their core activities and let IN-source the non-core activities to SSC. Post seing up of
SSC the departmental org structure will be as given below:
The advantages of the IN-sourcing by seing up SSC are given company will have 10-15% of cost savings due to consolidation of
below: resources, giving up space at each BU, multitasking of resources
 Cost reduction as all resource will be co-located at same among others. In the starting years company will also gain on:
place there will be optimization  Standardizing and streamlining the processes
 Standardization of way of working  Documenting and mapping the processes
 Faster processing  Creating single point of contact across BU’s
 Thru spend analytics beer negotiation with suppliers to
procure the materials and services at best prices Phase 2 – Development Phase – during 3-6 years of functioning
 Improvement in processes of SSC there will be further cost saving of almost 15-20% (henace
 Beer control over risks by end of 6th year of SSC the total cost saving will be in the
range of 25-35%). Further the below benefits will accrue to the
organization as a whole:
SSC journey from set-up from Stabilization to world  Greater knowledge of processes and improving the
class activities for increased efficiencies
 Turning data into analytics for the organization to
In general there are 3 stages for SSC to mature and start giving take informed decisions (like spend analytics, supplier
benefits to the organization: groupings, reduced procurement cost, improved
During initial trend in seing up of SSC the main objective coordination among BU’s)
was cost reduction. SSCs since then have evolved and focus has  Beer productivity and stronger controls (mitigation of
shied from cost reduction to efficiency improvement, automation risks)
of processes, Service Level Agreement for various processes for  Sharing of best practices
best in class delivery, and become a strategic finance partner for
the company. Phase 3 – World Class Operations phase – from year 7
There are mainly 3 phases for SSC to achieve its ultimate aim onwards, the SSC will function at the best in class level. This
of delivering strategic value to the organization as envisaged by will involve, automation of processes, real time dashboard of
CFO and board members. The 3 main phased of SSC are as under: health of SSC, contribution of SSC towards organizational goals,
integration of all functions to work seamlessly. Additionally the
Phase I - Setup and stabilization phase- during initial 1-2 years SSC and organization can have following achievements:

COVER STORY
This article covers the steps which can be taken by organizations which are of mid
to large size with multiple business units scattered at various locations (including
at international locations) and they have support functions like Finance & Accounts,
admin, HR, and IT. All these support functions work independently and not in
coordination with other BUs. This article suggests ways to reduce the cost and improve
efficiencies by adopting any of 2 strategies i.e. to outsource non-core activities to 3rd
party service provider OR to create a new model of Share Service Centre and combine
all the BU’s non-core activities to be delivered by SSC. Further the article also covers
different phases in life cycle of SSC from set-up > stabilization>development>world
class. Also highlighted is what SSC will needs to achieve at each stage.
 SSC able to generate revenue by charging to BU’s for the Summary

services provided
 Have a robust SLA in place which measures the performance SSC is a very robust model to implement for mid to large size
 Can be spin-off as a separate entity and provide service to organization which have many plants or BU’s which are spread
larger industry geographically. Immediate benefits can be felt in finance and HR
 Should be able to cater to international BU’s (global scale operations. For SSC to be successful it should have complete
of operations) sponsor of board, management and CFO should be involved for
 Digitization of work flow (paper-less processing) couple of years till it gets stabilized. MA
 Robotics Process Automation
rkganti@hotmail.com
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COVER STORY
c
St ra t e g i
Cost
Deepak Kumar Mehto

CPSM
Sourcing and Procurement Specialist
Infosys BPO Ltd., Pune

Analysis

COVER STORY
S
trategies are planned course of action for achieving as Strategic Cost Analysis.
the objective of any initiative undertaken at Strategic Cost Analysis integrates cost data and strategy into
organizational/departmental/personal level. every procurement initiative of an organization. Strategic Cost
Strategies are designed and developed to impact Analysis helps in identifying important resources and their judicious
key factors on which the success of initiative allocation for sustained success. The focus is on financial evaluation
depends. Profit in very simple form is the difference of various activities of organization for creating a competitive
of sales price and cost price. Companies cannot sustain profit advantage. A successful organization always plans &controls costs
levels by just increasing selling price, thus they have to work on and maintain information to make important commercial decisions.
the cost they are paying for manufacturing a product or providing Initial step for understanding the cost drivers is to evaluate why a
a service. When the key cost drivers are identified, controlled and good/service cost what it costs. Precise and detailed cost data of
monitored then profits are positively affected. This activity is called the constituents of good/service can help in this regard.
Spend Revenue
Illustrative Amount (Rs.)
Reduction-10% Increase-10%
Revenues 1000 1000 1350
COGs 700 630 945
Gross Profit 300 370 405
SG&A 150 150 185
Net Profit 150 220 220
Assumptions
I) COGS is 70% of Revenues
II) SG&A is 15% of the Revenues
In above illustration we see two strategies that could be adapting to changes in customers’ demands.
employed to achieve an upward spike of 46.67% in net profit When an organization analyze market through Porter’s five
scenario, either work toward decreasing the cost of goods sold by forces (threat of new entrants, bargaining power of suppliers
10% or increase the revenue by 10%. Depending on the and consumers, threat of alternate good/service and
feasibility of options, an organization can take intensity of rivalry among the existing firms), then
correct course of action.Next evaluation is the derived options for sustained profitability
to determine the cost we believe we are are cost leadership, product differentiation
ready to pay. Data like last price paid for Strategic and focusing on niche good/service.
the same good/service, prices paid by Cost Analysis integrates Cost leadership is being a supplier
competitor etc. indicate a near about cost data and strategy into that provides cheapest good/service
value. Lastly steps to improve are every procurement initiative but not always customer choose a
decided basis which strategies are product on just basis of price asked
of an organization. Strategic
made.Strategic Cost Analysis helps for it. Similarly following any one of
in: deciding product mixes and Cost Analysis helps in the options may not be the ultimate
production volumes keeping wastage identifying important baseline for an organization. Strategic
as minimum, eliminates unnecessary resources and their judicious Cost Analysis helps in identifying the
costs and helps in investing the allocation for sustained correct option/s.
reclaimed cost to other areas, countering Organization use many approaches
success.
suppliers’ & competitors’ activities and like cost accounting, management

accounting, target costing, life cycle costing, ABC costing, Total
cost of ownership etc. Quantitative approach of Cost accounting
has been used for many years. Past and present cost data of an
organization is recorded, classified and summarized under it. It
helps to ascertain cost of production by identifying three major
elements: material cost (direct and indirect), labor (direct and
indirect) and overhead (production, office and administration,
Sales and distribution etc.). Management accounting on the other
hand works on both quantitative and qualitative approach by
evaluating both financial and non-financial information to set goals
and forecast strategies. It helps in preparing policies, strategies,
budgeting, forecasting plans, making comparisons and evaluating
performance of management.
ABC costing that is activity based costing helps in budgeting
and fixing prices. It identifies activities in an organization and
assigns cost of each activity with resources to all products/
services according to actual consumption by each. It segregates
cost into fixed, variable & overhead and indicated cost drivers. It
estimates the cost elements of complete product/service and helps
in deciding to eliminate non value adding elements or re-engineer
to improve processes.
Life-Cycle of a product/service go through stages from
development or launch to growth, maturity, saturation and
finally declination of sales. Cost vary through life cycle as high at
initially due to investment in R&D. in Life cycle costing all costs are
considered during the life cycle to understand what costs need to
be recovered over the life of the product. Target costing is used
in product development where we build a product which can cost
under or up to an identified target cost. Target cost is determined
basis the economy and customer purchasing interests. Target cost
are aimed to be realized in mature stage of product life cycle. It is
achieved through reducing costs before designing and identifying
the gap between expected and target cost. Similar to life cycle
costing, Total Cost of Ownership is a concept used to compare
two different purchasing decisions. It encounters all the costs like
pre-acquisition cost, purchasing costs, utilization & maintenance
cost and salvage value.
Strategic Cost Analysis identifies appropriate value chains and
assigns costs and assets to it. It diagnoses the cost drivers and help
identify strategy to lower relative cost position through controlling
cost drivers or reconfiguring the value chains. Aer this the cost
reduction strategy is tested for sustainability. In the nut shell
Strategic Cost Analysis is voluntary practice with no pre-defined
rules and regulations thus the type of method depends on the size,
structure and purpose of organization. MA
deepak.mehto88@gmail.com

COVER STORY
Strategies
for Staying
Co s t
C
ost competitiveness is a mantra to
keep our organization healthy and
wealthy. It is like blood pressure
of a human being which need to be
Shri Anshuman Dey monitored on periodic basis. The
Assistant General Manager periodicity depending on current
Tata Motors Ltd condition of the person. Depending on age, weight and
other physical conditions, doctors recommend a range
within which blood pressure need to be maintained.
In addition, medicines are prescribed for immediate
recovery and change in lifestyle is recommended for
prevention of same. Similarly cost competitiveness
for an organization need to be understood in overall
perspective of business environment, organization
structure and business strategy adopted. Depending
on uncertainties and other critical factors of business
environment, periodicity of evaluation of cost
competitiveness need to be decided and monitored
upon. Severity of cost competitiveness impact on short
term and long term sustainable business strategies will
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govern corrective as well as preventive strategic action plans.There identify a decision that could be affected by a proposedcost
are certain business scenarios where the cost competiveness is competiveness measurement system and how it could change
the indispensable strategy for survival. However, for all business those decisions, then that measurement system has no value.
scenarios cost competitiveness is necessary but not sufficient History tells us that measurement systems themselves are easily
condition for sustainable business performance. We will explain distorted to suit reporting purpose. In today’s ERP driven world,
it in detail later and now we will go through few basic strategies plenty of data are made available through system. However,
to remain cost competitive. the challenge is the synchronization of right data at right time
at right place. To meet this challenge value based support from
Strategy of Meaningful Measurement various departments and divisions across the organization need
to be well coordinated preferably with top down approach.
As we know “Things which cannot be measured, cannot Today’s industry is knowledge, technology driven and therefore
be controlled and improved upon”, cost competiveness of an each one’s opinion/suggestion/advise need to be respected
organization should be measured in a meaningful way. Faulty and comprehended in overall perspective to evolve a good cost
measurement system is responsible of death of many reputed competitive measurement system which may reflect through tailor
organizations and therefore it is all the more important to institute made ERPs.Interestingly a well-designed Costing system embeds
a culture of trust and truthfulness across the organization to entire activities of an organization to get the cost & Profitability
develop the capability to evaluate any favorable or adverse of the Product/services in which the complete organization is
situation in holistic and realistic manner. Unless what we directly or indirectly engaged with. A customized Product costing,
measure, have some conceivable effect on decisions and behavior, Profitability Analysis system considering organization relevant
the measurement system will not maer at all. If we cannot key performance indicator must be developed and updated time
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to time with the change in the processes to have a meaningful at going market prices for the product).
measurement system.
Strategy of Strategic Cost Analysis

Capital Cost with respect to competition
Strategic Cost analysis can make organization focused on
meaningful cost competitiveness through which one can avoid or
escape from competitive pricing trap. It is a three step process. Lower Higher
First step to diagnose changing cost economics from the raw
materials stage to the final price paid by the consumer. It involves About to caught
constructing a value chain, a diagram that shows the value added in pricing trap
Operating cost with respect to competition

at each step in the whole market process and exposes shiing Higher Trade – off with detail
cost components.Second step is to assess the long-run shis in analysis Hard to hold
market share
the cost position of competitors relative to one’s own.Third step
is to factor the implication of future inflation into own costs and
those of the competition.
Given the realistic probability that rising capital and operating
costs will affect each competing company in different manner,
it is important for each company to probe the nature and size excellent position
of the differences in order to understand the potential shi in to use your low-cost
Trade – off with
competitive advantage. This is where a value chain comes in.To stance to win a higher
detail analysis
Lower market share by offer-
use it, a company must recast its own historical cost accounting
ing a lower price
data into the principal cost categories that eventually make up
the value of its product. However, estimating the same cost
elements for its rivals is a difficult and challenging task which
usually gets addressed through market intelligence. The principal Fig 1.1
cost categorieswhere relative cost shis can occur are of three
main areas: (1) suppliers (2) company’s own segment (3) forward Strategy of Value Analysis & Value Engineering
channels.Plainly, the chain’s makeup will vary from company to
company as well as from business segment to business segment Value Analysis is a creative approach which has its purpose
(product line, customer type, geographic area, or distribution of efficient identification of unnecessary cost i.e. cost which
channel). Although it makes sense to start with a value chain for provides neither quality nor use nor life nor appearance nor
a whole business, searching for variations by segment can reveal customer features. It assesses product functions and value to
important differences in each product’s cost competitiveness and cost ratios and explores opportunities for cost reduction. Value
the company’s unwiing cross-subsidy of unprofitable products. Analysis technique is used for existing products whereas Value
In value chain analysis (Refer Fig 1.1) we get a flavor of relative Engineering technique is deployed for new products used to
positions of operating and capital cost structure. When company create functional break through by targeting value mismatches
is less affected by both relative operating and capital cost during product, process and project design.
increases, company is in an excellent position to use your low- The key focus of the Value Analysis approach is therefore the
cost stance to win a higher market share by offering a lower price. management of ‘functionality’ to yield value for the customer.
Companies in the middle (either more or less affected by two If a company seeks to reduce the costs of producing a product,
variables) have less clear-cut strategies. Only a detailed analysis then it must seek out costs that are unnecessary or items of
will reveal the trade-offs between higher and lower capital costs the product that provide no functional value to the customer.
and lower and higher operating costs and what to do about them. With this approach then the Value Analysis process is concerned
In case both operating and capital costs are higher than those of with removing a specific type of cost. This cost can be removed
competitors, company is about to be caught in the pricing trap without negatively affecting the function, quality, reliability,
and at the same time it would be hard to hold market share and, maintainability or benefit required by the customer. As such,
more important, company can’t invest due to cost disadvantage the target for all Value Analysis activities is to find these
in the short run (because the new capital requirements are costs as opposed to simply re-engineering a product design
unaractively high and leave no room for a return on investment with noreal purpose to the re-engineering exercise. The Value

Analysis approach is therefore formal and systematic because
it is directed towards highlighting and dealing with these
‘recoverable costs’ of production. The objective is to create
value for money as opposed to creating new products that do
not provide customer satisfaction but are relatively inexpensive.
It is a five phase process: Phase 1 (Orientation Phase): In
this phase project and project team are selected. In reality, the
selection of the product will be based on criteria that is specific
to the business but it is preferable to start with a product that
is sold in volume at a profit rather than aempting to correct
a product that does not make a profit. Phase 2 (Functional
Analysis): FAST (Functional Analysis System Technique)
diagram approach is a standard practice adapted. Through this
process primary and secondary functions are identified. Phase
3 (Creative Brainstorming): Alternate options are identified.
Phase 4 (Analysis and Evaluation): Cost function matrix is
designed to cost an existing product, service or system by
function. Aributing cost to functions brings in perspective the
costs to satisfy a function. By this approach one can estimate
whether proper cost allocation to correct function requirement
is ensured. Phase 5 (Implementation): It is a 3W process (What,
Where, When) with top driven approach.
Strategy of “Sense and Respond System”
Cost competitiveness is measured on periodic basis. Once it

is measured, corrective actions are taken and monitored till the
next phase of measurement comes. In this orthodox system,
organization is not agile enough to sense situations in advance
and respond accordingly and effectively instead of waiting for
the current action being evaluated in due course of time. In
today’s business environment, where political, environment,
social, technology aspects are changing so fast that uncertainty
factors are continuously increasing, any medium and long
term strategy must be flexible enough to accommodate
interim corrections as effective respond mechanism. The
response mechanism may be either in terms of a) elimination
b) creation of an activity or c) increasing d) reducing some
correct factors of decision content. The organization structure
and culture needs a certain level of maturity to welcome this
kind of intelligent adjustment to ensure sustenance of business
performance. Organizational procedures and systems prefer to
be tuned towards a culture of result oriented accountability
rather than process oriented accountability. The present status
of cost competitiveness is an outcome of past decision and it
will continue to do so in future unless we intervene in present.
Flexibility in adaptation and adaptation of flexibility in cost
competitive measurement and decision making system can
ensure excellence in cost competitiveness. It is easier said than
done. The bigger the organization the bigger the challenge for

COVER STORY
successful adaptation of “sense and respond structure changed much to its disadvantage
strategy”. To use value chain, and a company producing capital goods
will not stay viable for long even if
a company must recast
Conclusion it aempts to operate at a low
its own historical cost breakeven point. But lowering the
Today’s business environment is accounting data into the Break-even point by reducing
becoming extremely complex and to principal cost categories its Fixed cost will be the right
grasp all the complicated changes that eventually make up the approach. It will either have to
taking place in the business envi- value of its product. However, diversify into a different field or
ronment is a tough assignment for estimating the same cost dispose of some of its large fixed
a manager. How then should we assets which is now no more
elements for its rivals is a
go about tackling the still tougher required and prepare to survive
assignment of formulating strate-
difficult and challenging task in a period of slump with almost
gic plans for cost competitiveness. which usually gets addressed no prospect of growth.
We can do so by classifying company’s through market
business in four categories: intelligence Category 4:
The industries in which product life cycles
Category 1: are geing progressively shorter (For example
This type of business consists of industries in which electronic industries). Market though highly technology
demand fluctuates in direct response to current economic intensive behaves like fashion industry. To cope with problems of
condition (For example consumer durables) and the market has shorter product life cycles, many companies need to realign their
reached a matured state such that company shis aention research and development efforts from basic to applied research
from market coverage and penetration to manage fluctuations – some companies even moving to shi control over research
in demand. Company will incur a loss every time there is a slump and development from engineering or production to marketing
in demand. In such case cost competitiveness will be through and thereby building their cost competiveness. Few are using
lowering the breakeven point by increasing the ratio of variable computer-aided design and Manufacturing (CAD-CAM) to slash
to fixed cost. The urge to invest in additional production facilities the turnaround time in Product design. Here the company must
must be restrained in favor of subcontractors, again in the be prepared to move in fast the moment the market appears,
interest of increasing the proportion of variable cost. grow profitably with the market and pull out smoothly when
competitors are beginning to catch up.
Category 2: Faced with the challenges of new economic environment
The market for these products remain much the same as in the manager must decide in which of the above four business
the past with no major fluctuations (For example Aluminum categories company belongs and based upon the identified
smelting, Textile etc.). Industries get impacted because of sharp category of business strategy of cost competitiveness can be
rise in the cost of energy, materials and labors.In such industries deployed though general approaches like Lowering breakeven
where competition is international, cost competiveness through point, Vertical integration, Restructuring the industry or Product
lowering breakeven point by reducing the operational cost will life cycle acceleration. MA
certainly help but will not be sufficient. Other strategy like
Mechanical automation, Technological enhancement, Robotics References
can be introduced to construct an efficient plant will also help. 1. The Spider’s Strategy – Amit Mukherjee
At the same time, here the top management must seriously 2. The Strategy – Harvard Business Review
3. The Mind of the Strategist – Kenichi Ohmae
consider the possibility of vertical integration to restore the
4. Value Engineering Concept, Technique and Application – Anil
competitiveness. K Mukhopadhya
Category 3:
The industries typically are heavy capital goods – have seen
their prospect of high growth severely dampened by rise of price Mukesh.Poddar@tatatechnologies.com
of oil and other fuels (For example Electric power industry). The
strategy of reducing the break-even pointby increasing selling
price will not help much. For this type of industry, price cost

INTERNATIONAL CORNER
Input Cost of some
External Factors
India Vs China
CMA S Srinivasan
Chennai
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or many consumer products, China has become the the international market are the preparations to combat products
factory for the world. Due to comparatively lower from any other countries in the world.
price emanating from lesser cost of production, India -like China has a long experience in manufacturing
its products are sought all over the world. What textiles and necessary skill levels in producing any textile product
makes the Chinese to produce goods at lesser are available, yet India could not beat China in the international
cost than that of the others? Are the Indian -firms market. Steps should be taken to lower the cost to effectively
competitive enough with respect to their Chinese counterparts? compete with China.
To answer these questions, some important cost- elements are
analysed in this study taking a Textile Yarn as reference. Factors compared
The study aempts to identify the “external” factors of an
organisation that contribute to lower cost for the Chinese 1. Overview of cost comparison
manufacturers .The “External” factors identified are listed below. 2. Comparative Labour Cost
A glimpse on the other internal factors like labour productivity  Comparative Productivity.
and market determined rates like Coon prices in China and India Working hours/week.
are also presented. Some details on number of workers disputes No: of public holidays.
in China are also given for information. Overtime rates
The study also derived data on performance of a typical 3.Comparative power and diesel rates,
Spinning unit in China and India, for which conversion cost is 4.Comparative Bank Lending Rates
taken as reference for the comparison of performance. 5.Comparative Tax details
For China, other factors like cost advantage due to undervalued 6.Export Incentives/Assistance
currency, minimal workers’ health and safety regulations,  Comparative coon and yarn prices in
lax environmental regulations and their enforcement, a highly respective markets.
efficient “industrial network clustering”, the catalytic role of  Comparative coon- area, production and yield.
foreign direct investment (FDI) etc are NOT studied as it seems  Comparative Govt.assistance / Minimum
the reasons for a lower “China- price “ extend well beyond these support price for coon.
issues.
Overall view of Cost Comparison.
Why China and Textiles?
The table below gives a snap shot of comparison of various
Although other countries like Bangla Desh, Vietnam, Indonesia, essential cost-element of a typical Spinning Mill of 40,000
also compete with India by pricing their textile products at lower spindles working round the clock for 302 days in a year producing
prices, it is China that gets a major market share due to its least 4,000 tonnes per annum of yarn of average count Ne32-34s.
price. So, the preparations to combat the Chinese- products in
(The costs and revenue data are to be taken as approximate representative figures to draw some broad conclusions)
Typical Marginal Cost Statement of a Spinning Unit
Figs p.a
(Period:Oct- 2010)
Particulars China India Ch-Ind
Count 32Ne S/Kg $(000) % on sales S/Kg $(000) % on sales Diff.(000)

Sales qty(Kg000) 4,000 4,000
Sales 3.87 15,480 100 3.40 13,600 100 -1,880
R.Mat’l 2.92 11,680 75.45 2.16 8,640 63.53 3,040
Power+Diesel 0.250 1,000 6.45 0.294 1,176 8.65 -176
Variable Cost 3.17 12,680 81.90 2.454 9,816 72.18 2,864
Contribution 0.700 2,800 18.1 0.946 3,784 27.82 984
Labour 0.209 836 5.40 0.212 848 6.23 12
Interest 0.112 449 2.90 0.187 748 5.50 -299

Typical Marginal Cost Statement of a Spinning Unit
Figs p.a
(Period:Oct- 2010)
Particulars China India Ch-Ind
Count 32Ne S/Kg $(000) % on sales S/Kg $(000) % on sales Diff.(000)

Other Fixed Cost 0.251 1,004 6.49 0.544 2174 15.99 -1170
Profit 0.128 511 3.300 0.0035 14 0.1 -497
Conv Cost 0.822 3,288 21.246 1.24 4,946 36.36 -1657
Conversion cost=Sales-Profit-RM Cost. All the cost calculations are shown in the annexures.
From the above table it is clear that the following costs need to China: Details of Net Profit/sales in Textile Units
be reduced in Spinning Units to effectively compete with China.
Some require Government intervention and some require inward Year % Net Profit/Op.Income
looking of the units. The difference in “Conversion Costs” is a
whopping S 1.65M per annum for equal production. 1980 20
Other fixed cost(include Factory Overheads that includes 1990 6.1
depreciation,Administration OH , S&D OH and the like-but other 1995 3.2
than labour, power& fuel- )difference of $1,170,000.This again 2001 3.3
confirms the o repeated rhetoric that Indian units suffer from (Source:www.nrdc.org/international & hp://eprints.sussex.
high fixed cost burden and Textile units are no exception to this ac.uk)(2010HYPERLINK “hp://eprints.sussex.ac.uk)(2010)/”)
malady.
 Interest difference of $299,000 p.a Raw Material Cost
 Power & Fuel difference $176,000 p.a
 Labour difference S12,000 p.a Annexure-1 &1a show the coon cost per Kg in China and India
The assumptions on the various cost elements are discussed during the period Jan 09 to Apr 10.Using regression equation, the
further below. price in Oct 2010 was derived.
Assumption on Profit %: China is the largest producer of coon and yet it imports coon
The Profit % for India is taken as per the Q3 -2010 results of to meet its high local demand for coon and therefore, the cost
Textile units in the Southern Region of India - where the textile to its textile mills is expected to be more than that in India.The
units are predominantly Spinning Mills. price of coon in Oct 2010 in China was about 30% more than
Financial Performance—Southern Region (India)-Textile that of India.
Units
China India
As % of Operating Income
Net Sales 100 100 100 Lint Price Gr

2.60 S-6 1.99
S/Kg 328
Raw Material Cost 61.7 60.9 61.2 Clean
Employee Cost 8.0 7.5 7.7 Cot(89%
2.92 2.16
realisation)
Power & Fuel cost 5.1 4.4 5.6 $/Kg
Other Operating Cost 16.8 16.4 14.2
It is presumed that similar level of technical skill is available in
OPBDIT 8.5 10.7 11.4 both the countries and therefore, both India and China have the
Interest 8.5 5.6 5.5 same level of yarn realisation % from similar coon.
[Coon Gr328 of China and S-6 of India are similar coons].
Depreciation 6.3 5.8 5.8 For India, the savings in coon price per Kg of yarn sold
OPBT -6.3 -0.6 0.1 is $0.76 and consequently an Indian Spinning unit of details
said above, should gain about USD 3 million per annum on
Source: CII Publication: Jan-Mar2010 raw material cost when compared to the units of China.

Yarn Price to the U.S, the relative position between China and India
would have remained the same.
Annexure-1b,1c show the yarn price in China (in mid Oct.2010) Annexure 2d gives the list of public holidays in China &
in Chenguyi Market and Indian Cone yarn price in Mid Nov 2010. India. It is to be noted that China declares even half holiday
For cost comparison Count 32-34 Ne is taken. and in some cases, the holidays are applicable only to
Period Oct/Nov 2010. certain sections of the public like women, youth, children,
armed forces etc and India should take a leaf from China
China Price India Price
on this issue.
Count S/Kg Count S/Kg No: of Legal/Public Holidays per annum
32-34 3.87 32-34 3.40 China India
40 4.24 40 3.78 11 14
Loss of three working days in a year is equivalent to about 1%
It may be noted that the price difference between 32-34 and less production for India w.r.t China.
40Ne was almost same ( $0.37 to 0.38 in both the countries).
Compared to India, the yarn price in China was about 14% Between China and India aer considering “Sundays” or any
higher and thus to some extent it could compensate its 30% one day per week as the weekly off and
higher coon cost. With this higher yarn price in China, the a) different number of public holidays(i.e 11 Vs 14) and
difference in RM/Sales ratio between the two countries remains b) different Over time rates (i.e.1.5 Vs 2.0)
at 12%(China 75.5%, India 63.5%). The effective wage rate per hour works out to S 1.21 for China
and $ 1.23 for India (Vide Annexure 2e). The computed wage bill
Labour Cost & Productivity p.a for China & India is shown in Annexure-2g and they are also
used in the Cost Statement given in the initial part of this article.
Minimum Wages As said earlier,India loses $12K p.a.in labour cost.
Effective from Jul 2010,the minimum monthly basic India:To get an edge over China in textile manufacturing, if its
wage in China had been -Yuan 900 while the average of wage hike cannot be avoided, a correspondingly more increase in
the actual has been around Yuan 1,000.The total wages productivity than the wage hike is required. Also reduction in no:
including allowances has been about Yuan 1,300($ 200). of holidays and O.T rates will also help in geing an advantage
Aer considering Chinese statutory working hours of 44 in labour productivity but the practicality of implementing
per week, the wages/hr is $1.05(^),the comparative figs for this suggestion is quite difficult considering resistance from
India are : Basic Rs 6,000,Allowances Rs.1,200, and the labour unions and thus leaving increase in productivity as the
total is $160 p.m and for 48 hrs/week, the wages/hr is $ plausible option. The higher productivity should also emerge on
0.78. improving the working “atmosphere”(Eg: labour training, beer
It may be noted that labour wage is not cheaper in China maintenance, beer layout, adequate ventilation, incentive for
but labour cost per unit output is. The tilt comes from less absenteeism etc).There may be some investment that yield
labour productivity. more benefit than its cost.
(^)China: ($/hr) Wvg;Skilled-1.45, M/c tenter- Workers’ Disputes in China
0.76,Unskilled-0.66.(Vide Annexure-2a for details). Trend in No: of workers disputes(000s)
Labour Productivity
No:of disputes No: of employ- Disputes/100
An earlier study(around mid 1970) has placed China- Year
(000s) ees(000s) employees
labour productivity at 13.7% of that of the U.S and India
at 10.5% (of that of the U.S) meaning that Chinese labour 1994 19
is 30% more productive than the Indian counter-part. (Vide 1995 33
Annexure- 2c).
1996 48
Although this report shows a questionable wide gap
between US on one side and China and India on the other 1997 71
side, but what is of relevance to this study is the relative
1998 94
productivity level between China and India. It is presumed
that although the actual productivity levels would have 2001 155 467 33
improved in both the countries in recent years with respect

No:of disputes No: of employ- Disputes/100 Bank lending rates in China is nearly 40% less than that of India.
Year
(000s) ees(000s) employees Average Interest cost (as a % of sales) for Indian textile units is
about5.5%
2002 184 610 30
.[ Source: CII Publication: Jan-Mar2010
2003 225 801 28 Financial Performance—Southern Region (India)-Textile Units]
2004 280 765 37
7.Assistance on Exports (China).
2005 314 740 42
2008 690 Tax Rebate% 2009 2010
Nature of disputes: Wage arrears, Frozen wages, CBA breach, General Item 14 15
Decrease in social benefits, Suspended O.T. Textile 11 9
The right to ”Strike” was removed from China’s constitution in
Clothing/Apparel 13 9
1982.Trade Union Law (Art.27)is not clear on ”Right to strike/Go
slow” but in practice number of strikes continue to grow in China.
(According to Min.of HR- China ,the rise in disputes over 2007,in
Rebate rate for chemical fibres export % 9 5
some regions is quite high - Guangdong-41% Jiangsu-50%,
Zhajiang-159%). Coon Export subsidy/Kg ($) N.A 0.29
Source: www.gov.ch/english/2007-04
5.Utilities In China, in line with WTO agreement, the incentives,
assistance, subsidies are geing reduced gradually and therefore,
Annexure-3 gives the comparative water rates in some countries the international price of various Chinese goods is likely to
in the world including China. As expenses on water forms a very increase over the years to come.
small part of overall cost no further analysis was taken up.
Annexure-4,4a & 4b give details on electric-power tariffs, India: Export Assistance:
cost and impact for China and India. The power rate in China is
$0.07/unit and for India (avg.of TN.Maha,GJ &Raj)is $0.085/unit. Export Promotion Scheme(Target Plus)
The power bill taken in the cost statement is worked out in the Exporters who have achieved quantum growth in export-
annaexure-4b The unfavourable impact of higher power rate in entitled to duty free credit, when incremental exports are
India is $164,000 p.a.(i.e $0.041/Kg yarn). substantially higher than the general actual export target.
This is an important area where through reduction in the power Target for 2004-5 was 16%.The lower limit of performance for
tariff a large saving can be brought about in India. A substantial qualifying for the reward was at 20% for current year(2009-10).
improvement in power generation and distribution are also For incremental growth over 20,25 and 100%,the duty free credits
required. would be 5,10 & 15% of FOB value of incremental export.
Annexure-4c gives the rates of diesel, coal, gas for China and
some selected countries. Legal Aid
The diesel rate per litre is: China-0.87, India-0.93 resulting Financial assistance would be provided to deserving exports
in higher cost for India of $12,000 p.a (i.e $ 0.003/Kg yarn) in on the recommendations of Export Promotion Councils to meet
power generation through Diesel Generating Sets used for captive cost of legal expenses connected with the trade related maers.
consumption due to (8%) power shortage.
EOUs
6.Bank lending Rates: EOUs shall be exempted from Service Tax in proportion to
their exported goods and services. EOUs shall be permied to
China India retain 100% of export earnings in EEFC accounts. Income Tax
Avg rate 2006-10 6.5% 11% benefits on plant and machinery shall be extended to DTA units
which convert to EOUs. Import of capital goods shall be on self-
Highest 1998 11% certification basis for EOUs. For EOUs engaged in Textiles &
Lowest(2002) 5.3% Garments manufacture leover materials and fabrics up to 2%
of CIF value of quantity of import shall be allowed to be disposed
Bench Mark rate(PBC 1 yr -Lending ) 5.6%
of on payment of duty on transaction value only.

8.Tax Details: 1.1.2008

Tax Details% China Remarks Tax Details % India Remarks
Corporate 25 All Corporate 30 Foreign

Corporate SSI 20 Indian Cos. 33 Incl.surcharge
Corp Hi-Tech 15
VAT 17 CENVAT 10.3
VAT(Tex &Gar) 16 Service Tax 10.3
Utilities 13 VAT 12.5
Books etc 4 Dividend,Interest 20 Non-Treaty
SSI 6 -Do- 15 Treaty Nations
Business Tax 3-5 If NO VAT Royalty 30 Non-Treaty
Entertainment 20 -Do-- 20 Treaty Nations
Consumpn Tax 3-45 On Non-essential
Land Appreciation 20-40 On all immovables S.T.Income Gains 55 All
Personal I.T(Max) 45 30
Financial Year 1Jan-31 Dec Financial Year 1Apr-31 Mar
W,H,Tax(Div,Int) 10 Reduced to9% in 2010 TDS 10
Local Real Estate Tax 1.2 On assessed value
Local Real Estate Tax 12 On Lease Value
Due to the above mixed information , it is difficult to quantify the benefit for China and it can be presumed that there is no significant
pecuniary disadvantage for India.
9.China: SWOT analysis w.r.t India (Textile Yarn)  Consumption exceeding production and increasing
dependency on coon import
A) Strength:  Reduction in incentives/subsidies in line with WTO
One of the low power –tariff countries in the world. Cheaper requirement will push the price up.
than the rate in India  Excessive dependency on external textile trade(40% of
High labour productivity resulting in least effective wage cost. production is exported)
Overhead costs are very less. Due to massive economic development, importing massive
Bank interest rates are less. energy resources (oil,coal etc)leading to increase in the
Higher coon yield (150% of world average) and double that global price which affect China due to its heavy import of
of India. energy.
 One of the world leading Chemical fibre producers- a Negative image on quality in some parts of the world.
substitute for coon which is in short supply. This helps in  Chinese industry depends much on Government, for
beer utilisation of the installed capacity when coon is in protection.
short supply. Maoism, due to which FDI shy away from China.
Higher export incentives. C) Opportunity for China.
Less corruption in Bureaucracy  Withdrawal of western countries from labour intensive
Illiteracy rate <2%In this illiterate women are 70%(Compulsory textiles/clothing industry and shiing these units to China.
and free education till age of nine). Energy shortage results in development of unconventional
B) Weakness: energy like Wind, Bio-mass, solar, ocean-waves in China.
Finer yarn counts like 80s C, 100sC and 120sC are produced D) Threat
a lile,throwing opportunity for India to sell finer counts in Appreciation of Yuan resulting in lesser yield of Yuan from
world market with least competition from China. export.
Increasing labour shortage and hence expected rapid rise in  Compulsion from the world through WTO, to reduce
wage rates in coming years assistance to coon growers (resulting in less coon growing

and rise in local prices),export subsidies, avoid child labour, improvement in India to meet international competition.
counterfeiting and piracy, lax environmental regulations and With educated labour, training, persuading trade unions
enforcement, of safety and medical care for workers and for higher labour productivity , beer working environment
allow free trade union activities. etc.productivity in India can be increased. Surplus Power
Increasing labour disputes generation with possible reduction in its tariff, lower fuel cost
Labour-cheap S.E.Asian countries catching up with China and bank interest rates, will reduce cost of production. Higher
 With one child policy aged(less productive)work force is yield on coon cultivation will also help in reducing coon
expected in next 10 years. prices.
Remarks
10.Conclusion Many authors have wrien about difficulty in geing reliable
information on China. The author also experienced the same
The study points out the areas requiring aention for but has quoted the source of information wherever available.
Annexure-1:
Coon prices in China (Jan 2009 to April 2010) Regression line fit
Period Cot.Lint Prices
(X) (Y) (x)=X-Mid pt (x.Y) x sq.
2009 S/kg
Jan 1.62 -7.50 -12.15 56.25
Feb 1.64 -6.50 -10.66 42.25
Mar 1.68 -5.50 -9.24 30.25
Apr 1.80 -4.50 -8.10 20.25
May 1.81 -3.50 -6.34 12.25
Jun 1.81 -2.50 -4.53 6.25
Jul 1.82 -1.50 -2.73 2.25
Aug 1.83 -0.50 -0.92 0.25
Sep 1.91 0.50 0.96 0.25
Oct 2.00 1.50 3.00 2.25
Nov 2.07 2.50 5.18 6.25
Dec 2.17 3.50 7.60 12.25
Jan 2010 2.18 4.50 9.81 20.25
Feb 2.17 5.50 11.94 30.25
Mar 2.28 6.50 14.82 42.25
Apr 2.37 7.50 17.78 56.25
16 31.16 0.00 16.41 340.00
N Sig(Y) Sig(x) Sig(x.Y) sig x sq
a=(sig Y)/n 31.16/16= 1.95
b=sig(x.Y)/sig(x sq) 16.41/240= 0.048
Y=a+bx For Oct2010 (x)= 13.50
Y(Oct2010)= 1.95+(0.048X13.5)= 2.60
Expected Cot.price per Kg in Oct2010= $ 2.60
N.B:China Coon Index- 328 stands for Gr-3, Staple 28mm. Source: Emerging Textiles.com

Annexure -1A
Trend in Coon prices in India (Jan 2009 to April 2010) Regression line fit
Period S-6 Cot.Lint Prices
(X) (Y) (x)=X-Mid pt (x.Y) x sq.
2009 S/kg
Jan 1.22 -7.50 -9.15 56.25
Feb 1.16 -6.50 -7.54 42.25
Mar 1.1 -5.50 -6.05 30.25
Apr 1.18 -4.50 -5.31 20.25
May 1.35 -3.50 -4.73 12.25
Jun 1.35 -2.50 -3.38 6.25
Jul 1.37 -1.50 -2.06 2.25
Aug 1.36 -0.50 -0.68 0.25
Sep 1.31 0.50 0.66 0.25
Oct 1.4 1.50 2.10 2.25
Nov 1.51 2.50 3.78 6.25
Dec 1.62 3.50 5.67 12.25
2010
Jan 1.63 4.50 7.34 20.25
Feb 1.6 5.50 8.80 30.25
Mar 1.72 6.50 11.18 42.25
Apr 1.81 7.50 13.58 56.25
16 22.69 0.00 14.21 340.00
N Sig(Y) Sig(x) Sig(x.Y) sig x sq
a=(sig Y)/n 22.69/16= 1.42

b=sig(x.Y)/sig(x sq) 14.21/340= 0.042
Y=a+bx For Oct2010 (x)= 13.50
Y(Oct2010)= 1.42+(0.042X13.5)= 1.99
Expected Cot.price in Oct2010= 1.99
For 2009 -10, Coon Lint Price=$1.99
Annexure-1b
Market Prices-Yarn China: Changyi Mkt. $/Kg
Oct10
Yarn $/Kg China
OE16 2.44
OE21 2.85
OE32 3.43
21 3.65
32 3.87
40 4.24

Annexure 1c.
India Yarn Price per Kg Dt: 13.11.10
S/Kg Exchange@Rs45/$
Cone Yarn This week Last Month
Oct10
6s 1.67 1.67
10s 1.84 1.84
20s 2.93 2.82
30s 4.22 3.27
34s 2.73 3.40
40s 4.73 3.78
Annexure-1d
Coon Yield Comparison China & India
India China India China
Area Prodn Prodn Kg/Ha Kg/Ha
Year Hectre 000tons 000tons
1950-51 56.5 92
1960-61 76.8 125
1970-71 76.1 106
1980-81 78.2 1336 2707 171 550
1990-91 74.4 1989 4148 267 750
1991-92 76.9 2023 5672 263 867
1992-93 75.4 2346 4510 311 660
1993-94 74.4 2066 3739 278 750
1994-95 78.6 2355 4342 300 785
1995-96 90.6 2893 4768 319 879
1996-97 91.7 3026 4203 330 890
1997-98 89 2686 4602 302 1016
1999=00 87 2652 3829 305 1028
2000-01 86 2380 4420 277 1196
2001-02 87 2686 5320 309 1103
2002-03 77 300
2003-04 76 400
2004-05 88 469
2005-06 87 477
2006-07 91 523
2007-08 94 555
2008-09 94 524
2009-10 103 487
2010-11 110 502
1 Bale= 170 Kg World avg 2010-11 Kg/hc- 700

Annexure-2a Hourly Rate: China & India (Jul2010) aer adj.of hrs/week
China India
Exchange 1 US$ Y6.43 Rs45
Minimum Wages pm Yuan 900 Rs 6,000
Actual Wages pm Yuan 1,003 Rs 6,000
Actual Allowance pm Yuan 285 Rs 1,200
Total Wages pm Yuan 1,288 Rs 7,200
Total Wages pm $ 200 $ 160
Hrs Per week 44 48
Total Wages/hr $ 1.05 $ 0.78
China:Actual wages in main cities: Shangai = 1,120, Guangdong,Zhenjing=1,000, Jiangsu, Shandong=Slightly less than 1,000
Annexure-2b Comparative Hourly Rate of different labour categories: ($) Jul-2010

Skilled M/C.Tenter Unskilled
China 1.45 0.76 0.66
US 17.97 15.76 12.50`
Australia 14.98 11.51
Annexure-2c Hourly rate and productivity.
Hourly Rate($) Prod’tivity Index
U.S 16.78 100
China 1.05 13.7
India 0.78 10.5

Source:Economy,68 Varia 2006,The Economics of the “China Price”,Peter Navarro’.
Annexure -2d Public Holidays in a year: China
Festival Date Legal Holidays
New Year’s Day Jan. 1 1 day

3 days (the last day of the last lunar month and the first and sec-
Spring Festival subject to lunation
ond days of the first lunar month)
Women’s Day Mar. 8 half day for women
Qingming Festival Apr. 4 or 5 1 day
May Day May 1 1 day
Youth Day May 4 half day for youth above 14 years old
Children’s Day Jun. 1 1 day for children under 13 years old
5th day of the 5th lunar
Dragon Boat Festival 1 day
month
Aug. 15 according to the
Mid-Autumn Day 1 day
lunar calendar
National Day Oct. 1 3 days (Oct. 1- 3)
Total 11 (for all)

Public Holidays in a year: India
1. REPUBLIC DAY 2010, 2. INDEPENDENCE DAY 2010 3. MAHATMA GANDHI’S BIRTHDAY 2010. 4. BUDHA PURNIMA 2010
5. CHRISTMAS DAY 2010 6. DUSSEHRA (VIJAY DASHMI) 2010 7. DIWALI (DEEPAVALI) 2010 8. GOOD FRIDAY 2010
9. GURU NANAK’S BIRTHDAY 2010. 10. IDU’L FITR 2010 11. IDU’L ZUHA 2010 (BAKRID) 12. MAHAVIR JAYANTI 2010.
13. MUHARRAM 2010 14. PROPHET MOHAMMAD’S BIRTHDAY (ID-E-MILAD) 2010
Total : 14 days Source: www.india.gov.in
Annexure-2e Hourly rate aer adj.Working days, O.T rate & Prod.index
Base Hourly W.Days p.a=Tot- OT-rate (10% Prod.Index Eff.rate/hr.
Eff.rate/hr
China Rate($) Sunday-H.days W.days) (P.I) A.P.I
China 1.05 365-52-11=302 1.5 1.21 13.7 1.21
India 0.78 365-52-14=299 2.0 0.945 10.5 1.23
Eff.rate/hr: China:1.05+(1.05*0.1*1.5)=1.21, India=(0.78*302/299)+(0.78*(302/299)*0.1*2)=0.945 per hour- both before considering
Productivity Index. The hourly rate/hr aer taking productivity index is China=$1.21 and India=$1.23
Annexure-2f [Common Production &Kg/Labour-hr]

Avg gm/Sp.Shi 114
Utilisation 0.95
Spdls 40,000
days pa 302
OT (10%) days 30
Total days 332
shis/day(22.5hrs/day) 2.8125
Tonnes p.a 4,045
Net of 1% H.W p.a (Tonnes) 4,000
No: of employees(base China) 277
Lab-hr pa(277X332X7.5=) 6,89,730
Kg/labour-hr 5.800
Annexure-2g
Cost figs in $ Same Employment of 277 persons in both
Labour Cost China India Remarks
Tot.Persons 277 277 Diff.in productivity adjusted in wage rates
Rate/hr 1.21 1.23 From Annexure 2e
Yarn Kg/labour-hr 5.8 5.8 From Annexure 2f
Rate/Kg 0.209 0.212 Ch=(1.21/5.8) Ind=(1.23/5.8)
Tonnes p.a 4,000 4,000

Ch=(4KX0.209) , Ind=(4KX0.212)- Same Figs taken in
Wages p.a ($000) 836 848
Cost Statement also.
India loses about $12,000 p.a in labour cost.

Annexure-2h
China:Trend in total compensation per hour per employee
2002 2003 2004 2005 2006 2010
In USD 0.57 0.62 0.67 0.70 0.81 1.05
In Yuan 4.73 5.17 5.5 5.94 6.43 6.76
Exchange USD-Yuan 8.33 8.33 8.21 8.48 7.94 6.43
N.B: Wages in China are rising and in 8 yrs, wages have nearly doubled in $ terms
The total urban manufacturing compensation in China is about 15% more than that in the rural centres.
China-Labour is well educated % higher wages and higher productivity may be due to this reason. So, Indian Textile units may
employ persons with higher education.
Annexure-3 Water[$/cu.m(i.e.1,000lit)]
China US UK Germany Brazil S.Africa
$/cu.m 0.31 0.74 2.37 3.01 0.65 1.02
Annexure-4 Power
Power Calculations 0.25 0.450 0.200 0.100 Wt.avg
TN Maha Guj Raj India

Exchange rate 2010 45 45 45 45 45
Basic rate/unit 2010 Rs 4.00 3.40 4.00 3.90 3.720
Other Charge2.5% 0.100 0.085 0.100 0.098 0.093
Total Rs 4.100 3.485 4.100 3.998 3.813
Total $/unit $ 0.091 0.078 0.091 0.089 0.085
KVA 2,000
KVA Charge p.m Rs 3.000 3.000 3.000 2.500 5,900 Avg.2.95
KVA Charge p.a $ 1,573
N.B:Incentive on beer P.F,higher load factor, late night consumption(22hrs-6hrs) and early payments, as well as penalty on low P.F
are not considered above.
Anneuxre-4a
Power Cost in US$/Unit Yr-2007
China India US UK Taiwan Japan Korea
0.07 0.085 0.052 0.078 0.055 0.136 0.058
Annexure-4b Power Cost Comparison

China India
Utilisation 0.95 0.95
Spdls 40,000 40,000
days pa 332 329
hrs/day 22.5 22.5
No: of R/F 90 90

R/F KW (65%of tot) 16 16
Tot.KW 1,440 1,440
KW for the Mill 2,215 2,215
KVA(0.9)full load 2,462 2,462
Load factor 0.75 0.75
Effec. KVA for LF 1847 1847
Transformer KVA 2,000 2,000
Power Cut % 8 8
2215X0.75X0.92X332X22.5/=951 China 332 & India 329 days
Kilo Units p.a 11,412 11,309
Tot.rate/unit($) 0.07 0.085
KWHr Bill pa($ 000) 799 961
KVA Bills pa($ 000) 1.6
Total Bill pa(S 000) 799 963
India loses S164,000 p.a
Power Cut (Estimates) 8% in both China & India
Annexure-4c Petrol/Gasolene- US$/lit0.946-( Ref. date 24.4.2010) Year 2006.

Item Region UoM $(=Y 6.43)
Australia Ton 61
Coal
China Ton 87
Crude Oil World Ton 638
Diesel Diesel India Lit 0.93
China Ton 5,043
Diesel China Lit 0.87
US Mn BTU 53
Nat.Gas
China Cu.Mtr 2
Annexure - 4d Diesel Bill

Generation China India
P.Cut% 8 8
Gen Units p.a(000s)pa [China 11,412X8/92=] 992 983
Units/lit diesel 4.30 4.30
Diesel lit(000s) p.a 231 229
Rate($)/lit 0.87 0.93
Diesel Bill p.a ($000) 201 213
India loses S12,000 p.a due to higher diesel cost.
Total Bill pa (Power+Diesel) 1,000 1,176
India loses $176,000 p.a in power bill w.r.t China
Miscellaneous Details:
Productionof COTTON Mn tons. (figs in ( ) are %

1961 2002 2004 2005 2006 2007 2008 2009
Production Est
World 9.6 19.6 27.0 25.5 26.7 26.2 23.8 23.5
China 0.8(8) 4.9(25) 7.1(26) 6.6 8.0(30) 8.1 8.0(34) 7.3(31)
India 0.9(8.5) 1.9(9) 4.1(15) 4.1 4.8(18) 5.4 5.0(21) 5.3(23)
USA 3.1(32) 3.7(21) 5.1(19) 5.2 4.7(18) 4.2 2.8(12) 2.8(12)
Pak 0.32(3.3) 1.7(9)
USSR 1.5(16) 1.4(5)
Consumpn
World 23.7 25 26.5 26.4 24.1 24.1
China 8.3 9.4 10.6 10.9 9.6 9.7
India 3.3 3.7 3.9 4.0 3.8 3.8
USA 1.5 1.3 1.1 1.0 0.9 0.9
Source:ICAC(USA) and FAOSTAT(Agriculture Database 2003)
Other Details:
India China Remarks
(%)Share of Mfring in GDP(2006) 17 41
20(2003-4)
(%)Share- text &clothing on tot.exports of all merchandise Declining Share.
15(2005-6)
36(1993-4)
(%)population below poverty Improvement
27(2004-5)
Source: Chapter 12 & 3 Book : India:The Emerging Giant” by Arvind Panagariya (Oxford University Press-USA)
The other factors affecting coon price are:
Coon Subsidy
Coon subsidy from Government is an important factor that determines the local coon price. The purpose of offering subsidy for
coon production is for raising farm incomes, preserving small farms and to reduce fluctuations in coon prices. Subsidies reduce
coon price and due to difference in the level of subsidies given by different coon growing countries, the local coon prices differ
and bring about different raw material cost to the textile units.
Govt.Assistance to Coon Growers- US$/Kg
2001-2 Nation 1999/2000
0.47 US 0.75
0.23 China 0.43
1.37 EU 1.39
India See below MSP in India
=48%of avg.price Avg/Kg($)2001-2 0.58
4,350 Tot.US$(Mn) 4,733
Source: ICAC 2000

Coon exports are subsidised through direct payments made by the Chinese Government to exporting agencies. These payments
aempt to bridge the gap between higher domestic prices and world prices. The government assistances in 2001-02 in S/kg are:
China-0.23, US-0.47, EU-1.37, World average-0.58.
More than one-fih of world coon producer earnings during 2001/02 came from governments (of various countries) support to
the sector

Minimum Support Price(MSP) in India generally set above world prices and provide producers with price
The other arm of the subsidy is minimum support price which support.
induces farmers to cultivate coon. The demand and supply Govt Minimum Support Price(India) Rs/Qtl One Qtl=100Kg
situation determines the price. In China, procurement prices are For India: Source Hindu Business Line Jun11,2010
2003/4 2005/6 2007/8 2009/10

Med.Staple 1,725 1,760 1,800 2,500
Long Staple 1,925 1,980 2,030 3,000
The average coon price in 2009/10 was S1.45=Rs65.25/kg(@Rs45/USD)
Coon Yield: Poulton, Kelvin Balcombe, and Sheila -May 2004]

China’s coon yield has increased dramatically over India should put all out effort to improve coon yield to get
the last 40 years. In the 1950s, the average yield was 225 advantage from lower Raw material price and there is a vast scope
kilograms/hectare. In the 1980s this increased to 750kg/ha and for the improvement-considering that the present yield in India
is currently(2001-2) at 1,177kg/ha.India’s coon yield in 2010 was is about 30% less than that of the world’s average. Higher yield
523Kg/hc(less than the world average of 700 kg/hc)while China’ will result in lower raw material price and it will be a great boon
coon yield is expected at 1,350Kg/hc.(Vide Annexure- 2d) to textile manufacturers in India. MA
[Source:Understanding the impact of Coon Subsidies on
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CORPORATE GOVERNANCE
THE LEANING
TOWER OF
Vasant Raval
V
CA Alka Adatia
India
F
rom its Greek root κυβερνάω [kubernáo], to govern means to steer in the right direction, an essential
step in achieving almost anything. Like most other actions, governance too can be dictated from outside,
which we call the compliance or rule-based approach, or be spirited from within, which we call the integrity
or principles-based approach. Whereas we have seen a steep rise in the compliance mode of corporate
governance, very lile is evidenced in support of an alternative, the integrity approach. A purpose of
this paper is to discuss this imbalance in today’s corporate governance mix and suggest possibilities for
embedding the integrity approach into the overall governance strategy.

G
CO
OV
RPORA
ERNAN
T
C
E
E
The foundation
Societies thrive on its members’ trust in each other. Without it, stability and predictability of the group behavior would be
precariously low, almost to a point where the social structure might suffer a complete breakdown. To quote Kenneth Arrow (1974, p.
23), “Trust is an important lubricant of a social system. It is extremely efficient; it saves a lot of trouble to have a fair degree of reliance
on other people’s word.” Trust, visvas in Sanskrit, is compared to Oxygen. Just like life would not be a possibility without oxygen,
societies would not be possible without the bedrock of trust (Schneier, 2012). Interestingly, we take almost ethereal presence of trust
for granted, to a point where we do not even notice it. We trust, for example, that the laundry guy will deliver ironed shirts on time;
that the subway trains would run uninterrupted; and that milk we buy in the morning is not poisoned. Figure 1 presents the trust cycle.
www.icmai.in September 2016  The


 Management Accountant 67
C O R P O R AT E G OV E R N A N C E
Figure 1. The Trust Cycle in the overall governance mix.

Governance as related to organizations was formalized in light of
the owner-manager separation. The corporate form of business thus
Trust elevated the notion of governance to the realm of business. With the
shareholders not engaged in the daily management of business, it
is essential that directors (generally called principals in a principal-
agent relationship) oversee the management in order to ensure that
SOCIETY
the management acts within its fiduciary obligations. It therefore
Expecations/one's resolves becomes necessary for the principal(e.g., the Board of Directors)
to trust but verify how well the agent (e.g., the CEO) performed
in delivering the interests of the shareholders. In a governance
model, the principal could almost exclusively rely on the compliance
approach, which we discuss first in the next section.
Stability/pradictability of
behavior Effciency
Compliance approach
Trust – its strength and reliability – depends on the society. Those
who cooperate in complying with societal norms are called doves; In our view, the compliance approach is a generalized (universally
because they do not violate trust, they are the key to sustainable applicable) solution to any form of governance. It is primarily
trust in the interpersonal and inter-group relationships. But then rules-based and applies to every entity subject to the compliance
not everyone cooperates, some defect some times and others may requirements. The entity – its character, virtue, or integrity –
defect oen (they are called hawks). When the hawks become active, becomes a non-issue, or plays an insignificant role. What takes over
one notices the trust gap. The debate concerning Mr. Vijay Mallya’s as a surrogate for values is the rule book.If you comply, you will find
motives and behavior in the media today illustrates this well. The yourself in the good books of the enforcement army. Some might
defectors – violators of trust - cause turbulence in the trust levels argue that the first sign of credibility in today’s connected world is a
and thus cause those in charge of governance(including regulators) clean bill of health in terms of compliance – a kind of litmus test in
to somehow contain the hawks. Fewer and more restrained the the due diligence process.
defectors, the more that the society will continue to thrive on mutual In concept, compliance triggers enforcement, that is, every
trust. Presumably, where a high level of trust exists, any impact of defector is subject to the consequences of breaking the rules. The
the compliance approach to governance would likely be modest, or company affected may lose its reputation or brand image, and may
may even go unnoticed. experience a significant decline in its market value. Early this year,
What can the society do to contain the universe of the defectors? Valeant Pharmaceuticals lost 40% of its market capitalization is a
For this there are societal pressures, such as moral, reputational, short few days because of its inability to file 10K with the Securities
and institutional pressures put in place (Schneier, 2012, p. 106). & Exchange Commission in a timely manner due to some suspected
Another societal pressure, called security systems, is comprised of moral compromises in its operations.
mechanisms that induce cooperation, prevent defection, induce trust, Once rules are set, they take the reputation of being the final word,
and compel compliance (Schneier, 2012, p. 104-105). Interestingly, much like principles or values. Rules are perceived as objective; they
moral pressures oen are a maer of one’s conscience, whileother make enforcement possible; they provide the minimal threshold of
societal pressures are externally induced. behavior of those who are subject to the rules. The composition
A compromise of trust is a result owo interacting elements: of requirements through a set of rules make potential breaches
the actor (agent, or doer), and the circumstances (context, mayain (1) difficult to maneuver, (2) more costly to engage in, and (3) less
Sanskrit, the matrix) (Raval, 2016). Measures of governance that beneficial in the outcome to the actor. This is because the rules
focus primarily on everything other than the actor’s (executive, target compliance by increasing the benefits of cooperating (that is,
director, manager, employee, etc.) virtues belong to what we call the complying) and steepen the consequences of defecting.
compliance approach. Guided by one’s virtue, when the individual There are several potential problems with the rule-based approach
acts on his own will, he demonstrates the presence of the integrity (Raval, 2015). Rules may lack requisite variety due to gaps in the
approach. Butwhen the actor essentially considers existing rules as coverage of all likely situations. At times, rules may conflict in
the best threshold for meeting the governance requirements, he sets addressing a given scenario. The focus on rules could introduce
in motion the compliance thinking. The integrity approach is likely to rigidity, push the principles into the background, institutionalize
be more efficient; however, the developments on the integrity front unthinking behavior, result in legal absolutism, or encourage passive
are so limited that we have yet to learn how to engage it effectively aitude toward governance because of the false sense of assurance

that when rules are followed, everything is in order. Rules, especially impose rules could subside if there are fewer crimes. Broadly, the
those enunciated by law, may be limited in their jurisdiction. history shows that the rules are on the rise and cost of compliance
Rules can also be challenged. For example, MetLife recently asked has been emerging as a major concern on the part of those who
the court to relieve itself of the regulatory burden of being classified comply. In light of this, it appears that relying solely on rules may
as “too big to fail,” and it succeeded in its claim. There is also a not be a viable approach in the long-run. We need to look at the
chance that rules punish the innocent due to ineffective monitoring, feasibility of introducing some elements of integrity as a pushback to
overwhelming trust in the evidence, or poor justice; at the same time, sheer dependence on rules to seek order in the corporate community.
some walk away from the crime due to their self-efficacy to maneuver
through the act, glitches in the enforcement, flawed information Integrity approach
search, or competent legal representation.
Rules are costly to implement. A considerable amount of research The integrity is best illustrated by Dr. Kiran Bedi’s experiments to
on the cost of compliance cropped up on the heels of the Sarbanes- awaken the inner consciousness of hard core criminals by offering
Oxley Act, 2002. A study by the Financial Executives International the violators workshops in a specificmethod of meditation, called
estimated that for corporations in excess of $1 billion dollars in Vipassana, facilitated by Padma Bhushan Shri S.N. Goenka. If the
revenue, the first year cost of compliance with the act would be criminal becomes aware of his fundamental constitution, there is a
$4.67 million.More recently, researchers at Lafayee University found chance that he would understand his vulnerabilities; in future, this
that per employee cost of federal regulatory compliance in the USA may guard him from indulging into illegal or immoral acts (Raval and
was $10,585 for businesses with 19 or fewer employees, compared Raval, 2010). A popular alternative is to make and enforce rules, to
with $7,755 for companies of 500 employees or more. Citing per treat prisoners as mere captives, and “teach them a lesson” through
employee cost of compliance and other data, Marie-Josee Kravis, a punishment. But forces of compliance can fill the prisons in a hurry,
senior fellow at the Hudson Institute, argues that much slower net and yet fail to provide a long-term viable solution to human frailty.
increase in business formation in recent years in the USA is due to a For example, in dealing with the criminals, the objective in the USA
toxic regulatory brew, from Dodd-Frank to state licensing laws. Some is retribution and not rehabilitation. The USA has five percent of
even argue that the real cost is having people focus on the business the world’s population, but 25% its prisoners! The total cost of
instead of just complying with the details of the rules. Compliance is the correctional efforts is $80 billion annually. The country would
perceived as a deterrent for competitiveness and innovation. In this not need so much prison capacity if some degree of success was
sense, chief executives presumably see the cost of compliance as an achieved in governance through integrity. Reforming those who
extra cost with very lile added value and therefore, a drain on the went astray could enhance value-centric behavior and turn more
monetary and human resources. And yet, the rules keep growing; the people to cooperate with rather than defect from the social norms.
latest surge in the USA is provided by the voluminous Dodd-Frank In this regard, Germany is probably on a beer path; its government
law, which is 23 times longer than the Glass-Steagall Act passed in believes in prisoner rehabilitation with lower costs, fewer prisoners,
response to the 1929 Depression. and shorter prison terms.
Powerful temptations to boil everything down to rules are The acceptance of integrity as the foundation for governance
constant. It is likely that in the shadow of the rules, one might feel leads to the idea of self-governance. This is where the one who is
comfortable in the concreteness of what to do. Such black-and- governed accepts and abides by rules and may even rise above the
white picturing could make those who govern miss altogether any rules. Perhaps the best example of self-governance is in the game
principles upon which the rule may stand. This loss of origins of of golf, where each player records her plays. In the story of The
a rule could escalate the trust gap, for the rules may be seen as Legend of Beggar Vance (Pressfield, 1999), when his ball lands in a
arbitrary. Those subject to rules may not accept or acknowledge the grassy terrain, the player moves a twig from under the ball and as a
authority of the rule-makers. Moreover, rules over time may need to result, the ball moves slightly. Although no one other than his caddy
be synchronized with new realities forced by constant change from sees this, he voluntarily counts the uncontrollable movement of the
forces such as the information technology advances. Unfortunately, ball as a play. An unconditional acceptance of the rule is internally
however, this may not happen. In his well-researched book (2014), motivated and is a driving force in compliance.
Phillip Howard asserts that paralytic effects of legal complexity are It is best to examine the integrity (principles-based) approachin
evident with ancient Roman law, with European civil codes of the comparison to the compliance (rules-based) approach. The
18th century, and now with the U.S. regulatory law. concreteness of compliance comes from a set of procedural – oen
Despite the limitations of rule-based governance, it is clear that explicit - requirements. Those who follow the ruleslikely would
rules will continue to exist. If greater degree of organizational wrong- be considered compliant. A careful examination of the integrity
doing is evident, then the regulators may impose even more rules in approach suggests that when we rely on principled behavior, rules
reaction to such compromises. On the other hand, the passion to become unnecessary or at most the lowest common denominator.

C O R P O R AT E G OV E R N A N C E
The integrity approach rests on doing the right thing, where spirit of a result in one’s resolve to behave in certain ways, which enhances
dictate originating from within is more important that the articulated predictability. As a result, it becomes possible for the organization
rule. Compliance may be driven by fear of punishment while integrity to work efficiently and to improve productivity.
is nurtured by one’s duty toward others. The compliance focuses Rules can also be designed to operate in the spirit of principles
on detection (followed by punishment), is prescriptive, is typically rather than highly specific, granular dictates. For example, the
mandatory, and oen forces blind obedience. In contrast, the International Accounting Standards Commiee leans on principles-
integrity-driven approach focuses on prevention, is self-induced and based standard-seing and resists prescribing detailed rules for
self-enforced, is adopted volitionally, and nurtures alignment with financial accounting and reporting. Under the precept “comply
one’s virtues. Finally, compliance is relatively easier to implement; or explain,” the preparerof financial statements deviating from
in contrast, because it relies on one’s virtues and internal strength, the principle needs to offer an explanation.Internally, the code of
the principles-based governance is more difficult to implement. At conduct, mission statement, and various high-level policies adopted
the current state of knowledge, we are almost always unsure if the by an entity are examples of high-level rules, or “commandments” that
integrity approach would deliver the results reliably. The seemingly set the tone at the top and shape the culture of the entity. A virtuous
objective and sure-footed compliance oen ends with addressing leader can thus help maintain an environment where the focus is on
symptoms; in stark contrast, integrity addresses the root-level the right thing to do rather than just doing things right. Undoubtedly,
phenomena. The promise of long-term success lies with the integrity this requires that the chief executive is value-centric and other
approach, but for now, we cling to the safety-blanket of rules. regarding, exhibiting in all aspects her determination to standby her
In the Eastern metaphysics, integrity and virtuous behavior are resolve to act in the best interests of her stakeholders.
examined in depth. A distinction is made based on how one sees In any organization, including families, the most significant
one’s world in terms of one’s rights and duties. The Rights (adhikara) message on integrity comes from the behavior of the leadership.
view originates in one’s self-centricity, implying “what’s in it for me;” The leaders set the tone-at-the-top which percolates throughout the
the Duties (dharma) view projects others’ (family, society, employer, organization and sends signals of what is the right thing to do. The
etc.) rights translating into his duties. The focus on rights allows organization’s conscience is built upon the leaders’ message orally,
one to take the compliance approach, which is inherently narrow, vicariously, and in wrien documents such as the mission and the
while the focus on duties makes the person constantly think of code of conduct. There is evidence that a new breed of leaders is
stakeholders’ interests. accepting the responsibilities of leadership by taking questions of
Properly implemented, the integrity approach could offer several culture more seriously. This generation of leaders (1) understands
significant benefits. First, the need for rules would diminish and that it is possible to actually change the way organizations operate
thus reduce non-value added costs. For the doves, this is important, and (2) has a tremendous opportunity as also a big responsibility to
for they see lile value in just following the rules and reporting actually get it right.
the facts to regulators. Second, if business leaders become aware The success of integrity-driven organizations depends upon
of their character traits and consequent vulnerabilities, they may maintaining the quality and character of leadership across times.
guard against any “blind spots.”Third, fewer rules would mean less For this, the established norms of leader recruitment and selection
bureaucracy and less need to revamp these rules over time. Phillip may not be enough. Aer all, integrity is hard to assess; for this,
Howard makes a case in his book (2014) that the United States one needs to observe the candidates for a long period of time
Congress rarely revises or repeals outdated legislation. Where self- across different contexts and thus understand the disposition of
dictated rules emerge from a value-centric mindset, there is no need the candidate. In this regard, family-owned businesses in India
to explicate and update rules; one would find the right thing to do would have had a higher rate of success in establishing virtue as
from the inner corridors of one’s disposition. To quote one of the the prime element of tone-at-the-top. In the USA, S.C. Johnson –
most-revered ethicists, T. H. Green (1906, p.360): Into the duties a family-owned group of businesses – has adopted the practice of
which he is expected to fulfil he will put much more meaning than is not involving more than one family member in each business. This
put by those who claim their fulfillment, and will always be on the eliminates possibilities of conflicts (related-party transactions,
look-out for duties which no one would think the worse of him for collusion, etc.) which may come in the way of the leader’s exercise
not recognizing. of integrity. Indeed, this is an example of how virtuous leaders may
suggest guiding principles or best practices, which in turn can be
Balancing the governance structure adopted by other business executives. In this manner, the increasing
presence of integrity-driven governance in the rules vs. principles mix
It is indeed clear that we as a society or as an organization – any would change over time in favor of principled-governance.
group of people focused on a common goal – will need rules for Just as rules impose costs of compliance, so does the principles-
governance. Establishing expectations through rules is expected to based governance. The renowned business leader with exemplary

virtues, J.R.D. Tata, was asked in 1979 why the Tataconglomerate comprehend how to assess a person’s integrity and (2) have had a
had not expanded as much in the 1960s and 1970s as did other long and reliable exposure to the future leader across various formal
groups. He replied, “I have oen thought about that. If we had done and informal contexts. There is more to learn before any practices
some of the things that some other groups have done, we would have can be instituted with a high degree of confidence.
been twice as big as we are today.” And he adds, “But I would not Despite the gloomy outlook, abandoning the inclusion of
have it any other way.” The reality is, the costs of integrity-driven principles-based elements in the overall governance map would serve
governance are not as easily identified or measured as the costs of only as a disservice in the long run. Perhaps we should look at what
compliance-driven governance. the non-actors – business leaders of uncompromising character –
We need to also remember that the integrity-driven approach is have done to archive a flawless record. Among the influential players
not “bullet proof” (Raval 2016). There will be instances of a moral in the corporate governance domain, presumably the candidates with
compromise in the form of a financial fraud even in the presence of exemplary moral leadership in business and private life include J.R.D.
high integrity. For example, the leader’s willpower (strength to self- Tata, Narayana Murthy, and Azim Premji. Beyond mere compliance,
regulate) may have temporarily waned under stresses and challenges the path they have laid out for principled behavior can work as
at a given time, and this may result in a vulnerability to succumb to a best practices in the integrity arena. When these tried and tested
moral temptation. Although the actualization of vulnerability is not examples are followed by other leaders in the same league, perhaps
automatic, however small, the possibility of a wrongdoing exists for there will emerge greater conviction in the integrity approach. This
the time being. in turn could change over time the mix between rules and principles
in the overarching governance framework. MA
Future governance reform
References
Broadly, governance measures thus far have been heavily 1. Arrow, Kenneth (1974), The Limits of Organization, New York, NY:
influenced by the question, how did it happen? Very lile of the Norton.
2. Green, T. H. (1906), Prolegomena to Ethics, Charloe, SC: Bibliolife.
character is considered, as in the question, why did someone do it?
3. Howard, P.K. (2014), The Rule of Nobody: Saving America from Dead
The irony is that if we comprehend the human side of indiscretions, Laws and Broken Government, London, U.K.: W.W. Norton & Co. Ltd.
it would likely result in understanding the cause rather than chasing 4. Pressfield, Steven (1995). The Legend of Beggar Vance: Golf and the
the symptoms. While this may be an acceptable argument, the Game of Life, New York: Avon Books.
5. Raval, Prafulla and Vasant Raval (2010), Finding Soul in Work and
downside of virtue-based governance is that human vulnerability
Life, Delhi, India: New Age Publishing.
to temptations may not be wholly predictable. Therefore, failures 6. Raval, Vasant (2015), Information Ethics: The Limits of Rules, The
or unexpected negative outcomes may surface where integrity is ISACA Journal, Vol. 3.w
solely relied upon. This outcome is inevitable regardless of how 7. Raval, Vasant (2016), The Disposition-based Fraud Model:
Theoretical Integration and Research Agenda, Journal of Business
the governance mix (rules vs. principles) is formed. There is hope,
Ethics, Forthcoming.
however, that in a balanced governance framework, the possibility 8. Schneier, Bruce (2012), Liars and Outliers: Enabling the Trust that
of executive indiscretions diminishes greatly. Society Needs to Thrive, New York, NY: Wiley.
As a result, it is necessary to build a framework where both
rules and principles are present in a balanced mix. The overlay of Foot Note
both collectively ensures a reasonable chance that fraud might be 1
MetLife and Dodd-Frank Backlash, The Wall Street Journal, March 31,
prevented. When such a mix is created, it is necessary to consider 2016, C2.
2
As reported in the Wall Street Journal, What’s Killing Jobs and Stalling the
the kinds of rules that would complement or reinforce integrity.
Economy, June 4-5, 2016, A9.
For example, rules that focus more on succession planning would 3
Rosa Parks defied the rules of racial segregation by taking a seat in a
probably yield beer results because those in charge of governance public transportation and thus became a powerful change agent.
4
will have a chance to assess and evaluate the human side of the CBS 60 Minutes, Crime and Punishment, April 3, 2016.
5
Less Stick More Carrot Key to Cultural Change in Financial Services, The
candidate. On the other hand, disclosing the multiple of the
Wall Street Journal, May 10, 2016, Accessed May 25, 2016: hp://blogs.
executive’s pay compared to the average salary in the company sheds wsj.com/riskandcompliance/2016/05/10/less-stick-more-carrot-key-to-
lile light on the leadership’s virtues. cultural-change-in-financial-services-2/?mod=djem_jiewr_BE_domainid
6
Undoubtedly, in a world flooded with the news of fraud, cheating, The Business Ethics of J.R.D. Tata, The Hindu, July 29, 2005
bribery, black money, and corruption, it is hard to get optimistic
about trusting the leader’s integrity. Where hawks dominate the
scene, the immediate reaction is to resort to stiff countermeasures,
including penalties and jail time. Trust in the executive’s character
is well founded only when those in charge of governance (1) vasantraval@creighton.edu

BANKING
Interest rate
cut & loan
from PSBs
I
nterest rate here is referring to the lending rate of the
Banks and others FII to commerce and trade. Now,
in India lending rate of Banks (Public Sector Banks
or PSBs) is mainly depend on monetary policy of
RBI. On other hand monetary policy depend on the
conditions of economy, situation of world economy,
and inflation rate. In recent past RBI has reduce the repo
rate in few occasion and refuse to do the same in some time
instead of request from all concern of economy.
On 09th Aug 2016 RBI has declare their Third Bi- monthly
policy decision for 2016-17. Policy repo rate under the liquidity
CMA Anit Mitra adjustment facility unchanged at 6.5 Percentage and CRR at
Sr. Executive Business
S 4% of the net demand and time liabilities. There is no major
Administrative, Siemens Ltd
A change in the repo rate and hence interest rate will be same.
Kolkata RBI has put logic behind their policy decision ( Ref Third

Bi- monthly Policy Statement, 2016-17). RBI shows very optimist entrepreneur will approach banks for loans and existing corporate
situation in some segments, though all segment not performing can finance their old loans with cheep finance. In totality this
well as per the statement. Some of favorable effects are in gives a push to the economy. It is correct and theoretically can
servicing sectors, Fuel inflation remains low and Liquidity be prove.
conditions eased significantly. But Industrial Production is still Now, let us try to understand if RBI would have reduce the rate
not good enough and Retail Consumer price Index still high. of Interest then is that increase the demand for loan in India for
This aracts observations from different corner of the stake capital expenditure by business units.
holder and they are of the opinion that RBI should reduce the rate Theoretically investment depends on real rate of interest and
now to boost the economy by increase the demands for funds. not on market rate of interest. Inflation is the difference between
Because foreign reserve ratio is good and moon soon up to first market rate and Real rate.
week of Aug’16 is more than average. So as per their opinion it With cut in the rate of interest increase investment when real
is the right time that RBI should reduce the rate of interest to rate of interest is positive, For example, if current rate is 2% and
lending more to business units. return from projects is 8% whereas inflation is 5% then real rate
A cut in the rate of interest will increase the flow of funds to is 3% which is more than current rate of interest.
business units or in other words with cut in the rate of interest To simplify it further we can say theoretically when future

BANKING
return from project is more than Market rate (i < R) then fresh through cash to avoid Tax. This is affecting both less revenue for
investment should happen in project more with every cut in Govt and fewer saving.
nominal rate of interest. But most probable reason of the decrease in savings rate from
Banks when cut their lending rate of interest it directly affect house hold is the low income. There is lile doubt that income
their interest income, because Bank has to pay for their funds in rural areas are under terrible stress. Still a major part of the
that is interest on saving from individuals. If firms find economical Indian populations are living in the villages. In urban areas also
to raise funds from publics (when real rate of interest is positive) Job creation not up to the mark. A recent Labour Bureau report
then they directly raise the funds from publics. But this situation has shown new jobs in eight industries — textiles, leather, metals,
not possible in high inflationary economy, like India. Therefore, automobiles, gems & jewellery, transport, IT/BPO and handloom/
cut in interest rate and investment boost will mainly depend powerloom — to have fallen to 1.35 lakh in 2015, from 4.21 lakh
on Bank’s lending policy. So, is bank will reduce their rate and 4.19 lakh in the previous two years.
further to boost the economy – at present? The CSO data, in fact, points to a decline in household savings
In mid 2016 Bank of Japan has declare zero interest rate but from 23.6% to 19.1% of GDP between 2011-12 and 2014-15. One
before that (almost 18 months prior to Japan) European Central doesn’t need to, therefore, search for complicated explanations —
Bank has declare below zero rate or negative rate of interest. In to understand why bank deposit growth has fallen to single digits.
negative interest rate a lender is to be paid by the bank. But it also Beside fall in saving or loadable deposits, Bank basically PSBs,
not gives much needed impetus to their economy. are under huge pressure of clearing NPA from their balance sheet
In India aggregate deposit with Banks up to end of March 2016 and in such circumstances they will also not ready to take further
grows only in single digit 9.9% over 2014-15. This growth rate is risk of lowering their income. Now, if they cut the rate on saving in
the lower in 53 years. A single digit growth was last recorded in present situation that reduce deposit further one hand and more
1962-63. That is Banks also have less fund in hand for lending. loan will increase the risk of further increase in NPA.
Economist can describe the reason beer but few factors can Therefore reduction of rate of interest can improve the
be identifying with common understanding. One of the factors supply of funds to industries and will give the impetus to
most of the people are saying “inflation”. But it is not inflation growth is not correct in present scenario.
only. Currently One year interest rate on Fixed deposit ranging Hope Central Govt and other institution will appraise the
from 7.25% to 7.5% whereas Consumer price inflation rate is 4.8% situation and will give proper consideration on issue of interest
but in 2013-14 when one year rate of interest on FD was 8.75% to rate cut as sole criteria to increase the lending from Banks to
9% then Consumer price inflation was 9.5% . Therefore, inflation boost the economy.
is not the reason. To development of economy Govt should organize the supply
Now, question is that is there any alternative source where sides and take necessary reforms program to create more
people can park their money, like real estate or in gold. But opportunities.
Central Statistics Office (CSO) data show physical savings of Personally I am optimist on turnaround of economy due to
households have registered a decline in 2013-14 and 2014-15, program from central Govt e.g “Make in India” and other reforms
which is also corroborated by the slump in real estate, and like GST. All pending reforms should take place ASAP and Central
fall in gold imports. And that makes for the second cause for govt must give proper aention on Make in rural India (separately
surprise. to make rural Indian as investment destination) and develop
There are some other explanation also available, it say that MSME ( Micro Small Medium Enterprise) through proper support
major reason of decline in bank deposit caused because of the both financially and for quality up-gradation like training centre,
sharp expansion in currency held by the public. as the central point of development to boost the economy to
Some of the leading news papers have concluded election in grow at desire rate. MA
2016 and related withdrawal funds as the reason of decline. But
we can reject the same because it was there in 2013-14, and 2014- Reference
15. 1. Paper published by RBI on “Real Interest Rate impact on
Second reason posted by many economists is the more and Investment and Growth –What the Empirical Evidence for India
Suggests?
more KYC norms by Banks as part of the Centre’s crackdown on
2. RBI Monetary Policy published on 09.08.2016
money laundering. This is believed to have particularly impacted 3. Data on employment from Ministry of Labor.
growth in high value fixed deposit.
Third reason of more fund holding by people due to increase in
service tax rate since 2013-14 from 12.36% to 15%, therefore more
and more people are meeting their payment for consume services anit_mitra2005@yahoo.co.in

TAXATION
INCOME DECLARATION
SCHEME, 2016
r b Ta x O n
g i n g Po l i cy To Cu
a m e C h an
AG n c o m e
i s c l o s ed I
U n d
D Megha S. Somani
Dr. CMA Jyoti M. Bhatia
Assistant Professor
A A
Assistant Professor
M.M.K College of Commerce &
M St. Andrews College of Arts,
S
Economics, Mumbai
E Science & Commerce, Mumbai
S

TA X AT I O N
Introduction on Policy Decisions taken in 1997 and recover black money and undeclared income, by offering
opportunity to people to declare their black money. This effort
On June 18, 1997; Central Board of Direct taxes had launched was first started in 1951 which led to tax collection of Rs.
Voluntary Disclosure of Income Scheme to curb the Undisclosed 10,89,00,000. In 1997, Voluntary Disclosure of Income Scheme
Income of the individuals in India. The aim of this scheme was to was the most successful scheme which assisted in recovery of Tax
give an opportunity to Income or Wealth Tax defaulters to disclose on undisclosed income. Modi Government in its effort to increase
their undisclosed income at the respective prevailing Tax rate [@ revenue took a refined structure of Voluntary Disclosure of
30% for individuals; @ 35% for firms & companies]. Income Scheme and framed Income Declaration scheme through
Impact of 1997 Scheme: Income tax department to curb the Black money and Undisclosed
It was observed that around 3.5 lakh Individuals, Firms & Income.
Companies disclosed their undisclosed income. This brought
revenue inflow of Rs. 78 billion to the Indian finance ministry. Introduction of Income Declaration Scheme 2016
Drawbacks of 1997 Scheme:
 This scheme did not penalize the declarant for having  This scheme came into effect from June 1, 2016 and is framed
undisclosed income. under Chapter IX of the Finance Act 2016.
 The rate of tax was the rate prevailing on the respective  This being refined structure of Voluntary Disclosure of Income
date. Scheme is a chance to Income Tax defaulters to declare their
 There was a controversy against the scheme since no undisclosed income in form of asset or otherwise pertaining to
difference was reflected between honest tax payers and users FY 2015-16 or earlier years.
of the scheme who had undisclosed income of the past years.  Under this scheme, the declarant can make a declaration from
1st June, 2016 to 30th September, 2016.ie. Declaration u/s 183 of
Need for Income Declaration Scheme in Finance the Finance Act 2016 can be filed only upto A.Y 2016-2017.
Bill 2016  Declarant is required to pay tax, surcharge and penalty on the
It was observed that in Assessment Year 2014-2015, only 48 declared undisclosed income.
million individuals were tax assesses which comprises of only  The declarant using this scheme will get immunity from penalty
3.18% of India’s population. Share of direct taxes as a percentage or prosecution proceedings under the Income-tax Act, 1961, and
of all taxes reduced from 60.78 per cent in 2009-10 to 51 per cent the Wealth-tax Act, 1957, related to such income / asset
in 2015-16; whereas direct-tax to GDP ratio has decreased from  Confidentiality of the declarant shall be maintained.
6.3 per cent in FY 2007-08 to 5.47 per cent in 2015-16, the lowest
in eight years. Computation of Undisclosed Income Under this
Scheme
List the Undisclosed Income (Income on which tax is not paid)
 Note: If asset is acquired from such undisclosed income and
such asset is located in India- Value of such asset is calculated as
per the following method:
Source: Income Tax Department, Central Board of Direct Taxes,

Government of India.
Source: Income Tax Department, Central Board of Direct Taxes,

Government of India.
Several efforts are taken by the Indian Government to trace

Mode of Making Declaration
a) Electronically using Online filing through incometaxindiaefiling.gov.in

b) Application in writing to Principal Commissioner/ Commissioner of Income tax as per the Jurisdiction in Form 1 u/s 183 on or before
September 30, 2016.
Computation of Tax Liability

Iff undisclosed
d l d
income = Rs. 100
a Tax payable @ 30% of undisclosed income 30
b Add: Surcharge (Krishi Kalyan cess) @ 25% of Tax payable [ie. ¼ of a] 7.5
c Total tax
d Add: Penalty on above tax @ 25% of Tax payable [ie. ¼ of a] 7.5
Total Tax 45
HENCE TOTAL TAX= 45% OF UN-
DISCLOSED INCOME
Deadline for Payment

Total Tax on undisclosed income Payment to be done by
Minimum 25% 30th November 2016
Additional 25% 31st March 2017
Balance amount (50%) 30th September
Points to be noted by DeclarantoOpting the Scheme: the applicable tax, cess and penalty totaling 45% on undisclosed
income.
 Declaration of undisclosed income or asset should have been It immunes the declarant from Benami Transaction (Prohibition)
chargeable to tax for any assessment year upto 2016-2017. Act, 1988 subject to certain conditions.
 Misrepresentation or suppression of facts or information will
render the declaration void. Conclusion
 Declarant is required to ensure correct valuation of undisclosed ‘Your undisclosed income is like Bomb - Defuse the tension
income payment of tax on the same since Tax, Surcharge and and declare your undisclosed income under Income Declaration
Penalty paid under Income Declaration will not be refunded. scheme 2016.’- Widely used slogan to create awareness about
 Declarant is liable to pay income tax at the rate of 30% the scheme.......
of the value of undisclosed income plus a surcharge of 25% Since the scheme is an invitation to all tax evaders to disclose
thereon. Additionally penalty at the rate of 25% of the tax is also their income/ assets, it is a welcome step to collect additional
required to be paid which gives a total tax payment of 45% under revenue. This scheme aracts notonly to the non- declarant of
this scheme. income but also those assesses who disclose partial income
 Payment for tax under this scheme made should be from which leads to mis-represent and suppress the facts. This scheme
disclosed income. acknowledges honest tax payers by levy of penalty on declarant
 Once a declaration is rejected, it shall be deemed that no availing this scheme. Also valuation of Assets purchased from
declaration was made. such undisclosed income is arrived at aer considering its market
(nominal) value rather than its historical cost.
Advantage to Declarant Availing this Scheme It is anticipated that this scheme will bring effectiveness in
taxation system and boost the Economy and balance India’s
This is an opportunity for the tax evaders to become law-abiding Fiscal structure. It will also assist in boosting Tax to GDP ratio of
taxpayer by disclosing their unaccounted income or assets. India. The proceeds from this scheme are expected to be utilized
wThis scheme can save declarant from penal provisions, scrutiny for to boost the Infrastructure in India. MA
or income tax enquiry for the declared income/ asset by paying jm_bhatia@yahoo.co.in

CAPITAL MARKET
Market Sentiment
Indicator”
Ganesh Sankar
Research Scholar
Institute for Financial Management
and Research, Chennai
Dr. G. Balasubramanian,
Dean and Professor of Finance,
Institute for Financial Management
and Research, Chennai
Traditionally trading decisions have been driven by the use 100 Index option prices. It soon became the premier benchmark
of technical and fundamental analysis. Fundamental analysis for U.S. stock market volatility. Due to the increasing popularity
studies the fair value of the asset using ratios, dividends, research of the VIX, the benchmark was soon updated to compute
etc. and compares it with the market value. If market price is volatility implied by a wider and core index of the U.S. equities
below or above the fair value the trader makes a choice of buying namely, S&P 500. In 2004 and 2006 futures and options on
or selling the asset. Technical analysis uses the historical price VIX were introduced. In India VIX was introduced by National
data of the asset to identify paerns or market trends to make Stock Exchange (NSE) in November 2007. India VIX uses the
trading choice. With the rapid growth in alternative channels to computation methodology of CBOE, with suitable amendments to
trade, like the market for derivatives, there has been increased adapt to the NIFTY options order book.1 Whaley (2000) studied
use of alternative tools to make trading decisions. One such the relationship of VIX with respect to the stock market in the
popular offshoot of the technical analysis is the market sentiment U.S. The study finds that the relationship between VIX and stock
indicator. Market sentiment is the general prevailing aitude market is negative, that is, if VIX falls the index rise. It also finds
of traders towards a particular asset or market. The market that the relation between stock market returns and changes in
sentiment can be bearish, bullish or neutral. There are many the VIX is asymmetric. The stock market reacts more negatively to
market sentiment indicators, namely, volatility index (VIX), put an increase in the VIX than it reacts positively when the VIX falls.
call ratio (PCR), 52 week high / low, to name a few. In this article There are two hypothesis for the observed inverse relationship;
we examine two popular indicators – VIX and PCR. namely, leverage hypothesis proposed by Black (1976) & Christie
Volatility Index (VIX) was introduced in 1993 by the Chicago (1982) and volatility feedback hypothesis proposed by French,
Board Options Exchange (CBOE) to measure the market’s Schwert, and Stambaugh (1987), Campbell and Hentschel (1992).
expectation of 30-day volatility implied by at-the-money S&P The leverage hypothesis states that if stock price declines the

relative proportion of equity to the firm value decreases, which Figure 1 below shows the movement of India VIX in relation to
makes the stock riskier and increases its volatility. The volatility the index NIFTY 50.
feedback hypothesis states that the negative return tends to
be intensified whereas the positive expected return tends to be
dampened and this creates the asymmetric volatility situation.
This article studies the relationship of VIX and the broad market
index namely NIFTY 50 traded in the NSE.
Traders who expect rise in prices buy call options and put
options are purchased in anticipation of a fall. Put call ratio (PCR)
introduced by Pan and Poteshman (2006), is defined as the total
volume of puts to the total volume of calls traded. It looks at the
difference in trading volume between the puts and calls. A large
value of the ratio (>1) would mean there are more put buyers than
the call tilting the market sentiment to bearish and vice-versa.
But Summa (2004) claims that since most equity option buyers
are inexperienced traders who have limited capital, their extreme From the figure it can be seen that a market fall is associated
bets reflected in extreme PCR will invariably go wrong. Using with a rapid increase in the VIX and a market rise is associated
data from CBOE the article proves that extreme value of PCR can with a decrease in VIX. One can also notice that VIX has a
be used as contrarian indicator being a market reversal. This tendency to move around the average, that is, a rise in VIX is
article looks at the relationship between PCR and the index in associated with a subsequent fall to revert to its mean and vice
the Indian market. versa. These results are in-line with studies from developed and
other emerging market.
Data Put Call Ratio: Table 2 below gives the descriptive statistics of
PCR computed using the NIFTY 50 Index Options contracts. Apart
Data from National Stock Exchange (NSE) is used for the analysis. from PCR computed using volume (or the number of contracts
Globally NSE ranks 1st in terms of number of contracts traded in traded) turnover (value) and open interest (OI) are also used.
Index Options1. NSE provides historical data on India VIX and the The theory behind the usage of 1) PCR based on turnover is that
index, namely NIFTY 50. Archive of daily index option contracts it gives a value weighted measure of the sentiment; 2) PCR based
trade data are used to arrive at the daily volume of puts and calls. on open interest includes contracts which are held for a period
Using this, PCR is computed as the ratio of total volume of puts to more than a day which means the trader has more confidence
total volume of calls. For the sake of liquidity only the near and on the bet. The ratios are computed using data between January
next month contracts are used for analysis. 2014 and June 2016.
(Total volume of Puts)

Analysis and Discussions PCRContracts=
(Total Volume of Calls) ….(1)
Volatility Index: PCRTurnover= (Total value of Puts) ….(2)

(Total value of Calls)
Table 1 below gives the descriptive statistics of India VIX for the
period between April 2014 and June 2016. During this period it (Total Open Interest of Puts)(Total
PCR(Open Interest)= ….(3)
Open Interest of Calls)
touched a low of 11.57% and went as high as 37.71% with a mean
value of 17.46%.
With the growth of market for derivatives there are
Table 1
alternative avenues for extracting price and direction
NIFTY 50 India VIX indicators apart from the conventional technical and
fundamental analysis. One such widely used tool is the
Mean 7800 17.46 market sentiment indicator. Though there are various
Median 7912 16.73 sentiment indicators there are two which are widely referred
in literature and practice, namely, volatility index and put
Max 8996 37.71
call ratio. In this article we look at how these two indicators
Min 6001 11.57 relate to the underlying broad index, the National Stock
Source: Author computed value Exchange’s NIFTY 50.

C A P I TA L M A R K E T
Table 2
PCR_Contracts PCR_Turnover PCR_OI
Mean 0.98 0.93 1.06
Median 0.97 0.93 1.04
Max 1.53 1.45 1.60
Min 0.48 0.42 0.68
Source: Author computed value
PCR computed on the total volume traded has a mean value of Conclusion
close to 1. It has moved between an extreme value of 1.53 on the
higher side and 0.48 on the lower side. The recent data from India shows that though the relationship
Figure 2 below plots the PCR computed on the total volume for between VIX and index price behaves similar to other markets,
the period between January 2014 and June 2016. Since there is a the relation between PCR and index is different. Contrary to
lot of side way movement on a daily basis, a trend is created using some of the studies in developed markets, the recent Indian
the 21 day EMA as suggested by Summa (2004). This smoothens data of the relationship between PCR and index shows PCR as
the PCR and aids in beer analysis. a non contrarian indicator. As a trader looking to use PCR as a
market sentiment indicator, a high value corresponds to a bearish
sentiment and low value corresponds to a bullish sentiment. MA
References
1. Black, F. (1976) “Studies of stock market volatility changes.”
Proceedings of the American Statistical Association, Business
and Economic Statistics Section, 177–181.
2. Campbell, J. Y. and L. Hentschel (1992) “No news is good news:
An asymmetric model of changing volatility in stock returns.”
Journal of Financial Economics 31(3):281–318.
3. Christie, A. (1982) “The stochastic behaviour common stock
variances: Value, leverage and interest rate.” Journal of Financial
Figure 3 shows the plot of 21 day EMA PCR (computed on
Economics 10:407–432
volume) with the index values. 4. French, Kenneth R., G. William Schwert, and Robert F. Stambaugh
(1987) “Expected stock returns and volatility.” Journal of Financial
Economics 19:3–29.
5. Pan, J., & Poteshman, A. M. (2006) “The Information in Option
Volume for Future Stock Prices”, Review of Financial Studies, 19:
871-908.
6. Summa John (2004) “Trading Against The Crowd”, John Wiley
& Sons
7. Whaley, R. (2000) “The investor fear gauge”, Journal of Portfolio
Management 26:12–17
Foot Note
1
A detailed computational methodology is available in www.nseindia.
com
2
Source: National Stock Exchange, Monthly Derivative Update (June
Contrary to the popular belief that PCR is a contrary indicator, 2016)
3
the evidence from Indian index option market shows otherwise. Open Interest is defined as the total number of outstanding contracts
A high extreme value of PCR is associated with a market peak held by market participants at the end of a day
which is followed by a subsequent market crash. A contrary
indicator would suggest that a high PCR would lead to a reversal
of general belief that the market is bearish and hence the prices
will go up. Figure 4 shows that the results are robust to alternative
specification of PCR using turnover and open interest. ganesh.sankar@ifmr.ac.in

COSTING
ol s i n
i e s
A BC t o
m p an
IT Co
`
D
Dr. N.Narsaiah Prof.T.Satyanarayana Chary
Associate Professor
A Dean and Professor
D
Vijay Rural Engineering College
V Telangana University, Dichpally
T
Nizamabad Nizamabad
I
nformation Technology (IT) companies require very IT companies find the costs by various functions such as
relevant and timely cost information to make beer professional development, IT projects, administration or client
managerial decisions that improves competitiveness development, and IT enabled services. It is also proved many
in terms of costs reduction, quality and profitability times by researcher that the results of ABC are significantly
enhancement. So, the IT companies must focus on different from the traditional cost allocation approach, hence,
ways to increase customer satisfaction through an it can be asserted that in performance evaluation and making
effective cost system that can ensure a perfect and optimum the cost predictions over future engagements such type of
resources consumption and cost ascertainment. cost analysis is desirable and more meaningful.
The relevant cost system is an essential one in IT sector
as the cost is usually charged to a single overhead cost pool About ABC
and then allocated to specific engagements, usually, as a
percentage of direct labor cost. This charge for overhead will ABC1 has explored itself to be a very powerful tool for
distort the total cost of the engagement if different types of IT products and services cost and profitability analysis. The
services cause costs to be incurred that are not in proportion most appropriate way of ABC is to allocate costs to IT services
to the number of hours worked or the direct employees cost through the various activities in place of IT companies that
incurred. If the traditional cost accounting systemarbitrarily can be measured by cost drivers. The ABC method is the
allocates costs to IT services rather than allocating costs that technique that could bring the significant improvement in the
reflect the true inputs, the firm will not be competitive when quality of allocation IT services overhead cost. This method is
bidding IT services. able to incorporate both physical measures of IT companies’
So, IT companies require a new cost system namely over purchases and services by following causal principles in
known as ABC method to ascertain the cost accurately as the costing system.

COSTING
Traditional cost accounting system may help the managers in performance through the ABC in the IT Companies.
arriving the accurate decision making, under the environment  In terms of budgeted plans and execution of action ABC
of resources allocation to cost objects inaccurately. Whereas in can helps to top management to understand the financial
ABC method, improved over the traditional cost method by using impact of strategic decisions over IT companies spending.
a two-stage allocation procedure and multiple cost drivers. In  ABC assists to develop future IT spending over the projects
the first stage, in IT companies it identifies significant activities and generate alternative funding scenarios also.
and overhead costs assigned to each activity in proportion to  ABC identify systems and peripherals in the applications
the resources consumed. Then Cost drivers are identified to and develop of new soware portfolios that are nearest to
appropriate allocates the resources to cost objects and each the end of their useful life and should be replaced them.
of the cost pools (Group of activities). Under stage two, the  ABC improve more meaningfully allocate the resources of
overheads are allocated from the cost pool to the final outputs projects and assess derive profitability over the projects to
of IT services in proportion to the amount of the cost consumed. the IT companies.
Thus works as ABC benchmark for IT companies for beer cost  ABC system establishes significant communication of IT
analysis and profitability analysis. costs to top level management and the IT client’s base in
an understandable and familiar form.
Objective of the Study and Sample Size  ABC has most frequently observed that the IT functions
and activities in IT companies along that focusing over the
The main objective of the study is to find out the cost of IT Research & Development process ( innovated and modified
companies through consumption of resources by activities and systems development), a production process (systems
profit generated by such activities through ABC method. The operation), a maintenance process, and a customer service
study is done on the basis of five top IT companies operating process (the help desk).
in India selected based on market capitalization ranking as the  ABC system employed in IT companies it can assist on
criteria among the IT companies. the other management practices like as performance
measurement, strategic planning, outsourcing.
Data Sources and Methodology
Implimentation Stages of ABC In It
The present study is an explorative and analytical research and
the required data was formed through the financial reports, cost ABC is very frequently used as a part of Total Cost Management
reports and company websites. The activity cost was analysed (TCM). The implementation process of ABC in IT companies is
through average activity cost of IT companies. The study covers traced through the six stages, they are as under:
the time period of five years from 2008-09 to 2012-13.Simple Stage1: Prepare the glossaries to Identify activities in IT
averages and t-Test are employed to analyse the data and companies and formulate similar type activities as cost
examine the authenticity of findings. pools.
Stage 2: Direct cost allocation to IT services (example as selling
Hypothesis of the Study cost of specific IT Services).
Stage 3: Allocate the cost (IT resource) to cost pools.
To ascertain the objective of the study the following hypothesis Stage 4: Identify the cost drivers.
is formulated and tested: Stage 5: Compute the activity driver rate.
 Ho: There is no significant difference in profits generated Stage 6: Allocate activity cost to IT service using the activity
by various activities under ABC method. rate and consumption of cost driver size to final output
of IT services.
Benefits through ABC in it Companies
Resource Consumption and Profit Generation under
Many facts and changes are discovered by IT companies aer ABC Method.
successful implementation of ABC. Therefore, the benefits that a
company can derive are found through ABC are: Initially, ABC emerged as a powerful profit analysis tool in
 Provide very clear, concise, compelling comparisons to the late nineties ABC was used extensively in diverse industrial
prestigious world class organizations spending on IT, companies. This success stemmed to IT companies from
and as a result identified anomalies and suggested ABC’s ability to reveal the hidden sources of profitability and
proper significant actions to be taken to improve the IT’s embedded cost and to serve as a catalyst for decisions to improve

profitability. Over time in IT companies ABC adapted to new areas this demand is converted into the resource requirement and the
such as cost-to-service activities, customer profitability, channel same is planned for the second step where the calculations of
profitability, and the use of ABC outputs to perform capacity the cost of such IT services can be estimated and accumulated
planning and drive predictive modeling. through the cost pool2.
ABC system estimate the cost of resources used in IT companies ABC can give management a beer understanding over the
to produce IT services to clients. Based on this demand and the profit as the utilization of resources takes effectively. Therefore,
various activities required and the time taken by various activities many top IT Companies namely, TCS, Wipro Limited, Infosys
as well the total resources requirement is calculated. Thus, the Limited, Tech Mahindra and HCL Technology found oen resource
resources of the IT industry can match with the business plan of consuming activities. Hence, such types of activities of those
the various business units and they can plan for the resources companies are identified and presented through table 1 to give
for themselves. This in turn to saves resources being charged and clarity and understanding about the consumption of resources.
estimate unutilized resources capacity of the IT companies. Once
TABLE 1: AVERAGES OF RESOURCES CONSUMING ACTIVITIES OF SELECT IT COMPANIES

(For the period 2008-09 to2012-13)
Averages of Resource consuming Activities of IT Companies ( ` in Crores)

Resource consuming Activities
WIPRO Infosys Tech HCL
TCS
Limited Limited Mahindra Technology
Functional
1534.66 3753.2 1293 558.9 8,365
Requirement analysis
Document Creation 31.876 103.9 4.8 19.56 60.048
Recruitment and training 165.206 10607.92 15,053 2262.84 404.412
Employees Cost 11870.794 266.16 83.6 50.12 19.2
Communication 452.826 193.76 122.2 104.26 24.278
Rent 728.042 38.24 12.8 25.32 49.8
Planning and Designing 290.362 38.8 10.4 184.42 372.08
Project Management and

351.568 1412.2 3780.25 303.54 239.46
Performance
Operation Support 182.688 1452.68 71.6 32.2 279.4
Technical Support 271.4 200.76 158 39.16 2
Keeping Current 271.206 25.74 24 1 31.8
Setup and configuring 183.654 206.2 44.4 23.44 10.68

COSTING
Averages of Resource consuming Activities of IT Companies ( ` in Crores)

Resource consuming Activities
WIPRO Infosys Tech HCL
TCS
Limited Limited Mahindra Technology
Service of equipments and

Programs 232.854 40.74 8.4 16.54 59.8
(maintenance and repairing)
Travelling and conveyance 477.09 70.18 39 22.58 0.368
Support for users 196.386 881.68 104 353.1 109.666
Marketing Support 305.964 28.32 52 6.06 13.2
Advertisement and Sales

355.654 42.84 21.4 3.98 49.834
promotion
Supervision & Administration 192.724 260.2 6 25.72 63.756
Activities Total cost 18,095.05 19,618.16 21,010 4032.40 10,158.16
Total Profit (or)Loss 20,373.88 7,760 4610 1430.62 1144.402
Total Sales Revenue 38,468.93 27,377.80 25,620 5438.36 11.302.56
Source: Compiled Data from IT Companies
Cost and Profit Analysis of Activities
Through the five years data of select IT companies’ resource companies though they follow similar type of cost accounting
consuming activities, the averages obtained in terms of cost and methodology in ascertainment of the cost i.e., ABC the activity
profit in per cent and presented through Table 2. The averages are wise cost and profit share by each and every activity as well
calculated using the following formulas; dominance of activities in sharing the cost and profit may differ
Average per cent of resource consume activities cost quietly, because, the nature as well as expertise of the company
in performing various activities.
= X 100 As the present study is an analytical one with the upshot of
five case problems namely, TCS, Wipro Ltd, Infosys Ltd, Tech
Mahindra and HCL the data with regard to average activities cost
As well Average profit generated through the resource consume over total cost and average profit generated by such companies
activities as as analysed and compared.
It is evident from the table that in all five companies Employees
= Cost found as the first and foremost activity in taking the lion-
share of total cost as well generating highest volume of profit
The results of select IT Companies aer applying the above over the total profit. On the other hand, the activities that have
said formulas presented through the table 2 and explained taken least share in cost and generated lowest profit are: Set
analysis of average of resource consuming activities cost over up and configuring cost, Recruitment and Training, Marketing
total cost and proportion of profit generated by activities. IT support, Functional Requirement Analysis, Personal Power Cost

in the case of TCS, Wipro Ltd, Infosys Ltd, Tech Mahindra and HCL respectively. Hence, the other activities, viz, Document Creation,
Communication, Rent, Planning & Design, Project Management & Performance, Operation Support, Technical support, Keeping Current,
Service of equipment, Computing Cost, Travelling & Conveyance, Advertisement & Sales Promotion, Supervision & Administration have
taken averagely a similar share of the cost over the total cost and generated almost same level of per cent of profits over the total
profit during the study period (See table 2 for details).
TABLE: 2 ANALYSES OF AVERAGE ACTIVITIES COST OVER TOTAL COST AND PROPORTION OF PROFIT GENERATED BY
ACTIVITIES
Resource TCS Wipro Ltd Infosys Ltd TECH Mahindra HCL

consume
Activities Cost Profit Cost Profit Cost Profit Cost Profit Cost Profit
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Functional
Requirement 8.48 1727.944 19.126 1484.11 6.153 283.65 13.85 194.84 82.347 942.38
Analysis
Document
0.1761 35.88 -- -- -- -- -- --
creation
Recruitment &
0.913 186.028 0.5294 41.084 0.022 1.0531 0.485 6.818 0.6108 6.99
Training
Employees Cost 65.6 13365.86 54.057 4194.64 71.644 3302.81 56.114 788.86 3.9811 45.56
Communication 2.502 509.85 1.356 105.246 0.3978 18.34 1.24 17.47 0.19 2.163
Rent 4.023 819.733 0.987 76.617 0.581 26.81 2.585 36.347 0.2389 2.734
Planning & Design 1.604 326.94 0.1948 15.121 0.06 2.8085 0.627 8.827 0.4902 5.61
Project
Management& 1.9428 395.83 0.1977 15.342 0.0494 2.2819 4.573 64.292 3.662 41.909
Performance
Operation
1 205.66 7.196 558.419 18.572 856.2 7.53 105.81 2.3573 26.977
Support
Technical Support 1.4998 305.58 7.4027 574.426 0.3407 15.71 0.798 11.225 2.7505 31.476
Keeping Current 1.4987 305.356 1.023 79.385 0.752 34.66 0.9711 13.65 0.0196 0.225
Set up and
1.014 206.7799 0.1311 10.17 0.1142 5.265 0.0198 0.2788 0.313 3.582
Configuring
Service of
equipments
and programs 1.286 262.1764 1.05 81.536 0.211 9.742 0.581 8.171 0.1195 1.367
(Maintenance &
Repairing)

COSTING
Resource TCS Wipro Ltd Infosys Ltd TECH Mahindra HCL

consume
Activities Cost Profit Cost Profit Cost Profit Cost Profit Cost Profit
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Computing Cost -- -- 0.2076 16.109 0.0399 1.843 0.4101 5.766 0.5886 6.736
Personal Power
-- -- 0.3576 27.75 0.1856 8.5571 0.5599 7.8718 0.0036 0.0416
Cost
Travelling &
2.636 537.177 4.4929 348.638 0.4949 22.81 8.756 123.097 1.0795 12.354
Conveyance
Support for Users 1.0852 221.113 0.1443 11.198 0.2474 11.409 0.15 2.1126 0.1299 1.487
Marketing
1.6908 344.494 0.2183 16.94 0.1018 4.695 0.0986 1.3875 0.4905 5.613
Support
Advertisement &
Sales 1.9654 400.442 1.3259 102.88 0.02855 1.316 0.6378 8.966 0.6275 7.181
Promotion
Supervision &
1.065 217 -- -- -- -- -- -- -- --
Administration
Source: Data Progressed
Test of Hypothesis and Findings of one- tail 1.729132792 and two- tail 2.09302405. Hence,
it can be concluded that the Wipro Ltd., finds a significant
In order to examine the hypothesis of the study t-Test is profit generated through the resources consuming activities.
employed. Table 3 represents analysis of t-Test results: The Whereas, results of Infosys Ltd., at 19 degree of freedom and
First and foremost company is TCS, whose mean of average at 5% level of significance the calculated values through t-Test
activity cost is 4.99909 and profit is 1018.69. Similarly, the Wipro at one- tail and two- tails are 0.092411092 and 0.184822185
Ltd’s results are: 4.999865 as average activity cost and profit respectively; these values are less than the t-test critical values
generated is 387.98055, followed by Infosys Ltd , 4.9997625 of one- tail 1.729132792 and two- tail 2.09302405. Hence, it can
average activity cost and profit is 230.49803, whereas, TECH be concluded that the Infosys Ltd., company finds a significant
Mahindra’s Mean activity cost found as 5.231857895 and profit profits generated through the resources consuming activities .
generated through activities is 73.55887895 and finally, HCL In the case of Tech Mahindra at 18 degrees of freedom
Technology found the same as 5.256842105 in terms of Mean of and at 5% level of significance the calculated values of one- tail
average activity cost as well as profit as 60.15887368. However, and two- tail are 0.046767272 and 0.093534545 respectively;
through the analysis highest profit generated company is found these values are less than the t-test critical values of one- tail
as TCS and lowest profit generated company is HCL Technology. 1.734063592 and two- tail 2.100922037. Hence, it can be
Moreover, sample size of select five IT companies reported concluded that the Tech Mahindra Company finds a significant
that the Pearson Correlation is less than 1 or equal to 1.On the profits generated through the resource consuming activities t.
other hand, TCS Company at 19 degree of freedom and at 5% level Finally, t-Test result of HCL Technology at 18 degree of freedom
of significance reported the values through t-Test one- tail and and at 5% level of significance the calculated values of one- tail
two- tail are respectively 0.068239548 and 0.136479096, these and two- tail are 0.118243611 and 0.236487222 respectively; these
values are less than the t critical values of one- tail is 1.729132792 values are less than the t critical values of one- tail 1.734063592
and two- tail is 2.09302405. Hence, it can be concluded that the and two- tail 2.100922037. Hence, it can be concluded that the
TCS company finds a significant profits generated through the HCL Technology Company finds that a significant profits are
activities that consume resources. generated through the resource consuming activities. Therefore,
Similarly, t-Test results of Wipro Ltd., at 19 degrees of all the select five IT companies are generated significant profits
freedom and at 5% level of significance the calculated values of through the resources consuming activities (See table 3).
t-Test at one- tail and two- tails are 0.04363032 and 0.08726064
respectively, these values are less than the t-test critical values

Table: 3 Hypothesis Results: t-Test: Paired Two Sample for Means
Wipro
TCS Infosys Ltd TECH Mahindra HCL Technology
Ltd
www.icmai.in
Cost Profit Cost Profit Cost Profit Cost Profit Cost Profit
Mean 4.99909 1018.692165 4.999865 387.98055 4.9997625 230.49803 5.231857895 73.55887895 5.256842105 60.15887368
Variance 206.8035926 8584878.13 153.7943442 926028.0572 264.0675606 561204.9348 165.8977194 32787.92477 350.0735798 45847.58751
Observations 20 20 20 20 20 20 19 19 19 19
Pearson
0.99999999 1 1 0.999999983 1
Correlation
Hypothesized
Mean 0 0 0 0 0
Difference
September 2016
df 19 19 19 18 18
 The
t Stat -1.5548597 -1.80307174 -1.37601066 -1.77075380 -1.2246666
P(T<=t) one-
0.068239548 0.04363032 0.092411092 0.046767272 0.118243611
tail
t Critical one-
1.729132792 1.729132792 1.729132792 1.734063592 1.734063592
tail
P(T<=t) two-
0.136479096 0.08726064 0.184822185 0.093534545 0.236487222
tail
Management Accountant
t Critical two-
2.09302405 2.09302405 2.09302405 2.100922037 2.100922037
tail
87
Source: Computed in Excel v 2007
COSTING
As resources are fragile elements, the best cost management can optimize them properly
and ensure the better consumption that leads to cost. So accurate cost ascertainment is
essential to compute the cost and analyse profitability. Activity Based Costing (ABC)
is emerged to provide the accurate information of costs for finding strategies and mak-
ing rational decisions. ABC is a subset of Activity-Based Management (ABM), which
is used to identify and evaluate activity wise cost of the firms and adjudging the per-
r-
formance of the organizations. The study makes a modest attempt on the analysis of
activities of IT companies, resource consumption and profit generation of such activi-i
ties in an analytical way.
Organizations: An Exploratory Empirical Analysis of Finnish Firms’,

Conclusion Accounting Organizations and Society, Vol. 24, pp. 649-72.
7. Przemysław Lech. (2007). “Proposal of a Compact IT Value
Application of ABC analysis can easily be extended to IT Assessment Method” The Electronic Journal Information Systems
industry to ascertain the services cost accurately. The analysis Evaluation Volume 10 Issue 1, pp 73 - 82, available online at www.
ejise.com.
of activities that consumed resources and generated profits 8. James Gerlach, Bruce Neumann, Edwin Moldauer, Martha Argo,
reported that TCS is top in effective consumption of resources and Daniel Frisby. (September 2002). “Determining The Cost of IT
and generated profits and HCL is found as least one. The IT Services”, Journal of Applied Quantitative Method, Vol. 45, No.9.
companies should accept the key underlying philosophy of ABC 9. Benson, R., Tom Bugnitz and Walton, W. (2005). “IT planning in the
real World”, The Journal of Corporate Accounting and Finance, Vol
that the use of ABC and its complexity by the results of select 16 No 5, pp 35–40, doi:10.1002/jcaf.20133.
companies as a cushion agent. 10. Gusev, D.I. (2010). “Cost estimating technique for information
Hence, ABC analysis allows IT companies to identify the technology in enterprise information system Automation and
specific work steps pertaining to individual IT services and Remote Control”, Pleiades Publishing Limited Vol. 71, No. 9, pp.
1964–1966.
groups of services. Then, IT companies can identify the costs 11. Robert G.Fichman & Chris Kemerer. (2002). Activity Based Costing
that are required to provide IT services and expected to ‘go away’ For Component Based Soware Development. Information
from unnecessary costs. In that way ABC is the beer cost and Technology and Management, Kluwer Academic Publishers,
profitable measure and eliminates un-profitable activities costs Manufactured in The Netherlands, Vol.3, pp 137-160.
12. Valentina Gecevska., &. Zoran Anisic. (2006). Using of Activity
and services. However, as this example demonstrated, costs that Based Costing (ABC) in Small and Medium Companies. Annals of
do not ‘go away’ might be beer deployed by producing more the Faculty of Engineering Hunedoara, TOME IV, Fascicole 2, Serbia,
profitable IT services or even to serve customers with greater cost pp 141-150.
saving potential. MA 13. Vineet Chouhan. (2014). Activity Based Costing: A Case Study of
Selected Industrial Enterprises. Indian Institute of Finance, Vol .
XXVIV, No 4, December 2014, pp. 1345-1354.
References 14. Marius Mihut.,& Nicolae Toman. (2010). A Cost Model for the IT
1. Robin Cooper and Robert S. Kaplan. (September 1992). “Activity- Department. Journal of Applied Quantitative Method, Summer
Based Systems: Measuring the Costs of Resource Usage”, Accounting 2010,Vol.5, No.2.
Horizons. 15. Asiegbu, B. C., & Ahaiwe, J. (2011).Soware Cost Drivers and Cost
2. A. Gunasekaran, R. Mc NEIL and D.Singh. (2000). “Activity-Based Estimation in Nigeria. Interdisciplinary Journal of Contemporary
Management in a Small Company” Production planning & Control, Research in Business, December 2011, Vol. 3, No. 8.
Vol. II NO.4, pp 391-399.
3. Yolande Lievens, Ph.D;Walter van den Bogaert, Ph.D; and Katrien Foot Note
Kesteloot, Ph.D. (2003). “Activity-Based Costing: A Practical Model 1
ABC’s originators Robin Cooper’s and Robert Kaplan recommended
for Cost Calculation in Radiotherapy”, International Journal
Radiation Oncology Biology. Physics, Vol. 57, No. 2, pp. 522–535. it for economic, normative, realistic and deterministic reasons that are,
4. Roztocki N and Weistroffer H R. (2006). “Stock Price Reaction to it represents best value, accurately represents financial events and
Investments in Information Technology: The Relevance of Cost aids rational decision making and contracting. Alleged benefits include:
Management Systems” The Electronic Journal Information Systems
increased cost awareness and understanding; beer tracing of costs to
Evaluation, Volume 9 Issue 1, pp 27-30, available online at www.
ejise.com. objects; superior allocation of overheads to cost objects; and financial
5. Gunasekaran, A and Sarhadi, M. (1998). “Implementation (cost driver rates) and non-financial (cost driver volumes) measures for
of activity-based costing in manufacturing”, cost management and operational decision (Hopper & Major, 2007).
International Journal of Production Economics, Vol 56,
No 57, pp. 231-242. 2.
6. Malmi, T. (1999). ‘Activity-Based Costing Diffusion across Group of activities

ANNEXURE
Table 1: Resources consuming Activities of TCS from 2008-09 to2012-13
Financial Years ( ` in Crores) Average of
Resource consume Resource
Activities consume
2008-09 2009-10 2010-11 2011-12 2012-13 Activities
1,933.55 (95.74) 1534.66
1068.26 1,031.2(-3.46) 987.79 (-4.21) 2,652.50 (37.18)
Functional
Requirement analysis
[9.88 %] [8.19 %] [6.99 %] [9.54 %] [8.12%]
33.67 54.39 (61.53) 16.17 (-70.27) 20.08 (24.18) 35.07 (74.65) 31.876
Document Creation
[0.331 %] [0.43 %] [0.11 %] [0.09 %] [0.10%]
173.03 120.9(-30.07) 112.21 (-7.25) 170.76 (52.17) 249.13 (45.89) 165.206
Recruitment and training
[1.60%] [0.96 %] [0.78 %] [0.84 %] [0.76%]
7,370.0(23.63) 11870.794
5961.17 7,882.43 (6.95) 14,100.41(78.88) 24,039.96(70.49)
Employees Cost
[58.58 %]
[55.16 %] [55.45 %] [69.63 %] [73.67%]
308.42 390.33 (26.55) 422.87 (8.33) 375.6 (-11.17) 766.91 (104.18) 452.826
Communication
[2.85 %] [3.10 %] [2.97 %] [1.85 %] [2.35%]
Rent 423.85 595.89 (40.58) 720.53 (20.91) 734.77 (1.97) 1165.17(58.57) 728.042
[3.92%] [4.73%] [5.06%] [3.62%] [3.57%]

290.362
264.87 221.3(-16.43) 464.24(109.74) 258.84 (-44.24) 242.56 (-6.28)
Planning and Designing
[2.45 %] [1.79 %] [3.26 %] [1.32 %] [0.74%]
387.68 (-8.46) 351.568

315.26 423.51 (34.33) 312.66 (-19.35) 318.73 (1.94)
Project Management and
Performance [2.7 2%]
[2.91 %] [3.36 %] [1.54 %] [0.97%]
182.688
218.29 164.49 (24.64) 158.49 (-3.64) 184.69 (16.53) 187.48 (1.51)
Operation Support
[2.02%] [1.30%] [1.11%] [0.92 %] [0.57%]
379.69 271.4
467.28 (23.06) 145.89(-68.77) 234.56 (60.77) 129.58 (-44.75)
Technical Support
[3.51%] [3.71%] [1.02%] [1.15 %] [0.39%]
271.206
158.22 196.23 (24.02) 233.72 (19.10) 292.1 (24.97) 475.76 (62.87)
Keeping Current
[1.46%] [1.55%] [1.64%] [1.44 %] [1.45%]
88.46 146.89 (66.07) 345.6 (135.31) 126.76 (-63.32) 210.56 (66.10) 183.654
Setup and configuring
[0.81%] [1.16%] [2.43%] [0.62 %] [0.64%]
Service of equipments and 145.53 232.854
176.53 (21.30) 212.77 (20.52) 219.67 (3.24) 409.77 (86.53)
Programs
(maintenance and [1.34%]
[1.40%] [1.49%] [1.08 %] [1.25%]
repairing)

COSTING

Activities consume
2008-09 2009-10 2010-11 2011-12 2012-13 Activities
419.45 408.64 (-2.57) 341.9 (-16.33) 398.81 (16.64) 816.65 (104.77) 477.09
Travelling and conveyance
[3.88%] [3.24%] [2.40%] [1.96%] [2.50%]
168.43 (28.02) 196.386

112.29 113.45 (1.03) 456.2 (302.15) 131.56 (-71.16)
Support for users
[0.51%]
[1.03%] [0.90%] [3.20%] [0.64%]
218.38 224.46 (2.78) 305.964

245.68 (9.45) 455.66 (85.46) 385.64 (-15.36)
Marketing Support
[2.02%] [1.78%]
[1.72%] [2.25%] [1.18%]
355.654
169.48 328.46 (93.80) 949.02(188.93) 152.43 (-83.93) 178.88 (17.35)
Advertisement and Sales
promotion
[1.56%] [2.61%] [6.67%] [0.75%] [0.54%]
346.87 145.4(-58.06) 129.8 (-10.70) 145.89 (12.39) 195.66 (34.11) 192.724

Supervision &
Administration
[3.21%] [1.15%] [0.91%] [0.72%] [0.59%]
18,095.05
Activities Total cost 10,805.19 12,579.64 14,213.17 20,248.8 32,628.44
20,373.88
Total Profit (or)Loss 11,814.33 15,233.24 15,815.75 28,645.03 30,361.04
38,468.93
Total Sales Revenue 22,619.52 27,812.88 30,028.92 48,893.83 62,989.48
Source: Financial Reports

* Figures in ( ) are growth rates
** Figures in [ ] are percentage in Activities Total Cost
Table 2: Resources consuming Activities of WIPRO Limited from 2008-09 to2012-13
Financial Years (` in Crores)

Average of
Activities consume
Activities
2008-09 2009-10 2010-11 2011-12 2012-13
Functional 3626.3 4546.3 (25.37) 5037.6 (10.80) 3208.6 (-36.30) 2347.2 (-26.84)
3753.2
Requirement analysis [26.11%] [27.32%] [28.08%] [13.51%] [9.06%]
70.4 41.1 (-41.61) 151.3 (268.12) 127.1 (-15.99) 129.6 (1.96)

Recruitment and training 103.9
[0.50%] [0.24%] [0.84%] [0.53%] [0.50%]
7065.5 9100.4 (28.80) 9035.6 (-0.71) 12,660.5(40.11) 15177.6(19.88)

Employees Cost 10607.92
[50.88%] [54.69%] [50.37%] [53.30%] [58.64%]
240.8 (11.53)
261 197 (-24.52) 215.9 (9.59) 416.1 (72.79)
Communication 266.16
[1.87%] [1.18%] [1.20%] [1.60%]
[1.01%]
128.6 166.7(29.62) 184.8(10.85) 215.4(16.55) 273.3(26.88)
Rent 193.76
[0.92] [1.00%] [1.03%] [0.90%] [1.05%]

Average of
Activities consume
Activities
2008-09 2009-10 2010-11 2011-12 2012-13
32.4 25.6 (-20.98) 34.8 (35.93) 48.8 (40.22) 49.6(1.63)

Planning and Designing 38.24
[0.23%] [0.15%] [0.19%] [0.20%] [0.19%]
Project Management and 25.6 36.5 (42.57) 40.1 (9.86) 43.6 (8.72) 48.2 (10.55)
38.8
Performance [0.18%] [0.22%] [0.22%] [0.18%] [0.18%]
1392.6 1076.3(-22.7) 1452.8 (34.98) 1514.7 (4.26) 1624.6 (7.25)

Operation Support 1412.2
[10.02%] [6.46%] [8.10%] [6.37%] [6.27%]
110.9 110.9 (0) 134.8 (21.55) 3354.4(2388.42) 3552.4 (5.90)

Technical Support 1452.68
[0.79%] [0.66%] [0.75%] [14.12%] [13.72%]
153.2 186.3 (21.60) 200.5 (7.62) 233.4 (16.40) 230.4 (-1.28)

Keeping Current 200.76
[1.11%] [1.11%] [1.11%] [0.98%] [0.89%]
16.4 18.4 (12.19) 23.8 (29.34) 34.2 (43.69) 35.9 (4.97)

Setup and configuring 25.74
[0.11%] [0.11%] [0.13%] [0.14%] [0.13%]
Service of equipments
and programs 56.5 78 (38.05) 133.6 (71.28) 431.1 (222.67) 331.8 (-23.03)
206.2
(maintenance and [0.40%] [0.46%] [0.74%] [1.81%] [1.28%]
repairing),
25.2 34.8 (38.09) 42.6 (22.41) 49.5 (16.19) 51.6 (4.24)
Computing Cost 40.74
[0.18%] [0.20%] [0.23%] [0.20%] [0.19%]
53.4 62.3 (16.66) 71.4 (14.60) 81.7 (14.42) 82.1 (0.48)

Persons Power Cost 70.18
[0.38%] [0.37%] [0.39%] [0.34%] [0.31%]
504.2 668.4 (32.56) 856.4 (28.12) 1094.7 (27.82) 1284.7 (17.35)

Travelling and conveyance 881.68
[3.63%] [4.01%] [4.77%] [4.60%] [4.96%]
15.4 20.8 (35.06) 27.8 (33.65) 34.5 (24.10) 43.1 (24.92)

Support for users 28.32
[0.11%] [0.12%] [0.15%] [0.14%] [0.16%]
26.8 31.6 (17.91) 43.2 (36.70) 52.8 (22.22) 59.8(13.25)

Marketing Support 42.84
[0.19%] [0.18%] [0.24%] [0.22%] [0.23%]
Advertisement and Sales 347 238.5 (-31.26) 247.9 (3.94) 323.1 (30.33) 144.5 (-55.27)
260.2
promotion [2.49%] [1.43%] [1.38%] [1.36%] [0.55%]
16,639.9 17,934.9 23,748.9 25,882.5

Activities Total Cost 19,618.16
13,884.6
Total Profit (or)Loss 6,095 9,059.6 8,365.6 7,934 7,344 7,760
Total Net Sales(Revenue) 19,979.6 25,699.5 26,300.5 31,682.9 33,226.5 27,377.80


COSTING
Table 3: Resources consuming Activities of Infosys Limited from 2008-09 to2012-13

Average of
Activities consume
2008-09 2009-10 2010-11 2011-12 2012-13 Activities
Functional
1,081 1,037 (-4.07) 1,083 (4.43) 1,386 (27.97) 1877 (35.42)
Requirement 1293
[8.36%] [6.33%] [5.34%] [5.52%] [6.17%]
analysis
Recruitment and 3 6 (100) 2 (-66.66) 5 (150) 8 (60)
4.8
training [0.02 %] [0.03%] [0.009%] [0.019%] [0.02%]
8,590 10,913 (27.04) 14,856 (36.13) 18,340 (23.45) 22,565(23.03)

Employees Cost 15,053
[66.50%] [66.67%] [73.26%] [73.13%] [74.19%]
57 58 (1.75) 84 (44.82) 94 (11.90) 125 (32.97)

Communication 83.6
[0.44%] [0.35%] [0.41%] [0.37%] [0.41%]
Rent 50 60 (20) 62 (3.33) 190 (206.45) 249 (31.05)
122.2
[0.38%] [0.36%] [0.30%] [0.75%] [0.81%]
Planning and 12 10 (-16.66) 13 (30) 14 (7.69) 15 (7.14)

12.8
Designing [0.09 %] [0.06%] [0.06%] [0.05%] [0.04%]
Project
8 6 (-25) 10 (66.66) 13 (30) 15 (15.38)
Management and 10.4
[0.06%] [0.03%] [0.04%] [0.05%] [0.04%]
Performance
2690 3812 (41.71) 3795 (-0.44) 4390 (15.67) 4824 (9.88)
[20.82%] [23.28%] [18.71%] [17.50%] [15.86%]
56 62 (10.71) 55 (-11.29) 90 (63.63) 95 (5.55)

[0.43%] [0.37%] [0.27%] [0.35%] [0.31%]
122 147 (20.49) 122 (-17.00) 184 (50.81) 215 (16.84)

Keeping Current 158
[0.94 %] [0.89%] [0.60%] [0.73%] [0.70%]
Setup and 21 20 (-4.76) 22 (10) 28 (27.27) 29 (3.57)

24
configuring [0.16%] [0.12%] [0.10%] [0.11%] [0.09%]
Service of
equipments and
27 25 (-7.40) 22 (-12) 64 (190.90) 84 (31.25)
Programs 44.4
[0.20%] [0.15%] [0.10%] [0.25%] [0.27%]
(maintenance and
repairing)
4 6 (50) 8 (33.33) 12 (50) 12 (0)
Computing Cost 8.4
[0.03%] [0.03%] [0.03%] [0.04%] [0.03%]
28 38 (35.71) 34 (-10.52) 43 (26.47) 52 (20.93)

Persons Power Cost 39
[0.21%] [0.23%] [0.16%] [0.17%] [0.17%]
Travelling and 97 108 (11.34) 61 (-43.51) 129 (111.47) 125 (-3.10)

104
conveyance [0.75%] [0.66%] [0.30%] [0.51%] [0.41%]
46 39 (-15.21) 35 (-10.25) 60 (71.42) 80 (33.33)

Support for users 52
[0.35%] [0.23%] [0.17%] [0.24%] [0.26%]
15 15 (0) 11 (-26.66) 29 (163.63) 37 (27.58)

[0.11%] [0.09%] [0.05%] [0.11%] [0.12%]

Average of
Activities consume
2008-09 2009-10 2010-11 2011-12 2012-13 Activities
Advertisement and 10 6 (-40) 3 (-50) 6 (100) 5 (-16.66)

6
Sales promotion [0.07%] [0.03%] [0.01%] [0.02%] [0.01%]
Activities Total
12,917 16,368 20,278 25,077 30,412 21,010
Cost
Total Profit (or)

2,731 5,325 2,464 6,177 6,353 4610
Loss
Total Net
15,648 21,693 22,742 31,254 36,765 25,620
Sales(Revenue)
Table 4: Resources consuming Activities of Tech Mahindra from 2008-09 to2012-13

Average of
Activities consume
2008-09 2009-10 2010-11 2011-12 2012-13 Activities
Functional 171.9 871.8 (407.15) 1,169.5 (34.14) 259.7 (-77.79) 321.6 (23.83) 558.9
Requirement analysis [6.33%] [22.74%] [25.10%] [6.46%] [6.50%]
Recruitment & 25.2 17 (-32.53) 11.8 (-30.58) 18.4 (55.93) 25.4 (38.04)
19.56
Training [0.92%] [0.44%] [0.25%] [0.45%] [0.51%]
1,559.9 1,855.6(18.95) 1,943.8 (4.75) 2,604.7 (34.00) 3,350.2(28.62)

Employees Cost 2262.84
[57.46%] [48.41%] [41.72%] [64.87%] [67.78%]
8.3 13.1 (57.83) 73.9 (464.12) 65.8 (-10.96) 89.5 (36.01)

Communication 50.12
[0.30%] [0.34%] [1.58%] [1.63%] [1.81%]
79 76.7(-2.91) 103.1(34.41) 124(20.27) 138.5(11.69)

Rent 104.26
(2.91%) (2.00%) (2.21%) (3.08%) (2.80%)
Planning and 14.6 15.9 (8.90) 23.4 (47.16) 34.2 (46.15) 38.5 (12.57)
25.32
Designing [0.53%] [0.41%] [0.50%] [0.85%] [0.77%]
Project Management 75.1 232.8 (209.98) 384.6 (65.20) 107.0 (-72.17) 122.6 (14.57)
184.42
and Performance [2.84%] [6.19%] [8.44%] [2.74%] [2.55%]
189.3 286.1 (51.13) 393.2 (37.43) 298.5 (-24.08) 350.6 (17.45)

[6.97%] [7.46%] [8.44%] [7.43%] [7.09%]
9.6 31.2 (225) 68.5 (119.55) 22.3 (-67.44) 29.4 (31.83)

[0.35%] [0.81%] [1.47%] [0.55%] [0.59%]
3 12.5 (-62.12) 24.9 (99.2) 55 (120.88) 70.4 (28)

Keeping Current 39.16
[1.21%] [0.32%] [0.53%] [1.36%] [1.42%]

COSTING

Average of
Activities consume
2008-09 2009-10 2010-11 2011-12 2012-13 Activities

Setup and 0.3 (100) 1.5 (400) 1.2 (-20) 1.0 (-16.66)
1
configuring [0.007%] [0.03%] [0.02%] [0.02%]
Service of
equipments and
6.3 19.2 (204.76) 23.9 (24.47) 27.5 (15.06) 40.3 (46.54)
Programs 23.44
[0.23%] [0.50%] [0.51%] [0.68%] [0.81%]
(maintenance and
repairing)
2.4 15.6 (550) 28.6 (83.33) 17.8 (-37.76) 18.3 (2.80)
Computing Cost 16.54
[0.08%] [0.40%] [0.61%] [0.44%] [0.37%]
12.4 8.6 (-30.64) 18.7 (117.44) 32.6 (74.33) 40.6 (24.53)

22.58
Persons Power Cost [0.45%] [0.22%] [0.40%] [0.81%] [0.82%]
Travelling and 506.2 344.2 (-32.00) 348.7 (1.30) 293.7 (-15.77) 272.7 (-7.15)
353.1
conveyance [18.64] [8.98%] [7.48%] [7.31%] [5.51%]
4.6 6 (30.43) 9 (50.0) 10.4 (15.55) 0.3 (-97.11)

[0.16%] [0.15%] [0.19%] [0.25%] [0.006%]
2.8 3.6 (28.57) 4.2 (16.66) 3.5 (-16.66) 5.8 (65.71)

[0.10%] [0.09%] [0.09%] [0.08%] [0.11%]
13.7 22.7 (65.69) 27 (18.94) 38.7 (43.33) 26.5 (-31.52)
Advertisement and
25.72
Sales promotion
[0.50%] [0.59%] [0.57%] [0.96%] [0.53%]
2,714.3 3,832.2 4,658.3 4015 4,942.2
Activities Total Cost 4032.40
Total Profit (or)Loss 890.4 524.9 481.9 2,504.6 2,751.3 1430.62
Total Net
3,604.7 4,357.8 5,140.2 6,395.6 7,693.5 5438.36
Sales(Revenue)
Table 5: Resources consuming Activities of HCL Technology from 2008-09 to2012-13

Activities consume
2008-09 2009-10 2010-11 2011-12 2012-13 Activities
Functional 9,492 9,245 (-2.60) 8,268 (-10.56) 8,184 (-1.01) 6,636 (-18.91)
8,365
Requirement analysis (85.45%) (85.51%) (79.80%) (81.24%) (78.63%)
Recruitment and 66.92 73.32 (9.56) 60 (-18.16) 52 (-5) 48 (-7.01)

60.048
Training (0.60%) (0.67%) (0.57%) (0.56%) (0.62%)

Activities consume
2008-09 2009-10 2010-11 2011-12 2012-13 Activities
293 326 (11.26) 448.31 (37.51) 459.99 (2.60) 494.76 (7.55)

Employee Cost 404.412
(2.63%) (3.01%) (4.32%) (4.56%) (5.86%)
Communication 12 11 (-8.33) 44 (300) 15 (-65.90) 14 (-6.66)
19.2
Expenses (0.10%) (0.10%) (0.42%) (0.15%) (0.16%)
18.39 23 (25.06) 25 (8.69) 26 (4.00) 29 (11.53)
Rent 24.278
(0.16%) (0.21%) (0.24%) (0.25%) (0.34%)
Planning and 52 46 (-11.53) 48 (4.34) 59 (22.91) 44 (-25.42)
49.8
Designing (0.46%) (0.42%) (0.46%) (0.58%) (0.52%)
Project Management 484 379 (-8.80) 308.4 (-18.73) 390 (26.62) 299 (-23.33)
372.08
and Performance (4.35%) (3.50%) (2.97%) (0.54%) (3.54%)
174.3 189.64 (8.80) 275.4 (45.22) 277.66 (0.82) 280.3 (0.95)
(1.56%) (1.75%) (2.65%) (2.75%) (3.32%)
213 254 (19.24) 269 (5.90) 314 (16.72) 347 (10.50)
(1.91%) (2.34%) (2.59%) (3.12%) (4.11%)
2 2 2 2 2
Keeping Current 2
(0.01%) (0.01%) (0.01%) (0.01%) (0.02%)
46 32 (-30.43) 21 (-34.37) 33 (57.14) 27 (-18.18)
Setup and configuring 31.8
(0.41%) (0.29%) (0.20%) (0.32%) (0.32%)
Service of equipments
and programs 8.73 11.04 (26.46) 16.64 (50.72) 12.63 (-24.09) 11.66 (-7.68)
10.68
(maintenance and (0.07%) (0.10%) (0.16%) (0.12%) (0.13%)
repairing)
74 65 (-12.16) 49 (-24.61) 68 (38.77) 43 (-36.76)
Computing Cost 59.8
(0.66%) (0.60%) (0.47%) (0.67%) (0.50%)
0.22 0.32 (45.45) 0.46 (43.75) 0.38 (179.58) 0.46 (21.05)
Persons Power Cost 0.368
(0.001%) (0.002%) (0.004%) (0.003%) (0.005%)
Travelling and 32.82 30.45 (-7.22) 388.74(1176.65) 47.22 (-87.85) 49.1 (3.98)
109.666
conveyance (0.29%) (0.28%) (3.75%) (0.47%) (0.58%)
12 14 (16.66) 11 (-21.42) 16 (45.45) 13 (-18.75)
(0.10%) (0.12%) (0.11%) (0.15%) (0.15%)
55.32 51.68 (-6.57) 50.32 (-2.63) 46.95 (-6.69) 44.9 (-4.36)
(0.49%) (0.47%) (0.48%) (0.46%) (0.53%)
Advertisement and 71.53 57.06 (-20.22) 74.9 (31.26) 64.29 (-14.16) 51 (-20.67)
63.756
Sales promotion (0.64%) (0.52%) (0.72%) (0.63%) (0.60%)
Activities Total Cost 11,108.23 10,810.51 10,359.77 10,073.12 8,439.18 10,158.16
Total Profit (or)Loss 1258.54 1526.3 1188.23 823.44 925.5 1144.402
Total Net
12,366.77 12,336.81 11,548 10,896.56 9,364.68 11.302.56
Sales(Revenue)


THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
(STATUTORY BODY UNDER AN ACT OF PARLIAMENT)
MANAGEMENT ACCOUNTANCY
EXAMINATION TIME TABLE & PROGRAMME – DECEMBER 2016
Saturday Saturday Sunday Sunday Monday

10th December, 2016 10th December, 2016 11th December, 2016 11th December, 2016 12th December, 2016
09.30 A.M to 12.30 P.M 02.00 P.M to 05.00 P.M 09.30 A.M to 12.30 P.M 02.00 P.M to 05.00 P.M 09.30 A.M to 12.30 P.M
Management Advanced Management Industrial Relations & Marketing Organisation & Economic Planning &
Accountancy Techniques Personnel Management Methods Development
96 The Management Accountant


EXAMINATION FEES
Per Group Rs 2500/-
1. (a) Application Form for Management Accountancy Examination is available from Directorate of Advanced Studies, The Institute of Cost Accountants of India, Hyderabad Centre of Excellence, Plot No. 35, Financial District, Nanakramguda
Village, Serilingampally Mandal, Gachibowli, Ranga Reddy District, Hyderabad on payment of Rs 50/- per form.
September 2016
(b) Students can also download the Examination Form from ICAI Website at www.icmai.in.
2. Last date for receipt of Examination Application Form without late fees is 30th September, 2016 and with late fees of Rs 300/- is 10th October,2016.
3. Examination fees to be paid through Demand Draft of requisite amount drawn in favour of “The Institute of Cost Accountants of India” and payable at Kolkata.
4. Students may submit their Examination Application Form along with the requisite amount at the Directorate of Advanced Studies, The Institute of Cost Accountants of India, Hyderabad Centre of Excellence, Plot No. 35, Financial District,
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Nagpur, Naihati, Nasik, Nellore, Neyveli, Noida, Panaji (Goa), Patiala, Patna, Pondicherry,PortBlair, Pune, Rajahmundry, Ranchi, Rourkela, Salem, Sambalpur, Shillong, Siliguri, Solapur, Srinagar, Surat,
Thrissur, Tiruchirapalli,Tirunelveli, Trivandrum, Udaipur, Vapi, Vashi, Vellore, Vijayawada, Vindhyanagar, Waltair and Overseas Centres at Bahrain, Dubai and Muscat.
6. A candidate who is fulfilling all the conditions only will be allowed to appear for the examination.
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CMA M P S Arun Kumar
Dy.Director (Advanced Studies)
INSTITUTE NEWS
Eastern India Regional Council
s of India-
Cost Accountant
The Institute of
ter
Bhubaneswar Chap
a Personality &
20 16 th e chapter organized al
On Ju ly 3, for its pursuing fin
w Sk ill De ve lop ment programme y, on e of th e
Inter vie r Tripa th
ises. Shri Amit Kuma d
students at its prem ish a guided the stu de nt s an d sh are
ill tra ine rs at Od 20 16 a
best so sk ws. On July 17,
us tec hn iqu es be fore facing intervie of CS T in th e
vario eme ‘Review
was held on the th
Practitioner’s Meet dh ansu Kumar Sa hu , Pa st Ch air ma n
GS T’. CM A Su lty on
Context of and Guest Facu
M (Finance), CESU n,
of the chapter, DG d CM A B.B. Nayak, Chairma
rec t & Ind ire ct Ta x at Chapter an na nc e), GR ID CO
Di M (Fi
ment Commiee, DG
Professional Develop rso ns on th e said occasion. Va
rious
th e res ou rce pe in diff erent
Ltd were organized
ree r co un se lin g pr ogrammes had been ap ter an d NS DL
ca r. The Ch
16 at Bhubaneswa r on
colleges in July 20 or ga niz ed a se mi na
tructure Ltd jointly ess
e-Governance Infras (N PS )’ in as sociation with Busin
al Pe ns ion Sc he me M an as Ku ma r
‘Nat ion an. CMA
, 2016 at CMA Bhaw
Standard on July 24 ugur at ed th e se mi na r as
of the Institute ina r and
Thakur, President ra nja n M ish ra, Council Membe
Gu es t an d CM A Ni i ee of the
Chief tion Comm
Chapters Co-ordina C.
Chairman, RCs & Sh iba Prasad Pa dh i, RC M , CM A
lka ta , CM A air ma n,
Institute, Ko r and Ch
a Ra ma na , Re gio nal Council Membe ut e, CM A
Venkat of the Ins tit
ud en ts Fa cil ita tio n Commiee, EIRC Bh us an Na ya k,
St Bibhut i
Chairman , CMA CM A
Siba Prasad Kar, De ve lop me nt Co mm i ee &
n, Pr of es sio na l on g ot her
Ch air ma apter were am
mo da r M ish ra , Secretary of the ch sp ea ke rs in the
Da nar. The
present in the semi Vice
eminent members uk he rje e, As sis ta nt
re Shri Prasenjit M bai,
technical session we na nc e In fra structure Ltd., Mum
nt , NS DL e-G ov er ov er na nce
Pres ide , NSDL e-G
ukherjee, Manager the
Shri Sandeepan M who deliberated in de ta il ab ou t
re Lt d., Ko lka ta th y, G. M
Infrastructu N.B.Tripa
al Pe ns ion Sy ste m (NPS)’ and CMA pla nn ing &
‘Nation st retireme nt
na nc e), NA LC O Ltd addressed on ‘Po ion ’, M r. Pr as en jit
(Fi ganizat
– perspective of or to a
employee and NPS nu an ce s an d benefits of NPS
rje e ex pla ine d th e ma r Na yak,
Mukhe A Uam Ku
ck ed an d int era ctive audience. CM co or din at ed the
pa ur er of the chapter
m tre as e
Vice Chairma n cu ganized to ma th rk
l se ss ion . A pr es s meet was also or rio us pr es s
technica ended by va
na r an d hig hli gh t the profession a
semi
representatives.
and electronic media
www.icmai.in
n September 2016  Th
The
he Management
M
Ma nagement Acc
Accountant
c o u ntant 97
97
INSTITUTE NEWS
The Institute o
f Cost Accoun
South Odisha tants of India
Chapter -
Th e Ch ap te r
ce le br at ed th
Independence Da e 70 th N at io
y at its premise na l
Bihari Nayak, ch s unfurled by CM
airman of the ch A Binod
the importance apter. He narra
of the day and ted about
sacrificed for th said how the pa
e nation in free triots had
clutches of the ing our nation
British rule. He from
the discipline to also emphasized the
be maintained about
as well as by th by the students
e staff. , faculties
The Institute
of Cost Accou
Durgapur Cha ntants of Ind
pter ia
a-
On August 11,
2016 the Chap
counseling prog ter organized
ramme at DAV a careerr
the support of model school, Du
Headquarters rgapur with
Kumar Chakra of the Institute
barti, secretar . CMA Susit
Somaddar, man y of the chapte
aging commi r, CMA P.K.
Bhaacharya, ee member an
RCM were also d CMA S.K.
and interacted present in the
with the studen programme
chapter organi ts. On the sam
zed a professio e day the
on ‘Income Dec nal developmen
laration Schem t programme
Keshari, IRS, Jo e 2016’. Shri,
int Commissione Ajay Kumar
w as th e ch ie r of Income Ta
f gu es t an d x, Durgapur
programme was sp ea ke r on th
chaired by Shri e to pi c. Th e
and CMA P.K.N S.K. Bhaacha
ayak, Vice Chai rya, RCM
rapporteur of th rman of the ch
e programme. Sh apter was the
Durgapur was ri Deepak Kedia,
also present in IRS, ACIT,
Islam Chowdhur the programme.
y, a senior mem CMA Rafikul
vote of thanks. ber of the chap
On August 15, ter gave the
had been celebr 2016 the indepe
ated at the ch ndence day
Vice Chairman apter and CMA
of the chapter un P.K.Nayak,
programme was furled the natio
aended by th nal flag. The
chapter. e members and
staffs of the
988 The Ma
Management
a na
na
nagement Accou
Accountant
u nt
ntaan
a nt  September 2016 www.icmai.in
w w w.icmai.in
Northern India Regional Council
Th e Re gio n or ga
ni ze d a Re sid en
Convention from tia l Re gio na l
June 10, 2016 till
the very first tim June 12, 2016 for
e at Kufri, Shimla
was based on ‘CM and the theme
As- Enablers of Pa
Business Strategie radigm Shi in
s’. Chief Guest, M
honorable MLA of r. Anirudh Singh,
the local constitue
the convention an ncy inaugurated
d had detailed dis
the use of technic cussions regarding
al expertise of CM
Pradesh and his co As for Himachal
nstituency as well
infrastructure proje especially in the
cts of the state go
C Bajaj, Former Pr vernment. CMA D
esident of the Insti
member of AERA ina tute and present
ugurated the techn
shared his views on ical session and
the changing and
of CMAs in various challenging roles
projects of Govern
On June 11 and 12, ment of India.
2016 during this co
Conclave was held nvention, a C F O
and chaired by Shri
President of the Ins D C Bajaj, Former
titute & present me
aended by Mr Sa mber of AERA and
njeev Sharma, Direc
Ltd., Mr S K Jaiswal, tor Finance, MDS
Director (Cost), Mini
Mr N K Grover, GM stry of Defence,
(F & A) CWC. Durin
key role of CMAs in g the conclave,
the public as well as
was discussed and corporate sector
contribution which
in sectors like Electr CMAs can make
icity, Railways, Wat
where huge money er Resources etc.
of Government had
also discussed. On been invested was
June 21, 2016, the
the second Intern Region observed
ational Yoga Day
CMA Bhawan, Ne celebrations at
w Delhi. On June
first time in the his 26, 2016, for the
tory of NIRC, CM
had been organized A Lady Summit
with special emph
eminent personalit asis on GST. The
ies included Pada
Kidwai Ji, Eminent mshree Naina Lal
Banker and Former
Bank, presently wo Chairman HSBC
rking as Chairperso
Services, Ms. Mee n Max Financial
nakshi Lekhi Ji, Ho
of Parliament, Ms. norable Member
Sarika Choudhary
Commission for W Ji, Member, Delhi
omen in the pres
Bhaad Immediate ence of CMA PV
Past President, CM
Thakur, President A Manas Kumar
of the Institute, CM
Vice President of A Sanjay Gupta,
the Institute. The
a seminar on ‘Pane Region organized
l Discussion on GS
Economics’ on July T Theories and
3, 2016 at CMA Bh
Keynote speaker, awan, New Delhi.
Mr. Krishnan Agar
Indirect Tax, Deloi wal, Sr. Manager
e Haskins & Sells
Rakesh Bhalla, fo LLP. and CMA
rmer Chairman, NI
Agarwal and CMA RC. Mr. Krishnan
Rakesh Bhalla share
experience and the d their valuable,
knowledge on the
above theme.
www.icmai.in
The
he Management
M
Ma nagement Acc
Accountant
c o u ntant 99
99
INSTITUTE NEWS
The Institute
of Cost Accou
Jaipur Chapte ntants of Ind
r ia-
The Chapter co
nducted career
its premises fro counseling prog
m July 16, 2016 rammes at
tenure, CMA P. till July 28, 2016
D. Agrawal, Dire . During this
of staff membe ctor Coaching
rs explained th and his team
including career e students abou
prospects aer t CMA Course
large number of qualifying the CM
students aende A Course. A
d the counselin
g programs.
Southern India Regional Council
The Institute of Co
st Accountants of
Bangalore Chapte India-
r
On August 6, 2016
the chapter organiz
inaugurating the 10 ed an event of
0th batch of oral co
CMA Manas Kuma aching classes by
r Thakur, President
he delivered the ina of the Institute and
ugural address. CM
Chairman-coachin A Chidambara G,
g of the chapter pr
the coaching activitie ovided update on
s and emphasized on
of the chapter on the focus areas
the same. CMA YH
Suresh Gunjalli, CM Anegundi, CMA
A V Murali, CMA GN
addressed the stude Venkataraman
nts and highlighted
the importance
100
10
0 0 The Ma
Management
a na
na
nagement Accou
Accountant
u nt
ntaan
w w w.icmai.in
and opportunities fo
r the profession an
on how to succee d guided students
d in the Institute
make a great caree examinations and
r from the professio
2016 the chapter ce n. On August 15,
lebrated the 70th Ind
at its premises. Shri ependence Day
B.K. Murali, Air Vic
and Dr. Manish Mok e Marshal (Retd.)
shagundam, Journa
in the celebrations list participated
. The National Fla
CMA Girish K, Chair g was hoisted by
man of the chapter
of the dignitaries, me in the presence
mbers and student
shared his experie s. Sri B K Murali,
nce in the Army.
of CSR initiative, CM Further as a part
A Girish K, chairma
R Sreepada, vice-c n and CMA H
hairman along wi
Managing Commi th CMA Geetha,
ee Member visited
School in Puenaha the Government
lli, Bangalore and dis
bags to students. tributed school
www.icmai.in
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INSTITUTE NEWS
ta nts of India-
f Cost Accoun
The Institute o
apter
Hyderabad Ch
eak
, Director, Fastbr
ly 3, 20 16, CM A N. Srinivasan d w orksho p
On Ju d a detaile
pete nc ed ev Pv t. Ltd conducte in g th e profi le/
Com for prep ar
about the tips nized a
to the students , 20 16 th e chapter orga
O n Ju y
ly 22
resume.
organized by
m m e on ‘L ook at CMA’ the
student prog ra . He explained
Zi te nd ra Ra o, Member, SIRC d al so ro le
CMA D. the Cost an
en ts ab ou t th e relevance of or ga ni za tio n.
stud
em en t Ac co untant’ in an uc te d
of the ‘Manag were cond
re er co un se lin g programmes lle ge s of
Various ca co
16 at various
tes of July 20
at different da
Hyderabad.
102
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The Institute o
f Cost Accoun
Coimbatore Ch tants of India
apter -
O n Ju ly 16 , 20
16 th e Ch ap te
pr og ra m m e on r or ga ni ze d a
th e th em e ‘C PD
Accounting – Co os t & M an ag
rporate Planni em en t
Prakash, Sr. Co ng Tool’ where
st Accountant CMA P.
Mills P Ltd., Co , Premier Spg
imbatore gave & Weaving
with practical a lecture on th
illustrations. e topic
On July 31, 20
16 another
PD programme
on ‘Fitness Tips
conducted whe for Day to Day
re Dr. R. Muthu Life’ was
Surgeon, ESI Co kumar, Retired
imbatore provid Senior Civil
presented a dem ed us
o of exercises. Va eful health tips and
programmes w rious career coun
ere conducted seling
2016 in different at different da
colleges of Coim tes of July
batore.
The Institute o
f Cost Accoun
-Trivandrum C tants of India
hapter
On June 21, 2016
the Chapter orga
development pr nized a professio
ogramme on th nal
Yoga Route’. Th e theme ‘Health
e guest speake Care – The
Practitioner an r was Sri V.J Is
d former Additio sac, Yoga
& Statistics Dep nal Director, Ec
artment, Govern onomics
Issac elaboratel ment of Kerala
y discussed abou . Sri V J
of yoga practic t the origin and
e and narrated benefits
style diseases case studies on
could be avoide how life
d by regularly
practicing
yoga exercises.
Chairman of th
Nair G S apprai e chapter, CMA
sed that practic Manoharan
healthy life an e of yoga is the
d avoiding med best way for
the Chapter ce icines. On Au
lebrated 70th In gust 15, 2016
Manoharan Nai dependence Da
r G S, chairman y where CMA
National Flag an of the chapter
d addressed th hoisted the
of members an e gathering. A
d students part large number
jointly recited th icipated in the
e National Anth function and
em.
www.icmai.in
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INSTITUTE NEWS
of India -
u te o f C o st Accountants
The Instit
m Chapter
Visakhapatna micians
ucted an ‘Acade
ly 20 , 20 16 th e chapter cond va Ra ma Kr ishna,
On Ju ie f gues t Prof K.Si
Meet’ at CMA Bh
aw an . Ch emphas d the
ize
an ce llo r, Gitam University e world
Ph.D Pro Vice – Ch ent competitiv
th e CM A co urse in the pres to En gi neering
need of an ce of CMA Course
and stressed th
e im po rt come a double
te st ud en ts so that they be and costing.
under gradua of engineering
both in the field
edged weapon
Assurance
ap te r an d the New India
On July 27, 2016
the Ch t programme on
es sio nal developmen m
Co Ltd organize
d a pr of Insurance Clai
ar en es s an d Role of CMA in t th e as se t
‘Insurance Aw ained abou
en t’. Sr i M . Anakaiah expl se ct or ge ne ral
Managem rgest publ ic
dia which is la that general
base of New In d sa id IR DA estimated
ny an e year
insurance co m pa kh crores by th
e pr em iu m w ill reach Rs 2 La e ro le of CMAs
insuranc an a Ra o ex plained th
Laks hm
2021. CMA U.
ors and loss

an d insured, survey s
in supporting
in su re rs conducted Pres
Au gu st 21 , 20 16, the chapter A Bh aw an
assessors. O n CM
llabus 2016 at
ing of CMA Sy Institute. CMA
Meet on launch dq ua rt er of th e
ruction of Hea r addressed on
as per the inst ai rm an of the chapte
v, Ch
P.V.N. Madha
the Meet.
104
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Western India Regional Council
The Region or
ganized a CEP
Present Scenar on ‘Role of CM
io – with resp As in
n
Restructuring ect to Project
of Loans’ on Ju Finance &
Mr. K. C. Jani, ly 15, 2016 at its
Ex-ED – IDBI Ba off
the programme nk was the spea ice.
who provided in ker for
finance, re-struc formation abou
turing of loans, t project
& Bankruptcy Ac new regulation
t and scope of like NCLT
areas. On July CMAs to excel
23, 2016 the Re in these
at Thane, SMFC gion organized
, where the first two CEPs
Law – Key feat one was on ‘M
ures of the dra odel GST
chairman of Ta Model GST Law
xation Commi ’ where
Ashok Nawal sh ee of the Institu
ared important te, CMA
GST Law. The features of dra
other CEP was Model
on ‘Amendmen
t in the
Companies (Cos
t Records &Aud
Deshpande, RC it) Rules, 2016’.
M, the speaker, CMA Harshad
industry covere gave the update
d like broadcas s about new
the Region cele ting sector. On
brated the 70th August 15, 2016
SMFC. CMA Pr Independence
adip H Desai, Day at Thane
National Flag. CM chairman, WIR
A Debasish Mitr C hoisted the
WIRC, CMA Ka a, immediate pa
ilash Gandhi, vi st chairman,
present in the pr ce chairman W
ogramme. IRC were also
The Institute
of Cost Acco
-Pimpri Chinch untants of In
wad Akurdi Ch dia
apter
The Chapter pa
rticipated in Ed
arranged by Lo ucation Fair –
kmat Group on Aspire 2016
Chapter conduc June 11 and 12
ted a seminar , 2016. The
Role of CMA in on Dra model
GST on June 18 GST Law and
session, CMA L , 2016. In the fir
D Pawar provid st technical
Model GST Law ed a lucid expl
with many exam anation of the
session, CMA Pr ples
adeep Deshpand . In the second technical
in GST. On June e explained the
21, 2016 the ch role of CMA
Yoga Day by co apter celebrated
nducting semin International
for Cost Acco ar on practical
untants. Yoga meditation
renowned yoga Guru, Ms. Dha
expert first co nashri Mulay,
explained the im nducted sessio
portance of Yo n wherein she
be useful for ou ga in daily life
r members to re and how it can
the chapter cond duce stress. On
ucted seminar July 23, 2016
by CMA L D Pa on New Return
war and gave a s under MVAT
subject. The ch detailed explan
apter conducte ation on the
GST’ by CMA L d a seminar on
D Pawar and CM ‘Discussion on
August 6, 2016 A Pradeep Des
. In the technica hpande on
a detailed expl l session CMA L.
anation on the D. Pawar gave
Deshpande expl GST Return an
ained the role of d CMA Pradeep
CMAs in GST.
www.icmai.in
The
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05
INSTITUTE NEWS
of India-Navi
u te o f C o st Accountants
The Instit
ter
Mumbai Chap
aching
tion for oral co
or ga ni ze d an inaugural func of Re lia nc e Jio
The Chapter A Ra jn ee sh Jain, CFO ce
batch on July
31, 2016. CM d the impo an rt
es t of th e fu nction explaine S. Pa nd ey ,
Infocom, the ch
ief gu n. Prof. B.
of glob al indu strial competitio hi Co lle ge Ar ts ,
a
of CMA in the er Co m m er ce of Rajiv Gand
til Co lle ge
tancy and r , Prof., K.B. Pa
HOD of Accoun an d Dr. Vivek Bhoi K. B. Patil
& Sc ie nc e, jo in tly w ith
Commerce ho no ur . The Chapter th e 70th
ts of bai celebrat ed
were the gues , Va shi, Navi Mum na l Flag of
m m er ce e N at io
College of Co st 15 , 20 16 where th ge.
Independence
Day on Au gu l, K. B Patil lle Co
Dr . V. S. Sh iv ankar, Principa
ed by
India was hoist
urat
st Acc o u n ta nts of India-S
of C o
The Institute
ra t Chapter
South Guja to ow
ogramme on ‘H
r or ga ni ze d a student’s pr s’ at the ch ap ter’s
The Chapte in atio n ie CMA exam d
essional ex am ticing CM an A
succeed in prof A P. D . M od h, senior prac itu de , go al
conference ha
ll. CM positive a
the themes viz rious
uc at io na lis t elaborated on ng pr io rit ies. He gave va
Ed d se i s,
anagemen t an work and te no
seing, time m he al so em ph asized on hard a CE P on
tips for prepar
ation, , 2016
udy. On July 17
tic al ex am pl es and case st ni ze d by th e chapter at its
s
prac d be en or ga g co t
st
lligence’ ha D. Modh, senior
practicin
‘Emotional Inte ea ke r, CM A P. d pr ov id d
ed
te sp ect an
office. The key no medabad dealt with the subj
un ta nt fro m Ah
acco
t it.
a brief idea abou d
In dia-Ahmedaba
ccountants of
T e Inst
Th itute of Cost A
Chapter ‘Over
programme on
e Ch ap te r or ganized a CEP La w ’ an d CMA
On July 9, 2016
th
e 20 16 & Model GST ,
Declaration Sc
he m ai Das Meh tra ro
View – Income th e ch ap te r w elcomed Shri Aj s to IC AI
asurer of inee
Hetal Shah, Jt tre and Govt. Nom
m m is si on er of Income Tax Jt . Co m m iss ioner, Shri H
Principal Co Ch au dh ar y, ,
ief Guest, Shri
P H Shreeram Kaza
council, the Ch ri De ep ak Pa rikh, ITO, Shri ic ip an ts .
missioner, Sh rs and pa rt
K Dev, Jt. Com bi c Ph ar m ac euticals, membe ex pl ai ne d th e
er, Alem ehrotra and his
team
General Manag ner
fir st se ss io n, Shri Ajai Das M 20 16 in a very lucid man
In the tio n Sc he m e, , Al em bic
me Declara l Manager
features of Inco Sh ri Sh re e Ra m Kaza, Genera w.
session, GST La
and in the 2nd presentation on
ac eu tic al s, Ba roda submied
Pharm
106
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ECONOMY & TAX UPDATES
Customs subject to such other condition”, the words “subject to
such conditions” shall be substituted;
Notifications: (ii) in condition (4b), the words “and following the procedure
Tariff: of in-bond movement of goods” shall be omied;
 The Central Government hereby makes the following (iii) condition (5) shall be omied;
further amendments in the notification of the Government of (iv) in condition (6), in clause (xiii), for the words and figures
India, in the Ministry of Finance (Department of Revenue), No. “Baggage Rules, 1998”, the words and figures “Baggage
96/2008-Customs, dated the 13th August, 2008 published vide Rules, 2016” shall be substituted;
number G.S.R. 590 (E), dated the 13th August, 2008, namely:- (v) in condition (11), for the words “shall be installed outside
In the said notification, in the Schedule, aer serial number 33 the bonded premises for this purpose”, the words “shall
and the entries relating thereto, the following serial number and be installed outside the premises of the unit” shall be
entry shall be added, namely:- substituted; and
S. No. Name of Country (vi) in condition (13), in clause (iv) for the words “outside the
“34 Republic of Guinea-Bissau”
bonded premises”, the words “outside the premises of the
unit” shall be substituted.
[Notification No. 46/2016-Customs New Delhi, dated the 3. In the said notification in paragraph 2, in the proviso, for
23rd August, 2016] the words “outside the bonded premises”, the words “outside
the premises of the unit” shall be substituted.
 The Central Government hereby exempts fabrics (including 4. In the said notification in paragraph 4, the words “or to
interlining) imported into India against a valid Special Advance debond”, “or debonding”, “debonding or” and “, as the case may
Authorisation (hereinaer referred to as the said authorisation) be” wherever they occur shall be omied.
issued by the Regional Authority in terms of paragraph 4.04A of 5. In the said notification, in paragraph 6, for clause (vii),
the Foreign Trade Policy from the whole of the duty of customs the following clause shall be substituted, namely:- “(vii) the
leviable thereon which is specified in the First Schedule to the unit shall be required to have a premises for secure storage of
Customs Tariff Act, 1975 (51 of 1975) (hereinaer referred to as goods procured duty free under this notification and the final
the Customs Tariff Act) and from the whole of the additional products manufactured or produced therefrom and the details
duty, safeguard duty and anti-dumping duty leviable thereon, of the premises shall be declared to the said officer.”.
respectively, under sections 3, 8B and 9A of the Customs Tariff 6. In the said notification, in paragraph 7, the words “out of
Act, subject to the following conditions. the bonded premises to the granite quarries”, the words “out
For details see the following link – hp://www.cbec.gov. of the premises of the unit to the granite quarries” shall be
in/resources//htdocs-cbec/customs/cs-act/notifications/ substituted.
notfns-2016/cs-tarr2016/cs45-2016.pdf 7. This notification shall come into force with effect from
[Notification No. 45/ 2016 – Customs New Delhi, the 13th 13thAugust, 2016.
August, 2016.] [Notification No. 44/2016-Customs New Delhi, the
29thJuly, 2016]
 The Central Government hereby makes the following
further amendments in the notification of the Government of  The Central Government hereby makes the following
India in the Ministry of Finance (Department of Revenue) No. further amendment in the notification of the Government of
52/2003-Customs, dated the 31st March, 2003, published in India in the Ministry of Finance (Department of Revenue) No.
the Gazee of India, Extraordinary, vide number G.S.R. 274 (E), 27/2011-Customs, dated the 1st March, 2011, published in the
dated the 31st March, 2003 herein aer referred to as the said Gazee of India, Extraordinary, vide number G.S.R. 153(E),
notification, namely:- dated the 1st March, 2011, namely :- In the said notification, in
2. In the said notification, in the opening paragraph, - the Table, aer serial number 63 and the entries relating thereto
(i) in condition (2), for the words “in Customs bond and the following entry shall be inserted:
64 1701 Organic sugar upto 10,000 MT in a year beginning with October and ending with September subject to Nil
e the following conditions: (i) The export of organic sugar is done in terms of the Public Notice No.73 (RE-
r 2013)/2009-2014 dated 18th November, 2014 and No.10/2015-2020 dated 5th May, 2015 of the DGFT;
and (ii) The exporter produces a Registration-cum-Allocation Certificate (RCAC) issued by the Agricultural
c and Processed Food Products Export Development Authority (APEDA) certifying the quantity of export
of organic sugar eligible to be exported by claiming exemption from export duty: Provided that for the
period ending with 30th September 2016, the exemption shall be restricted to 2500 MT.
[Notification No. 43 /2016-Customs New Delhi, the 26th July, 2016]

E C O N O M Y & TA X U P DAT E S
The Central Government hereby makes the following further amendment in the notification of the Government of India, in the
Ministry of Finance (Department of Revenue), No. 12/2012- Customs, dated the 17th March, 2012, published in the Gazee of
India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 185(E), dated the 17th March, 2012, namely:- In the said
notification, in the ANNEXURE, in Condition No. 28A, for the words “the Apparel Export Promotion Council or the Synthetic and Rayon
Textile Export Promotion Council”, occurring at both places, the words “the Apparel Export Promotion Council or the Synthetic and
Rayon Textile Export Promotion Council or the Coon Textiles Export Promotion Council” shall be substituted.
[Notification No. 42/2016-Customs New Delhi, the 11th July, 2016]
The Central Government hereby makes the following further amendment in the notification of the Government of India in the
Ministry of Finance (Department of Revenue) No. 27/2011-Customs, dated the 1st March, 2011, published in the Gazee of India,
Extraordinary, vide number G.S.R. 153(E), dated the 1st March, 2011, namely :- In the said notification, in the Table, aer serial number
62 and the entries relating thereto the following entry shall be inserted, namely:-
(1) (2) (3) (4)
“63 1701 Sugar exported against a valid Advance Authorization issued by the Regional Authority that Nil ”.
is to say the Director General of Foreign Trade appointed under section 6 of the Foreign Trade
(Development and Regulation) Act, 1992 (22 of 1992) or an officer authorized by him to grant
an authorization under the said Act subject to the conditions that: (a) Exports are effected in
proportion to the import of raw sugar against the said Advance Authorization; (b) Advance
Authorization holder has not got the said Authorization invalidated; (c) Advance Authorization
holder has not procured raw sugar from the domestic market; (d) At the time of clearance of
export consignment at port, the exporter submits a copy of the bill of entry as documentary
proof of import of raw sugar under the said Advance Authorization to the jurisdictional proper
officer of customs.
Note.- The principal notification No.27/2011-Customs, dated the 1st March, 2011 was published in the Gazee of India, Extraordinary,
Part II, Section 3, Sub-section (i) vide number G.S.R. 153(E), dated the 1st March, 2011 and last amended vide notification No.37/2016-
Customs, dated the 16th June, 2016 published in the Gazee of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number
G.S.R. 607 (E), dated the 16th June, 2016.
[Notification No. 41/2016-Customs New Delhi, the 6th July, 2016]
Non-Tariff:
 In exercise of the powers conferred by section 14 of the Customs Act, 1962 (52 of 1962), the Central Board of Excise and Customs
hereby makes the following amendments in the Notification of the Central Board of Excise and Customs No.112/2016-CUSTOMS (N.T.),
dated 18th August, 2016, with effect from 27th August, 2016, namely:-
In the SCHEDULE-I of the said Notification, for serial No.12 and the entries relating thereto, the following shall be substituted,
namely:-
SCHEDULE-I
Sl.No. Foreign Currency Rate of exchange of one unit of foreign currency equivalent to Indian rupees
1 2 3
(a) (b)
(For Imported Goods) (For Export Goods)
12. South African Rand 4.90 4.55
[Notification No. 117/2016 - Customs (N.T.) Dated the 26th August, 2016 04 Bhadrapada, 1938 (SAKA)]
 In compliance with the directions of Hon’ble CESTAT’s Final Order No. 41672-41675/2015 dated 11.11.2015, remanding the maer
for de novo proceedings, passed in 4 appeals as stated in column (4) and (5) of the Table below, pertaining to noticee mentioned in
column (2) of the said Table, and in exercise of powers conferred by sub-section (1) of section 4 and subsection (1) of section 5 of
Customs Act, 1962 (52 of 1962), the Central Board of Excise and Customs hereby appoints the Commissioner of Customs, Chennai-II,
Custom House, Chennai to act as a Common Adjudicating Authority to exercise powers and discharge duties conferred or imposed
on officers mentioned in column (3) of the Table in respect of the Order-in-Original mentioned in column (3) of the Table, for purpose

of adjudication, namely:-
Sl. No. Name of the Noticee Order-in-Original Number and dated and the officer who had Appeal Number before Appeal filed by
and Address passed the Adjudication Order the Hon’ble CESTAT,
Chennai
(1) (2) (3) (4) (5)
1. M/s Nagarjuna Oil 75/11-12 dated 19.01.2012 of Assistant Commissioner of Cus- C/323/2012 Noticee
Corporation Limited, toms, Nagapainam
Chennai
15051/11 dated 04.03.2011 of Deputy Commissioner of Cus- C/324/2012 Noticee
toms, Custom House, Chennai
10/11 dated 29.11.2011 of Assistant Commissioner of Cus- C/141/2012
toms,Cuddalore
2/12 dated 09.03.2012 of Assistant Commissioner of Cus- C/40701/15 Noticee
toms, Cuddalore
[Notification No. 116/2016 -Customs (N.T.) New Delhi, dated the 26th August, 2016]
 In exercise of the powers conferred by sub-section (2) of 23, for the entry in column 2, the following entry shall be
section 141 read with section 157 of the Customs Act, 1962 (52 of substituted namely:- “ Port of Visakhapatnam, Gangavaram port,
1962), the Central Board of Excise and Customs hereby makes the Visakhapatnam International Airport, Container Freight Station at
following regulations to further amend the Handling of Cargo in Bayyavaram Village, Kasimkota Mandal, Visakhapatnam District,
Customs Areas Regulations, 2009, namely:- Visakhapatnam, Special Economic Zone and the areas under the
1. (1) These regulations may be called the Handling of Cargo Greater Visakhapatnam Muncipal Corporation of Visakhapatnam
in Customs Areas (Amendment) Regulations, 2016. (2) They shall in the state of Andhra Pradesh”.
come into force on the date of their publication in the Official [Notification No. 114/2016-Customs (N.T.) New Delhi, the
Gazee. dated 26th August, 2016]
2. In the Handling of Cargo in Customs Areas Regulations, 2009
(hereinaer referred to as ‘the said regulations’), in regulation 5,  In pursuance of notification No. 60/2015-Customs (N.T.),
namely:- published vide number G.S.R. 453(E), dated 4th June 2015 in
a) in sub-regulation (3), for the word “thirty”, the word “ten” Gazee of India, Extra-ordinary, Part-II, section 3, sub-section
shall be substituted: (i), and as amended by notification No. 133/2015-Customs (N.T.),
b) in sub-regulation (4), the following proviso shall be inserted, published vide number G.S.R. 916(E) dated 30th November 2015
namely:- in Gazee of India, Extra-ordinary, Part-II, section 3, sub-section
“Provided that the condition of furnishing of bank guarantee (i), issued by the Government of India, Ministry of Finance,
shall not be applicable to ports notified under the Major Department of Revenue, under clause (a) of section 152 of the
Ports Act, 1962 (38 of 1963) or to the Central Government or Customs Act, 1962 (52 of 1962), the Director General, Revenue
State Governments or their undertakings or to the customs Intelligence, hereby appoints officers mentioned in column (5)
cargo service provider authorised under Authorised of the Table below to act as a common adjudicating authority
Economic Operator Programme.” to exercise the powers and discharge the duties conferred or
[Notification No. 115 /2016-Customs (N.T.) New Delhi, imposed on officers mentioned in column (4) of the said Table in
dated the 26th August, 2016] respect of noticees mentioned in column (2) of the said Table for
the purpose of adjudication of show cause notices mentioned in
 In exercise of the powers conferred by sub-section (1) of column (3) of the said Table.
section 4 of the Customs Act, 1962 (52 of 1962), the Central For details see the following link – hp://www.cbec.gov.
Board of Excise and Customs, being satisfied that it is necessary in/resources//htdocs-cbec/customs/cs-act/notifications/
in the public interest so to do, hereby makes the following further notfns-2016/cs-nt2016/csnt-caa-dri-01-2016.pdf
amendment in the notification of the Government of India in [Notification No. 1/2016-Customs (N.T./CAA/DRI) New
the Ministry of Finance (Department of Revenue) No.78/2014- Delhi, dated the 22nd August, 2016]
Customs (N.T.) dated the 16th September, 2014 published vide
G.S.R. No. 655 [E], dated the 16th September, 2014 namely:-  In exercise of the powers conferred by section 157 of the
2. In the said notification, in the Table, against serial number Customs Act, 1962 (52 of 1962), the Central Board of Excise and

Customs hereby rescinds the notification of the Government of versa, shall, with effect from 19th August, 2016, be the rate
India in the Ministry of Finance, Department of Revenue (Central mentioned against it in the corresponding entry in column (3)
Board of Excise and Customs) number 81/2011-Customs (N.T.) thereof, for the purpose of the said section, relating to imported
dated the 25th November, 2011 published in the Gazee of India, and export goods.
Extraordinary, Part II, Section 3, Sub-section (i) vide number For details see the following link – hp://www.cbec.gov.
G.S.R. 840 (E), dated the 25th November, 2011, except as respects in/resources//htdocs-cbec/customs/cs-act/notifications/
things done or omied to be done before such rescission. notfns-2016/cs-nt2016/csnt112-2016.pdf
[Notification No. 113/2016 - Customs (N.T.) New Delhi, the [Notification No. 112/2016 - Customs (N.T.) New Delhi,
22nd August, 2016 31st Shravana , Saka 1938] dated the 18th August, 2016 27 Shravana, 1938 (SAKA)]
 In exercise of the powers conferred by section 14 of  In exercise of the powers conferred by sub-section (1) of
the Customs Act, 1962 (52 of 1962), and in supersession of section 5 of the Customs Act, 1962 (52 of 1962), the Central Board
the notification of the Central Board of Excise and Customs of Excise and Customs hereby invests the officers specified in
No.106/2016-CUSTOMS (N.T.), dated 4th August, 2016, except column (1) of the Table below, with the powers of the Customs
as respects things done or omied to be done before such Officer of the rank specified in column (2) of the said Table, in the
supersession, the Central Board of Excise and Customs hereby jurisdiction specified in Notification No. 77/2014-Customs (N.T.),
determines that the rate of exchange of conversion of each of dated the 16th September, 2014 published in the Gazee of India,
the foreign currencies specified in column (2) of each of Schedule Extraordinary Part-II, Section 3, Sub-Section(i), vide G.S.R. 654
I and Schedule II annexed hereto, into Indian currency or vice (E), dated the 16th September, 2014, namely:-
Customs Officer Rank of the Customs Officer whose powers is to be exercised
(1) (2)
All Principal Commissioners who have been given additional charge of The Chief Commissioner.
a Chief Commissioner vide Office Orders of the Central Board of Excise
and Customs No. 79/2016 dated the 14th July, 2016 and 86/2016 dated
the 26th July, 2016 respectively.
[Notification No. 111/2016 -Customs (N.T.) New Delhi, the 18 August, 2016]
 In exercise of the powers conferred by sub-section (2) of apply as if in the said Schedule-
section 75 of the Customs Act, 1962 (52 of 1962), sub-section the heading A and heading B are heading C and heading D,
(2) of section 37 of the Central Excise Act, 1944 (1 of 1944), and respectively; and
section 93A and sub-section (2) of section 94 of the Finance Act, the entries in columns (4), (5), (6) and (7) against the Tariff
1994 (32 of 1994), read with rules 3 and 4 of the Customs, Central items in the said Schedule below all Chapters, except Chapter 61
Excise Duties and Service Tax Drawback Rules, 1995, the Central and 62, are NIL, and those in Chapters 61 and 62 are as specified
Government, hereby makes the following further amendments in in the Table annexed hereto;”.
the notification of the Government of India in the Ministry of 3. In the said notification, aer the Schedule, the following
Finance (Department of Revenue), No.110/2015-Customs (N.T.), Table shall be inserted.
dated the 16th November, 2015, published vide number G.S.R. 861 [Notification No. - 110/ 2016 - CUSTOMS (N.T.) New Delhi,
(E), dated the 16th November, 2015, namely:- dated the 13th August, 2016]
2. In the said notification, in the Notes and conditions, in
paragraph (10), aer clause (b), the following proviso shall be  In exercise of the powers conferred by sub-section (2) of
inserted, namely:- section 14 of the Customs Act, 1962 (52 of 1962), the Central
“Provided that where exports are made against Special Board of Excise & Customs, being satisfied that it is necessary
Advance Authorisation issued under paragraph 4.04A of the and expedient so to do, hereby makes the following amendment
Foreign Trade Policy 2015-20 in discharge of export obligations in the notification of the Government of India in the Ministry of
in terms of Notification No. 45/2016-Customs dated 13th August, Finance (Department of Revenue), No. 36/2001-Customs (N.T.),
2016, the rates of drawback specified in the said Schedule shall dated the 3rd August, 2001, published in the Gazee of India,

Extraordinary, Part-II, Section-3, Sub-section (ii), vide number S. Korea RP, Russia, Brazil and Indonesia.
O. 748 (E), dated the 3rd August, 2001. [Notification No. 44/2016-Cus (ADD), dt. 08-08-2016]
For details see the following link – hp://www.cbec.gov.
in/resources//htdocs-cbec/customs/cs-act/notifications/  Seeks to impose anti-dumping duty on the imports of
notfns-2016/cs-nt2016/csnt109-2016.pdf Viscose Staple Fibre excluding Bamboo Fibre originating in or
[Notification No. 109/2016-CUSTOMS (N.T.) New Delhi, exported from Peoples Republic of China and Indonesia for a
12th August, 2016 21 Shravana, 1938 (SAKA)] period of five years.
[Notification No. 43/2016-Cus (ADD), dt. 08-08-2016]
 Amending Import Manifest (Aircra ) Regulations, 1976
[Notification No. 108/2016-Cus (NT), dt. 11-08-2016]  Seeks to impose anti-dumping duty on the imports of PVC
Flex Film originating in or exported from the Peoples Republic of
 Amending Export Manifest (Aircra) Regulations, 1976 China for a period of five years
[Notification No. 107/2016-Cus (NT), dt. 11-08-2016] [Notification No. 42/2016-Cus (ADD), dt. 08-08-2016]
 Rate of exchange of conversion of the foreign currency with  Seeks to finalize the provisional assessments in respect of
effect from 5th Aug., 2016 imports of PVC Flex Film, originating in or exported from ChinaPR
[Notification No. 106/2016-Cus (NT), dt. 04-08-2016] by M/s Haining Tianfu Warp Kniing Co. Ltd., Peoples Republic
of China (Producer) and M/s Manna, Korea RP (Exporter),
 Exchange Rate notfn. with effect from 04th Aug., 2016 at rate of anti-dumping duty imposed vide Notification No.
thereby amending Notfn. 102/2016-Cus (NT) 82/2011-Customs (ADD) dated 25th August, 2011 [and extended
[Notification No. 105/2016-Cus (NT), dt. 03-08-2016] vide Notification No. 43/2015-Customs (ADD) dated 18th August,
2015].
 Tariff Notification in respect of Fixation of Tariff Value of [Notification No. 41/2016-Cus (ADD), dt. 08-08-2016]
Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver
[Notification No. 104/2016-Cus (NT), dt. 29-07-2016]  Seeks to extend the levy of anti-dumping duty on imports
of certain Rubber Chemicals, namely MBTS [Dibenzothiazole
disulphide] originating in, or exported from, People’s Republic of
Anti Dumping Duty China, (imposed vide notification No. 98/2011-Customs, dated
20th October, 2011) for a period of one year i.e. upto and inclusive
 Seeks to extend the levy of anti-dumping duty on imports of the 19th October, 2017.
of 1-Phenyl-3-Methyl-5-Pyrazolone originating in, or exported [Notification No. 40/2016-Cus (ADD), dt. 08-08-2016]
from, People’s Republic of China, (imposed vide notification
No.80/2011-Customs, dated the 24th August, 2011) for a period  Seeks to extend the levy of anti-dumping duty on imports of
of one year i.e. upto and inclusive of the 23rd August, 2017. Sodium Nitrite, originating in, or exported from Peoples Republic
[Notification No. 47/2016-Cus (ADD), dt. 19-08-2016] of China, (imposed vide notification No.46/2014-Customs(ADD),
dated 8th December, 2014) for a period of one year i.e. upto and
 Seeks to extend the levy of anti-dumping duty on imports inclusive of the 16th August, 2017.
of Caustic Soda, originating in, or exported from Chinese Taipei [Notification No. 39/2016-Cus (ADD), dt. 08-08-2016]
(imposed vide notification No.79/2011-Customs, dated the 23rd
August, 2011) for a period of one year i.e. upto and inclusive of  Seeks to amend notification No. 103/2011-Customs, dated
the 22nd August, 2017. 23.11.2011 to extend ADD on Opal Glass Ware originating in or
[Notification No. 46/2016-Cus (ADD), dt. 19-08-2016] exported from China PR & UAE.
 Seeks to levy provisional anti-dumping duty on Cold -rolled
flat products of alloy or non-alloy steel originating in or exported  Seeks to amend notification No. 50/2011-Customs, dated
from China, Japan, Korea RP and Ukraine. 22.06.2011 to extend ADD on sewing machine needles originating
[Notification No. 45/2016-Cus (ADD), dt. 17-08-2016] in or exported from China PR
Seeks to levy provisional anti-dumping duty on Hot-rolled
products of alloy or non-alloy steel imported from China, Japan,  Seeks to extend the levy of anti-dumping duty imposed vide

notification No.81/2011-Customs, dated the 24th August, 2011 clause (v) of rule 5 and rule 6 of Central Excise (Amendment)
on imports of Polytetrafluoroethylene (PTFE) originating in, or Rules, 2016 notified by Notificaton No. 8/2016- Central Excise
exported from, People’s Republic of China for a further period of (NT) dated 1st March, 2016, shall come into force
one year i.e. upto and inclusive of 23rd August, 2017. [Notification No. 42/2016-CENT dt. 11-08-2016]
 Seeks to amend CENVAT Credit Rules, 2004 so as to withdraw
Central Excise the facility to avail of CENVAT credit of duty paid on molasses
generated in the sugar season 2015-16 (i.e. 1st October, 2015 to
Notifications: 30th September 2016) which is used for producing ethanol for
Tariff: supply to public sector OMCs for blending with petrol by omiing
 Seeks to further amend notification No.12/2012-Central rule 6 (6) (ix) of the CENVAT Credit Rules, 2004.
Excise dated 17.03.2012 so as to levy Basic Excise Duty at a [Notification No. 41/2016-CENT dt. 10-08-2016]
concessional rate of 2% on Aviation Turbine Fuel drawn by
operators or cargo operators from the Regional Connectivity
Scheme (RCS) airports for a period of 3 years Service Tax
[Notification No. 32/2016-CE, dt. 26-08-2016]
Notifications:
 Amends Notification No.22/2003-Central Excise dated  Giving the powers of Chief Commissioner to Principal
31.3.2003 Commissioner who have been given the additional charge vide
[Notification No. 31/2016-CE, dt. 24-08-2016] office orders No. 79/2016 dated 14.07.2016 and 86/2016 dated
26.07.2016
 Seeks to further amend notification No.12/2012-Central [Notification No. 37/2016-Service Tax dt. 18-08-2016]
Excise, dated 17.03.2012 so as to withdraw the excise duty
exemption on ethanol produced from molasses generated in the Income Tax
sugar season 2015-16 (i.e. 1st October, 2015 to 30th September
2016), for supply to the public sector OMCs for blending with Notification:
petrol
[Notification No. 30/2016-CE, dt. 10-08-2016]  In exercise of the powers conferred by sub-section (1E) of
section 206C read with section 295 of the Income-tax Act, 1961
 Seeks to amend notification No. 17/2011-Central Excise, (43 of 1961), the Central Board of Direct Taxes hereby makes the
dated the 1st March, 2011, so as to exclude handicras falling following rules further to amend the Income-tax Rules, 1962,
under heading 7113 of the Central Excise Tariff Act, 1985 (5 of namely:-
1986), from the purview of excise duty exemption for “handicras”. 1. (1) These rules may be called the Income-tax (21 st
[Notification No. 29/2016-CE, dt. 26-07-2016] Amendment) Rules, 2016.
(2) They shall come into force on the date of their publication
 Seeks to amend notification No. 8/2003-Central Excise in the Official Gazee. 2. In the Income-tax Rules, 1962 (hereaer
dated 1st March, 2003, so as to increase the SSI Exemption limit referred to as the said rules), aer rule 37CA and before 37D, the
and the SSI Eligibility limit for articles of jewellery or parts of following rule shall be inserted, namely:—
articles of jewellery or both, falling under heading 7113 of the “Class or classes of buyers to whom provisions of sub-section
Central Excise Tariff Act, 1985 (5 of 1986). (1D) of section 206C shall not apply. 37CB. (1) The provisions of
[Notification No. 28/2016-CE, dt. 26-07-2016] sub- section (1D) of section 206C in relation to sale of any goods
(other than bullion or jewellery) or providing any service shall
Non Tariff: not apply to the following class or classes of buyers , namely:—
 Giving the powers of Chief Commissioner to Principal i. Government;
Commissioner who have been given the additional charge vide ii. embassies, Consulates, High Commissions, Legation or
office orders No. 79/2016 dated 14.07.2016 and 86/2016 dated Commission and trade representation, of a foreign State;
26.07.2016 iii. institutions notified under United Nations (Privileges and
[Notification No. 43/2016-CENT dt. 18-08-2016] Immunities) Act, 1947”.
[Notification No. 75/2016/F. No. 370142/19/2016-TPL. New
 Specification of 17th August, 2016 as the date on which Delhi, the 19th August, 2016]

 In exercise of the powers conferred by sub-section (1) and (e) interest income earned on fee/revenue received under the
sub-section (2) of section 199 of the Finance Act, 2016 (28 of Electricity Act, 2003.
2016), the Central Board of Direct Taxes, makes the following 2. This notification shall be effective subject to the conditions
rules further to amend the Income Declaration Scheme Rules, that Tamil Nadu Electricity Regulatory Commission,-
2016 (hereinaer referred to as the principal rules) namely:- (a) shall not engage in any commercial activity;
1. (1)These rules may be called the Income Declaration Scheme (b) activities and the nature of the specified income remain
(Third Amendment) Rules, 2016. unchanged throughout the financial years; and
(2) These rules shall come into force from the date of their (c) shall file return of income in accordance with the provision
publication in the Official Gazee. of clause (g) of sub-section (4C) section 139 of the Income-
2. In the principal rules, in rule 3, in sub-rule (1), in clause (d), tax Act, 1961.
aer sub-clause (II) following shall be inserted, namely:- 3. This notification shall be deemed to have been apply for
‘Provided that where the acquisition of immovable property by the period 01.06.2011 to 31.03.2012 and financial years 2012-13,
the declarant is evidenced by a deed registered with any authority 2013-14, 2014-15 and 2015-16.
of a State Government, the fair market value of such property [Notification No. 72 /2016 F.No.196/3/2012-ITA-I, New
shall, at the option of the declarant, may be taken on the stamp Delhi, the 17th August, 2016]
duty value as increased by the same proportion as Cost Inflation
Index for the year 2016-17 bears to the Cost Inflation Index for  In exercise of the powers conferred by clause (46) of
the year in which the property was registered: section 10 of the Income-tax Act, 1961 (43 of 1961), the Central
Provided further that where the immovable property was Government hereby notifies for the purposes of the said clause,
acquired before the 1st day of April,1981, the provisions of the National Skill Development Corporation, a body constituted by
first proviso shall have effect as if for the words “stamp duty Central Government, in respect of the following specified income
value”, the words “the fair market value of the property as on 1st arising to that Corporation, namely:-
day of April, 1981 on the basis of the valuation report obtained by (a) long-term capital gain out of investment in an organisation
the declarant from a registered valuer”, and for the words “Cost for skill development;
Inflation Index for the year in which the property was registered”, (b) dividend and royalty from skill development venture
the words “Cost Inflation Index for the year 1981-82” had been supported or funded by National Skill Development
substituted. Corporation;
[Notification No. 74/2016/ F.No.142/8/2016-TPL New (c) interest on loans to Institutions for skill development;
Delhi, the 17th August, 2016] (d) interest earned on fixed deposits with banks; and
(e) amount received in the form of Government grants.
 In exercise of the powers conferred by clause (46) of 2. This notification shall be effective subject to the conditions
section 10 of the Income-tax Act, 1961 (43 of 1961), the Central that National Skill Development Corporation,-
Government hereby notifies for the purposes of the said clause, (a) shall not engage in any commercial activity;
Uarakhand Environment Protection and Pollution Control Board, (b) activities and the nature of the specified income remain
a body constituted by Government of Uarakhand, in respect of unchanged throughout the financial years; and
the following specified income arising to that Board. (c) shall file return of income in accordance with the provision
[Notification No. 73 /2016, F. No.196/18/2016-ITA-I, New of clause (g) of sub-section (4C) section 139 of the Income-
Delhi, the 17th August, 2016] tax Act, 1961.
3. This notification shall be deemed to have been apply with
 In exercise of the powers conferred by clause (46) of respect to the Financial Years 2016-17, 2017-18, 2018-19, 2019-20
section 10 of the Income-tax Act, 1961 (43 of 1961), the Central and 2020-21.
Government hereby notifies for the purposes of the said clause, [Notification No. 71 /2016, F. No. 196/39/2015-ITA-I, New
Tamil Nadu Electricity Regulatory Commission, a body constituted Delhi, the 17th August, 2016]
by Government of Tamil Nadu, in respect of the following specified
income arising to that Commission, namely:-  In exercise of the powers conferred by sub-section (1) and
(a) amount received in the form of government grants; sub-section (2) of section 199 of the Finance Act, 2016 (28 of
(b) fees levied under clause (g) of sub-section (1) of Section 86 2016), the Central Board of Direct Taxes, makes the following
read with Section 181 of the Electricity Act, 2003; rules further to amend the Income Declaration Scheme Rules,
(c) penalties levied u/s 146 of the Electricity Act, 2003; 2016 (hereinaer referred to as the principal rules) namely:-
(d) interest income earned on government grants; and 1. (1) These rules may be called the Income Declaration Scheme,

(Second Amendment) Rules, 2016.  Whereas, a Protocol amending the agreement between
(2) These rules shall come into force from the date of their the Government of the Republic of India and the Government
publication in the Official Gazee. of Mauritius, signed on 24th August, 1982 for the avoidance of
2. In the principal rules, in rule 4, in sub-rule (5), aer the words double taxation and the prevention of fiscal evasion with respect
“submission of proof of”, insert the words “full and final”. to taxes on income and capital gains, and for the encouragement
3. In the principal rules, in Form-2, aer the table, for the of mutual trade and investment, (hereinaer referred to as the
portion beginning with the words “The declarant is hereby said Protocol) as set out in the Annexure to this notification, was
directed” and ending with the words “shall be deemed never to signed at Mauritius on the 10th day of May, 2016;
have been made.” the following shall be substituted, namely:- And whereas, the said Protocol entered into force on the 19th
“The declarant is hereby directed to make the payment of sum day of July, 2016, being the date of the later of the notifications
payable as per column (5) of the above table, as specified below:- of the completion of the procedures as required by the respective
(i) an amount not less than twenty-five per cent. of the sum laws for entry into force of the said Protocol, in accordance with
payable on or before 30th day of November, 2016; paragraph 1 of Article 9 of the said Protocol;
(ii) an amount not less than fiy per cent. of the sum payable Now, therefore, in exercise of the powers conferred by sub-
as reduced by the amount paid under clause (i) above on section (1) of section 90 of the Income-tax Act, 1961 (43 of 1961),
or before 31st day of March, 2017; the Central Government hereby notifies that all the provisions
(iii) the whole of the sum payable as reduced by the amount of said Protocol, as annexed hereto as Annexure, shall be given
paid under clause (i) and (ii) above on or before 30th day effect to in the Union of India, in accordance with Article 9 of the
of September, 2017. In case of non-payment of the amount said Protocol.
as specified above, the declaration under Form-1 shall be [Notification No. 68/2016/F. No. 500/3/2012-FTD-II, New
treated as void and shall be deemed never to have been Delhi, the 10th August, 2016]
made.”.
4. In the principal rules for Form-3, Form shall be substituted.  In exercise of the powers conferred by section 295 read with
[Notification No. 70/2016, F. No. 142/8/2016-TPL, New clause (aa) of subsection (1) of section 12A of the Income-tax
Delhi, the 12th August, 2016] Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby
makes the following rules further to amend the Income-tax Rules,
 In exercise of the powers conferred by clause (46) of 1962, namely:—
section 10 of the Income-tax Act, 1961 (43 of 1961), the Central 1. (1) These rules may be called the Income-tax
Government hereby notifies for the purposes of the said clause, (20thAmendment) Rules, 2016.
Haryana State Pollution Control Board, a body constituted by (2) They shall come into force from the date of their publication
Government of Haryana, in respect of the following specified in the Official Gazee.
income arising to that Board, namely:- [Notification No. 67/2016/F. No. 370142/22/2016-TPL, New
(a) grant from Central Government; Delhi, the 9th August, 2016]
(b) grant from State Government; and
(c) consent fee for permission for seing up industry in the  In exercise of the powers conferred by sub-section (1B) of
state of Haryana. section 139 of the Incometax Act, 1961 (43 of 1961), the Central
2. This notification shall be effective subject to the conditions Board of Direct Taxes hereby makes the following amendment in
that Haryana State Pollution Control Board,- the notification of the Government of India, Ministry of Finance
(a) shall not engage in any commercial activity; (Department of Revenue), issued vide S.O. 1281(E) dated the 27th
(b) activities and the nature of the specified income remain July, 2007, published in the Gazee of India, Extraordinary, Part
unchanged throughout the financial years; and II, Section 3, Sub-section (ii) dated the 27th July, 2007, namely:-
(c) shall file return of income in accordance with the provision 2. In the said notification, in para 5, in clause (1), for sub-
of clause (g) of sub-section (4C) section 139 of the Income- clauses (c) and (d), the following sub-clauses shall be substituted,
tax Act, 1961. namely:-
3. This notification shall be deemed to have been apply for “(c) a firm of Chartered Accountants or Company Secretaries
the Financial Year 2014-15 and shall apply with respect to the or Cost Accountants or Advocates, if the firm has been alloed a
Financial Years 2015-16, 2016-17, 2017-18 and 2018-19. permanent account number; or
[Notification No. 69/2016/F. No.196/33/2014-ITA-I, New (d) a Chartered Accountant or Company Secretary or Cost
Delhi, the 11th August, 2016] Accountant or Advocate or Tax Return Preparer, if he has been
alloed a permanent account number; or”.

[Notification No. 66/2016/F. No.133/89/2015-TPL, New with respect to the Financial Years 2015-16, 2016-17, 2017-
Delhi, the 9th August, 2016] 18 and 2018-19.
[Notification No. 63/2016/F. No. 196/30/2015-ITA-I,New
 In exercise of the powers conferred by sub-clause (f) of Delhi, the 26th July, 2016]
clause (iii) of sub-section (3) of section 194A of the Income-tax
Act, 1961 (43 of 1961), the Central Government hereby notifies the  Whereas, an Agreement between the Government of the
Micro Units Development & Refinance Agency Limited (MUDRA) Republic of India and the Government of Saint Kis and Nevis
for the purposes of sub-section (3) of said section. 2. This was signed at New York on the 11th November, 2014 (hereinaer
notification shall come into force from the date of its publication referred to as the said Agreement);
in the Official Gazee. And whereas, the date for the entry into force of the said
[Notification No. 65/2016/F. No. 275/28/2015-IT (B), New Agreement is the 2nd day of February, 2016 being the date of
Delhi, the 5th August, 2016] the later of the notifications of the completion of the procedures
as required by the respective laws for entry into force of the said
 In exercise of the powers conferred by clause (46) of Agreement, in accordance with the provisions of article 13 of the
section 10 of the Income-tax Act, 1961 (43 of 1961), the Central said Agreement.
Government hereby notifies for the purposes of the said clause, And whereas, paragraph 2 of the article 13 of the said
Kerala Headload Workers Welfare Board, a body constituted Agreement provides that the provisions of the said Agreement
by Government of Kerala, in respect of the following specified shall have effect forthwith from the date for the entry into force;
income arising to that Board, namely:- Now, therefore, in exercise of the powers conferred by
(a) levy collected under the Kerala Headload Workers Act, section 90 of the Income-tax Act, 1961 (43 of 1961), the Central
1978 (20 of 1980) Kerala Headload Workers rules 1981 and Government hereby notifies that all the provisions of the
schemes there under; Agreement between the Government of the Republic of India
(b) registration fees collected from members registered with the and the Government of Saint Kis and Nevis for the Exchange
board as beneficiaries; of Information relating to taxes, as set out in the said agreement,
(c) amount received in the form of grants-in-aid and loan from appended as Annexure hereto, shall be given effect to in the
Government; Union of India with effect from the 2nd day of February, 2016
(d) interest income received from investment; [Notification No. 62/2016 F. No. 503/09/2009-FTD-I, New
(e) sums received as deposit from employers as per Para 27 of Delhi, the 21st July, 2016]
Kerala Headload Workers (regulation of employment and
welfare) Scheme 1983 formulated under section 13 of the  In exercise of the powers conferred by section 32 and
Kerala Headload Workers Act, 1978 (20 of 1980); section 32AD of the Income-tax Act, 1961 (43 of 1961), the Central
(f) contribution from the members as defined in the Kerala Government hereby notifies the districts of the state as backward
Headload Workers Act, 1978 (20 of 1980) Kerala Headload areas.
Workers rules 1981 and schemes there under; For details see the following link –hp://www.incometaxindia.
(g) interest on loans and advances given to staff of the board gov.in/communications/notification/notification612016.pdf
and workers; and [Notification No. 61/2016,New Delhi, the 20th July, 2016]
(h) sums received as wages from employers as per Para 24(a)
and 24(b) of Kerala Headload Workers (regulation of
employment and welfare) Scheme 1983 formulated under
section 13 of the Kerala Headload Workers Act, 1978
(Kerala Act No.20 of 1980).
2. This notification shall be effective subject to the conditions
that Kerala Headload Workers Welfare Board-
(a) shall not engage in any commercial activity;
(b) activities and the nature of the specified income remain
unchanged throughout the financial years; and
(c) shall file return of income in accordance with the provision
of clause (g) of sub-section (4C) section 139 of the Income- Contributed by
tax Act, 1961. 3. This notification shall be deemed to have Taxation Commiee
been apply for the Financial Year 2014-15 and shall apply Institute of Cost Accountants of India

FROM THE RESEARCH DESK
Role of CMAs
in
Cost Competitiveness –
Complexity to Confidence
 Value Chain Management:
Value Chain Management is a strategic tool to compute the significance of the customer’s perceived
value. By facilitating companies to determine the strategic advantages and disadvantages of their
activities and value-creating processes in the marketplace, value chain analysis becomes indispensable
for assessing competitive advantage. Value chain is a revelation of complete business as a sequence of
activities in which usefulness is added to the products or services produced and sold by an organization
to enhance value maximization and cost competitiveness. The CMAs in this regard can provide decision
support to the managers in each activity for creating effective framework of value chain management.
 Target Costing:
Target Costing is generally implemented during the development and design phases of the manufacturing
or service process. It is a proactive planning for cost management and cost competitiveness. The target
cost is reached by recognizing a selling price for the product or service, and then deducting the amount
of profit margin required from that product or service by the company’s overall long term margin
requirements. If costs surpasses after the target cost has been set, the CMAs need to identify process
changes to meet the target cost. Here, CMAs can also find out a target cost for a newly designed product
or service to satisfy customer’s need.
 Supply Chain Management:
Supply Chain Management (SCM) is the oversight of materials, information, and finances as they
move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain
management involves coordinating and integrating these flows both within and among companies. It
is said that the ultimate goal of any effective supply chain management system is to reduce inventory
with the assumption that products are available when needed. In this context, the CMAs can apply
Lean Manufacturing or Just-in-Time techniques for reducing wastages, maximize cost efficiency, and
secure a competitive advantage.

 Performance Management:
Performance Management is the term used to describe the process set by an organization to ensure all
employees are sentient of the level of performance expected of them in that role, as well as any individual
objectives they will need to achieve overall organizational objectives. By setting targets, for strategic
business units and as well as for departments for effective performance measurement, the CMAs can
assist in the assignment of responsibility for the achievement of business targets by individual managers.
They can also use competitive cost benchmarking to quantify organizational performance and costs to
compare against competitors and identify why their performance and costs are different, and apply that
insight to strengthen competitive responses and implement proactive plans.
 Total Quality Management:
Total Quality Management is one integrated administrative system with strategic perspectives and has
as unique goal to assure the customer’s satisfaction and the continuous improvement of the business
and the production processes of the organization. The improvement of the processes’ quality requires
the engagement of everyone, from the senior administration until the last employee; otherwise, single
attempt for the solving of certain problems are condemned to fail. Here, CMAs can facilitate Managers
to discover wasteful and inefficient processes and implement newer, more cost competitive ways of
producing the same products. CMAs can even seek to improve intangible assets like a company's image
and brand. Customer's insight of a brand is important for sales as well as product pricing strategies.
 Cost-Benefit Analysis:
The CMAs are competent enough to carry out Cost-Benefit Analysis to evaluate the feasibility of
projects under consideration. It can be used to project the potential benefits of investing in marketing
ideas, product development, infrastructure enhancements and operational changes. If all potential costs
are compared accurately and the benefits outweigh the costs, the considered investment may be a good
choice. The information obtained during a cost-benefit analysis makes budgeting easier. It also facilitates
business owners to assess the potentiality of the project, consequently helps in effective investment
planning to earn high return on investment and use remaining capital to fuel additional projects.
 Risk Mapping for Cost Competitiveness:
Risk Mapping is the process by which organizations methodically identify the risks attaching to
their activities in pursuit of organizational objectives and across the portfolio of all their activities.
Hence, CMAs can frame effective risk management techniques for risk assessment, risk evaluation,
risk treatment, risk reporting as well as cost competitiveness. The focus of good risk management
is the identification and treatment of those risks in accordance with the organization’s risk appetite.
Thus, CMAs can also implement Enterprise Risk Management approach to align risk management with
business strategy and insert a risk management culture into business operations.

EXAMINATION TIME TABLE & PROGRAMME – DECEMBER- 2016
FOUNDATION COURSE EXAMINATION
Day & Date Foundation Course Examination Syllabus-2012

Time 2.00 p.m. to 5.00 p.m.
14th December, 2016 Fundamentals of Economics & Management
Wednesday
15th December, 2016 Fundamentals of Accounting
Thursday
16th December, 2016 Fundamentals of Laws & Ethics
Friday
17th December, 2016 Fundamentals of Business Mathematics & Statistics
Saturday
Examination Fees
Inland Centres Rs. 1200/-

Foundation Course Examination
Overseas Centres US $ 60
1. The last term of Foundation examination in 2012 syllabus will be December, 2016.
2. The Foundation Examination will be conducted in Offline, descriptive (Pen & Paper) mode only. Each paper will be
of 100 marks and for 3 hours duration.
3. Application Forms for Foundation Examination can be filled up either through online or in offline mode.
4. The examination application form can also be downloaded from the Institute website www.icmai.in and the student may
apply in offline mode by attaching demand draft of requisite examination fees. In case of overseas candidates, forms are
available at Institute’s Headquarters only on payment of $ 10 per form.
5. (a) Students can login to the website www.icmai.in and apply online through payment gateway by using Credit/Debit card
or Net banking
.
(b) Students can also pay their requisite fee through pay-fee module of IDBI Bank
6. Last date for receipt of Offline Examination Application Forms without late fees is 30th September, 2016 and with late fees
of Rs. 300/ is 10th October, 2016. In case of online Examination Application with payment gateway by using Credit/Debit
Card or Net banking, the late fees of Rs.300/-will be waived and the last date for application is 10th October, 2016.
7. Examination Centres: Adipur -Kachchh(Gujarat), Agartala, Agra, Ahmedabad, Akurdi, Allahabad, Asansol, Aurangabad,
Bangalore, Baroda, Berhampur(Ganjam), Bhilai, Bhilwara, Bhopal, Bewar City(Rajasthan), Bhubaneswar, Bilaspur, Bokaro,
Calicut, Chandigarh, Chennai, Coimbatore, Cuttack, Dehradun, Delhi, Dhanbad , Durgapur, Ernakulam,Erode, Faridabad,
Ghaziabad,Guntur,Guwahati, Haridwar,Hazaribagh, Howrah, Hyderabad, Indore, Jaipur, Jabalpur, Jalandhar, Jammu,
Jamshedpur, Jodhpur, Kalyan, Kannur, Kanpur, Kolhapur, Kolkata, Kota, Kottayam, Lucknow, Ludhiana, Madurai,
Mangalore, Mumbai, Mysore, Nagpur, Naihati, Nasik, Nellore, Neyveli, Noida, Palakkad, Panaji (Goa), Patiala, Patna,
Pondicherry,Port Blair, Pune, Raipur ,Rajahmundry, Ranchi,Rourkela, Salem, Sambalpur, Shillong, Siliguri, Solapur, Srinagar,
Surat, Thrissur, Tiruchirapalli,Tirunelveli, Trivandrum, Udaipur, Vapi, Vashi, Vellore, Vijayawada, Vindhyanagar, Waltair and
Overseas Centres at Bahrain, Dubai and Muscat.
7. A candidate who is completing all conditions for appearing the examination as per Regulation will only be allowed to
appear for examination.
8. Probable date of publication of result: 21st February, 2017.
A. Das
Director
(Examination)
* For any examination related query, please contact exam.helpdesk@icmai.in

INTERMEDIATE AND FINAL COURSE EXAMINATION TIME TABLE & PROGRAMME –DECEMBER 2016
PROGRAMME FOR SYLLABUS 2012
Day & Date Intermediate Final
Time: 9.30 A.M. to 12.30 P.M. Time: 2.00 P.M. to 5.00 P.M.
www.icmai.in
Saturday, Corporate Laws and
Financial Accounting
10th December, 2016 Compliance
Sunday, Laws, Ethics and Advanced Financial
11th December, 2016 Governance Management
Monday, Business Strategy &
Direct Taxation
12th December, 2016 Strategic Cost Management
Tuesday Cost Accounting & Tax Management
13th December, 2016 Financial Management & Practice
Wednesday, Operation Management Strategic
14th December, 2016 and Information Systems Performance Management
Thursday, Corporate Financial
Cost & Management Accountancy
15th December, 2016 Reporting
Friday, Cost &
Indirect Taxation
16th December, 2016 Management Audit
Saturday, Company Accounts and Financial Analysis &
17th December, 2016 Audit Business Valuation
EXAMINATION FEES
Group (s) Final Examination Intermediate Examination
One Group (Inland Centres) Rs. 1400/- Rs. 1200/-
(Overseas Centres) US $ 100 US $ 90
Two Groups (Inland Centres) Rs. 2800/- Rs. 2400/-
(Overseas Centres) US $ 100 US $ 90
1. Application Forms for Intermediate and Final Examination has to be filled up either through online or in offline modes. The examination application form can also be downloaded from the Institute website
September 2016
www.icmai.in and the student may apply in offline mode by attaching demand draft of requisite examination fees. In case of overseas candidates, forms are available at Institute’s Headquarters only on
payment of $ 10 per form. Online fees will be accepted through online mode (including Pay-fee Module of IDBI Bank).
2. STUDENTS OPTING FOR OVERSEAS CENTRES HAVE TO APPLY OFFLINE AND SEND DD ALONGWITH THE FORM.
3. (a) Students can login to the website www.icmai.in and apply online through payment gateway by using Credit/Debit card or Net banking.
 The
(b) Students can also pay their requisite fee through pay-fee module of IDBI Bank.
4. Last date for receipt of Examination Application Forms without late fees is 30th September, 2016 and with late fees of Rs. 300/- is 10th October, 2016. In case of online Examination Application with payment
gateway by using Credit/Debit Card or Net banking, the late fees of Rs.300/- will be waived and the last date for application is 10th October, 2016.
5. THE LAST TERM FOR EXAMINATION IN 2012 SYLLABUS FOR INTERMEDIATE & FINAL EXAMINATION WILL BE DECEMBER, 2016
6. The Finance Act 2015 will be applicable for the Subjects Direct Taxation, Indirect Taxation and Tax Management & Practice under Syllabus 2012 for the purpose of December 2016 term of Examination.
7. The Companies (Cost Records & Audit) Rules 2014 will be applicable for Paper 10 - Cost & Management Accountancy (Intermediate) and Paper 19 - Cost and Management Audit (Final) for December
2016 term.
8. The provisions of the Companies Act 2013 will be applicable for Paper 6 - Law, ethics and Governance (Intermediate) and Paper 13 - Corporate Laws and Compliance (Final) to the extent notified by the
Government at least six months prior to the date of the examination.
9. If a student obtains at least 60 per cent marks in any paper, the benefit of carry forward/exemption is allowed for the immediately successive three terms of Examination only.
10. Examination Centres: Adipur-Kachchh(Gujarat), Agartala, Agra, Ahmedabad, Akurdi, Allahabad, Asansol, Aurangabad, Bangalore, Baroda, Berhampur(Ganjam), Bhilai, Bhilwara, Bhopal, Bewar
City(Rajasthan), Bhubaneswar, Bilaspur, Bokaro, Calicut, Chandigarh, Chennai, Coimbatore, Cuttack, Dehradun, Delhi, Dhanbad, Durgapur, Ernakulam,Erode, Faridabad, Ghaziabad,Guntur,
Guwahati, Haridwar,Hazaribagh, Howrah, Hyderabad, Indore, Jaipur, Jabalpur, Jalandhar, Jammu, Jamshedpur, Jodhpur, Kalyan, Kannur, Kanpur, Kolhapur, Kolkata, Kota, Kottayam, Lucknow,
Ludhiana, Madurai, Mangalore, Mumbai, Mysore, Nagpur, Naihati, Nasik, Nellore, Neyveli, Noida, Palakkad, Panaji (Goa), Patiala, Patna, Pondicherry,Port Blair, Pune, Raipur ,Rajahmundry, Ranchi,
Rourkela, Salem, Sambalpur, Shillong, Siliguri, Solapur, Srinagar, Surat, Thrissur, Tiruchirapalli,Tirunelveli, Trivandrum, Udaipur, Vapi, Vashi, Vellore, Vijayawada, Vindhyanagar, Waltair and
Management Accountant
Overseas Centres at Bahrain, Dubai and Muscat.
11. A candidate who is fulfilling all conditions specified for appearing in examination will only be allowed to appear for examination.
12. Probable date of publication of result: Inter & Final – 21th February, 2017.
119
* For any examination related query, please contact exam.helpdesk@icmai.in
A. Das
Director (Examination)
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At the helm On August 20, 2016, a National Unity Conference was organized by Global
Economic Progress & Research Association, New Delhi on the occasion of 72nd
Birth Anniversary of our Late Prime Minister of India, Shri Rajiv Gandhi to felicitate
individuals with their exceptional outstanding achievements in their respective
fields across India. Former Union Minister of State for Planning, Govt. of India,
Hon’ble M.V. Rajasekharan was invited as the chief guest of the programme.
Hon’ble Dr. H. Shivanna, Vice Chancellor, University of Agricultural of
Sciences, Hon’ble T. Nithyakumar, Collector, Hon’ble M. Lakshmi Narayana
Samy, BSNL Advisory Committee, Dr. I.S.Basha, Editor, The Indian Observer were
the guests of honour of the programme.
This is a matter of pride that CMA Haresh Lokegaonkar, the member of
the Institute, from the state of Maharashtra was selected and had been
congratulated for his outstanding achievement as Young Social Activist for
unmasking corrupt practices be it on the post of Sheriff of Mumbai, the matters
concerning MMRDA Skywalk Maintenance Scam or issues affecting public at
large like LBT(Local Body Tax) for Small and Medium Traders and Consumer
Unions or non appointment of office bearers on Maharashtra State Human
Rights Commission resulting in pendency of more than twelve thousand cases
with Commission or arranging anshans in protesting Gau Hatya at Azad Maidan.
CMA Haresh Lokegaonkar is the youngest person felicitated by this
organization in the category of social work and he is also invited regularly on
various media platforms for debate shows on legal, political and issues affecting
public at large.
Pradhan Mantri Rojgar Protsahan Yojana

A new scheme “Pradhan Mantri Rojgar Protsahan Yojana”(PMRPY) has been announced in the Budget for 2016-17 with the objective of
promoting employment generation and an allocation of Rs. 1000 crores has been made. The scheme is being implemented by the Ministry
of Labour and Employment in 2016-17. Under the scheme employers would be provided an incentive for enhancing employment by
reimbursement of the 8.33% EPS contribution made by the employer in respect of new employees that are semi-skilled and unskilled for
the first three years of the employment
Key Features of the Scheme PMRPY  Employer should ensure that the new employee has a valid UAN
 The scheme is designed to provide employment facility to thee which is Aadhaar Linked.
newly employed people.  The monthly wages of the new employees should be less than
 The PMRPY scheme is targeted for workers earning wages upto o Rs.15,000/- per month
Rs. 15,000/- per month and also who are working 240 days in n  The EPS contribution for the new employee will be available
a year. for 3 years
 Total 1000 crore Indian rupees have been allocated for the schemee  In case an establishment eligible for a scheme has a drop/fall in
employment from the reference base, the establishment will not
Eligibility Criteria under PMRPY scheme ( 8.33% EPS contribution)) be eligible for the scheme in the months where employment is
 New employee should have joined in the establishment afterr below the reference base.
1.4.2016 and should not have regular employee in any EPF F
The PMRPY scheme becomes operational w.e.f 9th August,2016
registered establishment prior to this.
Details of the scheme is available at:

http://www.labour.nic.in/whatsnew/scheme-guidelines-pradhan-mantri-rojgar-protsahan-yojana-pmrpy
Publicity and awareness campaign by:

(Statutory body under an Act of Parliament)

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September 2016  The Management Accountant 123
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124 The Management Accountant 

124
September 2016 www.icmai.in

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www.icmai.in September 2016  The Management Accountant 3

4 The Management Accountant  September 2016 www.icmai.in

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www.icmai.in September 2016  The Management Accountant 5

Greetings!!! speciality. It doesn't have to be expensive; marketing

2016 2016 2016 2017

Subtopics Subtopics Subtopics Subtopics

Directorate of Research & Journal

August, 2016. With the help of our Regional

1. Executive Committee 2. Examination Committee

6. Research, Journal and IT Committee 7. Professional Development, Banking & Insurance

12. Taxation Committee 13. CAT Committee

18. Infrastructure Committee 19. Cost Accounting Standards Board

22. Board of Discipline 23. Board of Advanced Studies

Presiding Officer Chairman

24. GST Advisory Board 25. Railway Advisory Board

Hon'ble Union Minister for Micro, Small

Hon'ble Union Minister for Railways,

CMA Sanjay Gupta,

Shri Gyaneshwar Kumar Singh, Joint

CMA Manas Kumar Thakur, President of

CMA Sanjay Gupta,

CMA Manas Kumar Thakur,

Release of CMA Syllabus 2016 of

Dr. Subbarao Ghanta, Special Secretary

CMA P V Bhaad, immediate past

CMA Manas Kumar Thakur, President of

Oﬀicial launching of CAT ROCC Certiﬁcate

20 The Management Accountant  September 2016 www.icmai.in

www.icmai.in September 2016  The Management Accountant 21

by both national and international firms. There are a number of

in a particular location of a country even a country itself becomes location

equally important. Factors dominating depend on the type of industry

localisation of automobile industry in reference to Bosch.

CMA Dr. Mukesh Chauhan

22 The Management Accountant  September 2016 www.icmai.in

www.icmai.in September 2016  The Management Accountant 23

24 The Management Accountant  September 2016 www.icmai.in

Due to the plateaued growth of the automotive industry in

www.icmai.in September 2016  The Management Accountant 25

26 The Management Accountant  September 2016 www.icmai.in

Source: Compiled from various sources

Factors Aﬀecting Localization of Tier-1 Suppliers

From the secondary analysis of localization process in India,

Source: hp://india.jdpower.com/press-release/2014-india-customer- 1. Quality constraints:

www.icmai.in September 2016  The Management Accountant 27

3. Learning curve & Economies of Scale constraints:

In analysis I also observed that technologies used by Source:hps://www.atkearney,cim documents/10192/3da62f2b-

28 The Management Accountant  September 2016 www.icmai.in

www.icmai.in September 2016  The Management Accountant 29

Conclusion the Indian suppliers and transfer

30 The Management Accountant  September 2016 www.icmai.in

CMA Deepa R. Hinge

www.icmai.in September 2016  The Management Accountant 31

32 The Management Accountant  September 2016 www.icmai.in

Competitiveness and economic sustainability hinge.deepa@yahoo.in

www.icmai.in September 2016  The Management Accountant 33

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CMA P V Bhaad, immediate past

For 2009 -10, Coon Lint Price=$1.99