Save workers loss in textiles

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#102Rblog::अपने कर्मचारियों से प्यार करें || How to save manpower losses in textiles and other Industries


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Manpower shortage a challenge to ramp up textile production: Gokaldas MD

Topics textile industry | textile market | Lockdown

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The company has most of its facilities in Karnataka and the state allowed to operate with capacity capped at 50 per centGetting adequate manpower to ramp up production to meet the demand is one of the major challenges the textile industry is facing, said Sivaramakrishnan Ganapathi, managing director of India’s largest apparel exporter, Gokaldas.

More than 50 per cent of the first quarter is lost from a production standpoint, but the company is hoping that it would be able to resume 100 per cent operations by June.

“The challenge started even before the nation-wide lockdown, as the textiles and apparels got impacted when coronavirus affected China, and the availability of a lot of raw materials coming from China was disrupted,” he said.

India has gained global appreciation as an attractive outsourcing destination mainly due to its abundant availability of labor force. Indian textile industry is one of the biggest sectors in magnitude, and the second largest in terms of employment generation. The industry has several sectors employing nearly 4 million workers, providing a significant contribution to the national economy. Skills of Indian textile labors are ingrained in them for generations. Earlier it was hand technology and currently; power technology.

Textiles and apparels constitute major exports for India generating $14 billion revenue. Expiry of the decade old export quotas will bring a drastic change in the sector.

India enjoys several advantages comparatively over other countries such as abundant labor force, vertical integration of the complete production process, and material resources.

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Cost management is a system of determining the costs of products or services. It has primarily developed to meet the needs of management.  It provides detailed cost information to various levels of management for efficient performance of their functions.Cost management information about profit , loss, cost etc., of the collective activities of the business as a whole. It does not give the data regarding costs by departments, products, processes and sales territories etc. It does not fully analyse the losses due to idle time, idle plant capacity, inefficient labour, sub-standard materials, etc. Cost accounting is not restricted to past. It is concerned with the ascertainment of past, present and expected future costs of products manufactured or services supplied. Cost accounting provides detailed cost information to various levels of management for efficient performance of their functions.Cost unit  breaks up the cost into smaller sub-divisions and helps in ascertaining the cost of saleable products or services. A cost unit is defined as a ” unit of product , service or time in relation to which cost may be ascertained or expressed.”   For example in a spinning mill the cost per kg of yarn may be ascertained. Kg of yarn is cost unit.  In short  Cost unit is unit of measurement of cost.
Costing methods :There are two type of costing method in Textile industryJob costing – costing is taken to be a job or work order for which costs are separately collected and computed.Process costing – mass production industries manufacturing standardized products in continuous processes of manufacturing. Cost are accumulated for each process or department.
Classification of cost :Standard cost :Standard cost is the cost of producing the requested product at the requested quantity detailed to the consumed component level of both materials and cost elements such as labor, energy etc.
This can be achieved by calculation of the cost per machine hour, broken down to the smallest measurable element:
Proactive costing :Knowing the cost and margin of each order line before acceptance allows decision makers to confirm or reject an order price by actually knowing the accurate margin of that order before production, this leads to rejecting lines far under the variable cost, avoiding rejection of prices above variable cost but under “full average” cost and prioritizing orders by maximizing contribution per scarce resource hour.

Importance of cost management :
-Calculating overall profit and loss margin of industry.
-Control costs with special techniques like standard costing and budgetary control.
-cost data and other related information for managerial decision making such as introduction of a new product, replacement of machinery with an automatic plant etc.
-Maintaining the selling prices, particularly during depression period when prices may have to be fixed below cost.
-It helps in inventory control
-It helps in the introduction of a cost reduction programme and finding out new and improved ways to reduce costs
-Cost audit system which is a part of cost accountancy helps in preventing manipulation and frauds and thus reliable cost can be furnished to management
Elements of Spinning Costs:Raw cotton, wages and salaries, power, stores, overheads, interest and depreciation are the elements of spinning costs, which are analysed one by one.Raw material cost :In spinning mills, cotton is the chief raw material accounting for more than 85% of the fibre consumption and more than 76% of the total fibre consumption in the textile sector ? Cotton accounts for about 50 to 70 per cent of the yarn costs. Cotton costs are found to differ considerably within a year to the extent of about 30%, the C.V. being on the average 7%. Besides, there is a large inter- mill variation of about 30% in raw material cost.’ Within the same count, the raw material is found to vary between mills + /- 20% with a C.V.of 5% In view of the very large impact which cotton cost has on profitability, just a 5% adverse change is enough to almost wipe out the average profit margin for a mill. Since the cotton cost and yarn selling prices are largely governed by factors which are to a great extent beyond the control of the mills, it becomes all the more important that the best quality yarn is produced with maximum realization from cotton. In order to maintain cotton costs more or less at average levels, the ds should follow the policy of buying the required quality cotton in economic quantities at most favorable prices under best possible terms. Further, the procured cotton should be protected against losses by proper physical control.
Wages and labour cost :The ever increasing portion of sales rupees which is paid out for salaries and wages and for hge benefits points out the importance of effective control over labour and labour related costs. It is the largest component of conversion cost and the second largest element of spinning cost. It accounts for about 14% of the sales revenue of cotton yarn. But, there are wide inter mill variations in the incidence of labour cost, the variation being 6 per cent to 25 per cent of sales revenue. 8~ major cause of the inter-mill variation in labour cost is due to differences in labour productivity and wage rates. As far as labour productivity is concerned, there is a wide gap between Indian mills and those ‘in developed countries– our labour productivity is only 114 to 116 of that of developed countries.~ It should be ensured that labour productivity should be maintained at maximum possible levels. The improvement in labour productivity should be sought through co-operation of labour unions, but at the same time the hits of increased labour productivity be shared with work force.
Power Costs :Energy cost is one of the major components of conversion cost in a spinning mill and ranks next only to wages. The SKRA norm of power cost for the average spinning mills is 10.50% of the sales value.
Cost of Stores :The stores and spares items consist of packing materials, spindle oils, grease and lubricants, bobbins, skewers, aprons, spindle tapes and travellers, rings card clothing, combing needles, rollar cots in ring fames and ring spinning etc. According to SITRA, stores expenses are on the average about 3.5% of sales.
Overheads:Overheads include the expenditure incurred towards general administration, selling and distribution, insurance, travelling expenses, telephone, advertisement, rates and taxes, time office and welfare expense, printing and stationery.

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