Summer Training Report

on

“Sensitivity Analysis of Raw Material Cost”

Under the supervision of

Mr. S.Murugan
Manager Finance
ITC Limited, Haridwar (Uttrakhand)

By

Sumit Kumar
Roll no. 09070500052

Submitted to

Department of management studies

Dehradun Institute of Technology, Dehradun

August 2010
Certificate
 Student’s Declaration

Sumit Kumar
09070500052
Depatment of management studies
DIT, Dehrarun

Statement by the student

I Sumit Kumar the undersigned, student of Dehradun Institute of Technology Dehradun,

declare that this project report titled “Sensitivity Analysis of Raw Material Cost” is submitted
in partial fulfillment of the requirement for the summer internship project during the Post
Graduate Program in Management. I also declare that this is my original work and has not been
previously submitted as part of any other degree, diploma of another B-school or University. The
findings and conclusions of the data in this report are based on my personal study, during the
tenure of my summer internship.

Date: Sumit Kumar

 Acknowledgement

The internship project that I have been doing in ITC Haridwar (PCPB Division) bears the
imprint of many people. I want to acknowledge my project guide Mr. Rajesh Aggarwal for
his patience, time, effort and inspiration. I am indebted to him for the great influence and
constant support that shaped my thought process in terms of financial management in the
real world.

I am highly obliged and can never thank enough Mr. Rajkumar and Mr. Dharmenra
Tyagi, to give me this valuable opportunity to do my internship programme in such a
prestigious organization.

I owe a considerable debt of gratitude to Mr. R. P. Sharma, Mr. Pankaj Nathani, Mr. Kapil
Kumar, Mr. Devinder Singh, and Mr. Pankaj Kaushal with whom I interacted and they in
turn influenced directly and indirectly my project work. I learnt from them the detailing
and the fine essentials of practical world and the reality of working in the field.

My project would not have been possible without the help of logistics and operations team
and therefore, I would like to thank them for their time and co-operation.

Sumit Kumar

Roll no. 09070500052

MBA (finance) 3rd sem.

 Executive summary

This report is written as partial fulfillment of the requirement of MBA Program of

Dehradun Institute of Technology, Dehradun by first year student Mr. Sumit Kumar
(MBA- Finance) during his stint of 4 weeks summer internship at Personal Care Product
Business Division (PCPB) of ITC Ltd Haridwar. ITC Ltd is among the premier FMCG
companies in India. ITC has forayed in Personal care business in July 2005. During the
internship one project have been completed.

Project- Sensitivity analysis of raw materials cost for soap and shampoo
manufacturing

This project is about finding out the cost sensitive Raw materials for various variants of
soap and shampoo manufactured at ITC Personal Care Product Factory Haridwar. Total
Raw materials cost of a product is affected by their addition quantity and procurement
prices. The objective of this project is to identify materials which are highly cost sensitive
either in terms of addition quantity or prices or both. This in turn will help the company to
devise strategies for cost control measures. The project entails collecting relevant data and
analysis by using various tools and techniques in MS Excel Spreadsheet. The area of project
deals with Logistics, Operations and Inventory management. It is found that most
fragrances used in soap and shampoo manufacturing, are sensitive to both quantity as well
as price. It is also find that only a small proportion of raw materials are highly sensitive to
price and quantity. It is recommended to make a comprehensive list of quantity sensitive
raw materials and strict discipline at shop floor must be inculcated for their usage pattern.

Table of content
 Page No.

Certificate
Acknowledgement
Executive summary

Chapter I
Introduction

1.1 Company profile 1

1.2 Products of company 3
1.3 Management 35

Chapter II
Research Methodology

2.1 Data collection 43

2.2 Literature survey 43
2.3 Assumptions 45

Chapter III
Data analysis and interpretation

3.1 Introdution 46
3.2 Analysis of process 47
3.3 Soap manufacturing process 50
3.4 Shampoo manufacturing process 54
3.5 Categorization of variants 56

Chapter IV
Finding, Conclusion, Recommendation (if any), Limitation

4.1 Finding 58
4.2 Conclusion 58
4.3 Recommendation 58

Appendix 59
Bibliography

LISTS OF TABLE/CHAT/DIAGRAM/FIGURE
 Chapter I

Introduction
 Chapter II
Research Methodology
 Chapter III

Data Analysis and Interpretation

 Chapter IV

Findings/Conclusion/Recommendations/Limitations
 Appendix

(Questionnaire/Interview schedule)
4.5 BIBLIOGRAPHY

1. http://en.wikipedia.org/w/index.php?title=Break_even_analysis&action=edit&section=5

(Accessed 2 May 2009)

2. http://en.wikipedia.org/wiki/CVP_analysis (Accessed 27 April 2009)

3. http://www.cleaning101.com/cleaning/chemistry/soapchemistry2.cfm (Accessed 6 May 2009)

4. http://www.cleaning101.com/cleaning/chemistry/index.cfm (Accessed 7 May 2009)

5. http://www.soapmakingfun.com/cold-process-soap-guide2g.php (Accessed 8 May 2009)

6. http://www.teachsoap.com/soapmakingmethods.html (Accessed 9 May 2009)

7. http://www.teachsoap.com/soapmakingmethods.html(Accessed 8 May 2009)

http://www.gcimagazine.com/business/manufacturing/supplychain