CHAPTER-I

COST CONTROL AND COST REDUCTION IN LOGISTICS SECTOR

INTRODUCTIONLogistics management is that part of the supply chain which plans, implements and
controls the efficient, effective forward and reverse flow and storage of goods, services
and information between the point of origin and the point of consumption in order to meet
customers' requirements. To have a thorough understanding of how logistics industries
work. To know whether the customers are satisfied with the existing range of service
pattern.. Logistics involve the integration of information, transportation, and inventory,
warehousing, material-handling and packaging. To examine the economic zone
development for Logistics industry. To study the role of global 3PL service providers in
India .A professional working in the field of logistics management is called a logistician.
Meaning of Logistics:
The term "logistics" originates from the ancient Greek "" ("logos""ratio, word,
calculation, reason, speech, oration"). In ancient Greek, Roman and Byzantine empires, there
were military officers with the title Logistikas who were responsible for financial
management and distribution of supplies.

Definition of Logistics:

The process of planning, implementing, and controlling the efficient, cost effective flow and
storage of raw materials, in-process inventory, finished goods and related information from
point of origin to point of consumption for the purpose of meeting customer requirements.

OVERVIEW OF LOGISTICS INDUSTRY:

Logistics, as a business concept, evolved only in the 1950s. This was mainly due to the
increasing complexity of supplying one's business with materials, and shipping out products
in an increasingly globalized supply chain, calling for experts in the field who are called
Supply Chain Logisticians. This can be defined as having the right item in the right quantity

at the right time at the right place for the right price and to the right target customers
(consumer); and it is the science of process having its presence in all sectors of the industry.
The goal of logistics work is to manage the fruition of project life cycles, supply chains and
resultant efficiencies. Logistics is concerned with getting (or transmitting) the products and
services where they are needed or when they are desired. It is difficult to accomplish any
marketing or manufacturing without logistical support.
Objective of Logistics Management:
The primary objective of logistics management is to effectively and efficiently move the
supply chain so as to extend the desired level of customer service at the least cost. Supplies.
These can be described as follows:
1. Improving customer service:
An important objective of all marketing efforts, including the physical distribution activities,
is to improve the customer service.
2. Rapid Response:
Rapid response is concerned with a firm's ability to satisfy customer service requirements in a
timely manner. Information technology has increased the capability to postpone logistical
operations to the latest possible time and then accomplish rapid delivery of required
inventory.
3. Reduce total distribution costs:
The cost of physical distribution consists of various elements such as transportation,
warehousing and inventory maintenance, and any reduction in the cost of one element may
result in an increase in the cost of the other elements..
4. Generating additional sales:
A firm can attract additional customers by offering better services at lowest prices. For
example, by decentralizing its warehousing operations or by using economic and efficient
modes of transportation, a firm can achieve larger market share.

5. Creating time and place utilities:

The products are physically moved from the place of their origin to the place where they are
required for consumption; they do not serve any purpose to the users.
6. Price stabilization:
It can be achieved by regulating the flow of the products to the market through a judicious
use of available transport facilities and compatible warehouse operations.
7. Quality improvement:
The long-term objective of the logistical system is to seek continuous quality improvement.
Total quality management (TQM) has become a major commitment throughout all facets of
industry. If a product becomes defective or if service promises are not kept, little, if any,
value is added by the logistics.
8. Movement consolidation:
Consolidation one of the most significant logistical costs is transportation. Transportation cost
is directly related to the type of product, size of shipment, and distance. Many Logistical
systems that feature premium service depend on high-speed, small shipment transportation.
Premium transportation is typically high-cost. To reduce transportation cost.

Scope of logistics industry:

Logistics is not confined to manufacturing operation alone. It is relevant to all enterprises,
including Govt. institutions such as Hospitals and schools and service organization such as
retailers, banks and financial service organizations. The study of logistics is especially
important for bulk raw materials, where substantial outflow of freight is involved.
Management of Logistics is an art which is extremely difficult to perfect in India, JIT ends up
being SHIT - somehow in time the study of logistics is important to establish a lean supply
chain which would give an advantage of quick product change over, capability, excellent
short and long term forecast visibility.

Significant of logistics industry:

Todays organizations worldwide need logistics management more than ever because of
following:
1) Competitive pressure 2) information technology 3) channel power and 4) profit
leverage.
1) Competitive pressure: during the 1970s. Logistics received more attention as a major
cost driver to offset the effects of rising interest rates and increasing energy costs. In addition
the logistics cost became more critical for many multinational companies because of
globalization of their business. These developments affected logistics primarily in two ways:
I. The growth of world class competitors which has pressurized organization to differentiate
themselves and their product offerings. Logistics enable domestic firms to provide more
reliable and responsive services to customers in the local markets than overseas competitors.
II.As firms increasingly buy and sell off-shore, the supply chain between the manufacturing
firm and its supplier and customer firms become longer, costlier and more complex. Hence
in such situation, excellent logistics is necessary to take advantage of global opportunities.
2) INFORMATION TECHNOLOGY: with the explosion of information technology,
organization gained the ability to better monitor transaction intensive activities such as
ordering, transportation and storage of goods and materials. Computerized quantitative
models along with technology increased the ability to manage material flows and optimize
inventory levels and movements. For example, systems such as material requirement
planning (MRP 1), distribution resources planning (DRP) and just-in-time (JIT) allowed
firms to link many activities such as order processing, inventory management, forecasting
and production scheduling.
3) CHANNEL POWER: the channel power shifted from manufacturers to wholesalers,
distributors and retailers. This has had a great impact on logistics. In major consumer goods
industries, when competition increases, many suppliers and manufacturers are forced out of
competition and a few leading; competitors remain in the market. In the views of consumers,
all of the leading brands are substitute for each other and lower brand loyalty decreases the

manufacturers power. Ultimately sales of consumer products are determined by what is in

stock, and not by what particular brand offered to the customers.
4) PROFIT LEVERAGE: Any amount of money saved in logistics costs has greater

impact on the organizations profitability than a similar increase in sales revenue considerably
because profit earned through sales is only a small percent of sales revenue. Hence, a rupee
saved in logistics is a rupee increase in the companys profit.

Growth and development of Indian logistics:

With the growth of the industries there was the boom in the logistics sector Open market also
open the opportunity for logistics industries to grow and boom itself. Logistics call for an
understanding of the total supply chain, the elements of which include inventories, packing,
forwarding, freight, storage and handling. Logistics is responsible for all the movement that
takes place within the organization whether it is inbound logistics of incoming, raw materials
or movement within the company or the physical distribution of finished goods, logistics
encompasses all of these.

Typical logistics framework mainly consists of Physical Supply, Internal Operations and
Physical Distribution of Goods and Services. To put it more simply, the material supply
logistics starts from the base level of generation of the demand, through the process of
purchase and supply of material from the vendor right through to final acceptance and
payments to the supplier and issue to the indenter and has to be considered as a one
whole activity with each stage having an impact on price/cost of material supply, Logistics
is, in itself, a system; it is a network of related activities with the purpose of managing the
orderly flow of material and personnel within the logistics channel.

FUTURE CHALLENGES AND TRENDS OF LOGISTICS INDUSTRY:RECENT TRENDS IN INDIAN LOGISTICS INDUSTRY:

 When comparing US logistics with the global logistics it accounts US$900 billion
which is valued 25% of total global logistics 3.5US$ trillion. Whereas India is
estimated to be around 13% of its GDP, which is valued around US$94 billion in
2006-07.
Air transport industry contributes over 0.2% of the GDP keeping the prices constant
(1999-2007) Domestic air cargo has growing at CAGR of 12.80% where as
international cargo traffic has been moving at 13%. According to the planning
commission, countrys cargo movement would grow about CAGR of 11.5% from
2007-08 to 2013-14.
Marine sector contributes over 0.2% of the GDP at a constant prices(1999-2007)
major ports in India have handled about 463.84 tonnes of cargo in 2009-10 a growth
of 9.51 that of the previous year. According to the planning commission of India, the
shipping fleet will be increased up to 15mGRT by the end of 2013-2014.
The major plan of Indian railways is to develop Logistic parks which it has a potential
to optimize the supply chain and reduces the cost .The Indian railways would have to
innovate the new train services so that the customer shifts from road to rail.
Almost 80% of the products in India are transported through roads. One innovation
could be the introduction of time tabled parcel trains and container trains which is
essential to have few time tabled freight trains because it reduces the inventory levels
and thereby improves customer satisfaction.

Future challenges:

Unfair competitions:
Unorganised players get away without paying
taxes.
Dont follow the operating norms stipulated

Solution /opportunity:
Implies that a truck load loss of goods is
always round the corner. Organized
players can cash in by providing the

in the motor vehicle act such as quality of

requisites level of safety and insurance

drivers, vehicle, and volume and weight

cover for goods.

restriction.
Diseconomies of scale:
Differential sales tax structure in different
states.
Apart from non- uniform LSPS (logistic
service provider) have to pay other kinds of
taxes like octrois.
Governments failure in implementation of
VAT since 1 April 2005.
Face multiple check post:
This delays the process of delivery.
Compliance with varying documentation
requirements of different states is certainly a

Solution /opportunity:
Proposal for implementation of GST.
With uniform taxation across all states
companies could focus on supply chain
efficiency rather tax avoidance
optimizations.

Solution /opportunity:
Integration of IT into the process like EDI
could greatly speed up the whole process
and bring in the required efficiency.

difficulty.
Low IT penetrations:
Lack of communication infrastructure.
Lack of visibility.
Lack of real time tracking ability.

Highly fragmented sectors:

LSPs stick to their basic services.

Solution /opportunity:
Penetration of 3PL players and high level
of investments into technology like GPRS
would change the scenario.
Solution /opportunity:
Value added services provide a great
opportunity to increase the margins.

INTRODUCTION:

Accounting is the recording and reporting of transaction. It records the day to day events
relating to business in terms of money in various books of accounts additionally. It
communicates the results of business operation to management, shareholder, creditors, banks,
and financial institutions etc. as a language of business accounting serves as an important
means of communication between the business and its constituent part. The principles of
objectives of accounting are to provide information to user to make relevant decisions and
forms judgments.

DEFINITION AND MEANING OF ACOUNTING:

THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTS has defined
accounting as the art of recording, classifying, and summarising. In a significant manner and
in terms of money, transactions and events which are in part at least of a financial character
and interpreting the results there of.
In short accounting is identifying, measuring, recording, classifying summarising business
transactions analysing and interpreting the results there of, and communicating the results of
the interpretation to the end users for decision making.
Objective of Accounting:
Objective of accounting may differ from business to business depending upon
Their specific requirements. However, the following are the general objectives of
Accounting.
i)

To keeping systematic record: It is very difficult to remember all the business

transactions that take place. Accounting serves this purpose of record keeping by
promptly recording all the business transactions in the books of account.

ii)

To ascertain the results of the operation: Accounting helps in ascertaining results

i.e., profit earned or loss suffered in business during a particular Period. For this
purpose, a business entity prepares either a Trading and Profit and Loss account or
an Income and Expenditure account which shows the profit or loss of the business
by matching the items of revenue and expenditure of the same period.

iii) To ascertain the financial position of the business: In addition to profit a

businessman must know his financial position i.e., availability of cash, position of Assets and

liabilities etc. This helps the businessman to know his financial strength. Financial statements
are barometers of health of a business entity.
iv) To portray the liquidity position: Financial reporting should provide Information about
how an enterprise obtains and spends cash, about its borrowing and Repayment of borrowing,
about its capital transactions, cash dividends and other Distributions of resources by the
enterprise to owners and about other factors that may Affect an enterprises liquidity and
solvency.
v) To protect business properties: Accounting provides up to date Information about the
various assets that the firm possesses and the liabilities the firm Owes, so that nobody can
claim a payment which is not due to him.
vi) To facilitate rational decision making: Accounting records and financial statements
provide financial information which helps the business in making Rational decisions about
the steps to be taken in respect of various aspects of business.
vii) To satisfy the requirements of law: Entities such as companies, societies,
Public trusts are compulsorily required to maintain accounts as per the law governing
Their operations such as the Companies Act, Societies Act, and Public Trust Act etc.
Maintenance of accounts is also compulsory under the Sales Tax Act and Income Tax
Act.
Importance of Accounting:
i) Owners: The owners provide funds or capital for the organization. They Possess curiosity
in knowing whether the business is being conducted on sound lines or not and whether the
capital is being employed properly or not. Owners, being Businessmen, always keep an eye
on the returns from the investment. Comparing the Accounts of various years helps in getting
good pieces of information.
ii) Management: The management of the business is greatly interested in knowing the
position of the firm. The accounts are the basis, the management can Study the merits and
demerits of the business activity. Thus, the management is Interested in financial accounting
to find whether the business carried on is profitable or not. The financial accounting is the

eyes and ears of management and facilitates in drawing future course of action, further
expansion etc.
iii)

Creditors: Creditors are the persons who supply goods on credit, or Bankers or
lenders of money. It is usual that these groups are interested to know the financial
soundness before granting credit. The progress and prosperity of the firm, two which
credits are extended, are largely watched by creditors from the point of View of
security and further credit. Profit and Loss Account and Balance Sheet are Nerve
centres to know the soundness of the firm.

iv) Employees: Payment of bonus depends upon the size of profit earned by the firm. The
more important point is that the workers expect regular income for the Bread. The demand
for wage rise, bonus, better working conditions etc. depend upon the profitability of the firm
and in turn depends upon financial position. For these Reasons, this group is interested in
accounting.
v) Investors: The prospective investors, who want to invest their money in a Firm, of course
wish to see the progress and prosperity of the firm, before investing their amount, by going
through the financial statements of the firm. This is to safeguard the investment. For this, this
group is eager to go through the accounting this enables them to know the safety of
investment.
vi) Government: Government keeps a close watch on the firms which yield Good amount of
profits. The state and central Governments are interested in the financial statements to know
the earnings for the purpose of taxation. To compile National accounting is essential.
vii) Consumers: These groups are interested in getting the goods at reduced Price. Therefore,
they wish to know the establishment of a proper accounting control, which in turn will reduce
to cost of production, in turn fewer prices to be paid by the Consumers. Researchers are also
interested in accounting for interpretation.
viii) Research Scholars: Accounting information, being a mirror of the financial
performance of a business organization, is of immense value to the research Scholar who
wants to make a study into the financial operations of a particular firm. To make a study into

the financial operations of a particular firm, the research scholar needs detailed accounting
information relating to purchases, sales, expenses, cost of Materials used, current assets,
current liabilities, fixed assets, long-term liabilities and Share-holders funds which is
available in the accounting record maintained by the Firm.
Functions of Accounting
i) Record Keeping Function: The primary function of accounting relates to Recording,
classification and summary of financial transactions-journalisation, posting, and preparation
of final statements. These facilitate to know operating results and financial positions. The
purpose of this function is to report regularly to the interested Parties by means of financial
statement.
ii) Managerial Function: Decision making programme is greatly assisted by Accounting.
The managerial function and decision making programmes, without Accounting may mislead.
The day-to-day operations are compared with some predetermined Standard. The variations
of actual operations with pre-determined Standards and their analysis are possible only with
the help of accounting.
iii) Legal Requirement function: Auditing is compulsory in case o f Registered firms.
Auditing is not possible without accounting. Thus accounting becomes compulsory to comply
with legal requirements.
iv)

Language of Business: Accounting is the language of business. Various

Transactions are communicated through accounting. There are many parties-owners,
Creditors, government, employees etc., who are interested in knowing the results of
the firm and this can be communicated only through accounting. The accounting
shows a real and true position of the firm or business.

Advantages of Accounting:
The following are the advantages of accounting to a business:
i)

It helps in having complete record of business transactions.

ii) It gives information about the profit or loss made by the business at the Close of a year and
its financial conditions. The basic function of Accounting is to supply meaningful
information about the financial Activities of the business to the owners and the managers.
iii) It provides useful information from making economic decisions.
v)

It facilitates comparative study of current years profit, sales, expense etc., with
those of the previous years.

v) It supplies information useful in judging the managements ability to utilise enterprise

resources effectively in achieving primary enterprise goals.
vi) It provides users with factual and interpretive information about Transactions and other
events which are useful for predicting, comparing and evaluation the enterprises earning
power.
vii) It helps in complying with certain legal formalities like filing of income tax and sales-tax
returns. If the accounts are properly maintained, the Assessment of taxes is greatly facilitated.
Limitations of Accounting:
i) Accounting is historical in nature: It does not reflect the current financial position of the
firm or the business.
ii) Transactions of non-monetary mature do not find place in accounting. Accounting is
limited to monetary transactions only. It excludes Qualitative elements like management,
reputation, employee morale, Labour strike etc.
iii) Facts recorded in financial statements are greatly influenced by Accounting conventions
and personal judgements of the Accountant or Management. Valuation of inventory, provision
for doubtful debts and Assumption about useful life of an asset may, therefore, differ from
one Business house to another.

iv) Accounting principles are not static or unchanging-alternative Accounting procedures are
often equally acceptable. Therefore, Accounting statements do not always present comparable
data.
v) Cost concept is found in accounting. Price changes are not considered. Money value is
bound to change often from time to time.
vi) Accounting statements do not show the impact of inflation.
vii) The accounting statements do not reflect those increases in net asset Values that are not
considered realized.
BRANCHES OF ACCOUNTING:
Broadly speaking there are three branches of accounting.
i) Financial accounting
ii) Cost accounting
iii) Management accounting
Financial Accounting:
Financial accounting is the accounting for revenue expenses, assets and liabilities that is
commonly, carried on in the general office of a business. It is the recording of business
transaction in the purpose of presenting results to board of directors, shareholders etc.
Cost Accounting:
Cost accounting is defined as the process of accounting for cost from the point at which
expenses in incurred or committed to the establishment of its ultimate relationship with cost
centres and cost unit.
Management Accounting:
Management accounting presents accounting information in such a way as to assist
management in the creation of policy and in the day to day operations of an undertaking.

Management accounting is that portion of accounting which attempts to supply management

with quantitative information as basis for decisions.
Cost:
It is the sum of the total of all the expenditure in producing and selling a product i.e. called
cost.
The American accounting association as the foregoing in monetary terms, incurred or
potentially to be incurrent in the realization of the objective of management which may
manufacturing of a cost or rendering of a services.
Costing: The costing terminology of C.I.M.A., London defines costing as the the techniques
and processes of ascertaining costs.
Cost accountancy:
Cost accounting is defined as the application of costing and cost accounting principle,
methods and techniques to the sciences art and practice of cost control and the ascertainment
of profitability.
Objectives of Cost Accounting:
The main objectives of cost accounting can be summarized as follows.
1. To study, analyze and classify all expenditure with reference to the cost of products and
Operations.
2. To ascertain the total and unit cost per unit cost of commodity produced, work performed
and service rendered.
3. To ascertain the profitability of different products, jobs or work orders.
4. To provide data for periodical profit and loss accounts and balance sheets at such intervals,

E.g. weekly, monthly or quarterly as may be desired by the management during the financial
year, not only for the whole business but also by departments or individual products.
5. To exercise effective control over wastage and loss of materials during production.
6. To provide actual figures of costs for comparison with estimates and to serve as a guide for
Future estimates or quotations and to assist the management in their price fixing policy.
7. The provide means to measure the efficiency of labour.
8. To exercise effective control on the idle time of workers and machine.
Advantages of cost accounting:
(a) Benefits to the Management: The information revealed by cost accounting aims at
mainly assisting the management in decision making and optimizing profits. Besides this
there are certain advantages of cost accounting to the management i.e. it helps in price
fixation, in revealing profitable and unprofitable activities, idle capacity, in controlling cost
and also helps in inventory control.
(b) Benefits to the Employees: Cost accounting introduces wage scheme, bonus to the
efficient & sincere employees which in turn increasing productivity, profitability and
lowering cost.
(c) Benefits to Creditors: The better management of finance through cost accounting leads
to timely Debt servicing by company in the form of repayment of loan and payment of
interest. To stay and grow in competition and for judging soundness of present and
perspective borrower and cost reports give better picture of efficiency profit prospectus and
capacity.
(d) Benefits to the Government: Cost accounting enables the Govt. to prepare plans for
economic Development of the country, to make policies regarding taxation, excise duty,
export, price, ceiling, granting subsidy etc.

(e) Benefits to Consumers/Public: Cost accounting helps consumers in getting goods of

better quality at reasonable price.
Disadvantage of cost accounting:
Cost accounting has certain limitations.
Based on estimates: indirect costs are not charged fully to a product or process. It is
charged to all the products and processes on the basis of estimate.
Lack of uniformity: procedures of accounting followed by different organization are
different products. There is no uniformity. There is also possibility of difference in
pricing material issues for production. All these lead to different cost results for the
same operation.
Expensive: cost accounting is expensive. It involves lots of clerical won for
maintaining various costing records for different purposes.
Not an exact science: like other accounting system, it is not an exact science but an art
has developed through theories and practices.
Does not include all items of expense s and income: Items are purely financial nature
such as interest, financial charges, discount and loss on issue of shares and debenture,
etc.are not taken into consideration in cost accounting.
INTRODUCTION OF COST CONTROL:Cost control objective refers to the process of preventing costs from the amount planned. The
charted institute of management accountants London define it as the guidance and regulation
by executive action of the costs of operating an undertaking, particularly where such action is
guided by cost accounting. It is thus an attempt at keeping costs under a specified ceiling or at
the lowest possible level consistent with the performance of a specified task.
But in addition, cost control procedures must also ensure the proper authorization of
expenditure in respect of the engagement of employees, the purchasing of materials and the
use of services.

It would appear, therefore, that the objective of cost control is the performance of the same
job at a lower cost or a better performance for the same cost. It does not set a out a limit up
to which cost should be brought down; else it gives a call to continuously effects
improvements in them. It is a process of watching cost figures and taking action to trim them.
The management should never be satisfied that a point has reached beyond which no further
improvement is possible. Cost control involves appraising management of the fact that
Costs have changed
The direction of changes,
The reason for change
The knowledge that change is occurring may prompt management to alter basic operating
policies-to take up new products or drop old lines, to replace an employee, to emphasis
different marketing areas, or to use substitute raw materials.
Definition OF COST CONTROL:A procedure, where fixed cost and variable cost are taken and accordingly action taken to
reduce the cost incurred at different areas, there by avoid wastage of unwanted expenses, i.e.
called cost control.
Cost control is defined as the guidance and regulation by executive action of the cost of
operating and undertaking. The ultimate aim of cost accounting is cost control.
Essential Features of Cost control:
Cost accounting: the company should have an effective cost accounting system. This
will instruct the necessary information to control in the organization.
Cost planning: the company should to achieve cost targets. That is the company
should have the proper planning and budgetary system. The targets are sets after
taking into consideration of relevant factors.
Cost reporting: no company can function unless there is a perfect monitoring. Costs
can be controlled only when there is proper management reporting system.

 Corrective actions: On the basis of reported variances the management takes

corrective action. This will involve identifying the cause of variance and reasons. It is
necessary the management may review the standard of company.
Characteristics of cost control:
The main characteristics of cost control are:

Delegation of authority.
Measurement of performance.
Relevance of controllable.
Cost reporting.
Constant efforts.
Policies and general objectives.

Significance of cost control:

The emphasis is on the past and presents.

It improves the image of company for long term benefits.
It improves rate of return on investment.
It is a static and preventive function.
It aims at maintaining the cost in accordance with standard of costs.

Aspects of Cost Control

1) Planning: - Initially a plan or set of targets is established in the form of budgets and
standards.
2) Communication: - The next step is to communicate the plan to those whose responsibility
is to implement the plan.
3) Motivation: - Motivation is defined as the process that initiates, guides and maintains goaloriented behavior
4) Appraisal and Reporting: - comparison has to be made with the predetermined targets and
actual performance. Deficiencies are noted and discussion is started to overcome deficiencies.
5) Decision-making:- Finally, corrective actions and remedial measures are taken or the set of
targets are revised, depending upon the administrations understanding of the problem.

Advantages of cost control:

The main advantages of cost control,

It helps the firm to improve its profitability and competitiveness.

It helps the firm in reducing its costs and thus reduces its prices.
It is indispensable for achieving greater productivity.
Optimum level of productivity and quality.
Increased credit worthiness.
Increased exports more foreign earnings.
If the price of the product is stable and reasonable, it can maintain higher sales and thus

employment of work force.

Reasonable price for the customer.
Better and economic use of men, machines and money.

Disadvantages of cost control:

The main disadvantages of cost control are,
Not an exact science in the absence of it various decisions are subject to certain
judgement.
No solution to problem it only provides a basic for taking right decision but does not
provide solution.
No uniformity it is expensive and can be adopted only big companies and not
suitable concerns.
No standards determine of standards such as labour house material costs.
Different types of costs are required for different purposes.
Elements of cost control:
The following are the elements of cost control

Set a standard or target.

Select a yardstick for measuring with target or standard.
Ascertain the actual performance by applying the yardstick which was used

for measuring the standard or target.

Compare the actual performance with the standards or target and compute the

variance.
Periodically review the standards or targets and revise the standard or targets
and revise them in the light of changed circumstances.

Factors hampering cost control in India:

Cost of raw materials and other intermediate products is high.

High foreign commodity prices, particularly oil.
Power shortages and underutilization of capacity.
Delay in the issue of licenses.
High rates of taxes tend to raise the overall costs of production in India.

Steps of cost control:

Organizing a system of cost control and making it works successfully requires the

following 5 steps.
Set up the targets.
Measure the actual.
Compare the actual with targets.
Localize the cause for the variation between the targets and the actual.
Take such actions as necessary to eliminate these variations.

Cost control process:

The steps involved in designing process of cost control system are as follows.
Establishment norms:
To exercise cost control it is essential to establish norms, targets or parameters which

may serve as yardstick to achieve the ultimate objective.

Appraisal: the actual results are compared with the set norms to ascertain the degree of

utilization of men, machine and materials.

Corrective measures: the various are reviewed and measures or revision of targets, norms,
standards, etc.

Methods and techniques of cost control

Many management techniques are in use to facilitate the work of cost control. Some are
informal techniques and require only alert observation of physical conditions during daily
operations. The importance techniques in this connection are:

Budgetary control
Standard costing

Cost control ratio

Value analysis

Budgetary control: - The budget is the fundamental accounting model for cost control, by
setting goals in advance; it holds the operating managers to those goals. The actual
performance then is continuously compared with compared with the budgeted plan or the
targets expressed, in money terms. If the firm succeeds in adopting the concept of flexible or
variable budgeting, the control mechanism is made all the more effective.
Standard costing: this consists in developing standards with regard to the three main elements
of cost materials, direct labour, & overheads and then computing variances by measuring the
actual performances against predetermined standards. The core of standard costing is
measurement and analysis of variances.
Cost control ratios: ratios have always been an important means if exercising operational and
cost control. Expressing the relationship between two or more variables, they clearly bring
out the overall health of an organization. The interdependence or link between the activity,
capacity and efficiency is well highlighted. One ratio by itself will not reveal much for
monitoring and control; the three together shed enough light on production volume, capacity
utilisation, and productivity. As usual these ratios are stated in percentage terms such that the
quotient of factors is multiplied by 100.
Value analysis and engineering: The value analysis methodology had its formal beginning
by engineer at GEC during World War II when material and labour were in short supply. It
was tested and proved to be effective after many years of research. The technique was retitle
as value engineering and developed and implemented widely in industry as a cost saving tool.
Value engineering definition:-A systematic analysis and evaluation of the techniques and
functions in the various spheres of an organization with a view to exploring channels of
performance improvement so that the value in a particular product can be bettered.
Benefits of value analysis:
It enables to identify and pinpoint area that needs attention and improvement.
It ensures and maintains the desire quality products and suggests the manufacture of most
suitable products.
It provides a method of generating ideas and alternatives for possible solutions to a
concern.

 It is an effective tool for cost reduction.

It concentrates on customer satisfaction which leads to profitability of the organization.
By a continuing search for improvement, it creates an atmosphere for increase of
efficiency.
It makes possible optimum use of all resources.
It promotes innovation and creativity.
Cost control in individual cost element:
They are five cost control aspect in individual cost element.
Raw material: - the inefficient use of materials in one of the prime cause of increased costs.
Wastage through poor and design has risen to such an extent that waste recovery is now a
major industry. Materials are wasted in a number of ways:
a) Off cuts, b) breakage, c) inefficient, d) poor workmanship, e) low quality f)
Obsolescence, g) pilfering.
Wages: cost control deals with in this field out the deviation arising because of manhours/days as projected and actual man- hours/ day worked. Labour cost rise in three ways:
a) Higher pay, b) shorter working hour, c) reduced output.
Power and fuel: - the process evaluates the consumption of power and fuel in quantitative as
well as in value terms with the standard consumption.
Stores and spare parts:-the total cost, stores cost also a major component In the cost of
production. Some tools are very costly and the under utilisation only contributes the increased
cost of production.
Overheads: this process makes the comparison of actual overheads with set norms for
overhead to find the variance and its analysis thereof. The main aim of cost control is to
maximize the limited available resources of production and to improve the utilisation of
critical inputs.
Making the cost control as success:
Proper fixation: The target should always be fixed up in consultation with the
individuals responsible for achieving the target into consideration and all practice

aspects governing the production expenses. Further targets should attainable and not
ideal.
Periodical review of target: The target once fixed should not be revised first because
there are not attended it should however be noted the targets by themselves should not
be considered permanent.
Timely presentation of comparison: the comparison between the targets and actual is
presented sufficiently in time for necessary action to be taken. Belated presentation
will only be statistical information cannot be helpful in increasing in a department due
to defective selling up the machine causing higher wastage the earlier it is brought to
the notice of the department concerned the quicker will be the recertification done
presenting this information says after a month will only results in the increased cost to
continue unnoticed.
Cost control in effectiveness: The management of every modern enterprise required a lot of
cost information and it requires periodical information not only about total cost of production
and selling but also about cost of its products of different process or stages of production and
introduction about the various elements of cost such as materials cost.
Labour cost overheads which consists the cost of production and sale it should have
information to know whether losses and waste occur in any line of activities so that corrective
steps may be taken to minimize them. While the work in progress cost accounting
information provides knowledge to take effective and efficient decision for cost control
ascertainment of profitability and internal and external reporting in the present era of cut
throat competition management are facing the problem of survival only those organization
can meet the competition effectively and have a hold on the workers which are in the position
to keep their cost minimum.

INTRODUCTION OF COST REDUCTION:In the present industrial scenario increasing competition squeezes margins and management
of business enterprises pay more attention to cost reduction as a way of preserving or
improving profitability. Reduction of cost stay cosmetic as a company maintains smooth
liquidity. Problems raise ugly head with market quakes which begin strangling liquidity.

Cost reduction is not a special exercise carried out each time by management noticed that the
profit margin has fallen. It should not be a fire-fighting exercise. It is or should be a routine
activity carried out consistently throughout the whole organization, looking at every activity
at all levels. Such a services is based on commitment to change that will ensure that the
organization at least keep pace with technological developments and may even take the lead
in producing new approaches to old problems. Cost reduction is the key word for success into
days global competitive market scenario.
Any cost Reduction service must be on a full knowledge of thee organizations us of
its resources. The profitability of a product can be improved by all or any of the
following ways.
By improving function cost remaining constant
By improving function as well reducing cost
By reducing cost, functions remaining constant.
Here we are concerned with the last two types of programme. Cost reduction is an approach
rather than a technique. It depends very much on individual talent coupled with a complete
understanding of the business process from design to delivery. It is achieved only through a
process of the product is conceived to the movement customer uses it. Cost cutting is no
longer thee solution to sustainable profitability the key to success is finding creative ways to
prevent cost.
Definition of cost reduction:It is a systematic effort to improve profit margins by eliminating all forms of waste and
unnecessary expenses without, at the same time, impairing the generation of revenue.
In other words, the process of identifying and eliminating unnecessary costs to improve the
profitability of a business is known as cost reduction.
Features of Cost reduction:

Cost reduction is not concerned with setting targets and standards. Cost reduction is
the final result in the cost control process.

Cost reduction aims at improving the standards.

It is continuous, dynamic and innovative in nature, looking always for measures and
alternative to reduce costs.

It is a corrective function.

This is applicable to every activity of the business.

It adds thinking and analysis to action at all levels of management.

The reduction must be real. It must arise within the organization as results of
improved efficiency.

The reduction must be permanent.

The deduction should not be at the expenses quality of products.

PRINCIPLES OF COST REDUCTION:

The programme must be based on a management cycle.

It must be based on a sound management organization.
It must be a systematic job, coupled with every other company activity.
It is an accounting line responsibility, for which every employee must be held

consistently accountable.
Responsibility for cost control must be delegated and accompanied by corresponding
authority.
The programme must be evaluated, redesigned, and re-evaluated in a continuous
process of follow up.
Importance of cost reduction:a) Improves the competitive capabilities and ensures survival, growth and prosperity
b) Optimum utilization of the resources
c) Provides reasonable prices to consumers
d) Preservation of the nations scarce resources
e) Keeps the price under control charges to consumer
f) Helps govt. in controlling inflation.
g) It improves the image of company for long term investment.
h) It improves the rate of return on investment.
i) To prepare for meeting a future position.
j) To eliminate unnecessary expenses or wasteful spending.
Advantages of cost reduction:
The main advantages of cost reduction are,

1) To a particular concern: Improves profits

Improves financial position
Improves competitive capabilities
Serves as an index of efficiency.
2) To the industry
One company serve as a trend better for the other companies.
3) To the nation
Efficient utilization of scarce resources
High taxes can be levied by government
Retaining the markets and gaining new buyers
Combating inflation.
Disadvantages of cost reduction:
The main disadvantages of cost reduction are,
Quality may be sacrificed at the cost of reduction in cost.
In the beginning cost reduction programme may not be liked by the employees and
danger may be posted to the programme because depends upon the willing
cooperation and active participation of employees.
There may be a conflict between individual objective and organizational objectives.
Objectives of cost reduction:
The purposes of cost reduction are,

Create cash reserve for reinvestment in research and development.

Reduce cost as non profit so able to serve more people.
To become more efficient.
To prevent employee layoffs.
Reduced manufacturing costs to stay competitive.
Lower costs of services in order to provide additional services.
To prevent reduction in employee benefits.

Dimension of cost reduction:

Internally driven
Keep improving processes
Employee suggestion programs
Externally driven
Top of the technology and process.

 Competitor driven
Bench marking against competitors.
Real time data
Area of cost reduction: Materials
Design
Purchasing
Storage
Transport
Production
Labour:
overheads
Increasing the production volume.
Extension of market and price differentials
Size of business units

Outsourcing
Sales and marketing
Energy
Production

Cost reduction process:

The achievement of real and permanent reduction in the unit cost of goods manufactured or
services rendered without impairing their suitability for use intended. Reduction in the cost of
product must be brought about by the eliminating of wasteful and unnecessary resources
employed in its design, manufacture, sale and distribution. Reduction in quality of a product
or the range of its uses cannot be regarded as fitting cost reductions.
Cost reduction process contains the following sequences of steps:
Analysis:-Every activity, whether in the office, factory, or warehouse, can be analyzed in to
number of separate steps. This is done by asking questions and gathering and recording
answers given. From this process of data collection, it is possible to draw a picture of the
activity which enables it to be examined and improvements developed.
Examination: - each activity is now examined in some details to establish whether it is

(a) Vital (b) secondary (c) unnecessary.

Vital activities are those which directly lead to achieving the objectives previously
established. They become fundamental to subsequent improvement. Secondary activities
dont contribute directly to achieve the objectives but are necessity to support and serve that
vital activity. The remainder activities concerned are almost always unnecessary. The greatest
savings often arise from elimination of unnecessary activities and components, and this
should always be the first line of attract in spite of the problems included. Considerable
improvements can be achieved by combining activities.
Developing solutions: - detailed analysis and examination should lead to the development of
a number of possible solutions. No solution should be over- looked for ignored because it
does not seem practical.
Selecting a solution: - the choice between several solutions will depend on numerous factors
including company policies, personal preferences, aestheticapped and other subjective
criteria. This is this stage were analyst as to make show that everyone fully understand the
advantages and disadvantages of various solutions so that a rational choice can be made.
Obtaining agreement:-in the evaluation stage, one of the questions asked was: will it be
acceptable to customer, employee and management? The answer to this must have been yes;
otherwise the solution would not have passed the evaluation test.
How to reduce cost:

Elimination of waste
Improving operations
Increasing productivity
Cheaper materials
Improve standards of quality.

Tools and techniques of cost reductions: Value analysis

Work study
Job evaluation and merit rating
Quality control
Economic order quality
Standardization
Improvement in the design of a design
Inventory management and control.

Scope of cost reduction campaign:

A cost reduction campaign should cover both long term aim as well as short term
objectives.
In a short term only, variable costs are susceptible to cost reduction efforts. Many
fixed costs items, (i.e. depreciation, rent etc.) are unavoidable.
Some fixed costs are also avoidable in short term, i.e., advertising and sales
promotion expenses. These are called discretionary fixe costs.
In the long run, most costs can be either reduced avoided. This includes fixed costs as
well as variable costs items.

Planning for cost reduction:

There are two basic approaches to cost reduction,
Crash programmed
Planned programmed
a) Crash programmes to cut spending levels:
Management might decide on an immediate programme to reduce spending to a minimum.
Some current projects might be abandoned, capital expenditures deferred, employees made
redundant, and so on. The absence of careful planning might make such crash programmes
look like panic measures. Whats more, they might be too little and too late, or misdirected.

For example; decisions by a company to reduce the size of its internal audit section might cut
staff costs in the short term but increase costs in the longer term.

b) Planned programmed to reduce costs:

Many companies tend to introduced crash programme for cost of reduction in times of crisis
and ignore the problem completely in times of prosperity. A far better approach is to have
continual assessment of the organizations products production methods, internal
administration systems, and so on.
Organization for cost reduction:
The organization for formulating a cost reduction programme differs from concern. This is
because of such divergences as nature of the business size of the undertaking and individual
requirements. This committee comprises the heads in charges of various business functions. It
is the function of this committee to formulate and administer the cost reduction programmes.
The detailed functions of the committee may be summarized as under.
a) To plan an integrated cost reduction programmes, covering the various centres or points
where costs are incurred.
b) To seek, if necessary the assistance of experts from outside the entity to plan the
programme.
C) To define clearly the cost reduction programmes and assigns responsibility amongst the
executive.
d) To set targets of cost reduction programmes and determines priorities.
e) To discuss problems arising in the course of execution of the scheme.
f) To review the progress made from time to time.
g) To motivate employees to achieve the targets.
The important cost reduction areas as follows:
Product improvement:

Product improvement cost the level of efficiency determines the costs incurred.
Important factors in product improvements are,

Quality of the product.

Unnecessary weight, materials content, machine or labor operation.
Proper designing of the product.

Production planning and control:

The area of production methods and organization is important for the purpose of reduction.
There are many vital activities relating to production and production planning where a cost
reduction programme may be applied.
Marketing areas:
In marketing, the following are the cost reduction areas:
Channel of distribution; sales promotion schemes, marketing research plan, territorial
responsibilities, methods of remunerating salesman, advertising methods, after sale service
costs, packing methods, materials handling, transport arrangement etc.
Personnel management:
The cost reduction programme should explore the following,

Reduction labour content of production by suitable work study techniques and

introduction of sound incentive scheme.

Reduction in labour cost by improving labour relation welfare measures and
better working conditions.

Material control:
Some of the aspects that may be looked into are,
Effective and economical purchase of materials.
Adherence to EOQ.
Keeping low inventory- less investment in stock.
Administration areas:
Administration functions include personnel, purchase and general
administration. The goal of cost reductions requires efficiency administrations, effective
purchasing procedures and a fair personnel policy and schemes.

 Utility service:
Utility services include power, water, steam, repair, and maintenances transport and
clerical services, etc. the following points should be considered.

Supply of utilities at economic costs or scope for any further increase in

utilization.
Proper system for preventive and curative maintenance.
Finance:
Methods of funding capital expenditure to be cost effective.
Procuring capital at economical costs.
Employing capital in a manner so as to given the maximum return.
The following check list can guide in starting a
Good cost return programme:
Development of a programme checklist: This involves identification and
classification of costs. It also involves procedure to use such as setting, objectives,
responsibility, targets, records, and measurements or evaluations policies.
From committees in order to identify responsibilities: It is necessary that any
contributions by employee be recognized and compensated.
Maintaining records of programmes:
Coupled with identifying responsibility in specific programme, keeping details of
activities, status and accomplishment is equally important.
Identification of cost reduction ideas sources:
Ideas are the very heart of any cost reduction programmes. Without these, any
programme would fizzle sooner or later. Ideas may come from various sources.
For example: employee suggestions publications industry associations, professional,
consultants, seminars, among others for proper implementations.
Communication is the most critical:
Portion of implementing a cost reduction programme for the simple reasons that
employees need to be informed of the programme itself. The procedures, responsibilities
and updates, cost reduction can operate best when its objectives are fully disclosed.

Stages of cost reduction:

Cost positioning

Cost design

Cost management

Cost cutting

Stages -1:- cost cutting:

Cost cutting involves cost in spending based on arbitrary criteria.

Costs are divided into committed and discretionary categories.
Cuts targets discretionary better committed, large before small, expedient before

sensitive.
Performance measured against historical standards.

Stage-2:-cost management:

Cost management involves a systematic approach to cost reduction that involves an

understanding of relevant cost drivers.

Reduction are achieved by eliminating unused capacity, no value added, activity

cycle times.
Performance measured against long term standards.
Cost are organized by resources, activities and cost objects.

Stage-3:- cost design:

Cost design involves an evaluation and redesign of the internal chain. It seeks to
improve the relationship among resource required work performed to satisfy customer

requirements.
Reductions achieved by eliminating redundancy and confirming to operation as

strategy.
Costs are organized by process and sub process.
Performance measured against best in class standards of performance.

Stage-4:- cost positioning:

Costs are organized by links in the value chain.

Reductions achieved by consolidation of links, sharing information, better

coordination and exploiting synergies among supply chain members.

Performance measured against strategic objectives such as market share and price
target

Difference between cost reduction and cost control

SI NO

COST CONTROL

COST REDUCTION

1.

The process of cost control is to set

It is not concerned with maintenance of

target, ascertain actual performance, and

performance according to standards. It

compare it with the target, investigate the

challenges standards.

2.

variances and contract them.

Emphasis is on present and past.

Emphasis is on present and future.

3.

It tends to set up a conservative

It is a continuous process searching for

procedure and lacks dynamic approach.

alternatives all the times and is innovative in

4.

Usually limited to items which have

nature.
Applied to every section of the business.

5.

standards.
It is preventing function; costs are

It is a contractive function and does operate

6.

optimized before they are incurred.

Seeks to attain lowest cost possible under

even when a cost control system exists.

Recognized no conditions as permanent, since

existing conditions.

a change will result in a lower cost.

7.
8.

It is management by directive dictating

It adds thinking to doing at all levels of

how to do a thing.

management.

It represents efforts made towards

It represents achievement in reduction of costs

achieving a target/goal.

in all efforts to reach the goal.

CHAPTER-II
RESEARCH DESIGN
The research design is the conceptual structure which research is conducted .Research design
is the arrangement of conditions for collection and analysis of data in a manner that aims to
combine relevance to the research purpose with economy in procedure. It is the framework,
which specifies the type of information to collect the sources of data collection procedure
data was collected from primary and secondary sources.
DEFINITION OF RESEARCH
According to Ker linger defines research as a systematic, controlled empirical and critical
investigation of hypothetical preposition about the presumed relations among natural
phenomena.
OR
A framework or blue print for conducting the research projects, it specifies the details of the
procedure necessary for obtaining the information needed to structure and or solve research
projects.

MEANING OF RESEARCH DESIGN

The title of the research problem, the objective of the study, the investigative questions and
the hypotheses consists of concept; those concepts should be precisely defined.
RESEARCH DESIGN OF THE STUDY
Research design is purely the framework of plan for a study guides the collection and
analysis of data.

TITLE OF THE STUDY:The study is conducted at THE BANGALORE BVC LOGISTICS PVT LTD. The title of
the study is A study on cost control and cost reduction. THE BANGALORE BVC
LOGISTICS PVT LTD.

STATEMENT OF THE PROBLEM:In a highly competitive market, cost control and cost reduction is the only way to maximise
earnings. This is because in a competitive environment. A firm will have little concerned
control over the prices of its product or services, so when the company fixes the prices of its
products or services, the firm has to control its cost and keep them as low as possible below
the price in order to earn profit. Here the cost control and cost reduction plays a key role. The
objectives of the company is to plan at different level, maintain effective control and proper
decision making to save cost and access the performance of the cost reduction is a challenge
to predetermined standards.
Cost reduction is to , see whether there is any possibility is bring about saving in the costs
incurred in plant and administration overhead of inputs come down. So to meet the challenge
of the cost reduction logistics at BVC cost analysis is necessary.
To maximize profits through cost reduction and cost control it is imperative to analyze
various in BVC Logistics Company.

Objectives of the study

The main objectives of the study are: To study the cost management system and control technique of the company.
To study the methods of cost control adopted by the company.
To find the reasons for excess of cost over planned/ estimated cost.
To analysis the effectiveness of the cost reduction and control system

implemented by the company.

To identify cost that show an increasing trend and decreasing trend.
To identify and suggest the suitable methods for cost control and reduction.
To improves the images of company for long term benefits.
To recommend any improvement if required.

REVIEW OF LITERATURE:As a mark of previous literature several visits were offered to RC college library,
Bangalore University, the company library (THE BVC LOGISTICS PVT LTD) and
it was noticed that none of them had specifically done a report on cost control and
cost reduction for individuals. The reports, projects, and books referred to also gave a
lot of insight into the study.
SCOPE OF THE STUDY:A study was conducted on cost control and cost reduction at BVC LOGISTICS PVT
LTD to analysis the cost reduction and cost control techniques in detail.
Maintaining optimum cost it is difficult task for the organization. It is to be
maintained in such a way that quality of the product should not get affected and act as
a motivation force for the employees to increase labour productivity. This study
highlights problem in implementing cost control and cost reduction measures.
PLAN OF ANALYSIS:The study is based on various sources of information. The data collected is primary
data and secondary data and its complied, classified tabulated and then analyzed using
costing techniques and statistical tools graphs and charts are used to highlight the
statics.

Systematic sampling technique has been adopted for this study: selection of the study
period is 2010-11, 2011-12, 2012-13 and 2013-14 in the company.
METHODOLOGY OF THE STUDY:This study is based on face to face interview with the manager accounts and staff of
the company and also based on the availability of various data through annual report,
cost sheet. Prospectus provided by the company and academics books, articles and
websites.
SOURCES OF DATA: Primary source: - are those data collected for the first time which is for
specific purpose, primary data original in nature. The study is collected
through the records maintained by company through face to face interview
with staff of official of BVC.
Secondary sources:-the major data was collected from all available secondary
sources. List annual reports, cost sheet, review of books, magazines, journals,
text books, internet and websites of the BVC LOGISTICS PVT LTD as well
as others.

LIMITATIONS OF THE STUDY:-

The limitations of the study are as under:The study is confined only to BVC LOGISTICS PVT LTD.
The major limitation of this is practical difficulty.
The study is limited to a period of 3 years only.
The study is restricted only to BVC LOGISTICS, Bangalore; it is not

compared with any other.

Access to the information is limited only to BVC LOGISTICS.
Time was major constraints so research study could not be made in depth.
The study is purely on the data made available and inferences were drawn on

theoretical.
The conclusions have been drawn with not much comprehensive and practical
knowledge about the company.
CHAPTER SCHEME

CHAPTER-1
INTRODUCTION:

This chapter is about the introduction to the cost accounting, cost control and cost
reduction. It includes: meaning, definition, and objectives, function, and merits demerits of
cost accounting. And meaning, importances process, objective advantages and disadvantages
of cost control and cost reduction. Tools and technique of cost accounting cost control and
cost reduction.
CHAPTER-2
RESEARCH AND DESIGN:
This chapter deals about the research design of the project study. It consist about the
statement of the problem, scope of the study, objective of the study, plan of analysis,
methodology ,sources of data and limitations of the study.
CHAPTER-3
COMPANY PROFILE AND INDUSTRY PROFILE:
This chapter deals with the profile of the BVC LOGISTICS, mission, vision, objective
awards and achievements, social responsibility, new technologies. Future projects, and plans
of the organization structure.
CHAPTER-4
DATA ANALYSIS AND INTERPRETATION:
This chapter includes the main work of the research work. This chapter deals with a
role of cost control and cost reduction techniques of cycle explained with tables and graphs.
CHAPTER-5
FINDINGS, SUGGESTION AND CONCLUSION:
This chapter consist of the findings from the research study, the suggestions given to
the company and it includes the overall conclusion found from the research study. Which
gives overall cost sheet profits and loss accounts, balance sheet, findings, suggestion and
conclusion in drawn from the observations.
CHAPTER-6
BIBLIOGRAPHY

CHAPTER-7
ANNEXURE

CHAPTER-III
COMPANY PROFILE
GENESIS OF THE COMPANYOver the past 50 years, BVC has pioneered Supply Chain Solutions in critical offerings such
as Custom Clearance, Logistics Transportation, Invaluable Cargo Management and many
more. The Group has carved a niche within the Gems and Jewellery industry and
acknowledged as a stalwart in Invaluable Asset Movement Solutions. BVC Group today
boasts of global connectivity and is perhaps amongst the very few Indian Logistic Houses to
be associated with Mega Brands across numerous countries.
BVC Logistics is today a leading multinational company providing Integrated Logistics
Solutions by diversifying its reach across Multimodal Transport Operations, Ocean Freight,
Air Freight, Contract Logistics and Project Logistics. Benchmarked quality standards,
standardized processes and operation excellence across all the services and facilities, have
enabled BVC Logistics to emerge as the market leader in all these segments.
We pride ourselves as a Total Supply Chain Solutions Company offering End to End, Best of
Breed capability in Domestic and International Transportation and Warehousing customers
across varied verticals in India and Abroad.
We deliver Measurable and Tangible Solutions across our service offerings
BVC Logistics has a Pan India presence with foot print across India courtesy its strategic tie
up with Carrier Neutral Service Providers. Being a TRUE 7PL Company (Offering
Warehousing Solutions as a 3PL and Transportation Solutions as a 4PL) we have tied up
Niche players to give Best of Breed Deliverables to our Corporate customers BVC

Ventures is the holding company of the BVC group of companies with teams having decades
of experience, a strong global network and strategic industry partnerships and relationships.
The ethos of BVC Ventures is entrenched on a relentless pursuit for creating value for
stakeholders and creating benchmarks of growth rates in its industries.
Established in 1960, the five decade old group has pioneered movements and services in
logistics, security and tourism and technology. The Group has sustained within niche sectors,
becoming a market leader in specialized offering.
BVC Ventures is expanding as a conglomerate with joint ventures, aiding start-ups to grow.
The BVC Ventures team specializes in offering state of the art resources to start-ups and
helping it gain traction to become market leaders. A strong focus is devoted to developing
value for stakeholders and finding effective, scalable solutions to challenges persisting today.
BVC is a market leader in secured logistics services operating for over half a century
providing integrated multimodal transport operations. BVC has carved a niche within high
value goods logistics and is acknowledged as a stalwart in valuable asset movement
solutions.

BVC has established quality standards, standardized processes and operation excellence
across all the services and facilities. Integrity is the key constituent of BVC Logistics. BVC
Logistics boasts of global connectivity and is amongst the very few Indian Logistic Houses to
be associated with major global brands. For further information, please
Vision & Mission

Vision
To create a social difference through disruptive businesses across industries as a leading
conglomerate.
Mission
To set benchmarks in service quality, stakeholder satisfaction and growth rates in the industry.

Value

Values are what bind us together to move towards our vision.

Diversity
Diversity is deeply engrained in our culture. We strive to work with talented individuals from
many different backgrounds and varied viewpoints. This diversity enriches our creative
solutions and ensures value for our clients' businesses. A realization that diverse thought from
many sources directly contributes to business success represents itself in: innovation, problem
solving, and business management.

Quality
Attention to detail and attributes of balanced perfection can be realized from Quality. Quality
is a genuine concern for completing work well and is gained through education, training, and
experience. We, at BVC Logistics, lay strong emphasis on training our employees, as we
believe that the highest levels of customer satisfaction and operational excellence are
achieved only with this value.
Respect
Business practice cannot be exercised over time without patience and sensitivity. Openminded and fair business dealings start with respecting the needs and concerns of others. And,
it goes beyond classes, races, genders and ages. We are proud to say, every stakeholder
member of BVC Logistics appreciates this value.
Desire to Serve
Self-commitment and self-respect provide the pathway for this value to show up in business.
Enthusiasm for day-to-day activities and being mindful of the needs of one another and
customers result in business efficiencies. An honest proactive desire to serve Communication
Effective communication is the key for sustained business relationships. At BVC Logistics,
we believe that communication based on effective listening, understanding other's
perspectives, and appropriate discretion would lead to strong teams and partnerships.
Integrity

Integrity is all about consistency of actions, values, methods, measures, principles,

expectations and outcomes. We, at BVC Logistics, lay the foundation of trust, based on above
virtues, to build respectable and sustainable business relationships, which facilitates business
interaction with honesty and confidentiality.

Social Responsibilities and contribution:

At BVC Logistics, we understand our responsibility towards the society and the animals and
are committed for the betterment of society and animals around us.
BVC strongly believes in corporate social responsibility and contributing to the development
of the society. BVC works closely with various charitable organizations to help improve the
standard of living through providing educational and healthcare benefits to the
underprivileged and aid in animal welfare. The long term vision of the foundation is to create
a substantial difference in the quality of education and healthcare in areas needing utmost
attention.

Charitable Organizations:
The BVC Foundation along with BVC Charitable Origination regularly donates large
amounts to assists various foundations like... Giants Group, JSC and Sri Kunthunath Jain
Foundation the BVC Foundation sponsors 15 individuals at the Mumbai Marathon and
proceeds are donated to United Way of Mumbai to support education and healthcare causes.
The BVC team is raising awareness of the NGO to allow more corporate to donate to the
NGO, eventually leading to a larger difference.
Such donations continue to help improve the standard of living of the underprivileged in the
society.
Healthcare:
BVC Foundation has donated multiple dialysis machines to hospitals and hundreds of
patients are treated at discounted rates. Our goal is to continue with such donations that will
help patients for years to come. BVC foundation has also donated an ambulance which is
currently being used in a village in Maharashtra.

Education:
BVC Foundation recognizes that helping to educate the underprivileged youth of India will
result in a better quality of life for all. Since 1997 BVC has donated 17,000 books annually,
in addition to sponsoring the yearly academics of several children in remote areas.
Our focus will continue to remain on making education available to the underprivileged and
on improving the quality of academics for talented promising students.

Customers of BVC:

Services Offerings Contract Logistics Division

We offer the following bouquet of Services: Surface Mode Door to Door Express Service
Train Mode
Air Mode
Multi Modal
Full Truck Load ( FTL)
Warehousing and Distribution
Project Cargo Logistics
Reverse Logistics
Finished Goods Distribution (FG)
Service Parts Logistics (SPL)
E Com / B2C Solutions
Custom Clearance
Tours and Travels
BVC Express

Other Divisions:
International Freight Forwarding ( Ocean / Air Exports / Imports/ Customs
Brokerage)

 Luxury Goods
Precious Jems and Jewellery (Domestic)
Precious Jems and Jewellery - International
Project Logistics
FTWZ
Dangerous Goods

Network:

Through our strategic tie up with Multiple Carrier Neutral Service Providers operating a fleet
of Containerized vehicles plying the Trunk, Feeder as well as the First and Last Miles. The
vehicles are a combination of 32 Feet, 24 Feet, 20 Feet, and 17 Feet closed containers. The
Trunk routes spans from Delhi Bangalore Delhi, Delhi Hyderabad Chennai and the
Feeder routes span across and within various States in India. The vehicles are mounted with
GPS We keep track of our vehicles and in emergency situations, we seamlessly ensure that
the services are unhindered.
Our Surface network is augmented with FTL / Rail / Air Network. We operate SLR and VPU
on the Delhi Bangalore and the Delhi Chennai Routes.

Knowledge Capital:

Our strength lies in our PEOPLE. Everyone is passionate towards giving 100 % service to the
customers. Our people are trained so as to ensure that they understand the business. Our
Strong Talent Acquisition team ensures that the Right people are identified, groomed and
given specific responsibilities.

IT Infrastructure:

Dovetailed with Knowledge Capital IT Infrastructure plays a dominating role in shaping

BVC Logistics success. We are an IT savvy company and have invested heavily on the IT
infrastructure. Our IT backbone is our centrally hosted ERP System which is based on
ASP.Net and Microsoft SQL Operations, Billing, Administration, Accounts, Finance and
Sales Force Order Management Modules function seamlessly online in Real-time. We have a
Repository wherein scanned PODs are stored for duration of 3 years. We can integrate our IT
seamlessly into customers CRM for real time response. GPRS talks to our ERP system for
greater visibility. Our Track and Trace is real time.

Compliances and Security:

We follow the Rule of the Law of the Land. We are 100% compliant, Statutory and Security wise and we take pride in discouraging improper payments , illegal transactions, ensure that
all statutory obligations are strictly adhered to, conduct background checks, primarily to
ensure that we hire people with high Integrity and safeguard our customers precious cargo.
Our Network and the Fleet are completely secured. Our warehouses are as per international
standards

Control Tower Supply Chain Management Solutions:

Board of directors:

1.

Uday Chinai

Chairman & Managing Director

Mr. Chinai is a strong believer in
helping the society.
He has supported education,
healthcare and animal welfare
rights.
He is closely associated with
several NGOs and is active in
social events.

2.

Bhavik Chinai

Director
Bhavik Chinai joined as director of
the company in 2012.
He's responsible for implementing
the company's strategic vision,
developing business alliances and
building strong teams.
Bhavik is active in making a social
difference and is the president of an
NGO of the Giants Group.

Bhavik Chinai has prior experience

of working with several companies
in event management, venture
capital, private equity and supply
chain management.

3.

Rajesh Neelakanta

Executive Director & CEO

Rajesh Neelakanta has over 23 years
of experience in Sales & Marketing,
Operations Management, Profit
Centre Management, People
Management, Customer Relations
Management and a host of other
organisation building endeavours,
across the Logistics domain.
He has worked in marquee
organisations like HCL Ltd
Reprographics Division, Real Value
Appliances Ltd, AFL Limited, UPS
Jet air Logistics, Lee & Muirhead
Pvt Ltd and Arshiya International
Ltd, before coming on board at
BVC Group.

4.

Yogesh Bansode

President - Marketing & Operations

Yogesh Bansode brings nearly 20
years of strategic supply chain
management experience and serves
as President of BVC Logistics.
He started his career in General
Cargo with Global Airfreight and in
2003 he made inroad to the Valuable
Cargo Logistics.
In 2007 he got onboard with BVC
Logistics and since then he has been
successfully been handling the
Operations and Marketing of
Valuable Cargo.

5.

Krishnanand Bastikar

Vice President - International Marketing

He has joined BVC Logistics in
2002 as a Sales Manager, and since
his association with the logistics of
Gems & Jewellery has been for 14
years, the experience has been a key
for him to grow in BVC Logistics.
His experience spans across the
following: Preparing the sales &

marketing budget for the year.

Target new customers, discuss

volumes, overseas location.

Co-ordinating with the trade

agencies for the logistics.

Co-ordinating with the
overseas counterparts for the
logistics.

6.

Paresh Das

Paresh has worked in the sales &

marketing role for over 26 years in
the diverse industries such as
Engineering, Gems & Jewellery and
Logistics.
Currently he is working with BVC
Logistics Pvt Ltd heading their
domestic business which is a
strategic combination of both the
Logistics and G&J industry.
This profile is both challenging and
gratifying having to work not only
as a cons friend of the industry,
explaining the ease and importance
of using a Trusted Secure Logistics
Provider of over five decades which

promotes the formal mode of

Valuable Cargo Transportation.
Maxim in life: Work Hard, Play
Mercilessly

7.

Bharat Badani

Vice President CHA

He has joined BVC Logistics in
1982, since then his role in the firm
has been in a vital position as an
authorized person to sign export
shipping bill and import shipping
bill of entry for BVC Logistics.
He has completed his education in
Commerce from Mumbai University
and currently he is taking care of the
entire operations in customs.

8.

Magesh Narayanan

Vice President - Finance

Mr. Magesh Narayanan is a B.Com
Graduate from Narsee Monjee
College of Commerce and
Economics and he also acquires a
Chartered Accountancy degree from
the Institute of Chartered
Accountants of India ( ICAI ).
He brings in the experience of 15
years of working at Managerial level
in the Logistics Industry.
Currently he is serving as "Vice
President- Finance" in BVC
Logistics and his association with
the BVC group has been for 9 years

of his career. His extensive

experience spans across the
following:

Financial control of the Group Optimum Management of

Funds, Reducing Interest
burden, Looking for areas of

Cost control etc,

To give timely MIS reports to
the management which shall
give them information to take
strategic decisions regarding

9.

Sushil Sawant

the company?
Head Ocean
Sushil Sawant has over 15 years of
experience in International Freight
Forwarding & Logistics.
He has worked with global logistics
companies like Expeditors, Eagle
Global and leading Indian logistics
players like BLR Logistics
International.
Sushil also has more than a working
knowledge in the International Air
Freight operations.
He has excellent exposure to
Contract Logistics & Industrial
Project Logistics.

10.

Nirav Jogani

Independent Director
He is the Chairman of the G&J task
force of CII and involved in many
industry initiatives such as the
Gujarat Hira Bourse, Surat Rough
Diamond Sourcing and Surat
Convention Center apart from
servicing of many G&J, banking
financial and other clients.

Control tower operations

Function of control tower:

Award and achievements:

BVC LOGISTICS bags the award for Transport and Logistics Business of the Year
at the Franchise Small Business Awards 2014.

BVC Brinks Launched its New Logo & the JV Celebrated Completion of 18
Successful Months in November 2014.

BVC Logistics Awarded Best Logistics Company of 2013 at India International

Bullion Summit (IIBS).

BVC Logistics Receives Best Logistics Company Award at GJTCI Excellence Awards
in January 2014.

BVC Foundation's Annual Stationery Donation in July 2013.

BVC Logistics launched Jewellery EXIM Handbook in October 2012.

BVC Logistics Official Freight Forwarder for IIJS 2011.