Costing & Profitability
Costing serves two purposes. It tells management which products, customers and activities actually earn money, and it meets statutory requirements where the law requires cost records to be maintained and audited. We work across both, using recognised costing principles and your own records, for businesses across Tamil Nadu and, where suitable, elsewhere in India.
Discuss a costing requirement →Costing & cost structure
How cost is built up, product by product and process by process.
- Product and service costing
- Job, batch, process and contract costing
- Activity-based costing
- Standard costing and variance analysis
- Capacity utilisation and overhead absorption
- Cost sheets aligned to the Cost Accounting Standards and GACAP
Profitability & pricing
Which products, customers and orders actually earn money, and what price they must carry.
- Contribution by product, customer, plant or channel
- Break-even and sensitivity analysis
- Minimum acceptable price and discount limits
- Product mix and make-or-buy decisions
- Tender, quotation and order costing
- Export and domestic order profitability
Cost control & improvement
Where cost is leaking, and what can practically be reduced.
- Material yield, wastage and scrap review
- Process and conversion cost analysis
- Overhead and indirect cost review
- Energy and utility cost per unit
- Inventory holding and working-capital cost
- Cost reduction programmes with measurable targets
Statutory cost records & cost audit
Where the law requires cost records to be maintained and audited.
- Applicability assessment under the Companies (Cost Records and Audit) Rules, 2014
- Cost records in Form CRA-1
- Cost audit and report in Form CRA-3, where appointed as cost auditor
- Support on CRA-2 intimation and CRA-4 filing by the company
- Reconciliation of cost records with audited financial statements
- Preparation of annexures and cost data for filing
Cost certification
Cost figures that have to stand up to outside scrutiny.
- CAS-4 cost of production certificates
- Inventory valuation following CAS-25
- Cost certificates for banks and government departments
- Cost data supporting subsidy, incentive and tender submissions
- Related-party and inter-unit cost statements
- Certificates required by regulators and customers
Who this is for
Manufacturing, trading, service and engineering businesses that price on market rates without a clear view of their own cost. Companies approaching the ₹35 crore turnover mark, where cost records become a statutory requirement. Companies with multiple units or GST registrations that need cost of production certified.
We work with businesses across Tamil Nadu, including the industrial belts around Ranipet, Vellore, Kanchipuram, Sriperumbudur, Hosur, Coimbatore and Chennai. Site visits are undertaken where the work requires them, and suitable engagements are handled remotely.
How we work
Understand
We begin with the business, its records and the requirement behind the engagement.
Examine
We work from your own records, documents and processes rather than assumptions.
Review
Findings and outputs are reviewed by the proprietor before anything is issued.
Report
Conclusions in plain language, with the decisions or filings they support.
Scope, deliverables and timelines are confirmed in a written engagement letter before work begins.
Common questions
Our costing shows a profit, so why is cash always tight?
Costing measures whether a product earns a margin; cash depends on when money arrives and leaves. A profitable sale collected in 60 days, with material and wages paid in 15, creates a gap that no cost sheet shows. Both views are needed, and they answer different questions.
What is contribution, and how is it different from profit?
Contribution is sales value less variable cost. It shows what each unit contributes towards fixed costs and profit. A product can show positive contribution yet appear unprofitable after fixed costs are allocated, which is why pricing and product-mix decisions usually begin with contribution.
When do cost records become compulsory for us?
Companies in the sectors listed in the Rules must maintain cost records once turnover from all products and services reaches ₹35 crore in the preceding financial year. Cost audit follows at higher thresholds: ₹50 crore overall with ₹25 crore product turnover for regulated sectors, and ₹100 crore with ₹35 crore for non-regulated sectors. Companies whose exports exceed 75% of revenue, and those operating wholly in an SEZ, are outside the cost audit requirement.
Do the Cost Accounting Standards apply if we are not covered by cost audit?
They apply directly where cost records are required, because Form CRA-1 requires records to follow the Cost Accounting Standards and GACAP. ICMAI has issued 25 standards, along with GACAP and 13 guidance notes. Even where they are not mandatory, they give a consistent basis for measuring cost, which makes comparison across periods meaningful.
When is a CAS-4 certificate needed?
Typically where goods move between units under different GST registrations, or to a related party, and there is no comparable open market value. Rule 30 of the CGST Rules then permits valuation at 110% of the cost of production, with CAS-4 as the accepted basis for that cost. The certificate rests on cost records, so it is far easier where those records are already maintained properly.
We revised prices after the GST rate change. Should costing be revisited?
It is worth doing. From 22 September 2025, the 12% and 28% slabs were removed, leaving 5% and 18% as the main rates with a 40% band for specified goods. Where a rate falls, how much passes to the customer and how much stays as margin depends on the product's actual cost structure.
Do payment terms affect product cost?
They affect the economics of a sale. Where a supplier is a registered micro or small enterprise, payment must be made within the agreed period, capped at 45 days, or within 15 days where there is no written agreement. Late payment moves the tax deduction to the year of actual payment and attracts interest under Section 16 of the MSMED Act at three times the RBI bank rate, compounded. From 1 April 2026 this provision is Section 37(2)(g) of the Income-tax Act, 2025.
Do you work with businesses outside your district?
Yes. The firm is based at Kaveripakkam in Ranipet District and works with businesses across Tamil Nadu. Cost records, costing analysis and certification work can largely be handled remotely, with site visits where the work requires them.
Applicability of cost records, cost audit and specific measurement requirements depends on each company's facts and on the rules in force at the time, and is assessed case by case. Where the firm acts as cost auditor, it accepts only engagements that meet the independence requirements of the Companies Act, 2013 and The Institute of Cost Accountants of India.