RAILWAY WORKSHOP ACCOUNTING 192022 upreti 1 INDIAS PLAN

RAILWAY WORKSHOP ACCOUNTING 1/9/2022 upreti 1

INDIA’S PLAN EXP. IN TRANSPORT SECTOR AT A GLANCE CRORES OF Rs. 1/9/2022 upreti 2

FINANCING OF RLY’S PLAN EXP. CRORES OF Rs 1/9/2022 upreti 3

KEY STATISTICS CRORES OF Rs 1/9/2022 upreti 4

MARKET BORROWINGS VIS-A VIS LEASE CHARGES CRORES OF Rs 1/9/2022 upreti 5

1/9/2022 upreti 6

GROSS BOOK VALUE OF ROLLING STOCK CRORES OF Rs LOCOMOTIVES 4818 CARRIAGES 3004 WAGONS 2747 OTHERS 1/9/2022 7 TOTAL upreti 10576 7

EXPENDITURE IN THE RAILWAYS ORDINARY WORKING EXPENSES • REVENUE EXPENDITURE (1 -13) • APPR. TO PENSION FUND • APPR. TO DRF WORKS EXPENDITURE • PLAN HEADS SOURCES OF MONEY FOR RAILWAYS • FROM EXCHEQUER 1/9/2022 upreti. RESOURCES • FROM INTERNAL 8

HOW RLY’S NET REVENUE IS CALCULATED 1999 -2000 GROSS TRFC. RECEIPT 33111 WORKING EXPENSES 30283 NET TFC RECEIPTS MISC RECEIPTS 2823 429 NET REVENUE 3457 DIVIDEND PAYABLE 1914 EXCESS 1/9/2022 + 1543 DEVP FUNDupreti CAP. FUND 9

WORKSHOPS PRODUCTION UNITS REPAIR WORKSHOPS 1. SEPARATE ENTITY UNDER ZONAL RLY 2. HEADED BY GM HEADED BY CWM 3. TOTAL 6 IN NO. TOTAL 36 1/9/2022 upreti 10

REPAIR WORKSHOPS SERVICE PROCESS SHOPS JOB SHOPS MACHINE FITTING, SAWMILL 1/9/2022 upreti 11

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PRODUCTION CONTROL ORGANISATION (PCO) n n THIS IS THE HEART OF ALL THE ACTIVITIES IN THE W/S. IT CONTROLS ALL THE ACTIVITIES LIKE: n n n 1/9/2022 PRE PLANNING ESTIMATING PROCESSING RATE FIXATION PROGRESS INSPECTION upreti 13

WORK DONE IN W/S n IN ROLLING STOCK W/S – POH – IOH – AOH – SPECIAL REPAIRS 1/9/2022 upreti 14

WORKORDER SYSTEM • WHY WORK ORDERS • FOR RECORDING AND ANALYZING WORKSHOP EXPENDITURE • IT IS A SUBSIDIARY ACCOUNT HEAD UNDER THE MAIN HEAD WMS • TYPES OF WORK ORDERS • • • STANDING WORK ORDERS PRODUCTION WORK ORDER PGR WORK ORDERS • NOMENCLATURE • 1/9/2022 NORMALLY OF 7 -8 DIGITS upreti 15

COMPUTERISED SYSTEM X XXX 1/9/2022 = RAILWAY NO. = SHOP NO. = DEMAND NO. = COST CENTRE =1 =95 =5 =501 upreti CR ELW/BSL DEMAND 5 COST CENTRE NO. 16

EXPENDITURE IN WORKSHOPS 1. DIRECT EXPENDITURE A. PAYMENT TO DIRECT LABOUR B. MATERIAL 2. INDIRECT EXPENDITURE A. SHOP ON COST B. GENERAL ON COST C. PROFORMA ON COST 3. CALCULATION OF INDIRECT EXPENDITURE ACCOUNTING OF LABOUR 1. GATE ATTENDANCE CARD 2. ABSENTEE LIST 3. JOB CARD 4. TALLY SHEET 1/9/2022 upreti 17

On costs n Expenditure that cannot be directly charged to the cost of the work done is called on cost. – Shop on cost – General on cost – Proforma on cost They are distributed in proportion of the direct labour charges incurred in any work. n They are expressed in terms of percentage. n The percentage of the on cost is decided in advance based upon the previous year’s expenditure. 1/9/2022 upreti 18 n

In the PU’s the various on cost are categorised as n Administrative over heads. n Factory overheads n Township overheads n Stores overheads. n 1/9/2022 upreti 19

INCENTIVE SYSTEM Also Called Payment by Results • INTRODUCED IN 1960 • TO IMPROVE PRODUCTIVITY TO INCREASE OUTTURN SALIENT FEATURES • TIME IS THE YARDSTICK FOR MEASURING WORK AND PROFIT IS BASED ON IT. • ALLOWED TIME IS FIXED IN SUCH A MANNER THAT AVERAGE ABILITY OF WORKER IS ASSURRED INCENTIVE OF 33 1/3 %. • TIME TAKEN ---- JOB CARDS • MAXIMUM INCENTIVE OF 50 %OF THE TIME ALLOWED FOR EACH OPERATION 1/9/2022 upreti 20

• PIECE WORK BONUS IS PAID ON THE BASIS OF AVERAGE HOURLY RATES • INDIRECT WORKERS & CHARGEMEN GET 80%. • BASIC WAGES ARE GUARANTEED. • PAID AFTER OF THE WORK AND INSPECTION TOTAL WAGES+ OVERTIME+ LEAVE SALARY • HOURLY RATE = OF PAY NO. OF HOURS OF ATTENDANCE + NO. OF HOURS ON LEAVE WITH PAY. 1/9/2022 upreti 21

• • E. G. TIME ALLOWED = 10 HOURS AVERAGE HOURLY RATE = Rs. 36 TIME TAKEN = 8 HOURS INCENTIVE = (10 -8)*36=Rs. 72 MAXIMUM INCENTIVE=(10 -5)*36=Rs. 180 MINIMUM INCENTIVE =(10/3)*36 = Rs. 118 1/9/2022 upreti 22

Calculation of Allowed time Normalised actual time calculated by the time and motion study. n To this is added n – General handling and contingencies – Gauging and machining – Fatigue allowance – Production bonus n 12% 5% 12. 5 to 25% 33. 33% All added up will constitute the Allowed time. 1/9/2022 upreti 23

Revised Instructions The actual AT for each activity is to be reduced by 12% n Then the calculation of the DW should be done by dividing the modified activity by 267. n EIW’s should be less than 15% or less of the DW’s. n Strength of Supervisors to be calculated afresh. n No OT should be paid to the staff which is covered under the incentive scheme. upreti 24 n To 1/9/2022 be implemented from 1. 9. 1999. n

n Reduction in AT was done by reducing the fatigue allowancefrom 25% to 12. 5%, the contingency allowance from 12. 5% to 10%. If this does not result in required reduction the contingency allowance can be reduced further. 1/9/2022 upreti 25

WORKSHOP MANUFACTURING SUSPENSE - CAPITAL SUSPENSE UNDER DEMAND NO. 16 MINOR HEAD 7200 SUB HEAD 7210 (8 DETAILED HEADS) SUB HEAD 7220 (2 DETAILED HEADS) - EXPENDITURE IN W/S IS BOOKED TO DEBIT OF LABOUR MATERIAL OVER HEADS - CREDIT IS RECEIVED FROM WORK DONE FOR CAPITAL/DRF WORK DONE FOREIGN RAILWAY WORK DONE FOR HOME RAILWAY MATERIAL RETURNED TO STORES 1/9/2022 OF DEDUCT ENTRY -CONCEPT upreti WMS 26

LABOUR SUSPENSE HEAD It is a subhead under the head WMS • Payment to the staff is done at the beginning of the next following month. • Liability accrued in a month needs to be evaluated. • For this the journal entry made is: • WMS • LABOUR SUSPENSE Dr. Cr. • This is only on the basis of the estimation of the wages. The balance in Labour will thus represent 1/9/2022 upreti 27 liabilities on account of wages.

Compilation of workshop Accounts n Expenditure is incurred in two heads. – Labour – Material n Labour sub ledger. – Total time taken in each work order plus the insenctive bonus is summerised here. n Register of labour charges. – All sallery TA, labour bills chargable to labour suspense are mentioned here. 1/9/2022 upreti 28

n Labour schedule – It is the summery of labour charges for the whole workshop. n Main Stores Sub- Ledger – This shows the value of stores used workorder wise and the information is received through the Stores Debit Summarry. n Summary Sub Ledger – 1/9/2022 upreti 29

SOME COMMON/IMPORTANT JOURNAL ENTRIES 1. PASSING OF PAY SHEET Dr. LABOUR SUSP. Cr. CHEQUES/BILLS 2. CLEARANCE OF LABOUR SUSP. Dr. WMS Cr. LABOUR SUSP. 3. ISSUE OF MATERIAL FROM STORES. Dr. WMS Cr. STORES SUSP. 4. PURCHASE OF MATERIAL DIRECTLY BY SHOPS Dr. WMS 1/9/2022 upreti Cr. CHEQUES/BILLS 30

5. MANUFACTURED MAT. RETURNED TO STORES Dr. STORES SUSP. Cr. WMS 6. WORK DONE FOR HOME RAILWAY Dr. DEMAND 5/6 Cr. WMS 7. WORK DONE FOREIGN RAILWAY. Dr. FOREIGN RAILWAY Cr. WMS 1/9/2022 upreti 31

THE WORK DONE IN THE WORKSHOPS WHEN TRANSFERRED TO FINAL HEAD IS DEBITED TO A. REVENUE DEMANDS - 5 WORK DONE FOR LOCO - 6 WORK DONE FOR COACHES/EMU - 7 REPAIR & MAINTAINANCE IN THE DEMANDS THE FOLL. PU’S ARE DEBITED. - PU 34 FOR LABOUR - PU 35 FOR MATERIAL B. DEMAND NO. 16 1/9/2022 - PLAN HEAD 21 (RSP) upreti 32

COSTING IN REPAIR & MAINTENANCE WORKSHOP 1. TRADITIONAL APPROACH. 2. NEW COMPUTERISED COSTING SYSTEM A: INPUTS 1. PHYSICAL OUTTURN STATEMENT OF EACH SHOP 2. PHYSICAL OUTTURN OF GROUP ‘A’ SHOP. 3. PHYSICAL OUTTURN OF GROUP ‘B’ SHOP. 4. N/S ITEMS USED BY GROUP ‘A’ & ‘B’ SHOPS. 5. UTILISATION OF HIGH VALUE ITEMS FOR EACH COST CENTRE. 6. WORKSHOP OUTTURN. 7. PDR RATIOS. 1/9/2022 upreti 33

B. REPORTS 1. WGR GROUP ‘A’. 2. WGR GROUP ‘B’. 3. HIGH VALUE ITEMS. 4. LOCOWISE COST OF GROUP ‘B’. 5. AVERAGE UNIT COST OF GROUP ‘A’. 6. AVERAGE UNIT COST OF GROUP ‘B’. 7. TOTAL COST OF THE ROLLING STOCK 1/9/2022 upreti 34

FACTORS EFFECTING UNIT COST • EXPENDITURE ON LABOUR • EXPENDITURE ON STAFF, SUPERVISORS, OFFICERS ETC. • COST OF STORES (STOCK & NON STOCK) • OUTTURN OF THE WORKSHOP 1/9/2022 upreti 35

WORKSHOP EFFICIENCY INDICES 1. PHYSICAL OUTTURN VIS-A-VIS TARGETS 2. LOCAL PASSING % VIS-A-VIS OUTTURN 3. WMS CLOSING BALANCE 4. UNIT COST 5. STOCK PROCURMENT VIS-A-VIS NON STOCK PROCUREMENT. 6. PROFORMA ON COST CHARGES. 7. MACHINE UTILISATION. 8. CONTROL OF REVENUE EXPENDITURE. 1/9/2022 upreti 36

WHAT AILS INDIAN RAILWAY WORKSHOPS • NO IDEA OF INSTALLED CAPACITY. • POOR MAINTENANCE OF INFRASTRUCTURE. • UNWIELDY AND ILL-TRAINED LABOUR FORCE. • LACK OF COST CONSCIOUSNESS. • PREMIUM ON NUMERICAL RATHER THAN QUALITATIVE TARGETS. • SCANT REGARD TO EXISTING SYSTEMS/PROCEDURES. 1/9/2022 upreti 37

WHAT CAN BE DONE TO IMPROVE THE SITUATION. • SWOT ANALYSIS • OFF-LOADING OF NON-CORE ACTIVITIES. • MODERNISATION WITH ATTRITION OF STAFF. • CONSTANT UPGRADATION OF KNOWLEDGE. • IMPLEMENTATION OF COSTING SYSTEMS. • PROPER MAINTENANCE OF M&P. • QUALITY AND NOT QUANTITY OF OUTPUT SHOULD BE THE PRIME 1/9/2022 upreti. MOTIVATING FORCE. 38

MACHINARY & PLANT PROGRAMME • WHY M&P PROGRAMME • PROCUREMENT ON THE BASIS OF MONETARY VALUE 1. LESS THAN 1 LAKH 2. BETWEEN 1 TO 5 LAKHS 3. MORE THAN 5 LAKHS • FOR M&P 2000 -2001 1. LETTER FROM BOARD --JUNE/JULY 99 2. PROPOSALS FROM ZONES TO BOARD-- OCT 99 3. SORTING IN BOARD 4. INCLUSION IN BUDGET. 5. PINK BOOK 2000 -2001 --- MAY 2000 1/9/2022 upreti 39

• PINK BOOK DETAILS • • RAILWAY WISE DISTRIBUTION NEW ACQUISITION/PROGRAMMED DELIVERIES MORE THAN 50 LAKHS LESS THAN 50 LAKHS • OUT OF TURN APPROVAL OF GM 1/9/2022 upreti 40

ROLE OF COFMOW • COFMOW ESTABLISHED IN 1979 • MODERNISATION FUNDED BY WORLD BANK • TILL 98 -99 PROCURED 5560 MACHINES VALUEING Rs. 696 CRORES • DESIGNATED CENTRAL PROCUREMENT AGENCY OF HRD MINISTRY. • PROJECT REPORT PREPARATION AND IMPLEMENTATION FOR W/SHOP MODERNISATION. 1/9/2022 • STANDARDISATION OF upreti WORKSHOP LAYOUT 41

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MODERNISATION OF RAILWAY WORKSHOPS • IN 2 PHASES, 1 ST STARTED FROM 1978 COVERING 4 W/SHOPS & 2 ND PHASE STARTED IN 1982 COVERING 8 WORKSHOPS OBJECTIVES OF MODERNISATION • INCREASE OF OUTTURN BY INDUCTING NEW MACHINES • REDUCTION IN REPAIR DAYS 1/9/2022 • STEPPING UP OUTTURNupreti OF FOUNDRIES 43

DRAWBACKS OF PREVIOUS MODERNISATION • NO THRUST ON HRD. • NO MENTION OF QUALITATIVE IMPROVEMENT. • NO INTRODUCTION OF BETTER/NEW SYSTEMS • FAULTY FINANCIAL JUSTIFICATIONS. • NO EFFORTS TO ABSORB NEW TECH. • NO PERSPECTIVE PLANNING FOR CONTINUOUS UPGRADATION. upreti • NO 1/9/2022 MENTION OF REDUCTION OF STAFF 44

ANALYSIS OF RSP 99 -2000 (C. RLY. ) CRORES OF Rs 1/9/2022 upreti 45

UTILISATION OF SPARES PURCHASED IN 1995 FOR STLI/GWL REVIEW IN 1999 1/9/2022 CRORES OF Rs upreti 46

DETAILED REVIEW OF BSL WORKSHOP 1/9/2022 upreti 47

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REJECTED MATERIAL WORTH Rs. 27. 71 LAKHS SOME OF WHICH WAS PURCHASED AS LONG BACK AS 1992. • VI THE GROUND RENT OF ABOVE MATERIAL WORKS OUT TO Rs. 1. 32 LAKHS. • VII MODERNISATION PROGRAMME HAD ENVISAGED REDUCTION IN POH TIME FROM 23 DAYS TO 18 DAYS. FOR THIS PUPOSE MACHINARY WORTH Rs. 2. 16 51 1/9/2022 upreti CRORES WAS PURCHASED.

SUMMARRY OF THE REVIEW CRORES OF Rs. • MATERIAL LYING ON THE SHOP FLOOR • MATERIAL LYING IN SAFE CUSTODY 20. 61 7. 15 • REJECTED NON STOCK MATERIal . 11 • NON UTILASITATION OF MACHINES . 28 • PAYMENT MADE AFTER DESPATCH OF LOCO . 88 • PAYMENT MADE BY BOOKING EXRTRA MH. 63 • TOTAL 1/9/2022 28. 30 upreti 52

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