Foundries · Manufacturing
Cost each casting from the metal poured, not the tonnes despatched
A foundry is paid for good castings and pays for every kilogram it melts. We cost each pattern from the metal poured, the returns recirculated, the energy consumed and the castings rejected. The price per kilogram then reflects what the part really takes.
In one paragraph
Grey iron, SG iron, steel and non-ferrous foundries create cost in the melt shop and lose it in the yield. Most turn over ₹15–300 crore and sell castings by weight to pump, valve, machinery, tractor and automotive customers. Yield and melting cost are usually measured for the foundry as a whole rather than for the part. The owner or managing director usually leads the work, often with the works manager.
Owner or managing director, often with the works manager
The economics
How the money moves in this trade
A foundry buys pig iron, steel scrap, foundry returns and ferro-alloys. It melts them in induction furnaces or a cupola and pours more metal than it ships. Runners, risers and rejected castings go back into the furnace, and some metal is lost to oxidation and slag. The ratio of good casting weight to metal poured varies widely between a simple heavy casting and an intricate thin-walled one. Yet most foundries price both on one rate per kilogram.
Power or coke is a large and volatile cost, driven by furnace hours, holding time and the number of melts. Customers commonly link the casting price to a raw-material index. They also debit the foundry for castings rejected at machining, sometimes months after despatch. Margin is decided by yield, energy per tonne and rejection, and all three move by pattern.
The problem
Where the numbers usually break down
Yield is measured for the foundry, not the pattern
A plant-wide yield figure hides patterns with heavy gating and poor yield that are priced the same as efficient ones.
Returns are valued at the wrong price
Runners, risers and rejected castings re-enter the charge at a notional value, distorting both melting cost and inventory.
Energy is not traced to melts
The power bill is spread by tonnage, so long holding times and part-filled heats for small orders never show up as a cost.
Customer rejections arrive late and unanalysed
Machining rejection debits from customers are booked in bulk, without being traced to a pattern, a defect type or a heat.
Raw-material indexation is not reconciled
The price adjustment agreed with customers is applied loosely, and the actual charge-mix cost is never compared with what the index recovered.
What we do
The work, and the result each part produces
Pattern-wise yield and cost
Poured weight, good casting weight and returns recorded per pattern, with melting cost applied to the metal actually poured.
Each pattern is priced on its own yield.
Charge-mix and melting-loss costing
Cost per tonne of liquid metal built from the actual charge mix, alloy additions and melting loss for each grade.
Grade-wise metal cost is known, not assumed.
Energy per tonne by furnace and shift
Power or coke consumption linked to melts, holding time and furnace utilisation.
Energy waste is visible and attributable.
Rejection costed by pattern and defect
Internal and customer rejections recorded by pattern, defect and heat, valued at full cost including re-melting.
Quality loss has an owner and a value.
Index-linked price reconciliation
Customer price adjustments compared with the actual movement in charge-mix cost, quarter by quarter.
Under-recovery of raw-material increases is caught and raised.
Returns and inventory valuation
Foundry returns, scrap and work in progress valued on a consistent, documented basis.
Inventory and margin are stated on the same footing.
Where we start
The first steps of an engagement
Melt logs, power bills and rejections
We ask for heat-wise melt logs and charge sheets, pattern-wise production records, power or coke bills, customer rejection debits and the price-adjustment terms agreed with customers.
Yield for the main patterns
For the highest-volume patterns, poured weight is compared with good casting weight, and the result is set against the plant-wide yield the price assumes.
Returns valued on one basis
A documented basis for valuing returns and scrap is agreed, and customer rejection debits start being recorded by pattern, defect and heat.
A pattern-wise cost report
The first report shows yield, liquid metal cost and rejection for each pattern reviewed, with contribution per tonne by customer.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Yield by pattern and grade
- Liquid metal cost per tonne, by grade
- Energy per tonne of good castings
- Internal and customer rejection, by pattern
- Raw-material recovery against actual cost movement
- Contribution per tonne, by customer
Who it suits
Written for, and not the right fit for
- You need pollution-control consents, emissions monitoring or a mandated energy audit — those sit with the regulator and accredited energy auditors.
- You make closed-die forgings or precision castings where die and tooling cost dominate — our casting and forging page covers that.
- Grey iron, SG iron, steel and aluminium foundries selling castings by weight.
- Foundries supplying pump, valve, machinery and tractor makers.
- Owner-run foundries facing rising power costs or a customer price-review.
Cities where this trade concentrates
Services
Services this work draws on
Costing and profitability
What each product, line and customer really contributes.
Explore service ↗Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗MIS and financial planning
Reporting built around the questions you actually need answered.
Explore service ↗Internal controls and risk
Controls sized to your business, documented and actually tested.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
How should a foundry measure yield by pattern?
Most foundries track it for the plant or the month. Tracking it by pattern usually shows a small group of parts with much poorer yield, and those are the ones a plant-wide rate under-prices.
How should foundry returns be valued?
On a consistent basis that reflects their metal content and the cost of re-melting, agreed once and applied every month. The exact method matters less than using it consistently and documenting it for your auditor.
How can a foundry challenge customer rejection debits?
Record rejections by pattern, defect and heat. You can then see which debits trace to your process and which to the customer's machining, and respond with evidence.
5th Quadrant performs costing, accounting and reporting. Pollution-control consents, emissions monitoring and any energy audit mandated for a designated consumer are the client's own responsibility with the relevant regulator and accredited energy auditors; statutory audit and prescribed certifications are signed by an independently engaged licensed professional. Full detail is on our Professional Scope page.
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