The need for determining “production capacity” in respect of industrial organization in India arises from the following reasons:-

• To meet the requirement under Section 129 of the Companies Act, 2013, that prescribes the form and contents of the balance sheet as well as profit and loss account (Schedule III of the Companies Act).

• For purpose of Cost Audit Report under section 148 of the Companies Act, 2013 where a cost audit has been ordered by the Government.

• For internal management purpose, to be used

• In planning, scheduling and controlling production, and

• In planning expansion of capacity and correction of imbalances.

• For assessment of capacities for national-level planning.

• For fixing the price of the product(s) after ascertaining the capacity costs and per unit incidence thereof etc.

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