A PROJECT REPORT ON

FIXED ASSETS MANAGEMENT

AT

KESORAM CEMENT

Project Report submitted in partial fulfillment for

The award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

BY

Mr. GILEEMUDDIN SIDDIQUE

ROLL NO: 1402-17-672-177

DEPARMENT OF BUSINESS ADMINISTRATION

AMJAD ALI KHAN COLLEGE OF BUSINESS
ADMINISTRATION
Affiliated to Osmania University
BANJARAHILLS-HYD
(2017-2019)
 DECLARATION

I hereby declare that the project entitled “FIXED ASSETS MANAGEMENT AT

KESORAM CEMENT” submitted by me to AMJAD ALI KHAN COLLEGE OF

BUSINESS ADMINISTRATION, is a bonafide work undertaken by me in the

guidance ofM.HIMABINDU, project guide, AMJAD ALI KHAN COLLEGE OF

BUSINESS ADMINISTRATION,

The result embodies in this project work have not been submitted to any other

university or institution for the award of any degree/certificate or published anytime

before.

PLACE: Hyderabad Name: GILEEMUDDIN SIDDIQUE

Date: HT.NO:1402-17-672-177
 ACKNOWLEDGEMENT

It is great pleasure to acknowledge the kind of help & suggestions given by various

individuals the persons during my project work.

I express my deep sense of gratitude to Prof. SHEHBAZ AHMED, Director, AMJAD ALI

KHAN COLLEGE OF BUSINESS ADMINISTRATION, for extending his support.

I would like to thank my project guideDR.MD YOUNUS, Associate Professor, AMJAD

ALI KHAN COLLEGE OF BUSINESS ADMINISTRATION for his valuable guidance

& enthusiastic encouragement in motivating me to take up the project by providing valuable

ideas & suggestions to carry the project in this endeavor.

I would like to thank one & all, who directly & indirectly extended their valuable support in

completing this project.

I take this opportunity to express my deep felt gratitude to my family members for being a

source of strength & moral support throughout the course of my study.

(GILEEMUDDIN SIDDIQUE)
1402-17-672-177
 ABSTRACT
Fixed Assets are the assets held with the intention of being used on continuous basis for the

purpose of producing or providing goods or services and are not held for resale in the normal

course of business.

E.g.: Land and Buildings, Plant and Machinery, Motor Vehicles, Furniture and Fixtures.

Valuation of fixed assets is important to have fair measure of profit or loss and financial

position of the concern. Fixed assets are meant for use for many years. The value of these assets

decreases with their use or with time or many other reasons. A portion of fixed assets are reduced

by usage are converted into cash through charging depreciation. For correct measurement of

income, proper measurement of depreciation is essential, as depreciation constitutes a Part of total

cost of production.

Financial transactions are recorded in the books, keeping in view the going concern aspect of

the business unit. In going concern aspect it is assumed that the business unit has reasonable

expectation of continuing the business for a profit for an indefinite period of time. This assumption

provides much of the justification for recording fixed assets at original cost and depreciating them

in a systematic manner without reference to their current realizable value

 CERTIFICATION

This is to certify that the project work entitled ““FIXED ASSETS

MANAGEMENT AT KESORAM CEMENT”is being submitted in partial fulfillment
for the award of degree of Master of Business Administration to Osmania University, a
record of bonafide is carried out byMr.GILEEMUDDIN SIDDIQUE,bearing HT.NO 1402-
17-672-177The result in this report has not been submitted to any other University or
Institution for award of any degree or diploma.

PROF. SHEBAZ AHMED

DIRECTOR
 CERTIFICATION

This is to certify that the Project Report title“FIXED ASSETS MANAGEMENT AT

KESORAM CEMENT “submitted in partial fulfillment for the award of MBA
Programme of Department of Business Management, O.U. Hyderabad, was carried out
byMr.GILEEMUDDIN SIDDIQUE under my guidance. This has not been submitted to any
other University or Institution for the award of any degree/diploma/certificate.

DR.MD YOUNUS
Associatet Professor
Internal Guide Signature of the Guide
 TABLE OF CONTENTS

CHAPTER NO. DESCRIPTION Page No.

CHAPTER I INTRODUCTION 1-8

CHAPTER -II REVIEW OF LITERATURE 9-23

INDUSTRY PROFILE 24-38

CHAPTER - III

COMPANY PROFILE

DATA ANALYSIS AND

CHAPTER - IV 39-54
INTERPRETATION

FINDINGS SUGGESTION AND

CHAPTER - V 55-58
CONCLUSIONS

BIBLIOGRAPHY 59
 LIST OF TABLES

S.NO TABLE TITLE PAGE

NO
4.1. COMPONENTIAL ANALYSIS 40

4.2 GROWTH IN TOTAL INVESTMENT: 42

4.3 GROWTH RATE IN FIXED ASSETS: 43

4.4 FIXED ASSETS TO NET WORTH RATIO 47

4.5 FIXED ASSET RATIO: 48

4.6 FIXED ASSETS AS A PERCENTAGE TO CURRENT 49

LIABILITIES:

4.7 TOTAL INVESTMENT TURN OVER RATIO: 50

4.8 FIXED ASSETS TURN OVER RATIO: 51

4.9 RETURN ON TOTAL ASSETS: 52

 CHAPTER-I
INTRODUCTION:
 INTRODUCTION:

Fixed Assets are the assets held with the intention of being used on continuous basis for
the purpose of producing or providing goods or services and are not held for resale in the normal
course of business.
E.g.: Land and Buildings, Plant and Machinery, Motor Vehicles, Furniture and Fixtures.
Valuation of fixed assets is important to have fair measure of profit or loss and financial
position of the concern. Fixed assets are meant for use for many years. The value of these assets
decreases with their use or with time or many other reasons. A portion of fixed assets are
reduced by usage are converted into cash through charging depreciation. For correct
measurement of income, proper measurement of depreciation is essential, as depreciation
constitutes a Part of total cost of production.

Financial transactions are recorded in the books, keeping in view the going concern aspect
of the business unit. In going concern aspect it is assumed that the business unit has reasonable
expectation of continuing the business for a profit for an indefinite period of time. This
assumption provides much of the justification for recording fixed assets at original cost and
depreciating them in a systematic manner without reference to their current realizable value
It is useless to record the fixed assets in the balance sheet at their estimated realizable
values if there is no immediate expectation of selling them. So, they are shown at their book
value (i.e., Cost –Depreciation) and not at current realizable value. The market value of the fixed
assets may change with the passage of time, but for accounting purpose it continues to be shown
in the books in historical cost.

The cost concept of accounting states that depreciation calculated on the basis of historical
cost of old assets is usually lower than the amount calculated at current value/ replacement
value. These results in more profits, which if distributed in full will lead to reduction in capital.

1
ACCOUNTING STANDARD FOR FIXED ASSETS (AS-10):

AS-10 on Accounting for Fixed Assets has been made mandatory with effect from
01.04.1991. According to the AS-10, “Fixed Asset is an asset held with the intention of being
used on continuous basis for the purpose of producing or providing goods or services and is not
held for resale in the normal course of action”. Gross book value of fixed asset is its historical
cost or other amount substituted for historical costs in the books of accounts or financial
statements. When the amount of depreciation is deducted from gross book value then it is Net
Book Value.
Cost of Fixed Assets should consist of purchase price including import duties etc.,
and attributable cost of bringing the asset to its working condition for its intended use. Financing
costs relating to borrowed funds attributable to construction or acquisition of fixed assets for the
period up to the acquisition or completion. Expenditure incurred in start-up and commissioning
of the project including test runs.
Revaluation of assets: Fixed assets may be restated in the value with the help of appraisal under
taken by the competent value’s .Such valuation of assets is called revaluation.

FIXED ASSETS MANAGEMENT CYCLE

The fixed assets management cycle is the cycle of activities from the acquisition of the asset to the
final disposition of the assets at the end of their useful life. The cycle has 7 steps:
Acquisition: The cycle begins with the acquisition, purchase, gift or otherwise, of an asset and the
determination that the asset is to be capitalized. To be capitalized the asset has to meet the agency’s
capitalization limit and have a useful life of one year or more.
Receiving: The asset is formally received and accepted by the agency. Receipt may be
verified by entry into an automated purchasing system or by hard copy document. In the case of
donated fixed assets, receipt can be verified by a letter to the donor.
Payment: Payment is made for the asset according to the terms of the purchase order or
recognition of acceptance of a gift to the donor. The payment includes the acquisition cost, freight
and all other costs to put the asset. Acquisition cost of donated fixed assets is determined by its fair
market value.

2
Identification: The asset is identified as an asset, tagged or otherwise identified and entered
into the fixed assets management inventory system. Assets are identified with a permanently attached
identification tag, etching or by painting on the identification number.
Inventory: The longest step in the cycle. The asset is used over its useful life. Assets are
inventoried and accounted for during this step until they are no longer needed. The agency’s policies
and procedures determine the inventory interval.

Excess: the asset is declared as excess to the user’s needs. The asset may be transferred to another
user where it will continue to be used, accounted for and inventoried. Assets may be declared as
excess more than once until the asset is no longer needed.
Surplus: The last step in the fixed assets management cycle. The asset is declared to be surplus
property and to have no further value to the agency. The asset is disposed of by sale
or discarding depending on the residual value. Sale can be by auction, sealed bid, spot sale,
or through a sales store.

FIXED ASSETS MANAGEMENT CYCLE

3
NEED AND IMPORTANCE OF THE STUDY:
 As fixed assets play an important role in company’s objectives. These fixed are not
convertible or not liquidable over a period of time. The owner’s funds and long term
liabilities are invested in fixed assets. Since, fixed assets play dominant role in the
business and the firm has utilization of fixed assets. So, ratio contributes in analyzing and
evaluating the performance of the business.
 If firms fixed assets are idle and not utilized properly it affects the long-term
sustainability of the firm, which may affect liquidity and solvency and profitability
positions of the company. The idle of fixed assets leads to a tremendous loss in financial
cost and intangible cost associate of it. So, this will lead to evaluation of fixed assets
performance. Comparing with similar company and comparison with industry standards.
 Fixed assets are the assets which cannot be liquidated into cash within one year. The huge
amounts of funds of the company are invested in these assets. Every year company
invests an additional fund in these assets directly or indirectly. The survival and other
objectives of the company depend on operating performance of management i.e. effective
utilization of these assets.
 Firm has evaluated the performance, of fixed assets with proportion of capital employed
on net assets turnover and other parameters which are helpful for evaluating the
performance of fixed assets.

4
 OBJECTIVES OF THE STUDY:
The following are the objectives of the study
1. The study is conducted to know the amount of capital expenditure made by the company
KESORAM CEMENT LTD during study period 2014 to 2018.
2. The study is conducted to evaluate fixed assets performance of KESORAM CEMENT LTD.
3. The study is conducted to evaluate the fixed assets turnover of KESORAM CEMENT LTD.
4. The study is conducted to evaluate depreciation and method of depreciation adopted by
KESORAM CEMENT LTD.
5. The study is conducted to know the amount of finance made by long-term liabilities and owners
funds towards fixed assets.
6. The study is conducted to evaluate whether fixed assets are giving adequate returns to the
company
7. Study is conducted to evaluate that if fixed assets are liquidated, what proportion of it will
contribute for the payment of owners fund and long-term liabilities.

5
RESEARCH METHODOLOGY:

The data used for the analysis and interpretation is from annual reports of the
company i.e., secondary forms of data. Ratio analysis is used for calculation purpose.
The project is presented using tables, graphs and with their interpretations. No survey
is undertaken or observation study is conducted by evaluating fixed assets performance of the
company.
SOURCES OF DATA:

The data needed for this project is collected from the following sources:
1. The data is adopted purely from secondary sources.
2. The theoretical contents are gathered purely from eminent text books and references.
3. The financial data and information is gathered from annual reports of the company.
PERIOD OF STUDY:
Made a study for the period of 5 years . 2014-2018

SCOPE OF THE STUDY:

The project is covered on fixed assets of KESORAM CEMENT LTD. Drawn from annual
reports of the company. The subject matter is limited to fixed assets, its analysis and its
performance but not to any other areas of accounting corporate, marketing and financial matters.

6
LIMITATIONS:
The following are the limitations for the study
1. The study is limited into the date and information provided by the KESORAM CEMENT
LTD and its annual reports.
2. The report may not provide exact fixed assets status and position of KESORAM CEMENT
LTD; it may be varying from time to time and situation to situation.
3. This report is not helpful in investing in KESORAM CEMENT LTD
4. Either through disinvestments or capital market.
5. The accounting procedure and other accounting principles are limited by the changes made by
the company, may vary fixed assets performance.

7
 CHAPTER- II
INDUSTRY PROFILE
&
COMPANY PROFILE
INTRODUCTION OF CEMENT:

The basic need of human being is food clothing and shelter love and affection
/possession is on never ending process for a human being.

As the time passes on human beings their wants and wishes also changed from ancient
times to modern times and among them the living pattern and costruction works also have
been changed from temporary construction of house to permanent construction and the basic
material used in construction is “Cement”.

Cement the word derived from a latin word ‘CEMENTTUM’ means stone chipping such as
we used in roman.

Cement the word as per oxford, it is commonly used is any substance applied for soft
stocking things. But cement means is most vital and important material for modern
constructions. It is a material which sets and hardness when mixed with water. Cement is
basically used in construction as a building agent. In ancient times clay bricks and stones
have been used for construction works.
The Romans were using a binding or a cementing material that would harden and water. The
first systematic effort was made by “SMEATON” who undertook the execution of a new
light house in 1756. He observed that
production obtained by during lime stone was the best cementing material for work under
water.

The construction in lost centuries was with Lime that was the main equipment used for
construction work. The ancient constructions like Tajmahal, Qutubminar, Mysore Palace,
Red fort, Charminar etc., the evidence of lime construction.

8
THE INDIAN CEMENT INDUSTRY:

By staring priduction in 1914 the story of India cement industry is a stage of continuous of
growth.
India is the fourth largest cement producer after China, Japan and U.S.A. so far annual
production and demand has been growing a pace at roughly 68 million tons with an installed
capacity of 82 millions tons.

In 1914 as the foundation of stable cement Industry was laid as sun above. It was Indian
Cement Company at Porbandar in Gujarat. In 1920, the cement marketing corporation was
formed to promote the sale and distribution of cement. A significant development was made
in 1930 when all manufacturers mergers together to form the Associated Cement Company
Limited.
Cement Industry is the major Industry it has taken rapid strides for a modest beginning at
porbandar in 1914 to the 1980’s with over understanding out of the 60 units, 14 units are in
the public sectors remaining units are in private sector.
Indian endowed with cement grade lime stones (90 Billion tons ) and coal (190 Billion tons
). The basic raw material required for cement manufacture and self sufficient in
manufacturing cement making machineries. During nineties it had a particular impressive
expansion with a growth rate of 15%.

The strength and vitality of cement Industry can be gouged by the intrest shown and
support given by World Bank, considering the excellent performance of the industry in
utilizing loans and achieving the objectives and targets. The World Bank is examine the
feasibility of providing a third line of credit for further upgrading Industry in varying areas,
which will make it global.

Therefore, India today totally installed capacity of over 30 million tons, employing over a
150 thousand people directly and contributing amount of rupees 8 billion to India’s GDP.

9
TECHNOLOGY:

Cement may be manufactured employing three alternative technologies.

1.The largely out molded well process technology.

2.The more modern dry process that requires only 19% coal utilization.
3.The latest percallinator technology through which optimum utilization may be achieved.
Here the calcinatory or raw.

Material is partly or completed carried out before the feud enters the rotator kin besides
saving power, the adoption of this technology enable in increase in installed capacity by 30-
35%, the 30,000 tons per day plants being setup in the country use this technology.

TECHNOLOGICAL CHANGES:
Continuous technological upgrading and assimilation of latest technology has been going
on in the cement industry. Presently 93% of the total capacity in the industry is based on
modern and environment friendly dry process technology and only 7% of the capacity is
based on old wet and semi-dry process technology.

There is tremendous scope for waste heat recovery in cement plants and there by reduction in
emission level. One project for co-generation of power utilizing waste heat in an Insian
cement plant is being implemented with Japanese assistance under Green Aid Plan. The
induction of advanced technology has helped the industry immensely to conserve energy and
fuel and to save materials substantially.

India is also producing different varieties of cement like Ordinary Portland Cement (OPC),
Portland Puzzling Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well
Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White
Cement etc. production of these varieties of cement conform to the BIS Specifications. Also,
some cement plants have set up dedicated jetties for promoting bulk transportation and
export.
TOTAL PRODUCTION:
10
 The cement industry comprises of 175 large cement plants with an installed capacity of
148.28 million tons and more than 300 mini cement plants with an estimated capacity of
16.15 million tons per annum. The Cement Corporation of India, which is a Central Public
Sector Undertaking, has 15 units. There are 15 large cement plants owned by various state
Governments. The total installed capacity in the country as a whole is 159.38 million tons.

Actual cement production in 2004-05 was 166.35 million tons as against a production of
157.90 million tons in 2003-04, registering a growth rate of 8.84%. Major players in cement
production are Ambuja cement, Aditya cement, J K Cement and L & T cement.

Apart from meeting the entire domestic demand, the industry is also exporting cement and
clinker. The export of cement during 2003-04 and 2005-06 was 5.14 million tons and 6.92
million tons respectively. Export during April-May, 2005 was 1.35 million tons. Major
exporters were Gujarat Ambuja Cements Ltd. and L & T Ltd.

The planning commission for the formulation of X Five Year Plan constituted a ‘Working
Group on Cement Industry’ for the development of cement industry. The Working Group has
identified following thrust areas for improving demand for cement;

1.Further push to housing developments programs;

2.Promotion of concrete Highways and roads, and
3.Use of ready-mix concrete in large infrastructure projects.

Cement industry has been decontrolled from price and distribution on 1st march 1989 and de-
licensed on 25th July 1991. However, the performance of the industry and prices of cement
are monitored regularly. Being a key infrastructure industry, the constraints faced by the

Actual cement production in 2004-05 was 166.35 million tons as against a production of
157.90 million tons in 2003-04, registering a growth rate of 8.84%. Major players in cement
production are Ambuja cement, Aditya cement, J K Cement and L & T cement.

11
 Apart from meeting the entire domestic demand, the industry is also exporting cement and
clinker. The export of cement during 2003-04 and 2005-06 was 5.14 million tons and 6.92
million tons respectively. Export during April-May, 2005 was 1.35 million tons. Major
exporters were Gujarat Ambuja Cements Ltd. and L & T Ltd.
The planning commission for the formulation of X Five Year Plan constituted a ‘Working
Group on Cement Industry’ for the development of cement industry. The Working Group has
identified following thrust areas for improving demand for cement;
4.Further push to housing developments programs;
5.Promotion of concrete Highways and roads, and
6.Use of ready-mix concrete in large infrastructure projects.
Cement industry has been decontrolled from price and distribution on 1st march 1989 and de-
licensed on 25th July 1991. However, the performance of the industry and prices of cement
are monitored regularly. Being a key infrastructure industry, the constraints faced by the
industry are reviewed in the Infrastructure Coordination Committee meetings held in the
Cabinet Secretariat under the Chairmanship of Secretary (Coordination). The 444 Committee
on Infrastructure also reviews its performance.

DISTRIBUTION SYSTEM:
Distribution of cement was entirely under Government control until 1982. at present
the Industry has to make an agreement towards the levy quota which is to be sold
compulsorily to the Government the rest of the output or open market quota may be
sold in the open market evolved prices the output lifted by the Government is allocated
state wise.

(a) NEED AND IMPORTANCE:

In India we see rapid industrial development in the last few centuries. Indian industry is
growing at considerable ratio which reveals India is a developing country. And there are
different industrial sectors are playing a vital role for the economy’s development. They are
steel cement SOF. Information Technology Medical Science etc.

12
 One among them was “CEMENT INDUSTRY” which plays a vital role for the country’s
development. In India cement industry is growing rationally and marketing is the king pin of
all activities particularly to the business because of this changes in the external environment
i.e., social, political, legal, technical and international environment and changes in marketing.
There is increased in the salaries in all most in every market leading to competition is aspects
of price, promotion etc., which help to increase the standard of living of people.
The manufacturers of Cement like Kesoram cement, India limited, Orient limited, Ultratech
etc. are providing cement and they are distributing cement through wide network of dealers.

Kesoram cements are doing its business from decades and it is continuously contributing to
the national economy. In even Industry now a days there is no special interest for particularly
department like production or manufacturing but know a days total quality management plays
a vital for the company’s success.

Distribution channel which plays a vital role for the company success. Distribution
channels are link between the company and consumers.

13
COMPANY PROFILE

14
 PROFILE OF THE COMPANY

One among the industrial gains in the country today serving the nation on the industrial front
kesoram industries limited has a tenured and extent full history dating hock to the twenties
when the industrial house of Birla’s enquired it. With only a Textile mill under its banner in
1924,it grew from strength and spread its activities to newer fields like Rayon pulp
Transparent Paper. Spun pipes and Refectory Tyres oil mills and refinery Extraction.

Looking to the wide gap between the demand and supply of vital commodity
cement which it plays on important role in Nation Building, the government Private
entrepreneurs to argument the cement production Kesoram rose to the occasion and decided
to set up few cement plants in the country.

Kesoram cement is one of the prestigious units in the renowned Kesoram

industries group that is one of India’s leaden industrial conglomerates, under the leadership of
Mr.B.K.Birla, the famous personality of Indian Industry, who owes branches all over India.

Kesoram cement Industry is one of the leading manufactures of cement in India Kesoram
cement is a division of Kesoram Industries limited. It is a dry process cement plant. It is
located at Basant Nagar in Karimnagar District of Andhra Pradesh with the plant capacity is
8.26 lakhs tones per annum. It is 8Kms away from the Ramagundam Railway Station Lining
Madras to New Delhi.

15
PLANTS SETUP:
The first cement point of Kesoram with a capacity of 2.1 lacks tones per
annum incorporating Humboldt’s suspension preheated system was committed
during the year 1969.
The second unit was setup in the year 1971 with capacity of 2.1lacks tons which
added to the above plant capacities.

The third plant with a capacity of 2.5lacks tons per anum, which went on stream in
the year 1978.

The coal for this company is obtained by singareni collieries and the power is
obtained from APSEB. The power demand capacity for the factory is about 21M.W. Kesoram
has got 20G sets of 4MN each installed in the year1987.

Kesoram cement belongs to the Birla group companies one of the industrial giants in
the country.

Kesoram cement industries distinguished it self among the cement factories in India by
bagging the national productivity award for two successive years i.e., in 1985-86 and 87.
Kesoram cement also got the FAPCCI award for best family planning effort in the state for
the year 1987-88.

Kesoram also bagged NCBCN’S national award for energy conservation for the year
1989-90. The Kesoram industries look for the welfare of the employees and it provide
various facilities which the employees and it provide various facilities which the employee
feels satisfied with in the organization and after the work they fees satisfies the worker and
works families by providing various welfare schemes and by providing recreational facilities
of a glace.

The company set up “Recreation Club” for the purpose of recrimination facilities two
auditoriums are provided for playing indoor games like chess, shuttle and caroms and for
organizing cultural functions and activities like drama, music, and dance centers etc.
It provides Library and reading rooms for the benefit of the

16
employees more than 5000 books are available in the library along with other Newspapers
and magazines.

They setup English and Telugu medium schools for the growth of workers child. The
company provides “Dispensary” with a qualified medical offer and Medical staff for the
benefit of the employees.
A House Journal in the name of Basant Nagar sam char is brought out quarterly where an
all important activities and information of the plant is published.

The company provides cooperative stores where the supply essential commodities like rice,
wheat, sugar, kerosene etc. at cash and credit basis.

They conduct games for twice a year on the occasion of 26th January Republic Day and 15th
August Independence Day in order to encourage the employees, outside of their workstation.

The family planning camps are held regularly with the help of the District Medical and
Health Authorities at the Government Hospital. It has got on award for their excellent service.

Not only the employees of the factory are taken care, butthe company plays a
lot of attention towards the rural development activities. Twelve villages are
adopted and the company has extended help in constructing temples, road, and
giving programmers to the farmers, Eye surgical camps health checkup schemes
etc.

To keep the ecological balance, company has also undertaken massive tree
plantation in and around Basant Nagar and near by villages there by eliminating
the pollution and they have been nominated by the government of India for
“VRUKSHAMITRA AWARD” but effort of an industrial unit in the state for
rural development 1994-95 presented by CM in march 1996.

17
BRANDS:

Kesoram brands with namely Birla Supreme and Birla supreme gold (53
grades) has made a niche with outstanding quality and commands a premium in
the market. The latest offering, “Birla Shakthi” is also very well received and is
the most sought offer brand now.

KESORAMS CAREER:

Kesoram has an outstanding track record. Achieving 150% capacity utilization

in productivity and energy conservation. It has provided its distinctions by
bagging several awards of national and state level are worthy.

AWARDS:

 National productivity award for 1985-86.

 National productivity award for 1986-87.
 National award for energy conservation for 1980-90.
 National award for mines safely 1985-86, 1986-87.
 Prestigious state award yajamanya ratna and but management award for the
year 1980.
 Best FAPCCI award for but family planning effort in the state 1987-88.
 FAPCCI award for best workers welfare 1995-96.
 Best industrial productivity award of FAPCCI.
 Best management award of state government 1993.
 It has got “Vanamitra award” from the government of Andhra Pradesh.

18
Article II. KESORAM GROUP OF INDUSTRIES
a)Textiles Kesoram Industries Ltd,
42, Garden Reach Road
Calcutta-700034.

b)Rayon Kesoram Rayon Triennia (P.O.),

Dist : Hoogly, West Bengal.

c)Spun Pipes Kesoram Spun pipes & Foundries,

bansberia (P.O.), Dist: Hoogly,
West Bengal.

d)Cement Kesoram Cement,

Basantnagar-506187,
Dist : Karimnagar, Andhra Pradesh

e)Cement Vasavadatta Cement,

Sedam-585222,
Dist : Gulbargah, Karnataka.

f) Tyres Birla Tyres,

Shivam Chambers,
53, Syed Amir Ali Avenue.
Calcutta-700029.

Section 2.01 Product Profile

The main brands of cement manufactured are:

 RAASI GOLD (53 Grade)
 RAASI SUPER POWER
 RAASI 43 Grade cement.
All the brands are known for its best quality standards.

Human Resources
The Plant has well qualified, highly motivated manpower of 649 employees on its rolls. Out
of 649 employees, 92 are executive cadre and remaining are in staff and workmen cadre. The
KIL, KNR manpower is known for their spirit and commitment.

19
Section 2.02 Pollution Control

The Plant is commissioned for pollution free environment and installed all the required
pollution control equipment as per the statutory requirement. A separate team will regularly
monitor and maintain the said equipment.

Section 2.03 Safety

The Plant maintains high standards of safety and good housekeeping methods in line with
‘5S’ techniques.

Section 2.04 Contribution to the exchequer

KIL, KNR has been contributing around Rs.175.00 crores to the exchequer in the form of
taxes, royalty etc.

Section 2.05 Township

KIL, KNR has a well planned township consisting of 378 quarters having facilities like
 School
 Hospital
 Temple
 Guest House
 Co-operative Stores
 Recreation Club
 Play Ground etc.

Section 2.06 Rural Development

KIL, KNR as apart of Rural & Social Development Programme adopted 8 surrounding
villages . The company extends the facilities like
 Housing

20
 Water
 School
 Old age pension
 Roads etc;
By allocating a budget amount of about Rs.25.00 lakhs per annum.

Section 2.07

Section 2.08 Industrial Relations

KIL,KNR is known for its best Industrial Relations practices in this region and won many
awards from Govt. of A.P. and Chamber of Industries.

Section 2.09 Norms

 Raw Mill Clinker Cement
 Lime stone 96%
 Iron ore 2.5%
 Laterite 1.5%
 Raw Mill 1.5 tonnes
 Coal 20%
 Clinker97%
 Gypsum 3%

21
 CHAPTER-III
LITERATURE REVIEW

22
FIXED ASSET

Fixed asset, also known as a non-current asset or as property, plant, and equipment
(PP&E), is a term used in accounting for assets and property which cannot easily be
converted into cash. This can be compared with current assets such as cash or bank accounts,
which are described as liquid assets. In most cases, only tangible assets are referred to as
fixed.

Moreover, a fixed/non-current asset can also be defined as an asset not directly sold to a
firm's consumers/end-users. As an example, a baking firm's current assets would be its
inventory (in this case, flour, yeast, etc.), the value of sales owed to the firm via credit (i.e.
debtors or accounts receivable), cash held in the bank, etc. Its non-current assets would be the
oven used to bake bread, motor vehicles used to transport deliveries, cash registers used to
handle cash payments, etc. Each aforementioned non-current asset is not sold directly to
consumers.

These are items of value which the organization has bought and will use for an extended
period of time; fixed assets normally include items such as land and buildings, motor
vehicles, furniture, office equipment, computers, fixtures and fittings, and plant and
machinery. These often receive favorable tax treatment (depreciation allowance) over short-
term assets. According to International Accounting Standard (IAS) 16, Fixed Assets are
assets whose future economic benefit is probable to flow into the entity, whose cost can be
measured reliably.

It is pertinent to note that the cost of a fixed asset is its purchase price, including import
duties and other deductible trade discounts and rebates. In addition, cost attributable to
bringing and installing the asset in its needed location and the initial estimate of dismantling
and removing the item if they are eventually no longer needed on the location.

The primary objective of a business entity is to make profit and increase the wealth of its
owners. In the attainment of this objective it is required that the management will exercise
due care and diligence in applying the basic accounting concept of “Matching Concept”.
Matching concept is simply matching the expenses of a period against the revenues of the
same period.

23
The use of assets in the generation of revenue is usually more than a year- that is long term. It
is therefore obligatory that in order to accurately determine the net income or profit for a
period depreciation is charged on the total value of asset that contributed to the revenue for
the period in consideration and charge against the same revenue of the same period. This is
essential in the prudent reporting of the net revenue for the entity in the period.

Net book value of an asset is basically the difference between the historical cost of that asset
and it associated depreciation. From the foregoing, it is apparent that in order to report a true
and fair position of the financial jurisprudence of an entity it is relatable to record and report
the value of fixed assets at its net book value. Apart from the fact that it is enshrined in
Standard Accounting Statement (SAS) 3 and IAS 16 that value of asset should be carried at
the net book value, it is the best way of consciously presenting the value of assets to the
owners of the business and potential investor.

Depreciating a Fixed Asset

Depreciation is, simply put, the expense generated by the use of an asset. It is the wear and
tear of an asset or diminution in the historical value owing to usage. Further to this; it is the
cost of the asset less any salvage value over its estimated useful life. It is an expense because
it is matched against the revenue generated through the use of the same asset. Depreciation is
usually spread over the economic useful life of an asset because it is regarded as the cost of
an asset absorbed over its useful life. Invariably the depreciation expense is charged against
the revenue generated through the use of the asset. The method of depreciation to be adopted
is best left for the management to decide in consideration to the peculiarity of the business,
prevailing economic condition of the assets and existing accounting guideline and principles
as implied in the organizational policies.

It is worth noting that not all fixed assets depreciate in value year-over-year. Land and
buildings, for example, may often increase in value depending on local real-estate conditions.

A long-term tangible piece of property that a firm owns and uses in the production of its
income and is not expected to be consumed or converted into cash any sooner than at least
one year's time.

Fixed assets are sometimes collectively referred to as "plant".

24
 Balance sheet - accounting for fixed assets

Introduction

An important distinction is made in accounting between "current assets" and " "fixed assets".

Current assets are those that form part of the circulating capital of a business. They are
replaced frequently or converted into cash during the course of trading. The most common
current assets are stocks, trade debtors, and cash.

Compare current assets with fixed assets. A fixed asset is an asset of a business intended for
continuing use, rather than a short-term, temporary asset such as stocks.

Fixed assets must be classified in a company's balance sheet as intangible, tangible, or

investments. Examples of intangible assets include goodwill, patents, and trademarks.
Examples of tangible fixed assets include land and buildings, plant and machinery, fixtures
and fittings, motor vehicles and IT equipment.

How should the changing value of a fixed asset be reflected in a company's accounts?

The benefits that a business obtains from a fixed asset extend over several years. For
example, a company may use the same piece of production machinery for many years,
whereas a company-owned motor car used by a salesman probably has a shorter useful life.

By accepting that the life of a fixed asset is limited, the accounts of a business need to
recognize the benefits of the fixed asset as it is "consumed" over several years.

This consumption of a fixed asset is referred to as depreciation.

Definition of depreciation

Financial Reporting Standard 15 (covering the accounting for tangible fixed assets) defines
depreciation as follows:

"the wearing out, using up, or other reduction in the useful economic life of a tangible fixed
asset whether arising from use, effluxion of time or obsolescence through either changes in
technology or demand for goods and services produced by the asset.'

25
A portion of the benefits of the fixed asset will be used up or consumed in each accounting
period of its life in order to generate revenue. To calculate profit for a period, it is necessary
to match expenses with the revenues they help earn.

In determining the expenses for a period, it is therefore important to include an amount to

represent the consumption of fixed assets during that period (that is, depreciation).

In essence, depreciation involves allocating the cost of the fixed asset (less any residual
value) over its useful life. To calculate the depreciation charge for an accounting period, the
following factors are relevant:

- the cost of the fixed asset;

- the (estimated) useful life of the asset;

- the (estimated) residual value of the asset.

What is the relevant cost of a fixed asset?

The cost of a fixed asset includes all amounts incurred to acquire the asset and any amounts
that can be directly attributable to bringing the asset into working condition.

Directly attributable costs may include:

- Delivery costs

- Costs associated with acquiring the asset such as stamp duty and import duties

- Costs of preparing the site for installation of the asset

- Professional fees, such as legal fees and architects' fees

Note that general overhead costs or administration costs would not be included as part of the
total costs of a fixed asset (e.g. the costs of the factory building in which the asset is kept, or
the cost of the maintenance team who keep the asset in good working condition)

26
The cost of subsequent expenditure on a fixed asset will be added to the cost of the asset
provided that this expenditure enhances the benefits of the fixed asset or restores any benefits
consumed.

This means that major improvements or a major overhaul may be capitalised and included as
part of the cost of the asset in the accounts.

However, the costs of repairs or overhauls that are carried out simply to maintain existing
performance will be treated as expenses of the accounting period in which the work is done,
and charged in full as an expense in that period.

What is the Useful Life of a fixed asset?

An asset may be seen as having a physical life and an economic life.

Most fixed assets suffer physical deterioration through usage and the passage of time.
Although care and maintenance may succeed in extending the physical life of an asset,
typically it will, eventually, reach a condition where the benefits have been exhausted.

However, a business may not wish to keep an asset until the end of its physical life. There
may be a point when it becomes uneconomic to continue to use the asset even though there is
still some physical life left.

The economic life of the asset will be determined by such factors as technological progress
and changes in demand. For purposes of calculating depreciation, it is the estimated
economic life rather than the potential physical life of the fixed asset that is used.

What about the Residual Value of a fixed asset?

At the end of the useful life of a fixed asset the business will dispose of it and any amounts
received from the disposal will represent its residual value. This, again, may be difficult to
estimate in practice. However, an estimate has to be made. If it is unlikely to be a significant
amount, a residual value of zero will be assumed.

The cost of a fixed asset less its estimated residual value represents the total amount to be
depreciated over its estimated useful life.

27
Fixed Asset Controls

This section contains two dozen controls that can be applied to the acquisition, valuation, and
disposal of fixed assets. Of this group, 18 are considered primary controls and are included in
the flowchart in figure “System of Fixed Asset Controls”. The remaining 16 controls either
do not fit into the various fixed asset transaction flows or are considered secondary controls
that can bolster the primary controls as needed.

In essence, the system of controls for an asset acquisition requires that initial funding
approval come from the annual budget, as well as additional approval through a formal
capital investment form just prior to the actual acquisition. There should also be a post
installation analysis of how actual project results compared to the estimates shown in the
original capital investment form. The key controls used once an asset is installed are to tag it,
assign specific responsibility for it, and ensure that any asset transfers are approved by the
shipping and receiving managers. Finally, asset disposition controls call for regular
disposition reviews to ensure that dispositions occur while assets still retain some resale
value, a formal disposition approval process, and proper tracking of any resulting receipts.

28
System of Fixed Asset Controls

The controls noted in the flowchart are described at greater length next, in sequence from the
top of the flowchart to the bottom for each of the three types of fixed asset transactions.

 Obtain funding approval through the annual budgeting process. The annual budgeting
process is an intensive review of overall company operations as well as of how capital
expenditures are needed to fulfill the company’s strategic direction. As such, capital
expenditure requests should be included in the annual budget, thereby ensuring that they will
be analyzed in some detail. Expenditure requests included in the approved budget still should
be subjected to some additional approval at the point of actual expenditure, to ensure that
they are still needed. However, expenditure requests not included in the approved budget
should be subjected to a considerably higher level of analysis and approval, to ensure that
there is a justifiable need for them.

 Require a signed capital investment approval form prior to purchase. Given the significant
amount of funds usually needed to acquire a fixed asset, there always should be a formal
approval process before a purchase order is issued. An example is shown in figure below.
Depending on the size of the acquisition, a number of approval signatures may be required,
extending up to the company president or even the chair of the board of directors.
 Use prenumbered acquisition and disposal forms. If the company uses a manual system for
fixed asset acquisitions and disposals, then it should acquire a set of prenumbered acquisition
and disposal forms. By doing so, it can keep track of form numbers to ensure that none is lost
prior to completion. This is also a good way to ensure that employees do not attempt to
submit multiple acquisition authorization forms for the same asset, allowing them to order
duplicate assets and make off with the extra items. For this to be a fully functional control,
someone must be assigned the task of storing the forms in a secure location and monitoring
which form numbers have been released for use.
 Require return on investment calculation prior to approval. Given the considerable size of
some fixed asset investments, a reasonable control is to calculate the estimated return on
investment to see if the investment exceeds the corporate hurdle rate. The return calculation
can involve a variety of approaches, such as the payback period, net present value, or internal
rate of return. All three calculations are included in the capital investment proposal form
shown in figure below.

29
 Conduct a postcompletion project analysis. Managers have been known to make overly
optimistic projections in order to make favorable cases for asset acquisitions. This issue can
be mitigated by conducting regular reviews of the results of asset acquisitions in comparison
to initial predictions and then tracing these findings back to the initiating managers. This
approach can also be used at various milestones during the construction of an asset to ensure
that costs incurred match original projections.

 Compare fixed asset serial numbers to the existing serial number database. There is a
possibility that employees are acquiring assets, selling them to the company, then stealing the
assets and selling them to the company again. To spot this behavior, always enter the serial
number of each acquired asset in the fixed asset master file, and then run a report comparing
serial numbers for all assets to see if there are duplicate serial numbers on record.
 Independently review fixed asset master file additions. A number of downstream errors can
arise when fixed asset information is entered incorrectly in the fixed asset master file. For
example, an incorrect asset description can result in an incorrect asset classification, which in
turn may result in an incorrect depreciation calculation. Similarly, an incorrect asset location
code can result in the subsequent inability to locate the physical asset, which in turn may
result in an improper asset disposal transaction. Further, an incorrect acquisition price may
result in an incorrect depreciation calculation. To mitigate the risk of all these errors, have a
second person review all new entries to the fixed asset master file for accuracy.
 Affix an identification plate to all fixed assets. If a company acquires assets that are not
easily differentiated, then it is useful to affix an identification plate to each one to assist in
later audits. The identification plate can be a metal tag if durability is an issue, or can be a
laminated bar code tag for easy scanning, or even a radio frequency (RFID) tag. The person
responsible for tagging should record the tag number and asset location in the fixed asset
master file.
 Assign responsibility for assets. There is a significant risk that assets will not be tracked
carefully through the company once they are acquired. To avoid this, formally assign
responsibility for each asset to the department manager whose staff uses the asset, and send
all managers a quarterly notification of what assets are under their control. Even better,
persuade the human resources manager to include “asset control” as a line item in the formal
performance review for all managers.
 Use a formal transfer document to shift asset locations. If the preceding control is
implemented that assigns responsibility for specific assets to department managers, then the

30
transfer of an asset to a different department calls for the formal approval of the sending and
receiving department managers. Otherwise, managers can claim that assets are being shifted
without their approval, so they have no responsibility for the assets.

 Conduct regular asset disposition reviews. Fixed assets decline in value over time, so it is
essential to conduct a regular review to determine if any assets should be disposed of before
they lose their resale value. This review should be conducted at least annually, and should
include representatives from the accounting, purchasing, and user departments. An alternative
approach is to create capacity utilization metrics (which is most easily obtained for
production equipment) and report on utilization levels as part of the standard monthly
management reporting package; this tends to result in more immediate decisions to eliminate
unused equipment.


 Require a signed capital asset disposition form prior to disposition. There is a risk that
employees could sell off assets at below-market rates or disposition assets for which an
alternative in-house use had been planned. Also, if assets are informally disposed of, the
accounting staff probably will not be notified and so will continue to depreciate an asset no
longer owned by the company, rather than writing it off. To avoid these problems, require the
completion of a signed capital asset disposition form, such as the one shown in figure below.
 Verify that cash receipts from asset sales are handled properly. Employees may sell a
company’s assets, pocket the proceeds, and report to the company that the asset actually was
scrapped. This control issue can be reduced by requiring that a bill of sale or receipt from a
scrapping company accompany the file for every asset that has been disposed of.

The preceding controls were primary ones required as part of the basic fixed asset transaction
flows. In addition, the next ancillary controls either are general controls that operate outside
of any specific transaction or are designed to provide additional risk mitigation.

 Segregate responsibilities related to fixed assets. If the person purchasing an asset also
receives it, there is a considerable risk that the person will alter the purchasing documents to
eliminate evidence of the receipt and then steal the asset. The same concern applies to several
aspects of fixed assets transactions. A control over this situation is to segregate these types of
responsibilities:
o Fixed asset acquisition
o Fixed asset transaction recording
31
o Custody of the fixed asset
o Fixed asset disposal
o Reconciliation of physical assets to accounting records

 Restrict access to the fixed asset master file. The fixed asset master file contains all baseline
information about an asset and is the source document for depreciation calculations as well as
asset location information. If people were to gain illicit access to this file, they could make
modifications to change depreciation calculations (thereby changing financial results) as well
as modify locations (possibly resulting in theft of the assets). To avoid these problems,
always use password controls to restrict access to the fixed asset master file.
 Restrict facility access. If the company owns fixed assets that can be easily moved and have
a significant resale value, there is a risk that they will be stolen. If so, consider restricting
access to the building during nonwork hours and hire a security staff to patrol the perimeter
or at least the exits.
 Install an alarm system to detect RFID-tagged assets. If the company has especially
valuable fixed assets that can be moved, then consider affixing a RFID tag to each one and
then installing a transceiver near every building exit that will trigger an alarm if the RFID tag
passes by the transceiver.
 Reconcile fixed asset additions with capital expenditure authorizations. A good detective
control to ensure that all acquisitions have been authorized properly is to periodically
reconcile all fixed asset additions to the file of approved capital expenditure authorizations.
Any acquisitions for which there is no authorization paperwork are then flagged for
additional review, typically including reporting of the control breach to management.
 Increase the capitalization limit. A key problem with fixed asset tracking is that it involves
a considerable amount of additional paperwork as well as ongoing depreciation calculations,
which may so overwhelm the accounting staff that they are struggling to keep up with the
paperwork rather than focusing on proper control of the assets themselves. This
recommended control may seem counterintuitive, but increasing the capitalization limit
reduces the number of assets designated as fixed assets, thereby allowing the accounting staff
to focus its attention on the proper approval, tracking, and disposition of a smaller number of
large-dollar assets. Thus, oversight of smaller assets is abandoned in favor of greater
inspection of large-dollar asset transactions.

32
 Conduct a periodic fixed asset audit. The internal audit staff should schedule a periodic
audit of fixed assets, reconciling the on-hand inventory to the accounting records. Given the
considerable quantity of fixed assets that many companies maintain, it is acceptable to focus
on the 20 percent of fixed assets that typically account for 80 percent of the invested cost of
all fixed assets. An example of a report suitable for a fixed asset audit is shown in figure
below.
 Verify the fair value assumptions on dissimilar asset exchanges. Accounting rules allow
one to record a gain or loss on the exchange of dissimilar assets. Since this calculation is
based on the fair value of the assets involved (which is not stated in the accounting records),
the possibility exists for someone to artificially create an asset fair value that will result in a
gain or loss. This situation can be avoided by having an outside appraiser review the fair
value assumptions used in this type of transaction.

 Test for asset impairment. There are a variety of circumstances under which the net book
value of an asset should be reduced to its fair value, which can result in significant reductions
in the recorded value of an asset. This test requires a significant knowledge of the types of
markets in which a company operates, the regulations to which it is subject, and the need for
its products within those markets. Consequently, only a knowledgeable person who is at least
at the level of a controller should be relied on to detect the presence of assets whose values
are likely to have been impaired.
 Verify that correct depreciation calculations are being made. Though there is no potential
loss of assets if incorrect depreciation calculations are being made, it can result in an
embarrassing adjustment to a company’s financial statements at some point in the future. This
control should include a comparison of capitalized items to the official corporate
capitalization limit to ensure that items are not being inappropriately capitalized and
depreciated. The control should also include a review of the asset categories in which each
individual asset has been recorded, to ensure that an asset has not been misclassified and
therefore incorrectly depreciated.
 Verify that all changes in asset retirement obligation assumptions are authorized. A
company can artificially increase its short-term profitability by altering the assumed amount
of future cash flows associated with its asset retirement obligations. Since downward
revisions to these assumptions will be reflected in the current period’s income statement as a
gain, any changes to these assumptions should be approved prior to implementation.

33
MANAGEMENT OF FIXED ASSETS:

The selection of various fixed assets required for creating the desired

production facilities and the decision regarding the determination of level of fixed assets in

the capital structure is an important decision for the company to take for the smooth running

of business. The decisions relating to fixed assets involve huge funds for long period of time

and are generally of irreversible nature affecting the long profitability of the business. Thus,

management of fixed asset is of vital importance to any organization.

The process of Fixed Assets Management involves:

1.Selection of most worthy projects from the different alternatives of fixed assets.

2.Arranging the requisite funds/capital for the same.

The first important consideration is to acquire only that amount of fixed assets, which will

be just sufficient to ensure smooth and efficient running of the business. In some cases it may

be economical to buy certain assets in a lot size. Another important consideration to be kept

in mind is possible increase in the demand of the firm’s product needs the expansion of

activities. Hence a firm should have that amount of fixed assets, which could adjust to

increase demand.

Another aspect of fixed assets management is that a firm must ensure buffer stocks

of certain essential equipments to ensure uninterrupted production in the events of

emergencies. Sometimes, there may some breakdown in some equipments or services

affecting the entire production. It is always better to have some alternative arrangements to

deal with such situations but at the same time the cost of carrying such buffer stock should

also be evaluated. Efforts should also be made to minimize the level of buffer stock of fixed

assets so that there will be maximum utilization during that period.

Fixed assets management is an accounting process that seeks to track

34
Fixed assets for the purposes of financial accounting, preventive

Maintenance, and theft deterrence.

Many organizations face a significant challenge to track the location,

quantity, condition, maintenance and depreciation status of their fixed

assets. A popular approach to tracking fixed assets utilizes serial

numbered Asset Tags, often with bar codes for easy and accurate reading.

Periodically, the owner of the assets can take inventory with a mobile

Barcode reader and then produce a report.

Off-the-shelf software packages for fixed asset management are marketed

to businesses small and large. Some Enterprise Resource Planning

Systems are available with fixed assets modules.

Investment management is the professional management of various

securities (shares, bonds etc) and other assets (e.g. real estate), to meet

specified investment goals for the benefit of the investors. Investors may

be institutions (insurance companies, pension funds, corporations etc.) or

private investors (both directly via investment contracts and more

commonly via collective investment schemes eg. mutual funds) .

The term asset management is often used to refer to the investment

management of collective investments, whilst the more generic fund

management may refer to all forms of institutional investment as well as

investment management for private investors. Investment managers who

specialize in advisory or discretionary management on behalf of

(normally wealthy) private investors may often refer to their services as

wealth management or portfolio management often within the context

35
of so-called "private banking".

The provision of 'investment management services' includes elements of

financial analysis, asset selection, stock selection, plan implementation

and ongoing monitoring of investments.

Investment management is a large and important global industry in its

own right responsible for caretaking of trillions of dollars, euros, pounds

and yen. Coming under the remit of financial services many of the

world's largest companies are at least in part investment managers and

employ millions of staff and create billions in revenue.

Fund manager (or investment advisor in the U.S.) refers to both a firm

that provides investment management services and an individual(s) who

directs 'fund management' decisions.

36
 CHAPTER-IV
DATA ANALYSIS AND INTERPRETATION

37
COMPONENTIAL ANALYSIS:

The componential analysis of the fixed assets of kesoram includes net blocks, capital
(work in progress) and construction stores and advances. The data relating to different
components of fixed assets of the KESORAM CEMENT LIMITED. for 5 years
commencing from 2013-14 to 2017-18 are set out in the following table analysis:
Table:4.1
YEAR NETBLOCK CAPITAL TOTAL
(FIXEDASSETS) (W\P)

2013-14 4635.69 174.49 37.23745

2014-15 4941.68 174.49 39.6954
2015-16 16400.25 274.04 41.60068
2016-17 16634.82 274.07 42.45245
2017-18 18172.36 274.18 47.86038
Figure.4.1
20000
18000
16000
14000
12000
NETBLOCK
10000
CAPITAL
8000
TOTAL
6000
4000
2000
0
2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRETATION:

By observing the above table it reveals that the investment in the net block is in increasing

trend .It was 37.23 over the total fixed assets during the year 2013 and it has increased to

47.86 during the year 2017-18.

38
TREND ANALYSIS:

In financial analysis the direction of change over a period of years is of initial importance.
Time series and trend analysis of ratio indicates the direction of changes. This kind of
analysis is particularly applicable to the profit and loss account. It is advisable that trends of
sales and net income may be studied in the light of two factors. The general price level that
might be found in practice is that a number of firms would be shown at persistent growth
over period of years but to get a true trend of growth, the sales figure should be adjusted by a
suitable index of general prices.
In other words, sales figures should be deflated for raising price level. Another method
of securing trend of growth and the one which can be used instead of adjusted sales figure or
as to check on them is to tabulate and lot the output of physical volume of the sales expressed
in suitable units of measure. The general price level is not considered while analyzing trend
in growth as it can mislead management. They may become unduly optimistic in period of
prosperity and pessimistic in dual periods.
For trend analysis the use of index numbers is generally advocated, the procedure followed

is to assign the numbers to items of base years and at calculated percentage change in each

item of other years in relation to base year. This procedure may be called as “Fixed

percentage method”. This margin determines the direction of upward or downward and

involves the implementation of the percentage relationship of each statement item means on

the same in the base year. Generally the first year is taken as the base year. The figures of the

base year are taken as 150 and trend ratio for the other years is calculated on the basis of first

year. Here an attempt is made to know the growth rate in total investment and fixed assets of

the KESORAM CEMENT LIMITED. for 5 years that is 2013-14 to 2017-18.

39
 GROWTH IN TOTAL INVESTMENT:

Table:402

YEAR INVESTMENT TREND PERCENTAGE

2013-14 1534.80 150

2014-15 1669.55 161.340356

2015-16 3730.32 360.487051

2016-17 3788.77 366.185485

2017-18 5158.72 493.691535

Figure:4.2

GROWTH IN TOTAL INVESTMENT

6000

5000

4000

3000 INVESTMENT
TREND PERCENTAGE
2000

1000

0
2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRATATION:

From the analysis of above table it can be observed that Total Investment of KESORAM

CEMENT LIMITED. had change and the growth rate is increased and in the year 2016 it is

the increasing stage and in the year 2018 it is increased due to increased in the current block.

It is constant from 2013-14 to 2017-18.

40
Table.4.3

GROWTH RATE IN FIXED ASSETS:

YEAR FIXEDASSETS TREND PERCENTAGE

2013-14 4365.38 150

2014-15 4716.99 158.054516

2015-16 15890.33 249.470378

2016-17 17166.18 278.695784

2017-18 14025.19 321.282225

Figure:4.3

GROWTH RATE IN FIXED ASSETS

20000
18000
16000
14000
12000
10000 FIXEDASSETS

8000 TREND PERCENTAGE

6000
4000
2000
0
2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRETATION:

The above table shows that the investments in fixed assets are increasing. So this is a good

sign for the company. When compared to 2014-2018 it is been continuously increased in

different ratio percent to 321.28%

41
RATIO ANALYSIS:

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as the indicated

Quotient of two mathematical expressions and Ratios look at the relationship between

individual values and relate them to how a company has performed in the past, and might

perform in the future.

The absolute accounting figure reported in financial statement does not provide a meaningful

understanding of the performance and financial position of the firm. Ratios help us to

summarize large quantities of financial data and to make qualitative judgment about firm’s

financial performance.

1.FIXED ASSETS TO NET WORTH RATIO :

This ratio establishes the relationship between fixed assets and net worth .

Net worth = share capital + reserves and surplus + retained earnings

Fixed assets to net worth ratio = Fixed assets

Net worth

The ratio of “Fixed assets” to “Net worth” indicates the extent to which share holders funds

are sunk into the fixed assets. Generally, share holders should finance for

Purchasing fixed assets and equity including the reserves and surpluses and retained

earnings. If the ratio is less than 150% it implies that owner’s funds are more than total fixed

assets and the share holder provide a part of working capital.

When the ratio is more than 150% it implies that owner’s funds are not sufficient to finance

the fixed assets and financier has to depend upon outsiders to finance the fixed assets. There

is no “Rule of Thumb” to interpret but 60%-65% is considered to be satisfactory ratio in case

of industrial undertaking.

42
2. FIXED ASSET RATIO:

This ratio explains whether the firm has raised adequate long term fund to meet its fixed

assets required and is calculated as under:

= Fixed assets (after depreciation)

Capital employed

This ratio gives an idea as to what part of the capital employed has been used in purchasing

the fixed assets for the concern. If the ratio is less than 1 it is good for the concern.

3. FIXED ASSETS AS A PERCENTAGE TO CURRENT LIABILITIES:

The ratio measures the relationship between fixed assets and the funded debts and is very

useful to the long term erection. The ratio can be calculated as shown below

Fixed assets as a percent of current liabilities= Fixed Assets

Current liabilities

3.TOTAL ASSETS TURN OVER RATIO:

The ratio is calculated by dividing the net sales by the value of total assets that is (net

sales/total investment) or (sales/total investment).A high ratio is an indicator of over trading

of total assets while a low ratio reveals idle capacity. The traditional standard for the ratio is

two times. = Net sales

Total Assets

43
4.FIXED ASSETS TURNOVER RATIO:
The ratio expresses the no. of times fixed assets are being turned over in a stated period. It is
calculated under.
= _____________sales_____________
Net fixed assets (after depreciation)
This ratio shows how well the fixed assets are being used in business. The ratio is important
in case of manufacturing concern because sales are produced not only by use of current assets
but also by amount invested in fixed assets the higher ratio, the better is the performance. On
the other hand, a low ratio indicates that fixed assets are not being effectively utilized.
5. RETURN ON TOTAL ASSETS:
= Profit after tax
Total assets
This ratio is calculated to measure the profit after tax against invested in total assets to
ascertain whether assets are being utilized properly or not.
The higher the ratio the better it is for the concern.
Let us use ratios in the (KESORAM CEMENT LIMITED.) information:

44
FIXED ASSETS TO NET WORTH RATIO
The ratio indicates the extent to where the shareholders funds are struck in the fixed assets.
The formula to compute fixed assets to net worth is calculated as follows:
Fixed assets (after depreciation)
Net worth
NET WORTH =share capital + reserves and surplus + retained earnings-net loss.
If the ratio is less than 150% it implies that owner’s funds are more than the fixed assets and
the shareholders and vice versa provide a part of working capital.
Fixed assets to net worth ratio = Net fixed assets
Net worth
Table: 4.4
YEAR NETFIXED ASSETS NET WORTH RATIO IN %

2013-14 3602.15
4365.38 1.2169
2014-15 4613.65
4716.99 1.02351
2015-16 15666.04
15890.33 1.02153
2016-17 17166.18 17859.82 0.94606
2017-18 14025.19 15234.82 0.92061

Figure: 4.4
FIXED ASSETS TO NET WORTH RATIO
20000
18000
16000
14000
12000
NETFIXED ASSETS
10000
NET WORTH
8000
RATIO IN %
6000
4000
2000
0
2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRETATION:

The above table shows a continuous increase in net worth and fixed assets. This shows the

satisfactory position of the company.

45
FIXED ASSET RATIO:

Capital employed=shareholders fund + Long-Term borrowings

Fixed assets (after depreciation)

Capital Employed

Table:4.5

YEAR NETFIXED ASSETS CAPITAL EMPLOYED RATIO IN %

2013-14 4365.38 1799.57 3.359146

2014-15 4716.99 978.68 4.819747

2015-16 15890.33 3063.83 3.554482

2016-17 17166.18 2286.16 5.321644

2017-18 14025.19 2421.52 5.791895

Figure:4.5

20000
18000
16000
14000
12000
NETFIXED ASSETS
10000
CAPITAL EMPLOYED
8000
RATIO IN %
6000
4000
2000
0
2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRETATION

The above table shows growth in fixed assets satisfactory position of fixed assets in the

company. Long term funds show less fluctuation, there is no change the highest percent 5.79

recorded in the year 2017-18. That shows the position of the company is satisfactory.

46
FIXED ASSETS AS A PERCENTAGE TO CURRENT LIABILITIES:

Fixed assets as a percentage to current Liabilities

= __fixed assets__

Current Liabilities

Table:4.6

YEAR NET FIXED ASSETS CURRENT LIABILITIES RATIO IN %

2013-14 4365.38 1982.39 2.202079

2014-15 4716.99 2153.61 2.190271

2015-16 15890.33 5345.56 2.037266

2016-17 17166.18 6420.48 1.894894

2017-18 14025.19 7716.26 1.818793

Figure.4.6

20000
18000
16000
14000
12000
NET FIXED ASSETS
10000
CURRENT LIABILITIES
8000
RATIO IN %
6000
4000
2000
0
2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRETATION

The above table shows the relationship between fixed and current Liabilities. The above

table shows growth in fixed assets this shows the satisfactory position of fixed assets in the

company. Even the current liabilities are increasing. The highest percentage recorded was in

the year 2013-14 i.e., 2.20 and the lowest was in the year 2017-2018 i.e., 1.81.

47
TOTAL INVESTMENT TURN OVER RATIO:

The total investment turnover ratio can be calculated by the formula as given under

Total investment ratio = sales

Total investment

Table:4.7

YEAR SALES INVESTMENT RATIO IN %

2013-14 6385.50 1534.80 6.170758

2014-15 7042.82 1669.55 4.218394

2015-16 18205.64 3730.32 3.540132

2016-17 18270.69 3788.77 4.822328

2017-18 20174.94 5158.72 3.949168

Figure.4.7

25000

20000

15000
SALES
INVESTMENT
10000
RATIO IN %

5000

0
2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRETATION

From the above table we can see that sales had an increase Investment is constant from 2014-

2018 that signifies the company position is satisfactory.

48
FIXED ASSETS TURN OVER RATIO:

The fixed assets turnover ratio is a relation between the sales or cost of goods and

fixed/capital assets employed in a business.

Fixed assets turnover ratio = sales

Total fixed asset

Table:4.8

YEAR SALES NETFIXED ASSETS RATIO IN %

2013-14 6385.50 4365.38 1.462759

2014-15 7042.82 4716.99 1.493075

2015-16 18205.64 15890.33 1.217602

2016-17 18270.69 17166.18 1.501767

2017-18 20174.94 14025.19 1.438478

Figure4.8

25000

20000

15000
SALES
NETFIXED ASSETS
10000
RATIO IN %

5000

0
2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRETATION

The above table shows increases in Net fixed assets. That can also be seen clearly in sales,

that indicates a good sign.

49
RETURN ON TOTAL ASSETS:

The return on fixed assets can calculate as under:

Return on fixed assets = profit after tax

Total Assets

Table:4.9

YEAR PROFIT AFTER TAX TOTAL ASSETS RATIO IN %

2013-14 977.02 5743.73 0.170152

2014-15 1593.24 6218.17 0.175955

2015-16 1404.23 14815.64 0.144817

2016-17 2446.19 16667.95 0.14676

2017-18 2655.43 19697.50 0.18481

Figure :4.9

25000

20000

15000
PROFIT AFTER TAX
TOTAL ASSETS
10000
RATIO IN %

5000

0
2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRETATION

The above table shows increase in profit 2014-2018 profit has gone up. This shows the

favorable position of the company.

50
VALUATION OF FIXED ASSETS:

KESORAM CEMENT LIMITED. Follows

1) Historical cost method in the valuation of fixed assets.

2) The fixed assets do not include assets acquired on sale-cum-lease basis from various

Financial Institutions whereon the lease rent paid for the year is charged to revenue.

3) Plant and Machinery includes the value of Air Conditioning Plants at various units

which were transferred and vested with the Corporation under the transfer scheme. The gross

value and depreciation thereon are not segregated in the absence of break up details under the

transfer scheme. The value thereof, however, is insignificant.

4) Investments are intended for long term and are carried at cost. Income on investment

is accounted on accrual basis.

5) Capital expenditure on assets not owned by the company is reflected as a distinct

items in capital WIP till the period of completion and therefore in the Fixed assets.

6) The Company evaluates the impairment of losses on the fixed assets whenever events

or changes in circumstances indicate that their carrying amounts may not be recoverable. If

such assets are considered to be impaired the impairment loss is then recognized for the

amount by which the carrying amount of the assets exceeds its recoverable amount, which is

the higher of an asset's net selling price and value in use. For the purpose of assessing

impairment, assets are grouped at the smallest level for which, there are separately

identifiable cash flows.

7) Fixed assets is adjusted in their carrying cost in respect of foreign currency

transactions entered before 1-4-2018 and that related to current assets is recognized as

revenue/expenditure during the year.

51
8) In case of commissioned assets, where final settlement of bills with contractors is yet

to be effected, capitalization is done on provisional basis subject to necessary adjustment in

the year of final settlement.

CALCULATION OF DEPRECIATION:

Depreciation methods followed by KESORAM CEMENT LIMITED. is as follows:

1) Depreciation is charged on straight-line method as per rates notified by the

Government of India except where actual cost does not exceed Rs. 5354 in which case it is

charged 150% in the same year. In respect of assets, where rate is not laid down,

depreciation is provided on straight-line method under the schedule XIV of the Companies

Act 1956.

2) Depreciation is provided on pro-rata basis in the year in which the asset becomes

available for use.

3) Where the cost of depreciable assets has undergone a change during the year due to

increase/decrease in long term liabilities on account of exchange fluctuation, price

adjustment, change in duties or similar factors, the unamortized balance of such asset is

depreciated prospectively over residual life determined on the basis of the rate of

depreciation.

4) Internal electrical wiring, fittings etc., are treated as part of buildings and as such

depreciation applicable to buildings is charged thereon.

52
CHAPTER-V
FINDINGS
SUGGESSIONS
CONCLUSIONS
BIBLIOGRAPHY

53
 FINDINGS

After analyzing the financial position of KESORAM CEMENT LIMITED. and

evaluating its fixed assets management or capital budgeting techniques in respect of

component analysis, trend analysis and ratio analysis. The following conclusions are drawn

from the project preparation.

The progress of KESORAM CEMENT LIMITED. shows that there is an increase in Net

block considerably over the year that the investment in the net block is in increase trend .It

increased during the year 2014-18 and it has 44.49%.

 Regarding to the fixed assets to net worth ratio shows a continuous increase in net worth

and fixed assets. This shows the satisfactory position of the company.

 Regarding the long-term funds to fixed assets they show an increase.

 Regarding the total investment turnover ratio it is observed sales had an increase from

2014-18.

 Regarding the Fixed Asset turnover ratio, sales had an increased.

 Regarding the Return on total assets ratio it has been observed that

There is profit. This shows the favorable position of the company.

 From the above study it can be said that the KESORAM CEMENT LIMITED. overall

financial position on fixed assets is satisfactory.

54
 SUGGESTION

 It is suggested to improve the position of the company by effective’s utilization of fixed

assets.

 Growth rate in fixed assets can be increase by employing more investment.

 Total investment to sales can be improved.

 Instead of disclosing the combined flows of debtors and loans advances as

decrease/(increase) in trade and other receivables, their separate disclosure will be more
meaningful.

 Globalization of economies and the requirement of shares from investors in capital market,
diverse and demanding audience to the company, need a clear and in-depth in information
about the company’s financial position in Annual report.

55
 CONCLUSION

The Fixed asset management of KESORAM CEMENT LIMITED. is quite comfortable

with a judicious mix of debt and equity. The overall assessment of financial statement
signifies efficient utilization of the investments, loans and advances. The profitability of the
company appears to be impressive, as judged by increase in reserves and surplus.

The management discussions and analysis by Director’s report and opinions expressed by
Auditor’s report through fixed asset management statements is true and fair view in
accordance with the provisions of the companies Acts, and Accounting standards.

The overall fixed asset management of the company appears to be more than satisfactory.

56
 BIBLIOGRAPHY

1.Khan, M Y and P K Jain, Financial Management, Tata McGraw-Hill

Publishing Co., New Delhi, 2007.

2.I M Pandey, Essentials of Financial Management, Vikas Publishing House Pvt Ltd, New
Delhi, 1995.

3.Ramesh, S and A Gupta, Venture Capital and the Indian Financial Sector, Oxford
university press, New Delhi, 1995.

4.Anthony, R N and J S Reece, Management Accounting Pincipls, Taraporewala, Bombay.

5.Jain, P K , Josette peyrard and Surendra S Yadav, International Financial Management,

Macmillan India Ltd, New Delhi, 1998.

6.Prasanna Chandra, financial Management, Tata McGraw-Hill Publishing Co., New Delhi,
2007.

www.kesoramcement.com

www.indiancements.com

www.fixedassectsmanagement.com

www.googlefinance.com

57