Fixed Asset

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Chapter – I
INTRODUCTION

1

GENERAL INTRODUCTION
Finance may be defined as the provision of money at the time where, It is required.
Finance refers to the management, flews of money through an organization. It concerns
with the application of skills in the manipulation, use and control of money. Different
authorities have interpreted the term “finance” differently. 1-Lowever there is three main
approaches to finance.
1. The first approach views finance as to providing of funds needed by a business on
most suitable terms this approach confines finances to raising of funds and to the
study financial institutions & instruments from where funds can be procured.
2. The second approach relates finance to cash.
3. The third approach views finance is being concerned with rising of funds &their
effective utilization.

2

Definition of financial management:
Financial management as practice by corporate firms can be called corporation
finance or business finance, financial management refers to that part of the management
activity which is concerned with the planning & controlling of firms financial resources, it
deals with finding out various sources for raising funds for the firm. The sours must be
suitable & economical for the needs of the business. The most appropriate use of such
funds also forms a part of financial management.
Objects of financial management:
Financial management is concerned with procurement and use of funds. Its main
aim is to use business funds in such a way that the firm's value/earning are maximized
there are various alternatives available for using business funds. The pros & cons of
various decisions have to look in to before making a final selection. Financial,
management provides a framework for selecting a proper cause if action and deciding a
viable commercial strategy. The main objective of a business is to maximize the owner
economic welfare. These objectives can be achieved by
1. Profit maximization and
2. Wealth maximization.

3

Management of Fixed Assets:
The selection of various fixed assets required creating the desired production
facilities and the decision as regards determination of the level of fixed assets is primarily
the task at the production / technical people. The decision relating to fixed assets involve
huge funds for a long period of time and are generally of irreversible nature affecting the
long term profitability of a concern, an unsound invest decision may prove p be total to the
very existence of the organization. Thus, management of fixed asset is of vital importance
to any organization.
The process of fixed asset management involves:- .
(I)
(II)

Selection of most worthy projects or alternatives of fixed assets
Arranging the requisite funds /capital for the same.
The first important consideration to be acquire only that much 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 demand of the firm's product
necessarily expansion of its activities. Hence a firm should have that much amount of
fixed assets which could adjust to increase demand.
The third aspect of fixed assets management is that must ensure buffer stocks of
certain essential equipments/services to ensure uninterrupted production in this events of
emergencies. Sometime, there may be a 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 be encouraging their maximum utilization during learn period
learn period, transferring a part of peak period and living additional capacity.

4

Fixed Assets:
Fixed assets are those assets which are required and held permanently for a pretty
long time in the business and are used for the purpose of earning profits. The successful
continuance of the business depends upon the maintenance of such assets. They are not
meant for resale in the ordinary course or business and the utility of these remains so long
as they are in working order, so they are also known as capital assets. Land and building,
plant and machinery, motor vans, furniture and fixture are some examples of these assets.
Financial transactions are recorded in the books keeping in view the going concern
aspect of the business unit. It is assumed the business unit has a reasonable expectation of
continuing business at a profit for an indefinite period of time. It will continue to operate
in the future. 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 values. It is useless to show fixed assets in the balance sheet at their
estimated realizable values if there is no immediate (I.e., cost less depreciation provided)
and not at their current realizable values. The market value of a fixed asset may change
may with the passage of time, but for accounting purpose it continues to be shown in the
books at its book value, I.e., the cost at which it was purchased minus depreciation proved
up to date.
The Cost concept of accounting, deprecation calculated on the basis of historical
costs of old assets is usually lower than of those calculated at current value. These results
in more in more profits on paper which, if distributed in full lead to reduction of capital.

5

Need for Valuation of Fixed Assets
Valuation of fixed assets is important-in order to have fair measure of 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 for other reasons. A portion of fixed reduced by use is
converted in to cash though charging depreciation is essential, as depreciation constitutes a
part of the total cost of production.
Importance:
Fixed assets are the asset which cannot be liquidates in to cash within one year. The
large amount of the company is invested in these assets. Every year the company
investment a additional fund in these assets directly or indirectly the survival and other
objectives of the company purely depends on operating performance of management in
effective utilization of their assets. Firm has evaluate the performance of fixed assets with
proportion of employee on net assets turnover and other parameters which is helpful for
evaluating the performance of fixed assets.

6

Objectives of the Study:
 The study is conducted to evaluate Fixed assets performance of KESORAM
CEMENT.
 The study is conducted to evaluate the fixed assets turnover of KESORAM
CEMENT INDUSTRIES.
 The study is made to know the amount of capital expenditure made by the company
during study period.
 The study is conducted to evaluate depreciation and method of depreciation
adopted by KESORAM CEMENT INDUSTRIES.
 The study is conducted to known the amount of finance made by long term
liabilities and owner funds towards fixed assets.
 Study is conducted to evaluate that if fixed assets are liquidated. What is the
proportion of fixed assets amount will contribute for payment of owner funds and
long term liabilities.
 The study is evaluate is giving adequate return to the company.

Need of The study:
 Fixed assets plays very important role in relating company's objectives the firms to
which capital investments vested on fixed assets. This fixed asset are not
convertible or not liquid able over a period of time the owner funds and long term
liabilities are invested in fixed assets. Since fixed assets playing dominant role in
total business the firms has realized the effective utilization of fixed assets. So
7

ration contributes very much in analyzing and utilized properly it effects long term
sustainability of the firms which may affect liquidity and solvency and profitability
positions of the company. The idle of fixed assets lead a tremendous in financial
cost and intangible cost associate to it. So there is need for the companies to
evaluate fixed assets performance analysis time to time by comparing with pervious
performance. Comparison with similar company and comparison with industry
standards. So chose a study to conduct on the fixed assets analysis of KESORAM
CEMENT using ratio in comparison with previous year performance. The title of
the project is analysis on fixed assets management.
Scope:
 The project is covered of fixed assets of KESORAM CEMENT drawn from annual

report of the company. The fixed assets considered in the cannot be converted in to
cash with one year. Ratio analysis is used for evaluating fixed assets performance
of "KESORAM CEMENT INDUSTRIES".
 The subject matter is limited to fixed assets it analysis and its performance but not
any other areas of accounting, corporate, marketing and financial matters.

RESEARCH METHODOLOGY:
Research Methodology is a systematic procedure of collecting information in order to analyze
and verify a phenomenon. The data is collected through two principle sources.



Primary data
8



Secondary data

Primary Data:
I have collected information by discussing with the financial executives of the company.
Secondary data:
I have collected secondary data from company manuals, Records, Books, Annual reports,
Company website.

9

Limitation:
 The study period of 45 days as prescribed by Kakatiya university.
 The study is limited up to the date and information provided by kesoram cement
and is annual reports.
 The report will not provide exact fixed assets status and position in Kesoram
cement. It may varying from time to time and situation to situation.
 This report is not helpful in investing in kesoram cement industries either though
disinvestments or capital market.
 The accounting procedure and other accounting principles are limited by the
company changes fixed assets performance.

10

Chapter-II
INDUSTRY PROFILE

11

INDUSTRY PROFILE
The 85 year old Indian cement industry is one of the cardinal and basic
infrastructure industries, which enjoys core sector status and play a crucial role in the
economic development and growth of a country. Being a core sector is industry was
subject to price and or distribution controls almost uninterruptedly from world war -II to
1982. When the government of India announced the partial decontrol manufacturing
cement became increasingly attractive industry and the industry experienced substantial
expansion.
As the supply in response to the 1982 partial decontrol was significant in march,
1989. Price and distribution control were finally dispensed with. It was one of the first
major industries in the country to be so deregulated.
DEFINATION OF CEMENT
Cement may be defined as it is a mixture of calcium silicate and aluminates which
have the property of setting and hardening under water. The amount of silica, alumna who
is present in each crust is sufficient to combine with calcium oxide [cao] to from the
corresponding calcium silicate and aluminates.

12

CLASSIFICATION OF CEMENT
Cement is 3 types
i.
ii.
iii.

Puzzolantic cement
Natural cement
Portland cement

1. Puzzolantic cement:
It consists of silicates calcium and aluminum. It shows the hydraulic, properties
when it is in the form of powder and being mixed with suitable proportion of lime. The
rate of hardening is much slower and the comprehensive strength developed is about a half
of Portland cement. It us found more resistant to the chemical action that others.
2. Natural cement:
This is natural occurring material. It is obtained form cement rocks. The cement
rocks are claying lime stones containing silicates aluminates of calcium. The selling
property of this cement is more than the Portland cement but is comprehensive strength is
half of its.

13

3. Portland cement:
a)
b)
c)
d)
e)
f)
g)
h)
i)

Ordinary Portland cement
Rapid hardening Portland cement
Low heat cement
White or colored cement
Water proof Portland cement
Portland slag cement
Portland puzzo
Sulphate resisting cement
Oil well cement

INDIAN CEMENT 1NDUSTERY - PRESENT STATUS
After the deli censing of the industry in July, 1991 it reacted positively to the policy
changes. New capacities created and the volume of the production increased. From a
situation of importing cement, the country started exporting due to high quality and cost
effectiveness. After liberalization the black market in cement also disappeared
Currently INDIA stands second largest in the cement production world wide after
china after India, japans and USA stands. On the other hand India's per capital
consumption is only 100kgs. As compared to the world average of 260kgs. The industry
has 59 companies owing 115 plants.
In the mailer of exports, the government considers cement as extreme focuses are&
However Indian cement in the global market is not very competitive due to high power
and full costs. In order to improve its position in the international market. Technological
up gradation is essential in terms of process up process up gradation product
diversification costs reduction quality control and energy savings

14

PROFILE OF THE INDUSTRY
The 85-year -old Indian cement industry is one the cardinal and basic infrastructure
industries which enjoys core sector status and playa crucial role in the economic
development and growth of a country. Being a core sector this industry was subject to
price and distribution controls almost uninterruptedly from world war-II. When
government of India announced the partial decontrol manufacturing cement became
increasingly attractive and the industry experienced substantial expansion.
As the supply in response to the 1982 partial decontrol was significant in March
I989,price and distribution control were finally dispensed with .It was one of the first
Major industries in the country to be so deregulated.
OVERVIEW OF THE INDUSTRY
The word cement means any substance applied for sticking things .But cement is
most vital and important material for modem construction as a binding agent .In the
ancient times ,clay ,bricks and stones have been used for construction Work.
The Romans were using a binding or a cementing material that would harden
Under water. The first systematic effort was made by SMEATION who Under took the
erection of a new lighthouse in 1756.he observed that the production Obtained by burning
limestone was the best cementing material for work under water.
After eighty years

brunch chemist

produced hydraulic cement by burning

finely ground delay used in the form of paste .cement invented by. JOSEPH ASPDIN in
1824. Since hardened Cement paste resembled Portland stone found in England be
named it a s Portland cement

A name that has ensured even Portland cement was list

manufactured in USA in 1975 In Portland cement was produced for the rust lime in 1940.
by south India industries limited Madras. This unit had capacity of 30 tones per day

15

By 1913 however three units started their operations with a combined installed
capacity of 75000 tons per annum. In 1914 indigenous production fees for short of
domestic demand necessitating an import of 1, 65,723 tones. Shipment difficulties and
foreign

Trade during the first world war acted as a catalyst for the . Development of

indigenous Industry, and

by

1924

the total installed

capacity

grew to 5,59,800

In 1963 all the cement companies with the exception of

SONE VALLEY

tones per annum.

PORTLAND CEMENT COMPANY LIMITED merged to form the ASSOCIATED
CEMENT COMPANIES LIMITED. This has more
well as uniformly in quality. By 1947 the

facilitated

a cost reduction

installed capacity of the

raiscdto2.2miIlion tones per annum. After partition 5 of the cement
in

the country went

to Pakistan

and

total installed

capacity

as

industry

producing

units

of 18 units that

remained in India was 1.5 million tons per Annum. This is increased to 3.8million tones
by 1950-51.
In the three

decades

between 7-8 million tones pe/

between
decade

1950-1980

the

capacity

expansion

was

the target set in respect of additional capacity

generation was released with impetus given by the partial decontrol announced in 1982.
Several units locked up project for expansion of capacity and modernization which
contributed towards increased production.

16

INDIAN CEMENT INDUSTRY PRESENT STATUS
After the

dealing of the industry in July 1991 it reacted positively to the policy

changes new capacities created and the volume of production increased from a situation
of importing cement the. country started exploring due to high quality and cost
effectiveness after liberalization the black market in cement
India

also disappeared currently

stands second largest in the cement production worldwide after china on the

other hand per capita consumption in India is only books as compared To the world
average of 260kgs the industry has S9 companies owning 1 is plants in the matters of
exports. The government considers cement as a extreme Focus area .however Indian
cement

in the

global market is not very competitive Due to high power

full costs. In order to improve its position in the

international market

and

technological

up gradation is essential in terms of process Product diversification cost reduction
quality control and energy saying.
ABOUT THE INDUSTRY
These chapter examiners a profile of cement industries ltd. i.e. .its history location
organization structures etc.
LOCATION;
Kesoram cement industry is one of the leading manufacturer of cement in India it is
a day process cement plant the plant capacity is 8.25 lakh tones per annum .it is located at
basanthnagar in Karimnagar district of Andhra pradesh Basanth nagar is 8km away from
the ramagundam

railway station linking madras to newdelhi the chairman of the

company is syt.B.K.Birla

17

HISTORY:
The first unit at Basanthnagar with a capacity or 2,1 lakh tons per annum
incoresponding suspension-preheated system was commissioned during the year of 1969
the second unit Was setup in year 1971 with a capacity of 2.1 tens per annum and the third
unit with a capacity of 2.5lakh tons per annum went on stream in the year 1978 the coal
for this company is being supplied iron singareni collories and the power is obtained from
APSEB the power demand for the factory is about 21MW kesoram has got 2DG sets of
4M"W each Installed in the year 1987.
Kesoram Cement as set up a 15kw capacity power*plant to facilitate for
unintellpted power supply for manufacturing of cement starts at 24 august 2007 per hour
12 mw, actual power is 15mw. Birla supreme in popular brand of kesoram
its prestigious plant of Basanthnagar

cement from

in A.P which has outstanding track record in

performance and productivity serving the nation for the last two and had decades It
distinction by Bagging several national awards .It also has the distinction optimum
capacity utilization. Kesoram offers a choice of top quality portioned cement for light
heavy constructions and allied applications quality is built every fact of the operations.
The plant layout is rational to begin with the limestone is rich in calcium carbonate
a key factor that influence the quality of final product the day process technology used in
the latest computerized monitoring overseas the manufacturing process samples are sent
regularly to the burenu of Indian standards national council of constructions and Building
material for certification of derived quality norms

18

The company has vigorously undertaking different promotional measures their
product through different media which includes the use of newspapers, magazines
hoardings etc
Kesoram cement industry distinguished itself among all the cement factories in
India by bagging the national productivity award consecutively.For two veat but the year
1985 -1987.(he federation of Andhra Pradesh chamber of commerce and industries also
conferred an kesoram cement an award for.the best Industrial promotion expansion efforts
in the year 1981.kesoram also bagged FAPCCl Awarded for "best family planning effort in
the state " for the year 1987-1988.
One among the industrial giants in the country today serving the nation on the
industrial front kesoram industrials Ltd has a cheque red and eventful history dating Back
to the twenties when only a textile mill under its banner 1924 it grew from Strength to
spread and activities 10 newer fields like Rayan pulp Transport paper spun pipes
Refractivity tires and other products
Looking to the wide gap between the demand and supply of a vital commonly
cement Which plays Ul important role in national building activity the government of
India had de-licensed the cement industry in the year 1966 with a view to attract private
entrepreneurs to augment the cement industry production kesoram rose to the occasion
And divided to setup a few cement plants in the country Kesoram cement undertaking
marketing activities extensively in the states of Andhra Pradesh Karnataka Tamilnadu,
kerala maharastraha and gujrat in AP sales depots are located in different areas like
karimnagar warangal nizambad vijayawada and nellore In other states it has opened
around 10 depots.

19

THE AWARD WON ARE:
Kesoram cement bagged prestigious awards like national awards for productivity
and technology and conservation and several state awards for year 1984 kesoram cement
is best family planning effort in the federation of Andhra Pradesh chamber of commerce
And industry and also national award for two successive years 1985-86& 1986-87.lt has
also bagged the national award for energy efficiency for the year 1989-90 for the
performance among all cement plants in India .thus award stall-by national council For
cement and building material in association with the government of India .
Kesoram bagged the prestigious Andhra Pradesh state productivity award in 19871989 also Annexed state award for industrial management in 1988-1989.and also "Best
Industrial promotion expansion efforts " in the state and yajamanya ratna and best efforts
an industrial unit in the state to develop rural economy was bagged for its contribution
towards the year 1991.it also bagged the "may day award" of the government of India For
the best management and the pandit jawaharlal Nehru silver rolling trophy for the
industrial productivity effort in the state of andhra Pradesh

by FAPCCI and also the

Indira Gandhi memorial national award of the government of Andhra Pradesh for the year
1993.
During the last 3 years the government of Andhra Pradesh has given the following
awards Best awards for the year 1994.Best industrial relation award for 1994.TO keep the
ecological balance they have also undertaken massive tree plantation in The economy and
government of India has nominated township areas and them for VRIKSHMITHRA award
Best effort of an industrial unit in March 1996In the year March 2007 "Best management
award 2007" for the best management practices In kesoram cement presented by chief
minister.

20

CEMENT PRODUCTION WORLDWIDE
Country

1981

1983

1986

1989

1990

World ranking

CHINA

83

108

106

210

210

1

JAPAN

88

85

73

82

87

2

USA

65

61

71

70

72

3

INDIA

21

25

36

45

48

4

ITALY

43

40

36

4

41

5

GERMANY

30

28

24

27

40

'

6

Today in the cement industry is producing 58.3 million tones per annum indication
surplus conditions while its demand is 56.7 million tones lies per annum Now The cement
market has become 'buyer market' which was a selling market till 1970'sAnd so the quality
&brand taken an upper edge for cement marketing.
Today installed at the India cement industry is 771 lakh tones but in India 106
Major plants are producing 583lakh tones leaving the balance for exports.

21

KESORAM GROUP OF INDUSTRIES
a) Textiles

Kesoram Industries Ltd,
42, Garden Reach Road.
Calcutta - 700024.

b) Rayon

Kesoram rayon triennia (po),
Dist Hoogly, West Bengal.

c) Spun pipes

Kesoram Spun pipes & Fonndries,
Bansberia (po) Dist Hoogly,
West Bengal.

d) Cement

Kesoram cement,
Basanth nagar -505187,
Dist karimnagar —Andhra Pradesh.

c) Cement

Vasavadatta cement,
Sedam- 585222,
Dist guibaragh — Karnataka.

1) Tyres

Burka Tyres, Shivam chambers, 53,
Syed Amir Au Avenue,
Calcutta - 700019.

22

Chapter-III
COMPANY PROFILE

23

ABOUT THE KESORAM
Kesoram cement industry is one of the leading manufactures cement in India,
incorporated by the promoters of Birla group company is a dry process cement plant. The
plant capacity is 8.26 lakh tone per annum, it is located at Basanthnanagar in karimnagar
dist. Of Andhra Pradesh which is 8km away from the Ramagundam Railway station,
linking madras to New Delhi.
The company's first; unit at Basantnagar with a capacity of 2.1 lakh tones per
annum. Humbolds suspension preheater system was commissioned during the year 1969.
The second unit was set up in the year 1971 with a capacity 2.1 lakh tones per annum and
the third unit with a capacity of 2.5 lakh tones per annum went on stream in the year 1978.
the coal for this company is being supplied by singareni colonies and the power is
obtained form apsed. The power demand for the factory is about installed' in the year
1987.
Kesorarn cement has set up a 15 MW captive power plant to facilitate for
uninterrupted power supply for manufacturing of cement, which starts on august 1997.
Kesoram cement industry distinguished itself among all the cement Factories in
India by bagging the national productivity a ward consecutively for years i,e., for the year
1985-86 and 1986-87. The federation of Andhra Pradesh chambers of commerce and
industries FAPCCIO also conferred on Kesoram cement. An award for best industrial
promotion /expansion efforts in the state for the year 1984.

24

Kesoram also bagged FAPCCI award for "best family planning efforts in the state"
for the year 1987-88.
One among the industrial giants in the country to day, serving the nation On
industrial front, Kesoram industries ltd. has a chequred and eventful history dating back to
the twenties when the industrial house of Birla acquired it. With only a textile mill under is
banner in 1924, it grew from Strength and spread and its activities to newer fields like
rayon, spun pipes, transparent paper, pulp, tyres, ref rectories and other products.
Cement which plays an important role in nation building activity, the Government
of India had de-kucensed (he cement industry in the year 1966 with a view to attract
private entrepreneurs to augment the cement production. Then Kesoram decided to set up
a few cement plants in the country.
Birla supreme is popular brand of Kesoram cement from its prestigious plant of
Basantnagar, in A,P which has outstanding track record in performance and productivity,
serving the nation for the last two and half decades. It has proved it s distinction by
bagging several national awards and state awards it also has the distinction of achieving
optimum capacity utilization.
Kesoram offers a choice of top quality Portland cement for light, heavy
constructions and allied application. Quality is built to every fact of the operations. As is
the preference for uality, so is the demand for the product.

25

The limestone is rich in calcium carbonate, a key factor that influences the quality
of the final product . The dry process technology used in the late computerized monitoring
oversees the manufacturing process. Samples are sent regularly tot the brreau of Indian
standars, national council construction and building material for certification of derived
quality norms The company has actively undertaken promotional measures for promoting
their product though different media, which includes the off hoardings compliments,
newspapers, etc.
Kesoram cement is undertaking the marketing activities extensively in the states of
Andhra Pradesh, Karnataka, Tamilnadu, Kerala, Maharashtra and Gujarath. In A.P. sales
deposts are located in different areas like Karimnagar, Warangal, Nizamabad, Vijayavvada
and Nellore. In other states it has opened around 10 depots.
The market share of Kesoram cement in the all India cement is 1.19%. In A.P. it is a
7.05%.

26

CEMENT INDUSTRY PROFILE
Cement is the basic construction material used extensively all over the World. The
per capita consumption of cement universal acknowledged one of the measure of the
country. The per capita consumption of cement in India is estimated at approximately 57
ke and India is the third lowest consumer in the world. Thus there is a excellent potential
growth of cement industry in India.
Cement was first patented in 1824 in England. In India, first cement plant was
established by Indian cement industrial growth was continuously sufficiency and import of
cement was stopped. In august, 1965 the Government accepted the principle to decontrol
the prices and distribution of Cement. A scheme of decontrol drawn and brought in to
effect from January, a cement allocation and coordination organization (CACO) was
Formed. As the decontrol scheme did not prove to the satisfaction of the government,
CACO was abolished and its functions over by the cement, controller attached by the
government corporation of India limited. Prices of cement are revised by the government
from time to time based on studies and reports of bureau 'of industrial cost and prices.

27

AWARDS:
Kesoram cement captured various awards including national awards for
productivity, technology conservation and several state awards.
For the year 1989, kesoram bagged "best family planning efforts in the state" by the
federation of A.P. chambers of commerce &industry and national awards for "mines
safety" for two successive years 1985- 86& 1986-87. it also bagged the national award for
engery efficiency for the year 1989-90 for the performance among all cement plans in
India.
This award installed by national council for cement and building and material
(NCBM) in association with the department of power, ministry of govt, of India.
Kesoram bagged the prestigious "A. P" stale productivity award 1987-89, also
annexed the state award for 'industrial management' in the state and 'vazamany ratna' and
'best efforts of an industrial unit' in the state to developed 'rural economy' was bagged for
its contribution towards the social responsibility and rural and community development
programmes. For the year 1991 it begged 'may day award of the govt, of A.P."best
management" and the Pandit J. Nehru "silver rolling trophy for the industrial productivity
effort in the stale of A.P. by FAPCCI. The India Gandhi memorial award for excellence in
industry. "Best management award" of the govt. of the A. P. for the year 1993. And it got
the prestigious award "ISO-9002" award for its quality.

28

During the last 3 years the Govt. of A. P. has given the following awards
Best management award tor the year 1993. best industrial retain award for the year
1994. best industrial retain award for the year 1995. Environment and mineral
conversation, award for the year 1995, to keep the ecological balance, they have been
nominated by government of India for" VRIKSHAMITRA AWARD" best effort of an
industrial unit in the state for rural development for the year 1994-95, presented by chief
minister in march, 1996 and best family welfare award for the year 1996-97.

29

Chapter-IV
DATA ANALYSIS
&
INTERPRETATION

30

Trend Analysis:
In financial analysis the direction of changes over a period of years is of initial
importance. Time series or trend analysis of ratios indicators the direction of changer. This
kind of analysis is particularly applicable to the items of profit and loss account. It is
advisable that trends of sales and net income may be studies in the lightly of two factors.
The rate of fixed expansion for secular trend in the growth of the business and the general
price level . It might be found in practice that a number of firm would be shown a
persistent growth over period of years. But to get a true trend of growth, thd sales figure
should e adjusted by a suitable index of general prices In other words, sales figures should
be defaulted for rising price level. Another method of securing trend of growth and be
which can be used instead of the adjusted sales figure or as check n them is to tabulate and
plot the output or physical volume of the sales expressed in suitable, units of measure . If
the general price level is not considered while analyzing trend of growth, it can be mislead
management they may become unduly optimistic in period of property and pessimistic in
duel periods
For trend analysis, the use of index numbers is generally advocated the procedure
follow is to assign the numbers 100 to items of the base year and at calculate percentage
change in each items of other years in relation to base year. The procedure may be called
as Mixed percentage method V
This margin determines the direction of upward or downward and involves the
implementation of the percentage relationship of the each statement item meant to the
same in the base year. Generally the first year is taken as the base year. The figure of the
base year are taken as 100 and trend ratio be other year or calculated on the basis of one
year. Here and attempt is made to known the growth total investment and fixed assets of
Kesoram cement industries for six years that is 2001-2002 to 2007-2008

31

Table 1:
YEAR
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012

INVESTMENT
41,28,06,232
44,85,21,386
39,68,35,265
24,99,02,930
28,19,24,444
29,09,50,811
28,87,27,907

TREND PERCENTAGE
100
108,65
96.13
60.54
68.29
70.48
69.94

INTERPRETATION:
From the analysis of the above table it can be' observed that the growth rate of total
investment of Kesoram cement industries is in downward trend which shows table of the Kesoram
cement industries investment is decreasing from time to time. During the year 2005-2006 it was
recorded 100%. But it is decreasing in the year 2011-2012 which shows that there is a net
decrease by 69.94 %. The average investment In total assets was found to be Rs.33,85,23,710.7
during the review period . During the period of 2005-2006 it is a Rs.41,28,06,232 and it was
decreased in the year 2011-2012 Rs 28,87,27,907

32

GROWTH IN FIXED ASSETS
Table 2:
YEAR
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012

INVESTMENT
6,07,94,08,271
6,25,64,02,879
5,89,55,39,377
5,69,93,08,565
5,71,48,37,436
7,43,21,97,039
11,05,19,01,277

TREND PERCENTAGE
100
102.91
96.97
93.74
94.00
122.25
181.79

Interpretation:
Growth rate in fixed assets, the examination of the above tabic reveals analysis and interpretation.
1. During the year 2005-2006 the assets investment was recorded at 6,07,94,08,27 1 and it
increased to Rs. 11,05,19,01,277 in 2011-2012 The fixed assets investment is quite
satisfactory.
2. The trend percentage in the year 2005-2006 is taken as the base year as 100% and it was
increased to 181.79% in the year 2011-2012.
3. the average growth rate in fixed assets Rs.6,87,56,56,406 in 7 years

33

Chapter-V
ANALYSIS
&
INTERPRETA TIONS

34

RATIO ANALYSIS:
Ratio analysis is a powerful is a powerful tool of financial analysis. A ratio is
defined as "The indicated quotient of two mathematical expression" and as "The
relationship between for evaluating the financial position and performance of a firm. The
absolute accounting figure reported in financial statement do not private a meaning full
understanding of the performance and financial position of a firm. An accounting figure
conveys meaning when it is related to some other relevant information.
Ratios help to summarize large quantities of financial data and to make qualitative
judgment about the firms 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& surplus + Retained earnings.
Fixed Assets
Fixed Assets to Net Worth Ratio = ------------------------------ X 100
Net Worth
This ratio of "Fixed Assets'"' to "Net Worth" indicates the extent to which
shareholder be financed by shareholders, equity including reserves surpluses and retained
earnings. If the ratio is less than 100% it implies that owners funds are more than total
Fixed Assets and a part of the working capital is provided by the share holders. When the
ratio is more than 100% it implies that owner’s funds are not sufficient to finance the fixed
assets and the finance ahs to depend up on
outsiders to finance the fixed assets. There is no "Rule of Thumb" to interpret this ratio but
60%to65%is considered to be ratio in ease of industrial undertaking.

35

2. Fixed Assets Ratio:This ratio explained whether the firm has raised adequate long term funds to meet
its fixed assets requirements 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 one it is good for the
concern. 1
3. Fixed Assets as a Percentage to Current Liabilities:
The ratio measures the relationship between fixed assets and the funded debt and is
a very useful so the long term erection. The ratio can be calculated as below.
Fixed assets
Fixed assets as a percentage to current liabilities =

-------------------------Current Liabilities

36

4. Total Investment Turnover Ratio:
This ratio is calculated by dividing the net sales by the value of total assets i.e.,
(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 in two times.
5. Fixed Assets Turnover Ratio:
This Ratio expresses the number of times fixed assets are being turned -over is a state
period. It is calculated ass under:
Sales
--------------------------------Net Fixed Assets (After depreciation)

This ratio shows low well the fixed assets are being used in the business . The ratio
is important in ease 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 indicated that fixed assets are not being
efficiently utilized

37

6. Gross Capital Employed:
The term "Gross Capital Employed" usually comprises the total assets , fixed as
well as current assets used in a business.
Gross Capital Employed - Fixed Assets + Current Assets
7. Return on Fixed Assets:
Profit after Tax
------------------------ x 100
Fixed Assets
This ratio is calculated to measure the profit after tax against the amount 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.
Fixed Assets to Net worth:
The ratio indicates the extent to where shareholders are 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 &surplus +Retained earning
If the ratio is less than 100% it implies that owner funds are more than the fixed
assets and apart of working capital is provided by the share holder and vice-versa.

Fixed Assets to Worth Ratio =

Fixed Assets
------------------ x 100
Net worth

38

Table 3:
YEAR
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012

NET WORTH

GROSS FIXED
ASSETS
6,07,94,08,271
6,25,64,02,879
5,89,55,39,377
5,69,93,08,565
5,71,48,37,436
7,43,21,47,039
11,05,19,01,277

3,64,91,77,075
3,38,82,85,855
3,38,78,40,215
3,48,48,27,422
3,77,14,58,784
4,16,05,00,140
6,54,43,44,641

RATIO IN %
166.59
184.65
174.02
163.54
151.52
178.63
168.88

Interpretation
1. The gross fixed to Net worth ratio is furcating from year to year. In the year 20052006 the gross fixed assets to net worth to acquire the ratio is 166.59%, in the year
2008-2009 the fixed assets to net worth to acquire the ratio is 178.93%.
2. The average net worth to fixed ratio is Rs.37,07,76,93,567 or fixed assets average
Rs.6,87,56,56,406.
3. The highest ratio recorded in 2006-2007 at 184.65 the lowest ratio is recorded at
151.52 in the year 2005-2006 and it was increased during the year 2009-2010 at
168.88.

39

Fixed Assets as a percentage to Long Term Liabilities
Fixed Assets Ratio a Various ratio of fixed assets to net worth is a ratio of fixed assets to
long term funds which is calculated as:
Fixed assets (After depreciation)
...................................................... X 100
Capital Employed

40

Table – IV
YEAR
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012

NET WORTH

GROSS FIXED
ASSETS
6,34,91,77,075
3,38,82,85,855
3,38,78,40,215
3,48,48,27,422
3,77,14,58,784
4,16,05,00,140
6,54,43,44,641

1754935148
1429465367
5584744868
5114519720
6141150452
6290568081
3832557792

RATIO IN %
48.1
42.2
164.8
146.8
162.8
151.2
119.7

Interpretation
1. The fixed assets as a % of long term liabilities the ratio is fluctuating from year to year.

The fixed assets as a percentage of long term liabilities is recorded at 42.2% in the year
2005-2006 and it is recorded at 164.8% in the year 2006-2007
2. The highest ratio is recorded at 164.8% in the year 2004-2005 the low ratio is 42.2% in
2006-2007 and it is increased during the year 2011-2012 at 119.7%
Fixed Assets as a Percentage Current Liabilities;Fixed assets
Fixed Assets as a Percentage to Cu Liabilities=.................................
Current liabilities

41

Table: V
YEAR
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012

FIXED ASSETS

CURRENT
LIABILITES
2,053,36,47,518
2,03,50,59,123
2,40,99,51,568
2,14,80,89,665
2,30,72,27,432
3,72,38,07,994
5,05,58,08,066

6,07,94,08,271
6,25,64,02,879
5,89,55,39,377
5,69,93,08,565
5,71,48,37,436
7,43,21,47,039
11,05,19,01,277

RATIO IN %
2.96
3.07
2.44
2.65
2.47
1.99
2.18

Interpretation

1. The ratio was fluctuating trend percentage in review period.
2. From the above table it is observed that the ratio was recorded at 2.96in the 2005-2006 and
is gradually changing to 2.47 in 2009-2010 which indicates that the current funds are used
in the fixed assets which is quite satisfactory.
3. The average ratio was recorded at 2.59 during the review period of time
4. The highest ratio was recorded at 3.07 which is higher than the average ratio. During the
year 2006-2007.

5. The lowest ratio was recorded at 1.99 which is less than the average ratio. During the year
2010-2011.
42

Total Investment Turnover Ratio
The total investment turnover ratio can b calculated by the formula as given under :
Sales
Total investment turnover ratio= -------------------- x100
Total investment

Table: VI
YEAR

FIXED ASSETS

CURRENT
43

RATIO IN %

2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012

LIABILITES
4,128,06
4,448,21
3,368,35
3,499,02
2,819,24
2,901,24
28,87,27,907

1,34,543,28
1,40,116,22
1,35,375,24
1,29,553,62
1,42,195,78
1,61,317,75
22,08,96,60,339

32.5
31.2
34.1
51.84
50.43
55.29
76.56

Interpretation
1. The ratio was in increasing trend.
2. During the year 2005-2006 the ratio was recorded at 32.5 and in the 2011-2012 the
ratio was increased to 76.56
3. The highest ratio was recorded at 76.56 in the year 2011-2012 which is more than
the average ratio.
4. The ratio was 32.5 which is lesser than the average ratio.
Fixed Assets Turnover Ratio
The fixed assets ratio is the relationship between the sales of cost of goods/capital
assets employed in a business.
Sales
44

Fixed Assets Turnover Ratio

----------------------x 100
Total Fixed Asset

45

Table: VII
YEAR

SALES (IN LACKS)

TOTAL FIXED

PERCENTAGE

2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011

1,34,543,28
1,40,116,22
1,35,375,24
1,29,553,62
1,42,195,78
1,61,317,75

ASSETS
60,794,08
62,564,02
58,955,39
56,993,08
57,148,37
74,321,97

2.21
2.23
0.29
2.27
2.40
2.17

2011-2012

2,20,89,660,339

1,10,519,01

1.99

46

Interpretation:
1. The fixed assets turnover ratio is fluctuating trend during the review period of time.
During the year 2005-2006 the ratio was recorded as 2.2 1% and in the year 20112012 the ratio was decreased to 1.99
2. Average ratio was observed 2 .22% during the review period of time
3. The highest ratio was recorded at 2.40% during the year 2010-2011 which is more
than average.
4. The lowest ratio was 1.99% in the 2011-2012 which is less than the average.

Fixed Assets as a Percentage to Total Assets:-

Fixed Assets
Fixed Assets as a percentage to Total Assets-----------------X 100
Total Assets

47

Table: VIII
YEAR
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012

FIXED ASSETS

TOTAL ASSETS

PERCENTAGE

(IN LACKS)
60,794,08
62,564,02
58,955,39
56,993,08
57,148,37
74,32,197
1,10,519,01

1,17,985.89
1,12,647.26
1,12,637.07
1,13,443.60
1,23,031,14
1,38,204,81
1,63,964,36

51.5
55.5
52.3
50.0
46.0
53.77
67.40

48

Interpretation:
1. Fixed assets to total assets ratio is fluctuating trend during the review period of time
2. During the year 2005-2006 the ratio was recorded at 51.5% and the year 2009-2010
the ratio was decreased to 46%.
3. Average ratio was observed at 53.78% during the review period of time.
4. The highest ratio was observed at 67.40% during the year 2011-2012 which is more
then the average. The lowest ratio was recorded at 46% in the year 2009-2010
which is less then average ratio.

49

Gross capital Employed:
Gross capital Employed = Fixed Assets + current Assets.
Table: IX
YEAR

2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012

FIXED ASSETS (IN

CURRENT

GROSS CAPITAL

LACKS)

ASSETS (IN

EMPLOYED (IN

60,794,08
62,564,02
58,955,39
56,993,08
57,148,37
74,321,97
1,10,519,01

LACKS)
53,063.74
45,589,02
49,713.32
53,95.48
63,063.52
60,981.33
86,811.49

LACKS)
1,13,857.82
1,08,162.05
1,08,668.71
1,10,944.56
1,20,211.89
1,35,303.33
1,97,330.50

Profit After Tax:YEAR

PROFIT AFTER

2005-2006

TAX (IN LACKS)
4,644.97

2006-2007

4,137.14

2007-2008

2,814.67

2008-2009

6,299.57

2009-2010

3,351.28

2010-2011

4,570.92

2011-2012

26,568.32

Interpretation:
From the above the profits of Kesoram Cement Industries is in increasing which is
good for the company. Lacks and it is increased during the year 2011-2012 the PAT is
26,568.32
50

In the year 2006-2007 the PAT is the lowest and in 2011-2012 it is observed that the
highest PAT is 26,568.32 over the years.
Return On Gross Capital Employed;The profit for the purpose of calculation on capital employed should be computed
according to the concept of capital employed used. The profits taken must be the profit
earned on the capital employed in the business
Profit After Tax
Return on Gross Employed ---------------------------------= XI 00
Gross Capital Employed

51

Table: X
YEAR

PROFIT AFTER IN

2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012

LACKS
4,644,97
4,137,14
2,814,67
6,299,57
3,351,28
4,570,92
26,568,32

CROSS CAPITAL
1,13,857.82
1,08,162.05
1,08,668.71
1,10,944.56
1,20,211,89
1,35,303.33
1,97,330.50

PERCENTAGE
4.0
3.8
2.5
5.7
2.8
3.4
13.46

Interpretation:
1. Return on Gross Capital Employed ratio is fluctuating trend during the review
period of time
2. During the year 2005-2006 the ratio was recorded at 4.0% and in the year 20102011 the ratio was increased to 13.46% and the average ratio is 5.09
3. The highest ratio was recorded at 13.46% in the year 2011-2012 which is more than
average ratio.
4. The lowest ratio was recorded at 2.5% duding the year 2008-2009 which is less
than the average ratio.
52

Return on Fixed Assets:The return on fixed assets can be calculated as under:
Profit After Tax
Return on Fixed Assets =................................X 100
Fixed Assets

53

Table: X
YEAR
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012

PROFIT AFTER IN
LACKS
4,644,97
4,137,14
2,814,67
6,299,57
3,351,28
4,570,92
26,568,32

CROSS CAPITAL
60,794.08
62,564.02
58,955.39
56,993.08
57,148.37
75,321,97
1,110,519

Interpretation:
54

PERCENTAGE
7.6
6.6
4.7
11.05
5.86
6.15
24.03

1. Return on fixed assets ratio is increasing
2. During the year 2005-2006 the ratio recorded as 7.6% in the year 2011-2012 the
ratio was increased to 24.03%
3. The average ratio is 9.42%
4. The highest ratio is recorded at 24.03% in the year 2011-2012, the lowest ratio is
4.7% in the year 2007-2008.

55

Chapter-VI
CONCLUSIONS
&
SUGGESTIONS

56

CONCLUSIONS
The debt service coverage ratio, which is increasing from 2003-2007 is a good sign
to the company which indicates that taking loans is decreasing so that more amount of
profits are available to internal shareholders.
The return on capital employed which is increasing from 2003-2007 which is a
very good sign.
Total assets turnover ratio and fixed assets turnover ratio, which has been
increasing after a decrease in 2003 is good sign from increasing as a time of dissolution.
The inventory turnover ratio is some what low in 2000 but it increased a lot in 2004 and
decreased in next year but the gradual growth in the inventory turnover shows that the
company is in a good position to do more amounts of sales. The debtors turnover ratio is
very low in 2000 where it has increased a lot in 9.03. Which is a bad sign for the company.
The creditor turnover ratio when compared 2003 with 2004 it has some what increased
which shows good sign for the company, because company is getting lot of time to pay off
it debts.
The net profit ratio is fluctuating because of increase in operating profit ratio. Even
though decreasing trend is observed in current ratio during the period 2002-2006.
company was still able to maintain good current ratio above 1.28, which indicates that the
company had effectively utilized the blocked funds in the initial years. Similar trend was
observed in case of quick ratio also.
The debt equity ratio is decreasing in 2003 have been increased in 2004 now it.
Decreasing gradually. It shows company raising funds slowly. The amount of total assets
which is high in 2004 is decreased lot on 2006 which shows a bad sign for the company.
By seeing the above points we can say the company's position is growing steadily
and the company is having potentially in improving the financial position future which is a
good sign.

57

SUGGESTIONS
After, analyzing the financial position of Kesoram cement industries and evaluating its
fixed assets management or capital budgeting techniques in respect of components
analysis. Trend analysis and ratio analysis. The following conclusions are drawn from the
project preparation.
 The financial position of Kesoram cement regarding investment it has been





increased.
Regarding the fixed assets to net worth it has observed that it has been increased.
Regarding the fixed assets it has been observed that the fixed asset has increased.
Regarding the long term funds to fixed assets it is increased over the years.
Regarding the fixed assets as a percentage of current liabilities it is observed it is

decreased.
 Regarding the total investment turnover ratio it is observed that it has been
increased over the years considerably I, e 32.5% to50.43%.
 Regarding the fixed assets turn over ratio it has been observed that it is satisfactory
at it were increasing from 108% Regarding the fixed assets to total assets it's been
observed that there was decreased from 51.5% to 67.4%. As a result it is said to be
that the ratio is quite satisfactory.
 Regarding the profit and gross capital employed ratio it can be observed that it has
been increasing over the year i.e. from 113857.82 to 197330.5 As a result of the
above it can be said that ratio is steadily increasing.
 From the above study it can be said that the Kesoram cement industries financial
position on fixed assets is quite satisfactory.

58

BIBLIOGRAPHY

Title of the Book, Publisher & Edition

Authors Name

Financial management, Vikas publisher,

1. M. Pandey

8th Edition.
Financial management, Tata McGraw-Hill

2. Prasanna Chandra

5lh Edition.
Financial Accounting, Kalyani publishers

3. R. K. Sharma & Shashi

8th Edition.

K. Gupta

Financial Accounting & Analysis,

4. S.P. Jain & L.L. Narang

Kalyani publisher, 3rd Edition.

59

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