Fixed Assets

P.R.
CEMENTS LTD MANAGEMENT
FIXED ASSETS
GANDHI ACADEMY OF TECHNICAL EDUCATION
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P.R. CEMENTS LTD MANAGEMENT
FIXED ASSETS
CHAPTER - I Introduction Need & Importance of study Objectives of t e study !et odo"o#y $imitations
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FIXED ASSETS
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 !lant and "achiner# "otor $ehicles Furniture and Fixtures. $aluation 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 man# #ears. %he value of these assets decreases with their use or with time or man# other reasons. A portion of fixed assets are reduced b# usage are converted into cash through charging depreciation. For correct measurement of income proper measurement of depreciation is essential as depreciation constitutes a !art of total cost of production.
Financial transactions are recorded in the boo&s &eeping in view the going concern aspect of the business unit. 'n 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. %his assumption provides much of the (ustification for recording fixed assets at original cost and depreciating them in a s#stematic manner without reference to their current reali)able value.
't is useless to record the fixed assets in the balance sheet at their estimated reali)able values if there is no immediate expectation of selling them. *o the# are shown at their boo& value +i.e. ,ost -.epreciation/ and not at current reali)able value. %he mar&et value of the fixed assets ma# change with the passage of time but for accounting purpose it continues to be shown in the boo&s in historical cost.
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%he cost concept of accounting states that depreciation calculated on the basis of historical cost of old assets is usuall# lower than the amount calculated at current value1 replacement value. %hese results in more profits which if distributed in full will lead to reduction in capital.
ACCO&NTIN' (TAN)AR) *OR *I+E) A((ET( ,A(--./:
A*213 on Accounting for Fixed Assets has been made mandator# with effect from 31.34.1551. According to the A*213 6*i0ed 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 action7. 'ross boo1 va"ue of fixed asset is its historical cost or other amount substituted for historical costs in the boo&s of accounts or financial statements. 8hen the amount of depreciation is deducted from gross boo& value then it is Net 2oo1 3a"ue. Cost of *i0ed Assets should consist of purchase price including import duties etc. and attributable cost of bringing the asset to its wor&ing condition for its intended use. Financing costs relating to borrowed funds attributable to construction or ac9uisition of fixed assets for the period up to the ac9uisition or completion. Expenditure incurred in start2up and commissioning of the pro(ect including test runs. Reva"uation of assets: Fixed assets ma# be restated in the value with the help of appraisal under ta&en b# the competent value:s .*uch valuation of assets is called revaluation.
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FIXED ASSETS
*I+E) A((ET( !ANA'E!ENT C4C$E

%he fixed assets management c#cle is the c#cle of activities from the ac9uisition of the asset to the final disposition of the assets at the end of their useful life. %he c#cle has ; steps:
Ac5uisition: %he c#cle begins with the ac9uisition purchase gift or otherwise of an
asset and the determination that the asset is to be capitali)ed. %o be capitali)ed the asset has to meet the agenc#:s capitali)ation limit and have a useful life of one #ear or more.
Receivin#: %he asset is formall# received and accepted b# the agenc#. <eceipt ma# be
verified b# entr# into an automated purchasing s#stem or b# hard cop# document. 'n the case of donated fixed assets receipt can be verified b# a letter to the donor.
Payment% !a#ment is made for the asset according to the terms of the purchase order or
recognition of acceptance of a gift to the donor. %he pa#ment includes the ac9uisition cost freight and all other costs to put the asset. Ac9uisition cost of donated fixed assets is determined b# its fair mar&et value.
Identification: the asset is identified as an asset tagged or otherwise identified and

entered into the fixed assets management inventor# s#stem. Assets are identified with a permanentl# attached identification tag etching or b# painting on the identification number.
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FIXED ASSETS
Inventory: %he longest step in the c#cle. %he asset is used over its useful life. Assets are
inventoried and accounted for during this step until the# are no longer needed. %he agenc#:s policies and procedures determine the inventor# interval.
E0cess% the asset is declared as excess to the user:s needs. %he asset ma# be transferred to
another user where it will continue to be used accounted for and inventoried. Assets ma# be declared as excess more than once until the asset is no longer needed.
(urp"us: the last step in the fixed assets management c#cle. %he asset is declared to be
surplus propert# and to have no further value to the agenc#. %he asset is disposed of b# sale or discarding depending on the residual value. *ale can be b# auction sealed bid spot sale or through a sales store.
*I+E) A((ET( !ANA'E!ENT C4C$E

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FIXED ASSETS
NEE) AN) I!PORTANCE O* THE (T&)4:
As fixed assets pla# an important role in compan#:s ob(ectives. %hese fixed are not convertible or not li9uidable over a period of time. %he owner:s funds and long term liabilities are invested in fixed assets. *ince fixed assets pla# dominant role in the business and the firm has utili)ation of fixed assets. *o ratio contributes in anal#)ing and evaluating the performance of the business. 'f firms fixed assets are idle and not utili)ed properl# it affects the long2term sustainabilit# of the firm which ma# affect li9uidit# and solvenc# and profitabilit# positions of the compan#. %he idle of fixed assets leads to a tremendous loss in financial cost and intangible cost associate of it. *o this will lead to evaluation of fixed assets performance. ,omparing with similar compan# and comparison with industr# standards. Fixed assets are the assets which cannot be li9uidated into cash within one #ear. %he huge amounts of funds of the compan# are invested in these assets. Ever# #ear compan# invests an additional fund in these assets directl# or indirectl#. %he survival and other ob(ectives of the compan# depend on operating performance of management i.e. effective utili)ation of these assets. Firm has evaluated the performance of fixed assets with proportion of capital emplo#ed on net assets turnover and other parameters which are helpful for evaluating the performance of fixed assets.
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O26ECTI3E( O* THE (T&)4%
%he following are the ob(ectives of the stud# 1. %he stud# is conducted to &now the amount of capital expenditure made b# the compan# during stud# period 233>22311 2. %he stud# is conducted to evaluate fixed assets performance of P7R77 0. %he stud# is conducted to evaluate the fixed assets turnover of P7R77 4. %he stud# is conducted to evaluate depreciation and method of depreciation adopted b# P7R77 =. %he stud# is conducted to &now the amount of finance made b# long2term liabilities and owners funds towards fixed assets. >. %he stud# is conducted to evaluate whether fixed assets are giving ade9uate returns to the compan# ;. *tud# is conducted to evaluate that if fixed assets are li9uidated what proportion of it will contribute for the pa#ment of owners fund and long2term liabilities.
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!ETHO)O$O'4:
%he data used for the anal#sis and interpretation is from annual reports of the compan# i.e. secondar# forms of data. <atio anal#sis is used for calculation purpose. %he pro(ect is presented using tables graphs and with their interpretations. @o surve# is underta&en or observation stud# is conducted b# evaluating fixed assets performance of the compan#. (O&RCE( O* )ATA:
%he data needed for this pro(ect is collected from the following sources: 1. %he data is adopted purel# from secondar# sources. 2. %he theoretical contents are gathered purel# from eminent text boo&s and references. 0. %he financial data and information is gathered from annual reports of the compan#.
PERIO) O* (T&)4%
"ade a stud# for the period of = #ears .233>23;to2313211
(COPE O* THE (T&)4:

%he pro(ect is covered on fixed assets of P7R77 .rawn from annual reports of the compan#. %he sub(ect matter is limited to fixed assets its anal#sis and its performance but not to an# other areas of accounting corporate mar&eting and financial matters.
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$I!ITATION(:
%he following are the limitations for the stud# 1. %he stud# is limited into the date and information provided b# the !.<. and its annual reports. 2. %he report ma# not provide exact fixed assets status and position of P7R7A it ma# be var#ing from time to time and situation to situation. 0. %his report is not helpful in investing in P7R7 4. Either through disinvestments or capital mar&et. =. %he accounting procedure and other accounting principles are limited b# the changes made b# the compan# ma# var# fixed assets performance.
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CHAPTER 8 II IN)&(TR4 PRO*I$E CO!PAN4 PRO*I$E
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IN)&(TR4 PRO*I$E
'n the most general sense of the word a cement is a binder a substance which sets and hardens independentl# and can bind other materials together. %he word BcementB traces to the <omans who used the term Bopus caementiciumB to describe masonr# which resembled concrete and was made from crushed roc& with burnt lime as binder. %he volcanic ash and pulveri)ed bric& additives which were added to the burnt lime to obtain a h#draulic binder were later referred to as cementum cimentum cCment and cement. ,ements used in construction are characteri)ed as ydrau"ic or non- ydrau"ic. %he most important use of cement is the production of mortar and concreteDthe bonding of natural or artificial aggregates to form a strong building material which is durable in the face of normal environmental effects. ,oncrete should not be confused with cement because the term cement refers onl# to the dr# powder substance used to bind the aggregate materials of concrete. Epon the addition of water and1or additives the cement mixture is referred to as concrete especiall# if aggregates have been added. 't is uncertain where it was first discovered that a combination of h#drated non2 h#draulic lime and a po))olan produces a h#draulic mixture +see also: !o))olanic reaction/ but concrete made from such mixtures was first used on a large scale b# <oman engineers.%he# used both natural po))olans +trass or pumice/ and artificial po))olans +ground bric& or potter#/ in these concretes. "an# excellent examples of structures made from these concretes are still standing notabl# the huge monolithic dome of the !antheon in <ome and the massive Baths of ,aracalla. %he vast s#stem of <oman a9ueducts also made extensive use of h#draulic cement. %he use of structural concrete disappeared in medieval Europe although wea& po))olanic concretes continued to be used as a core fill in stone walls and columns.
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!O)ERN CE!ENT
"odern h#draulic cements began to be developed from the start of the 'ndustrial <evolution +around 1?33/ driven b# three main needs:

F#draulic renders for finishing bric& buildings in wet climates F#draulic mortars for masonr# construction of harbor wor&s etc in contact with sea water. .evelopment of strong concretes. 'n Britain particularl# good 9ualit# building stone became ever more expensive
during a period of rapid growth and it became a common practice to construct prestige buildings from the new industrial bric&s and to finish them with a stucco to imitate stone. F#draulic limes were favored for this but the need for a fast set time encouraged the development of new cements. "ost famous was !ar&erGs B<oman cement.B %his was developed b# Hames !ar&er in the 1;?3s and finall# patented in 1;5>. 't was in fact nothing li&e an# material used b# the <omans but was a B@atural cementB made b# burning septaria 2 nodules that are found in certain cla# deposits and that contain both cla# minerals and calcium carbonate. %he burnt nodules were ground to a fine powder. %his product made into a mortar with sand set in =-1= minutes. %he success of B<oman ,ementB led other manufacturers to develop rival products b# burning artificial mixtures of cla# and chal&. Hohn *meaton made an important contribution to the development of cements when he was planning the construction of the third Edd#stone Lighthouse +1;==25/ in the English ,hannel. Fe needed a h#draulic mortar that would set and develop some strength in the twelve hour period between successive high tides. Fe performed an exhaustive mar&et research on the available h#draulic limes visiting their production sites and noted that the Bh#draulicit#B of the lime was directl# related to the cla# content of the limestone from which it was made. *meaton was a civil engineer b# profession and too& the idea no
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further. Apparentl# unaware of *meatonGs wor& the same principle was identified b# Louis $icat in the first decade of the nineteenth centur#. combining chal& and cla# into an intimate mixture and burning this produced an Bartificial cementB in 1?1;. Hames Frost or&ing in Britain produced what he called BBritish cementB in a similar manner around the same time but did not obtain a patent until 1?22. 'n 1?24 Hoseph Aspdin patented a similar material which he called !ortland cement because the render made from it was in color similar to the prestigious !ortland stone. All the above products could not compete with lime1po))olan concretes because of fast2setting +giving insufficient time for placement/ and low earl# strengths +re9uiring a dela# of man# wee&s before formwor& could be removed/. F#draulic limes BnaturalB cements and BartificialB cements all rel# upon their belite content for strength development. Belite develops strength slowl#. Because the# were burned at temperatures below 12=3 I, the# contained no alite which is responsible for earl# strength in modern cements. %he first cement to consistentl# contain alite was made b# Hoseph AspdinGs son 8illiam in the earl# 1?43s. %his was what we call toda# BmodernB !ortland cement. Because of the air of m#ster# with which 8illiam Aspdin surrounded his product others +e.g. $icat and ' , Hohnson/ have claimed precedence in this invention but recent anal#sis of both his concrete and raw cement have shown that 8illiam AspdinGs product made at @orthfleet Jent was a true alite2based cement. Fowever AspdinGs methods were Brule2of2thumbB: $icat is responsible for establishing the chemical basis of these cements and Hohnson established the importance of sintering the mix in the &iln. 8illiam AspdinGs innovation was counter2intuitive for manufacturers of Bartificial cementsB because the# re9uired more lime in the mix +a problem for his father/ because the# re9uired a much higher &iln temperature +and therefore more fuel/ and because the resulting clin&er was ver# hard and rapidl# wore down the millstones which were the onl# available grinding technolog# of the time. "anufacturing costs were therefore considerabl# higher but the product set reasonabl# slowl# and developed strength 9uic&l# thus opening up a mar&et for use in concrete. %he use of concrete in construction grew rapidl# from 1?=3
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onwards and was soon the dominant use for cements. %hus !ortland cement began its predominant role. it is made from water and sand
Types of modern cement Port"and cement

,ement is made b# heating limestone +calcium carbonate/ with small 9uantities of other materials +such as cla#/ to 14=3I, in a &iln in a process &nown as calcination whereb# a molecule of carbon dioxide is liberated from the calcium carbonate to form calcium oxide or lime which is then blended with the other materials that have been included in the mix . %he resulting hard substance called Gclin&erG is then ground with a small amount of g#psum into a powder to ma&e GKrdinar# !ortland ,ementG the most commonl# used t#pe of cement +often referred to as K!,/. !ortland cement is a basic ingredient of concrete mortar and most non2specialit# grout. %he most common use for !ortland cement is in the production of concrete. ,oncrete is a composite material consisting of aggregate +gravel and sand/ cement and water. As a construction material concrete can be cast in almost an# shape desired and once hardened can become a structural +load bearing/ element. !ortland cement ma# be gra# or white.
Port"and cement b"ends

%hese are often available as inter2ground mixtures from cement manufacturers but similar formulations are often also mixed from the ground components at the concrete mixing plant. Port"and b"astfurnace cement contains up to ;3L ground granulated blast furnace slag with the rest !ortland clin&er and a little g#psum. All compositions produce high ultimate strength but as slag content is increased earl# strength is reduced while sulfate resistance
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increases and heat evolution diminishes. Esed as an economic alternative to !ortland sulfate2resisting and low2heat cements.
Port"and f"yas cement contains up to 03L fl# ash. %he fl# ash is po))olanic so that ultimate strength is maintained. Because fl# ash addition allows a lower concrete water content earl# strength can also be maintained. 8here good 9ualit# cheap fl# ash is available this can be an economic alternative to ordinar# !ortland cement. Port"and po99o"an cement includes fl# ash cement since fl# ash is a po))olan but also includes cements made from other natural or artificial po))olans. 'n countries where volcanic ashes are available +e.g. 'tal# ,hile "exico the !hilippines/ these cements are often the most common form in use. Port"and si"ica fume cement. Addition of silica fume can #ield exceptionall# high strengths and cements containing =223L silica fume are occasionall# produced. Fowever silica fume is more usuall# added to !ortland cement at the concrete mixer. !asonry cements are used for preparing bric&la#ing mortars and stuccos and must not be used in concrete. %he# are usuall# complex proprietar# formulations containing !ortland clin&er and a number of other ingredients that ma# include limestone h#drated lime air entrainers retarders waterproofers and coloring agents. %he# are formulated to #ield wor&able mortars that allow rapid and consistent masonr# wor&. *ubtle variations of "asonr# cement in the E* are !lastic ,ements and *tucco ,ements. %hese are designed to produce controlled bond with masonr# bloc&s. E0pansive cements contain in addition to !ortland clin&er expansive clin&ers +usuall# sulfoaluminate clin&ers/ and are designed to offset the effects of dr#ing shrin&age that is normall# encountered with h#draulic cements. %his allows large floor slabs +up to >3 m s9uare/ to be prepared without contraction (oints.
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: ite b"ended cements ma# be made using white clin&er and white supplementar# materials such as high2purit# meta&aolin. Co"ored cements are used for decorative purposes. 'n some standards the addition of pigments to produce Bcolored !ortland cementB is allowed. 'n other standards +e.g. A*%"/ 3ery fine"y #round cements are made from mixtures of cement with sand or with slag or other po))olan t#pe minerals which are extremel# finel# ground together. *uch cements can have the same ph#sical characteristics as normal cement but with =3L less cement particularl# due to their increased surface area for the chemical reaction. Even with intensive grinding the# can use up to =3L less energ# to fabricate than ordinar# !ortland cements. Non-Port"and ydrau"ic cements Po99o"an-"ime cements7 "ixtures of ground po))olan and lime are the cements used b# the <omans and are to be found in <oman structures still standing +e.g. the !antheon in <ome/. %he# develop strength slowl# but their ultimate strength can be ver# high. %he h#dration products that produce strength are essentiall# the same as those produced b# !ortland cement. ("a#-"ime cements7 Mround granulated blast furnace slag is not h#draulic on its own but is BactivatedB b# addition of al&alis most economicall# using lime. %he# are similar to po))olan lime cements in their properties. Knl# granulated slag +i.e. water29uenched glass# slag/ is effective as a cement component. (upersu"fated cements7 %hese contain about ?3L ground granulated blast furnace slag 1=L g#psum or anh#drite and a little !ortland clin&er or lime as an activator. %he# produce strength b# formation of ettringite with strength growth similar to a slow !ortland cement. %he# exhibit good resistance to aggressive agents including sulfate. Ca"cium a"uminate cements are h#draulic cements made primaril# from limestone and bauxite. %he active ingredients are monocalcium aluminate ,aAl2K4 +,aK N Al2K0 or ,A in
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,ement chemist notation ,,@/ and ma#enite ,a12Al14K00 +12 ,aK N ; Al2K0 or ,12A; in ,,@/. *trength forms b# h#dration to calcium aluminate h#drates. %he# are well2 adapted
for use in refractor# +high2temperature resistant/ concretes e.g. for furnace linings.
Ca"cium su"foa"uminate cements are made from clin&ers that include #eGelimite +,a4+AlK2/>*K4 or ,4A0 in ,ement chemistGs notation/ as a primar# phase. %he# are used
in expansive cements in ultra2high earl# strength cements and in Blow2energ#B cements. F#dration produces ettringite and speciali)ed ph#sical properties +such as expansion or rapid reaction/ are obtained b# ad(ustment of the availabilit# of calcium and sulfate ions. %heir use as a low2energ# alternative to !ortland cement has been pioneered in ,hina where several million tonnes per #ear are produced.O12PO10P Energ# re9uirements are lower because of the lower &iln temperatures re9uired for reaction and the lower amount of limestone +which must be endothermicall# decarbonated/ in the mix. 'n addition the lower limestone content and lower fuel consumption leads to a ,K2 emission around half that associated with !ortland clin&er. Fowever *K2 emissions are usuall# significantl# higher. ;Natura"; Cements correspond to certain cements of the pre2!ortland era produced b# burning argillaceous limestones at moderate temperatures. %he level of cla# components in the limestone +around 0320=L/ is such that large amounts of belite +the low2earl# strength high2late strength mineral in !ortland cement/ are formed without the formation of excessive amounts of free lime. As with an# natural material such cements have highl# variable properties. 'eopo"ymer cements are made from mixtures of water2soluble al&ali metal silicates and aluminosilicate mineral powders such as fl# ash and meta&aolin.
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CO!PAN4 PRO*I$E
PR CE!ENT( $T)7
:e"come to P. R Cements
"1* !.< ,ements Ltd. is &nown for its long2standing 9ualit# tradition of services and reliabilit# in the cement manufacturing industr# head9uartered in F#derabad A! 'ndia operates a cement plant at $epala"adhavaram $epalamadhavaram "andal @algonda .istrict in Andhra !radesh 'ndia. %he geographical location of plant #ields an advantage of having eas# access to suppl# all over A! %amilnadu Jarnata&a and Krissa "ar&ets. %he technolog# used in cement plant was indigenousl# developed b# @,,B" and has an annual production capacit# of 1 33 333 tons per anuum. %he 9ualit# of the cement produced is par above with B'* standards and other leading brands in A!. %he K!, =0 grade cement produced at this plant is preferred in the construction of commercial and industrial complexes residential homes and a m#riad of other structures needing speed# strengthening bond.
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Company Profi"e
%he ,ompan# has started its commercial production in the #ear 1553 under the brand name 6!<AJA*F7. %he 6,ompan#7 later was ta&en over b# a leading and d#namic entrepreneur in the #ear 233; and since then the produce has been mar&eted under the brand name 6*upreme !ower7. %he plant is strategicall# located at Qepala "adhavaram of "allacheruvu "andal of @algonda .istrict A.! and it is nearl# 22? Jms from F#derabad and 2? Jms from Jodada on the F#derabad2$i(a#awada @ational high wa# and having eas# access to suppl# all over A! ,hennai Jarnata&a and Krissa mar&ets. %he plant is having a capacit# of 00=%!. operating with $ertical *haft Jiln %echnolog#. %he ma(or strength of the compan# is for its high 9ualit# of the product and its location.
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3ision and !ission
Our 2usiness
%he ,ompan# has been set up with the primar# ob(ective of producing and selling Krdinar# !ortland ,ement of =0 grade. %he finest and high 9ualit# of cement is available for all t#pes of customers whether for governmental commercial or residential needs using latest state of the art manufacturing process.
Our 3ision
%o renovate !<,L into a role model cement manufacturing ,ompan# full# aware of generall# accepted principles of corporate social responsibilities engaged in nation building through most efficient utili)ation of resources and optimall# benefiting all customers and clients while en(o#ing public respect and goodwill.
Our !ission
!<,L while maintaining its leading position in 9ualit# of cement and through greater mar&et outreach will build up and improve its value addition with a view to ensuring reasonable price to its customers. %his can be achieved b# an unwavering expansion in all elements of business with strong &e# forces.
Our (trate#ies
8e shall achieve our vision b# maintaining high 9ualit# product relentless pursuit of customer satisfaction empowering !<,L emplo#ees to lead cement industr# and achieve manufacturing excellence producing superior returns to our compan#.
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)irectors Profi"e
!r7'72a"a Reddy is .irector of the compan# is a postgraduate in *ocial *ciences. A techno2savv# first generation entrepreneur with a great vision and instrumental in turning around a sic& entit# to a profitable corporate. "r. <edd# was chosen to spearhead !<,L in 233; and ever since he has not onl# lent sound direction to the compan# but also has ta&en the challenging responsibilit# of ensuring continuous growth to it. Ender his able and d#namic leadership !<,L has made enormous progress and has metamorphosed into a flourishing and vibrant compan#.
!ana#ement Team%
<%eamwor& is the abilit# to wor& together toward a common vision. %he abilit# to direct individual accomplishments toward organi)ational ob(ectives. 't is the fuel that allows common people to attain uncommon results.7
NA!E )r7T o"ada 3( Prasad 47(arat C andra 2abu T7(ud a1ar Reddy P7Narasim a Reddy (73en1ates=ara Rao >7$ (rinivas T7 ( iva Prasad N7>onda Reddy >7 $ac i Reddy !rs7 C7( >ris na Priya )7(rinivasa Rao 333 (atyanarayana Environmenta" Po"icy
)E(I'NATION $ice !resident Meneral "anager2Kperations *r. "anager R *ite 2'n charge Fead2!roduction Fead2"ines Fead2Accounts Fead2"ar&eting Fead2*tores "aster Jilns Fead2,orp.F< "anager2F< !urchase .ept
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6%he struggle to save the global environment is in one wa# much more difficult than the struggle to van9uish Fitler for this time the war is with our selves. 8e are the enem# (ust as we have onl# ourselves as allies.7 Kur environmental polic# is built around two truths @o cement plant can flourish at the cost of the environment. Environmental protection is a management responsibilit# as well as the responsibilit# of ever# emplo#ee of the ,ompan#. %his polic# concerning environmental protection addresses the aspects of the compan# s operations that can potentiall# influence the environment and ,ontinuall# improve environmental management policies programs and performance based on the results of our periodic review and ta&ing into account regulator# development customer needs technical developments scientific understanding and communit# expectations. 8e at !<,L commit ourselves to: "inimi)e the environmental ris&s to our emplo#ees and the communities in which we operate. !romote emplo#ee awareness of environmental concerns actions and responsibilities. %o promote Mreener# in and around the factor#. ,onservation of natural resources. Kperate facilities and conduct the compan#Ss activities ta&ing into consideration the efficient use of energ# and materials.
(afety Po"icy
!<,L is committed to meeting our environmental health and safet# +EF*/ goals for its product and processes and to maintaining a safe and health# wor&place. !<,L:s main
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motto is to provide a safe and healthful wor&place for all and to minimi)e the impact of our production processes and products on the environment. !<,L constantl# prosper to achieve the following guidelines for our smooth production and safe wor& place. !rovide ade9uate control of the health and safet# ris&s arising from our wor& activities. ,onsult with our emplo#ees on matters affecting their health and safet#. !rovide and maintain safe plant and e9uipment. ,onstituted statutor# committee on emplo#ees safet# and emplo#ee welfare. Ensure safe handling and use of substances. !rovide information instruction and supervision for emplo#ees. Ensure all emplo#ees are competent to do their tas&s and to give them ade9uate training. !revent accidents and cases of wor&2related ill health. %o maintain safe and health# wor&ing conditions. <eview and revise this polic# as necessar# at regular intervals.
Product ?ua"ity Po"icy%

<:e at PRC$ are committed to fabricate t e cement of unmatc ab"e 5ua"ity =it competitive price t ere by increase of sa"es to meet t e customer demands7 T is can be ac ieved by constant inventiveness of our business performances =it current trends7@
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OPC AB 'rade 8An Overvie=

Krdinar# !ortland cement is produced b# grinding cement clin&er in association with g#psum +02=L/ to specified fineness depending on the re9uirements of the cement consumers. ,ement clin&er is produced on large scale b# heating finel# pulveri)ed ,alcareous and Argillaceous materials at ver# high temperature up to 14=3I, in rotar# &ilns. %he ,alcareous and Argillaceous materials obtained from the earth are properl# proportioned to get a suitable ratio of lime +,aK/ *ilica +*iK2/ Alumina +Al2K0/ and 'ron +Fe2K0/ present in the mixture.%he Krdinar# !ortland ,ement will be produced based on B*121155> +E@215;/ standard.
Product (pecifications
Kur specifications shown below are as par with "a(or brands and falls at above standard levels.
P7R Cement PARTIC&$AR( CHE!ICA$ Properties 3a"ues
Re5uirements as per I(% -CCDE-FG
Page 2=
FIXED ASSETS
1. "agnesia +L/ 2. *ulphur ,alculated as *o0 +L/
1.2
"ax. >.3L
1.>=
"ax. 2.;= to 0L "ax . 4L
0. Loss of 'gnition +L/ 1.20 4. 'nsoluble <esidue +L/ 7P ysica" Properties F'@E@E** +m21&g/ (O&N)NE(( 1/ Le2,hatlier method 2 2/ Autoclave +L/ (ettin# Time 1/ 'nitial 2/ Final 11= 2;3 3.22 00= 1
"ax . 2L
"in.22=
"ax 13 "ax 3.?
"in 03 "in >33
CO!PRE((I3E (TREN'TH,!pa/ 1/ 0 da#s + ;2T 1 hr/ 25 "in "in 2; 0;
2/ ; da#s + 1>? T 2 hr/ 0? >ey *eatures :
1. 8e produce finest 9ualit# of K!, =02Mrade cement and the 9ualit# of cement produced is par above with B'* standards.
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FIXED ASSETS
2. Uualit# ,ontrol and Anal#sis +U,A/ department is e9uipped with ultra modern facilities. 0. Kur <R. centre at the plant furnished with modern and testing facilities is managed b# highl# 9ualified and experienced professionals. 4. %he K!, =02Mrade cement produced at this plant is preferred in the construction of commercial and industrial complexes highwa#s runwa#s .ams residential homes and a m#riad of other structures needing speed# strengthening bond.
(ocia" H!ora" Responsibi"ity %

8e support the communities where we do business hold ourselves to the
highest standards of ethical conduct and environment responsibilit#
Page 2;
FIXED ASSETS
Current Openin#s
%he following are the current openings at !<,L. Experience in cement industr# is an added advantage for all (ob openings. Assitant "anager 2Accounts with ? #ears experience. *r.manager 2Finance with 13 #ears experience. "anager "ines with 13 #ears experience. *r."ar&eting "anager with 12 #ears experience. *r."anager F< with 13 #ears experience. Asst."anager Electrical with ? #ears Experience. *r."anager 2Kperations with 12 Qears Experience. "anager !urchase with 13 #ears expereince. 'f #ou feel #ou are 9ualified for above openings drop #our resume at careersVprcements.com 1 hrVprcements.com. Kur F< dept will contact *hort listed candidates ver# soon.
Re#istered Office% PR CE!ENT( $I!ITE)

!lot @oA?0? $ive&ananda @agar ,olon# Page 2?
FIXED ASSETS
Ju&at!all# F#derabad2;2
Corporate Office PR CE!ENT( $I!ITE)

!lot @oA12 *oftpro Feights 2nd flooor *oftware Enits La#out "adha!ur F#derabad2?1 ,ontact !hone:34322011=>15 Fax: 343220114521 "ail:infoVprcements.com
*actory PR CE!ENT( $I!ITE)

Qepalamadhavaram Qepalamadhavaram "andal @algonda .istrict
Products of t e or#ani9ation%
Page 25
FIXED ASSETS
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FIXED ASSETS
CHAPTER 8 III
Revie= of "iterature
*i0ed asset:
Page 01
FIXED ASSETS
also &nown as a non-current asset or as propertyI p"antI and e5uipment +!!RE/ is a term used in accounting for assets and propert# which cannot easil# be converted into cash. %his can be compared with current assets such as cash or ban& accounts which are described as li9uid assets. 'n most cases onl# tangible assets are referred to as fixed. "oreover a fixed1non2current asset can also be defined as an asset not directl# sold to a firmGs consumers1end2users. As an example a ba&ing firmGs current assets would be its inventor# +in this case flour #east etc./ the value of sales owed to the firm via credit +i.e. debtors or accounts receivable/ cash held in the ban& etc. 'ts non2current assets would be the oven used to ba&e bread motor vehicles used to transport deliveries cash registers used to handle cash pa#ments etc. Each aforementioned non2current asset is not sold directl# to consumers. %hese are items of value which the organi)ation has bought and will use for an extended period of timeA fixed assets normall# include items such as land and buildings motor vehicles furniture office e9uipment computers fixtures and fittings and plant and machiner#. %hese often receive favorable tax treatment +depreciation allowance/ over short2term assets. According to 'nternational Accounting *tandard +'A*/ 1> Fixed Assets are assets whose future economic benefit is probable to flow into the entit# whose cost can be measured reliabl#. 't 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. 'n addition cost attributable to bringing and installing the asset in its needed location and the initial estimate of dismantling and removing the item if the# are eventuall# no longer needed on the location. %he primar# ob(ective of a business entit# is to ma&e profit and increase the wealth of its owners. 'n the attainment of this ob(ective it is re9uired that the management will exercise due care and diligence in appl#ing the basic accounting concept of 6"atching ,oncept7. "atching concept is simpl# matching the expenses of a period against the revenues of the same period.
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FIXED ASSETS
%he use of assets in the generation of revenue is usuall# more than a #ear2 that is long term. 't is therefore obligator# that in order to accuratel# 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. %his is essential in the prudent reporting of the net revenue for the entit# in the period. @et boo& value of an asset is basicall# 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 (urisprudence of an entit# it is relatable to record and report the value of fixed assets at its net boo& value. Apart from the fact that it is enshrined in *tandard Accounting *tatement +*A*/ 0 and 'A* 1> that value of asset should be carried at the net boo& value it is the best wa# of consciousl# presenting the value of assets to the owners of the business and potential investor.
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FIXED ASSETS
)epreciatin# a *i0ed Asset

.epreciation is simpl# put the expense generated b# the use of an asset. 't is the wear and tear of an asset or diminution in the historical value owing to usage. Further to thisA it is the cost of the asset less an# salvage value over its estimated useful life. 't is an expense because it is matched against the revenue generated through the use of the same asset. .epreciation is usuall# spread over the economic useful life of an asset because it is regarded as the cost of an asset absorbed over its useful life. 'nvariabl# the depreciation expense is charged against the revenue generated through the use of the asset. %he method of depreciation to be adopted is best left for the management to decide in consideration to the peculiarit# of the business prevailing economic condition of the assets and existing accounting guideline and principles as implied in the organi)ational policies. 't is worth noting that not all fixed assets depreciate in value #ear2over2#ear. Land and buildings for example ma# often increase in value depending on local real2estate conditions. A long2term tangible piece of propert# that a firm owns and uses in the production of its income and is not expected to be consumed or converted into cash an# sooner than at least one #earGs time. Fixed assets are sometimes collectivel# referred to as BplantB.
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FIXED ASSETS
2a"ance s eet - accountin# for fi0ed assets Introduction

An important distinction is made in accounting between Bcurrent assetsB and B Bfixed assetsB. Current assets are those that form part of the circulating capital of a business. %he# are replaced fre9uentl# or converted into cash during the course of trading. %he most common current assets are stoc&s trade debtors and cash. ,ompare current assets with fixed assets. A fi0ed asset is an asset of a business intended for continuin# use rather than a short2term temporar# asset such as stoc&s. Fixed assets must be classified in a compan#Gs balance sheet as intan#ib"eI tan#ib"eI or investments7 Examples of intangible assets include goodwill patents and trademar&s. Examples of tangible fixed assets include land and buildings plant and machiner# fixtures and fittings motor vehicles and '% e9uipment. Ho= s ou"d t e c an#in# va"ue of a fi0ed asset be ref"ected in a companyJs accountsK %he benefits that a business obtains from a fixed asset extend over several #ears. For example a compan# ma# use the same piece of production machiner# for man# #ears whereas a compan#2owned motor car used b# a salesman probabl# has a shorter useful life. B# accepting that the life of a fixed asset is limited the accounts of a business need to recognise the benefits of the fixed asset as it is BconsumedB over several #ears. %his consumption of a fixed asset is referred to as depreciation.
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FIXED ASSETS
)efinition of depreciation
Financial <eporting *tandard 1= +covering the accounting for tangible fixed assets/ defines depreciation as follows: Bthe 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 technolog# or demand for goods and services produced b# the asset.' 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. %o calculate profit for a period it is necessar# to match expenses with the revenues the# help earn. 'n 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/. 'n essence depreciation involves allocating the cost of the fixed asset +less an# residual value/ over its useful life. %o calculate the depreciation charge for an accounting period the following factors are relevant: 2 the cost of the fixed assetA 2 the +estimated/ useful life of the assetA 2 the +estimated/ residual value of the asset.
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FIXED ASSETS
: at is t e re"evant cost of a fi0ed assetK %he cost of a fixed asset includes all amounts incurred to ac9uire the asset and an# amounts that can be directl# attributable to bringing the asset into wor&ing condition. .irectl# attributable costs ma# include: 2 .eliver# costs 2 ,osts associated with ac9uiring the asset such as stamp dut# and import duties 2 ,osts of preparing the site for installation of the asset 2 !rofessional fees such as legal fees and architectsG fees @ote 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 factor# building in which the asset is &ept or the cost of the maintenance team who &eep the asset in good wor&ing condition/ %he cost of subse9uent 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 an# benefits consumed. %his means that ma(or improvements or a ma(or overhaul ma# be capitalised and included as part of the cost of the asset in the accounts. Fowever the costs of repairs or overhauls that are carried out simpl# to maintain existing performance will be treated as expenses of the accounting period in which the wor& is done and charged in full as an expense in that period.
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FIXED ASSETS
: at is t e &sefu" $ife of a fi0ed assetK An asset ma# be seen as having a ph#sical life and an economic life. "ost fixed assets suffer ph#sical deterioration through usage and the passage of time. Although care and maintenance ma# succeed in extending the ph#sical life of an asset t#picall# it will eventuall# reach a condition where the benefits have been exhausted. Fowever a business ma# not wish to &eep an asset until the end of its ph#sical life. %here ma# be a point when it becomes uneconomic to continue to use the asset even though there is still some ph#sical life left. %he economic life of the asset will be determined b# such factors as technological progress and changes in demand. For purposes of calculating depreciation it is the estimated economic life rather than the potential ph#sical life of the fixed asset that is used. : at about t e Residua" 3a"ue of a fi0ed assetK At the end of the useful life of a fixed asset the business will dispose of it and an# amounts received from the disposal will represent its residual value. %his again ma# be difficult to estimate in practice. Fowever an estimate has to be made. 'f it is unli&el# to be a significant amount a residual value of )ero will be assumed. %he cost of a fixed asset less its estimated residual value represents the total amount to be depreciated over its estimated useful life.
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FIXED ASSETS
*i0ed Asset Contro"s

%his section contains two do)en controls that can be applied to the ac9uisition valuation and disposal of fixed assets. Kf this group 10 are considered primar# controls and are included in the flowchart in figure 6*#stem of Fixed Asset ,ontrols7. %he remaining 11 controls either do not fit into the various fixed asset transaction flows or are considered secondar# controls that can bolster the primar# controls as needed. 'n essence the s#stem of controls for an asset ac9uisition re9uires that initial funding approval come from the annual budget as well as additional approval through a formal capital investment form (ust prior to the actual ac9uisition. %here should also be a post installation anal#sis of how actual pro(ect results compared to the estimates shown in the original capital investment form. %he &e# controls used once an asset is installed are to tag it assign specific responsibilit# for it and ensure that an# asset transfers are approved b# the shipping and receiving managers. Finall# 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 trac&ing of an# resulting receipts.
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FIXED ASSETS
(ystem of *i0ed Asset Contro"s

%he controls noted in the flowchart are described at greater length next in se9uence
from the top of the flowchart to the bottom for each of the three t#pes of fixed asset transactions.
Obtain funding approval through the annual budgeting process . %he annual budgeting process is an intensive review of overall compan# operations as well as of how capital expenditures are needed to fulfill the compan#:s strategic direction. As such capital expenditure re9uests should be included in the annual budget thereb# ensuring that the# will be anal#)ed in some detail. Expenditure re9uests included in the approved budget still should be sub(ected to some additional approval at the point of actual expenditure to ensure that the# are still needed. Fowever expenditure re9uests not included in the approved budget should be sub(ected to a considerabl# higher level of anal#sis and approval to ensure that there is a (ustifiable need for them.
Require a signed capital investment approval form prior to purchase . Miven the significant amount of funds usuall# needed to ac9uire a fixed asset there alwa#s should be a formal approval process before a purchase order is issued. An example is shown in figure below. .epending on the si)e of the ac9uisition a number of approval signatures ma# be re9uired extending up to the compan# president or even the chair of the board of directors.
Use prenumbered acquisition and disposal forms . 'f the compan# uses a manual s#stem for fixed asset ac9uisitions and disposals then it should ac9uire a set of prenumbered ac9uisition and disposal forms. B# doing so it can &eep trac& of form numbers to ensure that none is lost prior to completion. %his is also a good wa# to ensure that emplo#ees do not attempt to submit multiple ac9uisition authori)ation forms for the same asset allowing them to order duplicate assets and ma&e off with the extra items. For this to be a full# functional control someone must be assigned the tas& of storing the forms in a secure location and monitoring which form numbers have been released for use.
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FIXED ASSETS
Require return on investment calculation prior to approval . Miven the considerable si)e 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. %he return calculation can involve a variet# of approaches such as the pa#bac& period net present value or internal rate of return. All three calculations are included in the capital investment proposal form shown in figure below.
Conduct a postcompletion project analysis. "anagers have been &nown to ma&e overl# optimistic pro(ections in order to ma&e favorable cases for asset ac9uisitions. %his issue can be mitigated b# conducting regular reviews of the results of asset ac9uisitions in comparison to initial predictions and then tracing these findings bac& to the initiating managers. %his approach can also be used at various milestones during the construction of an asset to ensure that costs incurred match original pro(ections.
Compare fixed asset serial numbers to the existing serial number database. %here is a possibilit# that emplo#ees are ac9uiring assets selling them to the compan# then stealing the assets and selling them to the compan# again. %o spot this behavior alwa#s enter the serial number of each ac9uired 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.
ndependently revie! fixed asset master file additions . A number of downstream errors can arise when fixed asset information is entered incorrectl# in the fixed asset master file. For example an incorrect asset description can result in an incorrect asset classification which in turn ma# result in an incorrect depreciation calculation. *imilarl# an incorrect asset location code can result in the subse9uent inabilit# to locate the ph#sical asset which in turn ma# result in an improper asset disposal transaction. Further an incorrect ac9uisition price ma# result in an incorrect depreciation calculation. %o mitigate the ris& of all these errors have a second person review all new entries to the fixed asset master file for accurac#.
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FIXED ASSETS
"ffix an identification plate to all fixed assets . 'f a compan# ac9uires assets that are not easil# differentiated then it is useful to affix an identification plate to each one to assist in later audits. %he identification plate can be a metal tag if durabilit# is an issue or can be a laminated bar code tag for eas# scanning or even a radio fre9uenc# +<F'./ tag. %he person responsible for tagging should record the tag number and asset location in the fixed asset master file.
"ssign responsibility for assets7 %here is a significant ris& that assets will not be trac&ed carefull# through the compan# once the# are ac9uired. %o avoid this formall# assign responsibilit# for each asset to the department manager whose staff uses the asset and send all managers a 9uarterl# notification of what assets are under their control. Even better persuade the human resources manager to include 6asset control7 as a line item in the formal performance review for all managers.
Use a formal transfer document to shift asset locations 7 'f the preceding control is implemented that assigns responsibilit# for specific assets to department managers then the transfer of an asset to a different department calls for the formal approval of the sending and receiving department managers. Ktherwise managers can claim that assets are being shifted without their approval so the# have no responsibilit# for the assets.
Conduct regular asset disposition revie!s. Fixed assets decline in value over time so it is essential to conduct a regular review to determine if an# assets should be disposed of before the# lose their resale value. %his review should be conducted at least annuall# and should include representatives from the accounting purchasing and user departments. An alternative approach is to create capacit# utili)ation metrics +which is most easil# obtained for production e9uipment/ and report on uti2 li)ation levels as part of the standard monthl# management reporting pac&ageA this tends to result in more immediate decisions to eliminate unused e9uipment.
Require a signed capital asset disposition form prior to disposition . %here is a ris& that emplo#ees could sell off assets at below2mar&et rates or disposition assets for which an alternative in2house use had been planned. Also if assets are informall# dispose.
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FIXED ASSETS
#erify that cash receipts from asset sales are handled properly . Emplo#ees ma# sell a compan#:s assets poc&et the proceeds and report to the compan# that the asset actuall# was scrapped. %his control issue can be reduced b# re9uiring that a bill of sale or receipt from a scrapping compan# accompan# the file for ever# asset that has been disposed of.
%he preceding controls were primar# ones re9uired as part of the basic fixed asset transaction flows. 'n addition the next ancillar# controls either are general controls that operate outside of an# specific transaction or are designed to provide additional ris& mitigation.
$egregate responsibilities related to fixed assets . 'f the person purchasing an asset also receives it there is a considerable ris& that the person will alter the purchasing documents to eliminate evidence of the receipt and then steal the asset. %he same concern applies to several aspects of fixed assets transactions. A control over this situation is to segregate these t#pes of responsibilities:
o o o o o
Fixed asset ac9uisition Fixed asset transaction recording ,ustod# of the fixed asset Fixed asset disposal <econciliation of ph#sical assets to accounting records
Restrict access to the fixed asset master file . %he 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. 'f people were to gain illicit access to this file the# could ma&e modifications to change depreciation calculations +thereb# changing financial results/ as well as modif# locations +possibl# resulting in theft of the assets/. %o avoid these problems alwa#s use password controls to restrict access to the fixed asset master file.
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FIXED ASSETS
Restrict facility access. 'f the compan# owns fixed assets that can be easil# moved and have a significant resale value there is a ris& that the# will be stolen. 'f so consider restricting access to the building during nonwor& hours and hire a securit# staff to patrol the perimeter or at least the exits.
nstall an alarm system to detect R% &'tagged assets . 'f the compan# has especiall# valuable fixed assets that can be moved then consider affixing a <F'. tag to each one and then installing a transceiver near ever# building exit that will trigger an alarm if the <F'. tag passes b# the transceiver.
Reconcile fixed asset additions !ith capital expenditure authori(ations. A good detective control to ensure that all ac9uisitions have been authori)ed properl# is to periodicall# reconcile all fixed asset additions to the file of approved capital expenditure authori)ations. An# ac9uisitions for which there is no authori)ation paperwor& are then flagged for additional review t#picall# including reporting of the control breach to management.
ncrease the capitali(ation limit. A &e# problem with fixed asset trac&ing is that it involves a considerable amount of additional paperwor& as well as ongoing depreciation calculations which ma# so overwhelm the accounting staff that the# are struggling to &eep up with the paperwor& rather than focusing on proper control of the assets themselves. %his recommended control ma# seem counterintuitive but increasing the capitali)ation limit reduces the number of assets designated as fixed assets thereb# allowing the accounting staff to focus its attention on the proper approval trac&ing and disposition of a smaller number of large2dollar assets. %hus oversight of smaller assets is abandoned in favor of greater inspection of large2 dollar asset transactions.
Conduct a periodic fixed asset audit . %he internal audit staff should schedule a periodic audit of fixed assets reconciling the on2hand inventor# to the accounting records. Miven the considerable 9uantit# of fixed assets that man# companies maintain it is acceptable to focus on the 23 percent of fixed assets that t#picall# account for ?3 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.
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FIXED ASSETS
#erify the fair value assumptions on dissimilar asset exchanges . Accounting rules allow one to record a gain or loss on the exchange of dissimilar assets. *ince this calculation is based on the fair value of the assets involved +which is not stated in the accounting records/ the possibilit# exists for someone to artificiall# create an asset fair value that will result in a gain or loss. %his situation can be avoided b# having an outside appraiser review the fair value assumptions used in this t#pe of transaction.
)est for asset impairment. %here are a variet# of circumstances under which the net boo& value of an asset should be reduced to its fair value which can result in significant reductions in the recorded value of an asset. %his test re9uires a significant &nowledge of the t#pes of mar&ets in which a compan# operates the regulations to which it is sub(ect and the need for its products within those mar&ets. ,onse9uentl# onl# a &nowledgeable person who is at least at the level of a controller should be relied on to detect the presence of assets whose values are li&el# to have been impaired.
#erify that correct depreciation calculations are being made7 %hough there is no potential loss of assets if incorrect depreciation calculations are being made it can result in an embarrassing ad(ustment to a compan#:s financial statements at some point in the future. %his control should include a comparison of capitali)ed items to the official corporate capitali)ation limit to ensure that items are not being inappropriatel# capitali)ed and depreciated. %he 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 incorrectl# depreciated.
#erify that all changes in asset retirement obligation assumptions are authori(ed . A compan# can artificiall# increase its short2term profitabilit# b# altering the assumed amount of future cash flows associated with its asset retirement obligations. *ince downward revisions to these assumptions will be reflected in the current period:s income statement as a gain an# changes to these assumptions should be approved prior to implementation
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FIXED ASSETS
!ANA'E!ENT O* *I+E) A((ET(%
%he selection of various fixed assets re9uired 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 compan# to ta&e for the smooth running of business. %he decisions relating to fixed assets involve huge funds for long period of time and are generall# of irreversible nature affecting the long profitabilit# of the business. %hus management of fixed asset is of vital importance to an# organi)ation. %he process of Fixed Assets "anagement involves: 1. *election of most worth# pro(ects from the different alternatives of fixed assets. 2. Arranging the re9uisite funds1capital for the same. %he first important consideration is to ac9uire onl# that amount of fixed assets which will be (ust sufficient to ensure smooth and efficient running of the business. 'n some cases it ma# be economical to bu# certain assets in a lot si)e. Another important consideration to be &ept in mind is possible increase in the demand of the firm:s product needs the expansion of activities. Fence a firm should have that amount of fixed assets which could ad(ust to increase demand. Another aspect of fixed assets management is that a firm must ensure buffer stoc&s of certain essential e9uipments to ensure uninterrupted production in the events of emergencies. *ometimes there ma# some brea&down in some e9uipments or services affecting the entire production. 't is alwa#s better to have some alternative arrangements to deal with such situations but at the same time the cost of carr#ing such buffer stoc& should also be evaluated. Efforts should also be made to minimi)e the level of buffer stoc& of fixed assets so that there will be maximum utili)ation during that period.
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FIXED ASSETS
CHAPTER - I3 )ata Ana"ysis &Interpretation
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FIXED ASSETS
CO!PONENTIA$ ANA$4(I(%
%he componential anal#sis of the fixed assets of !.<. includes net bloc&s capital +wor& in progress/ and construction stores and advances. %he data relating to different components of fixed assets of the !.<. for = #ears commencing from 233>23; to 2313211 are set out in the following table anal#sis:
4EAR
NET2$OC> ,*I+E)A((ET(/
CAPITA$ ,:LP/
TOTA$
233>23; 233;23? 233?235 2335213 2311211
;1>>35>1 +?.22/ 134213?4;+=>.=;/ 14;;242=1+>4.?;/ 1?453=?3>+>5.?3/ 21=2>244?+ ;0.=;/
?3333333+51.;?/ ?3333333+40.40/ ?3333333+0=.10/ ?3333333+03.23/ ?3333333+24.;4/
?;1>>35>1 +133/ 1?4213?4;+133/ 22;;242=1+133/ 2>453=?3>+133/ 25=2>244?+133/
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FIXED ASSETS
INTERPRETATION%
B# observing the above table it reveals that the investment in the net bloc& is in increasing trend .'t was ?.22 over the total fixed assets during the #ear 233> and it has increased to ;0.=; during the #ear 2311.
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FIXED ASSETS
TREN) ANA$4(I(% 'n financial anal#sis the direction of change over a period of #ears is of initial importance. %ime series and trend anal#sis of ratio indicates the direction of changes. %his &ind of anal#sis is particularl# applicable to the profit and loss account. 't is advisable that trends of sales and net income ma# be studied in the light of two factors. %he general price level that might be found in practice is that a number of firms would be shown at persistent growth over period of #ears but to get a true trend of growth the sales figure should be ad(usted b# a suitable index of general prices. 'n other words sales figures should be deflated for raising price level. Another method of securing trend of growth and the one which can be used instead of ad(usted sales figure or as to chec& on them is to tabulate and lot the output of ph#sical volume of the sales expressed in suitable units of measure. %he general price level is not considered while anal#)ing trend in growth as it can mislead management. %he# ma# become undul# optimistic in period of prosperit# and pessimistic in dual periods. For trend anal#sis the use of index numbers is generall# advocated the procedure followed is to assign the numbers to items of base #ears and at calculated percentage change in each item of other #ears in relation to base #ear. %his procedure ma# be called as 6Fixed percentage method7. %his margin determines the direction of upward or downward and involves the
implementation of the percentage relationship of each statement item means on the same in the base #ear. Menerall# the first #ear is ta&en as the base #ear. %he figures of the base #ear are ta&en as 133 and trend ratio for the other #ears is calculated on the basis of first #ear. Fere an attempt is made to &now the growth rate in total investment and fixed assets of the !.<. for = #ears that is 233>23;to2313211.
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FIXED ASSETS
'RO:TH IN TOTA$ IN3E(T!ENT:

4EAR 233>23; 233;23? 233?235 2335213 2313211 IN3E(T!ENT CA...... CA...... CA...... CA...... CA...... TREN) PERCENTA'E -.. -.. -.. -.. -..
'RO:TH IN TOTA$ IN3E(T!ENT
INTERPRATATION% From the anal#sis of above table it can be observed that %otal 'nvestment of !.<. had no change. 't is constant from 233>23; to 2313211.
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FIXED ASSETS
'RO:TH RATE IN *I+E) A((ET(%

4EAR 233>23; 233;23? 233?235 2335213 2313211 *I+E)A((ET( -MMAA.GMB -AE-.BDEC -EGEGFF.B CDC.AEABM BAMCDDFFC TREN) PERCENTA'E -.. --.7.D -CM7MB -BC7BD -MC7MM
'RO:TH RATE IN *I+E) A((ET INTERPRETATION: %he above table shows that the investments in fixed assets are increasing. *o this is a good sign for the compan#. 8hen compared to 233>22311 it is been continuousl# increased in the ratio 133 percent to 142.44L
Page =2
FIXED ASSETS
RATIO ANA$4(I(% <atio anal#sis is a powerful tool of financial anal#sis. A ratio is defined as the indicated Uuotient of two mathematical expressions and <atios loo& at the relationship between individual values and relate them to how a compan# has performed in the past and might perform in the future. %he absolute accounting figure reported in financial statement does not provide a meaningful understanding of the performance and financial position of the firm. <atios help us to summari)e large 9uantities of financial data and to ma&e 9ualitative (udgment about firm:s financial performance.
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FIXED ASSETS
*I+E) A((ET( TO NET :ORTH RATIO % %his ratio establishes the relationship between fixed assets and net worth . @et worth W share capital T reserves and surplus T retained earnings Fixed assets to net worth ratio W Fixed assets @et worth %he ratio of 6Fixed assets7 to 6@et worth7 indicates the extent to which share holders funds are sun& into the fixed assets. Menerall# share holders should finance for !urchasing fixed assets and e9uit# including the reserves and surpluses and retained earnings. 'f the ratio is less than 133L it implies that owner:s funds are more than total fixed assets and the share holder provide a part of wor&ing capital. 8hen the ratio is more than 133L 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. %here is no 6<ule of %humb7 to interpret but >3L2>=L is considered to be satisfactor# ratio in case of industrial underta&ing. *I+E) A((ET RATIO:
%his ratio explains whether the firm has raised ade9uate long term fund to meet its fixed assets re9uired and is calculated as under: W Fixed assets +after depreciation/ ,apital emplo#ed %his ratio gives an idea as to what part of the capital emplo#ed has been used in purchasing the fixed assets for the concern. 'f the ratio is less than 1 it is good for the concern.
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FIXED ASSETS
*I+E) A((ET( A( A PERCENTA'E TO C&RRENT $IA2I$ITIE( : %he ratio measures the relationship between fixed assets and the funded debts and is ver# useful to the long term erection. %he ratio can be calculated as shown below Fixed assets as a percent of current liabilities W TOTA$ A((ET( T&RN O3ER RATIO:
%he ratio is calculated b# dividing the net sales b# the value of total assets that is +net sales1total investment/ or +sales1total investment/.A high ratio is an indicator of over trading of total assets while a low ratio reveals idle capacit#. %he traditional standard for the ratio is two times. %otal assets turnover ratio W @et sales %otal Assets
Fixed Assets ,urrent liabilitie
*I+E) A((ET( T&RNO3ER RATIO: %he ratio expresses the no. of times fixed assets are being turned over in a stated period. 't is calculated under. W XXXXXXXXXXXXXsalesXXXXXXXXXXXXX @et fixed assets +after depreciation/ %his ratio shows how well the fixed assets are being used in business. %he ratio is important in case of manufacturing concern because sales are produced not onl# b# use of current assets but also b# amount invested in fixed assets the higher ratio the better is the performance. Kn the other hand a low ratio indicates that fixed assets are not being effectivel# utili)ed.
RET&RN ON TOTA$ A((ET(: W !rofit after tax %otal assets %his ratio is calculated to measure the profit after tax against invested in total assets to ascertain whether assets are being utili)ed properl# or not. %he higher the ratio the better it is for the concern.
Page ==
FIXED ASSETS
$et us use ratios in t e ,P7R7/ information: *I+E) A((ET( TO NET :ORTH RATIO
%he ratio indicates the extent to where the shareholders funds are struc& in the fixed assets. %he formula to compute fixed assets to net worth is calculated as follows: Fixed assets +after depreciation/ @et worth @E% 8K<%F Wshare capital T reserves and surplus T retained earnings2net loss. 'f the ratio is less than 133L it implies that owner:s funds are more than the fixed assets and the shareholders and vice versa provide a part of wor&ing capital. Fixed assets to net worth ratio W @et fixed assets @et worth
4EAR 233>23; 233;23? 233?235 2335213 2313211
NET*I+E) A((ET( -MMAA.GMB -AE-.BDEC -EGEGFF.B CDC.AEABM BAMCDDFFC
NET :ORTH -BC-C.EFA -MDAEAG.-AM.GEBGA -FEAF-.GD C.AABMACC
RATIO IN N -7.E -7.F -7CF -7BF -7GC
Page =>
FIXED ASSETS
*I+E) A((ET( TO NET :ORTH RATIO
INTERPRETATION%
%he above table shows a continuous increase in net worth and fixed assets. %his shows the satisfactor# position of the compan#.
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FIXED ASSETS
*I+E) A((ET RATIO:

,apital emplo#edWshareholders fund T Long2%erm borrowings Fixed assets +after depreciation/ ,apital Emplo#ed 4EAR 233>23; 233;23? 233?235 2335213 2313211 NET*I+E) A((ET( -MMAA.GMB -AE-.BDEC -EGEGFF.B CDC.AEABM BAMCDDFFC CAPITA$ E!P$O4E) -F..BEFCA C.C.ACEMG -EEBC.MDA C-MG.CAMG CCBDAAGCB RATIO IN N -7.E -7.F -7CF -7BF -7AF
INTERPRETATION %he above table shows growth in fixed assets satisfactor# position of fixed assets in the compan#. Long term funds show less fluctuation there is no change %he highest percent 10? recorded in the #ear 233?235. %hat shows the position of the compan# is satisfactor#.
*I+E) A((ET( A( A PERCENTA'E TO C&RRENT $IA2I$ITIE(%

Page =?
FIXED ASSETS
Fixed assets as a percentage to current Liabilities W XXfixed assetsXX ,urrent Liabilities
4EAR
NET A((ET(
*I+E) C&RRENT $IA2I$ITIE( -FFDMMFG
RATIO N G7DD
IN
233>23;
-MMAA.GMB
233;23?
-AE-.BDEC
BEBB-ME-
M7.M
233?235 2335213
-EGEGFF.B CDC.AEABM
AGEADEBD GC.---M-
B7MC B7DM
2313211
BAMCDDFFC
EFFCMACA
B7AF
Page =5
FIXED ASSETS
INTERPRETATION %he above table shows the relationship between fixed and current Liabilities. %he above table shows growth in fixed assets %his shows the satisfactor# position of fixed assets in the compan#. Even the current liabilities are increasing. %he highest percentage recorded was in the #ear 233>23;i.e. ;.>> and the lowest was in the #ear 233;2233?i.e. 0.42
Page >3
FIXED ASSETS
TOTA$ IN3E(T!ENT T&RN O3ER RATIO%

%he total investment turnover ratio can be calculated b# the formula as given under %otal investment ratio W sales %otal investment 4EAR 233>23; 233;23? 233?235 2335213 2313211 (A$E( CM.CDG.MC CD-EGFCA. B-BEFFFBG MMBAD.BBM ME--MABC. IN3E(T!ENT CA...... CA...... CA...... CA...... CA...... RATIO IN N E7D-.7MF -C7AD -G7GM -E7DA
INTERPRETATION From the above table we can see that sales had an increase 'nvestment is constant from 233>22311 that signifies the compan# position is satisfactor#.
*I+E) A((ET( T&RN O3ER RATIO%
Page >1
FIXED ASSETS
%he fixed assets turnover ratio is a relation between the sales or cost of goods and fixed1capital assets emplo#ed in a business. Fixed assets turnover ratio W sales
%otal fixed asset 4EAR 233>23; 233;23? 233?235 2335213 2313211 (A$E( CM.CDG.MC CD-EGFCA. B-BEFFFBG MMBAD.BBM ME--MABC. NET*I+E) A((ET( -MMAA.GMB -AE-.BDEC -EGEGFF.B CDC.AEABM BAMCDDFFC RATIO IN N -7DD -7DA -7AE -7DE -7BF
INTERPRETATION %he above table shows increases in @et fixed assets. %hat can also be seen clearl# in sales that indicates a good sign.
RET&RN ON TOTA$ A((ET(%

%he return on fixed assets can calculate as under: <eturn on fixed assets W profit after tax
Page >2
FIXED ASSETS
%otal Assets 4EAR 233>23; 233;23? 233?235 2335213 2313211 PRO*IT A*TER TA+ -BEM-AF C.-E-DB CCEEDMAF BFDDBGFMCGMMDC. TOTA$ A((ET( B-DCFEG.B BMBG-D-FD BE.EDC-FG MDMB-CFBA ACMMCFCAB RATIO IN N .7..M .7..D .7.D .7.FB .7.F-
INTERPRETATION %he above table shows increase in profit 233>22311 profit has gone up. %his shows the favorable position of the compan#.
3A$&ATION O* *I+E) A((ET(%
Page >0
FIXED ASSETS
P7R7 *o""o=s
Fistorical cost method in the valuation of fixed assets. %he fixed assets do not include assets ac9uired on sale2cum2lease basis from various Financial 'nstitutions whereon the lease rent paid for the #ear is charged to revenue. !lant and "achiner# includes the value of Air ,onditioning !lants at various units which were transferred and vested with the ,orporation under the transfer scheme. %he gross value and depreciation thereon are not segregated in the absence of brea& up details under the transfer scheme. %he value thereof however is insignificant. 'nvestments are intended for long term and are carried at cost. 'ncome on investment is accounted on accrual basis. ,apital expenditure on assets not owned b# the compan# is reflected as a distinct items in capital 8'! till the period of completion and therefore in the Fixed assets. Fixed assets is ad(usted in their carr#ing cost in respect of foreign currenc# transactions entered before 1242233> and that related to current assets is recogni)ed as revenue1expenditure during the #ear. 'n case of commissioned assets where final settlement of bills with contractors is #et to be effected capitali)ation is done on provisional basis sub(ect to necessar# ad(ustment in the #ear of final settlement.
CA$C&$ATION O* )EPRECIATION%
Page >4
FIXED ASSETS
.epreciation methods followed b# P7R7Cements "td are as follows: .epreciation is charged on straight2line method as per rates notified b# the Movernment of 'ndia except where actual cost does not exceed <s. =333 in which case it is charged 133L in the same #ear. 'n respect of assets where rate is not laid down depreciation is provided on straight2line method under the schedule Y'$ of the ,ompanies Act 15=>. .epreciation is provided on pro2rata basis in the #ear in which the asset becomes available for use. 8here the cost of depreciable assets has undergone a change during the #ear due to increase1decrease in long term liabilities on account of exchange fluctuation price ad(ustment change in duties or similar factors the unamorti)ed balance of such asset is depreciated prospectivel# over residual life determined on the basis of the rate of depreciation. 'nternal electrical wiring fittings etc. are treated as part of buildings and as such depreciation applicable to buildings is charged thereon.
Page >=
FIXED ASSETS
CHAPTER 8 3 F'@.'@M* ,K@,LE*'K@* *EMME*%'K@* B'BL'KM<A!FQ
Page >>
FIXED ASSETS
*IN)IN'( %
<egarding the long2term funds to fixed assets the# show an increase.
<egarding the total investment turnover ratio it is observed sales had an increase from 233>211
<egarding the Fixed Asset turnover ratio sales had an increased.
<egarding the <eturn on total assets ratio it has been observed that
%here is profit. %his shows the favorable position of the compan#
Page >;
FIXED ASSETS
CONC$&(ION(%
After anal#)ing the financial position of !.<. and evaluating its fixed assets management or capital budgeting techni9ues in respect of component anal#sis trend anal#sis and ratio anal#sis. %he following conclusions are drawn from the pro(ect preparation.
%he progress of p.r. shows that there is an increase in @et bloc& considerabl# over the #ear that the investment in the net bloc& is in increase trend .'t increased during the #ear 233>213 and it has >5.?3L.
From the above stud# it can be said that the !.<. overall financial position on fixed assets is satisfactor#.
Page >?
FIXED ASSETS
(&''E(TION%
't is suggested to improve the position of the compan# b# effective:s utili)ation of fixed assets.
Mrowth rate in fixed assets can be increase b# emplo#ing more investment.
%otal investment to sales can be improved.
't is suggested to decrease current liabilities.
Page >5
FIXED ASSETS
2I2$IO'RAPH4%
(7 N O 1 Financial management 2OO> NA!E A&THOR P&2$I(HER 4EAR O* P&2$I(H
Jhan " Q and ! J %ata "cMraw2 Fill Hain !ublishing ,o. @ew .elhi
233;
Essentials of Financial
2
' " !ande#
"anagement
$i&as !ublishing Fouse !vt Ltd @ew .elhi
155=
$enture ,apital and the 'ndian Financial *ector
<amesh * and A Mupta Hain ! J Hosette pe#rard and *urendra * Qadav
Kxford universit# press @ew .elhi 1. "a cmillan 'ndia Ltd @ew .elhi.
155=
'nternational Financial "anagement
155?
:ebsites
www.!.<..com www.indiancements.com www.fixedassectsmanagement.com www.googlefinance.com
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FIXED ASSETS
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P.R.

CEMENTS LTD MANAGEMENT

GANDHI ACADEMY OF TECHNICAL EDUCATION

P.R. CEMENTS LTD MANAGEMENT

GANDHI ACADEMY OF TECHNICAL EDUCATION

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P.R. CEMENTS LTD MANAGEMENT

ACCO&NTIN' (TAN)AR) *OR *I+E) A((ET( ,A(--./:

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Identification: the asset is identified as an asset tagged or otherwise identified and

GANDHI ACADEMY OF TECHNICAL EDUCATION

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GANDHI ACADEMY OF TECHNICAL EDUCATION

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GANDHI ACADEMY OF TECHNICAL EDUCATION

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GANDHI ACADEMY OF TECHNICAL EDUCATION

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GANDHI ACADEMY OF TECHNICAL EDUCATION

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1. "agnesia +L/ 2. *ulphur ,alculated as *o0 +L/

"ax. 2.;= to 0L "ax . 4L

"ax 13 "ax 3.?

ACCO&NTIN' (TAN)AR) OR I+E) A((ET( ,A(--./:

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1. "agnesia +L/ 2. ulphur ,alculated as o0 +L/