Project

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) Selection of most worthy projects or alternatives of fixed assets

(II) 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.

RESEARCH METHODOLOGY:

Need for 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 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.

6

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.

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.

Methodology:

The data used for analysis and interpretation fore annual reports of the company

that is secondary forms of data. Ratio analysis is used for calculation on purpose.

The project is presented by using tables, graphs and with their interpretations. No

survey is undertaken or observation study is conducted in evaluating "fixed assets"

performance of "KESORAM CEMENT INDUSTRIES".

7

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.

8

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.

Sources of data :-

The data gathering method is adopted purely from secondary sources.

The theoretical contents are gathered from eminent texts books reference and

library at Kesoram cement industries.

The financial data and information is gathered from annual reports of the company

internal records.

Interpretation, conclusion and suggestion are purely base on my opinion and

suggestions provided by the project guide.

9

Chapter-II

INDUSTRY PROFILE

10

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.

11

CLASSIFICATION OF CEMENT

Cement is 3 types

i. Puzzolantic cement

ii. Natural cement

iii. 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.

12

3. Portland cemen t:

a) Ordinary Portland cement

b) Rapid hardening Portland cement

c) Low heat cement

d) White or colored cement

e) Water proof Portland cement

f) Portland slag cement

g) Portland puzzo

h) Sulphate resisting cement

i) 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

13

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

14

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

tones per annum.

In 1963 all the cement companies with the exception of SONE VALLEY

PORTLAND CEMENT COMPANY LIMITED merged to form the ASSOCIATED

CEMENT COMPANIES LIMITED. This has more facilitated a cost reduction as

well as uniformly in quality. By 1947 the installed capacity of the industry

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

in the country went to Pakistan and total installed capacity 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 1950-1980 the capacity expansion was

between 7-8 million tones pe/ decade 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.

15

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 also disappeared currently

India 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 and

full costs. In order to improve its position in the international market 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

16

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 cement from

its prestigious plant of Basanthnagar 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

17

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.

18

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 1987-

1989 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.

19

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.

20

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.

21

Chapter-III

COMPANY PROFILE

22

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.

23

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.

24

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%.

25

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.

26

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.

27

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.

28

Chapter-IV

DATA ANALYSIS

&

INTERPRETATION

29

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

30

Table 1:

YEAR INVESTMENT TREND PERCENTAGE

2003-2004 41,28,06,232 100

2004-2005 44,85,21,386 108,65

2005-2006 39,68,35,265 96.13

2006-2007 24,99,02,930 60.54

2007-2008 28,19,24,444 68.29

2008-2009 29,09,50,811 70.48

2009-2010 28,87,27,907 69.94

31

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

2003-2004 it was recorded 100%. But it is decreasing in the year 2009-2010 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 2003-2004 it is a

Rs.41,28,06,232 and it was decreased in the year 2009-2010 Rs 28,87,27,907

32

GROWTH IN FIXED ASSETS

Table 2:

YEAR INVESTMENT TREND PERCENTAGE

2003-2004 6,07,94,08,271 100

2004-2005 6,25,64,02,879 102.91

2005-2006 5,89,55,39,377 96.97

2006-2007 5,69,93,08,565 93.74

2007-2008 5,71,48,37,436 94.00

2008-2009 7,43,21,97,039 122.25

2009-2010 11,05,19,01,277 181.79

33

Interpretation:

Growth rate in fixed assets, the examination of the above tabic reveals analysis and

interpretation.

1. During the year 2003-2004 the assets investment was recorded at 6,07,94,08,27 1

and it increased to Rs. 11,05,19,01,277 in 2009-2010 The fixed assets investment is

quite satisfactory.

2. The trend percentage in the year 2003-2004 is taken as the base year as 100% and it

was increased to 181.79% in the year 2009-2010.

3. the average growth rate in fixed assets Rs.6,87,56,56,406 in 7 years

34

Chapter-VANALYSIS

&INTERPRETA TIONS

35

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 AssetsFixed 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.

36

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

37

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

38

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 AssetsFixed Assets to Worth Ratio = ------------------ x 100

Net worth

39

Table 3:

YEAR NET WORTH GROSS FIXED

ASSETS

RATIO IN %

2003-2004 3,64,91,77,075 6,07,94,08,271 166.59

2004-2005 3,38,82,85,855 6,25,64,02,879 184.65

2005-2006 3,38,78,40,215 5,89,55,39,377 174.02

2006-2007 3,48,48,27,422 5,69,93,08,565 163.54

2007-2008 3,77,14,58,784 5,71,48,37,436 151.52

2008-2009 4,16,05,00,140 7,43,21,47,039 178.63

2009-2010 6,54,43,44,641 11,05,19,01,277 168.88

Interpretation

1. The gross fixed to Net worth ratio is furcating from year to year. In the year 2003-

2004 the gross fixed assets to net worth to acquire the ratio is 166.59%, in the year

2007-2008 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.

40

3. The highest ratio recorded in 2002-2003 at 184.65 the lowest ratio is recorded at

151.52 in the year 2005-2006 and it was increased during the year 2007-2208 at

168.87.

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

41

Table – IV

YEAR NET WORTH GROSS FIXED

ASSETS

RATIO IN %

2003-2004 1754935148 6,34,91,77,075 48.1

2004-2005 1429465367 3,38,82,85,855 42.2

2005-2006 5584744868 3,38,78,40,215 164.8

2006-2007 5114519720 3,48,48,27,422 146.8

2007-2008 6141150452 3,77,14,58,784 162.8

2008-2009 6290568081 4,16,05,00,140 151.2

2009-2010 3832557792 6,54,43,44,641 119.7

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 2004-2005 and it is recorded at 164.8% in the year 2005-2006

2. The highest ratio is recorded at 164.8% in the year 2004-2005 the low ratio is

42.2% in 2005-2006 and it is increased during the year 2009-2010 at 119.7%

42

Fixed Assets as a Percentage Current Liabilities;-

Fixed assets Fixed Assets as a Percentage to Cu Liabilities=.................................

Current liabilities

43

Table: V

YEAR FIXED ASSETS CURRENT LIABILITES

RATIO IN %

2003-2004 6,07,94,08,271 2,053,36,47,518 2.962004-2005 6,25,64,02,879 2,03,50,59,123 3.072005-2006 5,89,55,39,377 2,40,99,51,568 2.442006-2007 5,69,93,08,565 2,14,80,89,665 2.652007-2008 5,71,48,37,436 2,30,72,27,432 2.472008-2009 7,43,21,47,039 3,72,38,07,994 1.992009-2010 11,05,19,01,277 5,05,58,08,066 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 2003-

2004 and is gradually changing to 2.47 in 2007-2008 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 2004-2005.

44

5. The lowest ratio was recorded at 1.99 which is less than the average ratio. During

the year 2008-2009.

Total Investment Turnover Ratio

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

SalesTotal investment turnover ratio= -------------------- x100

Total investment

Table: VI

YEAR FIXED ASSETS CURRENT

LIABILITES

RATIO IN %

2003-2004 1,34,543,28 4,128,06 32.5

2004-2005 1,40,116,22 4,448,21 31.2

2005-2006 1,35,375,24 3,368,35 34.1

2006-2007 1,29,553,62 3,499,02 51.84

2007-2008 1,42,195,78 2,819,24 50.43

2008-2009 1,61,317,75 2,901,24 55.29

2009-2010 22,08,96,60,339 28,87,27,907 76.56

45

Interpretation

1. The ratio was in increasing trend.

2. During the year 2003-2004 the ratio was recorded at 32.5 and in the 2009-2010 the

ratio was increased to 76.56

3. The highest ratio was recorded at 76.56 in the year 2009-2010 which is more than

the average ratio.

4. The ratio was 32.5 which is lesser than the average ratio.

Fixed Assets Turnover RatioThe fixed assets ratio is the relationship between the sales of cost of goods/capital

assets employed in a business.

SalesFixed Assets Turnover Ratio ----------------------x 100

Total Fixed Asset

46

Table: VII

YEAR SALES (IN LACKS) TOTAL FIXED

ASSETS

PERCENTAGE

2003-2004 1,34,543,28 60,794,08 2.21

2004-2005 1,40,116,22 62,564,02 2.23

2005-2006 1,35,375,24 58,955,39 0.29

2006-2007 1,29,553,62 56,993,08 2.27

2007-2008 1,42,195,78 57,148,37 2.40

2008-2009 1,61,317,75 74,321,97 2.17

2009-2010 2,20,89,660,339 1,10,519,01 1.99

47

Interpretation:

1. The fixed assets turnover ratio is fluctuating trend during the review period of time.

During the year 2003-2004 the ratio was recorded as 2.2 1% and in the year 2009-

2010 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 2008-2009 which is more

than average.

4. The lowest ratio was 1.99% in the 2009-2010 which is less than the average.

Fixed Assets as a Percentage to Total Assets:-

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

Total Assets

48

Table: VIII

YEAR FIXED ASSETS

(IN LACKS)

TOTAL ASSETS PERCENTAGE

2003-2004 60,794,08 1,17,985.89 51.5

2004-2005 62,564,02 1,12,647.26 55.5

2005-2006 58,955,39 1,12,637.07 52.3

2006-2007 56,993,08 1,13,443.60 50.0

2007-2008 57,148,37 1,23,031,14 46.0

2008-2009 74,32,197 1,38,204,81 53.77

2009-2010 1,10,519,01 1,63,964,36 67.40

49

Interpretation:

1. Fixed assets to total assets ratio is fluctuating trend during the review period of time

2. During the year 2003-2004 the ratio was recorded at 51.5% and the year 2007-2008

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 2009-2010 which is more

then the average. The lowest ratio was recorded at 46% in the year 2007-2008

which is less then average ratio.

50

Gross capital Employed:

Gross capital Employed = Fixed Assets + current Assets.

Table: IX

YEAR FIXED ASSETS

(IN LACKS)

CURRENT

ASSETS (IN

LACKS)

GROSS CAPITAL

EMPLOYED (IN

LACKS)

2003-2004 60,794,08 53,063.74 1,13,857.82

2004-2005 62,564,02 45,589,02 1,08,162.05

2005-2006 58,955,39 49,713.32 1,08,668.71

2006-2007 56,993,08 53,95.48 1,10,944.56

2007-2008 57,148,37 63,063.52 1,20,211.89

2008-2009 74,321,97 60,981.33 1,35,303.33

2009-2010 1,10,519,01 86,811.49 1,97,330.50

Profit After Tax:-

YEAR PROFIT AFTER

TAX (IN LACKS)

2003-2004 4,644.97

2004-2005 4,137.14

2005-2006 2,814.67

2006-2007 6,299.57

2007-2008 3,351.28

2008-2009 4,570.92

2009-2010 26,568.32

51

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 2009-2010 the PAT is

26,568.32

In the year 2005-2006 the PAT is the lowest and in 2009-2010 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 TaxReturn on Gross Employed ---------------------------------= XI 00

Gross Capital Employed

52

Table: X

YEAR PROFIT AFTER IN

LACKS

CROSS CAPITAL PERCENTAGE

2003-2004 4,644,97 1,13,857.82 4.0

2004-2005 4,137,14 1,08,162.05 3.8

2005-2006 2,814,67 1,08,668.71 2.5

2006-2007 6,299,57 1,10,944.56 5.7

2007-2008 3,351,28 1,20,211,89 2.8

2008-2009 4,570,92 1,35,303.33 3.4

2009-2010 26,568,32 1,97,330.50 13.46

53

Interpretation:

1. Return on Gross Capital Employed ratio is fluctuating trend during the review

period of time

2. During the year 2003-2004 the ratio was recorded at 4.0% and in the year 2009-

2010 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 2009-2010 which is more than

average ratio.

4. The lowest ratio was recorded at 2.5% duding the year 2006-2007 which is less

than the average ratio.

Return on Fixed Assets:-

The return on fixed assets can be calculated as under:

Profit After TaxReturn on Fixed Assets =................................X 100

Fixed Assets

54

Table: X

YEAR PROFIT AFTER IN

LACKS

CROSS CAPITAL PERCENTAGE

2003-2004 4,644,97 60,794.08 7.6

2004-2005 4,137,14 62,564.02 6.6

2005-2006 2,814,67 58,955.39 4.7

2006-2007 6,299,57 56,993.08 11.05

2007-2008 3,351,28 57,148.37 5.86

2008-2009 4,570,92 75,321,97 6.15

2009-2010 26,568,32 1,110,519 24.03

55

Interpretation:

1. Return on fixed assets ratio is increasing

2. During the year 2003-2004 the ratio recorded as 7.6% in the year 2009-2010 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 2009-2010, the lowest ratio is

4.7% in the year 2005-2006.

56

Chapter-VI

CONCLUSIONS

&

SUGGESTIONS

57

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.

58

CONCLUSIONS & 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.

59

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.

60