Science, Technology and Development ISSN : 0950-0707

FIXED ASSEST MANAGEMENT-ULTRATECH

JILLA PRASHANTH , N.SHWETHA
DEPARTMENT OF MBA
Sree Chaitanya College of Engineering, KARIMNAGAR

ABSTRACT: Term utilized in representing resources and property which can only with significant effort be
changed over into cash. This can be contrasted and current resources, for example, cash or financial balances, which
are depicted as fluid resources. As a rule, just substantial resources are alluded to as fixed.

In addition, a fixed/non-current resource can likewise be characterized as a benefit not legitimately sold to a
company's shoppers/end-clients. For instance, a heating association's present resources would be its inventory (for
this situation, flour, yeast, and so on.), the estimation of sales owed to the firm by means of credit (,for example
indebted individuals or records receivable), cash held in the bank, and so on. Its non-current resources would be the
broiler used to prepare bread, engine vehicles used to transport conveyances, cash registers used to deal with cash
installments, and so on. Each previously mentioned non-current resource isn't sold legitimately to buyers.

These are things of significant worth which the association has purchased and will use for an all-inclusive
timeframe; fixed resources regularly incorporate things, for example, land and structures, engine vehicles, furniture,
office gear, PCs, installations and fittings, and plant and apparatus. These frequently get positive assessment
treatment (deterioration stipend) over momentary resources. As per International Accounting Standard (IAS) 16,
Fixed Assets will be resources whose future monetary advantage is plausible to stream into the element, whose cost
can be estimated dependably.

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

Financial transactions are recorded in the books, keeping in view the going concern aspect of
the business unit. In going concern aspect it is assumed that the business unit has reasonable
expectation of continuing the business for a profit for an indefinite period of time. This assumption
provides much of the justification for recording fixed assets at original cost and depreciating them in a
systematic manner without reference to their current realizable value.

It is useless to record the fixed assets in the balance sheet at their estimated realizable values if
there is no immediate expectation of selling them. So, they are shown at their book value (i.e., Cost –
Depreciation) and not at current realizable value. The market value of the fixed assets may change
with the passage of time, but for accounting purpose it continues to be shown in the books in historical
cost.

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

ACCOUNTING STANDARD FOR FIXED ASSETS (AS-10):

AS-10 on Accounting for Fixed Assets has been made mandatory with effect from
01.04.1991. According to the AS-10, “Fixed Asset is an asset held with the intention of being used on
continuous basis for the purpose of producing or providing goods or services and is not held for resale
in the normal course of action”. Gross book value of fixed asset is its historical cost or other amount
substituted for historical costs in the books of accounts or financial statements. When the amount of
depreciation is deducted from gross book value then it is Net Book Value.
Cost of Fixed Assets should consist of purchase price including import duties etc., and
attributable cost of bringing the asset to its working condition for its intended use. Financing costs
relating to borrowed funds attributable to construction or acquisition of fixed assets for the period up
to the acquisition or completion. Expenditure incurred in start-up and commissioning of the project
including test runs.
Revaluation of assets: Fixed assets may be restated in the value with the help of
appraisal under taken by the competent value’s .Such valuation of assets is called revaluation.
FIXED ASSETS MANAGEMENT CYCLE
The fixed assets management cycle is the cycle of activities from the acquisition of the asset to the
final disposition of the assets at the end of their useful life. The cycle has 7 steps:
Acquisition: The cycle begins with the acquisition, purchase, gift or otherwise, of an asset and the
determination that the asset is to be capitalized. To be capitalized the asset has to meet the agency’s
capitalization limit and have a useful life of one year or more.
Receiving: The asset is formally received and accepted by the agency. Receipt may be verified by
entry into an automated purchasing system or by hard copy document. In the case of donated fixed
assets, receipt can be verified by a letter to the donor.
Payment: Payment is made for the asset according to the terms of the purchase order or recognition
of acceptance of a gift to the donor. The payment includes the acquisition cost, freight and all other
costs to put the asset. Acquisition cost of donated fixed assets is determined by its fair market value.
Identification: the asset is identified as an asset, tagged or otherwise identified and entered into the
fixed assets management inventory system. Assets are identified with a permanently attached
identification tag, etching or by painting on the identification number.
Inventory: The longest step in the cycle. The asset is used over its useful life. Assets are inventoried
and accounted for during this step until they are no longer needed. The agency’s policies and
procedures determine the inventory interval.
Excess: the asset is declared as excess to the user’s needs. The asset may be transferred to another user
where it will continue to be used, accounted for and inventoried. Assets may be declared as excess
more than once until the asset is no longer needed.
Surplus: the last step in the fixed assets management cycle. The asset is declared to be surplus
property and to have no further value to the agency. The asset is disposed of by sale or discarding
depending on the residual value. Sale can be by auction, sealed bid, spot sale, or through a sales store.

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FIXED ASSETS MANAGEMENT CYCLE

NEED AND IMPORTANCE OF THE STUDY:

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

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Firm has evaluated the performance, of fixed assets with proportion of capital employed
on net assets turnover and other parameters which are helpful for evaluating the performance of fixed
assets.

OBJECTIVES OF THE STUDY:

The following are the objectives of the study
1. The study is conducted to know the amount of capital expenditure made by the company
UltraTech Cement Limited during study period 2010-11 to2014-17.
2. The study is conducted to evaluate fixed assets performance of UltraTech Cement Limited.
3. The study is conducted to evaluate the fixed assets turnover of UltraTech Cement Limited.
4. The study is conducted to evaluate depreciation and method of depreciation adopted by
UltraTech Cement Limited.
5. The study is conducted to know the amount of finance made by long-term liabilities and
owners funds towards fixed assets.
6. The study is conducted to evaluate whether fixed assets are giving adequate returns to the
company
7. Study is conducted to evaluate that if fixed assets are liquidated, what proportion of it will
contribute for the payment of owners fund and long-term liabilities.

METHODOLOGY:
The data used for the analysis and interpretation is from annual reports of the company
i.e., secondary forms of data. Ratio analysis is used for calculation purpose.
The project is presented using tables, graphs and with their interpretations. No survey is
undertaken or observation study is conducted by evaluating fixed assets performance of the company.
SOURCES OF DATA:
The data needed for this project is collected from the following sources:
1. The data is adopted purely from secondary sources.
2. The theoretical contents are gathered purely from eminent text books and references.
3. The financial data and information is gathered from annual reports of the company.
PERIOD OF STUDY:
Made a study for the period of 5 years . 2013-14 to2017-18.
SCOPE OF THE STUDY:
The project is covered on fixed assets of UltraTech Cement Limited. Drawn from annual reports of
the company. The subject matter is limited to fixed assets, its analysis and its performance but not to
any other areas of accounting corporate, marketing and financial matters.
LIMITATIONS:
The following are the limitations for the study
1. The study is limited into the date and information provided by the UltraTech Cement
Limited and its annual reports.
2. The report may not provide exact fixed assets status and position of UltraTech Cement
Limited; it may be varying from time to time and situation to situation.
3. This report is not helpful in investing in UltraTech Cement Limited
4. Either through disinvestments or capital market.
5. The accounting procedure and other accounting principles are limited by the changes made by
the company, may vary fixed assets performance.

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FINDINGS
After analyzing the financial position of UltraTech Cement Limited and evaluating its fixed
assets management or capital budgeting techniques in respect of component analysis, trend analysis
and ratio analysis. The following conclusions are drawn from the project preparation.
The progress of UltraTech Cement Limited shows that there is an increase in Net block
considerably over the year that the investment in the net block is in increase trend .It increased during
the year 2014-18 and it has 56.67.
 Regarding to the fixed assets to net worth ratio shows a continuous increase in net worth and
fixed assets. This shows the satisfactory position of the company.
 Regarding the long-term funds to fixed assets they show an increase.
 Regarding the total investment turnover ratio it is observed sales had an increase from 2014-18.
 Regarding the Fixed Asset turnover ratio, sales had an increased.
 Regarding the Return on total assets ratio it has been observed that
There is profit. This shows the favorable position of the company.
 From the above study it can be said that the UltraTech Cement Limited overall financial
position on fixed assets is satisfactory.
CONCLUSION

The Fixed asset management of UltraTech Cement Limited is quite comfortable with a
judicious mix of debt and equity. The overall assessment of financial statement signifies efficient
utilization of the investments, loans and advances. The profitability of the company appears to be
impressive, as judged by increase in reserves and surplus.

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

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

SUGGESTION

 It is suggested to improve the position of the company by effective’s utilization of fixed assets.
 Growth rate in fixed assets can be increase by employing more investment.
 Total investment to sales can be improved.

 Instead of disclosing the combined flows of debtors and loans advances as decrease/(increase)
in trade and other receivables, their separate disclosure will be more meaningful.

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

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BIBLIOGRAPHY

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

Publishing Co., New Delhi, 2007.

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

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

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

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

Macmillan India Ltd, New Delhi, 1998.

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

Delhi, 2007.

Annual reports of ULTRATECH CEMENTS LIMITED-2013-17.

www.ultratech.com
www.indiancements.com
www.fixedassectsmanagement.com
www.googlefinance.com

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