INTRODUCTION

Definition :-

The management of fixed assets such as buildings, fixtures and machinery, which
cannot be converted to a fair cash value in a timely manner. Fixed assets are often
managed through the use of asset tags, which are tracked through serial numbers or bar
codes, for easier organization, and are filed for the purpose of accounting, maintenance
and theft deterrence.

MANAGEMENT OF FIXED ASSETS:

The selection of various fixed assets required creating the desired

production facilities and the decision regards the determination of the level of fixed assets
is primarily the task that at the production technical people. The decision relating to
fixed assets involves huge funds a long period of time and are generally irreversible
nature affecting the long term profitability of a concern, an unsound invest decision may
prove to be total to the very existence of the organization.

Thus, the 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 alternative 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 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 of fixed assets management is that a firm must ensure buffer stocks of
certain essential equipment / services to ensure uninterrupted production in these events
of emergencies. Sometime, there may be a breakdown in some equipment or services
affecting the entire production. It is always better to have some alternative arrangements
to deal with such situations. But at the same time the cost of carrying such buffer stock
should also be evaluated. Efforts should also be made to minimize the level of buffer
stock of fixed assets be encouraging their maximum utilization during learn period,
transferring a part of peak period and living additional capacity

Main important finance functions are:

Investments decision

Financing decision

Dividend decision

Liquidity decision

The major areas of finance are:

Financial services

Corporate finance/ financial management.

Financial services is concerned with the design and delivery of advise and
financial products to individuals, business and governments and with in the areas of the
banking and related institutions.

Financial management is concerned with the duties of the financial managers in

the business firm. Financial management actively manages the financial affairs of any
type of the business.
NEED FOR STUDY: -

Fixed Assets plays very important role in relating company’s objectives the firms
to which capital investment vested on fixed assets. This fixed asset is not convertible or
not liquid able over a period of time the total 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 ratio contributes very much
in analyzing and evaluating the performance of fixed assets. If firms fixed assets are idle
and not 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.

NEED FOR VALUATION OF FIXED ASSETS:

Valuation of fixed assets is important in order 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 for other reasons. A portion of fixed assets
reduced by use is converted into cash though charging depreciation. For correct
measurement of income proper measurement of depreciation is essential, as depreciation
constitutes a part of the total cost of production.
OBJECTIVES OF THE STUDY:

1. The study is conducted to evaluate fixed assets performance of BHEL.

2. The study is conducted to evaluate the fixed assets turnover of BHEL.

3. The study is made to known the amount of capital expenditure made by the
company during study period.

4. The study is conducted to known the amount of finance made by long-term

liabilities and owner funds towards fixed assets.

5. The study is evaluate is giving adequate returns to the company.

SCOPE:

The project is covered of fixed assets of BHEL drawn from annual reports of the
company. The fixed assets considered in the project are which cannot be converted into
cash with one year. Ratio analysis is used for evaluating fixed assets performance of
BHEL.

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:

Methodology is a systematic procedure of collecting information in order

to analyze and verify a phenomenon. The collection of data through two principle sources
viz.

(1) Primary data

(2) Secondary data

PRIMARY DATA:

It is the information collected directly without any reference. In the study

it was mainly interviews with concerned officers and staffs either individually or
collectively. Some of the information had verified or supplemented with personal
observation, the data collected through conducting the personal interview with the
officers of Anjani Portland Cements Limited.

SECONDARY DATA:

The secondary data was collected from already published sources such as
pamphlets annual reports, reports and internal records the data includes: Collection of
required data from annual reports of Anjani Portland Cements Limited. Reference from
text books and relating to financial management. Articles published in business details
like the economic times, business time etc.
LIMITATIONS:

1 The study period of 45 days as prescribed

2 The study is limited unto the date and information provided by BHEL and its
annual reports
3 The report will not provide exact fixed assets status and position in BHEL; it may
vary from time to time and situation to situation.

4 This report is not helpful in investing in BHEL either through disinvestments or

capital market.
5 The accounting procedure and other accounting principles are limited by the
company changes in them may vary the fixed assets performance.

IMPORTANCE: -

Fixed Assets are the assets, which cannot be liquidates into cash within one year.
The large amount of funds of the company is invested in these assets. Every year the
company investments an 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 capital
employed on net assets turnover and other parameters which is helpful for evaluating the
performance of fixed assets.
 COMPANY PROFILE:

BHEL is the largest engineering and manufacturing enterprise in India in the energy
related/infrastructure sector. BHEL was established more than 40 years ago, ushering in
the indigenous Heavy Electrical Equipment industry in India, a dream which has been
more than realized with a well-recognized track record of performance. It has been
earning profits continuously since 1971-72. BHEL caters to core sectors of the Indian
Economy viz., Power Generation and Transmission, Industry, Transportation, Renewable
Energy, Defence, etc. The wide network of BHEL’s 14 manufacturing divisions, 4 power
sector regional centres, 8 service centres, 15 regional offices and a large number of
Project Sites spread all over India and abroad enables the Company to promptly serve its
customers and provide them with suitable products, systems and services-efficiently and
at competitive prices.

BHEL has attained ISO 9001 certification for quality management and all the
manufacturing units/divisions of BHEL have been upgraded to the latest ISO-9001: 2000
version. All the major units/divisions of BHEL have been awarded ISO-14001
certification for Environmental Management Systems and OHSAS-18001 certification
for Occupational Health and Safety Management Systems. BHEL was the first Public
Sector Company in the country to win the coveted ‘PRIZE’ for its Haridwar unit under
the CII Exim Award for business excellence, as per the globally recognized model of
European Foundation for Quality Management.
POWER GENERATION

Power Generation Sector comprises Thermal, Gas, Hydro and Nuclear power
plant business. As of 31.3.2008, BHEL-supplied sets account for 85,786 MW or around
64% of the total installed capacity of 1, 34,697 MW in the country. Significantly, these
sets generated an all-time high 454.59 Billion Units of electricity contributing 73% of the
total power generated in the country. The cumulative capacity of projects installed
worldwide have crossed 1,00,000 MW. BHEL has proven turnkey capabilities for
executing power projects from Concept to Commissioning.

The company has introduced new rating thermal sets of 270 MW, 525 MW & 600 MW
in subcritical range and possesses the technology & capability to produce large capacity
thermal sets with super critical parameters and gas turbine-generator sets. Co-generation
and Combined cycle plants have been introduced to achieve higher plant efficiencies. To
make efficient use of the high ash content coal available in India, BHEL also supplies
Circulating Fluidized Bed Combustion (CFBC) boilers for thermal plants.

The Company manufactures 220/235/500/540 MWe, nuclear turbine-generator

sets. Custom-made hydro sets of Francis, Pelt on and Kaplan types for different head-
discharge combinations are also engineered and manufactured by BHEL. The Company
has proven expertise in Plant Performance Improvement through Renovation,
Modernization and Up rating of a variety of power plan.
equipment, besides specialized know-how of residual life assessment, health diagnostics
and life extension of plants. BHEL built thermal sets consistently exceed the national
average efficiency parameters and have achieved the highest-ever Plant Load Factor
(PLF) of 80.4% during 2010-11, which is 2.5% higher than the national average.
Operating Availability (OA) was also the highest-ever at 86.7%. BHEL is one of the few
companies worldwide, involved in the development of Integrated Gasification Combined
Cycle (IGCC) technology which would usher in clean coal technology.
INDUSTRIES:

BHEL manufactures and supplies major capital equipment and systems like
Captive power plants, Centrifugal compressors, Drive Turbines, Industrial boilers and
auxiliaries, Waste heat recovery boilers, Gas turbines, Pumps, Heat exchangers,
Electrical machines, Valves, Heavy castings and forgings, Electrostatic precipitators,
ID/FD fans, Seamless pipes etc. to a number of industries, like metallurgical, mining,
cement, paper, fertilizers, refineries & petro-chemicals etc., other than power utilities.
BHEL has also emerged as a major supplier of controls and instrumentation systems,
especially distributed digital control systems for various power plants and industries.

TRANSPORTATION:

Most of the trains in Indian Railways, whether electric or diesel powered, are equipped
with BHEL’s traction propulsion system and controls. The systems supplied are both
with conventional DC drives and state-of- the art AC drives. India’s first underground
metro at Kolkata runs on drives and controls supplied by BHEL. The company also
manufactures complete Rolling stock i.e. Electric locomotives up to 5000 HP and EMU
coaches and Diesel Electric locomotives from 350 HP to 3100 HP for both mainline and
shunting duty applications. BHEL also undertakes retrofitting and overhauling of rolling
stock. In the area of urban transportation, BHEL is geared up for turnkey execution of
electric trolley bus systems, light rail systems and metro systems.

BHEL is contributing to the supply of electrics for EMUs for 1500V DC & 25 kV
AC to Indian Railways. Almostall the EMUs in service in India are with the electrics
manufactured and supplied by BHEL. BHEL has also diversified into the area of track
maintenance machines and coach building for Indian Railways.