CHAPTER-1

INTRODUCTION

NEED FOR VALUATION OF FIXED ASSETS:

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.

MEANING OF FIXED ASSETS:

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.
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
2

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.

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 01.2009.1991. 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 values .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 agencys 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
agencys policies and procedures determine the inventory interval.
4

Excess: the asset is declared as excess to the users 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.

FIXED ASSETS MANAGEMENT CYCLE

NEED FOR THE STUDY

As fixed assets play an important role in companys objectives. These

fixed are not convertible or not liquidable over a period of time. The owners 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 longterm 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.
So, Chosen a study to conduct fixed assets analysis of RADIANT CABLES
PVT.LTD using ratio in comparison with previous year performance.

SCOPE OF THE STUDY

1. The project is covered on fixed assets of RADCAB. 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.

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 during study period.
2. The study is conducted to evaluate fixed assets performance of RADCAB.
3. The study is conducted to evaluate the fixed assets turnover of RADCAB.
4. The study is conducted to evaluate depreciation and method of depreciation
adopted by RADCAB.
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
7

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 4 years .2011-2012 to 2014-2015

IMPORTANCE:

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.
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.

LIMITATIONS:
The following are the limitations for the study
8

1. The study is limited into the date and information provided by the RADCAB
And its annual reports.
2. The report may not provide exact fixed assets status and position of RADCAB;
it may be varying from time to time and situation to situation.
3. This report is not helpful in investing in RADCAB
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.

CHAPTER-

REVIEW OF LITERATURE

MANAGEMENT OF FIXED ASSETS

The selection of various fixed assets required for creating the desired
production facilities and the decision regarding the determination of level of fixed
10

assets in the capital structure is an important decision for the company to take for the
smooth running of business. The decisions relating to fixed assets involve huge funds
for long period of time and are generally of irreversible nature affecting the long
profitability of the business. Thus, management of fixed asset is of vital importance to
any organization.

The process of Fixed Assets Management involves:

1. Selection of most worthy projects from the different alternatives of fixed assets.
2. Arranging the requisite funds/capital for the same.

The first important consideration is to acquire only that 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 the demand of the
firms product needs the expansion of activities.

Hence a firm should have that

amount of fixed assets, which could adjust to increase demand.

Another aspect of fixed assets management is that a firm must ensure
buffer stocks of certain essential equipments to ensure uninterrupted production in the
events of emergencies. Sometimes, there may some breakdown in some equipments
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 so that there will be maximum utilization during
that period.
Fixed assets management is an accounting process that seeks to track
11

Fixed assets for the purposes of financial accounting, preventive Maintenance, and
theft deterrence. Many organizations face a significant challenge to track the location,
quantity, condition, maintenance and depreciation status of their fixed assets. A
popular approach to tracking fixed assets utilizes serial numbered Asset Tags, often
with bar codes for easy and accurate reading. Periodically, the owner of the assets
can take inventory with a mobile barcode reader and then produce a report. Off-theshelf software packages for fixed asset management are marketed to businesses
small and large. Some Enterprise Resource Planning systems are available with fixed
assets modules.
Investment management is the professional management of various
securities (shares, bonds etc) and other assets (e.g. real estate), to meet specified
investment goals for the benefit of the investors. Investors may be institutions
(insurance companies, pension funds, corporations etc.) or private investors (both
directly via investment contracts and more commonly via collective investment
schemes eg. mutual funds) . The term asset management is often used to refer to the
investment management of collective investments, whilst the more generic fund
management may refer to all forms of institutional investment as well as investment
management for private investors. Investment managers who specialize in advisory or
discretionary management on behalf of (normally wealthy) private investors may often
refer to their services as wealth management or portfolio management often within the
context of so-called "private banking".
The provision of 'investment management services' includes elements of financial
analysis, asset selection, stock selection, plan implementation and ongoing
monitoring of investments.
12

Investment management is a large and important global industry in its own right
responsible for caretaking of trillions of dollars, euros, pounds and yen. Coming
under the remit of financial services many of the world's largest companies are at
least in part investment managers and employ millions of staff and create billions in
revenue.
Fund manager (or investment advisor in the U.S.) refers to both a firm
that provides investment management services and an individual(s) who
directs 'fund management' decisions

10 largest asset management firms

Global Investors 2020 11 top 10 asset managers by assets under
management. (Source: BGI)

Rank Company

Assets under management

Country
(US$million)

1.

Barclays Global Investors

1,400,491

UK

2.

State Street Global Advisors

1,367,269

US

3.

Fidelity Investments

1,299,400

US

4.

Capital Group Companies

1,20100,435

US

5.

Legg Mason

891,400

US

6.

The Vanguard Group

852,000

US

7.

Allianz Global Investors

790,513

Germany

13

8.

JPMorgan Asset Management

782,646

US

9.

Mellon Financial Corporation

738,294

US

10.

Deutsche Asset Management

723,366

Germany

Fixed asset, also known as property, plant, and equipment (PP&E), is a term
used in accountancy for assets and property which cannot easily be converted
into cash. This can be compared with current assets such as cash or bank
accounts, which are described as liquid assets. In most cases, only tangible
assets are referred to as fixed. Fixed assets normally include items such as land
and buildings, motor vehicles, furniture, office equipment, computers, fixtures
and fittings, and plant and machinery. These often receive favorable tax
treatment (depreciation allowance) over short-term assets because they
depreciate over time.

14

CHAPTER- III

INDUSTRIAL PROFILE
and
COMPANY PROFILE

ABOUT RADIANT CABLES PVT LTD

RADIANT

had its modest beginning in 1978, when a house wiring

plant was setup at its present site in Hyderabad, India has been registering
study growth ever since. In a short span of time, the company has expanded
the product range to various types of LV/HV power cables (up to and including
15

33KV0, control, instrumentation, Mining, Flexible,

Specialty, Electron beam

cross-linked, custom made wires &cables for special applications.

CAPABILITIES:
RADIANT is a professionally managed, ISO 9002 company striving for
excellence in every sphere of activity. The company is equipped with excellent
plant and facilities to ensure the quality products to meet the exacting
standards. Radiant also has manufacturing lines incorporating microprocessorbased controls with state of art facilities, housed in a controlled environment. A
team of component engineers professional managers is consistently striving to
improve upon its already high standards of quality and workmanship. Radiant
sources the raw materials only from reputed, quality conscious and approved
suppliers. All manufacturing process at RADIANT incorporates a continuous
quality assurance plan, which is monitored at every stage of manufacture.

ELECTRON BEAM TECHNOLOGY CENTRE

Radiant is the first license of atomic energy regulator board to have
established a state of art

electron beam technology centre, primarily to

manufacture wires & cables for special strategic applications and to with stand
NBC environment. In the controlled beam, reaction is controlled independently
instantly with ON/OFF feature and this process is utilized to produce new

16

material by various chemical reactions induced by fast electrons. It is a process

with high efficiency, uniformity and good controllability.

REASEARCH & DEVELOPMENT

Radiant has its own in-house

R&D facility for developing new and

innovative process & product and response to every changings of the market.
Radiants in-house research and development unit, has been recognized
by department of scientific and industrial research, ministry of science and
technology, government of India.

Radiants R&D efforts and commitment have found encouragement from

technology development board , government of India, and they have extended
financial assistance to radiants project for indigenization of electric wires and
cables using electron beam processing system, which has been introduced by
radiant forthe first time in the country.

17

COLLABORATION:
Radiant is the first to introduced irradiated cross-linked material insulated
RADCAB wires and cables in India, under know-how and technology transfer
agreement with M/s. Rockbestos surprenant cable corporation (RSCC), USA,
pioneers in radiation cross-linking technology.

QUALITY ASSURANCE:
Radiant cables are manufactured and tested to confirm to the latest Indian,
British, JSS, MIL, RSDO and other user, as well as international specifications.
Radiant cables also carry ISI certification marks. Radiant has established its name
for prompt delivery, quality product and satisfactory customer service.
PRODUCTS AND MARKETS:
I.

Industrial:
XLPE/PVC insulated normal, FR, FRLS power and control cables and

instrumentation cables up to and including 33kv.

II. Transport:
Electron Beam cross-linked RADCAB wires and cables for rapid transit
(locomotive, Automobile etc.)
III. Petrochemical:
PVC / Radiation cross-linked insulated, FR, FRLS wires and cables.
IV. Power:
XLPE/PVC insulated normal, FR, FRLS power and control cables up to and
including 33kv.
V.

Mining:
Single / double armored copper power cables.

18

VI. Electronic:
Composite insulated wires and cables as per latest MIL specifications.
VII. House wiring:
VIII. Shipboard cables.
IX. EXANE WIRES & CABLES under RSCC, USA license.

RECOGNITION & AWARDS:

RADIANT has been the proud recipient of many Awards and commendation
certificates for best management, for its outstanding contribution towards
indigenization of critical aircraft wires and cables, harmonious industrial relation,
labor welfare, etc., Best Entrepreneur Awards from Govt.of A.P., and samman Award
from Ministry of Finance, govt. of India and National Award for Quality product from
the Honorable President of India.

THE PRODUCT:
Radiants single and multi-conductor RADCAB wires & cables are rated up to
and including 4000V and have a conductor temperature rating and including
150C.These cables

are available with standard, flexible, coated coppers

conductors.
The proprietary insulation compounds [ETFE, EVA, EXANE, HDPE,
HYPALON, LDPE, POLYALKANE, POLYALKANE, POLYOLEFINS, PVC, PVDF,
etc.,]

are

specially compounded

irradiation cross-linked, thermosetting, high

temperature compounds whose principle ingredients are mixed with carefully

selected rein forcing fillers, additives to provide excellent electrical properties
19

combined without standing thermal stability, flame resistance and mechanical

properties. The insulation is not affected by ozone in any standard ozone test.
The insulation compounds exposed to a high voltage, high energy beam
(irradiation process) that causes the compound to cross-link and thus provide a
thermosetting insulation with a customized balance of properties for the applications.
The RADCAB cables offer the following advantages over conventional cables:
Wide temperature rating(-65cto+150c)
Smaller diameters and weights
Higher thermal over loads
No jackets needed
Tougher mechanical
Higher current ratings
Excellent frame resistance
Excellent oil resistance
Excellent moisture resistance
Flame retardant
Lower bending radius
Excellent dynamic cut through
Excellent crush resistance
Excellent scrape abrasion resistance
Higher nuclear radiation resistance
Better electrical properties
No environmental hazard
Resistant to melting

20

Application:
RADCAB

Cables

are

designed

for

use

in

power, control

and

instrumentation in diesel/electric locomotives, subway commuter cars, shipboard,

oil rigs, aerospace, missiles, tanks & spacecrafts. It can also be considered for
motor leads either AC or DC, or other rugged applications where the flexible
stranded conductors and excellent balance of properties are required.
COMPARISION BEETWEEN CV AND E-BEAM CROSS LINKING
CV METHOD

E-BEAM METHOD

Uses peroxide to create links, there

tend to be unused peroxide residues
which can reduce the thermal
stability of the compound.

For cross linking peroxide is not

used a result typically it has better
heat stability.

To be processed in a CV, the

formulation of cable insulation can
not contain any components that
must be processed at a temperature
hither then the kick-off point of the
peroxide.
This severely limits the availability
of unique polymers that can be
used in the compound and
consequently
limits
the
performance.
Many CV cured formulations need to
contain volatile process aids and
plasticizers so that they can be
processed at low temperatures z to
prevent premature cross linking. This
additive can have a negative effect
on the electrical performance as well
as thermal stability.
Products cross linked can contain by
products such as acetophenone in
the insulation which is considered to
be as health hazard.

21

When designing a formula for

cable insulation to be cross
linked by e-beam there is
greater freedom of polymer
selection since the finished
compound is processed as a
thermoplastic material with the
cross links formed after words.
This gives flexibility to use
unique polymer, which give
improved performance.
No
such
process/aids
are
required, there by not effecting
electrical performance or thermal
stability.

Products cross linked do not

contain these toxic materials.

ENVIRONMENTAL POLACY
We, at Radiant are committed to carry out our manufacturing process in a manner
compatible with the environment and economic development of our country. We
will continue to develop and deploy environmental friendly technologies for
manufacturing, recovery, recycle and reuse whereby minimizing wastage and
optimizing on resources.
We agree to comply with and improve upon the environmental regulatory
requirements. Our concern for environment is for the people at large.
We shall import proper in-house education and training with an objective to
inculcate in every member of the organization, a sincere appreciation of
environmental concerns and a commitment to protect the environment.

QUALITY POLACY
We, at Radiant, are committed to satisfy the needs of our customers by providing
high quality and reliable products and to be on the path of continuous quality
improvement and realizing ones full potential.

STATUS OF NEW PROJECTS

Our directors are happy to inform that, your company has received Commercial
order development and supply of ship board cables from DMDE For different
version of pressure Tight Fire Survival Cables (ship board cables). Our directors
are hopeful of executing the same in time Our directors are further pleased to

22

inform the members that our company Successfully developed E-Beam cross
Linked Locomotive Cables forDLW and the type tests in respect of E-Beam cross
Linked Locomotive Cables for DLW successfully completed as per RSDO and
EMD specifications our Company has received category I approval from RSDO
for SPEC.MP.0.5200.2011 and approval for EDPS 179&32009. Our directors are
father pleased to inform the members that the company is Developing special
versions of electronic Wires and cables, Floured/polyamide Insulated electron
beam irradiated, medium weight, silver-coated Cuconductor ,150C, 600v, & 200c,
600v. For outer space applications for ISRO Our directors are further pleased to
inform the members that, the company successful developed E-beam irradiated
cables for rail coach Factory as pre EDTS132 specifications. These cables are
indigenously developed as imports substitutes for cables required by RCF,for use
in AC coaches. Our directors are further pleased to inform the members that, our
companys project of upgrading existing Accelerator from1.5mev to 3 Mev is under
progress and the necessary components have been imported and received. The
commissioning of upgrading facility is expected to be completed about 2 to 3
months.Our directors are further pleased to inform the members that, a separate
compounding plant is being supposed to setup as a 100% export oriented unit.
This proposed the plant will not only supplement the R&D activities but will also
substantially increase the business opportunities apart from providing material for
self self consumption as import substitution.

23

ACHIEVEMENT/RECOGNISITION:
APPROVAL FROM AREB:
Our directors are further pleased to inform the members that, license for
operation are proposed upgraded irradiation system is under active consideration
by the atomic energy regulatory board, Mumbai and the same is expected to be
received shortly.

QUALITY MANAGEMENT SYSTEM:

The members already aware that your company has approved by Lloyds
register quality assurance to BS EN ISO 9002 : 1994 quality management
system standards your directors happy to inform the members that your
company is effecting transition to ISO 9001-2000 series, which is excepted to
be completed by november,2008.

SHARE CAPITAL AND FINANCE:

There was no change in the paid up share capital of the company during year.
The company sole banker, state bank of Hyderabad, has been continuously
supporting the working capital needs of company from time to time. They
have recently renewed and sanctioned working capital facilities which the
directors are hopeful would substainly take care of the resources required for
the increased operations.

24

ASSISTANCE
FROM
THE
DEVELOPMENTBOARD (TDB)

TECHNOLOGY

The technology development board, New Delhi has released amount of

Rs.320 lakhs against the total approved financial assistance of Rs.440 lakhs.

AUDITORS:
The auditors s.Dalgiya and company, chartered accountants, retire at the
ensuing annual General meeting and the eligible for re-appointment.

DIRECTORS RESPONSIBILITY STATEMENT:

The board of directors of the company confirms:
i.

That in the preparation of annual accounts, the applicable accounting

standards have been followed and there has been no material departure;

ii.

That selected accounting policies were applied consistently and the

directors made judgements and estimates that are reasonable and prudent
so as to give a true view of the of affairs of the company as at march
31,2008 and of the profit of the company for the year ended on that date;

iii.

That proper and sufficient care has been taken for the maintenance of the
adequate accounting records in accordance with provision of the companies
Act 1956 for safe guarding the assets of the company and for preventing
and detecting fraud and other irregularities;

iv.

The annual accounts have been prepared on going concern basis.

INFORMATION UNDER SECTION 217(1)(E) OF THE COMPANIES ACT,

1956 READ WITH COMPANIES (DISCLOSURES OF PARTICULARS IN
25

REPORT OF BOARD OF DIRECTORS)RULES 1988 FORMING PART OF

DIRECTORS REPORT:
A.

CONSERVATION OF ENERGY :
The company has been monitoring the energy consumption at regular
intervals through a dedicated team. Review of working of various equipment
and plant are made periodically and recommendations made by the team are
considered and implemented for conservation of energy.

B.

TECHNOLOGY
ABSORPTION,ADOPTION,INNOVATION:
Research and Development Specific areas in which R&D was
carried out by the company

Developments of new products, design,

process, process & test equipment, methods and materials.Testing and

certification of existing products for conformity to Indian and international
standards.Benefits

derived

as

results

of

above

R&DIndigenisation / import substitution. Technology up gradation.

Development of new product such as:
Ebeam Irradiated Cross Linked Exane Electric and Electronic Wires
& Cables
Electronic fluropolymer insulated radiation cross linked, modified
ETFE lightweight silver coated copper cables prototype developed.
Pressure Tight Fire Survival Electronic Wires and Cables prototype
developed.
33 KV Power cables under development
Launcher cables developed.
RF cables developed

FUTURE PLAN OF ACTION:

To carry on the projects on hand and work on the following new project

26

Manufacture of RF Cables, Co-Axial Cables long duration tests for evaluation of

electrical, environmental and thermal Parameters of intermediate and finished
products.
-Technology packages using E-Beam Technology.

Expenditure on R&D

Rs.in lakhs

Capital
Revenue expenditure
Total
Percentage of total turn-over

18.69
147.49
166.18
6.32%

Technology Absorption
Importing technology for operating the E-Beam Technology Centre under the
Know How and Technology Transfer Agreement with RSCC.
The board wishes to place on record their sincere appreciation for the Honorary
services and valuable guidance rendered by Shri.F.C kundalia, Chairman
Emeritus of the company .the board further wishes to put on it records
appreciation for the support extended by state bank of Hyderabad, Sanathnagar
branch. The board further wishes to acknowledge the support and encouragement
given by Reockbestos Surprenant cable corporation USA vivirad as ,France,
Department of Scientific and Industrial Research, Ministry of science and
technology, Govt. Of India, New Delhi, Technology Development Board,
Department of science & technology, Govt. Of India, New Delhi and the excellent
team work put forth by the companys workmen And staff.

27

CHAPTER- IV

DATA ANALYSIS
&
PRESENTATION

28

COMPONENTIAL ANALYSIS:

The componential analysis of the fixed assets of Radiant cables (RAD CAB)
includes net blocks, capital (work in progress) and construction stores and advances.
The data relating to different components of fixed assets of the Radiant
cables (RAD CAB) for 4 years commencing from 2011-12 to 2014-15 are set out in the
following table analysis:

YEAR

NETBLOCK

CAPITAL

(FIXEDASSETS)

(W\P)

2011-12

71660961

80000000

2012-13

(8.22)
12009210847

(91.78)
80000000

(100)
184210847

2013-14

(56.57)
147724251

(43.43)
80000000

(100)
227724251

2014-15

(64.87)
1849201082011

(35.13)
80000000

(100)
2649201082011

(69.80)

(30.20)

(100)

INTERPRETATION:

29

TOTAL

871660961

By observing the above table it reveals that the investment in the net block
is in increasing trend .It was 8.22 over the total fixed assets during the year 2011 and it
has increased to 69.80 during the year 2015

TREND ANALYSIS:
In financial analysis the direction of change over a period of years is of initial
importance. Time series and trend analysis of ratio indicates the direction of changes.
This kind of analysis is particularly applicable to the profit and loss account. It is
advisable that trends of sales and net income may be studied in the light of two factors.
The general price level that might be found in practice is that a number of firms would
be shown at persistent growth over period of years but to get a true trend of growth, the
sales figure should be adjusted by a suitable index of general prices.

In 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
adjusted sales figure or as to check on them is to tabulate and lot the output of physical
volume of the sales expressed in suitable units of measure. The general price level is
not considered while analyzing trend in growth as it can mislead management. They
may become unduly optimistic in period of prosperity and pessimistic in dual periods.

For trend analysis the use of index numbers is generally advocated, the procedure
followed is to assign the numbers to items of base years and at calculated percentage

30

change in each item of other years in relation to base year. This procedure may be
called as Fixed percentage method.

This 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 year. Generally the first year is taken as the base year. The figures of
the base year are taken as 100 and trend ratio for the other years is calculated on the
basis of first year. Here an attempt is made to know the growth rate in total investment
and fixed assets of the RADCAB for 4 years that is 2011-12 o 2014-15

GROWTH IN TOTAL INVESTMENT:

31

YEAR

INVESTMENT

TREND PERCENTAGE

2011-2012

25000000

100

2012-2013

25000000

100

2013-2014

25000000

100

2014-2015

25000000

100

GROWTH IN TOTAL INVESTMENT

30000000
25000000
20000000 INVESTMENT
15000000
10000000
5000000
0

2011-2012

TREND PERCENTAGE

2012-2013

2013-2014

2014-2015

INTERPRATATION:
From the analysis of above table it can be observed that Total Investment of RAD
CAB had no change. It is constant from 2011-2012 to 2014-2015

GROWTH RATE IN FIXED ASSETS:

32

YEAR

FIXED ASSETS

TREND
PERCENTAGE

2011-2012

144550743

100

2012-2013

15912008692

110.2011

2013-2014

19797882008

124.43

2014-2015

26220109534

132.36

33

GROWTH RATE IN FIXED ASSETS

FIXEDASSETS

TREND PERCENTAGE

132
124

110
15912008692

19797882008

26220109534

100
144550743
2011-2012

2012-2013

2013-2014

2014-2015

INTERPRETATION:
The above table shows that the investments in fixed assets are increasing.
So this is a good sign for the company. When compared to 2011-2015 it is been
continuously increased in the ratio 100 percent to 132.36%

34

RATIO ANALYSIS:

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as

the indicated Quotient of two mathematical expressions and Ratios look at the
relationship between individual values and relate them to how a company has
performed in the past, and might perform in the future.

The absolute accounting figure reported in financial statement does not

provide a meaningful understanding of the performance and financial position of the
firm. Ratios help us to summarize large quantities of financial data and to make
qualitative judgment about 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 and surplus + retained earnings

Fixed assets to net worth ratio = Fixed assets

Net worth
The ratio of Fixed assets to Net worth indicates the extent to which
shareholders funds are sunk into the fixed assets. Generally, shareholders should
finance for Purchasing fixed assets and equity including the reserves and surpluses and

35

retained earnings. If the ratio is less than 100% it implies that owners funds are more
than total fixed assets and the shareholder provide a part of working capital.
When the ratio is more than 100% it implies that owners funds are not
sufficient to finance the fixed assets and financier has to depend upon outsiders to
finance the fixed assets. There is no Rule of Thumb to interpret but 60%-65% is
considered to be satisfactory ratio in case of industrial undertaking.
2. FIXED ASSET RATIO:
This ratio explains whether the firm has raised adequate long term fund to meet its fixed
assets required 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 1 it is good for the
concern.

3. FIXED ASSETS AS A PERCENTAGE TO CURRENT LIABILITIES:

The ratio measures the relationship between fixed assets and the funded debts
and is very useful to the long term erection. The ratio can be calculated as shown
below
Fixed assets as a percent of current liabilities =

Fixed Assets
Current liabilities

36

4.TOTAL ASSETS TURN OVER RATIO:

The ratio is calculated by dividing the net sales by the value of total assets that is
(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 is two times.
=

Net sales
Total Assets

5.FIXED ASSETS TURNOVER RATIO:

The ratio expresses the no. of times fixed assets are being turned over in a
stated period. It is calculated under.
=

_____________sales_____________
Net fixed assets (after depreciation)

This ratio shows how well the fixed assets are being used in business. The ratio is
important in case 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 indicates that fixed assets are
not being effectively utilized.

6. RETURN ON TOTAL ASSETS:

=

Profit after tax

Total assets

37

This ratio is calculated to measure the profit after tax against 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. Let us use ratios in the Radiant cables (RAD
CAB) information:

FIXED ASSETS TO NET WORTH RATIO

The ratio indicates the extent to where the shareholders 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 and surplus + retained earnings-net loss.
If the ratio is less than 100% it implies that owners funds are more than the fixed assets
and the shareholders and vice versa provide a part of working capital.

Fixed assets to net worth ratio = Net fixed assets

Net worth

38

YEAR

NET

FIXED NET WORTH

RATIO IN %

ASSETS
2011-2012

144550743

132120985

1.09

2012-2013

15912008692

146595701

1.08

2013-2014

19797882008

154079375

1.28

2014-2015

26220109534

189581076

1.38

FIXED ASSETS TO NET WORTH RATIO

1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Total

INTERPRETATION:
The above table shows a continuous increase in net worth and fixed assets. This
shows the satisfactory position of the company.

39

FIXED ASSET RATIO:

Capital employed=shareholders fund + Long-Term borrowings
Fixed assets (after depreciation)
Capital Employed
YEAR

NET FIXED

CAPITAL

ASSETS

EMPLOYED

RATIO IN %

2011-2012

15912008692

20220102947

1.08

2012-2013

144550743

18020089825

1.09

2013-2014

19797882008

19932200965

1.28

2014-2015

26220109534

214702547

1.38

30,000,000,000
25,000,000,000
20,000,000,000
15,000,000,000

Sum of NET FIXED

ASSETS

10,000,000,000

Sum of NET WORTH

Sum of RATIO IN %

5,000,000,000
0

INTERPRETATION
40

The above table shows growth in fixed assets satisfactory position of fixed
assets in the company. Long term funds show less fluctuation, there is no change
The highest percent 138 recorded in the year 2013-2014
. That shows the position of the company is satisfactory.

FIXED ASSETS AS A PERCENTAGE TO CURRENT LIABILITIES:

Fixed assets as a percentage to current Liabilities
= __fixed assets__
Current Liabilities

YEAR

NET

FIXED CURRENT

RATIO IN %

ASSETS

LIABILITIES

2011-2012

144550743

18864487

7.66

2012-2013

15912008692

39331491

4.2009

2013-2014

19797882008

57956936

3.42

2014-2015

26220109534

72011141

3.64

41

Total
10
8
6
4
2
0

Total

INTERPRETATION

The above table shows the relationship between fixed and current Liabilities.
The above table shows growth in fixed assets
This shows the satisfactory position of fixed assets in the company. Even the current
liabilities are increasing. The highest percentage recorded was in the year 2012-2013
i.e., 7.66 and the lowest was in the year 2009-2010i.e., 3.42

TOTAL INVESTMENT TURN OVER RATIO:

The total investment turnover ratio can be calculated by the formula as given under
Total investment ratio =

sales
Total investment

42

YEAR

SALES

INVESTMENT

RATIO IN %

2011-2012

24026720092

25000000

9.61

2012-2013

261978250

25000000

10.48

2013-2014

313988837

25000000

12.56

2014-2015

44356200834

25000000

17.74

Sum of SALES
Sum of INVESTMENT
Sum of RATIO IN %

2011-2012

2012-2013

2013-2014

2014-2015

INTERPRETATION
From the above table we can see that sales had an increase
Investment is constant from 2010-2014 that signifies the company position is
satisfactory.

43

FIXED ASSETS TURN OVER RATIO:

The fixed assets turnover ratio is a relation between the sales or cost of
goods and fixed/capital assets employed in a business.

Fixed assets turnover ratio =

sales
Total fixed asset

YEAR

SALES

NET

FIXED RATIO IN %

2011-2012
2012-2013
2013-2014
2014-2015

24026720092
261978250
313988837
44356200834

ASSETS
144550743
15912008692
19797882008
26220109534

1.66
1.65
1.59
1.69

1.7
1.68
1.66
1.64
1.62
1.6
1.58
1.56
1.54
1.52
Total

INTERPRETATION

44

The above table shows increases in Net fixed assets. That can also be seen clearly in
sales, that indicates a good sign.

RETURN ON TOTAL ASSETS:

The return on fixed assets can calculate as under:

Return on fixed assets = profit after tax

Total Assets

YEAR

PROFIT

AFTER TOTAL ASSETS

RATIO IN %

TAX
2011-2012

1394158

31628972008

0.02009

2012-2013

2019163

343716186

0.02011

2013-2014

22996458

390962187

0.2011

2014-2015

38663781

464312835

0.083

45

0.25

0.2

0.15

Total

0.1

0.05

INTERPRETATION

The above table shows increase in profit 2010-2014 profit has gone up. This
shows the favorable position of the company.

46

VALUATION OF FIXED ASSETS:

Radiant cables Pvt Ltd. (RAD CAB) Follows

1)

Historical cost method in the valuation of fixed assets.

2)

The fixed assets do not include assets acquired on sale-cum-lease basis from
various Financial Institutions whereon the lease rent paid for the year is charged to
revenue.

3)

Plant and Machinery includes the value of Air Conditioning Plants at various units
which were transferred and vested with the Corporation under the transfer scheme.
The gross value and depreciation thereon are not segregated in the absence of
break up details under the transfer scheme. The value thereof, however, is
insignificant.

4)

Investments are intended for long term and are carried at cost. Income on
investment is accounted on accrual basis.

5)

Capital expenditure on assets not owned by the company is reflected as a distinct

items in capital WIP till the period of completion and therefore in the Fixed assets.

6)

The Company evaluates the impairment of losses on the fixed assets whenever
events or changes in circumstances indicate that their carrying amounts may not be
recoverable. If such assets are considered to be impaired the impairment loss is
then recognized for the amount by which the carrying amount of the assets exceeds
its recoverable amount, which is the higher of an asset's net selling price and value
47

in use. For the purpose of assessing impairment, assets are grouped at the smallest
level for which, there are separately identifiable cash flows.
7)

Fixed assets is adjusted in their carrying cost

in respect of foreign currency

transactions entered before 1-4-2011 and that related to current assets is recognized
as revenue/expenditure during the year.
8)

In case of commissioned assets, where final settlement of bills with contractors is

yet to be effected, capitalization is done on provisional basis subject to necessary
adjustment in the year of final settlement.

48

CALCULATION OF DEPRECIATION:

Depreciation methods followed by Radiant cables Pvt .Ltd. is as follows:

1)

Depreciation is charged on straight-line method as per rates notified by the

Government of India except where actual cost does not exceed Rs. 5000 in which
case it is charged 100% in the same year. In respect of assets, where rate is not laid
down, depreciation is provided on straight-line method under the schedule XIV of the
Companies Act 1956.

2)

Depreciation is provided on pro-rata basis in the year in which the asset becomes
available for use.

3)

Where the cost of depreciable assets has undergone a change during the year due
to increase/decrease in long term liabilities on account of exchange fluctuation, price
adjustment, change in duties or similar factors, the unamortized balance of such
asset is depreciated prospectively over residual life determined on the basis of the
rate of depreciation.

4)

Internal electrical wiring, fittings etc., are treated as part of buildings and as such
depreciation applicable to buildings is charged thereon.

49

SUMMARY
&
CONCLUSIONS

50

CONCLUSIONS:

After analyzing the financial position of Radiant cables (RAD CAB) 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 RADIANT CABULS 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 2011-2015 and it has 69.80%.

FINDINGS

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 2008-2014

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 RAD CAB overall financial position
on fixed assets is satisfactory.

51

BIBLIOGRAPHY

52

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
Co., New Delhi, 2007.

53

Publishing

APPENDICES
ORGANISATION STRUCTURE

54

RADIANT
HIGH PERFORMANCE RELIABLE WIRES AND CABLES

ADVISOR

BOARD OF
DIRECTORS

MANAGING DIRECTOR

CHAIRMAN
MANAGING
DIRECTOR
DIRECTORS

GENERAL MANAGER
(R&D)

CORPORATE
OFFICE
CORPORATE
PLANNING
INFORMATION
SYSTEMS
CENTRE
OPERATIONS

GENERAL MANAGER COMMERCIAL

FINANCE
ACCOUNTS
R&D
PURCHASE
QUALITY ASSUARANCE STORES
QUALITY CONTROL
DESPATCH
CABLE ASSEMBLY DIVISION
CALIBRATION
EQUIPMENT DEVELOPMENT
TRAINING

55

GENERAL
MANAGER SALES

MARKETING

SALES

56