“A STUDY ON FIXED ASSET MANAGEMENT WITH

REFERENCE TO BHARAT SANCHAR NIGAM LIMITED”

Submitted by
A N V S K SWETHA
(Reg. No. 17551E0001)
In partial fulfillment of the requirements for the award of the Degree
of MASTER OF BUSINESS ADMINISTRATION
Under the Esteemed Guidance of
Dr.RUDRA
MBA,M.Phil,Ph.D.,UGC-NET,AP-SET
GODAVARI INSTITUTE OF ENGINEERING &TECHNOLOGY

(AFFILIATED TO JNTUK KAKINADA)

RAJAMAHENDRAVARAM
 INTRODUCTION
FIXED ASSET MANAGEMENT:
Fixed assets management is an accounting process that seeks to track fixed assets
for the purposes of financial accounting, preventive maintenance, and theft
deterrence.

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 uses serial numbered asset tags, which are labels often with
bar codes for easy and accurate reading. The owner of the assets can take inventory
with a mobile bar code reader and then produce a report.

As per company Act 1956 the maintenance of Assets is statutory requirement of

the enterprises.

Assets are of two types.

1. Current Assets. Current Assets are cash in hand, amount receivable from other
organization and Bank balance etc. and shown in the balance sheet as such.
2. Fixed Assets. Fixed Assets are infrastructure of the company such as land,
building, apparatus and plants, computers office machinery and equipment.

Fixed Assets are of Two types.

- Tangible
- Intangible
Tangible assets are those assets having physical substance that can be seen and
touched like ( Buildings, A&P etc.). These are governed by AS 10
Intangible assets are those assets having no physical substance but future
economic benefits are expected to flow from them to the enterprise such as
Goodwill, Trademark, Computer software etc. AS 26.
On formation of BSNL w.e.f. 01-10-2000 all the assets & liabilities of DTS &
DTO were transferred to BSNL. Assets to the tune of Rs.63, 000 Crores were
transferred on that date. The value of fixed Assets available in BSNL as on 31-
03-2007 is approximately 118 Thousand Crores.and as on 31.03.2009 Is
approximately 1,32, 000 crores and as on 31-03-2010 it was approximately
139000 crores.

Cost of Fixed Asset:

Any item of fixed asset is capitalized at cost. Cost comprises- - Purchase price
- other directly attributable charges such as site preparation, initial delivery and
handling cost, installation/execution costs, related professional fee if any -
Customs and Other tax and duties are included whereas rebat e are deducted
there from.
- Interest & Finance Charges on loans identifiable with a particular
project/scheme are allocated to the respective project. However, on completion
these costs are charged to revenue expenses.
- Administrative & other Overheads
- Common expenditure i.e. expenditure attributable to more than one
scheme/project/asset incurred during the year is to be apportioned to each
scheme/asset.

• Classification of Expenditure in BSNL

- Revenue Expenditure
- Capital Expenditure
- Inventory
- WIP
- Fixed Asset

On the basis of activities, the expenditure incurred in BSNL will either be

revenue or Capital. Here we are concerned only about capital expenditure,
which is initially booked under Inventory, WIP or directly under Assets. The
difference between WIP Expenditure and Fixed Assets Expenditure is that from
the date of booking under Fixed Asset, the depreciation on such Asset s starts.
 COMPANY PROFILE

TELECOMMUNICATIONS IN INDIA:
India's telecommunication network is the second largest in the world based on
the total number of telephone users (both fixed and mobile phone). It has one of
the lowest call tariffs in the world enabled by the mega telephone networks and
hyper- competition among them. It has the world's third-largest Internet user-
base. According to the Department of Telecommunication of India (DoT), as on
March 2015, India has 302.35 million internet connections. Major sectors of the
Indian telecommunication industry are telephony, internet and television
broadcast Industry in the country which is in an on-going process of
transforming into next generation network, employs an extensive system of
modern network elements such as digital telephone exchanges, mobile
switching centers, media gateways and signaling gateways at the core,
interconnected by a wide variety of transmission systems using fibre-optics or
microwave radio relay networks. Telecommunication in India has greatly been
supported by the INSAT system of the country, one of the largest domestic
satellite systems in the world. India possesses a diversified communications
system, which links all parts of the country by telephone, Internet, radio,
television and satellite. Indian telecom industry underwent a high pace of
market liberalization and growth since the 1990s and now has become the
world's most competitive and one of the fastest growing telecom markets.

MAJOR TELECOM SERVICE PROVIDER IN TELECOM INDUSTRY:

BHARATI AIRTEL

IDEA CELLULER

BSNL

TATA DOCOMO

RELIANCE COMMUNICATIONS

AIRCEL

VODAFONE INDIA
BSNL: BHARAT SANCHAR NIGAM LIMITED

Bharat Sanchar Nigam Limited (abbreviated BSNL) is an Indian state-owned

telecommunications company headquartered in New Delhi, India. It was
incorporated on 15 September 2000. It took over the business of providing of
telecom services and network management from the erstwhile Central Government
Departments of Telecom Services (DTS) and Telecom Operations (DTO), with
effect from 1 October 2000 on going concern basis. It is the largest provider of
fixed telephony and fourth largest mobile telephony provider in India, and is also a
provider of broadband services. However, in recent years the company's revenue
and market share plunged into heavy losses due to intense competition in the
Indian telecommunications sector. BSNL is India's oldest and largest
communication service provider (CSP). It had a customer base of 117 million as of
Jan 2014. It has footprints throughout India except for the metropolitan cities of
Mumbai and New Delhi, which are managed by Mahanagar Telephone Nigam
Limited (MTNL). BSNL is divided into a number of administrative units termed as
telecom circles, metro districts, project circles and specialized units. It has 24
telecom circles, 2 metro districts, 6 project circles, 4 maintenance regions, 5
telecom factories, 3 training institutions and 4 specialized telecom units.

HISTORY

The foundation of Telecom network in India was laid by the British some times in
19th century. The history of BSNL is linked with the beginning of Telecom in
India. In 19th century and for almost entire 20th century, the Telecom in India was
operated as a Government of India wing. Earlier it was part of erstwhile Post &
Telegraph Department (P&T).In 1975 the Department of Telecom (DoT) was
separated from P&T. DoT was responsible for running of Telecom services in
entire country until 1985 when Mahanagar Telephone Nigam Limited (MTNL)
was carved out of DoT to run the telecom services of Delhi and Mumbai. It is a
well-known fact that BSNL was carved out of Department of Telecom to provide
level playing field to private telecoms. Subsequently in 1990’s the telecom sector
was opened up by the Government of Private investment.

BSNL SERVICES:

BSNL is the only service provider, making focused efforts and planned initiative to
bridge the Rural-urban Digital divide ITC Sector. In fact there is no telecom
operator in the country to beat its reach with its wide network giving services in
every nook and corner of country and operators across India except Delhi and
Mumbai. Whether it is accessible areas of eastern region and north eastern region
of the country. BSNL serves its customers with its wide bouquet of telecom
services.

Vision : To become the largest telecom service provider in South East Asia

Mission : To provide world class state of art technology telecom services on

Demand

Objectives: To be a lead Telecom services Provider

Phone Plus Services BSNL offers a host of phone plus services, converting the
basic telephones to a sophisticated tool which can be used for a variety of
application. All the phone plus services are available at free of cost from 22nd
January 2003 on wards.

1. Dynamic Locking

2. Call Waiting

3. Abbreviate using
4. HOT Line

. 5. Call transfer/ Call forward.

6. Automatic wake up/ reminder call

7. Call hunting service

8. Caller Line Identification Presentation [CLIP].

9. Phone Bell

10.Call Conferencing

11.Voice based value added Services

 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. 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.

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.
 REVIEW OF LITERATURE
Fixed asset:

Fixed asset, also known as a non-current asset or as property, plant, and equipment
(PP&E), is a term used in accounting 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.

Moreover, a fixed/non-current asset can also be defined as an asset not directly

sold to a firm's consumers/end-users. As an example, a baking firm's current assets
would be its inventory (in this case, flour, yeast, etc.), the value of sales owed to
the firm via credit (i.e. debtors or accounts receivable), cash held in the bank, etc.
Its non-current assets would be the oven used to bake bread, motor vehicles used to
transport deliveries, cash registers used to handle cash payments, etc. Each
aforementioned non-current asset is not sold directly to consumers.

These are items of value which the organization has bought and will use for an
extended period of time; 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. According to International
Accounting Standard (IAS) 16, Fixed Assets are assets whose future economic
benefit is probable to flow into the entity, whose cost can be measured reliably.

The primary objective of a business entity is to make profit and increase the wealth
of its owners. In the attainment of this objective it is required that the management
will exercise due care and diligence in applying the basic accounting concept of
“Matching Concept”. Matching concept is simply matching the expenses of a
period against the revenues of the same period. 36 The use of assets in the
generation of revenue is usually more than a year- that is long term. It is therefore
obligatory that in order to accurately determine the net income or profit for a
period depreciation is charged on the total value of asset that contributed to the
revenue for the period in consideration and charge against the same revenue of the
same period. This is essential in the prudent reporting of the net revenue for the
entity in the period.
Depreciating a Fixed Asset

Depreciation is, simply put, the expense generated by the use of an asset. It is the
wear and tear of an asset or diminution in the historical value owing to usage.
Further to this; it is the cost of the asset less any salvage value over its estimated
useful life. It is an expense because it is matched against the revenue generated
through the use of the same asset. Depreciation is usually spread over the
economic useful life of an asset because it is regarded as the cost of an asset
absorbed over its useful life. Invariably the depreciation expense is charged against
the revenue generated through the use of the asset. The method of depreciation to
be adopted is best left for the management to decide in consideration to the
peculiarity of the business, prevailing economic condition of the assets and
existing accounting guideline and principles as implied in the organizational
policies.

It is worth noting that not all fixed assets depreciate in value year-over-year. Land
and buildings, for example, may often increase in value depending on local real-
estate conditions. A long-term tangible piece of property that a firm owns and uses
in the production of its income and is not expected to be consumed or converted
into cash any sooner than at least one year's time. Fixed assets are sometimes
collectively referred to as "plant".

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 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.

 OBJECTIVES OF THE STUDY:

The following are the objectives of the study

• To assess the amount of capital expenditure made by the company during the
period of study 2013-14 to2017-2018.

• The study is conducted to evaluate the fixed assets turnover of BHARAT

SANCHAR NIGAM LIMITED

• The study is conducted to evaluate whether fixed assets are giving adequate
returns to the company.

• To evaluate that if fixed assets are liquidated, what proportion of it will contribute
for the payment of owners fund and long-term obligations.
 RESEARCH 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

THIS STUDY HAS BEEN CONDUCTED BY CONSIDERING THE LAST 5

YEARS DATA COLLECTED ABOUT FIXED ASSETS IN THE BHARAT
SANCHAR NIGAM LIMITED.

i.e., FROM 2013-2014 TO 2017-2018

 SCOPE OF THE STUDY
:

The project is covered on fixed assets of BSNL 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 BSNL and its
annual reports

.2. The report may not provide exact fixed assets status and position of BSNL it
may be varying from time to time and situation to situation.

3. This report is not helpful in investing in BSNL Either through disinvestments or

capital market.

4. The accounting procedure and other accounting principles are limited by the
changes made by the company, may vary fixed assets performance.
 CHAPTERISATION
CHAPTER 1:

 INTRODUCTION
 OBJECTIVES OF THE STUDY
 SCOPE OF THE STUDY
 NEED FOR THE STUDY
 RESEARCH METHODOLOGY OF THE STUDY
 LIMITATIONS OF THE STUDY

CHAPTER 2:

 THEORITICAL FRAME WORK

CHAPTER 3:

 INDUSTRY PROFILE
 COMPANY PROFILE

CHAPTER 4:

 DATA ANALYSIS AND INTERPRETATION

CHAPTER 5:

 FINDINGS
 SUGGESTIONS
 CONCLUSION

APENDIX:

 BIBLIOGRAPHY
 QUESTIONNAIRE