1.

1 INTRODUCTION TO THE STUDY

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 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 invests decision may prove to 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 management involves:

1. Selection of most worthy projects or alternatives of fixed assets.

2. Arranging the requires 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 o f the firm’s product

necessarily expansion of its activities. Hence a firm should that much amount of fixed

assets which could adjust to increase demand.

The third aspect of fixed assets management is that a firm must ensure buffer stocks of

certain essential equipments / services to ensue uninterrupted production in the events of

1
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.

Fixed Assets:

Fixed assets are those 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 of 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 buildings, 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 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 manger without reference to

their current values if there is no immediate expectation of selling them. Fixed resale, so

they are shown at their book values (i.e., cost less depreciation provided) and not at their

current realizable values

2
The market value of a fixed asset may change with the passage of time, but for

accounting purpose it continues to be shown in the books as 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 that of those calculated at current vale or replacement

value. This results in more profits on paper which, if distributed in full, will lead to

reduction of capital.

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.

3
1.2 Need for study:

Fixed Assets play very important role in realign company’s objectives the firms to which

capital investment vested on fixed assets. Theses fixed assets are not convertible or not

liquid able over a period of time the total owner finds 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 in

analyzing and utilized properly it affect long term sustainability of the firms which may

effect 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

needs 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 ICICI

BANK. Using ratio in comparison with previous year performance. The title of the

project is analysis on Fixed Assets management.

4
1.3 Scope:

The project is covered of fixed Assets of ICICI BANK. drawn form annual report of the

company. The fixed assets considered in the project is which cam not be converted into

cash with one year. Ratio analysis is used for evaluating fixed assets performance of

ICICI BANK.

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.

5
1.4 Objectives of the study:

 The study is conducted to evaluate fixed assets performance

 The study is conducted to evaluate the fixed assets turnover on ICICI BANK.

 The study is made to known the amount of capital expenditure made by the

company during study perid.

 The study is conducted to evaluate depreciation and method of depreciation

adopted by ICICI BANK.

 The study is conducted to known the amount of finance made by long term

liabilities and owner funds towards fixed assets.

 The 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 to evaluate adequate returns to the company.

6
RESEARCH METHODOLOGY:

PRIMARY DATA:

The primary data was collected mainly with interactions and discussions with the

company’s executives. It is collected by personal interaction with the officials of the

finance and accounting department and also from annuals of the company. The financial

data relating to the organization has been collected for the 5 years.

SECONDARY DATA:

The data used for analysis and interpretation from annual reports of the company that is

secondary forms of data. Trend analysis and Ratio analysis are the techniques used for

calculation 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 ICICI BANK.

Sources of Data:

 The data gathering method is adopted purely form secondary sources.

 The theoretical content is gathered form eminent text book reference and library

at ICICI BANK.

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

company internal records.

 Interpretation, Conclusions and suggestions are purely base on my opinion and

suggestions provided by the project guide

7
LIMITATIONS

1.The study mainly depends on the secondary data taken from annual report and internal

record of the company.

2.The figure taken from the financial statement from analysis where historical in nature,

time value of money not being considered.

3. the study is confined to short period of 4 years, this could not picture exact position of

the company.

4.The results are made using the statistical technique re expected outcomes and not the

fact.

5. Every company will be having their own factor and situation, the findings of the study

could be taken only as guide lines and can’t be applied directly to other company of the

industry

8
2.1 Conceptual framework

Current Assets The second category of assets included in the balance sheet are current

assets. In contrast to fixed assets, they are short-term in nature. They refer to

assets/resources, which are either held in the form of cash or ate expected to be realized

to cash within the accounting period in the normal operation cycle of the business. The

term ‘operating cycle’ means the time span during which cash is converted into

inventory, inventory, into receivable /cash sales and receivables into cash.

Conventionally, such assets are held for a short period of time, usually not more than a

year. These are also known as liquid assets. Current assets include cash, marketable

securities, accounts receivable (debtors), notes/bills receivables and inventory.

Cash is the most liquid current asset and includes cash to hand and cash at bank. It

provides instant liquidity and can be used to meet obligations/acquire without assets

without any delay.

Marketable securities are short-term investments, which are both readily marketable

and are expected to be converted into cash within a year. They provide an outlet to invest

temporary surplus /idle funds/cash. According to generally accepted accounting

principles, marketable securities are shown in the balance sheet below the cost or the

market price. When, however, show at cost, the current market value is also shown in

parenthesis.

9
Accounts receivable represent the amount that the customers owe to the firm, arising

from the sale of goods o credit they are shown in the balance sheet at the amount owed

less an allowance (bad debts) for the portion which may but be collected.

Notes/bills payable refer the amounts owned by outsiders for which written

acknowledgments of the obligations are available.

Inventory means the aggregate of those items which are (i) held for sale in the ordinary

course of business (finished goods), (ii) in the process of production for such sales (work-

in-process) or (iii) to be currently consumed in the production of goods and services (raw

materials) to be available for sale. It is the least liquid current assets. Included in

inventory are raw materials, working process (semi-finished) and finished goods. Each of

these serves a useful purpose in the process of production and sale. Inventory is reported

in the balance sheet at the cost or market value whichever is lower.

Investments the third category of fixed assets is investments. They represent investments

of funds in the securities of another company. They are long-term assets outside the

business of the firm. The purpose of such investments is either in earn return or/and to

control another company. It is customarily shown in the balance sheet at costs with the

market value shown in parenthesis.

Other assets included in this category of assets are what are called deferred charges that

are advertisement expenditure preliminary expenses and so on. They are pre-payment for

services /benefits for the periods exceeding the accounting period.

10
Liabilities

The second major content of the balance sheet is liabilities defined as the claims of

outsiders that is, other than owners. The assets have to be financed by different sources.

One of source of funds is borrowing – long-term as well as short-term. The firms can

borrow on a long-term basis from financial institutions/banks or through

bonds/mortgages/debentures, and so on. The short-term borrowing may be in the form of

purchase of goods and services on credit. These outside sources from which a firm can

borrow are termed as liabilities. Since they finance the assets, they are, in a sense, claims

against the assets. The amount shown against the liability items is on the basis of the

amount owned, not the amount payable. Depending upon the periodicity of the funds,

liabilities can be classified into (1) long-term liabilities and (2) current liabilities.

Long-term Liabilities

They are so called because the sources of funds included in them are available for periods

exceeding one year. In other words, such liabilities represent obligations of a firm

payable after the accounting period.

Debentures or bonds are issued by a firm to the public to raise debt. A debenture or a

bond is a general obligation of the firm to pay interest and return the principal sum as per

the agreement. Loan raised through ‘Issue of debentures or bonds may be secured or

unsecured.

11
Secured loans are the long-term borrowings with fixed assets pledged as security. Term

loans from financial institutions and commercial banks are secured against the assets of

the firm.

They have to be repaid/redeemed either in lump sum at the maturity of the loan/debenture

or in installments over the life of the loan. Long-term liabilities are shown in the balance

sheet net of redemption/repayment.

Current Liabilities

In contrast, the long term-liabilities, such liabilities are obligations to outsiders repayable

in a short period, usually within the accounting period or the operating cycle of the firm.

It can be said to be the counterpart of the current assets. Conventionally, they are

paid ;out of the current assets; in some cases, however existing current liabilities can be

liquidated through the creation of additional current liabilities.

Sundry creditors or accounts payable represent the current liability towards suppliers

from whom the firm has purchased raw materials on credit. This liability is shown in the

balance sheet till the payment has been made to the creditors.

Bills payable are the promises made in writing by the firm to make payment of a

specified sum to creditors at some specific date. Bills are written by creditors over the

firm and become bill payable once they are accepted by the firm. Bills payable have a life

of less than a year; therefore, they are shown as current liabilities in the balance sheet.

12
Bank borrowings form a substantial part of current liabilities of a large number of

companies in India. Commercial banks advance short-term credit to firms or financing

their current assets. Banks may also provide funds (term loans) for a financing a firm’s

fixed assets. Such loans will be grouped under long-term liabilities. In India, it is a

common practice to include both short and long-term borrowings under loan funds.

Provisions are other types of current liabilities. They include provision for taxes or

provision for dividends. Every business has to pay taxes on its income. Usually, it takes

some time to finalize the amount of tax with the tax authorities. Therefore, the amount of

tax is estimated and shown as provision for taxes or tax liability in the balance sheet.

Similarly, provision for paying dividends to shareholders may be created and shown as

current liability.

Expenses payable or outstanding expenses are also current liabilities. The firm may

owe payments to its employees and others at the end of the accounting period for the

services received in the current year. These payments are payable within a very short

period. Examples of outstanding expenses are wages payable, rent payable, or

commission payable.

Income received in advance is yet another example of current liability. A firm can

sometimes receive income for gods or services to be supplied in the future. As goods or

services have to be provided within the accounting period, such receipts are shown as

current liabilities in the balance sheet.

13
Installments of long-term loans are payable periodically. That portion of the long-term

loan which is payable in the current year will for part of current liabilities.

Deposits from public may be raised by a firm for financing its current assets. These may

therefore classify under current liabilities. It may be noted that public deposits may be

raised for duration of one year through three years.

How should the changing value of a fixed asset be reflected in a

Company’s accounts?

The benefits that a business obtains from a fixed asset extend over several years. For

example, a company may use the same piece of production machinery for many years,

whereas a company- owned motor car used by a salesman probably has a shorter useful

life.

By accepting that the life of a fixed asset is limited, the accounts of a business need to

recognize the benefits of the fixed asset as it is "consumed" over several years.

This consumption of a fixed asset is referred to as depreciation.

Definition of depreciation

Financial Reporting Standard 15 (covering the accounting for tangible fixed assets)

defines depreciation as follows:

14
"the wearing out, using up, or other reduction in the useful economic life of a tangible

fixed asset whether arising from use, efflux ion of time or obsolescence through either

changes in technology or demand for goods and services produced by the asset.'

A portion of the benefits of the fixed asset will be used up or consumed in each

accounting period of its life in order to generate revenue. To calculate profit for a period,

it is necessary to match expenses with the revenues they help earn.

In determining the expenses for a period, it is therefore important to include an amount to

represent the consumption of fixed assets during that period (i.e. depreciation).

In essence, depreciation involves allocating the cost of the fixed asset (less any residual

value) over its useful life. To calculate the depreciation charge for an accounting period,

the following factors are relevant:

- The cost of the fixed asset;

- The (estimated) useful life of the asset;

- The (estimated) residual value of the asset.

What is the relevant cost of a fixed asset?

The cost of a fixed asset includes all amounts incurred to acquire the asset and any

amounts that can be directly attributable to bringing the asset into working condition.

Directly attributable costs may include:

- Delivery costs

- Costs associated with acquiring the asset such as stamp duty and import duties

15
- Costs of preparing the site for installation of the asset

- Professional fees, such as legal fees and architects' fees

Note that general overhead costs or administration costs would not costs of a fixed asset

(e.g. the costs of the factory building in which the asset is kept, or the cost of the

maintenance team who keep the asset in good working condition)

The cost of subsequent expenditure on a fixed asset will be added to the cost of the asset

provided that this expenditure enhances the benefits of the fixed asset or restores any

benefits consumed.

This means that major improvements or a major overhaul may be capitalized and

included as part of the cost of the asset in the accounts.

However, the costs of repairs or overhauls that are carried out simply to maintain existing

performance will be treated as expenses of the accounting period in which the work is

done, and charged in full as an expense in that period.

DEPRECIATION AND SALVAGE VALUE

Although the useful life of equipment (a fixed asset) may be long, it is nonetheless

limited. Eventually the equipment will lose all productive worth and will possess only

salvage value (scrap value). Accounting demands a period-by-period matching of costs

against income. Hence, the cost of a fixed asset (over and above its salvage value) is

distributed over the asset’s estimated lifetime. This spreading of the cost over the periods

which receive benefits is known as depreciation.

The depreciable amount of a fixed asset – that is, cost minus salvage value – may be

written off in different ways. For example, the amount may be spread evenly over the

16
years affected, as in the straight-line method. The units of production method bases

depreciation for each period on the amount of output. Two accelerated methods, the

double declining balance method and the sum-of-the years’-digits method, provide for

greater amounts of depreciation in the earlier years.

DEPRECIATION METHODS

1. STRAIGHT-LINE METHOD

This is the simplest and most widely used depreciation method. Under this method an

equal portion of the cost (above salvage value) of the asset is allocated to each period of

use. The periodic depreciation charge is expressed as

Cost – Salvage Value

= Depreciation

Estimated life

1. UNITS OF PRODUCTION METHOD

Where the use of equipment varies substantially from year to year, the units-of-

production method is appropriate for determining the depreciation. For example, in some

years logging operations may be carried on for 200 days, in other years for 230 days, in

still other years for only 160 days, depending on weather conditions. Under this method,

depreciation is computed for the appropriate unit of output or production (such as hours,

miles, or pounds) by the following formula:

Cost – Salvage

17
 = Unit Depreciation

Estimated units of production during lifetime

The total number of units used in a year is then multiplied by the unit depreciation to

arrive at the depreciation amount for that year. We can express this as

Unit depreciation x usage = depreciation

Or Cost – Salvage

X usage = depreciation

Estimated life (in units)

This method has the advantage of relating depreciation cost directly to income

2. DOUBLE DECLINING BALANCE METHOD

The double declining balance method produces the highest amount of depreciation in the

earlier years. It does not recognize salvage or scrap value. Instead, the book value of the

asset remaining at the end of the depreciation period becomes the salvage or scrap value.

Under this method, the straight-line rate is doubled and applied to the declining book

balance each year. Many companies prefer the double declining balance method because

of the greater “write-off” in the earlier years, a time when the asset contributes most to

the business and when the expenditure was actually made. The procedure is to apply a

18
fixed rate to the declining book value of the asset each year. As the book value declines,

the depreciation becomes smaller.

100%

X 2 = depreciation rate

Estimated life in years

3. SUM-OF-THE-YEARS-DIGITS METHOD

With this method, the years of asset’s lifetime are labeled 1,2,3 and so on, and the

depreciation amounts are based on a series of fractions that have the sum of the years’

digit as their common denominator. The greatest digit assigned to a year is used as the

numerator for the first year, the next greatest digit for the second year, and so forth.

What is the Useful Life of a fixed asset?

An asset may be seen as having a physical life and an economic life.

Most fixed assets suffer physical deterioration through usage and the passage of time.

Although care and maintenance may succeed in extending the physical life of an asset,

typically it will, eventually, reach a condition where the benefits have been exhausted.

However, a business may not wish to keep an asset until the end of its physical life. There

may be a point when it becomes uneconomic to continue to use the asset even though

there is still some physical life left.

19
The economic life of the asset will be determined by such factors as technological

progress and changes in demand. For purposes of calculating depreciation, it is the

estimated economic life rather than the potential physical life of the fixed asset that is

used.

What about the Residual Value of a fixed asset?

At the end of the useful life of a fixed asset the business will dispose of it and any

amounts received from the disposal will represent its residual value. This, again, may be

difficult to estimate in practice. However, an estimate has to be made. If it is unlikely to

be a significant amount, a residual value of zero will be assumed.

REVIEW OF LITERATURE

Review: 2.1

Author: - Cambridge systematic, Inc

Topic: -AASHTO Transportation asset management guide

Abstract

This American Association of State Highway and Transportation Officials (AASHTO)

guide provides state departments of transportation (DOTs) and other transportation

agencies guidance on implementing asset management concepts and principles within

their business processes. At its core, asset management deals with an agency’s decisions

in resource allocation and utilization in managing its system of transportation

infrastructure.

20
Review 2.2

Author: - US Department of Transprtation

Topic: - FHWA asset management

Abstract

This document explains the basics of asset management: What is asset management?

Why do we need asset management? An overview of current practices in asset

management and a vision into the future for improving the process are presented.

Review 2.3

Author: - Cambridge systematic, Inc

Topic: - FHWA “Asset Management Position Paper: White Paper”

Abstract

This document describes asset management concepts and core principles. White papers

for each major area in the asset management program are presented, including

infrastructure,

planning, operations, safety, environment, right-of-way, and federal lands.

Review 2.4

Author: - Cambridge systematic, Inc

Topic: Analytical Tools for Asset Management

Abstract

21
This report presents new analytical tools to support asset management. Emphasis is given

to tools needed to assist agencies in trade-off decisions for resource allocation

Review 2.5

Author: - Midwest Regional University Transportation Center

Topic: - Best Practices for Linking Strategic Goals to Resource Allocation and

Implementation Decisions Using Elements of a Transportation Asset Management

Programe

Abstract

This report assembles a set of tools, based on the experiences and best practices in a

diverse set of states, for linking strategic goals to resource allocation. Based on

detailed documentation of the practices in five states—Florida, Maryland,

Michigan, Montana, and Pennsylvania—a synthesis of best practice of strategic

planning, asset management, and the linkage between the two was developed.

22
Review 2.6

Author: - Transportation Research Board

Topic: - 6th National Conference on Transportation Asset Management

Abstract

The 6th National Conference on Transportation Asset Management was held November

1-3, 2005, in Kansas City, Missouri. More than 250 attendees benefited from the

technical

presentations and facilitated discussions conducted at the conference. This

circular summarizes the content of the conference’s sessions and presentations.

Review 2.7

Author: - Aileen Switzer and Sue McNeil

Topic: - Developing a Road Map for Transportation Asset Management Research

Abstract

This article synthesizes the initiatives from a number of professional and government

organizations to develop a research road map for transportation asset management. This

road map is intended to identify research needs and provide significant milestones along

the way.

23
Review 2.8

Author: - Lance A. Neumann and Michael J.Markow

Topic: - Performance-Based Planning and Asset Management

Abstract

Performance-based planning is systematic and analytic, building upon the following

components: expressions of policy in terms of quantifiable objectives; explicit measures

of system performance; analytic methods to predict impact of different types of

investments; models for system monitoring; and feedback mechanisms to assess

performance trends.

Review 2.9

Author: - Cambridge Systematics, Inc.

Topic: - Performance Measures and Targets for Transportation Asset Management

Abstract

Volume I describes the research effort and provides the current state-of-thepractice on the

use of performance measures, principally in the context of transportation asset

management.

Volume II introduces a framework for identifying performance measures and setting

target values, and its appendices contain examples of performance measures and targets.

24
Review 2.10

Author: - Ralph Haas, Lynne Cowe Falls, and Susan Tighe

Topic: - “Integrating Pavement and Asset Management in Functional and Operational

Terms”

Abstract

If asset management and its component systems are to function in a coordinated and

effective way, an integration platform is required. This paper suggests that three key

elements need to be included in such a platform. They are locational referencing, asset

valuation, and level of service.

25
 3.1 INDUSTRIAL PROFILE

INTRODUCTION OF BANKING

“Bank is an institution whose Debts widely accepted in settlement of other people’s debts

to each other”.

The banking company in India defined the Band , in the companies Act.1949, as the one

“which transacts the business of banking which means the accepting for the purpose of

lending to invests of deposits of money from the public. The deposits, which repayable

on demand withdrawal by check, draft orders.

TYPES OF BANKING

Several types of banks have come in to existence performing different specialized

functions based upon the functions performed by them; banks may be classified into

different types;

1) COMMERCIAL BANKS:

They are a joint stock bank which acts as different kinds of deposits from the public and

grant short term loans. There main aims Is to provide security of funds to depositors and

make profits for their share holders. As their deposits are mainly for short periods, they

cannot lend money for long periods. They mainly finance business and trade for short

periods to meet their day – to – day transactions. They may provide finance in the form of

cash credits our drafts or loans. They also provide finance by discounting bills of

exchange.

2) INDUSTRIAL BANKS
26
These banks are also called investment banks. They provide long terms finance to

industries ranging over a few decades. They finance long term projects and

developmental plans. T hey receives long term projects deposits from the public. They

may also raise funds by the issue of shares debentures. They specialized in the undertake

industrial finance the new issue of shares, debentures and securities of new enterprises.

3) AGRICULTURE BANKS

The commercial industrial banks are not able to meet the financial requirements of

agriculture. Agriculture requires both short term and long term finance. Frames requires

short term finance to buy seeds, fertilizers, implements etc.,

4) CO-OPERATIVE BANKS:

The banks are formed to supply credit to members on ea

sy terms. They do not aim at profit in their operations. They attract depositors from the

farmers and promote thrift by offering slightly higher rates of interests than commercial

banks. They provide credit facility to needy framers and small scale industries.

5) EXCHANGE BANKS:

The specialized in financing the import and export trade of the country. They purchase

bills from exporters and sell them to importers. They provide remittance facilities and

trade information to their clients.

6) SAVEIGN BANKS:

27
These banks collect small and scattered savings of the low and middle income group

people. These banks receive small amounts, deposits and withdrawals are restricted. Bank

offer minimum interest on these deposits.

7) CENTRAL BANK:

The central bank controls the entire banking system in the country. It operates the

currency and credit system in the country. It acts as an agent and adviser to the

government and works in the best interests of the nation with out any profit motive in ts

operations.

Historically, a bank has been a place where depositors could park money and borrowers

could borrow. The typical spread of the bank was raising money through deposits and

leading it to corporate clients. This made the relationship with the retail consumer rather

passive. But with banks recognizing the power of the country’s middle class, this

relationship is becoming very active.

The commercial banking structure in India consists of:

 Scheduled Banks in India

 Unscheduled Banks in India

Scheduled Banks in India constitute those banks which have been included in the Second

Schedule of Reserve Bank of India (RBI) Act, 1934. RBI in turn includes only those

banks in this schedule which sof theriria laid down vide section42 (6)(a) of the act.

28
As on 30th June, 1999, there were 300 scheduled banks in India having a total network of

64,918 branches. The scheduled commercial banks in India comprises of State bank of

India and its associates (8), nationalized banks (19), foreign banks (45), private sector

banks (32), co-operative banks and regional rural banks.

“Scheduled banks in India” means the State Bank of India constituted under the State

Bank of India Act,1955(23 of 1955), a subsidiary bank as defined in the State Bank of

India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted

under section 3 of the Banking Companies(Acquisition and Transfer of Undertakings)

Act, 1970 (5 of1970), 223.18lakhs the main sources of the funds were long-term deposits

were

“Under section 3 of the banking companies (acquisition and transfer of undertakings) act,

1980 (40 of 1980), or any other bank being a bank included in the second schedule to the

reserve bank of India act, 1934 (2 of 1934), but does not include of a co-operative bank”.

“Non-schedule bank in India” means a banking company as in clause (c) of section 5 of

the banking regulation act, 1949 (10 of 1949). This is not a schedule bank”

29
The following are the schedule public sector banks in India:

● State bank of India

● State bank of banker and Jaipur

● State bank of Hyderabad

● State bank of Indore

● State bank of Mysore

● State bank of Patiala

● State bank of Saurashtra

● State bank of Travancore

● Andhra bank

● Allahabad bank

● Bank of Baroda

● Bank of India

● Bank of Maharashtra

● Canara bank

● Central bank

● Central bank of India

● Corporation bank

● Dean Bank

● Indian overseas bank

● Indian Bank

● Oriental Bank of Commerce

● Punjab National Bank

30
● Punjab State and Sind Bank

● Syndicate Bank of India

● Unit Bank of India

● UCO Bank

● Vijaya Bank

The Following are the scheduled private sector Banks in India:

● Vysya Bank Ltd

● UTI Bank Ltd

● Indusind Bank Ltd

● ICICI Banking Corporation Bank Ltd

● Global trust Bank Ltd

● HDFC Bank Ltd

● Bank of Punjab Ltd

● IDBI Bank Ltd

31
The following are the scheduled foreign banks in India:

● American Express Bank Ltd

● ANZ Gridlays Bank Ple

● Bank of America NT&SA

● Bank of Tokyo Ltd

● Baque National Plc

● Citi Bank N.C

● Deutsche Bank A.G

● Hong Kong and Shanghai Banking Corporation

● Standard Charted Bank

● The Chase Manhattan Bank Ltd

● Dresdner Bank A.G

Current scenario:

The Indian banking sector during the December quarter posted mixed results. Although

this was on expected lines, some of the banks showed a huge variation. We have tried to

understand the trend in the December quarter results. We have informed four analytic

groups to understand the result pattern. These are the public sector (PSU), public sector

ex-SBI, private sector and private sector ex-ICICI bank. Our universe of banks for the

said study is as follows:

32
Top 10 large Banks in INDIA:

2005 2004 Rank Bank

Rank

1 1 HDFC

2 7 HSBC

3 3 ANB Amro

4 6 Corporation

bank

5 15 Andhra bank

6 2 City bank NA

7 21 Punjab

national bank

8 9 Standard

charted

9 13 UTI Bank

10 12 Vysya bank

(Source: KPMG Annual Bank Survey

33
INSURANCE IN INDIA

The insurance sector in India has come a full circle from being on open competitive

market to nationalization and back to a liberalized market again. Tracing the development

in the Indian insurance sector reveals the 360 degree turn witnessed over a period of

almost two centuries.

A BRIET HISTORY OF THE INSURANCE SECTOR

The business of life insurance in India in its existing from started in India in the year

1818 with the establishment of the oriental life insurance company in Calcutta.

Some of the important milestones in the life insurance business in India are:

►1912: The Indian Life Assurance Companies Act enacted as the first statute to

regulate the life insurance business.

►1928: The Indian Insurance Companies Act enacted to enable the government to

collect statistical information about both life and non – life insurance businesses.

34
3.2 COMPANY PROFILE

ICICI Bank is India’s second –largest bank with total assets of about

656035317.docxRs.1, 676.59 bn (US$ 38.5 bn) at March 31, 2005 and profit after tax of

Rs. 20.05 bn (US$ 461 mn) for the year ended March 31,2005 (Rs. 16.37 bn(US $376

mn)in fiscal 2004).

ICICI Bank has a network of about 573 branches and extension counters and over 2,000

ATMs. ICICI Bank offers a wide range of banking products and financial services to

corporate and retail customers through a variety of delivery channels and through its

specialized subsidiaries and affiliates in the asset management.

ICICI bank set up its international banking group in fiscal 2002 to cater to the cross

border needs of clients and leverage on its domestic banking strengths to offer products

internationally. ICICI bank currently has subsidiaries in the United Kingdom, Canada and

Russia, branches in Singapore and Bahrain and representative offices in the United

States, China, United Arab Emirates, Bangladesh and South Africa.

ICICI Bank’s equity shares are listed in India on he Bombay Stock Exchange and the

National Stock Exchange of India Limited and it American Depositary Receipts (ADRs)

are listed on the New York Stock Exchange (NYSE).

35
History:

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial

institution, and was its wholly – owned subsidiary. ICICI’s shareholding in ICICI Bank

was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity

offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank’s acquisition

of Bank of Madura Limited in an all – stock amalgamation in fiscal 2001. And secondary

market sale by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was

formed in 1955 at the initiative of the world Bank, the Government of India and

representatives of Indian industry.

Objective:

The principal objective was to create a development financial institution for providing

medium-term and ling – term project financing to Indian businesses. In the 1990s, ICICI

transformed its business from a development financial institution offering only project

finance to a diversified financial services group offering a wide variety of products and

services, both directly and through a number of subsidiaries and affiliates like ICICI

Bank

In the 1990s, ICICI transformed its business from a development financial institution

offering only project finance to a diversified financial services group offering a wide

variety of products and services, both directly and through a number of subsidiaries and

36
affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first

bank or financial institution from non – Japan Asia to be listed o the NYS

Structure:

After consideration of various corporate structuring alternatives in the context go the

emerging competitive scenario in the Indian banking industry, and the move towards

universal banking, the managements of ICICI and ICICI formed the view that the merger

of ICICI Bank would be the optimal strategic alternative for the both entities, and would

create the optimal legal structure for the ICICI Groups universal banking strategy. The

merger would enhance value for ICICI shareholders through the merged entity access to

low-cost deposits, greater opportunities for earning fee-based income and the ability to

participate in the payments systems and provide transaction banking service. The merger

would enhance value for ICICI Bank shareholders through a large capital base and scale

of operations , scam less access to ICICI‘ s strong corporate relationship built up over fie

decades, entry into view business segments, higher market share in various business

segments, particularly fee-based service, and access to the vast talent pool of ICICI and

its subsidiaries. In October 2001, the boards of Directors of ICICI retail finance

subsidiaries, ICICI personal financial services limited and ICICI capital service Limited,

with ICICI Bank.

ICICI Bank at the present scenario:

India has never had it good before booming economy reflects in the rise of SENSEX past

the 10,000 mark, projections of an 8-plus percent GDP growth, the revival of

manufacturing and rising foreign investments have delivered growth in the banking

37
sector. During the recent survey conducted by the KPMG with respect to the India’s top

banks, ICICI bank holds its slot in the list of top banks.

Top 10 Banks By Growth In Business

BANK %Growth

UTI Bank 53

ICICI Bank 47

ABN Amro 38

State Bank of Indore 34

Allahabad Bank 32

Oriental Bank Of Commerce 32

HDFC Bank 30

Nainital Bank 29

Union Bank Of India 28

State Bank of Mysore 27

(KPMG Annual Survey)

38
TOP 10 BANKS BY GROWTH IN PAT

BANK %GROWTH

Centurion 459

BNP Paribas 213

American express Bank 170

HSBC 71

HDFC Bank 31

Indian overseas Bank 27

Punjab national Bank 27

ICICI Bank 22

UTI Bank 20

Union Bank of India 19

39
ICICI Bank in News: Chairman Speaks

They say elephants dance. DUNDAPUR VAMAN KAMATH thinks otherwise. Since

leading ICICI bank’s first foray into the retail business five years ago. Managing Director

and CEO Klamath has turned ICICI Bank into the fastest growing bank in the industry.

At Rs.62, 063 corers, the bank has the largest retail portfolio and is the leader in home

and car loans. The most diversified universal ankh, it boasts more than 15 million

customer accounts. 600 branches and a network of 2000 ATM’s across the country. Its

life and general insurance subsidiaries have become the biggest private insurers in just

five years. Similarly, ICICI bank’s asset management business, with a corpus of Rs.

22,600 corer, is among the fastest growing mutual funds and second only to UTI Mutual

fund in terms of size.

In fact, the bank’s growth emanates from every business segment it is in. no wonder, it

turns up as the fastest growing (large) bank on the study of best banks in India. ICICI

bank’s growth be affected by a sudden tightening of liquidity? “Factors driving the

growth in retail are very fundamental like affordability, rising income levels and the

buoyancy in the overall economy.” Says Chanda Kochhar, executive director, ICICI

Bank. Going forward, the bank is also betting big on its international operations. In just

one year of its launch, ICICI Bank became the biggest Indian Bank in Singapore.. In the

UK too, the bank has turned profitable in the first full years of its operations.

40
Financial Management:

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. However there are three main

approaches to finance.

1. The first approach views fiancé as to providing of funds needed by a business on

most suitable terms this approach confines fiancés to the raising of funds and to the

study of financial institutions & instruments from where funds can be procured.

2. The second approach relates fiancé to cash.

3. The third approach views fiancé is being concerned with raising funds & their

effective utilization.

41
Definition of Financial Management:

Financial Management as practice by corporate firms can be called corporation fiancé or

business fiancé, 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 sources must

be suitable & economical for the needs of the business. The most appropriate use of such

funds also forms a part of Financial Management.

Objectives 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 into before making a final selection. Financial Management

provides a framework for selecting a proper cause if action and deciding 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

42
ASSETS

Assets may be described as valuable resources owned by a business which were acquired

at a measurable money cost. As an economic resource, they satisfy three requirements. In

the first place, the resource must be valuable. A resource is valuable if (i) it is

cash/convertible into cash; or (ii) It can provide future benefits to the operations of the

firm. Secondly, the resource must be owned. Mere possession or control of a resource

would not constitute an asset; it must be owned in the legal sense of the term. Finally, the

resource must be acquired at a measurable money cost. In case where an asset is not

acquired for cash/promise to pay cash, the test is what it would have cost had cash been

paid for it.

Assets Characteristics:

Assets have three essential characteristics:

 They embody a future benefit that involves a capacity, singly or in combination

with other assets, in the case of profit oriented enterprises, to contribute directly

or indirectly to future net cash flows, and, in the case of not-for-profit

organizations, to provide services;

 The entity can control access to the benefit; and,

 The transaction or event giving rise to the entity's right to, or control of, the

benefit has already occurred.

43
It is not necessary; in the financial accounting sense of the term, for control of access to

the benefit to be legally enforceable for a resource to be an asset, provided the entity can

control its use by other means.

It is important to understand that in an accounting sense an asset is not the same as

ownership. In accounting, ownership is described by the term "equity," (see the related

term shareholders' equity). Assets are equal to "equity" plus "liabilities."

The accounting equation relates assets, liabilities, and owner's equity:

The accounting equation relates assets, liabilities, and owner's equity:

The accounting equation is the mathematical structure of the balance sheet.

Assets are usually listed on the balance sheet. It has a normal balance, or usual balance,

of debit (i.e., asset account amounts appear on the left side of a ledger).

Similarly, in economics an asset is any form in which wealth can be held.

Probably the most accepted accounting definition of asset is the one used by the

International Accounting Standards Board. The following is a quotation from the IFRS

Framework: "An asset is a resource controlled by the enterprise as a result of past events

and from which future economic benefits are expected to flow to the enterprise."

Assets are formally controlled and managed within larger organizations via the use of

asset tracking tools. These monitor the purchasing, upgrading, servicing, licensing,

disposal etc., of both physical and non-physical assets.

The assets in the balance sheet are listed either in order of liquidity-promptness with

which they are expected to be converted into cash-or in reverse order, that is, fixity or

44
listing of the least liquid (fixed) first followed by others. All assets are grouped into

categories, that is, assets with similar characteristics are put in one category. The assets

included in one category are different from those in other categories. The standard

classification of assets divides them into (1) fixed assets, (2) current assets, (3)

investments, and (4) other assets.

Tangible fixed assets are those, which have physical existence and generate goods and

services. Included in this category are land, building, plants, machinery, furniture, and so

on. They are shown in the balance sheet, in accordance with the cost concept, at their cost

to the firm at the time they were Purchased. Their cost is allocated to/charged

against/spread over their useful life. The yearly charge is referred to as depreciation. As a

result, the amount of such assets shown in the balance sheet every year declines to the

extent of the amount of depreciation charged in that year and by the end of the useful life

of the asset it equals the salvage value, if any. Salvage value signifies the amount realized

by the sale of the discarded asset at the end of its useful life.

Intangible assets do not generate goods and services directly. In a way, they reflect the

rights of the firm. This category of assets comprises patents, copyrights, trade marks and

goodwill. They confer certain exclusive rights to their owner’s patents conger exclusive

rights to use an invention, copyrights relate to production and sale of literary, musical and

45
artistic works, trade marks represent exclusive right to use certain names, symbols, labels,

designs, and so on intangible fixed assets are also written-off over a period of time.

Intangible assets lack physical substance and arise from a right granted by the

government or another company. Intangibles may be acquired or developed internally.

Examples of rights granted by the government are patents, copyrights, and trademarks,

while am example of a privilege granted by another company is a franchise. Other types

of intangibles include organization costs, leasehold improvements, and goodwill.

Organization costs are the expenditures incurred in starting a new company; an example

would be legal fees. Leasehold improvements are expenditures made by a tenant to his or

her leased property, such as the cost of putting up new paneling. Goodwill represents the

amount paid for another business in excess of the fair market value of its tangible net

assets. For example, if company A paid $ 1000,000 for company B’s net assets having a

fair market value of $84,000, the amount paid for goodwill is $16,000. Goodwill can be

recorded only when a company purchases another business. The amount paid for the

goodwill of a business may be based upon the acquired firm’s excess earnings over other

companies in the industry. Internally developed goodwill (e.g., good customer relations)

is not recorded in the accounts.

ACCOUNTING FOR INTANGIBLE ASSETS

APB Opinion 17 specifies the requirements for accounting for intangible assts.

Intangibles that have been acquired, such as goodwill, should be recorded at cost. In the

event that an intangible is acquired for other than cash, it should be reflected at either the

46
fair market value of the consideration given or the fair market value of the right received,

whichever is more clearly evident. Intangibles should not be arbitrarily written off if they

still have value.

When identifiable intangibles are internally developed (e.g., patents), they should be

recorded as assets and reflected at cost. If they are not identifiable, they should be

expensed.

Intangible assets must be amortized over the period benefited not to exceed 40 years.

Amortization is a term used to describe the systematic write-off to expense of an

intangible asset’s cost over its economic life. The straight-line method of amortization is

used. The amortization entry is

Amortization expense

Intangible asset

The credit is made directly to the given intangible asset account. However, it would not

be incorrect to credit an accumulated amortization account, if desired.

Some intangibles have a limited legal life. An example is patents, which have a legal life

of 17 years.

DEFERRED CHARGES

Deferred charges are of along-term, nonrecurring nature. They are allocated to a number

of future periods. Examples are start-up costs and plant rearrangement costs.

47
Deferred charges are customarily listed as the last asset category in the balance sheet

since their dollar value is usually insignificant relative to total assets.

OTHER ASSETS

When non-current assets cannot be properly placed into the asset classifications already

Discussed, they may be included in the Other Assets category. Placement of an item in

this classification depends upon its nature and dollar magnitude. However, this

classification should be used as a last resort.

COLLECTABLE ASSETS

Not surprisingly, periodic disenchantment with returns on marketable securities has led

some investors to examine a host of tangible assets that are normally considered only by

“collectors”. The average returns on collectibles such as Chinese ceramics, coins,

diamonds, paintings, and stamps have on occasion been quite high, but generally such

assets also experience periods of negative returns. This fluctuation is not surprising

because if one (or more) type of collectible had provided consistently high returns, many

investors would have been attracted to it and would have bid its price up to a level where

high returns would no longer have been possible. In deed, more recent studies of prints

and paintings have concluded that their risk and return characteristics make them

relatively unattractive investments for risk-averse investors.

In a sense, a collectible asset often provides income to the owner in the form of

consumption. For example, an investor can admire a Roberto Clementre rookie baseball

card, sit on a Chippendale chair, gaze upon a Georgia O’ Keefe painting, play a

48
Stradivarius violin, and drive a Stutz Bearcat automobile. Value received in this manner

is not subject to income taxation and is thus likely to be especially attractive for those in

high tax brackets. However, the value of such consumption depends strongly on one’s

preferences.

If markets are efficient, collectible assets will be priced so that those who enjoy them

most will find it desirable to hold them in greater-than-market-value proportions, whereas

those who enjoy them least will find it desirable to hold them in less-than-market-value

proportions (or, in many cases, not at all).

Institutional funds and investment pools have been organized to own collectibles of one

type or another. These arrangements are subject to serious question if they involve

locking such objects in vaults where they cannot be seen by those who derive pleasure

from this sort of consumption. On the other hand, if the items are rented to others, the

only loss may be that associated with the transfer of a portion of the consumption value to

the government in the form of a tax on income.

Investors in collectibles should be aware of two especially notable types of risk. The first

is that the bid-ask spread is often very large. Thus an investor must see a large price

increase just to recoup the spread and break even. The second is that collectibles are

subject to fads (that risk has been referred to as

stylistic risk). For example, Chinese ceramics may be actively sought by many investors

today, leading to high prices and big returns for earlier purchasers. However, they may

49
fall out of favor later on and plunge in value. Unlike financial assets, there is no such

thing as fair value for collectibles that can act as a kind of anchor for the market price.

GOLD:

In the United States, private holdings of gold bullion were illegal before the 1970s. In

other countries, investment in gold has long been a tradition. According tone estimate, at

the end of 1984 gold represented over 6% of the world market wealth portfolio.

History suggests gold has performed like other types of collectibles in that it has had

periods of high returns but also periods of low returns (particularly since the early 1980s).

Furthermore, gold has had a high standard deviation, suggesting that by itself it has been

a risky investment. However, for any single investment, risk and return are only parts of

the story. Correlations of an asset’s returns with the returns on other assets are also

relevant. In general, gold price changes have a near-zero correlation with stock returns.

Gold thus appears to be an effective diversifying asset for an equity investor.

Furthermore, gold prices generally have been highly correlated with the rate of inflation

in the United States as measured by changes in the Consumer Price Index. This is

consistent with gold’s traditional role as a hedge against inflation, because higher

inflation generally brings higher gold prices. Investors interested in gold need not restrict

themselves to bullion. Other possibilities range from stocks of gold mining companies to

gold futures to gold coins and commemoratives. Furthermore, there are other types of

precious metals, such as silver, that investors may want to consider

4.1 DATA ANALYSIS

50
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 to be total to the

very existence of the organization. Thus, management of fixed assets 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 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 a firm must ensure buffer stock of

certain essential equipments / services to ensure uninterrupted production in the events of

51
emergencies. Sometime, there may be breakdown in some equipment or services

affecting the entire production. It is always better to have some alterative arrangements to

deal with Cush situations. But at the same time the cost of carrying such situations. But at

the same time cost of carrying such arrangements to deal with such situations. But at the

same time the cost of carrying such buffer stock of fixed assets be encouraging their

maximum utilization during lean period, transferring a part of peak period and living

additional capacity.

Fixed Assets:

Fixed assets are those assets which are required and held permanently for a pretty

longtime 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 buildings,

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 value. It is useless to show fixed assets in the balance sheet at

their estimated realizable values if there is no immediate expectation of selling them.

52
Fixed resale, so they are shown at their book values and not at their current realizable

values.

The market values of a fixed asset may change with the passage of time, but for

accounting purpose it continues be shown in the books at its book value the cost at which

it was purchased minus depreciation paved up to date.

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 asset 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.

Trend Analysis:

Trend analysis and Ratio analysis are the techniques used in analysis of Fixed assets

management. 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

change. 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 light of

two farceurs. The rate of fixed expansion or secular trend in growth of the business and

the general Price level. It might be found in practice that a number of the business and the

53
general price level. It might be found in practice that a number of firms would be shown a

persistent growth over period of years. But to get a true of growth, the sales figure should

be adjusted by a suitable index of general prices. In other words, sales figures should be

deflated for rising price level. Another method of securing trend of growth and one which

can be used instead of the adjusted sales figure or as check on 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 prosperity and pessimistic

in duel periods.

For trend analysis the use of index numbers is generally advocated the procedure

followed is to assign the numbers 100 to times of the base year and at calculate

percentage change in each items of other years in relation to the base year. The 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 the each statement item beans 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 he other year are calculated on the basis of one

year .Here an attempt is made to known the growth total investment and fixed assets Icici

bankfor Five years that is 2001-2002 to 2007-08.

TABLE: 4.1

54
1 GROWTH RATE OF INVESTMENT TREND

YEAR INVESTMENT TREND

PERCENTAGE

2008-09 41,28,06,232 100

2009-10 44,85,21,386 108.65

2010-11 39,68,35,265 96.13

2011-12 24,99,02,930 60.54

2012-13 28,19,24,444 68.29

Growth rate of Investment

Trend Percentage
est
Inv

me
nt

120 108.65
100 96.13
100
80 68.29
60.54
60
40
20
0
2008- 2009- 2010- 2011- 2012-
2009 2010 2011 2012 2013

years

Investment

55
Figure: Growth Rate On Investment Trend

INTERPRETATION:

From the analysis of the above table it can be observed that the growth rate of total

investment of ICICI BANK industries is in downward trend which show table ICICI

BANK Industries investment in total investment is decreasing form time to the during the

year 2008-09 it was recorded 100%. But it is decreasing in the year 2011-12 which shows

that there is a net decrease by 60.54%. The average investment in total assets was found

to be Rs.35, 79, 98,051.4 during the review period. During the period of 2008-09 it is Rs.

41,28,06,232 and it was decrease in the year 2012-13 Rs. 28,19,24,444.

2 GROWTH RATE ON FIXED ASSETS:

Table: 4.2

YEAR FIXED ASSETS PERCENTAGE

2008-09 6,07,94,08,271 100

2009-10 6,25,64,02,873 102.91

2010-11 5,89,55,39,377 96.97

2011-12 5,69,39,08,565 93.74

56
 2012-13 5,71,48,06,436 94.00

Growth rate on Fixed

Assets
set
Fix

As
ed

104 102.91
102 100
100
98 96.97
96 93.74 94
94
92
90
88
2008-09 2009-10 2010-11 2011-12 2012-13
years

Fixed Assets

FIGURE: GROWTH RATE ON FIXED ASSETS

INTERPRETATION:

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

interpretation.

57
 1. During the year 2008-09 the assets investment was recorded at 6,07,94,08,271

and it is decreased to Rs 5,71,48,37,436 in 2012-13 the fixed assets investment is

quite satisfactory.

2. The trend percentage in the year 2008-09 is taken as the base year as 100% and it

was decreased to 94.00% in the year 2012-13.

3. The average growth rate in Fixed assets Rs.5, 92, 90,306 in 5 years.

RATIO ANALYSIS:

Ratio analysis 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 firm. The absolute accounting figure

reported in financial statement do not private a meaningful 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

judgments about the firm’s financial performance.

1. Fixed Assets to Net Worth Ratio:

This ratio establishes the relationship between Fixed Assets and net worth.

58
Net Worth = Share Capital + Reserves & Surplus + Retained Earnings.

Fixed Assets

Fixed assets to Net worth Ratio=------------------ X 100

Net Worth

This ratio of “Fixed Assets to Net Worth” indicates the extent to which shareholder funds

are sunk into the fixed assets.

Generally, the purchase of fixed assets should 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 is

provided by the shareholders. When the ratio is more 100% it implies that owner’s funds

are not sufficient to finance the fixed assets and the finance has to depend upon outsiders

to fiancé the fixed assets. There is no “rule of thumb” to interpret this ratio but 60% to 65

% is considered to be satisfactory ratio in case of industrial undertaking.

2. Fixed Assets Ratio:

This ratio explains whether the firm has raised adequate long term funds to meet its fixed

assets requirements and is calculated as under.

Fixed assets (after depreciation)

-------------------------------------------

59
 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.

3. Fixed assets as a percentage to current Liabilities:

This 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

4. Total investment Turnover Ratio:

This 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.

60
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 as under.

Sales

-------------------------------------------------------

Net fixed Assets (After depreciation)

This ratio shows low well the fixed assets are being uses in the 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 indicated that fixed assets are not being

efficiently utilized.

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:

61
 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.

1. Fixed Assets to Net Worth:

The ratio indicates the extent to where 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 + reserve & Surplus + Retained earnings.

If the ratio is less than 100 % it implies that owner funds are more than the fixed assets

and a part of working capital is provided by the share holders and vice – versa.

Fixed assets

Fixed assets to net worth ratio = ------------------------------------- X 100

Net worth

Table 4.3

62
 YEAR NET WORTH GROSS FIXED

ASSETS RATIO IN

2008-09 3,64,91,77,075 6,07,94,08,271 166.59

2009-10 3,38,81,85,855 6,25,64,02,879 184.65

2010-11 3,38,78,40,215 5,89,55,39,377 174.02

2011-12 3,48,48,27,422 5,69,93,08,565 163.54

2012-13 3,7714,58,784 5,71,48,37,436 151.52

Graph of Fixed Assets to Net

worth
20 184.6
0 5 174.0
18 166.5 163.5
2
0
16 9 4 151.5
0 2
14
Ra
tio

0
12
0
10
0 80
60
40
20
0

2008-09 2009-10 2010-11 2011-12 2012-13

years

Fixed assets to net worth

ratio

FIGURE: FIXED ASSETS TO NET WORTH

INTERPRETATION:

63
 A) The Gross fixed to Net worth Ratio is fluctuating from year to year. In the year

2008-09 the gross fixed assets to net worth ratio is 166.59, in the year 2008-2013

the fixed assets to net worth to acquire the ratio is 151.52.

B) The average net worth to fixed assets ratio is Rs,3,53,62,97,870 or fixed assets

average ratio is Rs. 5,92,90,99,306 the average percentage of fixed assets to net

worth is 168.06.

C) The highest ratio recorded in 2009-10 at 184.65 the lowest ratio is recorded at

151.52 in the year 2011-12.

2. Fixed Assets as a percentage to long term Liabilities:

Fixed Assets ratio a various 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

TABLE: 4.4

YEAR FIXED ASSETS LONG TERM PERCENTAGE

64
 FUNDS

2008-09 6,07,94,08,271 3,64,91,77,075 166.5

2009-10 6,25,64,02,879 3,38,81,85,855 184.6

2010-11 5,89,55,39,377 3,38,78,40,215 174.0

2011-12 5,69,93,08,565 3,48,48,27,422 163.5

2012-13 5,71,48,37,436 3,7714,58,784 152.7

200 184.6
180 174
166.5 163.5
160 152.7

140
120
100
80
60
40
20

0
2008-092009-102010-112011-122012-13

65
FIGURE: FIXED ASSETS AS A PERCENTAGE TO LONG TERM LIABILITIES

INTERPRETATION:

A) The fixed assets as a % of long term liabilities the ratio is fluctuating form year to

year. The fixed asset as a percentage of long term liabilities is recorded at 166.5%

in the year 2008-09.

B) The highest ratio is recorded at 184.6% in the 2009-10 the lowest ratio is 152.7%

in 2012-13.

3. FIXED ASSETS AS A PERCENTAGE TO CURRENT LIABILITIES:

Fixed Assets

Fixed Assets as a percentage to Current Liabilities = -----------------------------

Current Liabilities

TABLE:4.5

YEAR FIXED ASSETS LONG TERM PERCENTAGE

FUNDS

2008-09 6,07,94,08,271 2,05,36,47,518 2.96

66
 2009-10 6,25,64,02,879 2,03,50,59,123 3.07

2010-11 5,89,55,39,377 2,40,99,51,568 2.44

2011-12 5,69,93,08,565 2,14,80,89,665 2.65

2012-13 5,71,48,37,436 2,30,72,27,432 2.47

3.5
2.96 3.07
3
2.65
2.44 2.47
2.5

1.5

0.5

0
2008-092009-102010-112011-122012-13

FIGURE: FIXED ASSETS AS A PERCENTAGE TO CURRENT LIABILITIES

67
INTERPRETATION:

A) The ratio was fluctuating trend percentage in review period.

B) From the above table it is observed that the ratio was recorded at 2.96 in the 2008-

09 and is gradually changing to 2.47 in 2012-13 which indicates that the current

funds are used in the fixed asset which is quite satisfactory.

C) The average ratio was recorded at 2.71 during the review period of time.

D) The highest ratio was recorded at 3.07 which is higher than the average ratio.

E) The lowest ratio was recorded at 2.44 which is less than the average ratio.

4. TOTAL INVESTMENT TURNOVER RATIO:

The total invest turnover ratio can be calculated by the formula as given under.

Sales

Total investment turnover ratio = --------------------------- X 100

Total investment

TABLE:4.6

YEAR SALES (IN LACKS) TOTAL RATIOS

INVESTMENT

68
 2008-09 134543.28 4128.06 32.5

2009-10 140116.22 4485.21 31.2

2010-11 135375.24 3968.35 34.1

2011-12 129553.62 2499.02 51.84

2012-13 142195.78 2819.24 50.43

60
51.84 50.43
50

40
32.5 31.2 34.1
30

20

10

0
2008-092009-102010-112011-122012-13

FIGURE: TOTAL INVESTMENT TURN OVER RATIO

INTERPRETATION:

A) The ratio was in increasing trend.

B) During the year 2008-09 the ratio was recorded at 32.5 and in the 2012-13 the ratio

was increasing to 53.43.

69
 C) The highest ratio was recorded at 51.84 in the year 2009-10 which is more than the

average ratio.

D) The lowest ratio was 32.5 which is lesser than the average ratio.

5. FIXED ASSETS TURN OVER RATIO:

The fixed assets turnover ratio is the relationship between the sales or cost o f goods /

capital assets employed in a business.

Sales

Fixed assets turnover ratio = --------------------------------- X 100

Total fixed Assets

TABLE:4.7

YEAR SALES (IN LACKS) TOTAL FIXED PERCENTAGE

ASSETS

2008-09 134543.28 6.794.08 2.21

2009-10 140116.22 62564.02 2.23

2010-11 135375.24 58955.39 2.29

70
 2011-12 129553.62 56993.08 2.27

2012-13 142195.78 57148.37 2.40

2.45
2.4
2.4

2.35
2.29
2.3 2.27
2.25 2.23
2.21
2.2

2.15

2.1
2008-092009-102010-112011-122012-13

FIGURE: FIXED ASSETS TURN OVER RATIO

INTERPRETATION:

71
 A) The fixed assets turnover ratio is fluctuating trend during the review period of

time. During the year 2008-09 the ratio was recorded as 2.21 % and in the 2012-

13 the ratio was increased to 2.40 %.

B) Average ratio was observed 2.28 % during the review period of time.

C) The highest ratio was recorded at 2.40 % in 2012-13 which is more than the

average.

D) The lowest ratio was 2.21 % in the 2008-2009 which is less than the average.

6. FIXED ASSETS AS A PERCENTAGE TO TOTAL ASSETS:

Fixed assets

Fixed assets a % Total Assets = -------------------------------- X 100.

Total Assets

TABLE:4.8

YEAR SALES (IN LACKS) TOTAL FIXED PERCENTAGE

ASSETS

2008-09 60794.08 117985.89 51.5

2009-10 62564.03 112647.26 55.5

2010-11 58955.39 112637.07 52.3

72
 2011-12 56993.08 113443.60 50.0

2012-13 57148.37 123031.14 46.0

60 55.5
51.5 52.3 50
50 46

40

30

20

10

0
2008-092009-102010-112011-122012-13

Figure: Fixed Assets As A Percentage To Total Assets

INTERPRETATION:

A) Fixed assets to total assets is fluctuating trend during the review period of time.

B) During the year 2008-09 the ratio was recorded at 51.5 % and the year 2012-13

the ratio decreased to 46 %.

C) Average ratio was observed at 51.06 % during the review period of time.

73
 D) The highest ratio was observed at 55.5 % in the year 2009-10 which is more than

the average. The lowest ratio was recorded at 46% in 2012-13 which is less than

average ratio.

7. GROSS CAPITAL EMPLOYED:

Gross capital employed = fixed assets + Current Assets.

YEAR FIXED SALES CURRENT ASSETS GROSS CAPITAL EMPLOYED

(IN LACKS) (IN LACKS)

2008-09 60794.08 53063.74 113857.82

2009-10 62564.03 45598.02 108162.05

2010-11 58955.39 49713.32 108668.71

2011-12 56993.08 53951.48 110944.56

2012-13 57148.37 63063.52 120211.89

PROFIT AFTER TAX:

YEAR PROFIT AFTER TAX (IN LACKS)

74
 2008-09 4644.97

2009-10 4137.14

2010-11 2814.67

2011-12 6299.57

2012-13 3351.28

INTERPRETATION:

From the above profits of ICICI BANK Industries is in increasing which is good for the

company. In the year 2008-09 the PAT is 3351.28 lacks and then it is decreasing.

In the year 2008-09 the pat is the lowest and in 2009-10 it observed the highest PAT is

62999.57 over the years.

8. 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 Tax

Return on Gross Employed = ------------------------------------ X 100

75
 Gross Capital Employed

TABLE:4.9

YEAR PROFIT AFTER TAX GROSS CAPITAL PERCENTAGE

(LACKS) EMPLOYED

2008-09 4644.97 113857.82 4.0

2009-10 4137.14 108668.71 3.8

2010-11 2814.67 108668.05 2.5

2011-12 6299.57 110944.56 5.7

2012-13 3351.28 120211.89 2.8

76
 6 5.7

5
4 3.8
4

3 2.8
2.5
2

0
2008-092009-10 2010-11 2011-122012-13

Figure: Return on Gross Capital Employed

INTERPRETATION

 Return on Gross Capital Employ6ed ratio is fluctuating trend during the review

period of time

 During the year 2005-06 the ratio was recorded at 4.0 % and in the year 2012-13 the

ratio was increased to 2.8 % and average ratio is 3.76 %.

 The highest ratio was recorded at 5.7 % in the year 2008-09 which is more than

average ratio.

 The lowest ratio was recorded at 2.5 % in the year 2008-09 which is the less than the

average ratio.

77
9. RETURN ON FIXED ASSETS:

The return on fixed assets can be calculated as under.

PAT

Return on Fixed Assets = ------------------------- X 100

Fixed Assets

TABLE:4.10

YEAR PROFIT AFTER TAX FIXED ASSETS PERCENTAGE

(LACKS)

2008-09 4644.97 60794.08 7.6

2009-10 4137.14 62564.03 6.6

2010-11 2814.67 58955.39 4.7

2011-12 6299.57 56993.08 11.05

2012-13 3351.28 57148.37 5.86

78
 12 11.05

10

8 7.6
6.6
5.86
6
4.7
4

0
2008-092009-102010-112011-122012-13

Figure: Return On Fixed Assets

INTERPRETATION:

 Return on fixed assets ratio is decreasing.

 During the year 2008-09 the ratio recorded as 7.6 % & in the year 2012-13 the ratio

decreased 5.86 %.

 The average ratio is 7.14 %

 The highest ratio is recorded at 11.05 % in the year 2009-10 the lowest ratio is 4.7 %

in the year 2010-11.

79
5.1 FINDINGS

 According to the trend analysis it can be observed that the growth rate of

total investment of Icici bank industries is in down ward trend.

 The average growth rate in fixed assets Rs. 5,92,90,306 in five years.

 The gross fixed to net worth ratio is fluctuating from year to year in the

year 2005-06 the gross fixed assets to net worth ratio is 166.59, in the year

2006 to 8 the fixed assets to net worth to acquire the ratio is 151.52.

 The fixed assets has percentage to current liabilities ratio was 2.96 in the

year 2005-06 and is gradually changing to 2.47 in 2009-10.

 The year 2005-06 the fixed asset turn over ratio was 2.21% and in the year

2011-12the ratio was increased to 2.40%.

80
5.2 SUGGESTIONS

 As ICICI BANK is the manufacturer of electronics and consumer durables alloys

in the country, the most acceptable material for electronics devices world wide. It

should put in more efforts to capture a sizable market share of consumer durables.

 ICICI BANK continues to be comfortable on the power front with the availability

of surplus power uninterruptedly from its feeder agencies. However, by taking

strategic decisions at appropriate time it could be able to transfer some of its

surplus power, reserved for its future expansion and modernization schemes,

temporary to another sister organizations in public sector, thereby avoiding

payment for unused power charges duly safe guarding is requirements to avail the

same at times it becomes necessary.

 The company has to maintain same status quo and increase the financial

performance and increase profit.

 The company can progress further by expanding to other areas.

 The company can claim concessions from Govt. of India.

 While several sectors like Defense and Aeronautics enjoy concessions of ‘NIL‘

duty, power and software sectors from 5% to 20% no concessions are available to

ICICI BANK in import of its raw materials. Government should take steps to

provide some relief in this regard.

81
5.3 Limitations:

 The study period of 45 days as prescribed by Osmania University.

 The study is limited up to the date and information provided by ICICI BANK and

its reports.

 The reports will not provide exact fixed Assets status and position in ICICI

BANK. it may varying from time to time and situation to situation.

 This report is not helpful in investing in ICICI BANK. Either through

disinvestments or capital market.

 The accounting procedure and other accounting principles are limited by the

company changes in them may vary the fixed assets performance.

82
5.4 CONCLUSION

After analyzing the financial position of ICICI BANK industries and evaluating its Fixed

assets Management or Capital Budgeting Techniques in respect of Components analysis.

Trend analysis and Ratio analysis. The financial position of ICICI BANK 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

assets have 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 % to 50.43 %. Regarding the fixed assets turnover ratio it has been

observed that it is satisfactory at it were increasing from 108 % Regarding the fixed

assets to total assets it been observed that there was decreased form 31.5% to 46 % as a

results 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 as been increasing over the year form

113857.82 to 120211.89. As a result of the above it can be said that the ratio is steadily

increasing. From the above study it can be said that the ICICI BANK industries financial

position on fixed assets is quite satisfactory.

83
 BIBLIOGRAPHY

1. Alexander – fundamentals of investment, 3/e, Pearson education,2006.

2. V.A. Avadhani- Security Analysis and Portfolio Management, 8/c Himalaya

publisher, 2006

3. Prasanna Chandra- Investment analysis on securities and Portfolio

management, TataMc Graw-Hill, 2006

4. M.y.khan- Financial Services, 3/e Tata McGraw-Hill,2004.

5. Subbalakshmy- Investor Preference Related to Securities Market.

6. Phillip Gotthelf- Techno Fundamental Trading.

WEBSITES:

www.religare.com

www.bseindia.com

www.sebicom

www.moneycontrol.com

www.google.com

www.amazon.com

www.economictimes.com

www.nseindia.com

84
85