A

PROJECT REPORT ON
“FIXED ASSET MANAGEMENT”
Of
SISTEMA & SHYAM’s GROUP

Sistema Shyam TeleServices Ltd.

Submitted in
SUMMER INTERNSHIP
IN PARTIAL FULFILLMENT OF THE REQUUIREMENT FOR AWARD
OF MASTER OF BUSINESS ADMINISTRATION (MBA)
TWO YEAR FULL TIME PROGRAMME

UNDER GUIDANCE OF

FACULTY GUIDE COMPANY GUIDE

Mr. SAI GUNARANJAN BOSE Mr. VIVEK SINGHAL
ACADEMIC HEAD Mr. PRAMOD GUPTA
IIPM, JAIPUR

SUBMITTED BY:
SWATI GUPTA
MBA (09-11)
UID No. : JA0911FW10010ISBE-NG
 DECLARATION

I SWATI GUPTA student of the Master of Business Administration hereby

declare that all information, facts and figures in this report are my own findings
and experience at the “Sistema Shyam TeleServices Ltd (SSTL)”.

I also hereby declare that all the facts, figures and information given in this report
are absolutely correct.

This information has been used for purely academic purpose.

SWATI GUPTA
M.B.A. (Finance)
IIPM, Jaipur

2
 PREFACE

This summer training provides a student with an opportunity to understand in full

the real life working environment, which is a bit different from normal theory
classes. Our class knowledge attains maturity and perfection through application in
the practical field application of management principle in all branches whether
personnel, finance, information technology etc results in more sufficient and
effective utilization of available resources.

One learns through practice, management in best learn if the students, handles it
systematically, practical training is supposed to serve as a starting point will held
the student gain off confidence and a familiarity with the subject.

The summer training program is an integral part of MBA course in Indian

Institute of Planning & Management (IIPM), Jaipur.

I have done my summer training for Sistema Shyam TeleServices Ltd (SSTL),
Jaipur. My topic of study was “FIXED ASSET MANAGEMENT”

I have no hesitation in saying that this study has given me the confidence to face
the real market world.

I have tried my best to do honesty and justice to the topic and any weakness and
shortcomings are unintentional and are regretted.

3
 ACKNOWLEDGEMENT

I take this opportunity to express my sincere thanks and deep gratitude to all those
people who extended their whole hearted co–operation and have helped me in
completing this project successfully.

First of all, I express my sincere gratitude to Mr.Vivek Singhal (GM- Finance) &
Mr. Pramod Gupta (Manager- Commercial) for giving me an opportunity to
work under their guidance.

I also express my gratitude to Mr. Om Prakash Jain (Senior Manager- Finance)

and Mrs. Sudha Khandelwal (Senior Executive) for all the help and guidance
extended to me by them at every stage of my training. Their inspiring suggestions
and timely guidance enabled me to perceive the various aspects of the project in a
new light.

I would also like to thank Mr. Manish Tiwari (Dean- IIPM) and Mr. Sai
Gunaranjan Bose (Academic Head- IIPM) for their constant support during the
entire Project.

Finally, I would also like to thank all members of the organization for having
guided and encouraged me at various stages throughout the duration of the project.
In all I found a congenial work environment in Sistema Shyam TeleServices Ltd.
(SSTL) and completion of the project will mark a new beginning for me in the
future.

Swati Gupta

4
 CONTENTS

S. No. Particulars Page No.

1. Executive Summary 6
2. Objective & Scope of Project 7
3. Company Introduction 8-24
4. Introduction of the Topic 25
 Process overview 26
 Initiation of process 26
 Termination of process 26
 Process Objective 26
 Scope 27
 Key Functional Departments 27
 Key Inputs 28
 Process Outputs 28
 Process Narrative 28-34
 Key performance Indicators 35
 Key Risk Elements 35
5. Research Methodology & Data Analysis 36-37
6. Findings & Conclusions 38-41
7. Illustrations & Annexure 42-47
8. Bibliography 48

5
 EXECUTIVE SUMMARY
Sistema Shyam Tele Services (SSTL) is a joint venture company between Sistema
{LSE: SSA} of Russia and Shyam Group of India. Sistema is the majority share
holder in this joint venture with a 73.71% equity stake, along with the Shyam
Group, holding a 23.79% stake and the rest 2.5% being public partake. SSTL has
spectrum to provide mobile telephony services in all the 22 circles across the
country. Presently SSTL offers mobile telephony services in the Rajasthan, Tamil
Nadu, Kerala as well as the Kolkata circles. MTS is the 8th largest telecom brand
in the world and has recently been voted as the 71st ranked brand out of 100 top
global brands in the world by Millward Brown.
The company is primarily focused to accomplish Pan-India rollout plan within
scheduled time frame work. The Company holds UAS license for all 22 telecom
circles for Pan-India rollout that would encompass around 600 district headquarters
and 4 metros. Major competitors of MTS are Reliance, Bharti Airtel, Tata
Teleservices, Idea Cellular, Vodafone and BSNL.

The project undertaken is regarding Standard Operating Procedure for “Fixed

Asset Management”. The objective of this process is to ensure adequate control
over material receipts, issues and control over physical inventory held at the
warehouse /sites. He process also covers the steps involved to ensure accurate
measurement and recording of costs to be capitalized and depreciated. The process
also aims at ensuring adequate control over tagging, physical verification,
movement/site returns and disposal of assets. While doing so it also ensures proper
identification and classification of assets.

6
 OBJECTIVE AND SCOPE OF STUDY

OBJECTIVES

1. To understand the Accounting and financial activities carried Out in SISTEMA

SHYAM TELESERVICES LTD.

2. To analyze the FIXED ASSET MANAGEMENT in the Organization.

3. To ensure adequate control over physical inventory and proper identification &
classification of assets.

5. To understand the concept of various Documents and their respective

Accounting and financial impact.

SCOPE

I had done my project training in MTS at Jaipur. The topic given to me was
regarding FIXED ASSET MANAGEMENT of the company. The study
conducted by me has helped in enhancing my skill and thinking power.

The main scope of this study is to ascertain physical inventory and various
methods to maintain an adequate control over recording and verification of fixed
assets.

As a researcher, during this training period I had co-related my theoretical aspects

into practical one. After knowing the actual problem, now I am able to solve it in
effective and efficient manner.

7
 COMPANY INTRODUCTION
SISTEMA SHYAM TELESERVICES LIMITED (FORMALLY KNOWN AS
SHYAM TELELINK LIMITED)

Sistema Shyam Teleservices Limited (formally known as Shyam telelink limited)

Limited (STL) was awarded the license to operate Basic Telephony Services in
Rajasthan under the fixed license fee regime in 1996. Sistema Shyam Teleservices
Limited (formally known as Shyam telelink limited) started its basic telephone
services in Rajasthan under the brand name “RAINBOW” in June 2000 at Jaipur.
The company migrated to the Unified License Regime in November 2003. In the
Unified License Regime, the company can provide basic as well as mobile
telephony services in the Telecom Circle of Rajasthan. Shyam offers its services in
more than 100 cities, and has one of the best brand recalls in Rajasthan Shyam
offers to its customers, services based on multiple technologies, which has been
possible because of exhaustive optical fibre backbone of over 3,500 Kms. This has
helped STLL to grow as an integrated service provider.

Presently the company has received the licenses for all 22 circles in India. Sistema
Shyam Teleservices Limited (formally known as Shyam telelink limited) has
brought the best technology to the doorstep of the people of Rajasthan. STL has
tied up with various world leaders like lucent Technologies, IIT Chennai, IBM,
Sun Microsystems etc. The company is listed on the Delhi, Mumbai, Kolkata,
Saurastra, and other national stock exchanges .The basic objective of Sistema
Shyam Teleservices Limited (formally known as Shyam telelink limited) is to
provide one window access to Basic Telephony, Broadband Internet,

8
Entertainment, and E/M- Commerce through high speed state-of-the-art-network.
Sistema Shyam Teleservices Limited (formally known as Shyam telelink limited)
is providing connectivity to its subscribers using both wireless and wired media in
access network. The wireless connectivity is being provided using Code Division
Multiple Access (CDMA), and or CorDECT.

Russian Telecoms and holding firm Sistema acquired a 10% stake in Sistema
Shyam Teleservices Limited (formally known as Shyam telelink limited) for a total
cash consideration of US$ 11.4 million at the end of September 2007. Sistema,
aims to become one of India's top five mobile operators and have 60m subscribers
by 2017.Sistema is the largest private sector consumer services company in Russia
and the CIS. It was founded in 1993, today it has the 7th largest subscriber base in
the World, and the corporation develops and manages a portfolio of market-leading
businesses in selected service-based industries. In total, companies controlled by
Sistema serve more than 80 million consumers in Russia, the CIS and Eastern and
Western Europe. Sistema's shares are listed under the symbol "SSA" on the
London Stock Exchange, under the symbol "AFKS" on the Russian Trading
System (RTS) and the Moscow Interbank Currency Exchange (MICEX), and under
the symbol "SIST" on the Moscow Stock Exchange (MSE).In October 2007,
Sistema signed a share purchase agreement for the acquisition of an additional
41% stake in Sistema Shyam Teleservices Limited(formally known as Shyam
telelink limited)and a call option agreement, which gives Sistema the right to
increase its stake in Sistema Shyam Teleservices Limited(formally known as
Shyam telelink limited)from 51% up to a maximum of 74%.The Russian company
has been scouting for a foothold in India for several years now. Earlier, Sistema
had tried to pick up a stake in Aircel Cellular, but the deal fell through. It was also

9
in race for Hutchison's stake in Hutch-Essar. Sistema, which was founded in 1993,
is the largest private sector consumer services company in Russia. Later in
December 2007, Sistema received an approval for the acquisition of the blocking
stake in Sistema Shyam Teleservices Limited (formally known as Shyam telelink
limited) from the Foreign Investment Promotion Board (FIPB) of India. As a result
of the acquisition of the additional 41% stake, the overall purchase price totaled
US$ 58.1 million. By June 2008 Sistema has upped its stake in Shyam Telelink, to
73.1% from 51%. Sistema plans to invest USD 5bn billion dollars in India in the
next three years, targeting telecoms but also real estate, high technology and
banking. Sistema is one of several foreign players keen to establish themselves in
India's booming telecoms market.

RAINBOW IS NOW MTS

Product Portfolio

Sistema Shyam Teleservices Limited (formally known as Shyam telelink limited)

limited unconditionally Strives on continuous basis to provide seamless coverage,
widest range of innovative products and services at competitive prices and quick
response to its increasing customer base.

10
The Product Portfolio of the company is providing state of art products and
services like Fixed Phones (Wireless & Wire line), Mobile Phone (Limited
mobility and Full Mobility within Rajasthan), ISDN PRI &BRI, Lease Lines,
Broadband, STD PCO & Coin collection Box (Prepaid & Post paid). The value
Added Service segment is witnessing a tremendous growth and company is also
generating maximum mileage through the same services. The Value Added
Services are designed as per the tastes and preferences of the customer which not
only make them happy and delighted but also sustain the ARPU growth. The
company is also foraying in Broadband segment aggressively by enabling it to
complete wire line network with Broadband ADSL 2+ to deliver speeds up to 24
mbps.

The Company has distinguished itself from other Fixed Wire line & CDMA
operators by providing for money to its customers through launching a plethora of
Value Added Services. Sistema Shyam Teleservices Limited (formally known as
Shyam telelink limited) was amongst the many first to launch these services on
Fixed Line Telephony in the country. The gamut includes the following services:
Live Pandit online Services, RAINTONES-Caller Ring Back Tone Service, JUST
TALK- Voice Portal Service, SMART TALK – Multi Party Conferencing,
PARALLEL RINGING , SELECTIVE RINGING, KICK OUT & Prepaid Billing
Module for individual & STD PCO Customers.

Company also offers a broad range of Internet products including: Data on Wire-
ADSL, enables faster internet access up to 24 Mbps, Data on air- PSDN, which
enables a CDMA phone user to access data services (Internet) in a limited
demographic area with speed up to 144 kbps, Data on Cable- CABLE

11
CorDECT :A technology mix of normal Cable connection and CorDECT
technology for providing high speed Internet, Dedicated Lease Line Services –
These are the committed Internet access at desired speeds and with assured
performances. The company has over 24000 Internet customers.

Market Scenario

The State of Rajasthan is one amongst the largest Telecom circles and registering
an incredible growth in Fixed Line as well as Mobile telephony. The current tele-
density trend shows that there is still immense potential for Fixed & Mobile
Services in Rajasthan province. The total number of phones in Rajasthan had
surpassed the figure of 9.86 Million by March 2007. The total phones consists
76% Mobile phones and 24% fixed phones. The main competitors in Wire line
Fixed Telephony are BSNL and Airtel and in Mobile Telephony (GSM /CDMA),
faces competition from Airtel, Vodafone, Reliance, Tata and Idea. The Company is
having very aggressive plans to move forward in Broadband product category by
deploying ADSL network in the state.

Sistema Introduction

Sistema is the largest public diversified corporation in

Russia and in CIS, which manages fast growing companies
operating in the consumer services sector and has over 100
million customers. Sistema develops and manages market-
leading businesses in selected service-based industries,
including technology, banking,
Telecommunications, real estate, retail, media, tourism and healthcare.

12
Since its inception in 1993 Sistema has evolved into an international group with
expanding geographical representation focusing on consumer services, through
organic as well as inorganic growth. Subsequent to an IPO in February 2005, 19%
of its shares are traded on London Stock Exchange in the form of Global
Depository Receipts (GDR) under the symbol SSA. It is also listed on the Moscow
Stock Exchange and the Russian trading System.

Investor Relations

Ownership of Sistema Shyam Tele Services Limited

Sistema Shyam Tele Services Limited Equity

Structure

      Sistema (LSE : SSA) – 73.71%

         
    Shyam Group – 23.79%
         
    Public – 2.5%

About the Company

Sistema Shyam Tele Services (SSTL) is a joint venture company between Sistema
{LSE: SSA} of Russia and Shyam Group of India. Sistema is the majority share
holder in this joint venture with a 73.71% equity stake, along with the Shyam
Group, holding a 23.79% stake and the rest 2.5% being public partake. SSTL has

13
spectrum to provide mobile telephony services in all the 22 circles across the
country. Presently SSTL offers mobile telephony services in the Rajasthan, Tamil
Nadu, Kerala as well as the Kolkata circles. In a recent development, SSTL tied up
with Mobile Tele Systems OJSC of Russia to bring the globally acclaimed telecom
brand-MTS-to India. MTS is the 8th largest telecom brand in the world and has
recently been voted as the 71st ranked brand out of 100 top global brands in the
world by Millward Brown.

The Company ‘SISTEMA Shyam Tele Services Ltd. (SSTL) was founded in 1998
and operating in the state of Rajasthan since 2000. SSTL obtained a unified Pan-
Indian license to provide cellular services in March 2008 and now has spectrum in
all 22 Indian Telecom circles, covering 28 administrative states and 7 union
territories with a population of approximately 1.1 billion people.

SSTL the first telecom operator to acquire the fastest 100,000

customers in the state of Rajasthan.

History of SSTL

The company started Telecommunication services in the state of Rajasthan through

wireless and wire line network from the Year 2000 under the brand name
"Rainbow". Rainbow offers VOICE, DATA and IMAGE services. The customers
of the company include Corporate, Hotels, Banks and High Network Individuals in

14
the state. The company provides high bandwidth and self protected backbone
which provide highly reliable super highway connecting various cities in the ring.

Change of Company Name

Pursuant to provision of Section 21 of the Companies Act, 1956, the name of

company has been changed from “Shyam telelink limited” to “Sistema Shyam
Tele Services Limited” w.e.f. 22nd January, 2009. The name was changed in
order to reflect the joint venture between Sistema JSFC & Shyam Group. This is
reiterated that SISTEMA is one of the largest public diversified corporation in
Russia and the CIS, which manages fast growing companies operating in the
consumer service sector and SHYAM Group is a premier telecommunications
equipment design & manufacturing organization in India with an eye on the global
markets, and also in order to make all concerned aware of this Joint Venture.

SSTL Presence in India

The company has recently launched full mobility services in the state of Rajasthan
by deploying a state of art CDMA network of more than 830 BTS. About 609
more BTS are in pipe line and will be operational by end of July 2009. Currently
SSTL has more than 10, 00,000 (Voice & Data) SATISFIED CUSTOMERS on its
network. SSTL has the distinction of having majority of big corporate, MNCs,
Government Departments, Defense services, Banks, Five star hotels etc.

The Company has obtained an in-principle approval to use GSM technology under
the existing UASL license of Rajasthan circle on October 18, 2007 from the DoT.
15
The Company has paid INR 32.25 Cr. as a onetime charge for use of GSM
spectrum and would be paying revenue share license fees on an ongoing basis
under the original terms of the UASL agreement. The Company is in the process
of setting up the infrastructure for launching the services on the alternate
technology. The company is in process of launching CDMA network of more than
19,000 BTS in across India by end of Mar 2010.

Global Recognition

 Top 100 Most Powerful Brands

MTS launched its current brand in 2006, building on the reputation as the leader
and highest quality operator in the region. The brand was developed to attract
customers in a variety of cultural, socio-geographic and income segments with the
consistent message of quality and leadership. To facilitate further growth and
recognition of the brand, MTS recently adopted new Brand Standards to
communicate the brand consistently in all messaging and launched a new slogan
“Operator Svyazi” to reinforce its perception as a strong, trustworthy and quality-
focused company.

The strength of the brand has been consistent and has been recognized
internationally in both 2009 & 2008 in BRANDZ™ Top 100 Most Powerful
Brands, a ranking published by the Financial Times and Millward Brown, a
leading global market research and consulting firm. MTS was ranked as the 71st
Most Powerful Brand in 2009 & 89th Most Powerful Brand in 2008.

16
  Business Week Info Tech 100

In May 2008, MTS was included in the InfoTech 100 ranking of the best-
performing tech companies by Business Week. MTS was ranked as the 14th
company globally, based on four criteria: shareholder return, return on equity, total
revenues, and revenue growth. MTS became the highest-ranked company from
Russia, and above such companies as AT&T, LG and Microsoft.

 Trusted Brand 2008

In June 2008, MTS was recognized by Reader’s Digest as the most Trusted Brand
among mobile operators in Russia. The European Trusted Brands 2008 survey was
conducted in 16 countries in 14 different languages. In Russia, over 40% of
consumers nominated MTS as the most Trusted Brand in “Mobile Phone Network”
category.

 World Communication Awards

In September 2008, MTS received three nominations for the World

Communications Awards 2008. The Company made the shortlist in the “Best
Brand”, “Best Mobile Operator” and “Best Project Management” award categories.

 GSMA BOARD

17
In April 2008, the CEO of MTS joined the Board of the GSM Association
(GSMA), the global trade association for the mobile industry. GSMA's board
members include 25 operator representatives, the Chair of the Executive
Management Committee - the body that manages the Association's ongoing
activities in the area of products and services - and the GSMA CEO Rob Conway.
Board members include executives of such leading global operators as China
Mobile, AT&T, Orange, Telefonica O2 Europe, T-Mobile, Vodafone, and Telenor
Mobile.

 GSMA 13th Annual Global Mobile Awards

In January 2008, MTS became the first Russian company to receive a nomination
in the 13th Annual Global Mobile Awards hosted by the GSM Association
(GSMA). MTS was recognized for its WAP-portal — wap.kids.mts.ru — designed
specifically for children in the d«Best Mobile Infotainment Portal for
News/Entertainment» category.

 Corporate Governance

MTS was ranked as the most transparent company in Russia by Standard & Poor’s
in 2005, 2006 and 2007.  The ranking was based on the analysis of ownership
structure and shareholders’ rights, financial and operational openness and
composition and procedures of the Board of Directors and Management
Committee.

PAN India Expansion & Project Status

18
The Indian Telecommunication Industry has emerged as the fastest growing
telecom markets in the world and is poised to deliver swift growth as a result of
several economic reforms that have lead to strong GDP growth. High per Capita
income is also giving impetus for telecom growth. India still remains largely under
penetrated market with over a billion people and it is one of the most attractive
telecom markets in the world today. India is all set to achieve approximately 540
million mobile subscribers by 2010 with compounded annual growth rate 28
percent. Innovation in pricing of services and handsets were the two main factors
contributing to the growth of mobile services in the country. The revenue from
mobile services is expected to increase up to $35 billion by 2010 compared to
$22 billion in FY07.

Keeping in view the growth of telecom sector in India, Company aims to

strengthen its operation on Pan India basis and putting its prominent efforts to
expand its operation to new 21 Circles for which UASL Licenses and Start up
Spectrum have been granted to the Company by DoT. The Company has engaged
various consultants for finalizing Strategy, Business Plan, Network Roll Out
and other plans. The Company has also completed the vendor selection
process for Pan India Network Equipment supplies and installation.

The Company has already completed the first phase of expansion of its business
operations in Rajasthan. The Roll out of Pan India operations is also under
process and to be completed in next 9-12 months time. The Company is
planning to start its operations from south and east first after expansion in
Rajasthan. The network design for Pan India services includes one of the advance
communication infrastructures considering the growth and supporting the mobile,

19
fixed, cable, broadband and value added services. It is also proposed to offer
roaming services to the customers in the new circles through covering the
maximum possible area.

Major Players in Telecom Industry

20
 1. RELIANCE

2. BHARTI AIRTEL LIMITED

3. TATA TELESERVICES

4. IDEA CELLULER

5. VODAFONE

6. BSNL

Analysis of telecom players

Telecom industry is a vast field today we include fixed phone, wireless phone,
internet service, VSAT, DTH and service providers in telecom industry but for my
convenience I focus only wireless phone service only. In wireless service there are
many companies out of them few are below---

Reliance Communication Limited is a part of the Reliance Anil

Dhiru bhai Ambani Group. Reliance Communication is India’s largest integrated

21
fully converged communications service provider in the private sector with an
individual, enterprise & customer base of over 40 million. Reliance
Communication is one of the top two operators in the Indian wireless market, the
largest growing wireless market in the world. Reliance com is one of the largest
wealth craters with market capitalization of over Rs.1, 00,000 Cr.

Reliance Communication has the largest capacity network in the country, the most
future ready integrated and converged network that can support even following 3G,
4G telephony and broadband services. More than half of the world’s population
connects with each other on the Reliance network. Every third call that comes in
India is carried on Reliance’s network. Reliance Communication is the preferred
network of over one million customers in USA, UK, Canada, Australia and New
Zealand.

Bharti Airtel Limited is a leading Indian

telecommunication service provider with 49.01 million customers. The company
has three strategic business units’ i.e. mobile services, broadband and telephone
services and enterprise services.
Mobile services unit consists largest portion of the company business, both in
terms of total revenues and total customers, Bharti Airtel offers mobile services in
all 23 telecom circles of India and is therefore the first private mobile services
operator to have an all India presence. The Company’s mobile customer base
accounts for a 22.9% share of the overall wireless(GSM+CDMA) market as on
march 31, 2007 and has a presence in 4676 census towns and in 2,07,327non-cenus
towns and villages, covering an addressable population of 59% of the total
population.

Broadband and Telephone Services (B&TS) provides a wide gamut of voice

and data services through a wire line network. Bharti Airtel is the first private
22
operator to provide fixed line and broadband services over the same copper wire. It
provides innovative, cost effective solutions for corporate, small business
enterprises and individual homes. Given the high cost of creating a wire line
network, B&TS has adopted a focused approach to network creation and
customer’s acquisition. Currently B&TS provides services in 94 cities across 22
telecom circles. The unit had 1.75 million voice customers. It has a capacity of
more than 3 million tags with a cumulative investment of over Rs.40 bn.

TTML is a part of the Rs. 1, 20,000 crore (US $ 29

billion) Tata group that has over 87 companies, over 3, 30,000 employs and more
than 2.8 million shareholders. Most of the people think that TTML and TATA
Indicom both are the same companies but it is not true, TTML is a listed company
and it is a SBU of TATA Indicom, and TTML presence in Maharashtra and Goa
only.

Formally huge tele.com (India) ltd. That company was renamed to Tata
Teleservices Maharashtra Limited, subsequently to the acquisition of 70.85%
equity shareholding by Tata group in December 2002.

TTML provides mobile, fixed wireless phone (FWP), public telephone booths and
wire line services. Broad band data network & application services include leased
line, DSL, Wi-Fi, Ethernet, managed gateway services and conferencing services.
TTML is a market leader in commercial, residential and PCO market in
Maharashtra circle.

23
 IDEA cellular is a part of the Aditya Birla Group, India’s first
truly multinational corporation. IDEA cellular is a leading GSM mobile service
operator with pan India licenses with a customer base of 40 million in 15 services
areas.

Idea enters in market so late but it gain better competitive advantage in market
because the support of its parent group and by adopting the focus market strategy.

Introduction of the Topic

24
 Sistema Sistema Shyam Teleservices Limited
(formally known as Shyam Telelink Limited)

Finance Department

STANDARD OPERATIONG PROCEDURE FOR

FIXED ASSET MANAGEMENT

Process Overview:
Material is received at the warehouse / site on the basis of a purchase order /work
order issued by commercial Department. On receipt of material / completion of
work and related documents (invoice/challan/work certificate) a Goods Receipt

25
Note/Services Receipt Note (GRN/SRN) is prepared by the stores personnel. For
Direct Delivery to site a corresponding Material Transfer Note (MTN) is prepared
simultaneously indicating material issued from stores. Therefore, Finance
personnel records inventory in Capital Work in Progress (CWIP) basis the
GRN/SRN report generated from system.

Material issue is undertaken by the stores personnel on the basis of an approved

Material Requisition Note (MRN) received from the user department. A Material
Transfer Note (MTN) is prepared on issue and the MTN report, along with details
of site to which material is issued, is forwarded to finance. The Site on air report
along with specifications of asset installed, and site commissioning date is obtained
from networks which is subsequently reconciled lying in CWIP are transferred to
Fixed Asset Register(FAR). The Commissioning date certified by network
department is taken as the date of capitalization in FAR. Assets other than cell sites
are capitalized from the put to use date as certified by the user department.
This process documents the standards, guidelines and tracking methodologies for
the flow of inventory till the time it is capitalized and updates in FAR. The
document also highlights the risks inherent in the process that should be covered
by the materials/ Commercial and Finance team.

Initiation of process: User department raises a Material Requisition Note

(MRN) based on material requirement.

Termination of process: All assets put to use/ sites on air are adequately
monitored and are reflected in the FAR at accurate values.

Process Objective: The objective of this process is to ensure adequate

control over material receipts, issues and control over physical inventory held at
the warehouse /sites. He process also covers the steps involved to ensure accurate
measurement and recording of costs to be capitalized and depreciated.

The process also aims at ensuring adequate control over tagging, physical
verification, movement/site returns and disposal of assets.
26
While doing so it also ensures proper identification and classification of assets.

Scope:

Scope of the process covers:

 Handling of material receipts and issues at warehouse/site

 Physical controls over inventory held at warehouse
 CWIP accounting ,excluding cenvatable tax component
 Reconciliation of CWIP GL with CWIP register
 Capitalization of Fixed Assets with categorization of assets.
 Reconciliation of FA GL with FAR
 Inter location movement of assets
 Return to warehouse
 Disposal of assets
 Physical verification and reconciliation of book vs. physical asset.

Key Functional Departments:

Department Key Responsibility

Network Information on cell site commissioning/expansion
and cell site configuration along with asset
installed details.
Materials/Commercial  Material Transfer Note (MTN) report along
with supporting documents
 Details on asset disposal captured in Asset
Disposal Form (ADF)
IT  Installation certificates for asset capitalization
User department  Asset Movement Form (AMF) in respect of
inter location movement of assets.

Key inputs
27
 GRN/SRN report from system
 MTN report giving details of site wise material issues
 Information on cell site commissioning/expansion and cell site configuration
along with asset installed details
 Details on material returns to warehouse/inter location asset movement/ asset
disposal

Process outputs

 Creation of vendor liability for material receipt

 CWIP record giving details of inventory location (store/site) and date of receipt
for generation of ageing report.
 Updated FAR

Process Narrative

The process documents the method of tracking material receipts, issues and control
over physical inventory. The organization aims to ensure accurate accounting for
the same, while maintaining operational efficiency.

I) Material Receipts:

User department raises an MRN, capturing specifications and quality details of

material required. The User Department Head approves the MRN as per the policy
and subsequently forwards to commercial for use of material. Commercial
personnel checks whether the requirement can be met out of the existing inventory
stock at the warehouse. If sufficient inventory stocks are not available, the user
department is asked to raise an indent. At the time of raising the indent the user
department personnel specifies the material category as capital item or revenue
item based on the standard item master maintained. All indents raised are approved

28
by the User Department Head centrally, excluding certain opex items as per policy.
A Purchase order (PO) is issued against the indent (also specifying the item
category- capex/ opex) and material is received.

 At the warehouse:

In case of receipt of receipt of material at the warehouse, the warehouse in-charge

verifies whether the quality specifications and value of material delivered as per
the PO. If the material delivered does not meet the stipulated specifications, the
material may be rejected as per the policy. In case of a rejection of material, the
warehouse in-charge marks the same on the delivery challan/invoice and informs
the User Department and vendor of the same. Subsequently, the warehouse in-
charge makes an entry in the Material Return Register (MRR), capturing details of
the delivery and material details of the rejected material. The rejected material is
stored separately and returned through issue of a non-returnable gate pass
If no discrepancies are observed, the warehouse in-charge updates the inventory
register and raises a Goods Receipt Note (GRN) in System (FOC material received
is separately noted). Material received is stored as per the prescribed stacking
norms to ensure easy traceability and access.

 At the location:

In case of receipt of material directly at the location, the Site Engineer/User

Department Personnel verifies the material specifications vis-à-vis the
invoice/challan delivered. If the quantity of the material is not as per
invoice/challan the Site Engineer/User Department personnel marks the
excess/shortage on the delivery challan/invoice and forwards the invoice/delivery
challan to network personnel/ User Department personnel for approval.
Network/User Department personnel approve the document and forward the same
to the warehouse in-charge. The warehouse in-charge validates the invoice quantity
vis-à-vis the PO quantity or as mentioned in the delivery schedule provided in the
PO.

29
If invoice quantity is greater than the PO quantity the warehouse in-charge informs
the vendor and User Department of the same. If a consensus is reached as per
policy to accept the extra quantity the User Department personnel amend the
Indent raises a fresh indent for the additional quantity and forwards it for requisite
approvals to User Department Head. Thereafter, the commercial department
amends the PO and relevant commercial personnel as per policy.

If the invoice quantity is lesser than the PO quantity the warehouse in-charge
informs the Vendor and User Department of the shortage and escalates the
incomplete delivery as per PO schedule, as per policy.

For the material being accepted, the warehouse in-charge raises a Goods Received
Note (GRN) in System. Simultaneously, the Warehouse in-charge raises a Material
Transfer Note (MTN) for the material. He/she indicates the location where the
material has been received on the MTN. Thereafter, he/she updates the inventory
register indicating the receipt and issue of material. Subsequently, the warehouse
in-charge forwards the MTN details to Finance personnel, for updating the CWIP
register.

 Completion of work as per work order:

In case of work performed against a work order issued, the Project Manager (PM)
issues a Work Completion Certificate (WCC) and forwards the same to warehouse
in-charge, along with relevant documents, which are approved as per policy.

The warehouse in-charge prepares a Service Receipt Note (SRN) in System and
raises an MTN for services received. The warehouse in-charge indicates the
location where the services have been received on the MTN.

II) Inventory ageing and physical control

Warehouse personnel prepares an inventory ageing report as per defined frequency

capturing details such as item specification, vendor, quantity, date of receipt, GRN
details, user department etc. He/ she forward the ageing report to the respective
30
user departments for feedback. User department specify whether the material is
usable or is to be scrapped/transferred. Thereafter, the process for disposal of
material or transfer of material is initiated as indicated by the user department.

A joint physical verification of inventory is undertaken by Commercial and

Finance personnel as per the defined schedule. The verification is to reconcile
physical stock vis-à-vis stock reflected in the inventory records. If a variation is
noted, corrective action is taken as per policy.

III) Capital Work in Progress (CWIP) Accounting

Finance personnel receive GRN/SRN and approved invoice for materials/ services
received and passes an accounting entry for creating vendor liability and updates
CWIP inventory. The inventory cost accounted for in CWIP account excludes the
cenvatable tax component mentioned in the invoice. At the end of every month
finance personnel generates GRN/SRN report from SYSTEM, and reconciles the
same with invoices booked for the month. Thereafter he/she identifies all
GRNs/SRNs for which an invoice has not been received during the period and
forwards the same to Commercial personnel for validation. Once approved,
Finance personnel provisions for vendor liability for material/services against
which no invoices have been booked. Also he/she updates CWIP with the same.
Periodically finance personnel calculate ageing of CWIP inventory based on date
of receipt of goods as per GRN/SRN. He/ she identifies reasons for slow moving/
non moving items for material lying at locations, e.g. material lying at/ expenses
incurred for an abandoned site. The Finance personnel may consider taking
corrective actions e.g.
Explore possibility of reallocation of material, disposal or write off (where re-use/
re-allocation are not possible).

IV) Issue and dispatch of material:

On receipt of approved MRN from the user department the warehouse in-charge
prepares an MTN. He/she indicates the location to which material is to be
31
transferred as per the MRN. Thereafter, warehouse in-charge updates inventory
quantity in the inventory record and dispatches the material. He/she also forwards
the MTN details to Finance personnel for updating the CWIP register.

Warehouse in-charge also prepares a monthly report of MTNs issued, capturing

details of material issued and location of transfer. He /she forward this report on a
monthly basis to finance personnel, for ensuring comprehensive updating of the
CWIP register.

V) Updating of Fixed Asset Register and capitalization of assets

including provisional capitalization:

Finance personnel receives site on-air report and commissioning certificate/put to

use date, along with asset configuration details, from the PM/ user department on a
periodic basis. PM/ user department also forwards expansion and upgrade details.
In case there is no expansion or upgrade for the defined period a nil declaration
report is submitted to finance personnel. Finance personnel receive a monthly
MTN report from Commercial personnel and reconciles the same with inputs
received from PM/user department to identify items to be capitalized. Also, he/she
ascertains the category and useful life of the asset as per guidelines provided in the
accounting manual.

A finance personnel transfers items to be capitalized from CWIP to FAR and

passes accounting entries for the same.
VI) Asset Tagging

Finance personnel generate serial numbers for all assets to be tagged. Serial
numbers capture relevant asset details as per the format. Finance personnel
subsequently oversee fixing of labels on physical assets by external agency.
Thereafter, finance personnel carries out a random sample check for accuracy of
asset tagging performed by the appointed agency. Any discrepancies noted are
corrected.

32
VII) Inter location movement of asset

As per requirement, User Department personnel fills out the Asset Movement
Form (AMF) specifying the asset serial number and description, existing location
and location of transfer. The AMF is approved as per policy and the asset is
transferred. If the asset is being transferred to another location, user department
personnel send the AMF to Finance personnel. Finance personnel update the FAR
capturing movement details on a monthly basis.

VIII) Return of Assets to Warehouse

If the asset is being returned to the warehouse, the user department personnel
forward the AMF to warehouse in-charge. Warehouse in-charge makes an entry in
the Material Return Register (MRR).

In case an MRN is received for issue of returned goods within specified period,
warehouse in-charge raises an MTN capturing location of transfer. He/ she
dispatch material to the specified location as per MRN and forwards MTN details
to Finance Personnel. Finance personnel capture asset movement details in FAR. If
the asset is to be retained at warehouse, warehouse in-charge updates the inventory
details and forwards the same to Finance personnel for de-capitalization. Finance
personnel de-capitalize the asset, by transferring the asset from FAR to CWIP, as
per policy.

IX) Asset Disposal

An asset may be identified as obsolete as per the policy on identification and

disposal of scrap material. Details of such assets are captured on the AMF by the
user department and forwarded to warehouse in-charge. The warehouse in-charge
fills out an Asset Disposal Form (ADF) and forwards the same to finance
personnel.

33
 Also, for assets identified for disposal in the feedback received from user
departments on inventory ageing, the warehouse in-charge fills out an ADF and
forwards the same to finance personnel.

Thereafter, the Finance personnel calculate the WDV for the asset to be disposed
and invite quotations for sale of the asset as per policy. Subsequently, he/she
performs a comparative analysis of quotes received and forwards the same to the
relevant authority, as per policy, for selection of a buyer. Once a buyer is identified
Finance personnel obtains the sale consideration from the buyer and generates a
sale invoice for the same.
Finance personnel oversee delivery of the asset to the buyer. Subsequently, he/she
updates the FAR, capturing details of the sale and passes an accounting entry for
disposal of asset.

X) Physical Verification of Assets

As per physical verification schedule, Finance personnel generates a list of assets

from FAR and forwards the same to external agency appointed for physical
verification of assets. The appointed agency submits the observations of the
physical verification capturing details of variance e.g. variance of quantity or
specification of book v/s physical asset. Thereafter, Finance personnel pass
relevant accounting entries and updates FAR.

Key Performance Indicators

1. Timely and accurate updating of CWIP and FAR

2. Timely and accurate tracking of asset movement and return
3. Enhanced inventory and warehouse controls

Key Risk Elements

34
1. Delay in updating material receipts and issues
2. Inadequate feedback received from User Department pertaining to inventory
ageing.
3. Inadequate tracking of asset movement
4. Inadequate RFQ process for asset disposal.

35
 RESEARCH METHODOLOGY
&
DATA ANALYSIS

RESEARCH METHODOLGY

A detailed survey of employees working in SSTL was carried out to know

their opinion regarding the Fixed Asset Management Process and to study &

36
analyze those policies to reach to a conclusion. The details of the methodology are
stated below:

 Type of research :

 Descriptive Research

 Sampling Technique:

 Random Sampling

 Universe & Sample Size:

 10 employees (Universe)

 5 employees (Sample Size)

 Method of Data Collection

The data has been divided into two parts:

o Primary Data:

 Conducted personal interviews with the respondents

o Secondary Data:

 Website of MTS India

 Annual Reports

FINDINGS & CONCLUSIONS

37
FINDINGS

Q-1 Do you intimate/specify about the goods if it is not as per the specification
made by the indenter?

YES
NO

Q-2 Do you intimate account about the actual date of put to use of asset?

YES
NO

Q-3 Whether the assets are physically verified at different intervals?

38
 YES
NO

Q-4 Are the assets in your possession are properly tagged?

YES
NO

Q-5 In case of transfer of asset from one place to another do you intimate the
finance?

39
 YES
NO

CONCLUSIONS

40
In my report I learn that SSTL is running by the experienced people that are
capable enough to take the competitive advantage in market.

 F&C department’s process is good but it is not feasible to make the

documents in EXCEL.

 When our MIS is hamper due to technical problems so it is suggested to

company to make another system as a supportive so we can do our work
without inconvenience.

 The Company can use software’s like SAP(System Analysis and Program
Development)

ILLUSTRATIONS & ANNEXURES

41
 Questionnaire

NAME:

DESIGNATION:

DEPARTMENT:

CONTACT NO:

Q-1 Do you intimate/specify about the goods if it is not as per the specification
made by the indentor?
Answer- 1. YES 2. NO

Q-2 Do you intimate account about the actual date of put to use of asset?
Answer- 1. YES 2. NO

Q-3 Whether the assets are physically verified at different intervals?

Answer- 1. YES 2. NO

Q-4 Are the assets in your possession are properly tagged?

Answer- 1. YES 2. NO

Q-5 In case of transfer of asset from one place to another do you intimate the
finance?
Answer- 1. YES 2. NO

Format of excel PO

42
 SISTEMA SHYAM TELESERVICES LIMITED
Plot - 3, Rainbow Tower, Amrapali Circle,
Jaipur, Rajasthan. PIN - 302021
Phone:0141- 5100373, Fax: 0141- 5100390
PURCHASE ORDER
(Indigenous)
TO :   OUR P.O. NO:  
    DATED:  
    YOUR QUOT.NO:  
PAN.NO:   DATED:  
TIN NO:   INDENT NO. :  
Mobile NO.   Indentor's Name  
KIND ATTN :    
  P. O. Number must be quoted on all
  correspondence i.e. Challan, Invoice etc.
 
Dear Sirs, RST/CST/1421/04108
We are pleased to place our order for the following items in accordance with the terms and conditions
stated overleaf:
Qty. (In UNIT PRICE AMOUNT
S. NO. DESCRIPTION
Nos.) (Rs.) (Rs)
         
ORDER VALUE 0.00
(IN WORDS) : Rs.
Special Instruction:-
1-Bills submitted without attaching signed copies of the PO will not be considered for payment processing.
2-Packing has to be done as per instructions given by SSTL.
3- Material has to be supply as per the approved sample; In case of any deviations from the sample
material may be rejected.
4- 500 No’s wall clock is delivered before 16-April-09.
Price Basis F.O.R. - SSTL Jaipur Basic Value  
Delivery 8 Days from the date of PO Discount N/A
Mode of Dispatch By Road Excise Duty N/A
Mode of Payment By Cheque TAX / CST
100% within 30 days of
Payment Terms
submission of Invoice.    
    Total 0.00
Consignee Address :  
M/s SISTEMA Shyam Teleservices Limited  
Plot No -155,Jhotwara Ind.Area,  
Jaipur, Rajasthan. PIN – 302021  
(Authorized
  (Authorized Signatory) Signatory)
     
Regd. Office : B-2D, SHIV MARG, BANI PARK, JAIPUR – 302016
Format of excel WO
SISTEMA SHYAM TELESERVICES LIMITED
43
 Plot - 3, Rainbow Tower, Amrapali Circle,
Jaipur, Rajasthan. PIN - 302021
Phone:0141- 5100373, Fax: 0141- 5100390
WORK ORDER
(Indeginious)
TO :   OUR W.O. NO:  
    DATED:  
    YOUR QUOT.NO:  
    DATED:  
    INDENT NO. :  
Mobile NO.   Indentor's Name  
TELEFAX NO.    
KIND ATTN :    
  P. O. Number must be quoted on all
  correspondence i.e. Challan, Invoice etc.
  TIN No. - 08162104055
Dear Sirs, RST/CST/1421/04108
We are pleased to place our order for the following items in accordance with the terms
and conditions stated overleaf:  
UNIT
S. NO. DESCRIPTION Qty. (In Pcs.) PRICE AMOUNT
(Rs.) (Rs)
         
ORDER VALUE 0.00
(IN WORDS): Rs.
F.O.R. - SSTL(Rainbow Tower)
Price Basis Jaipur Basic Value  
Delivery 1-2 Days from the date of WO Discount N/A
Mode of Dispatch By Road Excise Duty N/A
Mode of Payment By Cheque TAX  
100% within 30 days after
Payment Terms
delivery    
    Total  
Consignee Address :  
M/s SISTEMA Shyam
Teleservices Limited  
Plot No -155,Jhotwara
Ind.Area,  
Jaipur, Rajasthan. PIN –
302021  
(Authorised
  Signatory) ( Authorised Signatory)
     
Regd. Office : B-2D, SHIV MARG, BANI PARK, JAIPUR –
302016  
CC: Accounts / Purchase / Stores
Format of GRN
SISTEMA Shyam Teleservices Ltd.

44
 Goods Receipt Note
( Plot No. 155, Jhotwara Industrial Area, Behind Ganesh Floor Mills, Jhotwara, Jaipur- Ph. 0141-5142699, 0141-5182258 JAIPUR RAJASTHAN)
CST/LST No.:
Status Approved
Vendor Name:   GRN No.: GRN/JTW/2008/
Address: GRN Date :
CST/LST No.: PO No.:
Transporter
Name: PO Date :
Lorry No. Ref Doc No.:
LR/RR No.: Ref Doc Date:
  RC No.:
  RC Date :
Item
Name Pending Order Accepted
S No. Challan Qty Received Qty Rejected Qty
Qty Qty
/UOM
             
             
             
             
             
             
             
             
             
Inspection
     
Details:
Inspected By: Approved By:
Prepared By:   Approved Dated:  
Regd. Office: B-2D, Shiv Marg, Banipark, Jaipur – 302016

Format of SRN
SISTEMA Shyam Teleservices Ltd.

45
 Goods Receipt Note
( Plot No. 155, Jhotwara Industrial Area, Behind Ganesh Floor Mills, Jhotwara, Jaipur- Ph. 0141-5142699, 0141-5182258 JAIPUR
RAJASTHAN)
CST/LST No.:
Status Approved
Vendor Name:   SRN No.: SRN/JTW/2008/
Address: SRN Date :
CST/LST No.: WO No.:
Transporter
Name: WO Date :
Lorry No. Ref Doc No.:
LR/RR No.: Ref Doc Date:
  RC No.:
  RC Date :
Item Pending
Received Rejected Accepted
S No. Name Order Challan Qty
Qty Qty Qty
/UOM Qty
             
             
             
             
             
             
             
             
             
Inspection
     
Details:
Inspected By: Approved By:
Prepared By:   Approved Dated:  
Regd. Office: B-2D, Shiv Marg, Banipark, Jaipur – 302016

Corporate Information

46
Board of Directors Depositories

Mr. Ron Sommer Chairman  National Securities Depository Ltd.

Mr. Sergey Cheremin Dy. Chairman 4th Floor, Trade World
Mr. Vsevolod Rozanov Whole Time Director Kamala Mills Compound
Mr. Rajiv Mehrotra Director Senapati Bapat Marg,
Mr. Ajay Khanna Managing Director Lower Parel
Mr. Alok Tandon Managing Director Mumbai-400 013
Mr. Suman Sehgal Director Ph: 91-22-24994200
Mr. Mikhail Shamolin Director Fax:91-22-66608035/24976351
Mr. Madhukar Director  Central Depository Service (India)
Ltd.
Phiroze Jeejeebhoy Towers,
17th Floor, Dalal Street,
Mumbai-400 001
Ph.: 91-22-22723333-3224
Fax: 91-22-22723199/22722072

Company Secretary Equity Shares Listing

Mr. Rashid J Malik Equity shares of the company are listed

at Mumbai & National Stock Exchange.
Auditors Internal Auditors

M/s S.R. Batliboi & Associates M/s Mehra Goel & Co.
Chartered Accountants, Chartered Accountants,
Golf View, Corporate Tower B, 505, Chiranjiv Towers,
Sector 42, Sector Road, 43, Nehru Place,
Gurgaon (Haryana), India New Delhi-110019, India
Bankers Corporate Office

 ICICI Bank MTS India Towers, Plot No.334

 Punjab National Bank Udyog Vihar, Phase – lV,
 Bank of China Gurgaon (Haryana), India
 Indian Bank Website: www.mtsindia.in
 ABN Amro Bank Tel: 91-124-4812500
 VTB Bank Fax: 91-124-4812825
 Yes Bank
Registrar And Transfer Agents Registered Office

Indus Portfolio Pvt. Ltd. B2-D, Shiv Marg Bani Park,

G-65, Bali Nagar Jaipur-302 016, Rajasthan, India
New Delhi-110015 Tel: 0141-5100510
E-mail: ippl@indusinvest.com
Tel: 91-11-25172115, 25422805, 25422801

47
Fax:91-11-25449863

BIBLIOGRAPHY

Websites:
 www.mtsindia.in

 www.mtsgsm.com

 http://www.sistema.com/businesses/telecom/shyam

 http://www.itvarnews.net/news/9660/MTS.html

 www.isourceupdates.com

Others:

 Annual Report
 Interview of Respondents

48