Executive Summary

The Fixed Assets Management is the Traditional Financial Statement of a business enterprise.
While they do furnish useful financial data regarding its operations, a serious limitation of these
statements is that they do not provide information regarding changes in the firm’s financial
position during a particular period of time. Fixed assets are acquired for use in the business for
earning revenues so they are shown at their book values and at their current realizable values.
But when the business unit is not a going concern and is to be liquidated, current realizable value
of fixed assets become relevant. A fundamental concept of accounting, closely related to the
going concern concept, is cost concept of accounting. According to this concept, a fixed asset is
recorded in the books at the price paid to acquire it and that this cost is the basis for all
subsequent accounting for the asset. This concept does not mean that the fixed asset will always
be shown at cost but it means that cost becomes basis for all future Fixed assets are acquired for
use in the business for earning revenues so they are shown at their book values and at their
current realizable values. But when the business unit is not a going concern and is to be
liquidated, current realizable value of fixed assets become relevant. A fundamental concept of
accounting, closely related to the going concern concept, is cost concept of accounting.

In this paper, we'll take a close look at how well the Rashidpur Gas field Co., LTD. handles its
fixed assets. This study took a descriptive, qualitative method. The research team at Rashidpur
Gas field Co. LTD. gathered information through observing workers who dealt with fixed assets,
conducting interviews with workers who dealt with fixed assets, and documenting documents
connected to fixed assets. The investigation of the efficiency of fixed asset management at
Rashidpur Gas field Co. LTD demonstrates that it has not been efficient, as evidenced by the
discrepancy between the timeliness of its actions and the correctness of its cost estimations in
relation to relevant rules.

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 Chapter One

Abstract

This paper aims described analyzing the effectiveness and efficiency of fixed asset management
at the Rashidpur Gas field Co. LTD. This research is qualitative research with a descriptive
approach. Data collection techniques in this study were the observation of the work of employees
who handle fixed assets, interviews with employees who handle fixed assets, and documentation
of documents related to fixed assets at the Rashidpur Gas field Co. LTD. Based on the results of
the research that has been carried out, it shows that: the results of the analysis of the
effectiveness of fixed asset management at the Rashidpur Gas field Co. LTD have not been
effective as seen from the incompatibility of timeliness, the accuracy of cost calculations against
applicable regulations.

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1.1 INTRODUCTION

Fixed Assets are the assets held with the intention of being used on continuous basis for the
purpose of producing or providing goods or services and are not held for resale in the normal
course of business. E.g.: Land and Buildings, Plant and Machinery, Motor Vehicles, Furniture
and Fixtures. Valuation of fixed assets is important to have fair measure of profit or loss and
financial position of the concern. Fixed assets are meant for use for many years. The value of
these assets decreases with their use or with time or many other reasons. A portion of fixed assets
are reduced by usage are converted into cash through charging depreciation. For correct
measurement of income, proper measurement of depreciation is essential, as depreciation
constitutes a Part of total cost of production. Financial transactions are recorded in the books,
keeping in view the going concern aspect of the business unit. In going concern aspect it is
assumed that the business unit has reasonable expectation of continuing the business for a profit
for an indefinite period of time. This assumption provides much of the justification for recording
fixed assets at original cost and depreciating them in a systematic manner without reference to
their current realizable value. It is useless to record the fixed assets in the balance sheet at their
estimated realizable values if there is no immediate expectation of selling them. So, they are
shown at their book value (i.e., Cost – Depreciation) and not at current realizable value. The
market value of the fixed assets may change with the passage of time, but for accounting purpose
it continues to be shown in the books in historical cost. The cost concept of accounting states that
depreciation calculated on the basis of historical cost of old assets is usually lower than the
amount calculated at current value/ replacement value. These results in more profits, which if
distributed in full will lead to reduction in capital.

1.2 Statement Of the Problem

Fixed Assets plays very important role in relating company’s objectives the firms to which
capital investment vested on fixed assets. This fixed asset is not convertible or not liquid able
over a period of time the total owner funds and long-term liabilities are invested in fixed assets.
Since fixed assets playing dominant role in total business the firms has realized the effective
utilization of fixed assets. So ratio contributes very much in analyzing and evaluating the
performance of fixed assets. If firms fixed assets are idle and not utilized properly it effects long-
term sustainability of the firms, which may affect liquidity and solvency and profitability

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positions of the company. The idle of fixed assets lead a tremendous in financial cost and
intangible cost associate to it. So there is need for the companies to evaluate fixed assets
performance. Comparison with similar company and comparison with industry standards. So
chose a study to conduct on the fixed assets analysis of Rashidpur Gas Field India Products using
ratio in comparison with previous year performance. The title of the project is analysis on fixed
assets management.

1.3 IMPORTANCE OF THE STUDY

Fixed Assets are the assets, which cannot be liquidates into cash within one year. The large
amount of funds of the company is invested in these assets. Every year the company investments
an additional fund in these assets directly or indirectly the survival and other objectives of the
company purely depends on operating performance of management in effective utilization of
there assets. Firm has evaluate the performance of fixed assets with proportion of capital
employed on net assets turnover and other parameters which is helpful for evaluating the
performance of fixed assets.

1.4 OBJECTIVES OF THE STUDY:

1. The study is conducted to evaluate fixed assets performance of Rashidpur GAS field c0.LTD.

2. The study is conducted to evaluate the fixed assets turnovers.

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

4. The study is conducted to evaluate depreciation and method of depreciation adopted by

Rashidpur

5. The study is conducted to known the amount of finance made by long-term liabilities and
owner funds towards fixed assets.

6. 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 fund and long-term liabilities.

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

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1.5 SCOPE OF THE STUDY

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

1.6 LIMITATIONS OF THE STUDY

1 The study period of 45 days as prescribed by university

2 The study is limited unto the date and information provided by Rashidpur Gas Field and its
annual reports

3 The report will not provide exact fixed assets status and position in Rashidpur Gas Field; it
may vary from time to time and situation to situation.

4 This report is not helpful in investing in Rashidpur Gas Field either through disinvestments or
capital market.

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

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 Chapter two
LITERATURE SURVEY

2.1 MANAGEMENT OF FIXED ASSETS

The selection of various fixed assets required for creating the desired production facilities and
the decision regarding the determination of level of fixed assets in the capital structure is an
important decision for the company to take for the smooth running of business. The decisions
relating to fixed assets involve huge funds for long period of time and are generally of
irreversible nature affecting the long profitability of the business. Thus, management of fixed
asset is of vital importance to any organization. The process of Fixed Assets Management
involves:

1. Selection of most worthy projects from the different alternatives of fixed assets.

2. Arranging the requisite funds/capital for the same.

The first important consideration is to acquire only that amount of fixed assets, which will be just
sufficient to ensure smooth and efficient running of the business. In some cases it may be
economical to buy certain assets in a lot size. Another important consideration to be kept in mind
is possible increase in the demand of the firm’s product needs the expansion of activities. Hence
a firm should have that amount of fixed assets, which could adjust to increase demand. Another
aspect of fixed assets management is that a firm must ensure buffer stocks of certain essential
equipments to ensure uninterrupted production in the events of emergencies. Sometimes, there
may some breakdown in some equipments or services affecting the entire production. It is
always better to have some alternative arrangements to deal with such situations but at the same
time the cost of carrying such buffer stock should also be evaluated. Efforts should also be made
to minimize the level of buffer stock of fixed assets so that there will be maximum utilization
during that period.

Prof. Marshall mentioned about the activities of money changers in the temple of Olympia and
other sacred places in Greece, around 2000 B.C. He wrote “Private Money Metallic Currencies,
More or less exactly, to a Common Unit of value, and even to accept money on deposit at
interest, and to lend it out at higher interest permitting meanwhile drafts to be drawn on them”.

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Sayers R.S.2 3Steles: we can define bank as an institution whose debts (bank deposits) are
widely accepted in settlement of other people’s debts to each other. S.B. Gupta A bank is an
institution that accepts deposits of money from the public withdrawals by cheque and used for
lending. Thus, there are two essential functions which make a financial institution a bank: The
literature review included asset management concepts, current asset management practices and
philosophies of other state departments of transportation (DOTs) and the FHWA, and research
efforts focused on right-of-way acquisition. The purpose of this review was to ensure that
TxDOT and the research team will benefit from state-of-the-art concepts and practices for asset
management. ASSET MANAGEMENT CONCEPTS 1 Asset management is an emerging effort
to integrate finance, planning, engineering, personnel, and information management to assist
agencies in managing assets cost-effectively (AASHTO 1997). In its broadest sense, asset
management is defined as “a systematic process of maintaining, upgrading, and operating assets,
combining engineering principles with sound business practice and economic rationale, and
providing tools to facilitate a more organized and flexible approach to making the decisions
necessary to achieve the public’s expectations” (OECD 2001). The main objective of asset
management is to improve decision-making processes for allocating funds among an agency’s
assets so that the best return on investment is obtained. To achieve this objective, asset
management embraces all of the processes, tools, and data required to manage assets effectively
(Nemmers 2004). For this reason asset management is also defined as “a process of resource
allocation and utilization” (AASHTO 2002). The framework needed to carry out this process
effectively encompasses an agency’s policy goals and objectives, performance measurements,
planning and programming, program delivery, and system monitoring and performance results.

2.2 Overview about Rashidpur Gas field Co. Ltd

Rashidpur Gas Field is a natural gas field located in Habiganj, Bangladesh. In

1960, Pakistan Shell Oil Company discovered it. In 1975, this gas field came under the control of
the Government of Bangladesh. It is one of the sixth gasfields owned and operated by a
government company, Sylhet Gas Fields Company Limited.

2.2.1 Geography

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A gas field was discovered for the first time in the hilly area namely Rashidpur of No.7
Bhadeshwar Union in Bahubal Upazila. Rashidpur gas field is located in Rashidpur of Bahubal
upazila of Habiganj. It is situated between Moulvibazar and Habiganj in Sylhet division. In the
year 1990–91, a well was drilled and two plants were set up. A total of 8 wells have been drilled
and linked up to meet the demand of gas by the North-South Pipeline. In 2015, Gazprom was
assigned to drill Rashidpur gas fields along with Srikail and Bakhrabad

Rashidpur is a producing conventional gas field located onshore Bangladesh and is operated by
Sylhet Gas Fields Limited (SGFL). The field is located in block Block 12.

2.2.2 Production from Rashidpur

The Rashidpur conventional gas field recovered 80.35% of its total recoverable reserves, with
peak production in 2002. The peak production was approximately 0.18 thousand bpd of crude oil
and condensate and 105 Mmcfd of natural gas. Based on economic assumptions, production will
continue until the field reaches its economic limit in 2047. The field currently accounts for
approximately 2% of the country’s daily output.

2.2.3 Remaining recoverable reserves

The field is expected to recover 27.18 Mmboe, comprised of 0.13 Mmbbl of crude oil &
condensate and 162.33 bcf of natural gas reserves. Rashidpur conventional gas field reserves
accounts 0.01% of total remaining reserves of producing conventional gas fields globally

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 Chapter Three
RESEARCH METHODOLOGY

The data used for analysis and interpretation form annual reports of the company that is
secondary forms of data. Ratio analysis is used for calculation on purpose. The project is
presented by using table’s graphs and with their interpretations. No survey is undertaken or
observation study is conducted in evaluating ‘Fixed assets’ performance of Rashidpur Gas Field.

3.1 SOURCES OF DATA

The data gathering method is adopted purely from secondary sources. The theoretical contents
are gathered from eminent texts books and references and library at Rashidpur Gas Field. 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.

The data needed for this project is collected from the following sources:

1. The data is adopted purely from secondary sources.

2. The theoretical contents are gathered purely from eminent text books and references.

3. The financial data and information is gathered from annual reports of the company.

3.2 DATA ANALYSIS & INTERPRETATION

The analysis returns on fixed assets of Rashidpur Gas Field Co. LTD(RGFCL) is studied with
the help of following techniques.

1. Componential analysis

2. Trend analysis

3. Ratio analysis

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Componential analysis: The componential analysis of the fixed assets of Rashidpur Gas Field co.
limited (RGFCL) includes Net Block , Capital (work in process) and construction stores and
advances. The data relating to different components of fixed assets of the Rashidpur Gas Field
co.limited (RGFCL) for ten Years commencing from 2005-06 are set out in the following table
analysis.

Interpretation

The investment in the net block is in fluctuating trend and it is varying in between 61.24 over the
total fixed assets during the year 2005-06 and it is increasing to 71.94 during the year 2016-17.
The average net block registered 1741231.51 during the above period s. The investment in use in
capital w/p is also in fluctuating trend and it is varying in between 36.23 % over the total fixed
assets during the year 2005- 06 it decreased to 20.51 % during 2016-17. The average capital W/P
was registered at RS. 469699.67. The investment in use in construction stores and advances in
fluctuating trend and it varying in between 2.53 % on the total fixed a assets during the year
2005-06 and it is increased to 7.54% during 2016-17.

TREND ANALYSIS

In Financial analysis the direction of changes over a period of Years is of initial importance.
Time series or trend analysis of ratio indicators the direction of change. This kind of analysis is
particularly applicable to the times of profit and loss account it is advisable that trends of sales
and net income may be studied in the light of two factors. The rate of fixed expansion or secular
trend in the growth of the business and the 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 trend
of growth; the sales figure should be adjusted by a suitable index of general prices. In other
words, sales figures should be deflated for 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. In generally advocated the
procedure followed is to assign the numbers. 100 to items of the base year and at calculate
percentage change in each item of other Years in relation to the base year this procedure may be

10
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 means to the same in the base year. Generally the first year is taken as the base year. The
figure of the base year is taken as 100 and trend ratio for the other year is calculated on the basis
of one year. Here an attempt is made to known the growth total investment and fixed assets of
RGFCL for 12 Years that is 2005-06 to 2016- 2017.

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 Chapter Four
4.1 FINDINGS OF THE STUDY

After analyzing the financial position of Rashidpur Gas Field co. Limited (RGFCL) and
evaluating its fixed assets Management or capital budgeting techniques in respect of components
analysis, trend analysis and ratio analysis. The following conclusions are drawn from the project
preparation. The progress of the RGFCL shows that there is an increase in Net Block
considerably over the year that is from 61.24% to71.94% regarding the working-progress it has
decreased from 36.23 to 20.51 the financial position of RGFCL regarding investment it has been
increasing form 100%

1 Regarding the fixed assets to net worth it has observed that it has been decreased slightly to
105.09

2 Regarding the fixed assets it has been observed that the fixed asset has increased.

3 Regarding the long - term funds to fixed assets it is decreased over the Years.

4 Regarding the fixed assets as a percentage of current liabilities it is observed it is decreased

over the Years except in the year it is increased.

5 Regarding the total investment turnover ratio it is observed that it has been increasing over the
Years considerably i.e., 21.59 to 93.92.

6 Regarding the asset turn over ratio it has been observed that it is satisfactory at it were
increasing from 27.59 to 82.61.

7 Regarding the fixed assets to total assets it has been observed that there was increase from 50%
to 64%.

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8 Regarding the profit and gross capital employed ratio it can be observed that it has been
increasing over the year i.e., from 5.41 to 17.11 result of the above it can be said that the ratio is
steadily increasing.

9 Regarding profit and fixed assets ratio it can be observed that it has been increasing over the
Years i.e., from 112455.4 to 638776.4 it can be said that the profit to fixed assets ratio is quite
satisfactory.

10 From the above study it can be said that the RGFCL financial position on Fixed Assets is
quite satisfactory.

4.2 Suggestions & Recommendations:

1 Suggestions for efficient management of fixed assets of RGFCL are

2 The RGFCL should follow the NPV method or IRR method both at a time rather than
following only NPV method.

3 The RGFCL should analyze and measure a list of projects for evaluation.

4 The ratio of return on fixed assets is poor. The finance department (The manager of RGFCL
should take remedial steps to improve the position.

5 The PAT ratio must be improved.

6 The RGFCL capital budgeting policies should be achieved in the forth coming Years.

7 The RGFCL has to increase its consultancy services to other power project in India and abroad.

8 RGFCL must concentrate on other diversification and takeover.

9 RGFCL must be expanded with profit making units with low cost.

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Chapter Five

5.1 Conclusion

Based on the discussion and analysis of fixed asset management at the Rashidpur Gas Field Co.
Ltd which was analyzed in terms of effectiveness and efficiency, it can be concluded that:

1. The effectiveness of fixed asset management is considered less effective because of the 8
indicators studied, 2 indicators show that they are not by applicable regulations. These indicators
are the accuracy of time determination and the accuracy of cost determination. The time for
making and submitting documents related to fixed assets at the sub-district office is still often
past the deadline that has been set. Meanwhile, the cost problem is the non-transparent use of
costs in the procurement of regional property and maintenance services for a regional property.

2. The efficiency of fixed asset management is considered efficient when viewed from the
resulting output. The sub-district office has been able to produce outputs in the form of
documents and asset procurement well. But in terms of input, especially the time input, it should
be further improved because the time used is still too long and can be accelerated again.

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