A
SYNOPSIS REPORT
ON
LONG TERM INVESTMENT DECISION
AT
KESORAM CEMENT LTD
Submitted
By
K. NAMITHA SRI
H.T.NO: 1304-20-672-162
PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
Department of Business Administration
AURORA POST GRADUATE COLLEGE
PEERZADIGUDA
(Affiliated to Osmania University)
2020-2022
AURORA POST GRADUATE COLLEGE
PEERZADIGUDA
DEPARTMENT OF MANAGEMENT
SYNOPSIS
Title of the Project : LONG TERM INVESTMENT DECISION
Student Name : K. NAMITHA SRI
Hall Ticket Number : 1304-20-672-162
Signature of the Student :
Signature of the Guide :
TABLE OF CONTENTS
S. No. CHAPTER Page No
1 INTRODUCTION
2 NEED FOR THE STUDY
3 OBJECTIVES OF THE STUDY
4 RESEARCH METHODOLOGY
5 LIMITATIONS OF THE STUDY
INTRODUCTION
An efficient allocation of capital is the most important finance function in modern
times. It involves decisions to commit firm’s funds to long-term assets. Such decisions are
tend to determine the value of company/firm by influencing its growth, profitability & risk.
Long term LONG TERM INVESTMENT DECISIONSs are generally known as
capital budgeting or capital expenditure decisions. It is clever decisions to invest current in
long term assets expecting long-term benefits firm’s long term LONG TERM
INVESTMENT DECISIONSs would generally include expansion, acquisition,
modernization and replacement of long-term assets.
Such decisions can be long term LONG TERM INVESTMENT DECISIONSs,
financing decisions or operating decisions. Long term LONG TERM INVESTMENT
DECISIONSs deal with investment of organization’s resources in Long tern (fixed) Assets
and / or Short term (Current) Assets. Decisions pertaining to investment in Short term Assets
fall under “Working Capital Management”. Decisions pertaining to investment in Long term
Assets are classified as “Capital Budgeting” decisions.
Capital budgeting decisions are related to allocation of investible funds to different long-term
assets. They have long-term implications and affect the future growth and profitability of the
firm.
In evaluating such investment proposals, it is important to carefully consider the expected
benefits of investment against the expenses associated with it.
Organizations are frequently faced with Capital Budgeting decisions. Any decision that
requires the use of resources is a capital budgeting decisions. Capital budgeting is more or
less a continuous process in any growing concern.
These days almost everyone is investing in something… even if it’s a savings account
at the local bank or a checking account the earns interest or the home they bought to live in.
However, many people are overwhelmed when they being to consider the concept of
investing, let alone the laundry list of choices for investment vehicles. Even though it may
seem the everyone and their brothers knows exactly who, what and when to invest in so they
can make killing, please don’t be fooled. Before you can confidently choose an investment
path that will help you achieve your personal goals and objectives, it’s vitally important that
you understand the basics about the types of investments available. Knowledge is your
strongest ally when it comes to weeding out bad investment advice and is crucial to
successful investing whether you go at it alone or use a professional.
The investment option before you are many. Pick the right investment tool based on the risk
profile, circumstance, time available etc. if you feel the market volatility is something, which
you can live with then buy stocks. However, remember that risk and returns are directly
proportional to each other. Higher the risk, higher the returns.
TYPES OF INVESTMENT OPTIONS
A brief preview of different investment options is given below:
Equities:
Investment in shares of companies is investing in equities.
Stocks can be brought/sold from the exchanges (secondary market) or via IPO’s – Initial
Public Offerings (primary market). Stocks are the best long-term investment options wherein
the market volatility and the resultant risk of losses, if given enough time, are mitigated by
the general upward momentum of the economy. There are two streams of revenue generation
from this form of investment.
1. Dividend: Periodic payments made out of the company’s profits are termed as dividends.
2. Growth: The price of the stock appreciates commensurate to the growth posted by the
company resulting in capital appreciation.
On an average an investment in equities in India has a return of 25%. Good portfolio
management, precise timing may ensure a return of 40% or more. Picking the right stock at
the right time would guarantee that your capital gains i.e. growth in market value of stock
possessions, will rise.
Bonds: It is a fixed income (debt) instrument issued for a period of more than one year with
the purpose of raising capital. The central or state government, corporations and similar
institutions sell bonds. A bond is generally a promise to repay the principal along with fixed
rate of interest on a specified date, called as the maturity date. Other fixed income
instruments include bank deposits, debentures, preference shares etc.
The average rate of return on bond and securities in India has been around 10-16% p.a.
Precious Projects: Precious objects are items that are generally small in size but highly
valuable in monetary terms. Some important precious objects are like the gold, silver,
precious stones and also the unique art objects.
NEED FOR THE STUDY
The Project study is undertaken to analyze and understand the Capital Budgeting process in
KESORAM CEMENT LIMITED, which gives mean exposure to practical implication of
theory knowledge.
To know how the company gets funds from various resources.
To know about the company’s operation of using various Capital Budgeting
techniques.
SCOPE FOR THE STUDY
1. Financial investment decision is essential in all types of organizations whether it be
profit or non-profit, financial investment decision is essential in a planned Economy
as well as in a capitalist set-up as it involves efficient use of the resources. Even in a
boom period, when a company make high profits there is also a fear of liquidation.
2. In a country like India where resources are scarce and the demand for funds are many,
the need of proper financial management is required .In case of newly started
companies with a high growth rate it is more important to have sound financial
management since finance alone guarantees their survival.
3. Financial management is very important in case of non-profit organizations, which do
not pay adequate attentions to financial management. However a sound system of
financial management has to be cultivated among bureaucrats, administrators,
engineers, educationalists and public at a large.
OBJECTIVES OF THE STUDY
To study the relevance of capital budgeting in evaluating the project for project
finance
To study the technique of capital budgeting for decision- making.
To understand the nature of risk and uncertainty
To study the long term investment decision profitability of the firm.
To evaluate the long term performs by return of capital employment cost of
capital and return on assets.
RESEARCH METHODOLOGY
To achieve aforesaid objective the following methodology has been adopted. The
information for this report has been collected through the primary and secondary sources.
Primary Sources:
It is also called as first handed information; the data is collected through the
observation in the organization and interview with officials. By asking question with the
accounts and other persons in the financial department. A part from these some information is
collected through the seminars, which were held by KESORAM CEMENT LIMITED.
Secondary Sources:
The secondary data have been collected through the various books, magazines,
brouchers & websites.
LIMITATION OF THE STUDY:
Lack of time is another limiting factor, i.e. the schedule period of 8 weeks are not
sufficient to make the study independently regarding Capital Budgeting in
KESORAM CEMENT LIMITED.
The busy schedule of the officials in the KESORAM CEMENT LIMITED. Is
another limiting factor. Due to the busy schedule officials restricted me to collect
the complete information about organization.
Non-availability of confidential financial data.
The study is conducted in a short period, which was not detailed in all aspects.
All the techniques of capital budgeting are not used in KESORAM CEMENT
LIMITED. Therefore it was possible to explain only few methods of capital
budgeting.
