SAP-TO BE Process

New Allenberrry Works

FICO NAW
Finance and Controlling
Version 1.0
28.09.2006

STATEMENT OF CONFIDENTIALITY /

DISCLAIMER
This document is the property of Caritor, Inc. No
part of this document shall be reproduced, stored
in a retrieval system, or transmitted by any means,
electronic, mechanical, photocopying, recording,
or otherwise without prior written permission from
Caritor, Inc.
 Table of Contents

Table of Contents
Asset Accounting.....................................................................................................................................3
1. AS IS Process........................................................................................................................................4
2. Core to Be Process..........................................................................................................................8
Changes to Existing Organization........................................................................................................................12
Description of Improvements and Key Metrics.....................................................................................................12
Notes on Further Improvements...........................................................................................................................12
Functional Deficit and Method to Remove That....................................................................................................12
Interface Requirement..........................................................................................................................................12
System Configuration Considerations..................................................................................................................12
File Conversion Considerations............................................................................................................................13
Any reports required related to current business process....................................................................................13
Any document/output would be printed for this business process........................................................................13
Authorization Considerations................................................................................................................................13
End User Training Requirements..........................................................................................................................14

A. SAP Standard Reports.................................................................................................................15

B. Custom Developments................................................................................................................16

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Asset Accounting

TO-BE Document

For SAP R/3 Implementation at New Allenberry Works.

Date: 28.09 2006

Sr. No of TO BE document 15

Ref. Sr. No. Of AS-IS document

Name of Business Process: Asset Accounting.

Module: Finance Sub module: Asset Accounting

Version no of document: Date: 28.09.2006

Version Management This Document is subject to change control. Every change of the document has
to Undergo change control procedure and has to be registered in the following table

Version Change Prepared By Date

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1. AS IS Process
NAW currently has the following fixed assets and assets under construction

Fixed Asset

Land

Building

Machinery

Vehicles

Electric Installations

Furniture and Fixtures

Tools and Dies

Computers

Generator

Office equipment

Asset under construction

Building

Machinery

At present Asset Master Record is managed in excel sheet. The Asset Master record
numbering is assigned internally.

There is no requirement to shut down an asset (discontinue depreciation) for a period of

time. NAW does physically verify the assets (No definite time) but as soon as it comes to
notice that any asset is no longer on hand or cannot be used, the uses of the asset are
discontinued.

None of the asset values are managed in foreign currency.

The fiscal year for asset accounting correspond to

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Start 1st April of the year

End 31st March of the year.

NAW is not currently using a shortened fiscal year nor have used a shortened year in the
past.

It is required for NAW to calculate quarterly depreciation.

Depreciation area

There is a distinction necessary between book depreciation (for external balance sheet) and
tax values (for tax balance sheet) in NAW as depreciation is charged on Straight Line
method in Books of Accounts and on WDV method for income tax purposes.

NAW needs to record depreciation for purposes other than the book depreciation-for income
tax purpose. Cost accounting depreciation / Special reserve for special depreciation / net
worth tax valuation are not used.

NAW needs the values for income tax purpose. At present NAW does not use any
depreciation area for calculating cost accounting depreciation and passing it on to cost
accounting.

Chart of depreciation

Depreciation is to be calculated as per income tax act and companies act separately.

Asset class

The structure of fixed assets in NAW s Balance sheet is given in Annexure . A list of assets
types that are managed in the Asset Accounting System (e.g. Land, Building, Plant &
Machinery etc are given in the Schedule of Balance Sheet. At present only one class of
each asset category is maintained. NAW intends to classify assets in future as per sub class
also as provided in SAP.

NAW does not manage financial assets in the Asset accounting system. At the end of the
year depreciation is claimed as per Schedule 14 of company act.

For each category the default depreciation method and the period of depreciation in NAW is
Straight Line Method.

NAW does not have specific amount above which purchases are to be capitalized as fixed
assets. At the end of the year depreciation is claimed as per rule of companys act.

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Direct acquisition of internal activity

Some services (internal activities) are also capitalized (legal costs or consultancy charges)

The information flow for asset acquisition in NAW is as follows

Requirement Approval from COO Quotation PO Asset receiving

Payment

Asset acquisition is posted on net basis. (Deducting any discount)

NAW wants down payment for assets to be shown differently. GL account is maintained to
keep a record of costs using acquisition to assets under construction.

After receipt of invoice it is verified with the purchase order and payment is made on due
date. The assets are capitalized on the date when these are put to use.

Subsequent acquisition

When subsequent acquisition becomes integral part of previously capitalized fixed assets
only than NAW intends to post this acquisition to previously capitalized fixed asset.

Depreciation Processing

NAW has the following method of depreciation that are currently being used.

Straight Line Method (SLM) for book depreciation

Written down method (WDV) for tax depreciation.

Depreciation values are calculated to the day in case of book depreciation and in case of tax
depreciation condition of 180 days are considered as per income tax act.

NAW does not want to allow negative depreciation for certain assets.

The period control for depreciation values are handled as per statutory rules and
regulations.

Depreciation Posting

It is not necessary from business point of view to post depreciation directly to cost
accounting as at present NAW is not using cost centre.

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NAW does not post depreciation to assets under construction.

NAW posts depreciation to depreciation account.

No depreciation is posted for assets under construction.

Summary settlement is used for asset under construction.

NAW does not have assets whose value appreciates.

NAW has not splitted any asset into one or more new asset till now.

Retirement

No asset accounting is maintained in NAW separately, only GL account is maintained. It is

posted after preparation of invoice.

NAW can sell or transfer assets to affiliate or associated companies.

NAW conducts the physical inventories for fixed assets on suitable intervals.

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2. Core to Be Process
The Asset sub module handles the creation of assets, buying of an asset,
capitalization of assets, scrapping and selling/transferring, depreciating of an
asset.

Asset Master Data:

The "master data maintenance" component is used for recording the master data of
fixed assets on an individual asset basis. An asset master is created for each and every
asset. Asset number uniquely identifies a fixed asset. It consists of main asset number
and sub-asset number. Numbers for assets can be either assigned internally or
externally. For NAWFbd we will use numbering internally. Asset masters have to be
created before procurement and capitalization of assets

Chart of Depreciation

Chart of Depreciation contains the list of defined depreciation areas arranged according
to the business and legal requirements. Chart of Depreciation enables us to manage all
rules for the valuation of assets in a particular country or economic region. Company
code is assigned to Chart of Accounts. Several Company codes can work with the same
chart of accounts.

Asset Class

Asset class is the main criteria for classifying fixed assets according to the legal and
management requirements. For each asset class, control parameters and default values
are defined for depreciation calculation and other master data. Assets are created under
asset classes.

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The following asset classes will be created for NAW Fbd

Land
Building Office
Building Factory
Plant and machinery
Tube well
Electrical Installations
Furniture, Fittings and other equipments
Vehicles
Assets Under Construction

Group Assets for income tax purposes

Depreciation Area

It is an area showing the valuation of a fixed asset for a particular purpose like Book
purposes, Tax balance sheet purpose etc. The following Depreciation areas will be
created:

Book Depreciation
Income Tax Depreciation as per Income Tax Act, 1961
Assets will be numbered and number ranges would be maintained which will be linked to
the Asset Class. The number range for the assets will be generated internally and would
be different for different asset classes so that there is no mix-up of Assets.
Depreciation Keys will be maintained in the system, which will fetch the rates of
depreciation. Account Determinations will be created. This depreciation will be posted to
the respective GL Accounts with the help of Account Determination. Insurance details of
the asset would be maintained in the insurance tab of the asset master.

Internal orders will be raised under the controlling module for each of the capex
proposal. For every internal order under capex will be attached to an asset under
construction in the settlement rule of the order.

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Purchase requisitions and orders will be created under account assignment

category F with reference to the internal order. All the expenses will be collected
under the internal order. At the month end when the internal order is settled the
amounts will get transferred from internal order to asset under construction or
directly to main Asset.
Based on the technical completion certificate received from plant the asset under
construction will be capitalized using the standard transaction.

Depreciation will be calculated on monthly basis.

The following transactions are allowed for Fixed Asset management: --

Creation of an Asset
Capitalization of an Asset under Construction
Depreciation of an AssetBook as well as IT Depreciation
Unplanned Depreciation
Sale of an Asset with gain/loss
Scrapping of an Asset
Transfer of an Asset

Asset Purchase will be handled through the PO-GR route in MM.

Process Flow Chart:

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Process Flow Diagram:

Creation of Po

Release the PO

G.R & Capture Asset will get posted to

Excise Invoice Internal Order

Post CENVAT I.O Settlement

Invoice Verification Asset created

Payment to vendors,
advance
adjustments etc.

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Further Notes

Changes to Existing Organization

- Assets will now have asset numbers in the SAP System.
- Procurement of assets through Purchase Orders with reference to internal
orders.

- Since the AUC can be monitored through raising internal orders, the raising of
internal orders will be done through accounts, and thereafter budgets will be
assigned.

Description of Improvements and Key Metrics

Budgetary control on Capital Expenses Through internal orders .

Asset Register available on line & Asset related transactions will update the Balance
Sheet and Profit and Loss Account as soon as the transactions take place

Automated Depreciation computation both for Book purposes and income tax
purposes

Depreciation posted periodically (monthly) into accounts .

Depreciation simulation can be seen for any number of years through a standard
report.

Notes on Further Improvements

NA

Functional Deficit and Method to Remove That

NA

Interface Requirement
NA

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System Configuration Considerations

NA

File Conversion Considerations

NA

Any reports required related to current business process

NA

Any document/output would be printed for this business process

Authorization Considerations
Detailed Authorization matrix will be defined for all users in the common file for all
modules.

The high level Authorization requirements are as below.

Business Roles Number of Users

Business Manager

Operations Manager

Transaction Owners

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End User Training Requirements <E.g.:

Business User Segments Number of Type of Transaction Geographical

Users Location

Business Manager Display, Reports

Operations Manager Change, Display,

Reports

Transaction Owners Create, Display, Reports

Sign-off (Approval) for this document:

Name of Team members: Organization / Bus. Signature

Unit

FI/CO Consultant-Vinod Atmakuri Caritor Inc

Business Process Owners-C.M.Duggar New Allenberry Works

Key User-Balbir Khanna New Allenberry Works

Key User-Vishal Sharma New Allenberry Works

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A. SAP Standard Reports

<E.g.:

SAP Standard Reports

S No: Report Description Selection Criteria Output

01 Asset Balances S_ALR_87011963 Screen View/Output

02

03

04

05

06

07

08

09

10

11

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B. Custom Developments
<E.g.:

Print Requirements

Sl No: Report Description Selection Criteria Output

1.0

2.0

Development Requirements

Sl No: Report Description Selection Criteria Output

1.0

Report Requirements

Sl No: Report Description Selection Criteria Output

1.

2.

3.

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