SUSTAINABLE INVESTMENT APPRAISAL: INCORPORATING ENVIRONMENTAL AND SOCIAL FACTORS INTO CAPITAL BUDGETING DECISIONS AT ULTRATECH CEMENT

Abstract

Capital Budgeting is the process of planning and evaluating long-term investment decisions undertaken by an organization. It involves the selection of projects or investments that are expected to generate benefits over an extended period, such as purchasing new machinery, expanding production facilities, launching new products, or investing in research and development. The primary objective of capital budgeting is to maximize shareholders' wealth by identifying and selecting projects that provide the highest returns while minimizing risk. Capital budgeting plays a crucial role in financial management because it involves substantial investment of funds and has long-term implications for the growth and profitability of an organization. Various techniques such as Payback Period, Accounting Rate of Return (ARR), Net Present Value (NPV), Internal Rate of Return (IRR), and Profitability Index (PI) are commonly used to evaluate investment proposals. These methods help management assess the feasibility, profitability, and risk associated with different projects. Effective capital budgeting ensures optimal allocation of scarce financial resources, improves operational efficiency, and enhances the competitive position of the organization. It also aids in strategic decision-making by aligning investment decisions with the overall goals and objectives of the business. This study examines the concepts, techniques, importance, and challenges of capital budgeting and highlights its role in achieving sustainable organizational growth and financial success