Cement 120322054853-phpapp02


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Ratio analysis of cement industries

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Cement 120322054853-phpapp02

  1. 1. Guidance By :- Dr.Vineet Chouhan Submitted By :- Chirag Kalal (12bc00002)
  2. 2. Industry Profile The first endeavor to manufacture cement dates back to 1889 when a Calcutta based company endeavored to manufacture cement from Argillaceous (kankar). Finally it was in 1914 that the first licensed cement manufacturing unit was set up by India Cement Company Ltd at Porbandar, Gujarat with an available capacity of 10,000 tons and production of 1000 installed. In 1927, the Concrete Association of India was formed with the twin goals of creating a positive awareness among the public of the utility of cement and to propagate cement consumption. Cement Industry after Independence Period of Restriction (1969-1982) Partial Control (1982-1989) After Liberalization
  3. 3. Company Profile ACC Limited is India’s foremost cement manufacturer with a country wide network of factories and marketing offices. Established in 1936, ACC has been a pioneer and trend-setter in cement and concrete technology. ACC is marketed through a network of 19 Sales Units, 54 Area Offices, and 194 warehouses. This is backed by a country wide network of over 9,000 dealers who, in turn, are assisted by their sub-dealers. ACC manufactures the various kinds of Portland cement for general construction and special applications. In addition to this, ACC offers two value added products namely, Bulk Cement and Ready Mix Concrete Mr. N. S. Sekhsaria is vice Chairman of ACC Limited and Mr. Sumit Banerjee is Managing Director of the company. ACC (ASSOCIATED CEMENT COMPANY) LIMITED
  4. 4. INDIA CEMENT LIMITED The India Cements Ltd was established in 1946 and the first plant was setup at Sankarnagar in Tamilnadu in 1949. Since then it has grown in stature to seven plants spread over Tamilnadu and Andhra Pradesh. The capacities as on March 2002 have increased multifold to 9 million tons per annum.  The Company is the largest producer of cement in South India.  The Company's plants are well spread with three in Tamilnadu and four in Andhra Pradesh which cater to all major markets in South India and Maharashtra.  The Company is the market leader with a market share of 28% in the South. It aims to achieve a 35% market share in the near future. The Company has access to huge limestone resources and plans to expand capacity by de-bottlenecking and optimization of existing plants as well as by acquisitions.  The Company has a strong distribution network with over 10,000 stockiest of whom 25% are dedicated.  The Company has well established brands- Sankar Super Power, Coromandel Super Power and Raasi Super Power.  Regional offices in all southern states and Maharashtra offices/representative in every district  Technical cell to cater to all your queries/doubts
  5. 5. GUJRATAMBUJA CEMENT LTD. Ambuja Cements Limited was set up in the late 80s. The cement industry presented an opportunity of steady growth and ethical competition to the promoters. However, a decade later, it became one of world’s most efficient cement companies producing the finest cement in the world at the lowest cost. While adhering to the most stringent international pollution-control norms Today, Ambuja is the 3 rd largest cement company in India, with an annual plant capacity of 16 million tonnes Ambuja Cement exports almost 17% of its production in a very competitive international environment. For the last ten years, Ambuja Cement remains India’s highest exporter of cement. • Award for Corporate Social Responsibility by Business World – FICCI • International Award For Rural Development by Asian Management Institute (AIM) • National Award for commitment to quality by the Prime Minister of India. • National Award for outstanding pollution control by the Prime Minister of India.
  6. 6. JK CEMENT JK Lakshmi Cement, member of the JK Organisation is a blue chip cement company operating in India. Launched in 1982, Lakshmi Cement, an ISO9001:2000 company, is built over an area of about 8 square kilometers at Jakaypuram the Sirohi District of Rajasthan. Public company listed on the Bombay Stock Exchange JK Cement shines bright at the Rural Marketing Association of India (RMAI) Flame Awards 2013 MTM Corporate Star Award 2013 for JK Cement National Safety Award – Runners Up Position for the performance year 2011 As one of the large manufacturers in the Indian cement industry, JK Lakshmi Cement has acquired the ultra modern equipment from Fuller International of the United States of America, and electronic packers from Ventomatic in Italy. The annual installed plant capacity was 3.4 million tonnes per annum in 2007, but was being expanded to 5 million tonnes per annum during 2008
  7. 7. UltraTech Cement UltraTech Cement Limited is India’s biggest cement company and India’s largest exporter of cement clinker based in Mumbai, founded in 1983 India.The company is division of Grasim Industries. It has an annual capacity of 52 million tonnes. UltraTech cement holds the Superbrand status. UltraTech Cement Middle East Investments Limited, a wholly owned subsidiary of the Company has acquired management control of ETA Star Cement together with its operations in the UAE, Bahrain and Bangladesh UltraTech Cement Limited and its subsidiaries have an annual capacity of 53.90 million tonnes, making it among the top 10 producers of cement globally Bhartiya Udyog Ratan Award presented to Sh. KYP Kulkarni By Indian Economic Development & Research Association (IEDRA), New Delhi IMC Ramkrishna Bajaj National Quality Award
  8. 8. Research Methodology Objective of the study  To know present scenario of cement industry  To analyze the information collected on sales, profit, EPS, Market Price, etc.  To do ratio analysis of the selected companies and to make necessary comments on it  Draw conclusion about financial position of selected cement company  To study five companies of the cement industry to know which company is  Fundamentally strong for investment purpose Benefit of the study  It provides vast knowledge about cement Industry.  It is importance for compare the theoretical knowledge with practical study. Sources of data  I have utilized secondary sources of data to suffice the need of my project adequately.
  9. 9. Research Design I have used DESCRIPTIVE RESEARCH design. Reference Period Limitation of study I have utilized Last 3 Year data of balance sheet and Profit & loss account of company for analysis of cement Industry.  The data for the project is collected mainly through secondary sources. It is not sure that the data is accurate and complete.  The concept of fundamental analysis is totally new for me more ever this subject is very broad.  Information is windows dressed up. So it is difficult to obtain actual required data for the completion of the project.  Time period collected for the project was high and tough. Due to time limitation it may be possible that some of the data left out.  The time available was very less, so fundamental analysis has been done only Five companies. This may lead misinterpretation of industry, as there are many companies in cement industry
  10. 10. Analysis and Interpretation of Data ECONOMIC ANALYSIS Following are various tools through which we can measure economic condition of nation. GDP(GROSS DOMESTIC PRODUCT) FDI(FORIGN DIRECT INVEST MENT) INFLATION FISCAL SITUATION
  11. 11. COMPARISON OF AVERAGE RATIO COMPANY NAME Ratio Name Unit India Cement J.K Cement Ultratech Cement Ambuja Cement Acc Cement Gross Profit Ratio Per. 28.40 41.008 30.038 50.97 28.414 Net Profit Ratio Per. 13.518 13.5 13.114 22.648 19.248 Operating Ratio Per. 73.17 62.532 70.538 69.29 73.74 Operating profit Ratio Per. 26.946 38.326 30.45 30.99 26.536 Current Ratio Pro. 2.37 1.7307 1.26118 1.0031 0.84 Liquidity Ratio Pro. 2.01 1.3759 0.98116 0.61348 0.56496 Debts Equity Ratio Pro. 0.68 1.381 1.8679 0.18 0.20 Proprietary Ratio Pro. 0.60 0.42946 0.35262 0.86 0.84 Return on Capital Employed Pro. 0.13032 0.37866 0.21972 0.39688 0.39998 Net profit to total assets Ratio Pro. 0.07672 0.13654 0.1136 0.25194 0.255 Debtor turnover Ratio Tim e 44.4 8 0.06006 8.2 14.8 Fixed assets to proprietary fund Ratio Pro. 1.09824 0.9874 2.0598 0.69454 0.89564 Earnings Per share Per. 14.714 98.162 6.542 8.44 64.428
  12. 12. RANK TO AVERAGE RATIO COMPANY NAME Ratio Name Unit India Cement J.K Cement Ultratech Cement Ambuja Cement Acc Cement Gross Profit Ratio Per. 5 2 3 1 4 Net Profit Ratio Per. 3 4 5 1 2 Operating Ratio Per. 4 1 3 2 5 Operating profit Ratio Per. 4 1 3 2 5 Current Ratio Pro. 1 2 3 4 5 Liquidity Ratio Pro. 1 2 3 4 5 Debts Equity Ratio Pro. 3 4 5 1 2 Proprietary Ratio Pro. 3 4 5 1 2 Return on Capital Employed Pro. 5 3 4 2 1 Net profit to total assets Ratio Pro. 5 3 4 2 1 Debtor turnover Ratio Time 5 2 1 3 4 Fixed assets to proprietary fund Ratio Pro. 2 3 1 5 4 Earnings Per share Per. 3 1 5 4 2 RANK
  13. 13. Finding and Conclusion  Ambuja cement Ltd shows good position in most of the ratios which is good sign for the company and will enjoy rapid growth. Ambuja cement Ltd has more number of strong point rather than weak points. Where Shree cement Ltd is also having well position in different ratios so it reflects that firm is growing and shows good position.  In case of net profit margin also, it can be concluded that Ambuja cement has always been getting a good amount of profit than the rest of the companies that were selected for all the five companies.  From the analysis, Shree cement’s earning is very high and dividend paid is also very high. So it indicates good sign for the company and also for the investors.  Overall growth of the Ambuja and Shree is high than the other three companies.  The overall ranking is as follows: J.K cement &Ambuja Cement ACC Limited India cement Ultratech Cement
  14. 14.  Thus as per the ranking and overall good and bad conditions defines the strength and weaknesses of the cement companies.  The Indian cement industry is the second largest producer of quality cement. Indian Cement Industry is engaged in the production of several varieties of cement  On the basis of this analysis Ambuja cement and Shree cement is more financially sound compare to other three companies.  Binani cement is not showing good Position in majority of the ratio so it is bad sign for the company.
  15. 15. Recommendation  Cement companies have lots of room to grow, so investment in these types of industries helps the investors at long time.  Buy shares of reputed companies backed by top class management  Before investing, we should undertake a deep study on the net sales, net profits, in relations to equity capital employed and should attempt to forecast for the coming years.  Do not invest in inactive shares. Generally it is difficult to encase them.  From the company’s point of view, the company should allow the investors to take part in board of directors meeting & should give maximum dividend to the shareholders.  Do not overpay for growth.  Do not invest in unlisted shares.  The investors should become cautious while investing for very long time.  The investors should analyze price movement.  Economic performance is greatly affected to the performance of the industries of the country, so investors should know economic performance of the country while investing.  If they follow the market trends then they can deliver high returns and also they should reduce the risk.
  16. 16. Bibliography REFERENCE BOOKS:- •Khan & Jain – Financial Management •Management Accounting: - R.S.N Pillaai and Bhagavati SITES VISITED:- •www.moneycontrol.com •www.acc.com •www.google.com •www.wikipedia.com •www.indiacement.co.in •www.gujaratambujacement.com •www.ultratechcement.com •www.jkcement.com
  17. 17. Thank you…