Sectoral analysis shalini money roller

CEMENT SECTOR
ANALYSIS
Ambuja Cements Ltd Analysis
ABSTRACT
A detail top down analysis of cement sector from
Global-to-Indian-to-peer-to-Ambuja Cements Ltd
performance. Future prospects and
recommendation from research point of view. All of
these are tried to be covered in the report.
By Shalini Singh
For completion of Equity Research Winter Project by
The Money Roller

Shalini Singh The Money Roller Equity Research Project
Calcutta Business School Analysis On Cement Sector and Ambuja Cements Ltd
pg. 1
Serial
no.
Particulars Page No.
1 Executive Summary 2
2 Global Scenario 3-4
3 India’s Scenario 6-11
4 Peers status 12-16
5 Ambuja Cement Analysis 17-44
6 Outlook 45
7 References 46

pg. 2
Cement is the concrete man-made ingredient used all over the world. It
importance increased with need for development and growth of infrastructure,
real estate, housing etc. With increase in living standard and economic growth
the need for development of these sectors have increased. Cement is the key
ingredient for construction of infrastructure and housing etc. so its need and
importance increased simultaneously. In last 5 years this sector has seen slow
growth of business due to high interest rates, high inflation rate, poor monsoon,
weak rural economy, low GDP growth, etc. We will see global, and Indian
scenario before digging into the Company profile and its peers to have top down
analysis of the sector as a whole.
In Indian market 70% cement sector market is captured by small group of big
players. There are few government companies involved.
Big players in India constitute of UltraTech Cement, ACC, Ambuja Cements
Ltd., Shree Cements, and India Cement etc.
Government in the recent budget has announced expenditure in smart city
projects, RBI rate cuts, and dropping inflation rate effects will have a holistic
impact on the cement sector and in the conclusion part we will deal with the
prospects of this sector and its outlook.

pg. 3
India is second largest Cement producer in the world preceded by China. It
contributes key resource to construction units. The industry plays a crucial role in
the development of the housing and infrastructure sector of the economy. The price
and distribution control of cement was removed in 1989 and the cement industry
has been de-licensed in 1991 under the Industrial (Development & Regulation)
Act, 1951. Since then the Cement Industry has progressed well both in
capacity/production and as well as in process technology.
Process of cement production mainly consumes electritricy than fuel.
2.0339% 1.7559%
57.3115%
6.5847%
1.5852%
1.5852%
1.5364%
1.6828%
1.8779%
1.4877%
22.5588%
World Cement Production, 2015
United States Brazil China
India Indonesia Iran
Korea, South Russia Turkey
Vietnam Other Countries(rounded)

pg. 4
The cement industry comprises of 210 large cement plants with an installed
capacity of 350.00 million tonnes and more than 350 mini cement plants with an
estimated capacity of 11.10 million tonnes per annum. There are a few large
cement plants owned by the Central and the State Governments
Some key drivers of cement industry.  Indian real estate market  Indian
infrastructure scenario  Government programs like rural or urban development
etc.  GDP of India  FDI of India.
Increase in India’s cement production over the years which accounts only 6% of
world cement production can be seen below. So, there is huge market for cement
with various opportunities untapped subject to environmental factors that has to
be taken care of.

pg. 5
Source: USGC.gov
Cement sector growth is inalienable to the growth of GDP of the country, FDI,
infrastructure sector growth, real estate sector growth.
Clinker the key ingredient produced by cement companies to procure in the
manufacturing of cement.
0
50000
100000
150000
200000
250000
300000
PRODUCTION
YEAR
India
World Cement Production, 2015
Countries 2015 Percentage of Production
United States 83400 2.0339%
Brazil 72000 1.7559%
China 2350000 57.3115%
India 270000 6.5847%
Indonesia 65000 1.5852%
Iran 65000 1.5852%
Korea, South 63000 1.5364%
Russia 69000 1.6828%
Turkey 77000 1.8779%
Vietnam 61000 1.4877%
Other Countries(rounded) 925000 22.5588%
4100400 100%

pg. 6
World’s Production of Clinker
Countries 2015 Percentage
United States 106000 2.9444%
Brazil 60000 1.6667%
China 2000000 55.5556%
India 280000 7.7778%
Indonesia 59000 1.6389%
Iran 79000 2.1944%
Japan 55000 1.5278%
Russia 80000 2.2222%
Saudi Arabia 55000 1.5278%
Turkey 69000 1.9167%
Vietnam 80000 2.2222%
Other Countries 677000 18.8056%
3600000 100%
We can see India is second largest producer in clinker and cement production
preceded by China.
2.9444% 1.6667%
55.5556%
7.7778%
1.6389%
2.1944%
1.5278%
2.2222%
1.5278%
1.9167%
2.2222% 18.8056%
World's Clinker production
United States Brazil China India
Indonesia Iran Japan Russia
Saudi Arabia Turkey Vietnam Other Countries

pg. 7
Cement sector is one of eight core industries of India. The Index of Eight Core
Industries (ICI) monitors production of eight core industries i.e. Coal, Crude Oil,
Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity every
month. These eight industries have combined weight of around 37.90 % in Index
of Industrial Production (IIP). ICI is released 12 days prior to the release of IIP
by CSO.
The growth rate was mainly driven by positive growth in Fertilizers, Electricity,
Coal and Refinery Products. Cement showed a negative growth from 5.6% to
2.2% in 2014-15 and 2015-16 respectively.
Growth Rate of Eight Core Industries (in
percent)
Sector Weight 2008-
09
2009-
10
2010-
11
2011-
12
2012-
13
2013-
14
2014-
15
2015-
16
(Apr-
Dec)
Coal 4.38 8 8.1 -0.2 1.3 4.6 1.3 8.5 4.6
Crude Oil 5.22 -1.8 0.5 11.9 1 -0.6 -0.2 -0.9 -0.8
Natural
Gas
1.71 1.3 44.6 10 -8.9 -14.5 -13 -5 -2.7
Refinery
Products
5.94 3 -0.4 3 3.1 29.0* 1.5 0.4 2.4
Fertilizers 1.25 -3.9 12.7 0 0.4 -3.4 1.5 -0.1 10.1
Steel 6.68 1.9 6 13.2 10.3 4.1 11.5 4.4 -1.9
Cement 2.41 7.2 10.5 4.5 6.7 7.7 3.1 5.6 2.2
Electricity 10.32 2.7 6.2 5.6 8.1 4 6 8.3 4
Overall
Index
37.9 2.8 6.6 6.6 5 6.5 4.2 4.4 1.9
India is the second largest Exporter of Cement in the world and the statistics to
support the statement is shared below: -
Source: Annual Report of Ministry of Commerce and Department of Industrial
Policy and Promotion

pg. 8
India’s total exports
S.No. Country
Amount in lacs
2015-2016
Quantity in 2015-16
Percntage
of Quantity
1
SRI LANKA
DSR
1,03,474.89 75084390 57.33151%
2 NEPAL 34,563.54 42375360 32.35617%
3
YEMEN
REPUBLC
913.15 3174000 2.42354%
4 MALDIVES 4,760.70 3046990 2.32656%
5 OMAN 336.52 1438400 1.09831%
6 MOZAMBIQUE 4,087.48 1238090 0.94536%
7 KENYA 13.84 1010990 0.77195%
8 KUWAIT 5,273.01 911160 0.69573%
9 MADAGASCAR 834.81 813100 0.62085%
10 SEYCHELLES 578.42 368840 0.28163%
11 Others 11,052.58 1503980 1.14838%
Total 1,65,888.94 130965300 1.000000
India's Total 17,16,37,804.58 1,17,11,51,08,520.00
%Share 0.0967 0.1118%
Source: Department of Commerce Export Import Data commerce.gov.in
-40 -20 0 20 40 60 80 100 120
Weight
2008- 09
2009- 10
2010- 11
2011- 12
2012- 13
2013- 14
2014- 15
2015-16 (Apr-Dec)
Growth Rate of Eight Core Industries (in percent)
Coal Crude Oil Natural Gas Refinery Products Fertilizers
Steel Cement Electricity Overall Index

pg. 9
India’s total export is merely 0.1118% thus there are scope for good business in
export of cement. Since India is among the top two producers of the cement in
the world, the scope of this business is wider.
Source: Department of Commerce Import Export Data commerce.gov.in
57.33151%
32.35617%
2.42354%
2.32656%
1.09831%
0.94536%
0.77195%
0.69573% 0.62085%
0.28163%
1.14838%
Export of Cement by India world wide
SRI LANKA DSR NEPAL YEMEN REPUBLC MALDIVES
OMAN MOZAMBIQUE KENYA KUWAIT
MADAGASCAR SEYCHELLES Others
13.10%
6.58%
6.00%
4.89%
4.75%
3.41%
3.36%
3.33%3.24%
3.22%
2.94%
2.81%
2.75%2.44%
2.44%
2.23%
2.22%
2.18%
1.54%
26.57%
Indian Cement Importing countries worldwide
CHINA P RP SAUDI ARAB U ARAB EMTS SWITZERLAND U S A
QATAR IRAQ NIGERIA KUWAIT INDONESIA
KOREA RP GERMANY VENEZUELA MALAYSIA BELGIUM
JAPAN IRAN AUSTRALIA UNSPECIFIED OTHER COUNTRIES

pg. 10
It is important to know each Big Indian Cement Players. Following are the
market share of big players in India: -
Ultra tech Cement of Aditya Birla Group is the biggest Cement Company in
India and largest exporter of cement in India, followed by ACC and then Ambuja
Cements Ltd. UltraTech's products include: Ordinary Portland cement, Portland
blast furnace slag cement, Portland Pozzolana cement.
ACC is one of the largest cement manufacturers. It is presently controlled by
Swiss cement company Holcim making it a subsidiary company of Ambuja
Cements Ltd.
Ambuja Cements Ltd. is also one of the largest cement manufacturers of India.
With 13% market share in India. It is part of Lafarge-Holcim group which is the
largest conglomerate formed after merger of Lafarge and Holcim.
India is producing, different varieties of cement like Ordinary Portland Cement
(OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement
(PBFS), Oil Well Cement, White Cement, etc. These varieties of cement are
produced as per the Bureau of Indian Standard (BIS) specifications and its
quality is comparable with the best in the world.
Cement is a key ingredient of concrete which is the most man-made material. It
is the third largest energy consuming and CO2 emitting sector. Various means
are being used to make this business sustainably grow with low CO2 emission.
22%
15%
13%10%
7%
6%
27%
Market Share
Ultra ACC Ambuja JaiPrakash India Cements Shree Cements Others

pg. 11
National Council for Cement and Building Materials (NCCBM) is an
autonomous apex R&D organization under the Administrative Control of this
Department.
The Budget provisions for the current financial year 2015-16 is Rs. 5.00 Cr for
‘Plan ‘and Rs. 14.55 Cr for ‘Non-Plan’ activities. Outlay for the 12th Five Year
Plan for NCCBM is Rs. 35 Cr.
Source: Annual Report of Ministry of Commerce and Department of Industrial
Promotion and Policy.
0 2 4 6 8 10 12 14 16 18
Number of Cement Companies
Number of Cement Companies in Indian States
West Bengal Uttar Pradesh Tamil Nadu Rajasthan
Meghalaya Maharastra Madhya pradesh Kerela
Karnataka Jammu and Kashmir Himanchal Pradesh Haryana
Gujrat Delhi Bihar Assam
Andhra Pradesh

pg. 12
Source: Cement information system.
0
5
10
15
20
25
30
35
40
45
No.of Plants

pg. 13
Companies Year Production of clinker Production of
Cement
UltraTech
Cement
2011 26.75 32.92
2012 31.31 39.43
2013 31.75 40.13
2014 31.52 40.79
2015 35.69 43.88
2016 37.07 47.56
Ambuja
cements
2011 14.7 20.97
2012 15.81 21.62
32.92
39.43
40.13
40.79
43.88
47.56
9.43
14.2
12.33
14.22
15.92
14.099
20.97
21.62
20.96
21.43
21.54
21.19
23.46
24.12
23.86
24.24
23.84
23.18
9.94
9.463
8.431
8.592
0 5 10 15 20 25 30 35 40 45 50
2011
2012
2013
2014
2015
2016
Production of Cement in MT
India Cements
ACC
Ambuja
Shree
Ultra

pg. 14
2013 14.27 20.96
2014 14.9 21.43
2015 14.4 21.54
2016
Shree
Cements
2011 7.47 9.43
2012 10.29 14.2
2013 8.68 12.33
2014 9.86 14.22
2015 11.32 15.92
2016 14.099
India
Cements
2011
2012 7.673 9.94
2013 7.195 9.463
2014
2015 6.483 8.431
2016 6.765 8.592
Comparative Sales figure of the Peers are given below: -
0
5
10
15
20
25
30
35
40
2011 2012 2013 2014 2015 2016
Production Clinker in MT
Ultra Ambuja Shree ACC India Cements

pg. 15
Products offered:-
Highest range of products are offered by UltraTech Cements. Ambuja Cement’s
93% of the product profile consists of Portland Pozzolana Cement. In addition to
above ACC cements also offers Bulk Cement, it is alternative to bagged cement.
More popular in western countries. ACC - in a joint venture with the government
of India - has set up the most sophisticated bulk unloading terminal at
Kalamboli, Navi Mumbai, to bring its cement from the ACC plant at Wadi in
Karnataka.
0
5000
10000
15000
20000
25000
30000
2011 2012 2013 2014 2015 2016
Net Sales in Crores in Rs.
Ultra Ambuja Shree ACC Indian Cement Industry
Companies/
Products
Portland Cement/
Portland
Pozzolana
Cement
Premium
Cement
Ordinary
Portland
Cement
Ready Mixed
Concrete
Portland blast
furnace Slag
cement
UltraTech
Cement √
Complying with
Sril lankan and
European
specifications
√ √ √
Ambuja
Cements √ √ √ √
ACC
√ √ √
Shree
Cements √ √ √

pg. 16
The terminal at Kalamboli has three 5000-tonne-capacity silos to store cement
which is transported in specially designed railway wagons. The company has its
own fleet of 15-tonne road-bulkers in which cement is then brought to the end-
user's construction site. The terminal has three modes of evacuation: bulk tanker
trucks, jumbo bags (one and 1.5 tonnes), and 50 kg bags.
UltraTech Cements has highest capacity of cement production because it has
large number of integrated cement plant and grinding units further, it also
produces more variety of products than others. Whereas all other companies are
somewhere very close competitor to each other.
All these units have one thing common in them, they are opting best eco-friendly
techniques possible and spend in Research and development for continued
process of development and innovation and use of alternative resources to reduce
their electricity consumption, dependence on fly-ash etc.
0
10
20
30
40
50
60
70
UltraTech Ambuja ACC Shree Cements
Series1 69.3 29.65 30.96 27.6
TotalCapacityinmilliontonnes
Companies
Total capacity of Cement production

pg. 17
Ambuja’s Capacity utilisation is also lower as compared to ACC and Ultra Tech
Cements. So as to gain competitive edge over the competitors it will have to
increase its capacity utilisation.
We can clearly see Ambuja’s capacity utilisation is 71.5% as compared t its
nearest peer UltraTech cements whose capacity utilisation is 73.6%, besides the
fact that both the company has faced decrease in capacity utilisation since 2012
which was 77.4% for Ambuja and 80.9% for UltraTech Cements.
2011 2012 2013 2014 2015 2016
Ambuja Cement 0.767 0.774 0.750 0.745 0.726 0.715
Ultratech Cement 0.675 0.809 0.788 0.756 0.730 0.736
ACC Cement 0.818 0.790 0.780 0.780 0.770 0.730
India Cement 0.710 0.674 0.707 0.698 0.612 0.600
Shree Cement 0.698 0.978 0.913 0.813 0.675 0.551
0.000
0.200
0.400
0.600
0.800
1.000
1.200
Capacity Utilization
Ambuja Cement Ultratech Cement ACC Cement
India Cement Shree Cement

pg. 18
Ambuja Cements Limited, formerly known as Gujarat Ambuja Cement Limited,
was founded by Narotam Sekhsaria in 1983 in partnership with Suresh Neotia.
Ambuja Cements Ltd (ACL), currently a part of a global conglomerate Holcim, is
one of India's leading cement manufacturers and has completed over 30 years of
operations. The company was acquired by Global cement major Holcim, the second
largest cement manufacturer in the world, in 2006. The Company has also made
strategic investments in ACC Limited.
Initially, Holcim had bought 14.8% promoters' stake in the GACL for INR 21.4
billion. Currently Holcim holds 63.61% of shares in Ambuja Cements.
Ambuja Cements is one of the largest cement manufacturers in India. With 8700
dealers and 29000 retailers (as per 2014 data) it has a vast distribution network
of evolved dealers and retailers whose reach helps the Company to cater to all
markets including rural and semi-urban markets.
Vision
To be the most sustainable and competitive company in our industry.
Mission
Create value for all. Delighted customers. Inspired employees. Enlightened
partners. Energised society. Loyal shareholders. Healthy Environment.
It is a part of LafargeHolcim conglomerate which has business in 90countries
spread all over the world.
Cement Capacity: - 29.65 million tonnes (as per 2014-15 data)
Production of Cement: - 21.54 million tonnes
Production of Clinker: - 14.4 million tonnes
Domestic market is the core business area for Ambuja cements whereas its export
business suffering continuously since last five years.

pg. 19
GDP Growth of India
GDP rate has been a driver for cement sectors performance over the years. Hence
predicting next year’s GDP is helpful to predict next year’s Cement sector growth.
Year GDP annual growth (%) Expected growth as per
Economic survey 2016-
17 (%)
Avg of both
(%)
2007 8.608 8.608 8.608
2008 3.891 3.891 3.891
2009 8.48 8.48 8.48
2010 10.26 10.26 10.26
2011 6.638 6.638 6.638
2012 5.619 5.619 5.619
2013 6.639 6.639 6.639
2014 7.243 7.243 7.243
2015 7.563 7.563 7.563
2016 7.4 7.4 7.4
Avg2017 7.23 8 7.615
India is expected to see a favourable GDP growth, so as the cement sector. The projection
given shows all three possibilities in which direction GDP may move depending on the trend
that it has been following. GDP range we are expecting is between 7-8% below which is not
good sign the cement sector.
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Avg20
17
GDP anuual growth 8.608 3.891 8.48 10.26 6.638 5.619 6.639 7.243 7.563 7.4 7.23
Expected growth as per
Economic survey 2016-17
8.608 3.891 8.48 10.26 6.638 5.619 6.639 7.243 7.563 7.4 8
Avg of both 8.608 3.891 8.48 10.26 6.638 5.619 6.639 7.243 7.563 7.4 7.615
0
2
4
6
8
10
12
Extimating GDP growth of India in 2017
GDP anuual growth Expected growth as per Economic survey 2016-17 Avg of both

pg. 20
Particulars 2008-
09
2009-
10
2010-
11
2011-
12
2012- 13 2013-
14
2014-
15
2015-
16
(Apr-
Dec)
2017
Cement 7.2 10.5 4.5 6.7 7.7 3.1 5.6 2.2
GDP
annual
growth
8.48 10.26 6.638 5.619 6.639 7.243 7.563 7.4 7.23
Cement GDP annual growth
2008- 09 7.2 8.48
2009- 10 10.5 10.26
2010- 11 4.5 6.638
2011- 12 6.7 5.619
2012- 13 7.7 6.639
2013- 14 3.1 7.243
2014- 15 5.6 7.563
2015-16 (Apr-Dec) 2.2 7.4
2017
3.1(Assuming growth 2nd
highest of 7 years data)
7.615
If GDP hikes to 7.615% as per favourable informations from Economic Survey 2016-17 (and
our calculations) we expect Cement sector to grow at least wit second highest rate of last 7
years.
0
5
10
15
20
25
2008- 09 2009- 10 2010- 11 2011- 12 2012- 13 2013- 14 2014- 15 2015-16
(Apr-Dec)
2017
Relation Between GDP growth and cement sector
Cement GDP annual growth

pg. 21
Company : Ambuja Cement
Fundamental Analysis
Ambuja Cement is a cement manufacturing company since 3o years, under the leadership of
Suresh Kumar Neotia and N.S. Seksharia. Ambuja Cements Ltd, is a part of the global
conglomerate LafargeHolcim, is one of the leading cement companies in the Indian cement
industry. Its environment friendly initiatives have played a key role in India’s efforts to
become a green state. Currently, Ambuja has a cement capacity of 29.65 million tonnes with
five integrated cement manufacturing plants and eight cement grinding units across the
country.
1. Shareholding Pattern
Foreign Promoter holding is high, QFI and Financial institution holding is high
so the company has a strong base.
63.61%
1.92%
8.76%
0.04%
18.53%
7.14%
Shareholding Pattern
Foreign Promoter Mutual Fund Financial Institutions
Government QFI Non Institution

pg. 22
2. Ratio Analysis
Return on equity
𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑡𝑎𝑥
𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 𝑓𝑢𝑛𝑑
7.835% 14.811% 13.648% 14.731% 15.229%
Propeitory ratio
(shareholders
equity/total
assets
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
0.727787 0.726814 0.73165 0.708675 0.699146
Debt-equity ratio
𝐿𝑜𝑛𝑔 𝑡𝑒𝑟𝑚 𝑏𝑜𝑟𝑟𝑜𝑤𝑖𝑛𝑔𝑠
0.0022 0.001889 0.003073 0.003933 0.005304
Current ratio
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
2.029888 1.904692 1.947468 1.751895 1.542642
Interest coverage
ratio
(EBIT/Interest
expenses)
𝐸𝐵𝐼𝑇
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠
13.77056 28.65834 23.88414 29.8258 33.81626
Quick ratio 1.752322 1.622449 1.618986 1.42511 1.208026
Cement Capacity In million tonnes 29.65 28.75 27.95 27.95 27.35
Cement
Production In million tonnes 21.54 21.43 20.96 21.62 20.97
Operating Profit
Margin in %
26 29 22.31 23.62 19.97
Return on capital
employed
14 13.77 12.79 13.91 7.38
Return on Assets
10.34 10.43 9.98 10.76 5.7
Inventory
Turnover Ratio (X)
9.25 9.89 9.81 11.23 10.57
Interest Coverage
Ratio
25.1611
23.44659
20.18482 18.89855

pg. 23
Company has improved over the years to come up with a favourable Current Ratio, Quick
ratio, Debt equity ratio. But, Interest coverage ratio has sharply declined but it is still at a
good ratio of 13.77. Despite of the fact that the company managed to increase in cement
production and capacity to 0.11million tonnes and 0.90million tonnes respectively through
fixed assets acquisitions during the year, still due to lower sale prices its net profit was down
by 46% and also because of additional depreciation and tax provisions, and higher tax write-
backs in 2014.
But, company is relishing the merger of Lafarge and Holcim to be largest global
conglomerate LafargeHolcim since Ambuja Cement is a part of it. So, there is good future
prospects for the company.
Return on Assets and Return on Capital Employed has been decreasing due to decrease in
demand, bad monsoon faced, high input prices and stringent price of cement.
2011 2012 2013 2014 2015
Operating Profit Margin in % 26 29 22.31 23.62 19.97
Return on capital employed 14 13.77 12.79 13.91 7.38
Return on Assets 10.64 10.43 9.98 10.76 5.7
Inventory Turnover Ratio (X) 9.25 9.89 9.81 11.23 10.57
Debt-equity ratio 0.0022 0.001889 0.003073 0.003933 0.005304
Current ratio 2.029888 1.904692 1.947468 1.751895 1.542642
0
5
10
15
20
25
30
35
PercentageofReturn
Years ->
Financial Analysis of Ambuja Cement
Operating Profit Margin in % Return on capital employed Return on Assets
Inventory Turnover Ratio (X) Debt-equity ratio Current ratio

pg. 24
UltraTech Cements has maintained a stable Operating Margin whereas Ambuja Cements
have showed a good improvement in the same over the past one year from 19.91% to
24.65%. India Cements has however managed to recover quickly over last two years from
13.38% to 18.73% i.e. 40% improvement.
2011 2012 2013 2014 2015 2016
Ambuja Cement 26 29 22.31 23.62 19.97 24.65
ACC Cement 21.86 21.66 16.58 15.12 14.04 13.71
India Cement 13.51 21.95 18.31 13.38 16.12 18.73
Shree Cement 29.24 30.66 31.29 26.74 22.95 25.86
0
5
10
15
20
25
30
35
ProfitMargin-->
Year -->
Operating Profit Margin
Ambuja Cement Ultratech Cement ACC Cement India Cement Shree Cement
2011 2012 2013 2014 2015 2016
Ambuja Cement 14 13.77 12.79 13.91 7.38 4.94
ACC Cement 15.21 12.45 12.41 13.14 6.54 6.44
India Cement 1.16 4.79 2.49 -2.53 0.47 2.28
Shree Cement 5.47 15.7 21.16 13.5 6.5 5.95
-5
0
5
10
15
20
25
Ratio--->
Year -->
Return on Capital Employed

pg. 25
Ambuja Cements is showing a reducing return on capital employed and increasing debt to
equity ratio due to company’s investment in setting up integrated cement plant and clinker
plants in eastern region to improve sales in this zone.
Thus a decreasing Return on Assets in also seen here as compared to peers.
3. Resource based view
Efficient use of resources is a key to success in manufacturing industry. Especially, since
2010 when carbon tax has been introduced cement companies have to keep a check on
improving its efficiency and reducing the emission of CO2 as much as possible.
Cement manufacturing most of the manufacturing cost comprises of Energy cost
(electricity)& Fuel cost and freight expense.
2011 2012 2013 2014 2015 2016
Ambuja Cement 14 13.77 12.79 13.91 7.38 4.94
ACC Cement 15.21 12.45 12.41 13.14 6.54 6.44
India Cement 1.16 4.79 2.49 -2.53 0.47 2.28
Shree Cement 5.47 15.7 21.16 13.5 6.5 5.95
-5
0
5
10
15
20
25
Ratio--->
Year -->
Return on Capital Employed
9.214%
0.049%
0.293%
6.814%
23.729%
29.009%
1.061%
7.232%
23%
Expenses in manufacturing of cement
Cost of raw materials consumed
Purchase of Stock-in-Trade
Changes in inventories of finished goods, work-in-progress and Stock-in-Trade
Employee benefits expense
Power and fuel

pg. 26
Source: Annual report of Ambuja cement
Ambuja has successfully reduced the power and fuel expenses compared to its peers. This is
possible due to its reliance on generating and utilising the power and electricity capitively in
the plant through DG generator, steam generator, Windmill generator. It has started
generating electricity via windmill from 2011. Since then the company is maintain a low
expense in Power fuel etc. compared to peers.
It was the first cement company to build captive ports with three terminals along
western coastline to facilitate cost-effective, timely and environmentally cleaner
shipments of bulk cements to its customers.
While the Company’s network of ports, bulk cement terminals and captive ships
supported a sustainable and strong market position in Mumbai, Panvel, Surat
and Cochin, the Mangalore bulk cement terminal, with its commercial
operations, helped expand the Company’s footprint in the South region.
2011 2012 2013 2014 2015 2016
Ambuja Cement 0.415 0.407 0.406 0.408 0.392 0.375
ACC Cement 0.431 0.403 0.412 0.418 0.422 0.408
India Cement 0.461 0.438 0.453 0.452 0.442 0.423
Shree Cement 0.388 0.387 0.430 0.402 0.392 0.361
0.000
0.050
0.100
0.150
0.200
0.250
0.300
0.350
0.400
0.450
0.500
AxisTitle
Axis Title
Power, Fuel, Travelling, Selling & Distribution Cost

pg. 27
TRANSPORTATION
ROAD 40%
RAIL 30%
WATER 30%
Water transportation is mainly used for cities near to ports. It also exports
through ports and thus cost-saving is there too.
Since Ambuja Cements 93% product portfolio consists of Portland Pozzolana
Cement (PPC) . The benefit of PPC is that it utilises fly ash, a by-product of the
power industry. Fly ash is not only cost-effective, it replaces natural limestone as
a raw material. It consumes less energy and thus Coal consumption in Kcal/kg is
low
2010 2011 2012 2013 2014
Ambuja Cement 750 739 736 735 730
Ultratech Cement 1,030.00 1,060.00 1,095.00 1,094.00 1083
ACC Cement 750 742 736 733 730
0
200
400
600
800
1000
1200
Coal Consumption in Kcal/kg
Ambuja Cement Ultratech Cement ACC Cement

pg. 28
.
Year 2015 Percentage
Cost of raw materials consumed 797.11 9.214%
Purchase of Stock-in-Trade 4.2 0.049%
Changes in inventories of
finished goods, work-in-progress
and Stock-in-Trade
25.39 0.293%
Employee benefits expense 589.52 6.814%
Power and fuel 2,052.94 23.729%
Freight and forwarding expenses 2,509.68 29.009%
Finance costs 91.79 1.061%
Depreciation and amortisation
expense
625.66 7.232%
1955.18 23%
Revenue from operations (net) 8651.47 100%
Further, company as discussed earlier, has to pay carbon tax as is levied by government to
keep a check on emission of CO2 by electricity consuming companies.The modern Indian
Cement plants are state-of-the-art plants and are comparable to the best in the world.
The Indian Cement Industry has managed to keep pace with the global technological
advancement. Induction of advanced technology has helped the industry to improve its
efficiency by conserving energy, fuel and addressing environmental concerns. Cement is one of
the most technologically advanced industries in the country.
Hike in carbon tax since its inception is given below. This also increases the end-use cost of
cement substantially.

pg. 29
If we compare total expenses of last 5years we can see that despite of increase in cement
production, there has been less incremental cost.
Source: - Annual Reports of last five years.
50
100
400
0
50
100
150
200
250
300
350
400
450
2010 2014 2016
Rs/ton
Year
CARBON TAX IN RS PER TONNE
Source: Union Budget 2010, 2014 and 2016
2009 2010 2011 2012 2013 2014 2015
Domestic Sales 18 19.5 20.54 21.31 20.94 21.43 21.50
Total Sales 18.8 20 20.91 21.43 21.04 21.51 21.60
Exports 0.8 0.5 0.37 0.12 0.1 0.08 0.10
0
5
10
15
20
25
Sales by Ambuja Cements
Domestic Sales Total Sales Exports

pg. 30
Ambuja Cement has been winning the prestigious CII Sustainability Award for Corporate
Excellence for the 5th year in a row. This also explains about its efficiency. Thus, despite of
the fact that last year cement demand grew only just by 1.5% on a YoY basis.
Energy cost have a great impact on the cement companies. This can be justified with the
following graph which explains the inverse relation in price of energy and cement over the
years since 2001. In 2012 India introduced the Perform Achieve Trade (PAT) scheme. Over
2012–2015 PAT has targeted 478 companies and eight sectors: thermal power plants, iron
and steel, cement, fertilizer, aluminium, textile, pulp and paper, and chlor-alkali. The
companies account for 164 MTOE of energy consumption (54 percent of India’s total). Each
company is subject to an energy consumption reduction target calculated using production
and annual energy consumption data over five years (2006–2010) submitted by designated
consumers, who receive tradable, certified energy savings credits if they hit efficiency gains
beyond their targets. In parallel, the central government promotes complementary actions
aimed at correcting market failures in the adoption of environment-friendly technologies. In
particular it subsidizes manufacturing firms by a linked capital subsidy scheme to mitigate
the high up-front costs of new technologies that aim to replace old machines with less
energy-intensive technologies. These subsidies reduce the payback period for energy saving
investments, which would otherwise average about three years. Even before the end of the
first PAT pilot period, results were encouraging. In 2013, an industry survey by the
Confederation of Indian Industries of 55 Indian companies producing 10 percent of India’s
total emissions and 45 percent of its industrial emissions revealed that 93 percent of these
companies were implementing emission reduction initiatives. These companies together
were cutting 2.5 million metric tons of carbon dioxide-equivalent annually (Clough 2015).
Source:- United Nations Industrial Development Organizations Report, 2016.

pg. 31
Source: MetaStock software.
We can see whenever there is a rise in energy price there has been a decline in the cement
price and vice versa. For making the study simpler I have compared CNX Energy and Ambuja
Cement price. Below is the bullish cycle of cement industry can be seen since year 2000.

pg. 32
Domestically company has good market in North region and with strong market
position in Mumbai, Surat and Cochin, the Mangalore(commenced its operation
in 2013) bulk cement terminal, with its commercial operations, helped expand
the Company’s footprint in the South region as well. But
Company grew by 7% (approx.) CAGR per annum in 9 years. This is possible
because of its huge investment in research and development over the years and
acquisitons of bulk terminals, access to various ports and acquitions of
companies like Dirk India Private Limited, Waste heat Recovery plant at
Rabriyawas in Rajasthan for improving efficiency, optimising power cost etc.
But the expense made is yet not enough as compared to the competit
41%
38%
21%
Region-wise sale by Ambuja Cements Ltd
North South/West Region East

pg. 33
Ambuja Cements invest less in R&D as compared to big players. However, its
investment have proved to be worthwhile over the time and helped company to
reduce use of coal, shift from non-renewable resources to some extent.
It was the first cement company to build captive ports with three terminals along
western coastline to facilitate cost-effective, timely and environmentally cleaner
shipments of bulk cements to its customers.
Portland Pozzolana Cement is the core product of Ambuja Cements, it
utilizes fly-ash a by-product of power industry. This cement constitute 93% of the
product profile of the company. Use of fly-ash in it is not only cost effective, it
replaces limestone as a raw material.
Company did not only depend on R&D for improving but also have adopted
process analysis time-to-time to increase productivity. Expanding packing units
from 8 to 12 outlets immediately increased the productivity of the unit without
any further change or development. 24hr engineering and technical support let to
a record of 10,000 ton/day from 7,500 ton/day in Ambujanagar unit of the factory.
When company faced acute shortage of dry fly-ash, it had to depend on wet fly
ash, but to make them dry fly ash coal is required and the expense with which it
could be accomplished via conventional manner was impracticable an investment
to the tune of Rs. 100 crores.
Ambuja Cements has undertaken a pilot project, the data identified the crop that
can be best suited for replacing coal. It came out with the conclusion that cumin,
grape seed, green gram and mustard can be used against coal. For this the
company managed to convince farmers and created Farmer’s club to procure and
supply biomass to the company at a profitable rates. Till date over 18,800 mega
tonnes of biomass has been supplied to the company.

pg. 34
According to companies Quarter 4 result of 2016 declared on the website of
company demonetisation bad effect can be felt. There were fall in demand for
cement.
Quarter 4
2016
Quarter 4
2015
Year
December
2016
Year
December
2015
Sales
volume
Million
Tonnes
5 5.48 21.12 21.53
Net Sales Rs. In
crores
2197 2356 9160 9368
Operating
EBDITA
Rs. In
crores
329 328 1683 1531
PAT Rs. In
crores
176 110 970 808
Thus we can see that 0.48million tonnes sales were lost during the
stagnant demand after demonetisation, due to fall in domestic demand. But next
quarter this impact is expected to nullify and a stable situation is expected.
There has been field work conducted with some questions relevant to
effect of Demonetisation given by The Money Roller team. The responses include
a summary of 108 respondents belonging to or related directly in dealership in
Cement sector.
Out of 108 respondents only 21 respondents i.e. 19.4% reply that before
demonetisation there revenue comprise of cash revenue 10-40%. 21 respondents
out of 108 responded that there revenue comprise of cash revenue is 100%.
After Demonetisation only 9 out of 108 claim their revenue to be in cash
100%. Out of 108 respondents only 21 respondents i.e. 62.04% reply that before
demonetisation there revenue comprise of cash revenue 10-40%. This is a very
good number to see that blocked money hastily and speedily are in circulation in
the economy. This is a good sign for economy in long run, but the business
suffered a lot and faced low demand problem which was certainly an issue for
this industry since last two years due to consecutive bad monsoon years
hampering demand of cement and growth of cement sector. 87 out of 108
respondents said that ‘Impact of demonetisation was bad’ when they were asked
what is the impact of demonetisation on their business? Whereas 20 respondents
said that there are no such bad impact business is smooth as usual.

pg. 35
Sharing the questionnaires and interested responses recovered from the
field work analysis: -
Impact of
demonetizatio
n on business
demand?
31 out of 108 (i.e. 28.7%)
respondents replied that
impact led to less than 30%
reduction in demand
71 out of 108 (i.e.
65.74%) respondents
replied that impact led
to less than 40% to
60% reduction in
demand
6 respondents
replied more than
70% decline in
demand i.e.
5.56%
Share of cash
revenue in the
total revenue
before 8 Nov?
28 out of 108 (i.e. 25.93%)
respondents replied that they
earned more than 70%
revenue in cash before 8th
November, 2016
80 out of 108 (i.e.
74.07%) respondents
replied that they
earned less than 70%
revenue in cash before
8th November, 2016
Share of cash
revenue in the
total revenue
after 8 Nov?
9 out of 108 (i.e. 8.3%)
respondents replied that they
earned more than 70%
revenue in cash after 8th
November, 2016
99 out of 108 (i.e.
91.67%) respondents
replied that they
earned less than 70%
revenue in cash after
8th November, 2016
Mode of
payment
customers
prefer for
digital
payments?
Debit Card 10 respondents Credit Card 2
respondents
Paytm 2
respondents
No response 94
respondents
How are they
upgrading
their business
to go cashless?
Use of POS machines by 11
respondents 10.19%
4 respondents replied
they are accepting
cheques 3.73%
Others No proper
reply 86.1%
When will
things go to
normal again?
21 respondents replied after
3 months 18.15%
after 6 months 25.92%
6 respondents
replied after
9months 5.55%
6 respondents
replied after 1 year
5.55%
Will
implementatio
n of GST
impact your
business and
how?
39 respondents replied it to
be good for one or other
reasons specified by them i.e.
36.11%
it to be good for one or
other reasons specified
by them i.e. 26.85%
37.04%
respondents i.e.
40 out of 108
replied it to be
bad
Impact of
demonetizatio
n on labour
attrition and
reason?
13 respondents replied the
effect to be high as they are
facing labour turnover.
no effect.
No comments 83

pg. 36
Conclusion economy is moving to cashless economy as per the 91.67% responses
reports cash revenue to be less than 70% compared to 74.07% respondents
previously do. No very adverse labour problem faced by the sector as projected by
media. People are willing to accept GST as well with open heart. 65.74%
respondent’s reply that the decline in demand for cement were between 31 to
70%. This is a bad figure for the last quarter whose effect is also seen in the
company’s last quarter result.
However YoY basis as per Dalal street Journal Ramco Cements flagship
company of Ramco group based in Chennai registered growth of 30% in PAT.
Grasim industries also registered 11% growth in PAT YoY basis. ACC however
reported 48% decline in consolidated PAT in YoY basis.

pg. 37
Ambuja Cement has taken various initiatives to cater to social needs and has
also won several awards and recognition few among them are mentioned below: -
1. 27 Ambuja Knowledge Centre as a CSR activity.
2. Ambuja Cement Foundation which started 12 Skill & Entrepreneurship
Development Institutes (SEDI).
3. It was the first cement company to build captive ports with three terminals
along western coastline to facilitate cost-effective, timely and
environmentally cleaner shipments of bulk cements to its customers.
While the Company’s network of ports, bulk cement terminals and captive
ships supported a sustainable and strong market position in Mumbai,
Surat and Cochin, the Mangalore bulk cement terminal, with its
commercial operations, helped expand the Company’s footprint in the
South region.
4. Farmer’s Club for biomass to be acquired from farmers for converting wet
fly ash to dry fly ash.
5. It has won CII Sustainability Award for Corporate excellence for 5th year
in a row in 2015.
6. Ambujanagar won the 'Best Environmental Excellence in Plant Operation’
a national award by NCBM
7. The company has been certified four times water positive, a feat achieved
through conservation efforts and increasing water efficiency in its plants.
8. It is also plastic positive, by burning as much as over 50,000 tonnes of
plastic waste in its kilns, equivalent to 1.54 times of total plastic used. The
company also generates 6.5% of its energy from renewable resources.
9. Ambuja won by Federation of Indian Chambers of Commerce and Industry
(FICCI) CSR award in 2016 for Water Resource Management Program.

pg. 38
Ambuja’s sale is mainly from domestic sale. North Region Company has a good
market compared to others. With its new grinding unit in east and port at
Mumbai company expects its market to improve in eastern and southern region
as well.
41%
38%
21%
Region-wise sale by Ambuja Cements Ltd
North South/West Region East
2010 in MT 2011 IN MT 2012 IN MT 2013 in MT 2014 in MT 2015 in MT
Eastern Region 3.7 3.95 4.22 4.21 4.45 4.6
West / South Region 7.5 8.52 8.30 8.09 8.3 8.2
Northern Region 6.8 8.07 8.79 8.64 8.74 8.7
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Regional slaes by Ambuja

pg. 39
Company grew by 7% (approx.) CAGR per annum in 9 years. This is possible
because of its huge investment in research and development over the years and
acquisitions of bulk terminals, access to various ports and acquitions of
companies like Dirk India Private Limited, Waste heat Recovery plant at
Rabriyawas in Rajasthan for improving efficiency, optimising power cost etc.
But the expense made is yet not enough as compared to the competitors.
2007 2008 2009 2010 2011 2012 2013 2014 2015
Cement Capacity - Million Tonnes 18.5 22 22 25 27.35 27.95 27.95 28.75 29.65
18.5
22 22
25
27.35 27.95 27.95 28.75 29.65
0
5
10
15
20
25
30
35
Increase in Cement Capacity in Ambuja Cements - Million
Tonnes
2012 2013 2014 2015
ULTRATECH 11.09 14.71 38.95 32.88
SHREE 16.4 25.19 21.36 14.28
AMBUJA 1.27 1.01 5.44 2.36
0
10
20
30
40
50
60
70
RS.INCRORES
YEAR
Research&Development Expenses
AMBUJA SHREE ULTRATECH

pg. 40
We can see disproportionately total expense of manufacturing cement differs
from increase in cement production. This is due to dependency on coal, fuel,
electricity prices etc. whose prices are beyond the control of the company or this
sector as a whole. Abrupt changes in these inputs prices makes it challenging for
this sector to perform better.
Similar Analysis with peers of Operating expense as a percentage of sale is made
for better understanding the core areas of competitors over Ambuja in the next
page.
1 2 3 4 5
%age increase in Cement
Production
4.173% 6.904% 6.025% 5.338%
%age increase in total expense 17.868% 11.635% 2.108% 6.932% 0.275%
0.000%
2.000%
4.000%
6.000%
8.000%
10.000%
12.000%
14.000%
16.000%
18.000%
20.000%
Cement production and Total expense
%age increase in Cement Production %age increase in total expense

pg. 41
Year 2011 2012 2013 2014 2015
Net Sales(Rs in crores)
Ultra 13206 18158 20,023 20,078 22,648
Ambuja 8504 9675 9,079 9,911 9,368
Shree 3453.53 5898.12 5,590 5,800 6,454
Operating Expenses (Rs. In crores)
Ultra 10646 14162 15,504 16,462 18,732
Ambuja 7075.01 7898.21 8064.67 8693.69 8647.38
Shree 2744.05 4487.72 4222.47 4389.12 5230.35
Ratio of Operating expenses to Sales
Ambuja 83.20% 81.64% 88.83% 87.72% 92.31%
Ultra 80.61% 77.99% 77.43% 81.99% 82.71%
Shree 79.46% 76.09% 75.53% 75.68% 81.05%
Thus Ambuja Cements’ operating cost is higher than its peers which eats up its
share of profit and obstructs to gain competitive advantage over the competitors.
2011 2012 2013 2014 2015
Ambuja 83.20% 81.64% 88.83% 87.72% 92.31%
Ultra 80.61% 77.99% 77.43% 81.99% 82.71%
Shree 79.46% 76.09% 75.53% 75.68% 81.05%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
%age of Operating Expenses to Sales
Ambuja Ultra Shree

pg. 42
Threat from Competitors
 There are big players in
the market in this
segment who
contributes around 10-
12 companies covers
70% of the market.
Threat of New Entrants
 This is a capital intensive
business and requires huge
investment so new
entrants are not a threat.
 Big market players have
enough deep pockets to
hinder the progress of new
entrant and grasp their
market share
Threat of Substitute
 Cement is the key resource
of construction. It has no
substitute.
 But, huge research and
development expenses are
being incurred by companies
to use Alternative Resources
in production of cement so
as to make it cost effective.
Bargaining Power of
Suppliers
 26% of Total
operating cost is
power and fuel cost
and 21% of total
operating cost is
freight cost. So,
increase in coal
prices, electricity
prices, or in the
royalty of limestone
that increased to Rs.
80 from Rs. 68 per
tonne affect the
production cost.
Bargaining Power of
Buyers
 Since small
number of players
cover 70% of the
market and cement
has no substitute so
there is no threat
from buyers side
except when the
demand for cement
goes down due to
low economic
growth etc.

pg. 43
Analysis of Porter’s five force model
1. Threats of New Entrants: - The sector is by its nature
Capital intensive as it requires sophisticated machineries and
infrastructures to support the production of cement. Hence, it is not
nature makes it let exposed to threat of new entrants. There are 12 big
companies which constitute 70-75% of total cement manufactured in the
country. This cartel is a challenge for new company to enter this business
and sustain for too long unless it is introduced with concepts
extraordinarily or exceptionally well.
2. Threat from existing players: - Since few big players are
the face of the industry prima facie. So, there is stiff competition. Price
war is also not possible because as we discussed few necessary input cost
is beyond the control of this sector and thus research and development
cost incurred to come up with substitute of polluting and expensive non-
renewable resources and increase its composition to a level not
compromising with the quality of cement production is the only way to
sustain in long run.
3. Threat from Buyers: - There are no such threats from buyers as
there are few companies known well in the market for production of
cement. But prices can still not be increased abruptly due to stiff
competition among the rivals and low demand of cement due to low
economic growth.
4. Threat from Suppliers: - 26% of Total operating cost is power
and fuel cost and 21% of total operating cost is freight cost. So, increase in
coal prices, electricity prices, or in the royalty of limestone that increased
to Rs. 80 from Rs. 68 per tonne affect the production. They make it hard
for company to maintain a smooth increase in expense proportionate to
increase in production. Thus impacts the returns earned by the companies
in this sector.
5. Threat of Substitute: -There are no such threats as cement has
no substitutes. In construction it is the basic raw-material essential.

pg. 44
Strength
1. Brand recognition
2. Part of LafargeHolcim
and subsidiary like ACC .
3. Good Southern and
Northern market in India
4. Lowest cost cement
producer in India
5. Pioneer in sea transport
6. Captive Ports adds to
cost-effectiveness
Weakness
1. Lower market share in
the Eastern region.
2. Less expenditure in R&D
compared to it's
competitors.
3. Losing Export sales.
Opportunities
1. Export can be improved.
2. Increase capacity of
Ready Mixed Concrete.
3. Increase capacity
utlization to achieve
economies of scale.
4. Use of alternative to
improve fuel efficiency
5. Low per capita
consumption of cement in
India.
Threats
1. Potential threat from the
existing players.
2. Shree Cements is doing
well and UltraTech
Cemenets is way beyond
reach of the company
presently with larger
number of cement plants
and grinding units.
3. Rise in cost of raw
materials like limestone,
gypsum, etc.

pg. 45
SWOT Analysis
1. Strength: Ambuja Cements Ltd is the third largest cement producers
in India after UltraTech cements and Shree Cements. With 8700 dealers
and 29000 retailers (as per 2014 data) it has a vast distribution network of
evolved dealers and retailers whose reach helps the Company to cater to
all markets including rural and semi-urban markets. It is a part of
LafargeHolcim conglomerate which has business in 90 countries spread all
over the world. Hence its Brand is recognised. It has its base in Southern
and northern part of market in India as recognised as discussed by us
separately in this paper. Whereas this zone is not the core competence of
Ambuja as compared to its peers because they also have the Brand
recognition and UltraTech Cements have deeper roots in the market in
India with wider distribution network.
It was the first cement company to build captive ports with three
terminals along western coastline to facilitate cost-effective, timely and
environmentally cleaner shipments of bulk cements to its customers.
2. Weakness: Lower market share in Eastern region. Its exports are
continuously decreasing and therefore company is also trying hard to
expand business domestically through increased number of dealers and
retailers ( 8700 dealers and 29000 retailers as per 2014 data)
Ambuja Cements 2009 2010 2011 2012 2013 2014 2015
Exports in Million Tonnes 0.8 0.5 0.37 0.12 0.1 0.08 0.10
3. Opportunities: Increase in Export and Ready mix concrete will
improve company’s operating profit and capacity utilisation. Its
partnership with LafargeHolcim should be wisely utilised to grow the base
of the company stronger and improve to be better than now in technology
and efficacy improvement.
4. Threats: Threat from near competitors and uncontrollable input
prices like oil, petroleum, electricity, coal prices, royalty on limestone,
carbon tax on use of pet coke, and gypsum prices.
Company has improved over the years. Its current ratio is improved. It
has a favourable Interest coverage ratio. It has a very low debt equity
ratio despite of being in the capital intensive business. This is a sign of
strength.

pg. 46
It has made good acquisitions during the last few years. As a result its
performance is good. But last year’s profit were low due to several external
factors that hampered the business overall.
Number of integrated cement plants and Ambuja Cements as compared to
UltraTech Cements.
Year 2012 2013 2014 2015
Power and Fuel (Rs. In cr) 2333.96 2066.31 2268.64 2057.51
Cement Production in MT 21.62 20.96 21.43 21.54
Power and Fuel cost per MT(in
Rs/MT)
107.9537 98.58349 105.8628 95.52043
0 2 4 6 8 10 12 14 16
Integrated Cement manufacturing plants
Grinding units
Integrated Cement manufacturing plants Grinding units
Ambuja 5 8
UltraTech 12 15
Plants and Grinding units
Ambuja UltraTech

pg. 47
India’s slow growth has adversely affected cement industry as it is closely tied to
economic growth. In 2015 the sector grew only by 1.5% YoY basis due to weak
economy, reduced government spending, and poor monsoon for second consecutive
year. Excess capacity, weak demand and falling prices had a negative impact on
company’s performance.
Revival of infrastructure projects would increase demand, thereby reducing the
gap between demand and supply. Government’s continued focus on housing and
infrastructure development, recent announcement in Union Budget for
infrastructure development, increased budget allocation for roads and railways,
irrigation will be key drivers for cement demand.
Union Budget 2016-17 was a silver lining in the dark cloud for the cement
industries on account of governments focus on infrastructure and housing.
Honorable Finance Minister Mr. Arun Jaitley has raised allocation for roads from
Rs.57976 crore in 2016-17 to Rs.64,900 crore in 2017-18 with a stress on laying
2000kms coastal roads. 30% of the cost of laying road will generate opportunity for
cement companies to earn Rs.19470 crore (Dalal street Journal) With allocation to
build 10 million houses by 2019 under the PM Awaas Yojana raising allocation
from Rs.15000 crore to Rs.23000 crore we expect a surge in the cement demand in
2017. Housing sector contributes to 45% of income of cement sector companies.
These are good signs for the industry as a whole. After demonetisation a better
GDP growth is expected in near future as money hoarded is flowing into the
economic system again. Smart City projects progress will be another big thing
industry is looking up to for increased demand.
All in all with a stable economic growth rate the company’s performance is
expected to improve.
Recently, as per company announcement on 20th Jan, 2017 Competition
Commission of India issued order against Ambuja and other cement companies on
allegation filed by state of Haryana for using anti-competitive practice of reducing
supply and inflating prices. Company has taken note of it in its quarter end report
and website. They have published that the same has been taken into consideration
and will be addressed by the company.

pg. 48
1. https://minerals.usgs.gov/minerals/pubs/commodity/cement/
2. http://dipp.nic.in/English/Publications/Reports/Ministry%20of%20Commer
ce%20and%20IndustryGlobal%20Competitiveness%20Improvement%20of
%20Indian%20Cement%20Industry.htm
3. http://www.cccme.org.cn/
4. https://pubs.usgs.gov/bul/0660i/report.pdf
5. http://dipp.nic.in
6. http://eaindustry.nic.in/cement/report3.asp
7. http://www.i-cema.in/
8. http://dipp.nic.in/English/default.aspx
9. http://www.icra.in/Files/ticker/SH-2016-Q2-3-ICRA-Cement.pdf
10.http://www.cmaindia.org/
11.http://www.ambujacement.com
12.Dalal Street Journal
13.Annual reports of
 Ambuja Cements
 Ultratech Cements
 Shree Cements
 India Cements
 ACC cements

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