The Coffee Bean & Tea Leaf(CBTL), Business strategy case study
ratio analysis on Cement ind
1. -:: PROJECT TOPIC ::-
“FUNDAMENTAL ANALYSIS OF
CEMENT SECTOR”
YEAR : 2010-11
2. Guidance By :-
Mrs. Amina I. Nakhuda
Submitted By :-
Rahul Paghdal (36)
3. 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
4. Company Profile
ACC (ASSOCIATED CEMENT COMPANY) LIMITED
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.
5. 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
6. BINANI CEMENT
‘Binani’ is now consolidating on its enviable track record, with over one and
a quarter century of success behind it. It was in the turbulent times of 1872 when the
ancestors of Binani, Seth Pragdas and Seth Mathuradas Binani, ventured into the
trading of non-ferrous metals
Binani Metal Works Limited, in collaboration with Multi core Solders, UK,
came into being in 1941.
Binani Metal Works Limited went public for the first time in 1953. In 1962
Binani entered into collaboration with the world leaders in the field of non-ferrous
metals, Cominco Limited Canada, to form Cominco Binani Zinc Ltd., thus becoming
the first producer of primary zinc in India.
In 1997, the company diversified into the manufacture of cement by
establishing Binani Cement Ltd.
In 2008, the Group acquired 70% stake in Shandong Binani Rongan
Cement Company in China.
7. SHREE CEMENT
The Company was incorporated on 25th October 1979, at Jaipur. The
Company was promoted by members of the Bangur family and others. Shree Digvijay
Cement Co. Ltd., Graphite India, Ltd. and Fort Gloster Industries, Ltd. took active part
in the promotion of the Company. The Company manufacture's cement & cement
products.
1986 - A diesel generating set of 13.6 MW was installed for captive
power generation.
The Company undertook to set up a new cement plant of 0.6 million
TPA capacity in Rajasthan.
1996 - The Company commissioned its second cement plant - Raj
Cement with a capacity of 12.4 lakh tonnes per annum in Beawar.
8. AMBUJA CEMENT
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.
9. 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.
10. Research Design
I have used DESCRIPTIVE RESEARCH design.
Reference Period
I have utilized Last 5 Year data of balance sheet and Profit & loss
account of company for analysis of cement Industry.
Limitation of study
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
11. 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
12. COMPARISON OF AVERAGE RATIO
COMPANY NAME
Ratio Name Unit India Shree Binani Ambuja Acc
cement Cement cement Cement 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 Pro.
Employed 0.13032 0.37866 0.21972 0.39688 0.39998
Net profit to total Pro.
assets Ratio 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 Pro.
proprietary fund Ratio 1.09824 0.9874 2.0598 0.69454 0.89564
13. RANK
RANK TO AVERAGE RATIO
COMPANY NAME
Ratio Name Unit India Shree Binani Ambuja Acc
cement Cement cement Cement 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 Pro. 5 3 4 2 1
Employed
Net profit to total Pro. 5 3 4 2 1
assets Ratio
Debtor turnover Ratio Time 5 2 1 3 4
Fixed assets to Pro. 1
2 3 5 4
proprietary fund Ratio
Earnings Per share Per. 3 1 5 4 2
14. 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:
Ambuja cement & Shree cement
ACC Limited
India cement
Binani cement
15. 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.
16. 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.
