Description
FUNDAMENTAL ANALYSIS OF CEMENT SECTOR
-:: PROJECT TOPIC ::“FUNDAMENTAL ANALYSIS OF CEMENT SECTOR”
YEAR : 2010-11
Guidance By :Mrs. Amina I. Nakhuda
Submitted By :Rahul Paghdal (36)
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
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.
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
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.
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.
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.
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.
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
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
COMPARISON OF AVERAGE RATIO Ratio Name Gross Profit Ratio Net Profit Ratio Operating Ratio Operating profit Ratio Current Ratio Liquidity Ratio Debts Equity Ratio Proprietary Ratio Return on Capital Employed Net profit to total assets Ratio Unit Per. Per. Per. Per. Pro. Pro. Pro. Pro. Pro. Pro. 0.07672 44.4 1.09824 0.13654 8 0.9874 0.1136 0.06006 2.0598 0.25194 8.2 0.69454 0.255 14.8 0.89564 India cement 28.40 13.518 73.17 26.946 2.37 2.01 0.68 0.60 0.13032 COMPANY NAME Shree Binani Ambuja Cement cement Cement 41.008 30.038 50.97 13.5 13.114 22.648 62.532 70.538 69.29 38.326 30.45 30.99 1.7307 1.26118 1.0031 1.3759 0.98116 0.61348 1.381 1.8679 0.18 0.42946 0.35262 0.86 0.37866 0.21972 0.39688 Acc cement 28.414 19.248 73.74 26.536 0.84 0.56496 0.20 0.84 0.39998
Debtor turnover Ratio Tim e Fixed assets to Pro. proprietary fund Ratio
RANK
RANK TO AVERAGE RATIO Ratio Name Gross Profit Ratio Net Profit Ratio Operating Ratio Operating profit Ratio Current Ratio Liquidity Ratio Debts Equity Ratio Proprietary Ratio Return on Capital Employed Net profit to total assets Ratio Debtor turnover Ratio Fixed assets to proprietary fund Ratio Earnings Per share Unit Per. Per. Per. Per. Pro. Pro. Pro. Pro. Pro. Pro. Time Pro. Per. India cement 5 3 4 4 1 1 3 3 5 5 5 COMPANY NAME Shree Binani Ambuja Cement cement Cement 2 3 1 4 5 1 1 3 2 1 3 2 2 3 4 4 2 3 4 5 1 4 5 1 3 4 2 3 2 4 1 1 5 2 3 Acc cement 4 2 5 5 5 5 2 2 1 1 4
2
3
3
1
5
4
4
2
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
? 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.
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.
Bibliography
REFERENCE BOOKS:•Khan & Jain – Financial Management •Management Accounting: - R.S.N Pillaai and Bhagavati SITES VISITED:•www.moneycontrol.com •www.acc.com •www.shreecementltd.com •www.binanicement.com •www.google.com •www.wikipedia.com •www.indiacement.co.in •www.gujaratambujacement.com
Thank you…
doc_849913640.pptx
FUNDAMENTAL ANALYSIS OF CEMENT SECTOR
-:: PROJECT TOPIC ::“FUNDAMENTAL ANALYSIS OF CEMENT SECTOR”
YEAR : 2010-11
Guidance By :Mrs. Amina I. Nakhuda
Submitted By :Rahul Paghdal (36)
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
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.
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
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.
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.
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.
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.
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
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
COMPARISON OF AVERAGE RATIO Ratio Name Gross Profit Ratio Net Profit Ratio Operating Ratio Operating profit Ratio Current Ratio Liquidity Ratio Debts Equity Ratio Proprietary Ratio Return on Capital Employed Net profit to total assets Ratio Unit Per. Per. Per. Per. Pro. Pro. Pro. Pro. Pro. Pro. 0.07672 44.4 1.09824 0.13654 8 0.9874 0.1136 0.06006 2.0598 0.25194 8.2 0.69454 0.255 14.8 0.89564 India cement 28.40 13.518 73.17 26.946 2.37 2.01 0.68 0.60 0.13032 COMPANY NAME Shree Binani Ambuja Cement cement Cement 41.008 30.038 50.97 13.5 13.114 22.648 62.532 70.538 69.29 38.326 30.45 30.99 1.7307 1.26118 1.0031 1.3759 0.98116 0.61348 1.381 1.8679 0.18 0.42946 0.35262 0.86 0.37866 0.21972 0.39688 Acc cement 28.414 19.248 73.74 26.536 0.84 0.56496 0.20 0.84 0.39998
Debtor turnover Ratio Tim e Fixed assets to Pro. proprietary fund Ratio
RANK
RANK TO AVERAGE RATIO Ratio Name Gross Profit Ratio Net Profit Ratio Operating Ratio Operating profit Ratio Current Ratio Liquidity Ratio Debts Equity Ratio Proprietary Ratio Return on Capital Employed Net profit to total assets Ratio Debtor turnover Ratio Fixed assets to proprietary fund Ratio Earnings Per share Unit Per. Per. Per. Per. Pro. Pro. Pro. Pro. Pro. Pro. Time Pro. Per. India cement 5 3 4 4 1 1 3 3 5 5 5 COMPANY NAME Shree Binani Ambuja Cement cement Cement 2 3 1 4 5 1 1 3 2 1 3 2 2 3 4 4 2 3 4 5 1 4 5 1 3 4 2 3 2 4 1 1 5 2 3 Acc cement 4 2 5 5 5 5 2 2 1 1 4
2
3
3
1
5
4
4
2
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
? 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.
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.
Bibliography
REFERENCE BOOKS:•Khan & Jain – Financial Management •Management Accounting: - R.S.N Pillaai and Bhagavati SITES VISITED:•www.moneycontrol.com •www.acc.com •www.shreecementltd.com •www.binanicement.com •www.google.com •www.wikipedia.com •www.indiacement.co.in •www.gujaratambujacement.com
Thank you…
doc_849913640.pptx