EQUITY RESEARCH ON INDIAN CEMENT INDUSTRY

(By FUNDAMENTAL ANALYSIS METHOD)

SUMMER INTERNSHIP REPORT

SUBMITTED
To
MADRAS CEMENTS LTD

SUBMITTED BY

S.BARATHAN
Reg no 31509631011
SSN SCHOOL OF MANAGEMENT
CHENNAI
MBA PROGRAM (SESSION: 2009-2011)

TABLE OF CONTENTS
CONTENTS PAGE NO
ACKNOWLEDGEMENT 4
RESEARCH DESIGN 5
EQUITY RESEARCH 6
INTRODUCTION TO CEMENT INDUSTRY 7
OVERVIEW OF CEMENT INDUSTRY AND BUDGET PROVISONS 8
SWOT ANALYSIS 10
PORTERS 5 FORCES MODEL 11
TYPES OF CEMENT IN INDIA 11
MANUFACTURING PROCESS 16
INTRODUCTION TO FINANCIAL RATIOS 17
MAJOR PLAYER’S OF THE INDUSTRY 21
1.AMBUJA CEMENTS LTD 22
1.1.FINANCIAL RATIOS 24
1.2.GRAPHS 25
2.ULTRATECH CEMENT LTD 29
2.1.FINANCIAL RATIOS 31
2.2.GRAPHS 32
3.INDIA CEMENTS LTD 36
3.1.FINANCIAL RATIOS 38
3.2.GRAPHS 39
4.JK CEMENT LTD 43
4.1.FINANCIAL RATIOS 45
4.2.GRAPHS 46
5.GRASIM LTD 50
5.1.FINANCIAL RATIOS 52
5.2.GRAPHS 53
6.MADRAS CEMENTS LTD 57
6.1.FINANCIAL RATIOS 59
6.2.GRAPHS 60
7.1.FINANCIAL RATIOS OF COMPANIES FOR YEAR 2008-2009 64
7.2. GRAPHS 65
CEMENT INDUSTRY FUTURE TRENDS 71
CEMENT INDUSTRY GROWTH DRIVERS 71
CONCLUSION 73
BIBLIOGRAPHY 74

LIST OF TABLES

CONTENTS TABLE PAGE

NUMBER NO
AMBUJA CEMENTS LTD-FINANCIAL RATIOS 1.1 24
ULTRATECH CEMENT LTD-FINANCIAL RATIOS 2.1 31
INDIA CEMENTS LTD-FINANCIAL RATIOS 3.1 38
JK CEMENT LTD-FINANCIAL RATIOS 4.1 45
GRASIM LTD-FINANCIAL RATIOS 5.1 52
MADRAS CEMENTS LTD-FINANCIAL RATIOS 6.1 59
FINANCIAL RATIOS OF COMPANIES FOR THE 7.1 64
YEAR 2008-2009

LIST OF FIGURES

CONTENTS FIGURE PAGE

NUMBER NO
AMBUJA CEMENTS LTD-GRAPHS 1.1 25
ULTRATECH CEMENT LTD-GRAPHS 2.1 32
INDIA CEMENTS LTD-GRAPHS 3.1 39
JK CEMENT LTD-GRAPHS 4.1 46
GRASIM LTD-GRAPHS 5.1 53
MADRAS CEMENTS LTD-GRAPHS 6.1 60
FINANCIAL RATIOS OF COMPANIES FOR THE 7.2 64
YEAR 2008-2009- GRAPHS

ACKNOWLEDGEMENT
I would like to express my profound gratitude and grateful thanks to
Mr.G.BARTH (DGM-L&D) and Mr.SUBURAMAN (HRD) for giving me the
opportunity undertake this research project in MADRAS CEMENTS LTD.
I am really thankful to Mr. D.SATISH KUMAR (AGM Corporate Finance and
Accounts) for making all kinds of arrangements to carry the project successfully
and for guiding and helping me to solve all kinds of problems regarding the project
work. His systematic way of working and in comparable guidance has inspired the
pace of the project to a great extent.
I would also like to Mr.GANESH for assigning me a project of such a great
learning experience.
I would like to thank all the employees of MADRAS CEMENTS LTD who have
directly or indirectly helped me with their moral support for the completion of my
project.

RESEARCH DESIGN

OBJECTIVE OF THE STUDY

To provide an overview of Indian Cement Industry.
To study about some of the major players in Indian Cement Industry.
To compare the financial ratios of the major players and interpreting them.
To identify the growth drivers of the Indian cement industry.
METHODOLOGY OF STUDY:
The whole study can be termed as a desk research. Hence there is no field work
and collection of primary data for this research except for secondary information
obtained by the medium of internet, journals and magazines.
DATA COLLECTION:
Only secondary data was collected from the internet, company websites,
magazines and various articles. However the main source of information is Annual
report provided by the companies.

LIMITATIONS OF THE STUDY:

The companies were chosen based on convenience and availability of secondary
data.

EQUITY RESEARCH:
Equity Research refers to the study of the performance of the economy as a whole,
the industry and various companies and analyzing the same. It enables to predict
the future performance of a particular stock based on its past performance, the
current status of the internal as well as the external environment.
EQUITY RESEARCH can be done by two methods:
FUNDAMENTAL ANALYSIS:
Here we look at balance sheet, income statement etc. to determine a company‘s
value. In financial terms it is used to measure a company‘s intrinsic value. It takes
a long term approach to analyze the market as compared to technical analysis. It
often looks at data over a number of years.
TECHNICAL ANALYSIS:
Technical traders study the price movements of the particular company's stock in
the market. Technical analysts strongly believe that the price movements follow a
trend and by identifying the trend, one can accurately predict the price that might
occur in future. Technical analysts use financial tools with software support.
STEPS IN FUNDAMENATAL ANALYSIS:
The various steps in fundamental analysis are listed below. Fundamental Analysis
is a conservative and non-speculative approach based on the ―Fundamental
analysis of
The Economy
The Industry
The Company

CEMENT INDUSTRY
INTRODUCTION:
Cement Industry originated in India when the first plant commenced
production in 1914 at Porbandar, Gujarat. The industry has since been growing
at a steady pace, but in the initial stage, particularly during the period before
Independence, the growth had been very slow. Since indigenous production was
not sufficient to meet the entire domestic demand, the Government had to control
its price and distribution statutorily. Large quantities of cement had to be imported
for meeting the deficit. The industry was partially decontrolled in 1982 and this
gave impetus to its pace of growth. Installed capacity increased to more than
double from 27 million tons in 1980-81to 62 million tons in 1989-90.
The cement industry responded positively to liberalization policy and the
Government decontrolled the industry fully on 1st March 1989. From 1991
onwards cement industry got the status of a priority industry in schedule III of the
industry policy statement, which made it eligible for automatic approval for
foreign investment up to 51% and also for technical collaboration on normal terms
of payment of royalty.
After the globalization and liberalization of Indian economy, the cement industry
has been growing rapidly at an average rate of 9 per cent. The country is now the
second largest producer of cement in the world next only to China. Additionally, in
the last two decades, the industry has undergone rapid technological up gradation
and growth, and now, some of the cement plants in India are comparable to the
world’s best operating plants in all respects.
Till a few years ago India was importing cement from other countries, as the
production could not meet the demand for the whole country. Now the tables have
turned as India has started exporting large quantities of cement and clinker to
Bangladesh, Nepal, Sri Lanka, Maldives, Mauritius, Africa, Seychelles, Burma,
UAE, and Singapore etc.
India is today the second largest producer of cement in world.95 % is consumed
domestically and only 5% is exported. Demand is growing at more than 10 % per
annum. More than 90 % of production comes from large cement plants. There are a
total of 146 large and more than 350 small cement manufacturing units in the
country.
More than 80% of the cement manufacturing units use modern environment
friendly “dry” process.
In the cement industry there are two sectors – one consisting of large plants and the
other consisting of mini cement plants. A factory with an installed capacity
exceeding 2,97,000 tones per annum (900 tons per day) is a large plant and with
capacity up to and including 2, 97,000 tons is a mini cement plant.
Since mini cement plants are scattered all over the country with a number of
associations representing different types of processes, sizes etc. and some of them
are even tiny units, it has not been possible to obtain correct data of this sector.
OVERVIEW OF THE PERFORMANCE OF THE CEMENT SECTOR:
The Indian cement Industry not only ranks second in the production of cement in
the world but also produces quality cement, which meets global standards.
However, the industry faces a number of constraints in terms of high cost of power,
high railway tariff; high incidence of state and central levies and duties; lack of
private and public investment in infrastructure projects; poor quality coal and
inadequate growth of related infrastructure like sea and rail transport, ports and
bulk terminals. In order to utilize excess capacity available with the cement
industry, the government has identified the following thrust areas for increasing
demand for cement:
• Housing development programmers and Promotion of concrete highways
and roads.
• Use of ready-mix concrete in large infrastructure projects.
• Construction of concrete roads in rural areas under Prime Ministers Gram
Sadak Yojana.
BUDGET PROVISIONS:
Some of the provisions in the budget that could have a direct and indirect bearing
on the cement sector are as follows
• In order to provide incremental lending to the infrastructure sector, Indian
Infrastructure Finance Company (IIFCL) will evolve a takeout financing
scheme in consultation with banks. IIFCL will refinance 60% of commercial
bank loans for PPP projects in critical sectors over the next 15 to 18 months.
IIFCL and Banks are now in a position to support projects involving total
investment of Rs 100,000 crore.
• Allocation under Jawaharlal Nehru National Urban Renewal Mission
(JNNURM) was stepped up by 87% to Rs 12887 crore in 2009‐10 compared
to 2008‐09.
• Allocation for housing and provision of basic amenities to urban poor
enhanced to Rs 3,973 crore in 2009‐10. This includes provision for Rajiv
Awas Yojana (RAY), a new scheme announced.
• Allocation for Bharat Nirman increased 45% in 2009‐10.
• Allocations under Pradhan Mantri Gram Sadak Yojana (PMGSY) increased
59% over B.E. 2008‐09 to Rs 12,000 crore in B.E. 2009‐10.
• Under Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), allocation
increased by 27% to Rs 7,000 crore.
• Allocation under Indira Awaas Yojana (IAY) increased 63% to Rs 8,800
crore in 2009‐10. Allocation of Rs 2,000 crore made for Rural Housing
Fund (RHF) in National Housing Bank (NHB) to boost the resource base of
NHB for refinance operations in rural housing sector.
ADVANTAGE INDIA:
High growth in the real estate sector:
The Indian cement industry has been on a high growth trajectory for more than a
decade, led by buoyancy in sectors such as real estate and construction.
Industry performance indicators on an incline
Cement industry’s sales, installed capacity and production have witnessed a
sustained growth between 2004 and 2009
Modern technology
The industry has witnessed continuous modernization and adoption of new
technologies in recent years.
Second-largest cement producer in the world
India ranks second in cement production in the world, with an installed capacity of
about 230 million tonnes in 2008–09.
Easy availability of raw material
In India, limestone is available in many states such as Rajasthan, Himachal
Pradesh, Madhya Pradesh, Tamil Nadu, Andhra Pradesh and Jharkhand.

SWOT ANALYSIS:
STRENGTHS
High Entry Barriers
Cement being a capital-intensive industry creates high entry barriers for the new
players. Moreover, the creation of distribution channel, acquisition of limestone
reserves etc makes entry of new players extremely difficult.
WEAKNESS
Dependence on Government
Industry is highly dependent on government authorities for power supply. Cement
industry has been suffering from frequent power cuts.
Increasing dependence on imported coal
Over the years, there has been deterioration in the quality of coal. In particular, the
ash content has increased implying lower calorific values for coal, and improper
and inefficient burning, etc.
This has increased the dependence of cement industry on imported coal. Poor port
infrastructure and high volatility in exchange rates creates concerns.
OPPORTUNITIES
Growth from newer products - Ready to mix concrete
RMC is a value-added semi-finished product that results in a superior quality
concrete.
Various advantages of RMC are quality control, eco friendly, greater speed of
construction, correct proportion of ingredients, lower wastage, reduced manpower
requirement etc. RMC is a high margin product as compared to site mixed concrete
(SMC).
In India, RMC accounting for meager 5% of cement production that is converted to
RMC as against 70% in developed countries.
Though India is the second largest cement manufacturer, it is among the lowest
cement consuming countries. In India per capita cement consumption is 122 kg,
which is far below the world average of approximately 320 kg. With the growth of
economy, per capita cement consumption rises at brisk pace. It indicates there is a
potential for growth in cement industry.
THREATS
Rising input cost
Rising interest rate
Rising interest rates may impact housing demand and thereby affecting cement
demand and also capital expenditure.
Substitutes
Bitumen and Engineering plastic have emerged as substitute of cement in road and
building construction.
PORTERS 5 FORCES MODEL:
Porter’s five forces model clearly provides the picture of industry attractiveness.
Bargaining power of Suppliers: - High
Government of India exercise excessive control on Coal and Power prices &
supply. Government authorities also control the transportation sector.
Bargaining power of Buyers: - Low
In the recent past the cement industry is witnessing major change in purchase
quantity. Now the share of small purchases i.e. retail purchases have been rising
whereas that of bulk purchase has declined.
Rivalry among the Firms: - High
Large number of players, Overcapacity, High degree of product homogeneity, High
storage cost and high exist barriers, creates intense rivalry among the firms.
Threat of Substitute: - Low
Use of Bitumen in Road construction and Engineering plastic in Building creates
some concern for the industry.
Barriers to entry: - Medium to High
High Capital Investment, Distribution Network and Oversupplied market deters
new entrants.
TYPES OF CEMENT IN INDIA:
The types of cement in India have increased over the years with the advancement
in research, development, and technology. The Indian cement industry is
witnessing a boom as a result of which the production of different kinds of cement
in India has also increased. By a fair estimate, there are around 11 different types
of cement that are being produced in India. The production of all these cement
varieties is according to the specifications of the BIS.
Some of the various types of cement produced in India are:
• Clinker Cement
• Ordinary Portland Cement
• Portland Pozzolana Cement(PPC)
• Portland Blast Furnace Slag Cement
• Oil Well Cement
• Rapid Hardening Portland Cement(RHPC)
• Sulphate Resisting Portland Cement(SRPC)
• White Cement
In India, the different types of cement are manufactured using dry, semi-dry, and
wet processes. In the production of Clinker Cement, a lot of energy is required. It is
produced by using materials such as limestone, iron oxides, aluminum, and silicon
oxides. Among the different kinds of Cement produced in India, Portland
Pozzolana Cement, Ordinary Portland cement, and Portland Blast Furnace Slag
Cement is the most important because they account for around 99% of the total
cement production in India.
The Portland variety of cement is the most common among the types of cement in
India and is produced from gypsum and clinker. The Ordinary Portland cement and
Portland Blast Furnace Slag Cement are used mostly in the construction of airports
and bridges. The production of white cement in the country is very less for it is
very expensive in comparison to grey cement. In India, while cement is usually
utilized for decorative purposes, marble foundation work, and to fill up the gaps
between tiles of ceramic and marble.
The different types of cement in India have registered an increase in production in
the last few years. Efforts must be made by the cement industry in India and the
government of India to ensure that the cement industry continues innovation and
research to come up with more and more varieties in the near future.
1. Clinker Cement
Clinker Cement has registered a growth over the last few years in India. The Indian
cement industry is growing at a rapid pace and this has given a major boost to the
production and sale of Clinker Cement in India.
The cement industry in India is highly technologically intensive and as a result, the
quality of clinker cement that is produced in India is of a very high grade and is
often considered among the best in the world. The production of Clinker Cement
requires a lot of energy because it needs to be manufactured at the temperature of
around 1400-1450 degree Celsius.
If Clinker Cement is kept in a dry condition, it can be stored for a long period of
time without any loss of its quality. It is for this reason that Clinker Cement is
preferred in the construction of houses, bridges, and complexes.
2. Ordinary Portland Cement
Ordinary Portland Cement (OPC) is manufactured in the form of different
grades, the most common in India being Grade-53, Grade-43, and Grade-33. OPC
is manufactured by burning siliceous materials like limestone at 1400 degree
Celsius and thereafter grinding it with gypsum.
Grade 43 is in high demand in India and is largely used for residential, commercial
and other building construction purposes. It has a compressive strength of 560 kg
per square cm.
Grade 53 is known for its rich quality and is highly durable. Hence it is used for
constructing bigger structures like building foundations, bridges, tall buildings, and
structures designed to with stand heavy pressure. As such, Ordinary Portland
Cement is used for quite a wide range of applications.
3. Portland Pozzolana Cement
Portland Pozzolana Cement is manufactured by blending Pozzolanic materials,
OPC clinker and gypsum either grinding them together or separately. Today
Portland Pozzolana Cement is widely in demand for industrial and residential
buildings, roads, dams, and machine foundations.
PPC is resistant to harsh water attacks and prevents the formation of calcium
hydroxide at the time of cement setting and hydration. It withstands aggressive
gases, thermal cracks, wet cracking, etc. The BIS quality specifications for PPC is
used in heavy load infrastructure and constructions such as marine structures,
hydraulic structures, mass concreting works, plastering, masonry mortars, and all
applications of ordinary Portland cement.
Some of the other big names in the Portland Pozzolana manufacture are Ultratech,
Ambuja, ACC cements, Star Cement, and Birla group.
Portland Pozzolana Cement is highly popular in India and with many cement
plants setting up jetties for transportation, initial costs would gradually decrease as
well.
4. Portland Blast Furnace Slag Cement
In recent years, there has been a significant growth in the production of Portland
Blast Furnace Slag Cement and its sales have also increased considerably over the
last few years. This has given a major boost to the Indian cement industry. The
Slag Cement of the Portland Blast Furnace is a type of cement that is hydraulic and
is manufactured in a blast furnace where iron ore is reduced to iron. The molten
slag which is tapped is quickly drenched with water, dried, and then grounded to a
fine powder. This fine powder that is produced is commonly known as the Portland
Blast Furnace Slag Cement.
The manufacture of Portland Blast Furnace Slag Cement requires 75% less energy
than that needed for the production of the Portland cement. The low cost of
production of Portland Blast Furnace Slag Cement makes it cheaper than Portland
cement. It is for this reason that in recent years, the sales of Portland Blast Furnace
Slag Cement have increased.
Portland Blast Furnace Slag Cement has a typical light color and an easier 'finish’
ability. Its concrete workability is better and it has a higher flexural and
compressive strength. It is resistant to chemicals and also has more hardened
consistency. This is the reason that Portland Blast Furnace Slag Cement is used in
the construction of dams, bridges, building complexes, and pipes.
5. Oil Well Cement
Oil Well Cement as the name suggests, is used for the grouting of the oil wells,
also known as the cementing of the oil wells. This is done for both, the off-shore
and on-shore oil wells.
As the number of oil wells in India is increasing steadily, the sales of Oil Well
Cement have also increased. This has boosted the Indian cement industry to a
large-extent.
Oil Well Cement is manufactured from the clinker of Portland cement and also
from cements that have been hydraulically blended. Oil Well Cement can resist
high pressure as well as very high temperatures. Oil Well Cement sets very slowly
because it has organic 'retarders' which prevent it from setting too fast. It is due to
all these characteristics that it is used in the building of the oil wells where the
pressure is around 20,000 PSI and the temperature is around 500 degrees-
Fahrenheit.
There are 3 grades of Oil Well Cements. Grades O is ordinary and is used
commonly; HSR is high sulphate resistant; and MSR is moderate sulphate
resistant. Each grade is used where it is applicable at a particular range of oil well
sulphate environments, temperatures, pressures, and depths. Oil Well Cement has
proved to be very beneficial for the petroleum industry due to its characteristics.
For it is due to the Oil Well Cement that the oil wells function properly.
6. Rapid Hardening Portland cement
Rapid Hardening Portland Cement (RHPC) is a type of cement that is used for
special purposes when a faster rate of early high strength is required. RHPC has a
higher rate of strength development than the Normal Portland Cement (NPC).
The Rapid Hardening Portland Cement's better strength performance is achieved
by increasing the refinement of the product. This is the reason that its use is
increasing-in-India.
Rapid Hardening Portland Cement is manufactured by fusing together limestone
and shale, at extremely high temperatures to produce cement clinker. To this
cement clinker, gypsum is added in small quantities and then finely grounded to
produce Rapid Hardening Portland Cement. It is usually manufactured using the
dry process technology.
Rapid Hardening Portland Cement is used in concrete masonry manufacture, repair
work which is urgent, concreting in cold weather, and in pre-cast production of
concrete. Rapid Hardening Portland Cement has proved to be a boon in the places
where quick repairs are required such as airfield and highway pavements, marine
structures, and bridge decks.
The Rapid Hardening Portland Cement should be stored in a dry place, or else its
quality deteriorates due to premature carbonation and hydration. As the Indian
cement industry produces Rapid Hardening Portland Cement in large quantities, it
is able to meet the domestic demand and also export to other countries.
7. Sulphate Resisting Portland Cement
Sulphate Resisting Portland Cement (SRC) is a type of Portland cement in
which the quantity of tricalcium alumiante is less than 5%. It can be used for
purposes wherever Portland Pozzolana Cement, Slag Cement, and Ordinary
Portland cement is used.
The use of Portland Sulphate Resisting Cement has proved beneficial, particularly
in conditions where there is a risk of damage to the concrete from sulphate attack.
The use of Sulphate Resisting Portland Cement is recommended in places where
the concrete is in contact with the soil, ground water, exposed to seacoast, and sea
water. In all these conditions, the concrete is exposed to attack from sulphates that
are present in excessive amounts, which damage the structure. This is the reason
that the use of the Sulphate Resisting Portland Cement have increased in India.
The Sulphate Resisting Portland Cement should be kept in a place which is dry
otherwise through premature hydration and carbonation the quality of cement
deteriorates.
8. White Cement
White Cement has registered growth in production and sale in India in the last few
years. The White Cement sector has been growing at the rate of 11% per year. This
has given the Indian cement industry a major boost.
White Cement is much like the ordinary grey cement except that it is white in
color. In order to get this color of the White Cement, its method of production is
different from that of the ordinary cement. However, this modification in its
production method makes White Cement far more expensive then the ordinary
cement.
The production of White Cement requires exact standards and so it is a product
which is used for specialized purposes. White Cement is produced at temperatures
that hover around 1450-1500 degrees Celsius. This temperature is more than what
is required by the ordinary grey cement.
As more energy is required during the manufacture of White Cement, it goes to
make it more expensive than the ordinary grey cement.
White Cement is used in architectural projects the use of white cement has been
specified. It is used in decorative works and also wherever vibrant colors are
desired. White Cement is used to fill up the gaps between marble and ceramic tiles
for a smoother and more beautiful finish.
MANUFACTURING PROCESS:
Mining - Limestone is extracted from own mines, which are situated approx. 4 km.
away from plant. The mining of limestone is done in such a way so as to get 78%
to 82% pure limestone.
Crushing - The extracted limestone is then transported to Jai crusher by dumpers.
The limestone is crushed into small pieces of approx. 16 to 25 mm. sizes.
Grinding - The crushed limestone along with latrine is feed into the Raw Mill for
grinding. The ground material is called Raw Meal. It is than sent to the CF Silo.
Blending - In the Silo the Raw Material is blended to make the mixture uniform.
From here the material is sent to the pre heaters.
Burning - In pre heaters, the mixture is heated at various temperatures at various
stages. This preheated material is now fed into the kiln where it is heated at the
temperature of 1400- 1500 degree where calcinations take place. Coal is used in
the kiln to maintain the temperature and finally clinker emerges out of it. This
clinker is transported through a conveyor into a storage Silo from where it taken
out through vibratory feeders and fed into the open circuit cement grinding mill
hoppers.
Grinding - The grinding of clinker with gypsum is done in cement mill. It is
basically have where the grade of cement is controlled gypsum is added to increase
the setting time of the cement. Then cement is than stored for some time.
Storage and packing - The cement is than conveyed to different cement storage
silos according to their grades and from silos it is packed in pp bags by using
electronic packaging machines.

INTRODUCTION TO FIANCIAL RATIOS

LIQUIDITY RATIOS
Liquidity implies a firm’s ability to pay its debts in the short run. If a firm has
sufficient net working capital, it is assumed to have enough liquidity. The current
ratio and the quick ratio and Absolute Liquid ratio are the three ratios, which
directly measure liquidity.
Current Ratio: It measures the ability of the enterprise to meet its current
obligations. It gives an idea about the short term liquidity position of the firm.
CURRENT RATIO = CURRENT ASSETS
CURRENT LIABILITIES
Quick Ratio or Liquid Ratio: In current ratio, the composition of current assets is
not considered. A firm which has large amount of cash and accounts receivable is
more liquid than a firm with high amount of inventories in its current asset. Thus
we take quick ratio which shows the firm‘s ability to pay its liabilities without
relying on sale and recovery of its inventory.
QUICK RATIO = CURRENT ASSETS – INVENTORY – PREPAID EXPENSES
CURRENT LIABILITIES
Absolute Liquid Ratio: It is similar to liquid ratio; here absolute liquid assets are
calculated by adding both cash and bank balance and investments.
ABSOLUTE LIQUID RATIO =ABSOLUTE LIQUID ASSETS
CURRENT LIABILITIES
PROFITABILITY RATIOS:
These ratios measure the efficiency of the firm’s activities and ability to generate
profits.
Gross Profit Margin: This ratio is used as an indicator of the efficiency of the
production operation and the relation between production costs and selling price.
 Indicates of how much profit is earned on your products without consideration of
selling and administration costs.
GROSS PROFIT MARGIN= GROSS PROFIT
NET SALES
Net Profit Margin: It measures the overall efficiency of production,
administration, selling, financing, pricing and tax management.
NET PROFIT MARGIN= NET PROFIT
NET SALES

Operating Profit Margin: This ratio indicates how much of income is generated
with respect to sales.
Operating Income =Profit before Interest, Depreciation and Tax (PBIDT)
OPERATING PROFIT MARGIN= OPERATING PROFIT
NET SALES
Return on Equity (ROE): It measures the corporation's profitability that reveals
how much profit a company generates with the money shareholders have invested.
ROE = PROFIT AFTER TAX (PAT)
SHAREHOLDER‘S EQUITY
The ROE is useful for comparing the profitability of a company to that of other
firms in the same industry.
Return on Capital employed (ROCE): It measures the efficiency and
profitability of firm’s capital investments.
ROCE = PBIDT
CAPITAL EMPLOYED
ROCE should be always greater than company borrows. Otherwise increase in
borrowings will result in decrease in Earnings per Share.
TURNOVER RATIO: It gives the speed of conversion of current assets
(liquidity) into cash.
Inventory Turnover Ratio: It measures Number of times that you turn over or sell
inventory during the year. High inventory turnover is an indicator of good
inventory management. But a high ratio can also mean there is a shortage of
inventory. A low turnover may indicate overstocking, or obsolete inventory.

Inventory Turnover Ratio = SALES

INVENTORY
Days in Inventory: It measures the average number of days it will take to sell
your inventory.
Days in Inventory = NUMBER OF DAYS
INVENTORY TURNOVER RATIO

Debtors Turnover Ratio: It measures the how many times credit sales have been
created and collected.
Debtors Turnover Ratio= NET SALES
 DEBTORS
Debtors Collection Period: It measures the length of time your trade payables are
outstanding before they are paid.
Debtors Collection Period= NUMBER OF DAYS
DEBTORS TURNOVER RATIO
Fixed Asset Turnover Ratio: It indicates the ability of the firm to use fixed assets
to generate sales for the firm.
Fixed Asset Turnover Ratio = NET SALES
FIXED ASSETS
LEVERAGE RATIO: These are of two types:
1. Capital Structure Ratio- these are based on proportions of debt and equity in the
capital structure of the firm.
2. Coverage Ratio- these are derived from the relationships between debt servicing
commitments and sources of funds for meeting this obligation.
Capital Structure Ratio:
Debt Equity ratio: It indicates the relative contributions of creditors and owners.
Debt equity ratio = DEBT
EQUITY

Coverage Ratio:
Interest Coverage Ratio: This ratio tells us how many times the firm can cover or
meet the interest payments associated with debt.
Interest coverage ratio= EBIT
INTEREST
EQUITY – RELATED RATIOS
It measures the shareholders return and value.
Earnings per Share (EPS): It gives the performance of the firm.
EPS = NET PROFIT
NUMBER OF EQUITY SHARES
Price Earnings Ratio: It is the number of times the market price of a share is
discounted vis-à-vis the EPS of the firm. It is the most popular financial ratio in the
stock market for secondary market investors as it indicates whether the stock is
undervalued or overvalued. This method is useful as long as the firm is a viable
business entity and its real value is reflected in its profits.
P/E RATIO = MARKET PRICE OF SHARE
EARNING PRICE OF SHARE (EPS)
Dividend per Share (DPS): Dividend paid for each Equity Share holder.
DPS= DIVIDEND PAID
NUMBER OF EQUITY SHARES
Dividend payout ratio: It indicates ratio of amount of Divided paid from Net
profit as Dividend to equity share holders. Dividend paid include the Dividend Tax
Dividend payout ratio= DIVIDEND PAID (INCLUDING DIVIDEND TAX)
NET PROFIT
Net worth per Share: It indicates the Book Value of each Equity share of the
company.
Net Worth per Share= NET WORTH
NUMBER OF EQUITY SHARES

MAJOR PLAYER’S OF THE INDUSTRY

This section provides the overview and financial information on prominent players
in the Indian cement sector like
• Associated Cement Company Ltd. (ACC),
• Grasim Industries Ltd.
• Ambuja Cements Ltd.
• UltraTech Cement Ltd.
• J.K. Cement Limited.
• Madras Cements Ltd.
• Jaypee Group Ltd.
• Binani Cement Ltd.
• Prism Cement Ltd.
• India Cements Ltd.
•

1. AMBUJA CEMENTS LTD

Ambuja Cements Ltd (ACL) started out as a joint sector co. with public sector
Gujarat Industrial Investment Corporation (GIIC) and Narottam Sekhsaria &
Associates in 1981. Later with private partners buying out GIIC's stake, the
company became a private sector venture.
The company is the most cost efficient cement manufacturer in the country. It has
shown innovation in utilizing measures like sea transport, captive power plants,
and imported coal and availing of govt. sops and subsidies to constantly check the
costs. It has also been a major player in exports of cement.
In the last decade the company has grown tenfold. It was the first company in India
to introduce the concept of bulk cement movement by the sea transport. The
company's most distinctive attribute, however, is its approach to the business.
Ambuja follows a unique homegrown philosophy for successful survival. Ambuja
is the most profitable cement company in India, and one of the lowest cost
producers of cement in the world.
The company was awarded for its credit, the National Award for commitment to
quality by the Prime Minister of India, National Award for outstanding pollution
control by the Prime Minister of India, Best Award for highest exports by
CAPEXIL and Economic Times - Harvard Business School Association Award for
corporate excellence in different years. The company was adjudged as the top
Indian company in the cement sector for the Dun and Bradstreet - American
Express Corporate Awards 2007. The company developed a unique homespun
channel management model called Channel Excellence Programmed (CEP) for
marketing their product. Over 7000 dealerships and 20,000 retailers across India
are covered under this model. The company name was changed from Gujarat
Ambuja Cements Limited to Ambuja Cements Limited on April, 2007, the word
Gujarat was dropped to reflect the true geographical presence of the company.
PLANTS:
It is having eight cement plants at Ambujanagar (Gujarat), Darlaghat (Himachal
Pradesh), Upperwahi (Maharashtra), Rabriyawas (Rajasthan), Daburji (Punjab),
Bhatinda district (Punjab) and Ropar (Punjab).

FINANCIAL HIGHLIGHTS:
The Company kept pace with the double digit demand growth, and maintained its
strong position of approximately 18% market share in its main markets, and around
10% on an all India basis.
Sales volumes increased by 6.5%, to 18.8 million tonnes in 2009 as against 17.6
million tonnes in 2008.
The Company has built a large network of over 6,000 dealers and 20,000 retailers
across 18 states in India.
Cement production and sales volumes increased by 6% and 6.5% respectively, to
reach 18.83 million tonnes and 18.79 million tonnes.
Average sales realization increased by 7%, to Rs. 3,760 per tonne.
Net sales were 14% higher, at Rs.7077 crores. EBITDA was 8% higher, at Rs.1972
crores.
Consolidated net profit excluding exceptional items increased 12%, to Rs.1217
crores.
Total cement production increased by 6%compared to 2008, from 17.8 to 18.8
million tonnes, despite the fact that clinker production was marginally lower at
11.4 million tonnes.
UPCOMING PROJECTS:
During 2009 a new bulk cement terminal started operation at Kochi, providing
access to new markets in the South, and two new captive power units, each with 15
MW capacities, were commissioned at Bhatapara (Chhattisgarh) and Maratha
(Maharashtra).
The new clinker production line at Rauri (HP), also with 2.2 million tonnes
capacity, has commenced production trials during January 2010. The associated
cement grinding facilities at Dadri (UP) and Nalagarh (HP), each with 1.5 million
tonnes capacity were commissioned.
An additional 30 MW captive power unit at Ambujanagar (Gujarat) was
commissioned on Jan 2010, taking total captive power capacity to more than 400
MW.
Further investments to improve rail connectivity at several locations are also in
progress, for increased efficiency of logistics operations.
Additional cement grinding capacity is also under construction, at the Bhatapara
and Maratha units, and will be completed during 2010.
By the end of the year, the Company's total installed cement capacity will be
increased from 22 million tonnes to approximately 27 million tonnes.
1.1. FINANCIAL RATIOS
Year 2008- 2007-2008 2006-2007 2005-2006
2009

Current Ratio
1.14 1.59 1.36 1.68
Liquid Ratio
0.74 0.95 0.86 1.10
Absolute Liquid Ratio
0.92 0.80 1.66 2.15
Operating Profit %
30 36 54 39
Gross Profit %
30 36 53 37
Net Profit %
17 23 31 24
Return on Equity (ROE) %
19 25 38 43
Return on Capital employed
(ROCE) % 30 36 58 52
Net Working Capital(in
Crores) 238.25 865.65 418.24 476.02
Inventory Turnover Ratio
10.34 6.63 9.81 15.33
Fixed Asset Turnover Ratio
2.05 1.95 1.93 2.52
Debtors Turnover Ratio
46.44 27.69 39.16 69.69
Debtors Collection Period
7.86 13.18 9.32 5.24
Debt equity ratio
0.03 0.05 0.07 0.25
Interest coverage ratio
81.33 62.08 39.26 20.35
EPS(in Rs)
8.00 9.21 11.62 9.91
P/E RATIO
4.96 17.81 12.47 -
DPS(in Rs)
2.40 2.20 3.50 3.04
Dividend payout %
35 28 35 35
Net Worth per Share(in Rs)
42.46 37.26 30.62 23.02
 1.2. GRAPHS
The various ratios calculated are represented in graphical form for better
understanding.

2. ULTRATECH CEMENT LTD

UltraTech Cement Limited was incorporated as a public limited company on
August 2000, as “L&T Cement Limited” a 100% Subsidiary of Larsen & Toubro
Limited. The name of the Company was changed to UltraTech Cement Co. Limited
with effect from 19th November 2003 after the Aditya Birla group owned Grasim
Industries acquired it. The name of the company was again changed to UltraTech
Cement Limited with effect from 11th October 2004.
UltraTech Cement Limited, a Grasim subsidiary was incorporated in 24th August
2000 as L&T Cement Limited, has an annual capacity of 17 million tonnes.
PRODUCTS:
It manufactures and markets Ordinary Portland Cement, Portland Blast Furnace
Slag Cement and Portland Pozzolana Cement and Ready Mix Concrete.
PLANTS:
As part of the eighth biggest cement manufacturer in the world, UltraTech Cement
has five integrated plants, five grinding units as well as three terminals of its own
(one overseas, in Colombo, Sri Lanka).UltraTech Cement is the country’s largest
exporter of cement clinker. The export markets span countries around the Indian
Ocean, Africa, Europe and the MiddleEast.
Ultratech subsidiaries are Dakshin Cement Limited and UltraTech Ceylinco (P)
Limited.
FINANCIAL HIGHLIGHTS:
Domestic sales volume rose by 13% over FY09, though total volume was up by
11%.
Net Turnover rose by 10%, attributable to higher domestic sales volume. Exports
and Ready Mix Concrete (RMC), each, contributed to around 7% of Company’s
net turnover.
Interest cost decreased from Rs. 126 crores in FY09 to Rs. 118 crores in FY10 due
to repayment of long term debts to the tune of Rs. 300 crores.
Net profit for FY10 stood at Rs. 1,093 crores as compared to Rs. 977 crores in
FY09.

Installed capacity
(Mn.TPA):
Clinker 17.80 17.80
Cement 23.10 21.90

Production (MMT):
Clinker 15.55 15.07
Cement 17.64 15.87

UPCOMING PROJETCS:
Company has earmarked around Rs. 2,600 crores towards capex to be spent over
the next 3 years. This will be invested in augmenting the grinding capacity at its
Unit in Gujarat, installing waste heat recovery systems at its Units in Maharashtra
and Andhra Pradesh, setting-up packaging terminals at various locations and for
other modernization projects
 2.1. FINANCIAL RATIOS
Year 2009- 2008- 2007- 2006-2007 2005-
2010 2009 2008 2006

Current Ratio
1.13 1.09 1.02 1.27 1.39
Liquid Ratio
0.50 0.54 0.54 0.70 0.71
Absolute Liquid Ratio
1.35 0.91 0.21 0.76 0.42
Operating Profit %
30 28 33 30 18
Gross Profit %
28 26 32 28 15
Net Profit %
16 15 18 16 7
Return on Equity (ROE) %
24 27 37 44 22
Return on Capital
employed (ROCE) % 37 31 36 41 19
Net Working Capital(in
Crores) 173.3 118.89 25.33 204.99 216.47
Inventory Turnover Ratio
8.58 9.22 9.04 11.33 8.69
Fixed Asset Turnover
Ratio 1.43 1.38 2.20 1.95 1.30
Debtors Turnover Ratio
32.66 32.91 25.43 26.76 19.12
Debtors Collection Period
11.17 11.09 14.35 13.64 19.09
Debt equity ratio
0.35 0.59 0.65 0.90 1.40
Interest coverage ratio
14.52 14.41 24.14 17.03 6.59
EPS(in Rs)
87.82 78.48 80.94 62.84 18.47
P/E RATIO
13.14 7.01 9.65 12.29 36.98
DPS(in Rs)
6.00 5.00 5.00 4.00 1.75
Dividend payout %
8 7 7 7 11
Net Worth per Share(in Rs)
370.21 289.36 216.65 141.69 83.46
2.2. GRAPHS

3. INDIA CEMENTS
India Cements was set up in 1946 and the company's first plant was established in
1949 at Sankarnagar, Tamil Nadu. Since the India Cements Ltd. has been
established, it has risen in stature to become the biggest cement producer in south
India.
India Cements has 7 plants spread across Andhra Pradesh and Tamil Nadu. The
total production capacity of the plants is around 9 million tons per year. In south
India, India Cements Company has a 28% market share and it plans to achieve a
market share of around 35% in the near future.
Around 90% of India Cements Company's produce is sold in the Tamil Nadu and
Kerala markets. India Cements Company has a distribution network which is very
strong - it has over 10,000 stockists out of which around 25% is devoted to the
company.
PRODUCTS:
The India Cements Ltd. owns famous brands such as Rassi Super Power, Sankar
Super Power, and Coromondal Super Power, Sulphate Resisting Portland Cement
(SRC).
The India Cements Company has subsidiary companies which include ICL
Financial Services, Industrial Chemicals & Monomers, ICL International, and ICL
Securities. In 1997 India cements acquired Aruna Sugars Finance Ltd which was
later renamed as India Cements Capital & Finance Ltd.
ACQUISITIONS:
It also acquired Cement Plant of Visaka Cement Industry, at Tandur, Ranga Reddy
district of Andhra Pradesh with Installed capacity 900000 Tonnes. The cement
division of Raasi Cement (RCL) was vested with the company from April.1998
under a scheme of arrangement India Cements has established itself as a leading
cement manufacturing company and as it plans to expand its production capacity,
the company's position in the market is sure to rise in the near future.

FINANCIAL HIGHLIGHTS:
The clinker production from the company's cement plants during FY 09 was lower
at 69.83 Lakh Tonnes compared to previous year 72.13 Lakh Tonnes and cement
production was also marginally lower at 91.11 Lakh Tonnes compared to previous
year 92.34 Lakh Tonnes.

UPCOMING PROJECTS:
Increasing the capacity of its plants at Vishnupuram and Malkapur besides setting
up grinding units at Chennai, Tamil Nadu and Parli, Maharashtra, all of which are
now functional. The company is in the process of finalizing additional capacity
creation in North India through Greenfield projects acquisition. The proposed plant
at Himachal Pradesh for which company holds the mining lease has been delayed
due to infrastructure bottlenecks.
 3.1. FINANCIAL RATIOS
Year 2008-2009 2007-2008 2006-2007 2005-2006

Current Ratio
1.86 2.19 3.96 4.05
Liquid Ratio
1.54 1.86 3.45 3.55
Absolute Liquid Ratio
0.21 0.56 0.66 0.21
Operating Profit %
32 37 33 18
Gross Profit %
28 33 27 8
Net Profit %
13 21 21 3
Return on Equity (ROE) %
15 25 36 6
Return on Capital
employed (ROCE) % 18 21 17 8
Net Working Capital(in
Crores) 990.21 1165.88 1283.52 1139.29
Inventory Turnover Ratio
4.08 9.18 9.79 7.83
Fixed Asset Turnover
Ratio 0.86 0.87 0.80 0.73
Debtors Turnover Ratio
9.26 9.74 8.58 6.28
Debtors Collection Period
39.41 37.48 42.54 58.10
Debt equity ratio
0.55 0.55 0.93 0.76
Interest coverage ratio
8.03 9.61 4.50 1.34
EPS(in Rs)
15.30 22.62 21.73 2.38
P/E RATIO
6.92 8.26 7.46 69.44
DPS(in Rs)
2.00 1.00 1.00 0.00
Dividend payout %
15 10 6 0
Net Worth per Share(in
Rs) 102.96 89.62 60.97 41.49

3.2. GRAPHS

4. JK CEMENT LTD
J.K. Cement is an affiliate of the J.K. Organization, which was founded by Lala
Kamlapat Singhania. The J.K. Organization is an association of industrial and
commercial companies and has operations in a broad number of industries.
Our cement operations commenced commercial production in May 1975 at our
first plant at Nimbahera in the state of Rajasthan
It commissioned a second grey cement plant at our Mangrol plant in 2001, with a
production capacity of .75 million ton. Today, J. K. Cement Ltd. is one of the
largest cement manufacturers in Northern India. We are also the second largest
white cement manufacturer in India by production capacity. While the grey cement
is primarily sold in the northern India market, the white cement enjoys demand in
the export market including countries like South Africa, Nigeria, Singapore,
Bahrain, Bangladesh, Sri Lanka, Kenya, Tanzania, UAE and Nepal.
Our access to high quality limestone reserves that are suitable for production of
white cement provides us with a competitive advantage. Backed by state-of-the-art
technology and highly skilled manpower against the backdrop of India’s
infrastructural growth in an overdrive, we are upbeat about the future. We are
confident of contributing heavily in India’s journey of development. We see a
world of concrete ideas on the horizon.
PRODUCTS:
We produce grey cement and white cement. Grey cement produced by us consists
of Ordinary Portland Cement (“OPC”) and Portland Pozzolana Cement (“PPC”).
OPC has three principal grades that are differentiated by their compressive
strengths, and consist of 53-grade, 43-grade and 33-grade OPC.
The cement products are marketed under the brand names J.K. Cement and
Sarvashaktiman for OPC products, J.K. Super for PPC products and J.K. White
and Camel for white cement products, which we believe are well known brands.
PLANTS:
We manufacture grey cement in two facilities located at Nimbahera and Mangrol in
the state of Rajasthan in Northern India. White cement is produced at our facility at
Gotan in the state of Rajasthan.
FINANCIAL HIGHLIGHTS:
EBITDA was 8% higher, at Rs.1972 crores.
Consolidated net profit excluding exceptional items increased 12%, to Rs.1217
crores.
UPCOMING PROJECTS:
The clinkerisation expansion projects at Bhatapara and Rauri were commissioned
in December 2009 and January 2010 respectively.
The total cost of these two projects will be approximately Rs. 2,700 crores.
Apart from the above two major projects, an additional 30 MW captive power unit
at Ambujanagar(Gujarat) is currently undergoing production trials and will be
commissioned during the first quarter 2010, taking total captive power capacity to
more than 400 MW.
In addition, three new ships for western coastal transportation are under
construction, of which two are expected to be brought into service in 2010.
Further investments to improve rail connectivity at several locations are also in
progress, for increased efficiency of logistics operations. Additional cement
grinding capacity is also under construction, at the Bhatapara and Maratha nits, and
will be completed during 2010. By the end of the year, the Company's total
installed cement capacity will be increased from 22 million tonnes to
approximately 27 million tonnes. All the expansion projects have been financed
through internal accruals
 4.1. FINANCIAL RATIOS
Year 2008-2009 2007-2008 2006-2007 2005-2006

Current Ratio
2.65 2.48 2.31 2.65
Liquid Ratio
2.46 1.92 1.97 2.22
Absolute Liquid Ratio
0.44 0.53 0.97 1.48
Operating Profit %
22.17 29.04 27.56 16.18
Gross Profit %
19.13 26.58 24.74 9.53
Net Profit %
10 18 14 4
Return on Equity (ROE) %
12.00 25.17 21.78 4.83
Return on Capital employed
(ROCE) % 18 26 24 11
Net Working Capital(in
Crores) 587.07 380.42 316.52 317.04
Inventory Turnover Ratio
11.00 12.73 11.21 10.40
Fixed Asset Turnover Ratio
1.23 1.34 1.34 0.97
Debtors Turnover Ratio
28.22 25.47 19.84 18.94
Debtors Collection Period
12.93 14.33 18.40 19.27
Debt equity ratio
0.48 0.48 0.68 0.86
Interest coverage ratio
6.14 10.66 8.83 1.90
EPS(in Rs)
20.36 37.92 25.54 4.66
P/E RATIO
1.95 4.32 5.67 37.64
DPS(in Rs)
3.50 5.00 3.50 1.50
Dividend payout %
20 15 16 37
Net Worth per Share(in Rs)
169.61 150.63 117.28 96.42
4.2. GRAPHS

5. GRASIM LTD
Grasim Industries Limited, a flagship company of the Aditya Birla Group.
Starting as a textiles manufacturer in 1948, today Grasim's businesses comprise
viscose staple fibre (VSF), cement, chemicals and textiles. Its core businesses are
VSF and cement, which contribute to over 90 per cent of its revenues and
operating profits. In July 2004, Grasim acquired a majority stake and management
control in UltraTech Cement Limited. One of the largest of its kind in the cement
sector, this acquisition catapulted the Aditya Birla Group to the top of the league in
India. The cement business of the Group is being restructured in a phased manner.
In the first phase, Grasim's cement business is being demerged into Samruddhi
Cement Limited, a subsidiary of Grasim. In the second phase, Samruddhi Cement
Limited will amalgamate with UltraTech. Upon completion of restructuring, the
cement business will be consolidated in UltraTech, a pure play cement company.
 
Grasim ventured into cement production in the mid 1980s, setting up its first plant
at Jawad in Madhya Pradesh and since then it has grown to become a major player
in the cement industry.
All the plants are located close to sizeable limestone mines and are fully automated
to ensure consistent quality. All units use state-of-the-art equipment and technology
and are certified with ISO 9001 for quality systems and ISO 14001 for
environment management systems
PRODUCTS:
Grasim is also nurturing some regional brands like Vikram Cement and Rajashree
Cement. Grasim is a leading ready mix concrete (RMC) player in India. Grasim is
also the largest producer of white cement in India. The white cement division
manufactures world-class white cement in a variety of textures and finishes. It has
applications in floorings and exterior wall finishes, apart from other innovative
uses.
Grasim is a voluntary member of the Cement Sustainability Initiative (CSI), which
is the apex for the cement industry globally to establish common measures, share
best practices and exchange data relating to environmental impact.

PLANTS:
Composite plants: Jawad, Rawan, Shambhupura, Malkhed, Reddipalayam,
Kotputli
Ready-mix concrete (35 plants)
Ready-mix concrete (34 plants)
White cement: Kharia, Khanga
FINANCIAL HIGHLIGHTS:
Net income from operations at Rs.20195 Crores increased by 9% driven by higher
volumes in Cement business.
PBIDT rose by 32% with higher volumes, lower input and energy prices.
Interest cost increased from Rs.307 Crores to Rs.335 Crores. Loans aggregating
Rs.650 Crores were raised during the year to fund capital expenditure.
Net profit before extraordinary gain was Rs.2759 Crores in FY10, as against
Rs.2187 Crores in FY09, an increase of 26 %.
UPCOMING PROJECTS:
Company spent Rs.705 Crores towards the completion of expansion projects in the
cement business, and normal modernization in all the businesses.
 5.1. FINACIAL RATIOS
Year 2009- 2008- 2007- 2006-2007 2005-
2010 2009 2008 2006

Current Ratio
1.32 1.36 1.38 1.62 1.59
Liquid Ratio
0.85 0.75 0.92 1.05 1.00
Absolute Liquid Ratio
7.18 2.07 1.96 3.03 2.86
Operating Profit %
36 26 34 30 24
Gross Profit %
35 25 32 29 23
Net Profit %
21 15 20 18 13
Return on Equity (ROE) %
25 17 25 25 17
Return on Capital employed
(ROCE) % 35 21 29 27 21
Net Working Capital(in
Crores) 281.32 820.03 814.7 892.33 753.39
Inventory Turnover Ratio
19.59 7.84 10.44 10.44 8.82
Fixed Asset Turnover Ratio
4.58 1.52 2.54 2.54 2.20
Debtors Turnover Ratio
23.69 19.30 14.35 14.92 16.01
Debtors Collection Period
15.41 18.92 25.44 24.46 22.79
Debt equity ratio
0.15 0.36 0.39 0.47 0.40
Interest coverage ratio
20.00 16.81 28.71 20.57 13.35
EPS(in Rs)
191.53 179.76 223.35 167.53 94.16
P/E RATIO
14.70 8.80 11.80 12.80 22.00
DPS(in Rs)
30.00 30.00 30.00 27.50 20.00
Dividend payout %
18 19 15 19 24
Net Worth per Share(in Rs)
779.35 1033.83 887.99 679.59 543.46

5.2. GRAPHS

6. MADRAS CEMENTS LTD

Madras Cements Ltd is the flag ship company of Ramco Group, a well known
business group of South India. It is based at Chennai. The main product of the
company is Portland cement manufactured through the five advanced production
facilities spread over South India. The cement capacity is 10 million tons per
annum. Madras Cements Ltd is a trend-setter in adopting state-of-the-art
technology for the manufacture of Cement, Ready Mix Concrete and Dry Mortar
Products. MCL is the first to bring the following technologies in South India's
cement industry.
 AWARDS:
• 4 Leaves Award from Centre for Science and Environment.
• National Award for Energy Conservation from Confederation of Indian
Industries.
• Best Energy Efficient Unit from National Council for Cement and Building
Materials.
• Corporate Performance Award from Economic Times.
• Best Improvement in Energy Performance from International Congress
on Chemistry of Cement.
• Visvesvariah Industrial Award from All India Manufacturers Organisation.

• Business Excellence Award from Industrial Economist.

• Export Performance Award from CAPEXIL.

• State Safety Awards from Tamil Nadu & AP Governments.

PRODUCTS:
The company is the fifth largest cement producer in the country. Ramco Super
grade is the most popular cement brand in South India. 
The company also produces Ready Mix Concrete and Dry Mortar products. In
addition, the company also operates one of the largest wind farms in the country.

PLANTS:
MCL operates five plants with a total capacity of 10 MTPA.
• R R Nagar, Tamil Nadu (1.2 MTPA)
• Jayanthipuram, Andra Pradesh (3.6 MTPA)
• Alathiyur, Tamil Nadu (3.0 MTPA)
• Ariyalur, Tamil Nadu (2.0 MTPA)
• Mathod, Karnataka (0.2 MTPA)
UPCOMING PROJECTS:
The company plans to establish grinding and packing plants near fly ash
availability areas / major cement consumption areas to help the Company in
economizing transportation costs and better servicing of markets
Grinding Plant with a capacity of 0.50 Million Tonnes Per Annum (MTPA) at
Kattuputhur Village, Uthiramerur Taluk, and Kancheepuram District Tamil Nadu
was commissioned in the month of June 2009.
Grinding Plant with a capacity of 0.50 MTPA at Singhipuram Village, Valapady
Taluk, Salem District, and Tamil Nadu was commissioned in the month of
September 2009.
Grinding Plant with a capacity of 0.95 MTPA at Kolaghat, Purba Medinipur
District, West Bengal, was commissioned in the month of January 2010.
Packing Plant with a capacity of 120 Tonnes per Hour (TPH) at Malkapur,
Nalgonda District.
Andhra Pradesh was commissioned in the month of September 2009.
Packing Plant with a capacity of 120 TPH at Aralvaimozhi, Kanyakumari District
Tamil Nadu was commissioned in the month of December 2009.
FINANCIAL HIGHLIGHTS:
Operating profit before interest, depreciation and tax was higher at Rs.877.29
crores as against Rs.793.50 Crores of the previous year, showing 11% increase.
The higher borrowings during the year for the various expansion projects had
resulted in increase in interest cost.
The commissioning of the new projects had also increased the depreciation charge

6.1. FINANCIAL RATIOS

Year 2009- 2008- 2007- 2006-2007 2005-
2010 2009 2008 2006

Current Ratio
2.08 2.08 1.94 1.56 1.43
Liquid Ratio
1.32 1.32 1.33 1.23 0.98
Absolute Liquid Ratio
0.23 0.29 0.28 0.37 0.60
Operating Profit %
33 33 39 37 22
Gross Profit %
26 28 34 32 15
Net Profit %
13 15 21 20 8
Return on Equity (ROE) %
23 29 43 46 201
Return on Capital
employed (ROCE) % 17 18 24 33 17
Net Working Capital(in
Crores) 546.24 440.38 401.51 394.51 228.70
Inventory Turnover Ratio
6.46 7.21 8.06 11.93 9.77
Fixed Asset Turnover Ratio
0.72 0.79 1.03 1.42 1.00
Debtors Turnover Ratio
17.15 26.41 31.74 23.42 19.99
Debtors Collection Period
21 14 12 16 18
Debt equity ratio
1.65 1.95 1.71 1.02 1.53
 Interest coverage ratio
4.52 6.00 12.93 21.53 4.38
EPS(in Rs)
14.86 15.28 343.02 255.03 65.43
P/E RATIO
8.13 4.73 9.76 10.71 33.29
DPS(in Rs)
2 2 40 25 15
Dividend payout %
15.75 15.34 13.76 11.31 26.18
Net Worth per Share(in Rs)
65.48 52.96 801.38 551.72 325.54

6.2. GRAPHS

7.1. FINANCIAL RATIOS OF COMPANIES FOR THE YEAR 2008-2009

AMBUJA INDIA JK MADRAS
CEMENTS ULTRATECH CEMENTS CEMENTS GRASI CEMENTS
COMPANY LTD LTD LTD LTD M LTD LTD
Current Ratio 1.14 1.09 1.86 2.65 1.36 2.08

Liquid Ratio 0.74 0.54 1.54 2.46 0.75 1.32

Absolute Liquid Ratio 0.92 0.91 0.21 0.44 2.07 0.29

Operating Profit % 30 27 32 22 26 33

Gross Profit % 30 26 28 19 25 28

Net Profit % 17 15 13 10 15 15

Return on Equity % 18 27 15 12 17 29

Return on Capital employed

(ROCE) % 30 31 18 18 21 18

Net Working Capital 238.25 118.89 990.21 587.07 820.03 440.38

Inventory Turnover Ratio 10.34 9.22 4.08 11 7.84 7.21

Fixed Asset Turnover Ratio 2.05 1.38 0.86 1.23 1.52 0.79

Debtors Turnover Ratio 46.44 32.91 9.26 28.22 19.3 26.41

Debtors Collection Period 7.86 11.09 39.41 12.93 18.92 14

Debt equity ratio 0.03 0.59 0.55 0.48 0.36 1.95

Interest coverage ratio 81.33 14.41 8.03 6.14 16.81 6

EPS(in Rs) 8 78.48 15.3 20.36 179.76 15.28

P/E RATIO 4.96 7.01 6.92 1.95 8.8 4.73

DPS(in Rs) 2.4 5 2 3.5 30 2

Dividend payout % 35 7 15 20 19 15

Net Worth per Share(in Rs) 42.46 289.36 102.96 169.61 1033.83 52.96
7.2. GRAPHS

Optimum ratio to be maintained is 2:1.The Company should have twice the current
assets to match its current obligations. Madras cements Ltd has most optimum
value.

Liquid ratio includes only liquid asset which can be readily converted to meet
current obligations of the company. Ratio should be maintained optimum. It is
more precise than current ratio it clearly indicates the solvency position if the
company.

Operating profit % highlights the operational efficiency of the firm. Operating

profit is Profit before Interest, Depreciation and Tax (PBIDT). Higher the value
satisfies the shareholders of the company. Madras cements Ltd has highest
Operating efficiency of all.

Net Profit indicates the equity earning of the company. Higher the value satisfies
the shareholders of the company. Madras cements Ltd has Net Profit % of 15
though having high Operating Profit % is due to high Interest, Depreciation cost.

Return to Equity higher makes the share holders of the company happy and attracts
more retail and institutional investors. Madras Cements Ltd has highest ROE.

Ambuja Cements Ltd has the lowest debt of all. Debt equity indicates the capital
structure of company. Madras Cements Ltd has highest Debt Equity ratio. Debt
Equity ratio must be maintained at optimum value.

Higher the ratio shows the better the financial position the firm. It clearly shows
the interest paying ability of the firm. Ambuja cements Ltd have highest Interest
ratio because it has lowest debt of all.
EPS is amount earned by one equity share. Higher EPS makes it highly attractive
for shareholders. Grasim Ltd and Ultratech Ltd has highest EPS .Aditya Birla
Group has high EPS.

Higher the P/E ratio indicate stock is valued richly this is could be due to market
expectations.  P/E ratio is a "fundamental" measure used by long-term investors.
Industry average P/E ratio is around 9.

Dividend per Share is dividend earned by each share.DPS depends upon Dividend
allocated for the year by management board. Grasim pays highest dividend per
equity share.

Percentage of Net Profit to be distributed as dividend to Equity share holders while

the rest of the net profit is added to reserves and surplus. Ambuja Cements Ltd has
highest Dividend payout ratio
CEMENT INDUSTRY FUTURE TRENDS:
OPPORTUNITIES:
• Per capita consumption in India continues to be low at 143 kg, as compared
to other countries such as China (1,014 kg) and Japan (524 kg), which
indicates significant potential for growth.
• Housing, infrastructure and industrial and commercial construction are
expected to be the key drivers for future growth. The Union Budget
substantially stepped up allocation for many infrastructure sectors over the
budget estimates for the previous year, especially for the National Highways
Development Program (NHDP), Jawaharlal Nehru National Urban Renewal
Mission (JNNURM) and Accelerated Power Development and Reform
Program (APDRP).
• Demand for housing, which accounts for the largest share of the total
domestic demand for cement in India, is set to grow rapidly due to
increasing urbanization, rising number of households and growing
employment. According to the Eleventh Plan, the demand for housing in
India is estimated to increase from more than24 million units in 2007 to over
26 million units by the end of the Plan period.
• Infrastructure projects such as DFC as well as upgraded and Greenfield
airports and ports are expected to step up construction activity, thereby
leading to a surge in the demand for cement
CEMENT INDUSTRY GROWTH DRIVERS

HOUSING:
• The housing segment is expected to be a key demand generator for the
cement industry, considering the intensive demand the segment is currently
witnessing.
• According to the Eleventh Five Year Plan (2007–2012), housing demand is
estimated to increase from more than 24 million units in 2007 to over 26
million units at the end of the Plan period.
• Growing urbanization, an increasing number of households and higher
employment are primarily driving the demand for housing.
• The housing segment accounts for a major portion of the total domestic
demand for cement in India.
INFRASTRUCTURE:
• The Government of India is strongly focusing infrastructure development to
boost the economy’s growth.
• Infrastructure projects such as the Dedicated Freight Corridors (DFCs) and
upgraded and Greenfield airports and ports are expected to drive
construction activity.
• Further, upcoming industrial clusters and infrastructure development in
emerging tier-II and tier-III cities are also expected to fuel growth in the
sector

REAL ESTATE:
• The commercial real estate (CRE) segments, comprising retail space, office
 space and hotels as well as civil facilities including hospitals, multiplexes
and schools, have been on the rise with a growing economy.
• Service sectors such as telecom and financial services, as well as the IT/ITeS
sector (which accounts for the maximum commercial office space in the
country) are growing.
• Manufacturing sectors (pharmaceuticals, biotechnology, and automotives)
and fast moving consumer goods (FMCG) are likely to drive the demand for
office space
OTHER FACTORS:
• Government initiatives are expected to provide impetus to construction
activity in rural and semi-urban areas through large infrastructure and
housing development projects.
• According to the Eleventh Plan, the Government of India intends to
substantially augment railway capacity and facilities for handling and
storage to ease the transportation of cement and further reduce its
transportation costs.
• The industry is also focusing on the modernization of trade through high-end
technology adoption and low energy consumption, which is comparable with
the best in the world.
• The demand for cement in India is expected to increase in the long run, since
fundamental growth drivers of the economy, such as infrastructure, trade and
per capita income, are intact.
CONCLUSION:
The cement industry is likely to record an annual growth of over 10% in the
coming years on the back of higher domestic demand. Domestic cement demand is
expected to remain strong, given the revival in the housing sector and continued
Government spending on infrastructure.
The cement industry in spite of facing many problems is utilizing the capacity of
80 % average to meet the demand.
The cement industry is a cyclical commodity industry where the profit and return
on capital is dependent on the demand cycle picture. From the mid 90’s to 2002-
2003 periods, there was an excess of supply and hence prices were depressed. Most
companies had poor to non-existent profits and accordingly the stock prices
suffered. Since 2003, the demand has increased rapidly and so have the prices.
Most of top players in the cement industry are able to give good consistent returns.
With the Indian economy growing with strong positive signs. With increased
demand projected for coming years Cement industry is expected to be in
upswing. Thus prospective future outlook of cement industry makes attractive
for investors.
The strong growth driver increase in cement demand due to this growth drivers,
Government of India spending on infrastructure, Strong market trends and
Economy in growing phase makes Cement industry very attractive in the market
but with caution due to increase in raw material prices.
BIBLIOGRAPHY
www.capitalline.com
www.economywatch.com
www.ibef.org
www.researchandmarkets.com
www.grasim.com
www.indiacementsltd.co.in
www.madrascements.com
www.gujuratambuja.com
www.ultratech.com
www.cmaindia.org
www.jkcements.com