CHAPTER 1

INTRODUCTION
An annual publication that public corporations must provide to shareholders to describe
their operations and financial conditions. The front part of the report often contains an
impressive combination of graphics, photos and an accompanying narrative, all of which
chronicle the company's activities over the past year. The back part of the report contains
detailed financial and operational information.
In the case of mutual funds, an annual report is a required document that is made
available to fund shareholders on a fiscal year basis. It discloses certain aspects of a
fund's operations and financial condition. In contrast to corporate annual reports, mutual
fund annual reports are best described as "plain vanilla" in terms of their presentation.
It was not until legislation was enacted after the stock market crash in 1929 that
the annual report became a regular component of corporate financial reporting. Typically,
an annual report will contain the following sections.
Financial Highlights
Narrative Text, Graphics and Photos
Management's Discussion and Analysis
Financial Statements

Notes to Financial Statements

Audit report
corporate Information
A mutual fund annual report, along with a fund's prospectus and statement of additional
information, is a source of multi-year fund data and performance, which is made
available to fund shareholders as well as to prospective fund investors. Unfortunately,
most of the information is quantitative rather than qualitative, which addresses the
mandatory accounting disclosures required of mutual funds.
A company's annual report is the single most important way for it to convey itself to
potential investors. As such, it should come as no surprise that an annual report serves to
present the company in best light possible without violating any Securities and Exchange
Commission (SEC) regulations. Unfortunately, many investors read annual reports but
fail to read them effectively. In other words, while annual reports are clearly prepared
without any intent to deceive or reflect dishonesty about the business, investors should
always read them with a sense of skepticism. In other words, learn how to read between
the lines and decipher the actual condition of the company.
Audited document required by the SEC and sent to a public company's or mutual fund's
shareholders at the end of each fiscal year, reporting the financial results for the year
(including the balance sheet, income statement, cash flow statement and description of
company operations) and commenting on the outlook for the future. The term sometimes

refers to the glossy, colorful brochure and sometimes to Form 10-K, which is sent along
with the brochure and contains more detailed financial information.

Objective of study.
The Obiective of taking this topic is,

To study what is annual report.

And to study the profile of ambuja cement company and its annual report.

Scope of study:
The project having relevant information of company.
Revised information collected as per the latest data year 2014.

Research Methodology:

The research is of secondary data.

The information included in project is of secondary data information.

Limitation:

The information of project is not a primary data.

The time period involved in this period is less.

Chapterization:
Chater 1: Introduction.
Chapter 2: Profile of a Ambuja cement company.
Chapter 3: Comparitive Balancesheet of a company.
Chapter 4: Audit Report of company.
Chapter 5: Findings,analysis & conclusion.

CHAPTER 2

PROFILE OF AMBUJA CEMENT COMPANY

AMBUJA CEMENT.
The Company Was Established As a Joint Venture Between Public Sector Gujrat
Industrial Investnent Corporation And NarottamSekhsaria& Associates.
In May 19,1983 the company was rehabilitated into public ltd company.Also they
changed their name in to Gujarat Ambuja Cements Ltd.In the year 1985,the company set
up a cement plant up in technical collaboration with Krupp Polysius, germany Bakau
wolf and Fuller KCP.During the year 1988-89 the company commissioned the 12.6 MW
diesel-generating sets. In the year 1991 company got necessary approvals for setting up
another cement plant with 1 million tone capacity per anuam at Himachal Pradesh.
The company undertook bulk cement transportation, by sea,to the majour markets of
Mumbai Surat and athor deficit zones on the west coast. In the year 1997, the company
started commercial production in Kodinar plant with an enhanced capacity. In the year
1998, they set up a $20 million clinker griding unit in Shrilanka.
In the year 2000 larson and Tubro and Gujrat Ambuja Cement entered in the agreement
to reduce transportation cost. In the year 2004 Ambuja Cement Rajastan amalgamate with
the company.
In july 2005 ,Indo Nippon special cement company amalgate with the company. And
company changed their name from Gujrat Ambuja Cement Ltd to Ambuja cement in the
year 2007. In june 2011 the company made strategic investment in Dang Cement

Industries Pvt Ltd Nepal and acquired 85% shareholding for 19.13 crore to help further
expansion of capacity in the northern region of India and Nepal.
Ambuja cement entered the cement business with the driving conviction that challenges
are there to be met and apportunities are ment to be seized.The company achieve
maximum efficiency and productivity at the lowest cost.Company had set up the plant in
record time.Capacity utilization of company is above 100%.The power consumption is
record to be low.In short the company had to be emerge unbeatable on all key
parameters.For the company empowerment is not only fashionable term, it was only way
to achieve goals.
Cement is the most essential raw material in any kind of construction activity.
Accordingly, cement industry plays a crucial role in the infrastructural development of
the country. Given the vast geographical size and massive population of the country,
various construction activities undertaken by the Central Government, State
Governments, Public Sector Undertaking and other organisations, including private sector
generate huge demand for cement. In addition, provision for housing is the first and
foremost requirement of every household and, therefore, market demand of cement for
private consumption iincreasing constantly.
Ambuja Cements Ltd. (ACL) is one of the leading cement manufacturing companies in
India. The Company, initially called Gujarat Ambuja Cements Ltd., was founded by
Narotam Sekhsaria in 1983 with a partner, Suresh Neotia. Sekhsarias business acumen
and leadership skills put the company on a fast track to growth. The Company
commenced cement production in 1986. The global cement major Holcim acquired

management control of ACL in 2006. Holcim today holds little over 46% equity in ACL.
The Company is currently known as Ambuja Cements Ltd.
ACL has grown dynamically over the past decade. Its current cement capacity is about
25 million tonnes. The Company has five integrated cement manufacturing plants and
eight cement grinding units across the country. ACL enjoys a reputation of being one of
the most efficient cement manufacturers in the world. Its environment protection
measures are on par with the finest in the country. It is one of the most profitable and
innovative cement companies in India. ACL is the first Indian cement manufacturers to
build a captive port with three terminals along the countrys western coastline to facilitate
timely, cost effective and environmentally cleaner shipments of bulk cement to its
customers.
The Company has its own fleet of ships. ACL has also pioneered the development of the
multiple bio-mass co-fired technology for generating greener power in its captive plants.
ACL has always met tough challenges and seized the opportunities that have come its
way. It has nurtured the same spirit of enterprise and search for cutting-edge technology
with which it started. It thus continues to be the driving force and in many ways a
benchmark for the cement industry in India.
Ambuja cements frist cement manufacturing plant at ambujanagargujrat worth 0.7
million tones capacity commences production. The only cement company to be awarded
the National Quality Award in recognition of total quality management.

The parameters adopted by the Government for this award are on the lines of the most
prestigious international awards such as the MalcomBaldrige National Quality Award of
the USA, the Demming prize of Japan and the European Quality Award. At Ambuja,the
company recognise their social responsibility and aim to improve the quality of life of
their workforce, their families and the communities around their operations.
The Company pursues a clear policy with regard to employment practises, occupational
health and safety, community involvement as well as customer and supplier relations. The
main raw materials used in the cement manufacturing process are Clinker, Fly Ash
Metric, Gypsum, Silica, Iron ore, and Limestone. The main material, limestone, is usually
mined on site while the other minor materials may be mined either on site or in nearby
quarries. Another source of raw materials is industrial by-products. The use of by-product
materials to replace natural raw materials is a key element in achieving sustainable
development. About 75% of all the cement produced goes into ready-mix concrete, which
is used for buildings, bridges, sidewalks, walls and all types of structures. The rest is used
for building materials such as concrete blocks, pipes and pre-cast slabs in road building
and repairs and other nation building applications. First cement company to receive the
ISO 9002 quality certification. Ambuja also has ISO 14000 Certification for
environmental systems. Companies unique corporate philosophy has enabled them to
cement the driving spirit of indigenous enterprise with robust Global Processes., Ambuja
Cements has grown more than 20 times in just two decades.
continue to deliver and improve upon performance, a project aptly titled People Power
has been launched at the Ambujanagar plant, with the aim of nurturing highly productive

people and healthy plants. The company using an Australian device to eliminate noise
and vibration that is unavoidable during the conventional drilling, blasting and crushing
process. This device is more energy efficient and enables more efficient. Recently
Ambuja is the only company using this device in the India.
Ambuja Cements has always prided itself on its world class performance. In order to
cement industry. The Company improved efficiency of its kilns to get more output for
less power. Thereafter it set up a captive power plant at a substantially lower cost than the
national grid. The
company sourced a cheaper and higher quality coal from South Africa and better furnace
oil from the Middle East .Asia result today, the company is in a position to sell excess
power to the local state government. Occupational health and safety is one of the core
values. At Ambuja Cements, they have allocated significant resources to strengthen the
occupational Health And Safety Management Syatem.
VISION OF A COMPANY:

To be the most admired and competitive company in cement industry.

MISSION OF A COMPANY :
1.Delighted Customers
2.Inspired Employees
3.Enlightened Partners

4.Energised Society
5.Loyal Shareholders
6.Healthy Environment
PRODUCT OF A COMPANY INCLUDES:
Produced in Ambuja Cements are:
Portland Pozzolano cement (PPC)
Ordinary Portland cement (OPC)
PPC is manufactured by blending a mixture of ordinary portland cement and pozzolana
materials such as fly ash, in proportions not less than 15 per cent and not over 35 per cent
by weight of cement.OPC contains a mixture of portland clinker and gypsum ground to a
very fine powder.
Ambuja Cements Limited (ACL) has taken lead in the utilisation of industrial wastes in
Cement production. Fly ash is a fine glass powder recovered from gases emitted by
burning coal during the production of electricity. Fly ash is a major waste of coal-based
thermal power plants. Fly ash disposal is a significant environmental concern as it creates
huge pressures on land and water and fugitive emissions.
ACL is one of the largest companies in India to use fly ash in cement manufacturing and
has set up Grinding Units at different parts of the country dedicated for the purpose.
The total quantity of fly ash to the tune of 4.7 MTPA is currently being used for
production of Pozzolana cement. Eight Grinding Units are set up to exclusively use fly
ash from nearby thermal power stations.
10

In 2009, about 91% of ACL's total cement production was PPC and just 9% OPC.
Production of slag-based cement and other blended cements by utilising some of the
other industrial wastes has been envisaged in the forthcoming units. This has helped to
reduce the clinker factor from 75.15 in 2006 to 69.13 in 2009.
With the above measures aimed at waste utilisation in cement making, we are able to
achieve substantial reduction of CO2 emissions from our operations. Over 25-30% of the
production cost of cement is power. It quickly became clear to us that if company were to
run an iconic company, They needed to keep power costs to the minimum. So company
focused our efforts on improving efficiency at our kilns to get more output for less power.

EXECUTIVE MEMBERS OF A COMPANY:

CHAIRMAN -

N. S. SEKHSARIA.

Mr. Sekhsaria is the main promoter of Ambuja Cements Limited. He has created new
benchmarks in the cement industry with path-breaking and innovative thinking and
turned cement from a commodity into a brand. He is Chairman of ACC Ltd. and also of
Ambuja Cements Limited.
VICE CHAIRMAN - PAUL HUGENTOBLER.
Mr. Hugentobler, a Swiss national, joined Holcim Group Support Limited in 1980 as
Project Manager and in 1994 was appointed Area Manager. He has been a member of the
Executive Committee of Holcim since January 2002 with responsibility for South Asia
11

and ASEAN excluding Philippines. He joined the Board in May 2006 and in September
2009 was made Non-executive Vice Chairman.
DIRECTOR -

BERNA FONTANA.

Bernard Fontana, a French national, began his career with Groupe SNPE in France.
Since then, he's moved on to become the Head of US operations and thereafter, a member
of the Executive committee at Groupe SNPE; HR, IT and Business Development Head at
Flat Carbon, a member of the Executive Committee at ArcelorMittal and the CEO of
Aperam; before joining Holcim Ltd. on February 1, 2012 as CEO.
DIRECTOR-

M .L. BHAKTA.

Mr. Bhakta is a senior partner of Messrs Kanga & Company, a leading firm of advocates
and solicitors in Mumbai. He has vast experience in the legal field, especially in matters
relating to corporate law, banking and taxation. He was Chairman of the Taxation Law
Standing Committee of LAW ASIA. He joined the board in 1985.
DIRECTOR -

NASSER MUNJEE.

A Masters degree holder from the London School of Economics, Mr. Munjee is a board
member of a number of companies. He has a deep interest in rural development, housing
finance and urban issues, specially the development of modern cities and humanitarian
causes. He has been awarded the Best Non-Executive Independent Director 2009 award
by The Asian Centre for Corporate Governance. He joined the board in 2001.
DIRECTOR-

RAJENDRA .P. CHITALE.

12

An eminent Chartered Accountant, Mr. Chitale is the managing partner of M/s M.P.
Chitale& Associates. He has served as a member of the Insurance Advisory Committee,
the Company Law Advisory Committee and other committees of the Government of
Maharashtra and the Government of India. He is on the board of several large
corporations. He joined the board in July 2002.
DIRECTOR -

SHAILESH HARIBHAKTI.

Mr. Haribhakti Is the Executive Chairman of BDO Consulting Private Ltd and the
Managing Partner of Haribhakti& Co Chartered Accountants. He is on the Board of
Directors of several private and listed companies. He has been awarded the Best NonExecutive Independent Director 2007 award by The Asian Centre for Corporate
Governance. He joined the Board in May 2006.
DIRECTOR -

OMKAR GOSWAMI.

A professional economist, Dr. Goswami has taught and researched economics for nearly
two decades. In 1997, he moved away from formal academics to become the editor of
Business India, one of Indias prestigious business magazines. He has served as the Chief
Economist of the Confederation of Indian Industry and is on the Board of several large
companies. He joined the Board in July 2006.
DIRECTOR - NARESH CHANDRA.
A Padma Vibhushan awardee in 2007, Mr. Naresh Chandra is a postgraduate from the
Allahabad University. He has held several important positions within the Government of
India, including Governor of the State of Gujarat and Indias ambassador to the United

13

States. He is a Director on the Board of ACC and several other reputed companies. He
joined the board in July 2008.
MANAGING DIRECTOR -

ONNE VAN DER WEIJDE.

A Dutch national, Mr. Onne joined Holcim in the year 1996 and after holding various
positions, he was appointed Director and General Manager for Holcim (India) Pvt. Ltd. in
March 2005. He was the CFO of ACC between 2006 and 2008. He has a lot of
experience of the cement industry. He joined the Board in January 2009.

Executive management Team:

1.
2.
3.
4.
5.
6.
7.
8.
9.

Mr. Ajay Kapur, Chief Executive Officer.

Mr. J.C. Toshniwal - Business Head (North).
Mr. S.N. Toshniwal - Business Head (East).
Mr. SanjeevChuriwala, Chief Financial Officer.
Mr. B.L. Taparia, Company Secretary & Corporate Sustainability Officer.
Mrs. MeenakshiNarain - Joint President (HR).
Mr. VivekAgnihotri, National Head - Marketing & Commercial Services.
Mr. GhassanBroummana , Head TSS.
Mr. Shakti Arora, Head - Central Purchase Officer.

RECENT ACTIVITIES

Ambuja envisions being the most sustainable Company in the cement industry and draws
heavily on Holcim''s sustainability policy on CO2 and energy, eco-efficient products,
atmospheric emissions, sustainable construction, etc. The strategic stress on
environmentally-friendly and cost-effective resources resulted in the establishment of the
Geocycle department to focus on Alternative Fuels and Raw Material (AFR).
14

An ambitious project, named ''Geo20'' has been taken up by the Company last year,
which involves a capital investment of '' 200 crores. The project that is meant to substitute
costlier traditional fossil fuels with Alternative Fuels (AF), is nearing completion and
slated to be operational at all of our integrated plants by end of 2014. Holcim is actively
supporting our efforts by making available its global experience and technical expertise
in the area of clean and green technology and burning all sorts of waste materials without
the corresponding release of harmful gases and CO2 in the air. Holcim''s rich experience
in this area has helped to devise innovative ways of sourcing.

The Company''s promoter, Holcim has proposed a restructuring exercise with a view to
simplify its investment structure as well as unlock synergies in the operations of two of
its subsidiaries in India - Ambuja and ACC. Under this exercise, the Company will
acquire 24% equity shares of Holcim India Pvt. Ltd. (HIPL) from Holderind Investments
Limited (Holderind) for a consideration of approximately '' 3,500 crores and HIPL will
then amalgamate with the Company. Upon completion of the amalgamation, the
Company will hold 50.01% equity shares in ACC and consequently, ACC and all its
subsidiaries will become the subsidiary of Ambuja. Holderind will hold 61.39% equity
shares in Ambuja.
Over the last few years, both Companies have been working on a common platform for
technical support, major procurement and IT functions. However, there are many areas
where synergies are yet to be unlocked. This amalgamation will help realise these

15

synergies. This process along with the alignment of critical back-end functions will help
both Companies improve their competitive position in the current challenging market.

UPCOMING ACTIVITY OF COMPANY.

i) A new brown-field expansion project was announced in 2011 at Sankrail grinding unit
in the eastern region comprising a roller press and related logistics. The project is
underway, with extended scope to include advanced technical specifications. It is slated
to cost ` 325 crore and aimed for completion by 2016. So far, equipment orders have been
placed and civil work is in progress. This project would add 0.80 million tonne grinding
capacity to the unit, along with other facilities.
ii) Significant cement capacity addition of approximately 4.50 million tonnes with
associated clinkerisation capacity of 2.17 million tonnes is coming up at the proposed
integrated plant at Marwar Mundwa, Nagaur district in Rajasthan with cement capacity of
1.5 MTPA; and with similar capacity grinding units at Osara (M.P.) and Dadri (U.P.), the
total project cost is estimated at ` 3500 crores. Environmental clearances for the project
were acquired but kept in abeyance for Marwar Mundwa by the MoEF. Part of the mining
land is already in possession and the rest is under an advanced stage of acquisition. The
Company is also in the process of tying-up water sources required for construction and
operations. Full-fledged construction work is expected to commence in the latter part of
2014.

16

iii) Last year, the Company had taken up 13 new ambitious projects at different locations
worth 272 crores to optimise and enhance efficiency. These projects have a quick
payback of two and half years to four years. Work is progressing well and most are likely
to be completed in the first half of 2014.
iv) A new brown-field expansion project to set up a roller press at a cost of ` 70 crore at
the Rabriyawas unit in Rajasthan, will add 0.80 million tonne grinding capacity in the
first half of 2014. The year 2014 will see capital expenditure worth ` 802 crores, over and
above the ` 725 crores investment made in 2013. The entire proposed expenditure would
be financed by internal accruals.
The year 2014 will see capital expenditure worth ''802 crores, over and above the ''725
crores investment made in 2013. The entire proposed expenditure would be financed by
internal accruals.

17

CHAPTER 3

PARTICULARS

as at

as at

31st dec
2012
Rs.In
Crores

31st dec
2013
Rs.In
Crores

Absolute
Increase
or
Decrease
Rs.In
Crores

SOURCES OF FUNDS
Shareholders Fund
Share Capital
Reserves and surplus

Minority Interest

308.44

309.17

0.7

8488.97

9152.72

663.8

8797.41

9461.89

0.84

0.71

(0.13)

Non current liabilities

Long term borrowing

39.32

33.43

(5.9)

Deferred tax liabilities(net)

548.25

564.32

16.1

4.91

17.58

12.7

21.84

25.53

3.7

Other long term liabilities

Long term provisions
18

614.32

640.86

Comparitive Balancesheet of a Ambuja Cement Company

CURRENT LIABILITIES
Short term borrowings

10.31

1.08

(9.2)

Trade payable

948.57

979.76

31.2

Other current liabilities

665.14

796.10

131.0

Short term provisions

1308.99

1076.34

(232.7)

2933.01

2853.28

12345.58

12956.74

611.2

Tangible assets

5903.75

6099.90

196.2

Intangible asset

47.02

46.85

(0.2)

Capital work in progress

532.68

697.50

164.8

6474.45

6844.25

TOTAL

ASSETS
Non- current asset
Fixed asset:

19

Non-current investment

37.10

29.60

(7.5)

Deferred tax asset(net)

0.76

0.44

(0.32)

Long term loans and advances

281.35

307.24

25.9

Other non-current asset

257.63

247.93

(9.7)

576.84

585.21

Current Investments

1543.83

1683.94

140.1

Inventories

986.93

936.41

(50.5)

Trade receivables

220.54

235.13

14.6

Cash and bank balance

2260.17

2344.98

84.8

Short term loans and advances

250.84

271.35

20.5

Other current assets

31.98

55.47

23.5

5294.29

5527.28

12345.58

12956.74

Current asset

TOTAL

Comments on Balancesheet Statements.

20

611.2

The share capital of a company is raised by 0.7 crore in the year 2013. The reserve &
surplus of a company have been increased by 663.8 crore. The minority interest is also
decreased by 0.13 crores.
The overall non-current liabilities of the company is increased by 26.6 crores as
compared to that of last year, But that of current liabilities have been decreasesd by 79.7
crores as compared to last year. The huge decrease is due to the dercrease in short term
provision.
Hence the total available funds has been increased by 611.2 crore.
The extra fund of a company has been utilized in purchasing of a fixed assets. So that the
fixed assets of a company is increased by 360.8 crore.
Some amount is invested by the company in investment.. However in 2013, the
investment of a company has been decreased by 7.5 crores as compared to the investment
of 2012.
The non-current asset of the company such as long term loans and advances and other
non-current assets have resulted in increase of 15.9 crores as compared to last year 2012.
The current assets of a company such as inventory, sundry debtors, cash & bank
balance ,other current assets, loans and advances has also been increased in the year of
2013 by 233 crores.

21

CHAPTER 4
AUDITORS REPORT
Recorded in the annual report, the auditor's report tests to see that a corporation's
financial statements comply with GAAP. This is sometimes referred to as the clean
opinion. Most auditor's reports consist of three paragraphs. The first states the
responsibilities of the auditor and directors. The second is the scope, stating that GAAP
was used. Finally, the third paragraph gives the auditor's opinion.
The audit is conducted as accordance with the auditing standards generally accepted in
India. Those standards require that are plan and perform the audit to obtain reasonable
assurance about whether financial statements are free of material statement .the audit
include examing ,on a test basis, evidence supporting the amounts and disclosure in the
financial statements.
The audit also include assessing the accounting principles used and significant estimate
made by the management as well as evaluating the overall financial statements
prestation. The company believe that the audit provide the reasonable basis for opinion.
According to information provided to the auditor the company did not taken any loans
,secured and unsecured .from companies ,firms or other parties.

22

There is an adequate internal control system commence with the size of the company and
the nature of its business for the purchase of inventory and fixed assets and for the sale of
goods and purchase of goods and services. During the course of audit the auditor have
not observed any major weakness or continuing failure of the company in respect of the
above areas.
According to information provided by the management, the company has changed
retrospective effect changed its method of measurement of compensation coast relating to
employee stock option .
The fixed assets are stated at their original cost. The capital work in progress is stated at
the amount expended up to the date of balance sheet.
The inventory are valued at lower of cost. The inventory include of coal, fuel, materials,
raw material, stores and spares.
The company has only one business segment that is cementations material as its primary
segment.
Cash and bank balance in the balance sheet is including of fixed deposits , cheque in
hand and cash in hand.
Expenses included under the head misc-expendiotures are amortised over the period of
estimate future benefits not exceeding ten years.
The Company has maintained proper records showing full
quantitative details and situation of fixed assets.

23

particulars, including

The Company has a programme for physical verification on a rotational basis, which,
in our opinion, is reasonable having regard to the size of the Company and the nature
of its business.
Accordingly, certain fixed assets have been physically verified by the management during
the year and no material discrepancies were noticed on such verification.
There was no disposal of substantial part of fixed assets during the year.
The management has conducted physical verification of inventory at reasonable intervals
during the year
The procedures of physical verification of inventory followed by the management are
reasonable and adequate in relation to the size of the Company and the nature of its
business.
The Company is maintaining proper records of inventory. Discrepancies noted on
physical verification of inventories were not material, and have been properly dealt with
in the books of accounts.
According to the information and explanations provided by the management, we are
of the opinion that the particulars of contracts or arrangements referred to in section
301 of the Act that need to be entered into the register maintained under section 301 have
been so entered. In our opinion and according to the information and explanations given
to us, the transactions made in pursuance of such contracts or arrangements exceeding
value of Rupees five lakhs have been entered into during the financial year at prices
which are reasonable having regard to the prevailing market prices at the relevant
time.

24

Auditor have broadly reviewed the books of account maintained by the Company
pursuant to the rules made by the Central Government for the maintenance of cost
records under section 209(1)(d) of the Companies Act, 1956, related to the manufacture
of cement and are of the opinion that prima facie, the prescribed accounts and
records have been made and
maintained.
The

Company is generally regular in depositing

with

appropriate authorities

undisputed statutory dues including provident fund, investor education and protection
fund, employees state insurance, income tax, sales tax, wealth tax, service tax,
customs duty, excise duty, cess and other material statutory dues applicable to it.
According to the information and explanations given to auditors, no undisputed dues
in respect of provident fund, investor education and protection fund, employees`
state insurance, income-tax,

wealth-tax, service tax, sales-tax, customs duty, excise

duty, cess and other material statutory dues which were outstanding, at the yearend for a
period of more than six months from the date they became payable.

The Company has no accumulated losses at the end of the financial year and it has not
incurred cash losses in the current and immediately preceding financial year. Based
on our audit procedures and as per the information and explanations given by the
management, we are of the opinion that the Company has not defaulted in repayment
of dues to a financial institution, bank or debenture holders.

25

According to the information and explanations given to us and based on the documents
and records produced to us, the Company has not granted loans and advances on the
basis of security by way of pledge of shares, debentures and other securities.
The Company has not made any preferential allotment of shares to parties or companies
covered in the register maintained under section 301 of the Companies Act, 1956.
The Company did not have any outstanding debentures during the year. The Company
has not raised any money through a public issue during the year. Accordingly, the
provisions of clause of the Order are not applicable to the Company.
Based upon the audit procedures performed for the purpose of reporting the true and
fair view of the financial statements and as per the information and explanations given
by the management, we report that no fraud on or by the Company has been noticed or
reported during the year except for instances of misappropriation by employees, the
amount of which is not determinable.

26

CHAPTER 5
ANALYSIS, FINDINGS & CONCLUSION

-The cement industry witnessed flat growth in 2013 due to several reasons - a prolonged
monsoon that extended until the festive season, natural calamities (floods and cyclone)
that hit many parts of India and low demand due to financial crunch and slowdown in
realty and infrastructure sectors.
-In the first half of 2013, industry demand was slow due to fall in construction activity
and a virtual halt in government spending. During the second half, the early arrival of the
monsoon compared with the previous year did not augur well.
-The cement industry also faced rising costs, high interest rates, land acquisition and
clearance issues. An overall weak macro environment and ban on sand mining continued
to worry the industry.
-Increase in freight rates for several commodities has had a cascading impact on the
cement industry. An increase in freight rates for coal and cement drove up transportation
cost as well as the landed cost of imported goods. Moreover, the rupee''s weakness
27

against the U.S. dollar and other global currencies prevented India from taking advantage
of the decline in commodity prices in the world market.
-Over the past few years, the cement industry witnessed huge capacity addition (almost
90 million tones on the available supply basis), which substantially increased the gap
between demand and supply and consequently lowered capacity utilization.
It expect the demand to gradually revive over 2014 and 2015 with a newgovernment and
recovery in construction activity.

Financial Result
-Cement production decreased by 3% to reach 20.96 million tonnes, from 21.62 million
tonnes while clinker production decreased to 14.27 million tonnes, 10% down from 15.81
million tonnes in year 2012.

- Domestic cement sales volume continued with sluggish demand by recording a decrease
of 2% at 20.94 million tonnes from 21.31 million tonnes in year 2012. Cement exports
decreased to 0.10 million tones from 0.12 million tonnes in year 2012. Clinker sales
(including exports) were up at 0.56 million tonnes from 0.55 million tonnes in 2012.

28

- Net sales at '' 9,087 crores were 6% lower than that of previous year''s '' 9,675 crores.
-Average sales realisation decreased by around 4% at ''4,208 per tonne against approx
''4,400 per tonne in 2012.
-Total (operating) expenses for the year 2013 increased by 2% over that of year 2012.
-The Company achieved an absolute EBITDA of '' 1651 crores in year 2013. This is
lower by 33% over the corresponding '' 2473 crores of the year 2012

Particular

Stand alone

29

Consolidated

C.Y

P.Y

C.Y

P.Y

31.12.13

31.12.12

31.12.13

31.12.12

Sales (Net of excise duty)

9086.84

9674.94

9118.00

9739.54

Profit before interest and

2044.45

2821.84

2033.91

2821.95

Less: Finance Cost

65.08

75.66

66.75

78.46

Gross profit

1979.37

2746.18

1967.16

2743.49

Less: Depreciation and

amortization expense

490.07

565.22

493.67

568.68

1489.30

2180.96

1473.49

2174.81

Exceptional items

(24.82)

279.13

(24.82)

279.13

Profit before tax

1514.12

1901.83

1498.31

1895.68

219.55

604.77

219.87

603.86

1294.57

1297.06

1278.44

1291.82

(0.13)

(1.39)

depreciation

Profit before Exceptional

Items and Tax

Less: Tax expense

Profit after tax but before
minority Interest
Less: Minority interest

Profit for the Year

1294.57

1297.06

1278.57

1293.21

Add: Balance as per the last

financial statements

737.01

284.75

1048.09

598.72

Profit available for appropriation

30

Appropriations:

2031.58

1581.81

2326.66

1891.93

(0.96)

150.00

200.00

150.00

200.00

556.34

554.80

556.34

554.80

94.55

90.00

94.55

90.00

844.80

800.89

843.84

737.01

1525.77

1048.09

Consequent to change in
group''s interest

General Reserve
Dividend on Equity Shares
(including interim)
Corporate Dividend Tax
Total Appropriations

Balance carried forward to Balance 800.89

Sheet
1230.69

DIVIDEND
The Company has paid an interim dividend of 70% ('' 1.40 per share) during the year. The
Directors are pleased to recommend a final dividend of 110% (''2.20 per share). Thus the
aggregate dividend for the year 2013 works out to 180% (''3.60 per share) and the total
payout will be ''648.37 crores, including dividend distribution tax of ''92.71 crores. This
represents a payout ratio of 50%.

MARKET DEVELOPMENTS
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The Company''s domestic cement sales in 2013 declined by 1.7% to 20.94 million tonnes
as compared to 21.31 million tonnes achieved in 2012. Total cement sales (including
exports) declined by 1.8% to 21.04 million tonnes as compared to 21.43 million tonnes
achieved in 2012.
REGION-WISE SALES VOLUME / GROWTH
In the North region, domestic cement sales of the Company declined by 1.7% to 8.64
million tonnes in 2013 compared to 8.79 million tonnes in 2012.
In the East region, the Company achieved sales of 4.21 million tones of cement in the
domestic market, registering a decline of 0.2% over the previous year sales of 4.22
million tonnes.
In the West & South region, the Company''s domestic cement sales in 2013 declined by
2.5% to 8.09 million tonnes as compared to 8.30 million tonnes achieved in 2012.
Cement exports in 2013 reduced further to 0.10 million tonnes as compared to 0.12
million tonnes in 2012.
GROWING THE DISTRIBUTION FOOTPRINT
The Company continues to develop and leverage its large and able network of around
8,500 dealers and 27,000 retailers across India. Their reach and penetration helps the
Company in core rural and semi-urban markets across the country. This, coupled with the
strong brand equity and efficient channel management, has significantly helped the
Company to withstand severe competition in an over-supplied market.

32

The Company''s network of ports, bulk cement terminals and captive ships on the west
coast has supported a sustainable and strong market position in Mumbai, Surat and
Cochin. The Mangalore Bulk Cement Terminal that commenced its commercial
operations in 2013 will further strengthen the Company''s position and enhance its
footprint in the South region.
ENHANCING OUR SYSTEMS
The Company embarked on the Marketing and Commercial Excellence (MaCX)
programme to further sharpen its marketing, sales and distribution functions. This
ambitious programme is part of the comprehensive Holcim Leadership Journey (HLJ),
announced by Holcim management across the globe to deliver gains and create value in a
competitive environment over the next few years. MaCX aims to supplement in-house
skills with global expertise of Holcim and that of advisory firms, to revamp customer
interfacing functions by focusing on core value levers. This is an investment to future
proof the Company and to promote an environment of innovation and excellence.

COST DEVELOPMENTS
During the year 2013, the economy witnessed upward movement in overall cost structure
and volatile foreign exchange rates. However, the Company implemented cost
optimisation initiatives which helped in containing inflationary impact to some extent.
MAJOR COST MOVEMENTS:

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i) Cost of major raw material, fly ash, increased by 7% on per tone basis. However,
strategy to change in mix of gypsum resulted in cost decrease by 2% on per tonne basis.
Overall, the absolute raw material cost decreased by approx. 6% over the previous year
including the impact of lower volumes.

ii) Power and fuel costs account for approximately 26% of the total operating cost of the
Company.

Coal cost for kiln and captive power plants reduced by 8% and 10%

respectively, due to reduced usage of imported coal and also substitution of high cost coal
by pet coke usage. Besides, there was increased usage of Alternate fuels by 3% over the
usage for the year 2012.
Cost of grid power continued its upward movement with per kwh rate increasing by
approximately 22% over the previous year. In 2013, captive power generation which
supports 66% of the total power requirements of the Company, reduced by 10%.
Overall, the reduction in dependence on grid, increase usage of captive power and
reduction in fuel prices have helped the Company in registering a decrease of 11% in
absolute cost of power and fuel as compared to the year 2012.

iii) Freight and forwarding cost works out to 30% of total operating costs. During the
year, the same hardened by 6% on per tonne basis over the year 2012 due to an increase
in diesel prices.

34

iv) The cost of packing bags went up by around 14%, driven by increase in PP granule
prices.

EXPANSION PROJECTS AND NEW INVESTMENTS

The Company took up several projects to serve its customers in a more efficient, costeffective, reliable and environment-friendly manner, while bolstering its market Dosition
in the industrv.
CAPACITY EXPANSION DURING THE YEAR
The new Bulk Cement Terminal (BCT) at Mangalore commissioned this year will help
the Company expand its footprint in the southern markets of India.
EFFICIENCY IMPROVEMENT MEASURES:
Getting better at being the best The Company focused on consolidation and optimisation
of its existing capacities in all the three regions. Capital investments kept flowing in
during the year, to ensure the highest standards of safety in order to meet the Company
policies of ''Zero Harm'', clean and energy efficient infrastructure, cost efficient and
environment- friendly material handling systems and process optimisation.
Achievements at a glance
i) A Waste Heat Recovery (WHR) plant at Rabriyawas with an approved investment of ''
75 crores is being installed to bring efficiency in fuel utilisation, optimise power costs
and meet our Renewable Power Obligation.

35

ii) In order to strengthen logistics capability and extend its reach tocustomers, a new
railway siding project has been initiated at the Rabriyawas unit in Rajasthan. The total
project cost is ''250 crores. So far 40% work of the Railway Project is completed and our
timelines for completion are within the second quarter of 2016.
iii) An automatic wagon loading system constructed at the Farraka unit in West Bengal
built at a cost of approximately ''32 crores was completed and made operational during
the year. This system will reduce cost and improve efficiency of material handling.

COMPANIES CONTRIBUTION TO THE SOCIETY.

Through the efforts that company made in various states in India. And the outcome of
that is positive. Companies areas of focus cover issue that affect their location and are
offen common to other rural areas too. Prior to the indentification of these areas that have
been undertaken by the company that are participatory rural appraisals and closr
interaction with the people.
The ambuja cement foundation is active in 10 of Indias majour states where the
companies plants are present. The oldest location where the first activity was started is
Kodinar in Gujrat.The statewise spread demomstrate the activities undertaken in each
state translating in to success stories and finally collectively leading to enhancing the true
potential of rural India.
AFC is doing its bit to improve the state of agriculture in Nadikudi in utter Pradesh.
Farmers field school are a irect way of building capacity of the farmers, where they are

36

encouraged to observe and learn new agriculture technique and undertake experiment on
their own fields. Training is an important component of this programme and issues such
as the importance of organization into a farmer group, health care during using
insecticides, preparation of Bordeaux mixture, types and technique of nursery raisin ,jiva
amrit etc are taken up.The concept of Agro Eco System Analysis ,enrichment of farm
yard manure with neem powder,etc were introduced to the farmer.A Wadi project for
horticulture has been initited in Nakikudi on lands belonging to schedule tribes in 3
mamdals.About 50 was brought under cultivation in the year and now barren land is bein
cleared under the National Rural Employment Gurantee Scheme to be made available.
Animal health camps are held regularly with the help o the department of animal in the
village with the help of.In 2009-2010 a new veterinary clinic was established with
adequate infrastructure,an in house veterinarian and an assistant.Farmer from five
villages benefited from the clinic.
A training centre has been established at Nadikudi where 26 women enrolled for a 6month programme to learn the basics of sewing. Many women were also presented with
sewing machines at the end of the training so that they could open their own small
enterprises and earn additional income for their families.
Several training programme were conducted for the Women Self Help Group of
Nadikudi. The training covered issues such as management of the revolving fund,internal
lending and the role and responsibilities of the SHG. The books of accounts of 24 SHGs
were audited by an external resourse person. Some common error were indentified that

37

were then addressed in follow up training sessions. At chandrapur several infrastructure

developmental activities were undertaken in the year 0f 2010.
Adolescent groups have been formed in 6 villages. Sensitisation meetings were carried
out with these groups in collaboration with ICDS to help them become aware about
career, health, hygiene and related issues. Youth groups have been developed by ACF in
the villages and these function change agents for the community, working on improving
sanitation facilities and helping members of the community get their dues such as
pensions and ration cards.

CONCLUSION.
Today ambuja cement company has become one of the larger and profitable and well
known to the people and profitable cement units in Indian cement industry.
It has done his job within a very short time by providing itself as an efficient unit . From
the beginning it has maintain high quality standard and it has been approved by ISO.
Now sloly it is going towards the international market and has started to spread its wings
overthere. It is slowly and steadily moving towards the grand success.
The company not only developing its own firm but it also developing thae states in which
the company have its own plants of cement units.
It has awareness towards environment by achieving zero level pollution. Ambuja
Cements has always prided itself on its world class performance.

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WIBIOGRAPHY.

39

THE INFORMATION IS TAKEN FROM THE FOLLOWING SITES.

http://www.ambuja cement.com
http://www.google.com.
http://www.investopedia.com.
http://www.moneycontrol.com

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