Professional Documents
Culture Documents
1|Page
OBJECTIVES OF STUDY
RESEARCH METHODOLOGY
2|Page
A)
Selection of subject:
B) Title of dissertation:
3|Page
C) Collection of data:
The research methodology would like to gather information for carrying
out analysis by using the following method during research study.
Secondary data:
Financial search is the systematic design, collection and analysis of
data and finding relevant to specific financial aspects of the company.
The data was collected through financial statements like:
1)
2)
3)
4)
4|Page
Annual reports.
Balance sheet.
Profit and Loss Account
Other articles.
HYPOTHESIS
5|Page
INTRODUCTION
Ambuja Cements Limited was set up in the late 80s. The cement
industry presented an opportunity of steady growth and ethical competition
to the promoters.
6|Page
More importantly, its plants are some of the most efficient in the world.
With environment protection measures that are on par with the finest in the
developed world.
But the companys most distinctive attribute is its approach to the
business. Ambuja believes its most valuable assets arent cement plants. They
are the people who run the plants.
This unique vision is encapsulated in the companys homegrown
philosophy of giving people the authority to set their own targets, and the
freedom to achieve their goals.
Its called I can
This simple vision has created an environment where there are no limits
to excellence, no limits to efficiency. And has proved to be a powerful engine
of growth for the company.
As a result, Ambuja has consistently raised the bar in all aspects of the
cement industry. Be it transportation, plant efficiency, brand building or
human resource development.
7|Page
A whole new way of transporting cement In the early 90s, almost all
cement in India travelled by rail or road. And in bags. A mode that involves
deterioration of both, the quality and volume of cement.
9|Page
Branding a commodity
Cement is a commodity, sold largely on price. Ambuja Cement was the
first company to create a brand out of cement and command a premium.
It was also the first to introduce a special cell, providing technical
services to consumers and masons. Today, this has become the norm in cement
marketing.
The trick of course was to provide a consistently high quality of
cement, backed by excellent service. This was reinforced by a strong
dealer network.
The result is that customers are ready to pay 2-3% premium for Ambuja
Cement for the value they receive. Ambuja Cement is the top brand in
Western, Northern, Central and Eastern India.
Exports
10 | P a g e
The Environment
From the outset, Ambuja has believed that a cement plant cannot
flourish at the cost of the environment. Thats why it adheres to the most
rigorous international environmental norms.
The pollution levels at all its cement plants are even lower than the
rigorous Swiss standards of 100 mg/NM 3.
At the Gujarat plants, surface miners have been employed to scrape the
surface of the mines. Thus ensuring that all the mining is totally blast free.
There
is
no
noise
or
air
pollution.
Similarly at the Himachal Pradesh plant, Ambuja has employed techniques
that have made mining absolutely safe and pollution free.
Not surprisingly then, the company has consistently won awards for its
pollution free plants. Awards as prestigious as the National Award for
Outstanding Pollution Control and The Eco-Gold Star of Tata Energy
Research Institute (TERI).
11 | P a g e
Milestones
Building of a cement plant in record 13 months:2.8 kilometer conveyor belt running through three hills was constructed in just
9 months.
Introduced a completely new system of transporting cement in India the
bulk cement transportation by sea.
Introduced complete blast free limestone mining by using the surface miner in
limestone mining for the first time in India.
12 | P a g e
Created water reservoirs in used up mines and raised the water table in arid
areas.
Our plants have achieved the lowest pollution levels comparable with the
most strongest Swiss standards.
Recognition:
Technical Details
Established 1986.
Total Capacity 15 million tonnes.
Infrastructure Dedicated port at Gujarat. Capable of berthing 40,000
DWT vessels with carrying capacity of 20,000 tonnes.
Packing terminals at Mumbai, Surat and Sri Lanka.
13 | P a g e
ON THE BASIS OF
MATERIAL USED
EXTERNAL
ANALYSIS
14 | P a g e
ON THE BASIS OF
MODUS
OPERANDI
INTERNAL
ANALYSIS
HORIZONTAL
ANALYSIS
VERTICAL
ANALYSIS
(A)EXTERNAL ANALYSIS:
External Analysis is done by outsiders who do not have access to the
detailed internal accounting records of the firm.For Financial Analysis,
these outsiders depend almost entirely on the published financial
ststements.These outsiders include investors, potential investors creditors,
government agencies, credit agencies and the general public.The main
objective of such analysis varies from any party-to-party.
(B)INTERNAL ANALYSIS:
Internal Analysis are conducted by persons who have access to the
internal accounting records and the other related information of a business
firm.This internal analysis is conducted for measuring the operational and
managerial efficiency of the firm.This analysis is performed by the
employees of the organisation as well as government agencies, this analysis
is quite comperensive and reliable.
15 | P a g e
(A)HORIZONTAL ANALYSIS:
Horizontal analysis refers to the comparison of financial a
company for several years. The figures of the various years are compared
with standard or base year this comparison focus attention on items that
have changed significantly during the period under review.So, horizontal
analysis is useful for long term analysis and planning.
(B)VERTICAL ANALYSIS:
Vertical Analysis refer to the process of evaluating the
relationship of the various items in the financial statement of one
accounting period. In vertical analysis, the figures from financial statement
of a year are compared with a base selected from the same years statement.
So, it is a study in terms of information at a perticular data only.
16 | P a g e
Ratio analysis is very powerful analytical and planning tool used for
evaluating firms strengths, weakness, opportunities and threats. Different
parties are interested in ratio analysis for gaining a proper information
contained in financial statement of a firm for different purpose. There are
many ratios available for evaluating a firms financial performance. In
financial ratio analysis, profitability ratio help to measure a firms financial
return, while Liquidity efficiency and gearing ratios help to measure financial
risk. One ratio may not throw light on any area of performance of the firm.
Therefore, a group of ratios must be preferred. For the purpose of financial
analysis, financial ratio is divided into four categories.
19 | P a g e
(1)
LIQUIDITY RATIOS:
(2)
LEVERAGE RATIO:
Financial Leverage refers to the use of debt finance, while debt
capital is a cheaper source of finance, it is also reskier source of
finance. For analysis financial leverage two types or ratios are
commonly used.
(a)
(b)
Structural ratio
Coverage ratio
(3)
ACTIVITY RATIOS:
20 | P a g e
(4)
PROFITABILITY RATIOS:
Profitability reflects the final result of business operations. These are twp
types of profitability ratios.
(a)
(b)
COST-VOLUME-PROFIT ANALYSIS:
21 | P a g e
Rs. in Cr.
INCOME :
Sales Turnover
Other Income
Stock Adjustments
Total Income
EXPENDITURE :
Raw Materials
Excise Duty
Power & Fuel Cost
Other Manufacturing
Expenses
Employee Cost
Selling and Administration
Expenses
Miscellaneous Expenses
Less: Preoperative
Expenditure Capitalised
Profit before Interest,
Depreciation & Tax
Interest & Financial
Charges
Profit before Depreciation
& Tax
Depreciation
Minority Interest before
PAT
Profit Before Tax
Tax
Profit After Tax
Minority Interest after PAT
Profit/Loss of Associate
Company
22 | P a g e
Dec 2009
Dec 2008
7,721.42
255.81
-49.47
7,927.76
7,102.65
514.39
65.24
7,682.28
945.10
680.72
1,422.75
776.63
572.22
907.80
1,325.77
763.37
272.84
1,452.62
266.82
1,329.20
255.62
0.00
266.76
0.00
2,121.48
2,250.34
22.43
32.60
2,099.05
2,217.74
297.28
0.00
260.10
0.00
1,801.77
584.93
1,216.84
0.00
0.00
1,957.64
567.93
1,389.71
0.00
0.00
1,216.84
1,389.71
0.00
0.00
675.84
683.74
1,227.72
664.96
1,397.61
675.84
Equity Dividend
Preference Dividend
Corporate Dividend Tax
Equity Dividend (%)
365.59
0.00
62.13
120.00
334.97
0.00
56.92
110.00
7.58
42.45
8.75
37.25
1.51
223.89
Extraordinary Items
23 | P a g e
BALANCE SHEET:
24 | P a g e
Rs. in Cr.
Dec 2009
SOURCES OF FUNDS :
Share Capital
Reserves & Surplus
Total Shareholders Funds
Secured Loans
Unsecured Loans
Total Debt
Minority Interest
Total Liabilities
Dec 2008
304.74
6,163.31
6,468.05
304.52
5,367.03
5,671.55
100.00
65.70
165.70
0.00
100.00
188.67
288.67
0.00
6,633.75
5,960.22
6,227.30
2,783.06
3,444.24
2,714.44
5,710.11
2,512.87
3,197.24
1,947.23
722.44
327.82
683.24
152.20
880.90
292.42
938.74
224.60
852.13
352.67
1,584.80
674.04
1,413.93
470.56
-250.08
483.65
2.71
4.28
APPLICATION OF FUNDS :
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress
Investments
Current Assets, Loans &
Advances
Inventories
Sundry Debtors
Cash and Bank Balance
Loans and Advances
Less: Current Liab. & Prov.
Current Liabilities
Provisions
Net Current Assets
Miscellaneous Expenses not
25 | P a g e
26 | P a g e
DATA
COLLECTION &
ANALYSIS
Sales
Working Capital
Year
Sales
Working Capital
Ratio
2008
7102.65
5960.22
1.192
2009
7721.42
6633.75
1.164
INTERPRETATION:
This ratio shows the velocity of the utilization of working capital. The
ratio measures the efficiency of the company with which the working
capital is used by the company. Hence higher the ratio better it is. From the
above analysis it is clear that the company utilizes its working capital
properly and effectively.
CURRENT RATIO:
Current ratio measures the relationship between current asset and
current liabilities. This ratio highlights the firms ability to meet its short
28 | P a g e
term liabilities from its short term assets. The standard for the ratio is 2:1.
However one should not rely on it blindly. The current ratio should be
subject to qualitative test. It should be remembered that this ratio is subject
to the influence of many financial forces, which may depress or retrive it
dramatically overnight. It is represented as follows.
Current Ratio = Current Assets
Current Liabilities
Year
Current assets
Current liabilities
Ratio
2008
2368.14
1884.49
1.257
2009
2008.76
2258.84
0.889
INTERPRETATION:
As per general norms, current ratio should be 2:1. In this regard the
current ratio of Ambuja Cement Ltd. Is very low. This ratio further decline in
the year 2009. It shows liquidity position is not satisfactory.
QUICK RATIO:
This ratio measures the relationship between quick asset and quick
liabilities. Quick assets can be immediately converted in to cash, so this
29 | P a g e
ratio gives a more immediate indication of the firms ability to settle its
current debts. This is more stringent test of Liquidity than current asset.
The firm should have a quick ratio in proportion of 1:1 that is considered as
the standard. Where this is not so, a substantial Ash Legged is usually
maintained. It accesses how liquid the firm would be, if so business
operations come to an abrupt halt. This is written as.
Quick Assets
Quick Ratio = Quick Liabilities
Year
Quick Assets
Quick Liabilities
Ratio
2008
483.65
1884.49
0.257
2009
250.08
2258.84
0.110
INTERPRETATION:
Quick ratio is used to as a measure of the companys ability to meet its
current obligations. A high quick ratio is an indication that the firm has the
ability to meet its current liabilities in time and on the other hand, a low
quick ratio represents that the firms liquidity position is not good.
Net Worth
Funded Debt =
Loan Fund
Loan Fund
Year
Funded Debt
Net Worth
Ratio
2008
288.67
5671.55
0.05
2009
165.70
6468.05
0.03
INTERPRETATION:
This ratio determines the companys dependence on external fund. It
should be always less and we can saw from above table that it has decreased
from previous years, so its good for the company.
Year
Net Profit
100
Sales
Sales
Ratio
2008
1389.71
7102.65
19.57%
2009
1216.84
7721.42
15.76%
INTERPRETATION:
Net profit ratio is used to measure the overall profitability of a
concern. It is an index of efficiency and profitability. This ratio also
indicates the firms capacity to face adverse economic conditions such as
competition and low demand. Higher the profit, the better is the
profitability.
reduction in the amount of current asset. These ratio measures the extent to
which the companys invested capital or net worth in tied-up in non-liquid,
permanent, depreciable assets. This is shown as
Shareholders Fund
Proprietary Ratio =
Year
Total Assets
Shareholders Fund
Total Asset
Ratio
2008
5671.55
16063.41
0.35
2009
6468.05
17900.24
0.36
INTERPRETATION:
As it is stated that the ratio should be less as is possible. Here we can say
that the proprietary ratio of the company is satisfactory because all the figures
calculated above are small.
generate sales and profit. To calculate this ratio the following formula is
used
Sales
Asset Turnover Ratio =
Year
Sales
Total Assets
Total Assets
Ratio
2008
7102.65
16063.41
0.44
2009
7721.42
17900.24
0.43
INTERPRETATION:
The asset turnover ratio of the AMBUJA CEMENT LTD. is very
good. To conclude we can say that the company is utilizing its total asset
appropriately and efficiently. The asset turnover shows that earning volume
is satisfactory according to total capital invested in the company.
34 | P a g e
This ratio established the relationship between fixed assets and the
shareholders fund. The ratio of fixed asset to net worth indicate the extent to
which shareholders fund are sink in to the fixed asset.
The formula to calculate this ratio is as follows:
Fixed Asset (after dep.)
Fixed Asset to Net Worth=
Net Worth
Fixed Asset
Net Worth
Ratio
2008
13695.27
5671.55
2.41
2009
15891.48
6468.05
2.46
INTERPRETATION:
The above data shows that the shareholders fund is mostly used for
acquiring and maintaining fixed assets.
35 | P a g e
Year
Sales
Fixed Assets
Fixed Assets
Ratio
2008
7102.65
13695.27
0.52
2009
7721.42
15891.48
0.49
INTERPRETATION:
The ratio in financial year 2009 is more than the preceding years. The
companys fixed asset is utilized appropriately and effectively in each and
every year.
36 | P a g e
CONCLUSION:
SUGGESTIONS:
37 | P a g e
LIMITATIONS
38 | P a g e
(a)
As the research has taken place in very short tenure, the shortage of
time is one of the limitation of this study.
(b)
39 | P a g e
BIBLIOGRAPHY:
(1). I. M. Pandey
---
Management Accounting
---
Management Accounting
Shashi K. Gupta
www.ambujacement.com
40 | P a g e